4 Energy Stories for Monday

Cool nights in Florida means we sleep with the windows open, and sleeping with the windows open means (thanks to loud insects, noisy sprinklers, and a plane that had better damned well have been on fire if it flew that low over my house) that I’m up at 3 am reading the news and blogs, which never sleep. Here are some things I’m reading today …

Crude Oil Ruses Above $79 in Asia on Demand Gain

Crude oil traded little changed in New York after rising above $79 a barrel for the first time in a year on speculation demand will increase as the global economy recovers from recession.

A Real Stimulus Plan: Meeting The Challenges Not Yet Met

The only reason the U.S. has not experienced major, recurring power blackouts in the last two years is because of the Great Recession. When the economy recovers, the inadequacy of our antiquated grid will be obvious. Again, nothing is being done. 

“Peak demand” haunts the refining sector just as “peak oil” supply besets the production side….

The golden age of oil refiners has ended. Will they see another? Such doom-laden questions crop up with any cyclical business — as do proclamations of golden ages. But after the stellar profits of recent years, a sense of despair is gathering over refiners. Margins have collapsed amid recession. The likes of Valero Energy (VLO: 18.12 +0.27 +1.51%) and Sunoco (SUN: 25.60 +0.40 +1.59%) have switched off plants to cope. Rex Tillerson, head of Exxon Mobil, reckons U.S. gasoline demand peaked in 2007.

It is this concept of “peak demand” that haunts the refining sector just as “peak oil” supply besets the upstream production side. Mr. Tillerson figures U.S. demand will fall to around 17 million barrels a day by 2020, from about 19 million a day today.

Crude Oil - Déjà Vu Year 2008, No Fundamentals Required

Given the continued sluggishness of the economy, high unemployment rate and large amounts of excess oil production capacity around the world, analysts said a sudden upward spike was still unlikely, while others are predicting an immanent correction down below $70. However, if you take a closer look, it is evident that the current crude oil market is almost entirely detached from fundamentals. Furthermore, there are several factors supporting oil rising to new levels, as fundamentals are out the window in the near to medium term.

XX Sean’s note — the analysis as presented in this piece goes: Crude oil is going higher, but the fundamentals don’t support it. I disagree. I think many people have yet to realize that crude oil is a currency, and it is a hard asset currency that is rising relative to the U.S. dollar, as well as other fiat currencies. That’s as fundamental as it gets.

UPDATE:  Here’s an updated link by the article’s author: http://dianchu.blogspot.com/2009/10/crude-oil-deja-vu-2008-no-fundamentals.html

Oh, and also, as I pointed out Friday, when it comes to crude oil, China is eating our lunch.

Also, here are some non-oil stories … 

Copper Climbs in Asia on Speculation China’s Economic Growth Accelerating

Copper rebounded in Asia on speculation a report in China will show economic growth in the world’s largest metals consumer accelerated in the third quarter, driven by the government’s $586 billion stimulus package.

Detailed Look At TIC Flows: August Treasury Purchases By China, Japan And UK Drop To Lowest Total Year To Date

XX Sean’s note — Tyler Durden at Zero Hedge has great charts to go along with analysis that makes me rather worried. Wordpress won’t let me upload a chart today (grrr!) so you’ll have to go read the whole thing.

XX Sean’s note – Jesse at Le Cafe Americain is always worth reading, and today he talks about a regional, non-dollar reserve currency developing in Latin America. If you’re interested by that sort of thing — and I am — then you might want to read his analysis.

Finally, any day that starts with Yves at Naked Capitalism is usually a good day. Her links are always worth reading, as is her antidote du jour, and Yves has a good piece here: Munchau: Next Crisis Coming Sooner Than You Think. She also offers a nice analysis of Paul Krugman’s latest. Here’s a sentiment I can agree with:

“My big beef is that he didn’t go far enough and is WAAY too forgiving of the motivations and actions of Larry Summers and by extension, Team Obama.”

Have a good Monday.

Related Posts

• Eight Important Stories for Monday (07/27/09)
• Energy News Roundup (09/23/08)
• Oil and Gold Charts and Monday News (10/19/08)
• 6 Must-Read Stories for Tuesday (03/10/09)
• Obama’s Big Sellout, and Other Stories (12/11/09)