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Canadian Stocks Resume Declines as Oil Slumps to Six-Year Low

Canadian stocks resumed their slide, falling for the fourth time in five sessions, as crude prices traded at the lowest in more than six years and financial shares slumped. Energy producers paced a decline in equities as crude futures dropped 1.5 percent in New York amid an increase in U.S. drilling and the prospect OPEC production may rise to a record after sanctions on Iran are lifted. Concerns grew that demand for oil may slip as manufacturing in New York unexpectedly shrank and Japan’s economy contracted last quarter. The Standard & Poor’s/TSX Composite Index fell 26.35 points, or 0.2 percent, to 14,251.53 at 4 p.m. in Toronto, paring a loss of as much as 0.7 percent in the final half hour of trading. The benchmark Canadian equity gauge has fallen 2.6 percent this year. Commodities producers are the worst-performing industries in the S&P/TSX this year as crude has slumped […]

Posted On : Published By : Tom Whipple
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U.S. gives Shell final nod to drill for oil in Arctic

Shell branding is seen at a petrol station in west London, January 29, 2015. The Obama administration on Monday granted Royal Dutch Shell the final permit to drill for oil and gas in the Arctic for the first time since 2012, a move environmentalists vowed to fight. The Interior Department gave Shell the final permit to drill into the oil zone in the Chukchi Sea off northern Alaska after the Fennica, an icebreaker the company leases that carries emergency well-plugging equipment, was repaired after suffering a gash in its hull. The permit was expected as the department had previously approved Shell’s exploration program before the Fennica hit uncharted shoals in southern Alaska. Shell obtained the leases in the Chukchi during the administration of former President George W. Bush. Shell has spent about $7 billion on exploration in the Arctic. It has not explored in the region since 2012, when […]

Posted On : Published By : Tom Whipple
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ND oil production numbers released today

“It could last two years”, Helms said. Officials believe the capacity exists to maintain production in North Dakota for another two full years even with the sustained lower prices. The industry, facing continued low crude oil prices, is finishing off previously drilled wells to get oil and some revenue flowing and to meet regulated completion timetables, state officials said Friday. Helms said the current number of active drilling rigs – 74 on Friday – and the inventory of wells that needs to be completed is sufficient to maintain production of 1.2 million barrels per day for 24 months. The state reached a milestone in June – passing the 10,000 mark for shale oil wells – but it comes amid rising uncertainty for the oil industry prompted by plummeting barrel prices that has caused the shutdown of numerous rigs in North Dakota. “Even though we have the low prices, there […]

Posted On : Published By : Tom Whipple
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Ruble Near 6-Month Low Narrows Options for Central Bank Support

The ruble fell toward a six-month low amid renewed weakness in oil prices, threatening to end the Russian central bank’s series of interest-rate cuts aimed at reviving the economy. The currency slid 0.5 percent to 65.3010 per dollar by 4:32 p.m. in Moscow, dropping for a third day. The ruble has lost a quarter of its value since reaching this year’s peak on May 18 as the central bank stepped up foreign-currency purchases to build reserves. Brent crude fell 0.1 percent to $49.15 a barrel on Monday, trading below $50 for the third day after entering a bear market last month. Russia’s economy is heading for an estimated 3.6 percent contraction this year, hemmed in by lower oil prices and international sanctions tied to its role in the Ukraine conflict. Policy makers have reduced the benchmark interest rate five times by a total of 6 percentage points since making […]

Posted On : Published By : Tom Whipple
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Peak of Gas Production in the Barnett Shale

An ocean of ink has already been spilled on pros and cons of using Hubbert curves to model production from a large collection of wells in one or many reservoirs. In 2010, I published together with my last graduate student in Berkeley, Dr. Greg Croft, a highly cited paper on this subject. I have also commented multiple times in this blog on the different aspects of the Hubbert curve analysis, its limitations, and predictive power. Since I cannot out-talk or out-convince the numerous critics of this type of analysis, let me give you a simple example of its robustness. This particular story is as follows. At the end of the year 2010, Greg Fenves, at that time Dean of UT’s Cockrell School of Engineering in Austin, asked me to make a presentation to the School’s Engineering Advisory Board (EAB). Using the results of our recent paper with Greg Croft, […]

Posted On : Published By : Tom Whipple
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The Divergence Of Rig Count, Oil Price And Production Explained

Summary Since June, oil prices have plummeted 30% on concerns of a worldwide supply glut. Paradoxically, during this same period, the oil rig count has climbed by 74 rigs or 7%. This article analyzes this relationship between rig count and oil price to predict in which direction the rig count will move next. It also analyzes the relationship between oil production and rig count to complete the circuit and determine the evolution of oil supply in response to a change in oil price. Finally, I use this data to pinpoint a 3-month period during which I expect both domestic oil production and rig count to fall which will maximize bullish prospects for oil. My trading strategy based on this analysis is discussed in detail. Since June 24th, crude oil prices have plummeted 31%, as fears of a global storage surplus, weakening Chinese demand, and a strong U.S. dollar have […]

Posted On : Published By : Tom Whipple
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Oil prices drop on shrinking Japan economy, more U.S. drill rigs

Offshore oil platforms are seen at the Bouri Oil Field off the coast of Libya August 3, 2015. Oil prices fell to near six-year lows on Monday as Japan’s economy contracted and producers in the United States added drilling rigs for a fourth straight week despite a recent rout in prices. Japan’s economy, the second biggest in Asia and No.3 in the world, shrank in the second quarter from a year earlier, adding to fears that slowdowns in Asia’s biggest economies will weigh on oil demand. U.S. crude CLc1, or West Texas Intermediate (WTI), was trading 58 cents lower at $41.92 a barrel at 0423 GMT (0023 EDT), close to more than six-year lows. Brent futures LCOc1 were down 54 cents at $48.65 a barrel, still some way from their 2015-low of $45.19. U.S. energy firms added oil rigs for a fourth straight week to the highest number since […]

Posted On : Published By : Tom Whipple
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Oil Dips Further, Nymex Crude Under $42 a Barrel

By Eric Yep Oil slipped further into negative territory in Asian trade on Monday as the market remained under selling pressure, with U.S. oil prices dropping below the $42 a barrel mark. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $41.88 a barrel at 0341 GMT, down $0.62 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.64 to $48.55 a barrel. "We have concerns about crude fundamentals and prices in [the second half of 2015] and 2016," Morgan Stanley said in its weekly report. The bank warned that oil demand is already near peak seasonal levels and will fall in the coming weeks as summer demand wanes. Moreover, oil production from the Organization of the Petroleum Exporting Countries has grown significantly this year, and the U.S. dollar is expected to strengthen further, weighing on oil […]

Posted On : Published By : Tom Whipple
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Oil Resumes Decline as U.S. Drillers Add Rigs for Fourth Week

Oil resumed its decline as a rebound in U.S. drilling added to signs producers will keep pumping crude amid a global glut. Futures slid as much as 1.4 percent in New York. The number of rigs seeking oil rose by 2 to 672 for the sixth gain in seven weeks, Baker Hughes Inc. data show. The U.S. agreed to allow some crude to flow to Mexico in the latest step toward easing a 40-year ban on most domestic exports. Oil has slumped more than 30 percent from the June closing peak this year amid speculation the global surplus will be prolonged. The Organization of Petroleum Exporting Countries may boost output to a record after Iran’s international sanctions are removed, according to the nation’s OPEC representative. “There is no change to the fundamentals,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The market is continuing […]

Posted On : Published By : Tom Whipple