SaxoTV

Hansen: We are facing a new world order in oil

883 views
October 29, 2014 barrel, bg group, bp, brent, brent crude, brent geo-political, brent spread, brent wti, brent wti spread, canada, canadian, commodities, commodity, commodity market, commodity prices, commodity strategy, commodity trade, commodity trading, crude, crude oil, crude oil price, crude oil prices, crude price, crude prices, crude spread, crudeoil, geo, geopolitical tensions, geopolitics, oil, oil and gas, oil commodities, oil company, oil demand, oil industry, oil market, oil markets, oil price, oil prices, oil production, oil range, oil spread, oil stocks, oil supplies, oil supply, oil trading, opec, opec price, production, productivity, saxo bank, saxo tv, shale oil, statoil, trading, tradingfloor.com, unconventional, wcs, west canadian select, wti, wti and oil, wti brent, wti crude, wti crude oil, wti price, wti supply, wti vs brent, wticrude
Statoil is the latest energy company to post a loss in its third quarter earnings. It follows bad news from BP, BG Group and Total. Saxo’s Ole Hansen says there’s a crude reason for these poor results and that's a 'collapse' in the oil price.

He says that after being used to the oil price averaging 110 USD/bbl for the last four years, it's been a shock that crude is trading around 80 - 85 USD/bbl. This has been a contributing factor in why many companies have made large write downs.  For Statoil, Canada was its largest.

Hansen says that decision was made because of the falling price in West Canadian Select (WCS). It's trading around USD 13 less than WTI, bringing the price down to USD 70. He says that makes it difficult for companies like Statoil to make a profit.

Over the last few years, oil supply across the globe has been rising particularly in the US. Although geopolitical risks have offset this, Hansen says that's fading as countries like Libya are now producing oil once more. That, however, is resulting in a supply surplus of around one million barrels a day and is expected to rise further. "It's a new world order that we have to get used to," says Ole. "It's good for consumers but not good for producers."