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Archive for December, 2017

Peak Oil Review – 11 Dec 2017

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Peak Oil Review – 11 Dec 2017

In the wake of the OPEC decision to extend the production freeze, the oil markets were relatively quiet last week. Prices fell early in the week after the EIA reported a 6.78-million-barrel increase in the US gasoline inventory, but climbed later in the week on reports of near-record Chinese oil imports for November of more than 9 million b/d and concerns about the embassy-in-Jerusalem situation. At week’s end US crude settled at $57.36 and London nearly $6 higher at $63.40. For the immediate future, there are concerns about the US oil rig count which continues to climb slowly. The EIA reported last week that US production expanded to 9.71 million b/d, the highest since EIA began compiling weekly data in 1983. There are, of course, concerns that the EIA’s weekly production estimates are inflated and will be revised when better information becomes available. Other factors moving the markets last week were a good US jobs report, signs of modest growth in the EU economy, and the threat of a strike in Nigeria.

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MIT report on EIA’s assumptions and models regarding US oil production as reported by Bloomberg

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“The EIA’s [assumes] that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the MIT research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract. ‘The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,’ said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. ‘This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.’ The problem with the EIA’s numbers, the researchers say, is that they give drillers too much credit for coming up with ways to improve fracking.”

From a Bloomberg News story (12/2)

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Peak Oil Review – 4 Dec 2017

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Peak Oil Review – 4 Dec 2017

The long-discussed decision by OPEC and its collaborators on whether to extend their production freeze to the end of 2018 came last week and to nobody’s surprise was unanimous. After three months of hype, hints, rumors, and speculation, and a nearly $10 a barrel increase in oil prices, the matter is settled for another year. When the oil markets concluded there would be no immediate sell-off in reaction to the three-month price increases, oil futures started rising again. On Friday afternoon, increasing political turmoil surrounding the Trump administration and its relations with Russia roiled the market leaving New York futures at $58.35 and London at $64.10.

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