Oil prices dip on strong dollar, rising Canadian output Oil prices dipped on Monday as a strong dollar weighed on markets and Canadian oil sands production was expected to increase this week. Crude markets, however, did receive some support from the start of the U.S. summer driving season coinciding with a fall in U.S. crude output to its lowest since September 2014. U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $49.22 per barrel at 0656 GMT (02:56 a.m. EDT), down 11 cents from their last settlement. International Brent futures were at $49.10 a barrel, down 22 cents. The dollar hit a one-month high against the yen on Monday and stood tall against other leading currencies .DXY after comments by Federal Reserve Chair Janet Yellen […]
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Oil Near $50 Amid Drop in U.S. Rigs, Disruptions in Nigeria Oil traded near $50 after a drop in active rigs in the U.S. and further supply disruption in Nigeria. Futures rose as much as 0.8 percent in New York. Rigs targeting crude in the U.S. fell by 2 to 316, after no change the previous week, Baker Hughes Inc. said on its website Friday. Explorers have dropped more than 1,000 oil rigs since the start of last year. A Nigerian militant group said it blew up three pipelines in the oil-rich Niger River delta on Saturday, the third attack in as many days, as it steps up an offensive to cripple the West African nation’s oil and gas industry. Oil has rebounded since tumbling to a 12-year low in February amid output declines in the U.S., Nigeria and Canada. Prices climbed above $50 a barrel on Thursday as declining U.S. crude supplies eroded a global glut. West Texas Intermediate […]
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Fueling Oil’s Push to $50: Fear Is Back Oil-supply outages are at their highest level in more than a decade, bolstering the “fear premium” that has helped push crude prices to $50 a barrel. About 3.5 million barrels a day worth of production is off line because of disruptions such as militant attacks in Nigeria, wildfires in Canada and political unrest in Libya—more than 3% of the global total, says research firm ClearView Energy Partners LLC. That is likely the highest since the Iraq war hit output there in 2003, says Jacques Rousseau, the firm’s managing director of oil and gas. At the same time, there is less slack to fill supply gaps. Unused production capacity that the Organization of the Petroleum Exporting Countries can bring on quickly has dwindled , and the glut of output from other producers, including U.S. shale companies, has ebbed as companies cut back amid lower prices. “There isn’t a lot of […]
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Oil Pessimists Exit Market as Supplies Seen Closer to Balance The oil market doomsayers are beginning to capitulate. Speculators reduced bets on falling prices to the lowest level in 11 months as oil briefly breached $50 a barrel on signs supplies are coming into balance. Crude climbed 7.4 percent this month in New York amid lower U.S. production and unplanned disruptions in Canada and Nigeria. Prices are up almost 90 percent since February. Money managers’ short position in U.S. benchmark crude reached the least since June, according to data from the Commodity Futures Trading Commission. “If you’ve been short since February this has been a very painful ride,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “There are always a few die-hards but otherwise you’d want to get out. This is indicative of the improving fundamentals.” West Texas Intermediate futures rose 0.6 percent on the New York Mercantile Exchange during the […]
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Big oil groups raise net debt by a third to cope with low prices The net debts of the largest Western oil companies have surged by a third over the past year, increasing their vulnerability to another fall in oil prices. The aggregate net debt of the 15 largest North American and European oil groups rose to $383bn at the end of March, up $97bn from 12 months ago, according to company reports compiled by Bloomberg. Oil companies’ revenues have slumped as a result of the crash in crude prices that began in the summer of 2014. Although they have cut capital and operating costs sharply, most of them have had to borrow to finance their investment programmes and dividend payments.
The debt surge was particularly sharp in the first quarter of this year, when oil prices dropped to a low of about $27 per barrel. Although interest rates are near record lows and oil prices have since recovered, ending last week at about $49, the increased indebtedness of the industry means it will face greater difficulties should oil prices slip back again. That would be likely to mean more job losses and investment cuts, as well as possibly dividend cuts and more defensive mergers and acquisitions. Part of the increase in oil debt over the past year is accounted for by the $19bn cash component of Royal Dutch Shell’s acquisition of BG Group. But all the large companies have reported sharp increases in their borrowings.
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3 Years Of Painful Cuts Sets Markets Up For Serious Supply Crunch Total global oil production could decline for the next several years in a row as scarce new sources of supply come online. According to data from Rystad Energy, overall global oil output will fall this year as natural depletion overwhelms all new sources of supply. But the deficit will only widen in the years ahead due to the dramatic scaling back in spending on new exploration and development. Statoil says that global capex is set to fall for two years in a row, and is on track to fall for a third year in 2017 as more spending cuts are likely. “For the first time in history, we’ve seen cutting of capex two years in a row and potentially we risk a third year as well for 2017,” Statoil’s Chief Financial Officer Hans Jakob Hegge told Bloomberg in a recent interview . “It might be that we see quite […]
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OPEC Expected to Keep Output Steady as Oil Rebalances The Organization of the Petroleum Exporting Countries isn’t likely to take any coordinated action on crude-oil output at its meeting on Thursday, representatives said, as the group sees signs of success with its hands-off approach of the past 18 months. Oil prices have nearly doubled since hitting 13-year lows over the winter , as a global glut that has weighed on the market since 2014 shows signs of unwinding. Rising prices have taken the air out of calls for action within OPEC, the cartel that controls more than a third of the world’s crude-oil production. There is no specific proposal on production on the agenda of OPEC’s biannual meeting in Vienna, said Falah al-Amri, Iraq’s OPEC envoy. That was echoed by several OPEC representatives who gathered here last week to discuss the gathering. Saudi […]
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Oil States Expected to Stick With Saudis : OPEC Reality Check OPEC members gathering in Vienna June 2 are expected to go along with a Saudi Arabia-led policy focused on squeezing out rivals amid signs the strategy is working. That means the meeting may be less fraught than the previous summit in December, which ended with public criticism of the Saudi position from Venezuela and Iran. By allowing prices to fall, high-cost producers are being forced out, easing the supply glut and spurring a rally of 80 percent since January to about $50 a barrel. All but one of 27 analysts surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will stick with the strategy. An alternative proposal — to freeze output — was finally rejected in Doha last month. The group may also choose a secretary-general to replace Abdalla El-Badri, whose term has been extended after members failed to agree on a successor. In recent months, three new […]
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Iraq joins Mideast rivals raising oil exports ahead of OPEC meeting Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week. Iraq, which is the second-largest producer in the Organization of Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day. Saudi Arabia, Kuwait, Iran and the United Arab Emirates, also plan to raise supplies in the third quarter. A recovery in global oil prices from 12-year lows to above $50 a barrel LCOc1 and rivalry between Saudi Arabia and Iran have dampened expectations that OPEC will rein in supplies at Thursday’s meeting. While additional exports could make up for shrinking output […]
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Iraqi forces push into Fallujah as IS bombings kill 24 Iraqi forces started pushing into the city of Fallujah on Monday as a wave of bombings claimed by the Islamic State group in Baghdad and near the Iraqi capital killed at least 24 people. The advance is part of an offensive to rout militants from Fallujah and recapture the city west of Baghdad, which has been held by the Islamic State for over […]
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Africa Refuses to Go Green, Wants Fossil Fuels African countries face new hurdles in their quest to turn on the lights for about 621 million people as global financiers become increasingly reluctant to fund non-renewable energy projects. It is becoming increasingly difficult for African countries to obtain financing from both the public and private sectors, particularly for coal and fossil fuel projects — with international financial institutions compelling companies to protect the environment or lose financing. European and North American advocates are pushing multilateral development banks to stop supporting fossil fuel energy investments. For instance, recent research by the Africa Progress Panel, chaired by Kofi Annan, shows that the World Bank Group has adopted guidelines that only allow coal investment in “rare circumstances” while the US Overseas Private Investment Corporation, which supports companies investing in the developing countries, is effectively prohibited from investing in energy projects involving fossil fuels. Aid agencies such as Britain’s Department for International […]
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Militants blow up Shell, Agip pipelines in Nigeria Militants blew up strategic gas and crude pipelines belonging to Shell and Agip on Saturday in an increasingly fierce campaign that has chopped Nigeria’s oil production in half, militants and residents said. A new militant group, calling itself the Niger Delta Avengers, reported in social media that they had dynamited the trunkline linking the Dutch-British Shell company’s Bonny terminal and the Brass export terminal of the Italian company Agip. A local community leader Eke-Spiff Erempagamo confirmed the attack. Nigeria’s oil production had already fallen from a projected 2.2 million barrels a day to 1.4 million barrels before the latest attacks on the oil industry in southern Nigeria, including three within the past week on facilities of the U.S. oil major Chevron. Several companies have evacuated some of their workers. The Niger Delta Avengers has given the oil companies a May 31 deadline to leave Nigeria’s […]
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Lufthansa grounds flights to struggling Venezuela Lufthansa has cancelled the only flight between Germany and Venezuela, underlining the worsening conditions and growing isolation of the South American country. The German airline has flown from its Frankfurt hub to Venezuela’s capital Caracas three times a week. But in an email to Venezuelan customers on Saturday night European time, the company said it would cancel the route from June 17. Several other international carriers have halted or reduced their Venezuelan operations, including Air Canada, American Airlines and Alitalia, in large part because of the socialist government’s tight currency controls, which left them with billions in unpaid bills.
Near-empty tarmac at the airport serving Caracas is an increasingly common sight in a country ravaged by a social, political and economic crisis. The International Monetary Fund forecasts the economy will shrink 8 per cent this year, and 4.5 per cent in 2017. Inflation is galloping and is forecast to exceed 1,642 per cent next year. Lufthansa’s decision is the latest signal of the dire state of the Venezuelan economy, which was highlighted by food shortages and looting in parts of the country alongside power and water rationing. Lufthansa confirmed the decision reflected Venezuela’s economic condition. Demand on the route has fallen over the past few years as fewer business travellers visit the country.
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In Venezuela the stage is set for a chaotic exit Oh, that men should put an enemy in their mouths to steal away their brains. Nicolás Maduro’s stint as president of Venezuela has had Shakespearean overtones from the start. Ascending to power in 2013 he claimed to have conferred with the ghost of Hugo Chávez, insisting the cancer that killed his predecessor — whom he calls “father” — was a case of CIA murder most foul. Our revolutionary Hamlet is now a tropical Macbeth. Reviled by his subjects and increasingly isolated, he paces the presidential stage declaiming defiant soliloquies against offstage enemies.
While he plays dramatically for time, Venezuela is collapsing. The International Monetary Fund predicts an 8 per cent economic contraction for 2016; the inflation rate is the fastest in the world; electricity and running water are luxuries. Food and medicine are scarce. Anaemic oil prices and a heavy debt load leave scant foreign exchange for the import sector. Mr Maduro is loath to reverse unsustainable fiscal and monetary policies he inherited from his mentor or to accept help from outside. It grows harder to tell if he is merely clinging to power at any cost or actively scuttling his country. Having declared a state of emergency, Mr Maduro has been visiting island neighbours this week. Ostensibly seeking to raise cash, he will also be hoping to shore up friendly votes in case the Organization of American States tries to take action against his repression at home. While abroad he would do well to monitor property prices: given the billions of petrodollars that have disappeared during his time in office, and the worsening conditions suffered by his people, a Venezuelan retirement may not be an option.
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Suncor Starts to Bring Canadian Oil Sands Back Online Suncor Energy said it expects to restart its Canadian oil sands operations, such as work… Canada’s largest crude-oil producer said it expects initial production to commence by the end of this week, noting startup activities had begun at its base plant and its MacKay River facility. Suncor’s announcement is the latest sign that Canadian oil sands outages ?are slowly coming to an end. The global oil market was brought closer to balance in recent weeks by a series of temporary disruptions , including the one in the Canadian oil sands. Production was halted at Suncor?earlier this month as wildfires forced the evacuation of Fort McMurray, located some 270 miles?north of the provincial capital of Edmonton. None of Suncor’s facilities were damaged as a result of the fires, the company said. ? “Suncor has moved over 4,000 employees and contractors back into the region,” the company said in a release, […]
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The Crude Crash Has Created Oil’s Technological Superpowers Falling oil prices which started in late 2014 have highlighted an increased emphasis on the cost of producing oil, particularly from shale oil formations in the U.S. With 50 percent of U.S. oil production coming from U.S. shale, analysts initially estimated breakeven prices for shale oil operations to be at $75 per barrel, then lowering those estimates to $50 per barrel, and now, in some core regions, breakeven prices are as low as $30-$35 per barrel. The reason U.S. shale continues to see lower breakeven prices is because companies in the U.S. continue to innovate shale drilling techniques and technology. Similarly, Canadian shale drilling continues to improve alongside that of the U.S., and Canada has implemented similar technological progress towards the extraction and refining of oil from its oil sands. This continued U.S. improvement in oil and gas drilling, extraction, and refining technology provides for the hypothesis […]
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Chinese Company Makes a Splash in Texas Shale Crude Oil Pipeline Chinese conglomerate Yantai Xinchao has US$1 billion to blow and is looking to buy oil-producing assets in the Permian Basin as it moves aggressively to expand its Texas oil portfolio at a time of slumping oil prices and good deals. The company already has two oilfields in Texas, which it bought last year for US$1.3 billion from two local companies. According to the head of Xinchao’s U.S. subsidiary, Blue Whale Energy, the conglomerate is following an aggressive growth path, focusing on building a strong oil and gas portfolio in the U.S. But it’s not just seeking participation in oilfields. Xinchao wants to be the operator of the fields it will buy, which will give it the final word in matters such as drilling depth and exploitation intensity. Related: U.S. Oil Rig Count Declining Again After Single-Week Reprieve It’s no coincidence the Chinese company has focused exclusively […]
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The faux insurgency of the climate change deniers and the need for closure Climate change deniers like to style themselves as latter-day Copernicuses and Galileos , lone visionaries bucking the established wisdom of the ages embodied back then in the teachings of the Catholic Church. There is a certain appeal to imagining oneself as isolated and embattled but unbowed. The analogy, however, is specious on its face. For neither Copernicus nor Galileo had giant international oil and coal companies supporting them with tens of millions of dollars of annual public relations expenditures and scores of fake think tanks which would have provided them comfortable and profitable sinecures while shielding them from the attacks of the church. No, the climate change deniers actually work for the established church of our age, wealthy corporate interests opposed to doing anything to mitigate the ongoing carnage of climate change–the very interests that continue to have a stranglehold on the legislative bodies of the world to such […]
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