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Oil holds above $60 on weak dlr; demand fears linger
Fri 7 Nov 2008, 8:18 GMT

By Fayen Wong

PERTH (Reuters) - Oil hovered above $60 a barrel on Friday, as support from a weakening U.S. dollar was countered by an increasingly gloomy economic outlook that weighed on near-term energy demand.

Comments by OPEC-member Libya that the oil-producing cartel was not considering cutting production again also kept the commodity at a 1- year low.

U.S. light crude for December delivery fell 9 cents to $60.68 a barrel by 0702 GMT, having earlier fallen to $59.97, its lowest since March 22, 2007. London Brent Crude shed 18 cents to $57.25 a barrel.

"The pullback in the U.S. dollar is a key driver for oil's gains," said Toby Hassall, chief analyst at Commodities Warrants Australia in Sydney.

"But a weak global demand outlook will continue to be the primary driver in oil market. With the U.S. non-farm payroll expected to be abysmal, there is nothing much on the demand side that can lift prices."

The dollar extended losses against the Japanese currency on Friday, falling more than 1 yen from the day's highs on risk aversion.

Oil prices have tumbled more than 9 percent this week, as a raft of dismal economic data from the United States heightened worries about a protracted global recession and growing U.S. fuel stockpiles underscored slackening energy demand.

The International Monetary Fund said on Thursday it expected 2009 global economic growth of 2.2 percent, down 0.8 percentage points from its October forecast. It also cut its 2009 baseline oil price projection to $68 a barrel from $100.

Asian stocks fell on Friday on fears of a global recession, as layoffs and corporate profit warnings piled up in the face of a slowing global economy.

Traders will be looking towards U.S. economic indicators due later on Friday, including government reports on October unemployment data and September wholesale inventories, to gauge how the world's largest economy is faring.

OPEC NOT CONSIDERING MORE CUTS

OPEC is not actively considering cutting production again as oil markets are still volatile, but the group could opt to meet before its next scheduled meeting in December, Libya's top oil official said on Friday.

Shokri Ghanem also warned that continued low oil prices could force companies to cancel new projects, risking a shortage of oil in two years.

In about three months, oil prices have plummetted nearly $90 from record highs above $147 a barrel, as the worsening global economic crisis erodes energy demand in the United States, the world's largest energy consumer, and other industrialised nations.

Slowing demand and the sharp price declines drove the Organization of the Petroleum Exporting Countries to agree to cut output by 1.5 million barrels per day (bpd) at an emergency meeting last month.

OPEC's seaborne oil exports, excluding Angola and Ecuador, will drop 310,000 bpd in the four weeks to November 22 and will have fallen 700,000 bpd from an August supply peak, an oil analyst who tracks future flows said.

Opec could cut supply again
Wire services

Opec will cut oil output again if the trend towards lower prices and slowing demand growth are unchanged when the group meets in December, Iran's Opec Governor Mohammad Ali Khatibi said yesterday.

The credit crisis and economic slowdown could shave as much as 3 million barrels per day (bpd) from global crude demand, Khatibi told Reuters.

"If everything is the same and the trends continue like this then Opec will have to do something," Khatibi said in an interview by telephone.

"We have to balance the market. Recent indications are that demand could have fallen by 2 to 3 million barrels per day. Stocks are rising."

Oil dipped below $60 a barrel last week, the lowest since March 2007, and has tumbled nearly 60% from its July peak over $147.

Opec agreed at an emergency meeting on Oct. 24 to chop production by 1.5 million bpd, or around 5%, to halt the price slide, but the cut has had little effect to date.

Opec President Chakib Khelil said on Saturday the producer group would probably move to cut again at its December meeting if prices stayed low and members had fully met their existing pledges to reduce supply.

Some members of Opec would propose at the December meeting that the group look to maintain prices within a $20 range, Khatibi said.

That range could be either $70 to $90 per barrel or $80 to $100 per barrel, he added, declining to name the countries that would propose or support the price band or to say if Iran would support it.

Venezuela's oil minister said last month it would propose Opec adopt one of those two price bands. Venezuela has already proposed a further cut of another 1 million bpd in Opec supply at the December meeting.

Current prices were too low to encourage investment in unconventional oil projects such as oil sands and in expensive conventional oil projects in the deep sea, Khatibi said.

"In the short-term the crisis is affecting demand," Khatibi said. "But in the medium term this will affect supply. We need a price that will ensure we build capacity today to meet tomorrow's demand."

Iran's plans to expand output were unaffected as it had neither deep sea nor unconventional projects, he said. "But if this continues, it will affect all producers, and Iran will be no exception".

Oil companies are already reconsidering some projects that looked profitable when oil was higher.

Iran, the world's fourth-largest oil producer, has cut around 200,000 bpd from output of around 4.04 million bpd in line with Opec's October agreement, an Iranian oil official said on Friday.

World needs to tap oil reserves more quickly-IEAReuters, Wednesday November 12 2008

By Jane Merriman
LONDON, Nov 12 (Reuters) - The world is not about to run out of oil, but there is a risk its reserves may not be exploited fast enough to meet global demand growth in the years ahead, the International Energy Agency said on Wednesday.
The agency's World Energy Outlook for 2008 stopped short of sounding the alarm that oil supplies may have peaked, but highlighted obstacles to accessing new fields that include the increasing dominance of national oil companies.
"Some 30 million barrels per day of new capacity is needed by 2015," said the IEA, which advises industrialised countries.
"There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe."
The IEA estimated the world needs investment of more than $26 trillion in the next 20 years to ensure adequate energy supplies, an increase of more than $4 trillion from estimates in its 2007 World Energy Outlook.
The Executive Summary of its latest Outlook was released last week ahead of the full report.
In oil, upstream investment spending has risen in nominal terms, but much of the increase was due to high costs and also because cheaper reserves were off-limits to international oil companies.
"Today, most capital goes to exploring for and developing high-cost reserves, partly because of limitations on international oil company access to the cheapest resources."
The gap between what was being built in terms of new capacity and what would be needed to keep pace with demand was set to widen sharply after 2010, the IEA said.
The IEA's projections pointed to a rise in world oil supply to 106 million barrels per day (bpd) in 2030 from 84 million bpd in 2007.
NON-OPEC PEAK
Most of the increase would come from members of the Organization of the Petroleum Exporting Countries, whose share of world oil output was projected to rise to 51 percent in 2030 from 44 percent in 2007.
Outside OPEC, production has already peaked in most countries and would peak in most others before 2030.
The need to invest enough to ensure supply meets demand has been a recurrent theme in the IEA's annual outlook.
The 2008 report highlighted again the urgent need for investment, but also shifted the focus to dwindling reserves.
It looked at decline rates for 800 of the world's oilfields, where it expected the average rate of decline to increase to 8.6 percent in 2030 from about 6.7 percent currently for those that have passed their production peak.
Given the high cost of bringing on new output and the struggle to match supplies with demand, the IEA assumed consumers would pay an average of $100 a barrel for oil over the next seven years and more beyond that.
The agency was careful not to predict prices, but makes price assumptions in its assessments.
Oil reached a record peak of more than $147 a barrel in July, but has fallen back below $60, a drop of more than 50 percent in just over three months.
The IEA saw more price volatility ahead.
"Pronounced short-term swings in prices are likely to remain the norm," the IEA said.
"The sudden drop in oil prices in August and early September 2008 - in the absence of any obvious major shift in demand or supply - lends support to the argument that financial investors have been playing a significant role in amplifying the impact of tighter market fundamentals on prices."
The report's projections for world oil demand were for a 1 percent increase per year on average, to 106 million bpd in 2030 from 85 million bpd in 2007.
World energy demand was expected to grow by 1.6 percent per year on average, with China, the world's second biggest energy consumer, together with India, accounting for just over half the increase.

Tuesday November 18, 2008 Oil will continue to dominate energy field for decades
TAN TENG-HAI

Oil will continue to play a major part in meeting the energy needs of the world to 2030 and beyond, according to the projection of the International Energy Agency (IEA).


The IEA estimates that meeting its forecast will require around $3 trillion worth of global investment in finding, producing, transporting and refining the oil required by 2030.


The global production of crude oil will not peak before 2030, if necessary investment is made in exploration and production.


Nearly $500 billion in investment includes refining but excludes investment in tighter fuel specifications, which has absorbed most of the refinery investment in Europe over the last decade.


Meeting tighter product specifications requires refiners either to use more expensive low-sulphur crude or to invest in new hydrofining units to reduce sulphur content in product. The units needed are major investments and take several years to plan and build.


At the same time, the changing expectations in refining globally have resulted in a strong push for cleaner fuels, biofuels and carbon dioxide emission reductions.


More clean-refiners have to adapt for operational excellence, giving due consideration to the complexity and scale of any new expansion or construction. This desire is tempered, however, by concerns about crude oil supply, quality and cost of production.


At Shell Global Solutions, we believe that conventional crude resources are not in imminent danger of running out. There are sufficient reserves to last for 40 to 100 years, given new technology to extend recoverable oil reserves and "yet to be found" oil.


We also feel there is the potential to recover unconventional reserves, such as heavy oils and oil sands. Output of liquid fuels will be supplemented by gas-to-liquids technologies, which convert stranded gas from remote areas into transport fuels.


Closure of refineries will exacerbate any shortage as it will affect the supply side. Refineries will also have to process different crude oils. Initially, other low-sulphur crudes may be used, but over time the crude oils available will become heavier and sourer (i.e. containing more sulphur) and low-sulphur crude will carry an even greater premium. Hence, refineries will have to adapt processing to serve that trend.


By 2030, there will be fewer oil-producing nations than today, and Opec countries will supply half of the world's oil needs. Consequently inter-regional trade in oil will double to 65 million barrels a day by 2030.


As we struggle to understand the increases in margins and differentials, we have to ask: What changed? World refining utilisation has gone up 2% from 2003 to an average of 86.3% worldwide.


The exceptional margins result from four drivers: strong demand, nearly full utilisation rates of refineries, length in global fuel oil supplies and high oil prices.


Most of the refinery expansions being announced are in the strong-demand regions of Asia and the Middle East. In Europe and the US, the focus is more on using heavy feedstocks, adjusting the product mix, and improving cost efficiency. More expansions are planned for the end of the five-year period.


There is an increased interest in achieving top-quartile performance. A refiner can invest to improve reliability, energy cost and other operational factors to achieve improved competitive cost structures. The improvement will lift the refiner's income, as energy cost is tied to crude price, and returns on reliability and operational improvements are margin-dependent.


Three factors have been influencing them to increase capacity, including the need to boost profitability, widen the price gap between light and heavy products, and increased cash and personnel availability as companies finish their low-sulphur fuel investments.


In Asia and the Middle East, state-owned companies mostly hold the majority of refining assets. These companies have expressed a strong need for new capacity and believe that the current tight capacity situation will ensure higher margins. The Middle East refiners also see that they can improve the value they receive from their heavy crude by refining it themselves.


On the question of over-expansion, in general the boom will drop utilisation regionally, and Asia and Middle East are at highest risk of over-expansion. Other regions, given their slow demand, will keep their expansions to a minimum. Yet, in the next few years, prior to that capacity coming online, refining capacity will remain tight since new construction will take more than five years.


Tan Teng-Hai is regional manager for consultancy at Shell Global Solutions East.

Oil Rises a Second Day on Speculation OPEC Will Prevent Glut

By Gavin Evans and Christian Schmollinger

Nov. 24 (Bloomberg) -- Crude oil rose for a second day in New York on speculation further production cuts by the Organization of Petroleum Exporting Countries will prevent a glut in supplies.

Slowing global demand has left a 1 million-barrel-a-day oversupply that needs to be removed by the year-end, Venezuela's Oil Minister Rafael Ramirez said yesterday. Prices below $50 a barrel risk stalling new developments by smaller oil companies, Total SA Chief Executive Officer Christophe de Margerie said.

``The market now sees that OPEC is more likely to cut production,'' said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. ``To be effective, it must be a 1.5 million-barrel-a-day cut or more. Even 1 million won't be enough because the sentiment has been so bearish.''

Crude oil for January delivery rose as much as $1.41, or 2.8 percent, to $51.34 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $50.32 a barrel at 3:29 p.m. in Singapore. Prices are down 66 percent from the record $147.27 a barrel on July 11.

Oil gained 1 percent to $49.93 a barrel on Nov. 21, the first increase in six days, as a report forecast a 3.8 percent decline in OPEC shipments this month and the Standard & Poor's 500 Index climbed from an 11-year low. Oil traded at a three-year low of $48.25 earlier that session.

OPEC ``have got to be pretty careful how they attempt to manipulate this,'' Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a Bloomberg Television interview. ``There's some expectation they'll cut production further, but they're likely to look to the new year before assessing it again.''

Recession, OPEC

Brent crude oil for January settlement rose as much as 81 cents, or 1.7 percent, to $50 a barrel on London's ICE Futures Europe exchange today. It was at $49.50 a barrel at 3:27 p.m. in Singapore. The contract gained 2.3 percent to $49.19 on Nov. 21.

OPEC ``needs higher prices, so they will intervene,'' said Total's de Margerie during an interview on RTL radio and LCI television yesterday. He called an oil price below $50 a ``danger'' as it will curtail investment in new oil fields.

New York oil futures have fallen as the U.S., Japan and much of Europe slipped into recession, equity prices slumped and a rising U.S. currency reduced the appeal of dollar-priced commodities.

Heads of state from the 21-nation Asia-Pacific Economic Cooperation group, including the U.S., China and Japan, promised to act ``quickly and decisively'' to resolve the global economic crisis, without offering specific steps. The leaders issued their comments following a two-day summit in Lima.

Double Whammy

Oil ministers from the 13-nation OPEC group meet in Cairo on Nov. 29. Venezuela, OPEC's fifth-largest producer, will be seeking a 1 million-barrel-a-day cut and assurance that the 1.5 million-barrel reduction agreed on Oct. 24 is being implemented, Ramirez said.

OPEC's ``not having a lot of leverage on prices,'' ANZ's Pervan said. ``The large cutbacks we've seen in the last month or two really haven't impacted positively on prices. And I think they're concerned that as they cut production and prices fall, they're getting a double whammy on revenue.''

Oil inventories in the U.S., the world's largest consumer, are at their highest in six months after rising for eight straight weeks, according to Energy Department data. Reports tomorrow will probably show the world's largest economy contracted more than earlier forecast in the third quarter.

Of all commodities, oil is the most exposed to the U.S. economy, which is the ``epicenter'' of the global slowdown now under way, Pervan said. Prices may drop below $40 a barrel in the first quarter as the contraction continues, he said.

``As far as we can see, demand conditions are likely to get weaker before they get stronger in oil over the next six months,'' he said.

Tuesday, December 2, 2008, 14:02Oil rebounds after fall to 3-year lows


Oil pared losses today after an earlier fall to a new 3-1/2-year low below $48 a barrel, weighed down by heavy losses in global stock markets after confirmation that the United States was in recession.

But a rally in European shares and expectations of a bounce on Wall Street helped oil move up from its lows.

US light crude for January delivery was up 3 cents at $49.25 a barrel by 1pm. It earlier touched a new 3-1/2 year low of $47.36, its lowest since May 2005.

Prices had dropped nearly 10 per cent today. London Brent crude was up 5 cents at $48.02 a barrel after touching a low of $46.02, its lowest since February 2005.

"Today's equity market rebound is preventing oil from going lower," said Olivier Jakob, of consultancy Petromatrix.

"The equity market has been a main input for oil," he said. "Because the slowdown in oil demand is linked to the global economy - that's why the correlation is very strong."

Oil prices had tumbled today after Opec decided to wait until later this month to take more supply off the market to try to defend prices.

"Opec was the key reason for the sell-off at first and then the poor performance on equity markets helped it follow through," said Rob Laughlin, oil analyst at MF Global in London. A key economic research body found today that the United States economy had slipped into recession in December 2007.

The Organization of the Petroleum Exporting Countries is ready to cut production by a significant amount when it meets later this month in Algeria to try to shrink rapidly building stocks, Opec's secretary-general said yesterday.

thankyou

Nicked from the Hawk board over on another site. Good news for many O&G Co's

USA Oil Windfall Tax Shelved

"...The switch drew applause from industry. The judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America's oil and natural gas would be seriously damaged by such a tax policy," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, which represents independent oil and gas producers..."

Full article here:

http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4B206W20081203

Oil now under $45 heading south?

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

December 4, 2008


Oman to assume $45bbl oil price in 2009 budget



Oman will amend its 2009 budget to assume an average oil price of $45 a barrel following a sharp decline of around $100 in international crude prices since July.


Omans official news agency said the Persian Gulf Arab oil producers council for financial affairs and energy resources agreed at a meeting to amend the oil price assumed in the budget.

The council agreed the amendments, the most important of which is to calculate oil revenues based on an average of $45 a barrel in line with the recent developments in the oil markets represented by a significant decline in the price of oil compared to the level reached in the first half of the year, the statement said.

It did not say what the previous oil price assumed in its 2009 budget was. Oman is a small oil producer and is not a member of OPEC.

(Source: Trade Arabia)

Just watched some presenter on the news rabitting on about how $25 oil will "help us all at the pumps"

MOTHER OF ALL LOL's

Haven't they a CLUE what damage that will do to the price of oil? With exploration, development, upkeep on ice or just plain abandoned they would soon after see $200 as a result. Oh jeez are they really that stupid!?!?

Yes!

With demand falling, there is no way oil will reach $200 in the short to medium term...



Oil to hit $25 a barrel as global recession deepens, Merrill Lynch predicts

Oil prices could tumble below $25 a barrel next year if the global recession reaches China, investment bank Merrill Lynch has predicted.

The prediction that the crude prices could revisit lows last seen in 2002 led to a plunge in energy shares on Wall Street and sent the Dow Jones index down 215 points - or 2.5pc.

"With demand vanishing across all key oil consuming regions, benchmark crude oil prices continue to plummet," Merrill said in a research note. "A temporary drop below $25 a barrel is possible if the global recession extends to China."

Oil fell below $43 barrel overnight as crude oil heads for its biggest weekly decline since March 2003. Since the US was declared to be in recession earlier this week the price has fallen 19pc.

"The connection is pretty clear - fewer people in jobs is a clear sign of a weakening economy,'' said Toby Hassall, a research analyst at Commodity Warrants Australia in Sydney.

"As unemployment rises, GDP falls and oil demand falls. It's not likely to show much hope for the economy.''

However, low prices are not expected to last.

"With demand vanishing"

WTF?!? What planet do these people live on?

Kilduff: Expect Rebound In Oil Prices Early 2009
Posted By:John Kilduff


John Kilduff
CNBC Contributor

Crude oil prices are now mired well below $50 per barrel, and they look to be heading lower still. While some of the price pressures are obvious, there is one that may be less so: hedge fund liquidations. The list of funds that have had to enact capital preservation measures is growing by the day, and the names are notable: Tudor Investments, Fortress Investments, and D.E. Shaw have all reported that several of their funds have thrown up the gates preventing further investor redemptions, due to being swamped by requests for redemptions from investors that must be met by year-end.

These are probably the most notable instances of what is happening, but they are hardly alone. I believe the liquidations underway to meet these year-end cash payouts are putting tremendous pressure on commodity prices across the board. This wave of liquidations should be expected to continue over the next several weeks, and could easily result in crude oil prices dipping down into the mid-30s. However, once this round of selling is concluded, I would expect a significant rebound in prices as we enter 2009.

I reviewed the historical price chart for crude oil, when it collapsed it 1998 to around the $10 level. History may be repeating itself. On October 1, 1998 crude oil fetched just over $16 per barrel and quickly fell to a low of $10.35 on December 21st. By May 1, 1999, prices rebounded to well over $18 per barrel. Fast forward to today, and we have crude falling from $102 from October 2nd to the mid-40s, this morning.

Obviously, the economic landscape is much more challenging today than it was in late 1999, as the economy was enthralled in early part of the dot com boom.

However, even with Chinas economy slowing and the dim economic data before us, the extent of the sell-off seems to have over shot, the same way $147 per barrel did on the upside. With more and more expansion plans being shelved by energy companies and production cutbacks from both OPEC and Non-OPEC producers looming, energy supplies will quickly tighten, as the global economy turns back up, even modestly.

Investors should also take note of the performance of the oil majors like ExxonMobil [XOM 76.60 0.33 (+0.43%) ] , Chevron [CVX 74.42 2.66 (+3.71%) ] , and BP [BP 43.52 0.19 (+0.44%) ] . Their shares prices never went hyperbolic with the price of oil, but even with the nearly $60 dollar drop from October, their share prices have been relatively stable and their recent lows probably represent long-term bottoms.

The crash in energy prices is incredibly simulative to the economy. I submit that the energy price shock of last summer had as much as anything to do with our current economic straits. Each of the last several recessions, including the relatively tame circa 2001 recession, have been preceded by a spike in energy prices.

This mornings devastating employment report, which showed a loss of 533,000 jobs, certainly represents a challenge to my thesis that prices can rebound in the first quarter of next year. However, it appears everyone from investors to hedge fund to companies are clearing the decks ahead of the New Year. With the worst of the news being put behind us, and prices declines for oil into the $30s, the case for a rebound remains

http://www.rigzone.com/news/article.asp?a_id=71745

Why We'll See $200 Oil Soon

Done marky ;) .... IMHO 2009 Will be slow things need to settle down, but oil will tic up slowly in the next 12/18 months !


The "Era of Cheap Oil Prices"
is Ending Soon ( from MoneyMorning)


When the global recession ends in 2009, all of the factors that drove oil prices to record highs last summer will again be exposed and oil prices will again hit triple digits.


Here's why oil prices will rebound and the six oil plays the best investors are making now while oil prices are at historic lows

Enjoy oil prices now while they're cheap, because a cadre of analysts is calling for oil to rise as much as 113% in 2009.

Among the many reasons oil producers, importers and exporters are bracing for a serious oil price hike !!

The "easy" oil has already been found.
The world's largest fields are declining - from the Persian Gulf, to the North Sea, to the Gulf of Mexico, to Alaska.
Two major oil exporters - Indonesia and China - have begun importing oil.
New growth in Asia is demanding nearly 10 billion barrels every year while
There's hasn't been an "elephant oil field" discovery (one that yields at least 1 billion barrels) in 40 years.
This report outlines - in plain English - when oil prices will begin climbing again and how high the top oil experts say oil prices are going to go in 2009, 2015 and 2030.