RE:RE:Oil Hits 2016 highThe majority opinion is still for long term lowish oil prices, current levels, slightly more perhaps, but way below average price for the past few years.
We are now marginally over producing, say, 1% given that there will always be outages somewhere although perhaps below the current overall outage level.
Global rig count has approximately halved. I believe this to be correct. Halving the global rig count over the past 2 years has had a negligable effect on output. Remarkably, astonishingly in fact, this has lead most to conclude that the fall in rig count has little effect on output, therefore fall in rig count is not really significant.
Of course in the relatively short term this is correct - for up to a couple of years (for shale wells slightly less) as existing well keep pumping. Beyond that, output will fall significantly. The delayed effect of a fall in rig count is not understood, even less well understood is the equivalent delay in the other direction when the rig count is increased, for the first couple of years the increased rig count will have little effect upon output.
A major oil supply crunch is fast approaching.
Doug