Global Analysis from the European Perspective. Preparing for the world of tomorrow


Oil and Gas



Europe’s Inevitable Intervention in Libya Will Add 1.3 Million Barrels to the World Oil Glut

LibyaEUEurope 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

Retail Oil Investors get Burned

burningoilLast 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

Meet Manifa and other giant oil projects that will add to the global oil glut

manifa-project-webWorld 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

US and Canadian oil producer suffer the most from current oil price collapse

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.

Europe Brent3

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

US Shale oil industry will simply vanish

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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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





Turkish Foreign Minister Mevlut Cavusoglu fired a shot across the bow of anyone who would try to stop his country’s drillships from operating in Cypriot waters, indicating military force would be used. Cavusoglu told the pro-government A Haber news channel that Turkey “has the right to prevent” any unauthorized drilling in waters that it says fall within its own continental shelf. Asked specifically if Turkey could use military means to stop such drilling, Cavusoglu said “of course.” Source The National Herald




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Gazprom’s Power of Siberia pipeline comes online, carrying Russian gas to China for the first ever time. Russia on Monday started piping gas to China, as the long-awaited Power of Siberia pipeline connecting the two countries came online. President Vladimir Putin and Chinese premier Xi Jinping officially opened the 3,000 kilometer gas pipeline today via videoconference. Source Moscow Times


China has upped its imports of Saudi oil significantly, part of a bid to draw Crown Prince Mohammed bin Salman into its orbit amid an ongoing trade war with the United States.

Beijing’s crude oil imports rose to nearly 2 million barrels per day (bpd) in October, up 24 million bpd or 76.3% compared to the previous month, Saudi daily Asharq al-Awsat reported, citing China’s General Administration of Customs. Source Asian Times





Works for an undersea electricity cable link and natural gas pipeline between Turkey and Turkish Cyprus are ongoing, Energy and Natural Resources Minister Fatih Dönmez has said.

Although work continues for the cable line and pipeline to meet the island’s needs, the work schedule and completion date have not yet been set, Dönmez told reporters on Nov. 22 before his speech in parliament’s planning and budget committee meeting. Source Hurriyet Dailynews






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