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Peak Oil Review

Peak Oil Review – 5 Dec 2016

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Peak Oil Review – 5 Dec 2016

The agreement between OPEC and Russia came as a surprise for most. Until the Vienna meeting started, there was much pessimism that a deal would be reached and all indications had been that negotiations were deadlocked over the issue of who would cut by how much. The breakthrough seems to have come when Moscow changed its position from “freeze but no production cut” to agreeing to reduce output by 300,000 b/d from the 11.2 million b/d it reached in November. This change, plus the agreement by Baghdad to cut oil production by 210,000 b/d, was enough to convince the Saudis to cut by 486,000 b/d and the other Gulf Arab states would join in for at total Gulf Arab cut of 786,000 b/d. Libya, Nigeria, and Indonesia were left out of the agreement and Tehran was allowed to increase production by 90,000 b/d to 3.8 million – somewhat short of their 4 million b/d goal. Given the bad relations between Riyadh and Tehran, allowing the Iranians to continue increasing production was the toughest part of the deal for the Saudis to swallow.

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Peak Oil Review – 28 Nov 2016

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Peak Oil Review – 28 Nov 2016

Oil prices were steady in the first part of the week as the markets waited for news about the OPEC meeting this week. When it was announced on Friday that the Saudis would not attend a preliminary meeting with the Russians and other non-OPEC members, prices dropped about $2 a barrel to close circa $46 in New York and $47 in London. Although analysts and market traders remain skeptical that any significant agreement will be reached, the week began with a spate of reports from “insiders” that “progress” was being made.

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Peak Oil Review – 21 Nov 2016

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Peak Oil Review – 21 Nov 2016

Oil prices climbed on Monday but then held steady for the rest of the week as talk of an OPEC agreement balanced against a stronger dollar and increasing global oil surpluses. At week’s end, New York futures settled at $45.69, about $2 above the recent lows touched the week before last, but $7 below the tops of the speculative bubbles set in June and early October.

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Peak Oil Review – 14 Nov 2016

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Peak Oil Review – 14 Nov 2016

Last week oil prices suffered their fourth losing week in a row as OPEC continued to argue over a possible production freeze/cut and oil production continued to grow adding to the surplus. At week’s end, futures prices were down to $43.41 in New York and $44.75 in London. The surprising US election results roiled for a few hours on after the results became known, but prices settled on Wednesday with a small gain and were down on Thursday and Friday on new reports of oil production increases and stockpile builds.

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Peak Oil Review – 7 Nov 2016

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Peak Oil Review – 7 Nov 2016

Oil prices continued to slide last week with New York futures down by nearly $8 a barrel from the recent highs set in mid-October. The week closed out with NY at $44.07 and London at $45.58. The hype over an OPEC production freeze which has been driving prices up since last spring is no longer moving prices higher. OPEC and Russia have to come up with a significant production cut in the next three weeks or be faced with lower prices until supply and demand come back into balance from economic forces. The final OPEC meeting to approve a cut is only three weeks away (November 30th) and so far no progress has been made at preliminary meetings that were intended to work out details.

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Peak Oil Review – 31 Oct 2016

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Peak Oil Review – 31 Oct 2016

Oil prices trended down last week to register the biggest loss in six weeks. At the close New York futures were at $49.27, down from $50.50 on Monday, and London was trading at $50.03. There was a brief rally during the week when US crude stocks came in lower than expected, but the week’s decline came mainly because traders lost faith that OPEC will be able to reach agreement on a production freeze.

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Peak Oil Review – 24 Oct 2016

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Peak Oil Review – 24 Oct 2016

Except for a brief spike on Wednesday following the release of the EIA’s stocks report, oil prices were relatively stable last week trading around $51-52 a barrel in New York and London. Little price movement can be expected until the OPEC/Russia combine agrees on the nature of a production freeze, if any. Last week, there were mixed signals from Moscow as to just what their intentions regarding a freeze would be. With several countries expecting an exemption from any production cap, the bulk of the cut would likely fall on the Saudis and the other Gulf Arab states. The IEA is still saying that it does not expect the price of oil to go much above $60 in the near future as US shale oil producers would quickly flood the markets, offsetting any OPEC freeze of the size under discussion.

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Peak Oil Review – 17 Oct 2016

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Peak Oil Review – 17 Oct 2016

Last week started with a flurry of speculator optimism deriving from the World Energy Congress in Istanbul during which the Russians backed Saudi efforts to raise prices using a production freeze, the details of which have yet to be determined. For the rest of the week, oil prices moved little as various reports affecting the oil markets showed that it is unlikely that a significant OPEC/Russian production agreement can be negotiated. The week ended with New York futures settling at $50.35 and London at $51.95. Most analysts do not expect any significant change in prices until the fate of the freeze becomes known around the end of November. In the meantime, technical exchange meetings will take place to see if an agreement can be worked out. Recent and projected increases in OPEC production make it likely that considerably larger production cuts than were agreed to at Algiers will be necessary to move prices higher. Goldman Sachs warned last week that the planned Russian/OPEC production freeze is unlikely to be enough to rebalance the markets in 2017.

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Peak Oil Review – 10 Oct 2016

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Peak Oil Review – 10 Oct 2016

The rally that began with the announcement of the OPEC production freezes in late September continued through Thursday last week. There is much skepticism that the tentative agreement, which will not be signed for another six weeks, will have a significant impact on global oil supplies. Crude prices slipped on Friday settling at $49.81 in New York and $51.93 in London. The 10-day rally now has taken prices up by about $5 a barrel. OPEC and the Russians have figured out that just talking about supply cuts can increase oil revenues substantially. A $5 price jump increases OPEC’s revenues from pumping roughly 33 million b/d by some $160 million a day.

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Peak Oil Review – 19 Sep 2016

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Oil prices continued to fall last week, closing Friday in New York at $43.39 and $46 in London. There was considerable news tending to push prices lower. OPEC and the IEA revised their forecasts for the next year and concluded that the imbalance in the oil markets would continue into 2017 vs. predictions that the gap would close this fall. This coupled with increased Iranian production; the possibility that Libya and Nigeria oil production will soon rebound; the report that Bakken shale oil production grew in July and EIA’s admission that US oil production is not falling as rapidly as forecast; all contributed to the weaker oil markets.

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Peak Oil Review – 12 Sep 2016

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It was a volatile week, with New York futures starting out at around $43 a barrel on Monday, climbing to $47.50 on Thursday and then falling to close at $45.88 on Friday. The major event last week was the EIA status report, which came out on Thursday, reporting a near-record fall in the US crude stocks of 14.5 million barrels from the week before last. This was the largest weekly drop in 17 years and set off a short-lived buying frenzy. Traders ignored the impact of tropical storm Hermine which was thrashing around in the Gulf that week, closing production platforms and delaying tanker arrivals along the Gulf and East Coasts. The EIA reported that US crude imports were down by 12.6 million barrels from the week before, and that US refineries were running at 93.7 percent of capacity to satisfy US gasoline consumption demand over Labor Day. By Friday, traders realized that the crude drop was likely a one-off event and not the beginning of a trend.

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Peak Oil Review – 5 Sep 2016

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The struggle between fundamentals and speculators’ dreams of much higher prices continued last week with oil futures falling through Thursday and then rebounding on Friday to close at $44.44 in NY and $46.83 in London, down about $2.50 for the week. The fundamentals include growing stockpiles, increasing US and Canadian rig counts, and fears that US interest rates will be going up shortly which will lead to a stronger dollar and lower oil prices.

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Peak Oil Review – 29 Aug 2016

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Oil futures fell some 3 percent in New York and 2 percent in London last week, settling at $47.64 and $49.92 respectively. The markets have become volatile of late with traders reacting to nearly every API or EIA report and every utterance from the Saudi or Iranian oil ministers. Last week the markets were pressured by numerous comments pro and con the possibility of an oil production freeze next month; a jump in Chinese diesel exports; comments by Federal Reserve Chair Janet Yellen that there could be a price-depressing rate increase sooner-rather-than-later; increased exports from Iraq via Kurdistan; the possibility of a ceasefire in Nigeria; sluggish US and Chinese economies; and a jump in US crude and oil product inventories.

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Peak Oil Review – 22 Aug 2016

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Oil prices climbed another $3 a barrel last week as traders continued to hope that not only will OPEC and Russia agree to a production freeze next month, but that it will eventually result in the elimination of global oversupply and reduce global stockpiles to a normal level. The week closes with New York futures at $48.52 and London at $50.88.

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Peak Oil Review – 15 Aug 2016

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Oil prices climbed a bit on Monday, fell on Tuesday and Wednesday, and then surged upwards on Thursday and Friday after the Saudi energy minister said his country would be willing to discuss rebalancing the oil market. The minister said Saudi Arabia would “take any action to help” the crude market and will discuss the issue at a meeting in Septmber. Coupled with an EIA forecast that foresees a “sustained tightening” of the crude markets and a reduction in product stocks, New York futures prices now have climbed from below $40 a barrel early in the month to a close of $44.49 on Friday. The IEA says that a combination of falling production and increasing demand, which will be up by 1.4 million b/d in 2016, means that there will be no oversupply in the second half of this year. The Agency believes that refinery processing of crude is now down about 500,000 b/d year over year and projects that production in North and South America alone will be down by 700,000 b/d in the third quarter.

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Peak Oil Review – 1 Aug 2016

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Oil prices fell steadily during July as the realities of oversupply trumped traders’ hopes that there would be balanced markets and higher prices later this year. July opened with London trading just below $51 a barrel and New York around $49.50. By month’s end, London was down to $42.71 and New York to $40.74. The month’s trading was dominated by reports of increasing oil product inventories and higher OPEC production. The decline of nearly $10 a barrel naturally has had repercussions across the oil industry. For most of July, the US rig count was growing as drillers anticipated that crude prices would soon be at a level where more wells would be profitable. By month’s end, however, these hopes had been dashed, and the US oil rig count had nearly stopped growing.

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Peak Oil Review – 18 Jul 2016

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Concerns are rising that the predictions of the oil markets coming back into balance later this year are wrong and that lower oil prices are ahead. Oil production is not falling as fast as predicted. Some outages are coming to a close and the growing glut of oil products could be as bad as last year’s crude glut. Many analysts now are talking about prices falling below $40 in the next few months and a few are even talking about a return to the $30 level. Although US crude stocks have been falling of late, the growth in the inventories of refined products continues to grow. Europe is running out of storage space for refined products which would force a cut in refining and result in lower demand for crude. Increased refining to support the summer driving season in the US has only another few weeks to run before the increased demand for gasoline comes to an end. The US oil rig count was up for the 6th time in 7 weeks and North Dakota reported that its oil production increased slightly in May.

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Peak Oil Review – 11 Jul 2016

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Futures fell about $4 a barrel during the holiday-shortened US trading week closing at $45.41 in New York and $46.44 in London. Prices edged down early in the week, recovered a bit on Wednesday, and the plunged after the EIA reported that the US crude inventory had dropped by only 2.2 million barrels as opposed to the 6.7-million-barrel drop that the API came up with after their weekly survey. The weekly decline for Brent was the largest since January.

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Peak Oil Review – 4 Jul 2016

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The oil markets remained volatile last week, trading around $48-50 a barrel, amidst much uncertainty about the future of crude prices. In the wake of the Brexit vote, analysts are all over the board as to where prices will be by the end of the year. Some are talking about $85 a barrel while others are looking for a retreat to less than $30 again. Nearly all agree that the markets will “rebalance” with supply and demand coming together as demand increases and the supply continues to drop as the impact of the much lower investment levels during the last two years reduces supply. For the next six months, however, there is uncertainty especially concerning the spate of unplanned outages that have taken place in the past few months. Oil worker strikes such as in France and Norway likely will be settled quickly, and Alberta tar sands production will soon be back to normal by the end of the summer. The outages in Libya, Nigeria, and Venezuela, however, are more uncertain and seem to be getting worse rather than better in the immediate future.

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Peak Oil Review – 27 Jun 2016

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The vote in Britain to pull out of the EU came as a surprise as most observers were expecting the referendum would fail. Oil prices fell immediately and after some gyrations settled down about $2.50 a barrel at $47.64 in New York and $47.54 in London.

The ramifications of the British vote for the oil markets will take years to work out, and many believe it will lead to a series of international realignments with other countries pulling out of the EU and possibly even the secession of Scotland and Northern Ireland from the UK. Conventional wisdom currently holds that Britain’s withdrawal from the EU will lead to lower economic growth in the EU, UK, and possibly other countries.

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Peak Oil Review – 20 Jun 2016

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Oil prices dropped for six straight trading sessions before rebounding on Friday to close at $47.98 in New York and $49.17 in London but both markets were down for the week. Trading was dominated by polls showing that Britain may vote to leave the EU this week sparking financial turmoil and slower economic growth. These fears resulted in a stronger US dollar which in turn drove oil prices lower. Running counter to these pressures were an IEA forecast that the global supply/demand would be back in balance by the end of the year; production outages in Libya, Canada, and Nigeria; and concerns that the deteriorating situation in Venezuela could soon limit oil production and exports.

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Peak Oil Review – 13 Jun 2016

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Oil prices remained firm last week amidst continuing reports concerning actual or impending supply disruptions. US futures dipped below $50 a barrel on Friday, to close at $49.83, but analysts are expecting further gains as the impact of more disruptions are felt. Higher oil prices have encouraged a small revival of drilling activity with the US rig count up slightly for the second week in a row.

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Peak Oil Review – 6 Jun 2016

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Oil prices hovered just below the $50 level last week with Brent closing just above $50 on Thursday before settling at $49.46 on Friday. As has been the case lately, there were numerous factors pressuring oil prices one way or another. The week opened with much enthusiasm that OPEC would agree to a production freeze, but this went away when the OPEC meeting failed to take any action. The major factor pushing prices higher last week was the unplanned production outages in Alberta, Nigeria, and Venezuela. Although the fires are now well past the Alberta tar sands, it will be several weeks before the 1 million b/d of production that had to be shut down during the firestorms can return fully to production. In the meantime, the Alberta outage and the one in Nigeria have likely removed much or all of the production surplus that has overhung the markets and for now, there may be a rough balance of supply and demand.

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Peak Oil Review – 30 May 2016

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Oil briefly traded above $50 a barrel last week but quickly fell back to close at $49.33 in NY and $49.32 in London on profit taking and uncertainties about the status of the global oil glut. For the past two months, oil prices have been driven higher by a series of unplanned production outages in Kuwait, Libya, Canada, Nigeria, and concerns about the political stability of Venezuela. Currently, about 3.5 million b/d of normal production is offline. While some of these outages, such as the 1 million b/d fire-caused drop in tar sands production, will be short-lived, other situations such as in Nigeria, Libya, and Nigeria could last indefinitely.

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Peak Oil Review – 23 May 2016

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Last week began on a bullish tone with oil prices climbing to a seven-month high, Goldman Sachs talking about the end of the oil glut, and columnists predicting a new spike in prices. All this optimism was based on solid Chinese oil imports, strong US gasoline demand, and production outages in Alberta, Nigeria, Libya and Venezuela. As the week moved on, however, the market became less optimistic as US, European, and Asian crude stocks continued to rise, and prices failed to break through the $50 a barrel barrier.

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