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Ukraine crisis: EU leaders warn of more sanctions against Russia

Part of a missile outside an apartment building in Mariupol, eastern Ukraine, on Sunday Leaders from all 28 members of the EU have warned Russia that it faces further sanctions after fighting in Ukraine’s eastern provinces escalated in recent weeks. The heads of state noted “evidence of [Russia’s] continued and growing support” for separatists in eastern Ukraine and called on the EU to consider “further restrictive measures”, in one of the most explicit statements yet by the EU. Foreign ministers will meet on Thursday to discuss further measures at an emergency meeting called by Federica Mogherini, the EU’s foreign policy chief. The call to consider stricter sanctions marks a more cohesive line on Russia from the EU after weeks of internal disputes over how to approach the situation in Ukraine. The bloc had previously been split between hawkish member states, who had pressed for tougher sanctions, and others who […]

Posted On : Published By : Tom Whipple
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Whiff of panic over Britain’s fracking policy

PRESTON, LANCASHIRE – OCTOBER 07: Engineers at work on the drilling platform of the Cuadrilla shale fracking facility on October 7, 2012 in Preston, Lancashire. The controversial method of extracting gas by pumping high pressure water and chemicals into shale formations deep underground has been blamed for two minor earthquakes in the surrounding region. Environmental campaigners are calling for a halt to the drilling of what Cuadrilla believe could be significant reserves of natural gas. (Photo by Matthew Lloyd/Getty Images) D avid Cameron’s energy policy has hardly been a model of strategic clarity. But his government has at least been consistent in its enthusiasm for shale gas. Britain’s prime minister promised several years ago to “go all out” to extract the country’s trapped resources of shale. Even the Liberal Democrats, normally cautious about any initiative that might upset environmentalists, have supported the push for hydraulic fracturing, or fracking. Not […]

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Low prices to delay ‘peak oil demand’ past 2030, says BofA

(Reuters) – The recent rout in oil prices could delay the onset of "peak oil demand," or zero global demand growth, by around five years to beyond 2030, Bank of America Merrill Lynch (BofA) said. The bank had earlier expected that the continuation of high oil prices above $100 per barrel since 2011 would result in peak oil demand by 2025 as consumers moved to smaller and more fuel efficient cars. "Eventually, high prices would have led to substitution out of oil altogether, whether towards other cheaper fossil fuels like natural gas or out of fossil fuels and towards alternatives and renewables and switched to alternative or renewable fuel," BofA said in a note on Jan. 23. It now estimates that if prices stay in the $50 to $70 per barrel range over five years, peak demand would be pushed out past 2030. Crude oil prices LCOc1 CLc1 have […]

Posted On : Published By : Tom Whipple
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Robert Rapier: Why $50 Oil Won’t Last

In the past few weeks I have received numerous questions about the role of a “drop in demand” in the oil price decline. These questions are driven by many stories in the media that have referenced a drop in demand. There are two primary reasons given for this so-called demand drop. One is that years of high oil prices have resulted in reductions in consumption through conservation and improvements in vehicle fleet efficiency. The second reason is due to the strengthening dollar, oil has become more expensive for many countries since oil is generally traded in dollars. There are elements of truth behind both reasons. There has indeed been reduced oil consumption in recent years in most developed regions of the world. It is also true that the dollar has strengthened against many currencies. But despite the rationale that explains this drop in oil consumption, ultimately the data must […]

Posted On : Published By : Tom Whipple
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Oil Slides to Near 6-Year Low; Saudi Arabia Holds Firm Despite Supply Glut

Oil fell to the lowest level in almost six years as signs that Saudi Arabia ’s new king will maintain its production policy and rising U.S. crude stockpiles bolstered speculation that a global glut will persist. Futures dropped as much as 2.7 percent in New York , extending a 6.4 percent slide last week. King Salman Bin Abdulaziz, who took over after the death of King Abdullah on Jan. 23, pledged to maintain the policies of his predecessor in a speech on Saudi national television. U.S. inventories climbed to 383.5 million barrels last month, the highest level for December since 1930, the American Petroleum Institute reported. Oil slumped almost 50 percent last year as the Organization of Petroleum Exporting Countries resisted calls to cut output even as the U.S. pumped at the fastest pace in more than three decades. Saudi Arabia, the world’s biggest exporter, has chosen not to […]

Posted On : Published By : Tom Whipple
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$80 Oil? $200 Oil? Insiders Talk Up Market With Dire Predictions Of Shortages

With oil prices down 60 per cent since last summer, some industry insiders are trying to talk up the market by predicting wild price spikes to come, brought on by insufficient investment in oil production. John Hofmeister, a former president of Royal Dutch Shell and head of the natural gas lobby group Citizens For Affordable Energy, is calling for $80-a-barrel oil by this summer . But that’s peanuts compared to the predictions of Claudio Descalzi, head of the Italian energy company Eni Spa. He sees oil "maybe" hitting $200 a barrel within a few years. Why? Because investment in oil production is collapsing, and it will take a long time to start up new projects if and when a supply crunch comes. At the World Economic Forum, Descalzi predicted capital spending on oil would drop 10 to 13 per cent this year. And many new oil projects take five […]

Posted On : Published By : Tom Whipple
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Hedge Funds Bet Oil Will Fall Further

Hedge funds boosted bearish wagers on oil to a four-year high as U.S. supplies grew the most since 2001. Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks. U.S. crude supplies rose by 10.1 million barrels to 397.9 million in the week ended Jan. 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia ’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June. “There’s been a rush to call a bottom,” John Kilduff , a partner at Again Capital LLC, a New York-based hedge fund that […]

Posted On : Published By : Tom Whipple
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Dollar rally only just getting started

Diverging policy pushes currency higher but tepid growth will take toll Stacks of U.S. $100 bills are arranged for a photograph in New York, U.S., on Thursday, Feb. 7, 2013. The U.S. dollar advanced in trading today to the highest in almost three weeks against a basket of major currencies. Photographer: Scott Eells/Bloomberg M ark Twain famously quipped that whenever you find yourself on the side of the majority, it is time to pause and reflect. This is always sage advice for investors, but perhaps more so this year given that many seem to have started 2015 with similar if not identical views. Case in point: the US dollar. There is a strong consensus that the dollar , which rose significantly in 2014, will continue to rise this year, a fact reflected in both long-only portfolios as well as in huge net long positioning among commodities traders. More On […]

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Saudi Arabia’s Succession Line Is Set, but the Nation’s Path Remains Uncertain

Saudi Arabia’s Succession Line Is Set, but the Nation’s Path Remains Uncertain thumbnail Saudi Arabia’s new king moved with unprecedented swiftness on Friday to appoint not only the heir to his throne but the heir to his heir as well. If all proceeds according to plan — as most Saudis and some analysts assume it will — the chain of succession dictated by King Salman after the death of his half brother Abdullah lays out who will be the head of state of one of the Arab world’s richest and most influential nations through the middle of this century. Such a long-term road map represented a show of confidence in the national project, especially in an era when longtime Arab leaders have been tossed out by popular revolts and neighboring states like Iraq, Yemen and Syria are breaking apart. But analysts who study Saudi Arabia say that despite the […]

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For Saudis, Falling Demand for Oil Is the Biggest Concern

As the world’s oil producers wring their hands over a global glut that’s pushing down prices, evidence is mounting that Saudi Arabia is more concerned about shrinking demand. The world’s largest exporter has chosen not to cut production, counting instead on lower prices to stimulate consumption, said Mohammad Al Sabban, an adviser to Saudi Arabia’s petroleum minister from 1988 to 2013. The Saudis are keeping an eye on investments in fuel efficiency and renewable energy, according to Francisco Blanch, Bank of America Corp.’s head of global commodity research. “Nobody should imagine the world will continue to demand oil as long as you have it in your fields,” Al Sabban said in an interview. “We need to prepare ourselves for that stage.” The U.S. shale revolution showed that forecasts of dwindling world oil supply were premature. It also gave credence to the old adage, attributed to a Saudi oil minister […]

Posted On : Published By : Tom Whipple