Fuel Prices set to Fall ?

GRR

GRR

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I notice on the AIS website a large number of tankers at Fawley or bound for Fawley. this is normally an indication of loads sold by the owners at what they believe is the most favourable price.

does this indicate that prices are likely to fall considerably in the near future - even if not for the consumer !!!
 
OPEC considering a 2M BOE/D cut in production to maintain crude oil prices at a level where further investments can be sustained to ensure accessability of appropriate resources when demands increase (read economic recovery). Watch this space,but would hazard to guess that next 4 - 6 weeks will see the cheapest product hitting the market,before we see an increase in pump prices again ... all IMHO of course..
 
A good friend of mine is a director of three banks including an arabian bank and also a close advisor to merv king of the bank of England as he is recognised as a top economist, he is very much in the know! had a curry with him a couple of weeks ago and mentioned that opec where making noises about cutting production of oil. He said it will never happen! he reckons its of no use to them unless they get it out of the ground and there is always someone else who will if they cut thier own production, so its his considered opinion that there will be a glut and prices will fall further! so there you go! until of course we all start using it again in large quantities. So you guys out there with boats that burn 30 gallons an hour, cut down on the long trips and we will all benefit! /forums/images/graemlins/tongue.gif

Barry
 
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....reckons its of no use to them unless they get it out of the ground and there is always someone else who will if they cut thier own production...

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This time it appears to be different as the Russians appears to be "in with the discussions" ... leaves my fellow Norwegians to ramp up ... which it may not be in their interest to do at this juncture... Key for the oil companies now is to maintain $ BOE at a level where CAPEX can be made with a reasonable ROCE...

A small % lower level of production = lower stress on equipment = lower running and maintenance cost... all in the economics of running/developing the reservoirs and complexes..... the oil, condensate and gas is down there ... just deferred production and revenue to be evaluated against reduction in ROCE and long term investment...

But I am easy going ... we can agree to disagree..., which all again is IMHO of course..
 
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....reckons its of no use to them unless they get it out of the ground and there is always someone else who will if they cut thier own production...

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This time it appears to be different as the Russians appears to be "in with the discussions" ... leaves my fellow Norwegians to ramp up ... which it may not be in their interest to do at this juncture... Key for the oil companies now is to maintain $ BOE at a level where CAPEX can be made with a reasonable ROCE...

A small % lower level of production = lower stress on equipment = lower running and maintenance cost... all in the economics of running/developing the reservoirs and complexes..... the oil, condensate and gas is down there ... just deferred production and revenue to be evaluated against reduction in ROCE and long term investment...

But I am easy going ... we can agree to disagree..., which all again is IMHO of course..

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Don't be too sure of Russian ... it is traditional that Russian production falls of at begging of winter. I've been out here for many years working in Russian oil and we have seasonal variations each year that you can set your watch by.
Also you have to know that Russia was cashing in on OPEC's reductions in past for hard currency. They would agree to cuts alongside OPEC but Druzhba and later to Primorsk would quietly ramp up to 12 pumps.... from normal 8 - 10.
At end of summer and into late autumn russia sidelines large quantities to satisfy domestic demand - but this year they left it later because oil prices were sky-high and they were making loads of dosh ! Now price is dropped - they can stock up ... similar happens when harvest time comes round. People tend to forget the sheer size of Russia and it's fuel needs.
There is one new factor that has an effect and may be part of slow down ... as Russia has cut piped volume to Primorsk - that of Gas Contracts and alliances being sought. European partners for the north pipeline have proven tro be weak and unreliable ... so Russia is looking to create a more southern based cartel - it's quite a way down the road to signatures now.
Russia is expanding it's influence all over the world now in oil / gas related affairs ... witness Mednedev's South America trip. The softening of relations with China.

Finally Russia is having trouble with foreign partners internally. Having broken up Yukos which had various foreign subsidiary co's and distributed core parts to favoured, they then attacked other partnered co's. This has undermined confidence in dealing with them.

The fact is a) don't underestimate the Russian - he is not as naive as people think, b) Russia can sit it out far longer and better than we can ... he has worlds potential largest mineral reserves and oil.

Back to original post - you will find that biggest problem is traders who have bought on futures and also stock to clear. I have clients who are losing millions on sales if they let stock go at todays prices after buying in. I have clients who are playing the cheap game because revenue is not there for profit and blending down to other markets in that way saving stock for better days ! Many are not even buying in. The returns are not good enough. Refinerys are not at full capacity in many areas. OPEC has already reduced output just couple of weeks ago ... as another post said - it will make little difference. The general market itself will drive the pricing not OPEC - we are not 1963 / 1973 anymore.
 
I know Russia has vast reserves of oil, but about a month or so ago, it was announced that a huge reserve of oil, bigger than all the current fields had been found in Alaska. About a week later, Canada also announced it had made a huge discovery.

With news earlier on today that with the ice receding in Greenland, they have access to potentially huge reserves there.

Is this going to cause an oversupply and the medium to long term, a weakening of prices and therefore not cost effective to pull the oil out of these frozen wastes?
 
I don't see how they can fall much further whatever the price of oil. About 70p/litre of the cost of road fuel is scammed by HM govt in duty and VAT which leaves about 30p/litre for the actual cost of the diesel and 20p/litre for petrol. The cost of shipping, refining and retailing remains fixed plus the value of the dollar is now higher against Sterling so I can't see any room for further major cuts. Also you can be sure that Crash Gordon and his cronies will see the falling price of oil and think it too good an oppurtunity to miss so I expect further duty rises in the next budget
 
Oil found was also found close to my Island a month or so ago, between Malta and Tunisia, no ammounts where communicated and also a county in continent Africa did a huge bang about 2 weeks ago

there is also some interesting new technolgies online
1) Algae is very interesting biofuel because it grows fast and also has many particulas similar to Crude
2) clean fuel from production from Coal seems also very viable and might be much more enviroment friendly in the near future, on USA soil they say they have coal for current total energy consumption till then end of this century
 
Actually I think all this scaremongering about peak oil is just bollox put about by the oil industry to keep prices high. The fact is that the higher the price of oil and the more scarce it becomes, the greater the effort will be to prospect new sources of oil and develop new technologies to manufacture oil from other carbons. I am certain we will still be driving cars and boats in 50yrs time and those will mostly still be powered by fossil fuels albeit with far greater efficiency and lower emissions
 
If you saw Top Gear on Sunday, Honda have a real winner with a Hydrogen powered car. I'm more inclined to believe that although there will still be fossil fuels around and regularly used, other technologies will be firmly in place.

I also think that the oil producing countries have shot themselves in the foot once too many times! I believe that most od the western world, in particular the USA, are fed up of being held "over a barrel" (excuse the pun) regarding the supply of oil.

I can imagine massive investment in new technology over the next ten years, with the USA once more leading in this area. They have incalculable gains to be made from pursuing this direction, with their domestic demand for fuel, particularly the plain old motor vehicle.

The US motor industry will have to come out fighting and the only way they're going to be able to do this is by being innovative and not just carrying on making the ugly gas guzzlers they currently produce.

The main thing that is keeping the price of fuel at a higher level, is not so much the supply of oil, but the refining capacity. It's unlikely any oil companies will invest in new build refineries, because of the capital cost and the payback period, which would be around 25 years. They think that in 25 years the demand for the types of fuel they refine now, will have diminished, so that payback would take even longer, if at all!
 
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I know Russia has vast reserves of oil, but about a month or so ago, it was announced that a huge reserve of oil, bigger than all the current fields had been found in Alaska. About a week later, Canada also announced it had made a huge discovery.

With news earlier on today that with the ice receding in Greenland, they have access to potentially huge reserves there.

Is this going to cause an oversupply and the medium to long term, a weakening of prices and therefore not cost effective to pull the oil out of these frozen wastes?

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Texas and Gulf of Mexico has large reserves, but it comes down to cost involved in recovery.

You also have to factor in actual recovery per well. Many wells get plugged long before they effectively run dry. a) because of increased costs to recover as well reduces and we are talking in single digit % recovery, b) market fluctuation in oil price.

Russian oil can be flowing for much lower price than many producers, but it's recovery costs can be high in seasonal variations.

Alaska and frozen north are at this time subject to considerable environmental forces trying to stop development.

The picture is not simple and will create argument in more ways that just strict cost and accessibility.
 
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The US motor industry will have to come out fighting and the only way they're going to be able to do this is by being innovative and not just carrying on making the ugly gas guzzlers they currently produce.

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That's history ... most US cars now rival European for consumption - even the "Towncars" that traditionally guzzled fuel like it was going out of biz !
In fact it's Japanese and European cars that are the bad guys now ... increasing engine sizes ... making 4x4's that eat fuel ...

Onto when oil will run out ? That's a joke. Recovery on a well is far from ideal. A large % of oil is left in a well as uneconomic to recover, and past that is a large % that they cannot recover. I can remember when max recovery even with steam injection was about 14%.

So as technology advances so that % creeps up in recoverable volume. As scarcity and price drive it - capped wells in Texas / Gulf Of Mexico etc. will be uncapped etc. etc. IMHO it will see out our kids .... plus with addition of alternative powered vehicles lessening call on fossil .. will eek it out more ...

Oh and final comment - look who are biggest funders / investors in alternative energy .... is it Green groups ? No it's Oil Co's.
 
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Oh and final comment - look who are biggest funders / investors in alternative energy .... is it Green groups ? No it's Oil Co's.

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I can certainly understand that! In fact, I wouldn't be at all surprised if oil companies have on one or more occasion, suppressed the development of greener technology.

These companies need to be at the forefront of this technology to ensure their future existence as the requirement for fossil fuels diminishes.

I would also think they they would try to purchase, patent and license any technology that is seen as a threat to their financial muscle!
 
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Honda have a real winner with a Hydrogen powered car.

[/ QUOTE ] All we have to do now is ditch the coal and gas fired power stations we use to convert the water to hydrogen.
 
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All we have to do now is ditch the coal and gas fired power stations we use to convert the water to hydrogen.

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Yup. Tis amazing how little understood that point is among the general public!
 
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A good friend of mine is a director of three banks including an arabian bank and also a close advisor to merv king of the bank of England as he is recognised as a top economist, he is very much in the know! had a curry with him a couple of weeks ago and mentioned that opec where making noises about cutting production of oil. He said it will never happen! he reckons its of no use to them unless they get it out of the ground and there is always someone else who will if they cut thier own production, so its his considered opinion that there will be a glut and prices will fall further! so there you go! until of course we all start using it again in large quantities. So you guys out there with boats that burn 30 gallons an hour, cut down on the long trips and we will all benefit! /forums/images/graemlins/tongue.gif

Barry

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He was wrong. Very, very wrong.

Estimated cut of 2 millions barrels a day. Biggest single cut in oil production, ever.
 
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The so called "cut in production" has not had much of an effect on the price of oil though!

There's always someone else who's willing to supply!

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They only announced it an hour ago and Russia has also agreed to cut.
 
Oh dear ...

The 2m Bpd cut will come about not because of OPEC forcing it - they want to keep oil prices up - but in fact overstocking is starting to kick in.
Suggest if anyone wants to see how worlds oil markets line up and OPEC / non OPEC oil etc. - subscribe to Energy Intelligence - a daily email breakdown of world oil news. Better than reading some pumped up futures guy or so-called expert journalist.

The price slump is continuing and so far does not appear to be levelling out ... there are even fears of it nibbling into high $20's ... That will really upset someone.
 
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