Oil prices have stabilized this week after falling roughly $8 a barrel in the previous two weeks with NY oil trading round $90 a barrel and London around $111. The weekly stocks report showed US crude inventories climbing by 3.8 million barrels last week as refinery utilization dropped to 82 percent, the lowest level in a year. US refineries which undergo maintenance in February and March seem to be slower in returning to normal this year and have had unplanned outages. Gasoline inventories fell by 600,000 barrels, but distillates were down by 3.8 million – five times more than analysts had been expecting. This suggests that exports of distillate remain strong. Gasoline stocks in the Northeast climbed for the 8th straight week indicating recovery from the damage done by superstorm Sandy.
In the last two days much attention has been focused on the death of Venezuelan President Chavez and the implications of his passing on Venezuela’s oil production. The general consensus is that it is much too early to tell and that little will change before the Presidential election which is scheduled to take place next month. The political situation is seen as highly unstable and few believe that Chavez’s likely successor Nicolas Maduro has the charisma or political skills to maintain the delicate balance which kept Chavez in power for 14 years.
Venezuela was producing 3.52 million barrels of oil a day in 1997, but this has now slumped to 2.4 million as Chavez milked the national oil company to pay for domestic social projects which enhanced his popularity and even to make a gift to Cuba of some 100,000 b/d which cost his country $3-4 billion a year. The US is currently importing about 550,000 b/d of crude from Venezuela, down 44 percent in the past year, and most analysts believe the US could replace this amount fairly easily should the political situation curtail exports.
The ongoing Middle Eastern troubles continued apace this week with Israel back to talking about red lines in regards to the Iranian nuclear confrontation; a major city falling to Syrian rebels; terrorist bombs continuing to go off in Iraq; the Ninewa pipeline feeding Baghdad’s largest oil refinery being blown up for the fifth time in three weeks; a rare car bomb went off in the Iraqi Kurds capitol of Erbil; and the Egyptian army was sent into Port Said to deal with the growing unrest.
The Brent pipeline in the North Sea which collects about 100,000 b/d from two dozen oil fields remains closed due to a leak.
Shell has declared Force Majeure on Bonny Light crude as it searches for a leak in the Nembe Creek oil line that was likely cut by thieves for the umpteenth time.
Iran and Pakistan plan a ground breaking next Monday on a new multi-billion dollar 1700 mile pipeline that is intended to bring Iranian natural gas into Pakistan. The project, which has been vigorously opposed by the US, passes through Baluchistan, a hotbed of Sunni-Shiite controversy. The chances of its ever being completed much less transporting significant amounts gas do not seem good.
In Washington, the “sequester” is picking up steam as President Obama announced his new energy-environmental team of Gina McCarthy as EPA administrator and Ernest Moniz as Secretary of Energy. The President has already said that if Congress will not act, he will use existing authorities to curb greenhouse gas emissions and boost clean energy. Environmentalists continue to step up opposition to the Keystone pipeline.
Mexico’s President seems to be making progress on efforts to end the 75-year old PEMEX monopoly on oil production.
In Beijing speeches at the ceremonial “National People’s Congress” suggest the government may be getting serious about air pollution and that major changes in energy policy are in the works.