Oil plunges to a 6-year low. Is $30 a barrel next?

Oil plunges to a 6-year low. Is $30 a barrel next?

Mar 17th, 2015

by John Donovan. 

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CNNMoney (New York) March 16, 2015: 5:39 PM ET

Extremely cheap oil is back, and it may get even cheaper. Crude plunged 4% to as low as $42.85 a barrel on Monday. That’s the lowest price since March 2009 and marks the fifth consecutive day of losses.

EXTRACTS

A month ago, people were talking about an “oil comeback.” Now that looks like ust a mirage. More and more analysts predict prices of $40 or lower, at least in the near term.

“I think the market almost has to have a $30-handle on it before it gets this out of its system,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.

That could cause gas prices to take another tumble, Kloza says, bringing the average U.S. price back to around $2 a gallon. It’s currently at $2.42.

What’s fueling the latest plunge? The world still has too much oil. The supply glut that sparked the dramatic crash in crude from $100 a barrel last summer to under $50 in January remains. Oil settled at $43.88 on Monday.

The key now is to see a pullback in production, but so far no one wants to budge. OPEC hasn’t scaled back production, and power player Saudi Arabia continues to say it has no intention to do so.

In the U.S., shale companies also continue to pump more and more oil. While there are signs that the number of oil drilling rigs has fallen significantly in recent weeks, there’s a lag before that drop in rigs really translates into less production.

“Shale production is not getting dented,” says Kloza.

While the oil slide has been going on for months, there are key thresholds that act as trigger points for the market. Crude’s collapse below $43.50 a barrel on Monday represents one of those points.

Barclays said that breach makes the bank more negative on oil and signals a further move below $40. In other words, the selling is probably not done.

“It will overreact to the downside. There are an awful lot of smart people who think this market is on a rendezvous course with the December 2008 low of $32.40,” says Kloza.

That level represents a modern day low, although it occurred under extremely different circumstances. Back then oil was slammed by lack of demand as the world’s largest economy was trying to rescue itself from a major financial crisis. Today oil is falling because there is too much supply.

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Posted in: CNNMoney.com, Oil, Oil Company Profits, Oil Prices, OPEC.
Tagged: Oil · Oil Prices

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March 15, 2015

by Andrew Lipstein

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Seattle’s Silly War On Oil Rigs

Seattle’s Silly War On Oil Rigs

Mar 16th, 2015 

by John Donovan. 

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From an article byLoren Steffypublished 16 March 2015 by Forbes.com under the headline:

Seattle’s Silly War On Oil Rigs: Reminder, The City Is Also Home To Boeing, The World’s Largest Jet Maker

If a plane flies over Seattle, does anyone hear it? Probably not, because they’re all down at the docks protesting the parking of drilling rigs used in the Arctic. When the port of Seattle agreed to allow Shell to park drill ships on the city’s waterfront, a “kind of civic call to arms” erupted, according to the New York Times.

A unanimous City Council lined up alongside the mayor toquestion the legality of the agreement with the Port of Seattle, a court challenge was filed by environmental groups, and protesters, in bluster or bluff, vowed to block the rigs’ arrival — though the exact timetable is secret, for security reasons — with a flotilla of kayaks in Elliott Bay.

One resident referred to the lease as “a crime against the planet.” Understanding the nature of the “crime” means winding through some serpentine legal logic.

According to the Times:

At the center of the dispute lies a tangle of questions about the politics of climate change. Since Shell will not be drilling or exploring for oil anywhere near Seattle, but merely parking for the night, so to speak, can or should the company be denied a berth because of what might or might not happen thousands of miles away off the north coast of Alaska, or what could take place years in the future if burning fossil fuels — maybe produced by Shell, maybe not — raises sea levels or causes other havoc? Lawyers for the port, in court filings, have said opponents are waging an “intense” political campaign that will falter on the rocks of a narrow contractual dispute.

Opponents of the contract, though, said that protecting Seattle’s environment, in the broadest sense, means taking on the fight everywhere. Whether there may be harm from greenhouse gases, or possible environmental damage from an oil spill or other accident in Alaska, to which Seattle is deeply connected in its economy and history, what Shell does in the Arctic, they say, will not stay there.

Which is why I ask about the planes. Because Seattle is also home toBoeing BA +1.11%, the world’s largest commercial jet manufacturer. While the Shell rig may represent a potential danger to the planet, Shell is still struggling with the technical challenges of drilling in the Arctic. It has yet to produce a single drop of oil from the region.

Meanwhile, thousands of Boeing planes zip through the skies worldwide daily, belching forth carbon that is far more damaging to the planet than anything Shell is likely to tap in the Arctic — should it ever succeed there.

The demand for oil is too great to be stopped by a fleet of kayaks.

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Posted in: Alaska, Arctic, Beaufort Sea, Chukchi Sea, Environment, Forbes, Litigation,Oil Spill, Pollution, Royal Dutch Shell Plc, Shell, United States.
Tagged: Alaska · Arctic Ocean · Beaufort Sea · Chukchi Sea · Oil · Royal Dutch Shell Plc ·Shell

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Max Richtman of the National Committee to Preserve Social Security & Medicare delivers 2 million signatures of Americans opposed to Social Security cuts to Sen. Bernie Sanders on Capitol Hill.

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