Marine Link
Monday, October 23, 2017

Oil Price Crisis News

Wells Fargo Calls $100 Oil a 'Pipe Dream'

Image: Organization of the Petroleum Exporting Countries

USD 100 per barrel oil  is but a “pipe dream,” Wells Fargo said in a new investor note, reports MarketWatch. The report quoted Wells Fargo’s John LaForge saying that he’s doesn’t expect oil prices to climb anywhere near $100 a barrel over the next few years. Barrels price will bounce between $30 and $60 in the coming years, according to top bank’s diagnosis. “We continue to hear that big cutbacks are on the cusp of happening,” he said. “The evidence, however, implies otherwise. Shale production has caused American output to stand higher than it did in 2014, before the oil price crisis began.

Projections center on When, not If

The cyclical nature of the offshore exploration and production beast is legendary in financial circles, riding boom and bust waves for years at a time. While industry analysts and insiders alike had forecast a pick-up in activity no sooner than mid-year 2000, the collective industry is “itching” to get back to the business of building, repairing and supplying the myriad of rigs, boats and other business opportunities that abound in a full-blown boom oil market. Patience, it seems, is wearing thin, particularly in the face of dwindling business prospects and the lingering of the $30+ barrel of oil. While it seems all too natural that sustained high prices would sooner than later drive a resurgence of the moribund offshore business…

Offshore Recovery Stalled For Now

As crude oil prices reach Gulf War highs and recent memories of historic low crude prices fade, capital spending on finding and developing new oil reserves continue to play catch up. "The recent oil-price crisis set back non-OPEC output growth for at least a year," a recent report released by Deutsche Banc Alex. Analysts say there is a lag time for exploration spending to play catch up with oil prices - for every one month when crude prices are below the cost of production, it takes three months of high prices to regain the volume of production lost during the low cost period. Crude prices began to rebound from lows near $10 a barrel when OPEC and other major producers cut crude production to raise prices in March 1999.

Glencore Sees Record Oil Trading Volumes as Margins Shrink

Glencore looks set to cement its position as the world's second-largest oil trader as it tries to offset low volatility and tight margins with record volumes this year, its global head of oil, Alex Beard, told Reuters. The London-listed commodities trader and miner will shift around 6 million barrels per day (bpd) of crude and refined product this year, up 25 percent from last year. The figure represents around 6 percent of global supply and only rival Vitol trades more oil, at some 7 million bpd. Most merchants are being forced to ramp up volumes to protect profits in an environment of low volatility. "We don’t set targets in terms of volumes," Beard told the annual Reuters Global Commodities Summit.

BP Chairman to Retire

Carl-Henric Svanberg. Photo: BP p.l.c.

BP has announced that Carl-Henric Svanberg has informed the company’s board of directors of his intention to retire as chairman. Svanberg will chair the annual general meeting to be held in May 2018 and will remain in position until a successor is in post. Ian Davis, the BP board’s senior independent director, will now lead the process to identify and appoint BP’s next chairman. Mr Svanberg joined the BP board on 1 September 2009 and became chairman on 1 January 2010. Svanberg said: “It has been a tremendous privilege to lead the BP board over the past eight years.

Jacques de Chateauvieux, CEO, Bourbon

The plan, on its face, was simple. At the turn of the century Bourbon embarked on the path to become a dominate player in the global offshore supply vessel sector, building technologically sophisticated vessels for a good price in emerging Chinese shipyards, among others globally. Dubbed Horizon 2012, the plan was backed with a multi-billion dollar investment, a world economy that was firing on all cylinders and an offshore oil and gas market that was steamrolling ahead, powered by oil prices in the region of $150. That was yesterday.

Oil Prices May Fall in Q3 Say Citigroup

Weakening economies in Europe, Asia, cause Saudi to produce surplus crude Citigroup Inc. has said oil prices may fall in the third quarter, as economies weaken in Europe and Asia and Saudi Arabia produces surplus crude, Bloomberg reports. Increased crude production from Saudi Arabia and Iraq may be a "major downside risk to prices" if the economic crisis worsens, said Citigroup analyst in New York, Edward Morse. "Saudi Arabia continues to push prices lower" by cutting June official selling price differentials to Asia and increasing output to about 10 million barrels a day, Morse said. "What's most dangerous to prices would be a repeat of conditions in 1997-1998, when Saudi overproduction coincided with an unexpected Asian financial crisis that hit hard at demand."    

Oil Rallies on Chinese Import Boost and Mideast Tensions

© prathaan / Adobe Stock

Oil prices firmed on Friday as bullish news from strong Chinese oil imports to turmoil in the Middle East put Brent on track for a nearly 3 percent weekly gain. The developments added to other signs that the market was finally rebalancing after years of excess, but analysts warned that the 2018 balance was still shaky. Brent was at $57.20 at 1335 GMT, up 95 cents. U.S. West Texas Intermediate (WTI) crude was at $51.44 per barrel, up 84 cents from its last settlement. The contracts were on track for weekly gains of more than 2 percent and 4 percent, respectively.

Oil Prices At Nine-Year High As Iraq Suspends Exports

Oil prices rocketed to a new nine-year high Nov. 22 after Iraq suspended oil exports under its humanitarian exchange program with the United Nations. London January Brent futures opened at $25.90, the highest oil price since January 1991 when allied forces were preparing to eject Iraqi troops from Kuwait. Prices leapt as Iraq's Oil Minister Amir Mohammed Rasheed confirmed that Iraq had stopped oil deliveries under the latest six-month phase of its oil-for-food exchange with the UN. Baghdad protested the UN's proposal to extend by two weeks the sixth phase of the program and accused the United States of trying to push other Security Council members into accepting a draft resolution on weapons inspections.

Rig Rates Down 10 Percent

According to a Nov. 25 report from Business Standard, the current global credit crisis and an over 63 percent fall in crude oil prices in the last four months have resulted in oil companies drilling fewer wells in offshore areas. This has increased the availability of rigs across the world and helped bring down rig rentals by up to 10 percent in the recent past. The rig rates have corrected primarily in the shallow water fields where there have been traditionally more rigs available. (Source: Business Standard)

Ship Recycling Prices Plunge 25%

Demolition Prices for elderly ships have fallen by a quarter in 2012 to date, and owners are encouraged to dispose of recycling candidates sooner rather than later, says Mark Williams of Braemar Seascope. Addressing the 7th Annual Ship Recycling Conference in London on 19th June, the Braemar Seascope Research Director told delegates that deflating international steel prices were likely to translate into lower offers for recycling tonnage in the coming quarters. Meanwhile, rapid reductions in the value of the Indian…

Oil Instability, Consolidation Muddy Offshore E&P Picture

The cyclical nature of the oil business has blossomed into full bloom during the latter part of 2000, as a host of political power plays have sent oil prices on a virtual rollercoaster, albeit mostly up, helping to send it soaring as high as $37/barrel at the time of this writing. The business of accurately predicting the direction in which oil pricing will go has seemingly become less of a science and more of a speculative game. While it was the Asian financial crisis which led prices to the cellar in 1997, it is another crisis — the potential advancement of hostilities in the Middle East — which have helped to send the price back up to near decade (read: Gulf War) heights.

Chinese Demand Ensures Asian LNG Rally Has Legs

© Altin Osmanaj / Adobe Stock

Unexpectedly strong demand from China, along with rising oil and coal prices, should keep Asian liquefied natural gas (LNG) spot levels buoyant this winter. Despite rising supplies from new plants, spot prices have risen by 55 percent from their 2017 lows to $8.40 per million British thermal units (mmBtu) as Asian buyers also refilled summer stocks. With the peak demand October-March winter gas season almost underway, further price gains are expected. Nuclear outages in Taiwan and rising demand from Thailand…

The U.S. Gulf Market: When Will It Turn Around?

Discussions around our office and with various clients usually entail an exchange of anecdotal information believed to explain the current situation with the quest to predict when things will turn around. There are a host of different viewpoints, most seemingly relevant, but no one satisfactory answer. In previous downturns in the offshore service sector, there was usually a fairly clear understanding embraced by most of why things were slow. This downturn is more difficult to understand. Back in 1998 when the Asian financial crisis impacted oil prices, it was easy to see why E&P fell. This downturn also affected most oil fields around the world about the same. The price of oil was too low to drill new wells and upgrade production at a profit.

Jotun Coatings Announces Price Increase

Jotun has acknowledged the steep rise in the cost of raw materials through 2010 used in some of their coatings. This rise in costs has significantly affected all paints and coatings manufacturers worldwide. Consequently, Jotun has been forced to increase prices on some of its products, but emphasises that it has not affected its entire range. Throughout 2010 the market price of major raw materials used in coatings, such as epoxies, titanium dioxide, acrylics and metal-based materials has increased by up to as much as 50 per cent. The surprisingly high global demand coupled with the downscaling of capacity following the 2007 financial crisis has caused an imbalance in the raw materials market for coatings…

U.S. Midwest Refiners Boost Output

File Image (CREDIT: AdobeStock / (c) Sharrif Che'Lah)

U.S. refineries from Ohio to Minnesota are capitalizing on access to cheap crude from Western Canada and North Dakota oilfields, helping their region break a historic dependence on fuel from the Gulf Coast while redrawing oil trade maps. Since the early 2000s, crude and fuel flows from the Gulf Coast into the U.S. heartland have been cut in half, as crude coming from Canada and North Dakota has pushed U.S. Midwest refining activity to record levels. In 2016, Midwest refining capacity rose to 3.9 million barrels per day (bpd) of crude, the highest annual volume on record.

House GOP Spearheads Bill to Expand Domestic Drilling

Today, the House passed H.R. 4899, The Lowering Gasoline Prices to Fuel an America that Works Act by a vote of 229-185. If enacted the bill would expedite oil and gas leasing on federal lands, open new offshore drilling areas and expand drilling in Alaska’s National Petroleum Reserve. This bill is everything Big Oil wants for Christmas. Reviving “Drill Baby Drill” can’t magically lower prices of a global commodity, and any economic gains pale in comparison to the long-term damage climate change threatens to inflict on our economy. Bringing about additional droughts, wildfires and other extreme weather events is no way to save money. Leaving fossil fuels in the ground is the only course of action that respects the seriousness of the climate crisis.

Hyundai Heavy $600M Order for LNG Carriers

* Photo: Abdelkader, LNG Carrier Hyundai Heavy built and selected as one of the world’s best ships in 2010.

Hyundai Heavy Industries, the world’s largest shipbuilder, won a $600 million order to build two 155,000 m3 LNG carriers, including an option for another same class vessel, from Greece-based Dynagas Ltd. These membrane-type LNG carriers are due for delivery in the second half of 2013. They will feature the Dual Fuel Diesel Engine System which allows the ship to run on oil fuel or natural gas. Due to tightening global regulations on carbon emissions, increasing demand for LNG as an alternative energy source after Japanese nuclear crisis…

Pirate Attacks Still a Major Concern -Sailors’ Society

Sailors’ Society’s CEO Stuart Rivers (Photo: Sailors' Society)

Global piracy continues to be a concern in the Gulf of Guinea, Southeast Asia and Venezuela, according to statistics released yesterday by the International Chamber of Commerce’s International Maritime Bureau (IMB). In the first nine months of 2017, 121 incidents of piracy and armed robbery against ships were reported, including 92 vessels boarded with five hijackings, 11 attempted attacks and 13 vessels fired upon. While this is a decrease compared to statistics from the same period in 2016…

Lubmarine Outlines Position in Supply Crisis

Marine lubricants supplier TOTAL Lubmarine has outlined its position concerning increasing raw material costs and growing shortages of marine lubricants. Andrew Knox, Head of Marketing at TOTAL Lubmarine, says, "Recent events have shown how tight the worldwide situation is. This is due to a long historical period of low and decreasing margins which have discouraged the industry from investing. "With the 2004 and 2005 increases in crude oil and lubricant raw material market prices, industry profitability has worsened, and the incredible acceleration in cost increases in recent months puts the industry in an unprecedented position of vulnerability. Since July, base oil price costs have increased by between 24 and 35 percent.

Oil Skidding Toward 11-year Low

Oil prices extended their freefall on Friday, flirting with 11-year lows, after the International Energy Agency (IEA) warned that global oversupply of crude could worsen next year. Brent and U.S. crude's West Texas Intermediate (WTI) futures fell as much as 5 percent on the day and 12 percent on the week as mild pre-winter weather and a plummeting U.S. stock market added to the toll on oil prices. Oil traders and analysts alike have been perplexed by oil's decline since the Dec. 4 meeting of the Organization of the Petroleum Exporting Countries which all but abandoned price support for crude by removing OPEC's production ceiling in an oversupplied market. "It's very tough to find a cause to get bullish here," said Peter Donovan, broker at Liquidity Energy in New York.

Oil Below $40/bbl After Rise in US Oil Rigs

U.S. crude oil prices on Friday dove below $40 a barrel for the first time since the 2009 financial crisis, notching their longest weekly losing streak in 29 years after a further rise in U.S. drilling and a drop in Chinese manufacturing. Oil prices pushed briefly below the $40-pivot mark following weekly data that showed U.S. energy firms added two oil drilling rigs last week, the fifth increase in a row. The rise in rigs, which is emerging now after a second quarter lull in prices, is adding to concerns U.S. shale production is proving slow to respond to falling prices, prolonging a global glut. "Everyone is still looking at it saying 'Wow, you still don't have production coming down,'" said Tariq Zahir, founder at Tyche Capital in Laurel Hollow, New York.

Watching Ukraine for Economic, Commodity Fallout

Reuters - A top Federal Reserve official said on Tuesday he is closely watching the unfolding crisis in Ukraine for potential effects on U.S. economic growth and volatility in commodity prices. "It's something I'm watching really carefully for potential implications for growth," Richmond Fed President Jeffrey Lacker told the Council of Economic Education. "We obviously worry first about the disruptions of the commodity markets ... and volatile commodity prices." Russia's military intervention in Ukraine's Crimea peninsula has driven up oil markets. But prices eased on Tuesday after President Vladimir Putin told reporters Russia would only use force as a "last resort."

Maritime Reporter Magazine Cover Oct 2017 - The Marine Design Annual

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