$100 a barrel

[Win2Win]

Sparky....How much do you charge for a barrel of coal? :D

[mathare]

Has oil hit that yet? I hope so...

Looks like I will be in for a good bonus at the end of the financial year then

[Win2Win]

Hit it today!

[mathare]

Hit it today!

Cool!

Wonder if it has anything to do with those two oil workes who got fired for violating a sheep that was due to be slaughtered as part of a religious festival in Algeria

[Win2Win]

Seems to have been a rogue trader bidding at $100. Nice to see the Wests heating bills going up because of

[Onlyforfun]

Seems to have been a rogue trader bidding at $100. Nice to see the Wests heating bills going up because of

Hmmm. How would a trader bidding at $100 be "rogue". Sure, somebody pushed the price up a few cents on 1 particular contract, but compared to Brian Hunter of Amaranth who ended up controlling over 10% of the natural gas market in '06 resulting in big volatility and major losses, this is small beer.

The main reasons are:

1) supply = demand. However, demand is rising and supply can't.
2) INFLATION. With every Central Bank worth it's name running the printing presses as fast as they will go, all commodities (i.e., tangible goods with limited supply) are increasing in nominal price as the amount of dollars, Euros and pounds chasing them increases. Witness record or near record prices for precious metals, soft commodities and specialised industrial metals.
3) The Muslim problem. Bhutto's assasination does not help stabilise the middle east.
4) Falling inventories of gasoline in the US.
5) More attacks on Nigerian oil infrastructure.

[mathare]

1) supply = demand. However, demand is rising and supply can't.

This is true to a point. Supply can increase as the oil companies can recover more of the fields they are developing than they do at present. They can also use more advanced exploration techniques to find smaller, yet still profitable, fields and drill those.

There is now more emphasis on firms getting more out of their current fields and also looking at more complex reservoir structures. The estimates of oil running out in 20-30 years were all based on historical recovery factors for the big fields that firms drilled in the North Sea ages ago. Back then they used to drill the obvious bits and pump out as much all as was economically viable. Nowadays the technology and data interpretation techniques have improved enough to mean they can get more out of a given field and exploit smaller fields that weren't profitable years back.

Our total oil supply is kinda limited (we're taking out a lot more than is being created) but there are also new oil-producing areas in the world that are being explored to a greater degree that will result in more oil all round.

[Win2Win]

Hmmm. How would a trader bidding at $100 be "rogue".

That's the term they used on BBc at 8am this morning, and 1/2hr later on Bloomberg. Just someone purposely bidding at $100 to get the piece of paper saying he is the first one in history to record a bid at $100 for oil.....be worth something on Ebay :wink

[MarcusMel]

Look up Joe's fuel Cell on the internet.

[sparkyminer]

I think the world price of coal is very high at the moment also.:D

[GlosRFC]

I think the world price of coal is very high at the moment also.:D

That's because of the cost of millet for the canaries and carrots for the ponies.

[Win2Win]

That's because of the cost of millet for the canaries and carrots for the ponies.

[Onlyforfun]

This is true to a point. Supply can increase as the oil companies can recover more of the fields they are developing than they do at present. They can also use more advanced exploration techniques to find smaller, yet still profitable, fields and drill those.

There is now more emphasis on firms getting more out of their current fields and also looking at more complex reservoir structures. The estimates of oil running out in 20-30 years were all based on historical recovery factors for the big fields that firms drilled in the North Sea ages ago. Back then they used to drill the obvious bits and pump out as much all as was economically viable. Nowadays the technology and data interpretation techniques have improved enough to mean they can get more out of a given field and exploit smaller fields that weren't profitable years back.

Our total oil supply is kinda limited (we're taking out a lot more than is being created) but there are also new oil-producing areas in the world that are being explored to a greater degree that will result in more oil all round.

I completely agree that we are not in danger of running out, but I have serious concerns about whether supply can keep up with demand and if the current high prices will drop significantly. In both cases I suspect not, indeed, in a tight suplly / demand situation the recoverable reserve is less important in terms of the economics than the rate of recovery. Some stats:

In 1987, 20 separate fields produced more than 1million bbl / day, in 2007, only 4 did and 1 of those, Cantarell declined at 27% in '06.

Daily global demand is roughly 85 million bbl / day. The only significant new field in the pipeline is Tupi "in" Brazil. It has an estimated reserve of around 8 billion barrels (or around 100 days of global demand), but is hugely challenging. It is 180 miles offshore, in over 2km of water, and the oil itself is under a further 3km of sediment and 2km of salt which is soft and mushy. It is right at the limit of technology and best case scenarios predict a maximum production of 400,000 bbl / day but not until at least 2015 and who knows what the costs will be, but they will be significantly higher than the $4-5 / bbl of N African conventional.

Tar sand and oil sands contain huge reserves but costs are around $28 for tar sands and $40 for oil shale. The net energy recovered is also significantly lower and they compete with agriculture for already scarce water suplply and my bet is that people care more about food on the table than cars in the garage.

Asian demand has soared from 9million bbl/day in 1995 to 15 million in 2005 and is projected to reach 28 million by 2030. Will all those small, technically complicated fields be able to produce an extra 19 million bbl/day. Even if they can it won't be viable unless prices stay high.

Throw in some good old fashioned inflation and some resource nationalism and barring a depression on the scale of the 30's high oil prices are here to stay.