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Texas Set To Overtake Iraq In Oil Production

Posted on 04 July 2014 by VRS  |  Email |Print

America’s increasing reliance on hydraulic fracturing to recover energy trapped in shale will soon lead Texas to generate more oil than Iraq, OPEC’s No. 2 producer.
Texas produced just over 3 million barrels a day in April for the first time in nearly four decades, according to a new report by the U.S. Energy Information Administration (EIA). That accounted for 36 percent of the United States’ total production for the month — 8.4 billion barrels per day………………………………………..Full Article: Source

Technology paves road to freedom from OPEC

Posted on 04 July 2014 by VRS  |  Email |Print

News out of Iraq has helped drive oil prices higher in recent weeks. One of the predictable results has been a slew of articles about how rising oil prices could thwart a U.S. economic resurgence. While that might be partially and temporarily true in the very short run, the reality is that the U.S. will have relatively stable energy prices for the foreseeable future.
In general, most of the articles miss the real reasons behind slow economic growth and are just breathy attempts to get pageviews. The main reason for the rangebound energy prices in America — which I discussed here — is the rapid pace of energy-related technology the past decade. ……………………………………….Full Article: Source

Petrochemicals latest China commodity to be hit by potential fraud

Posted on 03 July 2014 by VRS  |  Email |Print

Chinese petrochemical imports have become the latest commodity financing tool to come under investigation for possible fraud, highlighting the risks from the widespread use of raw materials as collateral to raise loans and skirt credit restrictions.
Commodity financing deals in China, which Goldman Sachs has estimated to be worth as much as $160 billion, have come under close scrutiny after an alleged metal financing fraud at Qingdao Port, a huge trading hub in eastern China………………………………………..Full Article: Source

Kuwait expects oil price to ease

Posted on 03 July 2014 by VRS  |  Email |Print

Kuwait Oil Minister Ali Al-Omair said he expects oil prices to ease following a rise prompted by unrest in oil-producing OPEC members Iraq and Libya. “Markets have witnessed a slight increase recently, but this rise will not last for long as prices will stabilize.
They have already started to ease and return to normal levels,” said Omair, cited by the KUNA news agency. He attributed the prise rise to violence in Iraq and Libya, both key oil producers and exporters in the Organization of Petroleum Exporting Countries………………………………………..Full Article: Source

The Peak Oil Crisis: Iraq on the Precipice

Posted on 03 July 2014 by VRS  |  Email |Print

The daily newspapers are now full of stories predicting that Iraq, as we know it, will soon disintegrate into three or more warring states. In the last two weeks Sunni insurgents led by the extremist ISIS have routed a good part of the Iraqi army, taken over much of northern Iraq not controlled by the Kurds, and now are moving close to Baghdad.
Despite the dispatch of American and Iranian military advisors to at least assess the situation, most observers say government forces are too weak to drive back the insurgents and retake the lost territory. Washington is refusing to get involved unless the Shiite-dominated Iraqi government makes radical changes in its relations with the Sunnis and Kurds………………………………………..Full Article: Source

World Oil Markets Can Deal With Situation In Iraq – Lew

Posted on 03 July 2014 by VRS  |  Email |Print

US Treasury Secretary Jack Lew said on Tuesday there was ample oil production capacity to offset any supply disruptions that may occur due to the violence in Iraq. “I believe that world energy markets will be able to deal with the situation as it goes forward,” Lew said.
“I don’t think it’s in the interest of any of the parties in Iraq for there to be a severe disruption in supply,” he added. “There is sufficient capacity in the world right now to deal with whatever we need to deal with.”……………………………………….Full Article: Source

Opec output slips in June over Iraq crisis

Posted on 03 July 2014 by VRS  |  Email |Print

Opec’s oil output has fallen in June from May’s three-month high, a survey found on Monday, as fighting in Iraq closed its largest oil refinery and technical problems slowed its southern exports.
The slight decline underlines how unrest and outages in the Middle East and Africa are taking their toll on Opec supply, just as the International Energy Agency is highlighting a greater need for Opec oil in the rest of the year………………………………………..Full Article: Source

Texas oil production set to top No. 2 OPEC country

Posted on 03 July 2014 by VRS  |  Email |Print

Texas now is pumping 36 percent of the nation’s oil, more than doubling its production in three years, according to new federal data. The Energy Information Administration reports that Texas oil production topped 3 million barrels per day in April, for the first time since the late 1970s.
Nearly as much crude flowed from Texas as from Iraq, which was the second largest OPEC producer in April at 3.2 million barrels per day, according to estimates from Bloomberg. The news agency estimates that Iraq’s production fell to 2.9 million barrels in June amid insurgent violence, which would drop it below Texas oil if the state’s supply continued to rise as it did every month since 2011………………………………………..Full Article: Source

Iraq conflict gives a jolt to oil prices

Posted on 02 July 2014 by VRS  |  Email |Print

Oman crude oil on the Dubai Mercantile Exchange last month reached levels not achieved since last September on renewed tensions in Iraq and the potential threat to oil production.
The DME August-delivery Oman crude contract settled at US$109.44 per barrel, up $2.98 from the closing May price of $106.46 when the July contract settled. The monthly average of the DME, which is used by Oman and Dubai to set their official selling price, was $108.08 a barrel, up from $105.65 in May and also the highest since September. The $2.43 a barrel increase was the largest monthly rise since August, as crude oil prices finally broke out of the narrow trading ranges that had characterised the market this year………………………………………..Full Article: Source

Increase in oil prices over the years have spurred innovations that have led to efficient use of energy inputs

Posted on 02 July 2014 by VRS  |  Email |Print

Oil is a critical source of energy. In the past, a major oil price shock meant devastation for economic growth. “Our obsession with oil prices comes with good reason,” writes Morgan Stanley economist Ellen Zentner. “Abrupt and sharp increases in oil prices have played a key role in precipitating recessions in 1973-75, 1980-81, 1990-91, 2001 and 2008-09.”
Recent turmoil in Iraq has sent oil prices much higher. But economists aren’t ready to freak out just yet. “Over time, however, those shocks to the relative price of oil have spurred innovations that have led to a more efficient use of energy inputs,” continued Zentner………………………………………..Full Article: Source

Where The US Got Its Oil in 2013

Posted on 02 July 2014 by VRS  |  Email |Print

As events in Iraq continue to unfold, we have been getting quite a few queries on just how much oil the US imports from Iraq. In my previous post – The Top 10 Oil Producers in 2013 — I showed that even though the US is a major oil producer, we are an even greater oil consumer. So we import millions of barrels a day of oil from over 40 countries — one of which is in fact Iraq.
The Energy Information Administration (EIA) tracks US oil imports and finished product exports, and I have tabulated our Top 10 sources of crude oil imports from 2013. Overall, the US imported 7.7 million barrels per day (bpd) of crude oil in 2013, a 2 million bpd decline since 2008………………………………………..Full Article: Source

Opec’s crude output climbs as members fill in for loss

Posted on 02 July 2014 by VRS  |  Email |Print

Opec crude production climbed for a second month in June as gains in Saudi Arabia and Nigeria made up for the loss of Iraqi barrels, a Bloomberg survey showed.
Production by the 12-member Organisation of Petroleum Exporting Countries (Opec) rose by 278,000 barrels a day to 30.223 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 43,000 barrels a day lower to 29.945 million because of changes to the Kuwaiti, Libyan and Ecuadorian estimates………………………………………..Full Article: Source

SocGen: Iraq supply shock could drive oil price to $150

Posted on 01 July 2014 by VRS  |  Email |Print

The oil price could spike to $150 per barrel briefly if the conflict in Iraq hits operations in the country’s major southern oil fields, Société Générale (SocGen) has warned. A report by the bank noted that this kind of supply shock could affect up to 2.6 million barrels per day of Iraqi oil exports, CNBC reported.
A disruption of this scale could then spark a co-ordinated release of strategic oil reserves by member states of the International Energy Agency, although SocGen acknowledged this was an unlikely event. Meanwhile, Saudi Arabia could also put more oil onto the market to mitigate the impact on the global economy………………………………………..Full Article: Source

Could Lower Oil Prices Bring Chaos to Oil Exporters?

Posted on 01 July 2014 by VRS  |  Email |Print

The growth in oil production in the United States is forecasted to cause financial strain on oil exporters by lowering oil prices; as Edward Morse put it, “Lost market share and lower prices could pose a devastating challenge to oil producers dependent on exports for government revenue.”
Such statements are common, but they are not very credible. Even if we assume that oil prices will fall (they have not yet), the financial impact on oil exporters will vary—and many oil exporters are much better prepared to cope with lower oil prices than in the 1980s………………………………………..Full Article: Source

OPEC oil output slips in June on Iraq

Posted on 01 July 2014 by VRS  |  Email |Print

OPEC’s oil output has fallen in June from May’s three-month high, a Reuters survey found on Monday, as fighting in Iraq closed its largest oil refinery and technical problems slowed its southern exports.
The slight decline underlines how unrest and outages in the Middle East and Africa are taking their toll on OPEC supply, just as the International Energy Agency is highlighting a greater need for OPEC oil in the rest of the year………………………………………..Full Article: Source

Iraq and the oil market: How much will prices rise?

Posted on 01 July 2014 by VRS  |  Email |Print

It stands to reason that one of the effects of the turmoil in Iraq will be a change in oil prices. Indeed, the violence in OPEC’s second-largest producer has already sent oil prices to 10-month highs.
A recent report from the International Energy Agency (IEA) put it well: “While Iraq’s production is huge, so are the political hurdles it is facing — and nothing provides a clearer example of that risk than the military campaign.” Yet this is no time to panic. For one, Iraq is not the only dark cloud hovering over the world oil market………………………………………..Full Article: Source

Rising Oil Prices Loom Over World Economic Recovery

Posted on 27 June 2014 by VRS  |  Email |Print

The global economy faces a new threat from an old enemy: oil. A spike in the price of crude foreshadowed economic slumps in each of the last four decades. So economists are worrying because the price of Brent crude, considered the benchmark for the industry, recently reached its highest point in nine months—above $115 a barrel.
The jump in price came amid fresh violence in Iraq, the Organization of the Petroleum Exporting Countries’ second-biggest producer after Saudi Arabia. Brent started the year about $6 cheaper………………………………………..Full Article: Source

What would an oil price shock mean for EM?

Posted on 27 June 2014 by VRS  |  Email |Print

Although the violence in Iraq has so far had a muted impact on global oil markets, if prices continue to rise there could be some nasty consequences in store for the more fragile of emerging market economies. And while a spike would hurt countries that rely on energy imports, it won’t necessarily translate into quick and easy economic gains for EM hydrocarbon exporters, say analysts.
The price of a barrel of Brent crude has risen from $109 to $114 since large swaths of Iraq began falling to extremist militias of the Islamic State of Iraq and the Levant (Isis) two weeks ago………………………………………..Full Article: Source

What is driving fear out of nat gas market?

Posted on 27 June 2014 by VRS  |  Email |Print

Rising U.S. shale gas production is driving fear out of the futures market, says Goldman Sachs Group Inc., and will constrain prices for the next two decades. Gone will be the near tripling of costs to $15.78 as in 2005 as traders remain confident the fuel will be there when needed.
Natural gas will trade “largely” at $4 to $5 per million British thermal units for the next 20 years, says Goldman Sachs. Societe Generale SA sees prices at $5 through 2019. Bank of America Corp. forecasts $5.50 for 2017, while BlackRock Inc. projects $4 to $5 for the next decade………………………………………..Full Article: Source

Oil markets poised for record as Iraq crisis deepens

Posted on 26 June 2014 by VRS  |  Email |Print

Oil markets have staged only a muted reaction to the bloody insurgency gripping OPEC’s number two producer Iraq, but analysts warn any disruption to supplies could push prices to record peaks. The offensive led by extremists that has swept through the north of the country and is now threatening to rip Iraq apart has sent prices to nine-month highs but they remain $30 below the peaks hit in 2008.
“This contrasts with the period of civil war in Libya in early 2011 that halted production. Back then, oil prices, volatility and skew all reacted far more aggressively,” said BNP Paribas analysts Harry Tchilinguirian and Gareth Lewis-Davies………………………………………..Full Article: Source

Two Key Issues That Will Determine Next Year’s Oil Prices

Posted on 26 June 2014 by VRS  |  Email |Print

Rising oil production in the US and slowing oil demand growth in the rest of the world were expected to bring Brent oil prices below $100 a barrel, but supply disruptions in the Middle East and North Africa have kept them from happening.
Now that ISIS is holding substantial territory in Iraq, Raymond James analysts have increased their estimates for 2014 and 2015, but they also warn that there is a huge range of possible prices depending on how Mideast conflicts and US politics play out………………………………………..Full Article: Source

The US To Allow Crude Oil Exports; Not That It Will Make Much Difference

Posted on 26 June 2014 by VRS  |  Email |Print

We’ve the news that the US is to allow some crude oil exports for the first time since the ban on them was set in place in the 1970s. This is good news as it removes an economic inefficiency (and removing economic inefficiencies is always good news) but it’s not going to make all that much difference to the nation as a whole.
It’s really all a fight between the independent crude producers and the independent refiners. They, obviously, care about how this goes, crude exports or no crude exports, but it makes very little difference to the rest of us………………………………………..Full Article: Source

What If the U.S. Set Oil Prices?

Posted on 26 June 2014 by VRS  |  Email |Print

For decades now, the U.S. has essentially had to accept the oil prices set by world markets. Starting in 1973 with the OPEC-driven oil shock, the major producers have been foreign countries. If the U.S. wanted the oil, we had to pay the price. But are things starting to change?
U.S. moves toward allowing exports: Federal policy currently prohibits the export of oil, but today we saw the first crack in that wall: two companies have reportedly received permission to export a specific type of unrefined oil. Although the rulings haven’t been officially announced, and the Commerce Department says there’s been “no change in policy on crude oil exports,” the implications are clear………………………………………..Full Article: Source

World saved $3.5 trillion from emergency oil stocks: IEA

Posted on 26 June 2014 by VRS  |  Email |Print

The world has saved $3.5 trillion over the last 30 years by maintaining emergency oil stocks to offset supply shocks and curb price surges, the West’s energy watchdog said on Wednesday. The International Energy Agency (IEA) said in a report that emergency oil stocks held by member and non-member states have acted as an ” insurance” against oil supply disruptions.
Spiralling violence in key oil producer Iraq in recent weeks has pushed global oil prices to nine-month highs, reviving speculation of a release of strategic stocks in case of severe supply disruptions………………………………………..Full Article: Source

Oil price hike about fear, not Iraq output: OPEC chief

Posted on 25 June 2014 by VRS  |  Email |Print

The head of OPEC, the group of major oil exporters, says recent crude price increases are to blame on market fears caused by the crisis in Iraq but not on a drop in output. OPEC Secretary General Abdullah Al-Badry said Tuesday that Iraq is “still producing as normal,” with 95 per cent of its capacity in the country’s south being unaffected by the violence.
The price for a barrel of Brent crude, the key international benchmark, has risen from a stable level of $110 held over the past four years to about $115 following the takeover of some parts of Iraq by Sunni insurgents………………………………………..Full Article: Source

OPEC secretary general says no shortage of oil

Posted on 25 June 2014 by VRS  |  Email |Print

OPEC is ready to pump extra oil in the event of any supply disruptions caused by Iraq and its biggest producer, Saudi Arabia, can ramp up to capacity if needed, oil officials said on Tuesday.
For now the market is well-supplied and prices above $114 a barrel are the result of market nervousness, OPEC Secretary General Abdullah al-Badri said. An official from Saudi Arabia, the only OPEC member with significant spare capacity, said it was committed to supplying the market if needed………………………………………..Full Article: Source

Major Global Oil Price Shock Unlikely Despite Iraq Violence, says Standard Life

Posted on 25 June 2014 by VRS  |  Email |Print

Global oil prices are unlikely to experience a major shock in the near future despite continuing violence in Iraq, says Standard Life. In a market briefing report for investors, the financial firm said that even if the political situation continues to diminish Iraqi oil production is unlikely to be damaged further.
“After a period of unusual calm in global oil markets, the benchmark ICE Brent oil spot price spiked to just under $116 per barrel (bbl) late last week, its highest level since September last year,” said analysts in a statement………………………………………..Full Article: Source

Decline In Oil Echoed In Other Commodities

Posted on 25 June 2014 by VRS  |  Email |Print

Oil was the major loser overnight on speculation that Iraqi oil production won’t be disrupted by escalating violence in the country. Although the Iraqi army yesterday ceded control of the Baiji refinery in the north, they also recaptured some territory along the border with Jordan and Syria, according to Iraqi state TV.
Moreover, the fighting has remained concentrated in the north and center of the country, while the oil industry is concentrated in the south, so there has not been that much disruption to oil exports. The movement in the markets is largely a risk premium that rises and falls with the insurgents’ progress. The change in Brent futures over the last month suggests that the market is most concerned about what will happen this year and not as concerned about the longer-term future of oil prices………………………………………..Full Article: Source

Rising Oil Price Hits Fragile Importers

Posted on 25 June 2014 by VRS  |  Email |Print

High oil prices are starting to burden emerging economies, sparking concerns that tensions in the Middle East may derail fragile recoveries.
The price of a barrel of Brent crude has risen by more than 5% since June 12, when militants attacked and then overran several cities in major oil producer Iraq, and speculative money is firmly backing yet-higher prices. For economies including India, Turkey and Indonesia, a higher oil price is particularly onerous because they have to import most of the oil used to fuel their economies………………………………………..Full Article: Source

Oil Price Seen Rising Faster Than Market Shows on Iraq

Posted on 24 June 2014 by VRS  |  Email |Print

The worsening conflict in Iraq poses a bigger risk to long-term oil prices than traders anticipate, according to banks from Citigroup Inc. and Bank of America Corp.
Brent crude contracts for December 2018 cost $15.20 a barrel less than August, a spread that’s widened by 9.4 percent since the end of May. Violence in Iraq is the biggest risk to new supply this decade from any nation in the Organization of Petroleum Exporting Countries, the International Energy Agency said June 13………………………………………..Full Article: Source

7 Global Consequences Of Soaring Oil Prices

Posted on 24 June 2014 by VRS  |  Email |Print

Crude oil prices in the U.S. and around the world are hitting highs last seen in September amid the ongoing crisis in Iraq as terrorist group Islamic State in Iraq and Syria (ISIS) seizes cities and oil refineries in their march toward Baghdad. Here are seven ways that rising oil prices will impact global economies:
1. Growth in the euro zone, dragged down by France and Germany, is grinding to its slowest pace in six months, according to a June survey released Monday. About 5,000 companies across the currency area and in the manufacturing and services sectors reported higher input prices and specifically higher oil prices as “a key cause of rising costs,” according to survey compiler Markit………………………………………..Full Article: Source

Last Days For OPEC’s Quota System

Posted on 24 June 2014 by VRS  |  Email |Print

Taking OPEC Secretariat official figures as recent as April­May 2014, before the June 11th OPEC meeting in Vienna, the Secretariat was able to state that “OPEC member states [conforming to the quota system] collectively produced slightly less than the 30 million barrels/day Crude ceiling volume”.
In other words the quota could be rolled over yet again, markets would not be oversupplied, and prices would stay “comfortably” firm and high. However, this statement from OPEC admitted that “unscheduled outages and production losses” in the 12 member states supposedly complying with the 30 Mbd maximum output target, in May, were running at about 2.5 to 2.6 Mbd………………………………………..Full Article: Source

Iraq crisis puts oil markets on alert

Posted on 24 June 2014 by VRS  |  Email |Print

Increasing violence in Iraq, Opec’s second-largest oil producer, has spooked many markets, including oil. It has also elicited loud punditry about an emerging oil crisis, a need for the US to release strategic petroleum reserves and significantly higher prices throwing a monkey wrench into plans for global economic growth. But what are markets actually saying?
So far, the oil market’s reaction has been fairly benign. At most, there is a $5 premium in spot prices and perhaps a risk premium half that size in forward prices. Spot prices of Brent crude oil jumped 4.5 per cent (about $5 per barrel) on the fall of Mosul and the spreading territorial control of the Islamic State of Iraq and the Levant (known as Isis) over central Iraq………………………………………..Full Article: Source

Oil price risks put global inflation back in focus

Posted on 23 June 2014 by VRS  |  Email |Print

Iraq will be foremost in investors’ minds in the coming week as oil price risk has returned to markets, complicating the task for central banks, whose policies are beginning to diverge for the first time since the global financial crisis.
Oil prices neared nine-month highs late last week, touching $115 a barrel, and the advance of militants in Iraq – the second-largest OPEC producer – is destabilizing oil markets. That has implications for inflation in the United States and Europe, as well as Asia’s export-oriented economies that are large net importers of oil………………………………………..Full Article: Source

Oil and Iraq: Burning at both ends

Posted on 23 June 2014 by VRS  |  Email |Print

War in Iraq has lifted the oil price a little. Its long-term impact will be bigger. Before Islamist fighters seized much of northern Iraq, hopes that the recent era of stable oil prices would last rested heavily on the country. Its exports were expected to go on rising, providing lots of low-cost oil at a time when the depletion of mature fields elsewhere is beginning to bite into supplies.
The International Energy Agency has projected that Iraq’s production will jump from 2.5m barrels a day (b/d) now to 4.4m in 2015 and nearly 6m by 2020. Other forecasts have been even rosier. But as on so many occasions since 1980, war, sanctions and domestic upheaval have constrained the huge potential of OPEC’s second-biggest producer. The chances of restarting exports from northern Iraq (via a pipeline crippled by sabotage in March), and of investment and modernisation in the country’s south, are looking slimmer by the day………………………………………..Full Article: Source

$50 jump in oil prices could stall U.S. economy

Posted on 23 June 2014 by VRS  |  Email |Print

The record levels reached by the stock market this week have been tainted by just how marginal the gains have been. The S&P 500 closed at all-time highs three times in a row this week, gaining just over 1% by Friday. The weekly gains now resemble daily gains of yesteryear. In fact, the benchmark index has not had a daily move of more than 1% for more than two months. Still, the stock market is on track for solid monthly and quarterly gains barring a catalyst that may result in a long-awaited pullback.
Several such catalysts, such as sectarian war erupting in Iraq and consequently a sharp rise in oil prices, continued tensions between Ukraine and Russia and the Federal Reserve policy meeting were brushed off by investors in equity markets in the past week………………………………………..Full Article: Source

Bullish Oil Wagers Reach Record as Fighting Engulfs Iraq

Posted on 23 June 2014 by VRS  |  Email |Print

Hedge funds increased bets on rising crude prices to a record as fighting in Iraq threatened to disrupt supply from OPEC’s second-biggest member. Speculators raised their net-long position in benchmark West Texas Intermediate by 4.3 percent in the week ended June 17, U.S. Commodity Futures Trading Commission data show.
Futures reached a nine-month high on June 13 after fighters from the Islamic State in Iraq and the Levant, or ISIL, seized the northern city of Mosul and advanced toward Baghdad………………………………………..Full Article: Source

Will OPEC’s Geo-Political Crackup Put Russo/Iranian Alliance into Global Oil Driver’s Seat?

Posted on 23 June 2014 by VRS  |  Email |Print

The lightning-fast econo/political changes impacting the world’s oil alliances have critically undermined the solidarity of OPEC, while strengthening the new Russo/Chinese/Iranian block against the U.S./Canada/Mexico (NAFTA Alliance) and a weakening Saudi Arabia.
While the Saudis and Russia still represent the world’s only potential exporters of near 10 million barrels of oil per day, most OPEC members are in varying stages of disarray, preventing their adequate supply of the world’s oil needs. In fact, the runnerup OPEC suppliers, counted on to deliver one-third of the world’s energy requirements are on the verge of internal collapse………………………………………..Full Article: Source

Will the Iraqi Siege Cause Oil and Gasoline Prices to Spike?

Posted on 20 June 2014 by VRS  |  Email |Print

Should we be worried about a major spike in oil prices—and summer gas prices—because of the sectarian conflict in Iraq? It’s an important question in the markets right now, because every $10 increase in the price of oil shaves 0.5 percent of global growth. I’m cautiously optimistic for the moment that the answer will be: no.
Oil, as I’ve written before, is amongst the most fear driven commodities. Supply and demand are supposed to rule markets, but every time there’s a major conflict in the oil rich Middle East—from the Iranian revolution to the Gulf War—prices go up about 30 percent higher than they should be, regardless of the facts on the ground………………………………………..Full Article: Source

4 Things To Consider When Oil Prices Rise

Posted on 20 June 2014 by VRS  |  Email |Print

Industrial commodities. The current increase in the price of oil is obviously related to the turmoil in Iraq, and concerns that ISIS will disrupt the country’s oil production. As a result, the CRB raw industrials commodity spot price index has been falling recently. The price of gold hasn’t budged much, suggesting that the risks of higher inflation attributable to the recent rise in oil prices are offset by the risks of a recession.
Stock prices. The S&P 500 was highly correlated with crude oil prices from 2008-2012. Since then, the two have decoupled, with stocks rising to new record highs since March 28, 2013, while the oil price has been moving sideways in a volatile range………………………………………..Full Article: Source

Extra responsibility for Saudi Arabia

Posted on 20 June 2014 by VRS  |  Email |Print

The recent OPEC meeting was a non-event to the extent that most of the world media failed to show up to cover the meeting. No wonder. A roll over of the existing 30 million barrels per day (bpd) was expected and what happened was exactly like before in similar meetings.
For quite some time, the organization under the leadership of Riyadh, has managed to come with a new working formula devoid of typical political maneuvering — namely, freezing discussions on quotas, keep an eye on the demand and supply fluctuations and adjust whenever necessary by pumping more oil or cut some, and at the same time leave the price to be determined by the market………………………………………..Full Article: Source

Oil And Gold Prices Surge As Tensions In Iraq Escalate

Posted on 20 June 2014 by VRS  |  Email |Print

With tensions in Iraq escalating to the point that President Obama said he would deploy up to 300 military advisers to the country, investors sent prices of gold and oil surging in Thursday trading. Gold, the classic safe-haven trade, reached its highest point in two months as oil, whose Iraqi production could see pressure if ISIS (Islamic State of Iraq and Syria) militants move the conflict to the south of Iraq, surged to its highest price of the year.
Bolstered by a drop in the dollar and the Federal Reserve’s reticence to raise interest rates — not to mention the situation in Iraq — gold gained 3.7% in Thursday trading and surged to its highest price in two months. Gold futures, which hit as high as $1,322 an ounce during its regular trading session, settled at $1,314.10 for the day, its highest level since April 14. Spot prices, too, closed at $1,314 an ounce………………………………………..Full Article: Source

Investors need to guard against oil price spike

Posted on 19 June 2014 by VRS  |  Email |Print

Investment managers are learning to embrace failure. They have been wrong on two critical calls this year, on bond yields and on oil. As a result, the best friend of hedge fund managers, momentum, has for the time being deserted them. The issue now is to guard against the growing possibility of a true oil price spike.
The first call investors got wrong was on US Treasury yields. They were almost universally expected to rise gently from 3 per cent; instead, they have fallen to as low as 2.5 per cent. That led to drama within the market in spring as investors exited from cyclical sectors that do well when the economy is expanding (and hence bond yields are rising)…………………………………..Full Article: Source

If Iraqi oil goes off line, $200 oil is next

Posted on 19 June 2014 by VRS  |  Email |Print

The ISIS rebels have carved out an impressive swath of territory in northern Iraq. This has enormous implications and risks to the world’s oil supplies. Months before the ISIS rebels began their threatening move into Iraq’s southern regions, the International Energy Agency was imploring OEPC to produce and export an additional 1.2 million barrels per day (mbd) more oil by the end of 2014.
The sad fact is that out of 12 OPEC members, eight of them are collectively in decline. When summed together Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela were producing just over 14.5 million barrels per day in early 2005; but are now producing just 11.25 mbd…………………………………..Full Article: Source

OPEC May Bring Forward Next Meeting if Iraq Crisis Disrupts Exports

Posted on 19 June 2014 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries could meet ahead of schedule if the continuing crisis in Iraq disrupts the country’s exports of crude oil, officials from Gulf states that are members of the cartel said Wednesday.
At the end of its latest meeting last week, OPEC said it would keep its production ceiling for 2014 at 30 million barrels of oil a day and would next meet on Nov. 27. But that plan could change if the oil supply from Iraq is disrupted. Iraqi oil exports currently run at around 2.5 million barrels of oil a day…………………………………..Full Article: Source

Iraq’s Impact On Global Oil In Four Easy Charts

Posted on 19 June 2014 by VRS  |  Email |Print

In less than a week, al Qaeda splinter group Islamic State of Iraq and Syria (ISIS) has seized several key cities in the north and center of Iraq, the world’s seventh-largest oil-producing country, causing Iraq’s largest oil refinery to shut down Tuesday and bumping up international oil prices as traders fear the escalating violence could inhibit oil production.
Energy industry watchdogs have expected Iraq to expand its oil production considerably in the next decade, which would help keep global oil prices stable and meet rising global oil demand, particularly in China…………………………………..Full Article: Source

Iraq Unrest May Lead to $15-20 Rise in Oil Price in 2 Months: Exporters Body

Posted on 19 June 2014 by VRS  |  Email |Print

The Federation of Indian Export Organisations (FIEO) on Wednesday said the unabated turmoil in Iraq may lead to a spike in oil prices by $15 to 20 a barrel in the next couple of months, adding to inflation woes and jacking up India’s oil import bill.
India imports about 25 million tonnes of oil from Iraq each year. Militants pressing a major offensive in Iraq attacked Iraq’s biggest oil refinery on Wednesday, pushing up Brent for August settlement to about $113.60 a barrel on the London-based ICE Futures Europe exchange…………………………………..Full Article: Source

Black gold becoming more precious resource

Posted on 19 June 2014 by VRS  |  Email |Print

A five-year-long link between crude oil and gold has come apart as the economic recovery boosts energy consumption and lowers the metal’s appeal as a haven, encouraging investors to buy oil and sell gold.
The 120-day correlation between West Texas Intermediate crude and gold futures slipped into negative territory this year for the first time since July 2009, according to data compiled by Bloomberg. The relationship tightened, though remained negative, last week as military tension in Iraq boosted prices for both commodities…………………………………..Full Article: Source

Iraq insurgency puts Opec’s oil capacity forecast at risk

Posted on 18 June 2014 by VRS  |  Email |Print

The Islamist insurgency in Iraq is putting at risk a predicted increase in the amount of crude oil that can be produced by Opec countries. Opec had expected as much as 60 per cent of its predicted growth in capacity to have come from Iraq over the coming five years, a report from the International Energy Agency said.
The IEA had predicted that, following the US withdrawal of troops from Iraq, the country, which is already Opec’s second largest producer of crude oil, would be able to boost its production capacity by an additional 1.28 million barrels per day by 2019………………………………………..Full Article: Source

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IEA warns on Opec oil production risks

Posted on 18 June 2014 by VRS  |  Email |Print

The sectarian strife in Iraq has put growth of Opec crude oil production capacity over the next five years at risk, according to the International Energy Agency, highlighting the importance of the country to the global energy market. Roughly 60 per cent of the growth in the oil-producing cartel’s production capacity up until 2019 was expected to come from Iraq.
“Given Iraq’s precarious political and security situation, the forecast [for Opec output capacity growth of 2.08m barrels a day for 2013-19] is laden with downside risk,” the watchdog backed by wealthy nations said in its medium-term oil market report released on Tuesday………………………………………..Full Article: Source

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