[Revi]

I think this glut can last a little while longer. The oil being produced in Texas has plateaued and North Dakota is declining slightly, and that was the oil that really lifted the world higher. We'll see, but it looks like it might have hit a top and is declining now:

http://peakoilbarrel.com/bakken-decembe ... g-decline/


http://peakoilbarrel.com/texas-oil-prod ... a-plateau/

[AdamB]

And my efficiency is doing the same things I did yesterday, except with less energy.
And presto! increased discretionary. Woo Hoo! And you think this is BAD? It isn't.

It seems Monte has decided to leave the site again, otherwise he'd have chimed in again that by not "wasting" energy we're putting millions out of work, like "NASCAR workers".

I'm not sure I would be thrilled with everyone taking what I'm saying today, and comparing to what I said a decade ago, and being able to show the 180 right to my face, or just how outright wrong I was. Some people can learn from their mistakes, but if all you want to do is repeat how right you have been all along, it would come in handy to have actually been right.

[AdamB]

Money is also lost to the general economy when oil is purchased overseas; some $600 billion/year essentially disappeared when we were forced to purchase oil on the open international market at $100 barrel.

And obviously it was worth it, otherwise the people coughing up the cash would have chosen to do something else.

Like roll over and die?

No one chose that. Instead, they bought a Prius and became happy to not contribute to the problem as much. Plus saved themselves some of that coin, even if the Hummer drivers decided they preferred to pay more for their fuel.

[AdamB]

I think this glut can last a little while longer.

The experts in these things say a couple years anyway.

Supply and demand might not even equilibrate until 2018. That means like TWO summers of cheap road trips, minimum!

The oil being produced in Texas has plateaued and North Dakota is declining slightly, and that was the oil that really lifted the world higher. We'll see, but it looks like it might have hit a top and is declining now:

http://peakoilbarrel.com/bakken-decembe ... g-decline/


http://peakoilbarrel.com/texas-oil-prod ... a-plateau/

As we know from how the past peak oil and or gas was drowned in said oil and gas, Ron does not appear to account for peak being related to price, as Rockman has told us. And certainly he does no analysis of remaining drill sites, so there is no reason to think that this claim of peak is any more valid than those of the past. Additional $$, applied to remaining well sites, would give us some estimate of how much more there is, far better than the same "all decline, all the time" ridiculousness that were proven wrong during the last peak oil scare, be it 2000, 2005, 2006, or 2008. It should be noted, Ron was around for, and a long term participate at TOD during the peak oil call of 2008, so he of all people should certainly know better than do the same thing that was done then, and expect a different result.

[AdamB]

I'm not sure I would be thrilled with everyone taking what I'm saying today, and comparing to what I said a decade ago, and being able to show the 180 right to my face, or just how outright wrong I was. Some people can learn from their mistakes, but if all you want to do is repeat how right you have been all along, it would come in handy to have actually been right.

Adam you did the very same ten years ago as Reservegrowthdroolz and you are doing it again under your latest alias, AdamBoy.

While I would happy to take credit for others who knew the mechanisms that were about to unleash a flood of oil onto the market, it doesn't seem fair. Stealing the credit from others might be okay in your world, but it is not in mine.

Regardless how Monte's analysis has matured, he remains steadfast in his understanding of the twin predicaments of exponential resource depletion versus exponential population growth (guess which one wins?).

Resources aren't being depleted at an exponential rate, and population is logistic in nature, not exponential.

I recommend google, prior to suggesting internet fraud on my part, or becoming more "carried away". Again.

[Tanada]

When the Oil Minister of KSA speaks the international oil traders tend to pay close attention. We should too. Much more at link below quote.

The first phase of a long-anticipated industry recovery is underway as refineries on the Gulf Coast and around the world work through storage tanks of crude oil. The United States has a near-record stockpile of more than 530 million barrels, which could take months to cut down.

"The question now is how fast you will work off the global inventory overhang," said Falih, who serves as chairman of Saudi Aramco, the company that produces one out of eight barrels of oil the world consumes every day. "That will remain to put a cap on the rate at which oil prices recover. We just have to wait for the second half of the year and next year to see how that works out."

Boom and busts

In the first half of the decade, shale drillers in Texas and North Dakota put fracking in the nation's lexicon and led the United States to its biggest oil boom since the 1970s. But oil markets eventually became overstuffed as producers pumped more than 1 million barrels than the world needed each day.

For Saudi Arabia and other OPEC nations, the surge in U.S. oil production proved shale drillers could respond faster to high crude prices than all but the lowest-cost producers – "a game-changer," Falih said, in the way the Organization of Petroleum Exporting Countries manages oil markets. Since November 2014, Saudi Arabia has refused calls by other OPEC nations to resume its role as the world's swing producer and cut its oil production in a bid to stabilize falling crude prices.

"The tools that OPEC has used in the past – targeting specific prices – have not always worked in the long term," Falih said. "They create market dislocations that ultimately hurt producers and consumers."

The Kingdom, which can profit off of oil even at low prices, opted to let market forces weed out higher-cost producers. U.S. oil production, driven by higher-cost shale plays, has dropped by more than half a million barrels a day since early 2015 and nearly 80 drillers have gone bankrupt."No matter what we do, ultimately markets win," Falih said.

http://www.houstonchronicle.com/busines ... 317909.php

[AdamB]

When the Oil Minister of KSA speaks the international oil traders tend to pay close attention. We should too. Much more at link below quote.

And then we can think for ourselves. Of the Oil Minister could just get those inventories to stop climbing....

Down spot, down!!

https://www.eia.gov/dnav/pet/hist/LeafH ... ESTUS1&f=W

The Saudi's have a vested interest in changing market expectations. This alone makes anything they say suspect in terms of their own best interest. They have requirement to tell the TRUTH, expecting that from them would just be silly. So it makes perfect sense, that they want to declare the end of the glut to support price regardless of whether or not the glut is done or not. Glut still hanging around in the worlds largest consumer, inventories stubbornly high, and guess what happens in two months? Low demand season! If some of us web denizens can figure out that this is the perfect time to try and pimp oil for a few billion additional dollars if we can get commodity traders to bite, the Saudi Oil Minister sure can! Me, I'm planning road trips for the fall because when gasoline prices decrease again (that persistent inventory going into a even lower demand cycle) it is cheapo road trip time even compared to the $2.00/gal now!

Now that peak oil has arrived and brought with it higher production and lower prices, for the time being (until market forces rebalance the supply/demand equilibrium) all we can do is....take a muscle car on a cool road trip and enjoy...

[vtsnowedin]

If Saudi Arabia announced today that they would export no oil for less then $75 a barrel what do you suppose the price of Brent would be three days later?

[Subjectivist]

If Saudi Arabia announced today that they would export no oil for less then $75 a barrel what do you suppose the price of Brent would be three days later?

I suspect I ran would say they would sell for $65/bbl to try and undercut them and get market share, but many others would be at or just below $75/bbl.

[ROCKMAN]

vt/sub - Rather difficult to predict especialy if you tie the price to a time line: 1 week, 1 month, 6 months, 1 year, etc.

Regardless of the price the KSA demands the refineries aren't going to pay it and lose money. So then it becomes a question of supply vs demand with the consumers in the various major importing countries. Another complications: US refineries export products from 3 million bopd they crack everyday so that dynamic takes in much more then just the US market.

But as pointed out if there aren't enough buyers that can pay $75/bbl then global production will decline...unless someone sells for less then $75/bbl. Even if all the producers stick with $75/bbl the KSA may get less rervenue then they are getting today. As said many times before the producers can't force the refiners to pay more then they can justify just as the refiners can't forcer the consumers to pay more then they can justify. IOW if the consumers don't buy enough products made frtfrtom $75/bbl oil and all the sellers stick with that price production will decline. How much? No way to predict since no one predict how the consumers/economies would respond.

Or it's really no different then buying a new car: both sides come to a mutually acceptable price or the car stays in the lot. Or the oil stays in the ground.

[tita]

If Saudi Arabia announced today that they would export no oil for less then $75 a barrel what do you suppose the price of Brent would be three days later?

This question was already debated a few months ago under the "What Effect Would Oil Price Control Have? " topic, with the idea of russia not selling oil under 40$. The conclusion is that the producers don't control the price of the oil they sell, but only the quantity (and not completely, as you have to pay salaries and debt and a bunch of various stuff, you need some kind of revenue). The saudis already tried this approach by reducing gradually the quantity of oil their were selling in the beginning of the 80's. When they realized that their strategy was only leading them to reduce without end their production, as the other producer were investing and drilling and increasing, they simply flooded the market and created an oil glut.

Since then, the concept of swing producer for KSA only exist in the way to increase output to limit an escalation of the price in case of supply disruptions. But it didn't worked in 2008 as they had no more spare capacity. But nobody dare to fight an "oil glut" (the one we're living is more a well approvisoned market than a real oil glut).

[AdamB]

If Saudi Arabia announced today that they would export no oil for less then $75 a barrel what do you suppose the price of Brent would be three days later?

$75/bbl. Your are describing something similar to the Saudi business model from 1986 through about 2012. They dictated price through changes in rate.

Guess what happened at >$100/bbl? Two things. Conservation, and others began to change the rate equation. The Saudi's lost control of pricing when they lost the price of the marginal barrel. It then forced them to defend market share instead of price. Still doing it today they are.

The REAL question is what price will minimize conservation, minimize independent US produces from ramping production back up, and maximizing Saudi revenue. That price might not be $75. Might be $60.

No objections from happy consumers, even if they don't realize that peak oil is now higher production and lower prices, they just care about the results of lower prices and what cool things they can begin doing again without spending as much as they did back in the bad old days.

[sparky]

.
everybody is pretty much saying the same thing
if the price is in the 100$ and there is jobs aplenty , no problem
if the price is in the low 40$ and everyone is on the dole there is a definite squeeze on demand
there is no issue with supply and demand , it ALWAYS balance eventually , it's not a dual system it is one system .

but independently of the world economy , geology is not listening , the easy cheap oil is depleted first
I've never been too enthused with the EROEI model ,
better to use the monetary cost of getting at the black stuff and keeping it flowing
it's a simple metric which encompass all the outlays , including the potted plants in the CEO office

[ROCKMAN]

sparky - I've never been too enthused with the EROEI model , better to use the monetary cost of getting at the black stuff and keeping it flowing it's a simple metric...". Not a bad position to take given that no well has ever been, or ever will, be based directly on EROEI. It might surprise folks but the drop in oil prices means that the EROEI of projects developed at the current level will be much higher then when oil was $90+/bbl.

[AdamB]

.
everybody is pretty much saying the same thing
if the price is in the 100$ and there is jobs aplenty , no problem
if the price is in the low 40$ and everyone is on the dole there is a definite squeeze on demand

Amazing how things have changed. When the price came UP through $40/bbl, that was the end of the world because it meant peak oil. Now? It means that the economy has slowed down because it turns out that $100/bbl doesn't bother anyone.

there is no issue with supply and demand , it ALWAYS balance eventually , it's not a dual system it is one system .

but independently of the world economy , geology is not listening , the easy cheap oil is depleted first

yes. It was gone by 1901. We have become so accustomed to more and more difficult oil that we don't even notice anymore.

[Plantagenet]

The 2014-2016 oil glut was basically caused by the large increase in oil production coming from US shale oil. Over 3 million bbls/day of new oil production came on the market in just a few years time and caused the oil glut.



Yes, it is possible to have an oil glut when demand falls and production stays flat, but that isn't whats been happening in the world markets over the last few years.

Cheers!

[PeakOiler]

The 2014-2016 oil glut was basically caused by the large increase in oil production coming from US shale oil. Over 3 million bbls/day of new oil production came on the market in just a few years time and caused the oil glut.

Yes, it is possible to have an oil glut when demand falls and production stays flat, but that isn't whats been happening in the world markets over the last few years.

Cheers!

But EIA data since Dec 2015 shows the US "shale revolution" is a "flash-in-the-pan" phenomenon. Alaska, N. Dakota, and Texas are in decline again, and for that matter, the US, and even the recent IEA charts now shows a decrease in world oil production. I'm going to update and post charts for each of the above states after the EIA releases the April data on June 30th.

The EIA's "forecast' production in your post above needs revising soon! lol The 1970-1971 US peak was not equalled or surpassed by the shale revolution in the US. Close, but no cigar.

I suspect the "glut" will be gone by the end of 2017.