Down and out: Oil prices headed for a second year of steep losses in their last trading hours of 2015 as record OPEC supply created an unprecedented global glut that may take another year to clear. Reuters reports U.S. West Texas Intermediate crude futures traded 32 cents lower at $36.28 a barrel this morning, while Brent was 19 cents lower at $36.27 a barrel. Brent prices are set for a third year of declines after ending 2013 slightly lower and falling sharply over the past two years. Prices fell 3% on Wednesday as crude inventories in the United States rose 2.6 million barrels last week, the U.S. Energy Information Administration says, echoing high stocks in Europe and Asia. The immediate outlook for oil prices remains bleak. Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market. Read the full story.
One thing leads to another: With the world awash in crude, The Wall Street Journal reports the oil industry is contemplating a new problem the oversupply could tee up: an oil shortage. As the oil glut has sent prices to decade lows, plummeting investment by oil-producing countries such as Venezuela and Russia and oil drillers such as ExxonMobil and Shell means fewer barrels will be produced. That could leave the world in exactly the opposite situation as now: short of oil and willing to pay more to get it. This may herald the beginning of a cycle that other commodities, from gold to copper, find more familiar—a cycle in which a glut leads to lower prices that lead to investment cuts, which chokes supply and prompts the price gains that lead to renewed expansion and future gluts. Read the full story (subscription may be required).
Sweet and sour: Frequent rain and muddy conditions made the closing of the sugar cane harvesting season a rough one for south Louisiana farmers and mill operators, The Courier reports. “It was a bad grind because of all the mud,” says Bobby Gravois, a sugar cane farmer in Thibodaux. While the first two weeks of the season were dry, heavy rains came Oct. 24 and continued throughout the season, leaving little chance for fields to dry. Lafourche Sugars Corp. stopped grinding Monday, about five days longer than usual because of the muddy conditions, while Raceland Raw Sugar Corp. is still grinding. Herman Waguespack Jr., senior agronomist with the Thibodaux-based American Sugar Cane League, says this season’s yield will probably be average to below average. Read the full story.
Editor’s note: The offices of Business Report will be closed on Friday in observance of New Year’s Day and Daily Report will not be published. Daily Report will return on Monday, Jan. 4. Have a safe and happy holiday weekend.
