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Oil prices fall on profit taking, rate hike uncertainty

An attendant cleans the window of a car near a sign displaying the petrol station’s current fuel prices in yen in Tokyo August 24, 2015. Oil prices fell in Asia on Monday as traders took profits, snapping gains last week that saw the biggest two-day rally in six years. Brent crude futures for October delivery slipped nearly $1, or 2 percent, putting the benchmark on track for its fourth straight monthly decline, having risen in only two of the past 14 months. "There is definitely a lot of profit taking going on," said Daniel Ang, an analyst at Singapore’s Phillip Futures. "There is some readjustment in the positions taken by traders," he said. The fall came after Brent climbed 10 percent last week, while U.S. crude finished the week up 12 percent. Brent fell 98 cents to $49.07 per barrel as 0329 GMT after rising $2.49, or 5 percent, […]

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Oil Set for Third Monthly Drop as U.S. Rig Count Gains Amid Glut

Oil headed for a third monthly decline as U.S. drillers showed no signs of letting up even as a supply glut persists. Futures fell as much as 2 percent in New York after the biggest two-day rally since 2009. The number of active rigs seeking oil in the U.S. increased for a sixth week to 675, the most since the start of May, according to Baker Hughes Inc. A measure of oil-price fluctuations rose Friday to a five-month high. Oil is holding losses after a slide this month below $40 a barrel, the lowest since February 2009, on concern slowing demand in the U.S. and China will leave the global market oversupplied. While crude has swung higher amid a rebound in commodities and equities, prices are still down more than 25 percent from this year’s peak in June. “The retracement is the market coming back to the reality that […]

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Eni Discovers Massive Gas Field in the Mediterranean

Eni SpA discovered a “super giant” natural gas field offshore Egypt in what the Italian oil company said is the largest find in the Mediterranean Sea. The deep-water deposit in the Zohr Prospect in the Shorouk block may hold 30 trillion cubic feet of gas, equivalent to 5.5 billion barrels of oil, Eni said in an e-mailed statement Sunday. Eni, which wholly owns the license for Shorouk, said the discovery validates its strategy of exploring mature areas. Egypt’s petroleum ministry confirmed the discovery in a separate statement. “Egypt has still great potential,” Claudio Descalzi, the company’s chief executive officer, said in the statement. “This historic discovery” will transform the energy industry in Egypt, he said. International oil and gas companies are seeking new deposits as existing fields become depleted. Egypt’s energy demand is rising as the Arab world’s largest population grows, making the country more reliant on imports provided […]

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Indian Oil Said to Plan $3 Billion Petrochemicals Unit in Iran

Indian Oil Corp. is seeking to build a $3 billion petrochemicals plant in Iran, according to people with direct knowledge of the matter. The plan hinges on assurances from Iran that the 1 million-ton-a-year project will have access to cheap natural gas as feedstock, said the people, who asked not to be identified because the information isn’t public. A company spokesman didn’t respond to requests for comment by phone, text message and e-mail. Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totaling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Persian Gulf nation may be nearing an end. Economic and financial restrictions on Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, left it in need of […]

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Warning Signs in U.S. Presaged China’s Stock-Market Plunge

Long before investors lost faith in the Chinese stock market, something seemed amiss at the ports of Long Beach and Los Angeles, where the stevedores and longshoremen process about 40% of U.S. trade with China. Jock O’Connell, a trade adviser in California with 28 years’ experience studying the docks, wasn’t seeing the patterns he would expect from a rapidly growing Chinese consumer class. The number of containers coming from China was continuing to grow, but beginning in 2013, fewer were being sent in the other direction. Global stock markets had a rude awakening last week when investors suddenly woke up to a faltering Chinese stock market and unmistakable signs that the world’s second-largest economy was slowing. Close observers of U.S.-China trade patterns, however, had for several years seen the telltale signs many in the markets missed. “A couple of years ago, everybody was still agog about the growing, burgeoning […]

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China’s Next Problem: Paying for Its Stock-Market Bailout

China’s epic stock-market drops over the past week give the impression that Beijing may have given up on trying to prop up the market or is at least retreating to defend a lower level. The question is, what will the government do with all that stock that it already has bought? Unlike the U.S. bailouts of 2008 and 2009, China is in the unenviable position of having bought near the market’s top, not at the bottom. Getting a TARP-like profit from its investments seems unlikely with the market so far below where much of the buying took place. If the gang of bailout entities known as the “national team” —banks, brokers, pension funds and government agencies—is stepping aside, it seems likely their holdings will drop even further in value. The Shanghai Composite Index traded in a 2000-to-2400 range during the three years before the bubble formed. Falling to that […]

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China Places Cap on Local Government Debt

BEIJING—Chinese lawmakers have placed a 16-trillion-yuan ($2.5 trillion) cap on local government debt as Beijing looks for ways to address one of the major impediments to the world’s second-largest economy. The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said. The moves are the result of a new law requiring the government to limit local debt, it said. The caps don’t include indirect liabilities, which officials said totaled 8.6 trillion yuan, according to Xinhua. The latest government estimate put China’s local debt load at 17.9 trillion yuan as of the middle of 2013, up from negligible levels just six years before, […]

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Crises Put First Dents in Xi Jinping’s Power

BEIJING—Shortly before President Xi Jinping boarded a plane last month to attend a summit in Russia, his office issued an executive order: China’s stock markets must go back up. The massive state-backed share-buying that ensued propped up the markets briefly in mid-July, allowing Mr. Xi to showcase China’s economic might at the summit with emerging-market leaders. In recent weeks, though, share prices have plunged again, taking global markets with them and triggering an international crisis of confidence in Mr. Xi’s stewardship of the world’s second-largest economy. Mr. Xi will project an image of strength when he presides over a World War II Victory Day parade on Thursday featuring fighter jets, ballistic missiles and 12,000 troops—an event China hasn’t marked in such a high-profile way before. Three weeks later, he heads to Washington for a state visit meant to convey China’s parity with the U.S. Yet just as he stages […]

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China turmoil divides Fed over inflation

Sign up for quick access to a wealth of global business news, including: China turmoil divides Fed over inflation Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For 4 weeks […]

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Behind Deadly Tianjin Blast, Shortcuts and Lax Rules

Continue reading the main story Slide Show Slide Show|7 Photos Tianjin Explosion Reveals Company That Exploited Weak Governance Tianjin Explosion Reveals Company That Exploited Weak Governance CreditChina Stringer Network/Reuters TIANJIN, China — One partner was the son of a local police chief, the other an executive at a state-run chemicals firm. After meeting at a dinner party, they started a company here to handle the export of the most dangerous chemicals made in China , promising “outstanding service” and “good results.” Within two years, Rui Hai International Logistics had built a reputation as the go-to place for businesses looking to ship hazardous materials to customers abroad, a niche market that had been dominated by sluggish state enterprises. Rui Hai offered lower prices, a no-hassle approach to paperwork and quick government approvals. Business was brisk. It seemed like another success story for the Binhai New Area, a thriving economic development […]

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China in crackdown on spreading online ‘rumours’

A financial journalist ‘confessed’ to causing ‘panic and disorder’ on China’s stock market, state media reported [AP] China has punished 197 people in a special campaign by police targeting online rumours about China’s stock market, the recent fatal explosions in Tianjin and "other key events", state media reported. No details of the punishments were given, but according to the report, the crimes punished included claiming a man had jumped to his death in Beijing due to the stock market slump and falsifying the number of people who had died in the Tianjin blasts. Another alleged crime involved circulating "seditious" rumours about China’s upcoming commemorations of the 70th anniversary of the end of World War II. A financial journalist "confessed" to causing "panic and disorder" on China’s stock market and inflicting "huge losses on the country", state media reported on Sunday. Wang Xiaolu, a journalist with Caijing magazine, was detained […]

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Challenged on Left and Right, the Fed Faces a Decision on Rates

Photo Janet L. Yellen, the Federal Reserve chairwoman. Credit Stephen Crowley/The New York Times JACKSON HOLE, Wyo. — Conservative activists who want the Federal Reserve to raise interest rates distributed chocolate coins in golden wrappers at the local airport last week as Fed officials arrived for their annual policy retreat. Liberal activists in green “Whose Recovery?” T-shirts formed a receiving line at the resort hotel in the heart of Grand Teton National Park where the meeting was held, to personalize their argument that the Fed should wait. Sometime soon — possibly as early as mid-September and probably no later than the end of the year — the Fed plans to raise its benchmark interest rate one-quarter of one percentage point, a mathematically minor move that has become a very big deal. Investors, who always pay attention to the Fed, are paying particular attention now. The central bank has held […]

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Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

A dump truck is loaded with oil sands at the Syncrude Canada Ltd. mine. CALGARY, Alberta— Canadian Oil Sands Ltd. COSWF 2.60 % , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta. The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said. While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.” Canadian Oil Sands […]

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US Oil Production Nears Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015. US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008. Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also? US Recent US Production was down 96,000 barrels per day in July to 9,503,000 bpd. That is 190,000 bpd below the March level of 9,693,000 bpd. US Crude Oil Production Here is what the last 50 years of US production looks like. The peak was in […]

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Why $40 oil is killing Iraq, Venezuela and others, but not Russia

Tags: Iraq | oil | Russia | Scotland | vladimir putin Russian President Vladimir Putin meets with journalists after submerging into the waters of the Black Sea inside a research bathyscaphe in Sevastopol, Crimea, August 18, 2015. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin It’s not the economy, stupid. At least it isn’t where hearts are warmed by the fiercer flame of nationalism, rather than rising living standards. Oil prices as low as $40 a barrel are separating the oil haves from the oil have-nots. The oil producers happily rode a wave of high oil prices for years, buying popularity with increased state spending while excusing themselves from the hard pounding of legitimate economic reform. The oil-buyers — like India and Egypt — now enjoy prices as low as a third of those they paid as recently as two years ago and can cut fuel subsidies, saving spending or redirecting it to broader […]

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U.S. Is Seen as Laggard as Russia Asserts Itself in Warming Arctic

Continue reading the main story Slide Show Slide Show|9 Photos A New Race for the Arctic A New Race for the Arctic CreditRuth Fremson/The New York Times ABOARD COAST GUARD CUTTER ALEX HALEY, in the Chukchi Sea — With warming seas creating new opportunities at the top of the world, nations are scrambling over the Arctic — its territorial waters, transit routes and especially its natural resources — in a rivalry some already call a new Cold War. When President Obama travels to Alaska on Monday, becoming the first president to venture above the Arctic Circle while in office, he hopes to focus attention on the effects of climate change on the Arctic. Some lawmakers in Congress, analysts, and even some government officials say the United States is lagging behind other nations, chief among them Russia , in preparing for the new environmental, economic and geopolitical realities facing the […]

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Ruble Rebound Beating World Has Bondholders Waiting to Sell

The biggest recovery in emerging-market bonds and currencies has Russian investors poised to sell, even with oil prices bouncing back. The ruble’s 5.7 percent rally last week was surpassed only by Ukraine’s hryvnia while top gains for Russia’s bonds pared this month’s declines as five-year yields tumbled 51 basis points in three days to 11.88 percent. “Pressure on the markets is only rising,” Andres Vallejo, who helps manage the equivalent of $2.6 billion at Kapital Asset Management in Moscow, said by phone on Friday. He’s getting ready to short-sell local bonds known as OFZs if yields fall to 11.25 percent. The investor skepticism underscores doubts the central bank has much more scope to reduce interest rates after 6 percentage points of cuts since January aimed at rescuing Russia from its worst recession since 2009. “It’s unlikely that yields will fall below 11 percent,” Igor Kozak, the head of fixed-income […]

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Maersk Gets Approval for $4.5 Billion U.K. North Sea Gas Field

A.P. Moeller-Maersk A/S won U.K. approval for a $4.5 billion development plan for the Culzean natural gas field as the Danish company tries to ramp up output at its energy division. The field, located in the central part of the British area of the North Sea, is expected to produce enough natural gas to meet 5 percent of the U.K.’s total demand in 2020 or 2021, Maersk said in a statement on Monday. Maersk Oil will be the operator of the field with a 49.99 percent stake, while JX Nippon Oil & Energy Corp. has 34.01 percent and BP Plc 16 percent. Nils Smedegaard Andersen, chief executive officer of the Maersk group, said earlier this month the company is actively searching for North Sea oil acquisitions as the drop in energy prices makes takeovers attractive. The company wants to return focus to its North Sea waters, where it first […]

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Oil Prices Rise Again as Traders Close Out Bets

NEW YORK—Oil prices soared Friday for the second day in a row, notching the biggest two-day percentage gain since 2009 as traders who had bet on lower prices scrambled to close out those wagers. Oil prices had surged Thursday on positive U.S. economic data, news that some Nigerian exports would be halted and a report that Venezuela wanted an emergency meeting of the Organization of the Petroleum Exporting Countries to respond to low prices. The market momentum continued Friday in the anticipation that monthly U.S. government data due for release Monday would show a continued decline in domestic crude production. Analysts attributed most of the rally Friday to traders closing out bets made after the U.S. benchmark had slumped below $40 a barrel earlier this week for the first time since 2009. On Friday, light, sweet crude for October delivery settled up $2.66, or 6.2%, to $45.22 a barrel […]

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Oil markets catch breath after biggest gains in six years

A fuel pump is seen in a car at a gas station in Toronto April 22, 2014. Crude oil futures were largely steady on Friday after posting their biggest one-day rally in over six years the day before led by recovering equity markets and news of diminished crude supplies. Stock markets around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong U.S. economic data boosted investor sentiment, and the dollar advanced for a third consecutive session. Front-month October Brent crude LCOc1 had dipped 20 cents to $47.36 per barrel as of 0046 GMT. It settled $4.42 higher at $47.56 per barrel in the previous session. U.S. crude CLc1 edged down 3 cents to $42.53 per barrel, after ending up $3.96, or 10.3 percent, at $42.56 per barrel, its biggest one-day percentage gain since March 2009. "A short covering rally, led by crude […]

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Efficiency mandates to cap recovery in oil demand

A drop of diesel is seen at the tip of a nozzle after a fuel station customer fills her car’s tank in Sint Pieters Leeuw December 5, 2014. Lower prices should help stimulate oil consumption in advanced economies, restoring some of the demand lost over the last decade, as the cost of crude soared from less than $50 to more than $100 per barrel. In the late 1980s and through the 1990s, strong growth in demand played a crucial role in rebalancing the market after the slump caused by the two oil shocks in the 1970s. Investments in energy efficiency and policies to encourage conservation ebbed as memories of the oil shocks receded and a long period of relatively low prices encouraged complacency. But it could prove much harder to stimulate increased oil consumption this time around because policies to encourage further reductions in fuel demand for years ahead […]

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Iran Deal Opens a Vitriolic Divide Among American Jews

Photo Representative Jerrold Nadler, Democrat of New York, in 2014. Mr. Nadler has announced his support for the nuclear accord with Iran. Credit Andrew Burton/Getty Images WASHINGTON — The attacks on Representative Jerrold Nadler, Democrat of New York, since he announced his support for the nuclear accord with Iran have been so vicious that the National Jewish Democratic Council and the Anti-Defamation League both felt compelled this week to publicly condemn Jewish voices of hate. On the other side, three Jewish Democrats in the House who oppose the deal released a joint statement denouncing “ad hominem attacks and threats” against not only supporters like Mr. Nadler but also Jewish opponents, who have been accused of “dual loyalties” and treason. This August recess has not produced the kind of fiery town hall-style meetings that greeted lawmakers in 2009 before their vote on the Affordable Care Act, but in one small […]

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Exclusive: Arab OPEC producers brace for oil-price weakness for rest of 2015

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. A second oil price rout of 2015 has forced Arab OPEC members to cut their price expectations for this year, showing they are prepared to tolerate cheaper crude for longer to defend market share and curb rivals’ output. OPEC delegates, including those from core Gulf OPEC countries, see economic troubles in top energy consumer China as short term and unlikely to have much impact on demand for crude which will rise seasonally in the fourth quarter. But they also believe it will take more than just a few months for weak oil prices, which fell to a more than six-year low near $42 on Monday, to reduce supplies from higher-cost producers such as U.S. shale and stimulate demand. They expect the recent price drop will help reduce […]

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Iran: Low oil prices no production deterrent

Iran must ignore low price of crude oil when considering potential market share, oil minister says. File Photo by UPI Photo/Mohammad Kheirkhah TEHRAN, Aug. 28 (UPI) — Iran must ignore the lower price of crude oil and work to increase the rate of production to ensure its share of the market, the country’s oil minister said. Iran, since reaching a multilateral nuclear agreement that could bring sanctions relief, has hosted representatives from companies like Italy’s ENI and Royal Dutch Shell. Iran’s crude oil production in July was around 3.1 million barrels per day, an increase of six tenths of a percent from the previous month and about 13 percent less than the peak rate in the pre-sanctions era. Iranian Oil Minister Bijan Zangeneh said his country could become the second largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, within seven or eight months of sanctions […]

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China’s industrial wane follows PetroChina

China reports drop in industrial sector profits after PetroChina, the country’s largest oil and gas producer, reports a steep decline in profits. File Photo by UPI/Stephen Shaver BEIJING, Aug. 28 (UPI) — China reported poor performance from major industrial firms as its major oil company, PetroChina, posts a 63 percent drop in its first half profit. The National Bureau of Statistics reported Friday profits from major industrial firms were off 2.9 percent year-on-year in July, down from the year-on-year decline of 0.3 percent reported for June. China’s economy is slowing from double-digit growth, but still expected to grow at around 6 percent of gross domestic product. Nevertheless, a series of steep declines in the Shanghai Composite Index forced the government to infuse cash into the market, cut the value of the national currency and lower key interest rates in an effort to maintain positive momentum . Industrial profit declines […]

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Texas oil production increased in June

Texas energy regulator reports a net increase in June oil production year-on-year. File Photo by UPI/Shutterstock/Lilac Mountain. AUSTIN, Texas, Aug. 28 (UPI) — A Texas energy regulator said total crude oil production for June, the last full month for complete data, was up around 12 percent year-on-year. The Railroad Commission of Texas said crude oil production in June averaged about 2.43 million barrels per day, up from the 2.15 million bpd reported in June 2014. June data show the third straight month for gains for the No. 1 oil producer in the nation. April crude oil production of 2.31 million bpd was a 13 percent increase year-on-year. Decreases were posted, however, in early 2015. The railroad commission, the state’s energy regulator, said the average Texas rig count as of Aug. 21 was 383, which represented about 45 percent of all U.S. onshore rig activity. A report from Fitch Ratings […]

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China Extends Two-Day Gains, but Weekly Losses Mount

Chinese stocks surged for two straight trading days amid suspected government buying, but plunges Monday and Tuesday left the market down nearly 8% for the week. China’s domestic market became the epicenter of a global selloff, with a five-session crash starting last Thursday triggering steep losses in U.S. and European stocks. Rumors of Beijing’s hand in the market reversed the selling by Thursday, which helped support global shares prices, commodities, and currencies of emerging markets that had been battered. The Shanghai Composite Index fell for second-straight week and posted a third month of declines, falling 11.8% in August. Hong Kong’s Hang Seng Index lost 12.3% this month, its worst monthly performance since September 2011. To quiet worries about its slowing growth, Beijing took several easing measures this week to get its economy back in gear, including an interest-rate cut and liquidity injections. The move follows a decision earlier this […]

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U.S. Oil-Rig Count Rises for Sixth Consecutive Week

The number of U.S. oil-drilling rigs, which is a proxy for activity in the oil industry, has fallen sharply since oil prices headed south last year. The rig count dropped for 29 straight weeks before climbing modestly in recent weeks. Oil prices were up 6.9% to $45.49 following the report, as a surprise one-day rally extended to a second day. Oil prices surged Thursday as traders who had bet on lower prices closed out those positions following positive U.S. economic data, news that some Nigerian exports would be halted and a report that Venezuela wanted an emergency meeting of the Organization of the Petroleum Exporting Countries to respond to low prices. The rally comes after concerns about China’s economy, coupled with persistently high oil output from the U.S. and OPEC, the 12-nation oil cartel, has soured investor sentiment recently. Despite recent increases, there are still about 58% fewer rigs […]

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US rig count down 8 units, ‘ugly’ next 12 months expected

After several weeks in which the overall US drilling rig count steadily climbed, the week ended Aug. 28 marked its largest loss since early June, dropping 8 units to 877 rigs working, according to data from Baker Hughes Inc. The decline reflected a 9-unit drop in gas-directed rigs. The oil-directed count, however, increased for the sixth straight week, edging up a unit ( OGJ Online, Aug. 21, 2015 ). The overall count is now down 1,037 units year-over-year. In its energy update this week, Raymond James & Associates Inc. noted that it has revised downward its 2015-16 forecast for crude oil prices and US exploration and production cash flows, reflected by what the financial services firm believes will be a “much slower” US drilling recovery than it previously anticipated. RJA earlier in the year optimistically forecast the rig count would bottom out in June at 930 units, which ended […]

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Creditors Squeeze the Last Drop Out of Oil-and-Gas Companies

Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days. A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt. Halcon Resources Corp. highlighted the trend late Thursday, exchanging $1.57 billion in unsecured bonds for $1.02 billion in new “third-lien” debt , backed by a claim on the company’s assets that sits behind those of its credit line and $700 million in bonds the company sold in May. Halcon followed Midstates Petroleum Co., a Tusla oil-and-gas company that in May issued $504 million in bonds with […]

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Reduced offshore share in U.S. oil and natural gas production lowers risk from hurricanes

graph of monthly U.S. crude oil and natural gas production, as explained in the article text Offshore energy production in the Gulf of Mexico has experienced relatively minor disruptions because of tropical storms and hurricanes in recent years, and the National Oceanic and Atmospheric Administration (NOAA) has predicted a below-normal 2015 hurricane season in its updated Atlantic Hurricane Season Outlook , released on August 6. Hurricane-related risk to total U.S. crude oil and natural gas production has decreased over recent years as the share of total U.S. production originating in the Gulf of Mexico has declined sharply. In 2003, 27% of the nation’s crude oil was produced in the Gulf of Mexico; by 2014, that share had declined to 16%. The Gulf of Mexico’s share of natural gas production has also declined from a high of 26% in 1997 to 5% in 2014. This decline in the Gulf of […]

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More Oilfield Services M&A Likely On The Way

Whether finally seduced by the relief a merger can usher in or surrendering to the security of making a joint venture permanent, the more distressed companies in the oil patch are de-stressing themselves by succumbing to the safety that mergers and acquisitions (M&A) offer. As companies have readjusted to a world where $60 oil can quickly become $40 oil, businesses – particularly the hard-hit, physically challenging services sector – have been watching their dollars dwindle from each bottom line. The biggest companies have seemed safe enough, but there’s been plenty of angst to go around. And so it was startling, but not shocking, in November when Halliburton bought Baker Hughes Inc. in a largely stock-for-stock deal worth $34.6 billion. Somewhat similarly, in recent days, oilfield services giant Schlumberger Ltd. revealed its plan – in a joint press release with joint venture partner Cameron International Corp. – to take over […]

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Weaker Ruble Helps Lukoil Spend Less to Boost Oil Output

Lukoil PJSC was able to boost output in the first half of the year while reducing spending as a weaker ruble cut costs. Russia’s second-largest oil producer cut capital expenditure by 31 percent to $5.32 billion “mostly due to ruble devaluation,” according to a regulatory filing Friday. Oil and gas production rose 4.8 percent from a year earlier to an average of 2.37 million barrels equivalent a day. Brent crude prices have fallen by more than half in the past year, hitting revenue at Russian oil producers. That was partly offset by lower taxes and a weaker currency, which cut costs for companies that earn dollars and pay most of their expenses in rubles. The Russian exchange rate averaged about 53 to the dollar in the second quarter compared with 35 a year earlier. In addition to the currency effect, Lukoil “also reduced drilling,” Alexander Kornilov, an oil analyst […]

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European Refiners’ Profit Revival Faces End

A view of French oil giant Total’s refinery in Donges, western France. LONDON—For Europe’s biggest energy companies, the oil-price rout has had one silver lining: Their little-loved refineries returned to churning out big profits. Now, that bright spot could be fading, even as oil prices slump. Analysts and executives are flagging the prospect of lower refining profits as summer gasoline consumption eases, lowering demand. The International Energy Agency, a Paris-based watchdog for the world’s biggest consuming countries, said earlier this month that “fissures are appearing” in the strong refining environment that has prevailed this year. Analysts don’t expect refining profits to crash in the same way oil prices have, at least in the near term. Major oil companies’ downstream businesses—including refining and the sale of petroleum products—will likely continue to perform better than they have for several years as weak prices for their key input and rising consumption bolster […]

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Oil Prices Extend Gains as Markets Rebound

By Eric Yep Crude-oil futures extended gains in Asian trade Friday after financial markets received a shot in the arm from U.S. growth numbers that helped prices rally overnight. Oil prices had surged over 10% in the previous session, the largest one day percentage gain since March 2009 for Nymex crude and December 2008 for Brent crude. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $42.94 a barrel at 0307 GMT, up $0.38 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange rose $0.17 to $47.73 a barrel. "In terms of percentage, 10% is indeed a spectacular increase for both WTI and Brent. However, in dollar terms, this increase amounted to only $4," analyst Daniel Ang at Phillip Futures said. He said most of the price rally came from short-covering and bargain-hunting as oil market bears are […]

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Oil markets catch breath after biggest gains in six years

A fuel pump is seen in a car at a gas station in Toronto April 22, 2014. Crude oil futures were largely steady on Friday after posting their biggest one-day rally in over six years the day before led by recovering equity markets and news of diminished crude supplies. Stock markets around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong U.S. economic data boosted investor sentiment, and the dollar advanced for a third consecutive session. Front-month October Brent crude LCOc1 had dipped 20 cents to $47.36 per barrel as of 0046 GMT. It settled $4.42 higher at $47.56 per barrel in the previous session. U.S. crude CLc1 edged down 3 cents to $42.53 per barrel, after ending up $3.96, or 10.3 percent, at $42.56 per barrel, its biggest one-day percentage gain since March 2009. "A short covering rally, led by crude […]

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For OPEC, This Year’s Painful Oil Slump Will Bring Gains in 2016

While OPEC’s fight to snatch market share from rival oil producers might look like a costly failure as prices languish below $50 a barrel, an entirely different picture could emerge next year. Supplies outside OPEC are expected to contract in 2016 for the first time since 2008, sliding by 200,000 barrels a day, according to the International Energy Agency. With consumption set to grow by 1.4 million barrels a day, OPEC and its de facto leader Saudi Arabia could seize the chance to broaden their market as competitors damaged by the price slump fall off. “To declare their policy a failure is a pretty big leap,” said Greg Sharenow, who manages $15 billion as executive vice president of Pacific Investment Management Co. “I don’t think you could view Saudi and OPEC’s business plan and model as being a six- or 12-month view. In the long-run, what you’re going to […]

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Oil Exploration Companies Scramble to Cut Costs

Genel Chief Executive Tony Hayward speaks at a conference in May. LONDON—When oil prices started falling last summer, Genel Energy GENL 13.53 % PLC, a small exploration company listed here, asked the government of Ethiopia to extend its exploration license, so it could put off drilling and save some cash. Across the industry, international wildcatters like Genel are renegotiating drilling commitments, selling off stakes in licenses and canceling plans to drill exploration wells—whatever it takes to pare back budgets that once hinged on expensive drilling programs. “When capital becomes very scarce, you end up having sensible discussions with governments about how to re-phase activity to reflect the realities of the day,” says Tony Hayward , former chief executive of BP BP 6.21 % PLC and now chairman of Genel. The move by these exploration companies reflects a much broader scramble by the industry—from the world’s biggest integrated oil companies […]

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Kurds pledge oil company payments to boost output

Kurdish government moves forward with pledge to make regular payments to oil companies working in the region and struggling through the weak crude oil market. Photo courtesy of Gulf Keystone Petroleum. ERBIL, Iraq, Aug. 27 (UPI) — A move to issue regular payments to oil companies operating in the Kurdish north of Iraq should help them endure the market downturn, the government said. The Ministry of Natural Resources of the semiautonomous Kurdish government said it would issue the first batch of regular payments to oil companies by the middle of next month. The decision came after a Kurdish oil council approved the allocation of between $75 million and $100 million of the revenue generated from direct oil sales. The Kurdish government said it recognized that international oil companies are struggling to maintain normal operations because of the lack of payments during a depressed oil economy. "Regular payments will allow […]

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Kenya Starts Talks With Uganda on Financing for Oil Pipeline

Kenya started talks with neighboring Uganda on the financing and construction of an oil pipeline that will link the two countries and ferry crude produced by companies including Tullow Oil Plc, the Kenyan Energy Ministry said. Discussions that also looked at project time frames and involved officials from both East African countries began this week, Joseph Njoroge, the ministry’s principal secretary, said in a phone interview from Nairobi, Kenya’s capital, on Wednesday. The negotiations follow an announcement by Kenyan President Uhuru Kenyatta on Aug. 10 that the route for the conduit had been agreed after months of debate. “We have started working out the details together with the Ugandans,” Njoroge said. “We will also engage as many stakeholders as we can. We want this project to take off immediately.” Tullow has found oil in both countries, with Uganda estimating finds at 6.5 billion barrels and Kenya at 600 million […]

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Venezuela Asks OPEC for Emergency Meeting on Oil Prices

Hard-hit Venezuela has been contacting other OPEC members to push for an emergency meeting in coordination with Russia to come up with a strategy to stop the current oil price rout, people familiar with the matter said. According to these people, Venezuela has been in touch with some members of the Organization of the Petroleum Exporting Countries, including Qatar’s oil minister and president of the OPEC conference, Mohammed al-Sada, to try again to find common ground to defend crude prices. “Venezuela is genuinely concerned that if no action is taken prices are going to drop further,” an OPEC delegate said. “They also understand that OPEC alone cannot help much and there is a need for cooperation with producers outside OPEC, mainly Russia,” the delegate said. A representative of Venezuela couldn’t be immediately reached for comment. Russia has previously sought closer ties to OPEC, but has signaled that it won’t […]

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How Brazil’s China-Driven Commodities Boom Went Bust

SÃO PAULO—Not long ago, Brazil stood as the leading example of how a developing nation could rise toward global prominence on the force of a China-driven commodity boom. As its economy surged, Brazil stormed the world stage—hosting a World Cup, demanding more say at the United Nations and blocking a U.S. free-trade plan for the Americas. Now Brazil is looking like a symbol of something else: resource-rich nations’ habit of ending their booms with spectacular busts. Brazil’s stock market is down 22% in the past year. Its currency has lost a third of its value against the dollar. And on Friday, Brazil is expected to report that in the second quarter, its economy shrank at a pace of about 1.7%. Economists are voicing fears of prolonged stagnation. China has caused turmoil in many places, but none more so than in this prime supplier of commodities to a country whose […]

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China’s Oil Giants Don’t Fit Into Cheap-Oil World

Sinopec may be the worst off of China’s three big oil companies. China’s three state energy giants won’t dare blame their own country. But thanks to China’s slowing demand pulling down the oil price, the pain those companies feel is about to get worse. The suffering wasn’t necessarily on display Thursday, when oil prices rebounded as global fears ebbed. Shares of Cnooc , CEO 15.95 % the Chinese offshore oil producer, soared 14%, the largest one-day increase in the last decade, partly also because it reported a dividend worth 63% of net profit during the first half of the year, higher than the usual 30% to 40% ratio. Yet a high payout isn’t sustainable when Brent crude has fallen 16% in the past month despite Thursday’s rally, and is now worth about $45 a barrel. Cnooc requires Brent at $46 just to break even in the second half of […]

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China Oil Giants Eschew Global Jobs Purge as Belts Tighten

China’s biggest oil companies say they’ll cut costs, but not employees. As the collapse in crude prices curbs profits and prompts a wave of layoffs in the energy industry from Schlumberger Ltd. to Royal Dutch Shell Plc, Chinese state energy giants say their employees are safe. The oil and gas industry has cut more than 176,000 jobs globally this year and more reductions are likely, according to Swift Worldwide Resources. While eschewing those layoffs may avoid a repeat of protests early last decade when China Petroleum & Chemical Corp. and PetroChina Co. fired tens of thousands of workers, it’s going to make further cost savings a challenge, said Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc. “It’s not easy to just remove thousands of people from their post,” Tian Miao, an analyst at North Square Blue Oak Ltd., a researcher, said by phone from Beijing. “Plus, what […]

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