If the International Energy Agency tells you that the market is well supplied, you had better believe it. The agency that represents 28 consuming countries always wants to error on the side having too much oil as opposed to not enough. The IEA is now saying that after more than two years of steadily tightening oil, market conditions appear to have reversed. It seems as the producers of oil got prepared for the loss of Iranian oil so they increased global oil inventories by an impressive 1.2 million barrels a day in the first quarter. That oil has been hoarded by many countries in Europe and Asia and the EIA pointed out that China put away about 700,000 barrels of oil a day into their reserve and Saudi Arabia is storing an additional 500,00 barrels per day. In fact the Saudis are asking for more customers, telling anyone who wants to listen that they have more oil for sale. While European and Asian oil hoarding has slowed a bit, demand is more geared towards the higher grades of crude. European and Asian refiners prefer higher quality crude and because North Sea production is struggling, they are looking more to North Africa. Of course the war in the Sudan and Syria and uncertainty in Nigeria is keeping a premium on the high grades. The IEA says that Non-OPEC oil production shut down due to technical or political problems rose by 500,000 barrels a day to 1.2 million barrels a day and that the North Sea and Canada represented the largest part of the decrease. Global Data’s energy offering, “Oil and Gas Pipelines Industry Outlook in Asia Pacific, 2012 Details of Operating and Planned Crude Oil, Petroleum Products and Natural Gas Pipelines to 2015” is the essential source for industry data and information related to the pipeline industry in Asia Pacific.
It provides asset level information related to all active and planned crude oil, petroleum products and natural gas transmission pipelines in Asia Pacific. The profiles of major companies operating in the pipeline industry in Asia Pacific are included in the report. The latest news and deals related to the sector are also provided and analyzed. OPEC agrees. It seems that for a change OPEC, the perceived leader of producing nations, and the IEA that rarely agree do so this time. OPEC said its production increased by about 136,000 barrels a day in March to 31.3 million barrels a day. In other words, in OPEC's mind they are producing about 1.3 million more barrels per day than they are actually selling. In the US, oil supply is near a 22 year high. It should be no wonder why global supply is rising. This is close to the most over supplied market that we have seen since 2008 after the crash. As the time of talks over Iran’s nuclear program nears, the stakes are growing. The Islamic republic seems to be going at out to woo its oil customers in Asia, while severing economic co-operation with Europe. Tehran is offering advantageous credit terms to Asian customers, according to Financial Times.
A number of nations including India were offered 180 days free credit which accounts to a discount of about $1.2 to $1.5 per $118 barrel per month. Iran’s move comes before crucial negotiations between Tehran and the Western over Iran’s nuclear program. Iran has extended a pay back period for importers such as China to 60 and 90 days, after Iran’s main rival Saudi Arabia and other leading Middle East countries introduced 30 days of credit. Currently Iran, which used to be the OPEC second oil producer, is struggling to boost its oil exports after being hit by EU sanctions against the country’s nuclear program. The sanctions come into force in July and will put an embargo on Iranian oil export and freeze the assets of its Central Bank. The 17th Asia Oil Weekbegins with the 21st Asia Petroleum Strategy Briefing on Monday 25 June 2012, the longest running Strategy Briefing held in and on Asia within the global upstream industry. It provides an in-depth examination of the competitive upstream oil and gas-LNG strategies in Asian exploration and development with diagnosis of portfolios held by corporate oil, Governments and National Oil Companies, whilst tracking competitors and state players across Southeast Asia and ASEAN, Australasia, China, the sub-Continent (India, Nepal, Pakistan, Bangladesh), East Asia (Japan, South Korea, Taiwan) and in old/new frontiers (Timor Lester, Sri Lanka and elsewhere).The Strategy Briefingis presented by Dr Duncan Clarke, Chairman CEO, Global Pacific Partners, a leading global strategist, speaker and author on the fast-changing world oil and gas industry.
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| Pure oil |
The 17th Asia Upstream 2012 conference is a landmark event for Asia’s exploration industry. Featuring 30+ senior-level Presentations with Speakers drawn from across Asia and worldwide and bringing together senior executives from Super-Majors, Independents, Government and National Oil Company to interface, network and negotiate deals, whilst showcasing leading corporate players. he European Union, as well as Turkey, Japan, South Korea and China have already significantly cut imports. While in February, the country’s oil production has fallen by 50,000 barrel a day to 3.38 million barrel a day, a 10-year low according to the Iain response, the Islamic Republic stopped oil sales to Greece, Spain and Germany. It halted supplies to Britain and France earlier this year. On Wednesday Tehran also banned imports from 100 European companies in order to counter the EU sanctions, according to Iranian Press TV. The banned items include “luxury items”, says Susan Khedive, Deputy President of the Iran Trade Promotion Organization.Of course the oil glut is mere child's play compared to the mother of all gluts in the natural gas market. The question is whether or not the daily injection report can save the price from total collapse. While on the Fox Business Network, listening to some other opinions on this market, I really do not believe that people are understanding the historic nature of what is happening in this market. For example, trying to look at traditional relationships between oil and gas is a waste of time. The old metrics just don't work in the new world of frocking.
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| Economical Growth |
With new wells producing more, we can get more gas with less drilling and at substantially less cost. Natural gas traded below $2.00 for the first time in a decade. The Wall Street Journal and AP laid out all the interesting facts. They said that the falling price of natural gas has been a boon to homes and businesses that use the fuel for heat and appliances, and for manufacturers that use it to power their factories and make chemicals, plastics and other materials. From October to March, households spent $868 on average on natural gas, a decline of 17 percent from last winter. Those savings have helped to relieve the burden of rising gasoline prices. Households spent $1,940 on gasoline from October to March, a 7 percent increase from the same period a year ago. Oil was higher in Asian trade Tuesday as worries about a possible disruption to Middle East crude supplies outweighed the gloom from the latest US jobs data, analysts said. New York’s main contract, West Texas Intermediate crude for delivery in May was up 24 cents at $102.70 per barrel while Brent North Sea crude for May gained nine cents to $122.76 in morning trade.”
The concerns about geopolitical tension and supply disruptions in the Middle East remain despite the underlying factors that pushed prices down in the past few days,” said Justin Harper, market strategist at IG Markets Singapore. Major crude producer Iran on Monday confirmed that nuclear talks this week with world powers would take place in Istanbul on Saturday over Tehran’s controversial nuclear program.
Keynote presentations include: Talisman Energy, Premier Oil, Roc Oil, Mubadala Oil Gas, Japex, Cairn India, KrisEnergy, Oil Search, Petromin PNG Holdings, Singapore Exchange Limited, Horizon Oil, Carnarvon Petroleum, Moyes Co, Drum Cussac Asia, Standard Chartered Bank, Larus Energy, CompactGTL, Nido Petroleum, AWE Limited, Eaglewood Energy, Risco Energy, Dart Energy, MEO Australia, United Energy Corp, Schlumberger Business Consulting, with presentations also from Government Representatives from the Philippines, New Zealand, Timor Leste, Sri Lanka, Indonesia and BangladeshIran last held talks with the so-called P5+1 powers -- Britain, China, France, Germany, Russia and the United States -- in January 2011 with no result.The United States and other Western countries fear Iran is developing a nuclear weapon, but Tehran insists that its atomic program is for exclusively peaceful purposes.Iran has threatened to shut the strategic Strait of Hormuz -- a major passageway for a fifth of the world’s oil supply -- if the West imposes further sanctions.Meanwhile, Kuwait is mulling “many scenarios” in case the Strait is closed, a top official said on Monday.Kuwait pumps around 3.0 million barrels per day and most of it is exported as crude and refined products through the Strait. Anglo Asian Mining Plc (LON:AAZ)provided an update for the three months to 31 March 2012 on operations and production at its Gedabek gold/copper/silver mine in Azerbaijan.
Keynote presentations include: Talisman Energy, Premier Oil, Roc Oil, Mubadala Oil Gas, Japex, Cairn India, KrisEnergy, Oil Search, Petromin PNG Holdings, Singapore Exchange Limited, Horizon Oil, Carnarvon Petroleum, Moyes Co, Drum Cussac Asia, Standard Chartered Bank, Larus Energy, CompactGTL, Nido Petroleum, AWE Limited, Eaglewood Energy, Risco Energy, Dart Energy, MEO Australia, United Energy Corp, Schlumberger Business Consulting, with presentations also from Government Representatives from the Philippines, New Zealand, Timor Leste, Sri Lanka, Indonesia and BangladeshIran last held talks with the so-called P5+1 powers -- Britain, China, France, Germany, Russia and the United States -- in January 2011 with no result.The United States and other Western countries fear Iran is developing a nuclear weapon, but Tehran insists that its atomic program is for exclusively peaceful purposes.Iran has threatened to shut the strategic Strait of Hormuz -- a major passageway for a fifth of the world’s oil supply -- if the West imposes further sanctions.Meanwhile, Kuwait is mulling “many scenarios” in case the Strait is closed, a top official said on Monday.Kuwait pumps around 3.0 million barrels per day and most of it is exported as crude and refined products through the Strait. Anglo Asian Mining Plc (LON:AAZ)provided an update for the three months to 31 March 2012 on operations and production at its Gedabek gold/copper/silver mine in Azerbaijan.
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| Oil of Middle East |
Gold production from heap leach processing totalled 9,925oz with gold sales of 8,252 oz at an average of US$1,679 per oz. Silver dore production for Q1 2012 totalled 7,670 oz. Copper, silver and gold production from SART operations totalled 148 tonnes of copper, 34,666 oz of silver and 27 oz of gold. Q1 2012 gold production is below that of Q4 2011 which totalled 15,292 oz.Centamin Plc (LON:CEY)announced preliminary production results from its Sukari Gold Mine in Egypt for the quarter ended 31 March 2012. Total gold production for the quarter was 49,071ounces, a 9% increase on the corresponding quarter in 2011, but a significant decrease when compared to the last quarter (58 965 oz). The underground mine achieved record quarterly material movement and underground ore production increased to 71,815t, a 3% increase on Q4 2011.Oracle Coalfields Plc (LON:ORCP) announced that it has been granted a Mining Lease by the Director General, Mines & Mineral Development, Government of Sindh, Pakistan. The Mining Lease applies to 66.1 square kilometres of Block VI of the Thar Coalfield for coal mining and extends for thirty years and may be renewed for a further thirty year period.Petropavlovsk Plc (LON:POG) issued its Interim Management Statement for the period from 1January 2012 to 31 March 2012. Attributable gold production in Q1 2012 amounted to 120,800oz with gold sales of 129,900 oz, up 5% on Q1 2011. The estimated total cash costs of operations varied between $508 per ounce for the Pioneer operation to $952 per ounce for the Pokrovskiy operation. The average realised gold sales price was US$1,690/oz. The Group believes it remains on track to achieve its target of 680,000oz of attributable gold production in 2012.But it’s one thing to have a trading system in which oil industry players place strategic bets on where prices will be months into the future; it’s another thing to have a system in which hedge funds and bankers pump billions of purely speculative dollars into commodity exchanges, chasing a limited number of barrels and driving up the price.
The same concern explains why the United States government placed limits on pure speculators in grain exchanges after repeated manipulations of crop prices during the Great Depression.The market for oil futures differs from the markets for other commodities in the sheer size and scope of trading and in the impact it has on a strategically important resource. There is a fundamental difference between oil futures and, say, orange juice futures. If orange juice gets too pricey (perhaps because of a speculative bubble), we can easily switch to apple juice. The same does not hold with oil. Higher oil prices act like a choke-chain on the economy, dragging down profits for ordinary businesses and depressing investment. When I started buying and selling oil more than 30 years ago for my nonprofit organization, speculation wasn’t a significant aspect of the industry. But in 1991, just a few years after oil futures began trading on the New York Mercantile Exchange, Goldman Sachs made an argument to the Commodity Futures Trading Commission that Wall Street dealers who put down big bets on oil should be considered legitimate hedgers and granted an exemption from regulatory limits on their trades. The commission granted an exemption that ultimately allowed Goldman Sachs to process billions of dollars in speculative oil trades. Other exemptions followed. By 2008, eight investment banks accounted for 32 percent of the total oil futures market. According to a recent analysis by McClatchy, only about 30 percent of oil futures traders are actual oil industry participants. Congress was jolted into action when it learned of the full extent of Commodity Futures Trading Commission’s lax oversight. In the wake of the economic crisis, the Dodd-Frank Wall Street reform law required greater trading transparency and limited speculators who lacked a legitimate business-hedging purpose to positions of no greater than 25 percent of the futures market. Jodie Gunzberg, S&P Indices’ Director of Commodity Indices, Mike Davis, ICE Futures Europe’s Director of Market Development, and Nicholas Kennedy, NYSE Liffe’s Head of Business Development for Commodity Derivatives, shared their thoughts on the outlook for various commodities and Asian economies in the coming year. China: What growth slowdown means China’s red-hot economy is slowing down as it increases its government shifts the country’s focus towards domestic consumption and reduce dependence on export. Commodity prices have fallen broadly as more evidence of China's slowing economy has renewed concerns about its future demand for everything from oil and copper to soybeans.As well, investors are concerned about global and regional developments including political turbulence in the Middle East, India’s economic and energy policy changes and the Fukushima nuclear disaster, and their impacts on the commodity and financial markets, said Ms Gunzberg.
China's rapid growth has slowed in the past year because of government measures designed to prevent the economy from overheating.Ms Gunzberg observed that China’s economic growth had slowed to 8.9% in the final quarter of 2011, compared with a double-digit rate of expansion the previous year. For 2012, the government has set a growth target of 7.5%.Stellar Diamonds plc (LON:STEL)announces it has received a letter from the Ministry of Mines of Sierra Leone in relation to its two licences in the Country's Kono district. The letter asserts that the Ministry ought not to have granted the renewals of the Company's licences in 2010 under the Mines and Minerals Act of 2009 and that as a result the Company no longer has mineral rights over the licences. Stellar Diamonds disputes the assertions and is seeking clarification of the position with the Ministry. The Company has not received any similar correspondence on the Tongo exploration licence which was also renewed in November 2011 on the same basis as the Kono licences. In a separate announcement, the Company announced the latest bulk sampling results from the Lion-5 Kimberlite in Kono. 346 dry tonnes of kimberlite were processed to yield 312 carats for in-situ grade of 90cpht. Diamond values have been modelled at $220 per carat indicating in-situ kimberlite value of $198 per tonne.
Oil & Gas NewsRed Emperor (LON:RMP) The news of yet even more oil shows on drilling through tight limestone and shale could be a significant step towards unlocking the potential within the structure as it indicates that the hydrocarbons in the shallow horizons have migrated, suggesting that the region does have reservoir quality sandstones (permeability, porosity, etc.). While shareholders will be encouraged by the oil and gas shows, there is still a long way to go before the Company can draw concrete conclusions from the analysis and results of the drilling to date as to whether they are oil bearing. However, traces of oil and gas in shallower horizons and subsequently an active petroleum system increases the chance of a commercial success with this well. In the news:THE drastic rise in the price of oil and gasoline is in part the result of forces beyond our control: as high-growth countries like China and India increase the demand for petroleum, the price will go up.But there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of “pure” speculators — investors who buy and sell oil futures but never take physical possession of actual barrels of oil.
These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. They should be banned from the world’s commodity exchanges, which could drive down the price of oil by as much as 40 percent and the price of gasoline by as much as $1 a gallon. Today, speculators dominate the trading of oil futures. According to Congressional testimony by the commodities specialist Michael W. Masters in 2009, the oil futures markets routinely trade more than one billion barrels of oil per day. Given that the entire world produces only around 85 million actual “wet” barrels a day, this means that more than 90 percent of trading involves speculators’ exchanging “paper” barrels with one another.Because of speculation, today’s oil prices of about $100 a barrel have become disconnected from the costs of extraction, which average $11 a barrel worldwide. Pure speculators account for as much as 40 percent of that high price, according to testimony that Rex Tillerson, the chief executive of ExxonMobil, gave to Congress last year. That estimate is bolstered by a recent report from the Federal Reserve Bank of St. Louis. Many economists contend that speculation on oil futures is a good thing, because it increases liquidity and better distributes risk, allowing refiners, producers, wholesalers and consumers (like airlines) to “hedge” their positions more efficiently, protecting themselves against unseen future shifts in the price of oil.