(Washington Post) Royal Dutch Shell reported weak third quarter earnings Thursday morning, hobbled by a triple whammy of low oil prices and losses related to suspended projects in the Arctic and Canadian tar sands. The company lost $6.1 billion overall in the quarter, compared with a gain of $5.3 billion a year earlier.
View full article here: www.washingtonpost.com
“We are witnessing the total collapse of Venezuela’s economy. A contraction of these proportions might be a unique case in the last 50 years in the world. This never happens. Even Iraq’s GDP didn’t fall proportionately during the war.”
Alexander Guerrero, economist and head of the firm Techno-Economic.
Oil prices continued to slide last week due to increasing inventories and a weakening Chinese economy. Prices have now fallen about $6 a barrel from the recent highs seen in late August and again in mid-October. New York futures closed Friday at $44.60 and London at $47.99 which is about at the bottom of the trading range we have seen since early September. Prices, however, are still some $4 – $5 a barrel higher than the lows of circa $40 and $44 a barrel set in mid-August.
(Bloomberg) Saudi Arabia may run out of financial assets needed to support spending within five years if the government maintains current policies, the International Monetary Fund said, underscoring the need of measures to shore up public finances amid the drop in oil prices.
View full article here: www.bloomberg.com
(ArtBerman.com) The problem with oil prices is that they are not low enough.
Current oil prices are simply not low enough to stop over-production. Unless external investment capital is curtailed and producers learn to live within cash flow, a production surplus and low oil prices will persist for years.
“Who is the top forecaster in the oil market? The surprising answer is that nobody knows because the accuracy of predictions is never properly tracked and measured after they are made…Weather forecasts have improved enormously over the last 50 years because they have been subjected to rigorous analysis. It is far less obvious that forecasts for oil prices and other financial markets have become any better. If we demand accuracy and accountability from weather forecasters and intelligence specialists, shouldn’t we do the same from oil market forecasters?”
John Kemp, energy columnist for Reuters
Oil prices fell on Monday and Tuesday in reaction to the previous week’s surge and then stabilized around $47 in New York and $50 in London – down about 5 percent for the week. This is about $2 a barrel above the trading range that has obtained since early September. The downside was supported by a 7.6-million-barrel increase in US stocks and more bad news about the US and Chinese economies. The upside was helped by the 8th consecutive drop in the US rig count, a drawdown in US oil product stocks, a 76,000 b/d drop in US production, and speculation that Russia might join other exporters in orchestrating supply cuts. The overriding fundamental is that US crude stocks remain at an 80 year high of 468 million barrels – some 26 percent above last year’s levels and 22 percent above the five-year average.
(Resource Insights) We all know Goldilocks from the story of Goldilocks and the Three Bears in which the young maiden wanders into the home of the bears and samples some porridge that happens to be sitting on the dinner table. The first bowl is too hot, the second is too cold and the third is just right.
Like a corporate version of Goldilocks, the oil industry has been wandering into the world marketplace in recent years often finding an oil price that is either too high such as in 2008 and therefore puts the brakes on economic growth undermining demand and ultimately crashing the price as it did in 2009. Or it finds the price too low as it is today therefore making it impossible to earn profits necessary for exploiting the high-cost oil that remains to be extracted from the Earth’s crust.
“China was always seen as the kind of wonder market that was going to grow and need so much LNG that people got somewhat carried away.” Chinese LNG imports are down 3.5% this year, compared with a 10% rise in 2014.
Howard Rogers with the Oxford Institute for Energy Studies and a former gas executive at BP
Oil prices surged last week with NY futures trading above $50 a barrel for the first time since July before settling on Friday to close at $49.63, the biggest weekly rise in six years. London oil futures closed Friday at $52.65, up 9.4 percent for the week. The move was prompted by the falling US rig count which has many traders convinced that US production will fall much further; a weaker US dollar prompted by a lack of Federal Reserve movement to increase interest rates; and stepped up Russian involvement in the Middle East which is likely to prolong turmoil in the region. There continues to be disagreement among analysts as to whether last week’s move will send oil prices to higher trading ranges, or is simply a repeat of last August when prices surged $10 a barrel only to fall off in a week or so. While the US rig count continued to drop last week most other indicators suggest the markets will be weaker in the immediate future so that the week’s surge was simply a case of “hot money” chasing headlines. US crude and gasoline stocks continued to grow the week before last, and Goldman Sachs remains adamant that this oil rally is not going to last.
