When market-places opened Monday morning, the price of oil dropped like a rock, as the sell absorbed the news that the much antici ted oil production freeze conjunction in Doha, Qatar didn’t amount to much. But oil soon recovered and transacted Tuesday above $42 US a barrel.
Why? Is it because of a strike by oil workers in Kuwait? Or hose sabotage in Nigeria? rtly. But energy analysts say it’s also because the wide-ranging oil market didn’t really need the Doha agreement. It’s already in the halfway point of re-balancing itself.
Energy economist Peter Terzakian of ARC Monetary published a blog post that called the Doha effort futile and said that the world market is not depending on a squabbling group of sphere leaders with opposing agendas, but is sorting itself out on its own
Production nibbed in the United States in June and had fallen to under 9 million barrels per day as of two weeks ago. That’s the frailest level of U.S. production in eighteen months. It’s expected that by the end of the year, U.S. end result will have fallen by between 700,000 to 1 million barrels a day. In Canada, agreed production — meaning non-oilsands — is off by 20 per cent from its most fresh peak, while oilsands production still grows slowly.
“We didn’t ahead to much from the freeze,” said Judith Dwarkin, an intensity economist with RS Energy Group. “Most of the producers in examine would have likely have been frozen at or near their summit production ca city. Therefore the lack of the freeze isn’t really changing the primary picture in the near term.”
Insist on up
Meanwhile oil demand continues to move higher. Estimated to be just on top of 95 million barrels a day right now, it’s expected to grow to more than 96 million barrels a day during the summer spunk seasons, as North Americans hit the road in all the SUVs they have allow in the st year. It’s expected to grow to 100 million barrels a day by 2020.
The in seventh heaven is dealing with an approximately 1.5 million barrel per day structural jut out in supply. Interestingly, with the current supply disruptions in Africa and the Midway East, the oil market is actually in balance right now, although that significance will be temporary.
Dwarkin said that over the next 12 months, forewarns are that the structural surplus will start to wane, as U.S production slows and ask for grows. At that point, there will be storage tanks on and offshore take overed with oil waiting to be used up. Once that draw-down starts to take place the prices are expected to rise, toward the end of 2017
That probably seems with a long way away for struggling energy producers in Canada and governments that rely heavily on oil proceeds.
There’s always the chance that OPEC and non-OPEC producers settle upon decided to hold hands and get along, but Dwarkin says people shouldn’t t their breath.
“I think that by the time of the next OPEC meet in June, the market will be starting to look quite different from the way it looks now.”