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Commodities Briefing - Category | Oil more

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

Economist’s faith in oil price rebound vindicated

Posted on 03 March 2015 by VRS  |  Email |Print

Oil prices have been climbing steadily since the end of January, a rebound that has brought some cheer to TAC Economics chairman Thierry Apoteker. Not because the chief economist of the French-based research firm had bet big on the nascent rally that has taken the shine off naysayers’ predictions that oil prices would stay depressed.
Instead, he can afford to breathe just a tad easier as he believes he has been proved right in his predictions. At the start of the year, as oil prices languished in the doldrums with doomsday predictions of a plunge to US$20 a barrel, Dr Apoteker was the odd man out………………………………………..Full Article: Source

Oil price volatility to curb M&As

Posted on 03 March 2015 by VRS  |  Email |Print

The oil market volatility will likely curb merger and acquisition activity across several sectors in in the first half of 2015, though a sustained low oil price environment will eventually trigger a consolidation trend among small producers in the oil and gas industry, experts told The Daily Star.
“The uncertainty around the medium term equilibrium oil price is likely to result in a continuation of lower M&A deal volume in the short term,” said Adnan Fazli, oil and gas financial advisory leader for Deloitte Middle East………………………………………..Full Article: Source

U.S. Oil Prices Fall

Posted on 03 March 2015 by VRS  |  Email |Print

U.S. oil prices fell Monday on concerns about a continued oversupply of crude, paring earlier gains. Light, sweet crude for April delivery settled down 17 cents, or 0.3%, to $49.59 a barrel on the New York Mercantile Exchange.
Futures rose above $51 a barrel earlier in the session after a widely watched forecaster said crude supplies in a key storage hub grew by a smaller-than-expected amount last week. Data service Genscape Inc. reported that oil inventories in Cushing, Okla., grew by 1.39 million barrels in the week………………………………………..Full Article: Source

Explaining the global oil-price drop

Posted on 02 March 2015 by VRS  |  Email |Print

The Middle East is burning. Jets fighter from Saudi Arabia, Jordan, the United Arab Emirates (UAE) and Egypt have attacked numerous Islamic State (IS) movement targets in Syria, Iraq and Libya, mainly in response to the sadistic killing of a captured Jordanian pilot, Moaz al-Kasasbeh.
In this hostile conflict, begun in June 2014, oil prices have dropped significantly, from the highest level of more than US$100/barrel in 2010 to approximately $50 this year. Yet Saudi Arabia, the biggest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) did not do anything to cut oil supply, to stabilize prices………………………………………..Full Article: Source

Oil prices at $60 is ‘new normal’, says Colombian finance minister

Posted on 02 March 2015 by VRS  |  Email |Print

Mauricio Cárdenas, Colombia’s finance chief, says country is adjusting to new era of lower prices. The era of $100 oil is over, according to Colombia’s finance minister, who said the country was preparing for a “new normal” of between $60 and $70 per barrel.
Mauricio Cárdenas said Colombia, which produces one million barrels of oil per day, was “not counting” on prices returning to their June high of $115 a barrel in the coming years. “We’re making everything that is necessary to adjust in a small and gradual way to prices between $60 and $70,” he told the Telegraph………………………………………..Full Article: Source

‘Happy Naimi’: Calm Saudi Arabia signals $60 oil price for the long-haul

Posted on 02 March 2015 by VRS  |  Email |Print

OPEC kingpin Saudi Arabia is feeling vindicated after a strategy of allowing oil to flood the market has begun to achieve what it was aiming for. As a global oil glut pushed prices down 60 percent between June 2014 and January 2015, signs began to emerge that OPEC’s rivals, including North American producers, will have to curtail output of their expensive barrels.
Two months into 2015, oil prices have recovered to around $60 per barrel from their January lows of $45 – much faster than Saudi Arabia had hoped for when it convinced fellow OPEC members in November not to cut output to defend market share against shale oil and other competing supply………………………………………..Full Article: Source

Oil prices can ‘bounce back’ to $80 per barrel

Posted on 02 March 2015 by VRS  |  Email |Print

Davy Stockbrokers is forecasting a recovery and tightening in global oil prices in the second half of this year, adding that numbers can rise from the current $59 to $60 per barrel level to a long-term price of $80 per barrel.
“While the edge may have come off demand growth, the primary driver of weaker oil prices has been the relentless increase in US light tight oil or shale-based oil that requires controversial methods, such as ‘fracking’ to find] production and, to a lesser extent, sustained output from OPEC,” said Job Langbroek, Davy’s senior exploration and mining analyst in a new detailed report on the price of oil………………………………………..Full Article: Source

Iraq tips oil price jump to $US65

Posted on 02 March 2015 by VRS  |  Email |Print

Iraqi Oil Minister Adel Abdel Mahdi says he expects the price of crude oil, which dropped to a six-year low in January, to continue recovering to reach $US64 ($A82.12) or $US65 per barrel. “I don’t think they (prices) will return to their former levels immediately… We expect them to rise more, probably to $US64 or $US65,” he told reporters.
Brent North Sea crude, the global benchmark, had tumbled to $US45 per barrel at the beginning of the year, less than half the level reached six months earlier. It surged to $US62 on Friday. Iraq, which is hugely dependent on oil exports for revenue and is fighting a costly war against the Islamic State jihadist group, also owes more than $US20 billion to the oil companies operating in the south, Mr Abdel Mahdi said………………………………………..Full Article: Source

India Budget 2015: High profile oil & gas sector gets no mention by FM Jaitley

Posted on 02 March 2015 by VRS  |  Email |Print

Barring duty rejig for petrol and diesel, Finance Minister Arun Jaitley did not mention the high profile oil and gas sector in his Budget speech yesterday. This happened against the backdrop of certain inputs by the Petroleum Ministry being found among the stacks of stolen documents.
Jaitley, presenting the Budget for 2015-16 yesterday in the Lok Sabha, did not mention of any initiative in the oil and gas sector other than an excise duty rejig on petrol and diesel to make available Rs 40,000 crore for roads and highway construction. A dozen persons were arrested last month for allegedly stealing official documents from the coal, power and oil ministries. The stacks of stolen documents recovered included details of exploration sites, natural gas pricing and the Oil Ministry’s arbitration with Reliance Industries……………………………………….Full Article: Source

Oil Drops as Gain in Saudi Arabian Output Boosts OPEC Production

Posted on 02 March 2015 by VRS  |  Email |Print

Oil fell after capping its first monthly gain since June as increased production from Saudi Arabia lifted OPEC’s output beyond its collective quota for a ninth month. Futures decreased as much as 1.1 percent in New York. The Organization of Petroleum Exporting Countries pumped 30.6 million barrels a day in February, above the group’s output target of 30 million a day, according to a Bloomberg survey.
U.S. drillers cut the number of rigs in service for a 12th week to the fewest since June 2011, Baker Hughes Inc. data showed. Saudi Arabia led OPEC’s decision in November to maintain the group’s output, exacerbating a global glut that drove oil almost 50 percent lower in 2014………………………………………..Full Article: Source

US Will Never Gain Oil Market Crown Says IEA Head

Posted on 02 March 2015 by VRS  |  Email |Print

No matter how much oil the United States produces over the next few years, it will never become the next Saudi Arabia in the global oil market, according to Fatih Birol, the new executive director of the International Energy Agency (IEA). What’s especially interesting about this forecast is that it directly contradicts what Birol said only three months ago, and he gave no explanation for his change of mind.
On Feb. 26, Birol told The Telegraph’s Middle East Congress in London that OPEC, particularly the Persian Gulf members, will prevail over all other producers for the foreseeable future, even though the revolution in extracting shale oil has been “excellent news” for American producers………………………………………..Full Article: Source

Oil industry investment plunges after commodity price tumble

Posted on 27 February 2015 by VRS  |  Email |Print

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

OPEC mulls emergency meeting amid low oil prices

Posted on 27 February 2015 by VRS  |  Email |Print

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

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

Posted on 27 February 2015 by VRS  |  Email |Print

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

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

Posted on 27 February 2015 by VRS  |  Email |Print

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

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

Posted on 27 February 2015 by VRS  |  Email |Print

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

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

Posted on 26 February 2015 by VRS  |  Email |Print

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

Nigeria Proposes Cutting Oil Price Benchmark to $52 a Barrel

Posted on 26 February 2015 by VRS  |  Email |Print

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

Oil Price Crash: Top 5 At-Risk Countries

Posted on 26 February 2015 by VRS  |  Email |Print

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

Oil Demand Seen as Growing

Posted on 26 February 2015 by VRS  |  Email |Print

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

The end of OPEC

Posted on 26 February 2015 by VRS  |  Email |Print

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

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

Posted on 25 February 2015 by VRS  |  Email |Print

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

Is there a Logical Oil Price?

Posted on 25 February 2015 by VRS  |  Email |Print

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

Oil back below $50 as OPEC hopes fade

Posted on 25 February 2015 by VRS  |  Email |Print

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

Are low oil prices here to stay?

Posted on 24 February 2015 by VRS  |  Email |Print

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

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

Posted on 24 February 2015 by VRS  |  Email |Print

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

OPEC Said Not to Plan Emergency Meeting Amid Falling Oil Prices

Posted on 24 February 2015 by VRS  |  Email |Print

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

Oil continues to fall, and Opec isn’t helping

Posted on 24 February 2015 by VRS  |  Email |Print

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

Oil’s Plunge Could Help Send Its Price Back Up

Posted on 23 February 2015 by VRS  |  Email |Print

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

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

Posted on 23 February 2015 by VRS  |  Email |Print

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

Oil giant BP predicts Opec comeback as Brent crude price rises

Posted on 23 February 2015 by VRS  |  Email |Print

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

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