Oil Prices

[opmi]

^^ for a chow Kuan country that nationalized foreign oil companies, it is easier to default on bonds than to pay up.


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[Tiggerbee]

ConocoPhillips said Dec. 8 that would cut spending next year by about 20 percent. The Houston-based company is deferring investment in North American plays including the Permian Basin of Texas and New Mexico and the Niobrara formation in Colorado. Oasis, an exploration and production company based in Houston, said Dec. 10 that it’s cutting 2015 spending 44 percent.

http://www.bloomberg.com/news/2014-12-12...-says.html

U.S. Oil Rigs Drop Most in Two Years, Baker Hughes Says

U.S. oil drillers idled the most rigs in almost two years as they face oil trading below $60 a barrel and escalating competition from suppliers abroad.

Rigs targeting oil dropped by 29 this week to 1,546, the lowest level since June and the biggest decline since December 2012, Houston-based field services company Baker Hughes Inc. (BHI) said on its website yesterday.

As OPEC resists calls to cut output, U.S. producers including ConocoPhillips (COP) and Oasis Petroleum Inc. (OAS) have curbed spending. Chevron Corp. (CVX) put its annual capital spending plan on hold until next year. Rigs targeting U.S. oil are sliding from a record 1,609 after a $50-a-barrel drop in global prices, threatening to slow the shale-drilling boom that has propelled domestic production to the highest level in three decades.

“It’s starting,” Robert Mackenzie, oilfield services analyst at Iberia Capital Partners LLC, said by telephone from New Orleans. “We knew this day was going to come. It was only a matter of time before the rig count was going to respond. The holiday is upon us and oil prices are falling through the floor.”

ConocoPhillips said Dec. 8 that would cut spending next year by about 20 percent. The Houston-based company is deferring investment in North American plays including the Permian Basin of Texas and New Mexico and the Niobrara formation in Colorado. Oasis, an exploration and production company based in Houston, said Dec. 10 that it’s cutting 2015 spending 44 percent.

Lower Capex

“Our capex will be lower,” Roger Jenkins, chief executive officer of Murphy Oil Corp. (MUR), an El Dorado, Arkansas-based exploration company, said during a presentation Dec. 10. “I think this idea of lowering capex 20-something percent is going to be pretty common in the industry.”

Even as producers cut budgets and lay down rigs, domestic production is surging, with the yield from new wells in shale formations including North Dakota’s Bakken and Texas’s Eagle Ford projected to reach records next month, Energy Information Administration data show. Oil output climbed to 9.12 million barrels a day in the week ended Dec. 5, the highest in EIA data going back to 1983, and is projected to increase to 9.3 million barrels a day next year.

“You still have a lot of spending that went on in 2014 that will take effect in 2015,” Joe Overdevest, who helps manage about $4.4 billion at Fidelity Investments and is co-portfolio manager of its natural resources fund, told reporters in Toronto yesterday. “There’s a delay in that production. It will probably take at least a year to start seeing major effects.”

Production Decline

Oil production probably won’t drop until mid-2015, James Williams, president of energy research company WTRG Economics in London, Arkansas, said by telephone. “U.S. shale is unstoppable at $100 a barrel, but it’s clearly stoppable at $60,” he said.

Chevron, the largest U.S. energy producer except for Exxon Mobil Corp. (XOM), is still evaluating its capital plans and will probably release them early next year, company spokesman Kurt Glaubitz said by phone Dec. 9. The company usually has its budget out in mid-December.

The Organization of Petroleum Exporting Countries, responsible for about 40 percent of the world’s oil supply, decided Nov. 27 to maintain its collective crude output target, resisting pressure for cuts to shrink a global glut. “Why should I cut production?” Saudi Arabia oil minister Ali Al-Naimi asked Dec. 10, while speaking to reporters as he attended United Nations global warming talks in Lima.

Rigs Forecast

The international benchmark North Sea Brent oil and its U.S. counterpart West Texas Intermediate crude are trading at their lowest levels since 2009. WTI for January delivery tumbled 3.6 percent yesterday to settle at $57.81 a barrel on the New York Mercantile Exchange. The 2014 peak was $107.73.

U.S. oil rigs will fall below 1,100 for the first time in three years, bottoming out at 1,073 in August, forecasts prepared by the Louisville, Kentucky-based energy data company Genscape Inc. show.

The Permian Basin lost the most rigs this week, falling by 20 to 548. Counts rose in natural gas-rich plays such as the Marcellus in the eastern U.S. and the Haynesville in the South.

Natural gas for January delivery increased 16.1 cents to settle at $3.795 per million British thermal units on the Nymex yesterday, down 14 percent in the past year. Stockpiles of the fuel dropped 51 billion cubic feet last week to 3.359 trillion, according to the EIA.

[CityFarmer]

Both the supply and demand are adjusting to the lower oil price. The market is pretty dynamic...

Record oil tankers sailing to China amid stockpiling signs

LONDON (Dec 13): The number of supertankers sailing to China jumped to a record in ship-tracking data amid signs that the oil-price crash is spurring the Asian nation to stockpile.

There were 83 very large crude carriers bound for Chinese ports, according to shipping signals from IHS Maritime compiled by Bloomberg at about 8:30am today in London.

The ships would transport 166 million barrels, assuming standard cargoes, the largest number in data starting in October 2011
...
http://www.theedgemarkets.com/sg/article...ling-signs

[BlueKelah]

Both the supply and demand are adjusting to the lower oil price. The market is pretty dynamic...

Record oil tankers sailing to China amid stockpiling signs

LONDON (Dec 13): The number of supertankers sailing to China jumped to a record in ship-tracking data amid signs that the oil-price crash is spurring the Asian nation to stockpile.

There were 83 very large crude carriers bound for Chinese ports, according to shipping signals from IHS Maritime compiled by Bloomberg at about 8:30am today in London.

The ships would transport 166 million barrels, assuming standard cargoes, the largest number in data starting in October 2011
...
http://www.theedgemarkets.com/sg/article...ling-signs

find this stockpiling story not convincing. Besides it would take at least a couple of weeks or a month from ordering and delivery? so if china bought last month it would have been at about $85 USD level?

[CityFarmer]

Both the supply and demand are adjusting to the lower oil price. The market is pretty dynamic...

Record oil tankers sailing to China amid stockpiling signs

LONDON (Dec 13): The number of supertankers sailing to China jumped to a record in ship-tracking data amid signs that the oil-price crash is spurring the Asian nation to stockpile.

There were 83 very large crude carriers bound for Chinese ports, according to shipping signals from IHS Maritime compiled by Bloomberg at about 8:30am today in London.

The ships would transport 166 million barrels, assuming standard cargoes, the largest number in data starting in October 2011
...
http://www.theedgemarkets.com/sg/article...ling-signs

find this stockpiling story not convincing. Besides it would take at least a couple of weeks or a month from ordering and delivery? so if china bought last month it would have been at about $85 USD level?

The article didn't say the shipment is at $60+ level, right?

The point is China need to build-up its strategic petroleum reserve. It will be accelerated due to lower oil price, which is a significant contribution to global demand.

[brattzz]

ya, china buy-buy-buy!!

Cheap oil is good!

[BlueKelah]

The article didn't say the shipment is at $60+ level, right?

The point is China need to build-up its strategic petroleum reserve. It will be accelerated due to lower oil price, which is a significant contribution to global demand.

China's Strategic Petroleum Reserve expansion was announced in 2007.
Wikipedia Source

So everytime China buys some more, some journalist writes an article on how China is increasing their stockpiling and accelerating it. Not the first time reading this type of story.

Been happening since 2007 so woop-de-doo. Stock-piling demand from China has always been there.

"Rally in prices" as the analyst claims was probably just short covering.
Unless something disrupts supply side, would expect oil to just continue its slide.

[CityFarmer]

Early slowdown signs emerge for U.S. oil states after crude slide

After leading the U.S. economic recovery out of recession, some of the nation's top oil states are showing early signs of a slowdown as a result of the plunge in crude prices.

In Houston, Texas, the first oil industry layoffs have been announced, with realtors there predicting a sharp decline, up to 12 percent, in home sales next year.

Alaska's 2015 fiscal year budget revenue forecast will have to be lowered by almost $2 billion, according to Fitch Ratings, because of the sharp drop in the state's forecast crude prices. That will widen Alaska's budget gap to almost $3.4 billion, Fitch said in a Dec. 11 report.

States such as Texas, North Dakota, Alaska, Oklahoma and New Mexico are all likely to feel strains next year, Wells Fargo Securities municipal analyst Roy Eappen said in a recent report.
...
http://www.todayonline.com/business/earl...rude-slide

[Boon]

Why oil prices are so unstable:

John Kemp

Sun Dec 14, 2014

http://www.reuters.com/article/2014/12/1...W620141215

[CityFarmer]

An official view from OPEC...

OPEC chief defends policy, says group to try to ride out price fall

DUBAI - Oil producers group OPEC can ride out a slump in oil prices and keep output unchanged, its head said on Sunday, arguing market weakness did not reflect supply and demand fundamentals and could have been driven by speculators.

Speaking at a conference in Dubai, Abdullah al-Badri defended November's decision by the Organization of the Petroleum Exporting Countries not to cut its output target of 30 million barrels per day (bpd) in the face of a drop in crude prices to multi-year lows.

"We agreed that it is important to continue with production (at current levels) for the ... coming period. This decision was made by consensus by all ministers," he said. "The decision has been made. Things will be left as is."
...
http://www.todayonline.com/business/opec...ndamentals