Archive for the ‘demand’ Category

Oil Held Off Market To Force Price Up

January 15, 2009

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.

By Clifford Krauss
International Herald Tribune

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.

Only six months ago, companies up and down the energy pipeline were rushing oil to market, struggling to keep up with galloping demand and soaring prices. Now, with the global economy slumping and people driving less, demand for oil has plunged — and the same companies are acting in ways that would have been unimaginable until recently.

Oil producers are shutting down rigs, refiners are producing less gasoline, and investment planning throughout the industry is in turmoil.

Read the rest:
http://www.iht.com/articles/2009/01/15/
business/15oil.php

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Russia, Gazprom and the European Gas & Oil Mess

January 6, 2009

Russia sharply cut gas flows to Europe via Ukraine on Tuesday in a dramatic worsening of a pricing dispute with Kiev that threatened to disrupt supplies as far west as Italy and Germany.

Russian export monopoly Gazprom said it supplied some 65 million cubic meters (mcm) to Europe on Tuesday through ex-Soviet neighbor Ukraine, a fall of 78 percent from the 300 mcm it had been shipping since the dispute erupted on January 1.

Reuters

The European Union, dependent on Russia for a quarter of its gas, urged Moscow and Kiev to find a solution this week and German Economy Minister Michael Glos said it was very important the two sides began negotiations.

The head of Ukraine’s state energy firm said he would fly to Moscow on Thursday. Gazprom said it was ready to talk any time but did not expect Ukraine to return to the talks table for now.

Read the rest:
http://news.yahoo.com/s/nm/20090106/ts_nm
/us_russia_ukraine_gas

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By GEORGE JAHN and MARIA DANILOVA, Associated Press Writers

The RussiaUkraine natural gas dispute hit Europe with the force of a winter storm Tuesday, cutting or limiting supplies to nearly a dozen nations. Tens of thousands of people were left without heat and governments scrambled to find alternate energy sources.

Shocked by how fast the shortages were spreading, the European Union demanded a quick end to the dispute — a sharp turnaround from their earlier stance, when officials had downplayed the conflict between Moscow and Kiev as primarily a business matter.

But by Tuesday evening, gauges on delivery pipelines to six countries — including some depending totally on Russian gas — were pointing toward zero and an increasing number of other nations reported significant reductions.

The Ukrainian gas company Naftogaz said Russia’s gas giant Gazprom had sharply reduced its shipments to Europe through pipelines crossing Ukraine, triggering the cuts.

Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey all reported a halt in gas shipments, and even France, Germany, Austria and Poland reported substantial drops in supplies from Russia.

Read the rest:
http://news.yahoo.com/s/ap/20090106/ap_on_
bi_ge/eu_ukraine_russia_gas

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What Is Gazprom?

Gazprom is the world’s biggest producer and exporter of natural gas — and Russia’s most powerful company.
It controls 20 percent of the world’s natural gas reserves and operates the world’s largest gas distribution network — approximately 157,000 kilometers of pipelines covering an area from Europe to the Far East, according to its Web site.

Gazprom exports energy to 32 countries and provides around 25 percent of the European Union’s gas supplies.

Last month it reported an 85 percent increase in net profits to $20.8 billion for the first six months of 2008. In 2007 it reported annual profits totaling nearly $61 billion. In 2008 the Financial Times placed it fourth on its list of the world’s top 500 corporations, as ranked by market capitalization.

CNN

Formed in 1989 to replace the Soviet Ministry of the Gas Industry, Gazprom is closely tied to the Russian government, which owns a controlling 50 percent stake in the company. Current Russian President Dmitry Medvedev is a former Gazprom chairman.

In recent years, an increasingly confident Moscow has used Gazprom to assert its authority over Russia’s former sphere of influence by offering heavily subsidized gas to ex-Soviet countries such as Ukraine and Belarus.

But that policy has led to disputes as Gazprom has then sought to raise prices.

Read the rest:
http://www.cnn.com/2009/WORLD/europe/0
1/06/gazprom.profile/index.html?section=cnn_latest

OPEC Cuts Production 2.2 Million Barrels Per Day

December 17, 2008

OPEC says it is cutting 2.2 million barrels a day from its output — the largest ever at one time — to stem crude prices that have plummeted over 70 percent from summer highs of nearly $150.

An OPEC statement says its latest announcements means it is taking 4.2 million barrels a day off the market compared to September levels. The 4.2 million figure includes more than 500,000 barrels of overproduction OPEC said in September it would eliminate and a formal cut of 1.5 million barrels a day that it agreed on last month.

That amounts to a new reduction of 2.2 million barrels announced Wednesday.

In practice, “it’s 2.2” said OPEC President Chakib Khelil.

Members among the 13-nation organization were officially producing a daily 29.045 million barrels in September.

–Associated Press

OPEC Could Make Biggest Production Cut Ever This Week To Raise Prices

December 15, 2008

OPEC ministers could make their deepest oil supply cut ever when they meet on Wednesday to combat shrinking demand, bulging stocks and a $100 collapse in prices.

By Barbara Lewis and William Maclean
Reuters

File photo shows the OPEC logo in Vienna, Austria. OPEC Secretary ...

For many in the Organization of the Petroleum Exporting Countries, up to 2 million barrels per day (bpd) must be removed to keep up with a slump in consumption that has knocked two-thirds off prices since July.

“We have to act — we see a very sizeable reduction,” OPEC Secretary-General Abdullah al-Badri told reporters on his arrival on Monday in this western Algerian city.

OPEC President Chakib Khelil agreed.

“Everybody is supporting a cut — I don’t have any doubt about it.”

Oil rigs extract petroleum in the Los Angeles area community ... 
Oil rigs extract petroleum in the Los Angeles area community of Culver City, California. World oil prices have rebounded on expectations that crude exporters’ cartel OPEC will cut production at a key meeting in Algeria this week, dealers said.(AFP/Getty Images/File/David McNew)

Benchmark U.S. crude rose more than $2 a barrel toward $49 in early trade — still far from the “fair” price of $75 a barrel identified by Saudi Arabia, the world’s biggest crude exporter, at the end of November.

After slashing a combined two million barrels daily, 7.3 percent of its output at two previous meetings, OPEC was on course to chop at least another five percent off a world market that burns 86 million barrels of oil each day.

Saudi Arabia, had yet to make public comment on its position, but OPEC chief Khelil said Riyadh had already cut back in anticipation of further supply curbs.

Read the rest:
http://biz.yahoo.com/rb/081215/business_us_opec.html?.v=1

Russia to Attend OPEC Summit

December 13, 2008

The head of OPEC says Russia and three other non-cartel members will take part in the oil producers’ summit next week in Oran, Algeria.

Chakib Khelil says Russia will send its deputy prime minister in charge of energy and its oil minister to Wednesday’s summit. The other guest countries invited by the 14-member cartel are Oman, Azerbaijan and Syria.

Khelil asserts that a final consensus has been reached by the Organization of Petroleum Exporting Countries to reduce oil output levels.

The OPEC head, who is also Algeria’s oil minister, spoke Saturday.

Associated Press

China likely to miss energy saving goal for 2008

December 13, 2008

China is likely to miss an energy saving target that it has set itself for this year, state media reported Saturday, citing the nation’s top economic planning agency.

In the first nine months of the year, the nation cut average energy consumption by 3.46 percent, the Xinhua news agency reported, citing the National Development and Reform Commission.

Workers install an electrical pylon in the southwestern province ... 
Workers install an electrical pylon in the southwestern province of Sichuan. China is likely to miss an energy saving target that it has set itself for this year, state media reported Saturday, citing the nation’s top economic planning agency(AFP/File/Liu Jin)

This makes it unlikely that China will meet its full-year target of a four-percent reduction.

The target was part of a larger ambition of reducing average energy consumption by 20 percent over the period from 2006 to 2010.

This first two years also fell short of the targets, with a 1.79-percent reduction in average energy consumption in 2006 followed by a 3.66-percent drop in 2007, according to Xinhua.

China has come under growing pressure to improve energy efficiency as its dependence on imported energy has risen, while its environment has continued to deteriorate.

–AFP

Oil Prices Soar as Russia Announces Output Cut

December 12, 2008

Crude oil prices jumped more than 10 percent Thursday after Russia said it was ready to join forces with OPEC and cut output.

Traders shrugged off a forecast of the first decline in oil demand in 25 years, instead anticipating joint efforts by the Organization of the Petroleum Exporting Countries and Russia to slash production in an effort to bolster prices.

Oil rigs extract petroleum in the Los Angeles area community ... 
Oil rigs extract petroleum in the Los Angeles area community of Culver City, California. Crude oil prices jumped more than 10 percent Thursday after Russia said it was ready to join forces with OPEC and cut output.(AFP/Getty Images/File/David McNew)

Light sweet crude for delivery in January closed at 47.98 dollars a barrel on the New York Mercantile Exchange, a gain of 4.46 dollars, or 10.25 percent, from Wednesday’s close.

In London, Brent North Sea crude for January jumped 4.99 dollars, or 11.77 percent, to settle at 47.39 dollars a barrel on the InterContinental Exchange.

AFP

After the benchmark New York contract closed Friday at a four-year low of 40.50 dollars, the market has increasingly focus on next week’s OPEC meeting in Oran, Algeria.

Russia is ready to join forces with OPEC to stem the plunge in crude prices and could even become part of the oil cartel if membership were in Moscow’s interests, Russia President Dmitry Medvedev said Thursday.

“Our partners, colleagues from the oil club (OPEC) are asking us to have a coordinated policy and whoever I meet, they are asking quite actively,” he said in remarks broadcast on state television.

Read the rest:
http://news.yahoo.com/s/afp/20081211/bs_afp
/commoditiesenergyoilprice_081211214936

Russia Will Join OPEC’s Plan to Cut Output

December 10, 2008

Faced with falling oil prices, Russia is preparing to announce that it will work with OPEC in coordinating a reduction in output, the minister of energy said Wednesday.

Earlier this fall, a Russian official floated the idea of storing oil, rather than exporting it, to help the Organization of the Petroleum Exporting Countries stabilize prices, but this is the first time that the Kremlin has offered to reduce output.

By Andrew Kramer
The New York Times 

Workers weld a first juncture of the Eastern Siberia-Pacific ...
Workers weld a first juncture of the Eastern Siberia-Pacific Ocean pipeline in Siberia’s Tynda-Skovorodino region, eastern Russia, October 2006. Russia said Wednesday it would announce proposals to reduce its oil output by December 17, signalling the energy superpower’s readiness to cooperate with OPEC to prop up falling crude prices.(AFP/File/Str)

World oil prices, which have been slumping around $40 a barrel, rose in response to the comments by the minister of energy, Sergei I. Shmatko, in early trading in New York Friday. Oil settled at $43.10 a barrel, up $1.03.

Mr. Shmatko said that by Dec. 17, the date of the next scheduled OPEC meeting, Russia will announce a plan to reduce the country’s oil production, the Interfax news agency reported. The minister offered no details of how this would be done, or how much oil might be taken off the market. Mr. Shmatko said Russia would also seek to persuade other non-OPEC producers to reduce output. A spokeswoman for the ministry declined to elaborate.

While formally at arms length, Russia and OPEC have flirted over some form of cooperation through the fall.

It is development sure to alarm consumers, who where just breathing a sigh of relief as American gasoline prices dipped below $2 a gallon. It is unclear, however, how much effect Russia’s increasingly anti-Western government might have on prices.

The Russian oil sector is a blend state-owned and private companies including a major joint venture with BP, the British oil giant, that would have to answer to stockholders for a reduction in revenue caused by a drop in output. Producing and transporting oil is costly in Russia and idling pipelines and fields could severely damage the industry.

Typically in oil price slumps, Russia and the Soviet Union before it has continued to pump oil freely, benefiting from the support for world oil prices provided by OPEC’s members, while not sharing in the financial loss of cutbacks. Norway and Mexico also benefit from OPEC while not belonging to it.

Other non-OPEC countries, meanwhile, have rejected any cooperation with OPEC. A spokesman for the ministry of petroleum and energy in Norway, the world’s fifth-largest oil exporter, said Wednesday that his country would not cooperate with the cartel, regardless of Russia’s decision, Bloomberg news reported.

In this fall’s steep drop off in oil prices, Saudi Arabia had been pressuring non-OPEC countries, particularly Russia, to cooperate. Russia pumps about 9.8 million barrels of oil a day, the second-greatest output in the world after the Saudis, and exports about seven million barrels of crude oil and refined products, mostly to Europe.

Read the rest:
http://www.nytimes.com/2008/12/11/business/worldbu
siness/11oil.html?_r=1&scp=1&sq=opec,%20russia&st=cse

Global demand for oil to plummet

December 10, 2008

Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.

The stark conclusions came as the World Bank’s chief economist predicted that the world faced “the worst recession since the Great Depression”.

By Javier Blas in London and Krishna Guha
FT

A view of an oil refinery off the coast of Singapore March 14, ... 
A view of an oil refinery off the coast of Singapore.(Vivek Prakash/Reuters)

The US energy department said global oil demand will fall this year and next, marking the first two consecutive years’ decline in 30 years.

“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.

Meanwhile, the World Bank’s Global Economic Prospects report said the commodities boom of the past five years – which drove up prices 130 per cent – had “come to an end”.

Read the rest:
http://www.ft.com/cms/s/0/bcda848c-c62a-11
dd-a741-000077b07658.html

Iran: Nuclear? Rich With Oil? A Threat? Some Dubious Ideas Linger….

December 5, 2008

The incoming Barack Obama administration has already been inundated with reports, policy recommendations and position papers vying for the president-elect’s attention on the Iran nuclear issue. Although nicely wrapped in the semantics of a “fresh” or “game-changing” approach, the majority are familiar and lack novelty, and this should come as no surprise as many were penned by old US foreign policy hands like Dennis Ross and Martin Indyk.

As a result, even when they seem to be suggesting a reasonable “new thinking” in the US’s Iran policy, wedded to the idea of “engagement” and or “dialogue without preconditions”, these noble efforts are, however, undermined by their reliance on dubious assumptions. Not to mention their restrictive methodologies, which ultimately veer them back towards the same old plans for “coercive diplomacy”.

By Kaveh L Afrasiabi 
Asia Times 

There are also the limits to the “dialogue without preconditions” logic put forth by, among others, the president of Council on Foreign Relations, Richard Haass, in a new collaborative report with Indyk published by the Brookings Institution. Although positive in many respects and apparently earning the disapproval of Israel, the Haass-Indyk call for engaging Iran in dialogue without preconditions falls short of what is really necessary and lacking in Washington today, that is, dialogue without false assumptions.

One such false assumption that has been adopted like an article of faith by nearly all the pundits and nuclear experts in the US today, is that Iran is fast approaching a “nuclear breakout capability” – in light of Iran’s double process of mastering the nuclear fuel cycle and advancing its missile technology. This has warranted the word “crisis”, to quote US Senator Jon Kyl. [1] Not to be outdone by politicians, a number of nuclear experts, such as David Albright, have echoed the sentiment.

Read the rest:
http://atimes.com/atimes/Middle_East/JL06Ak01
.html

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Ahmadinejad, Iran Worry Oil’s Price Shrinks Thier Importance

Iran’s President Mahmoud Ahmadinejad has for the first time admitted that the fall in world oil prices will affect the economic projects of his government, local media reported on Thursday.

“If we fix the oil price at 30 dollars a barrel in the budget, we will have to abandon much of our economic projects … We have to set it at 30 to 35 dollars as we don’t determine the oil price on international markets,” he said.

He acknowledged that “oil prices will be low for some time” because of the global recession.

Iran, which is OPEC’s second largest producer, has an official oil output of 4.2 million barrels a day, with half of the country’s budget dependent on its crude exports.

Iranian President Mahmoud Ahmadinejad (left) Foreign Minister ... 
Iranian President Mahmoud Ahmadinejad (left) Foreign Minister Manouchehr Mottaki in Tehran on December 1, 2008. Ahmadinejad has for the first time admitted that the fall in world oil prices will affect the economic projects of his government, local media reported.(AFP/File/Atta Kenare)

Ahmadinejad boasted only last month that his government could run the country “with a barrel of oil priced at between eight and five dollars.”

“Even if we reach the point where the enemies do not buy our oil any more, we can manage the country. Thanks God, fluctuations in oil prices will have no effect on the next budget,” he said.

From:  AFP

Read the rest:
http://news.yahoo.com/s/afp/20081204/wl_midea
st_afp/iranpoliticseconomy_081204163303