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Commodities Briefing - Category | Oil more

Oil industry investment plunges after commodity price tumble

Posted on 27 February 2015 by VRS  |  Email |Print

A sharp fall in oil prices has led to a decline in investment by the oil and gas industry, which statisticians believe reflects falling profitability in the sector. Investment in the oil and gas industry slumped in the final three months of last year, amid a dramatic collapse in the price of oil.
Business investment fell by £0.6bn in the final quarter of 2014, down 1.4pc on the previous three months, the Office for National Statistics (ONS) said. The unexpected drop marked a second quarterly fall in investment. The Bank of England had pencilled in growth of 2.5pc for the period………………………………………..Full Article: Source

OPEC mulls emergency meeting amid low oil prices

Posted on 27 February 2015 by VRS  |  Email |Print

Some OPEC members, concerned about the economic impact of low oil prices, say the cartel may have to call an emergency meeting sooner rather than later. But Saudi Arabia, the most influential member, is likely to veto such an idea.
Many OPEC members say the cartel may have to call an emergency meeting production and prices because of the damage the collapse of oil prices has been doing to their countries’ economies. But the prospects of such a gathering seem remote………………………………………..Full Article: Source

IEA Sees Oil-Demand Boost Balancing Market in Echo of Saudi View

Posted on 27 February 2015 by VRS  |  Email |Print

The oil market will rebalance in the next several months as a price collapse boosts consumption and curbs supplies, the International Energy Agency said, a day after Saudi Arabia’s oil minister told reporters demand is rising.
An oil price as low as $45 a barrel is unsustainable, Fatih Birol, the chief economist for the Paris-based adviser to 29 nations, said at a conference in London Thursday. Investment cuts in the U.S., Russia and Brazil will curtail output growth, bringing supply and demand back in line, he said………………………………………..Full Article: Source

Opec sees market stabilising, okay with current price of $60

Posted on 27 February 2015 by VRS  |  Email |Print

Oil prices have started to stabilise around current levels of $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf Opec delegate said. The comments indicate that the core Gulf members of the Organisation of the Petroleum Exporting Countries (Opec) are showing no sign of wavering in their strategy to focus on market share rather than cutting output, despite concerns from other members about falling oil revenue.
“Oil prices seem to stabilise around the current level … there are a lot of indications showing that demand is growing,” the senior Gulf Opec delegate said. “The market is stabilising as well as prices,” the delegate said, adding that $60 a barrel is “okay for now.”……………………………………….Full Article: Source

Regulator plays down impact of rules shake-up on gas traders

Posted on 27 February 2015 by VRS  |  Email |Print

Fewer than four natural gas traders hold positions big enough to breach broad new limits on speculation in the US, a regulator said in comments that played down the impact of a controversial rule proposal.
The disclosure came as the US Commodity Futures Trading Commission held its latest meeting to ponder its proposed “position limits” rule for commodities that would cap the number of futures contracts held by any single trader………………………………………..Full Article: Source

Why Oil Will Fall To $40 As Obama Looks The Other Way

Posted on 26 February 2015 by VRS  |  Email |Print

On August 20, 2014 I warned Forbes.com readers that oil prices were going to drop a lot. (See article; the price of WTI was $104/barrel at the time). I’ve rarely felt more conspicuous about a prediction and I’m in the business of making predictions. Now what? Prices have collapsed–or I should say: the bubble has popped. What happens next?
First, prices are firming up while news of marginal production cuts invite buyers. In the long run, prices will reflect the advent of new supplies of cheap oil coming from two very important sources in the Western Hemisphere. Mexico’s Pemex reforms could lead to a one million barrel per day production increase while President Obama’s restrictive energy policies are about to be reversed………………………………………..Full Article: Source

Nigeria Proposes Cutting Oil Price Benchmark to $52 a Barrel

Posted on 26 February 2015 by VRS  |  Email |Print

Nigeria’s Senate and executive proposed cutting this year’s budgeted oil price benchmark to $52 per barrel from $65 suggested in December, as falling prices erode the income of Africa’s biggest crude producer.
Nigeria’s finance ministry said an agreement had been made with the Senate and most members of the House of Representatives, though the lower chamber has yet to approve. “The proposal is $52 a barrel for 2015 due largely to decline in crude oil prices,” Enyinnaya Abaribe, chairman of the Senate Committee on Information and Media, said……………………………………….Full Article: Source

Oil Price Crash: Top 5 At-Risk Countries

Posted on 26 February 2015 by VRS  |  Email |Print

Since June 2014, global oil prices have dropped by more than 50%. The drop could strongly affect the economic and political stability of these five oil exporting countries. Oil prices make winners and losers. In general, oil importers will gain from low prices, while most oil exporters will suffer. Still, there are differences. While the United States, Norway, and the Gulf States can protect themselves with diversified economies and high hard currency reserves, the oil shock could bring some countries to the verge of economic default and political crisis.
Venezuela entered the period of low oil prices with an already frail economy ruined by the more than a decade-long socialist regime of Hugo Chavez and his successor Nicolas Maduro. The oil price slump significantly worsened the country’s already failing economy………………………………………..Full Article: Source

Oil Demand Seen as Growing

Posted on 26 February 2015 by VRS  |  Email |Print

Demand for crude oil is growing, Saudi Arabia’s top oil official said Wednesday, amid new data showing the world is getting hungry again for petroleum products and potentially bolstering OPEC’s decision to maintain production in the face of a price collapse.
Saudi Arabia Oil Minister Ali al-Naimi used his first public comments since December to note that the oil market had become “calm” and chided anyone who would “rock the markets.” “Why do you want to rock the markets? The markets are calm…Demand is growing,” Mr. Naimi told reporters on the sidelines of a conference in Jazan, a coastal city in Saudi Arabi’s southwest………………………………………..Full Article: Source

The end of OPEC

Posted on 26 February 2015 by VRS  |  Email |Print

At first, people thought that OPEC was purposefully keeping prices low (by not reducing supply) in order to smother the emerging shale industry in the crib. With low oil prices, less investment would flow to alternatives to conventional oil, which can be expensive. But, as Bloomberg reports, that might not be the answer. The answer increasingly seems to be that OPEC isn’t raising prices because it can’t raise prices.
The cartel isn’t holding. The smaller OPEC members don’t want to shrink output — which would have to happen to raise prices — because their economies are too unstable and they can’t afford it. Even Saudi Arabia, the most important OPEC member, is in favor of staying the course………………………………………..Full Article: Source

Why a small dip in the oil price matters an awful lot

Posted on 25 February 2015 by VRS  |  Email |Print

After a mini rally, oil prices are falling again. From $62 a barrel 10 days ago, Brent crude has slipped to $58.43 on Tuesday. It may not seem like much of a cut after the collapse in world oil prices that sent Brent tumbling from $115 to $45 a barrel between last June and January, but it is still significant.
The reason this turn in the price of oil matters can be seen in every corner of the world economy: when fear of a new cold war or a eurozone break-up hangs over every corporate and government decision, cheap energy lightens the load………………………………………..Full Article: Source

Is there a Logical Oil Price?

Posted on 25 February 2015 by VRS  |  Email |Print

If you have been following the price of oil over the last few months, the chances are you are a little confused. On the one hand, you have the likes of A. Gary Shilling who, in this Bloomberg article, loudly trumpets the prospect of oil at $10/Barrel, and on the other, there is T. Boone Pickens, who, at the end of last year was predicting a return to $100 within 12-18 months.
Pickens prediction has moderated somewhat as WTI and Brent crude have continued to fall, but in January he was still saying that oil would return to $70 or $80/barrel in the near future. So, who is correct? ……………………………………….Full Article: Source

Oil back below $50 as OPEC hopes fade

Posted on 25 February 2015 by VRS  |  Email |Print

Any hopes of a sustained rally in the price of oil disappeared Tuesday morning as doubts were raised over an anticipated cut in production from the Organization of the Petroleum Exporting Countries (OPEC). The oil cartel is not due to meet until June this year but a report by the Financial Times - with comments by Diezani Alison-Madueke, the Nigerian oil minister - suggested that an emergency meeting was due in the near term.
This raised hopes that OPEC could cut production, something it had refused to do back at its last meeting in November 2014. An anonymous delegate from the group denied these claims, telling Bloomberg overnight there was no emergency meeting planned. Brent crude futures dropped to 58.56 a barrel by 8:00 a.m………………………………………..Full Article: Source

Are low oil prices here to stay?

Posted on 24 February 2015 by VRS  |  Email |Print

Predicting the oil price is a bit of a mug’s game. There are simply too many variables involved to make any kind of meaningful, definitive forecast. What we do know is that, despite a recent upturn, the price of oil has slumped almost 50% since last summer following the longest-running decline for 20 years.
And we know why - US shale oil, and to a lesser extent Libyan oil returning to the market, has pushed up supply while a slowdown in the Chinese and EU economies has reduced demand. Add to the mix a strong US dollar making oil more expensive in real terms, pushing demand even lower, and you have a recipe for a plummeting oil price………………………………………..Full Article: Source

Oil price turbulence: will it climb to $100 or drop to $10?

Posted on 24 February 2015 by VRS  |  Email |Print

The oil price fell again today after a week of small gains and losses in which a barrel of Brent crude hovered around the $60 mark. A strengthening dollar and concerns about long-term oversupply offset reduced output due to freezing weather and industrial action in the US, Reuters reports.
But the oil price remains at little more than half its peak in June last year, and some analysts predict it may yet fall far lower. Others claim the price has now bottomed out. Last week, Bloomberg’s A. Gary Shilling predicted the possibility of oil at $10 per barrel – a far cry from the predictions of T. Boone Pickens, who towards the end of last year anticipated a return to an oil price of $100 within 12 to 18 months………………………………………..Full Article: Source

OPEC Said Not to Plan Emergency Meeting Amid Falling Oil Prices

Posted on 24 February 2015 by VRS  |  Email |Print

The Organization of Petroleum Exporting Countries has no plans to hold an emergency meeting amid falling oil prices, according to a delegate from the group. Crude prices have dropped almost 50 percent from a June peak as OPEC refused to cut production and U.S. output reached a three-decade high.
There have been no concrete discussions about holding an emergency meeting, said the delegate, who asked not to be identified because the group’s talks are private. OPEC’s next regular meeting is on June 5. Brent futures dropped $1.32 to $58.90 on the London-based ICE Futures Europe exchange………………………………………..Full Article: Source

Oil continues to fall, and Opec isn’t helping

Posted on 24 February 2015 by VRS  |  Email |Print

It was another down day in the oil market: Crude prices fell more than 2 per cent on Monday, with WTI finishing Feb. 23 below US$50 a barrel for the first time in almost two weeks. For a moment, things looked like they might go the other way. Opec President Diezani Alison-Madueke said in a Financial Times report on Monday that she would call an emergency meeting of the Organization of Petroleum Exporting Countries if prices continue to fall. Oil prices reacted sharply to the news-until they fell again.
In addition to being Opec president, Alison-Madueke serves as Nigeria’s oil minister, and cheap oil has helped sow crisis in Nigeria. The Nigerian currency, the naira, is at all- time lows against the US dollar, terrorist attacks by the Islamist group Boko Haram have worsened, and national elections were recently postponed more than a month………………………………………..Full Article: Source

Oil’s Plunge Could Help Send Its Price Back Up

Posted on 23 February 2015 by VRS  |  Email |Print

If something is cheaper, people will likely buy more of it. That core principle of economics is proving to be especially true with oil after its recent plunge. Over the past six months, 53% of vehicle purchases in the U.S. were light trucks or sport-utility vehicles, which tend to consume more gas than cars, according to Commerce Department data.
That was the highest share in a decade and up from 51% last June, when oil prices peaked for the year. The Transportation Department estimates Americans drove more than three trillion miles in the 12 months through November, the most since mid-2008 and the biggest annual increase—38 billion miles—in a decade………………………………………..Full Article: Source

With OPEC Taking Away the Punch Bowl, U.S. Oil Companies Are Sobering Up

Posted on 23 February 2015 by VRS  |  Email |Print

America’s energy industry hadn’t been having this much fun since Ronald Reagan was in the White House. With the price of oil intoxicatingly high over the past few years, oil companies have been using it to fuel one of the greatest oil production booms in the country’s history. In just a few short years, we’ve wiped out decades of declines and are now producing more oil than we have since the 1980s.
There’s just one problem, and that’s the fact that the world didn’t yet need all of the oil we’re now producing. But, few could see that, because everyone was a bit too tipsy on the intoxicating allure of the profits that could be made from triple-digit oil prices. It’s a price no one expected to see go away, as the group with the most control over the price of oil, OPEC, was enjoying the $100 vintage just as much as the next guy………………………………………..Full Article: Source

Oil giant BP predicts Opec comeback as Brent crude price rises

Posted on 23 February 2015 by VRS  |  Email |Print

Saudi Arabia and its fellow Opec members are set to make a massive comeback and regain control of the world’s crude oil market, and could be in their previous position of influence as early as next year. The prediction, published by oil giant BP, is based on growth in America’s production of shale gas slowing down.
The US shale boom is partly behind a collapse in global oil prices over the past six months. BP believes the Organisation of Petroleum Exporting Countries (Opec) will be back on top within the next 15 years. The firm stated that Opec will regain its traditional 40 per cent market share by the end of 2035………………………………………..Full Article: Source

Global crude oil prices - changing market dynamics

Posted on 23 February 2015 by VRS  |  Email |Print

For much of the last six years since the financial crisis in 2008 global oil prices recovered swiftly and have remained high in a range of $100 per barrel since 2010. The soaring oil prices during this period were being supported by steady economic recovery following the crisis, increasing consumption in rapidly growing countries like China and conflicts in key oil nations like Iraq and Libya.
Thus, in the midst of growing demand, oil prices spiked. But then very soon and unexpectedly, WTI crude that peaked at around $106 per barrel in June last year had fallen more than 50 per cent to under $50 per barrel by January this year. Simply put, the reasons for this change are two-fold — surging US production coupled with weakening demand in many countries due to insipid economic growth………………………………………..Full Article: Source

Oil Prices Hit The Snooze Button For The Next Year Or Two

Posted on 20 February 2015 by VRS  |  Email |Print

Oil bulls and bears need to stop talking their books and get real. Crude isn’t going back above $100 a barrel – at least not anytime soon. Nor is it falling to $20. How can I be so sure? A confluence of political, economic, and, most importantly, technological changes are having a major impact on the way we produce and consume oil, making it both cheaper and more abundant.
Barring some major international conflict, oil prices will most likely be range bound for quite a while, with a floor of somewhere around $40 a barrel (where we have seen massive rig count and CAPEX reductions) and a top around $80 a barrel, above which production really ramps up………………………………………..Full Article: Source

Oil’s Volatility Reflects Debate: Is Worst Over Yet?

Posted on 20 February 2015 by VRS  |  Email |Print

New evidence of surging U.S. oil supplies sent prices on a roller-coaster ride Thursday, reflecting the growing divide among traders over whether an eight-month rout is over. The U.S. Energy Information Administration said oil inventories grew by 7.7 million barrels in the week ended Feb. 13. Analysts said swelling stockpiles are a sign that producers aren’t cutting back on output despite a more than 50% collapse in prices since last summer.
In its report, the EIA said U.S. oil production was on track to reach a 42-year high this month. But traders in the futures market had been bracing for much worse, and many took the data as a cue to buy. On Wednesday, an industry group had estimated a jump of 14.3 million barrels for last week, which would have been a record had it been borne out in the government data……………………………………….Full Article: Source

Oil prices fall again as inventories build

Posted on 20 February 2015 by VRS  |  Email |Print

Oil prices fell for a second day on Thursday, after the U.S. government reported another record high in crude inventories, but prices bounced sharply off session lows on relief the builds were less than an industry group had estimated.
Prices also retraced losses as investors covered more short positions in U.S. crude futures a day ahead of the expiry of the front-month contract. U.S. commercial crude oil inventories rose 7.7 million barrels last week to a record 425.6 million barrels, , the U.S. Energy Information Administration (EIA) said. It was the sixth straight week levels were at a seasonal record peak………………………………………..Full Article: Source

Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth

Posted on 20 February 2015 by VRS  |  Email |Print

Saudi Arabia’s refusal late last year to rein in oil production helped trigger the price crash that has hurt oil-producing countries and publicly listed energy companies alike. And now even the kingdom’s own oil company is feeling the pain.
As a result, state-owned Saudi Aramco is looking for ways to cut costs everywhere, from pushing contractors for better deals on oil-well services to negotiating discounts on its phone and power bills, according to people familiar with the matter………………………………………..Full Article: Source

The oil price: The Saudi project, part two

Posted on 19 February 2015 by VRS  |  Email |Print

Stage one of Saudi Arabia’s plan—or perhaps hope—to restructure the oil market is taking longer than expected. By refusing to rein in production while prices fell, the Saudis permitted a big surplus to grow and served notice on higher-cost rivals (Russia, Venezuela, American shale-oil producers) that they would not prop up other people’s profit margins at the expense of their own market share.
That signal has been weakened by the growing amount of oil in storage, which is absorbing most of the glut. World oil stocks rose about 265m barrels last year and Société Générale, a French bank, reckons they will increase by a further 1.6-1.8m barrels a day (b/d) in the first six months of this year, adding roughly 300m barrels to the total. At the moment, global oil output is exceeding demand by about 2m b/d, so the build-up of stocks is enough to take most of the glut off the market……………………………………….Full Article: Source

Oil tumbles as huge supplies raise doubts about rally

Posted on 19 February 2015 by VRS  |  Email |Print

The comeback rally in oil paused on Wednesday, with crude prices falling 5 percent or more after traders and investors were overwhelmed by the latest estimates for U.S. supply builds that came in nearly five times above market expectations.
Benchmark Brent oil fell below the psychological $60 support and U.S. crude traded not far above $50 after industry group American Petroleum Institute estimated a supply build of more than 14 million barrels last week. A Reuters poll had expected a growth of just about 3 million barrels for the week to Feb. 13………………………………………..Full Article: Source

OPEC is going to make a massive comeback, BP predicts

Posted on 19 February 2015 by VRS  |  Email |Print

One of the big stories of the past few years has been the boom in unconventional gas and oil extraction outside the traditional oil-producing countries. The explosion of fracking in the U.S. seemed as if it was dislodging the old oil-producing countries permanently.
But that is not likely, according to BP’s latest 20-year outlook for the energy market. BP says the Organisation of Petroleum Exporting Countries (OPEC) isn’t going anywhere, and it will actually make a comeback. BP is forecasting “OPEC’s market share by the end of the Outlook is around 40%, similar to its average of the past 20 years.”……………………………………….Full Article: Source

Oil price ‘could fall to $10 per barrel’

Posted on 19 February 2015 by VRS  |  Email |Print

Oversupply, the failure of Opec and diminishing demand will push oil price down again, Bloomberg says. The plunging global oil price has gone into reverse in the past two weeks, prompting some traders to suggest that the oil market had reached a bottom. But according to new analysis by Bloomberg, oil prices could fall sharply again and could even reach $10 per barrel.
In his report, A. Gary Shilling argues that a combination of factors will push the oil price down again. The first is the diminishing power of the Opec cartel. In Shilling’s view, Saudi Arabia has experienced market-share losses in the past, due to the “cheating” of fellow cartel members, who have exceeded their agreed output quotes………………………………………..Full Article: Source

The price of oil is not a reflection of demand and supply

Posted on 19 February 2015 by VRS  |  Email |Print

“People today are worried about the plunging price of oil, which however is not a reflection of demand and supply alone”, says Dr. R. Seetharaman, Group CEO, Doha Bank. In the last six months, we have seen oil prices come down by 50 per cent – this does not mean that supply has increased by 50 per cent, or that demand has reduced by 50 per cent.
Yes, there indeed is excess supply, but what really has changed is the currency. The Dollar Index, for instance, has moved from 79 to above 94, and has also contributed to fall in prices in the commodity market. When the Dollar is weak, people hedge their risks by buying commodity futures, and when the Dollar is strong they unwind their positions………………………………………..Full Article: Source

All Commodities Rise With Rising Oil

Posted on 19 February 2015 by VRS  |  Email |Print

What happens to other commodities when oil prices spike? On one hand, if oil rises so much that an economic slowdown overpowers the tax-break effect, then commodities might fall. However, oil is a main input to produce many other commodities, so the prices of goods can rise when oil prices increase.
The latter scenario is more likely, given the historical relationship of energy to inflation and to other commodities. One of the hallmarks of diversification in commodities is how lowly correlated they are to each other from the individual supply-and-demand models. Notice that the highest correlation between any two sectors in the chart below is 0.27………………………………………..Full Article: Source

Betting on Oil

Posted on 19 February 2015 by VRS  |  Email |Print

For better or for worse, exchange-traded products have made commodities markets more accessible to investors. The collapse in oil prices in the back half of 2014 has prompted some bargain-hunters to take their chances bottom-fishing the volatile commodity. In just the past four months, exchange-traded products offering exposure to energy markets via futures contracts have attracted about $3.5 billion in asset flows.
That figure represents a remarkable 80% of the $4.3 billion in total assets invested in the category as of the end of January. There are currently 20 ETPs in the category, which is dominated by United States Oil ETF (USO), which serves as a crude, but investable, proxy for the price of oil………………………………………..Full Article: Source

Commodities explained: Oil data watch

Posted on 18 February 2015 by VRS  |  Email |Print

Concerns about a growing oil supply surplus last year prompted Saudi Arabia, the world’s largest exporter, in November to persuade fellow Opec members that cutting production to support oil prices was not in their interest. The Kingdom said a period of lower prices would shave off some US shale production and other high-cost output and protect Saudi Arabia’s (and in theory the cartel’s) market share.
With the oil market focused on the impact of the plunge in oil prices on supply as well as demand, traders are on tenterhooks. Some are even grumbling that they have to hang around on Fridays for the weekly US rig count announcement — a data point that could provide hints about where oil output is heading particularly in a volatile oil market. But what else is on the list of potentially market moving data?……………………………………….Full Article: Source

Get ready for $10 oil, says A. Gary Shilling

Posted on 18 February 2015 by VRS  |  Email |Print

At about US$50 a barrel, crude oil prices are down by more than half from their June 2014 peak of US$107. They may fall more, perhaps even as low as US$10 to US$20. Here’s why. U.S. economic growth has averaged 2.3% a year since the recovery started in mid-2009. That’s about half the rate you might expect in a rebound from the deepest recession since the 1930s.
Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline………………………………………..Full Article: Source

What the oil price crash means for investors

Posted on 18 February 2015 by VRS  |  Email |Print

Why has the oil price crashed? The oil price has nearly halved over the last eight months. The cost of a barrel of Brent crude, the most common measure of oil, hit $115 last June but stands at just $62 today. Price falls this dramatic are down to one of two things: a drying-up of demand or a glut of supply.
Experts side with the latter. Figures for oil demand can paint a confusing picture. The International Monetary Fund (IMF) has estimated that between 35% and 40% of the fall in the oil price in the second half of 2014 can be accounted for by a decline in demand. However, monthly data from the US Energy Information Association shows global oil demand rising at a steady pace up to December………………………………………..Full Article: Source

Oil prices to recover partially from record low: IEA

Posted on 18 February 2015 by VRS  |  Email |Print

Global oil prices are expected to recover only partially from their current $50-$60 a barrel range, the International Energy Agency (IEA) says in its five-year forecast. The agency said on Tuesday that crude prices will continue to remain well below the level of more than $100, last seen in June 2014.
“The global oil market looks set to begin a new chapter of its history, with markedly changing demand dynamics, sweeping shifts in crude trade and product supply, and dramatically different roles for Organization of the Petroleum Exporting Countries, OPEC, and non-OPEC producers in regulating upstream supply,” the report said………………………………………..Full Article: Source

Oil prices rise to $62, reach close to 2015 high

Posted on 18 February 2015 by VRS  |  Email |Print

Oil rose to $62 a barrel on Tuesday, close to its 2015 high, supported by threats to Middle East supplies and expectations lower prices may prompt a slowdown in US output. Egypt on Monday bombed Islamic State targets in Libya, where violence has reined in most oil output, and Iraq’s semi-autonomous Kurdistan Regional Government threatened to withhold oil exports if Baghdad failed to send its share of the budget.
“The oil price is finding additional support from renewed greater perception of the risks to supply,” said Carsten Fritsch, analyst at Commerzbank. “In the short term, the momentum suggests that prices will climb further.” Brent crude rose 60 cents to $62.00 a barrel by 1101 GMT. It reached a 2015 high of $62.57 on Monday. US crude was 43 cents higher at $53.21 a barrel……………………………………….Full Article: Source

BP’s 2035 outlook sees OPEC oil gaining ground as U.S. shale slows

Posted on 18 February 2015 by VRS  |  Email |Print

OPEC will regain ground and exceed its historic record production levels by 2030 as U.S. shale oil growth flattens out in the coming years, energy company BP said on Tuesday. In the near term, demand for oil from the Organization of the Petroleum Exporting Countries (OPEC) is likely to remain under pressure as U.S. shale oil production remains strong, BP said in its annual benchmark Energy Outlook 2035.
Production of tight or shale oil in the United States has been the main driver in supply growth that prompted the near halving of oil prices since July as OPEC opted not to cut its own production………………………………………..Full Article: Source

More oil project delays to return price to $110 – Rosneft CEO

Posted on 17 February 2015 by VRS  |  Email |Print

The key market indicators show the oil prices could soon rebound to about $80 a barrel, Rosneft CEO Igor Sechin said, adding that the price may even bounce back to $110 a barrel if more projects are shelved. “Look at the market fundamentals and it seems prices should soon rebound to the $60 or $80 a barrel levels that would make it worth building the wells that the world needs,” Sechin wrote in an article for the FT.
However, if markets are distorted, and the recovery takes longer than expected, many projects will be scrapped, and with demand returning, the price could rise to $90-110 a barrel or even higher. Many experts compare the current oil crisis to the one of the mid-80’s when the oil price fell more than 70 percent and remained at low levels for more than a decade………………………………………..Full Article: Source

How Will the Global Oil Price Slump Impact the US Economy?

Posted on 17 February 2015 by VRS  |  Email |Print

With the unexpected shock of the global crude oil price collapse enveloping the second half of 2014, with few signs of letup, its effect on the 2015 U.S. economy is starting to take a long-term downside position. Although most media economic analysts dwell on the benefits to America’s predominant consumer sector, a rational analysis of the pluses and minuses of this dramatic price reversal paint a mixed picture.
In order to make a fair and balanced assessment of the sudden drop of both worldwide Brent crude, and U.S.-based West Texas Intermediate, starting in mid-year 2014, there’s little question that the American consumer, as well as many businesses focusing on that sector, come out as clear winners. This is true not only of the unprecedented price drop “at the pump,” but in the many-faceted consumer expenditures for heating and air conditioning, in addition to the other myriad consumer users impacted by this price plunge………………………………………..Full Article: Source

Oil traders celebrate market rout

Posted on 17 February 2015 by VRS  |  Email |Print

For some the lavish party thrown by Socar, the state oil company of Azerbaijan, during International Petroleum Week, was a chance to drown their sorrows and forget about the market. But for others enjoying the hospitality at the Grosvenor House Hotel on London’s Park Lane there were reasons to celebrate.
After several years of flat markets, falling profits and declining margins, oil traders are enjoying the most favourable trading conditions they have seen since the global financial crisis in 2008. For the big players such as Glencore, Gunvor, Mercuria, Trafigura and Vitol, which source, store and transport crude oil and related products, the market rout may be a boon………………………………………..Full Article: Source

Did OPEC engineer the oil crisis?

Posted on 17 February 2015 by VRS  |  Email |Print

Richard Fischer, President, Dallas Federal Reserve, on February 11 said that OPEC engineered the drop in oil prices to put US oil producers out of business. However, Fisher is not the only one calling out OPEC for taking aim at US shale. Dan K. Eberhart, CEO of Canary LLC, picked up on this proactive action months ago.
During an interview on CNBC in early December last year, Eberhart said, “what’s shaping up is a battle royale between the US shale producers and OPEC. It’s a case of who’s going to blink first. I think OPEC, by deciding not to change their production quota, is betting on the US.”Eberhart explained that OPEC is applying downward pressure on oil prices by significantly contributing to excess oil supplies during a period of lessened demand………………………………………..Full Article: Source

Global oil demand estimated to have grown in 2014: OPEC

Posted on 16 February 2015 by VRS  |  Email |Print

Global oil demand is estimated to have grown by 0.95 million barrels per day (mb/d) in 2014, representing an upward revision of 20 thousand barrels per day (tb/d) from the previous month, according to OPEC Monthly Oil Market Report (MOMR).
According to a report by UAE’s official news agency Wam, quoting OPEC MOMR, the adjustment mainly reflects better-than-expected oil demand data from OECD America and China. In 2015, world oil demand is anticipated to rise by 1.15 mb/d, following an upward revision of 30 tb/d due to expectations of higher oil requirements in OECD America and Other Asia, the MOMR said……………………………………….Full Article: Source

Could Oil Still Drop To $20?

Posted on 16 February 2015 by VRS  |  Email |Print

Last week analysts at Citigroup slashed their forecast for crude oil to $20 a barrel before prices begin to recover. They see prices dropping to that point by the end of the first quarter or the beginning of the second quarter. The forecast is based on two points: the amount of crude oil in storage and the end of OPEC’s role as the so-called swing supplier.
WTI crude oil for March delivery closed at around $44 a barrel on January 29th and at $52.65 this past Friday, about where it traded before Citi’s forecast was published. Crude dipped to around $49 last Wednesday before climbing back up on Thursday and Friday………………………………………..Full Article: Source

Economist expects oil price rising in second half

Posted on 16 February 2015 by VRS  |  Email |Print

Oil prices are likely to increase in the second half of 2015 due to lesser investments in shale projects, says a senior economist. “Additional supplies of oil in the market will be gradually removed, which will contribute to higher oil prices in the second half of this year,” Said A. Al-Shaikh, group chief economist at the National Commercial Bank (NCB), said.
He was speaking on the sidelines of a press conference in Jeddah where Dun & Bradstreet South Asia Middle East Ltd. (D&B) in association with the NCB released the D&B Business Optimism Index (BOI) survey for Saudi Arabia for Q1, 2015. The BOI survey highlights mixed trends in the optimism levels of both the hydrocarbon and non-hydrocarbon sectors in Saudi Arabia………………………………………..Full Article: Source

Three important questions for the oil market

Posted on 16 February 2015 by VRS  |  Email |Print

The oil market is in a state of flux, says former Bank of England economist Spencer Dale. Is it now on the road to recovery? The oil market is in a state of flux. Prices have fallen by over 50pc since last summer. The Organisation of the Petroleum Exporting Countries (Opec) seems to have forgotten its lines. There are howls of pain from large and small oil producers alike.
Against such a backdrop, it is tempting to focus on the here and now. Although prices may be down for some years, the world’s demand for energy is likely to increase by almost 40pc over the next 20 years or so, driven by growth in developing economies………………………………………..Full Article: Source

Higher Oil Forecasts Suggest OPEC Tactics Are Paying Off

Posted on 16 February 2015 by VRS  |  Email |Print

The world’s three big energy agencies are forecasting higher demand for OPEC’s crude oil this year, a sign the producing nations’ strategy to let prices fall is starting to win them back market share from rivals who are cutting output. After an oversupply of world oil sent prices tumbling in 2014, top OPEC exporter Saudi Arabia urged fellow members not to prop up the market and to try to knock out competing sources like U.S. shale, which, because it has higher production costs, had to cut output when prices fell.
In reports this week, The International Energy Agency and the Organization of the Petroleum Exporting Countries have raised by at least 200,000 barrels per day (bpd) their estimates of demand for OPEC crude in 2015, while the U.S. government’s Energy Information Administration forecasts OPEC will pump 140,000 bpd more………………………………………..Full Article: Source

Here’s how a $50 drop in oil prices affects every country in the world

Posted on 13 February 2015 by VRS  |  Email |Print

The oil crash has impacted oil importers and exporters differently. The 50% plunge in oil prices will be a roughly $1.7 trillion gain for consumers in oil importing nations, according to BlackRock. But exporters will suffer, especially countries that are counting on revenues from higher oil prices to balance their budgets.
“Winners in this climate should be global consumers, oil importers such as India and Japan, and the transport and retailing industries,” BlackRock’s Jean Boivin wrote in a research report. “Oil-exporting nations and companies with limited cash buffers and poor access to debt markets (think Venezuela or over-leveraged U.S. shale plays) look to be the biggest losers.”……………………………………….Full Article: Source

Private equity and energy: Refilling the pipeline

Posted on 13 February 2015 by VRS  |  Email |Print

Oil’s plunge may have helped consumers, but it has hurt big private-equity firms. Earlier this month Apollo Global Management announced that profits were down by 79% year on year in the three months to December 31st. This week KKR and the Carlyle Group said they were smarting too, with KKR’s profits down by 94% and Carlyle’s by 68%. Energy-related assets, whose valuations have fallen with the oil price, are largely to blame.
Spurred on by the shale boom in America, private-equity funds have invested heavily in the energy sector. More money was raised for energy buy-outs in America in 2014, and more deals were made, than ever before, according to Preqin, a data provider………………………………………..Full Article: Source

Iraq minister predicts oil price recovery

Posted on 13 February 2015 by VRS  |  Email |Print

An eight-month slump in the oil market has reached a bottom and prices will recover, Iraq’s oil minister predicted Tuesday. Oil prices have slumped more than 50% since June amid a surge in oil supply led by U.S. shale oil production and sluggish demand.
Iraq and other members of the Organization of the Petroleum Exporting Countries have taken a hands-off approach to the selloff, opting to defend market share rather than cut production to bolster prices as the group had done in the past………………………………………..Full Article: Source

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