<A little snippet that may not be as good as it sounds The Oil Drum Oil execs speak to the Senate today>

29 comments on A closer IEA look at Saudi Arabian production

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LJR on November 8, 2005 - 4:17pm Permalink | Subthread | Parent | Comments top
US Govt. could be buying for the SPR to replace what they released for the hurricanes.  China is starting an SPR and they too could be buying.  The crude tanks at refineries are normally not full.  Taken altogether there is probably a lot of spare storage without requiring the speculators excavate their back yards.

Refineries are expensive, require extensive permitting, and are faced with political opposition from local neighborhoods.  Furthermore, to be profitable they must amortize over many years.  If oil is peaking the numbers for a new refinery may not work.

Most new oil discoveries will be a lower grade, heavier and more poisonous stuff requiring different refinery setups than for light, pure crude.

It makes some sense for countries like Saudi Arabia and Venezuela to build refineries and capture the refining profit.  They know exactly what refineries they will need for their crude.  They have no permitting hassles or local opposition.

Why should the U.S. build additional refining capacity for oil coming from abroad?  Here today, gone tomorrow.  I'd much rather see those investment dollars be spent for alternatives such as nuclear, wind, solar, and battery research.

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Typhoon on November 8, 2005 - 4:20pm Permalink | Subthread | Parent | Comments top
We're still releasing oil from the SPR, not filling it.  The "there's plenty of oil, but can't refine it" argument just doesn't work.  Certainly, refining capacity is tight, but so is the global crude oil market.
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GreyZone on November 8, 2005 - 5:49pm Permalink | Subthread | Parent | Comments top
Oilcast.com's latest news audio session (MP3 format) talks about the return of growing Chinese demand after it having been flat for a while. Apparently the August and September Chinese demand numbers are way up again.
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Francois on November 8, 2005 - 6:27pm Permalink | Subthread | Parent | Comments top
So - given that we are drawing from the SPR and importing refined products temporarily from Europe - is that enough of an explanation for the continuing drop in energy prices over the last week? And what about natural gas - why has that market seen a 30-40% drop in spot prices? As others have commented - the sums dont add up. Do we have (a) demand destruction (Economy much weaker than thought)? or (b) government manipulation (somehow), or (c) there really is more than enough to party on through the winter, or (d) the speculators are selling short and/or dumping their long positions, or what? Does anybody out there have a better read on what is going on?
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LevinK on November 8, 2005 - 7:58pm Permalink | Subthread | Parent | Comments top
According to Bloomberg the mild weather in recent weeks helps keep demand for heating oil and NG low.
Now that the driving season is over and people stay more at home, there is something like a timeout in the demand. The high  heating oil and the next driving season will be far more critical.

This is the nature of the markets - every temporary glut/shortage causes huge variations.

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29 comments on A closer IEA look at Saudi Arabian production

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