madrose1
18 years ago
Crude Oil $59.75 Falls a Third Day on Forecast for Mild U.S. Weather
By Christian Schmollinger and Shigeru Sato
March 12 (Bloomberg) -- Crude oil fell for a third day on the expectation milder U.S. weather will cut winter fuel demand.
Temperatures in the Northeast, the nation's biggest consumer of heating oil, may rise to normal levels in the week ended March 25, the National Weather Service said yesterday. A cold snap since February has sapped inventories of the fuel by 10 percent, driving crude prices above $60 a barrel.
``The Northern Hemisphere's winter heating oil demand season's over,' said Ken Hasegawa, a manager of the international division at commodity futures broker Himawari CX Inc. in Tokyo. ``From now on, we should closely watch gasoline demand in the U.S. as the main factor.'
Crude oil for April delivery fell as much as 78 cents, or 1.3 percent, to $59.27 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $59.64 at 2:38 p.m. in Singapore.
The contract fell $1.59, or 2.6 percent, to $60.05 on March 9, the biggest decline in four weeks. Oil reached a one-week high of $62.30 a barrel the day before.
Hasegawa said he expects oil futures in New York to trade in a $58.00-$62.50 a barrel range this week.
Demand for oil products in the U.S., the world's largest consumer, fell a second time in the week ended March 2, the Energy Department said last week. Total product demand averaged 21.3 million barrels a day, a five-week low, as deliveries of distillates, including heating oil and diesel, fell 4.5 percent.
Heating use in New York City may be 15 percent below average this week, forecaster Meteorlogix LLC said yesterday.
Brent Crude
In London, Brent crude oil for April settlement fell as much as 73 cents, or 1.2 percent, to $60.40 a barrel in electronic trading on the ICE Futures exchange. It was at $60.85 a barrel at 2:41 p.m. Singapore time.
Heating oil for April delivery fell as much as 2.16 cents, or 1.3 percent, to $1.6906 a gallon in after-hours trading and traded at $1.6989 at 2:35 p.m. Singapore time. It fell 2.8 percent to $1.7122 a gallon on March 9, the biggest drop since Feb. 14.
World oil demand usually peaks in the fourth quarter when refiners make heating fuel for the northern hemisphere winter.
``The market has been so dependent on oil demand and heating oil demand particularly,' said Steve Rowles, an analyst with CFC Seymour Ltd. in Hong Kong. ``In this volatile market, any slowdown in global demand is going to have a larger impact.'
Oil futures fell to a 20-month low of $49.90 on Jan. 18 after mild weather in the U.S. Northeast cut demand and helped swell stockpiles. Prices rose in five of the past seven weeks as a cold snap boosted heating demand and gasoline demand rose above year-earlier levels.
Gasoline Demand
U.S. gasoline demand rises during the nation's summer vacations between Memorial Day late May and Labor Day early September.
Implied demand rose 0.8 percent to 9.2 million barrels a day in the week ended March 2, the Energy Department said last week. Gasoline consumption rose 0.8 percent. Deliveries from refineries and terminals averaged 9.1 million barrels a day the past four weeks, 3.3 percent more than a year earlier.
While demand appears strong, the weekly data are volatile and may also have been influenced by the unusual weather patterns in the U.S. the past three months, Gorey said.
Gasoline for April delivery fell as much as 3.05 cents, or 1.6 percent, to $1.8716 a gallon and traded at $1.8770 in after- hours trading at 12:30 p.m. Singapore time. The contract fell 1.2 percent to $1.9021 on March 9, after earlier reaching $1.945, the highest price for a contract closest to expiration since Aug. 23.
madrose1
18 years ago
Oil Prices Climb Above $59 Per Barrel, Led by Heating Fuel Price Gains
NEW YORK (AP) -- Oil prices jumped more than $1 per barrel Friday, led by gains for heating fuels, in another volatile trading day for crude. Light, sweet crude for March delivery rose $1.40 to settle at $59.39 a barrel on the New York Mercantile Exchange after dipping as low as $57.59 earlier in the session.
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Helping to push up prices was a U.S. warning that Nigerian militants may be planning to expand their activities beyond the restive southern petroleum-producing regions.
The Lagos-based consulate said possible targets could include expatriate personnel, Western businesses or facilities and locales visited by tourists and foreigners.
Citigroup Futures Research energy analyst Tim Evans said traders were also taking a second look at natural-gas inventory numbers released Thursday, which helped boost heating fuel prices.
Last week's withdrawal of 259 billion cubic feet from underground storage was short of some analysts' expectations, but it was the biggest since 1997, he said.
Natural gas prices rose 21.1 cents to $7.503 per 1,000 cubic feet, and heating oil prices rose 4.63 cents to $1.6734 a gallon, helping to lead up crude prices.
Brent crude rose $1.35 to $58.95 on London's ICE futures exchange.
Phil Flynn of Alaron Trading Corp. said traders also may have been skeptical about forecasts for warmer weather for the U.S. Northeast, the world's largest heating oil market.
The U.S. National Oceanic and Atmospheric Administration said it expects above-normal temperatures next week to end a spate of freezing weather in the U.S. Northeast, which accounts for 80 percent of the nation's heating oil demand.
Oil price swings have become the norm recently, as 11 of the prior 16 sessions saw daily moves of more than $1, Cameron Hanover's Peter Beutel wrote in a research report. On Thursday, prices dropped more than $1 before settling down just a penny.
Analysts said the upcoming three-day weekend, with the Nymex closed on President's Day, and the March oil contract's expiring on Tuesday may also have pushed up volatility.
In other Nymex trading, gasoline futures rose 4.81 cents to $1.6453 per gallon.
madrose1
18 years ago
Oil $60+ surges on winter chill, Iran posturing
By Associated Press | February 9, 2007
NEW YORK -- Oil prices surged $2 a barrel late yesterday, as energy traders rushed back into the market amid frigid temperatures in the United States and political tension overseas.
Earlier in the session, the market had been trading hesitantly, coming off a sharp drop a day earlier and struggling to find direction. Oil prices have been rising over the past two weeks on frigid US weather. They have so far been unable to surpass the $60 mark.
Light, sweet crude for March delivery rose $2 to settle at $59.71 a barrel in late trading on the New York Mercantile Exchange, after peaking at $59.87. It was the highest settlement price since Dec. 29, when crude closed at $61.05.
Factors such as renewed warnings out of Iran, violence in Nigeria, and record cold in the United States kept prices afloat yesterday -- leading traders to believe that $60 a barrel may not be as insurmountable as they thought.
"This is trend-chasing. It's very nervous, short-term, speculative trading. People were guessing that a top was in the market, and now they've been disappointed that prices didn't fall further," said Tim Evans, energy analyst at Citigroup Global Markets.
The daily volatility in trading "shows that the market is still solidly in the $56-$60 range," said Victor Shum, an energy analyst with Purvin & Gurtz in Singapore.
Also yesterday, Iran stepped up its warnings to the United States, which rekindled worries that supplies from the oil producer could be hindered, said James Cordier, president of Liberty Trading Group. Iran's supreme leader, Ayatollah Ali Khamenei, said Tehran will strike US interests around the world if his country is attacked.
madrose1
18 years ago
Oil 57.30 pulls back from four week high of $59 on seasonal demand , growing economy and severe cold thru mid Feb
By Christian Schmollinger
Feb. 2 (Bloomberg) -- Crude oil was little changed in New York after falling from a four-week high yesterday on signs late- winter heating demand may have limited impact on U.S. fuel supplies.
Oil plunged late yesterday, having risen almost $5 a barrel in three days on signs cold weather and economic growth may increase demand. Crude inventories are 1.2 percent above last year's level and distillate supplies, including heating oil and diesel fuel, are 2.7 percent greater with gasoline levels 2.5 percent higher.
`` The heating season is sort of slowly being taken out of the picture for investors,' said Dariusz Kowalczyk, chief investment strategist for CFC Seymour Ltd. in Hong Kong. ``The supply situation is ok. I don't see that part of the equation having an impact on prices in the near future.'
Crude oil for March delivery was at $57.36 a barrel, up 6 cents, in after-hours electronic trading on the New York Mercantile Exchange at 12:01 p.m. in Singapore.
The contract fell 84 cents, or 1.4 percent, to $57.30 yesterday, having gained 7.6 percent the two previous sessions on reports showing increased fuel demand and economic growth in the U.S., the world's biggest oil consumer.
Crude oil may rise next week on speculation U.S. fuel consumption will increase because of cold weather and a growing economy.
Twenty-five of 47 analysts, traders and brokers, or 53 percent, said prices will increase, according to a Bloomberg News survey. Fourteen expected a decline and eight forecast little change. Last week, 56 percent of respondents expected futures to rise.
In London, Brent crude oil for March settlement was at $56.85, up 13 cents, in electronic trading on the ICE Futures exchange at 11:58 a.m. Singapore time.
Seasonal Demand
Heating demand in the U.S. Northeast will be 28 percent above normal through Feb. 8, forecaster Weather Derivatives said. Temperatures may remain below normal through Feb. 15, the National Weather Service said yesterday. The region accounts for about 80 percent of the nation's heating oil use.
The cold weather ``will continue to be a factor underpinning the price of crude,' said CFC Seymour's Kowalczyk. ``The one unknown is how long the U.S. will have temperatures below historical averages.'
January was the peak month for U.S. deliveries of distillates, including heating oil and diesel, in three of the past five years, according to Energy Department data.
U.S. distillate stockpiles fell for the first week in seven, leaving inventories at 140 million barrels on Jan. 26, 9.1 percent above the five-year average for the period last week. Oil stockpiles held 324.9 million barrels, 10 percent above average, the department said.
Direction
As prices near the $60 a barrel level, oil should fall as supply is growing faster than demand this year, said Kowalczyk. Crude at $50 finds support because the Organization of Petroleum Exporting Countries will work to keep it higher and developing some new fields becomes uneconomical at that level.
``If we're close to $60, I'd say sell and if we're close to $50 I'd say buy,' said Kowalczyk.
Oil may rise today following a stronger than expected report on the U.S. unemployment figures that will support an outlook for better global economic growth. Oil rose 2.1 percent on Jan. 31 following an announcement that the U.S. economy grew 3.5 percent in the fourth quarter of 2006.
OPEC, which produces 40 percent of global oil, began a 500,000 barrel a day production cut yesterday. The reduction raises the total amount of oil taken out of the market to 1.7 million barrels since Nov. 1.
The group's output was 385,000 barrels a day higher than its targets in December. Venezuela and Nigeria produced a combined 220,000 barrels over the mark.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net
madrose1
18 years ago
Oil climbs above $US63 on OPEC cut
Posted at 6:10pm on 16 Dec 2006
Oil prices climbed above $US63 a barrel on Friday as dense fog delayed crude shipments to refineries along the US Gulf Coast a day after OPEC agreed to cut output for a second time in two months.
US crude rose 92 US cents to $US63.43 a barrel, the highest settlement in two weeks. London Brent crude was up 60c at $US63.49.
Dozens of ships have been delayed since Thursday by a thick fog blanketing the Houston Ship Channel and other parts of the Gulf Coast, cutting the region's many oil refineries off from fresh crude supplies.
Forecasts predicted the fog would linger on and off for five days and oil companies warned that a prolonged disruption to shipments could force them to reduce fuel output.
The shipping disruptions came a day after the Organization of Petroleum Exporting Countries decided to cut supply by 500,000 barrels per day, or 2%, effective February 1. That follows a cut of 1.2 million bpd agreed from November 1.
On Thursday, US crude rose more than $US1 a barrel after the decision to cut output by OPEC, which is the source of more than a third of the world's oil.
Ample inventories and mild weather across much of the United States, the world's top oil consumer, limited the rally.
Heating demand lower
Heating demand will average much below normal in the US northeast in the next five days, private forecaster DTN Meteorlogix said. The six- to 10-day forecast for the region was for temperatures to be mostly above normal, DTN said.
OPEC has continued to pump about 1m bpd above its current output target in December, Geneva-based consultant Petrologistics said on Friday.
Excluding Iraq, which is not part of OPEC deals to limit supply, OPEC output was expected to average 27.3m bpd in December, steady from November, according to Petrologistics.
Crude oil stocks in the United States, the world's top oil consumer, fell 4.3m barrels last week. They still stood at their highest level since 1998 for this time of year.
US crude oil has hovered around $US60 a barrel for the past three months as OPEC's first cut helped arrest a 25% slide from a record high of $US78.40 a barrel in July.
Also supporting prices on Friday was a fresh attack on the oil industry in Nigeria, the world's eighth-largest exporter. Gunmen invaded an oil field control station operated by Royal Dutch Shell in Nigeria's Bayelsa state and were holding several people hostage, a company spokesman said.
madrose1
18 years ago
Oil $60.84 Declines as Warmer Weather Moves Into the U.S. Northeast
By Robert Tuttle
Dec. 12 (Bloomberg) -- Crude oil fell to a two-week low as warm U.S. weather is forecast to reduce heating-fuel demand over most of the next month.
Temperatures in the Northeast, where 80 percent of U.S. heating oil is burned, will probably be above average through Dec. 25, according to National Weather Service forecasts. The temperature in New York will average 58 degrees Fahrenheit (14 degrees Celsius) on Dec. 20, 21 degrees above normal, according to forecaster MDA Federal Inc.'s Earthsat Energy Weather.
Several weather forecasts show ``no real break in the sustained moderated temperatures; it's helping push the market down,'' said John Kilduff, vice president of risk management at Fimat USA in New York. Today's move is ``a continuation of the overall downward trend we have been in.''
Crude oil for January delivery fell 20 cents, or 0.3 percent, to $61.02 a barrel on the New York Mercantile Exchange, the lowest close since Nov. 28. Today's fall was the third straight daily decline.
Brent crude oil fell 32 cents, or 0.5 percent, to $61.52 a barrel on the ICE Futures exchange in London. It was the seventh straight daily drop, the longest series of declines for Brent since November 2005.
Oil also fell after Edmund Daukoru, the Organization of Petroleum Exporting Countries president, said the group has not reached a consensus on a decision to reduce output for a second time this year at its meeting later this week.
``We need to take a very, very critical look'' at inventories, Daukoru said today in Abuja, Nigeria, where the group is expected to meet on Dec. 14. ``We always arrive at a consensus based on the fact that we have an open mind regardless of what is said before the meeting.''
`General Support'
Daukoru, who is also Nigeria's oil minister, earlier said ``general support'' exists among members for a reduction.
OPEC members Iran and Venezuela have called for further cuts, while Qatar, Kuwait and the United Arab Emirates today said they're concerned about an oversupply of oil, without yet demanding reductions. Libya's top OPEC official said there's no need to reduce supply again.
``Another production cut is waiting in the wings here, but not for right now,'' Kilduff said. ``They are going to let this one ride because it's December and it's the peak demand season.
OPEC said in October it would curtail output by 1.2 million barrels a day starting in November. A Bloomberg News survey showed the group trimmed output by 550,000 barrels a day.
Northeast heating demand will average 31 percent below normal over the next seven days, according to forecaster Weather Derivatives in Belton, Missouri.
`Milder' Weather
``At least through the 26th, it still looks to be milder than normal across much of the eastern third of the U.S.,'' said Jason Nicholls, senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. ``After Christmas, it looks like there might be one or two cold shots but I don't think it stays permanently cold.''
Crude oil accounts for about 60 percent of the retail price of heating oil. Heating-oil futures fell 0.19 cent to $1.7224 a gallon in New York.
Crude oil has fallen about 3.3 percent this month as analysts and traders said they expect U.S. fuel inventories to meet demand for heating amid signs of mild weather.
The U.S. Energy Department is scheduled to release a report on last week's petroleum inventories tomorrow at 10:30 a.m. in Washington.
U.S. supplies of distillate fuel, including heating oil and diesel, probably declined 250,000 barrels last week, based on the median estimate from the Bloomberg News survey of 15 analysts. Stockpiles held 132.4 million barrels in the week ended Dec. 1, 0.9 percent more than the five-year average for the period.
Crude oil inventories probably fell 1.3 million barrels, based on the survey. Stockpiles held 339.7 million barrels on Dec. 1, 14 percent above the five-year average.
madrose1
18 years ago
Oil prices fall below $62 a barrel
© 2006 The Associated Press
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SINGAPORE — Oil prices fell in sluggish Asian trading Monday amid mixed expectations for OPEC's meeting later this week. Forecasts for milder winter weather in the U.S. also depressed prices.
Light, sweet crude for January delivery dropped 31 cents to $61.32 a barrel in electronic trading on the New York Mercantile Exchange, midafternoon in Singapore. The contract on Friday fell by 46 cents to settle at $62.03 a barrel.
January Brent crude on London's ICE Futures exchange slipped 20 cents to $62 a barrel.
Heating oil futures fell 1.13 cents to $1.7460 a gallon while unleaded gasoline prices declined 0.13 cent to $1.6200 a gallon. Natural gas prices dropped 17.2 cents to $7.389 per 1,000 cubic feet.
The market is somewhat uncertain what to expect from Thursday's meeting of the 11-member Organization of Petroleum Exporting Countries.
Some OPEC officials have been pressing in recent days for a cut in output on top of a production cut of 1.2 million barrels a day, approved in October, while others have indicated that with prices above $60 a barrel, the cartel was likely to refrain from cutting output at the meeting.
Some Saudi officials have expressed satisfaction with current price levels, but Saudi Oil Minister Ali Naimi said recently that he was concerned about excessively high oil inventories in major consuming nations.
Recent data from the International Energy Agency showed stocks held among the 30 members of the Organization of Economic Cooperation and Development at the end of September at 2.76 billion barrels, the highest level in almost eight years and 4.5 percent higher than a year ago.
Expectations of milder temperatures in the United States also weighed on prices. Temperatures in the Northeast, the nation's largest heating oil market, were expected to moderate this week, with above-normal temperatures through most of the nation, according to the National Weather Service.
renshen1
18 years ago
Biofuel can cause crude oil slump to $40 in ’07: expertPublished: Thursday, 7 December, 2006, 12:03 PM Doha Time
TOKYO: Crude oil prices in New York may tumble to $40 a barrel next year as demand for biofuel made from crops spurs investors to switch from energy to agricultural commodities, said Tetsu Emori, chief commodities strategist at Japan’s Mitsui Bussan Futures Ltd.
Shifting to biodiesel and ethanol additives may slow the growth of demand for gasoline and diesel in the US, Europe, and Japan, Emori said in an interview on Monday.
Emori predicted oil would rise to $96 a barrel in August this year because of the hurricanes in the US Gulf. Prices fell from a peak of $78.40 on July 14 after a calmer-than-usual storm season.
“Some people may say the 2006 oil bubble eventually was short-lived like a firework that sparks and disappears,’’ Emori, 40, said. “People called me crazy when I projected a couple of years ago oil to surge this year. They may do that again because I said oil may touch the $40 a barrel mark next year.’’
Oil consumers are increasing use of fuels and additives that derive from corn, soybean, sugar cane, and oilseed, as they try to reduce pollution. The switch may cause a shift of money from oil futures on the New York Mercantile Exchange to the grain futures market in Chicago, Emori said in Tokyo.
Biofuels may account for 7% of global transportation energy by 2030, provided governments implement International Energy Agency policies to promote alternatives to oil, the Paris-based adviser to oil-consuming nations said in its World Energy Outlook 2006 report.
Oil prices in New York have dropped 20% from the record set in July and traded at $62.71 a barrel at 4.47pm in Tokyo.
“Biofuels may be an epoch of great change for oil, possibly ending the spike in prices of crude we’ve seen in the past few years, and attract pension and commodity fund managers to pour more money into grains,’’ Emori said. “A record of $78.40 a barrel set on July 14 may eventually be the peak of oil in the years through the end of 2010.’’
Biofuels include gasoline blended with ethanol that’s made from sugar cane or grain and diesel mixed with vegetable oils. Prices for corn, used to make ethanol, have risen 47% in Chicago this year. Oil has gained 2.4%.
Crude oil will average $62 a barrel next year and $61 in 2008 in New York, according to the median forecast of 35 analysts surveyed by Bloomberg News.
Shinzo Abe’s government, an IEA member country, plans to increase consumption of biofuel for transportation to 500,000 kiloliters (3.15mn barrels) by the end of 2010 as part of efforts to cut greenhouse gas emissions and meet targets set under the Kyoto Protocol. Japan currently doesn’t use biofuel.
Starting in April 2010, Nippon Oil Corp and other Japanese refiners aim to supply about 12mn kiloliters of ethanol-blended gasoline, about 20% of the country’s total consumption, the Petroleum Association of Japan said in a statement in April. – Bloomberg
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=121251&version=1&templ...
madrose1
18 years ago
While on the topic of oil the January crude contract closed just over $63.50 on Friday only two weeks ahead of the December 14th OPEC meeting. OPEC President, Edmund Daukoru, said another cut of -500,000 bpd is likely at the December meeting. He said I don't expect anything less than 500K. Actually another 500K cut would finally get them to the -1.2 mbpd they claimed to have cut on Nov-1st. According to a Reuters survey the actual cut was only -785,000 bpd and most of that in the less desirable high sulphur oil. Nobody is buying this product so let's cut it. 785,000 may sound like a lot but in reality OPEC production is only -300,000 bpd below last years production at this time. The demand decline is due primarily to price destruction from the spike to $3+ gasoline and a slowing US economy. With a +16% jump in November SUV sales that demand destruction appears to have ended. Energy Secretary Samuel Bodman said Friday there was no need for a cut and OPEC needed to keep the markets well supplied. At the same time Saudi's Oil Minister said the cartel needed to remove 100 million bbls from the market to restore balance. Remember, this balance they want to achieve appears to be oil over $60 despite comments to the contrary. Chavez, who is up for reelection this weekend, said on Thursday OPEC had reached a consensus to keep prices for the OPEC basket of crude above $50. That basket is currently selling for $56 with light sweet crude at $63. OPEC must be doing something right because Angola, Ecuador and Sudan are thinking about joining the cartel. Evidently belonging to OPEC is a status symbol for those without an economy.
I had a laugh on Friday when one astute commentator said OPEC was a sham for the gullible to allow Saudi Arabia to control the price of oil while appearing to be politically correct. In practice Saudi is the only OPEC country with any material surplus production and it has always fallen to Saudi to make the harsh moves when the situation demanded. Saudi nearly single handedly bankrupted Russia in the 1990s by flooding the market with oil at a time when Russia needed high prices to fund further development. Their tactics cost Russia 10 years before they could recover from that blow. Russia has significant amounts of oil but the lost decade prevented them from being able to use that oil to grab a larger share of the global market. Now 15 years later much of Russia's capacity has been used up and oil they could have used to fund development 15 years ago is needed to cover production from declining fields. In short Saudi stole their thunder at a time it would have mattered and Russia has never been able to regain that position.
NATO has warned Europe that Russia may be planning on forming an OPEC like cartel for natural gas and LNG. Russia's state owned entity Gazprom controls 25% of the world's supply of natural gas and wants to be the LNG exporter to the world. That is all we need another unfriendly world power selling us life giving supplies of natural gas that can be turned off in a heartbeat like they did to the Ukraine last year. It would be the equivalent of being a patient in ICU with OPEC responsible for our oil IV while GPEC led by Russia responsible for our oxygen/gas mask. You may be laughing but that is exactly where we are heading. Gas supplies in North America have already peaked so we cannot save ourselves.
madrose1
18 years ago
Peak Oil Theory – “World Running Out of Oil Soon” – Is Faulty; Could Distort Policy & Energy Debate Nov 14th
http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDetails.aspx?CID=8444
In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
Complete Press Release
CAMBRIDGE, Mass., November 14, 2006 – In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
“The global resource base of conventional and unconventional oils, including historical production of 1.08 trillion barrels and yet-to-be-produced resources, is 4.82 trillion barrels and likely to grow,” CERA Director of Oil Industry Activity Peter M. Jackson writes in Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources. The CERA projection is based on the firm’s analysis of fields currently in production and those yet-to-be produced or discovered.
“The ‘peak oil’ theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues,” Jackson observes. “Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges with delivering liquid fuels to meet the needs of growing economies. This is a very important debate, and as such it deserves a rational and measured discourse.”
“This is the fifth time that the world is said to be running out of oil,” says CERA Chairman Daniel Yergin. “Each time -- whether it was the ‘gasoline famine’ at the end of WWI or the ‘permanent shortage’ of the 1970s -- technology and the opening of new frontier areas has banished the specter of decline. There’s no reason to think that technology is finished this time.”
The report emphasizes the importance of focusing on the critical issues. “It is not helpful to couch the debate in terms of a superficial analysis of reservoir constraints. It will be aboveground factors such as geopolitics, conflict, economics and technology that will dictate the outcome.” The report also points to such aboveground questions as timing and openness to investment, infrastructure development, and the impact of technological change on demand for oil
Undulating Plateau
The new report describes CERA’s liquids supply outlook as “not a view of endless abundance.” However, based on a range of potential scenarios and field-by-field analysis, CERA finds that not only will world oil production not peak before 2030, but that the idea of a peak is itself “a dramatic but highly questionable image.”
Global production will eventually follow an “undulating plateau” for one or more decades before declining slowly. The global production profile will not be a simple logistic or bell curve postulated by geologist M. King Hubbert, but it will be asymmetrical – with the slope of decline more gradual and not mirroring the rapid rate of increase -- and strongly skewed past the geometric peak. It will be an undulating plateau that may well last for decades.
During the plateau period in later decades, according to the CERA analysis, demand growth will likely no longer be largely met by growth in available, commercially exploitable natural oil supplies. Non-traditional or unconventional liquid fuels such as production from heavy oil sands, gas-related liquids (condensate and natural gas liquids), gas-to-liquids (GTL), and coal-to-liquids (CTL) will need to fill the gap.
Critical Issue
CERA argues that understanding the difference between a plateau and a peak followed by a precipitous decline, as well as the timing of events, is critical to the global energy future. “Corporations, governments, and other groups, including nongovernmental organizations, need to have a coherent description of how and when the undulating plateau will evolve so that rational policy and investment choices can be made,” according to the report.
“It is likely that the situation will unfold in slow motion and that there are a number of decades to prepare for the start of the undulating plateau. This means that there is time to consider the best way to develop viable energy alternatives that would eventually provide the bulk of our transport energy needs and ensure that there is a useable production stream of conventional crude for some time to come,” CERA concludes.
Peak Theory Shortcomings
The CERA review also finds that current “peak oil” advocacy suffers from several problems:
The peak argument is not presented in the context of a credible systematic evaluation of available data; its proponents have not made available a transparent and detailed analysis that would allow an objective and rational discussion. At base “their methodology is to impute decline curves against currently proven reserves and declare that the game – and the argument – is over.”
The underlying analytical model formulated by the late M. King Hubbert both fails to recognize that recoverable reserve estimates evolve with time and are subject to significant change, and it also underplays the substantial impact of technological advances. Consequently, total annual production at the high point in 1970 was 600 million barrels higher – 20 percent -- than Hubbert’s projection of peak production for the US Lower 48, although he correctly anticipated its timing within two years.
Hubbert’s method requires accurate knowledge of the ultimate recoverable reserves of an area, but his 1956 analysis could never have incorporated the impact of giant discoveries in Alaska and the deepwater Gulf of Mexico, and therefore couldn’t have predicted the production profile for the U.S. As a result, total cumulative U.S. production between the high point in 1970 and 2005 exceeded Hubbert’s predictions by the equivalent of more than 10 years of US production at present rates.
Hubbert-posited post-peak reservoir decline curve assumptions are rebutted by observation that the geometry of typical oilfield production profiles is often distinctly asymmetrical and does not generally show a precipitous mirror-image decline in production after an apparent peak, even without the application of new technology or enhanced oil recovery techniques. As a result, in the US Lower 48 where Hubbert came closest to accurately forecasting a peak, oil production in 2005 was some 66 percent higher than projected by Hubbert, and cumulative production between 1970 and 2005 was some 15 billion barrels higher, a variance equal to more than eight years of US production at present rates.
Those who believe a peak is imminent tend to consider only proven remaining reserves of conventional oil, which they currently estimate at about 1.2 trillion barrels. In the view of many petroleum geologists, this is a pessimistic estimate because it excludes the enormous contribution likely from probable and possible resources, those yet to be found, and plays down the importance of unconventional reserves in the Canadian oil sands, the Orinoco tar belt, oil shale and GTL projects. CERA believes the global inventory is some 4.8 trillion barrels, of which about 1.08 trillion barrels have been produced, leaving 3.72 trillion conventional and unconventional barrels, an order of magnitude that will allow productive capacity to continue to expand well into this century.
The “peak oil” argument is frequently supported with data indicating that new exploration finds are not sufficient to replace annual production. Their data sets have serious deficiencies. The peak argument is an incomplete and therefore misleading analysis because it ignores the role of development (vs exploration) projects in expanding reserves, fails to understand economic factors that can point company and national strategies to emphasize development vs exploration work. By focusing on “discovery” and ignoring the increased knowledge and confidence about field volumes, it disregards the fact that revisions, additions and exploration together have generated resource growth of 320 billion barrels – 80 billion barrels more, or one-third more, than total production – during the period from 1995 to 2003. CERA draws both on its own data bases and those of its parent company IHS, which has the world’s most complete proprietary data bases on oil production and resources.
Hubbert’s method does not incorporate economic or technical factors that influence productive capacity; most importantly, it ignores the impact of both price and demand, both major drivers of production.
Peakists’ projections of the date a peak would be reached continue to come and go, the most recent targeted around Thanksgiving Day 2005, give or take a few weeks.
madrose1
18 years ago
Oil $58.50 extends slide on mild US weather
Tue Nov 14, 2006 3:58pm ET
NEW YORK (Reuters) - Oil extended a two-day price slide on Tuesday as mild U.S. weather cut heating oil demand in the world's top energy consumer.
U.S. crude settled down 30 cents to $58.28 a barrel, after falling $1.01 on Monday, while London Brent crude gave up 21 cents to settle at $58.84.
Unseasonably mild temperatures in the United States were expected to leave heating oil demand about 16 percent below normal this week, the National Weather Service said.
Analysts polled by Reuters have predicted inventory data for release on Wednesday would show distillate stocks -- including heating oil -- had fallen by only 400,000 barrels last week.
"Inventory levels are too high, with heating oil inventories ultra-high. But energy demand should pick up with winter," Tony Nunan, manager at Mitsubishi Corp.'s risk management unit, said.
High levels of fuel stocks prompted the Organization of the Petroleum Exporting Countries (OPEC) last month to announce an output cut of 1.2 million barrels per day from November 1.
But U.S. customers of Saudi Arabia, the world's largest crude exporter, said on Tuesday the OPEC member had not cut their December supplies. The kingdom hiked shipments to Asia for December and left European supplies unchanged, buyers said on Monday
The producer group believes prices should be between $55-$60 a barrel, a senior Kuwait energy official said on Tuesday without specifying whether he was referring to OPEC's reference crude basket price or international oil prices.
Since the beginning of October, U.S. and Brent crude have traded between around $58 to $62 a barrel, with speculative hedge funds playing a part in keeping prices in this range.
They have sold when the price begins to break higher and bought as it nears the bottom of the six-week range, analysts and traders said.
The latest data from U.S. regulatory body the Commodity Futures Trading Commission showed speculators on the New York Mercantile Exchange cut net crude short positions in the week ended November 7, taking their overall position to around neutral.
"This lack of commitment and a net position which is neutral should partly explain the flat price swings that we currently have," Olivier Jakob, analyst at Petromatrix, said.
madrose1
18 years ago
Democrats to target oil majors in new US Congress
Wed Nov 8, 2006 12:21am ET
Democrats to target oil majors in new US Congress
UPDATE 2-British and American hostages freed in Nigeria
FTSE edges up, results put brakes on earlier rally
More Company News... Email This Article | Print This Article | Reprints [-] Text [+] By Tom Doggett and Chris Baltimore
WASHINGTON, Nov 8 (Reuters) - Big oil companies will be a top target of Democratic lawmakers when they officially take over the House of Representatives early next year.
Democrats picked up enough seats in Tuesday's U.S. election to win majority control of the House and have promised to roll back billions of dollars in tax breaks and other financial incentives extended to the oil industry in energy legislation Congress passed last year.
Democratic Rep. Nancy Pelosi, who is poised to be the next Speaker of the House when the new Congress convenes in January, says oil companies have unfairly earned record profits by gouging consumers at the gasoline pump.
Pelosi says taking away the financial relief given to Big Oil in last year's Republican-written energy law will be among the six major tasks Democrats plan to tackle in the first 100 hours after she slams the gavel to convene the new House.
She says Democrats will go after oil companies by enacting tough laws to stop gasoline price gouging, and some Democrats want to impose a windfall profits tax on Big Oil.
Rep. Rahm Emanuel, who heads the House Democrats' campaign committee, said Democrats will "redirect" the billions in breaks given to oil companies to programs that will move the United States toward energy independence.
"You know, (oil companies are) making billions of dollars, charging us $3 a gallon, of course those folks don't need tax breaks," said Howard Dean, chairman of the Democratic National Committee. "We can use that money to balance the budget."
The energy bill had about $2.8 billion in tax breaks and financial incentives for the oil and gas industry. Continued...
The legislation allowed companies to speed up writing off exploration and drilling expenses, and immediately deduct half the cost of large oil refinery expansions.
Legislation to repeal those tax breaks and other government financial incentives would also have to clear the Senate and then be signed by President George W. Bush.
Bush could veto any legislation that House Democrats propose, raising the possibility of energy policy deadlock over the next two years.
"You've still got a Republican president so what can you get done?" said Robert Ebel, an energy expert at the Center for Strategic and International Studies. "It's probably going to be two years where nothing is going to happen" on energy issues.
TAX BREAK ROLLBACK?
Repealing the financial relief would affect domestic oil giants such as Exxon Mobil Corp. (XOM.N: Quote, Profile, Research), Chevron Corp. (CVX.N: Quote, Profile, Research) and ConocoPhillips (COP.N: Quote, Profile, Research), and large U.S. operations of foreign firms such as BP Plc (BP.L: Quote, Profile, Research) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research). Mark Kibbe, a tax policy analyst with the American Petroleum Institute, said the tax breaks make it more affordable for companies to search for oil and gas in the United States, instead of looking in other countries where production costs are generally much cheaper.
"You're increasing the costs of those projects and you're making U.S. companies that much less competitive in the world market," he said.
Guy Caruso, who heads the federal Energy Information Administration, warned that taking away the government's financial help could kill some energy projects. "The more expensive the project, the more affected they will be from a rollback in tax incentives and breaks," he said.
Costly projects like drilling for crude in the very deep waters in the Gulf of Mexico or developing the thick oil trapped in shale rock in the Rocky Mountain region could be shut down, said Caruso.
"There are some projects I'm sure would drop off the table," he added.
madrose1
18 years ago
Oil slips below $59 on OPEC doubt, high stocks
Sun Nov 5, 2006 4:13pm ET
By Neil Chatterjee
SINGAPORE, Nov 6 (Reuters) - Oil slipped under $59 on Monday as traders doubted OPEC's resolve for production cuts despite assurances from the cartel's president.
A lack of attacks on the oil industry in Nigeria over the weekend also eased concern over further disruption to the world's eighth-largest exporter, following a U.S. warning last week for an imminent militant bombing campaign.
U.S. light crude for December delivery <CLc1> was down 21 cents at $58.93 a barrel by 0200 GMT, after gains of $1.26 on Friday that trimmed losses last week to 2.7 percent. London Brent crude <LCOc1> traded 21 cents down at $58.94 a barrel.
THE 21st CENTURY IN PICTURES
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OPEC President Edmund Daukoru said on Sunday all OPEC members will fully implement their oil production cuts, while market conditions may force the cartel to cut output further next month, indicating the group may no longer tolerate prices under $60.
"A December quota cut may be necessary because the market is still soft," Daukoru told Reuters in South Korea ahead of an oil conference. "$60 will not hurt the world economy."
Price hawk Venezuela is recommending OPEC take an additional 300,000 barrels per day (bpd) off the market at its December meeting, to add to a 1.2 million bpd cut agreed from November, to try to stem a 25-percent price slide since mid-July.
Despite the assurance, market scepticism over the cuts was underlined by a Reuters survey that showed OPEC oil output rose 70,000 bpd in October as a jump in supply from Nigeria outpaced cutbacks from Saudi Arabia, Iran and Iraq.
Worries over Nigerian production sparked a rally on Friday, after the U.S. consulate in Lagos warned a militant group in the country's oil producing Niger Delta may have imminent plans to launch a campaign of bombings and attacks on oil facilities.
"Nigeria has an even greater importance because of the lighter, but scarcer, grades of crude they produce -- a major interruption to Nigerian supply would push prices higher," said Tobin Gorey at the Commonwealth Bank of Australia.
Violence in the world's eighth-largest exporter has already cut oil output by 500,000 barrels a day since February.
Production in Iraq, where a court on Sunday sentenced former leader Saddam Hussein to hang, fell around 140,000 bpd in October from September as there no shipments from a sabotage-hit northern pipeline to Turkey.
Despite the OPEC cutbacks and ongoing geopolitical worries in producer nations, bulging fuel stocks in top consumer the United States and concerns over the U.S. economy have depressed the market into a month-long trading range of $57-$62 a barrel.
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Keywords: MARKETS OIL
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madrose1
18 years ago
Oil $59.22 Prices Rise by $1+ a Barrel, Nigerian fears
WASHINGTON — Oil prices rose by more than $1 a barrel Friday on worries that militants in Nigeria are preparing to launch simultaneous attacks in the country's oil-rich delta region.
A bomb hoax that led to the evacuation of nonessential workers from a huge BP PLC refinery may have contributed to the buying. Output at the 400,000 barrel a day Whiting, Ind., refinery was not affected, a spokesman said.
Light sweet crude for December delivery rose $1.26 to settle at $59.14 a barrel on the New York Mercantile Exchange, where gasoline futures climbed 5.38 cents to settle at $1.5069 a gallon and heating oil gained 3.78 cents to settle at $1.6775 a gallon.
In London, December Brent crude on the ICE Futures exchange rose 49 cents to $58.36 a barrel.
While oil prices have retreated significantly from a summertime high above $78 a barrel, they have been trading in a range of around $57-$61 over the past month as traders look for demand clues in weather and economic forecasts and weigh them against OPEC's plans to curb supplies.
Until the end of the month there is unlikely to be much movement in the market, said Simon Wardell of Global Insight.
"It's going to be a fairly slow week with prices stuck between $55 and $60," Wardell said. "Really until the end of the month there will be a few clues but nothing major coming up that decides where we are at."
"A great deal is going to depend on the weather," said Cameron Hanover Inc. president Peter Beutel.
U.S. diplomats warned Friday that militants in Nigeria are planning a major new wave of attacks and kidnappings in the next few days that could include up to 20 simultaneous bombings across the country's oil-rich delta region.
The warning came in an e-mailed statement sent to American citizens from the U.S. Consulate in Nigeria's main city, Lagos, and a U.S. diplomat confirmed plans for fresh attacks were believed to be under way.
"The U.S. government has learned that as of late October 2006, a militant Niger Delta group may have finalized its plans for a unified attack against oil facilities in the Niger Delta region," the statement said.
Militants have taken dozens of oil workers working in the southern oil region hostage since the beginning of this year. The violence has pared about one quarter from Nigeria's normal 2.5 million barrel daily production.
Oil prices had fallen Wednesday and Thursday after weekly U.S. inventory data showed an increase in crude supplies. The U.S. Energy Information Administration said U.S. crude oil inventories rose by 2 million barrels to 334.3 million barrels in the last week.
That was largely due to crude imports bouncing back up by 599,000 barrels per day from the previous week, when imports dropped off significantly.
In other Nymex trading, natural gas futures climbed 7 cents to settle at $7.884 per 1,000 cubic feet.
madrose1
18 years ago
Crude Oil Futures Rise for a Second Day on Colder U.S. Weather
By Christian Schmollinger
Oct. 25 (Bloomberg) -- Crude oil rose for a second day on speculation colder U.S. weather will boost heating oil demand.
Below-normal temperatures until Oct. 31 in the Northeast, the nation's largest heating oil consumer, will boost heating demand 30 percent above normal for this time of year, researcher Weather Derivatives said. World crude oil demand peaks in the fourth quarter, when refiners in the U.S., Europe and north Asia prepare to supply winter fuel.
``If heating oil does move higher, there could be some pull on crude,'' said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd. in Hong Kong. ``We're entering the heating season, where heating oil is the driver of the energy complex.''
Crude oil for December delivery rose as much as 26 cents, or 0.4 percent, to $59.61 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was trading at $59.56 at 12:40 p.m. in Singapore. Yesterday, the contract rose 54 cents, or 0.9 percent, to $59.35 a barrel, the first gain in three days.
Heating oil for November delivery rose for a second day, by as much as 0.4 percent, to $1.7017 a gallon, after rising 1.6 percent yesterday.
Oil prices have fallen 24 percent from the record $78.40 reached on July 14. Futures slid the past two months as fuel stockpiles in the U.S., the world's biggest oil consumer, rose and forecasters including the Organization of Petroleum Exporting Countries trimmed their demand projections, citing slower global economic growth.
In London, Brent crude for December settlement climbed as much as 32 cents, or 0.5 percent, to $60.18 a barrel on the ICE Futures exchange. It was at $60.15 at 12:30 p.m. Singapore time.
Inventories
An Energy Department report later today will probably show crude oil supplies gained 2.9 million barrels last week, based on the median estimate from a Bloomberg News survey of 10 analysts. Distillate supplies, including heating oil and diesel, may have dropped by 1.25 million barrels, their third straight decline, according to the survey.
On Oct. 13, U.S. oil stockpiles held 335.5 million barrels, or 14 percent more than the five-year average for the period. Supplies of distillates were 145.4 million barrels, 15 percent more than five-year average.
Product demand averaged 21.4 million barrels a day in the week ended Oct. 13, the highest in two months. Refiners used 86.3 percent of their plant capacity that week, the lowest since mid-April. Refineries may have operated last week at 87 percent of capacity, according to the Bloomberg survey.
``Lower refinery output related to the lower capacity utilization will mean a big decline in inventories of heating oil and gasoline, especially if demand for heating oil is strong,'' said CFC Seymour's Kowalczyk.
U.S. Weather
AccuWeather meteorologists predicted Oct. 18 that most of the U.S. will have a cooler-than-normal winter. The El Nino weather pattern in the Pacific Ocean will be weaker than expected, providing colder temperatures.
This year, AccuWeather is forecasting January temperatures in New York of 30 to 31 degrees Fahrenheit, or 1 or 2 degrees below the 30-year average.
AccuWeather is also projecting above-normal snowfall for the Northeast. There's even a possibility that New York City could extend its four-year record of winters with snowfall above 40 inches. The 30-year average is about 22 inches.
AccuWeather said an area stretching from the western Great Lakes to the Pacific Northwest would likely have above-normal temperatures. That was in line with a forecast from the U.S. National Weather Service's Climate Prediction Center for warmer weather for the western half of the continental U.S. and Alaska.
To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net .
madrose1
18 years ago
Big worries for big oil - WSJ
WSJ reports Exxon Mobil (XOM), Royal Dutch Shell (RDS.A), BP (BP) and ConocoPhillips (COP) have all relied on big oil-price jumps to fuel a streak of handsome earnings gains and, in many cases, record quarterly profits in recent years. Many of the world's biggest publicly traded oil cos report earnings this week and are expected to post strong results, thanks to high crude prices. Since July, though, crude prices have fallen about 25%, sapping the momentum from short-term profit-growth potential at a time of rising costs and higher taxes. And if oil prices continue to drop, that could drive new thinking among oil execs over whether to pursue big tie-ups. If oil prices stabilize or drop further, cost inflation could also subside. But costs generally take time to catch up with swings in commodity prices. That poses a growing challenge to profitability in the short term. If prices continue falling, two other big questions for investors may emerge: Will the world's largest oil cos curb their generous share-buyback programs? And will they start looking for acquisitions, now that share prices have fallen along with commodity mkts, making some targets look cheaper?
madrose1
18 years ago
Oil ($56.85) Falls for a Second Day on Speculation OPEC Won't Meet Cuts
By Angela Macdonald-Smith and Hector Forster
Oct. 23 (Bloomberg) -- Crude oil fell for a second day in New York because of speculation that the Organization of Petroleum Exporting Countries members will fail to cut production by as much as planned.
The agreement to lower output by 1.2 million barrels a day comes as four of OPEC's 10 members with quotas already produce below their assigned amounts. U.S. stockpiles of oil, gasoline, heating oil and diesel are higher than the average for this time of year.
``There are doubts about the ability of OPEC to really stick to the cuts that they've stated,'' said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``The announced cut was greater than expected but it still didn't seem to scare the market very much. We're likely to see more softness.''
Crude oil for December fell as much as $1.07, or 1.8 percent, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $58.94 at 9:20 a.m. Singapore time.
On Oct. 20, the December contract fell $1.17, or 1.9 percent, to $59.33 a barrel. The November contract, which expired at the close on Friday, fell 2.9 percent to $56.82, the first time this year that the monthly contract nearest to delivery closed below $57 a barrel.
Twenty-one of 49 analysts, traders and brokers in a weekly Bloomberg News survey said prices will decline this week. Fourteen forecast an increase and 14 predicted little changed. The survey was carried out before OPEC formally announced production cuts.
November Cuts
The 4.4 percent reduction starting Nov. 1 will be based on how much members were pumping last month, rather than quotas, United Arab Emirates Oil Minister Mohamed al-Hamli, who will become OPEC president in 2007, said Oct. 20 after members met in Doha, Qatar.
The 10 OPEC members with quotas produced 27.6 million barrels a day last month, lower than the combined quotas of 28 million barrels a day. Nigeria, Iran, Venezuela and Indonesia now pump less oil than their official allocations or quotas, according to Bloomberg estimates. Algeria, Libya, Saudi Arabia and the United Arab Emirates are pumping more.
U.S. crude oil inventories surged 5.02 million barrels to 335.6 million in the week ended Oct. 13, the Energy Department reported Oct. 18. It was the biggest increase since March and left stockpiles 14 percent higher than the five-year average for the week.
Supplies Fall
Supplies of distillate fuel, a category that includes diesel and heating oil, and gasoline fell in the week. U.S. refineries had their lowest operating rate since April as companies shut units for maintenance.
``We are likely to see more of what happened last week, with crude inventories up and products down,'' Harrington said.
The U.S. gasoline pump price fell eight cents in the past two weeks to $2.20 a gallon, the lowest this year, as crude oil prices declined, Trilby Lundberg said, citing her survey of about 7,000 filling stations nationwide.
Prices for regular gasoline have declined 82.5 cents from a record average $3.025 a gallon reached in mid-August as lower demand following the end of the summer driving season has kept inventories above average. Wholesale gasoline futures in New York fell to the lowest since February on Oct. 17.
Gasoline for November delivery fell 7 cents, or 0.1 percent to $1.4665 a gallon in after-hours trading on the New York Mercantile Exchange.
To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net ; Hector Forster in Tokyo at hforster@bloomberg.net .
madrose1
18 years ago
Oil ($59) Rises Slightly Before OPEC Meeting Tomorrow to Decide on Output Cuts ....(market minimally impacted)
By Hector Forster
Oct. 18 (Bloomberg) -- Crude oil rose in New York before an OPEC meeting tomorrow that will decide on a plan to lower output by 1 million barrels a day.
Members of the Organization of Petroleum Exporting Countries, which pump about 40 percent of the world's oil, meet in Qatar to try and stem a three-moth slide in prices. Oil declined for the first day in four yesterday after U.S. industrial production fell the most in a year in September, signaling weaker demand in the world's largest energy consumer.
``Prices have been rising as OPEC is saying they will cut 1 million barrels,'' said Mikikaru Amano, an analyst at futures broker Taiheiyo Bussan Co. in Tokyo. ``There are enough inventories and the supply-demand balance has weakened.''
Crude oil for November delivery rose as much as 32 cents or 0.5 percent to $59.25 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $59.12 at 11:01 a.m. in Singapore.
The contract fell $1.01, or 1.7 percent, to close at $58.93 a barrel yesterday. Prices reached a one-week high of $60.54 after Kuwait's oil minister said OPEC will agree to cut output by 1 million barrels a day.
The group will cut production by about 3.6 percent, Kuwait's Sheikh Ali-Jarrah al-Sabah said yesterday, rather than reduce quotas which some members can't meet and others ignore.
``We are shrugging off OPEC's production cuts,'' Kyle Cooper, director of research at IAF Advisors in Houston, said yesterday. ``There are healthy inventories and any cut in production will increase spare capacity.''
In London, Brent crude oil rose as much as 36 cents, or 0.6 percent, to $61.30 a barrel on the ICE Futures Exchange. It was at $61.22 a barrel at 10:48 a.m. Singapore time.
Demand Slowing
OPEC cut its oil consumption forecasts for 2006 and 2007 on Oct. 16, citing ``far from robust'' demand. Continuing daily output at September levels of 29.7 million barrels would increase stockpiles by 1 million barrels a day in the fourth- quarter when they usually decline, the group said.
Oil reached a record $78.40 on July 14, on concern global capacity was insufficient to replace lost output if Israel's attach on Hezbollah forces in Lebanon sparked a larger conflict in the Middle East, source of a third of the world's oil.
Prices have fallen 25 percent since as the conflict ended and stockpiles rose. Oil reached a 10-month low of $57.22 on Oct. 12 and has traded above $60 on only two days since.
``It's been trading somewhat side-ways for the last couple of weeks,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``If OPEC wasn't making these statements on production it would have gone much lower.''
Inventories Rising
An Energy Department report later today will probably show the nation's above-average crude oil stockpiles rose for a third straight week, based on a Bloomberg News survey of 14 analysts.
U.S. crude oil inventories held 330.5 million barrels on Oct. 6, 14 percent higher than the five-year average.
Supplies probably gained 1.5 million barrels last week, based on the median of forecasts by 15 analysts. Refinery utilization probably fell a fourth week to a five-month low of 88.8 percent as plant operators took advantage of weak pre- winter demand to carry out maintenance.
Supplies of distillate fuel, a category that includes heating oil and diesel, probably declined 800,000 barrels from 149.9 million the prior week. Ten analysts expected a decline, three forecast a gain and two said that supplies were unchanged.
Analysts were split on whether gasoline stockpiles rose or fell last week. Supplies probably dropped 200,000 barrels from 215.4 million the week before. Eight of the analysts said inventories fell, five expected that supplies rose and two forecast no change.
The Energy Department is scheduled to release its weekly report on petroleum inventories today at 10:30 a.m. in Washington.
Industrial production in the U.S., which uses about a quarter of the world's oil, fell 0.6 percent in September after being unchanged in August, the Federal Reserve said yesterday. Economists had expected a 0.1 percent decline.
To contact the reporters on this story: Hector Forster in Tokyo at hforster@bloomberg.net .
madrose1
18 years ago
Crude Oil Rises ($59) for a Third Day as OPEC Discusses Output Cut
By Hector Forster
Oct. 16 (Bloomberg) -- Crude oil rose for a third day in New York on concern OPEC members will reduce production further to stem a decline in prices in the past two months.
The Organization of Petroleum Exporting Countries, producer of 40 percent of the world's oil, will meet in Qatar on Oct. 19 to discuss falling oil prices and a proposed output cut, the group's acting secretary general Mohammed Barkindo said yesterday.
Crude oil for November delivery rose as much as 38 cents, or 0.7 percent, to $58.95 a barrel in after-hours trading on the New York Mercantile Exchange. It was at $58.85 a barrel at 6:17 a.m. Singapore time. The contract gained 71 cents, or 1.2 percent, to close at $58.57 a barrel on the New York Mercantile Exchange on Oct. 13.
OPEC still hasn't decided whether to make a proposed 1 million-barrel-a-day cut in output from the group's actual production or its quota. The group's 10 members with quotas pumped 27.6 million barrels a day last month, according to Bloomberg data. OPEC's official production ceiling, which excludes Iraq's output, is 28 million barrels a day.
OPEC members will meet in Doha, Qatar, to discuss one item on their agenda, which is a proposal to cut 1 million barrels a day from the group's actual production, Qatar Oil Minister Abdulla bin Hamad al-Attiyah said in a statement to state-run Qatar News Agency yesterday.
Crude oil also rose on Oct. 13 after Norway shut two offshore platforms for safety precautions. Statoil ASA and Royal Dutch Shell Plc today began closing the rigs, which represent almost 10 percent of output of the nation, the world's third- largest crude exporter.
Statoil and Shell are halting output of about 280,000 barrels daily at the Snorre A platform in the North Sea and Draugen in the Norwegian Sea. Norway's Petroleum Safety Authority ordered the closures because tests found that one type of lifeboat is not strong enough to be dropped from the platforms to the sea, affecting the ability to evacuate in emergencies.
Norway denied Statoil's and Shell's applications for exemptions from the regulations yesterday, though both companies continued to produce oil and natural gas.
To contact the reporter on this story: Hector Forster in Tokyo at hforster@bloomberg.net .
madrose1
18 years ago
Oil Is Little Changed After Rising on OPEC Plan to Trim Output
By Gavin Evans
Oct. 10 (Bloomberg) -- Crude oil was little changed in New York after rising yesterday on plans by six members of the Organization of Petroleum Exporting Countries to lower output.
Oil gave up much of yesterday's gain after OPEC said it won't meet to formalize the 1-million-barrel a day cut agreed by Saudi Arabia, Libya, Algeria, Kuwait, Venezuela and Nigeria. A U.S. government report later this week will probably show oil stockpiles in the world's biggest consumer rose for a second week amid slowing demand, according to a survey of analysts.
``The market rallied higher on the OPEC news but wasn't able to close above $60,' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``The crude oil market still looks bearish and seasonally it's still in a down-trend.'
Crude oil for November was at $59.85 a barrel, down 11 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:47 a.m. in Singapore.
The contract rose as much as 2.6 percent to $61.30 yesterday, a one-week high. Prices closed at $59.96, a 20-cent gain, after a spokesman for OPEC president Edmund Daukoru said the group won't meet to formalize the voluntary cuts.
``The rally was aborted on the statements from Daukoru's office,' John Kilduff, vice president of risk management at Fimat USA in New York, said yesterday. ``To the extent OPEC doesn't have its act together, any gains will be forfeited and the trend lower will resume.'
OPEC Output
OPEC produces about 40 percent of the world's oil and pumped 29.64 million barrels a day in September, down from 29.82 million barrels a day a month earlier, according to Bloomberg estimates.
The planned reduction represents a 3.4 percent cut from last month. OPEC agreed at a meeting on Sept. 11 to leave a production quota ceiling for 10 of its members unchanged at 28 million barrels a day. Since the meeting, the group's so-called basket oil price dropped about 9 percent to $55.13 a barrel
``I think OPEC is serious,' Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago, said yesterday. ``There are fears that if prices fall too much further they'll be unable to staunch the decline.'
Oil futures reached their all-time high of $78.40 on July 14 on concern that fighting in Lebanon between Israel and the Islamic militia Hezbollah, which was supported by Iran, would spread through the Middle East. Prices fell to $57.75 a barrel on Oct. 4, the lowest since Feb. 16.
Yesterday's rally was supported by concern North Korea's claim to have tested a nuclear weapon may heighten tensions in northern Asia. U.S. President George W. Bush yesterday condemned North Korea for its ``provocative' announcement and urged the United Nations to take quick, decisive action.
North Korea
``The North Korean news won't have any effect on oil supplies but is helping push prices higher,' Frank Verrastro, director of the Center for Strategic and International Studies energy program in Washington, said yesterday. ``Prices rose to records on Hezbollah and that didn't have any impact on supply either.'
Oil prices have fallen 19 percent the past two months as U.S. oil and fuel stockpiles rose and demand eased with the passing of the summer vacation driving season.
Average U.S. daily demand for oil products fell 2.3 percent to 20.23 million barrels a day in the week ended Sept. 29, the lowest in seven months and the sixth straight decline, according to Energy Department data.
``The market is possibly going to head down into the mid- fifties,' Altavest's Sander said. ``The inventories should be positive for the bears.'
U.S. crude oil inventories held 328.1 million barrels on Sept. 29, 13 percent above the five-year average for the period, the department said last week.
The department's next report on Oct. 12 will probably show oil stockpiles gained another 1.5 million barrels last week, according to a Bloomberg News survey of 11 analysts.
Distillate inventories, including diesel and heating oil, were probably unchanged. They held 151.5 million barrels on Sept. 29, 19 percent above the five-year average.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
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