Petroleum / Oil
Petroleum / Oil
Venezuela’s Chavez: Oil prices may keep falling
10.15.08, 11:40 PM ET
Venezuela – (Adds quote, background)
CARACAS (Reuters) – Venezuelan President Hugo Chavez said Wednesday oil prices, which have dropped by half in the last few months, will probably
keep falling as the United States suffers a recession. Chavez is a price hawk in OPEC and has over the last few weeks been lowering what he considers the likely range for world oil prices, which have plunged due to fears that recessions around the world will slash demand.
The leftist president said Venezuela would likely be hit by the global turmoil but would not collapse because of the drop in income. Oil accounts
for about half of government revenue. “The price of oil is falling? Yes. The price will carry on falling? Probably. But Venezuela will not drown,” he said at a forum about the benefits of socialism.
World oil prices are at a 13-month low below $73 a barrel, down from a record of about $150 a barrel in July. Venezuela, one of the United States’ biggest oil suppliers, has drafted a budget for next year based on a prediction of $55-60 a barrel for its basket of low-quality crudes, officials said earlier Wednesday. The South American nation’s tarry crude usually trades at about $10 a barrel below U.S. oil.
[Submitted by Hemp4Fuel]
Oil falls to 14-month low on bad US economic data
By GEORGE JAHN, Associated Press Writer 11 minutes ago
VIENNA, Austria – Oil prices fell to a 14-month low Thursday as bad U.S. economic news stoked fears that a significant global economic slowdown will undermine demand for crude.
Concerns over the economy overrode growing expectations that the Organization of Petroleum Exporting Countries could opt to cut back production in an effort to shore up prices.
By mid-afternoon in Europe, light, sweet crude for November delivery was down US$1.07 to US$72.10 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. Earlier in the session, prices fell as low as US$71.21.
The contract fell overnight US$4.09 to settle at US$74.54, the lowest settlement price since Aug. 31, 2007.
Oil prices are now half of the peak they reached in mid-July.
“The market is just very worried about a severe international economic downturn,” said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. “They’re thinking that oil consumption will be weaker than expected.”
Investors were discouraged Wednesday by a U.S. Commerce Department report that showed retail sales dropped in September by 1.2 percent, a sign that turmoil in the credit markets has begun to slow consumer spending. Later in the day, the Beige Book, the assessment of business conditions from the Federal Reserve, said that the economy continued to slow in the early fall.
Japan’s benchmark Nikkei 225 stock average was down nearly 10 percent Thursday while the Dow Jones industrials plummeted 733 points Wednesday, or 7.9 percent, it’s second-largest point loss ever.
“If we’re in the grips of a severe downturn, it’s very hard to pick where things will bottom,” Moore said. “There’s the potential that bad economic news will continue to rattle markets.”
Trader and analyst Stephen Schork linked Wednesday’s downward turn to macroeconomic trends.
“The Dow tanked and the dollar rallied,” he said in his Schork Report.
Investors are beginning to anticipate an output cut by the Organization of Petroleum Exporting Countries at its next meeting in November in a bid to boost prices, Moore said.
OPEC said in a report Wednesday that oil consumption dropped in developed countries by more than 1 million barrels a day in September compared to the same period a year earlier. Demand growth from developing countries increased by a daily 1.2 million barrels over the same time, OPEC said.
“OPEC may try to take some action,” Moore said. “It’s quite likely they will adjust lower their production targets.”
In other Nymex trading, heating oil futures fell 0.53 cent to US$2.1852 a gallon, while gasoline prices decreased by nearly 4 cents to US$1.7450 a gallon. Natural gas for November delivery rose by 3 cents to US$6.62 per 1,000 cubic feet.
In London, November Brent crude fell US$1.05 to US$69.75 a barrel on the ICE Futures exchange.68.0000
Associated Press writer Alex Kennedy contributed to this report from Singapore.
[Submitted by Hemp4Fuel]
20bn barrel oil discovery puts Cuba in the big league
Self-reliance beckons for communist state
Estimate means reserves are on a par with US
Rory Carroll, Latin America correspondent
Saturday October 18 2008
Friends and foes have called Cuba many things – a progressive beacon, a
quixotic underdog, an oppressive tyranny – but no one has called it lucky,
until now .
Mother nature, it emerged this week, appears to have blessed the island with
enough oil reserves to vault it into the ranks of energy powers. The
government announced there may be more than 20bn barrels of recoverable oil
in offshore fields in Cuba’s share of the Gulf of Mexico, more than twice
the previous estimate.
If confirmed, it puts Cuba’s reserves on par with those of the US and into
the world’s top 20. Drilling is expected to start next year by Cuba’s state
oil company Cubapetroleo, or Cupet.
“It would change their whole equation. The government would have more money
and no longer be dependent on foreign oil,” said Kirby Jones, founder of the
Washington-based US-Cuba Trade Association. “It could join the club of oil
“We have more data. I’m almost certain that if they ask for all the data we
have, (their estimate) is going to grow considerably,” said Cupet’s
exploration manager, Rafael Tenreyro Perez.
Havana based its dramatically higher estimate mainly on comparisons with oil
output from similar geological structures off the coasts of Mexico and the
US. Cuba’s undersea geology was “very similar” to Mexico’s giant Cantarell
oil field in the Bay of Campeche, said Tenreyro.
A consortium of companies led by Spain’s Repsol had tested wells and were
expected to begin drilling the first production well in mid-2009, and
possibly several more later in the year, he said.
Cuba currently produces about 60,000 barrels of oil daily, covering almost
half of its needs, and imports the rest from Venezuela in return for Cuban
doctors and sports instructors. Even that barter system puts a strain on an
impoverished economy in which Cubans earn an average monthly salary of $20.
Subsidised grocery staples, health care and education help make ends meet
but an old joke – that the three biggest failings of the revolution are
breakfast, lunch and dinner – still does the rounds. Last month hardships
were compounded by tropical storms that shredded crops and devastated
“This news about the oil reserves could not have come at a better time for
the regime,” said Jonathan Benjamin-Alvarado, a Cuba energy specialist at
the University of Nebraska.
However there is little prospect of Cuba becoming a communist version of
Kuwait. Its oil is more than a mile deep under the ocean and difficult and
expensive to extract. The four-decade-old US economic embargo prevents
several of Cuba’s potential oil partners – notably Brazil, Norway and
Spain – from using valuable first-generation technology.
“You’re looking at three to five years minimum before any meaningful
returns,” said Benjamin-Alvarado.
Even so, Cuba is a master at stretching resources. President Raul Castro,
who took over from brother Fidel, has promised to deliver improvements to
daily life to shore up the legitimacy of the revolution as it approaches its
Cuba’s unexpected arrival into the big oil league could increase pressure on
the next administration to loosen the embargo to let US oil companies
participate in the bonanza and reduce US dependency on the middle east, said
Jones. “Up until now the embargo did not really impact on us in a
substantive, strategic way. Oil is different. It’s something we need and
[Submitted by Hemp4Fuel]