A new month is upon us and there are some early signs that some things may be changing. Better than expected manufacturing data in China and the Eurozone as well as rising yields in the U.S. put us on guard for a change in the economic winds. Maybe the stock market won't go up forever? Yet for OPEC, it is a new world with U.S. oil production eclipsing 8 million barrels per day.
OPEC meets this week in Vienna as tensions between Iran and Saudi-Arabia are high. Not only do they have to deal with rising U.S. production, they have to deal with the fact that they hate each other. It will be almost impossible to agree to a production cut in this environment. The only way that we will see OPEC cut production is if oil prices fall so hard that it forces them to all get along. Not likely at current levels.
Even if they decide they want to cut, who will have to do the heavy lifting? If sanctions are lifted on Iran they will feel like they are entitled to pump as much as they can. Reuters reports that Iraq exported an average of 2.381 million barrels of oil per day in November, up from 2.253 million a month earlier, oil ministry spokesman Asim Jihad said on Sunday. The average selling price was $103 per barrel, generating $7.3 billion in revenues, he added.
Of the 2.381 million daily total, 2.072 million barrels were shipped from the southern oil port of Basra and 309,000 from Kirkuk in the north. After decades of wars and sanctions, oil output from OPEC's second-biggest producer began a swift revival in 2010 after Big Oil signed deals to tap its southern oilfields. But infrastructure and security problems, on top of a row between Baghdad and the Kurdistan region, have slowed progress this year - it had hoped to hit 3.5 million barrels per day by the end of 2013. OPEC's second biggest producer is expected to show a second year of only modest output growth in 2014.
Gasoline prices over Thanksgiving were the lowest since 2010, yet are spiking due to a slew of Gulf Coast refinery issues. Some are blaming gasoline exports for the rise. We are going to see a warm up but the cold is supposed to return. Natural gas rocked as many parts of the country saw record cold temperatures. After a brief warm-up most of the country is going to sink in a deep freeze with cold temperatures all over except maybe the North-East. U.S. manufacturing may move us a bit but it is the focus on how cold it may get and when that will drive market sentiment.