Posted on 01/24/2022 7:03:19 AM PST by george76
The oil market is quickly realizing that many OPEC producers may not have the capacity to boost output much further.
OPEC+ has been undershooting its collective production targets for months and will likely continue to do so in the months ahead.
Low spare production capacity could leave the world without a buffer to offset sudden supply disruptions, which are always lurking in the global oil market.
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Most of the world’s global spare capacity is currently held by OPEC’s Middle Eastern members Saudi Arabia and the United Arab Emirates (UAE)
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Low spare production capacity could set the stage for a prolonged oil price rally because the world would have a lower buffer to offset sudden supply disruptions, which are always lurking in the global oil market.
The unrest in Kazakhstan and the blockade in Libya in the past month highlighted the challenge that the oil market will be facing if spare capacity continues to shrink. And shrink it will—that is, if OPEC+ continues to add 400,000 barrels per day (bpd) to its production quota every month until it unwinds all the cuts.
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United States, Canada, and Brazil—all of which are outside OPEC+ pacts—are expected to raise their oil production this year as high prices and growing demand incentivize more activity and drilling. In the U.S. shale patch, however, capital discipline continues to be a key theme, so annual production increases are not expected to be anywhere near the 2018-2019 surge in output.
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JP Morgan, for its part, expects the falling spare capacity at OPEC+ to increase the risk premium in prices, and sees oil hitting $125 a barrel this year and $150 a barrel next year.
“We see growing market recognition of global underinvestment in supply
(Excerpt) Read more at oilprice.com ...
Commodities are down. Oil is a commodity.
Not to mention our slow down.
Most of the world’s global spare capacity is currently held by OPEC’s Middle Eastern members Saudi Arabia and the United Arab Emirates (UAE)
Great site, I’m a member. Good coverage of the patch.
Underlying lack of production ability means more trouble for consumers soon and there’s no way for it to end quickly.
It’s primarily Saudi Arabia, Qatar and Kuwait. If the Iranians get their political act together they have the potential of using Iranian and Iraqi oil fields to put the Saudis out of business.
“and didn’t we sell our reserves already?”
No, we are still selling reserves but not enough to make much of a dent in the strategic reserve.
If someone had told us oil would be at $83 two months ago we would have said that’s high. This is a temporary lull after a fast move up and if you follow the chart back you’ll see the same pattern has repeated since $50.
Oil goes higher again soon, there’s little spare capacity out there.
During the Trump years there was no energy shortage, low prices, too,, . Within months of the Biden installation there is an energy shortage, and high prices.. It is amazing.
Biden supported the Russian and moslem pipelines but opposes American pipelines .
Brandon will get right on that -- he'll shrink investment further.
If only we had a pipeline or something where we could use our own oil and be self sufficient.................................
“there is an energy shortage, and high prices.”
It takes a while for lack of investment in production to have this effect but Biden supercharged that by stopping leasing on a lot of govt lands. Meanwhile some member of OPEC aren’t producing up to their agreed limits.
This little rest stop won’t last, and $83 is a high level already and very few American oil producing are losing money anywhere above $60.
No recognition of what Team Biden has doen to US oil production.
I think we are seeing the growing (and predictable) results of socialist policies.
The US would have all the capacity we need if the tyrannical Federal government would let us recover and refine it.
Tesla current packs are no where near $32000 they have a $115kwh pack in production and are going to be under $60 by 2025. The gigafactory in Austin will be cranking out LiFePO4 cells under $100 by next year.
https://finance.yahoo.com/news/electric-vehicle-battery-cost-touches-113057091.html
https://www.dnv.com/feature/tesla-battery-day-energy-transition.html
Welcome to the 21st century.
A high end Model S has a 100 kWh pack at $115 which is what Tesla pays thats $15,000 by 2025 that same pack will be $5500 and carry a 3000 cycle life in a EV with a range of 330 miles thats over w million miles which is exactly what Tesla says their new packs are designed to hit.
$60? For a battery to power your car?
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