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Oil Prices Recover Some Ground But Long-Term Problems Remain

Filed in Prices by on 13 October 2015

Oil prices rebounded on Tuesday following positive import numbers out of China, but the market was reminded of its longer term problems as a top energy watchdog said the global glut in the commodity will continue into 2016. Prices received support from Chinese data showing an increase in crude imports last month and as some investors bargain-hunted following oil’s 5% slump on Monday. The International Energy Agency, which represents some of the world’s largest oil consumers, said Tuesday that oil demand will slow next year while supply will continue to be strong amid an expected return of Iranian crude to the market. “The market may be off balance for a while longer,” the Paris-based agency said in its monthly report. Brent crude, the global oil benchmark, rose 1.3% to $50.88 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading […]

Oil gains capped by IEA report, U.S. stocks forecast

Filed in Prices by on 13 October 2015

Oil prices slipped on Tuesday after the International Energy Agency (IEA) forecast a global supply glut would last through 2016 as demand growth slows and key OPEC producers maintain near-record output.  The Paris-based IEA said the world oil market would remain oversupplied for at least another year.  “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels – should international sanctions be eased – are likely to keep the market oversupplied through 2016,” the agency said.

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Oil Halts Slide as Rebound in China Crude Imports Buoys Outlook

Filed in Prices by on 13 October 2015

Oil halted its decline after falling the most in six weeks as signs of rising demand in China countered an increase in OPEC production. Futures climbed as much as 1.3 percent in New York after Monday’s 5.1 percent drop. China’s crude purchases rebounded in September from a three-month low even as total imports extended a slump. Global oil consumption is expanding while non-OPEC nations will supply less, according to Abdalla Salem El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries. Oil advanced above $50 a barrel last week for the first time since July but has failed to sustain gains amid speculation the market could remain oversupplied. China’s economic slowdown is still impacting on global growth amid this year’s plunge in commodity prices. OPEC raised its production to the highest level since 2012 as it predicted stronger demand for its crude. “Any rally in oil is going to […]

NYMEX November natural gas futures settle at $2.535/MMBtu, up 3.3 cents

Filed in Prices by on 13 October 2015

The NYMEX November natural gas futures contract rose 3.3 cents to settle at $2.535/MMBtu, as weather forecasts called for the possibility of increased heating demand in the Northeast. “It is looking more and more like the [$2.50/MMBtu] mark is the marginal cost of production ‘average’ floor. In a bearish market like this one, that means it becomes a pivot,” ICAP Energy Vice President Drew Wozniak said in an email. The November contract has made small gains in each of the last five trading sessions. “The natural gas market is also trying to establish a bottom, with [Commodity Futures Trading Commission] data showing a managed money net short exposure [that is] the largest in more than five years, a significant oversold condition,” Citi Futures energy futures specialist Tim Evans said in an email. “Overall, we continue to have a bullish bias, with limited downside and increased upside from current levels […]

Oil Surplus to Persist in 2016 as IEA Sees Demand Growth Slowing

Filed in IEA by on 13 October 2015

Global oil markets will remain oversupplied next year as demand growth slows and Iranian exports are poised to recover with the lifting of sanctions, the International Energy Agency said. While supplies outside OPEC will decline in 2016 in response to lower prices, demand growth will ease from this year’s five-year high amid a weaker outlook for the world economy, allowing the crude surplus to endure, the IEA predicted. Iran could swell the glut if restrictions on its sales are removed with the completion of a nuclear accord, while Iraq has replaced the U.S. as the biggest source of new supplies as its output reaches record levels. “The market may be off balance for a while longer,” the Paris-based adviser to 29 nations said in its monthly report. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be […]

Oil glut to persist as global growth demand slows: IEA

Filed in IEA by on 13 October 2015

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC producers maintain near-record output, the International Energy Agency said on Tuesday, even as low prices curb supply outside OPEC. The IEA, which advises industrialized countries on energy policy, said in a monthly report that world oil demand will rise by 1.21 million barrels per day (bpd) in 2016, down 150,000 bpd from last month’s forecast. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels – should international sanctions be eased – are likely to keep the market oversupplied through 2016,” the Paris-based IEA said. A drop in oil prices because of abundant supply to just over $50 a barrel – half the level of June 2014 – has […]

IEA Sees Oil Market Remaining Oversupplied Next Year

Filed in IEA by on 13 October 2015

A top energy watchdog Tuesday warned that oil markets would likely remain oversupplied next year, as oil demand growth slows down amid an expected return of Iranian oil. The assessment by the International Energy Agency–which represents some of the world’s largest oil consumers–is somewhat less upbeat than the Organization of the Petroleum Exporting Countries which Monday said oil markets would start to rebalance themselves next year amid declining U.S. production. In its closely watched monthly oil market report, the IEA cut its forecast for oil demand growth for next year by about 200,000 barrels a day compared with its previous assessment in September. It now sees world oil consumption rising by 1.2 million barrels a day in 2016, compared with a five-year-high growth of 1.8 million barrels a day in 2015. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels-–should international […]

Oil Market Report

Filed in IEA by on 13 October 2015
  • After a relatively stable month in September, crude oil price benchmarks rallied in early October on expectations of lower US output and rising tension in the Middle East. At the time of writing, ICE Brent was trading at $51.90/bbl with NYMEX WTI lower at $48.80/bbl.
  • Global demand growth is expected to slow from its five-year high of 1.8 mb/d in 2015 to 1.2 mb/d in 2016 - closer towards its long-term trend as previous price support is likely to wane. Recent downgrades to the macro-economic outlook are also filtering through.
  • World oil supply held steady near 96.6 mb/d in September, as lower non-OPEC production was offset by a slight increase in OPEC crude. Non-OPEC accounted for just under 40% of the 1.8 mb/d annual increase in total oil output. Lower oil prices and steep spending curbs are expected to cut non-OPEC output by nearly 0.5 mb/d in 2016.
  • OPEC crude supply rose by 90 kb/d in September to 31.72 mb/d as record Iraqi output more than offset a dip in Saudi supply. A slowdown in forecast demand growth and slightly higher non-OPEC supply lowers the 2016 ‘call’ on OPEC by 0.2 mb/d from last month’s Report to 31.1 mb/d.
  • OECD commercial inventories extended recent gains and rose by 28.8 mb in August to stand at 2 943 mb by end-month. Since this was nearly double the 15.0 mb five-year average build for the month, inventories’ surplus to average levels widened to 204 mb.
  • The onset of seasonal turnarounds in the OECD and the FSU is estimated to have curbed global refinery runs by 1.9 mb/d in September to 79.4 mb/d. Runs remained remarkably strong, particularly in Asia and the Middle East, leaving global throughputs up nearly 2 mb/d on a year ago.

Oil market glut will persist through 2016, says IEA

Filed in IEA by on 13 October 2015

Slowing global economic growth together with robust output from Opec producers will mean the oil market glut will persist through 2016, the world’s leading energy forecaster said on Tuesday.  The International Energy Agency said in its closely watched monthly report a “marked slowdown” in oil demand growth looms as the stimulus from lower prices fades and economic activity weakens in countries dependent on commodity revenues.

 At the same time, despite the oil price plunge curbing growth in US shale and other non-Opec production, additional barrels from Iran — alongside others within the producers’ group — will ensure the oil overhang remains into next year.  A collapse in oil prices has supported strong oil demand growth this year. But the IEA anticipates oil demand growth will fall to 1.2m barrels a day in 2016 — to 95.7m b/d — down from initial estimates of 1.4m b/d. It is a sharp contrast to the stronger than expected 1.8m b/d in 2015, taking total demand to 94.5m b/d.

The IEA, which uses the International Monetary Fund’s growth assumptions for its oil demand estimates, said the global economic outlook was “more pessimistic”. The fund said earlier this month the world economy will for 2015 expand at its slowest pace since the global financial crisis.

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OPEC Crude Little Change

Filed in OPEC by on 13 October 2015

The OPEC Monthly Oil Market Report is just out with the crude only production numbers for the 12 OPEC countries. The data below is in thousand barrels per day and the last data point is September 2015. OPEC 12 OPEC 12 crude only production was up 109,000 barrels per day in September but that was after the August production numbers were revised down by 82,000 bpd. OPEC crude only production now stands at 31,571,000 pbd. That is just 12,000 bpd above June production but still 100,000 bpd below their peak in July of 2008. Saudi Arabia Saudi Arabia was down 48,000 bpd in September to 10,225,000 bpd. That is 174,000 bpd below their latest peak in June. The big gainer in September was Iraq, up 80,100 bpd in September. That is still 5,000 bpd below their latest peak in July. The UAE hit a new high in September, up […]

OPEC Sees U.S. Oil Output Dropping Next Year

Filed in OPEC by on 13 October 2015

U.S. oil output will decline in 2016 for the first time in eight years as producers slash spending, the Organization of the Petroleum Exporting Countries said Monday, while the producer group continues pumping at high levels . In its closely watched monthly oil market report, OPEC slashed its U.S. oil production forecast by 280,000 barrels a day next year, to 13.538 million barrels a day, a number that includes natural gas liquids. That would be about 60,000 barrels a day less than in 2015, the first decline since 2008. The finding is consistent with what the U.S. Energy Information Administration said last week, predicting that U.S. crude production would average about 8.9 million barrels a day in 2016, down from 9.2 million barrels a day in 2015. OPEC said lower oil prices were forcing U.S. oil producers to cut spending and causing their wells to deplete faster than expected. […]

OPEC Sees U.S. Oil Output Falling for First Time in Eight Years

Filed in OPEC by on 13 October 2015

 U.S. crude output peaked at 9.6 million barrels a day in April U.S. oil production is projected to decrease in 2016 for the first time in eight years, according to OPEC. Total output of crude and natural gas liquids is forecast to fall 0.5 percent to 12.47 million barrels a day next year, the Organization of Petroleum Exporting Countries said in its monthly market report Monday. The decline is being driven by the fall in prices, which has curbed spending, OPEC said. U.S. oil drillers have idled more than half the nation’s rigs since last October, data from oilfield-services company Baker Hughes Inc. shows. “What happens with shale production next year is highly uncertain,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “Recent reports on drilling and production justify a pessimistic forecast. It’s not surprising that […]

OPEC Pumps Most Crude in Three Years as It Lifts Demand Forecast

Filed in OPEC by on 13 October 2015

OPEC pumped the most crude in three years as it predicted stronger demand for its oil in 2016 while supplies elsewhere falter. The Organization of Petroleum Exporting Countries said it pumped 31.57 million barrels a day last month, the most since 2012, according to its monthly market report. OPEC sees production outside the group shrinking by 130,000 barrels a day next year as the U.S. shale boom sputters. “The oil industry has experienced a rapid fall in global upstream spending,” OPEC’s Vienna-based secretariat said. “In 2016, the postponing or canceling of upstream projections will likely continue, resulting in contraction” of supplies. Oil prices have rallied about 10 percent in the past month as drilling cutbacks in the U.S. and reduced energy investment globally suggest the surplus in world oil markets will eventually dissipate. OPEC Secretary-General Abdalla Salem El-Badri said in Kuwait on Monday that the market may be “balanced” […]

IEA Expects Iraqi Oil Output to Remain `Broadly Flat’ Next Year

Filed in Iraq by on 13 October 2015

Oil production from Iraq, the world’s fastest source of supply growth last quarter, will remain similar to current levels next year as the slump in crude prices and the cost of fighting Islamic State militants hamper the government’s ability to invest in new capacity, the International Energy Agency said. Volumes are expected to stay at about 4.2 million barrels a day, matching third-quarter output, the IEA said in its monthly report. While the country has “performed better than many had anticipated,” there are signs of strain, the agency said. Iraq, the biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, pumped a record 4.4 million barrels a day in June, according to data compiled by Bloomberg. Output last quarter rose by a third from a year earlier, the world’s fastest supply growth, according to the IEA. “Oil’s collapse and Iraq’s severe financial crisis have forced the […]

Iranian parliament passes bill approving nuclear deal: IRNA

Filed in Iran by on 13 October 2015

Iran’s President Hassan Rouhani addresses a plenary meeting of the United Nations Sustainable Development Summit 2015 at the United Nations headquarters in Manhattan, New York September 26, 2015. Iran’s parliament passed a bill on Tuesday supporting the government in implementing a nuclear deal with world powers, but insisted that international inspectors would have only limited access to Iran’s military sites, state news agency IRNA said. “The bill to implement the JCPOA … was passed in a public session on Tuesday with 161 votes in favor,” IRNA said, referring to the Joint Comprehensive Plan of Action reached in July. (Reporting by Sam Wilkin; Editing by Paul Tait )

Insurgents shell Russian embassy in Syria during rally

Filed in Syria by on 13 October 2015

AP Photo/Muzaffar Salman DAMASCUS, Syria (AP) — Insurgents fired two shells at the Russian embassy in the Syrian capital on Tuesday as hundreds of pro-government supporters gathered outside the compound to thank Moscow for its intervention in Syria. An Associated Press reporter was outside the embassy when the first shell slammed into the compound in central Damascus and smoke billowed from inside. As people started running away, another shell hit the area. It was not immediately clear if there were casualties. Opposition fighters in the suburbs of the capital have targeted the embassy in the past but it was not clear if Tuesday’s attack targeted the rally. Before the shelling, the demonstrators had gathered outside the embassy carrying posters of the Russian and Syrian presidents, Vladimir Putin and Bashar Assad, and waved the two countries’ flags. Some held placards that read: “Thanks Russia” and “Syria and Russia are together […]

U.S.-Made Weaponry Is Turning Syrian Conflict Into Proxy War With Russia

Filed in Syria by on 13 October 2015

Insurgent commanders say that since Russia began air attacks in support of the Syrian government, they are receiving for the first time bountiful supplies of powerful American-made antitank missiles. With the enhanced insurgent firepower and with Russia steadily raising the number of airstrikes against the government’s opponents, the Syrian conflict is edging closer to an all-out proxy war between the United States and Russia. The increased levels of support have raised morale on both sides of the conflict, broadening war aims and hardening political positions, making a diplomatic settlement all the more unlikely. The American-made TOW antitank missiles began arriving in the region in 2013, through a covert program run by the United States, Saudi Arabia and other allies to […]

KRG ruling party ejects rivals, escalating political crisis

Filed in Iraq by on 13 October 2015

The Kurdistan Regional Government’s (KRG) ruling party has begun using its control of security forces to unilaterally expel its most potent political rivals from government – dramatically destabilizing a region already roiled by war, economic crisis, and popular discontent. Security forces answering to the Kurdistan Democratic Party (KDP) of Massoud Barzani, who continues acting as president after the expiration of his term on Aug. 19, prevented KRG Parliament Speaker Yousif Mohammed, a member of the rival Gorran party, from passing a checkpoint into the Kurdish capital of Erbil on Monday. KDP-aligned forces also barred Gorran ministers from entering government offices. “An effort has been orchestrated as a military coup d’état against the Parliament, a legitimate institution,” Mohammed said. KDP leaders said they were reacting to a series of arson attacks […]

Iranian Lawmakers Approve Nuclear Deal

Filed in Iran by on 13 October 2015

Iranian parliament approved the general outlines of the nuclear bill on Sunday. DUBAI—Iranian lawmakers on Tuesday approved the implementation of July’s historic nuclear deal with six world powers, removing one of the final obstacles within Iran’s system to the accord. A majority of Iran’s parliament members approved the bill, which directs the government to put the deal in place, according to the official Islamic Republic News Agency. The vote saw 161 in favor of the deal to 59 against, according to IRNA. Thirteen members abstained. The parliament had approved the basic outlines of the bill in a vote on Sunday. All legislation approved by Iran’s parliament must get a final sign-off from the Guardian Council, a powerful 12-member clerical body, before it becomes law. But the final say on all matters of state, including the nuclear deal, rests with Supreme Leader Ayatollah Ali Khamenei. Mr. Khamenei, a hard-line conservative, […]

Oil Traders Targeting Iran for $1 Billion in 2016 Gasoline Sales

Filed in Iran by on 13 October 2015

Iran will need to import about 20 percent more gasoline to meet pent-up demand in the first year after economic sanctions are lifted, creating a market for some $1 billion in fuel sales from abroad, according to traders and analysts. The nation with the world’s fifth-largest crude reserves may need to buy about 50,000 barrels a day of gasoline if sanctions are removed in early 2016 as expected, say analysts at consultants Facts Global Energy, IHS Inc. and Energy Aspects Ltd. With its refineries running at full capacity and unable to raise output for at least another year, Iran now imports 41,000 barrels a day, or about 9 percent of the gasoline it uses. Iran was the Persian Gulf region’s biggest gasoline buyer before world powers imposed sanctions over its nuclear program, and it may need to import even more — as much as 70,000 barrels a day, according […]

Venezuela calls on OPEC to control output, seeks $70 floor price: Ramirez

Filed in Venezuela by on 13 October 2015

Venezuela this month will unveil a bold new strategy for rescuing ailing oil prices, one lifted from the OPEC’s history books – a price band that would build an automatic floor for prices at $70 a barrel. In an exclusive interview with Reuters, Venezuela’s long-time oil minister and current United Nations ambassador Rafael Ramirez said the proposal – to be presented to a meeting of OPEC technical advisors on Oct. 21 – would reapply the old mechanism of progressive production cuts to control prices, with a “first floor” of $70 per barrel and a later target of $100 per barrel. “We will try to progressively recover the price,” he said. The proposal offers the first detailed public insight into Venezuela’s months-long global effort to drum up support for measures to revive […]

Eni focus on Egypt sharpens

Filed in Egypt by on 13 October 2015

Italian energy company Eni said it was building on a legacy position in Mediterranean waters with two new shallow-water concessions offshore Egypt. Eni takes a position alongside British energy company BP and French company Total in the shallow-water Karawan and North Leil blocks off the Egyptian coast. Eni offered no estimate of the reserve potential in the two exploration areas, which combine for 1,280 square miles. The Italian company will serve as the operator of the two basins. “These two new concession agreements follow the recent award of the deep water Karawan and North Leil blocks, strengthening Eni’s presence in Egypt, a country of historic and strategic importance,” the Italian company noted. Eni announced a discovery of gas in a deepwater prospect […]

Eni, BP take licenses offshore Egypt in 2015 bid round

Filed in Egypt by on 13 October 2015

Eni SPA and BP PLC have been awarded exploration rights to the 1,927-sq-km Block 4 and 1,389-sq-km Block 7 offshore Egypt following the 2015 Egyptian Natural Gas Holding Co. (Egas) bid round.BP will operate Block 4, or North Ras El Esh, where interest is split 50-50 between BP and Eni. Eni will operate Block 7, known as North El Hammad, with 37.5% interest while BP will have 37.5%. Total SA is the third partner for Block 7, holding 25%.

BP also was awarded Block 14, North El Tabya; and Italy’s Edison SPA was awarded Block 12, Northeast Hapy, according to a statement from Egypt’s petroleum ministry. Blocks 4 and 7 will be managed on behalf of Eni by affiliate International Egyptian Oil Co. (IEOC). Both blocks are in the shallow waters of the Mediterranean Sea, facing the Nile Delta and southwest of the Temsah area and west of the Baltim area, where Eni operates existing fields and production facilities (OGJ Online, Apr. 22, 2013).

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Saudi offers of extra oil in Asia fail to lure interest in cutthroat market

Filed in Saudi Arabia by on 13 October 2015

Saudi Arabia failed to attract offers for additional oil cargoes for loading in October, industry sources said, in a sign that the market remains over supplied despite recent production cuts. The offers were made to some customers in Asia ahead of maintenance at a major Saudi refinery, two sources close to the matter said, as the world’s biggest crude exporter seeks to maintain its market share in Asia. Yet in a sign of the ongoing price war between producers and the surplus supplies, potential buyers who received the offers said they were too prompt in delivery, adding that cheaper alternatives such as Iraq’s Basra crude were also available. “Even if the November OSPs (Official Selling Prices) are attractive, we do not have room to take more,” one of the potential buyers said, declining to be named due to company policy. Refinery maintenance across Asia in the third quarter has […]

OMV finds gas in Pakistan

Filed in Pakistan by on 13 October 2015

Austrian energy company OMV said a new natural gas discovery in Sindh province in Pakistan means it could potentially boost production in the energy-starved country. OMV announced the discovery of natural gas in the Latif South-1 exploration well in Pakistan. Preliminary testing yielded about 2,500 barrels of oil equivalent per day. “We are very pleased with this exploration success,” Johann Pleininger, an OMV board member in charge of exploration and production, said in a statement. “The appraisal and development of this discovery will potentially enable us to enhance the production in Pakistan.” Pakistan’s aging infrastructure means the country lacks a reliable power sector. The Asian Development Bank last month backed a provisional assistance package of at least $1.2 billion per year on average through a partnership with Pakistan […]

Asian stocks consolidate gains on cautious optimism, dollar wary

Filed in China by on 13 October 2015

erage outside a brokerage in Tokyo, Japan, September 29, 2015. Asian shares edged higher on Monday, consolidating recent rises as late gains in Wall Street on Friday and a rebound in the commodities complex prompted some investors to hunt for bargains while the dollar struggled. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent in early deals, rounding off impressive 10 percent gains so far this month as investors unwound some of their long U.S. dollar and short commodities and emerging markets trade. In a sign that the sentiment towards emerging markets may have turned a corner, the much-tracked Bank of America Merrill Lynch fund flow report showed that weekly outflows from emerging market funds were at their lowest since July. “The staunching of EM equity outflows illustrates that […]

Asia Currencies Fall as China Imports Spur Return of Growth Woes

Filed in China by on 13 October 2015

Asian currencies halted a seven-day run of gains as a sharper-than-predicted drop in Chinese imports added to signs the world’s second-largest economy is slowing. Shipments of goods into China fell for an 11th straight month, declining 20.4 percent, more than the 16 percent estimate in a Bloomberg survey. The figures paint a gloomy picture for exports from South Korea and Taiwan, which count China as their biggest overseas market. Indonesia’s rupiah led losses as an index of commodities dropped overnight, damping the outlook for the producer of palm oil and coal. The Malaysian ringgit slumped after a plunge in oil on Monday. “Overnight we’ve seen the crude oil prices turning back,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “Investors are waiting on the sidelines to see what’s transpiring in the fundamental picture, but the fundamental picture hasn’t changed all that much in terms of […]

China Growth in Focus as Exports and Imports Fall

Filed in China by on 13 October 2015

China’s exports and imports fell in September as global demand remained weak , signaling that the world’s second-largest economy continues to struggle into the end of the year. Exports dropped less than some economists had expected. Still, they said the data offered a further indication that China’s third-quarter growth figures set for release next week will likely fall below Beijing’s target of about 7% for the whole year. “Exports in September look a little better than expectations,” said HSBC economist Ma Xiaoping, adding that year-end trade figures tend to pick up due to Christmas shipments. “But if you factor in seasonal factors, I don’t see much improvement in global demand,” she added. According to the General Administration of Customs, Chinese exports fell 3.7% in September from a year earlier in U.S. dollar terms following a 5.5% drop in August . Imports in September fell 20.4% from a year earlier, […]

China imports slump as growth expected to slide below target

Filed in China by on 13 October 2015

China’s imports slid for the 11th straight month, adding to economists’ growing bearishness — now at a post global financial crisis low — as policymakers seek to arrest an economic slowdown.  September’s 17.7 percent year-on-year drop in imports, in renminbi terms, further underlines the challenges of China’s long-standing bid to pivot the economy away from investment-led growth and cheap exports towards domestic consumption.  Slower growth in China, which ripples around the globe via depressed demand for everything from commodities to luxury goods, has roiled global stock markets in recent months.  Analysts expect gross domestic product figures due out next Monday to show real growth at 6.7 percent for the third quarter, lower than the official full-year target of “around 7 percent”, according to a Bloomberg survey of 25 economists. Official data showed real growth at 7 percent in both the first and second quarters this year. UBS China economist Harrison Hu is looking for growth of 6.6 percent given “continued property destocking, stumbling industrial activity, shrinking stock market turnover and weak exports”.

North Dakota rig count holds steady

Filed in Shale Oil by on 13 October 2015

After a week of strong gains in crude oil prices, data from North Dakota show a level of stability in the level of exploration and production operations. Data from the North Dakota government show 68 rigs engaged in exploration and production in the state, unchanged from the previous week. Monday’s rig count is down 64 percent from this date in 2014. Rig counts serve as a barometer for the health of an energy sector burdened by depressed crude oil prices, down roughly 42 percent from this time last year. The price for West Texas Intermediate, the U.S. benchmark for crude oil prices, of $49.80 per barrel is up nearly 8 percent from one week ago , however. Lower crude oil prices are nevertheless starving […]

Phillips 66 lowers 2016 capex, boosts share buyback

Filed in Oil Supply by on 13 October 2015

U.S. refiner Phillips 66 set a lower capital budget for 2016 and raised its share buyback plan. The company said on Monday it would spend $3.6 billion in capital expenditure next year, excluding Phillips 66 Partners’ capital program. The company’s capital budget was $4.6 billion for the current year, which included $200 million for Phillips 66 Partners, according to a Simmons & Co analyst. Of the total budget, the refiner plans to invest $2 billion in its midstream business and $1.2 billion in its refining operations. The company is building a liquids export terminal at Freeport, Texas, expanding its natural gas liquids fractionator in nearby Sweeny and investing in several pipeline projects. Phillips 66 also raised its share buyback by $2 billion to $9 billion. Chief Executive Greg Garland said the company planned […]

Lessons from shale industry will reshape global oil market

Filed in Shale Oil by on 13 October 2015


The US shale revolution has changed the oil market for good.  From a near standing start in 2010, US shale oil production has increased to around 4m barrels a day today, with much of that production estimated to be somewhere broadly in the middle of the cost curve.   Although US shale oil accounts for less than 5 percent of the global oil market, it has already had a profound impact. The rapid growth in US shale oil last year was the main factor causing the collapse in oil prices: US oil production increased by more than twice the entire expansion in global oil demand.  More generally, the different production techniques and financing structures found in the US shale industry are likely to have a lasting impact on global oil market dynamics, in at least three important ways. First, shale oil is likely to respond far more quickly to changes in prices. The lead times between investment decisions and production of US shale can be measured in weeks, rather than the years taken for conventional production. And the life of a shale well tends to be far shorter than that for a conventional well, with production typically falling by as much as 70-80 per cent in the first year. As such, as prices fall, investment and drilling activity will quickly decline and production will soon follow. But the contraction of the shale industry that we are now observing should not be seen as a fatal blow: as prices recover, US shale is likely to bounce quickly back.

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Gasoline prices fall in US Midwest as Gulf Coast supply arrives in region

Filed in Prices by on 13 October 2015

Gasoline prices in the US Midwest tumbled Monday as supply arrived from the Gulf Coast and refineries came out of planned turnarounds. Group 3 suboctane fell 7.50 cents to the NYMEX November RBOB futures contract plus 11 cents/gal. That is 29 cents below the record differential for that grade, which was recorded October 5. “It’s just supplies coming up off [Explorer pipeline], I reckon. And refinery issues not as pressing,” one source active in the Midwest said. “I’m guessing maybe some refineries coming back,” another source said, noting that inventories in the region are still low. The Chicago grades also dropped Monday. Chicago CBOB fell 4 cents to NYMEX plus 23 cents/gal. Chicago RBOB also fell 4 cents to NYMEX plus 38 cents/gal. –Daron Jones, –Edited by Jason Lindquist,

Oil Company Workers Kiss Their Perks Goodbye

Filed in Canada by on 13 October 2015

Canadian energy companies have cut thousands of jobs and scrapped projects in a drive to cut costs. Now they’re raiding workers’ perks. Holiday parties, childcare benefits and Fridays off are being targeted as the rout in crude prices grinds into its 16th month, workers and company representatives say. The clampdown on perks comes as firms dig deeper for savings after eliminating about 36,000 oil and natural gas jobs in the crash, according to a tally by the Canadian Association of Petroleum Producers. At Canadian Natural Resources Ltd.’s office in Aberdeen, Scotland, the only microwave is in overdrive after the cafeteria stopped serving hot meals and raised the price of sandwiches. The coffee cups are smaller, too. While the company has avoided job cuts, salary reductions of as much as 10 percent mean some workers are also earning less. ConocoPhillips, which is cutting 500 workers in Canada this year, removed […]

China Sept dollar-denominated exports fall 3.7 percent, less than expected; imports sink 20.4 percent

Filed in China by on 13 October 2015

A container box is loaded on to a truck at a port in Rizhao, Shandong province, August 12, 2015. China’s September exports fell 3.7 percent from a year earlier, less than analysts had expected, while imports fell by 20.4 percent, their 11th consecutive month of decline. That left the country with a trade surplus of $60.34 billion for the month, the General Administration of Customs said on Tuesday, slightly higher than expected. Analysts polled by Reuters had predicted exports would fall 6.3 percent after a drop of 5.5 percent in August. Imports had been expected to drop 15 percent, following a 13.8 percent decline in August. Combined exports and imports fell 8.1 percent in the first nine months of the year from the same period in 2014, well below the full-year official target for growth of 6 percent. (Reporting by Shao Xiaoyi, Meng Meng and Pete Sweeney ; Editing […]

Cutting Staff Pay to Keep Workers

Filed in Oil Supply by on 13 October 2015

As layoffs become the energy industry’s main response to low oil prices, a handful of producers are aiming to trim personnel costs without pink slips by spreading the pain among their employees. Companies including Occidental Petroleum Corp. OXY -0.76 % and Canadian Natural Resources Ltd. CNQ -2.54 % are employing hiring freezes, caps on bonuses, and even across-the-board wage cuts to preserve jobs. They and others that already have reduced payrolls—including many drilling and well servicing firms—are reluctant to slash further, say energy-industry experts. In part, they’re trying to avoid the type of skilled worker shortages that followed mass job cuts in prior downturns. But it’s also because their businesses can’t succeed without sufficient staff, especially if the downturn in oil prices reverses course. “There’s no more fat to be cut,” said Deborah Byers, a partner at consultants Ernst & […]

Earthquake Shakes Cushing, Okla.

Filed in Shale Oil by on 13 October 2015

Two moderate magnitude earthquakes shook northern Oklahoma on Saturday, including one near the major oil storage hub of Cushing. The strongest was a 4.5 magnitude quake recorded by the U.S. Geological Survey at 5:03 p.m. Saturday about one mile northwest of Cushing. It followed a 4.4 magnitude quake recorded at 4:20 a.m. about 18 miles southwest of Medford and about 100 miles northwest of Cushing. Crude oil stored in facilities near Cushing is used to settle futures contracts traded on the New York Mercantile Exchange. As of Oct. 2, 53 million barrels was in storage there, according to the U.S. Energy Information Administration. Bob Noltensmeyer, emergency manager for the city of Cushing, said he hadn’t received reports of significant damage although there were “shattered nerves.” “This one was pretty strong,” he said. “The whole house shook.” The U.S.G.S. also reported a 3.7 magnitude quake about 13 miles southwest […]

Saudi Arabia’s gambit for market share meets Yankee ingenuity

Filed in Shale Oil by on 13 October 2015
Saudi Arabia’s gambit for market share meets Yankee ingenuity

Ever since oil prices started plunging last summer, people have been wondering whether the producers responsible for the supply added since 2010 — mostly in the US and Canada — would want to keep pumping. How many US shale wells, for example, would be economically viable in a world where the West Texas Intermediate price was about $45 per barrel instead of $100?  It’s now been long enough to get a sense of the answer. Compared to the peak almost exactly one year ago, the number of US rigs drilling has collapsed by 62 per cent, according to Baker Hughes:

Meanwhile, the Bureau of Economic Analysis reports business spending on “mining exploration, shafts, and wells” has dropped about 35 per cent since the peak in the fourth quarter of 2014 (table 5.3.3 of the National Income and Product Accounts), although the number of dollars spent has actually fallen a bit further thanks to deflation (table 5.3.5).

Statoil squeezing more gas out of North Sea

Filed in Norway by on 13 October 2015

Norwegian energy company Statoil said it may be able to boost recovery rates from the Gullfaks gas field in the North Sea using a novel cost-effective solution. Statoil and its partners at the Gullfaks field in the North Sea started what they said was the first wet gas compression process on the seabed. Subsea compression gives companies more maneuverability in terms of gas processing and above-ground infrastructure. When testing the process in mid-2015, Statoil said the compression method could extend the production plateau at Gullfaks by about two years. “The recovery rate from the Gullfaks South Brent reservoir may be increased from 62 percent to 74 percent by applying this solution in combination with other measures,” Kjetil Hove, a senior vice president for […]

Gazprom Restarts Gas Deliveries to Ukraine

Filed in Russia, Ukraine by on 13 October 2015

Russian state natural-gas company PAO Gazprom resumed deliveries to Ukraine on Monday, after halting exports in July, reducing the risk of disruption to supplies to the rest of Europe this winter. Deliveries were resumed after Ukraine paid $234 million of a total $500 million prepayment expected for gas in October, Gazprom chief executive Alexei Miller said. Ukrainian Energy Minister Volodymyr Demchyshyn confirmed to Interfax news agency that deliveries had resumed early on Monday. Ukraine and Russia finalized, but didn’t yet sign, a preliminary gas agreement last month, which would bring down the cost of Russian gas for Ukraine to that paid by neighboring European Union countries until March. In return, Ukraine promised to ensure that Russia can ship gas to the EU without interruptions and to pump 2 billion cubic meters of gas into underground storage facilities over the next month. The European Union has worked to bring […]

Statoil Puts Second Subsea Gas Compression Project into Action

Filed in Norway by on 13 October 2015

Statoil reports that its Gullfaks gas compression project is now in operation in the North Sea. Statoil ASA reported Monday that it has started operating its second gas compression system at the Gullfaks area in the Norwegian North Sea. This latest project follows on from Statoil putting the world’s first subsea gas compression plant online at the Åsgard field in the Norwegian Sea in mid-September. Gullfaks subsea gas compression will increase recovery from the Gullfaks South Brent reservoir by approximately 22 million barrels of oil equivalent. Compression is a way to get fields to produce more oil or gas for longer as the natural pressure in a reservoir drops. Until now compression plants have been installed on platforms or onshore, but this new facility is under almost 1,000 feet of water. In addition to improving recovery Statoil’s models show that subsea gas compression will be more energy efficient than […]

Why the Earth’s past has scientists so worried about the Atlantic Ocean’s circulation

Filed in Climate by on 13 October 2015

January–August 2015 blended land and sea surface temperature percentiles. (NOAA) In the last month, there’s been much attention to a cool patch in the North Atlantic Ocean, where record cold temperatures over the past eight months present a stark contrast to a globe that is experiencing record warmth. And although there is certainly no consensus on the matter yet , some scientists think this pattern may be a sign of one long-feared consequence of climate change — a slowing of North Atlantic ocean circulation, due to a freshening of surface waters. The cause, goes the thinking, would be the rapidly melting Greenland ice sheet, whose large freshwater flows may weaken ocean “overturning” by reducing the density of cold surface waters (colder, salty water is denser). If cold, salty waters don’t sink in the North Atlantic and flow back southward toward Antarctica at depth, then warm surface waters won’t flow […]

Welcome To a New Planet

Filed in Climate by on 13 October 2015

Not so long ago, it was science fiction. Now, it’s hard science — and that should frighten us all. The latest reports from the prestigious and sober Intergovernmental Panel on Climate Change (IPCC) make increasingly hair-raising reading, suggesting that the planet is approaching possible moments of irreversible damage in a fashion and at a speed that had not been anticipated. Scientists have long worried that climate change will not continue to advance in a “linear” fashion, with the planet getting a little bit hotter most years. Instead, they fear, humanity could someday experience “non-linear” climate shifts (also known as “singularities” or “tipping points”) after which there would be sudden and irreversible change of a catastrophic nature. This was the premise of the 2004 climate-disaster film The Day After Tomorrow . In that movie — most notable for its vivid scenes of a frozen-over New York City — melting polar […]

Oil Takes a Third Swing at Holding $50 as OPEC Sees Recovery

Filed in Prices by on 12 October 2015

Oil rose above $50 a barrel in New York for a third day, a level it hasn’t closed above since July, as OPEC officials predicted that global crude markets will recover. West Texas Intermediate futures climbed as much as 1 percent after advancing 9 percent last week. Demand will grow and non-OPEC supply is due to contract, Abdalla Salem El-Badri, the secretary-general of the Organization of Petroleum Exporting Countries, said at a conference in Kuwait City on Sunday. Prices have bottomed and there are signs of a recovery in 2016, according to Qatar’s Energy Minister Mohammed Al Sada. Oil rose above $50 a barrel in New York on Oct. 8 for the first time since July, yet failed to settle above that mark on speculation the crude surplus will persist. U.S. oil explorers idled rigs for a sixth week as they struggle with low prices, data from Baker Hughes […]

Oil edges up on lower U.S. rig count, weaker dollar

Filed in Prices by on 12 October 2015

Oil prices rose in early Asian trading on Monday after U.S. drillers cut oil rigs for six straight weeks, while traders awaited Chinese trade data to be published following the one-week National Holiday. U.S. drillers removed nine oil rigs in the week ended Oct. 9, bringing the total rig count down to 605, oil services company Baker Hughes Inc ( BHI.N ) said late on Friday. That total was the least since July, 2010. Drillers had cut a total of 61 rigs over the prior five weeks. Since hitting an all-time high of 1,609 during this week a year ago, weekly rig count reductions have averaged 20. “Another fall in the U.S. oil rig count helped support WTI price (but) the focus will be on the release of China’s […]

U.S. shale firms snap up $50 oil hedges, risking rally reversal

Filed in Prices by on 12 October 2015

Welcome to the oil market’s new vicious cycle. This past week, as oil prices barreled over 9 percent higher to break out of a weeks-long trading range, U.S. shale producers jumped at the chance to lock in $50-plus crude for the first time in months, making up for lost time after holding off hedging during the market’s late-summer slump. U.S. crude oil futures for December 2016 delivery, a favored contract for hedgers, saw trading volume spike to a weekly record high of nearly 190 million barrels, twice as much as the average for the previous four weeks, in what market sources and industry executives said was the biggest wave of hedging since a fleeting rush in late August. The price premium for the Dec 2016 contract against the same month in 2015 has shrunk to just […]

Saudi Arabia oil output up by 7%

Filed in Saudi Arabia by on 12 October 2015

Global oil prices were marginally improved in September but the combination of oversupply and sluggish demand continued to bear on WTI and Brent prices, Jadwa Investment said in its latest edition of the monthly Chartbook. However, from a regional perspective, Saudi crude oil production increased by 7% on comparable 2014 levels. It is envisaged that Saudi crude oil production will remain around current levels for the foreseeable future. Non-oil exports in July remained 20.6 percent lower than the same period last year. Petrochemicals and plastics, the two largest non-oil exports, continued to be the hardest hit so far in 2015, falling more so compared to other non-oil exports. Imports also fell by 12.2 percent, year-on-year. Meanwhile, bank holdings of government bonds rose sharply in August reflecting the new approach in government financing strategy. More funds were spent on capital projects and it is envisaged that more government bond issuance […]

Putin rules out possibility of ground operations in Syria

Filed in Syria by on 12 October 2015

Russia n President Vladimir Putin ruled out on Sunday the possibility of sending Russian troops for ground operations in Russia’s ongoing military intervention in the war-torn Syria . “This is out of the question,” Putin was quoted by the RIA Novosti news agency as saying in an interview with the Rossiya-24 TV channel. He said Russia is not going to do this no matter what happens, and “our Syrian friends know about it.” In response to allegations from Western countries and media that the Russian air campaign in Syria has not targeted the Islamic State (IS) and has led to civilian casualties, the Russian leader retorted that Russia conducted enough reconnaissance before launching the counter-terror attacks. “We have continuously carried out aerial and space reconnaissance, comparing the data we obtained from different sources,” he said. He added that Moscow notified the United States and […]

Revived security forces advance on Ramadi

Filed in Iraq by on 12 October 2015

Pro-government security forces have launched a multi-pronged attack to retake Ramadi, tightening the military blockade around the city and setting the stage for a deeper assault. Iraqi leaders have been talking of an imminent operation to liberate Ramadi ever since it fell to the Islamic State (IS) militant group five months ago, without significant results . But for more than a month, the military dynamic has been shifting: Shia militias have been ordered to withdraw from the area, the Iraqi government has brought more Sunni tribal fighters into the al-Hashid al-Shabi (Popular Mobilization) program, and the U.S. military has provided extensive help […]

Shiites in Iraq Hailing Putin for Syria Push

Filed in Iraq, Russia by on 12 October 2015

Mr. Putin’s popularity is soaring in Iraq’s Shiite heartland for his military raids in Syria. Credit Sabah Arar/Agence France-Presse — Getty Images NAJAF, Iraq — One of the most popular Facebook posts in Iraq ’s Shiite heartland is a Photoshopped image of President Vladimir V. Putin of Russia dressed in the robe of a southern tribal sheikh. It was the American-led invasion in 2003 that toppled Saddam Hussein and empowered Iraq ’s long-repressed Shiite majority. The United States also took the lead more than a year ago to assemble a coalition to conduct airstrikes in Syria and Iraq against the Sunni militants of the Islamic State. But with the struggle against the Islamic State largely stalemated, it is the naked display of Russian military power in neighboring Syria, as well […]