Oil prices

[gopokes88]

Yeah I don't think that's a good thing. Draining what we have is not sustainbable and will lead us to complete reliance in the future.

No it won't.

We only have the ability to drain our glut because OPEC is flooding our markets with imports. This depresses WTI prices and widens the spread between Brent and WTI. Now an arbitrage opportunity is created.

What your post assumes is that arbitrage opportunity lasts forever, it won't, there will be an inflection point where exporting is no longer viable. What exporting allows is for oil inventories to long term settle into a nice sweet spot of not to high not too low, that will lead to stability in pricing.

http://oilprice.com/Energy/Crude-Oil...-US-Shale.html

[Anonymous.]

"Oil is slipping down again over the last couple weeks. Fear is building due to the US E&P companies rapidly ramping production up to make up for the OPEC freezing/cutting. The entire freeze's global supply impact has basically been negated by USA shale producers.

Greed is a hellofa b!tch. "

Both of those are political statements not based in even a shred of reality.

US shale production has gone from about 8.6 MBPD, to 8.9 MBPD. 300k BPD, the OPEC and NOPEC cuts were 1.8 MBPD. They have achieved about 80-85% compliance which equates to 1.50 MBPD.

So no, US production has not completely negated the cuts, it's still 1.2 MBPD short.

Next China's demand for crude is still growing, just not as fast, but it is still growing. "China's implied oil demand growth eased to 2.5 percent in 2016, down from 3.1 percent in 2015 and 3.8 percent in 2014, led by a sharp drop in diesel consumption and as gasoline usage eased from double-digit growth."

That's still growth amidst global supply cuts.

Which is why global inventories are falling overall.

So yes your post was a bunch hyperbolic nonsense based in politics and not what the data says. So take it somewhere else.

https://www.eia.gov/dnav/pet/hist/Le...s=WCRFPUS2&f=W
https://www.wsj.com/articles/saudi-o...ent-1485024168
http://www.reuters.com/article/us-gl...-idUSKBN15N04P
http://www.offshore-technology.com/n...entory-5720219

Thank you for the clarification. I suppose it could be read that way, which is my fault for poor clarification. But my post is talking about investor's sentiment and futures, not "this production # = this production #". This is why I mentioned the entire first sentence, the fear is building. What we saw back in December with the OPEC freeze announcement (oil prices and E&P stock jumping up) has been negated by the fears of US shale producers going crazy again - which they have began doing.

[Plutonic Panda]

No it won't.

We only have the ability to drain our glut because OPEC is flooding our markets with imports. This depresses WTI prices and widens the spread between Brent and WTI. Now an arbitrage opportunity is created.

What your post assumes is that arbitrage opportunity lasts forever, it won't, there will be an inflection point where exporting is no longer viable. What exporting allows is for oil inventories to long term settle into a nice sweet spot of not to high not too low, that will lead to stability in pricing.

http://oilprice.com/Energy/Crude-Oil...-US-Shale.html

i hope you're right. I know little to nothing about the oil industry.

[Teo9969]

I don't understand the concern? Oil is right where it should be. It's not even broken short term resistance and is nowhere near approaching a downturn.

[gopokes88]

I don't understand the concern? Oil is right where it should be. It's not even broken short term resistance and is nowhere near approaching a downturn.

That's why I get frustrated. It was a hyperbolic post not based on any data. In fact Goldman Sachs today said imports will drop in march. Remember the lead time on an oil tanker is ~45 days. So what's hitting the gulf right now is that last surge in supply before OPEC started cutting. Heck imports jumped by 1 million BPD this week. As the cuts start making their way here we will feel it. Goldman also said they aren't sure why gasoline demand was so bad in January, but that consumption has recovered.

[Bunty]

http://www.nbcnews.com/news/us-news/...w-lows-n730881

[Anonymous.]

Been nearly 3 months since his claim about everything in my post being hyperbolic political nonsense, and here we are - crude nearly fell below $50 today. Like I said, US shale is killing the global market balancing.

Wonder where gopokes88 is?

[gopokes88]

Been nearly 3 months since his claim about everything in my post being hyperbolic political nonsense, and here we are - crude nearly fell below $50 today. Like I said, US shale is killing the global market balancing.

Wonder where gopokes88 is?

We're at $50.54 still, and two days ago we we're at $53. You do realize the price has to go up and down for traders to make money right? It's been stuck in a tight range and we're still in that range.

And you're post was hyperbolic political nonsense. You conveniently disappeared when it went back up only to come back on the back down. Just like you'll be gone all summer when it rises for summer driving season but back in the fall when demand declines again.

[Anonymous.]

You're kidding right? It never went up more than like $3 from the lows of this range. Literally every headline and expert in the industry is talking about the affects of US Shale production on the global supply having trouble getting back to balance.

Even Bunty posted that article above saying the exact same thing from over a month ago and you never chimed in.


It's cool man, I am not knocking you - I am not asking you to admit you were wrong in your accusations. Just simply here to report the industry news and trends.

And for the record, I really hope the price goes back up as we head into summer. It isn't like I am rooting against it. I am just amazed at the audacity of US producers to be going so hard on the drilling this quickly. There was nothing gradual about it, a switch was flipped in December with the OPEC announcement and now the shooting of the foot is in full effect.

[bradh]

Is it new drilling, or the active completions of already drilled wells that were shut when the price was low? Stupid question I know

[Anonymous.]

Wells drilled when price was low, but not completed. Now both completion of those and fully drilled new wells are going like wildfire.

[OKCRT]

Wells drilled when price was low, but not completed. Now both completion of those and fully drilled new wells are going like wildfire.

Seems to me these oil co's can make a decent profit with $50.00 oil. No need for prices to get crazy high again. I kind of like it right where it is.

[Pete]

Everyone seems to think that $60 / barrel is the magic number where all the companies that have made it this far can make good money at that price.

At $50, most seem to be just hanging on.

[sooner88]

Everyone seems to think that $60 / barrel is the magic number where all the companies that have made it this far can make good money at that price.

At $50, most seem to be just hanging on.

It completely depends on the location and the way the operator / non-operator runs their company. We have seen many companies who have breakevens well below $50. A somewhat sophisticated hedge program has allowed many of our customers to do very well with depressed oil prices.

[pw405]

You're kidding right? It never went up more than like $3 from the lows of this range. Literally every headline and expert in the industry is talking about the affects of US Shale production on the global supply having trouble getting back to balance.

Even Bunty posted that article above saying the exact same thing from over a month ago and you never chimed in.


It's cool man, I am not knocking you - I am not asking you to admit you were wrong in your accusations. Just simply here to report the industry news and trends.

And for the record, I really hope the price goes back up as we head into summer. It isn't like I am rooting against it. I am just amazed at the audacity of US producers to be going so hard on the drilling this quickly. There was nothing gradual about it, a switch was flipped in December with the OPEC announcement and now the shooting of the foot is in full effect.

In November of 2014, North American rig counts peaked at 1,929. Today there are 955.

US Oil output peaked at 9.6 MM barrels/day in June of 15. The most recent (4/21/17) figures indicate output of 9.26 MM barrels/day. US production was at the lowest in July of '16 (~8.4MM barrels/day) While more rigs have been deployed lately, I would assume much of this is merely to fight declining production of all the drilling that occurred in '12-15'.

While many (myself included, go back and look at my early post in this thread) assumed (hoped) this price cycle would be a 6-12 month blip on the radar, I now am coming to believe that this price cycle will last 5 years. I really don't think we'll see oil above $90 until the end of 2019.

[jccouger]

In November of 2014, North American rig counts peaked at 1,929. Today there are 955.

US Oil output peaked at 9.6 MM barrels/day in June of 15. The most recent (4/21/17) figures indicate output of 9.26 MM barrels/day. US production was at the lowest in July of '16 (~8.4MM barrels/day) While more rigs have been deployed lately, I would assume much of this is merely to fight declining production of all the drilling that occurred in '12-15'.

While many (myself included, go back and look at my early post in this thread) assumed (hoped) this price cycle would be a 6-12 month blip on the radar, I now am coming to believe that this price cycle will last 5 years. I really don't think we'll see oil above $90 until the end of 2019.

Were you able to predict the crash?

[pw405]

Were you able to predict the crash?

Nope! Never really paid much attention to it. Just sorta figured that ~$100 was the new normal.

Assuming there are no supply shocks, it is going to take a while to bring the current stocks back down. They remain stubbornly high:


(Note - amounts are in billions of barrels of oil)

When exactly will that occur? I dunno. I think 20-30 months is a reasonable estimate. I hope it happens sooner since my paycheck comes from the industry. Nobody can predict the future. We may be in WW III by that time. Trump may levy a tax on imported oil.

Luckily, the broader macroeconomic picture seems fairly healthy right now, so demand for oil should be strong and prices could pick up sooner. Based on data available, I really don't see many things that are going to push oil out of the $50's this year. Do you?

[BG918]

The big question is what does the next recession/market correction do to oil prices? They remained high through the last one but that was a different scenario than what we will see this time. Everyone in my industry (design/construction) is already planning on the slowdown occurring next year into 2019-2020 with the market swinging back in the 2021-2022 timeframe. Obviously no one can predict the future but that is what everyone is thinking, and how we are figuring our business plans for the next 3 years.

[pw405]

The big question is what does the next recession/market correction do to oil prices? They remained high through the last one but that was a different scenario than what we will see this time. Everyone in my industry (design/construction) is already planning on the slowdown occurring next year into 2019-2020 with the market swinging back in the 2021-2022 timeframe. Obviously no one can predict the future but that is what everyone is thinking, and how we are figuring our business plans for the next 3 years.

Probably depends heavily on the nature of the event. If the equity markets dip but employment is steady, likely won't affect oil. If we enter some sort of military conflict that spooks markets (ie, Seoul is leveled), I would think it would increase oil prices because Jets and tanks get bad MPG's. However, if we repeat the financial crisis and unemployment hits 10% again, hello $20 oil.

[C_M_25]

I'm surprised this thread is still going strong.

I bet this last crash brings about a fundamental change in the market as it was the first major crash that is directly related to the development of unconventional oil/gas. In the 80's crash, you saw a very long climb (a decade almost) for oil prices, and I think we'll see a long climb this go 'round, but my bet is on that you will see a lot of volatility in the market so long as unconventionals are the main driver of the industry. The cycles will become more frequent and drastic. I believe this will occur because it is too easy to turn fields on/off without significant losses to well performance. There are also a tremendous amount of DUC's yet to be completed, and the amount of undrilled inventory across the industry is tremendous.

The moment you see an increase in prices, you will see E&P companies open their fields back up, flood the market, and drop the prices pretty quickly. It's just too easy with these types of oil/gas plays. The only way this doesn't happen is if something happens to Saudi (read OPEC) OR there is a major reduction in mid-major companies. If you can reduce the number of companies competing for investor money, you will gain more control on how fields are "turned" on/off and how they are developed thus reducing the amount of oil hitting the markets at once. Just my 2c's.

[OKCisOK4me]

If it wasn't for the thought of the cycles becoming more frequent, I'd jump back on the fossil fuels pony and ride the express, but not knowing when that drop is going to occur freaks me out and I'm too old and a recent first time home owner to hinge my income on this industry.

Add on... Man, I really did enjoy what I did for the 14 months I played my part in the service side of the oil industry. It was a great learning experience.

[gopokes88]

And we're back over $50 probably staying up here heading to $60 over the summer. Broke through key resistance at $50.20. Traders got sentiment extremely negative crashed prices to $43. Made money on the way down and made money on the way up.

Clipperdata is saying imports have decreased by 500k-1MBPD and that data isn't showing up in eia reports yet.

[pw405]

I'm very surprised traders didn't react more favorably to the news that the OPEC outputs cuts being extended 9 months. Hopefully we see a meaningful draw down over the summer driving season, but I still don't see $60's this year. Hopefully I'm wrong.

[Bits_Of_Real_Panther]

And we're back over $50 probably staying up here heading to $60 over the summer. Broke through key resistance at $50.20. Traders got sentiment extremely negative crashed prices to $43. Made money on the way down and made money on the way up.

Clipperdata is saying imports have decreased by 500k-1MBPD and that data isn't showing up in eia reports yet.

Market sure doesn't want the oil to be over 50 it appears

[bchris02]

I think the 50s are optimal. You want oil to stay cheap for consumers yet be expensive enough that the energy industry can profit. I really don't want it to go too far north of $70 as at that price, consumers will start to be pinched.