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Tag: oil prices

  • ExxonMobil, Chevron profits slide on low oil prices

    ExxonMobil, Chevron profits slide on low oil prices

    ExxonMobil reported a 63% slide in first quarter profits following low crude oil prices and weak refining margins.

    It reported a profit of $1.8bn (£1.24billion), a sharp decline from $4.94billion for the same period last year and its lowest quarterly profit since 1999.

    Revenue dropped 28% to $48.7bilion, but it had strong results from its petrochemicals division.

    Rival Chevron faired even worse, with a quarterly net loss of $725million.

    That compared with a net profit of $2.57billion for the same period in 2015 and was worse than analysts had expected.

    John Watson, Chevron chief executive, said: “We are controlling our spend and getting key projects under construction online, which will boost revenue.”

    Shares in ExxonMobil rose 1.4% in New York on Friday, while Chevron fell 0.6%.

    Meanwhile, oil prices hit their highest levels of the year on Friday, driven up by lower US production and a weak dollar.

    Brent crude was up 12 cents at $48.26 a barrel in afternoon trading, while US oil rose 57 cents to $46.60.

    US oil production has continued to fall in recent months, easing concerns about oversupply, while the dollar has lost almost 2% of its value against other global currencies in the past week.

    A weaker US dollar typically contributes to a rise in oil prices, because oil is priced in dollars. When the dollar weakens against other currencies, oil becomes cheaper to buy, pushing up demand.

    However, the latest rise in oil prices may be limited by a future increase in Middle East production, according to a note released by Deutsche Bank.

    Iraq and the UAE are likely to raise production after maintenance issues are resolved, Deutsche indicated, and Saudi Arabia may also increase production significantly.

    “A sustainable rise in Opec production may be just around the corner, and… the rally may pause,” Deutsche analysts said.

    But this may be tempered by events in Latin America, where Venezuela is struggling to maintain its crude output, according to a report from Eurasia Group.

    The organisation reported that low oil prices over the past two years have meant Venezuela’s government is running out of cash to keep its state-owned oil pumps operational.

    Hamza Khan, senior commodity strategist at ING, said: “The issue is that we haven’t seen price rallies … correlate with fundamentals. The fundamentals – high stocks, high production – haven’t changed.”

    The oil price has fallen dramatically over the past two years since Brent crude hit a peak of $115 a barrel in June 2014.

    One factor behind the fall has been slowing demand from China and other developing economies.

    Supplies have also increased, most notably from new sources of US shale oil.

    In addition, big producers such as Saudi Arabia have not reduced output to try to push up prices.

    Earlier this month, a meeting of the world’s leading oil exporters failed to agree a cap on production.

    Saudi Arabia appeared willing to freeze output only if all members of the Opec oil producers’ cartel agreed, including Iran.

    But Iran maintained it would continue the increase in oil production it has followed since economic sanctions were lifted earlier this year.

  • Oil prices tumble after Doha talks collapse

    Oil prices tumble after Doha talks collapse

    • Kachikwu seeks consensus among OPEC members

    Oil prices tumbled yesterday after a meeting of major exporters in Qatar collapsed without an agreement to freeze output.

    Brent crude futures fell almost seven per cent in early trading yesterday before recovering to $40.97  per barrel, still down 2.15 per cent since their last settlement.

    Traders said only an oil worker strike in Kuwait had prevented Brent from tumbling below $40 per barrel, while a cut in U.S. drilling down to 2009 levels had prevented steeper falls there.

    Also, benchmark U.S. crude futures were down more than five per cent at $38.31 a barrel.

    Goldman Sachs said the Doha no-deal could result in a “bearish catalyst” for U.S. crude prices, which it forecast would average $35 a barrel in the current quarter.

    Meanwhile, the Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) yesterday, Dr. Ibe Kachikwu has assured that despite the stalemate on crude oil production freeze, the Organisation of the Petroleum Exporting Countries (OPEC), will continue to work to achieve consensus for output freeze among oil producers.

    Addressing newsmen after the protracted meeting of OPEC and non-OPEC oil producers held under the aegis of Oil-Producing Countries Ministerial Meeting in Doha, Qatar, Dr. Kachikwu stressed that OPEC must work at achieving a workable consensus on the issue by bringing everybody on the negotiating table.

    In a statement endorsed by the Group General Manager, Group Public Affairs Division, Garba Deen Muhammad,  the minister said: “We are just going to work at it. It is a supply and demand issue and we need to consult and bring everybody into the circle and thank God that a committee is now in place to try and work towards getting everybody on board.”

    The Minister noted that once every member country of OPEC is brought on board, it would become easier to convince other major oil producers to sign-up to the freeze policy which is designed to remedy lingering decline in the price of crude oil in the international market.

    The meeting had 18 countries in attendance namely: Qatar, Kuwait, Oman, Saudi Arabia, Nigeria, Russia, Mexico, Ecuador, Trinidad and Tobago, Iraq, Mexico, Azerbaijan, Kazakhstan, Angola, Bahrain, Indonesia, Venezuela and United Arab Emirates.

    It is expected that the consensus issue been canvassed by Dr. Kachikwu will be pursued vigorously in the next OPEC Ministerial Meeting slated for June, 2016 in Vienna, Austria.

     

  • Oil prices tumble after Doha talks collapse

    Oil prices tumble after Doha talks collapse

    Oil prices tumbled on Monday after a meeting by major exporters in Qatar collapsed without an agreement to freeze output.

     

    Tensions between Saudi Arabia and Iran were blamed for the failure which revived industry fears that major government-controlled producers will increase their battle for market share by offering ever-steeper discounts.

     

    The failure also made the credibility of the OPEC producer cartel in tatters and the world awash with unwanted fuel.

    “OPEC’s credibility to coordinate output is now very low,” said Peter Lee of BMI Research, a unit of rating agency Fitch.

     

    “This isn’t just about oil for the Saudis. It’s as much about regional politics.”

     

    Morgan Stanley said that the failed deal “underscores the poor state of OPEC relations.’’

     

    “We now see a growing risk of higher OPEC supply,” especially as Saudi Arabia threatened it could hike output following the failed deal.

     

    Oil prices have fallen by as much as 70 per cent since mid-2014 as producers have pumped one to two million barrels of crude every day in excess of demand.

     

    The oversupply has led storage tanks around the world filled to the rims with unsold fuel.

     

    Sunday’s meeting in Qatar’s capital, Doha, had been expected to finalize a deal to freeze output at January levels until October 2016 in an attempt to slow that ballooning oversupply.

     

    But the agreement fell apart after top exporter Saudi Arabia demanded that Iran, which was not represented, should also sign up.

     

    The Sunni Muslim kingdom of Saudi Arabia and Shia Islamic Republic of Iran compete for influence in the Middle East, where they are currently fighting proxy wars in Syria and Yemen.

     

    Brent crude futures fell almost seven per cent in early trading on Monday before recovering to 40.97 dollars per barrel, still down 2.15 per cent since their last settlement.

     

    Traders said only an oil worker strike in Kuwait had prevented Brent from tumbling below 40 dollars per barrel, while a cut in U.S. drilling down to 2009 levels had prevented steeper falls there.

     

    Benchmark U.S. crude futures were down more than five percent at 38.31 dollars a barrel.

     

    Goldman Sachs said the Doha no-deal could a “bearish catalyst” for U.S. crude prices, which it forecast would average 35 dollars a barrel in the current quarter.

     

    Analysts said that the failed agreement would also impact the broader economy.

     

    “In the near-term, lower oil prices are bound to weigh on investor confidence and could exacerbate financial volatility,” said Frederic Neumann, co-head of Asian economics research at HSBC.

     

    “Concerns over financial stability in the energy sector and a further fall in drilling capex are headwinds to growth against an already fragile global economic backdrop.”

     

    With producers such as Saudi Arabia and Russia pumping near record levels and Iran also increasing output following the lifting of international sanctions against it last January, there is no end in sight for the global oil glut.

     

    Iran was the only OPEC member not to attend the Doha talks.

     

    Despite calls on Saudi Arabia to save the agreement, Riyadh, OPEC’s de facto leader, insisted that all 13 members must take part in any freeze.

     

    “It seems that for the Saudis politics and national pride are still more important than the price of oil,” said Ralph Leszczynski of shipbroker Banchero Costa.

     

    Iran has refused to stabilise production, seeking to regain market share post-sanctions.

     

    “Iran has no reason to auto-sanction themselves when they are just trying to get back some of the market share they lost in recent years due the western-imposed sanctions,” Leszczynski added.

     

    While tumbling oil prices hurt producers, straining the budgets of energy exporters from Russia to Malaysia, they can also benefit consumers.

    As a result of the failure at Doha, Barclays said that Brent would likely average 36 dollars per barrel during the second quarter of this year as a global glut continued unabated.

     

    “This meeting and its outcome should have built… trust among producers for possible future cooperation and coordinated action. In this regard, the meeting was a complete failure,” Barclays said.

     

    It added that “the failure of the talks gives the market another clear indication that OPEC’s relevance in this market environment has faded.”

  • Oil price hits three-months high at $41.43

    Oil price hits three-months high at $41.43

    Oil prices rose one per cent yesterday with benchmark Brent prices hitting a three-month high on hopes for a coordinated approach by major producers to support prices.

    Brent crude futures were trading at $41.43  a barrel at  their highest since Dec. 9, up 59 cents on the day.

    On Monday, the contract had climbed by 5.5 per cent in intra-day trading and it has now gained more than 50 per cent since this year low on Jan. 20.

    U.S. West Texas Intermediate (WTI) futures were up 38 cents at $38.28 a barrel.

    “The bullish sentiment continues to push prices up or the absence of negative news,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

    News of a meeting of Latin American crude producers set in Quito for Friday had boosted oil prices on Monday, and bullish sentiment swept over into yesterday’s session.

    The members of the Organisation of Petroleum Exporting Countries (OPEC)  and other producers in Russia are also due to meet for talks on March 20, according to the Nigerian petroleum minister, Dr. Ibe Kachukwu.

    Kuwait’s oil minister said yesterday that his country’s participation in an output freeze would require all major oil producers, including Iran, to be on board.

    “I’ll go full power if there’s no agreement. Every barrel I produce I’ll sell,” Anas al-Saleh told reporters in Kuwait City.

  • ‘Low oil prices, instability affecting Middle East, North Africa insurance’

    Once viewed as an economic power house among emerging markets, with seeminglyunstoppable growth prospects, the Middle East region has succumbed to a deterioration in medium-term economic forecasts, driven by unrelenting low oil prices and persisting regional instability.

    A. M. Best Associate Director, Market Development & Communications, Dr. Edem Kuenyehia made this known in a report made available to The Nation in Lagos.

    According to him, these two key challenges are likely to dictate the operating landscape of Middle East and North Africa (MENA) economies over the near to medium term,and will have repercussions for the insurance markets across the region.

    He stated that the price per barrel in January, this year stood at approximately a quarter of its market value two years previously, and at the lowest point since 2003.

    He noted that despite the substantial fall inthe price of oil, there are further potential headwinds that can place greater pressure on the sector including reduced levels of demand from emerging economies, such as China, increased shale oil extraction mainly from the United States and the prospect of Iran reenteringthe market as a major supplier following the removal of certain oil-related sanctions.

    He said: “With a clear imbalance between global supply and demand already in existence, there is concern that a further reduction in demand and, or increased supply could drive oil prices as low as $15 per barrel. The Middle East, North Africa economies displayed relatively strong levels of resilience to the 2008 global financial crisis, however, with oil production and refinement the foundation of most economies in the region, the impact and severity of a prolonged period of low hydrocarbon, political instability remains a further and somewhat interlinked challenge for the MENA.

    “Inthe aftermath of the Arab Spring uprising, some of the countries affected have made positive strides from a political standpoint while others have seen a marked deterioration. Whilst the causes for political instability have not to date been directly linked to low hydrocarbon prices. There is a concern that heightened regional instability and political tensions over the longer term may exacerbate economic pressures on many MENA economies.”

    Kuenyehia said A.M. Best believes that the impact of these two key challenges on the insurance markets inthe region is difficult to predict, but will undoubtedly hinge upon where the “new normal” oil price lands and how governments manage potential budgetary cuts and social unrest.

  • Falling oil prices: We’ll develop agriculture, other sectors –  Buhari

    Falling oil prices: We’ll develop agriculture, other sectors –  Buhari

    President Muhammadu Buhari on Tuesday night said that his administration was fully committed to increasing the productivity of Nigeria’s agriculture and solid minerals sectors to save the nation from the harsh effects of lower crude oil prices.

    Speaking at a meeting with leading members of the Council of Saudi Arabia’s Chambers of Commerce and Industry, President Buhari said that with declining revenues from crude oil exports, Nigeria’s hopes of economic resurgence now lie in the rapid development of its immense agricultural and solid mineral resources.

    Inviting Saudi Arabian businessmen to invest in both sectors, the President said that his administration will welcome greater foreign investment in support of its efforts to rapidly diversify the Nigerian economy.

    Buhari, in a statement by the Special Adviser on Media and Publicity, Femi Adesina, said that Nigeria had regrettably depended too much on crude oil exports to the neglect of other resources and was now paying a harsh price for failing to diversify its economy early enough.

    He said: “With the downturn in the global prices of oil, we now have to prospect our solid minerals. We have to return to agriculture. Mining and agriculture are our hopes now.

    “We will welcome investments in these areas. We will appreciate an in-flow of more resources and expertise to help us achieve our objective of economic diversification,” the President said.

    The governors of Osun, Ogun, Katsina, Borno, and Zamfara states, who were part of the President’s delegation, took turns to address the Saudi Arabian businessmen on investment possibilities in their states, assuring them of good returns.

    The Chairman of the Council of the Saudi Arabian Chambers of Commerce and Industry, Dr Abdulrahman Al Zamil said that agriculture was a very important area of investment for its members, adding that they were already in Brazil, the United States of America and Sudan, “where we have huge farms.”

    Declaring that they were willing to invest in Nigeria Dr. Abdulrahman Al Zamil said that the Saudis were the leading investors in Egypt, Morocco, Tunisia, Kenya and Ethiopia.

  • Low oil prices, blessing in disguise

    SIR: We have been so unfortunate to be governed by rulers instead of leaders; who knew only how to balkanise the country into unsustainable states and local governments that endlessly wait like helpless chicks of birds in the nest for monthly allocation of proceeds from the oil wealth. While other oil producing countries were massively  investing their oil wealth in developmental projects like converting the deserts into haven for industrial growth and development, petroleum refineries, building state of the art hospitals, schools, tourist havens, power generation, good transportation systems, heaven on earth palatial estates and pro-poor social programmes, our rulers were busy competing to see who will steal more than the other and stashing their humongous booty into local and foreign banks. Each succeeding regime struggled to make sure that they outdid their predecessors in the kleptomanic spree! This free for all scrambling for our common wealth when oil prices were in high heavens, had continued unchecked till the present democratic administration of President Muhammadu Buhari who has vowed to fight corruption even with his last drop of blood now that oil price is at its lowest ebb.

    One wonders where Nigeria would have been if the level of industrialization championed by private business men in the late seventies and eighties were sustained. There was hardly any part of the east especially Aba, Onitsha, Nnewi and many others that do not have manufacturing industries. Textile industries dotted the nooks and crannies of Kano, Kaduna, Aba, Onitsha, Lagos etc. Automobile industries existed in the east, west, north and south. These industries would have fully matured into giant exporting entities by today if the intoxicating oil money did not bemuse and befuddle our opportunistic rulers into thinking that there is no tomorrow. There were even some other government established industries such as Ajaokuta steel complex, Jos steel rolling mill, Aladja and Katsina steel rolling mills that were supposed to galvanize our industrial growth and development.

    Nigeria’s population size is one of the greatest assets any serious nation can wish for. Even with World Trade Organization’s free trade liberalization mantra, we could still protect our own developing market by patronizing made in Nigeria goods and services more so now that the exchange rate has gone into the high heavens. When the industries start working, jobs and more jobs will be created. Our industries will start running shifts to clear the already saturated market of the unemployed legion. The irritating band of okada riders and keke-Napep drivers will naturally disappear when our factories and farms starts running again.

    Regrettably, lack of political will and efficient economic policies mired by the stupendous oil wealth bemused the country into channelling her energy into wealth appropriation instead of creation. Provision of enabling environment for business growth and survival such as finance, good roads, water supply, electricity and security by the government was a responsibility they left for these industries. How then could they compete favourably with their foreign counterparts?

    My dream is that the current low oil prices will force Nigerians to change for the better by being more patriotic. That the federal, state and local governments will diversify their revenue streams, become less corrupt and work for the interest of the masses instead of devilish personal aggrandizement. Further devaluationof our currency now, will be pouring salt into a battered injury. It is usually export oriented economies that gain when they devalue their currencies. It would have been a somewhat different kettle of fish if we were exporting refined petroleum products. This government may not contain the salary increment pressure that will surely come from labour if naira is further devalued. Since oil revenue is now coming in trickles, let us help ourselves by minimizing capital flights through importing or expending only on necessities that does not have local alternatives even as the fight against treasury looters is sustained with gusto without minding whose ox is gored.

     

    • Kingsley Ike Okeke-Agulu, Ph.D.

    Jos.

  • Oil prices fail to rise over Saudi, Iran face off

    Oil prices fail to rise over Saudi, Iran face off

    Oil prices slid yesterday, erasing early gains, as fresh signs of an oversupplied crude market trumped concerns about increased tensions in the Middle East.

    Light, sweet crude for February delivery recently fell 41 cents, or 1.1%, to $36.63 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 20 cents, or 0.5%, to $37.08 a barrel on ICE Futures Europe.

    Prices climbed earlier yesterday on concerns about increased tensions in the Middle East. Rallies fueled by geopolitical concerns in the past two years have quickly fizzled as traders have bet that robust global production and ample inventories would mute the effect of any production outage. Heightened global unrest and still-high oil output could stoke further volatility in oil prices in the coming weeks.

    Brent prices fell 35% last year, their third straight annual loss, as a global supply glut showed few signs of abating. U.S. prices posted a second straight annual loss for the first time since 1998.

    More than 18 months into the crude-price rout, oil production remains high around the world as producers compete for market share, keeping global inventories high.

    Saudi Arabia’s execution of a dissident cleric on Saturday inflamed sectarian tensions, sparking some worry among traders that crude output in the world’s most prolific oil-producing region could be threatened. Saudi Arabia and several of its allies have severed or downgraded diplomatic ties with Iran.

    Bahrain and Sudan have severed diplomatic ties with Iran in solidarity with Saudi Arabia. The United Arab Emirates has downgraded its diplomatic team.

    Saudi Arabia produced 10.2 million barrels a day of crude oil in November, or about 11% of global output of crude and related liquids, according to the International Energy Agency. Iran produced 2.9 million barrels a day of crude that month.

    Some oil analysts and investors have argued for months that the low price of crude doesn’t adequately account for a possible supply disruption due to violence or unrest. The oil market has been vulnerable to sharp rebounds in recent months as traders who had bet on lower prices quickly reverse course.

    Money managers including hedge funds added to their bets that oil prices would fall in the week ended Dec. 22, according to the most recent data from the Commodity Futures Trading Commission. Increased concerns about geopolitical conflicts could have prompted some traders to close out their bearish bets.

    But further tension between Saudi Arabia and Iran could also expand the global glut of crude oil, weighing on prices, analysts said, as the two producers compete for market share. Iran is expected to increase its output by hundreds of thousands of barrels a day this year if international sanctions on the country are lifted, and Saudi Arabia has already expressed its unwillingness to cut production to make room for Iranian barrels.

    The heightened tensions with Saudi Arabia could encourage Iran to accelerate its production increases, analysts said.

    “For the smaller and more cash-strapped countries, such as Iran, every barrel they place in the market counts because that’s how they can get hard currency,” said Virendra Chauhan, an analyst at consulting firm Energy Aspects.

    United Nations (UN) Secretary-General, Ban Ki-Moon yesterday urged Saudi Arabia and Iran to avoid any actions that could further exacerbate the situation between the two countries and in the region.

    Ban made the call in a telephone call he made to Mr Abel bin Al-Jubeir, the Foreign Minister of Saudi Arabia and Mr Mohammad Zarif, the Iranian Foreign Minister.

    According to a readout to UN correspondents in New York, Ban stressed the importance of continued constructive engagement by both countries in the interest of the region and beyond.

    In his conversation with the Iranian foreign minister, Ban recalled his statement on the execution of Sheikh al-Nimr and 46 other prisoners by Saudi Arabia on Saturday.

    He further recalled his condemnation of the attack at the Saudi embassy in Tehran and urged the foreign minister to take the necessary measures to protect diplomatic facilities in the country.

    Speaking with the Saudi Foreign Minister Al-Jubeir, the secretary-general reiterated his views on capital punishment and his disappointment over the execution of al-Nimr, whose case he said was raised by the Saudi authorities on several occasions.

    The secretary-general reiterated that the attack on the Saudi Embassy in Tehran was deplorable.

    Ban said that the announcement of a break in Saudi diplomatic relations with Tehran was deeply worrying.

    Regarding Yemen, the UN scribe urged Saudi Arabia to renew its commitment to a ceasefire.

  • Oil prices stable after U.S. drilling cut

    Oil markets were fairly stable in early Asian trading on Monday with U.S. crude contracts receiving support from reduced American drilling.

    U.S. crude futures were trading at 44.86 dollars per barrel, up 23 cents from their last settlement, pushed by a slight fall in drilling activity.

    “Baker Hughes reported U.S. oil rig count fell 10 to 652 last week.

    “The consecutive second decline suggests a low price environment coupled with low oil price hedge is starting to impact U.S. supply,” ANZ bank said.

    The International Energy Agency said on Friday that a cut in production from non-OPEC suppliers, especially the United States, would lead to rebalancing of the market by next year.

    The global crude benchmark Brent was trading at 48.16 dollars a barrel.

    ANZ said strong supply from the Middle East remained a concern on the supply side, while Macquarie Bank noted that falling auto sales in August were acting as a drag on demand.

    “Sales were 1.0 per cent lower year-on-year, slightly more than the 0.8 per cent fall seen in July 2015,” the bank said.

    “It added that sales could pick up towards the end of the year.

  • Weak oil prices hurt Exxon Mobil, Chevron results

    Plunging crude oil prices weighed on quarterly earnings at the world’s biggest oil company.

    Exxon Mobil reported it earned $4.2bn (£2.68bn) in the second quarter, which marked a drop of more than 50 percent from last year.

    Profits increased in the company’s chemical unit during the period, but that was not enough to offset the oil price drop.

    Since last year, Brent crude oil prices have fallen more than 40 percent.

    “Our quarterly results reflect the disparate impacts of the current commodity price environment, but also demonstrate the strength of our sound operations, superior project execution capabilities, as well as continued discipline in capital and expense management,” said Rex Tillerson, Exxon Mobil’s chairman and chief executive officer. The massive drop in crude oil prices also weighed on results at oil producer, Chevron.

    Second quarter profit fell 90 percent from last year, to $571m (£365m).

    “Second quarter financial results were weak, reflecting a crude price decline of nearly 50 percent from a year ago,” Chevron chief executive officer, John Watson, said.

    “Our upstream businesses were particularly hard hit, as lower prices reduced revenues and triggered impairments and other charges,” Mr Watson added. “Downstream operations continued to deliver strong financial performance, reflecting both high reliability and improved margin.”

    Oil giant Royal Dutch Shell announced yesterday it has shed 6,500 jobs as part of cost-cutting plans as it seeks to counter falling oil prices.