Why Iran is a problem for the oil market
(CNBC) An Iranian oil tanker, moored at the port of Assaluyeh for more than a year, set sail for South Korea last week, heralding a new period of uncertainty for world crude prices.
This Time, Cheaper Oil Does Little for the U.S. Economy
(NY Times) WASHINGTON — It has been a truism of the American economy for decades: When oil prices rise, the economy suffers; when they fall, growth improves.
But the decline of oil prices over the last two years has failed to deliver the usual economic benefits.
As oil prices have fallen to levels not seen since 2003 — sagging below $27 a barrel on Wednesday before rebounding to about $30 on Thursday — many experts now say they do not expect lower prices to bolster the domestic economy significantly in 2016.
The Myth of US Self-Sufficiency in Crude Oil
(Energy Matters) Guest post by Matt Mushalik who runs the Australian Crude Oil Peak web site where this article was first published. There is a wealth of information and brilliant charts below the fold.
Saudi Arabia Will Be the Big Loser from the Plunge In Oil Prices
(Time) Ali Bin Ibrahim al-Naimi, Saudi Arabia’s petroleum and mineral resources minister, at the 168th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna on Dec. 4, 2015. The country relies on oil for about 80% of budget revenue.
Oil Giants Start Losing Safety Net as Refining Margins Squeezed
(Bloomberg) Refining profits that buttressed earnings for Exxon Mobil Corp. and Royal Dutch Shell Plc as crude prices plunged are now slumping, further pressuring all of the world’s biggest oil companies as they move into 2016.
Global refining margins, the estimated profit from turning oil into gasoline and diesel, fell 34 percent in the fourth quarter, the steepest decline in eight years, to $13.20 a barrel, data on BP Plc’s website show. Every $1 drop cuts BP’s pretax adjusted earnings by $500 million a year, according to its website.
Why Oil Prices Could Remain Low
(Seeking Alpha) There is much hope in the financial markets, with individual investors and oil company employees that oil prices will rise in the months ahead. Many point to the 2008 commodity crash as THE example as to why the oil price decline is likely temporary. However, if we look back further in history we see another situation where the crash in commodity prices marked an extremely long period of oil price suppression.
IEA says world ‘drowning’ in oil, prices could go lower
(CNN) World is ‘drowning’ in oil, says IEA Can oil really go lower? The answer from the International Energy Agency is an “emphatic yes.” The world is “drowning” in oil, and weak demand has failed to match relentless pumping by the world’s biggest oil producers, the group said. With Iran planning to boost its production by as much as 1.5 million barrels a day by the end of 2016, the global oil glut will get even worse.
$20 Oil No Longer Seen As Good For The Economy
(OilPrice.com) After flirting with breaking below $30 per barrel, oil decidedly broke that threshold at the end of last week, deepening the unrelenting losses the market shave witnessed so far in 2016.
The reasons for the 20 percent decline in oil prices since the start of the year range from rapidly growing concerns over the Chinese economy , fears of a persistent glut in oil supplies, and most recently the removal of sanctions on Iran .
Goldman Sachs, in a note to oil industry investors
“At our conference, producers largely did not provide specifics on what capex/ production would look like at $35/bbl of oil. Instead, producers spoke largely of their agility to spend within cash flow and … ramp up when needed. Commentary suggested $50 per barrel WTI is now where producers would raise activity.”
Goldman Sachs, in a note to investors
Peak Oil Review – 18 Jan 2016
Crude futures settled below $30 a barrel on Friday with New York closing at $29.42, down 10.5 percent for the week, and London closing at $28.82, down 13.7 percent for the week. The global oil glut, a stronger dollar, and reports that the sanctions on Iran were about to be lifted contributed to the move. The now familiar factors of a circa 1.5 million b/d surplus in global oil production; a strong US dollar, up 20 percent since mid-2014; the Chinese economy continuing to slacken; and problems on the horizon for US growth were the main reasons behind the price slump. A couple of new concerns have arisen lately. Analysts are worried about the optimism being expressed by US shale oil producers over the likelihood of higher oil prices just ahead. Many US drillers are not trying to cut back on production but simply tying to hold things together until later this year. Another factor is reduction in demand for diesel used to drill and frack oil wells which is down by nearly 50 percent in the last 18 months. The drop in demand for diesel along with warm weather is leading to large surpluses of distillates.