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Oil Prices Slide on Supply Data

Oil prices sank to a fresh three-month low Wednesday on concerns that the global glut of crude oil is being processed into a glut of refined products. Though data released Wednesday showed that U.S. crude-oil stockpiles fell last week, the country’s total commercial inventories of crude oil and petroleum products rose to a record high. The inventory report reinforced investors’ concerns that demand from consumers is not keeping up with production of gasoline and other fuels. Consumption rose strongly in the first half of the year, but some analysts say that growth was weather-related and can’t be repeated. Crude-oil production is near multiyear highs in the U.S., Saudi Arabia, Iraq and elsewhere. In addition, Iran and six world powers reached a deal to limit Iran’s nuclear program and eventually lift sanctions that currently limit the country’s oil exports. Light, sweet crude for August delivery settled down $1.63, or 3.1%, […]

Posted On : Published By : Tom Whipple
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Natural Gas Nears Eight-Week High on Forecasts of Hot Weather

By Timothy Puko Natural gas prices rose to a near eight-week high on Wednesday, as weather reports continue to show large patches of above-normal temperatures for the second half of July. Natural gas for August delivery gained 7.8 cents, or 2.8%, to $2.918 a million British thermal units on the New York Mercantile Exchange. It was the highest settlement since May 21. The summer heat is likely to result in more demand for gas-fired power to run air conditioners. Recent forecasts predicted above-normal temperatures spreading in the next two weeks across large parts of the country, especially in the Southeast. Forecasts from MDA Weather Services show the most heat, with temperatures 1 to 5 degrees Fahrenheit above normal for nearly the entire country from July 25-29. However, Wednesday’s rally was capped by concerns that the hot temperatures won’t be extreme and may not last long enough to outweigh near-record […]

Posted On : Published By : Tom Whipple
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Oil’s Fall Requires Major Changes

The oil and gas industry is in for a new round of cost cutting. It also needs a dose of fresh thinking. Oil prices are under pressure thanks to a combination of China, Greece and Iran. That, along with a bearish prognosis from the International Energy Agency in its latest report, dents hopes for a quick rebound this year. That should have the oil producers teeing up for more cost cutting. All cuts, however, aren’t created equal. This industry had a cost problem at $100 a barrel, let alone $50 a barrel. Announcing their first-quarter results, the majors pointed to evidence that development costs on ambitious new projects were falling already. BP , BP -0.72 % for example, said it was seeing savings of between 20% and 30% in certain areas and the industry as a whole is trimming overheads, shedding jobs and squeezing contractors. There is a lot […]

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How the plunging price of oil has set off a new global contest

HOUSTON — He’d spent years touting his vision that America would one day dominate one of the world’s most powerful markets. And when Harold Hamm, a pioneer in discovering vast reserves of shale oil under American soil, took the stage in front of several hundred oil luminaries, he never acknowledged that the narrative was in doubt. “For the next 50 years, we can expect to reap the benefits of the shale revolution,” Hamm said one day this spring. “It’s the biggest thing that ever happened to America.” But away from the stage, the U.S. oil industry — and Hamm — was in crisis. In the previous six months, Hamm, founder of oil giant Continental Resources, had lost $6.5 billion, more than one-third of his net worth. The industry that Hamm had helped create was facing its greatest test in a frantic race to stay profitable as rival Saudi Arabia […]

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Cheap Oil Is Bad for the Economy (at Least, So Far)

It’s been about a year since oil prices started their historic drop, falling from above $100 a barrel to a bottom of about $45 in March. After creeping back to around $60, prices are shaky again amid news of a nuclear deal with Iran and record Saudi production. And low oil prices are good for growth, right? Cheap oil means cheap gasoline, and the assumption throughout the oil price rout has been that for the U.S. economy, built on consumer spending, cheap gas is all good. In theory, yes. In practice, it’s been tough to find the benefits in the economic data this year. Goldman Sachs estimates that a decline in energy-related investment such as new drilling equipment, caused by low oil prices, subtracted about half a percentage point from economic growth during the first half. That’s a pretty hefty bite out of a growth number that probably won’t […]

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Size Matters as Big Oil Takes Pass on Mexican Oilfield Auction

Exxon Mobil Corp., Chevron Corp. and the French oil giant Total SA opted out of Mexico’s historic oil auction because the fields are too small. None of the 14 shallow-water prospects in the Gulf of Mexico holds more than 384 million barrels of crude, according to Mexico’s National Hydrocarbons Commission. That’s far short of the billion-barrel finds prized by major international oil producers, said Fadel Gheit, a New York-based senior analyst at Oppenheimer & Co. “Shallow water is the minor leagues and these companies want to play in the major leagues,” Gheit said on Wednesday. “Deepwater is where the major leagues are. The shallow waters have already been picked dry.” The U.S. and European explorers that abstained from the first round of bidding Wednesday also probably balked at some of the financial and contractual terms insisted upon by the Mexican government, Gheit said. Any terms that would have crimped […]

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Russia Quickly Maneuvers to Capitalize on Iran Nuclear Deal

Photo Sergey V. Lavrov, center, the Russian foreign minister, with Frank-Walter Steinmeier, the German foreign minister, left, and Secretary of State John Kerry before a session Tuesday in Vienna. Credit Pool photo by Joe Klamar MOSCOW — Sergey V. Lavrov, the Russian foreign minister, lost no time in talking about the accord on Iran ’s nuclear program . He was on television minutes after the deal was clinched, and even before the formal news conference had begun, announcing the landmark agreement to the audience back home and emphasizing the many potential benefits, strategic and economic, that it holds for Russia . The deal reopens the door for lucrative contracts to expand Iran’s civilian nuclear energy program, which Russia has been looking forward to for years. And it may neutralize a major reason the United States has offered for developing a missile defense system in Europe, a project that President […]

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Iran’s oil return a game changer for OPEC, but not for now

A gas flame is seen in the desert near the Khurais oilfield, about 160 km (99 miles) from Riyadh, June 23, 2008. OPEC is likely to keep oil output steady and defend its market share this year after Tehran’s nuclear deal with major powers, since a full return of Iranian crude to the market will not be swift, Gulf OPEC delegates said. But 2016 will be a tough year for the producer group when international sanctions on Iran are expected to ease, allowing it to boost oil production and exports. Tehran’s determination to reclaim its position as OPEC’s second largest producer after it clinched the deal on Tuesday will cause new rivalries within the group. But Saudi Arabia and its Gulf OPEC allies are betting that higher demand next year may help the market absorb extra volume. They doubt that Iran’s return would pose a serious challenge to their […]

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Iran needs time and favorable conditions to boost oil output: Kemp

Iran has big ambitions to increase oil and gas production once sanctions are lifted but a substantial increase in exports is probably years away. The country has the world’s fourth-largest proved reserves of crude oil (behind Venezuela, Saudi Arabia and Canada) and the largest proved reserves of natural gas (ahead of Qatar and Russia), according to BP. It is the oldest major oil producer in the Middle East and output peaked at more than 6 million barrels per day (bpd) in 1974 ( link.reuters.com/ryq25w ). But decades of revolution, war and sanctions have cut production of crude and condensates to just 3.6 million bpd in 2014 ("BP Statistical Review of World Energy" 2015). In contrast, Saudi Arabia, Iran’s main rival, has raised liquids output from 8.6 million bpd in 1974 to 11.5 million bpd in 2014. RECOVERY HOPES Sanctions imposed by the United States and the European Union amid […]

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Warming Ties With Iran? For EU, It’s Complicated

A final Iranian nuclear deal signed on Tuesday will likely spark a flurry of diplomacy as Europe and Iran seek to repair their dilapidated relations—but true political engagement could prove more elusive. Wariness of Tehran’s ambitions, differences among European Union governments, and the limits of European leverage in a turbulent and fractious Middle East are likely to limit cooperation over issues such as Syria, Yemen or Iraq. First, though, the accord has set off plans for a procession of high-ranking visitors to Tehran. French Foreign Minister Laurent Fabius said Wednesday he will go soon. British Foreign Secretary Philip Hammond on Wednesday said he hopes the U.K. and Iran can fully reopen their respective embassies by year-end. Ties plunged after the 2011 storming of the British embassy in Tehran. European Union foreign policy chief Federica Mogherini, who presided over the nuclear negotiations, also wants to open the first EU mission […]

Posted On : Published By : Tom Whipple