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RE: OPEC, for some quiet moments.. - admin - 03-20-2015

After spending more than five years and billions of dollars trying to re-create the U.S. shale boom overseas, some of the world’s biggest oil companies are starting to give up amid a world-wide collapse in crude prices.

Oil Giants Break Their Picks Trying to Crack Non-U.S. Shales - WSJ

Oil supplies at Cushing, Oklahoma, the delivery point for U.S. futures contracts, surged to a record last week, fueling speculation that prices already at a six-year low will fall further as the nation’s storage tanks fill up. Stockpiles rose 2.87 MMbbl in the seven days ended March 13 to 54.4 MMbbl, the Energy Information Administration said Wednesday. That’s the highest since the agency began tracking inventories at the hub in 2004. Cushing supplies have soared 69% this year as the shale boom boosted U.S. production to the highest in three decades.

Oil supplies at record in Cushing signal lower U.S. prices

Saudi Arabia’s crude oil exports rose 7.8% in January to the highest level in 11 months, according to the Joint Organisations Data Initiative. The world’s biggest oil exporter shipped 7.47 MMbpd in the month compared with 6.93 MMbpd in December, data posted Wednesday on the initiative’s website showed. Shipments increased to the highest since February 2014, the data showed.

Saudi crude exports in January reached highest in 11 months

Oil prices fell once again Thursday, after a minister from the Organization of the Petroleum Exporting Countries (OPEC) said the group did not have a choice with regards to cutting oil production because it did not want to lose its global market share.

OPEC oil minister: We 'have no choice' on output - Yahoo Finance

RE: OPEC, for some quiet moments.. - admin - 03-22-2015

Energy entrepreneur Boone Pickens said Thursday he sees $70-a-barrel oil by year's end, and between $80 and $90 within 12 to 18 months. In an interview on CNBC "Squawk Box," Pickens said U.S. producers are in the process of rebalancing the market—pointing to the decline rig count in response to the continued collapse in crude prices.

Boone Pickens: Why I see $70 oil by year's end

Oil companies, expecting prices to rebound after the biggest drop in six years, have come up with an alternative to storing their crude in tanks: They’re keeping it in the ground. It’s a new twist on an old oil-trading technique, known as a contango storage play, in which a trader buys cheap crude in an oversupplied market and saves it to lock in profits at higher future prices. Operators, who have spent millions drilling holes through petroleum-rich shale rock are just waiting for prices to go up before turning on the spigot.

Shale operators storing oil underground, waiting for price recovery

ConocoPhillips Chairman and CEO Ryan Lance delivered an energy policy speech at the U.S. Chamber of Commerce Tuesday that appealed to the congressional and executive branches of federal government to lift the outdated and economically constraining national ban on crude oil exports.

Oil exports could sustain benefits of U.S. energy renaissance, ConocoPhillips CEO says

The Fed believes oil's decline is "transitory" but the steep drop since mid-summer is having a long and far-reaching impact. The macroeconomic and geopolitical affects are fairly obvious and have been widely discussed. Less well known and a step beneath the surface, the fallout includes:

Oil's "transitory" fall starting to have long-lasting impact - Yahoo Finance

Dennis Gartman has bad news for oil: It's going to go "stunningly" lower. In an interview Thursday with's "Futures Now," the Commodities King said that a combination of a rapidly rising inventories and a strong dollar could lead to $15 oil by the end of the year.

Dennis Gartman: Crude could hit $15. Here's why

RE: OPEC, for some quiet moments.. - admin - 03-23-2015

Along with the rest of the energy world, we have been closely tracking rig counts (now down 40 percent from last fall) and other data to try to determine where the oil markets are heading. This week, the Energy Information Administration reported that production is finally set to decline in several key U.S. shale regions; a long-awaited development. The Eagle Ford, Bakken, and Niobrara shales are expected to see a combined 24,023 barrel-per-day decline in production in April, the first significant dip in output

Global Shale Revolution On Hold

The part of the U.S. oil industry devoted to extracting tight oil from deep shale reservoirs in places such as North Dakota and Texas has made the United States the world's "swing producer." A swing producer is a country or territory that has large production in relation to the total market, substantial excess capacity and the ability to turn its capacity on and off quickly in response to market conditions. The term makes the U.S. oil industry sound powerful and important. And, while the U.S. industry remains an important player in the world--third in production behind Russia and Saudi Arabia--it is most definitely not powerful in the sense that the moniker "swing producer" would imply.

U.S. Shale A Marginal, Not Swing Producer

After years in the works, the White House will finally release rules on Friday to regulate hydraulic fracturing more commonly known as fracking, according to The Wall Street Journal. But the rules will only apply to fracking done on federal lands, which account for 11 percent of the natural gas and 5 percent of the oil used in the U.S., the Journal notes. (And not all of that gets extracted through fracking, which involves shooting enormous volumes of water into the ground to free up hydrocarbons.) States are still in charge of most of America’s fracking.

Why the new federal fracking rules won’t change much about fracking in America | Fusion

Energy companies and those relying heavily on international sales are expected to be the biggest drag on earnings this coming season as the S&P 500 Index is forecast to see its year-over-year quarterly earnings decline for the first time in nearly six years.

Energy companies and exporters expected to drag on S&P earnings - MarketWatch

RE: OPEC, for some quiet moments.. - Putncalls - 03-23-2015

It looks to me like the Sauds are standing firm on their decision to NOT decrease production or increase capacity. I think this means that the US producers limit their production as the rules of capitalism dictate.

RE: OPEC, for some quiet moments.. - admin - 03-23-2015

OPEC will not take sole responsibility for propping up the oil price, Saudi Arabia's oil minister said on Sunday, signaling the world's top petroleum exporter is determined to ride out a market slump that has roughly halved prices since last June.

OPEC won't bear burden of propping up oil price: Saudi minister - Yahoo Finance

Saudi Arabia’s Oil Minister Ali al-Naimi is “optimistic” about the oil market and the world’s biggest exporter is pumping about 10 million barrels of crude a day, close to the record amount produced in 2013. Saudi Arabia is able to meet demand from any customer, al-Naimi said at a conference in Riyadh, Saudi Arabia, on Sunday. While global demand for oil is improving, there isn’t enough need to raise the nation’s production capacity beyond its current level of 12.5 million barrels a day, he said.

Saudi’s Naimi Optimistic on Oil With Output Close to Record High - Bloomberg Business

The biggest retreat from U.S. oil fields on record is showing signs of subsiding. Oil explorers sidelined 41 rigs this week, the smallest drop in three weeks and down from the average 59-rig decline in February. The count has fallen for 15 straight weeks to 825, reaching the lowest level in more than five years, Baker Hughes said on its website Friday.

Smallest U.S. oil rig drop in 3 weeks shows retreat losing steam

U.S. Sen. Lisa Murkowski, R-Alaska, has stressed the economic and national security benefits of ending the 1975 federal ban on exporting domestically produced crude oil at a hearing before the Senate Energy and Natural Resources Committee.

Ending U.S. oil export ban holds economic, geopolitical benefits, Murkowski says

RE: OPEC, for some quiet moments.. - admin - 03-24-2015

The next big threat to oil prices isn’t from OPEC or Bakken shale. It’s Russian samovars, or teapots. Simple refineries that process crude into fuel oil are scaling back, because when oil prices slump, the government reduces the discount that these refiners—known as teapots to those in the industry—get for exporting fuel. They use less crude, freeing it up for sale abroad, which in turn adds to the global glut.

Russian teapots pose next big threat to global oil prices

Some of my best friends live in Texas. However, I’ve misjudged them so far. I didn’t expect that they would continue to pump more and more crude oil despite the plunge in oil prices and the freefall in the US oil rig count. Let’s drill down and see what we find: (1) US production. US crude oil field production rose to another new high of 9.4mbd during the 3/13 week, with output still rising in both Texas (to 3.9mbd) and North Dakota (to 1.2mbd).

These 4 things are weighing on oil prices - Business Insider

Schlumberger Ltd, the world's No.1 oilfield services provider, said it expects the oil and gas industry's spending internationally on exploration and production to drop by 10-15 percent in 2015.

Oil giant Schlumberger says an oil price spike is right around the corner - Business Insider

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.

Oil drops as Saudi output nears record, China demand worries drag - Yahoo Finance

RE: OPEC, for some quiet moments.. - admin - 03-25-2015

Remarkable table!

If the U.S. export ban were removed, U.S. companies would make more money per barrel for a short time until the extra U.S. supply pushed down the price of world oil even further.

The biggest problem with making an economic argument to lift the oil export ban is that U.S. tight oil companies were losing money at WTI oil prices of more than $90 per barrel. The table below summarizes 2014 year-end financial data from the oil-weighted U.S. land-based companies that I follow.


Summary table of 2014 year-end financial data from oil-weighted U.S. land-based E&P companies. All dollar amounts in millions of U.S. dollars. FCF=free cash flow; CF/CE=cash flow from operations/capital expenditures. Source: Google Finance and Labyrinth Consulting Services, Inc.

(Click image to enlarge)

The table is ordered by 2014 FCF (free cash flow: cash from operations minus capital expenditures). Only 3 of the sampled companies had positive free cash flow in 2014. All the rest spent more money than they earned.

Lifting The U.S. Oil Export Ban Is No Solution To Low Oil Prices

RE: OPEC, for some quiet moments.. - Thylacine-2 - 03-25-2015

With relatively cheap and almost unlimited financing available, it was common for companies to chose a high growth strategy, expanding operations on borrowed money rather than limiting capex to a rate which could be covered by free cash flow.

It may be a bit misleading to say everybody with CF/CE <1 was losing money at $90 oil. Some were accumulating debt they could never repay at $90 oil. Others could have come out OK if $90 oil had endured.

RE: OPEC, for some quiet moments.. - admin - 03-25-2015

Oil won’t rebound to $100/bbl because increased prices would draw more shale and other output from higher-cost producers to the market, said Mohammed al-Madi, Saudi Arabia’s governor to OPEC.

Return to $100 oil seen unlikely by Saudis amid shale surge

Sempra Energy’s subsidiary, Port Arthur LNG, has requested that the Federal Energy Regulatory Commission (FERC) initiate the pre-filing review for the company's proposed Port Arthur LNG natural gas liquefaction and export facility in Port Arthur, Texas. The proposed liquefaction project is designed to include: two natural gas liquefaction trains with a total export capability of approximately 10 mtpa, or 1.4 Bcfgd; two 160,000-m3 storage tanks; marine facilities for vessel berthing and loading; natural gas liquids and refrigerant storage; feed gas pre-treatment; truck loading and unloading areas; and combustion turbine generators for self-generation of electrical power.

Sempra Energy submits Port Arthur facilities for pre-file review with FERC

By restricting capital spending to their highest-return assets and reducing development activity,” oil and gas companies are trying to preserve liquidity, Moody’s explained last week: in aggregate, E&P companies will cut 2015 capital expenditures by 41%.

The US oil bust is getting uglier - Business Insider

Oil storage capacity continues to deplete. Storage levels at Cushing, Oklahoma, home to the crucial WTI benchmark, are at record levels. As of March 13, Cushing oil inventories hit 54.4 million barrels, the highest ever, according to the Energy Information Administration. That means that Cushing’s storage is now 77 percent full, up from just 27 percent in October 2014.

Three Triggers That Will Send Oil Crashing Again - Yahoo Finance

RE: OPEC, for some quiet moments.. - Thylacine-2 - 03-26-2015

This statement doesn't account for the time lag for increased prices to draw more production to the market. The current collapse in oil prices could very well lead to a lack of supply in 2016-17 and a price substantially higher than $100/bbl. Perhaps a price high enough to damage the world economy.