EIA's Predictions Questionable - OPEC Call is the Fudge Number!

Just How Accurate Are The EIA’s Predictions?

  

• Mahjoub Mohamed Salih, WNN news

  

The EIA recently published the February edition of their Short-Term Energy Outlook. If you follow this month to month, and we do, you will notice their prognostications change a little every month. And over several months those small changes can add up to some rather dramatic changes. Nevertheless, below are several charts with their current oil production projections.

The EIA STEO only gives monthly data for total liquids. All C+C data is quarterly and annually. The monthly projected data begins in February 2016. Projections for quarterly and annual data begins January 2016.

The EIA says Non-OPEC total liquids dropped .5 million barrels per day in December and another .36 mbd in January. But then, other than another short drop in the first quarter of 2017, they see things leveling out for the next two years.

For the total world, the EIA expects far better production numbers than just for Non-OPEC. They expect new highs to be reached in 2016 and again in 2017.

They see US total liquids dropping in 2016 then they begin a slow rise through 2017, but not overtaking the peak in 2015.

Apparently the EIA thinks Russia has had it. They see a drop in December 2016 then a huge drop in January  2017. We have no idea why. However the scale here makes the decline seem greater than it really is. From January 2015 to December 2017 the decline is only 400,000 barrels per day.

Adding the other FSU nations to the mix, mostly Azerbaijan and Kazakhstan, only exacerbates the decline, making it half a million bpd between January 2015 and December 2017.

Looking at just Crude + Condensate you get a better picture of what the EIA really expects in the next two years.  They expect Non-OPEC C+C to drop 580,000 bpd in 2016 and another 170,000 bpd in 2017 for a total of 750,000 bpd over the two years.

They are expecting far better things out of OPEC's gang.  They have the OPEC gangs total liquids up 1,010,000 barrels per day in 2016 and another 870,000 bpd in 2017. They do not project OPEC C+C.

But taking a closer look at their US Projections:

The EIA expects US C+C to drop 740,000 barrels per day in 2016 and another 230,000 bpd in 2017 for a total decline over two years of 970,000 barrels per day. 

  

However they have US total liquids faring much better then just C+C. They have total liquids declining by only 490,000 barrels per day in 2016 and increasing by 100,000 bpd in 2017.

What this means is that US “Other Liquids”, that is NGLs, biofuels and refinery process gain must show a very impressive gains while everything else is going to pot. They show other liquids increasing by 250,000 bpd in 2016 and another 330,000 bpd in 2017. 

Most of this increase has to come from NGLs as biofuels are only a minor input and refinery process gain pretty much follows C+C consumption. But…

 

Using their projections for Dry Gas production we find that gas production increased more than other liquids increased in 2015. However they say gas production will increase by only .4 percent in 2016 while other liquids increase by 4.6 percent, and a similar story in 2017 though not quite as dramatic.

Bottom line: We find the EIA’s past production data very accurate. However their projections appear to be pretty lame. This observation is proven out by the fact that those projections are constantly changing. Also, those “Other Liquids” projections seem to make no sense whatsoever. It appears to be mostly a fudge.  

But the very biggest problem with the EIA’s projections are with OPEC. That is because it is not a projection at all but an estimate of what will be needed to meet world demand. That is they estimate Non-OPEC production, then they estimate world demand, and the difference between the two will be the “Call on OPEC”. That is, they will simply expect OPEC to make up the difference, whatever that difference may be.

Lately, however, OPEC seems to be producing a lot more than their call asked them to. That is, they appear to be ignoring their call. And they will likely do likewise when they are expected to produce more to meet demand. They are all currently producing flat out and if there is a call on them to produce more, it will very likely go unanswered. 

WE thus  expect the “Call on OPEC” is a running joke between OPEC nations.

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Since 2000 Real GDP Grew 31.6%, But Wages Are Flat?

Platinum Wealth Advisors

 Comments

Markets were momentary inspired by Buffet’s latest blockbuster deal  and shenanigans that turned over the downward sentiment of the past seven trading-sessions. But the old guy in Omaha is not the world, and the real world could actually care less about what Berkshire did, does, or doesn’t do. Markets, however, being collectively neurotic by nature, care for short time spurts -   that is until the next trendy thought or event captures its child-like focus and limited imagination – thus the game goes on..   

A brief review of the real world concludes that there is little to be exuberant about. In addition to Greece,Spain, Italy and perhaps the rest of the Eurozone, along with other nations, all account for many top Western economies who are  in critical distress. Some are near terminal. Meanwhile, bad debt at Chinese banks continues to accelerate, as expected, Resource economies are seeing exports drop for commodities. Australia’s  coal industry is now on the watch list ; so is Norway’s oil industry.  Bonds for the Eurozone are now paying negative returns, indicating that there are no “Real Economy “investments for notional capital. Japan’s consumer confidence is dropping faster than a hockey’s player’s gloves in a big-game  fight , each month. Russia’s GDP fell sharply, by 4.5%; it is getting hammered by both sanctions and resource issues. Taiwan too is lowering market yields. Brazil, Venezuela, Mexico, and no doubt many more South and Central American countries, are basket-cases. Then there is the Ukraineand its Slovak and Eastern European neighbours, who are all experiencing hardships.

 Still, an even  bigger concern are countries in the Middle East, South Asia and Africa, where the economic optics are limited, distorted or non- existent, but one may conclude with confidence that given  the extent of wars, starvation, medical deprivation and extra-ordinary waves of migration to less-marginal neighbouring countries, that most of these economies are also terminal cases with little hope of recovery to  sustainable levels for their indigenous populations. Overpopulation is thus rampant everywhere.

In the meantime, most folks in North America are getting poorer, since 2000,  as “The Tale Of Two Charts” ndicates below - and more importantly, they do not participate at all in the real GDP growth. It looks  much worse too, as per capita incomes are going backwards while  drowning in the temporary relief from more debt at all levels, to keep a broken  consumer  consumption system hobbling along. Pensions and medical services are also in peril in both  developing and developed countries.

So indeed, markets may be neurotically happy for a brief moment enjoying  the usual relief reactions, despite what is plain and clear to object analysis and evaluation. Meaning, the iceberg’s damage has but one inescapable conclusion – so what the heck, why not rearrange the deck chairs with Uncle Warren, while having the ship’s band play merrily along - once more?

Knowing that in the end, reality is a cruel mistress - who promises wide-spread currency wars (devaluations –  already China, Japan, Australia are suspects…), and trade protectionism with its consequential and expanding global conflicts!

Good Luck; Be Careful Out There!

Where Did the GDP "Growth" Go? Not into Wages

How can the economy grow by roughly one-third in real dollars while real median household income drops like a rock?

Based on gross domestic product (GDP), the U.S. economy has grown smartly since 2000: GDP rose from 10,031 in 2000 to 17,840 in mid-2015. That's an increase of 77.8%.

A Tale of Two Charts

Ironically - the same old French story - Storm the Bastille?

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For Norway, Oil at $50 Is Worse Than the Global Financial Crisis 

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As Economic Malaise Grows, Brazil 

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Learning Success: 

APPLY Tips From The Best

 

Indra Nooyi,  PepsiCo , another of  100 Most Powerful Women - Forbes, has not only led her company to record financial results but is making strides to move PepsiCo in a healthier direction, leading the courageous charge to shed traditional fast food properties and to replace them with initiatives to supply healthier foods. She is deeply caring and committed as a senior executive. She is a fun-loving executive as well—she played lead guitar for an all-woman rock band in college, loved to play cricket, and is known to sing karaoke and perform at corporate gatherings to this day. Yes, I have been known to relate to her fun-loving spirit as a senior executive as well.

Originally Published

Platinum Wealth Partners

http://pwa2000.blogspot.ca/2015/08/since-2000-real-gdp-grew-316-but-wages.html