Category: Peak Oil Review

Oil traded in a narrow range last week between $44 and $46 per barrel in New York and $48 to $50 a barrel in London. Increases mostly came from news suggesting that better economic times might be ahead in some part of the world, while declines came when concerns about high inventory numbers, oversupply, and the outlook for China took precedence. US natural gas futures have cycled steadily between $2.73 per million BTUs and $2.64 for over a month now with little news to drive prices out of their trading range.

The three day, nearly 30 percent, price surge which began the week before last continued through last Monday, then slowed as the week progressed with New York crude closing Friday up 1.8 percent and Brent down by 0.9 percent. New York futures settled on Friday at $46.05 and London at $49.61.

It was one of the wildest weeks for the oil markets in recent years. On Monday, another plunge in the Chinese stock markets sent New York oil futures below $38 a barrel and London down to $43, a six and one half year low. The markets bounced around on Tuesday and Wednesday and then surged upwards for two days on the news that the US’s GDP was doing better than previously thought and that the Chinese situation was stabilizing. By Friday afternoon New York futures were up 12 percent for the week, the largest one-week gain since February 2009, closing at $45.22 a barrel. London’s Brent gained 10 percent during the week, closing at $50.05.

The great oil price slide of 2014-15 is taking on epic proportions. US futures traded for a while below $40 a barrel on Friday while Brent closed out at $45.46. Last week the financial press struggled to find an historical comparison to what is taking place in the oil markets. Some papers finally settled on the price crash of 1986 which sent oil prices down to $10 a barrel and led to the demise of the Soviet Union as the most apt. The now familiar forces of too much oil in inventories with nobody moving to cut production; China’s exports, manufacturing, yuan, and stock markets continuing to drop with still more problems in sight; and the prospect for increased Iranian exports after the nuclear agreement is ratified; all contributed to the falling prices. Many sense a decisive shift in the oil markets overall appraisal of the situation with those expecting a price rebound at any minute throwing in the towel and acknowledging that those not expecting a substantial price increase until late 2016 or even 2017 are probably right.

Oil prices have now had a 7th consecutive weekly loss with New York futures closing Friday at $42.50 and London at $49.19. Last week Beijing’s devaluation of the yuan joined the 2 million b/d oil glut and an unplanned outage at a major US refinery to send oil prices lower. Traders now are talking about prices falling into the $30s. The week’s new data included: US crude stocks falling a bit, but not as much as expected; new forecasts from the IEA and EIA which predict that the glut will continue and US production will fall until late in 2016 at which time production and oil prices will rise; the monthly report from North Dakota saying that shale oil production continued to rise in June and that its well-head prices are now down to $28 a barrel; and that the US rig count was up slightly the week before last.

Oil prices continue to fall with New York futures closing Friday at $43.87 and London at $48.61, both down 7 percent for the week. There was the now usual mid-week bounce as traders anticipated that US crude inventories would decline. This time they did fall for the third straight week, but record refining simply turned the crude into inventories of oil products leaving the total stockpiles of commercial crude oil and products largely unchanged at the time of year when it usually drops due to heavier summer demand.

Last week started with the China’s stock markets suffering the biggest one-day loss in eight years. After that it was mostly down hill for the oil markets. There was a bounce after the Wednesday stocks report showed a larger-than-expected, 4.2 million barrel, drop in the US crude inventory, but by the end of the week prices were falling again. At the close Friday New York futures were down to $47.12, the lowest close since March 20th, and London was down to $52.26. The week’s losses left US oil futures down 21 percent during July and Brent down 18 percent, the largest one-month losses since last December. The price drop in July was the largest since the 2008 financial crisis.

The slide in oil prices continued with New York futures closing Friday at $48.14, down 6 percent for the week, and London futures closing at 54.42, down 4.3 percent during the week. This time the decline was aided by an increase of 21 rigs drilling for oil in the US suggesting that US shale oil production will increase or at least decline more slowly. The decision to reactivate these rigs was likely taken a month or more ago when prices seemed to be stabilized around $60 a barrel. In addition to the increase in rigs, the now normal factors of a stronger US dollar, a contracting Chinese economy, increasing inventories, and higher oil output from Saudi Arabia and Iraq contributed to the falling prices. The prospect that more Iranian oil will be coming on the the market before the end of the year also keeps pressure on the market.

While still volatile, oil prices continued to decline last week with New York futures closing at nearly a three-month low of $50.89 – down 3.5 percent for the week and 14 percent this month. In London oil futures followed a similar pattern with Brent also finishing at close to a three-month low of 57.10 – down 3.2 percent for the week and 10 percent this month. This was the third consecutive weekly loss for oil futures.

Last week US oil prices had their biggest weekly decline since March as concerns about over supply, the Greek debt crisis and China’s stockmarket plunge all came together to force prices down. Most of the decline came on Monday and Tuesday in the wake of the Greek Austerity referendum with New York futures trading below $51 a barrel, down $10 from where they had been in the previous week and London got close to $55 a barrel before a rebound set in. By Sunday night the Greeks reached a deal with the other Eurozone members over a bailout and Beijing “stabilized” its equity markets using draconian measures. New York futures closed out the week at $52.74 and London at $58.57.

The gradual down trend in oil prices which began in early May continues with New York futures closing the week at $55.52 and London at $60.32 – down about 13 percent from the spring highs. The Greek crisis; the Iranian nuclear negotiations; reports of near-record oil production by Russia and OPEC resulting in a circa 2 million b/d global surplus; the steep decline in the Chinese equity markets; and the announcement that the US drilling rig count increased last week after 29 consecutive declines all contributed to weak prices. At $55 a barrel, NY futures have now broken out of the $57-62 trading range that has obtained since early May.

Crude oil prices were little changed last week, with New York futures trading around $60 a barrel and in London around $63. As has been the case for several weeks, the global oversupply of crude, the Greek debt crisis, and China’s weak economy have kept downward pressure on the markets. Trader hopes that the summer driving season will soon push up the demand for gasoline and expectations of an economic rebound continue to support oil prices. The uncertainties of the Iranian nuclear negotiations cut both ways with an agreement likely leading to a large increase in available crude, while failure of the talks would lead to increased tensions or worse in the Middle East.

After the usual amount of volatility that we have seen for the last three months New York oil futures closed at $59.61 per barrel on Friday, down 35 cents for the week. London futures, which have been drifting generally downwards since the beginning of May, closed at $63.02, down $1.24 for the week and about $4 a barrel in the last ten days. If the major energy watchers are correct, the oil markets remain oversupplied by about 1 or 2 million b/d, which is setting the trend, but with numerous factors ranging from the Greek debt crisis to the US rig count influencing trader decisions, oil prices continue to be volatile with the markets reacting to the day’s news.

For the last two months Brent crude has been trading in a $7-8 range between $62 and $69 a barrel. New York futures have been trading about $6-7 below Brent. Much of the volatility has come in sudden jumps as the markets interpreted and reacted to news relating to the oil market. Many traders seem to be convinced that prices are still too low and that one day there will be a rebound into triple digits despite market fundamentals – oversupply of crude and generally weak economic conditions – that seem to say that prices have rebounded too much from the lows seen last winter.

Oil prices fell last week with New York futures closing Friday at $59.31 a barrel, down 1.9 percent for the week. London closed Friday at 63.31 down 3.4 percent for the week. The debate over whether prices will climb or fall in the short term continues, with optimists citing various bits of good news about the global economy and the falling US rig count to support their case. Pessimists cite the estimated 2 million b/d of global overproduction and expectations of increased exports from the Middle East as reasons prices will decline. Much of the decline last week was due to a stronger dollar occasioned by the ongoing Greek bailout crisis.

Oil prices fell through Thursday last week, but rebounded 5 percent on Friday after Baker Hughes reported that the US rig count had resumed falling; the EIA reported a larger drop in US crude inventories than analysts had been expecting; and the dollar which had been climbing recently turned lower. At the close Friday, New York futures were at $60.30 a barrel and London was at $65.56, about where they were at the beginning of the week. New York prices climbed 1.1 percent during April and London fell 1.8 percent suggesting that the recent price increases are peaking out.

Volatility continued last week with oil prices falling early in the week, rebounding on Wednesday and Thursday, and then falling again on Friday. At week’s end, New York futures were down 1.4 percent for the week closing at $59.72 and London was down 2.2 percent to $65.37. Traders’ hopes for higheroil prices, which sparked the recent 35-40 percent price rally, have come mainly from falling rig counts and expectations that lower prices would fuel increased demand. These ideas have been supported by small declines in US oil stocks. The deteriorating situation in the Middle East, which shows every sign of getting worse, is another factor supporting prices despite indications that there is still a global oil surplus.

Last week oil prices gained for the ninth week in a row, setting a 30-year record for consecutive weeks of price increases. On Wednesday New York oil futures approached $62 a barrel, but settled to close out the week at $59.69. London futures performed similarly, closing out the week 2.2 percent higher at $66.69. The debate over whether prices have climbed too high, too soon continues. Those believing that prices are going higher look at the continuing drop in the US rig count – down again last week to 660 which about 58 percent lower than where it was last October. Those people expect US production will be dropping shortly, and indeed the EIA now is forecasting an 86,000 b/d drop in US shaleoil production next month. While this sounds like a lot, in comparison which total US production of around 11 million b/d this is not much. Market analysts are still expecting that US production which grew by 1.1 million b/d in 2014 will by up by another 675,000 b/d this year and 425,000 b/d in 2016.

The battle between higher and lower oil prices continued last week with futures hitting 2015 highs on Wednesday of $69.63 in London and $62.68 in New York. Prices then fell to close out the week at $65.39 and $59.39 respectively. London oil was down 1.6 percent for the week, its weekly drop in a month. As has been the case for several weeks now some observers are looking at the continuing decline in US drilling rigs – down by 11 last week — and some better US employment numbers which they believe will lead to an imminent decline in US oil production and higher domestic demand. Others, however, note that global oil production is still circa 1.5 million b/d above consumption; the global economy is not doing that well; and the US shale oil industry has such a large backlog on drilled but not-yet-fracked wells, that it still will be a while before demand catches up with supply.

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3.  Continue Reading

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3.  Continue Reading

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3.  Continue Reading

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3.  Continue Reading

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3.  Continue Reading

Contents 1.  Oil and the Global Economy 2.  The Middle East & North Africa 3. Continue Reading