Oil was on the cusp of entering a new bear market after a surprise increase in US gasoline stocks drove benchmark US crude prices to the lowest level since April.

West Texas Intermediate sank below $42 a barrel in the wake of US government data that showed motor fuel inventories climbing by 452,000 barrels last week instead of falling as analysts had predicted.

WTI has fallen by 19 per cent since hitting a year-high of almost $52 a barrel in June, with a decline of 20 per cent from a peak generally accepted as marking the beginning of a bear market.

Brent, the international crude marker, was down to $43 a barrel, having lost 18 per cent since June.

The US gasoline figures added to concerns that a huge surplus of refined products could delay the long-awaited rebalancing of the oil market as refiners buy less crude to turn into fuel.

The US is the world’s most important market for motor fuel, consuming one in every nine barrels globally.

The price fall will put fresh pressure on major producing countries and companies who thought a two-year market rout was over after oil almost doubled between January and June.

“It doesn’t look the bulls will be back in charge of this market any time soon,” said Tamas Varga at London-based oil brokers PVM.

At 241.5m barrels US gasoline stocks are now 12 per cent higher than this time a year ago, according to the latest weekly report from the US Energy Information Administration.

“We are above last year’s level for this time of the year by 25.5m barrels and we are above the five year average by 25.7m barrels,” noted Dominick Chirichella of the Energy Management Institute.

Inventories usually fall over the summer driving season but this year the as refiners have continued to churn out products and demand has been weaker than expected.

The increase in stocks has been putting pressure on gasoline prices and in turn refinery margins, which have declined sharply. , one of the world’s biggest oil producers, said on Tuesday that its margins had slumped to a six-year low in the second quarter and warned they would remain under pressure.

Wednesday’s report from the EIA also showed commercial crude stocks had risen for the first time since May, increasing by 1.67m barrels to 521.13m.

Stocks at Cushing, the delivery point for US oil futures contracts and a major storage hub, rose 1.1m barrels.

Combined US crude and product stocks are at the highest level on record.

Traders are now watching Brent and WTI to see if they break their 200-day moving averages. These are considered as key technical levels, which if breached could trigger further selling. Both markers are about $1 away.

It is the tale of a little-known but well-connected oil company that was co-founded by a Saudi prince and claims to be a “partner of choice” for multinationals. But US authorities have now left PetroSaudi International grappling with questions over its dealings with the scandal-racked , the Malaysian state wealth fund.

US investigators last week threw their weight behind longstanding claims that $1bn of Malaysian public money meant for 1MDB’s joint venture with PetroSaudi was instead siphoned off to a Malaysian businessman, who splurged millions on art, partying and a Hollywood film.

Officials from the US Department of Justice allege that $20m of the total was sent to the unnamed PetroSaudi prince and then again to an unnamed top Malaysian official, whose description corresponds to that of Najib Razak, the country’s prime minister.

PetroSaudi has denied any wrongdoing and rejected any claims of involvement in misappropriation of funds from 1MDB. It says it is not aware of any investigation into its own conduct, but will co-operate with any official requests for assistance. Mr Najib has also denied any wrongdoing in connection with 1MDB, whose advisory board he chaired.

The US court case, launched last week to recover money allegedly looted from 1MDB, provided the most extensive detail so far on the alleged transactions, including those involving the 1MDB-PetroSaudi joint venture.

The US action is one of several probes spanning continents into claims of multibillion dollar corruption in 1MDB’s international dealings. PetroSaudi is neither a defendant in the US case nor accused of any crimes.

PetroSaudi was founded in 2005 as a private oil company by Prince Turki bin Abdullah bin Abdel Aziz — a son of the late King Abdullah — and his business partner Tarek Obaid, a former banker. The company grew from drilling and oilfield management into trading, opening offices in London’s Mayfair district that have pictures of Saudi royalty and are decked with national flags.

The company also attracted high profile individuals from western business as advisers, including Rick Haythornthwaite, chairman of and , who provided advice on oil exploration. Tony Blair Associates, the consultancy set up by the former UK prime minister, has said it did a few months of advisory work for PetroSaudi almost six years ago, on business in Asia unconnected with Malaysia. PetroSaudi’s website currently lists projects in Ghana, Indonesia, Venezuela and Tunisia.

The 1MDB-PetroSaudi joint venture first attracted scrutiny last year after Xavier Justo, a former PetroSaudi executive, leaked a trove of corporate email correspondence that was covered extensively on the investigative blog. Mr Justo is now serving a three-year sentence in a Thai jail after pleading guilty in August 2015 to blackmail in relation to the documents.

At the heart of the 1MDB-PetroSaudi relationship is a 2009 agreement for the Malaysian fund to invest $1bn in a joint venture in exchange for the Saudi company bringing in mineral extraction concessions in Turkmenistan and Argentina allegedly valued at $2.7bn, according to the US complaint.

Some 1MDB officials and others then allegedly arranged for the fund’s share of the money to be fraudulently transferred to a Swiss bank account controlled by a young Malaysian businessman and impresario named Jho Low. The DoJ court filing claims Mr Low laundered more than $400m into the US, using at least $106.7m to acquire a stake in EMI Music Publishing Group North America Holdings Inc, the world’s third-largest music publishing company.

Mr Low has not responded to a request for comment submitted through Jynwel Capital, his family’s Hong Kong-based company. He has previously denied any wrongdoing.

The DoJ case also focuses on $24.5m allegedly sent in two tranches in February and June 2011 from the account controlled by Mr Low to a Riyadh bank account in the name of a man described in the complaint as a Saudi prince who co-founded PetroSaudi.

All but $4.5m of these funds were then allegedly transferred again within days to a person dubbed “Malaysian Official 1”, whose biography and responsibilities outlined in the DoJ case match those of Malaysia’s prime minister. Mr Najib has come under opposition pressure to resign since it emerged last year that he received $681m into his personal bank account in 2013 — money the country’s attorney-general has said was a gift from the Saudi royal family.

People familiar with the matter confirm that the two co-founders of PetroSaudi referred to in the DoJ complaint are Prince Turki and Tarek Obaid. Neither man has been accused of any wrongdoing. According to the company, Prince Turki ceased to be a shareholder in 2013.

PetroSaudi maintains all the funds and transfers related to the joint venture with 1MDB — which ended in 2012 — have been properly accounted for. It says it would not be appropriate to comment further, because of the ongoing US proceedings.

Prince Turki could not be reached for comment. A Malaysian government spokesman did not respond to a request for comment.

Additional reporting by Kara Scannell

Bunge offered a bumpy picture for the rest of 2016 as the international agricultural trader delivered a strong rise in second quarter profits on declining sales.

The trading house reported a 40 per cent rise in earnings for the three months to June to $121m thanks to strong grains trading while sales fell 2.3 per cent to $10.54bn, writes Emiko Terazono, Online Commodities Editor.

For the rest of the year, Bunge sees slow farmer selling in Brazil and Argentina as well as “challenging conditions in certain edible oils markets”. It also said the “mark-to-market gains we benefitted from in the second quarter to largely reverse in the third quarter”.

Nevertheless, the company said it would see a rise in full-year earnings with earnings in the second half weighted in the fourth quarter.

Chief financial officer, Drew Burke, said:

Overall, we continue to expect to grow earnings in 2016. In agribusiness, forward oilseed processing and grain handling margins in North America and the Black Sea are solid, reflecting big harvests and strong demand.

said its profit would take an additional $1.1bn-$1.3bn hit from last year’s at its Samarco iron ore Brazilian joint venture when it reports annual results next month.

The world’s biggest miner by market capitalisation said the charge was equivalent to a 50 per cent share of the estimate of remediation and reparation costs under a framework agreement with the Brazilian government.

The charge comes as prepares to report the biggest financial loss in its corporate history, due to the prolonged slump in commodity prices and impairments linked to the Samarco disaster and its US oil business.

“The recognition of the provision demonstrates our support for the long-term recovery of the communities and environment affected by the Samarco tragedy,” said Andrew Mackenzie, BHP chief executive. “And the belief we have that the agreement is the most appropriate mechanism to do this.”

The Brazilian miner , BHP’s joint venture partner at Samarco, said it would book $1.2bn in charges in its results on Thursday.

The collapse of a tailings dam at the Samarco operation in November killed 19 people, destroyed entire communities and left 700 people homeless, sparking nationwide anger in Brazil.

Although the between Samarco and the Brazilian government was ratified in May, a court later suspended that deal in a move that could reinstate an initial $6bn public claim for damages. BHP and its partners are appealing that decision.

In addition, Brazilian prosecutors filed a R$155bn ($44bn) for damages in May.

“Samarco and its shareholders continue to believe that the agreement provides an effective long-term framework to remediate and compensate for the impacts of the Samarco dam failure,” said BHP.

Citi said in a note that the suspension of the agreement posed a financial risk for BHP, but added it felt the current settlement adequately covered the remediation and compensation related to the disaster.

BHP booked a $1.2bn pre-tax charge relating to Samarco in February when it announced its half-year results.

The miner said the latest $1.1bn-$1.3bn charge reflected uncertainty over Samarco’s operations — BHP had hoped the mine would reopen this year and generate cash to meet liabilities.

But the mine has not yet received government approvals to reopen, forcing BHP to allocate $118m in funds to Samarco for remediation and stabilisation works.

Analysts at Citi said they assumed that a restart may not occur until 2018, raising questions about the liability for Samarco’s $3.8bn debts.

“Technically there is no recourse to BHP/Vale but we question whether they would walk away from the liabilities given the future implications on accessing capital markets for funding,” said Citi. 

BHP, which was incorporated at Broken Hill, Australia in 1885, is due to report results on August 16. UBS is forecasting a statutory loss of US$6.8bn, and underlying profit of US$803m.

BHP Billiton’s Sydney-listed shares edged up 0.7 per cent to A$20 on Thursday.

Oil prices on both sides of the Atlantic have fallen into bear market, heaping more pressure on oil companies and major producing countries that had hoped the worst of the rout was over.

Brent, the international crude market, fell as low as $42.11 per barrel on Friday morning, down more than 20 per cent from its intraday peak of $52.86 per barrel on June 9. A 20 per cent decline is the technical definition of a bear market.

Meanwhile, West Texas Intermediate, the main US crude benchmark, fell as much as 43 cents to $40.69 on Friday. Both contracts are now below their 200-day moving averages. These are considered as key technical levels, and now they have been breached it could trigger further selling.

Oil prices are still comfortably above the nadir touched at the start of the year and Brent crude, the North Sea benchmark that is the most used international measure, is still hovering just over bear market territory. However, the renewed decline is a worrisome development for energy groups and states that depend on oil revenues.

Here are five things traders are tracking to see if the slide continues — or if the sell-off is just a blip in a recovery.

Supply and demand

Two years since oil began its precipitous decline from above $100 a barrel, reaching a trough below $30 in January, the market appears to be edging closer towards balance.

High-cost supplies are declining, demand has been boosted, and concern about the impact of investment cuts on future supplies have all helped the market recover from levels that threatened bankruptcy and caused economic pain across the sector.

But the process of moving back to a balanced market was never going to be smooth. This summer has disappointed the more bullish analysts as the two-year-old glut of crude has become a glut in products — the gasoline, diesel and jet fuel that consumers use.

Refiners ran hard to meet forecasts of surging demand but may have over-egged just how much fuel was needed. Stocks of both crude and products that have will need to be worked off before there can be a more sustained recovery.

Gasoline

The recent decline in oil prices has several drivers but one stands out: gasoline demand has underwhelmed and .

In the US — the world’s most important gasoline market, accounting for almost one in every nine barrels of oil globally — a huge surplus is overhanging the market as the summer driving season draws to a close. Stocks are 12 per cent higher than a year ago.

This is putting pressure on prices and refining margins. If it continues, refiners, who had been running hard for much of the past 18 months as low prices buoyed demand, may decide to buy less crude. That, many fear, is delaying the rebalancing of the market.

This new downstream threat has also sharpened attention on demand, which may now not be growing as quickly as many people assumed.

The US Energy Information Administration recently lowered its gasoline demand growth forecast for the remainder of the year to 130,000 barrels per day, or 1.5 per cent, from 220,000 previously.

Others think it is lower still. Veteran oil economist Philip Verleger reckons US gasoline consumption has increased at a rate of just 1.1 per cent this year compared with 2015.

“The fall in gasoline prices will pull crude prices down,” he says. “In the absence of a disruption, do not be surprised to see Brent falling below $40 a barrel, possibly to $37, by mid to late September.”

Floating storage

The persistence of the oil glut has seen some traders storing crude oil and refined fuels such as gasoline and diesel aboard tankers at sea.

They can partially finance the storage by selling the oil forward through the futures market where it currently fetches a higher price thanks to a structure known as that is prevalent when the market is oversupplied (the opposite structure, , sees spot prices rise above future prices during times when supplies are tight).

But while the contango currently covers some of the additional cost of hiring vessels it is not yet wide enough to make it a widespread trade like it was during the financial crisis, when a sudden collapse in demand made floating storage the hottest trade of 2009.

Instead, traders and analysts say it has largely been driven by necessity, with onshore storage already very full or locked up by rival traders in long-term deals. Indeed, outside of a few isolated geographic pockets, floating storage has declined in the past month as global supplies start to recede.

Energy Aspects, a London-based consultancy, calculates that floating storage levels for crude and fuel oil have declined by more than 60m barrels since early June, mostly from oil held on water.

“Stocks are drawing down and oil is coming out of storage, albeit the pace has slowed slightly due to high product stocks,” says Amrita Sen at Energy Aspects.

Rig counts

When Saudi Arabia took its fateful decision in December 2014 not to bolster prices by reducing production it did so with a clear aim in mind — to rebalance the market by driving out higher-cost supplies. That put US shale producers, among others, firmly in the crosshairs.

From that date, oil market participants have closely followed the weekly US rig count survey complied by Baker Hughes to assess the pace of the rebalancing process. Though it is an imperfect measure, the number of rigs drilling is a guide to where US production will go after almost doubling from 5m barrels in 2007 to 9.4m barrels last year.

Since hitting a seven-year low of 316 in May, the number of rigs drilling for oil has crept higher, rising to 371. Last week’s gain of 14 was the biggest increase since December. Since crude oil rose above $50 a barrel in June, drillers have put 55 rigs to work.

If maintained, the increase in drilling activity should stop the decline in US oil production. The US Energy Information Administration now thinks crude production will bottom at 8.1m barrels per day in September before edging up to 8.3m b/d in November and December. Oil majors forecast a similar trend.

“In the US, production continues to slowly decline and we anticipate a further drop in the third quarter,” Bob Dudley, BP chief executive, said on Tuesday. “But with producers slowly adding back rigs, by the year-end.”

Hedge fund positioning

After amassing a near-record bet on the recovery in oil prices between January and May, funds have either started taking profits or .

In early May, hedge funds held the equivalent of almost 420m barrels of Brent through futures and options contracts. Net longs — the difference between bets on higher and lower prices — have since fallen to less than 300m barrels equivalent.

In the US benchmark West Texas Intermediate there has been a similar pattern, with net longs declining by 100m barrels since late April.

“This has been largely driven by a fairly rapid take-up of short positions by the money managers group, which looks reflective of a broader change in sentiment,” say analysts at JBC Energy in Vienna.

“Inputs on the speculative side are certainly more bearish than bullish and crude fundamentals could certainly be used to make a case that there is some more downside to prices yet to be flushed out.”

An accelerating drop in oil prices threatens a in high-yield energy bonds, reigniting the relationship between the two asset classes as crude approaches bear market territory.

Prices for high-yield energy bonds have fallen for eight consecutive days — following a decline in the price of US oil towards $41 a barrel, its lowest level since April.

Rising stocks of gasoline, alongside an increase in the number of rigs drilling for oil, has increased pressure on crude prices and lifted the risk premium investors are demanding to own junk energy debt.

Bond investors view the recent decline in high-yield as a healthy correction after the sector has returned 24 per cent this year, including a 52 per cent gain from its February trough.

“It shows the market is focused on broad fundamentals,” said Henry Peabody, a portfolio manager with Eaton Vance. “The market is not terribly worried about this pullback and there is a massive reach for yield.”

Chesapeake bonds maturing in 2021 have fallen from 71 cents on the dollar in mid-July to 68.5 cents on Thursday, while oil-rig operator Transocean has seen its debt due in 2021 sliding to 84.7 cents from 89 cents on the dollar over the same period, according to MarketAxess.

Correlations between oil prices and the risk premium or spread on junk energy bonds — the difference in yield on a corporate bond and a similarly maturing US Treasury — have historically been negative, according to Marty Fridson, chief investment officer of Lehmann Livian Fridson Advisors. The higher the price of oil, the lower the spread an energy company must pay to sell its debt.

“The real question is at what point will you see the risk premium actually go up in energy and on the high yield index as a whole?,” Mr Fridson said. “What will it take to do that? $40 [a barrel] may be a reasonable number.”

Junk debt weakness has spread beyond the energy space, with the broad market weakening for the past three days.

Delinquencies in the energy sector have climbed rapidly since the year began, but have yet to meaningfully spread to other industries.

Standard & Poor’s expects 5.3 per cent of the companies it rates in junk territory to , roughly triple the level two years before.

Portfolio managers said they also had a better view of which companies would survive $40 or $50 a barrel oil now than they did in the first quarter, when bond prices swung violently.

“When you think back to February, if you watched CNBC for eight hours at your trading desk you would see red headlines all day on oil hitting new lows,” said Daniel Kelsh, a fixed-income strategist with UBS Wealth Management. “And because of that, there has been a little bit of a breakdown in how people think about risk. It doesn’t appear to be capturing the imaginations now the same way as it did.”

appealed for investors’ patience after announcing a 72 per cent drop in second-quarter earnings as continued weakness in oil and gas prices battered the Anglo-Dutch group.

The results were much worse than market expectations and added to the gloom hanging over the industry after weak numbers from BP and Statoil earlier in the week and a below $43 a barrel, the lowest level for three months.

ConocoPhillips and Total also announced steep drops in earnings on Thursday, although the latter’s was less precipitous than analysts had feared.

“The second quarter was incredibly challenging across the board,” said Iain Armstrong, analyst at Brewin Dolphin. “If oil prices don’t start improving in the third quarter the bears will start getting really aggressive again.”

Shell’s results were especially disappointing for investors because it was the first full quarter after completion of its £35bn . The addition of BG assets helped lift production 28 per cent to 3.5m barrels of oil equivalent per day. But this was more than offset by the weak market conditions in which those products were sold.

Shares in Shell were down 3.4 per cent at £19.75 on Thursday afternoon.

On a current cost of supplies basis — the measure most closely watched by analysts — second-quarter earnings were $1.05bn, down from $3.76bn in the same period last year. Analysts’ consensus forecast had been for $2.2bn.

Ben van Beurden, chief executive, admitted it was proving a difficult “transitional year” for Shell but insisted the group was making progress towards a more streamlined business that could deliver fresh growth in an era of lower oil prices.

He said the group was on track to cut costs by 20 per cent by the end of this year, compared with the combined operating costs of Shell and BG in 2014. This year’s planned capital expenditure of $29bn, meanwhile, would be 38 per cent less than the pair jointly invested as standalone companies in 2014.

The decision on Thursday to put on hold a multibillion-dollar liquefied national gas export facility in Lake Charles, Louisiana, was the latest example of the squeeze on spending.

A combination of low prices and the BG acquisition have caused Shell’s debt to equity ratio to more than double in the past year to 28.1 per cent and Simon Henry, chief financial officer, warned it could edge closer to the group’s self-declared upper limit of 30 per cent.

However, he said plans to raise $30bn from asset sales was progressing well, with 17 potential transactions worth $6bn-$8bn under way, two-thirds of them in the upstream exploration and production business.

Jon Rigby, analyst at UBS, attributed the “disappointing” results to “much worse” than expected cash flow of $2.29bn, down from $6.1bn a year ago.

Mr van Beurden said the big gap with market expectations reflected “a lot of noise and moving parts” caused by the integration with BG that had made it difficult for analysts to make accurate estimates. He said a cleaner picture of performance should emerge next year.

Shell remained committed to defending its dividend, he added, with the payout held steady at 47 cents in the second quarter.

Total reported a 30 per cent year-on-year fall in adjusted net income to $2.2bn, beating analysts’ consensus forecast for $1.89bn.

Marc Kofler at Jefferies described the results as “resilient”, aided by strong cost controls.

The French group said it was on course to exceed its target to cut costs by $2.4bn this year and aimed to generate $2bn from asset sales by the year end.

Shares in Total were up 1.3 per cent at €43.24 on Thursday afternoon.

ConocoPhillips, the largest pure exploration and production company in the energy sector, reported an adjusted net loss of $985m, or 79 cents a share, compared with a profit of $81m a year ago. Analysts’ consensus forecast had been for a loss of 61 cents a share.

The US group said its production exceeded expectations in the second quarter and raised its output target for the year. But pressure from weak prices caused it to trim its 2016 capital expenditure budget for the third time from $5.7bn to $5.5bn.

Don’t look down.

Brent crude has entered a new bear market, dropping towards $42 a barrel for the first time since April, as concerns about the ongoing oil glut continue to hammer prices, reports David Sheppard, deputy commodities editor.

Since hitting a year high of $52.86 in June Brent has now fallen by more than 20 per cent – the common definition of a bear market – spreading fears for oil companies and major producing countries that had hoped the worst of the two-year rout had passed.

On Friday, Brent moved below its 200-day moving average, a key indicator of sentiment for traders.

The latest slide comes as energy traders have started storing more crude off the UK coast, parking as much as two weeks worth of UK production on supertankers as they struggle to find buyers and see more profitable opportunities in holding the oil.

Demand from refiners has slipped after they produced too much gasoline in the first half of the year, transferring the crude glut into the refined product market and hitting their own profit margins.

But there are signs that the oil market has made progress since prices slipped to a 13-year low below $30 a barrel at the start of this year. Global crude oil inventories have started to slowly draw, and forecasts remain for the market to come closer to balance next year.

Goldman Sachs, traditionally one of the most bearish voices in the oil market, weighed in on Friday, arguing that while the recovery is “fragile” it is continuing.

They blamed strength in the dollar for some of the weakness in dollar-priced commodities like crude. The dollar index is up 6 per cent since May.

Goldman analysts said in a note:

The improvement in oil fundamentals remains fragile and continues to feature large offsetting forces: wildfires have helped offset surprisingly strong Iran production, slowing demand growth in India and China in 2H16 will help offset production issues in Nigeria and Venezuela and finally product builds have offset crude draws.

The resulting uncertainties on the near-term path of the oil market rebalancing have left the US dollar as the primary driver to lower crude oil prices recently. Beyond these near-term uncertainties, however, our updated supply-demand balance is little changed and continues to point to a slow rebalancing of the global oil market over the coming year.

The UK has become the temporary centre of the as a lull in demand from refineries has led traders to store crude on ships off the coast.

As much as 14m barrels of North Sea crude — the equivalent of more than two weeks of UK production — have been anchored in giant supertankers off Southwold, the Firth of Forth and Cornwall in recent weeks.

While stocks of crude oil have largely been declining elsewhere in the world the flotilla of storage vessels off the UK illustrates how the process of bringing oil supply and demand back into balance will be far from smooth, with pockets of regional weakness emerging.

Since hitting a high for the year above $50 a barrel in June crude prices have , slipping towards $40 a barrel and putting more pressure on oil companies and Opec producers that hoped the worst of the two-year price crash was over.

Most of the oil is on board tankers that have recently lifted North Sea crude, according to satellite ship tracking information and trading sources. The grades of crude they are carrying all help physically underpin the Brent futures contract, the world’s oil benchmark.

One supertanker, the Maran Thetis, picked up a cargo of crude at the UK’s Hound Point terminal in the Firth of Forth this week, the main loading point for Forties — the biggest single grade of the physical cargoes that can be delivered through Brent futures.

But instead of sailing to an oil refinery the Very Large Crude Carrier (VLCC), which carries at least 2m barrels of oil, has been anchored about two kilometres offshore from the famous Muirfield golf course in East Lothian, which has hosted the Open Championship.

Another fully loaded VLCC, the Gener8 Ulysses, is about 20 miles east in the North Sea where it has circled for the past week.

Further south, a small flotilla of oil tankers, including at least two VLCCs, have dropped anchor 10 miles off the Suffolk seaside town of Southwold. They are sitting in one of the few offshore berths in the North Sea where they are allowed to transfer oil from one tanker to another.

Traders said the oil was being stored for a variety of reasons, but most link back to signs that the market .

Refineries in Europe have been slowing production after turning too much cheap crude into gasoline and diesel earlier this year, essentially spreading the crude glut into the refined product market.

“We are facing more run cuts in Europe as products are oversupplied,” one senior trader said.

In Asia, refiners have started using more oil stored locally, pulling crude out of onshore and offshore storage according to analysts. That has reduced the profitability of sending oil all the way from the North Sea.

Others say a drop in chartering rates for VLCCs has made it profitable to store the oil on ships in north-west Europe, at least in the short term.

The situation has not been replicated globally. Total volumes of oil stored at sea have been coming down, according to London-based consultancy Energy Aspects and shipping data.

Day rates for hiring VLCCs have fallen since the first quarter as demand has slowed and as more new tankers are expected to enter the global fleet.

“We have lots of ships coming to market just as demand growth is slowing,” said Stavroula Betsakou, head of tanker research at Howe Robinson Partners.

A market condition known as , where prices for future delivery are higher than spot prices due to the oversupply, allows traders to make a profit if they are able to store the crude at sea cheaply enough.

Most of the trades are expected to unwind over the next two months, industry sources said. The trading arms of Shell and Total have chartered at least two of the VLCCs off the coast of the UK, they said.

In the English Channel, the Sara VLCC recently spent a week at anchor off Falmouth in Cornwall. It is listed as ‘for orders’ meaning it may be looking for a buyer. At the opposite end of the country, 15 miles south of John O’Groats, the Alfa Britannia Aframax tanker is sitting with about 700,000 barrels of crude by Wick.

Oil traders tend to guard information about their operations closely fearing they will give rivals an advantage. Some in the industry are also sensitive about the public perception of floating storage, fearing it will be misconstrued as hoarding oil or an attempt to boost the price.

In 2009, the last time floating storage was a major feature of the oil market after demand collapsed during the financial crisis, the Daily Mail newspaper decried the practice as the work of .

, the Norwegian oil explorer that focuses on the Kurdistan region of Iraq, says it has offered almost $300m for heavily indebted UK rival .

The unsolicited cash and share proposal, issued on Friday, comes just a week after the London listed company announced a debt-for-equity swap and launched an equity fundraising.

The DNO offer, which takes into account the dilution that will follow a proposed financial , has been pitched at just below 1p a share — a far cry from the 465p Gulf Keystone traded at four years ago.

The offer is comprised of $120m cash and 170m DNO shares worth about $170m.

“Combining these two companies will create further scale and unlock operational synergies that will reinforce DNO’s already formidable presence in Kurdistan,” said Bijan Mossavar-Rahmani, executive chairman of the Oslo-based company.

Gulf Keystone, once favoured by investors looking for exposure to northern Iraq — touted as one of the last great onshore “easy oil” deposits — has been in financial turmoil. It has been hammered by the collapse in crude prices and is owed large sums by the cash-strapped Kurdistan Regional Government.

It has also been dogged by boardroom battles and drawn shareholder scorn over corporate governance and executive pay.

Although DNO was among companies Gulf Keystone had been in discussions with over the past year, the approach was still a surprise for the company, one person familiar with the matter said.

Gulf Keystone did not dismiss the offer, but said it would not entertain any proposal until after the financial restructuring has taken place.

“The board has concluded that completion of the restructuring best serves our stakeholders and we will not engage in any additional process that causes the company to be distracted from that objective,” it said on Friday.

Shares in Gulf Keystone rose more than 30 per cent in early trading, before paring gains to trade 15 per cent higher at just over 4p.

Gulf Keystone bondholders agreed earlier in July to convert more than $500m of debt into equity, which would reduce its debt to a more manageable $100m. Although they will suffer significant dilution if the restructuring goes ahead, chief executive Jón Ferrier said at the time it was the only way to avoid .

The company had hoped to implement a plan to sustain and raise production at Shaikan, one of the biggest producing fields in the semi-autonomous region of northern Iraq.

in the region, it has suffered from a protracted downturn in oil prices since mid-2014 and erratic payments from the regional government.

“Gulf Keystone’s debt has dominated its investment case; however, we are concerned ‎that the heavy-oil Shaikan project is a high capital expenditure and low margin business that would generate a relatively low rate of return for DNO,” said analysts at RBC.

DNO shareholders gave a lukewarm response to the bid, with its shares rising 1 per cent to NKr8.40.

By offering 40 per cent in cash, DNO said it would provide an “early exit” for those who may be unable or unwilling to hold equity for an extended period.

Gulf Keystone’s market capitalisation has slipped from more than £3bn in 2012 to £50m. Its shares have fallen more than 99 per cent over the period.

has agreed to pay $2.5bn for a majority stake in a Brazilian offshore oil licence, marking the Norwegian group’s biggest acquisition for five years and strengthening its international operations beyond the North Sea.

The will give a 66 per cent interest and operating control of the BM-S-8 block in Brazil’s prolific Santos basin and includes part of the Carcará field, one of the biggest new oil discoveries of recent years.

For Statoil, the acquisition will add to its already sizeable presence in Brazilian waters as the group, 67 per cent-controlled by the Norwegian state, looks for fresh sources of growth to reduce dependence on its maturing local fields.

For Petrobras, the deal will bring the Brazilian state-controlled oil producer closer to its $15bn target for asset sales this year as it battles to cut a $126bn debt pile. The company is facing shareholder lawsuits over its role in a rocking the government of President Dilma Rousseff, while at the same time contending with low oil prices and a deep recession in the Brazilian economy.

Analysts at Jefferies said the transaction was “significant for the industry as it represents the first example of Petrobras giving up operatorship of Santos basin assets”, referring to large reserves of oil beneath a layer of salt deep beneath Brazil’s Atlantic seabed.

The deal suggests that international oil companies are willing to seize on reduced asset prices in an era of weak oil and gas prices to shore up their reserves, even as the industry cuts near-term costs and capital expenditure.

“We feel that the timing is really good,” said Tim Dodson, Statoil’s head of exploration. “We’ve been preparing for this kind of asset coming on the market for quite some time.”

Statoil said the BM-S-8 licence was estimated to contain 700m-1.3bn barrels of oil equivalent, with potential for further exploration that could open additional volumes. Production is expected to begin in the mid-2020s.

Companies and investors have become more wary of big offshore projects since the oil price crashed two years ago but Mr Dodson said the BM-S-8 block was a “world class asset with high resource density” that would produce attractive returns “at most oil prices”.

Statoil will pay half of the $2.5bn upon completion of the acquisition and the remainder in instalments. The group said it was also in talks with about “long-term strategic co-operation”.

“Brazil is an important area for us already and we think it will be even more important going forward,” said Mr Dodson. “We think there is still considerably more oil to be found [in the pre-salt reserves] and very little of it has been produced so far.”

MOSIER, Ore. — The Chinook salmon that Randy Settler and other Yakama tribal fishermen are pulling from the Columbia River are large and plentiful this summer, part of one of the biggest spawning runs since the 1960s. It is a sign, they say, of the river’s revitalization, through pollution regulations and ambitious fish hatchery programs.

But barely four miles upstream from the fishermen’s nets, state workers are still after a major oil train derailment in June. About 47,000 gallons of heavy Bakken crude bound from North Dakota spilled when 16 cars accordioned off the tracks. All of it, Oregon environmental officials said, might have gone into the river but for a stroke of luck that carried the oil instead into a water treatment plant a few hundred feet from the riverbank.

That juxtaposition — the rebounding river coming a hair’s breadth from disaster — has resonated across the Pacific Northwest and brought about a day of reckoning. From ballot boxes to the governors’ desks in Oregon and Washington, a corner of the nation that seemed poised only a few years ago to become a new energy hub is now gripped by a debate over whether transporting volatile, hazardous crude oil by rail through cities and environmentally delicate areas can ever be made safe enough.

“Communities around this state have awoken,” said Oregon’s governor, Kate Brown, a Democrat. Washington’s governor, Jay Inslee, who is also a Democrat, said he thinks that all oil transit should be halted until more stringent track inspection rules can be put into place. “Can it be transported into the Pacific Northwest safely?” he said. “That answer now is no.”

The volume of oil being shipped by rail across most of the rest of the nation has plummeted, as low oil prices and more pipeline capacity have reduced the need for trains. The number of rail cars carrying petroleum is from the peak in 2014, according to the Association of American Railroads.

But here along the Columbia River gorge, about 60 miles east of Portland, the trains have continued to rumble through Oregon and Washington in numbers near their peak. Even with lower oil prices, railroad industry experts said, crude heading by rail to refineries in the Pacific Northwest has a shorter distance to travel from North Dakota, making the route cost effective.

In the tense environment since the derailment, the idea that the Northwest is now bearing a disproportionate burden of energy transport risk has accelerated local efforts to stop the trains or make them safer.

Last month, the City Council in Vancouver, Wash., where one of the biggest oil terminals in the nation is under review, any similar proposals from even being considered in the future.

In Spokane, Wash., a city built by the railroad industry and one through which almost all oil trains pass, voters will decide in November whether to outlaw that transit. The City Council voted to put the proposal on the ballot, mandating a $261 fine for every rail car carrying oil or coal, even though the railroads have said they would file a lawsuit to overturn the statute as a violation of interstate commerce.

Both of Oregon’s United States senators have proposed the legislation, called , that would require the Department of Transportation to reduce levels of volatile gases in crude oil and give greater teeth and resources to crash investigators.

Greater transparency in oil shipments is also on the horizon. Railroads have generally refused to divulge specific oil train schedules, citing security concerns, but starting in October, details about every oil train through Washington will have to be shared with state officials, who will then distribute reports to emergency management agencies through a secure system. The information will be shared with the public on a quarterly basis, starting in December.

Mr. Inslee, who is running for re-election, as is Ms. Brown in Oregon, will have the authority under state law to decide whether the oil terminal in Vancouver will go forward, a question that could reach his desk this fall. He said that he is keeping an open mind and awaiting the recommendation from the state , which wrapped up a month of hearings on the terminal this week.

Some environmental groups are already calling the Vancouver project all but dead, saying that an approval by Mr. Inslee would run counter to the governor’s often-expressed convictions about climate change — not to mention on the virtues of renewable energy — and would also mean imposing a project on a city that has said it does not want it. Washington’s attorney general, Bob Ferguson, to the terminal on Friday, the last day of the hearings.

“For the railroads, the politics have turned for the worse,” said Clark Williams-Derry of the Sightline Institute, an environmental research and advocacy group in Seattle.

Railroads and oil companies said they have responded to public concerns and that oil transport can be safe.

A spokesman for Union Pacific, Aaron Hunt, said in an email that lag bolts — a track-fastening system that failed in Mosier, according to the preliminary — are being replaced with more secure rail spikes and that the railroad had enhanced its inspection processes.

Dan Riley, a spokesman for , a partner in the Vancouver terminal project, said that the company has been a leader in shifting to newer, more secure tank cars and that the attention since the Mosier accident will only accelerate those safety enhancements. “It’s an opportunity to improve the entire system,” he said in an interview.

But railroads have also resisted rules that might have mitigated the Mosier accident and other derailments around the country, said Sarah E. Feinberg, the administrator at the Federal Railroad Administration, specifically outfitting trains with modern braking systems, called .

“These trains are basically operating with a braking system from the Civil War era, and we have said to the railroads, ‘You must upgrade,’” she said. “And we get a tremendous amount of pushback from the industry: It’s too expensive, it’s too complicated, it’s logistically complicated.”

Tribal fishermen like Mr. Settler, 61, who has been piloting boats on the Columbia River since he was 9, said he fears that for the river, the worst is not over. State officials said recently that oil from the spill had seeped into the groundwater, which connects with the river. In any case, Mr. Settler said, it is clear to him that human failure and inadequate track maintenance, not bad luck, caused the crash.

“They knew it was a high-risk area,” Mr. Settler said on his boat on a recent morning off Mosier’s shoreline. “But it didn’t stop the trains from coming.”

Kazakhstan’s state oil company looks increasingly likely to be defeated in its attempt to tighten control over its London-listed subsidiary, after investors voiced their concerns about the motives behind the deal.

The proposals from National Company KazMunaiGas, the parent group, which include a potential buyback worth up to $1.3bn, go to a vote of minority shareholders in its subsidiary, KazMunaiGas Exploration Production, on Wednesday.

A vote against the proposals would mark the latest twist in a tussle for control of Kazakhstan’s third-largest oil company. It would also be a blow to NC KMG, Kazakhstan’s state oil champion, in which the government is hoping to float a stake under .

NC KMG has already once, removing one of the most contentious of a set of proposed changes to the agreement that governs its relations with its subsidiary, and raising the price of a proposed share buyback to $9 per global depository receipt.

But many minority shareholders are still planning to vote against the deal, according to investors and people close to KMG EP. Shareholder advisory services ISS and Glass Lewis have recommended that investors vote against NC KMG’s proposals.

“Effectively it’s about ridding the company of its independence and reducing our rights as shareholders,” said Ivan Mazalov, director of Prosperity Capital, one of the largest minority shareholders in KMG EP with a stake of about 2 per cent, who is voting against the proposals. “I think a few investors share our frustration.”

A crucial role in the vote will be played by China Investment Corporation, the largest minority shareholder with an 11 per cent stake, or a third of the free float. The Chinese sovereign wealth fund, which bought its stake in 2009 at a price of just over $20 per GDR, has privately voiced its dissatisfaction with elements of NC KMG’s proposal, according to several people briefed on the conversations.

Frank Kuijlaars, NC KMG chairman, told the Financial Times in July that CIC’s displeasure had prompted the changes to the parent company’s offer.

“They have invested at a price which is higher than the one currently on the table — that was something they felt was disappointing,” Mr Kuijlaars said. He argued that the parent company’s proposals were necessary to help lift the share price: “We agree with them. [But] by doing nothing it’s not going to get better.”

Analysts at Sberbank CIB argued that CIC was unlikely to vote for the proposals. “Probably no one at a Chinese state-owned holding would want to take responsibility for approving a realised loss on an asset,” they wrote. “That suggests [CIC] would have no incentive to vote in favour of the proposed changes.”

CIC declined to comment.

Should the proposals be defeated, it would be a blow for NC KMG, which has presented them as essential to improving efficiency at its subsidiary.

Mr Mazalov said that a defeat of the proposals should force NC KMG to return with a better offer. The parent company attempted to buy out minority shareholders in its subsidiary for $18.50 per GDR in 2014 but the deal was shelved amid falling oil prices.

“We should be able to agree on the buyout price which is closer to fair value of the shares,” Mr Mazalov said.

Petrol will cost Rs 61.09 a litre in Delhi from midnight as compared to Rs 62.51 a litre currently, said Indian Oil Corp, the nation’s largest fuel retailer.

He said with crude oil prices falling, the profits and margins of state-owned E&P (exploration and production) firms ONGC and Oil India were getting eroded.

Petroleum Minister Dharmendra Pradhan asked the nodal officials to be more vigilant on involvement of any middle man and directed to reach out to every beneficiary.

Petroleum Minister Dharmendra Pradhan asked the nodal officials to be more vigilant on involvement of any middle man and directed to reach out to every beneficiary.

Petroleum Minister Dharmendra Pradhan asked the nodal officials to be more vigilant on involvement of any middle man and directed to reach out to every beneficiary.

HOUSTON — As recently as two summers ago, Latshaw Drilling was so fully booked it sometimes had to turn away companies eager to rent one of its 39 rigs at $22,000 a day.

But that was before , which despite a recent upturn from February lows, are still nowhere near their 2014 levels. Because of slumping world demand and a glut of global supply, oil players of all sorts — whether major producers like Royal Dutch Shell, smaller companies or service providers like Latshaw Drilling — are still struggling to cope with the industry’s doldrums.

In the case of Latshaw, based in Tulsa, Okla., only 16 of its rigs are now in use, although it has cut the daily rental price by a third and aggressively phoned, wined and dined prospective customers. Even when Latshaw does make a deal, not all the workers it laid off want to return to a business that is so cyclically volatile.

“It’s gone quiet,” said Steve McCoy, Latshaw’s vice president for contracts. “You have to pursue every lead, turn over every rock, to try to get ahead of the game.”

As the big oil companies reported their earnings this week, not even Exxon Mobil and Chevron, the two American industry leaders that posted results on Friday, could escape the fallout from a market of deteriorating oil prices and declining profit margins from refining.

Exxon’s second-quarter profit was down nearly 60 percent from a year earlier, to $1.7 billion. Chevron reported a loss of $1.47 billion, in contrast to a profit of $571 million in last year’s second quarter.

The price of a barrel of West Texas Intermediate crude oil, a benchmark, was below $41 and falling Friday morning — compared with just over $100 this time two years ago.

Oil companies have slashed their exploration and production budgets, many by as much as half. The cuts total more than $150 billion through next year. An estimated 150,000 energy workers have lost their jobs in the United States, while more than 150 oil and gas companies in North America have filed for bankruptcy since early 2015.

The latest quarter’s results have been even more dismal than industry analysts had predicted. Chevron’s loss for the quarter was its largest since 2001.

Even though Exxon Mobil slashed its capital budget 38 percent, to $5.16 billion in the second quarter, those cuts were not enough to compensate for a $4.7 billion drop in profits from oil and gas production and a $1.7 billion drop in refinery earnings.

The major European producers, which have also cut exploration budgets and hundreds of thousands of jobs, did little better. Royal Dutch Shell, Total and BP all reported sharp declines in profits — Shell’s were down 93 percent — and executives expressed little optimism for a rapid rebound.

“You have to continue to reinforce cost reduction, efficiency — rethink almost everything you do,” BP’s chief executive, Bob Dudley, said in an interview this week.

In a sign of the mounting pressures in the industry, contract maintenance workers staged a 24-hour strike Tuesday on seven Royal Dutch Shell platforms in the British North Sea to protest proposed pay cuts. A 48-hour strike is scheduled for next week.

“We are disappointed at this development,” Shell said in a statement on Friday. “It is clear that in order for the North Sea oil and gas industry to remain competitive in the lower oil price environment, structural change is needed.”

But the basic problem all the oil companies face is essentially out of their control: No matter how much they curb production, there is still way too much supply of crude oil in a global market where demand is soft — especially in Europe and in the developing world.

A near doubling of United States oil production in recent years, because of a frenzy of new activity in shale fields, produced a glut that persists even as output gradually falls in the United States, China, Brazil and Mexico.

Crude and petroleum product inventories remain at record highs around the world, in large part because the Organization of the Petroleum Exporting Countries cartel, which is led by Saudi Arabia and still accounts for a third of global oil output, is unwilling to restrain production. The biggest recent production increases in the OPEC cartel have come from Iran, which is taking advantage of the lifting of international sanctions.

And now Canadian output, which was briefly curtailed by recent wild fires, is coming back on the market.

United States refiners, meanwhile, bought so much oil at bargain prices in recent months that they now have record stockpiles of gasoline and diesel. That has led to the lowest summer gasoline prices in more than a decade. But it also has obliged refiners to cut fuel production, thus further cutting demand for crude.

Scattered signs indicate the oil industry has hit bottom and may be primed for a bounce next year. Many energy analysts are optimistic prices will rise for oil and natural gas over the next few years because the industry has so sharply curtailed exploration and production.

Barclays Research, for instance, projects that the global oil price could average $85 a barrel by 2018. That would still be lower than levels reached in 2014, but enough for healthy profits.

“We’re at the bottom, but we’re not expecting an immediate and sharp recovery,” said Paal Kibsgaard, chief executive of Schlumberger, the giant oil service company, in a conference call this month. “It’s going to be a slow and steady recovery.”

Latshaw Drilling’s 16 active rigs exceed the 12 it had in service last December. Signed contracts would raise that number to 20 by late fall. “We’re optimistic about our future,” Mr. McCoy said.

Not everyone is in a position to ride out the storm, though, as heavy debts continue to sink some companies. Just this week, Halcon Resources, a sizable Houston oil company, filed for bankruptcy.

Exxon Mobil is in far better financial condition than most other companies in the industry. And its stock had been soaring this year, although in morning trading on Friday it was down more than 2 percent. But even Exxon has been stretched by debt — much of it an overhang from the company’s purchase seven years ago of XTO Energy, a shale gas driller, for about $41 billion.

This year Exxon Mobil lost its AAA credit rating, and was forced to stop buying back shares to conserve cash.

“The industry debt level is essentially like a tanker dragging an anchor. You are not going to go anywhere very fast,” said Ed Hirs, managing director of Hillhouse Resources, a small Houston oil company.

Mr. Hirs, seeking to raise $50 million to drill a clutch of oil wells in South Texas, is meeting resistance.

He took a prominent fund executive out for coffee the other day in downtown Houston and patiently showed him well maps and charts. Mr. Hirs argued that his wells were potentially so rich and easily developed that they could make money at $20 a barrel, less than half the current price. Even if only one of eight wells proved to be a gusher, he promised, big profits were coming.

But the banker cut him off.

“There’s too much risk,” the banker said, according to Mr. Hirs. And the banker explained that his fund was having trouble raising money from its own investors, who were worried about how long it might take the oil and gas industry to finally recover, Mr. Hirs said.

“Things are stuck,” he said.

The renewed back towards $40 a barrel is a reminder to the world’s largest producers that they must learn to adapt to a new era of energy.

Forecasts for a quick recovery have come unstuck as the market wrestles with a stubborn glut in crude and, more recently, refined fuels such as petrol. The nimble companies of the US shale patch have used the brief respite this spring to lock in prices that will ensure more of them survive the downturn.

Some have stepped up drilling after squeezing down costs. The US Energy Information Administration now expects the decline in US oil production to bottom in September, leaving a leaner, more resilient industry behind.

After a decade when oil prices risked spiking whenever production was lost to maintenance, sabotage or war, the opposite now prevails. Periods of oversupply can more easily tip the market lower. The 20 per cent price drop since June has come, after all, despite indications supply and demand are still slowly inching back to balance.

This is the reality oil companies and major producers, notably the Opec cartel must confront. While prices may not drop back to the $30 a barrel level that threatened bankruptcy for companies and nations alike in January, neither are they likely to easily climb back to levels that can fund the largesse shareholders and citizens had come to expect.

Wealthy Gulf states such as the UAE and Oman have taken steps to cut subsidies, especially on fuel, which were previously taken for granted. Saudi Arabia has gone further, launching its ambitious ‘’ plan it hopes will end its reliance on oil revenues.

In Venezuela and Nigeria, reforms are even more pressing. Already riven with corruption and poverty when prices averaged $100 a barrel, both must begin the process of overhauling their economies now their hand has been forced.

Russia, the largest oil exporter outside Opec, which saw its economy shrink by 3.7 per cent last year, has acknowledged it can no longer depend solely on its oil and gas resources.

Though the twin pillars of hydraulic fracturing and horizontal drilling that unlocked the US shale bounty have not been tested in a major supply disruption, the benefits of the new energy era should still prove an overall positive for consumer countries.

Growth may not have been boosted as much as many had predicted by lower prices because developed economies are less energy intensive. Even so, more cash for consumers is to be welcomed. China and India’s large populations should reap the rewards.

Stock market investors no longer view the price slide as a harbinger of a slowing economy, belatedly recognising the magnitude of the supply shift. Oil companies may need to review dividends, however, which many continue to borrow to fund.

Policymakers must also be vigilant that lower oil prices do not undo the strides made to reduce reliance on oil and its polluting effects. US petrol demand, which flatlined after the financial crisis, is expected to reach new highs this year. Sales of sports utility vehicles are surging. Oil imports are rising again. The , by contrast, fell 4.1 per cent in the first quarter of this year, with high fuel taxes curbing consumption.

A post-Brexit vote must also weigh the economic and political damage of leaving the EU against how the budget of an independent Scotland would look in this lower oil-price world. Oil dropped below $100 a barrel days before the last referendum. It has barely stopped falling since.

and , the two biggest US , capped a miserable week for the industry with steep drops in second-quarter earnings while fresh falls in the price of oil promised further pain ahead.

of Italy also issued disappointing results on Friday, following weak numbers in recent days from rivals , and .

Investors had been braced for falling earnings but the size of the drops exceeded expectations at most of the US and European majors as the sector struggles to adapt to persistently low prices. A renewed dip in the oil market this week — Brent crude was trading at around $42 on Friday, its lowest since April — has only deepened the gloom.

While upstream production businesses are being ravaged by low prices, downstream refining and marketing operations are suffering from weak margins because of high inventories of finished petroleum products.

“With oil prices falling we’re going to see further pressure on the upstream, which is where the results have been most disappointing,” said Iain Reid, analyst at Macquarie. “Everyone was hoping that downstream was going to get them out of the hole but refining margins are also coming under pressure.”

were down 59 per cent from last year at $1.7bn, or 41 cents a share, missing analysts’ consensus forecast for 64 cents. underlying profits were closer to market expectations but an impairment charge of $2.8bn resulted in a quarterly loss of $1.5bn.

The Chevron write-off related to assets from which revenues were no longer expected to cover costs — a stark example of how companies that fattened up during the era of $100-a-barrel oil are being forced to reassess their operations.

Exxon said its capital expenditure was down 38 per cent in the second quarter, compared with last year, and its rivals have made similar cuts. This has allowed most of them to protect dividends from the earnings rout. Exxon even managed to increase its quarterly payout by 2.7 per cent to 75 cents per share.

and said earlier in the week that they too remained committed to keeping dividends stable after announcing profit falls of 72 per cent and 45 per cent, respectively. But they are counting on gradual recovery in oil prices to above $50 per barrel to keep current levels of shareholder return sustainable.

“They’ve already moved a long way on costs in a short period of time; the savings they have managed to deliver is pretty impressive,” said Marc Kofler, analyst at Jefferies. “But the longer oil prices stay around $45, the harder it becomes.”

Claudio Descalzi, chief executive of Eni, held out hope of some improvement in the market later this year as supplies are gradually run down. “The balance will be reached from a physical point of view because demand has increased and production is going down,” he told the Financial Times.

a net loss of €290m in the three months to June 30, down from €505m a year ago. Analysts had expected a profit of €70m.

of France was the only western oil major to announce better than expected results this week, although its profits were still down 30 per cent.

State officials have approved a new oil pool at the Kuparuk River unit.
The Alaska Oil and Gas Conservation Commission approved a request from ConocoPhillips Alaska Inc. to establish the Kuparuk River-Torok Oil Pool at the unit.
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So far layoffs in the state’s petroleum industry have had few effects on the broader Anchorage area economy, data gathered by Anchorage Economic Development Corp. indicates.
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Homer Electric Association’s board of directors has approved an initiative to establish local control for the utility, moving out from economic regulation by the Regulatory Commission of Alaska and giving full authority for the approval of electricity rates to the board.
‘We’re going to go to our me…

The federal government is beginning its environmental review of the second oil development proposed for federal lands within the National Petroleum Reserve-Alaska.
The U.S. Bureau of Land Management announced a Notice of Intent on July 25 to conduct the review for the Greater Mooses Tooth-2, or GMT-…

During a second quarter 2016 results earnings call on July 26, BP executives commented that the company sees Alaska as one of a number of regions where capital investment can be flexible in response to the changing oil price situation.
‘In the Lower 48, Iraq, and Alaska, where we have vast resources…

ConocoPhillips is looking at a 6 percent global workforce cut, but doesn’t expect a large reduction in Alaska.
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Sen. Mia Costello was putting the final touches on details for a three-week vacation when the news came: SB 125, her bill to place legislators as non-voting board members on the Alaska Gasline Development Corp., was vetoed by Gov. Bill Walker. A day later, the Alaska Supreme Court vacated a voter in…

Serious air pollution problems at six refineries including Tesoro Corp.’s Kenai facility in Alaska are being addressed through a $425 million settlement announced July 18 by the U.S. Justice Department and the Environmental Protection Agency.
Tesoro and its subsidiaries operate five of the refinerie…

Royale Energy Inc. said July 25 that it has signed a letter of intent to merge with privately held Matrix Oil Corp. The $41.5 million transaction is subject to completion of due diligence reviews and definitive documentation and stockholder approval. Royale said the companies seek to complete the me…

In its latest quarterly report to the Alaska Legislature, published in early July, the Alaska Industrial Development and Export Authority’s Interior Energy Project described continuing progress towards an expanded natural gas supply for Fairbanks and the surrounding area of the Alaska Interior. Howe…

The Alaska Oil and Gas Conservation Commission has scheduled a reconsideration hearing on penalties it imposed on Cook Inlet Energy last year.
A public hearing had been previously scheduled on the CIE request for reconsideration, but the company asked that the hearing be continued pending appointme…

Alaska Sen. Lisa Murkowski says her top priority when Congress resumes work is crafting a House-Senate compromise on a broad bipartisan federal energy bill that passed the Senate in April 85 to 12.
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Endicott Pipeline Co. and Northstar Pipeline Co., both owned by Hilcorp subsidiary Harvest Alaska, have applied to the Regulatory Commission of Alaska for a permit to connect the Endicott Pipeline to the Northstar Oil Pipeline. The joint application also includes approval of a connection agreement b…

Given that no further exploration is planned in leases sold in the Department of the Interior’s 2008 Chukchi Sea lease sale, the federal District Court in Alaska has finally dismissed a long-standing appeal against the validity of the environmental impact statement for the sale. With the various com…