The oil market remains prone to short-term dislocations, with the hurricane season continuing to play a greatly magnified role in a market with limited slack. |
The peak period for hurricanes is usually from August to September, so the oil market is concerned about the risk of weather-related production losses over the coming weeks. |
The pinch point is product output. |
The price is definitely going to $65 a barrel. That's not an earth shattering call to make now. |
The problem is getting the oil where it is needed in the form it is needed. |
The share of fossil fuels (in China's energy use) may fall but the absolute amounts consumed will grow. |
The statement fell short of an outright denial, leaving market fears free to grow. |
The strikes may further constrain Europe's already limited ability to export product across the Atlantic. |
The U.S. is facing a major gasoline crisis and is starting from a nearly empty tank. |
The U.S. refinery system has been showing signs of severe tightness. The shut-in of refining capacity from Katrina is then not so much a straw, but rather a large log on top of an already fully laden camel. |
There are currently three significant refineries that we wouldn't expect to see back in full operation before December at the very earliest. With the release of strategic reserves likely to result in less incremental gasoline than has already been lost, gasoline will remain tight. |
There are not enough firm projects on stream to meet 1.5 million bpd (demand growth). |
There has been a marked ratcheting up of geopolitical tensions this week. |
There has been poor performance so far this year in the North Sea. The United States certainly is not coming back as quickly as people thought it would and Russia has been very, very poor, partly due to the cold weather. |
There is a strategic element to it. It's something that we've seen before. Japan was doing the same thing about 10 to 15 years ago, with a lot of its natural resource companies, including oil companies, buying into foreign projects. |