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What Will 2015 do for Peak Oil?

The Cornucopians are exuberant, they believe that collapsing of oil prices dealt the death knell for peak oil. An oil glut, they say, is what we have, not peak oil. But an oil glut is exactly what we would expect at the very peak. After all, that is what peak oil is, that is the the point in time when the world produces more oil than ever in history… and the most it ever will produce. I am of the firm conviction that the world is at the peak of world oil production right now, or was at that point three or four months ago. I think history will show that the 12 months of September 2014 through August 2015 will be the one year peak. Whether the calendar year peak is 2014 or 2015 is the only thing still in question, or that is my opinion anyway. The […]

Posted On : Published By : Tom Whipple
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Oil and the Economy: Where Are We Headed in 2015-16?

Resilience Published on Resilience (http://www.resilience.org) The price of oil is down. How should we expect the economy to perform in 2015 and 2016? Newspapers in the United States seem to emphasize the positive aspects of the drop in prices. I have written Ten Reasons Why High Oil Prices are a Problem . If our only problem were high oil prices, then low oil prices would seem to be a solution. Unfortunately, the problem we are encountering now is extremely low prices. If prices continue at this low level, or go even lower, we are in deep trouble with respect to future oil extraction. It seems to me that the situation is much more worrisome than most people would expect. Even if there are some temporary good effects, they will be more than offset by bad effects, some of which could be very bad indeed. We may be reaching limits […]

Posted On : Published By : Tom Whipple
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Oil Turnaround: Timing The US Production Peak

Summary Analysis points to US production peaking in late April. Oil rig reduction is accelerating. Current two week decline in EIA estimates not too unusual. Canadian rig count down 66% year over year. Current oil rig count 1482. Estimated production breakeven rigs required: 1267. Shale oil wells deplete much faster than traditional wells. This article attempts to determine the number of rigs that need to be deployed in order to neither increase nor decrease the US production of oil. To estimate a ballpark peak date and ballpark breakeven number of rigs in this cycle, one needs to: 1. Estimate the number of barrels that are produced in a given week, given a known number of oil rigs in operation. 2. Estimate the rate of depletion (that is, to estimate the amount of additional depletion expressed as a percentage of peak production as a function of time that occurs as […]

Posted On : Published By : Tom Whipple
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Oil heads for seventh weekly loss as supply glut drags

LONDON (Reuters) – Oil prices headed for a seventh straight weekly loss on Friday, with key producers showing no sign of cutting output in the face of a global supply glut. Global oil benchmarks hit their lowest since 2009 this week and are down more than 50 percent from June levels, with Brent crude futures LCOc1 extending declines on Friday, dropping 50 cents a barrel to $50.46 by 0427 ET. U.S. crude futures for February delivery CLc1 were down 12 cents at $48.67 a barrel despite robust U.S. economic data that brightened the outlook for demand. Brent’s premium to U.S. crude CL-LCO1=R fell near $1.80 a barrel, the narrowest since October as international seaborne oil markets appear to be under even more pressure than the U.S. domestic market. "It is another negative week and a reflection of the focus on negative arguments," said Hans Van Cleef, senior energy economist […]

Posted On : Published By : Tom Whipple
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Don’t Bank on Oil Rebound Says Fund That Foresaw Collapse

A hedge fund that returned almost 60 percent last year by betting on oil’s collapse says the slump may have further to run. Crude may drop below $40 a barrel in the next few months without a substantial slowdown of production growth in the U.S. and Canada , said Doug King , London-based chief investment officer of Merchant Commodity Fund. Bearish oil wagers in the second half of 2014 helped the $260 million fund gain 59.3 percent, the best performance since its June 2004 start. Brent futures lost 48 percent last year, the most since 2008, as the Organization of Petroleum Exporting Countries resisted calls to cut output. The U.S. is pumping the most crude in more than three decades as horizontal drilling and hydraulic fracturing unlock shale reserves, adding to a global supply glut that Qatar estimates at 2 million barrels a day. “Unless we see real slowdown […]

Posted On : Published By : Tom Whipple
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Renowned Trader Hall Sees $40 Oil ‘Absolute Price Floor’

Oil prices have almost bottomed out and “some recovery” is likely by the second half of the year as demand picks up, commodity hedge fund manager Andrew J. Hall told investors. Crude could trade in the $40-a-barrel range in 2015, close to “an absolute price floor,” the head of Astenbeck Capital Management wrote in a Jan. 2 letter obtained by Bloomberg News . A significant amount of U.S. and Canadian production can’t cover the cash costs of operating at that price, he said. “Oil prices will stay under pressure in 2015,” he wrote. “However, current prices are not sustainable in the longer term. The interplay between extreme weakness in the short term and the potential for supply shortfalls in the medium term should create attractive trading opportunities over the course of the coming 12 months.” Hall gained notoriety in 2009 after receiving a pay package of about $100 million […]

Posted On : Published By : Tom Whipple
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Natural Gas Prices Climb on Larger-Than-Expected Stockpile Drain

By Timothy Puko Natural gas futures closed higher Thursday, after data showed U.S. storage levels fell further than expected last week. The front-month February contract settled up 5.6 cents, or 2%, at $2.927 a million British thermal units on the New York Mercantile Exchange. It was only the sixth session of gains in the past 17. Storage levels shrank by 131 billion cubic feet in the week ended Jan. 2, the U.S. Energy Information Administration said. The drain was 12 bcf greater than the 119-bcf consensus average of 20 forecasters surveyed by The Wall Street Journal. John Kilduff, founding partner of Again Capital in New York, said he is going to buy, but that his move would be limited. Frigid weather around the country this week should push prices above $3/mmBtu soon, but production is so strong and the risk of a collapsing market is still so great that […]

Posted On : Published By : Tom Whipple
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Natural Gas Market is Ice Cold

ENLARGE Natural-gas prices hit a more-than two-year low this week. Above, pedestrians on Thursday brace themselves against a cold wind in New York. European Pressphoto Agency Heaters from Minnesota to Maine are running full blast to ward off Arctic temperatures. But the natural-gas market is still ice cold. Prices for the fuel, used to heat half of U.S. homes, hit a more-than two-year low this week and are down 35% since mid-November. The arrival of freezing weather across most of the country hasn’t revived the market. Normally, plunging temperatures are a cue for traders to make bullish bets because the resulting spike in demand can deplete natural-gas supplies. Last February, prices jumped by more than 30% in a matter of days during one particularly severe cold snap. This time, natural gas isn’t getting its usual seasonal rally because many analysts believe supplies are high enough to get through even […]

Posted On : Published By : Tom Whipple
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Natural Gas Peak Season ‘Becoming a Dud’ as Prices Keep Falling

By Timothy Puko Natural gas prices are inching downward again Thursday with mild forecasts for later this month offsetting the day’s frigid temperatures. Natural gas for February delivery is down 1.6 cents, or 0.6%, at $2.855 a million British thermal units on the New York Mercantile Exchange. The move puts gas on pace to finish lower in 12 of the past 17 sessions, a period that would usually be the peak season for gas prices. This winter has been too mild to encourage enough heating demand to offset record supply. Even with temperatures of more than 15-degrees-Fahernheit-below normal in several of the largest markets for gas heating, traders are thinking about warmer weather forecast for next week and even unseasonably warm weather that helped build up healthy supplies throughout December, said John Woods, president of JJ Woods Associates and a Nymex trader. "It’s becoming a dud, this winter season," […]

Posted On : Published By : Tom Whipple
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Study: World must leave most fossil fuels underground to avert warming

Much of the world’s fossil fuels — coal, oil and gas — need to stay underground if humans want to keep Earth from warming to extremely dangerous levels, according  to a new report published  Thursday in the journal Nature. As prices plummet at gas pumps worldwide, the report from University College London’s Institute for Sustainable Resources found that if countries want meet the goal of capping warming at 2 degrees Celsius above the average before the industrial revolution, some of the world’s richest countries will have to resist the temptation to pump or dig such resources from the ground. Burning fossil fuels expels greenhouse gases, which keep the sun’s infrared radiation from bouncing back into space and trap it on Earth. The widespread burning of fossil, which began about 200 years ago with the invention of the steam engine, started adding carbon dioxide, a major greenhouse gas, into the atmosphere at a rapid rate. Governments are now […]

Posted On : Published By : Tom Whipple