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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 […]

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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 […]

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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, […]

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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 […]

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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 […]

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Report: Iran refutes claim supreme leader wrote US president

TEHRAN, Iran (AP) — Iran has denied a report that its supreme leader wrote a letter to U.S. President Barack Obama, the Islamic Republic’s official news agency reported, as the country negotiates with world powers over its contested nuclear program. The IRNA news agency quoted Foreign Ministry spokeswoman Marzieh Afkham as saying the report Saturday by the Wall Street Journal was "an unprofessional media game." "The U.S. president has a record of sending letters and in some cases Iran responded to his letters," Afkham said Sunday. Neither she nor the IRNA report elaborated on her comments, though Afkham said Iran had no immediate plans to write Obama again. The Wall Street Journal report said Ayatollah Ali Khamenei wrote Obama in recent weeks in response to a letter by the U.S. president asking Iran to work with an American-led coalition fighting the extremist Islamic State group in Iraq and Syria. […]

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Bahrain joins Emirates in sending fighter planes to Jordan

MANAMA, Bahrain (AP) — The Gulf island nation of Bahrain says it has deployed fighter planes to Jordan, a day after it announced plans to send troops to the kingdom. Bahrain’s brief statement early Monday said the planes would "participate in the international efforts aiming to eliminate terrorism." It did not provide details, and military officials could not immediately be reached for comment. Bahrain is home to the U.S. Navy’s 5th Fleet and like Jordan is part of the U.S.-led coalition carrying out airstrikes against the Islamic State militant group. Gulf neighbor the United Arab Emirates previously deployed a squadron of F-16 fighters to Jordan. Bahraini King Hamad bin Isa Al Khalifa visited Jordan last week, and his government on Sunday announced it was sending an unspecified number of troops to help support Jordan.

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Libya Pipeline Explosion Called Sabotage

Libyan oil officials have blamed saboteurs for blowing up a pipeline and stopping flows from the country’s largest oil field. The fire from the Saturday explosion was extinguished on Sunday, the state-owned National Oil Co. said. The blast affected the pipeline from Sarir, until now the country’s highest-producing oil field at 185,000 barrels a day, said the company on its website over the weekend. The blast came after gunmen assaulted a U.S.-Libyan oil field Friday and less than two weeks after gunmen claiming to represent Islamic State killed nine guards and kidnapped at least three workers at a nearby Libyan-French facility. The field attacked on Saturday is operated by an NOC subsidiary. Libya’s production level fell to about 325,000 barrels a day in January from almost 900,000 barrels in October. Production has been dented by an armed conflict between two rival governments and now oil officials fear foreign terrorist […]

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In Iraq, Kirkuk remains a question mark

Kurdish Peshmerga fighters stand guard on the outskirts of Mosul January 26, 2015. (Stringer/Iraq/Reuters) KIRKUK, Iraq The view from the roof of Gov. Najmaldin Karim’s office shows this multiethnic city laid out below. He points toward the Sunni suburb of Huwija about 15 miles west, which is controlled by the Islamic State. Two weeks ago, the extremists staged a ferocious assault there that almost broke through Kirkuk’s defense lines. “ISIS has its eyes on Kirkuk. It is the big prize for them,” says Karim, using the term for the enemy that’s common here. This very morning, a gray day when poor visibility favored the attackers, the Islamic State launched an artillery and mortar strike from a Sunni suburb called Daquq, south of the city. Coalition airstrikes have pounded ISIS targets here twice this week. Kirkuk province sits uneasily on the fault line with Kurdistan to the east, the Shiite-led Baghdad […]

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China must guarantee minimum 6.5 percent annual GDP growth in five-year plan: state media

SHANGHAI (Reuters) – China needs to guarantee a "bottom line" of 6.5 percent annual economic growth for its 13th five-year-plan, a state newspaper quoted the director of the National Development and Reform Commission (NDRC) Department of Planning, Xu Lin as saying. That would mark the lowest annual growth rate since 1990. The comments by Xu, made on Feb. 14 at the "50 Forum Annual Meeting" – a gathering of Chinese economists – is also an acknowledgment that China is switching to a more sustainable pace of growth from the double-digit rates of the recent past. If this year’s GDP growth is 7 percent, then the "bottom line" for annual GDP growth in the 13th five-year-plan needs to be at least 6.5 percent, the China Securities Journal quoted Xu as saying. China’s economy grew at 7.4 percent in 2014, its slowest pace in 24 years, dragged down by cooling property […]

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China ‘Teapot’ Refineries May Access Imported Oil Under New Rule

(Bloomberg) — China will allow more oil refiners to process imported crude, opening the door for small, independent plants known as teapots to use an alternative feedstock. Refiners investing in overseas oil exploration or capable of advanced processing and pollution-treatment technology will have priority to use imported crude, the National Development and Reform Commission said in a Feb. 9 statement released on its website on Monday. To be eligible, plants must also have at least one crude distillation unit with a designed capacity of more than 2 million metric tons a year, it said. China, the world’s second-largest oil consumer, is widening access to crude supplies amid a global glut that’s driven benchmark prices to the lowest in almost six years. Teapot operators, which process mainly fuel oil, have for years sought to expand their options because it’s more profitable to process crude. China National Chemical Corp., or ChemChina, […]

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China January FDI grows at strongest pace in four years

BEIJING (Reuters) – Foreign direct investment (FDI) in China grew at its strongest pace in nearly four years in January, surging 29.4 percent from a year earlier to $13.9 billion as investors largely shunned the troubled manufacturing sector and focused on the more resilient services industry. But analysts cautioned about reading too much into economic indicators for January alone, given the strong seasonal distortions caused by the timing of the Lunar New Year holidays, which began on Jan. 31 last year but start on Feb. 19 this year. January FDI rose 4.5 percent from December, the Commerce Ministry said on Monday. In terms of value, January FDI was the highest since June 2014. Earlier data showed FDI in China rose just 1.7 percent in 2014, the slackest pace since 2012. The weak performance underscored a cooling economy which is spurring more Chinese firms to plow money into assets overseas […]

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Canadian National’s Main Line Shuts After Crude Cars Derail

(Bloomberg) — Canadian National Railway Co. shut its main line linking western and eastern Canada after an eastbound train carrying crude oil derailed in Ontario. The train of 100 cars, all carrying crude from Canada’s oil-producing region of Alberta to eastern Canada, derailed just before midnight Saturday in a remote and wooded area about 30 miles (48 kilometers) north of Gogama, Ontario, spokesman Patrick Waldron said in an e-mail. About 18 freight trains a day use the line, he said. A total of 29 cars were involved in the incident and seven caught fire. The remaining 71 cars were moved from the site, Waldron said. Some oil was spilled. Shipments scheduled along the affected corridor will be delayed by at least 24 hours, the company said. Canadian oil producers have grown dependent on shipping crude by rail as pipeline capacity has become constrained. The shutdown happened as locomotive engineers […]

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Train Carrying Crude Oil Derails in Ontario

A train carrying crude oil and operated by Canadian National Railway Co. derailed near the town of Timmins in northern Ontario just before midnight on Saturday, causing a fire but no reported injuries. The train derailed in a remote wooded area, according to a spokesman for Montreal-based CN, Canada’s largest railroad company. He said the railway company had deployed firefighting and environmental crews to the scene. The cause of the incident wasn’t yet known, he said. “Our emergency crews continue to conduct a full site assessment to determine the number of rail cars derailed and involved in the fire, and if any product has been spilled,” said CN spokesman Patrick Waldron in an emailed statement on Sunday afternoon. “Seventy-one cars of the 100-car train have been safely moved away from the derailment site. Early site assessments indicate that at total of 29 cars are involved in the incident. That […]

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BP’s battles leave it vulnerable to major move

BP is a shadow of its pre-Gulf of Mexico spill self, having sold more than half its pipelines, 35% of wells and 12% of reserves As head of the world’s biggest energy company, ExxonMobil chief Rex Tillerson has the clout to snap up BP in a single bite If ExxonMobil chief executive Rex Tillerson really wanted to, he could snap up BP in a single bite. Of all the UK major’s rivals, Exxon, the world’s biggest energy company, has the firepower to swallow BP whole. Could it happen? Some industry insiders think yes. Almost five years after the Deepwater Horizon disaster in the Gulf of Mexico, BP’s share price is languishing 30 per cent below where it was before the oil spill. BP’s total shareholder return has sharply underperformed those of its peers over the past decade. The near-50 per cent tumble in oil prices since the summer — […]

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Heavy shelling as rebels keep pressure on Ukraine’s Debaltseve

VUHLEHIRSK, Ukraine (Reuters) – Separatists are keeping up attacks on the strategic railway junction of Debaltseve despite a ceasefire in eastern Ukraine, a Kiev military spokesman said on Monday, and witnesses reported heavy shelling in the area. "The illegal armed groups are not supporting the ceasefire," military spokesman Anatoly Stelmakh told reporters, adding that the Russian-backed rebels were using Grad rockets and tanks to attack government forces holding the town. "The number of attacks on Debaltseve has even increased in comparison to previous days and they are using all types of weapons," he said. "The terrorists have been given the order to take Debaltseve at all cost." A Reuters correspondent at Vuhlehirsk, about 10 km (some six miles) to the west of Debaltseve, reported heavy shelling from the direction of the town, with blasts around every 10 seconds. Underscoring the fragility of the ceasefire, which was negotiated by Ukraine, […]

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Euro up but on edge before crunch meeting on Greece

LONDON (Reuters) – The euro edged up on Monday ahead of a meeting of euro zone finance ministers that investors hope will find common ground to support Greece beyond its current bailout program and keep it inside the currency bloc. The single currency has gained steadily through a nervous month of deadlock between the new government in Athens and its international creditors in Europe and at the IMF. That, and the relative calm on debt markets in Spain, Italy and Portugal, suggests euro zone leaders might be risking less in letting Greece leave the euro now than they would have done during a previous standoff in 2012. But at least for now, analysts seem more inclined to attribute the lack of a significant sell-off to confidence that ministers will find a way to satisfy the complicated political agendas on both sides. "This can quickly turn sour for the euro […]

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Putin Lets Russian Consumers Feel Pain as Economy Succumbs

A customer holds bread rolls as he stands with a shopping cart in the baked goods area inside a Perekrestok supermarket in Moscow. Consumers are retrenching after the ruble lost almost half of its value against the dollar in the past 12 months. Photographer: Andrey Rudakov/Bloomberg (Bloomberg) — Russian households are bearing the brunt of the blowback from the crisis in Ukraine and a tailspin in oil prices, setting the stage for the biggest drop in consumption in more than two decades that will deepen the country’s recession. Crushed by a 44 percent slump in the ruble in the past year as prices soar, retail sales are set for what Otkritie Capital predicts will be their biggest decline since the breakup of the Soviet Union in 1991, when savings were wiped out and households endured food shortages and hyperinflation. That’s unnerved consumers like Svetlana Korotkova, who’s stockpiling cereals and […]

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Ukraine Cease-Fire Largely Being Respected

ENLARGE Ukrainian soldiers make their way on the road leading to the embattled town of Debaltseve on Saturday, after a cease-fire came into effect. Photo: Getty Images The cease-fire between Ukrainian government forces and Russia-backed separatists was largely being observed on its first day despite sporadic exchanges of fire, the head of an international monitoring mission said Sunday. Ertugrul Apakan, the chief monitor of the Organization for Security and Cooperation in Europe’s Special Monitoring Mission to Ukraine, said in a news conference in Kiev that the cease-fire was observed throughout east Ukraine overnight and during the first half of Sunday, with the exception of the area around the city of Debaltseve, where fighting had been heaviest in recent days. The separatists claim that the area should be under their control under the cease-fire agreement, and that thousands of government forces were surrounded there. Kiev officials deny the claim of […]

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A Flawed Plan B for Greece

ENLARGE Greek Prime Minister Alexis Tsipras addresses a news conference after a European Union leaders summit in Brussels on Thursday. Photo: Reuters It is a mark of the gulf that still separates Greece and the rest of the eurozone that an agreement last week simply to engage in “technical discussions” was hailed as a step forward in the search for a solution to the country’s debt crisis. It was certainly a climb-down by the new Greek government, which had previously ruled out any negotiations with its “troika” of international lenders. And it followed previous climb-downs: Athens is now asking for debt restructuring rather than write-downs, and it now says it will abide by 70% of the reforms required under its current bailout program. But talking signifies nothing. Even this latest step was only possible on the basis of a fudge after an initial attempt by eurozone finance ministers to […]

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Peak Oil and Scotland

As it is a finite resource, by definition, we will run out of Oil at some point. Around the year 2000, Scotland (and the UK Continental Shelf as a whole) reached “peak oil” (Oil and Gas UK 2014).  So what is “peak oil”, and what are the implications of it? Peak oil is the point at which the highest rate of oil production is achieved, and beyond which oil production enters terminal decline. This could be due to many reasons – be it due to conscious policy choices by world governments to leave oil in the ground, or it becoming impossible or undesirable to extract what oil remains. The reason it is so difficult to anticipate when peak oil will occur is because new technology becomes available which either makes it possible to extract more difficult and remote fields, or it becomes possible to get more oil from fields […]

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William Catton’s warning

William Catton Jr. hadshot William Catton Jr., author of the seminal volume about our human destiny,  Overshoot: The Ecological Basis of Revolutionary Change , died last month at age 88. Catton believed that industrial civilization had sown the seeds of its own demise and that humanity’s seeming dominance of the biosphere is only a prelude to decline. His work foreshadowed later works such as Joseph Tainter’s  The Collapse of Complex Societies , Richard Heinberg’s  The Party’s Over: Oil, War and the Fate of Industrial Societies , and Jared Diamond’s  Collapse: How Societies Choose to Fail or Survive . In  Overshoot  Catton wrote: "We must learn to relate personally to what may be called ‘the ecological facts of life.’ We must see that those facts are affecting our lives far more importantly and permanently than the events that make the headlines." He published those words in 1980, and now, it […]

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The crash in the price of oil may change the oil market – a look at the IEA’s “Oil Medium-Term Market Report 2015”

On Tuesday 10 February at 13:00 GMT the IEA released its “Oil Medium-Term Market Report 2015 ”. The day before the release I was contacted by Jens Ergon at Sveriges Television (“Sweden’s Television, SVT) who wanted to get my opinion on the report. I had a number of hours to read through the 140 pages of the version provided to media prior to the report’s official release. This meant that I could comment on the report immediately it was released. SVT has now reported some of those comments in an article that Jens Ergon has written, “The Price Crash Will Reshape The Oil Market”. The subtitle is, “American oil boom behind the falling price. But opinions vary widely on the future of oil.” Let’s now go through the article together and I will make a few comments as we do so. “The comprehensive fall in the price of oil […]

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Oil Prices Gain on Hopes for European Demand

Oil prices rose Friday, with Brent climbing above $60 a barrel for the first time this year, as improving economic data from Europe boosted hopes for crude demand. Brent, the global benchmark, closed up 3.8% to $61.52 a barrel on ICE Future Europe, its highest price since Dec. 23. The price of U.S. benchmark crude closed up 3.1% at $52.78 a barrel on the New York Mercantile Exchange. Both benchmarks rose for the third week in a row, posting their largest three-week percentage gains in nearly four years. Brent prices have risen 26% and Nymex crude has gained 16% since Jan. 23. The gains reflect investors’ expectations that a global glut of oil will be shrinking soon, as energy companies slash production and economic growth spurs greater demand for gasoline and other crude products. Diesel fuel is stored in the U.K. Germany led an acceleration in eurozone economic growth […]

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Oil tops $60 for first time in 2015; oversupply persists

NEW YORK (Reuters) – Oil hit its highest level for the year on Friday with Brent crude rising above $60 a barrel, as euro zone economic growth exceeded expectations and market bulls priced in another drop in the U.S. oil rig count. The rise in prices was also fueled by bets that cuts in energy firms’ exploration budgets will help mop up some of the excess oil in the world market. Many analysts and traders believe there is a global oversupply of nearly two million barrels per day in crude oil. They say little has changed fundamentally to explain the rally of the past two weeks. Brent rose about 3 percent in Friday’s session and was on track to a 6 percent on the week and 15 percent on the month. Gains heightened after its front-month contract switched on Thursday at a premium. Brent had collapsed from a high […]

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Natural Gas Rallies on Winter Chill

(Adds details and price table.) By Timothy Puko Natural gas rallied to a two-week high Friday as weather forecasts suggested a spreading Arctic chill could both increase heating demand and reduce gas production. The front-month March contract settled up 9.1 cents, or 3.4%, at $2.804 a million British thermal units on the New York Mercantile Exchange. Four winning sessions out of five put gas up 8.7% for the week, its largest one-week gains since November. Gas had posted losses as large as 2.1% Friday morning but started to reverse around 10 a.m. EST. The rally accelerated around noon. Noon weather updates showed even colder weather than already anticipated, WeatherBELL Analytics LLC said in a note to clients. About half of all U.S. homes use natural gas for home heating, making winter cold one of the biggest drivers for demand. Arctic air is going to cover most of the East […]

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Fossil-Fuel Limits Emerge as Target for Deal on Warming

A coal-fired power plant in Winfield, West Virginia. Photographer: Luke Sharrett/Bloomberg (Bloomberg) — Envoys from some 190 nations are taking more seriously the idea of setting a goal for phasing out the pollution from fossil fuels, lending support to the movement against investments in oil and coal companies. After a week of discussions in Geneva, delegates convened by the United Nations adopted an 86-page draft document with options including the near-elimination of greenhouse-gas emissions by 2050 or 2100 — or to suck the most destructive fumes out of the atmosphere by 2080. While the text marks only the starting point of discussions, that fossil-fuel limits have been given such prominence in the talks is an indication the envoys are looking to ratchet up ambitions for a deal they wish to conclude in December in Paris. No nation publicly endorsed the text though almost all contributed to it. “It’s hard […]

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IEA Names Chief Economist Birol as New Executive Director

(Bloomberg) — The International Energy Agency’s Chief Economist Fatih Birol will replace Maria Van Der Hoeven as Executive Director in September. Birol, 56, who joined the IEA 20 years ago, has responsibility for its annual World Energy Outlook, which makes long-term forecasts on global energy supply, the Paris-based organization said in an e-mailed statement. His prior work at the Organization of Petroleum Exporting Countries in Vienna gives him a “unique perspective on the producer-consumer relationship,” the IEA said. “An outstanding choice, given his experience, knowledge, and the fact that he is very personable,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts said by e-mail. Birol has “a very cordial relation with his counterparts in OPEC.” Birol’s appointment comes at a time of turmoil in energy markets following the near 50 percent slump in crude prices last year, due in part to surging oil supply from […]

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Shale gas and tight oil are commercially produced in just four countries

Graph of type of estimated natural gas and crude oil production in four countries in 2014, as explained in the article text Source: U.S. Energy Information Administration calculations with data from DrillingInfo, Canadian National Energy Board, Cedigaz, Fact Global Energy China Monthly, Chevron, and Yacimientos Petroliferos Fiscales Note: Actual production from Canada through October 2014. November and December 2014 totals estimated. Canadian shale gas production total includes the Montney formation. Republished February 13, 2015, 10:30 a.m. to clarify China and Argentina’s production of shale gas and tight oil, respectively. The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing commercial volumes of either natural gas from shale formations (shale gas) or crude oil from tight formations (tight oil). The United States is by far the dominant producer of both shale gas and tight oil. Canada is the only other country […]

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Two Libyan Oil Fields Attacked

Two Libyan oil fields were attacked on Friday, Libyan oil officials said, in a fresh wave of violence targeting the North African country’s vital energy sector. The Libyan oil officials said guards repelled gunmen who assaulted the Bahi oil field operated by Waha Oil Co., a joint venture between the state-owned National Oil Co. and U.S. companies ConocoPhillips , Marathon Oil Corp. and Hess Corp. Meanwhile, the neighboring Mabruk oil field, operated by a Libyan joint venture with France’s Total SA, was stormed, officials said. “Smoke is coming out of the Mabruk field,” one official said. No one claimed responsibility for Friday’s attacks. Mabruk was also assaulted on Feb. 3 in what Libyan officials described as a coordinated terrorist attack. Nine guards were killed and three workers were taken hostage, officials said. A group claiming to represent Islamic State took responsibility for that attack on Mabruk. Libya’s oil production […]

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ISIS Attacks Iraqi Base Used by U.S. Trainers

ENLARGE Iraqi army soldiers on Nov. 11, 2014, at al-Asad airbase. On Friday, Islamic State militants made the most direct attack on a base used by U.S. forces since the current conflict began. Photo: Agence France-Presse/Getty Images WASHINGTON—Islamic State militants wearing Iraqi military uniforms and suicide vests attacked an Iraqi air base where U.S. military advisers are training Iraq’s security forces, the most direct attack on a base used by U.S. forces since the current conflict began. The attack came a day after Islamic State militants took control of a town near the base, the first new territorial gain by the group in Iraq in many weeks, officials said. On Friday, a group of 20 to 25 Islamic State militants, many dressed in Iraqi army uniforms, attacked the edge of the huge al-Asad Air Base before being repelled by Iraqi security forces, said Rear Adm. John Kirby, the Pentagon […]

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Yemen clashes kill 26 as embassy closures continue

SANAA (Reuters) – Clashes between Shi’ite Houthi militiamen and Sunni tribesmen fighting alongside Al Qaeda militants killed 26 people in Yemen, local officials said, as the United Arab Emirates joined Saudi Arabia and Western countries in closing its embassy in the country. Heavy fighting was ongoing in the southern mountainous province of al-Bayda, leading to the death of 16 Houthi rebels along with 10 Sunni tribesmen and militants, security officials and tribal sources told Reuters. The state faces collapse in Yemen two weeks after the Houthi group took formal control of the country and continued an armed push southward. France, the United States, Britain, Germany, Italy and Saudi Arabia have closed their missions in the capital Sanaa and withdrawn staff, citing security concerns. The United Arab Emirates announced the closure of its embassy in Sanaa on Saturday, state news agency WAM said. It cited "the increasing deterioration of the […]

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South Sudan to Cancel Presidential Election Amid Civil War

(Bloomberg) — South Sudan’s government plans to cancel presidential elections scheduled for June 30 and extend its own term by two years amid efforts to end the conflict in the oil-producing country. “In our quest for peace, the cabinet has decided to call off the elections and extend the lifespan of the elected positions so that we give peace a chance,” Information Minister Michael Makuei Lueth told reporters today in the capital, Juba. The main opposition party welcomed the move. President Salva Kiir and the legislature’s tenures will be extended until July 9, 2017, Lueth said. Lawmakers will vote next week on a constitutional amendment for the government to continue without elections, he said in a phone interview. South Sudan has been engulfed by conflict since December 2013, when a power struggle within the ruling party turned violent. After Kiir arrested rivals for allegedly plotting a coup and ethnic […]

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Venezuela Said Weighing Tax Relief for Drillers to Lure Spending

(Bloomberg) — Venezuela is considering a request from oil companies to cut taxes as a way of coping with a crash in prices and encouraging investments, according to an industry association official with direct knowledge on the matter. The proposal is to lower royalties and extraction taxes to 20 percent from 30 percent, said the official from hydrocarbon association AVHI, who attended meetings with authorities last week and asked not to be named in line with AVHI policy. Facing a shortage of dollars for servicing debt after oil fell 46 percent in the past six months, Venezuela is looking at ways to attract more investment from the national oil company’s joint venture partners. Private companies have held back investments amid currency controls, surging inflation and late payments. Oil accounts for 96 percent of Venezuelan exports. Venezuela’s Information Ministry didn’t respond to e-mails seeking comment on the proposal. The press […]

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Brazil faces water disaster; scientists warned it was coming

Brazil faces water disaster; scientists warned it was coming thumbnail Brazil’s largest city is facing a water shortage this year unlike it has seen in decades — a potential disaster scientists have warned about as far back as the 1980s. The metropolitan area of Sao Paulo, the world’s 12th-largest metro population at more than 20 million, is served by two main natural water systems — the Cantareira and Alto Tiete reservoir networks, which barely have any water in them, The Guardian reported this week . The Cantareira is only 5 percent full, and the Tiete is at less than 15 percent of capacity. This is an issue that water conservation advocates and scientists have warned about for decades. The Brazilian government has undertaken moderate efforts over the last 25 years to improve the drought conditions but they have had a limited impact. Experts say the drought could be catastrophic, […]

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Gazprom readies Chinese gas pipeline

Russian natural gas company Gazprom said it’s ready to meet Chinese energy needs. Photo courtesy: Gazprom TOMSK, Russia, Feb. 13 (UPI) — Russian energy company Gazprom is conducting the route preparations needed to send gas through the Power of Siberia pipeline to China, its top executive said. Gazprom officials meet in the Siberian city of Tomsk to discuss efforts to build a pipeline to China. The company said the pipeline’s route is clear, line preparation is under way and surveys have been conducted for underwater sections. Gazprom estimates the project will require more than 120 thousand tons of large-diameter pipe. Gazprom Chairman Alexei Miller said project preparations are in full swing . "All of Gazprom’s obligations to start gas supplies to China will be performed in full and in due time," he said during Thursday’s meeting. Gazprom has a 30-year sales agreement with China National Petroleum Corp. that calls […]

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US shale oil boom masks declining global supply

When rig count fall feeds through to output, prices should rally 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 T he surge in US shale oil production over the past five years has been truly phenomenal, but the notion that it was ushering in a new age of global oil abundance was always overdone and is looking more exaggerated by the day. One need only look at the trend in the number of rigs drilling for oil in the US — as published weekly in […]

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Rigs Targeting U.S. Oil Decline for 10th Straight Week

(Bloomberg) — U.S. oil explorers, facing crude near $50 a barrel, idled rigs for the 10th straight week, extending an unprecedented retreat in drilling and dragging the nation’s total rig count down to the lowest level in almost five years. Rigs targeting oil in the U.S. dropped by 84 to 1,056, Baker Hughes Inc. said on its website Friday. Those seeking gas slipped by 14 to 300, the Houston-based field services company said. Miscellaneous rigs were unchanged at two. The total U.S. count fell by 98 to 1,358. Last year’s 44 percent slide in crude prices triggered a record pullback in U.S. oil drilling, sidelining more than 400 rigs within two months, erasing tens of thousands of jobs and shrinking estimated exploration and production spending by more than $116 billion. John J. Christmann, chief executive officer of the Houston-based independent explorer Apache Corp., said Thursday that the drop in […]

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Bakken December Production Numbers

The North Dakota Industrial Commission has released the  Bakken and North Dakota  monthly production numbers for December 2014. There was a bit of a surprise as Bakken and all North Dakota production was up just over 39,000 barres per day. Bakken BPD Since Bakken production was up at almost the exact same amount as the rest of North Dakota, (Bakken up 39,080 kbd vs. 39,086 bpd for ND), suggest that all the wells being brought on line are Bakken and Three Forks rather than conventional wells. Bakken Change The North Dakota change per month, 12 month trailing average reached a new high in December of 25,006 barrels per day. That means North Dakota oil production was up an average of 25 thousand barrels per day every month in 2014. From the Director’s Cut : Nov Oil 35,647,735 barrels = 1,188,258 barrels/day Dec Oil 38,047,667 barrels = 1,227,344 barrels/day (preliminary)(NEW […]

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This Chart Shows Why the Number of Oil Rigs May Not Matter Anymore

A drill pusher uses a torch to cut the top off a 50-gallon metal drum on an oil drilling site. The number of oil rigs drilling new wells in the U.S. has collapsed at an unprecedented rate. The weekly number has gathered a huge following as investors try to figure out when the crash in oil prices has reached its bottom. Strangely, the number may be irrelevant. Baker Hughs Weekly Rig Count Rig counts have long been used to help predict future oil and gas production. In the past week drillers idled 98 rigs, marking the 10th consecutive decline. The total U.S. rig count is down 30 percent since October, an unprecedented retreat. The theory goes that when oil rigs decline, fewer wells are drilled, less new oil is discovered, and oil production slows.  But production isn’t slowing yet. In fact, last week the U.S. pumped more crude than at any time since the 1970s. “The headline U.S. oil rig count […]

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Feds may open arctic Alaska to drillers

Shell signs two-year commitment to lease Seattle port for drilling program after Washington hints at opening parts of Alaskan waters for exploration. Photo: Don Wilson/Port of Seattle. The federal government published its final environmental impact statement on a lease plan first unveiled in 2008. The lease was tied in up the court system amid complaints about the extent of environmental vetting. "We remain committed to taking a thoughtful and balanced approach to oil and gas leasing and exploration in this unique, sensitive and often challenging environment," Interior Secretary Sally Jewell said in a statement. The U.S. 9th Circuit Court of Appeals in San Francisco ruled early last year the Interior Department did not properly evaluate the scale of oil production that could result in the Chukchi Sea when it sold more than $2.6 billion in development leases in the environmentally sensitive area in 2008. The ruling stemmed from a […]

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U.S. oil sector slowing, on and offshore

Weak oil market impacting operations in the onshore and offshore sectors of the United States. Photo courtesy: Apache Corp. A steady increase in U.S. oil production has pushed crude oil markets toward the supply side, pushing crude oil prices to less than 50 percent of their June highs above $100 per barrel. That’s forced companies from BP to those in the oil services industry like Halliburton to cut spending and staff. Rig company Hercules Offshore said revenue generated from work in the U.S. waters of the Gulf of Mexico declined 33 percent year-on-year to $90.2 million. For full-year 2014, the company reported a $216 million loss from continuing operations. President and Chief Executive Officer John Rynd said the weak market was reflected in the fourth quarter and the downturn should continue in 2015 until commodity prices improve. "The significant decline in crude oil prices during the fourth quarter exacerbated […]

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Bakken Rig Count Slides to 126

Occidental Bakken Acreage|Click to Enlarge The Bakken-Three Forks rig count decreased by nine t0 126 rigs running across our coverage area by the end of last week. In recent Bakken news, Occidental announced it will scale back its 2015 capital spending by 33 percent to $5.8 billion from $8.7 billion spent in 2014. In addition to the cuts, the company will also be reducing its activity in the Bakken. Read more: Occidental Petroleum Reduced 2015 Capex by 33% The U.S. rig count fell another 98 to 1358 rigs running by the end of last week. A total of 300 rigs were targeting natural gas (down 14 from the previous week) and 1056 were targeting oil in the U.S. (84 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.). 129 rigs are running in the Williston Basin across MT, ND, and SD. […]

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Threatened Canadian Rail Strike Seen Weakening Heavy Oil Prices

(Bloomberg) — Canadian crude prices near a six-year low may weaken further should workers at Canadian Pacific Railway Ltd carry through with threats to strike this weekend. The company faces a work stoppage as soon as Feb. 15 by Teamsters Canada Rail Conference and Unifor Local 101R, which represent a combined 5,000 workers. Canadian Pacific will deploy managers “to maintain a reduced freight service” on its Canadian lines. Canadian oil companies have increasingly relied on rail cars to deliver crude produced in Alberta to refineries as far away as the U.S. Gulf Coast. Canadian Pacific delivered 110,000 carloads of crude last year, 22 percent more than in 2013, according to company data. Without “enough trains operating, I could see how it will delay the deliveries of crude shipments,” Dinara Millington, a vice president at the Canadian Energy Research Institute, said by phone Friday. “The prices of WCS could decline […]

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ConocoPhillips Mulling Sale of Western Canada Gas Properties

Employees torque a pipe at a wedge well at Christina Lake, a situ oil production facility half owned by Cenovus Energy Inc. and ConocoPhillips, in Conklin, Alberta, Canada. Photographer: Brent Lewin/Bloomberg (Bloomberg) — ConocoPhillips is considering the sale of properties that account for about 20 percent of its production in Western Canada outside the oil sands. The largest U.S. independent oil and natural gas producer is weighing whether to sell properties spread across British Columbia, Alberta and Saskatchewan in 2015, according to a copy of a marketing document seen by Bloomberg. Production from the properties is mostly gas and amounts to the equivalent of about 31,000 barrels of oil a day after royalties. The company hopes to select advisers for the process soon, Kristen Ashcroft, a company spokeswoman, said in a phone interview Friday. The sale is part of the company’s regular review of its assets across the region, […]

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