The World’s Five Most Important Oil Fields

Here Are The World’s Five Most Important Oil Fields

Much has been made about the role that hydraulic fracturing – or fracking -- has played in revolutionizing the energy landscape, unlocking vast new reserves of oil trapped in shale rock. This “tight oil” is pouring into the global pool of oil supplies at a crucial time, preventing oil prices from spiking in an age of high demand and geopolitical turmoil.

But the world still relies overwhelmingly on conventional oil production from existing fields, many of which are in decline. The Middle East has dominated the world of oil for half a century and as the list below shows, it remains king. Here are the top five most important oil fields in the world.

1.  Ghawar (Saudi Arabia) The legendary Ghawar field has been churning out oil since the early 1950s, allowing Saudi Arabia to claim the mantle as the world’s largest oil producer and the only country with sufficient spare capacity to act as a swing producer. Holding an estimated 70 billion barrels of remaining reserves, Ghawar alone has more oil reserves than all but seven other countries, according to the Energy Information Administration. Some oil analysts believe that Ghawar passed its peak perhaps a decade ago, but Saudi Arabia’s infamous lack of transparency keeps everyone guessing. Nevertheless, it remains the world’s largest oil field, both in terms of reserves and production. It continues to produce 5 million barrels per day (bpd). 

2.  Burgan (Kuwait) Just behind Ghawar is another massive oil field located in the Middle East. The Burgan field was originally discovered in 1938, but production didn’t begin until a decade later. The field holds an estimated 66 to 72 billion barrels of reserves, which accounts for more than half of Kuwait’s total, and it produces between 1.1 and 1.3 million bpd. 

3.  Safaniya (Saudi Arabia) The Safaniya field is the world’s largest offshore oil field. Located in the Persian Gulf, the Safaniya field is thought to hold more than 50 billion barrels of oil. It is Saudi Arabia’s second largest producing field behind Ghawar, churning out 1.5 million bpd. Like Saudi Arabia’s other fields, Safaniya is very mature as it has been producing for nearly 60 years, but Saudi Aramco is working hard to extend its operating life. 

4.  Rumaila (Iraq) Iraq’s largest oil field is the Rumaila, which holds an estimated 17.8 billion barrels of oil. Located in southern Iraq, Rumaila was highly sought after when the Iraqi government put blocks up for bid in 2009. BP and the China National Petroleum Corporation (CNPC) are working together to develop the giant field along with Iraq’s state-owned South Oil Company. The field now produces around 1.5 million bpd, but its operators have plans to boost that production to 2.85 million bpd over the next couple of years. 

5.  West Qurna-2 (Iraq) Also located in southern Iraq, the West Qurna-2 field is Iraq’s second largest, holding nearly 13 billion barrels of oil reserves. The West Qurna field was divided in two and auctioned off to international oil companies. Russia’s Lukoil took control of West Qurna-2 and successfully began production earlier this year at an initial 120,000 bpd. Lukoil plans on lifting production to 1.2 million bpd by the end of 2017. The neighboring West Qurna-1 field – operated by a partnership of ExxonMobil, BP, Eni SpA, and PetroChina – holds 8.6 billion barrels of oil reserves. They hope to increase production from 300,000 bpd to more than 2.3 million bpd over the next half-decade.

It’s clear that the Middle East is still the center of the universe when it comes to oil. Despite their age, these supergiants remain the oil fields of tomorrow. And as the tight oil revolution in the U.S. plays out, these fields will remain, and the world will continue to depend heavily on the fortunes of a few countries in the Middle East

Submitted by Nick Cunningham of OilPrice.com

Billions of barrels-worth of shale oil found in southern England

About 4.4 billion barrels-worth of shale oil have been found in the ground beneath the south of England, according to a report published Friday by the British Geological Survey (BGS).

The study, commissioned by the Department for Energy and Climate Change and released this morning, says the huge oil reserves lie under the Weald Basin in Kent and parts of Sussex and Surrey.

How much of this is recoverable is not yet known — further drilling and testing of new wells will be needed to establish this, but the discovery is set to spark a new stage in the battle between environmentalists and energy firms over the controversial topic of fracking.

The discovery has already pushed British authorities to start mulling plans to ease rules on accessing shale oil and gas, including drilling without landowners' permission

The discovery has already pushed British authorities to start mulling plans to ease rules on accessing shale oil and gas, including drilling without landowners' permission, reports Reuters.

Under the new plans, energy firms will be allowed to dig 300 metres (1,000ft) down for shale gas and deep geothermal operations provided they notify local communities and give them a “voluntary community payment” for access to the land of US$34,000 per well.

Last year, the BGS published a study of the Bowland Shale in northern England, which, it said, contained about 1,300tn cubic feet of gas. Analyst say that even if only a tenth of that were extracted, it would be the equivalent of 40 years’ gas supply for the UK.

Shale Boom Sends U.S. Crude Output to 28-Year High

U.S. crude production climbed to a 28-year high last week as the shale boom moved the world’s biggest oil-consuming country closer to energy independence.

Output rose 78,000 barrels a day to 8.428 million, the most since October 1986, according to Energy Information Administration data. The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies from shale formations in the central U.S., including the Bakken in North Dakota and the Eagle Ford in Texas.

“This is an incredible phenomena that looks set to continue,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “There’s a long way to go before we explore and exploit all of the shale deposits out there.”

The U.S. met 87 percent of its energy needs in 2013, and 90 percent in December, the most since March 1985, according to the EIA, the statistical arm of the Energy Department.

Crude output will average 8.46 million barrels a day this year and 9.24 million in 2015, up from 7.45 million last year, the EIA said in its monthly Short-Term Energy Outlook on May 6. Next year’s projection would be the highest annual average since 1972.

The EIA forecasts that the gain in production at shale fields will be augmented by greater offshore output this year and next. Crude output in the waters of the Gulf of Mexico will climb by 150,000 barrels a day in 2014 and by an additional 240,000 barrels in 2015, following four consecutive years of declines, according to the May 6 report.

Export Ban

U.S. Energy Secretary Ernest Moniz said yesterday that the mismatch between rising production of light oil in the U.S. and the country’s refining ability is driving the debate over whether to lift a ban on crude exports. The crude unlocked from shale deposits is too low in density to be absorbed entirely by the U.S. refining system, Moniz told reporters in Seoul.

“The driver, or the consideration, is that the nature of oil we are producing may not be well matched to our current refinery capacity,” Moniz said.

The remarks highlighted pressure to overturn 1975 legislation that bars exports while U.S. production rises and inventories swell. Senator Lisa Murkowski of Alaska, the senior Republican on the Energy and Natural Resources Committee, said in a Jan. 7 speech that she supports changing the export rules.

“This increases the pressure on the U.S. to finally allow for the export of crude,” Kilduff said. “The U.S. could be a major player in global export market.”

Stockpile Gains

Production gains helped send U.S. inventories to 399.4 million barrels in the week ended April 25, the most since the EIA began reporting weekly data in 1982. Stockpiles increased 947,000 barrels to 398.5 million barrels in the week ended May 9, according to the agency.

Inventories along the Gulf Coast, known as PADD 3, grew 2.33 million barrels last week to 215.7 million, the most in EIA data going back to 1990. Supplies there have been growing since January as the southern leg of the Keystone XL pipeline began moving oil to Gulf Coast refineries from Cushing, Oklahoma, the largest U.S. storage hub.

Futures rose after today’s EIA report showed supplies at Cushing, the delivery point for WTI, dropped for the 14th time in 15 weeks. Inventories fell 592,000 barrels last week to 23.4 million, the lowest level since Dec. 5, 2008.

West Texas Intermediate crude for June delivery increased 67 cents, or 0.7 percent, to settle at $102.37 a barrel today on the New York Mercantile Exchange. It was the highest closing price since April 21.

Shale Boom Sends U.S. Crude Supply to Highest Since 1930s

The U.S. is stockpiling the most crude since the Great Depression, thanks to the shale boom that has boosted production to the most in 26 years.

Inventories rose 3.52 million barrels last week to 397.7 million, the highest level since 1931, according to Energy Information Administration data going back to 1920. Crude output climbed 59,000 barrels a day to 8.36 million, the most since January 1988, as the combination of horizontal drilling and hydraulic fracturing, or fracking, unlocked supplies from shale formations in the central U.S., including the Bakken in North Dakota and the Eagle Ford in Texas.

The burgeoning supply has sparked arguments over whether a 1975 law that prevents most U.S. crude exports should be repealed. It also may reduce the impetus for a quick approval of the Keystone XL pipeline moving Canadian crude to the U.S. Average weekly imports are down 3.7 percent so far this year, compared with the same period in 2013.

“This paints a secure supply picture for the U.S.,” said Stephen Schork, president of Schork Group Inc., a consulting group in Villanova, Pennsylvania. “This will add to the political debate about exports and Keystone. Whatever issues arise, it’s important to remember you would rather deal with the problems of a supply glut rather than a dearth.”

Keystone XL

President Barack Obama’s administration said on April 18 that it will postpone a ruling on Keystone XL. The State Department said it wouldn’t make a recommendation until questions are resolved about the way the pipeline’s northern route through Nebraska was approved. The southern portion of the project began moving crude in January to the Texas Gulf Coast from Cushing, Oklahoma.

Inventories along the Gulf Coast, known as PADD 3, rose 2.44 million barrels to 209.6 million last week, the most in EIA data going back to 1990.

Much of that inventory is light, sweet crude, or oil with low density and sulfur content, from the shale fields. Many refineries along the Gulf Coast are designed to run most efficiently on cheaper heavy, sour barrels imported from Mexico and Venezuela.

“The problem is that we have a glut of light, sweet crude when what we need is sour,” Schork said. “There have to find a way to swap the barrels we’ve got in hand or exporting them, so we can take full advantage of the rise in output.”

Energy Independence

Harold Hamm, the chairman and chief executive officer of Continental Resources Inc. (CLR), who became a billionaire drilling in North Dakota, told U.S. lawmakers Jan. 30 that the country, which EIA data show supplied 86 percent of its own energy last year, can drill its way to full independence by 2020. Hamm is leading an effort to get Congress to allow crude exports for the first time since the 1970s.

Senator Lisa Murkowski of Alaska, the senior Republican on the Energy and Natural Resources Committee, said in a Jan. 7 speech that she also supports changing the export rules.

The federal Jones Act restricts domestic seaborne trade to vessels owned, flagged and built in the U.S. and crewed by citizens. Thirteen tankers can haul crude domestically out of a global fleet of about 2,400, according to the U.S. Transportation Department’s Maritime Administration. The Jones Act is a 94-year-old law.

WTI Slips

West Texas Intermediate crude for June delivery slipped 31 cents, or 0.3 percent, to settle at $101.44 a barrel on the New York Mercantile Exchange. Futures ended trading at $104.37 a barrel on April 21, the second-highest level of 2014.

The U.S. inventory level was the highest in EIA weekly data begun in 1982 and monthly government data going back to 1920. Reports before 1976 were based on data from the Bureau of Mines, according to the EIA, and stockpiles of Alaskan crude oil in transit were included starting in 1981.

Imports decreased 475,000 barrels a day to 7.8 million in the seven days ended April 18. Arrivals have averaged 7.46 million barrels in 2014, according to EIA figures, down from 7.74 million for the first 16 weeks of 2013.

“Imports remain strong,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’ve yet to waive off imports but may be nearing a breaking point because of swollen supplies along the Gulf Coast. When that occurs, there will be a major rebalancing of global markets.”

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

Gas Prices Hit 13-Month Highs, Prompt Macro Concerns

At $3.67, US Regular gasoline prices are their highest since March 2013 having risen over 12% (40c) in the last 2 months. This must be great news, right? It must mean world demand is picking up and driving up prices of crude oil as global trade soars (amid a collapsing Baltic Dry and decelerating Chinese growth). This can't be related to "war premia" right? - as we noted here - because stocks (which always know best) have discounted all this tomfoolery. However, as the following chart shows, each time gas prices have surged up toards the Maginot Line of $3.80, US macro-economic fundamentals have collapsed... the only problem is, this time is different - because macro data is already weak going in (and expectations for the post-weather pop are high). 

Gas prices heading towards the crucial $3.80 level - and US macro is already weak ahead of this turning point...

Crude Alert: Gartman Is Now Long Oil

Having been stopped out of his "long punt" in copper futures (which are, we remind readers, levered via margin and not a simple cash percentage loss of capital), world-renowned (for something) Dennis Gartman has issued his latest missive - ultimate contrarian call - advice... "we are sellers this morning of copper and buyers of crude oil, one relative to the other, with the problems in China weighing upon the former while crude has held impressively as other commodity prices have fallen." Crude oil longs beware... prepare to be Gartman'd.

Via Dennis Gartman,

We were stopped out of our copper position yesterday, losing 1.2% on the position, which when compared to the 10-15% movements we’ve seen recently in NFLX or TSLA or others such as that seems rather inconsequential but is important nonetheless. Those not out should be out... now.

[deflecting the futures-contract - and thus 10-20x levered via margin - 1.2% loss in copper with a 10-15% gain in unlevered risk positions in NFLX and TSLA (a magical catch we suppose) seems a little disingenous to us - but we digress]

NEW RECOMMENDATION: Indeed, we are sellers this morning of copper and buyers of crude oil, one relative to the other, with the problems in China weighing upon the former while crude has held impressively as other commodity prices have fallen. As we write, June WTI crude is trading 103.79 and July copper is trading $3.0010. We’ll have stops in tomorrow’s TGL, but we’d not wish to risk more than 2% on this rather unusual spread position.

Europe Folds As Putin Tells It To Pay Ukraine's Gazprom Bill, Or Else ...

Another day ending in "y" means another day in which Putin plays the G(roup of most insolvent countries)-7 like a fiddle.

The latest: Europe should provide aid to Ukraine to ensure uninterrupted natural-gas deliveries to the region, President Vladimir Putin’s spokesman said as reported by Bloomberg.

"Russia is the only country helping Ukraine’s economy with energy supplies that are not paid for,"  Dmitry Peskov told reporters today in Moscow,  commenting on President Vladimir Putin’s letter yesterday to 18 European heads of state. “The letter is a call to immediately review this situation, which is absurd on the one hand and critical on the other.

Said otherwise: PUTIN SAYS EUROPE GAS TRANSIT DEPENDS ON UKRAINE: IFX

Or, as we explained yesterday, Russia is quite happy to keep the EU gas flowing... as long as Ukraine has enough gas in storage to assure Gazprom it won't syphon off gas destined for Europe. So how much gas does Ukraine need to pre-stock? About $4-5 billion worth. The problem is that Ukraine doesn't have a dime to spend on gas.

So putting the question aside if Ukraine will or won't import even one bcf of Russian gas ever again (thanks to some fracking or US natgas exporting magic), what Putin just said is that if Europe wants an uninterrupted supply of gas it better find a way to fund Ukraine to the tune of up to $5 billion, or else the gas may just get shut off.

And guess what: Putin is about to win yet again:  

European Energy Commissioner Guenther Oettinger is working on a plan to help Ukraine pay some of its gas bills to Russia, he told Austria's ORF radio on Friday, saying there was "no reason to panic" about Russian gas supplies to Europe.

"We are in close contact with Ukraine and its gas company to ensure that Ukraine remains able to pay and the debts that the gas company has to Gazprom do not rise further," he said, adding he would meet Ukraine's energy and foreign ministers on Monday.

"I am preparing a solution that is part of the aid package that the IMF, the European Union and the World Bank is giving to Ukraine and from which payment for open bills will be possible."

German Vice Chancellor Warns 'No Alternative To Russian Gas'

'No Alternative to Russian Gas'

Even Germany's vice chancellor Sigmar Gabriel realizes that there is no alternative to Russian gas for Germany, at least not in the near future. It should be noted to this that Germany's energy policy has driven energy prices to the very edge of what the population and industry can still handle.

On the one hand, there is the vast subsidization of 'green energy', which is not only thoroughly uneconomic and blighting the landscape, but the costs of which have been off-loaded on consumers, who pay a special 'ecological fee' on top of their already far too high bills.

On the other hand, after the Fukujima accident, Germany's government quickly gave in to pressure from the Greens and decided to completely phase out nuclear energy (as if Germany were in danger of being hit by a tsunami). This is of course a completely futile gesture, as the country is surrounded by other countries brimming with nuclear reactors over which it has no control whatsoever (admittedly, even one nuclear accident would be one too many). However, this hasty step has once again made electricity more expensive.

Oil and Gas Reserves Infographic

We have come across a neat infographic published by RIA Novosti on the countries harboring large oil and gas reserves – all data are per capita and in USD terms.

Ukraine to pay 80% more for Russian gas

As of next week, Ukraine will pay nearly 80% more for Russian gas.

This means Moscow might charge Ukraine "close to $500 for 1,000 cubic meters of gas," according to the New York Times.

Ukraine uses gas for about 40% of its energy needs, and more than half of that supply comes from Russia.

Earlier this month Russia said it would no longer provide Ukraine with discounted gas. Under the agreement signed in 2010, Russian gas flowed cheaply into Ukraine and, in exchange, Russia was allowed to extend its lease on a military base in Sevastopol, Crimea. Now that Russia controls Crimea, it doesn't need the gas deal.

"Russia, because it committed armed robbery of Ukraine, and in this way in fact destroyed our bilateral agreement, wants to raise the price of gas for Ukraine,” Ukrainian Prime Minister Arseny Yatseniuk told reporters, as reported by the New York Times.

Ukraine has since secured $27 billion financing deal with the International Monetary Fund (IMF) to help stabilize the economy.

Russia Is Slowly Turning The NatGas Tap Off To Europe

While Naftogaz (Ukraine's gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining. Shipments are down over 4% from the prior week and also lower to Ukraine. This 'adjustment' follows increased sanctions by the West as Medvedev's notable statement this morning that Ukraine owes Russia $16bn.

NatGas output is tumbling

The good news:

Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption  

But Pay Up...

Ukraine owes Russia $11b after collapse of 2010 deal, Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.

Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies

NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black Sea naval port of Sevastopol in Crimea to 2042 from 2017

Or Else...

Russian natgas exports to Europe and Turkey, excl. former Soviet Union, declined to 405.3mcm as of March 22,  according to Bloomberg calculations based on preliminary data from Energy Ministry’s CDU-TEK unit.

Avg daily exports to region were ~457mcm in March, lower than yr earlier: calculations based on CDU-TEK data

Shipments March 16-22 were 3.04bcm, 4% decrease vs level in week ended March 15

Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a price about a third higher than what Russia’s gas company, Gazprom, charges clients elsewhere.

Russia says the increase is justified because it seized control of the Crimean Peninsula, where its Black Sea naval fleet is stationed, ending the need to pay rent for the Sevastopol base. The base rent had been paid in the form of a $100 per 1,000 cubic meter discount on natural gas for Ukraine’s national energy company, Naftogaz.

And if that's not clear enough...

Long Crude Oil Speculative Bets Rise To All Time High

Whether or not institutional investors, large speculators, decided to invest alongside Putin in the one trade that is most critical to the future prosperity and positive cash flow balance of Russia, namely keeping the price of Crude high, and rising, is unknown, however, as the following chart the net position in crude oil futures as of the week of March 4, just hit an all time high of $44.0 billion up from $42.4 billion the week prior, surpassing all prior peaks, and certainly any set during the summer of 2008 when oil was threatening to make a run on $150, and was set to hit $200 if one believes Goldman (which nobody does).

Needless to say, any de-escalation in the Crimea - which has certainly been the key catalyst for the full court press to bet on rising crude prices in recent weeks - will have a substantial knock on effect of forcing open call positions to close, and in the process lower the price of crude further beyond just fundamentals, assuming those still exist.

"Polar Vortex" Shock

The "polar vortex" shock has arrived, only this time it is not in the form of another 12 inches of overnight snow accumulation but in the shape of household utility bills. A reader was kind enough to send us his just received ConEd bill for the month ended Februery 10. The result speaks for itself. It also speaks for where so much of US household disposable income will go in first quarter. 

And unfrotunately it will get worse before it gets better. On the back of a rapid decline in the "glut" of low cost natural gas (as stockpiles are drawn down to the lowest level since 2004) and the shift in forecast (that the freezing weather could last well into March), Natural gas futures are soaring (up over 10% today). This is the highest front-month futures contract price since December 2008 as "the possibility of periodic shortages now looms."

Another Natural Gas Margin Hike: Third Time In Two Weeks

Iran deal knocks oil lower, bolsters risk appetite. Iran Nuclear Deal Done.

* Brent crude sinks over $2 a barrel on groundbreaking Iran deal

* Iran deal seen positive for risk appetite, global growth

* Yen remains under pressure, euro makes four-year highs

Oil prices fell sharply on Monday after Iran and six world powers sealed a deal curbing its nuclear programme, a fillip for global economic growth and risk appetites that should benefit share markets.

The agreement, reached late Sunday, gives Iran some relief from crippling sanctions. While it will not be allowed to increase its oil sales for six months, any easing of Middle East tensions tends to lead to lower crude prices.

Brent crude oil shed $2.29 to $108.69 a barrel, its biggest daily drop in a month. U.S. oil dived $1.09 to $93.75 a barrel.

Iran Nuclear Deal Done (-20% Uranium Production For $6-7bn Lifted Sanctions)

UPDATE: Details of the deal are emerging including $4.2bn in FX

Despite earlier denials from Iran's Deputy FinMin, EU, Iran, and US officials have confirmed:

• *IRAN NUCLEAR ACCORD WITH WORLD POWERS ENDS 10-YEAR DEADLOCK
• *IRAN WILL HALT 20% ENRICHMENT FOR 6 MONTHS, FARS REPORTS
• *IRAN AGREEMENT DOESN'T FORMALLY RECOGNIZE RIGHT TO ENRICH
• *IRAN AGREEMENT WILL STILL ALLOW IRAN TO ENRICH URANIUM
• *IRAN INTERIM AGREEMENT FREEZES ADDITIONAL SANCTIONS
• *IRAN DEAL LIFTS TRANSPORT AND INSURANCE SANCTIONS ON OIL

(With this Deal, Brent crude oil may touch $100 a barrel, U.S. crude oil $86 a barrel.)

Coal Prices To Remain Under Pressure.

A prolonged oversupply situation in global coal markets has led to Newcastle benchmark prices of the dry fuel crashing by 13.1 per cent to $81.45 a tonne in 2013. This is below their five-year average of $95.22/tonne. Prices are now expected to increase in the near-term as production cuts by key miners begin to take effect.

Newcastle coal prices, after hitting this year low of $76.45/tonne on July 10, have risen 6.5 per cent since then. Despite the increase, most producers lament that margins have been hurt by rising input costs, motivating them to slash output to constrict supply. Newcastle benchmark coal prices had peaked at $139.05/tonne on January 10, 2011, but are now down 41.4 per cent from that record level.

Nevertheless, any upward movement in prices is likely to be limited. Coupled with concerns over slowing import demand from China, reduced imports by Indian buyers who have been keen to renegotiate contracts with key supplier Indonesia following a 17 per cent decline in the rupee during the year, continue to exert pressure on coal.

CONTRACT RENEGOTIATION

Indonesian suppliers have been able to resist Indian consumers’ demands for better prices by selling their coal in the spot market. Regulation passed by the Indonesian government in 2011 forbids coal firms from exporting their produce at rates lower than international benchmarks, hurting a slew of Indian companies looking to source cheaper coal.

Whether this strategy can be sustained hinges on a revival in demand. India accounts for a fifth of Indonesia’s coal exports, and the South-East Asian country recently trimmed its production estimates for the current calendar year to 390 million tonnes from 400 million tonnes.

One major worry for global coal producers has been the shift toward cleaner fuel sources in China, the world’s largest importer. The Communist nation has been rapidly establishing hydro-power generation capacities, as well as gas-fired thermal plants, as it tries to mitigate high air pollution levels.

But a greater concern for coal producers going forward could be a proposal to ban purchases of coal with a heating value below 4,540 kilocalories (kcal) a kilogram, sulphur content above one per cent and with ash content higher than 25 per cent. This could also result in increased supply.

AUSTRALIAN IMPACT

While other producers opted to go slow on their coal projects, Australian miners were ramping up output to take advantage of the fall in the Australian dollar versus the US dollar. While the cost of shipments from Newcastle fell by 13.3 per cent in US dollar terms this year, prices have only been eroded by 5.8 per cent in Australian dollar terms.

This has helped boost Australian producers’ revenues and given them an incentive to increase supply. Australia is the world’s second-largest coal exporter.

With Chinese import demand slowing down and the US shifting to cheaper shale gas, India has a better negotiating position in global coal markets. A good monsoon this year has enabled India to increase reliance on hydro sources for power generation. What is more, the economic slowdown is likely to hurt coal import volumes.

A 4.7 per cent rise in Coal India’s production during the first half of 2013-14 will have a role to play in determining the exact quantum of imports. Coal India, prices its output lower than international benchmarks, viz, coal of 5,200 kcal/kg gross calorific value commands a rate of Rs 1,250/tonne ($20.42) in the case of power utilities, fertiliser units and the defence sector and Rs 1,690/tonne (27.60) for other industries. This is nearly three-fourth lower than international rates.

According to the latest Commerce Ministry data, India imported 7.9 mt of coking coal for its steel and cement plants and 32.8 mt of steam coal that was used for thermal power generation purposes in the first quarter of 2013-14. The imports were valued at $3.8 billion. In 2012-13, the country’s coal imports were valued at $16 billion, of which coking coal constituted 35.6 mt and steam coal 106.7 mt.

Oil Prices Up On Egypt Crisis and Drop in US Supply.

The market is being guided higher by an up-trending Gann angle from the April 2013 bottom at $86.29. speculators went after the last swing top at $99.21, putting the market in a position to challenge a top from May 2012 at $104.50.

Further rally is now expected to head back to 110.55/114.83 resistance zone. On the downside, break of 100.94 is needed to indicate short term topping. Otherwise, outlook will stay bullish.

The market is being driven higher for two main reasons. Firstly, the American Petroleum Institute reported a drop in supply by 9.4 million barrels last week. The decline of nearly 10.0 million barrels was the biggest reduction in more than 10 years. The draw-down took traders by surprise, triggering the sharp upside breakout. The rapidly tightening supplies could mean the start of long uptrend.

The unrest in Egypt is the second key reason why crude oil prices are rising. Bullish speculators fear a disruption in supply because of the lack of stability in the region. These speculators are betting the political turmoil will lead to a disruption in the transportation of nearly 2.4 million barrels per day of oil.

During the past week, Egyptian President Mohamed Mursi rejected an army ultimatum to leave office. Other than the street violence, traders haven’t seen any military action yet, but based on the size of the move this week, speculators are anticipating…