Global crude oil usage has risen from 61.2 million barrels per day (mbpd) in 1994 to 79.5 mbpd in 2015. An average increase of 1.4% per year for 2 decades. In the last 10 years, however, the rate is only +0.7%. Both oil production and consumption are leveling off.
American crude oil production declined to a low of about 5.0 mbpd in the period 2006-2008. It began to increase rapidly in 2009 until the price-collapse in 2015. If the increases in American production are not included in the global totals beginning in 2006, then global production has only increased to 75.1 mbpd in 2015 or a paltry +0.34% per year since 2007.
American oil consumption is basically flat, recovering very slowly to its pre-recession, 2008 levels. Globally consumption is flat or declining slightly because of efficiencies and conservation measures brought on by high prices.
Chinese consumption-growth has probably slowed. This along with the sudden, unexpected rise in American production are the main drivers of the over-supply and glut on the market and the price collapse.
OPEC is powerless over the market. They have no control. Nobody does.
Peak-oil happened. Deal with it. The cheap oil is running out. This is the price volatility that follows.
“Everything is possible in theory. It was possible a year ago, a month ago. Nothing new has happened. This frenzy is idiotic. It stems from the fact that people can’t read.” -Mikhail Leontyev, Rosneft
Syrian Civil War: Could Turkey be Gambling on an Invasion?
PATRICK COCKBURN • JANUARY 30, 2016
If there is no Turkish intervention on a significant scale then Assad and his allies are winning, because the enhanced Russian, Iranian and Lebanese Hezbollah intervention has tipped the balance in their favour. The troika of regional Sunni states – Saudi Arabia, Qatar and Turkey – have failed, so far, to overthrow Assad through backing the Syrian armed opposition.
Their enthusiasm for doing so is under strain. Saudi Arabia has a mercurial leadership, is enmeshed in a war in Yemen, and the price of oil may stay at $30 a barrel. Qatar’s actions in Syria are even more incalculable. “We can never figure out Qatar’s policies,” said one Gulf observer in frustration. A more caustic commentator, in Washington, adds that “Qatari foreign policy is a vanity project”, comparing it to Qatar’s desire to buy landmark buildings abroad or host the football World Cup at home.
“Historically, the average and median lead times between the peak in profit margins and the onset of recession have been eight and nine quarters, respectively,” wrote LaVorgna in a note to clients Thursday. “This would imply that the economy could enter recession in the second half of this year.”
“Margins always peak ahead of recession,” he added. “Indeed, there has not been one business cycle in the post-WWII era in which this has not been the case.”
Profit margins peaked during the third quarter of 2014, and have been steadily declining since, which LaVorgna suggests is a red flag.
CREDIT SUISSE CEO: ‘The doomsday scenarios are not justified’ (be very afraid)
Goldman Sachs CEO Lloyd Blankfein on Wednesday told CNBC that S&P 500 stocks are showing an unusual reaction to macro events like plummeting oil prices.
“I don’t really know why S&Ps would have that reaction to the underlying cause,” Blankfein said.
And Morgan Stanley CEO James Gorman last month said he was having just as much trouble making sense of the markets, citing their “emotional state.”
“It’s not obvious to me exactly what the connection is — absent oil of course,” Gorman said, calling oil a “wild card.”
It’s all taking a toll on bank stocks. But Thiam said things would return to normal with time — and with more positive results out of China.
“The doomsday scenarios are not justified,” he said. “There is an over-emphasis on the oil sector.”