Peak oil notes – Feb 14

So far this week oil prices have changed little. NY oil has been trading around $97 after moving up from $96 on Monday, and Brent has been trading just below $119. The weekly stocks report showed crude inventories increasing by 600,000 barrels which was below the 2.3 million barrel increase the analysts were forecasting and well above the 2.3 million barrel decline the API’s survey showed. Gasoline and distillate stocks were down by 800,000 and 3.7 million barrels respectively – suggesting that a lot of gasoline and diesel still is being exported.

The weekly report also showed a 1.2 million barrel drop in crude stocks at the Cushing hub. This suggests that more oil is going directly to refineries or the Seaway pipeline is doing a better job of draining the Cushing glut away to the Gulf Coast.

Shell has given up on the 2013 Arctic drilling season and is towing its Alaskan-based rigs to Korea for repairs.

This week the IEA, EIA, and OPEC all came out with forecasts for global oil consumption in 2013. The IEA in Paris is less optimistic about China’s oil consumption this year and lowered its forecast for global consumption this year by 90,000 b/d to 840,000 b/d. OPEC and the US’s EIA see demand increasing this year.

IAEA inspectors were in Tehran this week to discuss more access to the Iranian nuclear program. Tehran reported some progress but most observers remain skeptical. Tehran has been defiant of late and has even announced it is stepping up uranium enrichment.

Iraq has been quiet this week. In Syria, the insurgents continue to overrun government military bases and took over the country’s biggest dam. Assad’s forces seem to have a good hold on central Damascus and continue to shell and bomb rebel-held suburbs. Moscow announced it would continue to supply arms to the Assad government. While many believe that Assad can hold on in the center of Damascus for a prolonged period, there is little left of Syria’s economy and the rebels will soon be able to concentrate more forces on Damascus. Iran and Hezbollah are busy organizing militia forces that they hope will allow them to play a significant role in the chaos that is expected after Assad leaves.

The Egyptian economy is deteriorating rapidly, hard currency reserves are almost gone, and a shortage of diesel fuel is developing due to the inability to pay for imports. Prolonged fuel shortages will lead to food shortages and an increase in civil unrest. Fuel subsidies which keep retail diesel at $0.19 a liter now cost the country 120 billion Egyptian pounds a year. Unless the wealthier Arab states continue to bail Cairo out, there will be major problems later this year.

There was panic in Venezuela over the weekend after the government announced a major devaluation of the currency last week. No word yet on Chavez’s condition, but it is starting to look as if another major oil exporter is facing serious troubles.