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136 comments on DrumBeat: June 1, 2006

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westexas on June 1, 2006 - 9:20am Permalink | Subthread | Comments top
Interesting that a senior geologist with Chevon casually says that the Middle East has peaked.  Note the comment by the author of the article that worldwide supplies are threatening to decline.

New York Times:
For Venezuela, a Treasure in Oil Sludge

Excerpts:

"We do know that the Orinoco is underdeveloped," said Mr. Nelson, 49, a geologist from California with 27 years' experience developing heavy-grade oil. "And the resources in the Middle East are at their midpoint."

With demand rising, worldwide supplies threatening to decline and oil prices near record levels, the struggle in this country underscores the growing debate between governments and oil companies worldwide over profits from technologically challenging but potentially lucrative oil fields -- whether in the Caspian Sea, the Arctic tundra or here in the Orinoco region.

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westexas on June 1, 2006 - 9:24am Permalink | Subthread | Parent | Comments top
BTW, as has been referenced earlier, an interesting item from the Energy Bulletin on Saudi oil production:  "Saudi output since April stood at 9.1 million barrels per day (bpd), Petrologistics said. That was down from around 9.42 million bpd in March."   http://www.tradearabia.com/tanews/newsdetails_snOGN_article105674_cnt.html

The article claims that the production decline was due to voluntary cutbacks because of lower demand, but what is odd is that oil prices don't seem to reflect the lower demand.  Also, if I interpret the numbers in the article correctly, the Saudis have not increased their production back up to the 9.4 range.  

As I pointed out in our (Khebab & Brown) Energy Bulletin article, Saudi Arabia is now at about the same point at which Texas started its permanent decline.  The Oil & Gas Journal recently published an article that had an even lower reserve estimate for Saudi Arabia than our work indicated.

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westexas on June 1, 2006 - 10:58am Permalink | Subthread | Parent | Comments top
The four week running average of total US petroleum imports has rebounded back to the same level we saw in later December, 2005, after a 15% to 25% increase in crude oil prices.    The price/import discrepancy was what I though was so odd.  Why were US importers paying more for less crude oil and product?  My conclusion was that we are seeing the early stages of a bidding war for available net oil export capacity.  

What is impossible to quantify is what happened to total petroleum imports into poorer countries.  We do have lots of news reports of cutbacks in consumption in places like Thailland and Senegal and news reports of riots over fuel prices and fuel supplies in India and Pakistan.  

IMO, we are (temporarily) outbidding poorer importers.   The recent news from Saudi Arabia doesn't offer much reason for optimism on net export capacity.

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R W Reactionairy on June 1, 2006 - 8:21pm Permalink | Subthread | Parent | Comments top
Greeting and salutations.

In answer to your speculation concerning the reason for the reported increase in cost per bbl of imported crude: Isn't the most probable answer the effect that some of the short term hedge fortward buying enterred into prior to the run up in oil prices haveing gone throught the systems resulting in more purchases at a current spot price? Maybe this is what you meant by the bidding war???

My nominee for the second most likely cause is that the mix between light / sweet versus heavy and sour crudes may have shifted toward the more easily refinable and tighter supply of the good stuff.

One last point to which I have been trying to elicit a comments from someone [hopefully a whole lot better informed than me]: The headline cost of a bbl of WTI or Brent seems to react to reported U.S. inventories, but the differential between WTI and Brent ain't what it used to be. Is the overall level of the market actually being driven by the inventory numbers on the other side of the pond? Inquiring minds want to know. Thanks & :-)

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136 comments on DrumBeat: June 1, 2006

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