Europe is planning on recolonizing Libya, and so it will send in armed forces in the coming months to restore order and stem the flow of migrants coming from Africa. If this expedition army succeeds in securing parts of the country and restoring law and order, Italian and German engineers from ENI and Wintershall will follow suit to help resume the country’s oil production, which will add 1.3 million barrels per day (Libya produced 1.7 million barrels per day before Muammar Gaddafi was toppled in 2011) to the world oil glut . Continue reading
Oil and Gas
Last month we saw the iPath S&P GSCI Crude Oil ETN (USA) making an unusual dive, doing completely the opposite of what it was designed to do. Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN) are mainly designed to follow an index. To explain the basic principles of an ETF real quick, we take the AEX index as an example. The AEX is formed out of 25 funds each with their own weighing. The ETF issuer buys the shares of the companies according to their weighing in the AEX index. One is able to track the index pretty accurately this way. The ETF issuer buys it on a big scale and sells shares of their basket of AEX shares. The share that they are selling are called ETFs. The difference between an ETF and an ETN is the fact that the ETN is a note. The problem is the third party risk, with an ETN you’re facing the risk of the issuing party going bankrupt. If they do, the chances are that you will lose your money. Continue reading
World oil consumption is more than 90 million barrels a day. Between 2009 and 2014 oil was traded for about 110 dollars a barrel; now oil is changing hands for 32 dollars a barrel. Roughly a 7-billion-dollar cash flow a day is vanishing from the global market. Norway’s sovereign wealth fund that has accumulated a stake of 4.5 billion dollars in Apple over the past years1, will turn from an Apple buyer into an Apple seller.
The China Development Bank (a Chinese policy bank) has poured nearly 50 billion dollars into Venezuela in return for oil, with the country now collapsing under the Chinese debt, having no other choice but to drill for more oil. These are just some of the challenges the world is facing in 2016 as oil prices are heading towards 20 dollars a barrel.
Speculators and manipulators were able to manipulate the oil price to more than 120 dollars a barrel, with the production cost being roughly between 20 and 80 dollars. With a huge profit margin the world was digging for more and more liquid gold. Continue reading
Oil price has collapsed and is not going to rebound quickly. But not all the oil-consumer countries benefit from low prices in the same way. And not all oil-producer countries suffer equally.
Oil prices change as the values of currencies do. Purchase or sale contracts for oil are usually long term ones, the price of oil in such contracts does not change very frequently. Fluctuating exchange rates of currencies are still enormously important for the economies. Oil for $40 per barrel does not mean that this barrel is also as cheap in all countries as consumers have to buy dollars in order to purchase a barrel. Or producers sell their barrels for dollars and then exchange these dollars for their own currency. The domestic price based on the exchange rate is not always stable. Continue reading
Ukraine does not plan any additional purchases of gas from Russia by the end of this year. The reversed flow from the EU and the falling consumption have allowed gas storage tanks to be filled up to 53 percent, from about 46 percent last year, according to Gas Infrastructure Europe data. Russia is losing its blackmailing-tool on Ukraine.
Source: Ukrtransgaz statictics
After many years of prosperity, the tough time has come for the US shale industry. Dramatic US oil production decline is inevitable and many shale companies face bankruptcy. Their assets can end up to larger producers, reinforcing market concentration. US energy independence can only be saved by government intervention. US government will remove exports limitation and FED September rate hike suspension is related to the unsustainable debt levels US oil industry is keeping afloat. But that is simply not enough to prevent a collapse of the US oil industry. From our research we learn that cost per barrel declined slightly but decreasing production cost is not enough to compensate for lower oil price. US oil production already declined 400K barrels per day from its April peak. We estimate an other 2 to 3 Million barrels can be wiped out the coming year.
A few months ago, when the oil price rise again before the June crush, the US oil industry seemed to be able to go through the difficult times. „It is too late for OPEC to stop the shale revolution”1, „OPEC can’t stop the shale industry”2 – roared the headlines. However, after last publications of Energy Information Administration (EIA) the OPEC and Saudi Arabia are the only one to triumph. Continue reading
CRUDE OIL (WTI)
CRUDE OIL (BRENT)
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Turkey warned energy companies on Sunday against working with the Greek Cypriot government in carrying out exploratory drilling in the eastern Mediterranean, saying such activities could damage regional stability. Source: Reuters
Refiners in Japan and South Korea are looking to resume Iranian oil imports from January after receiving waivers from U.S. sanctions on Tehran, sources familiar with the matter said. Source: Reuters
Tehran has expressed hope that the Iran nuclear deal can be saved despite the US pulling out of the agreement. Iran’s statement came during a visit of the British foreign minister to Iran. Source: Deutsche Welle
Tajik President Emomali Rahmon has launched a new hydroelectric station that had been vehemently opposed for years by the late leader of neighboring Uzbekistan, Islam Karimov. Source: Radio Free Europe
At least three tankers loaded with liquefied natural gas (LNG) from Russian LNG facility Yamal have arrived in the United States recently, according to Russia’s Foreign Ministry spokeswoman Maria Zakharova. Source: Oil Price
Iraq restarted exports on Friday of Kirkuk oil, halted a year ago due to a standoff between the central government and Kurdistan’s semi-autonomous region, after a new government in Baghdad agreed a tentative deal with Erbil. Source: Reuters
A long-awaited project led by France’s Total SA that will help double liquefied natural gas (LNG) exports from Papua New Guinea has come another step closer, with the government agreeing to set financial terms early next year. Source: Reuters
US energy giant ExxonMobil has started exploring for oil and gas in block 10 of Cyprus’s Exclusive Economic Zone (EEZ), the country’s energy minister, Giorgos Lakkotrypis, said on Friday. Source: Ekathimerini
India’s crude oil imports from Africa jumped in October to their highest level in three years as Indian refiners rushed to secure more African barrels amid uncertainties over the U.S. waivers for Iran’s oil, while a narrowing premium of Brent Crude prices over Dubai swaps made Brent-linked African grades more attractive for buyers in Asia. Source: Oil Price
Nigeria will increase its oil production to 1.8 million barrels per day in 2019 and raise condensate production to 0.5 million bpd, the managing director of Nigerian state oil firm NNPC said on Tuesday. Source: Reuters
Saudi Arabia has announced a major cut in oil production to rebalance global markets and prop up plunging oil prices, citing U.S. sanctions waivers that are enabling Iran to keep exporting oil to most of its top customers. Source: Radio Free Europe
Several thousand drivers took to the streets and roads of more than 20 cities to protest high prices at the pump, local media report. Also as part of the protests, many loaded minute amounts of gasoline at local fuel stations, paying for it in small change as a symbolic gesture. Source: Oil Price
Natural gas is expected to overtake coal as the world’s second largest energy source after oil by 2030 due to a drive to cut air pollution and the rise in liquefied natural gas (LNG) use, the International Energy Agency (IEA) said on Tuesday. Source: CNBC
The United States could yet impose new sanctions to try to block construction of the Russian Nord Stream 2 gas pipeline across the Baltic Sea to the European Union, the U.S. ambassador to the EU said on Tuesday. Source: Reuters
Khalid al-Falih told reporters that Saudi Aramco’s customer crude oil nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 percent. Source: Reuters
Iran sold 700,000 barrels of crude oil to private companies for export on Sunday in a second round of sales aimed at countering U.S. sanctions on the country’s exports, oil ministry news website SHANA reported. Source: Reuters
China has recently overtaken Japan to become the world’s biggest importer of natural gas and will likely keep that crown as pipeline and liquefied natural gas (LNG) infrastructure grow. Source: Oil Price
The drillship Stena IceMax, commissioned by US oil giant ExxonMobil to drill for hydrocarbons, has been in Block 10 of Cyprus’s exclusive economic zone since Sunday night, according to Cypriot state radio RIK. Source: Ekathimerini
The Indian government allowed on Thursday foreign national oil companies (NOCs) to fill India’s Strategic Petroleum Reserve (SPR) at Padur, in a move to cut budget expenses for storage costs. Source: Oil Price
A South Korean delegation including oil buyers is expected to head to Iran next week to discuss resuming Iranian oil imports after a three-month halt, three sources with knowledge of the matter said. Source: Reuters
Iraq plans to increase its oil output and export capacity in 2019, with a focus on its southern oilfields, and is close to reaching a deal with international companies, Oil Minister Thamer Ghadhban said on Tuesday. Source: Reuters
South Korea will be able to import around 4 million barrels/month of Iranian oil under a US sanctions waiver announced Monday, but it will also continue striving to diversify its crude and condensate supply sources. Source: S&P Global
Russian energy giant Gazprom and Austrian oil and gas company OMV have signed a supplement to a contract in order to increase gas supplies to Austria by 1 bln cubic meters per year. Source: TASS
Japanese buyers of Iranian crude are expected to prepare for resuming oil imports from the Islamic Republic after the country was granted a waiver from U.S. sanctions, trade minister Hiroshige Seko said on Tuesday. Source Reuters
