Prices and production

It has been a quiet week for oil prices which have opened and closed in the vicinity of $79 a barrel. The federal holiday delayed the weekly stocks report until Thursday while the API reported crude stocks increasing by 1.2 million barrels, about in line with analyst expectations. Hurricane Ida did minimal damage to oil facilities in the Gulf. Without much news on supply and demand, oil prices remained tuned to the dollar which for a while traded above $1.50 to euro, new high ground for the year, but then settled back to $1.49.

Beijing reported that its economic situation continued to improve during October with factory output up 16.1 percent year over year. Crude imports were up 20 percent from a year earlier in October, a significant increase from September’s rise of 16.6 percent. China’s net imports in September were 4.47 million b/d, the second highest on record.

Technical analysts still see strength in their oil price charts and continue to talk about oil passing $100 in the near future.

IEA wacked before report released

The release of the IEA’s World Energy Outlook (WEO) for 2009 earlier this week was overshadowed by a story in the UK’s Guardian newspaper about the views of unnamed IEA “whistle blowers.” The story reported that senior Agency officials know that their forecasts of future world oil production are inflated and unrealistic and are only publishing them under pressure from the US government. One former IEA official went so far as to say that we have already entered the “peak oil zone.”

The Agency naturally enough denied the story, pointing out that they have taken the lead in forecasting increasing rates of global oil depletion and have been warning of an imminent supply crunch for some time now.

Interestingly, the Guardian’s story was corroborated by ASPO International’s President, Kjell Aleklett, who reports that he was told the same story, off the record, by senior IEA officials several years ago.

How far the story of US pressure on IEA forecasts will carry in the US media remains to be seen. Thus far, CNN has carried the denial story and Time Magazine mentioned the Guardian piece in the context of a larger article on the potential for an energy crisis as the recession ends.

This year’s 700-page WEO clearly set a new tone from past editions. While earlier years highlighted “reference case” projections for oil consumption, and last year’s edition presented new findings on rates of global oil depletion, this year the focus was on climate policy. The Agency goes so far as to say that its reference case is unlikely to ever be realized due to a myriad of other factors, such as the recession and emissions concerns that will impact on energy production.