Peak oil notes - Jan 9
New York oil futures continued to fall this week, closing on Wednesday at $92.33 a barrel which is $8 a barrel below the recent highs seen the last week of December. This week’s decline came on the news that while crude inventories were down by an expected 2 million barrels, gasoline and distillate inventories climbed by an unexpected 6.2 million and 5.8 million barrels respectively, suggesting much weaker demand. True product export numbers will not be available for at least two months. Some of the crude inventory decline could still be related to end-of-year tax avoidance as part of the week was still in 2013. Stocks at Cushing, Okla. grew last week suggesting that refiners did not want to have oil in Gulf Coast storage tanks where it would be taxed.
US domestic crude production increased by 24,000 b/d to 8.14 million b/d last week. This increase came before the polar vortex struck the mid-western oil fields sending temperatures to record lows. Next week’s figures will likely show a drop in production. The extreme cold forced many US refiners to slow operations suggesting that next week we will see an increase in crude and a draw on oil products.
Brent crude has been essentially flat this week, closing Wednesday at $107.15, increasing the WTI/Brent spread to $14.82. Libya’s National Oil Corp said that the resumption of production at the Sharara oil field has increased the country’s oil production to 546,000 b/d vs. 210,000 b/d in December. The local tribes controlling the field, however, say it will be shut down again in two weeks unless Tripoli agrees to their demands. The increase in Libyan production, however, has been offset this week by the increasing Sunni/Shiite fighting in Iraq which has raised fears about the future of Iraqi crude exports.
US natural gas futures continued to fall this week on forecasts of warmer weather across much of the US. Natural gas futures settled on Wednesday at $4.21, the lowest since early December – down by more than 30 cents per million BTU’s since late December.
The Iranian nuclear talks have run into a snag over the issue of Iran’s continuing research on advanced centrifuges. There has been no progress on talks to end the fighting in South Sudan.
The situation in those sections of Fallujah and Ramada in Anbar province that were taken over by al Qaeda militants last week is murky. Some reporting suggests that a deal has been struck between local Sunni tribes and Baghdad to drive Al Qaeda out of the cities in return for government forces withdrawing from the province. Needless to say Washington is very concerned about the strength al Qaeda has shown in recent days and the possibility that a deal to de facto partition the country is in the works. So far these problems do not seem to have affected Iraqi oil production or exports.
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