Oil Prices

[Behappyalways]

IEA Says Record 3 Billion-Barrel Oil Stocks May Deepen Rout
http://www.bloomberg.com/news/articles/2...ken-prices

[CityFarmer]

The fight between OPEC and US oil producers will continue for a while...

Struggling US oil producers get credit lifeline amid downturn
17 Nov 2015 06:22
[NEW YORK] An autumn credit crunch was expected to hit many independent US oil producers, starving the industry of billions of dollars and further denting company budgets and drilling plans.

But banks that adjust their loans to energy companies every six months based on the oil price and volumes of reserves were more lenient than many expected this time, leaving producers with more cash for drilling and allowing them to supply more oil to a market already flush with excess crude.

The biannual process, known in the industry as redetermination, shaved only 4 per cent off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout.

It offers cash-starved energy firms a lifeline right when oil prices are back near six-year lows around US$40 per barrel because of global oversupply.
...
REUTERS

Source: Business Times Breaking News

[lilvestor]

The fight between OPEC and US oil producers will continue for a while...

Struggling US oil producers get credit lifeline amid downturn
17 Nov 2015 06:22
[NEW YORK] An autumn credit crunch was expected to hit many independent US oil producers, starving the industry of billions of dollars and further denting company budgets and drilling plans.

But banks that adjust their loans to energy companies every six months based on the oil price and volumes of reserves were more lenient than many expected this time, leaving producers with more cash for drilling and allowing them to supply more oil to a market already flush with excess crude.

The biannual process, known in the industry as redetermination, shaved only 4 per cent off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout.

It offers cash-starved energy firms a lifeline right when oil prices are back near six-year lows around US$40 per barrel because of global oversupply.
...
REUTERS

Source: Business Times Breaking News

Looks like it. OPEC is waiting for the US producers to blink but that isn't going to happen as long as cheap money is still available. The fed and its easy money policy appears to have been more deflationary than inflationary, businesses that should have folded are being artificially kept alive to generate very limited employment. I think this is due to mechanization and advancements in technology, the relationship between capacity and employment is becoming increasingly non-linear, cheap money exacerbates this phenomenon.

[Behappyalways]

Gridlocked Tankers, Expiration of Floating Storage Charters Could Signal New Influx of Cheap Oil
http://shipandbunker.com/news/apac/58090...-cheap-oil

[Behappyalways]

Goldman eyes $20 oil as glut overwhelms storage sites
http://www.telegraph.co.uk/finance/oilpr...sites.html

[Bibi]

Goldman eyes $20 oil as glut overwhelms storage sites
http://www.telegraph.co.uk/finance/oilpr...sites.html

Their advice/forecast is not even worth Gold. Like useless mud. 

http://www.bloomberg.com/apps/news?pid=n...xRKcAZi630

Goldman's Murti Says Oil `Likely' to Reach $150-$200 within 2 years during 2008.

[greengiraffe]

• Nov 25 2015 at 5:10 PM  
  

Electric cars not driving the oil price

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While 100 million cars were sold in 2015, only 3 per cent were electric vehicles, a figure that is forecast to rise to just 26 per cent of the car market by 2035. Factor in that petrol-fuelled vehicles currently use just 25 per cent of global oil consumption, the impact of EVs on the oil price will be relatively insignificant.
[img=620x0]http://www.afr.com/content/dam/images/g/j/4/9/e/z/image.related.afrArticleLead.620x350.gl7j6b.png/1448443342549.jpg[/img]Platinum Asset Management managing director Kerr Neilson notes that petrol- fuelled vehicles only account for about 25 per cent of total global oil consumption. Angus Mordant
[Image: 1435901920075.png]

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by Philip Baker
Back in the early 1970s when the OPEC oil crisis was in full swing it was said the internal combustion engine would be dead within 20 years. There was also talk the world's crude oil reserves would be dry by the mid 1990s.
More than 40 years later there has been 32 billion barrels of oil coming out of the ground on average over the past five years and the world's reserves are now predicted to last for years thanks to the arrival of shale oil.
It seems reports of the automotive engine's death were greatly exaggerated.
These days, however, the talk has moved on to oil and the impact of electric cars.
[img=620x0]http://www.afr.com/content/dam/images/g/j/z/s/o/p/image.imgtype.afrArticleInline.620x0.png/1448418155026.jpg[/img]The rise and rise of electric cars might not be as fast as many think. Mark Jesser
Exactly where the oil price goes is critical for corporate profits, consumer expenditure and the global economy. But it's also important for the development and introduction of alternative technologies, such as the electric car, and to the progress of alternative energy supplies.
Just over a year ago the price of oil was changing hands at $US80 a barrel, but on Wednesday it was closer to $US43 a barrel.
If Goldman Sachs are right it could fall to as low as $US20 a barrel, although that's a worst case scenario and not what they are forecasting.
Some experts like to say that the most expensive component in an engine car is the petrol and there's no doubt the falling price of oil has given some joy to drivers.


Indeed, it is also thought that falling oil prices will put a dent in the sales of electric cars, as internal combustion engines become increasingly cheaper to run.
MATTER OF PREFERENCE
But amid all the usual reasons put forward for the falling oil price, such as the problems in the Middle East, a boycott of Russian exports and oversupply thanks to record production levels from both the US shale producers and OPEC, there is also the theory that drivers will eventually prefer electric cars. 
But is the arrival of electric vehicles also pointing to the end of oil and helping to push down the price?

It was a question asked at Platinum Asset Management's annual general meeting and the money manager was so taken with the question they have posted a lengthy answer on their website.
In short the answer is "no" but managing director Kerr Neilson makes some interesting observations about electric cars.
While he thinks that batteries and hydrogen fuel cells will be a major source of energy down the track and sales of electric cares will rise, "they are not yet capable of offsetting the growth in overall auto sales in emerging markets in the short to medium term".
In addition, he notes that petrol-fuelled vehicles only account for about 25 per cent of total global oil consumption. That implies electric cars, if they take over, won't have a meaningful impact on the overall demand for crude oil.

SUPPLY SIDE THE DETERMINANT
Instead, Neilson thinks it will be any moves on the supply side that will have a real say in what direction the oil price goes to in the short term.
For sure, there will be some demand from emerging markets but predicting just how many electric cars will be bought over the next 20 years is too hard when you consider what sort of impact Uber and the sharing economy will have.
Maybe people won't want to own cars.
The other point to make is out of 100 million cars sold in 2015, only 3 per cent were electric vehicles.
Cars powered by electricity alone are just not that popular – they account for less than one per cent of the 1.1 billion light passenger vehicles on the road – aren't that cheap when you consider the upfront cost and what they can really do.
According to Kerr Neilson, on the most optimistic outlook they will still only be 6 per cent of the global volume in light passenger vehicle sales by 2020, 11 per cent by 2025 and 26 per cent by 2035, implying there will still be a lot of cars running on fossil fuel.

[greengiraffe]

• Nov 27 2015 at 2:30 PM 
   
  

Oil price plunge tests US shale revolution

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[img=620x0]http://www.afr.com/content/dam/images/g/l/9/n/m/s/image.related.afrArticleLead.620x350.gl8asz.png/1448604390903.jpg[/img]The US shale oil industry has been a lot more resilient than expected, as oil prices continue to fall, say analysts.Brittany Sowacke
[Image: 1435474325700.png]

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by John Kehoe
When the price of an American barrel of crude oil collapsed beneath $US40 ($55) this week, drivers filling up their petrol-guzzling SUVs may have celebrated but it was a cruel blow to struggling energy producers.
Across the United States, oil companies are cancelling projects, laying off workers and cutting costs to cope with the oil price almost halving over the past year.
Yet paradoxically, US oil production, which hit a 43-year high of 9.4 million barrels a day in May, has barely edged lower from its record level.
"The US shale oil industry has proven to be a lot more resilient than people expected it to be," says Uday Turaga, chief executive of Texas-based consultancy ADI Analytics.
[img=620x0]http://www.afr.com/content/dam/images/g/l/9/o/n/a/image.imgtype.afrArticleInline.620x0.png/1448596838439.jpg[/img]A US analyst expects oil production to decline until early 2017. Akos Stiller
A few small oil companies are bankrupt and thousands of rough necks have lost their jobs. But most experienced drillers have weathered the price plunge, at least until now.
Continually improving technology, trimming prices paid to oil field contractors, and drilling faster and deeper, have cut costs by 15 to 30 per cent and made output more efficient.
STERN TEST
But the latest leg down in prices means the great American shale oil revolution, enabled by deep fracking and advanced new horizontal drilling technology thousands of metres beneath the surface, is facing its sternest test.

Major energy companies, including BHP Billiton operating at the Eagle Ford shale plate in southern Texas, struggle to earn a profit at these prices. Average break-even costs are about $US40-60 a barrell across the Eagle Ford, Permian basin at west Texas and the North Dakota bakken.
Skip York, an integrated energy analyst at consultancy Wood Mackenzie, said US oil production had "turned" and he expected it to decline until early 2017. Most analysts say US output won't plunge.
Unless Saudi Arabia commits a serious u-turn and meets the demands of Venezuela and Nigeria to cut production at the OPEC meeting on December 4, global oil prices are likely to remain depressed.
Short bets against the price of oil by money managers this week reached a yearly high, Citigroup says.

The world is flooded with oil, with little sign of respite. Iran is likely to bring 500,000 to 700,000 barrels a day on stream when sanctions are soon lifted.
CHINA INFLUENCE
But Barclays head of energy commodities research in New York, Michael Cohen, says the fundamentals of supply and demand are not what's driven the latest dive in prices this month.
"The price level right now is being driven by perceptions about what's going on in China and the Fed raising rates strengthening the dollar," Cohen says.

Energy traders are worried about China's cooling economic growth and the potential negative effect on energy demand. The US dollar is also surging on bets the US Federal Reserve will begin lifting interest rates next month.
"Oil is priced and invoiced in [US] dollars, so it means the price of oil in all these domestic currencies around the world goes up and that tends to dampen the demand for oil," says professor Steve Hanke of the Cato Institute.
To clear the market, when the US dollar rises, the price of oil usually falls.
Mr Cohen warns many oil firms are still "living off their hedges" against a falling oil price. The oil revenues of producers are typically hedged 20-30 per cent this year, but that protection will start to roll off next year leaving them exposed if prices don't bounce.
PRICE RECOVERY
Barclays is tipping a gradual price recovery for US West Texas Intermediate into the mid-$US60s in the second half of 2016. 
Wood Mackenzie sees the Brent oil price, the international benchmark, rising to the low $US70s later next year. That level is well below the $US100 a barrel some high-cost, oil producing countries require to stay afloat.
In the US, small cracks are emerging in the financial viability of onshore tight oil drilling. About 300,000 barrels a day have come off in the past six months and the North Dakota bakken formation posted its first annual output decline since 2011.
The mini-downturn has been masked by total US production remaining above 9 million barrels a day, thanks to offshore rigs in the Gulf of Mexico and Alaska coming back online after maintenance shutdowns.
Mr Turaga expects large players to take advantage of the tough conditions and acquire assets on the cheap, but is not expecting American producers to slash production.
"If it stays around $US40-50 I think we will see moderate declines in US oil production," he says.
More broadly, geopolitics in a volatile Middle East is the big wildcard. Oil temporarily lifted this month after France bombed Islamic State oil trucks in retaliation for the mass terrorist attacks in Paris, and Turkey shot down a Russian jet near around the Turkey-Syria border.
When the oil price plunged to about $US10 in 1986, the US oil industry was in dire trouble so US politicians influenced Saudi Arabia to cut the supply level and raise the price.
But this time US politicians are sitting pat – not wanting to raise politically sensitive petrol prices for drivers. Saudi Arabia is pumping feverishly. Theories abound that the Saudis want to steal market share from US producers to eliminate the global threat of shale. Geopolitically, the Saudis may also be trying to punish its enemy, Iran, as it re-enters the market.
Barring a major breakout of war or a change of tune by the Saudis, drivers should continue to enjoy low prices at the pump and oil producers will be battling.

[HitandRun]

Did Saudi just blinked?

From the FT =>


Saudi Arabia has challenged other big oil producers to join it in output cuts, saying it will back actions to shore up prices next year if these are mirrored by rivals both inside and outside the cartel.

While the proposal from Opec’s de facto leader sets a high bar for a deal and is unlikely to lead to a cut at Friday’s meeting in Vienna, it paves the way for a possible agreement in the future.

It also marks a softening in tone from the world’s largest oil exporter, which led the cartel’s shift in policy a year ago, arguing that keeping the taps open would put pressure on high-cost rivals. The move upended the oil industry and triggered the biggest price slump in at least a decade.

[CityFarmer]

Time isn't on Venezuela side, within OPEC...

Oil Rig Count Soars in Unlikely OPEC Nation Before Vienna Talks

All across the Americas, drilling rigs are being idled as oil prices hover near six-year lows. In Colombia, more than 57 percent have been pulled; in Mexico, 42 percent.

Then there’s Venezuela. Starved for hard currency needed to ease a crushing recession and struggling to shore up slumping output, the state oil giant known as PDVSA has been adding rigs at a furious pace to search for new sources of crude.

The number has climbed 19 percent this year, signaling a new push that comes at the same time the OPEC nation is urging its fellow members to cut output at Friday’s meeting to support prices. It’s a sacrifice that Venezuelan President Nicolas Maduro -- the successor to his mentor, the late Hugo Chavez -- isn’t willing to take in his own country, though, as a shortage of dollars fuels widespread shortages and runaway inflation and puts the opposition on the verge of taking control of congress in elections this weekend.
...
http://www.bloomberg.com/news/articles/2...enna-talks