In my June 4th report, I guestimated that the Nymex price would fall to $96/barrel. At least I got the direction right. The current price is $93.01. Brent has had a comparable fall down to $113.49. The dollar has rallied a bit in the last few weeks, so oil went down. In so far as the fate of humankind apparently rests upon what happens with Greece's debt, the oil price tumbled.
NEW YORK (CNNMoney) -- Oil prices fell to a fresh four-month low Friday as jitters about Greece's debt crisis continued to weigh on investors...
Fears about Greece defaulting on its debt have kept investors on edge for more than a year, but they escalated this week after riots erupted in Athens in response to austerity measures.
In response, Greek Prime Minister George Papandreou reshuffled his cabinet Friday, and European finance ministers are scheduled to meet Sunday to discuss a possible bailout package.
Nevertheless, tensions remain high...
"Personally, I'm going to recommend clients lighten up on both the S&P and oil today. That way we can take a more aggressive stance on Monday," said Phil Streible, senior market strategist with futures broker Lind-Waldock.
There's no reason to believe the crude oil price will spike again in the near-term. I will keep the alarm level unchanged, but we're heading for a downgrade.
Oil Alarm Level — Orange
Let's look briefly at the global demand situation to see what's actually happening instead of relying on widespread panic about Greece as our guide. The situation in Europe is just about what we'd expect.
"Europe is showing strong signs of demand destruction as the EU battles with rising debt problems among its member states which also feel the wrath of high fuel prices," said David Wech from Vienna-based JBC Energy consultancy.
"As we went into higher prices it was always a risk that we would see demand erosion and destruction, and the numbers coming out are confirming this risk," said Olivier Jakob at Petromatrix.
Energy consultants Wood Mackenzie say total European demand could fall by 200,000-250,000 barrels per day this year from around 15.1 million bpd in 2010.
Last time demand was seen at levels below 15 million was in 1995, versus a peak of 2006 at 16.42 million.
The Chinese, who are increasingly desperate to keep the phony GDP growth party going by building huge structures nobody uses, continue to use over 9 million barrels-per-day each month, though the annual growth rate has declined from its astonishing 2010 level.
BEIJING, June 14 (Reuters) - China's implied oil demand in May topped the 9 million barrel-per-day mark for the seventh month in a row, suggesting brisk demand persisted even though growth in the world's second-largest economy is slowing.
Reuters calculations based on preliminary government data showed that last month's oil demand, a combination of crude throughput and net imports of oil products, totaled 9.27 million bpd, a tad lower than the 9.36 million bpd in April but slightly above 9.15 million bpd in March.
The year-on-year growth rate in May slowed to 8.3 percent, the lowest since October 2010. That was still beyond a growth rate of 5-7 percent in oil consumption suggested in a Reuters poll earlier this year.
China, which has driven global oil demand growth for the past decade, is also ahead of an International Energy Agency (IEA) forecast to account for 40 percent of increased global crude use of 1.4 million bpd in 2011.
And then there is this disturbing information.
Beijing has forecast its worst summer power shortfalls this year because of factors including strong demand, insufficient grid capacity and power generation losses.
A spreading power crunch would boost oil demand as industries and factories start up independent diesel-fired power generators to make up for supply shortfalls, as it happened in late last year when many provinces ordered power cuts to meet energy intensity reduction targets.
Can you imagine? Human beings are burning diesel fuel to power factories in the 21st century! Diesel fuel is rapidly becoming one of the most precious substances on Earth. And the Chinese are just pissing it away just like Americans did before the oil shocks of the 1970s.
Surely Homo sapiens ("wise man") is doomed. Speaking of doomed and the not-so-wise pissing away of precious resources, here's a tasty news item that didn't get the attention it deserves (hat tip, Mish). From Head of Saudi Electric Company Says "Oil Runs Out in 2030 if Current Consumption Maintained"—
Courtesy of Google Translate please consider Saudi Arabia fears that the oil runs out in 2030 if current consumption is maintained
Note: I am rewording some awkward translations so they read better.[My note: I improved it further]
The electricity company of Saudi Arabia warns that oil in this country could be depleted by 2030 if domestic consumption is left unchecked. According to a report of Saudi Electric, domestic consumption is estimated to be between 2.5 and 3.4 million barrels a day.
The report, published in the magazine Al Mashka says that the increase in domestic consumption of oil is one of the main challenges facing the country, mainly because oil accounts for 80% of national income.
Abdel Salam al-Yamani, head of the Saudi Electricity Company also warned of the consequences for citizens to ignore the calls to save electricity and water, and has advised that they depend more on solar energy.
There's nothing I can add to this story. It speaks for itself.
What will the oil price be in two weeks? God only knows. I'll guess $91/barrel if the situation remains murky in Greece. Or $85/barrel if Greece defaults. Just having to write this nonsense makes me feel embarrassed.
The Awful Truth is that the world has gone completely crazy, and it's going to stay that way. Saner times are gone forever.
Dave,
"Saner times are gone forever."
Not true - they will come back when the oil (and coal is gone), and when the main effects of climate change are gone (thousands of years). But that is not forever :-)
cheers,
Alex
Posted by: Alexander Ač | 06/18/2011 at 11:31 AM