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Oil prices fall to an 11-year low as global supply balloons

(MSN/Reuters) Brent crude oil prices hit their lowest in more than 11 years on Monday, while U.S. crude flirted with seven-year lows on more signs that swelling global supply looked set to outpace tepid demand again next year.

Global oil production is running close to record highs and, with more barrels poised to enter the market from nations such as Iran and Libya, the price of crude is set for its largest monthly percentage decline in seven years.

Brent’s premium over U.S. crude narrowed further as the market braced for the end of a 40-year ban on U.S. crude exports. President Obama signed a law on Friday that will end the ban.

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Saudi Arabia’s vice minister of petroleum and mineral resources on the state of the global oil industry

“Around $200 billion of investments in energy have been canceled this year, with energy companies planning to cut another 3 to 8 percent from their investments next year. This is the first time since the mid-1980s that the oil and gas industry will have cut investment in two consecutive years.”

Prince Abdulaziz bin Salman al Saud, Saudi Arabia’s vice minister of petroleum and mineral resources

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Peak Oil Review – 28 Dec 2015

Despite oil’s fundamentals pointing to lower prices, the oil markets rebounded in thin trading last week. New York futures which were trading below $36 on Tuesday closed Thursday at $38.10, nearly a 9 percent jump. In a similar fashion Brent, which on Monday touched its lowest point since 2004, climbed to close out the week at $37.89. We now have US oil selling above Brent, which makes it rather hard to sell on the international markets unless a refiner is looking for very light oil and is willing to pay a premium.

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As Oil Money Melts, Alaska Mulls First Income Tax in 35 Years

(NY Times) ANCHORAGE — Oil money no longer pays the bills here. The governor, facing a profound fiscal crisis, has proposed the imposition of a personal income tax for the first time in 35 years. State lawmakers, who recently moved into a palatial new office building here, where they work when not toiling in the far-off Capitol in Juneau, are now seeking less costly digs.

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Introduction

Looking Back 10 Years After Peak Oil

(Peak Oil Barrel) Guest post by Verwimp Bruno.

Peak Oil is the moment in time when, on a global scale, the maximum rate of oil production is reached. The moment after which oil production, by nature, must decline forever. Since Earth is a closed system, next to this production (supply) event, there must be an equal demand event: Peak Oil Consumption.

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OPEC Sec on Lifting U.S. Ban

If the ban on US oil exports is lifted…] “The net effect of export of American oil on the market is zero. This will have no effect on the price because the U.S. still is an importing country. They export some, but they need to import the same quantity from somewhere else.”

Abdalla El-Badri, Secretary-General of OPEC

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Kemp: Oil Prices Unforecastable

“The long-term price of oil is literally unforecastable. The only thing that can be said with absolute certainty is that oil prices will continue to defy the expectations of experts.”

John Kemp, Reuters

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Evercore Analyst: Nothing is Economic…

“Nothing is economic at today’s prices… We’re drilling the best of the best rock right now.  At some point we’ll have to move to lesser-quality rock, which will increase the break-even costs.”

James West, analyst at Evercore ISI

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Peak Oil Review – 21 Dec 2015

Oil prices continued to fall with London closing on Friday at $36.88, down 3.8 percent for the week, and New York closing at $34.73, down 2.5 percent for the week. A surprise and unexplained jump of 17 units in the US rig count announced on Friday helped the decline. Prices are now approaching an 11-year low. New highs in US crude inventories, including a 1.4 million barrel jump in the stocks at Cushing, Okla., and unusually warm weather across the US and Europe, continue as major reasons for the decline. The outlook for oil prices remains gloomy. OPEC will keep its output at 32 million b/d for the time being and Iran is expected to be increasing its exports in the next few months. Talk of a bargain between OPEC and Russia to jointly lower crude production was quashed by Moscow late last week. Some are now saying that it will take two years to eliminate the excess crude stockpiles after supply and demand are brought back into balance.

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A drop of diesel is seen at the tip of a nozzle after a fuel station customer fills her car

Falling knives and dead cats: When will the oil slump end?

(Reuters) As oil traders have learned time and again, picking a bottom in today’s glutted global market can be a fool’s game: just when prices start to rebound, as they have three times this year, a wave of renewed bearishness smacks them back down.

With oil resuming its southward march due to yet more oversupply, closing in on $35 a barrel after trading at $100 in June 2014, any number of factors could indicate when the rout may finally be over – for real this time.

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Pumpjacks for an oil well near Williston, N.D.

The Global Battle for Oil Market Share

(Wall Street Journal) Pumpjacks for an oil well near Williston, N.D. What will the global oil market look like in 2016? This year is closing out with the industry in turmoil. The price of oil is hovering in the mid-$30s a barrel, supplies are swamping the market, the U.S. is on the cusp of ending its decades-old oil-export ban, and geopolitical rivalries continue to sow uncertainty.

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Oil Price Scenarios for 2016

(Energy Matters) Every year I have a bet with a good friend on where the Brent oil price will be in December the following year. Last year I estimated $56.50, my friend $99, so this year I am a clear winner, even though I’m out by about 49%. Brent is trading at $38 as I write. I can extract little satisfaction from this since I got “close” for the wrong reasons.

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WEO-2015

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

(Aleklett’s Energy Mix) 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.

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India’s Oil Consumption Primed For Growth As Economy Thrives

(OilPrice.com) The EIA recently published a global oil consumption data sheet that provided a clear picture of where the global oil economy is currently heading. The data revealed that although there had been a substantial oil consumption increase in the Middle East (led by Saudi Arabia), Asia (Led by China) and Oceania, the rest of the world which included Russia , other FSU countries, the U.S., Japan and Europe experienced a consistent decline in their oil consumption rates over the last decade.

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Q&A with Daniel Yergin: US shale boom shaking up the global energy order

(Nikkei) Oil prices remain stuck at low levels, unaffected by the waves of risk washing over the world amid mounting geopolitical tension. What is driving that trend, and how long will it last? The Nikkei Asian Review put these and other questions to Daniel Yergin, vice chairman of research company IHS and a world-renowned expert on oil prices.

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Reuters: “Zombies Appear in U.S. Oil Fields”

“Credit rating agency Fitch says defaults for oil and gas companies are already at the highest since 1999. Since the start of the third quarter, at least 12 oil and gas companies have defaulted on their debt. The ‘zombies’ bet that by shifting into survival mode they can hang on until oil prices recover, but the outlook is grim.”

Anna Driver and Tracy Rucinski, Reuters, “Zombies Appear in U.S. Oil Fields”

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Peak Oil Review – 14 Dec 2015

Oil prices tumbled for six straight sessions following the OPEC decision to maintain production levels the week before last. At the close Friday prices were down 11 percent for the week with New York futures closing at $35.62 a barrel and London at $37.93. This is the lowest close for oil futures since the 2008-2009 recession. Adjusting for inflation, oil prices this low were last seen in 2002.

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Only Investors Can Plant The Seed For An Oil Price Rebound

(OilPrice.com) The dramatic drop in oil prices has created what are called “zombie” companies , oil companies which can still afford to pay interest on huge debts, but little else. If oil prices stay low, the problem is likely to spread and become an economic zombie apocalypse for much of the industry and the communities and countries that depend on it.

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