Peak oil news - Apr 15
Prices and production
After continuing to fall on Monday and Tuesday, oil prices reversed and closed nearly $2 a barrel higher at $85.84 on Wednesday. The surge came after the US stocks report showed a 2.2 million barrel draw as opposed to the 1.1 million barrel increase the market had expected. This was the first decrease in US crude stocks for 10 weeks. The report also showed that US demand over the last four weeks is running 2.8 percent ahead of last year. Wholesale gasoline also climbed back close to the high of $2.36 a gallon set last week.
The recent jump in crude prices has a growing number of technical analysts around the world predicting that prices soon will climb into the $90s. If that happens, the spotlight will shift to the one country—Saudi Arabia—with the capacity to add enough oil to the market to cool off prices.
Although some rain has fallen in Venezuela and southwestern China, reservoirs continue to fall but at a slower pace. It’s a near certainty that both countries will eventually have to rely on fossil fuel power to replace hydro power.
China’s auto sales in March jumped 56 percent year on year to an astounding 1.74 million cars. There are already indications that the pace of 20 million units a year is starting to slow. On Wednesday Beijing raised the price of gasoline and diesel by an average of 4.6 percent.
International Energy Agency
The IEA reported that world oil production in February reached 86.6 million b/d, causing the energy watchdog group to increase its forecast for the growth in average world crude consumption this year by 1.7 million b/d to 86.6 million b/d. If this number is achieved, it will surpass the annual all-time high of 86.5 million b/d set in 2007. Chinese oil consumption is now forecast to hit a high of 9.1 million b/d this year as Beijing’s economy continues to grow at 10 percent a year and its vehicle fleet expands.
The Agency also warned that rising oil prices could harm economic recovery in the OECD countries. This of course is a sensitive issue for the financial press that is schizophrenic over the notion that economic growth will lead to increased oil consumption and higher prices which in turn will stifle economic growth. In reporting on this story, the Wall Street Journal points out that the IEA estimate may be too high for a year which the US still has numerous debt problems and is losing government stimulus money. This of course ignores the fact that most of the growth in demand is coming form Asia and the oil exporting countries.
The Journal also notes the large and increasing stockpiles of petroleum products held around the world, the 6 million b/d of reserve production capacity ascribed to OPEC, and a general feeling that the markets are currently well supplied. Their bottom line seems to be that the $3 gasoline that is expected this summer will slow consumption and add to the growing stockpiles.
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