Oil – Supply and Demand

Featuring Raoul Pal, Emad Mostaque, Diego Parrilla, Tracy Shuchart

In Episode Two of ‘The Big Story’, supply and demand factors in the market are examined, in particular, whether the bulls can rely on global economic growth and the summer driving season to bring about the draws in inventories that would support prices. Raoul also gauges opinion on OPECs actions and the likely response from the shale producers, on the path to making a trade recommendation.

Published on
12 May, 2017
Topic
Trading, Energy Commodities, Research
Duration
28 minutes
Asset class
Commodities
Rating
22

Comments

  • MS

    Michael S.

    13 6 2017 11:39

    0       0

    There may be shale producers pumping all the way down to $35, but that is only to stay cash flow positive (for a few). It does not even come close to paying down massive amounts of debt that it has taken to build their infrastructure (and I am not even talking about all the bonds sold by municipalities to expand their sewer, water, and road system's, and fire departments). There is also a cost to stopping production on a well, and if it is inactive for a certain amount of time, it has to be abandoned, which is even more expensive. Great series Raoul!!!

  • bf

    bart f.

    19 5 2017 11:47

    2       0

    The shift in the transportation complex which is ~35% of total demand has profound medium term impact. For example the compounding of fuel efficient gains which run circa 3.5% p.a implies after 5y an immutable reduction of 7% in total demand.

  • BA

    Blair A.

    18 5 2017 04:42

    0       0

    Great st uff Raoul! Perhaps a couple of charts on demand, stockpiles etc. Exactly why I'm here!

  • LR

    Luigi R.

    16 5 2017 01:36

    3       0

    This was very interesting but unless the "average" marginal cost of production for oil is less than $50, the industry is bankrupt. I don't dispute that there may be some shale producers that can be profitable at $35 but on average, globally, this industry is headed for bankruptcy at these prices. Demand is going up and eventually the removal of nearly half a trillion dollars of capex will eventually be fully realized. I have a client who sold nearly 4000 cars last year and only one was electric. That might be different 10 years from now but for the time being, gas powered cars rule the day. I agree wth many of the assertions made here but totally disagree on the timing...oil will be over $70 by 2018 because inventory draw downs will continue to surprise to the upside.

  • wb

    willem b.

    13 5 2017 05:26

    3       0

    There is very good data available from North Dakota State Government. The archive is available all the way back to 2010.

    https://www.dmr.nd.gov/oilgas/directorscut/directorscutarchive.asp

    May 2017 data below

    Oil Production
    February 28,958,939 barrels = 1,034,248 barrels/day
    March 31,794,769 barrels = 1,025,638 barrels/day(preliminary)
    (all-time high was Dec 2014 at 1,227,483 barrels/day)

    ND Sweet Crude Price
    February $42.74/barrel
    March $38.13/barrel
    April $39.86/barrel
    Today $38.50/barrel (all-time high was $136.29 7/3/2008)

    Rig Count
    February 39
    March 46
    April 50
    Today’s rig count is 51 (all-time high was 218 on 5/29/2012)

  • wb

    willem b.

    13 5 2017 05:18

    5       0

    Shale oil cost of production is falling due to a depression in oil and gas services. Technology is improving, but based ob what I am hearing about 80% of the cost of production cuts are due to services companies dropping their prices. If there is another drop in oil prices, will the oil services companies discount further or go bust?

  • RA

    Robert A.

    12 5 2017 22:35

    11       0

    Great stuff and love the segmented roll out as well as getting the valuable input from other experts specializing in parts of the market, e.g., shipping, shale and shale finance, Saudi, and consumption patterns/trends all in one Trade and the derivative trades that will flow from this major one. Excellent creative work guys.

  • PU

    Peter U.

    12 5 2017 15:52

    2       0

    I retract my TBC comment! Sorry!