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Hopes for Drought’s End Fade as California Rains Vanish

California will reach the halfway point in its rainy season this weekend. Hopes that the three-year drought will be washed away are probably already in the past. While December brought heavy rains that put the state on pace for a normal season, there hasn’t been much precipitation since then. Since Jan. 1, Sacramento and Fresno have received too little to measure. “We’ve had four weeks of a very minimal amount of rain in the northern part of the state, which is where our key reservoirs lie,” said Pete Fickenscher, senior hydrologist at the California Nevada River Forecast Center in Sacramento. Now the forecast calls for a high pressure ridge to form along the West Coast, bringing sun, mild temperatures and an extended dry spell. “They certainly have a dry forecast with that ridge,” said Brian Hurley, a meteorologist with the Weather Prediction Center in College Park, Maryland . “That […]

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U.S. airlines anticipate massive fuel savings despite costly hedges

(Reuters) – U.S. airlines gave bullish guidance this week for their first-quarter results, buoyed largely by plummeting fuel prices. Four airlines said they will save hundreds of millions of dollars in fuel costs starting this year, with global oil prices down more than 57 percent since June. Fuel is the biggest variable cost for airlines, often representing a third or more of total operating expenses. Fourth-quarter results did not fully reflect the windfall, because many airlines failed to anticipate the steep oil price slide, and made fuel hedges months ago that ended up costing the carriers hundreds of millions of dollars. On Thursday, Alaska Airlines ( ALK.N ) projected a group low of $1.85 per gallon for the first quarter, down from $2.64 in the fourth quarter of 2014. United Airlines ( UAL.N ) said it will pay between $1.96 and $2.01 per gallon for the quarter, down from […]

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U.S. jobless claims off seven-month high; oil layoffs watched

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits fell last week from a seven-month high, pointing to continued improvement in labor market conditions. Initial claims for state unemployment benefits slipped 10,000 to a seasonally adjusted 307,000 for the week ended Jan. 17, the Labor Department said on Thursday. That reversed the bulk of the prior week’s increase which had pushed claims to their highest level since early June, but fell short of economists expectations for a 300,000 reading. Economists had dismissed the prior week’s increase as "noise" given that claims data is difficult to adjust for seasonal variations around the holidays. Some, however, wondered if some of the elevation in claims reflected layoffs in the oil industry in the wake of plunging crude prices. "It is unclear at this point whether or not this move up in the trend reflects issues seasonally adjusting the […]

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Gazprom committed to Ukraine

Russian gas company Gazprom chief Alexei Miller says Ukraine still in debt, but contractual obligations will be honored. (UPI Photo/Anatoli Zhdanov) MOSCOW, Jan. 22 (UPI) — Russian energy company Gazprom remains committed to its contractual obligations in Ukraine, company chairman Alexei Miller said. Most of the Russian natural gas bound for the European market runs through Soviet-era transit networks in Ukraine. Ongoing contractual rows between Kiev and Gazprom, and simmering conflict in eastern Ukraine, means that conventional route, as well as Ukrainian gas supplies, is at risk. The Russian company said it was operating under the terms of historic documents embraced by the pre-conflict government in Ukraine, which extends through 2019. A so-called winter package gives Ukraine a discount on gas prices, though that deal expires March 31. Miller said the company remained committed to gas supplies to Ukraine and gas transits to Europe. "Gazprom has cooperated and will […]

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Ukraine Cedes Donetsk Airport to Rebels as Fighting Continues

MOSCOW — Ukrainian officials acknowledged on Thursday that they had relinquished to rebel forces control over the terminal of the airport in Donetsk, while artillery fire gutted a trolley bus in the embattled city, killing at least eight people, and evidence emerged of a growing Russian military role in the area. The airport, the scene of fierce battles in recent days, is nonfunctional, the terminal and runways having been destroyed months ago. Nonetheless, it has retained high symbolic value in the ongoing hostilities as the government’s last toehold in the city, the largest in the contested territory of southeastern Ukraine. At a news briefing in Kiev on Thursday, a Ukrainian military spokesman, Vladyslav Seleznyov, said that six soldiers had died in the fighting over the airport and 16 had been captured by forces of the self-declared Donetsk People’s Republic before a decision was made to withdraw from the ruined […]

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A new theory of energy and the economy – Part 1 – Generating economic growth

How does the economy really work? In my view, there are many erroneous theories in published literature. I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system. Once energy supply and other aspects of the economy start hitting diminishing returns, there is a serious chance that a debt implosion will bring the whole system down. In this post, I will look at the first piece of this story, relating to how the economy is tied to energy, and how the leveraging impact of cheap energy creates economic growth. Trying to tackle this topic is a daunting task. The subject crosses many fields of study, including anthropology, ecology, systems analysis, economics, and physics of a thermodynamically open system. It also involves reaching limits in a finite world. Most researchers have tackled the subject without […]

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Oil Fluctuates Ahead of ECB Meeting, Oil Data

LONDON—Oil prices fluctuated on Thursday with markets braced for the outcome of a crucial meeting by the European Central Bank and for data on U.S. crude inventories. The U.S. data could reinforce the perception that the global oil glut that has driven crude off a cliff since last summer will continue well into 2015. Brent, the global benchmark, is down close to 60% since June. On Thursday, Brent was up 0.7% to $49.40 a barrel in volatile trade on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded broadly flat at $47.80 a barrel. The ECB’s executive board is reported to have proposed buying roughly €50 billion ($58 billion) a month in bonds for at least a year, according to The Wall Street Journal. The final number will be decided when the full 25-member governing council meets later in […]

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Oil Trades Below $48 as U.S. Crude Supplies Seen Higher

Oil traded below $50 a barrel in London for a third day as investors awaited a European Central Bank decision on starting a quantitative-easing program. Brent futures fell as much as 1.1 percent. The dollar approached an 11-year high against the euro, undermining the appeal of dollar-priced commodities for protecting against inflation, amid speculation the ECB will today introduce large-scale bond purchases. Oil also declined on estimates that U.S. crude inventories expanded for a second week. “The ECB will rule market sentiment today,” Olivier Jakob , managing director at consultants Petromatrix in Zug, Switzerland , said by e-mail. “Some QE is already priced in, hence directionally crude can go both ways” once the ECB’s intentions are clear, he said. Brent for March settlement was 10 cents lower at $48.93 a barrel on the London-based ICE Futures Europe exchange as of 9:45 a.m. London time, having earlier fallen as low […]

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Natural-Gas Price Rebound on Cold Weather Forecasts, Profit-Taking

(Adds EIA survey forecasts and price table) Natural-gas futures bounced back from big losses as colder forecasts for the beginning of February and lower prices encouraged buyers on Wednesday. The front-month February contract settled up 14.3 cents, or 5.1%, at $2.974 a million British thermal units on the New York Mercantile Exchange. The gains broke a three-session losing streak that culminated with 9.5% losses on Tuesday alone, the biggest one-day losses by percentage since February 2014. While large, Wednesday’s gains were only the fourth-biggest in one day during the past month. The winter has been characterized by big swings in both directions as gas traders try to respond to shifting weather forecasts that impact demand. Half of U.S. homes use natural gas for heat, making winter cold typically the market’s biggest driver. Weather forecasts had flipped from colder than normal to warmer than normal over the weekend, leading to […]

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Supply Minus Demand, Explained

I recently posted a graph on supply versus demand balances.  This has drawn significant interest, as it stands in stark contrast to the forecasts of all the agencies, OPEC, and the major forecasting firms. In this post, I will discuss the underpinnings. Demand World Oil Demand (All Petroleum Liquids) Source: Respective monthly reports of the agencies The major agencies, the US Energy Information Administration (EIA) and the European International Energy Agency (IEA), as well as OPEC, expect demand to increase moderately in 2015, up 1.0 to 1.6 mbpd (million barrels per day), with an average gain of  1.2 mbpd.  This represents a middling year, better than 2014, but certainly unexceptional in recent times.  Given that oil prices have fallen by more than half, the agencies must consider price elasticity of demand to be something close to zero.  According to these views, cheap oil does not make people buy more of it. This was […]

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OPEC’s El-Badri Says Oil Will Rebound Instead of Fall to $20

Oil prices will rebound rather than extend their decline to as low as $20 a barrel because a collapse since June isn’t merited by global supply and demand, OPEC’s Secretary-General said. Producers outside the Organization of Petroleum Exporting Countries should be first to reduce their output amid a surplus that’s pushed crude below $50 a barrel, Abdalla El-Badri said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland on Wednesday. Iraq, OPEC’s fastest-growing supplier, said it needs to boost output to compensate for revenues eroded by the price slump. “The price will not go to $20 or $25, I think the price will stay at where we are now,” El-Badri said. “We have seen this before — prices coming down very fast and go up very slow. But prices will rebound.” Oil slumped almost 60 percent since June as OPEC nations continued pumping amid […]

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White House, Congress Clash Over Iran Sanctions

ENLARGE Sen. Bob Corker (R., Tenn.) chairs his first Senate Foreign Relations Committee hearing in Washington on Wednesday. Photo: Reuters WASHINGTON—The Obama administration collided with Congress Wednesday over Iran sanctions, and both sides were girding for a brawl that appeared likely to stretch through the year. Lawmakers from both parties vowed at a Senate hearing to press ahead with legislative plans for new punitive measures—over President Barack Obama ’s veto warnings. Top administration officials, meanwhile, disclosed at the hearing that the international talks over Iran’s nuclear program may extend beyond an end-of-June deadline. That would be the third such extension. Deepening the chasm, House Speaker John Boehner (R., Ohio) invited Israeli Prime Minister Benjamin Netanyahu to address Congress on Feb. 11 about threats from Islamic extremism and Iran. The Obama administration called the move a breach of diplomatic protocol because neither Congress nor Israel consulted first with the White […]

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Iraq back from the brink with record oil figures

In spite of still struggling to recover from the 2003 war and the continuing Islamic State (IS) insurgency, Iraq produced a record amount of oil last month, the country’s oil minister announced at the weekend. Unveiling production of 4 million barrels of crude per day in December, Adel Abdel Mehdi told reporters that the total was " a historical figure, and the first time Iraq has achieved this." Speaking at a joint press conference with his Turkish counterpart Taner Yildiz in Baghdad, the Iraqi minister added the production increase would "make up" for the recent slump in oil prices. Iraq, where lawmakers are now looking at a 2015 draft budget based on an average of $60 dollars a barrel, depends on crude exports to generate over 90 percent of government revenues. The barrel export count, if confirmed, also trumps estimates of 3.7 million b/d by the International Energy Agency […]

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Algeria Thwarts Plans to Attack Oil Installations

Algiers — In anticipation of possible attacks on the second anniversary of the Tiguentourine gas plant siege, Algerian troops stepped up security on the southern border. Authorities announced last week the foiling of a series of terrorist operations targeting three areas of oil and gas installations in the south. Army forces already succeeded in dismantling a 12-member terrorist cell that was planning attacks against vital facilities in conjunction with the January 16th anniversary of the In Amenas assault. The operation came a few days after the discovery of weapons and military equipment along the border area with Libya, which sparked fears of a fresh attack targeting oil facilities in the vicinity of Tiguentourine. A defence ministry communique stated that the neutralised terrorist cell was preparing to carry out operations in Algeria in co-ordination with groups operating abroad. The communique pointed to a link between this cell and a terrorist […]

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Algeria expects oil price to fall further, delays spending: PM Sellal

Algiers (Platts)–22Jan2015/608 am EST/1108 GMT Algerian Prime Minister Abdelmalek Sellal said late Wednesday he expects the oil price to fall further, adding that Algeria is now in a state of economic "crisis." Speaking on state television, Sellal said Algeria is to defer a number of key infrastructure projects due to the falling oil price as the slump begins to hit the North African country’s economy. "The decline in the oil price will continue and it will not go back to $120/b," he said. "We are in a state of crisis," Sellal said. "Oil is below $50/b, and no one anticipated such a fall." Algeria’s 2015 budget is based on a price of $60/b. "We will continue to invest in social projects, but we will have to cut certain non-essential spending such as trams and railways. These will be postponed," Sellal said. Despite the economic crisis, Sellal said Algeria had […]

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Fuel Shortages Show Pakistani Struggle to Cope With Oil’s Drop

As motorists around the world enjoy the lowest fuel prices in five years thanks to surging production, Pakistanis are struggling to fill up their tanks. Pakistani Prime Minister Nawaz Sharif is racing to tackle one of the nation’s worst fuel shortages in recent memory. Since the crisis began last week, he’s suspended five officials, including Pakistan State Oil Co.’s deputy chief, and has sought hourly updates on the situation. The cash-strapped distributor’s move this month to reduce shipments by 80 percent left it unable to meet a surge in demand after the government cut gas prices to match lower global costs. The Finance Ministry has arranged emergency funding to import oil, Power Minister Khawaja Asif said in a text message yesterday. The crisis is a test of Pakistan’s credibility in the eyes of overseas investors, whose fivefold increase in purchases of the nation’s shares resulted in Asia ’s second-highest […]

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Africa Oil Boom on Hold as Prices Spur Explorer Caution: Energy

Africa’s oil and gas boom is in jeopardy. The dash for resources that saw explorers invest billions of dollars to tap promising oil fields from Ghana on the west coast to Tanzania on the east, is stalling as the global drop in crude prices pushes drillers to reconsider the high costs of exploration on the African continent. For many drillers, 2014 was already failing to reach the promise seen in 2013 when half of the world’s 10 largest oil and gas finds were made in Africa. With oil prices dropping below $50 a barrel, analysts say they expect a more concentrated pullout in 2015. “Now that we’re at another weak oil price, every company will be reviewing discretionary spending,” said Brendan Warn, an analyst at BMO Capital Markets in London. In Africa’s frontier environment, drilling may bring a higher reward, but since most exploration takes place offshore, single wells […]

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Venezuela Sees U.S. Wielding Oil as Weapon to ‘Destroy’ Nation

The U.S. wants to use shale oil as a geopolitical weapon to destroy Venezuela by flooding the market with supply and driving prices down, according to the OPEC member. Hydraulic fracturing, the method used to remove shale oil trapped in rock, is “destructive,” President Nicolas Maduro said during a national address broadcast on radio and television. Venezuela’s economy shrank 2.8 percent last year as crude slumped almost 50 percent amid the fastest pace of U.S. production in more than three decades while the Organization of Petroleum Exporting Countries resisted calls to cut output. “The U.S. wants to use oil as a geopolitical weapon,” Maduro, 52, said during his speech on Jan. 21. “They’re trying to destroy Venezuela.” OPEC members Venezuela and Iran have questioned the group’s decision to maintain its quota. Oman, the biggest Middle Eastern oil producer that’s not part of OPEC, is having a “really difficult time” […]

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Beijing’s “southern water” safe and clear

BEIJING, Jan. 22 (Xinhua) — Beijing’s tap water has passed daily tests since last month, when a massive project drove water from a south China river into the Chinese capital, Beijing’s water supplier said. Water from a tributary of the Yangtze River has flowed about 1,200 km to Beijing since Dec. 27 as part of a south-to-north water diversion project to quench China’s drought-hit north. Beijing Waterworks Group said testing facilities have been installed at 159 sites across Beijing, and tests have been conducted twice a day. So far, the city’s tap water has met national standards, said Liang Li, spokeswoman of the group. The project delivers 800,000 cubic meters of water to Beijing each day, up from 700,000 when the supply began, according to Liang. Residents have praised the influx of "southern water" for clearer tap water. Beijing’s water supply previously relied heavily on groundwater with high calcium […]

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Canada hit hard by falling oil prices

Canadian oil group says it expects decline in commodity prices will have widespread impacts on sectors and economies. UPI/Gary C. Caskey CALGARY, Alberta, Jan. 22 (UPI) — Canadian oil production is expected to drop by more than 100,000 barrels per day because of slumping oil prices, an industry group forecasts. The Canadian Association of Petroleum Producers said in a short-term review it expects oil production to decline by 65,000 bpd this year and 120,000 bpd in 2016. CAPP President Tim McMillan said weak oil prices present a challenge across a wide range of sectors and economies in Canada. "Investors have seen their portfolios shrink. And governments will see reduced revenues from the industry’s royalty and tax payments," he said in a Wednesday statement. "We all will feel the effects." Because of the complexities involved with bringing some of the more viscous forms of Canadian crude oil to the surface, […]

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Keystone XL: An elephant in the room

US President Barack Obama signs autographs after delivering the State of the Union address before a joint session of Congress on January 20, 2015 at the US Capitol in Washington, DC. Keystone XL, not mentioned by the president, looms large in rebuttals from his adversaries. Pool Photo by Mandel Ngan/UPI WASHINGTON, Jan. 21 (UPI) — While touting oil independence during his State of the Union, it was the one word missing from the address, Keystone, that drew criticism for President Obama . "Let’s set our sights higher than a single oil pipeline," is all the president said during his State of the Union address on a project at the center of the agenda for the newly-minted Republican-led Congress. At the start of the 114th Congress, Republican leaders placed Keystone XL at the top of its to-do list. The project meant formally to bring tar sands oil from Canada to […]

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Bakken Rig Count Decreases to 163

Budget Cuts and Layoffs Mark Crisis in Region Rig Count Sharply Declines in Bakken The Bakken-Three Forks rig count decreased sharply over the past month, ending last week with a total of 163 rigs across our coverage area. This represents a drop of seven from last week and a startling 17 from only one month ago, according to the weekly report from Baker Hughes. WTI crude prices have decreased by ~$9.59 since December 19th, trading at $55.99/bbl on Monday morning. As oil prices continue to drop, reports of deeper budget cuts and layoffs are now daily news. Related: Energy Giants Announce Layoffs Related: Halcón Resources Reduces 2015 Budget The Bakken isn’t the only region to see a decline. The U.S. rig count decreased to 1,676 rigs running by the end of last week with a total of 310 rigs targeting natural gas (down 28 from December) and 1,366 targeting […]

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Suncor Executive Says Growth Plans Based on Bullish Crude Price Outlook

A senior Suncor Energy Inc. executive said Wednesday the company won’t delay its biggest long-term growth projects because it expects crude oil prices to double from current levels within the next three to four years. “In the longer term, oil is going to go back to $90-$100,” Alister Cowan, the oil sands producer’s chief financial officer, told investors attending a Canadian Imperial Bank of Commerce conference in Whistler, British Columbia, saying that prices would rebound to that level “probably in three years or four years’ time.” That bullish outlook echoes recent comments by CEO Steve Williams, who has said he also expects oil prices to climb back to the lofty levels of last summer. U.S. oil for March delivery traded on the New York Mercantile Exchange settled Wednesday at $47.78 a barrel. Oil prices have tumbled more than 55% since June, with the steepest decline following the Organization of […]

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Keystone Debate: Senate Votes on Dueling Climate Change Amendments

Sen. Brian Schatz (D., Hawaii) addresses his supporters at the Democratic Coordinated Election Night Celebration in Honolulu on Nov. 4, 2014. Eugene Tanner/Associated Press The Senate on Wednesday cast its first votes in at least eight years on climate change, putting lawmakers on the record about the politically contentious issue. As part of its ongoing debate over the Keystone XL pipeline, senators voted Wednesday on three nonbinding amendments addressing the scientific consensus of climate change. The Senate rejected the most contentious amendment sponsored by Sen. Brian Schatz (D., Hawaii) , which stated climate change is real and that human activity significantly contributes to it, something most scientists around the world agree is occurring. The amendments have no chance of becoming law because the underlying bill faces a veto threat from President Barack Obama . But the votes were part of a strategy by Democrats to put Republicans on the […]

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Refiners Top Off Their Storage Tanks

ENLARGE Gasoline prices are likely to average $2.33 this year, off 31% from 2014, according to the U.S. Energy Information Administration. Regular sold for $1.68 a gallon in Dellwood, Mo., on Tuesday. Photo: Getty Images The global glut of crude oil is turning into a U.S. glut of gasoline. As oil prices have tumbled during the past few months, U.S. refiners have been sucking up as much of the abnormally inexpensive crude as they can, turning it into gasoline, diesel and other fuels. Prices at the pump have plunged to almost $2 a gallon, the lowest nationwide average in more than five years. Even though U.S. drivers are filling their tanks more often, they can’t keep pace with surging gasoline supplies. So a lot of the fuel that refiners are producing is sitting in storage tanks. Gasoline inventories stood at 240.3 million barrels as of Jan. 9—the highest they […]

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BHP to reduce US onshore rigs by 40% by July

HOUSTON, Jan. 21 01/21/2015 Australia’s BHP Billiton will reduce its US onshore rig presence from 26 to 16 by July in response to lower oil prices . Andrew Mackenzie, BHP’s chief executive officer, explained in the company’s operational review for the half-year ended Dec. 31 that it will instead focus on improvements in drilling and completions efficiency. “Our ongoing shale investment program will remain focused on our liquids-rich Black Hawk acreage [in the Eagle Ford shale],” Mackenzie said. “However, we will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production.” The company in 2011 entered the Eagle Ford—where a majority of the company’s US onshore rigs currently reside—in its $12.1-billion merger with Petrohawk Energy. The move was part of a $20-billion investment in US shale by a company whose expertise at the time was primarily in deepwater […]

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Kemp: Oil Producers’ Under-Appreciated Role in US Economy

The states at the heart of the American shale oil revolution all grew faster than the US national average over the last decade, underscoring the importance of oil production to the US economy. John Kemp is a Reuters market analyst. The views expressed are his own LONDON, Jan 21 (Reuters) – The eight states at the heart of the American shale oil revolution all grew faster than the U.S. national average over the last decade, according to the U.S. Bureau of Economic Analysis (BEA), underscoring the importance of oil production to the U.S. economy. Gross domestic product (GDP) attributable to private industry grew at a compound annual rate (CAGR) of 1.8 percent between 2002 and 2013 for the nation as a whole, after allowing for inflation. But for the eight states at the centre of the shale oil revolution, all of which have increased their production by at least […]

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Norway draws record offshore interest

Norway sees record interest from energy companies eying its offshore reserves, but warns against unwarranted production expectations. (UPI/Shutterstock/James Jones Jr.) OSLO, Norway, Jan. 21 (UPI) — German energy company Wintershall said Wednesday there were emerging opportunities offshore Norway, where it’s one of the largest stakeholders. Wintershall said it won eight exploration licenses, serving as the operator at three, during the latest auction held by the Norwegian Ministry of Petroleum and Energy. With 50 licenses already in its books, the German oil and gas company is among the largest stakeholders in Norway. "As one of the fastest growing oil and gas companies in Norway, we are focused on turning our exploration success into developments and production," regional managing director Bernd Schrimpf said in a statement. "It is critical that we continue to replenish our license portfolio so that we can continue to operate in this way." The Norwegian government handed […]

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Russian Oil Producer Surgut’s $36 Billion Cash Pile Is Both Blessing and Curse

Recent history has shown that Russian leaders aren’t afraid to help themselves to companies they covet. And with the country’s cash squeeze growing, stock investors are worrying about which one could fall next. OAO Surgutneftegas is a name that many keep coming back to. The oil producer is sitting on $36 billion, a cash hoard that would go a long way to alleviating the financing squeeze at state-run energy company OAO Rosneft. Locked out of U.S. and European capital markets by international sanctions tied to the Ukraine conflict, Rosneft needs to pay back $19.5 billion of debt maturing this year. Surgut is hovering near a record low , having sunk 33 percent in New York trading since crude prices began plunging in June. Analysts at BCS Financial Group and UralSib Financial Corp. cite President Vladimir Putin ’s past takeovers as a key cause for concern. Putin moved to nationalize […]

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Moscow: Turkish Stream the new South Stream

Russian Foreign Minister Sergei Lavrov says Europe needs Turkish gas project, despite abandoning larger network last year. UPI/Li Tao/Pool MOSCOW, Jan. 21 (UPI) — Moscow said Wednesday a Turkish gas project will help ensure European energy security, the same reason given for the abandoned South Stream pipeline. Russian Foreign Minister Sergei Lavrov said the so-called Turkish Stream gas pipeline will do the same as a project the government in Moscow pulled off the table in late 2014. "We expect it to be realized and help enhance Europe’s energy security, therefore freeing it from problem transit states," he told reporters. Russia meets about a quarter of the natural gas needs for the European economy. The majority of that runs through the Soviet-era transit network in Ukraine, where lingering debt issues and ongoing conflict present risks to traditional energy routes. Russian officials in mid-December confirmed South Stream, touted as the answer […]

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Russia Presses Ahead With Plan for Gas Pipeline to Turkey

LONDON — President Vladimir V. Putin surprised the world in December when he aborted long-laid plans for a natural gas pipeline under the Black Sea to Europe, saying Russia would run pipes to Turkey instead. Many in the West thought it might be merely a bluff, to make the European Union reconsider its opposition to the pipeline project, known as South Stream. But in recent weeks, the Russian state-owned company Gazprom has shown signs that it is serious about proceeding with what it calls Turkish Stream. Gazprom quickly bought out its European partners in South Stream Transport, the Amsterdam company that was to build the Black Sea leg of the pipeline. And the chief of that Dutch company has petitioned the Netherlands government to let it keep working with Gazprom, despite European sanctions against Russia over the invasion of Ukraine. On the Turkish front, Gazprom is actively negotiating with […]

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Oil Rises From Biggest Slide in Week as Volatility Rises

Oil rebounded from the biggest drop in a week amid signs that prices near a 5 1/2-year low are slowing drilling in the U.S., the fastest-growing producer. Futures rose as much as 1.4 percent in New York , retracing some of yesterday’s 4.7 percent slide. BHP Billiton Ltd., the largest overseas investor in U.S. shale, said it will cut the number of active drill rigs in the nation by nearly 40 percent. Prices have probably reached their bottom, Iraqi Oil Minister Adel Abdul-Mahdi said in Kuwait on Wednesday. Oil fell almost 50 percent last year, the most since the 2008 financial crisis, as the U.S. pumped crude at the fastest rate in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to reduce supply. “Slower drilling is visible,” Olivier Jakob , managing director at Petromatrix GmbH in Zug, Switzerland, said by e-mail. “We have already […]

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NYMEX February gas futures settle at $2.831/MMBtu, down 29.6 cents

Houston (Platts)–20Jan2015/325 pm EST/2025 GMT The NYMEX February natural gas futures contract tumbled 29.6 cents to settle at $2.831/MMBtu as the market reacted to mild weather forecasts. "Domestic models are predicting that this pleasant weather will last for another five days and that the cold weather to follow will be less widespread than previously thought," said Gelber & Associates analyst Aaron Calder. "There’s still a lot of cold air hovering around Canada trying to get into the United States, but warm, Pacific air is pushing it eastward." The Weather Channel calls for no sub-freezing high temperatures Tuesday across the contiguous US, and highs in the 50s as far north as Omaha, Nebraska, and St. Louis. The forecast calls for low temperatures Wednesday to stay above freezing as far north as Washington and St. Louis. The National Weather Service’s forecast for Friday calls for lows above freezing as far north […]

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Oil Steady After Biggest Loss in a Week as IMF Cuts Forecasts

Oil was little changed in London as the International Monetary Fund cut its global-growth outlook by the most in three years. Brent gained 0.1 percent after slumping by 2.7 percent yesterday. The world economy will grow 3.5 percent in 2015, down from the 3.8 percent pace projected in October, the Washington-based IMF said in its quarterly global outlook yesterday. Prices pared earlier losses as German investor confidence jumped to the highest level in 11 years. Futures declined in New York . Oil slid more than 50 percent since June as the U.S. pumped at the fastest pace in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut output. The IMF’s downgrade, following reduced growth expectations published by the World Bank on Jan. 13, undermines speculation that lower oil prices would spur economic activity. “The IMF revision is part of the general growth downgrade […]

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More bad news is bad news for oil prices

Oil prices retreat after IMF issues downgrade to growth forecasts for global economy. Photo by John Angelillo/UPI The price for Brent , the global benchmark, was off more than 3.75 percent to trade near $48 per barrel early in the Tuesday session. The price for West Texas Intermediate , the U.S. benchmark, was down more than 3.8 percent to sell for $46.86 early in the trading day. The declines follow a downbeat report from the IMF on growth expectations for 2015. Growth for the global economy was expected at 3.5 percent this year, a 0.3 percent downward revision. The IMF said that, while low oil prices are a net benefit for consumers, the gains were offset by adverse factors elsewhere in the global economy. Olivier Blanchard , director of research at the IMF, said the low price of oil means different things for different economies and sectors. "[It means] […]

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Natural Gas Has Biggest Losses in 11 Months as Weather Forecasts Warm

By Timothy Puko and Christian Berthelsen Natural-gas futures had their largest day of losses in nearly 11 months as new weather forecasts cut hopes for a burst of cold to ramp up home heating demand. Natural gas for February delivery settled down 29.6 cents, or 9.5%, at $2.831 a million British thermal units on the New York Mercantile Exchange. The percentage losses were greater than any day since late February. They also come less than a week after the biggest one-day gains in the past 11 months, a quick reversal that has sent market volatility to its winter peak. The losses extended a losing streak that started Thursday and have nearly erased all the gains from the start of last week. They had come amid forecasts for a bout of extreme cold to blanket much of the eastern U.S. and a larger-than-expected draw on supplies according to weekly data […]

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Brazil Blackout Spawns Power-Rationing Fears

SÃO PAULO—Monday’s massive blackout is raising concerns that electricity rationing may hit Brazil this year, dealing a potentially serious blow to the nation’s already fragile economy. Energy officials blamed soaring summer demand and a transmission glitch for Monday’s outage , which rolled through the capital Brasília and 11 states, including São Paulo and Rio de Janeiro. But power woes in Brazil, which is suffering from a severe, multiyear drought, won’t be easily solved, according to Mário Veiga, president of PSR Consultoria, an energy consulting group in Rio de Janeiro. He said Brazilian authorities have exacerbated the current crisis by not pressuring consumers to reduce energy consumption sooner. “The problems occurred because the [federal] government did nothing to avoid this situation,” Mr. Veiga said. Mr. Veiga estimated that there is now a 30% chance that Brazil’s southeast, the country’s richest and most populous region, will face energy rationing in coming […]

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Special Report: For Islamic State, wheat season sows seeds of discontent

ARBIL, Iraq (Reuters) – As the season for wheat planting in Iraq wound down early last month, farmers in areas under the control of Sunni militant group Islamic State grew worried. More than two dozen farmers told Reuters they had not planted the normal amount of seed, because they could not access their land, did not have the proper fertilizers or adequate fuel, or because they had no guarantees that Islamic State would buy their crop as Baghdad normally does. Farmers, and Iraqi and United Nations’ officials, now fear a drastically reduced crop this spring. That could leave hundreds of thousands of Iraqis hungry. But another big loser would be Islamic State, which controls territory that normally produces as much as 40 percent of Iraq’s wheat crop. The breakaway al Qaeda group, which declared an Islamic caliphate across parts of Syria and Iraq last summer, has killed thousands and forced hundreds of thousands from their homes. Islamic State militants had hoped to use wheat to show it can […]

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Iraq Says Oil Output Must Rise to Compensate for Price Collapse

Iraq, the nation adding more new oil to global markets than any other supplier in OPEC, said it needs to boost production and exports of crude to compensate for collapsing prices. “Because of the new challenges, especially the price of oil, Iraq has to try its best to raise it oil production and exports,” Deputy Prime Minister Rowsch Nuri Shaways said today at the World Economic Forum in Davos, Switzerland. Iraq has lost about 50 percent of its revenues because of the slump in oil, Shaways said. An agreement last month between the country’s federal government and the semi-autonomous Kurdish region will boost exports by more than 550,000 barrels a day, he said. The nation is pumping at about 4 million barrels a day, already a record, Oil Minister Adel Abdul Mahdi said Jan. 19. Oil slid more than 50 percent since June as the U.S. pumped at the […]

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Kurd Oil Producers Unrelenting to Boost Supply at low Prices

Oil producers in Iraqi Kurdistan are unrelenting in their goal to boost output even after the collapse in international prices to below $50 a barrel. Genel Energy Plc (GENL) , headed by former BP Plc chief Tony Hayward , is sticking with plans to increase capacity 74 percent to 400,000 barrels a day this year at its Kurdish Taq Taq and Tawke fields. Norway’s DNO ASA (DNO) owns 55 percent of Tawke. “The operational side of the business remains very resilient and very strong and we maintain our production increase targets,” Genel Chief Financial Officer Julian Metherell said by phone from London . “Even at $50 a barrel we are looking at a revenue of $350 million to $400 million.” Gulf Keystone Petroleum Ltd. (GKP) , another oil producer in the semi-autonomous region, last month raised output by 60 percent to 40,000 barrels a day and sees 70,000 barrels […]

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Plug Pulled on Venezuela’s Sale of Citgo

ENLARGE Citgo-branded gas stations weren’t part of the sales process. Reuters A sale process for Venezuela’s Citgo Petroleum Corp. has been called off, and the U.S.-based oil refiner instead plans a debt sale that would raise funds for the cash-strapped country. The auction was scrapped in recent days after several suitors submitted bids in early December, people familiar with the matter said. Citgo is now planning to raise $2.5 billion in debt instead, one of the people said. The sales process could be restarted later. Corporate auctions are rare in the immediate aftermath of such recapitalization deals, however, and the added debt could make the company less attractive to suitors too. Citgo, which operates three U.S. oil refineries and related assets from its Houston headquarters, was expected to fetch between $8 billion and $11 billion should it have been sold, analysts and people close to the sales process have […]

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Libya’s OPEC Governor Kidnapped

ENLARGE Libya’s El Sharara oil field. The country’s OPEC governor was kidnapped last week in the militia-held capital of Tripoli. Reuters DUBAI—Libya’s OPEC Governor Samir Kamal was kidnapped last week in the militia-held capital of Tripoli, two officials familiar with the matter said Tuesday, as turmoil continues to ravage the north African country almost four years after the collapse of its central government. Mr. Kamal, who is also the head of the planning department at the Tripoli-based government’s oil ministry, was last seen Thursday, said one official at the National Oil Corp., or NOC. “Nobody knows why [he was kidnapped],” the official said. “Some people know where he is,” he added. Another NOC official confirmed that Mr. Kamal was missing, but declined to give further details. No one has claimed responsibility for his kidnapping. Kidnappings have become common in Libya, where oil fields have been seized by armed groups […]

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China denies being world’s No.1 economy

BEIJING, Jan. 20 (Xinhua) — Claims that China has overtaken the United States as the world’s largest economy were denied by the head of China’s National Bureau of Statistics (NBS) on Tuesday. "The NBS does not countenance these claims by some scholars and media organizations," said bureau head Ma Jiantang at a press conference in Beijing. A study last year by the International Comparison Program (ICP) projected that China would overtake the U.S. in 2014 based on purchasing power parity (PPP), which measures GDP in terms of prices of the same goods between nations. PPP takes into account the purchasing power of a currency rather than market exchange rates. Roughly, how many family cars, Big Mac’s, units of electricity or university educations can one person’s salary buy in one nation, as opposed to another person’s salary in a different country. "The NBS also took part in the study, which […]

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Halliburton, Baker Hughes to lay off thousands as oil slumps

(Reuters) – Oilfield service providers Baker Hughes Inc and Halliburton Co plan to cut thousands of jobs as drilling activity slows further due to a steep fall in crude oil prices. Global oil prices have tumbled almost 60 percent since June, hitting five-year lows as growing production and tepid global demand has caused a supply glut and prompted oil producers to scale back spending. "We expect our headcount adjustments to be in line with our primary competitors," Halliburton’s Chief Operating Officer Jeffrey Miller said on a post-earnings call on Tuesday, without giving a specific number. The company, which employees more than 80,000 people, said it cut 1,000 jobs in its operations in the eastern hemisphere in the fourth quarter. Baker Hughes, which is being acquired by Halliburton in a near-$35 billion deal, said earlier in the day it would lay off 7,000 employees. Shares of Halliburton and Baker Hughes […]

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Democrats Push Back With Keystone Export and Steel Amendments

“The project now would simply pump American oil across the American heartland — not to… Read More Photographer: Andrew Harrer/Bloomberg Senate Democrats said Tuesday they’ll push amendments to legislation approving the Keystone XL pipeline requiring that it’s built with domestically produced steel and that the oil it carries is used in the U.S. “The project now would simply pump American oil across the American heartland — not to be used here — but to be shipped overseas,” Senator Charles Schumer of New York , the Senate’s third-ranking Democrat, said at a news conference. With polls showing a majority of voters supporting Keystone, Democrats have sought to undermine its purported benefits to the U.S. They argue that the oil from Alberta is destined for overseas markets — an assertion disputed by pipeline builder TransCanada Corp. (TRP) Republicans have made circumventing President Barack Obama ’s review of the Keystone project, by […]

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Schlumberger to Pay $1.7 Billion for Stake in Russia Driller

Schlumberger Ltd. (SLB) will pay $1.7 billion for a stake in Eurasia Drilling Co. (EDCL) , a bet by the world’s largest oilfield services provider that economic sanctions won’t hold back Russia’s energy industry. Schlumberger, based in Houston and Paris, will pay $22 a share for a 46.45 percent holding in London-traded Eurasia Drilling, according to a statement today. Schlumberger has an option to buy the rest of the company’s shares three years after the deal closes. By buying into Russia’s largest driller, Schlumberger is putting aside concerns about economic sanctions and the state of the country’s economy. The deal comes as the slide in the crude price to less than $50 a barrel spurs consolidation in the services industry as demand for rigs drops and oil producers lean on suppliers to drive down costs. “Schlumberger believes that the sanctions will be lifted sooner or later, and the company […]

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Historic slide for U.S. gasoline nearing its end

Gasoline prices for U.S. consumers may reverse a long decline by mid-February as refiners switch to summer grades. File Photo by A.J. Sisco/UPI WASHINGTON, Jan. 20 (UPI) — Though gasoline prices continue to fall nation-wide, a fuels analyst said Tuesday the trend may reverse as U.S. refineries start entering a maintenance phase. Motor club AAA reports a national average price for a gallon of regular unleaded gasoline at $2.05, a slight decline from Monday but $1.23 less than this date in 2014. Half of all states are reporting averages below the $2 mark, with Missouri posting the lowest price at $1.76 per gallon. The low price at the pump is a reflection of crude oil prices, which are off more than 50 percent from their June values. While the low price of oil is leaving producers and those in secondary energy industries struggling, low gasoline prices are seen as […]

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Baker Hughes predicts rough 2015

Oil services company Baker Hughes expects challenges in 2015 as oil prices continue trading in bear market. (UPI/Shutterstock/Lilac Mountain) HOUSTON, Jan. 20 (UPI) — Lower oil prices since mid-2014 are expected to damage this year’s finances, though progress is steady, U.S. oil services company Baker Hughes said Tuesday. Baker Hughes said it had a record year, with full-year revenues of $24.6 billion coming in 10 percent above 2013 levels. Chairman and Chief Executive Officer Martin Craighead said fourth quarter results only punctuated the full-year performance. With oil prices off more than half of their June values, however, Craighead said to expect challenges ahead. While demand is holding steady, the number of rigs exploring for or producing oil is declining as company’s pull back in the bear mark. Craighhead said that would "clearly" impact the revenue stream for 2015. "We are taking proactive steps to manage the business through these […]

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Total to cut capital spending by 10% amid oil price rout

A Total SA petrol station is seen in Paris, France Total , the French oil and gas giant, plans to reduce group-wide capital spending by 10 per cent this year and speed up billions of dollars in asset disposals, under an accelerated cost-cutting plan led by new chief executive Patrick Pouyanné . The move comes as thousands more job cuts were announced in the energy industry on Tuesday, with Baker Hughes , the oilfield services provider being acquired by Halliburton in a $26.8bn deal, saying that it would lay off 7,000 employees. Global crude prices have tumbled nearly 60 per cent since June to trade at less than $49 a barrel, as a result of weaker growth in demand for oil, booming US shale production and Opec’s decision in November not to cut output. In a Financial Times interview, Mr Pouyanné — appointed to the top role at Total […]

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Texas RRC oil and Gas Production Data

The Texas Railroad Comission  has released their oil and gas production data for November. As most of you know, the Texas RRC data is always incomplete. Some data is updated immediately but the rest trickles in slowly, sometimes taking many months to years to complete. Nevertheless we can glean some indication of what is happening from what data is reported. That is, if production is increasing, then the incomplete month to month data should be increasing. And it is, but very slowly. The last data point in all charts below is November 2014 and the oil is in barrels per day. Texas crude only is still increasing but the increase rate seems to be slowing down. Texas RRC Condensate It is rather hard to tell what condensate is doing but the rate if increase, if any, seems to be slowing. Texas RRC C+C Combining the two we see a […]

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