Home » Posts tagged 'iea' (Page 10)

Tag Archives: iea

The party is over for tight oil.

Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies.

Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues.

EIA said that U.S. production will fall by 1 million barrels per day over the next year and that, “expected crude oil production declines from May 2015 through mid-2016 are largely attributable to unattractive economic returns.”

IEA made the point more strongly.

“..the latest price rout could stop US growth in its tracks.”

In other words, outside of the very best areas of the Eagle Ford, Bakken and Permian, the tight oil party is over because companies will lose money at forecasted oil prices for the next year.

Global Supply and Demand Fundamentals Continue to Worsen

IEA data shows that the current second-quarter 2015 production surplus of 2.6 million barrels per day is the greatest since the oil-price collapse began in 2014 (Figure 1).

Figure 1. World liquids production surplus or deficit by quarter. Source: IEA and Labyrinth Consulting Services, Inc.

(click image to enlarge)

EIA monthly data for August also indicates a 2.6 million barrel per day production surplus, an increase of 270,000 barrels per day compared to July (Figure 2).

Figure 2. World liquids production, consumption and relative surplus or deficit by month.

Source: EIA and Labyrinth Consulting Services, Inc.

(click image to enlarge)

It further suggests that the August production surplus is because of both a production (supply) increase of 85,000 barrels per day and a consumption (demand) decrease of 182,000 barrels per day compared to July.

…click on the above link to read the rest of the article…

Why Saudi Arabia’s Pursuit Of Market Share Is Self-Defeating

September 11, 2015

Why Saudi Arabia’s Pursuit Of Market Share Is Self-Defeating

The Saudis are on track to sacrifice ~$100 billion in crude export revenues in 2015, or 45 percent of 2014’s ~$219 billion in crude export revenues, in pursuit of market share, the measure of success Saudi Oil Minister Ali bin Ibrahim Al-Naimi announced at the November 27, 2014 OPEC meeting.

What do the Saudis plan as their encore in 2016? Will they continue pursuing market share over other goals (e.g., total revenue, economic diversification, OPEC conciliation), or will they alter course, and if so, is there a superior alternative?

Publicly, Saudi officials appear unwavering in support of market share. The crude oil futures markets and many pundits reflect this official line. Saudi economic fundamentals, IEA projections through 2020 for the oil market, and the currency markets—pressuring the Riyal-US$ peg—suggest the pursuit of market share is at best a chimera, at worst necrotizing fasciitis (flesh eating bacteria) for Saudi Arabia.

A Saudi Economic Reality Check

Depending on the data series used, the Saudi economy either is escaping unscathed, if not prospering, from the move to market share or is suffering from that move. The IMF Press Release reporting on an IMF team’s findings, published June 1, 2015, expressed the former:

“The decline in oil prices is resulting in substantially lower export and fiscal revenues, but the effect on the rest of the economy has so far been limited. Real GDP growth is projected by IMF staff at a healthy 3.5 percent this year, unchanged from 2014, with an increase in oil production and continued government spending expected to support the economy. Growth, however, is projected to slow to 2.7 percent in 2016 as government spending begins to adjust to the lower oil price environment. Over the medium-term, growth is expected to be around 3 percent. Inflation is likely to remain subdued.”

…click on the above link to read the rest of the article…

The Peak Oil Crisis: A $4 Trillion Hole

August 20, 2015

The Peak Oil Crisis: A $4 Trillion Hole

Last week reporters at the Wall Street Journal sat down and did some arithmetic. They looked at how much oil was selling for in the spring of 2014 (over $100 a barrel); looked at what it is selling for today (under $50); and concluded that if prices stay low for the next three years, the global oil industry and the countries it finances will be out $4.4 trillion in revenues. As these oil companies, nationalized and publically traded, will be producing roughly the same amount of oil in the next few years, the $4 trillion will have to come mostly out of profits or capital expenditures.

This is where the problem for the future of the world’s oil supply comes in. The big oil companies, especially those that export much of their production, have been doing quite well in recent years. National oil companies have earned vast profits for their political masters. Publically traded ones have developed a tradition of paying out good dividends which they are loathe to cut.

This leaves mostly capital expenditures on exploring for and producing more oil in coming years to take a dive as part of the $4 trillion revenue hit. Even if oil prices of $50 a barrel or less do not continue for the next three years, this still works out to a revenue drop of $1.5 trillion a year or about three times the planned capital expenditures of some 500 oil companies recently surveyed.

The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.

…click on the above link to read the rest of the article…

Oil Price Rebound Looking Unlikely

July 14, 2015

Oil Price Rebound Looking Unlikely

Oil prices may have firmed up a bit this spring, but we could be heading into another protracted period of weak prices.

First there are the demand risks. The Chinese stock market turmoil raises serious concerns over a potential financial crisis, which, needless to say, would be negative for oil prices.

The Greek crisis, again, presents risks to oil markets, not because Greece is a major oil produce or consumer (it is neither), but because of the threat of instability to the euro and to financial markets.

Both of these factors were behind the dramatic fall in oil prices earlier this month, but both are largely baked into the price already. And with an apparent band aid to the Greek crisis (but not a real solution) in hand, and the steadying of the Chinese stock markets over the last few days on the back of heavy intervention by the Chinese government, these two forces could be temporary.

However, there are other dangers ahead for oil prices. The International Energy Agency (IEA) estimated in its monthly oil market report that global demand growth will slow to just 1.2 million barrels per day (mb/d) in 2016, down from 1.4 mb/d this year. Weak demand means consumers won’t be able to soak up the extra supply.

But then there are the supply risks. OPEC revealed in its own monthly report that Saudi Arabia is now producing at its highest level on record. From May to June, Saudi Arabia ramped up output by an additional 230,000 barrels per day to reach a record high of 10.5 mb/d. Iraq also added 303,000 barrels per day in June and Nigeria added 75,000 barrels per day. OPEC continues to flood the market and collectively the cartel is producing well in excess of its 30 million-barrel-per-day target.

…click on the above link to read the rest of the article…

Global Cooling Alert: World Faces Longest Oil Glut In Three Decades

June 16, 2015

Global Cooling Alert: World Faces Longest Oil Glut In Three Decades

The world is on the brink of the longest-lasting oil glut in at least three decades and OPEC’s quest for market share makes it almost unavoidable.

Oil supply has exceeded demand globally for the past five quarters, already the most enduring glut since the 1997 Asian economic crisis, International Energy Agency data show. If the Organization of Petroleum Exporting Countries were to keep pumping at current rates it would become the longest surplus since at least 1985 by the third quarter, the data show.

There are few signs the 12-nation group will cut back. Saudi Arabia, OPEC’s biggest member, will probably increase production to intensify pressure on U.S. shale drillers, Goldman Sachs Group Inc. predicts. OPEC’s supplies may be swollen further this year if Iran reaches a deal with world powers to ease sanctions on its exports, Commerzbank AG says.

“It seems to be taking longer for the oil surplus to clear, and, even without the return of Iran, IEA data indicates it could last for the rest of the year,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “Any expectations the oversupply will be gone by 2016 don’t look justified at this stage.”

OPEC pumped 31.3 million barrels a day in May and will probably continue to pump around that level “in coming months,” the IEA said in a report on June 11. The agency doesn’t forecast OPEC production.

Brent for August settlement gained 28 cents to $64.23 a barrel on the London-based ICE Futures Europe exchange at 12:04 p.m. Singapore time.

…click on the above link to read the rest of the article…

Why EIA, IEA, and BP Oil Forecasts are Too High

June 9, 2015

Why EIA, IEA, and BP Oil Forecasts are Too High

When forecasting how much oil will be available in future years, a standard approach seems to be the following:

Figure out how much GDP growth the researcher hopes to have in the future.
“Work backward” to see how much oil is needed, based on how much oil was used for a given level of GDP in the past. Adjust this amount for hoped-for efficiency gains and transfers to other fuel uses.
Verify that there is actually enough oil available to support this level of growth in oil consumption.

In fact, this seems to be the approach used by most forecasting agencies, including EIA, IEA and BP. It seems to me that this approach has a fundamental flaw. It doesn’t consider the possibility of continued low oil prices and the impact that these low oil prices are likely to have on future oil production. Hoped-for future GDP growth may not be possible if oil prices, as well as other commodity prices, remain low.

Future Oil Resources Seem to Be More Than Adequate

It is easy to get the idea that we have a great deal of oil resources in the ground. For example, if we start with BP Statistical Review of World Energy, we see that reported oil reserves at the end of 2013 were 1,687.9 billion barrels. This corresponds to 53.3 years of oil production at 2013 production levels.

If we look at the United States Geological Services 2012 report for one big grouping–undiscovered conventional oil resources for the world excluding the United States, we get a “mean” estimate of 565 billion barrels. This corresponds to another 17.8 years of production at the 2013 level of oil production.

…click on the above link to read the rest of the article…

Global Oil Shortage Before Year’s End? Surely Not…

June 8, 2015

Global Oil Shortage Before Year’s End? Surely Not…

Now that OPEC has left its production quota unchanged, the world will continue to see a glut in supplies, right?

Some analysts aren’t so sure. Sanford C. Bernstein predicts that by the end of the year global demand will outstrip supply by an estimated 1.5 million barrels per day.

That flies in the face of a lot of separate estimates. The IEA says that oil supplies are still in excess of what the world is consuming, by some 2 million barrels per day. Even with flat supplies coming from US shale, drillers are still pumping way more oil than the world is consuming. That leaves Bernstein as an outlier when it comes to guessing which way oil markets are heading.

But there is reason to believe that Bernstein is not off the mark. While market analysts are right to closely watch the trajectory of US production levels as well as what OPEC is up to, a lot less attention is being paid to the demand side of the equation. Part of OPEC’s strategy, we must remember, is to ensure the world stays hooked on oil for the long haul. The cartel’s strategy of keeping prices low dovetails with that – low prices reduce the urgency to transition away from crude oil.

And their strategy is bearing fruit – demand is growing quickly. The IEA said in its May report that “global demand growth gained momentum in recent months.” That is certainly true in the US, where motorists are hitting the roads at levels not seen since before the financial crisis. Seduced by lower prices, gasoline consumption is at its highest level since 2007, after years of stagnation. Low gas prices are also giving a boost to SUV sales as drivers cast off their energy efficient ways at the first sign of weak prices.

…click on the above link to read the rest of the article…

OPEC according to the EIA

May 31, 2015

OPEC according to the EIA

OPEC publishes monthly production data for all OPEC nations in their Monthly Oil Market Report. The data crude oil production only and does not include condensate. I have found the data to be highly accurate and any errors are corrected in the next month’s report or the month following that. The OPEC data is from OPEC’s “Secondary Sources”.

The EIA also publishes OPEC production data in their International Energy Statistics. However the EIA does not publish crude only data. Their data includes condensate.

All data is in thousand barrels per day. The last EIA data point is December 2014 and the last OPEC data point is April 2015.

Almost 20% of Algeria’s production is condensate if the EIA is correct. Algeria does produce a lot of condensate but I have serious doubts about the accuracy of the EIA data. As you can see from the chart the EIA has Algeria’s production absolutely flat for 24 months, from January 2010 through December 2011. But both the EIA and OPEC agree on one point, Algeria is in decline.

Angola is one place the EIA and OPEC pretty much agree. Angola has declined by about 300,000 bpd since peaking in 2010.

…click on the above link to read the rest of the article…

What Does Exxon Know That We Don’t?

May 24, 2015

What Does Exxon Know That We Don’t?

Forecasts from the IEA and Goldman Sachs this week are trying to say that crude barrels are still overpriced – but the market isn’t listening. I’ve been convinced that crude prices above $60 are counterproductive as Goldman said in their recent note – but other factors are continuing to help push prices higher.

Let’s take a closer look and see what’s going on – and what might go on in the near future.

Some short-term fundamentals continue to push traders into long positions in oil. I’ve been among the first to point out the large outflows of capital from just about every other asset class, save for energy stocks and commodities. This isn’t particularly smart analysis, but clearly money managers and institutional investors are looking for ‘value’ in a very hot market – and oil stocks and commodities look just too low to them. For these ‘value searchers’, it’s damn the fundamentals – full speed ahead, and oil catches a bid with every, even small bullish indication.

As appears to be the case with Chinese demand, which has incrementally picked up in recent months. But it’s not like Chinese imports aren’t being met for the most part – they are finding more oil now than ever before in their history. And imported oil is not being used. Several reports have Chinese oil stockpiles growing for the last 7 weeks – an obvious way for China to hoard oil that they think is going to get more expensive later.

US stockpiles have come slightly down in the last few EIA reports – a surprise for many who believed that storage would increase throughout the summer. Many are extrapolating that this drop in stockpiles is a harbinger of slower production from slashed numbers of rig counts, but this may be very premature.

…click on the above link to read the rest of the article…

This May Just Be The Start Of The Oil Price War Says IEA

May 17, 2015

This May Just Be The Start Of The Oil Price War Says IEA

Saudi Oil Minister Ali al-Naimi may be one of the most powerful individuals in the global oil industry. After all, as the top oil official in arguably the world’s most influential oil-producing country, he has enormous influence.

But for all his power, is he the most ingenious? That question arises from the release of two reports on the current state of the oil industry that look at whether or not OPEC’s strategy of forcing US shale to cut back is succeeding.

The first, issued on May 12 by OPEC, says, in essence, that Saudi Arabia’s effort to keep its own oil production at near-record highs is succeeding in wresting market share back from US producers of shale oil, also called “light, tight oil” (LTO). The second, issued a day later by the International Energy Agency (IEA), agrees, but only up to a point.

“In the supposed standoff between OPEC and U.S. light tight oil (LTO), LTO appears to have blinked,” the IEA reported. “Following months of cost cutting and a 60 percent plunge in the U.S. rig count, the relentless rise in U.S. supply seems to be finally abating.”

But the report from the Paris-based IEA, which advises 29 industrialized countries on energy policy, also pointed to a rebound in oil prices that could benefit US shale producers.

As both the OPEC and IEA reports point out, the decline in US shale oil output has somewhat reduced the oil glut and led oil prices to rally up to about $65 per barrel. And the IEA adds that this brings LTO back above the threshold where its production becomes profitable again.

…click on the above link to read the rest of the article…

Are We Witnessing The Beginning Of The End For Fossil Fuels?

May 17, 2015

Are We Witnessing The Beginning Of The End For Fossil Fuels?

Bloomberg recently declared the era of fossil fuels irrevocably in decline: “The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there’s no going back.”

The sea change in how we power our economies officially occurred in 2013, Bloomberg’s Tom Randall writes in “Fossil Fuels Just Lost the Race Against Renewables.” That year, there were 143 gigawatts (GW) of renewable electricity capacity added globally, versus just 141 GW of new fossil-fueled capacity.

Despite low oil prices, the trend toward renewables is not going to slow down anytime soon, given that the cost of solar and wind power has steadily fallen to the point that it is now cheaper than grid electricity in some parts of the world, Randall argues. “The shift will continue to accelerate, and by 2030 more than four times as much renewable capacity will be added.”

That’s for electricity generation, of course, but before you can officially call the race in renewables’ favor, you have to consider transport. Our cars and trucks and planes mostly run on fossil fuels, after all. As Vox’s Brad Plumer points out, “Electricity and heat were only responsible for about 42 percent of global CO2 emissions from fuel combustion in 2012. For clean energy to truly win the race, it will have to make inroads in other sectors as well, particularly transportation.”

An analysis by the International Energy Agency found that the amount of energy used for transport has doubled over the past three decades, and that slightly more than half of all oil is used for transport.

…click on the above link to read the rest of the article…

Global oil glut grows to 2 million barrels a day as OPEC pumps more

May 14, 2015

Global oil glut grows to 2 million barrels a day as OPEC pumps more

International Energy Agency predicts oversupply of refined fuel, but points to rising demand

Fresh data on worldwide crude production shows the global glut of oil is growing with Saudi Arabia’s production near record highs, according to the International Energy Agency.

And there are signs the oversupply is moving into the market for refined products such as gasoline, meaning the recent rally in oil prices could lose steam, the IEA said in a report released today.

OPEC crude supply rose by 160,000 barrels a day to 31.21 million barrels a day in April, the highest since September 2012. Iraq and Iran boosted their output and top exporter Saudi Arabia was increasing its rig count.

There has been a slowdown in U.S. production, but global oil supply is still exceeding demand by two million barrels a day.

Many in the North American oilpatch have accused the Saudis of keeping output high to drive down U.S. production.

On the up side, there has been recovery in demand for crude as the U.S. and European economies gain steam. Demand for crude this year is projected to grow to as high as 1.1 million barrels a day, with the big surge expected later in the year.

U.S. data released today shows commercial crude inventories fell by 2.19 million barrels in the week ended May 8, the second week that inventories have fallen after rising for months.

WTI slips to $60

The new data on the worldwide oil glut hit oil prices in afternoon trading. West Texas Intermediate crude was down 62 cents to $60.13 US a barrel at the close, while Brent oil, the international crude contract, was off 34 cents at $66.52.

Meanwhile, Western Canada Select, the main Canadian contract continued to close the gap with WTI, moving close to its high for the year of $52.50.

Refiners have been buying more crude to take advantage of the low prices and are refining oil for summer driving earlier than usual. The signs of an uptick in oil prices helped accelerate their purchase of crude.

There are plenty of players who predict a fresh downturn in WTI prices as U.S. producers see the higher prices and turn the taps on again.

Can We Really Cut CO2 Levels By Leaving Fossil Fuels In The Ground?

April 7, 2015

Can We Really Cut CO2 Levels By Leaving Fossil Fuels In The Ground?

Population growth in the world’s developing economies, particularly Africa and Asia, has been and will continue to be a primary driver of demand for energy resources into the near and distant future. As more babies are delivered into the world, they will eventually crave consumer goods derived from mined commodities such as iron ore, copper, potash, uranium, nickel and rare earths. The babies grow up to buy homes, start businesses, and migrate to cities, all powered from energy, whether that energy is from hydro, wind, solar, natural gas, coal, nuclear or oil.

The International Energy Agency estimates that between 1990 and 2008, as world population increased 27 percent, energy use rocketed 39 percent. The Middle East was the biggest energy glutton, with an increase of 170 percent, followed by China at 146 percent, India at 91 percent, Africa 70 percent and Latin America 66 percent. 2009 was the first time in 30 years that world energy consumption declined, and that was only due to the financial crisis that killed growth across the entire global economy.

Unfortunately, as we all now know, the seemingly boundless demand for energy has put the earth’s inhabitants in a kind of prisoner’s dilemma with regards to how to meet the need for power, while at the same time stemming emissions from the burning of fossil fuels, that most scientists say is among the man-made culprits causing the planet to warm inexorably.

The problem of rising emissions has created a polarized debate among policymakers, with one side calling for action to stem climate change through international agreements such as the Kyoto Protocol, and the other arguing that emissions limits are part of a liberal agenda to cripple the coal, oil and gas industries that have provided well-paying jobs and steady shareholder income and growth for decades.

…click on the above link to read the rest of the article…

New IEA Data May Indicate A Slowdown In Rig Count Drop

March 31, 2015

New IEA Data May Indicate A Slowdown In Rig Count Drop

The IEA OMR is out early this month hence April’s edition of vital statistics comes early. The March 2015 Vital Statistics is here. EIA oil price and Baker Hughes rig count charts are updated to the end of March 2015, the remaining oil production charts are updated to February 2015 using the IEA OMR data. The main oil production changes from January to February are:

• World total liquids up 80,000 bpd
• OPEC down 90,000 bpd
• N America up 220,000 bpd
• Russia and FSU up 10,000 bpd
• UK and Norway up 100,000 bpd (compared with February 2014)
• Asia up 30,000 bpd

1. Global oil production is declining slowly but remains just above its long-term trend. Just over 94.04 Mbpd was produced in February.

2. The recovery in the oil price in February reversed in March and WTI has tested its January lows. Spreading conflict in the Middle East adds further complexity to the price dynamic.

3. The plunge in US oil rig count has slowed significantly although it continues falling slowly. This may signal a new phase of the oil price war that is discussed at the end of this post.

4. I anticipate that the price bottom may be in, but that price will bounce sideways along bottom for several months until we see significant falls in OECD production. Whilst there are signs that global production is falling slowly there is as yet little sign of a significant drop in US production.

…click on the above link to read the rest of the article…

Dramatic UK Emission Drop Just a ‘Taste of What Could Be Achieved

March 27, 2015

Dramatic UK Emission Drop Just a ‘Taste of What Could Be Achieved

UK greenhouse gas emissions fell by 8.4 percent between 2013 and 2014, according to official figures released today by the Department for Energy and Climate Change (DECC). Carbon emissions fell by 9.7 percent.

A 23 percent reduction in coal use and record warm temperatures were the main contributors to the decline in emissions. Continued falls in energy use were also a factor.

This dramatic drop in emissions is the largest on record for a growing UK economy. In fact, the economy grew faster in 2014 than it has in any year since 2007.

Economic Growth

It is extremely rare that emission reductions of more than 5 percent per year occur without an economic recession.

“This is further evidence, if it was needed, that efforts to cut carbon pollution and boost our economy can go hand in hand,” said Doug Parr, chief scientist at Greenpeace UK.

DECC’s figures follow recent estimates by the International Energy Agency that global CO2 emissions stalled in 2014 during a period of global economic growth. If confirmed, it would be the first time in 40 years when a growing global economy was not accompanied by rising emissions.

…click on the above link to read the rest of the article…

Tag Archives: iea

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

WTI slips to $60

Post navigation

Latest Posts