Jet Fuel Update for Week Ending 7/28/06

[BoeingBoy]

For the week ending 7/28/06:

Spot prices

NY Harbor jet - $2.1965
Gulf Coast jet - $2.1425
Los Angeles jet - $2.1750
WTI Cushing crude - $73.30
Bloomberg reports WTI @ $76.05 on 8/2/06 @ 2:05PM.

Regional spot prices for 7/28/06 from Platt's

Europe & CIS - $2.134
North America - $2.166
Asia & Oceania - $2.124
Middle East & Africa - $2.062
Latin & Central America - $2.164

The chart of jet vs WTI spot prices updated for July's averages:

View attachment 5055

Last, from this week's EIA 'This Week In Petroleum':

-----
Yesterday, on August 1, the Iranian President rejected a recent United Nations Security Council resolution and indicated that his country would continue to enrich uranium. Additionally, the formation of Tropical Storm Chris in the Atlantic Ocean was highlighted yesterday, with the projected path putting it north of Cuba by this weekend, with the possibility that it might enter the Gulf of Mexico sometime next week. In an environment in which very little spare production capacity is available, both upstream and downstream, each of these events in isolation would be enough to make market analysts nervous about the near-term future. But combined, along with ongoing supply uncertainties in Iraq, the Mideast, and continued production outages in Nigeria, worries about the increased risk of a supply disruption in August are keeping oil analysts on the edge of their chairs, watching daily events for signs that point to what the future might bring. Adding to this temperament is the knowledge that severe storms, even non-hurricane force storms, have often cut power to some refineries during August, causing them to be off-line unexpectedly, thus diminishing the potential to provide more supply as demand peaks.

Of course, the month could just as easily run its course with no additional supply disruptions or damaging tropical storms or hurricanes. Nevertheless, with August having the potential for being anywhere from benign to extremely eventful for oil markets, add the cadre of oil market analysts to the list of people who are sweating it out as the month of August begins. Even if the factors that analysts are worrying about don’t materialize this month, concern about potential disruptions will cause suppliers to maintain more oil in inventory, thus keeping prices relatively high.
-----

Jim

 

[FWAAA]

Fuel is spiking overseas late Sunday night (Monday) in Asian markets as half of Prudhoe Bay production is shut down:

Oil Prices Rise As Market Watches Alaska

Sunday August 6, 10:51 pm ET
By Tanalee Smith, Associated Press Writer

Oil Prices Rise As Market Watches Impact of Alaskan Field Shutdown, Mideast Violence

SINGAPORE (AP) -- Oil prices rose quickly Monday morning following a production shutdown at a large oil field in the U.S. state of Alaska and the continuing violence in the Middle East.

Light, sweet crude for September delivery was up 36 cents to US$74.95 a barrel in midmorning Asian electronic trading on the New York Mercantile Exchange.

"There is plenty of potentially bullish news out there today," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

The key factor being watched by traders was the violence between Israel and Hezbollah guerrillas in Lebanon, nearing its fourth week. While diplomatic efforts were intensifying -- the U.N. Security Council was to meet later Monday on a revised resolution -- the fighting continued almost unabated.

Also, on Sunday, BP Exploration Alaska, Inc. began shutting down oil production at the large Prudhoe Bay field due to severe corrosion and a small spill from a transit line.

Once the field is shut down, in a process expected to take days, BP said oil production would be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006, according to data from the U.S. Energy Information Administration.

BP officials said they didn't know how long the Prudhoe Bay field would be off line.

Shum said that while the closure wouldn't immediately affect U.S. oil supplies, it would likely impact the market.

"The U.S. market is actually well-supplied; crude inventories are very high. So while this won't have any immediate impact on U.S. supplies, the market is in very high anxiety. So any significant disruption, traders will take that into account, even though there is no threat of a supply shortage. "

However, Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo, said a 400,000-barrel per day reduction in output would have a major impact on oil prices.

"Oil prices could increase by as much as US$10 per barrel given the current environment," Emori said, though he said it was too early to tell what would be the exact effect.

http://biz.yahoo.com/ap/060806/oil_prices.html?.v=1

http://biz.yahoo.com/ap/060806/oil_field_shutdown.html?.v=13

Up to $76/bbl so far: http://www.bloomberg.com/apps/news?pid=206...=worldwide_news

$100/bbl - here we come.

 

[BoeingBoy]

WTI-Cushing closed today (8/7/06) at $76.98

Jim

 

[FWAAA]

Oil field could be shut down for months:

http://biz.yahoo.com/ap/060807/oil_field_shutdown.html?.v=53

Up to $77 today; Look for $85 before additional Saudi production brings prices back to $78 or so. Then come the hurricanes.

 

[BoeingBoy]

FWAAA,

I'm not clear on the location of the pipeline problem. Do you know it it's in the network feeding into the pipeline at Prudhoe or along the pipeline itself.

Either way, it'll be getting very cold in northern Alaska pretty soon. The high in Barrow was about 35 the middle of last month.

Jim

 

[SKY HIGH]

Fuel is spiking overseas late Sunday night
Up to $76/bbl so far: http://www.bloomberg.com/apps/news?pid=206...=worldwide_news
$100/bbl - here we come.

SKY HIGH states: Just in time for those WINTER (EAST) HEATING BILLS TO GO UP (AGAIN). :down: :down:

 

[FWAAA]

FWAAA,

I'm not clear on the location of the pipeline problem. Do you know it it's in the network feeding into the pipeline at Prudhoe or along the pipeline itself.

Either way, it'll be getting very cold in northern Alaska pretty soon. The high in Barrow was about 35 the middle of last month.

Jim

From what I've read, it sounds like the former - the feeder network sounds a little too fragile, given the environment in which it sits. The main Alyeska pipeline is stainless steel, IIRC, and should last a long, long time before corrosion causes problems like this. At least that's what my relatives who worked for Bechtel on the pipeline construction told me at the time. 800+ miles of huge pipe would cost untold billions to replace. Assuming the environmentalists would even permit it.

I had heard that the Prudhoe Bay fields' production had slipped, but I wasn't aware of just how much production had declined. One of the articles I linked last night (as the story broke) said that production in 1995 or so peaked at 1.5 million barrels/day and it's now just over half of that at 800k bpd. And this knocks out about half of that.

 

[BoeingBoy]

The main Alyeska pipeline is stainless steel, IIRC, and should last a long, long time before corrosion causes problems like this.

As far as I know, the pipe itself is steel. There's an external covering of stainless, with insulation between it and the actual pipe.

FWIW, they routinely run "pigs" through the pipeline (pushed by the oil), and one type uses ultrasound to check for corrosion/wall thickness.

Trivia - it takes either 5 or 7 days for crude to make the trip from Prudhoe to Valdez (don't remember which), and at any given time there's 9 million bbls of crude in the pipeline.

Jim