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El Nino has emerged, Asia braces for crop damage

SINGAPORE In 2009, the El Nino brought the worst drought in four decades to India. It razed wheat fields in Australia and damaged crops across Asia. Food prices surged. A closely watched forecast by Japan on Tuesday confirmed its return this year. A strong El Nino will roil economies that are heavily dependent on agriculture, particularly India which is already reeling from bad weather. It would also unhinge supply chains of commodities such as rice, corn and palm oil. In fact, the heat is already up in some places in the Asia Pacific. "We’ve already been hit by a three-month dry spell. We could not plant anything since January. All of us here in Taculen are praying for more rains," said Benny Ramos, a rice farmer in North Cotabato in southern Philippines. Prayers for rains in Asia, however, may not be answered as weather forecasts show an intensifying El […]

Posted On : Published By : Tom Whipple
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BHP plans deeper cost cuts to battle commodity rout

LONDON BHP Billiton said on Tuesday it would slash its iron ore production cost further and cut spending to better withstand a downturn in commodity prices that is testing even mining industry heavyweights. Giant iron ore producer BHP, the world’s largest mining company, and rival Rio Tinto are locked in a battle to become the lowest cost iron producer. At the same time, they are increasing production of the steel ingredient, hoping to squeeze out competitors and gain market share. BHP Billiton Chief Executive Andrew Mackenzie dismissed criticism that such a strategy was fuelling the sharp slump in iron ore prices. "We operate in highly competitive and cyclical markets, where earnings outperformance through the cycle depends on being the most efficient supplier, not supply restraint," Mackenzie said, speaking at an investor conference in Barcelona. "In this environment we are well prepared for the possibility of an extended period of […]

Posted On : Published By : Tom Whipple
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China’s April industrial output growth speeds up

BEIJING, May 13 (Xinhua) — Growth of China’s industrial output picked up in April after hitting a six-year low in March, pointing to tentative signs of improvement for the world’s second largest economy amid downward pressure. The industrial output grew 5.9 percent year on year in April, up from 5.6-percent growth in March, the lowest monthly level since December of2008, the National Bureau of Statistics (NBS) announced on Wednesday. The figure was released by the NBS with other major economic indicators for April and the first four months. Manufacturing output rose 6.5 percent, while the mining industry saw output grow 2.8 percent. Growth for electricity, heating, gas and water was 2.0 percent. In the first four months, industrial output grew 6.2 percent year on year, compared to 6.4-percent growth in the January-March period. Industrial output, officially called industrial value added, is used to measure the activity of designated large […]

Posted On : Published By : Tom Whipple
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Shale oil output at Bakken and Eagle Ford starts a descent

U.S. Energy Information Administration Key U.S. tight oil and shale gas regions. Oil production from the Bakken and Eagle Ford shale plays look like they’ve peaked and other shale plays may not be far behind. Oil production from seven major U.S. shale plays is expected to fall by a total of 86,000 barrels a day in June, according to a monthly report from the Energy Information Administration released Monday. The previous report released a month ago also showed a forecast for a fall of 57,000 barrels a day in May. Oil output at the Eagle Ford shale play in South Texas is forecast to see the biggest decline, down 47,000 barrels a day in June. The Bakken shale play, which stretches from Canada into North Dakota and Montana, is expected to see output fall by 31,000 barrels a day, the report said. That would follow forecast declines in both […]

Posted On : Published By : Tom Whipple
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EIA: Shale Oil Production Cuts to Get Bigger Next Month

The U.S. lost about 1 percent of the oil production flowing from its shale formations this month, and the decline is just starting. (Bloomberg) — The U.S. lost about 1 percent of the oil production flowing from its shale formations this month, and the decline is just starting. Output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will slide 54,227 barrels a day this month, based on Energy Information Administration estimates. It’ll fall another 86,000 barrels in June to a five-month low of 5.56 million, the agency said Monday. Last year’s plunge in crude prices led to the steepest and most prolonged retreat from U.S. oil fields on record. Drillers have idled more than half the country’s rigs and eliminated tens of thousands of jobs. Some of the country’s largest shale producers including ConocoPhillips and EOG Resources Inc. have said spending cuts […]

Posted On : Published By : Tom Whipple
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EIA: Oil output from major US shale to fall 86,000 b/d in June

Crude oil production in June from seven major US shale plays is expected to decrease 86,000 b/d compared with May to 5.6 million b/d, about even with where the total stood in March, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The total June decline comprises a 47,000-b/d loss in the Eagle Ford to 1.6 million b/d, a 31,000-b/d loss in the Bakken to 1.3 million b/d, and a 16,000-b/d loss in the Niobrara to 411,000 b/d. The Permian has maintained production growth over the past few months, albeit at a shrinking rate. Output from the basin in June is expected to increase 7,000 b/d—a third of total growth for April—to 2.1 […]

Posted On : Published By : Tom Whipple
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Can Tesla’s Battery Hit $1 Billion Faster Than the iPhone?

Tesla Motors Inc. Chief Executive Officer Elon Musk Unveils New Generation Of Batteries Tesla’s new line of big, stackable batteries for homes and businesses started with a bang. The reservations reported in the first week are valued at roughly $800 million , according to numbers crunched by Bloomberg. If Tesla converts even a fraction of those reservations into actual sales, the battery roll-out could measure up as one of the biggest ever for a new product category. Photographer: Tim Rue/Bloomberg The chart below compares the estimated value of Tesla battery reservations—these are not ironclad commitments to buy—with the early sales of three breakthrough products: the original iPhone, released in 2007; Viagra’s debut in 1998; and the introduction of the Tesla Model S battery-powered car in 2012. The iPhone surpassed $1 billion in sales by its third quarter on the market, while Viagra and the Model S needed a bit longer.  The new line […]

Posted On : Published By : Tom Whipple
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What would it take to free U.S. oil exports?

WASHINGTON Lawmakers pushing to repeal the 1970s-era ban on U.S. oil exports face a steep obstacle: The Obama administration sees no need to fully remove the restriction while the country is still importing part of its oil supply. And many politicians are wary of a voter backlash if gasoline prices go up just as they open the door to exports. However, Senator Lisa Murkowski, the Republican head of her chamber’s energy committee, is expected to introduce a bill as soon as Tuesday night that would lift the ban Congress passed in 1975 after the Arab oil embargo created fears of global shortages. While there is plenty of resistance in Congress against lifting the ban, the prospects for a reversal could improve under some of the following conditions: THE US OIL PRICE DROPS FURTHER Mainly because of the U.S. oil glut, domestic crude producers now get about $6 a barrel […]

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Oil industry challenges U.S. train safety rules in court: NYT

WASHINGTON A U.S. oil industry group has launched a legal challenge to federal rules aimed at tightening safety standards in oil-by-train transport, the New York Times reported on Tuesday. The American Petroleum Institute on Monday petitioned the U.S. Court of Appeals for the District of Columbia to block important provisions of the rules presented earlier this month by Transportation Secretary Anthony Foxx, the newspaper said. The United States and Canada announced on May 1 long-awaited safety rules for trains carrying oil, as regulators seek to reduce risks after a series of explosive accidents that accompanied a surge in crude-by-rail shipments. The rules call for a rapid phase-out of older tank cars considered unsafe during derailments, and are more aggressive than even some of the toughest proposals yet put forward. The petition filed on Monday seeks to bar a rule requiring older tank cars to be fitted with new safety […]

Posted On : Published By : Tom Whipple
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Short-Term Energy Outlook

Highlights North Sea Brent crude oil prices averaged $60/barrel (b) in April, a $4/b increase from March and the highest monthly average of 2015. Despite increasing global inventories, several factors contributed to higher prices in April, including indications of higher global oil demand growth, expectations for declining U.S. tight oil production in the coming months, and the growing risk of unplanned supply outages in the Middle East and North Africa. EIA forecasts that Brent crude oil prices will average $61/b in 2015 and $70/b in 2016, $1/b higher and $5/b lower than in last month’s STEO, respectively. Average WTI prices in 2015 and 2016 are expected to be $6/b and $5/b below Brent, respectively. The current values of futures and options contracts for December 2015 delivery suggest ( Market Prices and Uncertainty Report ) the market’s expectations (at the 95% confidence interval) for WTI prices in that month range […]

Posted On : Published By : Tom Whipple