Prices and production
Prices, which had been moving higher since late last week after closure of a major pipeline from Canada to the Chicago area, fell to close on Wednesday at $75.96 a barrel after it was announced that the pipeline would be reopened later this week. The weekly stocks report showed crude inventories falling by 2.5 million barrels as analysts had expected. Once again, the API survey which came out with a crude increase of 3.3 million barrels was nowhere near the EIA’s number. Bad economic news, including an unexpectedly large drop in the Federal Reserve Bank of NY’s general economic index, also contributed to the decline.
Despite having a number of refineries closed for maintenance, the Chinese petroleum industry refined some 8.21 million b/d in August. Increased imports of petroleum products made up for any shortfalls. Increases in product output over August 2009 were 5 percent for diesel, 6.9 percent for gasoline and 25 percent for fuel oil.
Moscow announced that Russian crude production is on track to hit 500 million tons this year, a post-Soviet high. In 2009 output grew by 1.5 percent to 494 million tons after a dip in 2008.
Baghdad announced that crude exports in August fell to 1.8 million b/d due to attacks and mechanical difficulties on the northern export pipeline. Shipments from Basra reached 1.45 million b/d, while the northern pipeline managed only 340,000 b/d.
Brazil says its deep water Libra field may hold as much as 8 billion barrels of oil, rivaling the nearby Tupi field which is estimated to contain 5-8 billion barrels.
The World Petroleum Congress
Daniel Yergin told 5,000 delegates attending the World Petroleum Congress meeting in Montreal this week that world energy demand will increase by 32-40 percent in the next 20 years. Yergin said “Indeed, we are seeing what we call ‘peak demand,’ at least in terms of oil, in North America and Europe. Oil demand will not increase in those regions and is more likely to decrease. “But it’s a very different picture in emerging markets.” Yergin based his demand-growth forecast on an expansion of the global economy to $120 trillion by 2030. The International Monetary Fund estimates it will reach $81.8 trillion in 2015 from about $61.8 trillion this year.
A note of rationality came from the CEO of France’s Total who said that global oil production will stabilize around 95 million b/d by 2030. He noted that producing fields are declining by 5 to 6 percent a year.