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Sideways moves

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By Ed Crooks: April 1, 2016

Oil prices went sideways all week, with Brent crude edging up above $40 on Thursday.  Hedge funds have made record bets on rising crude prices, but everyone is still watching prospects for the scheduled meeting of Opec and non-Opec oil producers in Doha, Qatar on April 17. Qatar’s oil minister said 12 countries had so far agreed to attend, including most Opec members and Russia. Reuters provided a useful factbox on the countries that could be present at the meeting.  Ecuador is one of the Opec members trying to persuade non-member countries to join in a commitment to freeze production.

Saudi Arabia and Kuwait have agreed to restart production at the Khafji oil field in the neutral zone between the two companies, suggesting that while the two countries  may want a production freeze one day, they don’t want it just yet. Similarly, Rosneft, the state-controlled Russian oil group, plans a 30 per cent increase in drilling activity this year.

It was the Opec meeting on November 27, 2014 that signaled the group’s shift in strategy. It gave up – at least for the time being – on the idea of cutting production to stabilise prices, and instead planned to keep pumping at rates that would preserve its market share. However, an analysis of customs data by the FT showed that Saudi Arabia, Opec’s de facto leader, had over the past couple of years lost its share of crude oil markets in some key customer countries.

The US and China promised to be among the earliest countries to sign the climate accord agreed in Paris last December. They plan to join many other countries represented at a signing ceremony on April 22 in New York, which is expected to break the record for the number signing up to an international agreement on the first day.

However, in spite of the euphoria that greeted the Paris accord, developing countries are being urged not to sign up to it immediately.  The Third World Network think tank argued in a note sent to members of the Arab Group of nations that signing the accord too quickly would deprive developing countries of leverage in negotiations over climate-related issues such as financial support and access to technology.

The Paris agreement is one of the factors contributing to the record number of shareholder resolutions relating to climate change that will be voted on by investors in US companies this year.  Investors have been more active in submitting such proposals, and the SEC has been less willing to let companies throw them out.

The Sydney Morning Herald published an impressively detailed account of alleged corruption in the oil industry worldwide. The FT set out the background to the Petrobras scandal that has engulfed Brazil. 

Clyde Russell of Reuters argued that LNG producers needed to rethink their business to find new markets. Streetwise Professor disagreed, saying vertical integration was “the exact wrong way to go in LNG.”

Remember the Bill McKibben piece I linked to last week, arguing that using natural gas for power generation might be no better in terms of greenhouse gas emissions than burning coal, because of methane leakage? Ted Nordhaus of the Breakthrough Institute wrote a rebuttal. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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