CRUDE OIL PRICING & RELATED / PART 1 - International In Scope
11/06 15:03 NARO Told to Expect $30 Oil, $3.50 Natural Gas in Five Years From Energy Price
NARO Told to Expect $30 Oil, $3.50 Natural Gas in Five Years From Energy Price Analyst; Premature Plugging of Marginal Wells Costing Nation's Economy Dangerously Expert Warns Royalty Owners of Nation
OKLAHOMA CITY, Nov. 6 - The following was released today by The National Association of Royalty Owners:
Don't sell out too cheap. Oil will be $30 a barrel and gas will be $3.50 in five years a leading energy analyst told more than 600 royalty owners attending the National Association of Royalty Owners convention here at the Marriott Hotel.
Wayne E. Swearingen, a Tulsa-based international oil consultant, predicted that the 21st century's supply disruptions and soaring prices will dwarf the OPEC crunches of 1978 and 1979.
"Global economic progress depends on the exploitation of oil. Energy from all hydrocarbon sources account for 80 percent of what makes our world go and oil accounts for 38 percent of all energy used, he told NARO delegates, which represent the 4.5 million private owners of oil and gas royalties.
"Most alternative energy sources require more energy to get them running than they produce," Sweringen charged.
He stressed to convention delegates of 32 states that on this 25th anniversary of the Arab Oil Embargo, the U.S. will very likely see sharp increases begin in the costs of imported oil within a few years.
"This will have dire economic and national security implications. Cheap imported oil is like cheap dope until the victim is hooked," Sweringen pointed out.
He added that the premature plugging of one oil well every thirty minutes in the U.S., coupled with the general public's lack of attention to the energy situation is accelerating our dependence on foreign oil.
Earlier, convention delegates adopted a resolution warning the American public of the high cost of cheap gasoline, noting that it means long lines at the pumps, American lives at risk protecting foreign oil and foreign terrorists setting the price of gasoline in America.
"The lessons of the Persian Gulf War and the Arab 0il Embargo have escaped the public, despite their bitter lessons," said James L. Stafford, president of the Ada, Okla-based energy association.
SOURCE National Association of Royalty Owners
S.Korea Analysts Expect Slight Oil Demand Increase
SEOUL, Nov 6 - South Korea's demand for oil will drop by around 10 percent this year, but is likely to recover slightly in 1999, when the country's economic recovery is expected to begin in earnest, analysts said on Friday.
They said the recovery in oil demand, which fell 13.1 percent year-on-year for the first nine months of this year, would start in the winter, which weather forecasters say will be colder than normal this year.
"The rate of decline is likely to recover (from the nine-month pace) to around 10 percent by the end of the year, mainly owing to a forecast for a colder winter," Kim Sung-hyun at Korea Energy Economic Institute told Reuters.
South Korea, which does not produce oil domestically, is the sixth-largest oil consumer and fourth-largest crude oil importer in the world.
Government data released earlier this week showed oil demand decreased to 494.7 million barrels for the nine months to September from 569.2 million for the same period last year.
For the January-September period, South Korea's crude oil imports fell 35.7 percent year-on-year in terms of value and by 5.4 percent in terms of quantity, the data showed.
South Korea's oil demand has been falling this year mainly in line with the economy's slide deep into a recession, which economists have said would persist.
Factories are running at 60 to 70 percent of capacity while domestic consumption has shrunk more than 50 percent from a year earlier.
The government's increase in tax rates on oil products, aimed at making up for sluggish tax collection from other sectors, have also been blamed for the sharp drop in demand for oil.
Early this year, the South Korean government forecast oil demand would contract by 12.8 percent for the full year.
Analysts said the U.S. Energy Information Administration's (EIA) forecast of a 4.8 percent decline in South Korean demand for this year was vastly underestimated and apparently calculated from outdated information.
In its latest energy update on South Korea released on Thursday, the EIA said the nation's oil demand would rise by 0.6 percent next year following a 4.8 percent fall this year.
Next year, when government officials and economists forecast the country would begin to recover from the recession, the country's oil demand should grow by two to three percent, analysts said.
"Oil demand may increase by two to three percent next year, assuming that South Korea recovers from the financial crisis," said Lee Bang-ho at the Korea Petroleum Development Corp.
Analysts predicted that the country's annual oil demand could recover to the same levels as before the crisis hit in earnest late last year by 2000.
11/06 15:43 World Oil down as glut overrides Iraq crisis
LONDON, Nov 6 - Oil markets dropped deeper into the mire on Friday, extending a slide that has taken prices back near 10-year lows.
Benchmark Brent closed down 15 cents at $12.35 a barrel, less than a dollar up from this August's nadir, as a stubborn supply glut allows oil traders to take a relaxed stance over key producer Iraq's brewing crisis with the United Nations.
Prices are nearly $7 below last year's average despite the threat posed by U.S. President Bill Clinton's latest warning of potential military action to Iraq's near two million barrels per day (bpd ) crude exports.
Prices jumped briefly ahead of a Clinton press conference as traders anticipated concrete plans to attack Baghdad but fell back again after he spoke not of Iraq but about a car bomb attack in Jerusalem on Friday.
"I think the rise was a question of clutching at straws," said one dealer.
Clinton had earlier called Iraq's latest defiance of U.N. resolutions "totally unacceptable," telling Baghdad that it must comply immediately and that military force was an option.
Hiss warning came after the U.N. Security Council's unanimous 15-0 vote on Thursday condemning Iraq's decision to stop cooperating with U.N. weapons inspectors.
The Security Council resolution did not raise the threat of force if Iraq failed to comply. But the U.S. and Britain have said they already have the authority to do whatever is needed to force Baghdad to stop blocking U.N. weapons inspectors.
Yet oil traders believe military action would only cut Iraq's exports under the U.N-sponsored "oil-for-food" programme in the unlikely event that oil facilities are directly targeted.
Fears of supply disruption are further blunted by a huge stock surplus that has besieged prices this year, thwarting a three million bpd producer cut package aimed at boosting prices.
Latest statistics from the American Petroleum Institute, a leading indicator of trends in the world's biggest oil consuming nation, showed a near eight million barrel leap in crude stocks last week, the fourth straight weekly rise.
The supply excess has overshadowed severe disruptions to output for nearly a month from Africa's biggest producer, Nigeria, as militant Ijaw youths demand improved amenities and more access to power for people from the oil-producing areas.
Analysts say producers must now cross their fingers for a long, cold northern hemisphere winter to ease swollen stocks.
11/06 17:11 NYMEX crude ends off on glut woes; sidesteps Iraq
NEW YORK, Nov 6 - Crude oil futures on the New York Mercantile Exchange ended lower Friday as concerns over excessive supplies overshadowed worries that renewed tension over Iraq could strangle oil flow from the Middle East, traders said.
"There was nothing in the week's news that threatened to tighten oil supply and so obviously the market's reaction continued to be bearish," said a Midwest oil trader.
December crude oil settled at $13.87 a barrel, losing 10 cents. It traded as low as $13.75.
The contract had jumped more than 20 cents to $14.24 on rumors near mid-morning that President Bill Clinton would talk about measures concerning Iraq in a televised address.
But December crude quickly fell after Clinton omitted Iraq in a speech at a White House event and talked about the latest violence in Jerusalem -- a car bomb attack against Jews. He urged Jews and Palestinians to persevere in the peace process despite the incident.
Front-month heating oil ended at 38.51 cents a gallon, down 0.59 cent, moving along with crude. The contract traded between 38.25/39.75 cents, within its recent range.
December gasoline finished at 42.10 cents a gallon, down 0.70 cent. It hit a session high of 43.10 cents a gallon on short covering.
December Brent crude on the International Petroleum Exchange in London closed 15 cents lower at $12.35, just ahove the day's low of $12.23, negating a rally after NYMEX crude surged on speculation about Clinton's television statement.
Other than crude's brief rally, the market had been mostly on the downtrend as concerns over increasing oil inventories persisted.
Oversupply jitters again jolted the market late Tuesday when the American Petroleum Institute reported a sharp jump in U.S. crude inventories --- nearly 8.0 million barrels for the past week, raising stocks nationwide to 344 million barrels, up more than 31 million barrels from their year-ago levels.
"That's the one thing that broke the market's back this week," a NYMEX floor trader said, noting that the rise, the fourth in as many weeks, worsened bearish feelings and triggered sell orders.
Gasoline futures lumbered through the week with the weight of a large 3.2-million-barrel stockbuild in the API data. A report that U.S. refinery margins were likely to remain in negative territory added to bearish sentiment in refined products.
Heating oil remained bearish as distillates stocks, mostly heating and diesel oil, remained high at nearly 147 million barrels, some 11.5 million barrels more than their levels a year ago, heading into what has been variously forecast as a colder winter season.
"But the implied demand for heating oil was still lower than it was a year ago and only slightly higher than the rolling quarterly average at a time when it should be putting the average higher," said Tim Evans, analyst at Pegasus Econometric Group.
Renewed tension between Iraq and the United Nations over arms inspection simmered throughout the week but a mostly cynical market ignored the rhetoric, although it watched for signs of any military response on the part of the U.S. and its allies.
Monday's early trading jumped on the news that the Saturday before, Iraq had decided to stop cooperating with the U.N. inspectors, who are charged with ensuring that Iraq's chemical and biological weapons have been destroyed.
Iraq, which for months has repeatedly hamstrung the inspectors' work, said it would not resume cooperation unless the U.N. Security Council reviewed the lifting of sanctions that were imposed against it for its invasion of Kuwait in August 1990.
Iraq also called for the removal of Richard Butler, chief of the U.N. Special Commission (UNSCOM) that oversees the destruction of Iraq's weapons of mass destruction.
As the week ended, Iraq remained defiant amid a Security Council resolution condemning its decision, but which did not call for military action, and a broadside from Clinton, who called the Iraq action "totally unacceptable" and demanded that the inspections be resumed immediately.
Traders were unfazed, pointing out that the "oil for-food" deal, an exception under the U.N. sanctions, remains in operation. Under the deal, Iraq is allowed to export about 1.9 million barrels per day of oil, with proceeds going mostly to buy goods to meet the humanitarian needs of Iraqi citizens.
Ironically, Iraq has stepped up its crude loading pace and scheduled an even more ambitious target for November, the last month of the latest phase of the humanitarian oil sale, according to shipping sources.
The heavy schedule seemed to support the belief of many oil traders that the current confrontation between Iraq and the U.N. would not disrupt Iraq's crude loadings.
|
