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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Exxon Mobil has evacuated all of its foreign staff from Iraq’s West Qurna 1 oilfield and is flying them out to Dubai, a senior Iraqi official and three other sources told Reuters on Saturday. Source: Reuters
A tanker carrying Iranian fuel oil in violation of U.S. sanctions has unloaded the cargo into storage tanks near the Chinese city of Zhoushan, according to ship tracking data on Refinitiv Eikon. Source: Reuters
Cypriot Defense Minister Savvas Angelides and French counterpart Florence Parly reportedly signed a statement of intent on Wednesday to allow the French Navy to use a naval station at Mari to permanently service its warships, according to news website politis.com.cy. Source: Ekathimerini
Saudi Arabia’s 200 billion-riyal ($53 billion) lifeline to its non-oil economy may be in place for longer than planned as the kingdom supports industries struggling to cope with reforms that pushed up costs and dampened demand. Source: The Star
The stock closed 16.4 per cent higher at an over seven-year high of Rbs189.7 and lifted the company’s market value to Rbs4.49tn (€61.8bn). That is enough to help it surpass Rosneft and Lukoil, the country’s top two crude producers, to become the second most valuable company on the exchange. Sberbank, the country’s biggest lender remains the biggest with a market capitalisation of Rbs4.92tn. Source: Financial Times
Armed drones attacked two oil pumping stations in Saudi Arabia on Tuesday in what Riyadh called a “cowardly” act by Yemen’s Houthi rebels, two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates. Source: Al Jazeera
A group of Republican and Democratic U.S. senators will introduce legislation as soon as Tuesday seeking sanctions targeting the Nord Stream 2, a gas pipeline from Russia to Germany under fire from the United States and some European Union countries. Source: Reuters
Turkey’s Treasury ministry is working on legislation to transfer the central bank’s 40 billion lira ($6.6 billion) in legal reserves to the government’s budget to shore it up, three economic officials told Reuters. Source: Reuters
Saudi Arabia said two of its oil tankers had been sabotaged off the coast of the United Arab Emirates, in attacks it said posed a threat to shipping and the security of global oil supplies. Source: CNN
China Petrochemical Corp. (Sinopec Group) and China National Petroleum Corp. (CNPC), the country’s top state-owned refiners, are skipping Iranian oil purchases for loading in May after Washington ended sanction waivers to turn up pressure on Tehran, three people with knowledge of the matter said. Source Arab News
Cyprus will rally support from fellow European Union countries and others to counter Turkey’s bid to drill in waters where the east Mediterranean island nation has exclusive economic rights, Cypriot officials said Wednesday. Source: StarTribune
The company building Russia’s 55 Bcm/year Nord Stream 2 gas link has finished the German section, and may use that to argue for a waiver from new EU rules for offshore links, a Nord Stream 2 representative said Tuesday. Source: S&P Global
The head of the European Parliament said on Monday Turkey’s intention to drill within Cyprus’ exclusive economic zone (EEZ) violates international law and called on the country to avoid raising tension in the region. Source: Ekathimerini
The Israeli Ambassador to Cyprus Sammy Revel has expressed its support for Nicosia following Turkey’s decision to begin drilling operations within Cyprus’ Exclusive Economic Zone (EEZ). Source: Ekathimerini
Russian gas producer Gazprom doubled its annual net profit last year, led by record sales to Europe despite pressure on EU states to diversify away from Russian energy imports. Source: Reuters
- Since the first cargo in April 2016 U.S. LNG exports to the EU have been increasing substantially and have seen a steep rise after President Trump and President Juncker’s meeting in July 2018 increasing by 272%;
- March 2019 recorded the highest volume ever of EU-U.S. trade in LNG with more than 1.4 billion cubic metres.
- The Trump administration on Thursday stopped issuing waivers that allow several countries to buy Iranian crude.
- Washington had issued the waivers to prevent global supplies from suddenly dropping and oil prices from spiking.
- It remains to be seen whether Saudi Arabia and OPEC will fill the gap and how much Iranian oil will find its way to the market.
OPEC oil supply hit a four-year low in April, a Reuters survey found, due to further involuntary declines in sanctions-hit Iran and Venezuela and output restraint by top exporter Saudi Arabia. Source: Reuters
Russian gas producer Gazprom doubled its annual net profit last year, led by record sales to Europe despite pressure on EU states to diversify away from Russian energy imports. Source: Reuters
Turkey is working on a mechanism to avert U.S. sanctions designed to halt trade with Iran, risking another showdown with Washington as it joins a group of nations determined to keep buying oil from the Islamic Republic. Source: Bloomberg
Gazprom and CNPC reviewed the development prospects of the Chinese gas market and the strategic aspects of co-operation between Gazprom and CNPC. It was noted that the preparation of facilities for Russian gas exports to China via the Power of Siberia gas pipeline from 1 December 2019, is going according to schedule. It is planned to start injecting natural gas into the pipeline in the 3Q of this year. Source: World Pipelines
Poland and Germany have suspended imports of Russian oil via a major pipeline, citing poor quality, triggering a rare crisis over supply from the world’s second-largest crude exporter. Source: The Moscow Times
The European People’s Party candidate for the next European Commission president, Manfred Weber, says he will block the construction of a Russian gas pipeline should he win the race to replace Jean Claude-Juncker. Source: EU Observer
Oil prices surged on Monday, hitting new 2019 highs, after the Trump administration announced that all oil buyers will have to end imports from Iran in just over a week or be subject to U.S. sanctions. Source: CNBC
