Oil recovery time will only early not late

By Emily Murray,2015-03-23 00:00
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Oil recovery time will only early not late

    Oil recovery time will only early not late

    Even if the world's oil supply surplus situation lasted until 2017, but at present there are signs that began to oil prices start recovery time will only advance, will not delay.

    Since mid - 2014, oil prices have tumbled by two-thirds to below $40 a barrel, close to 11-year lows.And for the most analysts expect oil prices to regain until 2017 or later the threshold of $100 a barrel, oil producers think will continue to produce more oil, maintain supply exceeds demand.

    But there are more and more traders started to buy call options, in preparation for the obvious rise in the price a year later.

    In recent weeks, the price in the 50 - $80 a barrel of brent crude oil of the call option open interest has skyrocketed, suggests that oil prices will be a growing confidence rebounded strongly from current level.

    Support oil prices more optimistic outlook factors include: the safety of the car sales growth, some oil and political risk, and debt heavy shale oil enterprises survive.

    Fact is true, some Banks currently view of crude oil market is more optimistic.

    "There's some downside risks, while oil prices in the short term but we think oil prices will gradual recovery in 2016," the Dutch bank said.

    Morgan Stanley(32.84, 0.96, 3.01%) said the "continuing decline in the demand and supply of means that the excess supply of the oil market situation is expected to disappear by the end of (2016)."

    * * come on: from the east to the west, car sales are strong * *

    Surplus is the result of oversupply, but continuing strong global gasoline demand, thanks to car sales rising.

    November car sales rose 20% year-on-year in China, the world's largest car market is expected to grow 5-7% annual sales.

    In 2015 China will have nearly 25 million new car on the road, and by 2020, most analysts expect the annual sales will reach 50 million units.

    Even in the European car sales growth, according to industry data, monthly market growth of 5-10% in Western Europe.

    American car sales may grow by 3% in 2015, the American Automobile Dealers Association (National Automobile and Association) next year is expected to hit a record high, a slight drop in 2017.

    India's oil demand is now close to 4 million barrels a day, is also growing strongly.The country's economy growing at an annual rate of more than 7%, and tens of thousands of people are buying their first car.

    These factors bring gasoline demand is expected to encourage refiners to produce as much as possible fuel, material will boost oil demand in 2016, as long as the oil refining business remains profitable.

    "Zombie" * * * * shale oil producers

    The supply side, the organization of petroleum exporting countries (OPEC) next year is expected to maintain their production in close to a record high, especially in Iran sanctions under the condition of complete recovery after oil exports.Outside OPEC, the oil production in Russia and showed no sign of slowing.

    But America's oil production has begun to decline, because producers to cope with the rising debt.The United States this year, driven by the shale oil production of oil production has been rising from less than 6 million BPD in 2010 to more than 9 million barrels a day.

    A drop in oil prices has created a lot of "zombie" shale oil miner."Zombie" miner is someone who can barely pay debt interest, mining enough new oil Wells have no money to replace the old Wells dry enterprise.

    Production * * * * most producers full speed

    If there is a massive supply disruptions, global oil producers have little spare capacity can be used to increase production to meet demand.

    Most manufacturers have all production, only Saudi Arabia has lots of spare capacity, although it can only meet 2% of the 2016 forecast demand.

    Risk consultancy Control Risks in the 2016 "risk map" outlook, according to "the current security and political risk prospects than at any time in the past decade, poor", lists the terrorist threat, political instability and economic uncertainty and a series of factors.

    At the same time, China is expected to expand the strategic petroleum reserve, it will increase demand for oil.The current daily demand has more than 10 million barrels of oil.

    Because of these factors, the international energy agency (IEA) estimated daily average of 2016 oil demand will increase by 94.6 million barrels a day this year to a record high of 95.8 million barrels a day.

    Excess supply in the current daily average of 500000-2 million barrels, need OPEC will present more than 31.5 million barrels of daily production ceiling fell to

    long-term use of the upper limit of 30 million barrels, in order to restore balance to the oil market.

    "The oil market remains tight balance between supply and demand than low actual reflect the level of higher oil prices. The excess supply about 1.5% of the daily average of 95 million barrels of supply, the political risk is higher, and limited spare capacity, the weaker oil producers are prone to disruption," citigroup said.

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