I love how the world turns so quickly. We had $140 oil in July of last year and now this has happened.
Demand is expected to fall by 980,000 barrels per day in 2009 to 84.7 million, the agency said in its monthly market report. The IEA's forecast last month was for demand to contract by 500,000 barrels per day this year.
If the oil producing countries don't cut supply fast enough we may see some sub $20 oil in the future. That should be good for consumers but bad for the electric car industry, renewables, alternative energy, as well as drillers and oil service and exploration companies. It might be good for refiners depending on how gasoline consumption shakes out.
We might also get a collapse of Iran's government due to social unrest caused by massive unemployment. However, if the Mullahs start massacring kids in the streets of Tehran Obama better not sit there and act like nothing is happening like Bill Cinton did in Rawanda.
Showing posts with label Oil. Show all posts
Showing posts with label Oil. Show all posts
Wednesday, February 11, 2009
Wednesday, November 12, 2008
Oil Prices at 21 month low at $56.16
As I suspected all that talk of an "oil superboom" or whatever Morgan Stanley predicted back in June has just been thrown right out the window.
"The extent of the retreat in demand has caught many people by surprise," said John Kingston, director of oil at Platts, the energy information arm of McGraw-Hill Cos. "Demand destruction is due to higher [gas] prices, which have caused U.S. drivers to change habits."
I think the slowing world economy and the Chinese going back to normal consumption after the Olympics has put supply and demand back into equilibrium again. Also the stronger dollar and hedge fund selling were all part of this drop as well. It is interesting to note if we will see big trucks and SUV sales start to creep up now that gas is affordable again?
"The extent of the retreat in demand has caught many people by surprise," said John Kingston, director of oil at Platts, the energy information arm of McGraw-Hill Cos. "Demand destruction is due to higher [gas] prices, which have caused U.S. drivers to change habits."
I think the slowing world economy and the Chinese going back to normal consumption after the Olympics has put supply and demand back into equilibrium again. Also the stronger dollar and hedge fund selling were all part of this drop as well. It is interesting to note if we will see big trucks and SUV sales start to creep up now that gas is affordable again?
Monday, June 30, 2008
Iraq to Bring 6 New Oil Fields Online
It seems that things are really starting to go decently in Iraq since they are now bidding out 6 of their oil fields to foreign companies. I have a feeling that a US firm will not win outright (they might win 1 or 2 for appearance sake) since the US would be accused of trying to "steal Iraq's oil wealth" or other nonsense. However I would bet on TotalFinaElf (TOT) winning a big chunk since the Iraqis turned to the French in the 70s to help them with their oil industry. This development should change the supply/demand picture going forward.
All the oil fields on the list are producing oil, Shahristani said, noting that the new contracts would raise the country's oil production by 1.5 million barrels per day.
Iraq's current daily oil production is around 2.5 million barrels.
So here we should have 1.5 million barrels of oil that will have added to total world supply by 2009 (bids are due by next March and contracts will be handed out in June) and this should push prices lower. It probably won't burst the oil bubble since good news about Iraq usually isn't very popular with the main stream media.
In any case we have lowered demand, everyone jawboning the market downward, and the potential for increased supply (Iraq and Brazil) going forward. I still think we will have $100 or less (Maybe even $80?) oil by this time next year.
All the oil fields on the list are producing oil, Shahristani said, noting that the new contracts would raise the country's oil production by 1.5 million barrels per day.
Iraq's current daily oil production is around 2.5 million barrels.
So here we should have 1.5 million barrels of oil that will have added to total world supply by 2009 (bids are due by next March and contracts will be handed out in June) and this should push prices lower. It probably won't burst the oil bubble since good news about Iraq usually isn't very popular with the main stream media.
In any case we have lowered demand, everyone jawboning the market downward, and the potential for increased supply (Iraq and Brazil) going forward. I still think we will have $100 or less (Maybe even $80?) oil by this time next year.
Friday, June 13, 2008
OPEC Cuts Oil Demand: Cart Pulls Horse again
It seems that even OPEC is starting to feel the heat of high oil prices and are jawboning the price down a bit.
OPEC lowered its 2008 global demand forecast, saying it now expects demand to increase by 1.28% to an average of 86.9 million barrels per day, down from a previous forecast of 1.35%. That decision follows similar moves by the U.S. Energy Department and the International Energy Agency earlier in the week.
I love how changing a forecast that really could be numbers plucked out of thin air and the threat that the Saudis might pump more oil sometime in the future caused oil prices to drop. Whoever said that speculation was not the reason behind much of the oil price spike the past few weeks has an agenda.
OPEC lowered its 2008 global demand forecast, saying it now expects demand to increase by 1.28% to an average of 86.9 million barrels per day, down from a previous forecast of 1.35%. That decision follows similar moves by the U.S. Energy Department and the International Energy Agency earlier in the week.
I love how changing a forecast that really could be numbers plucked out of thin air and the threat that the Saudis might pump more oil sometime in the future caused oil prices to drop. Whoever said that speculation was not the reason behind much of the oil price spike the past few weeks has an agenda.
Monday, June 09, 2008
Now the Saudis are Surprised by Oil Rise
It seems even the Saudi's were thrown off by that record 2 day oil rally.
The kingdom will work to ensure there will be no "unwarranted and unnatural oil price hikes that could affect international economies, especially those of developing countries," said Madani.
"There is no justification for the current rise in prices," he said.
They are deathly afraid that high oil prices will throw the world economy into a recession and people stop buying their product. The Saudis can make a ton of money in the near term but the tap stops once people stop driving to save the gas that they can barely afford.
The kingdom will work to ensure there will be no "unwarranted and unnatural oil price hikes that could affect international economies, especially those of developing countries," said Madani.
"There is no justification for the current rise in prices," he said.
They are deathly afraid that high oil prices will throw the world economy into a recession and people stop buying their product. The Saudis can make a ton of money in the near term but the tap stops once people stop driving to save the gas that they can barely afford.
Obama is Backing the Idiodic Windfall Tax
The more I hear from Obama the more it sounds like he just doesn't understand economic matters at all.
"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.
Will he make oil companies like Shell Oil, TotalFinaElf, BP pay this tax as well? I mean they are reaping windfall profits as well but they aren't based in the US. Also what prevents the oil companies from simply passing on the tax to the consumers thus making $4.00 gas into $5.00 gas? Of course like his all-troops out in 16 months Iraq policy he doesn't have any sort of plan for the "what-ifs."
Reading his plan further makes things even worse.
The plan would target profit from the biggest oil companies by taxing each barrel of oil costing more than $80, according to a fact sheet on the proposal. The tax would help pay for a $1,000 tax cut for working families, an expansion of the earned- income tax credit and assistance for people who can't afford their energy bills.
So Obama wants oil companies taxed based on oil prices? He does know that the oil companies barely affect prices since they only pull about 17% of the oil out of the ground? This tax makes no sense at all. I think Obama needs to realize that oil prices are globally set and these are domestic companies he is robbing. OPEC, Russia and China have way more clout in setting prices then Exxon will ever have.
Finally what keeps the oil companies from simply pumping less domestic oil or shuttering refineries when oil goes to $81? That seems to be what happened when Carter tried this same scheme in 1980.
We've been down this road before. Under a windfall tax signed into law by Jimmy Carter, domestic oil production plummeted by an estimated 795 million barrels, while imports of foreign oil surged. Congress had anticipated windfall tax revenues of $393 billion. The actual take: just $80 billion. Like so much else associated with the Carter era, the windfall-profits tax was a counterproductive flop. Do Democrats really believe a new dose of Carternomics is going to make today's economy stronger?
So Obama's plan will be to penalize US oil companies in order to increase the wealth of foreign exporters? Way to score an own goal Obama. The funny thing is the Dems actually think this will lower gas prices? I think Obama needs to go back and retake Economics 101 since he seems to have flunked it at Columbia.
"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.
Will he make oil companies like Shell Oil, TotalFinaElf, BP pay this tax as well? I mean they are reaping windfall profits as well but they aren't based in the US. Also what prevents the oil companies from simply passing on the tax to the consumers thus making $4.00 gas into $5.00 gas? Of course like his all-troops out in 16 months Iraq policy he doesn't have any sort of plan for the "what-ifs."
Reading his plan further makes things even worse.
The plan would target profit from the biggest oil companies by taxing each barrel of oil costing more than $80, according to a fact sheet on the proposal. The tax would help pay for a $1,000 tax cut for working families, an expansion of the earned- income tax credit and assistance for people who can't afford their energy bills.
So Obama wants oil companies taxed based on oil prices? He does know that the oil companies barely affect prices since they only pull about 17% of the oil out of the ground? This tax makes no sense at all. I think Obama needs to realize that oil prices are globally set and these are domestic companies he is robbing. OPEC, Russia and China have way more clout in setting prices then Exxon will ever have.
Finally what keeps the oil companies from simply pumping less domestic oil or shuttering refineries when oil goes to $81? That seems to be what happened when Carter tried this same scheme in 1980.
We've been down this road before. Under a windfall tax signed into law by Jimmy Carter, domestic oil production plummeted by an estimated 795 million barrels, while imports of foreign oil surged. Congress had anticipated windfall tax revenues of $393 billion. The actual take: just $80 billion. Like so much else associated with the Carter era, the windfall-profits tax was a counterproductive flop. Do Democrats really believe a new dose of Carternomics is going to make today's economy stronger?
So Obama's plan will be to penalize US oil companies in order to increase the wealth of foreign exporters? Way to score an own goal Obama. The funny thing is the Dems actually think this will lower gas prices? I think Obama needs to go back and retake Economics 101 since he seems to have flunked it at Columbia.
Friday, June 06, 2008
"Hysterical" Trading in Last Hour in the Oil Pits?
Now this is a very interesting data point on oil's insane rise these past two days:
Crude's late-day launch occurred out of nowhere, with no new data release or news headlines for an impetus. The last hour of trading can only be described as hysterical, with oil traders calling financial reporters, desperately trying to find out what vital information they were missing that the rest of the market had apparently discovered.
It seems that even oil traders were thrown off by the rally. It just feels to me like the price went over a certain point then gapped even higher due to automatic trading programs or something like that. I should think the CBOE or NYMEX should look at the trading to see if there wasn't something strange going on or not.
Crude's late-day launch occurred out of nowhere, with no new data release or news headlines for an impetus. The last hour of trading can only be described as hysterical, with oil traders calling financial reporters, desperately trying to find out what vital information they were missing that the rest of the market had apparently discovered.
It seems that even oil traders were thrown off by the rally. It just feels to me like the price went over a certain point then gapped even higher due to automatic trading programs or something like that. I should think the CBOE or NYMEX should look at the trading to see if there wasn't something strange going on or not.
Morgan Stanley Oil Prediction: Tail Wags Dog
I'm getting fed up with these crazy oil predictions that actually end up causing oil prices to rise.
Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer predicted strong demand in Asia could drive prices to $150 by Independence Day, when millions of Americans are expected to take to the roads. Slorer said shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based an oil price spike prediction on falling supplies in the Atlantic.
What demand are they talking about? From what I have read Indian Oil Demand is murky and hard to pin down. This fact if very interesting however:
First, and most unusually, the price of diesel in India is considerably below (25% less) the price of petrol; the world prices diesel at 20 per cent above the price of petrol. Second, the consumer price of petrol in India is more than that in the US (at $4.40 a gallon), and among the highest in the developing world. In China, petrol is priced at only 74 cents a litre, compared to the average Indian price of $1.17 a litre.
So we have growing demand from a country whose per capita income is $774? I mean their income is growing fast but can Indians actually afford to drive that many miles on gas prices at $4.40 a gallon? We can barely afford gas that expensive with our per capita income of $34,000? It is just common sense that Indians are cutting back on their gas use as prices go up.
Also Chinese demand for actual crude oil is only 2.5% higher then last year with most of the demand growth coming from diesel fuel and other oil products. I would bet that most of that diesel growth was because of Olympics prep work and stockpiling so their won't be a shortage come August.
Another thing is I'm pretty sure Americans will not be "hitting the roads" by the millions if gas is $4.50 or $5.00 a gallon. They will probably have vacations close to home if they even travel to their vacations at all. So this millions of phantom Americans hitting the roads is a strait-up myth that has already been disproved by the massive slowdown in driving this past Memorial Day Holiday.
Finally, the Dollar only dropped against the Euro by $0.10 cents this week from $0.645 to $0.635 in total and was actually much weaker at $0.625 in April. There is no way a $.10 move lower in dollar can justify a +11% move in 2 days. I think it is pure bubble speculation and the price is not reflected in the supply/demand fundamentals at all. I think this Ole Slorer is just pulling prices out of a hat and the speculators are following it in lock-step driving things higher.
Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer predicted strong demand in Asia could drive prices to $150 by Independence Day, when millions of Americans are expected to take to the roads. Slorer said shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based an oil price spike prediction on falling supplies in the Atlantic.
What demand are they talking about? From what I have read Indian Oil Demand is murky and hard to pin down. This fact if very interesting however:
First, and most unusually, the price of diesel in India is considerably below (25% less) the price of petrol; the world prices diesel at 20 per cent above the price of petrol. Second, the consumer price of petrol in India is more than that in the US (at $4.40 a gallon), and among the highest in the developing world. In China, petrol is priced at only 74 cents a litre, compared to the average Indian price of $1.17 a litre.
So we have growing demand from a country whose per capita income is $774? I mean their income is growing fast but can Indians actually afford to drive that many miles on gas prices at $4.40 a gallon? We can barely afford gas that expensive with our per capita income of $34,000? It is just common sense that Indians are cutting back on their gas use as prices go up.
Also Chinese demand for actual crude oil is only 2.5% higher then last year with most of the demand growth coming from diesel fuel and other oil products. I would bet that most of that diesel growth was because of Olympics prep work and stockpiling so their won't be a shortage come August.
Another thing is I'm pretty sure Americans will not be "hitting the roads" by the millions if gas is $4.50 or $5.00 a gallon. They will probably have vacations close to home if they even travel to their vacations at all. So this millions of phantom Americans hitting the roads is a strait-up myth that has already been disproved by the massive slowdown in driving this past Memorial Day Holiday.
Finally, the Dollar only dropped against the Euro by $0.10 cents this week from $0.645 to $0.635 in total and was actually much weaker at $0.625 in April. There is no way a $.10 move lower in dollar can justify a +11% move in 2 days. I think it is pure bubble speculation and the price is not reflected in the supply/demand fundamentals at all. I think this Ole Slorer is just pulling prices out of a hat and the speculators are following it in lock-step driving things higher.
Wednesday, June 04, 2008
India Raises Gas Prices
I guess Indian Consumers will soon feel the pinch of higher gas prices. I wonder how this info will affect the demand picture going forward.
India's government raised retail prices of gasoline, diesel and cooking gas, Oil Minister Murli Deora told reporters today in New Delhi. Malaysia, Indonesia, Taiwan, Sri Lanka and Thailand have also cut subsidies and raised fuel costs, which is likely to curb demand.
India's government raised retail prices of gasoline, diesel and cooking gas, Oil Minister Murli Deora told reporters today in New Delhi. Malaysia, Indonesia, Taiwan, Sri Lanka and Thailand have also cut subsidies and raised fuel costs, which is likely to curb demand.
Subscribe to:
Posts (Atom)