Hail the Return of $100 Crude! Maybe
A slump in new production outside the U.S. shale patch in 2019 could help to send Brent crude briefly back above $100 a barrel next year, according to London-based consultancy Energy Aspects. The International Energy Agency also has a 100 number in its latest outlook, published Friday. While it doesn't forecast prices and doesn't yet look as far ahead as 2019, it sees global demand exceeding 100 million barrels a day for the first time in the fourth quarter of this year. Oil's slump is over -- hail the return of triple-digit crude! Well, maybe, briefly. OPEC ministers and friends meeting in Oman today to assess their output deal would be wise not to get too carried away. The IEA, as I noted last week, is much less bullish about demand growth in the coming months than other pundits. For some, this raises the
asg70 wrote:And again, 10 years later, speculation muddies the waters for peakers trying to tease out how much of this is supply and demand vs. profiteering.
https://www.bloomberg.com/gadfly/articl ... omplicated
PERHAPS the most vexing thing for those watching the oil industry is not the whipsawing price of a barrel. It is the constant updating of theories to explain what lies behind it. In March 2014, when the price of a barrel of Brent crude was in three figures, the then boss of Chevron, an oil giant, observed that the scarcity of cheap oil meant “$100 per barrel is becoming the new $20”. Two years later, when the oil price slumped below $28, the talk was of a global oil glut caused by the furious efforts of the OPEC cartel to regain market share. Now that oil prices have tested $70, analysts are again scratching their heads. In “1984”, George Orwell coined the term “doublethink”, the ability to believe two contradictory things. Oil analysis seems to require similar cognitive gymnastics. Three big
AdamB wrote:PERHAPS the most vexing thing for those watching the oil industry is not the whipsawing price of a barrel. It is the constant updating of theories to explain what lies behind it.
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Oil analysis seems to require similar cognitive gymnastics.
Why the oil price is so high
The oil market is clearly tightening; in the three consecutive quarters 2Q17-4Q17 OECD crude stocks fell by an average of 630 kb/d; such a threesome has happened rarely in modern history: examples include 1999 (prices doubled), 2009 (prices increased by nearly $20/bbl), and 2013 (prices increased by $6/bbl). Since the nadir for Brent crude in June when the price was $45/bbl, the 2017 OECD crude draws have coincided with a price increase for Brent of nearly $25/bbl.
GoghGoner wrote:I kept hearing how OPEC is propping up prices by curtailing production. The only OPEC country that could even be questioned about not pumping full out is SA. SA may not be full throttle but they are only 1 mdb from it and they don't really like to be full throttle anyway. OPEC is doing nothing to prop up prices.
Why OPEC's Crude Oil Production Rose in JanuaryMarch WTI crude oil futures contracts rose 0.11% to $64.80 per barrel at 1:15 AM EST on February 1, 2018. Prices rose due to OPEC’s higher compliance with the production cuts in January 2018. Prices are near a three-year high. OPEC’s compliance with the ongoing production cuts was at 138% in January 2018 and 137% in December 2017, respectively. Higher compliance supports oil prices.
Impact
Oil producers agreed to cut production by 1,800,000 bpd from January 2017 to December 2018. Crude oil prices have risen more than 50% since June 2017, partly due to the production cuts. Higher compliance with pledged cuts would draw down global and US crude oil inventories and support oil prices. Any unplanned supply outage from Libya, Nigeria, Iraq, and Venezuela could also support oil prices.
Impact
Record US oil production could be the biggest bearish driver for oil prices in 2018. Non-OPEC production is expected to rise by 1,150,000 bpd in 2018, which could also weigh on oil prices.
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:GoghGoner wrote:The compliance number was an arbitrary number set by OPEC . It was set after that one month production spike on the graph. That very short term spike on which they are using for a baseline was when they were off loading inventories (this whole spike is bogus in my opinion). I know this because I watched Iranian floating storage numbers during that time.
You can easily see how much they have historically produced and how they are producing today. Looking individually at the OPEC producers, there is nothing in their production graphs that would even lead anybody to guess their was a cut (because there wasn't).
http://peakoilbarrel.com/opec-december- ... more-18449
OPEC Monthly Oil Market Report 18 January 2017Table 5 - 9: OPEC crude oil production based on secondary sources, tb/d
Country Nov 2016 Dec 2017
Algeria 1,089 1,037
Angola 1,688 1,633
Ecuador 547 526
Equatorial Guinea 160 132
Gabon 221 197
Iran, I.R. 3,710 3,829
Iraq 4,590 4,405
Kuwait 2,810 2,700
Libya 577 962
Nigeria 1,656 1,861
Qatar 651 594
Saudi Arabia 10,623 9,918
UAE 3,078 2,878
Venezuela 2,066 1,745
Total OPEC 33,305 32,416
kublikhan wrote:Oh I see. You are one of those. You have your opinion set in stone and are absolutely convinced you are right. Anything that contradicts your point of view is garbage, fake, scam, etc. There is no point debating someone with that kind of attitude.
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