Wednesday, March 15, 2017

Hail Shale: OPEC Is Losing The Global Oil Game

US Shale Revolution Yields New World Order
Brought to you by Benny Peiser's Global Warming Policy Forum

The prospect of rising US shale production threatens to undermine the efforts of OPEC, which now looks at risk of having ceded market share for no substantial price gain. --Jesse Snyder, Financial Post, 11 March 2017

Oil settles at the lowest level since November as record U.S. crude inventories and a boost in drilling activity threaten OPEC’s efforts to reduce a global glut. Bloomberg, 13 March 2017

US shale has been the largest single factor affecting the global energy business in the last decade. Expectations have been overturned; prices set in a climate of ever-increasing scarcity and dependence on volatile insecure producing areas have been undermined. Those who assumed the shale revolution would be killed off by a cyclical downturn in prices have been proved wrong. Instead, we are seeing a structural shift with supply growth exceeding demand. The implications, especially for countries dependent on earning high prices for their exports, are very serious. The net effect is a redistribution of wealth away from producers in favour of consumers. We are in for a long period of instability, driven this time not by scarcity but by plenty. --Nick Butler, Financial Times, 13 March 2017

Russia’s oil giant Rosneft sees a lack of will among the main signatories to the OPEC/non-OPEC deal and U.S. shale production as the main risks to a possible extension of the global supply cut deal, a Rosneft spokesman told Reuters on Monday. The deal had held prices above $50 per barrel before WTI fell to below $50 a barrel last week for the first time since December. This drop has further increased speculation whether the deal should or would be extended beyond its original expiry date at end-June, given the rise in U.S. shale. --Tsvetana Paraskova, OIlPrice, 13 March 2017

Oil’s fall from grace last week started with hedge funds, and it may only get worse from here. Investors cut bullish wagers on West Texas Intermediate crude to a one month-low, according to U.S. Commodity Futures Trading Commission data, a move that came just prior to a market dive that sent prices below $50 a barrel for the first time since December. Optimism about an agreement between the Organization of Petroleum Exporting Countries and some non-OPEC producers to cut output is fizzling as stockpiles continue to climb and U.S. drilling rigs are returning at the fastest rate since 2012. --Mark Shenk, Bloomberg, 13 March 2017

Pierre Andurand, one of the world’s best-known oil traders, has suffered a large loss at the start of this year because of wrong-way bets on crude. Mr. Andurand, who runs the $1.5 billion Andurand Commodities Fund, lost 8.5%, or approximately $130 million, in the first two months of this year, according to numbers sent to investors and reviewed by The Wall Street Journal. The loss makes his fund one of the global hedge-fund industry’s worst-performers in 2017. Like many funds, his has been too positive of late, recently forecasting oil would hit $70 a barrel early this year. On Monday, Brent, the global price benchmark, was trading at $51.26 per barrel, while U.S. crude was trading at $48.30 a barrel. --Laurence Fletcher, The Wall Street Journal, 13 March 2017

Some 1.2 billion barrels of oil have been discovered in Alaska, marking the biggest onshore discovery in the U.S. in three decades. The massive find of conventional oil on state land could bring relief to budget pains in Alaska brought on by slumping production in the state and the crash in oil prices. --Matt Egan, CNN Money, 10 March 2017

There’s something new and beautiful happening as a result of the US shale gas industry. Our nation is now in position to dominate a new world order in energy with huge benefits to rural America and nations around the world who are emerging from poverty. It’s a story of exports, something we’ve not done so well at it in a very long time. It’s about shale gas produced in Pennsylvania, Ohio and Texas that is being converted to LNG and sold to Egypt, Mexico and Japan. It offers a demonstration of just how important energy infrastructure is to this country if we want to maximize the benefits of the shale revolution. --Tom Shepstone, Natural Gas Now, 12 March 2017

Germany has always acted as pioneer and model pupil in climate policy. This role is now coming to an end. Minister of the Chancellery, Peter Altmaier, has denounced climate unilateralism. The federal Minister for Special Responsibilities promised the assembled business leaders and managers to fulfil a long-cherished wish: Germany’s expensive go-it-alone climatic policies could soon be over for good.  “I am firmly convinced that the path of national climate targets is wrong,” Altmaier told the participants of the exclusive “Convention on Energy and Climate Policy” organised by the economic council of the ruling Christian Democratic Party (CDU). --Daniel Wetzel, Die Welt, 11 March 2017


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