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Tactical pause in Putin’s assault on Ukraine

Ukrainian President Petro Poroshenko stands in an elevator after peace talks on resolving the Ukrainian crisis in Minsk, February 12, 2015. The leaders of Germany, France, Russia and Ukraine have agreed a deal to end fighting in eastern Ukraine, participants at the summit talks said on Thursday. REUTERS/Vasily Fedosenko (BELARUS – Tags: POLITICS) T he deal agreed by Vladimir Putin and Petro Poroshenko in Minsk on Thursday provides a ray of hope that the conflict in eastern Ukraine might be moving towards a settlement. But it would be foolish to view the pact more optimistically than that. After a testy 16-hour negotiation, the Russian and Ukrainian presidents have at least settled on a framework to end the fighting that has taken more than 5,000 lives. However, a similar agreement signed in the Belarusian capital last September swiftly collapsed. And any optimism about Minsk II requires a leap of faith […]

Posted On : Published By : Tom Whipple
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Here’s a $9 Trillion Question

(Bloomberg) — When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion. That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery. The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy. From the housing markets in Canada and Hong Kong to capital flows into and out of China and Turkey, the question isn’t whether there will be spillovers — it’s how big they will be, and where they will hit the […]

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Arthur Berman Interview: Why Today’s Shale Era Is The Retirement Party For Oil Production

As we’ve written about often here at PeakProsperity.com, much of what’s been ‘sold’ to us about the US shale oil revolution is massively over-hyped. The amount of commercially-recoverable shale oil is much less than touted, returns much less net energy than the petroleum our economy was built around, and is extremely unprofitable to extract for most drillers at today’s lower oil price. To separate the hype from reality, our podcast guest is Arthur Berman, a geological consultant with 34 years of experience in petroleum exploration and production.  Berman sees the recent US oil production boost from shale drilling as and short-lived and somewhat desperate; a kind of last hurrah before the lights get turned out: The EIA looks at the US tight oil plays and they see maybe five years before things start to fall off. I think it is less, but I am not going to split hairs. The […]

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Peak Nothing. Goldman Sachs Advisor Says “Too Much Physical Oil”

Goldman Sachs executive Gary Cohn says we could see so much oil, there would be no way to physically store it all, resulting in falling prices, at least in certain locational areas. Further destabilization across the globe could, logically, follow. Cohn told Bloomberg News : “I think the oil market is trying to figure out an equilibrium price. The danger here, as we try and find an equilibrium price, at some point we may end up in a situation where storage capacity gets very, very limited. We may have too much physical oil for the available storage in certain locations. And it may be a locational issue.” “And you may just see lots of oil in certain locations around the world where oil will have to price to such a cheap discount vis-a-vis the forward price that you make second tier, and third tier and fourth tier storage available.” […]

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Oil Rises but Price Gains Capped by Rising U.S. Supply

LONDON—Oil prices rose on Thursday but analysts remained cautious after news that U.S. oil supplies had touched record highs. Brent crude for March delivery rose 2% to $55.80 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in March recently traded at $50.16 a barrel, up $1.34, or 2.8%. Market participants said traders are looking to book gains before the expiration of the Brent March contract on Thursday. Analysts also pointed to weakness in the U.S. dollar, which is supportive of dollar-denominate commodities such as oil. Looking at the longer term fundamentals, however, the picture hasn’t changed much, analysts say. U.S. crude stockpiles rose more than expected last week, reaching another record high, according to the U.S. Energy Information Administration. The EIA also reported U.S. oil production rose by 49,000 barrels a day to 9.2 million last week, an […]

Posted On : Published By : Tom Whipple
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Oil bounces back as dollar weakens

LONDON (Reuters) – Brent oil futures rose to $56 a barrel on Thursday, as a weakened dollar and industry spending cuts offset worries of a supply glut after U.S. crude inventories increased for a fifth consecutive week. The dollar fell 0.25 percent against a basket of currencies .DXY, making dollar-traded commodities such as oil more attractive. "The dollar is weaker against all the commodities at the moment," said Michael Hewson, chief analyst at CMC Markets. "We saw a heavy selloff in commodities yesterday and I think that’s why we’re getting a little bit of a rebound in oil prices on the back of that." March Brent futures LCOc1 were up $1.38 at $56.04 a barrel by 0938 GMT (04:38 a.m. EST), following a 3 percent loss in the previous session that saw prices break below $54 at one point. U.S. March crude futures CLc1 were trading up $1.58 at […]

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Oil Layoffs Top 100,000 as Job Pilgrims’ Dreams Shatter

Workers wait in the heliport area during sunset at the Petroleos Mexicanos (Pemex) Pol-A Platform complex, located on the continental shelf in the Gulf of Mexico. Mexico’s oil prospects are grim. In late 2013, the country began taking steps to revise its constitution and end a seven-decade monopoly, anticipating billions in investment from the world’s biggest oil companies. Photographer: Susana Gonzalez/Bloomberg (Bloomberg) — The promise of plentiful jobs and salaries as high as $250k/yr lured Colombia native Clara Correa Zappa and her British husband to Perth, Australia, at the height of the continent’s oil and gas frenzy. * Engineers were in high demand in 2012, when oil prices exceeded $100/bbl, making the move across the world a no- brainer. Within 2 yrs, though, oil plunged to less than half the 2012 price and Zappa lost her job as a safety analyst. Now she’s worried her husband, who also works […]

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Iraq Minister Predicts Oil Price Recovery

An eight-month slump in the oil market has reached a bottom and prices will recover, Iraq’s oil minister predicted Tuesday. Oil prices have slumped more than 50% since June amid a surge in oil supply led by U.S. shale oil production and sluggish demand. Iraq and other members of the Organization of the Petroleum Exporting Countries have taken a hands-off approach to the selloff, opting to defend market share rather than cut production to bolster prices as the group had done in the past. “The price fall has no real justification,” oil minister Adel Abdul-Mehdi said in a statement published on the Iraq oil ministry’s website, adding that he expected oil demand to increase and spending cuts to hit high-cost oil projects, reducing supply in the market and helping to halt the fall in prices. The minister’s comments somewhat echo analysis by the International Energy Agency this week, which […]

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Oil-rich Kuwait gets power back on after widespread blackout

KUWAIT CITY (AP) — A country known for its vast energy wealth just couldn’t keep the lights on – at least for a short while. A sweeping blackout that struck the tiny but oil-rich Kuwait on Wednesday evening knocked out lights even at the international airport, brought out the amateur comedians on social media and got lawmakers Thursday asking why so much of the OPEC nation suddenly went dark. The power cut happened when a technical fault struck a transmission line linked to the al-Subbyia power station, according to Minister of Public Works, Electricity and Water Abdulaziz al-Ibrahim whose remarks were carried by the official Kuwait News Agency. Residents in the car-loving country reported unusually thick traffic jams caused by darkened traffic lights. Emergency measures used to bring power back online following the outage included the use of an electrical link to the rest of the six-member Gulf Cooperation […]

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Little noticed, new Saudi king shapes contours of power

RIYADH (Reuters) – By rapidly appointing two heirs, Saudi Arabia’s King Salman has pressed pause on "succession Sudoku", as one leading local journalist calls speculation over whose star is rising and whose waning in the large and secretive Al Saud ruling family. The choice of 69-year-old Muqrin for crown prince and 55-year-old Mohammed bin Nayef for deputy crown prince resolved the most important dilemma in the dynasty’s recent history – how to jump from sons of its founder, King Abdulaziz, to his grandsons. Yet while much attention has focused on the naming of Muqrin and bin Nayef, less noticed moves have indicated broader changes in the contours of how the Al Saud manage their power and which young princes might rule the world’s top oil exporter and key Western ally in future. After decades during which top jobs were held by the same handful of people, these appointments appear […]

Posted On : Published By : Tom Whipple