World
Petroleumworld
Bookstore
Institutional
links
OPEC
Petroleumworld
Business Partners
Blogspots
recomended
  |
Merry Christmas !
ISSUES....
Inside, confidential and off the record
High tone !
ENERGY PRICES ARE A BIT HIGHER with the market really trying hard to close
for the Christmas holidays around the world and finally following the long awaited but imminently boring OPEC meeting yesterday in Luanda, Angola, which ended as it was widely expected to end with no change in the quotas that have been in place for the past year but with the members each demanding of the other compliance with those same quotas.
Going into the meeting, the outcome was made quite clear when Saudi Arabia’s Oil Minister, Mr. al-Naimi, said that crude between $70 and $80 a barrel is a “perfect price.” What more need he say than that? How much clearer can he be than that? Thus, the quota of 24.845 bpd that took effect at the beginning of this year remains intact as the year ends. The meeting ended with the cartel’s Secretary-General, Mr. al-Badri, calling upon his members to improve their compliance with their quotas to between 75-80%. Begging really isn’t pretty, is it, for the harsh reality for the cartel is that the members call upon each other to comply and then rush home to produce what they must to meet their own
domestic cash requirements.
At least some are honest about it. For example, Angola’s Oil Minister, Mr. Jose Maria Botelho de Vasconcelos… the host of the meeting… said publically that his country is clearly not complying. He said, simply, that “We are complying at certain levels but our production capacity is significantly higher than
the quota that was given to us”.
He is not alone in over-producing and the problem with overproduction is only going to become more and more serious in the future, for soon Iraq will ramp up its production, and the member nations are going to find that they shall be competing one with the other for the same clients. That shall not be pretty for a presentation by OPEC’s Secretariat at the meeting in Angola showed rather clearly that the recent global recession has ended with some permanent loss in demand for energy from developed nations around the world. As Mr. al-Naimi said, following the presentation,We are seeing demand from China, the Middle East and Latin America… [but] I don’t think demand for fossil fuels will go up in OECD countries.
Neither do we:
Feb WTI up 91 74.67-72
Mar WTI up 74 75.33-38
Apr WTI up 65 76.01-06
MayWTI up 61 76.63-68
Jun WTI up 57 77.21-26
Jly WTI up 56 77.76-81
OPEC Basket $71.78 12/18 ( 71.88 12/22)*
Henry Hub Nat-gas $5.55
Finally, today is Wednesday and that means of course the weekly… and always erratic and given to material revision… DOE inventories of crude and its products. The API figures last night were quite positive, with crude inventories falling 3.7 million barrels; with distillate inventories falling 0.7 million barrels and with gasoline inventories falling 1.1 million barrels for an aggregated decline of 5.5 million barrels. This was much larger than had been thought and has put a bit into the crude market this morning.
As for today’s DOE’s, our “guess” is for a cut of 1.5 million barrels for both crude and distillates, but for an increase of about the same for gasoline, leaving the aggregated sum at -1.5 million barrels. The consensus is not far from these figures and as always we note that anyone predicating trades upon our “guess-timates” or those of the consensus is borderline psychotic.* PW
- Dennis Gartman/ The Gartman Letter 12/ 23 / 09
- For more on interesting comments, you can subscribe to The Gartman Letter by contacting Dennis Garthman:
Phone - Fax: or email : dennis@thegartmanletter
ISSUES.... 12/23/09
ISSUES.... Inside, confidential and off the record
Is an independent journalist effort from Petroleumworld, on Inside, Confidential and Off The Record Information, its views are not necessarily those of Petroleumworld - Send Us Your Issues
Legal information: Copyright/Disclaimer
Copyright© 2008 respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.com
Best Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels