Time for the EIA prediction for 2006
Posted by Heading Out on December 7, 2005 - 12:33am
The EIA report is now predicting that by March some 0.66 bcf of GOMEX natural gas (6.5% of production) and 297,000 bd of GOMEX crude oil (19% of production) will still be shut-in relative to the pre-hurricane status. All three of refineries that are still down are anticipated to be on line at the end of February, bringing back some 804,000 bd of production, just in time for the end of the heating season.
World oil demand is anticipated to grow some 1.7 mbd, higher than this year's projected 1.3 mbd increment, with US leadership of this growth. For those wishing to place bets on accuracy they anticipate an absolute growth (ie. accounting for declines) in spare capacity (i.e. over demand) of around 1 mbd. Which, when the increase in demand is factored in, means that they are expecting supply to increase by around 2.7 mbd. 0.8 mbd of this is projected to come from outside OPEC - 400 kbd from the Caspian, 450 kbd from the West (including Canada and Brazil) and 150 kbd from West Africa. The balance of the increase I assume is expected to come from OPEC, i.e. around 1.9 mbd. The average price for a barrel next year is expected to be around $63.
In regard to natural gas supply the US will increase by almost 5% next year, with imports of LNG rising to around 1,000 bcf. Of course that will depend to an extent on how many terminals will be available.
There are lots of "if's" in this prediction. We'll just have to wait and see how it works out.
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Canada, Nigeria, Kazakhstan. Fine. But what about other non-OPEC, top-25 producers?
Russia, Mexico, China, Brazil, Angola, Malaysia, India ?
I know we've discussed these individual situations here at length, what does the EIA have to say about them?
I know Deffeyes predicts the peak now. Others predict 2007+
Do I get points for picking 2006?
Heck, Goldman Sachs envisioned a spike to over $100 a barrel.
Nobody knows ...
I think that al-Queda has finaly realised the easiest way to hurt their enemies... Bombing and killing in western cities only builds their resolve wereas turning off their energy supply or even just stepping on the pipe gently will cripple them...
Add to that the already tight supply, the growing threat of continued exceptional hurricane strokes on the GoM and the seemingly unstoppable demand growth. Can we realy expect anything than the continuation of the multi-year trend in prices...?
Or is there some implication that "demand destruction" is more permanent than mere "demand reduction"? That we are actively "destroying" whatever the sources of demand were, so that demand would not come back even if prices came back down?
Most of the hits I see on this term come from the Peak Oil community so it seems to be specific to this group. What does it mean?
http://www.marketwatch.com/news/story.asp?guid={6D4DFEB4-0DE5-480D-9AE2-3676BF4E7F98}&siteid=google
We are thinking it may have already passed or may come next year. I still struggle with how people can persistently reach such different conclusions (although I'm used to it). I know it's about estimates for decline rates more than about new production. You have seen more of the the CERA report than I have. Is it possible to identify & quantify specifically the discrepancies between our assumptions and CERA's in a way that they can be more systematically compared and challenged? What exactly do they say about decline rates? Do you know? Thanks. I understand if you don't have time to address this.
With enough of this fudge spread around, I can see how they claim no problem. I just wish people in the public debates had time to actually discuss and challenge these assumptions, and that the journals would be more critical in their reporting rather then parroting their favorite pundits.
Thanks again.
With decline setting in to most if not all the mega FIPs there is plenty of scope for supply to turn out below EIA forecasts, I'd bet it will, when has it not? But I'd also bet that demand may grow less than expected, too, since China seems to be showing first signs of slowdown and the US is on the brink of slowdown lead by consumer demand and housing.
Things will be tight and any supply shocks will yank prices up; anything major, like significant silliness betwixt US and Iran, would probably spike the price over $100, briefly at least.
I expect an average price for WTI of $71 for 2006. Last December when the price was $42 I predicted spikes of $60 in April 2005 and $75 in Oct 2005 - only a little high for both and 2 months late for second. Interestingly the average price for the last 2 years has been very close to their prior year's highest spike, I expect that to continue. Now we are about at the turn of the oil age it may be a useful hypothesis - Agric's Law: "The average US$ price of a barrel of WTI oil for a calendar year will be determined by and within 5% of the prior calendar year's highest end of day price."
In the short term I guess a price of $66 at Dec 31st 2005 which will be 50% higher than it was exactly one year before.
At least we don't have Peak Alcohol!
Now that would be a crisis!