(Houston Chronicle) Dismal earnings, falling crude show recovery remains far off
The extended energy bust has enveloped every segment of the oil and gas industry, washing over major oil companies, independent producers, services firms and refiners as brutal earnings reports suggest that if the downturn has indeed reached bottom, the climb out will be long and painful.
(Trib Live) Cheaper oil is leading to the lowest summer gasoline prices in years, and it is causing heartburn for oil companies and their shareholders.
On Friday, Exxon Mobil Corp. reported its smallest quarterly profit in nearly 17 years — although it still earned $1.7 billion. Chevron Corp. posted its biggest loss in nearly 15 years.
The reports from the two biggest U.S. oil companies followed weak second-quarter results from BP and Royal Dutch Shell.
Exxon Chairman and CEO Rex Tillerson said the results “reflect a volatile industry environment.”
The companies have slashed spending on exploration and cut budgets to offset lower prices, but that has yet to create a sustained rebound in oil prices.
(Project Syndicate) The Organization of the Petroleum Exporting Countries is dead. Saudi Arabia killed it. Now, OPEC is just a toothless zombie, attracting attention, but without having any impact on the living.
Few have noticed OPEC’s demise for a simple reason: it never really had the impact that it was widely perceived to have. It was never actually a cartel, possessing monopolistic market power. Anyone who thought otherwise was mistakenly attributing to it Saudi Arabia’s market power.
(CNBC) After jumping over 20 percent in the second quarter of the year, oil prices hit three-month lows on Monday, threatening to put the brakes on a fragile recovery.
Resurgent concerns over supply-demand mismatches have hurt sentiment, analysts said.
“It’s not just in the U.S. In Asia, if you look at Chinese gasoline demand growth, it was 10 percent last year. This year, it’s tracking the mid-single digits,” said Scott Darling, JP Morgan’s Asia Pacific oil and gas head of research.
(technologyreview.com) Peak oil, if it even exists , is very much a moving target . But so, it turns out, is measuring how much oil is already above ground, sitting in the holds of ships and in storage facilities around the world.
It’s not that humanity is fundamentally incapable of measuring how much oil we are extracting—it’s that many countries don’t report their inventories.
(Bloomberg) U.S. oil producers continue to revive drilling in the shale patch, adding rigs for the fourth consecutive week in the longest streak of increases since August.
Rigs targeting crude in the U.S. rose by 14 to 371, after 27 had already been added since the start of the month, Baker Hughes Inc. said on its website Friday. Natural gas rigs declined by 1 to 88, bringing the total for oil and gas up by 15 to 462.
(oilprice.com) Crude oil prices hit a 10-week low on Tuesday, but one piece of data from Saudi Arabia could provide a glimmer of hope for those longing for an oil price rally. Saudi Arabia is burning through some of its oil inventories as exports combined with scorching domestic demand exceed its total production. In 2015, Saudi Arabia built up crude storage levels to a record high, as the kingdom stepped up production in the face of a global supply surplus.
(oilprice.com) It’s a safe bet that investors are getting increasingly tired of all the conflicting forecasts about oil and gas prices. Some argue that oil is heading back to $20 thanks to the continuing excess supply. Others claim that the excess is overestimated and crude is well on its way to reach $80 or more by the end of the year. The likely truth, as usual, is somewhere in the middle, at least for the time being.
“When oil prices crashed in the 1980s, the same thing that is happening today occurred in the industry then: companies went out of business and workers were laid off. And because there were few job openings, very few young people between the mid-1980s and 2000 went into oil and gas. As a result, much of the workforce that stuck around is now aging and moving closer to retirement, setting up the industry for a labor crunch, or the ‘Great Crew Change,’ as some dub it. There are too few experienced professionals to replace retiring workers.”
Nick Cunningham, Oilprice.com
Concerns are rising that the predictions of the oil markets coming back into balance later this year are wrong and that lower oil prices are ahead. Oil production is not falling as fast as predicted. Some outages are coming to a close and the growing glut of oil products could be as bad as last year’s crude glut. Many analysts now are talking about prices falling below $40 in the next few months and a few are even talking about a return to the $30 level. Although US crude stocks have been falling of late, the growth in the inventories of refined products continues to grow. Europe is running out of storage space for refined products which would force a cut in refining and result in lower demand for crude. Increased refining to support the summer driving season in the US has only another few weeks to run before the increased demand for gasoline comes to an end. The US oil rig count was up for the 6th time in 7 weeks and North Dakota reported that its oil production increased slightly in May.
(artberman.com) Two years into the global oil-price collapse, it seems unlikely that prices will return to sustained levels above $70 per barrel any time soon or perhaps, ever. That is because the global economy is exhausted.
The current oil-price rally is over as I predicted several months ago and prices are heading toward $40 per barrel.
Oil has been re-valued to affordable levels based on the real value of money. The market now accepts the erroneous producer claims of profitability below the cost of production and has adjusted expectations accordingly. Be careful of what you ask for.
Meanwhile, a global uprising is unfolding.
(fuelfix.com) HOUSTON – After the energy bust, the future of U.S. shale oil will depend greatly on how quickly drilling technology can evolve over the next 25 years, the Energy Information Administration says.
Rapid technological change and high energy prices could help domestic drillers push shale oil production to 12.9 million barrels a day by 2040, up from last year’s 4.9 million barrels a day, the EIA said Monday in an early look at some of its long-term projections due in a report later this month.
“[India’s] fuel demand is rising, and India’s excess capacity is very small. We all need to expand if demand sustains.”
Sanjiv Singh, director of refineries at India’s biggest processor
Futures fell about $4 a barrel during the holiday-shortened US trading week closing at $45.41 in New York and $46.44 in London. Prices edged down early in the week, recovered a bit on Wednesday, and the plunged after the EIA reported that the US crude inventory had dropped by only 2.2 million barrels as opposed to the 6.7-million-barrel drop that the API came up with after their weekly survey. The weekly decline for Brent was the largest since January.
Read full post at www.artberman.com
“Electricity generation is a significant consumer of water: it consumes more than five times as much water globally as domestic uses (drinking, preparing food, bathing, washing clothes and dishes, flushing toilets and the rest) and more than five times as much water globally as industrial production…If policymakers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use.”
Gary Bilotta, University of Brighton
The oil markets remained volatile last week, trading around $48-50 a barrel, amidst much uncertainty about the future of crude prices. In the wake of the Brexit vote, analysts are all over the board as to where prices will be by the end of the year. Some are talking about $85 a barrel while others are looking for a retreat to less than $30 again. Nearly all agree that the markets will “rebalance” with supply and demand coming together as demand increases and the supply continues to drop as the impact of the much lower investment levels during the last two years reduces supply. For the next six months, however, there is uncertainty especially concerning the spate of unplanned outages that have taken place in the past few months. Oil worker strikes such as in France and Norway likely will be settled quickly, and Alberta tar sands production will soon be back to normal by the end of the summer. The outages in Libya, Nigeria, and Venezuela, however, are more uncertain and seem to be getting worse rather than better in the immediate future.
