[Plantagenet]

The world is in an oil glut.

Global oil production is outpacing demand by about a million barrels per day. Global GDP is growing very slowly, so the oil glut may go on for some time. But how long will the current oil glut continue?


The world is in an oil glut now----but how much longer can this oil glut last?

[onlooker]

Looks like not much longer check out both these links:
http://www.zerohedge.com/news/2016-01-1 ... ale-assets
http://www.peakprosperity.com/blog/9630 ... t=FaceBook

[sparky]

.
It's pretty obvious that crude oil price is a boom and bust cycle ,
the reasons can only be guessed at ,
the fundamentals of the industry are not helping to understand why
exploration , development and transport cost are on the whole steadily rising
demand is not very variable , the customers can swallow a fair bit of price movement without crashing their demand


what make the market unstable is the great amount of speculation ,
the contracts for WTI are one of the biggest playground for traders there is .
often on a day the quantities of orders exceed real deliveries by a factor of 20/1
It's so easy ....bid , sell and you've made some money in a few hours from the comfort of your office
I suppose there is even some automated trading in the millisecond range

none of those trade care a fig about crude oil supply ,
it could be yogurts or wingnuts for the difference it would make ,but crude is way bigger and better

I propose that what make the price in market unstable , when the price is driven way past it's natural price
further one can make money when buying AND selling , both in a rising market and a falling one .

Of course there is the supply/demand driver
but fluctuations of more than triple ratio don't come from fluctuations of less than 10%
unless something is pushing the price change

as for the present "glut" for sure there is one ...... what 2% , that's a year worth of depletion !
The old cheap super-giants are the lonely dinosaures ,
they ruled the Earth for a long while but have no successors
smaller fields deplete fast and rely on a constant stream of new babies to replace the old ones

the oil industry financial model is simple ,
you look for a do-able prospect ,
spend a lot of money to get the stuff to customers
get the cash and use a small part to keep the operation going for as long as possible

you can buy a seat into any stage , but if you don't know much about what you are buying it usually end in tears

now the present production exploration is winding down ,
development plans have stopped for anything but the near completion
within two years the "glut" and storage will have vaporized ,
the price will remain down until traders cannot trade it down ,
then reality strike and the bidding will switch to up

cautiously at first then , as the gains are so easy , with wild exuberance .... welcome back to the future !

[ennui2]

$this->bbcode_second_pass_quote('pstarr', 'T')he so-called oil glut will last forever even as production falls. The world is going into a deflation, characterized by contraction or shrinking purchasing power. It is a condition where prices are falling but there is a corresponding decrease in employment, total output, and thus income. This has already begun.

[onlooker]

$this->bbcode_second_pass_quote('', 'T')his has already begun.

[KaiserJeep]

The glut will last until widespread warfare exists in the ME. Then we abruptly switch from glut to shortages as ME production ends.

[Tanada]

I hesitate to believe anything zerohedge posts any more, every day the sky is falling and after a while you get tired of the tune.

On the other hand oil demand grew a LOT in 2015, here is what the EIA published just a few days ago.

$this->bbcode_second_pass_quote('', 'E')IA estimates global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2015, averaging 93.8 million b/d for the year. EIA expects global consumption of petroleum and other liquid fuels to grow by 1.4 million b/d in both 2016 and 2017. Forecast real gross domestic product (GDP) for the world weighted by oil consumption, which increased by an estimated 2.4% in 2015, rises by 2.7% in 2016 and by 3.2% in 2017.

Consumption of petroleum and other liquid fuels in countries outside the Organization for Economic Cooperation and Development (OECD) increased by an estimated 0.8 million b/d in 2015, considerably lower than the 1.4 million b/d increase in 2014 mainly because of the slowdown in Eurasia, which saw a contraction in its consumption, and to a lesser degree because of China's slightly slower demand growth. Non-OECD consumption growth is expected to be 1.1 million b/d in both 2016 and 2017, reflecting higher growth in the Middle East and Eurasia.

OECD petroleum and other liquid fuels consumption rose by 0.6 million b/d in 2015. OECD consumption is expected to continue rising in both 2016 and 2017 by 0.3 and 0.4 million b/d, respectively, driven by an increase in U.S. consumption. OECD Europe demand is also expected to increase through the forecast period, albeit at a slower pace than the 0.3 million b/d increase in 2015. U.S. consumption is forecast to increase by 0.2 and 0.3 million b/d in 2016 and 2017, respectively. Consumption in Japan is forecast to decline by less than 0.1 million b/d in both 2016 and 2017.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('pstarr', 'T')he so-called oil glut will last forever even as production falls. The world is going into a deflation, characterized by contraction or shrinking purchasing power. It is a condition where prices are falling but there is a corresponding decrease in employment, total output, and thus income. This has already begun.

[JV153]

I don't think it will last much longer - that said with prices this low US LTO and especially Canadian tar sands oil are getting hit hard along with heavy oil from other areas and offshore projects.

Apparently Mexico has potential to the upside but security concerns are an issue.

[GHung]

Tanada said;

$this->bbcode_second_pass_quote('', 'O')n the other hand oil demand grew a LOT in 2015, here is what the EIA published just a few days ago.

$this->bbcode_second_pass_quote('', ' ') EIA estimates global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2015, averaging 93.8 million b/d for the year.

[ennui2]

$this->bbcode_second_pass_quote('Outcast_Searcher', '
')This site doesn't need to constantly produce false economic doom pronouncements by the bucketload. zerohedge already has that job.

[Tanada]

$this->bbcode_second_pass_quote('GHung', 'T')anada said;

$this->bbcode_second_pass_quote('', 'O')n the other hand oil demand grew a LOT in 2015, here is what the EIA published just a few days ago.

$this->bbcode_second_pass_quote('', ' ') EIA estimates global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2015, averaging 93.8 million b/d for the year.

[GregT]

Longer than our economies can remain solvent.

[JV153]

$this->bbcode_second_pass_quote('GregT', 'L')onger than our economies can remain solvent.

[Plantagenet]

The sanctions on Iran are now officially over.

UN certifies Iran compliance, Obama signs executive order ending sanctions on Iran

This will bring another ca. 500,000 bbl/day of oil onto the world market. Considering that the market is already oversupplied by ca. 1,000,000 bbl/day, the global oil glut just got a lot more gluttier.

[Newfie]

Not making a prediction, I'm really bad at them, but I like KJs thinking above. The glut will continue until there is a ME war or some other disruption.

[ennui2]

$this->bbcode_second_pass_quote('Newfie', 'N')ot making a prediction, I'm really bad at them, but I like KJs thinking above. The glut will continue until there is a ME war or some other disruption.

[Shaved Monkey]

$this->bbcode_second_pass_quote('KaiserJeep', 'T')he glut will last until widespread warfare exists in the ME. Then we abruptly switch from glut to shortages as ME production ends.