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.
Showing posts with label Oil Supply. Show all posts
Showing posts with label Oil Supply. Show all posts
Sunday, January 25, 2009
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.
Saturday, November 15, 2008
OPEC Could Cut Production by 1 Million Barrels in Cairo
Fighting to stave off oil plunging below $50 a barrel, OPEC may cut production another 1 million barrels a day.
Expectations are at the next OPEC meeting on November 29 they will definitely cut production again, the question is only by how much. The 1 million barrels a day figure is expected by most analysts; although some have said it could be anywhere from 500,000 a day to 3 million barrels a day.
The problem from OPEC's standpoint is it's one thing to announce production cuts, it's another thing to implement them, as supply cut announcements from September and October are still in the process of being put into action.
Iran is calling for cuts between 1 to 1.5 million barrels a day.
Oil futures closed Friday's session down to $57.04 a barrel for December delivery on the Nymex.
Expectations are at the next OPEC meeting on November 29 they will definitely cut production again, the question is only by how much. The 1 million barrels a day figure is expected by most analysts; although some have said it could be anywhere from 500,000 a day to 3 million barrels a day.
The problem from OPEC's standpoint is it's one thing to announce production cuts, it's another thing to implement them, as supply cut announcements from September and October are still in the process of being put into action.
Iran is calling for cuts between 1 to 1.5 million barrels a day.
Oil futures closed Friday's session down to $57.04 a barrel for December delivery on the Nymex.
Monday, November 3, 2008
Oil Falls Almost 6 Percent Monday, as Demand Drives Prices Down
OPEC, other oil producers and oil companies, at this time must sit on the sidelines and watch, as oil prices are being driven by only one thing at this time, and that is demand; and demand is continuing to decline.
What is driving demand is fears of consumers on the condition of the economy, and that has them holding their cash close to their chests.
Confirming this even more was the level of factory activity in the U.S., which has been the key indicator on the demand for oil. That dropped sharply in October, down to its lowest levels in 26 years.
With the Institute for Supply Management saying factory activity in the U.S. dropped to 38.9 for October, it underscored the deep cutbacks experienced in the sector. Anything under 40 is considered a very weak performance. The month of September came in at 43.5.
For the last several weeks, U.S. demand for oil has fallen off by about 2 million barrels a day.
Crude in the U.S. fell 6 percent to $63.91 a barrel, a drop of $3.90. London Brent Crude fell even more, finishing the session at $60.49 a barrel, a decline of $4.84 a barrel.
What is driving demand is fears of consumers on the condition of the economy, and that has them holding their cash close to their chests.
Confirming this even more was the level of factory activity in the U.S., which has been the key indicator on the demand for oil. That dropped sharply in October, down to its lowest levels in 26 years.
With the Institute for Supply Management saying factory activity in the U.S. dropped to 38.9 for October, it underscored the deep cutbacks experienced in the sector. Anything under 40 is considered a very weak performance. The month of September came in at 43.5.
For the last several weeks, U.S. demand for oil has fallen off by about 2 million barrels a day.
Crude in the U.S. fell 6 percent to $63.91 a barrel, a drop of $3.90. London Brent Crude fell even more, finishing the session at $60.49 a barrel, a decline of $4.84 a barrel.
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.
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.
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.
Wednesday, October 8, 2008
U.S. Crude Oil Inventories Increase While Demand Slackens
Crude oil and gasoline inventories increased last week in the U.S., as crude supplies grew by 8.1 million barrels to 302.6 million, according to the Energy Information Administration.
As expected, the lowering demand because of economic fears, along with the growing inventory has put downward pressure on prices as oil dropped below $87 a barrel early in the day for November delivery. Gasoline futures also fell by over 10 cents to their lowest levels in a year.
Most analysts were surprised by the amount the oil inventory rose, as they had looked for a 6 percent gain, while the real gain was 8.6 percent, now bringing inventories up to 80.9 percent of capacity as of last week.
Gasoline supplies increased 7.2 million barrels to end the week at 186.8 million. Some analysts were especially surprised here, as they were looking more for an increase of around 1.1 million barrels.
As expected, the lowering demand because of economic fears, along with the growing inventory has put downward pressure on prices as oil dropped below $87 a barrel early in the day for November delivery. Gasoline futures also fell by over 10 cents to their lowest levels in a year.
Most analysts were surprised by the amount the oil inventory rose, as they had looked for a 6 percent gain, while the real gain was 8.6 percent, now bringing inventories up to 80.9 percent of capacity as of last week.
Gasoline supplies increased 7.2 million barrels to end the week at 186.8 million. Some analysts were especially surprised here, as they were looking more for an increase of around 1.1 million barrels.
Monday, October 6, 2008
Economic Fears Spread to Europe as Oil Continues to Tumble
Oil continues its nosedive as demand continues to slacken in response to economic fears spreading in Europe.
Oil consumption in the U.S. fell by 7.1 percent over the last four weeks in contrast to last year during the same time. Use is now at about 19 million barrels a day in the U.S.
Crude had dropped as low as $87.56 a barrel in the afternoon, while settling at $87.80 for November delivery of light sweet crude. That was a fall of $6.07 for the day.
Brent North Sea crude also fell significantly, settling at $83.68 a barrel for November delivery, dropping $6.57 for the session.
The lagging participation of the European economy in the economic downturn is now over, and what has happened in the U.S. is now emerging in Europe. That has also caused the U.S. dollar to strengthen significantly against the euro, while also causing gold to be held back for now as a safe haven.
For oil, the new world of bailouts and economic fears leaves it in a place of probable continued decline in price as demand slows around the globe. India and China demand will slow as well, with China now exporting some gasoline because of slow domestic demand.
As far as the U.S. bailout by the government, it didn't do much to placate investors, as they have started to pour their money into short-term dollar-denominated financial instruments like U.S. Treasuries.
Oil consumption in the U.S. fell by 7.1 percent over the last four weeks in contrast to last year during the same time. Use is now at about 19 million barrels a day in the U.S.
Crude had dropped as low as $87.56 a barrel in the afternoon, while settling at $87.80 for November delivery of light sweet crude. That was a fall of $6.07 for the day.
Brent North Sea crude also fell significantly, settling at $83.68 a barrel for November delivery, dropping $6.57 for the session.
The lagging participation of the European economy in the economic downturn is now over, and what has happened in the U.S. is now emerging in Europe. That has also caused the U.S. dollar to strengthen significantly against the euro, while also causing gold to be held back for now as a safe haven.
For oil, the new world of bailouts and economic fears leaves it in a place of probable continued decline in price as demand slows around the globe. India and China demand will slow as well, with China now exporting some gasoline because of slow domestic demand.
As far as the U.S. bailout by the government, it didn't do much to placate investors, as they have started to pour their money into short-term dollar-denominated financial instruments like U.S. Treasuries.
Friday, October 3, 2008
Oil Joins Other Commodities in Steep Losses
After dropping by $4.56 yesterday, oil futures continued to plunge in after-hours trading, falling another 1.2 percent to as low as $92.81 on the New York Mercantile Exchange.
Other commodities have been struggling as well, as the Reuters/Jefferies CRB Index of 19 commodities was down to its lowest level in close to a year, with corn, copper and silver especially losing; all of them in their worst weekly drop in over 20 years.
For the week oil is down 13 percent, as concerns of demand continuing to fall because of fears about the poor economic conditions. The report by the Labor Department showed jobless claims for the week ending September 27 are their highest since September 2001,
Since the high of $147.27 on July 11, oil has fallen by 37 percent.
The use of fuel in the U.S. also fell to its lowest level since October 2001, averaging only 19 million barrels a day.
With the economic news seemingly getting worse by the day, there are an increasing number of people questioning the validity of spending $700 billion on a bailout that probably will make no difference at all, and in will all likelihood make the problems last longer than if we would just let it work its way through the market.
As far as gasoline prices, we're seeing them drop, but they're lagging behind the decline in oil prices as it's taking a little time for refineries to get back on line. Once that happens we should see gas prices start to mirror more closely the oil price drops.
Other commodities have been struggling as well, as the Reuters/Jefferies CRB Index of 19 commodities was down to its lowest level in close to a year, with corn, copper and silver especially losing; all of them in their worst weekly drop in over 20 years.
For the week oil is down 13 percent, as concerns of demand continuing to fall because of fears about the poor economic conditions. The report by the Labor Department showed jobless claims for the week ending September 27 are their highest since September 2001,
Since the high of $147.27 on July 11, oil has fallen by 37 percent.
The use of fuel in the U.S. also fell to its lowest level since October 2001, averaging only 19 million barrels a day.
With the economic news seemingly getting worse by the day, there are an increasing number of people questioning the validity of spending $700 billion on a bailout that probably will make no difference at all, and in will all likelihood make the problems last longer than if we would just let it work its way through the market.
As far as gasoline prices, we're seeing them drop, but they're lagging behind the decline in oil prices as it's taking a little time for refineries to get back on line. Once that happens we should see gas prices start to mirror more closely the oil price drops.
Wednesday, October 1, 2008
Oil Prices Continue to Drop as U.S. Demand Slackens
While the price of oil fluctuated significantly today, by the end of the day it settled more toward the lower end, ending at $98.53 for November delivery on the New York Mercantile Exchange (NYMEX). Prices continue to influence the amount Americans are willing to drive, affecting the overall demand.
Prices for the day went from a low of $95.95 a barrel to as high as $102.84.
For the week ending September 26, crude stock rose 1.5 percent by 4.3 million barrels, reaching 294.5 million barrels overall. That was close to three times what some analysts expected.
As far as gasoline inventories go, they rose to 900,000 barrels to 179.6 million barrels. Analysts were looking for a drop of 1 million to 3 million barrels.
Much of the discrepancy comes from the quick turnaround of U.S. refineries after the hurricane damage, along with the decreasing amount of miles consumers are traveling.
On the ICE Futures exchange in London, delivery for Novemeber Brent crude dropped by $2.84 to settle at $95.33 a barrel.
Prices for the day went from a low of $95.95 a barrel to as high as $102.84.
For the week ending September 26, crude stock rose 1.5 percent by 4.3 million barrels, reaching 294.5 million barrels overall. That was close to three times what some analysts expected.
As far as gasoline inventories go, they rose to 900,000 barrels to 179.6 million barrels. Analysts were looking for a drop of 1 million to 3 million barrels.
Much of the discrepancy comes from the quick turnaround of U.S. refineries after the hurricane damage, along with the decreasing amount of miles consumers are traveling.
On the ICE Futures exchange in London, delivery for Novemeber Brent crude dropped by $2.84 to settle at $95.33 a barrel.
Tuesday, September 30, 2008
Third Quarter Oil Price Drop Largest in 17 Years
Oil experienced one of its largest price swings in history during the third quarter as prices fluctuated within a range of $56 a barrel. From its record high of $147.27 a barrel on July 11, it went a low as $90.51 a barrel on September 16.
Overall in the quarter oil futures fell by 28 percent, the largest fall since 1991.
Along with the obvious economic factors which have slowed down oil demand, there is also the strengthening of the U.S. dollar during that period as well.
November delivery for crude oil fell to close to $40 during the quarter to settle at $100.64 at about 3:00 p.m on the NYMEX. That's the first time it has fallen in seven quarters. It went up by $4.27 in today's trading.
When you take into account OPEC announcing they're cutting production, and the two hurricanes recently hitting the south and disrupting oil flow, it's really an amazing event that the black liguid has stayed this low. Add the ongoing Nigerian attacks on their pipelines and rigs, along with the conflict between Russia and Georgia and it's even more astounding.
It seems like oil futures are completely driven by demand at this time, as according to Deutsche Bank the price of Oil for 2009 New York will probably drop by 23 percent to around $92.50 a barrel. At this time U.S. demand for petroleum has dropped about 4 percent from the same period last year.
Although gas prices increased by almost 9 cents today, overall its followed the decline in oil for the quarter, dropping by 11 percent to end at a nationwide average of $3.633 a gallon, according to AAA.
Overall in the quarter oil futures fell by 28 percent, the largest fall since 1991.
Along with the obvious economic factors which have slowed down oil demand, there is also the strengthening of the U.S. dollar during that period as well.
November delivery for crude oil fell to close to $40 during the quarter to settle at $100.64 at about 3:00 p.m on the NYMEX. That's the first time it has fallen in seven quarters. It went up by $4.27 in today's trading.
When you take into account OPEC announcing they're cutting production, and the two hurricanes recently hitting the south and disrupting oil flow, it's really an amazing event that the black liguid has stayed this low. Add the ongoing Nigerian attacks on their pipelines and rigs, along with the conflict between Russia and Georgia and it's even more astounding.
It seems like oil futures are completely driven by demand at this time, as according to Deutsche Bank the price of Oil for 2009 New York will probably drop by 23 percent to around $92.50 a barrel. At this time U.S. demand for petroleum has dropped about 4 percent from the same period last year.
Although gas prices increased by almost 9 cents today, overall its followed the decline in oil for the quarter, dropping by 11 percent to end at a nationwide average of $3.633 a gallon, according to AAA.
Friday, September 26, 2008
Oil Drops on Bailout Uncertainty
Oil settled about $1 lower on Friday as the unknown concerning the bailout package continues to paralyze investors across the board.
Crude in the U.S. settled at $106.89 a barrel, while Brent crude in London slipped by $1.06 to $103.54.
With demand for oil slackening because of consumers tightening their wallets, oil would probably be much lower if the hurricanes hadn't disrupted production in the Gulf of Mexico. That has helped support the commodity in otherwise difficult circumstances.
Shell Oil said it will take about two more weeks to get all its offshore fields in production again. Shell is the largest oil producer in the Gulf.
About 25 percent of U.S. crude production is in the Gulf of Mexico.
Crude in the U.S. settled at $106.89 a barrel, while Brent crude in London slipped by $1.06 to $103.54.
With demand for oil slackening because of consumers tightening their wallets, oil would probably be much lower if the hurricanes hadn't disrupted production in the Gulf of Mexico. That has helped support the commodity in otherwise difficult circumstances.
Shell Oil said it will take about two more weeks to get all its offshore fields in production again. Shell is the largest oil producer in the Gulf.
About 25 percent of U.S. crude production is in the Gulf of Mexico.
Wednesday, September 17, 2008
Light Sweet Crude Oil in big $6.01 Increase
Investors continued to move their money out of equities and put it in commodities, as oil was a beneficiary of the recent economic bad news which has hammered the financial companies. AIG was the main culprit today in moving commodities up.
October delivery for light sweet crude in New York surged by $6.01 dollars to finish the session at $97.16.
Across the pond Brent North Sea crude also moved upward by $5.62 to end at $94.84.
The U.S Department of Energy says that over the last month oil-based product use has fallen by 4.4 percent over the same time last year.
Recent bad weather has also caused a drop of 6.3 million barrels in the U.S reserves.
Even with the gain today, prices have dropped by $55 a barrel since the July 11 high of $147 a barrel.
October delivery for light sweet crude in New York surged by $6.01 dollars to finish the session at $97.16.
Across the pond Brent North Sea crude also moved upward by $5.62 to end at $94.84.
The U.S Department of Energy says that over the last month oil-based product use has fallen by 4.4 percent over the same time last year.
Recent bad weather has also caused a drop of 6.3 million barrels in the U.S reserves.
Even with the gain today, prices have dropped by $55 a barrel since the July 11 high of $147 a barrel.
Friday, September 5, 2008
Oil Drops to 5-month Low on Weak Demand, other Factors
Oil continues to plunge from its record high which reached $147 a barrel in July, as it dropped by over $2 a barrel, after settling the lowest on Thursday since April 4. Brent crude followed suit in London as it declined by over $2 a barrel as well, finishing at $103.95.
With China decreasing imports after the Olympics and consumers driving less, oil prices will probably continue to fall. Other factors include the ongoing storm season and the unknown decision by OPEC on what it will do going ahead. The weak U.S and world economy will continue to affect the price also.
The rise in value of the U.S. dollar will also continue to drive down oil prices.
With the Louisiana Offshore Oil Port, (largest oil-import terminal in the U.S.) saying they started offloading oil tankers early Thursday morning, it's also thought it could help keep oil prices down because of the quick resumption of delivery.
Thursday, August 21, 2008
Weaker U.S. Dollar, Increasing Global Tensions Drive Oil Up
Even though a U.S. government report revealed crude inventories in the U.S. increased by 9.4 million barrels, political tensions outweighed the good news in relationship to oil, as prices surged by almost 5 percent on Thursday.
While most of the political concerns center on the growing differences with Russia and the West, other factors like the ongoing battle with Iran over its nuclear program, as well as the neverending attacks on oil production in Nigeria have traders on edge on supply disruptions. In the case of Russia, their foray into Georgia already has slowed down the transportation of Azeri oil in the region.
One other factor contributing to the rise in oil prices is the possibility that Tropical Storm Fay could come back into the Gulf of Mexico during the weekend, which would slow down production by affecting offshore platforms and oil refineries.
more ...
While most of the political concerns center on the growing differences with Russia and the West, other factors like the ongoing battle with Iran over its nuclear program, as well as the neverending attacks on oil production in Nigeria have traders on edge on supply disruptions. In the case of Russia, their foray into Georgia already has slowed down the transportation of Azeri oil in the region.
One other factor contributing to the rise in oil prices is the possibility that Tropical Storm Fay could come back into the Gulf of Mexico during the weekend, which would slow down production by affecting offshore platforms and oil refineries.
more ...
Thursday, August 7, 2008
Oil Fluctuates on Slowing Demand, Attack on Turkish Pipeline
Oil continued its recent swing as opposing news stories had it going up and down.
On the one hand the price surged to $121 a barrel when news of the attack on the Turkish-based Baku-Tbilisi-Ceyhan pipeline, earlier in the day, by the PKK (separatist group Kurdistan Workers' Party), caused the upswing. It's estimated the pipeline could be closed for up to 15 days.
The other factor continues to be the cutting back on fuel use, as Americans continue to travel less during the summer months.
Residual effects of the drop in oil prices is also showing up at the gas pumps as overnight prices fell by a little over a penny to a national average of $3.849 a gallon; about 6 percent off it's highs last month of over $4 a gallon.
In afternoon trading, light, sweet crude rose by 21 cents to $188.79 a barrel on the NYMEX for September delivery, while Brent crude in London increased by 16 cents to $117.16 a barrel.
Wednesday, August 6, 2008
Oil Prices Swinging Back and Forth On Gasoline Stockpiles and Crude Oil Supply
A government report showing gasoline stockpiles are lower than last weeks' forecast, along with a surprise that the crude oil supply grew more than expected, has oil prices swinging back and forth today after the release of the report.
In early trading, September delivery of light, sweet crude gained 51 cents, to reach $119.68 a barrel on the Nymex. After the report prices have been going up and down.
According to the Energy Information Administration, stockpiles of gasoline dropped by 4.4 million barrels last week. That's much more than the 1.4 million decline analysts were looking for.
Crude supplies also surprised analysts in the positive, as they grew to 1.7 million barrels, in contrast to the 1.2 million barrel drop analysts thought would be coming.
In early trading, September delivery of light, sweet crude gained 51 cents, to reach $119.68 a barrel on the Nymex. After the report prices have been going up and down.
According to the Energy Information Administration, stockpiles of gasoline dropped by 4.4 million barrels last week. That's much more than the 1.4 million decline analysts were looking for.
Crude supplies also surprised analysts in the positive, as they grew to 1.7 million barrels, in contrast to the 1.2 million barrel drop analysts thought would be coming.
Tuesday, July 29, 2008
Strengthening U.S. Dollar and Decreasing Oil Demand Lowers Prices
September delivery for light, sweet crude dropped by $2.54 today, to close at its lowest level since June 10, settling at $122.19 on the Nymex. It dropped as low as $120.75 during the trading hours; something it hasn't done since May.
The higher cost of fuel has caused consumers to drive less, which has lowered the demand for oil; one of the major factors in its decline.
A stronger U.S. dollar has also been a factor, as investors abandoned commodities today to put their capital in equities, which drove up the DJIA by 266 points.
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