Oil Prices

[Boon]

Global Energy Mix Projection:

2012:
Total primary energy demand = 13,361 Mtoe
Coal = 29%
Oil = 31% = 4,142 Mtoe
Gas = 21%
Nuclear = 5%
Renewables = 14%

Boon san

What's your source of data?

According to the BP statistical review (a report that has been in existence for quite a while):

Total primary energy demand in 2012 = 12,483.2 Mtoe
Coal = 30% = 3723.7
Oil = 33% = 4,138.9 Mtoe
Gas = 24%
Nuclear = 4%
Hydroelectricity = 7%
Renewables = 2%

Part of the difference could be the result of BP accounting only for commercially traded fuels. Slight difference from your data, whether it is material, I guess it depends. I prefer to strip out hydroelectricity from renewables (like what BP did) as the potential for growth in large scale hydroelectricity is limited especially as it carries huge environmental consequences. Therefore, it is unlikely that renewables can replace hydrocarbons in the short run (<10 years).

Notwithstanding the above, I would be most happy to see rapid adoption in renewables but folks do have to bear in mind that a good catalyst for a rapid adoption is high oil prices.

Figure 2.2 is my source

In 2040, Fossil Fuels Still Reign

By Katherine Tweed
Posted 14 Nov 2014

http://spectrum.ieee.org/energywise/ener...till-reign

[kingpin9]

It’s an early present for economies that aren’t dependent on oil and gas for the majority of their growth.

Gasoline prices in the United States will approach $2 per gallon and may break that level in the coming weeks. The ultra-low prices will be a major stimulus, bigger than any tax break that the public has seen in years.

It’s hard not to be excited about it… unless, of course, you own energy stocks.

So how far will it go?

Writing’s on the Wall

Lower oil prices are incredibly simulative. Many average Americans will be joyfully spending their “extra” money on more presents, along with more oil and energy.

You see, low oil prices means cheap energy to produce and cheaper materials, like plastics. The savings get passed on through cheaper products and will boost export margins.

And we’ve already seen a rise in large-car purchases. And come this holiday season, many families will decide that they can take that road trip to Grandma’s house.

But many consumers don’t seem to realize that there’s a surplus of oil in the market, mostly from shale oil production in the United States. When this surplus gets sopped up like Thanksgiving gravy, and it will, the price of oil will stabilize and rise again.

Take it from me, these prices will be short-lived.

The industry is overreacting. Just as I predicted the price drop, my analysis of the entire situation is that prices aren’t going to be at or below $30 per barrel, as others had said.

Drop’s Almost Over

The market should focus on where prices need to be, especially for OPEC countries, not where their cost of production is currently. These countries are completely reliant on oil for their domestic economies. Saudi Arabia, Iran, Russia, and Venezuela need oil prices to be above $90 per barrel in order to function without incurring massive debt and stirring socioeconomic unrest.

OPEC countries also have massive amounts of cash stockpiled in anticipation of such a fabricated crisis. They’ll be burning through that cash in the coming months, allowing prices to stay below $80 for some time. There’s even a chance of some short-term shocks that will send oil prices below where they sit today.

But, the majority of the plunge has already taken place. We aren’t going to see another $40 plunge from current levels.

In the meantime, OPEC is hoping that the shock will be great enough to put the marginal shale producers out of business and shrink U.S. oil production to levels that are less of a threat.

OPEC will succeed, and companies will cut spending on new drilling and operations as the profit incentive drops, much like it did with natural gas. In fact, it took the natural gas industry more than two years to recover from the plunge to $2 per mcf and make it back to over $4 – the price they could make a profit.

It will be no different this time. The time for panic was when oil was at $100, not when it’s at $60.

Opportunities will abound in the coming months. In the next issue, we’ll look at one of those said opportunities that could pay out on a global scale when prices recover.

And “the chase” continues,

Karim Rahemtulla

[Boon]

Signs Of Peak Oil Starting To Emerge

By Euan Mearns | Sun, 07 December 2014

http://oilprice.com/Energy/Crude-Oil/Sig...merge.html
________________________________________________________________________________________________________________
Signs of stress must not be ignored, IEA warns in its new World Energy Outlook

World oil supply rises to 104 million barrels per day (mb/d) in 2040, but hinges critically on investments in the Middle East. As tight oil output in the United States levels off, and non-OPEC supply falls back in the 2020s, the Middle East becomes the major source of supply growth. Growth in world oil demand slows to a near halt by 2040: demand in many of today’s largest consumers either already being in long-term decline by 2040 (the United States, European Union and Japan) or having essentially reached a plateau (China, Russia and Brazil). China overtakes the United States as the largest oil consumer around 2030 but, as its demand growth slows, India emerges as a key driver of growth, as do sub-Saharan Africa, the Middle East and Southeast Asia.

“A well-supplied oil market in the short-term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries,” said IEA Chief Economist Fatih Birol. “The apparent breathing space provided by rising output in the Americas over the next decade provides little reassurance, given the long lead times of new upstream projects.”

http://www.iea.org/newsroomandevents/pre...tlook.html

________________________________________________________________________________________________________________

For those who are interested to dig deeper.....................

World Energy Outlook 2014 (Released on 12 November 2014)

http://www.worldenergyoutlook.org/public.../weo-2014/

Welcome to the 2014 edition of BP's Energy Outlook

http://www.bp.com/content/dam/bp/pdf/Ene...ooklet.pdf

[Boon]

When to Expect the Next Oil Price Spike?

By Phil Flynn/

The Energy Report/
Published December 08, 2014/
FOX Business

While oil prices continue to plummet because of the OPEC price war, already we are laying the groundwork for the next oil crisis rally. The break in oil prices is putting on hold many oil projects that were planned to meet the demand of the future. Last week a report said that over $150 billion worth of energy projects are being put on hold as OPEC has added more uncertainty to the global market. Rystad Energy pegs the global average cost of production will come in around $82.50 cents a barrel due next year due to rising production costs, meaning that we won’t be adding to global production capacity at a rate that will allow us to meet potential future demand if and when the global economy starts to expand.

In the meantime companies like Chevron, Exxon Mobil, and the U.K.'s BG are already hinting of scuttling major projects. In the short term, the Baker Hughes rig count seems to suggest that projects in the U.S., already in play, are going to continue but the real damage we will see from OPEC’s oil production offensive will be felt years down the road. Baker Hughes reported that the U.S. rig count increased to 575 rigs up for the first time in a few weeks.

OPEC is basically stealing our future. While oil prices were going lower anyway, OPEC’s move to try to break prices is really market manipulation and does real damage to the economy. While OPEC is all about greed and maintaining their market share, they are also really hurting themselves. OPEC has a decade of record profits and many OPEC nations squandered what should have been an opportunity to grow their economies and invest in their future. Instead they are now just focused on the status quo and hoping that they can hang onto their current market share.....................................................

http://www.foxbusiness.com/markets/2014/...ice-spike/

[greengiraffe]

Oil prices fall again, near five-year lows
NICOLE FRIEDMAN THE WALL STREET JOURNAL DECEMBER 09, 2014 9:26AM

OIL prices have dropped sharply to fresh five-year lows, putting additional pressure on countries that rely on oil revenue and on energy companies that are trying to calibrate their investment plans.

US oil prices settled down $US2.79, or 4.2 per cent, at $US63.05 a barrel on the New York Mercantile Exchange, the lowest level since July 16, 2009. Nymex oil futures are down 36 per cent so far this year.

Brent crude, the global benchmark, fell $US2.88, or 4.2 per cent, to $US66.19 a barrel, the lowest level since September 29, 2009. Brent is down 40 per cent year to date.

Oil prices have plunged for months as global supply growth has outpaced expectations while demand has been tepid. On Monday, oil prices declined steadily during the Asian and European sessions, but the sell-off accelerated as the US trading day got under way. US oil futures, which trade on the New York Mercantile Exchange, fell 2.6 per cent in the first hours of trading, reaching an intraday low of $6US3.06 a barrel.

Already, companies have been forced to make changes. ConocoPhillips on Monday said it now expects its capital spending to decline 20 per cent from a year ago to $US13.5 billion next year. The Houston-based oil giant said it plans to spend less on major projects that are nearly complete as well as defer spending on emerging shale plays in North America.

Norway’s Statoil AS A said on Friday that it would suspend the operations of three oil-drilling rigs for longer than previously planned because of overcapacity. Meanwhile, Schlumberger expects to post a pretax writedown of $US800 million for the fourth quarter, related to the oil-services giant’s plan to reduce the size of its WesternGeco marine seismic fleet.

Continental Resources., a major oil producer in North Dakota’s Bakken Shale, said last month it would spend $US4.6 billion in 2015, $US600 million less than planned, due to lower oil prices.

Iain Pyle, an analyst with Bernstein Research, said oil companies will have to re-examine some of their big investments. If oil prices don’t rebound soon, “what we’re going to see is projects getting cancelled,” he said.

While companies in the oil industry warn of major changes to their production and expenditure plans, those leading many of the world’s top economies have said the drop could be a shot in the arm for their economic forecasts. The positive spin from top policy makers in the US, Europe, Japan and elsewhere comes even as history has shown that sharp drops in oil prices tend to be associated with recessions as energy demand collapses.

Oil producing-countries are already hurting, especially those that rely heavily on petroleum revenue, like Iraq, Algeria and Nigeria. It is also a difficult development for countries such as Russia, Venezuela and Iran, which are already facing deep economic problems.

Driving Monday’s move, data showed that Japan’s economy contracted 1.9 per cent in the third quarter, more than previously estimated, while Chinese export growth fell below expectations and imports fell. China and Japan are the No. 2 and 3 oil-consuming nations after the U.S.

China’s crude-oil imports rose 5.5 per cent in November from October and were up 7.9 per cent year-over-year, according to Wall Street Journal calculations based on preliminary data released from the General Administration of Customs on Monday.

Declines in spending by oil firms will likely further pressure companies that provide oilfield services — such as Schlumberger, Halliburton Co. and Baker Hughes Inc. — which tend to suffer when oil companies reduce spending. All three companies traded down more than 1 per cent in recent trading, while Exxon Mobil Corp. and Chevron Corp. traded down 1.9 per cent and 3.3 per cent, respectively.

In its Monday statement, Conoco said it now expected production would increase about 3 per cent at its continuing operations, excluding those in Libya. Last month, the oil exploration and production company had said that next year’s budget would fall below the $US16 billion spent this year, dropping plans for some new wells in places such as Colorado’s Niobrara Shale.

Further hurting oil companies, the ICE Dollar Index, which measures the dollar against a basket of currencies, rose to a multiyear high early Monday. Oil is traded in dollars, so a stronger dollar makes oil more expensive for buyers using foreign currencies.

Even so, some investors are betting on a bounce back. Net long positions taken by large investors that the price of Brent crude oil would rise increased by 47 per cent as of December 2, according to the Intercontinental Exchange. Net long positions are calculated by the total number of bets that the price of oil would rise minus the number of bets that it would fall.

That bounce back would come despite little help on the way from the 12-member Organisation of the Petroleum Exporting Countries, which collectively pump more than one-third of the world’s oil. On November 27, the group opted to maintain production levels despite the recent sell-off. The decision sent the oil market into its latest bout of selling, with prices off more than 10 per cent since the move.

Morgan Stanley expects prices to remain down for some time. On Monday, the firm lowered its forecasts for crude oil prices for the next five years. For its base-case scenario, the US bank sees oil averaging $US70 a barrel during 2015, down nearly $US28 from its previous forecast. In a worst-case scenario, prices next year could be down 38 per cent on average.

—Ian Talley, Justin Scheck and Neena Rai contributed to this article.

[Porkbelly]

I do not believe that oil prices are low due to supply & demand.

I sense that it is orchestrated. Numbers being thrown up by organisations, institutions, analysts et al, may have some truth. Yet, with slowing China, Europe, the leaders of the world have demonstrated a committment to world economic stability.

This started with QE in the USA and UK,EU,China and even Japan. After 5 years, it seems the only route to take... humongous amounts to stimulate.

Any country that chooses not to sing the same song will face economic collapse. To date I have not read of any that has chosen a different approach.. though the methods may differ.

Oil prices have dropped partly to supply & demand but that could have just been the backdrop to use. OPEC had the opportunity to reverse prices but they chose not to. To maintain market share?... I think that is just a smokescreen.

As one thread says:

"And the music goes on..."

[Boon]

Ten Reasons Why A Sustained Drop In Oil Prices Could Be Catastrophic

By Gail Tverberg | Mon, 08 December 2014

http://oilprice.com/Energy/Oil-Prices/Te...ophic.html

[Ben]

Seriously, I am not too concern about oil price movement. We have seen oil price fluctuates widely before, but the fact is for every downturn they will be a subsequent upturn. There is no reason to believe this time will be different. Some analyst says the new norm for oil price is between $70 to $80. You believe that? I don’t. I think oil price could go lower than $70, and it will also go higher than $80. And I believe in the long term the likelihood of price staying above $80 is higher than below it. For a simple fact, oil supply is finite, but demand is infinite. True, there could be substitutes to oil, but until a substitute is widely available and cheaply deliverable than oil, the demand for oil will continues for I don’t-know-how-long time.

[Boon]

Oil prices: boom, bust and boom again

December 9, 2014
Paul Horsnell

http://www.ft.com/intl/cms/s/0/7cf27c68-...z3LPjUiNbc

[corydorus]

Just curious. Do all power plants accept gas, coal and oil ? If the plant cannot work with oil, reduced oil price may not help ... and can be a real disadvantage to alternative that taps on oil to generate electricity.