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West Races to Defuse Ukraine Crisis

Ukrainian military vehicles drive toward the flashpoint city of Debaltseve in eastern Ukraine on Sunday. ENLARGE Photo: Associated Press MUNICH—The U.S. and Germany are struggling to maintain a united front against an unflinching Russia ahead of a crucial week of high-stakes, top-level diplomacy on the Ukraine crisis. Chancellor Angela Merkel has given Russian President Vladimir Putin until Wednesday to agree to a road map to end the fighting in eastern Ukraine, according to Western officials. If in her assessment Russian intransigence has blocked a deal, they said, Germany will likely move to step up European sanctions against Russian companies, possibly including broader asset freezes. Separately, the U.S. is considering supplying Ukraine with lethal aid. President Barack Obama has held off on a decision until he sees Ms. Merkel—who has publicly opposed weapons deliveries—on Monday morning. The confluence of events—which follows a recent surge of deadly fighting between Ukrainian forces […]

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Merkel to meet Obama over Ukraine

Angela Merkel speaking at the Munich conference Angela Merkel is to meet President Barack Obama in Washington on Monday in a bid to secure a diplomatic solution to the escalating Ukraine crisis amid calls for the US administration to arm Kiev. The German chancellor’s visit comes after the latest round of talks between France, Germany, Ukraine and Russia failed to result in a peace accord at the weekend. Adamantly opposed to arming Ukraine, Ms Merkel is putting huge efforts into bringing Russian President Vladimir Putin to the negotiating table. In a four-way phone call on Sunday, Mr Putin and Ms Merkel, together with French President François Hollande and Ukrainian President Petro Poroshenko, agreed to meet on Wednesday in the Belarusian capital of Minsk. Talks have taken on new urgency following the collapse of September’s ceasefire agreement as Russian-backed rebels seize government-controlled areas in eastern Ukraine. The Washington meeting comes […]

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Crisis in Ukraine Underscores Opposing Lessons of Cold War

MUNICH — The Cold War is history, but its spirit this weekend stalked the security conference held here each winter for the past 51 years. Chancellor Angela Merkel of Germany and Senator John McCain drew very different lessons from the West’s 20th-century showdown with the Soviet Union, as they clashed over whether to arm Kiev’s troops in response to Russian aggression in eastern Ukraine . That disagreement represents one of the sharpest rifts yet over how the allies should respond to the current challenge from Moscow. Europe is very different from the days when the militaries of NATO and the Soviet bloc stared each other down. But the crisis in Ukraine has reopened familiar differences as to whether the threat of force — in this case, Washington’s readiness to bolster Ukraine’s military against pro-Russian rebels backed by the Kremlin — is more effective than months of so-far failed negotiations. […]

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There Is No Peak Oil–But We Are Approaching Peak Low-Cost Oil

The collapse in oil prices over the last seven months looks to destabilize the world stage by redirecting over $1.8 trillion in spending if current prices hold. While worldwide demand exceeds 92 million barrels per day , the drop in price from over $105 this past summer to under $50 translates into sizable savings for the average American. Who Gains vs. Who Loses Spread out across all industries, U.S. consumers could be looking at an extra $300 billion in savings this year, since oil touches just about every aspect of daily life in one form or another. The working poor, in particular, will be the largest beneficiaries , since energy expenses constitute a greater percentage of household income for them than for any other group. They will likely feel as though they are getting ahead, for a change, rather than continuing to slip further into the abyss . The impact of “less pain at the pump” […]

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Alternate opinions: The world’s energy information duopoly comes to an end

Woodcut showing a soothsayer in front of a king. We can see some of the signs in the nature the soothsayer uses: stars, fishes and sounds from the mountains. Creator: Olaus Magnus 1555. Source: "Historia de gentibus septentrionalibus", book 3 via Wikimedia Commons. Recent developments are beginning to undermine the supremacy of the world’s long-running energy information duopoly and its perennially optimistic narrative. Policymakers, investors and the public should take heed. Until now most energy price and supply forecasts and analyses were based predominately on information from the globe’s two leading energy information agencies: the  U.S. Energy Information Administration (EIA) , the statistical arm of the U.S. Department of Energy, and the  International Energy Agency (IEA) , a consortium of 29 countries originally formed in response to the 1973-74 Arab oil embargo to provide better information on world energy supplies to its members. Both agencies provide forecasts that are […]

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Charts showing the long-term GDP-energy tie

In Part 1 of this series , I talked about why cheap fuels act to create economic growth. In this post, we will look at some supporting data showing how this connection works. The data is over a very long time period–some of it going back to the Year 1 C. E. We know that there is a close connection between energy use (and in fact oil use) and economic growth in recent years. Figure 1. Comparison of three-year average growth in world real GDP (based on USDA values in 2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014. In this post, we will see how close the connection has been, going back to the Year 1 CE. We will also see that economies that can leverage their human energy with inexpensive supplemental energy gain an advantage over other […]

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Here’s Why Big Oil Companies Are Unable To Increase Reserves To Counter Declining Production

Here’s Why Big Oil Companies Are Unable To Increase Reserves To Counter Declining Production thumbnail According to the quarterly results announced during the past few weeks, major oil companies have reported a mediocre performance for last year, as far as exploration and production of crude oil and natural gas reserves is concerned. At the same time, companies have also reduced their capital spending budgets for this year, which might exacerbate their lower production problem. Over the last decade, some of the biggest oil companies have seen their production drop and their growth of reserves stutter, even though oil price was going up for the most part. Royal Dutch Shell plc (ADR) ( NYSE:RDS.A ), BP plc (ADR) ( NYSE:BP ), ConocoPhillips ( NYSE:COP ), Exxon Mobil Corporation ( NYSE:XOM ), and Chevron Corporation ( NYSE:CVX ) are five of the biggest global oil and gas companies, which saw their production drop 3.25% year-over-year (YoY) on […]

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Jeremy Grantham Divines Oil Industry’s Future

The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand. It became clear that OPEC, mainly Saudi Arabia, must cut back production if the price were to stay around $100 a barrel, which many, including me, believe is necessary to justify continued heavy spending to find traditional oil. The Saudis declined to pull back their production and the oil market entered into glut mode, in which storage is full and production continues above demand. Under glut conditions, oil (and natural gas) is uniquely sensitive to declines toward marginal cost (ignoring sunk costs), which can approach a few dollars a barrel — the cost of just pumping the oil. Oil demand is notoriously insensitive to price in the short term but cumulatively and substantially sensitive as a few years […]

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After Saudi Arabia Crushes The US Shale Industry, This Is Who It Will Go After Next

Whether it is to cripple the will of Putin and end his support of the Syria regime (thus handing the much desired gas-pipeline traversing territory over to Qatari and/or Saudi interests), a hypothesis first presented here in September and subsequently validated by the NYT , or much more simply, just to destroy any and all marginal producers so that Saudi Arabia is once again the world’s most important and price-setting producer and exporter of oil, one thing is clear: the Saudis will not relent from pumping more oil into the market than there is (declining) demand for, until its biggest threat and competitor – the US shale patch – which recently had become the marginal oil producer, as well as its investors – mostly junk bond holders gambling with other people’s money – are crushed, driven before the Saudi royal family, and the lamentation of their women is heard […]

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Oil majors fail to find reserves to counter falling output

* Oil groups produced much more than they found last year * Oil and gas output fell in 2014, echoes trend over past decade * Graphic on oil majors’ output: link.reuters.com/huh93w * Companies now making investment cuts to counter low oil prices Big oil companies had a poor record of finding and producing oil and gas last year, according to figures out in the past week – and big cuts in spending in response to falling crude prices could undermine their plans to turn that around. Four of the world’s six biggest oil firms by market value – Royal Dutch Shell, Chevron, BP and ConocoPhillips – released provisional figures showing together they replaced only two-thirds of the hydrocarbons they extracted in 2014 with new reserves. Combined, those four and industry leader Exxon Mobil posted an average drop in oil and gas production of 3.25 percent last year. All predict […]

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Oil Prices Post Biggest One-Week Gain Since 2011

Oil prices posted their largest weekly percentage gain in three years as traders looked past the current world-wide glut of crude to focus on signals of future production cuts. Market participants said oil prices, which have fallen more than 50% in the past seven months, could be bottoming out as producers have reacted to the low prices by cutting expenditure and reducing drilling activity. Analysts caution that the global oil market is still oversupplied and there are few signs of a major uptick in demand, so prices could slip yet again. The market was particularly volatile this week, posting a one-month high Tuesday before plunging Wednesday and then regaining those losses by the end of the week. U.S. oil for March delivery settled up $1.21, or 2.4%, at $51.69 a barrel on the New York Mercantile Exchange. Prices gained 7.2% this week, the largest weekly percentage gain since February […]

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Oil rallies another $1, but no rapid recovery seen

SINGAPORE (Reuters) – Crude oil prices rose more than $1 a barrel on Friday, continuing a rebound from near-six-year lows plumbed last week, although no rapid recovery is expected amid rising global inventories and steady OPEC supply. Prices closed more than 4 percent higher on Thursday, pushed up by conflict in producer Libya and expectations of a boost to oil demand after China’s central bank easing. Benchmark Brent crude futures were $1 higher at $57.57 a barrel at 0741 GMT (2.41 a.m. EST), after closing up $2.41 on Thursday. U.S. crude for March delivery was also up $1 at $51.47 a barrel. The contract had finished up $2.03 the previous day. "There are signs of rejuvenation in short-term physical demand," National Australia Bank analyst Vyanne Lai said in a note. Physical demand has been boosted recently by traders storing crude on tankers to benefit from higher prices for delivery […]

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Spending cuts drive rally for crude oil

Crude oil prices rally as spending drops in exploration and production side of the global energy sector. UPI/Gary C. Caskey NEW YORK, Feb. 6 (UPI) — Crude oil prices extended their rally Friday, posting some of the biggest two-week gains in recent trading as markets show signs of moving above a floor price. The price for West Texas Intermediate, the U.S. crude oil benchmark, gained 2.75 percent from the previous session to trade at $51.87 per barrel for the March contract early in the trading day. WTI started the year at $52.69 before falling more than 15 percent by the end of January. Prices since the start of February are up nearly 7 percent. Crude oil prices have lost about half of their value since June as markets swing toward the supply side, driven in large part by a weak global economy and increased production from the United States. […]

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Natural Gas Falls to 2 1/2-Year Low on Confidence in Supply

By Timothy Puko Natural-gas prices set another 2 1/2-year low, falling for the seventh time in eight sessions as traders show little concern about the health of supplies. The front-month March contract settled down 2.1 cents, or 0.8%, at $2.579 a million British thermal units on the New York Mercantile Exchange. This is the lowest front-month settlement since June 20, 2012, when gas closed at $2.517/mmBtu. Weather forecasts show above-normal temperatures spreading across nearly the entire country into next week. But they also show the chance for severe cold coming a week from now, with WeatherBELL Analytics LLC predicting temperatures about 20 degrees Fahrenheit below normal in an area including New York and Boston. Half of all U.S. homes use natural gas for heat, but this winter hasn’t been severe enough to spark the kind of heating demand that would overwhelm record production. "The cold needs to be more […]

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Iran warns West that pragmatist Rouhani at risk from talks failure

ANKARA/NEW YORK (Reuters) – Iran’s foreign minister has warned the United States that failure to agree a nuclear deal would likely herald the political demise of pragmatist President Hassan Rouhani, Iranian officials said, raising the stakes as the decade-old stand-off nears its end-game. Mohammad Javad Zarif pressed the concern with U.S. Secretary of State John Kerry at several meetings in recent weeks, according to three senior Iranian officials, who said Iran had also raised the issue with other Western powers. Zarif’s warning has not been previously reported. Western officials acknowledged that the move may be just a negotiating tactic to persuade them to give more ground, but said they shared the view that Rouhani’s political clout would be heavily damaged by the failure of talks. The warning that a breakdown in talks would empower Iran’s conservative hardliners comes as the 12-year-old stand-off reaches a crucial phase, with a March […]

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At least 22 killed in two bombings in Baghdad

BAGHDAD (Reuters) – At least 22 people were killed in two bombings in eastern Baghdad on Saturday, police said, hours before the government was due to lift a long-standing night-time curfew on the capital. At least 50 people were wounded in the blasts, the officials said. In the first attack, a suicide bomber detonated his explosive belt inside a restaurant in the Shi’ite neighborhood of New Baghdad, leaving 12 dead. In the second attack, two bombs ripped through the bustling Sharqa market district, killing 10 people. Earlier police had put the number of dead at 23. The interior ministry spokesman Brigadier General Saad Maan said he did not believe the blasts were linked to the decision to lift the curfew. The Iraqi government announced on Thursday that the decade-old curfew in the capital would end on Saturday at midnight and that four neighborhoods would be "demilitarized". The moves are […]

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Some Kurdish oil exports suspended

Gulf Keystone Petroleum suspends oil exports from Kurdish north of Iraq because of payment row. Photo courtesy: Gulf Keystone Petroleum. LONDON, Feb. 6 (UPI) — Exports from the Kurdish north of Iraq through Turkey are suspended while payment negotiations continue, Gulf Keystone Petroleum said Friday. The British company said it’s owed an unstated amount in payments from the Kurdish government. As a short-term measure , crude oil was redirected to the local market and exports by truck through Turkey are suspended. "This is expected to be a short term measure until a regular payment cycle can be established for sales via the export route," the company said. In the meantime, the company said it was working on finding ways to get crude oil from the Shaikan development in the Kurdish north out of the region through pipeline networks. Last month, the company announced with its Hungarian partner MOL it […]

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Shiite rebels take power in Yemen, fan fears of civil war

AP Photo/Hani Mohammed World Video Latest News Buy AP Photo Reprints SANAA, Yemen (AP) — Yemen’s Shiite rebels proclaimed a formal takeover of the Arab nation Friday, dissolving parliament in a dramatic move that completes their power grab in the region’s poorest nation where an al-Qaida terrorist offshoot flourishes. Angry demonstrators protested the rebels’ move in street rallies in several cities, raising fears of a full-blown sectarian conflict between Yemen’s new Shiite tribal rulers, known as Houthis, and the disenfranchised Sunni majority. The unrest could strengthen Yemen’s al-Qaida branch, considered the world’s most dangerous wing of the terror movement, and complicate U.S. counter-terrorism operations in Saudi Arabia’s southern neighbor. While Houthi rebels are bitter enemies to al-Qaida, they also are hostile to the United States, and frosty to the predominantly Sunni Saudis. The region’s Shiite powerhouse, Iran, looms as a potential key backer. White House spokesman Eric Schultz said […]

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Oil Companies in the Cross Hairs of Libyan Violence

ENLARGE Firefighters worked to put out a fire at an oil-storage tank in the port of Sidra in January. Photo: Reuters The violence roiling Libya has increasingly targeted oil companies and their assets, upending long-term investments by Western companies and driving down production in a country that helped trigger the world-wide rout in oil prices. In short order, Libyan oil output has fallen to about 325,000 barrels a day in January from nearly 900,000 barrels a day in October, largely because of oil fields being taken over by Libyan militias or shutdowns due to security concerns, according to officials at the state-owned National Oil Co. The plunge in production comes after civil war broke out mid-2014, leading to two big closures at the end of the year. French major Total SA closed the Mabruk oil field in central Libya, a facility that once produced 30,000 to 40,000 barrels a […]

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U.S. Oil Workers’ Strike Expands to BP Plants With Talks on Hold

Union workers picket outside of the Marathon Petroleum Corp. Galveston Bay refinery in Texas City, Texas, U.S. Photographer: F. Carter Smith/Bloomberg (Bloomberg) — U.S. oil workers at two BP Plc plants in the Midwest are joining the biggest strike at refineries across the nation since 1980 as negotiations on a new labor contract were suspended until next week. Workers at BP’s Whiting refinery in Indiana and the Toledo plant in Ohio that it co-owns with Husky Energy Inc. notified management that they’ll be joining the strike at 11:59 p.m. on Saturday, Scott Dean a spokesman for BP, said by e-mail Friday. The United Steelworkers, which represents 30,000 U.S. oil workers, has suspended negotiations with Royal Dutch Shell Plc, bargaining on behalf of employers, until next week. The nine U.S. plants on strike and the two refineries headed for a walkout together total about 13 percent of the country’s refining […]

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Special Report: Anatomy of Nigeria’s $20 billion ‘leak’

ABUJA, Nigeria (Reuters) – In late 2013, Nigeria’s then central bank governor Lamido Sanusi wrote to President Goodluck Jonathan claiming that the state oil company had failed to remit tens of billions of oil revenues it owed the state. After the letter was leaked to Reuters and a local news site, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the central bank’s budget. A Senate committee later found Sanusi’s account lacked substance. Sanusi has since become Emir of Kano, the country’s second highest Islamic authority, and has smoothed over relations with the president. He declined to discuss his earlier assertions. Before he was sacked, though, the central banker submitted to Nigeria’s parliament more than 300 pages of documentation in support of his claim. Reuters has reviewed that dossier, which offers one of the most comprehensive studies of waste, mismanagement and what Sanusi called “leakages” of cash in Nigeria’s oil industry. Detailed here, […]

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Angola Must Raise Taxes, Cut Fuel Subsidy as Oil Falls, IMF Says

(Bloomberg) — Angola should raise taxes and eliminate fuel subsidies to help offset plummeting revenue as oil prices plunge, the International Monetary Fund said. “First, get taxes up,” Nicholas Staines, the IMF’s resident representative in Angola, said in a presentation in Luanda, the capital, on Thursday. “I absolutely love taxes. It’s how a state runs. Without taxes, no state.” Oil prices have slumped by more than half since June, cutting revenue in Angola, where crude accounts for almost all of exports and more than two thirds of government income. Authorities have slashed the oil price estimate in the 2015 budget to $40 a barrel from $81 a barrel and are due to publish a revised spending plan next month. Budget revenue will probably drop by $17 billion and oil exports fall by $27 billion based on a $45 a barrel oil price and 2014 average production of 1.66 million […]

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Cheap Oil Continues to Hammer U.S. Oil Rigs

U.S. oil rigs continued to get crushed this week despite record levels of production. Drillers idled 83 rigs, following a decline of 94 rigs in the prior week, Baker Hughes reported Friday. The total U.S. rig count is down 25 percent since October, an unprecedented four-month retreat.  The collapse in oil prices is wiping out more than 30,000 oil jobs, according to a tally of announced layoffs by Bloomberg News. Cowen & Co. estimates that spending on exploration and production are declining more than $116 billion, a 17 percent decline. The oil crash hasn’t yet shown up in U.S. jobs numbers , and American oil production is at the highest level for this time of year since at least 1983. Still, there’s mounting anecdotal evidence of an industry in distress, and the rig counts appear to be in free fall. 

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US Production to Grow At Slower Pace in 2015

US oil production will continue to grow in 2015, but at a slower pace, according to recent analysis by Deloitte. U.S. oil production will continue to increase this year, albeit at a slower pace, due to companies continued investment in projects underway, according to recent analysis by Deloitte MarketPoint. For the past two years, U.S. tight oil production has grown at an annual rate of 1 million barrels of oil per day (MMbopd).   “While the recent drop in crude prices has squeezed the CAPEX budgets of shale producers , some reportedly have been able to lower their operating costs to below $40/bbl through efficiency gains and better economics in the ‘sweet spots’ of the shale plays,” recent Deloitte paper “Oil Prices in Crisis – Considerations and Implications for the Oil and Gas Industry”. Many analysts expected declines of between 300 and 500,000 barrels of oil per day (bopd) […]

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Low Oil Prices Have Yet To Rattle North Dakota Small Businesses

Small business owners in North Dakota, the United States’ second-largest oil-producing state, remain confident despite plunging crude oil prices. WILLISTON, N.D., Feb 6 (Reuters) – Even as plunging crude oil prices fuel anxiety in North Dakota, small business owners in the No. 2 U.S. oil producing state say they are confident that demand for their products and services will remain strong enough to keep things humming. North Dakota’s oil patch has been one of the faster-growing U.S. regions. Small businesses employ three-fifths of the state’s private workforce, about 195,000 people, with food service and construction among the larger employers, according to data from the U.S. Small Business Administration (SBA). While big oil companies grab the most headlines out of the state, much of the local economy still relies on hotel owners, plumbers, contractors and other small businesses, said Mike Gallagher, manager of the SBA’s North Dakota district. "There’s a […]

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Union strike ongoing at US refineries as negotiations continue

HOUSTON, Feb. 6 02/06/2015 A strike by union workers at nine US refining and petrochemical production plants remains under way as the United Steelworkers Union (USW) continue to negotiate collective bargaining agreements over pay, benefits, and health and safety standards with oil companies ( OGJ Online, Feb. 2, 2015 ). While discussions between USW and the industry ended without resolution on Feb. 5, both the union and Royal Dutch Shell PLC , which serves as lead company for National Oil Bargaining (NOB) negotiations, have agreed to resume talks, Shell said in a Feb. 5 statement. The company did not disclose a specific timeframe for when discussions between the parties would restart. In the meantime, USW has announced that it will sponsor a National Day of Action (NDA) on Feb. 7 for fair contracts and safe jobs throughout the oil industry, with plant gate rallies scheduled at 65 refineries and […]

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US jobs growth beats expectations

The US labour market recovery gathered momentum in January as employers added more jobs than expected and wages rebounded, raising the odds of an interest-rate hike in the middle of the year. The dollar jumped against the euro after official figures showed US employers added more than a million jobs in the past three months alone, the most since 1997. More On this story On this topic IN US Economy The data were coupled with improved earnings figures that reversed surprisingly weak wage numbers for December. “The US economy is looking better and better,” said Torsten Sløk, chief international economist at Deutsche Bank. US Treasury Secretary Jack Lew told Congress this week that the American economy was in a “self-sustaining” recovery. The latest figures support that verdict, and sharpen the contrast between the robust US recovery and gloomier prospects in many economies overseas. The US has now seen eleven […]

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U.S. Rig Count Falls by 83 in Latest Week

By Angela Chen U.S. oil-rig count fell by 83 to 1140 in the latest week, according to Baker Hughes Inc. Oil prices spiked last week after Baker Hughes reported that U.S. oil rig count dropped to a two-year low of 1,223. Market participants say oil prices, which have fallen more than 50% in the past seven months, could be bottoming out as producers react to the low prices by cutting expenditure and reducing drilling activity. March oil futures are up 4% to $52.50 a barrel. Gas rigs were down four to 314 this week. The U.S. offshore rig count is at 50, up one from last year and down four from the same period in the year-earlier period. For all rigs, including natural gas, the week’s drop was 87 to 1456. Compared to a year ago, this week’s down is down 315 from 1771. Write to Angela Chen at […]

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Alberta Plans to Lean on Consumers to Weather Oil Slump

(Bloomberg) — Alberta, Canada’s third-largest provincial economy, will lean on consumers to help offset a drop in oil royalties that has led to the “evaporation” of 17 percent of revenue, Premier Jim Prentice said. Albertans should expect increases to user fees and personal taxes over three budget cycles to help pay for the most expensive public services in the country, Prentice said in an interview at Bloomberg’s headquarters in New York. Imposing higher taxes on companies would increase the burden of confronting a slowing economy, he said. “I don’t think the right course of action right now is to increase corporate taxes or royalties,” Prentice said. “It’s the wrong time to start taxing investment and wealth. I won’t be part of it.” Sworn in September as the price of oil was in the midst of a collapse, Prentice is now tasked with reducing Alberta’s dependence on petroleum revenue while […]

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Light for British shale gas work turning green

British government extends exploration permits for shale gas to Cuadrilla Resources. Photo by photostock77/Shutterstock LONDON, Feb. 6 (UPI) — With federal permits in hand, British shale gas pioneer Cuadrilla Resources said Friday it was committed to a light environmental permit despite public uproar. The British Environment Agency gave the company permits to carry out shale gas exploration at its Roseacre Wood site in Lanchashire. "Following such a rigorous review and public consultation of all of our permit applications by the regulator, this unequivocally demonstrates that, as we have committed, our proposed exploratory operations will be carried out responsibly ensuring the local environment is protected," Cuadrilla Chief Executive Officer Francis Egan said in a statement. The British government said the permits granted to the company spell out ways in which it needs to protect regional groundwater and surface water supplies, ensure air quality is within safe limits and dispose, store […]

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Europe’s Energy Independence Drive Goes off the Rails

A year ago, Russia’s lunge into Ukraine seemed to be focusing European minds on the dangers of depending on Moscow for their energy supplies, pushing countries across the continent to scramble onto the shale-gas bandwagon in a quest to copy U.S. success and move towards having the ability to produce all the energy they need on their own. But now, after a series of disappointments from one end of Europe to the other, Europe’s shale dreams seem to have all but evaporated. And that makes it increasingly unlikely that Europe will be able to reap the kind of gas-fired benefits that have rejuvenated sectors of the U.S. economy and greatly reduced American reliance on foreign energy. That will have implications for both Europe’s economic competitiveness and its energy security at a time when a sluggish economy and a snarling Russia worry European leaders in equal measure. The latest blow […]

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Russian Foreign Reserves Fall to Lowest Since 2009 on Euro Slide

(Bloomberg) — Russia’s international reserves fell to the lowest in almost six years as the weakening euro caused a currency revaluation and the central bank intervened to stem the ruble’s depreciation. The value of the stockpile, which includes the central bank’s holdings and two sovereign wealth funds, declined $9.25 billion in January to $376.2 billion, the Bank of Russia said Friday on its website. That compares with a $33.4 billion plunge in December, when the central bank tried to arrest the ruble’s slump to record lows. Russia sold $2.3 billion in market interventions last month, according to central bank data. Policy makers have relied on their reserves to mount a defense of the ruble after it went into a tailspin in December. While President Vladimir Putin said Russia won’t “mindlessly burn up” reserves to defend its currency, the central bank spent about $88 billion of reserves on interventions last […]

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Kremlin: West declared economic war on Russia

West has declared economic war on Russia with sanctions, foreign ministry spokesman says. Photo by Denis Larkin/Shutterstock MOSCOW, Feb. 6 (UPI) — Low credit ratings issued against a Russian economy crippled by low oil prices and sanctions are part of a Western economic war, a Kremlin official said Friday. Russian Foreign Ministry spokesman Alexander Lukashevich said credit downgrades are based on the political motives of Western powers frustrated with Kremlin policies. "The use of targeted and deliberate downgrades of ratings of Russian companies and the sovereign rating of the country has become a part of the U.S. and EU economic war against us," he said. Standard & Poor’s in January cut Russia’s foreign currency rating to junk status. Russia’s currency, the ruble, continues to lose value, trading Friday at 67 to the U.S. dollar, down about 6.25 percent from the start of the year. Low oil prices and pressure […]

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Russia May Cut 15% of Oil, Gas Investments if Oil Prices Stay Low

MOSCOW–Russian Energy Minister Alexander Novak said Friday that about 15% of investments in the country’s oil and gas projects may be cut if oil prices remain at current levels, Russian news agencies report. The comments come as the country’s energy companies, including OAO Rosneft (ROSN.MZ) and the country’s second-largest gas company OAO Novatek (NVTK.MZ), have sought government help in plugging holes in their budget amid sliding oil prices. Russia may withdraw up to 500 billion rubles ($7.45 billion) from the reserve fund, tapping the coffers for the first time in six years. Write to Olga Razumovskaya at [email protected]

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Kremlin talks on Ukraine yield little but agreement to keep talking

DEBALTSEVE, Ukraine/MOSCOW (Reuters) – The leaders of France and Germany flew out of Moscow in the dead of night after five hours of talks with Vladimir Putin on Friday, with little to announce to end fighting in Ukraine beyond a promise to keep talking. None of the leaders spoke publicly after the meeting, which ended around midnight with President Francois Hollande and Chancellor Angela Merkel whisked straight from the Kremlin back to the airport. The French and German leaders had held similar late talks the night before with Ukrainian President Petro Poroshenko, part of a last-ditch push for a breakthrough before EU leaders consider new financial sanctions against Russia next week. European officials had played down expectations ahead of the Moscow talks, expressing doubt that Putin would compromise while pro-Russian rebels are advancing on the ground. Afterwards, Moscow and Berlin both described a commitment to work on a "possible […]

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The World After Cheap Oil

The World After Cheap Oil thumbnail The World After Cheap Oil By Rauli Partanen, Harri Paloheimo and Heikki Waris 250 pp. Routledge – Oct. 2014. $59.95. Toward the end of this book, its authors make an astute, if self-deprecating, observation about its potential merits. They’ve been discussing how innate human biases cause us to make cognitive errors when trying to make sense of world crises. They’ve described in particular the tendency of scientifically knowledgeable people to become less convinced about climate change the more evidence they encounter for it, due to confirmation bias. For the authors, this fact “raises the question of how meaningful writing this book has actually been.” Won’t skeptical readers simply cherry-pick the data that support their views and reject the rest? While it is, of course, correct that some readers will do this, there’s no question that writing the book has been meaningful. Indeed, in […]

Posted On : Published By : ASPO-USA
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Opinion: 5 reasons Peak Food is the world’s No. 1 ticking time bomb

Terraced rice paddy fields are seen during the harvest season in Mu Cang Chai, northwest of Hanoi. Global food poisoning? Yes, We’re maxing out. Forget Peak Oil. We’re maxing-out on Peak Food. Billions go hungry. We’re poisoning our future, That’s why Cargill, America’s largest private food company, is warning us: about water, seeds, fertilizers, diseases, pesticides, droughts. You name it. Everything impacts the food supply. Wake up America, it’s worse than you think. We’re slowly poisoning America’s food supply, poisoning the whole world’s food supply. Fortunately Cargill’s thinking ahead. But politicians are dragging their feet. They’re trapped in denial, protecting Big Oil donors, afraid of losing their job security; their inaction is killing, starving, poisoning people, while hiding behind junk-science. The truth is, America, Big Ag worldwide farm production can’t feed the 10 billion humans forecast on Planet Earth by 2050. Can we wait till 2050 for the fallout? […]

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These Experts Know Exactly Where Oil Prices Are Headed

Oil Drilling Site And Gas Plant Operated By MOL Hungarian Oil & Gas Plc The outlook on oil prices is clear: Oil will crash. Unless prices surge. Definitely one or the other. Crude just had the biggest two-week gain in 17 years, but it’s still about 50 percent cheaper than it was in June. The situation is volatile, and forecasts are all over the place — from $30 a barrel predicted by the president of Goldman Sachs to as high as $200 a barrel seen by the head of OPEC. So what’s going to happen next? Here’s a sampling of predictions from the last two weeks: Oil could fall as low as $30 because supply surpluses won’t disappear overnight, said Barclays analyst Miswin Mahesh. Oil has the potential climb to $200 per barrel from a lack of investment in new supply, warned OPEC’s Secretary General Abdell El-Badri. “If you don’t […]

Posted On : Published By : Tom Whipple
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Commodities explained: Oil and rig counts

Commodities explained: Oil and rig counts thumbnail The weekly US rig count data, published on Friday, have generated considerable excitement in the oil markets recently, with the numbers released by oil-services group Baker Hughes moving crude prices. What’s going on? The numbers identify the level of drilling activity and have traditionally been regarded as a gauge for the health of the US oil industry. They have come under the spotlight since the oil markets have tanked and traders and investors try to figure out what low prices mean for US shale production. The latest figures showed that oil rigs have fallen 24 per cent from the recent peak of 1,609 in October last year. Last Friday’s figures were particularly stark, with 7.1 per cent of all US rigs idled in one week. OK, but what is a rig, exactly? These are not the big oil platforms in the North […]

Posted On : Published By : Tom Whipple
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Here’s One Theory for Why Oil Is Going Nuts

Here’s One Theory for Why Oil Is Going Nuts thumbnail Brent oil surged to $58 a barrel on Tuesday. It is now 24 percent higher than it was just a few weeks ago, meeting the technical definition of a bull market. (Some perspective: Prices are still down 50 percent since June.) One possible reason for the recent surge: an industry in despair. U.S. drillers idled 94 rigs  last week, the most in data going back to 1987, according to Baker Hughes. In the past eight weeks, 352 rigs were idled. BP on Tuesday said it will reduce spending to $20 billion this year, compared with previous guidance of as much as $26 billion. The cuts bring renewed focus to rig counts and raise questions about how low prices can go and still sustain the U.S. oil boom. U.S. Rigs Fall to a Three-Year Low Source: Bloomberg The history of oil prices follows a golden rule: […]

Posted On : Published By : Tom Whipple
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Oil rallies another $1, but no rapid recovery seen

SINGAPORE (Reuters) – Crude oil prices rose more than $1 a barrel on Friday, continuing a rebound from near-six-year lows plumbed last week, although no rapid recovery is expected amid rising global inventories and steady OPEC supply. Prices closed more than 4 percent higher on Thursday, pushed up by conflict in producer Libya and expectations of a boost to oil demand after China’s central bank easing. Benchmark Brent crude futures were $1 higher at $57.57 a barrel at 0741 GMT (2.41 a.m. EST), after closing up $2.41 on Thursday. U.S. crude for March delivery was also up $1 at $51.47 a barrel. The contract had finished up $2.03 the previous day. "There are signs of rejuvenation in short-term physical demand," National Australia Bank analyst Vyanne Lai said in a note. Physical demand has been boosted recently by traders storing crude on tankers to benefit from higher prices for delivery […]

Posted On : Published By : Tom Whipple
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Oil up 6 percent on Libya violence, China easing; volatility expected

NEW YORK (Reuters) – Oil was up about 6 percent on Thursday as rising violence in producing country Libya and an expected boost in oil demand from a central bank easing in China helped crude rebound from one of its sharpest daily routs ever in the previous session. Traders and analysts said they expect higher-than-usual volatility in coming days as the market tries to find a bottom to a seven-month selloff that took prices to near six-year lows. But many were pessimistic about the market making a sustained rally, with record-high U.S. crude inventories rekindling renewed worries about a supply glut. "It is just a changing market sentiment as more and more players are starting to believe production cuts are coming in the U.S. and that will be enough to erase the surplus," Dominick Chirichella, senior partner at the Energy Management Institute, New York, said on the Reuters Global […]

Posted On : Published By : Tom Whipple
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Oil Majors Fail To Find Reserves To Counter Falling Output

Large oil companies are failing to find enough oil and gas to counter falling output. LONDON, Feb 5 (Reuters) – Big oil companies had a poor record of finding and producing oil and gas last year, according to figures out in the past week – and big cuts in spending in response to falling crude prices could undermine their plans to turn that around. Four of the world’s six biggest oil firms by market value – Royal Dutch Shell, Chevron, BP and ConocoPhillips – released provisional figures showing together they replaced only two-thirds of the hydrocarbons they extracted in 2014 with new reserves. Combined, those four and industry leader Exxon Mobil posted an average drop in oil and gas production of 3.25 percent last year. All predict their output will increase and new reserves will be added in coming years. But the 2014 results echo longer-term trends. Over the […]

Posted On : Published By : Tom Whipple
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Kurd Oil Producers Resort to $30 Sales as Export Income Stalled

(Bloomberg) — Foreign oil producers in Iraqi Kurdistan are resorting to selling crude at about $30 a barrel in the domestic market as the government hangs on to companies’ export earnings amid weaker world prices and a costly battle with Islamic State. “The government’s announcement was that there would be payments coming,” said Bijan Mossavar-Rahmani, executive chairman of Norwegian producer DNO ASA, said in an interview in Oslo. “That payment I think got disrupted because of lower prices and the resolution of the budget issues.” That’s forcing DNO to increase sales to the local market. “The companies cannot go on forever investing,” Mossavar-Rahmani said. “Local sales are an opportunity for us to get oxygen as we wait for those larger issues to come together.” DNO, Genel Plc and Gulf Keystone Petroleum Ltd. received an initial $75 million from the Kurdistan Regional Government for their exports last year that was […]

Posted On : Published By : Tom Whipple
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In oil price war, Gulf producers grab market share in Asia

SINGAPORE (Reuters) – Saudi Arabia’s move to slash the price it charges in Asia for its oil this week to the lowest in more than a decade is the latest aggressive action by Gulf states to defend market share in the world’s top oil consuming region. A price war between producers has raged since Saudi Arabia and its Gulf OPEC allies last November chose to keep their taps open in a bid for market share over price, sending oil prices down more than a third to under $50 a barrel in just two months. Since then, Gulf producers – including Saudi Arabia and the United Arab Emirates – have steadily increased shipments to Asia, helped by low production costs that allow aggressive discounts, at the expense of West African and Latin American supplies. Middle East exports to China, by far the region’s biggest importer, increased 2.5 percent to around […]

Posted On : Published By : Tom Whipple
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In Iran, as in U.S., Nuclear Deal is Hotly Debated

TEHRAN—In the chamber of Iran’s parliament recently, consternation mounted quickly over what hard-liners saw as a grave development: The foreign minister had taken a private stroll through a Geneva garden with his American counterpart, John Kerry, during a break in nuclear negotiations. Critics of the urbane Javad Zarif, a fluent English speaker, demanded last week that he appear before the legislature to recount what he had discussed with the U.S. secretary of state in mid-January. “Our nation can never tolerate this!” thundered lawmaker Ali Taheri from the main rostrum to what appeared to be a largely unfazed crowd of legislators going about other business. In a hall outside the chamber, another turbaned hard-liner Hamid Rasaee who belongs to what is known as the “steadfast” or “resistance” front, unleashed a tirade about the tête-à-tête before television cameras from the national broadcasting channel. “It’s a big mistake to have any relationship […]

Posted On : Published By : Tom Whipple
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The emerging Iran nuclear deal raises major concerns

FILE – In this Jan. 14, 2015 file picture US Secretary of State John Kerry, left, listens to Iranian Foreign Minister Mohammad Javad Zarif, as they walk in the city of Geneva, Switzerland, during a bilateral meeting ahead of nuclear discussions. (Martial Trezzini/AP) AS THE Obama administration pushes to complete a nuclear accord with Iran, numerous members of Congress, former secretaries of state and officials of allied governments are expressing concern about the contours of the emerging deal. Though we have long supported negotiations with Iran as well as the interim agreement the United States and its allies struck with Tehran, we share several of those concerns and believe they deserve more debate now — before negotiators present the world with a fait accompli. The problems raised by authorities ranging from Henry Kissinger, the country’s most senior former secretary of state, to Sen. Timothy M. Kaine, Virginia’s junior Democratic senator, […]

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Libya’s Guard Takes Oil Field Stormed by Islamist Gunmen

(Bloomberg) — Libya’s Petroleum Facilities Guard restored control over an idled oil field captured on Tuesday by Islamist gunmen who were said to be seeking a source of funds in the politically divided North African country. The assailants took three Philippine workers as hostages in their retreat from al-Mabruk oil field, Ali al-Hasy, a spokesman for the guard, said by phone on Thursday. Of the 15 guards deployed at the site when it came under attack on Feb 3., two survived and 13 are missing, he said. The field, operated by Total SA as part of a joint venture with Libya’s state-run National Oil Corp., stopped pumping crude on Dec. 15 after an Islamist attack shut Es Sider, the country’s largest oil port and the export terminal for al-Mabruk. Libya’s oil production dropped to 300,000 barrels a day last month from a peak in 2013 of 1.4 million barrels, […]

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Oil Companies in the Cross Hairs of Libyan Violence

Dow Jones Newswires By Benoît Faucon And Georgi Kantchev The violence roiling Libya has increasingly targeted oil companies and their assets, upending long-term investments by Western companies and driving down production in a country that helped launch the world-wide rout in oil prices. In just three months, Libyan oil production has fallen from nearly 900,000 barrels a day in October to about 325,000 barrels a day in January, largely because of oil fields being taken over by armed Libyan groups or shutdowns due to security concerns, according to officials at the National Oil Co. The plunging output comes after civil war broke out mid-2014 and caused two big closures at the end of the year. French major Total SA closed the Mabruk oil field in central Libya, a facility that once produced 30,000 to 40,000 barrels a day. And the country’s main oil port, known as Sidra, was closed […]

Posted On : Published By : Tom Whipple
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Saudi Arabia Deepens Asia Oil Discount to Record Low

A flame from a Saudi Aramco oil installion known as "Pump 3" is seen in the desert near the oil-rich area of Khouris, 160 kms east of the Saudi capital Riyadh. Saudi Aramco, as the producer is known, raised the premium for Arab Light crude to the U.S. by 15 cents a barrel to 45 cents to U.S. Gulf Coast benchmarks. Photographer: Marwan Naamani/AFP/Getty Images (Bloomberg) — Saudi Arabia, the world’s largest crude exporter, cut pricing for March oil sales to Asia, a sign that the desert kingdom is continuing to fight for market share. State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude by 90 cents to $2.30 a barrel less than Middle East benchmarks, the company said in an e-mailed statement Thursday. That’s the lowest in at least the 14 years since Bloomberg began gathering data. “This is further evidence that they […]

Posted On : Published By : Tom Whipple