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Commodities Briefing - Category | Oil more

Asian Buyers Seize on Oil-Price Spread

Posted on 16 March 2015 by VRS  |  Email |Print

It isn’t just the sharp drop in crude prices since last summer that has roiled the global oil industry. It is the way they have fallen. During the slump, U.S. oil prices have dropped further relative to Brent prices traded on London’s Intercontinental Exchange.
That has made it increasingly attractive for crude buyers in Asia to purchase oil from places such as Latin America, where producers set selling prices in line with the U.S.’s main West Texas Intermediate benchmark, instead of traditional providers in the Middle East that price off Brent………………………………………..Full Article: Source

Oil prices stabilizing, will continue to firm up: Saudi adviser

Posted on 16 March 2015 by VRS  |  Email |Print

Oil prices have started to stabilize around $60 a barrel in past weeks and will continue to firm up, while crude demand will grow stronger, an adviser to Saudi Arabia’s oil minister said on Sunday. The comments by Saudi oil adviser Ibrahim al-Muhanna suggested that the top oil exporter sees no need to reverse its policy of allowing the market to correct itself without cutting output, despite the steep price drop since June last year.
Kuwait’s OPEC governor said last week that OPEC was likely to extend its current production policy at the June meeting, in the first public comment on what will be a crucial decision determining the direction of global oil prices in the second half of this year………………………………………..Full Article: Source

American Oil Production Is Still Skyrocketing: Will Oil Prices Tumble?

Posted on 16 March 2015 by VRS  |  Email |Print

With oil prices having dropped by roughly 50% since last summer, U.S. oil companies have quickly reduced their investment plans and idled drilling rigs. Many pundits have assumed these actions would quickly be followed by falling production numbers.
While that might seem intuitive, it did not prove true. At some point, reduced drilling activity will inevitably lead to a fall in crude oil output — but that point could be far in the future. For the moment, domestic oil production is still rising steadily………………………………………..Full Article: Source

OPEC Yet To ‘Taste’ Bottom Of The Barrel

Posted on 16 March 2015 by VRS  |  Email |Print

Saudi Arabia will not cut its oil production to satisfy others. The lesson is learned and others must act accordingly. Finally, Saudi Arabia has reached its conclusion and it will keep on producing more oil as long as its customers demand for oil. This time, the biggest oil exporter is determined to push for more crude oil production and lower prices until other non-OPEC producers reduce their oil production.
Last November, a meeting in Vienna witnessed total shift in Saudi oil policy in terms of giving up its traditional ‘swing’ role producer to become an integral part of the global oil policy. Countries like Russia, Brazil and other higher cost oil producers were asked to participate and reduce their production until such time that the global market can take all available crude oil or to share the burden equally………………………………………..Full Article: Source

Economists expect oil prices to average above $60 despite current volatility

Posted on 16 March 2015 by VRS  |  Email |Print

Oil prices may remain volatile for some time to come but will ultimately average above $60 for Brent. This is despite the fact that they presently remain below $60, which is due to the dollar’s unrelenting rally that is putting pressure on stocks and commodities, regional analysts say.
The dollar index posted a back-to-back weekly gain of more than two percent, setting up its strongest two-week performance in more than six years. John Sfakianakis, Middle East director at Ashmore Group, told Arab News: “A stronger dollar is good when it comes to purchasing power and cost of imports, especially as we are in a global deflationary environment. The dollar always plays a role when it comes to commodities and oil.”……………………………………….Full Article: Source

Tomorrow’s oil price? Guesses range from $20 to $200

Posted on 13 March 2015 by VRS  |  Email |Print

Predicting and diagnosing the trajectory of oil prices has become something of a cottage industry in the past year. Along with all of the excess crude flowing from the oil patch, there is also an abundance of market indicators that, while important, tend to produce a lot of noise that makes any accurate estimate nearly impossible.
First there is the oil price itself. The crash began last summer, and accelerated in November. Since then, predictions for oil prices for 2015 have been all over the map — from Citigroup’s $20 per barrel, to T. Boone Pickens’ prediction of a return to $100 per barrel. OPEC’s Secretary-General even said prices could shoot up to $200 in the coming years as a result of overly drastic cutbacks and a failure to invest in new production………………………………………..Full Article: Source

The U.S. Has Too Much Oil and Nowhere to Put It

Posted on 13 March 2015 by VRS  |  Email |Print

Not only are the tanks at Cushing filling up, so are those across much of the U.S. Facilities in the Midwest are about 70 percent full, while the East Coast is at about 85 percent capacity. This has some analysts beginning to wonder if the U.S. has enough room to store all its oil.
Ed Morse, the global head of commodities research at Citigroup, raised that concern on Feb. 23 at an oil symposium hosted by the Council on Foreign Relations in New York. “The fact of the matter is, we’re running out of storage capacity in the U.S.,” he said………………………………………..Full Article: Source

Why Analysts Expect Oil Price To Plummet Further

Posted on 13 March 2015 by VRS  |  Email |Print

The Energy Information Administration (EIA) of the US reported oil inventory data of the country on Wednesday. EIA report showed an increase of 4.5 million barrels in crude oil supplies during the last week, taking the inventory to 448.9 million barrels.
According to the EIA, this is the ninth weekly gain and represents an 80-year high level. Compared to this time last year, crude inventories are approximately 20% higher. West Texas Intermediate (WTI) futures are the benchmark of crude oil price in the US. The physical point of its delivery is in Cushing, Oklahoma, where crude oil supply has increased by 2.3 million barrels to reach 51.5 million barrels………………………………………..Full Article: Source

Have Oil Prices Hit Their Floor?

Posted on 13 March 2015 by VRS  |  Email |Print

After their sharp drop late last year, oil prices have been trading in a relatively steady band for more than a month, raising an obvious question: Has the market hit a bottom? A number of fundamentals suggest not yet: Global storage levels are brimming. Economies in the U.S., Europe and Asia are all mixed, clouding demand forecasts.
And some of the world’s biggest producers—including Saudi Arabia, its fellow OPEC members and Russia—are still pumping at full speed. All of that means the global glut of oil that caused the big price drop in the first place isn’t likely to ease soon………………………………………..Full Article: Source

China, India drive global energy needs: Ex-OPEC official

Posted on 13 March 2015 by VRS  |  Email |Print

The global energy industry has seen huge demand from two fast-growing major economies - China and India - even as consumption dropped in Europe. “These two countries have launched themselves to a high growth zone,” said Abdullah bin Hamad al-Attiyah President of the Administrative Control and Transparency Authority ( ACTA).
“Take the case of India, from a very classical agrarian-based economy with just textile exports, India has become a giant in industry, IT and many sectors,” Abdullah was quoted as saying by the Gulf Times. China and India would need huge amounts of energy to achieve their growth targets………………………………………..Full Article: Source

OPEC story is not over

Posted on 13 March 2015 by VRS  |  Email |Print

Despite OPEC losing its influence, which might not be recoverable, people are still highly dependent on traditional fossil fuel which means the organization will still be important in the future, economist Max Fraad Wolff told RT. A new report by the World Bank claims the cartel of oil producing nations will lose its influence due to changing market conditions and technological advances.
We’ve seen this forecast before. It is very easy for various parties to forecast outcomes they would sort of like to see happen. It is clear that OPEC has suffered a diminution or decreased in its influence. It is likely to be a case where this influence might not be recoverable in its total. But I don’t think the days are numbered completely, I don’t think this story is over here………………………………………..Full Article: Source

The Real Reason Behind the Oil Price Collapse

Posted on 13 March 2015 by VRS  |  Email |Print

It’s not overproduction in shale fields, and it’s not global economic stagnation. It’s something far more threatening to Big Oil’s business model. Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): slowing demand due to global economic stagnation; overproduction at shale fields in the United States;
The decision of the Saudis and other Middle Eastern OPEC producers to maintain output at current levels (presumably to punish higher-cost producers in the U.S. and elsewhere); and the increased value of the dollar relative to other currencies. There is, however, one reason that’s not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil’s production-maximizing business model………………………………………..Full Article: Source

How long will the oil price war last?

Posted on 12 March 2015 by VRS  |  Email |Print

There are two very serious games of chicken being played in the world today. While Greece vs the Eurogroup has the soundbites and summit showdowns to catch more attention, the stare off between the OPEC oil cartel and US shale producers might end up having the greater economic consequences.
OPEC’s historic dominance of the oil market has been rocked by the re-emergence of Russia and the US as major producers, the latter led by a technological revolution known as hydraulic fracking (possibly coming to a field near you). Both OPEC and the American shale producers are pumping crude at record levels, which has led to a collapse in the oil price since the summer. Brent crude is currently trading at $56.5 (£36.9) a barrel, down from over $100 nine months ago………………………………………..Full Article: Source

Did lower oil prices help the economy at all?

Posted on 12 March 2015 by VRS  |  Email |Print

The oil price plunge has been touted as a global growth elixir, but so far the impact on the economy has been subtle and it’s unclear when that will change.
“Local fuel prices have almost fully adjusted to lower crude oil prices,” Goldman Sachs said in a note last week after tracking data from 24 countries. But it expects the stimulus impact on the economy won’t be straightforward, depending on whether low prices are perceived as likely to persist and government policy responses………………………………………..Full Article: Source

Fall in energy prices to impact oil and gas investments

Posted on 12 March 2015 by VRS  |  Email |Print

The rapid decline in energy prices is expected to have a large impact on investment in oil and gas projects worldwide. Since June 2014, the price of Brent crude oil price has collapsed due to a supply glut fuelled by a rise in US shale oil production, as well as weaker global demand, particularly in China and Europe.
Speaking during the Middle East Oil and Gas Show in Manama, Bahrain, Amin Nasser, Senior Vice President for Upstream Operations at Saudi Aramco, told local press: “Challenges during down cycles are more complicated today than before. At this moment the global industry is poised to potentially cancel about US$1 trillion in capital funding.” This figure includes delayed projects as well as those that could be cancelled outright………………………………………..Full Article: Source

Iraq builds up arrears to majors as oil price drops - sources

Posted on 12 March 2015 by VRS  |  Email |Print

Iraq is building up debts to the oil companies developing its giant fields, industry sources said, a further sign of how the oil-price drop is putting a squeeze on revenues in OPEC’s second-largest producer. Western oil companies including Royal Dutch Shell, BP and Exxon Mobil are working at Iraq’s southern oilfields under service contracts, which are currently based on a fixed dollar fee for additional volumes produced.
As a result of the halving of oil prices to around $56 a barrel from $115 in June, the amount of crude needed to pay the companies has roughly doubled - reducing revenue to a government fighting an Islamic State insurgency………………………………………..Full Article: Source

Saudi’s oil market strategy makes sense

Posted on 12 March 2015 by VRS  |  Email |Print

In December Saudi Arabia’s oil minister Ali al-Naimi posed an interesting question: “Is there a black swan out there that we don’t know about which will come by 2050 and we will have no demand?”
Obviously, we do not know the answer. However, it is almost certain that prospects for a big innovation that validates his anxiety have been increased by very high oil prices. This suggests that Saudi Arabia did itself no favours in the past by cutting production to support such prices………………………………………..Full Article: Source

OPEC oil output to go unchanged: Kuwaiti gov

Posted on 12 March 2015 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries may maintain its current oil production of over 30 million barrels a day at its next meeting in June, says Kuwaiti official. Kuwait’s OPEC governor Nawal Al-Fuzaia said Tuesday, “I think so because there is less than two months, removing weekend and summer time, before the next OPEC meeting,” adding, “I don’t think there would be a big change in the oil market supply/demand in this time.”
The cartel’s president and Nigerian Oil Minister Diezani Alison-Madueke had suggested an early meeting could be convened, should oil prices continue to fall, but so far they have not………………………………………..Full Article: Source

Shale oil to dominate Russia-OPEC talks in June

Posted on 12 March 2015 by VRS  |  Email |Print

Russia said on Wednesday it would meet OPEC in June to discuss the impact of shale oil on global markets, just days before the producers’ group decides whether its policy of high production is sufficient to stifle the U.S. energy boom.
The comment, from Russian Energy Minister Alexander Novak, comes as Saudi Arabia has said in recent weeks it wanted non-OPEC producers to cooperate with the Organization of the Petroleum Exporting Countries in future because the group would not cut output unilaterally and lose market share as a result………………………………………..Full Article: Source

Opec signals oil price war set to continue

Posted on 11 March 2015 by VRS  |  Email |Print

Opec’s Gulf oil producers have signalled that the cartel will persist with its current price war strategy when it gathers to decide on production quotas in June. Kuwait’s governor to the organisation told an energy conference in Qatar on Tuesday that the current policy of producing around 30m barrels per day of crude will continue.
“I think so because there is less than two months, removing weekend and summer time, before the next Opec meeting,” said Nawal Al-Fuzaia. “I don’t think there would be a big change in the oil market supply/demand in this time.”……………………………………….Full Article: Source

Al-Attiyah expects oil price around $60 a barrel by year-end

Posted on 11 March 2015 by VRS  |  Email |Print

HE Abdullah bin Hamad al-Attiyah, president of the Administrative Control and Transparency Authority expects to see oil price around $60 a barrel by the year-end. “We may not see a higher price…say $70 or more. It will take a few years,” al-Attiyah told Gulf Times on Tuesday.
Asked whether the era of $100 or more has ended, al-Attiyah, the former Deputy Premier and Minister of Energy and Industry said, “We should forget it for the time being.” Al-Attiyah said Qatar would be able to manage with oil price around $60 a barrel………………………………………..Full Article: Source

Oil & Gas: PwC’s Annual Global CEO Survey

Posted on 11 March 2015 by VRS  |  Email |Print

The reality facing oil and gas industries has changed dramatically over the last year. The industry is facing over-supply and lower prices – so it’s not surprising that nearly two-thirds of oil and gas CEOs say their companies are facing more threats to growth than they did 3 years ago.
For oil and gas companies, an increasing tax burden, over-regulation and geopolitical uncertainty top the list, followed by government response to fiscal deficit and debt burden and protectionist tendencies of national governments. Taxes are a particular issue for the sector, which also rates an internationally competitive and efficient tax system as the top outcome it would like to see from government………………………………………..Full Article: Source

OPEC is still kicking, but the World Bank thinks the oil cartel’s days could be numbered

Posted on 11 March 2015 by VRS  |  Email |Print

As OPEC ’s refusal to curb oil production contributes to a nine-month plunge in prices, a new paper suggests the cartel’s days may be numbered. OPEC, the Organization of the Petroleum Exporting Countries, has vowed to defend its market share against higher-cost producers such as U.S. shale drillers and companies developing Canada’s oil sands.
Its strategy hinges on the odds that an extended period of low prices will lead other producers to scale back output, enabling the group to reassert its influence. Yet a brief history detailed by the World Bank Group shows how difficult it can be to maintain a commodities cartel in the face of market forces and technological advances………………………………………..Full Article: Source

Why oil decline could get ugly again

Posted on 10 March 2015 by VRS  |  Email |Print

Still drilling at four-decade highs, the U.S. oil industry could help drive another price collapse in crude this spring. OPEC Secretary General Abdalla Salem el-Badri told a conference this past weekend that the cartel’s policy has hurt the U.S. shale oil industry and triggered a global reduction in capital spending that could ultimately lead to a shortage—and higher prices.
The U.S. industry, however, has not slowed its high levels of oil production, despite OPEC’s best efforts to curb drilling with lower prices. The U.S. has pumped more than 9 million barrels a day since early November, and last week it produced a multidecade high of 9.32 million barrels. Industry output has not been at such a level on a sustained basis since the 1970s………………………………………..Full Article: Source

Goldman Says $40 Oil Call May Be Too Low as Demand Surprises

Posted on 10 March 2015 by VRS  |  Email |Print

While the bank projects that oil will still reverse its recent advance, the failure of global inventories to increase amid weather-related disruptions and stronger-than-expected demand means there’s a risk prices will miss its target for the next two quarters, according to a report dated March 8. Morgan Stanley also said the oil market was “surprisingly healthy.”
Global benchmark crude prices rose in February for the first time in eight months, rebounding from an almost 50 percent loss in 2014 as U.S. production surged to a 30-year high. Sandstorms disrupted Iraqi exports while cold weather in the U.S. and a drought in Brazil bolstered consumption, according to Goldman Sachs………………………………………..Full Article: Source

Could oil slip to $40 a barrel? Goldman thinks so

Posted on 10 March 2015 by VRS  |  Email |Print

A lot has gone right for the oil market in recent weeks – weather related supply disruptions in the middle-east, rising demand, stellar refining margins and aggressive cost cutting by major producers. But is the rally running out of steam?
Brent, the international crude marker, and West Texas Intermediate, its US counterpart, have risen 26 per cent and 11 per cent respectively from their January lows, writes Neil Hume. That recovery followed a market rout that saw oil prices drop 60 per cent between June and January and hit $45 a barrel………………………………………..Full Article: Source

Oil, gas industry may cancel $1 trln projects on price fall -Aramco exec

Posted on 10 March 2015 by VRS  |  Email |Print

The steep fall in energy prices will hit investment in oil and gas projects worldwide and the industry may cancel about $1 trillion of planned projects globally in the next couple of years, a senior Saudi Aramco executive said on Monday.
“Challenges during down cycles are more complicated today than before…At this moment the global industry is poised to potentially cancel about $1 trillion in capital funding,” Amin Nasser, senior vice president for upstream operations at the Saudi oil giant, told a conference in Bahrain………………………………………..Full Article: Source

OPEC chief: After July, oil market will be back in balance

Posted on 10 March 2015 by VRS  |  Email |Print

The global crude-oil market will return to balance in the second half of this year from an oversupply of 2 million barrels a day that has caused prices to plummet, OPEC Secretary-General Abdalla El-Badri said.
Speaking yesterday at a conference in Manama, Bahrain, El- Badri said demand growth in 2014 was weaker than expected “at just below 1 million barrels a day” and usage will rise by 1.2 million barrels a day this year. Crude has lost half its value since June as U.S. producers pumped oil at the fastest pace since 1983. Prices collapsed after OPEC’s decision on Nov. 27 to maintain production rather than sacrifice market share in the face of a glut………………………………………..Full Article: Source

Badri: OPEC Shouldn’t Cut Output To “Subsidise” Shale

Posted on 10 March 2015 by VRS  |  Email |Print

The Organisation of the Petroleum Exporting Countries Secretary-General said on Sunday that the group’s exporters should not cut output to “subsidise” higher-cost shale, an energy source whose recent growth is blamed by OPEC for weakening oil markets.
Abdullah al-Badri added in remarks to a conference in Bahrain that tight oil, a term he has used for shale, was “not a challenge for us” but the market should now be left to decide which source of petroleum could survive at current prices. Oil prices have sunk to near six year lows in recent months as a result of a large supply glut, due mostly to a sharp rise in U.S. shale production as well as weaker global demand………………………………………..Full Article: Source

Kuwaiti minister: Oil price likely to stabilize at $50-$60

Posted on 09 March 2015 by VRS  |  Email |Print

World crude prices are expected to gain this year or at least stabilize at between $50 and $60 a barrel, Kuwaiti Oil Minister Ali al-Omair was quoted as saying. “Forecasts for the oil price this year indicate that it will gain or at least stabilise between $50 and $60 a barrel,” the official KUNA news agency quoted Omair as saying late on Saturday in Bahrain.
The minister said prices are currently supported by conflict in Iraq and Libya and by a drop in sand oil and shale oil output. But that is counterbalanced by slow global economic growth, which is dampening demand, Omair said. World prices dropped at close on Friday as the dollar rose sharply, making dollar-priced crude more expensive for buyers using weaker foreign currencies………………………………………..Full Article: Source

As oil prices tank, where did OPEC go wrong?

Posted on 09 March 2015 by VRS  |  Email |Print

The oil price crash that brought 2014 to a close was itself a sort of benediction on Wall Street: It was the nail in the coffin to the so-called “peak oil” debate, in which many experts had argued that oil prices were bound to rise — perhaps forever — as the world’s choicest oil reserves ran dry. Such gloomy forecasts of dire shortage and endlessly spiking prices are as old as the market itself, but they have always proven wildly incorrect.
Today’s glut is only the latest reminder, as U.S. crude for April delivery closed at $59.73 a barrel on Friday after hitting peaks of more than $100 in recent years.In 1998, “Oil shocked” It was a fitting headline for an Economist article describing the state of the oil market. Shock was indeed what the market was experiencing……………………………………….Full Article: Source

Why Oil Prices Haven’t Hit Bottom Yet

Posted on 09 March 2015 by VRS  |  Email |Print

Investors looking at crude oil technicals and thinking the commodity looks like a good value right now are like the people who saw a white dress when the infamous photo of a blue dress crossed their newsfeeds. In this case, investors’ misperception comes from reports of oil rig shutdowns and crude’s ability to remain above a key technical level, suggesting the commodity has bottomed.
Those are distractions from a real fundamental issue — there’s too much oil and too few places to affordably store it, said Tim Evans, Energy Futures Specialist at Citi Futures. “I’m trying to keep my clients from becoming complacent about rising inventories as if they don’t matter because price action suggests we should look away from physical surplus in the market,” Evans said. “There’s substantial downside risk, particularly at the front of the WTI crude oil curve.”……………………………………….Full Article: Source

GCC’s rich confident about local economies despite oil price fall

Posted on 09 March 2015 by VRS  |  Email |Print

The majority of GCC’s high net worth individuals (HNWIs) are more optimistic about the economic situation in the region than global growth prospects, a new survey showed. According to a report by Emirates Investment Bank, almost 55 per cent of those polled said that the economic condition in the Gulf was improving compared to jus t 31 per cent who were optimistic about the global economy.
HNWIs are defined as individuals with $2 million or more in investable assets. The survey was conducted among GCC’s HNWIs in the fourth quarter of 2014, a period characterised by falling oil prices………………………………………..Full Article: Source

OPEC Sec-Gen says oil market should return to balance in H2 2015

Posted on 09 March 2015 by VRS  |  Email |Print

The Organisation of the Petroleum Exporting Countries (OPEC) Secretary-General said on Sunday OPEC and non-OPEC producers should work together to stabilize oil markets, suggesting oversupply could amount to two million barrels per day (bpd).
But Abdullah al-Badri added in remarks to a conference in Bahrain he had no doubt markets would return to balance in the second half of 2015, explaining that he did not believe fundamentals warranted a price drop of the extent markets had seen. “Tremendous opportunity” in oil remained, despite recent market volatility and uncertainties, he said, adding that the industry’s ‎long term outlook remained healthy………………………………………..Full Article: Source

OPEC Chief Says Cartel Is Hurting U.S. Shale Producers

Posted on 09 March 2015 by VRS  |  Email |Print

OPEC’s top official said Sunday that the cartel’s decision to keep pumping crude in the face of collapsing prices is hurting the U.S. shale-oil industry and a global pullback on investment could lead to a shortage that will push the market upward again.
“Projects are being canceled. Investments are being revised. Costs are being squeezed,” said Abdalla Salem el-Badri, the secretary general of the Organization of the Petroleum Exporting Countries, at the Middle East Oil and Gas conference in Bahrain. “If we don’t have more supply, there will be a shortage and the price will rise again.”……………………………………….Full Article: Source

OPEC Sec-Gen says oil mkt should return to balance in H2 2015

Posted on 09 March 2015 by VRS  |  Email |Print

The Organisation of the Petroleum Exporting Countries (OPEC) Secretary-General said on Sunday OPEC and non-OPEC producers should work together to stabilise oil markets, suggesting oversupply could amount to two million barrels per day (bpd).
But Abdullah al-Badri added in remarks to a conference in Bahrain he had no doubt markets would return to balance in the second half of 2015, explaining that he did not believe fundamentals warranted a price drop of the extent markets had seen………………………………………..Full Article: Source

The Price of Oil Is Down, So Why Is Production Still Going Up?

Posted on 06 March 2015 by VRS  |  Email |Print

Too much oil, too fast. That turns out to be the downside of the U.S. oil boom—at least if you’re an investor. Prices crashed, and America is pumping so much crude its running out of places to store it. One promising sign you may have heard about: The plunge in U.S. oil rigs.
Every week since 1944, oilfield-services company Baker Hughes has released a survey of rigs out drilling for oil. But it wasn’t until oil prices dropped by more than half that “rig counts” became part of everyday business vocabulary. Oil watchers are desperate for any sign of an end to the glut………………………………………..Full Article: Source

World Bank Analyzes Oil Price Plunge

Posted on 06 March 2015 by VRS  |  Email |Print

Rapid expansion of oil supply from unconventional sources, a significant change in OPEC’s policy stance, and weak global demand are driving the recent plunge in oil prices, according to a new paper by the World Bank. These underlying forces are buoyed by a strengthening U.S. dollar and the fact that oil production in the Middle East has not been severely disrupted by ongoing conflict, says the paper, titled “The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses”.
The paper, authored by John Baffes, Ayhan Kose, Franziska Ohnsorge, and Marc Stocker, presents a comprehensive analysis of the causes and economic and financial consequences of the oil price decline………………………………………..Full Article: Source

Storage dearth may drive oil prices to $30

Posted on 06 March 2015 by VRS  |  Email |Print

As the U.S. runs out of space to store its glut of crude-oil supplies, prices for the commodity could sink to as low as $30 a barrel. When storage is full, there is pressure on those holding oil in storage to “dump that inventory,” said Charles Perry, chief executive officer of energy-consulting firm Perry Management. So a space shortage could cause a drop in prices to the $30 to $40-per-barrel range, he said.
West Texas Intermediate crude — the U.S. benchmark — has already seen its prices halved from a year ago. A cost of $30 per barrel of oil represents a 40% drop from the current level, which stands near $51………………………………………..Full Article: Source

Expect low prices, more volatility in oil: Exxon CEO

Posted on 06 March 2015 by VRS  |  Email |Print

Investors should brace themselves for more volatility in the oil market, with prices staying around current levels for a while, Exxon Mobil CEO Rex Tillerson told CNBC.”There is the potential for there to be further pressure on the market for a period of time,” he said in an interview that aired Thursday on “Squawk Box.”
“I think people kind of need to settle in for what is likely to be a bit of a volatile time, and I think need to settle in for what may be volatile around this level we’re at.”……………………………………….Full Article: Source

The Newest Commodity: Oil Storage Space

Posted on 06 March 2015 by VRS  |  Email |Print

U.S. crude-oil storage tanks are filling rapidly, with inventories posting their largest gain in nearly 14 years last week. The cost to store oil is also rising, as tank space becomes scarce in some regions. Gulf Coast storage is at an all-time high of 219.9 million barrels, the U.S . Energy Information Administration said Wednesday, which is about 77% of capacity.
Perhaps coincidentally, CME Group Inc. said Wednesday that it’s starting a new futures contract to trade – what else? – Gulf Coast crude-oil storage. CME owns the New York Mercantile Exchange. The exchange operator says this is the first-ever oil-storage futures contract. It will work like this:……………………………………….Full Article: Source

World’s biggest listed commodities trader says 2015 could be a boom year for oil

Posted on 05 March 2015 by VRS  |  Email |Print

Glencore Plc, the world’s biggest listed commodities trader, said 2015 could be a boom year for oil amid the biggest price swings in six years. “It is looking very well structured for oil trading,” Chief Executive Officer Ivan Glasenberg said in a conference call with analysts Tuesday. “If it continues like this, oil could have a blowout year.”
Volatility in Brent crude rose to the highest since 2009 last month, creating bigger gaps between prices that traders need to make a profit. Crude oil plunged 61 percent from June to January because of oversupply, before paring some of that slump. Glencore, based in Baar, Switzerland, and Vitol Group, the largest independent trader, will benefit from bigger price swings in 2015, said Fitch Ratings Ltd., a provider of financial information………………………………………..Full Article: Source

Saudi Arabia expects oil price to stabilize

Posted on 05 March 2015 by VRS  |  Email |Print

Saudi Arabia’s oil minister said on Wednesday he expected oil prices, which hit a near six-year low in January, to stabilize, signalling cautious optimism about the market outlook. Giving a speech in the German capital, Ali al-Naimi also urged non-OPEC producers to help balance the oil market, saying it was not up to Saudi Arabia to subsidize higher-cost producers and that circumstances required non-OPEC to cooperate.
“Going forward, I hope and expect supply and demand to balance and for prices to stabilise,” Naimi said. “Global economic growth seems more robust.”……………………………………….Full Article: Source

Welcome to the ‘new paradigm’ in crude oil

Posted on 05 March 2015 by VRS  |  Email |Print

The oil market bid farewell to $100 prices for West Texas Intermediate crude back in July, and many years may pass before it sees it again. Analysts at UBS on Wednesday said the market has entered a “new paradigm,” with WTI oil prices remaining “lower for longer.” They expect prices to trade in the $65 to $70 a barrel range “at least over the next several years.”
“The success of U.S. oil shale has been a game changer for the industry,” the analysts, led by Angie Sedita, said. “U.S. oil shales have lowered the cost of the marginal barrel of oil with roughly 60% of the basins economic at $65/bbl oil or lower.”……………………………………….Full Article: Source

Why OPEC is dead

Posted on 05 March 2015 by VRS  |  Email |Print

With oil’s price collapse, we can now declare that OPEC’s reign as king of the market is over. However, just as certain is the fact that there is no one to assume the throne. A new oil market and industry are taking shape—and without clear leadership, there will be many positive and negative consequences for global energy security.
As we consider OPEC’s fall, it is important to understand that it was never able to fully control the oil spigot at whim, nor the global economic forces most responsible for setting the oil price. In fact, at the rise of its intervention in the oil market in the 1970s, when its Arab members ordered an embargo that sent prices skyrocketing, OPEC’s actions actually hurt itself more than its consumers and contributed to its eventual decline………………………………………..Full Article: Source

Commodities explained: Hedging oil volatility

Posted on 04 March 2015 by VRS  |  Email |Print

The plunge in oil prices has strained the balance sheets of drillers and reduced costs for airlines. One way that companies manage the risks from commodities market swings is through hedging. So what is hedging exactly?
No silly gardening jokes please. Hedging involves locking in a price to buy or sell a commodity in the future. It is a form of insurance against adverse moves in markets notorious for them. Hedging is also employed in currencies, interest rates and stock indices, but it originated in grain markets……………………………………….Full Article: Source

Saudis Boost Oil Price to Asia Most in 3 Years as Demand Grows

Posted on 04 March 2015 by VRS  |  Email |Print

Saudi Arabia, the world’s largest crude exporter, increased the pricing terms for Arab Light sold to Asia by the most in three years as demand improved. State-owned Saudi Arabian Oil Co. said Tuesday it will sell cargoes of Arab Light in April at 90 cents a barrel below Asia’s regional benchmark. That narrows the discount by $1.40 from March, the biggest price increase since January 2012, according to data compiled by Bloomberg. The company also raised prices it offers to refiners in the U.S.
“We expected an increase, but the degree of increase is on the higher side of expectations,” Eugene Lindell, a senior analyst at JBC Energy GmbH in Vienna, said Tuesday by phone. “The Asian market is a little bit stronger compared to the last months,” and Aramco’s adjustments reflect that strength……………………………………….Full Article: Source

Kenya plan needs oil price rebound-Africa Oil

Posted on 04 March 2015 by VRS  |  Email |Print

Oil prices would probably need to rise to about $75 to $85 a barrel from around $60 currently for Tullow Oil and Africa Oil to go ahead with their Kenyan project, the chief executive of Africa Oil said.
CEO Keith Hill told the Reuters Africa Investment Summit he was confident that crude prices would recover to around those levels long before a final investment decision, due by the end of 2016, is made. “We still need oil prices to recover probably above today’s levels to pull the trigger on the project sanction,” he said. “I am quite confident that oil prices will recover by the end of the year.”………………………………………Full Article: Source

Barrett: Counter OPEC’s power by boosting American crude oil exports

Posted on 04 March 2015 by VRS  |  Email |Print

Drivers can mostly thank the lower cost of gasoline to the highest level of domestic oil production in four decades — over 9 million barrels per day. With American energy production booming and gas prices plummeting, it’s difficult to imagine a return to the shortages that characterized the 1973 Arab oil embargo.
But Saudi Arabia, Kuwait and the rest of the Organization of Petroleum Exporting Countries have recently launched a price war to force Americans back to a dependency on foreign energy. They are being aided by an outdated U.S. policy prohibiting the export of domestic crude oil……………………………………….Full Article: Source

Oil gloom won’t hit aluminium industry: Expert

Posted on 04 March 2015 by VRS  |  Email |Print

Qatar’s aluminium industry remained resilient to the global economic downturn and dwindling oil prices. The total annual production of aluminium in Qatar is continuously growing and expected to touch 640,000 tonnes in 2015, which is 9.4 percent higher than the installed capacity of Qatalum plant (585,000 tonnes), a senior official of Qatalum said.
“We were not affected by oil crisis, and our production level is still increasing. The annual production in 2014 reached 612,000 tonnes, about five percent higher than the full capacity,” said Tom Petter Johansen (pictured), CEO of Qatalum……………………………………….Full Article: Source

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