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Oil prices fall on weak Chinese data, U.S. refinery strikes

LONDON (Reuters) – Crude oil prices fell on Monday after U.S. unions called a refinery strike and activity in China’s factory sector shrank for the second month in a row, quashing Friday’s bullish mood. At 0938 GMT (4.38 a.m. ET) Brent crude oil futures were down $1.05 at $51.94 a barrel while U.S. crude futures were down $1.13 at $47.11 a barrel. The move down followed a rally on Friday fueled by month-end short covering and a record weekly drop in the number of U.S. oil rigs employed, according to Baker Hughes. The count is now down 24 percent from its October peak. Both contracts rose by about 8 percent and Brent closed at $52.99 a barrel on Friday. But on Sunday workers at nine U.S. refineries and chemical plants went on strike in a bid to pressure oil companies to agree to a new national contract. "So far […]

Posted On : Published By : Tom Whipple
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Commodities crash: Bad news for the world economy, but is anyone listening?

Depression: Unemployed;destitute man leaning against vacant store:photo by Dorothea Lange http://commons.wikimedia.org/wiki/File:Depression,_Unemployed,destitute_man_leaning_against_vacant_store-photo_by_Dorothea_Lange_-_NARA_-_195825.tif Reading the general run of financial headlines might lead one to believe that price declines in those commodities which are highly sensitive to economic conditions such as  iron ore ,  copper ,  oil ,  natural gas ,  coal , and  lumber  are good on their face. Obviously, the declines aren’t good for those who  sell  these commodities. But, those of us who  buy  these commodities in the form of cars, houses, utility bills and other products and services ought to be helping the world economy as we buy more stuff with the freed up income. As true as that may be, these commodity price declines also signal something else: exceptional weakness in the world economy. It is no secret that economic growth in Europe has been stalled for some time and is now receding. The European Union’s confrontation […]

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Islamic State Affiliate Takes Root Amid Libya’s Chaos

ENLARGE A Libyan worker cleans in front of the Corinthia Hotel last week, a day after it was targeted. Photo: European Pressphoto Agency Islamic State’s affiliate in Libya has capitalized on the battlefield failures and disillusionment among better-established, more moderate Islamist groups in the country, following the same formula that brought the radical movement success in Syria and Iraq, Western counterterrorism officials said. A group calling itself Islamic State’s Tripoli Province claimed responsibility for an attack on Tuesday on a hotel that killed nine people, including an American. It was the first time the group came to prominence in Libya, raising concerns that the reach of the extremists is spreading beyond Syria and Iraq. But the attacks also underlined the threat Islamic State poses to more entrenched Islamist groups such as Libya Dawn, a more moderate Islamist militia that is ideologically close to Egypt’s Muslim Brotherhood and now fights […]

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U.S. Treasury’s Sanctions Czar Says Iran, Russia, Islamic State Weakened

ENLARGE Under Secretary for Terrorism and Financial Intelligence David Cohen photographed in his office at the Treasury Department on Jan. 29 in Washington, D.C. Photo: Madeline Marshall/The Wall Street Journal WASHINGTON—Iran’s economy is now fundamentally incapable of recovery without a nuclear accommodation with the West, increasing Washington’s leverage in final negotiations with Tehran, said the Treasury Department’s outgoing sanctions czar David Cohen . “They’re stuck. They can’t fix this economy unless they get sanctions relief,” Mr. Cohen said in an interview with The Wall Street Journal about sanctions policy around the world. “I think they are coming to the negotiations with their backs to the wall.” Mr. Cohen is leaving his post to assume the No. 2 spot at the Central Intelligence Agency, where he’ll continue to spearhead U.S. efforts to contain Iran, Russia, North Korea and other American adversaries. Mr. Cohen has been a central player at Treasury […]

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Kirkuk: A new Isis attack is the latest challenge for the long-troubled oil-rich city in Iraq

Iraqi onlookers stand next to a burnt car following a motorcycle bombing attack which killed at least eight people on September 19, 2014 in the northern city of Kirkuk.(Getty) For Kirkuk, its oil-rich surroundings have been more a curse than a blessing. The northern Iraqi city struck black gold in 1927, while still under the control of the British Empire, and became the country’s oil production powerhouse in the north. At its peak, its oil fields were pumping out 3.2 billion barrels per day, but this has since fallen sharply amid war and mismanagement by the former Iraqi dictator Saddam Hussein, who seized control in 1968. Kirkuk is in what is now Kurdistan, a semi-autonomous region of Iraq, and was for years a multi-ethnic city. Many Kurds, who make up the bulk of the 850,000 population, had arrived in Kirkuk in search of work in the city’s oil industry. […]

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Morgan Stanley Sees China Peak Steel Now as Goldman Differs

(Bloomberg) — Peak steel arrives in China this year, according to Morgan Stanley, which forecast that production and consumption of the alloy will decline after 2015 as the second-largest economy matures. Steel output in the world’s top producer will peak at 806 million metric tons this year, drop to 801 million tons in 2016 and decline further to 795 million tons in 2017, the bank said in a commodities report on Monday. The comments reiterated remarks made by the bank’s analysts in a Dec. 16 note. China expanded at the weakest pace last year since 1990 amid a property market slowdown, as policy makers sought to shift the economy more toward consumption. The slowdown in the country that accounts for about half of global steel production contributed to a collapse in iron ore prices, which sank 47 percent in 2014. The drop was also spurred by a supply surge […]

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North Sea Oil Turns Buyer’s Market as Apache, BG Group Want Out

(Bloomberg) — Want to buy an oil well in U.K.’s North Sea? There are plenty available as some of the industry’s largest names try to sell aging, costly wells that have become even less profitable with the plunge in crude prices. BG Group Plc, Apache Corp. and Marathon Oil Corp. are among companies that have explored a sale of their North Sea assets, according to people familiar with the processes. In all, assets worth as much as 20 billion pounds ($30 billion) are currently for sale in the North Sea, said Dave Blackwood, senior adviser to investment bank Evercore Partners Inc. Drillers have struggled in recent years to extract oil from the North Sea’s depleting fields, leading to reduced output and costs that jumped 26 percent last year. Oil has slumped about 36 percent since the Organization of Petroleum Exporting Countries’ Nov. 27 accord to maintain production at 30 […]

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Oil Workers in U.S. on First Large-Scale Strike Since 1980

(Bloomberg) — The United Steelworkers union, which represents employees at more than 200 U.S. oil refineries, terminals, pipelines and chemical plants, began a strike at nine sites on Sunday, the biggest walkout called since 1980. The USW started the work stoppage after failing to reach agreement on a labor contract that expired Sunday, saying in a statement that it “had no choice.” The union rejected five contract offers made by Royal Dutch Shell Plc on behalf of oil companies including Exxon Mobil Corp. and Chevron Corp. since negotiations began on Jan. 21. The steelworkers’ union hasn’t called a strike nationally since 1980, when a stoppage lasted three months. A full walkout of USW workers would threaten to disrupt as much as 64 percent of U.S. fuel production. Shell and union representatives began negotiations amid the biggest collapse in U.S. oil prices since 2008. “The problem is that oil companies […]

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Oil Companies Draw on Creative Financing to Stay Afloat After Prices Tumble

(Bloomberg) — North America’s small and mid-sized energy companies are searching for creative ways to stay afloat as investors smell blood in the water from the almost 60 percent fall in the price of oil since June. Oil and natural gas companies are straining for solutions before cuts in credit lines and increases in lending rates hit home in April, when banks re-price the collateral used to secure revolving credit lines. Some are turning to more creative forms of financing as familiar sources of money dry up. That financing is coming from hedge funds, private equity shops and mega-wealthy investors like billionaire Carl Icahn who have the cash to weather a prolonged downturn and are on the hunt for deals among the wounded, bankers and analysts say. Oil operators, meanwhile, are laying off staff, freezing salaries and deferring investments to conserve cash. “Companies have lived in a state of […]

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Refineries Stay Open Amid Walkout

USW workers walk a picket line outside a Shell refinery in Texas. ENLARGE Photo: Reuters United Steelworkers at refineries that produce nearly 10% of the nation’s gasoline, diesel and other fuels went on strike Sunday, after contract negotiations broke down over salaries and safety concerns, union officials and companies said. The USW told members at nine refineries and chemical plants from Texas to California to walk out after their shifts were over and not to return until a new three-year collective bargaining agreement was reached. The strike affects 3,800 workers, the union said. The job action was the most widespread of its kind in 35 years. In 1980, a nationwide strike of refinery workers lasted three months, but most fuel generators were able to keep running using nonunion labor. This time around, companies said they, too, would keep plants operating under contingency plans. Royal Dutch Shell PLC., the oil […]

Posted On : Published By : Tom Whipple