Prices and production
Oil prices hovered between $81 and $82 early this week as a falling Euro balanced off reports of increasing demand from China. Tuesday evening the API reported that US crude stocks had risen by 7.5 million barrels last week which was 5 times has much as analysts were estimating. On Wednesday, the EIA confirmed that crude inventories had risen by nearly 7.5 million barrels, but also reported that gasoline and diesel stocks had fallen by 2.7 million and 2.4 million barrels respectively so that total commercial petroleum inventories were up by only 400,000 barrels last week. With the stocks report turning out neutral, oil closed $1.30 lower at $80.61 a barrel largely due to the dollar hitting a 10-month high against the Euro.
US demand for oil over the last four weeks averaged 19.4 million b/d, up 3.6 percent compared to last year. US gasoline demand last week increased by 238,000 b/d to 9.1 million barrels, a 1.2 percent increase over last year.
US natural gas prices fell to their lowest level in six months on reports that there will be above normal temperatures across much of the US in the next few weeks.
Platts reports that China’s “apparent” oil demand in February jumped 16.6 percent year over year to a new high of 8.5 million b/d. Beijing announced that it expects its demand for oil to increase by 5.5 percent this year.
Prognosticating about oil and gas prices continues. A senior IEA official predicted that prices will stay in their recent trading range for the rest of the year. Macquaire Research, however, sees demand for oil growing by about 2.4 percent this year and is looking for prices above $90 a barrel in the fourth quarter. The LA Times assures us that US gasoline prices are probably at their peak for the year as oil supplies are so plentiful. CNN on the other hand thinks we will see $3 nationwide gasoline shortly but it definitely won’t go high enough to hurt economic growth.
Venezuela’s Power Crisis
The water level at Caracas’s Guri reservoir, which supplies about 70 percent of the nation’s power, continues to fall a meter+ each week. Unless heavy rains come soon, the dam will have to shut down by late June or sooner to avoid damaging the turbines. As the pressure behind the dam drops, the generating turbines require increased amounts of water to compensate.
The government currently has procurement teams scouring the globe to buy enough thermo generating equipment to replace the power lost from the dam by year’s end. Knowledgeable observers say this much generating capacity would take years to procure and install.
In a bizarre move, the government asked the heads of the seven public electric power companies in the country to resign, just at the time when it will need their expertise to keep the lights on. The interaction among the rains, Chavez’s need to mollify the people with electricity before the September elections, and the country’s need to keep exporting oil will make for an interesting spring. In January Caracas exported 840,000 b/d of oil to the US.
UK Peak Oil Summit
An “historic meeting” was held March 22 at the Energy Institute in London. The 20 attendees included representatives from government, academia, industry and community activists. The notion of peak oil was an accepted working premise. For details, see today’s Peak Oil News.