Daily Archives: September 8, 2009

Kate Mackenzie

Cambridge Energy Research Associates believe oil demand, which has fallen away with the financial crisis, will return to 2007 levels by 2012. Significantly, they point out, this is a much faster turnaround than the last time oil demand fell, in the 1980s.

Oil demand began to decline at the end of the 1970s, from 64.1m b/d in 1979 to 61.6m b/d in 1980, according to the BP statistical review. It wasn’t until 1988 that it recovered to 1979 levels. Read more

Carola Hoyos

Much has been said about Saudi Arabia’s influence as the world’s top supplier of oil. (Really dedicated followers of crude, will surely now point out that Russia produces almost 2m b/d more oil than Saudi Arabia. But that is only because Saudi is keeping a lot of its output shut voluntarily to prop up prices – thus Riyadh and its vast production capacity is still very much number one).

But the kingdom not only influences the fate of the world’s oil consumers; it also holds power over the world’s other oil producers.

That is more than evident at this week’s Opec meeting, where several heavyweight oil ministers are missing and others have diminished their credibility by failing to adhere to their Opec quotas. Angola, which currently holds the group’s current presidency, is also its biggest cheater, having adhered to precisely 0 per cent of it agreed output cuts – not a great platform from which to lead.

Meanwhile Kuwait, which has almost fully adhered to its cuts, has a relatively new minister, as does Iran, Opec’s second largest member, which has enacted a paltry 5 per cent of its cuts. Meanwhile, Libya’s popular and long-time oil minister, Shokri Ghanem, is skipping the meeting and is expected to retire shortly.

This leaves few heavyweights around a  table at which Ali Naimi, Saudi Arabia’s long-serving minister, already wields super-power status. Read more

Kate Mackenzie

There are a few snippets of good news around this week for the much-maligned first generation biofuels.

The Journal of Industrial Ecology has published four papers shedding a more positive light on corn ethanol, perhaps the most reviled of biofuels, after some studies showed its production involved similar levels of greenhouse gas emissions to gasoline.

One of the new studies, from the University of Nebraska, looked at the life cycle of corn ethanol production found that efficiently-produced corn ethanol could involve emissions 48 to 59 per cent lower than that of gasoline. Read more

Kate Mackenzie

On FT Energy Source:

A less exciting Opec meeting Read more

Kate Mackenzie

After an exciting year or so, are we about to see a more boring Opec meeting tomorrow night? The consensus is the oil body will maintain the net 4.2m reduction in production agreed last year.

Bloomberg’s poll of 26 analysts and Reuters’ poll of 10 analysts were both unanimous: Opec will keep quotas steady.  Meanwhile, at least nine Opec member countries’ oil ministers, in various pre-Opec interviews in August, mostly said they either expected, or would be satisfied with, keeping the current quota (although Iran and Nigerian ministers mentioned concern about large global oil inventories, which dampen the cartel’s ability to influence prices). Read more

Kate Mackenzie

This apparently, is a quip in oil trading circles about Mexico’s finance minister, Agustín Carstens, on news that Mexico is set to reap $8bn from setting up hedges against falling oil prices last summer.  Carstens (right) hedged Mexico’s entire 2009 oil exports with Goldman Sachs and Barclays capital at a cost of $1.5bn, correctly predicting that the financial crisis would see oil prices plummet from their high of $147  in July last year.

It will be some comfort, especially Mexico’s own oil output has fallen faster than expected this year, prompting the replacement of Pemex chief Jesus Reyes Heroles. Read more

Kate Mackenzie

The CFTC last Friday published its first ‘disaggregated‘ version of its weekly commitments of traders report, which aims to provide more detail about commodity market participants, and especially, the role of speculators in determining prices.

But how much use is it for those hunting for evidence of speculator evil-doing – or of speculator exoneration? Read more

James Fontanella-Khan

Japan sticks to greenhouse gas target
Incoming PM promises 25% cut by 2020

China backs efforts to break oil contracts
Move delivers a blow to some of the world’s biggest investment banks (FT)
 Read more