Recent Articles

Oil falls 3 percent on weak China factory data

Filed in Prices by on 1 September 2015

Oil prices fell more than 3 percent on Tuesday after official data showed China’s giant manufacturing sector, the engine powering the world’s biggest energy consumer, contracted at the fastest pace in three years. China’s official Purchasing Managers’ Index (PMI) fell to 49.7 in August from 50.0 in July, reinforcing concerns over the world’s second-largest economy. The figures helped spur a retreat in oil prices after three days of hefty gains. Investors took profits after Brent and U.S. crude both soared more than 8 percent on Monday, traders said. “It was primarily the China fear factor,” Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, told Reuters Global Oil Forum. Benchmark Brent crude dropped $2.13 to a low of $52.02 a barrel, and was trading around $52.15 by 0815 […]

Oil Prices Pull Back After Breathless Rally

Filed in Prices by on 1 September 2015

Oil prices fell in Asian trade Tuesday as weak Chinese manufacturing data and profit-taking pared some of crude’s 25%-plus gains of the previous three trading sessions. U.S. oil prices had surged by around 27.5% in the past three days , the largest such rally since Iraq’s invasion of Kuwait in August 1990. Much of Monday’s gains came after reports that the Organization of the Petroleum Exporting Countries may consider cutting output to boost oil prices, and on signs of a decline in U.S. oil production. Despite hitting multiyear lows toward the end of August, Nymex crude prices rebounded sharply in recent days to finish up 4.4% for the month, while Brent crude gained 3.7% over the same period. But soft Chinese economic data helped to weaken oil prices in early Asian hours Tuesday. China’s official manufacturing purchasing managers index fell to 49.7 in August from 50.0 a month ago, […]

U.K. Stocks Fall as Investors Weigh Data Showing China Slowdown

Filed in Prices by on 1 September 2015

U.K. stocks declined as investors considered further indications that the Chinese economy is slowing down. Digital Entertainment Plc dropped 1.5 percent after its takeover battle took another twist with a revised proposal from 888 Holdings Plc. BP Plc slid 1 percent as oil’s biggest three-day rally in 25 years stalled before U.S. government data forecast to show crude stockpiles expanded. British American Tobacco Plc weighed heaviest on the FTSE 100 Index, falling 2 percent. Drugmakers were also a drag, with AstraZeneca Plc and GlaxoSmithKline Plc losing at least 2 percent. Shire Plc posted the biggest drop, falling 3.1 percent. The FTSE 100 retreated 1.5 percent to 6,154.38 at 8:32 a.m. in London. The equity benchmark slid 6.7 percent in August, its worst month in more than three years, amid investor concern about global growth as China’s economy shows signs of weakening just as the Federal Reserve prepares to […]

World’s Top Oil Trader Vitol Sees Price Stuck at $40-$60 to 2016

Filed in Prices by on 1 September 2015

Oil prices will remain stuck at $40 to $60 a barrel into 2016 as rising crude supplies overwhelm demand, according to the world’s largest independent oil trader. The oil-production surplus means stockpiles will keep expanding for “the next few quarters” and excess inventories won’t clear until 2017 at the earliest, Vitol Group BV Chief Executive Officer Ian Taylor said in an interview. The forecast, if realized, would mean oil-producing countries and the energy industry would need to weather a longer downturn than occurred after the financial crisis of 2008-2009, when prices fell as low as $36 a barrel, but recovered to almost $80 within a year. “Oil prices will be stuck between $40 and $60 a barrel this year and in 2016,” Taylor said. “I don’t see much reason to go higher, and we can go lower” because the physical crude oil market is “quite weak” right now. Vitol […]

NYMEX October gas futures settle at $2.689/MMBtu, down 2.6 cents

Filed in Prices by on 1 September 2015

The NYMEX October natural gas futures contract fell 2.6 cents Monday to settle at $2.689/MMBtu as traders focused on weather forecasts calling for more moderate temperatures by mid-September. In its six- to 10-day forecast, WSI called for above-average temperatures across the US Northeast, Upper Midwest and large portions of Texas. Below-average temperatures are expected across portions of the Northwest. Further into September, WSI’s 11-15 day forecast calls for unseasonable warmth over a smaller portion of the US, extending from eastern New York through New England, as well as west Texas and portions of the West Coast. “The natural gas market is on the defensive in Monday trade, with a lack of more intense late summer air-conditioning demand pointing to above-average storage injections in the weeks ahead,” Citi analyst Tim Evans said. Article continues below… Gas Daily offers the most detailed coverage of natural gas prices at interstate and intrastate […]

Gas sales give lift to Israel’s Delek Group

Filed in Israel by on 1 September 2015

 After posting strong second-quarter results, the chief executive officer at Israeli energy company Delek said growth should continue through future investments. Delek, which operates in some of the largest natural gas fields in the Mediterranean Sea, said operating profit for the second quarter increased 69 percent to $69 million. Net income swung from a $152 million loss in the second quarter of 2014 to a $5.5 million gain, driven in large part from sales from the Tamar gas field off the Israeli coast. Members of the Israeli government moved in mid-August to clear the way for the full development of offshore natural gas reserves. The Israel Antitrust Authority had ruled that Delek Group and its partners at Noble Energy, which has headquarters in Texas, control […]

Eni expects to change Egyptian gas dynamics

Filed in Egypt by on 1 September 2015

 The discovery of what may be the world’s largest gas field off the Egyptian coast could be a sea change for the North African country, Italy’s Eni said. Eni announced the discovery of gas in the deepwater Zohr prospect off the Egyptian coast. With an estimated 30 trillion cubic feet of natural gas in place, it’s the largest ever made in regional waters and potentially the largest in the world . “This historic discovery will be able to transform the energy scenario of Egypt,” Claudio Descalzi, the chief executive officer of Eni, said in a statement. “This exploration success acquires an even greater value as it was made in Egypt which is strategic for Eni, and […]

Protests in Iraq Bring Fast Promises, but Slower Changes

Filed in Iraq by on 1 September 2015

 Surrounded by the clamor of protest — a sea of Iraqi flags, vendors selling coffee and melon drinks, protesters singing the national anthem and railing against politicians — two friends paused and described their dreams. “I want to find a job opportunity,” said one of them, Yasir Abdulrahman, 21, who recently earned an engineering degree but remains unemployed. “I want to build a country. I want an opportunity.” His friend Hussein Ali, 22, quit university to support his family and now works as a taxi driver. He said that even the specter of bombings would not keep him away from the square. “We are only thinking of reforms,” he said. “If you want to change, you have to sacrifice yourself.” For […]

After Peshmerga victory, homes looted and destroyed

Filed in Iran by on 1 September 2015

 In the wake of a recent military victory against the Islamic State (IS) militant group south of Kirkuk, forces belonging to the Kurdistan Regional Government (KRG) have overseen the destruction and looting of homes belonging to displaced Sunni Arab residents.The looting began on Aug. 27 at the end of a major Peshmerga offensive – supported by air strikes by the U.S.-led coalition – which dislodged IS fighters from a half-dozen villages around the Daquq district in southern Kirkuk provinc…

Gas discovery offshore Egypt rivals Mediterranean giants

Filed in Egypt by on 1 September 2015

Eni SPA expects accelerated development of what it describes as a “supergiant gas discovery ” at its deepwater Zohr prospect offshore Egypt. The company will immediately appraise its discovery, which it says might hold 30 tcf of lean gas in place in an area covering 100 sq km. The Zohr 1X NFW discovery well was drilled to a total depth of 13,553 ft in 4,757 ft of water on Egypt’s Shorouk Block 9. The well hit a 2,067-ft hydrocarbon column in a carbonate sequence of Miocene age with 400 m of net pay, Eni said. The company has future plans to target a deeper Cretaceous upside with a dedicated well. Zohr is the largest gas discovery made in Egypt and the Mediterranean Sea, and if early estimates hold true, could become one of the world’s largest natural gas finds, the company said. As Eni begins to fast track development […]

China factory indexes ebb in new sign of economic weakness

Filed in China by on 1 September 2015

 Chinese manufacturing showed further signs of weakness in August, adding to evidence of an inexorable slowdown in the world’s No. 2 economy despite recent government efforts to support growth. Two factory activity indexes released Tuesday were at multi-year lows. An official manufacturing index based on a survey of factory purchasing managers fell last month to 49.7, the lowest level since August 2012, from 50.0 in July. The index, compiled by the Chinese Federation for Logistics and Purchasing, is based on a 100-point scale on which numbers above 50 indicate expansion. A separate survey, the Caixin purchasing managers’ index, fell to a six-year low of 47.3 from 47.8 in July, although the number was slightly better than a preliminary reading released last month. Caixin’s survey focuses on smaller, private enterprises while the federation’s survey is weighted toward larger, state-owned companies in China’s manufacturing industry, […]

Big Rail’s little cousins find boon in U.S. oil-by-rail bust

Filed in Railroads by on 1 September 2015

Amid the rolling mountains surrounding this quiet town in southwest New York state, tucked away on miles-long stretches of underused rail tracks, hundreds of idle oil tank cars attest to the extent of fallout from oil’s rout. The oil tank cars – a year ago sought-after to haul crude from North Dakota to New Jersey – now stand idle as a result of two converging trends: the reversal in U.S. shale oil production and the completion of new pipelines. They show how the pain from the slump in the oil-by-rail industry has spread far and wide. Big rail lines, such as Berkshire Hathaway-owned BNSF Railways or Union Pacific are losing what used to be their fastest-growing source of new traffic; refiners such as PBF Energy are left with […]

New U.S. oil data shows lower 2015 production: EIA

Filed in Shale Oil by on 1 September 2015

The U.S. oil industry pumped less crude than initially estimated this year, according to new government data that offered the clearest look yet at the impact of drillers’ retrenchment in response to collapsing prices. The downward supply revisions were “unambiguously” bullish for a global market awash with oil, said Credit Suisse global energy economist Jan Stuart, suggesting the oft-cited resilience of U.S. shale producers to lower crude prices might have been overstated. Oil prices surged by as much as $3 a barrel on Monday, with some traders citing the new data. The Energy Information Administration said its new survey-based output data showed the United States pumped a hair below 9.3 million barrels per day in June, down by 100,000 bpd from a revised May figure. The June figure […]

Walking Oil Rigs Spur Cheaper, Quicker Drilling in Supply Glut

Filed in Shale Oil by on 1 September 2015

Have you ever seen an oil rig walk ? Some of the newest rigs can travel hundreds of yards to the next well under their own power, lurching along like 150-foot-tall robots on pneumatic legs that raise the equipment five inches at a time, nudging forward at about a foot per minute. While that sounds slow, it is faster and cheaper than dismantling a rig and trucking the parts to a new site nearby. More efficient drilling rigs that cost a third less than just a year earlier are changing the face of the U.S. shale industry, helping boost per-rig output in the four largest fields by at least 40 percent since the crude price plunge began in 2014. While helping producers pump more oil, the new rigs have a downside. Companies such as Helmerich & Payne Inc., Nabors Industries Ltd. and Patterson-UTI Energy Inc. that provide the equipment […]

Fossil Fuels Losing Cost Advantage Over Solar, Wind, IEA Says

Filed in Renewables by on 1 September 2015

The cost of producing electricity from renewable sources such as solar and wind has dropped significantly over the past five years, narrowing the gap with power generated from fossil fuels and nuclear reactors, according to the International Energy Agency . “The costs of renewable technologies — in particular solar photovoltaic — have declined significantly over the past five years,” the Paris-based IEA said in a report called Projected Costs of Generating Electricity. “These technologies are no longer cost outliers.” The median cost of producing so-called baseload power that is available all the time from natural gas, coal and atomic plants was about $100 a megawatt-hour for 2015 compared with about $200 for solar, which dropped from $500 in 2010. Those costs take into account investment, fuel, maintenance and dismantling of the installations over their lifetimes and vary widely between countries and plants. For instance, commercial rooftop solar installations generate […]

Canada orders Alberta pipeline closures

Filed in Canada by on 1 September 2015

Canadian energy company Nexen said safety was its top priority after a provincial regulator ordered dozens of pipelines closed because of maintenance issues. The Alberta Energy Regulator issued a suspension order to Nexen Energy, a Canadian subsidiary of the China National Offshore Oil Corp., calling on the company to shut down more than 90 of its oil and gas networks after the company was found to be in non-compliance with federal regulations. The order came after last month’s report of a failure on the company’s Long Lake pipeline network in the province. About 31,000 barrels of a mixture of oil, water and sand spilled in Alberta from the system. “Given that this company has already had a pipeline failure at this site, the AER will not lift […]

Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

Filed in Canada by on 1 September 2015

Canadian Oil Sands Ltd. COSWF 2.60 % , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta. The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said. While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.” Canadian Oil Sands […]

Canada’s Oil-Dependent Alberta Province Projects Record Deficit

Filed in Canada by on 1 September 2015

The government of Alberta said Monday its deficit will hit record levels due to the swoon in crude oil prices and an economic slowdown and will consider increasing taxes to reduce that budgetary shortfall. Finance Minister Joe Ceci said Alberta expects the deficit to grow to an all-time high of 5.9 billion Canadian dollars ($4.5 billion) in the fiscal year that began April 1. He said the deficit could hit C$6.5 billion if oil prices remain low, reflecting the province’s reliance on crude production as its chief engine of growth. “There is no doubt that our big challenge is commodity prices that our government in Alberta does not control,” Mr. Ceci said at a news conference in the provincial capital of Edmonton. “No one expected global oil prices to reach levels that they’re at today,” he told reporters. The deficit in Alberta is a poor omen for Canada […]

Obama to Call for More Icebreakers in Arctic as U.S. Seeks Foothold

Filed in Arctic by on 1 September 2015

President Obama on Tuesday will propose speeding the acquisition and building of new Coast Guard icebreakers that can operate year-round in the nation’s polar regions, part of an effort to close the gap between the United States and other nations, especially Russia, in a global competition to gain a foothold in the rapidly changing Arctic. On the second day of a three-day trip to Alaska to highlight the challenge of climate change and call for a worldwide effort to address its root causes, Mr. Obama’s proposals will touch on one of its most profound effects. The retreat of Arctic sea ice has created opportunities for shipping, tourism, mineral exploration and fishing — and with it, a rush of marine traffic that is bringing new difficulties. “Arctic ecosystems are among the most pristine and understudied in the world, meaning increased commercial activity comes with significant risks to the […]

Obama Makes Urgent Appeal in Alaska for Climate Change Action

Filed in Climate by on 1 September 2015

President Obama on Monday issued a global call for urgent action to address climate change , declaring that the United States was partly to blame for what he called the defining challenge of the century and would rally the world to counter it. “Climate change is no longer some far-off problem; it is happening here, it is happening now,” Mr. Obama said here at an international conference on the Arctic. “We’re not acting fast enough. I have come here today, as the leader of the world’s largest economy and its second-largest emitter, to say that the United States recognizes our role in creating the problem, and we embrace our responsibility to help solve it.” In remarks that bordered on the […]

Monthly Crude Oil and Natural Gas Production

Filed in Oil Supply, USA by on 1 September 2015

Beginning with the June 2015 data, EIA is providing estimates for crude oil production (including lease condensate) based on data from the EIA-914 survey. Survey-based monthly production estimates starting with January 2015 are provided for Arkansas, California, Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Pennsylvania, Texas, Utah, Wyoming, and the Federal Gulf of Mexico. For two states covered by the EIA-914—Oklahoma and West Virginia—and all remaining oil-producing states and areas not individually covered by the EIA-914, production estimates are based on the previous methodology (using lagged state data). When EIA completes its validation of Oklahoma and West Virginia data, estimates for these states will also be based on EIA-914 data. For all states and areas, production data prior to 2015 are estimates published in the Petroleum Supply Monthly. Later in 2015, EIA will report monthly crude oil production by API gravity category for the individually-surveyed EIA-914 states. […]

EIA: New U.S. Oil Data Shows Lower 2015 Production

Filed in Oil Supply, USA by on 1 September 2015

The U.S. oil industry pumped less crude than initially estimated this year, according to new government data that offered the clearest look yet at the impact of drillers’ retrenchment in response to collapsing prices. The downward supply revisions were “unambiguously” bullish for a global market awash with oil, said Credit Suisse global energy economist Jan Stuart, suggesting the oft-cited resilience of U.S. shale producers to lower crude prices might have been overstated. Oil prices surged by as much as $3 a barrel on Monday, with some traders citing the new data. The Energy Information Administration said its new survey-based output data showed the United States pumped a hair below 9.3 million barrels per day in June, down by 100,000 bpd from a revised May figure. The June figure was also nearly 250,000 bpd below what the EIA had estimated a few weeks ago, […]

Russian oil company Rosneft reports second-quarter loss

Filed in Russia by on 1 September 2015

 Russian oil company Rosneft said profits for the second quarter were down because of market and currency volatility, but performance was better than expected. Rosneft reported second-quarter profits at $1.99 billion, about 22 percent lower than the same period last year. Chairman Igor Sechin in a statement said the second half of the year was characterized by a high degree of volatility in crude oil prices and the value of the ruble, for which the decline against the U.S. dollar helped offset other market factors. “The company demonstrated better dynamics of revenues, earnings before interest, taxes, depreciation, and amortization and adjusted net income in the first half 2015 compared to first half 2014 taking into consideration change in average oil prices, both […]

Russia, Venezuela to Discuss Potential Steps to Stabilize Oil Prices

Filed in Prices, Russia, Venezuela by on 1 September 2015

MOSCOW—Russian President Vladimir Putin will discuss “possible mutual steps” to stabilize the global price for oil at a meeting with Venezuelan President Nicolás Maduro in China on Thursday, a Kremlin aide said, as both countries grapple with lower prices for their main export. Venezuela, a Russian ally that has been hit hard by plunging oil prices, has been pushing for an emergency meeting with the Organization of the Petroleum Exporting Countries in coordination with Russia to work out a strategy to halt the recent retreat in prices, people familiar with the matter said. The Kremlin aide, Yuri Ushakov, didn’t expand on what potential steps could be taken but said they could be “within the context of Russia’s cooperation with OPEC.” Russia also has been hurt by lower crude prices, as oil and gas account for half of federal budget revenue. But officials have repeatedly said that Russia, which vies […]

Russia’s Gazprom Posts 29% Net Profit Growth

Filed in Russia by on 1 September 2015

Russian state gas giant PAO Gazprom said net profit for the second quarter was up 29% from the same period last year as a higher ruble price made up for lower sale volumes in its most-lucrative European market. Gazprom said net profit stood at 294 billion rubles ($4.6 billion), while revenue was down 4% from the previous year at 1.27 trillion rubles. The lower sales volumes reflect the increased competition that Gazprom is facing from rivals in Russia and in Europe. Total gas production was down 9% in the first six months of the year at 221.3 billion cubic meters, Gazprom said. Sale volumes to Europe slid 7% in the first half of the year, but revenues grew 7% to 947 billion rubles as the weaker Russian currency meant the ruble price was 21% higher than for the same period last year, the company said. Sales volumes and revenue […]

Europe Oil Consumption Peaked in 2005

Filed in Peak Oil by on 1 September 2015

Fig 1: Western Europe oil consumption, oil prices in $2014 Total oil consumption peaked 3 times at around 14 mb/d: (1) In 1973, the 1 st oil crisis which was triggered by the Yom Kippur war. The following OPEC embargo was successful because US oil production had peaked 3 years earlier so the US could not increase production to offset OPEC’s reduction (2) In 1979, the 2 nd oil crisis which was caused by Iranian oil production peaking in the mid seventies and the following Iranian revolution, resulting in a global recession in 1982 (3) In 2005, at the beginning of the 3 rd oil crisis when global crude oil production had a peak and declined until 2007 3 main oil consumers Germany, UK and France The oil crises in the 70s brought down consumption by 2 mb/d (oil prices increased 10-fold) through both energy conservation and a recession. […]

Oil prices fall on profit taking, rate hike uncertainty

Filed in Prices by on 31 August 2015

 Oil prices fell in Asia on Monday as traders took profits, snapping gains last week that saw the biggest two-day rally in six years. Brent crude futures for October delivery slipped nearly $1, or 2 percent, putting the benchmark on track for its fourth straight monthly decline, having risen in only two of the past 14 months. “There is definitely a lot of profit taking going on,” said Daniel Ang, an analyst at Singapore’s Phillip Futures. “There is some readjustment in the positions taken by traders,” he said. The fall came after Brent climbed 10 percent last week, while U.S. crude finished the week up 12 percent. Brent fell 98 cents to $49.07 per barrel as 0329 GMT after rising $2.49, or 5 percent, […]

Oil Prices Down With Markets Off to Shaky Start

Filed in Prices by on 31 August 2015

Oil prices fell in Asian trade Monday, reversing some of the gains made late last week amid concerns the latest rally in the oil and commodities markets would be difficult to sustain.  Investors are bracing for another week of volatile trading, with a focus on China as well as the timing of a U.S. interest-rate increase. Oversupply concerns also remain persistent as seasonal summer demand for oil fades and oil refineries slow operations.  On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $44.36 a barrel at 0351 GMT, down $0.86 in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell $1.03 to $49.02 a barrel.  In highly volatile trading Nymex crude and Brent crude gained 11.8% and 10.1%, respectively last week. In the same week, oil prices had slipped to multiyear lows, but clawed back gains to rise 16%-17% over the final two trading sessions.  On Monday, oil took cues from a softer start by Asian markets, with the Shanghai Composite Index down around 2% after Beijing placed a 16 trillion yuan ($2.506 trillion) cap on local government debt over the weekend, the latest move to address a slowing economy.

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Oil Set for Third Monthly Drop as U.S. Rig Count Gains Amid Glut

Filed in Prices by on 31 August 2015

Oil headed for a third monthly decline as U.S. drillers showed no signs of letting up even as a supply glut persists. Futures fell as much as 2 percent in New York after the biggest two-day rally since 2009. The number of active rigs seeking oil in the U.S. increased for a sixth week to 675, the most since the start of May, according to Baker Hughes Inc. A measure of oil-price fluctuations rose Friday to a five-month high. Oil is holding losses after a slide this month below $40 a barrel, the lowest since February 2009, on concern slowing demand in the U.S. and China will leave the global market oversupplied. While crude has swung higher amid a rebound in commodities and equities, prices are still down more than 25 percent from this year’s peak in June. “The retracement is the market coming back to the reality that […]

Eni Discovers Massive Gas Field in the Mediterranean

Filed in Egypt by on 31 August 2015

Eni SpA discovered a “super giant” natural gas field offshore Egypt in what the Italian oil company said is the largest find in the Mediterranean Sea. The deep-water deposit in the Zohr Prospect in the Shorouk block may hold 30 trillion cubic feet of gas, equivalent to 5.5 billion barrels of oil, Eni said in an e-mailed statement Sunday. Eni, which wholly owns the license for Shorouk, said the discovery validates its strategy of exploring mature areas. Egypt’s petroleum ministry confirmed the discovery in a separate statement. “Egypt has still great potential,” Claudio Descalzi, the company’s chief executive officer, said in the statement. “This historic discovery” will transform the energy industry in Egypt, he said. International oil and gas companies are seeking new deposits as existing fields become depleted. Egypt’s energy demand is rising as the Arab world’s largest population grows, making the country more reliant on imports provided […]

Indian Oil Said to Plan $3 Billion Petrochemicals Unit in Iran

Filed in India, Iran by on 31 August 2015

Indian Oil Corp. is seeking to build a $3 billion petrochemicals plant in Iran, according to people with direct knowledge of the matter. The plan hinges on assurances from Iran that the 1 million-ton-a-year project will have access to cheap natural gas as feedstock, said the people, who asked not to be identified because the information isn’t public. A company spokesman didn’t respond to requests for comment by phone, text message and e-mail. Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totaling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Persian Gulf nation may be nearing an end. Economic and financial restrictions on Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries, left it in need of […]

Warning Signs in U.S. Presaged China’s Stock-Market Plunge

Filed in China by on 31 August 2015

Long before investors lost faith in the Chinese stock market, something seemed amiss at the ports of Long Beach and Los Angeles, where the stevedores and longshoremen process about 40% of U.S. trade with China. Jock O’Connell, a trade adviser in California with 28 years’ experience studying the docks, wasn’t seeing the patterns he would expect from a rapidly growing Chinese consumer class. The number of containers coming from China was continuing to grow, but beginning in 2013, fewer were being sent in the other direction. Global stock markets had a rude awakening last week when investors suddenly woke up to a faltering Chinese stock market and unmistakable signs that the world’s second-largest economy was slowing. Close observers of U.S.-China trade patterns, however, had for several years seen the telltale signs many in the markets missed. “A couple of years ago, everybody was still agog about the growing, burgeoning […]

China’s Next Problem: Paying for Its Stock-Market Bailout

Filed in China by on 31 August 2015

China’s epic stock-market drops over the past week give the impression that Beijing may have given up on trying to prop up the market or is at least retreating to defend a lower level. The question is, what will the government do with all that stock that it already has bought? Unlike the U.S. bailouts of 2008 and 2009, China is in the unenviable position of having bought near the market’s top, not at the bottom. Getting a TARP-like profit from its investments seems unlikely with the market so far below where much of the buying took place. If the gang of bailout entities known as the “national team” —banks, brokers, pension funds and government agencies—is stepping aside, it seems likely their holdings will drop even further in value. The Shanghai Composite Index traded in a 2000-to-2400 range during the three years before the bubble formed. Falling to that […]

China Places Cap on Local Government Debt

Filed in China by on 31 August 2015

BEIJING—Chinese lawmakers have placed a 16-trillion-yuan ($2.5 trillion) cap on local government debt as Beijing looks for ways to address one of the major impediments to the world’s second-largest economy. The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said. The moves are the result of a new law requiring the government to limit local debt, it said. The caps don’t include indirect liabilities, which officials said totaled 8.6 trillion yuan, according to Xinhua. The latest government estimate put China’s local debt load at 17.9 trillion yuan as of the middle of 2013, up from negligible levels just six years before, […]

Crises Put First Dents in Xi Jinping’s Power

Filed in China by on 31 August 2015

Shortly before President Xi Jinping boarded a plane last month to attend a summit in Russia, his office issued an executive order: China’s stock markets must go back up. The massive state-backed share-buying that ensued propped up the markets briefly in mid-July, allowing Mr. Xi to showcase China’s economic might at the summit with emerging-market leaders. In recent weeks, though, share prices have plunged again, taking global markets with them and triggering an international crisis of confidence in Mr. Xi’s stewardship of the world’s second-largest economy. Mr. Xi will project an image of strength when he presides over a World War II Victory Day parade on Thursday featuring fighter jets, ballistic missiles and 12,000 troops—an event China hasn’t marked in such a high-profile way before. Three weeks later, he heads to Washington for a state visit meant to convey China’s parity with the U.S. Yet just as he stages […]

Beijing abandons large-scale share purchases

Filed in China by on 31 August 2015

China’s government has decided to abandon attempts to boost the stock market through large-scale share purchases, and will instead intensify efforts to find and punish those suspected of “destabilising the market”, according to senior officials.  For two months, a “national team” of state-owned investment funds and institutions has collectively spent about $200bn trying to prop up a market that is still down 37 per cent since its mid-June peak.  China’s leaders feel they mishandled the stock market rescue efforts by allowing too much information to become public, according to senior regulatory officials speaking at a meeting late on Thursday — an account of which has been seen by the Financial Times.  Last week’s equities collapse, which prompted a rout in global markets, was partly blamed on authorities’ apparent decision to refrain from the share purchases they had been making since early July.  After standing on the sidelines for more than a week, the government resumed large-scale stock-buying in the last hour of trade on Thursday. This helped to lift the Shanghai benchmark index from a small loss to end the day up more than 5 per cent. The market rose by almost 5 per cent again on Friday.

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China turmoil divides Fed over inflation

Filed in China, Economy, USA by on 31 August 2015

The turmoil in China has intensified the debate within a divided Federal Reserve over whether the inflation outlook will be strong enough to justify higher interest rates as soon as next month, as policymakers around the world struggle to get to grips with the clouded outlook for the People’s Republic.,,Events in China have shaken badly faith in the country’s economic management among officials attending the meetings in Jackson Hole, hosted by the Kansas City Fed, as well as exposing the uncertainty among western policymakers about the genuine health of China’s economy.   Nowhere is the debate on the repercussions more immediate and significant than within the Fed, which faces a pivotal policy meeting next month.

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Behind Deadly Tianjin Blast, Shortcuts and Lax Rules

Filed in China by on 31 August 2015

One partner was the son of a local police chief, the other an executive at a state-run chemicals firm. After meeting at a dinner party, they started a company here to handle the export of the most dangerous chemicals made in China , promising “outstanding service” and “good results.” Within two years, Rui Hai International Logistics had built a reputation as the go-to place for businesses looking to ship hazardous materials to customers abroad, a niche market that had been dominated by sluggish state enterprises. Rui Hai offered lower prices, a no-hassle approach to paperwork and quick government approvals. Business was brisk. It seemed like another success story for the Binhai New Area, a thriving economic development […]

China in crackdown on spreading online ‘rumours’

Filed in China by on 31 August 2015

A financial journalist ‘confessed’ to causing ‘panic and disorder’ on China’s stock market, state media reported [AP] China has punished 197 people in a special campaign by police targeting online rumours about China’s stock market, the recent fatal explosions in Tianjin and “other key events”, state media reported. No details of the punishments were given, but according to the report, the crimes punished included claiming a man had jumped to his death in Beijing due to the stock market slump and falsifying the number of people who had died in the Tianjin blasts. Another alleged crime involved circulating “seditious” rumours about China’s upcoming commemorations of the 70th anniversary of the end of World War II. A financial journalist “confessed” to causing “panic and disorder” on China’s stock market and inflicting “huge losses on the country”, state media reported on Sunday. Wang Xiaolu, a journalist with Caijing magazine, was detained […]

Challenged on Left and Right, the Fed Faces a Decision on Rates

Filed in Economy, USA by on 31 August 2015

Conservative activists who want the Federal Reserve to raise interest rates distributed chocolate coins in golden wrappers at the local airport last week as Fed officials arrived for their annual policy retreat. Liberal activists in green “Whose Recovery?” T-shirts formed a receiving line at the resort hotel in the heart of Grand Teton National Park where the meeting was held, to personalize their argument that the Fed should wait. Sometime soon — possibly as early as mid-September and probably no later than the end of the year — the Fed plans to raise its benchmark interest rate one-quarter of one percentage point, a mathematically minor move that has become a very big deal. Investors, who always pay attention to the Fed, are paying particular attention now. The central bank has held […]

Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

Filed in Canada, Tar Sands by on 31 August 2015

 Canadian Oil Sands Ltd. COSWF 2.60 % , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta. The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said. While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.” Canadian Oil Sands […]

US Oil Production Nears Previous Peak

Filed in Oil Supply, USA by on 31 August 2015

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015. US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008. Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also? US Recent US Production was down 96,000 barrels per day in July to 9,503,000 bpd. That is 190,000 bpd below the March level of 9,693,000 bpd. US Crude Oil Production Here is what the last 50 years of US production looks like. The peak was in […]

Why $40 oil is killing Iraq, Venezuela and others, but not Russia

Filed in Russia by on 31 August 2015

It’s not the economy, stupid. At least it isn’t where hearts are warmed by the fiercer flame of nationalism, rather than rising living standards. Oil prices as low as $40 a barrel are separating the oil haves from the oil have-nots. The oil producers happily rode a wave of high oil prices for years, buying popularity with increased state spending while excusing themselves from the hard pounding of legitimate economic reform. The oil-buyers — like India and Egypt — now enjoy prices as low as a third of those they paid as recently as two years ago and can cut fuel subsidies, saving spending or redirecting it to broader […]

U.S. Is Seen as Laggard as Russia Asserts Itself in Warming Arctic

Filed in Arctic by on 31 August 2015

 With warming seas creating new opportunities at the top of the world, nations are scrambling over the Arctic — its territorial waters, transit routes and especially its natural resources — in a rivalry some already call a new Cold War. When President Obama travels to Alaska on Monday, becoming the first president to venture above the Arctic Circle while in office, he hopes to focus attention on the effects of climate change on the Arctic. Some lawmakers in Congress, analysts, and even some government officials say the United States is lagging behind other nations, chief among them Russia , in preparing for the new environmental, economic and geopolitical realities facing the […]

Ruble Rebound Beating World Has Bondholders Waiting to Sell

Filed in Russia by on 31 August 2015

The biggest recovery in emerging-market bonds and currencies has Russian investors poised to sell, even with oil prices bouncing back. The ruble’s 5.7 percent rally last week was surpassed only by Ukraine’s hryvnia while top gains for Russia’s bonds pared this month’s declines as five-year yields tumbled 51 basis points in three days to 11.88 percent. “Pressure on the markets is only rising,” Andres Vallejo, who helps manage the equivalent of $2.6 billion at Kapital Asset Management in Moscow, said by phone on Friday. He’s getting ready to short-sell local bonds known as OFZs if yields fall to 11.25 percent. The investor skepticism underscores doubts the central bank has much more scope to reduce interest rates after 6 percentage points of cuts since January aimed at rescuing Russia from its worst recession since 2009. “It’s unlikely that yields will fall below 11 percent,” Igor Kozak, the head of fixed-income […]

Maersk Gets Approval for $4.5 Billion U.K. North Sea Gas Field

Filed in Natural Gas Supply, United Kingdom by on 31 August 2015

A.P. Moeller-Maersk A/S won U.K. approval for a $4.5 billion development plan for the Culzean natural gas field as the Danish company tries to ramp up output at its energy division. The field, located in the central part of the British area of the North Sea, is expected to produce enough natural gas to meet 5 percent of the U.K.’s total demand in 2020 or 2021, Maersk said in a statement on Monday. Maersk Oil will be the operator of the field with a 49.99 percent stake, while JX Nippon Oil & Energy Corp. has 34.01 percent and BP Plc 16 percent. Nils Smedegaard Andersen, chief executive officer of the Maersk group, said earlier this month the company is actively searching for North Sea oil acquisitions as the drop in energy prices makes takeovers attractive. The company wants to return focus to its North Sea waters, where it first […]

Oil records its biggest 2-day gain in years

Filed in Prices by on 29 August 2015

Brent crude oil jumped 5 per cent to above $50 a barrel on Friday and had its biggest two-day gain in years, as traders continued to buy back bets against the price.  The international oil benchmark rallied by 16 per cent over Thursday and Friday alone. West Texas Intermediate, the US benchmark, gained a similar amount and moved back above $45.   The moves capped a volatile week for oil and broader markets. Both oil benchmarks had dropped to six-year lows at the start of the week as China’s “Black Monday” exacerbated fears about a long-running crude glut.  “This is a short-covering relief rally after broader markets have stabilised and traders have lowered their expectations for a September rate rise from the US [Federal Reserve],” said Amrita Sen at consultancy Energy Aspects.  “Our view is that fundamentally nothing much has changed. The market is still oversupplied. Oil tanker rates have fallen sharply due to lower shipments to Asia.”

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Oil Prices Rise Again as Traders Close Out Bets

Filed in Prices by on 29 August 2015

Oil prices soared Friday for the second day in a row, notching the biggest two-day percentage gain since 2009 as traders who had bet on lower prices scrambled to close out those wagers. Oil prices had surged Thursday on positive U.S. economic data, news that some Nigerian exports would be halted and a report that Venezuela wanted an emergency meeting of the Organization of the Petroleum Exporting Countries to respond to low prices. The market momentum continued Friday in the anticipation that monthly U.S. government data due for release Monday would show a continued decline in domestic crude production. Analysts attributed most of the rally Friday to traders closing out bets made after the U.S. benchmark had slumped below $40 a barrel earlier this week for the first time since 2009. On Friday, light, sweet crude for October delivery settled up $2.66, or 6.2%, to $45.22 a barrel […]

Oil markets catch breath after biggest gains in six years

Filed in Prices by on 29 August 2015

Crude oil futures were largely steady on Friday after posting their biggest one-day rally in over six years the day before led by recovering equity markets and news of diminished crude supplies. Stock markets around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong U.S. economic data boosted investor sentiment, and the dollar advanced for a third consecutive session. Front-month October Brent crude LCOc1 had dipped 20 cents to $47.36 per barrel as of 0046 GMT. It settled $4.42 higher at $47.56 per barrel in the previous session. U.S. crude CLc1 edged down 3 cents to $42.53 per barrel, after ending up $3.96, or 10.3 percent, at $42.56 per barrel, its biggest one-day percentage gain since March 2009. “A short covering rally, led by crude […]

Efficiency mandates to cap recovery in oil demand

Filed in Prices by on 29 August 2015

Lower prices should help stimulate oil consumption in advanced economies, restoring some of the demand lost over the last decade, as the cost of crude soared from less than $50 to more than $100 per barrel. In the late 1980s and through the 1990s, strong growth in demand played a crucial role in rebalancing the market after the slump caused by the two oil shocks in the 1970s. Investments in energy efficiency and policies to encourage conservation ebbed as memories of the oil shocks receded and a long period of relatively low prices encouraged complacency. But it could prove much harder to stimulate increased oil consumption this time around because policies to encourage further reductions in fuel demand for years ahead […]