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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. […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple
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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 […]

Posted On : Published By : Tom Whipple