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19 June 2016

Press review 19-06-2016 - Decomissioning

The Brent index has been trading within a band around 50 $/b as increasing consumption trends meet increasing global economic and political uncertainties. Daesh spilt more blood in OECD countries with terror attacks in the US and again in France. But in the Middle East the caliphate is clearly loosing ground, especially in Iraq, where the US seems to have definitely chosen the Shiite site of the war.

However, markets are mostly concerned these days with the referendum in the UK regarding its membership of the European Union. The shocking murder of a Labour MP days ago underlines the dramatic moments lived in the country around this decisive moment. Even though the UK is not part of the Eurozone and not part of Schengen space, most foreign analysts and pundits are taking this referendum as an omen on the future of the European Union itself.

And next Sunday there is a new parliamentary election in Spain, which is shaping up to produce a left front government, not very different from the situation in Portugal. This coming week is the most important moment for the European Union since the Lisbon treaty was signed. For bad or for worse, the EU might well enter a completely different course just a few days from now.

08 June 2016

Photo-Voltaics is not an energy sink in Switzerland

Energy Policy recently published a study conducted on the EROEI of Photo-Voltaics (PV) technologies installed in Switzerland. The end result is a remarkably low figure of 0.8:1, well below any EROEI assessments ever conducted on this energy technology.

Such a figure naturally made the delight of those campaigning against renewable energy, who take at face value any hints of negative performance. However, from this study a number immediately stands out: average lifetime energy yield of 106 kWh/m2/a. As it turns out, a closer look at this single figure is enough to disprove the hypothesis of PV being an energy sink in Switzerland.

04 June 2016

Press review 04-06-2016 - Spike under the radar

The Brent index traded again above 50 $/b in various occasions throughout the week. However, the benchmark would close Friday pretty much were it started on Monday, perhaps showing that this fourth leg of the 2016 rally is running out of steam. Corporate news dominated the press pages, with another failed OPEC meeting largely relegated to the background.

There is now a good deal of discussion going around a coming petroleum price spike. The unfolding decline in world extraction is becoming pretty obvious with some analysts and pundits even risking to put dates on a return to high prices. While it is true that Brent has rallied for five consecutive months, there are still the above ground stocks to go through. Prior to this hypothetical spike another important event must take place: a shift of the futures curve into backwardation. That will be the first sign of a tightening market, flagging the need for stocks outflows.

28 May 2016

Press review 28-05-2016 - Still in contraction

Compared to the last this was a quiet week. The mainstream media is still trying to explain how its "lower for longer" mantra failed so miserably, but to what pure facts is concerned the pace slowed down. Brent continued its rally, but with considerably less volatility. It traded above 50 $/b for a few hours on Thursday, producing some hastened headlines.

Nigeria remains the most visible and worrying story in the petroleum world. The government appears powerless at this moment to stop the rebels hitting the country's petroleum infrastructure. Events seem to be spiralling out of hand with a relevant impact on the international petroleum market.

In Venezuela petroleum extraction is holding above 2 Mb/d, however, the socio-economic situation is so deteriorated that some sort of political disruption seems now inevitable.

21 May 2016

Press review 21-05-2016 - The decline

Alberta was again at the news forefront this week. Monday authorities ordered the immediate evacuation of various oil sands extraction sites north of Fort McMurray, as the wild fires turned again towards the West. While there are no precise news on damages to mining or processing facilities, a number of living quarters for industry workers are known to have been raised. Broad numbers, over 1 Mb/d have been offline for two weeks.

Day trading was hectic again in the petroleum market, the Brent index flirted with 50 $/b, then collapsed to the low 47s $/b, just recover back again. Still, this ended up being the highest weekly close price for Brent since last October.

Various price oracles have substantially changed their outlook this week, now totally dismissing the "lower for longer" mantra they were touting just a couple of months ago. What happens next largely depends on the faith of 900 Mb held in extra stocks by China or the OECD. In any case, a long term petroleum extraction decline is mostly guaranteed.

19 May 2016

This is Peak Oil

Titling the last press review of 2015 I asked if that had been the year petroleum peaked. The question mark was not just a precaution, the uncertainty was really there. Five months later the reported world petroleum extraction rate is pretty much still were it was then. This is not a surprise, but the impact of two years of depressed prices is over due.

Nevertheless, during these five months of lethargy the information I gathered brings me considerably closer to remove the question mark from the sentence and acknowledge that a long term decline is settling in. Understanding the present petroleum market as a feature of the supply destruction - demand destruction cycle makes this case clear.

15 May 2016

The Mystery of Petroleum Stocks

A number of days ago I started updating some datasets that had been left outdated for the lack of time. The jump in world petroleum extraction since early 2014 is obvious, but I wonder what happened to consumption in the meantime. The Energy Information Agency (EIA) in the US produces what I regard as the most reliable statistical dataset on petroleum available publicly. In times passed I used their worldwide stocks flow records to derive consumption from extraction figures. Unfortunately, the EIA stopped published this particular dataset.

This sent me on a quest for world petroleum stocks figures in order to estimate consumption. As it happens, there is at this stage no publicly available dataset on this matter, therefore any consumption estimates made presently have to rely on guesses. This post present the searching and guessing I did to arrive at my estimate.