[Graeme]

Oil's `Bull Run' May Be Over on Supply, JPMorgan Says

Crude oil's ``bull run'' may be over as prices become increasingly volatile and Saudi Arabia pledged to boost supplies, according to JPMorgan Chase & Co., the third- largest U.S. bank.

Prices are expected to ``correct'' over the next few months, JPMorgan analysts led by Brynjar Eirik Bustnes said in a report today. Spare production capacity may reach 5 million barrels a day by 2010, similar to levels in 2002 to 2003, when oil was $30 a barrel, the analysts said.

While using $90 a barrel as the oil price estimate for this year, JPMorgan is using $85 a barrel for its long-term oil price estimate for 2009 onwards, the analysts said.

bloomberg

[Cashmere]

Sell JPM.

[Heineken]

Same old cow pies.

I remember about a year ago seeing analysts claiming oil would soon retreat to $30, $40, $50. Whatever number they could pull out of a hat.

I doubt if oil ever sees sub-$100 again. If it does, it will be a brief event.

[Eli]

Jesus, what have they been consulting with Steve Forbes or something?

95$ price target for this year what fooking idiots.

[alokin]

I bet there is a difference between what they are saying in pubic and the figures they use internally. For whatever reason.

[Denny]

Its been a real joke how far off the mark the experts have been in predicting the proverbial upcoming decay in prices of crude.

Here is a sample, guess from what year?

See Business Week

"Oil, coal and natural gas...are projected to provide roughly the same 86% share of the total US primary energy supply in 2030 that they did in 2005 (assuming no changes in existing laws and regulations...

"In 2030, the average real price of crude oil is projected to be above $59 per barrel in 2005 dollars, or about $95 per barrel in nominal dollars."

Or, check this, a prediction made in 2003 that by 2025, the high end expectation of crude for the year 2025 was just $51! See

SeeAnon Eivev

And, here is a prediction made at the end of 2005, see Business Week:

"According to CGES, high prices are taking a severe toll on world oil consumption, and OPEC will have to make a significant cut of 1 million barrels per day or so to prevent a serious slump in prices. In the worst case scenario, from an oil producer's point of view, CGES sees Brent crude, now priced a bit under WTI, falling into the mid-$30s per barrel next year. "

For the long haul, it seems foolish to believe prices can drop much as long as we are not finding oil as fast as we are using it. Demand destruction would have to be so severe that modern western society would not function for demand to drop that much, as things stand right now.

[DantesPeak]

I need some of what they are taking at JPM to blot out the reality of PO, especially after the White House said today the meeting in SA this weekend is just for some type of group hug to feel better.

[Windmills]

Five million barrels per day in spare capacity?

[mmasters]

95 sounds about right come election time.

[heroineworshipper]

Workers, savers, & losers wish it would come down in their dreams. Dream on, poor people. And vote for more mortgage bailouts.

[copious.abundance]

Five million barrels per day in spare capacity?

With possibly up to 7 million bpd in new capacity coming online over the course of this year, and with the IEA projecting an increase in world demand of only 800,000 bpd this year, spare capacity of 5 million bpd does not seem unrealistic.

[MonteQuest]

Five million barrels per day in spare capacity?

With possibly up to 7 million bpd in new capacity coming online over the course of this year, and with the IEA projecting an increase in world demand of only 800,000 bpd this year, spare capacity of 5 million bpd does not seem unrealistic.

Minus about 4 mbpd of decline from existing fields.

[MonteQuest]

IEA as of June 10, 2008:

Global oil product demand is expected to average 86.8 mb/d in 2008, 80 kb/d below last month’s estimate, following the reduction of price subsidies in several non-OECD countries. Global growth is cut even more steeply by 230 kb/d to +0.9% or +800 kb/d when historical upward revisions to 2006 and 2007 data are factored in.

http://omrpublic.iea.org/currentissues/high.pdf

[copious.abundance]

[Minus about 4 mbpd of decline from existing fields.

Which, if true, would leave you with net new capacity of 3 million bpd. Subtract 0.8 million bpd in increased consumption per IEA and you have 2.2 million bpd in spare capacity. However, there is already an existing ~2 million bpd in spare capacity, so that gets you back to 4.2 million bpd in spare capacity. Which isn't too far from the quoted 5 million bpd.

[Plantagenet]

there is already an existing ~2 million bpd in spare capacity

Where is it? Can we send Bush and Gordon Brown and the UN there to beg for more oil after they leave this weekend's Saudi oil summit meeting empty-handed?

[arretium]

Minus about 4 mbpd of decline from existing fields.

Which, if true, would leave you with net new capacity of 3 million bpd. Subtract 0.8 million bpd in increased consumption per IEA and you have 2.2 million bpd in spare capacity. However, there is already an existing ~2 million bpd in spare capacity, so that gets you back to 4.2 million bpd in spare capacity. Which isn't too far from the quoted 5 million bpd.[/quote]

Where's this spare capacity right now?

[yull]

I think I'm going mad sometimes. How can such huge companies be so utterly deluded and ignorant yet us rabble posting on an internet forum have it all right? I'm sure we're right, but the ignorance and delusion out there is astonishing. We live in a mad mad world.

[TheDude]

Five million barrels per day in spare capacity?

With possibly up to 7 million bpd in new capacity coming online over the course of this year, and with the IEA projecting an increase in world demand of only 800,000 bpd this year, spare capacity of 5 million bpd does not seem unrealistic.

Minus about 4 mbpd of decline from existing fields.

Much of the new capacity has come on line already:





The megaprojects database, fine a piece of work as it is, is compiled from press releases and the like, thus not the final authority on judging future supply.

Prices are unlikely to move ``substantially downwards'' in the coming years, because of increased costs of production, Birol said. ``They may go down, but the substantial lower levels that we saw a few years ago --$20 or $50 a barrel -- those days are over,'' he said.

Political upheaval or natural disasters in oil-producing countries may ``seriously pull prices higher,'' Birol also said. If prices stay at current levels, alternatives to oil will become more economical and demand for oil in the long term may decrease, he said. ``But at this time, oil producers are earning serious revenue.''

[jlw61]

Oil's `Bull Run' May Be Over on Supply, JPMorgan Says

Crude oil's ``bull run'' may be over as prices become increasingly volatile and Saudi Arabia pledged to boost supplies, according to JPMorgan Chase & Co., the third- largest U.S. bank.

Prices are expected to ``correct'' over the next few months, JPMorgan analysts led by Brynjar Eirik Bustnes said in a report today. Spare production capacity may reach 5 million barrels a day by 2010, similar to levels in 2002 to 2003, when oil was $30 a barrel, the analysts said.

While using $90 a barrel as the oil price estimate for this year, JPMorgan is using $85 a barrel for its long-term oil price estimate for 2009 onwards, the analysts said.

bloomberg

Actually I pray it's true. I want to buy metals when they plummet and it will give me more time to convince the wife to move to our Plan B location. That, plus we want to visit a friend in the EU and another "down under" before travel becomes too expensive.

[Graeme]

Global oil demand to fall for first time since '93: analyst

Global oil demand is likely to contract 0.6% in 2008 for the first time in 15 years, said J.P. Morgan Chase late Friday. Analysts led by Joseph Lupton forecast global oil demand will fall another 0.2% in 2009 as demand dampens in emerging markets, whose appetite offset declines in developed markets' oil consumption in 2006 and 2007.

marketwatch