Reason #75 Why I Love To Blog -- December 2, 2016

Before reading the post below, if you haven't seen the earlier post on breakeven costs in the Bakken compared to the rest of US shale and the Mideast, go to that post, and then consider those numbers in light of the projections below. Just saying.

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The Post

Earlier this morning I posted the link to Filloon's Bakken update. His final words: WTI still has room to run.

The short squeeze continues, and institutional dollars will begin to roll into energy names over the last two weeks of this month. 

Not less than fifteen (15) minutes later, I see this headline over at Rigzone: OPEC crude cut could push oil to $75 per bbl in 2017.

The story was actually posted last night but I general wait until the next morning to look at the Rigzone articles. In this case, I'm glad I did.

From the linked Rigzone article:

The International Energy Agency has estimated that as a group, OPEC currently produces 33.8 MMbpd. In the September meeting in Algiers, the cartel said member nations would target dropping that volume between 32.5 MMbpd and 33 MMbpd.

Designed to boost the oil market’s recovery, the production drop will “accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward,” OPEC said in a statement Nov. 30.

World oil demand is expected to grow by about 1.2 MMbpd this year and in 2017. OPEC said that underscores that a market rebalancing is underway, but both Organization for Economic Co-operation and Development (OECD) and non-OECD inventories remain well above average. Given the inventory overhang, a lack of investment in 2016 and 2016, as well as massive industry layoffs, OPEC said it’s vital that stock levels are brought down.

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Looking Past 2017

Shale production to grow, offshore production to decline starting in 2018 -- Rigzone. 

But then in that same article:

With the announced OPEC production cut Wednesday, Rystad Energy expects global liquid production to remain at current levels into next year.

At the same time, demand is expected to grow by around 1.3 million barrels per day.

This means that the large amount of stored oil will decline considerably in 2017.