LONDON, Dec 15 (Reuters) – The most important characteristic
of the U.S. oil industry is inertia – or to put it another way,
drilling and production respond sluggishly even to a large
change in prices.
Since 1974, there have been four episodes in which oil
prices declined sharply over a relatively short time (ignoring
the brief price spike and equally rapid reversal in 1990
associated with preparations for the first war between the
United States and Iraq).
LONDON, Dec 12 (Reuters) – The inherently cyclical nature of
some commodity prices has fascinated economists since the late
19th century but still continues to catch both investors and
Regular and apparently self-sustaining price cycles were
first observed in the price of hogs in the United States and
Germany in the final quarter of the 19th and first quarter of
the 20th centuries.
LONDON, Dec 11 (Reuters) – North Dakota’s Industrial
Commission on Tuesday ordered that all oil produced from the
Bakken petroleum system must be passed through surface
separation facilities to ensure it is safe prior to transport.
The regulations respond to concerns about the flammability
of Bakken oil following a series of train fires across the
United States and Canada involving crude originating from the
LONDON, Dec 10 (Reuters) – If the U.S. shale boom is to slow
in response to the fall in oil prices, the impact will be felt
hardest in just five states.
Texas, North Dakota, Oklahoma, New Mexico and Colorado
together account for almost 98 percent of the total rise in U.S.
oil output since the beginning of 2008.
LONDON (Reuters) – If prices had not crashed over the past five months, the oil market would have moved into a substantial surplus in the first half of 2015, according to a review of drilling and production statistics from major shale plays in the United States.
The pace of drilling and production growth in the Eagle Ford and Permian Basin shale plays in Texas, which together with North Dakota’s Bakken account for most of the increase in U.S. output since 2008, was accelerating in the first eight months of 2014.
LONDON, Dec 8 (Reuters) – In the next few months, everyone
in the oil market will be intently watching the volume of new
drilling activity in the shale plays of the United States for
any signs of a slowdown in response to the fall in oil prices.
There are more than a dozen major shale plays in production.
But just three account for almost all the rise in oil output
since 2009 and nearly two thirds of all rigs in operation: the
combined Bakken/Three Forks in North Dakota and the Eagle Ford
and Permian in Texas.
LONDON, Dec 4 (Reuters) – “Warning lights are flashing over
the global economy,” Britain’s finance minister, George Osborne,
told a packed House of Commons on Wednesday during the last
major economic debate of the current parliament.
Osborne was getting his excuses in early as parliament
prepares for a general election in May 2015. “Japan is in
recession, the euro zone is stagnating, and the geopolitical
risks are rising,” according to Osborne, who warned that
forecasts for Britain’s growth had been downgraded as a result
(“Autumn Statement” Dec 3, 2014).
LONDON, Dec 3 (Reuters) – The Organization of the Petroleum
Exporting Countries (OPEC) last week made no change to its
production target despite a 40 percent slide in oil prices over
just five months, causing some commentators to pronounce the
If OPEC cannot act to defend the prices and revenues of its
member countries, does the organisation still serve any purpose?
LONDON, Dec 2 (Reuters) – Continental Resources, one of the
largest U.S. shale drillers, has learned the hard way that
hedging is like being pregnant: you’re either hedging or you’re
not. There is no middle ground. If you are not hedging, you are
gambling on future prices.
By lifting most of its hedges for 2014, 2015 and 2016, the
company, founded and majority owned by Chief Executive Harold
Hamm, has swapped its traditional hedging strategy for a gamble
on future oil prices.
LONDON, Dec 1 (Reuters) – “The market is not a weighing
machine, on which the value of each issue is recorded by an
exact and impersonal mechanism,” Benjamin Graham and David Dodd
wrote in their landmark work on “Security Analysis” in 1934.
“The market is a voting machine, whereon countless
individuals register choices, which are the product partly of
reason and partly of emotion.”