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3 Things to Keep in Mind About Falling Oil Prices

Posted on 09 December 2014 by VRS  |  Email |Print

Ten years ago, the kind of steep drop in oil prices we’ve seen in recent weeks would have been cause for unmitigated celebration. Economists almost universally analogized higher oil prices to a tax, with the proceeds largely going abroad to OPEC oil-producing countries. So any reduction in oil prices was viewed like a taxcut. Who could be against that?
It’s an indication of how much has changed in energy markets over the past decade that fallen oil prices are viewed with mixed feelings. Yes, some consumers are understandably happy that gas prices almost everywhere have dropped below $3 a gallon. But others worry that the falling oil prices, now down to the mid-$60s per barrel, and possibly falling to about $60 per barrel, will crimp efforts by U.S. shale oil producers to pump more oil out of existing wells and, worse, induce them to quit looking for more………………………………………..Full Article: Source

Will Oil Prices Recover In 2015?

Posted on 09 December 2014 by VRS  |  Email |Print

There seems to be a fair amount of consensus that oil prices will recover to $100 or thereabouts by 2020 (excluding your humble narrator), but next year is much more uncertain. Some pundits, like T. Boone Pickens, believe that it is all but certain that low prices now will lead to higher prices in the near future, as upstream investment falls and shale oil production especially experiences slower growth.
Additionally, lower oil prices should provide some impetus to the global economy, raising demand if only slightly. But I have to believe that these pundits are exaggerating the likelihood that prices will “recover”………………………………………..Full Article: Source

Oil Price Winners and Losers Around the Globe

Posted on 09 December 2014 by VRS  |  Email |Print

As the world’s top policy makers rewrite their forecasts for global growth on oil’s price-plunge, who are the biggest winners and losers? The Republic of Congo, Equatorial Guinea, and Angola–three West African nations that rely on oil to fund the lion’s share of their economy and state revenues–will likely be hit the hardest.
The near-$40 a barrel fall in crude prices represents billions of dollars in lost revenue equivalent to roughly 20% of their gross domestic product. For Djibouti, Seychelles and Kyrgyzstan, whose net oil imports take a huge chunk out of their economies, the decline in prices is a boon worth up to 11% of their GDP, allowing consumers to spend on goods and services that can fuel economic growth………………………………………..Full Article: Source

Oil Slumps to Five-Year Low Amid Concern Funds May Start Selling

Posted on 09 December 2014 by VRS  |  Email |Print

Brent crude slumped to a five-year low amid concern that hedge funds and other money managers bet too much on rising prices. West Texas Intermediate also fell.
Futures dropped as much as 3.3 percent in London and 2.6 percent in New York. Net-long positions on Brent rose to the highest in four months in the week to Dec. 2, according to data from the ICE Futures Europe exchange, while bullish bets on WTI climbed the most in 20 months. Brent declined 9.9 percent in the period while WTI slumped 9.7 percent………………………………………..Full Article: Source

The Economic Consequences of Global Oil Deflation

Posted on 09 December 2014 by VRS  |  Email |Print

A new wild card has just been introduced into an already increasingly unstable global economy: a growing world glut of oil and consequent oil price deflation. Since June 2014, the price of high grade (ICE Brent) crude oil has fallen more than 40 percent, declining from around USD$115 a barrel, in January 2014, to just USD$67 a barrel at the end of November.
That’s the lowest since the bottom of the 2009 recession. The price decline has not only been deeper than expected in a normal cyclical correction, but also appears more than just a temporary event. Some predict global oil prices will fall below USD$60 a barrel in 2015, and could potentially fall as low as the USD$40 a barrel collapse that occurred during the 2008-09 recession………………………………………..Full Article: Source

Is this the beginning of the end for OPEC?

Posted on 09 December 2014 by VRS  |  Email |Print

Forty one years ago OPEC, the global oil cartel, boldly asserted its power with an export embargo that drove the price of crude from $3 per barrel to $12 in just six months. Through subsequent oil shocks of 1978, 1990, and 2008, voices on the left — and a few on the right — have used the specter of $200 per barrel oil to justify reams of subsidies for wind and solar (“just another few years, and they’ll be able to stand on their own — really”), ethanol (“imagine how much we’ll save when oil is $300 per barrel”), and even hydrogen cars ($2 billion spent and still counting). The parade of grants, loans, and tax benefits all rode in the name of securing our “energy independence.”
Last week, the West Texas benchmark hit $67 per barrel — a five-year low — and with that milestone the doomsayers’ predictions came crashing down, as well………………………………………..Full Article: Source

Global Shale Ambitions Wane as OPEC Price War Deepens

Posted on 09 December 2014 by VRS  |  Email |Print

Efforts to replicate the U.S. shale revolution are under threat as a price war by OPEC pushes crude to levels last seen during the global financial crisis. From the U.K. to Australia, countries without government-backed energy producers appear the most vulnerable to delays in extracting shale oil and gas. Even nations such as China and Argentina, where state-run producers have a government mandate to drill, could see a slowing in investment.
The Organization of Petroleum Exporting Countries, responsible for about 40 percent of global supplies, has maintained output in the face of an oil glut. The move has sent prices lower, challenging shale plays in the U.S., and the rest of the world where production is more costly………………………………………..Full Article: Source

Opec and American shale keep the oil price spiralling downwards

Posted on 08 December 2014 by VRS  |  Email |Print

Oil prices were back near five-year lows – below $70 per barrel – at the end of last week as commodity traders, analysts and governments struggled to come up with new forecasts for 2015. The benchmark, Brent blend, had recovered from a major drop in the aftermath of last month’s meeting of the oil producers’ cartel, Opec. However, it was back down at $69.17 on Friday as the market bet on a prolonged low in prices.
Igor Sechin, Russia’s most senior oil official, warned that Opec’s unwillingness to cut production could push oil down to $60, while the Chicago Mercantile Exchange reported a huge increase in the number of investors hedging on crude hitting $40………………………………………..Full Article: Source

Forget the shale boom: will OPEC survive the post-Arab Spring times?

Posted on 08 December 2014 by VRS  |  Email |Print

Unprecedented events across the Middle East and North Africa have fundamentally changed the geopolitics of oil, writes Professor Mohammed Akacem in this thought-provoking analysis. The Organization of Petroleum Exporting Countries, OPEC, has decided to keep their output ceiling unchanged in the face of falling oil prices.
Despite the calls for reducing oil production by the price hawks to shore up sagging oil prices, the oil cartel decided to pass. While oil consuming countries are fixated on their dependence on the oil cartel, it is time to examine the reverse: how much are OPEC’s economies fixated on every oil price move and its impact, not only on their economies, but on their possible political survival?……………………………………….Full Article: Source

Hedge Funds Betting That OPEC-Led Oil Rout Is Near End

Posted on 08 December 2014 by VRS  |  Email |Print

Hedge funds are betting that the oil-price crash is close to ending. Speculators boosted their net-long position in West Texas Intermediate crude by 14 percent in the week ended Dec. 2, the most in 20 months, U.S. Commodity Futures Trading Commission data show. Short bets contracted by 15 percent as long wagers expanded 4 percent.
Oil’s collapse accelerated after the 12-nation Organization of Petroleum Exporting Countries decided Nov. 27 to maintain output levels, underscoring the price war in crude. Oil tumbled into a bear market in October and reached a five-year low last week as the U.S. shale boom added to a global glut at a time of weakening demand growth………………………………………..Full Article: Source

OPEC rocks

Posted on 08 December 2014 by VRS  |  Email |Print

Why are so many so glum about cheap oil? For years, the complaint has been that the high price of oil makes life difficult for people. These include ordinary American families for whom a $65 fill-up at the local Exxon became routine, as well as the many industries that rely on petroleum for their products.
Well, prices are now coming down (in real terms) to levels we haven’t seen in some time, and some people fret that this will be a bad thing. The most recent price drops were precipitated by a decision by the Organization of Petroleum Exporting Countries, or OPEC, not to cut its oil production………………………………………..Full Article: Source

When Oil Becomes Optional

Posted on 08 December 2014 by VRS  |  Email |Print

Is this the beginning of the end for oil’s long, tyrannical reign? Amid turmoil in two of the world’s largest oil-producing regions, Russia and the Persian Gulf, the price of oil has declined from $110 in last summer to below $70 last week. Explanations for the drop are many, ranging from an oil glut resulting from booming U.S. shale oil production to a Saudi plot to make U.S. shale unprofitable by driving down the price.
Volatility in the price of oil is nothing new. The essential dynamic — the global economy riding a roller coaster in which the cost of crude jerks and swerves from a punishing $125 per barrel to a still-painful $60 to $70 — is well established. But over the past two years, prices stabilized in the range of $90 to $110 per barrel. Then, last summer, oil began its precipitous dive………………………………………..Full Article: Source

Oil Prices - Decline Turned Into Collapse?

Posted on 05 December 2014 by VRS  |  Email |Print

Public investment markets are inherently volatile. Oil prices have been declining since June 7th when West Texas Intermediate was selling at $107 per barrel. Today, the same barrel of oil is selling at $66, reflecting an over-supply of oil on the world market, which has driven oil prices lower. Last Thursday, OPEC decided not to cut production, confounding expectations of a production cut.
Oil prices declined by 10% following the decision. We have been consistently stating our view that oil price weakness is a function of excess supply, rather than a problem with demand (recession, for example). It is true that much of the developed world is struggling with growth, and the emerging economy’s growth profile is contracting………………………………………..Full Article: Source

Will falling oil prices curb America’s shale boom?

Posted on 05 December 2014 by VRS  |  Email |Print

This year’s Christmas parade in Lindsay, in the heart of Oklahoma’s oil country, featured the Stars and Stripes every ten yards, 11 horses with riders in Santa hats and a rifle salute by veterans. But the highlight was a thundering, bright red oil tanker covered in fairy lights and owned by Hamm & Phillips, an oil-services firm with local roots that has ridden the shale boom in the state and across America.
That energy revolution is the envy of the business world. Abundant oil and gas have been extracted from underground rocks by blasting them with a mixture of water, chemicals and sand—“fracking”, in the jargon. As well as festive spirit, the firms responsible embody an all-American formula of maverick engineers, bold entrepreneurs and risk-hungry capital markets that no country can match………………………………………..Full Article: Source

$50 Oil Is Already Here

Posted on 05 December 2014 by VRS  |  Email |Print

Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there. Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American (PAA) Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark.
The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years………………………………………..Full Article: Source

Extreme oil bears gamble on $40 crude

Posted on 05 December 2014 by VRS  |  Email |Print

The oil market rout has made some investors so bearish they are buying contracts that pay out if prices drop below $40 a barrel — a level last traded during the bleakest chapters of the financial crisis.
Extreme market scenarios are playing out in put options for crude, which give holders the right to sell oil above a set price by a certain date………………………………………..Full Article: Source

Oil falls to below $70 in post-OPEC volatility

Posted on 05 December 2014 by VRS  |  Email |Print

Brent crude oil fell below $70 a barrel on Thursday as investors searched for a stable price range after a near 40 percent fall since June. Oil prices have been volatile since the Organization of the Petroleum Exporting Countries (OPEC) said last week it would not lower output despite an oversupplied market.
Brent was down 27 cents at $69.65 a barrel by 1345 GMT. U.S. crude was down 28 cents to $67.10 a barrel, after a 50 cent gain in the previous session………………………………………..Full Article: Source

OPEC: Making the best of a low price

Posted on 05 December 2014 by VRS  |  Email |Print

An effective cartel requires three things: discipline, a dominant market position and barriers to entry. The Organisation of the Petroleum Exporting Countries lacks all three. Its members cheat on their quotas. It supplies only 30% of the world’s oil—too little to exercise control. New producers abound.
That is the backdrop to OPEC’s decision last month to make no attempt to bolster the oil price, sending it below $70 a barrel—a near 40% drop since June. Saudi Arabia, its most influential member, could have sent the price up single-handedly by deciding to pump less. Unlike cash-strapped oil exporters such as Venezuela, the kingdom can afford self-denial: it has savings of $900 billion………………………………………..Full Article: Source

Why OPEC’s pain is China’s gain

Posted on 05 December 2014 by VRS  |  Email |Print

The collapse in oil prices couldn’t be better timed for China’s slackening economy, providing additional room for monetary easing and a boost to domestic consumption, say economists.
China is the world’s biggest and fastest growing oil importer, relying on imports for around 60 percent of its domestic oil consumption. Last year, the country imported over 280 million tonnes of crude oil, worth almost $220 billion, according to state-run news agency Xinhua. “[The] slumping oil price is the oil-guzzling dragon’s windfall gain,” Ting Lu, chief China economist at Bank of America Merrill Lynch (BofaML), wrote in a note………………………………………..Full Article: Source

Biggest Winners and Losers of International Oil Price Crash

Posted on 05 December 2014 by VRS  |  Email |Print

Oil prices around the world have fallen more than 38 percent since the year’s high in June. Among the winners are airlines, which are saving on fuel and not reducing fares for customers. Bank of America Corp. predicts earnings will gain 73 percent in 2015.
Saudi Arabia flexed its muscle at November’s OPEC meeting by overruling other members, showing that it’s still the dominant producer. The desert kingdom needs oil at $83.60 a barrel to balance its budget, according to the International Monetary Fund, but it’s got $736 billion in reserves………………………………………..Full Article: Source

Commodities Guru Frank Holmes Explains Why Oil Production Will Tumble

Posted on 05 December 2014 by VRS  |  Email |Print

If you want to understand why the drop in oil prices is temporary there are two things that you need to be aware of. 1) Oil demand growth is relentless. The EIA is still projecting that global oil demand is going to increase by 1 million barrels per day next, and the year after that, and the year after that…..
2) The rise in production has been entirely from North American shale which has hyperbolic decline rates. Crimped cash flow, and tight debt markets means a big reduction in drilling. Without a continued frenzied pace of drilling production will fall quickly………………………………………..Full Article: Source

Collapse of oil prices leads world economy into trouble

Posted on 04 December 2014 by VRS  |  Email |Print

Opec, the oil cartel, believed it could help production. Instead, it ended up hurting itself as well as the Russian rouble, energy stocks and much more. The Organization of Petroleum Exporting Countries (Opec), the largest crude-oil cartel in the world, wanted others to feel its pain as oil prices collapsed.
“Opec wanted … to cut off production … and they wanted other non-Opec [countries], especially in the US and Canada, to feel the pinch they are feeling,” says Abhishek Deshpande, lead oil analyst at Natixis. But in its rush to influence others, Opec ended up hurting everyone in the process – including itself………………………………………..Full Article: Source

The global politics of falling oil prices

Posted on 04 December 2014 by VRS  |  Email |Print

After years of high oil prices driven by scarcity and fears that oil is running out, the price of crude oil has fallen from about $US115 to less than $US70 a barrel over the past six months, causing a dramatic and welcome fall in the price of petrol at the bowser. What is going on? Like other commodities, the crude oil price is basically driven by supply and demand.
For decades, the environmental movement has been insisting that non-renewable fossil fuels are running out, that we have passed “Peak Oil” (when global crude oil production passes its upper limit), and that the world is on the brink of acute shortages, if not the end of the petroleum era………………………………………..Full Article: Source

Saudi tips $US60 oil price floor

Posted on 04 December 2014 by VRS  |  Email |Print

OPEC’s biggest oil producer Saudi Arabia now believes oil prices could stabilise at around $US60 a barrel, a level both it and other Gulf producers believe they could withstand, according to people familiar with the situation.
The shift in Saudi thinking suggests the de facto leader of the Organization of the Petroleum Exporting Countries won’t push for supply cuts in the near-term, even if oil prices fall further. Brent crude was trading at just over $US70 a barrel on Wednesday………………………………………..Full Article: Source

Hedge fund manager Andurand sees oil down to $50 in 2015

Posted on 04 December 2014 by VRS  |  Email |Print

Brent crude will continue its collapse to $60 a barrel by the end of the year and reach $50 in early 2015 as Opec stops balancing the global market, according to hedge fund manager Pierre Andurand.
Oil inventories will swell by 1mn to 2mn barrels a day in the first half of next year as Saudi Arabia and other Opec nations refrain from paring output to tackle a global glut, said the founder of Andurand Capital Management, who called the top of the oil market in 2008. The trader anticipated lower prices before Opec’s gathering, according to a November 11 investor letter………………………………………..Full Article: Source

Six reasons oil’s price plunge has shaken the markets

Posted on 04 December 2014 by VRS  |  Email |Print

Oil is a key economic input and its price has fallen sharply. All things being equal, that’s a plus for global growth, but the markets are in turmoil. Here are six key reasons why oil’s price plunge has the markets gyrating.
In 2011, 2012 and last year oil averaged $US95.13 a barrel, $US94.15 a barrel and $US98.05 a barrel respectively, a spread of just $US3.90. It averaged $US100 a barrel in the first six months of this year and got to $107.26 a barrel on June 20. Monetary policy was still loose and the consensus was that the oil price would not move sharply in either direction………………………………………..Full Article: Source

Oil’s swoon on OPEC is rare boon for a few hedge funds

Posted on 04 December 2014 by VRS  |  Email |Print

OPEC’s decision not to cut oil output despite a market glut gave a late-month boost to several energy hedge funds in November, pushing them toward double-digit gains in a year marked by commodity fund closures.
Greenwich, Connecticut-based Taylor Woods Capital Management, one of the larger U.S. energy hedge funds with nearly $1 billion under management, gained more than 5 percent last month and is up over 10 percent on the year, according to sources familiar with the firm’s returns………………………………………..Full Article: Source

What you need to know about falling oil prices

Posted on 03 December 2014 by VRS  |  Email |Print

Put simply, global oil supplies are exceeding demand and driving down prices in the process. A major factor has been the explosion in U.S. oil production, which is up to almost 9 million barrels per day and expected to hit the highest levels in four decades next year.
Another factor is the struggling economies in Asia and Europe leading to a decrease in oil consumption. China, one of the world’s largest oil consumers, has seen its economic struggles result in its demand for oil being outpaced in Asia by India, a country that has also struggled financially of late. Saudi Arabia also cut the price of its own crude to the U.S. earlier this month, which has further propelled the sell-off………………………………………..Full Article: Source

Lower Oil Prices Will Help Boost Global Economy, IMF’s Lagarde Says

Posted on 03 December 2014 by VRS  |  Email |Print

International Monetary Fund chief Christine Lagarde on Monday said falling oil prices will help boost economies in the U.S. and across much of the globe, a net positive for a world struggling with slowing growth. “It is good news for the global economy,” Ms. Lagarde said at The Wall Street Journal CEO Council annual meeting.
Oil prices tumbled to multiyear lows last week after the Organization of the Petroleum Exporting Countries decided to maintain its production quotas, rather than lowering its output target. Lower oil prices are good for most consumers, who pay less for gasoline, but could squeeze energy companies and the economies of some major producers like Russia and Venezuela………………………………………..Full Article: Source

Russia’s Economics ministry downgrades 2015 oil price forecast to $80 per barrel

Posted on 03 December 2014 by VRS  |  Email |Print

Russia’s Economic Development Ministry has downgraded its 2015 oil price forecast to 80 dollars per barrel and this year’s average — to 99 dollars per barrel, Deputy Economic Development Minister Aleksey Vedev told the media on Tuesday.
“The expected average price of oil next year has been down to 80 dollars per barrel from 100 dollars,” he said. “Since the oil prices are on the decline now, the 2014 price of the Urals blend should be lowered to 99 dollars from the originally expected average of 104 dollars.”……………………………………….Full Article: Source

America defiant in ‘oil war’ with OPEC

Posted on 03 December 2014 by VRS  |  Email |Print

America’s energy industry is battling OPEC with a ferocity not seen since the 1980s. So far, it’s not backing down. The oil cartel’s decision last week not scale back on production was widely seen as an attempt to choke off the U.S. shale boom. OPEC figures that by driving down oil prices, North American producers will collapse.
Both sides are feeling the heat as oil prices stay below $70. Oil rich nations are losing out on much-needed revenue to bankroll their budgets, and many domestic energy players are feeling the pressure as well………………………………………..Full Article: Source

OPEC: Saudi Prince says Riyadh won’t cut oil unless others follow

Posted on 03 December 2014 by VRS  |  Email |Print

Saudi Arabia’s former spy chief Prince Turki said world’s biggest oil exporter won’t surrender market share to anyone. Saudi Arabia’s influential royal Prince Turki al-Faisal al-Saud has said the kingdom would only consider cutting oil production if Iran, Russia and the US agreed to match those cuts because it wants to protect its market share.
Speaking in London, the Prince who is a senior Saudi royal and the former head of the country’s spy agency, said that the kingdom would not repeat previous mistakes of surrendering its share of the global market for crude to its rivals………………………………………..Full Article: Source

Sliding oil leads to commodity volatility

Posted on 02 December 2014 by VRS  |  Email |Print

Volatility hit the commodities markets on Monday as crude prices rebounded after hitting a new five-year low while copper slid to a four-year low, following last week’s sell-off triggered by Opec’s decision to maintain production levels. The Bloomberg Commodity Index of 22 raw materials fell to its lowest since May 2009.
Crude, which had plunged after the cartel’s meeting on Thursday, fell further, with ICE January Brent as low as $67.53 a barrel – the cheapest it has been since October 2009 – before rebounding to $71, up 86 cents……………………………………….Full Article: Source

Oil Prices: Where’s The Bottom?

Posted on 02 December 2014 by VRS  |  Email |Print

It’s amazing how quickly attitudes change. OPEC, once cock of the walk, is now seen as helpless and hopeless, all for not implementing a minor production cut. Mere weeks ago, some were talking about $150 as a target for next year, and now a $30 prices is being bruited about as a possibility. While it’s true that consistency is the hobgoblin of little minds, oil pundits are now inflicting whiplash on their audience.
Certainly, the price is lower than I thought it would be at this point, in part because the market imbalance is nothing compared to the weakness during the 1986 oil price collapse, when OPEC production had dropped by 50% in five years………………………………………..Full Article: Source

Oil price: five consequences of the falling prices

Posted on 02 December 2014 by VRS  |  Email |Print

The growing oil glut could drive oil prices as low as $40 a barrel, experts say – and that may be a good thing. The decision by members of the Organisation of the Petroleum Exporting Countries (Opec) last week not to cut production could have a profound effects on the global economy, analysts say, but not all of them will be negative.
Oil prices plummeted to a four-year low last week after Opec opted to keep its production ceiling unchanged, with some analysts predicting that prices could fall even further, possibly to around $40 a barrel………………………………………..Full Article: Source

OPEC’s War Won’t Be All Over by Christmas

Posted on 02 December 2014 by VRS  |  Email |Print

Like invasions of Russia and land battles in Asia, a war on U.S. shale promises to be a protracted and unpredictable campaign. Rising U.S. shale oil output is one target of Saudi Arabia’s push to have OPEC members maintain their output and so depress oil prices. Even leaving aside OPEC’s clutch of internal divisions, though, fighting U.S. shale will prove a grind—with substantial attrition on the cartel’s side.
Part of OPEC’s problem is that U.S. shale is a many-headed beast, with multiple resource basins and operators. So there isn’t a single price below which production gets shut down. Rather, estimates of break-even prices in U.S. shale span a range: Citigroup , for one, estimates this to be around $70 to $90 a barrel using full-cycle costs………………………………………..Full Article: Source

OPEC Fires First Shot In Global Oil Price War

Posted on 02 December 2014 by VRS  |  Email |Print

OPEC’s decision not to cut production to shore up oil prices drove down the price of oil even further in a strong challenge to American shale oil producers - or, in less delicate language, the start of an all-or-nothing price war.
The immediate result of OPEC’s decision was a further drop in the price of the world’s leading benchmark oil, Brent crude, which lost $6.50 per barrel , falling to $71.25 on Nov. 27, its worst performance in a single day since 2011. Brent soon had a weak rally, raising its value to $72.55. The price of oil has now dropped by nearly 40 percent since mid-June………………………………………..Full Article: Source

Oil at $40 Possible as Market Transforms Caracas to Iran

Posted on 01 December 2014 by VRS  |  Email |Print

Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union.
Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population………………………………………..Full Article: Source

Gulf Markets Weaken on Falling Oil Prices

Posted on 01 December 2014 by VRS  |  Email |Print

Stock markets in the Gulf closed sharply lower Sunday as tumbling oil prices sparked concerns about the economic growth prospects for the crude-exporting region. Saudi Arabia and its Gulf neighbors are among the biggest sellers of oil globally, using billions of dollars in revenue from hydrocarbon sales to bolster local economies.
But the Organization of the Petroleum Exporting Countries—of which Saudi Arabia is the de facto leader—decided late last week to maintain crude output levels, which means a glut in the market is likely to remain and keep oil prices at multiyear lows………………………………………..Full Article: Source

Oil Price Drop Forces OPEC Member Iraq to Weigh Spending Cuts

Posted on 01 December 2014 by VRS  |  Email |Print

The plunge in oil prices is forcing the Iraqi government to consider spending cuts even as the conflict with Islamic State threatens to shrink economic output for the first time in at least three years.
The government formed a panel to look into ways to cut next year’s proposed budget deficit to a “realistic level,” according to a cabinet statement released during the weekend. The current budget proposal envisages a budget deficit of about 47 trillion Iraqi dinars ($39 billion)………………………………………..Full Article: Source

Does the Oil Price Collapse Put the High Yield Market at Risk?

Posted on 01 December 2014 by VRS  |  Email |Print

The high yield market may have a taken a big hit on Thanksgiving day. The cause – a collapse in the price of oil on OPEC’s decision to leave oil production unchanged, something that Francisco Blanch of BofA Merrill Lynch Global Research told CNBC viewers is anything but temporary and as such something that will not be kind to the companies that operate in the oil sector. Blanch begins…
… if you are going to let the market balance itself as OPEC has stated, it’s going to be a pretty painful process. We know that production costs for many shale producers are meaningfully below the current spot prices………………………………………..Full Article: Source

Oil Price Crash, Gold Price Bottom Trend Forecast 2015

Posted on 01 December 2014 by VRS  |  Email |Print

It’s time to do a follow-up to my last Golden Bottom article. We are coming down to the wire and the action on Monday after the Swiss referendum should tell us whether gold has already formed a final bear market low, or whether we have one more drop in this intermediate cycle to the $1050 level before the final bottom.
If the vote is a yes then I suspect gold will reverse all of Friday’s losses and immediately head back up confirming that we got the final bear market bottom in early November………………………………………..Full Article: Source

Iran Wary of Oil ‘Shock Therapy’ as OPEC Vies for Market Share

Posted on 01 December 2014 by VRS  |  Email |Print

The “shock therapy” of a steep decline in crude prices is no solution for OPEC’s loss of market share to U.S. shale producers, Iran’s Oil Minister Bijan Namdar Zanganeh said.
U.S. crude prices tumbled 10 percent after the Organization of Petroleum Exporting Countries decided on Nov. 27 to keep its production target unchanged at 30 million barrels a day. Prices at this lower level are no guarantee of a significant reduction in U.S. shale output, Zanganeh said in an interview in Tehran on Nov. 28, after arriving from the OPEC meeting in Vienna………………………………………..Full Article: Source

Oil plunges as Opec tests the mettle of US shale industry

Posted on 28 November 2014 by VRS  |  Email |Print

Opec threw down the gauntlet to US shale oil producers by deciding not to cut its production, in a move that sent the oil price tumbling by more than 8 per cent to a four-year low. The cartel said it was leaving its output ceiling of 30m barrels a day unchanged, in a significant departure from its traditional policy of cutting production to prop up falling oil prices.
Any further fall in the price of crude, which has dropped by nearly 40 per cent since mid-June, will mean more pain for oil exporting countries and global energy companies, and could endanger billions of dollars of investment in new oil projects……………………………………Full Article: Source

Oil price plunges after Opec split keeps output steady

Posted on 28 November 2014 by VRS  |  Email |Print

Oil prices have crashed to a new four-year low, below $72 per barrel, after a major split inside Opec forced the cartel to hold production at current levels rather than make cuts to try to turn the market around.
The reduced cost of energy - prices are now down 37% since the summer - should be a boost to British consumers and the wider economy, but experts warned the North Sea oil industry is now facing a slump in investment and major job cuts. There are now predictions that the price of Brent blend could fall to as low as $60, which would be disastrous for countries with high producing costs and economies dependent on oil and gas, such as Russia and Iran……………………………………Full Article: Source

Saudis block OPEC output cut, sending oil price plunging

Posted on 28 November 2014 by VRS  |  Email |Print

Saudi Arabia blocked calls on Thursday from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to a fresh four-year low.
Brent oil LCOc1 fell more than $6 to $71.25 a barrel after OPEC ministers meeting in Vienna left the group’s output ceiling unchanged despite huge global oversupply, marking a major shift away from its long-standing policy of defending prices……………………………………Full Article: Source

The Opec oil price still matters (just not as much as before)

Posted on 28 November 2014 by VRS  |  Email |Print

A cursory glance at the history of the oil price since the second world war tells its own story. There are booms when the price of oil is low and busts when the cost of crude rises. Four spikes in oil since 1973 have been matched by four recessions over the same period.
The so-called postwar golden age is also the story of a flatlining oil price, which remained at around $2 a barrel during that period. Five Middle Eastern nations formed the Organisation of the Petroleum Exporting Countries in 1960 but it was more than a decade before Opec bared its teeth……………………………………Full Article: Source

How OPEC’s Vienna Meeting is Playing Out So Far

Posted on 28 November 2014 by VRS  |  Email |Print

There’s certainly grumbling among members of the Organization of Petroleum Exporting Countries as they meet at the cartel’s headquarters in Vienna to discuss tumbling oil prices. But oil prices sank to four-year lows Thursday, underlining the market’s perception that the griping won’t lead to action robust enough to stop the slump.
As they arrived at OPEC HQ this morning, the differences between OPEC members seemed as deep as ever–although most government officials were stressing they’d stick with the consensus to more strictly enforce the existing production quota of 30 million barrels a day, which could remove at least 300,000 barrels from the market based on recent data……………………………………Full Article: Source

World on brink of oil price war as Opec set to keep pumping

Posted on 27 November 2014 by VRS  |  Email |Print

Oil slumped on Wednesday as expectations that Opec will cut production faded following dovish remarks by cartel kingpin Saudi Arabia, which could signal the beginning of a price war. Speaking on the sidelines ahead of Thursday’s critical meeting of the Organisation of Petroleum Exporting Countries (Opec) in Vienna, Saudi oil minister Ali Al-Naimi said: “The market will stabilise itself eventually”.
His remarks were interpreted by the market as a signal that the cartel would keep its production ceiling at 30m barrels per day (bpd), which sent the price of crude lower…………………………………..Full Article: Source

Saudi oil minister expects oil price to ’stabilise’ as OPEC gathers

Posted on 27 November 2014 by VRS  |  Email |Print

Oil prices are likely to again come under pressure Wednesday after Saudi Arabia’s oil minister showed little sign of concern ahead of a crucial meeting of the Organisation of Petroleum Exporting Countries (Opec). Speaking to reporters on the sidelines of the gathering of some of the world’s biggest oil producing countries in Vienna, Ali Al-Naimi said: “The market will stabilise itself eventually”.
He added that that Opec had made no decisions ahead of its formal meeting tomorrow after he met with senior oil emissaries of Russia’s President Vladimir Putin on Tuesday…………………………………..Full Article: Source

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