Oil prices jumps 4.8% on supply concerns

May 18, 2009 by · Leave a Comment
Filed under: Commodities News 

Well here we go again, Oil prices are on their way up on more violence in Nigeria and fire at Sunoco (U.S. NE Refinery).  On NPR this morning, they reported that an estimate came out that gas prices would rise 15% in 2010 alone.  

With the economy still in recession or depression, depending on who you ask.   Many projects where pulled offline as the oil prices dropped because they are operating at a loss at those low prices.   It takes time to get those project back online so the time between getting them running and getting that product to the refiner.   That can be a formula for getting increases on prices as there is more demand on the supply side of this energy equation.  

News (CNN Money):

Oil prices rose almost 5% Monday after a fire at a major American refinery and violence in Nigeria renewed supply concerns going into the summer driving season.

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OPEC cuts oil production by another 2.2 million barrels per day

December 17, 2008 by · Leave a Comment
Filed under: Commodities News 

This will catch up with us at some point, these short term prices drops that people are so happy about will have long-term repercussions on the U.S. oil market.  The problem we face is that when oil drips this low, oil production is now being brought offline because they will not produce it as a loss.  Also we are seeing investment in renewable energy being reduced at the same time.

This will all create a hairy situation once demand picks up.  In oil production you can not just “flick a switch” and bring it online.  This lag effect is going to create a major price swing in the price in oil.  In other words, these oil prices are just a short term phenomena.

News:

The Organization of Petroleum Exporting Countries, in a bid to prop up falling oil prices, said Wednesday that it would cut production by 2.2 million barrels a day starting next month.

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OPEC slashes oil production by 1.5 million barrels per day

October 24, 2008 by · Leave a Comment
Filed under: Commodities News 

They have to maintain a very fine balance during this economic crisis.  If they reduce production to the point where demand outstrips supply, we could see a huge price swing that could collaspe companies that require fuel to run thier operations.   On the other hand, if the price goes too low, it will hurt oil exporting countries and take the incentive away to buildout renewable energy sources before the oil situation becomes much worse.

AP:

 OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the “dramatic collapse” of oil prices, but crude prices plunged 5 percent anyway as financial markets spiraled downward across the globe.

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OPEC deciding to cut Oil output on over supply concerns

October 22, 2008 by · Leave a Comment
Filed under: Commodities News 

Hopefully they will not cut too much so that oil gets priced well over $100 a barrel.   With our severe economic crisis that is unfolding, it would be devastating if oil prices spiked up again and stayed there.  I do believe oil is quite cheap at this moment and once this crisis passes we will see the price rise and hopefully that will be after we re-establish our new growth pattern.

Release:

A deep price slump, depleted oil demand and swollen stocks have heaped pressure on OPEC ministers to cut supplies at their meeting this week, but they also need to prevent further damage to a battered world economy.

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