Crude Oil Price Skyrockets to New High!

[dolanbaker]

That's a nasty spike we've got here.

[OilFinder2]

in response to the fallback in oil prices

But oil prices are not falling back, unless you regard WTI, and Alaska North Slope, as the only grades of oil available for making US gasoline. Heck, even Louisiana Sweet is over $101 per barrel and Tapis is over $105 per barrel, spot prices. I can't see any overall fallback in prices and the WTI trend is a still unexplained phenomenon, relative to other grades.

On the other hand, there are a lot of grades of oil which are priced at a discount to WTI, often by a large margin. Some examples in the US can be found in the chart on the right side of this link:
http://www.rmoj.com/
And of course all that Canadian tar sands crude is priced at a discount to WTI. So you have some oils priced higher than WTI, and some lower.

But yeah, I agree the WTI-Brent spread is starting to get bizarre. Brent skyrocketed today but WTI is responding with a big, fat yawn.

Let's just hope the Canadians don't start rioting.

[TonyPrep]

Wow, that's a lot of grades of cheap oil, Oilfinder, but only in the US (and I wonder why it doesn't show the price of Louisiana Sweet, which is over $100/bbl).

I usually look at Bloomberg for energy prices but another site has a much wider range of global crude grades and show the majority of them over $100/bbl (though each isn't updated quite as frequently). WTI is going in the opposite direction. Very strange.

[OilFinder2]

Wow, that's a lot of grades of cheap oil, Oilfinder, but only in the US (and I wonder why it doesn't show the price of Louisiana Sweet, which is over $100/bbl).

It's the "Rocky Mountain Oil Journal" so they only list grades of oil pertinent to Rocky Mountain and Great Plains oil producers.

The topic here was/is the US.

[Pops]

On the other hand, there are a lot of grades of oil which are priced at a discount to WTI, often by a large margin. Some examples in the US can be found in the chart on the right side of this link:
http://www.rmoj.com/

The reason some are discounted is because there is no infrastructure in place. N Dakota is shipping oil by rail and truck because there are no cheap pipelines. It's a light sweet grade but still discounted.

I can only guess there is no pipeline yet because they didn't expect prices to stay this high this long, they've known about the oil long enough...

http://ourfiniteworld.com/2011/02/14/is ... -peak-oil/

[OilFinder2]

I just love quotes like this from that article:

To me, the big question is whether Bakken oil shale, other oil shales, and all of the additional NGLs can really be made economic.

Yeah, it's so uneconomic that drillers are shutting down rigs and mothballing holes.



As for the infrastructure, they can always build new pipelines, which is already happening.

[Pops]

Yea, looks like it is economic around what $75-85/Bbl? They obviously feel that is the all time floor now.

ye-haw, happy days

[TonyPrep]

The topic here was/is the US.

Yeah, but the US needs oil from farther away than just the US, to make gasoline. So I would expect gasoline to be tracking world oil prices, rather than the price of Rocky Mountain oil. With oil, globally, around the $100 per barrel mark, expect gasoline prices to remain high or increase, despite what WTI is doing.

[OilFinder2]

^
Don't forget - a lot of international oil grades are priced less than WTI, too (aforementioned Canadian oil, for example). Just because Brent and some other grades are priced higher than WTI, doesn't mean all are.

[sparky]

.
Exactly right , WTI used to be the dearest grade ,now it's not by a long shot
the very ordinary quality OPEC basket used to be at a big discount but not now ( 97.37 US$/B)

IMHO the Canadians are being plucked like Christmas gooses

[dolanbaker]

Below is an interesting chart that shows WTI & Brent tracking each other from 2008 until about the end of November 2010 at which point they diverge quite noticably.

Could it just be an indicator highlighting the fact that global demand is rising while US demand is falling, Posted elsewhere on peakoil.com is a report that China is temporarily replacing Australian coal with oil, could that be the cause?

Will we see the gap shrink when the Australian coal is back on line, or will this become the "new normal" as the west continues to decline and the BRIC's continue to grow.

http://www.livecharts.co.uk/daily_chart ... futures_wi

[Daniel_Plainview]

Below is an interesting chart that shows WTI & Brent tracking each other from 2008 until about the end of November 2010 at which point they diverge quite noticably.

Could it just be an indicator highlighting the fact that global demand is rising while US demand is falling, Posted elsewhere on peakoil.com is a report that China is temporarily replacing Australian coal with oil, could that be the cause?

Will we see the gap shrink when the Australian coal is back on line, or will this become the "new normal" as the west continues to decline and the BRIC's continue to grow.

http://www.livecharts.co.uk/daily_chart ... futures_wi

Excellent chart, Dolan:



While the Asian economies have been recovering and expanding, the artificial stimulus provided by the US federal government is now wearing off, resulting in lower demand for crude. Asian economies are growing, while the Fed's life-support is sputtering.

Could it just be an indicator highlighting the fact that global demand is rising while US demand is falling,

Yep. There's also excess supply in the US thanks to North Dakota (perhaps) and Canada (perhaps).

Valero, the largest independent US refiner, has admitted it had “underestimated” the price spread, saying WTI has “almost become irrelevant” as a benchmark. ... The problem for Cushing, known as the “pipeline crossroads of the world”, is that it has no major pipelines to evacuate oil beyond nearby refineries. So stocks in the town’s tanks have risen to a record 38.3m barrels. This glut will probably worsen when a new pipeline extension adds 155,000 barrels a day from Canada.

The trains are adding to the surplus. Drillers in North Dakota have used new technology to tap the oil-drenched Bakken geological formation. The state’s production has since reached a record 355,000 b/d in November, double the 2008 average. That bonanza has boosted oil supplies in the midwest region around Cushing to the highest in three decades, even as local refinery demand has remained roughly steady.

FT.com

[OilFinder2]

the artificial stimulus provided by the US federal government is now wearing off, resulting in lower demand for crude

Fee free to show me where, on this chart, demand for crude in the US is lowering since the stimulus began.

[TonyPrep]

Look at this site:

http://www.upstreamonline.com/marketdata/markets_crude.htm

It shows 11 globally traded oil grades. Though they have all declined at their last update, 6 are over $100/barrel, 3 are in the upper 90s with only WTI and Alasksa North Slope under 90, WTI significantly so.

[Daniel_Plainview]

With Brent surpassing $104, the Brent/WTIC divergence is now $19/bbl.

Brent:

[vision-master]

yup - Brent crude rose $2.40 to $104.04 at 1708 GMT

[bratticus]

The OPEC Reference Basket price average for 2011 is ten cents short of 2008's.

click

[Daniel_Plainview]

(Reuters) -Brent crude oil prices hit $108 a barrel for the first time since 2008 on Monday on fears that spiraling violence in Libya could lead to wider supply disruptions from the OPEC member. "U.S. oil prices led the rally to jump by more than $5, the most in over two years, as traders also rushed to cover short positions in the key Brent/WTI spread, which had blown out to a record $16 a barrel. The April spread narrowed to $10 during the day, but widened to over $12 in after-hours trade. [WTIC's] more-active April contract jumped as much as $5.75 to a high of $95.47 a barrel, at one point narrowing the Brent/WTI contract by nearly $3 to $10 a barrel as traders covered short positions built up as the spread ballooned from about $3 in January to a low of $16 last week."

Although US markets were closed all day today, some hyper-volatility occurred in electronic trading:

ZH: Oil Goes Berserk In Electronic Trading As WTI Passes $98

WTIC (april) momentarily jumped past $98/bbl:



Brent jumped past $108:



A glitch? An over-reaction to Mideast turmoil? We'll know more tomorrow (Tuesday) ... stay tuned ...

[eXpat]

Brent jumped past $108:

A glitch? An over-reaction to Mideast turmoil? We'll know more tomorrow (Tuesday) ... stay tuned ...

Daniel, If the market takes this too into consideration, it will be an interesting day
OPEC to Reduce Exports as Winter Demand Ebbs, Oil Movements Says

The Organization of Petroleum Exporting Countries will reduce oil shipments this month as demand for winter fuels in the northern hemisphere fades, according to tanker-tracker Oil Movements.

Loadings will slip to 23.79 million barrels a day in the four weeks to Feb. 26, down 0.6 percent from 23.94 million barrels a day in the period to Jan. 29, the tanker-tracker said today in a report. The data exclude Angola and Ecuador. It’s the first monthly decrease since the four weeks to Feb. 5.

OPEC said in a monthly report today that supply concerns that have pushed oil through $100 a barrel in London are “unfounded.” Brent traded around $101 today amid speculation unrest in Egypt may disrupt Middle East oil exports. Global crude demand will slide by 0.4 percent in the second quarter while refiners perform seasonal maintenance, according to OPEC.

http://www.bloomberg.com/news/2011-02-10/opec-to-reduce-exports-as-winter-demand-ebbs-oil-movements-says.html
Reduce exports, from already this:
OPEC Oil Exports Fall 2% as Saudi Shipments Decline

OPEC’s oil exports fell 2 percent in December from a month earlier as Saudi Arabia, the world’s largest exporter, reported a decrease of 4.9 percent.

Total exports by the Organization of Petroleum Exporting Countries, excluding Algeria and the United Arab Emirates, fell by 387,000 barrels a day to 19.4 million barrels a day, the Joint Data Initiative website, which compiles data supplied by governments in an attempt to improve transparency, showed today.

Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.

“This is a huge difference,” said John Sfakianakis, Chief Economist at Riyadh-based Banque Saudi Fransi, noting the 2.32 million barrel per day difference between what Saudi Arabia produced and its exports.

“It’s not clear if Saudi Arabia consumed the full 2.32 million barrels locally during that month, but what’s clear is that rise in local consumption is becoming eminent,” he said.

http://www.bloomberg.com/news/2011-02-19/opec-s-december-oil-exports-fall-2-as-shipments-from-saudia-arabia-drop.html
Got popcorn?

[eXpat]

Angola Plans to Cut Crude Oil Exports by 13% in April

Angola plans to reduce daily crude oil exports by 13 percent in April from a month earlier, a preliminary loading program obtained by Bloomberg News shows.

Africa’s second-largest oil producer plans to ship 45.1 million barrels, or 1.50 million a day, down from 53.7 million, or 1.73 million a day, according to the program.

The April shipments comprise 47 crude cargoes versus a revised 56 for March. There will be eight Cabinda, four Dalia, seven Girassol, five Hungo, four Kissanje, three Kuito, two Mondo, seven Nemba, one Palanca, four Plutonio, and two Saxi shipments, the program shows.

Each Girassol and Plutonio cargo is 1 million barrels, Kuito 920,000 barrels and Palanca 985,000 barrles. The remaining cargoes are 950,000 barrels each.

http://www.bloomberg.com/news/2011-02-16/angola-plans-to-reduce-crude-exports-by-15-percent-in-april-program-shows.html