Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Oil Prices

OPEC Agreement to Limit Production Boosts Crude Price 11 Percent

This article appeared online at TheNewAmerican.com on Thursday, December 1, 2016:

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

The global price of crude oil jumped more than 11 percent since OPEC announced on Wednesday its first agreement to limit production by the cartel since 2008. There are many moving parts to the agreement — perhaps too many.

First, the cartel’s de facto leader, Saudi Arabia, has promised to

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Who Knew Mexico Had So Much Oil? Who Cared?

This article was published by The McAlvany Intelligence Advisor on Monday, November 28, 2016:  

According to the CIAs 2015 World Factbook, Mexico had less than 10 billion barrels of proven crude oil reserves as of last December. That placed the country at 17th position, just ahead of Angola and just behind Algeria. The fact that it had ten times more than that underground and under the Gulf of Mexico didnt matter. If you cant get to it, it doesnt count.

And ever since 1938 a succession of Mexican statist presidents made sure no one could get to it. When then-President Lazaro Cardenas consolidated all foreign oil producers by nationalizing their properties, he named the resulting company Pemex. And then he and future presidents milked it for all it was worth, funding various socialist projects, setting up retirement plans for their political cronies, and in general ignoring the untapped reserves lying just offshore.

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OPEC to Meet in Vienna Wednesday to Plan Production Cuts

This article appeared online at TheNewAmerican.com on Friday, November 25, 2016: 

Oil ministers from the 14 oil producing countries that make up the OPEC cartel are arriving in Vienna to prepare for their formal gathering there next Wednesday. The meeting is supposed to finalize a tentative agreement reached in September that would put a cap on the cartel’s production in an effort to raise the price of a barrel of crude oil. A sufficient rise would reduce the pain currently being inflicted on those members as the decision to keep pumping in November 2014 has bitten them — some of them badly.

Saudi Arabia was forced last month to

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OPEC Lives in a Dream World

This article was published by The McAlvany Intelligence Advisor on Friday, November 18, 2016:  

There are at least two problems with Saudi Arabia’s oil minister’s dream as he expressed it on television on Thursday: one, he doesn’t know what he’s talking about, and two, what he does know is wrong.

Mark Twain put it well: “It’s not what you don’t know that kills you. It’s what you know for sure that ain’t true.”

Saudi Arabia’s Energy Minister, Khalid al-Falih (shown), still thinks OPEC can impact the world oil markets the way they were able to just a few short years ago:

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Multi-nationals Are Leaving Venezuela, Selling Out at Fire Sale Prices

This article appeared online at TheNewAmerican.com on Wednesday, November 16, 2016:  

Over the last year, General Motors, Ford Motor Company, auto parts maker Dana, Clorox, Kimberly-Clark, Bridgestone Tire, and Liberty Mutual have either sold out their Venezuelan interests at huge losses, have given their factories and properties away for free, or are planning to. Those who used to work for them are now working in another profession: as bachaqueros. This is slang for “giant ants,” used as a pejorative to describe street vendors offering their wares in the black market.

General Mills sold its operations at half the assessed value, while Dana was lucky

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OPEC Fails to Agree as U.S. Energy Industry Ramps Up

This article appeared online at TheNewAmerican.com on Monday, October 31, 2016:

After 12 hours of effort to hash out an agreement to cut oil production that can be presented formally to the Organization of Petroleum Exporting Countries in November, 14 oil ministers meeting in Vienna over the weekend gave birth to — a goose egg. Without an agreement, the November 30 gathering is likely to be irrelevant, just as the cartel itself is becoming.

Every cartel eventually blows up due to members unwillingness to 

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Saudi Arabia to Sell $10 Billion in Bonds to Shore Up Its Finances

This article appeared online at TheNewAmerican.com on Wednesday, October 19, 2016:  

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

Oil ministers from Saudi Arabia have been traveling the world doing investment “roadshows” to promote their $10-billion bond offering that hits the markets this week. In so doing, they must disclose the risks investors could be taking, and then price the bonds according to those risks.

The Saudis appear to be paying the price for losing their bet about American oil producers. In November 2014 they made a massive wager that they could

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Venezuela’s Collapse: Horror Beyond Belief

This article appeared online at TheNewAmerican.com on Tuesday, October 18, 2016:  

The Coat of arms of Venezuela

When Matt O’Brien updated his previous article on the slow-motion collapse of Venezuela on Monday for the Washington Post, he reviewed the symptoms achingly familiar to those following the events: the collapse of oil prices; the incompetence of the cronies running the state-owned oil company (former Marxist Hugo Chávez replaced the workers who knew what they were doing with political cronies who didn’t); the inflation of the currency followed as night follows day, with price controls to mask the resulting inflation; inflation, as measured by the black market’s pricing of the Venezuelan bolivar, causing the bolivar to lose more than 90 percent of its value in just two years; the empty supermarket shelves; the oppression by police of those standing in long lines to purchase whatever might be left in those stores; and on and on. As O’Brien lamented:

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Saudi Energy Minister: Crude Oil at $60 Not “Unthinkable”

This article appeared online at TheNewAmerican.com on Tuesday, October 11, 2016: 

Saudi Arabia’s energy minister, Khalid al-Falih, asserted at the World Petroleum Congress in Istanbul on Monday that he is optimistic that members of the OPEC cartel will agree on production cuts at its meeting in late November, and that it isn’t “unthinkable” that, as a result, crude oil prices could hit $60 a barrel by the end of the year.

Following late September’s informal meeting when the cartel agreed to appoint a committee to come up with options in time for the Istanbul meeting, energy traders drove the price of crude above $50 a barrel. On Monday it nearly touched its highest level for the year, reacting to Russian President Vladimir Putin’s support for OPEC’s possible cut in crude oil production to “stabilize” the market.

Such a production cut, if it takes place (OPEC members are notoriously fickle about keeping solemnly-pledged agreements), would be designed to push crude oil prices higher, but still low enough to keep “rivals from raising their output,” according to OPEC’s secretary-general following the September meeting in Algeria.

That’s going to be a trick,

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Reality Sets In: OPEC Ready to Cut Production to Raise Oil Prices

This article appeared at TheNewAmerican.com on Friday, September 30, 2016:  

Wednesday’s announcement from OPEC about an agreement to cut production to shore up crude oil prices was met with both delight and scorn by observers. Exuded Phil Flynn, senior energy analyst at Price Futures Group:

This is the first OPEC deal in eight years! The cartel proved that it still matters even in the age of shale. This is the end of the “production war” and OPEC claims victory.

Bunk, said David Petraeus, the former CIA director who was forced to resign under a cloud in November 2012 and who subsequently was hired by Wall Street firm Kohlberg Kravis Roberts to chair the firm’s newly created KKR Global Institute:

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Brazil’s Oil Company Shrinks Following Operation Car Wash Scandal

This article appeared online at TheNewAmerican.com on Tuesday, September 20, 2016: 

Brazil - The first 100% Brazilian oil platform...

Brazil – The first 100% Brazilian oil platform, the P-51 will produce about 180 thousand barrels of oil and 6 million cubic meters of gas per day when operating at full load.

Two separate announcements on Monday from officials at Petrobras, Brazil’s state-owned oil company, reveal the massive damage it has suffered over the last 10 years. First was the news that it just successfully concluded the offloading of its precious gas pipeline unit for an estimated $5 billion. The company said this was just part of its determination to sell off about $20 billion of its assets over the next couple of years in order to pay down some of its $125 billion indebtedness.

The second announcement was even more revealing:

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New North American Oil Discoveries Continue to Frustrate OPEC

This article appeared online at TheNewAmerican.com on Wednesday, September 7, 2016:  

Apache Corporation, the sixth-largest independent oil and gas producer in the United States, announced this week that it has found a new gargantuan reserve of oil and natural gas in West Texas that could be one of the largest energy finds in the last decade. At the low end, the new “Alpine High” field could contain two billion barrels of oil plus massive natural gas reserves. More importantly, especially to OPEC members gearing up to find ways to raise prices, the company’s estimated profit margin is 30 percent after taking in account all expected development costs, even with crude selling at below $50 a barrel.

Apache isn’t waiting around for higher prices but instead has already drilled 19 wells into the new field and has committed one-fourth of its capital budget this year to develop the field further. The profit potential for natural gas is nearly off the charts. So abundant is that energy source from the new field that the company’s breakeven point is just 10 cents per million British thermal units (BTUs) while the market price for natural gas closed Tuesday at $2.72. This is going to turn Apache, currently a $20 billion company, into a major player.

The discovery is also going to turn OPEC’s plans to cap production in order to drive prices higher upside down. It is planning to meet informally later this month in Algiers to plot ways that it can drive the price of crude higher in response to increasing pleas from members such as Venezuela and Algeria for higher prices.

As recently as a month ago, OPEC was hoping to drive prices back to $70 a barrel in order to reduce the financial pressures low crude oil prices have imposed on all of the cartel’s members. Now, however, it is hoping to drive prices up to $60. Last month Venezuela’s President Nicolas Maduro, under mounting pressure to solve his country’s self-imposed problems resulting in inflation and food riots, said last month that the “fair, balanced oil price must be set at $70 a barrel.” On Monday the head of Algeria’s state-owned oil company, Noureddine Boutarfa, exclaimed that oil prices “below $50 a barrel is not acceptable.”

Acceptable or not, oil prices are headed lower according to both Morgan Stanley and Bank of America. Earlier this year Morgan Stanley estimated that the price of crude would move higher, but just cut its third-quarter forecast from $50 a barrel to $45. On August 25, Bank of America estimated that demand for crude would decline further than expected.

What befuddled prognosticators was the failure of the oil market to “rebalance” during the summer when American drivers set a record, burning through nearly 10 million barrels of gasoline every day. Even though American drivers drove a record three trillion miles over the last 12 months, that failed to soak up much of the surplus overhanging the market. Now, with demand slackening after Labor Day, and an economy essentially flat-lined, there is little reason to believe that prices will move higher.

Catching OPEC by surprise was the news that U.S. frackers restarted eight oil rigs every week this summer despite the lower prices. This puts the cartel in a pickle of its own creation: If it cuts production in order to drive prices higher, this will only further encourage U.S. producers to bring more rigs online. If they continue to flood the market, their budget deficits will get even larger while still losing precious market share to the Americans.

One unnamed OPEC official told the Wall Street Journal that all of this has caught the cartel by surprise: “[The U.S. shale industry has] surprised us, and can surprise us again.”

Oil Now in a Bull Market?

This article appeared online at TheNewAmerican.com on Friday, August 19, 2016:  

English: Logo of the U.S. Energy Information A...

Energy traders looking for any sort of news that would push crude oil prices higher have found two slender reeds: a falling dollar (making American oil more expensive overseas), and a surprise report from the U.S. Energy Information Administration (EIA) showing shrinkage in the vast oversupply of crude and gasoline that has weighed on the market.

Accordingly, the price of Brent crude (priced in London) and West Texas Intermediate (priced in Oklahoma) jumped by more than 20 percent over the last week, putting it into “bull market” territory. It has led observers to conclude that

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A Lesson in Free Market Economics – from Venezuela?

This article was published by The McAlvany Intelligence Advisor on Monday, August 15, 2016:  

Over the weekend, some 54,000 Venezuelan citizens living near the country’s border with Colombia poured over the Simon Bolivar Bridge so they could buy toilet paper, cosmetics, vitamins, and tires. Many brought empty suitcases, others brought packets of the nearly worthless Venezuelan bolivar currency, still others brought gold earrings, necklaces, and other personal valuables to exchange in local pawn shops for Colombian currency so they could spend it.

They were there to buy. And the merchants were ready to sell. As they exited the bridge on foot (cars won’t be allowed for at least another month) they were greeted with friendly Colombians

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Oil Price Rise Only Temporary; Could Drop Back to Low $20s

This article appeared online at TheNewAmerican.com on Wednesday, August 10, 2016:  

On November 17, gas prices had dropped to $1.9...

In light of record supplies of gasoline and crude oil, why are prices rising? After hitting a low of $26 a barrel in January, crude oil topped $52 a barrel in early June, only to drop below $40 a barrel last week. The recent rise back above $40 is a head fake, according to oil analyst Stephen Schork, editor of the daily subscription Schork Report. The recent bounce forced massive short covering by traders convinced oil was headed back down to the $20s and had nothing to do with the fundamentals.

The fundamentals, according to Schork, are bearish for oil (and gasoline) prices, and not likely to change any time soon. Even the Energy Information Administration (EIA), the government’s watchdog agency in charge of predicting the future, has been forced to

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Production Freeze Main Topic at OPEC Late September Meeting

This article appeared online at TheNewAmerican.com on Monday, August 8, 2016: 

OPEC’s current president, Qatar’s energy minister Mohammed bin Saleh Al Sada (shown at center, above), announced Monday that the oil cartel will hold “informal” side meetings at the International Energy Forum in Algeria in late September. Not surprisingly, the topic will once again be “cooperation” among the disparate and increasingly desperate members to restrict production in efforts to force oil prices higher.

Al Sada, who holds a Ph.D. from England’s University of Manchester’s Institute of Science and Technology, asserted,

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U.S. Oil Shale Producers Putting OPEC Into Financial Bind

This article appeared online at TheNewAmerican.com on Tuesday, August 2, 2016:  

This wasn’t supposed to happen. When OPEC decided in November 2014 to keep producing crude oil at or near maximum rates, it was following an unspoken strategy to force the U.S. oil shale industry to back off. That would allow prices to rise back to levels needed to fund the cartel’s military adventures and their welfare states.

Marginal producers in the United States did declare bankruptcy, while other producers stacked most of their oil rigs, cutting daily production in the country from 9.7 million barrels per day (mpd) to 8.5 mpd. This caused crude oil prices to rise from the low 30s to the mid 50s.

But then oil prices levelled off and began to decline,

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$60 Oil “Very Possible” Says Saudi Arabia’s New Oil Minister

This article was published by TheNewAmerican.com on Friday, June 3, 2016:  

On November 17, gas prices had dropped to $1.9...

On November 17, gas prices had dropped to $1.99 in Bakersfield, California, due to falling Oil prices

Following the OPEC meeting on Thursday, Saudi Arabia’s new oil minister, Khalid Al Falin, told CNN that $60 a barrel oil is “very possible” by the end of the year, with even higher prices expected next year. He said that supply and demand in the oil market have “converged” without the OPEC cartel needing to curtail supply. In short, OPEC is celebrating its strategy of letting the lowest oil prices seen in years weed out the weak and marginal players in the United States, resulting in cuts in production. As Qatar’s oil minister exulted at a press conference in Vienna following the meeting, “The worst is over for oil.”

Translation:

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What Happens After Venezuela Destroys its Currency?

This article appeared online at TheNewAmerican.com on Friday, April 29, 2016:  

English: THE KREMLIN, MOSCOW. At a joint press...

Hugo Chavez and Vladimir Putin

Venezuela is unable to pay its currency printers. Those printers have been flying in planeloads of currency in the middle of the night, landing at airports where it is offloaded onto trucks to be dispersed to banks throughout the country. In other words, Venezuela doesn’t have the money to pay for its money.

The destruction of the currency, the bolivar fuerte (“strong bolivar”), has been documented at The New American and elsewhere. When oil prices dropped, so did revenues to fund the various socialist welfare schemes put in place by the communist Hugo Chávez and continued by his protégé, Nicolás Maduro, at Chavez’s passing in March 2013. Instead of reining in those unaffordable programs, socialist economists instead decided to print their way out of the crisis.

The results were predictable, and catastrophic.

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Have Oil Prices Hit Bottom?

This article appeared online at TheNewAmerican.com on Thursday, April 21, 2016:  

The 40 percent increase in the price of crude oil just since the end of January prompts two questions: Have investors seen the bottom in oil prices, and have drivers seen the lows in gas prices?

Todd Garner, the managing partner at Protec Energy Partners hedge fund, thinks so:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.