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Chinese growth: 5 themes to watch for

People walking in front of the Shanghai skyline and the under construction Shanghai Tower (R). Global investors will be focused on China on Wednesday morning as the government releases second-quarter figures for economic growth, as well as monthly data on industrial production, fixed-asset investment and retail sales. Here are five key themes to watch for. 1. Headline GDP Chinese premier Li Keqiang said in London last month that he was “confident” China would meet its full-year gross domestic product target of 7.5 per cent growth. Economists expect second-quarter expansion to be 7.4 per cent, unchanged from the 18-month low hit in the first quarter, according to a Reuters poll. But if growth comes in closer to 7 per cent, the full-year target will be in jeopardy and make the government more likely to notch up its stimulus measures. 2. Property sales Real estate contributes 23 per cent to China’s […]

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What Is Power Consumption Telling Us About The US Economy?

We track US power consumption on a weekly basis as reported by Barron’s, as we believe this information provides insightful – albeit sometimes “noisy” and seasonally unadjusted – clues about the performance of the economy over time. The expectation is that a more robust economic environment requires more power, although factors like colder winters and warmer summers relative to the norm can greatly skew the analysis. With that in mind, let’s have a look at the weekly historical performance of this indicator going back to 1995 (in MM kWhs): Many peaks and bottoms can be observed as power demand changes seasonally over the year. We have used polynomial smoothing to extract a trend line (in black). Some quick observations: US power consumption peaked in 2006 (red line), approximately in line with the peak in the US housing market, and the trend line has flatlined since. By definition a peak […]

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Kemp: The Real Shale Revolution

Article title LONDON, July 14 (Reuters) – By now everyone knows the shale revolution was made possible by the combination of horizontal drilling and hydraulic fracturing. But although fracking has captured the popular imagination, and is often used as a synonym for the whole phenomenon, horizontal drilling was actually the more recent and important breakthrough. Mastery of horizontal drilling around 1990, originally for oil rather than gas exploration, was the decisive innovation that lit the long fuse for the shale revolution that erupted 15 years later. "Horizontal drilling is the real marvel of engineering and scientific innovation," David Blackmon wrote in Forbes magazine last year ("Horizontal drilling: a technological marvel ignored", January 2013). "While impressive in its own right, the main innovations in fracking have been beefing up the generating horsepower to accommodate horizontal wells rather than vertical ones, and refining of the fluids used to conserve water and […]

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North Dakota Expects ‘Big Surge’ in Summer Crude Output

North Dakota , the second-largest oil-producing state in the U.S., expects output to surge through the summer as more benign weather gives roughnecks extra time to work in the field. Output rose about 3.6 percent to 1.04 million barrels a day in May, the state’s Department of Mineral Resources reported yesterday. It was the largest increase since August. The growth came even as rain and high winds kept well completion crews out of the fields for several days during the month. Better summer weather will lead to production growth in the region of 5 to 6 percent a month in June, July and August, said Lynn Helms, director of the state’s Department of Mineral Resources. “We still expect the big surge to come in June, July and August in terms of completions and some really rapid production increases,” Helms said on a conference call with reporters yesterday. North Dakota […]

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More U.S. Condensate Producers Seen Seeking to Export

Enterprise Products Partners LP (EPD) and Pioneer Natural Resources Co. (PXD) , two of the first fuel suppliers to win approval to send U.S. condensates abroad, may be about to get some company. Less than a month after Enterprise and Pioneer said they received approval to export processed condensate, others are seeking the same permission, said Jacob Dweck, a partner at the law firm Sutherland Asbill & Brennan LLP, who represented Enterprise in its request to the U.S. Commerce Department. Dweck declined to identify the companies or say how many there were. The U.S. has prohibited most crude exports since 1975. Exports of products such as gasoline and diesel are legal. Condensates are ultra-light hydrocarbons that are gaseous when extracted from oil and natural gas reservoirs. Exports may ease a glut of crude created by a boom in output from hydraulic fracturing and horizontal drilling in shale formations. U.S. […]

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EIA’s Drilling Productivity Report

Note: Just as I was finishing this post North Dakota published their production numbers for May 2014. North Dakota production was up over 36,000 barrels per day on 227 new well completions according to The Director’s Cut. I will have a post on all that tomorrow. The EIA’s Drilling Productivity Report has just came out. Below are a few charts gleaned from that report. The World’s seven largest publicly owned oil companies have peaked. Their combined production has declined 12.4% since 2009. The Drilling Productivity Report shows, or tries to show, the true decline rate of shale oil and gas. I usually only track the oil however. Bakken Legacy Decline In January the EIA estimated that Bakken production from new wells would equal 88 kb/d. They estimated that the declines of all older wells would equal 63 kb/d leaving net production at 25 kb/d. In August they estimate that […]

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US shale drillers becoming immune to oil and gas prices: Raymond James

US exploration and production companies will become the long-promised "factories" with positive cash flow starting this year as growing production efficiencies make them relatively immune to flat commodity prices, investment bank Raymond James said Monday. "With rising US production and falling costs per unit of production, US E&P companies are now poised to actually grow cash flows even in a flat or modestly lower energy price environment," Raymond James’ top oil and gas analyst Marshall Adkins said in a note to clients. "We now think the US oil and gas business can be viewed as more of a sustainable growth industry rather than a pure commodity call," Adkins said. After a decade of spending roughly 40% more than it took in in revenues during the shale land grab, E&Ps have driven per barrel and per Mcf costs down to a point where in a flat price environment profits are […]

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North Dakota crude production jumps 36,379 b/d, reaches new high: state

North Dakota’s crude production in May reached another all-time high, continuing to climb above the 1 million b/d mark it reached in April, the state’s Department of Mineral Resources said Monday. May production rose 36,379 b/d from April to a record 1,039,635 b/d, the DMR said in a statement. The number of producing wells in the state also jumped to a record 10,892 in May, up 227 from April, it said. Bakken and Three Forks production made up 94% of the May output, or 974,695 b/d, with 7,526 wells producing in those formations, according to DMR data. –Josh Brown, [email protected] –Edited by Richard Rubin, [email protected] Crude Oil Marketwire Crude Oil Marketwire delivers vital intelligence to help you make critical decisions. Delivered daily direct to your desktop, Crude Oil Marketwire provides detailed market information including; crude oil price spreads, daily crude oil forwards, trade updates, industry officials’ commentary, futures settlement […]

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Oil Industry, U.S. Railroads Said to Agree on Tank Car Standard

Oil companies and railroads have offered U.S. regulators a proposal for a tougher tank-car design and a plan to phase out older model rail cars, according to two people involved in the talks. The American Petroleum Institute , which represents companies including Exxon Mobil Corp., and the Association of American Railroads, whose members include Berkshire Hathaway Inc.’s BNSF railway, agreed on a proposal for tank cars that have steel shells a half-inch thick, slightly thicker than current standards. The two groups also agreed on a goal for a three-year phase out of older models known as DOT-111s that safety investigators have said are vulnerable to rupture in a crash, said the two sources familiar with the issue. To contact the reporter on this story: Jim Snyder in Washington at [email protected] To contact the editor responsible for this story: Steve Geimann at [email protected]

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Peak Oil: Denial Magic 1

They should be magicians. Successful magic depends on the artist being able to distract the viewers from the sleight-of-hand performed. Keep them preoccupied with one topic or one item and it’s then much simpler to create the illusion of magic. Peak oil deniers are a lot like that. Toss out some carefully massaged facts bearing the imprint of near-truths but without context (just to be safe), engage in a pattern of irrelevancies to help muddy the waters, toss in some meaningless numbers while carefully shielding the important ones from the discussion, and presto! No more peak oil theories. But as with magic, the show must end. We walk back out into the light and back into reality, where some of us still believe that facts matter. Perhaps not today while the Happy Talk keeps everyone entertained, but soon enough that show will end as well, and then the realities—good […]

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Oil Abundance? Not So Fast – Drilling holes in the energy boom story

The story of America’s new energy abundance has been accepted uncritically by too many people.  A closer look at the realities of today and the last decade, coupled with a better understanding of our energy and oil systems, reveals risks that must be discussed and included in planning for the years ahead.  This brief paper presents key information on the role of oil in the economy, the fact that world oil production has not increased meaningfully since 2005, the failure of high prices to create new supplies, the nature and limits of the oil being produced through fracking, the global challenges to oil supplies, and the likelihood that the United States will never be a net oil exporter again or truly “energy independent.” People who are part of the energy or economic debate – whether as policy makers, […]

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Tech Talk – Here we go again, again

A couple of posts or so ago I mentioned that there are three major problems sitting relatively un-noticed as we head into the mess of Peak Oil. Of these, perhaps the one that gets the least attention is the steady decline in production from existing wells. We are just about at the point where the Alaskan Pipeline will tip over into feeding less than half-a-million barrels a day down from the North Slope. (It sent 501 kbd down the pipe in June with a 98.6% reliability factor). At the same time those in control of the oilfields in the Russia are reporting that Russian exports have fallen to the lowest level in 6 years . This brings back the relatively unrecognized reality of the Export Land Model which Jeffrey Brown first introduced on The Oil Drum back in 2007. It is […]

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Oil Futures Choppy as Markets Weigh Geopolitical Risks

Crude-oil futures swung between gains and losses in Asian trading hours Monday after declining for three consecutive weeks, while analysts warned that geopolitical risks to oil supply shouldn’t be completely overlooked. On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $100.50 a barrel at 0624 GMT, down $0.33 in the Globex electronic session. August Brent crude on London’s ICE Futures exchange fell $0.08 to $106.58 a barrel. "There are bearish risks from Libya and potentially Iran, but with Iraq on edge and Russia/Ukraine still simmering, oil prices are expected to find support," Edward Morse, head of commodities at Citi Research, said. Over the weekend, Iraq’s parliament failed to agree on a new speaker, prolonging a political impasse and delaying measures to address the country’s deteriorating security situation. In Vienna, U.S. Secretary of State John Kerry warned of "very significant […]

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WTI Heads for $100 as Supply Risks Ease; Brent Near 3-Month Low

West Texas Intermediate crude headed toward $100 a barrel for the first time since May amid signs that Libyan output is continuing to increase. Brent crude traded near the lowest price in three months. Futures declined as much as 0.6 percent in New York, after capping a 3.1 percent decrease last week. Production from Libya, the holder of Africa ’s biggest crude reserves, climbed to 470,000 barrels a day, state-run National Oil Corp. said yesterday. Exports from Iraq , OPEC’s second-largest producer, remain undiminished by an insurgency that flared last month. “Oil supply in Iraq remains unaffected, Libya is returning, which means the supply risks are receding,” Carsten Fritsch , an analyst at Commerzbank AG in Frankfurt , said by e-mail. “It seems that speculators are leaving the market and exacerbating the downtrend. But the supply risks are not gone for good, so the downside is rather limited from […]

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Oil edges lower after big drop on Libyan supplies

The price of oil edged lower Monday after its biggest one-day drop since April on expectations Libyan oil will soon return to the market. Benchmark U.S. crude for August delivery was down 39 cents to $100.44 per barrel at 0535 GMT in electronic trading on the New York Mercantile Exchange. It fell 3.1 percent last week and is down 4.3 percent so far in July. Brent crude, a benchmark for international oils, gained 19 cents to $107.45 on the ICE exchange in London. Oil prices shot up in June to a 10-month high over concerns violence in Iraq might disrupt supplies from OPECs second-largest exporter. Prices then drifted lower over the past two weeks as the advance by Iraqi insurgents stalled and oil exports were not threatened. Friday’s decline of $2.10, or about 2 percent, in the U.S. price was the biggest one-day loss since oil fell 2.2 percent […]

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Natural Gas Supply Gains Keep Driving Bulls From Market: Energy

Twelve weeks of above-average gains in U.S. natural gas supply are easing concern over winter fuel shortages and spurring speculators to cut their bets on rising prices. Hedge funds reduced net-long positions by 8.1 percent in the week ended July 8, the U.S. Commodity Futures Trading Commission said. Bullish wagers have fallen 43 percent from February and gas dropped last week to a six-month low, wiping out an advance of as much as 53 percent after frigid weather pushed consumption to a record. Stockpiles more than doubled from an 11-year low in March as mild weather curbed power-plant demand and output expanded for the ninth straight year. Storage rose more than 100 billion cubic feet for eight weeks in a row, the longest streak of triple-digit increases in government data going back 20 years. “It looks like the market is going to be in balance heading into the winter,” […]

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Iraq Fails to Agree on Parliament Speaker

Iraq’s newly elected legislature failed to agree on a new parliament speaker during its second seating on Sunday, further extending a political impasse that has dashed hopes of reaching a political resolution to the worst security crisis to afflict the country since the U.S.-led invasion in 2003. Parliamentarians met briefly on Sunday morning but adjourned almost immediately after Mehdi Hafez, the legislature’s interim speaker, announced that deputies hadn’t yet reached an agreement on a new speaker. The next session will be held on Tuesday, he said. Iraqi Prime Minister Nouri al-Maliki met with U.S. Secretary of State John Kerry in Baghdad on June 23. Agence France-Presse/Getty Images U.S. diplomats and other international observers have urged Iraqi politicians to reach a hasty agreement over the parliament speaker, the president and the prime minister—the so-called "presidencies" who are traditionally split between Sunni Arabs, Kurds and Shiite Arabs, respectively. But the abiding […]

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Kerry Cites 'Significant Gaps' as Foreign Ministers Join Iran Talks

U.S. Secretary of State John Kerry, right, meets with EU foreign policy chief Catherine Ashton and members of her delegation, during talks between the foreign ministers of the six powers negotiating with Tehran on its nuclear program on Sunday in Vienna. Agence France-Presse/Getty Images VIENNA—U.S. Secretary of State John Kerry warned of "very significant gaps" in nuclear talks with Iran, as he arrived in the Austrian capital to join the negotiations. With a week left to a July 20 deadline to complete a final nuclear deal, foreign ministers from the U.S., Germany and France arrived in Vienna in a bid to inject fresh momentum into the negotiations, which have progressed slowly in recent weeks. U.K. Foreign Secretary William Hague is due in Vienna Sunday afternoon. "Obviously, we have some very significant gaps still. So we need to see if we can make some progress and I really look forward […]

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Kerry Cites ‘Significant Gaps’ as Foreign Ministers Join Iran Talks

U.S. Secretary of State John Kerry, right, meets with EU foreign policy chief Catherine Ashton and members of her delegation, during talks between the foreign ministers of the six powers negotiating with Tehran on its nuclear program on Sunday in Vienna. Agence France-Presse/Getty Images VIENNA—U.S. Secretary of State John Kerry warned of "very significant gaps" in nuclear talks with Iran, as he arrived in the Austrian capital to join the negotiations. With a week left to a July 20 deadline to complete a final nuclear deal, foreign ministers from the U.S., Germany and France arrived in Vienna in a bid to inject fresh momentum into the negotiations, which have progressed slowly in recent weeks. U.K. Foreign Secretary William Hague is due in Vienna Sunday afternoon. "Obviously, we have some very significant gaps still. So we need to see if we can make some progress and I really look forward […]

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Iran Sends Rouhani Brother to Nuclear Talks

Iran has for the first time sent President Hassan Rouhani’s younger brother as a special observer to the nuclear talks in Vienna, signaling the importance of the final week of negotiations before a July 20 deadline. The presence of Hossein Fereydoun, who also serves as a special adviser to the president, came to light after he was photographed in one of the sessions between Iran and European foreign ministers. Fereydoun’s presence was also reported by Iran’s state-run Islamic Republic News Agency . “He’s the president’s eyes and ears,” Ali Vaez, an Istanbul-based analyst for the International Crisis Group , said in an e-mailed reply to questions. Thirteen days into negotiations between world powers and Iran, significant gaps remain over the Persian Gulf nation’s uranium-enrichment capacity. U.S. Secretary of State John Kerry arrived in the Austrian capital yesterday along with his counterparts from France, Germany and the U.K. Kerry is […]

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U.S., Iran say disputes remain in nuclear talks as deadline looms

U.S. Secretary of State John Kerry said on Sunday major differences persist between Iran and six world powers negotiating on Tehran’s nuclear program, with a week to go before a deadline for a deal. The United States, Britain, France, Germany, Russia and China want Iran to reduce its nuclear fuel-making capacity to deny it any means of quickly producing atom bombs. In exchange, international sanctions that have crippled the large OPEC member’s oil-dependent economy would gradually be lifted. Iran says it is enriching uranium for peaceful energy purposes only and wants the sanctions removed swiftly. But a history of hiding sensitive nuclear work from U.N. inspectors raised international suspicions and the risk of a new Middle East war if diplomacy fails to yield a long-term settlement. "Obviously we have some very significant gaps still, so we need to see if we can make some progress," Kerry […]

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Iraqi slaughter swells crowded Shi'ite cemetery

Responding to an appeal from Shi’ite clerics, Salah al-Wa’ili signed up earlier this month with a militia near Baghdad fighting the Islamist insurgents who have swept through northern Iraq and threatened the capital. A week later the 27-year-old part-time fighter was dead. Killed in battle against Sunni militants near the western city of Ramadi on Friday, he joined the growing list of casualties from the latest wave of conflict to strike Iraq, which has been plaged by war, sanctions and sectarian strife for longer than Wa’ili’s brief lifetime. For relatives who buried him on Friday in the sprawling and ever more crowded cemetery known as the ‘Valley of Peace’, outside the Shi’ite holy city of Najaf, grief was mixed with a bleak familiarity. Salah was laid to rest in a family plot next to the graves of three generations of relatives killed in conflict and […]

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Iraqi slaughter swells crowded Shi’ite cemetery

Responding to an appeal from Shi’ite clerics, Salah al-Wa’ili signed up earlier this month with a militia near Baghdad fighting the Islamist insurgents who have swept through northern Iraq and threatened the capital. A week later the 27-year-old part-time fighter was dead. Killed in battle against Sunni militants near the western city of Ramadi on Friday, he joined the growing list of casualties from the latest wave of conflict to strike Iraq, which has been plaged by war, sanctions and sectarian strife for longer than Wa’ili’s brief lifetime. For relatives who buried him on Friday in the sprawling and ever more crowded cemetery known as the ‘Valley of Peace’, outside the Shi’ite holy city of Najaf, grief was mixed with a bleak familiarity. Salah was laid to rest in a family plot next to the graves of three generations of relatives killed in conflict and […]

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U.S. Sees Risks in Assisting a Compromised Iraqi Force

A classified military assessment of Iraq ’s security forces concludes that many units are so deeply infiltrated by either Sunni extremist informants or Shiite personnel backed by Iran that any Americans assigned to advise Baghdad’s forces could face risks to their safety, according to United States officials. The report concludes that only about half of Iraq’s operational units are capable enough for American commandos to advise them if the White House decides to help roll back the advances made by Sunni militants in northern and western Iraq over the past month. Adding to the administration’s dilemma is the assessment’s conclusion that Iraqi forces loyal to Prime Minister Nuri Kamal al-Maliki are now heavily dependent on Shiite militias — many of which were trained in Iran — as well as on advisers from Iran’s paramilitary Quds Force. Shiite militias fought American troops after the United States invaded Iraq […]

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Deadlock Blocks Iraqi Leadership Vote as ISIS Makes Gains Toward Baghdad

As Iraq’s deadlocked Parliament was again unable to reach a deal to name a new speaker on Sunday, Sunni militants carried out a raid near Baghdad, a symbolically significant attack signaling their intent to move closer, even if only by a few miles, toward the Iraqi capital. Although the pretext for the delay was a severe sandstorm that prevented northern Iraq’s Kurdish lawmakers from flying to Baghdad, the real reason appeared to be that last-minute deals between the largest Shiite bloc and the Sunnis were falling apart. “We were ready, we came with our candidates, but the others haven’t presented their candidates,” said Usama al-Nujaifi, the Sunni lawmaker, who served as speaker in the last Parliament but has agreed not to run this time. “The country is completely collapsing and we need to unify the nation — the delay means more killing, more displaced and more emigration,” […]

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Cracks Start Showing in Libya's Oil Recovery

LONDON—Despite the reopening of two key terminals, a fragile oil recovery in Libya is showing cracks as the crude struggles to make it back to markets, oil officials said Monday. A planned tanker loading was disrupted by a protest this weekend, while the company overseeing Libya’s largest field was caught in Tripoli’s gunfire and customers are reluctant to buy the country’s unreliable cargoes, oil officials say. Last week, Brent oil prices fell to a three-month low after rebels in Libya agreed to reopen two key oil terminals they had occupied for nearly a year and separately, protesters allowed the country’s largest oil field to restart . The country’s production has jumped to 470,000 barrels a day, a spokesman for state-run National Oil Co. said. That is three times its level in late May but still only a third of its normal level. But over the weekend plans to load […]

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Cracks Start Showing in Libya’s Oil Recovery

LONDON—Despite the reopening of two key terminals, a fragile oil recovery in Libya is showing cracks as the crude struggles to make it back to markets, oil officials said Monday. A planned tanker loading was disrupted by a protest this weekend, while the company overseeing Libya’s largest field was caught in Tripoli’s gunfire and customers are reluctant to buy the country’s unreliable cargoes, oil officials say. Last week, Brent oil prices fell to a three-month low after rebels in Libya agreed to reopen two key oil terminals they had occupied for nearly a year and separately, protesters allowed the country’s largest oil field to restart . The country’s production has jumped to 470,000 barrels a day, a spokesman for state-run National Oil Co. said. That is three times its level in late May but still only a third of its normal level. But over the weekend plans to load […]

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East Libya Rebels Commit to Keep Open Largest Crude Export-Port

Rebels in Libya’s east committed to keeping open the country’s largest oil port, Es Sider , and dissociated themselves from a protest that shut a smaller crude export terminal. Brent traded near the lowest in three months. “This incident, in the port of Brega, has no impact on the agreement with the government to open Es Sider and Ras Lanuf,” said Ali al-Hasy, a spokesman for the self-declared Executive Office for the Barqa region. “We stand by the agreement with the government. Es Sider and Ras Lanuf will stay open.” Es Sider and Ras Lanuf, Libya’s third-largest oil port, have a combined daily loading capacity of 560,000 barrels. Brega, which was reported July 12 to have been shut by guards seeking better pay, can export 60,000 barrels a day, according to the Oil Ministry. The Executive Office for Barqa seeks self-rule for the eastern region also known as Cyrenaica. […]

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Militants Fire on Military Post in Egypt, Killing Soldier and Nearby Civilians

Militants in Egypt ’s northern Sinai fired mortar rounds late Sunday at a military post in El Arish, the provincial capital, killing a soldier and seven civilians, including two children, in a nearby residential complex, security and hospital officials said. A senior security official said the attack hit the military post, killing the soldier. The military post is near a compound of residential buildings in the Salam district. The main security headquarters and the local government offices are in the same area. The official, who spoke on the condition of anonymity because he was not authorized to speak to the news media, said a supermarket, a pharmacy and a residential building were hit by the mortar fire. Samy Anwar, the head of the local hospital, said seven civilians were killed in the attack, including a 10-year-old girl and a 12-year-old boy. He said 24 others were […]

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China Announces New Subsidies to Encourage Officials to Buy Energy-Efficient Cars

SHANGHAI—China announced new subsidies and other inducements Sunday to get government officials and agencies to buy energy-efficient vehicles in a renewed boost for a sector Beijing has had high hopes for. Under the new rules, which will be phased in over the next two years, electric cars, hybrids that run on gasoline and electricity and other new energy vehicles will account for no less than 30% of all new cars bought for official use each year, according to a notice from the country’s main economic planning agency, the Finance Ministry and three other government agencies. The notice said subsidies will be offered to government and public agencies for purchases of vehicles that cost less than 180,000 yuan ($29,186), subsidies included. Local governments will be asked to build charging stations and other needed infrastructure, said the notice, which was posted on the government’s website. The Chinese government has been trying […]

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China Requires 30% of State Cars Use Alternative Energy

China is mandating that electric cars make up at least 30 percent of government vehicle purchases by 2016, the latest measure to fight pollution and cut energy use after exempting the autos from a purchase tax. Central government ministries and agencies will take the lead on purchases of new-energy vehicles, a term that China uses to refer to electric vehicles , plug-in hybrids and fuel-cell autos, according to a statement on the central government’s website yesterday. The ratio will be raised beyond 2016, when local provinces are required to meet the target. China is stepping up support for electric vehicles as demand lags behind its target because of consumer concerns over price, reliability and convenience. The government has identified EVs as a strategic industry to help it gain global leadership, reduce energy dependence and cut smog that often reaches hazardous levels in Beijing and other cities. “This is a […]

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U.S. Gasoline Falls to $3.6699 a Gallon in Survey

Gasoline prices are cooling just as summer heats up, dropping for the first time in 10 weeks. The average for regular gasoline at U.S. pumps fell 3.99 cents in the three weeks ended July 11 to $3.6699 a gallon, according to Lundberg Survey Inc. The survey is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. The average, which is 7.91 cents below a year earlier, may fall another four cents to six cents in the next several days, Trilby Lundberg , president of Lundberg Survey, said in a telephone interview today. “The wholesale price cuts are continuing now as refiners pass along the lower prices they’re paying for crude oil,” Lundberg said. “If we can assume that crude oil prices don’t shoot right back up, we may see further declines at the pump.” The highest price for gasoline in the lower 48 states […]

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America's Oil Consumption Is Rising, Not Falling, Outpacing China's

In 2013, the nation’s demand for gasoline rose for the first time since 2007, and the trend is continuing in 2014, dampening hopes that the world’s largest oil guzzler is reining in its appetite for crude. Credit: Charles Minshew/KOMU U.S. oil demand reversed course in dramatic fashion in 2013, as the nation’s growth in crude consumption outpaced perennial leader China for the first time since 1999, according to oil company BP’s annual compendium of world energy statistics . The U.S. increase follows two years of declines, and dampens hopes that the world’s largest oil guzzler was permanently reining in its appetite for crude. The nation’s oil use rose by 400,000 barrels per day to a daily draw of 18.9 million barrels; China’s oil consumption grew by 390,000 barrels a day, to 10.8 million barrels a day, according to the BP figures released last month. "Are these data points a […]

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America’s Oil Consumption Is Rising, Not Falling, Outpacing China’s

In 2013, the nation’s demand for gasoline rose for the first time since 2007, and the trend is continuing in 2014, dampening hopes that the world’s largest oil guzzler is reining in its appetite for crude. Credit: Charles Minshew/KOMU U.S. oil demand reversed course in dramatic fashion in 2013, as the nation’s growth in crude consumption outpaced perennial leader China for the first time since 1999, according to oil company BP’s annual compendium of world energy statistics . The U.S. increase follows two years of declines, and dampens hopes that the world’s largest oil guzzler was permanently reining in its appetite for crude. The nation’s oil use rose by 400,000 barrels per day to a daily draw of 18.9 million barrels; China’s oil consumption grew by 390,000 barrels a day, to 10.8 million barrels a day, according to the BP figures released last month. "Are these data points a […]

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North Dakota oil groups strike $6bn deal

Whiting Petroleum , one of the largest oil producers in the booming Bakken formation of North Dakota, is acquiring Kodiak Oil and Gas, another leading company in the region, in an all-stock deal worth about $6bn including debt. The agreed deal is worth slightly less than Kodiak’s valuation at the end of last week, which gave it a market capitalisation of $3.78bn. It amounts to $13.90 per share, based on Whiting’s closing price of $78.54 on Friday, against Kodiak’s price of $14.23 at the end of the week. More On this topic IN Oil & Gas It also represents a premium of just 5 per cent to Kodiak’s average share price over the preceding 60 days. Under the terms, Kodiak shareholders will receive 0.177 of a Whiting share for every one they own in Kodiak, meaning that they will hold 29 per cent of the merged company. Whiting will […]

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Whiting to Unseat Bakken King Hamm With Kodiak Purchase

Whiting Petroleum Corp. (WLL) ’s $3.8 billion purchase of Kodiak Oil & Gas Corp. (KOG) will create the dominant crude-oil producer in the richest U.S. shale region as energy explorers seek access to future drilling opportunities. Kodiak stockholders will receive 0.177 of a Whiting share for each Kodiak share they own, which is the equivalent of $13.90 based on the acquirer’s July 11 price , the Denver-based companies said in a statement yesterday. Including $2.2 billion in debt, the total transaction is valued at about $6 billion. The agreement will vault Whiting ahead of Oklahoma billionaire Harold Hamm ’s Continental Resources Inc. as the premier oil supplier in the Bakken shale formation in the northern Great Plains. Whiting is buying a company that more than doubled production last year while Whiting’s own output growth slowed as costs to bring new wells online surged. Competition for Bakken assets is fierce […]

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Whiting Petroleum to Buy Kodiak Oil & Gas

Whiting Petroleum Corp. said it would buy Kodiak Oil & Gas Corp. for $3.8 billion in stock plus the assumption of $2.2 billion in debt, creating a new top producer in the Bakken Shale and Three Forks formations. The two companies together produced 107,000 barrels a day of oil equivalent in North Dakota and Montana in the first quarter. That compares with Continental Resources Inc. ‘s output of around 97,500 barrels of oil equivalent a day in the region. The combined company enterprise value would be $17.8 billion, with reserves of 606 million barrels of oil equivalent, including Whiting’s Colorado prospects, Whiting Chief Executive James Volker said Sunday. The Bakken is one of North America’s most prolific shale fields. In April its output surpassed one million barrels of oil a day for the first time. […]

Posted On : Published By : Tom Whipple
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Whiting Petroleum to Buy Kodiak Oil & Gas

Whiting Petroleum Corp. said it would buy Kodiak Oil & Gas Corp. for $3.8 billion in stock plus the assumption of $2.2 billion in debt, creating a new top producer in the Bakken Shale and Three Forks formations. The two companies together produced 107,000 barrels a day of oil equivalent in North Dakota and Montana in the first quarter. That compares with Continental Resources Inc. ‘s output of around 97,500 barrels of oil equivalent a day in the region. The combined company enterprise value would be $17.8 billion, with reserves of 606 million barrels of oil equivalent, including Whiting’s Colorado prospects, Whiting Chief Executive James Volker said Sunday. The Bakken is one of North America’s most prolific shale fields. In April its output surpassed one million barrels of oil a day for the first time. […]

Posted On : Published By : Tom Whipple
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Peak Oil in Russia

General Ideas This week no energy relevant developments came out of Iraq. The Islamic State seems to be still consolidating its territories, facing scant opposition from the Baghdad government. But the spectacular advances seem to be done with, at least for now. Few western media outlets are able to properly report the situation, with gory news now focusing on Israel and Gaza. The news meat-grinder has recently been profuse in news regarding the breakaway of the BRICS from the IMF and other OECD controlled institutions. This was a setting trend but that has been accelerated by the backlash of the US spying programme and, more importantly, by the intervention of NATO in Ukraine. In the midst of all this comes almost unnoticed what is probably the most important energy news of 2014: Petroleum extraction in Russia has definitely peaked. Russian authorities are openly bracing for the ensuing decline in […]

Posted On : Published By : ASPO-USA
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Russia warns Ukraine of ‘irreversible consequences’ after cross-border shelling

Russia is warning Ukraine of “irreversible consequences” after cross-border shelling from the battle-worn east struck Russian territory Sunday, reportedly killing one Russian citizen and injuring two others. “This incident highlights the extremely dangerous escalation of tensions in the Russian-Ukrainian border and may have irreversible consequences, the responsibility for which lies on the Ukrainian side,” Russia’s Foreign Ministry said in a statement Sunday, calling the incident an “aggressive action.” Russian officials summoned the Ukrainian charge d’affaires to the foreign ministry in Moscow to protest the civilian’s death, which they say occurred when the Ukrainian army shot mine shells from the Donetsk area into Russia’s Rostov region on the other side of the border, hitting a residential building. Ukrainian officials vehemently deny they have fired on Russian territory, and are questioning whether Russia is making up details surrounding the incident simply to build a case against Ukraine’s military. “Forces of […]

Posted On : Published By : Tom Whipple
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IEA Executive Director Maria van der Hoeven on peak oil

With the introduction of unconventional oil sources, predicting peak oil has become almost impossible, the executive argues “The global energy map is quickly being redrawn,” says Maria van der Hoeven, Executive Director of the Paris-based International Energy Agency. “What we are seeing is an oil boom that shows no sign of slowing” she adds. For energy analysts across the world, the IEA is the premiere source of industry intelligence, producing market reports and events that address all segments of the energy sector. This 360-degree viewpoint, coupled with the agency’s fervent relationships with the world’s biggest energy players, gives its staff unequalled insight into the world’s energy markets. According to van der Hoeven, global energy demand will increase by around 30% by 2035, with oil contributing to around 27% of total energy usage by this date. While she admits increased use of natural gas will result in a slight fall […]

Posted On : Published By : Tom Whipple
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The deteriorating economic outlook

The third and final estimate (until the annual GDP revisions) of first quarter 2014 real GDP growth released June 25 by the US Bureau of Economic Analysis was a 2.9% contraction in GDP growth, a 5.5 percentage point difference from the January forecast of 2.6% growth. Apparently, the first quarter contraction was dismissed by those speculating in equities as weather related, as stock averages rose with the bad news. Stock market participants might be in for a second quarter surprise. The result of many years of changes made to the official inflation measures is a substantially understated inflation rate. John Williams ( www.shadowstats.com ) provides inflation estimates based on previous official methodology when the Consumer Price Index still represented the cost of a constant standard of living. The 1.26% inflation measure used to deflate first quarter nominal GDP is unrealistic, as Americans who make purchases are aware. A reasonable […]

Posted On : Published By : Tom Whipple
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WTI Tumbles Below $101 as Supply Risks Ease; Brent Drops

West Texas Intermediate fell below $101 a barrel and Brent tumbled to a three-month low as supply risks eased in Iraq and Libya while stockpiles gained at Cushing, Oklahoma , the U.S. benchmark’s delivery point. Both oils capped their third weekly drops. Kurdish forces took over the Bai Hassan and Kirkuk oilfields today, Iraq’s Oil Ministry said in a statement. Libya’s supply rose as the Sharara field resumed output and two oil-export terminals reopened. Cushing supplies rose 447,000 barrels last week, U.S. government data show. WTI broke through technical support at the 100-day moving average. “Libyan barrels are coming back and the trouble in Iraq turned out to have minimal impact on oil output,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “There are also technical factors sending us lower. This has turned into a toxic brew for oil prices.” WTI […]

Posted On : Published By : Tom Whipple
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IEA: Oil prices pulling back on eased supply concerns, softening demand

On the back of rapid territorial gains by militants of the Islamic State of Iraq and Syria (ISIS) in northern Iraq, ICE Brent oil futures surged in mid-June to a 9-month high of more than $115/bbl. However, according to the International Energy Agency’s most recent Oil Market Report, future prices pulled back in early July on confidence that Baghdad’s southern fields would remain largely insulated from the turmoil and improved prospects for a recovery in Libyan exports. Brent futures last traded at $108/bbl, and West Texas Intermediate futures at $102/bbl. In the US, WTI prices were supported in mid-June by Washington’s decision to issue permits to certain firms to export stabilized condensate. “The front-month ICE Brent and NYMEX WTI spread contracted in June, averaging $6.82/bbl compared with $7.45/bbl in May, partly on the possibility that the export of distilled condensate could remove some of the overhang along the […]

Posted On : Published By : Tom Whipple
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IEA: US Oil Boom To Extend Into 2015, Risks High

Global oil demand growth will accelerate next year as the world economy expands and will again be met by rising supplies from the United States and Canada, further eroding OPEC’s market share, the West’s energy watchdog said on Friday. But the International Energy Agency (IEA) said in its monthly report that risks to oil production in several regions remained acute. "Supply risks in the Middle East and North Africa, not least in Iraq and Libya, remain extraordinarily high," the IEA said. "Oil prices remain historically high and there is no sign of a turning of the tide just yet." "Whether in crude or product markets, there is little room for complacency," it added. North Sea Brent crude oil hit a nine-month high above $115 a barrel in June as a Sunni Islamist insurgency swept across northwestern Iraq, taking control of large parts […]

Posted On : Published By : Tom Whipple
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Goldman Sachs on Oil Companies’ $700 Billion Problem

Oil companies like nothing more than spending big money drilling for new resources around the world. Unfortunately, more and more of that activity is looking like it might prove redundant. Indeed, Goldman Sachs ’s head of European energy research Michele della Vigna reckons around $700 billion’s worth of capital spending in the pipeline may no longer be needed. The reason? Yet another side effect of the shale revolution in the U.S. Watch the video for the lowdown. Goldman estimates that the big discoveries of shale oil in recent years have added around 66 billion barrels of crude oil resources; at its peak, that could add 8 million barrels per day to daily output. That extra production should prove enough to meet oil demand growth in the coming years, Goldman thinks. In the jargon, it means shale oil provides the oil market with its marginal supply. In turn, […]

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OPEC output steady, IEA says

Lower oil production from Iraq was offset by gains elsewhere from members of OPEC, the International Energy Agency said Friday. The Organization of Petroleum Exporting Countries said in its monthly market report for June production from Iraq had declined. IEA, based in Paris, said it saw little overall change from the 12 members that combine to represent about 60 percent of the total petroleum traded internationally "OPEC supplies were virtually unchanged in June at 30.03 million barrels per day, as lower Iraqi production offset gains in Saudi Arabia, Iran, Nigeria and Angola," IEA said in its monthly market report . Libya, a once-major North African oil producer, has struggled to return to a pre-war production level of around 1.4 million barrels of oil per day. A Sunni-led insurgency in Iraq, meanwhile, is threatening the country’s oil sector. OPEC in a June statement said there is sufficient oil production from […]

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Global oil exploration nears $1 trillion – where are the finds?

* New oilfield development drop to lowest since 1999 * Global reserve replacement ratio falls steeply * Enhanced oil recovery from mature field is partial solution Two years ago Total (NYSE: TOT – news ) ‘s chief Christophe de Margerie launched a “high risk, high reward” oil exploration strategy, betting he could hit a bonanza, even though his rivals had failed to make big discoveries. But Total risks joining the industry trend of making only smaller and fewer finds, despite global investments in oil exploration heading to a record $1 trillion by 2017. This week, Margerie told Reuters he gives himself until the year-end to find a major deposit or cut the exploration budget next year following several disappointing drilling campaigns. Top players are struggling to find enough conventional oil. Majors are caught between growing pressure from investors to cut spending and boost profits and the increasingly costly need […]

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Rift With Kurds Widens as Iraqi Leader Ousts Foreign Minister

The dangerous struggle between the leadership of Iraq and the country’s Kurdish minority intensified Friday, as the Kurds seized two oil production facilities in Kirkuk Province and the prime minister announced that he was appointing a temporary replacement for the foreign minister. The prime minister, Nuri Kamal al-Maliki, a Shiite, moved to replace the current foreign minister, Hoshyar Zebari, a Kurd, with Hussain Shahristani, a Shiite from Mr. Maliki’s bloc. Mr. Maliki was responding to a decision by Mr. Zebari and other Kurdish cabinet members to boycott cabinet meetings in protest of Mr. Maliki’s searing criticism of the Kurds this week. In a televised address on Wednesday, Mr. Maliki charged that the Kurds were harboring Sunni militant opponents of the central government and were even allowing members of the group known as the Islamic State in Iraq and Syria, which swept through northern Iraq in June, to […]

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Iraq Kurdistan Oil Output Rose Over 50% in June – IEA

Oil production from the Kurdistan region of Iraq increased by more than 50% last month, despite violence in the country’s north and as logistical problems at the port of Basra cut exports from the south. The shifting nature of Iraq’s oil sector reflects political developments in the country. In a bid to gain greater independence, the Kurdistan Regional Government has taken advantage of its relative stability to increase oil exports in the past two months, infuriating Baghdad which claims sovereignty over the country’s natural resources. Meanwhile, the federal government is struggling to contend with a Sunni extremist insurgency in the north and west, led by the group that calls itself Islamic State, that has shut the country’s largest refinery and cut output from the giant Kirkuk field to a trickle. Production from Iraqi Kurdistan rose to 360,000 barrels a day in June, an increase of 130,000 […]

Posted On : Published By : Tom Whipple