Crude futures prices may continue to free fall even with the 30% drop since June. The price of West Texas Intermediate for December is now hovering at the $76 a barrel level, just shy of the $75 target the team at Goldman Sachs (GS) is forecasting for 2015. While Brent for December is at $79 a barrel, the lowest since 2010 and below Goldman’s $85 a barrel target.
These prices may look good to some speculators, however Jonathan Hoenig of CapitalistPig.com says forget about it. “Why go long assets in a bear market? It’s a bad move, it's a low probability bet in my book.”
Hoeing predicts the bear market in crude will continue with prices potentially falling as low as $50 a barrel, in part because the global economy is slowing, pushing supply levels higher.
This week the U.S. Energy Information Administration (EIA) confirmed what the market is telling us by cutting its 2015 forecast for Brent crude to $83 a barrel. In a report, the EIA said, “There is significant uncertainty over the crude oil price forecast because of the range of potential supply responses from the Organization of the Petroleum Exporting Countries (OPEC), particularly Saudi Arabia, and U.S. tight oil producers to the new lower oil price environment.” OPEC is set to meet on November 27th in Vienna, Austria.
The other half of the energy story and also a big influence on prices, says Hoenig, is the advancement in the U.S. energy industry, and the production of great oil companies particularly in the United States. "We like to rail against fossil fuel companies, but it is their advancements in oil extraction and fracking that have brought oil and natural prices to historic lows.”
The EIA expects Henry Hub natural gas spot price to average $3.97/million British thermal units this winter, lower than the $4.53/M BTUs last winter. The United States Natural Gas ETF (UNG), which closely tracks the natural gas market, has advanced 22% over the past 12 months.
Fracking has transformed the state and attracted thousands of workers, including African immigrants
Ibrahim Kamara, left, and Younger Konah outside their trailer in Williston, North Dakota, Sept. 26, 2014.
Les Stone for Al Jazeera America
WILLISTON, N.D. — The sun wasn’t yet visible over the nearby farmhouse when Younger Konah and Ibrahim Kamara stepped out of their battered trailer. The matching black T-shirts they wore read, “100% All-American premium deliciousness.”
Decaying heavy machinery lay scattered around the field near the couple’s home: a bulldozer, pickups, a boat, a howitzer cannon, even an amphibious military transport vehicle. Several nearby trailers also housed migrant workers. Konah, 23, and Kamara, 26, each of whom escaped a West African war before arriving in this country as refugees, call this informal settlement “the camp.”
On their way to work at Fuddruckers, the hamburger chain, Konah was excited to meet the puppy a co-worker had offered her from a new litter. “I want something that will be mine, something I will train my way,” she said.
Konah and Kamara are two of the African-born workers who have come to this town in northwest North Dakota, a remote part of a remote state, to capitalize on the oil boom that has transformed the landscape and local economy. Between 2009 and 2013, the number of workers and those seeking employment in the county has more than tripled, from 15,000 to nearly 50,000.
Konah outside the trailer that she and Kamara rent. Les Stone for Al Jazeera America
No one tracks how many are African. But their stories recall American traditions of immigration and fortune seeking, recast for a time when all that matters is finding well-paid work.
Thanks to the Bakken, a formation of oil-saturated shale rock that lies under parts of North Dakota, Montana and Canada’s Saskatchewan province, the United States has surpassed Saudi Arabia as the top oil-producing nation. Geologists have long known about the oil, but it’s only since recent developments in hydraulic fracturing or “fracking” technology, a process of breaking the rock with pressurized water, that it could be profitably exploited. North Dakota is now the second-largest oil-producing state, after Texas, and saw its production almost triple from 2010 to 2013.
Williston functions more like a giant open-air factory than a small town. Pickup trucks and 18-wheelers swarm the streets at all hours. In fields on the town’s outskirts, natural gas flares burn next to the nodding pumpjacks. Retired general and CIA director David Petraeus, who visited earlier this year, said Williston resembles a “war zone.”
Due to skyrocketing demand, housing costs in Williston can approach big city rates; one-bedrooms often rent for $1,200 a month. Hotels and restaurants compete for business from a transient, overwhelmingly male population of oil workers. To keep workers here, service-industry jobs tend to pay far higher than they do elsewhere. A sign in front of the Walmart — which serves as both the industry canteen and the closest thing Williston has to a public square — recently advertised a starting wage of $17 an hour.
Before the boom, Williston was “in no way diverse,” according to Debbie Slais, director of the local library. But, she said, there are now native Spanish speakers and a Turkish community as well as immigrants from numerous African countries.
“No matter your situation, you find a job” in Williston, Kamara said. “It might not be the job you looking for, but you find a job you can survive on.”
The flare from a fracking rig outside Williston.
Les Stone for Al Jazeera America
Ibrahim Kamara grew up in Freetown, the capital of Sierra Leone. His father was a soldier, and his mother was a social worker and community organizer before they both died in the country’s civil war, which ended in 2002. He fled with his grandparents and sister to nearby Guinea before relocating to Fargo, North Dakota, in 2003. “It was like we’d been saved from Earth to heaven,” he said.
Kamara, who has a bushy goatee and a gap between his front teeth, attended middle and high school and North Dakota State University in Fargo, but he began getting in trouble and dropped out. “We’re used to the hard life over there [in Africa], where when things happen between two men they fight it out,” he said. He received a shoplifting misdemeanor conviction and an aggravated-assault charge that was dropped to a misdemeanor, he said. As a result, he was at risk of being deported.
About two-and-a-half years ago, he met Konah, who had left Liberia during its civil war. Konah has high cheekbones, a few faded tattoos and, like Kamara, speaks with a thick accent. She said she lived in the suburbs of Washington, D.C., and in Minnesota and Boston, before moving to Fargo. There, she worked as a cleaner, while Kamara worked as a cook at a TGI Fridays. Wages were low, about $8 an hour, and they heard about better opportunities in the oil fields. “We decided we had to move here to build a better future if we were going to be together,” Konah said.
“We came here with zero dollars,” Kamara said. “The only thing we had was gas in our car.”
After arriving in April 2013, they began visiting a temp company that arranged day work in exchange for a portion of their wages. They showed up at 6 a.m. to see if they would work that day. Kamara found jobs in construction and maintenance, while Konah cleaned and “flagged” — directed traffic around construction sites. On days when only Kamara worked, Konah sometimes spent her time in the car waiting for him.
But Kamara’s heart was in the kitchen. “I love meat,” he said. “I love cooking steaks.” He filled out an application at Doc Holliday’s Roadhouse, a new restaurant. When it opened, he got the job.
The owner then offered him additional work at another place, a brew pub that opened a few months later. Kamara said he has worked at five restaurants since moving to Williston; all of them opened in the last 18 months.
Kamara and Konah have come to Williston in search of a path to a better life.
Les Stone for Al Jazeera America
For their first three months in Williston, Kamara and Konah usually slept in their green Chevy Impala. Finding a place for the night could be a challenge. Walmart called the police on them, Kamara said, and locals sometimes “got scared if they see somebody sleeping outside their house.” (Walmart confirmed that its store doesn’t permit migrant workers to sleep in the parking lot.) The library allowed cars to park overnight, but there wasn’t always room for everyone. The couple first heard about the camp when a friend from Fargo suggested sleeping there.
Soon, they moved into the trailer, where they pay $600 a month for a cramped space that lacks running water or sewage. The land and trailers are owned by a Vietnam War-era veteran who has won local notoriety for his impersonations of World War II Gen. George Patton. He declined to give his name. Williston residents cannot legally turn their property into unlicensed campgrounds.
A bed with a leopard-print blanket filled one end of the trailer. There was room for a stove, a couch and a large flat-screen television. DVDs and a set of poker chips were spilled across the tiny kitchen table. Pallets of bottled water were stacked on one of the seats. At the far end of the trailer, there was a bunk bed made and ready for others who want to come to Williston and try their luck.
The pair paid to shower at a nearby truck stop and stored their food in pickle barrels to keep out the rats. In late September, the area experienced record temperatures above 90 degrees. Inside the trailer, it felt even hotter. In winter, the temperature can drop to negative 40. Konah and Kamara own a heater and have endured one winter so far.
The couple would like to move to an apartment eventually, but they worry about not having a credit history. They’ve paid application fees for apartments, Kamara said, only to be rejected. “We’re stuck here taking it a day at a time.”
Relaxing in an easy chair one afternoon, as a black-and-white Western played on television, the landlord estimated that there were 10 tenants living on his property. (A reporter met at least nine, seven of whom were born in Africa.) “I don’t know where they’d go if they got kicked out of here,” he said. “It’d be a sad thing for them.” In addition to his unlawful tenants, the landlord said, he was collecting royalties from seven oil wells on his land. “I’m surviving,” he said.
Kamara and Konah were too. Together, they earned more than $30 an hour, enough to save money and send some back to family in Africa. “You don’t have to have a lot to change someone else’s life,” Kamara said. “Americans didn’t have all their problems solved when they was helping me to come here for a better life.”
Kamara said his main contact in Sierra Leone had been his uncle, a hospital worker who recently died of Ebola. In September, the epidemic was much on their minds. “It’s the type of disease that can wipe out a generation,” Konah said.
The couple has managed to earn enough money at their jobs at Fuddruckers restaurant to send some back to relatives in Africa.
Les Stone for Al Jazeera America
It’s not work at Fuddruckers that draws most people to Williston. The oil industry is constantly hiring for well-paying jobs, which rarely require more than a high-school education. Truck drivers who haul equipment and frack water can reportedly make more than $80,000. Experienced oil-field workers earn considerably more.
Abdulateef Omar, 28, a truck driver who also lives in the camp, said he fled Sudan for West Africa. After spending time in a refugee camp in Ghana, he relocated to South Dakota. He had worked in hospital food service and studied at a technical college, but he said, the oil industry paid better.
Christopher Obey, a trucker from Liberia who had just arrived in the camp via Minnesota, found work within a day. His job had taken him to 25 states so far. “I just like to go around and make some money.”
For Kamara, a job in the oil fields was more elusive. He once applied to be a roustabout, a low-ranking laborer in the industry, but was rejected, he said. “They said I wasn’t qualified.”
That experience may be common for Africans here, according to Guleed Farah. The tall Somali-born man decided to take time off from his studies at the New Mexico Institute of Mining and Technology to work as a lab technician for a major oil-services firm. “The majority of them can’t get their leg in,” often, he believes, because of racism. “You can’t do anything about it. You have to live with it.” Farah hasn’t been so hampered; he showed off a letter from a large oil company offering him starting pay of about $8,000 a month.
Farah said employers are also wary of Africans’ imperfect English. Oil rigs are “very fast moving environments,” he said, and accidents are “due to miscommunication most of the time.”
Guleed Farah from Somalia is training to be a chemical engineer.
Les Stone for Al Jazeera America
Williston’s highly transient population — oil workers often come to town for shifts measured in weeks before going home — is not conducive to civic life. “Everybody is basically doing what they gotta do to survive, which means that everybody working,” Kamara said. Even in the camp, he said, “We don’t have a time when we all get together and sit down, talk about life.”
Religious services provide a rare opportunity to commune. Kamara and Konah like to go to a Lutheran church when their shifts allow it. And a group of Muslims rents out a room at the library for Friday prayers. The gatherings have been going on for several months, said Slais, the librarian, since one of the men’s wives came in for story hour with a child and asked if they had space available.
Before prayers, the muezzin, a Senegalese man in a floor-length caftan who works as a janitor at Walmart, laid mats over the gray carpet. “It’s a blessed city,” the imam, a Ghanaian man who washes trucks, said. As he led the service, about 50 worshippers trickled in.
Ngergal Ndiaye from Senegal prepares for Friday Prayer in the Library in Williston.
Les Stone for Al Jazeera America
Worshippers at Friday prayers at the library.
Les Stone for Al Jazeera America
Kamara said he and Konah would like to stay in Williston for three years and then leave to start a business, perhaps an import/export company that trades with their native countries. If that works out, he said, the remittances they’re sending now are helping to maintain what could become business relationships.
On a sunny September afternoon, that future seemed far away. Konah played with her new puppy, small, black and adorable, perhaps a mix of pit bull and labrador. She named it Tiger. A doggie bed had been newly installed under the trailer’s postcard of a table.
Kamara sat outside, shirtless and wearing a skullcap; he dug into a dish Konah had prepared of rice, potato leaves, spinach, palm oil and meat, flavored with habanero peppers.
Konah offered a handful to Tiger. The dog was reluctant at first but eventually sampled the fiery mix, repeatedly licking her lips in what looked like agitation. “Your first African food,” Konah said, pouring Tiger a bowl of water. “She’ll get used to it.”
(Reuters) - Oil fell below $80 a barrel for the first time since 2010 on Thursday, as more evidence of a slowdown in China's resource-hungry economy chimed with OPEC warning of a substantial drop in demand next year.
Data from Beijing showed below-forecast factory output and investment growth hitting a near 13-year low, reinforcing signs that the world's second-biggest economy will see its weakest growth for almost 24 years this year.
Stock markets .MIWD00000PUS, however, were not put off, wagering that the lacklustre figures could encourage more support measures from the Chinese authorities in the coming months, and that the slide in oil could aid growth globally.
European shares .FTEU3 rose 0.5 percent in a small rebound from falls on Wednesday. Futures markets pointed to a positive start for Wall Street ESc1 1YMc1 NDc1 later too after Asian .MIAPJ0000PUS and emerging market stocks .MSCIEF had edged up overnight.
But it was oil LCOc1 that remained the focus as it sat slumped at $79.60 a barrel, the first time since the end of September 2010 it had dropped under $80.
The Organization of the Petroleum Exporting Countries (OPEC) said in its latest report on Wednesday that demand for oil was expected to drop by around a million barrels a day next year because of the U.S. shale boom.
Its top producer, Saudi Arabia, also gave little away about whether it will cut output to remove surplus oil from the market, ahead of what is shaping up to be a landmark OPEC meeting on Nov. 27.
"There are not many bullish factors to lift the market now," said Avtar Sandu, senior manager for commodities at Phillip Futures in Singapore. "But it's not a one-way street down. Those who have been selling want to take profits around this area."
The robust dollar .DXY added to the pressure on oil as it moved towards a recent seven-year high against the yen, driven by speculation that Japanese Prime Minister Shinzo Abe will call a snap election in December.
A senior figure in Abe's ruling party told reporters it appeared the premier had indeed decided to call an election. If he wins, economists believe it will clear the way for further stimulus measures.
ROUBLE TROUBLE
Oil's ongoing slide also put renewed pressure on Russia's hard-hit rouble RUB=.
It was down well over 1 percent at 46.27 to the dollar and with tensions also bubbling in Ukraine again, traders were watching to see whether the central bank would be forced into more decisive action to defend the currency. [ID:nL6N0T31BG]
The central bank's deputy governor, Ksenia Yudayeva, told lawmakers in Moscow that the fall in the rouble was a "bad recipe" for the country's economy but also that the bank was against capital restrictions.
"Market participants are guessing about the central bank's next policy step after heavy verbal interventions recently and the limit imposed on FX swap operations," Maxim Korovin, a forex analyst at VTB Capital, said in a note.
The world's other big oil producers were being bruised too. Nigeria's naira NGN= fell hard for a fourth consecutive day despite central bank efforts to stabilise it, while Saudi Arabia's stock market .TASI, which is packed with oil firms, also tumbled.
In Europe's bond markets, both German and Italian yields dipped as a downbeat survey from the European Central Bank underlined the need for further policy easing, though the euro EUR= bucked the trend, rising 0.2 percent against the dollar.
Expert economists the ECB surveys every quarter cut their euro zone inflation forecasts for next year to just 1.0 percent and 1.4 percent in 2016, down from 1.2 percent and 1.5 percent respectively last time around.
"The balance of risks has become more clearly tilted to the downside. ... Respondents identify geopolitical tensions, mainly in Ukraine and Russia, but also in the Middle East, as by far the main risk," the ECB's report on the findings read.
Worries about low inflation are widespread and bolstering expectations of ongoing support and cheap money from the world's major central banks.
Safe-haven gold was steady at $1,160.76 per ounce XAU=, above Friday's 4 1/2-year low of $1,131.85, while growth-attuned metal copper CMCU3 was lifted 0.2 percent to $6,694 a tonne by the Chinese stimulus hopes. [MET/L]
(Additional reporting by Jacob Gronholt-Pedersen in Singapore and Alexander Winning in Moscow; Editing by Hugh Lawson)
It's one of the largest divorce settlements in history. A judge has ordered Oklahoma oil tycoon Harold Hamm to pay his ex-wife Sue Ann Hamm $995.5 million.
NBC explained how the massive settlement breaks down:
"One word: installments. According to the filing, just over $322 million must be paid by the end of 2014. The remaining $650 million will be paid out on a monthly basis - at least $7 million a month."
So what to do with all that money? ABC thought it would be fun to find out what one can get for $7 million: "How about 140 2015 BMW convertibles? Seventy Kentucky Derby contenders? Or a little getaway like this in the Hollywood Hills?"
The couple didn't have a prenuptial agreement. The settlement represents just a fraction of the Continental Resources CEO's wealth.
The New York Times reports Harold Hamm is the 24th richest man in the U.S. with his net worth of more than $18 billion.
Forbes' Christopher Helman writes, "This is a very positive outcome for [Harold] ... who may have been somewhat concerned that an adverse ruling could have forced him to sell enough shares to dilute his stake below 50%."
USA Today says this divorce settlement ruling allows Harold Hamm to keep hold of his almost 70 percent stake in Continental Resources.
Sue Ann Hamm is also getting some real estate in the settlement in addition to the cash.
She'll receive a home in Oklahoma that's valued at a little more than $4.6 million, a $17.5 million California ranch, and another home in Oklahoma that she and her ex-husband purchased the year after they were married. It's valued at $800,000.
The couple's divorce settlement looks meager though, next to the roughly $4.5 billion a Russian oligarch was ordered to pay his ex in May.
For years, the gold mining sector has been the worst investment sector imaginable. There was a while in 2014 when it seemed like the gold mining sector might avoid another disastrous 12-month stretch, but that seems unlikely after what has taken place in financial markets in the last few weeks.
With gold trading down to $1,149 an ounce, the companies that try to extract the yellow metal from the ground got hit hard yet again on Monday. The Market Vectors Gold Miners ETF fell by 6.3% and is now down by 17% in 2014. The gold mining sector has pretty much been the worst investment sector for the last three years.
Some prominent investors rallied behind an investment thesis that focused on gold miners in the years following the financial crisis, viewing the sector as the perfect antidote to currency instability and national governments run amok. As the price of gold spiked in 2011, gold mining companies borrowed billions of dollars and spent tens of billions of dollars more on ambitious new projects and ventures. As the price of gold has fallen, many of those projects have become uneconomical and caused a cash crunch that has rippled through gold mining companies, both large and small.
Barrick Gold, the world’s biggest gold mining company, has remained a strong example of what has gone wrong. Shares of Barrick fell by 6.7% on Monday and are now down by 36% in 2014.
The vast majority of Barrick’s revenue comes from gold mining operations. With some $10 billion in net debt, Barrick has not been able to reduce its debt-load in any meaningful way as the price of gold has plunged. Its 2011 purchase of Equinox Minerals for $7.4 billion did not work out and construction on its key and half-built Pascua-Lama gold project on the Chilean-Argentine border remains temporarily suspended after environmental and legal delays.
“With the project not just vying for social acceptance in Chile (and regulatory approvals on water), but also contingent on more robust project economics, the uncertainty is heightened,” Deutsche Bank recently said in a research note. “Management’s target net debt of $7bn, conveyed on its 3Q14 earnings conference call, is a tall order without a combination of a higher gold price and asset sales.”
In 2014, the gold miners have yet again continued to underperform gold itself, which is down a relatively modest 4% in 2014. Gold miners have now underperformed gold—through both good times and bad—in nine of the last 13 years.
The junior staff chairman of the troubled Tema Oil Refinery (TOR) says the refinery has the capacity to process any crude oil in the world, especially the Jubilee crude, but financing has been a challenge.
“Although there has been some misconception that TOR cannot refine crude oil, we can; even the worst crude oil has been processed by us -- Jubilee crude is sweet, and what makes it sweet is the sulphur content of 0.22% which is equal to that of Nigeria.”
Mr. Emmanuel Eduah Offoh told this to B&FT in an interview on the sidelines of a forum organised by the General Transport Petroleum and Chemical Workers’ Union of the Trades Union Congress (Ghana) in Takoradi.
He noted that successive governments over the years have not been able to invest capital into the company -- “government is sole shareholder of the refinery and every project or service we render to companies comes from our internally generated funds”.
From 2009, he noted that TOR has been battling with the state of the refinery -- “We have been to government on several occasions for support, and they made promises which have not been fulfilled.
“The forces that we are battling with are not easy; currently we are not processing because we do not have the crude oil to process, but we are doing our best to get some from the market,” he said.
According to him TOR is trying on its own to get credit, “but no single bank is ready to support us since we do not have a letter of credit from the Bank of Ghana.
Because of Single Obligor Limit, no bank can give us credit -- we buy the crude oil in dollars and sell in cedi. The Bank of Ghana says you can sell in cedi but we will not give you the dollar,” he added.
He pointed out that workers of TOR do not take salaries from the government chest, but from the company’s coffers -- the internally generated fund.
He added that TOR is ever-ready to refine any crude in the country, and urged stakeholders in the industry to support the company.
