Oil (NYMEX:CLX13) is falling after tropical storm Karen and now faces the stormy seas of U.S. politics. Production is now coming back on-line and except for being oversold the bulls are finding it hard to find much to hang their hat on. With the impending showdown over the debt ceiling and the ongoing government shutdown, oil traders are finding it hard to make the bullish case.
Oh sure, we will see the impact from tropical storm Karen and it will take its toll on Gulf Coast supply but we all know that that is only going to have a short term impact. Bloomberg reports that companies including Chevron Corp., BP Plc and BHP Billiton Ltd. returned staff to platforms as Karen was downgraded to a depression on Oct. 5 and passed by offshore assets. The storm's threat shut almost 62% of Gulf crude output. Not to mention gas has a 48% of natural gas (NYMEX:NGX13) output, or 1.8 billion cubic feet daily, as of yesterday.
Bloomberg says that BHP was resuming normal operations as it returned workers to platforms, the company said in an e-mailed statement yesterday. Anadarko Petroleum Corp. was also moving staff back, the company said. The Louisiana Offshore Oil Port planned to resume tanker offloading, spokeswoman Barbara Hestermann said. LOOP, the only U.S. port capable of taking cargoes from ultra-large crude carriers, had suspended tanker operations, the Covington, Louisiana-based company said on its website.
The good news is that gas prices continue to fall. Trilby Lundberg of the Lundberg survey says that the average price for regular gasoline at U.S. pumps fell 13.78 cents in the past two weeks to $3.3829 a gallon, according to Lundberg Survey Inc. The survey covers the period ended Oct. 4 and is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company.
More supply to think about! Dow Jones reports that Royal Dutch Shell PLC said it inaugurated Iraq's huge Majnoon oil field in the south of the country Sunday and aims to reach 175,000 barrels a day in the next weeks. Majnoon, located near the city of Basra in southern Iraq, is one of four major fields that the country is developing with foreign companies, and it is vital to its ambitious plan to up its output to at least 6 million barrels a day from the current production level of 3.2 million. Shell, which started production from the field's first well Sept. 20, successfully opened the wells and restarted production, which will be ramped up to "175,000 barrels a day in the next weeks," a Shell spokesperson told The Wall Street Journal. The output target is a critical milestone in Shell's plans to develop the field as it is the volume required for the Anglo-Dutch oil major to start recovering costs under its deal with the Iraqi oil ministry. Hussein al Shahristani, the Iraqi deputy prime minister for energy, said in Dubai last month that output from the gigantic field is expected to rise to almost 200,000 barrels a day before the end of the year. Iraq signed a series of service contracts with major oil companies such as Shell, Exxon Mobil Corp., Total, BP PLC, and Eni SpA at the end of 2009 to develop its oil fields. Shell and Malaysia's Petronas Gas Bhd were awarded the deal in December 2009 to develop the field located in southern Iraq near the Iranian border. Shell owns 45% of the venture and Petronas owns 30%, with the Iraq state-run company holding 25%. They have pledged to eventually raise production from Majnoon to 1.8 million barrels a day."