EIA (US) + IEA (Paris) indicate crude glut gone mid '16

[jimwillis]

The combined global demand for 2016 is much higher than 2015. The combined forecast for global supply (CY16) is DOWN slightly for Non-OPEC producers. OPEC is at near capacity (and has been there for some time) indicating the difference to be made up must come either from Non-OPEC (not going to happen...going wrong way), or OPEC. Crude is a global fungible commodity. The US decline will make a difference, as we will go to imports to fill the void, placing a bid on global Brent. I suspect that import uptick is between 800K to 1000K BPD over next six months. It only takes the over supply to dwindle down to around 1000K/BPD for crude to begin significant moves. Under that buffer and all the bets are off. Under investment in the energy complex will come home to roost in lower 48, as well as Iran/Iraq. My bet is that WTI will begin to move up as the snow falls in USA, and some supply chain mishap will occur in the MidEast to disrupt the Brent supply. Like Dan S. said, "it's a basket case" over there. Bloomberg recently reported even the lower ranks of the royal family in the Kingdom is upset with the reckless handling of affairs over the past 12 months and are calling for a family meeting to "replace" the current King. So, unrest is spreading in that region. It will reach the supply chain. Sure, you read that the shale camp will just "turn on those rigs" and begin to punch out new wells.... not so fast. A lot of the labor is gone, the rigs are stacked, and the EPers are holding on to the cash until they are convinced that WTI will be at high $50s for at least 2 months before they begin to move. Getting 3-6 rigs up and running is not a 60 day event. It's much longer.
For those holding positions in the energy patch now, hold on as better times are just around the corner. For those NOT in this patch, it's getting very close to invest time. Once the banks get their chance to weigh-in on revolving credit lines, those mid size firms that make it past the screen will do very well over the next year. With El Nino coming, it may be best to favor the warmer basins...i.e. Permian and Eagleford.

[dan_s]

I put Parsley (PE) in the Sweet 16 because the Permian is doing much better than the other major basins.

El Nino winters are usually wetter. That can cause problems in the Permian and the Eagle Ford.