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Sunday, 28 July 2019

Tanker #Insurance Soars As #Iran Tensions Mount


" oil prices in the wake of the attacks highlights the importance of Strait of Hormuz as a global oil artery"

Tanker at sea

Middle East Tanker Insurance Rates Soar 10-Fold

 

Insurance rates for tankers going through the Strait of Hormuz have skyrocketed tenfold in the two months since the first attacks on tankers off the coast of the UAE, CNBC reports, quoting the chief executive of a shipping company. The news could reinforce anticipation of higher oil prices, not because of fundamental factors but because of insurance rates.

The first link in a chain of events that may send prices higher took place in late May, when Middle Eastern media reported attacks on four tankers off the coast of the port of Fujairah, in the Persian Gulf and close to the Strait of Hormuz. Then, about two weeks later, another attack was reported, this time in the Gulf of Oman, right out of the Strait of Hormuz. Finally, Iran shot down a U.S. drone claiming it was flying over its territory.


After the U.S. blamed both tanker attacks on Iran, the drone incident was seen by many as the last straw before open military confrontation. This has not yet materialized, but oil prices spiked after both attacks and the drone shoot-down and reports about insurers hiking their tanker premiums for Strait of Hormuz-passing vessels multiplied.


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CAN DIPLOMACY WORK?



 

Sunday, 21 July 2019

#Bloomberg: No End In Sight For #Shale-Oil Drilling Slump

"The frack market “is a mess,” Brad Handler, an analyst at Jefferies LLC, wrote in a note to clients. “With every passing datapoint/call, there is little to suggest this market gets any better, and so we hack away at numbers again.”

Image result for shale oil drilling rigs 2019

Shale Drilling's Worst Yet to Come 

(Bloomberg) -- America’s biggest owner of drilling rigs fell the most in seven months after the chief of Helmerich & Payne Inc. said he called the bottom too soon.

Three months ago, when Helmerich had 220 of its rigs hired out, Chief Executive Officer John Lindsay told investors the second quarter would be the nadir for his fleet. But after the number of Helmerich rigs at work shrank to 214 a few weeks ago, Lindsay says his earlier projection was “premature.”

“The full effect of the industry’s emphasis on disciplined capital spending continues to reverberate through the oil field services sector,” he said in a Wednesday statement. “We are reluctant to predict another bottom and see further softening during our fourth fiscal quarter as our guidance would indicate.”

The hired hands of the shale patch who drill and frack wells are suffering from a slowdown in North American spending brought on by investor demands for higher returns. The U.S. oil rig count has fallen 11% this year, according to Baker Hughes.

 Image result for shale oil drilling rigs 2019

Fracking giant Halliburton Co. is eliminating jobs and warehousing equipment no one wants to rent. Superior Energy Services Inc. said earlier this week that it’s looking for ways to cut costs and may sell assets to raise cash. On Thursday, 28 of the 29 oil and gas industry stocks in the S&P 500 Index were falling.


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OIL PRICES SIGNAL RECESSION?

 

Sunday, 14 July 2019

#Economic #Abstractions Can No Longer #Stimulate Physical Economy


"History shows that the collapse of economies is very common. Collectively, we have closed our eyes to this possibility ever happening to the world economy in the modern era. If the issue with collapsing demand causing ever-lower energy prices is as severe as my analysis indicates, perhaps we should be examining this scenario more closely."



Image result for fact vs fiction

Why stimulus can’t fix our energy problems



Many people appear to believe that stimulus programs by governments and central banks can substitute for growth in energy consumption. Others are convinced that efficiency gains can substitute for growing energy consumption. My analysis indicates that workarounds, in the aggregate, don’t keep energy prices high enough for energy producers. Oil prices are at risk, but so are coal and natural gas prices. We end up with a different energy problem than most have expected: energy prices that remain too low for producers. Such a problem can have severe consequences.

Let’s look at a few of the issues involved:

[1] Despite all of the progress being made in reducing birth rates around the globe, the world’s population continues to grow, year after year.



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EXPONENTIALS TELL THE FUTURE




Sunday, 7 July 2019

Energy #Crisis Concerns As #OPEC Production Dips To 2014 Low

"In May, OPEC’s oil production had dropped to a 2015 low of 30.17 million bpd, as a major 200,000-bpd increase in Saudi Arabia’s production was unable to offset an even larger production decline in Iran"

Image result for opec cartel members

OPEC Oil Production Dips To 2014 Low


OPEC’s crude oil production dropped to below 30 million bpd in June, down by 170,000 bpd from May and the lowest monthly output since April 2014, as higher Saudi oil supply was insufficient to compensate for declines in the cartel members subject to U.S. sanctions, Iran and Venezuela, the monthly Reuters survey showed on Friday.
OPEC pumped 29.60 million bpd in June, according to the Reuters survey that tracks supply to the market from shipping data and sources at OPEC, oil companies, and consulting firms. 

Saudi Arabia, OPEC’s largest producer, boosted supply by 100,000 bpd in June over May, to 9.8 million bpd, the survey showed.



Despite the increase, Saudi Arabia was comfortably below its 10.311-million-bpd cap under the OPEC+ deal as it had been overachieving in its share of the cuts by 500,000 bpd in the previous months.


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ARE CUTS NEEDED FOR HIGHER PRICES?




Monday, 1 July 2019

#Shale Oil Stocks Are #Market Dogs


"The energy sector has made up almost a quarter of all U.S. bankruptcies in the past year"



Shale Patch Struggles 5 Years After Crude Collapse


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Rachel Adams-Heard
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Bloomberg) -- It’s been five years since crude started a precipitous drop that eventually saw it hit a low of $26 a barrel. While prices have recovered some of the lost ground, shale producers are still feeling the pain.
Oil’s 76% collapse from almost $108 a barrel in June 2014 was the worst plunge since the financial crisis of 2008. Below are some data points on how the industry has fared since.
In 2014, oil and gas companies made up almost 11% of the S&P 500 Index. Now, that’s just over 5% as some investors appear to have given up on the sector.

Shale Patch Struggles 5 Years After Crude Collapse

Shareholder antipathy stems at least in part from questions over the profitability of shale drilling. While the five big, publicly traded integrated major producers -- BP Plc, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA -- resumed generating free cash flow as a group in 2017, independent U.S. drillers only became cash-flow-positive (based on an average of 12 such companies compiled by Bloomberg) in 2018 -- and they were back in the red in the first quarter of 2019.


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OIL: BOOM OR BUST


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