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BHP cuts shale production amid drop in oil price

BHP Billiton is cutting its shale oil production and reducing the number of rigs it operates onshore in the US by 40 per cent due to the drop in oil prices . The world’s biggest miner by market capitalisation said on Wednesday that the revised drilling programme would boost efficiency but added that its shale investment programme remained under review. “In petroleum, we have moved quickly in response to lower prices and will reduce the number of rigs we operate in the onshore US business by approximately 40 per cent by the end of the financial year,” said BHP. This will reduce the number of rigs it operates to 16, down from 26. BHP’s drilling programme will be focused on its higher quality liquids-rich Black Hawk acreage in southern Texas. Noting that many of BHP’s peers were also cutting rig numbers at their shale oil operations in the US, […]

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Obama: America is No. 1 producer of oil, gas

The United States is on top of the world in terms of energy production, President Barack Obama said during his sixth State of the Union. “We believed we could reduce our dependence on foreign oil and protect our planet,” he said during his Jan. 20 address. “And today, America is number one in oil and gas. America is number one in wind power. Every three weeks, we bring online as much solar power as we did in all of 2008.” We decided to check out the data and see if in fact the United States is the world’s top oil and gas producer. As it turns out, the United States passed Saudi Arabia about two years ago in terms of oil production. And we’ve been the top producer of natural gas for more than two decades. The  U.S. Energy Information Administration , which tracks global energy production and consumption statistics, […]

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Russia taps Far East oil field

Though hobbled by sanctions, Russian oil company Rosneft announces new production from Far East field. (Photo: Rosneft) MOSCOW, Jan. 20 (UPI) — Hobbled by sanctions, Russian energy company Rosneft announced it joined its U.S. partners at Exxon Mobil in starting oil production from a Far East field. The Russian oil company said the production platform tied to the Arkutun-Dagi field yielded its first oil supplies Monday. Rosneft said the field should have a full-year peak production rate of about 32 million barrels of oil. Rosneft is the target of Western economic sanctions. Igor Sechin , its chief executive officer, is also the target of punitive economic measures. Sechin in August asked the Kremlin to use a national welfare fund to support its growing debt . With oil prices at historic lows, the Russian economy entered 2015 while teetering on the brink of recession. With new oil coming from its […]

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Ukraine, Poland ink gas pipeline deal

Prime Minister of Ukraine Arseniy Yatsenyuk has signed agreement with neighboring Poland to diversify regional gas networks. File Photo by John Angelillo/UPI KIEV, Ukraine, Jan. 20 (UPI) — The Ukrainian prime minister announced a pipeline deal with neighboring Poland that diversifies the energy sector with better access to liquefied natural gas hubs. Ukrainian company Naftogaz signed a deal with its Polish counterparts, Gaz-System, to build a pipeline between the two countries. Ukrainian Prime Minister Arseniy Yatsenyuk said the deal ensures his country remains an important hub in the European energy market. It’s not a reverse pipeline, "but it means an access to gas from the LNG terminals that have already been built in [Lithuania] and Poland," he said. The European market gets about a quarter of its gas needs met by Russia, though most of that runs through Soviet-era transit networks in Ukraine. Lingering contractual disputes between Kiev and […]

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Coming to Terms With the New Oil Reality

Dow Jones Newswires By Gabriele Steinhauser The sharp drop in oil prices has already roiled markets and pummeled energy companies. But its impact on oil production and climate policies is likely to last years past the moment when prices have recovered. The shale boom in the U.S., where oil production has nearly doubled over the past 10 years, and the refusal of the Organization of the Petroleum Exporting Countries to cut output, have contributed to a glut on global energy markets. At the same time, low growth in Europe and emerging markets is holding down demand, upending long-held assumptions of scarcity and ever-increasing prices. "The expectations that have governed the world for over a decade have been overturned by a new reality," says Daniel Yergin, vice chairman of energy research firm IHS and author of several books on the global oil market. Since the beginning of the year, investment […]

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Natural gas to unseat coal as generation king by 2035

Natural gas to unseat coal as generation king by 2035 thumbnail Information Administration predicts that natural gas will dethrone King Coal by 2035, and a number of market forces are at work that may assure that ascension. Coal through the first three quarters of 2014 provided roughly 51 percent of the nation’s electricity, and Wyoming supplies about 40 percent of that coal. Comparatively, natural gas through the period fueled about 20 percent of utility generation. In other words, the transition hasn’t happened just yet. However, 45 gigawatts of coal-fired capacity is set to retire in the next two years, and most of it will likely be replaced by natural gas generation. In Wyoming, the 132-megawatt Cheyenne Prairie Generating Station recently went online, replacing 82 megawatts of “older, coal-fired generation that cannot be economically retrofitted to meet new EPA air emissions regulations and must be retired,” according to a company […]

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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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Oil below $49 after IMF cuts growth forecast

London (Reuters) – Brent crude oil prices steadied below $49 a barrel on Tuesday after the International Monetary Fund cut its forecast for global economic growth in 2015 implying lower demand for fuel. Global growth is projected at 3.5 percent for 2015 and 3.7 percent for 2016, the IMF said in its latest World Economic Outlook report, reducing its forecast by 0.3 percentage points for both years. "New factors supporting growth – lower oil prices, but also depreciation of euro and yen – are more than offset by persistent negative forces," said Olivier Blanchard, the IMF’s chief economist. Brent crude traded around $48.84 a barrel by 1050 GMT, unchanged from Monday’s close. U.S. crude was trading down $1.28 cents from Friday’s close at $47.41 a barrel. U.S. markets were closed on Monday for a public holiday. Oil prices have dropped by more than half since June as output has […]

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How Low Can Oil Go? And When’s It Going Back Up?

ByGeorgi Kantchev Low crude prices will put a dent in relentless supply. Getty Images What a difference a year makes. In January 2014, Goldman Sachs said it did not “expect a material collapse in oil prices,” citing Saudi Arabia’s preference for prices of around $100 per barrel, and the country’s position on being ready to cut production to support those levels. One year later, crude prices are hovering around $50 a barrel and the Saudi Arabia-led Organization of the Petroleum Exporting Countries has repeatedly declined to cut the supply. Consequently, Goldman slashed its 2015 oil price forecasts last week, predicting that “this bear market will likely be characterized by more of a U-shaped recovery and will likely rebound to far lower price levels from where they sold off.” Goldman is not alone. In recent weeks several major banks have lowered their estimates for crude prices this year amid little […]

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IMF Cuts Global Economic-Growth Outlook

ENLARGE Olivier Blanchard speaks in Mexico City in July. The IMF’s chief economist called the price of oil a shot in the arm, but said that ‘there is clearly a state of weakness in the world economy and this shot is not enough.’ Susana Gonzalez/Bloomberg News Sliding oil prices will give global growth a brief jolt, but the benefits won’t be strong enough to keep the world economy out of a deepening long-term rut, the International Monetary Fund said. In new forecasts, the IMF downgraded its outlook for more than a dozen of the world’s largest economies, including markedly slower growth in China. The fund said global growth would be 0.3 percentage point lower this year and next than it had previously expected. It now expects the world economy to expand 3.5% this year and 3.7% in 2016. “The price of oil is a shot in the arm,” IMF […]

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IMF cuts forecasts for global economic growth

Christine Lagarde, the IMF managing director, says the outlook is ‘too low, too brittle and too lopsided’ Low oil prices will not provide a sufficient updraught to dispel the clouds hanging over the global economy, the International Monetary Fund said on Tuesday. In a sign of its increasing gloom about the medium-term economic outlook, the IMF cut its global economic growth forecasts by 0.3 percentage points for both 2015 and 2016 despite believing cheaper oil represents a “shot in the arm”. Its 2015 forecast for the UK was unchanged at 2.7 per cent and cut by 0.1 percentage point for next year to 2.4 per cent compared with its previous forecast in its World Economic Outlook last October. Its outlook for the UK is broadly favourable despite uncertainty about the general election, with the faltering eurozone economy likely to prove the biggest brake on growth. Last year the IMF described […]

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IEA’s Van der Hoeven sees no quick recovery for global economy, oil demand

Abu Dhabi (Platts)–20Jan2015/655 am EST/1155 GMT Flat global demand for oil and the wild card of shale oil development continued to cast long shadows over the global oil market, the International Energy Agency’s Executive Director Maria van der Hoeven said Tuesday. "There is no growth in demand, and that has to do with the global economy," she told reporters on the sidelines of the World Future Energy Summit in Abu Dhabi. "We do not see that recovering," she added. Van der Hoeven described the rise of North American shale oil and gas production in recent years as "a game changer" for global energy markets. It was too early to tell whether low oil prices would trigger deflation in advanced economies, but the IEA was monitoring the situation closely, she said. The IEA was also keeping a watch on the impact of falling oil prices on gas markets, she said. […]

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World’s Largest Traders Use Offshore Supertankers to Store Oil

ENLARGE The TI Oceania supertanker which is being used by oil trading house Vitol to store oil until the commodity’s price rises. Overseas Shipholding Group The supertanker TI Oceania was built to ferry vast quantities of oil across oceans, but for the next year it is expected to remain anchored off the coast of Singapore, storing millions of barrels of oil for Vitol SA, a giant trading house. According to shipbrokers and analysts, the 3-million-barrel megaship—one of the largest in the world—is just one example of efforts by traders to turn a profit in the slumping global oil market . The strategy is simple: buy and store oil at cheap prices now , selling futures contracts to lock in the higher oil prices expected later. “It is one of the easy ways to make money and that’s one of the interesting things about it from a trading perspective: It’s […]

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Iraq: Turkey Receives Kirkuk Oil

The Turkish port of Ceyhan has received 450,000 barrels of crude oil from the northern Iraqi province of Kirkuk, Turkish Energy Minister Taner Yildiz said, Shafaq News reported Jan. 18. The oil is being sold under the supervision of Iraq’s state oil marketing company following an agreement between Iraq and the Kurdistan Regional Government on oil exports and revenue-sharing .  

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Iran sees no OPEC shift toward a cut, says oil industry could withstand $25 crude

DUBAI (Reuters) – Iran sees no sign of a shift within OPEC toward action to support oil prices, its oil minister said, adding its oil industry could ride out a further price slump to $25 a barrel. The comments are a further sign that despite lobbying by Iran and Venezuela, there is little chance of collective action by the 12-member OPEC to prop up prices – entrenching the reluctance of individual members to curb their own supplies. In remarks posted on the Iranian oil ministry’s website SHANA, Oil Minister Bijan Zanganeh called for increased cooperation between members of the Organization of the Petroleum Exporting Countries. "Iran has no plan (to hold an emergency OPEC meeting) and is currently in consultations with other OPEC member states in a bid to prevent the sharp fall in the oil price, but these consultations have yet to bear fruit," he said. Oil has […]

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Iran Nuclear Talks to Resume Next Month

ENLARGE U.S. Secretary of State John Kerry and Iranian Foreign Minister Javad Zarif in Geneva last week. Associated Press BRUSSELS—Nuclear talks between Iran and six powers over Tehran’s nuclear program will resume at senior-official level early next month, a spokeswoman for the European Union said Monday. She said talks in Geneva on Sunday between the parties were “serious and useful” and they had decided to meet again in early February. Others, however, said the talks remain very difficult. The EU chairs the six-power group—made up of the U.S., Russia, China, France, the U.K. and Germany—which negotiates on the nuclear dossier. U.S. Secretary of State John Kerry held talks on Wednesday and on Friday with his Iranian counterpart, Javad Zarif, in an effort to accelerate the diplomacy. Senior U.S. diplomats also held several days of meetings in Geneva over the weekend with Iranian negotiators. The two sides have set a […]

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New round of Iran nuclear talks broadened consensus: Chinese official

Wang Qun, Director-General of the Department of Arms Control of Chinese Ministry of Foreign Affairs speaks to media in Geneva, Switzerland, on Jan. 18, 2015. The new round of negotiations over Iran’s long-standing controversial nuclear program broadened the consensus, said the head of Chinese delegation to the talks on Sunday. (Xinhua/Zhang Miao) GENEVA, Jan. 18 (Xinhua) — The new round of negotiations over Iran’s long-standing controversial nuclear program broadened the consensus, said the head of Chinese delegation to the talks on Sunday. Wang Qun, Director-General of the Department of Arms Control of Chinese Ministry of Foreign Affairs, said that this round of talks was intensive, practical and in-depth. Wang said that China hopes all sides to seize the valuable historic opportunity, and show the political will and determination to facilitate a package solution and a win-win comprehensive agreement. Wang added that parties involved agreed to hold the next round […]

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War Zones Are Still Hot But Cheap Oil Is Making Traders Complacent

Back when oil traded at $115 a barrel in June, traders were talking about the fighting in places like Iraq , Ukraine and Libya as part of the reason it was so high. Fast forward seven months and while crude has faded to $50 a barrel amid a supply glut, those geopolitical risks — along with some new ones that emerged — remain largely intact. Islamic State militants haven’t given up the goal of a Middle East caliphate, Libya is mired in chaos, pro-Russian separatists keep skirmishing with Ukrainian forces and North Korea is fighting Hollywood. All of this has some analysts wondering if investors are setting themselves up for a nasty surprise by driving oil down so far. To Michael McCarthy , chief strategist at CMC Markets, current prices indicate investors see “almost zero risk” of a geopolitical event disrupting output. In other words, brace for a big […]

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Former Saudi oil boss says it can cope with low price

Oil well at sunset Saudi Arabia can cope with low oil prices for "at least eight years", Saudi Arabia’s minister of petroleum’s former senior adviser has told the BBC. Mohammed al-Sabban said the country’s policy was to defend its current market share by enduring low prices. "You need to allow prices to go as low as possible in order to see those marginal producers move out of the market," he said. Mr al-Sabban advised the ministry for 27 years, leaving last year. Saudi Arabia, the largest producer within the Opec oil producers’ cartel, has repeatedly said that it will not cut output to try to boost the oil price. Mr al-Sabban said Saudi Arabia’s "huge financial reserves" would enable it to cope with the low oil price. The country is now in the process of cutting government spending. Without these cuts, Mr al-Sabban said, Saudi Arabia could not cope […]

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China seen posting weakest annual growth in 24 years, will spur more stimulus

BEIJING (Reuters) – China is likely to post its weakest growth since the global financial crisis in the fourth quarter as its property market cooled, reinforcing expectations the government will have to roll out more stimulus measures to avoid a sharper slowdown. Data on Tuesday is expected to show the world’s second-largest economy grew 7.2 percent in the October-December quarter from a year earlier, slowing from 7.3 percent in the previous quarter, a Reuters poll showed. That would be its weakest performance since the first quarter of 2009, when the growth rate tumbled to 6.6 percent and a sudden collapse in world trade threw some 20 million Chinese out of work. Full-year economic growth in 2014 is almost certain to undershoot the government’s target of 7.5 percent and mark the weakest expansion in 24 years, adding to concerns about shaky global demand. With the property market likely to remain […]

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China posts weakest annual growth in 24 years, more stimulus expected

BEIJING/SHANGHAI (Reuters) – China’s economic growth held steady at 7.3 percent in the fourth quarter from a year earlier, slightly better than expected but still hovering at its weakest since the global financial crisis, keeping pressure on policymakers to head off a sharper slowdown. The world’s second-largest economy grew 7.4 percent in the whole of 2014, the National Bureau of Statistics said on Tuesday, undershooting the government’s 7.5 percent target and the weakest expansion in 24 years. It was the first since 1999 that the government had missed a yearly growth target for gross domestic product (GDP). The China statistics bureau said at a news conference that the economy faces difficulties but it will keep growth within a "reasonable range." A series of incremental market reforms and modest stimulus measures over the year did little to reverse a slowdown in the property market, and industrial overcapacity, slowing investment and […]

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China Makes Most of Oil’s Collapse as Demand Rises to Record

China , the world’s second-largest oil consumer, is making the most of crude’s collapse as refiners process and import more oil than ever. Apparent oil demand, a measure of consumption, rose to an unprecedented 10.63 million barrels a day in December amid record crude processing and increased shipments from suppliers including Saudi Arabia , data compiled by Bloomberg show. This year, demand may expand by 5 percent, bolstered by about 7 million metric tons of crude stockpiling for emergency use, according to ICIS-CI Energy, a Shanghai-based consultant. China is emerging as a winner from the almost 50 percent drop in oil prices last year as OPEC resisted calls to cut production even as the U.S. pumps at the fastest pace in more than three decades. Refiners in the Asian nation will continue to boost operating rates in the coming months amid low diesel stockpiles and “healthy” margins, the International […]

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Opaque jobs picture poses hidden threat to China’s ‘new normal’

Commuters cross a street in the business district of Central in Hong Kong, China, on Monday, Aug. 18, 2014. Slowing economic growth and rising unemployment in Hong Kong may stoke more unrest in the city, which is grappling with a debate over how to pick its next leader in 2017. Photographer: Brent Lewin/Bloomberg China may have recorded its worst annual growth rate in nearly a quarter of a century but the country’s leadership does not appear too worried. “The national economy has been running steadily under the ‘new normal’ , showing good momentum of stable growth, optimised structure, enhanced quality and improved livelihoods,” Ma Jiantang, head of China’s National Bureau of Statistics, said on Tuesday as he revealed the economy had grown 7.4 per cent last year, the slowest pace since 1990. More On this story On this topic IN Chinese Economy The main reason for the nonchalance is […]

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Wood Mackenzie: Operators Could See up to 40% in Cost Reductions

URL: http://www.rigzone.com/news/oil_gas/a/136801/Wood_Mackenzie_Operators_Could_See_up_to_40_in_Cost_Reductions Wood Mackenzie lists 15 things to watch for in North America’s upstream sector in 2015. This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. The drop in oil prices has led to an unprecedented level of uncertainty going into 2015, especially for the prospects of the North American upstream oil and gas sector. While there is a lack of consensus about when oil prices will stabilize and at what level, Wood Mackenzie expects service cost relief, asset high-grading, and efficiency improvements in operations. "We are already seeing this play out as upstream operators announce drastically reduced capital budgets for 2015, yet forecast increased production growth (in aggregate)," says Delia Morris, senior North American upstream analyst for Wood Mackenzie. " As long as operators can move to the core areas of plays and sub-play breakevens continue to fall with […]

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Separatists renew attack on airport as Russia and Ukraine bicker

KIEV (Reuters) – Pro-Russian separatists renewed attacks on Ukrainian forces at an airport complex in the east on Monday after Kiev launched a mass operation to reclaim lost ground there that Russia called a "strategic mistake". Ukrainian officials said three soldiers had been killed and 66 wounded over the past 24 hours, during which they said they had returned battle lines at the airport outside Donetsk to the status quo under a much violated international peace plan. Russia expressed concern at what it called escalation by Kiev and published its own peace plan on Monday in the form of a letter from President Vladimir Putin to Ukraine’s President Petro Poroshenko, which it said Poroshenko had rejected. "It’s the biggest, even strategic mistake of the Ukrainian authorities to bank on a military solution to the crisis," Interfax quoted Deputy Foreign Minister Grigory Karasin as saying. "This may lead to irreversible […]

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Russia Confronts Stagnant Oil Output After Crude Price Slump

Russia ’s record crude oil output last year is likely to prove a high-water mark as economic sanctions and lower prices erode investment in developing deposits needed to replace aging Soviet-era fields. The world’s largest oil producer will probably see total output flat, at best, over the next two to three years, according to analysts and forecasters including OAO Gazprombank. Others, such as the Organization of Petroleum Exporting countries, predict a decline. The prospect of stagnant oil production, which has almost doubled since the chaotic years following the collapse of the Soviet Union , will add to the chronic economic challenges confronting President Vladimir Putin ’s government including the slump in energy prices, sanctions and capital flight. It will also allow other oil-exporting nations to grab market share. Russia’s oil production will likely “be flat or see a small decline for the next two or three years,” said Julian […]

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Russian economy to shrink 5%, says EBRD

Historical Museum, St.Basil Cathedral, Red Square, Kremlin in Moscow at night ©iStock Russia’s economy will shrink by close to 5 per cent this year, the European Bank for Reconstruction and Development forecast, while average growth for eastern Europe and the former Soviet Union will fall into negative territory for the first time since 2009. The development bank for the former Communist bloc said plunging oil prices and western sanctions would lead to a contraction in the Russia’s economy of 4.8 per cent this year, compared with a forecast drop of 0.2 per cent in September. More On this topic IN Europe The EBRD also forecast that Ukraine’s economy would shrink 5 per cent in 2015, on top of a 7.5 per cent decline last year. The bank warned that Ukraine’s foreign exchange reserves were “dangerously low”, adding it was “concerned” at the time being taken to put together a […]

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More Russian simple refineries to close at $50/b crude: Rosneft

Antwerp (Platts)–19Jan2015/948 am EST/1448 GMT Russia’s simple refineries are not profitable when the oil price is below $50/barrel, and more are expected to close this year and next, Yuri Timofeev, head of refining strategy at Rosneft, said Monday. Speaking at the Platts middle distillates conference in Antwerp, Timofeev said total refining capacity in Russia will go down over the next few years, but that the quality of refined products will improve substantially. March ICE Brent futures were trading below $50/b Monday, near their lowest level in five years, due to growing supplies globally. Timofeev said the new tax maneuver introduced by Russian authorities at the end of last year would make simple refineries — which produce a high share of lower grade products such as fuel oil — far less profitable. Article continues below… Andrew Bonnington, Platts Editorial Director for European and African Oil and Jorge Montepeque, Platts Global […]

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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 is spurring 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 […]

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EU Has No Plans to Ease Russia Sanctions

ENLARGE A stands at Monday a market that locals say was recently damaged by shelling in Donetsk in eastern Ukraine. Reuters BRUSSELS—The European Union sought Monday to dispel any suggestion that its united front against Russia was faltering or that members were considering lifting sanctions on Moscow in the near future. Questions about how long the 28-nation bloc can stick together in responding to Russian aggressiveness toward Ukraine were highlighted last week by the emergence of an internal EU paper looking at ways to improve ties with Moscow. EU members friendlier to Russia have long questioned the effectiveness of sanctions in influencing the Kremlin. Some have suggested the damage to the Russian economy caused by falling oil prices could provide an opening for scaling back the sanctions as part of a new diplomatic outreach. But EU foreign ministers, meeting Monday, stressed they would consider relaxing sanctions only if Russia […]

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Ukraine Accuses Russia of Sending More Troops and Artillery to Aid Rebels

MOSCOW — In as clear a sign as any of the unraveling peace process in eastern Ukraine , the authorities in Kiev accused Russia on Monday of again sending regular army soldiers into Ukraine to prop up pro-Russian separatists who were losing a battle. About 700 soldiers crossed Russia’s western border into the snowy war zone in eastern Ukraine, the Ukrainian National Security and Defense Council said in a statement that was not possible to verify independently. They came armed with a wide array of heavy weapons, Prime Minister Arseniy P. Yatsenyuk told journalists in Kiev, the capital. The country’s intelligence agencies “confirm that men and equipment entered from Russia,” he said. Howitzers and other artillery and antiaircraft systems were said to have crossed the border. “These items cannot be bought in a market in Donetsk or the Russian Federation,” Mr. Yatsenyuk said. “They can only come from the […]

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Former oil exec: $5-a-gallon gas on the way

John Hofmeister attracted national attention in 2010 when he predicted that average U.S. gasoline prices would soar to $5 a gallon in 2012, thanks to rising crude oil prices. His forecast fell short, as the cost of filling up flirted with $4 in 2012, but never went higher. Now, with gasoline prices at $2.14, their lowest level since May 2009, the former president of Shell Oil is issuing another warning, telling motorists that their joy ride may end sooner than they think. “The next round of high prices is likely to start later this year, as crude rebounds to the $80s and $90s, perhaps pushing to the $100 level by late in the year or early next,” Hofmeister told me the other day after a trip to Calgary, where he was promoting natural gas as a transportation fuel. “The triggering mechanism will be global demand growth relative to how […]

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Falling oil prices hit Venezuela, Iran and Russia hard

As oil prices continued to plunge last week, it was instructive to watch the disparate reactions of three governments whose whopping losses are likely to produce some of the biggest international stories of 2015. There was the panicked scrambling of Venezuelan President Nicolás Maduro, who skipped his own state of the union speech for a desperate world tour in search of loans or promises of $100 oil. He got neither, even as rumors flew back home about whether he would be allowed to stay in office on his return. Jackson Diehl is deputy editorial page editor of The Post. He is an editorial writer specializing in foreign affairs and writes a biweekly column that appears on Mondays. View Archive There was the cool response of Vladi­mir Putin, whose ministers announced drastic cuts in government spending — except for defense. Russia’s proxy forces in eastern Ukraine meanwhile launched a new offensive […]

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Oil Prices Start Week in Negative Territory

LONDON—Oil prices started the week in negative territory on expectations that a sustained recovery is still a long way off. U.S. crude snapped a seven-week losing streak last week after bullish comments by an international energy watchdog. But analysts said they see little evidence that the combination of oversupply and sluggish demand that has pummeled prices since last summer is abating. Brent crude for March delivery fell 1.3% to $49.52 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February flirted with $48 a barrel in recent trade, down 1.5% from Friday’s settlement. “Despite a nearly 60% fall in oil prices since mid-2014, oil market balances remain weak, with prospects of a recovery looking dim until the latter months of 2015,” Barclays analysts said in a report over the weekend. Oil markets rallied on Friday after the International […]

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Oil Trades Near $50 After First Weekly Gain in 2 Months

Oil dropped after capping its first weekly gain in two months as investors weigh rising OPEC against speculation supply from outside the group will slow. Prices slid at least 1.2 percent in London and New York. Iraq is pumping at a record pace of 4 million barrels a day, Oil Minister Adel Abdul Mahdi said. Non-OPEC nations will boost output this year at a weaker rate than previously forecast, according to the International Energy Agency. Crude slumped almost 50 percent last year as the U.S. pumped oil at the fastest rate in more than three decades while OPEC resisted calls to cut supply. U.S. producers idled a record number of drill rigs during the past six weeks, according to data from Baker Hughes Inc. “The bigger picture remains from a fundamental point-of-view,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “We have a supply […]

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Oil prices dip on gloomy economic outlook

SINGAPORE (Reuters) – Brent crude oil prices dipped back below $50 a barrel on Monday as Europe’s and Asia’s economic outlook darkened, although some price support came from falling U.S. output. Analysts said prices were supported around current levels but warned that there was not much room for gains. "Some positive data points helped to stabilize oil for now … Upbeat IEA comments and a falling U.S. rig count were the latest positive news. While the news was able to halt oil’s price decline, it was not enough to turn prices bullish," Morgan Stanley said on Monday. China is due on Tuesday to report economic growth data that is expected to be the weakest in 24 years. In Europe, Thursday’s meeting of the European Central Bank will likely see the launch of a government bond-buying campaign, pointing to further euro falls against the dollar as well as to downward […]

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Iran: New U.S. Sanctions Would End Nuclear Talks, Officials Say

Iran will stop negotiating with the six world powers if the U.S. Congress approves any new sanctions, senior parliamentary officials said Jan. 17, Fars news agency reported. The officials also said if any of the other six world powers imposed a new sanction against Iran, it would discontinue the talks. The announcement comes after U.S. President Barack Obama vowed to veto any new U.S. sanctions on Jan. 16 as talks on the nuclear issue continue . Stratfor provides global awareness and guidance to individuals, governments and businesses around the world. We use a unique, intel-based approach to analyze world affairs. Copyright © 2015 Stratfor Global Intelligence, All rights reserved. Our mailing address is: 221 West 6th Street Suite 400 – Austin, TX 78701, USA unsubscribe from this list     update subscription preferences | forward email

Posted On : Published By : Tom Whipple
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Iran Blames Oil-Price Plunge for Delay in Minister’s Saudi Visit

A meeting between the foreign ministers of OPEC’s Iran and Saudi Arabia was delayed in part due to discord over falling crude prices, said Hossein Amir-Abdollahian, Iran’s deputy foreign minister for Arab and African affairs. Saudi Arabia, the world’s biggest oil exporter, made an invitation in May to Iran’s Mohammad Javad Zarif for talks in the kingdom with his Saudi counterpart Prince Saud al-Faisal. The visit, postponed a few months ago because of differences over the Syria conflict, has been pushed off again “due to oil-price declines,” Amir-Abdollahian said on Al-Alam state-run television, according to its website. Oil producers in the Persian Gulf region, including Saudi Arabia, “are expected to make efforts to stop the fall in oil prices and not let the decline have a lasting impact on oil-producing nations’ economies,” Amir-Abdollahian said, according to Iran’s Al-Alam . Brent crude has dropped 53 percent in the past year. […]

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Iraq Pumps Crude at Record Level Amid Plummeting Prices

Iraq is pumping crude at a record pace and will continue to boost exports this year amid a global market glut that’s pushed prices down, Oil Minister Adel Abdul Mahdi said. “The average for Iraqi crude output is 4 million barrels a day, which is a historical record,” Abdul Mahdi said at a news conference after meeting his Turkish counterpart, Taner Yildiz , in Baghdad. The figure includes output from the semi-autonomous Kurdish region in the north. In December, Iraq pumped 3.35 million barrels daily without the Kurdish region, according to the oil marketing organization SOMO. Iraq plans to boost crude exports to 3.3 million barrels a day this year, including from the Kurdish area, Abdul Mahdi said. Iraq and Turkey agreed to boost Iraqi crude exports from the north via the Turkish port of Ceyhan to 375,000 barrels a day in the coming months, and to as much […]

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Kirk-Menendez Bill Boosts Pressure to Curb Iran’s Nuclear Program

ENLARGE Sen. Robert Menendez (D., N.J.) shown here at an event in December, has drafted legislation along with Sen. Mark Kirk (R., Ill.) to impose new sanctions if current talks to curb Iran’s nuclear ambitions fail to bear fruit. Getty Images WASHINGTON—Two U.S. senators stepped up pressure on both the White House and Iran on Sunday, drafting legislation to impose new sanctions on Iran if U.S.-led talks to curb its nuclear ambitions collapse. Sens. Mark Kirk (R., Ill.) and Robert Menendez (D., N.J.) said their bill would impose the sanctions only if Iran and U.S. diplomats miss a July deadline for a deal to curb Tehran’s nuclear program. The Senate Banking Committee is set to debate the bill and possibly hold a vote Thursday. President Barack Obama on Friday threatened to veto any legislation approving new sanctions on Iran , which he said would jeopardize the talks. Iranian diplomats […]

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OPEC’s Future Seen in Mining Slump as Oil Price Pummeled

Oil producers reluctant to curb output even as prices tumble to five-and-a-half year lows don’t need to guess what the future holds. They can ask a miner. In coal to iron ore markets, suppliers have raised volumes even as prices slumped, boosting global gluts and jeopardizing profits as the most dominant players seek to maintain revenue and squeeze out higher cost rivals. Prices of thermal coal , used to generate electricity, and metallurgical coal , a key ingredient in steel, have tumbled more than half since 2011 on supply additions and slowing demand in China , the biggest commodities consumer. With OPEC insistent that it won’t curb crude output, and U.S. production rising to its fastest weekly pace in more than 30 years, oil markets may be in line for similar prolonged pain. “If OPEC every now and again looks over their shoulder at what is happening in other […]

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Iran Blames Oil-Price Plunge for Delay in Minister’s Saudi Visit

A meeting between the foreign ministers of OPEC’s Iran and Saudi Arabia was delayed in part due to discord over falling crude prices, said Hossein Amir-Abdollahian, Iran’s deputy foreign minister for Arab and African affairs. Saudi Arabia, the world’s biggest oil exporter, made an invitation in May to Iran’s Mohammad Javad Zarif for talks in the kingdom with his Saudi counterpart Prince Saud al-Faisal. The visit, postponed a few months ago because of differences over the Syria conflict, has been pushed off again “due to oil-price declines,” Amir-Abdollahian said on Al-Alam state-run television, according to its website. Oil producers in the Persian Gulf region, including Saudi Arabia, “are expected to make efforts to stop the fall in oil prices and not let the decline have a lasting impact on oil-producing nations’ economies,” Amir-Abdollahian said, according to Iran’s Al-Alam . Brent crude has dropped 53 percent in the past year. […]

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Saudis Kept Oil Exports at 7-Month High as OPEC Met

Saudi Arabia ’s oil exports rose to a seven-month high in November when it led OPEC to keep production unchanged as the largest crude shipper fought to keep market share with output rising from the U.S. to Russia. Saudi Arabia’s oil exports rose to 7.3 million barrels a day from 6.9 million barrels in October, according to data yesterday on the website of the Joint Organisations Data Initiative. Crude stockpiles at the end of the month stood at 305.8 million barrels, the highest level since at least January 2002, figures on the group’s website showed. Saudi Arabia dropped its official selling prices in Asia for November sales to gain market share in the fastest-growing region for petroleum demand while it helped domestic refiners to be profitable. Brent crude futures have dropped about 35 percent since the Organization of Petroleum Exporting Countries unexpectedly maintained its production target of 30 million […]

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Libyan government army declares cease-fire

Libya’s internationally recognized government in the northeastern Tobruk has declared a cease-fire , with U.N.-brokered peace talks set to resume in Geneva next week. The Tobruk government’s rival, the self-declared Fajr Libya (Dawn of Libya) government in Tripoli had declared a truce earlier in the week, but said on Sunday that it would not participated in the talks unless they were held in Libya, but that they were willing to negotiate. Jason Pack from Libya-Analysis.com, speaking to Al Jazeera from London, said that the cease-fire agreement was only moderately promising, adding that while Fajr Libya , which is comprised of several militia groups, had agreed to a truce, many other militia groups operating in the country had not.  "We also do not have both sides of the political leadership of Tripoli represented in Geneva," Pack said, but added that the current situation in Libya was not necessarily a result of […]

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Oil Boss Says More Job Cuts Ahead

A sign tower reaches toward the sky at the entrance to oil-field services company Schlumberger. ASSOCIATED PRESS Energy companies aren’t finished shedding jobs due to crude oil prices that are half what they were about six months ago, the world’s biggest oil-field-services provider warned soon after disclosing 9,000 job cuts. Paal Kibsgaard, chief executive of Schlumberger Ltd. , said on Friday U.S. oil producers that focus on shale fields are worse off than rivals elsewhere because of their higher costs. “The new oil prices are clearly going to test the resilience of several North American land producers going forward,” he said, citing “their ability to get financing, their ability to continue to drive efficiencies and reduce costs and their ability to maintain production at current levels.” Some of the largest U.S. oil-and-gas producers have cut 2015 capital spending budgets by 20% or more. Investment bank Cowen and Co. said […]

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Falling oil prices threaten electric cars and biofuels

Tesla Motors Chairman and CEO Elon Musk (in driver’s seat) and chief designer Franz von Holzhausen (in passenger seat) drive the new Tesla Model S all-electric sedan out into the street as members of the media look on, at the car’s unveiling in Hawthorne, California on March 26 2009 Tumbling oil prices look set to hit electric cars and biofuels harder than other parts of the green power industry, the head of the world’s leading renewable energy agency has warned. That is because they compete directly with rivals such as petrol-fuelled cars that are becoming cheaper to run as oil prices fall. More On this topic IN Energy But wind farms, solar plants and other renewable electricity generators should not be affected by the price plunge because they do not face anything like the same level of competition, said Adnan Amin, director-general of the International Renewable Energy Agency , […]

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Michigan’s Governor Snyder eyes phasing out coal-fired power generation, unlike counterparts

Louisville, Kentucky (Platts)–16Jan2015/617 pm EST/2317 GMT Michigan Governor Rick Snyder is setting his energy stall out early in the state’s two-year legislative session, saying he wants to look into weaning the state off coal-fired generation. Currently, Michigan sources about 50% of its power from coal-fired plants, but Snyder told the Michigan Conservative Energy Forum Thursday that "now is the time to look at a long-term transition away from coal." In the long term, Snyder sees potential replacements for coal such as natural gas and wind "as viable options for Michigan, both of which have begun to build a presence in the state," Dave Murray, the governor’s deputy press secretary, said Friday. And the former business executive and venture capitalist’s stance on potentially expanding the state’s 10% by 2015 renewable portfolio standard during this year’s session could hold influence in the Republican-dominated state Legislature — which began its session on […]

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Repsol Abandons Drilling off Canary Islands

ENLARGE Repsol’s drilling program off the coast of Spain’s Canary Islands angered environmental groups. A sign from a 2014 protest, above, reads ‘No to oil companies, yes to renewables.’ Agence France-Presse/Getty Images MADRID— Repsol on Friday said it would abandon drilling off the Canary Islands, ending a year-long conflict that had pitted the Spanish oil company and central government against islanders worried about the effect oil extraction may have on the environment. An exploratory well reaching more than 3,000 meters below sea level found methane and hexane gases but it “lacked the necessary volume and quality to consider future extraction,” Repsol said. The company said it would seal off the well within a week and that it won’t carry out a previously planned second drilling. The well closure puts a cork in a controversial project that began over a decade ago, when seismic studies first suggested there could be […]

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EU Considers Bigger Loan for Ukraine

ENLARGE Ukrainian and European Union flags. EU governments discussed Friday increasing the amount the bloc lends to Ukraine over the medium term. Agence France-Presse/Getty Images BRUSSELS–-European Union governments discussed Friday increasing the amount the bloc lends to Ukraine in the medium term, with a number of bigger member states saying the proposed loan package floated by Brussels wasn’t large enough, according to people familiar with the debate. Last week, European Commission President Jean-Claude Juncker proposed a €1.8 billion ($2.10 billion) balance of payment loan for Ukraine through 2015 and early 2016. The money is planned alongside fresh assistance from the U.S. and other international sources to help the government in Kiev fill a funding gap estimated by the country at around $15 billion through the first quarter of 2016. Earlier this week, the U.S. pledged $2 billion in additional loan guarantees for Ukraine. According to two officials, a number […]

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Is Moscow bluffing on redirecting European gas supplies?

Is Moscow bluffing on redirecting European gas supplies? thumbnail Moscow says it’s planning to build a pipeline to the Turkish-Greek border and no longer ship natural gas to Western Europe through Ukraine within 3 years. The project is far more about political competition than economics. Russia has announced that it will stop supplying Europe directly with natural gas via pipelines that transit through Ukraine within three years, Russian news agencies reported last week. The move threatens the European Union ‘s energy security and may force Europeans to move quickly to wean the continent from its long-standing dependence on Russian gas. Russia says it will use a newly-announced pipeline through Turkey to bypass Ukraine and channel about 60 billion cubic meters of gas — about 40 percent of all Russian exports to Europe — to a new gas hub on the Greek-Turkish border. Europe will be required to make its […]

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