Oil Prices Tumble to Five-Year Lows
Oil prices tumbled Friday, plumbing five-year lows, following an OPEC decision that will likely translate into a lingering glut of crude. Brent crude, the global benchmark, fell $2.43, or 3.4%, Continue Reading
U.S. crude down 10 percent post-OPEC, Brent breaks below $70
NEW YORK (Reuters) – U.S. crude tumbled 10 percent in its biggest one-day drop in more than five years on Friday, and benchmark Brent broke below $70 a barrel, as OPEC’s decision not to cut output sent oil traders and analysts scurrying to find a new trading floor. "I see little reason to buy oil now. I think people are either going to drive it down further or just let the market collapse," said Tariq Zahir, managing member at Tyche Capital Advisors in Hollow Way, New York. U.S. West Texas Intermediate (WTI) light crude ( WTI ) settled down $7.54 at $66.15 a barrel, and fell further post-settlement, reaching a four-year low of $65.69. The last time the market lost 10 percent in a day was in March 2009. North Sea Brent LCOc1 finished down $2.43, or 3.3 percent, at $70.15. It fell to as low as $69.78 on […]
Market rout as oil slide rocks energy groups
Shares in the world’s biggest energy groups have tumbled in a market rout as plunging oil prices put at risk billions of dollars of investment and jeopardised future supplies of crude. The sharp slide in the price of Brent oil after Opec’s decision not to cut output triggered warnings that oil companies would cut as much as $100bn of capital spending in response, imperilling the US shale bonanza and threatening much Arctic oil exploration. Meanwhile oil’s fall continued to play havoc with the currencies of oil exporting countries, especially Russia. At one point on Friday, the rouble slid to a record low. More On this story On this topic IN UK Equities Leonid Fedun, vice-president of Lukoil, Russia’s second largest crude producer, told the Financial Times that Opec was trying to turn the US shale oil “boom” into a “bust” for smaller producers. He compared the surge in North […]
Natural Gas Futures Retreat on Warmer Forecasts
By Timothy Puko NEW YORK–Natural gas prices have given back gains from early this week in a strong response to warmer weather forecasts. Natural gas for January delivery fell 17.7 cents, or 4.1%, to $4.178 a million British thermal units on the New York Mercantile Exchange. The losses reflect nearly two days of trading as Nymex prices didn’t have a settlement over the Thanksgiving holiday on Thursday. They also settle an hour early Friday, at 1:30 p.m. Globex online trading will also close early at 1:45 p.m. Weather forecasts have pulled back from predictions for a fiercely cold start to December. Temperatures aren’t severely warmer than normal, but enough to get traders refocused on the record supply coming from the U.S. drilling boom, said Tim Evans, analyst at Citi Futures Perspective in New York. Traders had bid prices above $4.50/mmBtu earlier this month when an early burst of Arctic […]
IEA Chief Economist Urges Oil Producers to Invest in New Projects
Petroleum storage tanks at the Suncor tar sands operations near Fort McMurray, Alberta, Canada. IEA… ENLARGE Petroleum storage tanks at the Suncor tar sands operations near Fort McMurray, Alberta, Canada. IEA has singled out Canada as a key focus area for future oil production. Reuters MADRID—The International Energy Agency’s chief economist on Friday urged oil producers to boost investment in new projects to meet an anticipated rise in demand, a move that he said may avoid oil price spikes in coming years. Speaking in Madrid during the presentation of the IEA’s annual report, Fatih Birol said that a tumble in oil prices makes it hard to believe a supply crunch may happen any time soon, but the slow pace of development of new projects makes it imperative to act. “We shouldn’t just ignore tomorrow’s challenges,” Mr. Birol said. “This is hard point to make in this context of lower […]
OPEC Gusher to Hit Weakest Players, From Wildcatters to Iran
The refusal of Saudi Arabia and its OPEC allies to curb crude oil output in the face of plummeting prices has set the energy world on a painful course that will leave the weakest behind, from governments to U.S. wildcatters. A grand experiment has begun, one in which the cartel of producing nations — sometimes called the central bank of oil — is leaving the market to decide who is strongest and how to cut as much as 2 million barrels a day of surplus supply. Oil patch executives including billionaire Harold Hamm have vowed to drill on, asserting they can profit well below $70 a barrel, with output unlikely to fall for at least a year. Marginal producers in less profitable U.S. shale areas, as well as countries from Iran to Russia and operations from Canada to Norway will see the knife sooner, according to analyses by Wells […]
WTI moves near price where it could hurt
West Texas Intermediate crude, the U.S. benchmark, falls below level some see as profitable one day after OPEC Secretary-General Abdalla Salem El-Badri, pictured, leads ministers in the decision to keep output steady. File Photo by Maryam Rahmanian/UPI West Texas Intermediate shed more than $4 per barrel for the January contract in early Friday trading, adding to dramatic losses for the U.S. benchmark that greeted a Thursday decision from members of the Organization of Petroleum Exporting Countries to keep production levels static . Oil prices are at a four-year low and down more than 25 percent from their mid-summer levels. The decline in price is in part related to slow economic recovery and an increase in oil production from U.S. shale. "It is important to recognize that if the recent price trend continues, the long-term sustainability of capacity expansion plans and investment projects may be put at risk," Libyan Deputy […]
Market rout as oil slide rocks energy groups
Shares in the world’s biggest energy groups have tumbled in a market rout as plunging oil prices put at risk billions of dollars of investment and jeopardised future supplies of crude. The sharp slide in the price of Brent oil after Opec’s decision not to cut output triggered warnings that oil companies would cut as much as $100bn of capital spending in response, imperilling the US shale bonanza and threatening much Arctic oil exploration. Meanwhile oil’s fall continued to play havoc with the currencies of oil exporting countries, especially Russia. At one point on Friday, the rouble slid to a record low. More On this story On this topic IN UK Equities Leonid Fedun, vice-president of Lukoil, Russia’s second largest crude producer, told the Financial Times that Opec was trying to turn the US shale oil “boom” into a “bust” for smaller producers. He compared the surge in North […]
OPEC is playing a dangerous game with oil markets
(The Platts’ OPEC team in Vienna was headed by Margaret McQuaile, and also included Stuart Elliott, Adal Mirza, Jacinta Moran and Herman Wang.) Saudi Arabian oil minister Ali Naimi left OPEC’s Vienna meeting on Thursday saying the group had made “a great decision.” Oil markets didn’t agree. In the weeks leading up to the decision, expectations had built for a cut in output, not least because of the sharp fall in demand for OPEC oil that forecasting organizations–including OPEC itself–were projecting for the first half of next year. But when Naimi signaled early Wednesday that the oil market would eventually stabilize itself, it became clear that the Saudis were not interested in cutting output. The confirmation on Thursday that OPEC would simply roll over its 30 million b/d ceiling and arrange to meet again in June next year sent prices into freefall. Brent, having closed the previous day at $77.75/barrel, […]
Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale
OPEC’s decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers. The 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged even after the steepest slump in oil prices since the global recession, prompting speculation it has abandoned its role as a swing producer. Yesterday’s decision in Vienna propelled futures to the lowest since 2010, a level that means some shale projects may lose money. “We are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC,” said Mike Wittner , the head of oil research at Societe Generale SA in New York. “It’s huge. This is a signal that they’re throwing in the towel. The markets have changed for many years to come.” The fracking boom has driven U.S. output to the highest […]
Energy Quakes as OPEC Stands Pat
OPEC Secretary General Abdalla Salem El-Badri, center, is interviewed in Vienna ahead of the oil… ENLARGE OPEC Secretary General Abdalla Salem El-Badri, center, is interviewed in Vienna ahead of the oil cartel’s meeting on Thursday. Agence France-Presse/Getty Images Energy company stocks and the currencies of major oil-producing nations stumbled Friday as OPEC’s decision to maintain crude output levels despite a glut rippled across the globe. The Organization of the Petroleum Exporting Countries’ decision knocked down U.S. benchmark oil prices on Friday by 10% to $66.15 a barrel, the lowest level since September 2009. Uneasy investors dumped energy stocks. Among the hardest hit were U.S. domestic oil producers including Continental Resources Co., the biggest producer in North Dakota’s Bakken Shale. Its shares plunged on Friday nearly 20%, to $40.98. Exxon Mobil Corp. fell 4.2%, BP PLC dropped 5.5% and Royal Dutch Shell PLC lost 7%, all in abbreviated New York […]
Venezuela’s Maduro Plans To Slash Spending as Oil Price Drops
By Kejal Vyas CARACAS–Venezuelan President Nicolás Maduro announced plans on Friday to cut public spending, beginning with his own salary, as the price of oil continues its slump. The slide in crude prices of more than 30% since the summer has added a new layer of concern for Mr. Maduro, whose popularity, polls show, has dropped to a record low. The South American country is struggling with soaring inflation as well as a dollar crunch that has led to shortages of food and consumer goods. Venezuela’s basket of heavy crude and petroleum products tumbled 89 cents to end the week at $68.08 a barrel, the lowest in more than four years, the oil ministry reported. "I don’t take this blow from the drop in oil prices badly," Mr. Maduro said in a televised address to industry workers at the Miraflores presidential palace. "I take it as an opportunity to […]
Mexico’s Peso Feels Heat from Falling Oil Prices
By Anthony Harrup MEXICO CITY–Mexico’s peso fell Friday to its weakest level against the U.S. dollar in more than two years as the continuing decline in world oil prices pressured commodity-dependent currencies. As the most traded of the emerging-market currencies, the peso is often used by investors to hedge emerging market exposure and sold off in times of global financial turmoil. Already under pressure along with other emerging market currencies on prospects of higher U.S. interest rates, the Mexican currency lost further ground after the Organization of the Petroleum Exporting Countries decided against cutting crude oil output to address falling prices. The Mexican currency weakened as far as 13.96 to the dollar during Friday’s session before settling back to 13.9080, its weakest close since mid-2012. The drop in oil prices, and the lack of liquidity because of the U.S. Thanksgiving holiday, were pressuring the exchange rate, local currency traders […]
The First Oil-Exporting Casualty Of The Crude Carnage: Venezuela
In the aftermath of OPEC’s failure to cut oil production, Russia has been acting surprisingly sanguine, perhaps as a result of less leverage in its system as compared to America’s own high yield-funded shale complex – now that it is a race to who will default first and be forced to take production offline – with Putin today saying “Russia will cope with the rout in crude oil”, and adding that “we are satisfied overall with the situation and do not see anything so extraordinary in what is happening. Winter is coming and I am sure that the market will come into balance again in the first quarter or toward the middle of next year.” Maybe it will, or maybe not, if indeed as those with a working frontal cortex suggest the plunge in crude prices is merely a function of a collapse in global demand now that the […]
Beijing issues smog alert
BEIJING, Nov. 29 (Xinhua) — Beijing air control authorities issued a hazardous air alert and urged residents to stay indoors as a heavy blanket of smog covered the city on Saturday. The city’s office for severe air pollution emergency response issued a "blue alert", the lowest of a four-level warning system, on Saturday morning, blaming regional pollution and unfavorable weather conditions for the build-up of pollutants. Beijing’s air quality index (AQI) hit 276 at 12 p.m., according to the Beijing Environmental Protection Monitoring Center. The office has ordered local pollution emitters to take further measures to cut emissions and advised residents to stay indoors and to wear masks if venturing out. Children, the elderly and those who suffer respiratory and cardio-cerebrovascular diseases have been urged to reduce outdoor activity. The air is forecast to gradually clear up the over the next few day as strong gales from the north […]
China Motorists Exceed 300 Million as Cities Struggle
Traffic moves on a road in Beijing, China, on Nov. 7, 2014. The rising number of… Read More Photographer: Tomohiro Ohsumi/Bloomberg Related China now has about the same number of licensed drivers as there are people in the U.S., even though two out of three adult Chinese still aren’t qualified to operate a motor vehicle. There are now more than 300 million motorists in China, compared with the U.S. population of 319 million, according to Chinese public security ministry and U.S. census data. It took just four years to add 100 million new drivers in China, and 35 of its cities now have more than 1 million vehicles, with major urban centers like Beijing and Shenzhen having twice that number, the ministry said in a statement on its website. The rising number of motorists will boost vehicle demand while increasing the burden on cities already struggling to cope with […]
Oil Crash Will See Drillers Cut Spending to Shield Dividends
For the world’s largest oil companies , the accelerating crash in crude prices will probably mean scrapping investments from America’s shale fields to the seas off Brazil as CEOs protect dividend payments. The parts of the industry most exposed to cutbacks include certain U.S. shale deposits, where break-even costs vary from $40 to more than $100 a barrel. While some, such Russian oil tycoon Leonid Fedun , say the slump will halt a good deal of production, others argue that the shale industry will be able to maintain production for some time at these price levels . In the longer term, the greater dilemma for oil producers is that even as crude drops the costs of developing new reserves remain higher than ever. An extended period of lower prices will prevent companies from being able to replace production as existing fields dwindle. In ensuring investors get paid, companies may […]
Here Comes $60 Oil as OPEC Tests U.S. Shale: Chart of the Day
OPEC’s decision not to try and eliminate an oil-supply glut means the biggest crash in six years won’t stop until prices reach $60 a barrel, according to firms including Nomura Holdings Inc. and Deutsche Bank AG. The CHART OF THE DAY shows how the group supplying 40 percent of the world’s oil has kept pumping at or above its own production limit of 30 million barrels a day even as output in the U.S. climbs to the highest in decades. Crude collapsed into a bear market this year as the U.S. boom contributed to a global surplus that Venezuela estimates at 2 million barrels a day, more than the production of five OPEC members. The Organization of Petroleum Exporting Countries, which said Nov. 27 it is taking no action to reduce supply, has exceeded its target in all but four of the 34 months since it took effect at […]
Canadian Dollar Ends Lower As Oil Prices Plummet
By Don Curren TORONTO–The Canadian dollar ended sharply lower on Friday, suffering another day of deep losses, as oil prices spiralled lower. The currency didn’t derive sustained support from unexpectedly robust data on gross domestic product for the third quarter early in the session. The U.S. dollar was recently at C$1.1429, up from C$1.1332 at Thursday’s close, according to data provider CQG. The Canadian dollar initially advanced after news that Canada’s GDP grew 2.8% in the third quarter, much more than the expected 2.1% and the Bank of Canada’s previous forecast of 2.3%. The Canadian currency drove the U.S. dollar to C$1.1366 immediately after the data, but it was unable to hold onto gains, as crude-oil prices continued the decline after Thursday’s OPEC’s decision not to reduce production targets. The early about-face and subsequent losses by the Canadian dollar proved a little puzzling to some market participants and a […]
France to rank cars for pollution, wants to phase out diesel fuel
PARIS Nov 28 (Reuters) – France wants to gradually phase out the use of diesel fuel for private passenger transport and will put in place a system to identify the most polluting vehicles, Prime Minister Manuel Valls said on Friday. Next year, the government will launch a car identification system that will rank vehicles by the amount of pollution they emit, Valls said in a speech. This will make it possible for local authorities to limit city access for the dirtiest cars. "In France, we have long favoured the diesel engine. This was a mistake, and we will progressively undo that, intelligently and pragmatically," Valls said. About 80 percent of French motorists drive diesel-powered cars. Valls said taxation would have to orient citizens towards more ecological choices, notably the 2015 state budget measures to reduce the tax advantage of diesel fuel versus gas. The government has announced it will […]
OPEC Policy Ensures U.S. Shale Crash, Russian Tycoon Says
At today’s prices of just over $70 a barrel, drilling is close to becoming unprofitable… Read More OPEC policy on crude production will ensure a crash in the U.S. shale industry, a Russian oil tycoon said. The Organization of Petroleum Exporting Countries kept output targets unchanged at a meeting in Vienna today even after this year’s slump in the oil price caused by surging supply from U.S shale fields. American producers risk becoming victims of their own success. At today’s prices of just over $70 a barrel, drilling is close to becoming unprofitable for some explorers, Leonid Fedun , vice president and board member at OAO Lukoil (LKOD) , said in an interview in London. “In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,” said Fedun, who’s made a fortune of more than $4 billion in the […]
Oil: The Good, the Better, the Ugly
Oil prices have fallen a long way this year. They might fall much further still. Crude prices have fallen 36% since their summer peak, then sent into a tailspin by the failure of OPEC, the cartel of oil producing countries accounting for 40% of global supply, to trim its output quotas. And history suggests prices can fall substantially further. It’s worth bearing in mind that for nearly two decades to 2005, crude oil prices largely ranged between $20 and $40 a barrel in today’s money. The average inflation-adjusted price of West Texas Intermediate oil since 1970 is a little under $55 a barrel compared with a little under $70 now. That’s not to say that’s how far they’ll drop. A rapid technical snap-back is always a possibility. But the fundamentals seem stacked towards lower rather than higher prices for now. Which will make for some interesting economic dynamics. Current […]
Why oil prices will bounce back … eventually
When an asset class takes a swan dive off the cliff, fortunes can be lost trying to call the bottom. It’s often impossible to tell whether the asset in question is on a suicide run or undergoing a short-term correction. And so it is with oil. Oil prices are down by a third since June and are less than half of their 2008 high of $147 (U.S.) a barrel. So time to buy? If I knew how to call bottoms, I would not be a miserable, ink-stained wretch; I would be filthy rich and living in a villa on the Amalfi Coast or Côte d’Azur, martini in each hand. But allow me to present four ideas of why the foundation for a compelling oil price bounce-back is being set even as prices tumble. I’m just not going to tell you when that might happen, because I have no clue. […]
Peak oil in retrospect
It is the year 2004. With record high prices at the gas pumps and what seemed like a largely oil-explored world, it was an occasion to do what engineers do best: identify technical problems and devise solutions. With what seemed like a real “peak oil” energy shortage looming ahead, the need for reduction of electric power use had a direct impact on electronic design, resulting in the emergence of low-power circuit design. Is that emphasis still required? While some decry the demise of the ecosphere due to the burning of hydrocarbon fuels, an equal problem is the anticipated inability to supply those fuels to meet the growing world demand. This article looks in retrospect at the problem, largely through comments from senior oil engineers inside the industry, and then surveys what happened. The Oil Conundrum We go back a decade, to 2004. Glenn Morton, a geophysicist who headed North […]
Brent Oil Trades Near 4-Year Low as OPEC Targets Shale
Brent traded near its lowest closing price in four years as OPEC braced for a price war with U.S. shale producers after taking no action to relieve a glut. Crude in New York headed for the biggest weekly drop since 2011. Futures were little changed in London, having fallen 11 percent this week. OPEC will maintain its collective output target at 30 million barrels a day, Saudi Arabia ’s Oil Minister Ali Al-Naimi said after discussions in Vienna yesterday. The group’s policy will ensure a crash in the U.S. shale industry, predicted Leonid Fedun , the vice president of Russia ’s OAO Lukoil. Crude has collapsed into a bear market amid the fastest pace of U.S. production in three decades and signs of weakening global demand. OPEC wants a fair price and isn’t “sending any signals to anybody,” Secretary-General Abdalla El-Badri said. The 12-member group, which pumps 40 percent […]
OPEC Fails to Take Action to Ease Glut as Crude Plunges
OPEC took no action to ease a global oil-supply glut, resisting calls from Venezuela that the group needs to stem the rout in prices. Futures slumped the most in more than three years. The group maintained its collective production ceiling of 30 million barrels a day, Ali Al-Naimi , Saudi Arabia ’s oil minister, said yesterday after the 12 nations met in Vienna. Brent crude dropped as much as 8.4 percent in London, extending this year’s decline to 34 percent. Oil tumbled into a bear market this year as the U.S. pumped the most in more than three decades and conflict in the Middle East and Ukraine failed to disrupt supply. While OPEC’s 30-million-barrel limit has been in place since 2012, the group actually produced almost 1 million barrels more last month, data compiled by Bloomberg show. “OPEC has chosen to abdicate its role as a swing producer, leaving […]
Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale
OPEC’s decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers. The 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged even after the steepest slump in oil prices since the global recession, prompting speculation it has abandoned its role as a swing producer. Yesterday’s decision in Vienna propelled futures to the lowest since 2010, a level that means some shale projects may lose money. “We are entering a new era for oil prices, where the market itself will manage supply, no longer Saudi Arabia and OPEC,” said Mike Wittner , the head of oil research at Societe Generale SA in New York. “It’s huge. This is a signal that they’re throwing in the towel. The markets have changed for many years to come.” The fracking boom has driven U.S. output to the highest […]
Oil Price Drop After OPEC Decision Is ‘Terrible’: Iraq Minister
The plunge in crude prices after OPEC’s decision to keep its production ceiling unchanged is “terrible,” according to Iraq ’s oil minister. Brent crude, the global benchmark, fell the most in more than three years after the 12-member group completed talks and traded at $72.50 a barrel in London today. That’s 29 percent less than the $102.20 Iraq needs to balance its budget, according to International Monetary Fund estimates. “We are trying to follow up what is going on, then we will assess the whole issue,” Oil Minister Adel Abdul Mahdi said in an interview today in Vienna. “I already had a meeting with my team. We will try to put the right policy to face the situation.” Iraq is the second-largest producer in the Organization of Petroleum Exporting Countries, which left its daily output target unchanged at 30 million barrels yesterday. The group considered a cut of 5 […]
OPEC Inaction Signals Pain for Refiners With Costly Oil
OPEC’s failure to address oil’s slide to near $70 a barrel by refraining to cut its output target threatens profits at Asian refiners that filled inventories at higher prices. Brent crude plunged the most in three years yesterday after the Organization of Petroleum Exporting Countries said it will keep its collective production at 30 million barrels a day. South Korean refiner SK Innovation Co. (096770) predicted its fourth-quarter earnings will be hurt as a 38 percent fall in prices since a June peak widens losses from stockpiles. While a fall in crude cuts raw material costs for refiners, the benefits are limited because they have to account for oil accumulated when the market was higher. OPEC’s decision not to reduce output creates potential for further declines in prices, according to Goldman Sachs Group Inc. “The operating environment for the country’s refining industry is expected to worsen in the short-term,” […]
OPEC’s Decision and Tumbling Oil Prices Hammer Oil-linked Stocks and Currencies
The tumbling price of oil hammered commodity-dependent currencies as well as shares in oil and gas companies Friday, a day after the Organization of the Petroleum Exporting Countries left its output target unchanged , diminishing hope of any imminent respite for the ailing commodity. In early trade, Brent crude was an additional 1% lower at $71.86 a barrel, its weakest level in four years, having already plummeted nearly 7% on Thursday. It later picked up slightly. Analysts had estimated OPEC would need to take 1 million to 1.5 million barrels a day off the market to support oil prices, which have fallen by more than 30% since the summer, but its members didn’t bow to the market pressure. Russia’s ruble, which this year has also been pummeled by geopolitical tensions and resulting sanctions, hit yet another all-time low against the dollar, while fellow oil-linked currencies such as the Canadian […]
Tehran Hard-Liners Undermine Nuclear Talks
An Iranian man joins a gathering in Tehran in support of Iran’s nuclear program on… ENLARGE An Iranian man joins a gathering in Tehran in support of Iran’s nuclear program on Monday. Zuma Press VIENNA—As international talks on Iran were about to resume, the Obama administration early this month secretly presented an eight-page document to Tehran in a bid to demonstrate Washington’s flexibility and offer an opening to end the protracted dispute over Iran’s nuclear program. But a week later, the chairman of the Iranian parliament’s nuclear committee went public with the Nov. 9 proposal, slamming it by saying the U.S. had brought the negotiations “back to zero.” The potentially damaging leak by Ebrahim Karkhaneh, the chairman, marked a low point in what U.S. and European officials see as an ongoing, and possibly intensifying, effort by hard-line factions in Tehran to sabotage more than a year of international negotiations […]
Bottom for oil in 2015 is $35
Oil could plummet to $35 a barrel next year if OPEC doesn’t reach an agreement by the spring, oil price tracker Tom Kloza said Wednesday. The founder of Oil Price Information Services told CNBC’s “Squawk Box” that he expects at least a “lip service agreement” from OPEC members Thursday, when they meet to discuss output, but the members will largely ignore it, creating a bigger crisis in about six months. “When you look at the second half of 2015, that’s when you see oil beginning to dwarf demand by about a million, a million and a half barrels a day,” he said. “Thirty-five dollars is a possibility if they don’t get an agreement next spring because that’s when the oil really starts to build and you can have a billion barrels of oil with really no place to put it.” At that point, U.S. deep-water drilling and mature shale […]
Alberta Producers With World’s Cheapest Oil Face Cascading Woes
Canada ’s biggest energy producers now face the same prospects of shrinking budgets and declining profit as their smaller rivals as prices drop for what’s already the world’s cheapest oil. Producers including Suncor Energy Inc. (SU) and Canadian Natural Resources Ltd. (CNQ) , which each fell the most in at least three years yesterday, operate in one of the most expensive places on earth to produce oil. If crude prices continue sinking following OPEC’s decision not to cut global oil supplies, Canada’s producers big and small will have to tighten their belts to prepare for declining profits. “This is a pretty big shock,” said Justin Bouchard, an analyst at Desjardins Securities Inc. in Calgary. “There’s no question there’s going to be a slowdown. Even the big guys will have to look at their capital spending plans.” Western Canada Select, the Canadian benchmark, has lost more than a third of […]
Russia’s Oil Giant Battles Debt After $55 Billion Deal
Igor Sechin spent $55 billion in 2013 to buy competitor TNK-BP and create a Russian oil colossus, pumping about 5 percent of the world’s crude. Almost two years later and investors have written off the deal. Battered by sanctions and oil’s accelerating price crash, OAO Rosneft (ROSN) has lost 38 percent of its market value this year in dollar terms and today the whole company, TNK-BP and all, is worth $50 billion. And buying TNK-BP has left Sechin, Rosneft’s chief executive officer and a long-time ally of Russian President Vladimir Putin , with a lot of debt to repay . State-controlled Rosneft owes about $60 billion to banks and bondholders, making it more indebted relative to earnings than any large oil producer apart from Brazil ’s Petroleo Brasileiro SA. “Their aggressive expansion and debt accumulation made them more vulnerable to the falling oil price and the effect of sanctions,” […]
Russian Recession Risk Seen at Record as Oil Saps Economy
Russia will sink into recession at a Urals price of $80 a barrel, seven years after its economy grew 8.5 percent when its chief export oil blend averaged near $70, according to a Bloomberg survey of analysts. Urals at $80, or about $3 cheaper than its average in the month through November 15, will tip Russia into a contraction, according to the median estimate of 32 economists. The probability of a recession in the next 12 months rose to 75 percent, the highest since the first such survey more than two years ago, according to another poll. Russia, which receives about half of its budget revenue from oil and gas taxes, is closing in on its first slump since 2009 after dodging recession this year as it lurched from one crisis to another following the takeover of Crimea from Ukraine in March. Consumer spending , which accounts for half […]
Russia’s Economy Minister Says Prepare for Lower Oil Prices –Interfax
By Andrey Ostroukh MOSCOW–Russia, one of the world’s leading oil producers, will have to prepare for a drop in crude oil prices after OPEC’s decision to keep its production ceiling unchanged, Russia’s economy minister said Friday, Interfax news agency reported. The 12-member Organization of Petroleum Exporting Countries decided Thursday to keep its production ceiling unchanged at 30 million barrels a day, sending Brent crude prices below $72 per barrel for the first time since mid-2010. The continued decline in oil prices threatens to weigh further on Russia’s economic growth. The Russian government draws around 50% of its annual revenue from oil and gas exports. "It is likely that it [an oil price] will be close to $80 per barrel. But no one can tell that for sure so we need to prepare for any developments," Alexei Ulyukayev said. Mr. Ulyukayev also said that his ministry will lower its oil […]
Brent sheds close to $1 ahead of OPEC meeting
Traders keep an eye on signs of early movement from members of OPEC considering action amid low oil prices. File Photo by Monika Graff/UPI Iranian Oil Minister Bijan Zanganeh, who arrived early in Vienna, said his country was already producing below its capacity , so further cuts would be unfavorable for a country struggling to cope with sanctions targeting its energy sector. Members of the Organization of Petroleum Exporting Countries are working to shore up a market share in an era when U.S. dependence is plummeting because of the glut of oil from shale. Low prices mean less revenue for countries like Iran that rely heavily on export revenue. "We need to speak to other [member states] and exchange views with them on how to deal with the situation," the Iranian minister said. "The most important thing for all of us is the unity and solidarity of OPEC." The […]
Oil hits four-year low amid fading expectations of OPEC cuts
LONDON (Reuters) – Fading hopes of a meaningful cut in production at Thursday’s OPEC meeting sent oil prices tumbling to a four-year low as Thanksgiving in the United States saw world stocks touch the brakes on their recent rally. Gulf oil producers led by Saudi Arabia are expected to press the case at OPEC’s meeting in Vienna for holding off from output cuts, despite calls from some members for it to prop up prices that have crashed by a over a third since June. OPEC sources have told Reuters action is unlikely and Brent oil dropped by more than $1.75 in Asian and early European trading to $75.95 a barrel, the lowest level since September 2010. "The scene has been set by the Saudi comments going in to this meeting that market forces should be allowed to determine the price here," said National Australia Bank strategist Gavin Friend. "I think […]
Natural Gas Prices Retreat Ahead of Holiday, Warm Weather
By Timothy Puko NEW YORK–Natural gas futures closed lower Wednesday, with traders looking to get out of the market before the holiday and before unseasonably warm weather could damp demand. The front-month January contract settled down 4.8 cents, or 1.1%, at $4.355 a million British thermal units on the New York Mercantile Exchange. Prices have fallen in three of the last four sessions. The U.S. Energy Information Administration said Wednesday that stockpiles had shrunk by a November record of 162 billion cubic feet in the week ended Nov. 21. The draw was 13 bcf more than expected. That outsized drain on stockpiles would often boost prices, but they fell Wednesday afternoon. The holiday weekend likely played a large role, said John Woods, president of JJ Woods Associates and a Nymex floor trader. For as many people who may want to buy on strong demand, there are people who will […]
Oil price fall starts to weigh on banks
©Hulton Archive/Getty Images Banks including Barclays and Wells Fargo are facing potentially heavy losses on an $850m loan made to two oil and gas companies, in a sign of how the dramatic slide in the price of oil is beginning to reverberate through the wider economy . Details of the loan emerged as delegates of Opec, the oil producers’ cartel, gathered in Vienna to address the growing glut in the supply of oil. More On this story On this topic IN Banks Several Opec members have been calling for a production cut to shore up prices, but Saudi Arabia, Opec’s leader and largest producer, signalled that while there was a consensus among the cartel’s Gulf members they would not clarify if that meant a push for a big change in the group’s output targets. Repercussions from the decline in the price of crude, which has dropped 30 per cent […]
OPEC seen unlikely to cut output despite oil glut
VIENNA (AP) — OPEC oil ministers meeting in Vienna on Thursday are in a bind. Prices are plunging – and in the short term, the cartel may not be able to do much about it. Expectations that the group would not cut output to support the market saw the global price of oil slump another $1.89 on Thursday to $75.86 a barrel, extending its losses since June, when it was as high as $115. That drop has been driven by a boom in shale production in the United States as well as weakness in some major world economies, causing supply to outpace demand. OPEC powerhouse Saudi Arabia can weather such lower prices because its coffers are well-padded and its production costs are relatively low. But poorer OPEC members like Venezuela and Nigeria need levels close to $100 or above to fund national budgets. Saudi rival Iran is suffering, too, […]
Kirkuk oil facilities damaged in IS battle
The crude pipeline on fire after sabotaged during Tel al-Waridd fights on Nov. 26. (KAMARAN AL-NAJAR/Iraq Oil Report) A pipeline to the Baiji refinery was ablaze amidst a barrage of artillery fired by militants of the so-called Islamic State (IS) as they battled coalition forces in contested areas southwest of Kirkuk. IS militants launched their attacks late Tuesday and into Wednesday, battling Kurdish Peshmerga forces and facing air strikes by coalition planes. In the morning raid, IS militants took control of the Tel al-Warid and Maktab Khaled villages, 20 kilometers southwest of Kirkuk city, according to…
Libya: Rival Government Wants To Attend Oil Meeting
Both Libya’s internationally recognized government and a rival government want to attend the Nov. 27 OPEC meeting in Vienna, Reuters reported Nov. 26. Libya’s internationally recognized government will send three delegates to the meeting, a spokesman said. The rival government, which operates out of Tripoli, says it will refuse to comply with any production decisions if it is denied access to the meeting. An OPEC representative said the group’s only role is to facilitate the meeting, and it does not send invitations to member countries.
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ConocoPhillips Asks Judge to Probe Secret Citgo Sale
(Updates with arbitration details in fifth paragraph.) Nov. 26 (Bloomberg) –- ConocoPhillips (COP) Petrozuata BV asked a Texas judge to let it investigate claims Venezuela ’s state-owned oil company is secretly liquidating U.S. assets to avoid paying a potential multibillion-dollar arbitration award over the nationalization of ConocoPhillips’ assets in 2007. Petroleos de Venezuela ’s principal U.S. asset is Houston-based Citgo Petroleum Corp., which owns three refineries and a distribution network comprised of numerous pipelines and terminals. The Venezuelan government publicly said in September and October that it was no longer trying to sell Citgo, in deals with price tags estimated from $7 billion to $15 billion, according to court papers. “The available evidence indicates that PDVSA is liquidating its interests in Citgo to remove the proceeds from the United States to Venezuela or elsewhere with the specific intent to hinder, delay or defraud its creditors,” including the company’s “ability […]
Libya Producing 700,000 B/D of Oil — Energy Official
By Benoit Faucon Libya is currently producing 700,000 barrels a day of oil, a top energy official said Wednesday. The country’s current production, less than half of its normal level of about 1.5 million barrels a day, has been hit by frequent unrest and strikes. Speaking to reporters, Mohamed Oun, a deputy vice-prime minister for energy, also said his government decided to replace the head of the National Oil Co. Mustafa Sanallah with Almabrouk Abuseif Alahirish. Mr. Sanallah couldn’t be reached for comment. It’s unclear how Libya’s internationally recognized government could enforce the decision. A rival rebel cabinet is in control of NOC’s offices in Tripoli. Mr. Oun is part of a team sent to Vienna by the internationally recognized government for a meeting of the Organization of the Petroleum Exporting Countries. Deputy-Prime minister Abdulraman al-Taher Alahirish told reporters he would lead the Libyan delegation at the gathering. Under […]
Nigeria: Bonga Oil Spill – House Orders Shell to Pay U.S.$3.6 Billion Fine
Pastor Christian Lekoya Kpandei’s hand covered in oily mud, Bodo Creek, in 2011 (file photo). Photo: Amnesty International Abuja — The House of Representatives has directed Shell Nigerian Exploration Company (SNEPCo) to pay the sum of $3.6 billion or N604.832 billion for the damage caused by oil spill from its equipment failure almost four years ago in Bayelsa State The House Committee on Environment gave the directive during an investigative public hearing on Wednesday, citing the breakdown of an independent value analysis it adopted, which totalled N63.6 billion, payable for direct losses (irreversible damages) the community incurred. According to a breakdown of the damage, N103.192 billion is for loss of income, N85.785 billion is for water provision while N27.399,520,512 is for forestry and NTFP. For the indirect losses, SNEPCO is to pay N14.350 billion for health hazard; N8.089 million is for injurious affection while the sum of N302.416 billion […]
Petrobras Woes Scaring Away Investors
SÃO PAULO—A corruption investigation involving Brazilian state-controlled energy firm Petroleo Brasileiro SA is now being viewed as a liability to investors, who just a few months ago snapped up some of the company’s shares in the wake of the scandal. Petrobras confirmed this week it is being investigated by the U.S. Securities and Exchange Commission in relation to Brazilian prosecutors’ allegations that it was at the heart of a vast money-laundering and kickback scheme. The share price has dropped more than 40% since hitting an 18-month high in early September, and the company delayed its third-quarter earnings report because of auditors’ doubts. “No one knows how big the hole is (in the company’s numbers),” said Carlos Gribel, head of fixed income at Andbank Brokerage in Miami. “A lot of people think that worse things could start to come out.” According to prosecutors and suspects arrested in the case, a […]
China ramps up crude buying, reserves purchases far ahead of schedule
BEIJING/SINGAPORE (Reuters) – China is estimated to be holding double the amount of crude in its strategic reserves than its official plan has revealed, as the world’s top energy consumer takes advantage of a dive in prices to strengthen its position in the global oil market. Based on data compiled by industry and consulting sources, China now has nearly 30 days of stocks to cover crude imports, far ahead of its official schedule showing 15 days. In the next few years, China’s cover could reach 90 days, equivalent to the target reserves for the West’s main oil importers, including the United States, particularly if prices stay weak. After a 30 percent drop in oil prices since June, the OPEC producer club meets in Vienna on Thursday to consider whether to cut output to shore up prices. Beijing rarely publishes its oil stocks for fear that the knowledge will give […]
South Korea’s October product exports rise 16% to 21-month high
Seoul (Platts)–27Nov2014/438 am EST/938 GMT South Korea’s exports of refined oil products rose 16% year on year by volume in October, the biggest increase in 21 months. However, many of the sales were done on a spot basis, at lower prices than in previous months, as the country’s refiners drew down their inventories and as lower margins and refinery runs in China saw the country import more products from South Korea, industry sources said Thursday, November 26. The 16% rise — the biggest since January 2013’s 18.7% year-on-year increase — saw South Korea’s product exports reach 41.34 million barrels in October, or an average 1.33 million b/d, up from 35.64 million barrels a year earlier, according to data released earlier this week by state owned Korea National Oil Corp. The October total was also up 7.7% from 38.38 million barrels in September, and marked the fourth consecutive month of […]
Oil Bust of 1986 Reminds U.S. Drillers of Price War Risks
The last time that U.S. oil drillers got caught up in a price war orchestrated by Saudi Arabia, it ended badly for the Americans. In 1986, the Saudis opened the spigot and sparked a four-month, 67 percent plunge that left oil just above $10 a barrel. The U.S. industry collapsed, triggering almost a quarter-century of production declines, and the Saudis regained their leading role in the world’s oil market. So while no one expects the Saudis to ramp up output now like they did then and U.S. shale oil companies are pledging to keep drilling regardless, the memory of that bust looms large for American industry executives on the eve of OPEC’s meeting tomorrow. As the Saudis gather with officials from the 11 other OPEC nations in Vienna, analysts are split on whether the group will cut output to lift prices or leave production unchanged to fight for market […]