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Crude Oil Sep 15 (CLU15.NYM)
-NY Mercantile Watchlist
48.02 Down 0.43(0.89%) 1:53PM EDT
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Prev Settlement: N/A
Open: 48.79
Bid: 48.02
Ask: 48.03
Day’s Range: 47.72 - 49.03
Volume: 205,667
Open Interest: N/A
Session:
Exp. Date: N/A
My best friend works as an accountant for an oil and gas firm. If economist believe that there is a detailed understanding of what price point the ROI fails per well, they are seriously mistaken.
No doubt that there are controls in place to keep the company financially viable, but the idea that they understand the detailed costs per well is a mistake.
I’ve allowed myself to drift on this today... I’ve tried to ignore it all since I can’t do a thing about it.
Maybe the shale thing was supported by the fraclog... can make sense.
Some musings.
One slide, slide #49, is about all you need to know about the long term.
http://www.iea.org/oilmarketreport/2014_06_18_Oslo_MTOMR%202014.pdf
Fundamentals are not good and that is clear. IEA is a mixed bag and changes their number like I change shirts but their trends tend to hold water. The data says that we are still awash in oil and the people who trade think that picture will get worse instead of better for prices because of Iran now.
https://www.iea.org/oilmarketreport/omrpublic/
I misread the tea leaves this time and so far. I thought that we would be coming back into balance by now and that we would be seeing solid 70s with brightening prospects but not a surge. I figured the firming would take place about now and that the increase would be moderated by the end of summer driving season and the turn-arounds in refineries of winter.
I did not see the Saudis increasing production so much. Didn’t think they had the capacity. They allegedly have 1.9 mmbo in projects available but pickled for now. I also figured the Iranian picture was already factored in. The only thing I got right or close was consumption and I underestimated the growth of that. Shale has somehow held up much better than ever anticipated though IEA suggests this is falling soon. Domestic production is actually up according to EIA instead of down. I may tune my model this weekend but I’m having less interest in it now since it is just a serious game with some changeable rules that I can’t predict or control... it will be what it will be in spite of all I do... the only thing I can do is respond, somehow.
US stocks were falling nicely until the last few weeks... can’t quite figure that out. It was falling almost on track with my model.
All that said.. my production / consumption / storage forecast did not predict stocks or imbalance falling until about now. The price forecast I made was based on rational thought and bubbling up of outlook... it has not happened... obviously.
If I did not mistrust myself for being guilty of wishful thinking I might think I was seeing stocks peak and production beginning to turn downward.
http://www.eia.gov/petroleum/weekly/crude.cfm
Some of the bigger players... see firming next year in the summer season making this a nearly two year bottom. With oil, that is too far out. Too much can happen we just don’t know about. It is a geopolitical and fundamentals driven commodity with long term development factors. Geopolitical trumps all.
The bigger players are now starting to batten down the hatches. I’m seeing it in manufacturing and service companies and hearing it in the operator side. We
will see slaughter in the upstream by fall if things don’t improve as they feel the need to entrench of for a very long winter when they finish the first draft of the planning cycle this next month. You have done planning... there is always planner’s droop and the response is almost always cautious.
They say it is always darkest before the dawn but it has to quit getting darker first. Like back in the day I was in Scouts spending the night in a sleeping bag too thin for the cold, I’m waiting for the sun.
?
Drill, baby, drill!
;-)
If prices drop, how many of us will drive more? I used to go on “adventures” all the time because driving was the one thing I would spend my money on to do something for free, mostly go to parks. Not anymore.