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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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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 […]

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Pursuit of China’s Oil Prize Is a Race for Second Place

In the race to supply crude to the world’s biggest energy user, it’s the tussle for second place that’s too close to call. Russia, Angola and Iran are vying to be runner-up to Saudi Arabia as the top seller to China. The contest is set to intensify as Iran seeks to recover market share lost because of sanctions and the U.S. Congress debates a nuclear deal that’ll allow the Persian Gulf state to boost shipments. China overtook the U.S. as the biggest importer of crude most recently in June, taking advantage of a 50 percent slump in benchmark prices over the past year to boost strategic reserves. With the Asian nation forecast to account for more than a quarter of global demand growth in 2016, the prize of becoming a top supplier will bolster the economic health of national producers that depend on energy exports for most of their […]

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PetroChina’s Slump Seen Ignoring Value of Oil Pipeline Spinoff

PetroChina Co.’s slump to the lowest in six years may be ignoring the potential value from spinning off its huge pipeline network as part of the country’s energy industry reforms. Shares of China’s biggest oil and gas producer are trading in Hong Kong at the lowest since the global financial crisis, reflecting a plunge across the industry as oil prices collapse. The company, which has lost more than 45 percent in the past year, closed Monday at the lowest since March 2009. The stock isn’t reflecting the “goldmine” of its 77,000-kilometer (47,855-mile) pipeline network, according to Laban Yu, a Hong Kong-based analyst at Jefferies Group LLC. Shares were trading down 0.5 percent at HK$5.69 at 1:34 p.m. local time. “Pipeline assets alone could be worth HK$3.55 a share, but there’s zero consideration for such assets in the current stock prices,” Yu said. “It’s the elephant in the room.” The […]

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Operational constraints limit crude storage at U.S. refineries: Kemp

The Tesoro oil refinery is viewed from the air in Carson, California August 5, 2015. U.S. commercial crude stocks are still close to their highest levels in over 80 years, but operational requirements prevent refineries filling on-site storage facilities to their maximum capacity. An increasing proportion of U.S. crude oil stocks is held in off-site tank farms, some owned or leased by refiners themselves, but many owned or leased by marketers and traders. According to the Energy Information Administration (EIA), which surveys storage capacity every six months, total crude in storage at the end of March was 475 million barrels, and the country had capacity to store up to 660 million. Only 182 million barrels of storage capacity, around 28 percent, was on site at oil refineries. The rest was off site at tank farms or in pipelines, railroad tank cars, barges and oilfield tanks. Most of the crude […]

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U.S. to open up offshore acreage for drillers

Federal government schedules auctions for March for new oil and gas opportunities in the U.S. waters of the Gulf of Mexico. File photo by Maryam Rahmanian/UPI WASHINGTON, Sept. 14 (UPI) — The U.S. government said it was offering more than 40 million acres for drilling opportunities in the central and eastern Gulf of Mexico. "As one of the most productive basins in the world, the Gulf of Mexico is a cornerstone of our domestic energy portfolio, offering vital oil and gas resources that further economic growth and continue to reduce our dependence on foreign oil," Abigail Ross Hopper, director of the Bureau of Ocean Energy Management, said in a statement. BOEM said sales for central and eastern acreage within the Gulf of Mexico mark the ninth and 10th auctions under a five-year lease plan ending in 2017. The lease for 42.1 million acres in the central Gulf of Mexico […]

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Gasoline Leads Oil Prices Lower

The price of crude oil fell Monday amid an ongoing production glut. NEW YORK—Gasoline futures slid to an eight-month low Monday on concerns that the end of the busy summer-driving season could lead to a glut of the motor fuel. Oil prices also fell on fresh indications that the war for customers in the global crude market hasn’t abated. Gasoline prices settled down 6.56 cents, or 4.8%, at $1.3043 a gallon, the lowest settlement since Jan. 15. Gasoline prices surged 46% in the first half of the year, as relatively low prices sparked a surge in demand globally. U.S. driving hit a record, and refineries around the world ran at unusually high rates to churn out enough gasoline to meet consumption. But gasoline demand typically declines in September, as consumers stop taking trips after the busy summer-driving season. Gasoline prices have erased their spring gains and are now down […]

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Scientists say it’s been 500 years since California has been this dry

A snowboarder threads his way through patches of dirt in Olympic Valley, California. Many Tahoe-area ski resorts have closed due to low snowfall as California’s historic drought continues. (Max Whittaker/Getty Images) Researchers knew California’s drought was already a record breaker when they set out to find its exact place in history, but they were surprised by what they discovered: It has been 500 years since what is now the Golden State has been this dry. California is in the fourth year of a severe drought with temperatures so high and precipitation so low that rain and snow evaporate almost as soon as it hits the ground. A research paper released Monday said an analysis of blue oak tree rings in the state’s Central Valley showed that the amount of mountain snow California relies on for moisture hasn’t been so low since the 1500s. That was around the time when […]

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Analysts expect US crude oil stocks fell 200,000 barrels last week

US commercial crude stocks are expected to have decreased 200,000 barrels in the week that ended Friday, a survey of analysts showed Monday. The US Energy Information Administration is scheduled to release its weekly data at 10:30 am EDT (1430 GMT) Wednesday. The EIA five-year (2010-14) average shows inventories fell 270,000 b/d barrels for the same reporting period. Crude stocks typically decrease through the summer until late September, when demand drops because of the autumn refinery turnaround season. However, this year’s refinery activity has slowed down since early August, suggesting an early start to the maintenance period. Crude runs have fallen five weeks in a row. For the week ended September 4, the amount of crude processed equaled 16.1 million b/d, which was 6% below the summer peak of more than 17 million b/d at the end of July. Analysts do not believe refinery activity picked up last week. […]

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North Dakota May Let More Oil Wells Be Temporarily Idled

WILLISTON, N.D., Sept 14 (Reuters) – North Dakota’s oil regulators said on Monday they may allow more wells to be temporarily abandoned, a step that would permit producers to delay fracking beyond the typical one-year window and prevent even more crude from flooding onto global markets. The change would fuel massive savings for oil producers in the state who have amassed a backlog of almost 1,000 wells that have been drilled but not completed with processes needed to get the oil flowing. The delays are designed solely to ride out the roughly 50 percent drop in crude prices since last year. Any regulatory change in North Dakota also would assuage market concerns about supply continuing to outstrip demand at a time when Iraq, Saudi Arabia and other OPEC members show little sign of curbing their own output. While no decision has been reached, the North Dakota Department of Mineral […]

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U.S. shale oil production to fall for 6th straight month: EIA

Unused oil tank cars are pictured on Western New York & Pennsylvania Railroad tracks outside Hinsdale, New York August 24, 2015. Total U.S. shale oil production for October is forecast to decline by 80,000 barrels per day to 5.21 million bpd, compared with 5.29 million bpd in September, according to data released on Monday by the U.S. Energy Information Administration. The drop in October – the first in five months not to be bigger than the previous month’s – was slightly less than the 80,200 bpd decline in September, data shows. Production in the Eagle Ford is expected to fall for a seventh consecutive month, by 62,000 bpd to 1.42 million bpd, according to the EIA’s monthly drilling productivity report. Oil production from the Bakken region of North Dakota is expected to fall 21,000 bpd to 1.18 million bpd in October. It is the fourth month consecutive declines. In […]

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America’s Shale Gas Supply Is Caught in its Longest-Ever Decline

America’s shale gas boom hasn’t exactly been booming lately. Natural gas production from the seven largest U.S. shale deposits will drop for a fourth straight month in October to average 44.784 billion cubic feet a day, the lowest since March, based on an Energy Information Administration forecast released Monday. That’s the longest streak of monthly declines in government data going back to 2007. The pullback follows a decade of surging gas production that created a glut of the heating fuel and sent prices plunging to record lows in some regions. The biggest declines forecast for October are in oil-rich deposits such as the Eagle Ford shale formation in Texas, where drillers are idling rigs in response to a collapse in crude prices. Pipeline constraints in Appalachia aren’t helping either. Yield from the Marcellus shale of the eastern U.S., the nation’s biggest gas field, will fall 0.5 percent, the EIA […]

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Shale Drillers Pump More Oil From Each Well as Rigs Mean Less

Workers prepare drilling pipe on a deep sea crude oil platform in the waters off Veracruz, Mexico. Shale producers in the U.S. have learned to do more with less. Last year’s price crash forced drillers to cut budgets, reducing the number of rigs in U.S. oil fields by 59 percent from the peak. Crude production, though, has fallen only about 5 percent. Part of the reason for that is a spurt of innovation driven by desperation. Rig productivity increased last month in all shale oil plays, the Energy Information Administration said in a report Monday, as companies drill more wells in less time. Wells being drilled this month will be able to pump about 389,000 barrels a day of new production, down 39 percent from last November, a much shallower drop than the overall rig count, according to Austin, Texas-based Drilling Info Inc. “The amount of producibility per rig […]

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Coal’s Answer to Decade-Low Prices Is Even Lower Prices

Coking coal is testing one of the basics of Econ 101: that low prices are the cure for low prices. The global metallurgical coal benchmark for the fourth quarter settled last week at $89 a metric ton, down 4.3 percent from the previous period to the lowest level since March 2005, according to Doyle Trading Consultants, a Grand Junction, Colorado-based industry analyst. Even so, at least three-fifths of the material that moves by sea, some 180 million metric tons of the steelmaking component, are generating a return amid a glut as the crude oil rout and a weaker Australian dollar lower costs for the world’s largest met coal exporter, Bloomberg Intelligence data show. “The prices have to get low enough to where the Australians can’t even tolerate them,” said Jim Thompson, director of coal for IHS Inc. in Knoxville, Tennessee. “Then maybe we can get around to solving the […]

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Oil Patch Braces for Financial Reckoning

Magnum Hunter CEO Gary Evans says the company is selling a pipeline to raise cash. U.S. energy companies have defied financial gravity for more than a year, borrowing and spending billions of dollars to pump oil, even as crude prices plummeted. Until now. The oil patch is expected to finally face a financial reckoning, experts say, with carnage occurring as early as this month. One trigger: Smaller drillers are bracing for cuts to their credit lines in October as banks re-evaluate how much energy companies’ oil and gas properties are worth. But with oil trading below $45 a barrel, bigger oil outfits are struggling to stay profitable, too. Jim Flores, vice chairman of Freeport-McMoRan Inc., FCX -2.11 % which pumps oil in the Gulf of Mexico, explained the industry’s conundrum this way: “It’s raining and it’s going to rain for a long time. We’re all going to get wet. […]

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Gasoline Leads Oil Prices Lower

The price of crude oil fell Monday amid an ongoing production glut. NEW YORK—Gasoline futures slid to an eight-month low Monday on concerns that the end of the busy summer-driving season could lead to a glut of the motor fuel. Oil prices also fell on fresh indications that the war for customers in the global crude market hasn’t abated. Gasoline prices settled down 6.56 cents, or 4.8%, at $1.3043 a gallon, the lowest settlement since Jan. 15. Gasoline prices surged 46% in the first half of the year, as relatively low prices sparked a surge in demand globally. U.S. driving hit a record, and refineries around the world ran at unusually high rates to churn out enough gasoline to meet consumption. But gasoline demand typically declines in September, as consumers stop taking trips after the busy summer-driving season. Gasoline prices have erased their spring gains and are now down […]

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To Understand The Oil Story, You Need To Understand Exports

Despite the attention-grabbing economic volatility that is grabbing headlines, it’s important to keep our eye on the energy story firmly in focus. This is especially true as the headlines we regularly read about Peak Oil being dead " are "manifestly false" according to this week’s podcast guest, petroleum geologist Jeffrey Brown. As concerning as the fact that global oil production has plateaued over the past decade, despite trillions invested in trying to goose it higher, are Brown’s forecasting model for oil exports. His Export Land Model shows how rising internal consumption can swing (and has swung) countries from major exporters to permanent importers within a dizzyingly short period of time: The crucial issue to understand about what has happened after 2005 is that we’ve had a very large increase in global gas production and natural gas liquids, but a much slower increase in crude plus condensate. So, what I […]

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Brent oil prices dip on weaker China data

Oil pumps are seen at a MAX oil station in Yangon April 21, 2014. Brent crude oil fell on Monday as weaker-than-expected Chinese data weighed on markets, adding to concerns that declining global demand would exacerbate a surplus of crude. Traders also waited to see whether the U.S. central bank raises interest rates for the first time in nearly a decade later this week. Should interest rates rise, analysts expect oil to fall as a stronger dollar would undermine demand from importing countries. Oil prices have fallen almost 60 percent since June 2014 on the largest global surplus in modern times and concerns about a slowing Chinese economy. Growth in China’s investment and factory output missed forecasts in August. A recent run of weak data from the world’s second-largest economy has raised the chances that third-quarter economic growth may dip below 7 percent for the first time since the […]

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Oil Slips in Asian Trade, Fed Meeting in Focus This Week

By Eric Yep Crude-oil futures trimmed early gains to move lower in Asian trade Monday as markets grappled with continued oversupply, weakening demand and intraday losses in Chinese equity markets. Investors are bracing for more volatility and possibly lower oil prices in coming weeks. Goldman Sachs Group Inc. said last week that U.S. oil prices could fall to as low as $20 a barrel to clear out a global supply glut. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $44.51 a barrel at 0352 GMT, down $0.12 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $0.32 to $47.82 a barrel. Both WTI and Brent crude futures lost around 3% last week, and have fallen for 9 of the past 11 weeks. The U.S. Federal Open Market Committee meeting on Sept. 16-17 is expected to be […]

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Oil Prices to Fall to $20 Per Barrel?

resilience.org Peak oil is soooooo last decade . Goldman Sachs is suggesting that the price of oil could fall as low as $20 per barrel during the next few years. (Grain of salt warning: Keep in mind that back during the last peak oil craze in 2008, Goldman was predicting $200 per barrel oil .) A drop to $20 per barrel would mean that in real dollars the price of oil would be back to its lowest ever 1999 price. So why might crude prices drop to $20 per barrel? Two reasons. First, vast new supplies of petroleum have been accessed by fracking and horizontal drilling. Fracked oil is now swing production that can come quickly online whenever prices to start to rise. And second, oil states like Russia, Nigeria, Venezuela, Iran, and Saudi Arabia must keep pumping even at low prices in order to generate the cash they […]

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OPEC Is About to Get Even Bigger

There’s been a lot of debate as to whether OPEC’s decision to protect its market share would work. Some thought that the policy shift from protecting price to protecting market share would eventually lead to a breakup of the organization, as weaker members would revolt or bolt. That, however, doesn’t appear to be the case, as its membership is poised to actually grow in December when it welcomes Indonesia back as a member. What Indonesia brings to the table Indonesia is poised to rejoin the oil group after a seven-year hiatus. It originally left due to a slide in its oil output, as it couldn’t overcome the declining production from legacy fields. In fact, its current daily output of 870,000 barrels is just half of what it was in its peak in the late 1970s. Further, that oil output isn’t even enough to meet its own internal demand, which […]

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Iran Could Become Major Supplier of Natural Gas to EU

European Climate Action and Energy Commissioner Miguel Arias Cañete on Aug. 20. BRUSSELS—Iran could become a major supplier of natural gas to the European Union by the end of the next decade, according to new estimates from the bloc’s executive following the nuclear deal reached with Tehran this summer. The European Commission now believes that the bloc could import between 25 billion and 35 billion cubic meters of gas a year from Iran by 2030, according to a European official and a representative of a European energy company. That would put future gas supplies from Iran on a similar level to current imports from North Africa and help reduce the bloc’s dependence on shipments from Russia. Russia currently ships around 130 BCM a year to the EU. Western governments and energy companies have been positioning themselves to once again tap Iran’s rich oil and gas reserves since the prospects […]

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Iran sees crude oil price at $42-$50 in year to March 2017

Iran has projected average oil prices at $42 to $50 per barrel in a draft budget bill for the year to March 2017, a government spokesman was quoted as saying on Monday, expecting crude to stay in the current trading range. "In consultation with the Ministry of Petroleum, three price options of 42, 45, and 50 dollars were discussed which are expected to earn 68 trillion tomans (about $22.5 billion)," oil news agency Shana quoted Mohammad-Baqer Nobakht as saying. Benchmark Brent crude has traded between $42 and $55 in the last month, and was just below $48 on Monday morning. OPEC member Iran, which relies on crude sales to balance its budget, has called on other producers to rein in exports to support prices while it expects to boost output in 2016 when nuclear-related sanctions are expected to be lifted. As part of a nuclear deal reached in July […]

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Iraq Warns Oil Companies of Spending Cuts

Iraq’s oil ministry has issued a stark warning to the international oil companies running its energy sector that it will slash spending in 2016 as the country feels the full effect of low crude prices and the fight against Islamic State . A Sept. 6 letter from an oil ministry official is fresh evidence that Iraq is struggling to maintain a swift expansion of its energy sector that has made it the Organization of the Petroleum Exporting Countries’s second-largest producer with 4 million a barrels a day or more this summer. “Because of the drop in our oil-sales revenues, the Iraqi government has sharply reduced the funds available to the Ministry of Oil,” the official, Abdul Mahdy al-Ameedi, wrote. “This will…reduce the funds available for the reimbursement of petroleum costs to our contractors.” Mr. Ameedi also wrote that the oil ministry didn’t expect lower funding to “reduce production from […]

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Russian Flights Over Iraq and Iran Escalate Tension With U.S.

WASHINGTON — Russia is using an air corridor over Iraq and Iran to fly military equipment and personnel to a new air hub in Syria , openly defying American efforts to block the shipments and significantly increasing tensions with Washington. American officials disclosed Sunday that at least seven giant Russian Condor transport planes had taken off from a base in southern Russia during the past week to ferry equipment to Syria, all passing through Iranian and Iraqi airspace. Their destination was an airfield south of Latakia, Syria, which could become the most significant new Russian military foothold in the Middle East in decades, American officials said. The Obama administration initially hoped it had hampered the Russian effort to move military equipment and personnel into Syria when Bulgaria, a NATO member, announced it would close its airspace to the flights. But Russia quickly began channeling its flights over Iraq and […]

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U.S. and Iran Both Conflict and Converge

Photo An anti-American mural along a street in Tehran. The United States and Iran each face domestic pressures against closer relations, a nuclear deal notwithstanding. Credit Abedin Taherkenareh/European Pressphoto Agency BAGHDAD — American troops advising Iraqi security forces in restive Anbar Province are sharing a base with odd bedfellows: an Iranian-backed militia that once killed United States soldiers. Both are fighting the militants of the Islamic State. Here in the capital, though, Tehran and Washington still line up on opposite sides. The United States is urging the Shiite-dominated Iraqi government to do more to enlist members of the Sunni minority against the Islamic State. Shiite-led Iran and its proxies are thwarting that effort. The dichotomy illustrates the complexities of the relationship between the United States and Iran in places like Iraq , where the interests of the two rivals clash and converge. Now, after a deal to limit Iran’s […]

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Syria peak oil weakened government’s finances ahead of Arab Spring in 2011

While the attention of the world is on the refugee crisis we need to look at the causes of this mass exodus. Fig 1: Refugees walking on Hungarian motorway towards Austria in Sep 2015 In May 2013 the Guardian had an article “Peak oil, climate change and pipeline geopolitics driving Syrian conflict” http://www.theguardian.com/environment/earth-insight/2013/may/13/1 In March 2015, a group of researchers led by climatologist Colin Kelley (University of California) published a study in the Proceedings of the National Academy of Sciences with the title “Climate change in the Fertile Crescent and implications of the recent Syrian drought” “Between 2006 and 2009, the people of Syria suffered during the most severe drought that country has experienced since the beginning of its instrumental record. As water became scarce, crops failed and cattle died on a huge scale. As many as 1.5 million Syrians, out of a population of just over 20 million, […]

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Saudi copes with oil drop by selling FX

Look out world—China’s not the only central bank in town selling its currency reserves to cope with a tumultuous global economy. With crude prices having shed more than half their value over the past year, oil producing economies are feeling the sting of cheaper oil. More importantly, Saudi Arabia—OPEC’s largest member and the world’s top oil producer—bears watching as oil stays below $50 and a global glut depresses oil prices, analysts say. Even before China surprised markets by announcing a record drawdown of its foreign currency denominated assets, Saudi Arabia had already begun selling its reserves to plug a hole in its budget and support its flagging currency, the riyal. In February and March, the world’s largest oil exporter saw net foreign assets drop by more than $30 billion, the biggest two- month drop on record. These asset sales are important because Saudi holds one of the world’s largest […]

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Egypt will take Cyprus gas

The recent discovery of giant natural gas deposits in Egypt’s Zohr plot does not negate the country’s export deal with Cyprus, newly-accredited ambassador Hussein Mubarak told the Cyprus Weekly. Although Nicosia is looking into different scenarios, Cairo’s offer to import the gas from the Aphrodite plot offshore Cyprus, liquefy it in Egypt and sell it to Europe is there. “The discovery of the new natural gas at plot Zohr will not change the policy of Egypt towards Cyprus, Egypt is a huge country with huge energy needs,” Mubarak said. “Egypt has offered to import Cyprus natural gas for domestic use and also for liquefication at the plant in Egypt and then sell it to Europe, everywhere. “I think, economically, to start a liquefication plant is very costly, we already have a plant to treat it and liquefy it and sell it to Europe,” he added. The ambassador also said […]

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Saudi Arabia Says It Has Taken In 2.5 Million Fleeing Syrians

After attracting severe criticism on social media and from members of the Muslim community around the world, Saudi Arabia has defended itself saying that the kingdom has accepted more than 2.5 million refugees since the Syrian conflict began. The oil-rich nation also claimed that it has given permanent residency to hundreds of thousands of Syrians ever since 2011. Rich Gulf nations have been condemned for not welcoming Syrian refugees , who are fleeing the civil war and the Islamic State (Isis) onslaught in the country and making perilous journeys to Europe via sea. While numerous countries apart from Europe are embracing thousands of migrants, Gulf Cooperation Council (GCC) members Saudi Arabia, Oman, United Arab Emirates, Kuwait, Bahrain and Qatar have been blamed for remaining silent on the issue. However, according to the Saudi Press Agency, an unnamed official of the Saudi foreign ministry has said that nearly 2.5 million […]

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China stocks slide as data raises fresh economy worries

An investor speaks in front of an electronic board showing stock information at a brokerage house in Fuyang, Anhui province, China, September 14, 2015. China’s stocks fell on Monday after data suggesting economic growth was running below the 2015 target level of about 7 percent heightened concerns about the health of the economy. The economic concerns offset the impact of plans announced at the weekend to reform the bloated state-owned enterprise sector and produce "decisive" results by 2020. Underscoring the fragility of China’s financial markets even after some respite last week, currency traders suspected the central bank intervened to prop up the yuan in onshore markets, which wobbled following a report that net capital outflows in the first quarter of the year were more than $100 billion. "China’s economy faces relatively big downward pressure, so investor sentiment remains weak," said Gu Yongtao, strategist at Cinda Securities. China’s stock markets […]

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China’s Higher Refinery Runs May Boost Diesel Exports to Record

China’s diesel exports may surge to a record in the coming months as refinery output increases while domestic demand growth for the fuel slows. The nation’s diesel shipments might have risen to a record last month, topping the previous high in June of 670,000 tons, and may climb to 1 million tons a month in the fourth quarter, according to ICIS China, a Shanghai-based commodity researcher. China is scheduled to release August diesel export data next week. Refiners processed 44.34 million metric tons of crude in August, up 6.5 percent from a year earlier, data from the Beijing-based National Bureau of Statistics showed Sunday. That’s about 10.48 million barrels a day and 1.8 percent higher than July as production increased to satisfy growing demand for gasoline. “Diesel exports will continue to rise amid a supply glut created by high oil processing to meet robust gasoline demand,” Lin Jiaxin, an […]

Posted On : Published By : Tom Whipple
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China Unveils Overhaul of Bloated State Sector

BEIJING—Chinese President Xi Jinping set in motion the overhaul of the country’s bloated state companies just ahead of his U.S. visit , in a bid to show Beijing is committed to change even as the economy slows . A plan released Sunday, however, represents a modest fix to China’s brand of state capitalism. It attempts to enhance state companies’ returns by letting them add private investors. It also tries to improve state companies’ competitiveness overseas by making them bigger, though that risks creating more inefficiency and further stymieing private enterprise. Crucially, the plan doesn’t specify whether underperforming state firms will be allowed to fail, a measure economists say would be critical to its success. The plan reflects Mr. Xi’s belief, according to officials familiar with his thinking, that the state sector, rather than taking a back seat, should be improved to continue to play a dominant role in the […]

Posted On : Published By : Tom Whipple
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Chinese shares fall sharply as economic data undermines mood

Image copyright Chinese shares lead the losses in Asia Mainland Chinese shares fell on Monday after economic data released on Sunday underlined fears growth is slackening. Growth in both fixed-asset investment , up 10.9% in August from a year ago, and factory output, at 6.1%, came in below expectations. The Shanghai Composite index closed down 2.67% at 3,114.80, although Hong Kong’s Hang Seng closed up 0.27% at 21,561.90. The Shanghai index has lost nearly 40% since its peak in mid-June. Shares of four of China’s largest brokerages tumbled as much as 7% following news of fines and penalties from the securities regulator for failing to conduct proper checks on clients. The four were fined 178.5m yuan ($28m; £18m) and had 62.4m yuan of profits confiscated, according to the securities filings by the companies. Regulators have been cracking down on trading firms to stem the volatility that has rocked the […]

Posted On : Published By : Tom Whipple
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U.S. shale crude cash markets offer ray of hope amid global gloom

In shale strongholds of North Dakota and Texas, physical crude grades are trading at the highest premiums to futures prices in years, offering a glimmer of hope that a pickup in global oil markets might follow. While crude futures hover around 6-1/2-year lows, the cash markets, where producers and refiners buy and sell physical barrels of oil, are sending a more optimistic, if short-term, signal. West Texas Intermediate crude delivered to Midland, Texas, at the heart of the Permian Basin, is trading at a record $2.75 premium to benchmark U.S. futures. North Dakota’s Bakken crude fetches more than 50 cents more, the highest in two years. The two areas produce more than 60 percent of U.S. shale oil. Many cash crude traders say the relative strength of these markets most likely reflects local, short-term factors: newly built pipelines in Texas are increasing demand for local crude, while Midwest refiners […]

Posted On : Published By : Tom Whipple
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Write-Downs Abound for Oil Producers

U.S. oil-and-gas producers have written down the value of their drilling fields by more in 2015 than any full year in history, as the rout in commodity prices makes properties across the country not worth drilling. A group of 66 oil and gas producers have taken impairment charges totaling $59.8 billion through June, according to a tally by energy consultancy IHS Herold Inc. That tops the previous full-year record of $48.5 billion set in 2008, IHS says. In 2008, oil prices plummeted from above $140 a barrel at midyear to below $37 by year-end as the financial system’s near collapse sent the global economy into recession. The drop was steep but relatively short-lived as growing demand from China and other emerging economies was expected to suck up global supplies. Now, with China’s economy sputtering and U.S. production at its highest level in decades, prices aren’t expected to return to […]

Posted On : Published By : Tom Whipple
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Truth takes a hit in the battle over U.S. oil export ban

They say that the first casualty of war is truth. And, on both sides of the fight over lifting the ban on exports of U.S. crude oil, the truth has already fallen into a coma. The ban was instituted in 1975 in order to make America less subject to swings in international oil supply after suffering the price shock associated with the Arab oil embargo in 1973 . Last week a committee in the U.S. House of Representatives voted to end the ban after a Senate committee voted in July to do the same . A vote by the full House and Senate could be near. The proponents are careful NOT to say that the United States is energy-independent and so has oil to spare. Such claims made in the past backfired because it is too easy to look this up. Net U.S. imports of crude oil were almost […]

Posted On : Published By : Tom Whipple
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Interest in hybrid vehicles wanes

Interest in hybrid motor vehicles rises and falls with the price of gasoline. Today, with gasoline prices relatively low, some of the steam has gone out of the movement to compressed natural gas vehicles or the hybrids that also use gasoline. Interest was sky high in 2011 when the Legislature authorized two state agencies — the Department of Administration and Information and the Department of Transportation — to retrofit existing vehicles or to buy new ones capable of running on natural gas or a combination of natural gas and gasoline. The Legislature authorized $200,000 for the pilot program, enough to retrofit 10 vehicles for each of the two departments. A report from the state’s Economic Analysis Division issued at that time said the natural gas vehicles reduce carbon monoxide emissions by 90 to 97 percent. But the driving range of the vehicles is limited, the report warned. At the […]

Posted On : Published By : Tom Whipple
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Peak Oil Ass-Backwards: Crashing Oil Prices Aren’t Due to an Oil Glut But to Demand Destruction and Peaking Credit

Read Part 1 of the series. Confusion dawns upon the smartest men in the room (photo by Rafael Matsunaga) As I began to mention at the end of the first part of this three-parter, I’ve only just recently come to the conclusion that oil prices aren’t going to have a tendency to rise due to the tightening of supply imposed by peak oil , but to depreciate. This of course flies in the face of the common logic of supply and demand, but when factoring in the method by which the majority of our money is created, a deflationary effect can be seen to come into play. This has taken me an absurdly long time to clue into, for although I’d steadfastly amassed a bunch of pieces (various information), I hadn’t realized they were actually all part of the same puzzle. With peak oil and fractional-reserve banking being the […]

Posted On : Published By : Tom Whipple
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Oil Price Slips as Market Focuses on Oversupply

Oil retreated Friday as analysts reminded the market of high U.S. inventory numbers and the continued oversupply of crude. Light, sweet crude for October delivery settled down $1.29, or 2.8%, to $44.63 a barrel on the New York Mercantile Exchange. The contract fell 3.1% in the week. Brent, the global benchmark, fell 75 cents, or 1.5%, to $48.14 a barrel on ICE Futures Europe, notching a 3% weekly decline. Data from the U.S. Energy Information Administration on Thursday set the stage for a decline. It showed stocks rose 2.6 million barrels in the week to 458 million barrels, higher than the inventory estimate from industry group the American Petroleum Institute earlier in the week. U.S. investment bank Goldman Sachs piled on by lowering its short- and midterm price forecasts for U.S. oil to reflect a higher-than-expected oversupply. The bank had been among the most bearish in the market already […]

Posted On : Published By : Tom Whipple