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OPEC Trims 2016 Estimates for Rival Supplies as U.S. Oil Suffers

OPEC trimmed estimates for supplies from outside the group in 2016 as the slump in prices takes its toll on the U.S. shale-oil industry. The Organization of Petroleum Exporting Countries cut 2016 estimates for non-OPEC output by 110,000 barrels a day, its Vienna-based secretariat said Monday in its monthly market report. Still, the group sees non-OPEC supply expanding slightly next year, while the International Energy Agency on Friday predicted a contraction of 500,000 barrels a day, the biggest since 1992. Saudi Arabia told OPEC it curbed output in August to a six-month low. “There are signs that U.S. production has started to respond to reduced investment and activity,” OPEC said in the report. “Indeed, all eyes are on how quickly U.S. production falls.” West Texas Intermediate crude futures have tumbled more than 50 percent in the past year, triggering an unprecedented cutback in drilling that threatens to end the […]

Posted On : Published By : Tom Whipple
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Gulf Oil Producers Ramp Up Price War as China, Supply Concerns Persist

The Persian Gulf’s biggest oil producers appear to be intensifying their price war in a competition to maintain their share of the Asian market amid uncertainty about the direction of the oil market in 2015. Saudi Arabia, Iran and Iraq all cut their official prices for October deliveries to Asia this month, amid new concerns about the economy in China —one of their biggest customers—and a persistent glut that isn’t likely to disappear even as U.S. output begins to fall . The slashed prices—down 30 cents in Saudi Arabia, 35 cents in Iran and 50 cents in Iraq, for light crude—are similar to the measures taken earlier in 2015, when global prices for crude fell below $50 a barrel from highs of $114 the previous summer. Instead of cutting production as it did in past times of market turmoil, the Organization of the Petroleum Exporting Countries decided to keep […]

Posted On : Published By : Tom Whipple
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Oil trading in Asia reaches inflection point

A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014. Imagine what crude oil trading will look like in Asia in 10 years’ time. Probably quite different to like it does now. In recent months oil markets east of Suez have been roiled by the increasing influence of the trading arms of China’s state-controlled giants, PetroChina and Sinopec. PetroChina’s Chinaoil has effectively boosted the price of the benchmark Dubai crude by bidding aggressively for cargoes in the price discovery mechanism run by Platts, known as the Market on Close (MoC) or colloquially as the "window". This has increased the price of Dubai crude relative to other benchmarks such as Brent, as well as raising the ire of other market participants from producers to traders and refiners outside China. So great is the consternation that the talk of last week’s annual oil […]

Posted On : Published By : Tom Whipple
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Mexico Sets Minimum Payments for Next Offshore Oil Field Auction

Mexico will require royalty payments of 30 to 36 percent for companies that win rights to produce oil in the nine shallow-water fields up for auction this month, the country’s finance ministry said. Companies that win production sharing contracts to drill in the Gulf of Mexico will have to pay a rate that varies depending on the obligation of each field, according to the e-mailed statement. Mexico won’t require companies to pay an additional royalty for the investment that goes into production and development of each field, known as the work program. The announcement of the minimum financial requirements prior to the awarding of the contracts is one of several adjustments made by the Mexican government to attract more bids than in July, when only two of 14 blocks were awarded to private companies. In the country’s first auction of oil blocks to private companies, Mexico announced the required […]

Posted On : Published By : Tom Whipple
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Mexico Sweetens Terms for Coming Auction of Oil Fields

MEXICO CITY—Mexico sweetened the terms for its September auction of oil fields, setting minimum bids Monday that are generally lower than for the exploratory blocks offered in July, which generated little interest given the weak price environment for oil and gas. The Finance Ministry said the minimum bids for five groups of shallow-water fields guarantee a fair share of profits for the government while keeping the energy sector competitive for private capital. The ministry said the government’s overall take of the oil profits, after royalties and taxes, will be more than half. Industry analysts said the government is taking the right steps to make this month’s auction more successful than July’s. Oil regulators had already made some changes to the contract terms for the September auction to generate greater interest. “I think a very important thing to notice here is that the government is willing to show flexibility going […]

Posted On : Published By : Tom Whipple
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LNG to Take Center Stage in Shipbuilding Battleground

South Korea and Singapore shipbuilders are angling for early mover advantage for a larger pie of the LNG value chain. Leading shipbuilders in Singapore and South Korea are realigning their product offerings to tap potential demand for next-generation vessels capable of meeting the new emission control requirements scheduled to kick in from 2020. The International Maritime Organization (IMO) has announced the intent to introduce by 2020 a new standard to tighten allowable sulfur content in marine fuels globally outside of the emission control area in the North Sea, off the United States and Canada. The timeline for the imposition of the so-called IMO Tier III emission standard imposing a .5 percent sulfur limit globally remains subject to a review to be completed by 2018, according to the World Shipping Council. Oil companies have also developed low sulfur marine gas oil capable of satisfying the new emission requirements. Yet, as […]

Posted On : Published By : Tom Whipple
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Carmakers curb China output as sales growth stalls

Visitors stand around cars during the Volkswagen group night ahead of the Frankfurt Motor Show (IAA) in Frankfurt, Germany, September 14, 2015. Volkswagen and other major carmakers have begun reining in Chinese output, wages and other costs, industry sources told Reuters, as executives at the Frankfurt auto show put a brave face on a sharp slowdown in the world’s biggest vehicle market. The German car giant’s Chinese joint venture, FAW-VW, is cancelling staff bonuses and cutting shifts at its plants near Changchun, northeastern China, people with knowledge of the matter said. The bonuses being scrapped typically account for more than half of the assembly-line workers’ take-home pay. Volkswagen’s ( VOWG_p.DE ) high-end Audi brand also said it had cut output at its Chinese plants, trimming the working week to five days from seven in response to lower demand for models such as the A6 saloon. And German rival BMW […]

Posted On : Published By : Tom Whipple