THE OPEC Thread pt 7 (merged)

[Graeme]

Let me summarize article for you. This is current news about the conclusion by 23 analysts who are forecasting the price of oil next year. They conclude that on average the price will be about $85. Period.

There is no sign of peak oil occurring next year. Why? Read what the article says about OPEC production.

“OPEC spare capacity and inventories should be two key indicators for pricing,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who predicts WTI will average $70 in the fourth quarter and $85 in 2011. “Spare capacity and inventories are telling me that oil should trade in the $70-to-$80 range, which is where the Saudis want it.”

Total U.S. petroleum supplies, including crude and oil products, climbed to 1.14 billion barrels in the week ended Sept. 17, the most since at least 1990, according to the Energy Department.

Scary stuff indeed.

[Expatriot]

Oil may get to 100 in 2011 on dollar devaluation alone, even if supply/demand stay the same.

[dolanbaker]

When you compare the price of oil, relative to other commodities it appears to have dropped in value recently. If you're into barter, the values appear to be fairly stable.

[pstarr]

Spare capacity and inventories are telling me that oil should trade in the $70-to-$80 range, which is where the Saudis want it.”

Actually the Saudi want oil in the $22 to $28 range, the last time it climbed to $80 they complained bitterly.

Total U.S. petroleum supplies, including crude and oil products, climbed to 1.14 billion barrels in the week ended Sept. 17, the most since at least 1990, according to the Energy Department.

Scary stuff indeed.

No. Not scary. Just kind of depressing. Driving is down and oil stocks have climbed. I've always wondered how so-called "inventory" was taken seriously as a measure of depletion economics. It has little to do with resources and reserves supplies, merely very short term demand measure.

[KevO]

here we go. This will certainly test things and the absolute truth will be visisble one way or another within a couple of years if not a few months

LOS ANGELES, Nov. 5 -- The Organization of Petroleum Exporting Countries forecasts continued growth in global oil demand over the next 20 years, while acknowledging the potential impact of environmental policies on the energy market.

“Over the period 2009-30, consumption in developing countries increases by more than 22 million b/d. Of the total global oil demand growth in the long term, 75% is in developing Asia,” OPEC said in its 2010 World Oil Outlook.

OPEC noted that by 2015, demand is expected to reach 91 million b/d, a slight rise over the 90.2 million b/d predicted in last year's report due to better than expected recovery from the global economic crisis.

However, while recovery from the crisis has been faster than previously expected, OPEC’s report still said precrisis demand levels from 2007 were unlikely to be repeated again until 2011. By 2030, OPEC predicted that demand will reach 105.5 million b/d.

http://www.ogj.com/index/article-display.articles.oil-gas-journal.general-interest-2.economics-markets.2010.11.opec_-global_oil_demand.QP129867.dcmp=rss.page=1.html

[bratticus]

OPEC Cheating Most Since 2004 as $100 Oil Heralds More Supply

OPEC is breaching its production limits the most in six years...

... Iraq will account for 54 percent of the increase in OPEC’s supply capacity in the six years ending 2015, according to the IEA, replacing Iran as the biggest producer after Saudi Arabia. ...

It's so nice to know that OPEC can fix everything by massively exceeding their quotas. Makes me feel, like, "what could go wrong?"

[OilFinder2]

Shhh, don't tell anyone.

LINK

OPEC quietly raising oil production, IEA says
Thursday January 20, 2011 07:36:11 AM GMT
Reuters News Bookmark and Share
IEA/OPEC

LONDON, Jan 18 (Reuters) - OPEC oil producers may be quietly increasing output in response to higher oil prices and Saudi Arabia appears already to have raised its production, the International Energy Agency (IEA) said on Tuesday.

"It appears Saudi Arabia has been making more crude available to the market in the past six months, judging by export data from independent tanker trackers," the watchdog said in its monthly Oil Market Report.

The IEA said it had revised its estimates for Saudi Arabian oil production up by an average 135,000 barrels per day (bpd) for 2010, with the biggest upward revision for the second half of the year.

"In December, Saudi output was assessed at 8.6 million bpd, up 100,000 bpd from a revised November estimate of 8.5 million bpd," it said.

The agency said Saudi Arabia was on track to increase production again in January, and that Saudi Aramco had reduced prices for certain grades in February to make sales "more attractive".

[...]

[dolanbaker]

Isn't most of that increase going to Chindia!

Saudi reduced production to match the fall off in US demand, so they had some extra spare capacity, that spare is now being reduced to supply the increased demand.

The real qustion is "how big is this spare capacity buffer?"

[Cog]

Ok Saudi raised their production by 100k bpd. Big Whoop. So where are we going to get the other needed 1.4 million bpd?

http://www.cbc.ca/money/story/2011/01/1 ... ecast.html

The International Energy Agency on Tuesday raised its forecast for world oil demand for 2011.
The Paris-based agency predicted demand will rise to 89.1 million barrels a day, up from 87.7 million in 2010.
Read more: http://www.cbc.ca/money/story/2011/01/1 ... z1BQyomQ35

[AirlinePilot]

I am sure Saudi Arabia/OPEC has some spare capacity. How much is up for heated debate, but it exists. When prices climb again it behooves them to attempt to control them. This is not surprising nor is it unexpected. The global recession along with a decrease in US/OECD daily demand has masked the obvious situation that OPEC and the Saudi's were in less than two years ago. They were pumping flat out. Its supported by the fact that their production rose during the years prior to 2005, but even with more rapidly rising prices after the 05-09 time frame their production did not.

After the rest of the worlds demand and global population growth catches up with that spare capacity we are going to be right where we left off as the decline picture once again comes further into focus. Even with a ramp in "unconventional oil" at some point the decline in total crude numbers will trump even that.

The recent declines in Global Net Exports (I.E. Export Land) also point to another issue which is becoming possibly even more important than purely crude oil declines.

[peripato]

Well, I think the IEA are just pulling figures out of their hat, again. Also, this just released (Jan 13th '11), OPEC to Cut Loadings as Asian Demand Slows, Oil Movements Says. So someone, somewhere, must be wrong.

And, let's see where SA production (and by extension global production) is once Ghawar commences its terminal decline, just like the handful of other super-giants. Ghawar is 7% of total world output and reserves are padded for political purposes. The suspense is killing me.

[eXpat]

Funny title the one of the thread.
Amid upheaval in Libya, Saudi Arabia says world has enough oil

Oil on Monday climbed above $106 as energy firms recalled international staff from Libya and spreading unrest shut down some 100,000 barrels per day (bpd) of production there.

It was the first output disruption since popular unrest erupted in Tunisia, ousting its president, before spreading to Egypt, where it unseated Hosni Mubarak after 30 years of rule.

Libyan leader Muammar Gaddafi’s four-decade-rule also appeared in jeopardy as protests reached the capital Tripoli for the first time.

Saudi Oil Minister Ali al-Naimi will open proceedings at the International Energy Forum with a speech on Tuesday, but declined to comment to reporters on Monday.

His deputy Prince Abdulaziz bin Salman Al-Saud told a news conference on Monday the market had plenty of oil.

“We’re much more focused on how the market balance is, is it sufficiently supplied? And the answer is ‘yes, abundantly,’ therefore does the situation warrant any kind of intervention? I don’t think so,” he said.

http://www.theglobeandmail.com/globe-investor/amid-upheaval-in-libya-saudi-arabia-says-world-has-enough-oil/article1915095/

Angolan oil exports to fall in April

LONDON (Reuters) - Angola's oil exports are scheduled to fall sharply in April, trade sources said on Wednesday, bringing the country's supply close to its OPEC output target.

Angola is scheduled to export 1.54 million barrels per day (bpd) in April in 48 cargoes, excluding the Gimboa and Xicomba streams, provisional loading programmes show. Shipments were scheduled at 1.73 million bpd in March.

The scheduled exports would be close to Angola's target for oil production set by the Organization of the Petroleum Exporting Countries. Angola has been pumping significantly more than its OPEC target for months.

Oil traders said the drop in supplies, if confirmed, could support values for Angolan crude.

"We'll have to see what the final programme is like and whether or not there are a few extra cargoes inserted, as we've seen in the past," said a West African crude trader.

Supplies will be lower in April because of reduced shipments of crude grades including Dalia, Nemba, Mondo and Kissanje. There are four cargoes of Dalia loading in April, half the number planned in March.

If the Gimboa and Xicomba streams produce one cargo each in April, as they did in March, that would bring April's exports to 1.6 million bpd.

Angola says its OPEC output target is 1.656 million bpd, but an OPEC internal document widely quoted by industry sources suggests Angola's limit is 1.52 million bpd.

http://af.reuters.com/article/investingNews/idAFJOE71F0LC20110216

[Xenophobe]

Funny title the one of the thread.
Amid upheaval in Libya, Saudi Arabia says world has enough oil

Well, this is a BAD thing. We don't need Saudi Arabia saving us, we need turmoil, uncertainty, wild commodity speculation, hysteria!

If Simmons was still alive I'm sure he would agree with me, and be pitching his newest pump and dump scheme on every news channel, 24X7.....without him, how are we going to get the kind of arm waving fear we NEED!?

If we can just get the consumers into the game, sold out Volts and Leafs, people taking the bus and moving closer to work, we can cure this peak oil thing for another decade, maybe even two! We'd better not just get stuck with this penny anny, "here comes $120 oil!" talking head nonsense.

[Sixstrings]

Rumor Of Emergency OPEC Meeting To Hike Crude Supply

Those following the move in WTI this morning may wonder what the catalyst for the ongoing retracement has been. According to Italian sources (the country most affected by developments in Libya so take it with a grain of salt), OPEC is meeting in Riyadh to evaluate hiking crude supply in light of Libyan developments.

This mirrors a less definitive statement issued earlier by the Kuwait oil minister that "OPEC could call an emergency meeting if required by disruption to oil supply due to Middle East unrest." As a reminder after peaking WTI at $98.25, it since pared gains to under $95.75, and was trading at $96.11 last. So while Bernie Bernanke can always print dollars, it is up to OPEC to print oil. And the market seems to be satisfied for now with promises of such.
http://www.zerohedge.com/article/rumor-emergency-opec-meeting-hike-crude-supply

I like one of the comments on the page:

That's a good one. Where are they going to get it?

But this brings up a good question.. when's the last time OPEC significantly raised production? I can't remember. I remember at some point Bush literally begging them, hat in hand and holding hands too.. but still the Saudis said no. They blamed rising prices on speculators.. so now all of the sudden they can raise production because of Libya?

Guess I'll believe it when I see it.

[AirlinePilot]

Whether it was due to above ground factors like this present crisis or just due to decline, the real picture is about to unfold. This is what we have been waiting for. We are going to find out just how much and how fast the Saudi's/OPEC can cough up a few million barrels.

Going to be a very interesting year!

[Sixstrings]

Whether it was due to above ground factors like this present crisis or just due to decline, the real picture is about to unfold. This is what we have been waiting for. We are going to find out just how much and how fast the Saudi's/OPEC can cough up a few million barrels.

Going to be a very interesting year!

Oops looks like just a rumor.. either that or they thought about having a meeting but remembered they can't raise production.. either way no soup or oil for us:

Rejected: Saudi Oil Minister Saying OPEC Is Not Considering An Extraordinary Meeting

Today's rumor mill will apparently focus on whether OPEC will or will not miraculously push the "gush" button. After earlier we reported rumors that OPEC would raise oil supplies, and quoted the Kuwait oil minister, now the Saudi oil minister was caught on tape saying there will NOT be an extraordinary meeting. Which means that the Italian guy was spreading false rumors. Which means that whatever the offer for Italian CDS is, it is cheap. WTI, naturally, rallies on the news.

Obviously, alternative measure of printing oil will now have to be evaluated.
http://www.zerohedge.com/article/rejected-saudi-oil-minister-saying-opec-not-considering-extraordinary-meeting

[pana_burda]

¿ OPEC ... ?

Code: Select all

Bahrain is attached to Saudi Arabia's eastern province by a causeway.

Unrest among Bahraini Shias disturbs the Saudi royal family. The eastern province, which is where most of the oil is, has a large Shia population. It has been regarded as fifth column for the Shia rulers of Iran - though without much evidence.

Perhaps the Saudi royal family should feel nervous. The king and the crown prince are both old and ill.

http://www.bbc.co.uk/news/world-middle-east-12503334

[Pops]

Ya know, just read any headline of OFs and reverse whatever it says and you'll be close to the truth.

It's funny how KSA production is up but their exports are down:

Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.

“This is a huge difference,” said John Sfakianakis, Chief Economist at Riyadh-based Banque Saudi Fransi, noting the 2.32 million barrel per day difference between what Saudi Arabia produced and its exports.

Saudi Oil Exports Drop 4.9%
Growth in domestic oil consumption in Saudi Arabia is cutting into Saudi oil exports. This trend will continue. Higher prices enable them to export less.
Saudi Arabia’s exports fell to 6.05 million barrels a day in December from 6.36 million in November even as Saudi production rose to a two-year high of 8.37 million barrels a day, JODI said.
Saudi oil exports have probably already peaked. Rising domestic oil consumption eats into exports. This is known in Peak Oil circles as the Export Land Model problem. Export Land is experiencing much faster consumption growth than the rest of the world. Export Land is exporting less as a result. This trend will continue.

The chart is old but the trend id obvious:


http://www.theoildrum.com/node/7465

http://www.bloomberg.com/news/2011-02-1 ... -drop.html
http://www.futurepundit.com/archives/007917.html
.

[eXpat]

Ya know, just read any headline of OFs and reverse whatever it says and you'll be close to the truth.

Ain't that the truth

[bratticus]

That's a good one. Where are they going to get it?

Horizontal drilling all the way to the FSU.