Goldman Sachs - Global Oil Production Off 1 Mbd YOY: $95/Barrel By Year-End Unless OPEC Pumps More

[hatrack]

EDIT

OPEC agreed last year to lower output by 1.7 million barrels per day (bpd), and Goldman said global oil production is down about 1 million bpd from last summer's levels.

Disappointing output growth from non-OPEC producers also helped tighten supplies, Goldman said, adding global demand was up by 1 million bpd from year-ago levels. "Our estimates show that keeping OPEC production at current levels and assuming normal weather this coming winter, total petroleum inventories would fall by over 150 million barrels or 6.5 percent by the end of the year, which would push prices to $95 a barrel without a demand response," the report forecast.

A decision by OPEC to open the taps could take $5 to $10 off the price of a barrel of crude as some speculators exit the market, although the fall might be brief.

"Such a pullback would likely prove temporary as long as global economic growth remains strong, and the consequent reduction in oil spare capacity would increase the market vulnerability to unexpected oil supply disruptions," Goldman said.

EDIT

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=tnBusinessNews&storyID=2007-07-16T150149Z_01_N16337238_RTRIDST_0_BUSINESS-OIL-PRICES-OPEC-DC.XML

[phantom power]

1. Ooooo... I'm getting that edgy "top of the rapid" feeling again.

Maybe even the "running it backward" feeling.

[GliderGuider]

2. Well, there's the increasing pressure on OPEC to open the taps. Let's see what happens...

(sound of crickets)
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(more sounds of crickets)

[phantom power]

4. I predict OPEC will discover a need to spend more time with it's family.

[bighughdiehl]

3. Down 1mbpd YOY...

Is that all liquids or just C+C? Just curious.

[GliderGuider]

5. It's safe to assume that "global oil production" is all liquids.

If they were just referring to a region it might be C+C+NGPL.

It doesn't make much difference, though. C&C is heading down anyway, so it's a big part of that 1m.

[GliderGuider]

6. I take that back. I just found this:

http://www.cattlenetwork.com/content.asp?contentid=145158

NEW YORK (Dow Jones)--A quick look shows U.S. crude oil futures prices are lagging record year-ago levels by 5% while crude oil inventories are brimming at their highest early-July level in 14 years.

That snapshot might suggest that prices, which have held above $70 a barrel for the past two weeks, may be in for a steep slide.

But the regional issues surrounding the price of U.S. benchmark West Texas Intermediate crude oil for delivery at Cushing, Okla., mask a broader, far more bullish reality: Many refiners are paying record-high prices for increasingly tight supplies of sweet crude oil and even higher prices may lie ahead.

Plagued by civil unrest in Nigeria and heavy field maintenance and operational problems in the North Sea, global output of low-sulfur crude is down about 1 million barrels a day from a year ago. The shortfall is especially acute as the so-called sweet grade is especially desired during the peak U.S. summer driving season, because of its high gasoline yield.

The cash-market value of Light Louisiana Sweet crude on Friday was $80.72 a barrel, topping the previous record of $80.19 set Aug. 7, 2006, and 2.4% above the same day a year ago. On Monday, Nigeria's Bonny Light crude hit a record near $82.65, up 8% from a year ago.

It looks like the 1mbpd shortfall in the GS article is entirely light sweet crude.

[hatrack]

7. The article stated crude oil - it didn't say "only" but it was implied

nt

[Delphinus]

8. What if there are NO taps to open?

What if OPEC is pumping at capacity?

And, what is the global economic growth comprised of? Where is that growth happening here in the states?

[GliderGuider]

9. That's the million barrel question, isn't it?

KSA's production declined 8% last year, with oil prices at $60 to $70. Makes you say "Hmmm...." doesn't it?

[hatrack]

10. But I'm sure they have plenty more! The Al Saud would never lie to us, their bestest friends!

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Clap HARDER, Goddamnit!!!

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