US regulators have issued the first deepwater drilling permit since BP’s accident last April. But does it mean the end of the slowdown to drilling in the Gulf of Mexico? The oil industry still thinks not.
Oil companies note that the permit which was issued was for a project by Noble Energy that was active before the accident and, therefore, did not need to meet the full suite of new regulatory requirements.
In this week’s readers’ Q&A session, Terry Duffy and Craig Donohue, chairman and chief executive of the CME Group, answer your questions. The CME is one of the largest commodities exchanges in the world, and is home to the WTI crude benchmark, making them perfectly placed to answer any questions on oil price volatility.
Below, they answer questions on the spread between WTI and Brent crude, the future direction of the oil price and whether the group willbe involved in trading European carbon emissions.
The Q&A sessions are taking a break for three weeks, but will be back in March with Francesco Starace, chief executive of Enel Green Power, in the hotseat. We will publish more details closer to the time.
But for now, over to Terry and Craig:
1) Are any changes to the terms of the WTI contract being considered, to make it less dependent on factors that are strictly local to Cushing?
Apologies to our readers, but we’ve had to delay the planned Q&A session with the CME Group. We hope to be able to publish it on Monday, so keep watching this site.
We now have confirmation from the International Energy Agency that the Saudis have indeed raised their output.
The IEA has not disclosed its estimate of the scale of the increase, but nor has it denied earlier suggestions that Saudi Arabia has begun producing above 9m barrels per day. Its level of output in January was 8.6m b/d, so the kingdom appears to have raised its output by some 400,000 b/d.
A Saudi oil official declined to confirm or deny any of these figures earlier today. But it seems that the talks with European refiners on the quantity and quality of oil they required have indeed borne fruit.
The news confirms what has been priced into the market since last night (note: this chart is WTI, rather than our usual Brent, because of some chart formatting errors – but the direction is the same).
Reuters and Upstream are reporting what looks like good news for those relying on Libyan oil supplies. According to both sources, Jammal bin Nour a judge and member of the coalition that says it is in charge in Benghazi, has said:
The oil deals (with foreign companies) that are legal and to the benefit of the Libyan people we will keep.
The row about UK solar feed-in tariffs rumbles on. This morning, Energy Secretary Chris Huhne tried to persuade people in the South West that solar subsidies should not go to the kind of large-scale solar farms that are being developed in that part of the country.
His words seemed to back some of the arguments used by large-scale solar developers, who are up in arms about the government’s move. Firstly, even though the government is only announcing a review of which projects are eligible for subsidies, Huhne seems to have prejudged its outcome:
A 5MW solar farm could deny around 1500 homes from claiming FITs for solar panels on their roofs… At the moment the risk is, if we don’t deal with the excesses, then the whole thing will come grinding to a halt.
Just yesterday I was listening to the chief economist at the Centre for Global Energy Studies explain calmly why the oil price was unlikely to hit $150 a barrel. Today, it has taken a huge jump in that direction, peaking at more than $119.
Analysts are scrambling to update their forecasts. Here are some of their more important/interesting thoughts: