OEF REVIEW:The 2016 edition of the BP Energy Outlook outlines the ‘most likely’ path for energy demand by fuel based on assumptions and judgements about future changes in policy, technology and the economy, and develops a number of alternative cases to explore key uncertainties.
OEF REVIEW:While Venezuela’s new legislative majority faces many immediate concerns with the Nicolas Maduro regime following a Dec. 6 election, it also should begin to disband and replace Petroleos de Venezuela SA (PDVSA), a former board member of the national oil company said. “I believe PDVSA is impossible to upgrade,” said Gustavo Coronel, a petroleum geologist and consultant on energy geopolitics and public policy who was a member of the Venezuelan Congress before then-President Hugo Chavez dissolved it. “It should be replaced by another model of oil industry management in Venezuela.”
OEF REVIEW:The February 2016 OPEC Monthly Oil Market Report indicates the following, on page 17, with regard to “Recent Interactions Between the Oil Market and the Global Economy”: It seems that the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits in the short-term and there seems to be a ‘contagious’ effect taking place across many aspects of the global economy…more
OEF REVIEW:The head of Russian state-run oil company Rosneft on Wednesday floated the idea of a coordinated output cut by major oil-producing countries to prop up sagging prices but fell short of saying whether Moscow would contribute to such a plan. Rosneft Chief Executive Igor Sechin, in a speech at the International Petroleum Week conference in London, attributed oversupply in the market to overproduction by members of the Organization of the Petroleum Exporting Countries. He suggested major oil producers each cut production by 1 million barrels per day.
OEF REVIEW:A handful of shale patches in the state, which would be the world’s sixth-largest oil producer if it were a country, are profitable with crude below $30 a barrel, according to an analysis by Bloomberg Intelligence. In the Eagle Ford’s DeWitt County, which produced more than 100,000 barrels of oil per day in November, the average well can be profitable with U.S. benchmark crude at $22.52 a barrel, $4 below the lowest level this year. Drive 200 miles southwest to Dimmit County, and drillers need $58 oil. The wide range of break-evens illustrates one reason why shale production from exploration and production companies has been more resilient than expected, filling storage tanks in the U.S. to levels not seen in 85 years.
OEF REVIEW:Several factors have played a part in pushing U.S. crude oil prices below $30 per barrel, including high inventory levels of crude oil, uncertainty about global economic growth, volatility in equity and non-energy commodity markets, and the potential for additional crude oil supply to enter the market. Crude oil and petroleum product inventories, both domestically and internationally, have been growing since mid-2014 and are above five-year averages for this date.
OEF REVIEW:The impact of sharply lower oil prices is being felt around the globe. Oil-dependent countries are trying to mend busted budgets. Oil companies are cutting production and workers. While consumers in some countries enjoy lower gas prices, elsewhere consumers are paying higher food prices due to declines in the local currency. This article gives some facts and figures from the USA, Canada, Saudi Arabia, Iraq, Iran, Europe/Russia, Asia, Africa, and Latin America.
OEF REVIEW:“It’s hard to see a dramatic price increase,” Vitol Group BV Chief Executive Officer Ian Taylor told Bloomberg in an interview, saying prices were likely to bounce around a band with a midpoint of $50 a barrel for the next decade. “We really do imagine a band,” probably between $40 and $60 a barrel, he said. “I can see that band lasting for five to ten years. I think it’s fundamentally different.”
OEF REVIEW:China’s oil demand will grow 4.3% this year to surpass 11 million barrels per day, compared to 4.8% growth last year, the country’s top energy group forecast on Tuesday. State-owned China National Petroleum Corporation (CNPC) sees the country’s oil demand rising to 566 million tonnes, or 11.32 million barrels per day in 2016, some 460,000 barrels per day higher than last year.
OEF REVIEW:As oil prices continue to decline, North American exploration and production companies have hedged just 15 percent of their total production volumes for 2016, including 14 percent of oil and 18 percent of natural gas, leaving the companies largely exposed to current depressed market prices, according to new analysis from IHS (NYSE: IHS), the leading global source of critical information and insight.
OEF REVIEW:OPEC oil production has jumped to its highest in recent history in January as Iran increased sales following the lifting of sanctions and its rivals Saudi Arabia and Iraq also boosted supply, a Reuters survey showed on Friday. Rising output in the Organization of the Petroleum Exporting Countries further aggravates the market share battle between top global producers. In the past year this has flooded the market with new barrels, creating one of the worst oil gluts in history and helping send prices to a 12-year low.
OEF REVIEW:Though Syria itself is mostly irrelevant as a trading partner for China, the region’s stability is nevertheless one of Beijing’s core concerns, not only because Iraq is among its main oil suppliers. Beijing’s $900 billion Silk Road initiative aims to connect Asia, the Middle East, Africa and Europe through a wide-ranging infrastructure network. But ongoing fighting and terror attacks are putting this mega-project at risk.
OEF REVIEW:Given the current circumstances, the impact of China on global markets should not be underestimated. As the world’s largest oil importer, China is one of the countries that benefits the most from low oil prices. The decline in oil prices is generally good for China. But wild swings in oil prices, and a possible price rise in the future, could have a big negative impact on the country’s economy. One of the strategies to offset the impact of wild fluctuations in oil prices is to increase the country’s oil reserves.
OEF REVIEW:With oil-directed rigs representing two thirds of the decline, the US drilling rig count fell 18 units to 619 during the week ended Jan. 29, the latest Baker Hughes Inc. data show (OGJ Online, Jan. 22, 2016). The overall count is down 924 year-over-year and the lowest since Aug. 6, 1999. Martin Craighead, BHI chairman and chief executive officer, forecasted more pain in 2016 for the worldwide drilling industry“. At current commodity prices, the global rig count could decline as much as 30% in 2016, as our customers’ challenges of maximizing production, lowering their overall costs, and protecting cash flows are now more acute,” he said.
OEF REVIEW:These are the key findings of this report on Canadian oil and energy: 1. Recent developments have highlighted numerous uncertainties for Canada’s long-term energy outlook. 2. In the Reference Case, energy production grows faster than energy use and net exports of energy increase. 3. The levels of future oil and natural gas production are highly dependent on future prices, which are subject to considerable uncertainty. 4. Without development of additional oil pipeline infrastructure, crude oil production grows less quickly but continues to grow at a moderate pace over the projection period. 5. The volume of liquefied natural gas exports is an important driver of Canadian natural gas production growth. 6. Total energy use in Canada, which includes energy use in the energy production sector, grows at similar rates in all Energy Future 2016 cases, and Greenhouse Gas emissions related to that energy use will follow similar tren
OEF REVIEW:Global energy demand will increase 25 percent between 2014 and 2040, driven by population growth and economic expansion, ExxonMobil said today in the 2016 edition of The Outlook for Energy. At the same time, energy efficiency gains and increased use of renewable energy sources and lower carbon fuels, such as natural gas, are expected to help reduce by half the carbon intensity of the global economy.
OEF REVIEW:Three major U.S. shale oil companies have slashed their 2016 capital spending plans more than expected in a bid to survive $30 a barrel oil prices, with one of them saying prices would need to rise more than 20% just to turn a profit.
OEF REVIEW:Question: BP moved very quickly to say it thought that the oil price would stay low for a long time. What factors fed into that statement? Answer: If you consider the two most recent big drops – 2008/2009 and 1998 – both of those were driven by economic recessions. So, we saw big falls in demand. Those tend to correct themselves relatively quickly. In contrast, the price weakness this time was caused by strong growth in supply, initially as a result of very strong growth in US shale. Normally, world demand for oil grows by about 0.8 million barrels a day per year, but at the end of last year US shale, on its own, grew by 1.6 million barrels a day. Last year, we saw a combination of supply increments from Iraq and Saudi Arabia that added a further 1.5 million barrels a day. What we know from history is that the oil market takes an awful lot longer to adjust to supply shocks than it does to cyclical demand shocks.
OEF REVIEW:Saudi Arabia outlined ambitious plans on Monday to move into industries ranging from information technology to health care and tourism, as it sought to convince international investors it can cope with an era of cheap oil. A meeting and presentation at a luxury Riyadh hotel was held against a backdrop of low oil prices pressuring the kingdom’s currency and saddling it with an annual state budget deficit of almost $100 billion.
OEF REVIEW:A change to the North Sea Brent crude oil futures contract will alter the way prices for Brent futures are compared to futures prices for West Texas Intermediate (WTI) crude oil. Beginning January 29, the Brent contract will expire, or rollover to the next month, approximately two to three weeks before expiration of the WTI contract for delivery in the same month. Prior to the change, the Brent contract rollover was only five to seven days ahead of the WTI rollover.
