The boss of Danish conglomerate A.P. Moller-Maersk has warned the group’s oil division will have to close some sites and cut operating costs if oil prices remain at their current level.
Nils Smedegaard Andersen, chief executive, said that if prices stay around $60 per barrel, it will reduce revenue in the oil unit by one-third from the level of 2013.
He added: “As all costs, except taxes, are fixed it is obviously something we have to take very seriously. And we would have to do some things.”
Crude oil production from US wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction.
US energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.
Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs Group Inc.
By Professor Alex Russell and Professor Peter Strachan
Over the past 3 months the share price of the Wood Group has fallen by 21.5%.
The recent announcement of the creation of a possible 150 new jobs on the back of winning a £500 million contract for BP may help stabilise this price slide.
But like all oil service companies their share price fate is dependent on the price of a barrel of oil. And the once powerful international oil industry appears to be impotent to influence prices one iota at present.
Bank of England governor Mark Carney said the fall in the oil price was a “net positive development” for the UK.
Presenting the Bank’s financial stability report in London, he said: “We should be clear that the 40%-plus drop will flow quickly through to consumers and increase real disposable income and is a net positive for the UK economy.”
But Mr Carney warned that the fall in the oil price also presented some risks to financial stability.
The “big four” supermarkets are all cutting their fuel prices.
With world oil prices plunging, Asda, Sainsbury’s, Morrisons and Tesco are all reducing their petrol by 2p a litre and their diesel by 1p a litre from tomorrow.
The Asda cut means its customers will pay no more than 110.7p a litre for petrol, with the company’s diesel costing 117.7p a litre.
Armada Oil has terminated the terms of its existing credit facility amid the recent decline in oil price.
The firm said it was working with its current lender to secure an extension of the terms of its existing credit facility and expects a resolution before the ed of the year.
The loss of its financial facility has also halted work on the Bear Creek #1 project.
Crude oil prices are poised to fall below half where they were six months ago, before producers begin dealing with a global glut.
Brent, the global benchmark, will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey of 17 analysts, down from the $115.71 a barrel high for the year on June 19.
The grade has already collapsed 47% since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason.
Crude prices came under renewed pressure yesterday, and Brent hit five-year lows of nearly $60 a barrel after producer group Opec said it would stick to its decision not to cut output despite fears of a world awash in oil.
Brent and US oil initially extended last week's rout, which wiped more than 10% off global crude prices. They were up in New York's Monday morning trade after news that Libya's two biggest oil ports had shut due to fighting between armed factions allied to the country's two rival governments.
Loading delays for January cargoes of North Sea Forties crude due to lower-than-expected output was also positive for oil. The North Sea Forties set prices for Brent.
The number of insolvencies of UK oil and gas services companies has trebled in the last year amid the huge fall in oil prices, according to a new report.
Accountancy firm Moore Stephens said 18 businesses have become insolvent this year, compared to just six in 2013 which it described as “significant” as insolvencies in the sector have been rare over the last five years.
The number of insolvencies this year represents more than three times the average number of insolvencies in the sector in the previous four years, said the report.
Oil fell $2 a barrel to plumb new five-year lows yesterday after the world's energy watchdog forecast even lower prices on weaker demand and higher supplies next year.
Benchmark Brent oil tumbled to below $62 a barrel and US crude slumped to under $58 to extend Thursday's landmark fall below $60.
Motorists have received an early Christmas present in the form of yet more fuel cuts by supermarkets.
Asda, Tesco, Morrisons and Sainsbury’s all announced they were reducing the price of their petrol by 2p a litre and also knocking 1p a litre off their diesel.
The Tesco cut takes effect from lunchtime today, while the other three big supermarkets will introduce the lower prices from tomorrow.
A fresh slide in the price of oil piled more pressure on investors today after £36 billion was wiped from blue-chip shares in the previous session.
Brent crude stood at just over 64 US dollars a barrel - a drop of more than 40% on earlier in the year - after a monthly report by industry cartel Opec said demand next year was expected to fall to its lowest level in a decade.
The FTSE 100 Index, which slid 2% on Tuesday, had been in positive territory for much of the session but the oil slump meant the top flight finished 29.4 points lower at 6500 - its lowest level since the start of last month.
Leading supermarkets have cut the cost of their petrol again.
Asda, which reduced its petrol by 2p a litre last Saturday, knocked another 1p a litre off its petrol today. This means its petrol will cost no more than 114.7p a litre, with diesel remaining unchanged at 119.7p a litre
Morrisons, which took 2p a litre off its petrol and diesel yesterday, said it was reducing its petrol by a further 1p a litre.
Iran’s president has said the sharp fall in oil prices is the result of “treachery”, in an apparent reference to regional rival Saudi Arabia, which opposed production cuts to lift prices.
Hassan Rouhani told a cabinet meeting the fall in prices is “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world”.
“The people of the region will not forget such conspiracies, or in other words, treachery against the Muslim world.”
BP shares were down 2% as investors reacted to the company's failure to win a US Supreme Court battle over oil spill compensation claims.
The price of Brent crude fell to $66 a barrel due to oversupply fears.
Oil prices will stay at about $65 a barrel for at least half a year until OPEC changes its collective production or world economic growth revives, said the head of state-run Kuwait Petroleum Corp.
Oil is trading in a bear market as the US pumps at the fastest rate in more than three decades and global demand expands more slowly. OPEC decided on November 27 to maintain its output target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
“I think oil prices will stay around the current level of $65 for six or seven months until OPEC changes its production policy, or recovery in world economic growth become more clear, or a geopolitical tension arises,” Nizar Al-Adsani, KPC’s chief executive officer, said at a conference in Kuwait City.
Iran expects oil prices at five-year lows will put “short-term pressure” on the government’s budget even as it strives to contain inflation, President Hassan Rouhani said.
Crude prices have declined about 40% from a June peak amid overproduction and slower demand growth.
The Organization of Petroleum Exporting Countries decided on November 27 to maintain its production target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
Stock markets, oil companies, service companies and investors are reeling from Saudi’s shock decision not to support a cut in OPEC production in order to balancesupply and support prices, and the consequent slump in oil prices.
This stance is a radical departure from Saudi’s previous behaviour when supply and demand fell modestly out of balance.
In the past, a few words of support have been enough to have the oil traders scurrying back to their desks to close their short positions.
Why the change of policy on this occasion?
Brent extended losses from a four-year low as Saudi Arabia offered customers in Asia record discounts on its crude, bolstering speculation it’s defending market share.
West Texas Intermediate dropped in New York.
Futures fell as much as 0.8% in London and are headed for a second weekly decline. State-run Saudi Arabian Oil Co. cut its differential for Arab Light sales to Asia next month to $2 a barrel below a regional benchmark, according to a company statement.
Last month, I wrote about how the drop in the oil price will require operators in the UKCS to consider more carefully how they collaborate with each other.
Operators should equally be considering how a continued period of low oil price will affect their relationships with contractors in the oil and gas supply chain.
The UK Oil and Gas Industrial Strategy published in March 2013 identified the vital contribution of supply chain contractors to the continued development of the UKCS both through working with operators to enhance performance and efficiency and through the development of new technologies.
West Texas Intermediate crude fell, trimming the biggest rally since August 2012 as investors weighed OPEC’s decision to let the market curb a global supply glut. Brent slid in London.
Futures dropped 0.7% in New York, decreasing for the fifth time in six days. The Organization of Petroleum Exporting Countries may hold an emergency meeting in the first quarter of next year, Venezuela’s Foreign Minister Rafael Ramirez said in an interview.
The group’s failure to cut output at a gathering last week bodes well for US producers, according to billionaire wildcatter Harold Hamm, a founding father of the nation’s shale boom.
Plunging prices at the pumps have failed to arrest the slide in petrol purchasing.
Petrol sales in October 2014 fell when compared with October 2013 despite pump prices falling more than 8p a litre over the 12-month period, Government figures highlighted today by the AA showed.
The statistics also showed that petrol sales for the first 10 months of this year have fallen 20% compared with the same period five years ago.
Brent crude traded above $80 a barrel after China, the world’s second-largest oil consumer, cut interest rates for the first time since 2012 to bolster its economy. West Texas Intermediate also rose in New York.
Futures gained as much as 2.3% in London. The People’s Bank of China cut lending and deposit rates effective from tomorrow, according to a statement on its website.
Half of the 20 analysts surveyed predict the Organization of Petroleum Exporting Countries will reduce output, while the rest expect no change, when the group meets next week.
The slump in oil prices is a boon to China as the world’s second-biggest oil consumer. It’s a different story for the country as a major producer.
The slide in prices to a four-year low threatens to cut spending, production and profit for the country’s oil companies including PetroChina Co (857) Brent, the global benchmark, has fallen 26% this year to below $83 a barrel.
The decline, amid signs that global supply is outpacing demand, is pressuring profits from oil extraction across the globe. After a flurry of acquisitions and spending that’s stretched the balance sheets of Chinese oil companies, the country will also have a diminished appetite for deals, according to Sanford C Bernstein & Co.
