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Ukraine has a $1 billion plan to wean itself off Russian gas

Ukraine announced plans to spend $1 billion to build up a strategic gas reserve in order to reduce its reliance on fuel imports from Russia. Prime Minister Arseniy Yatsenyuk said on Saturday that the country would borrow the money using government guarantees in order to shift the country to European suppliers of natural gas, according to The Moscow Times . Gas imported from Russia accounted for 58% of Ukraine’s total consumption in 2013, while the country’s state-owned company Navtogaz also generates large revenues from fees it charges to transport Russian gas to Europe. In 2011 Navtogaz received transit fees equivalent to 1.9% of GDP . Ukraine gas The latest plan to diversify Ukraine’s energy supply comes following repeated threats by Moscow to recall a $3 billion loan made to the previous administration in Kiev. Under the terms of the deal, former President Viktor Yanukovych committed to capping Ukraine’s national debt […]

Posted On : Published By : Tom Whipple
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Commodities explained: Oil data watch

Floor hands Jose Garza, left, Jose Salinas, center, and Omar Cano make a pipe connection on Orion Drilling Co.’s Perseus drilling rig near Encinal in Webb County, Texas, U.S., on Monday, March 26, 2012. The Perseus is drilling for oil and gas in the Eagle Ford Shale, a sedimentary rock formation underlying an area of South and East Texas. Photographer: Eddie Seal/Bloomberg *** Local Caption *** Jose garza; Jose Salinas; Omar Cano Concerns about a growing oil supply surplus last year prompted Saudi Arabia, the world’s largest exporter, in November to persuade fellow Opec members that cutting production to support oil prices was not in their interest. The Kingdom said a period of lower prices would shave off some US shale production and other high-cost output and protect Saudi Arabia’s (and in theory the cartel’s) market share. With the oil market focused on the impact of the plunge in […]

Posted On : Published By : Tom Whipple
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Get Ready for $10 Oil

At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s why. U.S. economic growth has averaged 2.3 percent a year since the recovery started in mid-2009. That’s about half the rate you might expect in a rebound from the deepest recession since the 1930s. Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline. At the same time, output is climbing, thanks in large part to increased U.S. production from hydraulic fracking and horizontal drilling. U.S. output rose by 15 percent in the 12 months through November from a year earlier, […]

Posted On : Published By : Tom Whipple
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Why The Price Of Oil Is More Likely To Fall To 20 Rather Than Rise To 80

Why The Price Of Oil Is More Likely To Fall To 20 Rather Than Rise To 80 thumbnail This is just the beginning of the oil crisis.  Over the past couple of weeks, the price of U.S. oil has rallied back above 50 dollars a barrel.  In fact, as I write this, it is sitting at $52.93.  But this rally will not last.  In fact, analysts at the big banks are warning that we could soon see U.S. oil hit the $20 mark.  The reason for this is that the production of oil globally is still way above the current level of demand.  Things have gotten so bad that millions of barrels of oil are being stored at sea as companies wait for the price of oil to go back up.  But the price is not going to go back up any time soon.  Even though rigs are being […]

Posted On : Published By : Tom Whipple
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Oil turns lower as glut overshadows Japan’s return to growth

SINGAPORE (Reuters) – Oil prices turned lower on Monday after a firm start, with an oversupply continuing to weigh on the market despite data showing Japan had pulled out of recession. Prices initially rose in early Asian trade but then dipped as the return to growth in Japan in the October-December quarter was weaker than expected, while a drop in the number of rigs drilling in the United States did not change the view that oil markets remained oversupplied. In Japan, household and corporate spending disappointed, underlining the challenge premier Shinzo Abe faces in shaking off decades of stagnation. Benchmark Brent crude futures were trading at $61.24 per barrel at 0801 GMT (3 a.m. EST), down 28 cents since their last settlement. U.S. WTI crude was down 26 cents at $52.52 a barrel. The dip was also a reaction to strong gains made last week when oil markets rose […]

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Crude Oil Bears Betting on Supply Glut Miss Market Rally

Pumping jacks stand near an Anadarko Petroleum Corp. oil rig site in Fort Lupton, Colorado. U.S. oil explorers idled rigs for the 10th straight week to extend an unprecedented retreat in drilling. Photographer: Jamie Schwaberow/Bloomberg (Bloomberg) — Speculators cut bullish oil bets for a fourth week, missing a market rebound. Hedge funds and other money managers decreased net-long positions in West Texas Intermediate crude by 9.1 percent since Jan. 13, U.S. Commodity Futures Trading Commission data show. Futures climbed for a third week as companies including Apache Corp. and Total SA announced spending cuts. Bad weather kept tankers from loading in southern Iraq and Libya’s production decreased. Baker Hughes Inc. said rigs targeting oil in the U.S. dropped to the lowest in almost five years. “To maintain production growth you are going to have to drill more,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, […]

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Kuwait Oil Minister Sees Crude Recovering Further in Second Half

(Bloomberg) — The surplus in global crude supply is less than the 1.8 million barrels a day Kuwait estimated it to be last month, and prices will continue to recoup losses, Oil Minister Ali Al-Omair said. “We were expecting oil prices to recover in the second half, but they recovered faster than what we expected,” Al-Omair said at an industry conference in Kuwait City. “I expect oil prices to keep improving.” Brent crude futures, a benchmark for more than half of the world’s oil, gained 6.3 percent in London this year, after plunging 48 percent in 2014. The contract rose as much as 80 cents in trading Monday and was at $60.88 a barrel at 9:18 a.m. on the ICE Futures Europe exchange. Rising U.S. supply is contributing to a worldwide crude surplus. Qatar and the United Arab Emirates, OPEC members like Kuwait, estimated the excess at 2 million […]

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Sisi warns of response after Islamic State kills 21 Egyptians in Libya

CAIRO (Reuters) – Islamic State released a video on Sunday that appeared to show the beheadings of 21 Egyptian Christians in Libya and President Abdel Fattah al-Sisi warned that his country would respond to the deaths as it saw fit. Speaking on national television hours after the release of the video, Sisi said Cairo would choose the "necessary means and timing to avenge the criminal killings". Egypt’s state news agency MENA quoted the spokesman for the Coptic Church as confirming that 21 Egyptian Christians believed to be held by Islamic State were dead. The beheadings could stiffen Sisi’s resolve in dealing with security threats from militants thriving in neighboring Libya’s chaos who want to topple his U.S.-backed government. Egypt has denied reports in the past that it had taken part, along with its close ally the United Arab Emirates, in air strikes against militants based in Libya. The footage […]

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Libya Islamists Vow to Combat Islamic State in Sirte: LANA

(Bloomberg) — Libya’s rival Islamist parliament said it would fight to retake the city of Sirte from Islamic State militants, as the North African oil producer slipped deeper into anarchy. The General National Congress’s decision, reported today by the state-run Libya News Agency, came after it agreed with the allied Libya Dawn group of militias to form a joint military force to recapture state installations in the city that militants had seized. The move underscores tensions among Islamists at a time when the GNC and others are seeking to distance themselves from Islamic State, the militant movement that has seized large swaths of Syria and Iraq. It also adds another layer of friction between Islamists who refused to accept the results of last year’s parliamentary vote, and the elected legislature and government that blame them for the spike in violence, saying they created a breeding ground for “terrorists.” The […]

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Libya Warns of Oil Shutdown as Attacks Escalate

Smoke rises from the port of the eastern Libyan city of Benghazi during clashes between forces loyal to the internationally recognised government and militias, on Feb. 14, 2015. Photographer: Abdullah Doma/AFP via Getty Images (Corrects length of Qaddafi’s rule in fourth paragraph in story originally published Feb. 14.) (Bloomberg) — Libya’s state-run oil company warned that it would shut production at all fields if authorities in the divided nation fail to contain an escalation of attacks on facilities that cut crude output to a year-low. “If these incidents continue, National Oil Corp. will regrettably be forced to stop all operations at all fields in order to preserve the lives” of employees, the company said in a statement on its website. “National Oil Corp. urges the Ministry of Defense and the Petroleum Facilities Guard to take the appropriate measures to protect oil sites.” The North African nation’s oil production was […]

Posted On : Published By : Tom Whipple