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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Demonstrations which began in Basra have extended to Najaf, Nasiriya, Baghdad and Amara, where two protesters died. Protests against high unemployment, poor government services and corruption that began in Basra have extended to several other Iraqi cities, including Najaf, Amara, Nasiriya and Baghdad. Source Middle East Eye
On July 13, special forces from the counterterrorism unit arrived in Basra to protect the oil companies and oil fields in the province. Equipment from the oil fields has also been stolen in the ongoing protests, but demonstrators managed to arrest eight of the perpetrators on July 11, handing them over to the authorities in an exchange of confidence between the protesters and security forces. Source Al Monitor
The US secretary of state has called on European allies to take a harsher stance against Iran, which he accused of violating UN resolutions, as some of Tehran’s biggest oil customers appear to be succumbing to the US pressure. Source: Al Jazeera
UK-based independent oil and gas company Savannah Petroleum has made a third oil discovery in Niger in as many months and is extending its drilling campaign in the area. Source: Oil Price
Iran will take care to supply India with all the oil it needs, the country’s embassy in India said, a day after deputy ambassador threatened India that Iran could turn the tap off if India cut back on Iranian oil under the pressure of U.S. sanctions. Source: Oil Price
Norway’s ongoing oil workers’ strike is set to shut more rigs on the Norwegian Continental Shelf as the employers’ association has not contacted the trade union for new talks yet. Source: Oil Price
Spain’s new government is relaxing its budget targets as higher oil prices eat into the country’s growth projections. Spain expects a 2.7 percent public deficit relative to gross domestic product this year, up from a previous estimate of 2.2 percent, Economy Minister Nadia Calvino told reporters in Brussels Thursday. She sees a 2019 deficit of 1.8 percent, up from 1.3 percent. Source Bloomberg
Saudi Arabia had opened the taps even before OPEC and Russia agreed at the end of June to ease the production cuts to respond to the high oil prices and supply disruptions, judging from OPEC’s Monthly Oil Market Report that showed the Saudis boosted their crude oil production in June by more than 400,000 bpd. Source: Oil Price
Libya’s National Oil Corporation (NOC) lifted on Wednesday the force majeure on four ports in the eastern part of the country after the export terminals were handed over to the Tripoli-based internationally recognized Libyan oil company. Source: Oil Price
Indian refiners cut imports of Iranian oil last month as they started weaning their plants off crude from the country to avoid sanctions by the United States that are set to take effect in November. Source: Reuters
US President Donald Trump launched a strong verbal attack on Germany on Wednesday (11 July) for its support to the Nord Stream 2 gas pipeline, aimed at bringing more Russian gas to Germany under the Baltic Sea. Source: Euractiv
Libya’s oil output will keep dropping day by day if major ports remain closed after clashes last month led to a political deadlock, the head of the country’s state energy producer said. Source: Bloomberg
An independent Chinese refiner has suspended crude oil purchases from the United States and has now turned to Iran as one of its sources of crude, media reports, citing an official from the refiner, Dongming Petrochemical Group. Source: Oil Price
Eni announced Monday a second oil discovery in the Fagur Basin in the Egyptian Western Desert. Source: Rigzone
South Korea will not lift any Iranian crude and condensate in July, halting all shipments for the first time in six years amid U.S. pressure to cut all imports of Iranian oil from November. Source: Reuters
One of the world’s biggest cargo shippers announced on Saturday it was pulling out of Iran for fear of becoming entangled in U.S. sanctions, and President Hassan Rouhani demanded that European countries to do more to offset the U.S. measures. The announcement by France’s CMA CGM that it was quitting Iran deals a blow to Tehran’s efforts to persuade European countries to keep their companies operating in Iran. Source Reuters
Saudi Arabia cut pricing for most of its oil grades as the world’s biggest crude exporter is increasing production to assure buyers there is sufficient supply following U.S. President Donald Trump’s demands that OPEC do more to stabilize oil markets. Source: Bloomberg
ran plans to reduce its international trade relations only to countries that buy its crude oil, an Iranian MP told Iranian media. The new trade system will be based on bartering goods for crude, as Iran already does under a deal with Russia. Source: Oil Price
China has issued its second batch of crude oil import quotas to independent refiners and trading companies for 2018—a much smaller batch, but the low volumes were expected because the first batch was a large one and estimated to cover nearly a year’s worth of small refiners’ imports. Source: Oil Price
Romania is under growing pressure from Hungary and energy companies to rapidly adopt legislation on exploiting its gas deposits in the Black Sea – but some experts warn that the current bill is a bad deal for the country. Source: Balkan Insight
The U.S. military reaffirmed on Wednesday its promise to help keep oil tanker waterways in the Persian Gulf open, after Iran hinted that it might try to block the oil exports of its neighbors if the U.S. continues to push the world to stop importing Iranian oil. Source: Oil Price
During a visit to Vienna, Iranian President Hassan Rohani has reiterated that Tehran will remain in the 2015 nuclear deal with world powers as long as its interests are guaranteed by other signatories. Source: Oil Price
US army spokesman says they will ensure the freedom of navigation, after Tehran hints it might close Strait of Hormuz. The US military has promised once again to keep Gulf waterways open to oil tankers as the Iranian president appeared to renew threats to close off the region. Source Aljazeera
