Falling Oil Production (not just in the shale plays)

[dan_s]

A lot of people on Wall Street think the U.S. shale plays are the only producers where production will be falling. Oil production is falling all over the world. IEA now predicts that global demand for oil will exceed supply in less than 12 months.

"Worldwide, the number of offshore rigs has declined by 19% from since the decline in crude oil prices, falling to 304 in August 2015, down from 377 in August 2014. Lower oil prices were felt even more acutely in the GOM, with rig counts dropping by 46% over the same time period."

Read: http://www.oilandgas360.com/offshore-ri ... 1-26401157

[dan_s]

Total, the French energy group, has pledged to preserve its dividend payouts as it announced billions of dollars more in spending cuts and project delays to combat what it warned would be a prolonged decline in oil prices.

http://finance.yahoo.com/news/total-sla ... 00602.html

The market is doing what it has always done. Low prices for any commodity reduce supply and increase demand.

I was interviewed on Jim Puplava's Financial Sense Network this morning. Right before they had me on they had Robert Rapier. We are in agreement that global supply/demand for oil are much tighter than most analysts believe. Fears that China's demand will be going down and Iran will bring a lot of production quickly back to the market are way over-blown. Robert & I may be 100% correct, but FEAR and GREED drive traders and traders set the price. Regardless, the fundamentals for oil are definitely improving.

[bearcatbob]

This year we had long term GOM projects hit the market. Next year I understand we are going to have long term oil sand project production hit the market.

How close to balancing off shale decreases do the oil sands increases come in 2016.

It seems we might need to get past the startup of long term mega projects to get truly a meaningful decrease in supply.

Bob

[dan_s]

Canadian oil production is expected to be 300,000 BOPD higher in 2016. U.S. production is on such a steep decline that YOY difference should be near -1,000,000 BOPD.

Per IEA's Oil Market Report:
"Oil's latest tumble is expected to cut non-OPEC supply in 2016 by nearly 0.5 mb/d - the biggest decline in more than two decades. Lower output in the US, Russia and North Sea is expected to drop overall non-OPEC production to 57.7 mb/d. US light tight oil, the driver of US growth, is forecast to shrink by 0.4 mb/d next year."

I am expecting IEA to keep increasing their demand forecast and lowering their production forecast for 2016. That's what they have down the last three Oil Market Reports. If oil prices stay under $50/bbl we will see massive capital expenditure cuts by the upstream companies.