Wednesday October 22, 2008

Sep 2008 OPEC oil output down 330,000 barrels per day to 32.47 million barrels/day

peakoil.com -> oilonline.com :

The 13 members of the Organization of the Petroleum Exporting Countries (OPEC) pumped an average 32.47 million barrels per day (b/d) of crude oil in September 2008, a Platts survey showed. This is down 330,000 barrels per day from August and reflects output declines in Saudi Arabia, Iraq and Angola. Excluding Iraq, the 12 members bound by production agreements produced an average 30.18 million b/d. This is 230,000 b/d less than the August output of 30.41 million b/d and exceeds the so-called OPEC-12 output target of 29.673 million b/d by 507,000 b/d. "At Platts, we are seeing increasing signs of crude and products going unsold on the market," said Platts Global Director of Oil John Kingston. "This means that from an OPEC perspective, the cuts we estimate for September may not be coming fast enough to keep the market in balance."

- It's funny how the oil markets work. Nobody really knows what's going on, exactly how many barrels are being produced, shipped, refined and consumed. Nobody knows the actual amount of reserves remaining in the ground either. Interested parties have to rely on things like surveys, estimates ... and counting tankers.

So, if the surveys are to be believed, it seems that the oil markets are very well supplied indeed, and are in fact over-supplied relative to demand, seeing how crude oil prices have dropped by over half from the lofty high of $147.27 back in Jul 2008, back to under $70 at this point in time.

There is something contrarian about this whole thing. Markets are behaving like they are pricing in a global economic collapse. Given the circumstances, that remains a pretty real possibility, but even so, some of these resource companies are having fire sales right now that are worth looking into.

Recently, I accumulated more shares in an energy trust which has a dividend yield of over 30% and just a couple of days back announced that they are buying back a whopping 9.5% of their outstanding shares. Guess what's the price/book ratio? 0.6. An incredible bargain. Yesterday, I bought more of a uranium junior that was an even better bargain. At a price of 17 cents per share, the company had 55 cents worth of cash. Yes, they have more cash in the bank than the current market cap. And the land property, equipment, and uranium reserves are thrown in for free. The price/book ratio? 0.1. How about that?

See also :

1. OPEC announces production cut of 520,000 barrels per day
2. NYMEX crude oil drops below $80 as financial market meltdown continues
3. NYMEX crude oil falls for the third day to below $72 on recession concern
4. OPEC plans production cut as crude oil threatens to head toward $50

(2008-10-22 14:37:22 SGT) [Energy] Permalink Comments [2]

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