ResiliencePublished on Resilience (http://www.resilience.org)
Peak oil notes - Feb 20Published by ASPO-USA on 2014-02-20
Original article: http://aspousa.org/ by Tom Whipple
New York oil and gas futures surged this week on continuing cold weather across the US and rapidly falling distillate and natural gas stockpiles. At Wednesday’s close, NY oil was up to $103.31 a barrel and natural gas futures were at a five-year high of $6.25 per million BTU’s. With more cold weather forecast for next week and on into early March, fears are increasing that shortages of heating oil and gas could develop. Natural gas inventories are at their lowest since 2004 and there are concerns that gas production during the summer months will be insufficient to get the country through next winter. North Dakota reported that shale oil output from the Bakken fell by 50,000 b/d in December due to extremely cold weather. As the cold continued on into January and February, additional albeit temporary cuts in production can be expected.
Contributing to the price spike are the continuing riots in Venezuela where the opposition leader has been arrested and three US diplomats have been expelled for contacts with the opposition. While US imports from Venezuela have been dropping in recent years, they are still running on the order of 800,000 b/d. Should the riots continue, there is a chance that exports could be curtailed driving world prices still higher.
London oil has been quiet this week despite a new drop in Libyan exports, closing on Wednesday at $110.47. The WTI/Brent spread is now down to $7.13.
The weekly stocks report this week is delayed until Thursday because of Monday’s holiday, but analysts are expecting an increase in overall crude stocks; a drop in the inventories at Cushing, Okla. as more crude is moved to the Gulf Coast for refining; and a major drawdown of distillate stocks due to the continuing cold weather.
Violence in the Middle East continues apace -- more bombings in Iraq; Al Qaeda bombed the Iranian cultural center in Beirut in retaliation for Tehran’s’ support for Assad; pro-Morsi insurgents in the Sinai blew up a bus carrying South Korean tourists, likely shutting down what is left of Egypt’s tourist industry; and in Libya, two large militia groups have told the parliament to shut down which would leave the country without a government. If this is not enough, fighting has resumed around the capital of the last remaining state in South Sudan that is still producing oil.
The Iranian nuclear talks resume this week with western diplomats warning that the next round will be long and complicated with no guarantee of success. This in contrast with the Iranians who are running around telling everybody that the sanctions are nearly over and it is time to invest in the Iranian economy.
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