REPOST: Oil to Resume Upward March as Global Economy Heals

This article from CNBC.com talks about the rise of crude oil prices and its effect on the U.S economy.

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U.S. benchmark crude oil prices are expected to resume their march towards triple digits as stock markets respond to improved economic data in the U.S. and China, according to CNBC's latest oil market sentiment survey.

January U.S. Non-farm Payrolls released on Friday and this week's U.S. Federal Reserve policy meeting will set the tone for oil markets with investors looking for more evidence that the economic recovery is gaining momentum.

Most economists polled in late January by Reuters expect the Fed's ultra-loose monetary policy to stay in place well into next year despite the modest growth forecast for the U.S. economy.

About 155,000 jobs are forecast to have been added in the month, a Reuters poll showed. The U.S. unemployment rate is expected to hold steady at 7.8 percent. The U.S. economy will likely show that it has "bottomed" in the first-quarter, Michael Kurtz, Global Head of Equity Strategy at Nomura told CNBC's 'The Call' on Tuesday.

The picture for employment in the U.S. is "generally improving, slowly but surely," Sean Hyman, Editor of Moneynews at Ultimate Wealth Report told CNBC's 'Squawk Box' on Tuesday. "We're seeing economic improvement around the world particularly in China and India as well" and that could help lead to a "pick up" in demand for natural resources.

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"2013 will be a bright year for commodities overall," he added.

Eight out of 12 respondents -- or two-thirds -- believe prices will rise this week; two forecast prices will hold steady at current levels while two say prices may pullback.

Although U.S. crude futures failed to test $100 a barrel last week, some expect the psychological level to be breached this week.

"In the near-term, we could either consolidate the recent gains and head sideways or have a shallow pullback before the next burst higher," Hyman said. "Longer-term resistance comes in at around the $103-$105 area, so I believe it minimally makes it up to there."

But if prices do rise and stay elevated above triple digits, some fear this may disrupt the economic recovery and hit sentiment on the equity markets. Higher oil prices would constitute an "added tax on consumers," Michael Gayed, chief investment strategist and co-portfolio manager at Pension Partners, LLC.

U.S. crude futures notched up its seventh straight week of gains on Friday as signs of a recovering global economy brightened the outlook for fuel demand. A seven week run has not been seen since February-April 2009. Brent crude settled unchanged last Friday at $113.28 a barrel, off the session high of $113.84. U.S. crude fell 7 cents to settle at $95.88, off a high of $96.56 and up 0.3 percent on the week.

"The relentless grinding higher has been impressive in oil and equities since the beginning of the year," said Kirk Howell, Partner at Spy Ridge Capital. "I'm not in the business of trying to call tops as much as it is tempting to at this point. I'm neutral directionally but would own hedged upside calls in oil. Your loss is limited at such low volatility and you win on any significant move. Cheap options can get cheaper but it's worth buying cheap insurance when you don't think you need it."

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Many are questioning whether the grind higher in oil markets can continue.

Data from the ICE Europe Exchange shows that hedge funds and other leveraged investors raised their net-long exposure in Brent crude oil to a new record of 153,913 contracts of futures and options during the week ending 22 January.

"Such an increase in speculative net-long raises the question of whether the positioning is becoming unsustainable," said Ole Hansen, Head of Commodity Strategy at Saxo Bank in Denmark.

Oil markets are "still very much in risk on sentiment and during such times fundamentals plays a lesser role," Hansen noted. "We have a whole host of U.S. data this week which could set the near term tone but for now momentum in Brent remains positive also helped by the worry of a geopolitical event such as the attack today on an oil pipeline in Algeria."

Suspected Islamist militants attacked an oil pipeline in northern Algeria on Monday, killing two guards and wounding seven other people, a security source told Reuters, though flows were not disrupted.

For updates on the oil and gas sector, visit this Dr. Ali Ghalambor Facebook page.

REPOST: Critical facilities security 'top priority' in oil and gas markets

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This Info4Security.com article talks about the importance of structural security in oil production facilities.

 Frost & Sullivan's latest market report suggests the perceived vulnerability of oil and gas infrastructures worldwide continues to drive investment in security.

The security of critical facilities remains the uppermost priority for the global oil and gas industry. Escalating demand for oil and gas, the construction of new facilities and physical and cyber threats to these installations have led to growth in the oil and gas infrastructure security market.

New analysis from Frost & Sullivan, published in a report entitled: 'Global Oil and Gas Infrastructure Security Market Assessment', finds that the market earned revenues of $18.31 billion in 2011 with estimates suggesting this figure will reach $31.27 billion in 2021.

However, the potential vulnerability of oil and gas infrastructures to various threats – both physical and cyber – is a matter of great concern for operators. That concern is causing them to invest heavily in security.

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Driving the requirement for security solutions

“Global oil and gas companies are investing capital in new infrastructure projects, driving the need for security solutions at these facilities,” noted Frost & Sullivan's aerospace, defence and security senior research analyst Anshul Sharma. “With increasing awareness of threats, companies are adopting a security-risk management approach and implementing risk assessment of their facilities to ensure security Return on Investment (ROI).”

There's a growing preference for total solutions, it seems, with the flexible integration of individual security systems like access control, video surveillance and intrusion detection on one platform.

Heavy investments in cyber security are also projected due to various attacks on energy facilities in the past five years.

“The threats may vary from information theft to a terrorist attack, but the economic impact and financial damage in case of an attack will be much more significant,” explained Sharma. “It would also depend on the motive of the attacker. For example, a cyber attack to remotely control a SCADA system can have more serious consequences than a cyber attack to steal information.”

The cost of advanced security technologies, the lack of resources for managing security, compliance and operations, and low spending on cyber security threaten market prospects.

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Design of integrated security provision

“Suppliers of security systems should aim at designing an integrated security solution that proactively identifies, assesses and mitigates risks and threats originating from within the facility as well as from well beyond it,” advised Sharma.

“For their part, oil and gas companies and the operators of critical oil and gas facilities need to complete a thorough threat and risk assessment of their facility to ensure there is no overspending or underspending on security-related matters.”

This Dr. Ali Ghalambor Facebook page offers diverse information about the oil and gas sector.

Hydraulic fracturing and stimulating ground wells

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Sand, water, and pressure -- these are the basic components in extracting energy resources confined underground. The process of extracting petroleum and natural gases from rock reservoir formations found in the deep confines of the earth is called hydraulic fracturing. Through a pressurized fluid inserted into drilled holes or wellbore in rock formations, oil and gases are extracted.

Oil and gas experts, such as Dr. Ali Ghalambor, Tian Ran Lin, Shanghon Song, and Jacob Chacko, attest that hydraulic fracturing is used to increase or restore the rates at which petroleum, water, or natural gases can be produced in the natural reservoirs. While this method has many uses such as in preconditioning rocks in mining, heat extraction in geothermal systems, and geologic sequestration of carbon dioxide, hydraulic fracturing is mainly used in arousing production from oil and gas reservoirs.

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To stimulate ground wells, a hydraulic fracture is formed by pumping a fracturing fluid into the wellbore. With sufficient pressure, the fluid can bore further into the cracks so that the reserves can be easily reached and the oil can be easily extracted.

Used since the 18th century, fracking stimulates rock oil wells, and it has been proven to be an efficient method for extracting oil reserves. In recent times and with the advancement of technology, hydraulic fracturing has been used in the extraction of unconventional oils and gas resources. By the advancement of the method in recovering deposits, untapped resources such as shale gas, tight gas, and coalbed methane can now be made available.

While hydraulic fracturing has increased the yield of oil wells and gas reserves, careful installation is needed as drilling holes in rock formations can cause an adverse effect on the environment. Such effect includes increased instability of the earth floor, accident oil spills, and water contamination.

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Know more about hydraulic fracturing here.