Tag Archives: demand

Oil Price Scenario for 2017

Every year around this time I make an oil price “forecast” for fun and have a bet with a friend. A year ago my BAU scenario for Brent was $37 for December 2016. The current front month is $55.80. My friend wagered on $64 leaving $50.50 as the break-even point. It is time to concede defeat and examine why I did so badly?

To cut to the quick, my wag for December 2017 is $60 but we may see $80 some time during the year. Light tight oil (LTO) production has disturbed the historic price-supply dynamic adding uncertainty to predictions. Continue reading

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Oil Price Crash: How low will the oil price go?

I have been following the oil price crash since it began in late 2014, providing annual forecast scenarios and monthly vital statistics updates. There has recently been an acceleration in activity and news, and as the oil price has continued its fall to below $30, investors and speculators wrestle with the main question: “how low will the oil price go?” Continue reading

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Oil Price Scenarios for 2016

Let’s cut to the quick. My forecast for Brent at around this time next year in my BAU scenario is $37. This is grim reading for all those involved in and around the oil industry. Worse still, I think there is high probability that we see sub-$20 oil before the first quarter is out. Continue reading

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Global Production Up One Million bpd in March

Global oil production rose sharply in March by 1 Mbpd and we have a new peak in global total liquids production of 95.24Mbpd. But with the oil price currently resilient, it seems likely that surge in production may have reversed.
The plunge in US oil rig count has resumed. Oil plus gas rig count stood at 905 on May 1, just above the low point reached in the post financial crash period.
I anticipate that the price bottom may be in but that price will bounce sideways along bottom for several months until we see significant falls in OECD production. There is as yet little sign of a significant drop in US production.
The current action appears to be demand driven, the low price raising demand more than it is suppressing supplies. Continue reading

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Peak Oil in the Rest of the World

What caused the recent crash in the oil price from $110 (Brent) in July to $70 today and what is going to happen next? With the world producing 94 Mbpd (IEA total liquids) $1.4 trillion has just been wiped off annualised global GDP and the incomes of producing and exporting nations. Energy will get cheaper again, for a while at least. The immediate impact is a reduction in global GDP and deflationary pressure. Continue reading

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The 2014 Oil Price Crash Explained

In February 2009 Phil Hart published on The Oil Drum a simple supply demand model that explained then the action in the oil price. In this post I update Phil’s model to July 2014 using monthly oil supply (crude+condensate) and price data from the Energy Information Agency (EIA).

This model explains how a drop in demand for oil of only 1 million barrels per day can account for the fall in price from $110 to below $80 per barrel. Continue reading

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Energy and Mankind part 2

In 1911, Winston Churchill famously made the decision to convert the Royal Navy from coal to oil fired steam. He did this because oil offered many advantages over coal. It was more energy dense giving oil fired ships greater range and speed. And it could also be pumped through pipes, dispensing with the need for hundreds of stokers. Continue reading

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Gridwatch

BM reports provide instantaneous updates on the generating sources to the UK grid. Gridwatch has been recording this data for years and making it publicly available in an easy to access format. This post presents detailed charts of UK generating mix for January to April 2013. It is a prelude to a more detailed dissection of UK generating mix, and in particular the impact of wind on the grid, that will be published later this week. Continue reading

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