(Bloomberg) Reduced spending by oil explorers will lead to a global shortage of crude within the next few years, according to industry consultant Rystad Energy.
While the world’s exploration and production companies need to replace 34 billion barrels of oil every year to meet consumption needs, the companies made investment decisions that will result in only about 8 billion barrels in 2015, Rystad said in a report released Wednesday.
(CNBC) Oil prices pared some of their losses on Wednesday after falling to near seven-year lows earlier in the week, but those hoping for a rebound next year may be disappointed.
Fatih Birol, the executive director of the International Energy Agency (IEA), told CNBC that crude prices could continue to fall in 2016, presenting a challenge to governments that are trying to encourage the use of relatively expensive sustainable energy.
(CNBC) The collapse of the housing bubble sent the world spiraling into recession. The collapse of the energy and commodity bubble threatens to be just as damaging. That few are willing to even use the term “bubble” with regard to the boom and bust in the price of oil, copper, iron ore, and other materials tells how early we still are in the painful unwind phase.
(Peak Oil Barrel) The EIA’s Drilling Productivity Report has US shale oil on a steep decline. The below shale oil production charts are the EIA’s estimate of what shale production will look like through January 2016. Keep in mind this is the EIA’s estimate and not hard production numbers.
(Reuters) A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC members maintain near-record output, the International Energy Agency said, even as low prices curb supply outside the producer group.
(NY Times) The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier.
Earnings are down for companies that have made record profits in recent years, leading them to decommission nearly two-thirds of their rigs and sharply cut investments in exploration and production. More than 200,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply.
(Bloomberg) Oil extended losses below $40 a barrel amid speculation a record global glut will be prolonged as OPEC abandoned its long-time strategy of limiting production to control prices.
“It’s very clear that the production of oil and gas has carried [Texas] through this boomlet. Once the golden goose leaves, there’s nothing left but them regular gooses.”
Texas state Representative Garnet Coleman
The long-awaited OPEC decision came on Friday. With the Saudis and their close allies adamant that they would not cut production unless Russia and Iran and other OPEC members agreed to cut too, the meeting had no where to go but to continue existing policies. Indonesia was readmitted into the cartel and the output ceiling was adjusted to 31.5 million b/d reflecting the realities of the addition of Indonesia and of actual current production. While the cartel will reconsider the issue in June, the final decision led to considerable pessimism among traders. Global over-production is now running some 1.8 million to 2 million b/d and there is a good possibility that Iran will add at least another 500,000 b/d to the glut in the first six months of 2016. OPEC is hoping that stronger demand for oil will erase at least some of the over-production next year, but many see overproduction continuing into 2017.
(Wall Street Journal) The standoff between major global energy producers that has created an oil glut is set to continue next year in full force, as much because of the U.S. as of OPEC.
