Posts Tagged ‘prices’

Energy Economist: Shale oil’s response to prices may call for industry re-evaluation

Shale oil’s investment cycle is shorter and its decline profile sharper than conventional oil production. Current indicators suggest legacy declines from shale will catch up fast with the industry. This points to a sharp deceleration in US shale oil output. But, while conventional oil takes time to slow down, it also takes time to speed up. It will be shale that is best placed to benefit from any oil price recovery, as Ross McCracken, managing editor of Platts Energy Economist, explains in this month’s selection from the publication. The full analysis can be found in the February 2015 issue, which is also issue 400 of Energy Economist.

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The most powerful sanction against Iran? Try US crude exports

As the US Senate deliberates a new round of sanctions on Iran, two former Obama advisers make a compelling case for a powerful policy lever that is not even on the table — US crude exports.

The economic arguments for exporting US crude are fairly well-known and the main ones are trotted out by oil industry groups. But the foreign policy benefits of exports are not as widely talked about.

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California’s cap-and-trade no more than road bump in gasoline’s steep price decline

Drivers in car-crazed California paid more than 10% more for their gasoline at the start of the year. They just didn’t realize it.

As expected, California’s introduction of the emissions cap-and-trade program for transportation fuel suppliers boosted Los Angeles regular gasoline rack prices nearly 17 cents in the first two days of 2015 to $1.5885/gal. The rack is the wholesale level where gasoline and diesel is moved onto those often-shiny tanker trucks that hold roughly 9,000 gallons.

What barely changed right away was the price up and down the supply chain.

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Then and now: How prices of key petrochemicals in the US behaved the last time crude was $50/b

With oil prices at lows not seen in more than 5 1/2 years,  the global petrochemical industry finds itself playing memory games as it craves some much-needed guidance regarding price behavior.

Whether you believe past performance is the best indicator of current and future behavior – or the worst – it’s always fun to look back, right?

With that in mind, let’s take a peek at how prices of key petrochemicals in the US behaved in 2009 versus today.

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Is politicking pushing oil prices lower?

The immediate reason for the oil price plunge seems fairly clear – producers going gung-ho at a time of weak demand, which is not helped by the buoyant greenback.

What is murkier, perhaps, is how geopolitical agendas and motivations are feeding the bear market.

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The crude price plunge and LNG, a tenuous link

Over the last several months there has been much discussion about the impact of falling crude oil prices on the liquefied natural gas market. The conventional argument goes something like this: lower crude prices are making oil-linked LNG contracts cheaper and are putting pressure on the spot market as these contracts increasingly undercut spot prices.

At first glance, this argument appears quite compelling. On January 14, 2015, the price of Platts-assessed Dated Brent was $45.73/b. For buyers using 14.5% slope to crude, not uncommon in the Asia-Pacific market, that would equate to an LNG price of just $6.63/MMBtu. By comparison, the Platts JKM price (a spot index for the Asian LNG market) was assessed significantly higher at $9.38/MMBtu on the same day.

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Despite lower 2015 capex, could continued oil output gains delay price recovery?

Upstream operators that released 2015 preliminary capital budgets a few months before the year-end holidays have returned to the surgical table for more fiscal liposuction on already slender frames.  Despite this, they and other producers insist they can continue to grow oil production this year, and for some, growth will be in the double-digits.

Last week alone, small producers Halcon Resources, Sanchez Energy and Concho Resources all slashed projected 2015 capital spending by 48%, 29% and 33%, respectively.  In some cases this was the second revision from preliminary figures announced before oil prices began their steep descent to current levels below $50/b.

They are not alone.  Even the bigger players such as Continental Resources, a big Bakken Shale producer, said in late December its capex would be 41% lower than contemplated in early November when prices were still in the high $70s/b range, while ConocoPhillips will shave 20% off its budget compared to last year.

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The Oil Big Five: New year, new worries?

This is the first Oil Big Five post for 2015, and we’re happy to still be sharing with you some of the big issues and topics our global oil editors and analysts are tracking. The start of a new year often brings the dreaded New Year’s Resolutions, and we’d like the oil industry to promise to continue always being interesting, complex, sometimes befuddling, and rife with interesting subplots, some of which we feature below.

If you get nostalgic for 2014 (ah, remember those heady early months with oil prices above $100?), check out our archives, but what we’re really hoping you’ll do is leave us a comment here or tweet us @PlattsOil with the hashtag #oilbig5 with your thoughts about what’s most important in the industry right now.

Here are some of the topics that have caught the eyes of those in Platts offices around the world:

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UK warns utilities to pass on falling fuel costs

The UK’s finance minister, George Osborne, has reacted to plunging crude oil prices by warning energy companies to make sure they pass on to customers any reduction in their own fuel costs. With just four months to go till the country’s May 7 general election, politicians are likely to keep up the pressure on utilities. But how far have UK gas prices fallen?

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Indexology: A strong US dollar isn’t bad for all commodities

Jodie Gunzberg is the global  head of commodities for S&P Dow Jones Indices, which like Platts is part of McGraw Hill Financial. She writes on commodity investing on the Indexology blog. Her post from January 6, discussing the link between the US dollar the price of commodities, is reproduced here. 

A strong US dollar is generally bad news for commodities since historically as the US dollar strengthens, goods priced in dollars become more expensive for other currencies. The historical negative relationship between the US dollar and the S&P GSCI is shown below.

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