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Tuesday, 9 December 2014

US oil settles at $63.05, lowest since July 2009

World oil prices slid another 4 percent to new five-year lows on Monday, as expectations of a deeper slump next year and a prediction by a core OPEC member that crude will remain at $65 for several months triggered another round of selling.
U.S. crude oil settled 4.2 percent lower at $63.05 per barrel, at a new five-year low, its third worst drop of of the year. Brent crude for January fell was last down 4 percent at $66 a barrel, after slipping to a session low of $65.93—its lowest since October 2009. 

The chief executive of Kuwait's national oil company said oil prices were likely to remain around $65 a barrel for the next six to seven months, the latest indication that Gulf producers were content to ride out the latest rout.

The pessimistic outlook deepened the decline in a market that many traders now see as having little chance of rebounding.

"When these things go lower, they tend to go much farther than people anticipated," said Tariq Zahir at Tyche Capital. "I definitely think we're going to keep heading lower, everyone is trying to pick a bottom."

Late on Friday, Morgan Stanley set a new bar for bearishness on Wall Street, slashing its average 2015 Brent base-case outlook by $28 to $70 per barrel and warning that prices could drop as low as $43 a barrel next year.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.

Thus far, there appears little sign of intervention, even after oil prices dropped 15 percent, or nearly $12 a barrel, since the Organization of the Petroleum Exporting Countries opted not to cut production at its Nov. 27 meeting.

Top exporter Saudi Arabia has resisted calls from poorer members to curb output and shore up prices which have slumped more than 40 percent since June.

Libya's state oil company said on Sunday the country was producing 800,000 barrels a day, though its El Sharara oilfield was closed due to a pipeline blockade.

It is unclear how soon the price slump will slow the U.S. shale boom. While the number of onshore rigs drilling for crude oil remains relatively high, companies are making deeper cuts to spending for next year. On Monday, Conoco said it would slash spending by 20 percent, or $3 billion, the biggest reduction thus far announced by U.S. drillers.


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  2. NEW YORK: Oil production from the United States' biggest shale plays is poised to keep expanding at the same breakneck pace into early next year, according to new US projections released Monday that highlighted a slow response to tumbling prices.

    Oil production from the three main plays - the Bakken, Eagle Ford and Permian Basin - is set to rise by some 103,000 barrels per day (bpd) in January from December, the US Energy Information Administration said.

    That's just a hair below December's 105,000 bpd rise, and a faster rate than most months this year.

    Well productivity continues to grow, as drillers get better at squeezing more barrels of crude out of each well - and out of each dollar. Each new Bakken well is set to produce some 550 barrels a day in January, up from under 500 bpd as recently as June, the data showed.

  3. A more than 40 percent slump in global oil prices since summer, and Saudi Arabia's refusal to cut output to prop up the market, has put a spotlight on the U.S. shale industry, which is expected to slow after four years of growth due to lower prices.

    Production from the Bakken formation will rise by some 27,000 bpd to 1.25 million bpd, while Eagle Ford oil production will rise by some 30,000 bpd to 1.69 million bpd, according to the EIA's drilling productivity report.

    Oil production from the Permian Basin of West Texas and New Mexico will see output grow 46,000 bpd to 1.87 million bpd, the EIA said.

  4. CONOCO PHILLIPS: 2015 CAPITAL BUDGET DOWN – (ConocoPhillips, Houston) ConocoPhillips today announced a 2015 capital budget of $13.5 billion, a decrease of approximately 20 percent compared to 2014. The reduction in capital relative to 2014 primarily reflects lower spending on major projects, several of which are nearing completion, as well as the deferral of spending on North American unconventional plays. Despite the lower investment level, the company expects to achieve approximately 3 percent production growth in 2015 from continuing operations, excluding Libya. Key sources of growth include recent major project startups in Canada, Europe and Malaysia, development drilling programs in the Eagle Ford and Bakken, and new production from 2015 major project startups at Eldfisk II, the Australia Pacific LNG (APLNG) Project and Surmont Phase 2. (APLNG project on Curtis Island, Australia – Image: ConocoPhillips)


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