This thread is for information and discussion about the markets, prices and outlooks for oil and gas.
Latest IEA Outlook - here are the links
powerpoint presentation for the press
Some discussion of the IEA material in posts 34 et seq below.
About the Author
Cuthbert C
78 comments
Cuthbert C
For the sake of clarity, I'd like to say that isaac's post #37 reflects a complete misunderstanding and/or misrepresentation of what I said. In consequence I think it is simply irrelevant to this discussion. However I have decided not to respond in detail.
I'd also like to say that I did not use my moderator status on #39 - I don't trust myself to be fair and objective in this case, so I referred it to a higher authority and left it to them.
Betasurfer
Is this guy nuts or is there something to this?
$2.5 Trillion - That’s the size of of the global oil scam.It’s a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in "Madoff Units" ($50Bn rip-offs). That’s right - $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population is being manipulated into paying for a barrel of oil.
http://www.philstockworld.com/2009/11/11/goldmans-global-oil-scam-passes-the-50-madoff-mark/
marben100
The guy is nuts. Just have a look at a passage he quotes in "evidence":
Indeed the evolution of the Brent market has been a response to declining production and the fact that traders could not resist manipulating the market by buying up contracts and “squeezing” those who had sold oil they did not have. The fewer cargoes produced, the easier the underlying market is to manipulate." - Chris Cook, Former Director of the International Petroleum Exchange, which was bought by ICE.
Just who's doing the scamming here: the short-sellers sellng contracts for oil they did not have, that was in short supply, or those that stung them for making such a foolish trade?
Short-term, I do think the oil price isn't a fair reflection of the current supply/demand situation, as supplies seem to be (relatively) plentiful under muted demand conditions. That, however, is only short-term. The harsh fact is that pricing around current levels is required to stimulate sufficient investment to maintain global supplies (and support investment in "alternative energy"), in the face of increasing difficulty and cost of finding and extracting oil.
Obviously this view depends on who you believe: the Saudis and the IEA, who claim that they have plentiful supplies & can increase production more or less at will (from aging fields)... or Matt Simmons. The IEA's latest report does show increasing reliance on OPEC and dwindling supplies elsewhere. See #34 above.
Regards,
Mark
emptyend
In reply to emptyend (post #27)
The Guardian seems to be continuing in the same vein in an article they have just published
Oil: future world shortages are being drastically underplayed, say experts
• Swedish academics slate IEA's report as 'political document' for countries with vested interest in low prices
• Oil production 'likely to be 75m barrels a day rather than 105m'
....the strong theme remains - we are all being lied to [and that is why oil prices remain somewhat stronger than the present supply/demand numbers may suggest]
ee
Jackalope
In reply to tournesol (post #36)
TS "The proposition that political influence over oil producing states provides protection (or is might conceivably provide protection) against high oil prices or supply shortages is IMHO completely mistaken."
My arguement (quite probably not clearly expounded) is not that political influence over oil producing states is a successful strategy to counter peak oil, rather that it is a somewhat desperate (in my opinion) tactic to try and mitigate against the peak. For example, and briefly put, Iraq had large untapped reserves (relatively) but with the way things had panned out with Saddam, contracts were going to the wrong guys (the Russians for example), whereas post-invasion the contracts are going to the right guys (Shell, Exxon) as far as Western Governments are concerned. However, given that the these firms happily sell oil on international markets (as you point out), I can't see much benefit to Western Governments from this strategy (though presumbably they may be "encouraged" to sell oil back home if things get really messy). Chinese sovereign firms buying up swathes of African production may be a more productive strategy from the Chinese perspective. Anyhow, the central point of my arguement is that in public, our governments deny that there is a peak approaching, but their actions bely the official denials. Quite clearly they are aware that the peak is upon us and are acting to try to mitigate this, with attempts at resource grabbing one part of the strategy. However, their actions are as far as I can tell quite ineffectual, so the problem has by no means gone away.
dodge1664
CERA have a new report out:
http://www.cera.com/aspx/cda/client/report/report.aspx?KID=5&CID=10720
They claim:
*Supply evolution through 2030 is not a question of resource availability.
*IHS CERA projects growth of productive capacity through 2030, with no peak
evident.
which has provoked some discussion here:
http://www.theoildrum.com/node/5975
Its hard for me to know which expert to listen to, but I get the impression that CERA are known for being over optimistic, so maybe best to take it with a pinch of salt.
Any views?
emptyend
Poll on 2010 supply and demand outlook:
Growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis.
According to a Reuters poll of 10 top oil-tracking analysts and organisations, oil demand is predicted to rise by 1.3 million barrels per day next year to 85.9 million bpd.
At the same time, the rise in production from outside Opec and output of natural gas liquids from Opec members is seen rising by just 800,000 bpd in total.
"The key question for prices is supply," Barclays Capital analyst Costanzo Jacazio told the news agency.
"2010 is really a bridging year - if the economies continue to perform as well as they have been doing during the early stages of the recovery, then I think by 2011 we'll be seeing the demand numbers at or above where they were in 2008."
FWIW
ee
emptyend
Its a while since I last looked at the full futures strip:
http://futuresource.quote.com/quotes/quotes.jsp?s=cl
.....everything from September 2012 is now over $90 and the last three contracts are all over $100
....and every contract that is more than about two years out is trading at 12 month highs
...which in turn perhaps makes it tempting for chartists to consider whether the consolidation pattern in the $85 area on charts such as this one might be about to repeat their move at the start of 2008? ;-)
Interesting times, with the OPEC meeting coming up....
ee
emptyend
Interesting piece here on the Brent/WTI spread:
Brent crude oil has moved above U.S. crude as European and Asian demand has outstripped U.S. buying, and analysts say the North Sea benchmark looks likely to keep its premium for some time to come.Brent futures rose above U.S. light sweet crude, also known as West Texas Intermediate or WTI, in mid-November and have jumped to a premium of almost $1.20 this week, their highest since August.
As the U.S. economy stays weak but many countries in Asia and Europe recover more quickly, analysts say Brent could stay more expensive than its U.S. counterpart -- possibly for months.....
Oil consumption in Asia is booming and demand is also beginning to pick up in parts of Europe.
Refineries in China are running near record rates and demand for some types of oil products used in manufacturing, for example the petrochemical feedstock naphtha, are rising sharply.
The crack spread, or notional profit margin, for naphtha in Asia is running at a 14-month high, Reuters data show, indicating the rapid recovery of Asian industry.
Tapis and Minas grades (the Asian benchmarks) are now at a $7 premium to WTI and a $4 premium to Brent. You can see from this table how these spreads have widened recently:
http://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm
ee
emptyend
Not sure if the chart below will display correctly, but it is interesting to see that the last few days' rally in oil prices, coupled with the rally in the USD v GBP, has returned the chart of "WTI oil prices expressed in GBP" to almost its high for the year:
https://images.stockopedia.com/user-images/node-34235-chart_producer.php
WTI closed at £48 per bbl and has only on one day closed at over £49!
Whilst the UK enjoys its extended break, it seems quite possible to me that it moves still higher - which may well mean that UK-listed E&Ps should start 2010 in high demand!
ee
ManSiarad
Not sure whether this will have much of an impact on oil prices, but Abu Dhabi has announced a cut in production for February - perhaps foreseeing a decline in demand
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091228/BUSINESS/712289924/1005
ADNOC said it would cut output of its most prolific crude oil grade, Murban, by 13 per cent from normal volumes, compared with a 10 per cent cut announced for next month. It announced 15 per cent February cuts for Lower Zakum and Umm Shaif crude and 10 per cent for oil pumped from the Upper Zakum field.
The corresponding January cuts were 10 per cent for Lower Zakum and Umm Shaif and 20 per cent for Upper Zakum.
ADNOC does not regularly publish production figures, but in 2007 it put its output capacity for Murban crude at 1.5 million barrels per day (bpd) and said it could pump 600,000 bpd from each of the other three fields. Based on those figures, its proposed January and February output cuts amount to 390,000 bpd and 435,000 bpd respectively, or 13 per cent and 15 per cent respectively of the UAE’s total oil production capacity of about 2.85 million bpd.
Man Siarad
emptyend
Just an update on the chart above, showing WTI in GBP terms.....
.......new highs yesterday (over £50, prior to the USD rally) for the per bbl price of WTI - which takes us back into the price range of February-September 2008
ee
emptyend
Lex makes a very interesting point (coincidentally one that I have also been making! ;-)):
If those pushing gold to daily records today believe that this crisis is about the demise of fiat currencies, then the far larger market for a far more useful commodity – stored for free underground by Mother Nature – should surely catch a bid. But for now, the oil market’s collective wisdom seems to hold that it is recession, not inflation, that is the thing to fear.
...and there is a further very interesting article here which presents some of the arguments (omitting the fiscal position of major oil producers, about which I have previously commented in another thread) why the present market response re oil prices (and thus oil equities) should be very different from that seen in 2008.
Not surprisingly, I think oil equities have been greatly oversold in the expectation of continued falls in the oil price - which simply won't emerge on the scale that the markets appear to expect.
Nevertheless, I'd expect another week or three of wild oscillations until the grown-ups return to restore some order ;-)
ee
Isaac
Nevertheless, I'd expect another week or three of wild oscillations until the grown-ups return to restore some order ;-)
Who are the grown ups? I just find this statement silly.
The markets are trading at record volumes, if the "grown ups" are not trading this market then who is?
Time will show hedge funds and perhaps fund managers/banks/institutions go bust and your statement implies the show has simply been left to some school kids.
France is about to lose it's AAA rating, hardly kids are playing around here!
Not surprisingly, I think oil equities have been greatly oversold in the expectation of continued falls in the oil price - which simply won't emerge on the scale that the markets appear to expect.
You sound like your statement is 100% true, which remains yet to be seen, Oil can go anywhere, guess what markets are turbulent in a high Oil price environment...again.
If you are so sure Oil won't have contunued falls then why don't you throw your whole pension fund into Soco? I understanf they are about to bring online TGT and produce lots of Oil / cashflow. Surely it is a nobrainer in your high oil price environment?
I am not bearish Oil, I just don't think these loose statements can be made with certainty.
No disrespect ee but you have been dead wrong about Gold for a long time. It has been in a bull market making new highs for the past decade. It has outperformed Oil. There are'nt many asset classes that are well above their 2008 peaks............
emptyend
Who are the grown ups? I just find this statement silly.
The markets are having record volumes, if the "grown ups" are not trading this market then who is?
Time will show hedge funds and perhaps fund managers/banks/institutions go bust and your statement implies the show has simply been left to some school kids.
Well you are entitled to your view of course, but it is a fact that many senior people go on vacation during August and there is minimal amount of company-specific research being written.
The result is that (generally, in my experience) markets tend to trade without much reference to company fundamentals but with much more weight being placed on the balance of buying and selling and on the taking of minimal risk positions. As a consequence of recent dislocations, there are significant value opportunities in many parts of the market for those who are prepared to do their research - but that will have little impact on prices until institutions put some weight behind fundamental opinions in September. In the meantime the activity is dominated by index traders and other macro players (whose activity levels are very high - hence the volumes).
Re France the rumours are utter cobblers, put about by those who would like to create market mayhem and volatility. There are some similarities between certain market participants and the anarchist wing of the rioters.....
If you are so sure Oil won't have contunued falls then why don't you throw your whole pension fund into Soco?
My pension fund is investable only into funds, not specific stocks. Most of my other assets are already invested in SOCO International (LON:SIA) from various prices between 7.5p and 330p (average meaningless, as sub-zero thanks to profit taking at the margin some years ago and reinvesting in DNX). I don't give a damn about what the market thinks - and I care even less about what you might think.
No disrespect ee but you have been dead wrong about Gold for a long time.
Cobblers. I was a bull of gold from about $200 in the late 1990s to around $600-700 some years ago (though I was more bullish on oil) ....but if I were prepared to break one of my golden rules, I would now be thinking about shorting gold. It will come crashing down at some point - and just because various lunatics and armageddon fanatics keep puffing it higher and higher (for now), it doesn't mean that it is wrong to say that it is massively overvalued!! ....I sat on most of my DNX cash from November last year because I thought that market confidence in a global economic recovery had puffed the FTSE too high (and that confidence is now finally collapsing, with a certain amount of unthinking collateral damage in the short term that will be rectified in the coming weeks/months)......I think that gold is now well over-bought too - certainly on a relative basis to oil, if less so in USD terms....and I expect that to be proven too in the coming 18-24 months.
ee
ps...I notice that your own rants become more prevalent when you've got it wrong.
arkleseizure
Wow - do you think the sovereign debt crisis to be a storm in a teacup hyped up by maniacs EE?.
I cant help but feel that gold is a one way bet against the dollar with a 18 month view. But most of my dead certs pull up on the last stretch. The last gold fever was pulled up short by interest rates that gave positive real returns - is that remotely possible in today's indebted west?. Perhaps it is a little overheated at the moment, but nothing goes up or down in a straight line, or people would leverage the certainty. Do you see the sunny uplands of global recovery in the next eighteen months ahead?.
I am puzzled as to how one arrives at a rational valuation for gold in the first place, given its money function - it seems daft to value it on its demand in manufacturing industry.
Sorry for straying off topic - I would agree that oil (and everything else that the far east needs) ought to be one of the better investments.
