World economy talk

[uls]

re IEA 60m barrels of oil

50% will come from the US, 30% from Europe, 20% Asia

what they're doing is making more light sweet crude available for refiners

IEA member countries are required to hold reserves

they lowered reserve requirements

the price impact is stronger on Brent than WTI

[Monseratto]

Libya's disruption starting to bite during driving season...

IEA’s decision to release oil follows a veiled threat to release stored supplies made prior to the June 8 meeting of the Organization of the Petroleum Exporting Countries in Vienna.


The IEA governors, in an effort to exert pressure on producers, said they were “prepared to consider using all tools that are at the disposal of IEA member countries”—a reference to the fact that IEA members hold 1.6 billion bbl of oil in strategic reserves, which could be released to stabilize the market (OGJ Online, May 20, 2011).


In announcing its decision this week, IEA said the disruption of supplies from Libya has been under way for some time and its effect has become more pronounced as it has continued. The agency said the disruption would be compounded by seasonal high demand going into the summer months.


“The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further,” IEA said, adding that, “Greater tightness in the oil market threatens to undermine the fragile global economic recovery.”


IEA said the unrest in Libya had removed 132 million bbl of light, sweet crude oil from the market by the end of May, and that commercial stocks in the OECD countries had tightened as a result.


“Because crude demand peaks during the summer season in the Northern Hemisphere, we estimate that preventing further market tightening in the third quarter will require 2 million b/d of additional supply,” IEA said.


IEA also noted that analysts generally agree “that Libyan supplies will largely remain off the market for the rest of 2011.”


IEA’s statement follows a report by Goldman Sachs, as well as IEA itself, that Libya’s oil production faces a long haul to make a full recovery in the wake of the civil war gripping the country and will not return to its full capacity until 2015 (OGJ Online, June 23, 2011).

[uls]

from the article:

Because crude demand peaks during the summer season in the Northern Hemisphere, we estimate that preventing further market tightening in the third quarter will require 2 million b/d of additional supply,” IEA said.

so they'll release 2 million barrels per day

that 60 million barrels will last a month

[uls]

whenever WTI falls to the 90 dollar level, it finds a bid

[uls]

from the US dept of energy

Department of Energy - Department of Energy to Release Oil from the Strategic Petroleum Reserve

June 23, 2011

Department of Energy to Release Oil from the Strategic Petroleum Reserve

Washington, DC - U.S. Energy Secretary Steven Chu announced today that the U.S. and its partners in the International Energy Agency have decided to release a total of 60 million barrels of oil onto the world market over the next 30 days to offset the disruption in the oil supply caused by unrest in the Middle East. As part of this effort, the U.S. will release 30 million barrels of oil from the Strategic Petroleum Reserve (SPR). The SPR is currently at a historically high level with 727 million barrels.

"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," said Energy Secretary Steven Chu. "As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary."

The United States has been in close contact with oil producing and consuming countries about disruptions to the international oil market that could affect the global economy. The situation in Libya has caused a loss of roughly 1.5 million barrels of oil per day - particularly of light, sweet crude - from global markets. As the United States enters the months of July and August, when demand is typically highest, prices remain significantly higher than they were prior to the start of the unrest in Libya.

The Administration will continue to consult closely with other consuming and producing countries in the period ahead. The decision today is intended to complement the production increases recently announced by a number of major oil producing countries. The United States welcomes those commitments and encourages other countries to follow suit.

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the US govt will offer all 30 million barrels in one sale, not on staggered basis

the type of crude to be sold is sweet crude

the price is based on average price of Light Louisiana Sweet in past 5 days

[uls]

Japan to reduce oil reserves

Japan says to relax oil reserve requirements from June 27 | Reuters

Japan says to relax oil reserve requirements from June 27

(Reuters) - Japan will tap its emergency petroleum stockpile as part of global efforts to bolster tightening oil supplies, trade minister Banri Kaieda said on Friday.

Kaieda said the trade ministry has decided to relax refiners' oil reserve requirements by three days to 67 days' worth and that the lower requirements will take effect for one month from June 27.

[Ry_Tower]

I think they should still find a viable solution in Libya 'cause they might not be able to sustain this. Attack.

[uls]

US 10 yr yield


US 10 yr futures price

[safeorigin]

I think they should still find a viable solution in Libya 'cause they might not be able to sustain this. Attack.

well, at least some US companies are happy selling some ordinances

[uls]

you mean ordnance

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next week is gonna be fun

June 28 Greece parliament vote on austerity plan. no austerity plan no bailout

S&P500 is now just a few points above 200-day moving average

and check out the CRB index