Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

THE Price of Crude pt 14

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Price of Crude pt 14

Unread postby Tanada » Wed 07 Feb 2018, 11:38:41

kublikhan wrote:The spike in oil production was not Iran draining it's tankers. Iran's production increased because the sanctions were lifted. And it continued to increase long after Nov 2016. Even now, Iran's oil production is higher than Nov 2016:

Table 5 - 9: OPEC crude oil production based on secondary sources, tb/d

Iran, I.R. 3,710 3,829

OPEC Monthly Oil Market Report 18 January 2017

OPEC Monthly Oil Market

I already mentioned sanctions being lifted on Iran and their increased production.


You have proven yourself to be the Master Prognosticator, but I personally do not see the Iran increase of 119,000 bbl/d as being all that significant. While every oil exporter naturally wants to sell as much as they can at the highest value possible declines in legacy fields like the North Sea and Cantrell continue to take a toll on world supply. Sure right now the USA is surging, but I remain unconvinced this fracking supply will last for the long term simply because it has been a success for the last nine years.

Just look at the fracking decline rate in second half 2015 through first half 2016, it is a near perfect mirror of the increase rate for the prior five years. That was despite the fact that drilling continued at a pace of about 25% of the 2015 peak. Yes delivered supply is once again growing in the USA and has made up for that 2015-16-17 decline period and is setting new production records today. But how long will that last? We have evidence to support the contention that drilling has to proceed at least at 50% of the peak 2015 rate just to maintain near steady production rates from LTO. If all we wanted to do was maintain we could probably hold that production rate for a decade or so by expanding the number of wells as the less sweet spots become more and more dominant in the picture. But to keep increasing the total production rate we have to drill at more than the 50% of peak drilling rate of 2015, and pretty soon you start running into the law of diminishing returns.

All IMO of course.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
User avatar
Tanada
Site Admin
Site Admin
 
Posts: 14489
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: THE Price of Crude pt 14

Unread postby kublikhan » Wed 07 Feb 2018, 12:28:56

GoghGoner wrote:It depends on the subject. On this subject I am aware of and I have consumed about every detail. I was invested in oil during the OPEC announcement and I had a very nice vacation last year because of it. I have skin in the commodity cycle now and do a lot of my own analysis. Sorry I got annoyed with you, I have generally agreed with your posts in the past.
Sall good :) I lose my cool at times as well :)

Tanada wrote:You have proven yourself to be the Master Prognosticator, but I personally do not see the Iran increase of 119,000 bbl/d as being all that significant. While every oil exporter naturally wants to sell as much as they can at the highest value possible declines in legacy fields like the North Sea and Cantrell continue to take a toll on world supply. Sure right now the USA is surging, but I remain unconvinced this fracking supply will last for the long term simply because it has been a success for the last nine years.

Just look at the fracking decline rate in second half 2015 through first half 2016, it is a near perfect mirror of the increase rate for the prior five years. That was despite the fact that drilling continued at a pace of about 25% of the 2015 peak. Yes delivered supply is once again growing in the USA and has made up for that 2015-16-17 decline period and is setting new production records today. But how long will that last? We have evidence to support the contention that drilling has to proceed at least at 50% of the peak 2015 rate just to maintain near steady production rates from LTO. If all we wanted to do was maintain we could probably hold that production rate for a decade or so by expanding the number of wells as the less sweet spots become more and more dominant in the picture. But to keep increasing the total production rate we have to drill at more than the 50% of peak drilling rate of 2015, and pretty soon you start running into the law of diminishing returns.

All IMO of course.
The point was that Iran's production surge wasn't the result of dumping of their accumulated oil stocks from tankers. As here we are over a year later and Iran is still producing at the same elevated level as Nov 2016, indeed an even higher level. Iran's production is up nearly a million bpd over it's 2015 level.

As for my broader view on the global oil supply situation, it mirrors your own view. Declines in legacy fields coupled with several years of curtailed oil investments point to a further tightening of the oil market further down the road. Shale is increasing at a good clip but this won't be enough to cover demand increases and conventional supply declines in the medium to long term.

A dearth of new investment in oil production is stoking a risk of tighter crude supply and unstable prices, even as demand growth is expected to slow over the next five years. The worldwide cushion of spare production capacity will shrink without further investment in exploration and output. “There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices.” Oil prices at current levels are “better” but still not spurring investment. There is a supply challenge coming up.”
IEA Sees Risk of Volatile Oil Prices on Weak Upstream Investment

But I'm guessing that in the short term shale revival is going to overwhelm declines in conventional supply:
U.S. oil output is set for “explosive” growth this year as prices rally, the International Energy Agency said on Friday. That was just one of a chorus of voices from Goldman Sachs group Inc. to OPEC itself warning of a looming output surge reminiscent of the “heady days” of the first shale boom. “The big 2018 supply story is unfolding fast in the Americas” the IEA said in its monthly report. “Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico.”
IEA: Oil prices to squeeze over shale boom
The oil barrel is half-full.
User avatar
kublikhan
Master Prognosticator
Master Prognosticator
 
Posts: 4103
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: THE Price of Crude pt 14

Unread postby tita » Wed 07 Feb 2018, 18:05:03

kublikhan wrote:But I'm guessing that in the short term shale revival is going to overwhelm declines in conventional supply:
“Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico.”

Indeed. I quickly looked at the latest STEO from the eia, and the projected LTO growth for 2018 is impressive. In fact, it seems that consumption (projected to pass 100Mb/d in the middle of the year) can only be fulfilled by LTO and canadian syncrude (+2Mb/d, among +1.56 from USA), while the rest of the world only have to grow a little bit (+0.86Mb/d).

Of course, much can happen through the year.
User avatar
tita
Heavy Crude
Heavy Crude
 
Posts: 312
Joined: Fri 10 Jun 2005, 02:00:00

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Fri 09 Feb 2018, 11:38:26

tita wrote:Of course, much can happen through the year.


WTI is back under $60 right now. Drilling won't look so attractive all of the sudden.
GoghGoner
Light Sweet Crude
Light Sweet Crude
 
Posts: 1705
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Fri 09 Feb 2018, 12:17:47

GoghGoner wrote:
tita wrote:Of course, much can happen through the year.


WTI is back under $60 right now. Drilling won't look so attractive all of the sudden.

Perhaps global market jitters are causing concerns about exuberant short term economic forecasts? Global oil demand correlates very strongly with global economic strength over time.

If there is insufficient drilling to keep supply meeting demand, then the price will go up when that becomes obvious to the majority of investors. If that's an issue the price of oil will rise. The question will be when.

And if oil is cheaper, gasoline, etc. will also be cheaper for consumers in the mean time.

In the economy, there are often trade-offs to much of the news. It's not all glass-half-empty.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 4616
Joined: Sat 27 Jun 2009, 20:26:42

Re: THE Price of Crude pt 14

Unread postby rockdoc123 » Fri 09 Feb 2018, 12:42:46

In the economy, there are often trade-offs to much of the news. It's not all glass-half-empty.


given the vast majority of selling in the market over the past week has nothing to do with fundamentals it is hard to put a finger on the exact cause of sell off in the oil market. There are always theories (worries about increased US production, UK oil coming back on stream etc) but until the market settles down it is pretty hard to discern how much selling isn't being done by institutional investment houses who were hedged against volatility, lost a ton of money and may have been subject to margin calls elsewhere requiring they unload any stocks that someone might buy.
User avatar
rockdoc123
Expert
Expert
 
Posts: 5768
Joined: Mon 16 May 2005, 02:00:00

Oil Prices: Collapse Now, Spike Later

Unread postby AdamB » Wed 14 Feb 2018, 11:17:18

Oil prices closed out the week sharply down, wiping out all the gains posted since the start of the year. Surging U.S. shale production, along with broader financial turmoil, has clearly put an end to the bullish mood in the oil market. U.S. shale struck several blows against oil prices this week. First, the EIA dramatically overhauled its forecasts, predicting U.S. oil production would hit 11 million barrels per day (mb/d) this year, rather than late next year. Then, on Wednesday, it revealed estimates that put U.S. oil production at 10.25 mb/d for the week ending on February 2, a staggering 330,000 bpd increase from a week earlier. Those weekly estimates are subject to revision when more data becomes available, but if those figures hold, it would point to a significant ramp up in drilling activity and new supply coming online. As a


Oil Prices: Collapse Now, Spike Later
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 3984
Joined: Mon 28 Dec 2015, 16:10:26

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Wed 14 Feb 2018, 14:41:28

Well, that didn't take long. Today will be the biggest daily gain in the the last couple of months. A bullish EIA report triggered the mood swing. WTI firmly back above $60.
GoghGoner
Light Sweet Crude
Light Sweet Crude
 
Posts: 1705
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Wed 14 Feb 2018, 14:50:00

GoghGoner wrote:Well, that didn't take long. Today will be the biggest daily gain in the the last couple of months. A bullish EIA report triggered the mood swing. WTI firmly back above $60.

Short term, financial markets will make you scratch your head until it bleeds (IMO).

So this morning, it was fears of "high" inflation, due to a one month spike, led by fuel prices.

So early on it's "bad, bad bad, scary", and the markets fall.

And I, growing up in the 70's, am like, "What? Core inflation MIGHT be increasing to a more normal rate of 3ish percent, so it's time to panic? Since when?"

So later in the day we have the markets strong, with many economists dropping GDP targets and raising inflation targets due to the early report.

And I noticed, like you say, oil got strong. But oil is a KEY component of overall inflation. So why do the markets continue strengthening with oil up over $1.50 as I write this, if "the markets" are so scared of inflation?

...

I suppose a sore head is what I get from trying to use logic and cause and effect.... :?
User avatar
Outcast_Searcher
COB
COB
 
Posts: 4616
Joined: Sat 27 Jun 2009, 20:26:42

Re: THE Price of Crude pt 14

Unread postby tita » Tue 20 Feb 2018, 05:38:54

WTI and Brent going in opposite directions today. The spread is now very close to 3$.

Not sure what effect this will have on exports for the US.
User avatar
tita
Heavy Crude
Heavy Crude
 
Posts: 312
Joined: Fri 10 Jun 2005, 02:00:00

Previous

Return to Peak Oil Discussion

Who is online

Users browsing this forum: No registered users and 18 guests