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Canadian Oil Industry Starting to Shut In Production as Prices Plunge to $15

(The Fuse) Oil prices plunged to fresh decade-plus lows by mid-January amid concerns over persistent oversupply and the faltering Chinese economy. A growing chorus is projecting oil to drop as far as $25 or $20 per barrel before all is said and done, with some even raising the prospect of sub-$20 oil.

There are some places where oil already passed those lowly depths weeks ago, most notably Canada. While WTI and Brent hover around $30 per barrel, Western Canadian Select (WCS), a benchmark for heavy crude in Canada, has plunged to less than half that level.

Posted On : Published By : aspo-usa
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Oil Slump Sets Scene for Mergers

(Wall Street Journal) Here’s how bad things are getting in the oil patch: In some cases it is now cheaper for energy companies to buy one another rather than drill for crude.

A year-and-a-half on from the start of the worst crude-oil price crash in a generation, the biggest U.S. and European energy companies have delayed projects and made such deep budget cuts that they will soon struggle to replace the oil they pump out of the ground with new reserves.

Posted On : Published By : aspo-usa
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Who’s Afraid of Cheap Oil?

(The Economist) Along with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.

Posted On : Published By : aspo-usa
USA
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Is Non-OPEC Beginning to Decline?

(Peak Oil Barrel) The EIA’s Monthly Energy Review just came out. They have the U.S. production numbers through December along with World, OPEC C+C, Non-OPEC and selected Non-OPEC nations through October. All EIA data is in thousand barrels per day.

Posted On : Published By : aspo-usa
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The Hidden Consequences of the Oil Crash

(Politico) For months, American drivers have been greeted at gas stations with a pleasant surprise: Gas prices have fallen by half, dropping an average of more than $2 a gallon since their most recent peak in 2011. President Barack Obama took a moment to bask in the credit last week in his State of the Union speech: “Gas under two bucks a gallon ain’t bad,” he said.(Politico) For months, American drivers have been greeted at gas stations with a pleasant surprise: Gas prices have fallen by half, dropping an average of more than $2 a gallon since their most recent peak in 2011. President Barack Obama took a moment to bask in the credit last week in his State of the Union speech: “Gas under two bucks a gallon ain’t bad,” he said.

Or maybe it is.

Posted On : Published By : aspo-usa
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The oil conundrum

(The Economist) Oil traders are paying unusual attention to Kharg, a small island 25km (16 miles) off the coast of Iran. On its lee side, identifiable to orbiting satellites by the transponders on their decks, are half a dozen or so huge oil tankers that have been anchored there for months.

Posted On : Published By : aspo-usa
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OECD review committee chairman’s perspective on the global economy

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up. Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief. It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something. The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.”

William White, chairman, OECD’s review committee; former chief economist, Bank for International Settlements

“So much of the frenzy in shale in the past few years was a result of the money pouring out of Wall Street. It was as much a Wall Street play as it was an oil-and-gas play. It was putting money to work. Companies took on all that risk and now we see the result [–bankruptcies].”

Terry Clark, White Marlin Oil & Gas Co.

Posted On : Published By : Tom Whipple
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Peak Oil Review – 25 Jan 2016

Oil prices touched 12 year lows of just above $27 a barrel on Wednesday and then rebounded sharply to close above $32 on Friday. Other than the major east coast snowstorm in the US and the expectation there would be more demand for heating oil, there was no significant news to touch off the rebound other than traders feeling there was not much downside for oil prices left and that it was time to take profits. The rapid rebound was helped by the record size of the short positions held by hedge funds. As these were liquidated, the rebound accelerated to gain some 21 percent from the Wednesday lows. Hints by the European Central Bank last week that there could be a further stimulus coming also supported the move.

Posted On : Published By : Tom Whipple