[Pops]

sub - I was thinking that we might want to start making a distinction that we probably can't make: the "natural peak" vs the "artificial peak".

Ditto price.
I'm kind of surprised that folks who obviously read so much about the market are getting all twitchy when the market is, for once, acting normal. The Economist said:

Only rarely, says Jason Bordoff, director of Columbia University’s Centre on Global Energy Policy, has the oil market behaved like a normal market, more subject to the laws of supply and demand than to the whims of a cartel. Now is one of them.

[ROCKMAN]

Pops - "...more subject to the laws of supply and demand than to the whims of a cartel. Now is one of them.". And I'm still waiting for someone to show me when any oil cartel (except for the Texas Rail Road Commission) has been able to force oil prices up. LOL. Since early 70's when the TRRC started setting the Texas allowable oil production rate at 100% it would appear that the market has always been dominated by the supply/demand dynamic.

After all wasn't OPEC at the peak of its power in the 80's? IOW when the cartel was able to force oil to fall from the inflation adjusted prices of $107/bbl to less than $20/bbl? Or was it in the 90's when OPEC was able to force oil prices down from the mid $30/bbl to around $17/bbl?

All hail the mighty OPEC oil cartel!!! LOL

[Pops]

Pops - "...more subject to the laws of supply and demand than to the whims of a cartel. Now is one of them.". And I'm still waiting for someone to show me when any oil cartel (except for the Texas Rail Road Commission) has been able to force oil prices up. LOL. Since early 70's when the TRRC started setting the Texas allowable oil production rate at 100% it would appear that the market has always been dominated by the supply/demand dynamic.

After all wasn't OPEC at the peak of its power in the 80's? IOW when the cartel was able to force oil to fall from the inflation adjusted prices of $107/bbl to less than $20/bbl? Or was it in the 90's when OPEC was able to force oil prices down from the mid $30/bbl to around $17/bbl?

All hail the mighty OPEC oil cartel!!! LOL

So... monopoly's can't affect price?

the embargos didn't?

The TRRC didn't?

Standard oil didn't?

stop pulling my leg, LoL

[ROCKMAN]

Pops - As I said: tell me what dates OPEC forced the price of oil up by decreasing production since it was founded in 1960. That "embargo" didn't represent a drop in OPEC production: their production was flat from 1976 through 1979. The "embargo" was from 1974-75: during that time OPEC share of global production fell from 51% to 49%...hardly a game changer IMHO. Some OPEC counties might have decided to not sell to some countries but they didn't reduce production by any meaningful amount. OPEC production didn't start to slide significantly until global oil demand began shrinking as result of the global recession brought on by the high oil prices. It fell from 30 mm bopd to 18 mm bopd. I'm pretty sure that wasn't some diabolical plan of them dirty Arabs. LOL. From 1985 through today there has been no period when OPEC has decreased it's output significantly to force oil prices up. That is what "cartels" are designed to do, right? The biggest single decrease in OPEC production for the last 30 years was from 2001 to 2002 when it "plunged" from 31 mm bopd to 29 mm bopd.

And today how is that "oil cartel" power working out for OPEC? Since their peak revenue of $917 billion in 2012 OPEC net oil export revenue has decline about 60% to their projected revenue for 2015 of $380 billon. I'm sorry...lost track of the conversation: tell again how the OPEC "cartel" has been manipulating the price of oil for the last 30 years. Thanks in advance. LOL.

And I did point out that "cartels" prior to the founding of OPEC were able to manipulate oil prices by altering production rates. Pay attention fellow old fart. LOL.

[Pops]

Pops - As I said: tell me what dates OPEC forced the price of oil up by decreasing production since it was founded in 1960.

oh, come on ROCK, you are going to make me prove to you that OPEC has a partial monopoly and monopolies can affect price when supply is constrained?
OPEC quota reductions and price increases:
'73 = 50%
'79 = 14%
'80 = 34%
'81 = 34%
https://books.google.com/books?id=xoztF ... il&f=false

After the embargos, conservation and increased non-OPEC production lowered the price and OPECs influence. by 85 after KSA lowered it's production 75% but couldn't enforce quotas it threw a tantrum and flooded the market dropping the price to $10. Obviously it had been pushing up the price by withholding 7mbd or the price would not have dropped on the increased production... right?

They had 7-8mmb spare in the '90s but still couldn't increase the price because global capacity was sufficient. Price only rose when china started importing big time and the N Sea began to fail around 2000...and global capacity tightened.

I believe the reason they didn't cut production this time around is they learned the lesson of the '80s: if you force consumers to pay too much they learn to conserve and that is not a good thing when all you have to sell is oil.

[GoghGoner]

Hmmm... Twilight in the desert

Oil ends higher as OPEC output falls, global supply risks rise

OPEC oil production in October fell by 120,000 barrels a day from a month earlier, to its lowest level since May—marking a third straight monthly decline, according to a Platts survey of OPEC and oil industrial officials and analysts released Monday.

“The Platts survey is absolutely going to come across as bullish because the ‘new norm’ is for all of OPEC to be pumping at maximum capacity and you wouldn’t expect to see a monthly decline with policy like that,” said Tyler Richey, co-editor for The 7:00’s Report.

[kublikhan]

Hmmm... Twilight in the desert

OPEC oil production in October fell by 120,000 barrels a day from a month earlier, to its lowest level since May—marking a third straight monthly decline, according to a Platts survey of OPEC and oil industrial officials and analysts released Monday.

“The Platts survey is absolutely going to come across as bullish because the ‘new norm’ is for all of OPEC to be pumping at maximum capacity and you wouldn’t expect to see a monthly decline with policy like that,” said Tyler Richey, co-editor for The 7:00’s Report.

Nah, that output drop was seasonal & bad weather. Saudis shut down their air conditioners so domestic electricity demand is lower. Exports still increased. Meanwhile, Russian oil production hit record highs.

In the details of the release however, Richey pointed out that Saudi exports still increased and seasonality played a part in the headline number, while adverse weather influenced the drop in Iraqi output. The output pullback had “nothing to do with the cartel’s policy and until that changes, oil prices are likely to remain under pressure. "It would be a mistake to think that this might signal a move away from the group’s market share strategy when ministers meet next month in Vienna.” All signs, including an expected contraction in non-OPEC supply next year, “suggest that the likelihood of a policy change is pretty small.

Oil ends higher as OPEC output falls

Russian oil production, the world's largest, hit a post-Soviet high in October, rising 0.4 percent month on month to 10.78 million barrels per day (bpd)

Russian oil output in Oct hits post-Soviet high 10.78 mln bpd

[Revi]

I think in the rearview mirror Patterson may have turned out to be right. The peak might end up being this year.

We'll see...

[Revi]

Here's Patterson's latest post in which he calls a peak this year, 2015. We'll know in the rearview mirror in about 18 months:
http://peakoilbarrel.com/the-case-for-p ... more-10225

[Revi]

KSA and Russia might produce more in 2015, but the general trend is down. We'll see.

[Revi]

Here's the latest post from the oil barrel. In it a reputable firm says oil is peaking this year:

http://peakoilbarrel.com/oil-forecast-f ... more-10458

[Tanada]

Here's the latest post from the oil barrel. In it a reputable firm says oil is peaking this year:

http://peakoilbarrel.com/oil-forecast-f ... more-10458

So whomever wrote this report is projection oil supply to increase and stabilize in 2018. When I look at the public data for the last couple of years it is clear all of the oil majors have stopped investing in future production, so where exactly is this increase to a new stable plateau supposed to come from? ROCKMAN has lectured me about a zillion times about the fact that it takes a lot of active investment and development every year just to slow the decline in future years from existing fields. Now this anon report which may have been written with the best and purist intentions is saying even with very low investment in 2014, 2015 and through 2016 oil supplies will once again start increasing in 2017 as prices rise back into a stable range between 50 and 100 percent higher than today.

So how does that happen?

[Pops]

Iran & Iraq mostly. The majors really aren't all that major anymore.

Oil really isn't all that cheap, investment will continue, just not at the pace of the last decade.

My opinion is it's entirely possible that we are at peak. It's just that - again - you won't see it in real time.

[GoghGoner]

North America will be down significantly from the average 2015 production number. The other region that has showed growth before this year is South America but everything coming out of Brazil right now is really negative.

We know that every other region had flat-lined or decreased prior to 2015: Africa, Asia-Pacific, Middle East, Europe, and Eurasia. One of those is going to have to switch sides and overcome the fall in North America production or we will see lower overall production in 2016.

My guess is we will be down 1 MBD but could ramp back up in North America and set new highs again.

[ROCKMAN]

T - "So how does that happen?" Maybe it's nothing more complicated than producing existing reserves at a higher and sustainable rate (for a while). IOW has then been a huge increase in "proven" oil reserves that coincides with the record global production? I think not: the production from existing wells account for most of the increase. No different than someone making $60k/year going out and paying cash for a $100k BMW. They neither got a big raise nor got "wealthier": they just took it out of their savings. IOW they depleted some of their assets. Just as the KSA is depleting its "assets" more quickly today.

Or simply put: the world producing oil at a higher rate today doesn't necessarily mean we've increased our reserves proportionately.

[GoghGoner]

XOM peaked and burned through a lot of cash the last 10 years with annual prices very high.

http://www.bloomberg.com/news/articles/2015-11-05/the-next-ceo-of-exxon-will-inherit-a-diminished-giant

When Tillerson took over, Exxon had $28.7 billion in cash and was pumping almost 4.3 million barrels of crude daily. Today, Exxon’s output is down to 4 million barrels a day, and its cash reserves have declined 85 percent, to $4.3 billion, eroded by soaring project costs and collapsing energy prices. “The world has changed dramatically since Rex Tillerson took over,” says Brian Youngberg, an analyst at Edward Jones, a brokerage and advisory firm. “The fact that he’s leaving his successor a company that produces less than it did 10 years ago says a lot.”

[Revi]

The latest post by Patterson shows Opec up 200,000, and the US down by roughly the same amount. Hard to tell what's exactly going on, but it looks like we are still on the plateau for now:

http://peakoilbarrel.com/bakken-and-ope ... more-10553