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Global oil consumption is growing by 1 million bpd every year. With shale unable to meet this extra demand, analysts expect oil prices to rise in response. Shell Expects Oil Rebound as Shale Fails to Fill Supply Gap By:Firat Kayakiran and Jonathan Ferro (Bloomberg) Royal Dutch Shell Plc sees oil prices rising because supply from shale drilling in the U.S. wont be enough to satisfy growing global demand. The industry needs to find an extra 4 million barrels to 5 million barrels a day every year to meet demand and replace depleted fields, Shell Chief Financial Officer Simon Henry said in an interview on Tuesday. Lower oil prices increase demand and reduce investment, and it already has, Henry said after a conference organized by Chatham House in London. Global consumption of about 93 million barrels a day is increasing by 1 million every year, he said. Oil producers are delaying or canceling projects and cutting costs after crude slumped about 40 percent over the past year as the
Well counts usually lag oil prices by about four months, indicating that May could see returning rigs across the U.S.. Slide in U.S. oil rigs seen halting in May, says Morgan Stanley By: Bill Lehane (Bloomberg News) The decline in drilling rigs in the U.S. could bottom out in May, with operators already reviving operations in parts of Eagle Ford and Permian in Texas, according to Morgan Stanley. The low point in the rig count usually lags prices by about four months, analyst Adam Longson said in a report dated Monday. The number of active rigs fell last week to the lowest since October 2010, Baker Hughes Inc. data show. Oil prices gained this month amid speculation that the slump in active rigs would curb U.S. production, stemming the rise in the nations stockpiles and helping to alleviate a global surplus. To read the rest of this article, visit Power Source.
Schlumberger CEO Kibsgaard says the drop in oil prices is not due to overcapacity but rather a battle for market share. As Casey Hoerth reports, the implications of this means that the drop in crude prices might not be long-lived. Schlumberger CEO: Oil Price Decline Not Due To Overcapacity By: Casey Hoerth (Seeking Alpha) Every year, Schlumberger (NYSE:SLB), one of the two biggest oil service companies by market cap, presents at the Howard Weil Energy Conference. While about a dozen companies present at these conferences, the Schlumberger presentation has been particularly valuable every year because it gives excellent big picture insight on the industry as a whole. Unsurprisingly, this year, Paul Kibsgaard, the CEO of Schlumberger, dedicated a good bit of his presentation to crude oil prices and global capacity. Kibsgaard does not believe the drop in prices is due to global overcapacity, but instead is simply a battle for market share. At first glance that might not seem like a very
Wood Mackenzie analysts are reporting thatunconventional oil production will keep rising through 2016,despite lower oil prices. Wood Mac: Demise of Unconventional Oil Exaggerated By: Karen Boman (Rigzone) Low oil prices have hurt the economics of U.S. Lower 48 projects, but reports of the demise of unconventional oil have been greatly exaggerated, according to a recent analysis by Wood Mackenzie. A breakeven analysis of over 800 individual assets in the Lower 48 show dramatic variations in the viability of company asset bases and subplays. While the majority of production is not at risk in the long term, cash flow and funding limitations could impact activity, according to a March 24 press statement. U.S. Lower 48 oil and condensate production will keep rising through 2016 reaching 7.5 million barrels per day (bpd) but the pace of growth will slow considerably starting the second half of this year, Cody Rice, senior research analyst for Lower 48 upstream research at Wood Mackenzie,
Voices from across the industry are pulling back on predictions that oil prices would rebound as quickly as previously thought. The new consensus seems to be that $50-$60 is the new normal. Why $100 Oil Wont Be Coming Back for a Long Time By: Bradley Olson (Bloomberg Business) (Bloomberg) -- Get ready for an L-shaped oil recovery. A growing consensus is emerging from the likes of BP Plc, the International Energy Agency, shale wildcatters and even the Saudis that a near-term recovery to $100-a-barrel crude isnt in the cards. Instead, expect a range of $50 to $60 for at least the next few years. When oil prices plunged sharply in 2008, they rebounded almost as quickly. Several months ago, industry and government touted the same U or V-shaped recovery this time out. On closer examination, a new factor in the marketplace -- shale oil -- has changed their minds. This is the new normal, Dennis Cassidy, co-leader of the oil and natural gas practice for consulting company AlixPartners,
Barani Krishnan of Reuters reports on how brutal winter weather on the East Coast is affected crude prices and rig counts. Oil Ends Mixed After Mild Rig Count Drop, Heating Oil Spikes By: Barani Krishnan (Reuters) NEW YORK, Feb 20 (Reuters) - Crude prices ended mixed on Friday as the number of U.S. rigs drilling for oil fell far less than expected this week, while heating oil jumped 6 percent after severe winter cold crimped output at three refineries. After many bets that crude would rally on Friday from another plunge in the rig count, and short-covering before the expiry of the front-month in West Texas Intermediate (WTI) futures, the action was in refined products instead. News that at least three refineries, accounting for more than two-thirds of the U.S. East Coasts refined output, are being disrupted by single-digit temperatures sent heating oil futures to six-month highs. Its sell crude, buy products today, said Dominick Chirichella, senior partner at the Energy Management
U.S. oil tanks are quickly filling and if the trend continues, it could further pressure global prices that have recently stabilized. As U.S. oil tanks swell at record rate, traders ask: for how long? By: Catherine Ngai (Reuters) (Reuters) - Oil is flooding into U.S. storage tanks at an unprecedented rate, leading traders to wonder how long the hub in Cushing, Oklahoma, can keep absorbing its share of the global supply glut. About half the surplus crude accumulating in tanks across the United States is flowing into Cushing. If the build-up continues at the same rate, some industry officials and sources said, the tanks could reach maximum capacity by early April. Others suggest the flow might continue until July before it tests the limits of the dozens of steel-hulled storage tanks clustered in mid-Oklahoma. Traders have been scrambling to secure space at Cushing so they can store oil purchased at current low prices and sell it in a year at a profit exceeding $11 a barrel because
Traders Jim Iuorio and Anthony Grisanti believe the volatility that crude prices are experiencing right now prove that a bottom is in sight. Crude oil volatility indicates a bottom: Traders By: Alex Rosenburg The incredible plunging commodity, crude oil, has become even more volatile of late. But according to traders Jim Iuorio and Anthony Grisanti, that could actually indicate that a bottom is in sight. Crude oil settled 4.2 percent higher on Thursday at $50.48 per barrel, in a day that saw a nearly $5 range. The jump comes after oil fell 8.7 percent on Wednesday and rose 7 percent on Tuesday. I like volatility as much as the next guy, but 6 or 7 percent moves in a day is a little tough on a 50-year-olds heart, joked Chicago-based trader Iuorio. Indeed, the CBOE Crude Oil Volatility Index, which measures the expected volatility of crude, continues to rise drastically. The index hit a new multiyear high on Thursday. I think this is part of the bottoming process, Iuorio said Thursday
Oil firms in North Dakota are planning to retain their workers, hoping to be prepared for a rebound in prices. Many Oil Firms Plan No North Dakota Layoffs Despite Cheap Oil By: Ernest Scheyder (Reuters) WILLISTON, N.D., Feb 4 (Reuters) - Halliburton, Statoil ASA, Hess Corp and other North Dakota energy companies have decided, for now, not to lay off staff in the No. 2 U.S. oil producing state, hoping to be prepared for any prolonged rebound in crude prices. Many oil producers and their contractors are trying to strike a balance between cutting costs and maintaining workforce reserves after a more-than 50 percent drop in oil prices since last June. The drop has made some oil patch investors anxious that North Dakota could experience a third oil bust after slumps in the 1950s and 1980s. Local business leaders, though, say theyre confident the states economy can abide the slowdown. Indeed, oil prices are nothing if not volatile, up about 19 percent in the past four trading days after
While costs are spiraling upwards for upstream oil and gas companies, Deloitte officials say the industry needs to reset its cost structure and learn to operate more efficiently. Deloitte: Low Oil Prices Creating Need for More Efficient Operations By: Karen Boman (Rigzone) Upstream oil and gas companies will have to learn how to operate differently in order to weather the low oil price environment, Deloitte officials said Wednesday. Unlike the downstream sector, which has been forced to operate efficiently because it doesnt have the ebbs and flows that upstream does, costs on the exploration and production side have spiraled upwards, said Rick Carr, principal and leader of Deloitte LLPs oil gas operations and supply chain, at a media briefing in Houston. The North America shale market is still pretty embryonic, with nobody really having cracked the nut of running a lean, efficient operation, said Carr. In the case of North America shale operations, prices for oilfield services have
Continental CEO Harold Hamm is calling on producers to cut spending in order for oil prices to rebound quickly. Oil Will Recover Once Producers Quit Spending, Hamm Says By: Harry Weber (Bloomberg) (Bloomberg) -- Oil prices will recover as early as the first half of this year as producers cut back, Continental Resources Inc. founder and CEO Harold Hamm said Wednesday. Hamm said Continental, the largest leaseholder and producer in the Bakken shale play of North Dakota and Montana, can weather low crude prices forever as it idles wells. He expects other drillers to cut spending by 50 to 75 percent, in line with Continentals announced reductions. A lot of people think, well, if you start drilling, youve got about a six-month process before you can slow down, Hamm said in an interview at the Argus Americas Crude Summit in Houston. Wrong. Because after all, you drill that well, it takes about a month to drill it, or 25 days. You dont have to complete it. Spending at Oklahoma City-based
Reuters reports on global economic growth that should stem from falling oil prices. IMF Says Drop in Oil Prices to Persist, Help Global Growth By: Reuters WASHINGTON, Dec 22 (Reuters) - The recent drop in oil prices should persist, helping to boost global economic activity by up to 0.7 percentage points next year, two senior IMF economists wrote in a blog on Monday. Brent prices have fallen more than 46 percent since the years peak in June of above $115 per barrel, sped up by the November decision of the Organization of Petroleum Exporting Countries (OPEC) not to reduce production. Saudi Arabia has also convinced its fellow OPEC members it is not in the groups interest to cut oil output, however far prices may fall, the kingdoms oil minister said. Overall, we see this as a shot in the arm for the global economy, Olivier Blanchard, the IMFs chief economist, and Rabah Arezki, head of the commodities research team, said in the blog. The boost to the global economy would be between
Crude prices have been falling in recent days as fear of oversupply looms. Schlumberger CEO Paal Kibsgaard is dispelling these fears of oversupply and falling investment levels, ensuring the market that Crude will recover and predicting that the current growth forecasts will prove true. Collin Eaton of Fuel Fix reports. Schlumberger CEO: Oil will recover, spur EP spending By: Collin Eaton HOUSTON The slow but steady global economic recovery is still intact, and absolute oil demand has changed little despite fears of oversupply that have sent crude prices hurtling downward in recent days, Schlumbergers chief executive told investors on Friday. We expect Brent to recover and stabilize, Schlumberger CEO Paal Kibsgaard said in an earnings conference call. Oil demand is currently set to increase by 1.1 million barrels per day in 2015, which will require growth in exploration and production investments. Spending levels by oil and gas producers is the metric oil field services companies