Five Minute Headline Summary for December 2nd

OPEC production higher as cheating increases.

OPEC oil production hits the highest level in a year of 26.65 mbpd not counting Iraq. This is 1.8 mbpd higher than their current production target put in place nearly a year ago. The compliance with 4.2 mbpd production cut is now at 57%. OPEC meets again on December 22nd and is not expected to raise the production target.

Gold explodes to a new historic high.

Gold jumped to a new high of $1,216.75 overnight in London as further worries over the dollar weakness and lingering worries over the Dubai credit crisis continued to send investors into gold as a flight to quality. The Baltic Dry Index hit a 14-month in November but has fallen for 8 straight days on worries the global economic rebound is losing steam.

Iranian President Mahmoud Ahmadinejad Speaks Out, Again

Iranian President Mahmoud Ahmadinejad said it would be impossible for world powers to isolate his country after the U.S. and European allies said the regime?s plan to expand its nuclear program may provoke more sanctions.

"Who can isolate Iran? This is something that's impossible," Ahmadinejad said in an interview on state-run Press TV late yesterday. "The most strategic part of the world is the Middle East."

Iran, with the world's No. 2 oil and natural gas reserves, is already under three sets of United Nations Security Council sanctions over its nuclear program. Ahmadinejad?s Cabinet has ordered scientists to begin building 10 uranium-enrichment sites within two months in defiance of UN demands, state-run media reported earlier this week. The UN atomic agency last week censured Iran for concealing its Fordo uranium enrichment plant and repeated calls for the government in Tehran to suspend nuclear activities. Ahmadinejad condemned Russia for backing the International Atomic Energy Agency?s resolution, saying it was a "mistake." Iran is serious about building 10 more uranium enrichment plants, AFP cited Ahmadinejad as saying in the interview. "There is no room to bluff in this regard," he said. "We will follow through on what we say."

Iran's Oil Minister says Iran could halt exports.

Iran's oil minister Tuesday warned the world powers that Iran may stop exporting crude oil if economic sanctions continue to be enforced on the Islamic republic, an Iranian news agency said. "Iran is one of the world's major oil producers and any cut in Iran's supply of crude will, undoubtedly, cause prices to surge," the semi-official Mehr news agency quoted Masoud Mirkazemi as saying at a Tehran press conference. Fears of supply disruptions tied to international tensions with Iran, the second-largest oil exporter in the Organization of Petroleum Exporting Countries, have long sent jitters in oil markets. Last year, crude prices rocketed to a record $147 a barrel after reported threats by Israel to bomb Iran.

"Iran needs the oil market more than the oil market needs Iran right now," said Rick Mueller, an analyst with the consultancy ESAI. Saudi Arabia alone could quickly ramp up production enough to meet global demand should Iran cut the world off, he added.

Iran has used the oil card before in order to pump up prices. That might not be as dumb as they appear. If you could raise the price of oil by $3-$5 a barrel and ship 3 mbpd that might be worth some blustery bravado.

Barclay's warns on Mexican oil output

Mexico?s oil output may "decline sharply" next year as state-owned Petroleos Mexicanos enters a sixth year of falling production, Barclays Capital said. Output may drop 8.9 percent in 2010 from this year, Helima Croft and other analysts said in a note to clients today. Mexico, which pumped 2.607 million barrels a day of oil through October, may see Pemex?s output fall to 2.374 million barrels, according to Bloomberg calculations using Barclay?s estimate.

Pemex has pumped less oil since 2003, costing the Mexico City-based company about 300 billion pesos ($23.3 billion) in lost sales this year. Pemex's proved reserves may drop for the 11th year in 2010, as the company struggles to find new fields to replace its mature Cantarell field. "The decline in Mexican oil output picked up speed in October," Croft said in the note. "We expect Mexican oil output to continue to decline sharply."

Total to Invest $18 Billion in 2010

Total SA, Europe?s third-largest oil producer, plans to keep investment stable at about $18 billion next year as it seeks to work more closely with Chinese, Russian and Brazilian competitors to raise output.

Total has pumped less oil and gas this year after the recession cut energy use and the Organization of Petroleum Exporting Countries imposed stricter limits on output. The Paris-based company plans to restore production growth next year as it integrates new projects and adds joint ventures abroad. "If there is a way to develop a partnership with Petrobras in Brazil we would of course wish to do this," Darricarrere said in Paris yesterday. "The discoveries in Brazil will need big financing and technical expertise and the scale of the resources to be developed will leave room for international oil companies." Continue reading

Russian Nuclear Weapons needed to fill uranium shortage

The world?s atomic-power plants risk running short of fuel within a decade because uranium suppliers can't build enrichment facilities or recycle Soviet-era warheads fast enough, according to the World Nuclear Association. Fifty-two nuclear reactors are under construction, from China and India to Finland and France, according to an October bulletin from the association. Atomic power is undergoing a revival partly because it produces far fewer greenhouse gases than conventional coal- or natural gas-burning generators.

About 10 percent of global fuel demand will be met with supplies generated through a U.S.-Russia weapons agreement ending in 2013. Under the 1993 accord, Russia retrieves enough bomb-grade uranium from melting warheads and blending the metal with lower-level fuel to feed about 30 U.S. plants that can produce 41,250 megawatts of power.