Daily Commentary From OilSlick.com


Low Oil Prices Increase Pressure on Drillers
Offshore drillers are under more pressure than onshore firms because of the large number of new rigs coming out of shipyards over the next several years. The low oil prices make it uneconomical to spend billions finding and developing oil fields and until prices recover companies are going to be cutting back on offshore exploration. < Continue reading
Surprise, Surprise!
A handful of shale drillers thought they were being really smart with the hedging plans but their moves proved to be really dumb. Now they are facing huge revenue declines and probably a sharp drop in their stock prices when Q4 earnings arrive. Continue reading
Forecast Frenzy
It appears to be a contest to see who can make the most bearish forecast on oil prices and project the lowest demand growth numbers for 2015. The energy bears are coming out of hibernation to predict $40 oil and rapidly slowing demand growth. Six months from now we can look back on these forecasts and laugh. Continue reading
Drilling Already Slowing
The drop in crude prices has already prompted a decline in drilling activity. You could not tell from the weekly rig counts because they are still flat but that just means the rigs drilling last week were still drilling this week. You have to look out farther than that to see what is coming. Continue reading
Saudi Arabian Price War
I wrote a lot about the OPEC decision in the Option Investor commentary this weekend. Since I posted that newsletter we have learned that the majority of OPEC members supported a 1.5 mbpd cut as well as a 500,000 bpd cut from non-OPEC members. That was voted down by Saudi Arabia. As the largest producer they pretty much get their way. Continue reading
Oil as a Weapon
I think the current administration fails to understand that oil can be used as a weapon. Ronald Reagan used it with great impact on Russia and caused the end of the Soviet Union. Continue reading
Active Rigs Rise
Despite the drop in crude prices to $75 the number of active oil rigs rose +10 last week to 1,578 after dropping to a three month low the prior week. I don't expect much change in the coming weeks. Continue reading
Short Squeeze Ahead
The massive selloff in oil and energy stocks has prompted many traders and hedge fund to short energy equities as well as crude oil. News at the close today could upset their plans. Continue reading
OPEC Outlook Is Smoke and Mirrors
The OPEC Secretary General said the market should not panic on oil prices but OPEC slashed expectations for the future. Continue reading
Production Updates
There is a dirty little secret in the recent earnings reports from several exploration and production companies. Apparently having unlimited amounts of money does not guarantee increased production. Continue reading
Buy Some Gasoline
With the price of oil headed back towards $80 and the national average for gasoline at $2.99 and falling about a penny a day it is time to buy more fuel. Continue reading
Bear Market in Energy
While stock traders are moaning about the -9% drop in the broader markets the energy sector is in a bear market with more than 20% declines in some cases. Continue reading
No End in Sight
Crude prices are at two-year lows and some analysts are calling for even more declines. Equities are approaching -5% on the big caps but the Russell 2000 is already down -12.8%. S&P futures are down -10 late Sunday night with WTI futures down -1.25 to $84.50. Continue reading
Stop the Madness
Crude prices continued to decline on Sunday evening to trade at $89.50. Multiple factors are weighing on prices and it is madness to think that it will continue. Continue reading
Sand Update
A lot has happened in the frac sand market over the last couple of weeks. Suddenly drillers are using more and the type of sand has changed. Continue reading
Gas Glut?
Based on the drop in natural gas prices you would think there was a glut of natural gas. That is definitely not the case and somebody is going to get burned if we have another cold winter. Continue reading
Stay Out of Russia
Exxon and BP and a few others got the bad news last week. Stay away from Russia. Continue reading
Got Sand?
20 years ago a pile of sand would have been nearly worthless. If you owned a few million tons of sand today you would be set for life. Continue reading
LNG Flood
With $200 billion of LNG projects underway in Australia alone it looks like there will be a flood of LNG to market in the next 3-5 years. Continue reading
Stormy Week
Three named storms are currently in progress but none of them are heading for the oil patch. We have been fortunate for several years now that there has not been a repeat of Katrina. Continue reading
Crude Prices Headed to a Breakout
Crude oil closed at $97.35 on Friday and a right at a six-month low. Is this a buying opportunity? Continue reading
$700 Million Well
If oil is as plentiful as many writers would have you believe then why is Exxon spending $700 million on one well? Continue reading
Depletion Depression
Energy stocks fell last week for a multitude of reasons but a big one was falling production at the majors. Depletion is outpacing new production. Continue reading
Imports Not Immigrants
Oil imports from Mexico are declining as production falls to a 24 year low. Continue reading
Green is Good, Sometimes
Governments around the world are turning green with everyone passing more laws to try and force a reduction in green house gases. Unfortunately some of them have unintended consequences. Continue reading
Thank You Libya
Analysts believe the exports from Libya could return to 800,000 bpd within just a few weeks and that was enough to push crude prices sharply lower. Continue reading
Next Up Iran
With Libya returning to exporting oil and Iraq finally making gains against the ISIS insurgents the next topic for energy investors is Iran. Continue reading
Exporting Oil?
If you believe everything you hear in the news it would appear the export logjam for U.S. oil has broken. In reality it is just a crack in the dam. Continue reading
Iraq Worsening
The situation in Iraq is slowly getting worse with ISIS capturing three more towns and two border crossings this weekend and moved Iraq closer to a collapse. Continue reading
Iraq Headlines Sink Market
The Islamic State of Iraq and Syria (ISIS) jumped to the forefront in the battle to garner the most headlines in a single week. The terrorist organization or jihadist group, whichever you want to call them, surged from near obscurity in the USA to the top headlines for the week. Continue reading
Your Utility Bills Will Double
The LNG demand issue is actually worse than I thought when I wrote about it several weeks ago. If the Dept of Energy continues to approve exports we are going to be in a world of pain. Continue reading
Who Are You Kidding?
Daniel Yergin, longtime foe of the Peak Oil crowd, made news on Friday claiming removing the oil export ban would reduce gasoline prices by 8 cents in the USA. Continue reading
Railroad Renaissance
If we can't ship by pipeline we will ship by railroad. That appears to be the prevailing sentiment all across the U.S. but now Canada is getting into the railroad mindset. Continue reading
Rope a Dope
The six nation talks with Iran over a long term agreement on the nuclear issue ended without any progress. Surely nobody was surprised. Continue reading
We Don't Care What We Signed
Iran's Oil Minister said we will export oil regardless of current restrictions in the nuclear deal. Continue reading
Inventories Depress Prices
Crude prices declined to $98.75 on Thursday after another inventory gain pushed crude levels to another record. Continue reading
New Record High
Crude inventories reached the highest weekly level since the EIA began tracking in 1982. Continue reading
Keystone Pipeline Punted
President Obama delayed the decision on the Keystone pipeline until after the elections. I guess that should be no surprise to anyone. Continue reading
More Oil, Less Gas
That seems to be the recurring theme in the U.S. and that was the topic again last week. Continue reading
Higher Home Heating Costs Ahead
A House committee voted to raise your home heating costs and the cost of your electricity. The vote was 15-11 in favor. Continue reading
Coal Demand to Rise for Decades
That was the message from the Peabody Energy CEO last week. The demand curve is rising because a large percentage of the world still has no electricity. Continue reading
Crude Dips on Blockage
Crude inventories declined for the first time in eight weeks as a result of the collision in the Houston ship channel. Continue reading
Gas -51% Below Five Year Average
The EIA is starting to raise the alarm on natural gas supplies as another series of winter storms takes aim at the Midwest and Northeast. Continue reading
Another Fun Day in the Market
The equity markets finished on their lows with critical support breaks on the Nasdaq and Russell 2000. This is setting up for a rough end to the quarter. Continue reading
Ten Year Low in Gas Supplies
Natural gas supplies in storage fell under one trillion cubic feet for the first time since 2003. Continue reading
Inventory Overload
The EIA inventory report shocked traders once again with a major rise in crude inventories. Continue reading
New Russian Territory
According to news reports the show vote in Crimea passed with 95% of voters saying they want to be part of the Russian Federation. Of course there was no way to vote no on the ballot so nobody is surprised of the outcome. Continue reading
New 25 Year High
Crude oil production in the U.S. rose to 8.182 Mbpd last week and that was the highest level of production since 1989. That is up from 7.9 mbpd in December. Continue reading
Much Ado About Nothing
The press is full of calls for the U.S. to immediately produce more natural gas so we can export it to Europe and reduce Putin's hold on the European economy. That is never going to happen. Continue reading
What Goes Up, Always Comes Down
Crude prices collapsed over the last two days as initial tensions in the Ukraine have faded. WTI rallied to $105.22 on Monday before collapsing back to $100.95 today. Continue reading
Nuclear Explosion
As winter fades we could be headed for a nuclear spring. Conditions are setting up perfectly for a boom in uranium demand. Continue reading
Gasoline Demand Increasing
Economists and analysts look at a lot of indicators to determine the health of the economy. One of those indicators is the demand for gasoline and diesel. Continue reading
Venezuela Sliding Into Oblivion
With the situation in Venezuela getting worse as each day passes I am going to layout the reasons why their oil production is not going to bail them out of their current problem. Continue reading
Inventories Flat, Production Flat
The EIA inventory reports this morning failed to energize the markets and energy equities were mixed to fractionally lower. Gas futures did make a new 5-year high before selling off slightly. Continue reading
China's Golden Appetite
Gold traders celebrated last week on news of increased demand by China. News that gold imports into China increased +41% to 1,176.4 metric tons in 2013 helped to power the short squeeze. That was a record high and makes China the number one gold market in the world for the first time and surpassing India. Continue reading
OPEC Upgrades Demand Estimate
In their monthly estimate OPEC increased the expected demand for crude in 2014 by +40,000 bpd to push WTI over $101 at the open. Excitement faded by the close. Continue reading
Another 9,000 Quarter
U.S. exploration and production companies drilled 9,056 wells in Q4. That is a lot of holes and very few of them were dry. Continue reading
Pro-Pain
Propane users are definitely feeling the pain as the shortage grew from 18 states to 35 states last week with more cold weather on the way. Propane prices in Iowa spiked 83% last week alone. Nationwide prices were up +43% for the week. Continue reading
It's Alive!
The proposed Keystone XL pipeline came back to life on Friday after a government study found its impact on the climate would be minimal. Continue reading
Inventory Finally Arrives
The long awaited inventory surge showed up last week after a long period of declines to end 2013. This going to be the opposite from the expected draws in natural gas again when reported on Thursday. Continue reading
Throw the Peak Oil Books Away
A reader sent me an article by Cumberland Advisors suggesting that investors were underestimating the power of America's oil and natural gas industry revolution. (Hat tip to Barry.) Continue reading
Finally an Inventory Gain
After seven weeks of inventory declines in crude oil the EIA finally posted a minor gain Continue reading
Put Up or Shut Up
The UN nuclear inspectors are scheduled to visit two nuclear sites in Iran on Monday when the interim six month agreement begins. They are supposed to supervise a reduction in enrichment from 20% to 5%. Continue reading
Inventory Shocker
Crude inventories were supposed to rise last week as 2014 deliveries stacked up at ports until after the December 31st tax deadline passed. What we saw from the EIA today was a major shock to the market. Continue reading
Geopolitical Events Rule
Geopolitical events are bubbling up around the world and mostly in oil producing countries with the potential for upsetting the flow of oil to the world. Continue reading
Six Month Low
Crude prices in the U.S. sank to a six-month closing low at $92.32 on Wednesday thanks to the rising dollar and sharply higher product inventories. Continue reading
Thirty Million Barrels
Over the last five weeks U.S. crude inventories have declined by -30 million barrels as refiners flushed crude through the system in order to reduce their year-end property tax bill. Continue reading
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