Posts Tagged ‘OPEC’

Oil demand, prices and decelerating US supply

Global oil supply and demand forecasts for 2015 have changed significantly recently, but these changes have largely cancelled each other out: the outlook is still one of a market roughly in balance. However, this ignores the tectonic shifts taking place under the surface. US output growth is decelerating. If futures markets pre-empt this, as they did in February, they risk reversing it, which could produce another drop in prices, as Ross McCracken, managing editor of Platts Energy Economist, explains.

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As oil prices push towards $60/b, are we witnessing a “dead cat bounce”, or is the market finding some equilibrium?

On February 9 over 500 delegates crammed into London’s Mayfair Hotel for the Platts London Oil Forum 2015. I’ve lost count of how many times I’ve attended this annual event, which traditionally kicks off IP Week – it’s a fantastic opportunity for the industry to come together, and invariably features stimulating debate.

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Guest post: A lesson from the history of oil

Steven Kopits is the president of Princeton Energy Advisors, and contributes guest posts to The Barrel. 

In an interview with Bloomberg TV, BP CEO Bob Dudley took a bearish view on the price of oil, noting that the present feels like 1986, when oil slumped from $30 a barrel to $10 and did not recover until in 1990. “The fundamental supply and demand does remind me of 1986 a bit, where we could go into a period in this decade of lower oil prices,” Dudley noted, adding that prices may stay in a range below $60 for as long as three years. “It will be a long time before we see $100 again.”

I agree with Dudley: 1986 is the appropriate template for today’s oil market dynamics. However, the understanding of the precedent is incomplete, and the analogy, imperfect. The differences matter.

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The Oil Big Five: Groundhog day in the global oil industry

February in the US is the traditional time to hoist groundhogs before the public to determine whether winter is coming to a close or will continue in a seemingly endless slog. It’s also a time to remember the existential crisis of Phil and wonder if you’re actually stuck in one place for eternity.

In the global world of oil, some issues keep rearing their heads, like a Sonny and Cher song on a clock radio. But in the February edition of The Oil Big Five, we feature many new topics culled from our oil editors and analysts worldwide, who shared the top items they’re keeping an eye on in the oil industry. As always, we encourage you to share your top picks below in the comments or on Twitter with the hashtag #oilbig5, and enjoy this month’s list:

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Is politicking pushing oil prices lower?

The immediate reason for the oil price plunge seems fairly clear – producers going gung-ho at a time of weak demand, which is not helped by the buoyant greenback.

What is murkier, perhaps, is how geopolitical agendas and motivations are feeding the bear market.

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Despite lower 2015 capex, could continued oil output gains delay price recovery?

Upstream operators that released 2015 preliminary capital budgets a few months before the year-end holidays have returned to the surgical table for more fiscal liposuction on already slender frames.  Despite this, they and other producers insist they can continue to grow oil production this year, and for some, growth will be in the double-digits.

Last week alone, small producers Halcon Resources, Sanchez Energy and Concho Resources all slashed projected 2015 capital spending by 48%, 29% and 33%, respectively.  In some cases this was the second revision from preliminary figures announced before oil prices began their steep descent to current levels below $50/b.

They are not alone.  Even the bigger players such as Continental Resources, a big Bakken Shale producer, said in late December its capex would be 41% lower than contemplated in early November when prices were still in the high $70s/b range, while ConocoPhillips will shave 20% off its budget compared to last year.

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Either crude or gold has to give, or has the world changed?

If historical norms are anything to go by, then something is definitely off-kilter with oil and gold markets. Historically, it has taken about 15 barrels of crude oil to buy an ounce of gold. Today that ratio is more like 22:1, due to oil prices touching five-year lows on Monday, while gold, in contrast, has stayed stubbornly high and, perversely, managed to fly in the face of just about everything else by staging an $18/oz rally on Monday.

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Guest blog: Scrap “The Call on OPEC”

Steven Kopits is the President of Princeton Energy Advisors, and has been a guest blogger on The Barrel numerous times in the past. 

Seven years ago, when I first turned my attention full time to oil, one of the strangest concepts I encountered was the “call on OPEC”. The call on OPEC means different things in different contexts, but fundamentally, it is as non-economic and culturally imperialist a term as one could imagine.

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Bearish IEA market report tops off bad week for oil exporters

If you’re an oil exporter, the December 12th report on the state of the oil market from the International Energy Agency will have topped off yet another week of very bad news.

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The Oil Big Five: Looking into the short future of 2014

The end of December is just around the corner, and it’s typical at this time of year for publications to take a grand look backward to sum up the year. What kind of proclamations can we make about the global oil industry in 2014? What sort of lessons are there to be learned, and how will we look back on 2014 years from now?

As tempting as it may be to take that look in the rearview mirror, today we’re going to look ahead with our December version of The Oil Big Five. By now you know the drill: We ask our Platts editors and analysts in offices around the globe what they think are the biggest issues or topics in the oil world for the upcoming month, and then we ask you for your thoughts. Are we right, are we wrong, and what do you want to see covered? Leave us your comments here or with #oilbig5 on Twitter.

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