Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.
Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever.
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Showing posts with label opec. Show all posts
Showing posts with label opec. Show all posts
Monday, September 19, 2011
Friday, September 16, 2011
SPR release demonstrates healthy management of floor and ceiling approach to oil prices
It might not sound like much of a victory. The United States and other oil-consuming countries release emergency stocks of oil to put a lid on prices. The result: crude prices in London rise by $1 since the program began, three months ago.
But many oil experts say the strategic releases -- just the third-ever by a group of consumer countries -- were a major success. Not only did they likely avert a further rise in oil prices during the peak U.S. driving season, but they set a precedent for consuming countries to keep bullish oil speculators in check.
"The releases completely changed the psychology of the oil market," said Amy Jaffe, an energy policy expert at Rice University's Baker Institute in Houston.
"The move worked, as it has in the past, because speculators now have to worry that extra oil may come if prices reach a certain level. It showed they are willing to use the strategic reserves."
The program to release 60 million barrels by the 28-nation International Energy Agency, which formally ended on Thursday, was first announced on June 23, when it set off an immediate drop of $7 a barrel in Brent crude prices.
The program, led by the U.S. government, was controversial, with lots of oil market players deriding it as a political move to appease testy consumers, after U.S. gasoline prices rose to near $4.00 a gallon in May.
IEA's extra oil supplies may have helped accelerate a 22 percent slide in U.S. oil prices from 30-month highs near $115 in early May. U.S. crude traded below $90 on Friday.
While European benchmark Brent crude has bounced back to its June price levels, it has not come anywhere near a high of $127 a barrel reached in April, a price some economists warned could tip major economies back into recession.
The IEA releases came in response to surging oil prices and supply disruptions in war-torn Libya. As Libya starts to resume output following the toppling of Muammar Gaddafi's regime, the IEA says it sees no need to release more oil for now.
But many oil experts say the strategic releases -- just the third-ever by a group of consumer countries -- were a major success. Not only did they likely avert a further rise in oil prices during the peak U.S. driving season, but they set a precedent for consuming countries to keep bullish oil speculators in check.
"The releases completely changed the psychology of the oil market," said Amy Jaffe, an energy policy expert at Rice University's Baker Institute in Houston.
"The move worked, as it has in the past, because speculators now have to worry that extra oil may come if prices reach a certain level. It showed they are willing to use the strategic reserves."
The program to release 60 million barrels by the 28-nation International Energy Agency, which formally ended on Thursday, was first announced on June 23, when it set off an immediate drop of $7 a barrel in Brent crude prices.
The program, led by the U.S. government, was controversial, with lots of oil market players deriding it as a political move to appease testy consumers, after U.S. gasoline prices rose to near $4.00 a gallon in May.
IEA's extra oil supplies may have helped accelerate a 22 percent slide in U.S. oil prices from 30-month highs near $115 in early May. U.S. crude traded below $90 on Friday.
While European benchmark Brent crude has bounced back to its June price levels, it has not come anywhere near a high of $127 a barrel reached in April, a price some economists warned could tip major economies back into recession.
The IEA releases came in response to surging oil prices and supply disruptions in war-torn Libya. As Libya starts to resume output following the toppling of Muammar Gaddafi's regime, the IEA says it sees no need to release more oil for now.
Thursday, June 23, 2011
Blink, let’s play chicken
For OPEC to be a reliable steward of oil supply and its flex – it must be responsive to world events and react in a manner that communicates its actions and intended actions clearly to consuming nations.
Thursday's announcement of a 60 million-barrel release from emergency stocks -- only the third in the IEA's 37-year history -- came after consumer nations unsuccessfully applied pressure on the Organization of the Petroleum Exporting Countries to increase its output at a meeting this month.
The talks collapsed in disarray, but top exporter Saudi Arabia said it would still produce as much oil as the market needed.
As far as OPEC delegates were concerned, there was no justification for any action from the IEA.
OPEC delegates from the Gulf, which has traditionally sided with the U.S. and favored moderate prices, said it was unnecessary, unjustified interference.
"The oil price hasn't shot up to $150. There is no reason to do this. The market is not short of supply. Kuwait and Saudi Arabia have been raising production, but there have not been many buyers. The IEA is just playing politics with the U.S.," one Gulf delegate told Reuters.
OPEC has yet to issue an official statement, but speaking at Reuters Global Climate and Energy Summit last week, OPEC Secretary General Abdullah al-Badri accused the IEA of being unprofessional.
"Strategic reserves should be kept for their purpose and not used as a weapon against OPEC," Badri told Reuters.
Badri's words recall OPEC's use of its "oil weapon" during the Arab Oil Embargo, which led to the creation of the IEA in 1974 to protect consumers' interests.
A more harmonious chapter began with the formal beginning of producer-consumer dialogue through the International Energy Forum in 1991.
Since then, OPEC-IEA dialogue has been happiest when oil prices were high enough to reward oil producers, but not so high as to alarm consumers.
In June this year, OPEC failed to get as far as a new production agreement. Iran, holder of the rotating OPEC presidency, was joined by six other nations in refusing to add more oil to the market.
They refused even though data from the OPEC headquarters in Vienna agreed there could be an oil shortage later in the year.
Saudi Arabia, which holds almost all available spare production capacity, is expected nevertheless to raise its output toward 10 million barrels per day (bpd) in June and July.
Could this be the Kings club trying to discipline Western Democracies into submission and we’re foiling their plans by using a reserve to dampen price spikes while the EU is dealing with a debt work-out and the US is trying to ignite its economy?
In all likelihood OPEC is trying to influence the US Presidential election. Not happy at the democratic initiatives of Middle Eastern citizens who have been supported overtly or tacitly by the West, OPEC is trying to drive up energy prices to crisis levels to prevent a second term Obama administration.
Perhaps flooding the market with petroleum and bring down to $50 bbl for a period of time would bring producers in line with the democratic reforms their consumers demand and citizens bleed for.
Investment play: conagra
Thursday's announcement of a 60 million-barrel release from emergency stocks -- only the third in the IEA's 37-year history -- came after consumer nations unsuccessfully applied pressure on the Organization of the Petroleum Exporting Countries to increase its output at a meeting this month.
The talks collapsed in disarray, but top exporter Saudi Arabia said it would still produce as much oil as the market needed.
As far as OPEC delegates were concerned, there was no justification for any action from the IEA.
OPEC delegates from the Gulf, which has traditionally sided with the U.S. and favored moderate prices, said it was unnecessary, unjustified interference.
"The oil price hasn't shot up to $150. There is no reason to do this. The market is not short of supply. Kuwait and Saudi Arabia have been raising production, but there have not been many buyers. The IEA is just playing politics with the U.S.," one Gulf delegate told Reuters.
OPEC has yet to issue an official statement, but speaking at Reuters Global Climate and Energy Summit last week, OPEC Secretary General Abdullah al-Badri accused the IEA of being unprofessional.
"Strategic reserves should be kept for their purpose and not used as a weapon against OPEC," Badri told Reuters.
Badri's words recall OPEC's use of its "oil weapon" during the Arab Oil Embargo, which led to the creation of the IEA in 1974 to protect consumers' interests.
A more harmonious chapter began with the formal beginning of producer-consumer dialogue through the International Energy Forum in 1991.
Since then, OPEC-IEA dialogue has been happiest when oil prices were high enough to reward oil producers, but not so high as to alarm consumers.
In June this year, OPEC failed to get as far as a new production agreement. Iran, holder of the rotating OPEC presidency, was joined by six other nations in refusing to add more oil to the market.
They refused even though data from the OPEC headquarters in Vienna agreed there could be an oil shortage later in the year.
Saudi Arabia, which holds almost all available spare production capacity, is expected nevertheless to raise its output toward 10 million barrels per day (bpd) in June and July.
Could this be the Kings club trying to discipline Western Democracies into submission and we’re foiling their plans by using a reserve to dampen price spikes while the EU is dealing with a debt work-out and the US is trying to ignite its economy?
In all likelihood OPEC is trying to influence the US Presidential election. Not happy at the democratic initiatives of Middle Eastern citizens who have been supported overtly or tacitly by the West, OPEC is trying to drive up energy prices to crisis levels to prevent a second term Obama administration.
Perhaps flooding the market with petroleum and bring down to $50 bbl for a period of time would bring producers in line with the democratic reforms their consumers demand and citizens bleed for.
Investment play: conagra
Thursday, June 9, 2011
Price risks skewed heavily to the upside
On a short-term basis, the U.S. market looks oversold and could bounce later this week, but the thing that has my attention is oil!
OPEC data shows demand for its crude will rise by 2.1 million barrels/day (mmb/d) in the third quarter from the group’s total output in April of 28.8 mmb/d, Naimi said. “Saudi Arabia is committed to supplying the needs of the market regardless of the disagreement,” he said.
The 11 nations with production quotas pumped 26.15 mmb/d in April, according to the IEA. That leaves the group with about 4.5 mmb/d of spare capacity, most of it in Saudi Arabia, to be tapped in an emergency.
The 50-year-old organization met as fighting in Libya shut off most of the output from Africa’s third-largest producer. A rebellion against Libyan leader Muammar Qaddafi has cut shipments from the North African country by almost 90 percent, according to Bloomberg estimates.
The lack of Libyan oil production is concerning. Estimates of current shut in production vary from a low of 500,000 b/d to a high of 1.5 million, from a total production of 1.6 mmb/d. Company withdrawal of expatriate production workers appears to be a major contributing cause of the production decline, not damage to producing fields. Libya is a small producer; however its oil is highly prized in the Mediterranean basin by Italian, French, and other regional buyers, as well as in northwest Europe for use by heavy, sour-based refiners as a blending crude.
To date, OPEC crude production remains around 1.3 mmb/d below where it was before the Libyan crisis broke out. Political and military stalemate there leads me to assume Libyan supply will remain absent from the market for the rest of 2011.
Production from Yemen too is now significantly curtailed by political unrest.
OECD stocks are on a trajectory to descend through the trailing 5 year average.
The good news!!! Iraq's current output is about 2.7 million to 2.8 mmb/d and expected to reach 3 mmb/d by end 2011 and 4 mmb/d by end 2012. Iraq's oil exports in May averaged 2.225 mmb/d.
"Export terminals and pipelines will not be the obstacle," Shahristani, who is responsible for Iraq's energy affairs, told reporters during a visit to southern oilfields and export facilities.
Iraq is rebuilding its oil infrastructure after years of conflict and has signed deals with oil majors to reach a proposed production capacity of 12 mmb/d by 2017. Most analysts see 6-7 mmb/d as more realistic.
I see lots up upside in oil prices, if supply is not brought back on stocks will deplete to worrying levels and that could excessively hamper global growth as oil prices exceed pre-crash levels.
Stock pick of the day: COG
OPEC data shows demand for its crude will rise by 2.1 million barrels/day (mmb/d) in the third quarter from the group’s total output in April of 28.8 mmb/d, Naimi said. “Saudi Arabia is committed to supplying the needs of the market regardless of the disagreement,” he said.
The 11 nations with production quotas pumped 26.15 mmb/d in April, according to the IEA. That leaves the group with about 4.5 mmb/d of spare capacity, most of it in Saudi Arabia, to be tapped in an emergency.
The 50-year-old organization met as fighting in Libya shut off most of the output from Africa’s third-largest producer. A rebellion against Libyan leader Muammar Qaddafi has cut shipments from the North African country by almost 90 percent, according to Bloomberg estimates.
The lack of Libyan oil production is concerning. Estimates of current shut in production vary from a low of 500,000 b/d to a high of 1.5 million, from a total production of 1.6 mmb/d. Company withdrawal of expatriate production workers appears to be a major contributing cause of the production decline, not damage to producing fields. Libya is a small producer; however its oil is highly prized in the Mediterranean basin by Italian, French, and other regional buyers, as well as in northwest Europe for use by heavy, sour-based refiners as a blending crude.
To date, OPEC crude production remains around 1.3 mmb/d below where it was before the Libyan crisis broke out. Political and military stalemate there leads me to assume Libyan supply will remain absent from the market for the rest of 2011.
Production from Yemen too is now significantly curtailed by political unrest.
OECD stocks are on a trajectory to descend through the trailing 5 year average.
The good news!!! Iraq's current output is about 2.7 million to 2.8 mmb/d and expected to reach 3 mmb/d by end 2011 and 4 mmb/d by end 2012. Iraq's oil exports in May averaged 2.225 mmb/d.
"Export terminals and pipelines will not be the obstacle," Shahristani, who is responsible for Iraq's energy affairs, told reporters during a visit to southern oilfields and export facilities.
Iraq is rebuilding its oil infrastructure after years of conflict and has signed deals with oil majors to reach a proposed production capacity of 12 mmb/d by 2017. Most analysts see 6-7 mmb/d as more realistic.
I see lots up upside in oil prices, if supply is not brought back on stocks will deplete to worrying levels and that could excessively hamper global growth as oil prices exceed pre-crash levels.
Stock pick of the day: COG
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