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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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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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Former OPEC insider tells how global oil pricing got flipped on its head

By on 3 Apr 2016 in analysis, notable posts with 1 Comment
Former OPEC insider tells how global oil pricing got flipped on its head

(The National) From 2004 to 2008 and 2010 to 2014, oil production and prices both rose. The price increases were completely divorced from the market principle of a supply-demand balance. In the middle of 2014, the price momentum ran out of steam and prices began sinking in a bog of unconsumed, overproduced, expensive new oil.

That market disorder should have been a reason for concern. Unfortunately, greed suppressed the voices that raised the alarm and warned of the long-term dangers of short-term gains.

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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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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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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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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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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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The big bust in the oil fields

By on 25 Mar 2016 in news, notable posts with 0 Comments
The big bust in the oil fields

(Washington Post) Tilden, Tex. — He’d borrowed from banks and investors and retirement funds, all in a frenzied mission to drill for oil and gas, and by the time Terry Swift realized he’d gone too far, this was his debt: $1.349 billion.

His company, founded by his father almost 40 years earlier, had plunged into bankruptcy and laid off 25 percent of its staff. Its shares had been pulled from the New York Stock Exchange. And now Swift was in a company Chevrolet Tahoe, driving back to the flat and dusty place where his bets had gone bust.

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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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Why North-American Oil Is Positioned To Win In The Long-Run

By on 23 Mar 2016 in analysis, notable posts with 0 Comments
Why North-American Oil Is Positioned To Win In The Long-Run

(oilprice.com) Did U.S. investors complete the U.S. E&P’s revolutionary transformation of the global oil market at the end of February?

Very possibly, yes. At a time when oil companies large, medium, and small were cutting more from 2016 capex budgets, Americans were expressing their confidence in the U.S. E&P’s sector’s future, pouring $9.2 billion in new equity into the beleaguered sector.

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An Unlikely Victim Of Oil’s Collapse: Krispy Kreme

By on 23 Mar 2016 in news, notable posts with 0 Comments
An Unlikely Victim Of Oil’s Collapse: Krispy Kreme

(Forbes) Despite humble beginnings in North Carolina, Krispy Kreme has bet big on international expansion in recent years, with nearly three quarters of its 1,100 donut shops now located abroad.

Yet, with plunging oil prices wreaking havoc around the world, there are some places where it probably wishes it hadn’t set up shop.

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Drillers Can’t Replace Lost Output as $100 Oil Inheritance Spent

By on 21 Mar 2016 in news, notable posts with 0 Comments

(Bloomberg) Here’s Why This Is Only the Fourth Time Oil Has Tanked. For oil companies, the legacy of $100 crude is starting to run dry.

A wave of projects approved at the start of the decade, when oil traded near $100 a barrel, has bolstered output for many producers, keeping cash flowing even as prices plummeted. Now, that production boon is fading. In 2016, for the first time in years, drillers will add less oil from new fields than they lose to natural decline in old ones.

About 3 million barrels a day will come from new projects this year, compared with 3.3 million lost from established fields, according to Oslo-based Rystad Energy AS.

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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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US rig count, at 476, is lowest in 67 years of record-keeping: Baker Hughes

By on 18 Mar 2016 in news, notable posts with 0 Comments
US rig count, at 476, is lowest in 67 years of record-keeping: Baker Hughes

(platts.com) The total US rig count, which on Friday stood at 476, is now at its lowest point ever in the 67-year history of the Baker Hughes numbers, according to data released by the oilfield service company.

That is down by four from last week and down from 1,069 working the same week in 2015 and a recent peak of 1,931 in late 2014. The previous low was 488 in April 1999, Baker Hughes records show.

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Another False Oil Price Rally: Crossing A Boundary

By on 17 Mar 2016 in notable posts, viewpoints with 0 Comments
Another False Oil Price Rally: Crossing A Boundary

(artberman.com) The oil-price rally that began in mid-February will almost certainly collapse.

It is similar to the false March-June 2015 rally. In both cases, prices increased largely because of sentiment. As in the earlier rally, current storage volumes are too large and demand is too weak to sustain higher prices for long.

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Saudi Arabia’s Oil Chief Prepares for a World After Fossil Fuels

By on 17 Mar 2016 in news, notable posts with 0 Comments
Saudi Arabia’s Oil Chief Prepares for a World After Fossil Fuels

(Bloomberg) Even as it pumps near-record quantities of oil, Saudi Arabia is getting ready for a time when the world will no longer need its biggest export.

The world’s largest crude exporter is focusing on renewable-energy sources such as solar power in preparation for a post-oil global economy, Oil Minister Ali al-Naimi said at a conference in Berlin on Thursday.

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In Shift, Obama Won’t Open Southeast Atlantic Coast to Drilling

By on 15 Mar 2016 in analysis, notable posts with 0 Comments
In Shift, Obama Won’t Open Southeast Atlantic Coast to Drilling

(NY Times) When the Obama administration unveiled a proposal in January 2015 to open the southeastern Atlantic coast to oil and gas drilling for the first time, environmental advocates were shocked and enraged — and the oil industry was delighted.

The emotions were the same, just on opposite sides of the energy-environmental divide, when the Interior Department announced Tuesday that the administration was yanking Atlantic drilling off the table. And almost everyone was shocked.

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Investors Increasingly Bullish on Energy Sector

By on 14 Mar 2016 in news, notable posts with 0 Comments
Investors Increasingly Bullish on Energy Sector

(NY Times) It was one of the darkest periods of the oil market slump. The global economy was showing fresh signs of slowing, and crude prices were collapsing so steeply that virtually every well in America was unprofitable.

But when Diamondback Energy went out to raise $226 million worth of new stock that week in the middle of January, the oil and gas company found more buyers than it could accommodate. It had to nearly double the amount of shares it sold, to four million.

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If Oil Prices Have Hit Bottom, the Top May Not Be Too Far Away

By on 14 Mar 2016 in news, notable posts with 0 Comments
If Oil Prices Have Hit Bottom, the Top May Not Be Too Far Away

(Bloomberg) The top of the oil market may be closer than you think.

With Brent futures having bounced back as high as $41 a barrel, the International Energy Agency sees “ light at the end of the tunnel ,” and Goldman Sachs Group Inc. is spotting “green shoots.” Even so, many analysts warn that, like the failed rally last year, this recovery will sputter once prices go high enough to keep U.S. crude flowing.

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A Short History of Unsuccessfully Calling a Bottom in Oil: Chart

By on 11 Mar 2016 in analysis, notable posts with 0 Comments
A Short History of Unsuccessfully Calling a Bottom in Oil: Chart

(Bloomberg) The upturn in U.S. core inflation and rise in oil prices are causing money to pour into a trade that was one of Wall Street’s favorites heading into 2016, according to Société Générale SA.

Late in 2015, strategists at Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley—to name a few—were pounding the table on Treasury inflation-protected securities, based on the belief that market-based measures of price pressures over the medium term were far too subdued.

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