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Is Oil Returning To $100 Or Dropping To $10?

If you have been following the price of oil over the last few months, the chances are you’re a little confused. On the one hand you have the likes of A. Gary Shilling who, in this Bloomberg article , loudly trumpets the prospect of oil at $10/Barrel, and on the other there is T. Boone Pickens, who, at the end of last year was predicting a return to $100 within 12-18 months. Pickens prediction has moderated somewhat as WTI and Brent crude have continued to fall, but in January he was still saying that oil would return to $70 or $80/barrel in the near future. So, who is correct The answer is neither one. As with most things in life it is unlikely that the truth lies at either extreme. Pickens, and Shilling and other commentators suggesting that oil will fall to levels not seen since 1998, purport to […]

Posted On : Published By : Tom Whipple
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Oil prices dip as worries over U.S. oversupply drag

SINGAPORE (Reuters) – Oil prices dipped on Monday on worries about oversupply in North America, with Brent futures testing support around $60 a barrel and U.S. contracts hovering around $50.70. After an initial rise on Monday along with global markets on optimism that another euro zone crisis over Greek debt had been averted for now, prices began dipping as analysts said crude markets remained oversupplied, especially in the United States, where inventories are at record highs. Benchmark U.S. WTI crude futures were trading down 9 cents at $50.72 a barrel by 0745 GMT. Brent crude was trading 5 cents lower at $60.17. Several banks on Monday said they expected prices to keep falling. "We expect prices to head back below $50/bbl in the coming weeks, with a target of $43/bbl over the next 2-3 months," ANZ said. Barclays also said the market would weaken again in the near future. […]

Posted On : Published By : Tom Whipple
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Oil Extends Weekly Loss as Libya Opens Pipeline

Four pumpjacks are silhouetted as they operate at the site of an oil well outside Williston, North Dakota, U.S. Photographer: Daniel Acker/Bloomberg (Bloomberg) — Oil extended a weekly decline as Libya restarted a crude pipeline halted by a fire and the U.S. idled fewer drilling rigs than in previous weeks. West Texas Intermediate lost as much as 1.4 percent after falling 4.6 percent last week. Oil fields in eastern Libya resumed pumping to the port of Hariga after a pipeline was repaired, according to state-run National Oil Corp. The number of rigs targeting oil in the U.S. shrank by 37 to 1,019 last week, the fewest in service since July 2011, data from Baker Hughes Inc. showed on Friday. It was the smallest cut in seven weeks. “There is still an imbalance between supply and demand,” Jean Medecin a London-based member of the investment committee at Carmignac Gestion SA, […]

Posted On : Published By : Tom Whipple
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Oil’s Plunge Could Help Send Its Price Back Up

If something is cheaper, people will likely buy more of it. That core principle of economics is proving to be especially true with oil after its recent plunge. Over the past six months, 53% of vehicle purchases in the U.S. were light trucks or sport-utility vehicles, which tend to consume more gas than cars, according to Commerce Department data. That was the highest share in a decade and up from 51% last June, when oil prices peaked for the year. The Transportation Department estimates Americans drove more than three trillion miles in the 12 months through November, the most since mid-2008 and the biggest annual increase—38 billion miles—in a decade. Falling oil prices aren’t only a sign of too much supply and not enough demand. The more prices fall, the more people can afford oil, an effect that can goose demand and ultimately help push prices back up. This […]

Posted On : Published By : Tom Whipple
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Oil Rises Marginally, Gains Capped by High U.S. Supplies

By Eric Yep Crude-oil futures rose marginally in Asian trade Monday, with investor concerns about excess crude in U.S. markets limiting gains. On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $50.90 a barrel at 0409 GMT, up $0.09 in the Globex electronic session. Brent crude for April delivery rose $0.19 to $60.41 a barrel on London’s ICE Futures exchange. Nymex West Texas Intermediate crude declined 4.6% last week, dropping more than Brent crude, which fell 2.1%. Both benchmarks snapped a three-week winning streak. "U.S. crude stocks are elevated and set to build through May as challenges continue to mount," Morgan Stanley’s head of energy research Adam Longson said in a weekly report. The U.S. crude market faces challenges including growing oil production in North America, refinery maintenance and a marginal decline in oil imports. Although Brent crude prices are holding up […]

Posted On : Published By : Tom Whipple
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Hedge Funds Raise Bullish Oil Bets as Drillers Idle Rigs: Energy

The silhouette of pumpjacks is seen on the site of an oil well outside Williston, North Dakota, U.S. Oil explorers idled rigs for the 11th straight week, reducing them by 37 to 1,019, Baker Hughes said Feb. 20. Photographer: Daniel Acker/Bloomberg (Bloomberg) — Speculators raised bullish oil bets for the first time in five weeks as producers curbed new drilling. Hedge funds and other money managers increased net-long positions in West Texas Intermediate crude by 2.7 percent in the week ended Feb. 17, U.S. Commodity Futures Trading Commission data show. Futures rose 7 percent in the report week as companies including Total SA and Apache Corp. said they would cut spending and drill less. The number of oil rigs in the U.S. tumbled 35 percent since Dec. 5 to the fewest since 2011, according to Baker Hughes Inc. Outlays for exploration and production will drop by more than $116 […]

Posted On : Published By : Tom Whipple
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The oil price: The Saudi project, part two

Stage one of Saudi Arabia’s plan — or perhaps hope — to restructure the oil market is taking longer than expected. By refusing to rein in production while prices fell, the Saudis permitted a big surplus to grow and served notice on higher-cost rivals (Russia, Venezuela, American shale-oil producers) that they would not prop up other people’s profit margins at the expense of their own market share. That signal has been weakened by the growing amount of oil in storage, which is absorbing most of the glut. World oil stocks rose by about 265 million barrels last year and Société Générale, a French bank, reckons they will increase by a further 1.6 million – 1.8 million barrels a day (b/d) in the first six months of this year, adding roughly 300 million barrels to the total. Oil is being stored in the hope that demand and prices will pick up later. Such […]

Posted On : Published By : Tom Whipple
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What is Saudi Arabia not telling us about its oil future?

It is popular these days to speculate about why Saudi Arabia cajoled its OPEC allies into maintaining oil production in the face of flagging world demand. As the price the world pays for oil and oil products has plummeted, the price OPEC members are paying in terms of lower revenues is high, even unbearable for those who didn’t save up for just such a rainy day. Was the real reason for the decision to maintain production the desire to undermine rising U.S. tight oil production–which has now proven embarrassingly vulnerable to low prices after years of triumphalist talk from the industry about America’s "energy renaissance"? Were the Saudis also thinking of crippling Canada’s high-cost tar sands production? Was it Sunni Saudi Arabia’s wish to undermine its chief adversary in the region, Shiite Iran? Was the Saudi kingdom doing Washington’s bidding by weakening Russia, a country that relies so heavily […]

Posted On : Published By : Tom Whipple
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U.S., Iran Hold Nuclear Talks in Geneva

ENLARGE U.S. Secretary of State John Kerry, right, speaks with Iranian Foreign Minister Javad Zarif in Geneva on Jan. 14. Photo: Associated Press GENEVA—As U.S. Secretary of State John Kerry met with Iran’s foreign minister for fresh nuclear talks, Israel’s leader stepped up criticism of the diplomacy, saying it was “astonishing” that negotiations were continuing over what he warned would be a dangerous deal. Israeli Prime Minister Benjamin Netanyahu ’s comments are the latest salvo in growing tensions between his government and the Obama administration over the Iranian nuclear talks. They come ahead of Israeli elections next month and the prime minister’s visit to Washington to address Congress at the request of Republican leaders. U.S. and Iranian officials have been meeting in this lakeside Swiss city since Friday as they try to agree at least on the outline of a final nuclear agreement by late March. Mr. Kerry and […]

Posted On : Published By : Tom Whipple
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Oil Flows Resume at Libya’s Largest Field

Libya’s largest oil field and a key oil port were brought back online Sunday, though attacks by Islamic extremists have continued elsewhere in the war-torn nation. The resumption of oil flows from the Sarir oil field, which pumps about two-thirds of the country’s remaining output, was a rare piece of good news following renewed fighting in Libya’s civil war and a string of attacks by Islamic State militants. A pipeline carrying 185,000 barrels a day from Sarir to the Hariga terminal in eastern Libya was blown up about a week ago by unknown militants. “The pipeline was repaired. Production restarted today” at 9 a.m. Libyan time, a spokesman for the state-owned National Oil Co. told The Wall Street Journal. No group has claimed responsibility for the sabotage but Libyan oil officials have blamed Islamic State, which has made headway in the North African country after capturing swaths of Iraq […]

Posted On : Published By : Tom Whipple