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Commodities Briefing - Category | Oil more

End of Commodities Supercycle? (Energy Subset)

Posted on 28 July 2015 by VRS  |  Email |Print

About a decade ago, Goldman Sachs’ Arjun Murti suggested an oil “superspike” might send prices to $105 a barrel. There were two primary reactions to this analysis, first, that Goldman was just marketing its commodity indices, and second, that he/they were crazy. The former view probably continues to be held by some, the latter, not so much.
Murti’s later prediction that oil might hit $200 didn’t prove out, but the $105/barrel prognostication certainly held up. What many overlooked at the time of the initial $105/barrel prediction was that it reflected an estimate of how prices might respond to an oil supply disruption. As such, it was much more reasonable than the predictions of peak oilers like Matthew Simmons or T. Boone Pickens, who thought prices were on a permanent upwards trend because of geological scarcity………………………………………..Full Article: Source

Oil Prices Fall to Four-Month Low Amid Chinese Stocks Rout

Posted on 28 July 2015 by VRS  |  Email |Print

Oil prices fell to a four-month low Monday on concerns about a selloff in Chinese stock markets and increased oil drilling in the U.S. U.S. oil prices have slumped 20% this month as the global glut of oil shows no signs of abating.
Production remains near multidecade highs in the U.S., Saudi Arabia and elsewhere, and analysts say demand could decline in the second half of the year after the busy summer-driving season ends. Light, sweet crude for September delivery settled down 75 cents, or 1.6%, at $47.39 a barrel on the New York Mercantile Exchange, the lowest settlement since March 20………………………………………..Full Article: Source

As Oil Prices Slide Investors Prepare To Buy

Posted on 28 July 2015 by VRS  |  Email |Print

Unless you’ve been living in a cave for the past year, you know that the price of crude oil has plummeted. At under $50 per barrel (WTI Crude), gas prices are lower, it’s cheaper to transport goods, and there are a host of other benefits. However, lower oil has also created a few problems. In this article, we’ll explore some of each and discuss a great investment opportunity emerging as a result.
Oil, fossil fuel, crude, whatever moniker you prefer, is highly ingrained in the fabric of our society. Until such time as a less expensive, more efficient, and abundant energy source is identified, oil should continue its dominance………………………………………..Full Article: Source

Which is more likely, $33 or $75 oil?

Posted on 28 July 2015 by VRS  |  Email |Print

At a time when stocks are hitting highs, oil prices have been cut in half. Relative to past prices, it is tempting to call oil “cheap” and buy it. Indeed, there are many bullish calls by analysts to do just that. I receive a very large number of emails, and investors are showing a high interest in buying oil ETFs here for the long-term. Let us first try to answer a very simple question, “Will oil go to $33 to $75?”
Based on oil’s current trading pattern, from a medium- to long-term perspective, traditional technical indicators in the categories of momentum, trend, volatility and volume are not only useless, but they are also likely to mislead investors into making wrong decisions………………………………………..Full Article: Source

Hedge funds are most bearish on U.S. oil since 2010: Kemp

Posted on 28 July 2015 by VRS  |  Email |Print

Hedge funds are more bearish about the outlook for U.S. oil prices than at any time for almost five years, according to data from the U.S. Commodity Futures Trading Commission. Hedge funds and other money managers had a net long position in WTI-linked futures and options equivalent to just 118 million barrels of oil on July 21, down from a recent high of 294 million barrels 11 weeks earlier.
The net position was the smallest since September 2010. Money managers interested in oil have a long bias (there has been no net short since the current time series began in 2006). So the small net long indicates an unusually high level of bearishness among hedge funds………………………………………..Full Article: Source

Oil Bulls Flee at Fastest Pace in Three Years as Glut Expands

Posted on 27 July 2015 by VRS  |  Email |Print

Speculators’ conviction that oil will rally weakened at the fastest pace in three years, just before futures tumbled into a bear market. The net-long position in West Texas Intermediate contracted 28 percent in the seven days ended July 21, U.S. Commodity Futures Trading Commission data show. Long positions dropped to a two-year low while short holdings climbed 25 percent.
Oil traded in New York fell more than 20 percent from its June high, meeting the common definition of a bear market. U.S. output has held near a four-decade high while the largest OPEC members pump at record rates, keeping the market oversupplied. The drop was part of a broader retreat in commodity prices to a 13-year low, driven by concern that slower economic growth in China and a stronger dollar will hurt demand………………………………………..Full Article: Source

Oil groups have shelved $200bn in new projects as low prices bite

Posted on 27 July 2015 by VRS  |  Email |Print

The world’s big energy groups have shelved $200bn of spending on new projects in an urgent round of cost-cutting aimed at protecting investors’ dividends as the oil price slumps for a second time this year.
The sell-off in oil has been matched by a broader slump in copper, gold and other raw materials, pushing the Bloomberg commodities index to a six-year low over concerns of weaker Chinese growth and rising supplies across the board………………………………………..Full Article: Source

Oil Heading for Fall as Diesel’s Engine Sputters

Posted on 27 July 2015 by VRS  |  Email |Print

If you want to understand why oil is back below $50 a barrel and likely headed much lower once summer ends, start with PetroChina’s stock prices. Mainland-listed shares in China’s national oil champion are up 27% so far this year, while their Hong Kong-listed equivalents are down 9%.
The former have, of course, been juiced by Beijing’s desperate measures to prop up the mainland stock market. The latter are more reflective of what is really happening with oil supply and demand. China is showing signs of strain. While official gross-domestic-product data continue to helpfully meet Beijing’s targets, other numbers—and the stock-market panic— point downward………………………………………..Full Article: Source

Moody’s Says Low Oil Price Here to Stay as Russia Bleeds Capital

Posted on 24 July 2015 by VRS  |  Email |Print

Low oil prices are just the tip of what ails Russia, according to Moody’s Investors Service. With its dependence on commodities and a slump in investment, Russia will have a hard time recovering from its record economic slump as global oil prices are bound to remain lower for a long time, Yves Lemay, managing director in the sovereign risk group at Moody’s in London, said in an interview on Wednesday.
As much as a quarter of Russia’s gross domestic product and two-thirds of its exports are linked to the energy industry, according to the rating company. “Our assessment is that low oil prices are here to stay,” Lemay said. “Without major investment in the infrastructure, modernizing the equipment, oil production in Russia is unlikely to rise and may slowly decline in the coming years.”……………………………………….Full Article: Source

Oil Prices Enter Bear Market Amid Global Glut of Crude

Posted on 24 July 2015 by VRS  |  Email |Print

U.S. oil prices sank into a bear market Thursday as a global glut of crude shows little sign of abating. Prices had settled below the key $50-a-barrel mark for the first time since early April on Wednesday, and they kept falling for most of Thursday.
An unexpected increase in U.S. crude inventories, announced earlier this week, combined with high production already coming from the Organization of the Petroleum Exporting Countries, is raising concerns that the market is settling into a long period of oversupply. Light, sweet crude for September delivery settled down 74 cents, or 1.5%, at $48.45 a barrel on the New York Mercantile Exchange, the lowest settlement since March 31………………………………………..Full Article: Source

In Commodities Meltdown, Gas Is a Fleeting Bright Spot

Posted on 24 July 2015 by VRS  |  Email |Print

In the meltdown that is the commodities market, natural gas has emerged as a bright spot, barely touched by the turmoil that’s contributed to a global slump. Oil has tumbled 19 percent over the past three months on the Bloomberg Commodity Index, and gold is down 8.6 percent, helping send the gauge to a 13-year low this week. And U.S. natural gas? Up 5.5 percent. That’s because shipments are limited for now to North America, where hot weather has boosted demand for the power-plant fuel.
That all changes when exports, starting as soon as this year, take the gas market global. The fuel has been eating away at coal’s market share at U.S. power plants. Liquefied natural gas exports stand to erode domestic supplies, giving coal a reprieve in the U.S. but thrusting the competition between the two fuels onto an international stage………………………………………..Full Article: Source

What Should the Government Do About Low Oil Prices?

Posted on 24 July 2015 by VRS  |  Email |Print

Oil prices have been down this year. How should policy makers respond? We put this question to a group of energy researchers, professionals, and other experts. They presented a variety of suggestions that run the gamut—from imposing a carbon tax to letting the market run its course.
Their stories are below, in a compilation that relates to a previous Energy Report and formed the basis of a discussion on The Experts blog this spring. The current downturn in the oil and gas business, like the ups and downs of the cycles that came before it, is fundamentally a result of demand and supply………………………………………..Full Article: Source

Oil Returns to Bear Market as U.S., OPEC Output Prolongs Glut

Posted on 24 July 2015 by VRS  |  Email |Print

West Texas Intermediate futures dropped 1.5 percent Thursday to close at $48.45 a barrel. The grade has lost 21 percent in the past six weeks, meeting the common definition of a bear market. The slide in prices has cut the value of the crude futures market in half since 2013, exchange data shows.
Oil’s recovery has sputtered as U.S. oil production withstands lower prices, while OPEC members such as Saudi Arabia and Iraq push output to record levels in a bid to defend their market share. Prices were swept up in a broader selloff in raw materials, which have fallen to a 13-year low as the dollar strengthens and concerns grow over economic growth in China………………………………………..Full Article: Source

World Bank raises oil forecast—but don’t get too hopeful

Posted on 23 July 2015 by VRS  |  Email |Print

The World Bank has upped its oil price forecast for 2015, but the marginal rebound in the price of Brent crude at the start of the year won’t pull energy prices up to anywhere near 2014 levels, the international body said on Wednesday.
Crude oil is now expected to average $57 per barrel for the year—up from the World’s Bank’s estimate of $53 per barrel back in April. Geopolitical tensions and more closures of high-cost oils rigs could push the forecast even higher, the bank added in its “Commodity Markets Outlook” report………………………………………..Full Article: Source

World Bank projects crude oil to average $57/b in 2015, $61/b in 2016

Posted on 23 July 2015 by VRS  |  Email |Print

The World Bank on Wednesday revised upward its 2015 crude oil price forecast to $57/barrel from $53/b in April, with demand higher than expected in the second quarter, particularly in the US. However, large inventories and rising output from OPEC “suggest prices will likely remain weak in the medium-term,” John Baffes, the World Bank’s senior economist, said in a statement.
The bank said it expects the price to rise to $61/b in 2016 as supply growth slows. The price projections are included in the organization’s latest quarterly Commodity Markets Outlook………………………………………..Full Article: Source

U.S. Winning Oil War Against Saudi Arabia

Posted on 23 July 2015 by VRS  |  Email |Print

Last year the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, initiated an economic oil war against the United States when it refused to cut production in November of 2014 like it usually does when oil prices drop. This was an attempt to drive some U.S. shale oil producers bankrupt and stem the flow of North American shale oil onto the global market.
In fact, OPEC actually increased oil production in November, which drove oil prices down to nearly $50/bbl, the price at which many shale producers can’t even break-even. But it hasn’t quite worked out the way they wanted………………………………………..Full Article: Source

Credit Suisse Says It May Finally Be Time to Buy Oil and Gas Stocks

Posted on 23 July 2015 by VRS  |  Email |Print

Even as energy prices fall again,one firm says it might be time to finally buy oil and gas stocks. Stocks of U.S. oil and gas companies have been so battered as commodity prices have fallen that it looks like there is finally an “attractive entry point,” Credit Suisse analysts said in a research note.
The suggestion to buy these stocks came with a caveat though: “We acknowledge we are early.” One key index tracking oil exploration and production stocks — the SIG Oil Exploration & Production Index — fell another 2% Wednesday. The index is down 18% in 2015………………………………………..Full Article: Source

$100 oil price may come back, but not until 2020

Posted on 22 July 2015 by VRS  |  Email |Print

An oil forecaster who predicted last year’s calamitous drop in oil says the price of a barrel of crude will get back to the $100 US level — but not for another five years. In an interview with Bloomberg, PIRA Energy Group founder Gary Ross said that while he sees a long-term rebound in oil prices, right now there’s simply too much oil in world markets for prices to return to where they were any time soon.
According to official data from the U.S. Energy Information Administration, the world pumps out about 95.46 million barrels of oil every day. But demand is only 93.63 million barrels a day — about two million barrels less………………………………………..Full Article: Source

Oil price struggles to rise above $US50

Posted on 22 July 2015 by VRS  |  Email |Print

Oil prices remained under pressure in Asian trade Tuesday, with US oil prices struggling to move above the $US50 mark amid persistent concerns over a global oil glut. A stronger US dollar is also weighing on oil prices after the ICE US dollar index hit a three-month high on Monday, triggering a selloff across commodities as investors shifted to other asset classes.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $US50.00 a barrel at 0304 GMT, down $US0.15 in the Globex electronic session. It lost 1.5 per cent in the previous session, falling to a near four-month low of $US50.15 a barrel. September Brent crude on London’s ICE Futures exchange fell $US0.10 to $US56.55 a barrel………………………………………..Full Article: Source

Oil rebound? These banks think so

Posted on 21 July 2015 by VRS  |  Email |Print

Oil prices have faced something of a perfect storm over recent week, with the Greece crisis, high Saudi production and an Iran nuclear deal all weighing on the commodity. But despite its recent losing streak – which has seen Brent prices fall close to 10 percent over the past 30 days – a number of banks think oil prices are about to pick up.
Brent was trading around $56 per barrel on Monday morning, while West Texas Intermediate (WTI) was around $50. Although this is well off lows of around $45 and $42 hit earlier this year, it is still around 50 percent lower than in June last year………………………………………..Full Article: Source

Iran deal to keep crude oil prices in $55-58/bbl range

Posted on 21 July 2015 by VRS  |  Email |Print

Oil markets across the world are expected to remain oversupplied through 2015, following the nuclear deal with Iran. With Iran returning to the world’s oil market in some time, Brent crude is expected to settle at $55-58 a barrel. Such a development would continue to support India’s macroeconomic fundamentals, as risks of imported inflation would abate substantially.
Volatile oil prices would have prevented any further rate cuts by the central bank but with Iran signing the deal, the risk abates substantially. Oil analysts believe crude oil prices will come down further in forward markets by $5-10 a barrel, once Iran’s oil hits world markets. Iran is ready to ship 30 million barrels………………………………………..Full Article: Source

Oil drops near $50; analyst warns of ‘vicious selloff’

Posted on 21 July 2015 by VRS  |  Email |Print

Concerns that a global glut of supplies will continue to grow prompted another drop in oil futures on Monday to their lowest settlement since early April. The move lower led one analyst to warn that the market may soon experience a “vicious selloff.”
Still, U.S. prices managed to hold above $50 a barrel in the wake of a weekly decline in the number of active U.S. rigs drilling for oil. West Texas Intermediate August crude fell 74 cents, or 1.5% to settle at $50.15 a barrel on the New York Mercantile Exchange. That was the lowest settlement for a most-active contract since April 2. The August contract expires Tuesday………………………………………..Full Article: Source

Oil: Some crude numbers

Posted on 21 July 2015 by VRS  |  Email |Print

Having stabilised during the spring, crude oil is experiencing a summer swoon. The Brent oil benchmark has dropped to the mid-$50s a barrel after averaging about $65/bbl during Q2, while West Texas Intermediate is barely holding $50/bbl, about $10/bbl below its average in the second quarter.
And this sell-off has hit not just the flat price but is extending further out the curve: December 2018 Brent, for example, has dropped below $70/bbl, which is lower than it ever fell during the worst of last year’s crude collapse. The concerns that have driven prices lower are easy to find, but beyond the headlines they are hard to take too seriously. Take demand first………………………………………..Full Article: Source

The return of Iranian oil might cause more tensions in OPEC

Posted on 20 July 2015 by VRS  |  Email |Print

The return of oil from Iran following the landmark nuclear energy deal with world powers could create fresh tensions within OPEC but may reinforce the cartel’s output strategy, analysts say. Tehran and major powers — Britain, China, France, Germany, Russia and the United States — clinched a historic agreement in Vienna on Tuesday aimed at ensuring Iran does not obtain a nuclear bomb, and which paves the way for the removal of sanctions and the gradual return of Iranian oil to the global market next year.
The accord puts strict limits on Iran’s nuclear activities for at least a decade. In return, sanctions that have slashed the oil exports of OPEC’s fifth-largest producer will be lifted and billions of dollars in frozen assets unblocked………………………………………..Full Article: Source

Cheap Oil Should Fuel Economy at Last

Posted on 20 July 2015 by VRS  |  Email |Print

The drop in oil prices was supposed to help the economy, but so far has hurt it instead. Now the benefits should start rolling in. Lower oil prices have proven to be more of a bane than a boon for the U.S. economy. But that is about to change.
When the price of crude started dropping sharply last fall, most economists reckoned it would be a good thing. Sure, U.S. oil production had boomed due to the shale revolution, but the country was (and is) still a net importer of petroleum products. So, the thinking went, the losses from lower investment and lost jobs in the shale basins would be more than offset by the extra money that got spent on American goods and services rather than foreign oil………………………………………..Full Article: Source

History Shows Iran Could Surprise the Oil Market

Posted on 20 July 2015 by VRS  |  Email |Print

Iran could restore oil production halted by sanctions faster than anyone anticipates if the history of previous shutdowns is any guide. The consensus among analysts and traders is that Tehran needs at least a year after sanctions are lifted to raise output to the level prevailing before restrictions were imposed in 2012.
Similar pessimistic assessments for supply disruptions at OPEC members Libya and Venezuela were confounded by quicker-than-expected recoveries, according to data compiled by Bloomberg. Here’s Venezuelan oil production before and after a strike at state oil company Petroleos de Venezuela SA that started in late 2002:……………………………………….Full Article: Source

Global growth outlook spooks crude oil

Posted on 20 July 2015 by VRS  |  Email |Print

After threatening to spiral upwards, crude oil prices have started to fall again. After registering a multi-year low at $42 in mid-March this year, WTI (West Texas Intermediate) crude oil prices on the Nymex began to head northwards. In a short span time of seven weeks, the commodity had appreciated 48 per cent to mark a high at $62.5 on May 6.
However, it has since failed to sustain its upward momentum and resumed its decline. Crude oil has now closed on a negative note for the third consecutive week, falling below a key technical support at $54. Financial factors such as the strong appreciation in the US dollar against major currencies, the global commodity rout due to lower Chinese growth, continued benign interest rates in the US and monetary easing in other regions have played a role in the renewed pressure on oil prices………………………………………..Full Article: Source

Opec unwilling to flood finely balanced oil market

Posted on 20 July 2015 by VRS  |  Email |Print

Ample supply and the nuclear deal with Iran have pushed the price of West Texas Intermediate down about US$9 per barrel to just more than $50 since the beginning of this month. But the $30 per barrel levels predicted by some New York analysts are very unlikely to be seen.
The oil sanctions on Iran will not be lifted until the end of the year, only after the International Atomic Energy Agency issues a report in mid-December on Iranian compliance with the agreement reached last week in Vienna. That means it will be 2016 before any of the 0.5 million barrels per day (mbpd) of spare capacity promised by Iranian oil minister Bijan Zanganeh can be added to Opec supply………………………………………..Full Article: Source

Shell forecasts oil price recovery to $90 by 2020

Posted on 17 July 2015 by VRS  |  Email |Print

The Anglo-Dutch energy giant is betting on crude rising to $90 a barrel by 2020, a key assumption in its move to buy rival BG Group for $70bn to help transform it into a leading player in the costly deep water oil production and liquefied natural gas markets. “We are not banking on an oil price recovery overnight. It will take several years but we do believe fundamentals will return,” said Andy Brown, upstream international director at Shell, who oversees oil and gas production outside North America.
“Until such time, we, like other companies, will have to make sure we stay robust,” he added, referring to deep spending cuts taken by oil companies in recent months in the face of a near-halving of oil prices since June last year. A rise in global supplies, mainly due to a sharp increase in output from US shale, has weighed on oil prices………………………………………..Full Article: Source

Oil in Latin America: The good oil boys club

Posted on 17 July 2015 by VRS  |  Email |Print

Latin America’s oil firms need more foreign capital, but a historic auction in Mexico shows that investors can be hard to attract. It should have been a day of high excitement. A public auction on July 15th marked the end of a 77-year monopoly on oil exploration and production by Pemex, Mexico’s state-owned oil company, and ushered in a new era of foreign investment in Mexican oil that until a few years ago was considered unimaginable.
The Mexican government had hoped that its first-ever auction of shallow-water exploration blocks in the Gulf of Mexico would successfully launch the modernisation of its energy industry. In the run-up to the bidding, Mexico had sought to be as accommodating as its historic dislike for foreign oil companies allowed it to be. Juan Carlos Zepeda, head of the National Hydrocarbons Commission, the regulator, had put a premium on transparency, saying there was “zero room” for favouritism………………………………………..Full Article: Source

Iran: The oil and gas multibillion-dollar ‘candy store’

Posted on 17 July 2015 by VRS  |  Email |Print

They did not advertise their presence. But in the days and weeks before Tuesday’s nuclear deal between the west and Iran, a steady trickle of visitors from some of the world’s largest energy groups have flown into Tehran. By some accounts, they have done more than exchange business cards.
As one senior western executive puts it, few of the industry’s big players can ignore the “candy store” that is Iran — now preparing to throw open a multibillion-dollar shop window of oil and gas projects. An array of US and EU oil-related sanctions, in place since 2012, has prevented detailed negotiations. But once these are lifted, serious talks about a return to the country will get under way, with the European majors first………………………………………..Full Article: Source

Iran Faces Battle to Win Back Asia Oil Market Share

Posted on 17 July 2015 by VRS  |  Email |Print

Iran may be hoping to claim back its share of Asia’s oil market now that the nuclear accord signed this week cleared the way to ramp up exports. But the competition is already getting tougher across the region.
Take India. The country has long been a key market for Iran’s National Iranian Oil Co., or NIOC. But last week, one of NIOC’s biggest customers, Essar Oil signed a 10-year crude purchase agreement with Russia’s largest oil exporter Rosneft, which will also take a 49% stake in the Indian refiner………………………………………..Full Article: Source

Falling Oil Prices Stress Commodity Bearishness

Posted on 16 July 2015 by VRS  |  Email |Print

For almost 3 months now, oil prices have moved in a very narrow range. However, this month prices fell 15% in a matter of days, breaking that range and stressing the bearish sentiment among commodity investors. Some analysts point out that the decline was caused by a jump in rigs drilling for oil in the US.
Another factor to watch is the historic Iranian nuclear agreement with the US and five other world powers. This deal might have risen the bearish sentiment as Iranian oil output is expected to increase. Oil from Iran will take time to return, and will not have a market impact before next year, but given that the global petroleum market has an oversupply of about 2.5 million barrels per day, the mere prospect of new oil doesn’t help market sentiment………………………………………..Full Article: Source

Positive impact of lower oil price will be delayed due to counter-shocks, says IMF

Posted on 16 July 2015 by VRS  |  Email |Print

Oil exporting countries should continue to devise mechanisms to make up for the lost revenue such as increasing value added tax or corporate tax in their economies or to cut down on infrastructure spending which is high in many oil producing countries.
“I think the outlook for the global economy because of lower oil prices is certainly positive,” said Aasim Husain, Deputy Director of the Middle East and Central Asia department at the International Monetary Fund (IMF). Mr. Husain was responding to questions on an IMF staff paper, “Global Implications of Lower Oil Prices.”……………………………………….Full Article: Source

What Iran’s nuclear deal means for the oil price

Posted on 16 July 2015 by VRS  |  Email |Print

Oil prices have recovered after initially plunging over the deal reached with Iran’s nuclear program, as analysts ponder the details and the roadblocks that remain in its implementation. Brent crude oil fell from $US58.70 a barrel to $US56.50, as the world pondered a torrent of Iranian oil flooding the market. But by Wednesday, prices were back up at $US58.70.
“The devil is in the detail,” said ANZ senior commodities strategist Daniel Hynes. “Initially the market sold off on it – I think it was down 2 per cent on the original announcement – but prices have recovered somewhat after the details emerged………………………………………..Full Article: Source

Iran oil boost on hold to 2016 as nuclear inspectors go to work

Posted on 16 July 2015 by VRS  |  Email |Print

Global oil markets won’t feel the real impact of Iran’s historic deal with world powers until 2016 as sanctions remain in place while nuclear inspectors go to work, said banks including Citigroup Inc., UBS Group AG and Commerzbank AG.
OPEC’s fourth-largest member won’t achieve a crude-export boost of more than 500,000 barrels a day, or about 50 percent, until next year as Iran’s compliance with curbs on its nuclear program is verified, the banks say. The nation will probably choose to gradually increase exports once sanctions are lifted, rather than risk lower prices by rapidly pushing crude into an oversupplied market, according to the International Energy Agency………………………………………..Full Article: Source

Iran’s oil return a game changer for OPEC, but not for now

Posted on 16 July 2015 by VRS  |  Email |Print

OPEC is likely to keep oil output steady and defend its market share this year after Tehran’s nuclear deal with major powers, since a full return of Iranian crude to the market will not be swift, Gulf OPEC delegates said. But 2016 will be a tough year for the producer group when international sanctions on Iran are expected to ease, allowing it to boost oil production and exports.
Tehran’s determination to reclaim its position as OPEC’s second largest producer after it clinched the deal on Tuesday will cause new rivalries within the group. But Saudi Arabia and its Gulf OPEC allies are betting that higher demand next year may help the market absorb extra volume………………………………………..Full Article: Source

Look, Don’t Freak Out About Iranian Oil Flooding the Market

Posted on 16 July 2015 by VRS  |  Email |Print

Iranian oil will soon hit the global market, thanks to sanctions being lifted as part of the historic deal reached yesterday to regulate the country’s nuclear program. Some are suggesting that this will flood global markets with oil at a time when prices are already incredibly low (thanks, in part, to high production from the US and Saudi Arabia).
So, should you go out and buy a gas-guzzler and scrap your plans to save up for an electric car?Uh, no. To the extent that an increase in Iranian oil production will have an effect on the global price of gas, it will be slight and delayed.“Most of what is assumed can be delivered [from Iran] has already been priced into the market,” says Sarah Ladislaw, director of the Energy and National Security Program at the Center for Strategic & International Studies………………………………………..Full Article: Source

Global Implications of Lower Oil Prices

Posted on 15 July 2015 by VRS  |  Email |Print

While the dramatic drop in oil prices in the past year will mean significant losses in revenue for some exporting countries, consumers should be paying less for fuel—and have more money to spend. A new paper published by IMF staff suggests that higher spending will ultimately be good for global growth.
The decline in oil prices is certainly benefiting consumers, but not as much as we might have thought. Even though crude oil prices fell by about half between June of last year and by the end of the year, retail fuel prices on average globally have fallen by half as much, so by about a quarter, says Aasim Husain, co-author and deputy director in the IMF’s Middle East and Central Asia Department……………………………………….Full Article: Source

What Iran’s Nuclear Deal Means for the Global Crude Oil Market

Posted on 15 July 2015 by VRS  |  Email |Print

The nuclear accord reached in Vienna on Tuesday could eventually reshape global oil markets. After almost two years of talks, the holder of the world’s fourth-biggest crude reserves will benefit from an easing of international sanctions on exports in return for curbs on its nuclear program.
How Much More Oil Can Iran Produce? Iranian Oil Minister Bijan Namdar Zanganeh says the country can increase exports by 500,000 barrels a day as soon as sanctions are lifted, then an additional 500,000 a day in the following six months. Iran produced an average of 2.8 million barrels a day this year………………………………………..Full Article: Source

Iran Deal Raises Prospect of Fresh Oil Glut

Posted on 15 July 2015 by VRS  |  Email |Print

New supply could further pressure prices, but any selloff depends on Tehran increasing production in the face of competition. A nuclear deal between Iran and six world powers raises the specter of a fresh oil glut further pressuring prices, but any selloff depends on how successfully Tehran can increase production and sell crude in the face of competition.
The possibility of up to a million new barrels of Iranian oil flooding global markets, the amount Iranian officials aim to deliver within months, comes at a critical time. China’s stock-market turmoil in recent weeks could slow an economy that was expected to account for a lot of energy-demand growth………………………………………..Full Article: Source

Iran nuclear deal: This is what it means for oil

Posted on 15 July 2015 by VRS  |  Email |Print

Oil prices reversed themselves and moved higher despite a historic nuclear deal that traders feared could flood the market with Iranian crude. Under the landmark agreement, economic sanctions on Iran would be lifted in exchange for restrictions on its nuclear program. As a result, Iran will now be able to rejoin the world economic stage and export its goods – including oil.
Brent crude fell as much as 2 percent to hit $56.67 a barrel early on Tuesday in response, but later changed directions to $58.42, a gain of about 1 percent. West Texas Intermediate was up more than 1 percent at $52.86. Natural gas was down 1.2 percent. Analysts said the swing in oil was due to the realization that Iran’s crude won’t be back on the market any time soon………………………………………..Full Article: Source

Iran to return to oil market with maximum capacity

Posted on 15 July 2015 by VRS  |  Email |Print

Iran will return to the global oil market with maximum capacity once the sanctions against the country are lifted following Iran’s nuclear deal with world powers, a deputy oil minister was quoted as saying on Tuesday.
Iran and six major world powers reached a landmark nuclear deal on Tuesday, capping more than a decade of negotiations. Oil prices tumbled more than $1 on the news as the deal would see an easing of sanctions against Tehran and a gradual increase in its oil exports………………………………………..Full Article: Source

Iran’s return to oil market to weigh on crude prices

Posted on 15 July 2015 by VRS  |  Email |Print

After more than 10 years of diplomatic wrangling, the global oil and gas industry is ready to welcome Iran back to the market. The nuclear deal announced on Tuesday will eventually reopen Iran’s huge oil and gas reserves to the western companies, and bring Tehran closer to achieving its goals of rebuilding its economy, emerging from isolation and restoring crucial production and exports of its natural resources.
Iran has the world’s fourth-largest proven crude oil and the second-biggest natural gas reserves. Expectations of an agreement have already pulled oil prices lower, with ICE August Brent — the international benchmark — falling more than 10 per cent since the start of the month and trading below $57 a barrel on Tuesday………………………………………..Full Article: Source

OPEC Members Disagree Over Prospect of New Oil Supplies From Iran

Posted on 15 July 2015 by VRS  |  Email |Print

The nuclear agreement between Iran and six world powers has caused disagreement among Organization of the Petroleum Exporting Countries officials over how to react to new supplies of oil coming onto the export market.
As oil prices dropped Tuesday after the deal was announced, Algeria’s oil minister Salah Khabri said he may call for an emergency OPEC meeting to address the situation. In addition to the Iran development, the oil market has been affected by the Greek debt crisis and the Chinese stock market’s recent dive………………………………………..Full Article: Source

OPEC ups demand forecast, sees ‘balanced’ market

Posted on 14 July 2015 by VRS  |  Email |Print

The oil market should be more balanced next year as China and the developing world use more oil while supply of fuel from North American shale grows more slowly, OPEC said on Monday. In its monthly report, the 12-member Organization of the Petroleum Exporting Countries said it expected world oil demand to increase by 1.34 million barrels per day (bpd) in 2016, up from growth of 1.28 million bpd this year.
World oil demand growth should outpace any increase in oil supply from non-OPEC sources and ultra-light oils such as condensate, increasing consumption of OPEC crude, it said. “This would imply an improvement toward a more balanced market,” OPEC’s in-house economists said in the report………………………………………..Full Article: Source

Iran 5th gas exporter in 2014: OPEC

Posted on 14 July 2015 by VRS  |  Email |Print

According to the latest OPEC’s statistical report on 2014 market, Iran placed the 5th top exporter of natural gas and 7th oil seller in OPEC. Despite sanctions in 2014, Iran stood at the 5th place among the top natural gas exporters and the seventh oil seller in the world, according to OPEC’s Annual Statistical Bulletin 2015.
According to the bulletin the largest gas reserves in the OPEC belongs to Iran with 34.20 trillion cubic meters of natural gas ahead of Qatar with 24.531 trillion cubic meters. However the bulletin holds that sanctions imposed on Iran hindered infrastructural developments and led to an export of 8.360 billion cubic meters of natural gas putting Iran behind Qatar, Algeria, Nigeria, and the UAE in 2014………………………………………..Full Article: Source

Why Saudi Arabia Makes So Much Money on Oil

Posted on 14 July 2015 by VRS  |  Email |Print

Hint: it has to do with how many new wells the kingdom has to drill each year compared to other oil producers. A lot of reasons have been given as to why Saudi Arabia is allowing the oil price to not only fall but remain weak. Some suggest it’s because it’s seeking to harm emerging rivals like the U.S. and Russia.
Others have suggested that the move is because it wants to keep its regional rival Iran at bay. While both could be true, the reason Saudi Arabia isn’t worried about the oil price is because it doesn’t need a high oil price to justify the drilling costs needed to maintain or grow its production. This is due to the fact Saudi Arabia only needed to drill 399 new wells last year just to keep its daily production at 11.4 million barrels of oil………………………………………..Full Article: Source

Will China stocks burn oil?

Posted on 14 July 2015 by VRS  |  Email |Print

It took until July, but the crude-oil markets have managed to ignore Chinafor most of the year so far. The price volatility that saw an 11-percent selloff in oil futures in the first quarter followed by a 25-percent climb in the second quarter was driven primarily by uncertainties regarding the situations in Greeceand Iran along with inconclusive data in the U.S. on rig counts and inventory levels.
Meanwhile, China, one of the largest consumers of crude oil in the world, has been largely overlooked. To the extent that oil investors were paying attention to China, it was mostly as a source of bullishness………………………………………..Full Article: Source

Oil price has further to fall, says IEA

Posted on 13 July 2015 by VRS  |  Email |Print

Oil prices are set to come under further pressure from easing global demand and an expanding glut of crude while a rebalancing of the markets may last well into next year, the International Energy Agency has said. The IEA said it expected global demand growth to slow next year to 1.2m per day (bpd) from 1.4m this year - far less than needed to balance stubbornly growing non-OPEC and OPEC supply.
“The bottom of the market may still be ahead,” the IEA said in its monthly report. “The rebalancing that began when oil markets set off on an initial 60pc price drop a year ago has yet to run its course. Recent developments suggest that the process will extend well into 2016………………………………………..Full Article: Source

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