Oil prices fall for second day on oversupply concerns

US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the US Energy Information Administration said in a monthly report on Monday. (AP)
Updated 17 July 2018
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Oil prices fall for second day on oversupply concerns

  • Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated
  • US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August

TOKYO: Oil prices fell for a second day on Tuesday as worries about possible disruptions to supply eased and as investors focused on potential damage to global growth from the festering Sino-US trade spat.
Brent crude futures fell 32 cents, or 0.5 percent, to $71.52 a barrel by 0638 GMT to the lowest since April 17. They fell 4.6 percent on Monday.
US West Texas Intermediate futures were down 31 cents, or 0.5 percent, at $67.75 a barrel. They declined 4.2 percent on Monday.
“It is growth fears all around and more about concerns that ... trade worries will come back and bite,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“(Oil trading) volumes are abysmal and there is very little commitment at current levels.”
China is still confident of hitting its economic growth target of around 6.5 percent this year despite views that it faces a bumpy second-half as a trade row with the United States intensifies, the state planning agency said on Tuesday.
The remarks came a day after China reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated, keeping Brent crude in a $70 to $80 per barrel range in the short-term.
“Supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus” in the third quarter, the report said.
Meanwhile, an oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.
The strike, which began last Tuesday, has had a limited impact on Norway’s oil production so far, but some drillers warned of possible contract cancelations if the dispute goes on for a month or more.
While Libyan ports are reopening, output at the country’s Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.
US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the US Energy Information Administration said in a monthly report on Monday.
Production is expected to climb in all seven formations, with the largest gain of 73,000 bpd seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.


Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

Updated 15 October 2018
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Saudi energy minister compares electric vehicle ‘hype’ to peak oil misconceptions

  • Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market
  • Compared it to past misconceptions around the theory of peak oil

LONDON: Saudi Energy Minister Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market and compared it to past misconceptions around the theory of peak oil.
He told the CERAWeek energy gathering by IHS Markit in New Delhi that petrol and diesel engines would co-exist with emerging electric and hydrogen fuel cell technologies for much longer than widely expected.
Miscalculations around the pace of electrification could create “serious” risks around global energy security, he said.
“Conventional vehicles today, despite all the hype, represent 99.8 percent of the global vehicle fleet. That means electric vehicles with 0.2 percent of the fleet, only substitute about 30,000 barrels per day of oil equivalent of a total global oil demand of about 100 million barrels.
“Even if those numbers increase by a factor of 100 over the next couple of decades, they would still remain negligible in the global energy mix.”
He said: “History tells us that orderly energy transformations are a complex phenomenon involving generational time frames as opposed to quick switches that could lead to costly setbacks.”
In another broadside aimed at electric vehicles, the Saudi energy minister highlighted past misconceptions about global energy demand growth — and specifically the notion of “peak oil.”
“I remember thought leaders within the industry telling us that oil demand will peak at 95 million barrels per day. Had we listened to them and not invested . . . imagine the tight spot we would be in today.”
“Let’s also remember that in many parts of the world, roughly three fourths of the electricity, which would also power electric vehicles, is currently generated by coal, including here in India. So you could think of any electric vehicle running in the streets of Delhi as essentially being a coal-powered automobile.”
“When it comes to renewables, the fundamental challenge of battery storage remains unresolved — a factor that is essential to the intermittency issue impacting wind and solar power. Therefore the more realistic narrative and assessment is that electric vehicles and renewables will continue to make technological and economic progress and achieve greater market penetration — but at a relatively gradual rate and as a result, conventional energy will be with us for a long, long time to come.”