Oil prices fluctuate

President Donald Trump warned OPEC about its "artificially very high" oil prices Friday, saying they are "no good and will not be accepted!" His warning came in an early morning post to Twitter. Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted! — Donald J. Trump (@realDonaldTrump) April 20, 2018 Trump's rebuke of the Organization of Petroleum Exporting Countries came after Saudi Energy Minister Khaled al-Faleh said the global market has the capacity to absorb higher oil prices, after crude hit the highest level in more than three years. "I have not seen any impact on demand with current prices. We have seen prices significantly higher in the past — twice as much as where we are today," Faleh told reporters ahead of an oil producers' meeting in Jeddah, Saudi Arabia. "Energy intensity as you know has declined significantly ... this … [Read more...] about Trump Warns OPEC on ‘Artificially Very High’ Oil Prices

IntroductionIn January 2015 the price of a barrel of Brent crude slipped below $50 for the first time since May 2009. A surprise surge in global production and weaker than anticipated global demand upset what had been a fairly stable market with oil prices trading around the $100 - $120 per barrel range for the last three years, despite a number of significant geopolitical events affecting petroleum producing countries.The industry is awash with speculation about the forward price curve for oil: will the fall in oil prices be short lived or is this the beginning of a new world order of materially lower oil prices? While speculating as to why the market is as it is - or where it is going - is a natural reaction, prudent oil companies would be wise to take stock of prevailing market conditions and to realign their business strategies to address the new challenges and risks posed by lower oil prices.Organise Rather Than AgoniseIn order to effectively manage the risks of lower oil prices, … [Read more...] about Preparing for and Adapting to Lower Oil Prices: Reducing Risk, Mitigation Loss and Capitalizing on Opportunities in Today’s Market

As with any market, supply and demand are key to price. Recently, nowhere else has this been seen more acutely than in the oil & gas markets. Headlines at the turn of the year were dominated by the fall in oil prices. Brent crude remains at around US$58 a barrel, down from US$100-120 only last summer. So, four months on from OPEC’s decision (in November 2014) not to cut supply in the face of reducing global demand and increased non-OPEC production, how have companies in the oil sector fared?Up pipeThose with deep pockets will obviously fare better than others. Whilst the major oil & gas companies have cut back on exploration, staff and capital expenditure, oil price volatility is not new to them and these companies are generally used to weathering and planning for such storms. Equally, however, oil & gas companies are keen overall not to stop new investment or let skilled staff go. Previous downturns have shown this to be a poor strategy for the medium turn but it … [Read more...] about Coming Down the Pipeline: Risk and Opportunity for Oil and Gas Sector in Era of Low Oil Prices

Oil prices have plunged in the last few months.  For example, Brent futures traded at over $110 per barrel in June, and fell below $85 last week.  This is a fall of over 20%, and the market price for crude oil is now at its lowest level since 2010.Oil prices impact activities in the sector and, in particular, the investments that upstream operators choose to make.  Some means of producing oil cost more than others, and producers continually seek to reduce the marginal cost of production.  For example, as recently reported by the Financial Times, studies estimate that the median North American tight oil development needs a crude oil price of $57 per barrel to break even.  This threshold price compares to $70 per barrel one year ago.  The situation is similar for production from Canadian oil sands, for which the average break-even cost is reportedly between $63 and $65 per barrel.  A sustained drop in oil prices may provide a renewed … [Read more...] about A Consequence of Falling Oil Prices

The Wall Street Journal noted on Tuesday that the Trump administration’s plan to pressure Iran with renewed sanctions might have one big flaw: China. The Chinese are in a position to buy so much Iranian oil that the effect of isolating Iran from U.S. and European markets will be greatly diminished. As the WSJ explains, using oil as leverage is a tricky business because the world market is volatile and several national economies are a bit seasick from riding its waves:In May, President Donald Trump pulled the U.S. out of the 2015 Iran nuclear deal and vowed to reimpose sanctions on Tehran. Oil prices jumped sharply higher in reaction and if China does take spare Iranian crude that could add to pressure currently pushing crude lower, traders say. In anticipation of sanctions, foreign oil companies are already exiting Iran and international banks have declined to finance oil trades. While the European Union doesn’t back renewed sanctions, countries including Greece and Turkey, … [Read more...] about China Could Ramp Up Iranian Oil Purchases to Blunt U.S. Sanctions