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IEA cuts 2008, 2009 global oil demand forecasts ... again

Joseph Lazzaro — Wed, 10 Sep 2008 11:00:00 EST

Filed under: International Markets, Commodities, Oil

What's a telling sign of slowing global growth? Continually decreasing oil demand forecasts.

The International Energy Agency again lowered its global oil demand forecasts for 2008 and 2009 as high prices and reduced U.S. consumption lowered overall demand for crude, the organization announced Wednesday. It lowered its 2008 forecast by 100,000 barrels per day to 86.8 million barrels, and 2009 estimate by 140,000 barrels to 87.6 million barrels.

The IEA's announcement had little impact on oil prices early Wednesday as oil rose 60 cents to $104.43 per barrel. However, it should be noted that two bullish factors also affected prices Wednesday: an OPEC announcement of a commitment to existing production quotas with a pledge not to exceed them, as some cartel members have in the past; and Hurricane Ike in the Gulf of Mexico, which threatened to damage oil rigs and infrastructure as it approaches the Texas-area coastline, according to weather.com.

Oil's price surge takes a toll

Oil has declined about 30% since hitting a record high of $147.27 per barrel in July 12. Economist Richard Felson told BloggingStocks Wednesday the dip in oil's price over the past two months is not nearly enough to blot-out the process-changing affect of oil's four-year price surge.

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IEA cuts 2008, 2009 global oil demand forecasts ... again originally appeared on BloggingStocks on Wed, 10 Sep 2008 11:00:00 EST. Please see our terms for use of feeds.

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OPEC may consult on production increase if oil rally continues

Joseph Lazzaro — Fri, 09 May 2008 03:02:00 EST

Filed under: International Markets, Commodities, Oil, Recession

An OPEC official said Friday the cartel may meet to boost output ahead of its September 2008 meeting if crude oil prices keep rising, Reuters reported Friday.

"If the price keeps going up, OPEC may consult on an increase in production before it meets in September," the OPEC source told Reuters Friday, speaking on condition that he not be identified. He added that the increase "would have to be more than 500,000 barrels per day" to have an impact.

Oil Friday hit another record high, increasing $2.20 to $126.20 per barrel Friday morning, before easing back to $125.25, on concern about production in Nigeria amid civil unrest, and on emerging market oil demand growth, particularly in China and India. Further, institutional investor demand for oil as an asset class is also contributing to oil's record rise, many analysts agree.

'Two years, $75 late'

Economist Glen Langan told BloggingStocks Friday talk of a potential OPEC action on production is two years too late. "OPEC is two years, $75 late, I'm sorry to say," Langan said. "OPEC knew for two years that higher production was needed to help meet unprecedented emerging market demand, but they failed to act in the interests of the global economy."

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A pleasant scenario for oil-exporting nations: Lower production, but higher revenue

Joseph Lazzaro — Thu, 08 May 2008 12:14:00 EST

Filed under: International Markets, Politics, Commodities, Oil

As serious as the oil issue is in the United States, the west, and globally, considering its impact on economic development, circumstances could become even more challenging, in the quarters ahead, if present trends continue.

That's because, due to emerging market growth and per capita energy consumption rates in the United States - the oil -producing world "could be in a position of unprecedented pricing power," according to economist Glen Langan.

Langan says "could be" because the pricing power oil producers currently have, while significant, is not absolute. And oil-consuming nations still have time to regain some control over their oil bills. Oil Thursday reached a record high of $123.74 per barrel before closing slightly lower.

Here's the current global oil supply / demand landscape, as Langan sees it: daily global oil supply exceeds demand by the smallest of margins. It's the major reason the price of oil has been trending up for more than 5 years, but oil-consuming nations can increase that margin, via conservation, increased efficiency, and alternative sources of energy.

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In surprise, Russia's oil production drops for first time in 10 years

Joseph Lazzaro — Tue, 15 Apr 2008 17:51:00 EST

Filed under: Russia, Commodities, Oil

In a report that surprised many sector watchers, Russian oil production fell for the first time in a decade, based on year-over-year basis The Wall Street Journal reported Tuesday (Subscription required).

Russia, the world's second biggest exporter of oil after Saudi Arabia, averaged production of 10 million barrels per day during the first three months of this year -- a 1% drop in production when compared to the same period in 2007, The Associated Press reported Tuesday, citing International Energy Agency data.

Aging infrastructure or aging fields?

Analysts, oil industry executive, and economists will now begin the painstaking process of determining the exact cause of the production shortage. Russia has suffered from electricity shortages and poor weather conditions in oil production zones during the past year. In addition, despite Russia's impressive, 5-year economic boom and related development -- an economic expansion driven to a considerable degree by Russia's oil revenue -- the nation's oil infrastructure remains inadequate and in need of up to $50 billion in improvements and upgrades.

Independent energy trader Jim Dietz said if the current production drop stems from weather problems or infrastructure deficiencies, the oil market will largely overlook the decline, as a temporary dip.

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In surprise, Russia's oil production drops for first time in 10 years originally appeared on BloggingStocks on Tue, 15 Apr 2008 17:51:00 EST. Please see our terms for use of feeds.

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Oil rises to $107 after Iraq pipeline attack

Joseph Lazzaro — Thu, 27 Mar 2008 11:20:00 EST

Filed under: Bad News, Middle East, Commodities, Oil

Oil prices briefly jumped above $107 Thursday morning on news that saboteurs had blown up a major Iraqi export pipeline, the Agence France-Presse reported.

Oil rose $1.26 to $107.16 per barrel in early trading Thursday, before moderating some, to about $106.50. The other major energy commodities also jumped on the news in early trading Wednesday. Heating oil rose about 5 cents to $3.09 per gallon, unleaded gasoline added 1 cent to $2.72 per gallon, and natural gas rose about 3 cents to $9.43 per million BTUs.

One of Iraq's two main oil export pipelines near the southern city of Basra was blown up by saboteurs on Thursday, Samir al-Maksusi, Southern Oil Company spokesman, told the AFP. The pipeline transports oil from the Zubair oil field to the Al-Faw storage facility, where it is exported.

Oil spikes

The Iraq incident marks the second consecutive day a bullish data point has pushed oil prices substantially higher, and underscores the skittish price qualities of the world's most vital commodity, according to independent energy trader Jim Dietz. Dietz said that heading into the week many traders had expected oil to continue to trend lower on sluggish demand for oil and oil products in the U.S., due to its economic slowdown.

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Oil falls to $101 on profit-taking, Saudi production comments

Joseph Lazzaro — Mon, 24 Mar 2008 10:22:00 EST

Filed under: Good news, Commodities, Oil

Oil fell $1.02 to $100.82 per barrel Monday morning as traders/investors continued to lock-in profits and Saudi Arabia underscored its plans to boost production capacity, Reuters reported Monday.

The other major energy commodities were mixed in early trading Monday. Heating oil fell about 1 cent to $2.97 per gallon, unleaded gasoline rose 1 cent to $2.60 per gallon, and natural gas rose about 2 cents to $9.09 per million BTUs.

The crude oil decline Monday represents a continuation of a short-term downward trend, after oil surged more than $20 in less than two months, prompting some traders to take short-term profits, amid signs of likely slower oil demand growth in the United States.

The market early Monday was also responding to comments from Saudi Arabia, which said Sunday it is working to increase both oil production and refinery capacity in order to maintain global economic growth, according to Reuters.

Oil Analysis: The market will appreciate any comments and efforts by Saudi Arabia indicating it is striving to increase production and refining capacity. True, it takes time to increase production, but the market will take any expansion comments by the Saudis as a sign that more supply is on the way, which will lower oil prices considerably -- a welcome sight for oil importing nations and consumers.

Oil falls to $101 on profit-taking, Saudi production comments originally appeared on BloggingStocks on Mon, 24 Mar 2008 10:22:00 EST. Please see our terms for use of feeds.

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Oil closes at record $104.52 after OPEC rejects production increase

Joseph Lazzaro — Wed, 05 Mar 2008 16:19:00 EST

Filed under: International Markets, Bad News, Commodities, Oil

So much for that oil slump. Oil's price pullback lasted all of one day as buyers piled back into oil futures Wednesday, sending oil surging up $5.00 to a new record close of $104.52, after OPEC said it would maintain current production quotas.

The Organization of Petroleum Exporting Countries agreed to maintain production targets at a meeting Tuesday in Vienna, Bloomberg News reported. That price-bullish reality, combined with a surprise report by the U.S. Department of Energy indicating that U.S. crude inventories fell for the first time in eight weeks, was enough to send the oil pits into frenzied buyer mode, once again. Earlier this week oil broke through the previous nominal high of $103.76 set back in 1980.

Gasoline, heating oil prices surge

The other major energy commodities also rocketed higher. Heating oil surged 14 cents to $2.93 per gallon, unleaded gasoline jumped 10 cents to $2.63 per gallon and natural gas climbed 37 cents to $9.72 per million BTUs.

And once again, OPEC repeated its oft-stated rationale that "the markets are well supplied," Bloomberg News reported, arguing that speculators and investors seeking to buy oil as a long-term asset and as an inflation hedge, are primarily behind oil's climb to the stratosphere. And once again, traders and other oil buyers acted as if there won't be enough oil to meet global demand at some point in the months ahead.

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IEA cuts 2008 world oil demand forecast on slower global growth

Joseph Lazzaro — Wed, 13 Feb 2008 15:01:00 EST

Filed under: International Markets, Commodities, Oil

Global oil demand in 2008 will total 87.6 million barrels per day, about 200,000 barrels less than an initial 2008 estimate, due to slowing global economic growth, the International Energy Agency announced Wednesday.

The IEA said demand for transportation fuels in the eastern U.S. and other developed nations is slowing. However, the IEA added that projections for robust economic growth in China and the Middle East will continue to help support oil prices in 2008.

Oil fell 42 cents to $92.36 per barrel in mid-day Wednesday trading.

"Weaker projections for global economic growth are offset by low stocks, forecast cold weather in the U.S. and parts of Asia, supply disruptions (Nigeria/North Sea) and concern about Venezuelan supplies. Products have underperformed crude, leading to weak refining margins," the IEA stated.

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Oil falls below $90 as inventories rise, yet IEA maintains demand estimate

Joseph Lazzaro — Wed, 16 Jan 2008 13:06:00 EST

Filed under: International Markets, Other Issues, Oil

Oil plummeted $2.38 to $89.52 in early trading Wednesday after the U.S. Energy Information Agency announced that weekly crude oil inventories rose 4.3 million barrels to 287.1 million barrels, well above the 1.25 million barrel increase consensus estimate.

Heating oil fell 4 cents to $2.49, unleaded gasoline fell about 5 cents to $2.26, and natural gas fell about 4 cents to $8.15 per million BTUs.

However, despite the prospect of a U.S. recession that could lower oil demand, the International Energy Agency maintained its 2008 global oil demand forecast at 87.8 million barrels per day, a 2.3% increase from 2007, the organization announced Wednesday in a statement.

Still, the IEA qualified its 2008 oil demand projection by saying the estimate would be adjusted downward if evidence indicated the U.S. economy continues to slow.

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Fearing $150 oil, India wants Exxon, others to prospect in country

Joseph Lazzaro — Tue, 08 Jan 2008 16:22:00 EST

Filed under: Other Issues, India, Oil

India announced Tuesday that it wants oil sector giants ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX), among others, to bid and explore for oil and gas in the country, on concerns that oil may hit $150 per barrel, Bloomberg News reported.

India, Asia's third-largest oil consumer, does not have the technology to search for and extract oil/gas from deep waters and in remote regions, and the nation is concerned that rising energy demand and rising prices will complicate the access to energy it needs to sustain its growing economy.

Predicts $150 oil

"In the next two to three years we expect prices to reach $150 a barrel," India's Oil Secretary M.S. Srinivasan told Bloomberg News on Tuesday. "Given this scenario, we are putting in more efforts in our exploration and production.''

Oil rose $1.75 to $96.75 in mid-day trading Tuesday. Oil rose an alarming 57% in 2007 and reached $100.09 on January 3, 2008. Oil hit an all-time high, in inflation-adjusted terms, of $102.80 in April 1980.

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Best Stocks for 2008: Transocean (RIG), Boeing (BA)

Joseph Lazzaro — Fri, 28 Dec 2007 16:50:00 EST

Filed under: Boeing Co (BA), Stocks to Buy, Best Stocks for 2008

Concerning top picks for 2008, those assertive investors who can tolerate moderate/high risk should consider Transocean (NYSE: RIG). Transocean is favored here because it fits the investment theme of well-capitalized, experienced companies with long-term global trends in the company's favor. Transocean offers deepwater drilling services in the world's major offshore oil-producing regions, including Africa, Asia, Brazil, Canada, India, Middle East, Gulf of Mexico, and the North Sea -- and demand for drilling services is unlikely to decline in the immediate years ahead. Sell / Stop Loss if you were to purchase shares in this company: $84.

For those in need of a safer, large-cap play, consider Boeing (NYSE: BA), which boasts a solid commercial airline order book. Boeing is expected to win its global aviation battle with European rival Airbus, and in the process, transform flight as the 21st century progresses. Boeing's ace in the ongoing battle? The 787 Dreamliner, a super-efficient aircraft that will give airlines the profit margins they need and passengers the creature comforts/amenities they require in the digital age. Sell / Stop Loss if you were to purchase shares in this company: $58.

DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Best Stocks for 2008: Transocean (RIG), Boeing (BA) originally appeared on BloggingStocks on Fri, 28 Dec 2007 16:50:00 EST. Please see our terms for use of feeds.

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