Home » Posts tagged 'oil demand' (Page 13)
Tag Archives: oil demand
Oil’s wild ride in 2014 signals return to volatility – Business – CBC News
Oil’s wild ride in 2014 signals return to volatility – Business – CBC News.
After five years in which oil traded in a narrow band around the $100 US a barrel mark, crude markets returned to volatility this fall.
Back in late June of this year, oil was trading at $107 US a barrel. At year end, it was headed below $55 a barrel.
The months in between tell the story of how changes in supply and demand can lead to wild and unpredictable swings in the price of a commodity.
Geopolitical tensions earlier this year had the effect of pushing oil prices to a peak. It pushed through $100 a barrel in March because of tensions in the Ukraine and then in June, ISIS moved in on oilfields in Iraq, threatening to cut off supplies. Crude hit a peak for the year of $107 a barrel for the West Texas Intermediate contract.
But this summer, markets began to see thedownturn in Europe and Japan were worse than previously realized. At the same time, emerging markets, particularly China, began to lose steam after propelling global growth for the past five years.
“We are seeing significantly slower growth in the emerging economies around the world, so the global economy isn’t growing at a very strong pace and this is the initial reason why oil prices started to fall,” says Craig Alexander, senior economist with TD Bank.
Oil rises to $60 per barrel, Libya fire supports | Reuters
Oil rises to $60 per barrel, Libya fire supports | Reuters.
(Reuters) – Brent crude oil rose to $60 per barrel on Monday, supported by concerns about disruption to exports from Libya, but a global supply glut kept prices nearly 50 percent off their peak for the year.
A fire at one of Libya’s main export terminals has destroyed 800,000 barrels of crude – more than two days of the country’s output – officials said, as clashes escalated between factions battling for control of the nation.
Libya currently produces around 385,000 barrels per day (bpd) of crude oil – down from peak production of over 1 million bpd – but this is a small fraction of the global supply glut, analysts said.
“There’s tension in Libya, but liquidity is very thin so not much is needed to move oil prices,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
Trade was sparse, with many investors away for the festive period.
T. Boone Pickens Rages On CNBC: “I Am The Expert, Not You”, Says Oil Down Due To “Weak Demand” | Zero Hedge
Narrative, we have a problem! No lesser oil-man than T. Boone Pickens made quite an appearance on CNBC this morning – stunning the cheerleaders into first defense then silence as he broke the facts on oil’s collapse to them. Oil is down “mainly due to weak demand,” he explains… the anchors deny, “I am the expert, not you” Pickens rages as he warns drilling rigs will be laid down on a very wide scale (just as we have noted previously). Arguing over ‘peak oil’, he calls CNBC chatter “bullshit” and laid out a rather dismal short- to medium-term outlook for the oil & gas sector – not what the cheerleading tax-cut slurping media narrative wants to hear at all…
“demand is down” – “lower demand is the main driver” – “rig count is gonna fall – drop 500 rigs in next 6-9 months”
Capex cuts coming… oil prices may be back at $90-100 Brent in 12-18 months but not without rig counts plunging.
At 4:15 Pickens starts to discuss Peak Oil… enjoy –
CNBC: “Peak Oil didn’t happen” ..
Pickens: “that’s all bullshit… I am the expert not you” CNBC: “well you’re not much of an expert if you thought Peak Oil happened”
Saudi Arabia’s Oil Exports Drop Was Sign of Weaker Demand – Bloomberg
Saudi Arabia’s Oil Exports Drop Was Sign of Weaker Demand – Bloomberg.
Saudi Arabia shipped 10 percent less oil overseas in October than it did a year earlier, signaling demand was falling even before OPEC decided a month later to hold production unchanged with prices plunging.
Oil exports fell to 6.9 million barrels a day in October from 7.7 million barrels a day a year earlier, according to data from the Joint Organisations Data Initiative today. It was the sixth month in a row that Saudi Arabia produced less than 7 million barrels a day, the level it needs to balance its budget.
Crude slumped 43 percent this year as the Organization of Petroleum Exporting Countries sought to defend market share amid a U.S. shale boom that’s exacerbating a global glut. Saudi Arabia will stick to its policy to maintain output, the country’s oil minister Ali Al-Naimi said, according to state-run Saudi Press Agency.
“Now we can understand the reasons that compelled Saudi Arabia and OPEC to hold onto their market share,” said John Sfakianakis, the head of Middle East at Ashmore Group (ASHM) Plc, the London-based money manager specializing in emerging markets. “The problem is that they want to keep their market share while exporting less oil.”
Oil Price Scenarios for 2015 and 2016 – The Automatic Earth
Oil Price Scenarios for 2015 and 2016 – The Automatic Earth.
A couple of weeks ago I had a post titled The 2014 Oil Price Crash Explained that was cross posted to over 20 other blogs including The Automatic Earth and Zero Hedge. In this post I use the empirical supply and demand dynamic described in that earlier post (Figure 1) to try and constrain the oil price a year from now and in 2016. The outcome is heavily dependent upon assumptions made about supply and demand and the behaviour of OPEC and the banking sector. Three different scenarios are presented with December 2015 prices ranging from $45 to $100 / bbl. Those hoping for a silver bullet forecast will be disappointed. Individuals must judge the scenarios on merit and decide for themselves which outcome, if any, is most likely.
Figure 1 The blue supply line is constrained by monthly production – price data from 1994 to 2008 and shows how supply became inelastic to demand post-2004. As demand continued to rise, prices rose exponentially to $148 / bbl in July 2008 before crashing all the way down again. The blue supply line in this chart is shown as a faint blue dashed line in all other charts to provide a frame of reference.
But first a look at the recent response of oil price dynamics to fluctuations in supply and demand.
“Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers” | Zero Hedge
“Oil May Drop To $25 On Chinese Demand Plunge, Supply Glut, Ageing Boomers” | Zero Hedge.
We have forecast since mid-August that Brent oil prices would fall to “$70/bbl and probably lower”, and the US$ would see a strong rise. As Chart 1 shows, Brent has now reached our target, falling 40%, whilst the US$ has risen 10%. We believe this represents the first stage of the Great Unwinding of policymaker stimulus that has dominated markets since 2009. This Note now takes our oil price forecast forward into H1 2015.
Astonishingly, most commentators remain in a state of denial about the enormity of the price fall underway. Some, failing to understand the powerful forces now unleashed, even believe prices may quickly recover. Our view is that oil prices are likely to continue falling to $50/bbl and probably lower in H1 2015, in the absence of OPEC cutbacks or other supply disruption. Critically, China’s slowdown under President Xi’s New Normal economic policy means its demand growth will be a fraction of that seen in the past.
This will create a demand shock equivalent to the supply shock seen in 1973 during the Arab oil boycott. Then the strength of BabyBoomer demand, at a time of weak supply growth, led to a dramatic increase in inflation. By contrast, today’s ageing Boomers mean that demand is weakening at a time when the world faces an energy supply glut. This will effectively reverse the 1973 position and lead to the arrival of a deflationary mindset.
CONTENTS Page:
1. Oil prices continue bouncing down the stairs to lower levels. Page 2
2. Financial players have destroyed price discovery in oil markets. Page 4
3. OPEC’s high prices have accelerated move away from oil to gas. Page 5
4. Gulf countries risk losing US defence shield if oil prices stay high. Page 7
Oil Jumps Most in Two Weeks as Fighting, Strike Curb OPEC Output – Bloomberg
Oil Jumps Most in Two Weeks as Fighting, Strike Curb OPEC Output – Bloomberg.
Crude oil jumped the most in two weeks on signs output may contract from two nations accounting for about 9 percent of OPEC production. Prices remain near a five-year low, and the United Arab Emirates said the 12-nation group won’t rein in production in response to the slump.
Fighting disrupted exports from Libya’s largest and third-largest crude ports and halted output from some fields, state-run National Oil Corp said. Workers at Nigerian oil platforms and shipping terminals began an indefinite strike over industry reforms, according to a union spokesman. OPEC won’t cut output even if prices fall as low as $40 a barrel, U.A.E. Energy Minister Suhail Al-Mazrouei said.
Oil fell into a bear market this year amid the highest U.S. production in three decades and slowing growth in global consumption. Prices have fallen about 20 percent to the lowest in five years since the Organization of Petroleum Exporting Countries decided not to cut production to tackle the glut at a Nov. 27 meeting. The group has pumped more than its output target of 30 million barrels a day for the last six months.
…click on the above link to read the rest of the article…
IEA Cuts Global Oil Demand Forecast for 4th Time in Five Months – Bloomberg
IEA Cuts Global Oil Demand Forecast for 4th Time in Five Months – Bloomberg.
Global oil demand next year will be weaker than previously estimated and supply from non-OPEC producers will be bigger, theInternational Energy Agency said.
Consumption will expand by 230,000 barrels a day less than estimated in November, the Paris-based adviser to 29 nations said in a report today. Output from nations outside of the Organization of Petroleum Exporting Countries will grow at a faster pace than the agency predicted last month. Production rising faster than demand could strain some nations’ ability to store by the middle of next year, it predicted.
The agency cut projections because the economies of producer nations are being hurt by tumbling prices, the IEA said. Most of the reduction in next year’s estimate is attributable to Russia, where sanctions are hobbling growth, it said. Brent crude costs that collapsed 43 percent this year are too low for 10 of OPEC’s 12 members to balance their budgets, data compiled by Bloomberg show.
…click on the above link to read the rest of the article…
U.S. Getting Rid of Oil Addiction as Price Plummets in Glut – Bloomberg
U.S. Getting Rid of Oil Addiction as Price Plummets in Glut – Bloomberg.
The U.S. is producing the most oil in 31 years, economic growth is picking up and crude prices are plunging. So why is Americans’ use of petroleum waning?
As the U.S. moves closer and closer to energy independence, greaterfuel efficiency, changing demographics and an increase in renewables are altering the dynamic that in the past would have seen demand for gasoline climbing. Gross domestic product, the value of all goods and services produced in the U.S., grew at a 2.4 percent pace in the third quarter from the year-earlier period. Oil consumption fell 0.3 percent, government data show.
“Oil demand and GDP growth used to go hand in hand,” Christopher Knittel, a professor of applied economics at Massachusetts Institute of Technology’s Sloan School of Management, said by phone on Dec. 8 from Cambridge, Massachusetts. “Now, they’re in some ways almost independent of each other because of investments in fuel economy that tended to break the link.”
…click on the above link to read the rest of the article…
Brent falls close to $69 after Saudi price cut | Reuters
Brent falls close to $69 after Saudi price cut | Reuters.
(Reuters) – Brent crude fell close to $69 a barrel on Friday, putting it on track for a second weekly decline, as cuts to official selling prices from Saudi Arabia reverberated across the market.
Some analysts said the Saudi cuts to monthly prices for crude it sells to the United States and Asia show it is stepping up its battle for market share a week after refusing to support OPEC output cuts.
“It’s been weighing on the market, showing that OPEC is not ready to end its price war,” said Commerzbank analyst Eugen Weinberg. “The lower the better seems to be the new paradigm for OPEC.”
The January Brent crude contract LCOc1 dropped 53 cents to $69.11 a barrel by 0926 GMT. U.S. crude CLc1 was down 55 cents at $66.26.
A strong dollar, which recently hit two-year highs versus the euro, is another bearish factor for oil prices, as its strength makes dollar-denominated crude more expensive in other currencies.
…click on the above link to read the rest of the article…
US crude imports from Non-OPEC countries peaked 10 years before tight oil boom
US crude imports from Non-OPEC countries peaked 10 years before tight oil boom.
In part 3 of this series on the impact of US tight oil, we look at US crude oil imports from Non-OPEC countries. Excluding Canada – which is a special case due to its integration into the North American oil market – these imports peaked in 2002, long before the tight oil boom started.
(1) Introduction: US oil imports from Non-OPEC countries
The following graph shows an overview on US oil imports (crude + products) since 1960
Fig 1: US oil imports from Non-OPEC countries
Data are from the EIA Monthly Energy Review (table 3.3d Petroleum Trade). They start in 1960.
http://www.eia.gov/totalenergy/data/monthly/#petroleum
Imports peaked in 2005/06. The subsequent decline until 2010 was caused by high oil prices and the financial crisis.
22/7/2013 US oil demand peak was in 2007
http://crudeoilpeak.info/us-oil-demand-peak-was-in-2007
The speed of the decline was similar to the period following the 1st oil crisis. The tight oil boom started in 2010/11, causing a further decrease of around 750 kb/d.
…click on the above link to read the rest of the article…
‘We Are Entering A New Oil Normal” | Zero Hedge
‘We Are Entering A New Oil Normal” | Zero Hedge.
Investment Observations
The precipitous decline in the price of oil is perhaps one of the most bearish macro developments this year. We believe we are entering a “new oil normal,” where oil prices stay lower for longer. While we highlighted the risk of a near-term decline in the oil price in our July newsletter, we failed to adjust our portfolio sufficiently to reflect such a scenario. This month we identify the major implications of our revised energy thesis.
The reason oil prices started sliding in June can be explained by record growth in US production, sputtering demand from Europe and China, and an unwind of the Middle East geopolitical risk premium. The world oil market, which consumes 92 million barrels a day, currently has one million barrels more than it needs. US pumped 8.97 million barrels a day by the end of October (the highest since 1985) thanks partly to increases in shale-oil output which accounts for 5 million barrels per day. Libya’s production has recovered from 200,000 barrels a day in April to 900,000 barrels a day, while war hasn’t stopped production in Iraq and output there has risen to an all-time high level of 3.3 million barrels per day. The IMF, meanwhile, has cut its projection for global growth in 2014 for the third time this year to 3.3%. Next year, it still expects growth to pick up again, but only slightly.
Everyone believes that the oil-price decline is temporary. It is assumed that once oil prices plummet, the process is much more likely to be self-stabilizing than destabilizing. As the theory goes, once demand drops, price follows, and leveraged high-cost producers shut production. Eventually, supply falls to match demand and price stabilizes. When demand recovers, so does price, and marginal production returns to meet rising demand. Prices then stabilize at a higher level as supply and demand become more balanced. It has been well-said that: “In theory, there is no difference between theory and practice. But, in practice, there is.” For the classic model to hold true in oil’s case, the market must correctly anticipate the equilibrating role of price in the presence of supply/demand imbalances.
…click on the above link to read the rest of the article…
The Price Of Oil Exposes The True State Of The Economy – The Automatic Earth
The Price Of Oil Exposes The True State Of The Economy – The Automatic Earth.
We should be glad the price of oil has fallen the way it has (losing another 6% today as I write this). Not because it makes the gas in our cars a bit cheaper, that’s nothing compared to the other service the price slump provides. That is, it allows us to see how the economy is really doing, without the multilayered veil of propaganda, spin, fixed data and bailouts and handouts for the banking system.
It shows us the huge extent to which consumer spending is falling, how much poorer people have become as stock markets set records. It also shows us how desperate producing nations have become, who have seen a third of their often principal source of revenue fall away in a few months’ time. Nigeria was first in line to devalue its currency, others will follow suit.
OPEC today decided not to cut production, but whatever decision they would have come to, nothing would have made one iota of difference. The fact that prices only started falling again after the decision was made public shows you how senseless financial markets have become, dumbed down by easy money for which no working neurons are required.
OPEC has become a theater piece, and the real world out there is getting colder. Oil producing nations can’t afford to cut their output in some vague attempt, with very uncertain outcome, to raise prices. The only way to make up for their losses is to increase production when and where they can. And some can’t even do that.
…click on the above link to read the rest of the article…
Saudis signal no push for oil cut as market to ‘stabilize itself’ | Reuters
Saudis signal no push for oil cut as market to ‘stabilize itself’ | Reuters.
(Reuters) – OPEC leader Saudi Arabia signaled on Wednesday it was unlikely to push for a major change in oil output at the producer group’s meeting this week, a day after Russia refused to cooperate in any production cut. Saudi Oil Minister Ali al-Naimi said he expected the oil market “to stabilize itself eventually” but did not comment on talks with Russia held on Tuesday, which produced no firm pledge from Moscow to help support flagging oil prices.
Iranian Oil Minister Bijan Zangeneh said some OPEC members, although not Iran itself, were gearing up for a battle over market share and insisted that non-OPEC producers needed to participate in any OPEC-led output cut.
“The most important thing for all of us is the unity and solidarity of OPEC, and in this situation I believe we need to have the contribution of non-OPEC producers for managing the market,” Zangeneh told reporters.
…click on the above link to read the rest of the article…
The 2014 Oil Price Crash Explained | Energy Matters
The 2014 Oil Price Crash Explained | Energy Matters.
- In February 2009 Phil Hart published on The Oil Drum a simple supply demand model that explained then the action in the oil price. In this post I update Phil’s model to July 2014 using monthly oil supply (crude+condensate) and price data from the Energy Information Agency (EIA).
- This model explains how a drop in demand for oil of only 1 million barrels per day can account for the fall in price from $110 to below $80 per barrel.
- The future price will be determined by demand, production capacity and OPEC production constraint. A further fall in demand of the order 1 Mbpd may see the price fall below $60. Conversely, at current demand, an OPEC production cut of the order 1 Mbpd may send the oil price back up towards $100. It seems that volatility has returned to the oil market.
…click on the above link to read the rest of the article…
