Oil Prices up 12.5% from Previous Day on Iran Conflict

Brent crude is currently trading at $104.47 a barrel and WTI at $99.6 putting the Brent-TI spread almost $5 premium Brent over WTI in face of the Iran conflict.

Murban crude (trading on ICE Futures Abu Dhabi , or IFAD) is even higher at $113 a barrel. 

ICE's plans to launch IFAD were disclosed in November 2019 with ICE partnering with ADNOC (Abu Dhabi National Oil Company) and nine large energy traders, including BP, Shell, PetroChina and GS Caltex.

Brent Reaches $70 a Barrel on US-Iran tensions

The Brent March 2020 (front month) contract reached $70 a barrel.  Front month Nymex WTI in contrast hovered at $64 a barrel (Feb 2020). Both curves were in backwardation. Gold was trading similarly high around $1580 led by the Feb contract. Gold and silver remain in contango. Stocks overall are down with oil majors bucking the trend (Shell up 1.17% in UK trading - RDSA, BP up 1.81% in US trading - NYSE:BP).

Chevron to Follow Shell, BP and ConocoPhillips in putting North Sea assets up for sale

Chevron's various platforms including Alba and Britannia are included in the plans. Chevron was one of the first companies to drill in the North Sea in 1964, however they have been lately turning more towards shale extraction, including exploitation of Texas' Permian basin. Mike Wirth leads the company as CEO, having joined Chevron as a design engineer.

Oil Companies Adapt to "Lower for Longer" Operating Environment

With oil prices hovering around $50 a barrel, oil companies are adapting to a "lower for longer" oil price environment.  This has meant cutting back on investment and jobs. Shell plans to shut down its office in the Thames Valley Park by the end of 2016.

Shell's "AA" Credit Rating Cut to "AA-" by Fitch due to Takeover of BG Group

Moody's has also said it is reviewing credit ratings of oil, gas and mining stocks. These companies are selling assets and slashing headcount due to the rout in commodity prices. On the flip side, the deal makes Shell the UK's largest publically owned company, with HSBC in second place. Shell rival BP is around number 6 in market cap.

Shell BG Merger will create World's Largest Producer of LNG - Banks Pile into Bridge Financing

Shell shareholders have approved a merger with their smaller, Reading, Berkshire-based rival BG to create the largest producer of LNG in the world. The merger will take place on Feb 15, 2016. Van Beurden has promised £2.5bn in cost savings.

Barclays Bank is the facility agent for the bridge financing of the deal. Bridge financing is a way to close the gap in order to raise finance to close a deal - at least until such time that the borrower can arrange long-term financing.

Bankers involved with Barclays in financing the deal include:

Alastair Macdonald, Deutsche Bank
John-Paul Way HSBC
Michael Atherton RBC Capital Markets, part of Royal Bank of Canada
Thierry Muschs, Sumitomo Mitsui Banking Corporation

Shell and BP to Supply LNG to Kuwait

Kuwait's demand for LNG imports began in 2009 mainly to provide energy for air-conditioning during the summer months. The current deal is for Shell/BP to supply LNG for five to six summers hence, totalling around 2.5m tonnes a year. KPC has previously signed deals with Vitol as well.

Gazprom latest to Axe Large Capital-Intensive Projects

First it was BHP Billiton's announcement that they were downsizing the Olympic Dam project. Now Gazprom is the latest firm to cut capital spending as it dumps it Shtokman gas field project in the Arctic due to excessive costs. Shtokman contains nearly four trillion cubic metres of gas making it one of the world's largest natural gas fields. The head of Gazprom's production, Mr Cherepanov, said the project was too expensive "for the time being". Total and Statoil were partners in the project (Gazprom had selected them as partners), with 25% and 24% stakes respectively. The oversupply from the US shale gas boom has changed the dynamics of gas exploration across the industry. Gazprom trades on a number of exchanges including the Moscow Exchange, LSE and Berlin and Frankfurt Stock Exchanges and is Russia's largest listed company. The news comes just as Shell has gained permission to drill for oil in the Arctic off the cost of Alaska.

Shell posts highest ever annual profits for a European company, Ford posts worst loss in its History, Hedge Funds Unleash Recessionary Innovation

Oil giant Shell posted a Q4 loss (the first quarterly loss for 10 years) with oil prices falling to a record low.

NEVERTHELESS, annual profits reached a RECORD level up 14% from $27.6 to $31.4bn. Shell warned conditions remained "challenging". CEO Jeroen Van der Veer,born in Utrecht, boosted dividend by 11%. He said the company would continue "competitive and progressive dividend payouts". Oil is trading below $50 after a record high in mid July 2008 of $147.

China Premier's Wen Jiabao's comments at Davos, that the country had been hit hard by the world financial crisis, raised concerns on falling demand for oil. he also commented that financial regulators had failed to keep pace with "financial innovation" thus facilitating the credit crisis.

Offsetting Shell profits, Ford posted a full year loss for 2008 of $14.6bn, the worst ever performance in its 105 year history (FMC was incorporated in 1903). US rivals GM and and Chrysler have received billions in emergency bailout funding from the US government.

Ford pioneered the moving assembly line, allowing workers to stay in one place and do the same task repeatedly.

Meanwhile, hedge funds fight back with "recessionary innovation" to entice investors "sitting on the sides" in this recession. Osmium Capital Management, a hedge fund based in Bermuda, with $178m worth of assets under management, is launching a new class of shares denominated in troy ounces as opposed to euros, dollars or sterling. The fund hedges its exposure to gold by selling gold for cash and buying gold forward on a monthly basis.

Exxon Flush With Cash (Forty Billion Dollars)

Exxon Mobil has nearly $40bn in cash reserves, thanks to conservative investment and high oil prices in 2008. Add to this $225 billion in repurchased stock, and Exxon has enough resources to buy oil major Shell for a 60% premium. Shell India is currently importing LNG at a price of $9.06 per mmBtu (1 mmBtu == 1 GJ or 1 thousand million Joules of energy) from Australia's North West Shelf. The gas is destined for Hazira terminal, Gujarat (India West Coast), a joint venture between Shell and Total. Hazira was developed at a cost of Rs 3,000 crore (which is 30 billion rupees). Currently (Jan09) 1USD is about Rs 50, so the cost of the terminal is about $600m (at current x-rates). Shell owns 74% of the Hazira companies.

Exxon CEO Rex Tillerson from Wichita Falls, Texas has also spoken out about opening up US supplies of oil and natural gas which would boost jobs.

Need to brush up on SI Units? Check out this data sheet from Berlin.