Who's Gaming Oil?

New oil field deep in the Gulf a potential giant

2006-09-06T08:35:00.000-04:00

If projections hold up, it could yield 11% of U.S. output in 2012-14

By BILL HENSEL JR.
Copyright 2006 Houston Chronicle

Located 270 miles southwest of New Orleans and more than 5 miles below the water's surface, the potential of the Jack field was known about for years.

But three energy companies have now proved that what could be the most significant oil find since Alaska's Prudhoe Bay is both economically and technologically feasible.

Oil reserves are double previous estimates, says Saudi

2005-09-28T08:58:00.000-04:00

Oil reserves are double previous estimates, says Saudi By Saeed Shah

Saudi Arabia, the biggest oil producer, and Exxon Mobil, the largest oil company, yesterday declared that the world had decades' worth of oil to come, in an attempt to calm fears about the record prices experienced in recent weeks.

Forming a powerful alliance, the Saudi oil minister Ali al-Naimi said, at an industry conference in Johannesburg, that the country would soon almost double its "proven" reserve base, while Exxon's president, Rex Tillerson, spoke of 3 trillion or more barrels of oil that are yet to be recovered.

Mr Naimi said that Saudi Arabia would "soon" add 200 billion barrels to its current reserves estimate of 264 billion barrels. The level of the kingdom's reserves and future production capacity are a controversial issue, with sceptics suggesting that it is running out of oil. Muhammed-Ali Zainy, of London's Centre for Global Energy Studies, said: "Since these Opec countries [like Saudi Arabia] are closed, the only information available is available to themselves alone. So they can come up with a new reserves figure and the rest of the world will just have to take it."

Mr Naimi also said that there were "no takers" for more oil right now, as a result of constrained refining capacity. Roughly a quarter of US refining capacity is still shut after Hurricanes Katrina and Rita struck the country's southern coast, but global refining capacity - to turn crude oil into petrol and other products - was struggling to keep up with demand even before that.

"Give us the customers and we will pump more oil," the Saudi oil minister told reporters at the 18th World Petroleum Congress, adding that more refineries needed to be built. He said that enough global output would be added in the next three to four years to restore "some margin of safety" to oil markets.

The comments did have a soothing impact on the market. Despite early reports that Rita has sunk several rigs and left at least nine others adrift in the Gulf of Mexico, crude oil slipped 75 cents to end at $65.07 in New York yesterday. US petrol prices, however, continued to rise, leading George Bush to call on Americans to conserve fuel.

Saudi Arabia is the world's key oil power, with more than a third of Middle Eastern reserves - on its existing estimate - and it currently pumps out 9.5 million barrels a day, providing well over 10 per cent of world supply.

Mr Naimi said talk of oil scarcity reminded him of the 1970s, when people also thought the end of the age of oil was at hand. "But in the intervening years, when we were supposedly facing a precipitous decline, world oil reserves more than doubled," he said.

It is widely accepted that demand for oil will rise over the next decade or two. Most projections of how that demand will be met assume that Saudi Arabia will be able to ramp up production to 15 million barrels a day or more by 2020.

However, sceptics, led by the US banker Matthew Simmons, have argued that production in Saudi Arabia's known oil fields is already declining and that no major new fields have been discovered. By extension, these critics suggest the world has reached, or is about to reach, the high point of production.

Separately, Exxon's Mr Tillerson told the convention in South Africa that his company estimated that global energy demand would increase by 50 per cent over the next 25 years. Mr Tillerson said that by some estimates there was as much as 7 trillion barrels of oil yet to be discovered. On a more conservative basis, the world still had more than 3 trillion barrels from conventional fields, oil sands deposits and other sources. "That is more than twice all the oil recovered up to now in all of human history," Mr Tillerson said.

Craig Pennington, an energy analyst at Schroders in London, said: "The message from these two [Naimi and Tillerson] is that, 'Don't worry. We do have enough oil. Just give us time to bring it in'."

Saudi Arabia, the biggest oil producer, and Exxon Mobil, the largest oil company, yesterday declared that the world had decades' worth of oil to come, in an attempt to calm fears about the record prices experienced in recent weeks.

Man Discovers Black Gold In Utah

2005-05-06T20:11:00.000-04:00

Grand Rapids - Geologists are calling it a spectacular find in an unlikely place.

A small Grand Rapids oil company says there could be as much as one billion barrels of oil in central Utah.

Victor Niederhoffer and Laurel Kenner: Daily Speculations

2005-04-19T16:34:00.000-04:00

Victor Niederhoffer and Laurel Kenner: Daily Speculations: "Refinery Problems Help Crude Oil Prices? by Ross Miller

Back in the old days, when I used to take my dinosaur out for his walk, the wise old economists taught of something called 'derived demand.' For example, that component of crude oil demand that goes into refined product is not demanded directly; instead, its demand is derived from the demand for the refined product. Now if something creates a bottleneck in the refining process, supply of refined products will drop and so their price will increase. Similarly, the bottleneck will cause a drop in demand of the raw input (crude oil) and its price will decrease. Of course, in a manipulated market in which the participants (and certainly none of the financial journalists) do not know economics, it is possible for the price of the raw good to go up, but only temporarily."

BlogginWallStreet: Scary Markets

2005-04-12T10:39:00.000-04:00

Taleb's “black swan”, peak oil theorists, permanent bears, market con artists, deficit watchers, long wavers, and gold bugs all have one thing in common, profiting from your demise. Scaring people out of their money is an all too common marketing tactic.

PROOF YOU'RE GETTING ROBBED AT GAS PUMP

2005-03-24T16:30:00.000-05:00

March 24, 2005 -- HERE'S all you need to know to understand that Americans are getting screwed at the gas pump.

Fact 1: The inventory of crude oil in the U.S. right now is 8 percent larger than it was this same week last year. And that's the biggest amount of crude on hand since the middle of 2002.

Fact 2: That the 8 percent increase doesn't include all the oil purchased by Washington and put into the emergency Strategic Petroleum Reserve, which now has 685 million barrels. That's up from 650 million barrels last year and 599 million in '03.

Fact 3: There is 7.5 percent more gasoline in stock right now in this country than during the same week last year. And you'd have to go back to this same week in 1999 to find more gasoline inventory — when the average price at the pump was only $1.01 a gallon.

Fact 4: Including everything made of oil, there is 4.9 percent more supply this year than when Spring began in 2004. And there's about 10 percent more of all petroleum products in stock today than when the Iraqi war began.

And, finally, Fact 5: American consumers are being conned by speculators — and a media that doesn't ask enough tough questions — into thinking there is some sort of supply problem.

Sheikh Yamani on Oil's Pendulum

2005-03-23T17:50:00.000-05:00

The former Saudi Oil Minister has seen it all since 1962. Now he sees prices swinging back down "over the long term

...excerpt below...

"Another big change: the proliferation of speculators. Measured by fundamentals such as inventory levels, the oil markets aren't particularly tight these days. Many market participants say heavy buying by hedge funds and other financial types has played a sizable role in the current price run-up. If market psychology changes, these funds could push prices down even faster than they have risen. 'In the final analysis, fundamentals will work,' Yamani predicted. "

RTE Business - Saudis say oil supply fears overdone

2005-03-21T10:11:00.000-05:00

March 21, 2005 12:32
Saudi Arabia's oil minister Ali Al-Naimi has said his country can increase oil production by 1.5 million barrels a day to help ease rising world crude prices.

Naimi was speaking to reporters in Manila in the Philippines, where he is on a three-day visit.

The Saudi oil minister also dismissed market perceptions that oil supplies are limited. 'There is plenty of supply. What we in Saudi Arabia want is to alleviate this unnecessary concern about shortage of supply,' he said.

We have Sufficient Oil to Meet World's Demand

2005-03-21T10:09:00.000-05:00

By Anadolu News Agency (aa)
Published: Monday 21, 2005
zaman.com

As the largest oil exporting country in the world, Saudi Arabia has reported that they have sufficient oil capacity to meet world demand.

Saudi Arabian Oil Minister Ali Al-Naimi has issued a statement to reporters in Philippines capital, Manila and said that the country is capable of producing an extra 1.5 million barrels a day. If world markets require, Saudi Arabia can immediately meet this demand, the Minister added.

LewRockwell.com Blog: It's All About The Benjamins

2005-03-17T15:46:00.000-05:00

LewRockwell.com Blog: It's All About The Benjamins: "It's All About The Benjamins
Posted by Charles Featherstone at March 17, 2005 02:36 PM

If the peak oilers need any more evidence that today's high oil prices are the result of today's speculation, and not some looming peak of oil production two or five or ten years in the future, Dow Jones reports the following:

Witnessing new record-high oil prices and wild volatility, market participants are wondering whether market fundamentals have gone out the window. Are high prices drawing in so much fresh speculative buying that nosebleed-level oil prices are a self-fulfilling prophecy? 'It's not about the barrels or the BTUs anymore,' says John Hill of Broadway Futures, in an e-mail message. 'It's all about the Benjamins, massive amounts of capital chasing yield in the commodity markets and succeeding. OPEC can't produce enough crude. They can produce enough crude to feed the world's refineries, but not enough to meet the demand from speculative capital.' [Emphasis mine.]"

Oil Prices Soar after OPEC Increases Output

2005-03-16T13:19:00.000-05:00

"Oil prices soared to record prices today as world markets reacted negatively to Opec’s decision to pump more oil."

This is funny: the market reacts negativly to more supply in a supply/demand market. Sure this make perfect sense... $

OPEC not to blame for oil price leap, say ministers

2005-03-15T13:30:00.000-05:00

"The price of crude oil was 'out of OPEC's control', Qatar's Oil Minister, Abdullah bin Hamad al-Attiyah, said yesterday.

Crude prices were being affected more by factors such as economic growth than by how much oil the Organisation of Petroleum Exporting Countries was pumping, the Qatari minister said in Isfahan, where an OPEC meeting was due to begin today.

Oil-market fundamentals did not support an increase in production by OPEC, which pumped about 40per cent of the world's oil, said Iran's Oil Minister, Bijan Namdar Zanganeh. OPEC should not increase output in the second quarter, he said."

Fundamentals do not support increase = Current high price has nothing to do with actual supply.

Opec not to increase output Because Oil Supplies Are Adequate

2005-03-13T18:43:00.000-05:00

MARCH 13: The Organisation of Petroleum Exporting Countries won’t increase oil output to ease high prices because world markets are already adequately supplied, Opec President Sheikh Ahmad Fahd al-Ahmad al-Sabah said.

Right, so OPECs big move to 'cool prices' as noted in the previous post is to continue doing exactly what they've been doing all along -- pumping plenty of oil.

Is it the oil companies?

2005-03-13T08:40:00.000-05:00

New oil, gas fields discovered in southern Iran

2005-03-12T10:02:00.000-05:00

www.chinaview.cn 2005-03-08 20:09:39
TEHRAN, March 8 (Xinhuanet) -- Iranian Oil Minister Bijan Namdar Zanganeh announced here Tuesday that Iran has discovered two new oil and gas fields in the south of the country.

The new oil field, with an estimated capacity of 5.7 billion barrels, was located in the southern province of Khuzestan, 40 km northeast of the provincial capital of Ahvaz, Zanganeh told reporters."

Looks like the actual owners of the underlying commodity have a different view of things than those trying to sell futures...

BlogginWallStreet: Commodities Picture Getting Clearer

2005-03-10T16:44:00.000-05:00

"It seems that very quickly the belief that commodities prices have been driven mostly by demand is shifting to the view that it’s being driven by speculation. What has been true for quite some time is becoming painfully obvious (at least for those clinging to the demand theory) as the CRB rockets higher beyond a point from which demand alone can explain."

Are Big Funds Gaming Oil?

2005-03-10T16:34:00.000-05:00

BlogginWallStreet: What Happened to Disinflation?: "Today on CNBC they had on an analyst who talked specifically about the impact of speculation on the commodities markets and they mentioned that a lot of people are talking about this now.

Now there are rumors that the big funds are quietly pulling out of energy and commodities as the general public is just getting in. And there are still plenty of analysts telling the public that they should."