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Oil Stable Despite IEA Warning That Supply Glut Will Persist Well Into 2016
Oil prices are oscillating higher and lower this morning (likely helped by the collapsing dollar) despite a report from The IEA that the global oil glut will persist well into 2016. As The FT reports, global oil supplies are still growing at 'breakneck speed' and outstripped consumption in the second quarter by 3m barrels a day, the most since 1998, rather ominously concluding, "while a rebalancing has clearly begun, the process is likely to be prolonged."
The oil industry is hunkering down for an extended period of depressed prices and have adopted the “lower for longer” mantra, the IEA said.
“Global inventories will pile up further,” it said, adding that demand will not cut into the surplus until late 2016 at the earliest.
“Even with the slowdown in non-Opec production and higher demand growth, a sizeable surplus remains,” the IEA said.
The outlook does not include higher Iranian output should sanctions be lifted.
...
“If the oversupply persists it becomes much more important to understand how much storage is available,” said Jamie Webster, analyst at IHS Energy. “There is not an infinite amount. Unfortunately the total volume of tankage available is an opaque topic for some key regions.”
The IEA said the hundreds of billions of dollars of investment cuts by energy companies will eventually help rebalance the market.
But if demand continues as it has done this year, the situation will become “increasingly sensitive”, the IEA added.
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Which explains why the algos were buying oil earlier on.
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Look at the membership of the IEA and then tell me it is not a propaganda mouthpiece for the land of the free
http://www.iea.org/countries/
Nearly 100% of global net oil consumption increases from '09 til now was China alone premised on their credit growth from $7T to $28T...OECD nations continue to use less and less...so perhaps that Boon Pickens $100+ forever more was a little off...consider looking at China's impending population peak, it's credit peak, it's general collapse...
http://econimica.blogspot.com/2015/08/the-chinese-mirage-no-different-than.html
also from last April
http://econimica.blogspot.com/2015/04/how-peaking-global-crude-oil-production.html
Not a word about Saudi Arabia decreasing production by 200kbd in July.
200kbd out of 93mmbd global production is about 0.2%
That will easily be replaced by Iran
Iran is going to be the joker in the deck.....
You're right; those mullahs are pretty funny jokers.
Iranian production is a chimera and it was only up 28kbbl/day in the same time period.
Long UWTI; like it or not oil is the life blood of the machinery of the world and we are not far from a bottom here, just mho.
Or, at least a short term bottom. I just went long oil also.
I am also long oil.. but I did it by shorting DWTI.. Because I am not a fucking retard.
Its all positive news for gasoline though https://finviz.com/futures_charts.ashx?t=RB&p=m5
Maybe, maybe not. How things go in the next month or so will determine how well the contract finishes.....
Looks like the PPT is in full effect.
Everyone knows the shale producers will continue to pump at these levels until they run out and that the low cost Iranian and Iraqi oil will continue to flow at full force at these levels. Everyone knows there is an oil glut and that demand is flat or increasing very slightly well below the excess supply being produced. Now look at the situation unfolding in China where most of the oil demand growth had been coming from.
Thousands of capped shale wells will sooner or later have to be tapped, if nothing else simply for cash flow. Then the real fun begins.
People forget there are still over 600 rigs running and those new wells are going to be there too.....
How exactly can producers "rebalance" in a world filled with central banksters?
Oil producers are so broke and so desperate for cashflow that they cannot afford to leave it in the ground at any price. There is no longer sufficient credit and hot money to bid up prices, and it goes without saying there is no longer adequate demand either (everyone is debt saturated many-fold, with no possibility of repayment, because *drum-roll* the cheap oil is gone). The price needs to crash to $20 in current dollars, for a year at least, for any kind of organic "growth" to have a chance of being possible, and at $20, all of the world's oil producers are instantly insolvent failed states.
The real problem is simple: oil no longer earns its keep. It ought to be left in the ground given current extraction costs (to say nothing of environmental devastation). The analogy with debt is fitting. The marginal return on every unit of debt peaked long ago. The marginal return on oil, given the very real energetic and monetary costs necessary to make it available and usable, peaked long ago (this is what caused financialization and created the debtonomy). In both cases, the prudent solution - stop "producing" both, because both afford negative real returns and destroy the world's most import capital forms in the process - will trigger the instant collapse of the shantytown known as industrial civilization.
What happens when 30 million Arabians - who consume one in three of every Saudi-produced barrel - can no longer buy their copious amounts of oil for pennies on the dollar? The Kingdom dries up and blows away into the brutal Arabian desert, instantly. Until then, they will pump, like a vampiresucking its own blood. Currencies are not the only thing experiencing a self-cannibalizing (auto-catalyzing) race to the bottom.
Place yer bets... Iran's dealing.