Peak Oil Passnotes: Oil Prepares to Push On

PARIS – If you are attached to the oil markets it is a great time to be plugged in. Very little is really making sense, after all if we really factored in Iran

Brent is just 50 cents off its all time closing high and pump prices in the U.K. are closing on $2.00 a litre. But then nothing else is sitting still either. Though it has not risen as fast as Brent the NYMEX WTI is within $1.50 of its record high and the OPEC basket is now sitting over $60. That is $10 over where OPEC said they would like it to be. Their basket has doubled in value in three years to be $61.01 and has touched within 70 cents of its record.

Total world spare capacity is, and has been, the underlying driver behind the market over the past few years, coupled with demand. Estimates now put the capacity cushion of the planet Earth at 1.7 million barrels, 1.5 million of which sits with OPEC, most of which is so heavy no one really wants it. The world awaits the end of the refinery bottleneck, so that more complex refineries can actually process the stuff. That is at least five and more like ten years away.

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