The Unintended Consequences of Cheap Oil
Cheaper oil is good for the economy — it’s basically the equivalent of a tax cut. Unless it’s bad for the economy, which can be the case if falling prices spur deflation Continue Reading
Oil Extends Drop From 5 1/2-Year Low as Surplus Seen Persisting
Oil fell in New York and London , extending losses from the lowest close in more than five and a half years as OPEC nations predicted the global surplus will persist and U.S. stockpiles were forecast to rise. Futures dropped as much as 1.9 percent in New York. Crude stockpiles in the U.S. probably expanded further above seasonal levels last week, a Bloomberg News survey showed before a government report today. Prices may recover only when demand improves later this year, Ali Al Yabhouni, the United Arab Emirates ’ governor to OPEC, said yesterday. Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted calls to cut production even as the U.S. pumped at the fastest rate in more than three decades. WTI briefly traded higher than Brent yesterday for the first time since July 2013, a […]
Oil prices extend slide in commodities sell-off
SINGAPORE (Reuters) – Oil prices fell more than 1 percent on Wednesday after touching their lowest in nearly six years the previous session, extending losses alongside a sell-off in other commodities. Commodities came under pressure after the World Bank cut its forecasts for global growth, reinforcing worries of a gloomy economic outlook at a time when oil markets are plagued by oversupply. "There’s clearly a souring of sentiment towards industrial commodities and I think that’s spilling over to oil today," said Michael McCarthy, chief strategist at CMC Markets in Sydney. February Brent crude LCOc1 had dropped 49 cents to $46.10 a barrel by 0509 GMT and West Texas Intermediate crude for February CLc1 was at $45.38, down 52 cents. Copper plunged to 5-1/2 year lows, while gold struggled to hold near a 12-week high on Wednesday. "It’s unusual to see the so-called safe-haven assets moving down with industrial commodities," […]
Oil rout takes Brent to near six-year low
Crude oil approached six-year lows on Tuesday after a leading Opec producer said the cartel would not change its strategy to hold production at current levels, adding that a rebound in prices was unlikely. Brent crude, the international benchmark, and West Texas Intermediate have fallen almost 60 per cent since the middle of June to levels last seen in early 2009. ICE February Brent fell as far as $45.23 a barrel before recovering to $45.39 a barrel, down $2.04 in early trading. Nymex February West Texas Intermediate declined $1.57 to $44.50. More On this topic IN Commodities Speaking at an energy conference in Abu Dhabi, Suhail bin Mohammed al-Mazroui, the oil minister for the United Arab Emirates, said that he was confident that Opec’s November decision made in Vienna was the right one “The strategy will not change . . .” he said of the move to keep output at its existing […]
WTI Crude Oil Surpasses Brent for First Time Since 2013
West Texas Intermediate oil became more expensive than Brent for the first time in 1 1/2 years amid a weak European economy and signs that U.S. crude export controls will loosen. WTI traded higher than Brent today for the first time since July 2013, based on February intraday prices. It averaged $6.64 less than Brent last year, and traded as much as $15.45 lower than its European counterpart on Jan. 13, 2014. Oil demand in Europe will average 13.42 million barrels a day this year, down from 13.47 million in 2014, the International Energy Agency forecast last month. Opinion polls showed Greek Prime Minister Antonis Samaras hasn’t narrowed the lead by his top opponent from the Syriza party, boosting concerns that a change in political leadership will spur an exit from the euro area. “There are two key reasons for the rapid close of the Brent-WTI spread, with the […]
WTI Crude Oil Surpasses Brent for First Time Since 2013
West Texas Intermediate oil became more expensive than Brent for the first time in 1 1/2 years amid a weak European economy and signs that U.S. crude export controls will loosen. WTI traded higher than Brent today for the first time since July 2013, based on February intraday prices. It averaged $6.64 less than Brent last year, and traded as much as $15.45 lower than its European counterpart on Jan. 13, 2014. Oil demand in Europe will average 13.42 million barrels a day this year, down from 13.47 million in 2014, the International Energy Agency forecast last month. Opinion polls showed Greek Prime Minister Antonis Samaras hasn’t narrowed the lead by his top opponent from the Syriza party, boosting concerns that a change in political leadership will spur an exit from the euro area. “There are two key reasons for the rapid close of the Brent-WTI spread, with the […]
Natural Gas Bounces as Weather Forecast Grows Slightly Colder
By Timothy Puko Natural gas prices are rebounding slightly Tuesday as traders appear unwilling to keep selling at prices below $2.80 with two months of winter still to go. Natural gas for February delivery is 6.5 cents, or 2.3% higher, at $2.86 a million British thermal units on the New York Mercantile Exchange. Prices have now bounced five times this month, and each time they have dropped near $2.80/mmBtu. Weather forecasts encouraged Tuesday’s buying, analysts and a broker said. Half of U.S. homes use natural gas heat, and above-normal temperatures throughout December have cut demand, taking down the market at a time it usually peaks. Next week’s forecasts, while they are warmer-than normal, cooled in overnight updates, raising expectations for gas heating demand. With more than two months left for official winter heating season, traders have to be aware that weather can still turn severe and drive a spike […]
Oil prices down again as UAE defends holding production
LONDON (Reuters) – Brent and U.S. WTI crude oil prices fell to their lowest levels in almost six years on Tuesday as a big OPEC producer stood by the group’s decision not to cut output to tackle a glut in the market. Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly U.S. shale oil, and weaker-than-expected demand in Europe and Asia. Rather than cutting output to try to balance the market, producers from the Organization of the Petroleum Exporting Countries (OPEC) are offering discounts to customers in an attempt to defend market share. At 1032 GMT, February Brent crude was down $1.06 at $46.37 a barrel, after dipping to $45.23, its lowest since March 2009. U.S. crude for February was down $1.15 at $44.92 per barrel, off an intraday low of $44.21. "The market is in a bit of a panic […]
Oil Recovery Seen by Kuwait to U.A.E. After Lower Prices
Oil oversupply that sent prices to a five-year low probably will persist until at least the second half when demand is set to recover, according to Kuwait ’s oil minister and the OPEC governor of the United Arab Emirates . Faster global economic growth will be needed to help absorb the oil surplus estimated at 1.8 million barrels a day, Kuwait Oil Minister Ali Al-Omair told reporters in parliament yesterday. A demand-led recovery is seen in the second half, the U.A.E.’s Governor to OPEC Ali Al Yabhouni told reporters in Abu Dhabi. Oil fell about 40 percent since the Organization of Petroleum Exporting Countries chose to maintain its production target at a Nov. 27 meeting, seeking to defend market share rather than prices. The U.A.E. and Kuwait are OPEC members. Slowing economic growth has contributed to the drop in prices, Al-Omair said. “We are expecting that this situation will […]
Oil at $40, and Below, Gaining Traction on Wall Street
Brace for $40-a-barrel oil. The U.S. benchmark crude price, down more than $60 since June to below $45 yesterday, is on the way to this next threshold, said Societe Generale SA and Bank of America Corp. And Goldman Sachs Group Inc. says that West Texas Intermediate needs to remain near $40 during the first half to deter investment in new supplies that would add to the glut. “The markets are continuing to price in huge oversupply in the first half of 2015,” Mike Wittner , head of research at Societe Generale SA in New York , said by phone on Jan. 12. “We’re going to go below $40.” Oil is seeking a “new equilibrium” as the Organization of Petroleum Exporting Countries abandons its role of keeping supply and demand aligned, according to Goldman. Prices are poised to drop further, testing the ability of U.S. shale drillers to keep pumping. […]