Daily Commentary From OilSlick.com

Tale of Two Reports

12/31/2009 2:08:47 AM: I wrote on Tuesday night about the API inventory reports and the unexpected gains in crude. I reminded everyone that the EIA report on Wednesday would be the one to watch because they tend to disagree. They were 100% opposite. Continue reading

Five Days and Counting

12/30/2009 1:59:28 AM: It is only five days until OilSlick subscribers will begin receiving the daily emails with new plays and play updates. On January 4th we will start building our portfolios for 2010 and it appears there could be some volatile opportunities in January. Continue reading

Prepare for an Oil Tanker Glut

12/29/2009 2:51:19 AM: Bloomberg finally hit on a topic I have written about several times in the last couple months. Their excellent article points out that there will be a 26-mile long line of idled oil tankers once the oil storage trade ends and the new tankers ordered in 2008 begin to deliver. Continue reading

NYC Wants Ban on Shale Gas Drilling in Watershed

12/26/2009 10:32:44 PM: New York City urged the state to ban drilling for natural gas in the city's 2000 square mile watershed. NYC claims the practice of hydraulic fracturing is dangerous to unfiltered drinking water. Continue reading

EIA Numbers Show Serious Drop

12/24/2009 3:15:02 AM: The API inventory numbers on Tuesday night showed a drop of -3.7 million barrels but the more widely respected EIA numbers on Wednesday showed a much sharper decline in crude levels of -4.8 million barrels. Continue reading

Oil Inventories Falling According to API

12/23/2009 4:08:01 AM: Late Tuesday afternoon the weekly API inventory report showed that crude inventories in the U.S. fell another 3.7 million barrels compared to the expectations for a two million barrel decline. Continue reading

Brazilian Oil Producer Finds As Much As 2 Billion Barrels Offshore

12/23/2009 12:27:32 AM: Brazilian oil producer OGX Petroleo & Gas Participacoes SA announced it may have made its biggest discovery to date, saying it found up to 2 billion barrels of recoverable crude off Brazil's oil-rich coastline. The 1-OGX-2A-RJS well in the BM-C-41 block off Brazil?s coast has an estimated 1 billion to 2 billion barrels, the company said. Continue reading

PetroChina Leads Group In Iraqi Oil Field Deal

12/22/2009 11:42:39 PM: PetroChina, China's largest oil producer, and two other oil firms inked a deal to develop oil resources in the southern Halfaya oil field in Iraq. PetroChina partnered with Total of France and Malaysia's Petronas on the agreement. Iraq's oil ministry confirmed the deal was signed on Tuesday. Continue reading

BlackRock Fund Manager Likes Coal, Nat Gas, Oil Producer Plays

12/22/2009 11:12:02 PM: In an interview with Barron's, BlackRock fund manager Dan Rice said Exxon Mobil's $41 billion purchase of XTO Energy is not going to be the only acquisition in natural gas sector by the largest U.S. oil company. Rice mentioned Range Resources, Petrohawk Energy and Chesapeake Energy as the natural gas firms that look like the best acquisition targets. Continue reading

January is History, February Now in Focus

12/22/2009 1:18:49 AM: January crude futures expired at the close of trading on Monday at $72.47 after a wild ride over the last week. With lows at $68.59 and highs at $74.69 over just the last eight days it was a violent expiration. Continue reading

OPEC Meeting On Tuesday For Nothing

12/20/2009 11:44:09 PM: There is no reason for OPEC members to meet on Tuesday because the decision has already been made. There will be no change in the formal quotas and probably little whining about the barely 55% compliance with the current quota. Continue reading

The Runts in the Natural Gas Litter

12/18/2009 4:54:32 AM: After spending the last two days profiling the six largest gas producers and their potential as takeover candidates it is time to turn our attention to the smaller producers in the sector. You would think that the smaller companies might be the more likely targets but in reality for a big oil company trying to scale into a large gas position it is better to take advantage of another companies years of acquisitions and large infrastructure rather than pick up a couple minor leaguers that are spread to thin or too localized to provide that big increase in reserves. Continue reading

Natural Gas Acquisition Targets, Part Two

12/17/2009 4:08:08 AM: Yesterday I profiled Range Resources, Ultra Petroleum and EnCana as potential takeover targets after Exxon raised the bar with its acquisition of XTO. Today I am going to add EOG, Anadarko and Devon Continue reading

Who Will Be Next?

12/16/2009 2:21:34 AM: The Exxon acquisition of XTO has started the acquisition wheel turning and everyone wants to know where it will stop. Who will be the next to be acquired now that Exxon has validated the unconventional shale gas as a valid reserve asset. Continue reading

Exxon Puts Some Gas in the Tanks

12/15/2009 2:59:00 AM: In a surprise move Exxon announced the acquisition of XTO Energy for $31 billion in stock and $10 billion in debt assumption. This is the largest acquisition for the company since the $81 billion merger of Exxon and Mobil in 1999. It is also the biggest oil and gas deal in the last four years. The key point here is that XTO is primarily a natural gas company and Exxon saw the need for additional gas reserves and production in the coming years. Continue reading

OilSlick.com Is Moving Closer to Full Production

12/14/2009 2:16:45 AM: Today marks the first email newsletter as we work out the kinks in the new website. We welcome your comments and suggestions as we smooth out the creases in the new publication. Continue reading

Oil Prices Fall Below $69 on Monday Morning

12/14/2009 2:08:22 AM: Crude oil prices fell to a low of $68.59 overnight on Sunday after OPEC members again talked to the press about not changing production numbers at next week's meeting. This is old news but it is being blamed for the drop. I believe the fault lies elsewhere. Continue reading

Oil Prices Trade at $71 on Thursday Night

12/10/2009 8:57:17 PM: Despite the rebound from $69.81 on Thursday the current crude contract is facing its biggest two-week loss in months. January crude traded at $79.03 on December 1st making this week's drop to under $70 an 11% drop. Continue reading

Headline Summary for EIA Short Term Energy Outlook

12/9/2009 3:19:52 PM: In the new Short Term Energy Outlook from the EIA, which was released on Tuesday, the EIA took a shot at predicting oil prices through 2011 and demand growth for all the major fuels. Continue reading

Rig Glut Sinks Transocean

12/8/2009 1:54:07 PM: Transocean broke long term support this week as the number of available rigs rose sharply due to a more than 20% drop in global exploration budgets. The feast to famine cycle in the oil industry is very painful for Transocean with rigs out of service that rent for over $100,000 per day. Continue reading

Oil Prices Hit Two Month Low

12/7/2009 10:00:22 PM: The lack of demand and the rising inventory levels combined to pressure prices on crude on Monday. The big gain in inventories last week and the comments out of OPEC about lack of compliance with current quotas and the debut of the sour crude futures on the CME combined to push oil prices below $74 Continue reading

What About the Bakken?

12/5/2009 8:46:48 PM: If you have an email address you have probably received numerous advertisements for newsletters produced by Stansberry & Associates hyping the Bakken Shale in North Dakota. Stansberry claims there are 2 trillion barrels of untapped oil in this formation. More oil that all of OPEC combined just waiting to be tapped. Are the claims real? Continue reading

Crude Prices Drop on Weak ISM Data

12/3/2009 6:57:07 PM: The ISM Non-Manufacturing Index released on Thursday fell to 48.7 from 50.6 and this was the second consecutive monthly decline. This drop back into contraction territory raised questions about the strength of the recovery and the possible implications for the Non-Farm Payrolls Report on Friday. Continue reading

Gold Bugs Get Cold Feet Over $1225

12/3/2009 6:30:56 PM: After spiking to $1226.40 intraday on Thursday the sell off was dramatic. Gold fell sharply to trade at $1200 again shortly after the close after China warned that the rally in gold was a serious bubble. Continue reading

BP CEO Says World Oil Production In Trouble

12/2/2009 5:37:59 PM: BP PLC CEO Tony Hayward said more money needs to be spent on exploration and development soon if the world is going to meet its energy demands. Speaking at a conference in Trinidad, Hayward said BP was projecting the need for 45% more oil and gas by 2030. The demand was primarily driven by the world's emerging economies. Continue reading

Knock This Chip Off My Shoulder

12/1/2009 2:30:59 AM: Iran announced plans to build 10 more uranium enrichment facilities in a retaliation move for the U.N. nuclear agency the IAEA. If you don't like the two facilities we already have then we will build ten more just to show the UN does not control us. Almost everyone sees this for what it really is, pure bluster and hot air. Continue reading

IEA Chief Fatih Birol Spills Beans At CFR Meeting

11/30/2009 3:16:40 AM: Actually it was not beans but the details of the IEA 2009 World Energy Outlook, which was released last month. This is a high dollar report they sell for 120 Euros. ($180 dollars at today's exchange rate) Continue reading

U.S. Oil Production Has Biggest Spike Since 1970

11/29/2009 12:46:20 AM: According to Platts crude oil production in the U.S. is on target to have its biggest one year jump since 1970. U.S. oil production has averages 5.268 million barrels per day through October. That equates to a 6.4% jump over 2008 levels. Continue reading

China Plans to Increase Uranium Requirements by 500%

11/28/2009 12:18:00 AM: China's Guangdong Nuclear Power Holdings Co. said it will need more than 100,000 metric tons of uranium between 2009 and 2020 to feed its growing portfolio of nuclear powered plants. Guangdong currently uses 2,000 tons per year and its needs will jump to more than 10,000 tons per year. Since the world is already using more uranium than it can produce each year this should mean the price is going up. Continue reading

Trouble Brewing South Of the Border

11/27/2009 11:28:41 PM: Mexico's state owned oil company Pemex is under fire for falling crude production and lack of a plan to correct the decline. The sharp drop in Mexican oil exports has put a crimp in Mexico's budget and Fitch downgraded the country's debt to BBB on Nov-23rd. As the problems mount there are dark clouds forming over Mexico's future. Continue reading

Floating On An Ocean of Crude

11/25/2009 12:57:59 AM: Actually that title should read an ocean of crude is afloat. The tactic of buying spot crude when it is cheap and storing it has had mixed success in recent months. Back in April there were more than 100 million barrels in floating storage because ships were cheap and so was crude. Continue reading

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