Category:

Oil Turnaround: Timing The US Production Peak

Summary Analysis points to US production peaking in late April. Oil rig reduction is accelerating. Current two week decline in EIA estimates not too unusual. Canadian rig count down 66% year over year. Current oil rig count 1482. Estimated production breakeven rigs required: 1267. Shale oil wells deplete much faster than traditional wells. This article attempts to determine the number of rigs that need to be deployed in order to neither increase nor decrease the US production of oil. To estimate a ballpark peak date and ballpark breakeven number of rigs in this cycle, one needs to: 1. Estimate the number of barrels that are produced in a given week, given a known number of oil rigs in operation. 2. Estimate the rate of depletion (that is, to estimate the amount of additional depletion expressed as a percentage of peak production as a function of time that occurs as […]

Posted On : Published By : Tom Whipple
Category:

Mounting debt for energy firms as oil prices plummet

Mounting debt for energy firms as oil prices plummet thumbnail Energy firms have been financing new oil production by taking on large amounts of debt. When oil prices averaged over $100, that strategy made sense. But with oil at $50, most indebted firms are suddenly in crisis. In recent years oil exploration companies have taken on more debt in order to finance their operations. The level of debt in the upstream sector – excluding integrated oil companies like ExxonMobil – hit $199 billion at the end of 2014, a 55 percent increase since 2010, according to the  Wall Street Journal . Loading up on debt made sense when oil prices were high. Fracking new shale wells can be an expensive process, but when oil was averaging over $100 per barrel, the debt load for many firms didn’t seem so burdensome. Now with oil prices falling by more than half […]

Posted On : Published By : Tom Whipple
Category:

US Gasoline Demand Is Surging

As oil prices have plunged, US gas demand has soared, something that seemed unlikely just a few years ago. According to Morgan Downey, CEO of  Money.net , “A few years ago people were saying that US oil demand had peaked and would never recover — some called it ‘peak demand.’” In an email to Business Insider, Downey said the recent surge in demand is unusual because oil has a low price elasticity of demand, meaning demand is not very sensitive to changes in price. “Now with gasoline at almost $2/gallon on average nationwide, US gasoline demand has not only recovered, but is at all-time seasonal highs and likely to be at a record high throughout 2015,” he wrote. “This 2014 demand rally is a little unexpected and shows that oil consumer behavior changes during 2008-2013 were temporary and not permanent like many claimed they would be.” Here is Downey’s chart […]

Posted On : Published By : Tom Whipple
Category:

Euro at lowest level in more than nine years

LONDON, ENGLAND – NOVEMBER 26: In this photo illustration Euro notes are displayed in a pyramid, on November 26, 2010 in London, England. Concerns over the Euro zone debts have caused shares to retreat today by 1.3 percent, as speculation continues over other countries seeking financial help. According to reports, a 85 billion euro (112.7 billion USD) rescue package from the EU and International Monetary Fund (IMF) will be announced for Ireland on Sunday. (Photo illustration by Dan Kitwood/Getty Images) The euro extended its longest uninterrupted losing streak since its creation and fell below the $1.18 mark for the first time in more than nine years, to trade at about the same level as when it was introduced in January 1999. The common currency was first launched at an exchange rate of $1.1789 on January 4 1999 and fell below that level before recovering in the early 2000s. The […]

Posted On : Published By : Tom Whipple
Category:

Robert Rapier: My 2015 Energy Predictions

Happy New Year to readers around the world! For the past 5 or 6 years, I have begun the year by making predictions for the upcoming year in the energy markets. I am generally happy if I can hit on 60-80% of them. In 2014 I went 5 for 5 , but I can say with a fair amount of confidence that this is a feat that’s unlikely to be repeated for 2015. The reason for this is that I see a lot of uncertainty in the energy markets at this point. There are many changing variables right now, and the direction on several fronts is unclear. And if you look at some of the predictions others have made, that becomes obvious. I have seen predictions of $30 per barrel (bbl) oil and $100/bbl oil, and some suggesting that we would see both extremes. I have also seen people […]

Posted On : Published By : Tom Whipple
Category:

Oil Prices Remain Volatile

ENLARGE Analysts say the fundamentals haven’t changed significantly enough to mark an end to the slide in oil prices. Reuters LONDON—Oil prices remained volatile Thursday after breaking a four-session losing streak when weekly U.S. crude inventories experienced a bigger-than-expected drop. While the relatively bullish data might be an indication that U.S. oil production is stabilizing, analysts say the fundamentals haven’t changed significantly enough to mark an end to oil’s relentless slide. Crude prices have fallen more than 50% since their peak last June as a global oversupply, fueled by the booming U.S. shale industry, met tepid demand for the commodity. Brent crude for February delivery fell 0.5% to under $51 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures traded broadly flat at $48.60 a barrel. Global oil market fundamentals and sentiment remained weak and Wednesday’s mixed U.S. inventory data won’t […]

Posted On : Published By : Tom Whipple
Category:

Oil Steady After U.S. Supply Data Spur Biggest Gain in Two Weeks

Oil was steady in New York after an unexpected drop in U.S. stockpiles spurred the biggest gain in two weeks yesterday. Prices fell in London . Futures gained 0.2 percent in New York after rising 1.5 percent yesterday. U.S. crude stockpiles shrank by 3.06 million barrels to 382.4 million in the week ended Jan. 2, the Energy Information Administration said yesterday. A median increase of 700,000 barrels was projected in a Bloomberg survey. Credit Suisse Group AG cut its forecast for this year’s increase in U.S. crude output by 500,000 barrels a day. “We were due for a minor correction upwards,” Michael Poulsen, an analyst at Global Risk Management Ltd. in Middelfart, Denmark , said by e-mail. “On an isolated basis crude draws were mildly bullish. Intraday fluctuations of 3 percent seem to be the temporary new normal.” Oil’s collapse has been so rapid and so driven by sentiment […]

Posted On : Published By : Tom Whipple
Category:

Oil halts four-day drop, U.S. stockpile data supports

SINGAPORE (Reuters) – Brent crude extended gains on Thursday to hold above $51 a barrel, after an unexpected fall in U.S. crude stocks snapped a 4-session decline the previous day. Data showing the U.S. economy remained resilient amid slowing global growth helped bolster oil, which was also supported by Chinese crude imports likely hitting a record high in December. Brent crude marked an intraday high of $51.91 a barrel and was at $51.30 by 0543 GMT, up 15 cents. U.S. crude had risen 25 cents to $48.90 after touching a peak of $49.65. But pressure on prices that have plunged more than half since June highs remains strong, with key producers such as OPEC and Russia showing no signs of cutting output despite a supply glut and as major economies in Europe and Asia struggle with slowing growth. "Sentiment towards the oil market remains negative but the lack of […]

Posted On : Published By : Tom Whipple
Category:

Oil Investors Pour Most Money Into Funds in 4 Years

Investors betting oil will rebound from the lowest prices in 5 1/2-years poured the most money in more than four years into funds that track crude. The four biggest oil exchange-traded products listed in the U.S. received a combined $1.23 billion in December, the most since May 2010, according to data compiled by Bloomberg. Another $109.9 million was added this month through Jan. 5. Investors are piling into oil ETFs even after West Texas Intermediate crude, the U.S. benchmark, tumbled the most since 2008 last year amid signs of rising supply and weak demand. Shares outstanding of the four funds surged to the highest since 2009. “Commodity investors can be contrarian investors,” said Matt Hougan, president of San Francisco-based research firm ETF.com. “There are a lot of true believers in the commodity space. A lot of people are attached to the idea that oil’s natural price should be $100, […]

Posted On : Published By : Tom Whipple
Category:

Analysts Say There’s No Telling How Low Oil Prices Could Go

Oil’s drop has been so rapid and so driven by sentiment that forecasters from Bank of America Corp. to UBS AG say there are no clear signs for when the rout will end. Brent crude slumped below $50 a barrel yesterday, 57 percent less than the peak of $115.71 reached in June. UBS analysts say investors should avoid oil until the “free fall” ends. Traders are ignoring supply disruptions that would normally boost prices, ABN Amro Bank NV analysts said. Oil’s slump accelerated after Saudi Arabia and other members of the Organization of Petroleum Exporting Countries decided Nov. 27 to maintain their production ceiling. The 12-member group is seeking to protect market share rather than prices, challenging U.S. shale drillers and other rivals to pare their output instead. “It’s not clear that anyone can answer how low it will go,” Ed Morse , global head of commodities research for […]

Posted On : Published By : Tom Whipple
Category:

Oil Plunge Seen Eroding Emissions Ambition: Carbon & Climate

While the falling price of crude oil is giving consumers cheaper energy, it’s threatening long-term global pollution-control efforts. Reduced national income from energy taxes and “a low-growth economic environment” might spur countries to curtail their emissions-curbing pledges for after 2020, leading to more emissions of carbon for a longer time, said Zoe Knight, head of the HSBC Holdings Inc.’s climate change center in London . These proposals will be submitted under a United Nations climate-protection process starting in March. Public money “for funding low-carbon energy scale-up and energy-efficiency retrofits could be scarcer,” Knight said yesterday in an e-mailed note. Reduced government funds “leads to difficult choices on capital resource allocation, which in turn could mean high carbon lock-in over the long run,” she said. The International Energy Agency said in November that the world would probably reach by 2040 an emissions ceiling recommended by a panel of scientists formed […]

Posted On : Published By : Tom Whipple
Category:

Oil Firms’ New Dilemma: Save, or Borrow More?

ENLARGE Big oil companies must decide whether to risk upsetting investors by cutting dividends, or take on big debt in the hope that oil prices will soon recover. Bloomberg News For years, big oil companies have been spending more money than they bring in. With oil prices down more than 50% since last June, that is becoming an ever trickier way to run their businesses. The cost of developing new fields has ballooned over the past decade, while investors have kept pressing for high dividends. The result: Companies have spent more on capital costs and mollifying investors than they reap in cash flow. Now, companies including Exxon Mobil Corp. , Royal Dutch Shell PLC and BP PLC must decide whether to risk future earnings by cutting developments, risk upsetting investors by cutting dividends, or take on big debt in the hope that oil prices will soon recover. The big […]

Posted On : Published By : Tom Whipple
Category:

NYMEX February settles down 6.7 cents at $2.871/MMBtu

Houston (Platts)–7Jan2015/508 pm EST/2208 GMT The NYMEX February natural gas futures contract settled at $2.871/MMBtu Wednesday, down 6.7 cents, as the market continued to weigh current frigid temperatures against forecasts for milder weather later in the month. Wednesday’s settle price was the lowest since September 24, 2012, when the price closed at $2.837/MMBtu, but the February gas contract traded Wednesday in a range of $2.825-3.012/MMBtu. "When we came in this morning, the market had held out hope that after the coming warm-up, we would see a colder end of the month," said Teri Viswanath, BNP Paribas analyst. "[At] the noon update, you saw the [Arctic] ridge that the market had been expecting disappear for month-end." The Weather Channel forecasts sub-freezing lows across almost all of the lower 48 states on Thursday, stretching as far south as the Gulf Coast, northern Florida and South Texas, and sub-zero temperatures as far […]

Posted On : Published By : Tom Whipple
Category:

NOC oil heading to market via Kurdistan

The final welded section of the KRG’s Khurmala – Feyshkabour pipeline lies by trenching immediately south of oil storage tanks at DNO International’s pumping station, 3km from the Turkey border, in November 2013. It is now installed and on Jan. 1, 2014, began exporting Kirkuk oil on behalf of the NOC. (PATRICK OSGOOD/Iraq Oil Report) of Iraq Oil Report Recommend Sign Up to see what your friends recommend. Iraq’s federal North Oil Company (NOC) has begun exporting Kirkuk crude for the first time since militants led by the so-called Islamic State (IS) bombed the pipeline to Turkey nearly a year ago. The fields that still remain under the control of the state-run North Oil Company (NOC) – which since June has lost smaller assets to the IS group and larger fields to Kurdish appropriation – are sending 150,000 barrels per day (bpd) north via a pipeline network controlled by […]

Posted On : Published By : Tom Whipple
Category:

U.A.E. Energy Minister Says Oil Glut Could Run for Years

Oversupply in crude markets could take months or even years to fix depending on when producers outside OPEC cut their output, Abu Dhabi-based The National reported, citing comments by U.A.E. Energy Minister Suhail Al Mazrouei. “We are experiencing an obvious oversupply in the market that needs time to be absorbed,” the newspaper reported Mazrouei as saying in e-mailed comments. The United Arab Emirates supported the November decision by the Organization of Petroleum Exporting Countries to maintain production, The National reported Mazrouei as saying. Brent crude, a pricing benchmark for more than half of the world’s oil, tumbled 48 percent last year, the most since 2008. OPEC decided Nov. 27 to maintain production instead of cutting output to eliminate a surplus left by increased supplies from the U.S. to Russia . “Depending on the actual production growth from non-OPEC countries, this problem could take months or even years,” the U.A.E.’s […]

Posted On : Published By : Tom Whipple
Category:

Iran’s Supreme Leader Is Skeptical of Nuclear Talks With U.S.

TEHRAN — Iran ’s supreme leader said on Wednesday that his country should find internal solutions for dealing with economic sanctions and that the United States could not be trusted to lift sanctions in the event that a nuclear agreement is reached. The leader, Ayatollah Ali Khamenei , reiterated in a speech published on his personal website that he did not oppose the current negotiations with the United States and other world powers over Iran ’s nuclear program , but said that Iranians needed to rely on “bright and realistic glimmers of hope, and not on imaginary ones.” Those talks are scheduled to resume Jan. 18 in Geneva, Iran’s state Islamic Republic News Agency reported on Tuesday. In his first public criticism of the government of President Hassan Rouhani since his election in 2013, Mr. Khamenei said the government should “trust the people and domestic forces.” He also asked […]

Posted On : Published By : Tom Whipple
Category:

Budget debates focus on revenue worries

Members of Parliament gather to vote on Iraq’s new government in Baghdad on Sept. 8, 2014. (THAIER AL-SUDANI/Reuters) Iraq’s 2015 draft budget received a second reading in Parliament Wednesday, although concerns over the falling price of oil threaten to delay legislative progress."The most difficult issue now standing in the way of approving the budget is the deterioration of oil prices," said Tariq Sadiq, a Kurdish member of the federal Parliament’s Oil and Energy Committee. "There is a proposal to return the budget draft to the Cabinet."Several other MPs and Parliament staffers confirmed they discus…

Posted On : Published By : Tom Whipple
Category:

China Boosts Support for Latin Leftists

ENLARGE Venezuela’s Maduro, right, and China’s Xi in Beijing on Wednesday. Andy Wong/Press Pool China pledged billions of dollars of financing to Venezuela and Ecuador, two South American energy exporters battered by falling oil prices, as Beijing moved to secure resources and allies in the region. China has increased its diplomatic clout throughout Latin America by extending over $100 billion in credit to the region since 2005, according to figures from Boston University’s Global Economic Governance Initiative. On Thursday Chinese President Xi Jinping said China’s foreign investment in Latin America would hit $250 billion over the next decade, without offering details. Beijing has become the biggest foreign financier of both Venezuela and Ecuador, two oil-rich, leftist allies eager to help counter U.S. sway in the region. Following a meeting with Chinese President Xi Jinping, his Venezuelan counterpart Nicolás Maduro announced bilateral accords that would bring $20 billion in new […]

Posted On : Published By : Tom Whipple
Category:

Add Natural Gas Prices to Putin’s Long List of Problems

After last year’s plunges in oil and the ruble, Russian President Vladimir Putin now has another thing to worry about: the price of natural gas. While the fuel held up better than oil last year, weakening just about half as much, the average cost on Europe’s biggest open market will fall 13 percent this year to the lowest since 2010, according to the median of 13 traders, brokers and analyst estimates compiled by Bloomberg. Part of the reason for the drop is that global production capacity of liquefied natural gas will jump the most in four years, boosting competition for Russian pipeline flows that meet almost a third of Europe’s demand. Brent crude , used to help price state-owned OAO Gazprom’s gas sales to Europe , slumped 48 percent last year on global oversupply. Russia gets two-thirds of its export revenue from oil and gas and Putin has warned […]

Posted On : Published By : Tom Whipple
Category:

Venezuela: National Police Crack Down On Student Protest

Members of Venezuela’s Bolivarian National Police used tear gas to disperse a student protest at the Catholic University of Tachira in San Cristobal, Tachira state, NTN 24 reported Jan. 7, citing social media reports. At least two protesters were arrested. The previous night, a separate group of protesters used burning tires to block the Pan American Highway in San Cristobal but were eventually dispersed by police as well. Last year’s wave of protests began in Tachira state with student demonstrations against the government of President Nicolas Maduro.

Posted On : Published By : Tom Whipple
Category:

Shale player pulls plug on Ukraine

Energy company puts shale gas ambitions in Ukraine on hold because of a tough investment climate. UPI/Gary C. Caskey LONDON, Jan. 7 (UPI) — The economic climate in Ukraine is no longer conducive to continue investing in shale natural gas opportunities, producer JKX Oil & Gas said Wednesday. "The board of JKX has decided that the combination of Ukrainian Government-imposed restrictions on selling its gas to industrial clients and the punitive rate of gas production tax requires the company to suspend its planned 2015 capital investment program in Ukraine until the economic parameters for investment improve," it said in a statement. The company in August said new budget measures passed by the Ukrainian government means higher taxes for the oil and gas industry in the country. The most significant, it said, was a move to nearly double the tax on gas production to close to 55 percent. In its […]

Posted On : Published By : Tom Whipple
Category:

Oil Exports From U.S. Jump to Record as Shale Output Booms

The U.S. exported a record amount of crude oil in November after a five-year run of production growth that has made the country the most oil-independent in 20 years. Shipments surged 34 percent to average 502,000 barrels a day in November, the highest on record dating back to 1920, surpassing the previous monthly peak of 455,000 barrels set in March 1957, data from the U.S. Census Bureau and the Energy Information Administration show. The U.S. is now the 17th-largest exporter. The export record was unthinkable just five years ago, when U.S. crude production was still near a nadir following a 25-year decline. Since then, producers using horizontal drilling and hydraulic fracturing in underground shale rock have boosted output by 66 percent. Lawmakers in Washington are trying to end a 40-year-old law that restricts crude exports to just a few markets. “This is something we never expected to see,” said […]

Posted On : Published By : Tom Whipple
Category:

Canada jumps into Keystone XL fray

Alberta’s premier says he plans to visit Washington to make the case for the Keystone XL oil pipeline. UPI/Kevin Dietsch EDMONTON, Alberta, Jan. 7 (UPI) — Alberta’s premier said he was planning a trip to Washington to make the case that the Keystone XL oil pipeline is in the best interest of the region. "Alberta is committed to responsible energy development, which firmly positions us as a safe, secure and responsible energy supplier and we will continue to advocate on behalf of Keystone XL," Premier Jim Prentice said in a statement issued late Tuesday. Prentice served previously as the nation’s environment minister. As a minister, he said delays from Washington on the cross-border Keystone XL oil pipeline were regrettable, but should encourage the federal government to expand its export options to other markets like Asia. Republican leaders pushed legislation in favor of the pipeline to the top of their […]

Posted On : Published By : Tom Whipple
Category:

North Dakota defiant despite low oil prices

North Dakota Gov. Jack Dalrymple gives nod to potential budgetary impacts of low prices for crude oil during his annual State of the State address. UPI/Ron Sachs/Pool BISMARCK, N.D., Jan. 7 (UPI) — If low oil prices threaten North Dakota spending plans, the state’s governor said he had confidence lawmakers would take measured steps to cope. North Dakota Gov. Jack Dalrymple delivered his State of the State address late Tuesday, announcing plans to invest roughly $2.7 billion in state counties behind the oil boom in the state. "I have recommended increasing the state’s support during the upcoming biennium by another $1 billion," he said. North Dakota’s economy grew in 2013 faster than any other U.S. state in terms of real growth in gross domestic product. The U.S. Commerce Department said in a state-by-state review North Dakota can credit the extractive industries for a sizable portion of its 9.7 percent […]

Posted On : Published By : Tom Whipple
Category:

Freezing rain impacts Texas oil operations

Extreme winter weather in western Texas idles some drilling operations. UPI/Kevin Dietsch DALLAS, Jan. 7 (UPI) — It’s not oil prices, but extreme winter weather that’s impacting production and drilling operations in the Permian shale oil basin in Texas, an operator said. Pioneer Natural Resources said severe winter weather in West Texas has left the Spraberry/Wolfcamp area in the Permian basin in the dark and out of reach. The company said an "extensive recovery period is expected," and it could take several weeks before it determines the full extent of the damage . The National Weather Service said Wednesday conditions are ripe in West Texas for a possible winter storm and accumulations of freezing rain. The high for Wednesday is predicted at 31 degrees Fahrenheit, about 30 degrees below average. Since the start of the year, Pioneer said much of the associated infrastructure in the Spraberry/Wolfcamp area is frozen […]

Posted On : Published By : Tom Whipple
Category:

Oil Exports From U.S. Jump to Record as Shale Output Booms

The U.S. exported a record amount of crude oil in November after a five-year run of production growth that has made the country the most oil-independent in 20 years. Shipments surged 34 percent to average 502,000 barrels a day in November, the highest on record dating back to 1920, surpassing the previous monthly peak of 455,000 barrels set in March 1957, data from the U.S. Census Bureau and the Energy Information Administration show. The U.S. is now the 17th-largest exporter. The export record was unthinkable just five years ago, when U.S. crude production was still near a nadir following a 25-year decline. Since then, producers using horizontal drilling and hydraulic fracturing in underground shale rock have boosted output by 66 percent. Lawmakers in Washington are trying to end a 40-year-old law that restricts crude exports to just a few markets. “This is something we never expected to see,” said […]

Posted On : Published By : Tom Whipple
Category:

Duke Energy Asks Carolina Customers to Curb Power Use During Deep Freeze

Duke Energy Corp. asked customers in North and South Carolina to curtail energy use over the next 24 hours to reduce the potential for isolated power outages as frigid temperatures are expected to increase pressure on the electrical grid. Charlotte, N.C.-based Duke operates utilities that serve more than seven million customers in six states in the Southeast and Midwest. “The forecasted conditions are very similar to those we experienced last January during the Polar Vortex, and are affecting a large portion of the country,” said Nelson Peeler, Duke Energy vice president of transmission system operations. Mr. Peeler said Duke Energy expects to have sufficient generating resources to meet demand but added that conditions may change quickly. If necessary, the company may need to “initiate forced power reductions that would result in rotating or sustained power outages across the grid.” The company is asking customers to take voluntary measures that […]

Posted On : Published By : Tom Whipple
Category:

New Research Links Scores of Earthquakes to Fracking Wells Near a Fault in Ohio

Not long after two mild earthquakes jolted the normally steady terrain outside Youngstown, Ohio, last March, geologists quickly decided that hydraulic fracturing operations at new oil-and-gas wells in the area had set off the tremors. Now a detailed study has concluded that the earthquakes were not isolated events, but merely the largest of scores of quakes that rattled the area around the wells for more than a week. The study, published this week in The Bulletin of the Seismological Society of America, indicates that hydraulic fracturing, commonly called fracking, built up subterranean pressures that repeatedly caused slippage in an existing fault as close as a half-mile beneath the wells. The number and intensity of fracking-related quakes have risen as the practice has boomed. In Oklahoma, for example, quakes have increased sharply in recent years, including the state’s largest ever, a magnitude 5.7 tremor, in 2011. Both state and federal […]

Posted On : Published By : Tom Whipple
Category:

API includes other sources in broader State of American Energy report

WASHINGTON, DC, Jan. 7 01/07/2015 The American Petroleum Institute broadened its fifth annual State of American Energy report as it included solar, nuclear, hydropower, wind, coal, geothermal, biomass, and energy efficiency as well as oil and gas. The Solar Energy Industries Association, American Wind Energy Association, Biomass Power Association, and other nonoil and gas groups were represented. “We felt that an industry-wide report this year was necessary to underscore the reality that our nation will thrive if we adopt a true all-of-the-above energy strategy,” API Pres. Jack N. Gerard explained. The US is the world’s leading natural gas producer and petroleum refiner, and is expected to become its top crude oil producer “as early as this year, though some project we are already there,” Gerard said at a Jan. 6 luncheon where the 2015 report was released. “America’s emergence as a global energy leader has fundamentally reordered the world’s […]

Posted On : Published By : Tom Whipple
Category:

Another Cold Blast On Track For Permian Oil Patch In Texas

URL: http://www.rigzone.com/news/oil_gas/a/136651/Another_Cold_Blast_On_Track_For_Permian_Oil_Patch_In_Texas More icy weather is expected this week in the Permian Basin of Texas, on the heels of freezes that disrupted oil and gas work last week. HOUSTON, Jan 7 (Reuters) – More icy weather is expected this week in the Permian Basin of Texas, on the heels of freezes that snarled truck traffic, caused power outages and disrupted oil and gas work last week, the National Weather Service said on Wednesday. Parts of North Dakota, the top U.S. oil producing state after Texas, were also forecast to have snow or blizzards on Thursday, the NWS said, as blasts of arctic air moved across much of the country. Apache Corp, a leading producer in the Permian, said on Wednesday it suffered a modest impact from the freezes last week, while Pioneer Natural Resources Co said on Tuesday severe winter weather had disrupted its production and drilling operations in […]

Posted On : Published By : Tom Whipple
Category:

Lundin’s budget latest oil price victim

Lundin Petroleum cuts more than 30 percent from its 2015 spending plans, following industry trend in response to lower oil prices. (UPI/Shutterstock/James Jones Jr.) STOCKHOLM, Sweden, Jan. 7 (UPI) — With oil prices falling, Swedish energy company Lundin Petroleum said Wednesday it cut its 2015 spending plans by 31 percent from last year. Lundin said that, combined, its total spending for development, appraisal and exploration for 2015 would total around $1.45 billion. The bulk of the spending, about $750 million, would target ongoing operations in Norway, though the majority would focus on its Bertram project in Malaysia. Company President Ashley Heppenstall said the major focus would be on Norwegian and Malaysia projects that would combine for an increase in production to 75,000 barrels of oil equivalent per day. "We have a strong balance sheet and I expect our 2015 capital program to be fully funded from internally generated cash […]

Posted On : Published By : Tom Whipple
Category:

Who wins, who loses as oil prices plummet?

The global benchmark Brent crude oil price index slipped below $50 a barrel on Wednesday for the first time in five years, continuing the dramatic plunge that has seen oil prices halved since last June. Stock markets in oil-rich countries keep tumbling, while some analysts interpret the fall — which has brought a windfall to Americans at the fuel pump — as signaling an imminent financial crisis and potential economic slowdown. While not easily explained by a single cause, the price cut is widely believed to reflect slackening economic growth and weakening demand from major consumers such as China coupled with an increase in supply due to booming U.S. shale production. Analysts expect the downward trend to continue unless the world’s major producers, especially the Gulf state members of OPEC, move to cut their output in order to stabilize prices — an option they’ve avoided for now.  In the […]

Posted On : Published By : Tom Whipple
Category:

Guest blog: Are low oil prices good or bad for oil traders?

Guest blogger Jonathan Kingsman is the founder of Kingsman SA, which is now a unit of Platts, and he remains a Platts consultant. Are low oil prices good or bad for oil traders? In theory oil traders should not care about the price of oil; as they have reminded us many times recently, the big trading companies trade differentials and spreads, not flat (outright) price. In a trader’s ideal world oil prices would fluctuate in a range, giving traders just enough volatility for risk-free plays on shipment dates and tonnages. On the plus side, low prices have reduced financing costs and capital requirements. The halving of the oil price since June 2014 means that for the same amount of money, trading companies can hold twice as much stock, something that comes in rather handy with the current contango in the oil market. So rather than being bullish or bearish on […]

Posted On : Published By : Tom Whipple
Category:

The Changing Face of Peak Oil

The dawn of agriculture marked a huge turning point for human civilization.  At that point, when we, as a species (for the most part), abandoned the age-old concept of the so-called “Hunter-Gatherer” lifestyle in favor of putting down roots (pun very much intended), there were somewhere in the neighborhood of 5 million people on Earth.  It then took us around 10,000 years for that number to reach 1 billion around the turn of the 19th Century.  Now, a mere 200 years later, our population has absolutely exploded to the tune of over 7 billion people, and that growth was made possible by one thing: the cheap, plentiful energy provided by fossil fuels, oil chief among them. We’ve talked about Peak Oil Theory many times here on Backwoods Survival Blog ; it remains a future threat, even though the exact nature of that threat has changed over time (more on […]

Posted On : Published By : Tom Whipple
Category:

Keep your Eyes on the Prize

At the essential center of the framework of the Crash Course is the almost insultingly simple idea that endless growth on a finite planet is an impossibility. It is so simple it could be worked out by a clever 4 year-old. And yet it must not be so simple because the main narrative of every economy in every corner of the globe rests on the idea of endless, infinite growth. Various rationalizations and mental dodges are made in people’s minds to accommodate the principle of endless growth.  Some avoid thinking of it all together.  Some think that perhaps we will escape into space, and continue our growthful ways on some other yet-to-be named planet(s).  Most simply assume that some new wondrous technology will arise that can allow us to avoid pesky limits. Whatever the rationalization, none stand up well to simple math and cold logic. At the very heart […]

Posted On : Published By : Tom Whipple
Category:

Global Crude Oil Rallies After First Drop Below $50 Since 2009

Brent crude, the global benchmark grade, rallied after its first decline below $50 a barrel since May 2009. The price traded at $51.40 a barrel at 10:43 a.m. on the ICE Futures Europe exchange in London , having earlier dropped to $49.66. West Texas Intermediate, the main U.S. grade, also erased an earlier decline. To contact the reporter on this story: Rupert Rowling in London at [email protected] To contact the editors responsible for this story: Alaric Nightingale at [email protected] Grant Smith

Posted On : Published By : Tom Whipple
Category:

Oil Falls Further, With Brent Crude Below $50 a Barrel–Update

By Georgi Kantchev and Tommy Stubbington LONDON–Oil prices extended their relentless slide on Wednesday, with Brent crude falling below $50 a barrel for the first time since 2009. Brent futures dropped by more than 2% to an intraday low of $49.66 a barrel on London’s ICE Futures Exchange before recovering some ground to trade around $50.37 a barrel. At last year’s peak in June, Brent traded at more than $115. "We’ve fallen through $50 far quicker than we did through $60 and $70," said Kash Kamal, analyst at Sucden Financial. "This seems driven by sentiment but there is also no fundamental reason to expect a bottom either." On the New York Mercantile Exchange, light, sweet crude futures for delivery in February recently traded at $47.39 a barrel, down $0.56 from Tuesday’s settlement. Wednesday’s decline is the latest landmark in a six-month-long selloff spurred by booming production in the U.S. […]

Posted On : Published By : Tom Whipple
Category:

Oil Hits New Lows, Brent Crude Nears $50

As oil prices continue their slump, how is the smart money looking at the declines? WSJ’s Nicole Friedman and Geoff Rogow discuss on the News Hub. Photo: Getty. The collapse in oil intensified Tuesday, with U.S. prices closing below $50 a barrel for the first time in nearly six years amid mounting fears that the market will be awash in crude for the foreseeable future. A six-month-long selloff in the oil market has accelerated in the new year, with U.S. prices down 10% since Dec. 31. Until recently, the declines were driven mainly by unexpectedly strong U.S. output. But many investors are starting to fear that struggling economies in Europe and Asia will consume less crude than expected, worsening a global glut. Oil’s steep drop sent shudders through financial markets. Currencies of oil-producing nations fell against the dollar, and shares of energy companies slid. Many investors sought out Treasury […]

Posted On : Published By : Tom Whipple
Category:

Brent Crude Falls Below $50 a Barrel for First Time Since 2009

LONDON—Oil prices extended their relentless slide on Wednesday, with Brent crude falling below $50 a barrel for the first time since 2009. Brent futures dropped by more than 2% to an intraday low of $49.66 a barrel on London’s ICE Futures Exchange before recovering some ground to trade around $50.37 a barrel. At last year’s peak in June, Brent traded at more than $115. “We’ve fallen through $50 far quicker than we did through $60 and $70,” said Kash Kamal, analyst at Sucden Financial. “This seems driven by sentiment but there is also no fundamental reason to expect a bottom either.” On the New York Mercantile Exchange, light, sweet crude futures for delivery in February recently traded at $47.39 a barrel, down $0.56 from Tuesday’s settlement. Wednesday’s decline is the latest landmark in a six-month-long selloff spurred by booming production in the U.S. and fears that a slowdown in […]

Posted On : Published By : Tom Whipple
Category:

Brent oil slips below $50 on mounting glut, slack demand

LONDON (Reuters) – Brent crude oil fell below $50 a barrel for the first time since May 2009 on Wednesday, hammered by a growing supply glut and weak global demand. The pace of global business growth eased to its weakest rate in over a year at the end of 2014, according to JPMorgan’s Global All-Industry Output Index, produced with Markit. Weak economic activity is adding to fears of deflation, with euro zone inflation data due later on Wednesday expected to show the first annual fall in consumer prices since 2009. Benchmark Brent crude futures LCOc1 were down 85 cents at $50.25 by 4.16 a.m. ET, having fallen as low as $49.66, a level last seen in May 2009. U.S. futures CLc1 were down 40 cents to $47.53 a barrel, having fallen to $46.83, their lowest since April 2009. Oil markets are down for a fifth straight session and off […]

Posted On : Published By : Tom Whipple
Category:

Crude oil prices down sharply in fourth quarter of 2014

Source: U.S. Energy Information Administration, based on Bloomberg Crude oil prices fell sharply in the fourth quarter of 2014 as robust global production exceeded demand. After reaching monthly peaks of $112 per barrel (bbl) and $105/bbl in June, crude oil benchmarks Brent and West Texas Intermediate (WTI) fell to $62/bbl and $59/bbl in December, respectively. Brent prices fell below the five-year average in early September and slipped well below the five-year range in November and December. WTI prices have been below the five-year average since early October and below the five year-range since early November. Source: U.S. Energy Information Administration, based on Bloomberg U.S. highlights Domestic crude oil production increased 1.2 million barrels per day (bbl/d) in 2014, up 16% from 2013. At 8.6 million bbl/d, U.S. production is at the highest level in nearly 30 years. The Brent-WTI spread averaged less than $6/bbl, significantly lower than the 2011-13 […]

Posted On : Published By : Tom Whipple
Category:

Natural Gas Price Hover Near Two-Year Lows Despite Cold Weather

By Timothy Puko Natural-gas prices are hovering near two-year lows despite the arrival of frigid weather across much of the country, as fears of a looming glut weigh on the market. A cold front has sent temperatures plunging below normal in the Midwest and Northeast. Normally, major cold snaps send natural-gas prices soaring as traders anticipate a spike in demand for the fuel, which is used to heat about half of all U.S. homes. But gas futures are taking the opposite path this time. Prices have fallen in 10 of the past 14 trading sessions through Monday and are down over 35% from their recent peak in mid-November. On Tuesday, gas for February delivery traded at $2.904 a million British thermal units on the New York Mercantile Exchange, just 0.8% above the lowest price since September 2012. Investors are betting prices will stay low because producers are pumping out […]

Posted On : Published By : Tom Whipple
Category:

Riyadh holds to oil line, prices drop further

Saudi King Abdullah signals kingdom is keeping to its stance on defending oil market position. UPI/Roger L. Wollenberg NEW YORK, Jan. 6 (UPI) — Word that OPEC kingpin Saudi Arabia would defend its economic interests sent an already battered oil market into a tailspin during the Tuesday session. Crude oil prices suffered major losses Monday , with the price for the U.S. benchmark, West Texas Intermediate, and Brent, the global benchmark, reaching five-year lows. Oil prices are about 50 percent lower than they were in June 2014. Prices have declined dramatically since late November when members of the Organization of Petroleum Exporting Countries opted to keep production steady despite tough market conditions. Saudi King Abdullah in a speech read by Crown Prince Salman bin Abdulaziz suggested the kingdom was staying the course even with oil prices off about 25 percent since the OPEC meeting in November. "The kingdom will […]

Posted On : Published By : Tom Whipple
Category:

Coal India Strike Said to Shut Half of Output, Shipments

A strike by coal miners in India , the nation’s biggest walkout in four decades, shut down about half of monopoly Coal India Ltd.’s production and shipments yesterday, said two company officials, who asked not to be identified. The strike, by all of the company’s five major unions, entered its second day after talks between Coal Secretary Anil Swarup and the unions in New Delhi failed. The unions are protesting Prime Minister Narendra Modi ’s plan to end the state’s monopoly fearing job losses and cuts in benefits. The strike will last for the planned five days as the government isn’t listening to worker concerns, said S.Q. Zama, general secretary at the Indian National Mineworkers Federation. “If this strike continues beyond a couple of days, the situation with respect to coal stock would become critical,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt.’s energy practice […]

Posted On : Published By : Tom Whipple
Category:

Iran Accuses Saudis of Oil Conspiracy

Iran Accuses Saudis of Oil Conspiracy thumbnail Iranian hard-liners are lashing out at Saudi Arabia, accusing it of conspiring with the West to keep oil prices low in a bid to harm the Islamic Republic’s economy and pressure the country to conclude a nuclear deal with West.  In retaliation, Iranian hawks are urging restive Shia Muslims in eastern Saudi Arabia to rebel against the ruling House of Saud. Iranian hawks’ accusations have mounted over the Saudi’s refusal to cut production – in an effort to maintain its share of the global oil market – fueling the precipitous slide in prices. Crude oil prices have fallen by more than half since June, from $115 a barrel to below $50. “We will not forget which countries schemed to lower the price of oil,” the speaker of Iran’s parliament, Ali Larijani warned darkly during a visit last month to Damascus, the Syrian […]

Posted On : Published By : Tom Whipple
Category:

Iran: West Will Concede To Tehran In Negotiations, Official Says

Iranian Foreign Minister Javad Zarif told lawmakers that the Western countries involved in nuclear negotiations with the country now acknowledge Iran’s rejection of hegemony and commitment to its obligations, IRNA reported Jan. 6. He added that negotiations would result in the return of some of Iran’s frozen assets and that there is no longer talk of shutting down the Fordo and Arak nuclear sites. Iran’s Majlis, or parliament, cast 125 votes in Zarif’s favor following his remarks. The deadline to formalize an agreement on Iran’s nuclear program was extended, and a basic agreement is expected by March 1.  

Posted On : Published By : Tom Whipple
Category:

Moroccan shale continues to impress

Early Moroccan shale gas results better than expected for pioneer Gulfsands Petroleum. Photo by Steve Oehlenschlager/Shutterstock LONDON, Jan. 6 (UPI) — Gulfsands Petroleum, a company exploring the emerging shale potential in Morocco, said Tuesday exploration results there were better than expected. The company said its drilling operations in a permit area in northern Morocco were completed two days ahead of schedule and yielded "significantly elevated gas readings." Mahdi Sajjad, the company’s chief executive officer, said in a statement the results so far are the best the company has achieved to date in Morocco. "We look forward to completing the well and observing the production performance during well clean-up operations," he said. Morocco is one of the West African countries that have drawn interest from international energy companies eager to tap into unexploited reserves. During the first quarter of 2014, the company, which has headquarters in London, said it planned […]

Posted On : Published By : Tom Whipple
Category:

Nigeria: Crude Oil Export to Europe, Asia Drop

By Hamisu Muhammad With Agency Report Nigeria’s crude oil export to Europe and Asia, two of the country’s key markets, declined by 6.6 million barrels in September 2014, further reducing the country’s oil revenue at a time the plunge in global oil prices entered its third month. Report by Ship and Port online reported yesterday that the fall in oil prices, which began in June 2014 when prices peaked at $115 per barrel, had led to a decline in the country’s oil earnings, the major part of government revenue. According to the latest monthly report from the Nigerian National Petroleum Corporation, export to Europe which is Nigeria’s biggest regional market, tumbled to 29.2 million barrels in September from 33.6 million in August last year. The Asian region, which is the major target market for many oil exporters, reduced its import of Nigeria’s crude oil by 4.4 million barrels in […]

Posted On : Published By : Tom Whipple
Category:

Nigeria: Oil Price Slide Threatens 20 Percent Jobs

Lagos — The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has said that the nation’s oil and gas sector would suffer 20 percent job losses due to the sliding price of crude oil at the international market. General Secretary of the union, Comrade Bayo Olowoshile, who disclosed this in an interview with our correspondent also said expected investment in oil exploration and production would be in abeyance until there is sure profit margin stability. He also said the energy sector would suffer the chance of easy access to domestic gas requirements, adding that the development would slow down the hope in power generation and distribution despite the tariff review. He spoke on the way forward for the nation’s oil and gas sector and urged the federal government to stimulate local refining of petroleum white products and petrochemical products in 2015. He also advocated the need for […]

Posted On : Published By : Tom Whipple