Where are oil prices heading_ _ oilprice. com

In this post I present developments in world crude oil (including condensates) supplies since January 2007 and up until June 2016. Z gas tijuana telefono I then take a closer look at petroleum demand (consumption and stock changes) developments in the Organization for Economic Cooperation and Development (OECD) for the same period and what this implies about demand developments in non OECD.

• Since December 2015, OECD total annualized petroleum consumption has grown about 0.2 Mb/d [0.5 percent]. Grade 9 electricity unit review [Primarily led by growth in U.S. Electricity projects for 4th graders gasoline and kerosene consumption, ref also figure 6.]

• The OECD petroleum stock building was about 0.4 Mb/d during Jan-16 – Jun-16, which is a decline of about 0.6 Mb/d from the same period in 2015. U gas cedar hill mo This implies a 2016YTD net decline in total OECD demand of 0.4 Mb/d.

1. Npower gas price per unit The present EIA data for crude oil for the recent months underreports actual world crude oil supply, thus the supply data for 2016 should be expected to be subject to upward revisions in the future.

Oil is priced in U.S. Electricity usage calculator dollars and U.S. Wb state electricity board recruitment monetary policies (the FED) affect the exchange rate for other countries that in addition have a portion of their debts denominated in U.S. Save electricity pictures dollars, thus their oil consumption is also subject to the ebb and flows from exchange rate changes.

Figure 1: The stacked areas in the chart above show changes to crude oil supplies split with North America [North America = Canada + Mexico + US], OPEC and other non OPEC [Other non OPEC = World – (OPEC + North America)] with January 2007 as a baseline and per June 2016. Gas kush Developments in oil prices (Brent spot, black line) are shown against the left axis.

It was the oil companies’ rapid growth in debt [ref U.S. Gas leak in house Light Tight Oil (LTO)] that brought about a situation where supplies ran ahead of consumption and brought oil prices down.

Unit costs ($/b) to bring new oil supplies to the market is on a general upward trajectory while the consumers’ affordability threshold may be in general decline.

In this post I introduce the concept of “consumers’ affordability threshold”, and with that I am referring to the phenomenon that as crude oil prices start to grow, overleveraged consumers are likely to respond by reducing their consumption.

[Added OPEC supplies may cancel out declines from other oil producers and provide some temporary growth in global oil supplies. Gas vs electric oven This will likely prolong the period of depressed prices.]

• The oil companies CAPEX reductions will continue through 2017 and flow additions from sanctioned developments will gradually decline towards 2020.

• Any meaningful growth in oil companies CAPEX (sanctioned developments, FIDs [FID; Final Investment Decision]) will require a sustained oil price above $60/b.

[As most developments take 2-4 years from being sanctioned to flow, this introduces a time lag for when new developments will add to supplies.]

A big portion of oil companies’ portfolios of discoveries and infield drilling that met the sanction hurdle of $60/b were mostly expended while oil prices were expected to remain at $100/b or above. Gas kansas city The results from recent years’ exploration has replaced a small portion of what was extracted.

Figure 2: The stacked areas in the chart above shows development in crude oil supplies split on some economic entities from January – 07 and per June -16. Electricity electricity goodness The oil price [Brent spot] is shown against the left axis.

Figure 3: The stacked areas in the chart above shows relative development in crude oil supplies split on some economic entities from January – 07 and per June -16. Gas house gang The oil price [Brent spot] is shown against the left axis.

Figure 4: The chart above shows development in petroleum consumption for the US [red area], OECD Europe [yellow area], and other OECD (which includes Canada, Japan and South Korea) [blue area]. Gas knife The chart is complemented with lines showing smoothed 12 month moving averages (12 MMA) for the presented OECD countries/regions. Electricity billy elliot backing track The oil price (Brent spot) is shown against the left axis.

For the U.S., petroleum consumption started to grow while the price was above $100/b, while for OECD Europe, petroleum consumption growth started with the collapse in oil price.

As supplies in 2014 started to run ahead of consumption, the oil price collapse allowed for a strong stock build in OECD (ref also figure 5) and in China, according to some reports.

Figure 6: The chart above shows development in annualized [52 weeks moving averages] U.S. Electricity facts for 4th graders total petroleum consumption [blue line] and storage build [red line] both rh scale. Electricity kanji The black line, lh scale, shows development in oil prices (WTI). Gas density problems Consumption and storage developments are relative to Janaury 2014 (baseline).

• EIA data shows that U.S. Electricity history pdf total demand has moved sideways since Sep-15 with a noticeable growth in consumption (lead by gasoline and kerosene) and slower growth in stocks building (ref also figure 7).

Figure 7: The chart above shows development in U.S. Gas national average commercial stocks of petroleum, by some products, since Jan-14 [stacked areas, rh scale] together with the development in the oil price (WTI) [black line, lh scale].

Figure 8: The chart shows Year over Year (YoY) growth in private and public debt for the world’s 2 biggest economies, the U.S. Electricity and circuits test [blue line] and China [red line] and their total [black line] from Q1-2000 and as of Q1-2016.

The chart illustrates that the global debt overhang continues to grow led by the world’s 2 biggest economies. Duke electric orlando Since 2012 China and the U.S. Gas station have annually added a total of about $5 trillion to their debts.

With oil prices at $100/b, oil companies leveraged up with debt, expecting this to be the new normal. Gas z factor The collapse in oil in 2014 presented them with a new reality, with many now struggling to understand what it means for the future price formation of oil.

I have written several times that oil prices have very much been a function of monetary and fiscal policies and thus provide an important part of the foundations for how its demand develops. Gas zauberberg 1 Oil is no longer priced for the utilities it provides for societies, but just as another commodity. Electricity usage calculator kwh Oil demand developments still appear to be the variable that remains poorly understood.

If, as present EIA data suggests, crude oil demand in non OECD is in decline with oil prices below $50/b, there may be a shift in structural affordability which (with some time lag) will also affect the OECD.

Affordability is more related to price than costs. Ag gaston birmingham 120 The median household has experienced little or no growth in purchasing power relative to developments in other expenses like debt service/rent and health care. Gas vs electric water heater This is important as this suggests that the affordability threshold for higher priced oil is likely in decline. Electricity quiz and answers This may be hard to verify with oil prices below $50/b, but (if I am right) will materialize in a decline in consumption as oil prices start to move up.

This is where I expect that, for some time, oil prices will enter affordability dynamics as prices start to move up, causing consumption/demand to decline, thus curbing any price growth.

This will create some interesting dynamics as oil companies had bet their futures on sustained higher oil prices and the current “lower for longer” environment prolongs the time it takes to heal their balance sheets and defers necessary CAPEX in exploration and developments to meet projected future demand.

The continued stock build (in petroleum) suggests that there is still some way to go before supplies reach a level where oil prices regain fundamental support for growth. K electric share price One of the parameters I keep an eye on is how petroleum stocks develop, and I am not thinking about movements from one week to another, but more considering when commercial stock drawdowns over time (and seasonally adjusted) decline and permanently remain 5 percent (or more) below present levels.

For anyone out there trying to predict the future oil price trajectory, you must consider to what extent several key variables have been factored in. Hp gas These variables include the effects (or lack of) of future central bank’s policies, governments’ fiscal policies, bank leverage and risks to financial stability, the state of Chinese banks and monetary policies, Chinese oil demand, including the filling of their SPR [Strategic Petroleum Reserve] and developments in world trade.