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$100 Oil Is A Distinct Possibility

September 25, 2018

$100 Oil Is A Distinct Possibility

oil storage

An oil price spike is starting to look increasingly possible, with a rerun of 2008 not entirely out of the question, according to a new report.

The outages from Iran are worse than most analysts expected, and bottlenecks in the U.S. shale patch could prevent non-OPEC supply from plugging the gap. To top it off, new regulations from the International Maritime Organization set to take effect in 2020 could significantly tighten supplies.

Put it all together, and “the likelihood of an oil spike and crash scenario akin to the one observed in 2008 has increased,” Bank of America Merrill Lynch wrote in a note. BofAML has a price target for Brent at $95 per barrel by the end of the second quarter 2019. In 2008, Brent spiked to nearly $150 per barrel.

The supply picture is looking increasingly worrying, with Venezuela and Iran the two principal factors driving up oil prices in the fourth quarter. Notably, the bank increased its estimate of supply losses from Iran 1 million barrels per day (mb/d), up from 500,000 bpd previously.

U.S. shale can partially make up the difference, but the explosive growth from shale drillers is starting to slowdown, in part because of pipeline bottlenecks. BofAML sees U.S. supply growth of 1.4 mb/d in 2018 but only 1 mb/d of growth in 2019.

That means that there isn’t the same upward pressure on WTI as there is on Brent, largely because infrastructure bottlenecks in the shale patch keep supplies somewhat stuck within the United States. And it isn’t just in West Texas where the constraints are causing problems. “[B]ottlenecks in the Permian basin could well extend to other areas such as the Bakken or the Niobrara, and we do not even rule out temporary export capacity constraints in the Gulf Coast as domestic output overwhelms logistics,” BofAML said in a note.

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

The IEA’s Oil Production Predictions for 2016

February 4, 2016

The IEA’s Oil Production Predictions for 2016

The IEA Oil Market Report, full issue, is now available to the public. Some interesting observations:

Non-OPEC oil supplies are nevertheless seen sharply lower in December. Overall supplies are estimated to have slipped by more than 0.6 mb/d from the month prior, to 57.4 mb/d. A seasonal decline in biofuel production, largely due to the Brazilian sugar cane harvest, of nearly 0.4 mb/d was the largest contributor to December’s drop. Production in Vietnam, Kazakhstan, Azerbaijan and the US was also seen easing from both November’s level and compared with a year earlier. Persistently low production in Mexico and Yemen were other contributors to the year-on-year decline. 

As such, total non-OPEC liquids output slipped below the year earlier level for the first time since September 2012. A production surge in December 2014 inflates the annual decline rate, but the drop is nevertheless significant should these estimates be confirmed by firm data. Already in November, growth in non-OPEC supply had slipped to 640 kb/d, from as much as 2.9 mb/d at the end of 2014, and 2.4 mb/d for 2014 as a whole. For 2015, supplies look likely to post an increase of 1.4 mb/d for the year, before contracting by nearly 0.6 mb/d in 2016. A prolonged period of oil at sub-$30/bbl puts additional volumes at risk of shut in as realised prices fall close to operating costs for some producers.

IEA Forecast 2

The IEA has every month of 2016 Non-OPEC production below the year over year 2015 production.

IEA Non-OPEC YoY

For the past four years, North America has carried the load as far as the increase in Non-OPEC production is concerned. Now the IEA believes North America will suffer the lions share of the decline in 2016.

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

The Case For Peak Oil

November 21, 2015

The Case For Peak Oil

All charts below were created with data from JODI, the EIA and OPEC MOMR. It is in thousand barrels per day and the last data point is September 2015.

JODI World C+C

World crude oil production has taken off during the last two years due primarily to US shale oil production and higher output from OPEC. However very high oil prices has enabled many other countries to increase drilling rigs and production.

JODI Non-OPEC

Low oil prices are having an effect on Non-OPEC oil production though not nearly as much as a lot of people thought they would, and not nearly as soon either.

Big 5

Five nations, Saudi Arabia, Iraq, Russia, USA and Canada, have been responsible for way more than 100 percent of the increase in oil production in the last decade.

World Less Big Five

The world less the five nations charted above is down 5,000,000 barrels per day since 2005. This decline is despite the fact that oil prices, during much of that time, has been above $100 a barrel.

A look at the Non-OPEC segment of this group.

Russia, USA and Canada

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Top 5 Oil Producing Countries Could See Production Peak This Year

July 12, 2015

Top 5 Oil Producing Countries Could See Production Peak This Year

The EIA’s Short-Term Energy Outlook came out a few days ago. That is where they try to guess the future production and price for oil, for the USA as well as the world. As of late they seem to be getting a little timid with their predictions. They are saying not much growth is happening until the fourth quarter of 2016, and only a slight bump then.

(Click to enlarge)

This chart is Non-OPEC Total Liquids in million barrels per day. Production of N.O Liquids surged upwards from September of 2012 until December 2014, gaining 6.38 million barrels per day in those 27 months. That’s an average increase of 236,000 barrels per day per month. But then in January 2015 there was a drop of 800,000 bpd.

Non-OPEC total liquids still have not reached that December high again but the EIA thinks they will by August. I have my doubts. I also think they have their April and May liquids production estimates a little too high here. I have their predictions here starting in June though the EIA starts their projection in July. But there is no way that June production is anything but a guess here, and a bad guess at that.

(Click to enlarge)

For four and one half years, US Total Liquids increased by an average of over 100,000 barrels per day per month. Now the EIA says US Liquids have reached a plateau where they will remain through September of 2016. Then for some unknown reason the US will resume it upward surge.

Notice the huge decline of 460,000 bpd in January 2015. But then there was an increase of 160,000 bpd in February, 390,000 bpd in March and 190,000 bpd in April. That’s an increase of 740,000 barrels per day over three months when the US rig count was falling dramatically. I look for those numbers to be revised in the next couple of months.

 

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Saudi Oil Minister Denies ‘Conspiracy’ To Collapse Oil Prices

December 21, 2014

Saudi Oil Minister Denies ‘Conspiracy’ To Collapse Oil Prices.

ABU DHABI, United Arab Emirates – Saudi Arabia’s oil chief on Sunday dismissed allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilize.

The kingdom, which is dependent on oil revenues, is able to weather lower oil prices due to large reserves built up over the years. Non-OPEC member Russia and other nations like Iraq, Iran and Venezuela need prices substantially above present levels to meet budget goals and want to drive prices up.

Saudi Arabia maintains it is opposed to cutting production because of fears its market share could erode.

“The best thing for everybody is to let the most efficient produce,” Saudi Petroleum Minister Ali Naimi said in the United Arab Emirates capital of Abu Dhabi. He was addressing the Arab Energy Conference, a gathering held every four years.

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US crude imports from Non-OPEC countries peaked 10 years before tight oil boom

December 5, 2014

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.

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