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
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U.S. President Donald Trump linked American support for Middle Eastern countries to oil prices on Thursday as he again urged OPEC to lower prices. Source: Reuters
Japanese refiners have stopped buying Iranian crude ahead of the November 4 deadline set by Washington to all countries doing business with Iran before economic sanctions return. Reuters quoted today the head of the Petroleum Association of Japan as saying, “It is my view that each firm is taking the same stance and temporarily suspending (the loading) and watching the situation carefully.” Source: Oil Price
Turkey will not allow any unilateral hydrocarbon drilling or exploration in the Eastern Mediterranean Sea, Turkey’s Energy Minister said. Minister Fatih Dönmez said that Turkey would not allow any parties to breach Turkey’s rights or those of the Turkish Republic of Northern Cyprus (TRNC) based on international law. Source Hurriyet Daily News
The Libyan National Oil Corporation (NOC) has remarked that Al-Wafaa oilfield’s airfield has been blockaded on Wednesday morning an attempt to blackmail Mellitah Oil and Gas Company into awarding an unwarranted catering contract. Source The Lybia Observer
A Japanese digital currency exchange has been hacked, and 6.7 billion yen ($60 million) worth of cryptocurrencies are gone. Source: The New York Times
Russian oil producer Surgutneftegaz (SNGS.MM) is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises, apparently as insurance against possible tougher U.S. sanctions, traders who deal with the firm told Reuters. Source: Reuters
Russia’s President Vladimir Putin has ordered the transfer of ownership of the federal state-held company controlling Chechnya’s oil refining and petrochemical industry to the Chechen authorities. Source: Oil Price
Iranian cybercrime group APT33 has stepped up its attacks on a variety of companies in the Persian Gulf, including energy firms, The National reports, citing research from security company FireEye. Source: Oil Price
The St Petersburg International Mercantile Exchange (SPIMEX) has launched crude oil trading with loadings on the peninsula of Crimea that Russia annexed from Ukraine in 2014, data published by the exchange showed on Tuesday. Source: Reuters
Saudi Arabia’s state oil firm Saudi Aramco plans to spend more than US$133.3 billion (500 billion Saudi riyals) on oil and gas drilling over the next decade, Saudi Aramco’s Senior Vice President for Upstream said at an event on Monday. Source: Oil Price
Germany will chose where to build a liquefied natural gas (LNG) terminal by the end of 2018 as a gesture to the United States which wants to ship more gas to Europe, the economy minister said on Tuesday. Source: Reuters
Russia and Saudi Arabia will continue co-operating in the long term, including on the design of a framework for the relations between OPEC and its external partners, a Russian Energy Ministry statement said. Source: Oil Price
The US administration plans to start exporting its new and vast gas supplies to Europe via Germany within the next four years. As doubts continue over a Russian pipeline to Germany, Washington sees a gap in the market. Source: Deutsche Welle
U.S. Secretary of State Mike Pompeo slammed Iran’s Supreme Leader Ali Khamenei for staying silent on reports of China violating the human rights of Muslim minorities, accusing Iran of turning a blind eye because China is Iran’s number-one oil customer. Source: Oil Price
ndia’s state-held oil and gas companies continue to explore participation in more oil and gas projects in Russia, Indian Oil Minister Dharmendra Pradhan said at an India-Russia forum on Thursday at which one of the world’s largest energy importers and one of the largest exporters discussed bilateral oil and gas ties. Source: Oil Price
The huge Zohr gas field offshore Egypt has increased its production six-fold since it started production in January this year, Egypt’s Petroleum Minister Tarek el-Molla said on Thursday. Source: Oil Price
Venezuela resumed supplying a key domestic crude to political ally Cuba this summer as the South American country’s refining output fell further, according to internal documents from state-run oil firm PDVSA seen by Reuters. Source: Reuters
India’s state-run energy companies are looking to participate in more oil and gas projects in Russia, India’s oil minister said on Thursday, as a way to use the sector to bolster ties with the traditional ally rich in resources. Source Economic Times
Canadian Foreign Minister Chrystia Freeland on Wednesday said officials needed to do more work before she could hold fresh talks with the United States on renewing NAFTA as time runs out to reach a deal. Source: Reuters
Iran has started to store oil in its own tankers off its coasts ahead of the U.S. sanctions on its oil exports that are expected to cut Tehran’s ability to ship and sell oil to customers around the world. Source: Oil Price
China concluded the first physical settlement of the Shanghai crude futures contract (SC crude contract) on September 7, 2018, indicating that the newly launched contract has undergone all the trading processes, the Shanghai Futures Exchange said on its official website on September 10. Source: Oil Price
Venezuela has agreed to hand over at least seven oil fields to little-known companies that will be paid to boost output through contracts similar to ones rolled back under late socialist leader Hugo Chavez, according to two sources and an internal document. Source: Reuters
Amid signs of an improved political situation in the Korean peninsula, Russian gas giant Gazprom is reviving its decade-old idea of building a gas pipeline from Russia’s Far East to South Korea through North Korea, Gazprom’s Deputy Chairman Alexander Medvedev said at the Eastern Economic Forum in Vladivostok in Russia’s Far East on Tuesday. Source: Oil Price
Russia’s top oil producer Rosneft said on Wednesday it has agreed with China’s CNPC that the latter can buy minority stakes in Rosneft oil and gas projects in Siberia. Source: Reuters
