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History Suggests OPEC’s Days Could Be Numbered

"The last time they were in a parallel situation, with oil prices plummeting in the 1980s, you had all these proclamations that OPEC was dead," said Benn Steil , also at the Council on Foreign Relations, where he’s director of international economics. "Yet they weren’t, because when the fundamental forces of the business settled at a higher level of oil prices, they started to regain some relevance." You can read the World Bank study, which was authored by John Baffes, Ayhan Kose, Franziska Ohnsorge and Marc Stocker, here .

Posted On : Published By : Tom Whipple
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Venezuela’s Maduro seeks decree powers to face U.S. ‘imperialism’

CARACAS (Reuters) – President Nicolas Maduro was seeking special decree powers from Venezuela’s parliament on Tuesday in response to new U.S. sanctions, drawing opposition protests of a power-grab. If as expected the government-controlled National Assembly approves his request for an "Enabling Law", it would be the second time the 52-year-old successor to Hugo Chavez has gained these expanded powers since winning election in 2013. "I’m going to ask for an anti-imperialist Enabling Law … to preserve the nation’s peace, integrity and sovereignty," Maduro said in a speech late on Monday night, without specifying further what decrees he might use it for. Opposition leaders slammed Maduro, saying he was using the worst flare-up with Washington of his nearly two-year rule to justify autocratic governance, sidetrack parliament and distract attention from Venezuela’s grave economic crisis. "Nicolas, are you requesting the Enabling Law to make soap, nappies and medicines appear, to lower […]

Posted On : Published By : Tom Whipple
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Nigeria: Another Round of Petrol Shortage

editorial Frequent petrol shortages are not uncommon in the world’s 5th largest oil producer, but the sudden return of queues at service stations nationwide about a fortnight ago, in spite of the glut in world markets, jolted many Nigerians. The ugly sights of vehicles that snaked for kilometres out of filling stations were a reminder of the enduring fragility of the fuel distribution system in the country, and the instability in the petroleum industry generally. As often the case, it was payday for black marketers, who sold at between 150 naira and 250 naira per litre, against the official price of 85 naira per litre. As the shortage bit harder, the Petroleum Products Pricing and Regulatory Agency (PPPRA) announced that a billion litres of the commodity would be imported to bridge shortfalls in supply. As usual, the Ministry of Petroleum Resources announced that there was sufficient stock of petrol […]

Posted On : Published By : Tom Whipple
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Venezuela sanctions don’t extend to oil

Venezuelan President Nicolas Maduro facing internal pressure as nation’s economy gets squeezed by sanctions and low oil prices. (UPI Photo/Mohammad Kheirkhah) While an official in Caracas said sanctions are an act of war, a top U.S official said the measures will have no direct impact on oil revenue for Venezuela. President Barack Obama issued an executive order Monday that sanctions seven Venezuelan officials for human rights offenses. A White House spokesman said the Obama administration is "deeply concerned" by the culture of political intimidation in Caracas. "Venezuela’s problems cannot be solved by criminalizing dissent," the spokesman said. President Nicolas Maduro has faced mounting pressure from his opponents at least since taking the reins in Caracas after his predecessor Hugo Chavez died in 2013. María Corina Machado, a former assemblywoman who helped lead protests against Maduro last year, recently called on Pope Francis to step in to a fracturing Venezuela. […]

Posted On : Published By : Tom Whipple
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US EIA holds natural gas price projections steady

Washington (Platts)–10Mar2015/330 pm EDT/1930 GMT The US Energy Information Administration added just a few pennies to month-ago estimates for quarterly and annual US natural gas prices, pointing to relatively strong production, demand and storage numbers. In its latest short-term energy outlook, EIA put the new first-quarter Henry Hub average spot price target at $2.92/MMBtu, up 3 cents from last month’s forecast. The second-quarter average now figures to be $2.93/MMBtu, 2 cents more than the February report, the agency said. Similar hikes were predicted for this year, up 2 cents to $3.07/MMBtu, and 2016, up 1 cent to $3.48/MMBtu. EIA noted that the Henry Hub spot price averaged $2.87/MMBtu in February, a decline of 12 cents from January. Article continues below… Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate pipeline and pooling points in major U.S. markets. Gas Daily keeps you informed about […]

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Get Ready for Oil Deals: Shale Is Going on Sale

A gas flare burns as a driver monitors a water tank while loading saltwater from an oil well storage tank near Sidney, Montana, U.S. The value of about 75 shale-focused U.S. producers based on their reserves fell by a median of 25 percent by the end of 2014 compared to 2013, according to data compiled by Bloomberg. Photographer: Daniel Acker/Bloomberg (Bloomberg) — A decision by Whiting Petroleum Corp., the largest producer in North Dakota’s Bakken shale basin, to put itself up for sale looks to be the first tremor in a potential wave of consolidation as $50-a-barrel prices undercut companies with heavy debt and high costs. For the first time since wildcatters such as Harold Hamm of Continental Resources Inc. began extracting significant amounts of oil from shale formations, acquisition prospects from Texas to the Great Plains are looking less expensive. Buyers are ultimately after reserves, the amount of […]

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For Chinese Economy, Steel Goes From Strength to Weakness

HONG KONG — China’s exports of steel are soaring. But that is not a good sign for the economy. China has far more steel mills than it needs, a problem made worse by the country’s shrinking housing market, the most voracious consumer of the metal. Domestic steel prices have collapsed. Thousands of workers have been laid off as mills have scaled back or closed. With scant demand at home, those mills still in business have turned to foreigners as buyers of last resort. China shipped a record 100 million metric tons of steel overseas in the 12 months to the end of February, a 55 percent increase from the previous 12 months. “It’s true that companies have dumped steel globally last year,” said Louis Kuijs, the chief economist for greater China at the Royal Bank of Scotland, based in Hong Kong. “I’m sure they are happy that at least […]

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IMF: Canada squeezed by low oil prices

Low oil prices having secondary impacts on Canadian economy, a review from the International Monetary Fund found. (UPI/Shutterstock/Lilac Mountain) A January report from the IMF found lower crude oil prices would be a drag on investment activity in Canada, with the energy sector bearing the brunt of market trends. In its latest review, the IMF said Canada is facing additional pressures from an "over-heated" housing market and high household debt. Forecasters in January warned the Canadian housing market be slowing as interest rates rise with lower oil prices. Oil-rich Alberta province faces a risk of a "hard landing" in response. "Canada’s overvalued housing market may be cooling off," the IMF’s latest report said. Alberta leaders take up fiscal issues Tuesday when they convene for the start of a new legislative session. Premier Jim Prentice last week said lawmakers need to focus on a sustainable economic model that does away […]

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EIA: Eagle Ford, Bakken oil production to fall in April

US shale oil production is expected to increase by a mere 1,000 b/d from March to April, according to the Energy Information Administration’s Drilling Productivity Report (DPR), signifying a slowdown in growth caused by reduced company budgets and a shrinking rig count. Total oil output from the most prolific shale areas in the Lower 48—the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica—will remain virtually unchanged at 5.6 million b/d in April. The DPR focuses on those seven plays, which accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. April growth will be pushed down by declines of 10,000 b/d in the Eagle Ford to 1.7 million b/d, 8,000 b/d in the Bakken to 1.3 million b/d, and 5,000 b/d in the Niobrara to 413,000 b/d. Production from the Permian, meanwhile, will expand 21,000 b/d to nearly 2 million b/d. […]

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Chinese Stocks Fall to Three-Month Low in Hong Kong After Data

(Bloomberg) — Chinese stocks trading in Hong Kong fell to the lowest level since December after data showed industrial output posted its weakest start since 2009, and retail sales and fixed-asset investment trailed estimates. China Shenhua Energy Co. and China Coal Energy Co. slumped more than 2 percent in Hong Kong. Jiangxi Copper Co. and Aluminum Corp. of China Ltd. led declines for material producers in Shanghai. Qingdao Haier Co. jumped 10 percent to lead a rally for mainland-listed household appliance companies. Hong Kong’s Hang Seng China Enterprises Index slid for a second day, losing 0.7 percent to close at 11,427.34. The Shanghai Composite Index gained 0.2 percent to 3,290.90 even as most stocks fell. Factory production rose 6.8 percent in January and February, the National Bureau of Statistics said. That compared with the estimate of 7.7 percent. “The economic data are poor though it didn’t surprise the market […]

Posted On : Published By : Tom Whipple