Category:

China welcomes IMF backing to make yuan world reserve currency

China on Saturday welcomed backing from IMF experts that the yuan should be included in its reserve currencies, saying the move would strengthen the world’s financial system. Now the world’s second-largest economy, China asked last year for the yuan to be added to the elite basket of SDR currencies, but until recently it was considered too tightly controlled to qualify. It now looks likely the yuan will be formally admitted to the IMF’s “special drawing rights” currency basket at the end of the month, which would mark a milestone in China’s efforts to become a global economic power. IMF chief Christine Lagarde said the fund now deemed the yuan “meets the requirements to be a ‘freely usable’ currency” — a key hurdle to joining the yen, dollar, pound and euro as a leading unit in international trade. The yuan hit headlines in August when China’s central bank devalued the […]

Posted On : Published By : Tom Whipple
Category:

Warm weather worsens glut of U.S. gas, heating oil: Kemp

Unusually mild weather across the United States this autumn has sharply reduced heating demand and contributed to the substantial oversupply of both natural gas and heating oil. Heating demand has been 27 percent lower than the long-term average so far this heating season according to the National Oceanic and Atmospheric Administration (NOAA). Temperatures have been above normal every week since the beginning of September and heating demand has been correspondingly lower than usual ( tmsnrt.rs/1X1Y1WK ). The heating season runs from July 1 through until June 30 of the following year. NOAA estimates heating demand by comparing the temperature in each area with a baseline of 65 degrees Fahrenheit, and then weighting the differences by the population. Mild weather has coincided with strong growth in supply of both natural gas and heating oil this year and contributed to a big rise in the amount of both fuels in storage. […]

Posted On : Published By : Tom Whipple
Category:

India’s October Oil Demand Highest in 5 Months on Vehicle Sales

India’s fuel demand touched a five-month high in October as demand for vehicles ahead of the festive season led to a surge in the consumption of diesel and gasoline. Oil demand during the month shot up 17 percent to 15.2 million metric tons from a year earlier, the highest since May, according to data published by the oil ministry’s Petroleum Planning & Analysis Cell . Diesel use rose 16 percent to 6.34 million tons, while gasoline consumption increased 14 percent to 1.85 million tons. With the onset of the festival season, passenger car sales jumped 22 percent in October, while industrial production rose 3.6 percent in September from a year earlier. Asia’s third-largest economy can grow at a pace of 8 percent to 10 percent in the coming years, Finance Minister Arun Jaitley said on Nov. 14. Diesel demand, which comprises about 42 percent of India’s fossil-fuel consumption, was […]

Posted On : Published By : Tom Whipple
Category:

Oil Theft Soars as Downturn Casts U.S. Roughnecks Out of Work

The moon was a waning crescent sliver Sept. 9 when a man emerged from an oil tanker, sidled up to a well outside Cotulla, Texas, and siphoned off almost 200 barrels. Then, he drove two hours to a town where he sold his load on the black market for $10 a barrel, about a quarter of what West Texas Intermediate currently fetches. “This is like a drug organization,” said Mike Peters, global security manager of San Antonio-based Lewis Energy Group, who recounted the heist at a Texas legislative hearing. “You’ve got your mules that go out to steal the oil in trucks, you’ve got the next level of organization that’s actually taking the oil in, and you’ve got a gathering site — it’s always a criminal organization that’s involved with this.” From raw crude sucked from wells to expensive machinery that disappears out the back door, drillers from Texas […]

Posted On : Published By : Tom Whipple
Category:

Canada’s Trudeau unveils plan to fund green infrastructure at G20

Canadian Prime Minister Justin Trudeau prioritizes green infrastructure in investment strategy unveiled from the sidelines of a G20 meeting in Turkey . Photo by Heinz Ruckemann/UPI ANTALYA, Turkey, Nov. 16 (UPI) — Dedicated funding for infrastructure supporting a low-carbon economy is one of the pillars of a new investment strategy, Canada’s prime minister said. Lower crude oil prices are hurting a Canadian economy that depends heavily on oil and natural gas exports. Exports from Canada largely target a U.S. economy that’s relying less on foreign reserves because of increased production from shale basins in the Lower 48. Government data show a national unemployment rate of 7 percent in Canada, compared with 4 percent in the United States. Monthly gross domestic product increased in August — the last full month for which data are available — by 0.1 percent for Canada, compared with 1.5 percent for the United States in […]

Posted On : Published By : Tom Whipple
Category:

Climate scientists to be grilled by congressional investigators, but their e-mails are still off-limits

The U.S. Capitol behind the natural gas and coal fueled Capitol Power Plant. (Andrew Harrer/Bloomberg News) Scientists and top officials from the National Oceanic and Atmospheric Administration have agreed to start interviews akin to depositions this week with House investigators, who are demanding to know their internal deliberations on a groundbreaking climate change study. But the interviews may not be enough to placate the chairman of the House science committee, a global warming skeptic who last week stepped up the pressure on the Commerce Department to comply with his subpoena for e-mails that NOAA has refused to turn over. Chairman Lamar Smith (R-Tex.) wants thousands of e-mails among scientists and NOAA’s staff of political appointees that he thinks will show that the researchers had something to hide when they refuted claims that global warming had “paused” or slowed over the past decade. [ Congress demands climate change documents as […]

Posted On : Published By : Tom Whipple
Category:

An “oil theologist” is needed to interpret the given resources and reserves in World Energy Outlook 2015

This year’s big news regarding the reporting of oil reserves in World Energy Outlook 2015 is that this annual report now discusses “resources that are technically possible to produce” and what proportion of these are proven reserves. When I was working on Chapter 17, The Peak of the Oil Age for my new book a few weeks ago I discussed the difference between technically producible resources and reserves. To support that discussion I made a figure explaining how different types of crude oil are classified. All the oil formed millions of years ago is termed, “Total Petroleum Initially in Place (PIIP). We have now found most of the world’s producible oil but there are still some oilfields yet to be discovered. (Details on this will be found in the book.) Of all the oil that we have already found there is some that cannot technically be produced, i.e. is […]

Posted On : Published By : Tom Whipple
Category:

Struggling U.S. oil producers get credit lifeline amid downturn

An oil refinery is seen in Carson, California March 4, 2015. An autumn credit crunch was expected to hit many independent U.S. oil producers, starving the industry of billions of dollars and further denting company budgets and drilling plans. But banks that adjust their loans to energy companies every six months based on the oil price and volumes of reserves were more lenient than many expected this time, leaving producers with more cash for drilling and allowing them to supply more oil to a market already flush with excess crude. The biannual process, known in the industry as redetermination, shaved only 4 percent off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout. It offers cash-starved energy firms a lifeline right when oil prices are back near six-year lows […]

Posted On : Published By : Tom Whipple
Category:

North Dakota’s Bakken Pumps Less Oil for First Time in Decade

The shale boom in North Dakota has softened to a whisper. The state’s Bakken oil region produced less oil in September than it did the previous year, the first time that’s happened in more than a decade. Output fell as low oil prices, exacerbated by the region’s remoteness, caused companies to scale back drilling operations and delay completing new wells. North Dakota’s portion of the Bakken produced 1.11 million barrels a day in September, down 1.1 percent from the same month a year ago, according to state data. Half the oil left the state by costly truck and rail routes, forcing producers to offer steep discounts. Along with an overall decline in crude prices, that’s prompted drillers to idle 67 percent of the rigs that were in the region last year. “The production drop was inevitable with the rig decline and the low-price environment,” Carl Larry, head of oil […]

Posted On : Published By : Tom Whipple
Category:

Russia sees Chinese role in arctic oil

Russian minister says China may play an active role in exploring for oil and natural gas reserves in the arctic region. Photo by longtaildog/Shutterstock MOSCOW, Nov. 16 (UPI) — Russia’s deputy energy minister said Monday an invitation to China was on the table to help with energy exploration strategies in the arctic. A lack of infrastructure in the arctic north of Russia is putting a moderate throttle on the region’s oil production. Russian Deputy Energy Minister Anatoly Yanovsky told state news agency RIA Novosti there were talks between Russian oil company Rosneft and China on working in the arctic to enhance operations there. "The topic is in discussion at the company level," he said. "As far as I know, Rosneft is negotiating [with China.]" In Russia’s far north Yamal Peninsula, full-year oil production is waning by nearly 4 percent from last year to around 152 million barrels. Gazprom Neft […]

Posted On : Published By : Tom Whipple
Category:

Putin transformed from outcast to problem solver at G20

Sign up for quick access to a wealth of global business news, including: Putin transformed from outcast to problem solver at G20 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 […]

Posted On : Published By : Tom Whipple
Category:

Russia Resolves to Make Most of Soviet Oil as New Finds Delayed

Russia plans to squeeze all the oil it can from Soviet-era discoveries to hold crude output stable for the next two decades as new finds are delayed by sanctions and slumping prices, according to the Energy Ministry. “We’ve got a safety cushion until 2035,” Deputy Energy Minister Kirill Molodtsov said in an interview in Moscow. “The potential for output growth at oil fields already in operation is higher than in unexplored territories.” Russia, which relies on oil and gas for almost half of its budget revenue, has repeatedly broken post-Soviet production records this year as drillers benefit from a weakening ruble. Nevertheless future barrels may be at risk as exploration campaigns, mostly in undeveloped areas offshore, have tailed off following investment cuts. Exploration drilling dropped 21 percent in the nine months through September after increasing in 2012 to 2014, government data show. State-run energy giants Rosneft OJSC and Gazprom […]

Posted On : Published By : Tom Whipple
Category:

Putin Meetings Spur Russia Equity Rally as Sanctions Seen Easing

Russian stocks headed for an eight-month high and the nation’s bonds advanced as President Vladimir Putin’s alliance with the U.S. in the fight against terrorism sparked speculation sanctions will be reconsidered. Natural-gas exporter OAO Gazprom and Sberbank PJSC led gains in all but two of the Micex Index’s 50 stocks, while a rally in the nation’s five-year bonds sent yields falling the most in a week. The Group of 20 meetings in Antalya, Turkey, ended with an agreement to join forces to fight radical Islamist terrorism following attacks in Paris last week that killed at least 129 people. Putin also offered to change terms on a debt owed to Russia by Ukraine, marking a U-turn in his strategy toward his neighbor following a 20-month standoff that led the U.S. and European Union to impose sanctions on many Russian companies. For investors, a move toward greater cooperation between Russia and […]

Posted On : Published By : Tom Whipple
Category:

Oil edges up after Paris attacks, French air strikes in Syria

Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. Oil prices edged up on Monday as France launched large-scale air strikes against Islamic State in Syria, but analysts said commodities were expected to remain under pressure as oversupply weighs on prices. Crude benchmarks, which lost 8 percent last week, saw high levels of activity in early dealing as commodity traders looked for direction after the deadly attacks in Paris on Friday. Front-month U.S. crude futures CLc1 was at $40.87 per barrel at 0744 GMT, up 13 cents from their last close. Internationally traded Brent LCOc1 was at $44.64 a barrel, up 17 cents after failing to break resistance at $45 a barrel. Traders said the higher prices were largely a matter of sentiment, with a premium being factored in following France’s large-scale air strikes against Islamic State in Syria in response […]

Posted On : Published By : Tom Whipple
Category:

Oil and Natural Gas Prices in Historical Context

Memories are short, and we often mistake prices of the last few years as indicative of the historical norm. Indeed, when it comes to the price of crude oil, most Americans would probably be surprised to learn that it is still well above the long-term historical average, once we adjust for price inflation. Contrary to the popular rhetoric, cheap and plentiful energy has been the norm for the United States economy. There is nothing “unnatural” or “dangerous” about giving Americans access to affordable energy. Crude Oil Prices Figure 1 below shows the history of U.S. crude prices. FIGURE 1: Real (Inflation-Adjusted) U.S. Crude Oil Prices, 1950-2015 Contrary to popular belief, oil is not “cheap” right now, compared to the historical average. Over the period 1950-2015, the average annual price of a barrel of crude would be $39, when put into 2015 dollars using the Consumer Price Index. SOURCE: EIA […]

Posted On : Published By : Tom Whipple
Category:

IEA says 3-fold or greater increase in biofuels possible by 2040

The International Energy Agency released its latest World Energy Outlook 2015, saying there are clear signs that an energy transition is under way. The report finds that the plunge in oil prices has set in motion the forces that lead the market to rebalance, and cautions that strong direction is needed from the upcoming United Nations conference on climate change in Paris, COP2. “It would be a grave mistake to index our attention to energy security to changes in the oil price,” said IEA Executive Director Fatih Birol. “Now is not the time to relax. Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats.” The World Energy Outlook 2015 examines all energy sectors, looking at global energy trends to 2014, the oil market, natural gas, unconventional gas, coal, power, renewables and energy efficiency, along with […]

Posted On : Published By : Tom Whipple
Category:

U.S. Warplanes Strike ISIS Oil Trucks in Syria

ISTANBUL — Intensifying pressure on the Islamic State, United States warplanes for the first time attacked hundreds of trucks on Monday that the extremist group has been using to smuggle the crude oil it has been producing in Syria , American officials said. According to an initial assessment, 116 trucks were destroyed in the attack, which took place near Deir al-Zour, an area in eastern Syria that is controlled by the Islamic State. The airstrikes were carried out by four A-10 attack planes and two AC-130 gunships based in Turkey. Plans for the strike were developed well before the terrorist attacks in and around Paris o n Friday , and the assault was part of a broader operation to disrupt the ability of the Islamic State, also known as ISIS or ISIL , to generate revenue to support its military operations and run its territory. American officials have long […]

Posted On : Published By : Tom Whipple
Category:

The Looming Bankruptcy Of Saudi Arabia

There’s two interesting little stories in this idea that Saudi Arabia is going to go bust in a couple of years as a result of the sagging oil price. Both are more general economic ideas than just the story of that oil price. The first is that mono-anything in economics is something we don’t really like. We certainly don’t like either monopolies or monopsonies, but we should also be very careful of an economy that relies on any one product or even supplier. The perils of resting an entire economy on the production of just the one commodity should be obvious here. But the same could and should be said about reliance upon any one supplier in an economy as well. We want diversity, always, of producers and suppliers. The second is that this is an object lesson in why most economists don’t really believe in the idea of […]

Posted On : Published By : Tom Whipple
Category:

Oil Slump May Prompt U.A.E. Spending Cuts, Central Bank Says

The United Arab Emirates may cut government spending as a result of the slump in oil prices, Central Bank Governor Mubarak Rashed Al Mansoori said. The decline in the government’s oil revenue “may trigger further fiscal consolidation, albeit at a gradual pace, to preserve priority spending in support of non-oil growth,” Al Mansoori said at a conference in Dubai on Monday. Oil accounted for almost a third of the nation’s gross domestic product last year, government data show. The price of Brent crude has dropped more than 40 percent in the past year, putting a strain on economies in the six-nation Gulf Cooperation Council, where governments rely on income from oil to fund spending. The U.A.E. banking sector has lost 56 billion dirhams ($15.25 billion) in government deposits since September last year, National Bank of Abu Dhabi Chief Executive Officer Alex Thursby said last month. The global economic slowdown […]

Posted On : Published By : Tom Whipple
Category:

Japan fuel reprocessing plant delayed again, till 2018

TOKYO (AP) — The operator of Japan’s fuel reprocessing plant said Monday that it was postponing the plant’s opening to as late as September 2018, citing regulators’ lengthy inspection procedures and time needed for safety upgrades. The Japan Nuclear Fuel Ltd. said it was delaying the targeted completion of the Rokkasho reprocessing plant, which separates plutonium from spent fuel for reuse as fuel, by as much as 2 1/2 years. The delay-plagued plant, initially set for launch in 2000, was most recently set to open in March 2016 following a series of technical problems. JNFL president Kenji Kudo told reporters at the company’s headquarters in Aomori, in northern Japan, that a separate plant to produce plutonium-based fuel had been delayed until sometime during the first half of fiscal 2019. Japan already has about 47 tons of plutonium – 11 tons at home and the rest reprocessed in Britain and […]

Posted On : Published By : Tom Whipple
Category:

Japanese Oil Refiners JX Holdings and Tonen General in Merger Talks

JX Holdings, Japan’s biggest refinery by sales, approached the smaller Tonen General, the person said. The talks reflect a push by oil and gas producers to join hands amid a prolonged slump in oil prices and shrinking demand. A JX Holdings combined with Tonen General, Japan’s No. 3 player, would command about half of Japan’s market for refined products, and about double Idemitsu’s and Showa Shell’s combined market share. Both JX Holdings and Tonen General said in separate statements that they are searching for ways to increase the competitiveness of their refinery operations but nothing has been decided. A shrinking population, declining industrial activity and the advent of hybrid and electric vehicles have resulted in cutthroat price competition among refiners, draining their finances. Japan’s gasoline consumption has fallen 2% to 3% a year over the past decade, and the average price nationwide is at a five-year low. The pressure […]

Posted On : Published By : Tom Whipple
Category:

Canada needs to keep an eye on low oil prices: finance minister

Canada’s Finance Minister Bill Morneau speaks during a news conference in Ottawa, Canada November 10, 2015. Canada needs to keep a close eye on low oil prices, which the ruling Liberal Party took into consideration when drawing up an election platform that called for extra stimulus, new Finance Minister Bill Morneau said on Saturday. Morneau, speaking to reporters on the sidelines of a Group of 20 summit, also said U.S. Treasury Secretary Jack Lew was encouraged by the Liberals’ plans for new infrastructure spending. The Liberals won the Oct. 19 election, in part on a promise to run three years of budget deficits to boost the economy. Canada is a major exporter of crude and has been hard hit by slumping oil prices, which are now barely half what they were in the middle of 2014. "Obviously we need to pay close attention to the price of oil, the […]

Posted On : Published By : Tom Whipple
Category:

Google antsy as California slow on self-driving car rules

MOUNTAIN VIEW, Calif. (AP) — Hustling to bring cars that drive themselves to a road near you, Google finds itself somewhere that has frustrated many before: Waiting on the Department of Motor Vehicles. The tech titan wants the freedom to give the public access to self-driving prototypes it has been testing on public roads since the summer. Before granting that permission, California regulators want Google to prove these cars of the future already drive as safely as people. The Department of Motor Vehicles was supposed to write precedent-setting rules of the road by last Jan. 1. Nearly a year later, it is still struggling. After all, the agency is geared to administering driving tests and registering cars, not settling complicated questions the technology raises. If the cars’ advanced sensors and computing power can drive better than humans, do they need a steering wheel and pedals? Would a person even […]

Posted On : Published By : Tom Whipple
Category:

Oil Majors’ Dividends Survive Plunge in Oil Prices

The world’s biggest energy companies have doubled down on their promise to protect dividends, despite a precipitous drop in profits this year, driven by a steep decline in oil prices. “The dividends and payouts to shareholders have no reason to be as volatile as the oil price,” said Patrick Pouyanné, chief executive of France’s Total SA, TOT -0.17 % the world’s fourth-largest oil company by production, at a conference in Abu Dhabi this week. He added that it would be a “terrible mistake” to remove dividends and a sign that “we aren’t good at our business.” Oil prices are currently trading slightly above $40 a barrel—their lowest levels since August—and more investment banks, energy companies and analysts don’t see the price rising above $60 a barrel until 2017. The International Energy Agency said Tuesday oil prices would slowly rise to $80 a barrel by 2020, but also outlined a […]

Posted On : Published By : Tom Whipple
Category:

Should Oil Firms Be Held Liable in Earthquake Lawsuits?

Earthquake damage in Sparks, Okla., in 2011. The number of quakes in Oklahoma has soared. In 2011, a string of powerful earthquakes struck near the town of Prague, Okla., part of a surge in seismic activity in the state. Geologists eventually linked the quakes to increased oil and natural-gas production in the area—specifically, to the practice of injecting wastewater from hydraulic fracturing, or fracking, into wells deep underground. Sandra Ladra, a Prague resident who was injured in the most severe of the quakes, brought a lawsuit against New Dominion LLC and other oil and gas companies that operate injection wells in the region, accusing the companies of engaging in “ultrahazardous activities” that led to her injuries. In July, the Oklahoma Supreme Court allowed the case to go forward. So now it’s up to the courts to decide whether oil and gas drillers should be held liable for the damages […]

Posted On : Published By : Tom Whipple
Category:

Does the U.S. Need a Large Strategic Petroleum Reserve?

The Strategic Petroleum Reserve is the biggest government stockpile of oil in the world. The U.S. is sitting on the biggest government stockpile of oil in the world. Should it continue to maintain it? The Strategic Petroleum Reserve was set up in the 1970s as a response to the Arab oil embargo and the shock waves it sent through the U.S. economy. The idea: to create a supply of oil that would let the nation weather those kinds of disruptions and give it more leverage with oil-producing nations. Over the decades, Washington has tapped into the reserve only a handful of times. Now Congress has authorized another big draw on that supply. The recent budget deal allows the government to sell 58 million barrels from the stockpile. Some observers say we should be cautious about dipping into the reserve—let alone thinking about abandoning it entirely. It serves a vital […]

Posted On : Published By : Tom Whipple
Category:

Bakken Big Decline in September

The NDIC has published their monthly update for Bakken Oil Productin and all North Dakota Oil Production . Bakken & North Dakota Bakken production was down 24,424 barrels per day while all North Dakota was down 25,378 bpd. Bakken & ND Amplified Here is an amplified version of the last 15 months of North Dakota production. September 2015 production is now below September 2014 production so the 12 month average has now turned negative. ND & Bakken BPW Even though producing rigs in North Dakota declined in September, barrels per day per well declined also from 94 to 92. Bakken bpd per well declined from 112 to 109. This is a long term view of Bakken and North Dakota barrels per well. Bakken year over year percent growth has finally gone negative. August Producing Wells = 13,031 September Producing Wells = 13,025 10,228 wells or 78% are now unconventional […]

Posted On : Published By : Tom Whipple
Category:

Syria, climate change and the horror in Paris

As the world mourns those who died in Paris last week in a killing spree for which the Islamic State in Iraq and Syria (ISIS) has claimed responsibility , reporters and commentators have been discussing the motivations behind the attacks. I’m not sure that any so far has considered whether one can draw a straight line from a severe drought in Syria to these mass killings. My own answer is that the if the line is there–and I think it is–then it has taken many twists and turns before arriving in Paris. Even so, it might be worthwhile for those who will soon be gathering in this bereaved city in order to negotiate a new worldwide climate treaty to understand any such connection. For in the background behind these events, there is a Syria starved of water almost surely because of climate change. A study released earlier this year […]

Posted On : Published By : Tom Whipple
Category:

Oil rises after drop, still on course for big weekly loss

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. Brent crude edged up from a sharp drop on Friday, but was on track for the biggest weekly loss in more than two months as swelling stocks weighed on the market. The International Energy Agency said there was a record 3 billion barrels in tanks worldwide. "The underlying sentiment is bearish," said PVM analyst Tamas Varga. "I don’t see anything that could support prices rising in the long term." Brent crude was trading 70 cents higher at $44.76 per barrel at 0528 ET. It was on track for a more than 5 percent weekly loss. U.S. crude was 15 cents higher at $41.90 a barrel. The benchmark closed down on Thursday almost 3 percent on a 4.2 million-barrel rise in U.S. crude inventories. The IEA, in its Monthly Oil Market Report, said that ballooning global stockpiles […]

Posted On : Published By : Tom Whipple
Category:

Oil Prices Rebound on Bargain Hunting

An oil pump in California. Growing U.S. stockpiles have triggered concerns of a supply glut. LONDON—Oil prices rebounded on Friday as investors were bargain hunting after oil’s steep losses this week, but a bearish outlook for next year by a top energy watchdog kept prices under pressure. The International Energy Agency said Friday that global oil demand growth will slow to 1.2 million barrels a day in 2016 , after surging to 1.8 million barrels a day this year, a five-year high. “The impact of oil’s steep price plunge on end users is unlikely to be repeated and economic conditions are forecast to remain problematic in countries such as China,” the Paris-based agency said in its monthly report. Brent crude, the global oil benchmark, rose 1.3% to $45.80 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% […]

Posted On : Published By : Tom Whipple
Category:

Unsold oil stuck on tankers threatens world market gridlock

An oil tanker passes underneath the Golden Gate Bridge during a rainfall in San Francisco, California, February 26, 2014. As land storage sites worldwide reach brimming point due to a supply glut, tens of millions of barrels of oil are sitting on tankers looking for homes – threatening logistical paralysis. The International Energy Agency on Friday said stored oil has hit 3 billion barrels. Traders say the excess of crude is leaving tankers queuing at major ports worldwide, lengthening waiting times to days, weeks and even months. [IEA/M] The lack of space to unload oil is tying up the tankers needed to keep oil moving, and wells running. The bottlenecks could force oil suppliers into quick, cut-priced sales just to free space, adding more pressure to oil prices already close to six-year lows. The cost to hire a supertanker – each capable of carrying 2 million barrels of oil […]

Posted On : Published By : Tom Whipple
Category:

IEA sees bear oil market as stocks balloon

A drop of diesel is seen at the tip of a nozzle after a fuel station customer fills her car’s tank in Sint Pieters Leeuw December 5, 2014. The world is awash with oil having built record stockpiles in recent months and slowing demand growth combined with resilient non-OPEC supply could worsen the glut well into next year, the International Energy Agency (IEA) said on Friday. "Stockpiles of oil at a record 3 billion barrels are providing world markets with a degree of comfort," the IEA said in a monthly report, adding brimming stocks offer an unprecedented buffer against geopolitical shocks or unexpected supply disruptions. Oil prices have more than halved in the past 18 months with supply bolstered by U.S. shale oil output and OPEC’s refusal to cede market share. [O/R] The IEA said global oil supplies breached 97 million barrels per day in October, up 2.0 million […]

Posted On : Published By : Tom Whipple
Category:

Watch the spreads: oil prices tumble before year-end: Kemp

An oil pump of Cuba’s state-run CUPET is pictured near the coast in Mayabeque province, Cuba, October 15, 2015. Crude oil prices sold off heavily on Wednesday and Thursday, with front-month Brent futures falling more than 7 percent to the lowest level more two and half months. Prices slumped amid growing concerns about continued oversupply in the market, the build up of inventories and the possibility of storage space running on land and forcing more oil to be stored expensively at sea. The American Petroleum Institute reported on Tuesday that crude oil stocks in the United States rose by an unusually large 6.3 million barrels last week. The Energy Information Administration confirmed on Thursday a build of 4.2 million barrels with inventories now 109 million barrels above the prior-year level. There was plenty of other bearish fundamental news around, with OPEC predicting the oil market would remain oversupplied in […]

Posted On : Published By : Tom Whipple
Category:

IEA Says Record 3 Billion-Barrel Oil Stocks May Weaken Prices

Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency. This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry. “Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.” Oil prices have lost about 40 percent in the past year as the OPEC […]

Posted On : Published By : Tom Whipple
Category:

Is Crude Oil Facing Peak Storage?

Crude Oil (WTI) has had a troubling week, as the commodity continues to slide lower as growing over supply concerns point to further falls ahead. In fact, as a veritable conga line of tankers navigate towards the United States, some are now asking at what point “peak storage” have been reached. A range of factors have contributed to the global oil supply glut including diminished demand, as well as the introduction of Iraqi supply to the market. Although slow to start, Iraqi oil exports are now ramping up and, as we speak, a 2-mile long line of tankers is heading towards refineries in the United States. However, a tanker backlog is already underway in Houston, where over 39 oil laden vessels stand idle waiting for a turn to unload their cargo of crude oil. The current combined supply nears a capacity of over 28 million barrels, which doesn’t include […]

Posted On : Published By : Tom Whipple
Category:

Agencies: Russia Says OPEC Unlikely To Cut Output At December Meeting

Russian Energy Minister Alexander Novak says he does not expect the Organization of the Petroleum Exporting Countries to take steps to cut oil output at a meeting on Dec. 4, reports Russian news agencies Interfax and TASS. MOSCOW, Nov 13 (Reuters) – Russian Energy Minister Alexander Novak said he does not expect the Organization of the Petroleum Exporting Countries to take steps to cut oil output at a meeting on Dec. 4, Russian news agencies Interfax and TASS reported on Friday. "We are not going, let’s put it like this, to lower oil production volumes," Novak was quoted by TASS as saying. "I consider it unlikely, taking into account the position of the biggest producers," TASS quoted Novak as saying. Novak also reiterated that Russia would not deliberately cut its own oil output. "In general we focus on the total amount laid out in the strategy (of energy sector […]

Posted On : Published By : Tom Whipple
Category:

Yemen is turning into Saudi Arabia’s Vietnam

Fighters loyal to Yemen’s government celebrate after receiving three armored personnel carriers from the United Arab Emirates in the southwestern city of Taiz. (Reuters) BEIRUT — Eight months after launching a war in Yemen, Saudi Arabia appears trapped in a protracted and devastating conflict that is straining relations with its allies, intensifying internal power struggles and emboldening its regional rival, Iran, analysts say. Since March, the key U.S. ally has led a coalition of mostly Gulf Arab countries and Yemeni fighters in a military campaign to drive out Iranian-aligned rebels who seized the capital, Sanaa, and swaths of the Arabian Peninsula country. But the coalition appears increasingly hobbled by divisions and unable to find a face-saving way to end the costly conflict. The rebels, known as Houthis, still control much of Yemen’s north. And in southern areas where the coalition has driven them out, lawlessness has spread as attacks […]

Posted On : Published By : Tom Whipple
Category:

Iraq: Kurdish Forces Take Much Of Sinjar

Kurdish peshmerga fighters have seized a silo, cement factory, hospital and numerous public buildings in Sinjar, Iraq, and are now in the process of clearing the area of Islamic State militants, the Kurdistan Region Security Council said Nov. 13, Reuters reported. Kurdish forces also managed to take a key stretch of road leading to the Islamic State stronghold of Baj. Kurdistan Regional Government President Massoud Barzani held a press conference near Sinjar declaring the success of the operation, congratulating the peshmerga as well as the city’s Yazidi minority. He also announced plans to work with Baghdad to convert the district of Sinjar into an independent province within the federal structure of Iraq. The Sinjar offensive, which began Nov. 12 with the goal of cutting off a key Islamic State supply line , involved 7,500 Kurdish fighters supported by U.S. and coalition advisers directing airstrikes from behind the lines. The […]

Posted On : Published By : Tom Whipple
Category:

Iran, Russia: Officials Discuss Energy Swap

Representatives from Russia’s Rosneft and Iran’s oil ministry discussed an oil, natural gas and petroleum products swap, Trend News Agency reported Nov. 13. The two sides plan to form a joint committee to continue their negotiations. It would be the first time Rosneft exports or swaps natural gas with another country, breaking state-controlled Gazprom’s monopoly on exports of pipelined natural gas. Meanwhile, a presidential spokesman announced that Russian President Vladimir Putin will visit Tehran on Nov. 23 to take part in the Gas Exporting Countries Forum, Sputnik News reported. Iran’s energy sector is set to drastically change as Western sanctions are lifted following the nuclear agreement reached between Tehran and six world powers. After years of strength and stability, Rosneft and Gazprom must adapt to a new political and financial climate .

Posted On : Published By : Tom Whipple
Category:

North Dakota oil well backlog eclipses 1,000 for first time

The number of oil wells in North Dakota that have been drilled but not fracked eclipsed 1,000 for the first time in September, as producers delayed turning them on in hopes crude prices will soon recover. The milestone, which was widely expected around the second-largest oil producing state, highlights the immense cost pressure companies have come under in the past year as crude prices have dropped more than 50 percent. Fracking alone can account for nearly two-thirds of a well’s cost. Today more than 8 percent of oil wells in the state are sitting idle, storing their crude and natural gas in rock miles underground until prices rise. The delay harms the industry’s ability to grow production, a metric closely watched by investors. Daily output in the state fell 2 percent in September. "That’s sending a definite signal to the market that oil and gas operators are not willing […]

Posted On : Published By : Tom Whipple
Category:

Chesapeake Lenders Flee Debt as Oil Rout Pummels Reserves Value

Chesapeake Energy Corp.’s bonds have plunged to half their face value as lenders fret that tumbling energy prices are hurting their chances of getting paid on borrowings that are three times the current worth of the company’s oil and gas fields. The producer’s $1.5 billion of 4.875 percent notes due in April 2022 dropped 9.625 cents this week to 50.375 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The Oklahoma City-based company estimates the discounted value of its proven oil-and-gas reserves will fall to about $4.2 billion by the end of the year down from $22 billion last December. Chesapeake shares have been the worst performer among their peers in the Standard & Poor’s 500 Index this year, plunging 73 percent. The downturn in oil markets has been especially painful for the driller because it happened just as the company […]

Posted On : Published By : Tom Whipple
Category:

Canada to Ban Tankers on North Pacific Coast in Blow to Enbridge

Canada plans to formally ban oil tanker traffic on the northern coast of British Columbia, adding another hurdle to Enbridge Inc.’s Northern Gateway pipeline proposal. Prime Minister Justin Trudeau has instructed Marc Garneau, the minister of transport responsible for the Coast Guard, to implement the ban which has informally been in place for years and was part of the leader’s campaign platform, according to the prime minister’s office. The ban will add to hurdles Enbridge has faced since proposing the pipeline to move Alberta crude to the port of Kitimat, at the end of the Douglas Channel, and onto Asia to open new markets for Canadian oil. The project has been met with intense resistance from local communities over concerns including potential spills that could harm fisheries and threaten their livelihood. The company won conditional approval under former Prime Minister Stephen Harper, so long as it met hundreds of […]

Posted On : Published By : Tom Whipple
Category:

Hoeven tries again to erase oil export ban

Sen. John Hoeven, R-N.D., says he’ll try to work language into a highway funding bill that would lift a ban on crude oil exports. File Photo by Kevin Dietsch/UPI BISMARCK, N.D., Nov. 13 (UPI) — A Republican senator from North Dakota said he was working to insert language in a highway-funding bill that would lift a ban on U.S. crude oil exports. U.S. Sen. John Hoeven , R-N.D., told oil industry leaders gathered in Williston, a city at the heart of the state’s shale oil boom, that lifting a 40-year-old ban on crude oil exports would help support the state’s industry workers . "That’s why I am working to include legislation lifting the ban in the new highway bill that Congress is on track to pass," he said in a statement. Washington enacted a ban on domestic crude oil exports after Arab members of the Organization of the Petroleum […]

Posted On : Published By : Tom Whipple