Guest Post: IEA Oil Dump A Disaster In The Making

Tyler Durden's picture

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Everybodys All American's picture

2012 can't come soon enough.

66Sexy's picture

Low oil prces make the dollar look stronger and covers up the consequences of raised debt ceilings..

It silmply enables more government debt through the deception of a stable dollar. Consumers see price stability in oil and think 'all is well'.

narapoiddyslexia's picture

Its bullish for stocks. Apparently. 

SRV - ES339's picture

2012 can't come soon enough

... assuming you mean getting rid of Obama, who will replace him, and do you actually believe the Banksters grip on world finance will fade with a (Kleptocrat backed) Tea Party wacko in the White House?

best of luck with that... rotflmfao!

NotApplicable's picture

Ha! Voting is exactly what caused this mess. Good luck on fixing it with that lousy tool.

Zero Govt's picture

"2012 can't come soon enough"

Like that'll change anything ...Dream On Bro

AnAnonymous's picture

China's benevolent role over the world is growing each day.

Azannoth's picture

I bet it was made from 9/11 scrap metal, chinese have a sense of humour

Byronio's picture

I think you've offended the Chinese readers here...

We are supposed to be grateful for losing our country, our jobs, our habitat to them and others.

China Wants To Construct A 50 Square Mile Self-Sustaining City South Of Boise, Idaho

The following quote originally appeared in the Idaho Statesman, but has since apparently been taken down....

"The Chinese are looking for a beachhead in the United States," said Idaho Commerce Secretary Don Dietrich. "Idaho is ready to give them one."

Indeed.

If relations between the U.S. and China go south someday, we will deeply regret giving China so many open doors.

 

AnAnonymous's picture

50 square miles in Idaho? But laughable.

The US is buying front and center land in other countries by square thousand miles and what? 50 square miles?

 

The US is not the solution, the US is the problem.

Flakmeister's picture

First off, oil production is not 89 mmbpd.... that is "All Liquids".  He looses almost all credibility with this error.

Moreover, Libyan production was close to 4.5% of net exports, i.e. oil on the market. Moreover, as a fraction of the sweet crude on the export market, the ratio is closer to 10%...

That being said, the IEA release is a mistake. Note that the amount matches up with the total loss of sweet crude from Libya and is also timed to have the maximum effect given well known seasonal factors. It is an attempt to drive the price down in order to give The Bernank and the ECB some breathing room. No way QEIII or any other form of monetization can occur with oil above $100....

 

AnAnonymous's picture

The article's author is part of US citizens for whom propaganda is making a living. Still the same drivel over and over again. Best is that guy must think he deserves every single cent he earns. That is the only credibility propagandists bother about. Facts, who care about them as long as misinformation, disinformation brings money?

 

US world order.

Raynja's picture

Its 60 mmb total, not per day.
The whole analysis ignores the elasticity of demand and geopolitical concerns.

The release is a bad for citizens, just not for the authors reasons. Maybe someone should let our transitory chairsatan know that flow is actually more important than stock

CrashisOptimistic's picture

The ZH folks really HAVE to understand this, Flak

"ALL LIQUIDS" IS NOT OIL.  There is not 89 mbpd of oil being produced and that is why things are disintegrating.

Guys, heads up.  When oil comes up from the ground, it brings with it Natural Gas Liquids (which is not the same as Liquid Natural Gas).  Things like butane and ethane come up.  They have only 60% of the energy density of crude.  They Are Not Oil.  But they are counted as All Liquids, and because fields are dying, more and more of production that comes up is NGL.  

There is another category called Condensate.  This also is a bit light in energy density and is not crude.

Bottom line: You can't pour 1 barrel of NGL into a refinery and get out the same number of gallons of gasoline power as you would get if you poured 1 barrel of crude into the refinery.  Period.  This is a crushing reality of physics and the numbers are being juggled.

Read the NYT article about natural gas in shale of a few days ago to see how the industry obfuscates numbers to attract the greater fool to buy a lease overpaid for.  This is the nature of oil/nat gas plays.  The whole industry is based on camouflage.

You have to understand it deeply at a geological and physics level or you have no hope.  An economist out of Yale assigned to be an "oil analyst" at some bank will not understand all this.  Beware.

Flakmeister's picture

Another bit of smoke and mirrors is "Refinery Gains" where the volumetric gains in cracking the heavy sludge left at the bottom of the column is counted as "production".... moreover, the result of the hydocracking mainly Ethane which is primarily a feed stock for plastics.

Refinery gains do not represent new supply in the sense of "new energy"...

Citxmech's picture

Take a gander at any of the net EROEI over time charts and you'll quickly see why we're in a world of hurt. 

It's got nothing to do with what's available coming out of the refinery - it's got everything to do with what it takes to get the raw product from ground to market - and those required expenditures are rising exponentially.

Decreasing marginal returns and debt-based societies don't mix. 

aerial view's picture

Time to remove the meaningless words free markets, democracy and capitalism from all American dictionaries as well as truth, justice and the American way.

jerry_theking_lawler's picture

america is not a democracy. america is a democratic republic. that was written in blood in some old 'useless' documents in Washington DC that can be 'interpreted' to fit the needs of the leaders....what a sham.

CH1's picture

On paper it is a democratic republic.

Congress is for sale to the highest bidders. K Street dictates what they do.

cossack55's picture

Add the words "Agenda 21". Sleep tight.

overmedicatedundersexed's picture

Anyone who makes sense or has policy that is correct..need not apply. The bilderbergers the trilateralists the sociopaths in change have a plan that is working and the serfs better like it.

Greeny's picture

Obama, collecting Fat paychecks from Fat Cats of the Wall Street

for his Election campaign, His target is 1 Billion $USD.

Imaging to spend that much for another 4 years of doing nothing?

Joe Davola's picture

Giving a politician a billion to do nothing would likely save us a trillion or two in the long run.

oldmanagain's picture

Mostly garbage.

But it might sell on Zerohedge.

speedy's picture

The IEA will release over 60 million barrels a day for at least 30 days into the markets

 

Err. not 60 million a day, 60 million over 30 days.

Smokey1's picture

+1

Yes. That small oversight tends to nuke the entire article.

Flakmeister's picture

Well done... I missed that.

AnAnonymous's picture

If you are after each mistake the article propagates, good luck. It is a useless task. Propagandists make their money out of making errors, distorting truth etc People buy their propaganda (id est funding the propaganda effort) because they want to believe in the distorted facts.

 

Bringing back factuality is useless and vain; in this US driven world, it does not bring money.

 

The US citizens nature is eternal.

Libertarians for Prosperity's picture

The author of this article has zero understanding of how speculators affect oil prices. ZERO. ZILCH. NADA. When oil went cuckoo for cocoa puffs in 2008, the amount of speculative money in the commodity complex was over $250B, an increase of over 20X from 2003-2008. Furthermore, if margin requirements are typically less than 10%, that means speculators could take multiple trillion dollars worth of commodity positions if they wanted to. One million oil contracts are traded on the NYMEX daily. If the size of an oil contract is 1,000 barrels, this means the amount of "paper oil" traded each day is over 12 times daily world oil consumption.

http://www.marketwatch.com/story/ice-brent-futures-volume-set-new-record...

And all of that means.....   nothing?  

Brandon Smith is just another bugged-out doomer goon with 50 canned hams under his porch. He should stick to writing articles like, The Art of the Bug-Out Bag and Final Survival Preperations.

http://www.alt-market.com/articles/121-the-art-of-the-bug-out-bag


JeffB's picture

On the other hand, there is some pretty solid evidence that "speculators" were not the driving force in the big runup in oil prices leading up to and including the 2008 spike:

http://www.aspousa.org/index.php/2009/05/peak-oil-not-speculation/

"...After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world’s economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development.  It didn’t. In the four years to mid-2008, the world economy expanded by 18%. The global economy boomed, even without new oil.

However, this came at a price. In the absence of oil supply growth, demand accommodation was required. This was achieved by secular prices rises averaging 25% per annum from 2003 to the end of 2007. In other words, the price of oil went up, and this constrained consumption by causing the marginal consumer to drop out of the market. This proved a workable solution for a time, but the global economy could not sustain 25% annual price increases indefinitely, and by second half 2007, the situation was becoming critical. Consumption was being maintained by continuing draws on inventories averaging 1.4 million b/d, and virtually every producer, with the possible exception of the Saudis, was running flat out. By early 2008, even the Saudis were throwing the kitchen sink at the market - all to no avail. On paper, it looked like a peak oil nightmare.

Of course, consumers were responding. From 2005, the EU and Japan began to shed consumption and, from late 2007, US consumption also began to decline as the US consumer sought to escape high oil prices. Notwithstanding, developed economy consumers were not abandoning the market as fast as Chinese consumers were entering it, and prices continued to rise. In early 2008, prices took off and some argue that speculation took over. Still, as inventories continued to fall until May 2008 and all the oil producers were running at full output, the case for market manipulation at that time is hard to make. Indeed, the market was in backwardation most of this time. In backwardation, futures prices are lower than spot prices, the equivalent of the market saying, “Well, prices are high now, but they’ll be lower later.” The market - those very speculators - believed that oil was over-priced but was continually surprised as demand kept pushing up prices.

Prices did ultimately fall, but not because the supply situation eased, nor because speculators fled the market, and not because inventories were released. Prices fell because the global economy collapsed. ..."

Blano's picture

My new favorite avatar.

Byronio's picture

If they had an uprate feature I would give you one for your avatar.

Smokey1's picture

"Whether they are correct or not about the eventuality of peak oil remains to be seen."

It only remains to be seen by blind fools like you. Peak oil is screamingly obvious to anyone with half a brain.

Greeny's picture

"Peak oil is screamingly obvious" What time frame you are talking about 1-2 weeks? then maybe you right. I see OIL at 140$/b again as soon as QE3 hits the street. Hey By the way, Brent now going up and pushing $109/b already. We gonna see $140 before $80, how about that?

Smokey1's picture

Do you even know what peak oil is?

Greeny's picture

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.

Silver Dreamer's picture

There's also a large confusion over production and supply.  We may have plenty of supply, but we definitely have a production issue.

Flakmeister's picture

You might want to complete that thought... as it stands, it makes no sense.

Sambo's picture

No, it is not obvious. Peak cheap oil maybe but that is not the only thing left behind on the earth by dinosaurs & ...what they would have eaten but did not eat.

Flakmeister's picture

Not obvious if you rely on MSM. Obvious to anyone that actually follows what goes on in the oil patch...try following the technical discussion at theoildrum.com

Urban Redneck's picture

The technical discussion at theoildrum.com tends to be focused on where management tells the little geologists in the silo of thought that they may look for and extract oil.  There are bigger strategic issues that materially impact supply and are too often neglected in the conversation.

treemagnet's picture

Apparently not enough folks have had enough bad experiences to take this shit seriously.  My father-in-law being a perfect example.  By the time enough folks are awake, the vise will have them pinched.   And since they're fucked like a drowning victim, we're all fucked cause they're gonna cling and panic and drown the rest of us.

Turd Ferguson's picture

Well done, Brandon.

JW n FL's picture

the sheep dont care. they are not even watching of feeling this shit.. just another day in the sheeps life.

 

ignorance abounds!

JW n FL's picture

http://www.milidroid.com/2011/news/wsj-talks-about-upcoming-smartphone-tests-usual-ignorance-abounds/

WSJ Talks about upcoming Smartphone Tests. Usual Ignorance Abounds.

******************************************************************

You have to LOVE big brother! give yourselves over...

Sathington Willougby's picture

See the funny thing about that is, we noticed.

It's just hard to shout above all the bleating.

Land of the fleeced, home of the slave.