Crude Oil Prices Continue To Chill
Today as a mass of “global-warming-denying” arctic weather shuts in much of the country with punishing and historic low temperatures; crude oil prices slip again – this time to under $34 – leaving oil companies to float their stock at sea in the bellies of supertankers.
From the Indian Ocean to the South Atlantic to the Gulf of Mexico, giant supertankers brimming with oil are resting at anchor or slowly tracing racetrack patterns through the sea, heading nowhere.
The ships are marking time, serving as floating oil-storage tanks. The companies and countries leasing them for that purpose have made a simple calculation: the price of oil has fallen so far that it is due for a rise.
Some producing countries are trying to force that rise by using the tankers to withhold oil from the market, while traders are trying to profit by buying cheap oil now to store and sell at a higher price later. Oil storage has become so popular that onshore tank capacity is becoming scarce.
The crude oil markets are none-to-worried about the “unrest” in the middle east either, it seems. Normally a war (or threat of a war) in that area results in a spike in the price of crude, as futures traders bet on a resulting shortage resulting from direct action or political punishment. But not this time. There was a blip last week, just a hint of warming… but it didn’t last long.
OPEC lowered its energy demand forecast for 2009, with investors already shrugging off production cuts of 4.2 million barrels a day by member countries. The Organization of Petroleum Exporting Countries said in its January report that it expects world demand for crude will fall 180,000 barrels per day in 2009, compared with the previous year.
Is Gaia herself giving us a glimpse into our financial future? Do the record low temperatures foretell the continued glacerialization of world economies, the freezing of credit, and the icing-over of hope?
Even Hugo Chavez can’t believe his eyes, or the bottom line. He’s busy eating a little crow at the moment, hoping to court western oil companies to help bail him out of the mess he’s created in his oil-rich but cash-starved
President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.
Until recently, Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.
But faced with the plunge in prices and a decline in domestic production, senior officials here have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.
This economic slowdown, recession, adjustment (whatever you’d like to call it) seems bigger than currently imagined.
Meanwhile, U.S. oil inventories have been rising for months, suggesting that the recession severely cut into energy demand. The Energy Information Administration said Wednesday that crude inventories grew by 1.2 million barrels for the week ended Friday after jumping 6.7 million barrels the previous week…
Refineries are cutting back production because profit margins are next to nil.
Flynn said any existing storage facilities could be flooded with crude as the February contract comes to a close Tuesday, leaving little excess capacity.
“We’re running out of places to put it,” he said. “There’s more oil out there now than we’ve had in a long time.”