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Oil Trades Near Five-Year Low on U.S. Stockpiles, Iran

Filed in Prices by on 18 December 2014

Oil in New York swung between gains and losses near a five-year low as investors weighed a drop in U.S. crude stockpiles against signs that Iran is joining other OPEC members in refusing to cede market share. Futures were little changed after rising 1 percent yesterday. Crude stockpiles in the U.S., the world’s largest oil consumer, fell by 847,000 barrels last week, the Energy Information Administration reported. Iran “will under no conditions let go of its share” of the market given restrictions on its exports in recent years, Oil Minister Bijan Namdar Zanganeh said, according to the ministry’s news website. Oil has slumped more than 20 percent since OPEC decided at a meeting last month to maintain its output quota, resisting calls from members including Venezuela to cut supply. Iran this week followed Saudi Arabia , Iraq and Kuwait in offering wider discounts for sales to Asia . U.S. [...]

Oil prices land blow to OPEC, EIA says

Filed in OPEC, Prices by on 18 December 2014

The U.S. Energy Information Administration warned OPEC members might need to trim their budgets as oil prices continued their steady decline Wednesday. “Further revisions to future budget plans may be required in many OPEC member countries, particularly [Venezuela, Iraq and Ecuador], because of lower oil prices and large uncertainty over future global economic growth and crude oil production levels,” EIA said in a brief Wednesday. Brent, the global oil price index, continued dropping in early trading Wednesday, down nearly $1 per barrel to $59.16 for the January contract. Brent prices this week fell below the $60 mark for the first time in more than five years. A November decision by the Organization of Petroleum Exporting Countries to keep [...]

Oil Prices as an Indicator of Global Economic Conditions

Filed in Economy, Prices by on 18 December 2014

West Texas Intermediate sold for $105 a barrel at the start of July, but ended last week at $58. The most important factor has been surging U.S. production . But another reason oil prices have slid so much is weakness in demand for the product, which may be related to a slowdown of overall world economic growth. Here I comment on the importance of that second factor. Price of crude oil (West Texas Intermediate, dollars per barrel). Source: FRED. For example, the price of copper fell from $3.27/pound to $2.93, a 10% drop over those same six months. This of course has nothing to do with the success of people in getting more oil out of rocks in Texas. Softness in demand for commodities like copper and oil may be one indicator of new weakness in the world economy. Price of copper (NYMEX, dollars per pound). Source: Investing.com. The [...]

OPEC net oil export revenues expected to fall in 2014 and 2015

Filed in OPEC by on 18 December 2014

Based on crude oil market assessments in the Short-Term Energy Outlook , EIA estimates that members of the Organization of the Petroleum Exporting Countries (OPEC), excluding Iran, will earn about $700 billion in revenue from net oil exports in 2014, a 14% decrease from 2013 earnings and the lowest earnings for the group since 2010. OPEC earnings declined in 2014 largely for two reasons: decreases in the amount of OPEC oil exports and lower oil prices, with the 2014 average for Brent crude oil projected to be 8% below the average 2013 price. For similar reasons, revenues for OPEC (excluding Iran) in 2015 are expected to fall further, to $446 billion, 46% below the 2013 level. Brent crude oil is projected to average $68 per barrel in 2015, down from $100 per barrel in 2014 and $109 per barrel in 2013. Iran is excluded in this calculation because current [...]

Hawrami draws ‘red line’ for Baghdad oil talks

Filed in Iraq by on 18 December 2014

Leaders from Iraq’s autonomous Kurdistan Regional Government (KRG) are drawing red lines on oil policy that could put pressure on a fragile rapprochement with Baghdad.Kurdish Minister of Natural Resources Ashti Hawrami insisted Wednesday that the KRG will continue to export oil independently, and reasserted the KRG’s determination to control two major oil assets it seized in July, which were previously part of Baghdad’s oil portfolio.”Our export is our right. If that is the reason for di…

Rumaila to ramp up production 50% by end of decade

Filed in Iraq by on 18 December 2014

The Rumaila Operating Organization (ROO)—a partnership of South Oil Co. , BP PLC , PetroChina Co. Ltd. , and Iraq’s State Oil Marketing Organization (SOMO)—plans to increase production by 50% from Iraq’s giant Rumaila oil field to 2.1 million b/d by the end of the decade. The number represents an increase of 800,000 b/d from current production and will account for 3% of global oil production, according to BP’s Energy Outlook 2035. The agreement was made under a recently revised technical service contract signed by the partners and extended to 2034. Rumaila in September produced its 2 billionth bbl under the contract, which was initially signed in 2009. Of the estimated 70 billion bbl of oil initially in place, 14 billion bbl have been recovered. Assuming a conservative recovery factor of 40%, the partnership estimates there are 20 billion bbl still available for recovery. More [...]

Kurdistan Says Nearing Economic Self-Sufficiency On Oil Boom

Filed in Iraq by on 18 December 2014

Iraq’s semi-autonomous region of Kurdistan will see a steady rise in oil exports in the coming months, moving it closer to economic self-sufficiency, while it is still hoping to clinch a final deal with Baghdad on oil exports and revenue sharing. Kurdistan this month reached a limited agreement with Baghdad on oil exports after months of wrangling. The federal government had cut off Kurdistan’s budget allocation in response to the autonomous region’s decision to export oil unilaterally. Kurdistan’s minister for natural resources Ashti Hawrami told a conference in London that despite a fresh deal, Arbil had yet to agree on other issues including the right to export oil independently and a revenue sharing mechanism. “The KRG will play its full role in helping [...]

Kurdish oil vital for Iraq, London says

Filed in Iraq by on 18 December 2014

 Iraqi, Kurdish and other regional players gathered in London for an investment conference, two weeks after agreements in Iraq ended long-standing disputes over who has what level of control over the nation’s oil sector. British Energy Minister Matthew Hancock said investors need to stand by Iraq now that security and the political climate have improved. By 2040, he said, Iraqi crude oil production could triple to just over 8 million barrels per day. “Reserves in Kurdistan play a significant role in this increase,” he said. “Development and export opportunities in the Kurdistan region will play a very important role in the future energy sector of a united Iraq.” Gulf Keystone Petroleum, an energy company with headquarters in London, announced this week it linked oil wells in the Shaikan [...]

Saudi Arabia Spending Means Less Room for OPEC to Cut Output

Filed in OPEC, Saudi Arabia by on 18 December 2014

Saudi Arabia ’s plan to continue spending on social projects and security increases the likelihood that the world’s biggest oil exporter will stick with OPEC’s policy of maintaining output even as crude prices plunge. “Saudi Arabia is backing up OPEC policy with action to strengthen the home front against the adverse impact of falling oil prices,” Arabia Monitor Chief Economist Florence Eid-Oakden, whose firm advises investors on business risks in the Middle East , said yesterday by phone from London . The Saudi stock market rebounded after Finance Minister Ibrahim al-Assaf announced that the government plans to fund “massive” development projects next year, focusing on health care, education, social services and security. The Tadawul stock index lost almost a third of its value since September amid expectations that falling oil prices will curtail government spending . The Organization of Petroleum Exporting Countries decided Nov. 27 to keep its output [...]

Nigerian Striking Oil Unions to Enter Delayed Government Talks

Filed in Nigeria by on 18 December 2014

Nigeria’s oil unions are set to start delayed talks with the government as a national strike entered its fourth day in Africa ’s biggest crude producer. The strike by the Petroleum and Natural Gas Senior Staff Association of Nigeria and Nigerian Union of Petroleum and Natural Gas Workers, is aimed at curbing local fuel supply and exports. Pengassan represents managers and Nupeng lobbies for manual workers. “If we are unable to get a strong commitment from the government, the strike will continue until we get something positive,” Emmanuel Ojugbana, a spokesman for Pengassan, said by phone yesterday from Warri, a southern oil hub. Union leaders said delayed talks with the authorities would be held today in Abuja, the capital. Workers are protesting the government’s failure to fix refineries, cut gasoline prices in line with the slump in crude, and also to press for the passage of a new oil [...]

South Sudan Hires Ex-Blackwater Chief to Restore War-Hit Oil

Filed in Sudan by on 18 December 2014

The former head of U.S. security company Blackwater USA, Erik Prince, was hired by South Sudan to help repair damaged oil facilities and boost output cut by a year of civil war. Prince’s Frontier Services Group Ltd. (500) , a Hong Kong-listed logistics and transportation company, is being paid 18.7 million euros ($23.3 million) by South Sudan’s Ministry of Petroleum to transport supplies to and perform maintenance on the production facilities at the oil fields , Chief Executive Officer Gregg Smith said by phone from New York yesterday. About 30 employees including pilots, engineers and logistics technicians have been using helicopters and airplanes to reach South Sudan’s oil fields since September, Smith said. “This is not supporting the army,” Smith said. “The contract is clearly with the Ministry of Petroleum and Mining to support the oil field services and to make sure the production of oil keeps flowing.” South [...]

Drop in Chinese demand a ‘threat’ to some US coal exports: Wood Mackenzie

Filed in China, Coal by on 18 December 2014

Dropping Chinese demand for imported thermal coal will likely have the biggest impact on US producers who sell into markets across the Atlantic, global research firm Wood Mackenzie said Wednesday, December 17. That is because the estimated 25 million mt (27.6 million st) drop in imports from 2014 to 2015, which was ordered by the Chinese government to both protect local mining interests and the environment, will push lower-cost Indonesian and Australian thermal coal into the Atlantic, said Jonny Sultoon, an Annapolis, Maryland-based senior analyst for Wood Mackenzie. “There is a volume shift taking place back into the Atlantic Basin that is a threat for US exports,” Sultoon said. South Africa, which can sell to either the Pacific Basin or the Atlantic Basin, is now shifting back to the Atlantic, he said. Article continues below… Platts Coal Trader International is the only daily publication [...]

Bakken Oil Transport Still Not Safe

Filed in Railroads, Shale Oil by on 18 December 2014

When the North Dakota Industrial Commission issued its landmark ruling last week concerning the conditioning of oil, it appeared that they were making a serious move towards improving the safety of transporting crude out of the Bakken. But according to an article in the StarTribune, the new regulations, which go into effect April 2, 2015, won’t bring the industry any closer to a solution for a serious problem that is drawing fire from legislators, concerned citizens and environmental groups. Alan Stankevitz, an expert on the DOT 111 tanker car, explains in the StarTribune that the standards set by the commission, which includes Gov. Jack Dalrymple, are not enough to adequately address the problem. The order establishes new regulations that demand facilities to [...]

New York bans fracking after health report

Filed in Air Quality, Shale Gas, Water by on 18 December 2014

New York state will ban hydraulic fracturing after a long-awaited report concluded that the oil and gas extraction method poses health risks, Governor Andrew Cuomo’s administration said on Wednesday. New York Environmental Commissioner Joseph Martens said at a cabinet meeting he will issue an order early next year banning fracking, which has been under a moratorium since 2008. Once that happens, New York will join Vermont as the only states to completely prohibit fracking. The decision ends what has been a fierce debate in New York over the benefits and pitfalls of fracking, a process that involves pumping water, sand and chemicals into a well to extract oil or gas. Many in the state saw gas drilling as a key economic resource while others argued it was too dangerous. The state’s health commissioner, Howard Zucker, said there is not enough scientific information to conclude [...]

Low prices cause fuel shortages

Filed in Prices, USA by on 18 December 2014

 Consumers are enjoying low prices at the pump, but that’s making it harder to find certain fuels. Last week there was no premium unleaded gasoline in Iowa, said Dawn Carlson, president of Petroleum Markets and Convenience Stores of Iowa. Several local stores are members of the organization, a nonprofit trade association. Since Iowa is short on premium unleaded gasoline, retailers and distributors are having to go farther away to fill their tanks. Kent Hanstein, co-owner of Le Mars Truck Stop, said that could be Kansas City, Mo., or Sioux Falls, S.D. That adds to the cost of fuel for the retailer, he said. “It might be a difference of two to four cents a mile for freight, up to possibly 12 cents a mile for freight,” Hanstein said. Hanstein said fuel shortages in the fall with the harvest are common, but this year it’s a little [...]

Exxon Mobil Shows Why U.S. Oil Output Rises as Prices Plummet

Filed in Prices, Shale Oil by on 18 December 2014

Crude oil production from U.S. wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction. U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells. Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs Group Inc. Global giant Exxon Mobil Corp. (XOM) , the largest U.S. energy company, will increase oil production next year by the biggest margin since 2010. So far, the Organization of Petroleum Exporting Countries’ month-old bet that American drillers [...]

Cheap Oil Jamming Rails Means Higher U.S. Power Bills

Filed in Railroads, USA by on 18 December 2014

U.S. electricity costs are poised to reach the highest level since 1999 because railroads are too clogged to deliver enough coal to power plants. While the U.S. has the world’s biggest coal reserves, utilities are forecast by the government to end the year with the lowest stockpiles since 2005. With carriers including BNSF Railway jammed with record shipments of oil and grains, Xcel Energy Inc. (XEL) and other power producers say they can’t get the coal they need. The rail delays mean utilities haven’t rebuilt inventories that fell to a seven-year low last winter. Power producers filed 10 notices this year warning regulators that stocks were low enough to threaten generation, compared with two filings in 2013. Utilities have been obliged to rely more on natural gas, increasing costs for consumers. “There’s plenty of coal,”Jim Thompson, a director of coal for IHS, an Englewood, Colorado-based energy and industrial analytics [...]

Energy group questions Bristol Bay moratorium

Filed in Arctic by on 18 December 2014

Alaskan energy producers expressed dismay over a presidential decision to put the Bristol Bay off limits, though environmentalists lauded its stewardship. President Barack Obama issued a declaration that puts the Bristol Bay out of reach of oil and natural gas producers indefinitely. “This withdrawal prevents consideration of this area for any oil or gas leasing for purposes of exploration, development, or production,” Tuesday’s declaration read. Kara Moriarty, president and chief executive officer at the Alaska Oil and Gas Association, said she questioned the action’s wisdom given its indefinite term limit . “Although it might not be prudent today to consider oil and gas leasing in Bristol Bay, it is unclear why President Obama would choose to address this issue in [...]

Norwegian oil production down 5 percent

Filed in Norway by on 18 December 2014

 Production figures from Norway show average daily oil production down about 5 percent year-on-year, a national regulator said in Wednesday report. The Norwegian Petroleum Directorate released production figures for November , showing an average daily production of 1.46 million barrels of oil. “The oil production is 5 percent below the NPD’s prognosis for November and 5 percent below the oil production in November last year,” the agency said in its report. Major oil companies from BP to Marathon have trimmed back their expectations as oil prices continue to lose value. The price of oil, nearly 50 percent below June values, is at a point where some drillers may no longer be able to make a profit. Noreco, a Norwegian energy company focused on North Sea oil operations, said Monday its financial [...]

Statoil investing $600M on North Sea production

Filed in Norway by on 18 December 2014

A week after signaling a slowdown, Norwegian energy company Statoil said it was investing more than $600 million to develop a North Sea discovery. Statoil holds the majority interest in the Rutil discovery in the Gullfaks reserve area of the North Sea alongside its Norwegian state-owned counterpart Petoro and Austrian energy company OMV. Statoil said it would invest $610 million to develop the discovery using existing infrastructure. “By using existing infrastructure and standardized solutions we are able to create great value for our owners,” Ivar Aasheim, a senior vice president for field development on the Norwegian continental shelf, said in a statement Tuesday. Statoil procurement head Jon Arnt Jacobsen said last week the company was suspending contracts for four rigs because of lower profitability. Analysis from [...]

Chevron Suspends Arctic Offshore Drilling Program in Canada ‘Indefinitely’

Filed in Arctic, Canada by on 18 December 2014

 Chevron Corp. told Canadian regulators Wednesday that it has “indefinitely” suspended plans to drill for oil in Arctic waters, citing uncertainty over the outlook for crude prices. The move is the latest sign that a glut in crude oil is impacting major energy companies’ exploration and production programs. The Arctic holds billions of barrels of untapped oil reserves, but offshore-drilling costs there are among the highest in the world due to its remote location and severe weather. Chevron’s Canadian unit has pursued a test well drilling program in the Beaufort Sea in recent years, but said in a letter to Canada’s National Energy Board that it would put that project “on hold indefinitely” due to “the level of economic uncertainty in the industry.” Chevron confirmed the decision, noting all of its projects “must be competitive in our global exploration portfolio.” A 50% drop in oil prices since June [...]

KKR Stumbles on Shale Deal

Filed in Shale Oil by on 18 December 2014

 Shortly after bagging big profits on a Pennsylvania drilling deal, George Roberts traveled to Houston to meet with the banker who had brought the prospect to his private-equity firm, KKR & Co. Mr. Roberts, KKR’s co-founder, asked about other opportunities in shale drilling. Ralph Eads unfurled maps on a conference-room table and pointed out the country’s emerging drilling fields. “We want to be your first call,” Mr. Roberts told the Jefferies Group LLC banker. KKR went on to complete a couple of relatively small but hugely profitable shale deals before Jefferies in 2011 pitched the big one: Samson Investment Co., one of the largest closely held energy producers in the U.S. KKR bit, in the biggest-ever buyout of an oil-and-gas company. Now, the investment is deep in the red, as falling oil prices amplify struggles Samson has [...]

Marathon Oil to Cut Capital Spending in 2015

Filed in Oil Supply by on 18 December 2014

Marathon Oil Corp. plans to cut spending in 2015, the latest energy company to slim its spending plans amid tumbling oil prices. The Houston energy producer said it plans to spend $4.3 billion to $4.5 billion in capital projects, or about 20% less than in the current year, excluding its Norwegian business, which it sold in June for more than $2 billion amid a shift to focus operations on the U.S. Still, Marathon expects production to rise in the high-single digits, excluding its Libya operations. Last week, ConocoPhillips said it planned to cut capital spending also by 20% to $13.5 billion. Marathon’s shares closed at $26.67 on Wednesday, down 24% for the year. Write to Maria Armental at maria.armental@wsj.com

New York fracking ban reverberates nationally

Filed in Air Quality, Shale Gas, Water by on 18 December 2014

 The news took even the most seasoned environmental activists by surprise: after years of review,  Gov. Andrew Cuomo announced Wednesday  that New York State would ban hydraulic fracturing. “I can barely contain myself,” said Nadia Steinzor, the eastern coordinator for national non-profit Earthworks. “Even though Cuomo recently said he was going to make a clear decision, we were not expecting something as exciting and straightforward as this.” New York State’s decision comes two years after the state’s Department of Health initiated a review of the possible health impacts of hydraulic fracturing, a process in which thousands of gallons of water is mixed with chemicals and sand and pumped deep into the earth to break up gas-rich shale rock formations. The process has been approved in dozens of states across the U.S. and has often been touted by supporters as an economic boon to struggling regions, including next [...]

Drought situation improves slightly, but water shortage remains

Filed in Climate by on 18 December 2014

The U.S. Drought Monitor, which publishes its colorful drought map every Thursday , this week is expected to show a slight decline in the dark brown parts of California suffering the most acutely from a drought that has parched the state four years in a row. It’s raining in California again this week, but 80 percent of the state is in an extreme drought, with over half in an exceptional drought. So it should come as no surprise that a series of recent storms dousing the state are a long way from ending a particularly long overall dry streak that recent research estimates is the most severe in 1,200 years. But any drop of rain provides some relief — along with the threat of mudslides and flash floods . Drought Monitor, Dec. 9, 2014 State reservoir levels are inching up. The Lake Oroville reservoir reached its low mark on [...]

Severance tax would backfire, Pennsylvania association leaders warn

Filed in Shale Gas by on 18 December 2014

Enacting a severance tax aimed at Pennsylvania’s unconventional natural gas activity would substantially harm the commonwealth beyond the industry itself, three oil and gas trade association officials warned. Gov.-Elect Tom Wolf (D) made such a tax a major part of his campaign as a relatively quick way to increase revenue and begin bringing Pennsylvania’s budget in line. But the commonwealth’s economy has flourished as gas activity grew under the existing system, Associated Petroleum Industries of Pennsylvania Executive Director Stephanie Catarino Wissman said. “Energy development is sustaining families with new jobs and generating more income for communities,” she said during a Dec. 16 teleconference with reporters. “Don’t fix what is not broken. Don’t break the economic backbone of the commonwealth.” “The revenue projections that were out there during campaign season were wildly overestimated and can’t be supported by facts,” added Marcellus Shale Coalition Pres. Dave [...]

Canadian Oil Producers Slash 2015 Capital Budgets

Filed in Canada by on 18 December 2014

 Canadian oil producers deepened 2015 spending cuts on Wednesday, as Husky Energy , MEG Energy and Penn West Petroleum joined those hacking back capital budgets in response to tumbling crude prices. Penn West, one of Canada’s largest conventional oil producers, also cut its dividend to 3 Canadian cents per share from 14 Canadian cents. The three are the latest in a growing list of Canadian oil companies to clamp down on investment plans for next year. Others include Cenovus Energy, Tourmaline Oil Corp and Canadian Oil Sands Ltd, the largest-interest owner in the Syncrude oil sands project. Late on Tuesday Whitecap Resources also dialed back its 2015 budget and reduced the number of wells it is planning to drill, [...]

No Easy Answers When Disposing of Oil and Gas Wastewater

Filed in Shale Oil by on 18 December 2014

Increased natural gas use, for example, can help decrease U.S. greenhouse gas emissions as it has a lower carbon content compared to coal or oil. Natural gas also can help transition our energy mix to more renewable energy sources. This is because properly designed, gas-fired generation can respond quickly to pick up the slack if the wind suddenly dies or clouds unexpectedly roll in. But, these benefits mean nothing if the communities where gas is produced suffer air and water pollution, or if methane – a powerful global warming pollutant that is the primary ingredient in natural gas – is allowed to leak into the atmosphere unchecked. We all should be worried about global warming and the role that sloppy oil and gas production [...]

Bush School Student Study: Hydraulic Fracking In Texas Could Intensify Water Shortages

Filed in Shale Oil, Water by on 18 December 2014

 A new economic and policy analysis concludes that the hydraulic fracturing (HF) or “fracking” being done in Texas is adding to the state’s overuse of its water resources, but is only part of the state’s water problem. A recent study conducted by students at the Bush School of Government and Public Service at Texas A&M University has been summarized in “The Takeaway,” published by the school’s Mosbacher Institute for Trade, Economics, and Public Policy. HF is a drilling process which uses a mixture of water, sand and chemicals to create small fractures which creates paths that allow oil and gas to be produced from reservoir formations at [...]

Canadian Oil Producers Pare Spending Plans as Prices Drop

Filed in Canada by on 18 December 2014

A host of Canadian oil producers said Wednesday that they were paring capital spending plans as an uncertain outlook caused by lower oil prices rocks the industry. Husky Energy Inc. and Penn West Petroleum Ltd. were among the Calgary-based companies that said they would reduce capital investment next year following the dramatic plunge in oil prices in recent weeks. Surging oil production in North America, coupled with a decline in global demand, has led many energy producers to rethink their investment plans for the coming year. Oil prices have fallen more than 50% since June. Prices for light, sweet crude closed up 54 cents, or about 1%, at $56.47 a barrel on the New York Mercantile Exchange on Wednesday. Husky Energy said it plans to cut capital spending 33% to 3.4 billion Canadian dollars ($2.9 billion) in 2015. It also projected total 2015 production of between 325,000 and 355,000 [...]

Canadian PM Says Country Will Get Crude Oil to Markets Other Than U.S.

Filed in Canada by on 18 December 2014

Canada will get its landlocked crude oil to foreign markets other than the U.S., although the marketplace will ultimately decide the fate of pipeline projects to run through the country, Prime Minister Stephen Harper said Wednesday. In an interview with the Canadian Broadcasting Corp., Mr. Harper said planned pipelines such as Enbridge Inc. ’s Northern Gateway, Kinder Morgan Inc. ’s expansion of its Trans Mountain corridor and TransCanada Corp. ’s Energy East must obtain approval from regulators before they can proceed. Once approval is granted, “I think it’s ultimately up to the marketplace” whether the projects proceed, he said. “There’s the market process and there’s a scientific evaluation process, and those are directed by others” and not the government. Regardless, Mr. Harper said it is “inevitable” crude will get to new markets other than the U.S., based on the demand abroad for energy. Mr. Harper’s government has championed industry [...]

Economic Fears May Push Russia Into Ukraine Deal

Filed in Russia, Ukraine by on 18 December 2014

The turmoil in the Russian economy appears to be encouraging Moscow to seek compromise in the crisis over Ukraine , although President Vladimir V. Putin has proved so erratic in past months that Western leaders are wary of proclaiming progress, officials and analysts said Wednesday. On Sunday and again on Tuesday night — after days in which the ruble gyrated wildly , raising the possibility of a broader financial crisis that could saddle Mr. Putin with deeper economic and political problems — the Russian president spoke by phone with his Ukrainian, German and French counterparts. Statements released afterward in all four capitals talked of moving quickly to cement a cease-fire broadly observed since last week in eastern Ukraine . Mr. Putin may make his intentions clearer at his annual news conference on Thursday. European leaders will meet later Thursday and Friday in Brussels amid growing indications that [...]

Putin’s Year of Defiance and Miscalculation

Filed in Russia by on 18 December 2014

When Russia annexed the Crimea Peninsula in March, a flag picturing Vladimir Putin flew in Moscow. Zuma Press As Western governments seethed last spring over Russia’s takeover of the Crimea region in Ukraine, Vladimir Putin told advisers that the world eventually would accept the audacious move. The Kremlin was confident the economic costs of Western sanctions, though substantial, would be tolerable for the world’s ninth-largest economy. For much of the year, the Russian president’s gamble seemed to pay off. “His forecasts have come true,” Alexei Kudrin, a former finance minister and longtime Putin adviser, said in May. “A lot of people have come to terms with Crimea now, at least informally.” Mr. Putin also seemed confident, according to people who spoke to him at the time, that the deep ties he had nurtured for years with major trade partners like Germany would limit the fallout. Those calculations turned [...]

Jailed Russian tycoon leaves house arrest

Filed in Russia by on 18 December 2014

A Russian tycoon placed under house arrest in September in a move that rattled markets was released from house arrest on Tuesday, just hours before President Vladimir Putin’s annual televised press conference. A lawyer for Vladimir Yevtushenkov was quoted by Interfax news agency as saying his client had been freed. The last-minute release echoes a similar move last year, when Putin announced after his annual press conference that another tycoon, Mikhail Khodorkovsky, would be set free. “Vladimir Petrovich (Yevtushenkov) is now a free man who can work productively,” lawyer Vladimir Kozin said. Shares in Sistema, a company that Yevtushenkov controls and manages, surged by more than 30 percent in the early hours of trading on Moscow’s MICEX stock exchange. One of Sistema’s most lucrative assets – the oil company Bashneft – was transferred to the government this month. Yevtushenkov in September was charged with money-laundering in [...]

Snow Is Down and Heat Is Up in the Arctic, Report Says

Filed in Climate by on 18 December 2014

The Arctic continues to warm faster than the rest of the globe, and with greater repercussions, scientists are reporting. The new findings appear in the Arctic Report Card , first published in 2006 by the National Oceanic and Atmospheric Administration and updated annually. The report card catalogs the wide-ranging changes caused by the rising temperatures, in large part driven by emissions of greenhouse gases. Snow cover, measured since 1967, was below average and set a record low in April in the Eurasian region of the Arctic. Sea surface temperatures are rising, particularly in the Chukchi Sea, northwest of Alaska, where the waters are warming at a rate of almost one degree Fahrenheit per decade. The extent of Arctic sea ice, which retreats in summer, did not hit a record low in 2014. But it was the sixth lowest since satellite measurements began in 1979, and the [...]

Oil Prices Skid Ahead of Fed Outcome

Filed in Prices by on 17 December 2014

 U.S. oil prices resumed their downward slide in early Asian trade Wednesday. Bloomberg News U.S. oil prices resumed their slide in Asian trade Wednesday, and Brent crude stayed below $60, as markets braced for the outcome of the U.S. Federal Reserve meeting later in the day. The market expects the Fed to change some of the language in its policy statement, when it concludes its two-day meeting, to signal that a rate rise is likely in mid-2015. Commodity markets, which have benefited from the easing of U.S. monetary policy in the past few years, could come under pressure if the Fed tightens its stance. Analysts also expect an upward revision to U.S. gross domestic product growth forecasts in response to the slump in oil prices. Oil prices have almost halved since June as supply has outweighed [...]

Oil Trades Near 5-Year Low as Russia Echoes OPEC Output Policy

Filed in Prices by on 17 December 2014

Oil in New York traded near a five-year low as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy to refrain from curbing supply to tackle a global surplus. Futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is said to be offering shipments to Asia at the deepest discount in at least 14 years, taking a cue from Saudi Arabia in cutting price differentials. Oil has slumped about 45 percent this year as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing world demand growth. Members of the Organization of Petroleum Exporting Countries including Saudi Arabia , [...]

Crude Plunges Through $60 as Producers Fail to Curb Glut

Filed in Prices by on 17 December 2014

The global price of crude oil fell below $60 a barrel for the first time in five years with almost no signs producers are ready to tackle a glut. Brent oil slumped 2 percent to the lowest since May 2009 in London . West Texas Intermediate, the grade traded in New York , fell below $55 for the first time in five years before rebounding. OPEC shouldn’t be expected to cut output while other producers continue to expand, the United Arab Emirates energy minister said. U.S. drillers are benefiting as costs fall almost as quickly as prices, according to Goldman Sachs Group Inc. Crude fell about 45 percent this year as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut. The group, responsible for 40 percent of the world’s supply, will refrain from cutting output even if [...]

Goldman: “Oil Prices Can Go Lower For Longer”

Filed in Prices by on 17 December 2014

What a difference 5 months makes. It seems like it was yesterday when Goldman’s commodity strategist, Jeffrey Curie, wrote in a July 28, 2014 note that: The long-awaited global recovery appears to be getting on track, lifting commodity demand Apparently unaware that just 5 months later precisely the opposite narrative would be used by everyone, Goldman included, namely that plunging commodity prices (and demand) is a boost to the economy, Currie added the following: One of our key macro views for 2014 has been a gradual return to the ‘Recovery’ phase of the business cycle – where accelerating growth would drive a gradual (but persistent) closing of the large negative output gap which opened following the 2008/09 crisis. Disappointing 1Q14 growth raised question marks over this view and appeared reminiscent of the previous “stop-start” recovery patterns of 2010-13. On aggregate, DM growth fell to +0.4% annualized (from +1.9% in [...]

Brent Seen Falling to $50 in 2015 as OPEC Fails to Act

Filed in Prices by on 17 December 2014

Crude oil prices are poised to fall below half where they were six months ago, before producers begin dealing with a global glut. Brent, the global benchmark, will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey of 17 analysts, down from the $115.71 a barrel high for the year on June 19. The grade already collapsed 49 percent since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason. Brent futures sank in the weeks after the Organization of Petroleum Exporting Countries decided to maintain output even as the highest U.S. production in three decades swells a global surplus. The organization will stand by its decision even if prices fall to $40, United Arab Emirates Energy Minister Suhail Al-Mazrouei said. “This won’t stop until oil producers are [...]

Iran Said to Discount Light Crude to Asia to Deepest in 14 Years

Filed in Iran by on 17 December 2014

Iran is said to be offering its main crude grade to customers in Asia at the deepest discount in 14 years, taking a cue from Saudi Arabia in trimming price differentials. National Iranian Oil Co. cut its official selling price for January shipments of light crude to Asia to a discount of $1.80 a barrel below the regional benchmark as Middle Eastern producers vie to keep selling in the region, according to four people with knowledge of the decision. An official at NIOC’s crude-marketing department in Tehran declined to comment. Iran cut the differential to a discount from a premium of 13 cents a barrel to the average of the Oman and Dubai benchmark crudes for December. The light crude grade hasn’t sold at such a steep discount since Bloomberg began tracking the country’s official selling prices in March 2000. Oil prices have collapsed since the Organization of Petroleum [...]

More Kurdish oil expected after field upgrades

Filed in Iraq by on 17 December 2014

Wells in the Kurdish north of Iraq tied to production facilities to boost production, oil companies say. Photo by Christopher Halloran/Shutterstock BUDAPEST, Hungary, Dec. 16 (UPI) — Oil companies working in the Kurdish north of Iraq said Tuesday they completed infrastructure that should increase total production by more than 60 percent. Hungarian energy company MOL and Gulf Keystone Petroleum, which has headquarters in London, said in coordinating statements three wells in the Shaikan oil play in the Kurdish north are now connected to existing production facilities. With the addition, the companies said total production should increase from a combined average of 24,000 barrels of oil equivalent per day to 40,000 boepd. “We continue to focus our efforts to achieve volumetric increase in our assets in the Kurdistani Region of Iraq and also work together with the Ministry of Natural Resources in order to monetize production the most efficient way,” [...]

Nigeria: Oil Workers’ Strike – FG, Labour Meet As Workers Shut Operations

Filed in Nigeria by on 17 December 2014

THE Federal Government will today meet leaders of striking oil workers and other stakeholders in the petroleum sector in a desperate effort to end the industrial action before it worsens the fuel supply chain and other socio-economic situations. Already, the workers, on the umbrella of the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG and its Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN’s counterpart, operating as NUPENGASSAN, have not only stopped loading of products, major installations in both upstream and downstream have also, been shut. Vanguard gathered that the Federal Government through the Federal Ministries of Labour and Productivity as well as Petroleum Resources, slated today’s meeting for 11 am in Abuja. However situations reports across the country yesterday indicated high level of compliance by workers on the first day of the strike. In Lagos, most depots were shut. At Ejigbo Depot, some tankers that [...]

Natural Gas Slips On Long-Term Demand Concerns

Filed in Prices by on 17 December 2014

Natural gas closed lower Tuesday as traders start anticipating soft demand throughout the peak winter heating season, analysts said. The front-month January contract settled down 10 cents, or 2.7%, at $3.619 a million British thermal units on the New York Mercantile Exchange. The price is back down to within 3 cents of the seven-week low from Dec. 8 and nearing bear market territory. While weather forecasts are starting to show below-normal temperatures for the end of the month, the next week is still unseasonably warm. That suggests below-normal demand for home heating, the primary driver for natural gas consumption. With only a month to go until winter usually hits its coldest point, traders are starting to think the coming cold could be too late to create enough heating demand to absorb the record supply of U.S. natural gas, analysts said. “Each day that goes past and [...]

China’s Nov oil products output rise on year, led by jet/kero gains

Filed in China by on 17 December 2014

China’s oil products output in November grew from a year earlier on increased refinery throughput, data from the National Bureau of Statistics showed Tuesday, December 16. Domestic gasoil production last month rose 3.9% year on year to 15.12 million mt while LPG, gasoline and jet fuel/kerosene all posted double-digit growth rates. Fuel oil output was up 4.5% from a year earlier at 2.29 million mt. Only naphtha output showed a decrease last month, falling 3.2% year on year to 2.34 million mt. The NBS had said on Friday that crude throughput last month rose 5.5% year on year to 42.25 million mt or an average 10.32 million b/d. The gasoline yield as a percentage of overall crude throughput rose to 21.78% in November, from 20.77% a year earlier, while the gasoil yield slipped to 35.78% from 36.33% over the same period. In the first [...]

Obama Blocks Oil and Natural Gas Drilling in Alaska’s Bristol Bay

Filed in Water by on 17 December 2014

President Barack Obama announced Tuesday he is indefinitely blocking oil and natural gas drilling in Alaska’s Bristol Bay, a move that drew cheers from wildlife groups and muted reaction from oil and gas proponents. In a video message posted online , Mr. Obama cited the environmental and economic benefits of Bristol Bay’s natural habitat, including how it provides 40% of the nation’s wild-caught seafood, as reasons why drilling shouldn’t be allowed. “It’s something that’s too precious for us just to be putting out to the highest bidder,” Mr. Obama said. The announcement comes just weeks before the administration intends to release its draft plan for what federal waters it proposes to open up to energy development. Tuesday’s announcement is relatively noncontroversial. There is no oil [...]

Oil Is Dragging Down Prices Faster Than Official Price Index Can Capture

Filed in Prices by on 17 December 2014

Consumer prices around the world are pulling back so rapidly, along with the collapse of oil prices, that official measures of inflation have yet to capture the magnitude of the decline. But the Billion Prices Project , which scrapes the Internet daily to capture changing prices online, is recording a significant and broadening plunge in consumer prices. The Labor Department ‘s official measure of consumer prices has declined from 2.1% this summer to 1.7% in October. But the data from the Billion Prices Project measure, which is now known as the  State Street PriceStats  inflation series, which provided data through Dec. 12, shows the annual change in inflation now running at 1%. The PriceStats index was running a little hotter than the CPI this summer–reaching about 2.5% in June and July–and has now declined by 1.5 percentage point, compared with the 0.4 percentage point drop in the [...]

U.S. Talking Oil Exports Just When World Needs It Least

Filed in Congress by on 17 December 2014

The U.S. Congress is talking about allowing unfettered oil exports for the first time in almost four decades. Its timing couldn’t be worse. There’s space in the global market for 1 million to 1.5 million barrels a day of U.S. crude if the ban vanishes, Energy Information Administration chief Adam Sieminski told a congressional subcommittee at a Dec. 11 hearing. That would be less than 2 percent of worldwide demand . With prices sliding amid a glut, the figure is bound to be even smaller, according to consultants including Wood Mackenzie Ltd. As members of Congress promise more hearings on repealing the restrictions on oil exports, the world is awash in the stuff. Global prices have fallen by almost half since June to the lowest in five years amid slower demand growth and rising supply. What’s more, the kind of crude flowing in record volumes from U.S. shale plays [...]

Canada’s U.S. Oil Imports Dwarfs Saudis’ Share: Chart of the Day

Filed in Canada by on 17 December 2014

Canada ’s share of U.S. oil imports is dwarfing Mexico and Saudi Arabia , as the country is faced with few outlets for its growing oil sands production. The CHART OF THE DAY tracks the proportion of U.S. crude oil imports supplied by Canada, Saudi Arabia and Mexico since November 2004, when each provided a bit more than 15 percent of demand. Canada’s dominance started in 2006, when output from Alberta ’s oil sands formations boosted the country’s production to a then-record 3.29 million barrels a day. Its share has climbed to about 42 percent while the others combine for 24 percent, according to data compiled by Bloomberg. Canadian production rose 5.6 percent to a record last year and is projected by the U.S Energy Information Administration to reach 4.47 million barrels a day in 2015. The country’s refineries can process 2.12 million barrels a day, according to the [...]

U.S. household gasoline expenditures in 2015 on track to be the lowest in 11 years

Filed in Prices, USA by on 17 December 2014

U.S. Energy Information Administration, Short-Term Energy Outlook The average U.S. household is expected to spend about $550 less on gasoline in 2015 compared with 2014, as annual motor fuel expenditures are on track to fall to their lowest level in 11 years. Lower fuel expenditures are attributable to a combination of falling retail gasoline prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance. Household gasoline costs are forecast to average $1,962 next year, assuming that EIA’s price forecast, which is highly uncertain, is realized. Should the forecast be realized, motor fuel expenditures (gasoline and motor oil) in 2015 would be below $2,000 for the first time since 2009, according to EIA’s December 2014 Short-Term Energy Outlook (STEO). The price for U.S. regular gasoline has fallen 11 weeks in a row to $2.55 per gallon as of December 15, [...]