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Cheap Oil Trumps Yuan Drop in China’s Thirst for Hoarding Crude

Oil’s slump makes crude so attractive to China that even the biggest drop in its currency since 1994 probably won’t deter its ambition to hoard supplies. China devalued the yuan for a second time after Tuesday’s record reduction in the daily reference rate, setting up the currency for its biggest two-day loss in 21 years and making imports of dollar-denominated commodities costlier. That won’t significantly slow crude purchases to fill strategic reserves, which have helped the nation overtake the U.S. as the world’s biggest oil importer, according to Energy Aspects Ltd., KBC Advanced Technologies and Nomura Holdings Inc. “While devaluing the yuan will make dollar purchases more expensive, it’s important to place that move in the broader context of the drop in crude,” said Virendra Chauhan, a London-based analyst at Energy Aspects. “If you think about where we were trading last year, you’re talking about a 50 percent reduction […]

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China economic growth falters in July, yuan’s slide adds to worries

Employees work along a production line of a textile factory in Suzhou, Jiangsu province, China, June 13, 2015. Growth in China’s factory output, investment and retail sales were all weaker than expected in July, adding pressure on Beijing to roll out more measures to prevent a deeper slowdown, days after it shocked markets by devaluing its currency. While the central bank insisted on Wednesday it would not let the yuan slide too far, the devaluation came days after data showed a hefty drop in exports and producer prices, which clearly weighed on Chinese manufacturers last month. Nearly all data released for July was weaker than economists had forecast, pointing to further deterioration in the world’s second-largest economy. Data for June had fuelled some hopes that activity was stabilising after policymakers unleashed the biggest burst of stimulus since the global financial crisis. "This kind of data will only accentuate the […]

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China lets yuan fall further, fuels fears of currency war

China’s yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it in a move that sparked fears of a global currency war and accusations that Beijing was unfairly supporting its struggling exporters. Spot yuan in China fell to 6.45 per dollar, its weakest since August 2011, after the central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday’s devaluation. The currency fared worse in international trade, touching 6.59. The central bank, which had described the devaluation as a one-off step to make the yuan CNY=CFXS more responsive to market forces, sought to reassure financial markets on Wednesday that it was not embarking on a steady depreciation. "Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the People’s Bank of China (PBOC) said. Foreign exchange traders later said state-owned […]

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Combined-cycle, gas-fired unit costs coming in below expectations: Duke

Natural gas-fired combined-cycle units, which have emerged as perhaps the most important elements of utility and independent power generation fleets, have been costing less than was initially expected to build, and per-kW costs of less than $1,000/kW of installed capacity have become common. Duke Energy Progress said Tuesday that the final cost of its 625-MW Sutton combined-cycle project near Wilmington, North Carolina, was $551 million, or about $882/kW of installed capacity, about 18% less than the company’s original $671 million estimate, or a per-kW cost of about $1,073. Duke Energy spokeswoman Lisa Parrish said DEP and its sister utilities have built six gas-fired units over the last five years. "All have come in under budget," she said. "As we begin to build two new natural [gas-fired] facilities in the Carolinas, we will take advantage of efficiencies and best practices we’ve learned." Parrish said the project costs include associated transmission […]

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China strengthens hold over oil market as price maker

Employees spray water to cool down oil tanks at a storage facility, which belongs to one of China’s biggest state-owned firms PetroChina oil, in Suijing, Sichuan Province, in this August 13, 2010 file photo. China’s growing ability to buy and sell millions of barrels of crude oil on the Asian physical market in a matter of minutes through its main trading firms has given China so much clout that other traders are often forced to follow its agreed prices. Leading Chinese oil traders have cornered the market on several occasions since October last year. Early this month, Chinaoil, the trading arm of PetroChina ( 0857.HK ), bought 5 million barrels of crude in just 30 minutes through Asia’s main price-finding mechanism organized by Platts, part of McGraw Hill Financial Inc ( MHFI.N ). Market power is shifting towards big consumers, with oil output at record highs and global demand […]

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Shock China devaluation unhinges commodities

A U.S. $100 banknote is placed on top of 100 yuan banknotes in this picture illustration taken in Beijing May 7, 2013. Oil, copper and other commodities tumbled on Tuesday after China devalued the yuan, raising concerns that a persistently weaker currency will choke off demand in the world’s top commodities consumer. China’s central bank made what it called a "one-off depreciation" of nearly 2 percent in the yuan after a run of poor economic data, which sent the currency to a three-year low. The dollar gave up immediate gains made after the devaluation, which ordinarily would boost dollar-denominated assets, but such is the importance of China to commodities demand that investors overlooked any weakness in the U.S currency. "When you have the biggest customer for oil and commodities devaluing, then obviously you find your product coming under pressure and that is really how the day has panned out," […]

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Australia Sets Emissions Goal, but Climate Experts Say It Falls Short

Photo The Great Barrier Reef in Australia. Critics of the country’s new goal for greenhouse gas reduction say that it does not go far enough, and that the reef could be threatened. Credit Australian Institute of Marine Science, via Agence France-Presse — Getty Images SYDNEY, Australia — Prime Minister Tony Abbott on Tuesday announced a greenhouse gas reduction goal for Australia that he said struck “the right balance” between economic concerns and the need to address climate change , but scientists and environmental groups said the plan fell short of what was needed. The goal — reducing carbon emissions at least 26 percent, and possibly 28 percent, from 2005 levels by 2030 — also earned Mr. Abbott a stinging rebuke from the Marshall Islands, the tiny archipelago northeast of Australia that is threatened by rising sea levels. “If the rest of the world followed Australia’s lead, the Great Barrier […]

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Canadian oil sands crude halves in price

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Oil-Patch Slump Spurs Wave of Trucking Deals

The energy bust has touched off a wave of consolidation among the trucking companies that haul equipment around the oil patch, where business is shrinking along with the tumbling price of crude. This week, Daseke Inc. said it would buy Hornady Transportation LLC, its second acquisition in just over a month. After the deal is completed, Daseke’s fleet will total over 3,000 tractors and 6,000 trailers, an increase in the tractor count of about 40% since last fall and a 50% addition in trailers. Addison, Texas-based Daseke says in terms of equipment that it operates, the company is the largest flatbed trucking company in the U.S., although Landstar System Inc. LSTR -1.51 % is larger by revenue under a system that focuses on using independent owner-operator drivers. Flatbed truckers have fallen on hard times after several years of rapid expansion driven by the shale oil boom. With oil prices […]

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EPA Chief Apologizes for Toxic Spill Affecting Rivers in Colorado, New Mexico

WASHINGTON—U. S. Environmental Protection Agency Administrator Gina McCarthy apologized Tuesday for a mine spill in Colorado caused by her agency, but she indicated she didn’t know much about what happened and would seek to fix any flaw in the agency’s procedures. “I am absolutely deeply sorry this ever happened,” Ms. McCarthy said at a news conference in Washington. “But I want to make sure we react positively and in a way that’s credible and we move this forward.” An EPA cleanup crew on Aug. 5 accidentally triggered a breach in an abandoned gold mine in the Southwestern part of Colorado, releasing an estimated three million gallons of toxic, mustard-hued sludge through a river system spanning three states. The sludge, which flowed down the Animas River and emptied into the San Juan River in New Mexico, contains such contaminants as lead and arsenic from the Gold King Mine, north of […]

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Bargain Hunters Stymied as Oil Rout Offers 1 in 6 Odds of Profit

Bargain hunters looking to profit on the latest oil rout might as well roll a six-sided die. Only one in six of the stocks and bonds issued by North American energy producers since the start of the year appreciated in value, according to data compiled by Bloomberg. “People’s expectations were that prices would get better as the year went on,” said Chip Hodge, who oversees a $12 billion portfolio of natural resource bonds at Manulife Asset Management in Boston. “People are now trying to figure out how low it will go and how long it’s going to stay this way.” Oil’s rebound fizzled, with prices sliding from a June peak of $61 a barrel to a six-year low of $43.08 as rising production from the U.S., Saudi Arabia and Iraq exacerbates a worldwide glut. As prices seesawed, oil companies sought to raise cash to shore up their balance sheets. […]

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EIA: US crude output declines to continue through mid-2016

Total US crude oil production declined 100,000 b/d in July compared with June, and is expected to continue decreasing through mid-2016 before growth resumes late in 2016, according to the US Energy Information Administration’s most recent Short-Term Energy Outlook (STEO) . In the outlook, EIA noted that global liquids production continues to exceed demand, resulting in strong inventory builds throughout the forecast period. Global oil inventory builds averaged 2.7 million b/d in second-quarter 2015, up 800,000 b/d from the first quarter. Inventory builds are expected to slow to roughly 1.8 million b/d in the second half of the year, and to 900,000 b/d in 2016. Brent crude oil prices are expected to average $54/bbl in 2015 and $59/bbl in 2016, $6/bbl and $8/bbl lower than in last month’s STEO, respectively. Forecast West Texas Intermediate crude prices in both 2015 and 2016 average $5/b less than the Brent price. Global […]

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US Shale Declining and OPEC Still Climbing

There is new data out today. The EIA published their International Petroleum Statistics yesterday. The EIA also published their Drilling Productivity Report which gave their expected shale oil and gas production through September. Then this morning OPEC published their Monthly Oil Marketing Report with OPEC crude only production numbers through July. First the Drilling Productivity Report. Of course most of the Drilling Productivity Report is projection, not history. And that projection goes through September 2015 . The EIA has the Bakken peaking in December and declining 107 thousand barrels per day since that point. A secondary peak was reached in April and declining steadily since then. Eagle Ford The EIA has Eagle Ford peaking in March and declining 226 thousand barrels per day since that point. The EIA has Niobrara peaking in March, almost flat for one month then declining sharply after that for a total decline of 75 […]

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Gas prices continue slow decline ahead of Labor Day

Lower crude oil prices spilling over into consumer sector with prices at the pump off for nearly 30 days in a row. Photo by Oskari Porkka/Shutterstock WASHINGTON, Aug. 11 (UPI) — Declining trends in the global oil market has spilled over to everyday U.S. consumers, who saw prices at the pump drop for nearly a month straight, AAA finds. AAA reports a national average retail price for a gallon of gasoline for Tuesday at $2.58, down from the $2.59 for Monday and the $2.64 average one week ago. Tuesday’s price reflects 27 straight days for declines and largely mirrors momentum in the crude oil market . The global benchmark for crude oil prices, Brent, was trading early Tuesday at around $50 per barrel, about 20 percent below July 1 prices and more than 50 percent lower than one year ago. The national average price for a gallon of gasoline […]

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Oil-Sands Syncrude Drop Reveals Downturn Tactic as Outages Surge

Canadian synthetic crude production fell 15% from previous year Producers of light synthetic crude from Canada’s oil sands found a way to manage this year’s price slump by churning out less and getting more maintenance work done. The strategy is highlighted by a 15 percent decline in the production of the Syncrude benchmark in May from a year earlier, according to data reported by Statistics Canada on Monday. Oil-sands operators including Royal Dutch Shell Plc cut output while collectively undertaking the biggest set of repairs this spring in five years at their upgraders, plants that turn bitumen into light oil, according to Genscape Inc., an energy data company. The work followed the lowest average quarterly price for benchmark U.S. crude since 2009. “From a strategic point of view, I’m sure these major companies are betting that the peak of oversupply is this year, now,” said Carl Evans, a Genscape […]

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Canadian Stocks Plunge as Commodities Slump on Yuan Devaluation

Canadian stocks fell, a session after raw-materials producers had their strongest gains this year, as China’s currency devaluation prompted a selloff in commodities. Equities reversed most of Monday’s gains and declined for the third time in four days as energy and raw-materials companies lost more than 2 percent. Canadian Natural Resources Ltd. and TransCanada Corp. fell at least 1.6 percent. Crude oil retreated 3.8 percent after its biggest rally in a month in New York. Commodities declined amid speculation yuan weakness will erode the buying power of Chinese consumers. The Standard & Poor’s/TSX Composite Index fell 151.15 points, or 1 percent, to 14,315.24 at 10:39 a.m. in Toronto, after a 1.1 percent advance Monday that was the biggest in more than a week. The gauge has fallen 2.2 percent in 2015, one of only three developed markets in negative territory for the year among the 24 tracked by Bloomberg. […]

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Greece, lenders locked in marathon talks for bailout deal

Greece and its international lenders were locked in marathon overnight talks to seal a multibillion-euro bailout deal on Tuesday, racing against a countdown to European Central Bank debt repayments falling due in days. The indebted country is hoping to wrap up a deal for 86 billion euros ($94.75 billion) in fresh loans by Tuesday so it can get parliamentary and other approvals for aid to flow by Aug. 20, when a 3.2 billion euro debt payment is due to the ECB. "We are going into the final round of talks, looking at the Memorandum of Understanding from beginning to end," a senior Greek government official said during a brief break in talks in Athens, referring to terms of the bailout accord. The latest round of negotiations started early on Monday afternoon. An agreement would mark the end of a painful chapter on bailout talks for Greece, which fought against […]

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Russia: Economy Shrank 4.6 Percent In Q2

The Russian economy shrank 4.6 percent in the second quarter of 2015, according to official government figures released Aug. 10, the Moscow Times reported. The Russian ruble also weakened, dropping below 64 rubles to the U.S. dollar. The economy, which has been harmed by low oil prices and Western sanctions stemming from the conflict in eastern Ukraine, has slipped into recession for only the second time in President Vladimir Putin’s 15 years in power. The Kremlin is growing concerned that the economic crisis will translate into regional defiance or mass protests . Stratfor provides global awareness and guidance to individuals, governments and businesses around the world. We use a unique, intel-based approach to analyze world affairs. Copyright © 2015 Stratfor Global Intelligence, All rights reserved. Our mailing address is: 221 West 6th Street Suite 400 – Austin, TX 78701, USA unsubscribe from this list update subscription preferences | forward […]

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Sberbank Slumps as Russia Turmoil Crimps Lender’s Profitability

OAO Sberbank declined the most in a week, extending its slump from this year’s high to 24 percent, as a weakening ruble, international financing restrictions and higher loan provisions worsen the outlook for the Russian bank’s profits. The American depositary receipts dropped 4 percent to $4.81 in New York on Tuesday. A Bloomberg gauge of U.S.-traded Russian stocks slid 1.7 percent. Sberbank, which holds about half the nation’s deposits, tumbled 69 percent in 2014 as oil prices plunged and the state-controlled bank was cut off from U.S. and European credit markets under sanctions linked to the Ukraine conflict. Sberbank, widely seen as a proxy for Russia’s economy, has been squeezed by high borrowing costs, while a slump in oil, the nation’s biggest export, exacerbated the impact of the international sanctions, pushing the country into its first recession since 2009. Even though the central bank has been reducing interest rates […]

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Ukraine surge in fighting violates ceasefire – EU

Ukraine’s government says its forces have come under attack near the key city of Mariupol The European Union says escalating attacks on government-controlled areas in eastern Ukraine violate a February peace deal with pro-Russia separatists. "The Minsk Agreements must be implemented in good faith, starting with full observation of the ceasefire and genuine withdrawal of heavy weapons," the EU said. Ukraine on Monday accused rebels of carrying out the heaviest shelling since the truce was agreed. Russia denies any role in the fighting. However, Ukraine and the West say there is a growing body of evidence pointing to direct involvement from Moscow. Rebel leaders have denied firing on Ukrainian positions and accuse government forces of violating the ceasefire themselves some 40 times over a 24-hour period. Some of the worst fighting was near the village of Starohnativka, 50km (31 miles) north of the strategic port of Mariupol. Ukraine says […]

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The Earth’s Battery Is Running Low

In the quiet of summer, a couple of U.S. scientists argued in the pages of the Proceedings of the National Academy of Sciences that modern civilization has drained the Earth — an ancient battery of stored chemical energy — to a dangerous low. Although the battery metaphor made headlines in leading newspapers in China, India and Russia, the paper didn’t garner “much immediate attention in North America,” admits lead author John Schramski, a mechanical engineer and an ecologist. And that’s a shame, because the paper gives ordinary people an elegant metaphor to understand the globe’s stagnating economic and political systems and their close relatives: collapsing ecosystems. It also offers a blunt course of action: “drastic” energy conservation. It, too, comes with a provocative title: “Human domination of the biosphere: Rapid discharge of the Earth-space battery foretells the future of humankind.” The battery metaphor speaks volumes and then some. In […]

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India, Russia And Thailand Prepare For Currency War

When China sneezes, the world catches a cold. Alternatively, when China devalues, the rest of the (exporting) world scrambles to not be the last (exporting) nation standing, and to do so next, before everyone else does. Case in point, at least three major emerging market nations announced they are bracing for currency war. First India, where NDTV ask rhetorically “ How China’s Devaluation of Renminbi Impacts India ” and answers: 1) The Indian rupee slipped to a two-month low of 64.26 against the US dollar on Tuesday tracking the devaluation of the renminbi . Other currencies such as the Australian dollar and the South Korean won also lost ground. 2) The over 0.5 per cent fall in the rupee weighed on traders’ sentiments, resulting in a drop in equity markets. Both the BSE Sensex and the Nifty traded with 0.4 per cent losses. 3) According to SV Prasad of […]

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Oil Prices Slip as China Devalues Yuan

HONG KONG–Oil prices slipped on Tuesday as investors digested China’s decision to devalue the yuan, which will make imports of a number of commodities including crude oil more expensive. China’s move eroded a late rally in oil prices the previous day that stemmed from a weaker dollar. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $44.71 a barrel at 0417 GMT, down 25 cents in the Globex electronic session. Brent crude on London’s ICE Futures exchange fell 22 cents to $50.19 a barrel. Crude oil, like most other commodities are pegged to the dollar, which means China’s imports will become costlier. “When oil becomes more expensive, it is likely to hurt China’s demand,” says Daniel Ang, investment analyst at Phillip Futures. “I think that there is definitely going to be more bearish momentum to what we are seeing now, and we […]

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Oil prices fall after China devalues yuan

A customer fills the tank of her car at a fuel station in Sint Pieters Leeuw, Belgium December 5, 2014. Oil prices fell on Tuesday after China devalued its currency in its latest effort to prop up economic growth, making dollar-priced commodities more expensive and weighing on the oil demand outlook for the world’s top energy consumer. A slowdown in China’s economy, which is still expected to grow by around 7 percent annually, has been a key driver for the sharp drop in oil prices over the past year along with rising global supplies. Front-month Brent futures LCOc1 were down 10 cents at $50.31 a barrel at 0845 GMT (0445 EDT), cutting short oil’s biggest daily rally since late May the previous session. U.S. crude CLc1 fell 25 cents to $44.71. China’s central bank made a "one-off depreciation" of nearly 2 percent in the yuan CNY=SAEC after a run […]

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U.S. dollar rises as China devalues yuan

A bank clerk counts U.S. dollar banknotes on bundles of 100 Chinese yuan banknotes at a branch of a bank in Huaibei, Anhui province April 26, 2012. The U.S. dollar lurched higher on Tuesday as China allowed its yuan to fall to levels last seen in 2012, a shift that could provide a competitive boost to exports for the world’s second-largest economy. Asian stocks turned mixed as investors weighed the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength. China’s central bank set the midpoint for its currency at 6.2298 per dollar, down from Monday’s fix of 6.1162, and said it was aiming for a depreciation of 2 percent. Markets reacted by selling the Australian dollar, often used as a liquid proxy for the Chinese currency. The Aussie sank to $0.7314, compared with $0.7430 ahead of the news. Other currencies in the region […]

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Oil Prices Fall on Glut Worries

LONDON—Oil prices kicked off the week in the red and traded near multi-month lows on Monday, in response to widening concerns over excess supply and weak demand. Over the weekend, China released disappointing economic data , clouding the demand outlook for the world’s second-biggest oil consumer. Meanwhile, the number of oil drilling rigs in the U.S. rose last week, underscoring concerns that the supply glut is unlikely to abate soon. “The prospect that crude oil prices will retest the lows hit earlier in the year has caught the market off guard,” said David Hufton at brokerage PVM. “Sadly there is no relief in sight and the technical knives are out, with the years lows well within range.” Brent crude, the global oil benchmark, fell 0.3% to $48.50 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.3% at […]

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Brent, U.S. crude fall on oversupply, poor China data

An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya August 3, 2015. Crude oil futures fell on Monday, touching fresh multi-month lows after disappointing data from China over the weekend showed exports tumbled in the world’s second-largest economy. Exports fell 8.3 percent in July, the biggest decline in four months, as weaker global demand for Chinese goods and a strong yuan policy hurt manufacturers. Producer prices in July were at the lowest point since late 2009, during the aftermath of the global financial crisis, and have been sliding continuously for more than three years. China’s economy is officially forecast to grow at 7 percent this year, strong by global standards, but some economists believe it is growing at a much slower pace. "The trade data over the weekend would probably have the market a little uneasy," said Mark Pervan, senior commodities strategist […]

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Natural Gas Futures Climb as Hot Weather to Stoke Power Demand

Natural gas futures advanced as forecasts for unusually hot weather signaled increased demand for the power-plant fuel, limiting supply gains. Mild weather in the Northeast, mid-Atlantic and Midwest this week will give way to above-normal temperatures Aug. 15 through Aug. 24, said MDA Weather Services. Manhattan’s high Tuesday may be 80 degrees Fahrenheit (27 Celsius), 3 below normal, before jumping eight days later to 90, AccuWeather Inc. said on its website. A government report last week showed the smallest gain in gas storage levels in almost four months after a surge of heat in the biggest gas-consuming regions of the U.S. More hot weather ahead is limiting concerns about ending the stockpiling season with a burgeoning surplus. “The forecasts are back for more above-normal temperatures in mostly gas-consuming regions and the market is reacting accordingly,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC […]

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Iraq cabinet backs PM Abbadi’s sweeping reforms

Iraq’s cabinet has approved Prime Minister Haider al-Abbadi’s proposal to overhaul the government bureaucracy, scrapping three vice presidential posts and the offices of three deputy prime ministers. The cabinet backed the proposed reforms on Sunday, which still needs parliamentary approval. The six posts under threat represented various political and sectarian blocs in the government. The plan also effectively would push out of government former Prime Minister Nouri al-Maliki, widely criticised for inflaming sectarian tensions and appointing loyal, less-qualified senior officers to Iraq’s military ahead of the Islamic State of Iraq and the Levant (ISIL) group’s advance last year. However, al-Maliki issued a short statement backing the proposed plan. The proposal followed weeks of demonstrations, and a call for tougher reform measures from top Shia cleric Grand Ayatollah Ali al-Sistani, who is revered by millions of Iraqis. Political shockwaves On Sunday evening, Kurdistan’s regional government welcomed the decision and vowed […]

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At least 47 people killed in two bomb attacks in eastern Iraq: security sources

At least 47 people were killed and nearly 100 injured in two bomb attacks on Monday in eastern Iraq, security and medical sources said, underscoring a continued threat from Islamic State militants in a province previously considered freed of them. In January Iraqi officials declared victory over the radical jihadist group in Diyala province, which borders Iran, after security forces and Shi’ite paramilitaries drove them out of towns and villages there, but the militants have remained active. At least 40 people were killed and 72 others wounded when a car bomb exploded in a marketplace north of the city of Baquba, the sources said. A separate blast to the east of the city killed a further seven people and wounded 25. There was no immediate claim of responsibility for the attacks, but they came less than a month after a bombing claimed by Islamic State in the nearby town […]

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Iran sees no oil interest yet from U.S. companies

Though it’s expecting renewed international interest. Iran’s oil minister says there’s been no outreach yet from U.S. energy companies. File photo by Maryam Rahmanian/UPI TEHRAN, Aug. 10 (UPI) — After outlining the terms of new oil contracts in a future post-sanctions era, the Iranian Oil Ministry said it hasn’t seen any interest from U.S. companies. Iranian Oil Minister Bijan Zangeneh said "all international" energy companies can present bids for projects in Iran’s oil industry, though some are remaining on the sidelines . "We have received no requests from any American company so far," he said. Claudio Descalzi, the chief executive officer of Italian energy company Eni, was among the hundreds of representatives who joined Italian Foreign Minister Paolo Gentiloni on an official visit to Tehran last week. Eni had a $550 million deal to help Iran develop its Darkhovin oil field, expected to produce 160,000 barrels per day, before […]

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Kenyan Oil-Pipeline Accord With Uganda Paves Way for Exports

Kenya and neighboring Uganda agreed on the route of a planned oil pipeline, ending months of debate on the link that will export crude from companies including Tullow Oil Plc. The pipeline will pass through the Lokichar basin in northern Kenya, Manoah Esipisu, spokesman for Kenyan President Uhuru Kenyatta, said Monday by phone from the Ugandan capital, Kampala. The countries had also discussed building the link through southern Kenya and the capital, Nairobi. The agreed design will be the cheapest to develop, according to an e-mailed statement from the Ugandan presidency. Tullow has found oil in both countries, with Uganda estimating finds at 6.5 billion barrels and Kenya at 600 million barrels . The planned $4.5 billion pipeline to the Indian Ocean will allow the U.K. company to start exports from joint ventures with Africa Oil Corp. and Total SA. China’s Cnooc Ltd. is also a partner in Uganda. […]

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Panama Canal sets draft restrictions due to El Nino-related drought

The Panama Canal Authority said it will temporarily lower the maximum allowable draft for vessels transiting through the Panama Canal in September due to El Nino-related droughts, the first such restriction in nearly 20 years. The maximum allowable draft will be lowered to 11.89 meters (39 feet), from the current level of 12.04 meters (39.5 feet) from September 8, in a move that could affect almost 20% of vessels transiting the canal. "These temporary and preventive measures are due to an anticipated climatic variability event related to El Nino … it has triggered a drought in the Canal Watershed, causing the water levels of Gatun and Alhajuela Lakes to fall substantially below their average for this time of year," the Panama Canal Authority, or ACP, said in shipping advisory Friday. El Nino is a phenomenon marked by a warming of sea surface temperatures in the tropical Pacific and can […]

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Japan Returns to Atomic Club With Restart Amid Public Opposition

Protesters take part in a rally outside Kyushu Electric Power Co.’s Sendai nuclear power plant in Satsumasendai, Kagoshima prefecture, Japan on Aug. 9, 2015. Source: Jiji Press/AFP/Getty Images Japan is rejoining the group of nations using atomic power as it sweeps aside public opposition and fires up one of the reactors shuttered for safety upgrades after the Fukushima nuclear disaster more than four years ago. Kyushu Electric Power Co. will begin bringing online the No. 1 reactor at its Sendai facility on Aug. 11, start power generation as early as Aug. 14 and return it to normal operations next month, the company said in a statement. Two of its reactors on Japan’s southern island of Kyushu are the first to pass tougher safety checks set by the Nuclear Regulation Authority, the agency created after the Fukushima disaster, and to overcome legal challenges. “The Sendai restart is obviously a very […]

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China Moves to Devalue Yuan

BEIJING—China’s central bank devalued its tightly controlled currency, causing its biggest one-day loss in two decades, as the world’s second-largest economy continues to sputter. Chinese authorities said the change would help drive the currency toward more market-driven movements. The move also signaled the government’s growing worry about slow growth . A shift toward a weaker currency could help flagging exports at a time when many other efforts to boost the economy haven’t proven very effective. China’s yuan has been on an upward track for a decade, during which the country’s economy grew to be the second largest in the world and the currency gained importance globally. The devaluation Tuesday was the most significant downward adjustment to the yuan since 1994, when as part of a break from Communist state planning, Beijing let the currency fall by one-third. China sets a midpoint for the value of the yuan against the […]

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China central bank devalues the yuan after poor economic data

An employee seals a stack of yuan banknotes at a branch of Industrial and Commercial Bank of China in Huaibei, Anhui province April 6, 2011. China devalued the yuan CNY=SAEC on Tuesday after a run of poor economic data, guiding the currency to its lowest point in almost three years. The central bank described the move as a "one-off depreciation" of nearly 2 percent, based on a new way of managing the exchange rate that better reflected market forces. "Since China’s trade in goods continues to post relatively large surpluses, the yuan’s real effective exchange rate is still relatively strong versus various global currencies, and is deviating from market expectations," the bank said in a statement. "Therefore, it is necessary to further improve the yuan’s midpoint pricing to meet the needs of the market." China manages the exchange rate through an official midpoint, from which it can vary 2 […]

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China grants independent refiners licenses to import crude oil

Smoke rises from chimneys and cooling towers of a refinery in Ningbo, Zhejiang province August 19, 2014. China’s Ministry of Commerce said on Monday it will grant licenses to two independent refineries to directly import crude oil, shortly after the companies won import quotas, as Beijing continues to open up the tightly state-controlled sector. Beijing has already widened the pool of companies to which it will award quotas for imported crude, starting early this year to boost private participation in the oil trade ahead of a planned launch of a crude oil futures contract. Most quota winners still have to nominate a state-affiliated trading company as agent for any shipments. But Shandong Dongming Petrochemical Group [SDHLYD.UL] and Panjin Beifang Asphalt Fuel Co have now been approved for licenses to import crude on their own, according to a short statement posted on the ministry’s website (www.mofcom.gov.cn). The approval came just […]

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U.S. shale oil output forecast to fall 75,000 barrels per day in September: EIA

A pumpjack drills for oil in the Monterey Shale, California, April 29, 2013. U.S. oil production from the largest shale plays was forecast to fall by some 75,000 barrels per day in September from August, data from the U.S. Energy Information Administration showed on Monday. Eagle Ford production was set to fall by 56,000 bpd to 1.48 million bpd while production from the Bakken was set to drop 27,000 bpd to 1.16 million bpd. Production from the Permian Basin of West Texas and New Mexico bucked the trend and was forecast to rise by 8,000 bpd to 2.04 million bpd. Meanwhile, new well oil production was seen to rise 6 bpd to 333 bpd for the Permian and 26 bpd to 792 bpd in the Eagle Ford. It was set to rise 4 bpd to 692 bpd in the Bakken. (EIA corrects new-well oil production per rig to 688 […]

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Sanchez Energy boasts of hefty production gains

Sanchez Energy takes major hit during the second quarter, but maintains optimism about future production growth. File photo by Gary C. Caskey/UPI HOUSTON, Aug. 10 (UPI) — Despite reporting a half billion loss in the second quarter, U.S. shale player Sanchez Energy said its total production was up 164 percent year-on-year. Chief Executive Officer Tony Sanchez said in a statement Monday his company plans to cut capital spending by $50 million for the year, but still increase its production target by 4 percent, or about 2,000 barrels of oil equivalent per day. "The 2016 capital budget is expected to maintain production consistent with 2015 levels and will likely lead to some moderate year-over-year growth," he said. Low crude oil prices leave energy companies with less money to spend on exploration and production. Some of those companies are boasting of production gains by crediting improved efficiencies in well operations. Sanchez […]

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EIA: US shale oil output to drop 93,000 b/d in September

Crude oil production in September from seven major US shale plays is expected to decline 93,000 b/d to 5.27 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR) . EIA previously projected a 91,000-b/d decline for both July and August ( OGJ Online, June 9, 2015 ; July 13, 2015 ). 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 Eagle Ford continues to represent a bulk of the overall oil output declines, projected to fall 56,000 b/d in September to 1.48 million b/d. The Bakken is expected to fall 27,000 b/d to 1.16 million b/d, and the Niobrara is expected to fall 18,000 b/d to 399,000 b/d. In the Permian, meanwhile, EIA projects a larger increase for September […]

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The Trick That’s Going to Keep America’s Coal Alive

A miner operates the shearer in a longwall coal mine in Johnson City, Illinois. Photographer: Andrew Harrer/Bloomberg A 30-year-old mining technique is becoming all that’s keeping a group of U.S. coal producers from joining their competitors in bankruptcy. Coal, already locked in a battle with cheap natural gas, now faces federal environmental rules that threaten to reduce its share of power generation to the lowest in 66 years. Companies from Illinois to Northern Appalachia are responding by leaning more heavily than ever on longwall-mining, a technology that’ll be used to produce a quarter of America’s coal this year, up from 19 percent in 2013. Investors are backing the miners who rely on the efficient approach. Think of a giant deli slicer with multiple revolving blades that cuts coal from a seam into slices. Eighty percent of analysts covering Foresight Energy LP and CNX Coal Resources LP, both known for […]

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Shale Oil Output Wanes as U.S. Producers Retreat in Bear Market

The shale fields that propelled the U.S. energy boom are expected to take another step back next month as producers reduce costs in the midst of a bear market. Output from the prolific tight-rock formations, such as the Eagle Ford in southern Texas, will decline by about 92,000 barrels a day next month to 5.27 million, the Energy Information Administration said Monday. It’s the fifth straight month a slide is expected, after output more than tripled from 2007. Shale producers like EOG Resources Inc. have cut spending and reduced output after oil prices fell more than 20 percent from their 2015 peak in June, and remain down by more than half from a year ago. The number of rigs drilling for oil last week was 670, down from 1,609 in October, according to oil-field service company Baker Hughes Inc. “We’re certainly in the period where we should see the […]

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Chevron Takes Harder Punch From Low Oil

Today Chevron has slipped hard, as the drop in oil prices combined with its own ambitious expansion have weighed heavily on its earnings. The company’s stock price has underperformed Exxon and Shell over the past year—during which oil prices fell sharply—after besting its two bigger competitors during the previous five years. Chevron’s stock price, which rose 2.5% on Monday to $85.89, is down 32% for the past year, compared with a 20% drop at Exxon. Chevron’s $571 million profit in the second quarter was just 10% of its haul a year earlier. Had Chevron not booked a gain for selling a stake in an Australian refiner, the company would have posted a quarterly loss for the first time in almost 20 years. Excluding asset sales and noncash impairments, Chevron earned $1.8 billion, or 97 cents a share. Exxon and other oil powerhouses have struggled to tame costs and deliver […]

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Undamming Rivers: A Chance For New Clean Energy Source

Many hydroelectric dams produce modest amounts of power yet do enormous damage to rivers and fish populations. Why not take down these aging structures, build solar farms in the drained reservoirs, and restore the natural ecology of the rivers? Hydroelectric power is often touted as clean energy, but this claim is true only in the narrow sense of not causing air pollution. In many places, such as the U.S. East Coast, hydroelectric dams have damaged the ecological integrity of nearly every major river and have decimated runs of migratory fish. Conowingo Dam Photo credit: American Rivers. If Maryland’s Conowingo Dam were removed, large-scale solar projects could be built on the site of its drained 9,000-acre reservoir. This need not continue. Our rivers can be liberated from their concrete shackles, while also continuing to produce electricity at the site of former hydropower dams. How might that occur? A confluence of […]

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The Link Between Oil Reserves and Oil Prices

Last December the Energy Information Administration (EIA) released its latest estimate of U.S. Crude Oil and Natural Gas Proved Reserves . Although natural gas reserves rose, the real story was crude oil reserves. The EIA reported that U.S. proved reserves of crude oil and lease condensate had increased for the fifth year in a row, and had exceeded 36 billion barrels for the first time since 1975: There are two reasons for this increase in proved reserves. The first is that despite >150 years of oil production in the U.S., new fields are still being discovered. In March 2015 the EIA released its update to the Top 100 U.S. Oil and Gas Fields as a supplement to the December report. This was the EIA’s first update on the Top 100 fields since 2009. The most significant addition to the list was the Eagleville field (in the Eagle Ford Shale), […]

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U.S. sanctions put Gazprom-Shell alliance plans in jeopardy

Shell branding is seen at a petrol station in west London, January 29, 2015. Royal Dutch Shell’s plans to build a strategic alliance with Russia’s Gazprom could be in jeopardy after the United States added one of Gazprom’s biggest gas fields to its list of Russian sanctions on Friday. Shell and Gazprom signed an agreement in June to develop a strategic alliance in the gas sector, ranging from upstream – exploration and production – to sales, including possible asset swaps. Development of the Yuzhno-Kirinskoye field on the island of Sakhalin in the Pacific, a project known as Sakhalin-3, has been seen as central to that alliance as it would allow the two companies to expand their sole existing LNG venture, Sakhalin-2, located nearby. State-owned Gazprom was believed to be considering selling a stake in Sakhalin-3 to Shell, which confirmed only last week that it was interested in buying a […]

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Russian GDP Plunges 4.6%

Russia’s economy shrank the most since 2009 after a currency crisis jolted consumer demand, while a selloff in oil threatens to drag the country into a deeper recession. Gross domestic product contracted 4.6 percent in the second quarter from a year earlier after a 2.2 percent decline in the previous three months, the Federal Statistics Service in Moscow said on Monday, citing preliminary data. That was worse than the median forecast for a 4.5 percent slump in a Bloomberg survey of 18 analysts. The Economy Ministry had projected that output shrank 4.4 percent in the period, calling it “the lowest point ” for Russia. The rout on commodities markets has overshadowed the first signs of stabilization in Russia by hammering the ruble and shaking a country that relies on oil and gas for about half of its budget revenue. The nation is enduring its first recession in six years […]

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Russian Recession Finds No Bottom as Economic Skid Picks Up Pace

How low can it go? Russia, which Moody’s Analytics estimates entered a recession in the first quarter, may be in for a rough ride. Gross domestic product shrank 4.6 percent from a year earlier in the second quarter, the most since 2009, after a 2.2 percent slump in the previous three months, the Federal Statistics Service said on Monday, citing preliminary data. Capital Economics Ltd. sees a downturn that will trough with a 6.3 percent plunge in the third quarter, while HSBC Holdings Plc predicts this year’s worst performance from October to December. A steeper drop would run counter to assertions by government officials that last quarter marked “the lowest point ” for Russia, with growth set to resume late this year or at the start of 2016. What’s setting the economy back is a renewed slide in commodity prices that saw crude drop to a six-month low last […]

Posted On : Published By : Tom Whipple