Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
The last time excess supply caused a plunge in oil, it took almost five years for prices to recover.
The CHART OF THE DAY shows how West Texas Intermediate, the U.S. oil benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to $9.75 in April 1986 when Saudi Arabia, tiring of cutting output to support prices, flooded the market. Prices didn’t claw back the losses until 1990. Oil has dropped 57 percent since June and OPEC members say they’re willing to let prices sink further.
ROCKMAN wrote:Folks again need to focus on how a “marginal producer" is defined by. $30/bbl oil isn't going to cause any existing wells in the US, the KSA or anywhere else in the world to stop producing. Once again: I have many wells that would still generate nice net cash flows at $10/bbl. So does the KSA. But there are very few NEW wells in the US that would be drilled at that price. But guess what folks: neither does the KSA and most other NOC’s. As has been pointed out before the most of the remaining reserves YET TO BE DEVELOPED in the KSA and the rest of the world won’t be brought on line with low oil prices. Don’t believe me? Watch for the budget projections: a lot of foreign projects, including those of OPEC nations, are going to be shelved IMHO
In the US it will depend first if your leases have expired and you have to pick them up again.
rockdoc123 wrote:Good article today I was reading which reminds me about the stripper wells. Shut those puppies in and there is no guaranty you can start them up again cheaply or physically.
Pops wrote:rockdoc123 wrote:Good article today I was reading which reminds me about the stripper wells. Shut those puppies in and there is no guaranty you can start them up again cheaply or physically.
That's interesting doc, do you have a link?
the Flut-E liner. Probably ought to patent the application before blabbering about it on the internet.
Pops wrote:It really is as if no one gets that 60-70-80%% of that 5mmbd will be gone in a year without continued drilling - this ain't grandpa's glut.
Some stripper production can be shut down for awhile with few problems.
He added that could send UK petrol prices below £1 per litre.
Italian oil group Eni has said the next spike could be around $200 a barrel.
Opec secretary general Abdullah al-Badri, also speaking at Davos, defended the group's decision not to cut output.
He said: "Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower costs?
"Let's produce the lower cost oil first and then produce the higher cost,"
"We will go back to normal very soon," he said.
The lack of balance between oil's supply and demand means the road back to $60-$70 range will be "not that easy, not that quick," the prince said, adding that markets may not even have found the bottom yet.
Tanada wrote:I strongly doubt it will take 8 YEARS to drive marginal producers out of the market. I believe in my most self serving opinion it might take 8 MONTHS, possibly even twice that long, but in no wise will it take 8 YEARS.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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