But the "overproduction" started in the US. After the price fell significantly, Saudi bumped up production trying to keep market share and more cash flow.
Posted on 12/29/2015 11:54:02 AM PST by bananaman22
The OPEC 2015 World Oil Outlook came out a few days ago. They basically produce two outlooks, a medium term outlook to 2020 and a long term outlook to 2040. I found their medium term outlook pessimistic in some cases too optimistic in others. But I found their long term outlook to be wildly optimistic… in most cases.
In all cases below I chart crude when it is available and “liquids†only when no other option is available. The data is in million barrels per day.
(Excerpt) Read more at oilprice.com ...
Gluts take a while to peak. Producers up to their neck in debt look for every angle to up their volumes. Until the last moribund company defaults, the glut ain’t over. The last OPEC glut took almost 15 years to resolve itself. I wouldn’t expect this glut, coming as it did after 15 years of rising prices and production, to resolve itself after a single year.
The author seems to subscribe to the view that “this time, it’s different”, i.e. the past history of oil peaks and troughs don’t apply.
In fact, I suspect it’s strongly influenced by the mis-named country break-even analyses whose author re-jigged the definition from production break-even price to the price at which national budgets broke even. Just because the guy’s such an insightful, flaming genius.
The article is nearly as maniacal as the exclamation that it pretends to ridicule. The oil price war will be over sooner than many are being led to believe.
The world production-consumption spread will be getting mighty narrow around the end of March (see chart).
http://www.eia.gov/forecasts/steo/report/global_oil.cfm
Tooday’s oil price “glut” is directly and deliberately caused by the overproduction of oil by Saudi Arabia, Venezuela (desperate to get any money at all), Iran (same), Iraq (no controls, no valid central structure), the ISIS factions (in each of their own oil fields and pipelines), the Russians (who want to get more money AND destroy ISIS’s/Iran’s/Iraq’s money receipts - which contradict each other), Norway and the North Sea producers, and Mexico (under the crime control and government control - who both need as much money as possible.)
So the only ones who could reign it in would be Oboma’s Saudi allies. And those want to harm Iran’s money earnings and Iraq’s earnings, and the ISIS earnings.
So Obama is content to destroy Texas, North Dakato, OK, PA fracking companies all year. And of he can destroy the Keystone pipeline prospects, destroy the oil companies, and prop up the rest of the blue state economies by lowering oil prices?
All the better. Red states lose. Good.
Blue states win? All the better.
But the "overproduction" started in the US. After the price fell significantly, Saudi bumped up production trying to keep market share and more cash flow.
“The oil price war will be over sooner than many are being led to believe.”
The forecasts that I have seen, say that prices will head back up mid 2016. The US oil patch is really starting to pull in its horns.
Demand is hard to predict as always - but I don’t see anything in 2016 likely to turn around the Chinese or European economies. Immigrants?
I guess that a new wild card this cycle, will be how fast US fracking production springs back when prices rise.
WOW ,just think in the 70’s they told us we would be out of Oil by now
Forcasts are all over the place.
The medium-term foresees a $5/b increase each year so that a level of $80/b (nominal) for the ORB is reached by 2020, reflecting a gradual improvement in market conditions as growing demand and slower than previously expected non-OPEC supply growth eliminate the existing oversupply and lead to a more balanced market. This, in turn, will provide support to prices. Translated into real prices, the oil price is assumed to be $70.7/b by 2020 (in 2014 prices).
The long-term price assumption is based on the estimated cost of supplying the marginal barrel which will gradually move to more expensive areas. This continues to be the major factor in the period through to 2040. The price of the ORB in real terms is assumed to rise from more than $70/b in 2020 (in 2014 prices) to $95/b in 2040 (in 2014 prices). Correspondingly, nominal prices reach $80/b in 2020, rising to almost $123/b by 2030 and more than $160/b by 2040.
OPEC World Oil Outlook
http://www.opec.org/opec_web/static_files_project/media/downloads/publications/WOO%202015.pdf
It's not a price war. It's an effort to pay the bills before the debt collectors start seizing assets. That means all-out volumes for as long as each player can manage. Countries with national oil companies have a big advantage in terms of staying power, since their assets can't be seized short of armed invasion.
We are out of oil. $3 oil, that is.
Do you actually believe that Iran and Venezuela have a God-given right to get $140/barrel? Where is that written? I haven't seen that.
Why don't you take the blinders off and stop listening to idiot analysts. Look at oil prices in the long term. They've always been volatile and they always spike up and crash. Remember the crash of 1986? Remember prices in 1998/1999.
For about 15 years oil prices had a sustained run that was historically unprecedented. Did you complain about that? It couldn't last forever, no matter what speculators did.
Next time you go to the gas station, why don't you pay the vendor %5.00/gallon instead of the current price. That should make you feel better.
The oil industry had a nice run for 15 years. Including the ones in Texas and North Dakota. They got fat on the high prices, good for them. But they shouldn't be crying it's unfair for them now. They didn't cry for us when the market was in their behavior, and the rest of us were losing money and jobs. They had more than their share fair shar for a long time.
I know you are weeping terribly for Iranians and Venezuelans, but maybe they should have been responsible with their windfall instead of acting like the party would go on forever.
Thanks Robert.
Yes, agreed on overproduction. Oil continues to get more expensive to produce, which will make production restarts more difficult (besides the debt defaults that shut them down).
That’s alright, though. It will lead to production of many useful things being much more distributed and products less often transported around the globe. Support open source equipment design and building (cars, tractors and all).
Over the next 25 years?
I would say they are right.
That would be several hundred million dollars per year to OPEC nations. Word is, by the way, Saudis are also cutting energy production subsidies now. And here’s another hoot.
The Russian Deputy Energy Minister recently said, “I will tell you when Russian companies are for sure going to decrease production—when oil costs $0.”
Meanwhile, some of the wealthiest men on the planet have been saying that there will be no more wars. Leadership around the world is an incredible clown chorus—incredible as in unbelievable. Oil is used in enormous quantities in military pursuits.
Readers, watch for oil prices to skyrocket by sometime in 2017 if not before.
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