The Good News for recession consumers:
The average price of gasoline nationwide fell below $3 per gallon last weekend and looks poised to fall a bit further from the current level ~$2.92 at the pump.
The Bad News for recession consumers:
OPEC is in control of (more…)
US industrial production fell in September by the largest monthly amount since 1974. While a big chunk of the production loss was lower oil and gas production, the rest of the drop lowered demand for energy from oil and gas. The weekly EIA oil report showed continued decreases in petroleum consumption, allowing supplies to rise further toward average levels. Demand increased slightly from last week’s extremely low levels, but remains significantly lower than a year ago. As a result, crude has fallen below the $70 level, what I consider to be (more…)
OPEC just released its monthly oil report for October which included lower estimates for oil supply and demand for 2008 and 2009. Each year, global growth is projected to be positive: at almost 600,000 barrels per day (b/d) this year and 800,000 b/d in 2009. But there was one piece of information on page 25 of the report that raised my eyebrows and my hopes that we can keep oil prices and global greenhouse gas emissions in check: global oil demand in the third quarter of 2008 is reported to (more…)
The International Energy Agency (IEA) just lowered its global demand forecast again in its October oil report, making 2008 demand growth lower than 500,000 barrels per day (half the average rate of the last several years). The news, along with the financial collapse of last week, brought oil below $80 per barrel for the first time in a year before rebounding today along with global stock markets. Also in the report was a reduction in supplies, especially from non-OPEC countries who may be in permanent decline from here on out. Thus, the trillion dollar question that emerges for more accurate price projection is: Which will be faster — (more…)
The continued fall in the price of oil due to stock market crashes worldwide leads most analysts to wonder how far down it can go? To understand the depths of oil’s potential price we have to first understand the potential imbalance of demand and supply that can send prices lower than $80 per barrel. This blog will focus on the demand side and probe US demand specifically.
At ~20 million barrels per day (Mbd), the United States consumes more than double the amount of the world’s #2 consumer, China (~8.3 Mbd). US consumption equals almost 24% of world consumption. Thus, fluctuations in US demand have (more…)
The EIA published its weekly oil report today, and the story remains headlined by lower demand restoring inventory levels. Gasoline consumption was 5.5% lower than last week, helping a recovered refinery system and high imports increase its inventory back toward normal levels. Distillates/diesel inventories fell another half a million barrels to the bottom of the average range for this time of year. But 12% lower demand (more…)
I have to admit, today’s oil report surprised me. While crude oil production remains battered by the recent hurricanes, causing 2008 production to fall further below last year’s level, huge demand reductions continued to pick up the slack. While some of the reduction may have been temporary due to the gasoline shortage in the Southeast, much of it seems to be a robust trend. Gasoline and distillates consumption has dropped to levels not seen since (more…)
With another US bank having succumbed to the financial turmoil (my own Wachovia) and other banks in Europe taking emergency measures, the oil and gas markets decided that demand was falling faster than inventories. The price fell more than 10% back into the double digits and Deutsche Bank lowered its oil price forecast 23% for 2009, to $92.50 per barrel. Economic recession in Europe and Japan along with a likely recession in the US brings with it the potential for global oil demand to be close to flat next year. Even with slow production growth, such stagnation in demand could allow oil inventories to rebuild to (more…)
The bailout completes a trillion-dollar gift from tax payers to maintain some semblance of the US financial sector of the past few decades. The era of investment banks has ended, beginning what may turn out to be an era of inflation and weak dollars. This dollar weakness catapulted the oil price to as high as $130 per barrel, causing the NYMEX trading floor to suspend trading briefly since prices’ record rise was more than the one-day limit.
Other bullish news came from the Gulf, as less than 25% of its oil production has returned post-Ike. We are almost 10 days away from (more…)
A bullish report by the EIA showing declines in inventories of crude oil, gasoline, and distillates was not enough to buck the downward trend in oil prices due to a strengthening dollar and continued weak demand picture. The dollar rose to its highest this year at ~$1.435 per euro, 10.5% stronger than the July high of $1.6038 per euro. Next week’s report will show the impact of Hurricane Gustav. Since most refineries and crude production facilities are still offline, I guestimate that the numbers will come out very bullish with losses that bring crude, gasoline, distillates and propane near record lows for this time of year. The fact that oil rigs are not as damaged as post-Katrina and Rita is very fortunate, but (more…)