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IEA predicts oil price to rebound to $100

Javier Blas and Carola Hoyos, Financial Times
Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.

“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the report states.

… The IEA’s World Energy Outlook has come to this conclusion largely because it believes companies will struggle to pump enough new oil to offset the steep production declines of the world’s older fields.

“Current global trends in energy supply and consumption are patently unsustainable,” the report states.
(5 November 2008)
More tantalizing leaks about the upcoming IEA report. -BA

Highlights of the IEA report

Financial Times
In a flagship report due to be published next week by the International Energy Agency, the developed world’s energy watchdog doubles its forecast the price for oil will reach by 2030 and predicts the era of cheap oil is over. Below are the report’s highlights.

The Challenge:
“It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.”

The Oil Price:
“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over.”

Supply and Investment:
“Globally, oil resources might be plentiful, but there can be no guarantee that they will be exploited quickly enough to meet the level of demand projected.”

“Production continues to outstrip discoveries (despite some big recent finds, such as in deepwater offshore Brazil).”

… “The increasing dominance of national companies may make it less certain that the investment projected in this Outlook will actually be made.” …

● 106m b/d – total oil demand by 2030, up 25 per cent from 2007

● 9% – the natural decline rate of oil fields
(5 November 2008)
As TOD’s Leanan points out:
The report has not been officially released yet, and we don’t know if the 9% number is correct. I suspect some reporters may have gotten previews already, though. Once the report is officially released next week, expect a blitz of response from peak oilers, including TOD.

Peak gas output could come ‘earlier than we think’: Shell’s Mills

For the gas industry, peak gas output could come sooner than expected,
“maybe not too different from peak oil,” Shell executive vice president John
Mills told delegates at the ADIPEC conference in Abu Dhabi on Wednesday.

“Globally, what people have woken up to is that there is a prospect for
the gas industry that its supply-demand crunch could come earlier than
anticipated,” he said.

“The Middle East will still be increasing its gas exports right through
that [peak in global gas supply], but the picture in North America and Europe
will be quite different,” he said.
(5 November 2008)

$10 per barrel: in Russia, it’s actually arrived

John Kingston, Platts
Yes, the $10 barrel has reappeared…in Russia. That’s where government policies are slashing prices for local refiners and all but guaranteeing that the country’s extensive reserves of oil are not going to be developed to their fullest.

Earlier this week, Russia slashed its crude export duty to $39.35/b from just over $50/b. Given that the price of Urals crude is either side of $60, depending upon where it’s being exported from or delivered to, the $50 export duty meant that suppliers were staring at $10 if it was exported, minus transportation costs, versus keeping it at home and having lower costs. With that type of economics, it wasn’t hard to figure out what exporters would do.

As a result, crude has been piling up in Russia, and the internal price has declined to the $10 level. For the barrels of Urals that have made it on to the open market, this strange situation has pushed their price higher than Brent at times, an extremely rare situation.

But why should anyone outside Russia particularly care about this?
(3 November 2008)

Don’t Want to Spoil the Party over Low Gas Prices, But Robert Rapier has a Warning You Should Hear

Bill Paul, Energy Tech Stocks
While Robert Rapier is well known to readers of “peak oil” web sites such as The Oil Drum, his name isn’t nearly as well known as it should be among investors in general. As a former oil industry insider with many years of experience in the notoriously murky world of oil refining and marketing, Rapier is a pragmatist, not an ideologue, in his oil market analyses.

Thus is it worth noting that Rapier, on his web site, is warning that the current plunge in pump prices poses “a big risk for inventories. Keep a close eye on demand at these prices,” Rapier advises after noting that gasoline has been selling for less than $2 a gallon in parts of Texas. “If,” he writes, “demand picks up and inventories can’t recover, we will go into spring in position for gas prices to reverse in a hurry.”
(6 November 2008)