two tales twice told
Sep. 19th, 2005 11:37 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdOne:
From 2003, an article on market fundamentals indicating the possibility of a supply-disruption-triggered energy crisis. What's interesting about it is that the indicators they site have generally gotten worse, not better, since they put together this report. The exception was the SPR, before the recent (and IMO, correct) supply release ordered by President Bush.
Moving to today: "6:56am 09/19/05 OPEC holding to quota, to lift output by 2M barrels By Steve Goldstein LONDON (MarketWatch) -- The OPEC oil cartel will hold to its production quota but raise output by two million barrels a day, wire services reported." They didn't expose a good URL for that, so I can't paste it in. Regardless, what it translates to is that OPEC will dump some of their buffer onto the market - a good amount of it, 2MBPD is nothing to sneeze at - but it's the equivalent of the SPR, not new production. Once that buffer - which is of unknown size but I presume it to be large - is exhausted, they'd have to reel out new production to continue to ship at the same rate.
That's not a formal announcement and there's talk that there may also be a 500,000 barrel production quota hike. This is considered symbolic by many market viewers, and it is suspected that OPEC is already 500,000 over quota. (Of course, raising the quota just means people raise their cheating.) The very interesting thing will be how long it takes to show up. But with the muddying of the water provided by the reserves release, we may not be able to tell. [EDIT: There was no production quota hike.]
The other thing to keep in mind is that we're kind of at a local demand low right now - a serious one that often goes up to around 2MBPD, from my reading. As winter ramps up, demand will climb back up again, then fall in spring. (This assumes no significant recession. Recessions can drop demand considerably.) It's entirely possible that they may be thinking they can just announce 2MBPD more supply, not actually supply it, and when seasonal demand slack builds stockpiles, say their work is done. (This won't work as well for the United States, of course, but it could work elsewhere.)
Regardless, we're still in a post Phase One environment. Without Katrina, I think we'd have fallen to that $60 to $55/barrel price I mentioned earlier, at least until the next seasonal cycle up. But any shock of any scale to any of the very limited supply sources will disrupt the market in ways we've seen recently.
Two:
Christ on a crutch, what the fuck is going on here? British troops storm an Iraqi government jail to free two arrested special forces men. The British government claims the release was negotiated, but the ever-popular anonymous governmental sources admit that they knocked down a wall doing the pickup. Who the fuck was supposed to be driving, Elwood Blues?
Back to Iraq quotes Defense News as calling the situation in Iraq an undeclared Civil War. Unfortunately, the full article is subscription-only, but the URL for it is here in the unlikely event you're a subscriber. Other sources are quoting it similarly, tho' less extensively, as the B2I journalist I've linked to - he's a former freelancer now working for Time Magazine. Omar at IraqTheModel, a pro-democracy Iraqi who supported the invasion to overthrow Stalinist-wanna-be Saddam Hussein's Baathist dictatorship, agrees that the next 90 days are critical, but thinks it's more likely than not that a full civil war will be avoided. Let's hope he's right.
From 2003, an article on market fundamentals indicating the possibility of a supply-disruption-triggered energy crisis. What's interesting about it is that the indicators they site have generally gotten worse, not better, since they put together this report. The exception was the SPR, before the recent (and IMO, correct) supply release ordered by President Bush.
Moving to today: "6:56am 09/19/05 OPEC holding to quota, to lift output by 2M barrels By Steve Goldstein LONDON (MarketWatch) -- The OPEC oil cartel will hold to its production quota but raise output by two million barrels a day, wire services reported." They didn't expose a good URL for that, so I can't paste it in. Regardless, what it translates to is that OPEC will dump some of their buffer onto the market - a good amount of it, 2MBPD is nothing to sneeze at - but it's the equivalent of the SPR, not new production. Once that buffer - which is of unknown size but I presume it to be large - is exhausted, they'd have to reel out new production to continue to ship at the same rate.
That's not a formal announcement and there's talk that there may also be a 500,000 barrel production quota hike. This is considered symbolic by many market viewers, and it is suspected that OPEC is already 500,000 over quota. (Of course, raising the quota just means people raise their cheating.) The very interesting thing will be how long it takes to show up. But with the muddying of the water provided by the reserves release, we may not be able to tell. [EDIT: There was no production quota hike.]
The other thing to keep in mind is that we're kind of at a local demand low right now - a serious one that often goes up to around 2MBPD, from my reading. As winter ramps up, demand will climb back up again, then fall in spring. (This assumes no significant recession. Recessions can drop demand considerably.) It's entirely possible that they may be thinking they can just announce 2MBPD more supply, not actually supply it, and when seasonal demand slack builds stockpiles, say their work is done. (This won't work as well for the United States, of course, but it could work elsewhere.)
Regardless, we're still in a post Phase One environment. Without Katrina, I think we'd have fallen to that $60 to $55/barrel price I mentioned earlier, at least until the next seasonal cycle up. But any shock of any scale to any of the very limited supply sources will disrupt the market in ways we've seen recently.
Two:
Christ on a crutch, what the fuck is going on here? British troops storm an Iraqi government jail to free two arrested special forces men. The British government claims the release was negotiated, but the ever-popular anonymous governmental sources admit that they knocked down a wall doing the pickup. Who the fuck was supposed to be driving, Elwood Blues?
Back to Iraq quotes Defense News as calling the situation in Iraq an undeclared Civil War. Unfortunately, the full article is subscription-only, but the URL for it is here in the unlikely event you're a subscriber. Other sources are quoting it similarly, tho' less extensively, as the B2I journalist I've linked to - he's a former freelancer now working for Time Magazine. Omar at IraqTheModel, a pro-democracy Iraqi who supported the invasion to overthrow Stalinist-wanna-be Saddam Hussein's Baathist dictatorship, agrees that the next 90 days are critical, but thinks it's more likely than not that a full civil war will be avoided. Let's hope he's right.
