Prices and production
So far it has been a quiet week, with oil hovering around $77-78 a barrel and generally moving with changes in the equity markets. The weekly stocks report showed a small, but unexpected increase in US crude stocks based on larger-than-usual imports. Prices fell on Wednesday to close at $76.56 a barrel after Fed Chairman Bernanke told a Senate committee that no new moves to bolster the economy were imminent.

Oil prices have been stuck between $70 and $80 a barrel as high inventories and conflicting economic information have left traders without any clear signals as to where prices will move.

At a meeting on increasing Iraqi oil production – optimistically to 12.5 million b/d – BP and Shell presented papers on behalf of the 11 oil companies that have contracts to develop Iraqi oil. The papers discuss the roadblocks the Iraqi government itself causes to increased production. BP announced that it plans to drill 80-100 new wells in Iraq during the next 18 months.

Although Mexico continued to keep its total oil production level in the first half of July, output from the Cantarell field, which six years ago produced 2.1 million b/d now has fallen below 500,000 b/d.

Deepwater Horizon
With the oil leak largely under control and with hopes high that the well will be sealed with the next few weeks, attention is turning to other aspects of the disaster. Currently the government appears to be permitting BP to keep the well valves closed with extensions being granted 24 hours at a time. Although a new tropical storm is brewing SE of Florida, it is not as yet forecast to become a major problem for operations at the Deepwater well site.

Pressures on Washington to lift the drilling moratorium continue with a law suit being filed against the second round of the government moratorium. So far there does not seem to be a mass exodus of drilling rigs from the Gulf as most drillers are biding their time and waiting to see what happens.

Recriminations are increasing as more people with direct knowledge of the Deepwater explosion are called to testify. At least five Transocean employees have been designated “parties of interest” in the criminal investigations that are underway. At $4,300 a barrel, BP could face an $18 billion fine for the incident, but no one expects the courts to be that harsh.

BP has sold $7 billion worth of assets in the US, Canada, and Egypt to help pay for oil spill liabilities.