OPEC members failed to agree an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.

A final statement was issued with no mention of a new production ceiling, apparently allowing member countries to continue pumping oil at current rates into a market that has been oversupplied.

OPEC's secretary general Abdullah al-Badri said the body could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear program.

Most ministers left the meeting without making a comment. Iranian oil minister Bijan Zangeneh had said before the meeting that Tehran would be prepared to discuss action only when his country reached full output levels, if and when Western sanctions are lifted.

Saudi oil minister Ali al-Naimi earlier had said he hoped growing global demand could absorb an expected jump in Iranian production next year: "Everyone is welcome to go into‎ the market".

Iran has repeatedly said it would boost production by at least 1 million barrels per day when sanctions are lifted. Without curbs elsewhere, this would add to a global glut, as the world is currently consuming up to 2 million bpd less than it is producing.


Read more at Reutershttp://www.reuters.com/article/us-opec-meeting-idUSKBN0TM30B20151204#e0f8KIzvcB37SM38.99

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The next two quarters will be tough on crude prices, but 2016 will be a year of transition for oil markets, IHS Vice Chairman Dan Yergin said Friday.

Yergin told CNBC's "Squawk Box" he expects oil markets to begin to balance next year or in 2017.

"The oil market "can't stay low like this because you're not going to have the investment you need," he said." "By 2020, the world oil market is going to need another 7 million barrels a day of production."

"Right now, the whole mantra is slow down, postpone, cancel projects," he added.

Multinational energy companies and U.S. shale oil producers have slashed capital spending in order to protect their balance sheets as their revenues plummet and cash flow dries up. Crude prices began to sink from historic highs last fall, and the downturn accelerated after OPEC announced it would not cut supply to balance oil markets.

Despite expectations that high-priced American crude production would collapse at $70 a barrel, U.S. producers can perform well at $55 to $60 per barrel. However, current prices in the $40 to $50 range are creating "great pain," he said.

Yergin said he does not expect OPEC to change its policy of maintaining current oil output levels to defend market share. The 12-member orgnization is meeting Friday in Vienna.

Crude oil futures rose Thursday on reports that top oil exporter Saudi Arabia would agree to cut production by 1 million barrels a day, provided non-OPEC members also dial down output.

However, a Saudi source said later the report by industry publication Energy Intelligence was "baseless." Iran, Iraq and Russia swiftly rejected any such proposal.

Russia, which does not belong to OPEC, is the world's top oil producers and has been pumping crude at a rate of about 10.5 million barrels per day.

After years of sanctions on Iranian oil, Iran's leaders have said they plan to bring 500,000 barrels per day to markets as soon as possible, and they anticipate reaching 1 million barrels. The world is already oversupplied with about 1.5 million barrels of oil.

Kurt Hallead, co-head of energy research at RBC Capital Markets, said a Saudi cut was highly unlikely because it would essentially subsidize U.S. production and make room in the oil markets for Iran, the Saudis chief regional rival.

Oil prices may be range bound for years, he told "Squawk Box" on Friday.

"I think this is more like the period of 1991 to 1994, where you had about a three-year period of capacity absorption before the supply and demand lines kind of crossed again," he said.

In his scenario, prices would move up and down between current levels and roughly $60 per barrel.

http://www.cnbc.com/2015/12/04/yergin-why-oil-prices-cannot-stay-this-low.html

“There is nothing at the moment that could be done from OPEC to correct the situation,” said an OPEC delegate from a Persian Gulf Country. “Shale is the new reality.”

Asia's liquefied natural gas (LNG) glut is set to deepen in 2016 as long-planned new production comes to the market just as demand from top buyers Japan and South Korea as well as China wanes.

While analysts say that new consumer demand may offset dwindling use from established buyers, new supplies will outweigh overall orders, resulting in a low gas price outlook for years to come.

"From having been an import basin, Asia will next year be going to have excess supplies and worse so in 2017," said David Hewitt, co-head of global oil and gas equity research at Credit Suisse.

While term buyers will take most of the volumes from Australia's 13 new LNG supply-trains, commissioning cargoes over the next two years totalling 14 million to 15 million tonnes will go into the spot market, adding pressure to prices.

Hewitt said he expected Asian LNG spot to fall to "eye-watering low" levels of below $5 per million British thermal units (mmBtu) in early 2016 and to hit a low of $4 during the year.

Because of the emerging glut, Asian spot LNG prices LNG-AS have already plummeted by almost two-thirds since 2014 to around $7.30 per mmBtu.

NEW DEMAND, EVEN MORE SUPPLY

With this wave of supply, even rising demand from new customers that will outweigh the dips in demand from established importers will not be enough to balance the market.

Japan imported 6.06 million tonnes of LNG last month, down 12.8 percent from a year ago, while South Korea's monthly imports have averaged 2.7 millon tonnes this year, the lowest since 2009, customs data showed.

China's LNG demand could dip by around 300,000 tonnes this year, according to analysts, although this is expected to be a short-term dip rather than a long-lasting trend.

A dozen new buyers - including Morocco, Poland, the Phillippines and Bangladesh - are expected to start importing LNG by 2020, creating about 13 million tonnes a year of new demand. But this will not consume the 14 million to 15 million tonnes of commissioning cargoes coming onto the market.

Along with consumption from existing buyers, newcomers are expected to add 50 million tonnes per annum of demand by 2020, yet a huge 120 million tonnes a year of new LNG is scheduled to come online by then, according to industry expectations.

With such an overhang in supplies, analysts and industry members say that some planned production will have to falter in order to rebalance the market.

In another sign of a deepening glut, China's Sinopec has been given rare approval by its partners in the Australia Pacific LNG project to sell on some of the cargoes it doesn't need for itself, albeit with heavy restrictions.

The A$24.7 billion ($18.06 billion) Australia Pacific LNG project is now starting operations and will produce 9 million tonnes of LNG a year when completed.

Most LNG deals have so-called destination clauses which prohibit the sale of unwanted cargoes to third parties.

However, ConocoPhillips, which holds 37.5 percent of the project, and Australia's Origin, with a similar-sized stake, have given Sinopec permission to sell on some cargoes it doesn't need, permitting they are sold within China or outside Asia and are sold linked to oil prices, according to Conoco. Sinopec holds 25 percent of the project.

With oil-indexed LNG prices about a dollar higher than Asian spot prices and European benchmarks almost $3 per mmBtu cheaper, Sinopec will have a hard time selling the shipments. Higher freight costs from Australia to Middle East and European markets will also add to the price of Sinopec's cargoes.

Read more at Reutershttp://www.reuters.com/article/asia-lng-idUSL3N13T2R620151204#mwr3UzMhw

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National Electric Power Company of Jordan is expected to issue an LNG tender soon seeking cargoes from the spot market.

NEPCO’s managing director assistant for operation and planning, Amani Al-Azzamtold Reuters on Thursday that Jordan expects to import around 20 percent of its LNG from the spot market in 2016 and 2017.

He added that Jordan could import up to seven cargoes a year from the spot market in 2016 and 2017, noting that an LNG supply tender could be issued by the end of December, seeking one or two cargoes for delivery in the first quarter of next year.

Jordan’s NEPCO already inked a deal with Shell for the supply of 36 LNG cargoes in 2015 and 2016

http://www.lngworldnews.com/jordans-nepco-targets-spot-lng-purchases/

Turkey plans to build a pipeline to import gas from the Kurdistan Regional Government in northern Iraq, part of efforts to diversify its energy supply as relations with Russian President Vladimir Putin deteriorate.

The state-run gas grid operator Botas will open a tender in two months for construction of the 180-kilometer (112-mile) pipeline, which will carry up to 20 billion cubic meters of gas a year from the border with Iraq to where the existing grid ends at Mardin, a Turkish official said Wednesday, asking not to be named in line with policy.

Turkish officials have scrambled to secure alternative sources of energy since its F-16s downed a Russian warplane in the border region with Syria, triggering economic sanctions and intensifying verbal attacks from Putin. Though Russia has promised to adhere to its contractual supply obligations, the incident has left Turkey exposed.

“In the long-term, Turkey needs to cut its dependence on Russian gas below 30 percent, from 55 percent now, and it also needs to speed up work on getting Kurdish gas,” Mehmet Ogutcu, chairman of London-based energy advisory firm Global Resources Partnership, said by phone on Wednesday. “Those occupying ruling positions in Turkey should stop promulgating the narrative that it can get gas from other sources -- it’s not that easy.”

Turkey’s $800 billion economy relies on imports for almost all of its fossil fuel needs, with half of its natural gas coming from Russia at a cost of as much as $10 billion last year.

Istanbul, Turkey’s most populous city that accounts for more than a quarter of national output, is almost entirely dependent on Russian gas imports through the Trans-Balkan pipeline, according to the Turkish official. Storage facilities around the city may not be sufficient to meet demand in the case of a prolonged cut in supply, he said.

“On energy, Turkey is definitely more dependent on Russia than what the consensus seems to portray,” Naz Masraff, director for Europe at political risk consultants Eurasia Group, said on Monday. “If there were to be technical problems on the Trans-Balkan line for one or two days, that would really make Turkey and especially the Istanbul region struggle both in terms of power cuts, gas cuts, heating and production.”

The value of Turkey’s business makes it unlikely that Putin will break Russia’s deals to supply gas, according to Emin Danis, energy program coordinator at Istanbul-based Caspian Strategy Institute.

The pipeline to northern Iraq would further a relationship with Iraq’s Kurds that has improved in recent years, in contrast to the collapse of a ceasefire with autonomy-seeking Kurds in Turkey earlier this year. Turkey offers the sole route to market to the expanding Kurdish oil industry, and Turkish companies provide builders and consumer goods.

http://www.bloomberg.com/news/articles/2015-12-03/turkey-turns-to-iraq-s-kurds-for-gas-amid-pressure-from-putin

The US oil rig count fell by 10 to 545 last week, for a third period in a row, according to oil driller Baker Hughes.

That's the lowest tally since the week of June 4, 2010.

The gas rig count rose by 3 to 292.

In the prior period, US oil producers idled 9 rigs, while the gas rig count dropped by 4.

http://uk.businessinsider.com/baker-hughes-rig-counts-december-4-2015-12?r=US&IR=T