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Oil Producers Betting on Price Drop With OPEC Not Curbing Output

A visitor passes oil barrels stored at the Emirates National Oil Co. lubricants and… Read More The oil industry was listening as OPEC talked down crude prices to a more than five-year low. Drillers, refiners and other merchants increased bets on lower prices to the most in three years in the week ended Jan. 6, government data show. Producers idled the most rigs since 1991, with some paying to break leases on drilling equipment. Companies are hedging more and drilling less amid concern that the biggest slump in prices since 2008 will continue. Oil dropped for a seventh week after officials from Saudi Arabia , the United Arab Emirates and Kuwait reiterated they won’t curb output to halt the decline. “Producers are desperately hedging their production in a drastically falling market,” Phil Flynn , a senior market analyst at the Price Futures Group in Chicago , said by phone […]

Posted On : Published By : Tom Whipple
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Earnings Pessimism Jumps as Oil Threatens S&P 500 Growth

While stock investors wait for the benefits of cheaper oil to seep into the economy, all they can see lately is downside. Forecasts for first-quarter profits in the Standard & Poor’s 500 Index have fallen by 6.4 percentage points from three months ago, the biggest decrease since 2009, according to more than 6,000 analyst estimates compiled by Bloomberg. Reductions spread across nine of 10 industry groups and energy companies saw the biggest cut . Earnings pessimism is growing just as the best three-year rally since the technology boom pushed equity valuations to the highest level since 2010. At the same time, volatility has surged in the American stock market as oil’s 55 percent drop since June to below $49 a barrel raises speculation that companies will cancel investment and credit markets and banks will suffer from debt defaults. “Either there is nothing to worry about and crude is going […]

Posted On : Published By : Tom Whipple
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Oil to Put Chill on U.S. Earnings Season

As fourth-quarter earnings season gets under way, investors are bracing for the softest U.S. profit growth in years, pinched by collapsing oil prices and a strong dollar. That double whammy, coupled with the highest valuations for stocks since the financial crisis, will test the market’s ability to prolong its extended bull run and will likely make for continued bumpy trading in the weeks ahead. Over the past few months, the Dow Jones Industrial Average and S&P 500 have carved out new record highs, while suffering frequent setbacks. Both indexes hit fresh peaks in the final sessions of last year but have since experienced two straight weeks of declines. Some prominent hedge funds are cutting back their exposure to stocks and reducing their use of borrowed money to amplify their bets, according to fund managers and a confidential memo Morgan Stanley sent to clients last week that was viewed by […]

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U.S., Iran eye progress in next round of nuclear talks: Kerry

GANDHINAGAR, INDIA (Reuters) – U.S. Secretary of State John Kerry said on Monday that he and his Iranian counterpart would seek at their meeting on Wednesday to lay the ground for negotiations on Tehran’s nuclear program to make greater progress. Kerry meets Iranian Foreign Minister Mohammad Javad Zarif in Geneva in a bid to revive the search for an elusive nuclear accord after negotiators failed for the second time in November to meet a self-imposed deadline. "The meeting is calculated to take stock, number one, and to provide direction to our teams, number two, and to hopefully be able to accelerate the process to make greater progress," Kerry told reporters on a visit to India. Zarif has also struck a conciliatory tone ahead of the new push to end the 12-year-old dispute over Iran’s nuclear program, which Tehran insists is peaceful. The West fears it is seeking to develop […]

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Saving the Nuclear Deal With Iran

Twice recently, Iran’s president, Hassan Rouhani, has acted boldly in support of his biggest political gamble, pursuit of a nuclear agreement with the major powers. In a speech last Sunday on Iran’s troubled economy, he argued that Iran will never enjoy sustained growth if it is isolated from the rest of the world. Three weeks earlier, he made clear that he would confront Iran’s hard-liners in his efforts to clinch a deal in which Iran would agree never to produce a nuclear weapon in return for the lifting of crippling international sanctions. But Mr. Rouhani is not the only leader trying to keep a potential agreement from being savaged by domestic opponents. President Obama has a similar problem in Congress, where Senators Robert Menendez, a Democrat from New Jersey, and Mark Kirk, a Republican from Illinois, are expected to introduce legislation that could torpedo any deal by imposing new […]

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Iraq Raises Basrah Crude Price for Asia, Follows Saudi Lead

Iraq , OPEC’s second-largest producer, raised the selling price for February shipments to Asia of its main Basrah Light crude by 30 cents a barrel, after Saudi Arabia boosted its pricing to the region. Iraq set Basrah Light at a discount of $3.70 a barrel to the average of Middle Eastern benchmark Oman and Dubai grades, the country’s Oil Marketing Co. said yesterday in an e-mailed statement. The announcement followed increases Jan. 5 by Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, for its main grades to Asia. Iran raised its February prices to Asia last week. The Basrah Light discount for February, while narrower than the January discount of $4 a barrel, was greater than for any other month since at least August 2003, when Bloomberg began compiling data. “It’s in line with the Saudi move,” Robin Mills, the head of consulting at Manaar […]

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OPEC price war in Asia intensifies as oil falls below $50

SINGAPORE (Reuters) – Even as Saudi Arabia and its Gulf OPEC allies appear united in their refusal to cut output to boost global oil prices, they are becoming locked in an increasingly fierce battle to secure market share in Asia. Oil prices have slumped below $50 a barrel, the weakest since 2009, triggering a price war between producers to secure customers in Asia. And the price outlook remains grim with Goldman Sachs slashing its three-month benchmark crude forecasts to just above $40.[O/R] The United Arab Emirates (UAE) last week joined Kuwait and Iraq in pricing crude they sell to Asia below that of OPEC’s top producer Saudi Arabia. The discounts show how Gulf members, who account for more than half of OPEC output, are prepared to take on each other to retain market share and, in so doing, put more pressure on global oil prices. "It’s a fight for […]

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China auto sales slow in 2014 but reach 19.7 mln vehicles

BEIJING (AP) — Growth in auto sales in China, the biggest market by number of vehicles sold, slowed last year but reached 19.7 million vehicles. An industry group, the China Association of Automobile Manufacturers, said Monday sales for the full year rose 9.9 percent. That was down 5.8 percentage points from 2013. Global automakers are looking to China to drive sales growth despite its cooling economy. They are investing heavily in trying to appeal to Chinese tastes. Sales in December rose 16 percent to just over 2 million vehicles.

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China to Raise Consumption Tax on Oil Products, Cuts Prices

BEIJING–China said Monday that it would raise the consumption tax on a range of oil products for the third time in less than two months, as global oil prices remained under pressure. At the same time, the state economic planner said it would cut the official retail prices on gasoline and diesel, adding that the two moves effectively result in a net reduction of domestic oil prices. The moves are aimed at promoting energy conservation and cutting pollution, the Ministry of Finance said in statements on its website. China would raise the consumption tax on gasoline, lubricants and naphtha by 0.12 yuan (about US$0.02) a liter to 1.52 yuan, while the tax on diesel, jet fuel and fuel oil would rise by 0.1 yuan a liter to 1.2 yuan, effective Tuesday, the finance ministry said. The ministry said the additional tax revenue will be used to clean up the […]

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At least one major oil company will turn its back on fossil fuels, says scientist

The oil price crash coupled with growing concerns about global warming will encourage at least one of the major oil companies to turn its back on fossil fuels in the near future, predicts an award-winning scientist and former industry adviser. Dr Jeremy Leggett, who has had consultations on climate change with senior oil company executives over 25 years, says it will not be a rerun of the BP story when the company launched its “beyond petroleum” strategy and then did a U-turn . “One of the oil companies will break ranks and this time it is going to stick,” he said. “The industry is facing plunging commodity prices and soaring costs at risky projects in the Arctic, deepwater Brazil and elsewhere. “Oil companies are also realising it is no long morally defensible to ignore the consequences of climate change.” Leggett, now a solar energy entrepreneur and climate campaigner, points […]

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