Analysts' Oil Forecasts Wildly Off Base 17 comments
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Commercial crude oil inventories fell by 1.5 million barrels last week, just 100,000 barrels shy of the consensus estimate. Oil stocks fell by 6.3 million barrels, to 291.7 million, the previous week.
Going into the report, crude oil futures traded with a firmer tone as traders began focusing on global supplies. The crude oil market slipped into backwardation last week (see "Oil's Creeping Backwardation"), indicating the market's supply concerns, after a four-month sojourn into contango.
According to EIA, domestic refinery usage plunged to 66.7% last week, a further drop from the 77.4% utilization rate of the previous week. As a result, gasoline production fell to an average 8 million barrels per day, while distillate fuel production, including the refining of diesel and heating oil, slipped to a daily average of 3.3 million barrels.
Gasoline inventories declined by a larger-than-expected 5.9-million-barrel margin last week, despite analysts' forecasts for a 3.5-million-barrel drop. EIA figures indicate motor fuel demand has dropped 3.5% over the past 12 months.
Forecasts for a 1-million-barrel decline in distillate fuel stocks, too, were overly optimistic. EIA says inventories dropped by 4.2 million barrels as demand slipped 5.5% from year-ago levels.
In all, analysts were 1-for-4 on forecasts this week.
At least there was some comfort available in watching the oil market return to a semblance of normalcy. The NYMEX crack spread flipped back into positive territory Tuesday following the expiration of the October crude oil delivery. On Monday, the spread turned negative when an apparent short squeeze in the then-spot contract pushed the immediate cost of crude well above the proceeds obtainable through the sale of gasoline and heating oil (the crack spread's explained in "Time For Crack Spreads? ).
NYMEX Crack Spread/Refining Margin
The natural gas market also bounced back from Monday's disruption. Crude oil's premium over natural gas had been in a seasonal downturn until the spot crude market turned squirrelly.
On Monday, the premium ballooned to more than $13 mmBTU (million British thermal units) after a three-week decline to below $9 mmBTU.
Spot Crude Oil Premium Vs. Natural Gas
Disclosure: none
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This article has 17 comments:
"Hydrocarbons can be re-defined as a 'renewable resource, rather than a finite one' (Gurney 1997)" -- Peter R. Odell, economist/geologist, 2004
"Enormous implications follow from oil and gas being renewable resources." -- Peter R. Odell, economist/geologist, 2004
"I do not know of any idea more likely to keep people impoverished than the idea that resources are natural, fixed, and finite. " -- Thomas R. DeGregori, economist, 2002
"The problem with the finite-resource theory is nicely illustrated by recent trends in oil production. There are 6,784 trillion fewer barrels of oil in the ground today than there were in 1981, the year in which relative oil scarcity was greatest. At first glance, then, one might think that the natural resource base has deteriorated. Yet oil is relatively more abundant today than it was 17 years ago." -- Jerry Taylor, political scientist, 1998
"The industry will never run out of oil, not in 10,000 years. Some day, it may run out of customers. Every mineral industry is a perpetual tug-of-war, between diminishing returns and increasing knowledge." -- Morris A. Adelman, economist, 1997
"Neither we, nor our grandchildren, nor their grandchildren will live to see the end of the oil era." -- Karl-Heinz Schult-Bornemann, geologist, 1997
"We now have in our hands—really, in our libraries—the technology to feed, clothe, and supply energy to an ever-growing population for the next seven billion years." -- Julian L. Simon, economist, 1995
"It is obvious that the total amount of petroleum in the rocks underlying the surface ... is large beyond computation." -- Edward Orton, geologist, 1888
oilismastery.blogspot..../
> jack
I wouldn't put very much faith in what economist say. They think money will produce anything.
This week is a good example .It has probably produced many a yaht or ferrari.
At least as much qualification as Al Gore has to say that the world will end in just a few years unless we (except himself and other uber Liberals of course) abandon fossil fuel consumption.
"An ever growing population for seven billion years". Why seven?
Good job. The EIA analysts are not the only analysts off-base when it comes to oil companies estimates. Wall St. analysts are wringing their hands and moaning about how energy earnings estimates need to come down to reflect the recent drop in crude. Excuse me? Did the analysts actually rewrite all their estimates to reflect $147 oil in July. Boy, if they did they are a lot dumber than I thought. You can't change estimates based on a temporary "peak" in crude prices. It's just plain stupid. Analyst earnings estimates are becoming a
con game" where they just keep moving the "goal post" until the kick is long enough. Witness the recent downward revisions in Financials. Sure, make them as low as possible and then when they beat the number you get everyone to jump back into buying them.
I could not agree more with the German Finance Minister who said yesterday that Wall St. has morphed into a Vegas-style "casino capital" market. Manipulated, distorted, and not transparent. No wonder all the capital is moving to Asia. These fiancial whores have gotten exactly what they deserved. Good riddance!
Yank
While this may seem like a fantastic claim, let's think for a minute about who benefits from the UNPROVEN theory of Peak Oil. How about Big Oil, OPEC, Russia, oil speculators, Al Gore and other environmental extremists?
And who loses? Let's see, that list includes every American who consumes this product that is essential to our way of life. If Gold is right, and there truly is 100X (wow!) the oil in the earth the Peak Oilers assert there is, what would that make it worth?
In case you haven't figured this out yet, all these Peak Oilers are raking in hundreds of billions of dollars a year as a direct result of their dire warnings and predictions.
Talk about a conflict of interest! You think?
In 1976, Jimmy Carter said we were running out of natural gas. He went so far as to actually ban its use in barbecue grills!
Now it seems like every time we turn a shovel in the U.S., we find another mother lode of NG. We're up to a 118 year supply of proven recoverable reserves and counting.
But perhaps that's just a coincidence. Right!
To me and to a growing number of people, you peg your hat on the sure things in life - the sun rising everyday.
So you guys go ahead and argue about your oil theories...but it's not the only energy source under the sun
Is the sun going to run my car? Solar cars? If so, I don't see Toyota or GM producing one at this time. What people need to keep in mind is that oil supports nearly 100% of our transport sector. So solar won't affect that reality. Electric cars would affect it though, but significant barriers remain. With only a limited driving range and the need for an ICE engine to still be a part of the "electric car" in order to recharge the 400 lb. battery, we are light years away from such cars making any kind of significant inroads into the overall market share of car sales. And here's something nobody is talking about --- the large scale toxic waste that will be left behind when we start to dispose of these electric car batteries en mass.