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Oil Muddies U.S. Economic Picture

ENLARGE The sharp decline in oil prices and the drumbeat of energy companies laying off workers and cutting back spending ought to weigh on oil and gas output. But it could take some time for this to completely show up in Fed numbers. Work at a drilling rig in Texas. Photo: Getty Images U.S. industrial output is about to run out of energy. The same can’t be said for the U.S. economy. The Federal Reserve on Wednesday will release January figures on industrial production—the combined output of U.S. manufacturing, utility and mining sectors—and economists expect a gain of 0.4% from a month earlier. A pickup in manufacturing employment and hours, as well as auto-industry production schedules, suggest factory activity increased. There was a warm-weather downdraft in utility production in December that probably at least partially reversed itself last month. The problem area is mining. Although it conjures images of […]

Posted On : Published By : Tom Whipple
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Libya’s oil economy at risk, envoy says

Libyan conflict may disrupt prime source of revenue, oil, says U.S. ambassador. UPITarek Alhuony. Internal conflicts in Libya may leave the country without a source of oil revenue in less than two years, the U.S. ambassador to Libya said Tuesday. The fire that resulted from the militant bombing of a pipeline at the Sarir oil field, the largest in Libya, was extinguished during the weekend. Sarir is in the same region as oil fields attacked last week by fighters claiming loyalty to the group calling itself the Islamic State. Libya before NATO forces intervened to protect civilians from attacks by forces loyal to former leader Moammar Gadhafi was producing around 1.2 million barrels of oil per day. In its monthly report for February, the Organization of Petroleum Exporting Countries said member-state Libya was producing around 343,000 bpd as of January, a 27 percent decline from December. Sarir was producing […]

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Iraqi Shiite cleric recalls militiamen from fight against Islamic State

Followers of Shiite cleric Moqtada al-Sadr attend open-air Friday prayers in the Shiite stronghold of Sadr City. (Karim Kadim/AP) BAGHDAD — Iraqi Shiite cleric Moqtada al-Sadr said Tuesday that he would freeze the activities of his militias, potentially pulling back thousands of fighters from the battle against Islamic State militants. Sadr claimed to have taken the decision as a “show of goodwill” following reports of atrocities by Shiite militia groups, many of which are not under his control. Analysts said, however, that other strategic motivations may have prompted the move. The cleric’s order covered the Peace Brigades and the Promised Day Brigade, both of which have their roots in the Mahdi Army, the notorious Sadr militia that was responsible for thousands of attacks on U.S. troops during the Iraq war. The Peace Brigades is among the largest of the Shiite militias that have proliferated since the Islamic State rapidly […]

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Iran prepared to impose oil, gas embargo if necessary: supreme leader

Tehran (Platts)–18Feb2015/601 am EST/1101 GMT Iran would be willing to impose a hydrocarbon embargo if there were a final deal in the nuclear talks with the West and international sanctions were not lifted, Supreme Leader Ayatollah Ali Khamenei said Wednesday. "If we do not resist, the enemy will put conditions on our nuclear program and impose sanctions," Khamenei was quoted as saying by the official IRNA news agency. "If it’s going to be sanctions, the Iranian nation will impose sanctions on them in future. Iran owns the biggest oil and gas reserves in the world." "Europe and the world need the gas. Iran can impose sanctions on them, if it becomes necessary," Khamenei said. "The enemy is using sanctions as much as possible. Their goal is to stop the [Iranian] people’s progress. I believe that even if the nuclear issue turns out the way they are dictating, the sanctions […]

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Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said. “We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.” An agreement with Qatar is expected by early March, Pakistani officials say. Pakistani Prime Minister Nawaz Sharif came to office in May 2013 on a pledge to reduce the country’s electricity shortages, which see power regularly cut to homes and businesses for eight or more hours a day. Tackling the electricity deficit, however, has thus far largely eluded Mr. Sharif’s government. The government has promised to eradicate the electricity shutdowns, known as load shedding, by the […]

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World’s Largest Oil Exporter Said to Seek $10 Billion

A worker stands at a pipeline, watching a flare stack at the Saudi Aramco oil field complex facilities at Shaybah, in Saudi Arabia. Saudi Aramco, as it’s known, is in talks with international and local banks to replace an undrawn $4 billion loan, the people said, asking not to be identified as negotiations are private. Photographer:Reza/Getty Images (Bloomberg) — Saudi Arabian Oil Co., the world’s largest oil exporter, is in talks with banks to raise a $10 billion loan that could be used to fund acquisitions and other investments, according to four people with knowledge of the matter. Saudi Aramco, as it’s known, is negotiating with international and local banks to replace an undrawn $4 billion loan, the people said, asking not to be identified as the plans are private. Saudi Aramco told banks that it expects to make withdrawals under the new facility, two of the people said. […]

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Boko Haram Threatens to Disrupt Nigeria’s Elections in New Video

Abubakar Shekau, leader of Boko Haram. The insurgents distributed leaflets in the town advising residents not to vote in the presidential and legislative elections, which were delayed from Feb. 14. Source: AP Photo (Bloomberg) — The leader of the Islamist militant group Boko Haram vowed in a new video to disrupt Nigeria’s rescheduled general elections starting March 28. “This election will not hold even if we are dead,” Abubakar Shekau said in the video posted on Twitter, which couldn’t be independently verified. “Allah will not even allow it to happen.” Shekau claimed responsibility for a Feb. 14 attack on the northeastern state capital of Gombe, where detained militants were freed. The insurgents distributed leaflets in the town advising residents not to vote in the presidential and legislative elections, which were delayed from Feb. 14. Boko Haram has escalated its six-year-old campaign to impose Islamic law on Nigeria, Africa’s biggest […]

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Venezuela Squanders Its Oil Wealth

National Guard monitor a supermarket in Caracas, on Feb. 3, 2015. (Bloomberg) — By packing bags for $1 a day and with tips at a Caracas supermarket, Luis has managed to save up for a Japanese sports motorbike. His secret? Getting hold of scarce food before it hits the shelves. Luis offers preferential access to detergent, milk and sugar to his clientele of about 100 diplomats at a Centro Madeirense shop in the south of the capital. In return, they offer him occasional work as a handyman or courier and loan him money during dry patches. “Times are tough. We have to spin to survive,” Luis, 30, said in an interview in Caracas last month. “We have to be creative with the opportunities at hand to make ends meet.” Price controls have emptied stores of most goods, while the world’s highest inflation has pushed what is available beyond the […]

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China Considering Mergers Among Its Big State Oil Companies

ENLARGE Drivers wait to fill their tanks at a Sinopec gas station in Zhengzhou, Henan province, Feb. 9, before China was set to raise retail prices after global oil prices recovered some 20 percent in the past two weeks. Photo: Reuters BEIJING—China is considering forging megamergers among its big state oil companies, seeking to create new national champions able to take on the likes of Exxon Mobil Corp. and produce greater efficiencies at a time of low prices. At the request of China’s leadership, government economic advisers are conducting a feasibility study of options for consolidation, according to officials with knowledge of the research. One involves potentially combining the country’s largest oil companies, China National Petroleum Corp., or CNPC, and its main domestic rival, China Petrochemical Corp., or Sinopec, the officials said. Other options look at merging two other major energy companies, China National Offshore Oil Corp., or Cnooc, […]

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Beijing’s Step Back With Big Oil

Beijing is considering mergers for its state-controlled oil giants, such as the owner of PetroChina. ENLARGE Photo: Reuters If Exxon Mobil didn’t exist, would you invent it? China may be in the “yes” camp—which is a curiously retro position in today’s oil industry. Beijing is considering mergers for its state-controlled oil giants, such as China National Petroleum Corp., or CNPC, The Wall Street Journal reported Tuesday. PetroChina, CNPC’s listed arm, alone is worth north of $300 billion. Energy bankers will no doubt turn misty-eyed at the prospect of a late-1990s-style round of megamergers, exemplified by Exxon’s takeover of Mobil. But the world has moved on. While investors have sought refuge in Big Oil stocks amid the recent slump in prices, Small Oil has been much more in favor in recent years. Marathon Oil and ConocoPhillips split into separate upstream and downstream firms in 2011 and 2012, respectively. The resulting […]

Posted On : Published By : Tom Whipple