Erm..what?? What he just explained was some of what is behind the glut of oil on the market. Glut...oversupply....
$1.99 gas .
- Thread starter tuffenuff2
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Erm..what?? What he just explained was some of what is behind the glut of oil on the market. Glut...oversupply....
Tilted
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I'd agree. We're talking about a big ballpark here, but something around there is probably right.
That does assume, however, that things remain more or less what we might expect when it comes to, e.g., global economies, drilling innovation, as-yet-undiscovered reserves. If we found some new, easy to access, huge source in our own backyard that no one imagined might exist - then that might change the calculus some. Or if Russia conquered the Middle East and put different decision makers in charge of the cheapest, most readily accessible, sources of oil in the world. Or if we sooner than might be expected figured out how to take large-scale advantage of some alternative energy sources. Or if...
But, yeah, without some seismic game changers... we should all enjoy the cheap gas and oil while we've got it, because it's likely to be more expensive a year or two from now.
SG_Player1974
New Member
Yep... and also the geo-political reasons why the glut isn't being dealt with which leads to pricing.
What geo-political reasons were those? All I see are a bunch of financial self-interests at work...long-term ones and short-terms ones in competition with each other. US production rose because of the higher value of a barrel of oil and various innovations in extraction technologies. Production in many other parts of the world rose because of similar technology improvements coupled with the remarkable number of "new" reserves discovered with increasingly more effective and sophisticated exploration methods.
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Tilted
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The pricing is about the supply-demand balance (and expected supply-demand balance going forward). This is about supply and demand.
However, and of course, supply and demand is affected by various things - to include, e.g., market manipulation from the likes of OPEC. I haven't seen anyone here denying that the state of the supply-demand situation is dependent, at least in part, on OPEC's decision not to cut production to support oil prices. That's part of the supply-demand situation, it's part of why the market is currently over-supplied / under-demanded. The development of newer sources of oil, e.g. shale, at a quicker pace and on a larger scale than might have been anticipated a few years ago is also part of why the market is currently OS/UD. A slowdown in Chinese growth, and many other things, are also part of why the market is currently OS/UD. But, the reality that the market is (or has been) OS/UD, is without doubt the primary reason that oil prices have fallen recently. And they've fallen so far because it doesn't take much OS/UD to drive prices down a lot just as it doesn't take much US/OD to drive them up a lot, not if that imbalance persists (or is expected to persist) for a while, anyway.
BOP
Well-Known Member
A LOT of "closed/old" wells and properties were put in production (or back in to production) as the price of oil kept increasing steadily over the past 6 or so years. Heck, I'm a 1/5 owner of an oil property in Texas that had its wells closed down in the early 60s..and just two years ago, out of the blue, a drilling company tracked us down and negotiated a new lease deal to open it up again. Guess I won't be seeing any big royalty check on that now..
Serves you right, you 1%er you.
intertidal
New Member
I understand that production from Russia and Iraq is at 30 year highs and that US production has about doubled in 5 years. I am surprised that OPEC has been so slow to cut production. Have they become less relevant than they were in their glory days?
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Tilted
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U.S. production hasn't doubled, but after nearly 4 decades of declining production it's been growing impressively over the last 5 or so years. I think it's more like up 50% over that time.
As for OPEC, yes I think they have been becoming less relevant and less capable of controlling global oil prices. But they remain quite relevant still. I suspect the recognition that their grip has been slipping some is part of what's behind their current position and their recent decision not to cut production. They'd pretty quickly be better of financially if they'd cut meaningfully, but they're willing to take the hit because they think they have to or they may be even more irrelevant and fairly powerless. They are making a stand while they're still strong enough to do so.
In essence what they've said to the rest of the oil producers is this - we need you guys to join us, to act in concert with OPEC. This cartel needs to be bigger, get on board with us and together we can keep oil prices where we all want (or need) them to be. You guys benefit from what OPEC does, and we aren't going to go on doing it by ourselves anymore. At some point they won't be able to, so it's time to - in effect - expand their membership roll.
EDIT: I'm gonna take back what I said in the first paragraph. I just looked at individual monthly numbers and there were a couple of aberrant months there back around the financial meltdown when production dropped off a cliff for a short period of time. Using those months as a baseline, and looking at monthly rather than annual production, you can say that we've doubled production sense. We've actually more than doubled it. Looking at longer snapshots, we haven't really gotten there though we're getting into that ballpark right now.
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It is (was) possible that we could equal or exceed, in 2015, the previous all-time peak production level from around 1972. But I would guess that the precipitous drop in oil prices might keep that from happening.
Tilted
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Without knowing what oil prices are going to do over the next 6 months or so, we're largely just guessing, yeah. But my guess is that U.S. production continues to climb some in 2015, just not at the rate it would have had prices remained $90 - $100 -ish. That said, I think I'd agree with you that we don't get to an all-time high for U.S. production. We've increased production in the ballpark of a million barrels per day average for the last 3 years, 2014 will probably be a little above 8-1/2 mbpd (maybe 8.6 or so). I'd guess we don't get another million bpd bump for 2015, which is about what we'd need.
The hits are starting to become evident..... Fortunately (I hope) for us, we're seeing a tremendous uptick in the construction of offshore wind farm support vessels, offsetting to a large extent, the cutbacks in the very similar off shore oil support vessels.
http://www.marinetechnologynews.com/news/global-exploration-spending-expected-506509
http://www.marinetechnologynews.com/news/global-exploration-spending-expected-506509
my wife's best friend, was sent home from Kansas [back to Houston] before Christmas
.... the project her husband was working on was shut down he was a pipe fitter working on various expansion projects in the last 5 yrs .....
[they were supposed to be there 3 yrs]
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tuffenuff2
Active Member
$1.90 today with Sheetz card at Dahlgren.