Oil prices

[Jake]

*leaves to get gas*

[gopokes88]

How good of news this is time will tell but it's a very good step in the right direction

[Plutonic Panda]

http://www.bloomberg.com/news/articl...ee-oil-markets

[gopokes88]

Popping 3% today on Russia's willingness to participate in cut. $51.19

[OKCRT]

Popping 3% today on Russia's willingness to participate in cut. $51.19

If these co's can't make a nice profit with $50.00 oil maybe they shouldn't be in business. Many of these co's got use to the huge profits they were making and were able to blow funds on anything and everything and live it up. 2.00 gas is high enough for the working consumer. Hopefully oil prices don't get out of hand again.

[Pete]

As I've mentioned previously, when adjusted for inflation the all-time average price of oil is less than $43 / barrel.

That industry should be able to make plenty of profit at $50 / barrel instead of designing business practices based on double that.

[Bellaboo]

What happens in a boom is huge inflation cost due to demand. When the drilling boom died a couple of years ago in December, a truck load of sand for fracking had reached $1,200. 11 months prior to that it was $400 for the same truck load. It went up triple in a year. Now that prices are under control, they can make a profit in some plays, most notably the STACK in western Oklahoma.

[Anonymous.]

If these co's can't make a nice profit with $50.00 oil maybe they shouldn't be in business. Many of these co's got use to the huge profits they were making and were able to blow funds on anything and everything and live it up. 2.00 gas is high enough for the working consumer. Hopefully oil prices don't get out of hand again.

Many of the larger E&P corporations can make profit into the upper $30s. Everything else is icing. The smaller companies are the ones who were sweating bullets down there. now everyone can breath again. This trend is great for OKC.

[adaniel]

FWIW it would be much better for OKC and OK in general if natural gas went back up. It is around $3.25 /mcf....that and $50 oil will keep the lights on for most companies. But if it can get back up above, say $5 and stay there, you would see capital and jobs come back more.

On a somewhat related note, I am starting to get hit up by recruiters again, haven't seen that in at least two years. So that is a good sign.

[Pete]

There was a report today that OKC has a 'seller's' home market.

Truly, our economy didn't suffer that much through this recent oil downtown; at least our unemployment rate stayed below the national average.

[gopokes88]

There was a report today that OKC has a 'seller's' home market.

Truly, our economy didn't suffer that much through this recent oil downtown; at least our unemployment rate stayed below the national average.

I'll hammer this point home till everyone knows it as fact. All the data says that the okc economy is far more diversified than people realize. We just went through a brutal bear market in oil prices and OKC's economy was able to eek out a little growth. That's amazing. If the stock market crashes for 2 years NYC's economy shrinks. If there's another tech bubble SF and the valley shrink. Very very few cities are diverse enough that their primary industry can go through a bear market and the city doesn't at least slow down, most will shrink.

Okc isn't going to boom and grow at 4-5% without high oil prices but when the market crashes we aren't melting down like Detroit either.

[Pete]

I've said for a while that OKC's dependence on the O&G biz is much more psychological than real.

[emtefury]

http://www.bloomberg.com/news/articl...ee-oil-markets

An article on USA winning the oil war with Saudi Arabia with some background on why Saudi kept pumping oil.

http://www.nationalreview.com/articl...a-oil-fracking

[Teo9969]

an article on usa winning the oil war with saudi arabia with some background on why saudi kept pumping oil.

http://www.nationalreview.com/articl...a-oil-fracking

USA!

USA!

USA!

[lower-case letters]

[PhiAlpha]

If these co's can't make a nice profit with $50.00 oil maybe they shouldn't be in business. Many of these co's got use to the huge profits they were making and were able to blow funds on anything and everything and live it up. 2.00 gas is high enough for the working consumer. Hopefully oil prices don't get out of hand again.

That all depends on the play. Many companies jumped into plays with higher breakeven prices when the pricing environment was better only to have them rendered uneconomic by the downturn. Producers can survive in the $40-$50 range (as we've seen) and thrive if they have assets in the best areas, but really the $60-$80 range is where companies will start to make a "nice profit". $60-$80 per bbl for oil and $6-$8 per mmbtu for gas are what we should be hoping for, those ranges would provide plenty of growth opportunity in most domestic plays and should keep gasoline prices below $2.50.

[gopokes88]

An article on USA winning the oil war with Saudi Arabia with some background on why Saudi kept pumping oil.

http://www.nationalreview.com/articl...a-oil-fracking

There's some hyperbole in there but overall pretty accurate. I think OPEC failed to realize 4 things
1. They had no idea what hedging was, that insulated a good chunk of the industry in 2015. I can find the source on that but overheard at a meeting in 2015 was an analyst having to explain to a few OPEC ministers what hedging was.
2. There's not a source on this, but I really don't think they understood the way American bankruptcy works. If you put a truth serum in them they would tell you they were surprised a company could go bankrupt and a few months later reemerge debt free and even stronger.
3. They continuously underestimated just how innovate and creative Americans are because of the economic system we use. There are downsides to capitalism but it is no coincidence most of the worlds break throughs are in the US. The rewards are huge, and a capitalist system forces you to push forward or get left behind and die. They really underestimated how creative oil companies could get to reduce cost and how capitalism would force service costs lower. OPEC countries don't operate in a capitalist system, I seriously doubt they truly grasp how it works.
4. They failed to understand technology in general. Fracking can't just be "undone". Monkey is out of the bottle. It's not going to just go away magically. This applies to all technology, you don't ever go backwards, and even if the original company goes under someone is there to buy it up.

[emtefury]

OPEC also failed to realize the diversity of the US economy.

[pw405]

Natural gas hit $3.3x today.. certainly a good sign going into the winter!

[BDP]

There was a report today that OKC has a 'seller's' home market.

Truly, our economy didn't suffer that much through this recent oil downtown; at least our unemployment rate stayed below the national average.

Did the report speculate on what's fueling the housing market? It seems to me more people just want to live in the core of the city than they have in a long time, which has a more or less fixed inventory.

The flip side of that is that sales tax revenue has been abysmal, indicating a significant drop in consumer spending for several consecutive months. We're even beginning to see YOY drops against last years bad numbers. We haven't seen many store closings and we're still attracting new retail, but I know several local merchants that are kind of just hanging on, hoping it comes back.

It'd be interesting to know how much is psychological based on oil prices and how much of it is a real result of income loss due to layoffs and less people in the field.

... or maybe people are just paying for more their homes and have less to spend at retail. Ha.

[Pete]

The flip side of that is that sales tax revenue has been abysmal, indicating a significant drop in consumer spending for several consecutive months. We're even beginning to see YOY drops against last years bad numbers. We haven't seen many store closings and we're still attracting new retail, but I know several local merchants that are kind of just hanging on, hoping it comes back.

I don't mean to pick on you or this particular post but wanted to use it to make an important point...

IMO a huge problem with the way the City, state and even business is run is that we are constantly using ridiculous aberrations -- like sky-high oil prices -- as the standard to budget against and even for setting expectations.

Of course sales tax revenue is down from the last couple of years. Those years are in no way typical and it's bad business and management to expect that to continue, which the City and state and many energy companies all seem to do.

Another example: Those horrible layoffs at Chesapeake and Devon!! No matter that five years ago those companies were much smaller than today... The fact that the workforce swells at a ridiculous pace and then contracted is seen as a huge 'loss' instead of looking at the massive positive net gain over just a slightly longer period.

And another: Unemployment rates are up!!! No matter that they always remained below the national average and were for a time the absolute lowest in the country... It seems any movement to the negative -- even though anything longer than a few year window is amazingly positive -- is what everyone seems to harp on and wring their hands over.


All this is why I keep saying the energy correction (not slump! prices are still higher than all-time averages) creates much more of psychological impact than a real one, but then that psychological reaction leads to everyone acting out of fear which in turn does create an economic impact.

But IMO it's the emotional reaction and perception that hurts more than the actual impact on GDP by the natural fluctuations in the oil patch.

And it's the local media that drives this hysteria, with the constant drum beat of layoffs, "oil crash" and other hyperbole without putting any of that in context.

[gopokes88]

I don't mean to pick on you or this particular post but wanted to use it to make an important point...

IMO a huge problem with the way the City, state and even business is run is that we are constantly using ridiculous aberrations -- like sky-high oil prices -- as the standard to budget against and even for setting expectations.

Of course sales tax revenue is down from the last couple of years. Those years are in no way typical and it's bad business and management to expect that to continue, which the City and state and many energy companies all seem to do.

Another example: Those horrible layoffs at Chesapeake and Devon!! No matter that five years ago those companies were much smaller than today... The fact that the workforce swells at a ridiculous pace and then contracted is seen as a huge 'loss' instead of looking at the massive positive net gain over just a slightly longer period.

And another: Unemployment rates are up!!! No matter that they always remained below the national average and were for a time the absolute lowest in the country... It seems any movement to the negative -- even though anything longer than a few year window is amazingly positive -- is what everyone seems to harp on and wring their hands over.


All this is why I keep saying the energy correction (not slump! prices are still higher than all-time averages) creates much more of psychological impact than a real one, but then that psychological reaction leads to everyone acting out of fear which in turn does create an economic impact.

But IMO it's the emotional reaction and perception that hurts more than the actual impact on GDP by the natural fluctuations in the oil patch.

And it's the local media that drives this hysteria, with the constant drum beat of layoffs, "oil crash" and other hyperbole without putting any of that in context.

Nailed it.

The problem for the state and city govs is the funding sources are volatile. The city by some insane law is only allowed to fund itself with sales tax and the state relies too heavily on income taxes. The state should move the tax burden away from income towards property taxes, which do not fluctuate nearly as much. The city should be allowed to use property taxes to fund.

Instead we're heading for a 10+% sales tax if the teacher pay bill passes, which makes shopping on Amazon all the more appealing. 10% off everytime.

Edit: and if any of you try to blame repubs or fallin for this, it was all setup by democrats who controlled the entire state from founding till 2008. 100+ years.

[Richard at Remax]

Pete,

Just to clarify everything below $150k anywhere in the metro seems to be hot and is what is skewing the needle. 300k and above not in prime areas within 10 miles of downtown are really struggling. So basically all the suburbs. I wish Mize would have chosen a better headlining because it is a bit misleading.

[Chicken In The Rough]

There's some hyperbole in there but overall pretty accurate. I think OPEC failed to realize 4 things
1. They had no idea what hedging was, that insulated a good chunk of the industry in 2015. I can find the source on that but overheard at a meeting in 2015 was an analyst having to explain to a few OPEC ministers what hedging was.
2. There's not a source on this, but I really don't think they understood the way American bankruptcy works. If you put a truth serum in them they would tell you they were surprised a company could go bankrupt and a few months later reemerge debt free and even stronger.
3. They continuously underestimated just how innovate and creative Americans are because of the economic system we use. There are downsides to capitalism but it is no coincidence most of the worlds break throughs are in the US. The rewards are huge, and a capitalist system forces you to push forward or get left behind and die. They really underestimated how creative oil companies could get to reduce cost and how capitalism would force service costs lower. OPEC countries don't operate in a capitalist system, I seriously doubt they truly grasp how it works.
4. They failed to understand technology in general. Fracking can't just be "undone". Monkey is out of the bottle. It's not going to just go away magically. This applies to all technology, you don't ever go backwards, and even if the original company goes under someone is there to buy it up.

I chuckled when I read the headline! There is so much wrong with this article, I couldn't get through it. The Saudi strategy was only concerned with U.S. shale producers indirectly. They were demonstrating to the world the folly of unbridled investment in super risky ventures. Yes, this includes some shale. But more than anything, it targeted oil sands and ultra-deep water. It also targeted geopolitical game changing pipelines, monster LNG facilities, and heavy investment in renewables. By bringing a complete stop to capital inflows, and by bankrupting some of the debt-ridden energy mavericks, they have added 30 or 40 years to their own resources, and trillions to their resource value. It also does not bother the Saudis that there production has added hardship to Iran and Russia, and it demonstrated that they are no longer willing to act as the swing producer. They'd prefer the U.S. take that role, and our shale producers have not disappointed.

[king183]

http://www.bloomberg.com/news/articl...rent-benchmark

Listen to Saudi Arabia and hear the oil market is rebalancing. Look at the screen, and Brent is indeed holding above $50 a barrel. But dig deeper into the world of physical oil, and bearish signals abound, at least in the European market that helps dictate global prices.
The price difference between Brent crude for delivery in two months and three months -- a yardstick telling traders how well supplied the market is -- widened to minus 69 cents on Thursday, the biggest discount since February. Back then, the headline price for the grade was barely above $35 a barrel.

Seems like we should be prepared for another price drop.

[Rover]

Nailed it.

Edit: and if any of you try to blame repubs or fallin for this, it was all setup by democrats who controlled the entire state from founding till 2008. 100+ years.

Seriously? After years of claiming they can do better, you think 8 years or more of compiling stupid leadership is okay? The t-party group continues to completely drop the ball. Their focus on trying to tell everyone what to believe and how to run their lives is what they do. They are incompetent regarding fiscal responsibility, growth, education, local control, etc.