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Oil markets catch breath after biggest gains in six years

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

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

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

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Oil Exploration Companies Scramble to Cut Costs

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

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Kurds pledge oil company payments to boost output

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

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Kenya Starts Talks With Uganda on Financing for Oil Pipeline

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

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Venezuela Asks OPEC for Emergency Meeting on Oil Prices

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

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How Brazil’s China-Driven Commodities Boom Went Bust

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

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

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

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China Oil Giants Eschew Global Jobs Purge as Belts Tighten

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

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