Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (32578)	12/7/1998 11:57:00 PM
From: Rob Shilling	Respond to of 95453

Let's throw some calculations on the EIA numbers, I know this is a futile exercise, but it at least makes me feel better: Current EIA report says 1999 supply will be 30.6 mbpd OPEC plus 44.9 mbpd Non-OPEC for a total of 75.5 mbpd. Demand is supposed to be the same number for "balanced" supply and demand. Now, from the WSJ IEA (not EIA) article back a few weeks ago the demand for 1999 was forecast to be 75.6 mbpd (pretty close). It forecasts Non-OPEC supply to be 45.6 mbpd (0.7 mbpd higher than EIA). It reports that September OPEC production was 27.19 mbpd. So it is obvious that the EIA assumes zero (zip, zilch) OPEC cuts (30.6 vs 27.19) to get its supply numbers for OPEC. Let's not assume that (I know sounds like I am out on limb here :)) We know OPEC has been cheating a little, so let's add 400,000 bpd to the 27.19 mbpd September number. That would put 1999 OPEC supply at about 27.6 (at least for the first 6 months). Let's take the EIA's Non-OPEC supply number of 44.9 mbpd (it is more recent, so why not). Now for the rocket science: Add OPEC and non-OPEC to get total supply: 27.6 + 44.9 = 72.5 mbpd. Stay with me here .... demand is forecast to be 75.5 so that would mean that 1999 would have a 75.5-72.5 or .... 3.0 mbpd DRAWDOWN. That assumes that OPEC continues to CHEAT at 400,000 bpd and that demand does not rise farther, and that non-OPEC supply does not drop further. As I posted here before, since September we can almost guarantee a 2-2.5 mpbd drawdown in world-wide storage. Taking these current numbers, we would get at least 3.0 mbpd drawdown going forward. If OPEC cuts another 1.5 mbpd that would be 4.5 mbpd. That is over 120 million barrels a month!! All of this reduction in a year when drilling and exploration budgets will have been cut dramatically potentially causing longer term reductions in supply. So why are oil prices at 25 year lows ... I can't remember,.... oh that's right CNBC's in depth analysis whose result is ..... "there is a lot of oil out there"! :).