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Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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Oil Supply Outages Leave Spare Capacity Tightest Since 2008

There has been quite a sell-off in oil in the last few months. First, the deal between Iran and the West made front-page headlines and sparked speculation of an imminent drop in oil prices. Brent prices dropped 2.7% immediately after news of the deal broke, both on reduced geopolitical risk as well as hopes of more Iranian crude reaching global markets.

Second, U.S. oil production continues to climb. WTI prices dropped $1.31 in early trading on November 27, on news that U.S. crude inventories unexpectedly jumped by 6.5 million barrels the previous week. Hovering around $92, WTI reached a six-month low. Latest monthly data from the EIA shows that U.S. oil production reached 7.5 million bpd in August, a 37% increased from just two years earlier, and the highest rate of production since the early 1990’s. Drillers expect those numbers to continue upwards. Pundits and politicians alike are hailing this new era of energy abundance.


Source: EIA

Bear market ahead? Don’t count on it.

Bet on oil prices rising again in the coming months for one main reason: global spare capacity is at its lowest level in five years.
Multiple oil supply disruptions around the world have combined to bring global spare capacity to its narrowest point since the fourth quarter of 2008. In particular, conflict in Libya has cut off over 1 million barrels per day (bpd) since July 2013. Other significant outages come from Iran, Iraq, and Nigeria. The drop in production…




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