Oil Jumps Above $58 as Demand May Outpace Production Growth

[RamboLiberal]

http://www.bloomberg.com/apps/news?pid=71000001&refer=&sid=aiwRNOjz1HRc

Crude oil in New York surged above $58 a barrel for the first time since reaching a record in April on signs that producers will struggle to meet growing fuel demand during the second half of the year.

``There is no question that the market is going to $60,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. ``There is a lot of fear and hype about the possibility of us running out of oil, and it has stuck.''

Global oil use will jump to 86.4 million barrels a day in the fourth quarter, 200,000 barrels more than forecast a month earlier, an International Energy Agency report showed this week. The world pumped an average of 83.8 million barrels of oil a day in the first quarter. U.S. crude-oil supplies fell 4.9 million barrels in the last two weeks, Energy Department figures show.

Crude oil for July delivery rose $1.12, or 2 percent, to $57.70 a barrel at 1:55 p.m. on the New York Mercantile Exchange. Futures touched $58.15 a barrel, the highest intraday price since a record $58.28 was reached on April 4. A settlement at the current price would be a record. Prices have risen 7.5 percent this week and are up 50 percent from a year ago.

[Nickster]

1. So glad that we have an oilman in office who can avoid huge problems

with oil and the cost of oil. I'm so glad that he's jawboning OPEC to make these ludicrous prices go away. Oh wait.....

[burythehatchet]

11. that's funny

:rofl:

on edit - the idiot wouldn't know oil if he slipped in a puddle of it. He's never had to cap a well.

[Javaman]

18. Nor a successful oil business...

[pstans]

12. Bu$h is an oil man

and he and his friends are just raking in the profits.

[Warren Stupidity]

2. There is a lot of fear and hype?

:wtf:

Yo Kyle baby, the market, that old invisible hand, can only be temporarily a victim of 'fear and hype'. The long term upward spiral of crude oil prices reflects the fact that the peak production of cheap oil on this planet was reached sometime within the last two years. What you've got is the other side of 'fear and hype': denial.

[Coastie for Truth]

15. The long term is driven by "Peak OIl"

not a "Brick Wall" -- just a gradual increase in price as each incremental barrel of oil gets more expensive--

1. More expensive to find.
2. More expensive to drill.
3. More expensive to pay off local war lords, generalissimos, and kings.
4. More expensive to "defend."
5. More expensive to ship.
6. More expensive to refine (heavy crude, sour crude)

There is still is "Light, Sweet" crude that has already been found and mapped, drilled, the severance license fees paid, in safe locales, on shipping channels, compatible with our refinery capacity -- just less and less!!!! It has "passed its peak."

[depakid]

28. The moving average will inevitably rise

although there wil be peak and valleys-

Unfortunately, many economists and financial types don't have multidisciplinary skills- they often don't understand even rudimentary science, and so can't imagine how physical laws put limits on their ridiculous growth and profit oriented paradigms....

[dkofos]

3. I guess I will be staying home this summer.

[Nordmadr]

4. Happen to notice how the article says demand will be

86.4 million in the 4th quarter and that in the first quarter we were only able to produce 83.8 million? Now, I'm not a rocket scientist or anything, but assuming we are producing about as much as we can, that sounds to me like a 2.6 MILLION barrel per day world shortfall in supply. Wonder where that is going to come from?

Anyone, Anyone?

Olaf

[Dogmudgeon]

16. Where that extra 2.6 million barrels per day comes from

It's simple.

The Saudis pump seawater into the Ghawar oil field to force the remaining oil upwards where it can be pumped out. This can only be done for so long, since the addition of water eventually destroys the oil field. For instance, the Ghawar field is pumping a huge amount of water with its oil -- I've heard that as much as 80% of the crude product is now water and salt.

That accounts for about 1.5-2 million bbl/day. The rest is made up by pushing the rest of the fields in the OPEC market to keep relative pace with the Saudis. Non-OPEC producers, like Russia, are also pushing their declining output so they can make some "last-drop" money at high profit.

Matthew Simmons (I think it was him) predicted that we would find that the Peak Oil point will have been reached on Thanksgiving Day, 2005. That's a little over five months from now -- in "4Q2005". And keep in mind, Simmons is a friend of George W. Bush. (I guess GWB messed up that time by choosing a relatively non-Machiavellian friend.)

There will be a few upturns in output over the next few years as we exploit the last few remaining oil fields of any size, but after that magical Peak Oil point is reached, it will be all downhill. We might even exceed that official peak level from time to time in the subsequent few years -- for a day or two. It still won't be enough to restock the reserves.

It will take about two years for the shortfall (demand minus supply) to start becoming destructive. The modern era will end with the Presidential Election of 2008.

--p!

[brokensymmetry]

24. I couldn't agree more.

As I recall, you used to be "Bare Knuckled Liberal" before you changed your name - I always valued your insights.

[Dogmudgeon]

29. Thanks!

Had I known that my older handle "Pigwidgeon" had been appropriated by J.K. Rowling for her Harry Potter books, I would probably have stayed with it. But since I was one of the five people using the Internets who had never read the damn things, I continued in blissful ignorance.

So I changed my handle during the Great Name Change Amnesty, and now my name recalls a hyperactive owl. At least I think it's an hyperactive owl.

Fortunately, my insights still work most of the time. :)

--xBKL!

[hatrack]

30. Actually it was Deffeyes who made the Thanksgiving projection

And I think he meant it as a kind of joke, in that discerning the peak will be a rear-view mirror kind of event.

Even so, this is not going away, and prices are not going to come back down. From what I read over on the Stock Market Watch thread, the Nigerian "crisis" today went to the heart of the current crude oil supply problem - light sweet versus heavy sour.

Whatever SA's spare capacity (if any), the bulk of what production increases they have been able to jimmy up since the top of the year have been heavy sour crude, which is nobody's 1st choice, given the extra energy and money it takes to refine the stuff. Nigeria, OTOH, is still producing substantial amounts of light sweet, and today's potential interruption of that particular supply is what pushed this particular event.

These kinds of events, however, are going to become ever more common as we go over the top of the curve.

[Warren Stupidity]

35. That would explain the interest in going to mars. EOM

[bushisanidiot]

5. So Pres. Nosepicker's kissy-facing and handholding with Saudi royals

didn't help, huh?

guess AWOL feels like a cheap whore who got stiffed..

[Yo_Mama_Been_Loggin]

32. It helped the Saudis

They're making all kinds of money. More money that can be spent on Al Qaida and other mideastern radicals.

[AX10]

6. Remember in the spring of 2000 when Bush said...

that we had to deal with "high oil prices"? In 2000 (May-Jul) oil was about 1.45 a gallon. Now the national average is $2.20 (via Lundberg)!

:eyes:

[Ishoutandscream2]

14. Yeah, "open the spigots" he stated during 2000 campaign

and, yes, I remember gas was about at the 1.50 level a gallon. Why doesn't ANYONE IN THE MEDIA call him on this bullshit?

Oh yes, I forgot, never mind.

[Nordmadr]

7. Kick, someone else recommend this please. N/T

[Nordmadr]

8. By the way at 2:30, oil hit $58.45. That is the new all time high.

It reached as high as $58.60.

Olaf

[DiverDave]

9. I'm glad I get 33MPG

in my CRX...oh, and nominated.

[Ezlivin]

10. Too bad King George can't double the economy as he has oil prices

Oil was selling for $29.06 a barrel in January 2001 when Bush took office.

Freedom's on the march!

[Amonester]

13. D'ya think * told his kissin' tyrant saudi fiend to open up

tha spygot yet?????????

:sarcasm:

[Javaman]

17. Seems like the perfect politcal storm is hitting moron*

Downing Street Minutes, low polls, people want out of iraq, high KIA total this week in Iraq, now this...Wow, what a colossal failure.

[puerco-bellies]

19. The December Crude contract closed at $60.43

I'm taking big profits in most of my Nov & Dec contracts, I will leave some in the market till fall. With the profits I am SHORTING the Sept crude contracts. I think that we will see a $6-8 dollar pull back in the next week or two, or I (therefore my clients)will take a big hit on our short positions, but oh well that's the way the game is played.

This will last about three weeks then it is back to record highs. By November/December crude will be trading at $62.00+.

Aren't ya glad we have two oil-men in the White House?
P-B

[brokensymmetry]

26. You really expect that much pull back?

I'm looking at the August contract and - unless you are looking at a double top - the behavior of the prices and the moving averages seems stronger than that...

[Chicago Democrat]

31. Its seems it always goes like that

big surge then pullback. the charts look like a roller coaster going upward generally.

[bluestateguy]

20. A lot of people are getting what they deserve

I feel bad for the people who opposed this war and are having to suck up the high prices (public transportation simply cannot accomodate everyone's needs), but I think the war supporters out there are getting a litte chickens come home to roost.

[Just Me]

21. Oh, yeah. "fear and hype" eh?

I'll bet this guy would be the first to jump off the building if Wall Street tanked. :eyes:

*shit* This is getting awfully bad. Oh, well. *ouch*

[Pooka Fey]

22. This is what "Peak Oil" looks like. Nominated.

Start getting educated, if you haven't already. Check out the DU Peak Oil group, read James Howard Kunstler's "The Long Emergency", watch "The End of Suburbia".
websites:
http://www.energybulletin.net/primer.php
http://www.lifeaftertheoilcrash.net
http://theoildrum.blogspot.com
http://www.fromthewilderness.com

[Coastie for Truth]

23. But go a step further

Don't stop with just James Howard Kunstler's "The Long Emergency", and his DVD, "The End of Suburbia". (He's a bit Malthusian - and sometimes offnds my "engineering sensibilities").

Also read:
1). Paul Hawken, The Ecology of Commerce: A Declaration of Sustainability
2). Hawken and Lovins, Natural Capitalism: Creating the Next Industrial Revolution
3). Ken Deffeyes, Beyond Oil : The View from Hubbert's Peak
4). Ken Deffeyes, Hubbert's Peak : The Impending World Oil Shortage
5). David Goodstein, Out of Gas: The End of the Age Of Oil
6). Plus any, good, general "Geology for Dummies" level book on introductory geology; I have Anthony Evans, An Introduction to Economic Geology and Its Environmental Impact

As I posted in "" in this thread -- "The long term is driven by "Peak OIl" not a "Brick Wall" -- just a gradual increase in price as each incremental barrel of oil gets more expensive--" and that's where we are now.

[brystheguy]

25. I just bought a Puch moped off of Ebay last night.

Hoping to hedge my bets a little. Over a hundred miles to the gallon on that little sucker. I can't wait to pick it up!!

[Roland99]

27. So, *this* is why oil prices shot up?!?!?

http://news.yahoo.com/s/nm/20050617/bs_nm/markets_oil_dc_28&printer=1;_ylt=AhxkhyIpHIr_uySomBbWD9Gb.HQA;_ylu=X3oDMTA3MXN1bHE0BHNlYwN0bWE-

Oil prices set a new record of $58.60 a barrel on Friday, after the United States and other Western nations shut consulates in oil-producing Nigeria following a terrorist threat.

[struggle4progress]

33. Not to worry! It'll go back down to $57 ..

.. before it climbs into the $70s ...

[AX10]

34. Actually it will fall to $59.98 first.

:silly:

[Jack Rabbit]

36. Financial Times (London/Saturday): Oil prices exceed $58

From the Financial Times (London)
Dated Saturday June 18

Producers reap benefits as oil prices exceed $58
By Carola Hoyos in London

Oil prices climbed above $58 a barrel yesterday as it became increasingly clear that producers were unable to match strong demand from China and the US and security concerns resurfaced with alerts at western embassies in Nigeria.

The rise in US crude oil prices came as the US Energy Department's statistical arm spelled out the gains being reaped by members of the Organisation of the Petroleum Exporting Countries, the cartel that supplies nearly 40 per cent of the world's oil.

Oil export revenues for the 11-member group this year are expected to jump by 27 per cent to $430bn, a level not seen since the days of the Iran/Iraq war, according to calculations by its biggest customer. The revenue boom comes as the cartel is trying but failing to heed consumers' calls to help cool prices.

The Energy Intelligence Agency's report was released in the week that Opec admitted it had little power to quell record oil prices even though it increased its production quota by 500,000 barrels a day to 28m b/d.

Read more.

Fill 'er up?

[TwentyFive]

37. Why can't we spend $300 bil to invent alternative sources of energy?

The USA has the Entrereneurs, Scientists and Willpower to come up with alternative sources of energy. They will be cleaner and bost our standard of living.

So we spend all this money to fight a war over a dwindling supply of crude oil. Who benefits from this? Bush and his Saudi buddies and oil company pals.

Just think...if we could run cars on sunlight...what would happen to those trillions of dollars Exxon, Saudi Arabia, etc has invested in oil fields, refineries?

[Jack Rabbit]

38. A couple of immutable facts

1. The law of supply and demand. Although oil production is at at all time high, so is demand. China has come into the market as a major consumer. She needs the oil to poser her industry, just like North Americans and Europeans. In the US, we'll probably never see pump prices as low as $2/gallon again.

2. Peak oil. Not only are we using more oil globally, but the ability to produce more of it is limited to only the nest several years.

Doing nothing is a formula for economic disaster. You're absolutely right in saying that we need to start developing renewable sources of energy as an alternative to fossil fuels. Shell and Exxon be damned.

[oscar111]

39. "cars on sunlight"- solar boiler city supply, 2 all-elect. cars

if city electric source is solar boilers, as in Barstow CA,

or wind farms, as Denmark and Germany,

then charging up your car from an outlet would do it.

natch, car must be all-electric not some looser "hybrid" which is being foisted on us now.