September crude oil prices extended their latest winning streak to seven days and broke out to their best level since May 22nd. The primary source of support for the crude oil market was escalating Middle East tensions and potential risk that could have on short term supplies. This comes after violence in Syria and a recent attack on Israeli tourists in Bulgaria. The geopolitical risks helped the crude oil market overlook a round of disappointing US economic data on Existing Home Sales and further contraction in Mid-Atlantic manufacturing. The natural gas market rallied above the $3.00 again this morning, lifted by EIA storage data that showed a smaller than expected injection of 28 bcf.
If oil can close above $90/bbl for several days in a row it will be VERY BULLISH for all of our Sweet 16 stocks. If the tensions escalate, the price could push over $100/bbl.
Natural gas over $3/mmbtu is just a bonus.
Soaring food costs will impact oil prices. OPEC members MUST feed their people. Their social welfare programs are the only thing keeping the entire region from blowing up. More money for food means less money for oil projects. OPEC members must have Brent over $100/bbl and maybe higher just to stay even.
Oil & Gas Prices - July 19
Oil & Gas Prices - July 19
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 19
From PLS in Houston:
As of market close on July 19, oil prices increased for seven days attributable to rising Middle East tensions. Near-month Nymex (August 2012 contract) closed at $92.66/bbl - up $2.79 on the day. The forward Nymex strip stands at $93.90/bbl. In the U.S., near-month Nymex gas (August 2012) also rose 2.6 cents to close at $2.999 per MMbtu. The latest storage report shows gas inventories now stands at 2.654 Tcf - a level 19% over last year's with the gap narrowing consistently. With this docFinder Alert, PLS provides you with key slides intended to provide perspective on longer-term global oil supply and demand dynamics.
The slide above left is courtesy of Weatherford International and sources Deutsche Bank. Vividly shown is that despite increased drilling, OPEC spare capacity has not increased meaningfully over the last 20 years. Many trends on the graph draw attention. First is that OPEC's spare capacity is tightening through 2015. Second is the return of Iraqi oil to the markets. Third is the growing role of NGLs being supplied in the OPEC liquids mix. Fourth is the virtual full-production throttle of OPEC in 2003 and finally the clear large excess capacity that OPEC wielded in the mid-1980s.
The slide above right is courtesy of Valero Energy in which internal sources and consultants show world petroleum demand growth estimates segregated into U.S., OECD (excl. U.S.) and non-OECD (or emerging) countries. Notice particularly in 2004 where global oil demand expanded by nearly 3 MMbbls/day - which, as seen on the left slide, pushed OPEC spare capacity to virtually zero. In 2012, the data suggests global oil demand will rise by roughly 1 MMbbls/d and clearly demonstrates the unabated growth in oil demand from emerging countries. Also in this presentation is an excellent list of global refinery closures completed and planned to 2014.
As of market close on July 19, oil prices increased for seven days attributable to rising Middle East tensions. Near-month Nymex (August 2012 contract) closed at $92.66/bbl - up $2.79 on the day. The forward Nymex strip stands at $93.90/bbl. In the U.S., near-month Nymex gas (August 2012) also rose 2.6 cents to close at $2.999 per MMbtu. The latest storage report shows gas inventories now stands at 2.654 Tcf - a level 19% over last year's with the gap narrowing consistently. With this docFinder Alert, PLS provides you with key slides intended to provide perspective on longer-term global oil supply and demand dynamics.
The slide above left is courtesy of Weatherford International and sources Deutsche Bank. Vividly shown is that despite increased drilling, OPEC spare capacity has not increased meaningfully over the last 20 years. Many trends on the graph draw attention. First is that OPEC's spare capacity is tightening through 2015. Second is the return of Iraqi oil to the markets. Third is the growing role of NGLs being supplied in the OPEC liquids mix. Fourth is the virtual full-production throttle of OPEC in 2003 and finally the clear large excess capacity that OPEC wielded in the mid-1980s.
The slide above right is courtesy of Valero Energy in which internal sources and consultants show world petroleum demand growth estimates segregated into U.S., OECD (excl. U.S.) and non-OECD (or emerging) countries. Notice particularly in 2004 where global oil demand expanded by nearly 3 MMbbls/day - which, as seen on the left slide, pushed OPEC spare capacity to virtually zero. In 2012, the data suggests global oil demand will rise by roughly 1 MMbbls/d and clearly demonstrates the unabated growth in oil demand from emerging countries. Also in this presentation is an excellent list of global refinery closures completed and planned to 2014.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 19
I believe that tensions in the Middle East are heating up and will support higher oil prices in the near-term. Higher food costs (corn, wheat and soybeans) will require OPEC nations to spend more on food and social programs. This will draw capital away from necessary oilfield projects and have a long-term impact on oil supply.
Natural gas prices should continue to drift higher. I now believe $4/mmbtu is possible by year-end and much earlier if a hurricane moves into the Gulf of Mexico.
Natural gas prices should continue to drift higher. I now believe $4/mmbtu is possible by year-end and much earlier if a hurricane moves into the Gulf of Mexico.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil & Gas Prices - July 19
oil prices notched strong gains for the second straight week as
geopolitical tensions, U.K. North Sea maintenance outages and a bullish U.S. crude
plus product inventory report overshadowed the mixed U.S. economic data and the
ongoing concerns regarding the Eurozone economy. Violence erupted in Bulgaria
with Israel blaming a suicide attack on Iran and promising to “respond with force”
and in Syria where a bomb attack killed several government officials. In the U.S.,
crude and gasoline inventories unexpectedly fell while distillate stocks increased
more than expected. Thus, both WTI spot and Brent oil prices gained roughly 5.0%
to ~$91/Bbl and ~$107/Bbl, respectively. Natural gas prices also rose for the second
straight week due to a below-consensus storage injection figure and a weather
forecast issued by the National Weather Service calling for above-average
temperatures across the U.S. in August. Thus, the front-month NYMEX futures
contract increased 7.6% to $3.09/MMBtu while the composite spot cash price rose
3.2% to $2.90/MMBtu.
geopolitical tensions, U.K. North Sea maintenance outages and a bullish U.S. crude
plus product inventory report overshadowed the mixed U.S. economic data and the
ongoing concerns regarding the Eurozone economy. Violence erupted in Bulgaria
with Israel blaming a suicide attack on Iran and promising to “respond with force”
and in Syria where a bomb attack killed several government officials. In the U.S.,
crude and gasoline inventories unexpectedly fell while distillate stocks increased
more than expected. Thus, both WTI spot and Brent oil prices gained roughly 5.0%
to ~$91/Bbl and ~$107/Bbl, respectively. Natural gas prices also rose for the second
straight week due to a below-consensus storage injection figure and a weather
forecast issued by the National Weather Service calling for above-average
temperatures across the U.S. in August. Thus, the front-month NYMEX futures
contract increased 7.6% to $3.09/MMBtu while the composite spot cash price rose
3.2% to $2.90/MMBtu.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group