The Mysterious Case of Big Oil’s Disappearing Barrels

(Bloomberg) If you ever find yourself at a cocktail party with a bunch of oil executives, one phrase is a guaranteed mood-killer: “reserve replacement.”Not merely awkward to say, it is the industry’s bogeyman. Because in a business chiefly concerned with getting stuff out of the ground, you need to replace that stuff pretty consistently unless you want to, well, eventually run out of stuff.Last year, the stuff-gathering did not go so well.

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OPEC’s low-cost producers Saudi Arabia, Kuwait, Iraq and Iran — where production costs are often lower than $10 (U.S.) a barrel — cranked up output, with Saudi Arabia and Iran each producing 1 million barrels a day more than they did in late 2014.

Oil glut seen extending into 2017 on weaker demand

(Toronto Star) The much-anticipated rebalancing of oil markets appears to be a bit further away after the International Energy Agency revised its forecast, trimming its expectations for the growth in oil demand and citing near-record production by OPEC’s Middle East exporters.

The IEA said Tuesday that global oil demand is rising at a slower pace than expected, lowering its forecast by 100,000 barrels a day to an increase of 1.3 million barrels a day in 2016 and 1.2 million barrels a day in 2017.

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What Hubbert Got Really Wrong About Oil

(Forbes) If you happen to be someone who is interested in the topic of “peak oil”, you know the name M. King Hubbert.

The history of the scientific study of peak oil dates to the 1950s, when Hubbert, a Shell geophysicist, reported on studies he had undertaken regarding the production rates of oil and gas fields.

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Oil! Massive shale discovery in Texas

(CNN) Apache ( APA ) revealed the huge find this week after more than two years of stealthily buying up land, extensive geological research and rigorous testing.

The Houston company estimates the discovery, dubbed “Alpine High,” could be worth at least $8 billion.

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OPEC Monthly Oil Market Report August 2016

(peakoilbarrel.com) When oil fell below $30 a barrel earlier this year, banks turned away from lending to energy companies. The price of crude has bounced back more than 80% from its February low, but banks are still wary.

Big banks cut loans to the energy sector by about 3% in the second quarter over all and some individual lenders pulled back much more, according to an analysis of July and August securities filings by Barclays analysts.

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Oil Rig
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OPEC Just Triggered The Biggest Crude Oil Short Squeeze In History

(oilprice.com) Ever since the February crash, when oil tumbled to 13 years lows, and when OPEC started releasing tactical headlines at key inflection points about an imminent oil production freeze (which not only never arrived but has since seen Saudi Arabia’s output grow to record levels) which we first suggested were meant to trigger a short squeeze among headline scanning HFT algos, our suggestion was – as is often the case – dismissed as yet another conspiracy theory.

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A worker waits to connect a drill bit on Endeavor Energy Resources
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EIA: U.S. shale oil production to fall sharply through 2017

(fuelfix.com) The flow of oil from U.S. shale fields is projected by government analysts to fall 14 percent by 2017, as the reverberations of the recent crash in crude prices are felt.

Production from those shale fields had increased exponentially over the past decade as hydraulic fracturing and horizontal drilling techniques were improved. Shale oil now accounts for more than half of the nation’s crude output.

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Is the Oil Industry Dying?

Is the Oil Industry Dying?

(psmag.com) Talking about “peak oil” can feel very last decade. In fact, the question is still current. Petroleum markets are so glutted and prices are so low that most industry commenters think any worry about future oil supplies is pointless. The glut and price dip, however, are hardly indications of a healthy industry; instead, they are symptoms of an increasing inability to match production cost, supply, and demand in a way that’s profitable for producers but affordable for society. Is this what peak oil looks like?

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A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq December 21, 2015.  REUTERS/Essam Al-Sudani
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Oil prices slip as short-covering rally fizzles

(Reuters) A worker walks at Nahr Bin Umar oil field, north of Basra, Iraq December 21, 2015. Oil prices dipped on Friday, ending a two-day rally, as a glut of crude and refined products weighed on markets and investors eyed a possible stutter in China’s imports.

U.S. West Texas Intermediate (WTI) crude futures CLc1 fetched $41.74 per barrel at 0930 GMT (0530 ET), down 19 cents from their last close, after trading as low as $41.44 earlier in the day. They were on track roughly to break even on the week.

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A general view of a crude oil importing port.
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Oil prices plummet amid continued oversupply, with no end in sight

(The Guardian) A crude oil importing port. Oil may be a precious and dwindling resource, but at the moment, at least, it looks like we just have too much of it. Crude-oil prices are now at their lowest since early April, hit by continued oversupply, concerns about global demand and negative price sentiment by oil-market participants. And that situation looks likely to continue in the near future.

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Sinopec employee
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Oil Correction Stalls On Strong Dollar, Rising Rig Count

(oilprice.com) Oil briefly dropped below $40 per barrel this week but rebounded following the surprise drawdown in gasoline inventories, a robust decline of 3.3 million barrels. Oil traders were more than happy with that result, ignoring the 1.4 million barrel build in crude oil stocks. As a result, oil traded up 3 percent on Wednesday and posted an additional 2.5 percent gain on Thursday.

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A truck used to carry sand for fracking is washed in a truck stop on February 4, 2015 in Odessa, Texas.

Are Shale-Oil Companies Starting to Weather the Crude Slide?

(Wall Street Journal) A truck used to carry sand for fracking is washed in a truck stop on February 4, 2015 in Odessa, Texas. … Debt from U.S. shale companies has held its ground even as oil prices have beat a fast retreat, a sign the firms may have adapted to an era of cheaper crude and could remain key suppliers to the market.

A build-up in stockpiles of oil has renewed downward pressure on prices: U.S. crude is now at roughly $42 the barrel, 14% below where it was at the beginning of June, when it appeared to be rallying.

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Do Oil Companies Really Need $4 Billion Per Year of Taxpayers’ Money?

(NY Times) What would happen if the federal government ended its subsidies to companies that drill for oil and gas?

The American oil and gas industry has argued that such a move would leave the United States more dependent on foreign energy.

Many environmental activists counter that ending subsidies could move the United States toward a future free of fossil fuels — helping it curtail its emissions of heat-trapping carbon dioxide into the atmosphere.

Chances are, it wouldn’t do much of either.

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Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom on March 23, 2014 near McKittrick, California.  Photo: David McNew, Getty Images
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World of hurt for energy industry

(Houston Chronicle) Dismal earnings, falling crude show recovery remains far off

The extended energy bust has enveloped every segment of the oil and gas industry, washing over major oil companies, independent producers, services firms and refiners as brutal earnings reports suggest that if the downturn has indeed reached bottom, the climb out will be long and painful.

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FILE - This Jan. 30, 2012, file photo, shows the sign for the Exxon Mobil Torrance Refinery in Torrance, Calif. Exxon Mobile Corp. reports financial results Friday, July 29, 2016. (AP Photo/Reed Saxon, File)
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Exxon, Chevron still reeling from low oil prices

(Trib Live) Cheaper oil is leading to the lowest summer gasoline prices in years, and it is causing heartburn for oil companies and their shareholders.

On Friday, Exxon Mobil Corp. reported its smallest quarterly profit in nearly 17 years — although it still earned $1.7 billion. Chevron Corp. posted its biggest loss in nearly 15 years.

The reports from the two biggest U.S. oil companies followed weak second-quarter results from BP and Royal Dutch Shell.

Exxon Chairman and CEO Rex Tillerson said the results “reflect a volatile industry environment.”

The companies have slashed spending on exploration and cut budgets to offset lower prices, but that has yet to create a sustained rebound in oil prices.

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The Death of OPEC

(Project Syndicate) The Organization of the Petroleum Exporting Countries is dead. Saudi Arabia killed it. Now, OPEC is just a toothless zombie, attracting attention, but without having any impact on the living.

Few have noticed OPEC’s demise for a simple reason: it never really had the impact that it was widely perceived to have. It was never actually a cartel, possessing monopolistic market power. Anyone who thought otherwise was mistakenly attributing to it Saudi Arabia’s market power.

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Resurgence of supply glut fears send oil to 3-month lows

(CNBC) After jumping over 20 percent in the second quarter of the year, oil prices hit three-month lows on Monday, threatening to put the brakes on a fragile recovery.

Resurgent concerns over supply-demand mismatches have hurt sentiment, analysts said.

“It’s not just in the U.S. In Asia, if you look at Chinese gasoline demand growth, it was 10 percent last year. This year, it’s tracking the mid-single digits,” said Scott Darling, JP Morgan’s Asia Pacific oil and gas head of research.

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No One Knows How Much Oil Is Being Stored Around the World

(technologyreview.com) Peak oil, if it even exists , is very much a moving target . But so, it turns out, is measuring how much oil is already above ground, sitting in the holds of ships and in storage facilities around the world.

It’s not that humanity is fundamentally incapable of measuring how much oil we are extracting—it’s that many countries don’t report their inventories.

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U.S. Oil Drillers Add Rigs in Longest Streak Since August

(Bloomberg) U.S. oil producers continue to revive drilling in the shale patch, adding rigs for the fourth consecutive week in the longest streak of increases since August.

Rigs targeting crude in the U.S. rose by 14 to 371, after 27 had already been added since the start of the month, Baker Hughes Inc. said on its website Friday. Natural gas rigs declined by 1 to 88, bringing the total for oil and gas up by 15 to 462.

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Hawtah oil

Saudi Arabia Offers Hope For An Oil Price Rally

(oilprice.com) Crude oil prices hit a 10-week low on Tuesday, but one piece of data from Saudi Arabia could provide a glimmer of hope for those longing for an oil price rally. Saudi Arabia is burning through some of its oil inventories as exports combined with scorching domestic demand exceed its total production. In 2015, Saudi Arabia built up crude storage levels to a record high, as the kingdom stepped up production in the face of a global supply surplus.

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Shell Rig

Why Oil Prices Might Not Rebound Until 2019

(oilprice.com) It’s a safe bet that investors are getting increasingly tired of all the conflicting forecasts about oil and gas prices. Some argue that oil is heading back to $20 thanks to the continuing excess supply. Others claim that the excess is overestimated and crude is well on its way to reach $80 or more by the end of the year. The likely truth, as usual, is somewhere in the middle, at least for the time being.

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« Oil Prices Lower Forever? Hard Times In A Failing Global Economy

(artberman.com) Two years into the global oil-price collapse, it seems unlikely that prices will return to sustained levels above $70 per barrel any time soon or perhaps, ever. That is because the global economy is exhausted.

The current oil-price rally is over as I predicted several months ago and prices are heading toward $40 per barrel.

Oil has been re-valued to affordable levels based on the real value of money. The market now accepts the erroneous producer claims of profitability below the cost of production and has adjusted expectations accordingly. Be careful of what you ask for.

Meanwhile, a global uprising is unfolding.

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Future shale production will hinge on technology, EIA says

(fuelfix.com) HOUSTON – After the energy bust, the future of U.S. shale oil will depend greatly on how quickly drilling technology can evolve over the next 25 years, the Energy Information Administration says.

Rapid technological change and high energy prices could help domestic drillers push shale oil production to 12.9 million barrels a day by 2040, up from last year’s 4.9 million barrels a day, the EIA said Monday in an early look at some of its long-term projections due in a report later this month.

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