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Hedge Funds Primed for Oil Rebound With Increase in Bullish Bets

The momentum behind wagers on rising oil prices picked up steam as U.S. drilling slows and producers face potential credit line cuts. Money managers’ long position in West Texas Intermediate crude climbed by 6.1 percent in the week ended Sept. 22, the most since January, according to data from the Commodity Futures Trading Commission. The jump in longs and a decline in shorts boosted their net-long position by 15 percent. U.S. crude output is down 470,000 barrels a day from a four decade high of 9.61 million in June, data from the Energy Information Administration show. Explorers idled U.S. oil rigs for a fourth week, Baker Hughes Inc. said Sept. 25. The latest round of credit line reevaluations is under way, and almost 80 percent of oil and natural gas producers will see a cut in the maximum amount they can borrow, according to a survey by the law […]

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U.S. support for Syria rebels illegal, Putin says ahead of Obama meeting

Russian President Vladimir Putin delivers a speech during an opening ceremony of the MAKS International Aviation and Space Salon in Zhukovsky, outside Moscow, Russia, August 25, 2015. Russian President Vladimir Putin on Sunday branded U.S. support for rebel forces in Syria as illegal and ineffective, saying U.S.-trained rebels were leaving to join Islamic State with weapons supplied by Washington. In an interview with U.S. networks recorded ahead of a meeting with U.S. President Barack Obama, Putin said Syrian President Bashar al-Assad deserved international support as he was fighting terrorist organizations. Obama and Putin are scheduled to talk on Monday after Putin addresses the United Nations, although White House and Kremlin officials have disagreed on what the two leaders will discuss and even who initiated the meeting. "In my opinion, provision of military support to illegal structures runs counter to the principles of modern international law and the United Nations […]

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Saudi Arabia withdraws overseas funds

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Saudi Arabia Has Withdrawn Billions From Markets, Estimates Show

Saudi Arabia has withdrawn as much as $70 billion from global asset managers as OPEC’s largest oil producer seeks to plug its budget deficit after crude slumped, according to financial services market intelligence company Insight Discovery. "Fund managers we’ve spoken to estimate SAMA has pulled out between $50 billion to $70 billion from global asset managers over the past six months," Nigel Sillitoe, chief executive officer of the Dubai-based firm, said by telephone Monday. "Saudi Arabia is withdrawing funds because it’s trying to cut its widening deficit and it’s financing the war in Yemen," he said, declining to name the fund managers. Saudi Arabia is seeking to stem a decline in its finances after a 50 percent drop in oil during the past 12 months. The Saudi Arabian Monetary Authority’s reserves held in foreign securities have fallen about 10 percent from a peak of $737 billion last August to […]

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Venezuela Economic Crisis to Only Get Worse, Barclays Says

A ship arrives at the port in Puerto Cabello, Venezuela, on Aug. 24, 2015. Venezuela is suffering the deepest economic crisis in its history with output expected to contract 9.1 percent this year, Barclays Plc said Friday. The economic contraction will likely reach 16.5 percent between 2014 and 2016, while inflation over that period will exceed 1,000 percent, Barclays wrote in a note to clients. “It is impossible to understand why the government is not reacting to this reality, why it has not taken measures to alleviate the economic distortions that are destroying the real income of Venezuelans,” Barclays said. President Nicolas Maduro will not likely announce any changes in economic policy before congressional elections Dec. 6, the bank said. With support for the ruling Socialist party at around 19 percent, the country is politically divided as it also battles low prices for oil, which accounts for 95 percent […]

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Brazil pledges to slash emissions by 43%

Brazil pledged on Sunday to slash greenhouse gas emissions by 43 percent by 2030 as its contribution to a United Nations climate agreement, but said it will include reductions from past efforts against deforestation to help it reach the target. President Dilma Rousseff presented the country’s pledges during a speech at the U.N. General Assembly in New York, noting the targets are more ambitious than those of most developed countries and that Brazil will not need external support to achieve them. Brazil already curbed emissions by 41 percent between 2005 and 2012, largely through fighting deforestation. Rousseff reaffirmed the country’s commitment to ending that illegal practice in the Amazon , as stated during a joint announcement with U.S. President Barack Obama in June, but fell short of declaring a freeze on deforestation in general as many environmental groups had sought. Emissions from deforestation worldwide account for 15 percent of […]

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China carbon trading not all bad news for commodities: Russell

The China Central Television (CCTV) building is seen next to a construction site in heavy haze in Beijing’s central business district, January 14, 2013. – China’s planned national cap-and-trade carbon emissions system may at first appear to be yet another bearish factor for commodity demand in the world’s largest consumer of natural resources. In theory, limiting the amount of carbon emissions by setting a price per tonne and then making polluters pay for permits above their allocated limits will serve to raise costs for carbon-intensive industries, such as steel, aluminum, power generation, copper smelting and oil refining. A cap-and-trade system is only effective when it raises the cost of polluting to the point where the polluter limits output or invests in new technology or takes other steps to reduce emissions. Of course, a polluter can try to raise prices for the goods they produce, but this assumes that they […]

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Why Volkswagen’s Problems Don’t Include China

Volkswagen has been rocked by a diesel-emissions scandal that has shaken its executive suite and prompted investigations by governments around the world. But there is one place where the German company so far remains untouched: China, where diesel fuel is mainly for trucks only. Regulators have been silent, and Volkswagen has declined to answer questions about the China market. But so far the diesel-emissions scandal hasn’t involved any of the products Volkswagen makes with its joint-venture partners in its biggest single market. In fact, diesel passenger cars are extremely rare in China. According to IHS Automotive, China produced just 9,046 diesel cars in 2014, a paltry tally in the country where total passenger vehicle sales reached 19.7 million last year. Diesel is crucial to the Chinese economy, widely used in sectors ranging from manufacturing, agriculture, power generation to industrial transport, though diesel is currently plentiful because of the country’s […]

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Nepal Restricts Driving to Head Off Fuel Shortage

Photo A transport worker sat at the India-Nepal border on Sunday. Supply trucks from India stopped entering Nepal last week. Credit Prakash Mathema/Agence France-Presse — Getty Images KATHMANDU, Nepal — Nepal started imposing restrictions on vehicles’ movement on Sunday amid concerns about limited supplies of fuel and other essential commodities from India. Trucks carrying supplies from India stopped entering the country last week as protests followed the adoption of Nepal’s new Constitution. To address the shortages, officials in Nepal said cars would be permitted to run only on alternate days based on the last digit of their license plate number. Siva Tripathi, an official at the Nepal Ministry of Supplies, said Indian security personnel and customs officials had barred supply trucks from entering Nepal, citing orders from New Delhi. “Transportation has come to a complete halt since Thursday,” he said. “So we are facing the shortage of some essential […]

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Shell abandons contentious Arctic exploration after poor results

Sign up for quick access to a wealth of global business news Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For 4 weeks receive unlimited digital access to the FT’s […]

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Shell to Cease Oil Exploration in Alaskan Arctic After Disappointing Drilling Season

The oil and gas company pressed ahead with its multibillion-dollar exploration program offshore Alaska this summer despite tumbling oil prices and strident opposition from environmental groups concerned that drilling in the region could cause an ecological disaster. The Arctic—one of the few remaining unexplored oil frontiers—was a prize too great to simply walk away from, but the company has changed its mind after the Burger J well it drilled in the Chukchi Sea this summer only showed traces of oil and gas. “This is a clearly disappointing exploration outcome for this part of the basin,” said Marvin Odum, Shell’s upstream head in the Americas. And though in the longer term, Shell sees important exploration potential in the basin, it said it would cease further exploration offshore Alaska for the foreseeable future. The Anglo-Dutch company expects to book charges in its accounts as a result of this decision, and will […]

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Shell Halts Alaska Oil Drilling After Disappointing Well Result

Royal Dutch Shell Plc will stop exploring offshore Alaska, citing high costs and “challenging” regulation, six weeks after it got approval to fully drill a well in the Arctic waters off the U.S. state. Shell forecast it will take related financial charges, according to a company statement on Monday. The balance sheet carrying value of its Alaska position is about $3 billion, with additional future contractual commitments of about $1.1 billion, The Hague, Netherlands-based energy explorer said. Shell is abandoning exploration after winning approval in August to drill the Burger J well in Alaska’s Chukchi Sea. Success would have brought the company back to an area it left three years ago after a rig ran aground. That incident helped prompt the Obama administration to revisit U.S. rules for exploration in the region, while environmental groups have long-protested Shell’s plans, saying a spill could cause an ecological disaster. Indications of […]

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After calamitous year for coal, U.S. consumers hold key for rails

A shovel is placed over coal briquettes during a protest in front of the chancellery in Berlin December 3, 2014. Investors in U.S. railroad stocks, who have been punished in 2015 by an accelerating decline in high-margin coal shipments, now are pinning their long-term hopes on a resurgence in consumer spending. Their bet is that a strengthening economy will produce enough demand that railroads will be able to replace the income lost to years of declining coal use with so-called intermodal shipping – the movement of containers stuffed with clothing, furniture and other consumer goods. Thanks to environmental rules regulating power plant emissions, coal use has declined steadily since peaking in 2008. So far this year, freight volumes have tumbled 9.2 percent as low energy prices encouraged utilities to switch to burning cheaper natural gas, while the strong U.S. dollar has hurt exports. The accelerated decline this year has […]

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Junk-Debt Investors Fight for Scraps as U.S. Shale Rout Deepens

Photographer: Brittany Sowacke/Bloomberg It’s every U.S. shale investor for himself as the worst oil rout in almost 30 years drags down its latest victims. Investors in $158.2 million of Goodrich Petroleum Corp.’s debt agreed to take 47 cents on the dollar in exchange for stock warrants for some note holders and a lien on Goodrich’s oil acreage, according to a company statement today. That puts them second in line if the Houston-based company liquidates its assets in bankruptcy and pushes the remaining holders of $116.8 million in original bonds to the back of the pack. "In the industry it’s called ‘getting primed,’" said Spencer Cutter, a credit analyst with Bloomberg Intelligence. "It’s every man for himself. They’re trying to get in and get exchanged, and if you can’t you’re getting left out in the cold." Wildcatters attracted billions of dollars during the boom after years of near-zero interest rates […]

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Average U.S. gasoline price drops 9 cents in two weeks: Lundberg

A car is filled with gasoline at a gas station pump in Carlsbad, California August 4, 2015. The average price of a gallon of gasoline in the United States fell 9 cents in the past two weeks as refiners and retailers reduced their profit margins to sell more fuel, according to a Lundberg survey released on Sunday. Regular grade gasoline fell to $2.35 per gallon in the Sept. 25 survey from $2.44 on Sept. 11, when the previous survey was taken. It has tumbled 36 cents over the past five weeks to the lowest level since late February. Compared with one year ago, the $2.35 average price was $1.03 a gallon lower. The latest decline came despite crude oil prices having strengthened in the last five weeks, survey publisher Trilby Lundberg said. "The main reason for this is that both refiners and retailers have reduced their own profit margins […]

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Anticosti Island: Environmental groups call for BAPE review of shale-gas drilling

Quebec environmental groups are calling on the government to publish the results of 2015 drilling for shale gas on Anticosti Island and to hold an environmental review. (Radio-Canada) The Quebec government is not being straightforward about the data it has on shale-gas exploration on Anticosti Island, a coalition of environmental and citizens’ groups said Friday. The coalition is asking the Liberal government to order environmental review hearings through its provincial assessment agency, known as the BAPE, and to publish the results of its drilling activities on Anticosti. The director of Nature-Québec, Christian Simard, said there are eleven sites where drilling has been completed over the past two years. Simard said in 2014, the findings were published on the government’s website, however, this year’s findings have yet to be made public. "It is time to have an assessment, and to make it public — to open a debate," he said. […]

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Bank of America Seeing Life Signs in Russia’s Foundering Economy

Bank of America Corp. is starting to see faint signs of an economic recovery in Russia. The magnitude of a slowdown in capital investment is easing, while corporate profits have been increasing, a combination that Vladimir Osakovskiy, the bank’s chief economist in Moscow, said could mark a turning point. The country’s recession may have bottomed when gross domestic product shrank 4.6 percent in the second quarter, and considering that company spending will probably drive the recovery, that stabilization is likely to be more important for the broader economy than persistent weakness in consumer demand, he wrote in a report last week. “Corporate profits in Russia are quite good year-to-date, and we look at robust growth in corporate profits as the main potential driver of stabilization and recovery in the near future,” Osakovskiy said by phone from Moscow last week. “We might see that the main macroeconomic indicators will start […]

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Kremlin Said to Urge Basel III Delay as Economic Crisis Deepens

Kremlin aides are urging Russia’s central bank to delay introducing tougher capital rules for lenders known as Basel III, arguing they may deepen the worst economic crisis in six years, three people familiar with the matter said. The requirements, due to take effect Jan. 1, may force banks to cut corporate lending, prolonging a recession that was triggered by plunging oil revenue and sanctions over Ukraine, one of the people said. Noncompliance will also hurt because lenders in breach won’t be allowed to pay dividends to shareholders, including the government, so a delay may help the budget, the person said. An Economy Ministry official proposed the Basel III delay at a meeting with Bank of Russia Governor Elvira Nabiullina and Prime Minister Dmitry Medvedev this month, one of the people said. Nabiullina, who’s tasked with safeguarding the entire financial system, rejected the initiative, according to the person. “The central […]

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Russian Oil Producers Head for Tax Showdown Amid Output Warnings

Oil workers pass a pumping unit near Almetyevsk, Russia. Photographer: Andrey Rudakov Russia’s oil industry begins a critical battle over taxes this week. Losing may result in the first decline in crude production at the world’s largest energy exporter since 2008. Oil producers are due to meet with Russian Prime Minister Dmitry Medvedev Monday to present their joint view on Finance Ministry proposals to increase crude oil extraction taxes, said two company representatives who asked not be be identified because the meeting isn’t public. The ministry wants to boost revenue by about 600 billion rubles ($9.1 billion) in 2016 alone to mitigate the biggest budget deficit in years. The price of crude plunged by about 50 percent over the past year because of a global oversupply. While Russia’s government finances have deteriorated, its oil companies have proved more resilient to the slump as some tax rates automatically adjusted lower […]

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Zero Inflation Looms Again for ECB as Oil Drop Counters Stimulus

European Central Bank President Mario Draghi If the euro area is about to run out of inflation — again — it won’t shock Mario Draghi. The European Central Bank president said more than three weeks ago that the inflation rate could turn negative this year because of the renewed decline in oil prices. The 19-nation region is set to take a step in that direction on Wednesday, when data will show consumer prices stagnated in September for the first time in five months, according to a Bloomberg survey of economists. Stalled prices would mark a setback for policy makers who have been trying to steer inflation back toward 2 percent for the better part of two years, and may spark a new debate about deflation risks. Yet while officials have repeatedly stressed that they’re prepared to add stimulus if needed, they’ve also said they want more evidence before making […]

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The $12 Billion Reason BP Isn’t Worried About a Hostile Takeover

Oil giant BP Plc, which was said to be readying defenses for potential takeover offers, has a little-known ace in the hole: a disclaimer in its Macondo spill settlement that could tack $12.6 billion onto the price tag. A potential buyer might be forced to accelerate the payment of up to two thirds of the $18.7 billion in penalties the company agreed to pay the U.S. and several states, according to company filings. As it stands, BP has more than 15 years. An option that gives the federal government and some states the ability to demand faster payment in a takeover effectively hands them a veto power over any deal. Together with the company’s exposure to Russia amid sanctions and the worst oil crash in decades, it amounts to a powerful deterrent to suitors, said William Arnold, a former banker and executive at Royal Dutch Shell Plc. “This would […]

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Volkswagen CEO Promises Action on Emissions Scandal in Letter

He has promised investors and customers a thorough investigation into the emissions cheating scandal that has rocked Europe’s biggest car maker. And in a letter to employees, which was viewed by The Wall Street Journal, Mr. Müller closed ranks with labor representatives, vowing to ensure that such misconduct “never happens again.” “We will be relentless in getting to the bottom of this—fast, open and as decisively as possible,” Mr. Müller and Bernd Osterloh, head of VW’s powerful works council, said in the letter, which is to be sent to employees on Monday. The letter echoes comments Mr. Müller made during his first public appearance after being named CEO of the group on Friday. By sending it together with Mr. Osterloh, the new VW chief is demonstrating his willingness to work closely with labor, a key reason why he was chosen for the job. On Friday, Mr. Müller acknowledged the […]

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Limited Progress Seen Even as More Nations Step Up on Climate

Photo An area of the Amazon rain forest burned to make way for pasturelands. Brazil has pledged to end illegal deforestation. Credit Lalo de Almeida for The New York Times The pledges that countries are making to battle climate change would still allow the world to heat up by more than 6 degrees Fahrenheit, a new analysis shows, a level that scientists say is likely to produce catastrophes ranging from food shortages to widespread extinctions of plant and animal life. Yet, in the world of global climate politics, that counts as progress. The new figures will be released Monday in New York as a week of events related to climate change comes to an end. The highlight was an urgent moral appeal at the United Nations on Friday from Pope Francis, urging countries to reach “fundamental and effective agreements” when they meet in Paris in December to try to […]

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Britain must prepare for life without oil

The man tasked with saving the UK’s North Sea oil industry says it will take two years or more to recover from its problems and that Britain should start preparing for life without oil. Last year Sir Ian Wood wrote a report, commissioned by the government , into how to maximise the North Sea’s oil and gas, which has been a big driver of the economy since the 1970s but has been in long-term decline since the late 1990s. In an interview with the Financial Times, Sir Ian Wood warned: “Oil at $35 to $55 [per barrel] is the likely scenario into 2017, and I think the best guess right now for a recovery in the North Sea is 2017-18.” The North Sea today produces about 1.5m barrels of oil per day, compared with 4.5m at its peak. Its problems have increased significantly over the past year, however, as […]

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Population growth is part of migrant crisis

“It is clear that the greatest tide of refugees and migrants is yet to come. Therefore we need to correct the policy of open doors and windows.” So said Donald Tusk at the EU summit meeting on Wednesday. As president of the European Council he had just returned from a visit to the Syrian frontline states of Turkey , Jordan and Lebanon , so is well informed on the condition of the four million refugees there. Population pressures are now push and pull factors in the European refugee crisis. They are plainly there in the surge of Syrian refugees from Turkey through Greece this summer. In the camps on Syria’s border people have given up hope of peace returning, going home or finding employment in Turkey itself. Led by younger men they are responding to signals from northern Europe that they could have a better life there – alongside […]

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Oil Prices Rise as U.S. Drilling Drops

Oil pumps work at sunset in the desert oil fields of Sakhir, Bahrain. NEW YORK—Oil prices strengthened Friday as drilling in the U.S. declined and positive economic data boosted demand expectations. Prices have traded in a tight range this month amid uncertainty about how quickly the global glut of crude is set to shrink. Production is falling in the U.S., leading to lower commercial inventories of crude oil, but output remains robust in other countries. While global consumption has been strong, analysts question whether demand can continue to grow at a high pace next year. Light, sweet crude for November delivery settled up 79 cents, or 1.8%, at $45.70 a barrel on the New York Mercantile Exchange. Prices rose 1.5% on the week. Brent, the global benchmark, 43 90 cents, or 0.9%, to $48.60 a barrel on ICE Futures Europe, posting a 2.4% weekly gain. The number of rigs […]

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Oil prices stable as firm Chinese seasonal demand offsets weak Japan data

A petro-industrial factory is reflected in a traffic mirror in Kawasaki near Tokyo December 18, 2014. Oil markets remained subdued in early trading in Asia on Friday after weak data from Japan reinforced concerns over global economic growth, while strong seasonal demand from China helped support prices in the short-term. Japan’s core consumer prices fell 0.1 percent in August from a year earlier, government data showed on Friday, marking the first year-on-year drop since April 2013. The index includes oil products but excludes fresh food prices. HSBC said that markets had focused too much on China’s slowdown, warning that many developed economies were faltering. "It turns out that developed market imports haven’t been anywhere near as robust as relatively upbeat local demand data would suggest … For all their recent swagger, developed markets are hardly firing on all cylinders. So, don’t just blame China," the bank said on Friday. […]

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OPPENHEIMER: Goldman was wrong about $200 oil, and it’ll also be wrong about $20 oil

Oppenheimer issued a note Thursday arguing that oil is looking for a "new normal" price around $65 to $75 a barrel. But on the way to making its point, the firm also took a shot at Goldman Sachs’ history of getting calls on the price of oil wrong. On Thursday, Oppenheimer wrote (emphasis ours): We dismiss the $20 oil scenario, as we dismissed the $200 oil view in 2008 — both came from the same source. We think oil prices will remain lower for longer, until the objectives behind the collapse are met, and we don’t see this happening any time soon. We think the market is still searching for the new normal, which is not $50 and is not $100 either, but more likely in the $65-$75 range. That "same source" is Goldman Sachs. Earlier this month, oil analysts at Goldman Sachs said that in a worst-case scenario, […]

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Theft disrupts Kurdish oil flows to Turkey

Kurdish government chronic sabotage against crude oil problems robbing it of revenue needed to fund security operations. Photo by Mohammed al Jumaily/UPI ERBIL, Iraq, Sept. 25 (UPI) — The Kurdish government in northern Iraq said the flow of crude oil to a Turkish sea port was halted because of theft at the start of a Muslim holy day. On Thursday, Muslims honored the holy day of Eid al-Adha . The semiautonomous Kurdistan Regional Government said saboteurs targeted a crude oil pipeline running north to the Turkish sea port at Ceyhan. No repair crews were on duty because of the holy day. Crews are expected at the site Friday, though no estimate of a return to service is available, the government said. The Kurdish government credits crude oil exports through Turkey as a necessary economic lifeline. "Revenue from crude oil export through the pipeline to Ceyhan represents the Kurdistan Region’s […]

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Asia taking climate initiative

Asian Development Bank announces planned increase in climate spending ahead of key pledges from the U.S. and Chinese leaders. File photo by Stephen Shaver/UPI MANILA, Sept. 25 (UPI) — By 2020, the amount of funding to support the fight against climate change will double to $6 billion, the president of the Asian Development Bank said. World leaders gathering in New York this weekend are expected to announce commitments to more than a dozen sustainable development goals. With China, a world emissions leader, planning to lead the announcements, ADB President Takehiko Nakao said the growing Asian economies have a major role to play in the fight against climate change. "Nowhere is tackling climate change more critical than in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods and droughts are damaging livelihoods and taking far too many lives," he said in a statement. Nakao […]

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Enacting Cap-and-Trade Will Present Challenges Under China’s System

Photo President Xi Jinping of China addressing workers at the Boeing plant at Paine Field in Everett, Wash., on Wednesday. Credit Ruth Fremson/The New York Times BEIJING — American officials have applauded President Xi Jinping ’s commitment to a national market for greenhouse gas quotas as a breakthrough in environmental cooperation. But to work well, Mr. Xi’s pledge, made at the White House on Friday, will demand big changes from a Chinese government accustomed to heavy-handed intervention and skewed statistics. It will take years of effort to build a substantial market that plays a major role in curbing emissions, and even then, it could founder, like similar initiatives elsewhere, experts said. China has had local trials underway since 2013, supported by the liberal doling out of emissions permits or by cajoling companies to take part. Expanding those initial efforts nationwide by 2017, as Mr. Xi pledged to do, will […]

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U.S. and China team up on global warming

U.S. President Barack Obama and China’s President Xi Jinping (L) hold a joint news confernce in the Rose Garden of the White House in Washington September 25, 2015. – Tensions between the United States and China are running high on issues including cyber security, the South China Sea and currency values. So why are the U.S. and China working so well together on climate change? And what does it mean for the world? Today, President Barack Obama and President Xi Jinping announced an important climate agreement. If that sentence sounds familiar, there’s a reason. At their first summit (in California in 2013), President Obama and President Xi announced plans to cooperate in phasing out HFCs, a super-pollutant with huge global warming impacts. At their second summit (in Beijing in 2014), the two leaders reached an historic agreement to limit total emissions of heat-trapping gases in each country. Expectations for […]

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Schlumberger Won’t Extend Deadline to Buy Eurasia Drilling Stake

Schlumberger’s bid would give it a 45% stake in EDC, with an option to buy the rest of the company at a later date, an unusually large investment by a U.S.-listed company in Russia’s oil industry at a time of heightened tensions between Moscow and the West over Ukraine. It would help strengthen the presence of the world’s largest oil-services company in Russia and give it a base from which to grow in the region. EDC operates the largest fleet of onshore drilling rigs in Russia and is vital to operations at the country’s oil fields, where companies are ramping up output to compensate for the recent decline in oil prices. Russia’s economy is highly dependent on oil and gas, the sales of which account for around half its federal budget revenue. The transaction was proposed in January , accepted by EDC and originally expected to close by the […]

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Shale Oil and the 2014-15 Price Collapse

Art Berman is out with a new deck: “ The North American Unconventional Revolution & The 2014-2015 Oil Price Collapse ” (pdf) and it’s a great review of US shale, Saudi/OPEC response, and the great price fall over the past year. As always, Art is out to tell you some facts you don’t often see in the headlines: The story of the price collapse is pretty simple: It’s Chinese demand fall + US oil production growth + response of Saudi oil production growth. That’s pretty much it. Lower demand and production gains leading to surplus and lower prices. The heroic tales of rig productivity and drilling efficiency gains are what oil companies have to tell investors to show a brave face. Dig a little deeper to realize – what should be obvious to everyone – that companies are getting killed at these low prices. But future higher oil prices […]

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Oil, bonds go their separate ways

An oil pump is seen near Bakersfield, California October 14, 2014. NEW YORK (IFR) – The rebound in oil prices has not been enough to stop the bleeding at many U.S. energy companies, whose bonds keep weakening – and whose ability to muster fresh capital is dwindling away. Oil and bond prices are moving in opposite directions, underlining the market’s lack of confidence in a cash-strapped sector that is seeing its prospects go from bad to worse. The difficulties will start intensifying next week, when banks begin their twice-yearly review to set ceilings on how much exploration and production (E&P) companies can borrow. And with crude at US$45 per barrel – far below the US$60 minimum that underpins many E&P business models – the expected cut in borrowing bases will come as a double whammy. Revenue is down, capital market access is limited and cash is in short supply […]

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U.S. gasoline sales surge at fastest for over a decade

A view of the Tesoro refinery in Martinez, California, February 2, 2015. Gasoline sales to U.S. motorists rose by more than 5 percent in July compared with the same month a year before, according to the U.S. Energy Information Administration (EIA). Gasoline sales are rising at the fastest year-over-year rates for more than 14 years as demand surges. Continued economic expansion, rising employment and cheaper fuel are putting a record volume of traffic on U.S. roads as well as encouraging motorists to upgrade to larger and more fuel hungry vehicles. Gasoline sales were up 5.1 percent in July 2015 compared with July 2014, according to the EIA’s Prime Supplier Report published on Tuesday ( link.reuters.com/pyv65w ). Sales for the first seven months as a whole were up 4.4 percent compared with 2014 ( link.reuters.com/myv65w ). The Prime Supplier Report is based on a census of around 200 firms that […]

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Ban proposed for oil tankers in Great Lakes

Sen.. Gary Peters, D-Mich., calls for ban on crude oil tanker traffic in Great Lakes waters as pipeline company Enbridge conducts monitoring on pipeline running through state waters. File photo by Gary Malerba/UPI LANSING, Mich., Sept. 25 (UPI) — With Enbridge on a regional monitoring mission, two Michigan senators introduced legislation aimed at banning vessels from carrying oil through the Great Lakes. Pipeline company Enbridge is conducting emergency response drills on Line 5, a twin oil line running through the Straits of Mackinac dividing the two Michigan peninsulas. Enbridge, the company behind a major 2010 oil spill in lower Michigan, has faced safety questions over the durability of the 60-year-old Line 5. "After experiencing one of the largest inland oil spills in U.S. history, Michiganders know all too well that a pipeline break can have devastating consequences for our environment and our economy," Sen. Gary Peters , D-Mich., said […]

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E.P.A. to Bolster Testing Because of Volkswagen Scandal

Photo A 2014 Jeep Diesel being tested at the Center for Alternative Fuel Engines and Emissions at West Virginia University. Credit Tom M. Johnson for The New York Times Government regulators said Friday that they planned to step up the testing requirements of cars in the wake of the Volkswagen scandal. The Environmental Protection Agency , which disclosed last week that it had learned that Volkswagen diesel cars had equipment to evade smog-testing standards, said it had sent a letter to manufacturers of gasoline and diesel cars saying that regulators would be looking for so-called defeat devices in all vehicles. The agency said Volkswagen had used a device programmed to fool emissions testers into thinking that the car was emitting much less pollution than it was during regular driving. “Manufacturers should expect that this additional testing may add time to the confirmatory test process,” the E.P.A. wrote in its […]

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East Coast distillate fuel oil inventories higher than in recent years

graph of U.S. east coast distillate fuel oil inventories, as explained in the article text Inventories of distillate fuel oil in the U.S. East Coast are higher now than they have been in the previous three years, reaching 59 million barrels on September 18. Most of the recent increase is in the Central Atlantic region, but inventories are also higher in New England and in the Lower Atlantic, compared with previous late-September levels. Heating oil, a type of distillate fuel oil, is used as a space heating or water heating fuel in about eight million U.S. households, almost all of which are in the Northeast. In the Northeast, 27% of households use heating oil for space heating, while nationwide only 6% of households use heating oil, based on data from EIA’s latest Residential Energy Consumption Survey . The East Coast region (Petroleum Administration for Defense District, or PADD 1) […]

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BHI: Recent downward shift continues for US rig count

The US drilling rig count fell 4 units to 838 rigs working during the week ended Sept. 25, marking the fifth straight week of declines, according to data from Baker Hughes Inc. ( OGJ Online, Sept. 18, 2015 ). Since the recent peak during the week ended Aug. 25 that followed a small summer rebound, the count has dropped 47 units. It’s now down 1,093 units year-over-year. Canada’s rig count fell for a sixth straight week, dropping 6 units to 176, down 253 year-over-year. Since a recent peak after its own summer rebound, the count has declined 35 units, of which all but 1 have been oil-directed. This week, oil-directed rigs in Canada fell another 4 units to 66, down 180 year-over-year. Gas-directed rigs dropped 2 units to 110. Low crude oil prices have caused firms to substantially reduce their rig fleets over the past year to save cash. […]

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Baker Hughes: US Oil Drillers Cut Rigs For 4th Week On Weak Crude

Sept 25 (Reuters) – U.S. energy firms cut oil rigs for a fourth week in a row this week, data showed on Friday, a sign the continued weak prices were causing energy firms to reduce drilling plans. Drillers removed four oil rigs in the week ended Sept. 25, bringing the total rig count down to 640, the lowest since July, after cutting a total of 31 rigs over the three prior weeks, oil services company Baker Hughes Inc said in its closely followed report. That compared with 1,592 oil rigs in the same week a year ago and an all-time high of 1,609 in October 2014. Combined with the reduction in natural gas rigs, total U.S. rigs were at a 12-year low. Natural gas rigs were down one this week to 197, up just one from its lowest level since at least 1987, according to the Baker Hughes data. […]

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California Restores Rule to Cut Carbon in Fuel by 10%

By Alejandro Lazo SAN FRANCISCO–California regulators on Friday voted to reinstate a rule to require a 10% cut in the carbon content of transportation fuels sold in the state by 2020, despite oil industry objections that it would raise gasoline prices. The California Air Resources Board voted 9-0 to move forward with the state’s low-carbon fuel standard, which was the first regulation of its kind in the U.S. when it was established in a 2007 executive order by then-Gov. Arnold Schwarzenegger. It had been frozen since 2013, as the state made revisions to the law following a court challenge. Oregon adopted its own carbon fuel standard in 2009. The California regulation further tightens the state’s emissions regulations, already the most stringent in the U.S. It requires fuel makers to reduce emissions by developing cleaner fuels or adopting greater use of biofuels. It also requires fuel producers to take into […]

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Ukraine, Russia Reach Preliminary Deal on Gas Supplies Through March

BRUSSELS—Ukraine and Russia on Friday reached a preliminary deal on natural-gas supplies to the conflict-torn country until the end of March that, if implemented, will avoid potential cutoffs and shortages for Ukraine and the rest of Europe this winter. The agreement, which still needs to be approved by the government in Kiev, brings down the cost of Russian gas for Ukraine to the same price that is paid by neighboring European Union countries until March. In return, Ukrainian Energy Minister Volodymyr Demchyshyn promised to ensure Russia can ship gas to the EU without interruptions and to pump 2 billion cubic meters of gas into underground storage facilities over the next month. “This is an important factor for a secure time for the winter period,” said Alexander Novak, Russia’s energy minister. The European Commission, the EU’s executive, has been working for much of the year to get the two sides […]

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White House: Sanctions, oil leave Russia damaged

Russian President Vladimir Putin is expected to hear U.S. concerns about eastern Ukrainian rebels. The White House says Russian isolation and low crude oil prices creating major economic problems. File photo by David Silpa/UPI WASHINGTON, Sept. 25 (UPI) — Though low crude oil prices are playing a part, the White House said Russia’s refusal to meet international expectations is leading to economic decline. U.S. President Barack Obama is set to meet Russian President Vladimir Putin at the United Nations next week. White House spokesman Josh Earnest said Russian intervention in Ukraine, where pro-Russian rebels continue their operations, will top the agenda. "Russia’s international isolation and their continued refusal to abide by basic international norms, particularly when it comes to these combined Russian separatist forces, has taken a significant toll on their economy," Earnest said during his regular press briefing Thursday. The U.S. Treasury Department’s Office of Foreign Assets Control […]

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Expense forecast for Norwegian oil field cut

Norwegian energy company det Norske says spending forecast for giant Johan Sverdrup oil field lowered. Photo courtesy of det Norske. OSLO, Norway, Sept. 25 (UPI) — A partner in giant Johan Svedrup oil field off the coast of Norway said the initial estimate of expense for the first phase of operations was cut by $1 billion. An initial development plan submitted in February to the Norwegian government called for first-phase capital expenditures of $14.7 billion. Det Norske, a project partner, said lead developer Statoil lowered the estimate by about $1 billion. "The updated estimate is showing reduced capital expenditures as a result of positive market response in contracts and purchase orders," the company said in a statement. The Norwegian government signed off on Statoil’s initial development plans for the giant Johan Sverdrup oil field in August. First oil is expected late 2019. The first phase of operations should yield […]

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Ruble’s Three-Week Rally Has Sberbank Predicting Longer Advance

The ruble strengthened in a third week of gains, heading toward a resistance level that Sberbank CIB said could be surpassed as crude prices stabilize and companies convert export earning to pay taxes. Russia’s currency climbed 0.8 percent to 65.5670 per dollar by 4:32 p.m. in Moscow. That’s closing in on an “important multi-month” range of 65.30-65.50, Tom Levinson, chief currency and interest rates strategist at Sberbank CIB in Moscow, said in e-mailed comments. "Although it is too soon to signal the all clear for the ruble, it is currently well supported by an oil price that looks more upwardly mobile and the regular end of the monthly tax period," Levinson said. If oil gets “traction” above $50 a barrel, the ruble can keep its gains even without the support from tax payments, he said. The ruble has recovered 8.1 percent from a record-low close a month ago as […]

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Europe’s gasoline-heavy refiners see profit in VW scandal

A lone bird sits atop of the Volkswagen power plant in Wolfsburg September 22, 2015. Some of Europe’s struggling refineries could get an unexpected boost from Volkswagen’s diesel emissions scandal if once-dominant gasoline regains its popularity. Europe’s refineries, many of which were built in the 1950s to support booming petrol demand, have been hit over the past 20 years by shrinking fuel demand and government incentives that skewed car sales toward diesel engines, which were seen as more efficient and emitted less carbon dioxide. The rise of the diesel car, which accounted for 50 percent of car sales last year, has forced Europe to rely on diesel imports while its refineries struggled to find overseas markets for excess gasoline, which has put heavy pressure on profits and prompted a wave of plant closures in recent years. Volkswagen’s diesel emissions rigging scandal in the United States could reverse the fortunes […]

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As Russian oil profits hold up, Goldman says ‘buy’; taxman says ‘tax’

When the head of the Kremlin’s oil major Rosneft, Igor Sechin, went to see Prime Minister Dmitry Medvedev last month to report on his achievements, he proudly boasted about a bullish report from the U.S. investment bank Goldman Sachs. Goldman’s analysts said they had spotted a buying opportunity in the Russian oil sector. While energy companies around the world had been hit hard by a global fall in prices, Russia’s oil companies had been spared some of the damage thanks to a collapse in the rouble which lowered their costs. In fact, Goldman said, Russia’s oil industry, the world’s biggest by volume, was also its most profitable. A month later, investors don’t yet seem to have heeded Goldman’s advice to buy in. Most are still spooked away from Russia by international financial sanctions imposed by the United States and EU over the conflict in Ukraine. But the taxman has […]

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Oil Prices Gain on Falling U.S. Supply

Oil prices rose Thursday as traders focused on falling U.S. oil supplies. Light, sweet crude for November delivery settled up 43 cents, or 1%, at $44.91 a barrel on the New York Mercantile Exchange, after wavering between gains and losses throughout the session. Brent, the global benchmark, rose 42 cents, or 0.9%, to $48.17 a barrel on ICE Futures Europe. On Thursday, data provider Genscape Inc. told clients that crude supplies in Cushing, Okla., fell by more than 500,000 barrels in the week ended Tuesday, according to a market participant who viewed the data. The report came one day after the Energy Information Administration said that crude-oil stockpiles in the U.S. fell more than expected last week. Investors have been focused on signs that the glut of oil in the U.S. is shrinking. Oil companies sharply cut back on new drilling in the past year in response to the […]

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Oil edges up after tumble on buildup in U.S. gasoline stocks

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. Oil prices pared some losses on Thursday after sharp falls overnight on an unexpectedly large buildup in U.S. gasoline stocks and seasonally tepid demand. The global benchmark November Brent contract LCOc1 had climbed 44 cents to $48.19 a barrel as of 0151 GMT, after ending the previous session down $1.33 at $47.75 a barrel. U.S. crude CLc1 rose 47 cents to $44.95 a barrel, having slumped $1.88 on Wednesday to settle at $44.48. "A combination of a slightly better supply-side scenario in terms of prices and a bit of an improvement in industrial sentiment globally has brought in some support," said Michael McCarthy, chief market strategist at CMC Markets in Australia. Data from the Energy Information Administration on Wednesday showed that U.S. crude oil stocks USOILC=ECI fell 1.9 million barrels in the week to Sept. 18, […]

Posted On : Published By : Tom Whipple