Daily Commentary From OilSlick.com


China Car Buying Woes
Just wanting a car in China and having the money to buy it does not guarantee you a place in the drivers seat. Continue reading
Seriously Conflicting Ideas
The analyst community, global geologists and economists are producing some vastly differing opinions over the future of oil production and prices. Continue reading
What Does 2011 Hold For BP?
Knocking on the dawn of a new year, the time seems right to look forward while also taking a look back and when it comes to oil companies, what better candidate to do that with than BP? To say 2010 has been an eventful year for Europe's second-largest oil company would be a gross understatement. In fact, this was the year that BP was forced to claim the title of Europe's second-largest oil company by market value, but there was so much more. Continue reading
What Will Santa Bring Traders On Thursday?
The EIA reports inventories on Thursday and this will be the next to last accounting for the year. The last one covering the week ended on 12/31 will be on January 5th. Continue reading
OPEC Hawks Targeting $100 Oil Prices
If you have been listening to the news this weekend you probably heard some of the comments from various OPEC oil ministers saying $100 oil was a fair price. Fair to whom? Continue reading
Welcoming Iran Into the 21st Century
Iranian citizens got their first taste of reality last week when the government slashed their fuel subsidies. Ten cent per liter gasoline is a thing of the past and the people are not happy. Continue reading
Transocean's Burma Problem
Sometimes it is quite interesting what stories the mainstream financial media chooses to cover and which ones go ignored. Of course, there's limited airtime on television and limited physical space in daily newspapers, so some interesting tidbits are bound to fall through the cracks here and there. Such is the case with Transocean and its goings on in Myanmar (formerly known as Burma). Continue reading
Oil Companies Launching Ambitious Plans for Gulf
Shell, Statoil and Chevron are planning to spend up to $20 billion to explore and develop wells in the Gulf of Mexico over the next five years. Of course that assumes they can get their permits approved by the Bureau of Ocean Energy Management. Continue reading
Analysts Preparing for Permanent Triple Digit Oil Prices
The analyst community is slowly coming to the realization we are facing higher oil prices in the not too distant future and those prices will probably be here to stay. Continue reading
Position Limits On The Way
For those large traders in crude futures and other commodities the CFTC is about to change the rules. The Dodd-Frank Financial Reform Bill mandates the CFTC to implement a plan to reduce speculation pressures in the market. Continue reading
BP's Lost Decade
The government filed the first of several lawsuits against BP and its partners in the Horizon disaster and this will be the first chapter in a decade long saga of legal wrangling. Continue reading
WikiLeaks No Match For Commodities Bulls
Love it or hate it, the now notorious WikiLeaks whistleblower Web site has caused quite a stir. The ball got rolling with a ''war diary'' of Afghanistan-related logs and that was followed by similar fare on Iraq, but nothing could compare to ''Cablegate'' in which WikiLeaks graced the world with more than 251,000 U.S. Embassy cables from all over the world. Continue reading
OPEC and the IEA Square Off with Competing Predictions
OPEC and the IEA gave vastly different projections for future oil demand in Friday's updates. The OPEC outlook was relatively bearish but the IEA used terms like "giddy" when describing recent demand trends. Continue reading
China's Coming Nuclear War
China is quickly finding out that being the largest economy on the planet is not going to be without its challenges. One of those challenges is the future nuclear war. Continue reading
I Never Cease To Be Amazed
I read a column today from an analyst in Australia questioning if we were going to see a repeat of $147 oil. His conclusion was no spike. That was a freak event and won't happen again. Continue reading
Upside Surprise
A new report from Wood Mackenzie may mean we are farther along the peak oil road than anyone previously thought. This could mean an acceleration of price trends. Continue reading
Fact Check: California Consumes More Oil Than China
There is an attention-grabbing headline if there was ever one. The logical reaction, even by a market novice, would be ''no way.'' Sure, California is the largest U.S. state by population and the largest economy in the country, but there is no way that the state consumes more oil than the second-biggest economy in the world. Is there? Even with something in the order of three cars for every person in California, it does not seem plausible that Golden State's oil consumption would dwarf that of China. Continue reading
Richard Branson Predicts $200 Oil
Branson, founder of Virgin Atlantic Airways, warned that unless conditions change quickly we could see $200 oil and 15% unemployment in the USA. He predicts the "mother of all recessions" as peak oil approaches. Continue reading
OPEC To Consider Quota Adjustment
OPEC meets in Ecuador on Dec 11th to discuss production quotas and other items of interest. Tanker tracker Oil Movements said OPEC shipments rose +0.4% in November. It was the eighth consecutive month of increases. Continue reading
Cold Weather, Declining Dollar and Improving Economics
Crude prices rallied again on Thursday to close at $87.99 on colder than expected weather in the northern U.S., Europe and China. Also pushing prices higher was hopes for higher than expected job gains in November when the Non-Farm Payrolls are reported on Friday. Continue reading
Get Ready For Higher Oil Prices
The sudden flurry of better than expected economic reports point to a U.S. economy that is accelerating out of the recession and that improvement will be felt in demand all around the globe. Continue reading
He's Baaaaack...Maybe
Whether it is an intended or unintended consequence of the Federal Reserve's second go round with quantitative easing or just the belief that demand will really be there to support price, it looks like the phenomenon known as $100 oil could reappear sometime in 2011. Without the help of a crystal ball and with the European sovereign debt crisis applying some pressure to oil prices, few if any analysts are willing to even forecast a month when $100 will arrive, but plenty are willing to say it is coming back. Continue reading
How Do You Say Peak Oil Without Saying It?
If you?re the IEA the answer is simple. In their recent World Energy Outlook report they predicted production of 99 million barrels per day in 2035. That is about 13 mbpd higher than today but the devil is always in the details. Continue reading
Drillers Bullish on Future Prospects
When businesses put their money on the line rather than just predicting future business trends is says a lot about the future of the sector. Continue reading
Acknowledging Peak Oil Without Claiming It
The IEA has claimed for years that peak oil did not exist. The always overly optimistic agency is tasked with predicting oil flows for decades in advance and then putting a positive spin on the results or face losing their contract with the countries that hire the agency. Continue reading
Tsk Tsk, Transocean
With the holiday season upon us, the Peanuts Christmas special will soon be aired on a network or two and with that, viewers will be treated to another round of the famous quote ''Good grief, Charlie Brown.'' Seven months removed from the Gulf of Mexico oil spill, one might say ''good grief'' with regards to the fact this event still draws plenty of headlines. Continue reading
Pentagon Planning for Peak Oil
The Pentagon is concerned that the world could see a severe lack of oil beginning as soon as 2012 but at least by 2015. The Pentagon took several years to analyze the assertions from several sources including the late Matthew Simmons book "Twilight in the Desert." Their results were surprising. Continue reading
Demand Rising, Inventories Dropping
Unfortunately it is not just demand that is pushing inventories lower. There is a far more mundane reason at work here. Continue reading
Boone Pickens May Be Close to Winning the Gas War
Pickens claims he is close to getting a bill passed by Congress by year-end that would help convert over the road trucks and busses to natural gas. Continue reading
Random Thoughts
Pimco says $100 Oil is fair price, Exxon shuts down Nigerian platform, Petrobras on a winning streak, Russia drilling in Gulf of Mexico, China's Peak Coal and fuel shortage, Holiday travel to rise, used car prices hit record highs and Peak Oil is behind us. Continue reading
Coincidences Highlight Government Incompetence
On Monday, after reading the headlines and then penning my own stories about some more acquisition rumors regarding Massey Energy, I could not help but think the following thought: This is an obvious example of a company's assets being so specious that some skeletons in the closet get overlooked. I kind of felt the same way when the acquisitions rumors surrounding BP really heated up in the days following the Gulf of Mexico oil spill, but since no deal came to pass on that front, it might be fair to assume that no one was willing to overlook BP's spotty safety record and untold future liabilities. Continue reading
Peak Everything
Peak oil, peak water, peak copper, peak coal, peak uranium and now peak phosphorus. Seven billion people are consuming every natural resource and eventually there will be serious problems. Continue reading
IEA Claims Oil Demand Booming
On Friday the IEA lifted its forecast for global oil demand in 2010 to 87.3 million barrels per day, an increase of 400,000 barrels per day from its previous forecast. The IEA said in its monthly Oil Market Report that the predicted 2.8 per cent growth of global oil demand was the highest rate since the late 1970s, except for a spurt in 2004. Continue reading
IEA Selling Lies
The International Energy Agency (IEA) is the oil monitor for the 33 OECD nations. They are paid large sums of money to study and report on energy production and demand. It should come as no surprise that their annual World Energy Outlook (WEO) is skewed with a political bias. Continue reading
Directional Agreement
The API and EIA agreed in principle but those pesky details continue to get in the way. The drop in crude supplies pushed prices to a new two-year high. Continue reading
As BHP Billiton's World Turns
Licking its wounds after yet another failed attempt at a mega-acquisition, attention now turns to what company may be the next object of BHP Billiton's affections. Speculating on who is next in the world of mergers and acquisitions is just a byproduct of the Wall Street rumor mill, but the ''who is next'' is also a quasi-sport on the Street. It is a way turn a conversation that is nothing more than conjecture into legitimate headlines Continue reading
New Currency Problems Pressure Oil Prices
Renewed worries over Portugal and Ireland caused the Euro to take a dive and provided support for the dollar. The currency fluctuations were blamed for pushing crude prices lower but you would have had to use a magnifying glass to see the decline. Continue reading
OPEC Oil Demand Forecast
Comments on OPEC's 2010 World Outlook from the Oil and Gas Journal. Continue reading
$100 Oil Before Year End?
With the dollar in a suicide dive and economic activity increasing the odds of higher oil prices continue to increase. JP Morgan and Merrill believe $100 may be just around the corner. Continue reading
EOG Removing Gas From Its Name
The EOG CEO said, "Part of this is very simple. At current and projected gas prices, we have no interest in growing gas volumes." This is the same thing Chesapeake said when they reported earnings. Continue reading
What's Next For Petrobras?
With all the hoopola surrounding Tuesday's congressional races here in the U.S. and the expectation of more quantitative easing news expected to follow on Wednesday, it's easy to forget that the U.S. is not the only game in town this week when it comes to electoral politics. If you were not out trick-or-treating on Sunday or attending a costume party in the wildly popular BP oil spill outfit, you may not have heard that Brazil elected a new president. Continue reading
Good News Breaking Out Everywhere
News of unexpected growth came from the U.S., China and India this week prompting crude prices to move to the upper end of their current range. Continue reading
New Study Predicts Future Resource Wars
A new study released last week predicts there is a rising risk of violence over the next several years as oil supplies begin to decline. Continue reading
Investigator Spills the Beans
Fred Bartlit provided another nail for the BP coffin this week when he sent a letter to the commission exploring the Horizon disaster. It does not paint a pretty picture for BP's future. Continue reading
EIA Surprise
There was another "surprise" inventory report today. However, the surprise was EIA numbers roughly inline with what the API reported Tuesday night. The API reported a build in crude levels of 6.4 million barrels and the EIA reported an increase of 5.0 million barrels. Compared to the disagreements common between the two reports this one was at least close. Continue reading
BP Far From Out Of The Woods
Funny thing about a sudden change in the tenor of headlines in the business world: When they shift from really, really bad to not so bad, as is the case with BP, it is easy to be fooled into thinking all is well and it is back to business as usual. No, oil isn't leaking into the Gulf of Mexico anymore, and yes, BP is doing an admirable job of selling assets to raise cash for spill expenses, but to say the company is out of the proverbial woods would be inaccurate. Continue reading
Oil Price Estimates Rising Quickly
Analysts are lining up to raise their estimates for oil prices and triple digit prices in 2011 appear to be assured. Continue reading
Can Iraq Out Produce Saudi Arabia?
Iraq recently upgraded its estimated reserves and has launched some ambitious plans to boost capacity nearly 500% to 12 million barrels per day by 2017. Is Iraq delusional or can this be done? Continue reading
Saudi Arabia Blowing Smoke
Saudi Arabia's oil minister Ali al-Naimi is actively involved in telling bogus stories as a method of damage control over future production. This is not new but cracks are forming around the edges. Continue reading
More Random Musings From The Energy Patch
I have noticed a few interesting, if not humorous factoids and headlines coming from the energy sector over the past few days, so I thought it might be interesting to address these tidbits rather than in engage in my normal commentary. Continue reading
Random Thoughts
OPEC wants to see $100 oil to offset the shrinking value of the dollar. Transocean hits the jackpot. Chesapeake says natural gas boom is over. Continue reading
Just the Facts
Dragnet's Detective Joe Friday made that phrase famous. Sometimes we get emotional and start producing copy that obscures the facts more than explains them. Today I am going to give just the facts from Chris Skrebowski's ASPO presentation last week. Continue reading
OPEC Happy, Oil Companies Happy
OEPC ended its meeting without changing any quotas but that should not have been a surprise. Even though OPEC members are producing two million barrels per day more than their posted quotas nobody wants to rock the boat. Continue reading
Analysts Confused
It is the time of month where we get the new demand estimates from the IEA and EIA and analysts predict the price of oil based on those estimates and the economy. Apparently some analysts are seeing the glass half full and others half empty. Continue reading
Devon Energy: Lucky And Good?
We all know the old saying ''sometimes it is better to be lucky than good.'' Applicable in many walks of life, the combination of good fortune and acumen can be especially potent. That might be the case going forward with Devon Energy, one of the largest U.S. independent oil and natural gas producers. Call the company lucky, call it smart or both, but Oklahoma-based Devon made the prescient call to exit the offshore drilling business late last year. Continue reading
OPEC's Dirty Little Secret
OPEC members will meet in Vienna on the 14th to discuss production targets. With oil prices in the low $80s there is not likely to be any change in quotas. The real secret is that it would not matter. Continue reading
Petrobras Making Enemies
Petrobras was once a great oil company with a promising future. That future is becoming cloudier as each day passes. Continue reading
Chesapeake Suffering From Gas Pains
Chesapeake Energy (CHK) has gas! They have a lot of gas and they are trying to get rid of the pain produced by the excess. Continue reading
BRIC Demand in 2011 Could Be Trouble
Oil demand in the U.S. may be increasing at a snails pace but demand from Brazil, China and India could push consumption to the second highest level on record in 2011. Continue reading
Day Of Reckoning Approaches For Moratorium
The moratorium on deepwater drilling in the Gulf of Mexico, the White House's knee-jerk reaction to the Gulf spill is slated to end on November 30. Oddly enough, that is just a few days after Thanksgiving and the end of this foolhardy ban will certainly give plenty of folks something to be thankful for. In another slightly ironic twist, November 30 is a Tuesday, but the day of reckoning for the moratorium and its supporters will come four Tuesdays prior to the 30th. Continue reading
Iran Still Making Progress on Enrichment
Despite the increasingly tough sanctions Iran is continuing work on its enrichment program. Almost daily some major international company announces they will comply with the sanctions and halt business with Iran but the country marches on. Continue reading
Export Land Model Explained
There has been a lot of press about the Export Land Model recently as more and more analysts come to the realization that the key points in the model are true. What is the ELM and how will it impact us? Continue reading
OPEC Production Slipping
The output from OPEC declined to an eight-month low in September according to a Bloomberg survey. Continue reading
Moratorium Countdown
Pressure is building on the Interior Department to lift the current deepwater drilling moratorium. The legal cases are not going well and lawmakers are starting to tighten the screws on the administration. Continue reading
Know What You're Getting With Energy ETFs
ETFs have taken their lumps lately as more than a few pundits have chided this asset class as a culprit for May's ''flash crash.'' Other common knocks against ETFs include the love affair hedge funds seem enjoy with these products, ETFs have led to increased market correlation, making it harder to pick stocks, and ETFs have had made the market more volatile. All of these points are up for debate, but I want to address the curious world of energy sector ETFs. Continue reading
OPEC Positioning Has Begun
Nobody expects OPEC to raise the production quotas when it meets on October 14th but several oil ministers have already started lobbying for changes. Continue reading
Iran Making the News
It seems like everywhere I turned this weekend Iran was in the news. U.S. and U.N. sanctions appear to be having the desired effect because the government is becoming increasingly open about the nuclear option. Continue reading
Petrobras Bulks Up
Petrobras added $70 billion to their coffers on Thursday with the largest share offering in history. Petrobras said in a filing they might sell another 188 million shares over the next 30 days to cover excess demand. Continue reading
OPEC's Inconvenient Truth
OPEC won't tell you the truth about their future production. They won't even tell each other the truth about current production. This makes the world's dependence on them for our future energy needs a true exercise in faith. Continue reading
Big Oil Doesn't Equal Big Dividends
No, 2010 has not been a picnic for equity investors, but complaints aside, this has been one of the better years in recent memory for dividend increases and share buyback programs, the two most direct ways a management team can reward investors after capital growth. Continue reading
Long Term Impact
BP may have announced the well was officially dead but the impact of the spill on BP's fortunes could last for decades. Continue reading
Fracking Battles Heating Up
Every day that passes brings additional problems for the companies making a living drilling for shale gas. Each day brings us one step closer to a ban on hydraulic fracturing and a serious crimp in shale gas production. Continue reading
Peak Coal?
A recent study predicts that existing coalmines will reach peak production on a global basis as soon as 2011 with production levels cut in half by 2050. What happened to the Saudi Arabia of coal as the U.S. has been called? Continue reading
Three Hurricanes, No Damage
Hurricanes Igor, Julia and Karl have intensified with Igor and Julia reaching category four status but none of these storms are causing damage, yet. Continue reading
The Best E&P Stock No One Is Talking About
There are two schools of thought that investors should remeber when it comes to Latin America. First, Brazil is far from the only game in town. An addendum to that statement is Petrobras is not the only major oil player either. Second, Colombia has changed and changed for the better. Once known more for its Marxist rebels and for being a primary exporter of a certain powdery white illicit substance, Colombia has worked diligently to reshape its image and transform itself into a legitimate destination for global capital. Continue reading
Hedge Funds Stocking Up
Hedge funds and other large speculators stocked up on crude futures for the first time in five weeks. The number of net longs increased by 8% in the week ended September 7th. Continue reading
Fracking War Heats Up
The EPA has now demanded the ingredient list for the secret fracking sauce used in the shale gas wells in the Marcellus shale and other high population density locations. Continue reading
OPEC Warns Oil Demand is Slipping
In its monthly report OPEC said signs of an economic slowdown in industrialized nations forced the group to rethink future demand levels. Continue reading
Lipstick On A Pig
BP accomplished a very difficult task on Wednesday. They succeeded in putting enough makeup on their view of the Horizon explosion that it would be difficult for the general public to see BP's role in the disaster. BP's report paints them as just another participant in the group that was responsible for the well's failure. Continue reading
Calm Before the Storm
Companies involved in the Horizon disaster are waiting uncomfortably tonight for the formal release of BP's internal report on Wednesday morning. The atmosphere is similar to soldiers in the trenches overnight knowing there will be a heated battle at dawn. Continue reading
Potash's Doyle Needs A River Ace
In late July, when discussing the change leadership at BP, I compared some of the more illustrious C-level jobs to being the coach or manager of a prestigious sports franchise. With the escalating drama surrounding who is and who is not interested in acquiring Potash Corp. of Saskatchewan, the world's largest fertilizer producer, I have come up with another sporting analogy: Comparing Potash CEO Bill Doyle to a riverboat gambler. Continue reading
Drilling Moratorium Extended?
If environmental groups have their way the Mariner Energy platform explosion could extend the moratorium well into 2011. Continue reading
BP Getting Close and Getting Shafted
BP has removed the capping stack from the Horizon blow out preventer and is preparing to swap the failed BOP with a new BOP. Continue reading
PEMEX Plans Spending Spree
Petroleos Mexicanos, Mexico's state owned energy company, plans to invest $269 billion over the next eight years to increase production. Considering their production is dropping like a rock that is probably a good idea. Continue reading
Big Pay=Big Problems For Big Oil Execs
Americans love money, there is no getting around that. Those that have it usually want more and those that do not have a lot aspire to have more of it, but with that said, most Americans have standards when it comes to what can be perceived as excessive pay. And when it comes to excessive pay, no groups are more vilified than professional athletes and CEOs of large companies. Continue reading
BP to Blame Engineers for Blowout
In news leaked on Monday BP is planning on blaming its own engineers for bad decisions that led to the explosion on the Horizon. In addition to blaming their own people BP investigators are also blaming Transocean for not having the blow out preventer recertified in recent years. Continue reading
Tankers Exploding
That headline conjures up images of fireballs and massive oil slicks. However, the actuall explosion is in the rate of new tankers being built and put into service and it is depressing rental rates. Continue reading
WSJ Posts An Insightful Look at Horizon's Fall
There was an excellent article in the WSJ today about the last hours on the Horizon and some of the key decisions that led to the explosion. Continue reading
Matt Simmons Remembered
I wrote a short article a couple weeks ago on the death of Matt Simmons and recent controversial remarks. We still need to remember that Matt Simmons was a powerful force in the bringing the topic of Peak Oil to the forefront. Continue reading
Problems Persist For Petrobras
Last month, I filled this space with a piece about some of the myriad issues facing Petrobras, Brazil's state-run oil giant. The commentary can be viewed (HERE), but to summarize, the article notes that Petrobras is a seriously challenged stock and investors who are interested in the shares might do well to hold off a bit as better prices would likely avail themselves. Better prices have arrived as Petrobras closed at $33.52 today, more than $2 lower from their closing price when I wrote my previous piece, but that lower price probably is not an invitation to get involved stock, not yet at least.

Continue reading

Bears Coming Out On Oil Prices
With crude oil and refined products hitting a 20-year high last week the bears are starting to come out of the forest Continue reading
Random Notes
Largest oil products inventory in 20 years. Mexico changes its "no outsider" tune. Massive coal plant expansion. Rig counts back to pre bust 2008 level. Continue reading
This Was Not a Fun Day for BP
BP officials probably felt like they needed to be in a foxhole today because they were taking fire from all directions and the volume is increasing. Continue reading
Floating Oil Storage at 18-Month Low
Goldman Sachs said oil demand may have exceeded supply over the last two months because inventories stored on tankers fell to an 18-month low. Continue reading
Get Ready For Another Fertilizer Fiesta
To the untrained eye, it might appear that fertilizer companies are not involved in the sexiest of businesses. After all, they do not make ''sexy'' products like smartphones or oil rigs, and some folks might think what goes on on a farm is downright boring. It may be, but following fertilizer stocks is nothing if not exciting as this is a sector chocked full of high-beta names and to add to the excitement, these companies really know how to create mergers and acquisitions drama that makes financial writers jump for joy. Continue reading
Hedge Funds Slash Gas Holdings
In August 2009 gas prices fell -19% because of a calmer than normal hurricane season. In 2010 NOAA reduced its storm estimate in early August from a high activity forecast of 20 named storms to a moderate activity season of only 14 named storms. This prompted funds to slash futures positions. Continue reading
OPEC Raises Outlook for Oil Demand
OPEC said oil demand from the emerging economies of Asia, the Middle East and Latin America would push consumption higher in 2011. Continue reading
IEA Warns New Crude Supplies Dropping
The IEA said this week that the BP oil spill has put a cloud over deepwater exploration worldwide and will delay finding and production of new oil for years to come. Continue reading
Growing Pressure on EPA
Thursday's scheduled public meeting on hydraulic fracturing in Pennsylvania was postponed because planned attendance rose from 1200 to more than 8000. The EPA is under growing pressure to halt the fracturing process. Continue reading
California Misses The Energy Boat...Again
Earlier this year, I took California to task for a foolhardy legislative gambit that attempted to raise taxes on oil companies operating in the Golden State. The proceeds from the higher taxes were supposed to go toward making tuition at California's public universities more affordable after students protested tuition hikes. Higher taxes are bad enough because they never lead to an increase in collected revenue, but California's plan was worse because it is not like oil production is increasing in the state. Continue reading
Passing of a Pioneer
Matthew Simmons, founder of investment banking firm Simmons and Co, died over the weekend from a heart attack. Continue reading
After Further Review
Gas drillers like Chesapeake raced out to acquire all the acreage they could find in places like the Marcellus, Haynesville and Barnett Shale. They spent billions snapping up everything in sight. They spent so much that the money left over to develop those properties was chicken feed. Continue reading
New York Considers Ban On Shale Drilling
The Marcellus Shale may become a ghost town for drilling derricks if the State of New York passes a ban on shale gas drilling. The proposed ban would suspend drilling until next May while the state analyzes the fracking process and determines if it is hazardous to underground water supplies. Continue reading
Ding, Dong, the Witch is Dead
In this case the witch is BP's Macondo well. The static kill process appears to be a success and the well is no longer producing oil. Continue reading
Trouble Ahead, Trouble Behind For BP
In the classic Grateful Dead song ''Casey Jones,'' the chorus goes ''trouble ahead, trouble behind.'' Of course those lyrics apply to something else altogether, but they are relevant to the world's most notorious oil company: BP. A view through rose-colored glasses may help an investor see a not-so-bad picture of the British oil giant. That is understandable as the news flow involving BP has been more positive than negative over the past few weeks. At the very least it has been less bad than what was seen in May and most of June. Continue reading
BP Close to Plugging the Well
BP was going to start the static kill process on Monday but had to delay it 24 hours after a hydraulic leak was discovered in the current well cap. Tuesday is now the target date to start killing the well. < Continue reading
Trouble Brewing for BP
BP is close to plugging the leaking well but hostility is rising about their use of a cancer causing dispersant in record amounts in June and July. Congress has finally awakened to the problem and is demanding answers. Continue reading
Japanese Tanker Attacked
A Japanese tanker named the M Star was attacked in the Strait of Hormuz near Oman on Wednesday. One crewman was injured and the VLCC tanker sustained damage. The type of attack and the attackers are still a mystery. Continue reading
Problematic Petrobras
Here is an interesting trivia question that might win you a free drink next time you find yourself having a compelling conversation about energy stocks: Following BP's hemorrhaging of roughly $70 billion in market value in the wake of the Gulf of Mexico oil spill, which major integrated oil company has endured the second-largest haircut to its market cap this year? That dubious distinction would go to Petrobras, Brazil's state-run oil company. Continue reading
Dudley Faces Bumpy Road Ahead
There are plenty of high profile jobs that are ''tough'' jobs for good reasons. The world of sports illustrates this point very nicely. Being the coach of the Notre Dame football team is a tough job. Managing the New York Yankees is probably harder given that the job is performed under the watchful and hard-to-please eye of the New York media. And since I am going to talk about BP, I'll make this relevant to the U.K. and say that the managing the Manchester United football club is far from the easiest gig in the sports world. Continue reading
BP, By Any Other Name
BP has had a lot of names over the years and has acquired quite a few. I would not be surprised to see the name BP, formerly British Petroleum, fade away once the oil spill cleanup is complete. The name most likely to survive is Amoco. Continue reading
Nuclear Gas
Did you know that the U.S. exploded three nuclear bombs in Colorado and New Mexico in an effort to release natural gas from shale and sandstone formations? Continue reading
Planning Ahead For Future Containment
After seeing the damage a deepwater blowout can do the other major oil companies are planning to spend $1 billion to create a system to control future blowouts. Continue reading
Uranium Heating Up
Back in 2007 the price of uranium soared to $136 per pound. There was a shortage of uranium and too few mines to produce it. Fast-forward a couple years and 27 new mines came online and the sudden extra supply pushed prices back down to the $30 range. Now the cycle is restarting. Continue reading
Spill Blame Game Continues
Mercifully, BP appears to have made some progress on capping the leaking Macondo well. Hopefully, the company's plans to use relief well in August will prove successful in permanently stopping the flow of oil in to the Gulf of Mexico. BP can also boast of some more positive news as it has been able to successfully sell a variety of assets, including $7 billion worth to Apache (APA), in an effort to raise cash to pay for its spill-related liabilities. There is still a long road to travel before this travesty moves to the back-burner, but for the first time in three months, it appears as though things are headed in the right direction. Continue reading
Hedge Funds Going Long
Net long positions on the New York Mercantile Exchange rose 67% in the week ended July 13th. This is the most since February 2007 according to the Commitment of Traders report. Continue reading
Boeing Missing An Important Fact
Boeing raised its 20-year industry forecast for new commercial aircraft last week to reflect the recovering global economy. Unfortunately whoever prepared this forecast was missing one very important fact. Continue reading
IEA Predicts Growth In Oil Demand
In the first IEA forecast for 2011 the firm predicted oil demand would increase by 1.6% due to growth in developing economies. This compares to the IEA forecast for +2.1% growth in 2010 Continue reading
Test On, Test Off, Test On
You know the joke, "you could line all the accountants in the world end to end but you would never reach a decision." In BP's case you can query all the scientists in the gulf and not reach a consensus on the potential for further well problems. The government told BP to halt the integrity test for 24 hours so they could ask more scientists. Continue reading
New Moratorium, Same Old Farce
As you probably already know, the Interior Department has graced us with a revised moratorium on offshore drilling. For those that opposed the original moratorium, a wide-ranging, knee-jerk reaction to BP's (BP) negligence in operating the Deepwater Horizon rig, the revision represents a disappointment does because it is a far cry from an improvement over the original ban. In fact, the revised moratorium is pretty much a bad sequel to a movie that was horrible to begin with. Continue reading
Well Capped, New Moratorium Issued
BP may have successfully capped the leaking Macondo well and done so ahead of schedule but assembling a hardware configuration that allowed them to halt the leak at the blow out preventer. BP has not made an announcement yet but anyone monitoring the cameras from the 12 robotic subs was able to watch the event transpire around 7:PM tonight. Continue reading
A Panel of Experts?
As the administrations panel of experts begins taking testimony about the Horizon disaster, BP finally upgraded the wellhead with a new connection that they claim will stop any oil from leaking into the gulf. Continue reading
Will They or Won't They?
BP has entered a new phase in the oil spill saga. We have analysts claiming they have emails from BP workers saying the well could be plugged around the 12th to the 17th. A BP spokesman responded to other rumors saying it could be plugged on the 27th. BP still claims it will be mid August. What is the real story? Continue reading
The Beginning of the End for Shale Gas?
The new surge of shale gas drilling depends on two factors. The first is horizontal drilling and the second is hydraulic fracturing. I believe we are seeing the early signs of the demise in hydraulic fracturing. Continue reading
Gulf Spill Puts Unwanted Focus On Shale-Gas
The Gulf of Mexico oil spill has certainly opened a lot of eyes among the general public regarding the dangers of exploring for and extracting oil in deepwater locations. Americans can be a fickle bunch. Prior to the Gulf spill, polls showed that a majority of Americans favored some expansion of offshore drilling if for no other reason than to reduce U.S. dependance on foreign oil. That tune has been changed as a result of the spill. The images of oil-soaked birds and displaced workers proliferated by the media probably had something to do with the shift in sentiment. Continue reading
Under Promise, Over Deliver
In the history of the BP oil spill that saying has never been proven correct. BP has a history of saying one thing and then being proven wrong either in fact or in practice. Remember the 40 foot tall containment dome? How about the "Top Kill" process? Continue reading
Overregulation Just Ahead
With deepwater well complexity rivaling that of a NASA mission do we really need the government giving oil companies a check off list of certifications every time they drill a well? Obviously it would have helped in the BP case only if BP had actually heeded the list. Continue reading
On Second Thought Please Help
He Obama administration initially turned down offers of help from more than 30 countries when the BP oil spill first occurred. After getting low marks for his handling of the spill the president has reconsidered that lack of action. Continue reading
Exxon/BP Marriage Not Impossible, But Is It Probable?
Here we go again. Just a few weeks after speculation swirled that BP was ripe for a takeover following the massive decay in its share price and market value in the wake of the largest oil spill in U.S. history, the takeover chatter is starting again. Speculators and rumor proliferators seemed to take a little break from from grasping at straws regarding which one of BP's rivals would play vulture and pick up the embattled oil giant on the cheap, but the speculation gained some credibility today when JPMorgan published a note naming Exxon Mobil and Royal Dutch Shell as legitimate bidders for BP. Continue reading
Eighteen Days and Counting
BP says it is making good progress on the first relief well and it could be completed in only 18 days. Unfortunately tropical storm Alex is causing havoc around the drilling site despite being hundreds of miles away. Continue reading
I Repeat A Nuke Is Not the Answer
I continue to get emails asking me why the U.S. won't use the nuclear option on the BP well. Usually there is also the question about the fractured seafloor all around the well and worries about "plumes of oil" leaking everywhere. Continue reading
60% Chance of Tropical Storm
BP has got to be sweating bullets this weekend. There is a 60% chance of the stop south of Cuba turning into a tropical storm or even a hurricane. Continue reading
Trouble Brewing
The first storm of the Atlantic hurricane season is forming south of Cuba. NOAA said conditions are favorable for the system to intensify over the next two days as it heads into the western Caribbean. There is a 20% chance it will turn into a tropical storm over the next 48 hours. Continue reading
Moratorium Lift A Step In The Right Direction
From an investor's perspective, news that a New Orleans federal judge has lifted the government-imposed six-month moratorium on drilling at depths greater than 500 feet should have been more warmly received. The Oil Services HOLDRs ETF (OIH), home to stocks that are intimately impacted by the drilling ban such as Tranocean (RIG) and Halliburton (HAL), slid more than 3%. Hornbeck Offshore (HOS), the company that brought the suit against Uncle Sam, had a wild day, gaining as much as 11% at one point only to finish the day in the red. Continue reading
Judge to Rule on Moratorium by Wednesday
A federal judge will consider overturning the six-month drilling moratorium by Wednesday. The ban was placed by the Obama administration on all drilling over 500 feet. Experts claim the moratorium could cause more financial damage to the area than the oil spill. Continue reading
BP Spill the Doorway to $7 Gasoline?
What does the BP spill have to do with $7 gasoline? Everything if you believe the position being pushed by the current administration. Continue reading
Congress Shows True Colors...Again
After Thursday's congressional grilling of BP (BP) CEO Tony Hayward, any questions regarding why Americans have such a low opinion of their elected representatives should have been answered. I don't know exactly what the approval rating for Congress is, but I do know it is a number that would look good as a score for nine holes of golf. In other words, voters are not impressed and who could blame them? Continue reading
Reading The Tea Leaves On BP's Dividend Cut
In what can only considered less than surprising news, embattled oil giant BP announced today that it will not pay a dividend to shareholders this year. Despite the fact that the company recently authorized a payout of 84 cents per American depositary receipt for the first quarter, that dividend will be canceled, as will other payouts for the rest of 2010. BP says it hopes to resume paying a dividend next year, but working on that premise means one has to assume BP will even be in business in 2011 and that is far from a guaranteed proposition. Continue reading
A Missed Opportunity For Oil Giants
In advance of Tuesday's Capitol Hill dog and pony show, oil executives from Exxon Mobil, Chevron and ConocoPhillips, the three largest U.S. oil companies, and Royal Dutch Shell, now the largest European oil company by market value, were attempting to distance themselves from their embattled rival, BP. This was a predictable approach. After all, BP has been accurately painted as a villain for its role in the Gulf of Mexico oil spill, now the largest in U.S. history. Continue reading
Any Last Words Tony?
Tony Hayward may need to update his will and send his goodbyes to friends and relatives before he walks into that congressional testimony on Thursday. We already know the outcome and if Senators had their way he would not be leaving the room alive. Continue reading
Dog Pile
Remember when you were kids playing front yard football? There was always somebody who enjoyed yelling dog pile after a tackle and everyone in the group would jump on the downed player. Now you know how BP feels this weekend. Continue reading
BP Statistical Review of World Energy
Despite the disaster in the Gulf of Mexico BP still managed to release their annual review of the state of world energy on time today. Global energy consumption fell -1.1% in 2009 as a result of the recession and the first decline since 1982. Consumption in OECD countries fell by -5% and the largest decline on record. Continue reading
OPEC Cutting Estimates, Pressure Building on Obama
OPEC said there was no reason to increase production because they are revising demand estimates downward. In the U.S. the pressure is mounting on President Obama to end the ill conceived moratorium on drilling. Continue reading
Drilling Moratorium: Be Careful What You Wish For
On the surface, the Obama Administration's six-month moratorium on deepwater drilling in the Gulf of Mexico following the April tragedy at the Deepwater Horizon rig was a reasonable reaction to a dour confluence of events. Eleven deaths and the biggest oil spill in U.S. history were not going to go unnoticed by politicians, certainly not in an election year. And let's be honest: Deepwater drilling is risky business and some enhanced safety protocols could wind up benefiting the industry and its employees. Continue reading
LMRP Working But Food Chain Dying
The New York Times reported that BP had to slow down the flow on Sunday after capturing more than the 15,000 bpd the drillship can process. If you click on the video feeds you will see much more still boiling into the gulf. Continue reading
Drilling Moratorium Producing Hostility
For the last month the hostility in the gulf ports was directed at BP and their failure to halt the oil leak. Over the last week the hostility has started to be redirected towards the Obama administration. Continue reading
Does Not Appear to Be Working
BP finally managed to place the LMRP on the leaking well late Thursday night but it does not appear to be working. Continue reading
BP A Takeover Target? Don't Bet On It
The dramatic slide in BP's stock price has had plenty of consequences, all of them negative, leading wary shareholders scrambling to fine any tidbit of good news to cling to. With good news related to BP harder and harder to come by, the prospect of a takeover of the embattled oil giant has the potential to be quite intoxicating in a forbidden fruit sort of way. Before the takeover news hit the mainstream financial press, the most compelling reasons to be involved with BP's stock were its double-digit dividend yield and the appearance of a stock trading at a discount. Continue reading
Bloodletting Continues For Oil Stocks
History has proven time and again that no good news, let alone good price action, can be the result of any company being mentioned in the same breath as one of the alphabet soup agencies headquartered in Washington, D.C. FBI, IRS, SEC, all equal bad news. Oil companies with ties to the Gulf of Mexico oil spill are learning this the hard way as several of these firms are now under investigation by the Justice Department (DoJ). Continue reading
Confusion Reigns
President Obama held a press conference on Thursday to discuss the problem in the gulf. At the conference he said he was extending the moratorium on drilling for six more months, canceling lease sales and halting drilling on 33 deepwater rigs in the gulf. Unfortunately the devil is always in the details. Continue reading
Plug That Damn Hole
This was President Obama's direction during a session in the Oval Office. The president expressed his frustration with the inability of BP to fix the problem and he vented his frustration to the aides present saying, "Plug the damn hole." Continue reading
Feds Look As Bad As Oil Companies Following Spill
When it comes to the Gulf of Mexico oil spill, which may eventually prove to be the worst spill in U.S. history, there is no shortage of distributable blame. BP, the operator of the Deepwater Horizon rig, is pointing fingers at Transocean (RIG). Transocean built the rig and is saying the explosion and resulting spill are the fault of BP. Cameron International and Halliburton have taken their turns as whipping boys as well. Even Anadarko Petroluem, a company that merely held a 25% non-operating interest in the rig, has been skewered a bit. Continue reading
Dividend Has Transocean In A Tough Spot
When a company pays a dividend, that is usually a positive sign and an event that usually does not result in a huge decline for the company's stock. The operative word in that sentence is ''usually.'' Yes, there have been times that companies paid dividends when the market knew the balance sheet was suspect and there have been companies that have transitioned to stock dividends from cash dividends, raising suspicion that the underlying financials were weak. These are scenarios where a dividend payment is not a good thing. Continue reading
BP PR Gaffes Continue
For a company that is so sorely in need of anything that could even briefly boost its public image, you would not know that by looking at BP. In a world where perception is reality, BP's public relations gaffes following the Deepwater Horizon rig explosion on April have been nothing short of stunning. BP's handling of the spill cleanup has bordered on the incompetent and the company's public persona borders on, or maybe even surpasses, arrogant. Continue reading
Is There Oil In Them Hills?
Offshore drilling has come under heavy scrutiny in the wake of the Gulf of Mexico oil spill. No surprise there. Companies exploring for oil and gas in various U.S. coastal areas have been favorite targets for environmental groups for years and BP's (BP) apparently flagrant disregard for safety protocols on the Deepwater Horizon rig does nothing but paint the company and the industry in a negative light. Continue reading
Politicians Run Amok Following Gulf Spill
Politicians' reaction to the Gulf of Mexico oil spill been predictable to say the least. In the two-party system that dominates U.S. politics, one party is viewed as being a friend of ''big oil'' and the other is far less accommodating. The latter holds stout majorities in both houses of Congress (at least for now) and controls the White House as well, so while the timing of any oil spill would be bad, the timing of the Gulf spill is particularly bad for BP and friends because they will have to contend with a group of unfriendly politicians eager to pander to their constituents because 2010 is an election year. Continue reading
Analysts Not Much Help Following Gulf Spill
If you have been following equity markets for an extended period of time, by now you know that sell-side analysts are a curious bunch. Perhaps you remember the go-go days of the technology sector bubble in the late 1990s that saw many analysts tout shares of companies that were not profitable. Touting companies that do not make any money is one thing. Continuing to recommend those stocks when their price tags flew into the triple-digits and their P/E ratios soared to 40, 50 and higher is another issue altogether. Continue reading
The Smoking Gun
The 60 Minutes interview with Horizon survivor Mike Williams is must see TV. The interview was aired over the weekend and fortunately through the miracle of video on demand you can still see it. What Mike says is sure to be critical to the government's investigation. Continue reading
Niobrara Shale The New Hot Topic
Wyoming held a lease auction last Tuesday that pulled in $32.3 million in federal oil and gas leases. That broke the previous record of $30 million set in April 2008 and it was three times the total received by Wyoming for all the leases sold in 2009. Continue reading
Iran Facing A Growing Boycott
Iran is slowly finding itself cutoff from the rest of the world due to increasing pressure from the U.S. and European countries. Nearly every day now another company announces it is cutting ties with Iran in order to avoid having the nations organizing the boycott cut ties with them. Continue reading
Crude Inventory Rises Despite Increased Gasoline Demand
The API and the EIA both reported higher levels of crude in the U.S. this week and both showed a sharp drop in gasoline. BP neared a fix on the oil leak as Congress prepares to leak on BP. Continue reading
The Plot Thickens
The farther we get away from the event the more information is appearing on the events surrounding the explosion on the Deepwater Horizon. Information is coming from unexpected sources and the revelations are amazing. Continue reading
The Real Finger Pointing Begins Tuesday
The major players in the gulf oil spill with testify at open Senate hearings in Washington on Tuesday. In a pre release of prepared testimony BP is going to throw Transocean to the wolves in hopes of moving the spotlight off themselves. Continue reading
BP Switches to Plan B
BP claims the containment dome plan has been shelved and they are weighing other options for fixing the leak. At this point it is probably more like plan H for "somebody Help us" because all prior plans have failed. Continue reading
Attempt to Lower Containment Dome Postponed
The operation to lower the 78-ton containment box over the worst of the three leaks had to be postponed on Thursday due to volatile gases rising out of the ocean over the well. Continue reading
Transocean Is A Buy
After a thorough review of the details surrounding the sinking of the Deepwater Horizon rig and the news to date I am convinced that Transocean is a buy at this level. Continue reading
Hasty Reactions Could Doom Future Of Offshore Drilling
Reaction to the massive oil spill in the Gulf of Mexico caused by an explosion at a BP-leased rig two weeks ago has certainly been predictable in the financial markets. Shares of BP, one of Europe's largest integrated oil companies, and oil services firms such as Cameron International (CAM), Halliburton (HAL) and Transocean have seen healthy chunks of their respective market values disappear in the past week. Those bearish moves, while not palatable for shareholders, were at least predictable. Continue reading
Shutting Down the Gulf
Worries about future restrictions on drilling in the gulf and concerns about closing existing platforms in danger from the spill sent futures higher on Monday. Continue reading
A New Player Emerges in Gulf Spill
Anadarko Petroleum has emerged as another deep pocket in trouble as the Gulf oil spill continues to expand. The final bill could run as much as $14 billion according to one source. For a company like APC that would be the kiss of death. Continue reading
List of Names Grows Longer
News that the gulf spill was five times bigger than initially thought suddenly captured investor's attention and the list of companies involved in the well at the time of the blowout mushroomed past BP and RIG. Continue reading
India Ganging Up On China
India's Oil & Natural Gas Corp (ONGC) the country's largest explorer, and Indian Oil Corp are about to see their acquisition budget expand up to 500% over the current level. Continue reading
Do Tragedies Underscore Need For Alternative Energy?
The recent tragedies that have struck the energy sector obviously result in lost production and profits from a corporate standpoint. Massey Energy has said it will be able to replace some, but not all of the lost production at the Upper Big Branch Mine in West Virginia. From an investor's perspective, that is not good news at a time when metallurgical coal prices are soaring. Analysts have already said the door is open for Massey (MEE) rivals to take market share. Continue reading
Deep Wells Equal Deep Profits
Deepwater wells cost a fortune to drill and produce but they can return a fortune in profits. Companies that are willing to roll the dice can be rewarded with big production or in the case of BP a monster loss. Continue reading
USCG To BP, Just Kidding About the Leak
On Friday the U.S. Coast Guard told BP that there was no oil leaking from the wellhead on the Gulf floor. On Sunday they retracted that statement saying there was two leaks totaling 1,100 bpd of oil. Continue reading
Deepwater Horizon, Down But Maybe Not Out
The Transocean Deepwater Horizon may have sunk but that may not be the end of the story. The rig sank because of the volume of water showered on it by the flotilla of fireboats. The comments from Transocean are calling it "submerged" instead of sunk. Continue reading
Peak Oil Breaking Out All Over
In recent weeks there has been an explosion of articles, groups, government agencies and energy companies all going public with their peak oil concerns. Maybe, finally, the real peak oil story is about to go mainstream. Continue reading
The U.S.: The Wildcard In Oil's Ascent
Oil prices have encountered some headwinds since moving above $87 a barrel on April 6. That is not altogether surprising given that crude futures have turned in what can only considered a stellar performance (if you happen to be an oil bull) since early February when crude traded below $70 a barrel. So it can be argued that perhaps a little breather was to be expected. Of course, the Goldman Sachs/SEC imbroglio represented an interesting wildcard for oil prices to contend with. Continue reading
Open Interest In Puts Rising
Worries that crude oil prices may decline are causing the number of put contracts to rise as speculators place bets and owners hedge their longs. Continue reading
Goldman, China, Consumer Sentiment
The combination of the SEC suit against commodity giant Goldman Sachs, the worry of China putting breaks on its 11.9% growth and a sharp drop in U.S. consumer sentiment combined to push oil and gasoline prices below recent support. Continue reading
Saudi Increasing Eating Their Own Oil
The IEA said this week that the increase in oil consumption by Saudi Arabia would account for a whopping 11.7% of global demand growth. That puts them in second place behind China with a projected 26% of the total new demand. Continue reading
Oil to Set New High
The National Australia Bank claims the price of oil will hit $88 within a week according to their technical analysis. Continue reading
China Vs. India: The Next Heavyweight Fight For Oil
If you actively follow the oil market, there are a couple of themes that probably have become pretty obvious to you lately. First, when the weekly oil inventory data is reported for the U.S., regardless of what agency delivers said data, inventories have been steadily rising. The obvious reaction to that news is that demand for oil in the U.S. is waning. That scenario is also playing out in select markets in Europe. Continue reading
Triple Digit Recovery Killer
Oil prices have returned to the mid $80s and several high profile companies are now predicting $100 to $110 soon. If oil prices do continue higher those triple digit numbers will prove to be a recovery killer. Continue reading
Oil Rose Too Fast While Demand Dropped
Crude prices rose to $87 last week after the U.S. jobs report showed a gain in March. However, demand is not matching the jobs gain. Crude oil inventories rose to a 52-week high and the four-week moving average of crude oil demand fell for the third consecutive week to just over 19 million barrels per day. Continue reading
Time To Short Tankers
The first quarter produced some of the highest tanker rates in over a year but that is all about to change. Shipping costs in Q2 could fall to $28,758 per day for a VLCC compares to $49,908 in Q1 according to a recent Bloomberg survey. Continue reading
Amazing New Revelation by Dept of Defense
News broke today about a new report out by the DoD which is sharply critical of expected global production. I am shocked and amazed that these tidbits of new information are starting to be released from our own government. Continue reading
High Oil Prices Bound To Crash Airlines' Party
Crude oil for May delivery gained just 22 cents today to close at $86.84 a barrel on the New York Mercantile Exchange, perhaps a tame gain by recent standards, but with oil pushing $87 a barrel, $90 is logically right around the corner. The significance of $90 oil is not just the cost of $90, it is the specter of oil making its way back to $100. Triple-digits are good for basketball scores and for birthday checks from your grandmother, but seeing triple-digit oil is like a triple-digit golf score: Bad news. Continue reading
Startling Admission From EIA
The EIA normally walks hand in hand with the IEA in predicting an abundance of crude for years to come. The recent scandal with the IEA suggested they were under pressure to use optimistic EIA and USGS data in the preparation of their annual reports. With the recent appearance on the Internet of a presentation by Glen Sweetnam of the EIA made in 2009 the partnership may be over. Continue reading
CERA Cuts Iraq Production Targets
IHS CERA, not normally a group that finds many friends in the peak oil community, said Iraq's bid to boost production to 12 million barrels per day over the next seven years was fraught with challenges. CERA said getting to only half that number would be an achievement Continue reading
Shale Gas Decline Much Faster than Prior Estimates
Arthur Berman presented a paper at the ASPO conference last October on the rapid decline of shale gas wells compared to the estimates of the operators. I thought the content, methodology and conclusions were excellent. Mr. Berman has ruffled a few feathers in his research because it calls into question the reasoning behind the valuations in SEC filings by public companies like Chesapeake. Continue reading
China Remains The 800-Pound Gorilla In The Oil Room
If you are an avid reader of this newsletter and if you monitor the various weekly oil inventory reports from the alphabet soup agencies in Washington, you are probably well aware that U.S. demand for crude oil has been tepid at best over the past year or more. Such is the case in much of the developed world as well, yet oil prices remain at levels that can easily be considered ''high.'' Yes, we are a long way from the go-go days of summer 2008 when oil flirted with $150 a barrel, but we are also a far cry from the $32 per barrel traded at in December 2008. Continue reading
Obama Administration Warns of Oil Shortages Ahead
I had to read it twice because I could not believe that any official in a U.S. administration would actually admit the possibility of peak oil. According to Glen Sweetman, a Dept or Energy director, "a chance exists that we may experience a decline" in liquid fuels between 2011-2015. Continue reading
Conoco Goes On A Diet
Some of the best news I have heard in year was the restructuring plans for Conoco. I have wanted to own them but the 20% stake in Russia's Lukoil was always a deal breaker. Russia has a habit of taking what it wants once they international company has nothing left to contribute. Continue reading
Scattered Thoughts
A massive jump in U.S. crude oil inventories of 7.5 million barrels on Wednesday failed to dent the price of oil even though the dollar spiked up to a new ten-month high. There is some seriously bullish support under this market! Continue reading
High Oil Prices: Are They Really All That Bad?
Most of us are programmed to believe that high oil prices are a bad thing, particularly if we live in places without adequate public transportation systems. We feel the ''pain at the pump'' and have to deal with higher airline ticket prices and assorted other problems that arise on the back of soaring crude prices. So, at least in theory, it is reasonable to assume that most folks view high oil prices in a negative light. Fair enough, but that does not mean high oil prices are all they are cracked up to be. Continue reading
Petrobras Ups CapEx Spending Targets
Petrobras announced its earnings on Friday after the close and along with those earnings they said they were boosting their spending over the next five years to $200-$220 billion compared to the current $174 billion pace. Continue reading
Bank Targets $88 for Crude
An analyst at the National Australia Bank said he was targeting $88 if crude prices could break the resistance ceiling at $83. Crude prices closed on Wednesday at $82.93 and just 25-cents below the 14-month settlement high reached in January. Continue reading
Iranians Prepare to Duck and Cover
If you live in Iran and have access to the international news you are probably looking for a remote section of countryside in which to hide. It was discovered this week that the U.S. is shipping nearly 400 highly specialized bunker buster bombs to its staging base in Diego Garcia. You can bet they are eventually headed to Iran. Continue reading
Coal Still Has King-Like Ways
If an investor were to tune into certain shows on financial media networks at the right time, or wrong time depending on your perspective, the conclusion might be drawn that coal is dying a slow and painful death. Coal, perhaps even more so than crude oil, is the favorite whipping boy of the anti-fossil fuels establishment. It is allegedly dirty, expensive and even perilous to mine. Those are the battle cries of the anti-coal crowd, but the argument requires closer examination. Continue reading
Iraq Oil - Boast, Bluff or Bull
The background topic at the OPEC meeting this week is probably going to be Iraq. After signing deals with dozens of oil companies to overhaul their existing fields and explore new ones this is going to be a serious problem for OPEC if they can actually pull it off. Continue reading
IEA Raises Demand Estimates on Developing Countries
The IEA said demand for fuel in Asia was increasing at an "astonishing" rate. Oil demand in China spiked 28% in January according to the IEA. This prompted the organization to raise demand estimates for developing countries even though demand in developed countries remained flat. Continue reading
BP = Buying Production
If the BP purchase of Devon's global assets goes through BP could increase its daily production by 2015. There are still some bidders in the race but it appears BP is leading the pack to buy the Devon assets. As the race to bulk up ahead of Peak Oil accelerates we are going to see many more deals like this. Continue reading
EIA Raises Outlook for OPEC by 30,000 bpd
That is a drop in the proverbial bucket but still another monthly increase for the EIA. The government agency said production from OPEC nations is expected to average 29.5 million barrels per day in 2010. That is 30,000 higher than the estimate in February. Meanwhile the IEA chief is sounding the alarm. Continue reading
California Follows Florida's Oil Folly
Last week in this space, Florida's reluctance to allow offshore oil drilling was discussed and the point was made that although Florida's coastline is not likely to turn into the next Gulf of Mexico or Prudhoe Bay, any oil extracted from Florida's waters puts the U.S. in a better position than it would be without that oil. After all, it is domestically produced oil that means revenue for Florida and Uncle Sam, new jobs and less money flowing out the door to pay for imported crude. Only time will tell what will become of drilling proposals in Florida, but it is likely that they will fail and that is too bad. Continue reading
Tanker Market Expected to Rebound
The oil tanker business was a black hole for profits in 2009 as weak demand pushed rental rates below costs in some cases. Morten Amtzen, CEO of Overseas Shipholding Group, said he was celebrating that 2009 was over saying it was the most challenging in the last 30 years. Continue reading
Oil Hits $82.41 on Expectations for Stronger Demand
Crude prices rallied on Monday morning to $82.41 as the expectations rally continued. In theory a better than expected jobs report that showed less jobs lost than analysts had predicted, means crude demand is about to increase sharply. I think that is a stretch of the imagination but evidently there are plenty of vivid imaginations at work. Continue reading
Oil Prices Rebound on Terror Warning
Crude oil prices rebounded from a intraday drop after the Singapore Navy warned of threats against oil tankers in Malacca Strait. Continue reading
Iran Winning Friends Around the World
Secretary of State Hillary Clinton was met by Brazilian President Lula Da Silva and before the topic could even be discussed the president said we will "not push Iran into a corner." The president rebuffed a U.S. appeal for new sanctions saying, "we will not bow down" to gathering international pressure. Continue reading
Attitude Toward Florida Drilling Is Music To OPEC's Ears
For those readers that do no live in the state of Florida, you may not be aware of the fact that members of Florida's state legislature have filed a bill to allow drilling within three miles of Florida's coastline. This has long-been a thorny issue for the Sunshine State and when Republicans held majorities in both houses of the U.S. congress, they tried to pass legislation that would allow drilling in what is known as the Outer Continental Shelf (OCS). Continue reading
No Increase in Oil Drilling for Saudi Arabia
On Monday Saudi Aramco said it would not increase oil drilling in 2010 but would keep active rigs level at 100. Aramco just completed a five-year expansion to boost capacity to 12 million barrels per day just as the financial crisis killed demand Continue reading
IEA, IRAN and OPEC
The IEA's head, Nobou Tanaka, told a gathering in Tokyo that there is more risk of a decline in oil demand than a recovery. The IEA recently revised growth estimates for 2010 to 1.6 mbpd. The rebound follows two years of declines caused by the worst recession since the 1930s. However, Tanaka said price spikes as demand increases could cause volatility and again decrease demand. Continue reading
China's Oil Demand Rising
It should be no surprise to anyone that oil demand is rising in China but the speed of the increase is faster than previously thought. China is expanding their crude oil purchases to include Libya and Angola. Continue reading
Heavyweights Add Their Names to Rising Oil Prices
Bank of America and Barclays Capital have told clients to brace for crude prices above $100 a barrel by next year and even higher prices over the rest of the decade. It seems everyone is jumping on the rising oil bandwagon long before the actual fundamentals reach that price point. Continue reading
Oil Prices Decline Slightly Ahead of Inventory Report
Analysts had predicted an increase of two million barrels of oil over the last week but the API numbers out late Tuesday claim that inventories actually dropped by 3.1 million barrels. This makes Wednesday's EIA report another test of number correlation. Continue reading
Crude Rally Over?
Worries that the dollar may continue to grow stronger may have capped the rally in crude prices at $80. With the problems with the Euro ongoing and the British pound setting at nine-month lows the dollar seems like a safe haven even with the U.S. selling mountains of debt every two weeks. Continue reading
January Demand Crashed
The U.S. demand for crude oil fell -3.8% in January and refined products fell even worse. However there are signs that the economy may be finding some traction. Continue reading
Simple Math Says Washington Cannot Live In Denial Any Longer
For years, the American public has been inundated with anecdotes and factoids about the perils associated with continued purchases of foreign oil. While many of the statistics are eye-popping and downright alarming, most of the general populace seems conditioned to believe there is simply no alternative to buying foreign oil and if there is an alternative it comes in the form of wind, solar and other green energy initiatives. At least that is what many politicians would have us believe. Continue reading
Traders Holding Their Breath
Traders who are still long crude after the strong rebound earlier this week are holding their breath overnight ahead of the EIA inventory report due out on Thursday at 11:AM. The API report on Wednesday gave us clues that the EIA report could show sizeable gains. Continue reading
Oil Demand is Quietly Growing
If you watch all the headlines crossing the wires it would appear that oil demand is still dropping due to recession hangover. Refineries are shutting down or being mothballed and inventories continue to rise. It looks on the surface like an impossible set of circumstances where populations grow but demand does not. Continue reading
Pressure Building on Iran
Secretary of State, Hillary Clinton, made several stops in the Persian Gulf region over the weekend to try and shore up a coalition of support against Iran. She said Iran was becoming a military dictatorship and the clerical and political groups were losing control. She claimed the parliament was being supplanted and the Revolutionary Guard was taking over control. Continue reading
Low Oil Prices Could Control Iran
Iran is hurting under existing sanctions and under the lower prices on crude compared to 2008. Most people don't realize that President Reagan conspired with Saudi Arabia to bankrupt the former Soviet Union by flooding the market with excess oil and driving prices down. Continue reading
Blue Pill or Red Pill
In the movie Matrix, Neo is given a choice of two pills each of which will control his future in a different way. One was easy and one was hard. We have that same choice today. We can take the broad path and continue with business as usual or we can take the narrow path and endure the hardships of being ridiculed and maligned but confident in the knowledge of the coming future. Continue reading
Mikey Likes It !
Remember the Life cereal commercial where the brothers gave their bowl to Mikey to see if he would east it? Mikey dove right in and prompted the famous saying, "Mikey likes it and its good for him too!" We found out today that Mikey or in this case China likes ETFs and they are good for them too! Continue reading
Iran Preparing for Trouble
Iran has three supertankers idling in the Persian Gulf, two more on the way and several others in a holding pattern elsewhere on the globe. Are they preparing for a problem or just positioning for the slow season in demand? Continue reading
Is the Global Economy Really Recovering?
That question seems to be appearing more often as we move farther into 2010. The Q4 earnings cycle produced higher earnings but most were due to further cost cutting and not an increase in sales. Analysts are starting to question the V bottom recovery scenario. Continue reading
Massive Debt is a National Security Threat
We are watching the Greek debt crisis play out in the press from half way around the globe and most view it as a European problem. That may be today but rising debt all around the world, much of it a product from massive stimulus, is a serious national security problem. Continue reading
Oil Inventories Unexpectedly Rise
Despite multiple events that prevented some oil imports from reaching refineries last week the EIA and API both reported rises in crude inventories. Rising inventories and low demand should mean an end to the rally in crude prices. Continue reading
Exxon Pouring Money Into Risky Wells
You would not think of Exxon as a wildcat oil explorer. However, as their recent capital spending summary shows, Exxon has been spending billions in places that you would not expect to find a staid old oil company. Continue reading
Random Thoughts
There is so much news today and so many topics that need discussing. Nothing earth shaking but quite a few items enquiring minds will find interesting. Continue reading
Oil Demand Peaked in Developed Countries?
The IEA now claims that developed countries have peaked in their usage of oil. Higher prices, concerns over the environment and the recession have stifled demand and much of it will never return. Continue reading
20 Kilometers Per Day
India is currently on a massive road building campaign to build 30,000 kilometers of roads in a five year period. That equates to completing 20 kilometers per day. Continue reading
Fog Clouds Inventory Issue
The inventory dip due to fog that shutdown the Houston ship channel was not supposed to hit until next week's numbers but according to analysts that is why imports dropped so sharply in this week's report. Do they know for sure or were they just guessing? Continue reading
Venezuela Part Two
Venezuela signed a deal with Eni (E) to invest more than $18 billion in developing the country's Orinoco region. Because the Orinoco oil is similar to Canadian oil sands Eni will build a refinery in the region to upgrade the oil and export it as refined products. Is Eni management living under a rock and not aware of the dozens of suits for confiscation of property currently pending against Venezuela? Could be they are planning head. Continue reading
Inventory Roulette
The next two weeks of inventory reports are going to be a mess that could favor higher prices. The Houston ship channel was closed for part of last week due to fog and this week there was a collision in Port Arthur that has kept the channel closed since Saturday. Continue reading
Venezuela Circling the Drain
The socialist experiment being performed by Hugo Chavez in Venezuela is about to end. His nationalism of nearly every major private enterprise along with kicking all his past oil partners out of the country has sealed his fate and his grand experiment in copying Fidel Castro's Cuba is gaining speed as it heads for the drain. Continue reading
Inventories, Refining and Downgrades
It was not a fun day in the market and definitely not a fun day in the energy sector. When investors decide the market is under attack they move to the sidelines in a hurry. Sectors that have posted nice gains recently are the first to be dumped. Continue reading
Futures Expire With A Whimper Despite Equity Market Decline
Crude futures for February expired quietly at the close of trading on Wednesday after trading in more than a $2 range over the prior 24 hours. The February contract traded from a low of $76.76 to a high of $79.15 and back to settle at $77.62 on Wednesday. Continue reading
Sign Of the Times, South Korea Buying Oil Companies
This should be as clear as the back of your hand. Countries are on the prowl to buy up independent oil companies in order to add to reserve and protect future flows of oil when peak oil arrives. Continue reading
Key to Davy Jones Locker Found
McMoran Exploration found the combination to unlock Davy Jones locker and release billions of feet of natural gas. We may not need it today but eventually we will be happy about the discovery. Continue reading
Kiss Iran Security Premium Goodbye
The five permanent members of the U.N. Security Council plus Germany met on Saturday to discuss new sanctions on Iran. The meeting did not go as the U.S. hoped and it looks like new sanctions could be months away if at all. This should remove any worry over Iran doing something stupid in the near future and the threat of oil disruption from the Persian Gulf has dropped significantly. Continue reading
Gas Drillers Called Polluters In New York, PA
The Independent Oil and Gas Association of New York has urged Governor Patterson to stand behind his draft of the State Energy Plan, which supports the expansion of gas exploration in the Marcellus Shale. This is in response to multiple efforts to halt the drilling as dangerous and polluting. Continue reading
Showdown In Nigeria
Nigeria was placed on the list of terrorist nations by the White House this week and that did not sit well with the Nigerian government. Why do we care? We care because the U.S. imports one million barrels per day of light crude from Nigeria. Or at least we have in the past. Continue reading
EIA Monthly Oil Forecast and STO
In the monthly update of its global oil forecast the EIA claims oil prices will average $83.50 in 2011. I want some of what they are smoking please. Continue reading
China Fact or Fiction?
There are so many stories coming out of China that it is tough to know which are correct. Even the government economic numbers are very suspicious and many analysts believe they are cooking the books. China's real estate boom looks a lot like Dubai only worse. Almost weekly we get a mind-boggling number from China on some sector that provides a lift to U.S. markets. What if China was a massive smoke and mirrors scam? Continue reading
Oil Stored In Tankers Declines in December
According to shipbroker Simpson, Spence and Young the amount of oil held in floating storage declined by 12 million barrels in December. A total of 122 tankers are holding roughly 86 million barrels of oil products, mostly distillates, were under charter at month end. Continue reading
China May Not Come To Our Rescue
Crude prices fell on speculation that China's central bank may move to slow bank lending to avoid over heating the economy. Tighter monetary policy could limit China's growing demand for crude. Elsewhere warmer weather and comments that there is plenty of oil in storage to meet winter demand caused crude prices to stumble for the first time in nearly two weeks. Continue reading
Everybody Has A Prediction
Jeff Rubin, former CIBC World Markets chief economist, has updated his forecast calling for $90 oil this quarter and $100 by year's end. Rubin has been credited with accurately predicting $100 oil all the way back in 2007. I feel like Rodney Dangerfield. I can?t get any respect. I predicted $150 oil in 2008 back in 2004. Guess that is why Rubin gets the big bucks, he has a better press secretary. Continue reading
Bitter Cold Weather Burning Up Oil, Gas and Coal Supplies
The northern hemisphere is in the grip of a massive wave of cold air that is circling the globe with a havoc causing freeze. Heating oil supplies are falling at local dealers and citrus growers in Florida are fighting a hard freeze. Gas consumption is rising sharply. Continue reading
How To Read OilSlick Stock Recommendations
Now that we have started making play recommendations it is important that readers know what to expect in the nightly newsletter. There are actually two newsletters. One is the news and views from the day's events and the other is the actual recommended plays for the day. Continue reading
Crude Poised For a Fall
The timing could not have been better. Our first stock and option plays on OilSlick.com begin on Monday and the outlook for oil prices suggests a sharp correction. This is the perfect way to start the year. Continue reading
Archives:200920102011201220132014