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How OPEC Just Crushed Oil With One Chart
Just when you thought it couldn't get any worse - amid supply gluts, production surges, market share scrambles, and demand disappointment - it does. OPEC this morning confirmed not only no change in the already weak global demand picture but the current oil inventrory surplus is the largest in at least a decade. This has driven WTI prices down close to a $41 handle this morning (from over $48 a week ago) as simply put, there's too much oil and OPEC's grand strategy for solving this imbalance - pray for a colder winter...
Crude is down 7 of the last 9 days...
As Bloomberg reports, OPEC's new statement does not bode well for the short- or medium-term future...
Surplus oil inventories at highest level in at least a decade on increased global production, OPEC says in Monthly Oil Market report.
Stockpiles in developed economies 210m bbl higher than their 5-yr avg
Compares w/ 180m bbl overhang in 1Q 2009, which is only other occasion in past 10 yrs when inventory surplus has surpassed 150m bbl
Excess supply may be pared in coming mos on slowing non-OPEC supply, rising demand for winter fuels
...
Non-OPEC supply to contract next yr for 1st time since 2007; down 130k b/d to 57.11m b/d
OPEC keeps 2015, 2016 fcasts for global oil demand unch.
And so here, in one simple chart, is why this will not end well... There's too much oil!!
Supply and demand growth so far in 2015...
And OPEC's strategy to 'solve' this? Pray for a colder winter!!
The recent decline in oil prices has encouraged additional oil demand. It has also provided a challenging market environment for some higher-cost crude oil production, which has already shown a slowdown. Moreover, strategic oil reserves have grown as some countries – including China and India – have taken advantage of lower prices to add to their reserves, a trend that is likely to continue.
In addition, a colder- or longer-than-expected winter, as well as better-than-projected economic activities, could support incremental demand. This would help alleviate the current overhang and support a recovery of crude oil prices in the coming months.
Charts: Bloomberg
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where's all those peak oil experts ?
Oil will be in the $30's very soon
Ballzy call w crude @ 43.50. ...
where's all those peak oil experts ?
They've joined the global warming freaks.....they're trying to come up with a new name.
It won't have anything to do with Agenda 21.....cause they kicked that to the curb too.
Maybe we should take all the peak oil people and lump them in with the climate change folks.
Then we can just call that group: Educated and wise.
should have been $25 all along. Letting the criminal mega banks trade commodities with until limited bank funding was CRIMINAL...thank you Glass Stegall. Lets just call it "Revenge of Economics"
Yes but that doesn't have anything to do with the cost to produce it.
99% of shale is too expensive to produce when oil is below $60 a barrel.
US oil production has already peaked (again) and the world peak is here as well.
It's peak oil PRODUCTION. Pretty much a match that I can see.
This is called the bumpy plateau...
Peak oil experts predicting this would happen for years.
WhereTF is Obama??? 5 years ago he was on world tv blaming oil "speculators" for driving prices past $110. Oh, and don't forget about one our most esteemed leaders Crackzine Waters going off on uh,uh, uh, sociali...uh, uh, uh, taking ov... uh,uh,uh, na, nation, nationalizing oil companies.
https://www.youtube.com/watch?v=Y0BdKkEKTrs
Smells like burning. Wait nope. Not burning enough oil. Economy in the pissrr
From April. http://hedgeaccordingly.com/2015/04/the-slump-in-oil-prices-is-fuelling-...
this article has not got its facts straight
1. peak oil. everyone knows this.
2. low prices hurt opec. everyone knows this.
And this week at the Comedy Store we have "The Economic Sheep"...
Lol...
Cold winters only exist when the Fed or government blames cold weather for poor economic numbers
but-but According to Dr David Viner, a senior research scientist at the climatic research unit (Team Climategate) of the University of East Anglia,within a few years winter snowfall will become "a very rare and exciting event"
"Children just aren't going to know what snow is," he said
BY CHARLES ONIANS, The Independent, MONDAY 20 MARCH 2000
The link?....aaand its gone (surprice!)
"OPEC's grand strategy for solving this imbalance - pray for a colder winter.."
Great strategy but we are in a very big el-nino year so they'll have to wait for la-nina NEXT year before we get a real cold winter. The bright side is that there will be a lot more snow on the east coast of north america so maybe all those snow removal machines will use up the excess :)
I had a few beers with an older independant oil producer....he thinks oil will be $80 next year....I think he is praying for that though.....
Well young man
If they double the supply of $ in that time frame...................he could be right!
Zing!
What he needs is a good old-fashioned war.
How many deep were you guys at that point? :)
My thoughts keep returning to Mike Maloney explaining how, in his analysis, the great unwind will start with a great deflation.
To be followed by a huge " helicopter drop" of fiat into the system, at which point the rocket ignites, and it's uncontrolled hyperinflation.
Other than the timing ( tptb can really string this along) , it's just has he scripted.
He explained it in a way that made perfect sense. For me, this deflation is very telling.
Most Americans won't go for money drops, they have been taught to beleive that all stimulus must go to the 1% first and then trickle down. Plus, the Fed can just raise rates to 20% and increase bank reserve requirements to stop the carnage.
Excess supply may be pared in coming mos on slowing non-OPEC supply, rising demand for winter fuels...
In other words countries that get cold in winter (such as russia, aw, so sad;) will not produce as much whereas WE are reliable. war is hell. i think they are actually proud of the glut.
It's a good thing commodities are not used as financial assets.
The wind is almost perfect money.
"better-than-projected economic activities, could support incremental demand. This would help alleviate the current overhang and support a recovery of crude oil prices in the coming months."
You know what's good for better-than-projected economic activities? Less corruption!
You know who's bad at making less corruption? Oil companies!
Ohhhhhhhhhhh.....snap
Massive debt is killing demand. No turning around until debt is resolved: and good luck with this!
Wot?
actually technology of more efficency is killing demand...has always happened
Please explain how a more efficient steam engine REDUCED demand for coal?
https://en.wikipedia.org/wiki/Jevons_paradox
US military will be called in to fix this! As the world's number one consumer of oil...well, just fill in the dots!
if i recall correctly the usa military only uses ~ 0.5 mb/d.
Wot?
A nuclear winter perhaps?
LOL
Actually their strategy is to hope Putin is overthrown before Riyadh's credit line at the Fed is maxed out.
Back on planet earth, Vladimir Putin has a much better chance of dying in bed than any member of the House of Saud.
The real price of oil has only gone one way in the long run. Up. Gold doesn't come close. This too shall pass.
Putin doesn't need to die. But he certainly won't make it out of this alive politically. Not a chance...
I think you underestimate the man. Even if he goes in one way or another you'll have to deal with Ivanov who is very interesting fellow in his own right. You won't be getting Medvedev again or anyone else you can talk into stuff.
http://russia-insider.com/en/politics/sergey-ivanov-talks-tass/ri11080
This is terrific news. There might be some oil left after all for your children's children. You know, those future subsistance farmers.
Price is not the issue
Look at how the stuff is used.
Specifically transport inputs relative to total final consumption
In a perfect economy distribution should be frictionless.
However the goal of capitalists is to increase distribution / costs.
What kind of bullshit economics is that?
Please...
Real Social credit economics mate
Start by plotting the ratio of transport relative to Tfc over time (let's say yearly pie chart)
That energy is wasted energy, not used for real consumption.
The liberal economy is a racetrack economy, designed to project the illusion of scarcity
I can see you never took economic and know nothing of capitalism. This is capitalism...competion and supply and demand. If Dodd-Frank hadn't removed JP Morgan, Goldman Sach, etc from the equation we would still have over supply...we have for 8 years....and the price would still be $100. What happens now...massive deflation...on too much supply. If fracking hadn't occured...Obama would be sitting on a depression as his methods are so crooked...they can create nothing but ruin. Now the rubber is hitting the road as supply has become so overwhelming it is self destructing. printing more trillions won't help now....
Jp Morgan is capitalism / state sponsored usury.
It is not a feudal / equity relationship.
That ended with the freely transferable share and all that other shit.
Capitalism is inherently anti local.
Who is OPEC aiming at?
OK, I'll step aside now as the bullets fly...
The mistake of yee guys is to somehow think that finance mirrors the physical world.
All you need to do is watch real energy balance sheets.
You can then grasp the waste inherent within Finance capitalism
In a few short years it will take a barrel of oil to extract and refine a barrel of oil from the ground.
Then the fun beings.
The world ran out of oil 75 years ago
No it wont.
so why aren't those airplane tickets going down?! i need to make an overseas trip to visit someone & tickets are MORE EXPENSIVE than last year when i couldn't afford it ! no airplane ride for me, i guess.
US airport are controlled by the airlines....they have a monoply on slots. We build the airports...and give control to the worst airlines
In the "new normal" economic thinking... you have to think outside the "well". The major countries of the world all build "strategic oil reserve" storage facilities. So Saudia Arabia digs a hole to bring out the oil and other countries buy the stuff and put it into a hole. Excess supply now removed from the market...
It is a price war.
Mostly it is a price war between Saudi Arabia and Russia.
It cannot be a price war between either of the former and the US, because US oil producers are prohibited by law from selling overseas. HENCE THEY AREN'T COMPETING FOR THE SAME MARKETS, BUT BOTH COMPETING FOR CHINESE AND EUROPEAN MARKETS.
To the extent the US Oil Patch has influenced or triggered this price war it has been by sending cheap Mexican and Canadian producers to compete for those same Chinese and European Markets, driving the big producers to come into conflict as the price lowered.
"... and OPEC's grand strategy for solving this imbalance - pray for a colder winter..."
Looks like Mother Nature won't comply this time around:
http://www.accuweather.com/en/weather-news/us-winter-forecast-2015-2016-...
Fucking accuweather?
I'll go with the snowboarders and the Farmer's Almanac.
http://snowboarding.transworld.net/news/farmers-almanac-winter-forecast-...
Standard Disclaimer: Buffalo weather is generally the best indicator...
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The $?φ?@†$ have somehow managed to finally sever the price of oil and the price of fuel (heating/gasoline/et cetera).
It's their wet dream cum true.
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