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Shell to Pay $83 Million Settlement for Nigeria Oil Spills

Royal Dutch Shell Plc (RDSA) agreed to pay compensation to thousands of residents of the Bodo community in Nigeria’s crude-rich Niger River delta region for two “highly regrettable” oil spills in 2008. Shell will pay a total of 55 million pounds ($83.3 million) with “an individual payment to each claimant who accepts the settlement agreement in compensation for losses arising from the spills,” the Hague-based company said today in a statement. The settlement follows a three-year legal tussle between Shell and 15,600 Nigerians from Ogoniland, mostly fishermen, in a London court. “From the outset, we’ve accepted responsibility for the two deeply regrettable operational spills in Bodo,” Mutiu Sunmonu, managing director of Shell’s Nigerian unit, said in the statement. “We’ve always wanted to compensate the community fairly and we are pleased to have reached agreement.” The compensation is split 35 million pounds for individuals and 20 million pounds for the […]

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Old nexus between China GDP growth, power and coal demand broken: analyst

Singapore (Platts)–7Jan2015/635 am EST/1135 GMT The traditional relationship between China’s real GDP growth, expansion in electricity consumption, and coal demand is now broken, a phenomenon that began to emerge over 2012-2014, according to a new report by the US-based Institute for Energy Economics and Financial Analysis. Chinese power consumption over January-November 2014 ticked up by around 3.9% from the corresponding months of 2013, but thermal power production — fueled by natural gas and coal — declined 0.3% during the periods of comparison, based on government data, IEEFA analyst Tim Buckley wrote. Hydroelectricity, followed by "other" sources of power generation accounted for the rise in power production to 4,975 TWh in January-November, from 4,788 TWh a year ago. The annual growth in Chinese coal demand halved to 4-6% in 2012 and 2013 from around 10% over the decade to 2011. In 2014, coal demand actually declined by 2.1%, the report […]

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Oil group CEO: Amid price drop, US set to be global leader

WASHINGTON (AP) — The CEO of the oil and gas industry’s top lobbying arm says plunging oil prices may hurt American companies in the short run. But American Petroleum Institute CEO Jack Gerard says increased U.S. production and dropping oil prices also mean the U.S. is on its way to being a global leader in oil production. He says falling prices have empowered the United States and weakened OPEC and Russia. Gerard says the U.S. needs to maintain the right policies to secure a future that allows it to control its own interests. He says the nation should lift a ban on exporting crude oil in order to serve growing global demand. Gerard spoke at a "State of American Energy Event" in Washington.

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Republicans push Keystone bill, White House threatens veto

WASHINGTON (Reuters) – Republican senators kicked off the new U.S. Congress with legislation to approve the hotly disputed Keystone XL oil pipeline, but the White House promptly threatened a veto. With Republicans assuming full control of Congress on Tuesday after their victories in the November election, they have put Keystone at the center of their legislative agenda and plan weeks of debate. They believe that the public spotlight on the issue will pressure President Barack Obama to eventually approve the project. If Obama vetoes the initial legislation, backers will attach it to a wider measure he could find harder to reject, such as a must-pass spending bill or steps to improve energy efficiency. The White House was adamant that Obama would not sign the Keystone legislation. "There is already a well-established process in place to consider whether or not infrastructure projects like this are in the best interest of […]

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White House says it will veto bill to approve oil pipeline

AP Photo/Susan Walsh Politics Video Buy AP Photo Reprints WASHINGTON (AP) — The White House on Tuesday threatened to veto the first piece of legislation introduced in the Republican-controlled Senate, a bill approving the much-delayed Keystone XL oil pipeline, in what was expected to be the first of many confrontations over energy and environmental policy. Hours after supporters of the bipartisan bill, which is sponsored by all 54 Senate Republicans and six Democrats, announced its introduction, the White House said for the first time that President Barack Obama would veto it. "If this bill passes this Congress, the president wouldn’t sign" it, White House spokesman Josh Earnest said Tuesday, saying legislation shouldn’t undermine the review process underway at the State Department or circumvent a pending lawsuit in Nebraska over its route. It’s "premature to evaluate the project before something as basic as the route of the pipeline has been […]

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API disappointed with Keystone XL veto threat

President Barack Obama is likely to veto legislation approving the Keystone XL pipeline. UPI/Kevin Dietsch WASHINGTON, Jan. 6 (UPI) — A sign from the White House that bills meant to approve Keystone XL would be met with a veto is disappointing, the American Petroleum Institute said Tuesday. White House spokesman Josh Earnest affirmed signals from the president’s desk that Keystone XL might not get moved through normal vetting procedures despite a bill introduced Tuesday by the newly-minted GOP leadership on Capitol Hill. With Republican leaders taking their seat Tuesday for the first session of the 114th Congress, API President and Chief Executive Officer Jack Gerard rolled out the industry’s State of American Energy platform from Washington D.C. The agenda describes Keystone XL as "vital infrastructure" for the North American energy sector. Gerard said the project would support thousands of jobs, while bringing 830,000 barrels of oil per day across […]

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Chevron finds oil in Gulf of Mexico

Chevron announces significant oil discovery in the deep waters of the Gulf of Mexico. UPI/A.J. Sisco.. SAN RAMON, Calif., Jan. 6 (UPI) — U.S. energy company Chevron said its latest major oil discovery in the Gulf of Mexico anchors its position as a global leader in deep water activity. The company said it made what it described as a "significant" oil discovery at the Anchor prospect in the deep waters of the Gulf of Mexico, its second such discovery in less than a year. "We had one of our best years with the drill bit in 2014, reporting more than 30 discoveries worldwide and adding an estimated 1 billion barrels of new resources to our holdings," Jay Johnson, a vice president in charge of exploration and production operations, said in a statement. The company in early December announced crude oil production started at the Jack/St. Malo project in the […]

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U.S. Steel Lays Off 756 Blaming Low Oil Prices

ENLARGE Workers for U.S. Steel in Lorain, Ohio, say they will find out who is being laid off at a meeting Wednesday. Associated Press PITTSBURGH— U.S. Steel Corp. said it will idle plants in Ohio and Texas and lay off 756 workers, becoming one of the first big U.S. industrial casualties of the recent collapse in global oil prices. The plants make steel pipe and tube for oil and gas exploration and drilling. With oil prices more than 5½-year lows and hovering around $50 a barrel, energy companies have far less incentive to drill for new supply, reducing demand for the plant’s products. The Lorain, Ohio operation, which will shed 614 workers, produces more than 700,000 tons a year. Houston, where 142 will be laid off, generates over 100,000 tons annually. “The company has suddenly lost a great deal of business because of the recent downturn in the oil […]

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Crescent Point Scales Back 2015 Spending Plans on Oil Woes

Canadian oil producer Crescent Point Energy Corp. on Tuesday cut its capital-spending budget for 2015 by 28% from 2014 levels due to slumping oil prices, and said it is pursuing options to cut costs. Calgary, Alberta-based Crescent Point, like many of its peers in the oil patch, is scaling back spending plans to combat the more-than-50% drop in oil prices since last June. U.S. prices briefly fell below $50 a barrel Monday for the first time since April 2009, and continued to slide Tuesday , recently trading below $49 a barrel. Surging oil production in North America and a decline in global demand have led energy producers to rethink investment plans. In mid-December, Crescent Point’s Canadian peers, Husky Energy Inc. and Penn West Petroleum Ltd. , reduced capital-spending plans for 2015 due to the dramatic plunge in oil prices. Crescent Point, which called its budget plans “conservative and disciplined,” […]

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New Congress Grapples With Energy Issues

ENLARGE The John Amos coal-fired power plant is seen behind a home in Poca, West Virginia in May. With coal production slowing due to stricter environmental controls, the availability of natural gas and a shift to surface mining, the state’s coal country has been hit hard with job losses and business closures. Reuters Legislation approving the Keystone XL pipeline , which lawmakers will take up as soon as this week , will open the first broad debate on energy policy in Congress in eight years and give the new Republican majority a chance to push for significant changes to President Barack Obama ’s agenda. GOP lawmakers, who now control the Senate and have a firmer hold on the House, are planning measures that would aim to spur greater development of fossil fuels and curtail a series of Mr. Obama’s environmental regulations, including ones cutting greenhouse gas emissions. Republicans are […]

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California breaks ground on first US bullet train project

California’s high-speed rail project reached a milestone Tuesday as officials marked the start of work on the nation’s first bullet train, which will whisk travelers at 200 mph between Los Angeles and San Francisco in less than three hours. The ceremony in Fresno comes amid challenges. Central Valley farmers in the train’s path had sued to block it and are now contesting that those behind the project have fallen short of responsibilities under a 2013 legal settlement, according to The Fresno Bee . Meanwhile Republican members of U.S. Congress have vowed to cut funding for the $68 billion projecton the grounds of its perceived expense. Opponents also say the state can’t deliver the sleek project as it was first promised. Dan Richard, chairman of the California High-Speed Rail Authority, acknowledges the authority has been slow to buy up most of the land needed for laying track. But he is […]

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Plummeting oil price casts shadow over fracking’s future

There’s no doubt that US-based fracking – the process through which oil and gas deposits are blasted from shale deposits deep underground – has caused a revolution in worldwide energy supplies. Yet now the alarm bells are ringing about the financial health of the fracking industry, with talk of a mighty monetary bubble bursting − leading to turmoil on the international markets similar to that in 2008. In many ways, it’s a straightforward case of supply and demand. Due to the US fracking boom, world oil supply has increased. But with global economic growth now slowing – the drop in growth in China is particularly significant – there’s a lack of demand and a glut in supplies, leading to a fall in price of nearly 50% over the last six months. Fracking has become a victim of its own success. The industry in the US has grown very fast. […]

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Euro zone prices fall more than expected in December, likely to trigger ECB action

BRUSSELS (Reuters) – Euro zone consumer prices fell by more than expected in December because of much cheaper energy, a first estimate by the European statistic office showed in data that is likely to trigger the European Central Bank’s government bond buying program. Eurostat said inflation in the 18 countries using the euro in December was -0.2 percent year-on-year, down from 0.3 percent year-on-year in November. The last time euro zone inflation was negative was in October 2009, when it was -0.1 percent. Economists polled by Reuters had expected a -0.1 percent year-on-year fall in prices. The ECB wants to keep inflation below but close to 2 percent over the medium term. Eurostat said that core inflation, which excludes the volatile energy and unprocessed food prices, was stable at 0.7 percent year-on-year in December — the same level as in November and October. But energy prices plunged 6.3 percent […]

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How $50 Oil Changes Almost Everything

The plummeting price of oil means no more trout ice cream. Coromoto, a parlor in Merida, Venezuela, famous for its 900 flavors, closed during its busiest season in November because of a milk shortage caused by the country’s 64 percent inflation rate, the world’s fastest. That’s the plight of an oil-producing nation. At the same time, consuming countries like the U.S. are taking advantage. Trucks, which burn more gasoline, outsold cars in December by the most since 2005, according to data from Ward’s Automotive Group. The biggest collapse in energy prices since the 2008 global recession is shifting wealth and power from autocratic petro-states to industrialized consumers, which could make the world safer, according to a Berenberg Bank AG report. Surging U.S. shale supply, weakening Asian and European demand and a stronger dollar are pushing oil past threshold after threshold to a five-and-half-year low, with a dip below $40 […]

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Deep Debt Keeps Oil Firms Pumping

American oil and gas companies have gone heavily into debt during the energy boom, increasing their borrowings by 55% since 2010, to almost $200 billion. Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55% since last June. But signs of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment. Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. […]

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How increased inefficiency explains falling oil prices

Since about 2001, several sectors of the economy have become increasingly inefficient, in the sense that it takes more resources to produce a given output, such as 1000 barrels of oil. I believe that this growing inefficiency explains both slowing world economic growth and the sharp recent drop in prices of many commodities, including oil. The mechanism at work is what I would call the crowding out effect . As more resources are required for the increasingly inefficient sectors of the economy, fewer resources are available to the rest of the economy. As a result, wages stagnate or decline. Central banks find it necessary lower interest rates, to keep the economy going. Unfortunately, with stagnant or lower wages, consumers find that goods from the increasingly inefficiently sectors are increasingly unaffordable, especially if prices rise to cover the resource requirements of these inefficient sectors. For most periods in the past, commodities […]

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Cheap oil is killing my job

Marcus Benson moved 1,500 miles from his home in Philadelphia to North Dakota for the shale boom. He made the lengthy drive — with no job and nowhere to live — in April 2012 after hearing on the news that the state had the lowest unemployment rate in the country. “I felt like it was a good opportunity. I wasn’t doing much,” Benson, who had been working odd jobs after dropping out of college, told CNNMoney. He immediately landed good-paying work loading rail cars with sand used for fracking. “I went from doing odd jobs for $8 an hour to $25 an hour. I thought that was crazy,” Benson said. It wasn’t long before he was earning $30 an hour. Plunging oil prices recently cost Marcus Benson, pictured above, his good-paying oil job in North Dakota. Jeff Sharpe, pictured with his colleagues, also recently lost his job as a […]

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U.S. services industry, factory data point to slower growth

WASHINGTON (Reuters) – Growth in the U.S. services sector braked in December and new orders for manufactured goods fell for a fourth straight month in November, signs the economy lost some momentum in the fourth quarter. But with domestic demand picking up, against the backdrop of lower gasoline prices and firming wage growth, any slowdown in economic growth is likely to be temporary. "The economy hardly ended the year with a bang, but only because the recent pace was not sustainable. It is easing only modestly," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.  The Institute for Supply Management said on Tuesday its services index fell to 56.2 last month, the lowest reading since June, from 59.3 in November, which had left it just shy of revisiting its post-recession highs. It was held back as growth across all categories moderated, with some respondents saying a […]

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High Noon on the Gulf Coast: Canada, Saudi oil set for showdown

NEW YORK (Reuters) – As a test of wills between OPEC nations and U.S. shale drillers fuels a global oil market slump, a brewing battle between Canadian and Saudi Arabia heavy crudes for America’s Gulf Coast refinery market threatens to drive prices even lower. While the stand-off between the oil cartel and U.S. producers of light, sweet shale oil has captured the limelight in recent months, the clash over heavier grades – playing out in the shadowy, opaque physical market – may put even more pressure on global prices that have halved since mid-2014. Two factors will come into play over the next few weeks: From the North, new oil pipelines will pump record volumes of Canadian crude to the southern refineries, many better equipped to process heavy crudes than lighter shale oil. From the Middle East, top exporter Saudi Arabia is offering crude at discounted prices in an […]

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Gazpromneft Leads Russian ADR Drop as Crude Rout Deepens

OAO Gazpromneft fell to a three-week low, leading declines in U.S.-traded Russian energy companies as crude prices tumbled for a fourth day. The state-controlled oil company dropped 6.4 percent to $11.36 in New York. The stock contributed the most to a 1.2 percent retreat in the Bloomberg Russia-US Equity Index. OAO Lukoil (LUKOY) , the nation’s biggest non-government oil producer and OAO Surgutneftegas (SGTPY) each declined more than 3 percent. Oil, the country’s biggest export, continued its slide after the worst annual drop since 2008 on speculation expanding U.S. inventories will worsen a global supply glut. Brent crude , the grade traders use to price Russia’s main export blend, sank 3.8 percent to $51.10, the lowest since April 2009. Energy Ministry data released last week showed Russian producers boosted output to a post-Soviet record of 10.667 million barrels a day in December. “For the economy, investors and business in […]

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Eurozone falls into deflation for first time since October 2009

Eurozone Inflation Prices in the eurozone are falling for the first time in more than five years, strengthening the case for the European Central Bank to unveil a full-scale package of government bond purchases later this month, despite Germany’s disapproval. The collapse in the cost of oil dragged eurozone consumer prices down 0.2 per cent in the year to December 2014, Eurostat, the commission’s statistics bureau, said on Wednesday. The figure was slightly worse than the 0.1 per cent decline that economists had expected. More On this story On this topic IN Europe The last time the currency area was in deflation was October 2009. Prices are expected to drop again in January as more recent falls in crude lower the cost of consumer goods. The latest fall, from a 0.3 per cent increase in November, will bolster calls for more aggressive action from the ECB, where top officials […]

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The oil price is just plain wrong

Tags: commodities | economics | government | markets | oil The price sign outside Costco in Westminster, Colorado, shows gas selling for $1.81.9 for the first time in years The oil price is still too high, often too low and much too volatile. In other words, this is a market that doesn’t work well for anyone. The excessive volatility is glaringly obvious. The 50 percent price fall since June is extreme, but the market is only occasionally calm. Since 2000 the daily price has been on average 18 percent higher or lower than six months earlier. Such variation is uncalled for, especially given the fairly modest shifts in demand. Since 1990, the annual change has never been higher than 3 percent. On the other side, the average cost of supply moves very slowly. Only modest adjustments in inventory and production rates are required to keep the price stable, as […]

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Welcome To Peak Car

It’s looking increasingly likely that we’ve reached peak car , the point at which overall automobile usage tops out. The U.S. and Europe appear to be at that point now; the rest of the world may follow within a decade . You’d think that would spell trouble for the privately owned car—a future of waning use and perhaps eventual extinction. Think again. Peak car is the result of some major trends that look to marks the biggest change in automobile use since Henry Ford, as the car evolves from a huge piece of standalone hardware in a garage to a computerized network tool for the 21st century. Auto Use Really Is Down Peak car represents a major U-turn on thinking from just five years ago. That’s when transportation researchers forecast that the world was headed full-throttle towards global gridlock in the next 20 years , with the number of vehicles on […]

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Energy Crisis As Early As 2016

Low oil prices today may be setting the world up for an oil shortage as early as 2016. Today we have just 2% more crude oil supply than demand and the price of gasoline is under $2.00/gallon in Texas. If oil supply falls too far, we could see gasoline prices doubling within 18 months. For a commodity as critical to our standard of living as oil is, it only takes a small shortage to drive up the price. On Thanksgiving Day, 2014 Saudi Arabia decided to maintain their crude oil output of approximately 9.5 million barrels per day. They’ve taken this action despite the fact that they know the world’s oil markets are currently over-supplied by an estimated 1.5 million barrels per day and the severe financial pain it is causing many of the other OPEC nations. By now you are all aware this has caused a sharp drop […]

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This Oil Thing Is The Real Deal

This Oil Thing Is The Real Deal thumbnail Well! WTI below $50 and Brent below $53 when I start writing this. Who knows where they’ll be by the time I’m finished?! The euro down below $1.20, US stocks flirting with -2%, major European ones off -3%, Italy and Greece over -5%. Welcome to the real world, baby! Didn’t think you’d see it again so soon, did you? Welcome to the world where the Kool-Aid recovery does not reign supreme. Not that you’re not going to hear that anymore, and 24/7 incessantly so, but there’s no recovery with these oil prices, no matter what anybody says. The damage must be gargantuan by now. Everybody’s invested in oil. Sure, lots of shorts and stuff by now, but that’s not going to do much good. Not for pensions funds, or for governments. This thing will not blow up or over softly. There’s […]

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How The Price Of Oil Could Fall To Just $20 A Barrel

Oil prices are plunging even lower today . WTI crude is down below $50 per barrel for the first time since 2009. That’s already down by more than half since the beginning of 2014, a development almost no one saw coming. It begs the question: What is the lowest possible low for oil right now? One answer — which will terrify countries that are big oil-producers like Russia and Venezuela — is that there’s no insurmountable reason that oil couldn’t sink as low as just $20 a barrel. It’s already been there, after all. Fifty dollar oil is already having an amazing effect: Russia’s ruble has gone through the floor , and that nation is now in an economic crisis because of it, Venezuela is also in a major political and economic crisis , and the tumbling prices are likely to drive the eurozone into deflation soon , if […]

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Oil Prices Extend Declines

ENLARGE A refinery in Ulsan, South Korea. Reuters LONDON—Oil prices extended their slump on Tuesday with both Brent and U.S. crude futures trading at 5½-year lows amid continuing concerns about a global supply glut. Brent crude for February delivery on London’s ICE Futures Exchange dropped more than 2% to under $52 a barrel—its lowest level since April 2009. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February flirted with $49 a barrel, down about a dollar from Monday’s settlement. “Right now, panic seems to rule the place,” said Thina M. Saltvedt, a senior oil analyst at Nordea Bank Norge. “Prices could easily fall to $40 before we see any meaningful improvement.” Driving the bearish mood were reports that Russian oil output hit post-Soviet records and Iraqi oil exports were at their highest since the 1980s. Adding to the downward pressure, Saudi Arabia on Monday […]

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Oil Extends Drop Below $50 as U.S. Stockpiles Seen Swelling Glut

Oil extended losses below $50 a barrel amid speculation that U.S. crude inventories will expand, exacerbating a global supply glut that’s driven prices to the lowest level since April 2009. Futures fell as much as 3.1 percent in New York , declining for a fourth day. Stockpiles in the world’s biggest oil consumer probably rose by 750,000 barrels last week, a Bloomberg News survey shows. A gauge of the dollar held near a nine-year high, diminishing the investment appeal of commodities, as the Federal Reserve weighs raising interest rates and amid concern that Greece will leave Europe ’s currency union. Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as it competes with U.S. producers. The market faces “more problems” this year, according to Morgan Stanley, with surging output in Russia and […]

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Oil prices edge up after 5 percent plunge; Brent holds above $53

SINGAPORE (Reuters) – Oil edged up on Tuesday, recovering from a five percent plunge in the previous session that saw prices touch fresh 5-1/2 year lows in an oversupplied market. Growth in oil supplies showed no sign of abating, with output in Russia hitting a record high in 2014 and exports from OPEC’s second largest producer Iraq the highest since 1980. Jitters over political uncertainty in Greece drove investors out of risk assets globally to safe haven bonds. "It’s building on the recent bearish supply demand output of oil, led originally by the OPEC meeting," said Mark Keenan who heads Asia commodities research at Societe Generale. Brent crude LCOc1 gained 13 cents and was at $53.24 a barrel by 9.26 p.m. ET, after dropping to a low of $52.66 on Monday, its lowest since May 2009. U.S. crude CLc1 was up 7 cents at $50.11 after slipping below $50 […]

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Oil Prices Again Buck Economists’ Expectations

ByKathleen Madigan Economists ended 2014 with expectations that the rout in the oil markets was pretty much over. When asked by The Wall Street Journal in  early December where oil would trade on Dec. 31, 2014, the average forecast was $64.73 a barrel (up from just under $61 on Dec. 10). Instead, petroleum prices ended the year dropping to about $53 a barrel, and have continued to swoon in the very early days of 2015. Light, sweet oil for February delivery traded  briefly below $50 a barrel on Monday , the first time that has happened since April 2009. The price erosion is an example of Economics 101: too much supply and not enough demand are moving prices lower and lower.  What’s worsening the situation, however, is that instead of cutting back production when prices decline, energy producers such as Russia and Iraq are pumping the most crude in […]

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Oil drama drives shares lower in Asia and Europe

LONDON (Reuters) – European shares sank for a third day on Tuesday as a slide in oil prices showed no sign of easing off, supporting traditional safe-haven assets such as top-rated government bonds, the Japanese yen and the Swiss franc. Asian shares had slumped overnight after another day of drama on oil markets that drove U.S. crude to less than $50 a barrel for the first time since the first half of 2009 and handed Wall Street its worst losses in three months. The resulting bid for safety drove the average of yields on German DE10YT=RR, U.S. US10YT=RR and Japanese JP10YT=RR 10-year debt to less than 1 percent for the first time. Also hit by a poor reading from a purchasing managers’ survey in Italy, all of Europe’s major exchanges were in negative territory an hour into morning trade. "Global risk sentiment has been hurt by sliding stocks and […]

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Top Five Factors Affecting Oil Prices In 2015

As we ring in the New Year, let’s take stock of where we are at with the oil markets. 2014 proved to be a momentous one for the oil markets, having seen prices cut in half in just six months. The big question is what oil prices will do in 2015. Oil prices are unsustainably low right now – many high-cost oil producers and oil-producing regions are currently operating in the red. That may work in the short-term, but over the medium and long-term, companies will be forced out of the market, precipitating a price rise. The big question is when they will rise, and by how much. So, what does that mean for oil prices in 2015? It is anybody’s guess, but here are the top five variables that will determine the trajectory of oil prices over the next 12 months, in no particular order. 1. China’s Economy. […]

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NYMEX February natgas settles at lowest level since September 2012

Houston (Platts)–5Jan2015/402 pm EST/2102 GMT The NYMEX February natural gas futures contract tumbled 12.1 cents to settle at $2.882/MMBtu on Monday, the lowest price since September 2012, as the market reacted to warmer mid-January weather forecasts. The contract had been in positive territory until about 1 pm EST (1800 GMT) before dipping sharply to settle below the New Year’s Eve close of $2.889/MMBtu. Monday’s settle is the lowest since September 24, 2012, when the prompt-month contract closed at $2.837/MMBtu. Gene McGillian, Tradition Energy senior analyst, said the earlier uptick in the February contract may have resulted from short-covering, while the late tumble reflected traders’ concerns over the fundamentals of the natural gas market this winter. "How much gas is coming out of the ground, the fact that cold weather is forecast for only the next week to 10 days … really doesn’t mark a turnaround for the selloff we’ve […]

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Natural Gas Retreats After Big Bump

By Timothy Puko Natural-gas futures plummeted to a new two-year low on Monday, undoing big gains that started the session as traders looked to cash in on a volatile market. Natural gas for February delivery settled down 12.1 cents, or 4%, at $2.882 a million British thermal units on the New York Mercantile Exchange. Prices had climbed more than 5% after electronic trading opened Sunday evening, then steadily retreated just before floor trading opened in the morning. Both bulls and bears sold, a trader and a broker said. People who bet prices would rise late last week cashed out those bets to lock in profits, while people who believe prices will fall wanted to take advantage of higher prices to place new bets, they said. Record production is keeping many investors bearish even with a burst of cold spreading across the country this week, said Michael Doyle, a broker […]

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Libyan Air Force Plane Bombs Tanker, Killing Two

ENLARGE A member of the Libyan army stands on a tank on Dec. 23, 2014. The Libyan army has been battling Islamists who have taken control of much of Tripoli and the country’s second city of Benghazi. Agence France-Presse/Getty Images Two crewmen on board a Greek-managed tanker were killed after a Libyan air force plane bombed the vessel while it was anchoring at port, Greek and Libyan officials said Monday, highlighting the turmoil that continues to ravage the north African country almost four years after the collapse of central government authority. The vessel, the Liberian-flagged Araevo, was in the Libyan port of Derna in the east of the country when it was hit by a bomb from the aircraft midday Sunday, in what appeared to be a case of mistaken identity. The airstrike killed a 29-year-old Greek cadet engineer and a 23-year-old Romanian seaman. Two other seamen, both Philippine […]

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Oil Tanker Bombed at Libyan Port as Risks to Shipments Rise

A Greek-operated oil tanker was bombed near a port in eastern Libya , killing two sailors and underscoring a fresh threat to shipments from the country with Africa ’s biggest crude reserves. The Araevo, bearing a Liberian flag, was struck by a rocket during an airstrike yesterday in front of Derna port, killing two crew members and seriously injuring two others, according to an e-mailed statement from Libya’s state-run National Oil Corp. The attack didn’t result in a leak and the vessel is now in Tobruk port also in the east, Ilias Syrros, the safety manager for Aegean Shipping Enterprises Co., the Piraeus, Greece-based firm operating the tanker, said by phone. Libya is split between the United Nations-recognized government of Abdullah al-Thinni in the east and Islamists who control Tripoli in the west. Al-Thinni’s forces bombed the ship after it failed to provide details on its itinerary, said Ahmad […]

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Milestone for Kurdish oil, companies announce

Companies working in the Kurdish north of Iraq say they’ve reached milestones in terms of production and export deliveries. UPI/Gary C. Caskey LONDON, Jan. 5 (UPI) — Companies operating in the Kurdish north of Iraq said Monday they reached a milestone in terms of production and shipments for exports through Turkey. Gulf Keystone Petroleum, a British company, announced with its Hungarian partner, MOL, it was now producing oil from seven wells in the Shaikan development in the Kurdish north of Iraq and expected an eighth to come online later this month. As of Dec. 29, the companies said production was around 40,000 barrels of oil per day, with a record number of 354 trucks crossing the Turkish border with a combined 58,000 barrels of Shaikan crude oil for export sale . "No question, reaching [the] production level is a significant milestone in the project," MOL Executive Vice President Alexander […]

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Iraq ends turbulent oil year on high note

Members of the Iraqi military guard an oil platform on Sept. 21, 2014, in the Basra Gulf. (HAIDAR MOHAMMED ALI/AFP/Getty Images) Iraq reported record monthly exports for December, though revenues dropped to a three-year low due to the falling price of oil.Exports for 2014 averaged 2.517 million barrels per day (bpd), according to the initial readout provided by Oil Ministry spokesperson Assem Jihad – the highest annualized level since 1989, when exports hit 2.595 million bpd, according to the U.S. Energy Information Administration.Iraqi crude was sold in December for an average price of $57 per barrel, Jihad sai…

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Iraq exports record high 2.94 mil b/d crude in Dec, up 430,000 b/d from Nov

Amman (Platts)–6Jan2015/501 am EST/1001 GMT Iraq’s crude oil exports reached 2.94 million b/d in December, a new record high, taking the country’s 2014 monthly average to 2.517 million b/d, as the recent deal with Kurdish authorities begins to bear fruit. The exports include 2.76 million b/d from southern Persian Gulf terminals, along with 180,000 b/d shipped from the Turkish port of Ceyhan, well-informed Iraqi oil sources confirmed to Platts Monday, January 5. Based on these figures, Iraq’s production during December is estimated at 3.4 million b/d, including 150,000 b/d of Kurdish crude. If confirmed, this would be the country’s highest production rate since 1979. November production was 2.89 million b/d, while exports were 2.51 million b/d, according to the official figures. Northern exports were up 152,000 b/d from November, while southern exports rose 278,000 b/d from 2.482 million b/d in November. Oil previously exported through an independent pipeline system […]

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‘ISIL is losing’: Iraqis optimistic for 2015

‘ISIL is losing’: Iraqis optimistic for 2015 thumbnail Iraqi security forces backed by Shia militias, Kurdish forces and Sunni Muslim tribesmen will drive the Islamic State of Iraq and the Levant (ISIL) from all Iraqi lands before the end of 2015, Iraqi security officials and analysts say. Iraq has been witnessing its worst security crisis since the 2003 US-led invasion to topple Saddam Hussein. In June, ISIL fighters overran Iraq’s second largest city of Mosul without any real resistance from Iraqi troops. A few days later, ISIL seized the neighbouring province of Salahaddin and swaths of Kirkuk and Anbar provinces. Thousands of civilians and troops have been killed since then in direct clashes or mass executions carried out by ISIL. About two million people have been displaced from the conflict zones. The dramatic collapse of Iraqi troops in the northern and western provinces and the rapid advance of ISIL […]

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Iran breaking economic ties with oil

Iranian President Hassan Rouhani steering country out of recession despite bear market for crude oil. File Photo by Monika Graff/UPI TEHRAN, Jan. 5 (UPI) — An Iranian government spokesman said he expected the share of oil revenue designated in next year’s budget to be down by about 30 percent. The low price of crude oil is pushing economies like Russia’s, which relies heavily on export revenue, toward the brink of recession. Iran historically has been a hawk in the global oil sector, advocating for a price per barrel of around $100. Government spokesman Mohammad Bagher Noubakht said the share of oil revenues in the budget proposed for next year is down by about a third. "Now the government has to try hard to pull two big stones — inflation and recession — out of the bottom of the well," he said Sunday. Iran is restricted to exports of around […]

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Iran ‘Won’t Give In’ After 60% Decline in Oil Exports

Iran ’s oil exports have fallen 60 percent to 1 million barrels a day, the Tehran-based Shargh newspaper reported, citing comments by Oil Minister Bijan Namdar Zanganeh. Iran, constrained by international sanctions on its energy and financial industries, “won’t give in over 1 million barrels a day,” the paper reported Zanganeh as saying yesterday at a conference in Tehran. The minister didn’t elaborate, nor did he specify dates for the 60 percent cut in the nation’s exports, according to Shargh. U.S. and European sanctions on Iran over its nuclear program have curbed foreign investment and hindered development of the Persian Gulf state’s oil and natural gas reserves. Iran produced 2.77 million barrels a day of oil in December, down from an average of 3.58 million in 2011, data compiled by Bloomberg show. Oil exports are its main source of income. Brent crude, a pricing benchmark for more than half […]

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Saudis Report Deadly Border Clash With Infiltrators From Iraq

BEIRUT, Lebanon — Four heavily armed men from Iraq attacked a Saudi Arabia border patrol early Monday, firing automatic weapons and detonating suicide belts in a confrontation that left three guards and all the assailants dead, Saudi officials said. The early morning clash, which the Saudis described as an attempted infiltration near an isolated patch of the Saudi-Iraq frontier, was one of the deadliest episodes of border violence for Saudi Arabia.

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Guest blog: Scrap “The Call on OPEC”

Steven Kopits is the President of Princeton Energy Advisors, and has been a guest blogger on The Barrel numerous times in the past.  Seven years ago, when I first turned my attention full time to oil, one of the strangest concepts I encountered was the “call on OPEC”. The call on OPEC means different things in different contexts, but fundamentally, it is as non-economic and culturally imperialist a term as one could imagine. The call of OPEC works like this. Non-OPEC countries are assumed to produce as much as they can, guided essentially by price signals. Whatever demand is left over can be served by OPEC. OPEC is thus assumed to “balance the market” and the number of barrels necessary to do so is the “call on OPEC.” Now, imagine this concept grafted onto, say, automobile production. Suppose an American policy-maker argued that GM and Ford should produce as many cars as they […]

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Saudi Arabia Raises Price of Main Oil Grade for Asian Buyers

Saudi Arabia raised the cost of its oil sales to Asia in February, prompting speculation the world’s biggest exporter is retreating from using record price discounts to defend market share. Saudi Arabian Oil Co. will sell its Arab Light grade for $1.40 a barrel less than a regional average next month, the company said yesterday in a statement. That’s a narrowing from January, when the discount was $2, the biggest in at least 14 years. It decreased 11 prices globally and increased six. Brent oil fell 5.9 percent yesterday. Oil prices collapsed 32 percent since the Organization of Petroleum Exporting Countries decided to maintain its output target on Nov. 27, amid signs Saudi Arabia and other members are determined to let North American shale drillers and other producers share the burden of reducing an oversupply. When Aramco lowered prices for November it prompted speculation the nation was seeking to […]

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Michael Lynch: King Abdallah’s Illness, Political Change And The Oil Market

Michael Lynch: King Abdallah’s Illness, Political Change And The Oil Market thumbnail With King Abdallah of Saudi Arabia in serious condition, oil market participants are undoubtedly nervous that this could portend change and even upheaval in Saudi Arabia. Concern that his death could lead to a coup attempt or unrest in the Shi’ite population will no doubt be voiced, but is also likely to prove overblown. The overthrow of the Shah of Iran in 1979 came as a great surprise to most pundits. Indeed, as street demonstrations were growing more violent, a group of European bankers visited to lend more money to the Iranian government, dismissing the protests as nothing the Shah couldn’t handle. Among the more shocking revelations, it came to be known that the CIA station didn’t even have a farsi-speaking agent. The US government was so close to the Shah that it avoided doing anything that […]

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No Income Tax for North Dakota?

North Dakota’s Governor, Jack Dalrymple In a few short days, the North Dakota legislature heads back into session. Expected to take center stage are several key funding issues recently made more crucial by the continued decline in oil prices First is an initiative by GOP members that would effectively wipe out the state income tax. A new bill that is expected to be introduced early in the session will reduce the income tax rate to zero. This is a counter to Gov Dalrymple’s proposal for a 10% decrease in personal and corporate income tax that was made in an effort to draw more people to the region. This issue is highly contested since there is great concern over the potential lost revenue due to plummeting oil prices. North Dakota’s state funding is tightly tied to taxes on oil and gas production and was responsible for more than half the state’s […]

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Revamped U.S. oil hedges may test OPEC’s patience

NEW YORK (Reuters) – As a war of nerves between U.S. shale producers and Gulf powerhouses intensifies, OPEC’s biggest members are counting down the months until their upstart rivals lose the one thing shielding them from crashing oil prices – hedges. They may need much more patience than they reckon, however, because those hedges are a moving target. Rather than wait for their price insurance to run out, many companies are racing to revamp their policies, cashing in well-placed hedges to increase the number of future barrels hedged, according to industry consultants, bankers and analysts familiar with the deals. OPEC officials hope that once U.S. oil companies get fully exposed to the impact of an over 50 percent slide in crude prices since last June, they will have to drill fewer new wells, causing U.S. production growth to stall and putting a floor under oil prices now testing $50 […]

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Statoil’s new North Sea operations will run by remote control

Norwegian energy company Statoil starts work at North Sea platform that will eventually be run by remote. Photo courtesy of Statoil STAVANGER, Norway, Jan. 5 (UPI) — Norwegian energy company Statoil said it started operations at a North Sea platform that will eventually be run by remote control from the shore. The company brought the Valemon natural gas and condensate field into production Saturday. It’s the second platform to be put into production by the company in the last nine months. "Valemon is one of several new projects on the Norwegian continental shelf that will help add value, activity and innovation, demonstrating well the long-term perspective that characterizes Statoil’s activity on the Norwegian continental shelf," Arne Sigve Nylund, executive vice president for development and production in Norway, said in a statement. The North Sea platform has accommodations for as many as 40 workers. Long-term, the facility will be unmanned […]

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House Plans to Vote on Keystone XL Bill Friday

ByAmy Harder A sixty-foot section of pipe is lowered into a trench during construction of the Gulf Coast Project pipeline in Prague, Okla. The Gulf Coast Project is part of the Keystone XL Pipeline Project and will run from Cushing, Oklahoma to Nederland, Texas.  Bloomberg News The House is planning to vote Friday on legislation approving the Keystone XL pipeline, House Majority Leader Kevin McCarthy (R., Calif.), said in an interview Monday. With Republicans holding even more seats in the lower chamber after November’s elections, the measure is sure to pass. The vote will be the tenth time since 2011 that the GOP-controlled chamber has passed measures approving the controversial oil-sands pipeline, which has been under review by the Obama administration for more than six years. The most recent vote came in November, when the House  passed it 252-161 . The Senate, now also controlled by Republicans, is expected […]

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