Peak Oil Review: A Midweek Update – 15th Sept 2016

September 15, 2016

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It has been a down week for oil prices with New York futures falling from $47.50 on Thursday of last week to closeWednesday at $43.64. London futures closed at $45.85. Much of the downward pressure this week came from new pessimistic-for-prices reports from OPEC and the IEA.  The International Energy Agency has changed its forecast that the world crude oil glut would end this year. The Agency now believes the global surplus will continue into the first half of 2017 due to slower than expected growth in worldwide demand and increasing crude production. OPEC now expects that more oil will be pumped by non-member countries next year, including more US shale oil.

The price slide on Wednesday came after the EIA’s weekly stocks report showed a 6-million-barrel increase in total US commercial crude and product inventories. The slide was helped by reports that Exxon was resuming some of its production in Nigeria and that the major Libyan oil export terminals may reopen soon.

The IEA continues to be concerned about the steep decline in new investment in oil production. From $750 billion in 2014, new investment will fall to about $450 billion this year.  The Agency is naturally concerned about the impact on production in the years ahead.

On Sunday in Libya troops loyal to General Haftar and the eastern government took control of the oil-export terminals from local guards loyal to the Tripoli government. Although some see this move as a setback for Libyan unity, the National Oil Company said it is moving to resume crude exports. The company now seems to be loyal to both sides and is more interested in exporting oil than in who runs the country.

On Tuesday, the militia group, The Niger Delta Greenland Justice Mandate said that on Tuesday it blew up a major oil pipeline. This attack was carried out by a new group that apparently is not a party to the recently announced cease-fire. As usual, a blackout on releasing information on the effects of militant attacks means that it will be several weeks before a realistic picture of Nigerian oil production evolves.

Tom Whipple

Tom Whipple is one of the most highly respected analysts of peak oil issues in the United States. A retired 30-year CIA analyst who has been following the peak oil story since 1999, Tom is the editor of the long-running Energy Bulletin (formerly "Peak Oil News" and "Peak Oil Review"). Tom has degrees from Rice University and the London School of Economics.  

Tags: geopolitics, oil price