A good time to bring up my conspiracy theory yet again. You never really know who is bidding on (up) oil futures. If it is the agents of OPEC they don't really have any risk since they don't have to take delivery of the commodity, just exercise the contracts and the money goes from the left pocket into the right pocket, like bidding up your own item on Ebay where the only risk is the fee to Ebay. The price of oil may not have anything to do with demand.
HOOORRAYYY FOR BRAZIL!!! http://www.bloomberg.com/apps/news?pid=20601086&sid=aBUoYKhu7PWk Brazil Oil Finds May End Reliance on Middle East, Zeihan Says By Joe Carroll April 24 (Bloomberg) -- Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said. Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas. Zeihan's firm, which consults for companies and governments around the world, was described in a 2001 Barron's article as ``the shadow CIA.'' Brazil may be pumping ``several million'' barrels of crude daily by 2020, vaulting the nation into the ranks of the world's seven biggest producers, Zeihan said in a telephone interview. The U.S. Navy's presence in the Persian Gulf and adjacent waters would be reduced, leaving the region exposed to more conflict, he said. ``We could see that world becoming a very violent one,'' said Zeihan, former chief of Middle East and East Asia analysis for Strategic Forecasting. ``If the United States isn't getting any crude from the Gulf, what benefit does it have in policing the Gulf anymore? All of the geopolitical flux that wracks that region regularly suddenly isn't our problem.''
You're assuming that demand and absolute price levels respond in a linear relationship which is very rarely, if ever, the case. Good luck with that short . . .
Finding oil isn't the problem. Finding cheap oil is. This is going to be an expensive field to produce. Plus the world consumes about 85 million barrels of oil per day. An increase of 'several million' a day is important, but not exactly a replacement for the middle east.
Wow...oil could be cheaper, and we'd be getting it from a country that allows its chicks to go topless. It's a win-win really.
True...but if India and China are getting their oil from the middle east, we can buy more from Brazil and less from the middle east. Also, if oil is more plentiful, then the price should drop.
Over/Under on political instability in Brazil for next 15years? Our buddies are getting impatient keeping their dollar pegs.
Usually when they get out of whack you have japanese housing bubble of the late 80's, tech crash of 2000, the current credit crisis, oil bust in early 80's. The fact is at some price point alternatives to oil look appealing. the oil cartel does not want that to happen.
spiked to $119 and change today after news of US supply ship firing on 2 Iranian ships that came too close. next thing you know... General Patraeus has in grown toe nail, oil prices spike to $150/barrel.
Price of oil won't drop because of supply reasons. If we grow 5% in world oil consumption every year, we'll need a larger rate (2-3 times) of current conventional oil discoveries than we currently have. It's still on us to tighten consumption, improve efficiency, and reduce overall demand. Opening a place like ANWR is truly a drop in the bucket of the world's supply. Since I'm skeptical of peak oil and lack of alternatives, here are some good news. Research on Bakken Formation's Oil Reserves Nearly Completed The U.S. Geological Survey is nearing completion of a research project that will attempt to quantify how much oil is contained in the Bakken shales formation and how much of it is recoverable. The study is expected to be completed by late April, according to Sen. Byron Dorgan, D-N.D., who, along with other state officials, pushed the federal agency to finish the research started by scientist Leigh Price. Billion barrels Price estimated the Bakken formation may hold as many as 900 billion barrels of oil. But Price died in 2000 before the study could be published or peer reviewed. Other estimates of the Bakken formation's oil reserves have pegged the number at closer to 200 billion or 300 billion barrels. Dorgan said Thursday during a stop in Grand Forks that completing the survey is important to North Dakota. The Bakken formation stretches across western and central North Dakota, eastern Montana, southern Saskatchewan and part of northwestern South Dakota. "I think it's going to show a very substantial recoverable reserve of oil," Dorgan said. "It will be important as a signal to the rest of the world what we have here." Dorgan optimistic Dorgan said the U.S. Geological Survey began work on finishing Price's work about a year and a half ago. He said he is optimistic that improvements in technology will lead to a substantial increase in how much of the oil in the formation will be able to be recovered. Dorgan said the study's findings will only increase the oil boom that the western part of the state currently is experiencing. "The oil boom is real and it's going to be real significant" Dorgan said. During a stop at the International Crop Expo on Thursday in the Alerus Center, Dorgan questioned why the Department of Energy continues to put aside 50.000 to 60,000 barrels of crude oil in the nearly-full strategic petroleum reserve every day in light of high oil and gas prices. "When oil is $90 to $100 a barrel, we shouldn't be taking it out of the supply pipeline and sticking it underground," Dorgan said. "It is increasing prices. I think it's absolutely nuts to be doing this with the current price of oil." Dorgan said it is important to maintain the strategic petroleum reserve, but he said the reserve is about 97 percent full and there is no reason to continue filling it when oil and gas prices are so high. Dorgan also said that high oil and gas prices affect farmers and North Dakotans more than some, citing research that showed North Dakota residents use twice as much gas per person as New York residents. I posted the company making bio-ethanol without corn months back. Now there's a research group claiming that they could make "a high-octane liquid similar to gasoline" with cellulose. Trees in Your Tank? The Future of Green Gasoline: Earth Day Extra “The temperature window is very critical,” Huber says. If you heat too slowly, you produce mainly coke—elemental carbon residue. If you heat too fast, you make mainly vapors. The sweet spot, about 1000 degrees per second, transfers roughly half the cellulose’s energy into hydrocarbons. “If we can get 100 percent yield, we estimate the cost to be about a dollar per gallon,” Huber says. “Right now we’re at 50 percent. Can we get 100 percent? I don’t know. Hopefully we’ll bump those numbers up.” A lot of people are making a killing out of oil futures and production. I don't think these will roll out unless the supply/demand gets to a critical and real phase, which I don't see coming in the next 15-20 years in an age of $50+ gas.
Hits another high. http://biz.yahoo.com/ap/080428/oil_prices.html Oil prices hit new trading record near $120 with UK pipeline shut down and Nigerian unrest VIENNA, Austria (AP) -- Oil prices hit an all-time high near $120 a barrel Monday after a weekend refinery strike closed a pipeline system that delivers a third of Britain's North Sea oil to refineries in the U.K. The shutdown comes amid supply outages in Nigeria that have helped to support oil against a strengthening dollar. "We've got a confluence of a number of events that have really disrupted crude oil supply," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "That's what's driving oil to a new record even though the U.S. dollar actually strengthened a bit." Light, sweet crude for June delivery rose to a record $119.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract eased back to $119.04 a barrel by noon in Europe, up 52 cents from Friday's close of $118.52. BP PLC on Sunday shut down the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. because of a 48-hour walkout by employees at a refinery in central Scotland. Workers walked out of the Grangemouth refinery vowing not to give ground in their dispute with refinery owner Ineos over plans to close a generous pension scheme to new employees. Ineos chief executive Tom Crotty said it could take a week for the plant to return to production once the strike ends on Tuesday. BP said its pipeline could be up and running within 24 hours. BP's Kinneil plant, the onshore processing center for the pipeline system, is powered from the Grangemouth site. "With the refinery being shut down, it will affect supplies from the North Sea and that has a potentially significant impact," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "That comes at the same time that there's production disruptions from Nigeria so the combined effect of those is the immediate factor that's put pressure on oil prices." Analyst Stephen Schork also attributed the bullish market to the combination of events stoking supply concerns. "News that BP shut-in 40 percent of the Forties Pipe compounded the latest headline out of Nigeria regarding a rebel attack near that country's largest oil and gas export terminal on Bonny Island," he said, in his Schork Report. "Thus, all of that 'bubble talk' aside, the market looks stronger than ever." In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details. Separately, workers at an ExxonMobil Corp. joint venture there cut production by an unspecified amount to demand more pay. Demand is high for Nigeria's light, sweet crude, which is easily refined. After years of militant attacks, however, Nigeria's output is dropping and the country can produce only about 75 percent of its official production capacity of 2.5 million barrels per day. This week, the oil market is also expected to closely watch the outcome of the U.S. Federal Reserve's policy meeting on Tuesday and Wednesday. The central bank's policymakers will meet to decide whether to lower interest rates again and to issue an updated assessment of the U.S. economy and financial system. Most investors believe the Fed will lower rates by another quarter percentage point -- and that it will also suggest it may temporarily halt its round of recent cuts. "There are a lot of expectations that the Fed will make an announcement that they will take a pause in interest rate cuts," Shum said. "If that's the case, then the U.S. dollar may bottom out and that could cause some pullback in oil pricing." Many analysts believe the weakness of the dollar is a bigger factor than supply and demand because the soft dollar draws investors worried about inflation into commodities such as oil and gold. It also makes commodities less expensive for buyers operating in other currencies. In other Nymex trading, heating oil futures were flat at $3.310 a gallon while gasoline prices moved up slightly to fetch $3.0568 a gallon. Natural gas futures added over 10 cents to sell at $11.072 per 1,000 cubic feet. Brent crude futures rose 73 cents to $117.07 a barrel on the ICE Futures exchange in London
OPEC President says $200 per barrel is possible http://biz.yahoo.com/rb/080428/oil_opec_president.html ALGIERS (Reuters) - OPEC President Chakib Khelil does not rule out oil prices reaching $200 a barrel, even though supply is adequate, because the market is driven by the dollar's slide, Algerian government newspaper El Moudjahid reported on Monday. "Questioned about a possible rise which would go to $200, the minister did not rule out this eventuality, explaining that this rise is from now on indexed to the fall in the dollar or to the rise in the dollar," El Moudhajid reported. "In terms of fundamentals, stocks are high, demand is easing, supply is satisfactory. Therefore normally, without geo-political problems and the fall of the dollar, the prices of oil would not be at this level," he was quoted as saying. Khelil, a former World Bank official, is also Algeria's Minister of Energy and Mines. He added: "The prices are high due to the fact of the recession in the United Sattes and the economic crisis which has touched several countries, a situation which has an effect on the devaluation of the dollar, and therefore each time the dollar falls one percent, the price of the barrel rises by $4, and of course vice versa," he was quoted as saying in brief remarks to journalists on Sunday.
Because 'times like these' aren't what the Strategic Reserves are about. If things in the world got really hostile, like, Iran sank a tanker in the Straits Of Hormuz, this will seem like the best of times. Oil would jump to $300 in a heartbeat. There would be rationing and looooooong lines at the gas station just like 1973. And they are not really even for that. You need to have adequate stores in in case, the unthinkable happens. Think of $120 oil as the just the tough love this country needs to slap us into the reality of of our dependency and extravagance. Automobile commercials are still touting horsepower and ignoring efficiency. How bad could it be?
