U.S. oil imports rise as contango encourages storage: Kemp
A motorist pumps fuel into his vehicle at JJ’s Express Gas Plus station in Phoenix gas station in Phoenix, Arizona August 10, 2011. U.S. crude imports topped 8 million barrels per day (bpd) last week for only the second time this year, spurring an unexpected rise in stockpiles and sending U.S. oil prices down to a fresh post-crisis low. The United States imported 56.3 million barrels of crude in the week ending Aug. 14, up from 53.0 million barrels the week before, according to the U.S. Energy Information Administration. The difference is equivalent to the arrival of between one and two very large crude carriers (VLCCs), tankers that can carry up to 2 million barrels each ( link.reuters.com/vas45w ). Higher imports largely accounted for the reported 2.6 million barrel increase in commercial crude stocks, though refinery processing also slipped as a result of problems at BP’s Whiting refinery in […]
Nostalgic for the Financial Crisis? Only in the Oil Business
America’s suffering shale patch is about the only place in the U.S. where there’s nostalgia for the dark days of the financial crisis. While the global economy started to unravel in 2008, it was also the beginning of the biggest oil boom in U.S. history. Domestic production, which had been steadily declining since the bust of 1986, began to climb in 2009. OPEC cut output to an average of 28.5 million barrels a day that year, putting a floor under prices. And at the heart of the shale revolution, states like North Dakota, Texas and Oklahoma enjoyed lower rates of unemployment than the rest of the U.S. Sure, crude plummeted to $32 a barrel in December 2008, but it didn’t stay there for there for long. Analysts described it as a V-shaped bust, and by May the following year oil was back above $65. Plenty of people counted on […]
Congress Likely to Repeal Oil Export Ban in 2016, Evercore Says
Legislation to repeal a 40-year ban on most domestic oil exports will probably become law in the first quarter of next year, according to analysts at Evercore ISI. A move to end the ban would probably include a condition that allows the administration of President Barack Obama to set export levels, Evercore analyst Terry Haines said in a research note Friday. While there is some congressional support to lifting the ban, some analysts said its unlikely to happen before the 2016 elections. “Obama and his regulators are likely to have a more positive view of an oil export ban repeal that empowered regulators generally to decide oil export levels,” Haines said in the note. “That sort of repeal also would be attractive to congressional Republicans and Democrats that would see it as a compromise alternative that overturns the ban and is a significant step on the road to full […]
Next Texas Energy Boom: Solar
FORT STOCKTON, Texas—A new energy boom is taking shape in the oil fields of west Texas, but it’s not what you think. It’s solar. Solar power has gotten so cheap to produce—and so competitively priced in the electricity market—that it is taking hold even in a state that, unlike California, doesn’t offer incentives to utilities to buy or build sun-powered generation. Pecos County, about halfway between San Antonio and El Paso and on the southern edge of the prolific Permian Basin oil field, could soon host to several large solar-energy farms responsible for about $1 billion in investments, according to state tax records. On a recent day, contractors for OCI Solar Power LLC erected posts for a solar farm that will be the size of more than 900 football fields. First Solar Inc. FSLR -5.51 % was negotiating to lease an adjacent property, its second project in the county. […]
Major fossil fuel-producing states rely heavily on severance taxes
graph of state government taxation sources, as explained in the article text Several states that produce large amounts of fossil fuels rely heavily on severance tax revenue—taxes based on the volume and/or value of oil, natural gas, coal, and other natural resources. On average, severance taxes accounted for less than 2% of state tax collections in 2014, but in three states—Alaska, North Dakota, and Wyoming—severance taxes provided a much larger share of total state tax revenue in that year. Pennsylvania, on the other hand, is considering a severance tax, and currently derives less than 1% of its revenues from a well head fee. Alaska. Alaska relies on revenues from oil and natural gas production for up to 90% of its budget , and consequently the state experiences fluctuations in tax receipts that reflect changing oil and natural gas prices. The Alaska Clear and Equitable Share Wellhead tax is calculated […]
BHI: US oil-directed rig count rises for fifth straight week
The overall US drilling rig count edged up 1 unit to 885 rigs working during the week ended Aug. 21, according to data from Baker Hughes Inc. The oil-directed count increased for the fifth straight week, rising 2 more units ( OGJ Online, Aug. 14, 2015 ). The overall count is now down 1,011 units year-over-year. Last week 894 new well permits were issued, up from 832 permits issued during the previous week, according to an energy update by Raymond James & Associates. Utilizing a 4-week average, weekly permits issued were up 22 week-over-week. “Just like the rig count, permits are currently trending above the [year-to-date] lows, but still well below levels seen this past spring,” RJA said. “With WTI closer to $40[/bbl] than $45[/bbl], operators are likely to be reassessing any plans to ramp up activity. If prices continue to fall—or even stay flat as we are modeling—from […]
API: US petroleum demand up in July
Total petroleum deliveries, a measure of demand, rose 2.2% from July 2014 to average nearly 19.6 million b/d last month, according to the American Petroleum Institute’s most recent Monthly Statistical Report . “Demand for and production of oil and refined products grew across the board over the last year,” said API Chief Economist John Felmy. “In fact, demand for and production of oil and refined products were the highest July in 8 years, since 2007.” Gasoline demand rose 2.1% last month from July 2014 to just above 9.4 million b/d, and distillate demand rose 1.1%. US crude oil production increased 8.8% from July 2014 to an average of 9.5 million b/d—the highest July level since 1920. Natural gas liquids production averaged nearly 3.4 million b/d, marking the highest for the month on record and the new all-time record. According to the latest reports from Baker Hughes Inc., the number […]
Statoil gets nod for early phase of Johan Sverdrup
Statoil gets government approval for first phase of operations for giant Johan Sverdrup reserve field. Photo courtesy of Harald Pettersen/Statoil STAVANGER, Norway, Aug. 21 (UPI) — Norwegian energy company Statoil said the first phase of development plans for the giant Johan Sverdrup oil field were approved by the government. "We are on schedule in the Johan Sverdrup development," Oivind Reinersten, Statoil’s senior vice president for development, said in a statement. "The project activities will now be stepped up, and more contracts will be awarded in the autumn." First oil is expected late 2019. Statoil said the first phase of operations at the offshore field should yield as much as 380,000 barrels of oil per day, roughly half of the expected peak production rate. A Norwegian metal worker in late June started cutting steel for the jacket, the tower support structure, for a riser platform used for Johan Sverdrup. At […]
Scotland frets over oil, but posts economic gains
Scottish government boasts of steady economic growth, but expresses concerns about external factors like the low price of crude oil. File Photo by UPI/Maryam Rahmanian EDINBURGH, Scotland, Aug. 21 (UPI) — The Scottish government said Friday it was on a streak of slow but steady economic growth, but cautioned risks remain from low oil prices and a weak Asia. Scotland reported growth of 0.6 percent during the first quarter of the year, which it said signaled one of the longest continuous streaks of growth since 2001. "Today’s State of the Economy report shows almost three years of uninterrupted growth," Deputy First Minister John Swinney said in a statement. "The most recent figures for this year show all main sectors of the economy recorded growth." Though fiscal year 2016, the government said it expects to see $7 billion in new infrastructure investment. Despite the mid-term growth expectations, the government said […]
Russia’s Lukoil sells China its stake in Kazakh oil producer
Kazakh government expects oil boom once troubled Kashagan oil field resumes operations. Photo courtesy North Caspian Operating Co. MOSCOW, Aug. 21 (UPI) — Russia’s Lukoil said it sold its stake in a Kazakh oil producer to a rival in Beijing just as China’s economy falters and Kazakhstan’s gets a $1 billion loan. The Russian company said it sold its 50 percent in oil producer Caspian Investments Resources to Sinopec, a rival company based in China, for $1 billion, giving the Chinese oil company full control . The Caspian producer plays a role in the development of five separate fields in Kazakhstan. Lukoil said cumulative production since 2006 has amounted to 95 million barrels of crude oil and around 1 billion cubic feet of natural gas. The investment from Sinopec comes amid a slowdown in the Chinese economy. To stave off declines, the Chinese government devalued the national currency. This […]
Statoil’s Polarled pipeline becomes first to cross Arctic Circle
Norwegian energy company Statoil passes Arctic Circle during construction phase of new Polarled natural gas pipeline. Image courtesy of Statoil. STAVANGER, Norway, Aug. 21 (UPI) — Norwegian energy company Statoil said Friday a pipelaying vessel passed a milestone with construction of the Polarled gas pipeline crossing the Arctic Circle. "The Polarled gas pipeline crossed 66 degrees and 33 minutes north of the equator and became the first pipeline to cross the Arctic Circle," the company said in a statement. "This pipeline will open an entirely new gas highway from the Norwegian Sea to Europe." Statoil started the process of laying the 300-mile long pipeline from the Aasta Hansteen natural gas field in the Norwegian Sea in March. Its aim is to cross the Arctic Circle to a gas processing plant in the northwest of the country. It’s the first large-diameter pipeline of its kind to be placed in waters […]
Oil Falls in Asia After Weak Chinese Manufacturing Data
A tanker vessel sat moored outside a plant in Shunan, Japan, on July 20. Oil prices resumed their downward trajectory in Asian trade on Friday following weak Chinese manufacturing data, as markets remain jittery due to concerns about global economic growth. U.S. oil prices reversed overnight gains pressured by rising supply levels and are still vulnerable to falling below the key psychological price level of $40 a barrel. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October recently traded at $40.80 a barrel, down $0.52 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.52 to $46.10 a barrel. Early Friday, the preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell to a 77-month low in August to 47.1, compared with a final reading of 47.8 in July. “Today’s weaker-than-expected PMI will add to […]
Stocks, oil tumble as grim China PMI sparks growth fears
A man walks past a display showing stock prices in Tokyo August 12, 2015. Global stocks tumbled on Friday after a survey showed Chinese factories contracted at their fastest pace since the depth of the global financial crisis in 2009, sending investors scurrying to the safety of bonds and gold. Oil prices and emerging market assets also took a hammering, as fears of a China-led deceleration in global growth gripped markets. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 2.1 percent to its lowest since July 27, 2012. Markets in countries whose economic fortunes were closely linked to China’s growth tumbled. Japan’s Nikkei .N225 lost 2 percent and South Korea’s Kospi .KS11 shed 2.2 percent. The mood in markets, already soured by overnight weakness on Wall Street, darkened further on a grim reading of China’s factory activity. The Caixin/Markit manufacturing index showed activity in China’s factory […]
Oil Futures Fall, WTI Crude Hovers Near $40 a Barrel
Crude-oil futures fell in Asian trade Thursday after a surprise buildup in U.S. oil stockpiles and persistent oversupply concerns. Nymex oil futures edged closer to the $40 a barrel mark, after dropping to fresh six-year lows in the previous session, and analysts say a breach of this support level could pressure oil prices further. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $40.50 a barrel at 0332 GMT, down $0.30 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.28 to $46.88 a barrel. Nymex crude lost 4.3% in the last trading session, settling at the lowest in since March 2, 2009. Brent crude lost 3.4% in the last session and has been down for four of the past five sessions. U.S. oil prices in particular are under pressure after a surprise 2.6 million-barrel increase in […]
Oil prices dip further after U.S. stock-build, Saudi export rise
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. Oil prices fell again on Thursday as supplies rose both in North America and the Middle East, with U.S. contracts hovering slightly above $40 per barrel, levels not seen since the credit crunch of 2009, and globally traded Brent falling below $47. U.S. West Texas Intermediate (WTI) crude oil already slumped over 4 percent on Wednesday to hit a 6-1/2-year low as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut. U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government’s Energy Information Administration said. Supplies were also added from Canada, which increased exports to the United States by more than 400,000 barrels per day (bpd) over the […]
No End in Sight for Oil Glut
When oil prices started to edge down a year ago, most energy mavens thought the drop would be small and short-lived. Instead, the price of crude has plunged by almost 60% from its 2014 peak—and suddenly looks likely to stay low for months and maybe years to come. The reason: In the global battle for market share, nobody has backed down. Nobody has even blinked. Not Saudi Arabia, not the U.S., and not even troubled producers from Russia to Iraq. Everyone who can seems locked into pumping as much oil as possible. Far from going out of business, American oil companies have stunned their global rivals by maintaining or even adding production as U.S. prices nose-dived from $100 a barrel to $70 late last year to, as of Thursday, just above $40. Even more surprisingly, the Saudis have actually increased their production in the face of falling prices, in […]
Oil Poised for Longest Weekly Losing Streak Since 1986 Amid Glut
Russian Oil Drilling And Pumping Operations At Tatneft OAO Oilfield Oil headed for the longest run of weekly declines in almost three decades on signs the supply glut that drove prices to a six-year low will be prolonged. Futures fell as much as 1.6 percent in New York, set for an eighth weekly drop. The U.S. pumped crude in July at the fastest pace for the month since at least 1920, the American Petroleum Institute reported Thursday. The nation’s stockpiles are almost 100 million barrels above the five-year seasonal average, weekly government data showed Wednesday. Oil has slumped more than 30 percent since this year’s closing peak in June amid speculation the global surplus will persist. Leading members of the Organization of Petroleum Exporting Countries are maintaining output, while Citigroup Inc. predicts crude may slide to as low as $32 a barrel , a level last seen during the […]
Feels like 1986: Oil on track for longest weekly losing streak in 29 years
A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. Oil prices resumed their downward trend on Friday pulled lower by weaker global stock markets and a sharp contraction in China’s manufacturing activity, with the U.S. benchmark on track for its longest weekly losing streak since 1986. Activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries about lower demand for crude in the world’s second biggest oil consumer. Asian stocks also fell on Friday, following Wall Street down as fears took hold of a China-led deceleration in global growth. [MKTS/GLOB] Key oil benchmarks were trading near 6-1/2 year lows, with the U.S benchmark headed for its eighth straight weekly decline, the longest weekly losing streak since 1986. In late 1985, oil prices slumped to […]
Global Climate Deal Under Threat
BRUSSELS—A planned global deal to keep average temperatures from rising more than two degrees Celsius to contain climate change is under threat unless more countries submit emission-reduction targets and technical negotiations are substantially accelerated, the European Union’s energy and climate commissioner warned Thursday. “The window of opportunity…is closing fast,” Miguel Arias Cañete said. With just over three months to go until the Paris Climate Conference, which is meant to come up with a follow-up deal for the Kyoto Protocol, just 56 out of more than 190 countries, representing 61% of global greenhouse-gas emissions, have submitted targets for reducing these emissions, Mr. Cañete said. While that is up from the 35 states that submitted targets under the Kyoto deal, proposals are still missing from some big economies, including Argentina, Brazil, India, Indonesia, Saudi Arabia and Turkey. “There are big economies that should come on board.” Mr. Cañete said. The EU […]
Iran plans full oil market return
Iranian government spokesman said other producers need to prepare to make room for more of the country’s crude oil on the market. File Photo by UPI Photo/Mohammad Kheirkhah TEHRAN, Aug. 20 (UPI) — Once sanctions pressure on the energy sector is released, Iran must work to reclaim its share of the global market, a government spokesman said. Iran, under the terms of a November 2013 agreement, is allowed some oil exports in exchange for commitments to curb parts of its nuclear research activity. A multilateral agreement reached in July to further curb nuclear research activity could result in more export options. Iran in December produced just under 2.8 million barrels per day, down about 20 percent from 2011 levels. The country reported to the Organization of Petroleum Exporting Countries oil production for July at 3.13 million bpd, an increase of six tenths of a percent from the previous month. […]
How Much Longer Can Saudi Arabia’s Economy Hold Out Against Cheap Oil?
The oil price was near its lowest in more than a decade, cash reserves were being depleted, emerging markets were in turmoil and Saudi Arabia was beginning to panic. “It was a very scary moment,” said Khalid Alsweilem, former head of investment at the Saudi Arabian Monetary Agency, the country’s central bank. “And luckily at that point, oil prices started going up. Not by design, by good luck.” That was 1998, and now Saudi Arabia’s fortunes threaten to turn again. This time, luck might not be enough as the government tries to protect the wealth of a nation whose economy has swelled by five times since then. The bastion of conservative Sunni Islam also is paying for an expanding role in regional conflicts in the face of a resurgent Iran and Islamic State extremists who have bombed Saudi mosques. Economists are predicting a budget deficit of as much as […]
Obama lays out case for Iran nuclear deal in letter to Congress
U.S. President Barack Obama, flanked by guest observers including U.S. Representative Mike Simpson (R-ID) (L), delivers remarks before signing the Sawtooth National Recreation Area and Jerry Peak Wilderness Additions Act into law at his desk in the Oval Office at the White… U.S. President Barack Obama laid out his case for lawmakers to back the nuclear deal with Iran in a letter released by the White House, the latest step by the administration to gain support for a deal critical to the president’s legacy. In an Aug. 19 letter to Representative Jerrold Nadler, a Democrat from New York, Obama spelled out arguments he has made repeatedly in recent weeks: that the deal with Tehran was a good one, that Washington was enhancing its security cooperation with Israel, and that the United States would maintain its ability to punish Iran for destabilizing activities in the Middle East. "Should Iran seek […]
Atomic energy watchdog says critics ‘misrepresent’ Iran nuclear agreement
International Atomic Energy Agency Director General Yukiya Amano speaks to reporters Aug. 5 after briefing the Senate Foreign Relations Committee on the Iran nuclear accord. (Michael Mathes/AFP/Getty Images) The international watchdog agency charged with verifying Iran’s compliance with the recent nuclear deal said Thursday that critics of the deal “misrepresent” its plans for doing so. In an unusual rebuttal from his headquarters in Vienna, International Atomic Energy Agency Director General Yukiya Amano said he was “disturbed” by suggestions “that the IAEA has given responsibility for nuclear inspections to Iran.” Amano’s statement came after deal opponents seized on a news service account of IAEA plans to assess the “possible military dimensions,” or PMDs, of Iranian nuclear activity before 2003 to expand their criticism of the broader agreement restricting Iran’s future nuclear program. U.S. intelligence has said that 2003 was when Tehran stopped trying to develop an atomic weapon. The Associated […]
Algeria Writes to OPEC Over Falling Oil Prices
Algeria has written to OPEC warning that a new drop in oil prices may warrant fresh discussions over the group’s strategy, people familiar with the matter said, the latest sign of economic stress for some members of the cartel. According to the people, Algerian Oil Minister Salah Khebri last week sent a letter to OPEC’s secretariat complaining oil prices have sharply declined since the group decided to keep its ceiling unchanged at a meeting in June. The international oil benchmark, Brent, now trades around $47 a barrel, compared with $62 a barrel at the time of that meeting. “The letter asked OPEC to consider taking some form of action” though it didn’t specify what measures, one of the people said. Another familiar with the letter said that in conversation with other members, Algeria had pressed for closer cooperation with non-OPEC producers. Economically-fragile countries in the Organization of the Petroleum […]
Barzani remains in office after term expires
KRG President Masoud Barzani and U.S. Secretary of State John Kerry addresses reporters at the presidential compound in Erbil on June 24, 2014. (Photo credit: U.S. State Department) Kurdish politicians are continuing negotiations to end a dispute over the legitimacy of Kurdistan President Massoud Barzani, whose term expired Thursday.Barzani’s Kurdistan Democratic Party (KDP) says he remains in power, while political rivals argue that Parliament Speaker Youssif Mohammed should become acting president for an interim period before elections can be held.While the legal picture remains clouded, on a practical level Barzani continues to wield power. On Wednesday his party… This content is for registered users. Please login to continue. If you are not a registered user, you may purchase a subscription or sign up for a free trial .
Iraqis Pack Baghdad Square to Support Abadi’s Anti-Graft Measure
Holding aloft signs reading “we are all Abadi” and waving national flags, Iraqis packed a central Baghdad square in a weekend show of support for their prime minister. The display of solidarity for Haidar al-Abadi as he targets the corrupt and shrinks his government was a welcome change at a pivotal moment for a leader more used to bad news. Swathes of Iraq are under Islamic State control, sectarian divisions fester and the economy is slumping. “Abadi’s got the people on his side as well as the religious authorities,” said Sajad Jiyad, an analyst at the Baghdad-based Iraqi Institute for Economic Reform . “If he makes the reforms stick and improves people’s lives, we’ll look back on this as a defining moment,” he said. If he can’t and his rivals fight back, “things could take a turn for a worse.” After weeks of street protests against graft and poor […]
Israel Misses Gas-Wealth Opportunities
The Tamar Israeli gas-drilling platform in the Mediterranean Sea off the coast of Israel. TEL AVIV—Israel couldn’t believe its luck when huge natural-gas deposits were found in its waters five years ago. There was hopeful talk of cementing regional peace with pipelines to energy-hungry neighbors, and of plentiful gas fueling a new economic boom. Instead, what happened since then has spotlighted how unprepared Israel was to deal with newfound energy riches even as it prides itself on being a modern, investor friendly economy. Political feuding and bureaucratic infighting have delayed for years the development of the biggest gas field and now are threatening Prime Minister Benjamin Netanyahu’s fragile coalition government. No development work started so far on the Leviathan field, the largest in the Mediterranean and estimated to hold 22 trillion cubic feet of gas—enough to supply a country like Turkey for more than a decade. Amid uncertainty about […]
Nigeria: Surviving the Crude Oil Crunch
editorial The lingering decline in crude oil prices, which has greatly affected Nigeria’s revenue from crude oil exports, has taken another dimension in recent months. About 35 million barrels of the country’s crude oil remained unsold at the international market as at December 2014. Sales have been low this year as the fortunes of August and September deliveries remain uncertain, even as oil prices continue to hover on the lower band of $50 a barrel. As it stands, the nation is on a financial cliff and can fall off except a miracle happens. The one commodity that provides life support for the economy has not only seen its price at the international market fall to as low as $48 per barrel, the volume sold is shrinking as well. There is no sign that things will get better soon. The International Energy Agency (IEA) has even predicted that crude oil […]
Mexico Cuts Growth Forecast on Oil, U.S. Industrial Output
Mexico cut its growth forecast for this year, a week after a similar move by the central bank, citing declines in oil output and U.S. industrial production. Gross domestic product will expand 2 percent to 2.8 percent this year, down from a May forecast of 2.2 percent to 3.2 percent, Deputy Finance Minister Fernando Aportela said at a news conference Thursday in Mexico City. The economy grew 2.2 percent in the second quarter from a year earlier, the national statistics institute said Thursday. While that beat the 2.1 percent median forecast of 24 economists surveyed by Bloomberg, it’s down from 2.6 percent in the previous quarter and at the low end of the full-year range the government projected three months ago. “There are several factors that have limited growth,” Aportela told reporters at a Mexico City event on Thursday. “One of them is what we saw in the U.S., […]
China’s manufacturing sector suffers biggest shrinkage since 2009
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Gas Golden Age Fades as Supply Boom Meets Japan Nuclear Rebirth
Kyushu Electric Power Co.’s Sendai Nuclear Power Plant stands in Satsumasendai, Japan. Photographer: Tomohiro Ohsumi/Bloomberg The golden age of natural gas lost some of its luster this month. Japan, the world’s biggest buyer of the fuel in liquid form, restarted a nuclear reactor on the island of Kyushu Aug. 11, re-embracing atomic power to shrink energy-import costs. A week later, a production milestone was marked at Santos Ltd.’s Curtis Island plant in Australia, a new liquefied natural gas project that’s part of a record annual capacity increase. Japan’s return to nuclear power after the 2011 Fukushima disaster and China’s economic slowdown are undermining the demand that prompted the International Energy Agency to envision a golden age four years ago. Companies including Chevron Corp. and BG Group Plc were counting on Asia’s consumption as they sank hundreds of billions of dollars into new supply. A glut will cap LNG prices […]
Chinese province’s debt crisis exposes economic fault line
A man attempts to catch fish at a partially frozen fish farm near an abandoned steel mill of Qingquan Steel Group in Qianying township, Hebei province in this February 18, 2014 file photo. A mini debt crisis in northern China is exposing cracks in a financial pillar of the country’s economic revival plan: the $430 billion loan-guarantee industry. China has a heavy corporate debt burden and its economy is slowing, putting borrowers under strain, but many lenders take comfort from the fact that their loans are insured against default through the nation’s almost 8,000 guarantee companies. A third of these are state-backed companies that stand behind more than 60 percent of China’s guaranteed loans. They exist to facilitate finance for smaller businesses – China’s job-creators – but a crisis unfolding in northern Hebei province shows that their ability to meet those guarantees is in doubt. In Hebei, a gritty […]
Make Shell disclose offshore drilling risks, Senate members demand
Eleven US Senate Democrats and Independent Bernard Sanders (Vt.) asked the US Securities and Exchange Commission to make Royal Dutch Shell PLC disclose to the public and investors inherent risks offshore oil drilling poses if there is a spill or other environmental accident. They said in an Aug. 18 letter to SEC Chair Mary Jo White that Shell “provided investors with boilerplate generalities about the potential for an accident and insisted that the company has a sufficient plan for response and clean-up” following problems it encountered drilling off Alaska in 2012. Saying they are worried that other companies drilling for oil and gas on the US Outer Continental Shelf also haven’t disclosed potential risks of drilling off the US Gulf, Atlantic, and Pacific coasts as well as in the Arctic, the senators asked that the SEC fully review the companies’ plans. “America has never been more energy secure with […]
10 Currencies That May Follow Tenge in Tumble Triggered by China
On most days, Kazakhstan finds itself in the backwaters of financial markets. Yet, it’s this central Asian nation that has delivered the latest shock to global currency trading. Thursday’s 23 percent plunge in the tenge after Kazakhstan abandoned control of its exchange rate revealed a sense of urgency among policy makers: they had tried a managed depreciation just a day earlier. The escalation signaled to investors that it has become too costly for developing nations to defend their currencies. Vietnam also devalued the dong, while freely traded currencies such the South African rand and Turkey’s lira extended losses. The trigger for the wave of depreciations was China’s decision to weaken the yuan on Aug. 11, leaving countries competing with the world’s second-largest economy in export markets and those selling goods to it at a disadvantage. That added to the woes of emerging markets already reeling from a looming increase […]
Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes
The operator of Canada’s largest crude oil refinery, Irving Oil Ltd., said it has stopped importing Bakken Shale oil from the U.S. in favor of cheaper crudes from such producers as Saudi Arabia, reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices. The closely held company’s 320,000-barrel-a-day refinery in Saint John, New Brunswick, one of the biggest by volume in North America, has reduced purchases of Bakken crude shipped by rail to zero from a high of nearly 100,000 barrels a day two years ago, Irving President Ian Whitcomb said in an interview on Thursday. “We’re not importing any Bakken crude right now,” he said. The move reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows . A once-yawning gap, between the cost of oil produced in North America and overseas […]
Treasuries Roar as Disinflation Specter Haunts Global Economy
Treasuries headed for the biggest weekly gain in five months as slumping commodities prices sparked speculation a slowdown in global growth will revive deflation and delay the Federal Reserve from raising interest rates early. Benchmark U.S. government securities headed for the strongest rally since March as sliding oil prices pushed a gauge of inflation expectations toward a five-year low, enhancing the allure of fixed-income assets. The average yield on developed nation debt fell to the lowest in three months. “Risk-off sentiment has been strong over the past couple of weeks and supporting sovereign debt,” said Tomohisa Fujiki, head of interest-rate strategy for Japan at BNP Paribas SA in Tokyo. “Doubts about Chinese growth fueled concern about slackening global demand and emerging nations, which seems to have helped pave the way for a correction in Treasuries.” The U.S. 10-year note yield fell 14 basis points this week to 2.06 percent […]
In downturn, frackers turn to toilet water in drought-prone Texas
Rigging equipment is pictured in a field outside of Sweetwater, Texas June 4, 2015. Top shale oil producer Pioneer Natural Resources Co ( PXD.N ) has found an unusual way to both save water and cut costs for its wells: tapping the treated runoff from toilets, sinks and showers in west Texas. Pioneer has signed an 11-year, $117 million deal with the city of Odessa, Texas that will guarantee it access to millions of gallons of treated municipal wastewater each day, for use in nearby oilfields. Deliveries of the so-called effluent, are expected to start at the end of the year. As crude oil has slid to its lowest level in six years – currently about $40 a barrel – oil and gas companies pumping from shale rock have tried to cut every unnecessary penny from their operations. Water acquisition and transportation can be up to 10 percent of […]
Refineries Could Push Oil Over the Edge
As crude oil teeters on the edge of the $30s, it isn’t necessarily China or Saudi Arabia that will push prices over the edge. Rather, the final shove could come from the U.S. This isn’t about stubborn shale supply either. Rather, the big number to watch in coming weeks is refinery utilization, which measures how much of America’s refining capacity is running to turn crude oil into products like gasoline. This summer, those refineries have been running flat out . On a four-week-moving-average basis, utilization has been running above 95% since the week ending July 17, according to Energy Department data. That is the highest level since the summer of 2005. That should worry oil bulls on two fronts. First, despite U.S. refineries running at such a hot pace, sucking in crude oil, the price has still fallen by almost 30% since the start of July. Refiners have been […]
Study Confirms Climate Change Turned California Drought Into Disaster, With Worst Yet to Come
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Oil Futures Fall, WTI Crude Hovers Near $40 a Barrel
Crude-oil futures fell in Asian trade Thursday after a surprise buildup in U.S. oil stockpiles and persistent oversupply concerns. Nymex oil futures edged closer to the $40 a barrel mark, after dropping to fresh six-year lows in the previous session, and analysts say a breach of this support level could pressure oil prices further. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at $40.50 a barrel at 0332 GMT, down $0.30 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.28 to $46.88 a barrel. Nymex crude lost 4.3% in the last trading session, settling at the lowest in since March 2, 2009. Brent crude lost 3.4% in the last session and has been down for four of the past five sessions. U.S. oil prices in particular are under pressure after a surprise 2.6 million-barrel increase in […]
Oil prices dip further after U.S. stock-build, Saudi export rise
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. Oil prices fell again on Thursday as supplies rose both in North America and the Middle East, with U.S. contracts hovering slightly above $40 per barrel, levels not seen since the credit crunch of 2009, and globally traded Brent falling below $47. U.S. West Texas Intermediate (WTI) crude oil already slumped over 4 percent on Wednesday to hit a 6-1/2-year low as a huge unexpected stockpile build in the United States reinforced concerns about a growing global oil glut. U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the government’s Energy Information Administration said. Supplies were also added from Canada, which increased exports to the United States by more than 400,000 barrels per day (bpd) over the […]
Economist: Three Reasons Oil Will Surge Past $70 By the End of the Year
Oil has been demolished over the past year, falling from $100 a barrel to the low 40s. But one oil expert says things are about to turn the corner once again, and Brent crude is going to surge to $71 a barrel by the end of the year. Credit Suisse energy economist Jan Stuart spoke on Bloomberg TV yesterday, giving the reasons behind his big target. I admit, my target looks very ambitious. The thinking behind it is that production is rolling already. We know that it’s higher than we thought it was going to be at this stage, but it is rolling. The question is going to be how fast, how far. We think United States crude oil production ends the year below 9 million barrels a day from the 9.6 high…Number two, demand is growing…Emerging market demand not great, but not bad either. It’s still growing, the […]
U.S. Oil Could Return to 2008 Low of $32 in Citigroup View
Oil could fall to lows last seen during the global financial crisis amid a persistent supply surplus, Citigroup Inc. said. “Balances point to further oversupply throughout 2015 begging the question how low can oil go,” Citigroup analysts led by Seth Kleinman said in an e-mailed report Wednesday. The U.S. crude price of $32.40 a barrel reached in 2008 “is a conceivable reality.” Crude has tumbled more than 30 percent since June amid signs that producers are maintaining output even after oil fell back into a bear market. West Texas Intermediate, the U.S. benchmark, fell $1.64 to $40.98 at 12:08 a.m. local time on the New York Mercantile Exchange, the lowest level since March 2009. Prices could keep falling, even below producers’ operating costs, without forcing cutbacks in output, the bank said. Shutting down production is costly and can be permanent, which makes “high-end costs a tentative floor which can […]
Likelihood of U.S. Oil Sliding to $30 a Barrel Is Increasing
As U.S. oil fell to a six-year low below $41 a barrel on Wednesday, an increasing number of analysts and traders are saying crude could drop into the $30s—and soon. The move to a price last seen at the height of the financial crisis, in February 2009, could come amid a seasonal falloff in demand, coupled with concerns about the Chinese economy and the continuing global glut of crude . Cheaper oil would bring further joy to consumers and businesses around the globe, but more pain for everyone from Russian budget officials to U.S. shale-oil drillers. It would also test the limits of oil storage facilities around the globe, which are already filling up to the brim. A 40% price rally in the spring took oil to above $60 a barrel, offering hope that the worst of oil’s yearlong slump was over as investors bet that low prices would […]
Why oil prices could sink to $15 a barrel
The story behind oil’s plunge American drivers could soon be partying like it’s 1999. Oil prices have already taken a dramatic fall that’s saved consumers big time at the pump . Last week, crude tumbled below $42 a barrel , down from $100 last year. One big-name investor is predicting an even sharper drop. “There is no evidence whatsoever to suggest we have bottomed. You could have $15 or $20 oil — easily,” influential money manager David Kotok told CNNMoney. A further decline to $15 a barrel would be huge. Oil hasn’t traded that low since early 1999, when gasoline at the pump was selling for under $1 a gallon. Kotok’s views on the economy and financial markets are closely watched. The 72-year-old co-founder of Cumberland Advisors manages more than $2 billion in assets and hosts an annual invite-only fishing trip that doubles as an economic summit. Known as […]
Burned by oil, some U.S. fund managers still bet on rebound
A customer prepares to fill up his tank in a gasoline station in Nice December 5, 2014. Mutual fund managers who believed the slump in oil prices would be short-lived have been taking it on the chin, but some are not giving up, betting that the market will bounce back and they will have the last laugh. The FPA Capital Fund, the Towle Deep Value Fund and the Mount Lucas US Focus Equity fund are among several that are still plowing money into oil exploration and production companies, even as their performance numbers sank to the bottom 5 percent this year, according to Morningstar. (Graphic: link.reuters.com/nup45w ) Their reason for buying oil stocks even as crude prices are tanking again after a tentative second-quarter recovery? A bet that U.S. production will retreat sharply over the next 12 months, setting the stage for a rebound toward $65-70 per barrel that […]
Saudi Stocks Head for Bear Market as Oil Slides on Supply Glut
Saudi Arabian stocks were poised to close in a bear market after declining eight straight days as the price of oil slumped, hitting the country’s main source of economic growth. The Tadawul All Share Index sank 2.8 percent to 7,768.88 at 11:11 a.m. local time, a more than 20 percent drop from the most recent peak in April. Brent crude, a benchmark for more than half the world’s oil, slid 0.5 percent to $46.95 a barrel after falling to the lowest since January in earlier trading on Thursday. An unexpected increase in U.S. crude stockpiles and record oil production from Saudi Arabia in June has deepened concern that growing oversupply will continue to impact oil prices as nations tussle over market share. Governments in the six-nation Gulf Cooperation Council, home to about 30 percent of the world’s proven oil reserves, rely on income from crude to fund spending. Most […]
IAEA says access to Iran’s Parchin military site meets demands
International Atomic Energy Agency (IAEA) Director General Yukiya Amano attends a news conference during a board of governors meeting at the United Nations headquarters in Vienna September 10, 2012. The United Nations nuclear watchdog said it is satisfied with access Iran will grant it to the country’s Parchin military site, suspected by some states to have in the past hosted atomic bomb-related experiments. Without International Atomic Energy Agency (IAEA) confirmation that Iran is keeping promises enshrined in a landmark nuclear deal reached with world powers on July 14, the country will not be granted much-needed relief from sanctions. According to data given to the IAEA by some member states, Parchin might have housed hydrodynamic experiments to assess how specific materials react under high pressure, such as in a nuclear blast. Asked if Iran would be allowed to conduct inspections itself to address concerns about Parchin, the IAEA said it […]