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Oil Falls From 16-Month High as OPEC Seeks Wider Cut Cooperation

6 Dec 2016   Prices

Oil retreated from the highest close in 16 months as OPEC prepares to meet producers from outside of the group on Saturday to widen cooperation with supply curbs. Futures slid as much as 1.7 percent in New York after advancing 15 percent over the previous four sessions. The Organization of Petroleum Exporting Countries has invited 14 producers including Mexico and Kazakhstan to the talks in Vienna, Secretary-General Mohammad Barkindo said Monday. U.S. crude stockpiles probably slipped for a third week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Oil has been trading above $51 a barrel after OPEC agreed Wednesday to trim the group’s output by 1.2 million barrels a day by January, while Russia pledged a reduction of as much as 300,000 barrels. Attention is now shifting to how much of the group’s first supply cut in eight years will be adhered to after OPEC […]

Oil prices fall as production creeps up ahead of announced 2017 output cut

6 Dec 2016   Prices

Oil prices fell by one percent on Monday as a higher U.S. rig count unsettled markets amid nagging concern that output cuts, planned as part of concerted action between producer club OPEC and Russia, might not be as big as initially anticipated. Brent crude futures were trading at $53.89 per barrel at 0132 GMT, down 57 cents, or over 1 percent, from their last close. West Texas Intermediate (WTI) crude futures were at $51.49 a barrel, down 52 cents, or 1 percent. Traders said price falls were triggered by rising production just after last week’s accord between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member Russia to cut output in 2017. The cuts aim to rein in a supply glut that has weighed on markets for over two years. (For graphic on […]

Oil Prices Continue OPEC Rally

6 Dec 2016   Prices

Oil prices edged up to a fresh one-year high Monday, adding to last week’s sharp rally from OPEC’s agreement to cut production. The market is extending gains as many analysts raise hopes the Organization of the Petroleum Exporting Countries is more likely to abide by this deal than others from years past. Its members are notorious for exceeding production quotas, but this time severely bloated stockpiles and the past month’s rise in prices may make them more likely to follow through, analysts said. “Beside they only must be on their best behavior for a few months to get the market into a daily supply deficit,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said in a note. Light, sweet crude for January delivery settled up 11 cents, or 2%, to $51.79 a barrel on the New York Mercantile Exchange. It is the highest settlement since […]

Oil Market Turns Upside Down as Shale Rushes to Hedge Post-OPEC

6 Dec 2016   Prices, Shale Oil

U.S. shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above $50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down. The rush to hedge — locking in future cash flows and sales prices — could translate into higher U.S. oil production next year, offsetting the first output cut by the Organization of Petroleum Exporting Countries in eight years. As such, the producer group could end throwing a life-line to a sector it once tried to crush. “Right after OPEC, U.S. producers were very active hedging,” said Ben Freeman, founder of HudsonField LLC, a boutique oil merchant with offices in New York and Houston. “We are going to see a significant amount of producer hedging at this levels.” The hedging pressure triggered violent movements across the price curve. As shale firms sold oil for […]

Oil prices fall as production creeps up ahead of announced 2017 output cut

6 Dec 2016   Prices

Oil prices fell by one percent on Monday as a higher U.S. rig count unsettled markets amid nagging concern that output cuts, planned as part of concerted action between producer club OPEC and Russia, might not be as big as initially anticipated. Brent crude futures were trading at $53.89 per barrel at 0132 GMT, down 57 cents, or over 1 percent, from their last close. West Texas Intermediate (WTI) crude futures were at $51.49 a barrel, down 52 cents, or 1 percent. Traders said price falls were triggered by rising production just after last week’s accord between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member Russia to cut output in 2017. The cuts aim to rein in a supply glut that has weighed on markets for over two years. (For graphic on […]

IEA’s Birol sees oil market rebalancing well before end-2017

6 Dec 2016   IEA

The balance of supply and demand in global oil markets may soon change as a result of OPEC’s decision to cut production, International Energy Agency chief Fatih Birol said on Tuesday. “We had been expecting before the OPEC meeting a rebalancing of the market towards the end of 2017, but with this decision it implemented we may well see it happen significantly earlier,” Birol told Reuters on the sidelines of an industry conference. (Reporting by Stine Jacobsen, editing by Terje Solsvik)

World Energy Outlook 2016 – Fatih Birol in Brussels

6 Dec 2016   IEA

Two days later on 18 November, Fatih Birol presented WEO-2016 at the Centre for Strategic and International Studies in Washington. On 21 November it was the turn of the Friends of Europe in Brussels to host Dr Birol’s presentation. Birol’s journal continued then to Japan and many other nations. WEO-2016 is a weighty tome and there are few such books that receive this degree of attention. An invitation made it possible for me to participate in the Brussels meeting. I also had the opportunity to download the tome-like WEO-2016 report that, according to Birol, is focussed on renewable energy. The report’s subtitle, ”Energy-Mix for the Post-COP21 World” indicates that the Paris climate treaty is a central theme. I prepared for the Brussels meeting by studying in detail Chapter 3 of the report, […]

After two years, why an OPEC deal now? Kemp

6 Dec 2016   OPEC

OPEC has finally agreed to cut production, but only after two years of fruitless negotiations. So what changed to make an agreement possible now, after it had eluded negotiators at previous OPEC meetings? The intense diplomatic maneuvering behind the deal has been capably chronicled by my colleagues at Reuters (“How Putin, Khamenei and Saudi prince got OPEC deal done”), Bloomberg (“OPEC deal hinged on 2 a.m. phone call and it nearly failed”) and the Financial Times (“Saudi prince’s ambition for life beyond oil forces OPEC deal”). The common theme in these accounts is the personal intervention of top political leaders, which overcame the obstacles which had stalled negotiations at technical level (“OPEC talks struggle with question of market share”, Reuters, Nov 24). But the context was a change in oil […]

OPEC says members investing heavily to ensure oil supply

6 Dec 2016   OPEC

OPEC members are investing heavily to ensure supplies can meet global oil demand, which is likely to continue to rise steadily, the group’s secretary general told an energy conference on Monday. Mohammed Sanusi Barkindo, addressing delegates at India’s flagship energy event, Petrotech, said Asia will have a big role to play in global demand growth. “Alone in India, oil demand is projected to rise to more than 10 million barrels per day (bpd) by 2040, from 4.1 million barrels per day now,” said Barkindo. Overall, the outlook from the Organization of the Petroleum Exporting Countries calls for world oil demand to rise by 17 million bpd to around 110 million bpd by 2040, he said. (Reporting by Sudarshan Varadan and Promit Mukherjee; Editing by Tom Hogue) […]

OPEC Seeks Cuts From Nations Pumping a Fifth of Oil

6 Dec 2016   OPEC

No compatible source was found for this media. OPEC has invited 14 other crude producers, who together pump about a fifth of the world’s oil, to talks this week in Vienna aimed at securing wider cooperation with production cuts. Russia already committed to reduce its output by 300,000 barrels a day following the Organization of Petroleum Exporting Countries’ agreement last week to a production cut of 1.2 million, Secretary-General Mohammad Barkindo said on Monday at the PetroTech conference in New Delhi. Major producers including Mexico and Kazakhstan, along with relative minnows like Bolivia and Uzbekistan, have been asked to attend talks with OPEC ministers in the Austrian capital on Dec. 10, he said. Oil prices have risen 18 percent since OPEC’s surprise agreement last week to make its first supply cuts in eight year, which was also the first accord since the late 1990s involving non-members. The new 32.5 […]

OPEC November Production Hits Record Highs

6 Dec 2016   OPEC

The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all-time highs. Case in point, just out from Reuters: o OPEC November oil output rises 370,000 bpd month/month to 34.19 million bpd, the highest in recent history. o Saudi Arabia supply edges down on refinery maintenance and reduced direct crude burning o OPEC output rise led by Angola, Nigeria, Libya and Iraq Meanwhile, oil rose to fresh 16 month highs, with Brent rising above $55 for the first time since mid-2015. (Click to enlarge) More details from Reuters: OPEC’s oil output set another record high in November ahead of a deal to cut production, a Reuters survey found on Monday, helped by higher Iraqi exports and extra barrels from two nations exempted from cutting supply – Nigeria and Libya. The latest rise in supply means the […]

The Wider Ramifications Of The OPEC Deal

6 Dec 2016   OPEC

Contrary to many analysts’ expectations, OPEC successfully reached a deal to cut production on Wednesday. The deal, while still contingent upon non-OPEC production cuts, would see total OPEC production drop to 32.5 million bpd. There are winners and losers in the deal, with the largest cuts born by Saudi Arabia (486,000 bpd), the UEA (139,000 bpd) and Iraq (210,000 bpd). Iraq and Iran, initially resistant to major cuts, got away with only minor changes to their overall production, though Iran won’t be able to pass that golden 4 million bpd threshold Bijan Zanganeh had been insisting upon since August. Enthusiasm over the deal saw prices shoot up on Wednesday, with Brent and WTI sailing past $50 and investors winning big across the board. More good news greeted the market on Thursday, as Russia announced it would join in the production cuts, apparently sealing the deal. Lots, […]

Haftar’s Forces Take Control Of Ras Lanuf, Es Sider Oil Ports In Libya

6 Dec 2016   Libya

Libya oil General Khalifa Haftar, chief of the Libyan National Army (LNA), and his forces have taken control over two of the four export terminals in the Oil Crescent, according to a spokesperson for the LNA. His words were confirmed by a representative of the National Oil Corporation, speaking to Reuters. The news comes after the LNA clashed with the Petroleum Facilities Guard over the export terminals, which handle Libya’s oil trade. The PFG, which is affiliated with the UN-backed government, is the former master of the terminals, which it used as a means of extortion. The LNA is loyal to the rival government, the House of Representatives, based in eastern Libya. The PFG denied the reports claiming victory for Haftar. In September, Libyan media reported that Haftar’s forces had taken over all four terminals from the PFG and then handed this control over to the National Oil Corp. […]

OPEC to meet non-OPEC oil producers in Vienna December 10: Barkindo

6 Dec 2016   OPEC

OPEC has invited 14 non-OPEC oil producers to finalize details of coordinated cuts on Saturday December 10, at the oil producer group’s headquarters in Vienna, secretary general Mohammad Barkindo said Monday. “We will have our joint ministerial level meeting with non-OPEC countries this coming Saturday, December 10, at the OPEC Secretariat in Vienna — the first such meeting since 2002,” Barkindo said at the Petrotech conference in New Delhi. OPEC decided on November 30 to hold production at 32.5 million b/d starting January 1, 2017 — the first coordinated cut since 2008 — amounting to an approximate 1.2 million b/d cut from current output levels. The deal exempts Libya and Nigeria and is contingent on key non-OPEC producers also agreeing to cut 600,000 b/d in total. Members of the OPEC delegation in New Delhi also confirmed with reporters that 14 countries had been contacted to attend the meeting on […]

Ahead of deal to cut, OPEC oil output hits record high: Reuters survey

6 Dec 2016   OPEC

OPEC’s oil output set another record high in November ahead of a deal to cut production, a Reuters survey found on Monday, helped by higher Iraqi exports and extra barrels from two nations exempted from cutting supply – Nigeria and Libya. The latest rise in supply means the Organization of the Petroleum Exporting Countries will have a bigger task in complying with a plan to cut supply starting in 2017 – its first production-reduction deal since 2008. Supply from OPEC increased to 34.19 million barrels per day (bpd) in November from 33.82 million bpd in October, according to the survey based on shipping data and information from industry sources. Brent crude LCOc1 rose above $55 a barrel on Monday, trading at a 16-month high, on prospects of a […]

OPEC to Seek More Oil-Output Cuts from Nonmembers

6 Dec 2016   OPEC

The Organization of the Petroleum Exporting Countries’ logo is pictured ahead of a meeting between… OPEC’s agreement to slash oil output faces its first test Saturday, when it asks producers outside the cartel to make production-cut commitments intended to amplify the effect of the landmark deal. The Organization of the Petroleum Exporting Countries has invited representatives from 14 countries to meet in Vienna on Saturday to discuss joining the cartel after it agreed last week to slash 1.2 million barrels of daily oil production—more than 1% of global output. In all, OPEC wants its non-OPEC counterparts to slash 600,000 barrels a day. Four countries have committed to attend Saturday: Russia, Oman, Bahrain and Azerbaijan. OPEC officials believe Mexico and Kazakhstan are also likely to come. Their participation is crucial, OPEC officials say. Without it, the oil-price gains of the past week would be imperiled, and the OPEC production deal […]

Kurdish government short on oil export payments

6 Dec 2016   Iraq

Companies working in the Kurdish north of Iraq say export payments are coming in, but some debt is still unresolved. Pictured, Iraqi Kurdish Peshmerga fighters watching smoke billowing as they deploy in the area in Dohuk, north of Mosul, during an operation to attack Islamic State militants in Mosul, Iraq, October 20, 2016. Photo by Shvan Harkl/UPI OSLO, Norway, Dec. 5 (UPI) — Companies working in the Kurdish north of Iraq said they were paid collectively more than $50 million for oil exports through Turkey, but still owed more. Swedish energy company DNO said it was paid $36.2 million toward September exports of crude oil from the Kurdish north through Turkish ports. About $6 million of that payment goes toward outstanding debt. The company is sharing the funds with its partner, Genel Energy. DNO said it produced an average of 112,897 barrels of oil per day from its Tawke […]

Iranian MPs declared victory with OPEC deal

6 Dec 2016   Iran

Members of the Iranian parliament said Monday they signed a letter of appreciation that, in effect, declared victory with last week’s OPEC production deal. Iran under the terms of an agreement signed last week in Vienna will cap oil production at 3.79 million barrels per day. That’s 123,000 bpd less than what the government reported to the Organization of Petroleum Exporting Countries in October, but 107,000 bpd less than reported by secondary sources. Of the countries agreeing to limits, Iran is the only one that has room for more production. Saudi Arabia, one of Iran’s main adversaries, cuts the most by volume with 486,000 bpd starting in January. Members of the Iranian parliament on Monday signed a letter of appreciation, with the official Islamic Republic […]

Iran’s Rouhani says will not let Trump rip up nuclear deal

6 Dec 2016   Iran

Iran will not let U.S. President-elect Donald Trump rip up the nuclear deal it signed with world powers, President Hassan Rouhani said on Tuesday. “[Trump] wants to do many things, but none of his actions would affect us … Do you think the United States can rip up the JCPOA (the Joint Comprehensive Plan of Action nuclear deal)? Do you think we and our nation will let him do that?” Rouhani said in a speech at University of Tehran broadcast live on state television. (Reporting by Bozorgmehr Sharafedin)

Hunger Stalks World’s Youngest Capital as War Nears 4th Year

6 Dec 2016   Sudan

As South Sudanese homemaker Sarah Kiden stirs a boiling pan of lentils, she remembers when her five children could count on more than one meal a day. For the first time since the world’s newest country gained independence in 2011, hunger is stalking its capital, Juba, because of renewed violence and a deepening economic crisis. With her clothes-seller husband earning 200 South Sudanese pounds ($2.74) a day and food prices rising eight-fold in the past year, 32-year-old Kiden has little option but to cook a daily pot of stew, buy a few pieces of round flat-bread and hope it will sate her family’s appetite. “When we used to have breakfast and lunch then supper, all was good,” she said in an interview at her family’s one-room shack in Juba’s Munuki neighborhood. “Now the money can’t buy all those.” Civil war in oil-producing South Sudan has already claimed tens of […]

Fifteen Saudi Shia sentenced to death for ‘spying for Iran’

6 Dec 2016   Saudi Arabia

Tensions between Sunni-ruled Saudi Arabia and Shia-led Iran have escalated in the past year A court in Saudi Arabia has sentenced 15 people to death for spying for Iran. They were among 32 people – comprising 30 members of the kingdom’s Shia Muslim minority, an Iranian national and an Afghan – put on trial in February. Prosecutors accused them of treason, setting up a spy ring in collaboration with Iranian intelligence, and passing about sensitive data on military zones. Tensions between Sunni-ruled Saudi Arabia and Shia-led Iran have escalated in the past year. Saudi Arabia broke off diplomatic relations with Iran in January following the storming of its embassy in Tehran by protesters angered by the execution of the prominent Saudi Shia cleric, Sheikh Nimr al-Nimr, and three other Shia. Saudi officials insisted Nimr was guilty of terrorism offences, but Iran’s supreme leader said he had been executed solely […]

What You Need To Know About The World’s Biggest IPO

6 Dec 2016   Saudi Arabia

Oil rig dusk Sometime in the next 12 to 24 months, the world will see probably see the biggest IPO in history, and one that may remain unparalleled for a century or more – the IPO of Saudi oil giant Aramco. Aramco says it has more than 260 billion barrels of recoverable reserves – 10 times the level that Exxon has. In addition, Aramco has marginal recovery costs for each barrel of around $6 each – perhaps the lowest in the world. Despite all of that, Aramco the Aramco IPO faces some major challenges. First of all, the Aramco IPO sets the stage for a tremendous diversification challenge for Saudi Arabia. Aramco likely has a value of around $3 trillion as a total company, so even selling 5% of the company will require finding investors willing to shell out around $150 billion. That valuation likely means that Aramco will […]

Saudi Arabia Surrenders To U.S. Shale

6 Dec 2016   Saudi Arabia, USA

The new OPEC deal to cut oil output – the cartel’s first since 2008 – amounts to nothing less than Saudi Arabia’s surrender to the power of American shale. It has come about due to Riyadh’s belated, horrified understanding that it has utterly lost control over the energy market, running through its capital reserves in the process. Rather than young, feckless Deputy Crown Prince Mohammed bin Salman using Saudi Arabia’s John D Rockefeller strategy to permanently drive U.S. shale out of the energy market, the exact opposite result has occurred. Unwittingly, the Saudis have made the Americans the new global energy swing producer, the permanent ceiling for the global price of oil. This, in its way, is as momentous a shift in global power as the stunning recent Brexit and Donald Trump votes. Whereas Brexit […]

Exxon cuts Kurdistan portfolio by half

6 Dec 2016   Iraq

The American super-major, whose 2011 contracts with Kurdistan spurred an investment bonanza, has relinquished the Qara Hanjeer, Arbat East, and Betwata blocks. Exxon cuts Kurdistan portfolio by half ExxonMobil CEO Rex Tillerson (second from left) meets with KRG President Massud Barzani (fourth from right) and other senior Kurdish officials in Davos, Switzerland, on Jan. 23, 2013. (Photo credit: Kurdistan Regional Government) ExxonMobil has walked away from three of the six exploration blocks it operated in the Kurdistan region.The U.S. super-major relinquished its interests in the Qara Hanjeer, Arbat East, and Betwata blocks, according to Kurdistan’s Minister of Natural Resources Ashti Hawrami and Exxon spokesperson Lauren Kerr. The company retains 80 percent operating stakes in the Al Qosh, Pirmam and Bashiqa blocks.”It is normal,” Hawrami said, speaking on the sidelines of the CWC Kurdistan-Iraq Oil and G… This content is for registered users. Please login to continue. If you are […]

OPEC Target Gets Harder as African Members Boost November Output

6 Dec 2016   Africa, OPEC, Prices

OPEC’s mission to implement last week’s historic deal to curb production for the first time in eight years just got a little bit harder after three of its African members increased output in November. Crude production from the Organization of Petroleum Exporting Countries rose to a record 34.16 million barrels a day in November with gains led by Angola, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That’s up from a revised 33.96 million barrels a day in October. Nigeria and Libya — which aren’t bound by the OPEC cuts because their output has suffered from sanctions and oil infrastructure sabotage — also boosted production by a combined 140,000 barrels a day last month. Although OPEC uses independent estimates known as secondary sources that differ from the estimates of the Bloomberg survey, the resurgence in production […]

Nigeria, Morocco wealth funds sign pipeline deal to bring natural gas to Europe

6 Dec 2016   Morocco, Nigeria

A new pipeline project to bring Nigerian gas through Africa to Europe has been launched by the sovereign wealth funds of Nigeria and Morocco, the latest attempt to link Nigeria’s vast gas resources with the lucrative European gas market. The Trans-African Pipeline will be developed jointly by the Moroccan sovereign wealth fund Ithmar Capital and the Nigeria Sovereign Investment Authority, the partners said Monday. Nigeria has huge gas reserves totaling some 5.1 Tcm, according to the latest BP Statistical Review of World Energy, but few options for monetizing the gas other than its LNG export facility. A previous pipeline project — the Trans-Saharan Gas Pipeline — was agreed on between Nigeria’s NNPC and Algeria’s Sonatrach in 2002, and an intergovernmental accord signed in 2009. But there has been little progress on the project since, given the huge distances involved and the high cost of developing such a vast pipeline […]

Venezuela struggles to tame triple-digit inflation

6 Dec 2016   Venezuela

Bringing skills she gained working at a bank to her grocery store in Caracas, beset by a triple-whammy of ravaging food shortages, galloping inflation and plummeting currency, Miriam Borthomier relies on a basic but time-saving algorithm: 100 notes of any denomination of Venezuela’s currency weigh 110 grams. The biggest note in use is the 100 bolívar bill, which is worth roughly 2 US cents on the black market, forcing her customers to bring bagloads of cash. “I put the wads on the scale I use to weigh cheese and multiply the weight for the value of the notes, otherwise it’s horrible, I’d lose all day counting bills,” she said.

In an echo of Weimar Germany, Venezuelan shopkeepers have resorted to weighing banknotes instead of counting them. In defiance of official pegs, the local currency has tanked on the black market, losing a jaw-dropping 62 per cent of its value in November, making bills in circulation in the country virtually worthless. Hoping the recent Opec deal would boost Venezuela’s dwindling coffers, trade minister Jesús Faría said that “in the middle of such turbulence” the government would on Tuesday unveil measures to stabilise the currency.

Liberia: Exxon Set to Drill – Are Liberians Ready for Jobs in Oil Industry?

6 Dec 2016   Liberia

Liberia’s oil industry is holding its breath waiting for the outcome of ExxonMobil exploration efforts by the end of the year. With global oil prices low, and little interest by big oil companies in Liberia’s yet unproven oil reserves, Exxon’s drilling operation may represent Liberia’s last chance of discovering oil for some time. But if Liberia does have an oil boom many observers worry whether a country without oil experts can be ready for the huge task ahead? An investigation by FrontPageAfrica and New Narratives found that only one of the universities or higher institutions of learning in Liberia is offering courses in Petroleum Engineering or Oil and Gas management. These are the degrees that will be essential if Liberians are to have a role in the management of their own petroleum industry. “We are not in the position to offer oil and gas management courses, because […]

Australia’s BHP Billiton Wins Bidding for Stake in Mexico’s Trion Oil Field

6 Dec 2016   Australia, Mexico

Australia’s BHP Billiton won bidding Monday to partner with Mexican state oil company Petróleos Mexicanos in the Trion deep-water oil field in the Gulf of Mexico in an auction in which 10 other deep-water blocks are also being offered. Billiton outbid BP PLC to become Pemex’s first private partner in exploration and production under Mexico’s 2013 opening of the oil industry. Bids for 10 other deep-water blocks up for auction are due to be opened later Monday. For Trion, both Billiton and BP offered additional royalties of 4%, while Billiton offered an additional cash commitment of $624 million compared with $606 million offered by BP. Billiton will have 60% of the project and Pemex 40%. The auction is the fourth under the 2013 opening of the Mexican oil industry, but the first for deep-water reserves and the first to attract the interest of major oil companies. The Trion […]

China Offshore Oil wins two Mexico Perdido blocks in deep water auction

6 Dec 2016   China, Mexico

Mexico awarded China Offshore Oil Corporation the fourth block tendered from the Gulf of Mexico’s Perdido Fold Belt off the U.S.-Mexico maritime border in a historic deep water oil and gas auction on Monday. Block 4 is a 725 square mile (1,876.7 square km) area which the energy ministry says contains some 540.5 million barrels of oil equivalent (boe) in light and extra light crude. Earlier, China Offshore Oil also won the first block auctioned in the Perdido Fold Belt. (Writing by Dave Graham)

Ratings agencies see China slowing down

6 Dec 2016   China

As investors watch carefully the balance between oil supply and demand, ratings agencies said the Chinese economy was on pace to moderate in 2017. Twin crashes on the Chinese stock market at the start of this year added momentum to a plummet in crude oil prices. Oil prices at one point this year dropped below $30 per barrel before an OPEC production agreement helped put a floor under crude. Moody’s Investors Service one year ago “sharply” lowered its assumptions for oil prices for 2016 as production far outweighed consumption levels. In late December 2015, Goldman Sachs said crude oil prices may need to hit $20 per barrel before a balance between supply and demand returns. Moody’s said Monday that restructuring […]

China releases five-year plan for cleaner air, water, soil

6 Dec 2016   China

China’s State Council has released a national plan on environmental improvements for the 13th Five-Year Plan period (2016-2020), detailing tasks to cleanse polluted air, water and soil. The plan set the goals of a more environmentally friendly way of living, considerable reduction of major pollutants, effective control of environmental risks, and a sounder ecological system by 2020. To achieve those targets, the State Council asked Beijing, Tianjin and Hebei, as well as regions along the Yangtze River Economic Belt to draw up a red line, or bottom line, for ecological protection by the end of 2017, while other areas should come up with a red line before the end of 2018. Consumption of coal, which is a major source of pollution in China, will be strictly controlled. Beijing, Tianjin, Hebei, Shandong, regions along the Pearl River and Yangtze River Delta, and the 10 cities […]

Despite natgas challenges, New England has enough power for winter

6 Dec 2016   USA

Despite challenges caused by power plant retirements, New England should have enough electricity to keep homes and businesses warm this winter, the region’s grid operator said Monday. ISO New England said it launched Winter Reliability Program to pay generators to buy fuel for their power plants to help keep the lights on when the weather turns cold. “The region should have adequate supplies of electricity to meet demand, barring any unforeseen resource outages or fuel delivery constraints,” Vamsi Chadalavada, the ISO’s executive vice president and chief operating officer, said in a release. This is the fourth consecutive year the ISO has implemented a similar winter reliability program. This year’s version pays generators to buy oil and liquefied natural gas, rather than pipeline gas, before the winter. The ISO did not disclose in its statement how much it pays for the fuel. The fuel subsidy has become necessary, especially during […]

Dakota Access Oil Pipeline in New Setback as U.S. Permit Denied

6 Dec 2016   Pipelines

The U.S. Army Corps of Engineers denied Energy Transfer Partners LP a permit to build a section of the $3.8 billion Dakota Access Pipeline in North Dakota after weeks of opposition from Native Americans, environmentalists and other groups. “There’s more work to do” in exploring alternative routes, Jo-Ellen Darcy, the corps’ assistant secretary for civil works, said in a statement Sunday, rejecting the company’s request for a permit to route the line under Lake Oahe. The move punts a decision to the administration of President-elect Donald Trump. He expressed support for Dakota Access as recently as Dec. 1. Protests against the crude-oil pipeline have resulted in hundreds of arrests and drawn support from celebrities. The standoff is emblematic of a broader effort by environmentalists to stall oil and gas pipelines, […]

Once-mighty Chesapeake continues divestment streak

6 Dec 2016   USA

Once one of the stronger shale gas companies in the United States, Chesapeake Energy said it closed on a $450 million deal to sell some of its shale acreage. Chesapeake said it sold off 78,000 acres, of which more than half was considered core acreage, in the Haynesville shale area in Louisiana to an undisclosed private company for $450 million. The 250 wells currently in production are yielding about 30 million cubic feet of natural gas per day. “In addition, Chesapeake is marketing approximately 50,000 net acres located in the northeastern part of its Haynesville shale operating area, which the company also expects to close in the 2017 first quarter,” the company said in a statement. Chesapeake in early February said […]

US vehicle miles travelled up 3% in first 9 months of 2016 to 2.4 trillion miles

6 Dec 2016   USA

US driving topped 2.4 trillion miles in the first nine months of 2016, an increase of 3.0% compared to the same period last year, lengthening a series of consecutive monthly increases that started in April 2014, according to preliminary new data released by the US Department of Transportation’s (USDOT) Federal Highway Administration (FHWA). The new data, published in FHWA’s latest “ Traffic Volume Trends ” report—a monthly estimate of US road travel—show that more than 265.5 billion miles were driven in September 2016 alone—a 2.4% increase over the previous September and a 0.4% increase compared with August 2016. The September 2016 report also includes seasonally-adjusted data, which is conducted by USDOT’s Bureau of Transportation Statistics as a way to even out seasonal variation in travel and enable vehicle miles travelled (VMT) comparisons […]

WiTricity announces Tunable Matching Network technology; optimization of power transfer between ground and vehicle

6 Dec 2016   Electric Cars

Wireless power transfer company WiTricity announced Tunable Matching Network (TMN) technology, which allows the wireless charging system automatically to optimize energy transfer between the ground and vehicle in a wide range of real-world operating conditions including parking misalignment, differing vehicle ground clearance and varying battery voltage conditions. This flexibility enables wirelessly charged vehicles to interoperate more easily with standards-based charging sources made by different automakers, Tier 1 suppliers and infrastructure suppliers. WiTricity’s TMN technology is delivered as a compact electronics module embodying proprietary hardware and software algorithms, to be incorporated into both the wireless charging source on the ground and the wireless power capture device on the vehicle. The WiTricity TMN technology was recently tested by Idaho National Laboratory (INL), with funding from the US Department of Energy, to support validation of the SAE Technical Information Report (TIR) J2954. SAE TIR J2954 is a guideline for the wireless charging […]

Trump advisors aim to privatize oil-rich Indian reservations

6 Dec 2016   USA

Native American reservations cover just 2 percent of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves. Now, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership – a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations. The tribes have rights to use the land, but they do not own it. They can drill it and reap the profits, but only under regulations that are far more burdensome than those applied […]

Trump Meets With Al Gore on Climate Issues Amid Pressure from His Children

6 Dec 2016   Climate, USA

Ivanka Trump waves as former Vice President Al Gore, left, leaves meetings at Trump Tower… President-elect Donald Trump’s children are urging him to seize on environmental conservation as a potentially defining issue for his administration, according to two people familiar with the discussions, an effort that could clash with Mr. Trump’s aim of boosting energy production from fossil fuels and his opposition to many federal regulations. The familial push prompted a meeting Monday in New York between Mr. Trump and former Vice President Al Gore, an outspoken climate advocate who has promoted energy efficiency and warned of the consequences of global warming. Mr. Trump’s daughter, Ivanka Trump, also met with Mr. Gore in Trump Tower as she determines what role she will have in the next administration. The 35-year-old businesswoman emphasized family issues during the presidential campaign and is exploring other policies she might help shape, including energy efficiency […]

How Russia Outsmarted OPEC

6 Dec 2016   OPEC, Saudi Arabia

OPEC’s historical deal to cut production has been sealed, and oil prices have jumped as a result, comfortably above the $50 per barrel mark. According to Lukoil’s vice president, Leonid Fedun, the average price of crude in 2017 could reach US$60 a barrel, thanks in no small part to that agreement. According to some observers, the effect won’t be so noticeable , and prices will continue to hover around US$50. In any case, Russia will certainly benefit from the cut agreement, as the chief of VTB, one of the country’s largest banks, said recently. Andrey Kostin said that the decision to cut production will, on the one hand, prop up international prices, which of course is good news for Russia, and on the other hand, it will benefit the ruble, an outcome which was also to be expected given the central place crude oil occupies in […]

Peak Oil – From Global Catastrophe to Global Opportunity

6 Dec 2016   Peak Oil

Modern economics is a matter of supply and demand. And when it comes to ‘peak oil’, it’s the difference between catastrophe and opportunity. Since the early 20th Century, scientists, experts, and economists have been predicting the manifestation of ‘peak oil’. For years, many people viewed ‘peak oil’ as a herald of global catastrophe, and the end of major economies. However, in recent years, the supply and demand situation for oil has turned in favour of supply. It now appears that peak oil demand is what organisations and countries need to be aware of. What’s more, some experts are predicting that this demand will happen sooner than expected. And global oil and gas organisations need to consider their next move in order to stay competitive. What Do We Mean By ‘Peak Oil’? ‘ Peak Oil ‘ describes a situation where global oil production hits its peak, then is in perpetual […]

Tumbling Down the Net Hubbert Cliff

6 Dec 2016   Peak Oil

I gave a mini presentation at a Griffith University “sustainable economy” seminar on 29 November 2016 https://drive.google.com/file/d/0B21KVqpkTSnrQ2haWFAwaU5MRjQ/view As the themes were slanted towards “business opportunities”, I chose this title for my talk: “ Tiny House Communities: grassroots solutions for those with sufficient initiative to exit a collapsing industrial civilisation ”. In my pre-conference paper/abstract submission to the GCSE, I made it clear I was going to talk about much more than just tiny houses. Ultimately I spent only 5 minutes talking about tiny house communities and 15 minutes talking about our collapsing industrial civilisation. I focused especially on the sudden global energy descent we will soon be facing and tried to explain the key concepts with my “post peak oil” slides http://www.doomsteaddiner.net/blog/2016/11/12/post-peak-oil-slides-for-diners/ I received the usual denialism response I have come to expect from one individual in particular, a […]

The Climate Crisis and Economic Policy Choices

6 Dec 2016   Climate

A major issue in climate economics is whether it is possible to halt the growth in carbon emissions and to achieve, instead, a rapid reduction. It concludes that carbon emissions will never fall at a sufficient rate in a growth economy. Unfortunately, the EU operates a climate policy framework, the EU Emissions Trading System, that was designed by BP and it doesn’t work. Policies that might work were the political will there are described. However, the fossil fuel industry still has a stranglehold on policy. An entirely different way of thinking about climate issues is needed, one that is consistent with the limits to growth paradigm. The alternative way of framing the climate debate is: Humanity is faced with the high likelihood of a catastrophic ecological tipping point and this crisis is part of a general crisis at the limits to economic growth There are many unknowns at that […]

Oil Advances to 16-Month High as Focus Shifts to Non-OPEC Cuts

5 Dec 2016   Prices

Oil traded at a 16-month high as OPEC prepared to meet non-members in an effort to secure additional output cuts following last week’s surprise deal to curtail supply. Futures rose as much as 0.7 percent in New York after advancing 14 percent the previous three sessions. Organization of Petroleum Exporting Countries’ members will meet producers from outside the group in Vienna on Saturday to discuss the supply curbs, according to people familiar with the situation. In the U.S., drillers added rigs for a fifth week to reach the highest level since January, data from Baker Hughes Inc. showed. Oil has climbed above $52 a barrel after OPEC agreed Wednesday to reduce output by 1.2 million barrels a day by January, while non-member Russia pledged a cut of as much as 300,000 barrels a day. Attention is now shifting to OPEC’s compliance and efforts to persuade other producers to cooperate. […]

Oil Market Turns Upside Down as Shale Rushes to Hedge Post-OPEC

5 Dec 2016   Prices

U.S. shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above $50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down. The rush to hedge — locking in future cash flows and sales prices — could translate into higher U.S. oil production next year, offsetting the first output cut by the Organization of Petroleum Exporting Countries in eight years. As such, the producer group could end throwing a life-line to a sector it once tried to crush. “Right after OPEC, U.S. producers were very active hedging,” said Ben Freeman, founder of HudsonField LLC, a boutique oil merchant with offices in New York and Houston. “We are going to see a significant amount of producer hedging at this levels.” The hedging pressure triggered violent movements across the price curve. As shale firms sold oil for […]

Natural Gas Prices At Highest Level In Two Years

5 Dec 2016   Prices

Natural Gas Installation Amid all the headlines about Donald Trump and OPEC, very few news outlets noticed the remarkable increase in natural gas prices in November. Gas futures for front month delivery gained more than 34 percent over the past month, rising to their highest level in two years. Bouncing around at roughly $3.50 per MMBtu, natural gas prices are also up more than 100 percent since hitting a low point earlier this year. There are several reasons and trends underlying the price gains, so let’s go through a few of them. (Click to enlarge) First, natural gas production hit a peak earlier this year and fell back roughly 5 percent. Gas producers posted impressive gains without much of an interruption for the better part of the past decade, even as spot prices dropped below $3/MMBtu and at times below $2/MMBtu. But the gains in output really came to […]

Electric Cars Could Take an OPEC-Sized Bite From Oil Demand

5 Dec 2016   Electric Cars

A boom in electric vehicles made by the likes of Tesla Motors Inc. could erode as much as 10 percent of global gasoline demand by 2035, according to the oil industry consultant Wood Mackenzie Ltd. While battery-powered cars and trucks today represent less than 1 percent of total vehicle sales, they are expected to take off after 2025 as governments move to tackle pollution and costs fall, the Houston-based analyst said. By 2035 so-called EVs may remove 1 million to 2 million barrels a day of oil demand from the market — in the range of the production cut OPEC and its allies agreed this week in order to end a three-year crude surplus. “Anything that reduces the demand for transportation has an impact on the oil market,” Alan Gelder, vice president of refining, chemicals and oils markets at Wood Mackenzie, said in an interview in London. “The question […]

Is The Pain Finally Over For Oilfield Services?

5 Dec 2016   Shale Oil

As the Baker Hughes rig count ticks upwards, oilfield services providers (OFS) are seeing a much-awaited revenue rebound in the heart of the United States’ most prominent drilling areas. Spending on exploration activities in the final quarter of 2016 will be approximately $1 billion higher than previously expected, according to Jud Bailey, an analyst from Wells Fargo, who made the forecast in a note to investors earlier this month. The strong recovery should carry over into 2017 – especially since the Organization of Petroleum Exporting Countries’ (OPEC) agreed on a production freeze on Wednesday that caused oil prices to spike by 20 percent. These gains will add ammunition to oilfield service providers’ demands for higher payouts than originally agreed to when markets were hyper-bearish, Samir Nangia, an analyst with the United Kingdom-based IHS Energy Insight, told Fuelfix earlier this week. West Texas Intermediate (WTI) prices have […]

Big Oil Earnings To Explode In 2017

The energy sector has been outperforming other sectors among the S&P 500 companies this year, with a gain of 21.79 percent year to date. Now the question is whether or not the recent OPEC deal will further improve the prospects for the sector in 2017? Doug Terreson, head of energy research at Evercore ISI and Institutional Investor’s top-rated analyst for integrated oil certainly believes it will. He expects oil companies to double their earnings in 2017 on the back of a sustained increase in crude oil prices and low oilfield service costs. “We’re unrepentantly bullish here. Investors portfolios in our view should be overweight energy and this includes integrated oil, E&P and oilfield service stocks,” he told CNBC’s “Fast Money: Halftime Report” on Wednesday. “Our call this year has really been not to overthink it because with the oil price rising and costs declining, performance would probably be pretty […]

The Wider Ramifications Of The OPEC Deal

5 Dec 2016   OPEC

Pipeline and gauge Contrary to many analysts’ expectations, OPEC successfully reached a deal to cut production on Wednesday. The deal, while still contingent upon non-OPEC production cuts, would see total OPEC production drop to 32.5 million bpd. There are winners and losers in the deal, with the largest cuts born by Saudi Arabia (486,000 bpd), the UEA (139,000 bpd) and Iraq (210,000 bpd). Iraq and Iran, initially resistant to major cuts, got away with only minor changes to their overall production, though Iran won’t be able to pass that golden 4 million bpd threshold Bijan Zanganeh had been insisting upon since August. Enthusiasm over the deal saw prices shoot up on Wednesday, with Brent and WTI sailing past $50 and investors winning big across the board. More good news greeted the market on Thursday, as Russia announced it would join in the production cuts, apparently sealing the deal. Lots, […]