Over The Cliff | The Energy Report 12/31/12

The Energy Report December 31^st 2012

Over The Cliff

Happy New Year! It looks like we are going over the cliff so hang onto your wallet. While the oil market closed above 90 it seems focused on going over the cliff. Even strong data out of China won’t offset the fear of the great unknown.

Oil should be rocking on news that China’s manufacturing sector hit I the highest levels since May of 2011. The HSBC Purchasing Managers’ Index rose to 51.5 in December, much better than the preliminary reading of 50.9 published in the middle of the month and November’s final reading of 50.5. We should see a continued rebound in product supply. Look for crude to fall by 2 million barrels Gas to rise by 2 million distillates up 2.5 and runs up 0.5 OPEC is making a lot of money.

‘The Financial Times reports  that the OPEC oil cartel, led by Saudi Arabia, will pocket a record of more than US$1tn in net oil revenues in 2012 as the annual average price for Brent, the benchmark, heads to an all-time high in spite of weak economic growth.

And guess who comes in at number 2? Iraq! According  to Alawaba Iraq cementing its position among the worlds leading oil producers. Neighboring Iran dropped three spots to fifth as international sanctions took hold. Second only to Saudi Arabia within the Organization of Petroleum Exporting Countries (OPEC), Iraq’s output rose by 24 per cent this year as the BP-led Rumaila field increased supply. Iranian production shrank by the same percentage to the lowest level since 1988, according to data, and its exports will continue to drop into 2013, according to the International Energy Agency.

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Phil Flynn

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