Oil prices steadied near 3-1/2 year highs on Friday as the prospect of new U.S. sanctions on Iran tightened the outlook for Middle East supply at a time when global crude production is only just keeping pace with rising demand, Reuters reports. The United States plans to reintroduce sanctions against Iran, which pumps about 4 percent of the world’s oil, after abandoning a deal reached in late 2015 that limited Tehran’s nuclear ambitions in exchange for the removal of U.S. and European sanctions. The global oil market is finely balanced, with top exporter Saudi Arabia and No.1 producer Russia having led efforts to curb oil supply to prop up prices. Benchmark Brent crude LCOc1 was down 20 cents at $77.27 a barrel by 1330 GMT. On Thursday Brent hit $78, its highest since November 2014. U.S. light crude CLc1 was down 10 cents at $71.26, having touched a 3-1/2 year high of $71.89 on Thursday. Many analysts expect oil prices to rise as Iran’s exports fall. “The … [Read more...] about Oil near multi-year highs as Iran sanctions tighten supply outlook
20 year oil price chart
Bond pricing.Let’s say you’re the chief financial officer of a company with some bonds outstanding, and you want to issue some new bonds, and you are trying to figure out what interest rate you’ll have to pay on the new bonds. How can you do that? The traditional way to do it is to open up your office door, where you will find a pack of investment bankers waiting to talk to you. Each of them will have a pitchbook, and in each pitchbook there will be a page that says “Indicative new-issue pricing for XYZ Corp.” (if they’re careful they will have replaced “XYZ Corp.” with the name of your company), and you can just look at that pricing and have a decent idea of what new bonds will cost you. If you turn the page, you will probably see some supporting data—charts of the yields on your existing bonds, new-issue concessions for other recent issuers in your sector with similar credit ratings, etc.—which serves both to justify the … [Read more...] about Robots Can Price Your Bonds for You
Gasoline prices are up about 30 cents a gallon for the average American over the past year. And you can bet the average American doesn't like that -- even though, at about $2.80 a gallon, gasoline is nowhere near the nearly $4 level that held before oil prices crashed.Half a world away, India's drivers have it even worse. Pump prices in Delhi are actually higher than in the summer of 2014 and have become a political flashpoint ahead of next year's elections. Similarly, Beijing's drivers are paying prices not far off those that prevailed before oil began falling.It's easy to think that drivers drive, come what may; if you need to go get groceries, you go get groceries, whether you're burning fuel that costs $2 or $4 a gallon.But data compiled by ClearView Energy Partners, a research firm based in Washington, suggest that isn't necessarily the case -- and not just in the U.S. They looked at the correlation of oil demand with real gross domestic product and real … [Read more...] about Oil Demand: The Price Is Right or the Customer Is Right?
Each month, I publish reports on ten to fifteen publicly traded upstream oil & gas companies. Part of each report is my estimation of what the company would sell for in a negotiated transaction. I’ve been doing this for almost twenty years and during that time there have been several oil price cycles. The one that started in mid-2014 includes one of the most severe declines in crude oil prices in the last century. It has lasted much longer than the average cycle, which is about two years. (Click to enlarge) • Oil price cycles tend to overshoot on both the upside and the downside. The price of oil never stays at the “Right Price” for very long because a small over-supply can push the price quite low and a small under-supply can cause a big price spike. During the early months of this cycle, crude oil prices dropped below $30/bbl. • Once oil supply & demand get out of balance, there is no quick fix. This is an extremely capital intense business and … [Read more...] about Oil Prices Poised To Rise As Cycle Comes To An End
By Ernest Scheyder HOUSTON (Reuters) – U.S. oil production has topped 10 million barrels per day, approaching a record set in 1970, but many investors in the companies driving the shale oil revolution are still waiting for their payday. Shale producers have raised and spent billions of dollars to produce more oil and gas, ending decades of declining output and redrawing the global energy trade map. But most U.S. shale producers have failed for years to turn a profit with the increased output, frustrating their financial backers. Wall Street’s patience ran out late last year as investors called for producers to shift more cash to dividends and share buybacks. “‘Give me some cash, please.’ That’s what investors have said,” said Anoop Poddar, a partner at private equity firm Energy Ventures. And yet such calls for payouts remain a debate in the industry as oil prices have recently creeped up to four-year highs. Investors demanding immediate … [Read more...] about U.S. shale investors still waiting on payoff from oil boom