Home » Posts tagged 'oil supply' (Page 17)
Tag Archives: oil supply
Increased U.S. Output Bolsters Oil Glut Fears Sending Prices Back Down
Increased U.S. Output Bolsters Oil Glut Fears Sending Prices Back Down
Oil resumed its decline after the biggest gain since June 2012 as U.S. crude production increased, adding to signs that the global supply glut that has pushed prices to a 5 1/2-year low will persist.
West Texas Intermediate futures dropped as much as 2.7 percent in New York. U.S. output surged to 9.19 million barrels a day last week, the fastest pace in weekly records dating back to January 1983, the Energy Information Administration reported yesterday. The Swiss National Bank gave up its minimum exchange rate against the euro, a policy that was intended to shield its economy from the region’s sovereign debt crisis.
Crude slid almost 50 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted cuts to output amid the U.S. shale boom, exacerbating a surplus estimated by Kuwait at 1.8 million barrels a day.
Oil is leading this week’s slide in commodities after a decade-long bull market led companies to boost production and a stronger dollar diminished their allure to investors. The Bloomberg Commodity Index of 22 energy, agriculture and metal products declined yesterday to the lowest level since 2002, extending a 17 percent loss last year. OPEC will release its monthly report later today.
…click on the above link to read the rest of the article…
The Age Of Cheap Oil Is Over
The Age Of Cheap Oil Is Over
The longer I look at what is going on today with oil prices the less it makes sense to me. I know there are a lot of experts who blame this all on the “glut” of oil created by overly aggressive U.S. upstream companies that took all the cheap money they could get to “Drill Baby Drill”. However, the size and speed of the drop doesn’t seem justified when there is still plenty of room to store the short-term oversupply. Last week’s Department of Energy crude oil inventory report shows that we still have plenty of room in the storage tanks. In fact, the DOE reported a draw from storage of more than 3 million barrels for the week ended January 2, 2015.
Granted, oil storage levels are running above the previous 5-year average, but with a worldwide “glut” of oil production, why would refiners need to pull oil out of inventory?
There is some truth to the U.S. rapidly increasing oil production eating into Saudi Arabia’s market share, but to say we have some sort of global supply glut that cannot be absorbed by this market is nonsense. Humans are forecast to burn up 34.3 BILLION BARRELS of liquid hydrocarbon based fuels in 2015, so the “glut” argument seems to be quite a stretch to me. Plus, the demand for oil goes up by another 300 to 400 million barrels each year.
…click on the above link to read the rest of the article…
Could The Oil Bust Last?
Could The Oil Bust Last?
The oil industry has experienced boom and busts before, but the depths to which oil prices have plunged have surprised everyone. Could the bust now persist much longer than many think?
It is not just oil that has seen a bust. Over the last decade and a half, the global economy has witnessed a massive commodity boom, with prices rising for all sorts of raw materials, including gold, iron ore, oil, gas, copper, wheat, corn, and more. But the commodity “super-cycle” appears to be over, with vast new supplies having come online in the last few years.
As prices rose through the 2000’s, multinational companies extracting all sorts of commodities planned billion dollar projects. With new mines, new oil and gas fields, and other commodity supplies hitting the market at the same time, a bust has ensued.
Related: Gains From Low Oil Prices Could Be Wiped Out This Year
“Supply has been outstripping demand not because demand has been particularly weak, but because there was too much supply,” Stephen Briggs, a commodities analyst at BNP Paribas SA, told The Wall Street Journal. “It looks like this won’t change anytime soon.”
…click on the above link to read the rest of the article…
Oil Drops Below $45; U.S. Stockpiles May Speed Collapse
Oil Drops Below $45; U.S. Stockpiles May Speed Collapse
Oil extended losses to trade below $45 a barrel amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years.
Futures fell as much as 4.1 percent in New York, declining for a third day. Crude inventories probably gained by 1.75 million barrels last week, a Bloomberg News survey showed before government data tomorrow. TheUnited Arab Emirates, a member of the Organization of Petroleum Exporting Countries, will continue to expand output capacity, while shale drillers will probably be the first to curb production as prices fall, according to Energy Minister Suhail Al Mazrouei.
Oil slumped almost 50 percent last year, the most since the 2008 financial crisis, as the U.S. pumped at the fastest rate in more than three decades and OPEC resisted calls to cut production. Goldman Sachs Group Inc. said crude needs to drop to $40 a barrel to “re-balance” the market, while Societe Generale SA also reduced its price forecasts.
…click on the above link to read the rest of the article…
The Oil Price Fall: An Explanation in Two Charts
The Oil Price Fall: An Explanation in Two Charts
Don’t worry. It’s not complicated.
…click on the above link to read the rest of the article…
What Will 2015 do for Peak Oil?
What Will 2015 do for Peak Oil?
The Cornucopians are exuberant, they believe that collapsing of oil prices dealt the death knell for peak oil. An oil glut, they say, is what we have, not peak oil. But an oil glut is exactly what we would expect at the very peak. After all, that is what peak oil is, that is the the point in time when the world produces more oil than ever in history… and the most it ever will produce.
I am of the firm conviction that the world is at the peak of world oil production right now, or was at that point three or four months ago. I think history will show that the 12 months of September 2014 through August 2015 will be the one year peak. Whether the calendar year peak is 2014 or 2015 is the only thing still in question, or that is my opinion anyway.
The EIA says, in their Short Term Energy Outlook says US Crude oil will peak, at least temporarily, in May 2015.
Looking at the area breakdown for total US production:
…click on the above link to read the rest of the article…
US Rig Count Crashes At Fastest Pace Since 2009 To 14-Month Lows
US Rig Count Crashes At Fastest Pace Since 2009 To 14-Month Lows
Just as T.Boone Pickens warned, US Rig Counts are plunging. Down by 61 this week alone – the biggest weekly drop in over 5 years – at 1,750, this is now the lowest since November 2013 (and very close the lowest since 2010). The 10% or so plunge in the last 7 weeks is following the same trajectory as the 2008 collapse – which led to – just as Pickens suggested – a 50% crash in rig counts…
Pickens… “demand is down” – “lower demand is the main driver” – “rig count is gonna fall – drop 500 rigs in next 6-9 months”
This the first rig count drop year-over-year in a year…
Charts: Bloomberg
Oil heads for seventh weekly loss as supply glut drags
Oil heads for seventh weekly loss as supply glut drags
(Reuters) – Oil prices headed for a seventh straight weekly loss on Friday, with key producers showing no sign of cutting output in the face of a global supply glut.
Global oil benchmarks hit their lowest since 2009 this week and are down more than 50 percent from June levels, with Brentcrude futures LCOc1 extending declines on Friday, dropping 50 cents a barrel to $50.46 by 0427 ET.
U.S. crude futures for February delivery CLc1 were down 12 cents at $48.67 a barrel despite robust U.S. economic data that brightened the outlook for demand.
Brent’s premium to U.S. crude CL-LCO1=R fell near $1.80 a barrel, the narrowest since October as international seaborne oil markets appear to be under even more pressure than the U.S. domestic market.
“It is another negative week and a reflection of the focus on negative arguments,” said Hans Van Cleef, senior energy economist at Dutch bank ABN Amro.
…click on the above link to read the rest of the article…
Oil Production Vital Statistics January 2015
Oil Production Vital Statistics January 2015
Another ‘guest post’ by Euan Mearns at Energy Matters. I thought that, given developments in oil prices, we can do with some good solid numbers on production.
- The oil price crash of 2014 / 15 is following the same pace of the 2008 crash. The 2008 crash was demand driven and began 2 months ahead of the broader market crash.
- The US oil rig count peaked in October 2014, is down 127 rigs from peak and is falling fast.
- Production in OPEC, Russia and FSU, China and SE Asia and in the North Sea are all stable to falling slowly. The bogey in the pack is the USA where a production rise of 4 Mbpd in 4 years has upset the global supply dynamic.
- It is unreasonable for the OECD IEA to expect Saudi Arabia to cut production of cheap oil in order to create market capacity for expensive US oil [1].
- There are likely both over supply and weak demand factors at play, weighted towards the latter.
Figure 1 Daily Brent and WTI prices from the EIA, updated to 29 December 2014. The plunge continues at a similar speed to the 2008 crash. The 2008 oil price crash began in early July. It was not until 16th September, about 10 weeks later, that the markets crashed. The recent highs in the oil price were in mid July but it was not until WTI broke through $80 at the end of October that the industry became alert to the impending price crisis. As I write, WTI is trading at $48 and Brent on $51.
…click on the above link to read the rest of the article…
Saudi War On Shale Goes Nuclear – “No Chance OPEC Will Cut Output” Even With Brent Under $50
Saudi War On Shale Goes Nuclear – “No Chance OPEC Will Cut Output” Even With Brent Under $50
For those hoping that the recent brief dip in Brent crude below $50 – most notably Venezuela’s intrepid socialist leader Nicolas Maduro whose numbered days get shorter with every day Brent closes red, and countless bondholders of junk- debt capitalized shale companies – would mean that Saudi Arabia’s vendetta against OPEC would finally be put on hiatus, we have bad news: the vendetta just wen nuclear because as Reuters reports, there is “no chance of OPEC output cut.”
As Reuters further adds, Saudi Arabia and its Gulf OPEC allies are showing no sign of considering cutting output to boost oil prices, despite Brent’s dip below $50 a barrel this week, where it is surely headed once again in the coming days. More:
Those misgivings have grown with a slide in oil prices to below half their level in June, hurting the economies of OPEC’s smaller producers. Benchmark Brent dipped to $49.66 on Wednesday, its lowest since April 2009, before rising to $51 on Thursday.OPEC has forecast an increasing surplus in 2015, citing rising supplies outside the group and lacklustre growth in global demand. But the Gulf members, who account for more than half of OPEC output, are not wavering, arguing lower prices will slow competing supplies, spur economic growth and revive demand.
One delegate from a Gulf OPEC member said there was “no chance” of a rethink while another referred to the view that non-OPEC producers were to blame for the glut. “Naimi made it clear: OPEC will not cut alone,” the second delegate said.
…click on the above link to read the rest of the article…
The Real Cause Of Low Oil Prices: Interview With Arthur Berman
The Real Cause Of Low Oil Prices: Interview With Arthur Berman
With all the conspiracy theories surrounding OPEC’s November decision not cut production, is it really not just a case of simple economics? The U.S. shale boom has seen huge hype but the numbers speak for themselves and such overflowing optimism may have been unwarranted. When discussing harsh truths in energy, no sector is in greater need of a reality check than renewable energy.
In a third exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman explores:
• How the oil price situation came about and what was really behind OPEC’s decision
• What the future really holds in store for U.S. shale
• Why the U.S. oil exports debate is nonsensical for many reasons
• What lessons can be learnt from the U.S. shale boom
• Why technology doesn’t have as much of an influence on oil prices as you might think
• How the global energy mix is likely to change but not in the way many might have hoped
OP: The Current Oil Situation – What is your assessment?
Arthur Berman: The current situation with oil price is really very simple. Demand is down because of a high price for too long. Supply is up because of U.S. shale oil and the return of Libya’s production. Decreased demand and increased supply equals low price.
As far as Saudi Arabia and its motives, that is very simple also. The Saudis are good at money and arithmetic. Faced with the painful choice of losing money maintaining current production at $60/barrel or taking 2 million barrels per day off the market and losing much more money—it’s an easy choice: take the path that is less painful. If there are secondary reasons like hurting U.S. tight oil producers or hurting Iran and Russia, that’s great, but it’s really just about the money.
…click on the above link to read the rest of the article…
Top Five Factors Affecting Oil Prices In 2015
Top Five Factors Affecting Oil Prices In 2015
As we ring in the New Year, let’s take stock of where we are at with the oil markets. 2014 proved to be a momentous one for the oil markets, having seen prices cut in half in just six months.
The big question is what oil prices will do in 2015. Oil prices are unsustainably low right now – many high-cost oil producers and oil-producing regions are currently operating in the red. That may work in the short-term, but over the medium and long-term, companies will be forced out of the market, precipitating a price rise. The big question is when they will rise, and by how much.
So, what does that mean for oil prices in 2015? It is anybody’s guess, but here are the top five variables that will determine the trajectory of oil prices over the next 12 months, in no particular order.
1. China’s Economy. China is the second largest consumer of oil in the world and surpassed the United States as the largest importer of liquid fuels in late 2013. More importantly for oil prices is how much China’s consumption will increase in the coming years. According to the EIA, China is expected burn through 3 million more barrels per day in 2020 compared to 2012, accounting for about one-quarter of global demand growth over that timeframe. Although there is much uncertainty, China just wrapped up a disappointing fourth quarter, capping off its slowest annual growth in over a quarter century. It is not at all obvious that China will be able to halt its sliding growth rate, but the trajectory of China’s economy will significantly impact oil prices in 2015.
…click on the above link to read the rest of the article…
Oil Extends Decline From 5 1/2-Year Low as Supply Glut Lingers – Bloomberg
Oil Extends Decline From 5 1/2-Year Low as Supply Glut Lingers – Bloomberg.
Oil fell for a third day, extending its decline from the lowest level in five and a half years amid signs a global supply glut that’s driven crude into a bear market may continue this year.
Futures in London dropped as much as 1.3 percent, after sliding 5.1 percent last week. Iraq plans to boost crude exports this month, according to the oil ministry in the second-largest producer of the Organization of Petroleum Exporting Countries. Venezuela President Nicolas Maduro is traveling to Chinato hold talks on financing and energy and will visit other OPEC member nations to develop an oil-pricing strategy.
“Iraq’s crude production is one of the contributors to the glut we’ve been seeing,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said by phone. “The glut is expected to continue if demand fails to catch up with supplies. Venezuela’s oil industry is in recession amid falling production but if it can attract new investments, it can boost output.”
Peak Oil from the Demand Side: A Prophetic New Model – Peak Oil BarrelPeak Oil Barrel
Peak Oil from the Demand Side: A Prophetic New Model – Peak Oil BarrelPeak Oil Barrel.
The most attention-grabbing attempts to predict oil futures have come from geologists and environmental activists, who tend to look solely at production. An overlooked doctoral thesis by Christophe McGlade, Uncertainties in the outlook for oil and gas, in contrast, focuses on how both supply and demand might be constrained in the coming decades. Peak oil researchers should take note of McGlade’s thesis because he predicted, in November 2013, that oil prices would sink, and that they will stay low throughout the second half of this decade. I found this paper on Google Scholar and have no connection with the author, but I appreciate his careful consideration of peak oil arguments, and his ability to distance himself from the more narrow-minded aspects of both economic and geological thinking. Here’s a representative quote from the middle of the thesis, p. 216:
The focus of much of the discussion of peak oil is on the maximum rates of conventional oil production. Apart from issues over how this term is defined, results suggest that focussing on an exclusive or narrow definition of oil belies the true complexity of oil production and can lead to somewhat misleading conclusions. The more narrow the definition of oil that is considered (e.g. by excluding certain categories of oil such as light tight oil or Arctic oil), the more likely it is that this will reach a peak and subsequent decline, but the less relevant such an event would be.
Museletter 271: The Oil Price Crash of 2014 | Richard Heinberg
Museletter 271: The Oil Price Crash of 2014 | Richard Heinberg.
The Oil Price Crash of 2014
Oil prices have fallen by half since late June. This is a significant development for the oil industry and for the global economy, though no one knows exactly how either the industry or the economy will respond in the long run. Since it’s almost the end of the year, perhaps this is a good time to stop and ask: (1) Why is this happening? (2) Who wins and who loses over the short term?, and (3) What will be the impacts on oil production in 2015?
1. Why is this happening?
Euan Mearns does a good job of explaining the oil price crash here. Briefly, demand for oil is softening (notably in China, Japan, and Europe) because economic growth is faltering. Meanwhile, the US is importing less petroleum because domestic supplies are increasing—almost entirely due to the frantic pace of drilling in “tight” oil fields in North Dakota and Texas, using hydrofracturing and horizontal drilling technologies—while demand has leveled off.
Usually when there is a mismatch between supply and demand in the global crude market, it is up to Saudi Arabia—the world’s top exporter—to ramp production up or down in order to stabilize prices. But this time the Saudis have refused to cut back on production and have instead unilaterally cut prices to customers in Asia, evidently because the Arabian royalswant prices low. There is speculation that the Saudis wish to punish Russia and Iran for their involvement in Syria and Iraq. Low prices have the added benefit (to Riyadh) of shaking at least some high-cost tight oil, deepwater, and tar sands producers in North America out of the market, thus enhancing Saudi market share.
