Andy Lipow - Lipow Oil Associates

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Last quote by Andy Lipow

I think they had a hard time getting this deal together, and I don't particularly think that most of the OPEC countries want to cut any more. Now they're going to cut another couple thousand [barrels]? And how are they going to divvy that up?feedback
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May 10 2017 OPEC
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Andy Lipow is associated, including OPEC, Nymex, and inventory. Most recently, Andy Lipow has been quoted saying: “The problem is that gasoline demand in the U.S. certainly appears to be off compared to last year, and if we don't pull gasoline inventories during the driving season, what it means is we're just turning the crude oil surplus into a petroleum products surplus.” in the article Plunging oil prices show OPEC has lost its grip on the market.
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Andy Lipow quotes

We're certainly going to see more comments out of members of OPEC in the next six weeks leading into its main meeting with respect to discussing the possibility of extending production cuts through balance of 2017.feedback

I think that OPEC is hoping they can wait it out so they don't have to make a decision in May to continue with production cuts, but they may be forced into that decision given the high inventories here in the U.S.feedback

The big bet is that OPEC/non-OPEC complies with the cuts and inventory draws. If over the next few months inventory surveys show little in the way of confirming the cuts, back to the mid $40s we go.feedback

At these price levels, the specs are more inclined to enter the oil market on the long side as they feel we just won't go below $30 as world demand keeps rising.feedback

[Customers are] looking at other types of crude to fill the gap left by a reduction in OPEC production, and at the same time you're seeing continuing demand in China, as world oil continues to increase. That supports the price of crude and certainly helps the producers in the Permian Basin, Eagle Ford and elsewhere. Some of it for sure is making its way out to Asia. The infrastructure continues to get built out to export more and more crude oil. Not only have we built pipelines, but we built more export terminals. The industry continues to add infrastructure to support more exports.feedback

If the administration makes more and more statements that the Iranians consider to be provocative, the situation might turn into renewed sanctions on Iran or Iran acting in a manner that impacts the oil market in other ways.feedback

The oil price is reacting to the implementation of production cuts by OPEC And non-OPEC producers. Inventory statistics today showed products building across the board. If we're seeing not only inventories here but inventories worldwide increase there would be worldwide pressure on oil prices. It's clear it will pressure prices down but we have to see what happens with the rest of the world. You won't have to worry about running out of gas this summer.feedback

The export markets are taking what the domestic demand doesn't need, and it's good for refiners on the Gulf Coast…from that stand point it's helping refining margins.feedback

People just don't realize how integrated we are with these two countries.feedback

The bottom line is they've yet to come to a deal in spite of all their optimistic pronouncements, and the heavy lifting is going to have to be done by Saudi Arabia.feedback

While OPEC may announce a freeze and a cut in production at the end of November, there has been a free for all among its members to produce as much as possible since the September freeze announcement. I think that in spite of whatever agreement comes out of Vienna at the end of the month, the market will be skeptical that OPEC can bring the self-discipline to its members to actually enact a substantial production cut.feedback

It's good news for the refiners because both gasoline and distillate inventories dropped far more than the market anticipated. That is going to help refining margins in a difficult period.feedback

Refiners are importing less crude oil and are really just starting to draw down onshore inventory. Week in and week out we're seeing lower amounts of imports than one might expect given the amount of crude oil we're processing.feedback

This "puts OPEC in an even tougher spot because they have to cut even more production to accommodate the resumption of sales out of Libya and Nigeria.feedback

I think there's a very good chance that [the deal] gets derailed. The production cuts involve countries like Iraq and the Emirates who probably are not very excited about cutting their production.feedback

Clearly, it is inconsistent with the Saudis claim that they're going to cut production in the future, because one would think if you're going to cut production you don't have to cut your crude oil price very much.feedback

A lot of people ran to the pump to fill up so it created demand early. With the Colonial start-up over the next five days, terminals will be getting supplies.feedback

There's no other way to get barrels in there. It's right in the middle of the Southeast.feedback

But it will happen and the consumers will get their gasoline.feedback

You might have an unusual situation where people could pay more at the pump, and they'll be watching gasoline futures dropping off.feedback

Judging from the Nymex action right now, it doesn't look like the market thinks it's going to be fixed today or tomorrow.feedback

Inventories will have pulled down. It will take quite a while to replenish those inventories.feedback

It will eventually go away. The question is how long will it take to repair but it's been down 10 days already.feedback

I'm expecting that in the Carolinas, maybe some parts of Virginia and possibly some locations in Georgia.feedback

We really don't know exactly when Colonial is going to get started back. By Sunday, you might see some brown paper bags on gas pumps.feedback

I think certainly some of the unbranded stations will probably run out of gas.feedback

I would just say gasoline prices are likely to fall another 5 to 10 cents a gallon over the next several weeks, and the national average should actually approach $2 and $2.05 a gallon over the next few months.feedback

It continues to turn the crude oil surplus into a product surplus.feedback

I suspect over the next few weeks we're going to see inventories recover to a certain extent, as the imports catch up. There's still plenty of oil out there. What we're seeing is the result of storm impacts on vessel shipping at the same time we still see members of OPEC to increase their oil production.feedback

I think the big news is really in the products. That's what's driving the market down. Gasoline (supply) has been rising over the last several weeks, in the heart of the summer driving season. Good for consumers, and bad for refiners.feedback

If you look at inventory levels, since Memorial Day, gasoline inventories have trickled on up. I expect that we're going to maintain high inventory levels throughout the summer, going into Labor Day.feedback

They're buying time. It's going to fall off another 300,000 or 400,000 barrels a day by the end of the year.feedback

I remain sceptical, at the end of the day, about that happening as the oil producers are looking at the other guy to cut production while maintaining their own levels.feedback

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