Article

2015-12-14 International-UN-NGOs

Oil poised to recover in 2016, predict experts

Given the current plunge in the global supply of oil, energy analysts expect demand will outstrip supply as early as April 2016, leading to a recovery in oil prices that have been plummeting as much as 60 per cent over the past several months. Energy experts at the Euromoney Qatar Conference argued that oil supply continued to fall as less economically viable projects are postponed and cancelled.

For example, the US rig count (the number of rigs searching for oil and gas) declined to the lowest level since 1999 in December, with 737 rigs engaged in exploration and production - less than half the 2014 level of 1,920. Given the current dip on the supply side, global oil demand will outstrip supply as early as April 2016, leading to a recovery in oil prices, analysts predicted.

In the Energy Strategy session, speakers focused on falling demand from industrial powerhouses around the world, such as China and the Brics, which has driven oil prices down in 2015.

According to experts, global investment in exploration and production has fallen from $700 billion last year to $550 billion this year. With US crude prices having slid below $40 per barrel again, investment will sink even further in 2016. US shale output declines are projected to account for 400,000 barrels per day of an anticipated 500,000 bpd drop in non-Opec production.

The International Energy Agency, or IEA, expects oil prices to remain low through 2016, but forecasts a rebound to begin in 2017 as the current oil glut recedes and demand rises.

The low price of oil has led the energy industry to slash investments in drilling and exploration, which could lead to a tighter supply. Oil companies have cut such spending by about 20 per cent so far this year, and may spend even less in 2016. The spending decline, combined with continued growth in demand, eventually could lead to "some surprises" in pricing, the IEA said.

However, with global demand expected to remain weak in the first half of next year, senior executives from leading asset managers and energy companies agreed that the disruption of the last 15 months is likely to continue.

Experts predicted that the gas market would also likely to begin to recover in 2016, as nations around the world look to reduce emissions and introduce cleaner energy sources. Gas demand globally has grown at a better rate than oil in recent years - averaging 2.5 per cent - and is likely to increase as more nations look to phase out coal and other "dirty" fossil fuels.

Posted by Steve White 2015-12-14 00:00|| || Front Page|| [11137 views ] Top

#1 Now we get to test the theory that fracked shale oil puts a price ceiling on the price of oil- and indirectly on gasoline at the pump.

Guess the saudi oil ticks need some new limos, or jihadi armies or something.

Enjoy the low gas prices while they last.

Posted by Nguard 2015-12-14 00:38|| 2015-12-14 00:38|| Front Page Top

#2 I'd wager that, rather than US shale, it will be lower cost overseas projects (H/T to the Citi analyst who compiled that chart) that cap oil prices for the foreseeable future. It's tough to imagine the finance crowd, having been so recently burned by US shale, coming back while there are much lower cost alternatives that can supply the world's needs for a few years overseas. Financial instability or political instability, pick your poison.

Posted by Halliburton - Foreign Affairs Division 2015-12-14 08:34|| 2015-12-14 08:34|| Front Page Top

#3 Supply...plunge? Really? Last time I heard (just a few weeks ago) they were running out of places to put the stuff due to a glut.

Posted by Spinesing Gray3122 2015-12-14 08:40|| 2015-12-14 08:40|| Front Page Top

#4 The surplus supply still exists but it has been shrinking the last three months. The surplus seems to have been driven as much by decreased Chinese demand as by increased fracked supply. Historically, the faster prices fall - and they have fallen at record rates - the harder the bounceback once the supply is short of the demand.

Posted by Glenmore 2015-12-14 08:43|| 2015-12-14 08:43|| Front Page Top

#5 It's only got to be good when OPEC is not in control of the spigot.

Posted by JohnQC 2015-12-14 09:43|| 2015-12-14 09:43|| Front Page Top

#6 as of this post, WTI is at $35 and Brent is a $37

I doubt that many fracking operations are profitable at these prices.

Posted by lord garth 2015-12-14 10:16|| 2015-12-14 10:16|| Front Page Top

#7 Time to add to the strategic petroleum reserve?

Posted by Sven the pelter 2015-12-14 11:18|| 2015-12-14 11:18|| Front Page Top

#8 I wonder, Is there a "Fix" In on the gallons used by CHEVROET, A "PRICE FIX', for yeas now I've wondered about the miles driven per gallon.

My Toyota gets 39MPG and for years the standard was 20, I'm a master mechanic, and I wonder about collusion, between "BIG OIL' and the "BIG THREE ' carmakers.

It seems easy to add overdrives to the cars, and slow the engines (Buns less per mile) with the interstates you have flatter (Smother) travel.

I hear (Rumor) Caddy is testing 7 and 8 speeds (YES overdrives) bet we never hear of these again.

Posted by Redneck Jim 2015-12-14 11:32|| 2015-12-14 11:32|| Front Page Top

#9 redneck jim

the next big thing in vehicle gas mileage is in hybrid trucks, VIA Motors will likely be going IPO in Feb or March and will probably sell 30k to 60k in 2016 -- vehicles will get 40+ mpg and the ones used for local delivery will probably use only electricity

of course electricity isn't free either and the tax expenditure is high ($7k to $10k per vehicle)

within a few years, this will actually make a difference in the total US consumption

Posted by lord garth 2015-12-14 11:46|| 2015-12-14 11:46|| Front Page Top

#10 If you calculate the Fed and Treasury printing a lot more money without backing, the subsequent resultant inflation will be reflected in higher prices.

Posted by Procopius2k 2015-12-14 13:14|| 2015-12-14 13:14|| Front Page Top

#11

I hear (Rumor) Caddy is testing 7 and 8 speeds (YES overdrives) bet we never hear of these again.

GMC, and probably other GM divisions, introduced 8 speed automatics a year ago on large SUVs.

Posted by Halliburton - Foreign Affairs Division 2015-12-14 21:08|| 2015-12-14 21:08|| Front Page Top

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