Energy Prospectus

Libya is the world's 12th biggest exporter of oil and has cut 400,000 barrels a day from its 1.6 million bpd output, according to Reuters.
But the CEO of ENI, the blue chip Italian oil company, says the loss is much higher... and that the market is missing 1.2 million barrels.
All of this chaos is going on in a world where the demand for energy is growing at twice the speed of IEA predictions.
China alone added a million barrels a day to demand last year, which currently stands at 87 million bpd globally. It is expected to hit 89 million bpd by the end of 2011.
Where this oil will come from is unknown, as four million bpd are going offline due to lower production of old wells...
Even if Saudi Arabia can pump to its full claimed capacity of 12.5 million bpd, it won’t be enough to cover the spread.

IMO it is a good thing that oil prices settled down today. This recent spike and all the FEAR coming from the Libya mess was freaking out the overall market. We do not need that.

Eight of the Sweet 16 have now reported 4th quarter results and they all appear to be on-track to solid growth in 2011.

I have raised my Fair Value for CLR to $72/share. < 30% production growth forecast for 2011

Holding PXP at $50/share.

I will be working on BEXP tomorrow.

From Steven Leeb:

The long-expected price correction in stocks arrived this holiday-shortened week. Yet the damage hasn't been severe yet, particularly considering the big runup from early September to new multiyear highs just last Friday. As of today's close, the Standard & Poor's 500 is down less than 3% for the week.
Stocks were due for a much-needed pullback, awaiting only a catalyst. The catalyst was the spreading upheaval in the Middle East, notably to Libya. Unlike Egypt, its neighbor to the east, Libya is a significant oil producer. While only the world's 18th largest supplier of oil, it ranks considerably higher in terms of reserves. Inevitably, oil prices have soared this week, with the U.S. benchmark touching $100 per barrel for the first time since October 2008.

The risk of further oil-price increases, and therefore lower stock prices, is considerable. In the near term, these could come from a production shutdown in Libya, where output already has declined sharply (by 75% according to some estimates). Algeria, which borders Libya on the west and is the world's 16th largest producer, is considered to be at risk too. Then, of course, there's Saudi Arabia. The region's other producers that are bigger than Libya are Iran, United Arab Emirates, Kuwait and Iraq.
Until recently, it looked as if the oil-price rise was tied to global growth (but was also a negative effect of the Federal Reserve's quantitative easing). Now higher energy costs are increasingly likely to dampen growth.
With unemployment still high, an oil-price shock would particularly hurt consumers, notably at the gasoline pump. High energy costs in effect are a tax that crimps spending while also boosting inflation, as we've frequently noted in the past. Indeed, there's a strong historical correlation between soaring oil prices and economic recessions. The former were key factors in the 1973-74 and 1980 downturns and played supporting roles in 1991 and 2008-09.

Offseting higher gasoline prices (for consumers) are lower home utility bills. With coal and natural gas prices still low and the mild weather, we should all enjoy lower utility bills. - Dan

All of that said, there's still plenty of oil supply in the world. And the market reaction has been modest, all things considered. In fact, oil prices actually declined today, fueling a stock-market rebound from the lows, as Saudi Arabia, the International Energy Agency and the White House said that there are adequate reserves to make up for any production declines caused by the turmoil in Libya.
As of now, we continue to view the stock-market outlook positively, with an improving economy, very favorable monetary conditions and reasonable stock valuations. Stocks got ahead of themselves, but they're now in a necessary correction phase. We don't think the pullback is over. But we currently expect no more than a modest retracement of 10% or less in the broad stock market unless and until oil makes a dramatic move up that could signal greater risk of a real economic crisis.

I liked your last post. Cooler heads must prevail during this crisis. "Wallk slow, take a cold drink of water, and play it cool."