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U.S. oil extends gains on stock-draw, Brent lags with Asian economies

A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. U.S. oil prices extended gains in Asia on Wednesday on an unexpected stockpile draw and higher gasoline prices, while international crude markets were weaker on the back of low Asian economic growth expectations. Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $44.91 per barrel at 0453 GMT on Wednesday, up 32 cents from their last settlement. Internationally traded Brent futures were a bit weaker in comparison, gaining only 9 cents to $47.84 a barrel. The recent divergence in American and international markets has cut the discount of the U.S. oil to the Brent global benchmark by nearly two-thirds during the past month to around $2.50 per barrel. "We believe that this could be the market’s reaction to the decline in U.S. crude production (drilling) … further exacerbated […]

Posted On : Published By : Tom Whipple
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Brent crude premium to U.S. WTI futures narrowest since January

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. The premium of Brent crude oil futures to U.S. WTI oil prices reached its narrowest since the start of the year on Tuesday, driven by expectations for lower U.S. production over the coming months. The Brent/WTI spread touched $2.00 a barrel, the smallest gap between the two contracts since January, before easing back a touch to $2.19 by 1303 GMT. The front-month Brent futures contract, which expires later on Tuesday, was up 33 cents on the day at $46.7 a barrel, while WTI futures were up 51 cents at $44.51. Both benchmarks have lost roughly half their value over the last year, under pressure from rising global supply and faltering demand from key consumers such as China. Key forecasters have this week predicted a decline in U.S. output next year, particularly from higher-cost shale producers.

Posted On : Published By : Tom Whipple
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Oil Prices Rise Amid Signs of U.S. Output Cuts

Oil prices rose Tuesday, as signs of U.S. production cuts and bargain buying helped lift the market from a two-week low. Light, sweet crude for October delivery gained 59 cents, or 1.3%, to close at $44.59 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 26 cents, or 0.6%, to $46.63 a barrel on ICE Futures Europe. The U.S. Energy Information Administration said Monday that production from several important shale-oil fields is likely to fall by 80,000 barrels a day by next month. Crude oil output from the Eagle Ford shale in Texas, one of the hottest spots during the U.S. drilling boom, has dropped for seven straight months, down 17% over that time, according to ClipperData’s analysis. It was surprising that Eagle Ford has had the steepest declines, Simmons & Co. International said in a research note. Many speculators have made big bets throughout […]

Posted On : Published By : Tom Whipple
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Oil edges up towards $47, weaker Asian demand outlook weighs

A customer fills the tank of her car at a fuel station in Sint Pieters Leeuw, Belgium December 5, 2014. Oil edged higher towards $47 a barrel on Tuesday, supported by the prospect of lower U.S. inventories and production although concern about weaker Asian demand kept prices in check. While analysts expect reports this week to show no change in U.S. crude stocks overall, an estimate from market intelligence company Genscape that they fell by 1.8 million barrels at Cushing – U.S. crude’s delivery point – lent oil some support. Brent crude LCOc1 was up 26 cents at $46.63 a barrel, after declining in the previous two sessions. U.S. crude CLc1 was trading 38 cents higher at $44.38 at 0849 GMT. "Genscape is forecasting a large stock draw in Cushing," said Olivier Jakob, analyst at Petromatrix. "The supply and demand numbers suggest that the low oil prices are starting […]

Posted On : Published By : Tom Whipple
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Oil price curve may hint at higher prices at last

An employee changes a price sign at a petrol station in Hanoi, Vietnam September 3, 2015. Cautious oil market bulls are stirring, sensing higher prices for future months after a first whisper that the glut may be set to slowly shrink. The International Energy Agency (IEA) on Friday said lower prices will force non-OPEC producers including the United States to cut output by the steepest rate in over 20 years next year. This helped push the difference in price between oil for delivery in October and for delivery in one year’s time to its widest in six months, at $8.0 a barrel on Monday. "People are getting ready to press the ‘buy’ button, but the thing is we are probably just still a couple of months too early," Saxo Bank commodities strategist Ole Hansen said. The outperformance of longer-dated crude prices seems to be more about a pickup in […]

Posted On : Published By : Tom Whipple
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Oil Traders Hire Tanks on Tiny Island to Profit From Global Glut

To see how oil traders are profiting from the longest-lasting glut in three decades, look at the tiny Caribbean island of St. Lucia. Glencore Plc hired tanks at the island’s only oil terminal to stow crude, joining Vitol Group, people familiar with the matter said last week. They’re responding to the market’s deepening contango, a situation where prices today are lower than those in future months, allowing traders with access to storage to lock in a profit. From St. Lucia to South Africa to Rotterdam, they’re seizing the opportunity. “Contango opportunities are emerging,” Ian Taylor, chief executive officer of Vitol, the world’s largest independent oil trader, said in an interview earlier this month. While the oil market has been in contango since August 2014, in the last month prices have moved in a direction that makes the trade more profitable. The price difference between a Brent oil contract for […]

Posted On : Published By : Tom Whipple
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Decline rates will ensure oil output falls in 2016

An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015. “It takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast,” the Red Queen told Alice in Lewis Carroll’s novel “Through the Looking-Glass”. Oil companies have to invest heavily simply to offset the impact of natural decline rates on their existing fields, and even more if they want actually to increase production. The need for continued investment and drilling to maintain output as a result of the rapid decline rates on shale wells has been widely discussed. But decline rates on conventional oil fields are even more important because they account for more than 90 percent of global production. Decline rates on conventional fields will play a critical part rebalancing the oil market […]

Posted On : Published By : Tom Whipple
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Genel makes grab for Kurdish gas

British company Genel Energy takes on larger stake in gas assets in the Kurdish north of Iraq. Photo courtesy of Genel Energy. LONDON, Sept. 15 (UPI) — British energy company Genel Energy said it was buying the minority share of a Kurdish natural gas field form its partners at Austria’s OMV. Genel said it struck a deal to buy the 36 percent stake in the Bina Bawi gas field in the Kurdish north of Iraq. The British company said the deal is dependent only on the approval of the semiautonomous Kurdish government, with it expects shortly. "The consideration comprises an upfront payment of $5 million," Genel said in a statement. "A contingent payment of $70 million is payable once gas production exceeds agreed threshold volumes from the Miran and Bina Bawi fields." Genel in 2012 paid $156 million to take on Miran assets from Heritage Energy Middle East Ltd., […]

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U.N. Sends Experts to Iran to Discuss Past Nuclear Work

The United Nations atomic agency has sent a team of experts to Iran to discuss Tehran’s past nuclear work, according to a person familiar with the situation, while the chief of the agency could visit Iran in coming days. Sept. 15 marks the start of a critical one-month period for the International Atomic Energy Agency probe aimed at shedding light on Iran’s past nuclear work. Under an agreement struck in July , Iran and the agency have until Oct. 15 to finish that work. IAEA Director-General Yukiya Amano is supposed to report his findings to the agency’s board by Dec. 15. Many Western officials say Iran has worked on developing nuclear weapons know-how. Tehran denies this, claiming evidence given to the IAEA was forged. Iran has stonewalled agency efforts to probe its past activities for years. Iranian cooperation with the IAEA probe is a prerequisite for the lifting of […]

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Iraq warns big oil groups on spending curbs in southern oilfields

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Posted On : Published By : Tom Whipple