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
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Iraq plans to raise output by about 200,000 barrels a day, reaching 4.8 million barrels a day in average production, according to a person with knowledge of the matter. The country would join Saudi Arabia, Russia and others in adding more barrels to a sated market amid a price war — even as the coronavirus saps global demand. Source Bloomberg
Russia and Saudi Arabia are locked in an oil price war as global prices plummet owing to the effects of the coronavirus pandemic. Riyadh will now raise their oil exports to the highest levels ever. Source Deutsche Welle
Vladimir Putin’s government has taken control of Rosneft’s Venezuelan assets to try and sidestep US sanctions. The move comes shortly after the US indicted Nicolas Maduro and other officials over narcotrafficking. Russian oil production giant Rosneft said Saturday it had ceased operating in Venezuela and transferred its assets to a company own entirely by the Russian government. Source Deutsche Welle
Only the old hands at the Coffeyville oil refinery could remember anything like the prices posted this month. The small Kansas plant in the heart of rural America was offering just $1.75 a barrel for Wyoming sweet crude.
With more than two billion people on virus lockdown from India to California, energy demand has plunged. In corners of the U.S., Canada, Russia and China, oil prices at the well-head are collapsing under the weight of an unprecedented glut. Source World Oil
U.S. Secretary of State Mike Pompeo revealed Wednesday that he recently spoke with Saudi Crown Prince Mohammed bin Salman Al Saud and they agreed all countries need to work together to stabilize energy markets. Source Rigzone
Chesapeake Energy Corp, the oil and gas exploration and production company that helped spearhead the U.S. shale revolution, has tapped debt restructuring advisers amid a rout in energy prices, people familiar with the matter said on Monday. Source Reuters
Oil prices have fallen to their lowest level in 17 years, dropping below $25 a barrel, as demand for fuel has been hit by work and travel lockdowns introduced in some of the world’s biggest economies as part of efforts to contain the spread of coronavirus. Source FT
- President Donald Trump on Friday said he’s directed the U.S. Department of Energy to purchase crude oil for the Strategic Petroleum Reserve.
- The move was made in an effort to assist U.S. energy producers, which have been battered this week amid an oil price war between OPEC and Russia.
- “We’re going to fill [the strategic reserve] right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry,” Trump said. Source CNBC
As oil prices decline and pressure energy companies, President Donald Trump will reportedly likely seek a federal aid package for struggling U.S. producers, The Washington Post reported Tuesday, citing four people familiar with the matter. Source CNBC
Gas giant says decision down to efforts to reduce exposure to the ‘global epidemiological situation’. Russian player Gazprom has introduced restrictions on the work travel plans of its employees to any destination outside Russia, in an effort to reduce their exposure to what it referred to as — although stopping short of mentioning the coronavirus. Source Upstreamonline
Oil prices plunged to multi-year lows on Monday as tensions between Russia and Saudi Arabia escalate, sparking fears on the Street that an all-out price war is imminent. The sell-off in crude began last week when OPEC failed to strike a deal with its allies, led by Russia, about oil production cuts. That, in turn, caused Saudi Arabia to slash its oil prices as it reportedly looks to ramp up production U.S. West Texas Intermediate crude and international benchmark Brent crude posted their worst day since 1991. Source CNBC
IHS Markit estimated Wednesday that world oil demand in Q1 will be 3.8 million barrels per day lower than a year earlier, marking the biggest quarterly drop ever and topping the previous record seen in Q1 2009, when demand fell by 3.6 million bpd. Source Investor’s Business Daily
A Russian pipe-laying vessel is on the move in the Far East, feeding speculation that Gazprom PJSC will work out a way to circumvent U.S. sanctions and complete a controversial natural gas link.
The ship, Akademik Cherskiy, on Sunday left the port where it had been stationed in Nakhodka on Russia’s Pacific coast. At the end of last year, Energy Minister Alexander Novak mentioned that vessel as an option to complete the Nord Stream 2 pipeline in Denmark’s waters. Source World Oil
U.S. Energy Secretary Dan Brouilette believes Russia’s Gazprom will not be able to complete the Nord Stream 2 gas pipeline project on its own due to U.S. sanctions, Bloomberg reports, citing the official who spoke on the sidelines of an energy conference in Germany, the destination of Nord Stream 2. Source Oilprice
Global oil demand will suffer its first quarterly drop in a decade as the COVID-19 virus lashes the economy in China and its impact ripples throughout the world, the IEA said.
“Global oil demand has been hit hard by the novel coronavirus (COVID-19) and the widespread shutdown of China’s economy,” the International Energy Agency said in its latest monthly report. Source Arab News
The closure of oil fields and production facilities threatens the country’s finances, warns Libya’s central bank.The closure of Libya’s major oil fields and production facilities has resulted in losses of more than $255 million in the six-day period ending January 23, the country’s national oil company said on Saturday. Source TRT
Belarus has started importing oil from Norway after its main oil provider, Russia, suspended supplies earlier this month amid stalled talk on further strengthening economic ties between two countries. Source: Energy Voice
In rare joint statement of Jewish state and southern Arab neighbor, countries hail economic boost
The exportation of natural gas from Israel to its southern neighbor Egypt began Wednesday morning, Israel’s energy ministry announced as reported by local media. Source I24
Russia will finish the construction of Nord Stream 2 gas pipeline on its own since there are no technological obstacles requiring foreign assistance, Gazprom CEO Alexei Miller said in his interview with “Moscow. Kremlin. Putin” program on Rossiya-1 TV channel. Source Tass
Russian President Vladimir Putin said Saturday that he hopes work on the Nord Stream 2 gas pipeline will be finished by early next year. “I hope that by the end of this year, or in the first quarter of next year, work will be finished and the gas pipeline will start operating,” Putin told a joint press conference with German Chancellor Angela Merkel after talks at the Kremlin. Source France24
- India’s oil demand growth is set to overtake China by mid-2020s, priming the country for more refinery investment but making it more vulnerable to supply disruption in the Middle East, according to the IEA.
- India’s oil demand is expected to reach 6 million barrels per day (bpd) by 2024 from 4.4 million bpd in 2017.
- China’s demand growth is likely to be slightly lower than that of India by the mid-2020s, as per IEA’s China estimates given in November, but the gap would slowly become bigger thereafter. Source CNBC
The Federation of the Chemical Industry, part of the French CGT labor union, has called on staff at refineries and at other companies in the chemical sector, to extend their industrial action against the government’s pension reform and block deliveries from plants Tuesday-Thursday next week. Source S&P Global
Striking French workers are to begin on Tuesday a ‘total blockade’ of all the country’s oil refineries in the increasingly bitter dispute over pension reforms. Source The Local
Accord creates new tensions between Greece and Turkey as Ankara says EastMed project cannot proceed without its consent. Source Al Jazeera
