Oil markets hit by supply glut more than oil producers … for now

Calgary Herald ^ | January 6, 2015 | Stephen Ewart

[gingerbread]

Not to worry. These VAMPIRES in Washington is already figuring a way to tax all that cheap gas. Who wants to bet, that these people will put another “TAX” on all this cheap gas, in the coming months.

[thackney]

[mazda77]

Senator John Thune (REP Penn) has already started to do just that and publicly stated as much.

[Jarhead9297]

But we were told for years speculation drove prices. I foresee an artificial shortage in the hear future to spike prices. It is around the corner.

[mazda77]

whoops, South Dakota

[thackney]

But we were told for years speculation drove prices.

Speculators can drive prices up and down, but only for a while. A futures market price is based upon the future expectation of supply and demand, a speculation, typically based on data from a past month.

I foresee an artificial shortage in the hear future to spike prices.

Then you should invest your "speculation" into the futures market. Most traders are not forcasting that.

http://online.wsj.com/mdc/public/page/2_3028.html?category=Energy&subcategory=Petroleum

[Zhang Fei]

“Nobody wants to blink first in terms of cutting production,” Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis, told the Canadian Press.

I don't understand analysts who portray this as some kind of giant pissing contest. Companies have bills to pay, a good chunk of which is fixed, such as coupon payments on bond issues, and interest on bank debt - funds that have been spent on capital equipment or oilfield leases. As oil prices go down, profits per barrel go down, but the bills keep coming in, which means they need to pump more barrels to stay afloat. It's not a macho thing - it's a survival thing.

[expat_panama]

--not everyone's happy...

[PAR35]

Let’s see - pump at $50 and make a small profit ore even a small loss, but maintain cash flow, or shut down production and have no income at all so that your competition can make a bit more money? Seems like a fairly easy business decision to me.

Stopping drilling at these prices makes sense. Stopping pumping to help third world dictators while driving yourself into a quick liquidation makes no sense at all. Of course, we don’t expect journalists to understand business.

[HANG THE EXPENSE]

Good one

[CommieCutter]

We can’t drill our way out of this! Oh, wait...

[thackney]

At $50, there will be nearly no shut down of pumping existing wells. Once the expense of building the well and infrastructure is in place, it takes a long, long time for the production to decline and the water cut climb to make that uneconomical. At $25, some stripper wells are going to be shutting down, certainly.

The catch is, the new wells that have been the source of most of the US production growth are tight formation like shale that decline very rapidly in the early years. So those new wells are going to result in a decline in our total production rate, unless enough new wells are drilled.

[thackney]

King Abdullah: Saudi Arabia will keep ‘solid will’ as oil prices falling
http://fuelfix.com/blog/2015/01/06/king-abdullah-saudi-arabia-will-keep-solid-will-as-oil-prices-falling/
January 6, 2015

Saudi Arabia, the world’s largest oil exporter, will keep a “solid will” and maintain the nation’s stability even with falling crude prices, King Abdullah said in a speech read by his crown prince.

Saudi Arabia will enjoy “safety and stability,” according to a copy of the king’s speech read by Crown Prince Salman Bin Abdulaziz with Abdullah in the hospital for pneumonia. His medical procedure was successful, Abdullah Al al-Sheikh, the head of the Shura Council advisory body, said during the televised session in Riyadh.

[VaRepublican]

“Drill baby drill”, worked. When oil goes back up after the suads try to drive folks out of business it will work again. As long as the government doesn’t crush with regs.

[VaRepublican]

Sorry, (saud’s), I guess I should have looked up spelling.

[Balding_Eagle]

I don’t understand the reluctance of ‘the frackers’ to claim responsibility for the lower prices.

Someone will, as the consumer loves the new lower prices.

If our side (the patriotic American side) doesn’t, the American hating Left will.

[thackney]

Saudi Arabia oil production is down from last year.

In thousand barrels per day:

Sep 13
10,037

Oct 13
9,714

Nov 13
9,626

http://www.opec.org/opec_web/static_files_project/media/downloads/publications/MOMR_December_2013.pdf
page 45

Sep 14
9,673

Oct 14
9,650

Nov 14
9,590

http://www.opec.org/opec_web/static_files_project/media/downloads/publications/MOMR_December_2014.pdf
page 60

[Lurkina.n.Learnin]

It’s a race between the states and the federal gov’t to see who can capitalize on it.

[ROCKLOBSTER]

Then you should invest your "speculation" into the futures market. Most traders are not forcasting that.

Either that or simply send your investment capital, in increments of $5000 directly to me, which I will keep.

Either way, your results will be the same.