Oil price drop from 50 to 45??
Oil price drop from 50 to 45??
I assume this is largely due to the stronger USD???
Re: Oil price drop from 50 to 45??
Worries over Brexit impact on global oil demand and the stronger dollar are keeping oil speculators from going long on oil.
Fairly obvious (to me at least) that oil supply & demand are rapidly moving back into balance. EIA has some catching up to "reality" to do since their weekly U.S. production numbers were more than 100,000 barrels of oil per day higher than April actuals were. My bet is that this partially explains the big weekly drop they showed in Wednesday's report. An actual drop of 194,000 BOPD in one week is highly unlikely.
As I have posted here many times, the weekly supply and inventory volumes that EIA puts out each Wednesday are based on formulas. They have no way of actually knowing what production or storage volumes are. NO ONE REALLY KNOWS WHAT ACTUAL U.S. OIL AND GAS PRODUCTION IS UNTIL THE STATE REPORTS COME OUT. Even then, operators file amended production reports for months afterwards. Actuals for April are the most current numbers today.
IMO Brexit will have very little impact on the global economy or demand for oil.
IEA's monthly Oil Market Report should help, but lots of their numbers are also "SWAGS".
Bottomline is that this is an extremely capital intensive business. When upstream companies and national oil companies drastically lower their drilling budgets, we are going to see a drastic drop in production.
Quote from IEA's June 14th report: "We now know that less oil has been stock-piled than we originally expected. In January, we estimated that the surplus of supply over demand in 1H16 would be 1.5 mb/d. Today, with all the usual caveats about data revisions to come, it looks as if the figure is about 0.8 mb/d. Between January and today two main factors have transformed the outlook: first, oil demand growth has been significantly stronger than we expected. Firm data for 1Q16 shows year-on-year growth of 1.6 mb/d versus an initial expectation of 1.2 mb/d. The second main factor to transform the outlook has been unexpected supply cuts. Canada's wildfires at their peak removed up to 1.5 mb/d of production capacity; in Nigeria, militant action has forced production down to thirty-year lows; and Libya remains a long way from significantly increasing its production despite occasional signs of optimism. Canada's shut-in production will fully return in the near future but the troubles in Nigeria and Libya look to be long-standing. This current list of shut-ins might soon be augmented by Venezuela where the deteriorating situation could affect the operations of the oil industry. In addition to the unplanned shut-ins, our forecast of production falls due to lower oil prices remains intact. The non-OPEC group of countries will see production fall by 0.9 mb/d in 2016, including a 500 kb/d fall for US shale output. "
Fairly obvious (to me at least) that oil supply & demand are rapidly moving back into balance. EIA has some catching up to "reality" to do since their weekly U.S. production numbers were more than 100,000 barrels of oil per day higher than April actuals were. My bet is that this partially explains the big weekly drop they showed in Wednesday's report. An actual drop of 194,000 BOPD in one week is highly unlikely.
As I have posted here many times, the weekly supply and inventory volumes that EIA puts out each Wednesday are based on formulas. They have no way of actually knowing what production or storage volumes are. NO ONE REALLY KNOWS WHAT ACTUAL U.S. OIL AND GAS PRODUCTION IS UNTIL THE STATE REPORTS COME OUT. Even then, operators file amended production reports for months afterwards. Actuals for April are the most current numbers today.
IMO Brexit will have very little impact on the global economy or demand for oil.
IEA's monthly Oil Market Report should help, but lots of their numbers are also "SWAGS".
Bottomline is that this is an extremely capital intensive business. When upstream companies and national oil companies drastically lower their drilling budgets, we are going to see a drastic drop in production.
Quote from IEA's June 14th report: "We now know that less oil has been stock-piled than we originally expected. In January, we estimated that the surplus of supply over demand in 1H16 would be 1.5 mb/d. Today, with all the usual caveats about data revisions to come, it looks as if the figure is about 0.8 mb/d. Between January and today two main factors have transformed the outlook: first, oil demand growth has been significantly stronger than we expected. Firm data for 1Q16 shows year-on-year growth of 1.6 mb/d versus an initial expectation of 1.2 mb/d. The second main factor to transform the outlook has been unexpected supply cuts. Canada's wildfires at their peak removed up to 1.5 mb/d of production capacity; in Nigeria, militant action has forced production down to thirty-year lows; and Libya remains a long way from significantly increasing its production despite occasional signs of optimism. Canada's shut-in production will fully return in the near future but the troubles in Nigeria and Libya look to be long-standing. This current list of shut-ins might soon be augmented by Venezuela where the deteriorating situation could affect the operations of the oil industry. In addition to the unplanned shut-ins, our forecast of production falls due to lower oil prices remains intact. The non-OPEC group of countries will see production fall by 0.9 mb/d in 2016, including a 500 kb/d fall for US shale output. "
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil price drop from 50 to 45??
To get a better idea of how fast U.S. crude oil production is now falling, go to this website ( http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm ) and click on View History.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group