The three major organisations that forecast long-term oil demand and supply – the International Energy Agency (IEA), the Organisation of Petroleum Exporting Countries (OPEC), and the United States Energy Information Administration (EIA) – along with oil companies and consulting firms, believe that OPEC will reconcile predicted global demand and non-OPEC supply.
Click to continue reading “An inconvenient truth about OPEC”
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The oil prices is one elusive one as the delay impact of OPEC delaying the oil supply cut dip the oil prices back on Monday went back up $3 on Early Tuesday to $47 and began it’s profit taking cycle once more and plummet down to $46.72.
The trend on the previous 2 weeks still on a gradual up trend but with wild flucuation and sharp spikes and dives.
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According to Yahoo!News:
Oil prices hit new highs for the year Monday as investors geared up for the potential of more OPEC production cuts.
Read the full article at Yahoo!News:
Oil Spike 10 March 2009
- Benchmark crude for April delivery gained $2.01 to $47.53 a barrel on the New York Mercantile Exchange. Prices reached as high as $48.83 earlier in the day.
Is this the rising tide welcoming the March 15 2009 OPEC meeting? Time will tell..
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According to Yahoo!News:
OPEC
VIENNA (AFP) – - OPEC snapped back at the International Energy Agency (IEA) on Friday over its assessment that oil prices of around 40 dollars a barrel would be good for the global economy.
“The IEA has said that the world would get a trillion-dollar economic stimulus if oil prices stay at around 40 dollars a barrel through 2009,” the head of the Organization of Petroleum Exporting Countries, Abdalla Salem El-Badri, said in a statement.
“The moderation of prices since last summer’s extreme certainly offers some short-term relief to consumers. However, if the current low price environment persists, this short-term relief may not translate into long-term gain,” El-Badri argued.
“We all want to see the global economy back on its feet as quickly as possible,” the cartel chief insisted.
But “oil prices need to be at levels to help sustain economic growth by supporting longer-term energy industry investments across the board. Low oil prices inevitably mean less investment,” he said.Even the IEA, which represents industrialised oil-consuming countries, had recognised that a lack of investment now by OPEC “threatens a supply crunch around 2013, and a price surge,” El-Badri said.
IEA’s position was therefore “confusing and misleading: whilst asking for prices to remain at 40 dollars, it also wants investments to be made that are not economically viable at these prices. It is a short-sighted view,” the OPEC chief said.
Read the full article at Yahoo!News:
- This means IEA are having a wild time right now making statements after statements of useless forecast and recommendations that does not translate into actual usefullness and may jepodize the future supply of oil due to lack of investments & the whole world will crumble under such disasterous event.
The world cannot afford to have oil prices to remain at $40 per barrel for long as many non-conventional oil is going to be shut down if they remains non economically viable and declare bankrupt.
A sudden irreversilble spiral of doom & destruction may come suddenly when oil shortages causes more volatility of oil prices that will again destroy the world economy once again…and repeat…and repeat.
Let’s us all pray for a stable $75 per barrels after march 15 or we shall see dooms day event by 2013.
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According to Yahoo!News:
Russia is working towards creating a state reserve to buy crude from producers when prices are low, potentially removing up to 16 million tonnes of Russian oil from export markets, a top energy official said on Monday.
Deputy Prime Minister Igor Sechin, who oversees the oil and gas sector, said the move could help the Organisation of Petroleum Producing Countries stabilise oil prices.
Sechin travelled to Algeria in December and told OPEC delegates that Russia, the world’s second-largest oil exporter and the biggest outside OPEC, could cut exports by 16 million tonnes, or 320,000 barrels per day, if oil prices fell further.
Read the full article at Yahoo!News:
- This means Russia is going to propose their own supply cuts to assist in “stabilizing” the oil market which in layman terms to INCREASE the oil prices by supply cuts.
Russia wants to wait until OPEC meeting in march to propose the plan to OPEC to have a joint supply “cuts” to have a major impact on the oil prices…
15 March 2009 is the date to watch as OPEC Meeting will take place in Vienna, Austria for the 152nd (Ordinary) Meeting of the OPEC Conference.
16 March 2009 Monday will shall see some kind of speculative oil price movement that may or may not move beyond $45 per barrel which is highly incredible if true but if OPEC decide to turn off more oil from the export market and create an artificial oil shortage…the oil prices MAY SPIKE over time when the delay effects comes about one month to 3 months depending on how fast these oil producers wants it.
End March we shall see high oil prices fluctuations and crazy speculative trading that most people will either cash in or crash out in a short period of time, my advice is to watch and see if the oil prices momentum before any actions.
There will be hardship for those who can’t keep up with the possible hyper inflation that started off as a “Economic Stimulus” to bail out banks and the country’s crippling economy but it the “free money” may end up giving inflation a big boost.
My speculation may be a possible drop in USD after March 15 and very sharp movements to Crude Oil Prices for at least a few hours before yo yo up and down like mad.
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According to Yahoo!Singapore News:
COLUMBUS, Ohio – Oil prices slid closer to a new multiyear low Thursday because of growing doubts that the $789 billion stimulus package will reinvigorate the economy and demand for energy.
Retail gas prices, meanwhile, reached a new high for 2009 on Thursday and appeared headed back to $2 a gallon as refiners cut back on production.
Light, sweet crude for March delivery fell $1.04 to $34.90 a barrel on the New York Mercantile Exchange. The contract fell $1.61 overnight to settle at $35.94 after a government report on Wednesday showed that crude inventories jumped much more than expected.
Read the full article at Yahoo!Singapore News:
Let’s review what had just happen in this week alone
The roller coaster ride of oil prices goes from highest $41+ to lowest $35+ may be just the beginning of wild speculative trading and probably all the oil traders and investors are scratching their heads to which direction will the oil price head to next in a week, day or in a hour time.
The above news round up cannot give you a clear path on investment direction but only to guide you to be more vigilant & get prepared for any emergencies regardless of where you stay.
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OPEC
According to Yahoo!News:
OPEC Secretary General Abdalla el-Badri said the group would postpone 35 of 150 new oil and gas projects and would likely fall short of its goal to raise production capacity by five million barrels per day by 2012, according to a research note by analyst Addison Armstrong.
el-Badri also said that OPEC is close to completing its previously announced cut of 4.2 million barrels per day, Armstrong said.
The announcement may boost crude prices, but “they’re only hurting themselves,” said Phil Flynn, an analyst at Alaron Trading Corp.
Read the full article at Yahoo!News:
- My previous article try to speculate what will be the next move by OPEC and they had currently announced that they will cut 4.2 million barrels a day and halt 35 out of 150 oil & gas projects!!
This means a higher percentage of oil & gas will be cut off from the world until 2012!!
My personal speculation is either of the following
The seriousness of this which I had reiterated again here is a potential for disaster in the near future if the oil price remain under their expected $75 per barrel to remain operational to at least maintain current oil supply.
There could be a sudden but temporary drop in oil demand now due to the economic crisis but that does not means the world population will drop together with the demand, more people will bound to be born and demand the use of OIL.
Oil is the feed stock for the world economy and basically EVERYTHING is associated with oil, even the food we eat are directly or indirectly the product of oil.
Without oil, the pesticides will never be used, transportation to deliver food & products will not be possible, plastic which makes all our modern equipment are no longer cheap to make, paints, roads and nearly everything we touch including clothes are made from oil.
The current demand destruction is purely the result of traders speculation and not the result of basic fudamental of actual usage of oil.
What we shall see more is sudden spike in cost of everything due to scarcity & inflation plainly caused by the money the Government printed out of thin air…
The value of our money will shrink to a point that the salary we get from current work will diminish the purchasing power rather quickly…
Imagine $2500 today can buy lot’s of stuff and suddenly the value drop so much that it can only buy $10 worth of goods of today.
That happened in Zimbabwe where you need a stack of cash to buy anything in the country…
Imagine you had saved up $100,000 for retirement but only to find out the value drops to just $5,000 worth of today’s value in a few months…what do you do? Do you starts to retire or continue to slave further to save up more money?
Or you invest in something to beat the inflation as per most sales people will try to convince you to…such as buying investment in Lehman Brothers minibonds, Madoff little investment basket or some multilevel marketing…?
All of the above became zero value overnight due to the economic crisis…
What makes you think what you are investing is actually worthless?
Is there an insurance to claim against the collapse of an insurance company?
Will the internet be available during the energy crisis where electricity may go off suddenly, can I get my money back then?
If there is a world wide disruption in electronic system due to some kind of weird extreme wheather phenomenal such as a serious EMP solar storm in 2012 to 2013 will the bank be able to use their computer to find out how much money you have left in the system?
Does physical gold or metals worth any value in the future if there is even a serious crisis such as a world war 3 or nuclear holocaust?
What is the value of anything to you considering the world now infront of you? Money that printed out of thin air? Oil pumped from mother nature that is not infinite? Air we breath?
Very simple…
Assets are things we consider to hold some form of value to that individual and the basic fundamental value is things that have demand…or a neccessity to survive.
Let’s list a few.
There may be many more to list according to different individual but let’s talk more about the MOST basic sustainability requirements.
The things to invest in is your brain…skills to survive a bad economic crisis, food production, water desalination equipment, shelter building skills, renewable energy equipment or skills, clean air making plants and basic community defence against rioters & trouble makers.
Companies or individual that does the above will be the most valuble asset to invest in however do note that anything as intengible as electronic transaction via internet or ATM may not be 100% safe.
They are just digital data at any computer that have the potential for failures & in the event of a prolong war or disaster unable to liquidate your assets regardless of their performance.
Just imagine you stuck in a country or town where there are absolutely no access to a working ATM machine…or no telephone or internet network access for even the credit card machine cannot be used in stalls.
What then can you do?
Do you
Yes, survival is at stake here…anything is possible when the oil shortages comes…or planet x pass by causing grave climate changes…or any kind of nuclear disasters.
Make your decisions clear, greed will never give you 100% survival but it’s your instincts to prepare will.
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This is a super oil tanker, one of the biggest ones
A Oil Tanker, called Kashmir,was carrying 30,000 tonnes of oil condensates from Iran to United Arab Emirates port of Jebel Ali had collided with another container vessel called Sima Buoy or Sima Saman (with Singapore Flag).
No fatalities were reported. The tanker’s crew was evacuated safely after two sailors were pulled from the water with light injuries, Officials said the fire has been extinguished.
This news coincided with OPEC Secretary-General Abdullah al-Badri reiterated the group’s willingness to cut oil production further to “stabilize” the oil price at the next meeting on March 15 2009 in Vienna.
The market is expecting the U.S. stimulus package to go through hence maybe quite bullish for oil prices this week however the weekly U.S. crude inventories reports may reverse the trend.
Saudi Arabian Oil Co., the world’s biggest state oil company, will reduce crude supplies to Japan in March for a fourth month, refinery officials said.
The Dhahran, Saudi Arabia-based producer will cut shipments to Japanese refiners including Nippon Oil Corp., Idemitsu Kosan Co. and Cosmo Oil Co. by between 11 percent and 14 percent from levels agreed to under annual contracts, said officials at two refiners who received notices from the company.
Current trend we may be looking at a $42 to $40 fluctuation in short term and if there are more explosive news such as a Iran vs USA crisis which is currently unlikely but the wild card still is a possible preemptive attack by Israel…or simply wait for a pro-peaceful president to be elected at Iran in June 12, 2009 Iran presidential election.
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According to TodayOnline.com:
Iraq’s oil minister on Saturday predicted that OPEC will cut production in March, and said that the price of a barrel of crude should not be less than 70 dollars, a senior official told AFP.
Read the full article at TodayOnline.com:
- This is just one of many such cuts in oil supply the coming months & years by OPEC in their pursuit of reasonable oil prices to be at least U.S. $70 per barrel, the fact that OPEC is probably operating at cost or below margin for more than a month at around $40 per barel…makes it clear that OPEC may not be able to sustain the operation for long.
Non-conventional oil supply is even more costlier then conventional ones making deep sea oil rigs & heavy oil tar sands almost impossible to continue forever in current oil prices.
Some small tar sands companies already filing bankrupcies protection recently making it very hard to expand the production or even maintain current output level, this means within 1 year or 2 years…we might have a shortage.
Well, peak oil or net oil effects will kick in creating massive riots for long queues at the gas stations…deliveries of food & products unable to reach the cities, avaiation companies shut down non essential services, electricity supply unstable or totally gone and soon anarchy to reach the streets..
The Government had already knew about this and had plans to send troops to “reinforce” the police to maintain law & order in a very controlled manner, strict curfew & rationing will be enforced to everyone.
Seriously, this is almost like “TSHTF” doomsday scenario…unless you are prepared.
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According to Zawya.Com:
TEHRAN, Jan 05, 2009 (AFP) – Iran’s OPEC representative Mohammad Ali Khatibi said on Monday that the organisation would hold an extraordinary meeting in Kuwait in February, state television website reported. “The extraordinary meeting of the Organisation of Petroleum Exporting Countries of the Petroleum Exporting Countries OPEC is due to be held next month in Kuwait,” Khatibi was quoted as saying.
Read the full article at Zawya.Com:
- This explosive news on an emergency meeting on February 2009 ahead of the scheduled 15 March 09 (Ordinary) Meeting is not stated in OPEC website.
This can either be a Iran’s Propaganda effort to the rest of the world that even Yahoo!News is not associating with this news directly.
However, if this news is true…this could be the possibility the most explosive news ever! This can be the holy grail that the reporter journalist may wants but wish not to touch due to the sensitivity of the effects on the price of oil if leaked.
This meeting according to the article is to “study” the oil price and make proper recommendation “to the oil supply”.
This in light of Israel ground Incursion into Gaza recently killing over 300 people in it’s on going air strikes.
The rational retaliation from one of Palestinian’s close allies such as Iran (OPEC Member) to use the OIL WEAPON against Israel & Israel’s supporters!
In my little brain of imagination, the incursion into GAZA by Israel may allow Israel to find the “SOURCE” of those rockets that Hamas had been firing into Israel every day.
These rockets had increased their range to reach more “sensitive” locations inside Israel which may include more important “targets”.
In order to increase their range of the rockets means a support from third party countries such as the suspected IRAN or Russia or others.
If Israel found “hard evidence” of rockets from Iran, will Israel launch a preemptive attack on Iran based on that red hot “evidence” or at least extend the military war to Iran…
But all these can be just my little imagination at play but the possibility of widening war caused by global Muslim “volunteers” to fight Israel all over the world in form of either in huge protest or terror attacks on Israel’s interest globally including Jewish properties and etc.
The worst case scenario is OPEC to start the “REAL OIL CRISIS” this coming February by having oil embargo at Israel & Israel’s supporters!!!
Let’s PRAY it will not happen as this might have huge implication on the global scale!
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