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Bob Tippee 2011 Mid-Year Forecast
 

Bob Tippee 2011 Mid-Year Forecast

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On June 23rd, 2011

On June 23rd, 2011

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    Bob Tippee 2011 Mid-Year Forecast Bob Tippee 2011 Mid-Year Forecast Presentation Transcript

    • Oil & Gas Journal Midyear Forecast - 2011
      Bob Tippee, Editor
      Oil & Gas Journal
      Energy Advocates
      June 23, 2011
    • World oil demand
      OECD down slightly at 45.9 MM b/d; non-OECD up 3.5% at 43.4 MM b/d
    • World oil supply
      Non-OPEC: 53.3 MM b/d (+1.1%)
      OPEC NGL: 5.9 MMb/d (+10.2%)
      Stock change: -300 M b/d
      OPEC crude: 29.8 MM b/d (+1%)
    • Second-half problem (MMb/d)
    • The OPEC story
      World needs 30 MM b/d of OPEC crude in 2H
      OPEC production:
      29.9 MM b/d average 1Q
      29.2 MM b/d in May
      OPEC June 8 meeting
      Split interests: haves vs. have-nots
      No quota adjustment
      Unilateral production hikes by S. Arabia, others
    • IEA today: tapping strategic stocks
      Release 60 MM bbl in next month (2 MM b/d)
      North America 50%, Europe 30%, Asia 20%
      “…contribute to well-supplied markets and to ensuring a soft landing for the world economy” (Executive Director Nobuo Tanaka)
      Total storage: 1.6 billion bbl
      Reassess in 30 days
      In market by July; Saudi oil can take 3 months
    • Effect of IEA action
      2 MM b/d jolt of supply
      Brent and WTI quickly dropped by 7%
      Muted (so far) condemnation from OPEC
      Policy shift: market lever vs. emergency supply
    • Price wild cards
      Saudi response to IEA stock draw
      Economic response – especially crisis economies of Europe
      Dollar vs. Euro
      Demand response
      Trader worries about shrunken cushions (inventories and idle production capacity)
    • Spare production capacity (EIA)
    • OECD stocks
    • US oil price
      WTI discount to Brent was almost $20/bbl yesterday (June 22).
    • US energy demand
      Assumes real GDP growth of 2%
      Federal Reserve yesterday lowered GDP growth projection for 2011 to 2.7-2.9% from 3.1-3.3% in April
      Fed raised unemployment rate projection to 8.6-8.9% from 8.4-8.7% in April
    • US oil demand
    • US demand for key products
    • US gas price
      WTI:HH price ratio 22:1 yesterday (June 22) vs. BTU ratio of 6:1
    • US demand for gas
    • US gas production
    • US gas imports
      Canada -9%
      Mexico -83.%
      LNG -7%
    • Treasury: Percentage depletion=subsidy
      “The President agreed at the G-20 Summit in Pittsburgh to phase out subsidies for fossil fuels so that the United States can transition to a 21st-century energy economy. Percentage depletion effectively provides a lower rate of tax with respect to a favored source of income. “
    • The Close the Big Oil Tax Loophole Act
      Foreign tax credit for dual-capacity taxpayers
      Domestic production deduction (Sect. 199)
      Current-year expensing of intangible drilling costs (IDCs)
      Percentage depletion
      Deduction for qualified tertiary injectants