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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.

Only 113%?

'Oil storage at 25 year high'

By Upstream staff


Norway's Frontline, one of the world's biggest oil tanker owners, said today oil companies were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century.


"We think it's about 80 million barrels...but we are not 100% certain," the acting chief executive officer Martin Jensen told Reuters.

He said some 30 to 35 very large crude carriers capable of carrying two million barrels each and 10 Suezmaxes with a capacity of a million barrels each were being used by oil companies for floating storage in the last few months.

The figures include oil tankers owned by oil companies which were being used to stockpile oil.

Jensen said most of the supertankers being used for "floating storage" were anchored in the US Gulf, with others laid up in Asia and the Middle East Gulf.

"The Iranians have some and others are around Fujairah," he said.

Oil majors and independent trading companies have booked tankers in the last three months for storage to take advantage of a steep contango in the oil market.

Major ship broking houses and industry sources contacted by Reuters since oil majors and traders began storing oil late last year give more conservative estimates for storage.

Most say oil companies are storing some 60 to 70 million barrels in total, more than 3O VLCCs worth of oil equivalent.

"The truth is no one really knows exactly how much is being stored," one said.

"We have a total of 14 VLCCs chartered in from the spot market, what the oil majors are doing with their own fleets we just don't know," he said.

Futures nudge $48 as Opec cuts bite
News wires

Oil rose towards $48 a barrel in US trade, supported partly by perceptions the supply cuts by Opec producers may have put a floor under prices.


US crude rose $1.31 to $47.78 a barrel by 1623 GMT, after earlier rising to a session high of $48.59.

London Brent was up 50 cents at $48.87 a barrel.

"Opec is cutting output, as per their December mandate, by a lot more than discounted by the market - 70% (compliance) rather than 50%," Nauman Barakat, senior vice president at Macquarie Futures USA in New York, told Reuters.

"US crude, at least technically, is showing signs of bottoming out," he said.

Gains in US equity markets also provided a more positive backdrop to the energy markets.

Key US stock market indexes advanced after a report showed the pace of sales of existing homes in the US rose 6.5% in December.

The Dow Jones industrial average, for example, was up more than 90 points.

Oil has fallen more than $100 from a record peak above $147 a barrel in July, depressed by steep falls in energy demand as the world economy slides towards recession.

The International Monetary Fund has cut its forecasts for 2009 global growth to 0.5% from 2.2% in its previous economic outlook on the world economy issued in November.

Crude had jumped more than 6% on Friday boosted by evidence that Opec was making good on most of its pledged 2.2 million barrel per day cut in production this month.