IEA Sees Oil-Price Recovery; Cuts 2015 Non-OPEC Output Estimate

54 Comments on "IEA Sees Oil-Price Recovery; Cuts 2015 Non-OPEC Output Estimate"

Plantagenet on Fri, 16th Jan 2015 5:59 am 



OPEC oil production peaked I’m 2005. The current oil glut is due to the growth in US tight shale oil.

The EIA is right that growth in US production will slow at these low prices, bringing us closer to global peak oil.

bobinget on Fri, 16th Jan 2015 6:18 am 



These tepid words will have little effect countering
“global weakness” hash being dished daily.

Of course non OPEC output is shrinking. New crude oil investment dollars are in house arrest. I’m calling
it ‘ebolazation’ of private ‘retail’ investors

IEA is doing a bit of ass covering here . Doubtless
many see shortages coming as soon as mid summer.

One important reason for increased consumption;
military demand is increasing daily.
Iraq/Syria
( Oil War troop-movements)

The U.S. Will Send ABOUT 400 Troops to Syria

This spring to help train moderate opposition rebels to defeat Islamic State militants, Reuters reported.

The troops will work out of training sites in Qatar, Saudi Arabia and Turkey, Cmdr. Elissa Smith, a Defense Department spokesperson, said in the Army Times.

The troops will also be supported by hundreds of enabling forces who will provide security and other services, Defense One reported.

The goal of the deployment is to train more than 5,000 rebels in the first year to push back against Islamic State militants who have seized large swaths of Syria and Iraq. Coalition partners are expected to contribute forces to the training effort as well.

According to Reuters, up to 15,000 trained Syrian rebels will be needed to retake areas in the east that are already controlled by ISIS.

Identifying rebel fighters who don’t have ties to ISIS or the main al Qaeda affiliate in Syria will be extremely difficult, but Pentagon officials said they’re confident U.S. forces can recruit and train a moderate fighting force against the terrorists.

“We … know the Syrian opposition better now than we did two years ago through the programs we’ve had providing non-lethal assistance,” Smith said.

“This is going to be hard,” one unidentified senior defense official told Defense One. “We have to recruit the guys, we have to assume that there are a lot of guys who are recruitable, there’s got to be some vetting. This is not going to be an easy enterprise here.”

For months, an American-led campaign has pounded militant sites in Syria with nearly 800 airstrikes. Yet ISIS has continued to claim territory, including large segments of the Homs Desert, The Wall Street Journal reported.

“The coalition strikes seem similar to drone campaigns in Yemen or Pakistan, targeting only leadership. The front-line strength of ISIS has undoubtedly increased even as some of these targeted strikes take out mid-level individual leaders,” Mouaz Moustafa, political adviser for the Coalition for a Democratic Syria, told the Daily Beast earlier this week.

More than 3,000 U.S. troops have also been authorized to train security forces in Iraq. Total cost for the effort: $1.2 billion.

Plantagenet on Fri, 16th Jan 2015 6:32 am 



@bob

Obama’s wars in Iraq and Syria will further destabilize these two countries and result in decreased oil production just as occurred after his war in Libya

bobinget on Fri, 16th Jan 2015 6:35 am 



A few here will recall President Kennedy sending
an equal number of ‘advisors’ to secure locations in South Vietnam.

Upcoming international missions: Nigeria, Yemen,
Libya, if we are lucky, Saudi Arabia.

bobinget on Fri, 16th Jan 2015 6:42 am 



Since US has no ‘exit strategy’ Plantagenet will most surly be calling future editions of Oil Wars,
“Hillary’s Wars” ..

A bit unfair, as we never properly gave “The Iraq War” full provenance.

bobinget on Fri, 16th Jan 2015 6:48 am 



I have a better Idea.
Elect Jeb. Then, we keep the Iraq franchise ‘in the family’ so to speak.

Charlie Bucket on Fri, 16th Jan 2015 6:57 am 



@bobinget 6:42am: NICE!

Plantagenet on Fri, 16th Jan 2015 7:08 am 



@bob

obama himself admits his new wars in Iraq and Syria will continue past 2016. If Hillary chooses to continue bombing these wars may indeed continue well into her administration as well

And I quite agree with you that KSA and other countries in the ME may get sucked in as well

Makati1 on Fri, 16th Jan 2015 7:32 am 



War is all that is keeping the USSA in business. In fact, the US is a corporation, not a country now. Without wars to sell weapons, there would be no exports worth talking about. War is our main export and has been for 65+ years starting with Korea. Not that we ever win one.

Davy on Fri, 16th Jan 2015 7:55 am 



IEA, being governmental in scope is not going to mention the possibility of peak demand and peak supply in a vicious cycle down. This is not allowed in today’s forward guidance dominated economic picture. I suspect a stability to oil prices later in the year maybe. That seems reasonable with the way markets react but longer term the fundamental are pointing to a broad based bumpy descent.

The bumpy descent may appear to be just a bump down in the bumpy plateau but I see this bump down as mounting multidimensional predicaments converging to effect oil and the economy such that real limits are increasingly apparent. Propaganda is failing and the fog is lifting with reality showing her face.

We know contraction will not be smooth. We know contraction will exhibit random resulting decay some of which could be very disruptive. It is too early to tell when, where, and how this will start. I will say with the FX markets are in turmoil now and the latest oil price drop both point undeniably to disequilibrium. Disequilibrium in today’s barely stable BAU is not a positive to be discounting with positive news of any kind.

shortonoil on Fri, 16th Jan 2015 8:14 am 



We have been predicting a decline in prices since May, and posted this page in September:

http://www.thehillsgroup.org/depletion2_022.htm

At the present, about 15% of the world’s production is only usable as feedstock material. These are liquid hydrocarbons that do not participate in the production of fuels. They do, however, contribute to the overall world wide liquid hydrocarbon inventory.

Because they do not contribute to the production of fuels, they do not supply the energy required to drive the additional economic activity needed to provide for their own demand. That must come from higher quality crude. The world does not have an excess of crude, it has an excess of feedstock material. To bring the price back in line, as indicated by the graph above, it will require a production decline of this lower quality crude of about 4 mb/d. We don’t expect that to happen until later in 2016, at a price range of $60 to $65/b.

http://www.thehillsgroup.org/

bobinget on Fri, 16th Jan 2015 8:19 am 



Plantagenet,
You truly flabbergasted me with “KSA and other countries in the ME may get sucked in”

That’s like blaming climate change for sea level rise
without offering proof that people you, I, are complicit.

Saudi Arabia has been involved in Syria’s ‘proxy’
Civil War from day one.

http://en.wikipedia.org/wiki/Foreign_involvement_in_the_Syrian_Civil_War

Here’s Wikipedia’s box scoreboard.

Contents [hide]
1 Support for the Syrian government
1.1 Russia
1.2 Iran
1.3 Lebanese Hezbollah
1.4 Other parties
2 Support for the opposition
2.1 France and Britain
2.2 United States
2.3 Qatar
2.4 Saudi Arabia
2.4.1 Croatian weapons
2.4.2 Bandar bin Sultan
2.5 Arab League
2.6 Turkey
2.7 Mujahideen
2.8 Diplomatic isolation of Syrian government
3 Support for Islamic State of Iraq and the Levant
4 Spillover and border incidents
4.1 Spillover into Lebanon
4.1.1 Lebanese-Syrian border
4.2 Incidents at Syrian-Turkish border
4.2.1 2011 incidents
4.2.2 F4 jet incident
4.2.3 October 2012 cross-border clashes
4.2.4 February 2013 bombing
4.2.5 May 2013 border bombing
4.2.6 2013 helicopter incident
4.3 Tensions at Syrian-Israeli ceasefire line
4.4 Airstrikes on Hezbollah targets in Syria
4.5 Iraqi-Syrian border incidents
4.6 Jordanian-Syrian border
5 Other
6 See also
7 References

From a speech by Sir Richard Dearlove, the former chief of Britain’s intelligence service, MI-6. In it, Cockburn suggests that Saudi Arabia, in its fanatical zeal to oppose Shiites worldwide, “has played a central role in the ISIS surge into Sunni areas of Iraq.” (ISIS, of course, is the Islamic State in Iraq and Syria, now pretentiously calling itself a “caliphate” and changing its name to “the Islamic state,” presumably signaling that it intends to rule the entire Muslim world.)

Is there any doubt who first bankrolled ISIS? al-Qaeda?

Here’s a BBC primer. Simply laid out.
http://www.bbc.com/news/world-middle-east-23849587

Davy on Fri, 16th Jan 2015 8:29 am 



Here is a great article that incorporates many current financial issues including the oil price drop in regards to what appears to be a return to a more normal price discovery environment post Fed QE. This return to a more normal price discovery is repricing commodities now per their more likely value. The article goes on to say this should be a red flag for a down turn. It appears it was written before the surprise SNB move causing significant FX instability. If one adds that SNB policy change to this article we see even more clarification that deflation is marching on.

http://www.zerohedge.com/news/2015-01-16/end-fed-qe-didn%E2%80%99t-start-market-madness-it-ended-it

Plantagenet on Fri, 16th Jan 2015 8:29 am 



@bob

Your point is obvious. I am making a subtler point that you didn’t get

The caliphate is based in Syria and then spread into Iraq. More recently IS fighters and allied mujahideen are now popping up in Libya, Nigeria, Pakistan, etc.

My point is IS may open a front in KSA as well. In fact the Saudis are now building a new security fence in the north to keep IS militants out

Get it now?

shallowsand on Fri, 16th Jan 2015 8:56 am 



That is some fence. 600 miles long with body heat detection the entire distance. Also see that KSA beheadings and lashings are up. How much longer will the populace put up with that??

Plantagenet on Fri, 16th Jan 2015 9:12 am 



Muslims have put up with lashings and beheadings for ca 1400 years. In fact many Muslims support sharia law

GregT on Fri, 16th Jan 2015 10:00 am 



“In fact many Muslims support sharia law”

Which is exactly why fighting ‘Islamic State’ is a complete waste of time. We are not just fighting a group of militants, we are fighting an ideology.

Apneaman on Fri, 16th Jan 2015 10:07 am 



“Muslims have put up with lashings and beheadings for ca 1400 years. In fact many Muslims support sharia law”

Having to “put up” with your special interpretations of world history is just as punishing as Sharia law.

Plantagenet on Fri, 16th Jan 2015 10:36 am 



@Apneaman

I can’t help it if you are ignorant about world history AND current events.

Its simply a fact that Islam is ca. 1400 years old and that many modern Muslims want Sharia law.

Apneaman on Fri, 16th Jan 2015 12:01 pm 



It was not the facts, it is your use of them to promote your Manichean world view.

Perk Earl on Fri, 16th Jan 2015 1:28 pm 



“We know contraction will not be smooth. We know contraction will exhibit random resulting decay some of which could be very disruptive. It is too early to tell when, where, and how this will start.”

That’s the part that keeps me guessing, Davy, i.e. mainly the ‘when’ the severe contractions will begin again after 08/09’s initial cascade. So far the worst being held off by desperate fiscal policies. Along those lines I’m very curious to see if the EU opts for QE.

Plantagenet on Fri, 16th Jan 2015 1:28 pm 



Facts don’t promote anything—-they simply are facts.

Its simply a fact that Islam began about 1400 years old. Its also a fact that many Muslims today support imposition of Sharia law.

Those facts might be equally cited by someone supportive of Islam or critical of Islam or who doesn’t give a darn about Islam. The facts are just the facts.

Get it now?

Plantagenet on Fri, 16th Jan 2015 1:30 pm 



Of course Europe is going to opt for QE. Thats why the Swiss national bank abandoned their peg to the Euro yesterday and let the Swiss franc rise.

GregT on Fri, 16th Jan 2015 1:42 pm 



Plant,

Do you ever stop and think as to why you are constantly arguing with everyone here? Or do you do it just to be annoying?

Plantagenet on Fri, 16th Jan 2015 1:48 pm 



@GregT

????

I’m not arguing with anyone. I simply post facts that are relevant to the topic and people who don’t understand the facts start the arguments . For instance, in the post above which you imagine to be an argument, I simply posted the fact that the Swiss national bank abandoned their peg to the Euro currency and the Swiss franc rose by ca. 20-30% almost instantly.

The Swiss bank took this move because they believe the EU bank is about to engage in QE.

Get it now?

GregT on Fri, 16th Jan 2015 2:02 pm 



Plant,

Try to READ what Apneaman wrote above.

“It was not the facts, it is your use of them to promote your Manichean world view.”

Also, you continually twist everything around to support your ‘argument’. Do you not understand that much of the time you aren’t making any sense?

BC on Fri, 16th Jan 2015 3:08 pm 



“The world does not have an excess of crude, it has an excess of feedstock material. To bring the price back in line, as indicated by the graph above, it will require a production decline of this lower quality crude of about 4 mb/d. We don’t expect that to happen until later in 2016, at a price range of $60 to $65/b.”

shortonoil, excellent observation/analysis.

I anticipate that $40-$50 oil will result in a decline in US production of 2-3MMbbl in the years ahead and a proportional decline in consumption, which has been largely driven by consumption by shale producers and energy-related transport, etc.

The decline in “oil” production and consumption will occur with US and global recessionary conditions for cyclical capital goods orders, US industrial production, employment, housing, consumer spending, and US fiscal deficits/GDP, as well as further deceleration of CPI and falling interest rates.

The Fed cannot raise rates under these circumstances, but the velocity of debt to wages and GDP continues to decline owing to diminishing returns to increasing bank reserves, lending to the financial and energy sectors (inextricably linked, of course), and bubbly asset values.

We’re reached the permanent systemic exergetic log-limit bound of debt, net energy per capita and to extract energy, as well as the capacity for gov’t to run deficits to keep money supply, real, after-tax household incomes and profits, and real GDP per capita growing at a 5- and 10-year change rate.

IOW, Peak Oil, Limits to Growth, and the end of growth, the end of capitalism, and the end of the Fossil Fuel Age epoch have arrived. The Anglo-American and European rentier elite and their managerial hired guns, technocrats, and public intellectuals cannot tell us for fear of exacerbating the change rate of decline hereafter, as well as risking their credibility, legitimacy to rule, and their income (“money for nuthin'”, but the chicks ain’t free), wealth (rentier claims on labor, profits, and gov’t receipts in perpetuity), and power (including the prerogative of using violence against you and me and via “total war”), required to sustain the same.

Plantagenet on Fri, 16th Jan 2015 3:10 pm 



GregT

Yes, exactly. Read what Apneaman wrote.

I posted a simple factual statement about the ca. 1400 year age of Islam and he fantasized up a “manichean world view” with no basis in reality.

If you and/or Apneaman can’t understand simple factual statements, then thats your problem.

Cheers!

Plantagenet on Fri, 16th Jan 2015 3:18 pm 



The obama administration is projecting a healthy 3% US GDP growth rate in 2015.

Thats hardly the end of capitalism.

And with oil at <$50 bbl, its clearly not the end of the fossil fuel age either. In fact, the low prices mark a glut in oil supplies.

Apneaman on Fri, 16th Jan 2015 3:30 pm 



Sure Plant. It’s everyone else-not you. 3/4 of the replies to your comments are of the WTF? variety. Keep telling yourself that it’s everyone else who is unlearned and has poor reading comprehension.

BC on Fri, 16th Jan 2015 3:35 pm 



Plant, since when has a gov’t forecast been correct? They are purely for propaganda and entertainment purposes, as in competing with astrologers for the biggest laughs. 😀

But there is some value in that, I suppose. 🙂

Plantagenet on Fri, 16th Jan 2015 3:36 pm 



@Apneaman

Your fantasy that “everyone else ….is unlearned and has poor reading comprehension” is just plain wrong, Apneaman.

No doubt some people fit that description, but you are totally off base to characterize “everyone else” that way.

Most people are actually rather decent and intelligent folks, don’t you know.

Cheers!

Plantagenet on Fri, 16th Jan 2015 3:38 pm 



BC—I quite agree with you that most government forecasts aren’t very reliable. Nonetheless, the obama administration is forecasting respectable US GDP growth next year.

BC on Fri, 16th Jan 2015 3:52 pm 



Plant, you’re correct about the Swiss central bank’s motives in anticipation of the ECB taking over for printing by The Chair of at least hundreds of billions of euros to prevent contraction of M3 and nominal GDP hereafter.

But keep in mind that the Swiss banksters are part of the Anglo-American and European int’l banking syndicate (doing the workd of The Almighty), those who need another global financial and economic crisis to further their actions towards achieving the objective of “The Plan”, i.e., to merge the US, Canada, UK, and EZ into a single “Trans-Atlantic Federation” as a bulwark against Russia, China, and Radical Islam, which will require pulling the financial plug on China-Asia and eventually going to war with China in the Pacific, Africa, and the western hemisphere. If history is a guide, the Middle Kingdom won’t cooperate but instead turn inward from the world to deal with growing scale of domestic crises and social unrest, implying that the new generation of PLA generals will exert more authority and power domestically in the years ahead.

But part of “The Plan” by the banksters is also “bail ins” and seizing of deposits (it IS “their money”, after all, as they created it and have the legal claim on the cumulative compounding interest due in perpetuity), principal claims on assets, resources, and gov’t receipts and politicians to enforce same.

Finally, another part of “The Plan” is to eliminate social-democratic political representation, as well as starve the social-welfare-state for the bottom 90%+ of the population.

So, for the bottom 90%+, the enemy is much less likely to be Radical Islam and its various ideological factions in opposition to Anglo-American empire around the world, violent or otherwise, but the leadership of the militarist-imperialist, rentier corporate-state, as well as the rentier top 0.001-0.01% to 0.1% whom they serve in the interest of their income, wealth, status, influence, and relative power.

GregT on Fri, 16th Jan 2015 4:04 pm 



Plant,

Are you by any chance dyslexic? If so, I apologize for laughing.

Plantagenet on Fri, 16th Jan 2015 4:05 pm 



Thats a dark vision of the future, but you may well be right, BC. Thank you for laying out your thoughts on how this will all play out so clearly.

Have a great day!

GregT on Fri, 16th Jan 2015 4:11 pm 



So BC,

Are you trying to tell us that Obama isn’t really in control? That there are actually people ABOVE Obama, that he serves?

Could it be possible Plant? That the real world is more complex than you imagine it to be?

Apneaman on Fri, 16th Jan 2015 4:33 pm 



Plant plays passive aggressive games.

shortonoil on Fri, 16th Jan 2015 4:59 pm 



I anticipate that $40-$50 oil will result in a decline in US production of 2-3MMbbl in the years ahead and a proportional decline in consumption, which has been largely driven by consumption by shale producers and energy-related transport, etc.

That is about right. Our calculations put the equivalent petroleum consumption rate by the shale industry at 827,000 b/d. Of the industry’s 3.25 mb/d production, 1.2 mb/d has an API > 50. It is not used for the production of fuels:

http://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/energy/images/eneene/sources/petpet/images/refraf1-lrgr-eng.png

Coupled with declines in other high cost production crude, like bitumen, high sulfur extra heavy, and ultra deep the market should be back in balance by late 2016.

IOW, Peak Oil, Limits to Growth, and the end of growth, the end of capitalism, and the end of the Fossil Fuel Age epoch have arrived.

Over the next five years this will become blatantly apparent to even the most highly conditioned participates. At that point the “rentier elite” will find that Globalization is a double edged sword.

http://www.thehillsgroup.org/

GregT on Fri, 16th Jan 2015 5:50 pm 



“Over the next five years this will become blatantly apparent to even the most highly conditioned participates.”

I thought Plant said that the reason for low prices was because “we are in an oil glut”?

If prices remain at $40-$50/bbl for the next few years, by 2020 I figure there should be somewhere in the neighbourhood of 2 billion barrels of oil stored in tankers off of the coast of Spain. That should stop the crash of modern industrial civilization until at least 2022. Right?

Plantagenet on Fri, 16th Jan 2015 5:56 pm 



@GregT

Your suggestion that there will be 2 billion bbl of oil in storage off Spain by 2020 is one of the more improbable and bizarre predictions I’ve seen here.

Do you really expect the oil glut to go on that long?

Cheers!

GregT on Fri, 16th Jan 2015 6:16 pm 



If we were in an oil glut Plant, would you not expect prices to rise when it ended?

Perk Earl on Fri, 16th Jan 2015 7:12 pm 



Crude Oil (WTI) USD/bbl. 48.69 Feb 15
Crude Oil (Brent) USD/bbl. 50.17

http://www.bloomberg.com/energy/

Oil price has started back up – guess we’ll see where it levels out.

Plantagenet on Fri, 16th Jan 2015 7:16 pm 



You need to take an economics class, GregT. I’m surprised you don’t know these basic economic concepts.

Yes, commodity gluts produce price collapses, and the prices go up again at the end of the glut.

If you still don’t understand the concept try reading my answer again. If necessary read all the words out loud. Look up any words you don’t understand. Repeat util comprehension arrives.

Get it now?

GregT on Fri, 16th Jan 2015 7:56 pm 



The modern school of Economics is a failed ideology Plant. I am well aware of the economists’ beliefs. Unfortunately they don’t jive with real sciences, like biology, mathematics, and physics. The other area that you are confused with Plant, is that oil is not just a commodity. It is THE key resource that fuels our economies. All of the demand in the world will not make prices go up, if our economies cannot afford oil at lower prices. The oil will simply not be produced.

Makati1 on Fri, 16th Jan 2015 8:10 pm 



GregT: “Which is exactly why fighting ‘Islamic State’ is a complete waste of time. We are not just fighting a group of militants, we are fighting an ideology.”

Absolutely correct! There is no way to win this one without killing EVERY Muslim at one time. If we only kill 60,000 per day … they would be replaced with new births. (Do the math if you don’t believe me.)

If you don’t think religion has that much hold and power, I see what the Pope can do just by visiting his congregation here in the Ps. If he said to go to war against the Chinese to save the Church, I have no doubts that the 85 million Catholic Filipinos would fight to the death tomorrow.

After all, they shut down the government, air space/flights, cell phone communications and even the US Embassy (traffic was the excuse) for the five days of his visit.

Apneaman on Fri, 16th Jan 2015 8:52 pm 



It is not winnable, but it could be ended. Go home Whitey!

GregT on Fri, 16th Jan 2015 9:52 pm 



One man’s terrorist is another man’s freedom fighter.

The more innocent people that our governments continue to murder in the ME, the larger the resistance will become. The war on terror is a self perpetuating, unwinnable war. It certainly is beneficial for the ‘defence’ industry though.

Makati1 on Fri, 16th Jan 2015 9:53 pm 



“BP sees $50 oil for three years”

http://www.bbc.com/news/business-30827910

Government spin (IEA) vs industry (BP)views.

Davy on Sat, 17th Jan 2015 7:18 am 



Mak, ISIL capabilities can be diminished and disrupted. At some point diplomacy has to be an option both in Afganistan and Iraq. Until that day a conflict is inevitable. You can side with ISIL in their fight against your evil empire but the west has legitimate reasons to be there.