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)
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- Secretary of State Mike Pompeo said that Iran is responsible for the drone attacks on important facilities in Saudi Arabia’s oil-rich Eastern Province that reportedly forced the kingdom to shut down half of its oil production on Saturday.
- Yemen’s Houthi rebels have claimed responsibility for the attacks, which created a huge fire at a processor essential to global energy supplies.
- “We call on all nations to publicly and unequivocally condemn Iran’s attacks,” Pompeo said. Source CNBC
Germany is confident that hitches threatening the Russian-led Nord Stream 2 gas pipeline will be resolved to allow completion of the project on time this year. Source Bloomberg
The United States has evidence that the Iranian tanker Adrian Darya 1 has transferred its crude oil to the Syrian government, breaking assurances it gave not to sell crude to the country, the US State Department said on Thursday. Source France24
Turkey wants its banks to write off loans to some energy projects as part of a larger plan to clear lenders’ books, an effort aimed at boosting credit in the nation’s ailing economy. Source Bloomberg
The head of Saudi Arabia’s sovereign wealth fund was made head of an executive committee overseeing plans to float shares in Saudi Aramco before he was named new chairman of the state oil giant this week, five sources familiar with the matter said. Source BusinessWorld
Saudi ARAMCO signed on Thursday a Memorandun of Understanding (MoU) with China’s Zhejiang free trade zone to facilitate its acquisition of 9 percent stake in Zhejiang integrated refinery and petrochemical complex, Aramco said in a statement. Source Reuters
Mexico has made the first moves to launch its annual $1 billion oil hedging program by asking banks for quotes, sources familiar with the deal said, while buying in financial oil options contracts for 2020 has risen in recent days, consistent with the giant trade. Source Reuters
Zvezda Shipbuilding Complex (being established at the Russian Far Eastern shipbuilding and ship repair center by the Rosneft-led consortium with Rosneftegas and Gazprombank) and Samsung Heavy Industries Co. Ltd. of the Republic of Korea have set up a joint venture to manage projects for the construction of 42,000-120,000 tonnes deadweight shuttle tankers at Zvezda Shipyard Source Tass
FOLLOWING a circuitous route around Cyprus and multiple U-turns over the weekend, the Iranian oil tanker Adrian Darya 1, formerly Grace 1, had slowed to a 1.3 knots less than 50 nautical miles off the coast of Tartus Sunday night amid strong indications that its cargo of 2m barrels of Iranian crude will finally be discharged in Syria. Source Llyods List
Israel’s military said it retaliated by firing into southern Lebanon after Hezbollah’s claim it destroyed Israeli tank. Source Al Jazeera
Tensions continue to mount between Israel and Lebanon, after the Lebanese army opened fire on Israeli drones in south Lebanon. The incident on Wednesday follows an alleged Israeli drone attack on a Hezbollah stronghold at the weekend. Source RFI
Russian energy giant Gazprom has begun filling the Power of Siberia pipeline to China with natural gas, Interfax cited the governor of the Republic of Yakutia as saying on Thursday. Source Energy World
Russian energy giant Gazprom’s second-quarter net income rose by 16% year on year to 300.6 billion roubles ($4.55 billion), it said on Thursday. Sales in the three months to June 30 edged down to 1.78 trillion roubles from 1.83 trillion roubles in the same period last year. Source Reuters
Turkey’s Oruc Reis research vessel appeared to be on its way to Cyprus on Tuesday, a week after the country’s Foreign Minister Mevlut Cavusoglu said it would. Source Ekathimerini
Singapore has a message for Elon Musk, taking mass transit is a better climate-change solution than tooling around in one of his Tesla Inc’s electric vehicles. The city-state, which has said its efforts to cope with climate change are as crucial as military defence, has prioritised greater use of its trains and buses, Masagos Zulkifli, minister for environment and water resources, said in an interview Wednesday. Source Free Malaysia Today
Saudi oil giant Aramco has chosen to work with Lazard and Moelis as advisors for the initial public offering (IPO) of the world’s largest oil firm, people with knowledge of the plans told Bloomberg on Tuesday. Moelis and Lazard are set to have key roles in the listing, including picking the venues and underwriters, and trying to meet valuation expectations, Bloomberg’s sources said. Source Oil Price
- Saudi Aramco asks several banks to bid for roles in its initial public offering, people familiar with the matter tell CNBC on Monday.
- The state-owned oil company would be the world’s biggest IPO.
- The debt offering gives the Saudi officials confidence the IPO could happen as soon as 2020, the people tell CNBC. Source CNBC
Russia’s Rosneft (ROSN.MM), one of the world’s top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters.Source Reuters
The US State Department on Tuesday called on Turkish authorities to cease immediately any “unlawful activities” in Cyprus’ territorial sea and remove its drillship, Yavuz. Source Ekathimerini
The fourth Turkish oil and gas research ship, the “Oruc Reis,” is on its way to the eastern Mediterranean, Turkish Foreign Minister Mevlut Cavusoglu said via Twitter on Monday. His tweet was in response to Turkish Republican People’s Party (CHP) leader Kemal Kilicdaroglu, who questioned why Turkey is not in the eastern Mediterranean drilling for hydrocarbons. Source Greek Reporter
The American Petroleum Institute (API) reported a crude oil inventory draw of 3.4 million barrels for the week ending Aug 1. After today’s inventory move, the net draw for the year is 8.23 million barrels for the 32-week reporting period so far, using API data.
The United States has sanctioned the China’s state-run energy company Zhuhai Zhenrong Co Ltd for allegedly violating restrictions imposed on Iran’s oil sector, U.S. Secretary of State Mike Pompeo said in a speech on Monday. Source Reuters
The BP-owned Suezmax British Heritage is reported to be waiting out an Iranian threat to seize a UK tanker, anchoring up off the coast of Saudi Arabia instead of transiting close to Iran’s shores. Source Maritime-Executive
Indicating that there is still some confusion in India’s position on stopping oil imports from Iran in line with sanctions by the United States, the government said on Wednesday that it does not propose to cancel trade, including oil imports, from Iran. Source The Hindu
