Is This The Top For Oil Prices For Now?

Oilprice.com ^ | 06-05-2015 | Oilman

[bananaman22]

E&P earnings are coming in and the impression we’re left with is that natural gas investment in Marcellus is being reduced, while oil overall appears to be incrementally ramping up versus prior guidance. Also, production overall for 1Q15 has exceeded sell side expectations as well, as reported by many public companies.

Noble (NBL) reported that it’s cutting investment in the Marcellus by some $200M in response to the Nat Gas price crash. This is on top of prior production reductions at Chesapeake (CHK) & Range Resources (RRC). However, the Ponzi game in shale oil, having to continuously drill to replace 80% 12 month decline rates in existing production and having to burn yet more cash in doing so, is continuing to push production higher.

Overall we are not expecting WTI prices to revisit the $40s again but a temporary top appears likely until the industry works down overall inventory. E&P companies are clearly reflecting this as the hedging for later in 2015 & 2016, thus flattening the price curve, has picked up considerably recently. In our view, the companies building liquidity into the 2H15 will be in the best position to grow, as eventually the weaker players will fall and so will the inflated prices they seek for assets.

[thackney]

Oil pares gains, but ends at highest level of the year
http://www.marketwatch.com/story/crude-rallies-again-with-price-of-wti-atop-61-2015-05-06
EIA reports unexpected weekly drop in crude supplies

Oil futures pulled back from session highs above $62 a barrel on Wednesday, but the U.S. benchmark still marked a high for the year after government data showed that crude inventories fell unexpectedly, for the first time in 17 weeks.

June crude climbed by 53 cents, or 0.9%, to settle at $60.93 a barrel on the New York Mercantile Exchange. It climbed to highs above $62 before and shortly after the supply data, but prices settled below the session highs following a 25% climb in April.