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China’s Jan-Feb apparent oil demand rises 3% on year to 10.43 mil b/d: Platts estimates

Singapore (Platts)–16Mar2015/159 am EDT/559 GMT China’s apparent oil demand rose 2.6% over the first two months of this year to 83.92 million mt or an average 10.43 million b/d, Platts estimates showed Monday, March 16, based on recently released government data. This is the highest rate of growth over the period since the 5.7% recorded in 2012. Last year, there was a 0.6% year-on-year contraction in China’s apparent oil demand over January to February. China does not release official data on oil demand, or commercial and strategic oil inventories. Article continues below… In every economic cycle, overexpansion is followed by unprofitability, then consolidation. Will this be true for the refining sector? The Asian Refining Summit sets a global agenda, inviting industry leaders to share views on the critical developments affecting the downstream and trading communities. Platts calculates apparent oil demand based on data on refiners’ crude throughput and net […]

Posted On : Published By : Tom Whipple
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Has the Fed’s ‘patience’ been exhausted?

LONDON (Reuters) – For a world economy coming to terms with a soaring dollar and a plunge in oil prices, this week will be all about the U.S. Federal Reserve’s policy meeting and its intentions on interest rates. A combination of the European Central Bank printing lots of euros and expectations of a first U.S. rate rise has caused turmoil on the foreign exchanges and in emerging markets. The euro, which peaked at nearly $1.40 in the middle of last year, is now languishing around $1.05 and apparently headed for parity. After successive months of strong jobs data, expectations have been growing that the Fed will point towards a June rate rise by dropping a pledge to be "patient" in considering such a move. But the dollar’s surge, crimping U.S. exports and cutting imported inflation, could cause its policymakers to pause for thought. St. Louis Fed President James Bullard, […]

Posted On : Published By : Tom Whipple
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Five questions ahead of US Federal Reserve meeting

Next image The stakes were already high going into this week’s US Federal Reserve policy meeting. But the vertiginous surge in the dollar, alongside disappointing economic data, has heightened uncertainty about Wednesday’s announcement. A few things seem clear: rates are not yet moving from their near-zero levels, but Fed chairwoman Janet Yellen wants to free the Federal Open Market Committee to raise them when it sees fit. As a result, low-rates guidance is likely to be junked. And the strength of America’s labour market — where payrolls have been rising by more than 200,000 a month for a year — means June or September still seem the most likely moments for a first increase. But beyond these presumptions lie a host of questions: will the Fed be forced by low inflation to delay its first rise, how rapidly will it lift rates following the initial move, and where will […]

Posted On : Published By : Tom Whipple
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Norway’s $18 Billion Student Plan Ready to Cushion Oil Shift

(Bloomberg) — Norway has many sources to tap as policy makers seek to wean the nation off its oil reliance. Besides its $850 billion sovereign wealth fund, Norway’s State Educational Loan Fund, which provides loans to students domestically and abroad and some international students in Norway, is prepared to serve as a buffer amid deepening economic strains, according to Chief Executive Officer Marianne Andreassen. “With a damping of the oil sector engine and the huge investments there, many who worked in those areas will need to work elsewhere,” Andreassen said in an interview. Western Europe’s biggest crude producer is facing what central bank Governor Oeystein Olsen calls a “period of restructuring” amid plunging oil prices. A 53 percent drop in Brent since a June high is endangering an economy that relies on oil and gas for more than one-fifth of its output. Oil and gas companies operating in Norway […]

Posted On : Published By : Tom Whipple
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Lipstick on a pig: America as the world’s swing producer of oil

Most people have heard the old saying: "You can put lipstick on a pig. But it’s still a pig." That’s sort of what is happening in the American oil patch as producers try to put a positive gloss on the devastation that low oil prices are visiting on the industry. Perhaps the most inventive redefinition is as follows: The part of the U.S. oil industry devoted to extracting tight oil from deep shale reservoirs in places such as North Dakota and Texas has made the United States  the world’s "swing producer."  A swing producer is a country or territory that has large production in relation to the total market, substantial excess capacity and the ability to turn its capacity on and off quickly in response to market conditions. The term makes the U.S. oil industry sound powerful and important. And, while the U.S. industry remains an important player in […]

Posted On : Published By : Tom Whipple
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The U.S. Oil Bust Just Got Worse

The price of oil did today what it has been doing for a while: it waits for a trigger and plunges. As I’m writing this, West Texas Intermediate is down 4.4%, trading at $44.99 a barrel, less than a measly buck away from this oil bust’s January low. It’s down over 20% from the peak of the most recent sucker rally. US oil drillers have been responding by slashing capital expenditures, including drilling, in a deceptively brutal manner. In the latest week, drillers idled 56 rigs that were classified as drilling for oil, according to Baker Hughes. Only 866 rigs were still active, down 46.2% from October, when they’d peaked at 1,609. In the 22 weeks since, drillers have taken out 743 rigs, the most dizzying cliff dive in the data series, and probably in history: You’d think this sort of plunge in drilling activity would curtail production. Eventually […]

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Peak Oil Pulled a Fast One on Me

Peak Oil Pulled a Fast One on Me thumbnail I’ll admit that I was completely caught off guard by the recent (and ongoing?) crash in oil prices. It’d be a stretch to say I’m embarrassed by my lack of foresight, although perhaps “dumb-ass” would be a bit deserving. I would say I’m well enough versed with the reality of peak oil : I’ve read perhaps a couple dozen books on the topic, poured through several of the peak oil blogs (upon deciding to end my 5-year Internet hiatus a year ago), have seen several talks given by authors and writers on the topic, and I’ve attended two Age of Limits conferences. Nevertheless, even though there were bloggers out there discussing the possible ramifications of low oil prices, its possibility still didn’t register with me. I’ll explain what I mean by that shortly, but to do that it’d be best […]

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Brent falls below $57 on dollar rally

SINGAPORE (Reuters) – Brent crude fell below $57 a barrel on Friday as a strengthening dollar weighed on commodity markets after profit-taking by Asian investors earlier in the session. Asian investors were also mulling the impact from a tentative deal that would end a strike by U.S. refinery workers. Oil prices on Friday were initially supported by the U.S. dollar .DXY, which posted its biggest one-day fall in a month on Thursday, as it retreated from a 12-year high against a basket of major currencies on an unexpected fall in U.S. retail sales. But the greenback rallied to send Brent falling below $57 a barrel towards the end of the Asian trading day. A stronger greenback makes commodities denominated in the dollar more expensive for holders of other currencies and limits their purchases of commodities and other assets. Brent for April delivery LCOc1 was trading down 25 cents at […]

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IEA forecast pulls WTI down 2 percent

Sign up for our daily Energy Newsletter Report on resiliency in U.S. oil market drags the price for West Texas Intermediate crude oil down nearly 2 percent early in the Friday session. Photo by John Angelillo/UPI NEW YORK, March 13 (UPI) — An increase in estimated U.S. crude oil production from the International Energy Agency pushed West Texas Intermediate prices down nearly 2 percent Friday. The IEA, which has headquarters in Paris, said in its monthly market report global oil supplies rose by 1.3 million barrels per day year-on-year to an estimated 94 million bpd in February. The increase was led mostly by producers outside the Organization of Petroleum Exporting Countries. "Final December and preliminary current-quarter data show higher‐than‐expected US crude supply, raising the 2015 North American outlook," the IEA report read. Oil prices are down about half from the June 2014 highs above the $100 per barrel mark […]

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Oil Prices Tumble After IEA Warning

The benchmark U.S. oil price tumbled to a six-week low Friday, thwarting hopes for a sustained recovery after an influential energy watchdog said U.S. production growth is defying expectations and setting the stage for another bout of price weakness. Investors and oil producers should brace for further declines in oil prices , the International Energy Agency said in a monthly report. Prices haven’t fallen far enough yet to cut supply, and some signs of rising demand are just temporary—bargain buyers using cheap oil to fill up stockpiles, the agency said. That outlook weighed on sentiment in the oil-futures market, which has stabilized in recent weeks following a seven-month selloff that saw the benchmark price on the New York Mercantile Exchange plunge 59%. Behind the selloff, which by some measures was the steepest in decades, was a global glut of crude spurred by rising production in the U.S. and Libya. […]

Posted On : Published By : Tom Whipple