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Wednesday, 7 January 2015

U.A.E. Energy Minister Says Oil Glut Could Run for Years - Bloomberg

U.A.E. Energy Minister Says Oil Glut Could Run for Years - Bloomberg:

"Oversupply in crude markets could take months or even years to fix depending on when producers outside OPEC cut their output, Abu Dhabi-based The National reported, citing comments by U.A.E. Energy Minister Suhail Al Mazrouei.

“We are experiencing an obvious oversupply in the market that needs time to be absorbed,” the newspaper reported Mazrouei as saying in e-mailed comments. The United Arab Emirates supported the November decision by the Organization of Petroleum Exporting Countries to maintain production, The National reported Mazrouei as saying.

Brent crude, a pricing benchmark for more than half of the world’s oil, tumbled 48 percent last year, the most since 2008. OPEC decided Nov. 27 to maintain production instead of cutting output to eliminate a surplus left by increased supplies from the U.S. to Russia."

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MIDEAST STOCKS-Dubai leads gains as Gulf markets rebound | Reuters

MIDEAST STOCKS-Dubai leads gains as Gulf markets rebound | Reuters:

"Most Gulf stock markets rebounded on Wednesday after suffering sharp losses earlier in the week because of the renewed slide in oil prices.

Brent futures have fallen more than 10 percent this week to their lowest levels since the spring of 2009, and briefly dropped below $50 per barrel on Wednesday. 

However, some investors have decided that Gulf equities are oversold and have now returned to the markets as buyers, temporarily at least."

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Reuters Analyst Predicts WTI At $36.74 & Brent At $41.99 » Fx Empire Network

Reuters Analyst Predicts WTI At $36.74 & Brent At $41.99 » Fx Empire Network:


Oil prices continued to dominate the headlines and are the main topic of all financial investors and analysts. While consumers reap the benefits of the ongoing price war it is beginning to stress OPEC member relationships as well as investors as they move to risk off trading. Crude oil is well below the $50 level trading at 47.89 a price not seen since 2006 while Brent oil slowly eases below the $50 level, trading this morning at 50.88.

WTI oil prices dropped all week falling lower yesterday by 2.62 percent as rout continues on global supply glut. Oil prices sank to fresh 5-1/2- year lows on Tuesday, extending losses after a 5 percent plunge in the previous session as worries over a global supply glut intensified. Brent crude fell by 3 percent to below $52 a barrel as cuts to monthly oil selling prices for European buyers by top OPEC producer Saudi Arabia heightened worries about oversupply.

Investors are reportedly worried that the combination of an excessive supply of oil globally in conjunction with a weak demand — China and some European nations have slowed their once insatiable demand for the liquid gold — could result in a further decrease in prices, according to the BBC. It has also reportedly led to sharp declines in consumer shares of world’s leading energy firms (BP, Exxon Mobil, etc.) over the course of the past few months."

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Can This Man Save Ukraine's Economy? - Bloomberg View

Can This Man Save Ukraine's Economy? - Bloomberg View:

"Aivaras Abromavicius has managed money-losing funds for years, but he never presided over anything as hopeless as the Ukrainian economy. Still, the recently appointed economy minister is full of good cheer and certain he and his colleagues in the new cabinet can turn things around. It all depends on whether international lenders give Ukraine enough time to reform itself at the pace the government is setting. 

Strictly speaking, Abromavicius should never have become a government official in Ukraine. The 38-year-old asset manager is Lithuanian by birth. He moved to Kiev six years ago after marrying a Ukrainian, the chief executive of an agricultural company in which a private equity fund run by Abromavicius's employer, the Swedish investment firm East Capital, took a stake. He only gave up his Lithuanian citizenship after accepting the ministerial post.

Two more foreigners -- U.S. citizen Natalie Jaresko and Georgian Oleksandr Kvitashvili -- accepted Ukrainian citizenship at the same time, to become finance and health ministers, respectively."

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Oil's price rut - YouTube

Oil's price rut - YouTube: ""

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Martin Wolf on global debt overhang - FT World - World & Global Economy Video -

Martin Wolf on global debt overhang - FT World - World & Global Economy Video -

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Guest post: the Gulf nations must take advantage of low oil prices | beyondbrics

Guest post: the Gulf nations must take advantage of low oil prices | beyondbrics:

"With oil trading at $50 a barrel, the immediate prognosis for Gulf nations looks grim. However, the future may not be as bad as it first appears. There are several changes that could be made to enable these nations to emerge in a stronger, more stable position than before.

First, oil looks stretched, with Brent for sale a year from now at 19 per cent above the spot price and likely to bounce.

This price differential is unsustainable in a time of almost-zero developed market sovereign yields as it guarantees double-digit returns for anyone who has easy access to storage. Oddly, this may provide a near-term overhang as inventories – usually a sign of oversupply and one way it is calculated “real-time” – rise as a result. Consensus for year-end is $80 and, while the consensus has a history of being very, very wrong, it is in line with stabilising long-dated oil prices, which should theoretically approximate to the marginal cost of production. Indeed, future supply should become increasingly constrained as capex is cut and, while there is elasticity in oil demand, it is typically delayed as consumers do not have significant storage ability to eliminate spot imbalances. Many oil-producing assets are now trading at distressed levels. Given their long-term horizon, it may even make sense to start snapping these up."

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Budget shows oil is not the lifeblood of Dubai’s growth | The National

Budget shows oil is not the lifeblood of Dubai’s growth | The National:

"The Dubai government budget for 2015 was a long time in the preparation and crept into the new year by a couple of days.

Some financial watchers speculated that the delay was down to the fact there was a rethink going on at the Department of Finance and the Supreme Fiscal Committee because of the changing economic landscape brought about by the rapid decline in the oil price.

But when the budget appeared, that suspicion was laid to rest. The figures confirmed definitively what we’ve known for a long time: oil revenues are not vital to the government finances of Dubai, as they are to may other governments across the Arabian Gulf."

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Oilfield writedowns loom as crude slump guts drilling values | The National

Oilfield writedowns loom as crude slump guts drilling values | The National:

"Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration.

With crude prices down more than 50 per cent from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $48-a-barrel market include international titans such as Royal Dutch Shell and small wildcatters like Sanchez Energy Corp. 

The impending writedowns represent the latest blow to an industry rocked by a combination of faltering demand growth and booming supplies from North American shale fields. The downturn threatens to wipe out more than $1.6 trillion in earnings for producing companies and nations this year. Oil explorers already are canceling drilling plans and laying off crews to conserve cash needed to cover dividend checks to investors and pay back debts."

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End of Iran sanctions to benefit UAE |

End of Iran sanctions to benefit UAE |

"The entry of Iran in world oil markets would be negative, while trade between the UAE and Iran would increase if sanctions on the country over its nuclear programme are removed, analysts and experts said.

Iran is holding negotiations with a group of P5+1 countries including Britain, China, France, Russia and the US plus Germany to end decades long blockade on its business. The countries are likely to reach a comprehensive agreement in the next six months.

Iranian president Hassan Rouhani also indicated on Sunday that the country’s isolation from the world economy could soon come to end."

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How $50 Oil Changes Almost Everything - Bloomberg

How $50 Oil Changes Almost Everything - Bloomberg:


The plummeting price of oil means no more trout ice cream.

Coromoto, a parlor in Merida, Venezuela, famous for its 900 flavors, closed during its busiest season in November because of a milk shortage caused by the country’s 64 percent inflation rate, the world’s fastest.

That’s the plight of an oil-producing nation. At the same time, consuming countries like the U.S. are taking advantage. Trucks, which burn more gasoline, outsold cars in December by the most since 2005, according to data from Ward’s Automotive Group."

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Oil Falls for Fifth Day as U.S. Stockpiles Seen Adding to Glut - Bloomberg

Oil Falls for Fifth Day as U.S. Stockpiles Seen Adding to Glut - Bloomberg:

"Oil fell for a fifth day amid speculation that U.S. inventories will increase, exacerbating a global supply glut that’s driven prices to the lowest levels in more than five years.

Futures dropped as much as 1.7 percent in New York in the longest losing streak since August. Crude stockpiles in the world’s biggest consumer probably expanded by 700,000 barrels last week, a Bloomberg News survey showed before an Energy Information Administration report today. China, the second-largest oil user, won’t drive a market rebound in 2015 as its net imports will slow, Citigroup Inc. said.

Oil slumped by almost half last year, the most since the 2008 financial crisis, as the U.S. pumped the most crude in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut output. The market’s oversupply may take “months or years” to be absorbed, according to United Arab Emirates Energy Minister Suhail Al Mazrouei."

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MIDEAST STOCKS-Oil weighs on Gulf but Saudi cuts losses on late buying | Reuters

MIDEAST STOCKS-Oil weighs on Gulf but Saudi cuts losses on late buying | Reuters:

"Gulf stock markets extended their losses on Tuesday as Brent crude plunged for a second session in a row and the threat of a fresh euro zone crisis in Greece also prompted investors to sell risky assets globally. 

Brent crude touched a fresh 5-1/2-year low at $51.23 a barrel on oversupply concerns. MSCI's emerging market index fell 1.0 percent to a three-week low. 

Saudi Arabia's main index dropped as much as 4.0 percent in a broad sell-off early in the session, but then pared its losses and closed only 0.6 percent down."

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