Posted on 08/12/2015 6:04:11 AM PDT by thackney
U.S. oil fell to a six-year low Tuesday, pummeled by China’s plummeting currency and a growing conviction that global demand can’t catch up with an unrelenting supply of crude.
Oil, in tumult for more than a year, continued a summer swoon that took it below the lows it plumbed this spring. Production is still near historic highs in both the U.S. and the Organization of the Petroleum Exporting Countries, new data show. It indicates suppliers around the world are still mired in a fight for customers that ramped up output and took down prices nearly 60% from the highs of 2014.
The latest blow came from China, which devalued its tightly controlled currency Tuesday, spreading pessimism among investors about China’s economy and the possibility of a currency war. The yuan registered its biggest one-day loss in two decades following the central bank’s decision.
The plunge should make China’s imports of dollar-priced commodities such as oil more expensive, a discouraging sign for demand for the world’s second-biggest petroleum consumer, analysts said. It could also send the dollar rallying, a factor that has repeatedly pushed crude prices lower.
It “suggests that the Chinese economy is still struggling to move out of its slowing pattern and into a growth spurt,” Dominick Chirichella, analyst at the Energy Management Institute, said in a note. “Overall it continues to suggest that the main oil growth engine of the world is not going to come to the rescue of the oversupplied global oil market anytime soon.”
Light, sweet crude for September delivery fell $1.88, or 4.2%, to settle at $43.08 a barrel on the New York Mercantile Exchange. It was the largest one-day percentage loss in more than a month and sent U.S. oil to its lowest settlement since March 11, 2009, when the U.S. economy...
(Excerpt) Read more at wsj.com ...
Oil Majors’ Downstream Outlook Lacks Refinement
http://www.wsj.com/articles/oil-majors-downstream-outlook-lacks-refinement-1439381373
Brent crude is hovering around $50 a barrel. But in other ways for Europe’s oil and gas majors, this is probably as good as it gets.
Refining margins have soared in 2015, reaching their highest levels in more than two and half years, according to data from Finland’s Neste. The initial improvement in margins, after oil prices started to slide last year, wasn’t surprising: product prices fall more slowly than crude and lower oil prices also reduce European refineries’ energy costs.
But the continued rise in profitability was unexpected. Downstream earnings in the second quarter beat forecasts by 6 to 7% for integrated oil and gas companies, like BP, Royal Dutch Shell and Total, notes Jefferies. That helped cushion the blow of low oil prices to upstream businesses, especially as producers cranked up refineries to take advantage.
...Europe’s refineries are generally more geared toward a weaker part of the market, producing middle distillates like diesel or jet fuel. Middle distillate stocks have been rising, according to the International Energy Agency, while the ramp up of big Middle Eastern refineries adds further to diesel output.
There may be new opportunities, argues Saras, particularly for those with complex refineries that can handle the type of heavy, sour crude that should start flowing from Iraq and potentially Iran and is usually priced at a discount to global benchmarks.
Margins seem increasingly unlikely to collapse back into the doldrums.
excerpted
On one hand, this hurts some of my investments. On the other hand, the future loss is overshadowed by the current gain in cheaper gas.
I work for an adhesive manufacturer. We use oil and oil containing products in production and packaging. This helps by lowering production and transportation costs and helps increase the bottom line. Which, since I’ve got some company stock, it also helps my bottom line.
Kind of a circle of life thing.
Plus, the Saudi’s may have to live on a budget, Iranians may lose out and this really hurts Russia.
Win all around.
It is about $100 lower than the peak under President Bush.
I;m paying $2.60/gal here in SW Ohio. It was 2.22/gal last week.
Breakdown at Indiana refinery sends Midwest gas prices soaring
http://fuelfix.com/blog/2015/08/11/breakdown-at-indiana-refinery-sends-midwest-gas-prices-soaring/
For want of a refinery unit in Indiana, oil in Oklahoma and Alberta is tumbling and gasoline in the Midwest is soaring.
Leaking tubes on a piece of equipment forced BP Plc to shut the largest crude unit at its refinery near Chicago over the weekend, according to a person familiar with operations there. It could be down for at least a month. The shutdown of the most important unit in the biggest plant in the Midwest has disrupted markets throughout the region.
It puts extra oil onto an already-oversupplied market and cuts the supply of gasoline to the Midwest in the middle of peak summer demand. That’s helped push heavy Canadian crude to trade at the lowest level in a year and propelled wholesale gasoline in Chicago to the highest level since 2013.
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Meanwhile, Texas has begun to see gasoline prices below $2.
http://www.texasgasprices.com/
I gave $1.99 for regular in Terrell Tx.
It’s amazing how refinery maintenance problems come up so conveniently when crude prices tank, innit?????
You think a company intentionally shuts down their own refinery so that their competition can profit more?
....and yet the average price over HUSSEIN’S tenure has been MUCH higher than under Dubya.
Do you have a clue as to the complexity of a modern refinery?
Yes, pretty much the average price of everything goes up over a decade or so.
What would you estimate is the cash cost per barrel of the lowest-cost frackers? I believe Gulf oil producers bottom out in the low single digits.
First I’ve got to respond, frackers is a terrible term.
Hydraulic Fracturing is done by service companies. Oil production is done by the producers and owners.
The cost to go drill a new well and be economic is far larger than the cost to keep a well already drilled in production.
At least 4 counties, the main areas for new oil wells in the Bakken, were having a breakeven cost at or below $37.
Dunn $29
McKenzie $30
Williams $36
Stark $37
https://www.dmr.nd.gov/oilgas/presentations/FullHouseAppropriations010815.pdf
Page 7
That was to drill a new well. For wells already in operations producing oil, the average is $15 a barrel before they operating cost would match selling price.
Given that they also need to keep servicing their debt to keep operating, my guess is that their uncle point is somewhat above $15, depending on their indebtedness.
Financing costs will vary greatly. Some have no debt at all because they have rode this roller coaster before.
But if a company cannot make their payments, the wells are going to be sold to someone else that took more care with their finances. The well is not going to stop flowing if it makes more dollars than it costs to operate.
Some country is going to start a war if oil remains this cheap for too long.
Venezuela: Could Guyana Be Maduro’s Falklands?
http://www.worldcrunch.com/opinion-analysis/venezuela-could-guyana-be-maduro-s-falklands-/venezuela-nicolas-maduro-guyana-falklands-nationalism/c7s19248/
Venezuela, facing economic turmoil and the challenge of upcoming legislative elections, is inflaming a centuries-old border dispute with Guyana.
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