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OPEC, for some quiet moments..
The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world. The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad. It also issued a long-awaited document outlining exactly what kinds of oil other would-be exporters can ship.

There's A New Front In The Battle For Oil Market Share - Business Insider

The Obama administration’s move to allow exports of ultralight crude without government approval may encourage shale drilling and thwart Saudi Arabia’s strategy to curb U.S. output, further weakening oil markets, according to Citigroup Inc.

U.S. opening door to more oil exports seen foiling OPEC strategy

Natural Gas Prices to Fall 30% Next Year: Sikorski

Natural Gas Prices to Fall 30% Next Year: Sikorski - Businessweek

When turmoil hits the Middle East, one of the first questions everyone asks is: "How much oil is at risk?" Before prices crashed again, oil was actually rallying for a little while on Monday. News outlets and energy pundits were quick to attribute the early upward moves to Libya, where a rocket attack caused an oil storage tank fire. Turmoil in the region could lead to a disruption in oil supply. Because Libya is known to be a big player in the oil markets, this was a decent rationale. But how big a player is Libya really? It's about 1% of total global oil production.

MAP: Middle East Energy Production, Chokepoints - Business Insider


North Sea Brent crude oil at $60 a barrel or lower means oil-linked LNG supplies are heading almost below contracts priced at the US benchmark Henry Hub when liquefaction and shipping costs to Asia are added.

LNG Journal - THIS WEEK: The $60-a-barrel oil question hangs over LNG market and future projects - LNG Journal

Keppel Shipyard, a unit of Keppel Offshore & Marine, said it has secured a firm contract from Golar Gimi Corporation, a Golar LNG unit, to perform the conversion of a second Moss LNG carrier, the Gimi, into a floating liquefaction vessel.  The contract, which has become effective, is worth approximately US$705 million.

Keppel bags second FLNG vessel conversion for Golar LNG | LNG World News

As LNG contract prices are typically based on the average of the preceding six to nine months, it will be mid-2015 before suppliers feel the full effects of the low oil price on their cash flow. According to Wood Mackenzie, currently, Asian contract prices sit around US$16/mmbtu – relatively high compared to spot which is trading in the region of US$10/mmbtu. This will provide an incentive to buyers to reduce contract supply and increase demand for spot LNG which could drive the price close to the cap set by oil prices.

WoodMac sees oil slump having numerous effects on Asian LNG | LNG World News


The U.S. shale boom is connecting markets and changing the way oil and gas is bought and sold, according to BP Plc’s trading unit. Understanding one commodity in a region is no longer enough, Carol Howle, head of global oil Europe and finance at BP Integrated Supply & Trading, said in an interview. Change in trade flows will come as the U.S. turns from an importer of LNG to an exporter and liquefied petroleum gas export capacity increases, she said.

U.S. shale boom is making energy trading more global, BP says

There was an energy story that stood head and shoulders above all the rest in 2014, but no clear runner-up. After the #1 entry on the list below, the rest of the Top 10 is highly debatable. I don’t think there is a consensus #2 story, and I don’t believe there is a well-defined Top 10. But I do believe there is a clear #1. Here are my choices for the Top 10 energy stories of 2014, followed by about 15 more that could have easily been on the list. Feel free to chime in with any major stories I have missed.

Top 10 Energy Stories of 2014

Low oil prices today may be setting the world up for an oil shortage as early as 2016. Today we have just 2% more crude oil supply than demand and the price of gasoline is under $2.00/gallon in Texas. If oil supply falls too far, we could see gasoline prices doubling within 18 months. For a commodity as critical to our standard of living as oil is, it only takes a small shortage to drive up the price.

Energy Crisis As Early As 2016

Typically whenever crude prices fall, the LNG market is one of the first to feel the pain and projects that looked good with higher oil prices suddenly get a second look. Evidence of that was in hand in early December when the Petronas-backed Pacific NorthWest LNG Company said, without mincing words, it was putting on the back burner a much-awaited final investment decision on its greenfield export facility in British Columbia.

New Frontiers: Canada’s LNG projects get a sharp dose of reality « The Barrel Blog


Currently, oil is deeply entrenched into bearish territory and has fallen below the $60-a-barrel level following OPEC’s decision to hold production unchanged, the effects of booming shale supplies in North America and a stagnant European economy. Moreover, a stronger dollar has made the greenback-priced commodity more expensive for investors holding foreign currency. The cut in global crude demand growth by major energy consultative bodies has put the final nail in the coffin.

How long will oil & gas weakness persist?

The health of the Saudi economy -- and some would argue, the viability of the Saudi state itself -- remains extremely dependent on oil. Despite numerous initiatives and billions of dollars spent on efforts to diversify the Saudi economy, oil proceeds continue to account for 90% of export earnings, approximately 80% percent of government revenues and about 40% of GDP.

The real story behind Saudi Arabia's oil games - Dec. 31, 2014

"Prices are already approaching the danger point for the bulk of U.S. shale output, so industry costs would have to fall for prices to be sustainable at these lower levels," Melanie Debono, economist at Capital Economics, said in the consultancy's accompanying note.

Could 2015 herald a 'new oil order'?


Daniel Franklin, Executive Editor at “The Economist” thinks cheap oil will stick around for the most part: “At least for a while lower prices set in. I think for the horizon of 2015 we’re looking at an adjustment to a world of cheaper oil prices and lower investment.” This is good news for consumers.

Cheaper oil will benefit the world...for now - Yahoo Finance

OPEC revenues were down to $700 billion in 2014 (excluding Iran) and the EIA’s Short-Term Energy Outlook is predicting an even more precipitous drop to an annual rate of $446 billion in January, which will be the lowest since 2004.

OPEC Revenues down to $700 Billion | RealClearEnergy

BP is set to lose hundreds of millions of dollars in earnings and dividend income from Rosneft, Russia’s state-owned oil company, as a result of the plunge in crude prices and financial turmoil that has sent the rouble tumbling.

BP suffers as oil price and Russia crisis weigh on Rosneft stake -

Just two months ago, Continental Resources Inc., the shale driller founded by billionaire Harold Hamm, budgeted for $80-a-barrel oil and planned to spend $4.6 billion in 2015. Six weeks later, with crude down 29 percent in the interim, Continental cut its 2015 budget to $2.7 billion.

Oil Below $60 Tests U.S. Drive for Energy Independence - Bloomberg

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.

Revamped US oil hedges may test OPEC's patience


Saudi Arabia made deep cuts to its monthly oil prices for European buyers on Monday, a move some analysts said reflects the kingdom's deepening defence of market share, although it also hiked prices in Asia from record lows.

Saudi slashes monthly oil prices to Europe; trims U.S., ups Asia - Yahoo Finance

Oil prices will hit bottom by the end of the first quarter, according to an industry analyst. Chad Mabry, of the energy and natural resources research department of MLV & Co., said in an interview with CNBC's

Oil will hit bottom soon: Analyst - Yahoo Finance

The Obama administration’s move to allow exports of ultralight crude without government approval may encourage shale drilling and thwart Saudi Arabia’s strategy to curb U.S. output, further weakening oil markets, according to Citigroup Inc.

U.S. opening door to more oil exports seen foiling OPEC strategy

Russian oil production rose to a post-Soviet record last month, showing how pumping of the nation’s biggest source of revenue has so far been unaffected by U.S. and European sanctions or a price collapse for the commodity. The nation increased output 0.3% to 10.667 MMbpd, according to preliminary data by CDU-TEK, part of the Energy Ministry.

Russia pumps most oil since Soviet Era as sanctions yet to bite

Mexico is headed for its lowest annual oil production on record as state-owned Petroleos Mexicanos prepares for an influx of foreign investment.

Mexico oil output headed for record low as Pemex woes mount

Even before Nymex WTI crude futures on Monday dipped below $50 a barrel in the latest stage of the crude rout, Stephen Schork, editor of the widely followed Schork Report, took note of trading in well out-of-the-money put options (puts give you the right, but not the obligation, to sell the underlying futures contract at a specific strike price)... “In other words, bets on sub-$30 crude oil in June are now 1.7 times greater than physical inventory at the Nymex terminal complex in Cushing,” Schork said in a note, referring to the Oklahoma delivery point for WTI oil.

Some traders are betting on $20 oil - MarketWatch

Speculators pared their net-long position in West Texas Intermediate crude by 3.6 percent in the week ended Dec. 30, U.S. Commodity Futures Trading Commission data show. Short wagers jumped 12 percent, the first gain in six weeks.

Hedge Funds Cut Oil Bets After Worst Drop Since 2008 - Bloomberg


With crude prices down more than 50% from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup Inc. analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50/bbl market include international titans such as Royal Dutch Shell Plc and small wildcatters like Sanchez Energy Corp. The impending writedowns represent the latest blow to an industry

Oilfield writedowns loom as crude slump guts drilling values

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse. The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.

Biggest drop in oil rigs since 2009 foretells ‘tough year’

The oil price decline of 2014 upended the geopolitical chessboard. Worth watching in 2015 will be who can recover and dominate play -- OPEC, Vladimir Putin or U.S. shale drillers.

What’s next for OPEC, shale as lower oil prices extend into 2015

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration.

Oilfield Writedowns Loom as Crude Slump Guts Drilling Values - Bloomberg

Cheniere Energy, the developer of the first U.S. liquefied natural gas export terminal in decades, received authorization to build a second one. The Federal Energy Regulatory Commission said it will allow Cheniere to build an LNG plant and pipeline in Corpus Christi, Texas, according to a filing on Dec. 30. The permit paves the away for the U.S. Department of Energy to consider if the project can ship LNG to countries with which the U.S. doesn’t have a free trade agreement.

Cheniere second LNG terminal gets construction authorization

Crude oil production from U.S. wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction. U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.

Exxon shows why U.S. oil output rises as prices plummet


If the price falls past $39 a barrel, we could see it go as low as $30 a barrel, said Walter Zimmerman, chief technical strategist for United-ICAP in Jersey City, New Jersey, who projected the 2014 drop.

How $50 Oil Changes Almost Everything - Bloomberg

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.

Revamped US oil hedges may test OPEC's patience

The Energy Information Administration on Wednesday reported that U.S. gasoline stocks rose by 8.1 million barrels last week, compared with expectations for a 3.4 million barrel build. Distillate stocks, including diesel fuel and heating oil, rose by 11.2 million barrels, more than five times the amount expected.

Why oil will go even lower

As a result, Keystone has attained tremendous symbolic importance for both Democrats and Republicans. But this is the opposite of how it should be — the political fight has become completely divorced from reality. The pipeline’s actual importance to oil markets, the economy and the environment has steadily diminished. Whoever wins, the “victory” will be pointless and hollow.

Why the Fight Over the Keystone Pipeline is Completely Divorced From Reality - Bloomberg Politics

On Monday, oil fell below $50 a barrel. But even plunging prices won’t halt oil sands development, at least not for many years. Although costlier to produce because it requires more energy and water (causing greater carbon emissions), oil from tar sands is actually less price sensitive than other forms of crude. That’s because the cost structure is more akin to mining than convention oil drilling, as Bloomberg Businessweek’s Matthew Philips has noted. Oil sands operations require a large up-front investment, but they operate cheaply for many years thereafter.

Why the Fight Over the Keystone Pipeline is Completely Divorced From Reality - Bloomberg Politics

Expect oil to fall to around $40, possibly plummet to $33, and about 200 more rigs to shut down, energy expert John Kilduff told CNBC on Tuesday. U.S. crude closed down at $47.93 a barrel on Tuesday, the lowest since April 2009. "Right now, on a long-term chart, I see around $40-$42 as a base. If that gets taken out, we're going back to that 2009 low, that $33 print," Kilduff, founder of Again Capital and a CNBC contributor, said in an interview with "Street Signs."

Expect $40 oil, U.S. to shut 200 rigs, pro says


The CME's website shows monthly oil prices . Currently Dec 2015 is $55 ish and Dec 2016 is $60 ish.
Second Marc Lasry Hedge Fund Mgr was on CNBC this AM stating his firm is betting big on oil company debt down 50-70 percent . He see oil higher . States the average Wall Street firm see oil $60-70 this year and $70-80 next year . Interview via video on the CNBC website for any that missed the show live .

Yes, asset prices do have a habit of over and undershooting. Might take some time though as the short-term elasticities are low.

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