[tita]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('ROCKMAN', 'T')he KSA increased production for a very simple reason: to increase the consumer demand for oil so it can max its income.

[ralfy]

$this->bbcode_second_pass_quote('vtsnowedin', '
') I think you are about half right there. I see fracking North Dakota etc. as a technofix that works just fine at $100/ bl. But at the same time $100 oil threw the rest of the economy into a tailspin that eventually destroyed a lot of demand. The governments playing with the interest rates and bailing out failing industries just made it worse and added on a heavy layer of public debt that will have to be repaid.

[ennui2]

If we were smart, any can-kicking going on (and shale is a can-kicker) should buy time for Hirsch Report style weaning off of FF. The trick is to get people off of FF when it's still cheap rather than waiting for it to bite. That's why I admire Tesla's approach of making EVs sexy even with low oil prices, although I know what they're doing, even with the eventual Model 3, is a proverbial drop in the bucket.

I just don't think we should assume that a crash now vs. 10-15 years from now would be identical because technology is always changing and some of it is in fact moving in a beneficial direction.

[Plantagenet]

The oil glut was twice as bad in 2015 as it was in 2014----even though China continued to import more oil. More Growth in China is needed to eventually absorb the oil glut.

Is-China-The-Big-Sponge-That-Absorbs-The-Oil-Glut

There was about 1.94 million bbl/day of extra oil going into storage in 2015. US shale production is starting to drop, but Iran is bringing another 500-750,000 bbls/day to the world market in 2016.

China is the only world consumer who is rapidly INCREASING their use of oil. In spite of all the talk about a recession in China, China's oil use grew by 7% in 2015. If China keeps growing, they will eventually absurd the excess oil and end the oil glut---but it will take a couple more years for that happen.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Plantagenet', ' ')
China is the only world consumer who is rapidly INCREASING their use of oil. In spite of all the talk about a recession in China, China's oil use grew by 7% in 2015. If China keeps growing, they will eventually absurd the excess oil and end the oil glut---but it will take a couple more years for that happen.

[Plantagenet]

Good point, outcast.

Increased demand from China AND India---CHINDIA---is the most likely way this oil glut will end. Your link said India will consume another 300,000 bbls per day in 2016, with China increasing their demand by about the same amount. Since the current daily oversupply is about 1,950,000 bbls per day, that still will leave an oversupply of about 1,350,000 bls per day at the end of 2016.

US TOS production is starting to drop, but Iran is coming into the market and anxious to sell and gain market share.

If US production drops are roughly matched by new Iranian oil and everything else stays roughly the same and there is no recession in China and demand growth in demand in China and India stay the same, it will take until sometime in 2019 to end the oil glut.

Cheers!

[Subjectivist]

$this->bbcode_second_pass_quote('Plantagenet', 'G')ood point, outcast.

Increased demand from China AND India---CHINDIA---is the most likely way this oil glut will end. Your link said India will consume another 300,000 bbls per day in 2016, with China increasing their demand by about the same amount. Since the current daily oversupply is about 1,950,000 bbls per day, that still will leave an oversupply of about 1,350,000 bls per day at the end of 2016.

US TOS production is starting to drop, but Iran is coming into the market and anxious to sell and gain market share.

If US production drops are roughly matched by new Iranian oil and everything else stays roughly the same and there is no recession in China and demand growth in demand in China and India stay the same, it will take until sometime in 2019 to end the oil glut.

Cheers!

[Plantagenet]

$this->bbcode_second_pass_quote('Subjectivist', '
')Where do you get the figure that the surplus s nearly 2 MM/bbl/d? That is twice what I have seen written around the Internet.

[Tanada]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Subjectivist', '
')Where do you get the figure that the surplus s nearly 2 MM/bbl/d? That is twice what I have seen written around the Internet.

[Outcast_Searcher]

I think like with all things re global economics, it's way too difficult to make an accurate forecast on when the glut will end. There are simply too many moving parts.

For example, in the US, how strong the surge of car buyers (stupidly) buying big trucks and SUV's since "gas is cheap" (for now) will depend on (just to name a few) how cheap oil gets (which we don't know), how stable the low prices are as the price troughs (which we don't know) and how strong the US economy is re unemployment and rising consumer confidence (which we certainly don't know since these figures change quarterly and are subject to multiple revisions, etc).

And that's just the US. The logic that the glut WILL end as production is shut in due to low (enough) prices seems inescapable -- I just think we should be realistic about trying to make accurate global economic forecasts.

(For example, look how random we all are at just trying to pick the price of oil for the next year. It's like herding cats).

Just one opinion. Economists try to make accurate forecasts since it's their job and they are expected to (and I'll bet in private they admit they're as random at picking things like GDP growth as we are at picking oil prices). And almost none of us are economists even if we do use words (often somewhat randomly) like recession, demand, and GDP.

[ennui2]

Here's where we are now. I would not expect the glut to end in the near future.

http://in.reuters.com/article/us-global ... NKCN0VA16D

[geopressure]

There never was an oil glut... The Reporting agencies are full of it... here's a little it of proof...

https://www.dmr.nd.gov/oilgas/directors ... rchive.asp

Notice How over the last 3 reported months (September, October, & November) North Dakota Production rose by at least 5K BOPD per month... However, at the same time the number of completions fell from 123 to 43 to 26, respectively... With the number of competions falling by 2/3rds & then again by half, how can it be possible that production rates are still climbing... Especially when you consider that shale oil wells immediately start their decline, as soon as the frac-water is cleaned up...

ND is lying about their production rates... But that should come as no surprise to anyone familiar with the industry who has an average IQ or better...

--
Furthermore, ND claims:
"At the end of October there were an estimated 975 wells waiting on completion services2, 105 less than at the end of September."

Wait, wait, wait... if you only made 43 completions in the month of October, how the heck are there 105 fewer wells waiting on completions??? The Math does not work out...

The answer is in the disclaimer:

Disclaimer: The number of wells waiting on completions is an estimate on the part of the director based on idle well count and a typical five year average. Neither the State of North Dakota, nor any agency officer, or employee of the State of North Dakota warrants the accuracy or reliability of this product and shall not be held responsible for any losses caused by this product. Portions of the information may be incorrect or out of date. Any person or entity that relies on any information obtained from this product does so at his or her own risk.

In other words, The number of wells waiting on completions is a made-up number that means NOTHING!!!

[Plantagenet]

$this->bbcode_second_pass_quote('geopressure', 'T')here never was an oil glut... The Reporting agencies are full of it... The Math does not work out...

The answer is in the disclaimer:

Disclaimer: The number of wells waiting on completions is an estimate on the part of the director based on idle well count and a typical five year average. Neither the State of North Dakota, nor any agency officer, or employee of the State of North Dakota warrants the accuracy or reliability of this product and shall not be held responsible for any losses caused by this product. Portions of the information may be incorrect or out of date. Any person or entity that relies on any information obtained from this product does so at his or her own risk.

In other words, The number of wells waiting on completions is a made-up number that means NOTHING!!!

[Plantagenet]

T. Boone Pickens---well known oil investor---said yesterday that he had just sold every single share of every oil stock he owned.

This implies that T. Boone thinks the oil glut is going to go on a while longer-----and that the prices of oil companies in the stock market are going to fall much farther.

[JV153]

I'm starting to wonder about the global data on FF use, I'm quite certain that coal use has increased but it seems to me liquid fuel production hasn't jumped much, probably since so much of it is being used in generating that marginal barrel.

[Subjectivist]

$this->bbcode_second_pass_quote('', 'N')on-OPEC producers, such as those in the U.S., have struggled to break even with the lower oil price and have cut costs drastically. OPEC too said that its downward revision to the non-OPEC supply forecast was "mainly due to announced capex cuts by international oil companies, the fall in active drilling rigs in the U.S. and Canada, and a heavy annual decline in older fields."

Oil prices remain very low, with a barrel currently fetching around the $30-mark on the back of a glut and lagging demand. OPEC has refused to cut its own output and thereby support prices, however, even as lower prices hurt government budgets in OPEC member countries in the Middle East and beyond.

Supply and demand

Signaling that the imbalance in supply and demand was not set to be rectified anytime soon, OPEC said on Wednesday that it expected world oil demand to grow by 1.25 mb/d in 2016, "representing a marginal lower adjustment of 10,000 b/d from the previous forecast, to average 94.21 mb/d."
That forecast for oil demand follows a similar prediction from the International Energy Agency (IEA) on Tuesday. It too forecast that global oil demand growth would "ease back significantly" in 2016 from the five-year high of 1.6 million barrels a day (mb/d) in 2015 to 1.2 mb/d in 2016. It said demand growth would be "pulled down by notable slowdowns in Europe, China and the U.S."

At the same time as the global oil demand forecast was lowered, OPEC forecast that its own supply had increased in January, with crude production up 131,000 barrels a day to average 32.33 mb/d, according to secondary sources, above its official output ceiling of 30 mb/d.

Even as low oil prices start to hit home with even Saudi Arabia reporting a record budget deficit in 2015 and spending cuts to cope with lower oil revenues, OPEC has refused to budge on output and has been optimistic on the outlook for global oil demand.

U.S. buoys demand

In fact, OPEC believes that global demand for oil would still be "broadly robust" in 2016 with countries outside the Organisation for Economic Co-operation and Development, including China, India and Brazil, continuing to "contribute the bulk of oil demand growth this year." OPEC reiterated that it was ready to step into the breach to meet that global oil demand.

"In 2016, demand for OPEC crude is expected at 31.6 mb/d, a gain of 1.8 mb/d, higher than last year," OPEC noted, adding more detail on where it expected demand to come from.

"For 2016, oil demand is anticipated to grow by around 1.3 mb/d, below last year's growth but still broadly robust. Demand in the OECD countries is projected to grow by 0.2 mb/d, with the U.S. leading growth, while Asia-Pacific is seen declining and Europe is expected to be broadly flat compared to the previous year."

Rebuffing fears of a slowdown in U.S. growth and how that could put a dampener on oil demand, OPEC said "positive projected growth in the U.S. economy and continued healthy growth in the road transportation sector are seen outweighing downside assumptions for overall U.S. oil demand, mainly linked to fuel substitution and vehicle efficiencies."

[Subjectivist]

Has anyone seen any data on stripper well production costs? A couple months ago it was pointed out America has 400,000 stripper wells working but that around half of them need $50/bbl to break even or show a profit. At some point it isn't worth keeping them pumping if you are taking a loss because they will never pay back those losses after a moderate time period.

[ROCKMAN]

And once more I just don't understand the truly insane use of the phrase "lagging demand" in a world that is consuming/demanding more oil then ever before in history. Likewise with "glut" when every bbl of oil being produced has a ready and capable buyer. Some still try to define "glut" by the price of oil and not the supply/demand dynamic. IOW 15 years ago when oil was at the current price level I don't recall anyone running around like their hair was on fire screaming "GLUT!!!". LOL.

[Plantagenet]

$this->bbcode_second_pass_quote('ROCKMAN', 'A')nd once more I just don't understand the truly insane use of the phrase..."glut" when every bbl of oil being produced has a ready and capable buyer. Some still try to define "glut" by the price of oil and not the supply/demand dynamic. IOW 15 years ago when oil was at the current price level I don't recall anyone running around like their hair was on fire screaming "GLUT!!!"

[AdamB]

$this->bbcode_second_pass_quote('ROCKMAN', 'A')nd once more I just don't understand the truly insane use of the phrase "lagging demand" in a world that is consuming/demanding more oil then ever before in history. Likewise with "glut" when every bbl of oil being produced has a ready and capable buyer. Some still try to define "glut" by the price of oil and not the supply/demand dynamic.