This page has been archived and commenting is disabled.
Crude Oil To Bust Through $93 a Barrel on Supply Concerns
Since the start of the New Year, West Texas Intermediate (WTI) crude oil have been moving with significant bearish sentiment (See Chart) mostly on a lot of profit taking going around in the commodity space, and also on concerns over the high inventory and that supplies would exceed demand. The latest jobs report only further fanned the pessimism.
However, there are two new events that could turn the market around quickly before you can say “what happened?”
Shutdown - Canadian Upgrader
First, there was a fire on Jan. 6 at an oil sands upgrader (that’s where bitumen is converted to synthetic crude oil), which forced Canadian Natural Resources Ltd. to shut production at its 110,000 barrels per day (bpd) Horizon oil sands project.
Canada is the top country where United States gets its crude oil and petroleum product imports. This 110,000 bpd capacity is almost 6% of the U.S. daily import volume from Canada.
Shutdown - Alaska Pipeline
Then, the Trans Alaska Pipeline, which is owned by BP, ConocoPhilips, Exxon Mobil, Chevron, and Koch Industries Inc., had to shut down on Saturday Jan. 8, after a leak was discovered at Prudhoe Bay. (Talk about how BP just can’t get a break.)
The 800-mile pipeline carries about 15% of U.S. oil production. Oil producers reportedly are in the process of cutting 95% of output, which is normally around 630,000 bpd. So far, there’s no estimate as to how long the shutdown will last.
Worse Than Hurrican Ivan
These two outages could potentially cut the U.S. crude supply by up to 709,000 barrels per day. That’s about 8% of the U.S. crude import, and around 3.6% of U.S. consumption.
To put it in perspective, this 709,000 bpd volume is more than the disruption caused by Hurricane Ivan. When Ivan hit the U.S. Gulf in 2004, it took down about one third of the oil output in the region, which is around 1.6 million bpd.
OPEC Eyeing $110 a Barrel
Last but not least, several OPEC members are increasinly talking about how the Cartel would not act unless crude crosses $110 a barrel.
This new tightened supply picture, couple with OPEC talks will most likely turn crude oil to move on its own momentum. As such, there will be new money coming into the market, more upward pressure, and lots short covering.
Breaking Above $93 on Supply Concerns
From a technical standpoint, there’s a high probability that crude could easily top $91 a barrel as early as Monday, Jan 10, before busting through $93 a barrel levels by end of the week on supply concerns. And also look for WTI to outperform Brent during the week.
Dian L. Chu, Jan. 9, 2011 | Vote for Me - Shorty Finance Award | Facebook Page | New Article Alert | Google Profile
»
- advertisements -
How expensive was the operations to build that guy in those days? I cant remember.
How much today? If they start a new show, for the sake of credibility, they should go as main sponsor behind the project: the FED.
Brilliant refutation.
Anyone know how to type a raspberry?
MEXICO CITY (Reuters) -Exports of Mex ican heavy oil will fall to the lowest level in 15 years in 2011 once a local refinery is upgraded, which could hit the profitability of U.S. refiners emerging from the bruising 2008-09 market downturn.
The start-up of a major refinery project will cut Maya heavy crude exports by some 110,000 barrels per day this year, according to government data.
The decline in Maya exports could pressure top Mexican crude oil customers like Valero Energy Corp, Exxon Mobil Corpand Chevron Corp who have seen their profit margins squeezed by lower supplies of heavy crude that is cheaper but more difficult to process.
Isn't Valero owned by Chavez?,or is that Citgo?.
CITGO. Valero is an independent refiner; buys crude on open market
between manipulation by wall street and opec demanding higher prices due to currency debasement it would seem impossible to determine why the oil price increases. In a global depression such as we are in, it is unlike demand has increased as many proclaim.
I agree with you. But remmber don't argue with the market.
Changing Education Paradigms
...The next generation will not utilize Oil as we know it.
Baby Boomers are the last of the Industrial Revolution
Two germane videos explain...
http://seenoevilspeaknoevilhearnoevil.blogspot.com/
There has been an extraordinary amount of oilsands fires that have reduced production in the last year. Is the process more inherintly dangerous? Are they running too hard out without proper maintenance? This reminds me of BP's Texas disasters of two or three years ago.
Suncor has had several upgrader fires. They do happen. Production is in the best interests of the company(ies) and loss of 100K+ bpd is $9 million / day lost so they would MUCH rather go slower with no multi month loss than fast and risk fire. It seems not to matter.
They do everything they can to avoid fires.
The OPEC dudes are willing to sell at $100.00 and increase output, to stop a global panic............
Mighty hospitiable of them, huh?
The energy cartel knows it has the world by the balls, so why wouldnt they be douches?
More like an angry dog that chases a car. Most people are careful or will alter their behavior when going through or around such a neighborhood. That said in a head-to-head match, no dog is the least threat to +2000lbs of metal. If the dog bites or becomes viscous it may find itself on the receiving end. This is what prevents OPEC and the oil cartels from getting out of hand. They have a good thing going, they know this and want to ensure it lasts.
Correct usage should be 'exporter of' instead of 'importer of', no?
Bulk of scarcity appears to come from a BP and Big Oil control element. Big Surprise.
Sounds like a Peak Pipeline issue.
Coal and Oil prices relative to $Natgas are very high, go long $Natgas....
Viva GasVegas
There are no swing producers left - they can't react to price through production - the things left to determine price are fraud, manipulation and demand.
I dont think so. Iraq, the new US lap dog swin producers, is not operational yet. Too many oil countries in the world managing their resources to stay as long as possible in the game. Introducing Iraq now would destroy its longetivity as most of oil countries will hide behind Iraq to cull their extration volumes.
Red Alert (really):
China's December trade surplus came in at 13 billion versus an expected 20 billion.
You want more proof that American Consumers are seriously sucking wind, and just plain tapped out, and in the biggest consumer spending month, no less?
Americans can't even afford to buy as much cheaply made, cheaply priced, Chinese shit anymore. WTFISWTH?
Oh, that's right: Unemployment is (real rate) near 17% and combined with underemployment is (real rate) about 25%, with real wages falling and benefits being eliminated.
Yep. That'll do it.
Can't wait for the massive headlines from the MSM & CNBsC on this /sarcasm.