This page has been archived and commenting is disabled.
Why We Won't See An Oil Price Rebound Yet
Submitted by Arthur Berman via OilPrice.com,
The front page of The Wall Street Journal on Tuesday, February 10 proclaimed “Oil-Price Rebound Predicted” according to the IEA (International Energy Agency).
Not true.
The February 10 IEA Oil Market Report states that some “market participants are seeing light at the end of the tunnel” based on oil company spending cuts. It goes on to mention that over-supply could become as bad as in 1998 when oil prices plunged to almost $11 per barrel.
That’s some kind of light at the end of the tunnel!
I believe that oil prices will increase strongly before the end of 2015 but there has to be a reason. Budget cuts and falling rig counts may create a feeling that production will fall but markets don’t move far or for long based on feelings.
The first reason for a rebound in oil prices will be a production cut after the June OPEC meeting. That didn’t happen in November because Russia said no. I think Russia will be ready by June.
The second reason will be when North American oil production starts to fall, hopefully around the same time as an OPEC plus Russia production cut. Another reason may be a political event that introduces a fear premium into the price of oil like ISIS in Iraq, Ukraine or something not on the radar yet. That’s how the world is.
With that out of the way, let’s look at the facts. Two charts are all we need.
Both IEA and EIA (U.S. Energy Information Administration) released new data on February 10, 2015. I used IEA quarterly oil supply and demand data to make the following chart.
World quarterly liquids supply and demand. Source: IEA.
The chart shows that demand exceeded supply through the 4th quarter of 2013. That’s why oil prices were high in much of 2013 and in the first half of 2014. Supply has exceeded demand for all of 2014. That’s why oil prices fell (a lag before the market reacts to a change in supply-demand balance is common).
The difference between supply and demand was greatest in the 2nd quarter of 2014 (1.27 mmbpd supply surplus) and then it dropped to 0.84 and 0.81 mmbpd in the 3rd and 4th quarters, respectively. Better but still too much of a supply surplus.
EIA publishes monthly supply and demand data, and a forecast. The second chart incorporates that data.
World monthly liquids supply, demand and 2015 forecast. Data to the right of the vertical dashed line is an estimate. Source: EIA
This chart shows that production fell from its high in October 2014 but so has demand. The difference between supply and demand in October was a 1.19 mmbpd supply surplus. It fell to 0.68 mmbpd in December but has increased to 0.97 mmbpd in January 2015 (world demand usually falls in the first part of the year).
That is better but still too much of a supply surplus. EIA data says the U.S. production continues to increase as expected but not part of a reason for an oil price bottom or rebound.
I don’t have a lot of confidence in forecasts but let’s understand what EIA’s forecast means. It suggests that supply and demand will be almost in balance in February 2015 but that the supply surplus will return in force in March. After that, the gap will narrow and by September 2015, balance will return and remain through the end of the year.
That is when oil prices may start to rebound.
EIA apparently believes that U.S. and Canadian tight oil production will have fallen enough by late in the 3rd quarter of 2015 to bring world supply and demand close to equilibrium again. If OPEC cuts production, so much the better for re-balancing the oil market.
In this week’s Musings From the Oil Patch, Allen Brooks suggests that the small oil price spike in late January may have been short covering by traders at the end of the month. He cautions that refineries are preparing for the summer driving season and will not be buying as much oil during the turnaround time which is now. That will build inventories and lower oil prices.
Mike Bodell (personal communication) is even stronger. He feels that storage inventories may reach 70-75% of capacity soon and that will crush WTI prices possibly through the end of 2015. He thinks that events in Iraq with ISIS and in Ukraine with Russia may have created a fear premium that pushed oil prices up a week ago. This fear premium isn’t over yet.
The message is reasonably clear: oil prices will rebound when something tangible happens.
It will be late summer before any drop in North American tight oil production shows up in the data. An OPEC cut may happen slightly sooner–we’re talking about only a million or so barrels per day surplus after all. A political event could happen any time…or not. Any or all of this will coincide nicely with increased demand during the northern hemisphere summer.
That’s what two charts and a bit of interpretation can offer and it’s not bad. Prices will rebound this year but not until there is a reason.
»
- 13624 reads
- Printer-friendly version
- Send to friend
- advertisements -
Irrationality will rule a bit longer before reality crashes the party.
That's right. Let's wait until the Wednesday EIA report shows inventories declining.
Keep dreaming, like the last 10 reports. Producers need cash, selling oil creates cash. Selling less oil creates less cash. Is that too complicated for you?
JPM still has thousands of tankers full of crude from 2009 ready to dump
The writer of this article, Arthur Berman, is full of shit.
Yes, especially in the sense that fundamentals don't matter for ANYTHING any more.
If the Wall St shitstain sleaze wants oil up, it goes up. Also, 99% of that ECB QE money is coming to the US, so gotta use that to squeeze something.
tyler, we got a +5% since yesterday. we go back to 60+...
there is, the rebound....
Anybody ever heard of the Momentum Ignition algo ramps? Consider it done when they (whoever "they" are) decide to do it. Oil $100 in 12 months or less.
around june, for the football europ.
No, it's not complicated. But I think monthly US oil production will be down YOY by the end of 2015, notwithstanding the need for cash. You disagree?
Yes, because there are projects coming on line which began 1-2 years ago. They will continue and they will produce. Producing oil is the only thing that can keep producers alive, so don't assume they'll willingly reduce their production, for that means bankruptcy.
Look at it from their point of view: Produce at a loss and stay alive or reduce production and go bankrupt. Those are their choices.
Has anyone looked at USO and XOP? There were a few of us posting about starting to nible in the oil complex a few weeks ago. I think we are doing alright with that trade. Oil is going higher. Period. Albeit not in a straight line. Too much at stake for oil to be this low for an extended period of time.
Everyone knows why oil is down. Its due to Obamacare allowing millions to abandon their jobs and stay home to take online climate change classes. They just don't have to drive to work anymore.
Its not a frown, its a smile upside down!! ;-(
And that's a giant win for Gaia! Mission accomplished! Well, let's say its the end of the beginning, civilization still exists, and that's just got to stop.
Going to go a bit tangential here.
The environment and oceans are so unhealthy in Australia right now that the ocean and beaches are just lousy with large mature sharks, as in the 1950s and 1960s, and just as well too as the saltwater crocodile population has likewise exploded, so desperately near to total collapse is the poor withered environment. The great lost white tribe of Europe has destroyed Australia in only two centuries! ... or so the greenie grand-lie goes.
When I was a boy we would swim on any beach, and in any brackish river, without fear of attack. the beaches were partially netted off shore and croc hunting had greatly thinned croc numbers and made them fear humans.
That hunting ended in the mid-1970s, and since then the populations of mature predators has steadily build back and is now exploding. Beach shark netting ended in the mid-1990s as greenies went on a media rampage to save poor endangered man eaters.
But if you swam in the same places today that I used to swim as a boy there's a real chance of an encounter with a mature croc or a large shark. And these ones have zero fear of humans. In fact many now associate humans with sources of food and attractive food smells.
We even have moron environmentalists in 2012 and 2013 trying to claim, on camera, on national TV, that sharks don't attack people, and that tiger sharks are almost completely harmless! The are the same sorts of shitful people who what everyone to pretend Tigers a just big cute cuddly pussy cats.
This week alone we had several local videos taken of a 4.5 m saltwater croc on the beach within several hundred meters of my home, where children play every day.
Why?
Because there are now so many mature crocs in the adjacent river systems arounf each and every headland that the overflow of less dominant males are forced to leave the river, or die from attacks of the even bigger crocs.
And those big crocs also patrol the beaches, and not just as night either, they do in during the day too, have been for over ten years now. They have been observed via GPS tracking to routinely swim from north Queensland to Fiji, and back again, across the coral sea island chains. These crocs have no fear of large sharks, sometimes they simply attack and eat them. Aggressive hunting saltwater crocs, that are not afraid or shying away from humans, at all, is bad news.
This is, and is going to continue, to demolish the eco-tourism paradigm. Tourism has shrunk from the largest or second largest industry down to a withered sideshow during the past ten years or so. The beaches and reefs are not safe to swim at and the beach is not even safe to walk on. A croc can lunge from the surf, especially at night, or it is laying on the beach and you walk right up to it. And walking along in shallow water where you can't clearly see the bottom, at all times is a really bad idea.
So the tourist industry will collapse and resorts go bankrupt before we grow a spine and say that we also are equal animals in this habitat on this planet, and we are likewise entitled to be a protected species and to use, and have safe access, to rivers, beaches and reefs. And large sharks and large crocs must be made to know that if they come near human communities, they will die. Until that fear is re-instilled in them, the situation will get worse and worse.
From the past year alone:
Crocodiles That Attacked Boys in Australia - One killed, another injured by species known for aggression - January 27, 2014
Fishing community in shock after man snatched from boat while fishing in Kakadu - June 09, 2014
Rare pale-headed crocodile kills man in Australia - August 19, 2014
The last two were during winter, well out of the territorial and breeding season. Winter is when the crocs are least active and eat the least, sometimes eating nothing for months due to not being able to efficiently chemically digest food during cooler months, so it rots inside them. So generally less aggressive and hunt less during winter. But there are so many crocs now that the competition for food and territory is making them go after food in more marginal conditions and times. And poor man-eating sharks are not safe from them either. The crocs have since turned to eating man-eating species of sharks for food.
Brutus the giant crocodile attacks shark in Australia - August 6, 2014
There were two fatal shark attacks just last week in Australia, but this is the pattern so far for the past year, and for every one of these there are many near attacks also:
3 April, 2014: Christine Armstrong, 63 is taken by a suspected bronze whaler shark as she lagged behind her daily swimming group at Tathra Beach, NSW.
9 September, 2014: Paul Wilcox, 50, was found floating and was unable to be resuscitated after being pulled from the water near Clarkes Beach at Byron Bay. Witnesses saw a 3 m great white was in the area immediately after the attack.
2 Oct 2014: Shark attacked a unnamed 23 year old surfer in Australia at Wylie Bay in the town of Esperance on Western Australia, believed to be a 13-foot great white. Ripped off parts of both arms and damaged one leg. Lost one arm from the elbow and the other above the wrist.
15 December, 2014: Daniel Smith, 18, of Mossman Queensland was killed while fishing at Rudder Reef off the coast of Port Douglas. He was in the water near his friends’ from a private boat when he was attacked. He lost a leg and bled to death.
29 December, 2014: Spear fishing 17 year old Jay Muscat, killed at Chaeynes Beach 65 km east of Albany, Western Australia, after a shark attack around noon. His friend was also attacked by the shark but did not suffer serious injuries.
21 January, 2015: Yamba surfer Di Ellis and her daughter Lilly. Di was surfing and filming a pod of dolphins at Wategos Beach at Byron Bay on Monday when she was struck from behind by something that snapped her board in two. She thought it was a dolphin, but then found teeth marks in the board. "Then I was suddenly floundering in the water with two pieces of board," she said.
8 February, 2015: Jabez Reitman, Seven Mile Beach, south of Byron Bay, the attack occurred about 6 am sitting on a surfboard about 60 metres offshore. Shark grabbing him and pulling him below the water. The shark then let him go. He survived with a large single bite mark from upper torso to lower abdomen.
Then a day later ... only 5 days ago:
9 February, 2015: Japanese national Tadashi Nakahara, 41, is killed while surfing at Shelly Beach, at Ballina, in northern NSW. He lost all of both of his legs and the rear portion of his surf board was completely bitten off. Rapid blood loss led to death. Local police stated, "We believe it was a very large shark."
The number of shark attacks has risen dramatically over the past 15 years when environmental loons launched their campaign to "protect endangered sharks". A massive baloney war started about how dangerous humans are and how sick the environment is and that it can no longer even support high numbers of apex predators so damaged is the world by nasty invasive Euro-trash human being imports.
ALL BULLSHIT.
We even have greenie psychopaths in Australia claiming against an avalanche of evidence that sharks don't actually attack humans and that tiger sharks are harmless!
Indeed this outspoken guy makes a rather extreme case/claim that exactly the reverse is true. That hundreds if not thousands of people in Australia going missing in the water, every year, and are never seen or heard of again, and that it's the big sharks that are primarily responsible for this, and that greenie sympathisers within govt enviro-management agencies, are simply covering it up and calling it other things, and that the tourism industry is complicit in a campaign of damage minimisation and PR to pretend it isn't actually happening - that tourists and visitors are actually safe.
Sharks Targeting Humans - Vic Hislop
http://www.editinternational.com/read.php?id=48b31921511dc
Th truth is somewhere between these extremes, but the waters are certainly not safe. When I was a boy, yes, they could have been called more-or-less safe, but now they are dangerous, there are numerous very large predators now, and they were not present 25 years ago. The first time we saw a croc in the water it was a big shock to realise they were coming back.
Now we see them routinely and the growing numbers of croc and shark attacks continue to be massively downplayed, especially by smarmy experts who live nowhere near them and have no experience of the first hand impact of them always being there.
Our lifestyle has most definitely changed and many of the sorts of things we would do for work and recreation, with no care in the world of crocs or sharks, now makes your skin prickle and blood run cold with apprehension. Two out of every three croc victims die, and the survivors have terrible injuries that always become terribly infected by the bacteria in their mouths, which usually requires further amputations. Sharks on the other hand rarely kill more than 1 in 3 people and about half will recover their full health and mobility. Saltwater crocs make a great white look friendly, but a croc can attack you on land.
Meanwhile our psycho-greenie infested govt agencies and associated wildlife lobbies will not even consider the clear imperative of making crocodiles too afraid to come near humans again. Boats are routinely being attacked, fishermen killed, tourists are becoming terrified of these creatures and staying away in droves, while the crocs get bigger, more numerous and more widespread each year an a greater and greater danger to locals.
But ALL of the major cites and population centers that allegedly democratically decide such matters of "endangered species" animal protection policies are situated well south of the tropical saltwater crocodile habitation belt. But somehow they still get an equal vote, their opinions and equal weighting, and a massive predominant influence in what happens, for the locals who have to live beside these massive aggressive predatory reptiles. And anyone going against that is shunned by the national media and shouted down, while the only people the media will pay any heed too in the areas where these animals are the radical greenie extremists and the people from places like national parks agencies and crocodile farms, that have clear vested interests in the current situation not changing. National parks get funding to tap and remove bigger crocs from built up areas, while the croc farms are the recipient of the crocs, and their commercial skins and breeding capacity.
So why would any of those wretches ever argue to make crocodiles afraid to come near humans again?
And so nothing is done, and the situation gets worse every year. Democracy again reveals its weak exploited underbelly and this disenfranchises the sensible majority population, even further.
The policies of wilful ani-social idiots wins and remain the law, when two to three years of commercial hunting (private, not govt) would solve this whole problem, tourists would return and local people could reclaim their equal place to exist in this habitat.
So it's going to take the total collapse of the tropical region tourist industry, and street protests and civil disobedience if not state voting boycotts, by the affected locals, to get any effective change to this situation of the local majority simply not being listened to, while self-professed greenie saviours and Gaia protectors who rabidly hate human civilisation, are always listened to and their bloviating nonsense is always taken seriously to the growing detriment of a functional democracy and loss of faith in the whole process of electoral paths to mitigation of obvious serious problems.
The classic imagery of the twenty-something sexy couple walking hand in hand with a couple of small children along a tropical beach in ankle-deep surf wash, is increasingly a thing of the past here. The only people who do that are people who either don't know about crocs or won't pay heed to any warnings given. For every attack that occurs there are scores of near attacks that people don't even know about. This lulls them into thinking there's no danger in walking along the water's edge. The crocs do this on purpose as the older ones are very cunning animals, they are at least as smart as a dog. They observe and know that they won't get you at all if you ever become aware of the danger. So they will wait patiently, day after day, until they feel certain that you won't be able to get away to raise the alarm if they strike. So the smartest ones always attack in a way that makes them almost invisible. They grab the person, dump them on the ground in an instant, snap onto a limb and immediately drag you in to submerge to keep you quiet and drown you as they also roll to rip a limb off. They don't want anyone knowing a croc was ever there because then people will not come near the water in the area again. They do this with all animals. They watch humans carefully they by know we will communicate and will raise the alarm if we know a croc's present so the croc always hides unless it already knows that we all know it's present. So when it knows we're not coming near the water again, then it will show itself, openly, and will walk up on to the beach in front of you, removing all doubt. So it's the foreign visitors and tourists who are most in danger, plus the silly locals who think they have a special understanding with local crocs, and go nearer the water anyway. So the croc allows the local to continue to assume such an amicable understanding exists, fear reduces, and when they're sure they can kill that local, they simply do.
You can not bargain with such a nasty smart hunting predator, you are going to lose more and more people as more and more of them get smart about humans.
The only answer is to make them literally fear for their life to ever be near humans. They do not scare easily either, they after all swim about with larger crocs that will literally kill and eat them. They are hard-core cannibals. So pushing them back into the rivers they just left will not work. What you have to do instead is go into those rivers and hunt trap and kill the really big territorially dominant killer crocs, so that the smaller crocs can then safely stay within the rivers, rather than get pushed out into the coastal and island beaches and suburban creeks and drains.
The longer it take to do that, the worse and worse it will get, and the bigger and bigger will be the crocs that get kicked out of the tropical mangrove rivers by the remaining monster male crocs living in them. So the danger to humans is going to get steadily worse every year.
And if I pointed this out in public in any southern capital city I'd be screamed down and verbally abused, and possibly physically assaulted (and possibly arrested). So I'd love to fly and bus the smarmy assholes north and take them on a northern swimming hole tour to the places that I used to go swimming in and after the first grizzly horrific death I suspect they might begin to grasp that I have a valid point.
Meanwhile the shark attacks will likewise continue to climb, simply because there are more and more large hungry sharks competing for the same food every year.
So I well understand and commiserate with your upside-down smile, above. ;-(
Supply is still increasing whie demand is decreasing. US oil production is up over 600,000 bpd since last August. Dead cat bounces can only last so long and there are only so many oil tankers that can be leased for storage. Oil will continue to go down. Exclamation point.
I get your point but the decline rates are so rapid. We'll see.
Then why is production up 600,000 bpd since last August? The projects have been started, the equipment leased, the contracts signed, the loans taken out, the interest due to be repaid. They have no choice but to drill baby drill. New shale projects are on hold, but nothing is being shut down because they can't afford to shut them down.
Also, keep in mind that many production companies are hedged throughout this year, some till the end of the 1st qtr. of 2016. So no need to slow down production....
You also don't have to shut down a well, we choke them back, thus they are slowing supply but flow is still active.
On a long enough time line....
The end is near
We are already dead and just don't know it (is this the afterlife?)
Barely a dead cat bounce, thus far. It's still an overpriced pussy
Perhaps the light is coming from a train.
Off topic, trolling people who like Uber: http://www.counterpunch.org/2015/02/12/how-uber-distrupts-the-taxi-marke...
Bad article. It has a lot of "we need" but not a lot of explanation WHY. Who does the author think he or she is to know what someone else needs? Some people would rather afford a ride that hasn't had brakes inspected than walk 10 miles in the rain. What a fcked up author.
I did say it was trolling. My favourite edict from author Dean Baker, macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC:
And minimum wage and overtime laws should apply to taxi services. This means that drivers should be assured of earning at least the minimum wage net of expenses and one and a half times the minimum if they work more than a 40-hour week. If it is too complicated for Uber to make such calculations then they will be replaced by firms with more numerate management.
Spare a thought for the guy making money from uber being told he is not getting paid enough so now he is not getting paid at all. I'm sure this decree sounded logical in the author's head, gives me a warm feeling knowing people like him are looking out for us peons.
I would respectfully suggest that if they are not making enough money, to find another job.
Don't get me wrong, but labor laws suck. The socialist view is that people should get paid a minimum wage, even if they don't have a job, which is more often the case than not, now. Just keep pushing these minimum wage ideas and see how long it takes for automation to take place of those jobs, and then even more sitting at home watching Oprah, while they take it out of our pay.
We keep fucking with perverting supply and demand and we will only get the ugly side of nature.
Productivity numbers have been climbing for decades now, almost all due to technology. Technology that does not belong to the workers. As we see labor costs increasing relative to productivity, we see these jobs being replaced by technology. Technology is a competitor to American wages as much as any Chinese worker. There are no borders or tarriffs that can protect us from this competition except the market itself, which if free would allow wages to fall to compete. Instead through the power of debt we can subsidize these wage replacers with money of future workers that will NEVER have a job.
If we want jobs (which I don't think most really do anymore) then we must end debt that subsidizes unemployment and free the labor markets to be able to react to the world economy. If we resist, we will share the fortune of virtually every private union and watch as our jobs and industries slowly evaporate away, all while we stubbornly support non market wages for jobs that no longer exist.
You do realize that the obvious outcome of a heavily technological society is going to be far fewer jobs for working people, don't you? So perhaps that 'socialist view' is more in tune with reality than yours...just HOW are all these newly "freed" workers supposed to "react" to this new economy? They still have to eat.
I'm serious, give me some specifics. Tell me how it works.
I believe in a free market where wages can fluctuate to reflect true supply and demand, it is not possible for technology to displace labor as the technology must be paid for by its consumers and if they earn no wages, they can buy no technology. How many I phones would be sold today if there was no debt, no unemployment, no entitlement payments. Debt and government redistribution (and debt) allow misallowcation of spending which allows us to consume our selves unknowingly through the pain killing effects of this debt and redistribution. The thing about free markets, supply and demand, is that they are self balancing. Debt and redistribution are not, they are a corruption, a narcotic of incredible potency and addictive nature that destroys balance, creates bubbles, not just in commodities and stocks, but in the very nature of our economy.
We have had technological advancements from the very beginning and somehow survived and apparently thrived. It is only now that we see these massive imbalances and it is no coincidence that it happens at the same time that we see this massive debt overhang.
It was said by McKinley in the late 1800s when arguing for protectionism, that what good were cheap imports if we had no jobs to pay for them. Cheap foreign labor is no different than technology in that it can only displace our jobs if we buy it. We could have said no to the Chinese, ultimately we WOULD have said no to the chinese , if, we had not had cheap credit to allow us to buy what we could not afford. Technology cannot displace any job that cannot pay for it. The market ultimately ways rules.
UH OH! Shit might get real now.
OT: Unconfirmed report......."ISIS fighters seized most of the Al-Baghdadi, Iraq where 300 US Marines are stationed training Iraqi Forces."
http://www.thegatewaypundit.com/2015/02/isis-seizes-al-baghdadi-iraq-300...
http://www.businessinsider.com/isis-took-control-of-town-holding-us-mari...
So the CIA took over Al-Baghdadi?
This analysis is only based on the US. At least that's how it looks. They definitely left out China. When their reserves are full they will be importing less and the Chinese economy is not even close to recovery. Those two factors left out of the charts will have an impact.
The Chinese are just starting their great depression
I wouldn't get all excited by the prospect of higher oil prices...Because the economy is simply not strong enough to survive ANY significant increases in prices for anything.
Any attempts to 'rev up' prices will have increasingly negative effects, with even the smallest increases causing massive cut-backs in spending, until they get it through their thick skulls that 'growth, growth, growth!' is over.
Correct. High gas prices and Obama care would lead retail sales over the cliff. A bigger cliff then the one they currently fell off.
As would any significant increase in taxes...so business can't grow, government can't grow, the consumer can't grow. A good old-fashioned Mexican stand-off...The most nervous guy shoots first, but you don't want to be that guy, cause he doesn't make it.
In a deflation, who gets nervous and shoots first? Big Finance? Big Government? Or the consumer/labor force they both need?
Oil is cat bouncing from traders scooping up what they can to play the contango. Only so much storage for that game.
I'm toying with the idea of buying some LONG term oil stocks right now. Just sayin.
Cost of leasing a 3 million barrel supertanker for a year is $15 million minimum. That doesn't include the crew, fuel, insurance, and maintenance. Total cost could exceed $20 million. The prices is rising as more traders scramble for tankers to lease.
Buying oil today at $52, you would need to be able to sell at $60 in a year to make a decent profit. Eventually they will run out of storage and spot prices will collapse, sending many marginal producers into bankruptcy before prices can stabilize and rebound. It's way too early for a rebound.
So far, only five small privately held oil companies and no publicly traded oil companies have filed for bankruptcy. That should tell you that this isn't anywhere near the bottom yet. The only thing I can see turning this around before then is a major war in the ME.
lets talk about oil prices ad nauseum....if there is ANY BTFD opps it's currently in OIL or oil related industries
With an average PE of 60, no thanks. I'll wait for a few of the marginal players to file for bankruptcy first.
Stack dem rigs. Midland, Texas.
http://peakoilbarrel.com/wp-content/uploads/2015/02/4929691.jpg
Charts have this turd sub-$40 for quite a long time.
Aside from that most of these geniuses working at these fancy investment firms never mention that the de-financialization (if you will) of oil helps you realize that it never should have been above a certain point to begin with and certainly not in the triple digits. Fed losing control and power, oil junk debt and derivatives imploding, and not to mention flying in the face of every Pisani'ed punchdrunk Kool-Aid inhaler's dream with modest at best aggregate demand . . . . . . . . and one of you geniuses tell me where the big rebound is coming from?
I have a question though.
Virtually all the world's crude production increases came from the US over the past few years. Without those production increases, world crude production would now be less than it was in 2005.
Forget financialization. Where would oil have been priced without that extra supply?
Supply and demand have something to do with price????
We are protected from those vagaries by the great leaders of our time. Price for oil, for gold, for dollars, is whatever they say it is. For those of us trapped in the rational world, all is lost.
Need to view global production levels. That said just shows you how much cocaine-fueled, Fed funny money, let's all thump our chests with our 200K worthless MBAs financialization can do to artificially inflate an asset price even if the supply/demand scenario is moving against these desires for bubble prices. The winding down eventually accounts for all of that bullshit being sucked out of the prices.
If you believe like me that not only is the Fed losing power but that a reset of some sort moves the world to more asset backed infrastructures (I know, I know it sounds crazy now) then it's hard to make the case that oil will benefit from something like the Shale Orgy or both housing bubbles anytime soon . . . . if ever.
If not the US then somewhere else.
Let's congratulate the Saudis on their plan -- they won! They now have the United States (and global coalition?) sending massive numbers of troops and weapons into a bubbling cauldron. This will quickly suck up all the global surplus oil just getting everything in place. Then when bombs are falling all over the place some will hit the wrong places and bring even more turmoil. Oil prices will then rise on the increased demand and unrest -- the Saudis get higher prices and don't have to cut back any of their production!
dat be da black gold, baby, I ain' talkin' new grilles...I be nigrow rich today, jes aftah d'1st, hunned dollah beel n' a gold toof...
gold suckahs...
Big Oil CEOs don't see a rebound any time soon from what I've heard they say and watch what they are doing...dismantling rigs, laying off thousands of workers, and so on.
I do a fair amount of work for ExxonMobil and they are telling me that they are pretty much halting in discretionary corporate spending. All anecdotal, but not for me. My life and business are a constrant stream of anecdotal incidents.
Here's how the oil price rebound, which is already underway, will work: all throughout the volatile rebound from January through June of 2015, you will see many articles likes this talking about how the rebound won't happen, or will fail, or has gone far enough. And then, sometime this summer, with prices back above $70, authors like the one here will either dissappear or say "OK, fine, so now we rebounded." And then, there will be a huge pullback. But the point is that the dumb talk will run like a soundtrack over the price action.
GG