Good article by Rob Nikolewski: http://watchdog.org/228594/oil-and-gas/
Rob is based in New Mexico. He calls me once a month for my thoughts. Note that he quotes me in the article.
Oil Prices
Oil Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices
Good article in Wall Street Journal today on why tighter supply/demand for oil will (eventually) drive up prices. - Dan
Oil Production Shows Signs of Flagging As U.S. and OPEC pump out crude, other producers cut back
By
NICOLE FRIEDMAN
July 13, 2015 5:30 a.m. ET
The U.S. and the Organization of the Petroleum Exporting Countrieshave flooded the world with crude oil, sending prices tumbling. But the abundance has overshadowed declining production in areas—from Colombia to Norway to northern China—that experts consider vital to long-term supply growth.
Confronted with the plunge in prices, companies in these regions are delaying and canceling projects. Across the world, just six major oil projects received the green light in 2014, compared with an average of more than 20 a year from 2002 to 2013, according to Deutsche Bank.
The International Energy Agency said Friday that non-OPEC supply growth would “grind to a halt” in 2016, with output due to fall in Russia, Mexico, Europe and elsewhere.
Oil companies need to replace between 5% and 8% of crude output each year just to offset shrinking production from old wells, analysts estimate. Currently, that amounts to at least five million barrels of daily output. Falling production in areas that have been outside the spotlight in recent months could send prices shooting up in the coming years, hurting consumers and damping economic growth, once the market works through the current overhang, investors and industry officials say.
“When you start cutting exploration budgets and you stop developing the next frontier…the seeds have been sown for the next bull market,” said Virendra Chauhan, analyst at London consulting firm Energy Aspects.
Global oil output grew 5.5%, or by 4.9 million barrels a day, from 2011 to 2014, according to the IEA, a Paris-based energy watchdog. Most of that growth came from U.S. shale-oil fields. In much of the rest of the world, output was flat or declined, despite average prices of nearly $100 a barrel. Supply statistics include crude oil, natural-gas liquids and biofuels such as ethanol.
“The investment cycles outside the U.S. are much longer. When you start to make cuts initially, it’s very hard to quickly reverse those decisions,” said Poppy Allonby, a portfolio manager at BlackRock Inc., which oversees $4.8 trillion. “It’s clear that prices are currently too low to encourage significant investment.”With global oil prices now hovering below $60, the outlook for launching large-scale projects and exploring for new oil fields is bleak, especially outside the U.S. and the Middle East. Companies around the world have cut $130 billion on oil exploration and drilling for 2015 alone, according to consulting firm Wood Mackenzie.
Oil Production Shows Signs of Flagging As U.S. and OPEC pump out crude, other producers cut back
By
NICOLE FRIEDMAN
July 13, 2015 5:30 a.m. ET
The U.S. and the Organization of the Petroleum Exporting Countrieshave flooded the world with crude oil, sending prices tumbling. But the abundance has overshadowed declining production in areas—from Colombia to Norway to northern China—that experts consider vital to long-term supply growth.
Confronted with the plunge in prices, companies in these regions are delaying and canceling projects. Across the world, just six major oil projects received the green light in 2014, compared with an average of more than 20 a year from 2002 to 2013, according to Deutsche Bank.
The International Energy Agency said Friday that non-OPEC supply growth would “grind to a halt” in 2016, with output due to fall in Russia, Mexico, Europe and elsewhere.
Oil companies need to replace between 5% and 8% of crude output each year just to offset shrinking production from old wells, analysts estimate. Currently, that amounts to at least five million barrels of daily output. Falling production in areas that have been outside the spotlight in recent months could send prices shooting up in the coming years, hurting consumers and damping economic growth, once the market works through the current overhang, investors and industry officials say.
“When you start cutting exploration budgets and you stop developing the next frontier…the seeds have been sown for the next bull market,” said Virendra Chauhan, analyst at London consulting firm Energy Aspects.
Global oil output grew 5.5%, or by 4.9 million barrels a day, from 2011 to 2014, according to the IEA, a Paris-based energy watchdog. Most of that growth came from U.S. shale-oil fields. In much of the rest of the world, output was flat or declined, despite average prices of nearly $100 a barrel. Supply statistics include crude oil, natural-gas liquids and biofuels such as ethanol.
“The investment cycles outside the U.S. are much longer. When you start to make cuts initially, it’s very hard to quickly reverse those decisions,” said Poppy Allonby, a portfolio manager at BlackRock Inc., which oversees $4.8 trillion. “It’s clear that prices are currently too low to encourage significant investment.”With global oil prices now hovering below $60, the outlook for launching large-scale projects and exploring for new oil fields is bleak, especially outside the U.S. and the Middle East. Companies around the world have cut $130 billion on oil exploration and drilling for 2015 alone, according to consulting firm Wood Mackenzie.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices
One big question mark is the long-term outlook for U.S. shale-oil production. Not all market watchers think large investments in the Canadian oil sands or Arctic drilling are necessary. A Goldman Sachs Group Inc. report in May lowered its forecast for Brent crude prices to $55 a barrel in 2020. The bank said U.S. and OPEC supply growth would be sufficient to meet demand in the next five years, possibly the next 10 if productivity improves. On Friday, Brent crude settled at $58.73 a barrel. U.S. oil was at $52.74.
But others say that, at less than 6% of the global market, shale-oil production is too small to keep up with demand in the long term.
“There is an inordinate amount of attention paid to U.S. shale producers,” said Dan Pickering, chief investment officer at TPH Asset Management in Houston, which oversees $1.3 billion. “There’s going to be supply declines in a lot of places around the world.”
But others say that, at less than 6% of the global market, shale-oil production is too small to keep up with demand in the long term.
“There is an inordinate amount of attention paid to U.S. shale producers,” said Dan Pickering, chief investment officer at TPH Asset Management in Houston, which oversees $1.3 billion. “There’s going to be supply declines in a lot of places around the world.”
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Prices
An energy expert says it is AT LEAST six months before more Iranian oil hits the market.
http://finance.yahoo.com/news/iran-deal ... 33384.html#
My personal take is that the deal is so bad that the Republican controlled Congress is going to convince the American people not to support it. Democrats in Congress will have a hard time voting for approval of any deal that sends over $50 Billion cash to the global sponsor of terrorism.
http://finance.yahoo.com/news/iran-deal ... 33384.html#
My personal take is that the deal is so bad that the Republican controlled Congress is going to convince the American people not to support it. Democrats in Congress will have a hard time voting for approval of any deal that sends over $50 Billion cash to the global sponsor of terrorism.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group