the EIA in its monthly Short-Term Energy Outlook trimmed American crude output this year to 12.3 million barrels a day -- 110,000 barrels lower than it had forecast previously.
If it isn't produced here it will just be imported from Canada or elsewhere. Only loss to the economy being the transport and profit margin costs in excess of the local cost.
12/08/18 Peak OilFighting over scraps is what humans are good at.
shortonoil wrote:Well - if that's not bizarre what is, since Canadian production is also falling, and has been for some time.
Yoshua wrote: It required money printing in a way never seen before.
No one will understand that the world is experiencing an energy crisis (falling EROEI) that will bring down the global economy.
137 million barrels would amount to seven percent of US inventory or seven days consumption. Hardly an earth shattering misstatement of the facts if indeed the EIA has it wrong. It might well be how much is in pipelines etc. and not yet measured or otherwise accounted for and a factor that is always there but always cancels out in the end so is immaterial.Yoshua wrote:The oil price started to rise in the summer of 2017 on falling crude inventory reports from EIA.
According to Art Berman's calculations U.S crude inventories are 137 million barrels higher today than reported by EIA.
If true, then EIA is cocking the books to raise the crude price to help producers stay solvent.
Do they have any other option? If the producers go bankrupt, then the oil stops flowing and we all go down.
Yoshua wrote:An inventory rise of 137 million bbl would have an enormous impact on the oil price.
Someone else did the calculation and came to the same result.
The sanctions imposed on Iranian and Venezuelan oil is then only about blocking their oil as the inventories are filled to rim.
It was not "Art Berman's calculations". It was the EIA's own calculations. Art Berman was simply pointing out the EIA's fudge factor called "unaccounted for oil". This fudge factor, which has always existed, has grown recently. That's not shocking, this number goes up and down over the years. Sometimes positive sometimes negative. 137 million change in this accounting variable is nothing. It changed by half a million barrels between 2014 and 2015. IEA has a similar accounting line called “miscellaneous to balance”. Congress actually investigated these "mission barrels" back in 1999 to determine why the discrepancy had grown so large. Turns out, no conspiracy:Yoshua wrote:According to Art Berman's calculations U.S crude inventories are 137 million barrels higher today than reported by EIA.
Where has the oil gone? Missing barrels and market rebalancing: KempMARCH 8, 2016 - Of the 1 billion barrels reportedly produced but not consumed, roughly 420 million are being stored on land in member countries of the Organisation for Economic Cooperation and Development (OECD). Another 75 million barrels are thought to be stored at sea or in transit by tanker somewhere from the oil fields to the refineries. That leaves 550 million “missing barrels” unaccounted for, apparently produced but not consumed and not visible in the inventory statistics.
Missing barrels are recorded in the “miscellaneous to balance” line of the IEA’s monthly Oil Market Report as the difference between production, consumption and reported stock changes. The miscellaneous item reflects errors in data from OECD countries, errors in the agency’s estimates for supply and demand in non-OECD countries, and stockpile changes outside the OECD that go unrecorded. IEA data currently shows a miscellaneous to balance item of 0.5 million barrels per day in 2014 and 1.0 million barrels per day in 2015.
Missing barrels have been a feature of IEA statistics since the 1970s. Most of the time, the oil market ignores the miscellaneous to balance item, but it tends to become controversial when it becomes very large, either positive or negative.
ERRORS AND OMISSIONS
The last time the miscellaneous to balance item was this large and positive (implying an oversupplied market) was in 1997/98 when the issue triggered fierce criticism of the IEA’s statistics. Critics accused the IEA of over-estimating supply, under-estimating demand, contributing to perception of a glut, depressing prices, and causing unnecessary hardship to the oil industry.
Senator Pete Domenici, chairman of the U.S. Senate Budget Committee, asked the General Accounting Office to investigate the IEA’s statistics and the question of missing barrels. In a report published in May 1999, GAO concluded “missing barrels are not a new condition, and the amount and direction of missing barrels have fluctuated over time. At any point in time, the historical oil supply and demand as well as the stock data reported by IEA could be overstated or understated by an unknown magnitude." It was not possible to “quantify how much of the missing barrels are due to statistical limitations and how much are the result of physical oil storage in unreported stocks”.
In 1997/98 episode, the IEA concluded most of the missing barrels went into non-OECD storage and uncounted OECD inventories. In the current episode, it is also very likely some of the 550 million barrels unaccounted for in 2014/15 have gone into unreported storage outside the OECD. China’s government is known to have been filling its Strategic Petroleum Reserve. More barrels are likely to have gone into commercial storage in China and in other countries outside the OECD.
How do you lose 100 million barrels of oil?MAY 20, 2015 - Oil-market watchers are struggling to reconcile the large estimated oversupply in the market with the much smaller buildup of reported inventories and narrowing contango in futures prices. U.S. crude stocks have indeed increased by around 100 million barrels since the start of the year while China’s stocks appear to have risen by between 50 and 100 million barrels. But that still leaves more than 100 million barrels that have simply vanished from the international statistical system. These lost barrels show up under error terms such as “miscellaneous-to-balance” and “unaccounted for” in reports published by statistical agencies.
MISSING BARRELS
The “missing barrels” problem is not a new one: it was the hot topic during 1998 and 1999 when I first began writing about the oil industry. Its December 1999 monthly report entitled “an un-fond farewell to the missing barrels” explained:
“During the first half of 1998 a large amount of the excess supply in the oil market was unaccounted for ... There was strong disagreement at the time as to whether these ‘missing barrels’ were the result of statistical errors, or whether they represented a large increase in oil stored in non-OECD areas. “Almost two years later ... the weight of evidence is that the missing barrels did exist and that they have now returned to the market. The return was triggered by the reversal in the shape of the forward price curve and the need for additional barrels following OPEC’s effective production limitation which began last March”
Have you even looked at what is going on in Venezuela? Their oil production is falling like a rock.Yoshua wrote:The sanctions imposed on Iranian and Venezuelan oil is then only about blocking their oil as the inventories are filled to rim.
IEA: Venezuela’s Oil Production Is In Free FallWhile analysts were busy calculating how much Iranian oil will come off the market with the U.S. sanctions and whether Saudi Arabia and Russia are offsetting losses, crude oil production in Venezuela “is in free fall” and could soon sink to below 1 million bpd.
Venezuela’s oil production has been in free fall for two years. Outside of war-induced outages, Venezuela is suffering the worst loss of oil production in history amid an unprecedented economic collapse, years of mismanagement and underinvestment in the oil industry, an aggravating humanitarian crisis, and a leader who is hell-bent on clinging to power. Venezuela’s oil production plunged by 42,000 bpd from August to average just 1.197 million bpd in September. This compares to an average 2.154 million bpd for 2016 and 1.911 million bpd for 2017.
Venezuela: The Key To Oil PricesSummary
Venezuela oil production has plummeted.
Venezuela Oil Production
The following graph illustrates that the oil production in the distressed country has rapidly declined since late 2015, and has fallen off the cliff two years later:
In the last nine months, Venezuela's oil production has dropped from 1.9 mb/d to 1.3 mb/d, and initial reports indicate that it dipped even further in June: Venezuela’s crude production dropped below 1.3 mb/d in June, its lowest monthly production level in 69 years.
The data shows that the precipitous drop in Venezuela's oil production has played a key role in the oil price surge, which started around the same time in early 2016. Further, if Venezuela's oil production had continued at the 2.3 mb/d level throughout the 30-month period from late 2015 to May 2018, with all else equal, then the closely watched OECD commercial oil inventories would be 350 million barrels to 400 million barrels higher than where they are today. Interestingly, that is the exact difference between where OECD commercial oil inventories are today versus where they peaked in 2016. Cool stuff, huh?
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