News and Commentary From

Who is Winning the Oil War
OPEC is pumping at 100% of capacity and prices are still going down. They have run out of additional production capacity to bring online to offset the lower prices they are receiving. While Saudi Arabia can still make a profit at $50 oil that is not true for other producing nations. Continue reading
Offshore Drilling Crash
With the price of crude oil rapidly declining and approaching $50 again the cost of offshore drilling is forcing some companies to reconsider their programs. Some of them will pay huge penalties to reduce E&P expenses. Continue reading
World Massively Oversupplied with Oil
The IEA claims oil prices may fall further before prices firm in 2016. The IEA claims there will not be any non-OPEC production growth in 2016 for the first time since 2008. Continue reading
Expensive Decision
BP agreed to a record $18.7 billion settlement with the U.S. government, five Gulf Coast states and more than 500 local governments. That brings the total cost to BP for the Deepwater Horizon disaster to $53.8 billion and still rising. This creates an entirely new risk/reward metric to offshore drilling. Continue reading
Lifting the Oil Export Ban
The U.S. administration is coming under increasing pressure to lift the 40 year old ban on exporting U.S. oil. The ban was passed in 1970s in an effort to lower our dependence on imported oil from the Middle East. Continue reading
Missing Barrels
The International Energy Agency (IEA) has misplaced about 1.2 mbpd of crude. They claim production is one number and demand is another. The difference is about 2.0 mbpd but global inventories are only rising 800,000 bpd. Where did the oil go? Continue reading
Batten Down the Hatches
That term is a nautical term from the early 19th century. The captain of the ship would order sailors to "batten down the hatches" to avoid taking on water when heading into a severe storm. Energy investors should be taking steps to keep their portfolios from taking on water in the months ahead. Continue reading
OPEC Doubles Down
OPEC appeared to double down on the concept of gaining market share by producing more barrels at a lower price. They kept the posted speed limit at 30.0 million barrels per day but plan on producing much more in the months to come. Continue reading
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