il stocks bounced, in their best day in three years, but oil industry analysts say the equities may be premature in celebrating a bottom in oil prices. "I think it's too early to call that," said John Kilduff of Again Capital. "All the elements are in place that got us to these new lows. We've had episodes of backing and filling and working off some of those oversold conditions. I think the Russian situation was a disrupting event and oil was acting bad because of it. OPEC is on the wires every day saying they don't care how low it goes, they're not going to cut back."
West Texas Intermediate crude futures rose 54 cents to settle at $56.47 per barrel, while the S&P energy industry sector jumped 4.2 percent. Brent crude futures settled up 1.9 percent at $61.18 per barrel.
A new oil well head waits to be fracked at a Hess site near Williston, N.D. Andrew Cullen | Reuters A new oil well head waits to be fracked at a Hess site near Williston, N.D. Read MoreOil extends gains after EIA data
Oil majors like Exxon and Chevron were sharply higher, as were energy ETFs, like Market Vectors Oil Services ETF OIH and the Energy Select Sector SPDR Fund XLE. Transocean, Diamond Offshore, Halliburton and dozens of other names in the sector saw gains of 3 and 4 percent.
Read MoreTrying to pick a bottom in energy stocks
Analysts say it could take a change in stance by OPEC for the oil market to see a bottom. "I don't think we can determine that at all yet. In the last four months we've seen rebounds in prices from $3 to $5 and the market is still headed lower," said Gene McGillian, analyst at Tradition Energy.
"Until we get a sign these things that were driving us down are changed, we're still going to go lower," said McGillian, who said short covering was a big factor Wednesday.
Fadel Gheit, senior energy analyst with Oppenheimer, said the market may be getting close to a bottom.
"All the oil stocks are rising because people believe oil prices have bottomed. That's a second strong day in a row. People think if it repeats three times then the thing is real," said Gheit.
One reason that analysts expect oil prices to remain low is that supply continues to increase and will into the first half of next year. Newer U.S. wells are expected to continue to produce several hundred thousand more barrels a day next year, down from the million barrels expected when prices were high.
U.S. oil production grew last week to 9.14 million barrels a day from 9.12 million the week earlier.
Even Russia, badly burned by lower oil prices, could also put more onto the world market. New rules on refining tariffs could result in more product exports starting in January, said Andrew Lipow, president of Lipow Oil Associates. Russian consumers could also require less fuel if the economy continues to tank, and that could put more oil on the world market.
Citigroup energy analyst Eric Lee, however, said Russian output could go either way next year, depending on how much the financial crunch is hurting production. But he does agree more U.S. oil will make it to market and also oil from other places, like Kurdistan and potentially Iraq.
"I think there will be a sub-$50 (for WTI) in our future ... I think the low for this market will be late February/March due to the slack demand period. The refineries will be in maintenance for turnarounds," Kilduff said.
Saya semua ambil trading profit sekarang kecuali Mpay. Saya kan trader duit masuk poket dulu. Lamboghini saya pun kena pump petrol pergi Singapore malam ini sama girlfriend shopping muahaha. Sedap lah trading minggu ini. Perfect timing yay!
The market is oversupplied by 2 million barrels a day, according to Mohammed Al Sada, Qatar’s energy minister ------------------------------------------------------------------------------------------------------ Are the OPEC and non OPEC members going to self regulate to cut production by 2 million barrels /day? The answer is NO NO NO
The obvious facts are as follows - OPEC members are not in agreement with one another. Venezuela wanted OPEC to cut production but Saudi Arabia decided against it and wanted the non OPEC members to do so - a member of OPEC had blamed non OPEC members for the price down fall but OPEC had decided against a production cut - Shale Oil production in 2015 will increase further in USA due to huge investments that had borne fruition in shale oil production in 2014 and beyond - Does Saudi really know the marginal cost of producing shale oil in USA?
The recent improvement in Crude Oil price was due to covering of the shorts. The fundamental of supply versus demand does not support an increase in Crude Oil price...the supply of crude oil exceeds 2 million barrels/day now...It may even widen in 2015.
Standard & Poor’s Ratings Services revised its outlook to negative for Royal Dutch Shell Plc (RDSA), Total SA (FP) and BP Plc (BP/) as the oil-market rout driven by weakening demand and a flood of supply from American shale fields threatens cash flow into 2016.
The credit-rating company also cast a dim eye on Houston-based ConocoPhillips, saying it’s facing similar cash flow pressure, and said it may cut the ratings on Eni SpA (ENI) and BG Group Plc’s BG Energy Holdings. S&P cited “the dramatic deterioration in the oil price outlook” and the 50 percent increase in debt loads for the biggest European oil producers since the end of 2008. -------------------------------------------------------------------------------------------------------
Look at the big picture...Big Global Oil & Gas companies are facing cash flow pressures...it will get worse in 2015 and beyond ....
Studip man. Oil price has nose dived to USD45, people still want to buy..
Oil extended losses to trade near $45 a barrel amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years.
Futures fell as much as 1.7 percent in New York, declining for a third day. Crude inventories probably gained by 1.75 million barrels last week, a Bloomberg News survey shows before government data tomorrow. The United Arab Emirates, a member of the Organization of Petroleum Exporting Countries, will stand by its plan to expand output capacity even with “unstable oil prices,” according to Energy Minister Suhail Al Mazrouei.
The United Arab Emirates will stick with a plan to increase oil-production capacity to 3.5 million barrels a day in 2017 even as an oversupply pushed prices to the lowest in more than five years.
“In this time of unstable oil prices, we are showing in Abu Dhabi and across the country that we remain dedicated to reach our long-term production goals,” Energy Minister Suhail Al Mazrouei said in a presentation in Abu Dhabi yesterday. “Our investments remain there.”
Oil fell to the lowest level since March 2009 yesterday after Goldman Sachs Group Inc. and Societe Generale SA cut their price forecasts. Venezuela called on producers in the Organization of Petroleum Exporting Countries to work together to lift prices back toward $100 a barrel. The U.A.E., the fifth- largest OPEC member, produced 2.7 million barrels a day last month and has a current capacity of 3 million barrels a day, according to data compiled by Bloomberg.
What has happened in Saudi Arabia with the passing of King Abdullah should be viewed as no less than a coup that was waiting for this death to make its final move. One way or another, the change of regime will herald significant change for Saudi Arabia—and more importantly, on a wider geopolitical level. Saudi Arabia is in trouble and surrounded by enemies on all sides—mostly of its own creation. At the helm now is King Salman of the powerful Sudairi clan, while King Abdullah’s Crown Prince Muqrin bin Abdulaziz, King Abdullah’s choice, is Crown Prince (for now), but his power will be significantly reduced and he will be shadowed by King Salman’s choice of deputy crown prince, Interior Minister Mohammed Bin Nayef. Perhaps more significantly, King Salman’s 35-year-old son, Mohammed bin Salman, is now defense minister and chief of the royal court (i.e. the royal gatekeeper), replacing a figure we are all happy to see go: Khalid al-Tuwaijri, the undeniable leader of Saudi Arabia’s murky foreign intrigues.
What we are primarily interested in here is what this will mean for Saudi Arabia’s foreign policy—which has, of late, been defined less by any coherent policy and more by dangerous foreign intrigue that has led enemies dangerously close to and even stepping their toes across its borders. It has also helped create major conflicts in Yemen and Syria.
The mess in Syria and Iraq right now, and indeed the mess that lead to the death of Saudi border guards earlier this month, is in part the monster of Saudi financing (organized by Tuwaijri and notorious friend, Prince Bandar bin Sultan) of the Islamic State in Syria in its various forms.
The replacement of Tuwaijri could herald some major changes in Saudi Arabia’s list of friends and beneficiaries, but we are not necessarily looking to King Salman for these changes--as he is aging and reportedly has Alzheimer’s—rather, we are looking to his son controlling the royal court and the deputy crown prince.
What the ‘new take’ on IS and the Syria/Iraq conflict will be is unclear. Saudi Arabia is already too late to the game-change room here.
While Syria is a clear and present danger, Yemen is an immediate threat—and one in large part of the Saudi’s own making. Yemen is on the brink of all-out civil war, as we mentioned last week. The President, Prime Minister and entire government has resigned before the Houthi militia. Yemen’s long-running former leader until three years ago, Al Abdullah Saleh, has gotten into bed with anyone who could help him destroy the leadership that replaced him, and there were plenty of takers, from the highest levels of officialdom in the UAE to al-Qaeda, which Saleh has been helping for some time in an attempt to undermine the government. There will be a war. Al-Qaeda has been boosted by the Houthi siege and the government’s resignation. Now it can justify its claims to be the only group that can defend Yemen’s Sunnis. The Houthis are largely backed by Iran. Saleh played all sides here, including helping the Houthis take over the capital. The Saudis also had their hand in this, through Prince Bandar. This is interesting in itself and shows the Saudi dilemma and the difficult Iran-related choices it is going to have to make regarding Syria. The situation now, however, is that Yemen is exploding on Saudi Arabia’s border, and the Kingdom is short on friends.
Saudi foreign policy has been deplorable and has largely consisted of creating new enemies and creating dangerous shifts in Middle East geopolitics, and beyond. This is because its greatest enemy is a Sunni population that is tempted by democratic change.
For global oil, the Saudi story is one of the most important due to the high level of foreign intrigue and its dangerous activities in Syria, Iraq and Yemen.
Charges against Russian diplomats in the US and the arrest of a Russian employee of Vnesheconombank in Manhattan for economic espionage will likely be met with a similar—and possibly more creative—response from Moscow. Yevgeny Buryakov of Vnesheconombank has been arrested and two other Russian diplomats who have now left the US have been charged with economic espionage. Prosecutors say they also recruited students and business consultants to assist them.
At the same time, we are looking at another escalation of violent tensions in Ukraine’s eastern areas of Donetsk and Luhansk, where the ceasefire has been revoked. Pro-Russian separatists claim to have now pushed Ukrainian troops out of two districts outside of Donetsk, with their goal to control the entire region. The EU is considering new sanctions against Russia.
Discovery & Development
• Trading giant Vitol and Italy’s Eni are planning to develop a $7-billion offshore oil and gas project in Ghana. Offshore Cap Three Point is the largest foreign-backed investment project in Ghana’s gas sector. Ghana National Petroleum Corporation (GNPC) is now assessing the commercial potential of a new gas discovery made in partnership with Vitol and Eni. The new discovery is in the deep-water South Tano basin.
• Bad news for Cyprus: French Total SA may be considering a withdrawal from exploration in Cyprus’ Exclusive Economic Zone (EEZ), with the effort so far coming up dry for gas in Blocks 10 and 11. A final decision is expected next week. If Total withdraws from what was a two-well commitment, it will see a $79 million fine. A drop in the bucket compared to the $170 million it would cost to drill the deepwater wells. So far, the only discovery made offshore Cyrus has been by US-based Noble Energy in Block 12—but even here spudding and appraisal have been postponed. Italy’s Eni is currently drilling a second exploratory well in Block 9 (the first one was not successful).
• Australian BHP Billiton is cutting its US shale operation by 40% due to the decline in oil prices. By the end of June, the company plans to reduce its number of rigs from 26 to 16. At the same time, it says it will increase output by more than 50%. The company will focus its drilling operations on its Black Hawk field in Texas's Permian Basin.
• The Algerian government is facing demonstrations across the cities in its southern desert area over plans to exploit shale gas resources, which locals fear will affect the already scarce water supply.
Deals, Mergers & Acquisitions (and debt problems)
• Energy Transfer Partners and Regency Energy Partners—both major pipeline companies—have announced an $18-billion merger deal. This deal effectively creates the second-largest energy infrastructure company in the US. Unitholders of Regency will receive 0.4066 ETP common units and a cash payment of $0.32 share, reflecting a total price of $26.89 (assuming closing prices as of 23 January).
• Canadian-based Southern Pacific Resource Corp. (oil sands) has filed for protection from creditors through an insolvency filing under Canada’s bankruptcy law, due to low oil prices. The company is in talks with debtholders and will file a debt-restructuring plan. In December, the company said it would not be able to make an interest payment of $4.2 million to convertible unsecured bondholders.
• Connacher Oil and Gas Ltd., another Canadian-based oil sands company, has also put itself up for sale as it seeks to fix its liquidity and capital structure.
Regulations, Arbitration & Labor Issues
• Oil companies and union representatives started talks last week for a new nationwide contract covering hourly workers at 63 US refineries. This represents some 64% of the refinery capacity in the US. In February, the three-year agreement between the oil companies and United Steelworkers union (USW) will expire. The workers are seeking double the annual pay raises, among other things—otherwise they are threatening strike.
• BP will freeze pay worldwide this year for over 80,000 workers as part of its rather drastic ‘cost-cutting’ plan.
• There is a significant amount of uncertainty for foreign investors in Tanzania’s gas sector due to government corruption scandals and the ministerial resignations (not to mention ongoing regulatory uncertainty). Tanzania’s energy minister, Sospeter Muhongo, has been forced to resign over alleged illicit payments of public funds to a private power company. Muhongo is being replaced by a figure who has little gas/LNG experience, George Simbachawene, the deputy minister of land, housing and human settlement development. Nothing will move forward until elections scheduled for October 2015.
Please check the bursa announcements, Kumpulan Wang Persaraan has been massively buying Uzma engineering shares from February till now , good job to Uzma, aspect to shoot up in price soon
New IPO: Building management systems (BMS), solar thermal systems and energy-saving services provider, Solar District Cooling Bhd aims to list on the Ace Market!
MQ Trader 558 views | 3 d ago
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New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
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New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
johnmasino
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Posted by johnmasino > 2014-12-18 18:27 | Report Abuse
il stocks bounced, in their best day in three years, but oil industry analysts say the equities may be premature in celebrating a bottom in oil prices.
"I think it's too early to call that," said John Kilduff of Again Capital. "All the elements are in place that got us to these new lows. We've had episodes of backing and filling and working off some of those oversold conditions. I think the Russian situation was a disrupting event and oil was acting bad because of it. OPEC is on the wires every day saying they don't care how low it goes, they're not going to cut back."
West Texas Intermediate crude futures rose 54 cents to settle at $56.47 per barrel, while the S&P energy industry sector jumped 4.2 percent. Brent crude futures settled up 1.9 percent at $61.18 per barrel.
A new oil well head waits to be fracked at a Hess site near Williston, N.D.
Andrew Cullen | Reuters
A new oil well head waits to be fracked at a Hess site near Williston, N.D.
Read MoreOil extends gains after EIA data
Oil majors like Exxon and Chevron were sharply higher, as were energy ETFs, like Market Vectors Oil Services ETF OIH and the Energy Select Sector SPDR Fund XLE. Transocean, Diamond Offshore, Halliburton and dozens of other names in the sector saw gains of 3 and 4 percent.
Read MoreTrying to pick a bottom in energy stocks
Analysts say it could take a change in stance by OPEC for the oil market to see a bottom. "I don't think we can determine that at all yet. In the last four months we've seen rebounds in prices from $3 to $5 and the market is still headed lower," said Gene McGillian, analyst at Tradition Energy.
"Until we get a sign these things that were driving us down are changed, we're still going to go lower," said McGillian, who said short covering was a big factor Wednesday.
Fadel Gheit, senior energy analyst with Oppenheimer, said the market may be getting close to a bottom.
"All the oil stocks are rising because people believe oil prices have bottomed. That's a second strong day in a row. People think if it repeats three times then the thing is real," said Gheit.
One reason that analysts expect oil prices to remain low is that supply continues to increase and will into the first half of next year. Newer U.S. wells are expected to continue to produce several hundred thousand more barrels a day next year, down from the million barrels expected when prices were high.
U.S. oil production grew last week to 9.14 million barrels a day from 9.12 million the week earlier.
Even Russia, badly burned by lower oil prices, could also put more onto the world market. New rules on refining tariffs could result in more product exports starting in January, said Andrew Lipow, president of Lipow Oil Associates. Russian consumers could also require less fuel if the economy continues to tank, and that could put more oil on the world market.
Citigroup energy analyst Eric Lee, however, said Russian output could go either way next year, depending on how much the financial crunch is hurting production. But he does agree more U.S. oil will make it to market and also oil from other places, like Kurdistan and potentially Iraq.
"I think there will be a sub-$50 (for WTI) in our future ... I think the low for this market will be late February/March due to the slack demand period. The refineries will be in maintenance for turnarounds," Kilduff said.