Drillinginfo has acquired the assets, product lines and related services associated with Ponderosa Energy. Customers can now rely on a single partner for real-time, actionable intelligence and analytics and predictive support for investments in the industry, whether they are investing in exploration, production, buying, selling or trading. Learn more here.

—

CRUDE OIL
• Inventory levels for crude oil increased by 5.3 MMBbl last week as reported by the EIA. The gasoline and distillate inventories increased 0.7 MMBbl and 0.3 MMBbl respectively. The higher than expected crude oil build was due to higher imports (up 981 MBbl/d) which was slightly offset by higher refinery runs (up 309 MBbl/d). The most important number to keep an eye on, total petroleum inventories, increased by 7.1 MMBbl, which erased a similar decline from the previous week. Overall, the report was bearish, as the increase in crude oil stocks was larger than expected and the growth in gasoline was unexpected. The news was overshadowed on Wednesday, however, as Russia said it expected an OPEC agreement shortly after the EIA release.

• Significant news hit the market this week:

1) OPEC announced that their production increased 240 MBbl/d to 33.64 MMBbl/d according to secondary sources. Although this is the official number that OPEC uses when referring to their production levels, the numbers they collected through direct communication with members lists production at 34.61 MMBbl/d. This highlights just one of the many uphill battles that OPEC will face when setting and enforcing quotas. Members do not agree on each other’s’ production, meaning negotiations will start from different base production assumptions.
2) OPEC is proposing that Iran cap production at 3.92 MMBbl/d, which is lower than the 4.0-4.2 MMBbl/d production target that Iran has repeatedly voiced to the market. A deal is highly unlikely without Iran, as geopolitical rival Saudi Arabia has even threatened to increase production if Iran does not participate.
3) The data that IEA released the prior week showed that the ~250 MBbl/d average oversupply in Q3 grew in October as production grew 800 MBbl/d. IEA forecasts also showed an expected 1.2% year-over-year demand growth for 2017, which would be the low...