The United States is too reliant on foreign oil and should expand domestic drilling, Sen. Lisa Murkowski, R-Alaska, said in the party's weekly address Saturday.
The average price for a gallon of regular gas in the country has risen by 40 cents to $3.50 in the past month, and Murkowski, the lead Republican member of the Senate Energy and Natural Resources Committee, said President Barack Obama's Democrats needed to take action.
"If energy prices keep climbing, our nation could slip back into recession just as we're finally emerging from the last one," Murkowski said.
She called for a loosening of a moratorium on deep-water drilling Obama imposed after last year's Gulf of Mexico oil spill.
"America now imports 11 million barrels of oil every day," she said. "Last year alone, we spent more than $330 billion on foreign oil, much of it in countries that are not our friends.
"Republicans know that it's past time to produce more of America's oil."
Source
Showing posts with label Oil Demand. Show all posts
Showing posts with label Oil Demand. Show all posts
Saturday, March 12, 2011
Wednesday, October 20, 2010
Goldman Sachs (NYSE:GS) Sees Oil Prices Rising on Weak Dollar, Higher Demand
While oil prices could continue trading between $70 to $80 a barrel for the remainder of 2010, Goldman Sachs (NYSE:GS) sees oil prices rising to the $100 a barrel range by the end of 2011.
Reasons cited were the weakening U.S. dollar and stronger oil demand that originally believed.
One thing that could hinder that assertion would be the recession continuing on into 2011, which could decrease demand levels, along with oil prices.
An analyst at Goldman believes the $100 a barrel mark could be reached sooner rather than later.
If the economy actually begins to improve, existing constraints could be removed and oil prices begin to surge.
Reasons cited were the weakening U.S. dollar and stronger oil demand that originally believed.
One thing that could hinder that assertion would be the recession continuing on into 2011, which could decrease demand levels, along with oil prices.
An analyst at Goldman believes the $100 a barrel mark could be reached sooner rather than later.
If the economy actually begins to improve, existing constraints could be removed and oil prices begin to surge.
Monday, September 27, 2010
JPMorgan (NYSE:JPM) Sees $90 Oil by End of 2010
JPMorgan (NYSE:JPM) said the price of oil by the end of 2010 should reach close to $90 a barrel.
Data perceived as positive for the economy is partly driving the outlook, but probably the weak U.S. dollar is the main catalyst, as the commitment by the Federal Reserve to interfere in the economy if it remains weak a a major driver as well, which is part of the loss of value of the dollar.
One possible thing that could derail the higher price is if consumers continue to hold back on traveling and spending, which could cause demand to go down and inventories to go up, which could push oil prices down to lower levels than expected.
For Friday, in afternoon trade West Texas Intermediate crude for November contracts was up to $76.35 a barrel, gaining $1.17 on the New York Mercantile Exchange.
Data perceived as positive for the economy is partly driving the outlook, but probably the weak U.S. dollar is the main catalyst, as the commitment by the Federal Reserve to interfere in the economy if it remains weak a a major driver as well, which is part of the loss of value of the dollar.
One possible thing that could derail the higher price is if consumers continue to hold back on traveling and spending, which could cause demand to go down and inventories to go up, which could push oil prices down to lower levels than expected.
For Friday, in afternoon trade West Texas Intermediate crude for November contracts was up to $76.35 a barrel, gaining $1.17 on the New York Mercantile Exchange.
Wednesday, March 10, 2010
Crude Oil Futures Up
Crude Oil Futures
After a report from the U.S. Energy Information Administration that gasoline stocks had fallen last week by 2.9 million barrels, the price of crude oil shot up as high as $83.03 a barrel, its highest levels since early January.
The benchmark contract settled to $80.96 as the day went on, a decrease of 0.5 percent a barrel.
Other news affecting the price of oil was the announcement from OPEC that crude demand per day would rise by over 190,000 barrels a day over its previous estimate of 28.94 million barrels a day.
Crude Oil Futures
After a report from the U.S. Energy Information Administration that gasoline stocks had fallen last week by 2.9 million barrels, the price of crude oil shot up as high as $83.03 a barrel, its highest levels since early January.
The benchmark contract settled to $80.96 as the day went on, a decrease of 0.5 percent a barrel.
Other news affecting the price of oil was the announcement from OPEC that crude demand per day would rise by over 190,000 barrels a day over its previous estimate of 28.94 million barrels a day.
Crude Oil Futures
Tuesday, February 3, 2009
Oil Refinery Workers New Labor Contract
Union negotiators for oil refinery workers have tentatively agreed to a new contract which represents approximately 24,000 union members.
The new contract deals with labor issues like wage and benefit levels, which the details of the agreement weren't released.
If there had been a strike, it would have affected up to 10 percent of the overall refining capacity in America's oil industry. Other reports say the strike could have affected close to two-thirds of the capacity to make fuels in general, gasoline and diesel.
Details of the oil refinery workers deal will be released sometime on Wednesday by their representatives of the United Steelworkers union. Signing off on the deal was the National Oil Policy Committee, which still has to be ratified by local union units.
Some of the large oil and gas companies that would have been affected by the strike were Exxon Mobil (nyse:XOM), Royal Dutch Shell (nyse: RDSA), BP (nyse:BP) PLC, Valero (nyse:VLO), and Chevron (nyse:CVX), of close to 60 oil producers in general.
Besides higher wages, other issues being negotiated for the oil refinery workers were cost-of-living increases and full benefits for medical, dental and vision; both for current and retired oil workers.
The deal was worked out with Shell Oil, which will also be extended to the other plants, including Valero Energy Corp., Exxon Mobil Corp., Chevron and BP Plc. The deal, if approved, will keep up to six refinery plants from closing, and about 1.7 barrels a day from going off line.
Some of the known parts of the contract are a three percent raise for each of the three years of the contract, along with a signing bonus of $2,500 if it is approved before February 16.
Fuel and oil demand has fallen so much that the refineries have slowed production after falling prices put downward pressure on margins. Oil processors have had a record number of days of making gasoline at a loss, measured by futures prices.
The two largest refiners in America, ConocoPhillips and Valero were leading the fuel production cut in oil refinery output.
Gas prices had surged by 10 percent last week as the possibility of a strike loomed over the oil and oil refinery industry.
On the New York Mercantile Exchange, gasoline for March delivery increased 1.68 cents to $1.166 a gallon. Gas prices across the nation grew to $1.89 a gallon according to AAA.
Now that a strike is probably averted, we should see a corresponding fall in gasoline prices as demand continues to fall.
If things do change economically, this new contract could be a diaster for union members, as higher operating costs through increased wages and benefits could put many oil refinery workers out of a job in the months ahead. But that's how unions always work, as they overreach and cause loss of jobs, while benefitting only some of the members.
For the week ending January 16, oil refinery production had operated at 82.5 percent of capacity, down significantly from the 85.2 percent the week before. It'll a long time before gas and oil demand increase in any major way.
Motorists in the U.S. continue to drive much less, as for the second year they've driven at a lower rate than the previous year. According to the Federal Highway Administration, vehicle miles have plunged by 5.3 percent or 12.9 billion miles. We should see that continue on, and oil refineries operating at even less capacity before it turns around.
The new contract deals with labor issues like wage and benefit levels, which the details of the agreement weren't released.
If there had been a strike, it would have affected up to 10 percent of the overall refining capacity in America's oil industry. Other reports say the strike could have affected close to two-thirds of the capacity to make fuels in general, gasoline and diesel.
Details of the oil refinery workers deal will be released sometime on Wednesday by their representatives of the United Steelworkers union. Signing off on the deal was the National Oil Policy Committee, which still has to be ratified by local union units.
Some of the large oil and gas companies that would have been affected by the strike were Exxon Mobil (nyse:XOM), Royal Dutch Shell (nyse: RDSA), BP (nyse:BP) PLC, Valero (nyse:VLO), and Chevron (nyse:CVX), of close to 60 oil producers in general.
Besides higher wages, other issues being negotiated for the oil refinery workers were cost-of-living increases and full benefits for medical, dental and vision; both for current and retired oil workers.
The deal was worked out with Shell Oil, which will also be extended to the other plants, including Valero Energy Corp., Exxon Mobil Corp., Chevron and BP Plc. The deal, if approved, will keep up to six refinery plants from closing, and about 1.7 barrels a day from going off line.
Some of the known parts of the contract are a three percent raise for each of the three years of the contract, along with a signing bonus of $2,500 if it is approved before February 16.
Fuel and oil demand has fallen so much that the refineries have slowed production after falling prices put downward pressure on margins. Oil processors have had a record number of days of making gasoline at a loss, measured by futures prices.
The two largest refiners in America, ConocoPhillips and Valero were leading the fuel production cut in oil refinery output.
Gas prices had surged by 10 percent last week as the possibility of a strike loomed over the oil and oil refinery industry.
On the New York Mercantile Exchange, gasoline for March delivery increased 1.68 cents to $1.166 a gallon. Gas prices across the nation grew to $1.89 a gallon according to AAA.
Now that a strike is probably averted, we should see a corresponding fall in gasoline prices as demand continues to fall.
If things do change economically, this new contract could be a diaster for union members, as higher operating costs through increased wages and benefits could put many oil refinery workers out of a job in the months ahead. But that's how unions always work, as they overreach and cause loss of jobs, while benefitting only some of the members.
For the week ending January 16, oil refinery production had operated at 82.5 percent of capacity, down significantly from the 85.2 percent the week before. It'll a long time before gas and oil demand increase in any major way.
Motorists in the U.S. continue to drive much less, as for the second year they've driven at a lower rate than the previous year. According to the Federal Highway Administration, vehicle miles have plunged by 5.3 percent or 12.9 billion miles. We should see that continue on, and oil refineries operating at even less capacity before it turns around.
Sunday, January 25, 2009
Oil: OPEC Production Cuts
OPEC countries are under increasing pressure to cut oil production as oil prices aren't able to prop up the many countries so reliant on higher prices to take care of their needs.
It's not a stretch to say the leaders of oil producing countries will have their hands full as people start to get edgy over consequences of low prices.
In reality, there's not much OPEC and other oil producing countries can do about it, as the economic crisis has lowered demand for oil, and no matter how far oil production is cut, it's not going to get people to spend their money on gas they're not going to use.
Cutting oil production will only cause people to travel even less, undercutting the very strategy attempted by countries to prop up their crude prices.
If oil prices rise than there will be a high cost of oil that will sit there not being used, as people continue to save rather than spend their money.
Oil storage and reserves are growing while consumers hold back from buying, that isn't going to change for OPEC or oil companies. The oil industry can cut production, and it has already, but that won't solve the problem the market has already decided.
All that corporations and countries should do is get out of the way and let the market figure it out. Intervention into the oil market will cause unintended consequences as government interference always does, and only prolong the economic pain for everyone.
There is nothing driving the oil markets, prices, supply, costs, drilling and production other than consumer demand. Nothing can be done to change that until the economic crisis ends and then money flowing back into consumer goods and services.
The oil industry can only stand by and watch, cut cost, get leaner, and prepare for when the turnaround in the oil market comes.
This will be essential for the industry, as once demand rises, there will probably be a huge surge in buying as pent up demand explodes. Oil companies and refineries need to be ready for that time, as they'll soon forget the bad oil news of today and their profits will again surge ahead.
Oil exploration is another important factor in the mix, as there is plenty of oil out there, and the demand will come back stronger than ever as America, China and other nations will return to their insatiable appetites for oil that they had in the recent past.
So OPEC and oil companies just need to relax a bit. Yes there's problems related to low oil prices, but forcing the issue in attempts to artificially raise the price of oil above market levels never works.
We just have to wait out the tough times and wait for oil demand to rebound.
It's not a stretch to say the leaders of oil producing countries will have their hands full as people start to get edgy over consequences of low prices.
In reality, there's not much OPEC and other oil producing countries can do about it, as the economic crisis has lowered demand for oil, and no matter how far oil production is cut, it's not going to get people to spend their money on gas they're not going to use.
Cutting oil production will only cause people to travel even less, undercutting the very strategy attempted by countries to prop up their crude prices.
If oil prices rise than there will be a high cost of oil that will sit there not being used, as people continue to save rather than spend their money.
Oil storage and reserves are growing while consumers hold back from buying, that isn't going to change for OPEC or oil companies. The oil industry can cut production, and it has already, but that won't solve the problem the market has already decided.
All that corporations and countries should do is get out of the way and let the market figure it out. Intervention into the oil market will cause unintended consequences as government interference always does, and only prolong the economic pain for everyone.
There is nothing driving the oil markets, prices, supply, costs, drilling and production other than consumer demand. Nothing can be done to change that until the economic crisis ends and then money flowing back into consumer goods and services.
The oil industry can only stand by and watch, cut cost, get leaner, and prepare for when the turnaround in the oil market comes.
This will be essential for the industry, as once demand rises, there will probably be a huge surge in buying as pent up demand explodes. Oil companies and refineries need to be ready for that time, as they'll soon forget the bad oil news of today and their profits will again surge ahead.
Oil exploration is another important factor in the mix, as there is plenty of oil out there, and the demand will come back stronger than ever as America, China and other nations will return to their insatiable appetites for oil that they had in the recent past.
So OPEC and oil companies just need to relax a bit. Yes there's problems related to low oil prices, but forcing the issue in attempts to artificially raise the price of oil above market levels never works.
We just have to wait out the tough times and wait for oil demand to rebound.
Tuesday, January 13, 2009
OPEC Export Revenue Dropping to Lowest Level in Five Years
Lower oil prices will cause export revenue for the Organization of the Petroleum Exporting Countries (OPEC) to drop to their lowest level in five years, according to the U.S. Energy Information Administration.
Most of the assertions of OPEC can only be taken with a grain of salt, as there's never full compliance by member nations, and the EIA confirms they're looking at only about half the projected cuts will in reality be made, which recently were decreased to a wishful 4.2 million barrels a day.
That leads them to project revenue for OPEC countries will be down by about $57 billion from last month's numbers, with overall revenue for the year reaching an estimated $387 billion.
Further out in 2010, there should be an increase to about $526 billion, still far below the $972 billion in revenue generated in 2008.
Taking into account the projections made when oil hit the record $147 a barrel during the summer, which were at $1.3 trillion for 2009, this is an extraordinary challenge for the OPEC countries which rely so much on the revenue to keep their countries stabilized.
Most of the assertions of OPEC can only be taken with a grain of salt, as there's never full compliance by member nations, and the EIA confirms they're looking at only about half the projected cuts will in reality be made, which recently were decreased to a wishful 4.2 million barrels a day.
That leads them to project revenue for OPEC countries will be down by about $57 billion from last month's numbers, with overall revenue for the year reaching an estimated $387 billion.
Further out in 2010, there should be an increase to about $526 billion, still far below the $972 billion in revenue generated in 2008.
Taking into account the projections made when oil hit the record $147 a barrel during the summer, which were at $1.3 trillion for 2009, this is an extraordinary challenge for the OPEC countries which rely so much on the revenue to keep their countries stabilized.
Monday, January 12, 2009
Arbitrage Opportunity as"Super Contango" Spurs Stockpiling of Oil
In what is called a "super contango," oil producers and refiners are storing up crude oil in record amounts in expectation that prices will surge in the summer months.
While a contango is the usual for oil markets, where up to a several-month gap between the current price of the delivery of oil is lower than that in the spring and summer. What insiders call a super contango, is when that spread of time lengthens beyond the norm, like it is at this time.
The spread in price is measured by the costs of oil storage versus tying up the money of investors.
February delivery of crude fell to $37.59 a barrel on the NYMEX, almost $15 less than the contract price for July. That's much farther out than usual, and so dubbed a super contango.
For the New York Mercantile Exchange, their delivery apex is in Cushing, Oklahoma, where inventory is up by over 40 percent for the month ending January 2. It's been 4 years since it held that much oil.
Overall, U.S. inventories for oil storage has increased 6.7 million barrels for the week ending January 2, ending at 325.4 million.
This contango period is expected to lengthen even more, and so Cushing could potentially fill to their capacity of 42.4 million barrels, although only about 80 percent of that capacity is operable storage space.
Some companies are leasing oil tankers at sea, as storage space is getting more difficult to find.
In an effort to cut costs, a number of American manufacturers started to cut spending on fuel in an move to manage the bottom line, which could also have a significant impact on storage.
What all this means as far as investors go, is it's a potentially lucrative arbitrage opportunity, as the decision to store oil at these prices for possible large profits in the future is the financial impetus behind all this.
What oil investors can do with this large of a spread, is buy up a January Oil contract and take physical delivery of the oil and store it, and then sell the higher-priced February contract at the same time.
With almost no risk involved, it's definitely something to look into quickly for just about guaranteed profits.
The ICE Futures exchange in London had Brent crude for February dropping by $1.51 to end the session at $42.91 a barrel.
On Wednesday, we'll get a better look at oil stockpiles from the weekly energy report.
While a contango is the usual for oil markets, where up to a several-month gap between the current price of the delivery of oil is lower than that in the spring and summer. What insiders call a super contango, is when that spread of time lengthens beyond the norm, like it is at this time.
The spread in price is measured by the costs of oil storage versus tying up the money of investors.
February delivery of crude fell to $37.59 a barrel on the NYMEX, almost $15 less than the contract price for July. That's much farther out than usual, and so dubbed a super contango.
For the New York Mercantile Exchange, their delivery apex is in Cushing, Oklahoma, where inventory is up by over 40 percent for the month ending January 2. It's been 4 years since it held that much oil.
Overall, U.S. inventories for oil storage has increased 6.7 million barrels for the week ending January 2, ending at 325.4 million.
This contango period is expected to lengthen even more, and so Cushing could potentially fill to their capacity of 42.4 million barrels, although only about 80 percent of that capacity is operable storage space.
Some companies are leasing oil tankers at sea, as storage space is getting more difficult to find.
In an effort to cut costs, a number of American manufacturers started to cut spending on fuel in an move to manage the bottom line, which could also have a significant impact on storage.
What all this means as far as investors go, is it's a potentially lucrative arbitrage opportunity, as the decision to store oil at these prices for possible large profits in the future is the financial impetus behind all this.
What oil investors can do with this large of a spread, is buy up a January Oil contract and take physical delivery of the oil and store it, and then sell the higher-priced February contract at the same time.
With almost no risk involved, it's definitely something to look into quickly for just about guaranteed profits.
The ICE Futures exchange in London had Brent crude for February dropping by $1.51 to end the session at $42.91 a barrel.
On Wednesday, we'll get a better look at oil stockpiles from the weekly energy report.
Friday, January 9, 2009
Oil Prices Continue to Drop on Slowing Demand
Crude Oil for February delivery ended the session at $40.83, a decline of 87 cents, or 2.1 percent. Prices fell as low as $39.38 on the New York Mercantile Exchange during the day.
So far the announcements and compliance of OPEC nations in cutting production hasn't been a factor in determining the prices of crude. Demand continues to be the main driver of prices, rather than supply.
Many investors fled the sector Friday, fleeing from energy companies in droves.
Energy sector watchers now think the announcement of oil service behemoth Schlumberger (SLB) that they are going to cut 1,000 jobs in the U.S., along with overseas workers as well, is the beginning of further cuts in the industry. Halliburton (HAL) also said they're going to be laying off workers too.
To add fuel to the fire, Chevron (CVX) issued a warning today that their fourth-quarter results were going to be "significantly lower" than the heady third quarter's results. While that's not a surprise, combining those elements together shook up energy investors today.
This is going to be the wave of the near term, and the companies are going to suffer dramatically in contrast to recent success.
So far the announcements and compliance of OPEC nations in cutting production hasn't been a factor in determining the prices of crude. Demand continues to be the main driver of prices, rather than supply.
Many investors fled the sector Friday, fleeing from energy companies in droves.
Energy sector watchers now think the announcement of oil service behemoth Schlumberger (SLB) that they are going to cut 1,000 jobs in the U.S., along with overseas workers as well, is the beginning of further cuts in the industry. Halliburton (HAL) also said they're going to be laying off workers too.
To add fuel to the fire, Chevron (CVX) issued a warning today that their fourth-quarter results were going to be "significantly lower" than the heady third quarter's results. While that's not a surprise, combining those elements together shook up energy investors today.
This is going to be the wave of the near term, and the companies are going to suffer dramatically in contrast to recent success.
Tuesday, December 30, 2008
Crude Oil Poised for First Annual Decline in Seven Years
With consumers tightening their wallets over economic concerns, crude oil will suffer its first annual decline in seven years, as supplies rise over decreasing demand.
On the New York Mercantile Exchange, prices fell 99 cents for February delivery of crude oil, settling at $39.03 a barrel. Earlier in the day it fell below $38 a barrel. So far this year oil prices are down by 59 percent.
Crude-oil inventory fell last week by 1.45 million barrels, while on the other hand, according to analysts' estimates, gasoline stockpiles are rising, with projections of an extra 1.7 million barrels added for the week ending December 26.
Also increasing were heating oil, diesel, and other distillate fuel supplies, adding 1.5 million barrels to the inventory.
On London's ICE Futures Europe exchange, Brent crude oil fell by 40 cents to end the session at $40.15 a barrel.
I don't see anything changing the primary fundamental of declining oil demand changing any time soon, and that should be the key element to watch with oil, barring any geopolitical problems that may unfold.
On the New York Mercantile Exchange, prices fell 99 cents for February delivery of crude oil, settling at $39.03 a barrel. Earlier in the day it fell below $38 a barrel. So far this year oil prices are down by 59 percent.
Crude-oil inventory fell last week by 1.45 million barrels, while on the other hand, according to analysts' estimates, gasoline stockpiles are rising, with projections of an extra 1.7 million barrels added for the week ending December 26.
Also increasing were heating oil, diesel, and other distillate fuel supplies, adding 1.5 million barrels to the inventory.
On London's ICE Futures Europe exchange, Brent crude oil fell by 40 cents to end the session at $40.15 a barrel.
I don't see anything changing the primary fundamental of declining oil demand changing any time soon, and that should be the key element to watch with oil, barring any geopolitical problems that may unfold.
Thursday, December 18, 2008
Oil Plunges to Lowest Level in Four Years
Today on the New York Mercantile Exchange, oil fell to its lowest level in four years, dropping to $36.22 at the end of the trading day. That was a 9.6 percent or $3.84 plunge per barrel for January delivery.
While trading volume was higher for February, it still fell $2.94 to finish the session at $41.67 a barrel on the NYMEX.
OPEC is of course panicking at the potential unrest that will inevitably come if prices continue to fall, and so cut production by another 4.2 billion more barrels a day on Wednesday, but that hasn't impressed traders much, as assertions and practical cooperation are two different things. Many countries say they'll participate in cutbacks historically, but full cooperation rarely, if ever, happens.
Price is the driving force behind the decline, as economic weakness is causing consumers to cut back on driving. If prices were to go higher at this time, consumers would simply cut back more. It's not a good time for OPEC, and it could become an even more dangerous situation going forward in a number of the countries that are part of the organization.
It'll be difficult to develop a supply/demand balance going forward, as economic uncertainty and the unknown continue to hamper stability. Whenever that becomes stable, the price range is expected to flucuate by around $15 a barrel.
January gasoline on Globex also moved down with oil, as prices drooped 5 cents to finish at 92 cents a gallon. Heating oil followed suit, ending down by 7 cents to $1.37 a gallon.
While trading volume was higher for February, it still fell $2.94 to finish the session at $41.67 a barrel on the NYMEX.
OPEC is of course panicking at the potential unrest that will inevitably come if prices continue to fall, and so cut production by another 4.2 billion more barrels a day on Wednesday, but that hasn't impressed traders much, as assertions and practical cooperation are two different things. Many countries say they'll participate in cutbacks historically, but full cooperation rarely, if ever, happens.
Price is the driving force behind the decline, as economic weakness is causing consumers to cut back on driving. If prices were to go higher at this time, consumers would simply cut back more. It's not a good time for OPEC, and it could become an even more dangerous situation going forward in a number of the countries that are part of the organization.
It'll be difficult to develop a supply/demand balance going forward, as economic uncertainty and the unknown continue to hamper stability. Whenever that becomes stable, the price range is expected to flucuate by around $15 a barrel.
January gasoline on Globex also moved down with oil, as prices drooped 5 cents to finish at 92 cents a gallon. Heating oil followed suit, ending down by 7 cents to $1.37 a gallon.
Tuesday, November 11, 2008
Crude Drops Below $59 a Barrel as Demand Expectations Continue to Fall
Healthy assumptions that the International Energy Agency (IEA) will lower its forecast for oil demand in 2009, again drove crude oil prices down, as it settled at $59.33 barrel; it's lowest close since March 2007.
A number of factors, including the increasing strength of the U.S. dollar and the anemic equity markets continue to put downward pressure on energy prices.
So far the original 2008 forecast has been revised downward seven times this year, dropping usage by close to 1.3 million barrels a day.
Gasoline prices are mirroring the crude price drop, as regular gasonline across the U.S. dropped to an average of $2.22 a gallon, said the AAA.
On London's ICE Futures Europe exchange, Brent crude oil fell $3.37 for December delivery, settling at $55.71 a barrel.
A number of factors, including the increasing strength of the U.S. dollar and the anemic equity markets continue to put downward pressure on energy prices.
So far the original 2008 forecast has been revised downward seven times this year, dropping usage by close to 1.3 million barrels a day.
Gasoline prices are mirroring the crude price drop, as regular gasonline across the U.S. dropped to an average of $2.22 a gallon, said the AAA.
On London's ICE Futures Europe exchange, Brent crude oil fell $3.37 for December delivery, settling at $55.71 a barrel.
Sunday, November 9, 2008
Will Global Oil Demand Contract in 2009?
A number of energy analysts are asserting that global oil demand for 2009 will contract for the first time in 26 years.
If this were to happen, it would pretty much depend upon the depth the economic crisis goes and reaches.
The major emerging market economies (BRIC) are expected to decline in growth from between 2 percent to 3.5 percent, but will still remain in the positive, if projections are accurate.
More significant as far as oil contraction goes, is whether demand in the U.S. can fall to the point where it becomes a factor. with oil and gas prices falling so much in the recent months, it's difficult to see this continuing to the point of it going into negative territory.
Still, it's unknown at this time how deep the economic crisis will go, and there is definitely the possibility oil demand could contract with BRIC slowing down.
It remains to be seen if the increase in domestic gasoline demand in the U.S. last week is an anamoly, or if it's the beginning of increased use.
If this were to happen, it would pretty much depend upon the depth the economic crisis goes and reaches.
The major emerging market economies (BRIC) are expected to decline in growth from between 2 percent to 3.5 percent, but will still remain in the positive, if projections are accurate.
More significant as far as oil contraction goes, is whether demand in the U.S. can fall to the point where it becomes a factor. with oil and gas prices falling so much in the recent months, it's difficult to see this continuing to the point of it going into negative territory.
Still, it's unknown at this time how deep the economic crisis will go, and there is definitely the possibility oil demand could contract with BRIC slowing down.
It remains to be seen if the increase in domestic gasoline demand in the U.S. last week is an anamoly, or if it's the beginning of increased use.
Thursday, November 6, 2008
Weak Economy Continues to Put Downward Pressure on Oil Prices
Prices for oil dropped to near $60 a barrel Thursday, the lowest level in close to a year and a half.
With growing consensus showing we will be in for a long economic downturn, consumers are cutting back on everything but buying necessities, drying up oil demand.
The obvious effect of this is also to push gas prices down with oil, and that has many experts saying that could result in gas falling to $2 a gallon by the end of 2008. The AAA says overnight gas prices fell to $2.34 a gallon on average.
In just the last month average prices of gasoline have declined by close to 33 percent in the U.S.
Oil for December delivery settled at $60.77 a barrel on the New York Mercantile Exchange, a drop of $4.53 or 7 percent.
Brent Crude on the ICE Futures exchange in London fell $4.44, to settle at $57.43 for December delivery.
With growing consensus showing we will be in for a long economic downturn, consumers are cutting back on everything but buying necessities, drying up oil demand.
The obvious effect of this is also to push gas prices down with oil, and that has many experts saying that could result in gas falling to $2 a gallon by the end of 2008. The AAA says overnight gas prices fell to $2.34 a gallon on average.
In just the last month average prices of gasoline have declined by close to 33 percent in the U.S.
Oil for December delivery settled at $60.77 a barrel on the New York Mercantile Exchange, a drop of $4.53 or 7 percent.
Brent Crude on the ICE Futures exchange in London fell $4.44, to settle at $57.43 for December delivery.
Tuesday, October 28, 2008
Weak Demand Driving Oil Prices Down, Not Supply
While OPEC Secretary-General Abdalla el-Badri said the leaders of countries will definitely get together again if the recent daily cut of 1.5 million barrels in oil production doesn't curb plunging prices, it won't really matter, as it's not supply driving prices down, but demand.
Jittery consumers will continue to cut back on driving and traveling in response to the credit crisis and economic weakness.
"Until you see a change in economic sentiment, there won't be any sustained rallies in the oil market," said Kyle Cooper, an analyst at IAF Advisors in Houston. OPEC "can announce all the cuts they like and the market will ignore it."
Even if there is another meeting and decisions made to drop daily production more, it's doubtful all the countries would be willing or able to comply with the agreement anyway, which would do more harm to OPEC than help, as it would make it look even more desparate.
A number of OPEC countries are in great need for cash just like most countries around the world.
Gasoline usage dropped again last week, falling by 6.4 percent from the same period a year ago. Declining prices at the gas stations did nothing to jumpstart demand.
Crude oil closed down 49 cents today for December delivery, settling at $62.73 a barrel on the New York Mercantile Exchange.
In after-hour trading it rebounded some to $64.37 a barrel at about 4:00 EST.
On the London Ice Futures Europe exchange, Brent crude fell another $1.12, to settle at $60.29 a barrel.
Jittery consumers will continue to cut back on driving and traveling in response to the credit crisis and economic weakness.
"Until you see a change in economic sentiment, there won't be any sustained rallies in the oil market," said Kyle Cooper, an analyst at IAF Advisors in Houston. OPEC "can announce all the cuts they like and the market will ignore it."
Even if there is another meeting and decisions made to drop daily production more, it's doubtful all the countries would be willing or able to comply with the agreement anyway, which would do more harm to OPEC than help, as it would make it look even more desparate.
A number of OPEC countries are in great need for cash just like most countries around the world.
Gasoline usage dropped again last week, falling by 6.4 percent from the same period a year ago. Declining prices at the gas stations did nothing to jumpstart demand.
Crude oil closed down 49 cents today for December delivery, settling at $62.73 a barrel on the New York Mercantile Exchange.
In after-hour trading it rebounded some to $64.37 a barrel at about 4:00 EST.
On the London Ice Futures Europe exchange, Brent crude fell another $1.12, to settle at $60.29 a barrel.
Friday, October 24, 2008
OPEC Cuts Oil Production by 1.5 Million Barrels a Day
As expected today, OPEC announced it was making significant cuts in oil production, dropping it by 1.5 million barrels a day. That's about half-way between the 1 million to 2 million barrel cut analysts were looking for.
OPEC President Chakib Khelil was quick to communicate that the cuts weren't for the purpose of prices increasing, but to keep them from falling to unsustainable levels.
OPEC came under fire from some quarters for possibly fueling the flames of the economic crisis rather than helping it out.
Still, Khelil added that if prices continue to drop, OPEC was ready to step in at any time and reduce production again until prices stabilize.
Even with the oil production cuts, prices plunged by 5 percent today, dropping to below $63 a barrel at one point in the trading session. At about noon EST prices stood at $64.51 a barrel.
As Commodity Surge says, here's OPEC's problem:
"OPEC is of course cautious in their approach, as some of the other oil-producing nations pressured them to cut production by at least 2 million barrels a day. The problem they face is if they cut it too much, and prices surge too high, consumers will cut back even more on expenses, and the plan would backfire."
OPEC seems to be attempting to keep prices from falling below $60 a barrel.
OPEC President Chakib Khelil was quick to communicate that the cuts weren't for the purpose of prices increasing, but to keep them from falling to unsustainable levels.
OPEC came under fire from some quarters for possibly fueling the flames of the economic crisis rather than helping it out.
Still, Khelil added that if prices continue to drop, OPEC was ready to step in at any time and reduce production again until prices stabilize.
Even with the oil production cuts, prices plunged by 5 percent today, dropping to below $63 a barrel at one point in the trading session. At about noon EST prices stood at $64.51 a barrel.
As Commodity Surge says, here's OPEC's problem:
"OPEC is of course cautious in their approach, as some of the other oil-producing nations pressured them to cut production by at least 2 million barrels a day. The problem they face is if they cut it too much, and prices surge too high, consumers will cut back even more on expenses, and the plan would backfire."
OPEC seems to be attempting to keep prices from falling below $60 a barrel.
Thursday, October 23, 2008
Scott Bleier Predicts Oil will Fall to $50 a Barrel
Scott Bleier was right in mid-July when he said the commodity boom was going to go through a correction, and with that correction oil would fall to $100 a barrel.
He was wrong only in that it has fallen far below that, and now Scott says it'll fall as low as $50 a barrel. He could very well be right.
Forced liquidation of commodities by large funds, as well as decreased demand, could pressure it even lower than $50.
OPEC's upcoming emergency session where they're expected to decrease daily oil production by 1 million a day in order to stop the price plunge, probably won't have the desired effect, and oil will continue to fall.
He was wrong only in that it has fallen far below that, and now Scott says it'll fall as low as $50 a barrel. He could very well be right.
Forced liquidation of commodities by large funds, as well as decreased demand, could pressure it even lower than $50.
OPEC's upcoming emergency session where they're expected to decrease daily oil production by 1 million a day in order to stop the price plunge, probably won't have the desired effect, and oil will continue to fall.
Wednesday, October 22, 2008
Crude Oil Prices Continue to Fall off the Cliff: Now at 15-Month Low
In intraday trading crude oil fell of the cliff again, plunging by over $4 a barrel - a 15-month low. The continued fall in oil prices is completely tied to consumer demand, which has dropped as people cut back on spending on anything but essentials.
December delivery for crude oil dropped by $4.25 to $67.93 a barrel shortly after 11:00 a.m. EST today on the NYMEX. Oil futures hit a low of $67.50, the worst showing since June 27, 2007.
On London's ICE Futures Europe exchange, Brent crude has dropped by $3.40 for the December settlement, a 4.9 percent fall. It now stands at $66.32 a barrel. That's the lowest price since May 10, 2007.
For the week ending October 17, fuel demand in the U.S. averaged 18.7 million barrels a day, according to the report of the Energy Department released today. That's down 8.5 percent from the same period last year.
Average use of gasoline has also fallen, now averaging 8.8 million barrels a day for the last four weeks, down from last year by 4.3 percent.
With distillate fuel (heating oil, diesel) use also dropping significantly, we can see demand for oil will continue to fall for some time.
Even though the unprecedented special meeting by OPEC next month is expected to result in the cutback of 1 million barrels a day in production, that will do nothing to change the demand factor until the global economy recovers. That isn't going to happen any time soon.
Part of the result of all this will be less travel, which will affect not only oil companies, but airlines and shipping companies as well.
Oil inventories also continue to rise, as there was an increase of 3.18 millon barrels to 311.4 million barrels, the fourth time in a row.
December delivery for crude oil dropped by $4.25 to $67.93 a barrel shortly after 11:00 a.m. EST today on the NYMEX. Oil futures hit a low of $67.50, the worst showing since June 27, 2007.
On London's ICE Futures Europe exchange, Brent crude has dropped by $3.40 for the December settlement, a 4.9 percent fall. It now stands at $66.32 a barrel. That's the lowest price since May 10, 2007.
For the week ending October 17, fuel demand in the U.S. averaged 18.7 million barrels a day, according to the report of the Energy Department released today. That's down 8.5 percent from the same period last year.
Average use of gasoline has also fallen, now averaging 8.8 million barrels a day for the last four weeks, down from last year by 4.3 percent.
With distillate fuel (heating oil, diesel) use also dropping significantly, we can see demand for oil will continue to fall for some time.
Even though the unprecedented special meeting by OPEC next month is expected to result in the cutback of 1 million barrels a day in production, that will do nothing to change the demand factor until the global economy recovers. That isn't going to happen any time soon.
Part of the result of all this will be less travel, which will affect not only oil companies, but airlines and shipping companies as well.
Oil inventories also continue to rise, as there was an increase of 3.18 millon barrels to 311.4 million barrels, the fourth time in a row.
Friday, October 17, 2008
Oil Prices Will Continue to Fall
There's no question that the trend for oil prices has changed, and for a period of time we'll see that trend continue down.
A major reason I believe this will happen is the nature of trends themselves; it simply takes time for a trend to stop and turn itself around. The reason it takes time is because a trend is simply the response of human beings to a situation, and most human beings are slow to catch on and change.
In other words, people will neglect the underlying fundamentals at times of emotional turbulence and simply follow the crowd. Many times they do it as "bulls" and other times they do it as "bears." We are seeing the bears rear their heads in oil now, and that isn't going to stop in the short term.
While we know over a period of time that demand will start to surge again, as American consumers start to increase their driving again, and emerging market giants like China and India increase their acquisition of oil, and other commodities as well, we also know that they're cutting back on buying now, and that slowdown should continue.
One factor that could slow down this trend is if OPEC slashes production so much that it drives the cost of oil artificially above its market price. That could happen next month when they get together in an unprecedented emergency session to decide on what to do with the oil price drop.
We very well could see oil prices plunge much further before they begin their inevitable climb back up. Much of that will be determined by how long the fear factor reminds in the psyche of consumers, which has caused them to lower their consumption practices.
A major reason I believe this will happen is the nature of trends themselves; it simply takes time for a trend to stop and turn itself around. The reason it takes time is because a trend is simply the response of human beings to a situation, and most human beings are slow to catch on and change.
In other words, people will neglect the underlying fundamentals at times of emotional turbulence and simply follow the crowd. Many times they do it as "bulls" and other times they do it as "bears." We are seeing the bears rear their heads in oil now, and that isn't going to stop in the short term.
While we know over a period of time that demand will start to surge again, as American consumers start to increase their driving again, and emerging market giants like China and India increase their acquisition of oil, and other commodities as well, we also know that they're cutting back on buying now, and that slowdown should continue.
One factor that could slow down this trend is if OPEC slashes production so much that it drives the cost of oil artificially above its market price. That could happen next month when they get together in an unprecedented emergency session to decide on what to do with the oil price drop.
We very well could see oil prices plunge much further before they begin their inevitable climb back up. Much of that will be determined by how long the fear factor reminds in the psyche of consumers, which has caused them to lower their consumption practices.
Wednesday, October 15, 2008
Oil Plunges to 13-month Low on Demand Concerns
Concerns over the global economy continues to pummel oil prices, as it dropped to a 13-month low below $71 a barrel early Wednesday. Demand continues to shrink as consumers cut back on spending.
Most of this is based on the biggest oil consumer in the world, the U.S., where demand continues to diminish over the financial crisis.
November delivery for Brent North Sea crude fell to $70.70 a barrel, a $3.6 drop from Tuesday's close.
Delivery for November light sweet crude in New York also experienced a significant drop, falling as low as $74.93 a barrel, before recovering to $75.23 a barrel.
OPEC, which has taken the unusual step of meeting a month before their scheduled December meeting, has cut back its 2009 estimate for demand, citing the continuing economic climate in the U.S.
On Thursday there'll be an update on where U.S energy inventory stand, which will give a clearer picture on how the demand factor is playing out in the country.
Most of this is based on the biggest oil consumer in the world, the U.S., where demand continues to diminish over the financial crisis.
November delivery for Brent North Sea crude fell to $70.70 a barrel, a $3.6 drop from Tuesday's close.
Delivery for November light sweet crude in New York also experienced a significant drop, falling as low as $74.93 a barrel, before recovering to $75.23 a barrel.
OPEC, which has taken the unusual step of meeting a month before their scheduled December meeting, has cut back its 2009 estimate for demand, citing the continuing economic climate in the U.S.
On Thursday there'll be an update on where U.S energy inventory stand, which will give a clearer picture on how the demand factor is playing out in the country.
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