Them (oil) Cats Don’t Herd

April 18, 2016

OPEC leaders failed over the weekend to agree on a cut in oil production which might have stabilized global prices.  Gosh, who would have imagined that oil producer’s greed would trump their own long term interest? Don’t that beat all.

Meanwhile, as I’ve discussed elsewhere on this page, something like 400,000 people have plunked down a 1000 bucks  just for the chance to own an electric vehicle that will not even roll off the line  for at least a year.

Something is happening here and you don’t know what it is, do you, Mr Exxon?

Washington Post:

Oil prices were down over 3 percent Monday following the failure of a proposed deal between OPEC and some non-OPEC countries like Russia to hold crude-oil production at January levels.

Brent crude, the global benchmark, was off more than $1 to $41.61 Monday morning, and West Texas Intermediate crude, the U.S. benchmark, fell to $38.77.

Falling prices may have been propped up somewhat by a strike in Kuwait, which has lessened global production and thus, tightened the gap between supply and demand — at least temporarily.

The weekend meeting in Doha, Qatar, had been closely watched because it could have introduced an element of coordination among most OPEC countries and Russia, the world’s second largest oil producer at the moment, and thus resulted in at least some limits to how much oil makes its way onto the market. A global oversupply of oil has driven prices down steeply since 2014.

Instead, however, Saudi Arabia pushed to include Iran in any freeze agreement. But Iran, emerging from international sanctions, has been rushing to ramp up its oil production and did not attend the Doha event.

Marketwatch:

While the market has largely expected such a no-deal outcome, the prospect of a bigger glut at a time when demand growth is likely to slow still doesn’t bode well with the sentiment.

“The market has mostly priced in the fact production rate will stay the same even before the meeting. But a failure to reach an agreement is bearish for sentiment and prices are likely to fall further later during the U.S. trading hours,” said Nelson Wang, an energy analyst at CLSA who forecasts U.S. oil prices to drop as low as $30 a barrel.

Hopes for a deal were a main catalyst in a rally that lifted U.S. crude prices more than 50% from their February lows. Much of those gains are likely to get wiped out, as oil producers might be looking to increase production to protect their market shares, analysts say.

Morgan Stanley warns that if the kingdom was to lift production from the current level of 10.2 million barrels a day to 11 million barrels a day as threatened, while other players also show no restraint, “rebalancing could be pushed all the way into 2018.”

Bloomberg:

The slump in oil prices that’s brought upheaval and cost-cutting to the traditional energy industry spared renewables such as solar and wind, which raked in a record $329.3 billion of investment last year.

The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.

“These figures are a stunning riposte to all those who expected clean energy investment to stall on falling oil and gas prices,” said Michael Liebreich, founder of the London-based research arm of Bloomberg LP. “They highlight the improving cost-competitiveness of solar and wind power.”

bnef_graphclean

 

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5 Responses to “Them (oil) Cats Don’t Herd”

  1. lracine Says:

    More Bloomberg Investment hype again… groan…..

    Has anyone done any research on what is happening to the price and supply of Lithium??

    http://oilprice.com/Energy/Energy-General/Tesla-And-Other-Tech-Giants-Scramble-For-Lithium-As-Prices-Double.html

    Has anyone done any homework on the environmental impacts and greenhouse gas emissions from a Lithium mine and the necessary processing???

    Google Lithium mine images and processing….. does this look “carbon neutral” to you??????


    • Ummm, down from ~$45 to ~$23 over the last 5 years.

      No mining is carbon neutral and everyone knows that but the argument that because a process isn’t completely carbon neutral therefore shouldn’t be done fails to take in the big picture. It’s the same puerile and disingenuous argument that deniers put forward about the emissions from producing wind turbines. Mining and processing oil certainly isn’t carbon neutral but at least with Lithium, the end result is a net decrease in emissions over the long term.

      • dumboldguy Says:

        Ah, yes! Our good and loyal friend—-“net decrease in emissions over the long term”—–an especially good friend for the bright-sided and wishful thinkers among us.

        Taken in sum, all mining and resource extraction of any kind, as well as all manufacturing (whether it be wind turbines or Teslas) is decidedly NOT carbon neutral in our present world—-the whole free-market, run-amok-capitalism, neo-liberal BS that Reagan et al began 35 years ago has taken over the “globalized” world economy, and we are still paying little more than lip service to “reducing emissions over the long term” because there are still big profits to be made by the 1%.

        We are exceeding the carbon budget, we are baking in more of a temperature rise than the dreaded 2 degrees, Greenland is melting, Arctic sea ice is disappearing, and the ocean may rise TEN FEET in 35 years. And we want to argue about the small stuff? Wake up and smell the skunk cabbage—-we are fast obliterating the cushion of “the long term”.

  2. lerpo Says:

    Here’s the value of Global X Lithium, a lithium ETF: https://www.google.com/?ion=1&espv=2#q=NYSEARCA%3ALIT


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