stifel
Re: stifel
I agree that their timing could not have been much worse.
My opinion is that all of the concern about Saudi Arabia, Russia and Iran reaching some sort of production freeze is way overdone. Most of this talk before the meeting April 17 in Doha is just posturing anyway. An agreement with enforceable limits would definitely accelerate the rebound in oil prices, but it is going to happen anyway.
Basic fundamental are clearly pushing supply / demand back into balance. In a world where demand is going from 95.0 to 96.6 million barrels per day over the next three months, does it really matter if Iran increases production by 0.3 or 0.4 million barrels per day. That is a rounding error.
In addition to demand spiking, Non-OPEC production is going to decline 1.0 to 1.5 million barrels per day this year.
Take a look at this chart: http://www.eia.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm < COPY and PASTE to your web browser.
The refiners have started to draw more crude from inventory to ramp up gasoline production and it is just getting started. Most people do not understand how seasonal oil demand has become. You can clearly see it on this chart: https://www.iea.org/oilmarketreport/omrpublic/
In the "Old Days", the high demand period used to be in the winter because so many homes used heating oil. Almost all new homes built in the last 20-30 years heat with natural gas or electricity or solar. That has cause the high demand period to shift to the 3rd quarter. The spike has gotten even bigger because we've gone back to more SUVs and low mileage pickups. American and now the Chinese love those SUVs. BTW India's demand for fuels is now approaching China's. Low oil prices does have an impact on demand over time.
My opinion is that all of the concern about Saudi Arabia, Russia and Iran reaching some sort of production freeze is way overdone. Most of this talk before the meeting April 17 in Doha is just posturing anyway. An agreement with enforceable limits would definitely accelerate the rebound in oil prices, but it is going to happen anyway.
Basic fundamental are clearly pushing supply / demand back into balance. In a world where demand is going from 95.0 to 96.6 million barrels per day over the next three months, does it really matter if Iran increases production by 0.3 or 0.4 million barrels per day. That is a rounding error.
In addition to demand spiking, Non-OPEC production is going to decline 1.0 to 1.5 million barrels per day this year.
Take a look at this chart: http://www.eia.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm < COPY and PASTE to your web browser.
The refiners have started to draw more crude from inventory to ramp up gasoline production and it is just getting started. Most people do not understand how seasonal oil demand has become. You can clearly see it on this chart: https://www.iea.org/oilmarketreport/omrpublic/
In the "Old Days", the high demand period used to be in the winter because so many homes used heating oil. Almost all new homes built in the last 20-30 years heat with natural gas or electricity or solar. That has cause the high demand period to shift to the 3rd quarter. The spike has gotten even bigger because we've gone back to more SUVs and low mileage pickups. American and now the Chinese love those SUVs. BTW India's demand for fuels is now approaching China's. Low oil prices does have an impact on demand over time.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group