Oil prices

[mkjeeves]

Interesting break even point by basin I tripped across today. Oklahoma's are nearer the low end.

[pw405]

Interesting break even point by basin I tripped across today. Oklahoma's are nearer the low end.

This is why I think it is such a sham that energy companies will leave the state if we up GPT. Our basins are great, and our infrastructure to get oil to market is great too!

[jccouger]

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.

Looks like you were right. Oil got high enough for companies to make a slight profit & then they went crazy drilling without any foresight that they'd throw the supply balance out of wack.

[BG918]

Still waiting for that summer boost...

Oil prices fall to new 2017 lows
https://www.wsj.com/articles/oil-pri...ows-1497956961

[king183]

Still waiting for that summer boost...

Oil prices fall to new 2017 lows
https://www.wsj.com/articles/oil-pri...ows-1497956961

I think we will have to keep waiting. It's likely going to fall further, and I doubt we are going to get and stay above $50 this year, barring a major exogenous development.

[Prunesmoothie]

see below

[Prunesmoothie]

https://twitter.com/Lee_Saks/status/877899014137683969

They have a ways to go.

[OkiePoke]

The higher the oil price, the more US producers are going to produce. There are so many wells in fracklog.

[Anonymous.]

Looks like you were right. Oil got high enough for companies to make a slight profit & then they went crazy drilling without any foresight that they'd throw the supply balance out of wack.

Didn't you hear? I only post hyperbolic political nonsense! The market will be balanced any minute now!

[pw405]

Oomph.... this week was tough for oil prices. Anybody hear ramblings of layoffs from area O/G employees?

[pw405]

Well, here we are at $50 again. I still don't see anything pulling us out of the $50's this year. Hopefully next year sees the supply balance.

While slightly off topic, I was curious if anybody follows the natural gas storage reports from EIA? Natural gas suffered the same problem that oil did - dramatic overproduction crushed prices. Interesting though, as this cycle started before the oil price cycle.

For those who don't know, the EIA releases a weekly report showing the total amount of natural gas in storage in the US. Total inventory ebbs and flows with seasons. Winter results in inventory reduction


I've added the annotations (in red). A few interesting observations:

A. - Summer of '16 saw the first inventory reduction ("draw down") during the summer that I've ever seen. Indicates that consumption outpaced supply. Shows that nat gas usage by utilities is starting to make a meaningful reduction in supply.

B. - At the peak of bitter winter cold in early 2017, we saw a 220+ BCF reduction in inventories. The second largest single-week inventory reduction ever measured. Inventory reduction in winter are common, but typically not this size.

C. - Unfortunately, the early spring warm up really hammered consumption rates at the end of winter, and we see the "injection season" starting early. Very bearish sign.

D. Summer consumption of natural gas is starting to be observed, notice how the blue line begins to "crest" and approach the dark grey line. This means current inventories are rapidly approaching the mid-point of the 5-year average. A very bullish (good) sign for nat gas prices.

Hopefully we continue to see inventories fall as we approach winter. If the blue line can get UNDER the dark grey line, I can see nat gas prices starting to look better going forward.

[pw405]

Surprised there hasn't been much here for almost 2 months. Here's PW405 with your market report:



A. Jan 2004 - 248MM bbls in storage. $32/bbl.
B. Sept 2014 - 325MM bbls in storage. $91/bbl. Edge of the cliff.
C. April 2015 - 456MM bbls in storage. $52/bbl
D. March 2017 - 535MM bbls in storage. $50/bbl all time high in storage.
E. August 2017 - 457MM bbls in storage. $49/bbl


A few meaningful developments - over the past 5 months, demand has outpaced supply to the tune of 78,000,000 bbls. Interesting how price has yet to react. If this trend continues for another 10 months, we'll find that July 2018 will have about 300MM bbls in storage. Less than we did in Sept. 2014 when oil was in the ~$90's. Now, trader sentiment plays a large factor in all of this, but inventories are finally being meaningfully reduced. Some are warning that we'll see a price spike in 2020.

[OKCretro]

https://www.cnbc.com/2017/09/27/oil-...aboolainternal

[Jersey Boss]

https://www.cnbc.com/2017/09/27/oil-...aboolainternal

The addendum just posted to your link.
https://www.cnbc.com/2017/09/27/oil-...tan-rises.html

[jccouger]

Surprised there hasn't been much here for almost 2 months. Here's PW405 with your market report:



A. Jan 2004 - 248MM bbls in storage. $32/bbl.
B. Sept 2014 - 325MM bbls in storage. $91/bbl. Edge of the cliff.
C. April 2015 - 456MM bbls in storage. $52/bbl
D. March 2017 - 535MM bbls in storage. $50/bbl all time high in storage.
E. August 2017 - 457MM bbls in storage. $49/bbl


A few meaningful developments - over the past 5 months, demand has outpaced supply to the tune of 78,000,000 bbls. Interesting how price has yet to react. If this trend continues for another 10 months, we'll find that July 2018 will have about 300MM bbls in storage. Less than we did in Sept. 2014 when oil was in the ~$90's. Now, trader sentiment plays a large factor in all of this, but inventories are finally being meaningfully reduced. Some are warning that we'll see a price spike in 2020.

You are extrapolating your trend way too far. You also need to realize supply is being artificially held back right now by low prices. Oil output can be flipped like a switch and over supply the market in a instant. A half a decade ago supply was limited due to capabilities.

[Bits_Of_Real_Panther]

Some Saudi turmoil is afoot...

[bucktalk]

I can't but wonder if oil stabilizes around $53.00 per barrel how much (if any) it would help the state budget?

[Jersey Boss]

Not anywhere near as much if this industry was taxed and credits given the same as the O&G industry in comparative states.

[BG918]

Not anywhere near as much if this industry was taxed and credits given the same as the O&G industry in comparative states.

Raising the taxes to North Dakota levels at these prices would all but eliminate the state budget deficit. It’s that simple. The legislature doesn’t work for the people though they work for the oil companies who line their pockets.

[pw405]

...
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?

Well, I was wrong (woohoo!!), WTI crude has officially made it out of the $50's in 2017. Currently trading at $60.08.

[Bunty]

Raising the taxes to North Dakota levels at these prices would all but eliminate the state budget deficit. It’s that simple. The legislature doesn’t work for the people though they work for the oil companies who line their pockets.

If I was legislator, I wouldn't be afraid to raise the GPT to at least 5% throughout the life of a the wells. I don't need the legislative pay that bad, or the bribes.

[pw405]

Wow, quite a while since an update here. GPT in OK is now 5% and oil is flirting with the $70's.

From OilPrice.com:


Even with US Output surging, inventories are now comfortably within the 5 year average:


Additionally, supply is collapsing in OPEC member country Venezuela which can dampen some of the effects of surging US crude production:
https://seekingalpha.com/article/416...n-go-lot-lower

Overall, a pretty bullish setup for the summer driving season.

[king183]

FYI: GPT won't be 5% until the end of June. All of the tax increases go into effect 90 days after the governor signed them. They could also be delayed if Tom Coburn's group gets a veto petition on the ballot.

[gopokes88]

FYI: GPT won't be 5% until the end of June. All of the tax increases go into effect 90 days after the governor signed them. They could also be delayed if Tom Coburn's group gets a veto petition on the ballot.

Why would they get delayed if it’s on the ballot? I think it’d fail in a general vote, but I think 7% is going to fail as well.

[king183]

Why would they get delayed if it’s on the ballot? I think it’d fail in a general vote, but I think 7% is going to fail as well.

If a veto petition is filed against legislation, a temporary injunction put on the legislation until the voters decide. So, if Coburn's group gets a veto petition on the ballot, the increases are put on hold until the election. This also means teacher and support personnel pay increases will be delayed given provisions in the legislation tying it to the tax increases being in effect.