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Peak Oil Review

Peak Oil Review – 15 Jan 2018

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Peak Oil Review – 15 Jan 2018

New York oil futures closed up 4.7 percent last week despite a ten-rig increase in the number of active US oil rigs.  London and New York futures closed with biggest weekly gains since October. On Thursday Brent crude briefly traded above $70 a barrel for the first time since 2014, before closing out the week at $69.78. New York futures closed the week at $64.30, some $5.50 below London. As has been the case for several weeks, shrinking crude inventories, high rates of OPEC/Russian compliance with the production freeze and what is seen as strong demand continued to drive prices higher last week.

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Peak Oil Review – 8 Jan 2018

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Peak Oil Review – 8 Jan 2018

The first week of the new year saw much activity related to the energy markets. Oil prices continued to climb with NY futures closing at $62.01 on Thursday, the highest close since December 2014. The continuing fall in world crude stocks — US stockpiles were down by 7.4 million barrels last week—and a healthy global economy continues to push prices higher.  London futures are now at $67.66 a barrel and are closing in on $70.

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Peak Oil Review – 1 Jan 2018

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Peak Oil Review – 1 Jan 2018

US futures closed out 2017 above $60 a barrel for the first time since mid-2015. In the first half of the year, the OPEC/Russian production cut seemed to have little effect, but as the year wore on global crude inventories dropped.  By the third quarter, higher demand and lower inventories led to a price rally which left New York futures 12 percent higher for the year and London 17 percent higher. Prices are up by about 30 percent since OPEC and the Russians agreed to cut production in late 2016. For the record, US futures closed out the year at $60.42 and London at $66.62. Problems with UK, Libyan, and Nigerian production have pushed the spread between London and New York futures to more than $6 a barrel in recent weeks.

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Peak Oil Review – 26 Dec 2017

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Peak Oil Review – 26 Dec 2017

Last week started with a combination of the North Sea pipeline outage and a strike by Nigerian oil workers pushing prices up. In the background is the steady decline in world oil stocks that has convinced many that the oil glut will soon be over, and the steady increase in US shale oil production which has a few predicting that another price plunge is coming soon. The Nigerian oil strike was quickly settled, and by week’s end it seems that the North Sea pipeline outage will be at least partially repaired by early January.  Prices moved up slowly after closing Monday at $58.35 in New York and $65.04 in London.

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Peak Oil Review – 18 Dec 2017

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Peak Oil Review – 18 Dec 2017

Oil prices currently seem on course to finish out 2017 with a second annual gain after the decision by OPEC to extend its production freeze through 2018. Last week Brent briefly climbed above $65 a barrel for the first time since 2015 due to the closure of the pipeline that brings some 455,000 b/d ashore from the North Sea fields. Moreover, several major financial institutions have raised their oil price forecast for the coming year.  While the year ahead looks bullish to some, there is major disagreement between OPEC and the International Energy Agency over where oil prices are going in the coming year. OPEC, bullish as usual, says that production curbs by the cartel and its allies will eliminate the oil glut that has kept oil prices low for the last three years. The IEA, however, does not expect the oil glut, which contracted by about two-thirds in 2017, will continue to shrink due to a rapid increase in US shale oil production. There are pros and cons on both sides of this disagreement so that it is difficult to see just how the situation nets out.

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Peak Oil Review – 11 Dec 2017

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Peak Oil Review – 11 Dec 2017

In the wake of the OPEC decision to extend the production freeze, the oil markets were relatively quiet last week. Prices fell early in the week after the EIA reported a 6.78-million-barrel increase in the US gasoline inventory, but climbed later in the week on reports of near-record Chinese oil imports for November of more than 9 million b/d and concerns about the embassy-in-Jerusalem situation. At week’s end US crude settled at $57.36 and London nearly $6 higher at $63.40. For the immediate future, there are concerns about the US oil rig count which continues to climb slowly. The EIA reported last week that US production expanded to 9.71 million b/d, the highest since EIA began compiling weekly data in 1983. There are, of course, concerns that the EIA’s weekly production estimates are inflated and will be revised when better information becomes available. Other factors moving the markets last week were a good US jobs report, signs of modest growth in the EU economy, and the threat of a strike in Nigeria.

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Peak Oil Review – 4 Dec 2017

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Peak Oil Review – 4 Dec 2017

The long-discussed decision by OPEC and its collaborators on whether to extend their production freeze to the end of 2018 came last week and to nobody’s surprise was unanimous. After three months of hype, hints, rumors, and speculation, and a nearly $10 a barrel increase in oil prices, the matter is settled for another year. When the oil markets concluded there would be no immediate sell-off in reaction to the three-month price increases, oil futures started rising again. On Friday afternoon, increasing political turmoil surrounding the Trump administration and its relations with Russia roiled the market leaving New York futures at $58.35 and London at $64.10.

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Peak Oil Review – 20 Nov 2017

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Oil prices fell for most of last week, but then rebounded to close at $56.55 in NY ($62.73 in London) on Friday. This was only a dollar or so a barrel below the recent high set the week before last. As usual, there were numerous factors impacting oil prices. OPEC reported a small drop in October production due to lower output from Iraq, Nigeria, and Iran. OPEC also said it expects global demand for oil to grow by 1.5 million b/d this year and again in 2018. The IEA is not so sure that demand will be so strong, noting that crude prices have risen by roughly 20 percent since early September and now the “market balance in 2018 does not look as tight as some would like and there is not, in fact, a ‘new normal’.”

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Peak Oil Review – 13 Nov 2017

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Peak Oil Review – 13 Nov 2017

Oil prices leveled off last week with New York futures closing at $56.74, up more than $20 a barrel since June.  Brent closed about $7 higher at $63.52. As has become normal these days, multiple factors impacted the oil prices last week pulling the markets in both directions. While the arrest of over 200 important princes, ministers and industrial leaders in Saudi Arabia on charges of corruption early in the week roiled the markets for a few days, by the end of the week the markets were largely ignoring what could morph into a major Middle East crisis or even hostilities.

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Peak Oil Review – 6 Nov 2017

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Peak Oil Review – 6 Nov 2017

The price surge, which began in mid-September, continued last week with NY futures closing Friday at $55.64 and London at $62.07. The $6.50 spread is leading to ever higher US exports which are now above 2 million b/d. Crude prices are at their highest level in over two years. Behind the price surge has been the steady stream of hints from the Saudis and the Russians that they are ready to back an extension of the production freeze through 2018 at the November 30th meeting. Some are asking whether the major oil exporters will be willing to continue a production freeze if prices move much higher. There now is a solid perception among traders that the global crude stocks are declining and that demand is rising. This in addition to the OPEC hype is contributing to the price surge.

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Peak Oil Review – 30 Oct 2017

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Peak Oil Review – 30 Oct 2017

London futures closed above $60 a barrel last week for the first time since 2015. New York futures are now about $6 a barrel lower than London, increasing the incentive for foreign refiners to buy and export more US oil.  The main impetus for the price surge on Friday was comments by Saudi Crown Prince bin Salman that he backs an extension of the OPEC production freeze until the end of next year. Coupled with the Prince’s statement were upbeat OPEC pronouncements about the increasing demand for its oil and the dubious proposition that compliance with the production cut was now at 120 percent of the agreed numbers. Beyond the hype, however, are real concerns that the Iraqi, Iranian, and Venezuelan situations could deteriorate and lead to lower exports.

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Peak Oil Review – 23 Oct 2017

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Peak Oil Review – 23 Oct 2017

Oil prices were little changed last week with New York futures trading around $52 a barrel and London around $57. Numerous factors continue to affect oil prices: Baghdad’s seizure of the Kirkuk oil fields and the consequent reduction in exports; a stronger US dollar brought on by the prospect of a tax cut; a falling US oil-rig count; a large drop in US crude inventories due to the recent hurricanes and unprecedented exports; the brightening prospects for a nine-month extension of the OPEC production freeze; and finally a warning that the China’s economy may not be doing as well as many believe. When all these forces pulling in various directions were netted out, there was little change.

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Peak Oil Review – 16 Oct 2017

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Peak Oil Review – 16 Oct 2017

Prices climbed last week with Brent up almost 3 percent to $57.17 a barrel and WTI up over 4 percent to close the week at $51.45. The major developments affecting prices was an unexpected jump in Chinese oil exports of 1 million b/d in September to 9 million and the announcement that the President would not certify Iranian compliance to the nuclear accord. Statements by OPEC and Russian officials concerning a possible extension of the production freeze and the growing concerns that there will be hostilities in the aftermath of the Kurdish independence vote also supported prices.

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Peak Oil Review – 9 Oct 2017

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Peak Oil Review – 9 Oct 2017

US crude futures fell to $49.23 on Friday for a weekly loss of nearly 5 percent – the first weekly drop in more than a month. Hurricane Nate struck the US Gulf Coast Saturday night forcing the temporary closure of some 70 percent of US offshore oil production. In comparison with other recent hurricanes, Nate was relatively weak, so the damage to oil production and refining should be minimal and production back to normal in a day or two.

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Peak Oil Review – 2 Oct 2017

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After climbing steadily for over a month, oil prices slid downwards about a dollar a barrel last week ending up circa $51.50 in New York and $56 in London. The summer price surge took oil to the highest seen in two years with New York futures climbing from $42 a barrel in late May to peak above $52 last week. Several factors sustained the summer price surge. OPEC and the IEA released reports forecasting that global consumption would be higher. The Kurd’s independence referendum which led to Turkey threatening to block Kurdish oil exports was another factor, as were the effects of the hurricanes in the Gulf of Mexico.

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Peak Oil Review – 25 Sep 2017

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Peak Oil Review – 25 Sep 2017

Oil prices continued to climb last week with US futures closing at $50.66 and London at $56.90. The $6 spread between NY and London is mostly due to the aftermath of the US hurricanes which have resulted in the growth of US crude inventories while elsewhere they have declined. Market sentiment has changed in the last few weeks with many now convinced that oil prices will be moving higher due to the OPEC production cuts and strong demand for oil products brought on by the relatively low prices. The IEA just upgraded its demand growth estimate for 2017 to 1.6 million b/d. If growth like this continues, it will eat through the global surplus rather quickly.

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Peak Oil Review – 18 Sep 2017

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Peak Oil Review – 18 Sep 2017

Oil prices rose steadily last week with US crude futures briefly topping the psychological barrier of $50 a barrel and with London futures closing at $55.62. Most analysts are talking about higher prices ahead. The IEA’s monthly report says that the global oil supply contracted in the past month and that demand remains strong. These judgments came despite the US hurricanes that shut down over 25 percent of US refining capacity and took a good, but as yet unknown, bite out US demand in the Southeastern US and along the Gulf Coast.

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Peak Oil Review – 11 Sep 2017

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Peak Oil Review – 11 Sep 2017

Oil prices rose some $3 a barrel for the first three days last week and then collapsed on Thursday and Friday as Beijing announced its plans to reduce the capacity of its small “teapot” refineries, and Hurricane Irma closed in on Florida reducing demand for oil products in the state. Recovery from the Texas hurricane, Harvey, continues with 8 of 20 refineries that were closed by the hurricane now back to normal operations. The ports of Corpus Christi and Houston are returning to normal, and several other refineries report they will be back in operation in the next week or two. Gasoline prices in the US are starting to retreat from storm-induced spikes as refineries and pipelines return to normal. The unusually large crude and product reserves in stockpiles have helped cushion price increases.

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Peak Oil Review – 4 Sep 2017

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Peak Oil Review – 4 Sep 2017

As the severe flooding spread further east last week, closing down numerous refineries and causing widespread devastation, it is becoming apparent that it will be several weeks before the full impact on the US oil industry and indeed global oil markets can be assessed. At one point last week the hurricane shut down a quarter of US refining capacity, some 4.0-4.4 million b/d, but oil production outages mostly from Gulf production came to less than 1 million b/d. With a lot of oil going into storage and refinery demand well below normal, US oil prices have moved very little in the past week, while Brent has remained stronger in anticipation that Europe will be called on to replace the missing US barrels in the next few weeks.

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Peak Oil Review – 28 Aug 2017

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Peak Oil Review – 28 Aug 2017

It likely will take several weeks to assess the impact that Hurricane Harvey will have on the US oil industry.  As of Monday morning, the storm is still dumping large amounts of rain on Houston and its refineries. Weather forecasts are predicting that the storm will continue to cause heavy flooding along the Gulf Coast and will move further east, possibly closing or damaging additional oil production facilities in Louisiana.

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Peak Oil Review – 21 Aug 2017

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Peak Oil Review – 21 Aug 2017

Oil continues to trade in one of the narrowest ranges seen in the last decade as the efficacy of the OPEC production cap weighs against increasing US and other production increases and slowing Chinese demand.  Last week saw oil prices falling for three days and then rebounding sharply on Friday to close at $48.50 in New York as a combination of a large drop in US crude stocks, a weaker US dollar, and a falling rig count supported prices.

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Peak Oil Review – 14 Aug 2017

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Peak Oil Review – 14 Aug 2017

It has been two weeks of mixed signals as to the course of oil prices. Last week prices fell around 1.5 percent, closing at $48.82 in New York on concerns that the OPEC/NOPEC collation was not following through on its pledge to cap production. Even though US stocks continue to fall, much of this is due to increasing exports of light oils and finished oil products and not to increased domestic demand. On Friday, the IEA said that although the oil markets were slowly balancing, it is not going quickly. OPEC and other friends of higher oil prices continue to release optimistic reports, but the consensus seems to be that oil prices will stay around their current levels for the rest of the year unless there is a major geopolitical upheaval.

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Peak Oil Review – 31 July 2017

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Peak Oil Review – 31 July 2017

Oil prices were strong last week with New York futures closing about $4 a barrel higher for the week at $49.71 and London at $52.52. Behind the move was another unexpectedly large decline in US stockpiles of 7.2 million barrels. This decline was brought about by a high level of US refinery consumption of almost 17.3 million b/d of crude the week before last. This was 620,000 b/d higher than in the comparable week in 2016. A reduction in Saudi shipments to the US was also seen as responsible for the unusually large decline in inventories.

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Peak Oil Review – 24 July 2017

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Peak Oil Review – 24 July 2017

The markets remain confused about the future of oil prices as analysts attempt to interpret alternating bullish and bearish signals. Last week prices rose on Tuesday and Wednesday while falling on Monday, Thursday, and Friday leaving US futures at $45.77 or about $1 below where they started the week.  With the US now exporting circa 1 million barrels of oil each day and imports up only about 300,000 b/d over last year, US stocks have been falling of late.  There has been some increase in US consumption, but a rapid rise in US oil product exports is clouding the picture as to whether the high levels of US refinery output are being consumed domestically or being shipped abroad.

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Peak Oil Review – 17 July 2017

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Peak Oil Review – 17 July 2017

Oil prices climbed steadily last week, ending up Friday about $5 a barrel higher in New York at $46.54 with London the usual $2.50 or so higher. Although market concerns about oversupply have not gone away, a 7.6-million-barrel decline in US crude stocks and better demand from Europe and China was enough to keep the markets climbing higher. Rising prices were kept in check, however, by the continuing increases in oil production in the US, Canada, Libya and Nigeria. There are also concerns that adherence to the OPEC production cut is slipping and many traders are losing confidence in OPEC’s ability to balance the markets with the current level of effort.

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