Current Oil Price

[SunnyJim]

If oil output is cut as the demand drops then we may not see the drop that is expected.

Surely you've got cart afore t'horse there.

Peak Oil says we can't produce at a faster rate so, insofar as we don't take conservation or renewables seriously, the economy can't grow. What we notice is the banks going bust since they depend on an economy addicted to growth. Price changes ensure that demand and supply are alwasy in step but the failures of the market to see the signals means a bumpy ride on the plateau as growth comes to a halt and bigger bumps still on the PO downslope.

Sorry, I meant price drop. We won't see the price drop expected if OPEC drop oil production 'ahead of the curve' keeping stocks low and supply tight. This could keep oil prices above $80.

Also price changes aren't currently keeping supply and demand in step. OPEC are doing that. If it was up to price we'd be swimming in crude! This is because much of the price is due to the 'commodity investment bubble'. Supply and demand can be very much distorted by investment. The rest I agree with.

[PS_RalphW]

I'm hearing that WTI went through $111 on a dire US stocks report. So much for demand destruction cutting the price... also the ? is at a record low against the Euro, so expect rising prices at a forecourt near you.

[Totally_Baffled]

I'm hearing that WTI went through $111 on a dire US stocks report. So much for demand destruction cutting the price... also the ? is at a record low against the Euro, so expect rising prices at a forecourt near you.

Stocks still seem quite healthy? Have imports dropped in line with demand? Or have imports remained steady but demand has remained robust?

In other words have imports slowed because of rising stocks? Maybe gasoline production has slowed due to inventories rather than physical shortage of crude?

[PS_RalphW]

The rebound was because all figures, crude, petrol, distillates, others, all fell from last week, when the 'market analysts' had expected some of them to rise. In practice this is statistical noise, because the data is just too inaccurate on a weekly basis, but the market panics.

The real reason for the recent price run-up is a global shortage of distillates (diesel and heating oil). Crude stocks remain 'normal' because US refineries are cutting back production. The US petrol demand is suffering, and the refineries can't turn a profit on the margins. They are leaving the oil in the tanks and waiting for the petrol price to rise (which it is now doing).

[RevdTess]

Crude Imports were down over 1 million barrels per day.

Ironically, while the DOE published a 3m barrel draw in Crude stocks, the alternative API reported a 6m build. So...

Anyway, crude, diesel, gasoline inventories all down, so, price up.

[Totally_Baffled]

Crude Imports were down over 1 million barrels per day.

Ironically, while the DOE published a 3m barrel draw in Crude stocks, the alternative API reported a 6m build. So...

Anyway, crude, diesel, gasoline inventories all down, so, price up.

A further irony is that if inventories were 10% lower, but grew last week the price would of probably gone down! LOL

[Vortex]

I had expected any drastic drop to say $80 to have happened by now ... so perhaps this $100+ level is in fact a new stable region?

[RevdTess]

New all time WTI high 112.20, still pushing up

[Andy Hunt]

Blimey . . . speculators again?

[SunnyJim]

Read this!!! The most bearish Peak Oil article from the FT yet.

http://www.ft.com/cms/s/0/e7700bd0-0010 ... 07658.html

Say's we're in the shite. Export land model in action here?

<snip>
......
In spite of rising inventories, vanishing capacity makes current total stocks so small that the increase in oil prices is the necessary result of market fundamentals.

Therefore, oil prices will remain high and might continue to break records this summer, regardless of capacity expansion in Opec members and regardless of talk about ?peak oil?.

Our focus should be on exports from the oil producing countries, especially from the Gulf region, not on production or capacity increases. Capacity might increase, but exports could well decline. Why?

Economic growth, population growth, and urbanisation in the Gulf have increased demand for electricity to the extent that power shortages will be the norm in the next few years. Power shortages and inadequate generation capacity have delayed several development projects, industrial plants, and other construction projects in several Gulf cities. A large number of housing towers stand empty in some Gulf cities for lack of electricity.

It is not ?peak oil? that is fuelling the current increase in oil prices, it is ?peak power?. Sadly, the whole world will pay for these power shortages in the form of higher oil and gas prices. A heat wave this summer would force countries in the Gulf region to divert natural gas from use in the oil fields to power plants during peak demand. This, in turn, will reduce oil production and crimp exports. Countries that use water injection will divert crude oil from exports and burn it directly in power plants.

The result is a decrease in exports ? and an environmental disaster. Let us remember that there is no additional natural gas in the region. All natural gas, including gas from unfinished projects, has been allocated. Let us also note that these countries have started importing fuel oil for power plants. Such imports have become expensive and put strains on the world refining markets. In short, even building more power plants will not solve the problem. There is no gas for these plants.

One final complication: diverting crude from exports will lower government revenues, which are used in part to finance these plants!

One fact is clear: If Opec had excess capacity, it could flush out speculators, lower oil prices, and help the ailing dollar, thereby helping itself by increasing production.

To conclude: Let us forget about ?peak oil? for now and focus on the more immediate crisis: ?peak power?.

[RevdTess]

So this is how history will tell it, eh. "We never reached peak oil, but we needed the reinjection gas for power generation, so oil supplies fell and never recovered.

[SunnyJim]

Doesn't really matter does it? I mean what matters is that the message that we are going to have less oil in the coming years is going to get out there. Of course if they had lots of easy oil left, they wouldn't need all that gas etc to raise capacity.

If Saudi play their cards right they'll be getting subsidised gas next! Imagine if Russia were to cut a deal with Saudi where Saudi get gas to fuel their power stations and Russia get first dibs on the oil that they could use to bargain with the rest of the world! Eeekk!

Iran of course has lots of gas. Must be a big temptation for the US to get in there and control the gas, so that they could do the same. Provide gas to Saudi for electricity production in return for first dibs at the oil.... Who knows? Maybe that's what this was all about?

[clv101]

The global economic crisis is being blamed by everyone on the "Credit Crunch". Some unexpected, freak, external influence. If it weren?t for the credit crunch, everything would be fine and one it's over (not too long now) it'll be back to normal.

I expect exactly the same will happen with peak oil. The first couple of years that all liquids are down there will be something nice and specific to blame. Some single, unexpected, freak geopolitical action... and when we get over it all will be well again.

[SunnyJim]

But to be fair, much of the worlds financial problems are being caused by the credit crunch! If you're asking what caused the credit crunch, then that's a different matter.

Peak oil is even more hidden. The consumer (and economys at large) observe rising prices for gas, petrol, diesel, heating oil, food etc. If you ask why that is you find that oil exports from producing countries have fallen. If you ask why that is you find that it is due to lack of investment in capacity, if you ask why that is you might just find that no-one wants to invest because the oil that's left is going to cost a heap to get at and we need huge price rises to justify the investment...... that's alot of questions to ask....

So in the same way that observers of the credit crunch are only just coming round to question the deregulation of lending and the ability to sell debt 'off balance sheet', so it will take mainstream media along time to get round to asking 'why is there a lack of investment in capacity'?

[emordnilap]

Hmmm...heading for $120.