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IEA inquiry into whether oil supplies will run dry by 2012

May 26 2008

The International Energy Agency has ordered an inquiry into whether the world could run out of oil in four years' time, it was reported yesterday.

The IEA has concerns about what might happen in 2012, when demand for oil, boosted by the rapid growth of the Chinese and Indian economies, is expected to have reached 95 million barrels a day. Global supply at that point is projected at only 96 million barrels a day. Such a thin margin would be vulnerable to any sudden supply crisis in volatile countries such as Nigeria, Venezuela or Iraq, now estimated to have overtaken Saudi Arabia as the biggest oil nation.

The IEA said its inquiries would form part of short and long-term forecasts to be published in July and again in November. Its energy research chief, Lawrence Eagles, said: "Up to now we have believed that supply can cope with demand. One caveat is that we don't know for certain whether estimates of reserves in countries such as Saudi Arabia are entirely accurate."

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John Waterlow, analyst at oil research consultancy Wood Mackenzie, commented: "Many oil-producing countries are closed, secretive societies where it can be difficult to pinpoint the level of provable reserves."

The IEA's inquiry follows last week's new record high for black gold at $135 a barrel, fuelling inflation and possible world recession.

Although some analysts blame commodity speculators for the recent spike in prices, others point to surging international demand from Asia and South America. IEA researchers have warned that even if there is enough oil under the ground, supply difficulties could emerge because national oil companies and Western multinationals have failed to invest sufficiently in equipment and pipelines.

Meanwhile, 10 US airlines have been forced to close down since Christmas, according to the US Air Transport Association, which said it was "all to do with the cost of jet fuel". On Friday, shares in UK business airline Silverjet were suspended on the Alternative Investment Market after the airline admitted it was unable to secure funding to carry on doing business. Fuel costs for a single transatlantic trip on a Silverjet B767 are estimated to have jumped from 28,600 a year ago to 44,000 now.

Andrew Fitchie, analyst at Collins Stewart, said: "The no-frills airlines are in the eye of the storm. They will have to slash capacity, stay on the tarmac or look at merging."

The trouble with bubbles in term of trading them is that they go up progressively and come down like a bag of cement. Timing the fall for shorters who can't comprehend the ever more insane valuations is so difficult and it is so difficult to call the top. Similarly going long has serious ethical implications though that certainly doesn't bother Goldman or any other hedge funds that exploit a situation whoever gets in the way.Trend following techniques certainly work a treat so long as your not left standing when the music stops http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoros126.xml

http://www.youtube.com/watch?v=QovBLFZhQME

;)

Oil Trades Near 1-Week Low as Record Fuel Prices to Cut Demand

By Christian Schmollinger

May 28 (Bloomberg) -- Crude oil traded near a one-week low in New York after plunging yesterday on speculation record fuel prices will cut demand at the height of the U.S. driving season.

Gasoline futures fell for a second day after a report yesterday showed U.S. consumer confidence dropped to the lowest level since October 1992. The average U.S. gasoline pump price reached an all-time high May 26, crimping demand from motorists.

``The litmus test over the next couple of weeks will be how the U.S. driving season pans out and it looks like the risk is to the downside,'' said Mark Pervan, the senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne, who forecasts oil will trade between $120 and $135 in the next 18 months. ``The market is saying the driving season is going to disappoint.''

Crude oil for July delivery was at $128.81 a barrel, down 4 cents, on the New York Mercantile Exchange at 2:07 p.m. in Singapore. The contract earlier fell as much as 75 cents, or 0.6 percent, to $128.10, the lowest intraday price since May 20.

Yesterday, oil dropped more than $3 a barrel in the biggest one-day drop since April 29 to close at $128.85. Futures reached $135.09 on May 22, the highest since trading began in 1983, and have doubled in the past year.

``People realize that there is a point where high prices are going to start affecting demand and consumers will start revolting,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``The market is easy to push up until we have a collapse in demand and that's what it's going to take to get this thing into a downtrend.''

Brent crude oil for July settlement was at $128.23 a barrel, down 8 cents, on London's ICE Futures Europe exchange at 2:07 p.m. Singapore time. It declined $4.06, or 3.1 percent, to settle yesterday at $128.31 a barrel, the biggest decline since March 31. The contract touched a record $135.14 on May 22.

British PM calls for global action on oil price
Reuters, London

British Prime Minister Gordon Brown warned on Wednesday that the world was facing an oil "shock" and would find there was no easy answer to price rises without coordinated global action. Brown, who saw hundreds of protesting British truck drivers cause road chaos in the capital on Tuesday as they demanded government help over rising fuel prices, said he understood the impact on families across the country, but only a comprehensive international strategy would work in bringing oil prices down.
"A global shock on this scale requires global solutions," Brown wrote in The Guardian newspaper. He pledged to put global action on oil price rises at the top of the agenda at the Group of Eight (G8) summit in Japan in July and promised to propose more international work on "a better dialogue on supply possibilities and trends in demand."
Brown was due on Wednesday to meet oil industry executives in Scotland to discuss the high price of oil. According to The Guardian, he was expected to try to secure increased output from Britain's dwindling North Sea oil fields. But Brown said in the long term, oil dependency had to be reduced and other sources of energy explored and exploited.
"If we are to ensure a better deal for consumers, energy security and lower greenhouse gas emissions, Britain, Europe and the world will have to change how we use energy and the type of energy we use," he wrote. "We need to accelerate the development and deployment of alternative sources of energy, reducing global dependence on oil.
Brown's comments come a day after truckers from across Britain converged on London in a vast convoy, closing a busy artery and causing traffic chaos.
Similar protests took place in Wales, causing fresh trouble for Brown, whose leadership is under pressure after poor showings in recent local elections and a parliamentary byelection.
This latest wave of fuel protests, which echo similar protests in 2000, began in France, where fishermen have blockaded ports to demand cheaper fuel.
French truckers have also threatened to take action across France if the government fails to respond to their demands that industry diesel prices should fall back to average levels seen in January this year.
Diesel is about 130 pence ($2.57) a liter in Britain, more than double the price in the United States. Hauliers want a cut in fuel duty of 20 to 25 pence (40-50 cents) a liter.

Do you think there will be a retrace back to $100 when it hit's $140'ish

Oil price likely to hit $200 a barrel
BBC Onlone 30/05/2008

Global demand for oil has been fuelled by China and India
The price of crude oil could soar to $200 a barrel in as little as six months, as supply continues to struggle to meet demand, a report has warned.
Goldman Sachs energy strategist Argun Murti made the warning as benchmark US light crude passed the $123 mark for the first time. Surging demand was increasingly likely to create a "super-spike" past $200 in six months-to-two years' time, he said. Oil prices have now risen by 25% in the last four months and 400% since 2001.
US sweet, light crude hit an all-time peak of $123.53 (63.25) on Wednesday, while London Brent crude jumped to $122.32.
Mr Murti correctly predicted three years ago - when oil was about $55 a barrel - that it would pass $100, which it reached for the first time in January of this year. Soaring global demand for oil is being led by China's continuing economic boom and, to a lesser extent, by India's rapid economic expansion.
Both are now increasingly competing with the US, the European Union and Japan for the lion's share of global oil production.
This additional demand comes at a time of continuing production problems in a number of oil-producing nations.
Production is down in Nigeria after the latest attacks on pipelines this week by anti-government militants, while Iraqi exports through the north of the country have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents. Oil prices are also rising as the key US summer driving season approaches.
Economists warn that continuing high oil prices will impact on the global economy, hitting growth and fuelling inflation.


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Brent trading at a 60 point premium to US at the moment! Arb opportunity perhaps

Oil will moderate but not below US$100 a barrel
By Leonora Walters

The oil price will remain relatively high for some time to come and not dip below US$100 a barrel, predicts Nicholas Brooks, head of research and investment strategy at ETF Securities.


Brooks acknowledges that speculation has helped to drive oil to its recent highs, hitting a record US$135.09 a barrel on 22 May, while investors are keen to move out of equities into alternative investments. Oil and other commodities are also being used as a hedge against rising inflation.

This has led to more extreme predictions of oil hitting US$200 a barrel.

But Brooks said that when equities and credit markets stabilise there will be outflows from oil investments and falls in commodity prices. However he said the other fundamentals driving up prices remain in place, and this will them not far from current levels.

Yesterday oil was down 2% at US$128.45 a barrel in New York, and down 1.9% at US$128.51 a barrel in London.

Oil supply is being outstripped by demand and Organisation of Petroleum Exporting Countries (OPEC) are failing to make up the short fall. Although these countries have reserves they face capacity constraints because they do not have the infrastructure in place to pump more oil.

All OPEC members are currently producing oil at full capacity with the exception of Saudi Arabia, Kuwait and the United Arab Emirates. Although OPEC secretary general Salem el-Badri said the organisation would invest US$160bn (80bn) on increasing production capacity, this would take place over the next four years meaning it would not have a short-term effect.

Non OPEC members are also failing to help meet the supply, with the UK, Mexico and Norway expecting oil production declines, while Russia warned last month that its output may have reached its peak.

Another effect of this is that as capacity utilisation increases countries tend to build up their oil inventories so plentiful reserves do not mean a fall in price, said Brooks.

The rise in demand for oil is being driven by emerging economies such as China and the Middle East states, with China accounting for 34% of the growth in oil demand between 2004 to 2006, and the Middle East accounting for 26%. Middle East growth in demand has been helped by subsidised oil prices.

Brooks does not believe that many states will stop subsidising oil as this could be politically difficult. For example when Indonesia cut subsidies a few days ago increasing prices by 30%, protests erupted.

Key drivers in growing emerging market oil consumption include the increase in cars with vehicle sales rising 53% in China between 2005 and 2007, and 34% in India. Although car ownership in these states is low by world standards it is increasing quickly with per capita incomes, and China car sales may surpass US levels by 2010

I will have to get me one of those battery Bikes !

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/30/cnoil130.xml&CMP=ILC-mostviewedbox

There is nothing any one can do the market decides the price, you cannot probe airlines or any other company doing deals with the oil companies that is also speculation from the airlines and those companies as well as market speculators so its all hot air from the US regulator CFTC. I.M.O

smiler

Believe it or not this is called a smiler ride. Battery-Powered

Found another one also called a smiler ride, that's not you is it smiler.

If that pic is 39 years old could be ! :))

OIL: Oil jumped following a Morgan Stanley analyst's forecast of $150 oil by July 4, and in response to a drop in the dollar and fresh tensions in the Middle East.

Interesting angle on Oil News today in the Middle East.

'Kuwait MP's seek to cut oil output and limit production to one percent of proven reserves'. - Kuwait Arab Times 16.06.08.

The 'officially' stated reserves has been around 100 Billion barrels for several years. There are noises, probably with some truth, that the 'proven' reserves are materially less. There is some belief it could be as low as 25 Billion.

The current production is around 2.5 million barrels per day. The 'master plan' was/is to increase to 4 million barrels per day.

Clearly there are some political agendas being 'spun' by the new Kuwaiti MP's. Whatever the agenda, it all adds to the uncertainty of future oil supply.

This story will probably run a while as events unfold. I'll keep posting the news as it comes out.

Thanks Darradev (gcm still going well !)

Aye, the story has a fair bit to go.

I sold gcm a few weeks back but it is definitely on my watchlist.

Page last updated at 15:22 GMT, Monday, 16 June 2008 16:22 UK


Oil at record near $140 a barrel

There have been calls for increased global oil output
The price of crude oil has hit a new high of close to $140 a barrel in New York trade, despite Saudi Arabia agreeing to increase output in July.

US light crude rose to a record high of $139.89 a barrel, surpassing the previous high of $139.12 set on 6 June. The price later fell back slightly to trade up $4 at $138.86 a barrel.

On Sunday, Saudi Arabia had said it would increase its oil production by 200,000 barrels a day next month in a move to meet growing world demand.

That would make a total rise of 550,000 barrels a day, or over 6%, since May and would take Saudi output to its highest monthly rate since August 1981.

The news was announced after UN Secretary General Ban Ki-Moon met Saudi Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price.

The market has got it in its head that we are about to run out of oil, and is looking for negative news

John Hall, oil analyst


Q&A: Record oil prices

Last month, Saudi Arabia increased its production by 300,000 barrels a day.

The country is thought to be the only oil producer with the ability to pump substantially more crude.

It argues that the current high prices are caused by speculators rather than any shortage of crude oil.

Oil prices had fallen by almost $2 on Friday after reports that Saudi Arabia might boost oil production but many believe that this pledge is too little too late to bring down oil prices.

Extremely volatile

"If they'd have said this six months ago, it might have had some effect," said oil industry expert John Hall.

"But the market has got it in its head that we are about to run out of oil, and is looking for negative news."

"The market is extremely volatile at the moment," he added. "Any disruption to supply is immediately jumped on."

Speculation about the future of oil prices has been rife recently, with some analysts predicting oil could jump to as much as $200 a barrel during the next 18 months.

Israeli threats to strike Iran over its nuclear programme have also helped fan the flames.

Movements in the currency markets on Monday also triggered the latest price spike, with the dollar weakening against the euro and subsequently making oil cheaper for investors dealing in other currencies.

Meanwhile, Norwegian oil firm StatoilHydro saw oil and gas production temporarily abandoned when a fire broke out on the 90,000 barrel a day North Sea platform.