Oil prices are plummeting as unnamed OPEC sources say that t Saudi Arabia is “abandoning” the $100 price target that they really had in the first place. The sources also say that OPEC will go ahead with the tapering of cuts in December, which is likely, but should have been known in the first place. This comes after a report from the Energy Information Administration (EIA) reported big drops in petroleum supply and a big jump up in weekly demand and while Hurricane Helene shuts down some production in the Gulf of Mexico.
Yet the story that made oil prices plummet was the FT story that Saudi Arabia is ready to abandon its unofficial oil price target of $100/bbl as the kingdom prepares to boost output to regain market share.
The report said that “Officials in the kingdom are committed to returning production as planned on Dec. 1, which was expected. The story suggests that Saudi Arabia is tired of carrying the global oil market on its back and is not willing to continue ceding market share.”
Yet again this is from unnamed sources and Saudi Arabia has not commented officially on the story.
It’s possible it is a warning to other producers, but the talk of the $100 price target raises red flags about this story. Its true that Saudi Arabia has been losing market share by their restraint in production. Their revenue has fallen. that could be weighing in them.
As far as an increase in December in production, we better hope so based on this week’s Energy Information Administration (EIA) report because our supplies are dwindling.
The EIA reported that U.S. commercial crude oil inventories fell by 4.5 million barrels from the previous week. At 413.0 million barrels, U.S. crude oil inventories are about 5% below the five-year average for this time of year.
Gasoline inventories decreased by 1.5 million barrels from last week and are about 1% below the five-year average for this time of year. Distillate fuel inventories decreased by 2.2 million barrels last week and are about 9% below the five-year average for this time of year.
Cushing, Oklahoma did see a slight increase to 22.8 million barrels so we have not hit tank bottoms yet.
Let’s face it the reaction to the Saudi Arabia story at a time when the demands at a record high and supplies are dwindling really shows you the lack of confidence in the global economy the stock market continues to tell us that things are great and they’re going to get better while the oil market is sending signs of doom and gloom. As we know they both can’t be right either the stock market’s getting ready for a big correction which I see no signs of yet or oil prices are undervalued.
We need to start praying for those in the path of Hurricane Helene. Fox Weather is reporting that Hurricane Helene continues to intensify in the Gulf of Mexico, where it’s now expected to become a Category 3 hurricane ahead of an anticipated landfall along the Florida Gulf Coast on Thursday, bringing a catastrophic storm surge up to 20 feet. Nearly the entire state of Florida is under some sort of tropical weather alert, with Tropical Storm Warnings extending hundreds of miles to the north into Georgia and the Carolinas, including cities like Atlanta.
The Bureau of Safety and Environmental Enforcement said that it has activated its Hurricane Response Team and is monitoring offshore oil and gas operators in the Gulf of Mexico as they evacuate platforms and rigs in response to the hurricane.
The BSEE says that based on data from offshore operator reports submitted as of 11:30 a.m. CDT yesterday, personnel have been evacuated from a total of 17 production platforms, 4.58% of the 371 manned platforms in the Gulf of Mexico.
Production platforms are the offshore structures from which oil and natural gas are produced and transported to shore. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project’s duration.
Personnel have been evacuated from one non-dynamically positioned (DP) rig(s), equivalent to 20% of the five rigs of this type currently operating in the Gulf. Rigs can include several types of offshore drilling facilities including jackup rigs, platform rigs, all submersibles, and moored semisubmersibles.
A total of three DP rigs have moved off-location out of the storm’s path as a precaution. This number represents 14.3% of the 21 DP rigs currently operating in the Gulf. DP rigs maintain their location while conducting well operations by using thrusters and propellers; these rigs are not moored to the seafloor, so they can move out of harm’s way in a relatively short time frame. Personnel remain on board and return to the original location once the storm has passed.
As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing safety valves located below the surface of the ocean floor to prevent the release of oil or gas, effectively shutting in production from wells in the Gulf and protecting the marine and coastal environments. Shutting in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.
From operator reports, BSEE estimates that approximately 29.18% of the current oil production and 16.85% of the current natural gas production in the Gulf of Mexico has been shut in.
The EIA reported that in the first six months of 2024, U.S. net natural gas exports (exports minus imports) averaged 12.6 billion cubic feet per day (Bcf/d), 1% (0.1 Bcf/d) more than the same period last year and 2% (0.3 Bcf/d) less than in 2023, according to our Natural Gas Monthly. Since 2019, increases in liquefied natural gas (LNG) exports and exports by pipeline to Mexico have led the growth in U.S. natural gas exports. The United States has exported more natural gas than it imports since 2017.
One of the rising issues in the presidential campaign is how we’re going to power the economy of the future with artificial intelligence and data centers in cryptocurrency mining.
The amount of demand is going to grow dramatically and we have to be realistic in how we are going to meet demand growth when demand for Electricity is already at a record high..
John Kemp reports that US Electricity demand hit a record 2,069 billion kilowatt-hours (kWh) in the first six months of 2024, up from 1,971 billion kWh in the same period a year earlier, and surpassing the previous peak of 2,048 billion kWh set in 2022. The extra 98 billion kWh compared with last year came mostly from gas-fired generation (+43 billion kWh) with other major contributions from solar (+24 billion kWh) and wind (+19 billion kWh.
US Energy Secretary Jennifer Granholm is considering micro nuclear power generators to meet that demand which actually isn’t a bad idea. Just get rid of some of those solar panels and wind farms.