Oil Trades Near 10-Month High After Shell’s Nigeria Rig Attack
July 4th, 2007Via: Bloomberg:
Crude oil traded near a 10-month high in New York after Royal Dutch Shell Plc said militants attacked its rig in Nigeria, raising concern about further oil-supply disruptions from Africa’s largest producer.
Five expatriate contractors working for Lonestar Drilling Nigeria Ltd. were taken hostage, said Precious Okolobo, a spokesman for Shell’s Nigerian venture. The attack occurred early this morning in the Soku field, where the rig was drilling a well. No production was affected, he said.
“The oil sector is the one where geopolitical events play a very big part,” Tim Guinness, chairman of Guinness Atkinson Asset Management LLC, said from London. “We don’t know which one is going to next affect supply.”
Crude oil for August delivery rose 3 cents to $71.44 a barrel at 2:30 p.m. in electronic trading on the New York Mercantile Exchange. Open outcry trading is closed at Nymex today because of the Fourth of July holiday in the U.S.
At the same time, Paolo Scaroni, chief executive officer of Eni SpA, said force majeure at the company’s Nigerian Ogbainbiri flow station is still in place. Eni first made the declaration on June 19 after the facility was attacked by gunmen two days earlier.
Brent oil for August settlement gained 12 cents to $73.05 a barrel on the ICE Futures exchange in London.
The latest kidnappings in Nigeria occurred after the Movement for the Emancipation of the Niger Delta, or MEND, ended a one-month cease-fire this week. Jomo Gbomo, spokesman for MEND, said the group wasn’t involved.
The worldwide supply of oil by this time has got to be plummeting, especially with so many disruptions in producing countries like Nigeria. Plus, the U.S. refinery capacity is in such a shambles that we’re importing over 10% of the gasoline consumed each week, much of it from countries that don’t even produce oil, like France and Germany. All of this is occurring at a time when U.S. and global oil consumption is rising, and we’re in the middle of the summer driving season.
Yet gasoline prices have barely budged lately. How can that be?
Is it possible the whole Peak Oil thing really is a scam, being floated around as a rational explanation for the war in Iraq?
AntiChrist: gasoline prices and crude oil prices,
while related, are not the same thing; and they
don’t necessarily move with each other, or at the
same magnitude. This week, refinary utilization is
up, which means there’s a bit more demand for the
crude (by refiners). Crude is getting
pushed through the system faster, which increases
the demand for more crude as the inventory goes down.
Also I can assure you that peak oil IS the real deal and not some scam. The reason most people have a hard time understanding peak oil is that
there are DIFFERENT kinds of oil. What has already peaked is the easy oil (light sweet crude). “Sweet” means the crude oil is low in sulphur. As
refinaries have to start dealing with lower-quality “sour” (high sulphur) crude, refinaries start to break down because the sulphur
is very hard on refinary equipment (it acts like an acid). Then you have even WORSE crude…the oil sands in Canada. So you don’t just “run out of oil”…it just gradually gets harder to get the EASY oil, and over time you eventually end up with
expensive-to-produce oil. Right now we are probably AT the peak (probably occured in 2005 for light sweet crude). The peak production part of the curve will be/is a “bumpy top” and it will not
be obvious until several years AFTER the peak. I would expect that somewhere in the 2008-2010 range, it will be obvious to everyone.
Dboy
Dboy:
I suspect you’re right about Peak Oil. And all the other points you make i’ve seen discussed in detail at various oil-tracking sites.
But it makes me wonder, you would think the Bush Administration would’ve just come clean and admit by now that they invaded Iraq for the oil, on the grounds that with global oil output peaking, the world’s going to need that Iraqi oil. It would be a lot better explanation than the lame-ass reasons they’ve given up to this point for the war.
They won’t EVER say “we kicked Iraq’s ass to steal their oil”. What they have said many times is that “energy security is of great national importance”…which is basically the same thing,
just said in a way that it’s more easily absorbed by the public. Let’s be honest, people ‘can’t handle the truth’. If they could, we’d end up with better Presidents. We have horrible Presidents because the American people are too stupid to demand better.
Dboy