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China to crank up oil product exports, add to supply glut

SINGAPORE (Reuters) – Beijing has raised the initial volume of oil products that Chinese refiners can export this year, potentially adding to a supply glut just as new processing capacity in the Middle East is expected to pressure fuel prices and depress margins. China controls oil product exports through quotas to state-run refiners after assessing domestic needs. This year Sinopec Corp, CNOOC Ltd and PetroChina were given an oil product export quota of 9.75 million tonnes, up about 20 percent from the initial limit set for 2014, industry sources with knowledge of the matter said. The refiners will likely apply for more allowances once they exhaust the initial quotas as they run cheaper crude through the capacity added last year, and the final annual exports are expected to far exceed the opening levels. The first quota limit given to oil refiners in 2014 was for about 8 million tonnes, […]

Posted On : Published By : Tom Whipple
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Russian Retail Sales Drop as Real Wages Crumble Most Since 1999

(Bloomberg) — Russian retail sales fell last month for the first time in more than five years as real wages plunged the most since 1999, underscoring the damage inflicted on the economy by a tailspin in oil prices and the ruble’s collapse. Sales declined 4.4 percent from a year earlier after expanding 5.3 percent in December, the Federal Statistics Service in Moscow said Wednesday in a statement. The median estimate of 14 economists surveyed by Bloomberg was for a 1.9 percent decline. Wages adjusted for inflation shrank 8 percent. The drop in consumption, which accounts for about half the economy, is the latest blow for President Vladimir Putin as Russia lurches into recession following the oil rout and U.S. and European sanctions over Ukraine. The fastest inflation rate in almost seven years and the ruble’s 46 percent slump in 2014 are eating into workers’ paychecks, putting Russia on track […]

Posted On : Published By : Tom Whipple
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« Tight Oil Production Will Fall 600,000 Barrels Per Day By June

Posted in The Petroleum Truth Report U.S. tight oil production may fall 600,000 barrels per day by June 2015 based on reasonable projections of current rig counts.   I compared the decrease in rig counts that began in late 2014 to the rig count decrease in 2008 and 2009 following the Financial Crisis.  I projected current total rig counts according to three scenarios out to June 5, 2015 shown in the chart below. I then applied those decline rates to rig counts and production in the 4 major tight oil plays: the Bakken, D-J Niobrara, Eagle Ford and Permian basin. Comparison of rig count decrease in 2008-2009 and 2014-2015. Source: Baker Hughes (Click image to enlarge) In 2008-2009, the U.S. rig count dropped from 2,031 to 876 over a period of 283 days. As of February 13, 2015, the rig count has fallen from 1,931 to 1,358 over a period of 151 days.  The current rate […]

Posted On : Published By : Tom Whipple
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The Hot New Statistic Oil Traders Are Eyeing Is 71 Years Old

(Bloomberg) — It was like clockwork. Every week since 1944, Baker Hughes Inc. would release its survey of how many rigs were out drilling for U.S oil and gas. And every week, oil and gas traders would, for the most part, overlook it. What a difference a $50-a-barrel slide in oil makes. This past Friday, traders were bent over their desks, staring at their screens, waiting for 1 p.m. New York time to see whether drillers extended their biggest-ever retreat from U.S. oil fields. (They did.) Oil futures spiked within minutes of the count, closing at the highest level in four days. “I don’t think I’ve heard ‘Baker Hughes’ more in my life than I have in the past month,” Dan Flynn, a trader at Price Futures Group in Chicago, said by phone on Feb. 13. “It’s like I’m saying it in my sleep.” The sudden interest in Houston-based […]

Posted On : Published By : Tom Whipple
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Growth in Slow Start as U.S. Factories Curb Output: Economy

(Bloomberg) — Factory production rose less than forecast in January and home construction fell, showing the U.S. economy is off to a slow start in 2015. Output at factories climbed 0.2 percent and figures for the previous three months were revised lower, data from the Federal Reserve showed Wednesday in Washington. Total industrial production, which also includes mining and utilities, climbed less than projected as oil-well drilling slumped. Housing starts dropped 2 percent, according to the Commerce Department. “It’s not weak, but it’s not great either,” said Thomas Costerg, an economist at Standard Chartered Bank in New York, who correctly estimated the gain in factory output. “There are some downside risks, clearly.” The data bolster Fed concern that struggling economies from Europe to Asia, a stronger dollar and the sluggish recovery in housing pose obstacles that warrant keeping interest rates low for longer. Additionally, while consumers benefit from an […]

Posted On : Published By : Tom Whipple
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U.S. refinery strike passes 18th day but talks resume

HOUSTON (Reuters) – The largest U.S refinery workers strike since 1980 passed its 18th day on Wednesday but talks between union and oil company representatives over safety and pay restarted after a gap of a week and went into the night, according to a union text message. More than 5,000 workers at 11 plants, including nine refineries accounting for 13 percent of U.S. production capacity, remained on strike on Wednesday. "Industry responded to the information request and engaged in discussions into the evening," the text message to United Steelworkers union (USW) members read. "Still miles apart. Bargaining continues tomorrow." Talks between the USW and lead oil company negotiator Royal Dutch Shell Plc had been on hold as the company drew up a response to an information request and a counterproposal from the union. "Shell resumed negotiations with the USW on Wednesday and continues to work towards reaching a mutually […]

Posted On : Published By : Tom Whipple
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Blast at Exxon refinery in California could hike gasoline prices

TORRANCE, Calif. (Reuters) – An explosion and fire ripped through a gasoline processing unit at an Exxon Mobil Corp refinery near Los Angeles on Wednesday, leaving California with the threat of higher gasoline prices. Investigators were trying to determine the cause of the blast in Torrance, California, which occurred shortly before 9 a.m. PST (12 p.m. ET). Four contract workers were injured and sent to Long Beach Medical Center for evaluation. Exxon said late on Wednesday that three of the workers had been released. The company said it was operating units that had not been affected by the explosion at its 155,000 barrel-per-day refinery. Torrance Fire Captain Steve Deuel said a small ground fire that followed the explosion had been quickly extinguished. He said firefighters and refinery crews also contained a gasoline leak that had been caused by the blast. Deuel said there was no evidence of foul play. […]

Posted On : Published By : Tom Whipple
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Best Shale Driller Halts Oil Growth in Bullish Oil Sign

(Bloomberg) — The biggest, fastest-growing oil producer in the U.S. said it plans to halt output growth this year, delivering a signal that shale companies are beginning to do what it takes to reduce oversupplies. EOG Resources Inc., which has boosted its oil production by almost 50 percent annually for the past five years, is slashing spending 40 percent and will drill half the wells it did in 2014. The Houston-based company fell more than 6 percent in after-hours trading as it reported fourth-quarter profit Wednesday that missed expectations. The company joins Apache Corp. in its plan to pump about the same volume of oil as last year. The cutbacks are a sign that shale producers can slow down a lot more quickly than forecasters are expecting, said Michael Scialla, a Denver-based analyst at Stifel Nicolaus & Co. “EOG is viewed as the premier company in shale development, and […]

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Rigs Running Hot Offshore as Shale Scales Back

(Bloomberg) — While U.S. drilling on land has fallen along with the price of crude, the risky and expensive drive to pull oil from the depths of the Gulf of Mexico is showing little evidence of a slowdown. Oil rigs working in the Gulf will increase by more than 30 percent this year compared with 2014, according to data from Wood Mackenzie, an industry consultant. At the same time, the number of land-based rigs has fallen by a third since October, bearing the brunt of industry-wide cutbacks that have shed tens of thousands of jobs in the U.S. The reasons are two-fold. The rise in deep-water drilling stems from years of planning and billions of dollars already invested, and the payoff can be considerable. Anadarko Petroleum Corp.’s Lucius platform can handle as much as 80,000 barrels a day from the six wells that feed into it, an output that […]

Posted On : Published By : Tom Whipple
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NTSB: Oil by rail needs scrutiny after W. Va. incident

The National Transportation Safety Board estimated 28 tank cars of the 109 from a CSX line slipped the rails early Monday afternoon near Mt. Carbon, W. Va. The state Department of Military Affairs & Public Safety estimated that about a dozen of the cars were carrying crude oil, which would equate to approximately 8,000 barrels. The NTSB said an undetermined amount of crude oil spilled into an area river. U.S. crude oil production levels are more than the existing pipeline infrastructure can handle, forcing energy companies to use rail as an alternative transit method. The increase in crude oil transport by rail has raised safety concerns, most notably in the wake of a deadly 2013 accident in Lac-Megantic, Quebec. Most rail incidents involving crude oil spills were tied to cars labeled DOT-111. The incident in West Virginia involved newer model cars designated CPC 1232. "This accident is another reminder […]

Posted On : Published By : Tom Whipple