OIL ABOVE $55
After testing a 12-year low, the price of oil simply has to go up.That's according to the chief executive officer of shipping and oil giant A.P. Moeller-Maersk A/S, who says 2015's average crude price of $54 a barrel is too low for the industry to produce enough oil to satisfy global demand.
"In order for the world to be supplied with oil, it's not enough that Saudi Arabia produces," Nils Smedegaard Andersen said in a phone interview on Wednesday. "The world will need oil from places where production costs are higher. And therefore we expect the price of oil must go up."
Brent crude, which cost about $115 a barrel less than two years ago, this year dipped below $30. The plunge has forced the industry, including Maersk's oil unit, to cut jobs. Crude traded at about $30.5 a barrel on Thursday.
"When the price was $110 a barrel we had a clear expectation that it would go down, but we certainly never imagined it at $30," Andersen said. "Exactly where the right price is depends on how much cost can be taken out of production. But the price definitely needs to be higher than the average of 2015."
Though the industry has scaled back, Andersen says his conglomerate wants to make oil acquisitions. Last year, Maersk agreed to buy some onshore assets from Africa Oil Corp. It didn't find any suitable targets in its favorite area, the North Sea. That turned out to be "lucky," given the subsequent decline in prices, Andersen said.
Estimates compiled by Bloomberg show analysts see a barrel of Brent costing about $49 in the first quarter of 2017. But then again, this time last year they thought oil would reach $55 a barrel in the first quarter of 2016.
"We are looking in general at what's on the market, but are obviously cautious in not buying something that's too expensive or which has a too short production life," Andersen said. "In the long term, we think that projects with break-even of $45 to $55 would make excellent transactions."
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.