car bombings kill scores across iraq - peak oil

Tom Whipple, Editor

Current Developments

Global Middle East East Asia South Asia North America

Discussion & Analysis

CAR BOMBINGS KILL SCORES ACROSS IRAQ

Global Developments

1. OIL RISES FIRST TIME IN 6 DAYS ON CHINA INDUSTRIAL OUTPUT (Bloomberg, Saturday, August 10, 2013) -- West Texas Intermediate crude climbed for the first time in six days as industrial production increased in China, the second-biggest oil-consuming country. Futures advanced 2.5 percent after data from China's National Bureau of Statistics showed factory output increased 9.7 percent in July, 0.8 percentage point more than forecast in a Bloomberg survey. There have been recent "signs of strength" in oil markets with a 3.1 million-barrels-a-day surge in world refinery operating rates in June, the International Energy Agency said in a report today. "The industrial numbers out of China were impressive," said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. "This comes on top of a week's worth of positive Chinese data." WTI crude for September delivery advanced $2.57 to settle at $105.97 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 7.6 percent above the 100-day average. Prices dropped 0.9 percent this week. Brent oil for September settlement rose $1.54, or 1.4 percent, to end the session at $108.22 a barrel on the London-based ICE FuturesEurope exchange. Volume was 16 percent below the 100-day average. The European benchmark traded at a $2.25 premium to WTI, down from $3.28 yesterday. [more]

Association for the Study of Peak Oil & Gas USA

Sunday, August 11, 2013

2. NATURAL GAS SETTLES 2% LOWER AT $3.23/MMBTU AMID HIGH SUPPLY --Prices settle at lowest level since Feb. 15 as inventories rise

--Lingering below-normal temperatures cut demand in key areas

--Futures drop 3.5% in week, third straight weekly loss NEW YORK (Dow Jones, Saturday, August 10, 2013) -- Natural-gas futures prices fell 2% Friday to settle at their lowest level since mid-February amid rising inventories and weak demand caused by cooler-than-normal temperatures in the key Midwest and East Coast markets. Prices dropped 3.5% in the week, marking the third straight weekly loss. Front-month gas futures on the New York Mercantile Exchange have dropped in 11 of the past 13 sessions, shedding about 50 cents per million British thermal units, on the way down to mid-February lows. Unseasonably cool temperatures allowed residents in much of the eastern half of the nation to turn off air conditioners in recent weeks, reducing the need for power companies to increase their burning of natural gas to meet normal summer electricity demand. Current forecasts show below-normal temperatures holding in the region through the third week in August. The drop in demand, along with steady output near record-high levels, has pumped up inventory levels by more usual levels in recent weeks, increasing pressure on prices, analysts said. [more]

3. OPEC MAINTAINS ESTIMATE FOR GLOBAL OIL DEMAND GROWTH IN 2014 (Bloomberg, Saturday, August 10, 2013) -- The Organization of Petroleum Exporting Countries kept estimates for global oil demand growth in 2014 unchanged amid a stable outlook for the world economy. World oil consumption will increase by 1 million barrels a day, or 1.2 percent, next year to about 90.8 million a day, the group's Vienna-based secretariat said in its monthly market report today. Increasing output from countries outside OPEC means demand for the organization's crude will slide to 29.7 million barrels a day, or about 600,000 a day less than its 12 members pumped last month, the report showed. Brent crude futures have gained about 2.8 percent in the past three months, trading near $107 a barrel in London today, amid signs the slowdown in China's expansion has stabilized, U.S. unemployment retreating and the recession in European economies is easing. OPEC agreed to tighten compliance with its official production target of 30 million barrels a day at its last meeting in May. The group will next meet on Dec. 4. OPEC said group production fell 97,000 barrels a day to 30.3 million last month amid declines in Libya and Iraq, citing an average of secondary sources for the estimates. Output in the North African nation slumped 124,400 barrels a day to about 1.1 million while Iraq's production slid by 50,900 a day to 2.97 million a day. [more]

Middle East & North Africa 4. IEA: OUTAGES IN IRAQ, LIBYA MAY REDUCE OPEC'S OIL OUTPUT Agency Revised Higher OPEC Demand Expectations LONDON (Dow Jones, Saturday, August 10, 2013) -- The International Energy Agency warned Friday that oil supply from the Organization of the Petroleum Exporting Countries was falling, as it raised its forecast for demand for the exporters group's crude this year. "Continued supply outages in Iraq and Libya...may reduce the group's output in coming months," the IEA said in its monthly oil market report, adding that while global supply is still sufficient to meet demand, the market may be slow to adapt to the disruption. These supply problems have push oil prices higher, with the U.S. benchmark West Texas Intermediate rising 9% in July to hit a 16-month high. . Prices have since fallen amid concerns about the global economy. The IEA, which represents some of the world's largest oil consumers, pegged demand for OPEC's oil at 29.8 million barrels a day this year, an increase of 200,000 barrels a day from last month's forecast. That is still comfortably below the group's average production in the first half of the year of 30.6 million barrels a day. Demand last year was

30.3 million barrels a day. Disruptions to production in Libya and Iraq resulted in a fall in OPEC crude output of 170,000 barrels a day in July, compared with June, more than offsetting an increase in Saudi Arabian production to its highest level this year. According to OPEC's latest monthly oil market report, also published Friday, the group's output fell in July to its lowest level since March. [more]

5. CAR BOMBS KILL SCORES ACROSS IRAQ (Al Jazerra, Sunday, August 11, 2013)At least 91 people have been killed and hundreds injured in a series of car bombs that rocked Baghdad and other Iraqi cities amid Eid al-Fitr celebrations, an interior ministry official said. The attacks were the latest in spiralling violence which authorities have failed to stem, with the worst bloodshed in five years raising worries of a return to the all-out Sunni-Shia sectarian conflict that killed tens of thousands in past years. The latest violence comes just weeks after brazen assaults, claimed by an al-Qaeda front group, on prisons near Baghdad that freed hundreds of fighters and which analysts warn could boost armed groups. Overall, 17 car bombs and a series of shootings and other blasts killed at least 91 people and wounded over 300 across the country Saturday, security and medical officials said, as Iraqis celebrated the Eid al-Fitr holidays which follow the Muslim fasting month of Ramadan. Al Jazeera's Imran Khan, reporting from the Iraqi capital, said 50 people had been killed in nine blasts in seven areas of the city on Saturday evening, in apparently coordinated strikes. [more]

6. CAR BOMBINGS KILL SCORES ACROSS IRAQ BAGHDAD (Bloomberg, Saturday, August 10, 2013) -- As Iraqis flooded the streets of their capital and other cities on Saturday to celebrate Id al-Fitr, the holiday that marks the end of the holy month of Ramadan, a string of car bombs struck in mostly Shiite neighborhoods, killing more than 60 people, officials said. The bombings were the latest in a surge of attacks in Iraq this summer - before, during and after Ramadan - that have brought monthly death tolls to levels not seen in nearly five years, according to United Nations figures. The attacks on Saturday killed at least 61 people and wounded more than 200 across Iraq, an Interior Ministry official said. Nine car bombs struck around Baghdad, the capital, at public markets and near a city park, and many exploded in Shiite neighborhoods that have borne the brunt of the increasingly violent Sunni insurgency led by Al Qaeda's Iraq affiliate, killing at least 35 people. Other attacks - in the northern city of Tuz Khurmato, in Hilla, Karbala and Dhi Qar in the south - killed at least 26. The State Department condemned the attacks and noted that Abu Bakr al-Baghdadi, the leader of Al Qaeda's Iraq affiliate, is now based in Syria. [more]

7. LAWLESS SINAI SHOWS RISKS RISING IN FRACTURED EGYPT SHEIKH ZWAYD, Egypt (New York Times, Saturday, August 10, 2013) -- Every night at dusk, the streets of this desert town near the Israeli border empty out, and the chatter and thump of gunfire and explosives begin. Morning reveals the results: another dead soldier, another police checkpoint riddled with bullets, another kidnapping. In mid-July, the body of a local Christian shop owner was found near the town cemetery, his head severed, his torso in chains. The northern Sinai Peninsula, long a relatively lawless zone, has become a dark harbinger of what could follow elsewhere in Egypt if the interim government cannot peacefully resolve its standoff with the Islamist protesters camped out in Cairo. In the five weeks since Egypt's military ousted the Islamist president, Mohamed Morsi, the endemic violence here has spiraled into something like an insurgency, with mysterious gunmen attacking military and police facilities every night. Last week, the violence threatened to draw in Israel. On Thursday, Israel briefly closed an airport at the Red Sea resort of Eilat after Egyptian officials warned about the possibility of militants firing rockets from Sinai. The next day, up to five suspected militants were killed and a rocket launcher was destroyed in an airstrike in Sinai, the state news media reported, and there were unconfirmed reports that Israel had carried out the strike. The Sinai attacks have

taken about 62 lives, officials say, not counting the 60 suspects the Egyptian authorities claim to have killed. There has also been a troubling rise in attacks on Christians, who are fleeing the area in large numbers. [more]

8. ASSAD SENDS AIR FORCE TO PREVENT REBEL ADVANCES IN HOME PROVINCE

BEIRUT (Reuters Saturday, August 10, 2013) -- Warplanes bombed a village in Syria's north overnight in an apparent effort by President Bashar al-Assad to prevent rebels fighting him from advancing on communities in the stronghold region of his Alawite sect. Assad's forces are on the defensive in his family's home province of Latakia, and recent rebel gains across northern Syria, including a military air base captured last week in Aleppo province, have further loosened his grip on the country. Assad controls much of southern and central Syria, while insurgents hold northern areas near the Turkish border and along the Euphrates valley towards Iraq. The northeast corner of the pivotal Arab state is now an increasingly autonomous Kurdish region. (link.reuters.com/puw22v) The mainly Sunni Muslim insurgents are battling to overthrow Assad, whose minority Alawite sect is an offshoot of Shi'ite Islam, in a civil war which erupted two years ago when mainly peaceful protests against his rule were put down with force. As many as 20 people were killed in the air strikes on the village of Salma, including 10 civilians, six Syrian fighters and four foreign fighters, the anti-Assad Syrian Observatory for Human Rights group said on Saturday. Amateur video footage posted on the Internet showed a large apartment block with all its outside walls blown out. Men, some in military fatigues, were seen loading bodies onto a pickup truck. [more]

9. KREMLIN SAYS NO DEAL REACHED WITH SAUDI ON CHANGING SYRIA STANCE MOSCOW, Aug 9 (Reuters) - Russian President Vladimir Putin has not made an agreement with Saudi Arabia to scale back support for Syrian President Bashar al-Assad in exchange for economic incentives including an arms deal, the Kremlin said on Friday. Commenting on a Reuters report that Saudi intelligence chief Prince Bandar made the proposal to Putin at talks last week in Moscow, Putin's foreign policy adviser, Yuri Ushakov, said no deal had been discussed in detail. He also said no specifics about military cooperation had been discussed but did not issue a denial that the broad outlines of a proposal had been presented to Putin. "Putin did not discuss a deal," Ushakov told reporters. "No specific questions on developing military cooperation were discussed." Suggesting the meeting had been short on detail, he said: "It was a very rich and interesting meeting that was of a philosophical character." Prince Bandar and Putin "demonstrated a similar amount of concern" about the conflict in Syria, he said. Russia has supported Assad with arms and diplomatic cover throughout the war and any change in Moscow's stance would remove a major obstacle to action on Syria by the United Nations Security Council. Syrian opposition sources close to Saudi Arabia said Prince Bandar offered to buy up to $15 billion of Russian weapons as well as ensuring that Gulf gas would not threaten Russia's position as a main gas supplier to Europe. [more]

East Asia

10. EIA: CHINA SET TO TOP U.S. AS WORLD'S BIGGEST NET OIL IMPORTER IN OCTOBER NEW YORK (Dow Jones, Saturday, August 10, 2013) -- China is poised to top the U.S. as the world's biggest importer of oil in October and will hold the ranking for all of 2014, forecasters at the federal Energy Information Administration said Friday. The switch comes as the U.S., the world's biggest oil consumer, is

http://link.reuters.com/puw22v

experiencing steady oil demand and surging crude oil production from shale-oil fields, sharply reducing the need for imports. China, the second-biggest oil consumer, is showing robust growth and an increasing need for foreign oil, evident in Thursday's figures showing record-high crude-oil imports in July that were 20% above the same period in 2012. Rising U.S. oil output in October is projected to top the level of crude-oil imports for the first time since February 1995, the EIA said in its monthly short-term energy outlook released Tuesday. "Since reaching 12.5 million barrels per day in 2005, total U.S. liquid fuel net imports, including crude oil, have been falling and are expected to average less than 6 million barrels per day next year," Adam Sieminski, the EIA administrator, said in a statement released with Tuesday's outlook. Net liquid fuel imports are defined as total liquid fuels consumption, minus domestic production of crude oil, lease condensates, natural-gas liquids, biofuels, other liquids, and refinery processing gain, the EIA said. [more]

11. CHINA SET TO BECOME WORLD'S BIGGEST OIL IMPORTER (Globe and Mail, Sunday, August 11, 2013) China is poised to overtake the United States as the world's leading oil importer in October, part of a long-term trend that is forcing the Asian giant to find new supply sources including Canada to fuel its economy. Chinese crude imports will exceed those of the United States for the first time on a monthly basis in October, and for the entire year in 2014, the U.S. Energy Information Administration said Friday. "The imminent emergence of China as the world's largest net oil importer has been driven by steady growth in Chinese demand, increased oil production in the United States and a flat level of demand for oil in the U.S. market," the agency said. Even with a slowing economy, China's fuel consumption is targeted to increase to nearly 13 million barrels a day next year, a 13-per-cent increase from 2011 levels. In contrast, American fuel use will flat-line at around 18.7 million b/d next year, well below peak consumption of 20.8 million in 2005. But U.S. production is surging, crowding out offshore imports. (Canada's crude exports to the U.S. have climbed along with American domestic production.) By the end of 2014, China will be importing nearly seven million barrels a day, while U.S. imports will drop to just over five million. [more]

North America

12. EIA: OIL AND NATURAL GAS EMPLOYMENT LEADING THE ECONOMIC RECOVERY (Rigzone, Sunday, August 11, 2013) -- The oil and natural gas industry has played an instrumental role in the recovery of the United States economy following the economic recession, the Energy Information Administration (EIA) said in its Today in Energy brief released on Thursday. To put into perspective just how much the energy sector contributed to economic growth, consider that total private sector employment increased by more than one million jobs, or about one percent, during the six-year period of 2007 through 2012. The growth of oil and gas industry jobs alone during the same period increased by more than 162,000, or an increase of about 40 percent, the EIA said. Three job categories - drilling, extraction and support - combined for much of the growth in oil and natural gas industry jobs - jobs that kept a support floor under private sector employment figures. There were more than 90,000 drilling jobs by the end of 2012, according to the Labor Department's Bureau of Labor Statistics (BLS). That was an increase of 6,600 jobs since 2007. The BLS characterizes drilling as any job related to the spudding and drilling of wells, or the reworking of wells. Positions in the category of extraction accounted for more than 193,000 jobs by the end of 2012. That was an increase of 53,000 jobs since 2007. Jobs are characterized as extraction jobs by the BLS if they are engaged in operating, developing and producing oil and natural gas fields. Exploration and production work up to the point of shipment also fall into the category of extraction. [more]

13. CHESAPEAKE SHEDS MORE ASSETS IN TURNAROUND BID HOUSTON, Aug 9 (Reuters) - Chesapeake Energy Corp has sold its stakes in trucking and natural gas companies and is trying to shed real estate in Oklahoma City, the company told regulators this week, as its new chief executive attempts to turn it around. The second-largest U.S. natural gas producer has slashed spending and pledged capital discipline following last year's liquidity crunch, brought on by years of heavy spending on acreage in U.S. shale formations and low natural gas prices. While it's now more financially fit, the company still faces a gap between operating cash flow and capital expenditure that analysts at Barclays estimate at $1.8 billion this year. But asset sales and cash on hand may help fill the shortfall. Chief Executive Doug Lawler, who replaced former CEO Aubrey McClendon in May, told investors on the company's second-quarter earnings call last Thursday that he and senior management have undertaken a comprehensive review of all the company's assets, partnerships and investments in other companies to determine which are not providing "the proper returns" or a competitive advantage. "I think when you are investing in so many different things, it just takes you away from concentrating on your core business," said Mike Breard, analyst with Hodges Capital Management in Dallas on Friday. "They've got some good properties but they've tied it up with all this miscellaneous stuff." [more]

14. KEYSTONE XL WON'T ADD TO GREENHOUSE EMISSIONS: STUDY CAMBRIDGE, Mass., Aug. 9 (UPI) -- The proposed Keystone XL pipeline would not have an impact on greenhouse gas emissions, a study indicates. The study by energy consultancy IHS CERA says it agrees with the conclusions of the U.S. State Department's draft environmental review of Keystone released in March that says oil sands production is expected to continue at similar levels regardless of whether the project goes ahead. Keystone XL, which would move oil from the oil sands of Alberta, Canada, to refineries along the U.S. Gulf Coast, is now under federal review at the State Department. The project needs a cross-border permit to complete the project's northern leg. The department said in its draft review Keystone XL wouldn't substantially increase greenhouse gas emissions. President Barack Obama in his June 25 climate address said the project would win approval only if it does not significantly exacerbate the problem of carbon pollution. Environmentalists maintain Keystone XL would add to greenhouse gas emissions. In the absence of the pipeline, IHS CERA's study says, U.S. Gulf Coast refiners would replace expected deliveries of diluted bitumen from Alberta with heavy oil from Venezuela, which has roughly the same emissions intensity as the Canadian crude. [more]

15. IHS-CERA CONCLUDES "NO MATERIAL IMPACT" ON US GHG FROM KEYSTONE XL; HEAVY (Green Car Congress, Sunday, August 11, 2013) The proposed Keystone XL pipeline for transporting oilsands-derived crude to Gulf Coast refineries would have "no material impact" on US greenhouse gas (GHG) emissions, according to a new Insight report by IHS CERA. In a June speech at Georgetown University, President Barack Obama said that the controversial Keystone XL pipeline would only be built if the project "does not significantly exacerbate the problem of carbon pollution." (Earlier post.) In the absence of the pipeline, alternate transportation routes would result in oilsands production growth being more or less unchanged, IHS CERA found. The study also found that any absence of oil sands on the US Gulf Coast would most likely be replaced by imports of heavy crude oil from Venezuela, which has the same carbon footprint as oilsands crude. The new IHS CERA Canadian Oil Sands Dialogue study thus basically agrees with the conclusions of the US State Department's Draft Supplemental Environmental Impact Statement for Keystone XL that says oil sands production is expected to continue at similar levels regardless of whether Keystone XL

goes forward. (Earlier post.) The IHS CERA report notes that pipeline opponents argue that by opening up additional US markets for Canadian oil sands, the Keystone XL project would lead to significant incremental US GHG emissions. A primary dispute with the State Department's analysis is based on the economics of moving oilsands by rail-assumed to be the alternative method of transportation if Keystone XL or other pipelines are not constructed. [more]

16. THE COMING SHALE WRITE-DOWNS (Casey Research, Sunday, August 11, 2013) Not all shales are equal. Some shales are deeper than others; and some are dry gas, while others are gas with liquids. In North America, billions of dollars have gone into developing all types of shale formations to extract as much natural gas, natural-gas liquids, and oil as possible. The production from shale formations has truly been a game-changer for North America, but yet, oil is still more than US$100 barrel. How can oil be more than US$100/bbl even though the shale revolution was supposed to save us from high oil prices? First off, shale wells are very expensive to drill and complete. Including all costs, it can cost up to US$15 million to drill, frac, and complete a deep horizontal well. Because of the success of the shale revolution in North America, natural-gas prices have decreased significantly. In fact, in many parts of North America, the natural-gas shales are uneconomic without NGLs (natural-gas liquids) as a byproduct. We have written many times about the phantom shale-gas wells in North America. There are thousands of wells that have been drilled and only need less than 100 hours to be completed and producing before the wells are tied in to the system and sold for cash flow. The owners of the phantom gas wells are waiting for better prices before they complete the wells and sell the gas. The decline rates of the shale wells are a major Achilles heel to the North American oil and gas sector. We've written in detail-not just in the Casey Energy Report, but also in the Casey Daily Dispatch-about the misleading ways energy companies can report their production numbers. [more]

17. US DRILLING RIG COUNT DIPS 4 UNITS TO 1,778 (The Oil & Gas Journal, Sunday, August 11, 2013) -- The US drilling rig count decreased 4 units during the week ended Aug. 9 to reach a total of 1,778 rotary rigs working, Baker Hughes Inc. reported. Land-based drilling dipped by 2 units this week to 1,697 rigs working. There were 57 rigs working offshore, down 1 unit from a week ago. Of these, 55 were drilling in the Gulf of Mexico, unchanged from a week ago. The number of rigs drilling in inland waters fell 1 unit to 24. Rigs drilling for oil lost 3 units to reach 1,385, while those drilling for gas slipped 2 units to 388 rigs working. Compared with the same week last year, gas rigs were down 109 units, while those targeting oil were down 47. Seven rigs were considered unclassified, up 1 unit from a week ago. The number of rigs drilling horizontally decreased by 8 units to 1,065, while the number of rigs drilling directionally fell by 11 units to 266. Canada's rig count increased by 17 units to 358 this week. This count includes 230 rigs drilling for oil, up 7 units from a week ago, and 128 drilling for gas, up 10 units from last week. [more]

Discussion & Analysis

18. IS PEAK OIL DEMAND JUST AROUND THE CORNER? (The Washington Post, Sunday, August 11, 2013) -- For years, there’s been lots of debate over “peak oil” — the notion that, at some point in the near future, the rate of global oil production will bump up against a hard ceiling. This is generally considered a gloomy prospect.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/13/peak-oil-isnt-dead-an-interview-with-chris-nelder/

An oil pump operates in the desert oil fields of Sakhir, Bahrain, at sunset. (Hasan Jamali/Associated Press) But another, related concept has started to bubble up in energy discussions lately. It’s the notion of peak oil demand.his is the idea that the world’s appetite for oil may not be bottomless after all. Thanks to a combination of price increases, improvements in vehicle efficiency, as well as the advent of alternative fuels and electric cars, we may reach a point in the coming decades where the world’s demand for oil actually starts declining. And if that happens before peak oil production hits, well, that would come as a relief.he basic “peak oil demand” argument. he possibility of peaking oil demand recently came up in a long feature in the Economist. Right now, the world consumes about 89 million barrels of oil per day. Yet car travel in wealthy countries appears to be on the wane. New alternatives to gasoline are emerging — from natural-gas-powered trucks to plug-in electric vehicles. And as for developing countries, even China is now adopting stringent fuel-economy standards to curtail air pollution. [more]

Full Stories

1. OIL RISES FIRST TIME IN 6 DAYS ON CHINA INDUSTRIAL OUTPUT (Bloomberg, Saturday, August 10, 2013) -- West Texas Intermediate crude climbed for the first time in six days as industrial production increased in China, the second-biggest oil-consuming country. Futures advanced 2.5 percent after data from China's National Bureau of Statistics showed factory output increased 9.7 percent in July, 0.8 percentage point more than forecast in a Bloomberg survey. There have been recent "signs of strength" in oil markets with a 3.1 million-barrels-a-day surge in world refinery operating rates in June, the International Energy Agency said in a report today. "The industrial numbers out of China were impressive," said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. "This comes on top of a week's worth of positive Chinese data." WTI crude for September delivery advanced $2.57 to settle at $105.97 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 7.6 percent above the 100-day average. Prices dropped 0.9 percent this week. Brent oil for September settlement rose $1.54, or 1.4 percent, to end the session at $108.22 a barrel on the London-based ICE FuturesEurope exchange. Volume was 16 percent below the 100-day average. The European benchmark traded at a $2.25 premium to WTI, down from $3.28 yesterday.

http://www.economist.com/news/briefing/21582522-day-huge-integrated-international-oil-company-drawing

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/22/why-arent-younger-americans-driving-anymore/

Chinese Data The acceleration in Chinese factory output follows a series of positive figures. Retail sales climbed 13.2 percent in July, the National Bureau of Statistics in Beijing said today. Total exports of goods from China rose 5.1 percent last month, figures from the General Administration of Customs showed yesterday. The Non-Manufacturing Purchasing Managers' Index showed the first gain since March, according to government data on Aug. 3. China accounted for about 12 percent of global crude demand in 2012, ranking it second after the U.S., according to BP Plc (BP/)'s Statistical Review of World Energy. "Better-than-expected Chinese industrial data was always going to give a boost to risky assets such as oil," said Michael Hewson, a market analyst at CMC Markets Plc in London, who forecasts Brent crude to drop to $103 a barrel by the end of the year and WTI to fall as low as $95. Global refining rates probably increased in July, the Paris-based IEA, an adviser to developed nations, said today in its monthly market report. 'Unprecedented' Surge The surge in refinery rates in June was "unprecedented," leading to "overhang" of fuel inventory, Antoine Halff, head of IEA's oil markets and industry division, said from Paris today in an interview with Bloomberg television. The IEA trimmed its 2014 global oil demand-growth estimate by 100,000 barrels from last month. Worldwide consumption will increase by 1.1 million barrels a day to 92 million next year. The Organization of Petroleum Exporting Countries maintained its demand-growth forecast for next year at about 90.8 million barrels in its monthly report today. "The IEA and OPEC reports can be taken as either bullish or bearish depending on what numbers you focus on, but on balance they seem more supportive to me," Kilduff said. U.K. exports rose to a record in the second quarter, adding to signs of a broadening recovery, data from the Office for National Statistics in London showed today. German exports in June gained, the Federal Statistics Office said yesterday. Positive Numbers "The U.K. numbers are positive and add to the evidence that Europe has turned a corner," said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. "The most recent data from Europe and China is improving the global growth outlook and that's positive for crude prices." Egypt's interim President Adly Mansour signaled yesterday that a crackdown may be imminent on two Cairo sit-ins staged by supporters of ousted President Mohamed Mursi. The crisis was triggered by the military's July 3 removal of Mursi.

Crude dropped in the previous five sessions, the longest streak of declines since December. Prices fell amid concern the Federal Reserve will curb $85 billion a month in bond purchases that have stimulated growth. WTI will probably retreat next week, according to a Bloomberg survey of analysts and traders. Technical Factors WTI may resume its decline after dropping below key technical support levels yesterday, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. The contract broke below $102.96, the 38.2 percent Fibonacci retracement level on a chart from a June 24 low of $92.67 to the high on July 19. The 50 percent retracement level is $101 and 50-day moving average is $101.02. "I wouldn't be surprised if the market soon moved lower because of technical factors," Yawger said. "I'm looking at $101, where there is major support because both the 50 percent retracement and 50-day moving average are there. We may be seeing some strength today because we fell so far so fast." Implied volatility for at-the-money WTI options expiring in October was 21.6 percent, up from 21.2 percent yesterday, data compiled by Bloomberg showed. Electronic trading volume on the Nymex was 598,728 contracts as of 3:27 p.m. It totaled 694,391 contracts yesterday, 6.1 percent above the three-month average. Open interest was a record 1.9 million contracts.

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2. NATURAL GAS SETTLES 2% LOWER AT $3.23/MMBTU AMID HIGH SUPPLY --Prices settle at lowest level since Feb. 15 as inventories rise

--Lingering below-normal temperatures cut demand in key areas

--Futures drop 3.5% in week, third straight weekly loss NEW YORK (Dow Jones, Saturday, August 10, 2013) -- Natural-gas futures prices fell 2% Friday to settle at their lowest level since mid-February amid rising inventories and weak demand caused by cooler-than-normal temperatures in the key Midwest and East Coast markets. Prices dropped 3.5% in the week, marking the third straight weekly loss. Front-month gas futures on the New York Mercantile Exchange have dropped in 11 of the past 13 sessions, shedding about 50 cents per million British thermal units, on the way down to mid-February lows. Unseasonably cool temperatures allowed residents in much of the eastern half of the nation to turn off air conditioners in recent weeks, reducing the need for power companies to increase their burning of natural gas to meet normal summer electricity demand. Current forecasts show below-normal temperatures holding in the region through the third week in August. The drop in demand, along with steady output near record-high levels, has pumped up inventory levels by more usual levels in recent weeks, increasing pressure on prices, analysts said. "The fundamental picture is still very bearish," said Aaron Calder, senior analyst at Gelber & Associates.

September gas futures settled 6.7 cents lower, at $3.23 per million British thermal units, the lowest price since Feb. 15, or 25 weeks ago. The weaker demand comes as utilities have scaled back their gas use, in favor of cheaper coal, in recent months as gas prices climbed to 21-month highs above $4.40/mmBtu and held near $4/mmBtu as recently as early June. The Energy Information Administration reported Thursday that gas inventories rose 96 billion cubic feet in the week ended August 2. That was well ahead of the 78 bcf projected by analysts and traders in a Dow Jones Newswires survey and well above the rise of 25 bcf in the same week last year and the five-year average rise of 42 bcf. The EIA said the headline figure included 14 bcf of reclassification of storage levels, effectively lowering the real week-to-week change to 82 bcf, or only slightly more than the projected levels. Still, the EIA said inventories climbed above the five-year average level for the first since March, and analysts said recent cool temperatures will mean higher-than-normal increases in inventories will occur in coming weeks, keeping pressure on prices and allowing for ample stockpiles ahead of winter. Shiyang Wang, a Barclays analyst, said inventories need to rise by only 17 bcf more than last year's level in coming weeks to ensure prewinter stock levels are in line with normal levels. If prices remain weak in the low $3/mmBtu area, gas could displace some coal, the bank analyst said, noting that coal-to-gas displacement can vary by as much as 1.5 billion to two billion cubic feet a day, as prices swing to low-$3 from high-$3 levels. The EIA said recently that gas use by the power sector fell nearly 25% year on year in May, to 19.8 billion cubic feet a day from the May record set a year earlier. The drop came as May prices averaged above $4/mmBtu, up 63% from the 13-year low average price in May 2012. Mr. Calder said in a note that a slide in natural-gas prices going into the shoulder season, or the lull between peak-summer and winter-demand periods, "could lead to an October rally as power generators start switching to natural gas. In the near term, however, the latest storage reports indicate that the market is currently oversupplied and natural-gas prices have further to fall."

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3. OPEC MAINTAINS ESTIMATE FOR GLOBAL OIL DEMAND GROWTH IN 2014 (Bloomberg, Saturday, August 10, 2013) -- The Organization of Petroleum Exporting Countries kept estimates for global oil demand growth in 2014 unchanged amid a stable outlook for the world economy. World oil consumption will increase by 1 million barrels a day, or 1.2 percent, next year to about 90.8 million a day, the group's Vienna-based secretariat said in its monthly market report today. Increasing output from countries outside OPEC means demand for the organization's crude will slide to 29.7 million barrels a day, or about 600,000 a day less than its 12 members pumped last month, the report showed. Brent crude futures have gained about 2.8 percent in the past three months, trading near $107 a barrel in London today, amid signs the slowdown in China's expansion has stabilized, U.S. unemployment retreating and the recession in European economies is easing. OPEC agreed to tighten compliance with its official production target of 30 million barrels a day at its last meeting in May. The group will next meet on Dec. 4.

OPEC said group production fell 97,000 barrels a day to 30.3 million last month amid declines in Libya and Iraq, citing an average of secondary sources for the estimates. Output in the North African nation slumped 124,400 barrels a day to about 1.1 million while Iraq's production slid by 50,900 a day to 2.97 million a day. Non-OPEC The organization increased its 2014 forecast for oil supply from other nations by 20,000 barrels a day. Non-OPEC producers, led by the U.S. and Canada, will bolster production by 1.15 million barrels a day in 2014 to 55.1 million a day, according to the report. OPEC's projection for global oil demand growth is similar to that of the International Energy Agency, the Paris-based adviser to oil-consuming nations, which earlier today forecast that consumption will increase 1.1 million barrels a day in 2014 to 92 million a day. The group's members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

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4. IEA: OUTAGES IN IRAQ, LIBYA MAY REDUCE OPEC'S OIL OUTPUT Agency Revised Higher OPEC Demand Expectations LONDON (Dow Jones, Saturday, August 10, 2013) -- The International Energy Agency warned Friday that oil supply from the Organization of the Petroleum Exporting Countries was falling, as it raised its forecast for demand for the exporters group's crude this year. "Continued supply outages in Iraq and Libya...may reduce the group's output in coming months," the IEA said in its monthly oil market report, adding that while global supply is still sufficient to meet demand, the market may be slow to adapt to the disruption. These supply problems have push oil prices higher, with the U.S. benchmark West Texas Intermediate rising 9% in July to hit a 16-month high. . Prices have since fallen amid concerns about the global economy. The IEA, which represents some of the world's largest oil consumers, pegged demand for OPEC's oil at 29.8 million barrels a day this year, an increase of 200,000 barrels a day from last month's forecast. That is still comfortably below the group's average production in the first half of the year of 30.6 million barrels a day. Demand last year was 30.3 million barrels a day. Disruptions to production in Libya and Iraq resulted in a fall in OPEC crude output of 170,000 barrels a day in July, compared with June, more than offsetting an increase in Saudi Arabian production to its highest level this year. According to OPEC's latest monthly oil market report, also published Friday, the group's output fell in July to its lowest level since March. However, strong supply growth from oil producers outside OPEC, coupled with easing demand from refineries in the coming months, could mitigate the disruptions, the IEA said.

The IEA forecasts that substantial production growth in North America will help lift non-OPEC output by 1.4 million barrels a day in the second half of the year, compared with a year earlier, reaching 55.4 million barrels a day in the fourth quarter. However, markets could still be disrupted because the production growth is in a different part to the world to the supply disruptions, according to Antoine Halff, editor and head of the oil industry and markets division at the IEA. "A lot of the disruption in supply is really affecting European and Asian market and supply is coming from the American market," he said. "It's not an immediate one-to-one replacement; if you lose it now in Libya, you can't make it up immediately with a barrel from the U.S." The production of Libya's main grade of crude oil, called Es Sider, has collapsed after the terminal that exports the oil to global markets was shut by protesters demanding more jobs or unpaid wages, Libyan oil officials told The Wall Street Journal Wednesday. These protests caused Libya's production to dwindle to just 400,000 barrels a day at the beginning of August compared with an already reduced output of 1 million barrels a day in July, according to the IEA's figures. Oil supply from Iraq fell below 3 million barrels a day for the first time in five months in July as a result of attacks on a major pipeline, the IEA said. Production in the country is forecast to drop again in September by 500,000 barrels a day as a result of planned infrastructure work at its southern oil export terminals. Based on July's production figures, that would take Iraq's output down to around 2.5 million barrels a day in September, its lowest level in more than two years. The work planned for September on Iraq's southern export terminals is necessary to eliminate bottlenecks that already constrain production, said Mr. Halff. Iraq aims to boost its oil production by 360,000 barrels a day by the end of the year, to reach 3.61 million barrels a day, Abdul Mahdy al-Ameedi, the head of the Iraqi oil ministry's petroleum contracts, told The Wall Street Journal Wednesday. If they go according to plan, the infrastructure improvements will increase export capacity, said Mr. Halff, although he warned that the work could over run. "Officially they've said it's going to take a month, but expectations are it could be more like 5 or 6 months."

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5. CAR BOMBS KILL SCORES ACROSS IRAQ (Al Jazerra, Sunday, August 11, 2013)At least 91 people have been killed and hundreds injured in a series of car bombs that rocked Baghdad and other Iraqi cities amid Eid al-Fitr celebrations, an interior ministry official said. The attacks were the latest in spiralling violence which authorities have failed to stem, with the worst bloodshed in five years raising worries of a return to the all-out Sunni-Shia sectarian conflict that killed tens of thousands in past years.

The latest violence comes just weeks after brazen assaults, claimed by an al-Qaeda front group, on prisons near Baghdad that freed hundreds of fighters and which analysts warn could boost armed groups. Overall, 17 car bombs and a series of shootings and other blasts killed at least 91 people and wounded over 300 across the country Saturday, security and medical officials said, as Iraqis celebrated the Eid al-Fitr holidays which follow the Muslim fasting month of Ramadan. Al Jazeera's Imran Khan, reporting from the Iraqi capital, said 50 people had been killed in nine blasts in seven areas of the city on Saturday evening, in apparently coordinated strikes. Car bombings The blasts hit public markets, cafes, and restaurants, while violence earlier on Saturday killed two others in the capital, according to security and medical officials. At Baghdad's Al-Kindi hospital, medics treated a man, apparently a soldier, whose face, chest and arms were covered in blood. Medics sprinted into the hospital pushing people on stretchers, one of them a blanket-swathed man whose eyes were closed. Another man ran behind the stretcher, weeping as it was wheeled into the hospital. Outside, long lines of cars inched along Baghdad roads, held up by increased security measures that came too late for the dozens of victims. Also on Saturday, a suicide bomber detonated an explosives-rigged vehicle near a police checkpoint in Tuz Khurmatu, north of the capital, killing nine people. A car bomb in Kirkuk, also north of Baghdad, killed an engineer. Two car bombs in the southern city of Nasiriyah killed four, while a car bomb in the shrine city of Karbala left five others dead. Elsewhere, three people were killed and five others wounded in separate attacks in Babil and Nineveh provinces. More than 800 people died in attacks during the dawn-to-dusk fasting month of Ramadan, which began in the second week of July and ended this week. Fighters struck targets ranging from cafes where Iraqis gathered after breaking their daily fast, to mosques where extended evening prayers were held during the month. 'Open war' The violence came just weeks after attacks on prisons near the capital in which hundreds of inmates were freed. Analysts, as well as global police organisation Interpol, have warned that the jailbreaks could lead to a rise in attacks, as the escapees were said to include senior al-Qaeda fighters.

The Interior Ministry has said the country faces an "open war" fuelled by Iraq's sectarian divisions and has attempted to boost security in Baghdad, closing roads and sending out frequent helicopter patrols. Our correspondent said the withdrawal of American combat troops from Iraq 18 months ago has hit security efforts and emboldened Sunni fighters to step up attacks. "People in the Iraqi security services will tell you ... that the Iraqi army is now on its own. They do not have the intelligence from the Americans that they had before. That has caused Sunni groups to go on the offensive. "Then you have Shia groups taking revenge against them, in a classic tit-for-tat situation." The United States condemned the perpetrators of the attacks as "enemies of Islam," in an unusually detailed statement. The State Department said that the car bombs and shootings were "cowardly" attacks "aimed at families celebrating the Eid al-Fitr" holiday.

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6. CAR BOMBINGS KILL SCORES ACROSS IRAQ BAGHDAD (Bloomberg, Saturday, August 10, 2013) -- As Iraqis flooded the streets of their capital and other cities on Saturday to celebrate Id al-Fitr, the holiday that marks the end of the holy month of Ramadan, a string of car bombs struck in mostly Shiite neighborhoods, killing more than 60 people, officials said. The bombings were the latest in a surge of attacks in Iraq this summer - before, during and after Ramadan - that have brought monthly death tolls to levels not seen in nearly five years, according to United Nations figures. The attacks on Saturday killed at least 61 people and wounded more than 200 across Iraq, an Interior Ministry official said. Nine car bombs struck around Baghdad, the capital, at public markets and near a city park, and many exploded in Shiite neighborhoods that have borne the brunt of the increasingly violent Sunni insurgency led by Al Qaeda's Iraq affiliate, killing at least 35 people. Other attacks - in the northern city of Tuz Khurmato, in Hilla, Karbala and Dhi Qar in the south - killed at least 26. The State Department condemned the attacks and noted that Abu Bakr al-Baghdadi, the leader of Al Qaeda's Iraq affiliate, is now based in Syria. The United States has offered a $10 million reward for information "that helps authorities kill or capture" Mr. Baghdadi and is prepared to work with the Iraq government to counter the threat from Al Qaeda, Jen Psaki, the State Department spokeswoman,said in a statement Saturday night. That reward is second only to the one that the United States has offered for information leading to Ayman al-Zawahri, the head of the Qaeda network. According to the United Nations, 1,057 Iraqis were killed and 2,326 were wounded in attacks in July, the highest monthly casualty figures since 2008.

"We haven't seen such numbers in more than five years, when the blind rage of the sectarian strife that inflicted such deep wounds on this country was finally abating," Gyorgy Busztin, the acting United Nations representative for Iraq, said recently.

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7. LAWLESS SINAI SHOWS RISKS RISING IN FRACTURED EGYPT SHEIKH ZWAYD, Egypt (New York Times, Saturday, August 10, 2013) -- Every night at dusk, the streets of this desert town near the Israeli border empty out, and the chatter and thump of gunfire and explosives begin. Morning reveals the results: another dead soldier, another police checkpoint riddled with bullets, another kidnapping. In mid-July, the body of a local Christian shop owner was found near the town cemetery, his head severed, his torso in chains. The northern Sinai Peninsula, long a relatively lawless zone, has become a dark harbinger of what could follow elsewhere in Egypt if the interim government cannot peacefully resolve its standoff with the Islamist protesters camped out in Cairo. In the five weeks since Egypt's military ousted the Islamist president, Mohamed Morsi, the endemic violence here has spiraled into something like an insurgency, with mysterious gunmen attacking military and police facilities every night. Last week, the violence threatened to draw in Israel. On Thursday, Israel briefly closed an airport at the Red Sea resort of Eilat after Egyptian officials warned about the possibility of militants firing rockets from Sinai. The next day, up to five suspected militants were killed and a rocket launcher was destroyed in an airstrike in Sinai, the state news media reported, and there were unconfirmed reports that Israel had carried out the strike. The Sinai attacks have taken about 62 lives, officials say, not counting the 60 suspects the Egyptian authorities claim to have killed. There has also been a troubling rise in attacks on Christians, who are fleeing the area in large numbers. Although the world's attention has been focused on Cairo, where about 140 Islamist Muslim Brotherhood supporters have been killed in clashes with the police since Mr. Morsi's ouster, the chaos in Sinai in some ways represents a more troubling prospect. Unlike the Brotherhood, which has a longstanding commitment to nonviolence, the jihadists here are out for blood, and they appear to have been energized by the military's reassertion of power. Some Egyptians fear a renewal of the kind of terrorism they suffered during the 1990s, especially if the military resorts to an even broader and more forceful crackdown. The northern Sinai may be both a symptom and a cause of Egypt's festering crisis: one of the military's reasons for ousting Mr. Morsi was the belief that he was too soft on the jihadists here and saw them as potential allies. Yet the military, for all its warlike talk, seems unable to thwart the mysterious bands of gunmen who own the night here. "We are living in a state of constant terror, but we see nothing from the police or the army," said Mitri Shawqi Mitri, a 53-year-old Christian shopkeeper whose son, Mina, was kidnapped by gunmen early this month. "Everything has stopped for us, there is no work, all the churches have closed, the priests have fled."

Like many Christians living in Sinai, Mr. Mitri plans to leave, and a wall of his modest house in the town of El Arish has the words "For Sale" scrawled on it in Arabic. At least one Christian priest here has been killed in the past month, and several Christians have been kidnapped, including two women and Magdy Lamy, the shopkeeper who was beheaded. Many others have received death threats from militant Islamists warning them to leave Sinai, Mr. Mitri and other local Christians said. As Mr. Mitri sat talking to a reporter in his home, he received a text message from the kidnappers, who were demanding a ransom of 150,000 Egyptian pounds, about $21,500. "They want to know if I have the money in the house with me," he said, his face creased with anger and fear. The military announced last week on its Facebook page that its counterterrorism operation over the past month in Sinai had led to 103 arrests, and the destruction of 102 tunnels, 40 underground fuel storage tanks and 4 houses used by extremists. The reference to tunnels, presumably those used to smuggle weapons and goods into Gaza, tallies with the military's routine suggestions that Hamas, the Palestinian militant group that controls Gaza, is involved in the violence. However, there is no evidence to suggest that is true. Most residents here say the authorities appear to be on the defensive, with soldiers and the police hunkered down at their posts and suffering daily casualties. Although the attackers mainly hit the police and the military, a dozen civilians have been killed in the cross-fire and many others have been wounded, according to local hospital officials. Hanny Aish, a worker at a cement factory, was on a bus in the wee hours of July 15 when a rocket-propelled grenade crashed through the window, killing 3 of the 20 people on board and wounding the rest. "I was sitting behind the driver, and all of a sudden I had flesh and blood all over me," Mr. Aish, who suffered glass cuts across his body and shattered eardrums, said during an interview at his home. The attackers' target appears to have been an armored vehicle that passed by just afterward. But as in the rest of Egypt, even the most basic perceptions of the conflict reflect a bitter division between supporters and opponents of Mr. Morsi. The first group tends to blame the military for all the recent attacks here, saying it is staging fake jihadist attacks to build a pretext for a future crackdown. Sameh Muhammad, a conservative Muslim whose brother Salem was killed in the same bus attack in which Mr. Aish was wounded, said he believed an Egyptian military jet had fired a missile at the bus - despite the testimony of witnesses like Mr. Aish and photographs that appear to show that the bus was struck from the side. "We heard that a witness saw the jet firing a rocket at the bus," said Mr. Muhammad, a religious teacher dressed in a white skullcap and gown, with the long, scraggly beard of a hard-line Salafist Muslim. "They always say that Islamists have done this kind of crime," he said, as a pretext "to crack down on the whole movement." Jihadism has long been a problem in Sinai, which was under Israeli occupation from 1967 to 1982. The area's independent Bedouin tribes have resisted full integration into the state, and smuggling and drug trafficking to neighboring Israel and Gaza have been rampant here for decades. But the Egyptian state has contributed to the problem, local leaders say. "They treated us all as traffickers and criminals, and this marginalization made a fertile ground for terrorism," said Sheik Abdelhadi Etaik Sawarka, a leader of one of the area's main tribes.

After the 2011 revolution in Egypt, the security services withdrew from Sinai, leaving a vacuum where armed Islamists thrived, and some foreign fighters filtered into the area. The militants also gained access to more sophisticated weapons from Libya after the civil war in that country, analysts say. There are persistent rumors that the fighters have acquired surface-to-air missiles that could threaten aircraft in Egypt and Israel, though these have not been confirmed. The identities of the attackers in Sinai remain mysterious: no one has claimed responsibility, and the Egyptian authorities have said little about them, helping to fuel conspiracy theories. But "it appears that Islamist militants are taking advantage of a fluid situation," said Michael Wahid Hanna, an expert on Egyptian politics and the military at the Century Foundation. The biggest concern for the United States and Israel, Mr. Hanna added, is "the possibility that Egypt has lost control over what's going on in the Sinai." Some Islamists and Bedouins here claim that Mr. Morsi's administration was a welcome relief from the heavy-handed approach of Hosni Mubarak and his predecessors. But the change was mostly a matter of tone. Mr. Morsi ordered a crackdown on the jihadists, especially after 16 soldiers were killed by gunmen at a Sinai military base last August, though the subsequent military campaign was short and yielded few results. All the Islamic groups with an official presence here deny responsibility for the recent violence. But some of the more conservative Islamists also talk with a certain confidence about their situation, as if they held a trump card. "If the military pushes the Brotherhood down here, it will have to push all the Islamic groups down, because they are all supporting the Brotherhood," said Sheik Asaad el-Bayk, a Shariah court judge and a leader in a new hard-line Islamic movement called People of the Sunna and the Community. "They cannot do that, because it would mean major violence."

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8. ASSAD SENDS AIR FORCE TO PREVENT REBEL ADVANCES IN HOME PROVINCE

BEIRUT (Reuters Saturday, August 10, 2013) -- Warplanes bombed a village in Syria's north overnight in an apparent effort by President Bashar al-Assad to prevent rebels fighting him from advancing on communities in the stronghold region of his Alawite sect. Assad's forces are on the defensive in his family's home province of Latakia, and recent rebel gains across northern Syria, including a military air base captured last week in Aleppo province, have further loosened his grip on the country. Assad controls much of southern and central Syria, while insurgents hold northern areas near the Turkish border and along the Euphrates valley towards Iraq. The northeast corner of the pivotal Arab state is now an increasingly autonomous Kurdish region. (link.reuters.com/puw22v)

http://link.reuters.com/puw22v

The mainly Sunni Muslim insurgents are battling to overthrow Assad, whose minority Alawite sect is an offshoot of Shi'ite Islam, in a civil war which erupted two years ago when mainly peaceful protests against his rule were put down with force. As many as 20 people were killed in the air strikes on the village of Salma, including 10 civilians, six Syrian fighters and four foreign fighters, the anti-Assad Syrian Observatory for Human Rights group said on Saturday. Amateur video footage posted on the Internet showed a large apartment block with all its outside walls blown out. Men, some in military fatigues, were seen loading bodies onto a pickup truck. Salma is a Sunni village in the Jabal Akrad mountain range which overlooks the Mediterranean. Salma-based rebel forces comprised of mainly Islamist brigades, including two al Qaeda-linked groups, have killed hundreds in offensives this month and have seized several Alawite settlements. Rebels captured the religiously-mixed village of Kharratah two miles (three km) south of Salma, video posted online by rebels on Friday showed. The insurgents could be seen walking around the village, surrounded by green fields and orchards. No civilians could be seen and houses appeared to be empty. ALAWITE REGIONAL STRONGHOLD AT STAKE Assad has deployed extra forces in the region and the air raids reflected an urgent priority to protect the main region of his Alawite sect - 12 percent of Syria's 21 million people. The president's forces have also been pushing to retake lost ground in neighboring Aleppo province, where insurgents have made significant headway over the past few weeks. After the rebel capture last month of Khan al-Assal, a town southwest of Aleppo city, activists said on Saturday soldiers killed 12 civilians, including a woman, in a nearby town. The government accuses rebels of executing 123 people in Khan al-Assal and activists say the killing in Tabara al-Sakhani, 12 miles to the south, could have been retaliatory. Rebel-controlled districts of Aleppo city, once Syria's commercial hub but now partly reduced to rubble by the conflict, were also bombarded by army artillery, the Observatory said. More than 100,000 people have been killed in the 28-month conflict and 1.7 million Syrians have been forced to flee to neighboring countries, the United Nations says. Assad, whose family has ruled Syria for more than four decades, has relied on Alawite-led army units and security forces from the start, but has turned increasingly to loyalist militia armed and funded by Damascus to fight the rebels. He has also enjoyed staunch support from Middle East Shi'ite powerhouse Iran, neighboring Lebanon's Shi'ite Hezbollah movement and the Assads' longtime arms supplier Russia. His fragmented foes have received little military aid from Western powers that want Assad removed but are wary of the growing presence of radical Islamists in the rebel ranks.

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9. KREMLIN SAYS NO DEAL REACHED WITH SAUDI ON CHANGING SYRIA STANCE MOSCOW, Aug 9 (Reuters) - Russian President Vladimir Putin has not made an agreement with Saudi Arabia to scale back support for Syrian President Bashar al-Assad in exchange for economic incentives including an arms deal, the Kremlin said on Friday. Commenting on a Reuters report that Saudi intelligence chief Prince Bandar made the proposal to Putin at talks last week in Moscow, Putin's foreign policy adviser, Yuri Ushakov, said no deal had been discussed in detail. He also said no specifics about military cooperation had been discussed but did not issue a denial that the broad outlines of a proposal had been presented to Putin. "Putin did not discuss a deal," Ushakov told reporters. "No specific questions on developing military cooperation were discussed." Suggesting the meeting had been short on detail, he said: "It was a very rich and interesting meeting that was of a philosophical character." Prince Bandar and Putin "demonstrated a similar amount of concern" about the conflict in Syria, he said. Russia has supported Assad with arms and diplomatic cover throughout the war and any change in Moscow's stance would remove a major obstacle to action on Syria by the United Nations Security Council. Syrian opposition sources close to Saudi Arabia said Prince Bandar offered to buy up to $15 billion of Russian weapons as well as ensuring that Gulf gas would not threaten Russia's position as a main gas supplier to Europe. In return, Saudi Arabia wanted Moscow to ease its strong support of Assad and agree not to block any future Security Council Resolution on Syria, they said. A Gulf source familiar with the matter also said that Prince Bandar offered to buy large quantities of arms from Russia, but that no cash amount was specified in the talks.

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10. EIA: CHINA SET TO TOP U.S. AS WORLD'S BIGGEST NET OIL IMPORTER IN OCTOBER NEW YORK (Dow Jones, Saturday, August 10, 2013) -- China is poised to top the U.S. as the world's biggest importer of oil in October and will hold the ranking for all of 2014, forecasters at the federal Energy Information Administration said Friday. The switch comes as the U.S., the world's biggest oil consumer, is experiencing steady oil demand and surging crude oil production from shale-oil fields, sharply reducing the need for imports. China, the second-biggest oil

consumer, is showing robust growth and an increasing need for foreign oil, evident in Thursday's figures showing record-high crude-oil imports in July that were 20% above the same period in 2012. Rising U.S. oil output in October is projected to top the level of crude-oil imports for the first time since February 1995, the EIA said in its monthly short-term energy outlook released Tuesday. "Since reaching 12.5 million barrels per day in 2005, total U.S. liquid fuel net imports, including crude oil, have been falling and are expected to average less than 6 million barrels per day next year," Adam Sieminski, the EIA administrator, said in a statement released with Tuesday's outlook. Net liquid fuel imports are defined as total liquid fuels consumption, minus domestic production of crude oil, lease condensates, natural-gas liquids, biofuels, other liquids, and refinery processing gain, the EIA said. The EIA projects rising output from shale-oil fields will boost U.S. output by 14% this year, to 7.4 million barrels a day, the highest level since 1991. A further jump of 11.4% is expected in 2014, pushing output to 8.24 million barrels a day, the most since 1987. In October of this year, the EIA projects U.S. oil demand will average 18.61 million barrels a day, a slim 0.6% below the year earlier level. At the same time, U.S. liquids fuel supply, led by rising oil output, will total 12.38 million barrels a day, a year-on-year rise of 7.5%. Net imports in October are expected to fall by 13.5%, to 6.23 million barrels a day. In China, meantime, the EIA sees October demand rising 2% year on year to top 11 million barrels a day for the first time ever. China's fuel supply, will rise by just over 80,000 barrels a day, leaving a gap of nearly 140,000 barrels a day to be met by higher imports. China's net liquid fuels imports in October of 6.45 million barrels a day will top the U.S. level for the month by 3.5%, or nearly 215,000 barrels a day. The U.S. and China nearly reached parity on net imports at around six million barrels a day in December, the EIA said. In 2014, the U.S. net imports average is expected to drop 12%, to 5.57 million barrels a day, the lowest since 1986. China's net imports in 2014 are expected to rise 6.1%, to 6.57 million barrels a day, surpassing the U.S. by one million barrels a day, or 18%, the EIA data show. As U.S. oil demand growth slowed, in part because increased efficiency, including improved vehicle fuel mileage, the U.S. has becoming an increasingly larger net exporter of petroleum products. The EIA projects U.S. net exports of refined petroleum products will climb to a record 1.54 million barrels a day this month, as domestic demand drops to its lowest August level in four years.

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11. CHINA SET TO BECOME WORLD'S BIGGEST OIL IMPORTER (Globe and Mail, Sunday, August 11, 2013) China is poised to overtake the United States as the world's leading oil importer in October, part of a long-term trend that is forcing the Asian giant to find new supply sources including Canada to fuel its economy.

Chinese crude imports will exceed those of the United States for the first time on a monthly basis in October, and for the entire year in 2014, the U.S. Energy Information Administration said Friday. "The imminent emergence of China as the world's largest net oil importer has been driven by steady growth in Chinese demand, increased oil production in the United States and a flat level of demand for oil in the U.S. market," the agency said. Even with a slowing economy, China's fuel consumption is targeted to increase to nearly 13 million barrels a day next year, a 13-per-cent increase from 2011 levels. In contrast, American fuel use will flat-line at around 18.7 million b/d next year, well below peak consumption of 20.8 million in 2005. But U.S. production is surging, crowding out offshore imports. (Canada's crude exports to the U.S. have climbed along with American domestic production.) By the end of 2014, China will be importing nearly seven million barrels a day, while U.S. imports will drop to just over five million. Even as the U.S. breaks its addiction to imported crude, China's dependency will increase, driving both economic and strategic policies aimed at ensuring the country has a secure supply. Those include encouraging state-owned enterprises to invest in oil production and export infrastructure in places such as Canada, Venezuela and west Africa, and building up its navy to guard the critical sea lanes through which much of its crude must pass.

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12. EIA: OIL AND NATURAL GAS EMPLOYMENT LEADING THE ECONOMIC RECOVERY (Rigzone, Sunday, August 11, 2013) -- The oil and natural gas industry has played an instrumental role in the recovery of the United States economy following the economic recession, the Energy Information Administration (EIA) said in its Today in Energy brief released on Thursday. To put into perspective just how much the energy sector contributed to economic growth, consider that total private sector employment increased by more than one million jobs, or about one percent, during the six-year period of 2007 through 2012. The growth of oil and gas industry jobs alone during the same period increased by more than 162,000, or an increase of about 40 percent, the EIA said. Three job categories - drilling, extraction and support - combined for much of the growth in oil and natural gas industry jobs - jobs that kept a support floor under private sector employment figures. There were more than 90,000 drilling jobs by the end of 2012, according to the Labor Department's Bureau of Labor Statistics (BLS). That was an increase of 6,600 jobs since 2007. The BLS characterizes drilling as any job related to the spudding and drilling of wells, or the reworking of wells. Positions in the category of extraction accounted for more than 193,000 jobs by the end of 2012. That was an increase of 53,000 jobs since 2007. Jobs are characterized as extraction jobs by the BLS if they are engaged in operating, developing and producing oil and natural gas fields. Exploration and production work up to the point of shipment also fall into the category of extraction.

Positions that provide support functions employed upwards of 286,000 people by the end of 2012, or about half of the jobs in crude oil and natural gas production. That was an increase of more than 102,000 jobs from 2007. The BLS considers jobs in the support category to be positions performing activities for oil and natural gas operations, including exploration, excavation, well surveying, casing work and well construction. Drilling and support jobs were particularly hard-hit during the recession, but jobs in these categories have rebounded quickly, the EIA said. The importance of jobs generated by the crude oil and natural gas industry extends far beyond the industry. Energy jobs are generally higher-paying than most private sector positions. Because employee expenditures are linked to incomes, higher paying jobs have indirect effects on output and employment in other areas. Karr Ingham, a petroleum economist with the Texas Alliance of Energy Producers, estimates that there is a multiplier effect from energy sector jobs of about five. That means that for every job generated in the energy industry, there are about four jobs generated in other industries. The economy of North Dakota is a good example of the importance of oil and gas industry in a state's economic health. In 2001, North Dakota ranked 38th in real gross domestic product (GDP) per capita. However, North Dakota began making real gains in GDP at the time that shale exploration and production began in the state's Bakken formation. By 2011, and again in 2012, it had the highest annual increase in real capita GDP of any state, according to the U.S. Bureau of Economic Analysis.. The growth in the state has occurred at a time when incomes in the rest of the country have fluctuated. In 2012, the rate of real per capita GDP in North Dakota was nearly 11 percent, compared with a national growth rate of less than two percent.

13. CHESAPEAKE SHEDS MORE ASSETS IN TURNAROUND BID HOUSTON, Aug 9 (Reuters) - Chesapeake Energy Corp has sold its stakes in trucking and natural gas companies and is trying to shed real estate in Oklahoma City, the company told regulators this week, as its new chief executive attempts to turn it around. The second-largest U.S. natural gas producer has slashed spending and pledged capital discipline following last year's liquidity crunch, brought on by years of heavy spending on acreage in U.S. shale formations and low natural gas prices. While it's now more financially fit, the company still faces a gap between operating cash flow and capital expenditure that analysts at Barclays estimate at $1.8 billion this year. But asset sales and cash on hand may help fill the shortfall. Chief Executive Doug Lawler, who replaced former CEO Aubrey McClendon in May, told investors on the company's second-quarter earnings call last Thursday that he and senior management have undertaken a comprehensive review of all the company's assets, partnerships and investments in other companies to determine which are not providing "the proper returns" or a competitive advantage. "I think when you are investing in so many different things, it just takes you away from concentrating on your core business," said Mike Breard, analyst with Hodges Capital Management in Dallas on Friday. "They've got some good properties but they've tied it up with all this miscellaneous stuff."

Lawler declined to provide details of the review on the earnings call, but a 99-page filing the Oklahoma-based company made to the U.S. Securities and Exchange Commission shows the process is well underway. Chesapeake is actively marketing properties in Oklahoma City that are not part of its red-brick Georgian-style corporate campus, it said in its quarterly filing with the SEC on Tuesday. The company has written down the value of all the properties it has for sale, including those previously on the market in Fort Worth, Texas, recording an impairment loss totaling $189 million, according to the filing. SHOPPING SPREE McClendon presided over a spree of more than 100 real estate purchases in Oklahoma City in recent years, worth more than $240 million, according to state property records. Apart from office buildings and homes ringing the 100-acre corporate campus, the company also bought a nearby shopping center and built a luxury retail complex that includes a Whole Foods grocery store. Chesapeake is currently leasing, not selling, space in those complexes, according to its real estate unit's web site. A spokeswoman declined to comment on what properties are being marketed for sale in Oklahoma City. The company is also evaluating its interest in affiliate companies, opting to sell in some cases. On July 30, Chesapeake sold its interest in trucking company Big Star Crude for $3 million. The company sold its 10 percent interest in natural gas producer Gastar Exploration Ltd for $10 million cash in the current quarter, according to the filing. Chesapeake exited investments in Clean Energy Fuels Corp , which provides natural gas fuel for transportation. The carrying value of its $10 million investment in a 1.1 stake in the company backed by T. Boone Pickens has increased by $3 million before the stake sale last month. It sold a $100 million investment in Clean Energy Fuels convertible notes for $85 million in cash to a buyer who also assumed a commitment to buy the third and final $50 million tranche of convertibles.

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14. KEYSTONE XL WON'T ADD TO GREENHOUSE EMISSIONS: STUDY CAMBRIDGE, Mass., Aug. 9 (UPI) -- The proposed Keystone XL pipeline would not have an impact on greenhouse gas emissions, a study indicates. The study by energy consultancy IHS CERA says it agrees with the conclusions of the U.S. State Department's draft environmental review of Keystone released in March that says oil sands production is expected to continue at similar levels regardless of whether the project goes ahead. Keystone XL, which would move oil from the oil sands of Alberta, Canada, to refineries along the U.S. Gulf Coast, is now under federal review at the State Department. The project needs a cross-border permit to complete the project's northern leg.

The department said in its draft review Keystone XL wouldn't substantially increase greenhouse gas emissions. President Barack Obama in his June 25 climate address said the project would win approval only if it does not significantly exacerbate the problem of carbon pollution. Environmentalists maintain Keystone XL would add to greenhouse gas emissions. In the absence of the pipeline, IHS CERA's study says, U.S. Gulf Coast refiners would replace expected deliveries of diluted bitumen from Alberta with heavy oil from Venezuela, which has roughly the same emissions intensity as the Canadian crude. "If gulf refiners cannot access Canadian heavy oil, the most likely alternative is Venezuelan supply, which is projected to grow based on ongoing investments," the study states. Currently the majority of supply on the U.S. Gulf Coast comes from Venezuela, followed by Mexico, it notes. "Venezuelan heavy oil -- and Venezuela -- would be the No. 1 beneficiary of a negative decision on Keystone," the study says. The study says in the absence of the Keystone XL, Canadian oil sands will still find a way to market, either through pipelines traveling exclusively through Canada and not requiring U.S. government approval, or through the increasing use of railcars to ship the heavy oil. "Given sufficient investment, our view is that the economics for moving heavy oil sands crude by rail could improve further, even approaching pipeline economics," the study states. "Consequently, even without the Keystone XL pipeline, we believe that oil sands production would grow at a similar rate. Therefore [greenhouse gas] emissions will be unaffected by the fate of Keystone XL." "After five years and numerous studies, all pointing to the same conclusion, the White House and opponents of the Keystone XL pipeline project have exhausted all arguments," said Sen. John Hoeven, R-N.D., in a statement Thursday. "It's time to stop delaying this critical infrastructure project, which will create jobs, help to grow our economy and help us achieve true North American energy independence," Hoeven said.

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15. IHS-CERA CONCLUDES "NO MATERIAL IMPACT" ON US GHG FROM KEYSTONE XL; HEAVY (Green Car Congress, Sunday, August 11, 2013) The proposed Keystone XL pipeline for transporting oilsands-derived crude to Gulf Coast refineries would have "no material impact" on US greenhouse gas (GHG) emissions, according to a new Insight report by IHS CERA. In a June speech at Georgetown University, President Barack Obama said that the controversial Keystone XL pipeline would only be built if the project "does not significantly exacerbate the problem of carbon pollution." (Earlier post.) In the absence of the pipeline, alternate transportation routes would result in oilsands production growth being more or less unchanged, IHS CERA found. The study also found that any absence of oil sands on the US

Gulf Coast would most likely be replaced by imports of heavy crude oil from Venezuela, which has the same carbon footprint as oilsands crude. The new IHS CERA Canadian Oil Sands Dialogue study thus basically agrees with the conclusions of the US State Department's Draft Supplemental Environmental Impact Statement for Keystone XL that says oil sands production is expected to continue at similar levels regardless of whether Keystone XL goes forward. (Earlier post.) The IHS CERA report notes that pipeline opponents argue that by opening up additional US markets for Canadian oil sands, the Keystone XL project would lead to significant incremental US GHG emissions. A primary dispute with the State Department's analysis is based on the economics of moving oilsands by rail-assumed to be the alternative method of transportation if Keystone XL or other pipelines are not constructed. Pipeline opponents assert that rail costs are prohibitively high and that in a scenario in which pipelines are not constructed, oilsands growth (and consequently GHG emissions) will stall for lack of market access. Critics cite the steep crude oil price discounts for Canadian producers in the past year as further evidence that rail is not economic. On average in 2012, the price of heavy oils sands was $27 per barrel lower than a comparable barrel on the US Gulf Coast (USGC), and for short periods the difference was more than $40 per barrel. However, these deep discounts were not the result of rail costs but rather due to a severe supply and demand imbalance: constraints in the pipeline and refining systems limited flows, resulting in a prolonged period of surplus supply. In fact, growing rail capacity from western Canada has helped to moderate the price discounts faced by Canadian producers by relieving this oversupply. By the end of the first quarter 2013, approximately 150,000 barrels per day (bd) of crude was leaving western Canada by rail (compared with negligible amounts at the start of 2012). Based on continuing oil sands supply growth and the lack of new pipeline capacity through the next few years, we expect rail movements to increase to about 360,000 bd by the end of 2014. Even considering new capacity from rail, the balance between western Canadian supply and export capacity remains tight. Future price volatility is to be expected. However, in some periods such as the past three months-with the help of new capacity from rail-the system has been relatively balanced, and a barrel of heavy oil sands crude priced on average $17 per barrel lower than the value of similar quality heavy oil traded on the USGC. This indicates that oil sands can grow using rail; it is already happening. -IHS Cera Insight on Keystone XL IHS currently expects oil sands production to grow from 1.9 million barrels per day (mbd) in 2013 to 4.3 mbd in 2030 and does not expect the Keystone XL decision to have a material impact on the production outlook. The IHS study points out that 3 mbd of additional oil sands pipeline capacity (not including Keystone XL) is currently proposed. 80% of this proposed alternate capacity travels exclusively through Canada-connecting the oil sands with Canada's west and east coasts-and thus does not require US government approval. Even if pipeline capacity were to lag behind oil sands growth, the study says that transportation by rail is expected to play an ongoing role and that greater investment could make rail more economic to a level approaching that of pipelines.

"...the decision on Keystone XL may ultimately boil down to a determination of oil market share between Canada and Venezuela. Venezuelan heavy oil-and Venezuela-would be the number one beneficiary of a negative decision on Keystone." -IHS CERA InsightThe study found that with sufficient scale and investment the additional cost of transporting oil sands by rail to the US Gulf Coast rather than by pipeline could be lowered from today. If heavy oil sands producers were to invest in improved rail efficiencies, the economics could be within $6 per barrel compared to pipeline (for each barrel of oil sands produced). This would place rail well within the breakeven range for most oil sands production. One source of improved economics could come from shipping oil sands bitumen in its pure state, the report highlights. A lack of pipeline capacity would incentivize such added investment. Moving pure bitumen by rail. Although moving crude oil by rail is generally more expensive than by pipeline, the report notes, oilsands heavy oil could be an exception. In its natural form, bitumen is too thick for pipelines, and thus must be thinned by adding light hydrocarbons (typically natural gas condensates) for pipeline transportation. The resulting mixture (called diluted bitumen, or dilbit) is about 70% bitumen and 30% diluents, and is how bitumen is transported today, whether by pipeline or rail. However, unlike pipelines, rail cars do not necessarily require diluent for moving oil sands. With the appropriate investment, they can transport pure bitumen, using heat to thin the bitumen during railcar loading and unloading. By railing pure bitumen (instead of dilbit in a pipeline or rail car) oil sands producers can avoid some expense-specifically cost for the diluent-plus there would be fewer barrels to transport (compared with dilbit, shipping pure bitumen decreases the total volume moved by 30%). These savings offset some of the extra costs associated with rail transport. Assuming sufficient scale and investment, our view is that producer netbacks from the USGC for transporting pure bitumen by rail would be comparable to about $6 lower than for moving with pipeline (for each bitumen barrel produced). This compares favorably with netbacks for railing dilbit to the USGC, which would be in the range of $10 to $15 lower than pipeline for each barrel of bitumen produced. Assuming the comparative economics between pipeline and rail were in this range ($6 per barrel or less), over the longer term, we would expect oil sands growth would not be affected, even if rail is an ongoing component of the transportation options for oil sands. -IHS CERA Insight Venezuela. The study also found that, were oil sands not to be shipped to the US Gulf Coast, it would result in little to no change in overall GHG emissions. That region-which contains 50% of total US refining-has a large capacity to process heavy crude. This means that crude oils of similar GHG intensity would continue to be refined in the absence of oil sands, the study says. Venezuela is currently the largest single supplier of heavy crude to the US Gulf Coast and would be the most likely alternative source of heavy crude supply-which is projected to grow based on ongoing investments (including the Orinoco)-absent crude from the Canadian oilsands. IHS research has found Venezuelan heavy crude to have a similar range of life-cycle GHG emissions as oil sands imported into the United States. [Back to

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16. THE COMING SHALE WRITE-DOWNS (Casey Research, Sunday, August 11, 2013) Not all shales are equal. Some shales are deeper than others; and some are dry gas, while others are gas with liquids. In North America, billions of dollars have gone into developing all types of shale formations to extract as much natural gas, natural-gas liquids, and oil as possible. The production from shale formations has truly been a game-changer for North America, but yet, oil is still more than US$100 barrel. How can oil be more than US$100/bbl even though the shale revolution was supposed to save us from high oil prices? First off, shale wells are very expensive to drill and complete. Including all costs, it can cost up to US$15 million to drill, frac, and complete a deep horizontal well. Because of the success of the shale revolution in North America, natural-gas prices have decreased significantly. In fact, in many parts of North America, the natural-gas shales are uneconomic without NGLs (natural-gas liquids) as a byproduct. We have written many times about the phantom shale-gas wells in North America. There are thousands of wells that have been drilled and only need less than 100 hours to be completed and producing before the wells are tied in to the system and sold for cash flow. The owners of the phantom gas wells are waiting for better prices before they complete the wells and sell the gas. The decline rates of the shale wells are a major Achilles heel to the North American oil and gas sector. We've written in detail-not just in the Casey Energy Report, but also in the Casey Daily Dispatch-about the misleading ways energy companies can report their production numbers. Warning to investors: Whenever you see a company reporting 24-hour initial production (IP) rates, block that company from your email list and avoid it like the plague. IP rates are the initial production flow rates a company announces. Five years ago, the industry standard was to publish anywhere between 30- to 90-day IP rates. In the last couple of years, we have noticed a new trend of companies lowering the bar and announcing 24-hour IP rates. This is shocking and alarming, because the 24-hour IP rate is completely useless information. The decline rates of many shale formations are very harsh, resulting in 75% and higher decline rates in the first year. If a company announces a 24-hour IP rate of 1,000 barrels of oil equivalent per day (boepd), your first reaction should be to stay away from that company. It's a safe bet that same oil well will be producing around 500 boepd after 30 days, and most likely somewhere around 250 boepd after one year. That is what we mean by harsh decline rates. So the high costs and harsh decline rates of the North American shales are two reasons for high West Texas Intermediate oil prices. Another reason that is starting to rear its ugly head is write-downs of shale formations. The Shale Write-Down Shell was the first major to announce a major shale write-down in North America. Shell wrote down about US$2 billion, mainly associated with liquid-poor shale projects. The wells are simply uneconomic when there is nothing but dry gas coming out of them. Remember, not all shale formations are the same, similar to how not all gold deposits are the same.

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17. US DRILLING RIG COUNT DIPS 4 UNITS TO 1,778 (The Oil & Gas Journal, Sunday, August 11, 2013) -- The US drilling rig count decreased 4 units during the week ended Aug. 9 to reach a total of 1,778 rotary rigs working, Baker Hughes Inc. reported. Land-based drilling dipped by 2 units this week to 1,697 rigs working. There were 57 rigs working offshore, down 1 unit from a week ago. Of these, 55 were drilling in the Gulf of Mexico, unchanged from a week ago. The number of rigs drilling in inland waters fell 1 unit to 24. Rigs drilling for oil lost 3 units to reach 1,385, while those drilling for gas slipped 2 units to 388 rigs working. Compared with the same week last year, gas rigs were down 109 units, while those targeting oil were down 47. Seven rigs were considered unclassified, up 1 unit from a week ago. The number of rigs drilling horizontally decreased by 8 units to 1,065, while the number of rigs drilling directionally fell by 11 units to 266. Canada's rig count increased by 17 units to 358 this week. This count includes 230 rigs drilling for oil, up 7 units from a week ago, and 128 drilling for gas, up 10 units from last week. Major states, basins Of the major oil and gas producing states, California dropped 4 units to 38 rigs working. Texas and New Mexico were each down 2 units to 849 and 74, respectively. Wyoming and Alaska, at 51 and 11, were each down 1 unit. Seven states were unchanged this week: Oklahoma, 168; Louisiana, 108; Pennsylvania, 51; West Virginia, 38; Ohio, 35; Utah, 30; and Arkansas, 13. Gaining 1 rig each were North Dakota, 171, and Kansas, 24. Colorado was up 3 units to 71. Notable changes this week in major US basins included a 4-rig loss in Granite Wash with a total of 71 rigs working and a 3-rig fall in Eagle Ford, which reached 236 this week. The Permian gained 7 rigs to 470 units working. The Mississippian, at 74 rigs, was up 4.

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18. IS PEAK OIL DEMAND JUST AROUND THE CORNER? (The Washington Post, Sunday, August 11, 2013) -- For years, there’s been lots of debate over “peak oil” — the notion that, at some point in the near future, the rate of global oil production will bump up against a hard ceiling. This is generally considered a gloomy prospect.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/13/peak-oil-isnt-dead-an-interview-with-chris-nelder/

An oil pump operates in the desert oil fields of Sakhir, Bahrain, at sunset. (Hasan Jamali/Associated Press) But another, related concept has started to bubble up in energy discussions lately. It’s the notion of peak oil demand. This is the idea that the world’s appetite for oil may not be bottomless after all. Thanks to a combination of price increases, improvements in vehicle efficiency, as well as the advent of alternative fuels and electric cars, we may reach a point in the coming decades where the world’s demand for oil actually starts declining. And if that happens before peak oil production hits, well, that would come as a relief. The basic “peak oil demand” argument The possibility of peaking oil demand recently came up in a long feature in the Economist. Right now, the world consumes about 89 million barrels of oil per day. Yet car travel in wealthy countries appears to be on the wane. New alternatives to gasoline are emerging — from natural-gas-powered trucks to plug-in electric vehicles. And as for developing countries, even China is now adopting stringent fuel-economy standards to curtail air pollution. Tally it up, and analysts at Citi think the world’s thirst for oil could peak in a few years at around 92 million barrels per day (the gray-blue scenario) — as long as vehicle efficiency for cars and trucks keeps improving by about 2.5 percent per year:

http://www.economist.com/news/briefing/21582522-day-huge-integrated-international-oil-company-drawing



(The Economist) This is an unusual prediction, to say the least. For context, BP expects global oil demand to keep growing from 89 million barrels per day today to around 104 million barrels per day by 2030. So is Citi’s forecast plausible? For some perspective, I asked Stanford’s Adam Brandt, who recently co-authored a peer-reviewed study that explored the “peak demand” scenario. The story turns out to be a little more complicated … A more complex “peak demand” scenario Brandt’s paper takes a hard look at various historical trends on travel, vehicle efficiency and fuel use and tries to model what would happen if those carried forward. “This isn’t meant to be a prediction,” he explains, “but more about asking what the implications are of what we know about historical trends.” Here’s the main chart from his study:

http://www.washingtonpost.com/blogs/wonkblog/files/2013/08/20130803_FBC159.png

http://grandemotte.wordpress.com/2013/03/18/energy-outlook-2030/

http://pubs.acs.org/doi/abs/10.1021/es401419t

http://pubs.acs.org/doi/abs/10.1021/es401419t

http://www.washingtonpost.com/blogs/wonkblog/files/2013/08/peak-oil-brandt.png

Based on past trends, the study projects that global demand for conventional oil could peak around 2030 or so (the red wedge). And it could peak even sooner if nations adopted even stricter fuel-economy standards or if electric cars caught on faster than expected. Where things get interesting is in that tan wedge, labeled “unconventional liquids.” In Brandt’s study, this represents all the possible fuels that could conceivably replace conventional crude oil in our transportation system. It could be natural gas. It could be biofuels. It could be oil from unconventional sources like Canada’s tar sands or North Dakota’s shale rock. The study is agnostic on this. The precise contents of that tan wedge will have implications for things like climate change. If the world supplants its thirst for conventional oil with, say, oil from Alberta’s tar sands and other “unconventional” oil, then carbon-dioxide emissions will keep rising and heat the planet. If electric cars powered by renewables (say) fill in the gap, the picture looks rosier. So, Brandt says, we should worry more about that tan wedge rather than the red wedge. “Rather than the current focus on scarcity of conventional oil resources,” the study concludes, “we believe that more attention should be focused on understanding and anticipating the economic, environmental and social consequences of adopting the various alternatives to conventional oil.” Will the world hit peak travel? Clearly Brandt’s analysis provides a different picture than Citi’s forecast. Barring some huge policy shift, demand for some sort of liquid fuel for transportation is likely to keep growing enormously in the years ahead — the study projects that “transport energy demand” in Asia could grow more than 1,000 percent over the coming century. Still, Brandt’s study does project an overall peak in oil demand sooner than many other forecasts, such as BP’s. And that’s largely, Brandt explains, because their model suggests that global automobile travel may not keep growing indefinitely. “This is largely a story about land travel,” he says.

There are already signs that wealthy countries — the United States, Canada, Australia, Europe, Japan — appear to have hit a peak in driving (see chart). The key question, then, is what happens in fast-growing countries like China and India. But here too, Brandt says, there are reasons to think that their demand for driving could hit a saturation point even as these countries get wealthier.

http://en.wikipedia.org/wiki/Unconventional_oil

http://www.washingtonpost.com/blogs/wonkblog/files/2013/08/historical-travel.png

“You can’t just take the rapid growth of the past 10 years and continue this extrapolation indefinitely,” he says. For instance: “Eventually you get to the point where people in China are sitting in traffic. There’s a long-standing notion of a travel time budget, the idea that there’s only so much time people are willing to spend on travel. And that becomes the constraint, rather than income.” Note, by the way, that Brandt is purely talking about driving. As his paper makes clear, there’s no evidence that demand for air travel will level off as countries get richer — on the contrary, that seems to keep going up and up indefinitely. Reasons for skepticism Now, there are plenty of reasons to be skeptical about the “peak demand” scenarios. For one, as Brandt says, this is more of an exploration of what we currently know about travel demand and technology rather than a hard prediction. But the future won’t necessarily resemble the past. For one, it’s possible that fuel efficiency won’t improve as rapidly as these forecasts expect. As Chris Nelder has pointed out, stricter fuel-economy laws can help, but much depends on how quickly the cars on the road actually get upgraded. In the United States, the turnover rate for the 240 million vehicles in circulation has been fairly modest these past few years. What’s more, it’s entirely possible to imagine technologies that could increase demand for driving in the decades ahead. If Google’s autonomous vehicles make motoring around easier and more pleasant, people may do more of it. Likewise, Eric Jaffe of the Atlantic Cities recently discussed evidence that online delivery services could increase overall traffic — by allowing people to outsource their mundane errands and replace that time with other types of driving. Or perhaps the opposite will occur. So there are a lot of variables at play here. And if the world can’t find ways to curb its oil use on the demand side, then we’re back to worrying about resource scarcity — and in that case, as Nelder argues here, high oil prices could do the job of cutting our demand.

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FAIR USE NOTICE: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material in this newsletter is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this newsletter for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

http://www.freakonomics.com/2011/03/16/the-travel-time-budget/

http://www.getreallist.com/has-vehicle-efficiency-really-curbed-u-s-oil-demand.html

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/30/will-self-driving-cars-solve-all-our-energy-problems-or-create-new-ones/

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/30/will-self-driving-cars-solve-all-our-energy-problems-or-create-new-ones/

http://www.theatlanticcities.com/commute/2013/08/has-rise-online-shopping-made-traffic-worse/6409/

http://www.smartplanet.com/blog/take/peak-oil-isnt-dead-it-just-smells-that-way/963

http://www.law.cornell.edu/uscode/17/107.shtml

car bombings kill scores across iraq - peak oil

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