News and Commentary From

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
OPEC Reacts to Oil Glut
The temporary excess of oil has OPEC members discussing production cuts. Saudi Arabia is already scaling back. Continue reading
BP Forges Ahead
The Macondo well had pressures that reached 13,000 PSI but that is just the starting point for BP's new effort. Continue reading
Oil Rigs at Record High
Active oil rigs rose to 1,601 last week and the most since Baker Hughes began counting them separately in 1986. Continue reading
Railroad Congestion Hurting Everyone
Peabody Energy guided lower for coal shipments in Q4 because of railroad congestion caused by oil shipments. Now farmers are complaining about the same problem. Continue reading
Exxon Leaves Russia
The U.S. government gave Exxon more time to shutdown work on the Arctic well to comply with Russian sanctions. 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