[TonyPrep]

$this->bbcode_second_pass_quote('kmann', 'W')ith November increase of 55kb/day over the October record, and if this maintenance outage returns to production in December, I would guess that Stuart will see the three months of higher production.

[TonyPrep]

An interesting tidbit that I just noticed on the December IEA report was that it said OPEC production was lower. Since this is reporting November production and OPEC's "promise" to increase production by 500,000 bpd, from November 1st, seems hollow.

[kmann]

$this->bbcode_second_pass_quote('kmann', 'N')ew IEA Oil Market Report out today.
In the highlights:
$this->bbcode_second_pass_quote('', 'W')orld oil supply rose 55 kb/d in November to 86.5 mb/d as output recovery in Mexico, China and Brazil offset lower OPEC supply. Non OPEC supply is revised up by an average 50 kb/d to 50.2 mb/d in 2007 and 51.25 mb/d in 2008, on higher estimates for refinery processing gain. These offset downgrades of 95-140 kb/d for non-OPEC oil production.

[Graeme]

IEA Chief Says Oil May Rise to $150 on China Demand

$this->bbcode_second_pass_quote('', 'O')il prices may rise to as high as $150 a barrel because of booming demand from India and China, according to the director of the International Energy Agency.

``In a very high growth scenario in China and India it may move up to $150,'' Nobuo Tanaka said in an interview in Paris today. Those countries ``are consuming energy in a very, very substantial way.''


``Suddenly the lower-level price age may be over and we are now in the age of very high energy prices,'' Tanaka said.

In a high-growth scenario, oil import prices will rise to $150 a barrel by 2030 in nominal terms, or $87 a barrel in inflation-adjusted 2006-dollar terms, the IEA said in its Nov. 7 World Energy Outlook Report.

[Graeme]

Oil: The power to shock

$this->bbcode_second_pass_quote('', 'I')t is anyone's guess how high the price will go, yet everyone seems to agree that a new, much higher floor has been set. Goldman Sachs recently increased its 12-month forecast to $105 per barrel. Ian Henderson, head of the JP Morgan Natural Resources Fund, says it could reach $110 in the first quarter of this year. Gerard Lyons, chief economist of Standard Chartered, thinks the US will fall into recession next year, which will translate to a fall to between $70 and $80 per barrel as demand falls. Yet that will only be a temporary blip before it resumes its rise over the next three to five years when, he says, it could hit as much as $150 per barrel.

[Sys1]

"In a high-growth scenario, oil import prices will rise to $150 a barrel by 2030 in nominal terms"

Are they kidding? Once again, they deny peak oil. 150$ a barrel in 2030 means business as usual for the next 22 years.
Let me lol!

[Bas]

$this->bbcode_second_pass_quote('Sys1', '"')In a high-growth scenario, oil import prices will rise to $150 a barrel by 2030 in nominal terms"

[Lanthanide]

If they estimated this price by the middle of next year, they might be closer to the mark.

[steam_cannon]

$this->bbcode_second_pass_quote('Lanthanide', 'I')f they estimated this price by the middle of next year, they might be closer to the mark.

[Twilight]

I am inclined to be very cautious about this. With oil at or near $100 and worldwide credit tightening, there will be demand destruction for sure. Destruction of consumers, more like. India and China may keep bidding, but other countries will drop out. Who will cease bidding after a year of close to $100 average once lending is cut back or debt interest shoots up? How about at $120? Every country will be having its own stress test, and while some will pass with ease, others will fail. Once enough damage is done, there is no reprieve, they will stay dead even if prices fall back. I could imagine oil prices having their own "bumpy plateau" for a time as they knock down one country after another. I think this year we may see a temporary pullback as the first stage of fallout strikes. Ten years down the line we may realise this is a cyclical phenomenon. It would be a nightmare scenario for renewable energy investment, years of uncertainty and paralysis while people figure out what they are looking at. Who knows? I find the possibility intriguing.

[jdmartin]

Twilight I think that's exactly what's going to happen - a reverse sawtooth pattern, where prices will go up, drop down but not as low as they used to be, go up even further, drop down again but not as low, etc. It simply stands to reason and makes sense.

[TonyPrep]

Well, the January Oil Market Report summary is out. December was 87 mbpd. No info about what demand was estimated as. No doubt, the full report will have more info on that, and the average production for the year.

An interesting calculation, though, is to work back to the revised November figure. It was previously put at an all time high of 86.55 mbpd. However, given that the OMR reports an increase of 0.87 mbpd in December, that puts the revised November figure at 86.13 mbpd, quite a markdown. So I think we still need to wait to see if a new peak has been reached, or if the extra production is sustained.

Another interesting point about the summary is that OECD oil stocks fell 38.1 million barrels in November, that's over 1 mbpd. So, presumably, even 87 mbpd would not have been enough in November.

Wasn't November supposed to be the month of big OPEC increase? If so, it made no difference to overall production in that month and, clearly, didn't meet demand.

However, for now, it looks like production has taken a tick up; I await the demand figures with interest.

[Dan1195]

The questions are obvious:

a) is it legitimate: Initial data is always suspect

b) Where is this additional output coming from: We know SA has sour crude that no one wants. Other than incremental increases in places like Iraq I don't really have any idea where it would come from.

c) Is it sustainable for more than a couple of months: If its simply surge capacity than the answer is no.

[Zardoz]

$this->bbcode_second_pass_quote('TonyPrep', 'A')n interesting calculation, though, is to work back to the revised November figure. It was previously put at an all time high of 86.55 mbpd. However, given that the OMR reports an increase of 0.87 mbpd in December, that puts the revised November figure at 86.13 mbpd, quite a markdown. So I think we still need to wait to see if a new peak has been reached, or if the extra production is sustained...

[mkwin]

$this->bbcode_second_pass_quote('Dan1195', '
')

b) Where is this additional output coming from: We know SA has sour crude that no one wants. Other than incremental increases in places like Iraq I don't really have any idea where it would come from.

.

[Zardoz]

Oops! Just noticed this on the right side of the IEA OMR page:



That's an incredible increase. Whaddya think, gang? Will we once again see a big revision later on? How could there be that much of a jump from quarter to quarter?

[Tanada]

Does the whole graph consistently measure the same thing? What I mean is, does the firts part just have crude and condensates bu the last bar have all liquids? I have seen that kind of mixed data invalid graph before so I wondered.

[pup55]

$this->bbcode_second_pass_quote('', 'a')) is it legitimate: Initial data is always suspect

b) Where is this additional output coming from: We know SA has sour crude that no one wants. Other than incremental increases in places like Iraq I don't really have any idea where it would come from.

c) Is it sustainable for more than a couple of months: If its simply surge capacity than the answer is no.

[Zardoz]

$this->bbcode_second_pass_quote('pup55', '.')..So where did that oil go? about 60 million barrels (2 mbpd) per month should have shown up on an inventory somewhere. '

That is, unless it all went to China and they used it.

[TonyPrep]

The IEA were forecasting 4Q07 demand at 87.1 mbpd average, in their November OMR. In their December OMR, that was revised down to 86.9. According to their December OMR, oil production was 86.5, in October (as I don't have the full January OMR, I don't know if that's been revised, so I'll have to go with it). According to the latest OMR, production was 86.13 in November and 87.0 in December. That all works out at an average 86.54 mbpd in 4Q07. That's 0.36 mbpd below the last 4Q07 estimate that I know about.

So we should have seen global stocks fall by 32.76 million barrels in the 3rd quarter. Now, the latest OMR says OECD stocks fell by 38.1 million in November alone. Of course, it's possible that non-OECD stocks rose substantially in 4Q07, but it doesn't seem credible that stocks in only the OECD, and in only one month, could have fallen by significantly more than what the IEA December forecasts for global demand across the whole quarter would imply.

Unfortunately, global monthly demand actuals aren't given in the OMR.