Oil outlook bullish despite bearish inventories

Natural gas will overtake coal as the second-largest fuel source overall, ranking behind oil and powering everything from electrical plants to home-heating systems. But Exxon said coal use will continue to grow through 2025 around the world, primarily in developing nations such as China and India and the African continent, because economic growth will be fastest in emerging nations.

But thereafter coal use will start to drop, for the first time in history, according to the study, which Exxon uses to help its long-range planning. Key drivers in that expected drop in coal use will be growing demand for fuels that produce fewer greenhouse gases and a decline in China's population expected after 2030.

Exxon in recent years has moved to expand its natural-gas business, including the $25 billion purchase of U.S. shale-gas producer XTO Energy in 2010.” Don’t miss it!

The CME is looking into a new crude contract. The CME is thinking about a possible futures contract that could be physically settled with delivery to the Gulf Coast. Stay tuned!

I hate to say I told you so, but I did tell you that Libya’s oil production would come back much faster than expected. The EIA confirmed that saying that pace of Libya's re-entry into world oil markets has exceeded our prior expectations and those of many other outside observers.” {not mine!} While opinions vary significantly on the eventual trajectory for Libyan oil production, nearly all forecasts have steadily shifted upwards as the country's oil sector and related institutions continue to progress. The EIA says that “Libya’s National Oil Corporation (NOC) claims to be on track to meet its goal of returning to pre-war crude oil production levels of 1.65 million barrels per day (bbl/d) by the end of 2012. Most analysts now expect production to reach anywhere between 1.0 and 1.6 million bbl/d during that timeframe. Based in part on developments in recent weeks (Table 1), the U.S. Energy Information Administration (EIA) expects that Libyan output may ramp up to 1 million bbl/d by the beginning of the second quarter of 2012. Thereafter, EIA expects crude oil production to plateau somewhat, increasing only gradually to about 1.2 million bbl/d by the end of 2012, along an uneven and non-linear path.”

EIA gas report today! The street is looking for a 13 withdrawal! I say 3.

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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