Production and prices
Oil prices continued to fall this week as the markets focused on bad economic news and the perception that oil consumption continues to drop in the US. Prices which started the week at $125 a barrel have now fallen nearly $30 to the vicinity of $118. OPEC production for July was up a bit, but non-OPEC production including Russia continues to slump. Chinese demand for diesel and gasoline during August, the month of the Olympics, is down by nearly 40 percent which may have more to do with the recent price drops than the decline in US gasoline consumption which seems to have stabilized at around 2.3 percent.
The weekly stocks report has crude inventories up by 1.7 million barrels and gasoline stocks down by 4.4 million barrels on lower imports. Crude stockpiles along the Gulf Coast are still very low and it was noted that some refineries had to slow production when the tropical storm delayed shipments for a day or so.
Kurdish separatists are claiming responsibility for Wednesday’s fire which closed the 850,000 b/d Baku-Ceyhan pipeline operated by BP. The Turks, however, deny the fire was caused by sabotage. Repairs to the pipeline are estimated to take from two to five weeks.
US import data for May is now available. The six countries in the following table are the origin for about two thirds of US oil imports. In the first five months imports from Mexico are down by 18 percent over last year.
Tables 1: United States Monthly Crude Oil Imports From the Top Six Countries of Origin
|MM bbl/d||%||MM bbl/d||%||MM bbl/d||%||MM bbl/d||%||MM bbl/d||%||MM bbl/d||%|
Shortages in Pakistan, India and China continue to grow worse with no end in sight. In China’s Hubei province coal stockpiles are so low and so many power plants have been closed that power for the capital city has been reduced by 34 percent. Power shortages continue to spread with increased use of backup generators causing diesel shortages. Numerous other countries around the world are reporting similar problems.