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Oil Falls to Lowest in Almost Six Years on Global Glut

Crude oil fell to the lowest in almost six years after OPEC Secretary-General Abdalla El-Badri said that there was about 1.5 million barrels a day of excess supply. Oil slipped 1 percent in New York, reversing an intraday gain of 1.8 percent that followed comments by El-Badri that OPEC is open to talks with outside producers and insufficient investment could push crude prices to $200. A blizzard that may dump 2 feet of snow from New York to Boston bolstered diesel, often traded as a proxy for heating oil. “El-Badri acknowledged that there’s about a 1.5 million-barrels-a-day surplus,” Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. “It’s up to the market to decide whether that’s the critical factor or the possibility of OPEC-non-OPEC cooperation or the speculation that there could be $200 oil at some future date. It looks like the market […]

Posted On : Published By : Tom Whipple
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Worldwide Drilling Productivity Report

The EIA publishes what they call a Drilling Productivity Report  in which they claim that each rig is getting more productive, that is each rig produces just a little more oil each month than it did the previous month. But over the long haul, I find that the exact opposite is true. In every place in the world, each rig produces a little less oil every year. Baker Hughes publishes monthly their International Rig Count  where we can find the world rig count back to 1975. However I only looked at the last 15 years and found some surprising results. The last “Rig Count” data point on all charts below is December 2014. Also, very important, the rig count includes rigs drilling for gas as well as oil since Baker Hughes does not break down international rigs down to either gas or oil. They just give us the total […]

Posted On : Published By : Tom Whipple
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The Investment Gap

With the price of oil continuing to fall, there’s an enormous question mark hanging over the U.S. oil industry: What prices are required to break-even? There’s no simple answer, since each area—such as the Bakken play in North Dakota—has a wide range of wells, from amazing to horrible, with a corresponding range of breakeven prices. Some areas of each play are clearly better than others. “We’re already seeing an enormous amount of retraction into the safe zone ,” said Lynn Helms, North Dakota’s top oil regulator. (For a map showing this retraction—which started even before the oil price crash in the second half of 2014—see my recent Wired article “ Mapping a Fracking Boom in North Dakota .”) Until just a few months ago, there were still optimistic forecasts for the future of the Bakken. For example, a report by the investment bank Citi, “ Out of America : […]

Posted On : Published By : Tom Whipple
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Libya Producing 363,000 Barrels per Day

Oil output from Libya, where ports and oilfields have been shut due to fighting, has fallen to 363,000 barrels a day with exports at about 200,000, the oil minister appointed by forces in control of the capital Tripoli told Reuters. Two governments allied to armed factions are vying for control of Libya four years after the toppling of leader Muammar Gaddafi. The United Nations and Western powers do not recognise the administration which controls ministries in Tripoli. Its oil minister, Mashallah Zwai, told Reuters in an interview that Libya is producing 362,780 bpd of oil, showing a report from the National Oil Corp. That is down by half from November, when OPEC member Libya was producing around 750,000 barrels a day, and well below the 1.6 million which the North African country produced in 2010. Zwai said oil revenues would fall to between $10 billion and $12 billion this […]

Posted On : Published By : Tom Whipple
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Saudi Succession Hints at Shift in Foreign Role

RIYADH, Saudi Arabia — Prince Mohammed bin Nayef, the interior minister of Saudi Arabia , arrived at a meeting of security chiefs from across the Arab world in Marrakesh, Morocco, last March to deliver a call to arms: It was time, he declared, for a concerted effort to eradicate the Muslim Brotherhood, according to two Arab officials briefed on the meeting. Several were stunned at his audacity. Brotherhood-style Islamists are an accepted part of politics in much of the Arab world, including Tunisia, Libya, Jordan, Kuwait, Bahrain and Morocco itself, to say nothing of their warm welcome in Qatar, said the officials, who spoke on the condition of anonymity so as not to anger the powerful Saudi prince. But this toughness toward perceived enemies to his family’s dynasty is characteristic of Mr. Bin Nayef, a central player in the often opaque leadership of the kingdom who was named last […]

Posted On : Published By : Tom Whipple
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New Saudi king ascends to the throne as terrorism threat grows

New Saudi King Salman is taking the throne amid an unprecedented period of instability and terrorist threats. (Reuters) ARAR, Saudi Arabia — At 3 a.m. on a cold desert night earlier this month, four Islamic State militants carrying guns, grenades and cash slipped into Saudi Arabia here through a hole in the new heavy fencing that separates this country from Iraq. They were immediately spotted by Saudi border guards in a state-of-the-art control room 35 miles away, appearing first as blips on radar, then as ghostly white figures on night-vision cameras scanning the desolate desert landscape. Heavily armed troops were dispatched to confront them. When the battle ended, the four intruders — all Saudi citizens — and three Saudi soldiers were dead, including the local base commander, who was killed when a militant pretending to surrender detonated a suicide vest. “Thanks to God and our new systems, we are ready […]

Posted On : Published By : Tom Whipple
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Aramco Says Saudis Won’t ‘Singlehandedly’ Balance Crude Market

Saudi Arabia won’t balance global crude markets on its own even as prices fall to levels that are “too low for everybody” and threaten investment needed to meet long-term demand, the head of Saudi Arabian Oil Co. said. Saudi Arabia, the world’s biggest oil exporter, has the most spare capacity in OPEC and has historically played the role of swing producer, cutting its output to raise prices and pumping more to lower them. Oil prices have dropped 55 percent in the past year as rising production from the U.S. and Russia helped global output exceed demand. “Supply and demand and the rules of economics will govern. It will take time for the current glut to be removed,” Chief Executive Officer Khalid Al-Falih said at a conference in Riyadh. “Saudi Arabia will not singlehandedly balance the market in a downturn,” he said, reiterating government policy. The Organization of Petroleum Exporting […]

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Oil-rich Saudis find new help in struggle to delay action on climate change: Cheap gas

A flame from a Saudi Aramco oil installation known as “Pump 3” burns in the desert near the oil-rich area of Khouris not far from the capital, Riyadh. (Marwan Naamani/AFP/Getty Images) As the ruler of a country that sits atop 300 billion barrels of oil, Saudi Arabia’s King Abdullah was no fan of proposals to limit the burning of fossil fuels. During most of his reign, the king’s chief envoy to climate talks was a ­global-warming skeptic who boasted of his success at scuttling climate treaties . But it was in the monarch’s final months that Saudi officials hit upon a more effective way to knock the clean-energy movement off its tracks: cheap gas. Since Abdullah’s death last week, Saudi officials have recommitted themselves to recent policies that have helped drive oil prices to their lowest levels in a decade. The kingdom’s efforts to manipulate oil markets are wreaking havoc […]

Posted On : Published By : Tom Whipple
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Generation of Long-Lasting Mideast Rulers Produced Stability—and a Mess

ENLARGE With the death of Saudi Arabia’s King Abdullah, the downside of the Middle East’s recent legacy of autocratic rule is coming to the fore. Here, President Obama and Saudi Arabia’s King Abdullah in 2010. Photo: Roger L. Wollenberg/Press Pool The death last week of Saudi Arabia’s King Abdullah means the Middle East is nearing the end of an extraordinary era of leadership, which goes a long way toward explaining why the region is in such turmoil and so plagued by extremism flaring to the surface. King Abdullah—whose memory President Barack Obama honors with a visit to the kingdom Tuesday—sat atop the Saudi government for a decade and effectively ruled for a decade before that, after his predecessor suffered a debilitating stroke. For 20 years, then, he was a reliable U.S. ally who used a combination of skillful maneuvering and an iron fist to keep his country calm and […]

Posted On : Published By : Tom Whipple
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Thousands march in Venezuela over economic crisis, shortages

0 Like Share 0 CARACAS  – Demonstrators against Venezuela’s economic crisis — facing sky-high inflation and shortages of food and consumer goods — took to the streets in their thousands Saturday, banging pots and demanding an end to President Nicolas Maduro’s term. Opposition leaders, fed up with shortages of milk, coffee, sugar, meat, toilet paper, diapers, deodorant and corn meal, and with Maduro’s refusal to overhaul the increasingly state-managed economy, say the elected socialist should go. Ex-lawmaker Maria Corina Machado — who was jailed after deadly riots last year for inciting violence — said Maduro “must step aside now, so the Venezuelan people can stand united again. ” “The government needs to be changed urgently,” Machado argued, at what opposition activists called the “March of Empty Pots. ” She insisted that constitutional order — waiting for Maduro to be voted out — “cannot wait,” even as some marchers chanted, […]

Posted On : Published By : Tom Whipple