Oil up on Saudi commitment to cut; U.S. output seen rising

Mon Jan 16, 2017 | 3:26 PM EST FILE PHOTO: A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the Siberian city of Kogalym, Russia, January 25, 2016. Reuters/Sergei Karpukhin/File Photo Oil up on Saudi commitment to cut; U.S. output... X By Ethan Lou | CALGARY, Alberta Oil prices settled up on Monday, as Saudi Arabia's commitments to reducing production offset a report forecasting U.S. output would again rise this year. The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear a global oversupply that has depressed prices for more than two years. Russia and other key exporters outside OPEC have said they will also cut output. Saudi Energy Minister Khalid al-Falih said on Monday the country will adhere strictly to its output reduction commitment, expressing confidence that OPEC's plan to prop up prices would work. Benchmark Brent crude oil LCOc1 was up 41 cents a barrel, or 0.7 percent, at $55.86 and U.S. West Texas Intermediate crude CLc1 rose 27 cents, or 0.5 percent, to $52.64 a barrel.

Q4 risk to oil prices

Sun Oct 2, 2016 | 9:36 PM EDT Oil prices fall despite planned OPEC output cut A Texaco service station displays the price of petrol and diesel close to the financial centre of London January 30, 2016. REUTERS/Paul Hackett A Texaco service station displays the price of petrol and diesel close to the financial centre of London January 30, 2016. Reuters/Paul Hackett Oil prices fall despite planned OPEC output cut By Henning Gloystein | SINGAPORE Oil prices fell away from $50 per barrel on Monday despite last week's agreement by exporters to cut output, with traders doubting the step was big enough to rein in production that has exceeded consumption for the better part of three years. Brent crude futures LCOc1 were trading down 35 cents, or 0.7 percent, at $49.84 per barrel at 0053 GMT. U.S. West Texas Intermediate (WTI) futures CLc1 were down 40 cents, or 0.83 percent, at $47.84 a barrel. Oil trading activity will be limited on Monday as public holidays in China and Germany mean Asia's and Europe's biggest markets are shut. ADVERTISEMENT . The price falls came despite last week's agreement by members of the Organization of the Petroleum Exporting Countries (OPEC) to cut output to between 32.5 million barrels per day (bpd) and 33.0 million bpd from about 33.5 million bpd, with details to be finalised at OPEC's policy meeting in November. Traders said prices went lower despite the announced cuts as overproduction remained in place for the time being, and because the planned intervention might not be sufficient to bring production back to, or below, consumption. "OPEC has created its own Q4 risk to oil prices ... In raising expectations of a November deal to cut production, it also risks a steep price decline should it fail to achieve its goal of cutting output back to less than 33 million bpd," Barclays said in a note to clients. The market scepticism stems from the fact that OPEC production has so far chased new records for much of this year as rivaling members like Saudi Arabia, Iran and Iraq are reluctant to give away market share. As a result, OPEC's oil output is likely to reach 33.60 million bpd in September from a revised 33.53 million bpd in August, its highest in recent history, a Reuters survey found on Friday. Despite that, the British bank said that it did not expect a repeat of the price crash seen late last year after a rally earlier in 2015. "We think oil prices, and commodities more generally, will avoid the Q4 price crash that has become a feature of the market in recent years," it said, pointing to an improving Asian economic growth outlook, falling oil supplies and rising investor interest in oil markets as main support factors for this year. (Reporting by Henning Gloystein; Editing by Joseph Radford)

Saudi-Iran tensions scupper deal to freeze oil output

Kuwait oil workers' strike sees output plunge AFP April 17, 2016 Kuwaiti oil workers arrive at their union headquarter in Al-Ahmadi, 35 km south of Kuwait city, on April 17, 2016, to protest against plans to cut their wages and privatise parts of the oil sector View photos Kuwaiti oil workers arrive at their union headquarter in Al-Ahmadi, 35 km south of Kuwait city, on April 17, 2016, to protest against plans to cut their wages and privatise parts of the oil sector (AFP Photo/Yasser Al-Zayyat) More Kuwait City (AFP) - Thousands of Kuwait's oil workers began an open-ended strike on Sunday in protest at plans to cut their wages, action which saw the emirate's crude production plunge. A spokesman for the Kuwait Oil Co. (KOC), Saad al-Azemi, said on Twitter that "average production reached 1.1 million" barrels in Kuwait on Sunday. Daily production in OPEC's fourth largest producer is normally around 3.0 million barrels per day. Azemi also said natural gas production was at 620 million cubic feet, down from Kuwait's daily average of more than 1.3 billion cubic feet. The strike comes as world oil producers gathered in Qatar aiming to negotiate an output freeze to boost prices. "Thousands of workers began their strike," the oil workers union chief Saif al-Qahtani told AFP, adding that production had been partly halted but without clarifying which sites were affected. "Observed since 7:00 am (0400 GMT), this open-ended strike will continue until the workers' demands are met," Qahtani said. The cabinet strongly criticised the "unacceptable" strike, calling it a "clear violation of the law", and demanded legal measures against those involved. The government also urged Kuwait Petroleum Corp (KPC) to mobilise the manpower needed to ensure continued production. On Saturday, the union turned down an appeal from Kuwait's acting oil minister, Anas al-Saleh, to call off the strike. Hit by the sharp drop in crude prices on world markets, Kuwait is introducing a new payroll scheme for all public employees and wants to include the country's 20,000 oil workers, which would mean an automatic cut in wages and incentives. As the strike began, KPC spokesman Sheikh Talal Khaled al-Sabah said that the national oil conglomerate had activated an "emergency plan" to ensure that local and international markets were not affected by the walkout. "Export operations are going ahead as planned and (KPC) is capable of responding to major international market demands, based on agreements with clients," he said in a statement published on the KUNA news agency's website. The plan ensures that all petrol stations will continue to be supplied, as will Kuwait's international airport and companies operating there, he said. He urged Kuwaitis "not to listen to rumours that the strike has affected the needs of the local market". He said reserves of gasoline and petrol derivatives were "enough to meet the country's demands for 25 days and strategic reserves could suffice for 31 more days". KPC had offered to suspend all spending cuts if the union agreed to join a committee to negotiate a settlement, but said workers had boycotted negotiations called for Thursday by the social affairs and labour ministry. The union is also protesting against plans to privatise parts of the oil sector. ========================== Saudi-Iran tensions scupper deal to freeze oil output Saudi Arabia's Oil Minister Ali al-Naimi arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. REUTERS/Ibraheem Al Omari Saudi Arabia's Oil Minister Ali al-Naimi arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. Reuters/Ibraheem Al Omari Mohammed bin Hamad Al Rumhy, Oman's Minister of Oil and Gas, arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. REUTERS/Ibraheem Al Omari Mohammed bin Hamad Al Rumhy, Oman's Minister of Oil and Gas, arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. Reuters/Ibraheem Al Omari Qatar's Energy Minister Mohammed Saleh Al Sada arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. REUTERS/Ibraheem Al Omari Qatar's Energy Minister Mohammed Saleh Al Sada arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. Reuters/Ibraheem Al Omari Nigerian Oil Minister Emmanuel Ibe Kachikwu arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. REUTERS/Ibraheem Al Omari Nigerian Oil Minister Emmanuel Ibe Kachikwu arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. Reuters/Ibraheem Al Omari Bahrain's Minister of Energy Abdul Hussain bin Ali Mirza arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. REUTERS/Ibraheem Al Omari Bahrain's Minister of Energy Abdul Hussain bin Ali Mirza arrives to a meeting between OPEC and non-OPEC oil producers, in Doha, Qatar April 17, 2016. Reuters/Ibraheem Al Omari A worker looks at a pump jack at the Rosneft company owned Samotlor oil field outside the West Siberian city of Nizhnevartovsk, Russia, January 26, 2016. REUTERS/Sergei Karpukhin A worker looks at a pump jack at the Rosneft company owned Samotlor oil field outside the West Siberian city of Nizhnevartovsk, Russia, January 26, 2016. Reuters/Sergei Karpukhin A van is refuelled at Woqod oil station in Doha, Qatar January 28, 2016. REUTERS/Naseem Zeitoon A van is refuelled at Woqod oil station in Doha, Qatar January 28, 2016. Reuters/Naseem Zeitoon Saudi-Iran tensions scupper deal to freeze oil...X By Rania El Gamal and Reem Shamseddine DOHA (Reuters) - A deal to freeze oil output by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia demanded that Iran join in despite calls on Riyadh to save the agreement and help prop up crude prices. The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached. Iran is also pledging to ramp up production following the lifting of Western sanctions in January, making a compromise with Riyadh almost impossible as the two fight proxy wars in Yemen and Syria. Some 18 oil nations, including non-OPEC Russia, gathered in the Qatari capital of Doha for what was expected to be the rubber-stamping of a deal - in the making since February - to stabilize output at January levels until October 2016. But OPEC's de facto leader Saudi Arabia told participants it wanted all members of the Organization of the Petroleum Exporting Countries to take part in the freeze, including Iran, which was absent from the talks. Tehran had refused to stabilize production, seeking to regain market share post-sanctions. After five hours of fierce debate about the wording of a communique - including between Saudi Arabia and Russia - delegates and ministers announced no deal had been reached. "We concluded we all need time to consult further," Qatar's energy minister Mohammed al-Sada told reporters. Several OPEC sources said if Iran agreed to join the freeze at the next OPEC meeting on June 2, talks with non-OPEC producers could resume. Russian oil minister Alexander Novak called the Saudi demand "unreasonable" and said he was disappointed as he had come to Doha under the impression that all sides would sign the deal instead of debating it. Novak said Russia was not shutting the door on a deal but the government would not restrain output for now. ADVERTISEMENT Russia is a key ally of Iran and has been defending Tehran's right to raise output post-sanctions while also supporting the Islamic Republic in many of its conflicts with Riyadh. TOUGH SAUDI STANCE The failure to reach a global deal could halt a recent recovery in oil prices. "With no deal today, markets' confidence in OPEC's ability to achieve any sensible supply balancing act is likely to diminish and this is surely bearish for the oil markets, where prices had rallied partly on expectations of a deal," said Natixis oil analyst Abhishek Deshpande. In December, OPEC failed to agree on output policy for the first time in years after Iran disagreed over a production ceiling proposed by Saudi Arabia, arguing again that it wanted to boost output post-sanctions. "Without a deal, the likelihood of markets balancing is now pushed back to mid-2017. We will see a lot of speculators getting out next week," said Deshpande, who added that prices could fall close to $30 per barrel. Brent oil LCOc1 has risen to nearly $45 a barrel, up 60 percent from January lows, on optimism that a deal would help ease the supply glut that has seen prices sink from levels as high as $115 hit in mid-2014. Amrita Sen of Energy Aspects said oil prices could fall below $40 on Monday in a knee-jerk reaction. "While today’s lack of a freeze deal has no negative impact on balances - since Iran is really the only country likely to raise output substantially - it has a huge negative impact on sentiment especially as the deal had been hyped up so much," she said. Related Coverage Russia says door not closed for oil output freeze Qatar says OPEC needs more time for freeze deal OPEC, non-OPEC fail to reach deal on output freeze: sources Russia, Saudi debate oil deal draft at Doha talks Gary Ross, the founder and executive chairman of New York-based consultancy PIRA, said the failure to reach a deal was negative but would not have a long-lasting impact. "The market has recently moved up due to tightening balances. We see geopolitical risks to supply rising, we see U.S. production declining. In many respects, the rebalancing has already started," he said. Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to refuse to participate in the freeze. Deputy Crown Prince Mohammed bin Salman told Bloomberg that the kingdom could quickly raise production and would restrain its output only if Iran agreed to a freeze. Iran's oil minister Bijan Zanganeh said on Saturday OPEC and non-OPEC should simply accept the reality of Iran's return to the oil market: "If Iran freezes its oil production ... it cannot benefit from the lifting of sanctions." (Reporting by Rania El Gamal and Reem Shamseddine; Additional reporting by Vladimir Soldatkin, Sam Wilkin, Katie Paul and Tom Finn; Writing by Dmitry Zhdannikov and Andrew Torchia; Editing by Dale Hudson)

NYMEX crude oil dips beneath $30 for the first time since December 2003: TURKEY A TARGET

NYMEX crude oil dips beneath $30 for the first time since December 2003 Letter of Invitation: I would be available to answer any queries regarding best suburbs to integrate socially, just to let you know 21 suburbs of South Australia which are red-flagged by Australian banks. I am happy to provide detail answers to any questions with reference to Property Investment, Subdivision, Development, Buying/ Selling Residential, Commercial, Rural Properties and Businesses. I am available in person (Tue/Thu at 1289 South Rd, St. Marys, SA 5042 12 to 5 p.m) or on cell to answer any questions, and concerns you have to decide about your Real Estate. (Cell: 0431 138 537, Email: Saqlain@Dukesrealestate.com) Click here to invest in South Australian Residential Commercial, Rural Properties, Schools & Businesses. I sell land on this Earth for as cheap as 10 cents/ Sq.M to a price equivalent to price of 2 Aussie Mangoes/ Sq.M. I hope tomorrow I will be selling and leasing Moon's Surface. (Earth is rising over the Moon's Surface), Source: https://www.facebook.com/RealEstateSA5000/photos/a.899877783394135.1073741829.899009183480995/920077631374150/?l=734b9eef72 Tue Jan 12, 2016 | 1:57 PM EST Suicide bomber kills 10 people, mainly Germans, in Istanbul 8:14 AM EST | 01:00 Syrian bomber suspected in deadly Istanbul blast: Erdogan By Ayla Jean Yackley ISTANBUL (Reuters) - A suicide bomber thought to have crossed recently from Syria killed at least 10 people, most of them German tourists, in Istanbul's historic heart on Tuesday, in an attack Prime Minister Ahmet Davutoglu blamed on Islamic State. All of those killed in Sultanahmet square, near the Blue Mosque and Hagia Sophia - major tourist sites in the center of one of the world's most visited cities - were foreigners, Davutoglu said. A senior Turkish official said nine were German, while Peru's foreign ministry said a Peruvian man also died. Deputy Prime Minister Numan Kurtulmus said the bomber was believed to have recently entered Turkey from Syria but was not on Turkey's watch list of suspected militants. He said earlier that the bomber had been identified from body parts at the scene and was thought to be a Syrian born in 1988. Davutoglu said he had spoken by phone with German Chancellor Angela Merkel to offer condolences and vowed Turkey's fight against Islamic State, at home and as part of the U.S.-led coalition, would continue. "Until we wipe out Daesh, Turkey will continue its fight at home and with coalition forces," he said in comments broadcast live on television, using an Arabic name for Islamic State. He vowed to hunt down and punish those linked to the bomber. Merkel similarly vowed no respite in the fight against international terrorism, telling a news conference in Berlin: "The terrorists are the enemies of all free people ... of all humanity, be it in Syria, Turkey, France or Germany." There was no immediate claim of responsibility but Islamist, leftist and Kurdish militants, who are battling Ankara in southeast Turkey, have all carried out attacks in the past. Several bodies lay on the ground in the square, also known as the Hippodrome of Constantinople, in the immediate aftermath of the blast. It was not densely packed at the time of the explosion, according to a police officer working there, but small groups of tourists had been wandering around. "This incident has once again shown that as a nation we should act as one heart, one body in the fight against terror. Turkey's determined and principled stance in the fight against terrorism will continue to the end," President Tayyip Erdogan told a lunch for Turkish ambassadors in Ankara. Norway's foreign ministry said one Norwegian man was injured and was being treated in hospital. The White House condemned the "heinous attack" and pledged solidarity with NATO ally Turkey against terrorism. U.N. Secretary Ban Ki-moon said he hoped those responsible for "this despicable crime" were swiftly brought to justice. Turkey, a candidate for accession to the European Union, is part of the U.S.-led coalition against Islamic State fighters who have seized territory in neighboring Syria and Iraq, some of it directly abutting Turkey. "UNIMAGINABLE" SCENE The dull thud of Tuesday's blast was heard in districts of Istanbul several kilometers away, residents said. Television footage showed a police car which appeared to have been overturned by the force of the blast. "We heard a loud sound and I looked at the sky to see if it was raining because I thought it was thunder but the sky was clear," said Kuwaiti tourist Farah Zamani, 24, who was shopping at one of the covered bazaars with her father and sister. Tourist sites including the Hagia Sophia and nearby Basilica Cistern were closed on the governor's orders, officials said. "They attacked Sultanahmet to grab attention because this is what the world thinks of when it thinks of Turkey," said Kursat Yilmaz, who has operated tours for 25 years from an office by the square. "We're not surprised this happened here, this has always been a possible target," he said. Ambulances ferried away the wounded as police cordoned off streets. The sound of the call to prayer rang out from the Blue Mosque as forensic police officers worked at the scene. "It was unimaginable," the police officer who had been working on the square said, describing an amateur video he had seen of the immediate aftermath, with six or seven bodies lying on the ground and other people seriously wounded. Just over a year ago, a female suicide bomber blew herself up at a police station for tourists off the same square, killing one officer. That attack was initially claimed by a far-left group, the DHKP-C, but officials later said it had been carried out by a woman with suspected Islamist militant links. TURKEY A TARGET Turkey has become a target for Islamic State, with two bombings last year blamed on the radical Sunni Muslim group, in the town of Suruc near the Syrian border and in the capital Ankara, the latter killing more than 100 people. Violence has also escalated in the mainly Kurdish southeast since a two-year ceasefire collapsed in July between the state and the Kurdistan Workers Party (PKK) militant group, which has been fighting for three decades for Kurdish autonomy. The PKK has however generally avoided attacking civilian targets in urban centers outside the southeast in recent years. Turkey also sees a threat from the PYD and YPG, Kurdish groups in Syria which are fighting Islamic State with U.S. backing, but which Ankara says have close links to the PKK. "For us, there is no difference between the PKK, PYD, YPG, DHKP-C ... or whatever their abbreviation may be. One terrorist organization is no different than the other," Erdogan said, vowing that Turkey's military campaign against Kurdish militants in the southeast would continue. Davutoglu's office imposed a broadcasting ban on the blast, invoking a law which allows for such steps when there is the potential for serious harm to national security or public order. The attack raised fears of further damage to Turkey's vital tourism industry, already hit by a diplomatic row with Moscow which has seen Russian tour operators cancel trips. But Yilmaz, the tour operator, said he had sold a package to a tourist from Colombia just an hour after the blast. "The reality is the world has grown accustomed to terrorism. It's unfortunate, and I wish it weren't true, but terrorism now happens everywhere," he said. "The agenda changes quickly in this age. If tourism is affected by this, it will be temporary. These things pass, but the Hagia Sophia and the Sultanahmet mosque are eternal." (Additional reporting by Orhan Coskun and Ece Toksabay in Ankara, Humeyra Pamuk, Daren Butler and Melih Aslan in Istanbul, Madeline Chambers in Berlin and Joachim Dagenborg in Oslo; Writing by Nick Tattersall; Editing by David Stamp and Gareth Jones) ================================================================ Tumbling oil trades below $30 a barrel for first time in 12 years NEW YORK | By Catherine Ngai Oil fell briefly below $30 a barrel on Tuesday, extending a relentless selloff that has wiped almost 20 percent off prices this year amid deepening concerns about fragile Chinese demand and the absence of output restraint. The day's near 4 percent drop marks a seventh day of losses for oil. Traders have all but given up attempting to predict where the new-year rout will end, with momentum-driven dealing and overwhelmingly bearish sentiment engulfing the market. Some analysts warned of $20 a barrel; Standard Chartered said fund selling may not relent until it reaches $10. By Tuesday, the crash had become almost self-fulfilling, with speculators too afraid to buy for fear of being burned by another false bottom. U.S. West Texas Intermediate crude(WTI) CLc1 was down $1.19 at $30.22 per barrel as of 2:19 p.m. EST (1919 GMT), a 3.7 percent loss, after touching a low of $29.93, which was last seen in December 2003. Related Coverage › Strong dollar inflicts more pain on oil as bearish options bets build "The momentum is too strong to the bearish side, even if fundamentally nothing has changed," said Dominick Chirichella, a senior partner at Energy Management Institute. With prices now below break-even costs for many producers, particularly in the once-thriving U.S. shale patch, and the costly Canadian oil sands producers barely making $15 a barrel, an extended slump has caused financial pain to flare across the world, threatening corporate bankruptcies and fiscal strain. Benchmark Brent crude LCOc1 had dropped 97 cents to $30.58 a barrel, for a 3.1 percent loss, after hitting a low of $30.34. Related Video Video Capitulation needed for commodities to recover - strategist Prices firmed early in the day after a deadly suicide bombing rocked central Istanbul, and Nigeria's oil minister said a "couple" of Organization of the Petroleum Exporting Countries members had requested an emergency meeting. But they then nosedived anew after the United Arab Emirates oil minister quashed talk of a possible meeting, saying the group strategy was working. OPEC has rejected calls by some of its members to curb output, opting instead to pump full throttle to defend market share rather than shore up prices. Related Coverage › Nigeria says couple of OPEC members have requested emergency meeting Oil has tumbled more than 18 percent this year alone, the worst seven-day run since the financial crisis. The long list of negative factors also includes the weakening economy and ailing stock market of No. 2 consumer China, the rising U.S. dollar, which makes oil more costly, and the surprising resilience of U.S. shale drillers in the face of the price slide. Adding to supply fears, Iraq, the second-biggest OPEC producer, plans to export a record of around 3.63 million barrels per day in February, said trade sources. (Additional reporting by Simon Falush in London, Henning Gloystein in Singapore and Aaron Sheldrick in Tokyo; editing by Jason Neely and Alden Bentley) =====================================================

Fiscal problems add to the country's woes; Oil falls back on dollar, Kuwait stance that OPEC won't slow output

Oil prices surge after Saudi air strikes in Yemen Thu, Mar 26 08:20 AM EDT image By Himanshu Ojha LONDON (Reuters) - Brent crude oil soared more than 4 percent towards $59 a barrel on Thursday after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen, which sits on a key shipping passage between Europe and the Arab Gulf. The air strikes against Houthi rebels, who have driven the president from Yemen's capital Sanaa, could stoke concerns about the security of Middle East oil shipments if the conflict widens. Brent futures LCOc1 were up $2.47 at $58.93 by 0758 EDT. U.S. crude CLc1 was up $2.16 at $51.37 a barrel. Brent and U.S. crude prices spiked around 6 percent earlier in the session but pared gains in European trading. "Geopolitical risk like this has been on the back burner for a while because we've been focusing on global oversupply," said Ole Hansen, head of commodity strategy at Saxo Bank. "This news has not made the oversupply go away. The upside potential is limited unless something escalates. We need to see how this unfolds over the next couple of days," he said. Iranian officials demanded an immediate halt to Saudi-led military operations in Yemen and said Tehran would make all necessary efforts to control the crisis there, Iranian news agencies reported. In order to export to Europe, Arab producers have to ship oil past Yemen's coastlines via the Gulf of Aden to get to the Suez Canal. Four Egyptian naval vessels have passed through the Suez Canal en route to Yemen to secure the Gulf of Aden, maritime sources said. The waters between Yemen and Djibouti, known as Bab el-Mandeb, are less than 40 km (25 miles) wide. They are considered a "chokepoint" to global oil supplies by the U.S. Energy Information Administration (EIA). The EIA estimates that 3.8 million barrels a day of crude oil passed through Bab el-Mandeb in 2013, the latest year for which figures were available. The region is heavily populated with Western military forces. The United States and France operate large military bases in Djibouti. NATO's anti-piracy fleet also operates from the Gulf of Aden. While the strikes have not yet disrupted major oil facilities of key Gulf producers, such as Saudi Arabia, there are concerns that the conflict might widen. The Shi'ite Houthis have received some support from Iran, Saudi Arabia's long-time rival for dominance in the Middle East. State-run Kuwait Petroleum Corp said the OPEC member country had raised security around its oil facilities after the military operation in Yemen. Yemen shut its major seaports on Thursday, industry and local sources said. (Additional reporting by Aaron Sheldrick and Osamu Tsukimori in Tokyo, Meeyoung Cho in Seoul, Henning Gloystein and Florence Tan in Singapore; editing by Dale Hudson and Jason Neely) ======= Oil drops as Saudi output nears record, China demand worries drag By Henning Gloystein SINGAPORE Mon Mar 23, 2015 11:08pm EDT An offshore oil platform is seen in Huntington Beach, California September 28, 2014. REUTERS/Lucy Nicholson Credit: Reuters/Lucy Nicholson (Reuters) - Oil prices dropped on Tuesday after activity in China's factory sector fell to an 11-month low and as Saudi Arabia said its production was close to an all-time high. The flash HSBC/Markit Purchasing Managers' Index (PMI) dipped to 49.2 in March, below the 50-point level that separates growth in activity from a contraction on a monthly basis, stoking worries over the strength of the world's No.2 economy. Economists polled by Reuters had forecast a reading of 50.6. That followed an overnight report that Saudi Arabia, OPEC's biggest producer, was now pumping around 10 million barrels of crude oil per day, a near all-time high and some 350,000 bpd above the figure Saudi Arabia gave to OPEC for its February output. "The market was under pressure early in the trading day after comments from Saudi Arabia that it was producing almost 10 million barrels per day," ANZ bank said on Tuesday. Brent crude oil futures LCOc1 were trading down 34 cents at $55.58 a barrel at 0301 GMT. U.S. WTI crude CLc1 dropped 48 cents to $46.97 a barrel. Worries over slowing growth in China's economy as well as high production have contributed to a global surplus in oil supplies. "We expect crude prices to be pressured once again by the weight of some 2 million barrels per day of oversupply in Q2 2015," energy consultancy FGE said in a note on Tuesday. The refinery sector has benefited from cheap oil, which has improved margins for oil products such as diesel or jet fuel. "A sharp decline in crude prices over late 2014 and into January 2015, followed by an extraordinarily cold February (in the United States and parts of Europe), has meant good times for refiners," FGE said, but it added that high refinery margins were unlikely to last. "In H2 2015, we see an oversupplied products market even as crude prices begin to recover. Refinery margins will adjust downwards. (Editing by Joseph Radford) FILED UNDER: China Saudi Arabia ============================================== Oil falls back on dollar, Kuwait stance that OPEC won't slow output Thu, Mar 19 14:31 PM EDT image By Barani Krishnan NEW YORK (Reuters) - Oil prices fell on Thursday as a rebounding dollar and Kuwait's stance that OPEC had no choice but to keep producing in an oversupplied market undercut a rally from the previous day. Benchmark Brent oil and U.S. crude were down about 2 percent each, weighed by the dollar's rise against most currencies after the greenback's biggest tumble in 18 months on Wednesday. In the previous session, Brent rose nearly 5 percent and U.S. crude about 3 percent on the dollar weakness. "It's dollar play all over again today," said Phil Flynn, analyst at the Price Futures Group in Chicago. "The fact that the oil market is oversupplied is a given, so the only real variable now are currency moves and how they impact commodities demand." A stronger dollar weakens demand from holders of other currencies for commodities denominated in the greenback. The dollar rose 2 percent against the euro EUR= on Thursday, after its selloff on Wednesday on disappointment over the lack of a clear timeline for a U.S. interest rate hike. [USD/] Brent oil LCOc1 was down $1.18 to $54.73 a barrel by 11:46 a.m. EDT (1546 GMT). It rallied more than $2, or about 5 percent, on Wednesday after the U.S. Federal Reserve hinted at a slower rate hike process than previously thought. U.S. crude CLc1 fell 82 cents to $43.84. In Kuwait, oil minister Ali al-Omair said OPEC had to keep production steady, although he voiced concern about oil prices having been halved since the previous summer. [ID:nL6N0WL1AQ] "We don’t want to lose our share in the market," the minister said, reinforcing comments by OPEC kingpin Saudi Arabia of the need for members of the producer group to defend its output against rival shale oil producers in the United States and other non-OPEC nations. While oil firms have slashed exploration budgets and the number of U.S. rigs drilling for oil has fallen to four-year lows, shale output in the United States has barely slowed. Last week alone, U.S. crude stockpiles rose by 9.6 million barrels to reach above 458 million barrels, the highest in more than 80 years. [EIA/S] In Lausanne, Switzerland, nuclear talks between Iran and six major powers showed major differences remaining toward a deal, providing some support to oil prices. Iran, an OPEC member whose oil exports have been restrained by sanctions related to its nuclear program, has said it will add another million barrels to the market when the sanctions come off. [ID:nL2N0WJ061] (Additional reporting by David Sheppard in London and Jessica Jaganathan in Singapore; Editing by Susan Thomas, William Hardy and Chris Reese) ===================== An empty chest Fiscal problems add to the country’s woes Mar 21st 2015 | BAGHDAD | From the print edition ALMOST 90% of government revenue in Iraq comes from oil. Yet the price of the stuff has fallen by more than half over the past year, and the volume of Iraq’s exports has fallen by a fifth, even as the government embarks on an expensive military campaign against Islamic State (IS), the militant group that has taken over much of the north and west of the country. The country’s fiscal problems, in short, are almost as big as its political ones. In January Iraq’s parliament passed a budget of 119 trillion Iraqi dinars ($105 billion). That constitutes a 16% cut in spending: funds to every ministry were slashed. The budget also attempts to raise revenue, by introducing a sales tax on mobile and internet top-up cards, airline tickets, vehicles, alcohol and cigarettes. It nonetheless projects a deficit of 25 trillion Iraqi dinars, or about 9% of GDP. Even that seems optimistic. The budget is based on an oil price of $56 a barrel, and assumes exports of 3.3m barrels a day. In January Iraq exported 2.4m b/d, at an average price of $41 a barrel, according to the Economist Intelligence Unit, a sister company of The Economist. To fill the void the government plans to sell bonds, postpone some payments and dip into its savings. Having paid down its public debt from over 300% of GDP in 2004 to 31% of GDP today, it has some room for manoeuvre. It is discussing a $6 billion bond sale with Citigroup and Deutsche Bank. Officials say they will also borrow from the IMF and World Bank. The government of the autonomous Kurdish region in northern Iraq is borrowing from Turkey. Haider al-Abadi, Iraq’s prime minister, has talked to Egypt about converting debts into oil (although that would also cut into export revenues). Kuwait, meanwhile, has agreed to defer some of the compensation Iraq owes for its invasion in 1990. Western oil companies with contracts to boost Iraq’s oil output have agreed to cut back on investment, the cost of which is partly borne by the government. Shell alone has reportedly agreed to savings of $0.9 billion—although this, too, will eventually curtail exports. The government also plans to borrow from the central bank’s reserves, which the World Bank puts at $78 billion. It still has some assets abroad, although it appears to have exhausted a special fund in which it stashed excess oil revenue. War and austerity are taking their toll on the economy, which shrank by 2.7% last year, according to the IMF. Unemployment is thought to be over 25%; another 40% of Iraqis of working age are employed by the government. Even in 2013, before IS burst on the scene, new foreign direct investment was only $2.9 billion—a fraction of what Iraq needs to rebuild its war-torn infrastructure and revive its oil industry. In something of a vicious cycle, the shortage of cash is poisoning Iraqi politics. The budget only passed after the authorities in Baghdad and the Kurdish regional government agreed to share the income from oil, which the central government claims the sole right to export. The deal stipulates that the Kurds must provide the government with 550,000 b/d in exchange for 17% of the government’s oil revenues. Neither side is keeping to the bargain. So far the central government has paid a measly $250m to the Kurds, who, in turn, have handed over less oil than promised: only 248,000 b/d in the first seven days of March, for instance. Ashti Hawrami, the Kurds’ oil minister, says poor infrastructure prevents them from providing enough. Adil Abdul Mahdi, the national oil minister, insinuates that the Kurds are selling barrels on the side. This bickering, needless to say, is not helping the supposed allies push back IS. My feelings are that the potential suitor(s) are holding the sp at these current levels while they are in discussions. They will know what SH is really worth but if they can get it for a fraction of true value they will do all within their powers. OMO

Brent rebounds towards $57 after U.S. crude stocks fall

Oil prices drop after Saudi Arabia says it will not cut output alone By Henning Gloystein SINGAPORE Sun Mar 22, 2015 9:47pm EDT Share this Email Print An oil well is seen near Denver, Colorado February 2, 2015. REUTERS/Rick Wilking An oil well is seen near Denver, Colorado February 2, 2015. Credit: Reuters/Rick Wilking (Reuters) - Oil prices dropped around a percentage point in early Asian trade on Monday after Saudi Arabia said over the weekend that it would not unilaterally cut its output to defend prices. Since oil prices started to fall in June 2014, many analysts have expected Saudi Arabia, OPEC's biggest producer, to curb its output. Yet Riyadh has so far opted to keep output stable in a move to defend market share against non-OPEC producers like Russia and the United States, where production has soared as a result of the shale exploration boom. "We tried, we held meetings and we did not succeed because countries (outside OPEC) were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility," Naimi said. "The production of OPEC is 30 percent of the market, 70 percent from non-OPEC ... everybody is supposed to participate if we want to improve prices," Saudi oil minister Ali al-Naimi said on Sunday. Benchmark Brent crude oil futures LCOc1 was trading at $54.79 a barrel at 0123 GMT, down 53 cents from their last settlement. U.S. WTI crude CLc1 was down 58 cents at $45.99 a barrel. (Editing by Joseph Radford) ======================== By Keith Wallis SINGAPORE Tue Mar 10, 2015 11:44pm EDT An oil well is seen near Denver, Colorado February 2, 2015. REUTERS/Rick Wilking An oil well is seen near Denver, Colorado February 2, 2015. Credit: Reuters/Rick Wilking (Reuters) - Brent crude rose towards $57 a barrel on Wednesday, paring some of the previous session's sharp losses, after data showed U.S. crude stocks fell for the first time in two months. The benchmark closed nearly 4 percent down in the previous session on a rallying U.S. dollar and before an industry group said U.S. crude inventories fell by 404,000 barrels last week. Analysts had expected a 4.4 million barrel build in stocks. Brent for April delivery LCOc1 rose 27 cents to $56.66 a barrel by 2327 ET after dropping $2.14, or 3.66 percent, in the previous session. West Texas Intermediate for April delivery CLC1 climbed 56 cents to $48.85 a barrel after falling $1.71, or 3.42 percent. "The sell-off was overdone," said Jonathan Barratt, chief investment officer at Sydney's Ayer's Alliance. "I think it was more of a knee-jerk reaction because of the substantial build (of oil stocks) at Cushing," he told Reuters. U.S. crude inventories in the week to March 6 fell to 439.4 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.2 million barrels, data from industry group, the American Petroleum Institute (API), said on Tuesday. [API/S] The U.S. Department of Energy's Energy Information Administration will release official stockpile data later on Wednesday. Analysts polled by Reuters expect a stock increase of 4.4 million barrels for the week ended March 6. [EIA/S] With the U.S. dollar near to multi-year highs against a raft of currencies "oil has done very well to hold on. Brent is still trading through $55 a barrel", Barratt said. A strong greenback makes commodities including more expensive for holders of other currencies. Barratt said recent economic news had also been broadly encouraging and "if U.S. crude doesn't break below $48.50 again this is a great time to buy". The number of job openings in the U.S. in January rose to the highest in 14 years, figures from the Labor Department on Tuesday showed even as U.S. sales recorded their biggest decline since 2009. Data due on Wednesday, including industrial output and retail sales in February in China, the world's top energy consumer, could give further direction. The United States will also issue its Federal budget for February. The oil markets have also priced in geopolitical risks including Libya where two eastern oil fields have been shut following an attack by Islamist militants, an oil official said on Tuesday. (Reporting by Keith Wallis; Editing by Ed Davies)

Brent tumbles on Iran, Libya; U.S. crude up on spread play

Brent tumbles on Iran, Libya; U.S. crude up on spread play Mon, Mar 02 14:35 PM EST image By Barani Krishnan NEW YORK (Reuters) - Brent crude tumbled more than 3 percent on Monday on speculation of a nuclear deal that could boost Iran's oil exports, and U.S. crude rose by around 1 percent as traders bet the gap between the two would narrow. Iranian Foreign Minister Mohammad Javad Zarif said a deal on Iran's nuclear program could be concluded this week if the United States and other Western countries had sufficient political will and agreed to remove sanctions on Tehran. Iranian oil exports have been restricted by sanctions for several years as the United States and Europe responded to Tehran's nuclear program, although Iran says its nuclear plans are peaceful. Analysts say Iran could increase its oil sales fairly quickly if sanctions were lifted and may eventually be able to raise exports by up to 1 million barrels per day (bpd). A Reuters survey last week showed Iran pumped around 2.8 million bpd in February. Brent was also pressured initially by rising Libyan output and a firmer dollar .DXY that weighed on greenback-denominated commodities. In the case of U.S. crude, its advance versus Brent came after a smaller-than-expected build in the Cushing, Oklahoma delivery point, reported by oil services firm Genscape. Genscape's Cushing report, and the American Petroleum Institute (API) inventory data on Tuesdays, are a precursor to the government's weekly crude stockpiles report on Wednesdays. "The Genscape expectations for a slower rise in crude at Cushing and returning production in Libya reverses the dynamic in play last week," Phil Flynn, analyst at Price Futures Group in Chicago, said, referring to the rally in Brent and bigger Cushing builds then. Brent LCOc1 was down $2.12, or 3.4 percent, at $60.46 a barrel by 12:23 p.m. EST. U.S. crude CLc1 rose 55 cents, or 1 percent, to $50.31. Brent's premium to U.S. crude was at below $10.20 a barrel, after reaching above $13 earlier on Monday. The spread "became very, very crowded last week as everyone jumped in" when Brent began fetching a premium above $9, said Ola Vines at Eagle Commodities Brokers Ltd in London. (Additional reporting by Robert Gibbons in New York, Christopher Johnson in London and Florence Tan in Singapore; Editing by David Holmes, Pravin Char and Marguerita Choy)

Oil slips toward $56 on expectations oversupply to linger

Global oil prices rising again: Petrol currently costs Rs 56.49 a litre and diesel Rs 46.01 a litre in Delhi. http://zite.to/1E6GOTe Apple becomes the first publicly quoted firm to achieve a valuation of more than $700 billion http://econ.st/1AVX8ZK Oil slips toward $56 on expectations oversupply to linger Wed, Feb 11 07:57 AM EST image By Jack Stubbs LONDON (Reuters) - Oil slipped toward $56 a barrel on Wednesday, under pressure from expectations of persisting oversupply in world markets and an industry report saying U.S. crude stocks rose further from a record high. The American Petroleum Institute said on Tuesday crude stocks increased by 1.6 million barrels last week. Stocks are already at a record high, according to the U.S. government's Energy Information Administration (EIA), which issues its latest report on Wednesday. Crude had come under pressure on Tuesday from International Energy Agency (IEA) forecasts of continued supply growth in the United States to 2020 despite lower prices, and of a possible further rise in stocks this year. "The supply growth in 2015 is likely to continue unabated, albeit at a somewhat lower rate," Fereidun Fesharaki at Facts Global Energy said in a market note. "This all means a weak market in 2015 and even lower oil prices. Demand rebound will not save the oil market." Brent crude futures LCOc1 were down 28 cents at $56.15 by 1250 GMT (07:50 a.m. EST). U.S. crude CLc1 traded at $50.12, up 10 cents, having reached a high of $51.14 earlier in the session. After more than halving since June, oil prices have rallied by over 20 percent in the last four weeks. Kuwaiti Oil Minister Ali al-Omair said on Wednesday crude prices could rise to $60 a barrel by the end of the year. But analysts agreed with IEA predictions that following the crash, oil prices would stabilize well below the highs of more than $100 a barrel seen in the last three years. Jefferies Bache analysts said Brent and U.S. crude, known as West Texas Intermediate (WTI), would fall in the short term as the market responded again to oversupply. "We still expect fresh WTI lows and an ultimate decline towards the $40 area," they said in a note to traders. "Assuming our $40 WTI target is achieved, a nearby Brent price in the $48 area would be implied." "All in all, we are maintaining a bearish stance." Adding further pressure on prices, the EIA kept its 2015 and 2016 domestic oil output forecasts virtually unchanged from the previous month. The EIA expects U.S. oil production in 2015 to be 9.3 million barrels per day, slightly lower than the 9.31 million bpd forecast in last month's short-term energy outlook. (Additional reporting by Meeyoung Cho in Seoul and Adam Rose in Beijing; Editing by Dale Hudson and David Evans)

Exclusive: Iran's support for Syria tested by oil price drop: How much have they been RIPPING US OFF for DECADES?

Oz Zenn It was a clusterfuck all these years, vicki. A majestic, spectacular, steaming, smelling, perturbed clusterfuck....

Joe Vigilante The United States states has stock piles of oil sitting sitting in warehouses across the country. Billions of barrels just sitting waiting to be used. We buy the oil we use, and barrel and reserve our own product. The US and Saudi's can flood the market whenever we want. We've been doing this for decades.

Brics would be another money super power towards countries that don't have gold. You can't only back up money with so much gold before it gets in the way

Saq Aziz: So the next time a fervent croney capitalist hawk tells you that the market is some sort of trusted ethereal financial mechanism , you have permission to laugh. 'The market' is double speak for fraud as we see it today. There is no free market, i t has always been subject to ma nipulation. In this instance there is a clear agenda at harming economies that have traditionally been overly dependent on revenues generated by exporting oil. One moment Putin is signing a multi billion dollar trade deal with China, the next moment oil prices tank. The message from the Whitehouse being don't get too cocky, we have total spectrum dominance. It's laughable that certain people think the Saudi's are acting alone.

Ben Taylor If the Ruble starts to fight back an recover ..watch them lower the price even still...

saudi arabia sells $17.48 per barrel in their dessert

Roy Sauseda Jr. This is the best time to get the stocks we always wanted be were to high the Saudis are choking out the Cowboys and the Eagles in the west. And of course the big 3 never lose. The rest is and illusion. ..

Chuck Bauer And collapse the petrodollar so the IMF and world bank can install a new currency and the UN can take the guns from the American people. This is the beginning of the NWO.

Daniel Ruiz These guys don't have to worry much longer, the price of fuel was only temporarily cut in half to pacify the american people and prevent an overturning and or the fall of the US government, which is inevitable. Especially when we show so many similarities to Ancient Rome (Overextended military, Public Humiliation as Entertainment, (Gambling and microtransactions hidden in every aspect of life) just before its fall.

Joe Fakhury Quite telling.... Such an arrogant and totally uneducated position only confirms collusion not by choice but by force , with the USA. His excellency the Saudi oil minister speaks his master's voice to create the illusion that the current decline in oil prices is a market phenomenon and not a contrived drop. aimed at crippling Russian economy and Putin.

l probably cheaper to buy a barrel of oil than a litre of diesel at the UK pumps son $20 oil wouldn’t force production cut – Saudi oil minister

Mani Veiszadeh Sounds like he is even happy the prices are low. The deffinition of dumb. I have a comodity, it's falling, yaaaay, it may even fall further, yaaaaay, I don't care if it falls and falls, because I'm a corrupt Arab.

Oil declines amid stronger dollar, crude oversupply in U.S. Fri, Dec 26 15:15 PM EST image 1 of 2 By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices fell Friday, tumbling as the dollar strengthened and as a supply glut in top consumer, the United States, trumped worries about falling production from Libya. The market had come under pressure from Wednesday's Energy Department report, which showed a 7.3 million-barrel rise in crude inventories to their highest December level on record. Analysts had expected a seasonal decline. The slide was exacerbated as oil prices reacted to a strengthening dollar index. "There’s still significant weakness in confidence, and that means that we’re going to have occasional retests to the downside,” said Richard Hastings of Global Hunter Securities. The strengthening dollar index triggered the slide on Friday, he said. Additionally, the market continued to reel from bearish storage data just before the Christmas holiday. “The numbers on Wednesday were really bearish, and it’s possible the market is still trying to digest them,” said Andrew Lebow, a Senior Vice President of Jefferies in New York. “Maybe the path of least resistance is down here, given that we’ve been in a long down trend.” Crude imports by Japan, the world's fourth-biggest oil buyer, dropped 17.3 percent in November from a year earlier to 14.68 million kilolitres (3.08 million bpd), government data showed on Thursday. Brent crude settled down 79 cents at $59.45, while U.S. crude fell $1.11 to $54.73 in thin trade as many countries were still on holiday. "We tried to rally off of the Libyan situation, but I think that the market is still reeling from larger-than-expected inventory data," said Phil Flynn of Price Futures Group in Chicago. Fighting in Libya has cut output there to 352,000 barrels a day, or about half November's average, state oil company spokesman said on Thursday. This countered the U.S. Department of Energy's (DOE) report showing a big stockbuild. In Libya, a rocket hit a storage tank at the country's biggest export terminal, Es Sider, setting it on fire as armed factions allied to competing governments fought for control, officials from both sides said on Thursday. On Friday, officials said the blaze had spread to two more tanks. (Additional reporting by Alex Lawler and Henning Gloystein; Editing by Robin Pomeroy, Pravin Char, Chizu Nomiyama and Gunna Dickson) ======================= Why the oil price is falling Dec 8th 2014, 23:50 BY E.L. Timekeeper THE oil price has fallen by more than 40% since June, when it was $115 a barrel. It is now below $70. This comes after nearly five years of stability. At a meeting in Vienna on November 27th the Organisation of Petroleum Exporting Countries, which controls nearly 40% of the world market, failed to reach agreement on production curbs, sending the price tumbling. Also hard hit are oil-exporting countries such as Russia (where the rouble has hit record lows), Nigeria, Iran and Venezuela. Why is the price of oil falling? The oil price is partly determined by actual supply and demand, and partly by expectation. Demand for energy is closely related to economic activity. It also spikes in the winter in the northern hemisphere, and during summers in countries which use air conditioning. Supply can be affected by weather (which prevents tankers loading) and by geopolitical upsets. If producers think the price is staying high, they invest, which after a lag boosts supply. Similarly, low prices lead to an investment drought. OPEC’s decisions shape expectations: if it curbs supply sharply, it can send prices spiking. Saudi Arabia produces nearly 10m barrels a day—a third of the OPEC total. Four things are now affecting the picture. Demand is low because of weak economic activity, increased efficiency, and a growing switch away from oil to other fuels. Second, turmoil in Iraq and Libya—two big oil producers with nearly 4m barrels a day combined—has not affected their output. The market is more sanguine about geopolitical risk. Thirdly, America has become the world’s largest oil producer. Though it does not export crude oil, it now imports much less, creating a lot of spare supply. Finally, the Saudis and their Gulf allies have decided not to sacrifice their own market share to restore the price. They could curb production sharply, but the main benefits would go to countries they detest such as Iran and Russia. Saudi Arabia can tolerate lower oil prices quite easily. It has $900 billion in reserves. Its own oil costs very little (around $5-6 per barrel) to get out of the ground. The main effect of this is on the riskiest and most vulnerable bits of the oil industry. These include American frackers who have borrowed heavily on the expectation of continuing high prices. They also include Western oil companies with high-cost projects involving drilling in deep water or in the Arctic, or dealing with maturing and increasingly expensive fields such as the North Sea. But the greatest pain is in countries where the regimes are dependent on a high oil price to pay for costly foreign adventures and expensive social programmes. These include Russia (which is already hit by Western sanctions following its meddling in Ukraine) and Iran (which is paying to keep the Assad regime afloat in Syria). Optimists think economic pain may make these countries more amenable to international pressure. Pessimists fear that when cornered, they may lash out in desperation. Published time: December 23, 2014 11:16 Edited time: December 23, 2014 16:02 Saudi Arabia's Oil Minister Ali al-Naimi. (Reuters/Heinz-Peter Bader) Saudi Arabia’s oil minister said OPEC wouldn't budge on its decision not cut production, even if oil hits $20 a barrel. He also said the world may never see $100 a barrel ever again. “It is not in the interest of OPEC producers to cut their production, whatever the price is,” Ali al-Naimi told the Middle East Economic Survey, a weekly oil and gas publication. Naimi added, “Whether it goes down to $20, $40, $50, $60, it is irrelevant.” Saudi Arabia is the world’s largest oil producer, and is also the most dominant force in the Organization of the Petroleum Exporting Countries (OPEC). “We have entered a scary time for the oil market and for the next several years we are going to be dealing with a lot of volatility,” Naimi said. “Just about everything will be touched by this.” Other Arab OPEC producers expect global oil prices to recover to the tune of $70-80 per barrel by the end of 2015, spurred by economic recovery, Reuters reported, citing unmade OPEC delegates. Some of them described as hailing from core Gulf producing nations even see $100 as a real possibility. Oil prices have been sinking steadily since the peak of $115 in June, losing nearly 50 percent, standing at $60.25 a barrel at the time of publication. Lower oil prices will hurt oil companies, as investors will shy away from putting money into pricey exploration and drilling projects. Overall, oil producers stand to lose more than $1 trillion if oil prices remain at $60 per barrel, according to a report by Goldman Sachs. The slump also puts hundreds of thousands of oil and gas industry workers around the world at risk of losing their jobs. The UK alone could lose 35,000 jobs should the industry collapse. READ MORE: 35,000 oil & gas jobs at risk as crude price tumbles – study Conversely, an IMF economist has come out and said that low oil could boost world growth by between 0.3 and 0.8 percent. Prices took a sharp downward turn in November, after the OPEC oil cartel decided not to cut production from 30 million barrels per day. Combined, the 12 OPEC nations produce 40 percent of the world’s oil. The group meets again in June to discuss production levels. The group lowered production to boost oil prices following the 2008 financial crisis. AFP Photo/Str AFP Photo/Str Many analysts believe that influential Saudi Arabia was behind the decision to keep prices low, in order to squeeze out other competitors, namely American shale oil, which has completely changed the energy market in the past 5 years. The majority of OPEC members are now selling oil at a loss. Low oil prices are bad news for exporters, especially those who cannot produce oil cheaply. OPEC members Venezuela and Nigeria especially would feel the pinch of $20 per barrel, with many analysts believing it could lead Venezuela to default. READ MORE: Fitch slashes Venezuela rating to pre-default level Countries highly dependent on imports, such as Japan, China, India, Turkey, and Europe, will benefit from the discount. However, it is bad for exporters, especially Russia, which has forecast GDP will fall 4.7 percent next year if oil prices stay at $60. On the flip side, it’s good for customers. In the US petrol pump prices have already dropped by $1 gallon since the decision was taken by OPEC. ======== Oil price plunge: Solace for consumers, anxiety for government By Zafar Bhutta Published: December 21, 2014 Fear lurking that foreign fund inflows, exports may slow down. STOCK IMAGE ISLAMABAD: The plunge in international oil prices has come as a welcome relief for the consumers in Pakistan who had been paying high prices for the past many years. However, many countries including neighbouring India are expressing concern that uncertainty in the oil markets may hurt foreign fund inflows and exports. Pakistan is no exception and it could face a similar situation as the sharp drop in crude prices is threatening economic growth in several oil-producing nations and may slow down global demand, which will leave its impact on Pakistan’s exports. Reports suggest that Middle Eastern states face a massive loss of $135 billion following the slump in global crude markets. This scenario will also deal a blow to the revenues of Russia and Iran, which are already experiencing difficulties due to sanctions imposed by the US. A surge in US shale gas production and sales has shaken the world’s crude market, forcing the oil-producing nations to keep existing supplies intact on fears that the US will capture their share of the market if they cut production to stabilise prices. Asian Development Bank Assistant Chief Economist Joseph Zveglich comments many Asian countries should be able to profit from the decline in oil prices, including emerging markets China and India. Moreover, in countries where oil is sold below market rates, authorities can capitalise on the opportunity to remove fuel subsidies without making any increase in prices, which is quite unpopular with the people. The resources freed in the wake of the reduction in subsidies can be directed towards more productive spending, such as infrastructure development. At present, the government provides no subsidy on oil, but it charges from power consumers less than the actual cost of production due to a poor fuel mix. The country mainly banks on thermal power plants which produce expensive electricity. Officials of the Ministry of Water and Power say the government is providing a subsidy of Rs2 per unit to the power consumers and has set aside Rs180 billion in the current fiscal year. Savings on this account could be spent on building major dams like Diamer Bhasha, which has dragged on for years as financial resources are not forthcoming. Demand to fall in overseas markets Pakistan will see a drop in demand for its export goods in the Middle Eastern countries where government revenues have taken a hit from the fast declining crude prices. Exporters are excessively focusing on the European market after getting the Generalised Scheme of Preferences (GSP) Plus status from the European Union. But they are losing markets to competitors in other nations where they have no incentives available. Apart from the expected dent in export earnings, Pakistan may also see a slowdown in foreign fund inflows especially in the energy sector because of low oil prices. Revenues of state-owned hydrocarbon exploration companies – Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) – are also under threat. That’s why the country could not fetch a good price in the OGDC share float, which was eventually cancelled, as investors did not show enthusiasm due to the fall in the company’s profit. Commodity prices stay unchanged Though rates of petroleum products have come down, they have not impacted prices of commodities in the country. Overall, the inflation index has dropped sharply, but people are still paying high prices for essential commodities and other consumption goods. Even operators of transport vehicles in far-off areas are demanding higher fares and commuters are at the mercy of local administrations. On the other hand, cotton farmers are encountering tough times as they receive lower prices for their produce, perhaps because of a cartel in the textile industry. Bad governance is the real issue. In remote areas, petroleum dealers charge higher rates even after the government announces a cut in prices. The government should slash power subsidy and tighten the noose around power thieves to save funds and divert them to infrastructure projects in the energy sector. The writer is a staff correspondent Published in The Express Tribune, December 22nd, 2014. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation. ================== The Secret Stupid Saudi-US Deal on Syria William Engdahl | October 24, 2014 4 Comments The Kerry-Abdullah Secret Deal & An Oil-Gas Pipeline War The details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. Details were concluded in the September meeting by US Secretary of State John Kerry and the Saudi King. The unintended consequence will be to push Russia even faster to turn east to China and Eurasia. One of the weirdest anomalies of the recent NATO bombing campaign, allegedly against the ISIS or IS or ISIL or Daash, depending on your preference, is the fact that with major war raging in the world’s richest oil region, the price of crude oil has been dropping, dramatically so. Since June when ISIS suddenly captured the oil-rich region of Iraq around Mosul and Kirkuk, the benchmark Brent price of crude oil dropped some 20% from $112 to about $88. World daily demand for oil has not dropped by 20% however. China oil demand has not fallen 20% nor has US domestic shale oil stock risen by 21%. What has happened is that the long-time US ally inside OPEC, the kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC, with Iran following suit and panic selling short in oil futures markets. The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. [1] That Saudi financial discounting operation in turn is by all appearance being coordinated with a US Treasury financial warfare operation, via its Office of Terrorism and Financial Intelligence, in cooperation with a handful of inside players on Wall Street who control oil derivatives trading. The result is a market panic that is gaining momentum daily. China is quite happy to buy the cheap oil, but her close allies, Russia and Iran, are being hit severely. The deal According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center, the dramatic price collapse is being deliberately caused by the Saudis, OPEC’s largest producer. The public reason claimed is to gain new markets in a global market of weakening oil demand. The real reason, according to Abanmy, is to put pressure on Iran on her nuclear program, and on Russia to end her support for Bashar al-Assad in Syria.[2] When combined with the financial losses of Russian state natural gas sales to Ukraine and prospects of a US-instigated cutoff of the transit of Russian gas to the huge EU market this winter as EU stockpiles become low, the pressure on oil prices hits Moscow doubly. More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of US globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. The principal target, however, is Putin’s Russia, the single greatest threat today to that Superpower hegemony. The strategy is similar to what the US did with Saudi Arabia in 1986 when they flooded the world with Saudi oil, collapsing the price to below $10 a barrel and destroying the economy of then-Soviet ally, Saddam Hussein in Iraq and, ultimately, of the Soviet economy, paving the way for the fall of the Soviet Union. Today, the hope is that a collapse of Russian oil revenues, combined with select pin-prick sanctions designed by the US Treasury’s Office of Terrorism and Financial Intelligence will dramatically weaken Putin’s enormous domestic support and create conditions for his ultimate overthrow. It is doomed to fail for many reasons, not the least, because Putin’s Russia has taken major strategic steps together with China and other nations to lessen its dependence on the West. In fact the oil weapon is accelerating recent Russian moves to focus its economic power on national interests and lessen dependence on the Dollar system. If the dollar ceases being the currency of world trade, especially oil trade, the US Treasury faces financial catastrophe. For this reason, I call the Kerry-Abdullah oil war a very stupid tactic. The Kerry-Abdullah secret deal On September 11, US Secretary of State Kerry met Saudi King Abdullah at his palace on the Red Sea. The King invited former head of Saudi intelligence, Prince Bandar to attend. There a deal was hammered out which saw Saudi support for the Syrian airstrikes against ISIS on condition Washington backed the Saudis in toppling Assad, a firm ally of Russia and de facto of Iran and an obstacle to Saudi and UAE plans to control the emerging EU natural gas market and destroy Russia’s lucrative EU trade. A report in the Wall Street Journal noted there had been “months of behind-the-scenes work by the US and Arab leaders, who agreed on the need to cooperate against Islamic State, but not how or when. The process gave the Saudis leverage to extract a fresh US commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.” [3] For the Saudis the war is between two competing age-old vectors of Islam. Saudi Arabia, home to the sacred cities of Mecca and Medina, claims de facto supremacy in the Islamic world of Sunni Islam. The Saudi Sunni form is ultra-conservative Wahhabism, named for an 18th Century Bedouin Islamic fundamentalist or Salafist named Muhammad ibn Abd al-Wahha. The Taliban derive from Wahhabism with the aid of Saudi-financed religious instruction. The Gulf Emirates and Kuwait also adhere to the Sunni Wahhabism of the Saudis, as does the Emir of Qatar. Iran on the other hand historically is the heart of the smaller branch of Islam, the Shi’ite. Iraq’s population is some 61% majority Shi’ite. Syria’s President, Bashar al-Assad is a member of a satellite of the Shi’ite branch known as Alawite. Some 23% of Turkey is also Alawite Muslim. To complicate the picture more, across a bridge from Saudi Arabia sits the tiny island country, Bahrain where as many as 75% of the population is Shi’ite but the ruling Al-Khalifa family is Sunni and firmly tied to Saudi Arabia. Moreover, the richest Saudi oil region is dominated by Shi’ite Muslims who work the oil installations of Ras Tanura. An oil and gas pipeline war These historic fault lines inside Islam which lay dormant, were brought into a state of open warfare with the launching of the US State Department and CIA’s Islamic Holy War, otherwise known as the Arab Spring. Washington neo-conservatives embedded inside the Obama Administration in a form of “Deep State” secret network, and their allied media such as the Washington Post, advocated US covert backing of a pet CIA project known as the Muslim Brotherhood. As I detail in my most recent book, Amerikas’ Heiliger Krieg, the CIA had cultivated ties to the terrorist Muslim Brotherhood death cult since the early 1950’s. Now if we map the resources of known natural gas reserves in the entire Persian Gulf region, the motives of the Saudi-led Qatar and UAE in financing with billions of dollars the opposition to Assad, including the Sunni ISIS, becomes clearer. Natural gas has become the favored “clean energy” source for the 21st Century and the EU is the world’s largest growth market for gas, a major reason Washington wants to break the Gazprom-EU supply dependency to weaken Russia and keep control over the EU via loyal proxies like Qatar. The world’s largest known natural gas reservoir sits in the middle of the Persian Gulf straddling part in the territorial waters of Qatar and part in Iran. The Iranian part is called North Pars. In 2006 China’s state-owned CNOOC signed an agreement with Iran to develop North Pars and build LNG infrastructure to bring the gas to China.[4] The Qatar side of the Persian Gulf, called North Field, contains the world’s third largest known natural gas reserves behind Russia and Iran. In July 2011, the governments of Syria, Iran and Iraq signed an historic gas pipeline energy agreement which went largely unnoticed in the midst of the NATO-Saudi-Qatari war to remove Assad. The pipeline, envisioned to cost $10 billion and take three years to complete, would run from the Iranian Port Assalouyeh near the South Pars gas field in the Persian Gulf, to Damascus in Syria via Iraq territory. The agreement would make Syria the center of assembly and production in conjunction with the reserves of Lebanon. This is a geopolitically strategic space that geographically opens for the first time, extending from Iran to Iraq, Syria and Lebanon.[5] As Asia Times correspondent Pepe Escobar put it, “The Iran-Iraq-Syria pipeline – if it’s ever built – would solidify a predominantly Shi’ite axis through an economic, steel umbilical cord.”[6] Shortly after signing with Iran and Iraq, on August 16, 2011, Bashar al-Assad’s Syrian Ministry of Oil announced the discovery of a gas well in the Area of Qarah in the Central Region of Syria near Homs. Gazprom, with Assad in power, would be a major investor or operator of the new gas fields in Syria. [7] Iran ultimately plans to extend the pipeline from Damascus to Lebanon’s Mediterranean port where it would be delivered to the huge EU market. Syria would buy Iranian gas along with a current Iraqi agreement to buy Iranian gas from Iran’s part of South Pars field.[8] Qatar, today the world’s largest exporter of LNG, largely to Asia, wants the same EU market that Iran and Syria eye. For that, they would build pipelines to the Mediterranean. Here is where getting rid of the pro-Iran Assad is essential. In 2009 Qatar approached Bashar al-Assad to propose construction of a gas pipeline from Qatar’s north Field through Syria on to Turkey and to the EU. Assad refused, citing Syria’s long friendly relations with Russia and Gazprom. That refusal combined with the Iran-Iraq-Syria gas pipeline agreement in 2011 ignited the full-scale Saudi and Qatari assault on Assad’s power, financing al Qaeda terrorists, recruits of Jihadist fanatics willing to kill Alawite and Shi’ite “infidels” for $100 a month and a Kalishnikov. The Washington neo-conservative warhawks in and around the Obama White House, along with their allies in the right-wing Netanyahu government, were cheering from the bleachers as Syria went up in flames after spring 2011. Today the US-backed wars in Ukraine and in Syria are but two fronts in the same strategic war to cripple Russia and China and to rupture any Eurasian counter-pole to a US-controlled New World Order. In each, control of energy pipelines, this time primarily of natural gas pipelines—from Russia to the EU via Ukraine and from Iran and Syria to the EU via Syria—is the strategic goal. The true aim of the US and Israel backed ISIS is to give the pretext for bombing Assad’s vital grain silos and oil refineries to cripple the economy in preparation for a “Ghaddafi-”style elimination of Russia and China and Iran-ally Bashar al-Assad. In a narrow sense, as Washington neo-conservatives see it, who controls Syria could control the Middle East. And from Syria, gateway to Asia, he will hold the key to Russia House, as well as that of China via the Silk Road. Religious wars have historically been the most savage of all wars and this one is no exception, especially when trillions of dollars in oil and gas revenues are at stake. Why is the secret Kerry-Abdullah deal on Syria reached on September 11 stupid? Because the brilliant tacticians in Washington and Riyadh and Doha and to an extent in Ankara are unable to look at the interconnectedness of all the dis-order and destruction they foment, to look beyond their visions of control of the oil and gas flows as the basis of their illegitimate power. They are planting the seeds of their own destruction in the end. F. William Engdahl, BFP contributing Author & Analyst William Engdahl is author of A Century of War: Anglo-American Oil Politics in the New World Order. He is a contributing author at BFP and may be contacted through his website at www.engdahl.oilgeopolitics.net where this article was originally published. Endnotes: [1] M. Rochan, Crude Oil Drops Amid Global Demand Concerns, IB Times, October 11, 2014 http://www.ibtimes.co.uk/crude-oil-drops-amid-global-demand-concerns-1469524 [2] Nihan Cabbaroglu, Saudi Arabia to pressure Russia Iran with price of oil, 10 October 2014, Turkish Anadolu Agency, http://www.aa.com.tr/en/economy/402343–saudi-arabia-to-pressure-russia-iran-with-price-of-oil [3] Adam Entous and Julian E. Barnes, Deal With Saudis Paved Way for Syrian Airstrikes: Talks With Saudi Arabia Were Linchpin in U.S. Efforts to Get Arab States Into Fight Against Islamic State, Wall Street Journal, September. 24, 2014, http://online.wsj.com/articles/deal-with-saudis-paved-way-for-syrian-airstrikes-1411605329?mod=WSJ_hp_LEFTTopStories [4] POGC, North Pars Gas Field, Pars Oil and Gas Company website, http://www.pogc.ir/NorthParsGasField/tabid/155/Default.aspx [5] Imad Fawzi Shueibi , War Over Gas–Struggle over the Middle East: Gas Ranks First, 17 April, 2012. http://www.voltairenet.org/article173718.html [6] Pepe Escobar, Why Qatar Wants to Invade Syria, Asia Times, September 27, 2012, http://www.informationclearinghouse.info/article32576.htm [7] Ibid. [8] F. William Engdahl, Syria Turkey Israel and the Greater Middle East Energy War, Global Research, October 11, 2012, http://www.globalresearch.ca/syria-turkey-israel-and-the-greater-middle-east-energy-war/5307902 - See more at: http://www.boilingfrogspost.com/2014/10/24/the-secret-stupid-saudi-us-deal-on-syria/#sthash.K1Wms9s8.eTFX7BRN.dpuf =================== Saudi Arabia says won't cut oil output Sun, Dec 21 14:09 PM EST image By Rania El Gamal and Maha El Dahan ABU DHABI (Reuters) - Saudi Arabia said on Sunday it would not cut output to prop up oil markets even if non-OPEC nations did so, in one of the toughest signals yet that the world's top petroleum exporter plans to ride out the market's biggest slump in years. Referring to countries outside of the Organization of the Petroleum Exporting Countries (OPEC), Saudi Oil Minister Ali al-Naimi told reporters: "If they want to cut production they are welcome: We are not going to cut, certainly Saudi Arabia is not going to cut." He added he was "100 percent not pleased" with prices but they would improve, although it was unclear when. He blamed the fall in prices to half their levels of six months ago on speculators and what he called a lack of cooperation from non-OPEC producers. His remarks at a conference in Abu Dhabi marked the second time in three days that the kingdom has signaled that it would not alter output levels, preferring to allow the market to stabilize on its own. The determined tone of his comments was echoed by some other Arab oil ministers at the conference in the United Arab Emirates (UAE) capital. UAE Oil Minister Suhail Bin Mohammed al-Mazroui urged all of the world's producers not to raise their oil output next year, saying this would quickly steady prices. He did not elaborate. RISING SUPPLY The world is forecast to need less OPEC oil in 2015 because of a rising supply of U.S. shale oil and other competing sources, with no significant increase in world demand growth. Kuwaiti Oil Minister Ali al-Omair said OPEC did not need to cut production and would not hold an emergency meeting ahead of its next scheduled talks in June. "I don't think we need to cut. We gave a chance to others (and) they were not willing to do so," he said, referring to contacts with non-OPEC producers before OPEC's meeting in November in Vienna. There, OPEC kept its target output of 30 million barrels per day (bpd) unchanged, leaving the market to balance itself without the group's intervention. That stance was seen as a shift from a longstanding policy in which OPEC powerhouse Saudi Arabia has acted as a swing supplier. Asked about possible cooperation between members of OPEC, which include the world's lowest-cost producers, and non-member countries, Naimi replied: "The best thing for everybody is to let the most efficient producers produce". CONSPIRACY THEORIES He also said that OPEC's decision would ultimately help the world economy. "Current prices do not encourage investment in any form of energy, but they stimulate global economic growth, leading ultimately to an ‎increase in global demand and a slowdown in the growth of supplies," he said. Iraq's oil minister, Adel Abdel Mahdi, said he saw no need for an OPEC emergency meeting but "we have to wait and see" whether the group was right to keep output unchanged. Naimi denied politics played a role in the kingdom's oil policy and said the price fall would not have "a noticeable and big" impact on Saudi Arabia or other Arab economies. The market slide has triggered conspiracy theories, ranging from the Saudis seeking to curb the U.S. oil boom, to Riyadh looking to undermine Iran and Russia for their support of Syria. Before the Vienna meeting, there were hints that Russia could cut output or exports if OPEC did the same. But the message from Moscow after the meeting was that the world's second largest oil exporter would maintain its output. (Additional reporting by David French; writing by William Maclean; editing by Sami Aboudi and Jason Neely) ======================== Exclusive: Arab OPEC sources see oil back above $70 by end-2015 Tue, Dec 23 03:10 AM EST image By Rania El Gamal ABU DHABI (Reuters) - Arab OPEC producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of next year as a global economic recovery revives demand, OPEC delegates said this week in the first indication of where the group expects oil markets to ‎stabilize in the medium term. The delegates, some of which are from core Gulf OPEC producing countries, said they may not see - and some may not even welcome now - a return to $100 any time soon. Once deemed a “fair” price by many major producers, $100 a barrel crude is encouraging too much new production from high cost producers outside the exporting group, some sources say. But they believe that once the breakneck growth of high cost producers such as U.S. shale patch slows and lower prices begin to stimulate demand, oil prices could begin finding a new equilibrium by the end of 2015 – even in the absence of any production cuts by OPEC, something that has been repeatedly ruled out. "‎The general thinking is that prices can’t collapse, prices can touch $60 or a bit lower for some months then come back to an acceptable level which is $80 a barrel, but probably after eight months to a year," one Gulf oil source told Reuters. A separate Gulf OPEC source said: "We have to wait and see. We don't see 100 dollars for next year, unless there is a sudden supply disruption. But average of 70-80 dollars for next year – yes.” The comments are among the first to indicate how big producers see oil markets playing out next year, after the current slump that has almost halved prices since June. Global benchmark Brent LCOc1 closed at around $60 a barrel on Monday. Their internal view on the market outlook will provide welcome insight to oil company executives, analysts and traders, who were caught out by what was seen by some as a shift in Saudi policy two months ago and have struggled since then to understand how and when the market will find its feet. NOT AGAIN For the past several months, Saudi officials have been making clear that the Kingdom’s oft-repeated mantra that $100 a barrel crude is a “fair” price for crude had been set aside, at least for the foreseeable future. At the weekend, Saudi Oil Minister Ali al-Naimi was blunt when asked if the world would ever again see triple-digit oil prices: “We may not.” Saudi Arabia, the world’s biggest exporter – and its close Gulf allies within the Organization of the Petroleum Exporting Countries (OPEC) – say it’s time for others, whether that is countries like major exporter Russia or U.S. shale drillers, to slow down; OPEC can no longer slash output, ceding market share, to spare them a downturn.

As Naimi told the Middle East Economic Survey (MEES) in an interview this weekend: “It is not in the interest of OPEC producers to cut their production, whatever the price is.”

Without OPEC to defend prices, oil entered a free-fall, but most of OPEC’s members are holding fast. At this point, intervening in the market would simply invite new rivals to carry on pumping crude, eroding OPEC’s market share without any guarantee of a sustained price recovery, another Arab oil source told Reuters on the sidelines of a meeting in Abu Dhabi of the Organization of the Arab Petroleum Exporting Countries (OAPEC). "Every time prices fall, we would be asked to cut," the source said. The second Gulf OPEC source reiterated that OPEC would not cut alone. Non-OPEC producers such as Russia, Mexico, Kazakhstan and "anyone producing more than one million barrels per day" should also cut or at least freeze their output if they wanted a stable market and better prices, the Gulf OPEC source said. NO PRICE TARGET To be sure, there is no suggestion that OPEC is targeting a specific price, or would want to do so. The group hasn’t had a formal price goal in about a decade, and Saudi Arabia has long maintained that it is only seeking price stability, not a set level. But it offers a convenient metric at a time when traders are struggling to figure out where and when markets will settle down. Asked about market signals OPEC is looking for to decide on whether the market is stabilizing or not, irrespective of the price, Naimi said: "‎The signals need time, one year, two years, three years. There is not one signal that we look to and say that's it... but for sure those who are the most efficient producers are the one who would rule the market in the future." Iraqi oil minister Adel Abdel Mehdi told Reuters in an interview on Monday he thought prices would stabilize now at about $60 a barrel but could rise to over $70 by mid-next year. "I believe that m‎arket has started to stabilize itself now," Falah al-Amiri, head of Iraq state oil marketing SOMO told Reuters in Abu Dhabi. "‎The future for next year, I don't think there would be much optimism in the market that the price would go to $80 or above. But I don't even think prices would reach $80," said Amiri, citing a resilient shale oil production to current prices. (Editing by William Maclean, Will Hardy and Jonathan Leff) ================== United Arab Emirates urges all world's oil producers not to raise output in 2015 Kuwait is co-operating with countries outside of OPEC to stabilise the oil market. Kuwait energy minister says - @bilgribs Saudi Arabia's oil minister, Ali al-Naimi, denies politics played a role in the kingdom's oil policy - Oil market to improve after fall caused by non-cooperation of non-OPEC producers, speculators' actions, Saudi Arabia says - @Reuters Iraq oil minister says he sees no need for OPEC emergency meeting now over falling oil price - @Reuters ================ Exclusive: Iran's support for Syria tested by oil price drop Fri, Dec 19 13:34 PM EST image By Suleiman Al-Khalidi AMMAN (Reuters) - Syrian businessmen and trade officials say they are worried the economic lifeline provided by Iran is under strain from plunging oil prices, despite public messages of support from Syria's strongest regional ally. Syrian President Bashar al-Assad has relied on oil-producing Iran to help him fight a nearly four-year-old civil war and also prop under a currency under pressure.

“If it had not been for Iranian support we could not have survived the crisis," a senior Syrian trade official said from Damascus, requesting anonymity. "It was Iranian support that has been the most important. In return, we are promising them more and more, and opening more and more doors for them to invest in Syria," he said.

Oil production in Syria, which is under U.S. and European sanctions, has dropped sharply since the start of the conflict and as insurgents have taken over energy installations. In July last year, Iran granted Syria a $3.6 billion credit facility to buy oil products, according to officials and bankers at the time. Another $1 billion went for non-oil products. But with the global oil price down 50 percent since June, Syria - where rebels have seized up to a third of the country - has sought reassurances Tehran will maintain the status quo. The public message has been an overwhelming "yes". Syrian Prime Minister Wael al-Halqi visited Tehran this week to boost Iranian support for Syria, in particular ensuring Iranian petroleum products reach the Syrian market, Syrian state news agency SANA reported. “Iran’s economic support for Syria will continue incessantly,” said Iran's Vice President Eshagh Jahangiri on Tuesday after meeting Halqi, according to Iran's state news agency IRNA. But there were no detailed announcements of joint ventures or oil deals as followed previous such visits in the past. CURRENCY FALLS The Syrian pound, which fell around 70 percent since the civil war began in 2011, lost another 10 percent over the past fortnight alone. Dealers said the fall was driven by several factors, including a realization that U.S. strikes on Islamic State were not helping Assad as much as had been expected. But a major one was that a falling oil price had made them fear Iran would be less able to help shore up its ally's economy. Shi'ite Iran has deep ties with Syria. Assad is an Alawite, an off-shoot of Shi'ism, and Tehran sees him as a bulwark against Sunni Saudi Arabia's influence in the region. In the past, Assad streamed Iranian support to Shi'ite Hezbollah in neighboring Lebanon, while now, the militia gets funds directly from Iran to fight Assad's enemies at the front. Damascus-based businessmen and bankers say the Syrian Central Bank is worried about the drop in oil prices affecting Iranian support for Syria. Iran deposited $500-$750 million in Syria's Central Bank more than a year ago that has been used by the authorities to help stabilize the pound, according to two senior bankers with close ties with central bank officials. In recent weeks, the bank sold dollars shore up the pound in some of the largest market interventions since the start of the crisis, the two bankers said. Syrian officials could not be reached for comment on Thursday or Friday. There is a general consensus by traders, bankers and businessmen that the drop in Iranian oil earnings will have untold consequences on level of economic support in the long term despite little impact on business ties so far. “The 50 percent steep fall in oil prices will break Iran’s back, not just the level of support for Assad,” a prominent member of the Damascus Chamber of Industry said, also requesting anonymity. OIL DISRUPTIONS Iranians have delivered turbines for power plants and have been promised contracts to rebuild housing, roads and other infrastructure destroyed by the war on the understanding that Tehran would finance them in return for equity shares. All this could be jeopardized. Much, however, will depend on how long oil prices will continue to stay depressed, they say. Two Syrian businessman who sell products including olive oil and garments to Iranian private traders are worried they may defer payments. A member of the Syrian Chambers of Industry from the city of Aleppo said he understood the main item on Prime Minister Halqi’s shopping list in Tehran was bigger quantities of petroleum products imports. Growing power cuts have hit government-controlled areas as more gas fields go out of action, forcing the authorities to rely even more on imports of fuel for its power plants. Islamic State militant control of some of the border crossings with Iraq has disrupted the flow of tens of thousands of barrels of crude from Iraq that were delivered overland by oil tankers, an oil trader based in the region said. Four Iranian tankers have discharged cargoes of gasoline products in the last two months in Syria's ports, traders said. But they did not end shortages accentuated by higher demand in the winter season, prompting small protests in Alawite villages near the port of Latakia, the heartland of Assad support. (Writing by Oliver Holmes; editing by Philippa Fletcher)

Strong Dubai, weak oil price put Saudi in dilemma

Oil holds as traders search for floor to rout; Brent above $50 Thu, Jan 08 12:48 PM EST image By Barani Krishnan NEW YORK (Reuters) - Global oil prices were little changed on Thursday, with better-than-expected U.S. jobs and other data helping the market hold steady after recovering from a four-day losing streak a day earlier. But support for the market was likely to be short-lived as oil bears continue hunting a bottom for the second-biggest price rout in crude's history, traders said. Some traders think oil prices could be at a crossroads after losing over half their value from June highs, and that could explain benchmark Brent crude's stalling at above $50 since Wednesday. Others think the market has just been handed a reprieve before moving another leg lower. "I think there is selling fatigue and that's why you're seeing some short covering," said John Kilduff, partner at New York energy hedge fund Again Capital. "There are lots of folks out there still looking for a bottom. This thing is not over yet. Not by a long shot." Brent LCOc1 slipped by 22 cents to $50.93 a barrel by 12:35 p.m. ET (1735 GMT). It had dropped to $49.66 on Wednesday, its lowest since May 2009. U.S. crude CLc1 was up a cent at $48.66, after plumbing a 5-1/2-year low of $46.83 in the previous session. Weekly jobless claims in the United States showed the smallest layoffs in 17 years, a report by the U.S. Labor Department said. Monthly payrolls data for December, due on Friday, is expected to show the 11th consecutive month of job gains above 200,000, the longest such stretch since 1994. Expectations that the European Central Bank could resort to stimulus measures after a rash of weak economic data and record crude imports by China in December, possibly due to attractive pricing, also helped sentiment, traders said. But the world's largest oil traders have also started hiring supertankers to store crude at sea, marking a milestone in the build-up of the global glut of supplies, freight brokers and shipping sources said.((Glut: To flood (a market) with an excess of goods so that supply exceeds demand.)) Trading firms, including Vitol VITOLV.UL, Trafigura TRAFGF.UL and energy major Shell (RDSa.L) are among those that have booked crude tankers for up to 12 months, the sources told Reuters. (Additional reporting by Florence Tan in Singapore; Editing by Dale Hudson, William Hardy and Meredith Mazzilli) ========================= Oil down almost 10 percent in two days as hunt for bottom continues Tue, Jan 06 17:18 PM EST image By Barani Krishnan and Samantha Sunne NEW YORK (Reuters) - Global oil markets on Tuesday slumped for a fourth straight session as mounting worries about a supply glut pressured crude prices, which have fallen almost 10 percent this week to their lowest since spring 2009. Traders said the trend for crude seemed lower but that prices could bounce up whenever there is a break in market sentiment. One such moment occurred on Tuesday when weaker-than-expected U.S. economic data briefly pushed the dollar lower. This brought crude off session lows but only for an about an hour, as the downward path resumed. Refined products such as gasoline RBc1 and heating oil HOc1 also bounced up briefly in morning trade, rallying as investors took profits on short positions. But products later succumbed to the trend, and gasoline settled 2 percent down. Crude oil prices have plunged more than 55 percent since June, when benchmark Brent traded above $115 a barrel and U.S. crude above $107. In Tuesday's session, Brent LCOc1 settled down $2.01 at $51.10 a barrel. It earlier fell to $50.52, its lowest since May 2009, and less than a dollar away from breaking below the $50 support. In the first two days of this week, Brent has dropped $5.32, or almost 10 percent. U.S. crude CLc1 finished down $2.11, or 4.2 percent, at $47.93, after plumbing an April 2009 low of $47.55. Brent and U.S. crude extended losses in post-settlement trade after the American Petroleum Institute, an industry group, reported builds in gasoline and distillate stocks last week despite a 4 million-barrel drop in crude stocks. [API/S]. The government's Energy Information Administration will issue official inventory data for last week at 10:30 a.m. ET (1530 GMT) on Wednesday. [EIA/S]

"I think the likelihood of seeing $46 to $45 is quite likely," said Phillip Streible, senior market strategist at RJO Futures in Chicago. "People, I think, are further understanding that the U.S. is becoming a powerhouse in creating crude oil and that's not going to change anytime soon."

The sell-off in oil began six months ago on concerns of an oversupply of high quality U.S. shale crude. It accelerated after a meeting of the Organization of Petroleum Exporting Countries in November, when Saudi Arabia ruled out production cuts as a means of boosting prices. On Tuesday, Saudi Arabia's King Abdullah said in a speech read for him that the country would deal with the challenge posed by lower oil prices "with a firm will," giving no signs the No. 1 crude exporter will cut supplies. On Monday, the kingdom's announcement of further oil price discounts for its European and U.S. buyers added to the bearish state of oil markets already staggering from Russian output at post-Soviet-era highs and Iraqi oil shipments near 35-year highs. (Additional reporting by Libby George in London and Florence Tan in Singapore; Editing by William Hardy, Louise Heavens, David Gregorio and Andrew Hay) ============== Oil slump deepens as supply glut shows no sign of easing Tue, Jan 06 09:50 AM EST image By Libby George LONDON (Reuters) - Oil prices fell to fresh 5-1/2 year lows on Tuesday, extending a 5 percent plunge in the previous session as worries over a global supply glut intensified. Brent crude fell close to $51 a barrel, its lowest since 2009, with cuts to Saudi Arabia's official selling prices to Europe this week adding more pressure to the 55 percent price rout since June. Saudi Arabia's King Abdullah said in a speech read for him on Tuesday the country would deal with the challenge posed by lower oil prices "with a firm will" but gave no sign the world's top exporter was considering changing its policy of maintaining production in the face of fast-growing U.S. shale supplies. "We would need an indication that Saudi Arabia is considering output cuts," said Carsten Fritsch, a commodities analyst with Commerzbank. The Saudi official price cuts on Monday added to bearish data over the weekend showing that Russia's 2014 oil output hit a post-Soviet-era high and December exports from Iraq, OPEC's second-largest producer, reached their highest since 1980. Brent crude LCOc1 fell as low as $51.23 a barrel on Tuesday, its lowest level since May 2009. It recovered slightly to $51.96 at 0930 ET, down $1.15 on the day. U.S. crude CLc1 was at $48.94, down $1.10, after falling to $48.47, its lowest since April 2009. Fritsch at Commerzbank said other countries including Iraq, Iran and Kuwait are likely to cut their official selling prices in the coming days. The United Arab Emirate cut its prices on Tuesday. Jitters over political uncertainty in Greece, and a downward revision on Tuesday to Europe's December Composite Purchasing Managers' Index (PMI), raised questions about energy demand in Europe and compounded the bearish sentiment. A slew of factors was keeping up the downward pressure on prices, analysts said, pointing to concerns about the Greek economy, high oil output from Russia, Iraq and the United States, and a stronger dollar. [GLOB/MKT] In the face of official price cuts and a continued supply overhang, markets shrugged off news about rising hostilities and lower oil production in Libya, as well as data showing the number of rigs drilling for oil in the United States fell for a fourth straight week. U.S. commercial crude oil and products stockpiles were forecast to have risen in the week ending Jan. 2, a preliminary Reuters survey showed on Monday. [EIA/S] Despite this, some analysts said oil prices could recover this year. "The longer prices remain below $60, the bigger the eventual output response is likely to be," Julian Jessop, head of commodities research at Capital Economics, said in a note. (Additionall reporting by Florence Tan in Singapore; editing by William Hardy and Louise Heavens)

Unhelpful dramas

Edward Hadas: The oil price is just plain wrong

05 January 2015 | By Edward Hadas

The oil price is still too high, often too low and much too volatile. In other words, this is a market that doesn’t work well for anyone.

The excessive volatility is glaringly obvious. The 50 percent price fall since June is extreme, but the market is only occasionally calm. Since 2000 the daily price has been on average 18 percent higher or lower than six months earlier.

Such variation is uncalled for, especially given the fairly modest shifts in demand. Since 1990, the annual change has never been higher than 3 percent. On the other side, the average cost of supply moves very slowly. Only modest adjustments in inventory and production rates are required to keep the price stable, as the market showed from mid-2011 to mid-2014.

The sharp shifts are as harmful as they are unnecessary. The world can handle any fairly stable price but rapid dramatic changes turn good investments bad. For example, if the oil price stays below $60 a barrel, much of the money spent on developing U.S. shale oil will have been wasted. Conversely, the sharp rise in the mid-2000s devalued energy-inefficient investments which made good sense when oil was cheap.

Of course, the actual price matters. The behaviour of producers of both oil and rival sources of energy should change along with the cost of crude. So should the spending patterns of industrial and household customers. In a world of cheap crude, high-cost oil wells remain untouched and gas guzzlers are economical. When oil is costly, electric cars look better and deep sea drilling makes sense.

The overall global economy gains from having oil as cheap as possible. Anything else is a waste of resources. From that perspective, the current price is still far too high. The production of unnecessarily expensive oil wastes skilled labour and sophisticated equipment. Oil-importing nations end up paying more than they need to for crude. The financial world is troubled by the cross-border cash flow. Exporters gain cash, but high oil revenue often leads to poor governments and weak non-oil economies.

The price could be much lower if more production came from the most efficient fields. No one really knows how much lower, because Saudi Arabia and some other producers with ultra-low cost unused resources have decided not to exploit or explore them aggressively. Still, there is no good reason to think that more than $30 a barrel is needed. That was the annual average in the 1990s, adjusted for inflation, following the calculations of the U.S. Energy Information Administration.

The price for producers is one thing; the cost for consumers is something else. There are good reasons to charge far more than the cost of production. Oil is a non-renewable resource which pollutes as it is used up, and dependency on imports, however cheap, brings political risk.

The correct price for users should be just low enough to keep cars on the road but high enough to restrain usage and to encourage the development of currently more expensive but ultimately more attractive alternative sources of energy. There is no way to calculate the precise optimal price, but the policies in Europe and Japan – taxes account for about 60 percent of the petrol price at the pump – are on the right track.

The United States is an outlier with its low 15 percent tax rate on gasoline. That is clearly too low to give strong incentives for conservation and investment in renewable alternatives. The U.S. government does have many regulations to prod industry in desired directions, but higher taxes speak particularly clearly.

In an ideal world, the price of oil for producers would be lower and more stable than today, while the average price for consumers would be higher and more stable. The world will never be ideal, but oil pricing can be improved.

The best way to get an appropriate producer price is through a weak cartel. Producers should be just disciplined enough to keep the price stable, but too ambitious for market share to allow prices to rise enough to draw in frivolous investments and destructive overproduction. Happily, something like that may be on the way. The recent decision by Saudi Arabia to hold onto its market share, cost what it may in oil revenue, is a step in the right direction.

The best way to keep consumer prices at a sufficiently high level is to let the tax rate on oil vary along with the producers’ price for crude. The recent oil price drop provides an excellent opportunity. Consumers would hardly notice if the price of fuel did not fall, and most governments would welcome the additional tax take.

Unfortunately, governments are more anxious for short-term stimulus to consumer demand than for a sensible long-term approach to energy pricing. The opportunity will almost certainly be wasted.

============================== Oil extends crash into new year as glut fears deepen Mon, Jan 05 16:05 PM EST By Barani Krishnan NEW YORK (Reuters) - The selloff in global oil markets showed little signs of slowing in the new year, with prices down as much as 6 percent on Monday, the lowest since spring 2009, as fears deepened a supply glut that has vexed the market for six months would continue. U.S crude crashed below $50 a barrel while benchmark Brent tumbled under $53 after data showed Russian oil output at post-Soviet era highs and Iraqi oil exports near 35-year peaks. U.S. driller ConocoPhillips (COP.N) added to the bearish mood by announcing it struck first oil at a Norwegian North Sea project. Top crude exporter Saudi Arabia revealed it made deep cuts to its monthly oil prices for European buyers ARM-OSP-E, the sixth time since June it has slashed prices, corresponding with the rout in crude futures markets over the period. Analysts read the latest cut as reflecting Saudi Arabia's fierce defence of its market share. The Organization of the Petroleum Exporting Countries kingpin also trimmed its prices for U.S. refiners ARM-OSP-N for a sixth straight month, while raising rates for Asia. The euro's tumble to 2006 lows, and slower-than-expected growth in U.S. manufacturing, completed the perfect storm for the oil markets. "There's no doubt that we have a combination of supplies hitting their zenith at a time when demand is weakening," said Phil Flynn, an analyst at Price Futures Group in Chicago. U.S. crude CLc1 settled down $2.65, or 5 percent, at $50.04 a barrel, and was at a post-settlement low of $49.77 by 3:15 p.m. ET (2015 GMT). The last time U.S. crude traded below $50 was in April 2009. Front-month Brent LCOc1 closed down $3.31, or almost 6 percent, at $53.11 a barrel. It dropped earlier to $52.66, its lowest since May 2009. Oil has plunged nearly 55 percent in value since June, when Brent traded above $117 a barrel and U.S. crude above $107. The selloff, which began on concerns of oversupply in high quality U.S. shale crude, accelerated after the OPEC meeting in November, when Saudi Arabia ruled out production cuts as a means of boosting prices. The kingdom reasoned that reducing output will hurt its market share instead. Some traders seem certain that U.S. crude will be trading in the $40 region later in the week if weekly oil inventory numbers for the United States on Wednesday show another supply build. "We're headed for a four-handle," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. "Maybe not today, but I’m sure when you get the inventory numbers that come out this week, we definitely will." Open interest for $40-$50 strike puts in U.S. crude have risen several fold since the start of December, while $20-$30 puts for June 2015 have traded, said Stephen Schork, editor of Pennsylvania-based The Schork Report. Russia's oil output hit a post-Soviet high last year, averaging 10.58 million barrels per day (bpd), up 0.7 percent thanks to small non-state producers, Energy Ministry data showed. Iraq's oil exports were at their highest since 1980 in December, an oil ministry spokesman said, with record sales from the country's southern terminals. The Russian and Iraqi data overshadowed reports of drops in Libya's oil output because of conflict in that country. Libya's oil output has fallen to around 380,000 bpd after the closure of the OPEC producer's biggest oil port, Es Sider, along with another oil port, Ras Lanuf. (Additional reporting by Christopher Johnson in London; Editing by Marguerita Choy and Andre Grenon) ================= Revamped U.S. oil hedges may test OPEC's patience Mon, Jan 05 01:10 AM EST By Lucas Iberico Lozada NEW YORK (Reuters) - As a war of nerves between U.S. shale producers and Gulf powerhouses intensifies, OPEC's biggest members are counting down the months until their upstart rivals lose the one thing shielding them from crashing oil prices - hedges. They may need much more patience than they reckon, however, because those hedges are a moving target. Rather than wait for their price insurance to run out, many companies are racing to revamp their policies, cashing in well-placed hedges to increase the number of future barrels hedged, according to industry consultants, bankers and analysts familiar with the deals. OPEC officials hope that once U.S. oil companies get fully exposed to the impact of an over 50 percent slide in crude prices since last June, they will have to drill fewer new wells, causing U.S. production growth to stall and putting a floor under oil prices now testing $50 a barrel. "There are companies which are hedged until the beginning of the year or until the end of the year, so we need to wait at least until the first quarter to see what is going to happen," United Arab Emirates Energy Minister Suhail Bin Mohammed al-Mazroui told Reuters and one other news agency last month. Yet that hope is based largely on quarterly company reports from several months ago, when drillers last made their hedging portfolios public. In the meantime, with the price rout showing no sign of reversing, at least some firms have put on new hedges that will help prevent their revenues from falling further - and allow them to drill far longer this year than earlier expected. "OPEC should not expect to see any impact on U.S. shale growth in the first half of the year and the impact in the second half is being attenuated significantly by producer hedging," says Ed Morse, global head of commodities research at Citigroup, one of the biggest U.S. banks involved hedging. CAPTURING THE UPSIDE For the moment, it is unclear which companies are involved in the effort. New hedging strategies are only likely to get disclosed in quarterly earnings reports in late January. "It's a hot topic of discussion that everyone is thinking about and looking at," said Craig Breslau, who heads the energy derivatives marketing desk at Societe Generale in Houston, which has been involved in some restructuring transactions. While the proportion of oil companies actually executing those deals is not that high, the deals thus far have been large in terms of volume and dollars, he said. According to their last filings, oil companies such as EOG Resources Inc, Anadarko Petroleum Corp, Devon Energy Corp and Noble Energy Inc had hedged some of their 2015 production at prices of $90 a barrel or more. The net short position of oil producers and other non-financial companies in U.S. crude oil futures and options markets -- used as a rough gauge of hedging activity -- has grown from 15 million barrels in August to more than 77 million barrels last week. For many companies that set up "in the money" hedges prior to the slump, the downturn offers a chance to cash in or extend their protection. For example, a company that had sold swap contracts to hedge a part of its 2015 production at $90 a barrel - essentially shorting forward oil prices to guard against a drop - could buy them now back at around $57 for a profit of about $33 a barrel. Instead of just pocketing the cash, some companies are using the funds to shield themselves against a further market slide by buying swaps and options pegged closer to current prices. With the December 2015 put option for $60 a barrel now trading at around $9 a barrel, swaps cashed in now could buy a producer nearly four times more protection at that price. PROFITS OR SURVIVAL Most of the half-dozen companies contacted by Reuters - those with sizeable hedges in place - declined to comment or did not reply to requests for comment. A spokeswoman for EOG said that it was not selling off its hedges. Devon Energy declined to say whether the company was restructuring is large hedge book, but said it had not 'monetized' any of its position. So far only two companies have publicly confirmed winding down their profitable hedge books. Bakken shale oil pioneer Continental Resources pocketed $433 million by liquidating its hedges in September - a move that left the firm exposed to a further $20 slump, though it is not clear whether it has set up new hedges since. On Tuesday, tiny firm American Eagle Energy announced that it sold off its 414,000 barrels of oil hedged at $89.59 a barrel through last December for a profit of $13 million to improve its liquidity - even as the firm said it would have to stop drilling until prices improved. That appears to be the effect that OPEC is looking for, although thus far it is the exception rather than the rule. "The companies' situation is strong," said an OPEC delegate from a Gulf producer. "All this will delay the impact of the lower oil prices." (Additional reporting by Rania El Gamal in Dubai; Editing by Jonathan Leff and Tomasz Janowski) ============== Oil prices hits fresh five-and-a-half-year lows; Brent below $56 Sun, Jan 04 22:25 PM EST image By Florence Tan SINGAPORE (Reuters) - U.S. crude and Brent futures dropped to fresh 5-1/2-year lows on Monday as worries about a surplus of global supplies amid weak demand continued to drag on oil markets. OPEC's decision in November to maintain output had accelerated oil's losses earlier, while record-high Russian production and the highest Iraqi exports since 1980 added to the concerns about oversupply. The two oil benchmarks, Brent and West Texas Intermediate, have now lost more than half of their value from peaks hit in the middle of last year. U.S. crude slid as low as $51.40 a barrel, its lowest since May 2009, and at 0312 GMT was just a tick above that at $51.59 a barrel, still down $1.10. February Brent crude dropped as low as $55.36 a barrel, also its lowest since May 2009, before edging back to $55.42, still down a dollar. "Trying to pick a bottom could be deadly," said a crude oil trader who declined to be named due to company policy. Lackluster economic data from the United States on Friday fueled worries about the state of the global economy and the strength of oil demand. "Oil demand is unlikely be robust this year when we look at the state of economies in China, Japan and Europe," said Yusuke Seta, a commodity sales manager at Newedge Japan. A weak euro may also have contributed to further oil losses as it reduces the purchasing power of euro holders for dollar-denominated oil. [MKTS/GLOB] "Theoretically speaking, a weaker euro puts downward pressure on Brent, although quantitative easing in the euro zone could possibly put more liquidity in the region, which may subsequently flow into Brent," Seta said. Conflicts in Libya has reduced the OPEC producer's crude output to around 380,000 barrels a day, state-run National Oil Corp (NOC) has said. Fighting was reported near the country's biggest oil export port Es Sider in the east even as a week-long fire at the port's storage tanks was extinguished on Friday. (Editing by Tom Hogue) ========================= Kuwait and Saudi in new row over energy November 03, 2014 - 12:08:09 am KUWAIT CITY: Kuwait and Saudi Arabia are locked in a new energy row, this time over a jointly operated offshore natural gas field also shared with Iran, a newspaper reported yesterday. Citing Kuwaiti sources, Al-Rai newspaper said work at the Dorra field had been halted due to differences between the two countries over the routing of the gas they extract. The report said Saudi Arabia wants any Dorra gas to be pumped through Khafji and then divided between the two countries, and that Kuwait insists it should take its share directly from the field. Kuwait shares separately with Iran and Saudi Arabia the Dorra gas field, whose recoverable reserves are estimated at some 220 billion cubic metres (seven trillion cubic feet). Development of the part jointly owned with the Saudis has been frozen for a year, according to Al-Rai. The row comes a month after production at the offshore Khafji oilfield in a neutral zone between the two Arab states was halted last month, with Kuwaiti officials saying it was due to technical issues. However, trade unions and media outlets in Kuwait said that Saudi Arabia stopped production unilaterally because of differences between the two countries. Khafji is capable of producing 311,000 barrels of oil per day. Kuwait and Iran have been involved in unsuccessful talks for more than 10 years to demarcate their maritime border in the area. Dorra has long been a bone of contention between Kuwait and Iran, which also lays claim to part of the field. Kuwait agreed with Riyadh in 2000 to jointly develop the field they desperately need to satisfy their growing gas need. The Gulf emirate is rich in oil but needs the Dorra field because it lacks sufficient supplies of natural gas. ================== Does the US really need all the oil stashed in the Strategic Petroleum Reserve? October 27, 2014 Brian Scheid and Herman Wang On this week’s Capitol Crude podcast, Platts senior editors Herman Wang and Brian Scheid ask if the hundreds of millions of barrels of crude oil stashed away by the US government may indicate a hoarding problem. The Strategic Petroleum Reserve, hidden away in Louisiana and Texas, was born of an era of oil embargoes and shortages. But the Department of Energy is now reevaluating the SPR’s role in light of prolific domestic shale oil production. Find out how even the location of the reserves and type of oil in the SPR are being called into question ======================== Such a dramatic fall in the price of crude oil has global consequences. Who wins, who loses? http://econ.st/10LObTb pic.twitter.com/f6uM31fYaP Cheaper oil Winners and losers America and its friends benefit from falling oil prices; its most strident critics don’t Oct 25th 2014 | CAIRO, CARACAS, MOSCOW AND WASHINGTON | From the print edition IN EARLY October the IMF looked at what might happen to the world economy if conflict in Iraq caused an oil-price shock. Fighters from Islamic State (IS) were pushing into the country’s north and the fund worried about a sharp price rise, of 20% in a year. Global GDP would fall by 0.5-1.5%, it concluded. Equity prices in rich countries would decline by 3-7%, and inflation would be at least half a point higher. IS is still advancing. Russia, the world’s third-biggest producer, is embroiled in Ukraine. Iraq, Syria, Nigeria and Libya, oil producers all, are in turmoil. But the price of Brent crude fell over 25% from $115 a barrel in mid-June to under $85 in mid-October, before recovering a little (see chart). Such a shift has global consequences. Who are the winners and losers? The first winner is the world economy itself. A 10% change in the oil price is associated with around a 0.2% change in global GDP, says Tom Helbling of the IMF. A price fall normally boosts GDP by shifting resources from producers to consumers, who are more likely to spend their gains than wealthy sheikhdoms. If increased supply is the driving force, the effect is likely to be bigger—as in America, where shale gas drove prices down relative to Europe and, says the IMF, boosted manufactured exports by 6% compared with the rest of the world. But if it reflects weak demand, consumers may save the windfall. Today’s falling prices are caused by shifts in both supply and demand. The world’s slowing economy, and stalled recoveries in Europe and Japan, are reining back the demand for oil. But there has been a big supply shock, too. Thanks largely to America, oil production since early 2013 has been running at 1m-2m barrels per day (b/d) higher than the year before. Other influences are acting as a brake on the world economy (see article). But a price cut of 25% for oil, if maintained, should mean that global GDP will be roughly 0.5% higher than it would be otherwise. Some countries stand to gain a lot more than that average, and others, to lose out. The world produces just over 90m b/d of oil. At $115 a barrel, that is worth roughly $3.8 trillion a year; at $85, just $2.8 trillion. Any country or group that consumes more than it produces gains from the $1 trillion transfer—importers, most of all. China is the world’s second-largest net importer of oil. Based on 2013 figures, every $1 drop in the oil price saves it an annual $2.1 billion. The recent fall, if sustained, lowers its import bill by $60 billion, or 3%. Most of its exports are manufactured goods whose prices have not fallen. Unless weak demand changes that, its foreign currency will go further, and living standards should rise. Cheaper oil will also help the government clean up China’s filthy air by phasing out dirty vehicle fuels, such as diesel. Lighter fuels are dearer and, under current plans, drivers could pay up to 70% of the extra; lower prices will soften that blow. More generally, says Lin Boqiang of Xiamen University, lower prices should support the government’s efforts to reduce subsidies (it has already freed some gas prices, and electricity prices are expected to follow next year). The impact on America will be mixed because the country is simultaneously the world’s largest consumer, importer and producer of oil. On balance cheaper oil will help, but not as much as it used to. Analysts at Goldman Sachs reckon that cheaper oil and lower interest rates should add about 0.1 percentage points to growth in 2015. But that will be more than offset by a stronger dollar, slower global growth and weaker stockmarkets. Extracting oil from shale is expensive. So when the oil price drops, America is one of the places most likely to pull back (Arctic and Canadian tar-sands producers are even more vulnerable). According to Michael Cohen of Barclays, a bank, a $20 drop in the world oil price reduces American producers’ earnings before interest by 20%, and only four-fifths of shale reserves are economic to extract using current technology with Brent around $85. How quickly production will fall as a result, though, is unclear, since producers’ costs vary and some have locked in prices via hedging. The impact will also vary by region. “If I’m in California, it’s pretty clear-cut that this is a good-news story,” says Michael Levi of the Council on Foreign Relations, a think-tank. “If I were in North Dakota [the biggest shale-oil state], I would be a lot more nervous.” America is a net importer, so lower prices mean Americans get to keep more of their money and spend it at home. But the stimulative impact is less than it used to be, since imports are becoming less important, and oil is shrinking as a share of the economy. The Energy Information Administration, an independent government agency, expects net oil imports to drop to 20% of total consumption next year, the lowest share since 1968. In the early 1980s, when oil accounted for over 4% of GDP, a 1% price drop would boost output by 0.04%, says Stephen Brown of the University of Nevada, Las Vegas. That had fallen to 0.018% by 2008, and he reckons it is now about 0.01%. Cheaper oil could make more of a difference to monetary policy. Inflation expectations have become more stable since the 1980s, which means that the Fed feels less need to act when oil prices shift. But with inflation below its 2% target, it will fret that falling oil prices could be pushing expectations down, making it harder to keep inflation on target. It could decide to keep interest rates at zero for longer, or even extend its bond-buying programme (“quantitative easing”). Fears of deflation apply with greater force in Europe. Energy imports into the European Union cost $500 billion in 2013, of which 75% was oil. So if oil prices stay at $85, the overall import bill could fall to under $400 billion a year. But the benefits would be muted twice over. First, inflation in the euro zone is even lower than in America. Mario Draghi, the head of the European Central Bank, claims that 80% of its decline between 2011 and September 2014 was caused by lower oil and food prices. Oil at $85 could lead to deflation, provoking consumers to rein in spending further. Second, European energy policy is only partly to do with price and efficiency. Europeans are also trying to reduce dependence on Russia and to cut carbon emissions by turning away from fossil fuels. Cheaper oil makes these aims slightly harder to achieve. Reaping the benefits But one group of countries gains unambiguously: those most dependent on agriculture. Agriculture is more energy-intensive than manufacturing. Energy is the main input into fertilisers, and in many countries farmers use huge amounts of electricity to pump water from aquifers far below, or depleted rivers far away. A dollar of farm output takes four or five times as much energy to produce as a dollar of manufactured goods, says John Baffes of the World Bank. Farmers benefit from cheaper oil. And since most of the world’s farmers are poor, cheaper oil is, on balance, good for poor countries. Take India, home to about a third of the world’s population living on under $1.25 a day. Cheaper oil is a threefold boon. First, as in China, imports become cheaper relative to exports. Oil accounts for about a third of India’s imports, but its exports are diverse (everything from food to computing services), so they are not seeing across-the-board price declines. Second, cheaper energy moderates inflation, which has already fallen from over 10% in early 2013 to 6.5%, bringing it within the central bank’s informal target range. This should lead to lower interest rates, boosting investment. Third, cheaper oil cuts India’s budget deficit, now 4.5% of GDP, by reducing fuel and fertiliser subsidies. These are huge: along with food subsidies, the total is 2.5 trillion rupees ($41 billion) in the year ending March 2015—14% of public spending and 2.5% of GDP. The government controls the price of diesel and compensates sellers for their losses. But, for the first time in years, sellers are making a profit. As in China, cheaper oil should reduce the pain of cutting subsidies—and on October 19th Narendra Modi, India’s prime minister, said he would finally end diesel subsidies, free diesel prices and raise natural-gas prices. The International Energy Agency, an oil consumers’ club, reckons that the global cost of subsidising energy consumption (mostly in developing countries) is $550 billion a year. The fall in the oil price should reduce that, all else being equal, to about $400 billion. That means many countries face a choice: seize the moment to dismantle subsidies, or keep on handing out goodies that now cost less? Either way, they will benefit—by ending an economic distortion (though with some risk of a consumer backlash), or by reducing its fiscal cost for a while. The choice is particularly stark for oil importers in the Middle East (see chart). Energy subsidies cost Egypt 6.5% of GDP in 2014, Jordan 4.5%, and Morocco and Tunisia 3-4%. A 20% fall in the oil price would improve the fiscal balances of Egypt and Jordan by almost 1% of GDP, says the IMF. But, fears Mr Baffes, the efficiency gains may not be enough to persuade regimes, especially shaky ones, to cut subsidies that mostly benefit the politically influential middle classes. Many other countries are also wrestling with energy subsidies. Indonesia spends about a fifth of its budget on them. Gulf oil exporters are even more profligate: Bahrain spends 12.5% of GDP and Kuwait, 9%. Brazil wants a high oil price to attract investment to its ultra-deep offshore (pré-sal) oil reserves. But cheap oil is a boon to its farmers, and in the short term to Petrobras, its state-controlled oil firm, which has been forced to import at world prices and sell at a government-capped rate in order to keep inflation artificially low. For the first time in years, it is no longer making a loss on the imports it sells. Contrasting futures It might seem that the country which is the world’s largest exporter must lose out. With oil at $115 a barrel, Saudi Arabia earns $360 billion in net exports a year; at $85, $270 billion. Its budget has almost certainly gone into the red. Prince Alwaleed bin Talal, an influential businessman, called lower prices a “catastrophe” and expressed astonishment that the government was not trying to push them back up. But Saudi Arabia’s long-term interest may in fact be served by a period of cheaper oil. It can afford one, unlike most other exporters. Though public spending has risen in recent years, its foreign reserves have risen more. Net foreign assets were 2.8 trillion riyals ($737 billion) in August—over three years’ current spending. It could finance decades of deficits by borrowing from itself even if oil were cheaper than it is now. Over the past year production by non-OPEC countries, such as Russia and America, has risen from 55m b/d to 57m b/d. The Saudis might conclude that the main beneficiaries of dear oil have been non-OPEC members. Some of the new output is high-cost, unlike the Saudis’. A period of cheaper oil could drive some high-cost operators to the wall, discourage investment in others and let the Saudis regain market share. In the mid-1980s Saudi Arabia cut its output by almost three-quarters in an attempt to sustain prices. It worked and other countries cashed in—but the Saudis themselves suffered a big loss of revenues and markets. They see little reason to make such a sacrifice again. Blowing windfalls Saudi Arabia can survive low prices because, when oil was $100 a barrel, it saved more of the windfall than it spent. The biggest losers are countries that didn’t. Notable among these are three vitriolic critics of America: Venezuela, Iran and Russia. “However low the oil price falls,” Nicolás Maduro, Venezuela’s president, declared on October 16th, “we will always guarantee...the social rights of our people.” The reality is quite different. Hugo Chávez, his predecessor, dismantled a fund intended to squirrel away windfall oil profits, spent the money and ran up tens of billions of dollars in debt. That debt is now coming due. Earlier this month a hefty service payment took Venezuela’s foreign reserves below $20 billion for the first time in a decade. Every dollar off the price of a barrel cuts roughly $450m-500m off export earnings. By Deutsche Bank’s calculation, the government needs oil at $120 a barrel to finance its spending plans—higher than before the recent tumble. So, unlike other oil exporters’ budgets, Venezuela’s was already in trouble. Last year’s fiscal deficit was a reckless 17% of GDP. In response, the government printed bolívares, pushing inflation (even on official measures) over 60%. Industrial production is grinding to a halt and Standard & Poor’s, a ratings agency, downgraded Venezuela’s debt to CCC+ last month. Analysts have long thought it would move heaven and earth to avoid default—not least because it has overseas assets that creditors could seize and depends heavily on financial markets. But the “d” word is increasingly often heard. The impact of Venezuela’s oil-related travails may be felt beyond its borders. The country runs a programme called PetroCaribe, which provides countries in the Caribbean with cheap financing to buy Venezuelan oil. For Guyana, Haiti, Jamaica and Nicaragua annual deferred payments under PetroCaribe are worth around 4% of GDP. But it costs Venezuela’s government $2.3 billion a year. So if Venezuela decides to cut back on its largesse, the shock waves will be felt throughout the Caribbean. Iran is even more vulnerable than Venezuela. It needs oil at $136 a barrel to finance its spending plans, most of them inherited from the profligate and inefficient government of Mahmoud Ahmadinejad. Last year it spent $100 billion on consumer subsidies, about 25% of GDP. Sanctions mean it cannot borrow its way out of trouble. Hassan Rouhani, who took office last year, has re-established a degree of macroeconomic stability. The central bank said the economy grew in the second quarter of 2014 for the first time in two years. But he was elected on the promise of improving living standards. It is not yet clear whether lower oil prices will force further reforms, and increase pressure for a deal with America over Iran’s nuclear programme, or whether falling revenues will boost support for conservatives who are already making trouble for him. For Russia the impact will be less dramatic, at least at first. Its draft budget for 2015 assumes oil at $100 a barrel; below that, it will be harder for Vladimir Putin, the president, to keep his spending promises. Something similar happened when the oil price fell in the mid-1980s, leaving the indebted Soviet Union cash-strapped. But Russia now has reserves of $454 billion to cushion against oil-price fluctuations. More important, the rouble has fallen. Next year’s budget assumes a dollar is worth 37 roubles, so it balances with oil at 3,700 roubles. A barrel currently costs 3,600 roubles (a much smaller fall than the dollar price), because the currency has plunged 20% this year. With oil at $80-85 a barrel Russia would probably run a budget deficit of only about 1% of GDP next year. All the same, the country will suffer a slowdown. For years, real incomes rose, thanks to wage increases in the state sector. The increased spending went on imports made cheaper by a strong currency. So the slide in the rouble is cutting living standards by making imports dearer. Western sanctions have closed capital markets to Russian firms, even private ones. Business activity is waning. A senior finance-ministry official says the share of non-oil-and-gas revenues in the budget is shrinking, making Russia more dependent on oil. Some analysts think growth in 2015 will be just 0.5-2%, compared with about 4% a year in 2010-12. Inflation is 8%. Russia, it seems, is headed towards stagflation. For most governments—Venezuela’s is a possible exception—cheaper oil is likely to have a modest impact at first. Even Mr Putin may be able to ride out stagflation for a while. But over time, the consequences are likely to grow. The years of $100-a-barrel oil also saw the rise of a “Beijing consensus” towards more economic interventionism. Perhaps a period of $85 oil—if that were to happen—might usher in another shift in attitudes, assumptions and policies. Corrections: In an earlier version of this article we said that the oil price has fallen from $115 a barrel in mid-July. We should have said mid-June. This was corrected on October 23rd 2014. We also said that a $20 drop in the world oil price reduces American producers' profits by 20%. We should have said "earnings before interest". This was corrected on October 28th 2014. Sorry. ========== Strong Dubai, weak oil price put Saudi in dilemma November 01, 2014 - 7:19:46 am SINGAPORE: A strong Dubai price in a weak oil market has created a dilemma for top oil exporter Saudi Arabia as it works out official monthly selling prices for December. The largest Opec producer is expected to raise the December prices for most of the crude grades it sells to Asia when it notifies customers early next week. A hike would be in line with a strong Dubai market, but traders said that benchmark is not reflecting weak demand and poor refining margins in Asia. “It’s a tricky one this month,” said a trader with a Western firm. “They will go up, but by how much, I’m not sure, particularly as they have been very aggressive on securing market share.” Members of the Organisation of Petroleum Exporting Countries (Opec) — in no hurry to cut output despite global benchmarks at multi-year lows — have been competing on their official selling prices as they fight for market share, analysts said. Saudi Arabia slashed November prices last month, sparking talk of an emerging price war. For December, the kingdom could raise official selling prices (OSPs) across the board by at least $1 a barrel if it adheres to an informal formula typically used as a guide, a survey of five refiners and traders in Asia showed. The formula is loosely based on the average monthly changes in the spread between the first and third month Dubai cash prices and refining margins for oil products. “It’s a special situation. If you just call it, there should be a big jump,” a trader said. Cash Dubai flipped into what traders called an “artificial backwardation” supported solely by strong demand from China oil in a market assessment process in Singapore, even as Brent was in contango and has lost a quarter of its value since June. Prompt prices are higher than those in future months in a backwardated market, indicating strong spot demand. The reverse is true in a contango market. But Saudi Arabia may raise prices by a smaller than expected margin for December, traders said, as the producer could take into account weak spot demand in Asia, especially after the strength in Dubai snubbed out refining margin gains seen in September. A slump in naphtha cracks could also cap price hikes for light grades such as Arab Super Light and Arab Extra Light, traders said. “Refiners hope Saudi will consider not to reflect the distorted window market,” a trader with a North Asian refiner said, referring to deals revealed during pricing agency Platts’ market assessment process. Saudi crude OSPs are usually released by the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices. ========================================= 5 Biggest Risks Faced By Oil And Gas Companies By Andrew Beattie AAA | Whenever an investor approaches a new industry, it is good to know what the risks are that a company in that sector must face to be successful. General risks apply to every stock, such as management risk, but there are also more concentrated risks that affect that specific industry. In this article, we'll look at the biggest risks that oil and gas companies face. SEE: Measuring And Managing Investment Risk Political Risk The primary way that politics can affect oil is in the regulatory sense, but it's not necessarily the only way. Typically, an oil and gas company is covered by a range of regulations that limit where, when and how extraction is done. This interpretation of laws and regulations can also differ from state to state. That said, political risk generally increases when oil and gas companies are working on deposits abroad. Oil and gas companies tend to prefer countries with stable political systems and a history of granting and enforcing long-term leases. However, some companies simply go where the oil and gas is, even if a particular country doesn't quite match their preferences. Numerous issues may arise from this, including sudden nationalization and/or shifting political winds that change the regulatory environment. Depending on what country the oil is being extracted from, the deal a company starts with is not always the deal it ends up with, as the government may change its mind after the capital is invested, in order to take more profit for itself. Political risk can be obvious, such as developing in countries with an unstable dictatorship and a history of sudden nationalization - or more subtle - as found in nations that adjust foreign ownership rules to guarantee that domestic corporations gain an interest. An important approach that a company takes in mitigating this risk is careful analysis and building sustainable relationships with its international oil and gas partners, if it hopes to remain in there for the long run. SEE: Understanding Oil Industry Terminology Geological Risk Many of the easy-to-get oil and gas is already tapped out, or in the process of being tapped out. Exploration has moved on to areas that involve drilling in less friendly environments - like on a platform in the middle of an undulating ocean. There is a wide variety of unconventional oil and gas extraction techniques that have helped squeeze out resources in areas where it would have otherwise been impossible. Geological risk refers to both the difficulty of extraction and the possibility that the accessible reserves in any deposit will be smaller than estimated. Oil and gas geologists work hard to minimize geological risk by testing frequently, so it is rare that estimates are way off. In fact, they use the terms "proven," "probable" and "possible" before reserve estimates, to express their level of confidence in the findings. Price Risk Beyond the geological risk, the price of oil and gas is the primary factor in deciding whether a reserve is economically feasible. Basically, the higher the geological barriers to easy extraction, the more price risk a given project faces. This is because unconventional extraction usually costs more than a vertical drill down to a deposit. This doesn't mean that oil and gas companies automatically mothball a project that becomes unprofitable due to a price dip. Often, these projects can't be quickly shut down and then restarted. Instead, O&G companies attempt to forecast the likely prices over the term of the project in order to decide whether to begin. Once a project has begun, price risk is a constant companion. SEE: Uncovering Oil And Gas Futures Supply and Demand Risks Supply and demand shocks are a very real risk for oil and gas companies. As mentioned, operations take a lot of capital and time to get going, and they are not easy to mothball when prices go south, or ramp up when they go north. The uneven nature of production is part of what makes the price of oil and gas so volatile. Other economic factors also play into this, as financial crises and macroeconomic factors can dry up capital or otherwise affect the industry independently of the usual price risks. Cost Risks All of these preceding risks feed into the biggest of them all - operational costs. The more onerous the regulation and the more difficult the drill, the more expensive a project becomes. Couple this with uncertain prices due to worldwide production beyond any one company's control, and you have some real cost concerns. This is not the end, however, as many oil and gas companies struggle to find and retain the qualified workers that they need during boom times, so payroll can quickly rise to add another cost to the overall picture. These costs, in turn, have made oil and gas a very capital-intensive industry, with fewer and fewer players all the time. The Bottom Line Oil and gas investing isn't going anywhere. Despite the risks, there is still a very real demand for energy, and oil and gas fills part of that demand. Investors can still find rewards in oil and gas, but it helps to know the potential risks that go along with those potential rewards. SEE: 5 Common Trading Multiples Used In Oil And Gas Valuation Trade Like a Top Hedge Fund What can technical traders see that you don’t? Investopedia presents Five Chart Patterns You Need to Know, your guide to technical trading like the pros. Click here to get started, and learn how to read charts like an industry veteran. TAGS: Commodities Fundamental Analysis Microeconomics Oil & Gas Drilling & Exploration Risk Management Supply & Demand ============================================================== Saudi Arabia is not declaring a volume war (yet): Kemp Tue, Nov 04 20:13 PM EST By John Kemp LONDON (Reuters) - Saudi Aramco cut the price of December crude deliveries to U.S. refiners on Monday in order to protect its competitiveness amid an erosion of its U.S. market share by rival exporters such as Canada and Iraq. In August, U.S. crude imports from Saudi Arabia slipped below 900,000 barrels per day, according to the U.S. Energy Information Administration. With the exception of a brief period in 2009 and early 2010, Saudi exports to the United States fell to the lowest level since 1988 (http://link.reuters.com/jez33w). U.S. imports from Saudi Arabia in August were just 70 percent of the average level for the past ten years which has been around 1.3 million barrels per day. Saudi oil, which is priced at a differential to a U.S. sour crude marker, had become too expensive compared with alternatives available to U.S. refiners. So Saudi Aramco has been forced to cut the differentials for U.S. refiners by between 45 and 50 cents (depending on grade) per barrel even as it raised differentials for refiners in Europe and Asia. RIVAL EXPORTERS Some commentators have interpreted the U.S. price cuts as a signal the kingdom is initiating a deliberate price-war targeting U.S. shale producers. The reality is more complex. Most Saudi exports to the United States are much heavier and certainly sourer than the light sweet oils being produced from shale formations like North Dakota’s Bakken and Texas’ Eagle Ford. Aramco has therefore been spared head-to-head competition from rising U.S. shale output, which has mostly fallen on U.S. imports from West Africa. However, the company’s market share over the summer was hit by competition from Iraq, Venezuela, Brazil and Canada, so Aramco has cut its prices in the region to stabilize sales and buy back some of its lost share. OFFICIAL PRICES Saudi Aramco prices its crude sales against different benchmarks in the United States, Europe and Asia and applies a different set of differentials in each region to reach a final selling price . Past experience suggests differentials are primarily used to offset variations between the regional benchmarks to ensure Aramco’s crude sells at broadly the same price in each region. Final selling prices vary much less between the regions than the differentials themselves. For example, the differentials for Arab Medium grade delivered in December range by more than $4 per barrel from a discount of $5.00 in Europe and $1.60 in Asia to a discount of just 65 cents in the United States. But the outright prices (benchmark plus or minus the differential) currently range just over $2 between the most expensive region (Asia) and the cheapest (the United States). For Arab Light, the differentials vary by $4.95 per barrel, but outright sales prices currently vary by just $1.78. MARKETING STRATEGY Traders and refiners need liquid benchmarks to hedge their exposure to fluctuations in crude. But none of the benchmarks closely resembles the grades of oil marketed by Saudi Aramco, which is why the company has to apply large and variable monthly adjustments to its selling prices via the differentials. Saudi Aramco’s marketers attempt to ensure (1) refiners buy all the cargoes which the company has on offer and (2) sales prices in the three regions are broadly equalized. The first point is obvious. Saudi oil has to be priced competitively with other similar grades or refiners will buy something else instead. The second is more subtle. Saudi exports are protected against inter-regional arbitrage by destination clauses: oil sold to a refiner in the United States cannot be diverted and resold to a refiner in Asia. But other crudes can be arbitraged between the regions and so can the final products produced from refined oil. Refiners are all, to some extent, competing against one another in both the market for buying crude and in the sale of refined products. Aramco must price its crude to ensure its customers are not put at a competitive disadvantage in either market. While most Saudi oil is sold on long term contracts (with market-linked pricing) Aramco would rapidly lose customers if its oil proved to be expensive compared with other grades. The potential for arbitrage in both crude and product markets ensures that inter-regional differences in final selling prices are ordinarily no more than $2-3 per barrel. ARAMCO IS REACTIVE Changes in official selling prices are often interpreted as evidence of a “grand strategy” for market management by senior policymakers in Riyadh and Dhahran. For the most part, however, Saudi Aramco’s pricing strategy is reactive rather than proactive. The company adjusts differentials in response to current and forecast market conditions to maintain the competitiveness of its oil sales. At the margin, Saudi Aramco can adjust differentials to push slightly more oil into the market or hold sales back, as well as to alter the balance of sales between regions. But most of the changes in differentials are driven by the need to react to external events (such as refining demand and the availability of competing crudes) rather than Saudi strategy. The distribution of Saudi sales to the three regions displays a high degree of stability over time (in contrast to the differentials themselves). In the case of the United States, Aramco’s crude was too expensive in June, July and August, and export volumes slumped by almost 700,000 barrels per day. Like any other marketer, to reverse some of those losses, Aramco has cut its differentials to make its oil more attractive. The price cuts will intensify the competitive pressure on U.S. shale producers, but that is an indirect consequence of the policy, not its primary objective, which is to maintain market share. In any event, the Americas accounted for less than 20 percent of Saudi exports in 2013, according to the U.S. Energy Information Administration. In the much larger Asian market, which accounted for almost 70 percent of sales in 2013, where Aramco’s oil has been competitive, the company has actually boosted differentials for December sales by around $1 per barrel. Changes in differentials in the U.S. market are not a sign that Saudi Aramco is declaring a volume war on U.S. shale producers or other oil exporters (any more than differential increases in Asia signal the opposite). But that might be the unintended consequence if everyone tries to defend their market share. Sooner or later someone somewhere has to cut: whether it is the Saudis and OPEC, non-OPEC suppliers like Canada, U.S. shale producers, or all of them. (Editing by Clara Ferreira Marques) =============== Companies to benefit from low oil prices By Lee Wild | Fri, 14th November 2014 - 17:09 Falling oil prices have been bad news for the oil majors and junior explorers alike. Shares prices have tumbled and, according to a new article written by Interactive Investor's Harriet Mann, the immediate future looks bleak. But concerns about a deflationary spiral look wide of the mark, and outside of the oil industry, the drop in energy costs has been welcomed. In fact, JPMorgan reckons it equates to a tax cut for most of the world. Both West Texas Intermediate (WTI) and Brent Crude are down 25-30% from their June highs, and JPMorgan's commodity analysts reckon the price could slump further. Watch out for lows of $72 for WTI and $75 for Brent during the first quarter of 2015, they say, and do not expect any rebound in the average price in either 2015 - expected to be $77 and $82, respectively - or 2016. So, that's great for the consumer. Drivers are already paying less for petrol at the pump, and ongoing weakness in oil prices will boost real disposable incomes and purchasing power. Says JPM: Many may see the falling oil price as a "risk-off" indicator, a signal that demand is weakening. We note that this time around, however, the key driver of lower oil prices appears to be the spike in supply in addition to a strengthening US dollar index. This contrasts with '01 and '08, when poor oil demand drove the downside. Historically, a sharp fall in oil price tended not to be a precursor to a slowdown in activity, on the contrary. It's clear that cheap fuel is a tailwind for transport, airlines, automotive, retail, travel and leisure sectors, with disposable incomes likely to increase and transportation costs fall. JPM comes up with plenty of names it expects to do well from the slump. Its top dozen are: FirstGroup (FGP) - effective employment of fuel surcharges and active hedging activities mean net exposure of the sector to lower commodity prices is somewhat limited International Airlines Group (IAG) - Lower fuel prices provide significant expense savings for all airlines GKN (GKN) - From a longer-term view, lower oil prices could lead to higher demand for cars. Thomas Cook (TCG) - Fuel costs represent approximately 10% of the Tour Operators' cost base and hence lower oil prices should have a positive impact on the sector The rest are all European names - Electrolux, Inditex, Kuehne & Nagel International, Daimler, BMW, Lufthansa and DP World. Other potential stock beneficiaries JPM analysts also screened for the stocks, in oil sensitive sectors, which displayed the most negative correlation to oil prices. Of those, there are another dozen which JPM rates as 'overweight'. They are: British American Tobacco (BATS), EasyJet (EZJ), Persimmon (PSN), Inditex, Zodiac Aerospace, Safran (SAF), Bouygues, LVMH, Anheuser-Busch Inbev, Airbus, L'Oreal and ASML Holding. As you can see from the table below, other UK-listed companies which should do well out of cheap oil include Carnival (CCL), Reckitt Benckiser (RB.), Imperial Tobacco (IMT), BAE Systems (BA.), Next (NXT), Ryanair, (RYA) Bunzl (BNZL), Sainsbury's (SBRY), Dixons Carphone (DCC) and Marks and Sepncer (MKS). JPM's sector experts add ASOS (ASC) and SABMiller (SAB) to the list. This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. ------- Oil price crash has silver lining for Norway Fri Nov 14, 2014 7:07am EST inShare Share this Email Print RELATED NEWS Dollar rallies on U.S. data, stocks trade flat PRECIOUS-Gold down on drop in oil prices, bright US outlook IMF warns Russia's economy to suffer from falling oil prices Europe shares inch up; oil slump hits energy sector U.S. stocks slip from records; oil falls ANALYSIS & OPINION Time for a ‘melt-up’: the coming global boom Marginal oil producers, gold investors heed caution ahead of OPEC meeting RELATED TOPICS Stocks » Markets » Energy » * GDP may shed 1-2 pct over 2 years from low oil price * Non-oil sector benefits from currency fall * Labour market tension also eases * Budget does not rely on oil revenue By Balazs Koranyi and Ole Petter Skonnord OSLO, Nov 14 (Reuters) - Norway, Western Europe's top crude producer, looks set actually to benefit from the oil price crash as its energy sector is forced to relax its stranglehold over much of the economy and non-oil firms profit from more favourable business conditions. Although it generates almost a quarter of its GDP from oil and gas, about the same as Russia or Venezuela, Norway's economy remains surprisingly resilient, and even its oil industry has begun a readjustment towards lower costs that could extend the sector's lifetime. While Russia faces recession and Saudi Arabia a budget deficit if crude prices hold at four-year lows of $78 per barrel, the impact on Norway will be limited as it benefits from a weaker currency, which will ease conditions in the labour market, slow down wage growth, and halt offshore cost inflation. Norway is better placed than almost any other producer to deal with the current state of the oil market, cushioned against the crash by a mammoth fund of accumulated oil wealth worth $860 billion, or $170,000 per man, woman and child. That means its budget, which only spends the investment returns on the accrued oil wealth, is unaffected, and the government could even increase spending without running up debt. The low oil price could cut 1 to 2 percent from GDP over two years, economists say, but much of that will be made up by the rest of the economy. WIPED OUT "The silver lining is not even hidden, it's quite obvious," says Harald Magnus Andreassen, an economist at Swedbank. "The currency's fall has wiped out seven years of extra wage inflation." "This was a very convenient way for Norway to adjust the cost level," Andreassen said. "Had we done it the Greek way, with domestic devaluation like cutting wages, that would have been devastating for unemployment and consumption." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic on GDP vs oil price, click: link.reuters.com/rur43w For a graphic on unit labour cost in Europe, click: link.reuters.com/tym98v ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Norway's trade weighted currency has fallen more than 12 percent over the past two years, helping exporters without eating into consumption or seriously pushing up inflation. Norway's GDP excluding the offshore sector is seen growing nearly three times as fast as the euro zone this year and its unemployment rate is less than 3 percent, a quarter of Europe's. If people are worried about oil prices, it doesn't show. House prices are at record highs and Tesla's luxury Model S is one of the country's top-selling cars. And neither is the government holding back with subsidies -- aid to dairy farmers in the Arctic is running at five times the European Union level. OIL BOOM The oil boom has been blamed for hijacking the economy, pushing Norway's unit labour costs to twice the EU average. The booming oil sector has sucked the labour market dry, leaving many firms unable to find workers. That could now change as oil prices fall and workers are no longer attracted into the energy sector. "The cooling of the labour market will give us access to good and clever people and that's not a negative," says Arne Moegster, the CEO of fish farmer Austevoll. The oil price crash may also revive some energy projects that have lain dormant due to rising costs. "This is actually a good crisis to have," SAID Karl Johnny Hersvik, CEO of oil producer Det Norske. "We have seen immense increases in costs ... and the challenge is to be very rapid and proactive bringing them down again." Statoil, Norway's top producer, has taken the lead, cutting engineering costs by telling contractors to combine work on projects. Costs in the oil and gas sector, which only last year were expected to rise by a fifth over the next five years, are now seen as broadly flat over the period, according to the industry's lobby group. The biggest drawback for the economy may be the lack of pressure on the government to rein in the budget, where spending of saved-up oil money will be $20 billion more than in 2007. The government says some welfare spending is unsustainable and Norway must follow Sweden and Denmark in trimming the welfare state. It has even a proposed a timid cut for next year but that has caused public uproar and hurt the government in opinion polls, possibly halting its reform efforts. (Additional reporting by Stine Jacobsen, Alister Doyle, and Joachim Dagenborg; Editing by Giles Elgood) FILED UNDER: STOCKSMARKETSENERGY Tweet this Link this Share this Digg this Email Print Reprints Sponsored Links by Taboola From The Web SHOCKING: New Snoring Research My Snoring Solution How People are Paying Next To Nothing For New iPads Swoggi The 3 Most Effective Hand Gestures in Public Speaking Prezi BHP Deal Adds Pressure To U.S. Crude Oil Export Ban Investors.com Tortilla Brunch Bake Recipe Kraft Recipes Is There A Natural Way To Reduce the Symptoms of Herpes? The Ultimate Herpes Protocol #1 University in the World Universities.AC Is It Possible That Alzheimer's Can Be Reversed? The Brain Stimulator ===================== At the Wellhead: A drop in the price of oil is not all good news for China By Yen Ling Song | November 17, 2014 12:01 AM Comments (0) Conventional wisdom is that China, with its growing import dependence, would be nothing but “thumbs up” for the recent decline in oil prices. But as Song Yen Ling notes in this week’s Oilgram News column, At the Wellhead, conventional wisdom might not have the whole story. ————————– Low oil prices are bullish for a large energy consumer like China—end-users at the pump are enjoying fuel prices that are at four-year lows—but Chinese state oil companies that have sizeable upstream and downstream operations are not entirely happy. On the one hand, refineries are getting squeezed as they process crude purchased months ago at closer to $100/b, but sell oil products at regulated prices that are being continuously adjusted downward in line with a pricing formula introduced in March 2013 wherein oil product prices in the country track international crude prices. On the other hand in the upstream segment, the companies are suffering even more as margins erode, production gains face hurdles and M&A activity wanes. Bernstein Research projects that if the price of Brent crude averages $80/barrel next year, PetroChina, the listed subsidiary of largest upstream company China National Petroleum Corp., would see its profit decline by some 54% compared with profits at a Brent price of $105/b. China National Offshore Oil Corp., the country’s monopoly offshore producer, would likely see a 45% fall in profit while Sinopec’s income would decline by 37% under the same conditions. Although China’s appetite for imported crude has long dominated headlines, the country also has sizeable domestic production—currently stable at just a little over 4 million b/d—making it the world’s fourth largest oil producer behind Russia, Saudi Arabia, and the US. Bernstein estimates China’s domestic crude output would fall by 1.5% at a 2015 Brent price of $80/b because state-owned companies’ cash flows from their upstream operations would be insufficient to cover the cost of developing and replacing reserves. PetroChina expects its output to grow 1.3% next year, but persistent oil price weakness could pose significant challenges in hitting that target, Nomura Research noted last week, after an update from the company at an investor briefing. A sustained drop in oil prices would risk current production, as many of China’s oilfields are aging and require more investment for enhanced recovery, while others are geologically complex, such as tight oil basins, and are relatively more costly to develop. ————————– Reminder of Japan's dire situation which I posted last week. Govt-to-GDP debt at 227%, total debt ¥1.197 Quadrillion ============= At the Wellhead: A drop in the price of oil is not all good news for China By Yen Ling Song | November 17, 2014 12:01 AM Following the government’s exhortations for reform of state-owned enterprises, Sinopec and PetroChina cut their capital expenditures early this year to prove they were serious about change. The idea is to move the focus away from revenue and concentrate more on profitability and return on investment. The focus on value over volume and capex cuts meant Chinese oil majors’ M&A activity fell off this year. PetroChina’s total capital expenditure from January to September slipped 6.3% year on year to Yuan 188.9 billion ($30.9 billion) and the company in March said that it aims to reduce its 2014 capex by 7% to Yuan 296.5 billion. Rival Sinopec, Asia’s largest refiner, has pegged spending at Yuan 161.6 billion this year, a 4.2% decrease from 2013. Sinopec’s total capex over January-September fell 20% from a year ago to Yuan 69.4 billion, slightly more than half of which was devoted to the upstream segment. According to government sources, China’s total equity oil and gas production from overseas assets now exceeds 2 million b/d of oil equivalent—a direct consequence of its prior heavy investments. But many acquisitions that were executed when oil was at $110/b, may appear less attractive now that oil prices are near $80/b and reflect poorly on the buyers. Overseas oil and gas acquisitions this year have also dried up significantly despite the lower oil prices pulling down the cost of assets. The only major deal to be disclosed was Sinopec’s buyout of its joint venture partner Lukoil’s 50% stake in Kazakhstan’s Caspian Investment Resources for $1.2 billion in April. CNPC in September acquired a 10% interest in the Rosneft-operated Vankor oilfield in East Siberia, although no transaction value has been released. In stark contrast, China’s overseas oil and gas deals last year amounted to at least $19 billion, while in 2012 CNOOC’s $15.1 billion purchase of Canada’s Nexen pushed M&A values to some $23 billion. CNOOC is now in consolidation mode following the acquisition. Unlike its compatriots, the company’s capital expenditure has risen 24.4% this year to Yuan 74.4 billion, largely because it has numerous upstream development projects in the pipeline. While Nexen provided significant inorganic growth, CNOOC’s average operating expenditure has also risen and analysts say margins will continue to be squeezed, particularly if development of unconventional resources, such as oil sands, is accelerated. — Song Yen Ling in Singapore ===================== Saudis block OPEC output cut, sending oil price plunging Thu, Nov 27 15:53 PM EST image 1 of 2 By Alex Lawler, David Sheppard and Rania El Gamal VIENNA (Reuters) - Saudi Arabia blocked calls on Thursday from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to a fresh four-year low. Brent oil fell more than $6 to $71.25 a barrel after OPEC ministers meeting in Vienna left the group's output ceiling unchanged despite huge global oversupply, marking a major shift away from its long-standing policy of defending prices. This outcome set the stage for a battle for market share between OPEC and non-OPEC countries, as a boom in U.S. shale oil production and weaker economic growth in China and Europe have already sent crude prices down by about a third since June. "It was a great decision," Saudi Oil Minister Ali al-Naimi said as he emerged smiling after around five hours of talks. OPEC said in a statement that members had agreed to roll over the ceiling of 30 million barrels per day, at least 1 million above OPEC's own estimates of demand for its oil next year. "It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market’s turn to dictate prices and they will certainly go lower," said Dr. Gary Ross, chief executive of PIRA Energy Group. The wealthy Gulf states have made clear they are ready to ride out the weak prices that have hurt the likes of Venezuela and Iran - OPEC members which face big budget pressures, but cannot afford to make cuts themselves. Venezuela and Algeria had calling for output cuts of as much as 2 million bpd. Venezuelan Foreign Minister Rafael Ramirez said he accepted the decision as a collective one and hoped that lower prices would help drive some of the higher-cost U.S. shale oil production out of the market. "In the market, some producers are too expensive," he said. The OPEC statement made no mention of any need for members to stop overproducing, nor of any extraordinary meeting to reconsider the ceiling before a regular session next June. BATTLE OVER MARKET SHARE The Organization of the Petroleum Exporting Countries accounts for a third of global oil output. Gulf producers could withstand for some time a battle over market share that would drive down prices further, thanks to their large foreign-currency reserves. Members without such a cushion would find it much more difficult, as would a number of producers outside the group. Russia's rouble, which has been sliding for much of this year, extended losses on Thursday to trade more than 2 percent lower than the previous close against the U.S. dollar. Russia is already suffering from Western sanctions over its actions in Ukraine and needs oil prices of $100 per barrel to balance its budget. A price war might make some future U.S. shale oil projects uncompetitive due to high production costs, easing competitive pressures on OPEC in the longer term. "Why would Saudi cut production in the current environment? Why would they want to support Iran, Russia or U.S. shale producers? So they must have decided: let the market establish the price. Once the market goes to a new equilibrium, prices will go higher," PIRA Energy's Ross said. Kuwaiti Oil Minister Ali Saleh al-Omair said OPEC would have to accept any market price of oil, whether it were $60, $80 or $100 a barrel. Iraq's oil minister, Adel Abdel Mehdi, said he saw a floor at $65-70 per barrel. "We interpret this as Saudi Arabia selling the idea that oil prices in the short term need to go lower, with a floor set at $60 per barrel, in order to have more stability in years ahead at $80 plus," said Olivier Jakob from Petromatrix consultancy. "In other words, it should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States." (Additional reporting by Amena Bakr and Shadia Nasralla; Writing by Dmitry Zhdannikov; Editing by Dale Hudson, David Stamp and Robin Pomeroy) ==EDITION:U.S. SIGN INREGISTER HOME BUSINESS MARKETS WORLD POLITICS TECH OPINION BREAKINGVIEWS MONEY LIFE PICTURES VIDEO HAPPENING NOW: Black Friday live coverage Some fund managers see oil falling to $60 without OPEC cut BY CLAIRE MILHENCH LONDON Mon Nov 24, 2014 7:30pm EST inShare 22 Share this Email Print A OPEC flag is seen during the presentation of OPEC's 2013 World Oil Outlook in Vienna , November 7, 2013. CREDIT: REUTERS/LEONHARD FOEGER RELATED VIDEO OPEC ministers vs. themselves OPEC will keep production targets-Platt's Bambino RELATED NEWS UAE says OPEC will take 'appropriate decision': WAM ANALYSIS & OPINION The first cut may not be the deepest India Markets Weekahead: Ride the bull with a finger on the ejector button RELATED TOPICS Money » (Reuters) - Some commodity fund managers believe oil prices could slide to $60 per barrel if OPEC does not agree a significant output cut when it meets in Vienna this week. Brent crude futures LCOc1 have fallen by a third since June, touching a four-year low of $76.76 a barrel on Nov. 14. They could tumble further if OPEC does not agree to cut at least one million barrels per day (bpd), according to some commodity fund managers' forecasts. "The market would question the credibility of OPEC and its influence on global oil markets if there was no cut," said Daniel Bathe, of Lupus Alpha Commodity Invest Fund. That could send Brent down to around $60, Bathe said. "Herding behaviour and a shift to net negative speculative positions should accelerate the price plunge," he said. Yet fund managers and brokerage analysts are divided over whether OPEC will reach an agreement on cutting output. Bathe put the likelihood at no more than 50 percent. Oil prices have been falling since the summer due to abundant supply, partly from U.S. shale oil, and because of low demand growth, particularly in Europe and Asia. As a result, some investors believe a small cut of around 500,000 bpd would not be enough to calm the markets. Doug King, chief investment officer of RCMA Capital, sees Brent falling to $70 per barrel even with a cut of one million bpd. "With this, I would expect lower prices in the first half of 2015," he said. If OPEC fails to agree a cut, prices will drop "further and quite quickly", with U.S. crude CLc1 possibly sliding to $60, he said. U.S. crude closed at $76.51 on Friday, with Brent just above $80. 'OIL WAR' With member states struggling to balance budgets, many OPEC countries will be pushing for an output cut when OPEC meets in Vienna on Nov. 27. "Prices below $80 are putting significant strain on the cartel's weakest members such as Venezuela," said Nicolas Robin, a commodities fund manager at Threadneedle. He said a bigger cut, of one million bpd or more, was an "outlier scenario" but said such a move could rapidly push prices above $85. "A move higher would likely be accelerated by the lack of liquidity owing to the U.S. (Thanksgiving) holiday next week," Robin added. Doug Hepworth of Gresham Investment Management said bigger cut was needed to lift prices. "A surprise significant cut, say of 2 million bpd, is needed to push prices back up to $80. And that would have to be accompanied by some newfound discipline in the non-Saudi members," Hepworth said. The market has been awash with conspiracy theories as to why Saudi Arabia has not already intervened. New York Times columnist Thomas Friedman hinted at "a global oil war under way pitting the United States and Saudi Arabia on one side against Russia and Iran on the other". Hepworth argued that Saudi Arabia appeared pretty happy with current pricing levels and suggested they were waiting to see where the cut-off point for U.S. production was. "Time is on their side, they can afford to wait," he said, stressing he was talking months, not years, but added if oil fell below $70 that waiting time "shrinks to weeks". Tom Nelson, of Investec Global Energy Fund, said he believed Saudi Arabia had allowed the price to fall to incentivise smaller OPEC producers, which often rely on the biggest producer to intervene, to join Riyadh in cutting output. "They (the Saudis) want to cut but they don't want to cut alone," Nelson said, adding that a cut of between one million and 1.5 million bpd should be sufficient to balance the market. "The market really wants to see that OPEC is still functioning ... if there is a small cut, with an accompanying statement of coherence from OPEC that presents a united front, and talks about seeing demand recovery, and some moderation of supply growth, then Brent could move up to $80-$90." (Additional reporting by Eric Onstad; editing by Robin Pomeroy and Jason Neely)