Oil Surplus Set to Evaporate in 2017 (1 Viewer)

Saint_Ward

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IEA: The global oil surplus will disappear in 2017 - Dec. 13, 2016

Looks like OPEC is going to cut production to minimize the surplus in production.

Bad news for gasoline users, potentially good news for out of work oil people in Louisiana.

However, I think OPEC is trying to minimize the price increase to keep the US from going full bore on Shale again.
 

CountWhoDat

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IEA: The global oil surplus will disappear in 2017 - Dec. 13, 2016

Looks like OPEC is going to cut production to minimize the surplus in production.

Bad news for gasoline users, potentially good news for out of work oil people in Louisiana.

However, I think OPEC is trying to minimize the price increase to keep the US from going full bore on Shale again.
Yep, if Saudi et al are not careful, they will permanently lose market share when the US producers resume drilling if WTI stabilizes above $50.

I read somewhere - don't have the source - that US petro production has actually stayed stable even with the loss of jobs and the cessation of drilling at the more speculative wells.
 

pmiceli

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Russia and OPEC will increase production and undermine the price if the shale producers in the US aren't responsible in ramping up their production.

I think oil will plateau at about $65/bbl in 10 months but world events could influence that greatly.
 

DaveXA

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IEA: The global oil surplus will disappear in 2017 - Dec. 13, 2016

Looks like OPEC is going to cut production to minimize the surplus in production.

Bad news for gasoline users, potentially good news for out of work oil people in Louisiana.

However, I think OPEC is trying to minimize the price increase to keep the US from going full bore on Shale again.
There might be a coming supply shortage, but I'm pretty sure we're far, far from an oil shortage. The question is how much drilling and refining we and/or OPEC does. With us slowly but surely reducing our dependence of fossil fuels, we'll see a shift in energy production. Curious to see what the future holds.
 

guidomerkinsrules

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The good thing is that when they tried their nonsense in the 70s, we decided to shift to renewables so we'd never be hostage to energy brokers again

Good thing
 

superchuck500

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IEA: The global oil surplus will disappear in 2017 - Dec. 13, 2016

Looks like OPEC is going to cut production to minimize the surplus in production.

Bad news for gasoline users, potentially good news for out of work oil people in Louisiana.

However, I think OPEC is trying to minimize the price increase to keep the US from going full bore on Shale again.

I'll believe it when I see it. I think the Saudis will cut but OPEC deals are notoriously unexecuted. Plus, this whole strategy by the Saudis to squeeze out North America from the market did work to some extent but it also made the North Americans far more efficient. The shale break-even price is considerably lower now than it was in 2013 - so the Saudis strategy, in the long-term, actually enabled the North Americans to better compete.

But the Louisiana off-shore industry is going to remain challenged at $50. And there's so much production capability now, it's hard to imagine equilibrium, keep in mind that the new OPEC limits are still above their total output in 2013. Unless something substantial happens on the demand side, I don't think there's enough supply limitation. China has been in transition away from new industrial development in favor of services, so where does additional demand come from?
 

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I'll believe it when I see it. I think the Saudis will cut but OPEC deals are notoriously unexecuted. Plus, this whole strategy by the Saudis to squeeze out North America from the market did work to some extent but it also made the North Americans far more efficient. The shale break-even price is considerably lower now than it was in 2013 - so the Saudis strategy, in the long-term, actually enabled the North Americans to better compete.

But the Louisiana off-shore industry is going to remain challenged at $50. And there's so much production capability now, it's hard to imagine equilibrium, keep in mind that the new OPEC limits are still above their total output in 2013. Unless something substantial happens on the demand side, I don't think there's enough supply limitation. China has been in transition away from new industrial development in favor of services, so where does additional demand come from?
Demand isn't supposed to grow that much, but production from actively produced wells will quickly drop. I'll see if I can find these projections. One chart I saw showed a 7 million barrel a day deficit by 2020.
 

MGC

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The good thing is that when they tried their nonsense in the 70s, we decided to shift to renewables so we'd never be hostage to energy brokers again

Good thing
No, good thing Reagan's first executive order was to eliminate price controls on oil and gas. Production soared and prices fell, simple supply and demand.
 

DaveXA

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Demand isn't supposed to grow that much, but production from actively produced wells will quickly drop. I'll see if I can find these projections. One chart I saw showed a 7 million barrel a day deficit by 2020.
That wouldn't be hard to pick up with just a tweak upwards in production/refining.
 

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No, good thing Reagan's first executive order was to eliminate price controls on oil and gas. Production soared and prices fell, simple supply and demand.
Actually that was started under Carter in 79 and the last 2 would've completely phased out in April after Reagan was president anyway. Also, remember Reagan basically kept Carter's economic team in place for the first part of his term.

However, unless Trump throws oil sanctions on Iran, or unless Russia decides to curb production, OPEC doesn't have the control it did anyway. It wouldn't take much for Canada, Russia and the US to ramp up production to easily offset any substantial cut in OPEC production anyway as there is a lot of untapped potential in all 3 areas sitting. Cause of low prices
 

DaveXA

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Actually that was started under Carter in 79 and the last 2 would've completely phased out in April after Reagan was president anyway. Also, remember Reagan basically kept Carter's economic team in place for the first part of his term.

However, unless Trump throws oil sanctions on Iran, or unless Russia decides to curb production, OPEC doesn't have the control it did anyway. It wouldn't take much for Canada, Russia and the US to ramp up production to easily offset any substantial cut in OPEC production anyway as there is a lot of untapped potential in all 3 areas sitting. Cause of low prices
Indeed, there's a crapload of oil (not to mention natural gas) sitting underground waiting to be tapped. OPEC has always been somewhat overrated as a supply source. They have some clout, but not nearly as much as people think.
 

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That wouldn't be hard to pick up with just a tweak upwards in production/refining.
I'm talking about crude oil. The fracking boom of the last decade put 4 million barrels a day online basically doubling US production. Further more, those wells are 80% depleted within two years of production. 7 million barrels a day increase is no small task.
 

Rickboy

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There are a lot of things that don't jive here. For one, we've been in a bit of an oil glut since 2005 or earlier. The oil market cantango started back then and all you have to do is look at all the oil stored in Cushing or held in tankers in the Gulf to see that the high oil prices were being artificially manufactured. Saudi's opening the spigot didn't cause oil crash, it was speculators hens coming to roost along with severe currency fluctuation. For instance, the Russian ruble crashed after the whole Crimean thing. That made Russian oil super cheap.

IMO the IEA is setting us up for more rampant speculation in oil production and in the markets themselves.
 

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