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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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New supply patterns and additional disruptions push California gasoline prices higher

Republished May 12, 2015, 11:30 a.m., to correct an error in the text. Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update Supply disruptions in the tightly balanced and relatively isolated California gasoline market have increased wholesale and retail gasoline prices over the past several weeks. This comes after markets had adjusted to compensate for lost production following the February explosion and fire at ExxonMobil’s refinery in Torrance, California . Average retail prices for regular gasoline in California as a whole, and in Los Angeles specifically, have increased by 57¢ per gallon (¢/gal), and 63¢/gal, respectively, in the past three weeks, while U.S. average retail gasoline prices have increased by 20¢/gal. The costs of adjusting supply sources, along with planned and unplanned refinery outages and delayed resupply, have contributed to the gasoline price increases. The spot price in Los Angeles for CARBOB (California Reformulated Blendstock for Oxygenate Blending) […]

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Short-Term Energy Outlook

Market Prices and Uncertainty Report This is a regular monthly supplement to the EIA Short-Term Energy Outlook . Contact: James Preciado ( [email protected] ) Full Report Crude Oil Prices: Crude oil prices continued to rise in April and reached their highest levels of the year. The North Sea Brent front month futures price settled at $65.54 per barrel (b) on May 7, an increase of $8.44/b since the close on April 1 ( Figure 1 ). The West Texas Intermediate (WTI) front month futures price rose by $8.85/b over the same period to settle at $58.94/b on May 7. Figure 1: Historical crude oil front month futures prices Although current oil market conditions still show production outpacing consumption, a combination of factors may tighten markets in the near future and are lending support to current prices. Surplus production capacity was estimated at 1.7 b/d in April, the lowest since […]

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Encana Books Impairment Charge of $1.2 Billion in 1st Quarter

Factoring out a $1.2 billion impairment charge and other items, the Calgary, Alberta-based energy company’s operating earnings tumbled 98%, but still came in ahead of analyst expectations. Encana, which has worked to shift its focus to oil and gas liquids assets and away from natural gas , said liquids production jumped 78% from a year earlier to about 120,700 barrels a day. “We are well positioned to benefit as oil prices rise,” Chief Executive Doug Suttles told analysts on a conference call. Overall production, however, averaged about 430,100 barrels of oil equivalent a day, down from 536,100 barrels a day a year earlier. It said the drop reflects the sale of lower-margin assets and its shift to a higher-margin, liquids-weighted production mix. It also came amid a slump in global crude prices that has led the company to slash the number of active drilling rigs from 44 in November […]

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Mixed bag for U.S. gasoline prices, AAA says

U.S. drivers paying some of the highest prices at the pump for 2015, but also the lowest for this time of year since 2009, motor club AAA says. Photo by Earl S. Cryer/UPI WASHINGTON, May 12 (UPI) — The retail price for a gallon of gasoline in the United States is the highest so far for the year, but the lowest for this date since 2009, AAA said. Tuesday’s national average price of $2.66 per gallon of regular unleaded gasoline is about 4 cents, or about 1.5 percent, higher than this time last week. Motor club AAA noted the national average price has increased nearly every day for a month to reach the highest level of the year. "However, relatively low crude costs continue to translate to significant savings at the pump for consumers," the motor club said. "[The] national average is about a dollar less than a year […]

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Shell’s Alaska nod met with outrage

Greenpeace joins the chorus of voices expressing outrage after the federal government gave condition approval to Shell to start drilling in the arctic waters off the coast of Alaska. File photo / Earl S. Cryer/UPI ANCHORAGE, Alaska, May 12 (UPI) — A federal decision to give conditional approval to Shell to drill in the arctic waters off the coast of Alaska was an egregious error, advocacy groups said. "Instead of holding Shell accountable and moving the country towards a sustainable future, our federal regulators are catering to an ill-prepared company in a region that does not tolerate cutting corners," Greenpeace Senior Research Specialist Tim Donaghy said in a statement emailed to UPI. The federal Bureau of Ocean Energy Management conditionally approved Shell’s multi-year exploration plan for the Chukchi Sea. Before the company can start drilling, it needs additional permits from state and federal agencies, including those governing the protection […]

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At the gas pump, US biofuel lobby scores a point against big oil

NEW YORK In a long-running battle between oil refiners and the U.S. farm lobby over the future of ethanol fuel, biofuel producers may have just made a small, but important dent in big oil’s formidable defenses. Over the past few months, privately held retailers Kum & Go and Sheetz have become the first significant chains to announce plans to start selling E15, a gasoline with 15 percent of ethanol, 50 percent more than the typical U.S. blend. By the end of 2016, those two retailers plan to add E15 at pumps at 125 stations. That will more than double the number of U.S. outlets offering cheaper fuel with a higher ethanol content than the standard E10 blend that contains 10 percent of ethanol. If retailers continued to add stations at a similar pace over the next five years, there would be some 1,300 stations offering E15. That would still […]

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Russia Was Right: Shale in Europe Has Proved a Dud

Workers prepare pipes used in the drilling of shale gas at a rig operated by Exalo Drilling SA in Lubocino, Poland. Photographer: Bartek Sadowski/Bloomberg When Cuadrilla Resources Ltd. opened an office in Poland in 2009, it had a reason to be optimistic: the shale boom was transforming the U.S. into the world’s largest producer of natural gas. To the companies rushing to imitate that success in Europe, Poland looked like the next Texas. Six years later, the U.K. explorer has yet to drill its first Polish well — and that’s in the country that’s most eager to allow hydraulic fracturing in Europe. The so-called super-majors like Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell Plc have packed up and moved on. “It’s not easy,” said Marek Madeja, Cuadrilla’s director of well services in the country. “The costs of drilling in Europe are much, much higher than in the […]

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Maersk Oil makes North Sea discovery

Maersk Oil confirms presence of hydrocarbons at exploration well in the Danish waters of the North Sea. File Photo by UPI/Shutterstock/James Jones Jr. COPENHAGEN, Denmark, May 12 (UPI) — About a month after starting production in the region, Maersk Oil said Tuesday, it found a new source of reserves in the Danish waters of the North Sea. Drilled in December, the company said it was able to confirm the presence of hydrocarbons in the Xana-1X exploration well in the northern part of the Danish sector of the North Sea. "At present the partners are in the process of assessing the technical and commercial implications of the discovery and looking at potential follow-up," Martin Rune Pedersen, managing director of the company’s Danish business unit, said in a statement. Analysis this year from Wood Mackenzie found the region brought in $19 billion in capital spending last year. With oil prices falling […]

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The oil crash: something wicked this way comes

The recent oil price crash signals the impending demise of the oil and gas industry as a major world energy producer. That should be a good thing, in principle, but something wicked may still come out of the process. With the ongoing collapse of the oil prices, we can say that it is game over for the oil and gas industry, in particular for the production of “tight” (or “shale”) oil and gas. Prices may still go back to reasonably high levels, in the future, but the industry will never be able to regain the momentum that had made its US  supporters claim “energy independence” and “centuries of abundance.” The bubble may not burst all of a sudden, but it surely will deflate. So, what’s going to happen, now? The situation is, to say the least, “fluid”. A great rush is ongoing to convince investors to place their money […]

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World population-food supply balance is becoming increasingly unstable, study finds

Enlarge Credit: Jm Verastigue/public domain Researchers report that as the world population increases and food demand has grown, globalization of trade has made the food supply more sensitive to environmental and market fluctuations. This leads to greater chances of food crises, particularly in nations where land and water resources are scarce and therefore food security strongly relies on imports. The study assesses the food supply available to more than 140 nations (with populations greater than 1 million) and demonstrates that food security is becoming increasingly susceptible to perturbations in demographic growth, as humanity places increasing pressure on use of limited land and water resources . "In the past few decades there has been an intensification of international food trade and an increase in the number of countries that depend on food imports ," said Paolo D’Odorico, a professor of environmental sciences at the University of Virginia and one of […]

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Oil prices drop on high Saudi output, Goldman expects more falls

SINGAPORE Oil prices dipped on Tuesday as Saudi Arabia reported strong crude production figures and U.S. investment bank Goldman Sachs warned of further oil price declines. Tuesday’s falls continued price declines on Monday and the previous week, and they came after Brent climbed 40 percent from its January lows, with many analysts saying upward momentum looks to have come to an end as production around the world continues to outpace demand. Top oil exporter Saudi Arabia pumped 10.308 million barrels of oil per day in April, slightly less than in March but still close to record highs. Goldman Sachs said in a note that the recent price rally itself prevented a reduction of oversupply and would therefore lead to lower prices going forward. "While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals," the […]

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Oil Prices Fall as Dollar Strengthens

Oil prices slipped Monday as the U.S. dollar strengthened and investors eyed concerns about weak demand in the physical market. Light, sweet crude for June delivery settled down 14 cents, or 0.2%, to $59.25 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, fell 48 cents, or 0.7%, to $64.91 a barrel on the ICE Futures Europe exchange. The Wall Street Journal Dollar Index, which tracks the greenback against other major currencies, rose 0.3%. A stronger dollar makes oil, which is priced in dollars, more expensive for buyers using foreign currencies. Traders also considered weakness in the physical oil markets. Producers in West Africa, the North Sea and Azerbaijan are struggling to sell cargoes of oil in the spot market, even as the futures price for crude has rallied, said Morgan Stanley MS 0.99 % in a note. “The risks are growing that the commodity […]

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Exodus of oil ETF investors signals expected market weakness

NEW YORK Oil investors are hastening their exit from exchange-traded funds, a move that some analysts argue is a form of protection in light of weak market fundamentals ahead. Four of the largest oil-specific exchange traded funds, including the U.S. Oil Fund (USO), had outflows of $478 million in the three weeks to May 6, according to data from ThomsonReuters Lipper, marking the biggest withdrawal since the start of 2014. Oil’s value, which plummeted some 60 percent during a slump that started in June, has made a quick recovery recently. Just this week, it traded above $62 a barrel, its highest level in five months. Still, analysts and traders warn that the unravelling of ETF investments, which amassed nearly $6 billion, may be a warning sign of things to come. While market experts are increasingly mixed over how much ETF outflows effect the futures market directly, they say the […]

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Oil rallies as hedge funds are caught short: Kemp

LONDON Oil’s sharp rally since the middle of March has been driven by a race among bearish hedge funds to cover loss-making short positions rather than any great bullishness about the outlook. On the eve of the rally, hedge funds and other money managers had amassed record short positions in WTI-linked futures and options amounting to 209 million barrels of oil. But in the seven weeks between March 17 and May 5, hedge funds cut their shorts by almost 116 million barrels to 93 million, a decline of more than 55 percent. Over the same period, hedge funds added only 7 million barrels of net new longs, a 2 percent increase from 381 million to 388 million, according to the U.S. Commodity Futures Trading Commission (CFTC). Hedge fund short covering coincides almost precisely with the rise in front-month WTI prices, from a recent low of $42 per barrel on […]

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Natural Gas Gives Back Gains as Supply Surplus Looms

By Christian Berthelsen Natural gas futures handed back a chunk of recent gains as weakening supply-and-demand fundamentals begin to catch up with a market that had rallied on short-term factors. Robust domestic gas production and an anticipated stretch of larger-than-average additions to gas stockpiles this month are expected to return supplies to a surplus for the first time in 18 months. If that happens, the U.S. would finally overcome the severe supply deficit created by heavy demand for gas-fired heating during the frigid winter of 2014. "We’re producing more gas in the market than we’re burning," said Aaron Calder, an analyst at Houston-based research consultancy Gelber & Associates. "That’s bearish and it’s putting downward pressure on the market." Natural gas futures fell sharply in early trading, recovered somewhat and then drifted down for the remainder of the session. The front-month June contract ended down 7.8 cents, or 2.7%, at […]

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OPEC Sees Oil Price Below $100 a Barrel in the Next Decade

ENLARGE VIENNA—The Organization of the Petroleum Exporting Countries doesn’t see oil prices consistently trading at $100 barrel again in the next decade, a pessimistic assessment that has the group considering the return of production limits to influence the market, according to people familiar with its latest strategy report. The report, extracts of which were seen by The Wall Street Journal, predicts that oil prices will be about $76 a barrel in 2025 in its most optimistic scenario, a reflection of OPEC worries that American competitors will be able to cope with low prices and keep pumping out supplies. It also contemplates situations where crude oil costs below $40 a barrel in 2025. A price of “$100 is not in any of the scenarios,” said a delegate at an OPEC strategy presentation last week in Vienna. An OPEC representative declined to comment OPEC has been grappling with how to respond […]

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Saudi, Kuwait to shut joint oilfield for two weeks: Kuwaiti source

DUBAI A jointly operated onshore oilfield between Saudi Arabia and Kuwait will shut for two weeks of maintenance, a Kuwaiti industry source said on Monday, a move apparently aimed at giving the Gulf OPEC allies more time to solve a long-standing dispute. The scheduled closure of the Wafra onshore oilfield, operated by a Saudi Arabian division of U.S. oil major Chevron, will start on Monday night or Tuesday, the source told Reuters. The source declined to be named because of the commercial sensitivity of the matter. "It is planned maintenance starting from tonight or tomorrow," the source said, adding that production from the onshore fields in the Neutral Zone between Saudi Arabia and Kuwait was about 190,000 barrels per day. Last month, Saudi Chevron told its partner, Kuwait Gulf Oil Company, that it planned to shut down Wafra after failing to resolve various disputes with Kuwait, mainly related to […]

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China becomes world’s top crude buyer despite economy stuttering

SINGAPORE China overtook the United States as the world’s top importer of crude oil for the first time in April, and its purchases are expected to remain strong despite a slowing economy, with far-reaching consequences for global oil and commodities markets. The soaring imports came as a surprise as growth in the world’s second-largest economy was sputtering and its oil demand was expected to ease. However, low oil prices and China’s series of interest rate cuts – including one over the weekend – in a bid to stoke growth are factors boosting demand. China’s crude oil imports hit a record of almost 7.4 million barrels a day (bpd) last month, putting it ahead of the United States’ estimated imports of 7.2 million bpd for April, Reuters data show. While China may drop back to second place in some months ahead, it is clearly headed towards overtaking the United States […]

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China Focus: Experts say China’s interest rate cuts not start of QE

by Xinhua Writer Jiang Xufeng BEIJING, May 11 (Xinhua) — China’s central bank cut interest rates starting Monday in the face of inflationary pressure and economic headwinds, but experts say the step should not be interpreted as the start of quantitative easing (QE). The People’s Bank of China (PBOC) on Sunday announced it will cut the benchmark deposit and loan interest rates by 25 basis points. After the move, the third rate cut in six months, the one-year deposit rate stands at 2.25 percent, and the one-year lending rate at 5.1 percent. China’s consumer price index ( CPI ) edged up to 1.5 percent in April, but came in below market expectations. The producer price index (PPI), a measure of costs for goods at the factory gate and a leading indicator of CPI movements, plunged 4.6 percent year on year in April, marking the 38th straight month of declines […]

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China world’s biggest oil importer

China overtook the US as the world’s biggest importer of crude oil in April, the culmination of a seismic shift in global energy flows over the past decade. Chinese customs data showed crude oil purchases from overseas hit a new high of 7.4m barrels a day in April, equivalent to roughly one in every 13 barrels consumed globally and topping US imports of 7.2m b/d. The US routinely exports about 500,000 b/d. While China’s imports are not expected to consistently surpass those of the US until the second half of this year, the move illustrates how the US shale revolution has cut the country’s reliance on oil from overseas — and how China’s demand has grown even as its economy slows. Colin Fenton, managing partner at Blacklight Research, said China’s imports increased as it stockpiled oil . “It’s begun,” Mr Fenton said. “China’s crude imports have been above trend […]

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These Asian Bankers Face $43 Billion Dead Deals After Oil Plunge

Billionaire Charoen Sirivadhanabhakdi, Thailand’s richest man, who in February abandoned plans to buy control of Singapore builder United Engineers Ltd. after failing to reach agreement on price. It’s a tough time to be an investment banker in Southeast Asia. Singapore, the region’s biggest stock market, is having its driest spell in six years with no initial public offering bigger than $25 million in 2015. Mergers involving Southeast Asian companies have dropped 45 percent this year to the lowest level since 2009, bucking a 39 percent rise in the broader Asia Pacific. Adding to the woes, more than a fifth of all acquisitions, or $43 billion worth, announced in the past 12 months were scrapped, data compiled by Bloomberg show. The dearth of mergers, down to $20 billion, is taking a toll on bankers. Goldman Sachs Group Inc. has reduced its investment-banking team in Singapore about 30 percent, while HSBC […]

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Some U.S. oil drillers see more output, but not by much

At least half a dozen U.S.-focused energy firms say they will pump more oil and gas this year than initially expected, adding to a sense that eager drillers are quickly pivoting from months of retrenchment toward renewed growth. A closer look at the figures, however, suggests upgrades to their full-year output forecasts reflect minor adjustments rather than an emerging trend. At most they add up to around 50,000 barrels per day (bpd), according to data compiled by Reuters. On the low end, they might be shy of 20,000 bpd. They came from companies as large as Occidental Petroleum, which pumped nearly 200,000 bpd or over 2 percent of U.S. crude in the first quarter, and as small as Carrizo Oil & Gas Inc., which produced about a tenth as much. To be sure, brighter outlooks were not the norm. Bellwether shale firms including EOG Resources and Whiting Petroleum Corp […]

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Oil production declines deepen in June as productivity rises: EIA

NEW YORK Oil production declines from the largest U.S. shale plays will deepen for the second consecutive month in June even as rig productivity is accelerated, the U.S. Energy Information Administration said on Monday. The projected fall of some 71,000 barrels per day in June to 4.97 million bpd underscores how quickly production rates have declined after the worst price slump since the financial crisis and the start of the shale boom. Oil production from the Permian Basin of West Texas and New Mexico is forecast to rise 7,000 bpd to 2.06 million bpd, according to the EIA’s drilling productivity report, the smallest increase since June. Production per rig in the region is set to jump by 26 bpd, the biggest level in at least eight years. Meanwhile, production from the Bakken formation of North Dakota is projected to fall 31,000 bpd to 1.27 million bpd, while production per […]

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U.S. approves Shell’s plan to drill for oil in Arctic

WASHINGTON Royal Dutch Shell’s quest to return to oil drilling in the U.S. Arctic for the first time since 2012 took a big step forward on Monday when the Obama administration approved the company’s exploration plan. The Department of Interior approved the plan in a move that had been expected. Now Shell must only get several permits from the federal government and the state of Alaska in order to begin drilling this summer. Shell has not drilled in the Arctic since its mishap-filled 2012 season, when the company was forced to evacuate the Kulluk drill rig, which eventually grounded. (Reporting by Timothy Gardner ; Editing by Bill Trott )

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Momentum building against Shell’s Alaska plans

Seattle Mayor Ed Murray adds his voice to a chorus of those expressing reservation about Shell’s plans to drill in the arctic waters off the coast of Alaska. UPI/Jim Bryant SEATTLE, May 11 (UPI) — After a setback in Seattle, organizers announced plans to hold weekend events to protest Shell’s drilling plans in the arctic waters off the coast of Alaska. Seattle Mayor Ed Murray last week expressed opposition to Shell’s lease for a port terminal for use for its drilling plans offshore Alaska. The western port city is ready to help the port authority attract clean companies, "rather than the polluting industries of yesterday," he said. Port officials in January approved plans to lease Terminal 5 to Foss Maritime, which would facilitate Shell’s regional operations. The mayor’s appeal for a new permit, Foss said, would cause "long-term harm" to the industry. The federal Department of Interior in April […]

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Rig data paints mixed U.S. oil picture

The number of rigs in service in top oil producing U.S. states are on the decline as low crude oil prices crimps spending. Photo by Calin Tatu/Shutterstock HOUSTON, May 11 (UPI) — State and industry data show the number of rigs actively exploring for or producing oil and natural gas in the top three U.S. producing states declined. North Dakota state data show 84 active drilling rigs in service as of Monday. That’s down from the 86 reported last week, 108 year-on-year and the lowest on record for the state in more than five years. Oil companies are spending less on exploration and production because crude oil markets have been depressed for nearly a year. That leaves energy companies with less capital to invest in exploration and production. North Dakota produced 1.17 million barrels of oil per day in February, the last full month for which data are available. […]

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Noble grabs Texas shale in $2.1 billion deal

Noble Energy makes $2.1 billion grab for Texas shale reserves. File Photo by photostock77/Shutterstock. HOUSTON, May 11 (UPI) — Noble Energy Inc. said Monday it was moving into two Texas shale basins with the $2.1 billion acquisition of rival Rosetta Resources. Noble moved to acquire all the common stocks of Rosetta Resources, which hold more than 100,000 net acres in two premier Texas shale basins . "I am excited to announce this strategic transaction which adds two exceptional and material areas to our global portfolio," Dave Stover, Noble’s top executive, said in a statement. "The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic in the United States, which will expand our resource base and development inventory and further diversify our portfolio." Texas is the No. 1 oil producer in the nation. The Railroad Commission of Texas, the state’s energy regulator, said preliminary […]

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U.S. Conditionally Approves Shell Arctic Drilling Plan

ENLARGE Royal Dutch Shell hopes to use this oil rig for exploratory drilling in the Chukchi Sea, off the West Coast of Alaska. Photo: DANIELLA BECCARIA/ASSOCIATED PRESS The U.S. government on Monday conditionally approved a plan by Royal Dutch Shell RDSA -0.97 % PLC to drill in the Arctic Ocean this summer, removing one of the biggest obstacles the energy company must overcome before it can explore for oil and natural gas in the Arctic’s frigid, isolated waters. The conditional approval from the Interior Department is contingent on Shell obtaining several additional federal permits, approvals Shell hopes government officials will make in the coming weeks. “We’d like to see them sooner rather than later,” Shell spokesman Curtis Smith said Monday. “We’re moving assets and people as if we’re going to achieve those permits. We have reason to believe we will.” Other obstacles, including ongoing legal battles brought by environmental […]

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Grabbing Paddles in Seattle to Ward Off an Oil Giant

Photo Activists trained on kayaks last week in Puget Sound in advance of a floating protest of Royal Dutch Shell in the Port of Seattle. Credit David Ryder for The New York Times SEATTLE — A dozen or so men and women, cinched into life jackets, paddles at the ready, were about to launch their kayaks into Elliott Bay early Thursday evening with Seattle’s glittering skyline as the backdrop. For some of the paddlers, it was a first-time experience, and with the water at 50 degrees and choppy, there were some obvious signs of trepidation. “O.K., what hazards are we watching for?” Elizabeth Chiaravalli, their instructor, shouted, and a smattering of answers immediately bounced back. “The waves!” “The dock!” “The pilings!” Then Cynthia Orr, a 67-year-old mental health counselor, spoke up. “Shell Oil!” she cried, standing by her boat. Her fellow kayakers — or kayaktivists, as they call themselves […]

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The Drilling Productivity Report

New-well oil production per rig barrels/day New-well gas production per rig thousand cubic feet/day Region May 2015 June 2015 change May 2015 June 2015 change Bakken 610 631 21 607 620 13 Eagle Ford 700 720 20 1,754 1,783 29 Haynesville 27 27 – 5,963 6,034 71 Marcellus 37 38 1 8,176 8,222 46 Niobrara 480 497 17 1,865 1,884 19 Permian 270 296 26 501 543 42 Utica 243 253 10 6,386 6,650 264 Rig-weighted average 390 404 14 2,176 2,307 131 The Drilling Productivity Report uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells to provide estimated changes in oil and natural gas production for seven key regions. EIA’s approach does not distinguish between oil-directed rigs and gas-directed rigs because once a well is completed it […]

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This $2.1 Billion Shale Deal Will Be the First of Many

Where the Opportunities Are in Energy Stocks The first major shale deal after the worst oil price collapse in five years is a model for future transactions that promises to quickly change the industry as companies expand in new areas or soak up struggling rivals. Noble Energy Inc.’s $2.1 billion all-stock purchase of Rosetta Resources Inc. is poised to be an opening salvo in a long-predicted wave of industry consolidation that’s been slow to materialize since crude fell by more than half since June. As a stock-for-stock deal, Rosetta shareholders would see the benefit from a rebound in oil prices, a key sticking point after the value of North American energy companies fell by more than $200 billion since June, according to data compiled by Bloomberg. “Both shareholders then get to participate in the upside going forward,” Noble Chairman and Chief Executive Officer Dave Stover said Monday in an […]

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Bakken Formation Still Has 6 Billion Barrels of Oil

How much recoverable oil does the Bakken Formation have? The most recent estimate of proved reserves is just under 6 billion barrels for the entire Williston Basin, which includes the Bakken, and another 3.5 billion to 4.1 billion barrels of “undiscovered and technically recoverable” oil. Harold Hamm, founder and CEO of Continental Resources, once said he believed there were 24 billion barrels of oil in place in the basin. That size of this resource has been lost during the discussion of whether the price of oil will shut down fracking in the region. Eventually, as global demand for crude continues at or near historical highs, the oil from the region will be produced and shipped to refineries. And with the price of oil moving back up, that could happen sooner and not later. One sign of the possible contribution of the formation is the amount of oil that comes out of North Dakota […]

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Germany builds wind energy reputation

One of the largest offshore wind farms of its kind, Nordsee Ost, inaugurated off the German coast. Photo courtesy of RWE. HAMBURG, Germany, May 11 (UPI) — Wind energy is a vital part of a German move to a low-carbon economy, the German economic minister said during the inauguration of RWE’s Nordsee Ost wind farm. German Economics Minister Sigmar Gabriel hosted ministers from the Group of seven industrialized economies, along with representatives from RWE, for the inauguration of the 48-turbine wind farm off the northern German coast. "Offshore wind energy is a strategically important element of Germany’s energy and climate policy and is key to the success of the energy transition," Gabriel said in a statement. In April, German company E.ON started producing electricity from its Amrumbank West wind power project in the German waters of the North Sea . Germany is one of the world leaders in renewable […]

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Nuclear, Fracking Decisions on Tap for New U.K. Energy Secretary

LONDON—The U.K.’s new energy secretary, Amber Rudd, drew praise from both the oil-and-gas industry and green lobby groups ahead of decisions on the nuclear industry and hydraulic fracturing that other nations will be watching. The appointment of Ms. Rudd, a former parliamentary undersecretary at the Department of Energy and Climate Change, was announced Monday by U.K. Prime Minister David Cameron , who was elected last week with an outright majority. Ms. Rudd is likely to be presiding over the startup of the U.K.’s first fracking operations since 2011 when the government called a moratorium on the controversial technique after tiny earth tremors were detected near a site in northwest England. Protests and local opposition have slowed fracking in the U.K. where only a handful of exploration wells have been drilled and just one well has been fracked. While much of the department’s work is done on creating regulations for […]

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How Much Longer Can The Oil Age Last?

History has been so fascinated with oil and its price movements that it is indeed hard to imagine our future without oil. Over the last few months, we have witnessed how oil prices have fluctuated from a 6 year low level of $42.98 per barrel in March 2015 to the current levels of $60 per barrel. It is interesting to note that, in spite of the biggest oil cartel in the world deciding to stick to its high production levels, the oil prices have increased mainly due to falling US crude inventories and strong demand. However, the current upward rally might be short lived and there may yet be another drop in the international oil price when Iran eventually starts pumping its oil into the market at full capacity, potentially creating another supply glut. In these endless price rallies, it is important to take a holistic view of the […]

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Oil rises towards $66 after China cuts rates

LONDON Oil rose towards $66 a barrel on Monday after China moved to bolster its flagging economy, raising hopes that the world’s top energy consumer would help absorb a global supply glut. China cut interest rates for the third time in six months on Sunday to stoke its sputtering economy, which is headed for its worst year in a quarter of century. Data on Friday showed China ahead of the United States as the world’s top oil importer in April, as the Asian economy seized on lower crude prices to stock up. Brent crude LCOc1 for June was up 20 cents at $65.59 a barrel by 0800 GMT (4 a.m. EDT) after dropping 1.6 percent last week. June U.S. light crude CLc1 was up 20 cents to $59.59 a barrel after rising for eight straight weeks, the longest winning stretch since late 2012 to early 2013. Analysts talk of […]

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International Oil Rig Counts

All rig count data is provided by Baker Hughes . All monthly charts are oil rigs only . Gas rigs are not included in the count. The last data point for all monthly charts is April 2015. When I talk about “peaks” in this post I am only speaking of the peak since 2011 and am not suggesting that there were not higher peaks in previous years. International Oil Rig Count The International Rig Count has fallen by 150 rigs, from 1,080 in July 2014 to 930 in April 2015. This count does not include the USA, Canada or any of the FSU countries. The European Oil Rig Count dropped from 96 in October and November to 65 in April. The African Rig count peaked at 123 in February and dropped to 88 in April. The Asia Pacific rig count stood at 211 in January 2011 and now stood […]

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Iraq Begins Training of Sunni Tribal Fighters

ENLARGE Sunni recruits take part in their first training session to join an Iraqi government force that will fight Islamic State extremists, on Friday at a base in the town of Amriyat Fallujah. Photo: ahmad al-rubaye/Agence France-Presse/Getty Images AMRIYAT FALLUJAH, Iraq—Iraq’s Shiite-led government has begun training Sunni tribal fighters here in the western province of Anbar, in an urgent U.S.-backed initiative to stem recent advances by Islamic State. The setbacks in Anbar have exposed the need for trusted and equipped Sunni fighters to help turn momentum against Islamic State and dry up the extremists’ pool of potential recruits. “When the government fails, people turn to Islamic State,” said Mohammad Abu Risha, a young tribal sheik from Anbar who commands 150 fighters. “The tribes don’t trust the government, and the government doesn’t trust the tribes.” Mr. Abu Risha, speaking at an inaugural ceremony for the Anbar training program in Amriyat […]

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Saudi King Salman Won’t Attend Gulf Summit Hosted by Obama

RIYADH—Saudi Arabia said Sunday that King Salman won’t attend a summit of Gulf leaders to be hosted this week by U.S. President Barack Obama at Camp David. Foreign minister Adel al-Jubeir said the king decided to skip the meeting to focus on the Yemen cease-fire and humanitarian aid effort, according to a statement by the state news agency. The king has delegated Crown Prince Mohammed bin Nayef to lead Saudi delegation which would include Deputy Crown Prince Mohammed bin Salman and other senior officials. Write to Ahmed Al Omran at [email protected]

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Saudi Arabia Says King Won’t Attend Meetings in U.S.

Photo President Obama speaking about the Iran nuclear agreement at the White House last month. Credit Gabriella Demczuk for The New York Times WASHINGTON — Saudi Arabia announced on Sunday that its new monarch, King Salman, would not be attending meetings at the White House with President Obama or a summit gathering at Camp David this week, in an apparent signal of its continued displeasure with the administration over United States relations with Iran , its rising regional adversary. As recently as Friday, the White House said that King Salman would be coming to “resume consultations on a wide range of regional and bilateral issues,” according to Eric Schultz, a White House spokesman. But on Sunday, the state-run Saudi Press Agency said that the king would instead send Crown Prince Mohammed bin Nayef, the Saudi interior minister, and Deputy Crown Prince Mohammed bin Salman, the defense minister. The agency […]

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