Recent Articles

WTI Oil Holds Above $82 as U.S. Fuel Supply Seen Falling

Filed in Prices by on 22 October 2014

West Texas Intermediate crude held above $82 a barrel before a report that may show motor-fuel inventories shrank to a two-year low in the U.S., the biggest oil consumer. Brent was steady in London . December futures were little changed in New York . Gasoline stockpiles probably fell by 1.45 million barrels to 204.2 million, according to a Bloomberg News survey before data from the Energy Information Administration today. That would be the lowest since November 2012. Inventories of the fuel slid by 500,000 barrels through Oct. 17, the American Petroleum Institute reported yesterday, according to Bain Energy. Oil is paring its collapse into a bear market as banks including BNP Paribas SA and Bank of America Corp. predict the rout may be over. They’re in part counting on the Organization of Petroleum Exporting Countries to reduce supply as the U.S. pumps the most oil in almost three decades. [...]

Crude Rises After Chinese Growth Exceeds Expectations

Filed in Prices by on 22 October 2014

West Texas Intermediate crude rose as Chinese economic growth exceeded analysts’ estimates, signaling stronger fuel demand in the world’s second-biggest oil-consuming country. Brent futures gained in London . China ’s gross domestic product advanced 7.3 percent in the July-September period from a year earlier, the statistics bureau said today in Beijing. That exceeded the 7.2 percent median estimate in a Bloomberg survey of analysts. A government report tomorrow is projected to show that U.S. crude supplies climbed last week as fuel stockpiles declined. WTI fell below $80 a barrel for the first time since June 2012 last week. “The Chinese numbers gave the market a boost,” Gene McGillian , an analyst and broker at Tradition Energy in Stanford, Connecticut , said by phone. “We’ve lopped off a lot of value recently. If we can’t get above $85 decisively we’ll continue with the down trend.” WTI for November delivery, which [...]

Natural Gas Snaps Five-Session Losing Streak

Filed in Prices by on 22 October 2014

Natural gas snapped a five-session losing streak Tuesday but held near 11-month lows, as traders weighed near-term forecasts for mild weather against uncertainty about how much the upcoming winter will raise demand for the heating fuel. Natural gas for November delivery settled up 4.1 cents, or 1.1%, at $3.711 a million British thermal units on the New York Mercantile Exchange. Prices closed at the second-lowest level of the year. Cold temperatures boost demand for natural gas, which half of all American households use as a primary heating fuel. Weather forecasts for the next two weeks are predicting above-normal temperatures across the Central and Eastern U.S. “A burst of warming into the Midwest and East late this weekend into the first half of next week looks a bit stronger again today,” said forecaster Commodity Weather Group LLC in a note Tuesday. However, traders are still waiting [...]

Consumed by Islamic State, Iraq’s Anbar province a key battleground again

Filed in Iraq by on 22 October 2014

In recent weeks, the world has watched the battle to save Syria’s border town of Kobani from Islamic State. But the radical jihadists have for longer been engulfing another strategically more vital target – Iraq’s western Anbar province and its road to Baghdad. The vast desert region – where Sunni tribes rose up in 2006 and 2007 to drive out al-Qaeda with the Americans – has throughout 2014 been parcelled up, city by military camp, before the Iraqi government and U.S. forces could act. Now Anbar’s largest airbase Ain al-Asad, the Haditha Dam – a critical piece of infrastructure – and surrounding towns are encircled by Islamic State to the west from the Syrian border and to the east from militant-controlled sections of Ramadi. IS has grown so strong over the last year that “they are like an octopus stuck to your face,” said a Baghdad-based [...]

Official: Iran’s economy too vulnerable to oil market

Filed in Iran by on 22 October 2014

Maryam Rahmanian Hamid Farnam, the energy commissioner in the Iranian Chamber of Commerce, told the Oil Ministry’s news website Shana the government should work to slowly push oil revenue out of the national budget . “As long as we look at oil as a commodity for collecting revenues, not as a capital good, fluctuations in the world oil market will influence our economy,” he said. An assessment from the World Bank finds the Iranian economy is contracting. Sanctions imposed by Western powers on Iran’s energy sector resulted in a 5.8 percent decline in gross domestic product last year. The bank said the dependence on oil revenue makes the Iranian economy “intrinsically volatile.” Farnam said the government should work to cut the share of oil revenue in the total budget to nothing within a three- or four-year period. [...]

China reviewing oil relationships with Sudan, South Sudan, researcher says

Filed in China, Sudan by on 22 October 2014

The Chinese government and China National Petroleum Corp. are reviewing their relationships with Sudan and South Sudan following years of growth that changed both sides, a researcher said at Johns Hopkins University’s School for Advanced International Studies . “Sudan was a launching pad for CNPC to become a global corporation through financial and resource benefits,” said Luke Patey, a senior researcher at the Danish Institute for International Studies and author of “ The New Kings of Crude: China, Oil, and Civil War in Sudan and South Sudan .” “For much of the 2000s, CNPC took 40% of its oil from Sudan through subsidiaries as well as through the main subsidiary,” Patey said during an Oct. 20 event hosted by the SAIS China-Africa Research Initiative. “Things started to go bad for CNPC when the two Sudans signed a comprehensive [...]

How will Saudi Arabia respond to lower oil prices?

Filed in Saudi Arabia by on 22 October 2014

Oil prices (along with prices of many other commodities ) have fallen dramatically since last summer. Some observers are waiting to see if Saudi Arabia responds with significant cutbacks in production. I say, don’t hold your breath. Source: FRED. Source: FRED . When oil demand fell in the 1981-82 recession, the Saudis cut production by 6 million barrels a day in an effort to soften the decline in oil prices. They also cut production in response to lower demand in the 2001 recession and the most recent recession. On the other hand, the kingdom boosted production quickly beginning in August 1990 and January 2003 in anticipation of lost production from Iraq in the two Gulf Wars. This historical behavior led many observers to believe that Saudi Arabia would always play the role of a swing producer to stabilize the price of oil. Monthly crude oil production from Saudi [...]

Libya’s Rival Regimes Keep Oil Flowing From Split Nation

Filed in Libya by on 22 October 2014

Libya’s warring factions have pledged to keep the North African country’s crude flowing, putting pressure on other OPEC nations to curb output when the group supplying 40 percent of the world’s oil meets next month. Libya’s production has risen even as violence and political disputes have left the country under the rule of two competing administrations: the internationally recognized government of Abdulla al-Theni and the Islamist-led cabinet of Omar al-Hassi. Both authorities are seeking to keep oil output stable as various militias battle for influence. “It is almost beyond me that the Libyans managed to maintain production, considering that there is no government, and with all these militias,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in an interview Oct. 20 in Dubai. “It is almost a miracle that they managed to get back production to where they have managed to get it back to.” Libya, [...]

Trinidad Refinery Swaps Crude Sources on Ebola Scare

Filed in Trinidad & Tobago by on 22 October 2014

Trinidad & Tobago is substituting crude from Gabon with Colombian and Russian shipments amid protests by refinery workers alarmed by the outbreak of Ebola in other African countries. Energy Minister Kevin Ramnarine halted oil purchases from Gabon, the Caribbean country’s only African supplier in the past 20 months, he said in an e-mailed response to questions. The decision follows the refusal of workers from Petrotrin, which operates Trinidad’s sole refinery, to assist with the berthing of a tanker that arrived in Trinidad waters on Oct. 18 from Gabon. The vessel, called Overseas Yellowstone, eventually docked late yesterday using outsourced tugs and labor, Ramnarine said. “The situation is dynamic and we will review if need be,” the minister wrote. “It should, however, be noted that there is no Ebola outbreak in Gabon.” Gabon, which has had Ebola outbreaks in 2001-2002, 1996-1997 and 1994, is not among countries currently citing cases [...]

Royal Dutch Shell Sells More Nigerian Assets

Filed in Uncategorized by on 22 October 2014

Royal Dutch Shell PLC said Tuesday it has signed agreements to sell all of the Nigerian oil assets it put up for sale last year, the latest move by the Anglo-Dutch oil major to reduce its exposure to the West African nation.  A spokesman for Anglo-Dutch oil giant Shell said it—along with Italy’s Eni SpA and France’s Total SA —have signed an agreement to sell a 45% stake in Oil Mining Lease 18 to a consortium that includes Canadian company Mart Resources Inc. The terms of the deal weren’t disclosed.  The remaining 55% interest in the block—which produces up to 30,000 barrels a day—will be retained by the Nigerian National Petroleum Corp., Mart Resources said in a statement. The acquisition is subject to numerous terms and conditions including receipt of Nigerian government approval, it added.

Nigeria Can’t Cope With Drop in Crude Oil Price – NECA

Filed in Nigeria by on 22 October 2014

The Nigeria Employers Consultative Association (NECA) has berated the federal government over what it described as its lackluster plan on how the country will deal with the fall in international price of crude oil. The Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, had recently said the federal government has put in place contingency plans to deal with the dwindling price of crude oil. But speaking at a press conference in Lagos, Director-General of NECA, Mr. Olusegun Oshinowo, said government ought to flesh out such plans as well as explain the implications of the fall in the price of crude oil to Nigerians and how the nation would cope with the development. He warned that the country is prone to serious economic crisis if there are no concrete plans to deal with the situation and advised Nigerians to cut down on their skyrocketing expenses. He reasoned that [...]

Diesel Deregulation Frees Up Billions for India to Spend More Wisely

Filed in India by on 22 October 2014

ByAnant Vijay Kala India’s decision to end government control of diesel fuel prices will save the government billions of dollars which can be better spent on more pressing needs such as building schools, roads and ports, analysts say. India announced over the weekend that it would end a decades-old policy of controlling the retail price of diesel fuel. Providing diesel at below-market rates cost the government about $10 billion last year, hampering India’s ability to spend on other things. The government had given up control over the prices of gasoline back in 2010 but had continued to regulate prices of diesel – the primary fuel used in trucks and tractors as well as for running generators used to power irrigation pumps. “It shields the government’s finances from volatility in global oil prices, because of which the subsidy bill often went up,” said Radhika Rao, an economist at DBS Bank. [...]

China GDP growth slowest since global crisis

Filed in China by on 22 October 2014

s China’s economy grew at its slowest pace since the depths of the global financial crisis in the third quarter and is on track for its worst annual performance since 1990, when the country was under international sanctions in the wake of the Tiananmen massacre. The government on Tuesday described the 7.3 per cent year-on-year expansion in economic output in the third quarter as China’s “new normal” and said it was comfortable with the slowdown. [...]

Alaska’s Oil Piles Up at Port as Barrels Wait for a Ride

Filed in USA by on 22 October 2014

Stockpiles of oil from Alaska ’s North Slope have surged to a five-year seasonal high as tanker maintenance slows loadings, forcing the grade to trade at a discount to U.S. crude for the first time since 2010. Inventories at the Valdez terminal, the northernmost ice-free port in North America and the loading point for Alaskan oil, have averaged 4.38 million barrels this month, the most for October since 2009, data posted on the Alaska Revenue Department’s website show. Tanker repairs have shrunk the pool of vessels available, terminal operator Alyeska Pipeline Service Co. said. The trapped stocks threaten to further cut prices for oil from the North Slope, once the most prolific crude-producing region in the nation, as refiners on the U.S. West Coast turn elsewhere for supplies. California is bringing in a record volume of oil by rail from other states and the region has increased imports from [...]

TransCanada’s Keystone Stand-in Faces $1 Billion Gas Feud

Filed in Canada by on 22 October 2014

 TransCanada Corp. (TRP) will have to spend $1 billion more than planned on an oil pipeline to Canada’s Atlantic Coast if natural gas customers get their way, a move it says would threaten the viability of the project. TransCanada has delayed seeking regulatory approval of the C$12 billion ($10.7 billion) Energy East line as it negotiates with Quebec’s Gaz Metro Inc. and Ontario units of Spectra Energy Corp. (SE) and Enbridge Inc. (ENB) , said two people familiar with the talks who asked not to be identified discussing a private matter. The spat centers on TransCanada’s plan to convert a 3,000-kilometer (1,865-mile) stretch of its mainline gas conduit to carry oil. The nation’s largest pipeline operator after Enbridge is pursuing Energy East as environmental opposition imperils other planned lines from Canada ’s oil sands to tidewater, including its Keystone XL. Gas distributors claim that converting [...]

EIA: Consumers spending less on energy

Filed in USA by on 22 October 2014

Energy Department reviews how much consumers spend on transportation, heat and electricity. (File/UPI/Bill Greenblatt) Better fuel efficiencies and a change in fuels used for home heating means most people are spending less on energy than before, the U.S. Energy Department said. “Because electricity and transportation spending accounts for more than two-thirds of consumer energy expenditures, increasing vehicle fuel efficiencies and changing fuels used for home heating have contributed to lower consumer energy expenditures relative to disposable income,” the department’s Energy Information Administration said Tuesday. Edmunds.com said the average new vehicle sold in January got 24.9 miles per gallon of gasoline, an increase of nearly 5 mpg from October 2007. The number of consumers using natural gas has increased more than 3 percent from 2007. EIA said consumer energy expenditures as a percent of disposable income was lower last year than the average in the 1960s despite the rate of [...]

API: U.S. leverage hurt by oil export ban

Filed in USA by on 22 October 2014

 A report from the Government Accountability Office found consumer fuel prices would decline if authorities ended the 1970s ban on crude oil exports. John Felmy , API’s chief economist, said allowing free trade in the U.S. oil sector would have a ripple effect beyond the domestic market. “U.S. energy production is already having a major impact on world markets, and if policymakers embrace free trade, that influence will continue to grow in a way that benefits our economy,” he said in a statement Monday. U.S. refiners have expressed concern that easing the ban on crude oil exports would mean higher costs per barrel in the U.S. market. The GAO study found exports would raise domestic crude oil prices by as much as $8 per barrel. In terms of consumer benefits, the [...]

Consumer energy expenditures are roughly 5% of disposable income, below long-term average

Filed in USA by on 22 October 2014

Total U.S. household energy consumption expenditures have generally declined relative to disposable income since 1960, although during periods of high energy prices, consumers devote increasing shares of their income to energy. Energy expenditures ranged between 4% and 8% of disposable income since 1960. Consumer energy expenditures today are a lower percentage of disposable income than the average from 1960 to present (5.5% average). Consumer energy expenditures as a percent of disposable income in 2013 remain lower than the average since the 1960s, even though consumer energy prices grew faster than inflation over that period. Because electricity and transportation spending accounts for more than two-thirds of consumer energy expenditures, increasing vehicle fuel efficiencies and changing fuels used for home heating have contributed to lower consumer energy expenditures relative to disposable income. Source: U.S. Energy Information Administration, based on Bureau [...]

Kemp: Congressional Study Questions Embargo-Era Oil Policies

Filed in USA by on 22 October 2014

Lifting restrictions on U.S. crude oil exports could actually lower fuel prices for U.S. motorists and other consumers by contributing to a drop in world oil prices, according to a report from an influential congressional watchdog released on Monday. The Government Accountability Office (GAO) also recommended that the U.S. Department of Energy review the size of the Strategic Petroleum Reserve (SPR) to ensure it remains appropriate as net oil imports fall. Without a comprehensive re-examination, the Department cannot be sure the SPR is holding the right amount of crude and giving taxpayers good value for money, according to GAO (“Changing crude oil markets: allowing exports could reduce consumer fuel prices, and the size of the strategic reserves should be re-examined” September 2014). By focusing on the effectiveness of the export ban [...]

Total New CEO Will Contend With Slump in Production, Oil

Filed in France by on 22 October 2014

The successor to Christophe de Margerie, the outspoken Total SA (FP) boss who died in a Moscow plane crash, will have to contend with a slump in the company’s output and the failure of its exploration strategy. Patrick Pouyanne, currently the company’s refining chief and long-touted as a potential successor, will be nominated as chief executive officer at a board meeting in Paris today, Les Echos reported, without saying where it got the information. The new CEO must see through a round of cost cuts as lower oil prices and weak returns from refining eat into profit at France ’s largest company by sales. De Margerie, killed Oct. 20 when his private jet struck a snowplow on a Moscow runway, had sold older fields and sought to pare investments in new projects as part of a pledge to investors last month to cut $2 billion [...]

Will Cheap Gas Hurt Sales of Ford’s New Pickup?

Filed in USA by on 22 October 2014

Ford Motor Co. spent five years and some $3 billion developing a lighter-weight version of its F-150 pickup that burns less fuel. And that’s the problem: Gasoline prices have plummeted 15% in the last four months as it geared up to sell the new model. A technical tour de force, the new aluminum-bodied truck was designed and conceived for an era of higher fuel prices. It weighs 700 pounds less, is as much as 20% more fuel-efficient, and can tow up to 11% more weight than its predecessor. Due to go on sale in December, the 2015 model represents a bet by Ford that it can sell customers on new technologies to meet future fuel-economy standards. But an oil glut has undermined the company’s gamble on a vehicle that contributes 50% of its earnings in North America.

Texas RRC Oil and Gas Report, August Data

Filed in Oil Supply by on 22 October 2014

The Texas Rail Road Commission just released their oil and gas production report with the August data. As you probably know by now that this data is incomplete. The latest months will all turn down but as more companies report their data, which can be up to two years late, the data will reflect what is actually produced.  There is something strange about the August data however. This is the first time since last November that all four data sets, Crude, Condensate, Gas Well Gas and Casinghead (Associated) gas, are show lower production than the previous month. So keeping in mind that the previous months data was just as incomplete as this months is, the data should, if production is increasing, still show an increase. This month however, it does not.

Russia Loses Oil Ally in De Margerie After Moscow Crash

Filed in France, Russia by on 22 October 2014

Christophe de Margerie’s last act as chief executive officer of Total SA (FP) left no room for doubt about his feelings toward Vladimir Putin’s Russia . In a Moscow speech hours before the plane crash that took his life two days ago, De Margerie said U.S. and European Union sanctions on the country were “unfair and unproductive,” and that he opposed efforts to render it “isolated from the major global economic and political process.” Appearing before a receptive audience that included Prime Minister Dmitry Medvedev and a host of Russian executives, he cited his work as co-chair of a Franco-Russian business body alongside Gennady Timchenko — a commodities billionaire who was one of the first targets of U.S. sanctions. De Margerie’s death removes from the scene a businessman who rarely shied away from geopolitical debates and became one of Russia’s most outspoken allies in its efforts to avoid economic [...]

Russia, EU energy chiefs meet one-on-one

Filed in Ukraine by on 22 October 2014

Russian Energy Minister Alexander Novak met one-on-one with European Energy Commissioner Gunther Oettinger ahead of three-way talks that include Ukrainian delegates. Novak said earlier Tuesday he expected the meeting would result in a written agreement on the way to settle the long-standing issue. An already-fragile Ukrainian economy was left in further turmoil following the political upheaval that followed Kiev’s tilt toward the European Union in November. Russia meets about a quarter of European gas needs, though the bulk of that gas runs through a Ukrainian pipeline network. Last week, Oettinger said EU member states could stave off winter gas shortages . “No household in the EU has to be left out in the cold this winter,” he said. Gazprom said Monday it filled European underground gas storage facilities with about 80 percent of the [...]

Deadlock Over Russian Gas to Ukraine Remains

Filed in Ukraine by on 22 October 2014

Russia and Ukraine dashed expectations that they would end their long-running gas dispute on Tuesday, with Kiev’s inability to pay for its gas debts to Moscow emerging as the main obstacle.  Ukraine agreed to pay $3.1 billion toward its debts by the end of the year. Kiev now needs to raise $1.6 billion in additional funding before the two sides meet again next Wednesday, when the European Union said it was hopeful an interim deal could be signed that could avert gas shortages this winter, Russian and EU energy officials said.  The failure to resolve the deadlock comes despite heightened expectations over the past days both sides had agreed on all the main elements of a deal.

Russia slaps conditions on Ukraine gas deal

Filed in Ukraine by on 22 October 2014

Breaking point: Ukraine has had to import gas from its neighbours since Russia cut off its supply ©Yuriy Dyachyshyn/AFP Russia has raised further conditions for resuming gas supplies to Ukraine, dashing hopes that a deal to safeguard Europe’s energy supply this winter would be agreed on Tuesday. Moscow cut gas exports to Ukraine in June amid a payment dispute, and talks on restarting flows have been weighed down by the conflict between Kiev’s forces and pro-Russian militias. However, many officials had expected that a new deal on a gas price and a timetable for settling debts would be reached at a meeting in Brussels. More On this story Editorial Europe needs will to build energy union Energy spat tests EU resolve Moscow and Kiev talks end in an impasse UK blocks €5bn Russian North Sea deal On this topic Kremlin acts to silence human rights group Editorial Putin is [...]

WTI Climbs Amid Estimates of U.S. Gasoline-Supply Drop

Filed in Prices by on 21 October 2014

West Texas Intermediate rose for the third time in four days amid speculation motor-fuel inventories shrank in the U.S., the world’s biggest oil consumer. Brent advanced in London. Futures climbed as much as 0.9 percent in New York. Gasoline stockpiles fell by 1.45 million barrels to the lowest in almost two years, a Bloomberg News survey showed before government data tomorrow. WTI rebounded on Oct. 16 from the lowest level since June 2012 after the Energy Information Administration reported a 4-million-barrel drop in inventories of the fuel. China ’s economic growth beat analysts’ expectations in the July-September period from a year earlier, according to data from the statistics bureau in Beijing. Oil is paring its collapse into a bear market as banks including BNP Paribas SA and Bank of America Corp. predict the rout may be over. They’re in part counting on the Organization of Petroleum Exporting Countries to [...]

Crude Falls on OPEC Production Concerns

Filed in Prices by on 21 October 2014

U.S. and global crude benchmarks ended lower Monday amid choppy trading and concerns that member nations of the Organization of the Petroleum Exporting Countries will maintain high production levels in a bid to compete for market share despite growing global crude supplies. A four-month decline in prices has dragged crude oil into bear-market territory. Reuters Light sweet crude futures for front-month November delivery ended the day down 4 cents at $82.71 a barrel on the New York Mercantile Exchange. The contract was steady in early trading but slipped through midmorning, and stabilized in the afternoon. November futures expire Tuesday and most of the volume in the market has moved forward into the December contract, which ended down 15 cents at $81.91 a barrel. The global Brent contract ended the day down 76 cents or 0.9% at $85.40 a barrel on the ICE Futures Europe exchange. The declines ended two [...]

Oil Falls; OPEC Seen Waiting Till Meeting to Curb Output

Filed in Prices by on 21 October 2014

Brent crude fell on speculation that OPEC won’t take any action to bolster prices before a meeting scheduled for Nov. 27 in Vienna. West Texas Intermediate futures were little changed. Futures dropped 0.9 percent in London . Saudi Arabia and Kuwait have signaled the decline in prices doesn’t warrant immediate production cuts. Iran ’s President Hassan Rouhani instructed the oil ministry to use diplomacy to halt the slide, state-run Mehr news agency reported yesterday. “The harsh reality remains, we’re producing anywhere from 1.5 to 2 million barrels a day more oil than there’s demand for,” Tom Finlon, Jupiter, Florida-based director of Energy Analytics Group LLC, said by phone. “The statements from Saudi Arabia and Kuwait make it clear that they aren’t doing anything until the meeting, which is more than a month away.” Brent for December settlement declined 76 cents to end the session at $85.40 a barrel on [...]

Oil futures complex closes lower as Libyan production rises

Filed in Prices by on 21 October 2014

 The oil futures complex settled lower Monday as a rebound in Libyan production and concerns over the global economy added to the perception of an already oversupplied market. Front-month NYMEX crude closed 4 cents lower at $82.71/b, while ICE December Brent ended 76 cents lower at $85.40/b. In refined products, NYMEX November ULSD settled down 1.2 cents at $2.4856/gal. NYMEX November RBOB closed 3.25 lower at $2.2002/gal. Crude futures managed to avoid falling to multi-year lows seen last week, but were still unable to close in positive territory. “Oil prices had a hard time maintaining any kind of rally,” Phil Flynn, analyst at Price Futures Group, said. A downturn in the US equity markets, combined with news out of Iran that the government is [...]

NYMEX November natural gas settles down 9.6 cents to 11-month low

Filed in Prices by on 21 October 2014

 November natural gas futures contract tumbled 9.6 cents to a $3.67/MMBtu settlement Monday — the lowest close in 11 months — as the market considered forecasts calling for mild weather into November as well as new US gas production records set over the weekend. The last time the prompt month settled below $3.70/MMBtu was exactly 11 months ago, when the December contract closed at $3.674/MMBtu on November 20, 2013. “We’re at 11-month lows and the market can’t seem to pick its head up,” said Gene McGillian, analyst at Tradition Energy. Updated forecasts released Monday now are calling for mild weather to extend into the first week of November. The US National Weather Service’s forecast map is predicting above-normal temperatures for all of the US in its eight- to 14-day outlook. Article continues below… Sign up to Natural Gas Alert today. Platts [...]

Natural Gas Closes at 11-Month Low on Soft Demand

Filed in Prices by on 21 October 2014

Natural-gas prices hit their lowest close in nearly a year as warm October weather suggests heating demand won’t pick up soon. The front-month November contract settled down 9.6 cents, or 2.6%, to $3.67 a million British thermal units on the New York Mercantile Exchange. That is the lowest closing price for the front-month contract since Nov. 19 when it closed at $3.556/mmBtu. A five-session losing streak put gas below $3.70/mmBtu for the first time since Nov. 22. Weather forecasts, already warm for October, grew even warmer over the weekend. Weather is one of the most important variables for natural gas prices because the fuel heats half of U.S. homes. The new forecasts suggest this October will be the third warmest in 15 years: comfortable weather with little demand for gas heating, according to Commodity Weather Group LLC in Bethesda, Md. “We’re seeing a massive demand [...]

Lower Oil Prices Are Unambiguously Good

Filed in Prices by on 21 October 2014

Lower Oil Prices Are Unambiguously Good Steep stock market corrections often create shrouds of pessimism that do bad things to people’s brainpower. And one of the absolutely stupidest things I have heard in recent weeks is that the recent drop in oil prices is bad. You heard me right. Serious people on financial television are saying lower oil prices are a signal of worldwide economic collapse. Here at home that translates to recession, deflation, a profits collapse, and rising unemployment. I’ve been around for a while, and I’ve seldom heard such gibberish. The latest stock market scare stems from a bunch of fears, like the possible spread of Ebola, economic slowdowns in Europe and Asia, and deflation worries. And when the stock market decides to correct, any reason will do. We must respect the wisdom of the market. But the recent $20 drop in crude oil is [...]

Egypt slated to get Israeli natural gas

Filed in Egypt, Israel by on 21 October 2014

Partners in control of one of Israel’s largest offshore gas fields announce export plans for Egypt. (UPI/Shutterstock/James Jones Jr.) The partnership in control of one of the largest natural gas basins off the coast of Israel announced their intention to sign an export deal with Egypt. The consortium in charge of the Tamar natural gas field, led by Texas company Noble Energy and Israel’s Delek Group, said Sunday they’re negotiating the sale of at least 175 billion cubic feet of natural gas per year over the next three years with Egyptian buyer Dolphinus Holdings Ltd. The partners managing Tamar estimate the field holds as much as 10 trillion cubic feet of natural gas. Gas from Tamar would run through a pipeline system managed by Israel Gas lines to Ashkelon and then through a system managed by East Mediterranean Gas Ltd. for marketing to customers in Egypt. Delek said gas [...]

Iran Sees No Need for Emergency OPEC Meeting on Oil-Price Drop

Filed in Iran, Prices by on 21 October 2014

Iran , which faces sanctions on crude exports, sees no need for OPEC to hold an emergency meeting, a sign that markets may need to wait a month before the world’s biggest producer group responds to falling prices. Oil Minister Bijan Namdar Zanganeh has consulted with Iranian President Hassan Rouhani about political and economic reasons for the collapse in prices, the ministry’s news website Shana reported today. No emergency meeting of the Organization of Petroleum Exporting Countries is necessary to discuss the price slide, Shana said. Rouhani told Zanganeh to use the “oil diplomacy tool” to try to prevent a further decrease, the state-run Mehr news agency said yesterday, without elaborating. “They have their wings clipped a bit at the moment because they can’t really produce any more than they do,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in an interview in Dubai today. “It’s [...]

Iran Shuns Image as OPEC Hawk While Seeking Sanctions End

Filed in Iran, Prices by on 21 October 2014

Iran , eager for an end to sanctions that have restricted its oil exports, is shunning its image as OPEC’s price hawk by avoiding calls for an emergency session of the group to support prices. Oil Minister Bijan Namdar Zanganeh consulted with Iranian President Hassan Rouhani about political and economic reasons for the price collapse, the ministry’s news website Shana reported yesterday. No emergency meeting of the Organization of Petroleum Exporting Countries is necessary to discuss the slide, Shana said. Rouhani told Zanganeh to use the “oil diplomacy tool” to try to prevent a further decrease, the state-run Mehr news agency said Oct. 19, without elaborating. “They have their wings clipped a bit at the moment because they can’t really produce any more than they do,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in an interview in Dubai yesterday. “It’s difficult for them to call [...]

OMV’s production lifted by Libya

Filed in Libya by on 21 October 2014

Austrian energy company OMV says production from Libya on the rebound. “Production levels in the third quarter of 2014 increased by 5 percent versus the second quarter as production in Libya partially resumed,” the company said in its report. In its report for the second quarter, OMV said much of its Libyan assets were shut in by violence and the security situation there remained difficult. OMV’s statement follows a condemnation of the latest violence from the governments of France, Italy, Germany, the United Kingdom and the United States. “Libya’s hard fought freedom is at risk if Libyan and international terrorist groups are allowed to use Libya as a safe haven,” their Saturday statement read. Forces loyal to former Gen. Khalifa Haftar last week tried to reclaim the restive city of Benghazi from Islamist militias. At least 12 people died as a result of the violence . In [...]

Saudis probe oil pipeline blaze

Filed in Saudi Arabia by on 21 October 2014

Saudis investigating incident after oil pipeline hit by stray bullet. (UPI/Shutterstock/tcly) RIYADH, Saudi Arabia, Oct. 20 (UPI) — Authorities in Saudi Arabia said they’re conducting an investigation into an incident that left an oil pipeline in the eastern part of the country ablaze. The Saudi Press Agency reported authorities were able to control the blaze that erupted after a stray bullet hit the pipeline early Saturday. Local police said they conducted an investigation into the incident that followed a clash between area assailants and a security patrol. A 2012 report from Press TV, a broadcast agency controlled by Saudi adversary Iran, attributed a pipeline explosion in eastern Saudi Arabia to a substantial rise in crude oil prices. The report said a pipeline designed to carry as much as 6 million barrels of oil per day to the Ras Tanrua oil terminal was destroyed, though the account was later said [...]

Triple Whammy Looms for China’s Oil Refiners as Crude Plunges

Filed in China by on 21 October 2014

Crude oil ’s steepest crash in almost six years is throwing up a new challenge for China ’s refiners — a plunge in the value of their stockpiles. The oil price drop is adding up to a triple whammy for earnings prospects through the end of the year, for companies already beset by slowing economic growth and state controls on prices. UOB Kay Hian Ltd. yesterday downgraded China’s oil sector to underweight from overweight, citing weaker demand forecasts and the lower oil price. “Refiners’ earnings will be impacted and the main reason for that is inventory losses,” said Duke Suttikulpanich, a Singapore-based oil and gas analyst at Standard Chartered Bank. “Contrary to common belief, the sharp drop in oil price does not benefit refiners’ earnings. And low demand forecasts mean margins aren’t expanding.” A fall in crude prices, the raw material used to produce fuels including gasoline and diesel, [...]

Cheap Oil Spurs Record China Crude Runs

Filed in China by on 21 October 2014

Even amid a slowdown in economic growth, one government statistic on Tuesday showed China isn’t one to miss out on a good bargain.  Beijing said crude-oil processing volumes reached a record high in September. Some analysts said that is likely coming from stockpiling by refining companies due to bargain-basement prices, rather than a consumption bump.  “If crude runs are high, that is because import prices of oil are very low and companies are replenishing their inventories,” said Miao Tian, an analyst for investment bank North Square Blue Oak.

Mixed Economic Signals From China

Filed in China by on 21 October 2014

HONG KONG — Markets around the world have been jolted by fears that slowing growth and deflationary pressures in Europe, Japan and other major economies could derail the United States. But the health of China , for decades an engine of growth, has emerged as one of the most significant wild cards in the global economy. It is hard to be certain just exactly how the Chinese economy is faring, given mixed signals in the data. Chinese inflation is at its weakest levels in nearly five years. Commodity prices are plunging. New home sales are declining. Foreign investment is contracting. The overall economy, though, continues to chug along at a steady, albeit more modest, pace. China’s gross domestic product increased by 7.3 percent in the third quarter, compared with 7.5 percent in the previous quarter. While that was the lowest quarterly growth since the depths of the financial crisis [...]

U.S. Oil Exports Would Lower Gas Prices, Government Report Says

Filed in USA by on 21 October 2014

U.S. oil exports would lead to cheaper prices at the pump, according to a government report released Monday. The study, by the U.S. Government Accountability Office, will add fuel to the growing debate over whether to lift the nearly four-decade ban on U.S. oil exports. It comes as oil producers lobby to reverse the ban and get their oil to higher-priced foreign markets amid fast-rising volumes from fracking in shale formations in North Dakota, Texas and elsewhere. The U.S. produced more than 8.5 million barrels of oil a day in July, up 14% from a year ago, according to data from the U.S. Energy Information Administration. Meanwhile, the amount of foreign crude being imported to meet domestic needs has been cut in half to 30% of demand this year from 60% in 2005. Opponents of lifting the ban, which include major U.S. refiners that obtain domestic crude at lower [...]

GAO sees differing crude, product price impacts with more exports

Filed in USA by on 21 October 2014

Removing US crude oil export restrictions would likely increase crude prices and decrease consumer fuel prices, the Government Accountability Office said in a recent report . It also called for a reexamination of the size of the US Strategic Petroleum Reserve. The report said studies project that removing existing crude export restrictions would raise US production, which averaged 8 million b/d in April, by 130,000-3 million b/d from 2015 to 2035. US crude prices could rise $2-8/bbl as a result, bringing them closer to international levels, it indicated. “At the same time, studies and some stakeholders suggest that US prices for gasoline, diesel, and other consumer fuels follow international prices,” the report said. This suggests that allowing more US crude exports would increase global supplies, which is expected to lower international prices and subsequently reduce consumer fuel costs, [...]

Cutting back natural gas flaring in North Dakota hits a bump

Filed in Shale Oil by on 21 October 2014

North Dakota oil drillers appear to be losing ground in the effort to meet state-mandated requirements to reduce flaring of associated natural gas at crude oil wells due largely to persistently high flaring rates on the Fort Berthold Indian Reservation. While operators overall appeared to be close to meeting flaring reduction goals, the issue has been complicated by jurisdictional confusion, significant regulatory hurdles, and potentially overlapping state, federal and tribal regulations, officials claim. This week, Lynn Helms, director of North Dakota’s Department of Mineral Resources, said that statewide, 28% of associated gas was flared in August, just above the 26% flared limit set by the North Dakota Industrial Commission earlier this year. Under these rules, operators need to reduce flaring levels to 26% by October 1, then 23% by January 1, 15% within two years and 10% by 2020. Producers face dramatic oil production curtailment penalties if [...]

North Dakota aims to reduce natural gas flaring

Filed in Shale Oil by on 21 October 2014

About one-third of the natural gas North Dakota has produced in recent years has been flared rather than sold to customers or consumed on-site. The rapid growth in North Dakota oil production, which rose from more than 230,000 barrels per day (bbl/d) in January 2010 to more than 1,130,000 bbl/d in August 2014, has led to increased volumes of associated gas , or natural gas that comes from oil reservoirs. These increased volumes require additional infrastructure to gather, process, and transport gas volumes instead of flaring them. These additions can take time to build, and well operators are often reluctant to delay production. In an effort to reduce the amount of natural gas flared, North Dakota’s Industrial Commission (NDIC) established targets that decrease the amount of flared gas over the next several years. The first target of 26% [...]

EIA: North Dakota close to flaring goal

Filed in Shale Oil by on 21 October 2014

North Dakota on pace to meet target for capturing gas associated with state oil deposits. UPI/A.J. Sisco. WASHINGTON, Oct. 20 (UPI) — yearly goal for curbing the amount of natural gas burned off during oil production, the U.S. Energy Department said Monday. “The first target of 26 percent flared is set for fourth quarter 2014, with continued decreases in flaring reaching 10 percent by 2020,” the department’s Energy Information Administration said. North Dakota’s energy infrastructure hasn’t been able to keep pace with the rapid rise in oil production and, as a result, much of the gas associated with oil deposits is burned off, or flared. EIA said North Dakota is already within 2 percentage points of meeting its target for the fourth quarter. In September, the U.S. subsidiary of Norwegian energy company Statoil, along with a joint venture between General Electric [...]

French Oil Giant Boss Dies in Moscow Executive-Jet Crash

Filed in France by on 21 October 2014

Total (FP) SA’s Christophe de Margerie died when his airplane struck a snowplow on a Moscow runway, ending a career in which he oversaw the biggest expansion of oil reserves at the French energy giant in at least 15 years. The 63-year-old chief executive officer died at Moscow’s Vnukovo Airport in the crash that also killed three crew members, Total said in a statement. The driver of the snowplow was drunk, Russia ’s Investigative Committee said today in a statement on its website. During a 40-year career that began in Total’s finance unit, de Margerie oversaw far-flung operations for the French petroleum giant from Indonesia to the Middle East to Kazakhstan . Earlier this year he helped negotiate the Paris-based company’s entry into Russian shale under a Siberian drilling venture with OAO Lukoil; the company also is a partner in the vast Russian gas development [...]

CEO of French Oil Giant Total Dies in Moscow Plane Crash

Filed in France by on 21 October 2014

French oil company Total SA said Chairman and Chief Executive Christophe de Margerie died Monday in a plane crash at a Russian airport. The French executive, who enjoyed close relations with numerous world leaders, including Russian President Vladimir Putin, was 63 years old. Mr. de Margerie and the three crew members on board were killed when their Falcon 50 business jet gathered speed to take off at Moscow’s Vnukovo airport amid low visibility, and ran into a snow-removal truck maneuvering on the runway, according to airport authorities. A Total spokeswoman said Mr. de Margerie was in Moscow to attend a gathering of the Russian government’s foreign investment advisory council. Mr. de Margerie’s sudden death opens a period of uncertainty at Total, one of France’s largest companies, which had no obvious succession plan in place. In May, Total shareholders had approved a resolution increasing the age cap [...]

Ukraine Fighting Batters Truce Before Gas Talks Begin

Filed in Ukraine by on 21 October 2014

Talks aimed at ensuring Russian natural gas deliveries to Ukraine this winter are being held with the European Union in Brussels today as fighting continues in Ukraine’s war-torn east in defiance of a six week-old truce. EU Energy Commissioner Guenther Oettinger , Russian Energy Minister Alexander Novak and his Ukrainian counterpart Yuri Prodan are attending the talks that are supposed to end at 2 p.m. yet may take longer than planned, officials said. The standoff between the two former Soviet republics is coming to a head four months after Russia halted gas shipments over a pricing and debt dispute as a separatist insurrection raged in eastern Ukraine. The EU, which depends on Russian fuel piped across Ukraine for about 15 percent of its needs, has been seeking [...]

London wants EU emissions reforms

Filed in Climate by on 21 October 2014

British Energy Secretary Ed Davey said Monday the European Union can lead the fight against climate change, but only if certain reforms are enacted. “Europe has the opportunity to show the world how we can cut emissions while creating investment, jobs and growth, but only if we reform the system and reform it fast,” he said in a statement. “Otherwise we’re facing increasing costs for businesses, uncertainty for investment and ultimately higher costs for consumers, which isn’t acceptable.” Davey said his government was proposing a way to make an emissions trading system work better in the European economy. As it stands, with a skewed trading balance, the system is increasing the overall costs of meeting future carbon reduction obligations , he said. His comments followed criticism from European Commission President Jose Manuel Barroso [...]