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News

Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince

By on 1 Apr 2016 in news, notable posts with 0 Comments
Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince

(Bloomberg) Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.

Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate.

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Saudi Arabia will only freeze oil production if Iran joins plan

By on 1 Apr 2016 in news, notable posts with 0 Comments

(Bloomberg via WorldOil.com) RIYADH — Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market.

The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.

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As U.S. shale drillers suffer, even the bankrupt keep pumping oil

By on 1 Apr 2016 in news, notable posts with 1 Comment
As U.S. shale drillers suffer, even the bankrupt keep pumping oil

(Reuters) A pump jack stands idle in Dewitt County, Texas January 13, 2016. As oil prices nosedived by two-thirds since 2014, a belief took hold in global energy markets that for prices to recover, many U.S. shale producers would first have to falter to allow markets to rebalance.

With U.S. oil prices now trading below $40 a barrel, the corporate casualties are already mounting. More than 50 North American oil and gas producers have entered bankruptcy since early 2015, according to a Reuters review of regulatory filings and other data. While those firms account for only about 1 percent of U.S. output, based on the analysis, that count is expected to rise.

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Analysis

US Shale Oil Production Costs Fell by 30% from Decade High

By on 30 Mar 2016 in analysis, notable posts with 0 Comments
US Shale Oil Production Costs Fell by 30% from Decade High

(EconomicCalendar.com) Costs associated with shale oil exploration and production decreased by a third in 2015 thanks to implementation of more effective technologies. Experts are certain that this could affect crude oil prices in the short term.

Costs beared by US shale producers shrunk by 25-30% last year in comparison to their decade high in 2012. This is attributed to the usage of advanced technology that improved the effectiveness of both well drilling and post-drilling well development, according to research conducted by the energy industry consultant IHS Global Inc. and commissioned by the Energy Information Administration (EIA).

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Why rigs deactivation doesn’t matter much?

By on 28 Mar 2016 in analysis, notable posts with 2 Comments
Why rigs deactivation doesn’t matter much?

(Econotimes) According to latest numbers from Baker Hughes, number of active oil rigs operating in United States has dropped to lowest levels since 2008/09 financial crisis. While back in October, 2014, the number of active rigs were at 1609 but as of last week it declined further by 15 rigs to 372, lowest since November, 2009.

In recent times, some market participants have taken note of the rig count to increase bullish bets on oil price recovery, suggesting drop in number of rigs indicating further declining in investments. However, our analysis suggests, when it comes to oil price recovery by changing fundamentals, other than intraday or few days boost, rigs count doesn’t matter much.

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IMF: Oil Prices And The Global Economy – It’s Complicated

By on 24 Mar 2016 in analysis, notable posts with 0 Comments
IMF: Oil Prices And The Global Economy – It’s Complicated

(Seeking Alpha) By Maurice Obstfeld, economic counsellor and director of research at the International Monetary Fund; Gian Maria Milesi-Ferretti, deputy director in the Research Department of the International Monetary Fund; and Rabah Arezki, chief of the Commodities Unit in the IMF Research Department

Oil prices have been persistently low for well over a year and a half now, but as the April 2016 World Economic Outlook will document, the widely anticipated ” shot in the arm ” for the global economy has yet to materialize.

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Viewpoints

Peak Oil and Runaway China: A Dangerous Combination of Memes

By on 28 Mar 2016 in notable posts, viewpoints with 1 Comment
Peak Oil and Runaway China: A Dangerous Combination of Memes

(CFA Institute) Back in 2005, investors heard an endless chorus in the financial media around two memes: the end of oil, and the growth of China.

Oil production was supposedly hitting its upper limits. In 2005, the US Department of Energy published a study on the peaking of world oil production (.PDF) that stated:

Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing [….] This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production [….] The world has never faced a problem like this [….] Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.

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Oil Price May Have Bottomed Out But China’s Flat Demand Spells Trouble

By on 25 Mar 2016 in notable posts, viewpoints with 0 Comments
Oil Price May Have Bottomed Out But China’s Flat Demand Spells Trouble

(Forbes) As the Brent front-month futures contract stabilizes either side of the $40 per barrel level, and WTI lurks within that range too, a comment by the International Energy Agency that the “oil price may have bottomed out” has triggered a lot of market interest.

In its monthly oil forecast for March, the IEA, which advises on energy policy matters of industrialized nations, noted that non-OPEC oil production would fall by 750,000 barrels per day (bpd) in 2016, compared with its previous estimate of 600,000 bpd. Specifically, US production is forecast to decline by 530,000 bpd this year.

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What Happened to Peak Oil?

By on 18 Mar 2016 in notable posts, viewpoints with 1 Comment
What Happened to Peak Oil?

(greentechmedia.com) Peak oil is the point at which global oil production peaks and can only go down. M. King Hubbert developed the theory of peak oil after observing this pattern in individual oil fields and then extrapolating these trends to the U.S., accurately predicting a peak in U.S. production by 1970.

But in the last few years, as U.S. oil production has dramatically ramped up, many peak oil believers have been left looking a bit silly.

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Other Recent Posts

Halliburton CEO on an “unsustainable market”

By on 25 Apr 2016 in quotes with 0 Comments

“What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now.”

Jeff Miller, President of oil services company Halliburton

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Peak Oil Review – 25 April 2016

By on 25 Apr 2016 in Peak Oil Review with 0 Comments

Market sentiment has switched to the opinion that prices are not going much lower, despite warnings from Goldman Sachs and other respected observers that there is no fundamental support for higher prices at this time. Last week various pieces of slightly bullish news that are usually are ignored by the markets were enough to move prices higher for the eighth time in the last ten weeks. Crude now is up 67 percent since February, closing on Friday at $43.73 in New York and $45.11 in London.

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Bloomberg reporter on Wall Street & oil

By on 18 Apr 2016 in quotes with 0 Comments

“Wells Fargo’s foray into oil shows how Wall Street misjudged the risks hidden in an esoteric type of energy financing long thought to be bulletproof.”

Asjylyn Loder, Bloomberg News

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Peak Oil Review – 18 Apr 2016

By on 18 Apr 2016 in Peak Oil Review with 0 Comments

Oil prices climbed to recent highs early last week on hopes that the Doha meeting would eventually lead to some sort of production cut, a weaker dollar, and scattered production problems. Later in the week prices fell as the US crude glut continued to grow and expectations that something meaningful would come from the Doha meeting subsided. At week’s end, New York oil was at $40.36 and London at $43.10 up 2.8 percent for the week.

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OilPrice.com analyst on investment & prices

By on 11 Apr 2016 in quotes with 1 Comment

“Generally, it takes 18 months before the world has a decent picture of supply and demand. This is little consolation to those trying to do real time analysis on the direction of prices. That is why I can say categorically “the fix is in”. In other words, fields are declining, meaning investment is far below levels required just to replace production. The only thing that will change the vector of these declines is more spending, lots more spending, and the only thing will spur lots more spending is higher prices. Significantly higher than $40/bbl.”

Brad Beago, Oilprice.com, in Fortune magazine

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Peak Oil Review – 11 Apr 2016

By on 11 Apr 2016 in Peak Oil Review with 0 Comments

Oil prices surged 8 percent last Friday and are now back at levels seen at the top of the last price surge in mid-March. This time strengthening the US and German economies, a falling dollar, and the OPEC price freeze meeting on April 17th was seen as the trigger behind the rally. Friday’s rally was the 12th time in the last two months that daily prices have surged by 5 percent or more showing that there is a lot of money eager to participate in big price rise that will come someday. However, this rally was mostly based on hopes that things are going to get better rather than any specific news, other than the recent increases in US gasoline consumption which are likely to short-lived as retail prices move higher.

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Meet Us in DC, June 25-29

By on 4 Apr 2016 in event with 0 Comments
Meet Us in DC, June 25-29

Join us in Washington DC in late June for a combination of events that promise to be engaging, educational, and downright enjoyable. International Society for BioPhysical Economics 2016 Conference June 26-29, University of the District of Columbia The International Society for Biophysical Economics is the foremost organization for research and scholarship on the interconnections among energy, resources, […]

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Consulting firm on Argentina oil

By on 4 Apr 2016 in quotes with 0 Comments

“Most of the fields in Argentina are mature, and they are declining in production. A lot of investment [$20 billion per year] is needed to sustain production. This is having an impact on production curve now [with the rig count down from 112 in 2014 to 64 in February].”

Alejandro Gagliano, a partner at Giga Consulting in Buenos Aires

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Peak Oil Review – 4 Apr 2016

By on 4 Apr 2016 in Peak Oil Review with 0 Comments

The six-week long surge in oil prices which pushed the price of crude up by roughly 50 percent seems to be coming to an end with prices down 6 percent last week. Looming behind the price increase was the notion that the world’s major crude exporters would to get together and sign an agreement to freeze production at current levels. Supporting the price jump was an increase in US gasoline consumption as prices fell to levels not seen in decades and the never ending hope that the US economy was about to get better. Much of the surge was caused by the liquidation of the unprecedented short futures positions that hedge funds and other speculators had built up during the nearly two-year slide of oil prices. When oil fell below $30 a barrel, many speculators figured that the long price slide was over and that oil was unlikely to go much lower. The resulting liquidation of positions which pushed up prices was the largest on record.

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Platts Bentek analyst & Rystad’s head of analysis comments on the oil & gas sector

By on 28 Mar 2016 in quotes with 0 Comments

[Regarding natural gas prices:] “Going into summer, producers know it’s going to be a massacre.”

Sami Yahya, a Platts Bentek analyst.

“Global demand and supply will balance very quickly because we’re seeing an extended decline from producing fields.”

Per Magnus Nysveen, Rystad’s head of analysis, saying the world oil market will re-balance this year.

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