Daily Archives: April 27, 2009

Ed Crooks

A steep fall in profits for the first quarter has been reported by PetroChina, the world’s second-biggest oil company by market capitalisation.

Fiona Harvey

As the US climate bill progresses to the next stage – last week were the hearings on the bill, including testimony from Al Gore, and on Tuesday the “mark-up” should start – debate is heating up on whether the bill is a disaster for the American family or a blueprint for more jobs.

Ed Crooks

Francisco Blanch, head of global commodities research at Banc of America Securities-Merrill Lynch, has been answering FT readers’ questions on the outlook for the oil market. He predicts a long-term average of $72 per barrel in real terms, but says a return to $150 is quite possible by 2011-12, and even more likely by 2015.

Ed Crooks

Protestors have glued themselves to a statue in the Houses of Parliament to protest about the “clean coal” policy launched by the British government last week.

The protestors, from Climate Rush, say they are emulating a campaigner for votes for women who chained herself to the same statue one hundred years ago. (No superglue in those days.)

Cadi St John, one of the glued-up protestors who is a twenty year-old student at Bristol University, said:

A hundred years ago women were forced to break the law to have their voice heard in Parliament. A hundred years on and nothing’s changed. I’m in my first year at uni and I’m almost ready to give up and become a full-time campaigner about climate change. Like so many of my generation I’m terrified about what the future holds, but instead of environmental action Labour promises new coal fired power stations and a third runway at Heathrow. This is the only way I can make myself heard.

Expect the protests to intensify as the construction of those new coal-fired plants goes ahead.

Ed Crooks

China really does not get enough credit for its generosity. The latest wave of investment by Chinese companies in oil production in Brazil, Russia, Venezuela and Kazakhstan is a reminder that the country is exporting billions of dollars of capital to create benefits not just for China itself, but to be shared by the whole world. There are reasons why such a strategy makes sense, but the caricature of planners in Beijing steering China Inc to “tie up” the world’s natural resources is a long way from the truth.

Former commodity mega-bulls Goldman Sachs are expecting markets to continue to pull back from current levels in the near term as “fundamentals are not yet stable enough to support higher prices”, according to their latest Commodity Watch.

In oil markets, the Goldman analysts argue, this is largely down to the substantial US total petroleum inventories that have been building up counter-seasonally in the last few weeks.

Accordingly, they say they’ve opened tactical shorts in both the oil and metal markets.  Being ultimately bullish in mindset, however, they say it’s also a longer-term buying opportunity based on their view that deficit markets will return by the second half of 2009, generating “sustained commodity price and returns upside”.

Kate Mackenzie

On Energy Source:

Storing up a supertanker problem

Iraq seeks to make up oil price shortfall

Oil producers and consumers fret over future price spikes

If the oil shock caused the recession…


Elsewhere:

Ethanol: More Brazilian ethanol whoppers: Ignoring diesel means some claims made about Brazil’s ethanol use are not true (R-Squared)

Efficiency: A defence of the incandescent light bulb A lighting designer says the standard way of measuring light efficiency is ‘misleading’ (NY Times)

Wind: Wind power’s dirty little secret It makes nuclear less profitable without contributing reliable capacity (Infrastucturist)

Power: Power, and pitfalls of an electrical smart grid The project is daunting (LA Times)

Kate Mackenzie

Oil industry participants and commentators of all creeds are forecasting prices will ultimately rise, perhaps even causing a supply squeeze, as lower prices stifle investment in future production.

Could we see a similar price spike in oil shipping prices as a result of cancelled and delayed orders? Bloomberg reports some shipowners and brokers are predicting prices could rise as soon as the second half of this year, and one of the key causes, they argue, would not be higher oil prices – which many do not expect until 2010 – but a decline in investment similar to what the oil market itself is expected to suffer.

FT Alphaville wrote earlier this month that tanker rates for both ‘dirty’ (crude) and ‘clean’ (products such as gasoline) cargoes fell almost as quickly, if more erratically, than the better known Baltic Dry Index rates decline in October/November. Rates have fallen in some cases to less than a tenth of their previous costs.

Now some are saying these losses could begin to be clawed back: Oslo-based shipping consultancy Fearnley Consultants A/S estimates that prices on the benchmark Saudi Arabia-Japan route could double in the second half of this year.

Kate Mackenzie

Updated: Oil is vital to Iraq’s fragile economy. Parts of the country – mostly northern areas that are home to Iraq’s Kurdish minority – have abundant supplies of easily accessible oil. Although production is still patchy, Iraq earns 94 per cent of its revenues from oil.

But with oil prices now less than half of levels from a year ago, Iraq is trying to widen its focus from oil revenues. In the past few days it has raised the total amount it is seeking to raise from ‘signature bonuses’ to $2.6bn for the six oil fields and two gas fields that are the subject of bids – this only a couple of months after sweetening terms for foreign bidders by raising the levels they would be able to own in oil projects.

The entire Iraqi cabinet is visiting London on Thursday, the Guardian reports, to meet prospective investors and British politicians.

Kate Mackenzie

Oil at $50 a barrel is okay for now, some Opec producers say, but producers and consumers that lower prices now could lead to a supply crunch.

Opec producers met with representatives of Asian consuming countries in Tokyo over the weekend for the 3rd Asian Ministerial Energy Roundtable Meeting.

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