Friday, June 14, 2013

Oil Supply Continues Flat

Above is the latest data on global oil supply (all liquids from various sources above, and the green curve being only crude and condensate below).  We continue to be in a pattern in which supply has been very flat since the beginning of 2012.  A close up just of the last few years shows this better:

Despite the flat supply, prices have fallen over the last year:

Presumably the fairly high prices sustained since the mid 2000s have set in motion enough conservation efforts in the OECD that demand is falling there enough to accomodate the rising developing country demand, without prices increasing further.  I would not expect Brent prices to fall below $100 though, at least not for long, as Saudi Arabia will cut back production to support them.

For those who would like more background on these issues, I made some attempt to explain here.


petemason said...

April's figures on the Bakken stats have just been posted at
I notice that the increase in daily oil from April 2011 to October 2012 is close to 21k bpd, while from October 2012 to April 2013, it is nearer 6k bpd. Winter and spring have been tough, so I guess it will be surprising if the next few months' stats don't show a recovery to higher rates (although looks like May won't), especially with the improved recovery techniques. But will it be enough to maintain the global plateau? In fact, will it be enough to maintain an increrase in USA oil production in 2013.

Lynn Helms, at the NDIC Department of Mineral Resources over there, comments:
"Operators have not been able to catch a break. April 2013 was the coldest on record, on April 15th over 80% of state highways were ‘no travel advised’ due to the heavy snow fall, and more recently May 2013 is the wettest on record. Uncertainty surrounding federal policies on taxation and hydraulic fracturing regulation continue to make investors nervous. Pressure on the federal budget has led to a budget proposal that eliminates deductions for intangible drilling costs and the depletion allowance."

I guess if the slow down in Bakken production tightens supply in the US and (together with the EIA's expected return to (marginal) growth in oil consumption in the USA in 2013) helps raise oil prices, that will raise profit margins and encourage more oil pumping, but...

... If the Bakken doesn't return to previous performance, I wonder if prices won't tend to rise this year - unless China actually crashes and its consumption falls dramatically (not so sure about that).

Zeke said...

Some old song has a line "dreams and schemes". This is the world we live in. I spend a couple of decades as a licensed therapist. One thing I noticed is when the shit hits the fan, people start dreaming of quick, easy fixes. It's the first stage of adjusting to a reality you don't like. This is "no big deal" and I'll get back to life as it was. This is where we're at far as I'm concerned. Bakken will "save" us. Eagle Ford will "save" us. Electric cars will "save" us. Meantime, we'll talk about it.

petemason said...

And on USA total production, although it may not be significant, Bloomberg reports a fall in June:
"Increased output from shale formations including the Bakken and the Eagle Ford in southern Texas helped U.S. oil production reach 7.37 million barrels a day in the week ended May 3, the most since February 1992, Energy Information Administration data show. The figure slipped by 76,000 barrels a day to 7.22 million last week."