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)
...
Construction on the controversial Nord Stream 2 pipeline in the Baltic Sea is set to resume next week, a company spokesman said on Saturday.
Work on the pipeline was at a standstill for a year as companies working on the project pulled out under the pressure of sanctions from the United States.
The company leading the project told news agency DPA it aims to get back to work by December 5.
The 1,230-kilometer (764-mile) pipeline will bring natural gas from Russia’s Siberian gas fields to Germany, Europe’s biggest economy. Source Deutsche Welle
The presidency of Joe Biden paves the way for a deal between Germany and the United States to resolve the conflict over Nord Stream 2 and complete its construction in exchange for the EU commitments to expand LNG purchases from the US, Simonas Vileikis, a Brussels political adviser to the British consulting company Portland Europe, told TASS on Monday. Source TASS
Russian pipe-laying vessel Akademik Cherskiy, expected to be used to finish the Moscow-led Nord Stream 2 gas pipeline, is heading towards the German project hub of Mukran, Refinitiv Eikon data showed on Monday. Source GCaptain
The Public Debt Management Agency (PDMA) announced on Tuesday it successfully auctioned six-month treasury bills at a historic low interest rate of minus 0.12%. The 26-week T-bill auction was originally planned to fetch 625 million euros. Source Ekathemirini
The US State Department on Oct. 20 widened the scope of sanctions against the Nord Stream 2 natural gas pipeline and warned companies involved in the final installation that they face sanctions if they do not wind down activities within 30 days. Source Spglobal
Gazprom supplied 2.3 bln cubic meters of natural gas to China over the Power of Siberia gas pipeline in January – August 2020 after the deliveries started in December 2019. Daily gas deliveries from Russia to China over the Power of Siberia gas pipeline were above contractual commitments for the first time on Monday, Gazprom said. Source Tass
Denmark gave the green light Thursday to the Russia-led Nord Stream 2 consortium to operate its Baltic Sea gas pipeline in Danish waters, the country’s energy agency announced.
“Nord Stream 2 AG has been granted an operations permit for the Nord Stream 2 pipelines on the Danish continental shelf,” the energy agency said via a statement. “The permit has been granted on a number of conditions to ensure a safe operation of the pipelines.” Source Deutsche Welle
U.S. and European oil majors’ commitment to moving away from fossil fuels toward renewable energy threatens oil supplies and prices, Russia’s state-run oil giant Rosneft has said, according to the Financial Times. Source Moscow Times
Royal Dutch Shell announced on Wednesday plans to cut up to 9,000 jobs, or over 10% of its workforce, as part of a major overhaul to shift the oil and gas giant to low-carbon energy.
Shell, which had 83,000 employees at the end of 2019, said that the reorganization will lead to annual savings of $2 billion to $2.5 billion by 2022. Source Shell
The world’s largest group of shipping insurers will not insure vessels involved in the Russian-led Nord Stream 2 and TurkStream gas pipeline projects because of the threat of U.S. sanctions. Source Reuters
It is less than two months since U.S. President Donald Trump travelled to Texas to declare that the U.S. energy industry, laid low by this year’s oil price crash, was back on its feet. “We’re OK now,” the president told the assembled crowd.
But bankruptcy numbers released this week tell a different story. Another 16 upstream U.S. oil and gas companies — producers and service providers — hit the wall in August, the same number as in July, according to law firm Haynes and Boone. Source Financial Post
Austria has said it still supports the Nord Stream 2 gas pipeline, despite growing reservations about the project in parts of Europe following the poisoning of Russian opposition figure Aleksei Navalny. Source Radio Free Europe
Baker Hughes reported on Friday that the number of oil rigs in the United States fell by 1 to 180.
The total number of active oil and gas rigs decreased for the week by 2, with oil rigs falling by 1 and gas rigs falling by 1.
Total oil and gas rigs in the United States are now down by 632 compared to this time last year. Source OilPrice
President Donald Trump announced on Tuesday a decade-long ban on oil drilling off the coast of Florida, Georgia and South Carolina — a decision that surprised energy industry executives by reversing the administration’s earlier pledges to open those waters to exploration. Source Politico
Russia’s supply of natural gas to China via the Power of Siberia rose to 12 million cubic meters per day in July and August, from 10 million cubic meters supplied in June, Vladislav Borodin, director general at the gas giant’s unit Gazprom Transgaz Tomsk, said in the company’s corporate magazine. Source OilPrice
Investors gave Greece a fresh vote of confidence during Wednesday’s one-year treasury bill auction, as the Public Debt Management Agency borrowed without interest for the first time ever in a 52-week issue. Source Ekathemirini
China’s crude oil imports in August climbed 13% from a year earlier, buoyed by hefty orders placed earlier this year when global oil prices collapsed and as cargoes previously delayed by congestion at arrival ports finally cleared customs. Source Reuters
Chancellor Angela Merkel reaffirmed the German government’s determination to complete the construction of the Nord Stream 2 gas pipeline from Russia, despite attempts by the United States to kill the project. Merkel was visiting her constituency in northern Germany when she spoke about the sanctions Washington has imposed on entities associated with the Baltic Sea pipeline which, once completed, will deliver natural gas to Germany and the broader European market. Source Daily Sabah
OPEC+ emphasized the need to stick closely to its planned oil-production cuts to guard against the market recovery being undermined by a resurgence of the coronavirus.
Saudi Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak hailed the rebound in oil prices and demand, but repeatedly urged their allies in a video conference on Wednesday not to ease off their output curbs. Source Oil World
Norway’s huge sovereign wealth fund, the world’s biggest, lost 188 billion kroner (18 billion euros, $21 billion) in the first half of the year as the global economy reels from the Covid-19 pandemic, the central bank said Tuesday. Source The Local
Schlumberger is cutting more than 21,000 jobs as the global coronavirus pandemic quashes demand for energy and oil prices are routed. The company will pay more than $1 billion in severance benefits. The job cuts announced Friday, about a quarter of its entire workforce, puts the number of people employed by the world’s largest oilfield services company close to where it was at the start of the oil and gas fracking boom that upended global energy markets and put the U.S. on top. Source Wag MTV
Baker Hughes BKR, -1.91% on Friday reported that the number of active U.S. rigs drilling for oil edged up by 1 to 181 this week. That marked the first increase since the week ended March 13. The total active U.S. rig count, meanwhile, fell by 2 to 251, according to Baker Hughes. Source Houston Chronicle
The United States is trying to exert pressure on European creditors of the Nord Stream 2 project, threatening to impose retroactive sanctions on them. US Secretary of State Mike Pompeo demanded that Shell, Engie, Uniper, Wintershall and OMV should leave immediately or otherwise all their assets in America will be frozen. The new threats come amid Gazprom’s revved-up efforts to complete the project. However, it still remains unclear how the companies, which allocated 4.7 bln euro for Nord Stream 2 in loans, could avoid sanctions, Kommersant business daily writes. Source Tass
Shell, one of the world’s largest oil companies, has warned that the low price of oil could reduce the value of its assets by up to $22bn (£17.9bn). It said it expects oil to change hands at $60 per barrel in the long term and to be priced at $35 this year and $40 next year. Source BBC
