With all do respect Foxsea,, your numbers are quite askew. Not sure where your getting them from but they are not correct. From your reserve details to your production costs to produce AB oil. I know that the numbers you speak of are out there and floating around but those of us in the know, know they aren’t correct.
I don’t want to start an argument on it but they just aren’t.
ILGH is a reservoir / production engineer for a major producer here in AB the man does this for a living. His company pays him to know this stuff to the most infinite detail. When he speaks on this listen and learn.
Maybe so. ILGH is boots on the ground but I think his big-picture perception is askew. I remain an investor in the industry and this is an except from a recent analysis, published by Forbes:
"The global market is tight, despite statements from major oil producers that continue to focus on the risks of over-production, rising inventories and falling prices, rather than shortfalls and rising prices. The most logical inference is producers are comfortable with the rising price trend and willing to take a chance on prices escalating further in the short to medium term. Producers will likely continue to restrict output as long as they can deflect blame for increasing prices onto fears about Russia, coronavirus flare-ups, future slowdowns in demand, and pressure from investors worried about the energy transition.
Inventories of petroleum shot up massively during 2020 amid peak lockdowns. So, OPEC+’s job has been two-fold over the past 18 months — hold back enough supply to meet demand but not oversaturate the market and make sure that global inventories for both crude oil and refined products drain. That takes exceptional supply discipline, and the Saudi-Russia-led cartel has delivered. OPEC+ has been so successful that oil prices have been steadily rising since Brent dropped below $20 a barrel at the pandemic's peak in the spring of 2020.
OPEC+ has begun the process of easing supply cuts by adding 400,000 barrels a day each month. Global inventories are now close to “normal” pre-pandemic levels, but OPEC+ remains hesitant of adding more supply at this time, even though major consuming nations including the U.S., Japan, and India have urged them to.
Why is OPEC+ not adding more supply despite prices over $95 a barrel? Because it remains wary about demand further into 2022. It remains concerned about fresh Covid-19 outbreaks, particularly after the experience with the Delta variant and their potential to curb demand. Although restrictions are easing in many countries, Eastern Europe and Russia have had fresh outbreaks have brought about new lockdowns or mobility restrictions.
OPEC+ also knows that the recent surge in Brent prices to over $95 has been caused by the global spike in natural gas prices. The gas price spike is predicated on fears of a very cold winter in Europe and Asia. Russia has exacerbated this by sabre-rattling at Ukraine and the resistance of Germany to certify the Nord Stream 2 gas line from Russia. Prices could fall off sharply if this colder-than-normal weather does not materialize and the Russia situation is resolved. Some power generators with the capability to switch from expensive gas as feedstock will switch to oil products this winter, which could boost oil demand by 400,000 barrels a day to 1 million barrels a day.
OPEC+ is also eyeing the later 2022 oil market. Winter could bring more Covid cases, and spring is a lower-demand “shoulder” season. Adding more supply over the 400,000 barrels per month could result in an oil surplus forming in mid 2022. OPEC+ does not want to go back to square one with reducing inventories.
While most experts forecast that global oil demand will return to pre-pandemic levels of over 100 million barrels a day in 2022, much of the heavy lifting will occur in the second half of the year. The summer months in the Northern Hemisphere — the so-called peak driving/flying season — account for much of the demand growth in any year.
What to expect from OPEC+ ? The cartel is expected to keep its current agreement in place and not add more supplies than the previously agreed 400,000 barrels a day each month. Group leader Saudi Arabia has already said that it sees no demand in the physical market for additional barrels. It has also controlled prices for Saudi “spot” barrels — a move that reflects their commitment. Yes, oil markets are tight — but there is no shortage of oil available to global refiners.
One thing OPEC+ could address is that over the past two months, it has been adding less than the agreed to 400,000 barrels a day. It has been over-complying with its supply pact because some weaker members, mainly from West Africa — Nigeria and Angola — have been unable to produce at their quotas due to operational, technical, and investment issues. The larger cartel producers like Saudi, Russia, or the UAE could easily step in and fill that void, which could add supply and perhaps take some heat out of these prices."
