Fundamentals for Oil getting better

[dan_s]

Triple Double’s view on the IEA’s most recent Oil Market Report:



Non-OPEC Supply: Non-OPEC Supply growth again disappointed in August. Earlier in the year, the IEA predicted non-OPEC supply growth of 900,000 Bbl/d, but now expects growth of only 160,000 Bbl/d. To put this in perspective, the IEA’s downward revisions to non-OPEC supply growth of -714,000 Bbl/d over the last six months has outpaced the reductions in global demand growth of -450,000 Bbl/d over the same period. Interestingly, the IEA has reduced non-OPEC supply growth expectations for every region besides North America.



Long-term Demand: The IEA again lowered its 2012 global demand growth assumption to +1.25 Mil. Bbl/d due mainly to assumptions of slower growth in OECD countries.



Short-term OECD Demand: Leading edge August data actually showed a sight year-over-year increase of 0.2% in OECD demand. This reverses a trend of weakening demand in OECD countries during the past several months. The Pacific region was the largest contributor to OECD demand growth as Japanese oil fired power generation continued to be strong.



Short-term Non-OECD Demand: Leading edge August data showed that non-OECD demand grew 2.7% year-over-year (+1.2 Mil. Bbl/d), which was down from 3.6% year-over-year growth in July. However, the Chinese National Development and Reform Commission (NDRC) cut prices for gasoline by 3-4% on October 9th and this could be supportive for demand growth.



OPEC Supply: For 4Q 2011, the IEA raised its call on OPEC production by 300,000 Bbl/d to 30.8 Mil. Bbl/d. For 2012, the IEA assumes a call on OPEC of 30.5 Mil. Bbl/d. OPEC is currently producing 30.2 Mil. Bbl/d, but Libyan production (350,000 Bbl/d currently) is expected to rise to 450,000 to 600,000 Bbl/d by the end of the year. Saudi Arabia’s production fell modestly by 200,000 Bbl/d in September as the country’s seasonal demand for oil used for power generation moderated.



Despite high levels of uncertainty in Europe, global OECD inventories have drawn rapidly throughout the summer and are currently slightly below their five-year seasonal average despite Saudi Arabia producing at nearly its highest rates since the 1980’s. Thus, barring a global recession that significantly impacts global oil demand, we anticipate that fundamentals will continue to be supportive of crude prices for the balance of year as the market currently





John M. White

Triple Double Advisors LLC

1400 Post Oak Blvd

Suite 560

Houston, Texas 77056

[dan_s]

Barclays Capital analyst says oil prices will remain high in 2012 even if we do have a global recession. Reason: Supply and demand are very tight. Demand growth from developing nations is more than enough to offset declines in demand from U.S. and Europe.

http://www.forbes.com/sites/kenrapoza/2 ... k-economy/

[dan_s]

Bloomberg says Algeria might be the next domino to fall - and the US imports 30% of its light sweet crude with Europe taking a bunch of their natural gas.

If my data source is accurate Algeria produces around 1.9 million barrels per day of light sweet crude and exports around1.5 milloin b/d to the global markets

http://www.bloomberg.com/news/2011-10-2 ... recht.html