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Commodities Briefing - Category | Oil more

US oil ends below $79 after brief spike amid supply fears

Posted on 04 November 2014 by VRS  |  Email |Print

Global oil prices reversed a rally on Monday, with benchmark Brent returning to the red after a big hike in Saudi Arabia’s monthly export prices was viewed as a signal OPEC’s largest producer may be seeking to curb output.
State oil firm Saudi Aramco said it would raise the price of its flagship Arab light crude in December for customers in Asia and Europe, reversing some price cuts the previous month. It will cut prices for U.S. buyers………………………………………..Full Article: Source

Venezuela, Ecuador to present OPEC with plan to defend oil prices

Posted on 04 November 2014 by VRS  |  Email |Print

Venezuela and Ecuador are working on a joint proposal to defend oil prices that the two countries will present at the next OPEC meeting, Venezuelan President Nicolas Maduro said. Venezuela was the first country to request an extraordinary meeting of Organization of the Petroleum Exporting Countries to discuss the sharp drop in crude prices that began in October, but the idea got little support.
“Our Foreign Minister Rafael Ramirez was in Ecuador today coordinating with the government of President (Rafael) Correa, and we are going to take a proposal to OPEC,” Maduro said during a televised broadcast. “We’re working internationally to defend, as we should, the price of oil.”……………………………………….Full Article: Source

Is a secret ‘oil war’ raging?

Posted on 03 November 2014 by VRS  |  Email |Print

Oil prices have been falling for the past two months. The OPEC basket price has ranged between $80 and $90 a barrel compared to the $100-$115 range of the past four years. This recent drop happens at a time when oil-producing countries will draft their 2015 budget and try to adopt an average oil price for the upcoming year.
The drop in oil prices is expected to adversely affect their budgets. Markets usually expect OPEC countries to cut production when prices fall. This time, however, OPEC is looking to US shale oil to contribute to price stability, because the increase in shale oil production has impacted the markets………………………………………..Full Article: Source

Putin feels the pinch as falling oil price sees Russia’s growth downgraded

Posted on 03 November 2014 by VRS  |  Email |Print

Deutsche Bank revises down its estimates for Russia’s economic as Brent crude oil slides towards $80 per barrel. Russia’s economy is being hammered by falling oil prices but analysts are warning that the financial pain for the Kremlin has only just begun.
“The Russian economy is heavily reliant on oil revenues, with energy and energy-related production amounting to a substantial share of total economic output, half of the federal budget revenues and almost two-thirds of export revenues,” wrote Deutsche Bank’s research team in a note to investors………………………………………..Full Article: Source

Regan: Why OPEC is fine with falling oil prices

Posted on 03 November 2014 by VRS  |  Email |Print

Chances are you’ve been feeling a bit better about the economy in the last couple of months — and that optimism may have nothing to do with the stock market. Instead, you can thank lower prices at the gas pumps, a welcome boost to consumer spending power.
Despite increasing tensions in the Middle East, the nationwide average for a gallon of gas stands below $3 for the first time in four years — a roughly 20% drop from June levels. And OPEC, the oil-producing group that controls an estimated 40% of world supply and aims to keep oil prices as high as it can, seems to be just fine with that………………………………………..Full Article: Source

OPEC in price war, Iraq says members vie for market

Posted on 03 November 2014 by VRS  |  Email |Print

Members of OPEC, the group that supplies 40 percent of the world’s oil, are engaged in an internal price war as they seek to preserve their share of an oversupplied market, Iraqi Oil Minister Adel Abdul-Mahdi said.
“There is a price war within OPEC,” Abdul-Mahdi told an evening session of the parliament in Baghdad on Thursday last week, which was broadcast on state-run television. “The market’s fundamentals have changed, with an extra 3 million barrels a day of crude entering the market at a time when growth in China and India has slowed.”……………………………………….Full Article: Source

OPEC Chief Warns Against Oil Price Panic

Posted on 03 November 2014 by VRS  |  Email |Print

OPEC Secretary-General Abdalla Salem el-Badri says he doesn’t expect demand for the cartel’s oil or its production levels to change in the coming year, and he is urging member states not to be alarmed by oil’s current low prices. “Don’t panic,” el-Badri said Oct. 29 at an impromptu news conference in London, where he was attending a conference. “I am sure the market will balance itself.”
The concern, if not the panic, already is present. The price of the global petroleum benchmark, Brent crude, plunged a little more than $87 a barrel the day he made those comments — nearly $30 less than it was in June, a loss of about one-fourth of its value………………………………………..Full Article: Source

Will OPEC or America Blink First at Low Oil Prices?

Posted on 03 November 2014 by VRS  |  Email |Print

North American oil producers and OPEC nations seem to be in a standoff. Like Clint Eastwood and some bad dude in an old western movie, both have their hands close to the holster, waiting for the other to make the first move. This time, though, the guns they are reaching for would slow down oil production, relieve excess supply, and in turn raise oil prices from the lows we haven’t seen since the financial collapse of 2008.
With oil at $80 per barrel, neither group is happy, but both are saying that they will be able to outlast the other in this price environment. So, which one is right?……………………………………….Full Article: Source

It Looks Like $80 Oil Is Here to Stay

Posted on 31 October 2014 by VRS  |  Email |Print

The oil selloff appears to be permanent. Record-breaking increases in U.S. production, a resurgent Libya, and Saudi Arabia lowering its prices in a bid to keep its share of Asian customers—all of it has combined to knock oil prices down 25 percent since June, and there might be more room to fall.
A “structural transition has been reached,” analysts at Goldman Sachs (GS) wrote this week, and the ability to determine oil prices has shifted from OPEC to the U.S. The report, entitled “The New Oil Order,” argues that it’s time for American oil producers to slow down in the face of weak demand growth around the world and the quick pace of change………………………………………..Full Article: Source

Oil-Price Drop Has Saudi Officials Divided

Posted on 31 October 2014 by VRS  |  Email |Print

While international oil prices have plunged this month, Saudi Arabia’s normally talkative oil minister Ali al-Naimi has been on vacation.
Mr. al-Naimi’s absence from the fray—people familiar with his agenda say he was on vacation from the end of September and only returned to his office in recent days—is one symptom of the unusually high level of dissent within the secretive kingdom that has left it uncertain over how to respond to oil’s downturn………………………………………..Full Article: Source

These countries are getting killed by cheap oil

Posted on 31 October 2014 by VRS  |  Email |Print

Oil is selling for roughly $83 a barrel on the global market. That’s bad news for Iran, Nigeria, Venezuela, Russia, and Saudi Arabia, among others. They need the black stuff to trade at far loftier levels in order to balance their budgets.
Iran’s budget, for example, is built on oil at $135 dollars per barrel, according to data from Deutsche Bank and Thomson Reuters compiled by DoubleLine Capital. Russia has oil budgeted at $100, while Saudi Arabia will break even at $95 per barrel……………………………………….Full Article: Source

Oil price slide will lead to hiatus in M&A-bankers

Posted on 31 October 2014 by VRS  |  Email |Print

The recent fall in oil prices will put a nascent recovery in oil sector mergers and acquisitions on hold, senior bankers told an industry conference on Thursday.
Until around six to eight weeks ago, there was a sense that the market was recovering and a pickup in deal-making activity, Michael O’Dwyer, co-head of EMEA natural resources at Morgan Stanley, told the Oil and Money conference………………………………………..Full Article: Source

OPEC Oil Output Rises in October as Prices Tumble: Survey

Posted on 31 October 2014 by VRS  |  Email |Print

OPEC crude production rose to a 14-month high in October as oil futures sank into a bear market, a Bloomberg survey showed. Production by the 12-member Organization of Petroleum Exporting Countries climbed by 53,000 barrels a day to 30.974 million, led by gains in Iraq, Saudi Arabia and Libya, according to the survey of oil companies, producers and analysts.
Last month’s total was revised 14,000 barrels a day lower to 30.921 million because of changes to the Iraqi, Kuwaiti, Nigerian and Qatari estimates………………………………………..Full Article: Source

OPEC chief sees no big change on oil output in 2015

Posted on 31 October 2014 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (OPEC) is unlikely to change much on its output next year, and there is “no need to panic” at the price drop, said the OPEC’s secretary general Abdalla El-Badri Wednesday in London.Badri said:” I don’t think 2015 will be far away from 2014 in terms of production. There is nothing wrong with the market.”
OPEC’s expected production level is 30 million barrels per day (bpd) this year. “If prices stay at 85 U.S. dollars, we will see a lot of investment, a lot of oil, going out of the market, about 65 percent of the producers, they have high costs. Not OPEC,” he told the conference………………………………………..Full Article: Source

No Need to Panic at Oil Price Drop: OPEC

Posted on 30 October 2014 by VRS  |  Email |Print

There is no need to panic at the recent drop in oil prices, the secretary general of OPEC said on Wednesday, saying low prices would curb competing supplies and require the group to pump far more by the end of the decade.
Abdullah al-Badri said output of higher-cost oil supplies such as shale would be curbed if oil remained at around $85 a barrel, while the Organization of the Petroleum Exporting Countries enjoys lower costs and will see higher demand for its crude in the longer term………………………………………..Full Article: Source

OPEC Chief Says Output Likely to Stay Unchanged Despite Price Fall

Posted on 30 October 2014 by VRS  |  Email |Print

OPEC’s oil output is likely to remain around the same level next year as it has this, while the group is unlikely to cut the ceiling on its production at a meeting next month despite the recent sharp slide in global oil prices, its secretary-general said Wednesday. “I don’t think 2015 will be far away from 2014 in terms of production,” Abdalla Salem el-Badri told reporters on the sidelines of an industry conference in London.
Mr. al-Badri’s comments will temper expectations that the Organization of the Petroleum Exporting Countries could seek to cut its oil output in response to oil price weakness at its next meeting in Vienna, Nov. 27………………………………………..Full Article: Source

OPEC Says Shale Drillers First Affected by Oil-Price Drop

Posted on 30 October 2014 by VRS  |  Email |Print

Shale oil drillers will be hurt by the fall in crude prices before members of OPEC because their costs are higher, according to the group’s Secretary-General. As much as 50 percent of tight oil output will be “out of the market” at current prices, while the Organization of Petroleum Exporting Countries is not in a critical situation, Abdalla El-Badri said at the Oil & Money conference in London.
“First of all, will be the tight oil” affected by the drop in prices, El-Badri said. “If prices stay at $85, we will see a lot of investment, a lot of projects, a lot of oil going out of the market.”……………………………………….Full Article: Source

Why OPEC’s losing its ability to set oil prices

Posted on 30 October 2014 by VRS  |  Email |Print

OPEC ‘s glory days of steering global oil prices may be at an end. U.S. shale oil will replace the Organization of the Petroleum Exporting Countries as the first-mover “swing producer,” according to a Goldman Sachs report from the weekend-meaning OPEC is losing its power to set global prices for crude.
Saudi Arabia, the world’s largest oil exporter, no longer has “the ability to push prices lower than the production costs of U.S. shale” because any cuts from the kingdom would “accommodate the further expansion of U.S. shale, as well as reduce Saudi profits,” Goldman said………………………………………..Full Article: Source

OPEC unable to rebalance oil markets, price to be the leveller: PIRA Energy

Posted on 30 October 2014 by VRS  |  Email |Print

NYC-based PIRA Energy Group believes that cyclical strengthening is currently underway in the global economy with the U.S. in a better position to support global growth. In the U.S., stock excess modestly widens. In Japan, crude runs ease, but crude stocks draw. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
World oil market forecast. Cyclical strengthening is currently underway in the global economy with the U.S. in a better position to support global growth. OPEC cannot rebalance oil markets because the surplus is too large………………………………………..Full Article: Source

Energy Boom Can Withstand Steeper Oil-Price Drop

Posted on 30 October 2014 by VRS  |  Email |Print

Oil prices would need to fall at least another $20 a barrel to choke off the U.S. energy boom, industry experts say, though some smaller American producers would face serious problems from a more modest decline.
Small and midsize companies—not global giants—are behind the surge in U.S. oil output, which hit 8.97 million barrels a day earlier this month, according to federal statistics. Some of these drillers have taken on a lot of debt, which was easier to justify when oil was going for as much as $107 a barrel just four months ago………………………………………..Full Article: Source

PwC: US oil, gas transaction value hits 10-year high in 3Q

Posted on 30 October 2014 by VRS  |  Email |Print

Driven by a rise in billion-dollar deals, midstream activity, and interest in upstream shale plays from foreign buyers, mergers and acquisitions in the US oil and gas industry reached the highest levels in the past decade during the third quarter, according to a quarterly report from PwC US Energy Practice.
During the 3-month period ending Sept. 30, 78 oil and gas deals with values of more than $50 million took place, accounting for $123 billion in total value, compared with 43 deals worth just $16.4 billion in last year’s third quarter. That represents 649% growth in total deal value………………………………………..Full Article: Source

Energy groups left bruised as falling oil prices bite into profits

Posted on 29 October 2014 by VRS  |  Email |Print

Tumbling oil prices have hit the earnings of two big London-listed energy companies, in one of the first tangible signs of how the oil supply glut is reverberating across the global economy. FTSE 100 oil and gas producers BP and BG Group both reported a fall in third-quarter profits on Tuesday, in part due to the drop in the oil price over the period.
“This is prompting the whole sector to consider the implications of a sustained period of lower oil prices,” said Brian Gilvary, BP’s chief financial officer. BG’s interim executive chairman Andrew Gould said the company might be forced to delay future investments if the current price environment worsens………………………………………..Full Article: Source

Barclays Cuts Oil-Price Forecasts on World Supply Surplus

Posted on 29 October 2014 by VRS  |  Email |Print

Barclays Plc cut its oil-price forecasts for the second time this month, citing expectations that OPEC won’t cut supplies sufficiently to remove a global surplus. The bank reduced its 2015 estimate for the average Brent price to $93 a barrel from $96, and for West Texas Intermediate to $85 from $89.
Still, oil has probably reached its lowest point for this year as the oversupply temporarily diminishes and “should recover modestly” during the rest of the quarter, the bank said. “OPEC supply-side adjustments are expected, but these are unlikely to be sufficient to overcome a lackluster demand picture in the first half of the year,” analysts Miswin Mahesh and Michael Cohen wrote in a report today………………………………………..Full Article: Source

Why the Drop In Oil Prices Caught So Many By Surprise

Posted on 29 October 2014 by VRS  |  Email |Print

It’s not just Wall Street banks such as Goldman Sachs Group Inc. that got it wrong. Energy consultants and even the U.S. government didn’t foresee the sharp slide in oil prices, which have tumbled 25% since June.
Goldman shocked the market yesterday with a call for U.S. prices to fall to $70 a barrel in the second quarter of 2015. Barclays just released its second price update in three weeks, and other banks are releasing lower forecasts at least monthly. What did they miss?……………………………………….Full Article: Source

Why Does Saudi Arabia Seem So Comfortable With Falling Oil Prices?

Posted on 29 October 2014 by VRS  |  Email |Print

Oil prices continue to tumble: down about 25 percent since mid-June to a four-year low, and many analysts believe there is no end in sight. While that’s good for consumers and most businesses in the U.S., the falling price is bad for oil-exporting countries such as Russia, Venezuela, Iran and Iraq.
And blame — or credit — for the plummeting prices is falling squarely on Saudi Arabia. The kingdom, often called the “central banker of oil,” is still the key player in oil prices, says Rachel Bronson, author of Thicker Than Oil: America’s Uneasy Partnership with Saudi Arabia………………………………………..Full Article: Source

Crude at $80 a Barrel? No Sweat, Say Oil Producer CEOs

Posted on 29 October 2014 by VRS  |  Email |Print

U.S. energy companies are shrugging off a 24 percent plunge in oil prices, confident they can adapt and still make money. Amid predictions that the biggest drop in crude prices since the global financial crisis six years ago will choke off cash flow and slow drilling, industry leaders are reassuring investors they still have the means to return ample profits.
Improved technology is bringing down costs and most shale producers operate in multiple basins, allowing them to shift work to the most profitable sites………………………………………..Full Article: Source

OPEC: Hobbit Or Orc?

Posted on 29 October 2014 by VRS  |  Email |Print

The recent drop of $20 or so in oil prices from near all-time highs has pundits racing for their typewriters. Okay, laptops or something. Many have declared OPEC dead or ineffective, and one academic has noted that OPEC almost always produces over quota, proving it’s not a competent cartel.
Needless to say, aged methane emissions like me tend to sigh in our beards when we read this. OPEC has been declared dead more times than Mark Twain or the Boston Red Sox (next year for sure!) and yet it continues to hold meetings and set production quotas, as if thousands of pundits aren’t shoveling dirt on their coffin………………………………………..Full Article: Source

Goldman slashes 2015 oil price forecast as glut grows

Posted on 28 October 2014 by VRS  |  Email |Print

Goldman Sachs has slashed its 2015 oil price forecasts, making it the most bearish among major financial institutions, adding pressure on Monday to crude futures that have already tanked near 25 per cent over the past five months. The US investment bank said rising production will outstrip demand, joining other oil analysts who predict consumption will be dented by slower global economic growth and lead to a supply glut.
Goldman analysts said in a report released late on Sunday that they expect US benchmark West Texas Intermediate (WTI)crude to fall to US$75 a barrel and Brent to US$85 a barrel in the first quarter of 2015, both down US$15 from their previous forecast………………………………………..Full Article: Source

Oil price will fall to $70 US a barrel in 2015, Goldman Sachs says

Posted on 28 October 2014 by VRS  |  Email |Print

One of the world’s leading investment banks says the benchmark price of North American oil is going to fall even further, to $70 US a barrel by next spring. Investment bank Goldman Sachs slashed its forecast late Sunday night for both West Texas Intermediate (known as WTI) and Brent crude — the two most common types of oil used and sold in North America and Europe.
Goldman Sachs says WTI will go for $75 a barrel in the first three months of 2015. Brent, meanwhile, will change hands at $85 a barrel. Both forecasts are down $15 from what the bank was last expecting. And both are forecast to slip even lower in the second quarter — historically a seasonally low time for oil prices — before rebounding a little in the summer of 2015………………………………………..Full Article: Source

Hedge funds pick wrong in oil bet

Posted on 28 October 2014 by VRS  |  Email |Print

Hedge funds rushed back into oil too quickly, boosting bullish bets amid a rebound last week, only to then watch surging US crude supplies push prices back to a two-year low. The net-long positions in West Texas Intermediate futures rose 5.7 per cent in the seven days to October 21, US Commodity Futures Trading Commission data showed. Short bets shrank 20 per cent, the most in three months, while longs dropped 2.8 per cent.
After rising as analysts speculated prices had reached a floor, WTI sank again after stockpiles climbed. It fell to US$80.52 on October 22, the lowest settlement since June 2012, and ended the week down 24 per cent from the year’s high. The US benchmark might dip to US$75 by the end of the year, Bank of America Corp said………………………………………..Full Article: Source

Are low oil prices here to stay?

Posted on 28 October 2014 by VRS  |  Email |Print

Oil prices at multi-year lows may be just the beginning, with some analysts forecasting “black gold” may permanently lose its luster. “We have entered a new era in world oil,” Dan Yergin, vice chairman at IHS and Pulitzer Prize winning author of The Prize: the Epic Quest for Oil, Money and Power, told CNBC.
“The dominant thing is this growth in U.S. supply,” he said, noting production there is up 80 percent since 2008 for an output greater than 11 out of 12 OPEC countries………………………………………..Full Article: Source

Pain looms for commodity index investors as oil contango nears

Posted on 28 October 2014 by VRS  |  Email |Print

After a months-long battering from tumbling crude prices, commodity index investors may soon have another reason to consider leaving the oil market: contango.
For the first time since January, the U.S. West Texas Intermediate (WTI) crude oil futures market is poised to flip into contango, a structure in which prompt prices are below longer-dated contracts, typically signaling a weaker market. Outright oil prices have already tumbled about 25 percent since summer………………………………………..Full Article: Source

IMF urges Gulf states to restrain spending as oil price falls

Posted on 28 October 2014 by VRS  |  Email |Print

The International Monetary Fund has urged Middle Eastern oil producers to restrain spending and speed up economic reforms to reduce the fiscal risks of a sustained period of lower oil prices, warning that Saudi Arabia, the region’s largest oil exporter, could run a budget deficit as early as next year.
Speaking at the release of the IMF’s latest regional economic outlook report, Masood Ahmed, the fund’s regional director, said that if oil prices fell to $75 a barrel for a sustained period, Gulf states would see projected fiscal surpluses of $275bn falling to $100bn………………………………………..Full Article: Source

OPEC may be forced to act on oil prices

Posted on 28 October 2014 by VRS  |  Email |Print

Even with North America as a new driver of world oil prices, it may be OPEC that turns the tide. As West Texas Intermediate crude trades at $80 and Brent continues to slide toward $85, speculation is increasing that the Organization of Petroleum Exporting Countries will reverse course and cut production at its Thanksgiving meeting.
Saudi Arabia surprised the market when it vowed to hold production levels, while giving price breaks to Asian customers, but the slide in prices may be too painful for other OPEC members, analysts say. OPEC meets on Nov. 27………………………………………..Full Article: Source

Iran says OPEC meeting unlikely to lower output ceiling

Posted on 28 October 2014 by VRS  |  Email |Print

OPEC is unlikely to lower its oil production ceiling when the group meets in November, a senior Iranian oil official said, in comments that reduced the likelihood of any collective OPEC action to support prices.
Iran is normally among the first members of the Organization of the Petroleum Exporting Countries to call for action to support prices. Iran needs relatively high prices as Western sanctions limit its oil exports, analysts say………………………………………..Full Article: Source

Goldman slashes its crude oil price forecasts by US$15 for 2015

Posted on 27 October 2014 by VRS  |  Email |Print

Goldman Sachs has cut its price forecast for Brent and West Texas Intermediate by US$15 a barrel for the first quarter of 2015 because rising production in non-OPEC countries outside North America is expected to outstrip demand.
The U.S. investment bank slashed its forecast for WTI to US$75 a barrel from US$90 and for Brent to US$85 a barrel from US$100, it said in a research note on Sunday. The bank’s analysts expect WTI to fall to as low as US$70 a barrel and Brent to US$80 a barrel during the second quarter of next year, when it expects oversupply to be the most pronounced………………………………………..Full Article: Source

Sabic chief exec says oil price decline is temporary

Posted on 27 October 2014 by VRS  |  Email |Print

The recent decline in global oil prices will prove temporary even if it lasts a year or so, since population growth will ultimately bring higher consumption and prices, the chief executive of Saudi Basic Industries Corp (Sabic) said.
Mohamed al-Mady was speaking to reporters yesterday after the company, one of the world’s largest petrochemical groups and the Gulf’s largest listed company, reported a 4.5% drop in thirdquarter net income, missing analysts’ forecasts. It blamed sluggish third-quarter sales, which edged down to 48.71 billion riyals (RM42.56bil) from 48.80 billion riyals a year earlier………………………………………..Full Article: Source

5 reasons oil prices aren’t rising

Posted on 27 October 2014 by VRS  |  Email |Print

The old oil bull market, the one where oil went to $140 per barrel, now feels like ancient history. Oil prices have recently been challenging lows not seen since 2012. Continuously rising oil prices not only translate to higher prices at the pump but also to higher prices of goods because of the increased production and transportation costs. But now the economy is dealing with steadily falling oil prices in recent months, which can contribute to deflation — itself a source of concern.
24/7 Wall St. wanted to focus on five key reasons the price of oil is not rising. There are, of course, more than just five reasons for oil prices not rising. We avoided the role of currency movements, which have lately added a new curve ball — the dollar has rallied against major currencies, and oil is priced in dollars. Another factor we have not explored is Iran. If Iran’s energy infrastructure comes back online in full, this could further add to downward pressures on oil prices………………………………………..Full Article: Source

GCC ‘relatively upbeat’ despite oil price plunge

Posted on 27 October 2014 by VRS  |  Email |Print

Gulf states, which have based their budgets on an oil price of $80 a barrel or less, are likely to remain relatively sanguine about current oil market conditions, say Saudi-based economists and analysts. Their assessment follows International Monetary Fund chief Christine Lagarde’s recent warning that Gulf states would face budget shortfalls if the recent decline in oil prices persists.
“A sustained decline of $25 a barrel in the oil price would reduce the revenues of most Gulf countries by eight percent of gross domestic product, and put many of them into a fiscal deficit situation,” Lagarde told reporters on the sidelines of a conference in Kuwait City………………………………………..Full Article: Source

Why it’s time to stop fearing OPEC

Posted on 27 October 2014 by VRS  |  Email |Print

The global energy market can be a scary place for America. For decades, one of the biggest reasons has been the cartel known as OPEC. Saudi Arabia and the 11 other nations that make up the Organization of Petroleum Exporting Countries collude openly, setting production limits and shaping the world oil market in their interests.
Concerns about OPEC have driven American energy policy ever since a devastating six-month embargo by Arab oil producers in 1973 plunged the nation into recession and seared the four-letter acronym into the national consciousness………………………………………..Full Article: Source

The paradox of lower gas prices and low carbon subsidies

Posted on 27 October 2014 by VRS  |  Email |Print

There is an old Daily Mash story from 2009 where the headline screams: ‘Price of gas to rise, say men who set price of gas’. The argument goes that big energy company bosses have a vested interest in talking up gas prices. If that was ever true (I am not convinced it is), no-one is listening any more.
Last week, DECC announced it had revised its forecasts for future gas prices down. DECC tends to take the consensus position on fossil fuel prices, so its change reflects what most gas soothsayers have been saying for a while; prices look soft at the moment, even if you take into account recent falls………………………………………..Full Article: Source

Oil will tumble to $70 says new ‘bond king’

Posted on 24 October 2014 by VRS  |  Email |Print

The meltdown in the oil market is not over yet. That’s the message from Jeffrey Gundlach, the star bond investor who predicts oil will plunge another $10 (it’s $80 a barrel now). While another decline in oil prices would bring smiles to American consumers — think around $2.70 a gallon at the pump as a national average — it could spell trouble for the boom in shale projects boosting the U.S. economy.
“I think it’s going to $70 and if it does, it’s bye, bye fracking. Goodbye all of the great job creation from fracking because fracking becomes too expensive if you can buy oil at $70 a barrel,” Gundlach said on Wednesday at ETF.com’s Inside Fixed Income Conference………………………………………..Full Article: Source

Russia says oil at $90 to $110 is ‘fair price’

Posted on 24 October 2014 by VRS  |  Email |Print

The ‘fair’ and most comfortable oil price for world economies would range between $90 and $110 per barrel, with any fluctuations from that involving certain risks for the industry, Russia’s Energy Minister Aleksandr Novak said.
Most analysts believe the falling oil price won’t last long, as cheaper oil would make most of the current projects in the industry unprofitable, according to Novak speaking at the National oil and gas forum in Moscow on Wednesday………………………………………..Full Article: Source

Cheaper oil: Many winners, a few bad losers

Posted on 24 October 2014 by VRS  |  Email |Print

The collapse of the Soviet Union in 1991 had many causes. None was as basic as the fall in the price of oil, its main export, by two-thirds in real terms between 1980 and 1986. By the same token, the 14-year rule of Vladimir Putin, heir to what remained, has been bolstered by a threefold rise in the oil price.
Now the oil price is falling again. Since June, it has dropped from about $115 for a barrel of Brent crude to $85 or so—a reduction of roughly a quarter. If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences. For some governments it would be a rare opportunity; for others, a threat………………………………………..Full Article: Source

Saudi Arabia’s Risky Oil-Price Play

Posted on 24 October 2014 by VRS  |  Email |Print

With the U.S. on track to become the world’s largest oil producer by next year, it’s become popular in Washington and on Wall Street to call America the new Saudi Arabia. Yet the real Saudi Arabia hasn’t relinquished its role as the producer with the most influence over oil prices. Its reserves of 266 billion barrels, ability to pump as many as 12.5 million barrels a day, and, most important, its low cost of extracting crude still make it a formidable rival to the U.S., whose shale wells are hard to exploit.
“Saudi Arabia is the only one in the position of putting more oil on the market when they want to and cutting production when they want to,” says Edward Chow, a senior fellow at the Center for Strategic and International Studies in Washington. The Saudis are also the most powerful member of OPEC, the 12-member group that’s increasingly facing off against Russian, U.S., and Canadian production………………………………………..Full Article: Source

U.S. To Produce More Oil & Gas Than Russia…For Decades

Posted on 24 October 2014 by VRS  |  Email |Print

The U.S. shale oil and gas renaissance has effectively stripped Russia from its status as biggest non-OPEC oil producing state. And Russia won’t recover for the next 25 years. Or more, according to the U.S. Energy Information Agency.
U.S. oil and gas production is seen going from 9.8 million barrels a day in 2011 to 14.2 million per day in 2020. By then, Russia will produce an average of 10.7 million barrels daily. And while Russia’s oil production will rise by an average of 0.6% year over year between now and 2040, U.S. oil production will be a little bit better, at around 1% growth per year………………………………………..Full Article: Source

Are Declining Oil Prices Increasing the Risks to OPEC, U.S. Energy Security or Clean Fuels Supplies?

Posted on 24 October 2014 by VRS  |  Email |Print

World crude oil prices have declined by over 20% since June 2014. While this level of price volatility is not without historic precedent, prices are projected to possibly decline to much lower levels by year’s end. Further decline in crude oil market prices will impact most petroleum oil Suppliers and Consumers.
Lower oil prices should directionally benefit Consumers and help struggling economies around the World. The decline in oil prices, however, can pose economic and other risks to many petroleum oil and alternative fuels Suppliers. Will declining crude oil market prices create significant economic and sustainability risks to the OPEC Cartel, U.S. Energy Security or Alternative Clean Fuels programs?……………………………………….Full Article: Source

Dow Chemical Says Lower Oil Price to Boost Global Economy

Posted on 23 October 2014 by VRS  |  Email |Print

Dow Chemical Co. (DOW), the largest U.S. chemical maker by sales, said this year’s plunging oil prices will stimulate national economies and help rather than hurt its plastics business next year. Lower oil prices should help increase gross domestic product in the U.S., the U.K, Japan and China, Howard Ungerleider, chief financial officer of Midland, Michigan-based Dow, said on a conference call with analysts today.
The positive effect will become more visible through 2015, he said. “Low oil price means more demand in the GDP,” Chairman and Chief Executive Officer Andrew Liveris said on the call………………………………………..Full Article: Source

Bank of Canada to issue report on the effect of low oil prices

Posted on 23 October 2014 by VRS  |  Email |Print

The Bank of Canada’s latest read on the national economy is expected to explore a pressing question Wednesday: How much are low oil prices affecting the country’s bottom line? The price of oil recently hit a two-and-a-half year low, a sharp fall that is prompting Canadian policy-makers and the corporate world alike to reflect on the potential risks of lower prices.
The central bank has indicated it would attempt to measure the impact of tumbling prices in its quarterly monetary policy report, scheduled for release on Wednesday………………………………………..Full Article: Source

Lower oil prices push Russia toward recession

Posted on 23 October 2014 by VRS  |  Email |Print

If sanctions, inflation and political risk weren’t enough, falling oil prices are pushing Russia’s already beleaguered economy toward recession. The price of Brent crude oil, a global benchmark, hit a four-year low last week, plunging to below $83 per barrel from $116 in June.
While it was just under $85 on Wednesday, there is considerable risk it could dip well below $80, costing Russia, whose budget gets half its revenue from oil and gas exports, billions of dollars, analysts said. Geopolitics and oil prices have already reduced Russia’s budget by an amount equal to 4% of its gross domestic product. A loss of “$10 per barrel costs (Russia) 500-600 billion rubles a year” — equivalent to $12.2 billion to $14.6 billion, said Natalia Orlova, chief economist at Alfa Bank, by telephone………………………………………..Full Article: Source

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