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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: articwarrior who wrote (31110)10/25/1998 10:06:00 AM
From: Gameboy  Read Replies (2) of 95453
 
Articwarrior, what supply/demand figures are you using?

Those looking for much more upside without the oil supply / demand balance are in for some shocking surprises.

1. Late last year OPEC increased production by about 3 million barrels/day or otherwise we'd have the same high oil prices that we had last year.

2. By July 1st, OPEC (and friends of OPEC) had set production cutback quotas that would reduce production by 3 million barrels/day - and they've now complied with 95-99% of those cutback quotas.

3. During 1998, worldwide demand for oil has increased by about 1 million barrels/day.

4. Loss of worldwide, marginal stripper well production due to low oil prices has reduced worldwide supply by another 1 million barrels/day.

I figure we're drawing about 2 mb/d - at a minimum. The EIA worldwide supply/demand table (published this October)
eia.doe.gov
shows a net draw for the 4th quarter of 1.5 mb/d but it largely ignores the OPEC cutback and totally ignores the loss of marginal stripper well production.

OPEC has figured out that the market keys off of the US crude inventories, and has suggested cutting backs sales to the US by 15% - a good idea for them. US refineries compensated for OPEC cutbacks in August by importing more oil from Iraq and Colombia but worldwide inventories are falling and its just a matter of time before the daily 2 mb/d draw shows up in the highly visible US crude inventory figures.

If you think there is presently a build in crude inventories, I'd be curious to see your figures.

Best of luck,

Steve
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