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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Angela Merkel’s replacement as leader of Germany’s Christian Democrats has criticised the country’s leading environmental organisations for leading “crusades” against diesel cars, as she attempts to put distance between herself and her predecessor. Source: The Guardian
Turkey’s daily natural gas consumption reached a historic record high at 245 million cubic meters on Jan. 8, the energy minister said on Jan. 9. Source: Hurriyet Daily
Oil prices rose slightly on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world’s two biggest economies, while OPEC-led supply cuts also tightened markets. Source: CNBC
With 28 countries and a combined population of around 512 million people, the European Union is something of a prized market — and political battleground — for the world’s largest energy exporters, particularly when it comes to natural gas. Source: CNBC
Norway’s oil lobby raised its forecast for investments in the country’s petroleum industry as cost cuts during a three-year downturn made projects more profitable and able to withstand even the recent slump in crude prices. Source: Bloomberg
Oil and gas business activity in Texas and neighboring states plunged in the fourth quarter, according to the Dallas Federal Reserve. Source: CNBC
Turkey issued an announcement on Thursday declaring it will conduct “seismic research” in a large area of the Eastern Mediterranean which includes parts of the Greek continental shelf and the Cypriot E.E.Z. The new Turkish navigational telex (NAVTEX) refers to an area which overlaps both the Exclusive Economic Zone (EEZ) of the Republic of Cyprus and Greece’s continental shelf off the island complex of Kastellorizo. Source Greek Reporter
Russian natural gas volumes piped via Ukraine to European consumers fell by 7 percent in 2018 to 86.8 billion cubic metres (bcm), the Ukrainian gas transport monopoly Ukrtransgaz said on Wednesday. Source: Reuters
Lithuania and Russia’s gas giant Gazprom have agreed on the terms of gas supplies in 2019, with the final signatures yet to be put on the contract, the supply arm of the state energy group Lietuvos Energija (Lithuanian Energy) said on Monday. Source: Baltic Times
U.S. President Donald Trump’s criticism of the Russian-backed Nord Stream 2 pipeline is no reason to stop the project and any attempt to do so would be difficult now that it is being built, European Commissioner Guenther Oettinger said. Source: Reuters
The U.S. Environmental Protection Agency granted oil major Exxon Mobil Corp (XOM.N) a financial hardship waiver this year temporarily freeing its Montana refinery from U.S. biofuel laws. Source: Reuters
Russia’s oil output may decline next year due to a global reduction pact, Energy Minister Alexander Novak said on Tuesday, possibly halting an uninterrupted decade-long run of growth. Source: Reuters
France is extending the state guarantees for the Russian liquefied natural gas (LNG) projects Yamal LNG and the Arctic LNG 2 projects, Russian media quoted France’s Economy Minister Bruno Le Maire as saying after a meeting with his Russian counterpart Maxim Oreshkin in Paris. Source: Oil Price
Global coal demand will edge higher until 2023 as growth in India and other Asian countries offsets a decline in Europe and the United States, the International Energy Agency (IEA) said on Tuesday. Source: Reuters
India’s monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the impact of U.S. sanctions, according to ship tracking data and industry sources. Source: Reuters
French energy company Total (TOTF.PA) said it has agreed to sell a 4 percent stake in its Australian Ichthys liquefied natural gas (LNG) project to Japanese partner Inpex (1605.T) for $1.6 billion, following cost overruns. Source: Reuters
The United States urged Germany to drop its political support for Russian monopoly Gazprom’s Nord Stream-2 project and warned companies that are involved in the construction of the gas pipeline that they face the risk of sanctions unless they withdraw from the controversial project. Source: New Europe
Venezuela’s President Nicolas Maduro said on state television that Venezuela would put in place in 2019 a program to sell all its oil production in the Petro cryptocurrency, which the leader is touting as the first state-backed oil-backed digital currency. Source: Oil Price
Top Indian gas importer Petronet LNG is looking to sign a deal in a year’s time to buy at least 1 million tonnes of U.S. natural gas annually for a period of up to 10 years, as it pushes to diversify its supply sources beyond the Middle East. Source: Reuters
Prime Minister Alexis Tsipras is in Moscow for an official visit being touted as the beginning of the end of a frosty period in traditionally warm ties between Greece and Russia and during which energy cooperation is expected to be a key focus of talks. Source: Ekathimerini
Caracas and Moscow have signed $5 billion US dollars’ worth of contracts related to oil production during President Nicolas Maduro’s visit to Russia, Maduro tweeted a day after meeting with President Vladimir Putin. Maduro announced the deal on Twitter, thanking Putin and the people of Russia. “Contracts have been signed to guarantee investments for $5 billion to increase oil production with Russian partners of joint ventures,” Maduro said. Source: RT
ibya has closed all its oil loading terminals due to bad weather, and soon-to-be-full storage tanks will lead to a shut-in of 150,000 bpd, or half of the oil production at the large Sharara oil field, a source close to the issue told S&P Global Platts on Wednesday. Source: Oil Price
Saudi Arabia and Russia are on the verge of agreeing a deal to cut oil production, defying calls from US president Donald Trump to leave the taps open to keep prices low. Source: Financial Times
Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, three sources with knowledge of the matter said. Source: Reuters
