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U.S. may skirt oil storage crisis as drivers hit the road

NEW YORK (Reuters) – A month ago, it seemed inevitable: a massive global oversupply of crude oil production would overwhelm storage tanks in Oklahoma and fill supertankers off Singapore. Now, there are growing signs that the U.S. oil market can avoid the doomsday scenario in which it runs out of room to stockpile surplus crude, a development that oil traders worried would send crude prices into another tailspin. One reason is that refiners, spurred by high profit margins, are rushing to buy crude and churn out more fuel in response to an unexpectedly swift rise in U.S. road travel and soaring Chinese demand for fuel-hungry sport utility vehicles. Furthermore, shale oil drillers have hit the brakes on new wells faster than many anticipated. This could throw years of unyielding growth into reverse as early as May. Oil prices are starting to reflect these changes. U.S. crude has rebounded from […]

Posted On : Published By : Tom Whipple
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Calls For Immediate Shutdown Of Illegal California Injection Wells As Regulators Host ‘Aquifer Exemption Workshop’

While California legislators are calling for immediate closure of the thousands of injection wells illegally dumping oil industry wastewater and enhanced oil recovery fluids into protected groundwater aquifers, regulators with the state’s Division of Oil, Gas and Geothermal Resources (DOGGR) were holding an “Aquifer Exemption Workshop” in Long Beach on Tuesday. Just 23 out of the 2,500 wells DOGGR officials have acknowledged the agency improperly permitted to operate in aquifers that contain potentially drinkable water have so far been closed down — 11 were closed down last July and 12 more were shut down earlier this month. Given the urgency of the situation, it certainly does not look good that DOGGR made time to hold a workshop to outline “the data requirements and process for requesting an aquifer exemption under the Safe Drinking Water Act,” when it has given itself a two-year deadline to investigate the thousands more wells […]

Posted On : Published By : Tom Whipple
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Russia continues Asian pivot

President of Russian bank VTB wants listing on Chinese stock market. File Photo by Stephen Shaver/UPI. MOSCOW, March 30 (UPI) — With Russian energy interests pivoting east, the head of Russian bank VTB said Monday he was looking to get listed on the Chinese stock exchange. Andrei Kostin said, on his way to an Asian investment forum, that his bank was requesting a rating from China’s Dagong Global Credit Rating Co. "We are heading in that direction," he said. "It is the right decision given the current situation." Rating is one of the preliminary steps toward entering the Chinese stock exchange as a listed company. The Chinese rating agency in early March gave Russian energy company Gazprom Neft a AA credit rating, denoting a stable outlook for its debt portfolio and long-term production potential. Parent company Gazprom received one of its best outlooks in the industry, a AAA, despite […]

Posted On : Published By : Tom Whipple
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Revisiting the Shale Oil Hype: Technology versus Geology

The press has been all abuzz the past few weeks speculating on what the drop in oil prices will mean for U.S. shale oil (tight oil) production. Pundits have been falling over themselves quoting various estimates of the breakeven cost of production in this play or that, and rushing to be the first to declare a peak in the Bakken, Eagle Ford, Niobrara or wherever.  The Baker-Hughes rig count, which comes out every Friday, has become a must-read for people who probably had never heard of it a few months ago. Even the U.S. Energy Information Administration (EIA), based on estimates, suggests production is declining in three big shale oil plays. The industry, on the other hand, has been more circumspect. They point to productivity gains being made in drilling and completion technology that lower costs, and suggest they are developing a backlog (aka “fracklog” ) of wells that […]

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The global oil price drop may last for the next couple decades

The global oil price drop may last for the next couple decades thumbnail Stanford economist Frank Wolak says the drop in oil prices and demand reflects heightened energy production in North America, better technologies and the declining market power of the OPEC countries. Global oil prices may stay low for the next 10 or 20 years, according to Stanford economist Frank Wolak . The most likely medium-term outcome is $50 to $70 per barrel, according to Wolak. He is the Holbrook Working Professor of Commodity Price Studies in the Department of Economics at Stanford University. And while geopolitical and environmental issues may unexpectedly arise that turn oil prices upward, Wolak said many factors point to lower oil prices for the foreseeable future. Crude oil prices fell from a high of $115 a barrel in June 2014 to a low of $45 in January of this year. The lower prices […]

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Geopolitics and Oil Prices: Between A Rock and a Hard Place

Oil traders appear to be hedging themselves against a possible deal between the West and Iran on the nuclear question but doing so misses the increasingly complex forces at play today in oil geopolitics. A Saudi analyst with close ties to the Saudi government issued a clear and effective description of the new Saudi government’s foreign policy doctrine in today’s Washington Post, and it clearly indicates a warning about a wider Sunni-Iranian war across the Middle East. If Tehran and Moscow were counting on the kingdom to be disorganized in the face of a succession transition, this new op ed should shed any doubts about the new government’s seriousness of purpose. The Saudi royal family rallied around a clean and clear succession announcement last January and it looks likely the same unified internal coalition is ready and willing to implement a coordinated oil and military strategy against Iran. The […]

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Oil prices drop on possible Iran deal, dollar

LONDON (Reuters) – Oil prices fell on Monday as officials from Iran and six world powers discussed a possible deal over Tehran’s nuclear programme that could bring an end to sanctions and allow an increase in Iranian oil exports. The two sides have until the end of Tuesday to come up with an agreement at talks in Lausanne, Switzerland. Officials close to the talks have said progress has been made and many investors believe a deal is in the making. Few expect the talks to end without some sort of agreement. "Regarding Iran, there are two possible outcomes: a framework deal or an extended deadline," Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, told the Reuters Global Oil Forum. Brent crude was down 40 cents at $56.01 a barrel by 0938 GMT as the market began to price in a deal with Iran. U.S. crude was down […]

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Oil Prices Fall as Iran Deadline Nears

Dow Jones Newswires By Georgi Kantchev LONDON–Oil prices started the week in the red ahead of the looming deadline for Iran’s nuclear talks, while supply disruptions due to Saudi airstrikes on Yemen looked increasingly unlikely. Brent crude for May delivery fell 0.7% to $56 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $48.16 a barrel, down 1.5% from Friday’s settlement. The oil market awaited the outcome of a Tuesday deadline for talks between Iran and six world powers over its nuclear program. A possible relaxation of the sanctions against the country could pave the way for increased Iranian oil exports. "If a framework agreement is reached, we would expect an immediate bearish knee-jerk reaction in the markets, with oil prices quickly losing on the order of $5," Société Générale said in a report. But […]

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Once-bullish fund managers start to capitulate on oil prices

NEW YORK (Reuters) – Last fall, when the price of oil started dropping, fund manager Craig Hodges figured crude would rebound in 2015 and began buying shares of companies he thought would be unfairly hit, including construction company Primoris Services Corp and Eagle Materials Inc, which produces sand used in fracked wells. Hodges, who runs the $2.1 billion Hodges Small Cap fund, is now starting to concede that oil prices will stay low for as long as a year or more because of a global glut. Even the air strikes Thursday in Yemen by Saudi Arabia and its Gulf Arab allies, which prompted a one-day 5 percent boost to the price of oil, presented "a traders move" and doesn’t signal a sustained move up, Hodges said. Oil fell 6 percent today to about $48 a barrel. Instead of looking for a bounce back this year, Hodges is now on the […]

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Reuters Poll: Oil prices to stabilize as demand rises

(Reuters) – Oil prices should stabilise in the second half of this year and rise in 2016 and 2017 as consumers respond to a period of much cheaper fuel, a Reuters poll of analysts showed on Monday. The survey of 34 analysts predicted North Sea Brent crude LCOc1 would average $59.20 a barrel in 2015, up from around $55 so far this year. The forecast is up just 20 cents from the projection in last month’s Reuters survey. [O/POLL] Brent is expected to rise to $72.10 in 2016 and $78.70 in 2017, the poll showed. Oil prices fell more than 60 percent between June 2014 and January, and although they have recovered a little since then, they are still around half their level a year ago. This has encouraged motorists to make more use of their cars and let factories and other businesses boost fuel consumption. London-based consultancy Energy […]

Posted On : Published By : Tom Whipple