AuthorTopic: Oil Glut: IT'S THE DEMAND, STUPID!  (Read 10526 times)

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #15 on: March 10, 2017, 02:22:55 PM »
It's already lasted longer than what I once thought it would, the whole debt based money system and PO conundrum. It hasn't even gotten interesting yet. We're in the early innings. I don't want to be collapse biased, which is easy to do.

I never said Exxon would make it through and come back strong. But I expect it'll be harder to kill than the fucking Cyclops.

Agreed, Exxon will probably be the Last Man Standing and hardest to kill.  But die it will.

Far as innings go, it depends on the game you use as an analogy.  In your analogy, this is like a Cricket Test, which can take days to complete.  I think it is more like Baseball, done in about 3 hours.  I would put us in about the 3rd inning now.

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #16 on: March 10, 2017, 07:53:55 PM »
More oil !  "could yield a potential 120,000 barrels per day" - so that means AT MOST 1% of current US production.  Duh.

https://www.rt.com/usa/380220-alaska-oil-discovery-repsol/
Largest onshore oil discovery in US in decades claimed by companies in Alaska
10 Mar, 2017

An oil reserve of a potential 1.2 billon barrels has been discovered in Alaska's North Slope in what the companies involved believe is the largest US onshore oil discovery in nearly three decades.

Spanish oil company Repsol and Armstrong Energy said their discovery is located at the northeastern edge of the National Petroleum Reserve-Alaska, near the village of Nuiqsut. They say production beginning in 2021 could yield a potential 120,000 barrels per day.

The discovery of bands of light oil came from two wildcat wells drilled this winter at an area known as Horseshoe, the Alaska Dispatch News reported.

"Repsol and partner Armstrong Energy have made in Alaska the largest U.S. onshore conventional hydrocarbons discovery in 30 years," Repsol said. "The Horseshoe-1 and 1A wells drilled during the 2016-2017 winter campaign confirm the Nanushuk play as a significant emerging play in Alaska's North Slope."

The finding extends the prospects of the Nanushuk discovery, first announced by the companies in 2015, by an additional 20 miles, according to Repsol. Nanushuk is in the Pikka Unit, a collection of land leases owned by the two companies.

"The contingent resources currently identified in the Nanushuk play in Alaska amount to approximately 1.2 billion barrels of recoverable light oil," Repsol said Thursday.

Repsol and Armstrong have "drilled multiple consecutive discoveries on the North Slope" since 2011. Respol will now determine development strategies for Horseshoe, a spokesman said.

"We've scored a good goal in the game, and we have to play the rest of it," said Respol spokesman Kristian Rix, according to the Alaska Dispatch News.

The Horseshoe discovery was hailed by the likes of Alaska Governor Bill Walker and US Senator Dan Sullivan, who said the finding could be a major boon to oil development in the state.

"I believe that this announcement — with the state working together as a partner with Congress, the new administration, and the private sector — could usher in a new renaissance of economic growth and job creation in Alaska," Sullivan said.

    I applaud Repsol & Armstrong's announcement on #Horseshoe wells discovery. Great news for #Alaska; we must all pull together to fill TAPS. pic.twitter.com/6tJKJ2uGoe
    — Governor Bill Walker (@AkGovBillWalker) March 9, 2017

The estimates made by Respol, however, likely have not been confirmed by independent entities, said David Houseknecht, a geologist with the US Geological Survey in Alaska.

If predictions are correct, the Horseshoe discovery would be the largest onshore oil discovery in the US since the North Slope's Alpine field, operated by ConocoPhillips, was found in 1994, according to the Alaska Dispatch News. Houseknecht estimated that Alpine will produce around 750 billion barrels of oil by its end.

The Horseshoe discovery could potentially challenge the 1969 finding of the Kuparuk River oil field, also on Alaska's North Slope. Kuparuk has produced about 2.3 billion barrels of oil and is expected to top out at 3 billion barrels, Houseknecht said.
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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #17 on: March 10, 2017, 08:09:11 PM »
More oil !  "could yield a potential 120,000 barrels per day" - so that means AT MOST 1% of current US production.  Duh.

Not huge, but it could keep our local economy floating another year or two here.

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Cometh the Collapse of the House of Saud
« Reply #18 on: March 11, 2017, 04:51:57 AM »
When the Saudis have to shut in Oil Production for lack of storage space, they are finished.  They'll implode in a matter of days.

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Start Preparing for the Collapse of the Saudi Kingdom


U.S President Barack Obama reaches out to shake hands with King Salman of Saudi Arabia at the G-20 Summit in Antalya, Turkey, Sunday, Nov. 15, 2015.

    By Sarah Chayes Read bio
    Alex de Waal Read bio

February 16, 2016

Susan Walsh/AP

Saudi Arabia is no state at all. It's an unstable business so corrupt to resemble a criminal organization and the U.S. should get ready for the day after.

For half a century, the Kingdom of Saudi Arabia has been the linchpin of U.S. Mideast policy. A guaranteed supply of oil has bought a guaranteed supply of security. Ignoring autocratic practices and the export of Wahhabi extremism, Washington stubbornly dubs its ally “moderate.” So tight is the trust that U.S. special operators dip into Saudi petrodollars as a counterterrorism slush fund without a second thought. In a sea of chaos, goes the refrain, the kingdom is one state that’s stable.

But is it?

In fact, Saudi Arabia is no state at all. There are two ways to describe it: as a political enterprise with a clever but ultimately unsustainable business model, or so corrupt as to resemble in its functioning a vertically and horizontally integrated criminal organization. Either way, it can’t last. It’s past time U.S. decision-makers began planning for the collapse of the Saudi kingdom.

In recent conversations with military and other government personnel, we were startled at how startled they seemed at this prospect. Here’s the analysis they should be working through.

Understood one way, the Saudi king is CEO of a family business that converts oil into payoffs that buy political loyalty. They take two forms: cash handouts or commercial concessions for the increasingly numerous scions of the royal clan, and a modicum of public goods and employment opportunities for commoners. The coercive “stick” is supplied by brutal internal security services lavishly equipped with American equipment.
Related: The GOP 2016 Contenders Swooning for Saudi Arabia
Related: Riyadh Responds to Iran Deal: Give Us 600 Patriot Missiles
Related: Syria’s Peace Hinges on Iran vs. Saudi Arabia

The U.S. has long counted on the ruling family having bottomless coffers of cash with which to rent loyalty. Even accounting today’s low oil prices, and as Saudi officials step up arms purchases and military adventures in Yemen and elsewhere, Riyadh is hardly running out of funds.
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Still, expanded oil production in the face of such low prices—until the Feb. 16 announcement of a Saudi-Russian freeze at very high January levels—may reflect an urgent need for revenue as well as other strategic imperatives. Talk of a Saudi Aramco IPO similarly suggests a need for hard currency.

A political market, moreover, functions according to demand as well as supply. What if the price of loyalty rises?

It appears that is just what’s happening. King Salman had to spend lavishly to secure the allegiance of the notables who were pledged to the late King Abdullah. Here’s what played out in two other countries when this kind of inflation hit. In South Sudan, an insatiable elite not only diverted the newly minted country’s oil money to private pockets but also kept up their outsized demands when the money ran out, sparking a descent into chaos. The Somali government enjoys generous donor support, but is priced out of a very competitive political market by a host of other buyers—with ideological, security or criminal agendas of their own.

Such comparisons may be offensive to Saudi leaders, but they are telling. If the loyalty price index keeps rising, the monarchy could face political insolvency.
The Saudi ruling elite is operating something like a sophisticated criminal enterprise.

Looked at another way, the Saudi ruling elite is operating something like a sophisticated criminal enterprise, when populations everywhere are making insistent demands for government accountability. With its political and business elites interwoven in a monopolistic network, quantities of unaccountable cash leaving the country for private investments and lavish purchases abroad, and state functions bent to serve these objectives, Saudi Arabia might be compared to such kleptocracies as Viktor Yanukovich’s Ukraine.

Increasingly, Saudi citizens are seeing themselves as just that: citizens, not subjects. In countries as diverse as Nigeria, Ukraine, Brazil, Moldova, and Malaysia, people are contesting criminalized government and impunity for public officials—sometimes violently. In more than half a dozen countries in 2015, populations took to the streets to protest corruption. In three of them, heads of state are either threatened or have had to resign. Elsewhere, the same grievances have contributed to the expansion of jihadi movements or criminal organizations posing as Robin Hoods. Russia and China’s external adventurism can at least partially be explained as an effort to re-channel their publics‘ dissatisfaction with the quality of governance.
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Related: Defense One‘s complete coverage of Saudi Arabia

For the moment, it is largely Saudi Arabia’s Shiite minority that is voicing political demands. But the highly educated Sunni majority, with unprecedented exposure to the outside world, is unlikely to stay satisfied forever with a few favors doled out by geriatric rulers impervious to their input. And then there are the “guest workers.” Saudi officials, like those in other Gulf states, seem to think they can exploit an infinite supply of indigents grateful to work at whatever conditions. But citizens are now heavily outnumbered in their own countries by laborers who may soon begin claiming rights.

For decades, Riyadh has eased pressure by exporting its dissenters—like Osama bin Laden—fomenting extremism across the Muslim world. But that strategy can backfire: bin Laden’s critique of Saudi corruption has been taken up by others and resonates among many Arabs. And King Salman (who is 80, by the way) does not display the dexterity of his half-brother Abdullah. He’s reached for some of the familiar items in the autocrats’ toolbox: executing dissidents, embarking on foreign wars, and whipping up sectarian rivalries to discredit Saudi Shiite demands and boost nationalist fervor. Each of these has grave risks.

There are a few ways things could go, as Salman’s brittle grip on power begins cracking.

One is a factional struggle within the royal family, with the price of allegiance bid up beyond anyone’s ability to pay in cash. Another is foreign war. With Saudi Arabia and Iran already confronting each other by proxy in Yemen and Syria, escalation is too easy. U.S. decision-makers should bear that danger in mind as they keep pressing for regional solutions to regional problems. A third scenario is insurrection—either a non-violent uprising or a jihadi insurgency—a result all too predictable given episodes throughout the region in recent years.
An energetic red team should shoot holes in the automatic-pilot thinking that has guided Washington policy to date.

The U.S. keeps getting caught flat-footed when purportedly solid countries came apart. At the very least, and immediately, rigorous planning exercises should be executed, in which different scenarios and different potential U.S. actions to reduce the codependence and mitigate the risks can be tested. Most likely, and most dangerous, outcomes should be identified, and an energetic red team should shoot holes in the automatic-pilot thinking that has guided Washington policy to date.

“Hope is not a policy” is a hackneyed phrase. But choosing not to consider alternatives amounts to the same thing.

    Sarah Chayes is senior associate in the Democracy and Rule of Law and South Asia Programs at the Carnegie Endowment for International Peace. She is the author of Thieves of State: Why Corruption Threatens Global Security. She previously was special adviser to Chairman of the Joint Chiefs of Staff ... Full bio
    Alex de Waal is executive director of the World Peace Foundation and a research professor at The Fletcher School. Considered one of the foremost experts on Sudan and the Horn of Africa, his scholarship and practice has also probed humanitarian crisis and response, human rights, HIV/AIDS and ... Full bio
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Offline Palloy2

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #19 on: March 11, 2017, 07:01:51 AM »
This makes it sound like the US is totally blameless - the only thing wrong is their policy is "flat-footed".  And the evidence for this is? - nothing, because funnily enough they don't talk publicly about their plans for what comes next in Saudi Arabia.  No mention of the fact that the US NEEDS the Saudis to continue to invest their oil Dollars in US weaponry and Treasury bonds.  No mention of what would happen if Saudi sold its oil in other currencies as well.  No mention of what would happen if Saudi decided to leave the US Empire, taking Bahrain and Qatar (and likely Turkey) with it. 

The comparison with corruption in South Sudan is totally ludicrous - they have only been a country since 2011, after centuries of the slave trade and 50 years of Sudanese civil war.  They have had their own civil war since 2013, and have been losing money on oil since 2014.  And they are already broke and starving.

Quote
Russia and China’s external adventurism can at least partially be explained as an effort to re-channel their publics‘ dissatisfaction with the quality of governance.

Except Putin's satisfaction rating has been in the 80+% range for years, not in the US of course but in Russia, where it matters.

Assuming that journalism couldn't really be that bad, one must look for other reasons why crap like this gets published  The simple  message is "The Saudi leaders are crooks", so who in the US would want to push that as an idea?  What did Bush/Obama do about it in 14 years? - except publishing "the 28 pages" and leaving it for Trump to sort out.
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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #20 on: March 16, 2017, 01:19:11 PM »
More demand side evidence.  I do love how they try to paint this as Amerikans buying efficient new carz.   ::)

RE

https://www.bloomberg.com/news/articles/2017-03-16/opec-can-t-count-on-american-drivers-to-help-boost-oil-prices

OPEC Can't Count on American Drivers to Help Boost Oil Prices
by Mark Shenk
and Laura Blewitt
March 16, 2017, 10:31 AM AKDT


    Gasoline consumption so far this year down 1.7% from 2016: EIA
    Average pump price is up almost 30% from year ago: AAA

Rising U.S. oil production isn’t the only thing getting in the way of OPEC’s efforts to drain a global glut. American drivers aren’t helping either.

The Organization of Petroleum Exporting Countries is counting on growing demand to bolster the production cuts it’s making in a bid to balance the market. But motorists in the U.S. -- the world’s largest consumer of gasoline -- are using less, not more. And that’s not likely to change any time soon.

About 40 percent of the crude in America is processed into the motor fuel, government data show. As the price of gasoline has risen more than 30 percent since February 2016, drivers are burning less, swelling supplies to near record highs. Meanwhile, new cars offer consumers an ever-widening variety of more efficient options to cut back on fuel use.

"Don’t expect the U.S. driver to save the market this year -- he cares about the price now," Kevin Book, managing director of the Washington-based research firm ClearView Energy Partners, said in a telephone interview. "There’s now a strong correlation between price and gasoline demand."

As people trade in old cars, the new vehicles they’re driving are between two and 10 miles per gallon more efficient, Book said. “This is likely to lead to a flattening or even decline of U.S. demand as early as late this year."

The U.S. fleet of passenger cars and light trucks averaged a record 24.8 miles per gallon during the 2015 model year, an increase of 0.5 mpg from 2014, according to an annual report of automaker efficiency from the Environmental Protection Agency. In November, the agency projected an overall average of 25.6 mpg in 2016.
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One curve ball: required advancements in vehicle fuel efficiency could come to a halt if President Donald Trump strikes a deal with Michigan automakers to bring more factory jobs to the U.S. in exchange for weaker environmental standards. “You need to come back and give us big numbers in terms of jobs,” Trump told the chief executive officers of General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV on Wednesday.

While it would take time for a policy change like that to be incorporated into production lines, it could change fuel-use dynamics in the future.

The average price of regular gasoline at the pump nationwide was $2.29 a gallon in February, up 31 percent from a year earlier, AAA data show. In February 2016, the fuel touched $1.696 at a time when the price of crude dropped to $26.05 a barrel in New York, the lowest since 2003.
Swelling Stockpiles

As prices have risen, Americans have cut back on driving, reducing consumption 1.7% so far this year from 2016, according to Energy Information Administration data Wednesday. The fallout: U.S. gasoline inventories rose to a record 259 million barrels in the week ended Feb. 10.

Gasoline and diesel-powered vehicles aren’t the only options for motorists anymore; electric cars are gaining popularity. Manufacturers from Toyota Motor Corp. to General Motors are joining Elon Musk’s Tesla Motors Inc. in developing new models. Volkswagen AG plans to produce 3 million of them a year within the next decade.

"Demand isn’t as inelastic as it used to be," Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by telephone. "There are substitutes now."

The outlook isn’t entirely bleak, as some see it. Recent consumption looks soft after two consecutive years of strong demand increases, said Dan McTeague, a Toronto-based senior petroleum analyst at GasBuddy Organization, which tracks retail prices and availability.

"As consumers we are still very important," Tamar Essner, a New York-based energy analyst at Nasdaq Inc., said by telephone. "About 9 percent of global oil output goes to making gasoline for U.S. drivers."
Decline Overstated?

The rise in American gasoline supplies is based on "transient" factors and the decline in demand is overstated, according to analysts at Goldman Sachs Group Inc. Actual consumption is down by "a more modest" 85,000 barrels a day from a year earlier, not the 460,000 barrels shown in weekly data, analysts including Jeffrey Currie and Damien Courvalin, said in a Feb. 21 report.

Over the last 10 years, stockpiles have climbed to their annual peak in January and February, when winter weather curbs driving, monthly data from the EIA show. U.S. demand for gasoline typically peaks between the Memorial Day holiday in late May and Labor Day in early September, when Americans traditionally take vacations.

Demand in California, where drivers love their cars and consume more gasoline than any other state, has been slowed by record rains and heavy snow in recent months. But the state’s rainy season typically lasts from October to April, so weather should improve before peak driving season arrives, allowing demand to recover.

Nonetheless, "this year has been disappointing if you’ve been bullish for petroleum demand," said Kyle Cooper, director of research with IAF Advisors in Houston, in a telephone interview. "If you’re a bull, you’re hoping for OPEC’s success cutting supply because the other factors aren’t going your way."
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The Oil Market Is At A Major Turning Point
« Reply #21 on: March 20, 2017, 01:19:49 AM »
Typically, OP.com views this entirely as a Supply issue.  ::)

No, IT'S THE DEMAND, STUPID!

RE

The Oil Market Is At A Major Turning Point
By Nawar Alsaadi - Mar 17, 2017, 5:52 PM CDT


Often the most important turning points in markets, and in this case the oil market, happen with a whimper rather than a bang. The ongoing crash in the oil market is mostly associated with OPEC’s fateful 2014 Thanksgiving Day decision to abstain from a production cut, thus sending the oil prices tumbling down by close to 10 percent in a single day. This was perhaps the price turning point, however this wasn’t the fundamental turning point, the latter goes back to August 2013.

First, let’s set the stage. For decades, the oil market operated under a simple formula:

(Global oil demand) – (non-OPEC supply) = OPEC production level (Call on OPEC)

Put simply, OPEC acted as a safety valve, it released the valve when there was growing demand or a major supply outage, and restrained it during periods of sudden demand weakness such as global recessions. The formula worked, because for the most part, non-OPEC supply wasn’t growing sufficiently to meet demand growth, this in turn gave OPEC the upper hand in dictating a given level of global oil supply.

The emergence of shale oil in the United States as a viable supply source earlier this decade changed this stable relationship.


As can be seen from the above, Non-OPEC supply held at a around 52.5m barrels for the three years prior to the oil crash, from 2010 to 2013. Then something happened. Non-OPEC supply leaped forward by 2m barrels in 2013 and by another 2.5m barrels in 2014. This begets an important question: Why didn’t oil prices tumble in 2013? Why did it take until late 2014 for the market to take note of this sizable underlying shift in non-OPEC supply?

The answer can be found here:


Related: Can OPEC Resist The Temptation To Cheat?

This associated graph details YoY growth in monthly global oil demand, monthly OPEC and non-OPEC supply. Analyzing this data yields some fascinating results, and offers potential insight on where the oil market could be heading.

The first 12 months of the graph (Year 2013) demonstrates that non-OPEC supply mostly lagged global demand growth until August 2013, with the exception of two months, May and June. In August 2013, something changed, non-OPEC supply growth exceeded global demand growth and never looked back for 22 months straight. A highly unusual occurrence, yet, this fundamental change in the supply-demand relationship went largely undetected due to production declines at OPEC at the time (mostly due to production declines in Libya and Iran). This fragile balance finally broke down in September 2014, once OPEC resumed its production growth. This on top of much sustained non-OPEC production growth finally overwhelming global demand growth. This can be seen from the black line (global supply) breaking decisively above the purple line (global demand).

Looking at this, it is safe to conclude that oil prices were artificially maintained at the $100 level for most of 2013 and 2014 due to involuntary production declines at OPEC masking the extent of the imbalance between price sensitive non-OPEC supply and demand growth.

Non-OPEC supply stalls

After spending 22 months running ahead of demand growth, something happened in June 2015, Non-OPEC supply lagged global demand growth and has done so ever since. This fundamental shift has gone largely unnoticed due to a material increase in OPEC’s production in 2015 and 2016. What’s key to understand is that the majority of the increase in OPEC’s production was largely a one-off event.

During 2015 and 2016, OPEC raised its production by 2.12m barrels from 30.4m to 32.52m (as per EIA data). 84 percent of the increase or 1.77m barrels came from only two countries: Iraq and Iran. The exceptional increase in Iraqi production was due to large IOC investments undertaken before the crash (2011 to 2014) maturing in 2015. Meanwhile, the increase in Iranian production was due to the removal of the nuclear sanctions in January 2016.

The increase in Iranian production last year was especially significant in masking the extent of non-OPEC declines. In 2016, OPEC production increased by 890K barrels, 690K barrels of the increase came from Iran. Absent an increase in Iranian production in 2016, the oil market would have been materially undersupplied.
Related: Oil Prices Wait And Watch For OPEC’s Next Move

What’s next?

Due to the factors discussed above, the market has been under the impression that $50 oil is business as usual, just as the market was deceived into believing that $100 a barrel was business as usual in 2013, and for most of 2014. To truly gauge the oil market ability to balance at a given oil price, one must adjust for geopolitical changes in OPEC’s supply. Undertaking this exercise clearly indicates that a triple digit oil price is not sustainable due to its negative impact on demand growth and its overstimulating impact on Non-OPEC supply. Meanwhile, it is also clear that current oil prices are too low as evident from demand growth exceeding non-OPEC supply for the last 20 months and counting.

For current prices to sustain, OPEC must continue to fill the growing gap between non-OPEC supply and global demand growth. In light of the one-off OPEC supply factors that have taken place over the last two years - the ongoing OPEC cut not withstanding - its questionable that OPEC will be able to grow its production at the same brisk rate it did in 2015 and 2016 for any length of time (OPEC capacity growth will be the topic of my next article.)

With OPEC holding its production flat, a major turn in oil prices appears imminent, and could potentially carry prices to the $60-$70 range once the market takes notice of non-OPEC’s supply inability to meet demand growth at current prices.

By Nawar Alsaadi for Oilprice.com
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Oil prices soar after U.S. launches missile strike in Syria
« Reply #22 on: April 07, 2017, 12:15:49 AM »
If you can't get the Demand up, Spook the Traders with a bullshit missile attack on Syria.

RE

http://www.reuters.com/article/us-global-oil-idUSKBN17905I

Commodities | Fri Apr 7, 2017 | 1:31am EDT
Oil prices soar after U.S. launches missile strike in Syria


FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, appearing to run out of space to contain a historic supply glut that hammered prices, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo

By Henning Gloystein | SINGAPORE

Oil prices surged more than 2 percent to a one-month high on Friday after the United States launched dozens of cruise missiles at an airbase in Syria, later dropping back as there seemed no immediate threat to supplies.

U.S President Donald Trump said he had ordered missile strikes against a Syrian airfield from which a deadly chemical weapons attack was launched earlier this week, declaring he acted in America's "national security interest" against Syrian President Bashar al-Assad.

After tepid trading before the attack, international benchmark Brent crude futures LCOc1 jumped to $56.08 per barrel before easing to $55.71 per barrel at 0519 GMT, still up 1.5 percent from its last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 also climbed by more than 2 percent, to a high of $52.94 a barrel before receding to $52.56, up 1.7 percent.

Both benchmarks hit their highest levels since early March.

"The U.S cruise missile strikes have seen crude oil jump over two percent in a straight line," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Halley said the strikes had potentially big implications for oil markets.

Syria has limited oil production, but its location in the Middle East and alliances with big oil producers raised worries about spreading conflict that could disrupt crude shipments.

"What will be the response of Iran and Russia, two of the world's largest oil producers and staunch allies of the Assad regime? ... We will have to wait for these answers as the day moves on," Halley said.

The strikes rattled global markets. Oil prices surged as traders priced in a Middle East risk premium, and safe-haven products like gold jumped =XAU, while stock markets and the U.S. dollar .DXY slumped. [MKTS/GLOB]
Also In Commodities

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    Gold rises to five-month high on safe-haven demand as U.S. strikes Syria

"Outside of the energy sector, investors have been moving into defensive sectors today, particularly utilities and gold miners," said Gary Huxtable, client adviser at Australia's Atlantic Pacific Securities.

U.S. officials said the military had fired 59 cruise missiles against a Syrian airbase controlled by Assad's forces, in response to a poison gas attack on Tuesday in a rebel-held area.

Officials said the United States had informed Russia the strikes were coming. The strikes did not target sections of the Syrian base where Russian forces were believed to be present.

Russian officials, however, said U.S.-Russian cooperation in Syria was in doubt after the air strikes.

(Reporting by Henning Gloystein; Editing by Richard Pullin and Tom Hogue)
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OPEC Sees a World That Still Has Too Much Oil
« Reply #23 on: April 15, 2017, 03:28:48 AM »
https://www.bloomberg.com/gadfly/articles/2017-04-15/opec-sees-a-world-that-still-has-too-much-oil

OPEC Sees a World That Still Has Too Much Oil
By Julian Lee


 April 15, 2017 2:00 AM EDT

The oil market is tipping slowly from glut to equilibrium, as output cuts from OPEC and 11 non-OPEC countries start to reduce crude flows.

It's not quite there yet. Indeed, the grand "re-balancing" of supply and demand has yet to take place, although the International Energy Agency does at least believe "that the market is already very close to balance," according to its latest monthly report.
Cutting Oil Supply
Output cuts are becoming more effective as non-OPEC participation improves
Source: Bloomberg
Note: Nigeria's production fell below its October baseline in March, boosting OPEC's output cut

What's more worrying, and where the IEA's number-crunchers differ sharply with their OPEC counterparts, is what happens next? Re-balancing is one thing, but the OPEC output cut was also meant to usher in a period when demand would start running ahead of supply, and when inventories would be reduced.

It's here where there's a hell of a discordance between the two groups, and even within the IEA's own figures.

True, the volume of oil held in tankers -- the most expensive storage option -- has dropped. So, too, has the amount stored in commercial facilities in places such as the Caribbean and South Africa's Saldhana Bay. U.S. crude inventories fell in the week to April 7 by nearly 2.2 million barrels. But before we get too excited, that was the first big drop this year. While refined product inventories in the U.S. are falling sharply, it's really only the middle distillates (which include jet fuel, heating kerosene and gas and diesel oils) that are bucking typical seasonal trends.

The IEA shows global inventories falling at a rate of 200,000 barrels a day during the first quarter of this year. But its analysis of observed stockpiles -- and there are plenty of places where volumes in storage are not easily counted -- suggests "global stocks might have marginally increased" over the period. Confused? You're not alone.

OPEC, which published its own monthly report a day before the IEA, paints a much less optimistic picture. It shows global oil inventories increasing by 430,000 barrels a day in the quarter just ended. No confusion there. The world is still over-supplied with oil, according to its biggest producer nations.

And the surplus is big. The IEA reckons about 986 million barrels of oil were added to global inventories in the last three years. OPEC puts the figure at 1.2 billion barrels. Some of that is needed to fill new pipelines and to provide operating inventory for new refineries, but most is merely the result of over-supply.
Swelling Stockpile

The outlook for the current quarter is no clearer. The IEA sees further progress, with demand for OPEC oil running about 1 million barrels a day ahead of production, implying a similar-sized stock draw. But OPEC sees a world with supply still running ahead of demand, which will add about 280,000 barrels a day more to inventories.
Stock Draws Ahead
Extending the output cut will draw oil out of inventory in the second half of 2017
Source: IEA, OPEC, Bloomberg

There's one thing they both agree on, though. Things will change in the second half of the year (as the chart above shows). If the six-month output cut is extended, as seems likely, inventories could be drawn down at a rate of about 1.2 million barrels a day in the third quarter. But extending the cuts will be painful for producers. Many, within OPEC and outside, have brought forward planned maintenance (which involves shutting production) to help reach their targets. They won't be able to repeat that trick later in the year.
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Offline RE

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Oil Falls to Four-Week Low as U.S. Drilling Seen Boosting Output
« Reply #24 on: April 24, 2017, 02:36:22 PM »
https://www.bloomberg.com/news/articles/2017-04-24/oil-advances-as-opec-committee-backs-cut-extension-dollar-drops

Oil Falls to Four-Week Low as U.S. Drilling Seen Boosting Output
by Mark Shenk
April 23, 2017, 4:25 PM AKDT April 24, 2017, 11:25 AM AKDT


    Speculator’s WTI net-longs up 4.6%, third-straight gain: CFTC
    Prices rose earlier as dollar, equities rally on French polls

The Final Frontier for Energy Giants
Why Oil Sands Are Better Off in Canadian Hands

FGE's Fesharaki Says OPEC Is Putting a Band on Oil

Oil fell for a sixth day as the ramp-up of U.S. drilling signaled further production gains in the world’s biggest crude-consuming nation.
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Futures settled at four-week lows on both sides of the Atlantic. U.S. explorers added 5 rigs last week to cap the longest stretch of gains since 2011, Baker Hughes Inc. data show. An OPEC committee concluded that a six-month renewal of an output-cut deal is needed, delegates with knowledge of the matter said. Money managers boosted wagers that U.S. oil futures would increase in the week to April 18, government data showed. Oil rose earlier along with global equities after the first round of the French presidential election.

Oil retreated below $50 a barrel amid concern that rising U.S. crude output will offset efforts of the Organization of Petroleum Exporting Countries to trim a global glut. OPEC will decide at talks on May 25 whether to extend its curbs past June. Russia hasn’t decided whether to back an extension, Energy Minister Alexander Novak said last week, while Saudi Arabia’s Energy Minister Khalid Al-Falih said there may be a need to prolong the cuts.

"We had another rise in the rig count, which will send output higher, while Saudi Arabia and Russia are being cagey about extending the cuts," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. "The market is tired of empty gestures and needs to see solid evidence that they’re having an impact on inventories."

West Texas Intermediate for June delivery fell 39 cents, or 0.8 percent, to $49.23 a barrel on the New York Mercantile Exchange. It was the lowest settlement since March 28. Total volume traded was about 21 percent below the 100-day average. Futures have tumbled 7.4 percent in the last six days.
Speculator Bets

Brent for June settlement declined 36 cents, or 0.7 percent, to $51.60 a barrel on the London-based ICE Futures Europe exchange. It was also the lowest close since March 28. The global benchmark oil finished the session at a $2.37 premium to WTI.

"There’s a lot of managed money in the market," Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. "If OPEC and the Russians don’t come to an agreement to prolong the cuts on May 25, they are going to flee."

See also: Oil investors raise bets on higher price and lose in selloff

U.S. crude output rose to 9.25 million barrels a day in the week ended April 14, the highest since August 2015, Energy Information Administration data show.

In France, a snap poll by Ipsos showed centrist Emmanuel Macron would win the second round of voting. Macron’s spot in the second election round avoids a contest between the anti-European Union Marine Le Pen and the Communist-backed Jean-Luc Melenchon, curbing threats to the euro zone and encouraging investors to embrace more risk.

"The French vote has lifted all boats," Kilduff said. "Equities are up and the dollar is getting pummeled. Oil was unable to maintain its gains, which underscores the weakness of the market."

Oil-market news:

    Halliburton Co. boosted sales in North America as the world’s largest provider of fracking services was buoyed by rapidly rising rig counts in the prolific Permian Basin and other U.S. shale plays.
    China’s diesel fuel exports surged to a record as refiners drained commercial stockpiles swollen to the highest in almost a year and rushed to fulfill shipment quotas.
    U.S. crude oil and distillate fuel supplies probably fell last week, while gasoline stockpiles rose, according to analysts surveyed by Bloomberg before an Energy Information Administration report on Wednesday.
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Offline Palloy2

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #25 on: April 24, 2017, 04:40:15 PM »
Quote
"If OPEC and the Russians don’t come to an agreement to prolong the cuts ...

... the US certainly won't - that's "free enterprise" for you, with everyone making a loss or minimal profit.  Only 8 million barrels per day more and the US will be self-sufficent in oil !
"The State is a body of armed men."

Offline RE

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #26 on: April 24, 2017, 04:47:11 PM »
Quote
"If OPEC and the Russians don’t come to an agreement to prolong the cuts ...

... the US certainly won't - that's "free enterprise" for you, with everyone making a loss or minimal profit.  Only 8 million barrels per day more and the US will be self-sufficent in oil !

It's pretty hard to imagine how anyone is making any real organic profit these days in the Energy Industry.  It appears to be a debt funded game, and whoever has the longest credit line wins while the rest go Tits Up.  This seems to indicate that in the end game, Exxon, Gazprom and Araamco will won everything then duke it out with each other.

RE
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Offline Palloy2

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #27 on: April 24, 2017, 05:44:52 PM »
This is the last 6 years of US Crude Oil imports by Country. 
It shows the 2016 Total figure was 7.9 Mbpd, coming from :
Canada (3.2), Saudi Arabia (1.1), Venezuela (0.7), Mexico(0.6), Colombia (0.4), Iraq (0.4) and 31 others.

https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm

201120122013201420152016
All Countries
8,9358,5277,7307,3447,3637,8771910-2016
Persian Gulf
1,8492,1401,9941,8511,4871,7361973-2016
OPEC*
4,2094,0313,4933,0052,6733,1811973-2016
Algeria
1781202963511973-2016
Angola
3352222011391241591973-2016
Ecuador
2031772322132252371973-2016
Gabon
344224161011993-2016
Iran
1973-2001
Iraq
4594763413692294181973-2016
Kuwait
1913033263092042091973-2016
Libya
9564353121973-2016
Nigeria
76740623958542101973-2016
Qatar
5 1973-2011
Saudi Arabia
1,1861,3611,3251,1591,0521,0971973-2016
United Arab Emirates
7 2132111973-2016
Venezuela
8689127557337767411973-2016
Non OPEC*
4,7274,4954,2374,3394,6904,6971993-2016
Albania
1572014-2016
Argentina
2821132918121993-2016
Australia
96121041973-2016
Azerbaijan
3624292313101998-2016
Bahamas
1973-2001
Bahrain
1973-2001
Belarus
2006-2006
Belize
33211 2006-2015
Benin
1995-1999
Bolivia
631 11995-2016
Brazil
2321891101451901451973-2016
Brunei
2 1998-2012
Cameroon
36310 1993-2013
Canada
2,2252,4252,5792,8823,1693,2561973-2016
Chad
4928666172642003-2016
Chile
1995-2001
China
211 1973-2013
Colombia
3974033672943734421973-2016
Congo (Brazzaville)
5329184931993-2016
Congo (Kinshasa)
1100 1993-2013
Denmark
21997-2016
Egypt
4314 1101993-2016
Equatorial Guinea
1941174561996-2016
Estonia
1999-1999
Georgia, Republic of
1999-1999
Germany
2004-2004
Ghana
8 3 2011-2013
Guatemala
91177871995-2016
Guinea
1997-2003
India
2 2015-2015
Indonesia
206182036341973-2016
Italy
1 1 1973-2015
Ivory Coast
44 1999-2012
Kazakhstan
7 2004-2011
Kyrgyzstan
1996-1996
Malaysia
051973-2016
Mauritania
32 12006-2016
Mexico
1,1029758507816885821973-2016
Netherlands
11 11973-2016
Netherlands Antilles
1973-2004
New Zealand
1998-2008
Norway
53261799351973-2016
Oman
4193 301995-2016
Papua New Guinea
1995-2003
Peru
118119631995-2016
Puerto Rico
1973-1997
Russia
223101421838381973-2016
Singapore
1993-2006
South Africa
2006-2009
Spain
1995-1996
Sweden
2000-2000
Syria
3 1993-2011
Thailand
172096 1993-2014
Trinidad and Tobago
332785791973-2016
Tunisia
2006-2008
United Kingdom
3618211011191973-2016
Vietnam
10101310941995-2016
Virgin Islands (U.S.)
1973-1999
Yemen
6 1993-2011
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Offline agelbert

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Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #28 on: April 24, 2017, 08:13:15 PM »
Quote
"If OPEC and the Russians don’t come to an agreement to prolong the cuts ...

... the US certainly won't - that's "free enterprise" for you, with everyone making a loss or minimal profit.  Only 8 million barrels per day more and the US will be self-sufficient in oil !   

It's pretty hard to imagine how anyone is making any real organic profit these days in the Energy Industry.  It appears to be a debt funded game, and whoever has the longest credit line wins while the rest go Tits Up.  This seems to indicate that in the end game, Exxon, Gazprom and Araamco will win everything, then duke it out with each other.

RE


Yep.  When they "WIN" everything, it will, unfortunately for ALL of us, be a pyrrhic victory.




Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

Offline RE

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Morgan Stanley To Revise 2018 Forecast After Oil Price Rout
« Reply #29 on: May 09, 2017, 01:19:25 PM »
http://oilprice.com/Energy/Energy-General/Morgan-To-Revise-2018-Forecast-After-Oil-Price-Rout.html

Morgan Stanley To Revise 2018 Forecast After Oil Price Rout
By Irina Slav - May 09, 2017, 9:57 AM CDT Offshore oil rig


Morgan Stanley may have to revise its 2018 oil market outlook after last week benchmarks recorded the lowest price levels since last November, before OPEC and non-OPEC producers agreed to reduce their combined output.

Equity researcher Martijn Rats said in a note that contrary to the investment bank’s base scenario for 2018, in which it forecast a stable price environment, U.S. drillers have been adding rigs at a rate that suggests in a year, output would be much higher than it is now.

Last Friday, Baker Hughes reported the number of active rigs had climbed for the 16th week in a row. At 877, active rigs are now 462 more than a year ago. The output increase will be gradual and will not be immediately evident, but it will become evident next year, as it may be as large as a million additional barrels per day, Rats warned.

Even at current production levels, OPEC is losing market share to U.S. producers, according to Rats, as its output is declining while U.S. output is growing. According to Rats, “We doubt OPEC will allow this to go on for long.”

In fact, the analyst believes that OPEC will not extend its production cut agreement beyond this year, despite comments to the contrary from Saudi Arabia’s and Russia’s energy ministers. In separate statements yesterday, Khalid al-Falih and Alexander Novak said their governments were willing to extend the cuts for more than six months after the initial June 30 deadline to stabilize prices.
Related: Iran Plans To Raise Crude Oil Production Capacity By 3 Million Bpd
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This means that even if OPEC—and Russia—are not too happy with the increase in U.S. production, they have but few useful moves in the current environment. The problem is particularly serious for OPEC producers who have pledged deeper cuts than Russia.

If the parties extend the agreement for more than six months, they will continue losing market share – inventories will go down but so will exports. If, as Rats believes, they decide to open the tap after 2017 ends, this would mean 1.2 million barrels daily from OPEC coming back into the market plus more than 300,000 bpd from Russia, which has made clear its intentions to start ramping up production the first chance it gets.
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