March 6, 2012, the U.S. Energy Information Administration (EIA) said oil supply will drop. This is due to disruptions affecting non-OPEC countries.
This is probably the cause of increased fuel prices, but wait, there’s more! The EIA also says U.S. demand for petroleum is also going down. In fact, demand in the United States is at a 15 year low!
That decrease in U.S. demand is being offset by increased demand around the World. Also, the EIA says oil transportation problems in the U.S. Midwest will keep oil prices above $103 per barrel, into 2013!
Speaking of oil disruptions, Jordan announced that because of continued attacks on the natural gas line coming from Egypt, they will be forced to look elsewhere for natural gas: “It would be great if Egypt can prove they can secure the pipeline, but it is clear that Jordan can no longer rely on Egyptian gas.”-Qutaiba Abu Qoura, Jordanian Minister of Energy and Mineral Resources
For oil coming out of the ocean east of United Kingdom, North Sea oil prices spiked on March 6. The reason is production delays for Asian customers. It’s called Forties Crude, and hit $1.80 per barrel over the price of Brent Crude (which is about $20.00 per barrel over the price of U.S. Crude).
In September 2011, Forties Crude hit a record $2.05 over the price of Brent Crude.
Reuters estimates that Forties Crude pumping has dropped about 10,000 barrels per day since February 2012. Reuters analysts think this is due to production problems. In any case it only helps their price go up!
Canadian oil is dropping in price. According to reports out of Canada, their oil is losing value because there is now too much Canadian oil being pumped into the United States! In other words too much supply. So why are fuel prices in the United States going up?
Pipelines coming from Canada are rapidly filling up, and will soon be backed up with too much oil. Another factor in Canadian oil losing value; North Dakota!
Analysts with Cenovus Energy say North Dakota is now pumping out 400,000 extra barrels of oil everyday!
Again why are fuel prices going up then? The U.S. EIA says all that oil from Canada is getting “bottlenecked” in the U.S. Midwest, because of oil transportation problems. This is why the Canadians wanted the Keystone XL pipeline. But, U.S. oil man Barack Obama is blocking the proposed Keystone XL pipeline.
Canadians are hoping that getting their oil to more refineries would help bring up revenues: “…clearly not going to be a good quarter. Between blowouts in heavy pricing, blowouts in synthetic oil pricing, weak natural prices, it’s across the board. The only thing that’s working, really, is downstream.”-Andrew Potter, CIBC World Markets
So how much is Canadian oil? Western Canadian Select Crude is currently about $34 less per barrel than U.S. Crude (aka West Texas Intermediate). Canadians expect their oil prices to continue downward until mid 2013.