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Page added on January 21, 2015
OPEC’s El-Badri Says Oil Will Rebound Rather Than Fall to $20
Oil prices will rebound rather than extend their decline to as low as $20 a barrel because a collapse since June isn’t merited by global supply and demand, OPEC’s Secretary-General said.
Producers outside the Organization of Petroleum Exporting Countries should be first to reduce their output amid a surplus that’s pushed crude below $50 a barrel, Abdalla El-Badri said in an interview with Bloomberg Television at the World Economic Forum in Davos, Switzerland on Wednesday. Iraq, OPEC’s fastest-growing supplier, said it needs to boost output to compensate for revenues eroded by the price slump.
“The price will not go to $20 or $25, I think the price will stay at where we are now,” El-Badri said. “We have seen this before — prices coming down very fast and go up very slow. But prices will rebound.”
Oil slumped almost 60 percent since June as OPEC nations continued pumping amid the highest U.S. production in more than three decades. The 12-nation group’s decision on Nov. 27 to maintain output was based on economics, and wasn’t intended to target U.S. shale drillers, Russia or any other country, El-Badri said.
First Movers
Non-OPEC nations, some of which require prices of $100 a barrel to sustain output, should be first to pull back as their production has expanded over the past decade while OPEC’s remained stable, El-Badri said. OPEC decided in November that, if it cut supply, rising non-OPEC output would have required it to make successive reductions through to 2016, he said.
Brent crude for March settlement, the international benchmark, advanced 86 cents, or 1.8 percent, to $48.85 a barrel on the ICE Futures Europe exchange in London at 5:40 p.m. local time on Wednesday.
Iraq, OPEC’s second-biggest member, has lost about 50 percent of its revenues because of the slump in oil and consequently needs to bolster output, Deputy Prime Minister Rowsch Nuri Shaways said Wednesday at the WEF in Davos.
“Because of the new challenges, especially the price of oil, Iraq has to try its best to raise it oil production and exports,” Shaways said.
An agreement last month between the country’s federal government and the semi-autonomous Kurdish region will boost exports by more than 550,000 barrels a day, he said. The nation is pumping at about 4 million barrels a day, already a record, Oil Minister Adel Abdul Mahdi said Jan. 19.
OPEC and non-OPEC producers must keep investing in new supplies despite the price plunge, El-Badri said. Without sufficient spending in additional capacity over the next five years, oil prices could rebound above $100 a barrel.
OPEC’s crude output rose by 80,000 barrels a day last month to 30.48 million as additional oil from Iraqi fields more than offset a collapse in Libyan production, the International Energy Agency said in its monthly market report Jan. 16.
22 Comments on "OPEC’s El-Badri Says Oil Will Rebound Rather Than Fall to $20"
Plantagenet on Wed, 21st Jan 2015 7:04 pm
So OPEC is INCREASING its oil production, even at these low prices.
That means the oil glut is likely to go on a bit longer.
Davy on Thu, 22nd Jan 2015 6:22 am
Commodities are indicating this and will continue to fall as real economic growth declines. This decline is demand destruction in the works that will destroy supply. The reason BAU continues is the top is in control and the parasitic and cannibalistic wealth transfer policies can continue while resources are still available. Descent will make BAU appear to have a second life through this wealth transfer and commodity surplus from demand destruction.
Confidence and liquidity are the key now. How long can these thieves at the top plug the leaks in the dam of reality? There is no way to predict human nature. We can admit that the troubled finance system and oil depletion are a brick wall that cannot be breeched. Our end as a civilization is at that brick wall. We are in the dark in a tunnel of deception but that does not mean the brick wall is not there. We like to think it is not there and we dream up so many fantasies why it is not. It is there and it is called reality. Reality does not give a shit about the human species that thinks it is exceptional. Reality laughs at the notion humans are exceptional. Reality knows humans have an evolutionary handicap of a large brain. We are toast people so dream on if you like.
Makati1 on Thu, 22nd Jan 2015 6:56 am
El Badri says…
Obama says…
Willem Middelkoop says…
Saudi Aramco says…
the EIA says…
the IEA says…
Mohammed al-Sabban says…
Putin says…
Xi says…
On and on…
And, it is ALL prime bullshit. Only time will prove what the reality is and how it all ends. Be patient…
shortonoil on Thu, 22nd Jan 2015 7:55 am
Possibly, but not any more than $20; our calculations give a $76 cap for 2015. It will then start a long term decline that will continually shut in the highest cost producers.
http://www.thehillsgroup.org/depletion2_022.htm
$20/barrel won’t save the shale industry for more than a few more months. The oil age will end not because of a shortage of oil, it will end because of a shortage of producers who can make a profit producing it. There is no shortage of oil, the world has maybe 4,200 Gb of the stuff. What the world lacks is oil that can power enough economic activity to make it worth taking out of the ground. That is the oil that is getting increasingly rare, and difficult to find.
http://www.thehillsgroup.org/
Davy on Thu, 22nd Jan 2015 8:07 am
Damn short, that comment was short, sweet, and profoundly to the point. I can just imagine how quiet the halls of congress would have been during the sotu speech Obee gave if that paragraph would have been quoted. Just imagine if Obee invited you to the white house for a press conference and you uttered those words with a few graphs behind you. Just imagine how loud the reports would get and all the flashing cameras.
It amazes me how utterly earth shaking that paragraph would be IF Obee would announce it at his bully pulpit. That is all it would take to put the whole edifice into decay mode. CNN would have an immediate full press overage and other talking headless idiot networks would have to follow. Other world leaders would have to acknowledge the Pandora’s Box being opened. The financial market algo’s would circuit break and central bank jawboning heads would come out with some kind of damage control or maybe a bunch of stuttering….but..bbbut.
OK, I am brain farting in a day dream but I saw it in my mind’s eye a minute ago.
Davy on Thu, 22nd Jan 2015 8:12 am
As long as these parasitic 1%’ers plutocrats in Davos can continue the unholy alliance with the central banks and politician of the world these financial and social repression policies can last longer. I believe not much longer because these policies are clearly hitting diminishing returns. The economy is ready to turn as all business cycles do. Social fabric is fraying everywhere. BAU is so far extended in every way it surely can’t maintain energy intensity and complexity needed to battle entropic decay. We see growth stalling economically throughout BAU.
gamilon on Thu, 22nd Jan 2015 9:42 am
I see posts talking about the net energy returned on oil decreasing due to increased extraction costs, which I get. I also see talk about an absolute decrease in the energy content per volume of oil, which I am less clear on. Is it the case that, on global average, 1000 barrels of oil, extraction costs excluded, contain less energy than 1000 average barrels 20 years ago? When we read EIA statistics referencing barrels, are they normalized to any kind of energy content, or is a barrel assumed to be a barrel by volume in most reporting? I know there are different types of oil (light heavy, tar, sour, etc), but not a lot about how reporting of those types is factored or how the absolute energy content of them differs.
If the energy content is substantially different, shouldn’t the market price the lower quality oil differently, but exclude that effect from pricing of, for example, WTI which has known energy content? Therefore, as supply of high quality oil drops, why wouldn’t the high quality oil remain high in price while the low quality oil’s price continually adjusts to reflect its decreasing energy content?
paulo1 on Thu, 22nd Jan 2015 9:51 am
Well said, Davy.
I believe the powers in charge acknowledge this with arming the police to the extent they have these last few years, including vast purchases of ammunition. Look how close to the brink the shooting of Michael Brown brought many cities in NA?! A financial lurch brought about by collapsing junk bond shale investments will be like shooting an rpg into a gas tank.
When a country’s leader (a country 20 trillion dollars in debt) starts to offer free college as a realistic proposal we know just how screwed up everything is. I suppose the college cafeterias and bookstores will accept ebt cards? When the new students with free college start attending will the folks carrying student loans then say, “Why should I pay back anything? They’re getting college for free”.
This whole scene is a freaking joke.
Couldn’t Russia do us all a favour and bomb Davos?
GregT on Thu, 22nd Jan 2015 10:18 am
“The richest 1 per cent of the population will own more than half the world’s wealth by 2016, Oxfam International said in a report released as the World Economic Forum begins in Davos, Switzerland.”
http://globalnews.ca/news/1780220/richest-1-will-own-more-than-half-the-worlds-wealth-by-2016-oxfam/
The largest redistribution of wealth in the history of mankind continues…………..
shortonoil on Thu, 22nd Jan 2015 11:17 am
If the energy content is substantially different, shouldn’t the market price the lower quality oil differently, but exclude that effect from pricing of, for example, WTI which has known energy content?
There is a considerable difference in what refineries pay for oil. Lower quality crude is discounted, and sometimes significantly . The EIA dumps all liquid hydrocarbons into the same pot. If it is composed of hydrogen, and carbon it is all the same to them. They do keep track of LTO (light,tight,oil) but they do not, and never have reported on energy content. That information can be extracted from their data, but it is a lot of work. We use as a standard 37.5 API for our study. That was the average density of crude between 2000 and 2005 as derived from EIA reports. It was calculated from the results of three of their reports.
In all fairness to the EIA, however, their mandate has been to count barrels, and they have done a very good job of doing just that. If you want more specific information on the energy dynamics of petroleum you will have to get it from independent sources. Our site is one of those sources.
http://www.thehillsgroup.org/
gamilon on Thu, 22nd Jan 2015 1:20 pm
Thanks, Short. I ordered your study but haven’t received it yet. I look forward to reading more.
shortonoil on Thu, 22nd Jan 2015 4:21 pm
Thanks, Short. I ordered your study but haven’t received it yet. I look forward to reading more.
If your in the US that would have been shipped Tuesday, the 20th. If you don’t get it by next week make sure to let us know. We have more problems with delivery in the US than we do to Russia.
shortonoil on Thu, 22nd Jan 2015 4:34 pm
It amazes me how utterly earth shaking that paragraph would be IF Obee would announce it at his bully pulpit.
I’m in Virginia right now, and only an hour and a half from the White House. But let’s be serious; for him to see me he would probably have to interrupt a fund raising campaign, or “NO” —– a golf game.
Do you think I should wait around here, or just head back to Florida?
Northwest Resident on Thu, 22nd Jan 2015 4:47 pm
Come on, shortonoil. Cut Obama some slack. You know he can’t tell the truth. The sprawling masses can’t handle the truth. Look at it this way: If you have a few sheep and you’re going to butcher them in a few days, do you walk around swinging your meat cleaver and making loud noises and threatening gestures that scare them? Or do you let them graze in the pasture, peaceful and content, unaware, and then when the moment arrives make the kill fast and clean (as possible)?
All the lies and propaganda have one purpose — to keep the sheep serene and peacefully grazing, going about their business while the butchers finish sharpening their knives.
Rodster on Thu, 22nd Jan 2015 5:49 pm
I’m curious to see what happens to the price of oil now that the 91 year old Saudi King was pronounced dead?
shortonoil on Thu, 22nd Jan 2015 6:13 pm
All the lies and propaganda have one purpose — to keep the sheep serene and peacefully grazing, going about their business while the butchers finish sharpening their knives.
Are you suggesting that this whole charade is nothing more than a great big turkey farm at Thanksgiving.? Dam – just found a very long feather stuck in the keyboard!
Think I’ll head in some other direction; anyway, he’d probably insist that I give him some ridiculous handicap. Like saying that this whole thing is only going to happen to the Russians, and Iranians, and that Americans will be safe sitting home, watching TV and eating pizza for the next 100 years.
Don’t you know? Nothing bad can happen here; the gods, demigods, and sons of gods are all stationed in DC. They can change reality with a flick of their pen!
Davy on Thu, 22nd Jan 2015 6:41 pm
Short, it was a vision. A funny one at that because “IF” that paragraph would be spoken to the general public with the backing of the President at the nation’s biggest Bully Pulpit the effect would be like the announcement of the end of the world. You would be up there and take questions from the reporters. That is when they would put you on the spot like this kind of question:
Reporter – Mr. Short, if I heard you right you are basically telling us we are nearing the end of economic oil does that mean a recession?
Mr. Short – Sir, what I am saying is in a matter of 5 years the ability of oil to power the economy will have fallen to such a point that we will not have an economy as we know it now.
(Crowd livens up lots of talking and camera’s flashing)
(Several reporters yell and try to get Mr. Shorts attention)
(One gets her question to Mr. Short)
Report (a foxy young girl for Rolling Stones) – Mr. Short we have been told over and over we are nearly energy independent and we are the equivalent of Saudi America. What happened, what could have change this in such a short time?
Mr. Short – Sweetheart you were basically lied to by a corrupt system that is like the emperor with no cloths.
(The President steps in with a final remark)
The President – I am making a pledge to the American people that I and my administration are dedicated to formulating a Plan B that will allow us to meet this situation head on. I am going to propose a WWII Manhattan project style plan to prepare for the coming economic crisis. That all folks we have to go.
(Mr. Short walks through the doors with the president.)
They sit down and talk frankly and honestly. Mr. Short tells the President that basically the world is facing a massive collapse and a few Billion people will be gone within a decade. The president lights up a cigarette and grabs a beer and says “Short surely it can’t be that bad”.
Mr. Short says – Mr. President this is basically the end of the world as we know it with no way out.
The President takes a huge puff on his cig then a gentle sip of beer and lets out a sigh.
GregT on Thu, 22nd Jan 2015 7:03 pm
“The President takes a huge puff on his cig then a gentle sip of beer and lets out a sigh.”
And the crowd goes back to discussing more important things, like was that football really deflated, or not.
Northwest Resident on Fri, 23rd Jan 2015 1:15 am
Davy — Very clever. We know from one or two of our regular visitors here that you can expose people to all the data, all the facts, all the logic — and they still walk away believing in fairy tales. Some people — most people I imagine — will just never get it. Which is why it is so important to tell them what they want to hear, otherwise, they get agitated and they react in most illogical ways, especially in large frightened groups. I appreciate all the lies and propaganda and “all is well” illusion creating. It gives those of us who are able to understand the situation a little more time and opportunity to get ready, mentally and otherwise.
Davy on Fri, 23rd Jan 2015 6:26 am
NR, I have often mentioned that preppers like the lies and deception. It takes BAU to leave BAU. IOW prepping takes resources and to get resources in today’s world we need BAU. The lies and deception keep BAU functioning so I can implement my local plan B. In fact the longer BAU goes on the more time I have to prepare and squirrel away nuts. I am well into phase II prepping which is getting a fully functioning farmstead going in the 19 century fashion. I want to be able to produce food at minimum enough for family but ideally enough to sell, trade, barter, and gift. Phase I is short term issues related to shelter, safety, energy, food, water, and trade items.
Now, with that said, I don’t want to get ignorant and tunnel vision away from the simple fact that the sooner my local transition off BAU’s tit the better. So there is a point of maybe being totally prepared and my local is in danger of lacking transitional abilities. My local happens to be naturally a good place for transition. The Mo Ozarks have low population density, less affluence, a farming area, smallish farms, and good basic resource base in regards to water, biomass, and soils.
I mention this thought often, we need a crisis. We need a BAU ending crisis but one that starts gently and allows for reactions away from bad attitudes and lifestyles. If we are able to enter a crisis and stop wasting so many resources the better. If we are able to enter a crisis and people see the necessity of learning to produce food however they can the better. If we enter a crisis and overconsumption is drastically reduce the better. On and On and On…….
So in conclusion I need more time for phase II of the Davy doomstead but I am fully aware long term my local and region have to go through some kind of transition. Folks there is no way to know how BAU’s end is going to play out. It is much like the weather in complexity as a comparison. With so many predicaments, black swans, and unpredictable human nature who knows. I can tell you this man is his own worst enemy and it is us we have to worry about. A partially transitioned local is an essential step in your prepping success. This is why you can build your castle but if the town nearby is not prepared you won’t make it very long. The degree and duration of the descent is going to make a huge difference. If we fall too hard too fast it is game over in many locals maybe all of them.
Don on Fri, 23rd Jan 2015 10:14 am
I’m on board with the deception as well. It takes a pretty big disturbance in a society to get the r/K ratio down. The rougher the transition is the lower the ratio will be, and we could use quite a bit less rs, so for now keep em fat dumb and happy.
Davy roped me into the phase II stuff. Once I realized I had gotten about as far as I could with stockpiling precious metals, (Gold, Silver and lead) and #10 cans and with things looking bleaker I decided it was time for a move.
Now my old house, my dream house, (big and on the water in Florida with my own private dock), is up on the market and I am renting in Georgia while waiting for it to sell. When it does I am going to be buying a much smaller house on 5 to 10 acres in the foothills here.
The plans from there are to make it a good livable doomstead. Lots of fruit trees, a small garden, and a fish pond.
After that, it’s just a matter of getting it ready to be switched to being self sufficient when it looks like “Winter is coming”.
My skills as a software dev may not come in all that handy in a post industrial era so I’m definately puting them to use right now while BAU keeps moving right along and helping me prepare for it not being there.
Anyway, that’s why I’ve been gone, it’s been a rough move.
Davy on Fri, 23rd Jan 2015 10:50 am
Great news Don I hope passion and enjoyment come along with the bitch of cycling out of BAU arrangements you are encountering now. I will tell you this with my experience there was a learning and resource curve. At some points I was like Geeze am I ever going to get all this organized. You will find with prepping that one thing leads to another and you never can get enough prep done. So, at the end of the day you have to walk away from it and remember any prep is good prep even if it turn out to be bad prep. I say this because bad prep efforts are a learning experience. I lost allot of money selling real estate in the run up to the 08 crisis. I stocked up on items that turn out to be a waste of money. Yet, we came a C-hair away from collapse with nothing more than a minor historic downturn. That is in itself should be a worrying omen. I have found that if prep becomes a hobby and passion it is rewarding. That said it still does not make the transition any easier.
Another issues that has to be understood is time frame. This financial repression and excessive debt environment may bounce along for years. Demand destruction and oil supply destruction may cycle down in such a way to lengthen BAU from what we feel should happen. I feel it is oil and finance that will cause the train wreck. We are in uncharted waters with no historical references. We know the fundamentals are out of whack. We know there are limits of growth and diminishing returns at the highest levels. We know social fabric is fraying. We know overpopulation, carrying capacity overshoot, and ecosystem degradation are at worrying levels. We do not know the limits of these predicaments. The nature of our self-organizing adaptive dissipative system is complexity and energy intensity. There are ascending levels of abstraction that are beyond predictions and forecast.
We can enjoy life in the process of lifeboat building. I have said this multiple times folks do something. If you can’t do anything then think about prepping as an option. Make it part of your future options much like in the past people would consider the Sunbelt for retirement or the mountains. Evaluate your situation and at least consider your exposure to collapse and or a lesser contraction. There is no guarantee any action is going to make it better. There is dumb luck of being in the right place at the right time. In conclusion I would warn those of you in the worst locations unprepared and unconcerned have the most to worry about. Someone in Las Vegas maxed out in the suburban sprawl may become a refugee at some point.