Daily Commentary From OilSlick.com


Inventory Adjustment Continues
Crude inventories declined again for the fourth consecutive week. This was for the week ended on Dec 20th so we still have at least one more week of declines before the rebound begins in January. Continue reading
Inventory Crazy
Natural gas inventory levels took a major hit last week with a decline of -285 Bcf. To put it bluntly gas inventories are falling off a cliff as a result of the back to back winter storms. Continue reading
Just Kidding
Brent crude rose Sunday night to $109 after Libyan rebels refused to open the countries eastern ports. The speculation last week was a weekend reopening after the Libyan military warned of consequences. Apparently the rebels were just kidding when they said the ports would be released. Continue reading
The Tax Man Cometh
Refiners are running scared after crude inventories rose to the second highest level this year. With the tax deadline only 20 days away they are dumping oil as fast as possible. Continue reading
Natural Gas Usage Soaring
Back to back winter storms sent natural gas demand to the highest level of the year and prices well over $4. Continue reading
Massive Inventory Decline?
The American Petroleum Institute (API) said crude inventories declined -12.0 million barrels last week. However, numerous analysts believe this number is wrong. Estimates were for a decline of -1.25 million barrels. It almost looks like the API put the decimal point in the wrong place. Continue reading
OPEC Meeting Tensions
This should be an interesting OPEC meeting given the various events affecting the OPEC nations. Continue reading
Inventories Rise Again
We are getting pretty close to the end of this trend but crude levels rose for the tenth consecutive week and pushed WTI prices to a five month low. Continue reading
How Big Can They Get?
Everyone has heard of pad drilling where a company drills multiple wells from the same pad. It saves a lot of time in setup, takedown and transportation to the new well site. The concept of pad drilling is taking on a new meaning in places like the Bakken where there are multiple pay zones. Continue reading
FOMC Roils Market
The FOMC minutes for October were released at 2:PM and the markets immediately plunged to the lows for the week. The minutes suggested the Fed could taper QE sooner than previously expected and the market was not happy. Continue reading
Inventories Continue to Rise
Crude inventories rose again last week and are now only 9 million barrels away from setting a new 83 year high at 398 million. The prior high was in May at 397.6 million barrels on May 24th. Continue reading
Export Battle Brewing
Back in the 1970s around the time of time of the Arab oil embargo Congress passed a law banning oil exports from the U.S. without a specific permit. That law is about to be challenged by domestic producers. Continue reading
No Agreement with Iran
After three days of intensive talks the meeting of the six UN nations and Iran ended without an agreement. The daily news reports of prospective deals angered several nations not a party to the talks. Continue reading
Refined Products Drop Sharply
The market press was all excited about the sharp drop in product inventories and their headline coverage caused a strong short squeeze in crude. Continue reading
Another Week of Inventory Gains
Prices for crude oil collapsed below $95 after U.S. inventories rose strongly for the sixth consecutive week. Continue reading
Four Month Inventory High
Crude supplies in the U.S. surged for the fifth consecutive week despite a sharp drop in imports. Rising U.S. production and low demand is the reason for the continued gains. Continue reading
Rising China, Falling Dollar
Crude prices rose slightly on Friday as a result of better than expected economics in China and the sharp drop in the dollar as a result of the budget agreement. Continue reading
Debt Crisis Solved
Washington claims it has solved the debt crisis and the Dow raced to a +205 point gain before the votes even took place. It was clearly a case of buy the rumor. Let's hope there is not a sell the news response to the actual votes. Continue reading
US Biggest Oil Producer
That title is what everyone expects in a few short years but as I have written several times in recent months we should not count our barrels until they are in the tank. Continue reading
Inventory Surge
For the third consecutive week crude inventories have surged and there was a tidal wave of crude added last week. Inventories rose by nearly 7 million barrels. Continue reading
BP Under Attack
The remaining five defendants in the Deepwater Horizon trial have aligned themselves against BP in the second phase of the liability trial. Continue reading
Rising Inventories, Rising Prices
A sharp increase in crude inventories with demand declining should not result in a spike in crude prices. However, headlines rule and WTI rose +1.75 on news of the future. Continue reading
Iran Heating Up
As crude futures were closing on Friday the president announced he had a telephone call with Iran's new president over their nuclear future. A phone call is a long way from removing sanctions but it should negatively impact crude prices on Monday. Continue reading
Inventory Rebound
Crude inventories rebounded as expected after an abnormally large drop of -4.4 million barrels the prior week. Refinery utilization also plunged as fall maintenance begins. Continue reading
Washington Wars
Get ready for some volatility. The House and Senate are digging in for a couple weeks of high profile campaigning over the budget and debt ceiling. I called it campaigning because this is all high priced theater as each member of both houses positions themselves for the 2014-2016 elections. Continue reading
Inventory Taper
The Fed may have decided not to taper QE but there was a huge taper in oil inventories. The combination of inventory declines, dollar drops and the prospect of no QE taper this year sent oil and gold soaring. Continue reading
Storm Flurry Passes
A total of six storms and potential storms sprang up over the last ten days and now there are only three left. Continue reading
Summer Driving Over
Demand fell last week and fuel inventories rose as the summer driving season came to a close. Continue reading
Gas Drilling Increasing
It was only a couple months ago on June 14th that active gas rigs hit an 18 year low at 349. Last week active gas rigs spiked significantly. Continue reading
New Oil Price Driver
The Middle East has been a driver of oil prices for the last two months but now we have a new force pushing prices higher. The economic news is suddenly improving and demand expectations are growing. Continue reading
Next Stop $103
The attack on Syria has been postponed for several weeks if not permanently. Oil prices should respond accordingly and decline next week. Continue reading
Done Going Up
WTI prices shot up to $112.24 this morning before collapsing back to close at $109.50. This could have been the climax spike where existing shorts capitulated and new sellers appeared. Continue reading
Oil Prices Still Rising on Violence
Crude oil prices continued to rise despite a new calm settling in over Egypt. The country has cut the nighttime curfew from 11 to 9 hours and the demonstrations are weakening. However, as one crisis cools another one is growing. Continue reading
Oil Falls with Equities
WTI Crude declined -1.27 to close under $104 but Brent crude remained firm at $110 because of the various production disruptions in the Middle East and Northern Africa. Continue reading
Brent Hits High, WTI Lags
Multiple problems overseas continued to support Brent prices as the contract rose to slightly more than $110. However, while WTI rose it failed to set a new high. Continue reading
Headlines Push Crude Higher
The headlines from Egypt just keep getting worse and multiple countries are now calling for intervention into the crisis. More than 149 people were killed and 1,403 were injured when the military finally moved against the two pro Morsi demonstration sites. Continue reading
Inventory Decline No Help for Prices
Another weekly decline in crude inventories did not provide support for crude prices and WTI fell -$1.12 to $104. Even with the security issues overseas the July ramp was too far too fast and investors are taking profits. Continue reading
Big Oil Needs More Oil
The oil majors proved once again that spending tens of billions on exploration every year does not guarantee increased production. Exxon and Chevron both reported production declines even though each will spend over $25 billion on exploration this year. Conoco reported a small gain in production due solely to a +47% increase in North American shale production. Continue reading
Month End Selling
The Dow and S&P lost all of their intraday gains as heavy selling appeared at the close. This is typical for the last day of the month where funds even up their accounts and adjust portfolios. The first day of the month is typically bullish with new retirement contributions being put to work. Continue reading
Earnings Not That Bad
Energy earnings and earnings in general have not been as bad as expected if you believe what the market is telling us. Markets rise for many reasons and in this case it is not fundamental. Continue reading
China Drag
A new low for China's PMI for July offset a fourth week of declines in inventories to drag crude prices lower. Even the news of a major increase in Chinese imports in June could not support prices. Continue reading
Runaway Oil Bull
Energy stocks finally caught a bid over the last several weeks and quite a few are breaking out to new historic highs. This goes against the conventional wisdom since energy earnings are expected to decline in Q2. Energy is expected to post the worst earnings of any S&P sector. Continue reading
Egypt Still the Key
Oil prices held at a three-month high of $106 for the sixth consecutive day as violence continues in Egypt. On Tuesday seven people were killed and more than 260 injured in the fighting that also saw 40 policemen hurt. Continue reading
Pressing Our Luck
Crude prices continue to hold near 52-week highs but we may be expecting too much for a continued rally. With production of roughly 4.4 mbpd coming back online around the world this summer the global inventories are going to rise and prices are going to decline. Continue reading
Thank Ben Bernanke Tomorrow
When the market explodes out of the gate on Thursday you can thank Bernanke for the new highs in the market. His comments after the evening speech have powered the S&P futures to a +13 point gain. Crude prices are nearing $107 and the dollar collapsed. Continue reading
Massive Inventory Decline
WTI prices soared to more than $100 on Wednesday as a result of a massive decline in crude inventories and the impending military takeover in Egypt. For a low volume trading week the news flow was huge. Continue reading
Pretty Quiet Week
The energy sector failed to rebound with the market after the big decline on the 20-24th. There was a positive bias but it was slim. Events in Egypt provided support last week. Continue reading
Oil Positive Despite Dollar Gains
Crude oil rebounded from early losses to end slightly positive after the dollar surged to a new four week high. Continue reading
Geopolitical Risk Rising
Hot spots all over the world are raising the geopolitical risks to oil production. The constant headlines are helping to offset weakening demand expectation from China and Asia. Continue reading
Be Careful What You Ask For
Investors wanted some clarification from Ben Bernanke on when the QE would end but once they got it they wish they had not asked. Treasury yields and the dollar exploded higher and the equity markets collapsed. Continue reading
New Direction for Iran
Iranian citizens swarmed the streets in Tehran cheering for the new president, Hasan Rowhani, as he pledged to end the soaring 30% inflation and end the crippling sanctions. Meanwhile U.S. lawmakers are considering new legislation that would cut Iranian exports to less than 500,000 bpd. Continue reading
Mixed Economics Push Dollar Lower
Worries over what the Fed might do when it meets next week and conflicting economics from around the world pushed the dollar lower commodities higher. Continue reading
Geopolitical Tensions Rise
Oil prices are getting a boost from events around the world that don't seem serious individually but are adding up to some major sentiment worries. Continue reading
Sentiment Change
Market sentiment has definitely changed with a decline on the Dow of -216 to 14,960 and a break of support at 15,050. Crude prices rallied despite the market decline because of a monster drop in crude inventories. Continue reading
New High for Crude
Crude inventories reached a historic high last week at 397.6 million barrels. Fortunately the inventory build did not weigh on prices. Continue reading
Crack in the Foundation?
The markets sold off again on Wednesday and the Tuesday short squeeze was erased. Crude prices and commodities fell on worries over weak demand from China. Continue reading
Feeling the Pain
Holiday travelers are feeling the pain this weekend with gasoline prices rising ahead of the Memorial Day weekend. Prices hit record highs in some cities in the Midwest. Continue reading
Pivotal Market Day
The Dow rose +155 intraday before collapsing to lose -110 before ending with a -80 point loss. This outside day indicator typically indicates a change in market direction. We are due for a correction but one day does not make a trend. Continue reading
No Rest for Transocean, BP, Halliburton
The Deepwater Horizon disaster is the gift that keeps on giving. The State of Texas filed suit against the major parties for damages. The list of entities lining up for their share of the pie seems endless. Continue reading
Expiration Jitters
Brent declined -1.50 intraday then rebounded +2.50 as traders raced to cover positions ahead of contract expiration at the close. This is just one more sign of confusion in the broader market. Continue reading
Bullet Proof Oil
The price of WTI declined -$3 intraday on Friday but recovered all of it before the close. For now the $96 level appears to be resistance but WTI is sticking very close. Continue reading
Still No Weakness
WTI crude prices continue to hold at five week highs despite record U.S. production. Worries over events in the Middle East and the falling dollar helped provide support. Continue reading
Oil Had a Good Week
It was a good week for energy stocks with Wednesday's big drop in crude prices erased less than 24 hours later. The jobs surprise boosted expectations for demand and prices for WTI are back near their recent highs. Continue reading
Inventory All Time High
The EIA reported crude oil inventories of 395.3 million barrels. That exceeds the prior high of 391.9 million in July 1990. We have been expecting this for a couple months but the market was shocked by the number and crude prices imploded. Continue reading
What a Difference a Day Makes
A couple of economic numbers and an analyst comment or two can quickly change the outlook for a sector and a market. WTI has gained $5 since last Wednesday's lows at $86.36 and nothing has really changed in the economic outlook. The expectation for additional stimulus by the ECB was the fuel for the rally. Continue reading
Energy Earnings Arrive
After a bad two weeks for crude prices we will have earnings to take our focus off oil. Earnings should be decent for producers with WTI near $100 in early February. Next quarter could be a different story. Continue reading
Bad to Worse
The commodity decline due to negative global economics continues to worsen with crude prices falling to nine-month lows. While this will be good for the U.S. consumer it has translated into a serious decline in energy equity prices. Continue reading
Commodity Implosion
Fears of weak demand as a result of declining economics combined to push commodity prices to multi-month lows. WTI crude fell -$2.85 on Friday to $91. Brent declined -1.16 to $103. Continue reading
Record U.S. Production
Crude oil production in the USA rose to 7.181 mbpd last week and the highest level since June 1992. That is more than 1.0 mbpd over the 6.04 mbpd produced in the same week in 2012. Continue reading
The Pause That Refreshes
The long awaited pause for profit taking finally arrived. Now the only question is where will it stop? Is this a dip or a correction? Is it temporary or will it last for weeks? Continue reading
Gas Rigs at 14-Year Low
The lure of higher priced oil continues to take its toll on the gas drilling industry. The number of rigs actively drilling for gas declined by -29 last week to 389 and a 14-year low. Meanwhile gas production is still rising. Continue reading
$4 Natural Gas
Natural gas futures spiked over $4 on Wednesday as short covering continues. Gas was heavily shorted in expectations of the normal spring decline but storm after storm has pushed sentiment higher and hedgers are being forced to cover. Continue reading
Inventories, Copper, Schlumberger, BP, FOMC
The FOMC said there were no changes to the QE policy and reiterated the 6.5% unemployment and 2.5% inflation thresholds for future changes. This was no surprise but the dollar did decline and crude prices rose. Continue reading
Brent Suffering Expiration Blues
With the current month Brent contract expiring on Friday we are seeing some selling pressures. WTI and Brent spreads are narrowing but there is no real reason until late this year when the pipelines begin to flow. Continue reading
Spring Inventory Build Begins
The surge in crude inventories has begun as refinery utilization declined sharply. We are only six million barrels below a 22 year high in crude inventories. Continue reading
Energy Markets in Decline
Brent crude declined -$3.50 and WTI -$2.34 after economic numbers from China and Europe showed a dramatic decline in activity. Bad economics coupled with a sharp spike in the dollar crushed all commodities including oil, precious metals, copper, aluminum and steel. Continue reading
Same Story, Same Outcome
Iran and the six UN nations met in Almaty and no agreement was reached other than to meet again in the future. Despite an attractive offer to drop some sanctions against Iran the meeting ended just like every other meeting over the last 12 years and that is with no changes. Continue reading
BP, Iran and Inventory Builds
WTI crude declined from $98.60 to $92.89 in six days. There were various factors to blame but it was really just profit taking from the December to January rally. Continue reading
Iran, Gas, Alaska, Gold and Silver
The supreme leader of the Iranian people threw down the gauntlet over the nuclear issue on Friday with statements sure to increase sanctions on Iran. Continue reading
Iranian Rope-A-Dope
Nothing changed in the negotiating tactics employed by Iran in its meeting with the IAEA this week. Talks with the IAEA ended abruptly not long after they started Continue reading
New Highs for Brent
There is no stopping Brent as the price for the highly indexed commodity continues to move higher. Brent reached a new nine month high on Friday at $119. Continue reading
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