Fuel Prices set to Fall ?

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

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Ah yes....but it was also revealed that this was likely yesterday!

You know how quick the markets usually react to changes in oil production...

I don't think it will have a significant effect this time round. plus the fact if they force oil prices beyond a certain level, it will only plunge the world further into recession, thus reducing demand again......and pushing the button even harder towards countries using alternate resources...

I think they are playing a very dodgy game!
 
MARKET METRICS Wed., Dec. 17, 2008
Crude Oil Opec Basket 40.74 -1.79 ($/bbl)
ICE Brent 45.53 -1.12
Nymex Lt Swt 40.06 -3.54
Products Nymex (¢/gal)
Gasoline 100.55 -3.45
Heating Oil 144.25 -1.78
ICE ($/ton)
Gas Oil 470.25 +1.75
Natural Gas New York 6.82 +0.09
Spot Prices Henry, LA 5.79 +0.04
($/MMBtu)
Katy, Texas 5.59 -0.07
AECO, Canada 6.22 -0.13


Contradictory statements by Russian officials about Russia's intentions of cooperating with Opec are not only confusing the markets but also suggest that Moscow is again playing a game with the producer group.

General status as of Dec 18 : World watch :

Opec appears to have come through with exactly the kind of production cut that oil markets were looking for in order to stem the surplus and turn crumbling prices around -- but to no avail. Oil prices fell sharply anyway, with West Texas Intermediate futures tumbling over $3.50 a barrel to almost $40. The cut of 2.2 million b/d from the 11 Opec members under output restraints is due to take hold Jan.1 and follows 2 million b/d in previously promised reductions. The negative price response reflects a combination of Opec's poor credibility and the weakness of global oil demand. Past Opec overages, confusion about dates and reference levels, and the lack of country specific quotas to measure performance created a huge amount of confusion in trying to evaluate the new cuts. In response, oil traders that had bought in expectation of a strong deal ended up selling for fear of a weak one.
 
Drop much further and Capital Expenditure in the North Sea will be cut ...

Bad news for the country as resources may be stranded as older platforms will be decomissioned and resources left un-recovered and un-recoverable. Construction and engineering manufacturing jobs will go .... and when economic recovery starts the demand goes up rapidly, the "pare production capacity will not be available and price rockets up to over $100 /BOE and will stay high as it will take several years to kick off these long lead projects again (if they ever become economic to develop with facilities decommissioned offshore)... But then again what do I know ?? (... I seem to recall that I did mention that OPEC were to cut 2BN BOE/day ... and that the Russians would support....). Low oil price is not the best for all, .... definetly not for the UK mid to long term economy .... and there is no way that the fractional oil consumption from the worlds leisure boat market will affect the price in any way whatsoever....
 
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Drop much further and Capital Expenditure in the North Sea will be cut ...

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As oil prices rise and fall like a tarts knickers why would, what will be a temporary fall, affect expenditure in the North Sea?

That is like saying that farmers will stop planting potatoes because they were a bit cheap last week in the supermarket.

Surely the oil companies have a longer view of the market than that?
 
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Drop much further and Capital Expenditure in the North Sea will be cut ...

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As oil prices rise and fall like a tarts knickers why would, what will be a temporary fall, affect expenditure in the North Sea?

That is like saying that farmers will stop planting potatoes because they were a bit cheap last week in the supermarket.

Surely the oil companies have a longer view of the market than that?

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I'll give you an insight !

When we load ships mid-week - no-one asks us loads of daft questions. They load ... off they go ... traders / Oil co's are happy.

Load that same ship on friday - now the fun starts ... Nigel - when will our ship finish loading ? Will be after midnight or before ?

Why do you think ? It's price related. If it's before midnight - they can apply Fridays close of business pricing, if after then they have mondays to wait for. In some cases they gamble and delay / speed up loading to get documents before or after midnight depending on trend.

A lot of cargos are also bought / sold on spot market - not on contracts. In fact they don't like term contracts with fixed pricing.

The closure (plugging) of wells is a real matter of concern. Texas / Gulf Of Mexico is a prime example.

Latest news ? OPEC cutting drastically crude supplies from Jan 1. Kazakhstan pipeline through to Russian port in Black Sea to double throughput !! Oh Whoopee !
 
Well that's interesting, but surely supports the major's point of view? ie. prices move around all the time, in your example from a Friday to a Saturday, you can't base long term investment decisions on short term oil prices.
 
Enhanced extraction / recovery projects cost money and often have long lead times. As such a complex economic model is put together to assess weather the recovery potential is economic based upon a anticipated $ BOE. The high $ BOE price which we recently experienced, have made a lot of "un-economic" reservoirs potentially become "economic"... Some of these need at least $60 /BOE to become economically viable..... and for some Operators in the North Sea (which is a high cost area), these did become interesting.... We all work on mid and long term plans which assumes a set $ BOE, which is taken from market projections etc. A number of years ago, the projection was that the price would stay above $45 / BOE and large scale comittments in enhanced oil recovery projects were made. These are about to come to fruition, but there are more in the pipeline.... These projects may now be stopped as they are not viable any more, the ones bein planned, may be canned, and money being re-directed out of the North Sea to areas where we have lower cost and geological risk, but higher political risk. Once re-directed, it will be a 3 - 5 year recovery time for the North Sea capital expenditure projects, with a following gap in the engineering and construction as well as the support industries. People, skills, wealth and knowledge will be removed from the economy, which will augment the resession and make recovery worse (incresed social welfare cost etc). During which time whole fields will become un-economic and abandoned.

Very simplistic, I know, but there are limits to what I can talk about without giving out too much information .... right now, we are not overly optimistic in the industry ... and hope this current downwards trend will stop / stabilise soon before a number of projects will be cancelled / mothballed etc., and funds held back and moved by corporate directive.... Future UK reliance on other countries hydrocarbons are going to increase drastically if this continues for long...
 
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Future UK reliance on other countries hydrocarbons are going to increase drastically if this continues for long...

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I don't even pretend to understand all of this, but I thought that with the low £, then it is more attractive to extract our own oil for export and use than to buy in other peoples.

It reminds me of a lot of things that is starting to happen in this world. Whether there is a glut or a shortage, whether the cost price is high or low, whether there is stability or strife, there is always an excuse to keep the price high or manufacture some spin of gloom.

Makes you wonder why we are all so cynical.
 
Further ... I know traders that are defaulting on contracts - paying penalties rather than buy at contract price and lose mega bucks on the market. Some co's relied on the boom in price to make money - now it's reversed and some are trying to get their a**s out before it's too late.
 
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