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British energy players facing tight purse strings

Oil companies working in the British seas may face tight purse strings in current bear market for crude oil, analysis finds. (Photo: BP p.l.c.) Brent, the global price benchmark based on oil blends taken from the North Sea, is trading near the $60 per barrel mark, far below the price for the June contract. Ewan Mitch, lead analyst at British firm Company Watch, said the bear market is putting a strain on the pocketbooks of many regional companies. "The recent large falls in the price of oil and gas could leave the weaker companies in difficulties, especially the ones that need to raise funds to keep exploring," he said in the report. The price for Brent is approaching the point at which companies might not be able to generate a profit. British energy company BP said it could cope with an oil price as low as $60 per barrel, […]

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Russia expects major losses from S&P action

Russian development minister backs President Vladimir Putin’s assessment the government has the mettle to arrest economic decline. File Photo by Monika Graff/UPI MOSCOW, Dec. 29 (UPI) — Russia may lose as much as $30 billion as a result of a downgrade by Standard & Poor’s of its credit rating, Russia’s development minister said Monday. S&P last week put Russia on notice because of a weakened economy and negative review of monetary flexibility. Russian Minister of Economic Development Alexei Ulyukayev said in an interview with Russia’s Business FM radio station that the consequences of a credit downgrade may be severe. "We can’t specify this sum right now but intuitively this is about $20 billion – $30 billion," he said. "However, this amount still needs to be specified and requires additional work. This is a new risk." Western sanctions imposed in response to the Kremlin’s policies on Ukraine, coupled with a […]

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As oil falls, Russia choked by military, social spending

MOSCOW (Reuters) – Russian authorities are facing some unpalatable options as they try to keep the economy afloat – unless they can persuade President Vladimir Putin to curb massive military spending. Officials fear that without limiting the defense budget, the government will have to raise taxes, increase the pension age or print money to prevent the state deficit from running out of control. Despite a crisis brought on by diving oil markets and Western sanctions, they believe Russia can muddle through next year provided the price of crude, its dominant export earner, holds near current levels. But even at $60 per barrel, the present oil price is little more than half what the Kremlin needs to balance the budget, and it is quickly running out of money. Without radical action, the officials are much less confident about 2016-17 – and even sooner, should global oil prices continue their slide […]

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Russian ADRs Drop on First GDP Contraction Since 2009

Russian stocks traded in New York fell to the lowest level in a week as the economy shrank for the first time in five years and a court hastened the scheduled reading of a verdict in the case against opposition leader Alexey Navalny. The Bloomberg Russia-US Equity Index dropped 4.5 percent to 50.41 in New York. The Market Vectors Russia ETF, the biggest exchange-traded fund tracking the country’s stocks, sank percent 8.7 percent to $14.61. The ruble tumbled 7.4 percent against the dollar. Stocks slid and the ruble weakened after the government said gross domestic product shrank 0.5 percent in November. The economy is contracting as oil, the country’s top export, is trading at the lowest level in five years and sanctions linked to the Ukraine conflict stoke the country’s worst currency crisis in 16 years. A Moscow district court said it will hand down a verdict in Navalny’s […]

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Russia to add wheat exports duty to other curbs from February

MOSCOW (Reuters) – Russia will introduce a duty on wheat exports from Feb. 1, the government said, adding to other restrictions with which it is battling a rise in domestic grain prices. Russia, expected to be the world’s fourth-largest wheat exporter this year, has been exporting record volumes from a large grain crop of 105 million tonnes as the ruble’s plunging value has spurred a dash for foreign currencies. But last week, Moscow imposed informal export controls, including tougher quality monitoring and slashed railway loading programs, in a bid to cool domestic prices while also unveiling plans to impose a duty on exports. The government said late on Thursday the duty on wheat exports would amount to 15 percent of the customs price plus 7.5 euros and would be no less than 35 euros ($43) per tonne from Feb. 1 until June 30, 2015. Trade sources expect business to […]

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David Hughes Weighs In on The Fracking Fallacy Debate

In the current debate about the  Nature  article  "The Fracking Fallacy,"  the discussion has focused on estimates of cumulative production of shale gas plays by the Energy Information Administration (EIA) and The Bureau of Economic Geology at the University of Texas (UT/BEG).  David Hughes  provides another estimate in his recent post  "Fracking Fracas: The Trouble with Optimistic Shale Gas Projections by the U.S. Department of Energy ," a summary of his comprehensive study of all U.S. shale plays  Drilling Down  published by The Post Carbon Institute. The Fracking Fallacy debate is important because it casts doubt on the reliability of government estimates of our natural gas supply.  If U.S. gas production is in decline by the early 2020s as described in the  Nature  article, or sooner as I suspect, then important policy decisions about the export of natural gas and the retirement of coal-fired electric power plants have been […]

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Why Low Oil Prices Are Not Sustainable

Summary There have not been any considerable fundamental changes in the oil market from June to December that justify the big drop in oil prices. OPEC surplus of crude oil production capacity has changed very little between June and December. Now is an excellent opportunity to make a long-term investment in good energy stocks at a relatively cheap price. Oil prices have fallen sharply during the last six months. WTI crude oil’s last price of $54.73 per barrel is a 45.9% drop from its peak of $101.18 on June 25, while Brent crude oil has declined 46.6% from its peak price of $112.12 per barrel. WTI crude oil February 2015 leading contract Chart: TradeStation Group, Inc. According to the U.S. Department of Energy’s recent analysis release on December 18, the principal reasons for the sharp fall in crude oil prices are as follows: lowered expectations for global economic growth, […]

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10 Huge Countries Without Their Own Oil

The world’s 1.635 trillion barrels of proved oil reserves are not evenly distributed among the globe’s 216 nations. Just three — Saudi Arabia, Venezuela and Canada — account for nearly a third of the total.There are far more countries with no or very little oil than those countries with deposits that can be developed and used internally or exported. According to the U.S. Energy Information Administration (EIA), of the world’s 216 nations only 99 have any oil reserves at all. And only about 40 nations have proved reserves totaling more than a tiny 1 billion barrels.Global consumption of crude oil grew from around 83.2 million barrels a day to 90.4 million in the 10-years from 2004 to 2013, according to the EIA. With the exceptions of 2008 and 2009, when the global financial crisis stifled economic growth in much of the world, oil consumption has been rising, but about […]

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Oil Futures Edge Upward on Libya Fire

By Eric Yep Crude-oil futures edged higher in Asian trade Monday on reports of a fire at oil storage terminals at a Libyan oil terminal. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $55.37 a barrel at 0537 GMT, up $0.64 in the Globex electronic session. February Brent crude on London’s ICE Futures exchange rose $0.47 to $59.92 a barrel. Nymex crude lost 4.20% last week and Brent crude was down by 3.14% last week. Both the oil benchmarks have fallen for five consecutive weeks. "With persisting conflicts in Libya, crude export and production continue to be unstable. Current estimates of crude output in Libya stands at 352,000 barrels a day," analyst Daniel Ang at Singapore’s Phillip Futures said. He said for the past week both Nymex WTI and Brent crude were supported by short covering, but with 2015 just around […]

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Libya conflict helps oil move higher

Escalating violence in Libya helped oil prices advance towards $60 a barrel on Monday. The expanding seven-month civil conflict in Libya, an Opec member, has caused traders to refocus attention on the geopolitical risks and potential impact on supplies and exports. More On this topic IN Commodities Libya, which holds Africa’s largest oil reserves, has seen production drop from as high as 900,000 barrels a day in October to around less 400,000 b/d because of the most recent fighting. “A new wave of unrest in Libya resulted in crude oil production falling to some 350,000 b/d according to official statements,” said analysts at JBC Energy, a consultancy. “This is some 300,000 b/d less compared to our . . . estimates for average crude output in November.” ICE February Brent, the international oil marker, rose 59 cents to $59.90 a barrel, while Nymex February West Texas Intermediate, the US benchmark, added 59 cents to […]

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Oil Strengthens as Libya Conflict Offers Relief From Glut

Oil advanced for the first time in three days amid speculation that an escalating conflict in Libya may pare a global surplus that’s driven crude into a bear market . Brent futures rose 0.2 percent in London. Fires have been extinguished at three of five tanks at Es Sider, Libya’s largest oil port, which were set ablaze after an attack by militants, said Ali al-Hasy, a spokesman for the Petroleum Facilities Guard. Algerian Energy Minister Youcef Yousfi called on the Organization of Petroleum Exporting Countries to cut output to boost prices, the Associated Press reported. Oil plunged 46 percent this year, set for the biggest annual drop since 2008, as OPEC resisted supply cuts to defend market share in response to the highest U.S. production in three decades . Libya pumped 580,000 barrels a day in November, down from about 1.59 million at the end of 2010, according to […]

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Tanker market benefits from oil rout

Oil tanker The daily earnings of supertankers on the benchmark Middle East to Japan route hit a six-year high in mid-December, in part due to China building up its strategic reserves on the back of low oil prices. According to aggregated data from the Baltic Exchange, daily earnings reached $97,489 on the Middle East to Japan route, the highest levels since 2008. Only six months ago, tanker rates were so low ship owners could not cover their daily operating expenses of up to $20,000. “Somebody call the bucket brigade, because the tanker market is officially on fire,” said Noah Parquette, an analyst at Canaccord Genuity, the brokerage company. The rally in tanker rates is a welcome boost for an industry that has been ravaged in recent years. With oil prices dropping to below $60 a barrel for the first time since May 2009 — down almost 50 per cent […]

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Fires Put Out at Three Oil Tanks at Libya’s Es Sider Port

Fires were extinguished at three of five Libyan oil tanks that were set ablaze last week after an attack by militants, curbing the threat of 6 million barrels of crude spilling into the Mediterrean Sea. Libyan firefighters extinguished the fires at three tanks at the Es Sider port, Ali al-Hasy, a spokesman for the Petroleum Facilities Guard, said by phone. International assistance is being sought because the fires may lead to environmental damages in the Mediterranean Sea , al-Hasy said. Libya, holder of Africa ’s largest crude reserves, has been in a civil war since 2011 when dictator Muammar Qaddafi was killed after a 42-year rule. The fires at Es Sider started on Dec. 25 after Libya’s oil guard gave Islmatist militias an ultimatum before air strikes and the Islamists fought back with rockets. Brent oil rose 0.6 percent today to $59.82 a barrel amid speculation that the conflict […]

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Suicide bombers attack Syria gas facilities

DAMASCUS, Syria (AP) — A Syrian official says two suicide attackers have targeted separate natural gas facilities in the central province of Homs, killing eight people. The state news agency SANA also reported the attacks, saying guards opened fire at the attackers as they drove toward the plants, forcing them to detonate their payloads before reaching their targets. It said the facilities are operating as usual. The local official in Homs told The Associated Press that the attacks killed eight people and wounded 12. He spoke on condition of anonymity in line with regulations. There was no claim of responsibility, but opposition fighters and jihadis have frequently targeted the country’s oil and gas infrastructure during the nearly four-year conflict.

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Saudi 2015 budget based on oil price around $60

* Government doesn’t publish oil price assumption in budget * But finance minister indicates it’s close to current levels * Budget cuts oil price assumption for first time since 2009 * Disagreement over when oil will rebound – minister Saudi Arabia’s 2015 state budget assumes an oil price close to current levels of around $60 a barrel for Brent crude, a shift from past budgets which were based on prices well below market levels, analysts say. The kingdom doesn’t reveal the oil prices which it uses to calculate its annual budgets. So analysts estimate them, making assumptions about several other variables such as planned oil exports and production for the following year. For the 2015 budget, announced on Thursday, four analysts’ oil price estimates are in a range of $55 to $63. That does not mean Saudi Arabia necessarily expects such prices next year — Finance Minister Ibrahim Alassaf […]

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Canadian Oil Surge to U.S. Gulf Puts Mexico on Defensive

A price war is brewing between Canada and Latin America over who will satisfy U.S. Gulf Coast refiners’ hunger for heavy oil. The new Seaway Twin pipeline will almost double the amount of heavy Canadian crude coming to Gulf terminals and plants to about 400,000 barrels a day starting in January, according to Calgary-based based ARC Financial Corp. The shipments are growing even without the Keystone XL pipeline, which has been delayed for six years because of environmental opposition. The Canadian supply will square off against crudes from Mexico and Venezuela that have traditionally fed refineries along the Texas and Louisiana coasts. State-owned Petroleos Mexicanos widened its discount for U.S. buyers in December by the most since August 2013. Valero Energy Corp. and Marathon Petroleum Corp., which invested in special equipment to refine heavy crude, stand to gain the most from the Canadian supply. “Something’s going to have to […]

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Texans Discover Oil Grows on Olive Trees as Crude Drops

As crude prices tumble, landowners across Texas are accelerating production of a different kind of oil — olive oil. “I love the trees, and I love watching them grow,” Steve Coffman Jr. said of his 40 acres (16 hectares) of budding olive trees, which he planted two years ago on his red dirt ranch just outside Cotulla, Texas, the epicenter of the state’s Eagle Ford shale-oil boom. Nowadays he doesn’t have the same affection for his oil wells , which sit just down the road from his olive trees. “I can’t look, it’s depressing,” Coffman said as he pulled out his smartphone to check the latest energy prices. He shook his head. West Texas Intermediate crude had fallen again. Five years after one of the biggest oil booms in decades boosted royalty checks, a steep decline in oil prices has Texans seeking new ways to stay ahead. About 70 […]

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Russian Ruble Drops 7 Percent as Economy Shrinks

The Russian currency extended its losses on Monday after a report showed the economy has started shrinking in annual terms for the first time since 2009 as the country is buffeted by falling oil prices and Western sanctions. Meanwhile, the government, which has been scrambling to support the ruble and the economy, announced fresh steps to keep the banks afloat. The ruble has been one of the world’s worst performing currencies this year and was down another 5 percent on Monday, trading at 56 rubles per dollar in early afternoon in Moscow, wiping off some of the gains it made last week. The fall came as the Economic Development Ministry issued a report showing the economy shrank by 0.5 percent in November compared with a year earlier. The ministry attributed the year-on-year decline in the economy, Russia’s first in five years, to a sharp drop in manufacturing and investment. […]

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In Reversal, Germany Cools to Russian Investment

FRANKFURT — Few countries have invested more heavily in Russia than Germany has, rushing in to exploit new trade opportunities that opened up after the Cold War ended. More than 6,000 German companies set up operations there, and Russia became a major customer for German cars, pharmaceuticals and machinery. But now the rush is going in reverse. The announcement last week by the German chemical giant BASF that it had canceled a planned deal with Gazprom , the Russian energy giant, involving natural gas extraction and distribution, was the latest example of how German companies are delaying projects and investment. Opel, the car-making unit of G.M. based in Germany, has laid off workers at its plant in St. Petersburg; Volkswagen shut down an auto plant in Kaluga intermittently because of poor demand; and Fresenius, a health care company, canceled a joint venture with Russian partners. More than a third […]

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Oil Plunge Pushes Russia ADRs to Worst Year Since 2008

Russian stocks traded abroad are headed for the biggest annual drop in six years as companies from Yandex NV to OAO Megafon tumble amid a plunge in oil prices that is further slowing an economy already beset by sanctions. The Bloomberg Russia-US Equity Index fell 48 percent this year through Dec. 26. The gauge of the country’s most actively-traded stocks traded outside the country is on pace for the worst performance since a 70 percent rout during the global financial crisis in 2008. Oil, Russia ’s main export, sank into a bear market in October, accelerating the ruble’s 39 percent drop in 2014 and pushing inflation to the fastest in three years. While equities had traded below 2013 levels all year as international sanctions linked to the Ukraine crisis throttled gross domestic product growth, they accelerated losses in late November in tandem with plunging oil prices amid a global […]

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Russian economy suffers first major contraction since 2009

MOSCOW (Reuters) – Russia’s economy shrank sharply in November and the rouble resumed its slide on Monday as Western sanctions and a slump in oil prices combined to inflict the first contraction in GDP since the global financial crisis. The Economy Ministry said gross domestic product shrank 0.5 percent last month, the first drop since October 2009. With oil exports forming the backbone of the economy, analysts said the contraction is likely to worsen. The slide on the oil market accelerated this month after the exporters’ group OPEC refused to cut output, and prices are down almost 50 percent from a peak in June. On top of this, the sanctions imposed over Moscow’s role in the Ukraine crisis have deterred foreign investment and led to over $100 billion flooding out of the Russian economy this year. "With the current oil price we expect things to get worse. There is […]

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The News in Moscow

A customer counts out ruble banknotes at a food market in Moscow on December 23rd. Credit Photograph by Andrey Rudakov/Bloomberg via Getty The news in Moscow is that everyone has a new television and some people have a new car, but no one has any money or plans for winter vacation travel—or any plans for the future, really. When the ruble collapsed in mid-December, a man went to an Audi dealership to find that only one new car was still available; while he was test-driving the car, someone else bought it in cash sight unseen. Several people told me this story as though it was about a friend of theirs, and it may in fact be true. It is certainly true that large electronics stores have sold out of expensive television sets, which are apparently the durable good of choice in this round of dumping tumbling currency, and instructions […]

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Putin is trying to save Russia’s economy with one weird trick

(Reuters/Dmitry Astakhov/RIA Novosti/Pool) Vladimir Putin wants to have his dollars, spend them too, and invade Ukraine. That’s impossible, of course, but he’s trying to make it a little less so with some financial legerdemain that covers up what’s really going on. Putin, you see, is forcing Russia’s companies to spend their dollars instead—but Russia’s government will be on the hook if those firms get into trouble as Russia’s economy implodes. So Putin, in other words, is playing a financial shell game to try to buy enough time for oil prices to rebound and bail him out. Russia’s problem, as I’ve said before , is that it doesn’t so much have an economy as an oil exporting business that subsidizes everything else. And that business is in bad shape now that oil prices have halved the past few months. Cheaper oil means Russian corporations have fewer dollars to turn into […]

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What’s Next for World Oil as Lower Prices Extend Into ‘15

The oil price decline of 2014 upended the geopolitical chessboard. Worth watching in 2015 will be who can recover and dominate play — OPEC, Vladimir Putin or U.S. shale drillers. Oil’s international benchmark price dropped as much as 49 percent in 2014. Those looking for a quick rebound may be disappointed, as world consumption growth slowed to the least since 2009, U.S. companies pumped more than they have since the 1980s and a price war broke out among members of the Organization of Petroleum Exporting Countries. “It’s a turning point in the way people perceive OPEC, that this so-called cartel is not really driving prices,” said Jeff Colgan, a professor at Brown University’s Watson Institute for International Studies who researches the geopolitics of energy. “The real story is going to be about the fracking industry. How much pain can North American producers take?” Here are five concerns about oil […]

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Five energy surprises for 2015: The possible and the improbable

The coming year is likely to be as full of surprises in the field of energy as 2014 was. We just don’t know which surprises! I am not predicting that any of the following will happen, and they will be surprises to most people if they do. But, I think there is an outside chance that one or more will occur, and this would move markets and policy debates in unexpected directions. 1. U.S. crude oil and natural gas production decline for the first time since 2008 and 2005, respectively. The colossal markdown in world oil prices has belatedly been followed by a slightly smaller, but nevertheless dramatic markdown in U.S. natural gas prices. The drop in prices has already resulted in announcements from U.S. drillers that they will curtail their drilling operations significantly next year. But drilling that is already contracted for will likely go forward, and wells […]

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Is U.S. in an oil price nirvana?

Dallas economist Bud Weinstein prays every night for $60 oil — give or take five bucks a barrel. That’s the sweet spot, he says, where the U.S. economy gets a boost without putting the brakes on oil-producing states such as Texas. Lately, West Texas Intermediate crude has been fluctuating at the lower end of Weinstein’s nirvana zone. The price of oil has been cut nearly in half since June, punished by too much oil for a slowing world economy and piling on by speculators. Oil prices tried to stabilize midweek, bolstered by indications of stronger demand from China and word that billionaire Harold Hamm, a kingpin in the North Dakota shale play, will scale back his company’s growth plans next year. But the reprieve was temporary with West Texas Intermediate ending Friday at $54.73 a barrel, down another $1.79 for the week. When oil is selling for $55 to […]

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Oil Prices Drop to Nearly Five-Year Lows

Oil futures gave back early gains to end near five-year lows on Friday as a surge in U.S. supplies weighed on the market. Light, sweet crude for February delivery fell 2%, or $1.11, to $54.73 a barrel on the New York Mercantile Exchange. The U.S. benchmark ended 63 cents away from settling at the lowest price since May 5, 2009. The February contract for Brent crude, the global benchmark, ended down 79 cents, or 1.3%, at $59.45 a barrel on the ICE Futures Europe exchange, also just shy of a new five-year low. “The market at the end of the day just gave in to the fact that inventories are so high,” said Phil Flynn , senior market analyst at Price Futures Group in Chicago. “The market I think was really blindsided by the buildup last week.” Oil producers added 7.3 million barrels in the week ended Dec. 19, […]

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Oil Trades Above $60 Amid Signs of Saudi Confidence in Rebound

Oil traded above $60 a barrel in London amid the highest volatility in more than three years on speculation that Saudi Arabia , the largest crude exporter, is signaling confidence that prices will rally. Brent futures swung between gains and losses. Saudi Arabia’s assumption of oil at $80 a barrel next year is sending a message that the government expects a price rebound, according to John Sfakianakis, a former economic adviser to the kingdom’s finance ministry . Implied volatility for at-the-money options this week increased to the highest since October 2011, data compiled by Bloomberg show. Oil has slumped 46 percent this year, poised for the biggest drop since 2008, as the Organization of Petroleum Exporting Countries resisted supply cuts to defend market share while the highest U.S. production in three decades exacerbated a global glut. Crude prices are “fair” at about $70 to $80 a barrel, Iraq ’s […]

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Natural Gas Wavers on Weather

By Ira Iosebashvili Natural gas prices shuffled between gains and losses Friday, as mild weather damped hopes for demand and investors bought when futures dipped. Natural gas for January delivery was recently down 1.7 cents, or 0.6%, at $3.013 a million British thermal units on the New York Mercantile Exchange. Prices fell to $2.980/mmBtu earlier in the session, the lowest price in more than two years, causing investors to cash in bets that prices would fall and pushing the contract as high as $3.098/mmBtu. Record production of natural gas is overwhelming demand in the U.S. This December has been one of the warmest since 1950, which has also limited demand for home heating and power consumption and has made traders and analysts wonder how much of a gas glut there could be next year. Prices are down 33% since their November highs, with little relief in sight as temperatures […]

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Libya Oil Ports Guard Calls In Air Strikes on Islamist Militias

Libya ’s government struck from the air at Islamist militias it said shelled the country’s largest oil port today, according to the military unit in charge of protecting export terminals. The strike comes two days after the Petroleum Facilities Guard gave the militias 72 hours to return to Misrata, their main stronghold, to avoid the airstrikes after an earlier attack on the Es Sider terminal. “We decided to order attacks from the air without waiting after the rocket attack on Es Sider,” Ali al-Hasy, a spokesman for unit, said by phone from the port, where loading was halted Dec. 13 after a first round of clashes. Aircraft belonging to the internationally recognized government of Abdullah al-Thinni attacked the artillery unit that fired on the port and bombed positions in Misrata and along the front line in Bin Jawad, 35 kilometers west of Es Sider, he said. The self-proclaimed government […]

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Oil price collapse stokes financial crises in producing countries

The most significant development in the world economy in 2014 was the collapse in the price of oil. The near-50 per cent drop in the price of internationally traded Brent crude from a high of more than $115 a barrel in June to less than $60 earlier this month has put extra money into consumers’ pockets and boosted fuel-intensive businesses such as airlines, while cutting oil companies’ revenues and stoking financial crises in oil-producing countries including Russia and Venezuela. The roots of the price collapse lie in the US shale oil boom, which began when small and medium-sized producers worked out in 2009-10 how to apply to oil production the techniques of horizontal drilling and hydraulic fracturing that had already been highly successful for natural gas. US oil production has soared, from about 5m barrels a day in 2008 to 9.1m b/d this month. For the first three years […]

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Iraq faces new crisis as winter descends on millions uprooted by Islamic State

Iraqi refugees prepare for winter More than 1.3 million Iraqis have been displaced this year into a region crushed under the weight of the Syrian refugee crisis. View Photos IRBIL, Iraq — For three years, he worked closely with U.S. forces in Iraq. Now Ammar Younes sits in his frigid tent in a camp in Iraq’s Kurdish region, using a scalpel to gouge pieces of shrapnel out of his mangled legs as his young children look on. A trainer in the Iraqi army, the 34-year-old was wounded when Islamic State extremists placed a bomb under his car in Mosul in June, just a week before the northern city fell to the militants . He was forced to flee his hospital bed, still wearing his medical gown, when the city was overrun. Younes is one of more than 2 million Iraqis uprooted this year by the advance of the Islamic […]

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Doubts deepen over Chinese-backed Nicaragua canal as work starts

MANAGUA (Reuters) – When one of the poorest countries in the Americas and a little-known Chinese businessman said they planned to undertake one of the biggest engineering projects in history, few people took them seriously. A year and a half after the $50 billion project to build a canal across Nicaragua was launched by President Daniel Ortega, a former Marxist guerrilla, the doubts have only grown. Work officially began this week. But reporters hoping to see any evidence of how it would be done in a fraction of the time it took to build the much-shorter Panama Canal, or discover who would pay for it, were left with more questions than answers. At events marking the start of what is meant to be a five- year job, Nicaraguan officials and the Hong Kong-based company behind the canal dodged questions about its financial backers, mounting delays and whether Washington had […]

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Smoking Out Coal’s China Question

The global coal market has a burning question, and Li Zhidong has an answer. In a National Bureau of Research report, the management professor at the Nagaoka University of Technology in Japan addresses the issue of when coal use in China, the world’s largest consumer of the black stuff, will fall. Chinese coal demand has started slowing as officials favor cleaner fuels to combat pollution. That’s sent prices down, but demand hasn’t actually declined yet. Mr. Li calculates coal use in volume terms will fall starting 2016, as heavy industry also slows. The one consolation for international miners is that their higher-quality coal releasing more energy can find buyers longer. Mr. Li expects coal use in heat content terms to peak in 2019, as Beijing discourages lower-quality coal, and as higher heat-content stuff is still used by power producers who take time to switch to alternative energy sources. Pretty […]

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China cuts retail oil price

BEIJING, Dec. 26 (Xinhua) — China’s top economic planner announced a cut on the retail price of gasoline by 520 yuan (85 U.S. dollars) and that of diesel by 500 yuan per tonne. The adjustment, effective on Saturday, means retail prices will drop by 0.39 yuan per liter for gas and 0.43 yuan per liter for diesel, according to the National Development and Reform Commission. The cut marks the 10th since July. China has a pricing regime which adjusts domestic fuel prices when international crude prices change by more than 50 yuan per tonne during a time span of 10 working days. The last time China cut the fuel retail price on Dec. 12, it also decided to impose higher taxes on the products, the second increase in a month. Tax on gasoline, naphtha, solvent oil and lubricating oil will rise to 1.4 yuan per liter from 1.12 yuan. […]

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Oil Jobs Squeezed as Prices Plummet

ENLARGE A host of companies working in and around the oil patch are facing tough times amid a sharp decline in energy prices over the past year. Here, Endeavor Energy Resources’ Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas. Bloomberg News U.S. oil and gas companies have been an engine of growth through much of an otherwise lackluster economic expansion, providing steady employment, solid wages and fierce competition for workers across wide swaths of the country. Now, after a roughly 50% plunge in oil prices, exploration and production companies are cutting capital budgets, service companies are weighing layoffs and nonenergy firms that popped up to support the industry are bracing for a protracted slowdown. One company caught in the industry downturn is Hercules Offshore Inc. The Houston-based firm is laying off 324 employees, roughly 15% of its workforce, because oil companies aren’t renewing contracts […]

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In Oil States, Bracing for a Price Bust’s Ripple Through the Economy

Photo Gas prices dropped below $2 a gallon in Houston last week. While oil states like Texas are seeing revenues fall, experts say the price drop is unlikely to create the kind of economic disaster that accompanied the 1980s oil bust. Credit Michael Stravato for The New York Times HOUSTON — States dependent on oil and gas revenue are bracing for layoffs, slashing agency budgets and growing increasingly anxious about the ripple effect that falling oil prices may have on their local economies. The concerns are cutting across traditional oil states like Texas, Louisiana, Oklahoma and Alaska as well as those like North Dakota that are benefiting from the nation’s latest energy boom. Here in Houston, which proudly bills itself as the energy capital of the world, Hercules Offshore announced it would lay off about 324 employees who work on the company’s rigs in the Gulf of Mexico at […]

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E.P.A. Wrestles With Role of Nuclear Plants in Carbon Emission Rules

WASHINGTON — Trying to write a complicated formula to cut carbon emissions, the Environmental Protection Agency thinks it has found a magic number: 5.8. The agency is trying to complete a rule governing carbon emissions from power plants, and among the most complicated and contentious issues is how to treat existing nuclear power plants. Many of them are threatened with shutdowns because cheap natural gas has made their reactors uncompetitive. The agency’s proposal gave an odd mathematical formula for evaluating nuclear plants’ contribution to carbon emissions. It said that 5.8 percent of existing nuclear capacity was at risk of being shut for financial reasons, and thus for states with nuclear reactors, keeping them running would earn a credit of 5.8 percent toward that state’s carbon reduction goal. Since receiving tens of thousands of comments on the proposal, the agency is now reviewing the plan. It must evaluate all comments […]

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Bakken, A Tale of Two Counties

North Dakota publishes their  Historical Barrels of Oil Production by County  which gives county by county production back to 1951. The data here does not include confidential wells but they publish the last couple of months production data that does include confidential wells here: Oil and Gas Production Report . Looking over this data I found something very strange. In October Bakken production was down by 1,598 barrels per day and all North Dakota was down by 5,4054 barrels per day. All data is in barrels per day with the last data point October 2014 . McKenzie County was up 19,609 barrels per day or 4.88 percent. In October McKenzie was up even more than it was in September when the Bakken was up 52.5 thousand barrels per day. Mountrail Countywas down 18,728 barrels per day or 6.42 percent. There is  more on this story below. Dunn County was down […]

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Russia: Oil Output Could Be Cut Next Year

Russia may cut its oil output because of low global oil prices and a lack of investment in the country’s energy industry, Deputy Prime Minister Arkady Dvorkovich said Dec. 25, Xinhua news reported. According to Dvorkovich, Russia’s oil output could shrink by 10 percent over the next two or three years. Dvorkovich predicted that oil prices would remain at the current level or keep falling for a few months before stabilizing around $80 per barrel. At the beginning of December, the Russian government revised down its forecast for next year’s oil exports by 2.19 percent.

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Russia forecasts economic slump as bailed-out bank gets more funds

MOSCOW (Reuters) – Slumping oil prices have put Russia’s economy on course for a sharp recession and double-digit inflation next year, government ministers said on Friday, as authorities scaled up a bailout for the first bank to succumb to this month’s ruble crisis. The economy is slowing sharply as Western sanctions over the Ukraine crisis deter foreign investment and spur capital flight, and as a slump in oil prices severely reduces Russia’s export revenues and pummels the ruble. The government has taken steps to support key banks and address the deepening currency crisis in the past week, including a sharp and unexpected interest rate hike, but analysts are pessimistic on the outlook for both the economy and the ruble. Finance Minister Anton Siluanov told journalists on Friday the economy could shrink by 4 percent in 2015, its first contraction since 2009, if oil prices averaged their current level of […]

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Ruble Set for Best Week in 16 Years as Russia Turns to Exporters

The ruble fell, trimming a weekly rally that drove the currency up the most since in 16 years as the government ordered Russian exporters to reduce their foreign-currency holdings to shore up confidence. The ruble weakened 0.2 percent to 52.6600 a dollar by 12:28 p.m. in Moscow, bringing its advance in the past five days to 11 percent, the first weekly increase since the period ended Nov. 23. Government bonds gained, pushing the five-year yield lower for the first time in four days. The Micex Index (INDEXCF) of equities rose for a third day led by OAO Magnit, the nation’s biggest retailer, and natural gas producer OAO Gazprom. Coordinated measures by Russia’s government and central bank have succeeded in driving a 52 percent rebound in the ruble since it slid to a record-low 80.10 on Dec. 16. Gazprom and four other state-controlled exporters were ordered this week to cut […]

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Ukraine Cuts Power, Train and Bus Services to Crimea

ENLARGE In this Oct. 26 file photo, a man walks past a mural on an apartment building depicting Russian President Vladimir Putin in a navy uniform with the Kremlin and a Russian flag in the background in Sevastopol, Crimea. Associated Press MOSCOW—Ukraine cut off electricity as well as train and bus service to Crimea on Friday, moves that could raise tensions with Russia, which annexed the peninsula in March and has been prodding Kiev to negotiate with Moscow-backed rebels in the country’s eastern provinces. The power cutoff is the second this week by Ukraine, which says it has electricity shortages of its own because rebels have halted shipments of coal to its power plants. The halt in train and bus service, however, could indicate Ukraine is stepping up its pressure of the peninsula. In both cases, Ukrainian officials cited safety concerns. Passenger and cargo train service, both foreign and […]

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Cost of Russia’s bank bailout surges as weaker rouble bites

US actor Bruce Willis has been the face of a Trust Bank advertising campaign Russia trebled the size of its bailout of troubled lender Trust Bank to Rbs99bn ($1.9bn) on Friday, laying bare the growing financial fallout from its currency crisis and the slump in the price of oil, its main export. The rapidly rising cost makes the rescue of Trust bank, which foundered as the rouble collapsed early last week, the second-largest seen in Russia. It has now consumed a tenth of the money earmarked by the government last week for bank bailouts. The authorities also said they would spend Rbs320bn ($5.9bn) propping up two other banks. Anton Siluanov, finance minister, said state-owned VTB , the second-largest lender by assets, could receive Rbs100bn before the end of this year and another Rbs150bn in 2015, while Gazprombank could be allocated Rbs70bn. More On this topic IN Europe Moscow said […]

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Oil and Gas Prices Are Manipulated Once Again

OPEC will not cut output even at $20 a barrel … OPEC will not cut oil production even if the price drops to $20 a barrel and it is unfair to expect the cartel to reduce output if non-members do not, Saudi Arabia said. “Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” the kingdom’s Oil Minister Ali al-Naimi said in an interview with the Middle East Economic Survey (MEES), an industry weekly. In unusually detailed comments, Naimi defended a decision by the Organization of the Petroleum Exporting Countries, whose lead producer is Saudi Arabia, last month to maintain a production ceiling of 30 million barrels per day. – Daily Mail Dominant Social Theme: Nothing that is happening to oil is surprising. Free-Market Analysis: For years we had arguments with “peak oilers” who maintained that the world was running out of oil. Of course, they always […]

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Brent crude prices steady above $60 in thin Christmas trading

SINGAPORE (Reuters) – Brent crude oil futures traded steadily above $60 on Friday as a building supply glut and weak Japanese import data weighed on the market while strong U.S. economic data published over Christmas provided support. On the supply side, data suggested an increasing glut as a U.S. report showed crude inventories unexpectedly rose by 7.3 million barrels last week to their highest December level on record. Analysts had expected a seasonal draw. [EIA/S] The demand picture was mixed, with price supporting data from the United States where jobless claims fell and third-quarter economic growth indicated the quickest pace in over a decade. However, in Japan, crude imports in November dropped 17.3 percent from a year earlier to 14.68 million kilolitres (3.08 million barrels per day), data from the Ministry of Economy, Trade and Industry showed. Front-month Brent crude prices were trading at $60.68 at 0812 GMT, up […]

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Saudi Rulers to Curb Wages as Kingdom Confronts Oil Slump

Saudi authorities pledged to curb wages and push ahead with investments next year as the world’s largest oil exporter seeks to counter the effect of tumbling crude prices on the economy. The government said it expects the budget deficit in 2015 to widen to 145 billion riyals ($39 billion), from 54 billion riyals this year, the Finance Ministry said today. That amounts to about 5 percent of gross domestic product, according to Arqaam Capital, a Dubai-based investment bank. The Finance Ministry said the government will continue to invest in areas such as education and health care, while exerting “more efforts” to curb spending on wages and allowances, which make up about 50 percent of spending. Projected revenue will drop more than 30 percent next year to 715 billion riyals, while expenditure was set at 860 billion riyals, budget data show. Spending in 2014 is estimated to have been 1.1 […]

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Saudi Arabia Maintains Spending Plans in 2015 Despite Oil Slide

ENLARGE Saudi King Abdullah struck a note of caution in the budget announcement. Reuters/Saudi Press Agency/Handout DAMMAM, Saudi Arabia—The Saudi government unveiled a 2015 budget on Thursday that signaled a continuation of a high level of spending despite pressures from a steep fall in oil prices in recent months. The kingdom, the world’s top oil exporter, depends on oil revenue to fund social spending, helping head off the kind of unrest that has roiled Middle Eastern countries since 2011. A prolonged oil-price slump could threaten such policies here and in other Gulf monarchies. Saudi King Abdullah struck a note of caution in the budget announcement, instructing officials to consider the developments that led to oil’s decline by “rationalizing the expenditure.” Riyadh has chosen not to cut output in an effort to push up prices, despite its dependence on oil exports. The Saudi oil minister, Ali al-Naimi—secretary-general of the Organization […]

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Oil Trades Above $60 Amid Signs of Saudi Confidence in Rebound

Oil traded above $60 a barrel in London amid the highest volatility in more than three years on speculation that Saudi Arabia , the largest crude exporter, is signaling confidence that prices will rally. Brent futures swung between gains and losses. Saudi Arabia’s assumption of oil at $80 a barrel next year is sending a message that the government expects a price rebound, according to John Sfakianakis, a former economic adviser to the kingdom’s finance ministry . Implied volatility for at-the-money options this week increased to the highest since October 2011, data compiled by Bloomberg show. Oil has slumped 46 percent this year, poised for the biggest drop since 2008, as the Organization of Petroleum Exporting Countries resisted supply cuts to defend market share while the highest U.S. production in three decades exacerbated a global glut. Crude prices are “fair” at about $70 to $80 a barrel, Iraq ’s […]

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Iran Exits Recession With 4% Growth in Six Months, Rouhani Says

Iran ’s economy expanded 4 percent in the six months from March 21, President Hassan Rouhani said today, in a return to growth following two years of recession. In the 16 months since it came to power, the government has also “curtailed inflation from 40 percent down to 17” percent, Rouhani said in a speech in the eastern city of Birjand, according to the Iranian Students News Agency . “Economic revival has begun.” Efforts to secure a deal with world powers over the Islamic Republic’s nuclear program have won Iran some relief from economic sanctions, though talks on a permanent deal have been extended until July amid major differences. A 45-percent plunge in the price of crude this year threatens to slash oil revenues that account for the bulk of government spending. Rouhani today blamed “plots” by nations he didn’t name for driving down the price of crude. Oil […]

Posted On : Published By : Tom Whipple