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39 comments on The Top Twenty Fields: Are They in Decline?

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westexas on April 17, 2006 - 12:00pm Permalink | Subthread | Comments top
Reuters:  Qatar says OPEC can do nothing about high oil price
http://cnn.netscape.cnn.com/news/story.jsp?idq=/ff/story/0002/20060417/0347311525.htm

Excerpt:

"Oil prices have risen more than 20 percent since mid-February, despite sizable U.S. crude inventories, as geo-political fears compounded fundamental worries that refiners might struggle to make enough gasoline for the summer driving season."

Guess what else happened in mid-February?  Total net US imports started falling.   The following numbers are weekly, not four week running averages.  The week ending 2/10/06 showed average daily net oil imports of 13,396,000 bpd.  Seven of the subsequent weeks have shown declines.  The most current weekly data show 11,634,000 bpd.  This is a decline of 13.2%.   (The same period last year showed about a 3.7% decline.)

Looking at a slightly bigger picture, 12/30/05 to 4/7/06 (four week running average) we saw a decline of 8.7% (versus an increase in imports for the same time period last year).

Note that we don't know what percentage of crude oil inventories consists of heavy, sour crude.  Also, total product inventories are only up 2.9% year over year.   But fundamentally, what do you expect to see at peak production?  I expect to see peak everything, followed by a permanent and irreversible decline in conventional oil production.  Note that the EIA data show that world crude + condensate production was down by close to 500,000 bpd from 12/05 to 1/06 (versus an increase last year), following the all time record high number in December.  What did Deffeyes have to say about December?

If refiners don't need the imports, why are they bidding up the price?

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ET on April 17, 2006 - 1:44pm Permalink | Subthread | Parent | Comments top
"Guess what else happened in mid-February?  Total net US imports started falling."

Might imports be falling because inventories are high?
Seems like the price is whatever the market will bear.

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westexas on April 17, 2006 - 2:44pm Permalink | Subthread | Parent | Comments top
Note that total net oil imports should be total net petroleum (crude + product) imports.
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OneEye Jack on April 19, 2006 - 12:02am Permalink | Subthread | Parent | Comments top
Based on how I interpret your line of thinking, you are saying that the price of oil is high even though we have a large buildup in inventories because we have a lot of heavy, sour crude and not enough light, sweet oil.  The inventory number represents the total oil supplies in the country, but it doesn't reflect the light, sweet oil shortage that is going on.  Correct?

This makes sense to me.  However, I would think that you would see a price difference between the different grades of oil.  Light, sweet should be priced much higher than historic norms when looking at the difference in price between light, sweet and heavy, sour.  

So, I downloaded oil price data on SA light and SA heavy between 1978 and April 2006.

Year    LIGHT OIL    HEAVY OIL    Diff    % Diff
1978-Jan    12.70    12.02    0.68    5.6572
  1989-Jan    13.15    11.90    1.25    10.5042
  1990-Jan    18.40    17.15    1.25    7.2886
  1991-Jan    24.00    20.00    4.00    20.0000
  1992-Jan    15.90    13.15    2.75    20.9125
  1993-Jan    16.80    14.40    2.40    16.6667
  1994-Jan    12.40    10.10    2.30    22.7723
  1995-Jan    16.63    15.13    1.50    9.9141
  1996-Jan    18.20    17.05    1.15    6.7449
  1997-Jan    22.98    21.08    1.90    9.0133
  1997-Feb    21.55    19.65    1.90    9.6692
  1997-Mar    18.65    16.75    1.90    11.3433
  1997-Apr    18.33    16.48    1.85    11.2257
  1997-May    18.25    16.40    1.85    11.2805
  1997-Jun    18.92    17.17    1.75    10.1922
  1997-Jul    18.15    16.40    1.75    10.6707
  1997-Aug    18.27    16.67    1.60    9.5981
  1997-Sep    17.88    16.77    1.11    6.6190
  1997-Oct    19.13    18.03    1.10    6.1009
  1997-Nov    19.13    18.23    0.90    4.9369
  1997-Dec    17.65    16.15    1.50    9.2879
  1998-Jan    15.50    14.00    1.50    10.7143
  1998-Feb    13.40    11.70    1.70    14.5299
  1998-Mar    11.95    10.05    1.90    18.9055
  1998-Apr    12.60    10.70    1.90    17.7570
  1998-May    12.48    10.83    1.65    15.2355
  1998-Jun    12.68    11.28    1.40    12.4113
  1998-Jul    11.75    10.35    1.40    13.5266
  1998-Aug    12.55    11.65    0.90    7.7253
  1998-Sep    12.55    11.55    1.00    8.6580
  1998-Oct    14.03    13.03    1.00    7.6746
  1998-Nov    12.45    11.60    0.85    7.3276
  1998-Dec    9.95    9.20    0.75    8.1522
  1999-Jan    10.03    9.28    0.75    8.0819
  1999-Feb    10.53    9.68    0.85    8.7810
  1999-Mar    10.18    9.38    0.80    8.5288
  1999-Apr    13.83    13.03    0.80    6.1397
  1999-May    16.53    15.53    1.00    6.4392
  1999-Jun    14.40    13.50    0.90    6.6667
  1999-Jul    16.10    15.20    0.90    5.9211
  1999-Aug    18.58    17.43    1.15    6.5978
  1999-Sep    20.38    19.33    1.05    5.4320
  1999-Oct    23.00    21.95    1.05    4.7836
  1999-Nov    21.93    21.08    0.85    4.0323
  1999-Dec    24.23    23.38    0.85    3.6356
  2000-Jan    23.45    22.10    1.35    6.1086
  2000-Feb    25.28    23.43    1.85    7.8959
  2000-Mar    25.30    23.45    1.85    7.8891
  2000-Apr    23.88    22.93    0.95    4.1430
  2000-May    24.20    23.20    1.00    4.3103
  2000-Jun    27.10    26.10    1.00    3.8314
  2000-Jul    28.13    26.93    1.20    4.4560
  2000-Aug    24.88    23.28    1.60    6.8729
  2000-Sep            0.00   
  2000-Oct    29.15    27.05    2.10    7.7634
  2000-Nov    29.68    27.58    2.10    7.6142
  2000-Dec    29.08    27.33    1.75    6.4032
  2001-Jan    20.90    19.40    1.50    7.7320
  2001-Feb    23.48    21.98    1.50    6.8244
  2001-Mar    23.83    22.33    1.50    6.7174
  2001-Apr    23.20    22.15    1.05    4.7404
  2001-May    25.35    24.15    1.20    4.9689
  2001-Jun    27.55    26.35    1.20    4.5541
  2001-Jul    24.23    22.63    1.60    7.0703
  2001-Aug    24.33    22.73    1.60    7.0392
  2001-Sep    24.70    23.60    1.10    4.6610
  2001-Oct    20.83    20.08    0.75    3.7351
  2001-Nov    19.08    18.33    0.75    4.0917
  2001-Dec    18.33    17.58    0.75    4.2662
  2002-Jan    18.90    18.15    0.75    4.1322
  2002-Feb    17.39    16.54    0.85    5.1391
  2002-Mar    18.86    18.01    0.85    4.7196
  2002-Apr    24.58    24.08    0.50    2.0764
  2002-May    23.35    22.35    1.00    4.4743
  2002-Jun    21.57    20.82    0.75    3.6023
  2002-Jul    22.62    21.97    0.65    2.9586
  2002-Aug    23.02    22.07    0.95    4.3045
  2002-Sep    24.96    23.96    1.00    4.1736
  2002-Oct    26.63    25.63    1.00    3.9017
  2002-Nov    23.36    22.36    1.00    4.4723
  2002-Dec    23.19    21.89    1.30    5.9388
  2003-Jan    27.39    25.69    1.70    6.6174
  2003-Feb    28.73    27.03    1.70    6.2893
  2003-Mar    31.72    29.92    1.80    6.0160
  2003-Apr    24.50    21.25    3.25    15.2941
  2003-May    20.27    18.32    1.95    10.6441
  2003-Jun    23.52    22.27    1.25    5.6129
  2003-Jul    25.39    24.34    1.05    4.3139
  2003-Aug    25.58    24.83    0.75    3.0205
  2003-Sep    26.31    25.31    1.00    3.9510
  2003-Oct    25.54    24.14    1.40    5.7995
  2003-Nov    25.75    24.40    1.35    5.5328
  2003-Dec    26.17    24.47    1.70    6.9473
  2004-Jan    27.08    25.38    1.70    6.6982
  2004-Feb    26.31    23.36    2.95    12.6284
  2004-Mar    29.55    26.80    2.75    10.2612
  2004-Apr    28.68    26.23    2.45    9.3404
  2004-May    32.51    29.66    2.85    9.6089
  2004-Jun    33.77    30.62    3.15    10.2874
  2004-Jul    31.72    28.02    3.70    13.2049
  2004-Aug    36.17    32.67    3.50    10.7132
  2004-Sep    37.68    33.48    4.20    12.5448
  2004-Oct    40.84    36.39    4.45    12.2286
  2004-Nov    41.23    35.48    5.75    16.2063
  2004-Dec    36.87    30.12    6.75    22.4104
  2005-Jan    34.05    27.95    6.10    21.8247
  2005-Feb    38.05    33.35    4.70    14.0930
  2005-Mar    44.70    39.55    5.15    13.0215
  2005-Apr    48.20    42.80    5.40    12.6168
  2005-May    44.48    38.98    5.50    14.1098
  2005-Jun    45.96    41.16    4.80    11.6618
  2005-Jul    52.77    48.02    4.75    9.8917
  2005-Aug    54.32    48.87    5.45    11.1520
  2005-Sep    62.10    56.75    5.35    9.4273
  2005-Oct    54.71    48.51    6.20    12.7809
  2005-Nov    52.31    46.06    6.25    13.5693
  2005-Dec    49.00    43.15    5.85    13.5574
  2006-Jan    55.01    50.41    4.60    9.1252
  2006-Feb    59.56    54.31    5.25    9.6667
  2006-Mar    56.71    51.76    4.95    9.5634
  2006-Apr    61.04    56.29    4.75    8.4384

The first two columns are light and heavy prices, respectively.  The next two are the difference and % difference.  This data shows that, since 1978 we have had quite a bit of fluctuation in price.  The price difference between heavy and light has grown recently, but it looks like we had similar price differences back in 1998 without an imminent oil peak.  

So, I'm not sure why the price of oil is going up based on this data.  Comments?

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39 comments on The Top Twenty Fields: Are They in Decline?

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