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Yemen conflict keeps Brent crude oil around $63

LONDON (Reuters) – Brent crude oil steadied around $63 a barrel on Tuesday, not far below the 2015 high, supported by worries that a civil war in Yemen could destabilize the Middle East, affecting oil supplies. Oil has climbed around 15 percent this month due to concern over the conflict in Yemen, Saudi Arabia’s southern neighbor. The seaways around Yemen are some of the most important for the international oil trade with access points to the Red Sea and Suez Canal as well as the Middle East Gulf. The U.S. navy said on Monday it had sent an aircraft carrier and a guided-missile cruiser into nearby waters. Brent hit a 2015 high of almost $65 a barrel on April 16, up more than 40 percent from a January low just above $45. Prices have also been supported by speculation over falling U.S. output after data showing the number of […]

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Big Oil’s Latest Fear: A Price Shock After $114 Billion of Cuts

(Bloomberg) — As the oil patch grows accustomed to a new world of $50 to $60 crude, it’s now looking ahead to a different but equally daunting sort of cliff. Oil companies are warning there will be a price to pay — a much higher price — for all the cost cutting being done today to cope with the collapse in the crude market. Big projects intended to start pumping oil and natural gas 5 to 10 years from now are being canceled or put on hold as the price crash forced $114 billion in spending cuts on the industry. Energy giants from Exxon Mobil Corp. to Royal Dutch Shell say they’re taking a much more cautious approach to approving projects that cost billions and take years to complete. That’s setting the table for a future oil-price shock when a growing world population drives higher demand, said oil executives […]

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Oil Firms’ Capex Cuts Pave Way for Next Oil-Price Bull Run

By Sarah Kent and Ese Erheriene LAUSANNE, Switzerland–Oil companies’ spending cuts in response to the massive slump in prices since June are paving the way for the next bull run, Glencore PLC Chairman and Genel Energy PLC Chief Executive Tony Hayward said Tuesday. "The supply chain in the U.S. is being decimated," Mr. Hayward told the FT Commodities Global Summit in Lausanne. "Even if prices recover, the ability of the supply chain to respond will be severely impaired and it will take several years to get back to where we were," the former BP PLC CEO said. He added that oil production in the U.S. has already peaked, in the face of a clear challenge from the Organization of the Pertroleum Exporting Countries for market share. "OPEC has demonstrated it is the most effective cartel in history," Mr. Hayward said. In the meantime, the energy sector is likely to […]

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Cheaper fuel to boost container shipping: Kemp

LONDON (Reuters) – Lower oil prices are sharply reducing the cost of shipping merchandise from Asia to the United States and Europe as the cost of bunker fuel tumbles. Container shipping companies deal with the volatility in fuel prices by adding a separate bunker adjustment factor or fuel surcharge to their freight rates. Fuel can account for more than 60 percent of the total operating costs of moving freight across the oceans so the surcharges are one of the most important elements of total transportation costs. Surcharges are recalculated quarterly based on the average cost of fuel over a previous 13-week period. So the charge for April-June 2015 is based on fuel costs between December 2014 and February 2015. Other adjustments are made periodically to reflect changes in average fuel consumption, sailing time, vessel capacity and fuel quality changes. In September 2008, shortly after oil prices had peaked, shipping […]

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Libya’s official government has no luck selling oil bypassing Tripoli: sources

CAIRO/BENGHAZI (Reuters) – Libya’s official government has so far failed to sell oil on its own via an account and middlemen in Dubai, as customers continue to buy crude directly from a state oil firm under the control of a rival government, oil sources said. Libya’s internationally recognised Prime Minister Abdullah al-Thinni said this month that oil sales would be routed though a Dubai bank account belonging to a new state oil company reporting to his government in the east. His government wants to get hold of vital oil revenue as it fights the rival government controlling the capital Tripoli, in the west, for power and territory four years after the ousting of Muammar Gaddafi. The United Arab Emirates is one of the biggest political allies of Thinni. Several oil shipments from the eastern Hariga and Zueitina ports controlled by forces loyal to Thinni have left since his announcement, […]

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Saudis end air campaign in Yemen, seek political solution

DUBAI (Reuters) – Saudi Arabia announced on Tuesday it was ending a month-long campaign of air strikes against the Houthi rebels who seized large areas of Yemen and said it would back a political solution to bring peace to its war-ravaged neighbor. Iran, which has supported the fellow Shi’ite Houthis, welcomed the ceasefire, which followed months of factional fighting between the militant group and forces loyal to the government, which was driven out of the capital Sanaa. "Operation Decisive Storm has achieved its goals…(including) removing the threat to Saudi Arabia and neighboring countries, especially in terms of heavy weapons," said a statement carried by Saudi state news agency SPA. It said a new phase called "Operation Restoring Hope" was beginning. It would combine political, diplomatic and military action but would focus on "the political process that will lead to a stable and secure future for Yemen." Saudi spokesman Brigadier […]

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Japan nuclear ruling expected to cool Kyushu Electric’s summer LNG demand

Japanese utility Kyushu Electric’s late summer LNG demand is expected to be lower than last year after a court on Wednesday rejected a lawsuit attempting to stop the company from restarting its Sendai nuclear reactors, market sources said. The ruling paves the way for Kyushu Electric to restart its two 890-MW reactors at its Sendai nuclear power plant in Kagoshima prefecture by this summer. Platts research unit Eclipse Energy expects the restart to replace around 2 GW of capacity currently met by Kyushu Electric’s oil-fired power plants but will have no impact on the company’s gas-fired plants. However, market sources said that having nuclear as baseload power would give Kyushu Electric more room to cut down on LNG purchases. Article continues below… Oilgram News brings you fast-breaking global petroleum and gas news on and including: Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports Supply and […]

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Pemex prepares to expand oil production

Oil production at Pemex has touched bottom after a decade of decline, according to the head of exploration and production at Mexico’s state-controlled energy group, and a new era of deals with private companies should fuel its recovery. “Things are looking good,” Gustavo Hernández told the Financial Times in an interview, just weeks before the first contracts with private operators are due to be unveiled on May 13. The statement may sound rash — output at what has been Mexico’s sole hydrocarbons producer for nearly 80 years has been sinking inexorably since 2004, when the giant shallow-water Cantarell field was at its height, and the company has already cut its 2015 production forecast once this year. Furthermore, Pemex, the main contributor to the federal budget, is shouldering the brunt of public sector cuts in a government austerity drive as it seeks savings of some $4bn this year. The latest […]

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Asia can copy U.S. coal-to-natural gas switching: Russell

LAUNCESTON, Australia, April 21 (Reuters) – –Clyde Russell is a Reuters columnist. The views expressed are his own.– Can Asia replicate the coal to natural gas switching that has revolutionized power generation in the United States? Up to now the conventional thinking has been not really, given that coal remains cheap and abundant in the region, while natural gas is more scarce, expensive and difficult to transport. But factors are at work that suggest several Asian countries may be able to use more natural gas for power generation, and at prices that are still competitive, albeit higher than sticking with coal. The main reason is that natural gas is in the process of becoming significantly cheaper in Asia, which used to pay more than double what buyers did in Europe and almost five times more than consumers in the United States. U.S. natural gas prices have plummeted in the […]

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Why Did These Oil Workers Die?

ENLARGE A worker checks water levels and temperatures at an Encana Oil & Gas hydraulic fracturing operation outside Rifle, Colo. Photo: Brennan Linsley/Associated Press The deaths of Trent Vigus and at least nine other oil-field workers over the past five years had haunting similarities. Each worker was doing a job that involved climbing on top of a catwalk strung between rows of storage tanks and opening a hatch. There were no known witnesses to any of the men’s deaths. Their bodies were all found lying on top of or near the tanks. Medical examiners generally attributed the workers’ deaths primarily or entirely to natural causes, often heart failure. But in the past few months, there has been a shift. Though still unsure of the exact cause of the deaths, government agencies and some industry-safety executives are now acknowledging a pattern and are focusing on the possible role played in […]

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