ResiliencePublished on Resilience (http://www.resilience.org)
Peak oil notesPublished by ASPO-USA on 2014-03-13
Original article: http://aspousa.org/ by Tom Whipple
New York oil prices continued to fall steadily this week on growth in US crude stocks and weaker economic data from the US and China. WTI futures were trading above $105 a barrel early last week but are now down to $97.99. The weekly stocks reports which showed US crude inventories increasing by 6 million barrels -- three times what analysts predicted– led to a $2 a barrel drop for the day. After dropping from above $111 a barrel early last week, London oil has held fairly steady around $108 a barrel this week. The WTI/London spread is back over $10 a barrel.
The stocks report also showed supplies at Cushing, Okla. continuing to fall, now at a two-year low of 30.8 million barrels. US crude production began increasing again last week, this time by 105,000 b/d to 8.18 million. US production is now averaging about 1.02 million b/d above this time last year while net crude and product imports are down by 1.1 million b/d. Demand for US products continues strong. This led to a 533,000 barrel decrease in distillates and a 5.23 million barrel decline in gasoline stocks. Government data on the size of US product exports runs months behind the actual date of the exports but has been showing a 500,000 b/d over this time last year.
US natural gas futures have declined about 20 cents per million BTU’s this week to close at $4.50 as the winter heating season shows signs of drawing to a close with the exception of one last blast of winter in the northeast.
On the international scene, tensions arising from the Ukrainian situation continue to overshadow the energy markets. So many threats and counter threats related to energy are being thrown around by Russia and the West it is impossible for now to predict where all this is going. With a large share of Europe’s energy supply coming from Russia, the stakes are high. Numerous calls for the US to increase LNG exports to Europe to offset a possible loss of Russian gas are clearly based on bad information about the prognosis for US natural gas production in the near future. The US is just coming off the coldest winter in many years which drew inventories down to record lows. The US will likely have trouble restocking enough gas to get through another cold winter, much less heating Europe. At the present time there are not enough completed export terminals in the US to make a dent in Europe’s need for gas.
The chaos which resulted from a North Korean flagged tanker slipping into a western Libyan oil terminal and making off with a shipload of unauthorized crude led to the parliament’s ouster of Libya’s Prime Minister for mishandling the situation. The Libyan Air Force refused to bomb the tanker, citing the danger to civilians and the environment from dropping bombs on an oil tanker. What is left of the Libyan Navy surrounded the tanker for a while, but it was able to sail away with its cargo. Tripoli says it is assembling sufficient forces to take back the export terminals seized by local militias.
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