Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 2, 2018
Predictions Of $100 Oil Are Just Clickbait For The Uninformed
As seems to happen every time the oil price ticks up over some new round number threshhold, the energy media has seen a return of headlines predicting a return to $100/bbl crude prices this week as the price for Brent crude rose above $80. Since the price collapse of 2014, it has become something of a parlor game to be the first person to correctly predict when the return to $100 oil will come, and with the price for WTI also moving above $72/bbl early this week, this game saw a revival.
You have to wonder how many more months must go by with the OPEC and non-OPEC nations that are party to the export limitation agreement steadily controlling the price of crude within a pretty stable range before everyone reaches the realization that the return of $100 oil is just a pipe dream that will not be fulfilled until that agreement somehow falls apart. More than two years have now passed since these countries first reached their initial agreement-in-principle and 20 months since the export limitation quotas went into effect. Throughout those two years the oil ministers and secretaries of those participating nations have been very transparent on their goals and compliance levels, allowing outside observers to gauge their success in real time.
Anyone who has paid close attention to these aspects of the deal understands how successful it has truly been. When the limitations went into effect in January of 2017, the countries said their goals were to reduce the volatility of the price and stabilize it in a tight range around $65/bbl. By the end of that year, those goals had been achieved with remarkable success.
Early this year, the representatives made clear their belief that the global economy could sustain somewhat higher crude prices without falling into recession and said they would be working to raise prices during the course of 2018. Again, they have managed this rise with great success and a very low degree of price volatility, despite the ongoing collapse of Venezuela’s production levels, ongoing civil strife and frequent production interruptions from Libya and the re-implementation of U.S. sanctions on Iran.
As we reach the end of the third quarter, 2018, the global supply/demand equation for crude oil is essentially in balance and perhaps even slightly short-supplied, keeping a steady upward pressure on the price for crude. At the same time, Saudi Arabia, Russia and some other participating countries retain significant levels of excess producing capacity in reserve, which could be tapped to fill production voids left on the global market by those other countries. The ongoing rapid rise in U.S. crude production also serves to provide a stabilizing factor.
It’s important to understand that, while all of these oil-producing nations have a clear economic interest in a robust price for their oil production, none of them has any incentive to allow prices to rise back to levels that would result in economic recession and permanent demand destruction. A return to a $100/bbl oil price for any sustained amount of time would probably result in both of those outcomes, and serve to speed the conversion to renewable power sources and electric vehicles that are already beginning to make inroads into the demand bases for fossil fuels.
In their new report issued last week, the OPEC/non-OPEC nations projected robust global demand to remain in place for the next half-decade and a longer-term outlook that foresees global demand for oil continuing to grow through the year 2040. That outlook does not contemplate a return to $100 crude prices anytime in the foreseeable future, for good reason.
For all the talk about how the ongoing oil production boom in the United States is infringing on the market positions of other oil-producing countries, the current reality is that, so long as their agreement holds together, the OPEC/non-OPEC nations are firmly in a position to control the price for crude for the foreseeable future. So long as that remains the case, headlines that loudly predict a return of $100 oil are little more than clickbait for the uninformed.
15 Comments on "Predictions Of $100 Oil Are Just Clickbait For The Uninformed"
Roger on Tue, 2nd Oct 2018 7:36 pm
“… Saudi Arabia, Russia and some other participating countries retain significant levels of excess producing capacity in reserve, which could be tapped to fill production voids left on the global market by those other countries.”
Only a clueless accountant could believe such hopium…
makati1 on Tue, 2nd Oct 2018 7:59 pm
Meanwhile, the Us is trying to take over Venezuela because they DO have oil reserves. But they may have to get in line behind China.
“With over 300 Billion barrels of proven reserves, Venezuela has the largest amount of proven oil reserves in the world. The country’s oil is a relatively new discovery. Previously, Saudi Arabia had always held the number one position.”
America is desperate to control ALL of the oil in the world. Just look at the countries they have invaded or are trying to control:
Libya, Iraq, Iran, Nigeria, China, Russia, Venezuela, etc.
https://www.worldatlas.com/articles/the-world-s-largest-oil-reserves-by-country.html
The financial crash is going to take down the oily world, and soon. Be patient.
Roger on Tue, 2nd Oct 2018 8:15 pm
Yep, for the sake of Venezuela, I’m in favor of kicking Maudro”s sorry butt out of power. It will happen soon.
As for their reserves…that’s common knowledge.
As for China, they’re the new kid on the block…fixing to learn a lesson the Yankees already know about investing in Venezuela.
nostradamus on Tue, 2nd Oct 2018 8:30 pm
Outcast_Searcher on Wed, 3rd Oct 2018 12:14 am
You’d think the clowns in a “financial” magazine like Forbes would know better than to claim they can predict oil prices.
Too bad there’s not more consequences for such writers when they’re dreadfully wrong — then maybe they wouldn’t bray with such a self-assured attitude.
I notice virtually no citations, much less credible citations, to back up their claims re production and pricing (aside from the two for Mr. Obvious).
print baby print on Wed, 3rd Oct 2018 12:57 am
… Saudi Arabia, Russia and some other participating countries retain significant levels of excess producing capacity in reserve, which could be tapped to fill production voids left on the global market by those other countries.”
Only a clueless accountant could believe such hopium…
WE ( the world) are pumping as a lunatics like there is no tomorrow. Just look at those car ques in the cities and you will get the picture how we have wasted our future. Those who believe that Ghawar is a bottomless pit are delusional . Once long time ago I red that one barrel come short to the world market to sell and the price will skyrocket and whole economy will collapse . That was exactly happened 2008 except economy didn’t collapse. Now globally we try to control supply and demand. so far is working but the question is for how long it will ?
good one roger
Jaz on Wed, 3rd Oct 2018 6:38 am
$100 oil did not dampen demand between 2011 and 2014. Oil demand grew by 1.4 million barrels per day during each of those years. Of course lots of debt helped pay for it.
Oil at $100 is very affordable, in Europe including taxes we pay $300 per barrel.
It is the cost of crime we cannot afford.
https://www.gao.gov/products/GAO-17-732
When all the costs of crime are added up including police, courts, prisons, probation, lost of a worker when in prison. Most importantly the damage done to victims, both physically and mentally. The total costs more then the cost of oil.
https://www.nbc4i.com/news/investigates/charges-dropped-against-rape-suspect-after-victim-commits-suicide/1437211736
deadly on Wed, 3rd Oct 2018 9:06 am
One hundred dollar oil is going to cause disruptions. Drive-offs, theft of fuels at depots, the whole enchilada.
When oil was more than one hundred, an train engine group was parked on a siding in a rural setting. Fifteen thousand gallons of diesel went missing from the tanks.
Crime will increase with one hundred dollar oil.
Pat on Wed, 3rd Oct 2018 10:33 am
The fact, reality is world giant oil fields are just able maintain output using modern technology after all easy oil. already more than half century these giant fields were discovered, the ability to maintain the rate with no loss due geological factors look totally illogical. the fact world oil demand is skyrocketing with dwindling, shortages oil being the engine of world, prices can sky rocket to 150$. Prepare….
JuanP on Wed, 3rd Oct 2018 10:49 am
Russia’s oil extraction is at a record high and Putin says that Russia could increase production by 300,000 bpd if necessary.
https://www.rt.com/business/440215-putin-trump-oil-prices/
JuanP on Wed, 3rd Oct 2018 10:57 am
Mak “Meanwhile, the Us is trying to take over Venezuela because they DO have oil reserves. But they may have to get in line behind China.”
Right on! And your comment about American control wars and oil is a pretty straightforward description of what is going on. I was just thinking about how the US government would rather destroy all these countries than let them be independent. No empire in human history overextended itself more than the American Empire. The collapse will be hard, long, and brutal, and the US government may take the whole world down with it out of spite, lunacy, and selfishness.
I AM THE MOB on Wed, 3rd Oct 2018 11:06 am
Oil discoveries peaked in the 1960’s.
Every year since 1984 oil consumption has exceeded oil discovery.
In 2017 oil discoveries were about 7 billion barrels; consumption was about 35 billion barrels
Of the world’s 20 largest oil fields, 18 were discovered 1917-1968; 2 in the 1970’s; 0 since.
https://imgur.com/a/6dEDt
https://www.chron.com/business/energy/article/Oil-discoveries-in-2017-hit-all-time-low-12447212.php
print baby print on Thu, 4th Oct 2018 1:34 am
Jaz we printed the money so the economy can continue the bau. A lot of people drive less but demand still rise what does it tells you . That we can gobble up all oil we can get . I personally would like to have a breakfast on Caribbean beach every morning and to go there with my private jet , what about you . Did you get a picture ?
jean paul getty on Thu, 4th Oct 2018 11:02 am
Art Berman is a moron…
ariana pham on Wed, 29th Jan 2020 7:47 pm
This is very interesting information y8
Bathtime Thank you for sharing. To be sure your suggestions will help me thank you