JimisJim, the piece you posted was only looking at US production, and in posting the piece from Energy Economist I was responding to that piece. The IEA may be more accurate than the EIA but does the IEA try to put out forecasts as often as the EIA?
Regarding your thoughts on storage and fracklog, I don't view the storage & fracklog overhangs as being something that would have anything other than a relatively ST impact on keeping prices down, when and if supply were to come into balance with demand.
Using the analogy with natty, when we have had big storage overhangs, then followed by supply coming back into balance with demand (or better yet, demand getting stronger than supply), we've seen the natty price start to move up even at the same time that natty storage levels were still higher than the 5 year average. I can see a similar dynamic regarding oil. As we know the oil & gas markets are looking out 6-9 months and they tend to like to extrapolate current/anticipated production trends vs. looking at what the supply/demand situation is right at the moment. Storage and fracklog is a one-time, non-recurring issue --- once the excess storage is sold or the uncompleted wells are completed, that's it, the issue goes away.
Hopefully we are not at the point here where, when someone wants to discuss a particular point about oil prices, they have to address all of the factors that impact oil prices. |
