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Fossil Fuel Use is Limited by Climate, if Not by Resources

We appear to be in rather peculiar and unsettling times. A year ago, conversations and fears were over the high oil price, which until September 2014, had been above $100 a barrel . Since a high of $115 in July 2014, it has plummeted, with West Texas Intermediate falling to $43 and North Sea Brent Crude marginally higher at $47 earlier in the week. Today, both have rallied to around $48, with an untypical mere 21 cents between them. Since Brent normally trades at least several dollars above WTI, any apparent synchrony of the two often reflects price-volatility, as indeed is the case now. It is fair to say that the crash in oil price was not anticipated by most people who keep an eye on the oil supply situation, and accordingly, its cause is a matter of intense speculation, with the future prognosis even more so. Among the […]

Posted On : Published By : Tom Whipple
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Oil Continues to Slide After Brief Rally

By Georgi Kantchev Oil prices resumed their slide Thursday after rallying overnight on what market participants attributed to bargain-hunting rather than a change in fundamentals. The global oil market is experiencing a toxic combination of oversupply of crude and tepid demand that has driven prices off a cliff since last summer. Brent, the global benchmark, is down close to 60% since a peak in June. On Thursday, February-dated Brent crude fell 2.9% to $47.28 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, WTI futures traded down 1.9% at $47.57 a barrel. Futures jumped more than 5% late on Wednesday. Analysts attributed the rally to some buyers moving in at low price levels as oil was flirting with $45 a barrel. "Yesterday’s price jump is likely to have been merely a technical countermovement," Commerzbank said in a note. "It is too early for any genuine […]

Posted On : Published By : Tom Whipple
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Increased U.S. Output Bolsters Oil Glut Fears Sending Prices Back Down

Oil resumed its decline after the biggest gain since June 2012 as U.S. crude production increased, adding to signs that the global supply glut that has pushed prices to a 5 1/2-year low will persist. West Texas Intermediate futures dropped as much as 2.7 percent in New York . U.S. output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy Information Administration reported yesterday. WTI is trading at a premium to European benchmark Brent, having been at a discount since July 2013. OPEC will release its monthly report with supply and demand forecasts for 2015 today. Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted cutting output even amid the U.S. shale boom, exacerbating a surplus estimated by Kuwait at 1.8 million barrels […]

Posted On : Published By : Tom Whipple
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Oil prices retreat again as Iraq schedules record exports

LONDON (Reuters) – Oil prices resumed their move downwards on Thursday, as Iraq planned a further jump in exports for February, with both Brent and U.S. crude oil dropping around $1 toward near six-year lows, and almost wiping out gains made the previous day. "A war for output market share means oil prices are skewed to the downside. Funds are unwinding a large positive investment premium, but further selling is possible," ANZ said on Thursday. Brent crude oil was down $1.48 at $47.21 a barrel at 1007 GMT, at a discount to U.S. crude, which was trading at $47.60 a barrel, down 88 cents. Iraq plans to boost monthly crude oil exports from its southern ports to a record high level in February, trade sources said on Thursday. Iraq’s State Oil Marketing Organization has allocated 3.3 million barrels per day (bpd) of Basra crude to be shipped out in […]

Posted On : Published By : Tom Whipple
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Market expectations of oil price uncertainty have increased in recent months

Source: U.S. Energy Information Administration, Short-Term Energy Outlook , January 2015 Note: Confidence interval derived from options market information for the five trading days ending Jan. 8, 2015. Intervals not calculated for months with sparse trading in near-the-money options contracts. December was the sixth consecutive month in which monthly average Brent crude oil prices decreased, falling $17/barrel (bbl) from November to a monthly average of $62/bbl, the lowest since May 2009. The December price decline, and its continuation into early January, reflects continued growth in U.S. tight oil production, strong global supply, and weakening outlooks for the global economy and oil demand growth. As oil prices have sharply declined, market expectations of uncertainty in the price outlook have increased as reflected in the current values of futures and options contracts. West Texas Intermediate (WTI) futures contracts for April 2015 delivery, traded during the five-day period ending January 8, averaged […]

Posted On : Published By : Tom Whipple
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Oil markets tread water after World Bank report

Oil prices holding steady as markets weigh economic data. Photo by John Angelillo/UPI WASHINGTON, Jan. 14 (UPI) — Crude oil markets were treading water early in the Wednesday session after the World Bank said global economic growth was lower than expected. The prices for Brent and West Texas Intermediate were holding steady early in the Wednesday session to trade at $46.64 per barrel and $46.02 per barrel, respectively. Markets have been in a free fall for much of the week, with Brent holding below the $50 mark for three consecutive days, the lowest price in roughly five years. Oil prices are at the point where international energy companies and those in the secondary sector are trimming jobs and spending in an effort to cope with weak market conditions. The World Bank in a report Tuesday said overall economic growth last year was lower than expected . Behind the numbers, […]

Posted On : Published By : Tom Whipple
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Oil-at-Sea Storage Seen Raising Rates to Six-Year High

Supertanker owners from Tokyo to Athens said demand to store oil on vessels is strengthening, with Morgan Stanley and Evercore Partners Inc. predicting the highest shipping rates in six-years are possible. Frontline Ltd., Nippon Yusen Kaisha and Dynacom Tankers Management Ltd., who control 11 percent of the fleet, said orders are multiplying as the global oil glut expands. Brent crude plunged 60 percent since June amid signs OPEC nations are unwilling to tackle a global oversupply they say was caused by U.S. drillers and other producers. The price of oil for delivery at later dates is so far above current costs, a market structure known as contango, that it can be profitable to store cargoes and lock in returns now in the futures market. “This is going to tighten the market and make the entire market move higher,” Fotis Giannakoulis, an analyst at Morgan Stanley in New York , […]

Posted On : Published By : Tom Whipple
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Exclusive: U.S. lawmakers push ahead on Iran sanctions – senior senator

WASHINGTON (Reuters) – Republican and Democratic U.S. lawmakers will press ahead with a plan for more sanctions on Iran, the chairman of the Senate Foreign Relations Committee said on Wednesday, despite White House warnings that they risked derailing nuclear talks. Lawmakers, who say they fear Obama administration negotiators may not take a hard enough line with Tehran, are also at work on a separate bill to have Congress approve any final agreement on Iran’s nuclear program, Senator Bob Corker, the chairman, told Reuters in an interview. "There’s continual efforts to try to figure out a way for Congress to play a role to strengthen whatever final deal may occur," the Tennessee Republican senator said. Republican Senator Mark Kirk and Democratic Senator Robert Menendez are finalizing a bill for tougher sanctions on Iran if there is no final nuclear deal by June 30. The Senate Banking Committee is due to […]

Posted On : Published By : Tom Whipple
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Iran’s Budget Assumes $40 Oil After Prices Decline 33%

Iran , its oil exports curbed by sanctions, is lowering the crude price for this year’s budget to $40 a barrel as the energy slump affects governments and industry. The government is revising its draft budget to assume a base price of $40, from $72, the state-run Fars News Agency reported Finance and Economy Minister Ali Tayebnia as saying today. The minister said some projects will have to be halted, according to Fars. The Iranian calendar year begins March 21. Brent, a pricing benchmark for more than half the world’s oil, fell 18 percent this year after tumbling 48 percent last year. Qatar Petroleum and Royal Dutch Shell Plc yesterday called off plans to build a $6.5 billion petrochemical plant in the emirate in response to lower oil prices. Brent crude futures fell 2.9 percent to $47.28 a barrel at 2:27 p.m. in Dubai. Iran, OPEC’s fourth-largest producer, budgeted […]

Posted On : Published By : Tom Whipple
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Iraq to Double Exports of Kirkuk Crude Amid Oil Surplus

Iraq will double exports within weeks from its northern Kirkuk oil fields and continue boosting output further south amid a global market glut that’s pushed prices to their lowest level in more than five and a half years. Crude shipments will rise to 300,000 barrels a day from the Kirkuk oil hub, where authorities are also upgrading pipelines between fields, Fouad Hussein, a member of the Kirkuk provincial council’s oil and gas committee, said yesterday in a phone interview. “There is a need to install a new pipeline network” to increase exports from the area, Hussein said. Kirkuk, which currently exports about 150,000 barrels a day, will boost shipments to 250,000 barrels a day and then to 300,000 “in the coming few weeks,” he said. Iraq, holder of the world’s fifth-largest crude reserves, is rebuilding its energy industry after decades of wars and economic sanctions. The country exported 2.94 […]

Posted On : Published By : Tom Whipple