Guardian: “Jeremy Leggett among 100 signatories to letter opposing oil firm’s likely influence over university’s climate change studies.”
Maria van der Hoeven in the FT: Thanks to fracking, “US crude oil production has increased by 1.3m barrels per day in the past two years, and the US Energy Information Administration forecasts that the US will produce a further 1.4m b/d by the end of 2014.” Fracked oil trades at a discount to international benchmarks, but there is a problem. Read more
FT: “With one trading day left before the year-end, Brent oil prices are on the point of seeing an average for the year of about $111.5 a barrel, higher than the previous all-time high set in 2011 of $110.9.”
FT: New US government estimates show US oil production rose by 760,000 barrels a day this year – the largest increase in annual output since crude oil started to be pumped commercially in the US in 1859. Saudi production dropped to 9.5 mbd in November. Read more
In the Globe and Mail: “The IEA’s rosy forecast isn’t all that it appears – and it certainly isn’t going to lead to a significant break at the pump for you. ….The problem isn’t the availability of the fuel but the price needed to get it out of the ground. Unfortunately, that’s already more than we can afford. Read more
Chris Cook, former head of compliance at the International Petroleum Exchange: “The Guardian’s investigation into the alleged “Libor-like” fixing of UK gas prices was doubly ironic for me. The first irony is that, as director of compliance and market supervision of the International Petroleum Exchange (now ICE Futures Europe) in the 1990s, I was heavily involved in the development and legal architecture of the gas-market contract that has now allegedly been manipulated….. The real problem lies not with gas, but crude oil – which is suffering perhaps the greatest market manipulation the world has seen.”
Reuters: “Peak oilers have become almost extinct, destroyed by the arrival of new technologies with the U.S. leading the oil supply change,” said David Hufton of oil brokerage PVM.” Who agrees? “A request by Reuters for forecasts of 2020 prices drew 20 responses from consultants, banks and energy analysts. The poll produced a mean average of $118 a barrel for North Sea Brent, suggesting little change from the current level around $110. / But only five of the 20 are actually predicting prices anywhere near the mean average. / The real story is in the division between the two camps. Setting aside the demand side of the debate, the argument about supply is simple. One camp argues that the upside from shale oil supplies will be more than enough to meet demand growth. The other disputes that, saying the likely impact from shale is being exaggerated. ….The top bull is Barclays Capital, $24 clear of its nearest rival with a $184 forecast for Brent. Barcap heads a group of six that put Brent at $140 a barrel or higher.”
Washington Post: Two IMF economists try to tackle peak oil in a new working paper, “Oil and the World Economy: Some Possible Futures.” Read more
Ambrose Evans-Pritchard: The Citi report “is yet another piece of evidence pointing to Peak Cheap Oil. Jeremy Leggett, the head of the UK Taskforce on Peak Oil and Energy Security, says Britain is sleepwalking into a potential disaster by failing to prepare fully for a global supply crunch. The refusal to listen to warning signals is comparable to the complacency in the build-up to the financial crisis, he argues, but with graver implications for the British economy. I agree.”
Telegraph: “If nothing changes, Saudi may have no available oil for export by 2030”, Citi analyst Heidy Rehman wrote. ….Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security, said the report had “huge” implications and that a decline in global oil production could cause “massive stress to the global economy”.
Bloomberg: “Oil and its derivatives are used for about half of the kingdom’s electricity production, which at peak rates is growing at about 8 percent a year, the bank said today in a an e-mailed report.” Read more
Harvard University: “Oil production capacity is surging in the United States and several other countries at such a fast pace that global oil output capacity is likely to grow by nearly 20 percent by 2020, which could prompt a plunge or even a collapse in oil prices, according to a new study by a researcher at the Harvard Kennedy School.” Read more
Belfer Center, Harvard University: “Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.” Read more
FT: “Talks between some of the world’s richest oil consuming nations over whether to release billions of barrels in emergency oil reserves are moving to a question of “when” rather than “if” to act. The view in the oil markets is that the US, UK, France and Japan are likely to agree soon on a release of their strategic petroleum stocks, to prevent crude prices soaring further when European Union sanctions on Iran are introduced in July. Benchmark Brent crude was trading at about $125 a barrel on Tuesday, a few dollars below the post-financial crisis highs it hit last month.” On all three occasions of release for stockpiles, the oil price has been contained.
Olivier Jakob at Petromatrix: “It used to be that Saudi Arabia produced more oil when it wanted lower oil prices. Today, when Saudi Arabia wants lower prices it produces an op-ed in the Financial Times.” FT Alphaville: “It all does seem very counterintuitive. On the one hand Saudi is saying there is no supply shortage and stocks are at record levels. On the other hand it’s sending more crude to the United States. On the one hand you have high oil prices and the constant mumblings of SPR releases. On the other hand much of the analyst and academic community insists there’s no need for any emergency action. / So what is going on? / We’d be pleased to hear from anyone who can make sense of it.”
FT: “Saudi Arabia says it has the capacity to raise production by 2.5m b/d if markets need it. The problem, says Ed Morse, head of commodities research at Citigroup, is that “the market is seeking transparency, and all the Saudis are giving is verbal assurances”. The kingdom is already pumping at a three-decade peak of 10m b/d, and increased exports last month by 150-300,000 b/d, according to the IEA.”
Reuters: “Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, two British sources said, in a bid to prevent fuel prices choking economic growth in a U.S. election year.” Price falls $4 on the news. The White House then denies this is an option. Gasoline prices are at near record levels in the US.
Rumours of a pipeline blast in Saudi, denied, took the oil price to its highest since mad 2008. Iran has warned Saudi Arabia not to lift production to offset the embargo on Iranian oil. But Saudi production is up to 9.7 mbd.
The IAEA says Iran has been significantly accelerating production of higher grade uranium over the last six months.
So writes Liam Halligan in the Telegraph. “Crude is now expensive not due to political argy-bargy but because of the fundamental truths of demand and supply.” Oil now highest ever in sterling and euro terms.
Jitters over a possible attack on Iran are outweighing concerns that slowing export orders in China and the eurozone crisis could jeopardise global growth. The cost of Brent crude hit $121.92 a barrel, or £77.77. The previous sterling record was set last year at the height of the Libyan war. US crude hit a nine-month high of $106 (£67.62) a barrel this week. The highest price recorded in dollars was $147 in July 2008, when the pound was stronger. A high oil price pushed UK inflation last year to above 5%.
Bloomberg: “India is producing power from solar cells more cheaply than by burning diesel for the first time, spurring billionaire Sunil Mittal and Coca-Cola Co. (KO)’s mango supplier to jettison the fuel in favor of photovoltaic panels. The cost of solar energy in India declined by 28 percent since December 2010, according to Bloomberg New Energy Finance. ….India, the third-biggest energy user behind China and the U.S., has a goal to have installed 20,000 megawatts of solar- energy capacity by 2022, about equal to 18 new nuclear reactors. That target is 10 percent of today’s total generating capacity including all energy sources. Less than 1 percent of that current power base is solar.”
Up a third from $75, the price it put forward as fair in 2008. The IMF has estimate $80m is needed to balance the domestic budget.