energy and markets newsletter 121511
TRANSCRIPT
8/3/2019 Energy and Markets Newsletter 121511
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December 15,2011
Energy Data Highlights
Crude oil futures price12/13/2011: $100.14/bbldown$1.14 from week earlierup$11.53 from year earlier
Natural gas futures price12/13/2011: $3.279/mmBtudown$0.208 from week earlierdown$1.141 from year earlier
Retail heating oil price12/12/2011: $3.866 /galdown$0.028 from week earlierup$0.624 from year earlier
Crude oil inventories12/9/2011: 334.2 mmbbl
down1.9 mmbbl from week earlierdown11.9 mmbbl from year earlier
Weekly coal production12/3/2011: 22.106 million tonsup1.299 million tons from week earlierup0.273 million tons from year earlier
Natural Gas/ Power News
EIA Storage Release 12/8/11 (Actual): -20 Bcf Previous Week: -1 Bcf +2.7% Change from 1 Year Ago+8.7% Change 5-year Average
Fracking Has Formerly Stable Ohio City Aquiver Over Quakes
When Youngstown, Ohio, shook on Sept. 29, Karen Fox thought her daughter was
crashing down the stairs. “It rumbled enough where you could hear the windows
shaking,” Fox said in a telephone interview. “I ran downstairs and said, ‘My God,
are you OK?’ And she looked at me and she says, ‘I was running upstairs to see if
you were OK.’” Earthquakes weren’t recorded around Youngstown until D&L
Follow
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Energy Inc. began injecting wastewater from drilling into a 9,300-foot disposal well
in December 2010. From March through Nov. 25, there were nine in an area of
about 4.5 square miles west of the shaft, according to the state-coordinated Ohio
Seismic Network. As hydraulic fracturing produces natural gas by forcing
chemically treated water and sand underground, groups such as the Natural
Resources Defense Council question whether the risks of the process are worth it.A U.S. Environmental Protection Agency report Dec. 8 linked so-called fracking in
Wyoming to contaminated groundwater. Now, with temblors in states including
Ohio, Arkansas and Texas that researchers say may have been caused by
wastewater wells, residents also have to worry about their houses falling apart,
said Fox.
http://www.bloomberg.com/news/2011-12-14/fracking-has-formerly-stable-ohio-
city-aquiver-over-earthquakes.html
Fracking revolution goes global Forget OPEC. By far the most important oil news is that Saudi Aramco and China'sgiant Sinopec and CNOOC energy firms are each in talks to buy up to a 30 percentstake in U.S. oil and gas services company Frac Tech International. Frac Tech'sexpertise in hydraulic fracturing makes it a major player in the fast-growing part of the oil and gas industry, which is set to radically alter the world's energy supplypicture in the next decade.http://www.commodities-now.com/commodities-now-reports/power-and-energy/9290-fracking-revolution-goes-global.html
West Virginia Legislature adopts Marcellus Shale bill
Following four days of debate, the West Virginia Senate Wednesday gave finalapproval to legislation governing the state's Marcellus Shale reserves.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6768120
EU Energy Roadmap 2050 sees natural gas, renewables as 'critical'
Natural gas and renewables have been identified as "critical" energy sources to
2050 in each of the seven scenarios outlined by the European Commission in its
Energy Roadmap 2050 published Thursday.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8703636
Arizona regulators approve $52.9 million Southwest Gas rate hike
The Arizona Corporation Commission has approved a $52.9 million, or 7.7%,
general rate hike for Las Vegas-based Southwest Gas.
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6768124
ENN Energy Shares Tumble as China Gas Rejects Bid
Shares of Chinese city piped gas distributor ENN Energy fell nearly 8 percent on
Thursday as analysts expect it to raise its joint $2.2 billion unsolicited offer with
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Sinopec for industry counterpart China Gas…"The losses today for ENN arecompounded by the decline in commodities-related sectors after a slump in thephysical market," said Jackson Wong, vice-president of equity sales at TanrichSecurities in Hong Kong. "Otherwise, it's rather normal for the shares of acompany looking to acquire another to dip."http://www.cnbc.com/id/45675961
Japan’s ‘Big, Old Businesses’ Eye $200 Billion Power Market Post
Fukushima
Japan’s trading companies own enough electricity capacity to supply more than 40
percent of the country’s homes. Problem is, their generators aren’t in Japan. Mitsui
& Co. (8031), the second-largest trading house, says that may change as the
Fukushima nuclear disaster forces a review of electricity monopolies set up after
World War II. It’s an opportunity rivals Marubeni Corp. (8002) and Sumitomo Corp.
(8053) are also looking at, along with Tokyo Gas Co. (9531) Japan’s 10 regional
utilities dominate production, transmission and distribution of power throughoutthe country, generating combined annual revenue of 15.7 trillion yen ($200
billion), according to data compiled by Bloomberg. The government review of the
industry includes plant sales and law changes to spin off transmission businesses
from power plants. “It’s an investment opportunity for these guys and they are all
interested,” Penn Bowers, an analyst covering Japanese trading (8058) houses and
utilities with CLSA Asia-Pacific Markets in Tokyo, said in an interview. “Trading
companies are big, old businesses. They see deregulation and they can throw a lot
of capital on it.”
http://www.bloomberg.com/news/2011-12-14/japan-s-big-old-businesses-eye-200-
billion-power-market-post-fukushima.html
Green/ Alternative Energy News
Renewable energy industry urges US Senate to extend tax credits
Representatives from across the US renewable energy industry on Wednesday
urged members of the Senate Finance Subcommittee on Energy, Natural
Resources and Infrastructure to extend tax incentives for wind, solar and biofuels
that are scheduled to expire at the end of this year or next.
Crude Oil News
OPEC Daily Basket Price 12/14/2011- $106.88
(OPEC Daily Basket Price 12/13/2011- $107.65)
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Oil Climbs From Five-Week Low After Technical-Support Level Trigger
Buying
Oil rebounded from a five-week low in New York on speculation that yesterday’s
drop, the biggest since September, was exaggerated. West Texas Intermediate
futures gained as much as 1 percent after nearing the 50-day moving average,
signaling yesterday’s sell-off was overdone, according to data compiled by
Bloomberg. The euro stabilized after dropping yesterday to the lowest level
against the dollar since January. China’s purchasing managers’ index data showed
manufacturing recovered from its biggest contraction since March 2009. “We had
a huge sell-off yesterday, but today the euro is steady, and China’s PMI data
improved from the previous month, helping the markets,” saidRobert Montefusco,
senior broker at Sucden Financial in London.
http://www.bloomberg.com/news/2011-12-15/oil-climbs-from-five-week-low-after-
technical-support-level-trigger-buying.html
Oil Prices Recover Slightly as the Dollar Weakens
Oil prices climbed towards $106 on Thursday, supported by a weaker dollar andrenewed buying interest after the steepest plunge in nearly three months wipedfour percent off crude markets in the previous session. Rekindled fears aboutEurope's debt crisis helped trigger a downturn across asset classes onWednesday, while oil market losses were compounded by the lack of agreementby the Organization of Petroleum Exporting Countries (OPEC) on individual outputallocations limiting oil supply. "The OPEC outcome will have little influence onpolicy and net supply but sentiment-wise contributed to the combination of events
that led to weakness yesterday," said Gareth Lewis-Davies, a senior energystrategist at BNP Paribas. "This morning, oil is moving in response to a reversal ininvestor risk appetite in line with a move in currencies," he continued.http://www.cnbc.com/id/45675274
Oil rises to near $96 in Asia after plunging previous session amid Europe
debt fears
Oil prices rose to near $96 a barrel Thursday in Asia after plunging the previous
session on investor pessimism that Europe’s debt crisis will trigger a recession on
the continent next year. Benchmark crude for January delivery was up 95 cents to$95.90 a barrel in late afternoon Singapore time in electronic trading on the New
York Mercantile Exchange. The contract fell $5.19, or 5.2 percent, to settle at
$94.95 on Wednesday.
http://www.washingtonpost.com/national/falling-euro-pushes-oil-price-below-97-
for-first-time-this-month/2011/12/14/gIQAJIMwtO_story.html
NYMEX crude settles $5.19/b lower as euro dips to 11-month low
NYMEX January crude futures settled $5.19 lower at $94.95/barrel Wednesday,
falling sharply as the euro fell to an 11-month low as fears of European debt
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contagion sent jitters through the marketplace. January heating oil settled 9.89
cents lower at $2.8299/gal and January RBOB settled 12.17 cents lower at
$2.5037/gal. ICE January Brent, which dipped to a more than two-month low at
$104.36/b, settled down $4.48 at $105.02/b. NYMEX crude settles $5.19/b lower
as euro dips to 11-month low
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6768119
OPEC Oil Deal Puts Saudi Back in ChargeOPEC oil producers on Wednesday sealed their first new output agreement inthree years in a deal that settles a 6-month-old argument over supply policy firmlyin Saudi Arabia's favor. The Organization of the Petroleum Exporting Countriesagreed a target of 30 million barrels daily, ratifying current production near 3-yearhighs. It did not discuss individual national quotas. The deal vindicates SaudiArabia after its proposal to raise output in June to stem rising prices was rejectedby price hawks led by Iran, Algeria and Venezuela. "For the Saudis it's a fantasticdecision," said Jamie Webster of Washington consultancy PFC Energy. Saudi said itpumped 10 million barrels a day last month, 25 percent above its old OPEC quota,in what Gulf delegates said was a demonstration of strength to the price hawksahead of the meeting.http://www.cnbc.com/id/45679094
Return to Gulf: Big Oil Grabs Leases
The oil-and-gas industry took another step from the shadows of the DeepwaterHorizon disaster on Wednesday when federal officials unsealed more than $330million in winning bids for drilling leases in the Gulf of Mexico, the first offeredthere since the deadly April 2010 accident. Some 21 million acres of federalwaters—an area roughly the size of South Carolina—stretching hundreds of milesoff the Texas coast were up for bid. The auction attracted $337.6 million inwinning bids for 191 available blocks that could eventually lead to more than 400million of barrels of oil production. Twenty companies placed 241 bids for the rightto explore for oil and gas, including a $103.2 million winning bid on a deep-waterblock by ConocoPhillips Co. that elicited gasps from the more than 200 attendees.Conoco made the most winning bids with 75, while Exxon Mobil Corp. placed 50winning bids.http://online.wsj.com/article/SB10001424052970203893404577098773281211592.html?mod=WSJ_Commodities_LEFTTopNews
Brazil sues over oil spill Brazil’s federal prosecutors have filed suit against Chevron and Transocean for
R$20bn ($10.6bn) in damages and demanded that both companies shut their
operations in the country, in the strongest response yet to an oil spill off the coast
of Rio de Janeiro last month. At around 3,000 barrels, the spill in Rio’s Campos
basin was relatively small and has been plugged, but Brazilian officials have
sought to make an example out of the US oil companies as a warning to other
foreign companies looking to profit from the region’s lucrative new-found
reserves. Prosecutors late on Wednesday said the companies had shown “a lack of
planning and environmental management” in their attempts to control the spill,
asking that both Chevron and Transocean be banned from Brazil or face daily fines
of R$500m.
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http://www.ft.com/intl/cms/s/0/54077ca0-26ab-11e1-91cd-00144feabdc0.html#axzz1gVwD3kfJ
Heating Fuels to Miss Cold of Past Two U.S. Winters
The biting cold of the past two winters in the U.S. may be delayed until January, if
it comes at all, easing demand for heating fuels during their peak season. While
cold weather may make brief appearances in much of the U.S. this month, overallDecember temperatures will be above-normal and that may be a pattern for the
winter of 2011- 2012, said Jim Rouiller, senior energy meteorologist at Planalytics
Inc. in Berwyn, Pennsylvania.
http://www.bloomberg.com/news/2011-12-14/u-s-winter-to-miss-biting-cold-of-
past-two-seasons.html
Oil Rich America
There is a revolution going on in America. But it is not part of the Tea Party or the
loud Occupy Wall Street protests. Instead, massive new reserves of gas, oil, and
coal are being discovered almost everywhere in the United States, due torevolutionary methods of exploration and exploitation such as fracking and
horizontal drilling. Current prices of over $100 a barrel make even complex efforts
at recovery enormously profitable. There were always known to be additional
untapped reserves of oil and gas in the petroleum-rich Gulf of Mexico, off
America’s shores, and in the American West and Alaska. But even the top energy
experts never imagined just how vast the energy there was — or that it was also
beneath far more unlikely places such as South Dakota, Pennsylvania, Ohio, and
New York. Some studies suggest the United States has now expanded its known
potential gas and oil reserves tenfold. The strategic and economic repercussions
of these new finds are staggering, and remind us how a once energy-independent
and thereby confident American economy soared to world dominance in the early
20th century.
http://www.victorhanson.com/articles/hanson121211.html
Rising prices main clue to Iran sanctions impact
Tehran does not look like a city under siege. Its shops and markets are full of
goods and customers; signs that international sanctions are ravaging Iran's
economy are hard to detect. With global oil prices above $100 a barrel, the world's
fifth biggest oil exporter is proving it can cope with trade and financial restrictions
that the United States and Europe hope will force a halt to its controversial nuclear
programme, which is suspected of seeking to build an atomic bomb.
http://in.reuters.com/article/2011/12/14/iran-sanctions-economy-
idINDEE7BD0F020111214
Recent Rig Counts
Area Last
Count
Cou
nt
Change from
Prior Count
Date of
Prior
Count
Change
from Last
Year
Date of
Last
Year's
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Count
U.S. 9 Dec11
1987 -6 2 Dec 11 +264 3 Dec 10
Canada 9 Dec11 504 +20 2 Dec 11 +22 3 Dec 10
International
November 2011
1185 -12 October2011
+55 November2010
http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm
Weather
6 to 10 Day Outlooks
Temperature
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Precipitation
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8 to 14 Day Outlooks Temperature
Precipitation