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Oil prices - Nov 17

Click on the headline (link) for the full text.

Many more articles are available through the Energy Bulletin homepage


Welcome to a world of runaway energy demand

Martin Wolf, Financial Times
“The increase in China’s energy demand between 2002 and 2005 was equivalent to Japan’s current annual energy use.” This nugget of information, buried in the International Energy Agency’s latest World Energy Outlook, tells one almost all one needs to know about what is happening to the world’s energy economy.

Neoclassical economics analysed economic growth in terms of capital, labour and technical progress. But, I now think, it is more enlightening to view the fundamental drivers as energy and ideas. Institutions and incentives provide the framework within which the development and application of useful knowledge transforms the fossilised sunlight on which we depend into the stream of goods and services we enjoy.

This is the world of abundance that China and India are now joining. Nothing short of a catastrophe will stop them. For the pessimists, however, particularly climate-change pessimists, catastrophe will follow. What is certain is that the challenges ahead are huge.

Here, then, are the highlights of the new report.

First, if governments stick with current policies (which the IEA calls the “reference scenario”), the world’s energy needs will be more than 50 per cent higher in 2030 than today, with developing countries accounting for 74 per cent, and China and India alone for 45 per cent, of the growth in demand.
(14 November 2007)
Here is another link to this FT story.


Oil’s Next Big Move: The Unseen Reason Why $150 Oil May be Right around the Corner

Energy Tech Stocks
Everybody wants to know which way oil prices are headed next - not just traders and speculators but also every person in charge of a corporate or household budget.

There is at least one obvious reason why oil prices could soon hit $150 a barrel, namely: some sort of military confrontation between the United States and Iran. But there is another, unseen reason why prices could go that high in the coming months.

As explained by Charles Maxwell, the distinguished oil analyst at Weeden & Co., back in the late 1970s and early 1980s the politicians in oil-producing countries usurped the decision-making process in their state-owned oil companies. Investment decisions vital to maintaining production became the province of politicians who, despite owning the oil, believed that Western oil companies should pay for maintaining their oilfields.
(16 November 2007)


Oil’s Next Big Move: The Unseen Reason Why $50 Oil May be Right around the Corner

Energy Tech Stocks
There is so much “dumb” money in the oil market right now that unsophisticated traders could suddenly “panic,” sending the price down to $50 a barrel or lower.

That’s the expert opinion of Peter Fusaro, a noted observer of energy trading markets who publishes a directory of energy hedge funds.

In an interview, Fusaro emphasized that the oil market is still immature, characterized by a “vacuum of knowledge” even within major Wall Street institutions. Almost nobody does their homework, Fusaro added. Instead, a great many investors just follow the headlines and hope they will be lucky, which many have been recently as oil has climbed to close to $100 a barrel.
(16 November 2007)


Oil Rises More Than $1 on Signs OPEC's Lost Control of Prices

Mark Shenk, Bloomberg
Crude oil rose more than $1 a barrel on speculation that the Organization of Petroleum Exporting Countries has lost control of prices.

``OPEC can't do anything about the price,'' Venezuela's oil minister Rafael Ramirez said today in Riyadh, Saudi Arabia, where OPEC is holding a heads-of-state summit this weekend. Oil prices could reach $100 a barrel ``soon,'' he said. The December futures contract in New York expired today.

``OPEC could make things worse with a constrictive output policy but they can't lower prices with additional output,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York.
(16 November 2007)


Oilwatch Monthly - November 2007

Rembrandt, The Oil Drum: Europe
The November edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.5 MB, 21 pp). At the time of writing the latest IEA oil market report had not yet been published which has therefore not been incorporated in the PDF, but it is included in the figures and charts below.

Latest Developments (these include the IEA report which has not been published):

1) Crude Oil - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 706,000 b/d from July to August. Total production in August was estimated at 72.51 million b/d, which is 1.79 million b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005.

2) Total liquids - In October world production of total liquids increased by 1.4 million barrels per day from September according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 86.5 million b/d, which is the all time high maximum liquids production.
(16 November 2007)

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