News and Commentary From

OPEC Analysis
The OPEC production meeting is next Friday and there is a lot hanging on the outcome even if they do nothing. Their decision will impact oil prices and investment decisions by oil companies for the next six months. Continue reading
Goldman Turns Significantly Bearish
Back in 2008 Goldman made a market call saying crude oil would rise to $200. Prices surged in the days after the call but stopped at $150 before crashing back to $40 during the financial crisis. Now they are predicting $50 oil in 2020. You have to wonder what these guys are smoking and why anyone listens to them. Continue reading
Three Weeks
OPEC meets again on June 5th to discuss production quotas. Since they are producing about 2.0 mbpd over their existing quota they have plenty to discuss. Many of the high cost producers are pleading with Saudi Arabia to reduce production so prices will rise. Saudi refused back in November for an obvious reason. Continue reading
Light in the Tunnel
Crude inventories declined for the first time in 17 weeks and the decline in active rigs is slowing. The light at the end of the tunnel is not a train. Continue reading
Inventory Declined
While it was not much the inventory levels at Cushing Oklahoma declined by -500,000 barrels last week and the first weekly decline since November. This could be a sign of things to come. Continue reading
Production Decline Imminent
Various reporting agencies and production prognosticators claim a U.S. production decline is imminent. Production has declined in three of the last four weeks and we are already down -86,000 bpd from the 9.422 mbpd high in the week ended on March 22nd. Could that be the peak production in the U.S. for years to come? Continue reading
Half a Bakken Added to Production
Saudi Arabia increased production in March by 658,800 bpd. That is the equivalent to half the daily output of the entire Bakken shale. Saudi Arabia is clearly trying to grab market share at the expense of other OPEC members. Their output does not really impact the U.S. except that it can lower the price for Brent crude. Continue reading
$10 Billion in Savings
I reported a couple weeks ago about the growing "fraclog" and the trend not to complete wells is accelerating. U.S. producers may have saved as much as $10 billion in the last few months by not completing wells. Continue reading
$30 Oil is a Reality
You read every day where some analyst or talking head on TV is predicting oil at $30 because of whatever excuse they are using that day for the drop in oil prices. The next day oil rebounds a buck and analysts are forecasting $65 to $75 before the summer is over. The truth is nobody knows but the bears are closer then they realize. Continue reading
Wars and Rumors of War
Saudi's war against Yemeni rebels last week helped to boost oil prices but the lift was only temporary. As the Sunni/Shia conflicts in the Middle East play out we could see much higher prices. However, our more immediate fate is based on the war between the shale producers in the USA. Continue reading
Fracklog is Building
The "fracklog" is a new term coined to represent the backlog of wells that have already been drilled but not yet fractured and completed for production. The recent admissions by numerous E&P companies that they were only drilling and not fracking in order to cut costs has created a new problem for future production. Continue reading
Production Rising
Despite a -42% drop in active rigs the production in the U.S. continues to rise. The U.S. produced 9.366 million barrels per day in the week ended on March 6th. This came despite a drop of -806 rigs since September. Continue reading
Cushing Approaching Record Storage
Cushing Oklahoma is the delivery point for WTI futures and inventories there have risen to 49.2 million barrels and only 3 million below the record from April 2013. Continue reading
House of Cards About to Collapse
Exploration companies drill through miles of rock but it appears their foundations are on shifting sands. Companies are slashing expenses to the bone in an effort to survive and there are probably going to be a few that don't make it until oil prices rise again. Continue reading
Rigs Down -32%, Oil Production Up
The active rig count declined by -48 rigs last week to 1,310 and a -32.2% decline from the 1,931 high back in September. Oil production rose to a new post 1972 record at 9.28 mbpd. What is wrong with this picture? Continue reading
100,000 Energy Jobs Lost
Bloomberg is reporting that more than 100,000 jobs have already been lost in the energy sector. Previously bustling energy hot spots like the U.S. shale plays, Scotland, Brazil and Australia and others have lost well over 100,000 jobs with no letup in sight. Continue reading
Where Can I store My Oil?
The EIA reported crude inventories in the U.S. rose to 413 million barrels last week and the highest level since the EIA began keeping records in 1982. I have seen other reports based off older and less reliable inventory records that this is the highest level for January in 80 years. Continue reading
Friday Was a Preview
The +7% spike in oil prices on Friday was a short squeeze triggered by a news headline. While this may not be the beginning of a return to $70 oil it was a preview of how that return will begin. Oil prices will eventually stop going down and investors will become restless while shorts will continue loading the boat on every minute dip. A headline will appear and a short squeeze will result and the low prices will begin to fade. Continue reading
Energy Decline Continues
Oil prices may have held at the $45 level for the past week but that is no guarantee it will continue. Analysts continue to predict $30 oil despite the enormous damage that will cause to the U.S. economy and to the energy sector as we know it. Layoff announcements are increasing and with the energy earnings cycle just ahead there are sure to be even more dismissals. Continue reading
Beware of Unintended Consequences
While everyone is celebrating cheap gasoline the energy sector is imploding. Goldman Sachs now believes up to $2 trillion in future oil investments are now threatened by low oil prices. Goldman said "Lower commodity prices and production overcapacity are forcing a renewed focus on capital discipline, cost efficiency and productivity across the industry. We expect significant price pressure to come through the supply chain." $2 trillion is definitely a significant number. Continue reading