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Energy Leaders Pledge Cooperation Despite Discord Over Keystone

North America ’s energy chiefs agreed to collaborate so the region’s power needs are met, even as disagreements over the proposed Keystone XL pipeline split the governments of U.S. and Canada. U.S. Energy Secretary Ernest Moniz was joined by Mexico Energy Secretary Pedro Joaquin Coldwell and Greg Rickford, Canada’s minister of natural resources, at a news conference today in Washington to announce the modest pact, which includes plans to share more energy information. “Our data are not always consistent or available to us,” Moniz said. While Keystone wasn’t the focus, Rickford told reporters the project to carry oil sands from Alberta to Gulf of Mexico refineries would help the U.S. end its dependence on unreliable sources of oil. The three-nation talks took place as global oil prices fall to the lowest in five years, possibly putting a dent in the surge of domestic production from shale drilling. North America […]

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An Analysis of Exxon’s 2015 Energy Outlook

A couple of years back, I attended a presentation by Tom Eizember, Exxon’s head of strategic planning.   During the presentation, Eizember asked how many in the audience believed in peak oil, and I raised my hand.  I believe I was the only one.  Exxon does not subscribe to peak oil And yet.  Exxon has issued its new Outlook (which is well worth a look).  One of the interesting features of this report is its view of conventional oil production, comprising traditional onshore and offshore / deepwater production.  In Exxon’s view, conventional production peaked around 2005 and is not projected to revisit this level until, at best, around 2040.  This is not particularly controversial, but it is interesting to see Exxon acknowledge it.  And it’s important for our understanding of the long term outlook for the oil supply and oil prices, which I consider in greater detail below. Exxon Global Oil Supply Outlook 2015 Source: Exxon […]

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Risks for the 2015 economy? Oil prices, interest rates

Felix Sotelo of Dallas filled up his vehicle Friday at Fuel City off Riverfront Boulevard near downtown, where regular unleaded gas was $1.99 per gallon as part of an anniversary promotion by the station. Gas prices have fallen nearly 27 percent to an average of $2.30 a gallon in Dallas in the last year, according to GasBuddy.com. Will 2015 be a better year for you? Probably so — if you don’t work in the energy industry. Texas has diversified its economy significantly in the last 20 years, but oil is still king. So when oil prices plunge, it has a big effect on the state’s economy. How big? Next year may answer that question. The Texas economic engine is likely to move at a slower speed next year, even as the U.S. economy picks up steam. Texans — and all Americans — face an unprecedented time of economic transition […]

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Russian gas sector resilient, lawmaker says

Russian energy panel leader says natural gas sector is resilient despite economic pressures. (UPI/Shutterstock/Igor Golovniov) Low prices and Western sanctions imposed in response to Russia’s reaction to the Ukrainian embrace of the European Union have left the Russian economy teetering on the brink of recession. Last week, the Russian currency traded at an all-time low against the U.S. dollar for at least the third time this year. "Unfortunately, our relations in the gas sector today are not only affected by the market, but also by politics — first and foremost the politics of the United States and the European Union," Pavel Zavalney, deputy chairman of the energy committee in the State Duma, told Russian news agency Sputnik, formerly RIA Novosti. Apart from sanctions, EU law restricts companies that control natural gas production from controlling delivery mechanisms as well. That, in part, forced Russian natural gas company Gazprom to reconsider […]

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Russia Revives Threats of Higher Trade Tariffs on Ukraine Goods

ENLARGE Russia’s Prime Minister Dmitry Medvedev speaking on a live nation-wide TV show on Dec. 10. Associated Press KIEV, Ukraine—Russian Prime Minister Dmitry Medvedev has revived threats of higher trade tariffs on goods from Ukraine, tougher rules on migrant workers and reduced Russian financial support if Ukraine implements a trade-and-political deal with the European Union. The comments published in Russian newspaper Nezavisimaya Gazeta came as Ukrainian Prime Minister Arseniy Yatsenyuk headed to Brussels for the first time since he was reappointed earlier this month, with Western officials considering a package to prop up Ukraine’s wobbly finances. The Kremlin has long opposed the Association Agreement between the EU and Ukraine, which it considers to be within Russia’s sphere of influence. Ukraine and the EU delayed their free-trade deal until 2016 after Russia indicated it would retaliate with trade measures that could have crippled Ukraine’s already-struggling economy. Ukraine’s economic output is […]

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Russian Ruble Under Pressure Despite Rate Rise

ENLARGE MOSCOW—The battered ruble fell toward record lows against the dollar again Tuesday, just hours after the Russian central bank’s surprise move overnight to jack up interest rates to 17%, as investors worried that the rate rise wouldn’t be enough to alleviate the pressure on the currency from falling oil prices and western sanctions. The ruble rallied briefly in early trade—reaching less than 59 a dollar—but fell back into negative territory less than two hours after trading began Tuesday, slipping below the 64.44 level at which the Moscow Exchange had limited trading late Monday after the Russian currency lost more than 10% of its value. Traders said there was no indication yet that the central bank was intervening with sales of foreign currency, even as the dollar tested the record level of 67 rubles briefly. With crude oil prices falling further Tuesday, pressure seemed to build on the ruble […]

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Russian rouble turmoil after Russia midnight rate rise

Elvira Nabiullina, chairman of Russia’s central bank, speaks during a session at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, on Friday, May 23, 2014. SPIEF is an annual international conference dedicated to economic and business issues which takes place at the Lenexpo exhibition center May 22-24. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** Elvira Nabiullina Russian currency markets were in turmoil on Tuesday morning after Russia’s central bank sharply raised interest rates to 17 per cent in an emergency midnight move. The Russian currency initially rallied more than 8 per cent to 58.40 against the dollar following the central bank’s dramatic rate increase of 6.5 percentage points, reversing more than half of its 10 per cent drop on Monday, its worst intraday drop since the 1998 financial crisis. But the gains were short lived, with the currency up just 1.8 per cent at 64.77 as […]

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The Shocking Data Proving Shale Oil Is Massively Over-hyped

Hooray, Crude Oil is suddenly much cheaper than it used to be. That’s great news, right? Not so fast. For certain it’s not good news for those counting on a continued rise in US oil production from the “shale miracle”. Many drillers were challenged to operate profitably when oil was above $70 per barrel. Very few will remain solvent with oil in the $50s (as it is as of this writing). So, expect US oil production to suffer from these lower prices if they persist. But even if oil prices rise and rise soon, there’s new data that indicates the total amount of extractable oil from America’s shale plays is less — much less — than what we’re being told (or better put, “sold”). On today’s podcast, Chris talks with oil analyst David Hughes, who has complied several recent studies based on a massive database of production results on […]

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Oil rallies on Libyan troubles

Oil rallied from five and half year lows on Monday as investors bought back some of their bearish bets after Libya closed two of its oil terminals. Relentless production at US shale oilfields and output from Opec members that exceeds targets has coincided with a pullback in demand amid a weaker global economy, helping to send the price of oil more than 40 per cent lower since mid-June. More On this topic IN Commodities After trading at $60 a barrel on Monday, ICE January Brent – the international oil benchmark – recovered to stand $1.25 higher at $63.10 a barrel on Monday morning as traders absorbed the impact of the shutdowns in Libya. On the other side of Atlantic, Nymex January West Texas Intermediate rose 72 cents to $58.52. US crude closed below $60 for the first time in five and half years last week. Heavy fighting between forces […]

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Oil Drops Near $60 a Barrel as OPEC Seen Resisting Cuts

Brent crude fell close to $60 a barrel as the United Arab Emirates said OPEC will resist output cuts even if prices slump as low as $40. West Texas Intermediate extended its slump from the lowest in more than five years. Futures slid as much as 2.5 percent in London and 2.7 percent in New York . The market will stabilize itself and the Organization of Petroleum Exporting Countries will wait at least three months before considering an emergency meeting, U.A.E Energy Minister Suhail Al-Mazrouei said. The International Energy Agency cut its 2015 demand forecast by 230,000 barrels a day last week, trimming the estimate for the fourth time in five months. Oil has lost more than 20 percent since OPEC decided at a meeting in Vienna last month to maintain its production target, resisting calls from members including Venezuela to cut output. Drillers in the U.S., pumping crude […]

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Oil ‘contango’ fandango over how low prices will finally go

Even some Opec members are fixing their spot crude contract prices on the assumption that contango is already under way According to the International Energy Agency, growth in world demand for oil will next year again fall below the critical figure of 1m barrels per day, reaching 93.3m bpd in total Photo: Alamy Contango, or not contango? This is perhaps the most important question facing oil markets right now. In the space of a week, the global three top energy organisations have downgraded their forecasts for the amount of oil they think the world will need next year to fuel the economy. These revisions are significant in the context of understanding why the price of oil has fallen so dramatically in such a short period of time — down 45pc since June — and helping to predict accurately where it is likely to be heading in the future. One […]

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Goldman Sees U.S. Oil Output Maintained as Costs Sink With Price

U.S. producers, pumping crude at the highest rate in more than three decades, may increase output further as costs decline almost as fast as oil prices, according to Goldman Sachs Group Inc. The slump in benchmark U.S. futures, down more than 40 percent this year, is driving producers to move drill rigs to lower-cost fields, Goldman said in a note e-mailed today. While there is evidence of some rebalancing starting to occur in the market, it’s far from sufficient, according to Goldman. “Costs are falling nearly as fast as the price, which means oil producers can spend less to get the same or potentially even more in terms of production,” Goldman said. “While reductions in capex are coming faster than expected, it is unlikely to translate into less supply” it said, adding drill-rig rates have dropped as much as 20 percent. ConocoPhillips, the third-largest U.S. energy producer, cut its […]

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Fossil-Fuel Limits in All Nations Closer After UN Deal

A plan to limit fossil-fuel pollution in all nations for the first time came a step closer as envoys from more than 190 countries agreed on the key parts of a deal they plan to adopt next year to fight global warming. After two weeks of discussions in Peru organized by the United Nations , the diplomats agreed on the detail of pledges from all nations on curbing greenhouse gases . Richer countries gave an assurance they’re on track to mobilize $100 billion a year in climate aid by 2020. The decision sets the framework for a landmark agreement the UN intends to adopt in December 2015 in Paris that will rein in the emissions damaging the atmosphere. It included last-minute concessions to some of the poorest nations in the world, who are concerned the system will impose costly and painful changes on their economies. “We are on track […]

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UN climate deal reached in marathon session

Manuel Pulgar-Vidal (right), COP20 president and Peru’s environment minister, and Christiana Figueres, UNFCCC executive secretary UN global warming talks in Lima finally reached an agreement early on Sunday after a marathon round of haggling that pushed the meeting more than 30 hours past its scheduled closing time. “Thank you very much,” said the relieved conference chair, Peruvian environment minister, Manuel Pulgar-Vidal, who worked frantically through the night to resolve a clash between the US, China and other countries that delayed a final agreement. But the deal agreed by delegates from more than 190 countries on a work plan for a global climate treaty to be sealed in Paris next year came after a series of compromises that many observers said had weakened the outcome. “It’s been watered down, but it’s not a roadblock,” said Alden Meyer of the Union of Concerned Scientists in the US. Some of the sections […]

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Rich-Poor Climate Divide Threatens Prospects for New Deal

Residents exercising amid heavy smog on the Bund in Shanghai as local meteorological… Read More Photographer: AFP Via Getty Images Two weeks of debate on how to limit carbon pollution across the globe ended with a deal that failed to resolve the toughest debate: how to narrow the divide between industrialized countries and poor ones that believe they need fossil fuels to help expand their economies. Diplomats at the United Nations talks in Peru agreed on the data they’ll provide in the first quarter to support emissions goals for a pact to be signed in Paris next December. The discussions that finished in early hours of Sunday ran more than 30 hours overtime as nations fought about how to differentiate between those who’ve become rich on the back of burning fossil fuels and those who say they need cheap energy to develop. “The fact that it was so tough […]

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Climate Talks Yield Plan to Spread Burden of Emission Cuts

ENLARGE Peruvian Environment Minister Manuel Pulgar-Vidal slams his mallet to approve and close the discussion on a proposed compromise document at the climate talks in Lima. Agence France-Presse/Getty Images LIMA, Peru—The U.S. and other wealthy countries persuaded their developing-nation peers to advance a framework that for the first time would spread the burden of economically painful emission cuts across all nations. The compromise reached at early Sunday at climate talks in Lima—part of negotiations aimed at reaching a final, comprehensive climate pact next year in Paris—would require every country to submit plans for cutting their carbon footprints in the coming months. The final deal being negotiated would be a departure from earlier agreements that put the responsibility of such cuts only on highly industrialized countries. But 13 days of United Nations-organized talks also showed that a North-South divide remains over which countries should shoulder most of the costs of […]

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A Climate Accord Based on Global Peer Pressure

LIMA, Peru — Shortly before 2 a.m. on Sunday, after more than 36 straight hours of negotiations, top officials from nearly 200 nations agreed to the first deal committing every country in the world to reducing the fossil fuel emissions that cause global warming . In its structure, the deal represents a breakthrough in the two-decade effort to forge a significant global pact to fight climate change . The Lima Accord, as it is known, is the first time that all nations — rich and poor — have agreed to cut back on the burning oil, gas and coal. But the driving force behind the new deal was not the threat of sanctions or other legal consequences. It was global peer pressure. And over the coming months, it will start to become evident whether the scrutiny of the rest of the world is enough to pressure world leaders to […]

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The Saudi standoff: Oil-rich nation takes on world’s high-cost producers

In the high-stakes contest between the United States, the biggest shale oil producer, and Saudi Arabia, the biggest oil exporter, America has blinked first. The OPEC refusal to cut production at its November meeting was widely seen as the declaration of a price war against booming U.S. shale oil producers, which had sent their country’s oil production soaring. Saudis had watched as their market share dropped precipitously in the world’s biggest oil-consuming nation, and they wanted to send a clear message across the global energy market that they weren’t about to back off. Oil prices have been in freefall ever since. Brent crude, the global oil benchmark, sank another 3 per cent Friday to $61.85 (U.S.) a barrel, while West Texas intermediate, the U.S. benchmark, dropped 3.6 per cent to $57.81, extending its slide from well over $100 a barrel in the summer. If the global oil standoff pits […]

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OPEC chief says no target price, but oil slide beyond fundamentals

DUBAI (Reuters) – The head of OPEC said on Sunday the group had no target price for oil, signaling no change to a policy to maintain production levels which has contributed to sharp falls in the price of crude, unnerving global markets. Speaking at an event in Dubai, Abdullah al-Badri said the oil price, which dropped to a succession of five-year lows in recent days, had fallen further than market fundamentals should have dictated. He urged Gulf states to continue investing in exploration and production, saying the United States would continue to rely on Middle East crude for many years. The comments were Badri’s first since OPEC, or the Organization of the Petroleum Exporting Countries, left its output levels unchanged at a meeting last month, when it also said it had no target price. "The fundamentals should not lead to this dramatic reduction (in price)," Badri, a Libyan, said […]

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Libya Imposes Force Majeure on 2 Oil Ports After Clashes

Libya ’s National Oil Corp. declared force majeure on the oil ports of Es Sider and Ras Lanuf, and is taking measures to halt output at some oil fields because of armed clashes in the politically-divided North African country. Fighting factions should spare energy infrastructure in Libya, the state-run National Oil Corp. said in a statement yesterday on its website. Force majeure is in place at Es Sider and Ras Lanuf, Libya’s largest and third-largest oil ports with a combined capacity of 560,000 barrels a day. The measure is a legal step that protects a company from liability when it can’t fulfill a contract for reasons beyond its control. National Oil, known as NOC, didn’t say which oil fields are being halted. NOC is adopting measures to protect wells, pumps and pipelines. “Force majeure has been declared at the oil ports of Es Sider and Ras Lanuf because of […]

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U.A.E. Says OPEC Won’t Change Output Even If Price Drops to $40

OPEC will stand by its decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said. OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. OPEC is due to meet again on June 5. “We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” Mazrouei said current conditions didn’t justify an extraordinary OPEC meeting. “We need to wait […]

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Jihadis capture army base in northwestern Syria

BEIRUT (AP) — Jihadi fighters captured a Syrian army base Monday in the northwestern province of Idlib after two days of intense fighting that killed at least two dozen gunmen, activists said. The Britain-based Syrian Observatory for Human Rights and an Idlib-based activist who goes by the name of Mohammed al-Sayid said members of the al-Qaida-linked Nusra Front and other rebel factions captured the Wadi Deif base Monday morning. A Twitter account run by the Nusra Front in Idlib province said fighters are now removing mines from the area after the "Wadi Deif camp was liberated." The capture of Wadi Deif is a blow to the Syrian government that has managed to hold the besieged post for more than two years and repelled repeated attacks by opposition fighters. Rebels and the Nusra Front control much of the countryside of Idlib province while government forces dominate the provincial capital city […]

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Israel’s Gas Offers Lifeline for Peace

THE TAMAR PLATFORM, Israel — Alarms rang out across the Tamar natural gas platform off the coast of Israel. The Israeli navy had detected smoky signs that a rocket might have been fired by Hamas from the shores of Gaza. As a voice over the loudspeaker warned to take cover, the crew raced up the metal stairs to a small gym that doubles as an air raid shelter. It turned out to be a false alarm. Natural gas is both a geopolitical tool and a target in Israel, where a newfound bonanza of resources has the potential to improve ties with energy-hungry Egypt, Jordan and even the Palestinian Authority . But the linchpin of this diplomatic push is not an Israeli official, a Middle Eastern king or an American ambassador. It is an oil company in Texas. Noble Energy, the Houston-based company that runs the Tamar platform and is […]

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Iran discovers huge gas reserve in Persian Gulf

A huge natural gas reserve has been discovered in south of Iran, Managing Director of the National Iranian Oil Company’s (NIOC) Exploration Department Hormoz Qalavand has announced on Sunday. “Drilling the exploration oil wells has commenced in order to estimate the volume of this new gas reserve,” said Hormoz Qalavand. Although the drop in oil prices is a serious threat to the interests of most oil countries, it also creates the opportunity for the great oil exporters such as Iran and Iraq to concentrate their efforts on expanding their oil capacities and increasing supplies. Under current circumstances, and with the oil prices having hit their lowest record since October 2009 as $60 per barrel, Iran has taken advantage of the temporary paralysis in oil and gas industry by launching exploration projects in the Persian Gulf. Presently, Iran with several large-scale natural gas condensate fields including South Pars, Golshan, Ferdowsi, […]

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Low Oil Prices Continue to Hurt Venezuela

The Venezuelan bolivar currency is presented next to the U.S. dollar (JUAN BARRETO/AFP/Getty Images) Summary The Venezuelan economy continues its downward spiral as 2015 approaches. Faced with rising domestic expenses that it can no longer meet through dollar income from oil exports alone, Caracas has accelerated measures to increase its money supply since 2012. The central bank has also printed more bolivars to keep up with spending obligations. This expansion of the monetary supply has spurred inflation, which was already exacerbated by government foreign exchange mechanisms and smuggling to Colombia, making food and goods less available to consumers in Venezuela. The decline in global oil prices that began in September has compounded these troubles. Analysis Venezuela’s government has traditionally distributed foreign currency in its economy through the Sicad I and the Sicad II mechanisms. Before August, the Sicad I auctioned about $880 million per month and Sicad II disbursed […]

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Nigeria: Fuel Scarcity Looms as Oil Workers Begin Nationwide Strike

Lagos — NIGERIA Union of Petroleum and Natural Gas Workers, NUPENG, and its Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, will today begin an indefinite nationwide strike, to protest the inability of the government to carry out Turn Around Maintenance, TAM, of the refineries and reduce pump prices of petroleum products in line with the slump in global prices of crude oil. Other grievances include delay in the passage of the Petroleum Industry Bill, PIB; non-implementation of the Nigeria Oil and Gas Industry Content Development, NOGICD, Act to reflect Nigerians in management positions and expatriate quota law; appalling state of access roads to refineries and oil depots’ facilities and insecurity in the country that has led to the death of members. Other complaints are appointments in government agencies in disregards to succession planning, compulsory deduction from workers’ salaries for the National Housing Fund, NHF; casualisation and […]

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India’s Nov crude oil imports jump 17.3% on year to 4.2 mil b/d

Singapore (Platts)–15Dec2014/338 am EST/838 GMT India imported 17.25 million mt, or an average 4.21 million b/d, of crude oil in November, up 17.3% year on year, latest data obtained by shipping sources showed. The November crude imports were up 14.9% from October. India imported 1.46 million mt, or an average 356,726 b/d, of crude oil from Iran in the month under review, up 23.7% year on year. Saudi Arabia was India’s top crude oil supplier in November at 4.57 million mt. Article continues below… Platts Global Alert is a complete real-time information service for the global energy industry, providing breaking reports of deals done, price indicators for crude and products and more than 200 end-of-day assessments. The volume was up 55% year on year and also up 79.2% from October. Imports from Venezuela, the UAE and Iraq surged in November, but from Nigeria, Kuwait and Angola dropped. Imports from […]

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China 2015 GDP growth to weaken to 7.1 pct: PBOC working paper

BEIJING, Dec. 15 (Xinhua) — China’s GDP growth is expected to slow modestly next year to 7.1 percent, but employment and inflation will remain stable, according to a central bank working paper. "Real GDP growth will decelerate slightly to 7.1 percent in 2015, reflecting partly the slowdown in real estate investment," said a working paper written by a group of economists of the People’s Bank of China (PBOC). China’s GDP growth for 2014 is estimated at 7.4 percent, according to the research group led by Ma Jun, chief economist of the PBOC’s research bureau. Inflation will be 2.2 percent next year, slightly higher than this year’s estimated reading of 2.0 percent, said the paper posted on the PBOC’s website. China will see an easing fixed asset investment growth, stronger retail sales and faster export and import growth next year, said the paper. According to their research, fixed asset investment […]

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Can China’s Shale Gas Help It Reach Peak Coal by 2020?

Can China’s Shale Gas Help It Reach Peak Coal by 2020? thumbnail China’s GDP has grown 670% from $1.2 trillion at the beginning of the century to $9.24 trillion in 2013. That’s mind-numbingly fast growth. Perhaps the only thing more amazing is how the country has accomplished the feat: with the help from coal,  a lot of coal. Some estimates demonstrate that China has had to build at least one new coal power per week to fuel growth, which is backed up by the fact that nearly 80% of all electricity generated there comes from coal (compared to just 39% in the United States). However, after recently agreeing to peak carbon dioxide emissions by 2030 or sooner, economists quickly realized that China would need to reach peak coal usage well before then. No surprise, then, that Beijing announced last month that coal use would peak by 2020. In fact, some provinces will […]

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World on drip of unconventional oil

Currently lower oil prices due to a combination of increasing oil supplies and subdued demand come at a high cost to the environment and the climate. Additional oil supplies are exclusively from fracking tight oil in the US and from Canadian tar sands. Fig 1: Production of US tight oil, Canadian tar sands and rest-of-world crude The graph shows that crude oil production outside the US and Canada is on a bumpy plateau since 2005. In fact, after 2011, rest-of-world crude production declined like in 2005-2007: Fig 2: Overlay of rest-of-world crude production 2005/07 and 2012/14 periods Let’s have a more detailed look at the changes to crude oil production since 2001: Fig 3: Incremental crude oil production Jan 2001 – Aug 2014 All data are from here:  http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm Incremental production is calculated as total crude production minus the minimum production in each country in the period under consideration, […]

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Fed Likely to Stare Down Oil-Price Drop

ENLARGE Much has changed in the U.S. economy since Federal Reserve officials last issued their economic projections, in September. Oil prices have fallen by more than one-third, the dollar has climbed 5.3% against a broad basket of currencies and about 800,000 more Americans have found jobs. These developments present overlapping challenges as Fed Chairwoman Janet Yellen and her central-bank colleagues wrestle with shifting fundamentals at home and mounting jitters overseas. She will hold a news conference Wednesday, after the Fed’s two-day policy meeting, to discuss the central bank’s outlook and plans going into 2015. Falling oil prices are a boost to the U.S. consumer. But lower prices also are putting downward pressure on already low inflation, potentially moving the nation further away from the Fed’s objective of 2% annual increases in consumer prices. If Ms. Yellen and her colleagues put more weight on the looming inflation drop, they will […]

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US stripper well operators eye closures amid low oil price

Stripper well Analysts examining the effect of the oil price’s precipitous decline on companies should spare a thought for stripper well operators, the mom-and-pop businesses that coax the last trickles of crude from long-ago drilled holes. Although tiny in isolation — the average stripper well yields less than 2 b/d — there are more than 400,000 such wells in the US supplying about 11 per cent of US oil production. They produced 700,000 barrels per day in 2012, the latest year for which data are available — as much as the Opec member Qatar, according to data from the Interstate Oil & Gas Compact Commission. Now, with the price of US crude below $60 per barrel — down 46 per cent from levels six months ago — some operators plan to idle their stripper wells. Widespread closures could help balance the oversupplied global oil market and stabilise prices. Melvin […]

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Exxon Calls Peak Conventional Oil

A couple of years back, I attended a presentation by Tom Eizember, Exxon’s head of strategic planning.   During the presentation, Eizember asked how many in the audience believed in peak oil, and I raised my hand.  I believe I was the only one.  Exxon does not subscribe to peak oil And yet.  Exxon has issued its new Outlook (which is well worth a look).  One of the interesting features of this report is its view of conventional oil production, comprising traditional onshore and offshore / deepwater production.  In Exxon’s view, conventional production peaked around 2005 and is not projected to revisit this level until, at best, around 2040.  This is not particularly controversial, but it is interesting to see Exxon acknowledge it.  And it’s important for our understanding of the long term outlook for the oil supply and oil prices, which I consider in greater detail below. Exxon Global Oil Supply Outlook 2015 Source: Exxon […]

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Russia’s Energy Outlook Gloomy Amid Falling Oil Prices

Russia’s Energy Outlook Gloomy Amid Falling Oil Prices thumbnail While most oil-dependent economies are likely to suffer under the low and volatile oil prices predicted for next year, analysts paint a particularly dark picture for Russia, which is under the additional pressure of a faltering economy and Western sanctions over Ukraine. At the end of last week oil traded at below $59 per barrel, hitting a new five year minimum. Oil prices continue to plummet from their peak in mid-2014 as supply exceeds demand, further buckling under OPEC’s decision in November not to curb production. “Moving into 2015, we see downside risks to energy prices on the back of OPEC’s decision to allow the market to “stabilize itself.” This could result in lower oil prices but also higher price volatility,” Bank of America Merrill Lynch said in its commodities outlook released last week. The bank reduced its 2015 Brent crude oil forecast to an average of $77 per barrel and WTI forecast to $72 per barrel. Against the backdrop of falling prices, global oil supply and demand will likely stay in balance next year, according to the […]

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Rapid fall in oil prices may portend global recession

Rapid fall in oil prices may portend global recession thumbnail Cratering crude-oil prices may be a blessing to cash-strapped American consumers, but it’s a double-edged sword when it comes to the overall economy. The problem for the overall economy is not so much the drop in oil prices as it is the velocity at which oil prices have fallen. The plunge from a peak of just over $100 per barrel in the early summer to today’s $58 — a massive 42 percent drop in just a few short months, most of which has come in the last 90 days — could make anyone’s head spin. The rapid fall in crude prices is a telling sign to some Wall Street analysts and economists that there may be a global recession taking hold and the slowing growth is pushing oil lower. Remember, at the height of the financial crisis, crude got […]

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Oil Seen Dropping to $55 Next Week as Price Rout Deepens

Benchmark U.S. oil prices are poised to test $55 a barrel after a six-month rout pushed crude to the lowest in five years. West Texas Intermediate crude ended below $58 today for the first time since May 2009 after the International Energy Agency cut its global demand forecast for the fourth time in five months. Prices are down 46 percent from this year’s highest close of $107.26 on June 20. “By taking out $58, oil is moving towards the next target $55,” said Phil Flynn , senior market analyst at the Price Futures Group in Chicago . “It’s such an emotional selloff, and the even numbers are going to be the magic numbers.” WTI for January delivery dropped $2.14, or 3.6 percent, to $57.81 a barrel today on the New York Mercantile Exchange. Brent slid $1.83 to $61.85 on the London-based ICE Futures Europe exchange, the lowest since July […]

Posted On : Published By : Tom Whipple
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Natural Gas Gains on Potential Colder Weather

By Nicole Friedman Natural-gas prices bounced to a one-week high on Friday as weather forecasts turned slightly colder, which could increase demand for the heating fuel. Natural gas for January delivery settled up 16.1 cents, or 4.4%, at $3.795 a million British thermal units on the New York Mercantile Exchange. Prices posted a 0.2% loss for the week. Warmer-than-normal weather this month has kept natural-gas prices subdued amid tepid demand for indoor heating. About half of U.S. households use natural gas as their primary heating fuel. But some forecasts showed temperatures getting slightly colder in the next 11 to 15 days. Inventories also fell more than expected last week, the U.S. Energy Information Administration said Thursday. Prices often rise on Fridays as traders close out positions ahead of the weekend, in case temperature forecasts shift before markets reopen. "After today’s close there will be three days of new weather […]

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Oil ‘contango’ fandango over how low prices will finally go

Even some Opec members are fixing their spot crude contract prices on the assumption that contango is already under way According to the International Energy Agency, growth in world demand for oil will next year again fall below the critical figure of 1m barrels per day, reaching 93.3m bpd in total Photo: Alamy Contango, or not contango? This is perhaps the most important question facing oil markets right now. In the space of a week, the global three top energy organisations have downgraded their forecasts for the amount of oil they think the world will need next year to fuel the economy. These revisions are significant in the context of understanding why the price of oil has fallen so dramatically in such a short period of time — down 45pc since June — and helping to predict accurately where it is likely to be heading in the future. One […]

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IEA: Slow Demand, Rising Supply Put Further Pressure On Oil Price

URL: http://www.rigzone.com/news/oil_gas/a/136362/IEA_Slow_Demand_Rising_Supply_Put_Further_Pressure_On_Oil_Price Oil prices are likely to come under further downward pressure, IEA says, as it cuts its outlook for demand growth in 2015 and predicts healthy non-OPEC supply gains will aggravate a global oil glut. LONDON, Dec 12 (Reuters) – Oil prices are likely to come under further downward pressure, the International Energy Agency said on Friday, as it cut its outlook for demand growth in 2015 and predicted healthy non-OPEC supply gains would aggravate a global oil glut. Oil prices have fallen by 45 percent since June with the sell-off gaining pace after OPEC decided last month to keep its output target unchanged. The IEA said that if OPEC maintained production levels, the global oversupply would reach 2 million barrels per day in the first half of 2015, when demand will be seasonally weak. The agency, which coordinates energy policies of industrialised countries, cut its outlook for […]

Posted On : Published By : Tom Whipple
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Energy Agency Cuts Oil Demand Forecast, Adding to Pressure on Prices

LONDON — The downdraft in oil prices showed no sign of abating on Friday. The main international benchmark, Brent crude, fell about 3 percent to about $61.80 barrel, a five-year low. That dip came a day after the American benchmark, West Texas Intermediate crude, fell below the psychologically significant $60 a barrel level in the United States for the first time since 2009. The International Energy Agency added to downward price pressures on Friday by cutting its forecast for global demand for crude oil in 2015. For now, analysts say, there seems to be no safety net for oil prices. “In the very short term prices can go lower; the market is weighted to very bearish sentiment,” Richard Mallinson, an analyst at Energy Aspects, a London-based research firm, said Friday. European stocks fell on Friday, posting their biggest weekly loss since mid-2011 as energy stocks were hurt by the […]

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IEA outlook bruises oil markets further

Trimmed oil demand forecast slams crude oil prices in an already weak market. (UPI Photo/Monika Graff) The IEA said in its market report for December the outlook ahead was weaker than previously expected. The outlook for 2015 demand growth was trimmed by 230,000 barrels per day to just under 1 million bpd because of lower expectations about the Russian economy and other oil-exporting countries impacted by the bear market for crude oil . That word sent oil prices reeling in a market already battered by low demand expectations outlined in the December market report from the Organization of Petroleum Exporting Countries. Brent, the global benchmark, shed more than $1.20 per barrel for the January contract to trade at $62.46 early Friday. West Texas Intermediate, the U.S. index, passed a new threshold low to trade down $1.30 to near $58.50 for January delivery. Oil prices are at a point where […]

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World Oil Demand

mb/dWorld Oil Demand1Q20122Q20123Q20124Q20121Q20132Q20133Q20134Q20131Q20142Q20143Q20144Q20141Q20152Q20153Q20154Q2015868890929496© OECD/IEA 2014 World Oil Demand *Please note that these Highlights are from the latest Oil Market Report, which is released in full to subscribers only – according to this schedule each month . Non subscribers get free access to the latest Highlights on this schedule, however the full Oil Market Report is released to the public two weeks after the report is released to subscribers. If you would like to receive the full report with accompanying charts and graphs on the day of publication please subscribe or contact the subscription manager . Oil prices continued to plunge in November and into early December. The selloff gained pace after OPEC on 27 November decided to keep its output target unchanged. ICE Brent was last trading at a five-year low of $64.05/bbl, down more than 40% from June, and NYMEX WTI at $60.45/bbl. The outlook for global oil demand […]

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Coal Stokes Dispute at Climate Negotiations in Peru

I "To keep richer countries’ extra coal from being burned in poorer countries, the U.S., the World Bank, the United Nations and others are curtailing funding for coal-fired electricity in developing countries…" This is appalling–indeed, a sin against humanity. Rich nations are trying to foist high rich-nation power costs on poor nations still trying to feed, house and employ all their citizens. It’s global-warming theory elevated over the everyday reality of the poorest people on the globe. These world leaders are morally sick.

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Lima climate talks: Final push amid ongoing divisions

Drought in Sao Paulo, Brazil. The talks have highlighted divisions between developed and developing nations Related Stories Talks have continued past the official close of business on the final day of a key UN climate summit in Peru aimed at advancing a new global treaty. The negotiators in the capital, Lima, are tasked with preparing a text to serve as the basis for a new compact to be signed in Paris next year. But long-running divisions between rich and poor continue to hamper progress. US Secretary of State John Kerry has warned that the world is "still on a course leading to tragedy". He said a deal was "not an option – an urgent necessity". Negotiators have been meeting in Lima for almost two weeks to prepare the elements of the new treaty. ‘Red lines’ A new text has been produced by the chairman of the talks in an […]

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Economist: Iran needs oil at $125 per barrel

Iranian President Hassan Rouhani facing economic headwinds with oil prices dipping far below the $100 per barrel mark. UPI/President.ir/HO Oil prices have shed more than 40 percent of their June value, trading Friday at a five-year low at $62.69 for Brent, the global price index. In an interview with Shana, the Iranian Oil Ministry’s news website, economist Mahmoud Jaamsaz said Iran needs oil at about twice that level to balance its books. "If the government plans to end the year according to the figures anticipated in the budget and avoid deficit, it should be able to sell oil based on at least $125 per barrel," he said. Iran is restricted to exports of around 1 million barrels per day according to the terms of a multilateral agreement that offers some sanctions relief in exchange for commitments to curb nuclear research activity. Iran is out more than $35 billion in […]

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Anticipating Nuclear Deal and End to Sanctions, Iran Awaits a Business Boom

TEHRAN — The text message, received as the deadline for nuclear talks was expiring, gave Fatemeh Moghimi a thrill she had been waiting years to feel. “The deal,” it read, “was done.” It took Ms. Moghimi, the owner of a leading trucking company, a second to absorb the news. When she did, she recalled recently in her Tehran office, she fairly screamed to herself: “We’re in business!” As it turned out the message was a bad joke, and instead the nuclear negotiations were extended for another seven months — bad news for Iran ’s battered, inflation-ridden economy. But Ms. Moghimi was unfazed. “I’m not giving up hope,” she said with a smile. “It is going to be over soon. It is as if the sun is peeking through the clouds after a terrible rainstorm.” Ms. Moghimi’s unyielding optimism, shared by many top businesspeople here, was dented briefly last month […]

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Record Oil Tankers Sailing to China Amid Stockpiling Signs

A supertanker called ‘Front Shanghai’ is pictured here in this undated handout provided… Read More The number of supertankers sailing to China jumped to a record in ship-tracking data amid signs that the oil-price crash is spurring the Asian nation to stockpile. There were 83 very large crude carriers bound for Chinese ports, according to shipping signals from IHS Maritime compiled by Bloomberg at about 8:30 a.m. today in London . The ships would transport 166 million barrels, assuming standard cargoes, the largest number in data starting in October 2011. The cost of hiring the vessels surged to the highest in almost five years, according to Baltic Exchange data. The International Energy Agency , a Paris-based adviser to 29 nations, said in a report today that China may have added to strategic crude stockpiles last month, after pausing the activity in October. Oil plunged into a bear market this […]

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Despite lower crude oil prices, U.S. crude oil production expected to grow in 2015

Source: North Dakota Department of Mineral Resources, Bloomberg The recent decline in crude oil prices has created the potential for weaker crude oil production. EIA’s Drilling Productivity Report (DPR) includes indicators that provide details on the effect low prices may have on tight oil production, which accounts for 56% of total U.S. oil production. Analyzing these indicators and the changes in oil production following the drop in crude oil prices during the 2008-09 recession may offer some insight into possible near-term oil production trends. The price of West Texas Intermediate (WTI) crude oil delivered to Cushing, Oklahoma declined more than 31% from June to November 26 and another 7% after the late November announcement of the Organization of the Petroleum Exporting Countries (OPEC) decision to maintain the current production level. At $60 per barrel, the current price of oil is likely approaching or already below the expected per-barrel costs […]

Posted On : Published By : Tom Whipple