Falklands : Hydrocarbons Daily Record Sunday, 22 June 2008
Submitted by Falkland Islands News Network (Juanita Brock) 22.06.2008 (Article Archived on 08.07.2008)
Geo-politics played an important role in that Israel may have inadvertently sent a signal that it was practicing for an attack on Iran’s nuclear facilities. Relevant violence in Nigeria and now a heating up of terrorist activities in Lebanon and speculators have had a hay-day as far as increasing the price of crude.
HYDROCARBONS DAILY RECORD SUNDAY, 22 JUNE 2008
By J. Brock (FINN)
Focus on Jeddah
At 1930hrs LMT on Friday, 20 June 2008 Light Sweet Crude was trading at $134.62 up $2.69 on the New York Mercantile Exchange. Brent Crude was trading at $134.86 up $2.86 on London’s ICE Futures Market.
ANALYSIS:
(Friday’s increase)
Before I write of Jeddah, I will analyze why crude prices increased on Friday. Geo-politics played an important role in that Israel may have inadvertently sent a signal that it was practicing for an attack on Iran’s nuclear facilities. Relevant violence in Nigeria and now a heating up of terrorist activities in Lebanon and speculators have had a hay-day as far as increasing the price of crude.
(Jeddah)
Hopefully the energy summit in Jeddah will help to bring crude prices down, with a firm promise from Saudi King Abdullah to pump as much as 9.7 Million Barrels a day by the end of July increasing to 12.5 Million barrels a day. We all know that this is fine in principle but HDR has reported on many occasions that infrastructure is ageing and there are many people who would not want a refinery in their back yard or an expansion of any kind for environmental reasons.
Getting that new infrastructure and upgrading what we have, while enough money is available to get the job done, will not be easy. HDR agrees with the Saudi Energy Minister that the price of crude won’t immediately come down but would decrease as infrastructure is updated, renewed, built and – most importantly – operated in a cost-effective and efficient manner. This includes proper maintenance.
(Elsewhere)
Speculators are pouncing on the fact that there aren’t enough oil rigs and drill ships to explore for crude throughout the world. I doubt if anybody is frantically looking for crude to replace what is available from oil majors. Indeed, some rigs that had been contracted for exploration are now being kept on site for exploitation. However, crude when found in commercial quantities has to join the queue and take its turn to be extracted behind the oil majors.
(Supply and Demand)
HDR feels that to say there isn’t enough crude around to meet demand is ill advised. Demand is going down because people can no longer afford hydrocarbons products and they are belt tightening by taking fewer road and air trips and more will be staying home during the summer drive season. In China, where demand had been growing the subsidy has been cut by almost 20% and people are not prone to go into debt to fill up their gas tank.
(And finally)
The sky isn’t going to fall in if crude prices decline to affordable levels.
RELATED ARTICLES:
(Geo-politics)
Chevron Corp.'s Nigerian onshore oil output remained halted following an attack on a pipeline operated by the company, H. Odein Ajumogobia, the country's minister of state for petroleum, said today.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aECpcxIaPbpg&refer=home
(Shortage of Drill-ships)
Although President Bush last week called for repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.
http://www.nwanews.com/adg/Business/229416/
(Speculators)
Saudi Arabia's King Abdullah launched an offensive against oil "speculators" on Sunday at a summit on the soaring price of crude which exposed OPEC divisions over the need to increase production.
http://afp.google.com/article/ALeqM5he4hZ0UHoWG2l5xJvVb2D5WgLvUQ
(Crude Supplies)
This morning, Gordon Brown is on a pilgrimage in the direction of Mecca. The Prime Minister is in Jeddah to address a summit of oil producers and consumers, having warned the Saudis and the rest of Opec in advance of the visit that he thinks they are to blame for the stuttering world economy by not pumping enough of the black stuff out of the ground. The visit is richly symbolic of what is happening to the politics of energy and the environment.
http://www.guardian.co.uk/commentisfree/2008/jun/22/greenpolitics.gordonbrown
OPEC'S president has rebuffed a push from Western nations for increased oil production, arguing that current record prices are unrelated to supply-and-demand issues.
http://www.theaustralian.news.com.au/story/0,24897,23906400-601,00.html
(Development Money)
Prime Minister Gordon Brown called on Sunday for cash-rich Gulf nations to invest in renewable and nuclear energy production in Britain and elsewhere.
http://afp.google.com/article/ALeqM5gTckKvB2AMtKZG2iTKKoHce7fu0A
Saudi Arabia, the world's top oil exporter, will allocate $500 million in soft loans to developing nations hurt by record oil prices, King Abdullah said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJ_Re6.L9d28&refer=home
SHARE PRICES ON THE ALTERNATIVE INVESTMENT MARKET: Sunday, 20 June 2008.
TLW: 953.00 up 54.00, DES: 88.00 down 1.25, FOGL: 150.00 up 1.00 RKH: 95.50 up 0.50, BOR: 101.00 up 0.50 PRE: 13.50 unchanged, GBP: 7.88 down 0.13, GPK: 406.50 unchanged, BLT 1887.00 down 63.00, RDSA: 1953.00 down 35.00 RDSB: 1910.00 down 37.00
New York Stock Exchange:
XOM: 85.35 down 0.44 (Trading in USD)
THE MARKETS (20/06/08)
FTSE100: 5,620.80 down87.56, FTSE250: 9,361.10 down 85.82 SmallCap: 2,953.60 down 31.73
DJI: 12,063.09 up 34.03 NASDAQ: 2,406.09 down 55.97 S&P500: 1,317.92 down 24.91.
US DEPARTMENT OF ENERGY ADMINISTRATION INVENTORY REPORT FOR WEEK ENDING 13/06/08
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
HYDROCARBONS RESEARCH:
(Locating Deep Water Resources)
Five miles straight down, past the prowling barracuda and tuna, lies a massive sandstone formation marbled with oil. Extricating the inky fluid, which has lain undisturbed for millions of years, and shipping it 150 miles to land won't be easy.
http://www.theleafchronicle.com/apps/pbcs.dll/article?AID=/20080622/BUSINESS/806220324
(Note: Huge resources of gas-hydrates could provide energy needs for a millennium to come.)
REGIONAL DEVELOPMENTS:
(Brazil)
JEDDAH, Saudi Arabia -(Dow Jones)- Recent Brazilian oil discoveries may all be connected and form one big oil field, Brazil's Mines and Energy Minister Edison Lobao told Dow Jones Newswires in an interview Saturday.
http://www.istockanalyst.com/article/viewarticle+articleid_2304158~title_UPDATE:-Brazil-Min:-New.html
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