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Wall Street Sets Aside More Cash to Cover Weakening Oil Loans

Wall Street lenders that bankrolled the debt-fueled U.S. oil boom are putting aside more cash to cover potential energy losses as "lower for longer" takes its toll. After rebounding to $61 a barrel in June, crude prices tumbled 24 percent in the third quarter. JPMorgan Chase & Co. said Tuesday that it increased its loan loss reserves for oil and gas by $160 million in the third quarter. Bank of America Corp.’s at-risk loans increased 15 percent from a year ago due to the deteriorating finances of some of its oil and gas borrowers. And Wells Fargo & Co. reported that it reserved additional cash to cover potential losses in the energy sector. The financial industry has so far avoided the kind of damage that triggered the collapse of hundreds of energy lenders in the 1980s. Banks are in the middle of the second round of twice-yearly reassessments of […]

Posted On : Published By : Tom Whipple
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Oil unlikely to ever be fully exploited because of climate concerns – BP

BP’s chief economist says that burning existing fossil fuel reserves would not be consistent with limiting global warming to 2C, as governments have pledged to do. Photograph: Ben Stansall/AFP/Getty Images The world’s oil resources are unlikely to ever be fully exploited, BP has admitted, due to international concern about climate change. The statement, by the group’s chief economist, is the clearest acknowledgement yet by a major fossil fuel company that some coal, oil and gas will have to remain in the ground if dangerous global warming is to be avoided. “Oil is not likely to be exhausted,” said Spencer Dale in a speech in London . Dale, who chief economist at the Bank of England until 2014, said: “What has changed in recent years is the growing recognition [of] concerns about carbon emissions and climate change.” Scientists have warned that most existing fossil fuel reserves must stay in the […]

Posted On : Published By : ASPO-USA
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BP Smacks Down ‘Peak Oil’ Fears

Fear over the environmental impact of using oil, gas and coal reserves means we may never run out of untapped energy stores, according to a leading petroleum industry economist. “Concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted,” BP Chief Economist Spencer Dale told the Society of Business Economists Tuesday. This means the relative price of oil will not necessarily increase overtime, reports Reuters. Spencer’s remarks come amid concerns that an oversupply of oil is pushing the price of crude back under $50 a barrel. Global oil demand is slipping, at a time when supply is high, The Wall Street Journal reports . This is putting downward pressure on oil prices. Consulting firm PVM oil broker David Hufton told The WSJ oil prices could be higher, “as long as OPEC do not produce more than […]

Posted On : Published By : Tom Whipple
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No Sea Change for Oil: Liam Denning

There’s something in the water. It’s oil. On boats. That isn’t good if you’re betting on prices to rally. In its latest monthly report, out Tuesday, the International Energy Agency mentioned that some oil at European and Asian trading hubs was now being stored on vessels, despite prices not really justifying the cost. The implication is that regular storage tanks are getting a tad full. With oil prices having traded in a band between roughly $40 to $50 a barrel for about three months, some prominent voices say that the bottom is in. Granted, that “some” includes OPEC ministers, for whom predicting a rebound in prices is a little like Ronald McDonald forecasting a bull market in hamburgers. Still, with global oil demand projected to be up by a hefty 1.8 million barrels a day this year, and with low prices clearly starting to eat away at the U.S. […]

Posted On : Published By : Tom Whipple
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IEA Sees Oil Market Remaining Oversupplied Next Year

A top energy watchdog Tuesday warned that oil markets would likely remain oversupplied next year, as oil demand growth slows down amid an expected return of Iranian oil. The assessment by the International Energy Agency–which represents some of the world’s largest oil consumers–is somewhat less upbeat than the Organization of the Petroleum Exporting Countries which Monday said oil markets would start to rebalance themselves next year amid declining U.S. production. In its closely watched monthly oil market report, the IEA cut its forecast for oil demand growth for next year by about 200,000 barrels a day compared with its previous assessment in September. It now sees world oil consumption rising by 1.2 million barrels a day in 2016, compared with a five-year-high growth of 1.8 million barrels a day in 2015. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels-–should international […]

Posted On : Published By : Tom Whipple
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Bakken Production Down plus IEA Predictions

ND & Bakken Bakken production was down 19,502 bpd in August while all North Dakota was down 20,552 bpd. Here is an amplified chart of Bakken and all North Dakota production. ND & Bakken BPW Bakken barrels per well per day is now 112 while all North Dakota gets 94 barrels per well per day. North Dakota Change in BPD This chart shows the monthly change in North Dakota production. It is likely that by next month the 12 month average change in production will be negative. Bakken wells producing increased by 69 and ND wells producing increased by 65. From the Director’s Cut July Permitting: 233 drilling and 0 seismic Aug Permitting: 153 drilling and 1 seismic Sep Permitting: 154 drilling and 1 seismic July Sweet Crude Price1 = $39.41/barrel Aug Sweet Crude Price = $29.52/barrel Sep Sweet Crude Price = $31.17/barrel Today’s Sweet Crude Price = $35.00/barrel […]

Posted On : Published By : Tom Whipple
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U.S. shale oil output to fall by most on record in November: EIA

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma September 15, 2015. U.S. shale production is expected to fall the most on record in November, extending a nationwide output decline into its seventh consecutive month, according to a forecast on Tuesday from the U.S. Energy Information Administration. Total output is set to fall by more than 93,000 barrels per day (bpd) to 5.12 million bpd, according to the EIA’s monthly drilling productivity report. That’s the largest monthly cut forecast since data was available in 2007. Oil production from the Eagle Ford play in South Texas was expected to fall 71,000 bpd to 1.37 million bpd. Bakken oil output in North Dakota was expected to slide 23,000 bpd to 1.16 million bpd. Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 21,000 […]

Posted On : Published By : Tom Whipple
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Lenders Yank Credit From Struggling U.S. Oil Company

Lenders slashed a Denver energy company’s credit line to less than its outstanding balance, in one of the harshest cuts yet to a U.S. oil producer’s collateral-backed loans. Emerald Oil EOX -24.45 % Inc., which produces oil in North Dakota and Montana, said late Monday that its lenders have reduced its credit by 40%, to $120 million. It is in talks with those banks about how to pay back the roughly $20 million by which it is now overdrawn and is trying to find alternative financing, the company said. The credit-line cut is the second for Emerald this year and comes amid the second of a twice-annual review by banks of the oil-and-gas reserves that serve as collateral for loans. Over the last year as oil prices plummeted, banks have been reducing the amount they lend to companies across the country. “It looks as if the borrowing base bogeyman […]

Posted On : Published By : Tom Whipple
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North Dakota rig count holds steady

North Dakota rig counts stable after a week of strong gains in crude oil prices. Photo by David Gaylor/Shutterstock BISMARCK, N.D., Oct. 12 (UPI) — After a week of strong gains in crude oil prices, data from North Dakota show a level of stability in the level of exploration and production operations. Data from the North Dakota government show 68 rigs engaged in exploration and production in the state, unchanged from the previous week. Monday’s rig count is down 64 percent from this date in 2014. Rig counts serve as a barometer for the health of an energy sector burdened by depressed crude oil prices, down roughly 42 percent from this time last year. The price for West Texas Intermediate, the U.S. benchmark for crude oil prices, of $49.80 per barrel is up nearly 8 percent from one week ago , however. Lower crude oil prices are nevertheless starving […]

Posted On : Published By : Tom Whipple