Oil Prices Increase on Supply Concerns

[hotwing]

Jan. 13, 2006, 7:52AM

Oil Prices Increase on Supply Concerns

By GILLIAN WONG Associated Press Writer
© 2006 The Associated Press
SINGAPORE — Crude futures rose Friday as traders focused on Royal Dutch Shell PLC's announcement of delays in oil shipments from Nigeria and the market fretted over Iran's nuclear ambitions.

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http://dart.chron.com/click.ng/site...nd1&seaque=no&seares=no&ssi=no &display=print Light, sweet crude for February delivery on the New York Mercantile Exchange rose 6 cents to $64.00 a barrel in electronic trading by midday in Europe. February Brent crude futures on London's ICE Futures exchange gained 30 cents to $62.92 a barrel.
Gunmen kidnapped four foreigners from an offshore oil platform run by Shell on Wednesday, and on Thursday an explosion _ apparently sabotage _ caused a rupture along a major pipeline feeding Shell's Forcados oil export terminal.
The company sent a message to shippers declaring its inability to meet export commitments due to unforeseen circumstances. Shell said oil loading would be delayed three to four days beginning Friday.
Nigeria is Africa's leading oil exporter and the fifth-biggest source of U.S. oil imports. The country produces about 2.5 million barrels a day. The pipeline rupture and the kidnapping cut oil production in the West African country by 10 percent.
"The impact of the shut-in is heightened by the fact that Nigeria produces sweet crude, which is in higher demand in the US because many of the refineries are set up to handle it," said Sucden Commodity brokers in London.
Also Friday, Iran _ a major oil producer _ vowed to end all voluntary cooperation with the U.N. nuclear watchdog if it is referred to the Security Council for possible sanctions over its controversial nuclear program.
Foreign ministers of Germany, Britain and France said Thursday that nuclear talks with Iran had reached a dead end after more than two years of acrimonious negotiations and the issue should be referred to the U.N. Security Council.
"The major concern is that there is not enough spare production capacity in the world to cover any loss of production from Iran should any action be taken against it," said Sucden.
While U.S. petroleum supply data this week showed a surge in inventories of gasoline and heating oil, predictions of some icy weather over the weekend in the northeastern United States _ the world's biggest heating oil market _ is likely to support prices, traders said.
Heating oil on the Nymex edged lower to $1.7106 a gallon while gasoline was flat at $1.7185 a gallon.
Natural gas futures, which on Thursday settled below $9 per 1,000 cubic feet for the first time in nearly five months, extended their losses Friday as they inched lower to $8.935 per 1,000 cubic feet.
Natural gas hit an all-time peak of $15.78 on Dec. 13 on concerns of a potentially cold winter and disrupted production in the Gulf of Mexico in the wake of Hurricane Katrina.
Trading on the Nymex will be closed Monday for Martin Luther King Day.

 

[jetflyer]

Iran will be interesting.

The world only produces 84 million barrels per day of oil, of which the U.S. uses 20.5 million barrels per day.

Iran can hold back some of their 4 million barrels of oil per day from world markets and cause turmoil with the price of oil. It would be like the 1970's oil embargo all over again. Oil prices would go to $120-$200 pretty quickly if Iran forced the world to live without its oil and the world had to live with 80 million barrels per day.

There simply is not enough spare capacity in the world to replace a loss of Iran's oil.

Iran is going to use their oil as a political and financial weapon to get their nukes built.

Will the U.S., Israel, Britain, Germany, and France allow them to build these nukes?

If it goes to the U.N. security council, Russia has said it WILL NOT block action against Iran which is surprising since they've been giving Iran weapons and their nuclear fuel for years. China on the other hand gets a LOT of oil from Iran and will probably block a move for sanctions.

Can we even sanction Iran, when their major export anyways is oil!? We as a world need every drop they can give.

If military action is performed versus Iran and they are occupied can the flow of oil be kept moving?

Iraq is our best model for keeping the oil moving.
In 1995 Iraq produced their high of 3.5 million barrels per day.
In 2002 before the war Iraq produced 2.5 million barrels per day.
Now pipelines get blown up daily and they only produce 1.3 million barrels per day!

The world is danged if they invade Iran and danged if they don't.

These are interesting times getting more interesting by the moment.

Jet

 

[Whale Rider]

Time to bust out the Yugos......:uzi:

 

[jetflyer]

The scary thing is Iranian supply concerns are just the beginning. In the near future, around 2010, oil production for the world is supposed to reach a maximum and begin declining irreversibly and every barrel will cost more to extract as well. It's called "peak oil" predicted by Shell geologist M. King Hubbert in the 1950's and is being discussed in congress right now, by Congressman like Republican Roscoe Bartlett from Maryland.

Here is an article talking about problems coming with oil from
http://www.itp.net/business/features/details.php?id=3639&category=

.Time to get the facts and fiction right on the oil crisis
January 8, 2006
by Stephen Corley

We should have survived one of the more irritating journalistic traditions by now, or are there so many you just missed one? Late December provokes a universal reporting catharsis whereby entire organs devote themselves to looking back on the year either in pictures or in news stories.

Presumably the purpose is to learn from mistakes made or is it simply a purge in time for a fresh supply of bad news in the year ahead?

Thankfully this is a trap Arabian Business managed to avoid and rightly so. It always struck me as industry ennui. Filling newsprint easily rather than taxing the allegedly fine minds of its reporters. So let’s depart from the chronic ‘look back on 2005’ and look ahead.

There is no shortage of topics locally and so many myths to debunk that one is spoilt for choice. However, ignoring the ridiculous obsession with traffic and house prices for a moment, it’s probably appropriate to try and deal with the one that still drives the region’s future and possesses the potential to destroy everyone else’s — oil.

History suggests that the first half of the oil age has just closed. It lasted 150 years and saw the rapid global expansion of industry, transport, trade, agriculture and financial capital and allowed huge increases in populations.

Alas, the second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital.

This is good news and bad news as they say. Good for the region, in that as a net recipient of a forecast US$240 billion from oil within the GCC and US$40 billion for the UAE alone, we can probably expect new airports, business parks, roads and new themed projects, from the overpriced to the under-whelming. Bad in that an economic boom often involves over expansion and diversification due less to business prowess and ability and more to do with egos.

The hinge question is whether we have reached what geologists term peak oil — output at the top of the production bell curve after which supply is always falling, together with higher costs of extraction.

Local minds were forced to consider the realities of this during 2005 when the Burgan field, Kuwait’s largest and the world’s second largest, passed its maximum production point.

That’s not to say oil is running out. On the contrary, it seems likely that there is global capacity for many years yet. However, about 944 billion barrels of oil has so far been extracted, some 764 billion remains extractable in known fields, or reserves, and a further 142 billion of reserves are classed as ‘yet-to-find’, meaning oil that is expected to be discovered. If this is so, then the overall oil peak arrives next year.

What is agreed is that world oil demand is surging. The International Energy Agency, which collates national figures and predicts demand, says developing countries could push demand up to 121 million barrels a day by 2030, and that oil companies and oil-producing nations must spend about US$100 billion a year to develop new supplies to keep pace.

If world demand continues to grow at 2% a year, then almost 160 million barrels a day will need to be extracted in 2035, twice as much as today.

Assurances given recently at the local MEED conference for example, foresee increased oil supply as a result of extra expenditure in lifting capacity.

Meeting the kind of demand above is almost inconceivable. According to industry consultants IHS Energy, around 90% of all known oil reserves are now in production — suggesting that few major discoveries remain to be made.

Shell says its reserves fell last year because it only found enough oil to replace 15% to 25 % of what the company produced. BP told the US stock exchange that it replaced only 89% of its production in 2004.

So if we are at or about to enter peak oil, then global production can be expected to decline steadily at about 2% to 3% a year. Combined with the sort of heady demand outlined above, this can only lead to one thing, strong upward pressure on the spot price.

Despite the assurances from western governments that inventories are sound or a mild winter is expected, this kind of pressure exceeds anything we have experienced so far. The cost of everything from travel, heating, agriculture, trade and plastics rises. And the scramble to control oil resources intensifies.

For the west that will mean, at best, kissing your lifestyle goodbye and, at worst, the foundations for world war three.

I am one that thinks we are in the beginning stages of many showdowns for oil resources with other nations, possibly leading to WWIII. Iraq, Iran, and Venezuela(U.S.'s third largest oil supplier) are just the beginning. It's when China and the U.S. get into a conflict that things will get interesting. The great game of trying to acquire the world's last remaining resources for ourselves has just begun.

Oh and there's a reason that China is building its military faster than anyone has since WWII. They plan on having to use it soon.

Jet

 

[coogebeachhotel]

Why did the guy upstairs have to give the oil to all of the kooks?

 

[jetflyer]

Good point Coogebeachhotel, but you know that includes the U.S. as being full of kooks.

In 1970 the United States produced 10 Million barrels a day which is more oil than Saudi Arabia's current production of 9.5 million barrels a day!!

The world is entering a very dangerous and new realm it has never seen before. You have to learn about this!

Read this article that explains why the U.S.'s production is down to 7 million barrels a day now and why the same will soon happen to the world(declining production). You'll also learn why this is such a big deal.

It's the best article I've ever seen that describes PEAK OIL.
THIS IS A VERY EDUCATIONAL DOWN TO EARTH, NON DOOMSDAY ARTICLE:
It's too long to cut and paste so here is the link:

www.yubanet.com/cgi-bin/artman/exec/view.cgi/8/15426

Jet

 

[jetflyer]

If anyone is interested in reading a book on the future of oil production and PEAK OIL I suggest reading this book:

Here is a link to it at amazon.com: The End of Oil : On the Edge of a Perilous New World by Paul Roberts. You can read the reviews on the book there. Readers have given it 4 1/2 out of 5 stars average.

It will be one of the most enlightening books you EVER READ. You will look at the world differently I promise.

Plus if we're not careful this is why we're going to fight WWIII. Once you learn the scope of this issue, you'll agree.

This book is the most non-doomsday books on peak oil I have read. There are about twenty other books out there about peak oil production if you guys get interested. This book just gives you the facts about oil's inevitable future decline and why oil is going to be so difficult to replace. There is just so much dang energy in a barrel of oil. Nothing compares except nuclear.

Jet

 

[jetflyer]

If anyone is interested in some dooms-day stuff on Peak Oil that is very full of facts I suggest reading:

www.lifeaftertheoilcrash.net

This site has been quoted many times in the House of Representatives by Republican Roscoe Bartlett. Roscoe Bartlett said this site galvanized him to search more and to do everything he can to educate the world on Peak Oil to prevent the end of our civilization.

You'll find quotes like this one from Dick Cheney himself. In a 1999 speech he gave while still CEO of Halliburton, Cheney stated:

By some estimates, there will be an average of two-percent
annual growth in global oil demand over the years ahead,
along with, conservatively, a three-percent natural decline
in production from existing reserves.That means by 2010 we
will need on the order of an additional 50 million barrels a
day.

Why do you think the Energy Policy was kept TOP SECRET? The entire thing was about Peak Oil. Matthew Simmons the author of one of the latest Peak Oil books and is a BUSH/CHENEY family friend was one of the advisors to Cheney in the Energy Meetings. Bush and Cheney simply can not acknowledge that their actions in Iraq, Iran, and Venezuela are primarily for oil.

After you read this site it will motivate you. You will read and study and try to disprove its findings that the end of our civilization is coming, that we are doomed back to the stone age, and years of chaos, famine, economies worse than the great depression, etc.

After you read this site you'll realize we need to drill in Alaska NOW, make several hundred more nuclear power plants, turn coal and oil shale to oil with carbon sequestration, expand solar and wind energy, conserve more, etc.

Warning: You may not sleep for weeks after reading this site.

Jet

 

[tailhookah]

Jetflyer....

A truely alarmist reaction to the current situation that I agree w/ completely... it will be too late to prevent mass economic chaos when the peak is realized. We need to be proactive now to prevent our dependence on oil to be our downfall. Unfortunately in the current age we are in building a new nuke plant or even a refinery is almost impossible. The general population is full of idiots who either don't have the care or capacity to grasp the true nature of what the end of easy and cheap energy will mean. Politicians are so worried about the next election or the current scandal they are trying to cover up or avoid that they for the most part are worthless as well. So as the article points out our only hope is academia or grassroots efforts...

We are sooo screwed.....

tail

 

[jetflyer]

tailhookah,

I agree completely. Nobody sees past tomorrow and it will be our downfall.

Name your poison: deficits in social security and medicare, growing household debt, ENERGY, budget deficits, trade imbalance, etc.

All these future emergencies waiting to blow up on us could have been prevented if our leaders would have been more responsible, or maybe if us as a society would have been more responsible. We elect those that give it to us NOW.

God help us for being so shortsighted,
Jet