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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The chaos in gas and electricity markets is set to hit one group of people the hardest this winter: the four million households that use prepayment meters (PPMs).

While most people pay their bills monthly for energy they have already used, PPMs require people to pay for energy before they use it. PPMs take whatever money is in the meter and supply energy to the household.  Source Open Democracy


Russia’s Gazprom has damped hopes for additional gas exports to Europe next month as the continent struggles with record prices, despite recent hints from President Vladimir Putin that more could be forthcoming.

UK and European gas prices surged as much as 18 per cent on Monday after a keenly awaited pipeline capacity auction showed no increase from Russia either through the Ukrainian pipeline system or lines passing via Poland to north-west Europe. Source FT








  • November contracts at the Dutch TTF hub — a European benchmark for natural gas — were trading at around 118 euros per megawatt hour (MWH) just after midday in London.
  • The front-month contract has risen almost 400% since the start of the year.
  • Several British energy suppliers have collapsed amid the gas price crisis. September alone reportedly saw nine companies cease trading.
  • In recent weeks, governments in Spain, Italy, Greece, and France have taken drastic actions to minimize the impact of wholesale price rises on consumers. Source CNBC

EU environment ministers are set to discuss speculation in the bloc’s carbon market as part of a debate on high energy prices on Wednesday, with Poland and Spain pushing for curbs.
“We urgently need to reduce the influence of financial market participants on ETS allowance prices,” said the Polish government in a note to the ministers ahead of the meeting. Source Montel




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France will move to ease the cost of rising prices for consumers by blocking further natural gas price hikes and by preventing a planned increase in electricity tariffs scheduled in February, Prime Minister Jean Castex said on Thursday.

“For natural gas and electricity, we’ll put in place what I would call a tariffs shield. We’re going to shield ourselves against those tariff hikes,” Castex told TF1 television. Source Reuters


New price will be applicable for the six-month period beginning October 1

The government on Thursday raised price of natural gas by 62 per cent. This gas is used to produce electricity. Also, it is used as fuel for producing fertilisers and as CNG (Compressed Natural Gas) to use as fuel in automobiles and cooking gas for household kitchens. Source Business Line





Two more energy firms have ceased trading as rocketing wholesale gas and electricity prices push the majority of the UK’s smaller energy suppliers to the brink. Avro Energy and energy firm Green have both collapsed today putting hundreds of thousands of customers into limbo. Ofgem has reassured people affected that their energy supplies will continue. Source Wales Online


Russian gas giant Gazprom has turned down an option to maximize gas shipments to Europe as the continent faces a looming energy crisis amid surging natural gas prices. Gazprom did not book any of the additional capacity available in transit pipelines running through Ukraine in auctions for October, the state-run Interfax news agency reported Monday. The company also reserved only a third of the space it was offered on the Yamal gas pipeline, which goes through Poland. Source The Moscow Times



-European gas prices surged more than 10% as Russia is keeping its grip on the market, opting to cap additional flows to the continent. Gazprom PJSC opted not to flow more gas to Europe via Ukraine in October, according to the results of an auction on Monday. There were also signs Russian flows via the key Yamal-Europe pipeline will remain limited, with traders booking just a fraction of the capacity offered to flow gas next month into Germany via the Mallnow compressor station. Source World Oil



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