Daily Commentary From OilSlick.com


OPEC Steady, Crude Rises
OPEC agreed to leave their output target on hold at 30.0 mbpd despite slow demand growth and a weak global economy. The IEA raised their demand estimate to 90.5 mbpd. Prices rose unexpectedly on the news. Continue reading
MMR Finds a Buyer
They did not have to look far since the Chairman and CEO of McMoran was still the Chairman of Freeport McMoran. We have expected an acquisition of MMR for several months but I always thought it would be after the Davy Jones well was completed. Continue reading
USA Produce More Than Saudi Arabia?
The news headlines seem to be filled with predictions for crude prices for 2013. Some are reasonably thought out while others are just plain crazy. Almost daily we hear a repeat of the USA producing more than Saudi Arabia prediction. Continue reading
Volatility Ahead
We can expect some volatility in oil prices next week as the current WTI contract expires on Monday, the equity markets are teetering on the support cliff and there are strong rumors out this weekend that Iran is ready to embrace serious talks about ending its nuclear program. Continue reading
Iranian Revolution Ahead?
The headlines out of Iran today were all about the implosion in their currency and skyrocketing inflation as a result of the sanctions. Reporters theorized we could see a quick regime change similar to that in the Arab Spring other countries in the Middle East. While that is possible it will not impact the price of oil in the near future. Continue reading
U.S. Produces the Most Oil since January 1997
The U.S. produced 6.509 mbpd in the week ended Sept 21st, a gain of +3.7%. If this trend continues for the rest of 2012 it will be the highest level of sufficiency since 1991. Continue reading
Finally A Breakdown in Crude
When crude bubbles burst they do it in style. WTI prices have declined -$8 to trade as low as $91.25 today on a strong bounce in inventories and bullish news from Saudi Arabia. Continue reading
The Ride of Your Life
The Fed announced QE3 in a program that could add $1 trillion to the Fed's balance sheet in 2013 and commodities and equities soared. Thank you Uncle Ben. Continue reading
Interesting Week in the Energy Sector
Israel increases its war of words over Iran. President Obama refuses to meet with Netanyahu. Libyan terrorists attack the U.S. consulate. Anti U.S. violence breaks out in Egypt. Crude inventories rise significantly higher than expected. Continue reading
White House Back on SPR Kick Again
The White House met with a handful of oil experts on Thursday to discuss the merits of another release of oil from the Strategic Petroleum Reserve. The experts recommend "go big" and said the release could potentially be several times larger than the last release. Continue reading
Surprise, Surprise!
The ECB surprised everyone with an actual announcement of a potential bond buying program. I say potential because the program is conditional and it may be 2013 before any funds are actually spent. Continue reading
Isaac Restart, Iran, BPT and Gas Prices
Crude prices rallied $2 on Friday as a result of the drop in the dollar after Bernanke seemed to indicate the Fed would add stimulus when it meets in two weeks. Now that the Labor Day driving is over and demand for fuel will decline the price of oil and gasoline should decline. Continue reading
Isaac Passes With Little Damage
Hurricane Isaac has moved farther inland and has been downgraded to a tropical storm. The damage appears to be limited to trees, flooding, power outages and some normal wave damage to installations around the ocean front. < Continue reading
Natural Gas Outlook
Is it time to buy natural gas companies? Continue reading
IEA Lowers Demand Forecast
The IEA cut demand estimates for 2012 by -250,000 barrels to 89.6 mbpd. They cut 2013 demand estimates from 90.9 mbpd to 90.5 mbpd. Continue reading
Crude Prices Proving Resilient
Brent prices moved over $113 intraday and settled at $112. That is two weeks of gains from $102 without a material bout of profit taking. Continue reading
Crude Demand Rising
Crude demand as referenced by refinery inputs rose to 15.796 mbpd and the highest demand since Sept 22nd 2006. Continue reading
Seven Week High
Crude prices rose to a seven week high on Wednesday as violence escalated in Syria and tensions with Iran increased. Continue reading
Hurricane Decline
Crude oil inventories declined sharply for the second week as the impact from tropical storm Debby is felt in the supply chain. Continue reading
Demand Increased, Imports Decreased
Crude inventories fell last week with the biggest decline in months. Unfortunately it was not because demand is soaring. Continue reading
Clock Ticking On Iran
Iran said exports would decline by up to 30% because they were shifting some additional oil to cover internal refinery requirements because gasoline and diesel demand was growing. They also said long delayed oilfield maintenance would reduce output of oil for sale. Continue reading
Energy Independence
I get a lot of questions from readers about the U.S. becoming energy independent thanks to the boom in shale oil production. Ironically if oil prices were to continue falling the U.S. would become more dependent on imports rather than less dependent. Continue reading
Saudi Demands Higher Production Ceiling
Saudi's Oil Minister Ali al-Naimi, started the fireworks ahead of the OPEC meeting by calling for a higher production quota saying "there was a need for a higher ceiling than currently exists." Continue reading
Cheap Oil is Back
If you call $92 oil cheap then cheap oil has returned. Along with the drop in oil prices has been a decline in gasoline to $3.73 per gallon and a -23 cent drop since early April. Continue reading
OPEC Production Rises to 31.85 Mbpd
Oil production spiked in April to 91.0 mbpd according to the IEA. That is a whopping 3.9 mbpd over the same period in 2011. Production increases in Iraq, Nigeria, Angola, Kuwait, UAE and Libya accounted for 510,000 bpd. Algeria, Iran and Qatar saw production decline -190,000 bpd. Continue reading
Crude at 22 Year Highs
The EIA reported crude inventory levels on Wednesday that rose to 379.5 million barrels and the highest level since 1990. Gasoline prices fell to $3.75 per gallon and the OPIS said that could fall to $3.50 by July 4th. Continue reading
U.S. Gasoline Demand Down 5.6%
The MasterCard Spending Pulse report showed gasoline demand declined the prior week by -5.6% from year ago levels. There is no specific event to blame on the drop other than a cold spell in the north that brought back snow to many states. I believe that is grasping at straws to blame that for all of the shrinking demand. The key to this puzzle will be the gasoline demand over the next four weeks and into the Memorial Day weekend. If demand does not increase significantly then other factors are at work. Continue reading
Iranian Sanctions Can Proceed
The EIA produces a report for President Obama every 60 days on inventories and supplies as part of the pending Iranian oil sanctions on July 1st. That report for March and April showed supplies building. Continue reading
Inventories Topping Out?
The morning EIA inventory report showed one more week of gains as we approach the end of the refinery maintenance season. Over the next couple weeks the trend should reverse and begin a long series of inventory declines as refiners begin ramping up for the summer driving season. Continue reading
Chesapeake, Horizon, Earnings
Chesapeake CEO Aubrey McClendon proved once again how excessive leverage can ruin an investing strategy even when you have a great company behind you. Continue reading
Spanish Oil Demand Dropping?
You would think from the decline in oil prices over Spain's economic worries that they were a big consumer of oil. That is not the case with daily demand of only 1.5 mbpd. Still, concern over Spain and and its impact on Europe is weighing on prices. Continue reading
Headline Wars
I would like to proclaim we have seen the lows for oil but with the three Es of Economy, Earnings and Europe hanging over the market there is no guarantee the lows for the week will be "the" lows for this cycle. The seasonal fundamentals, production fundamentals and the Iranian oil embargo all support higher prices. This is a battle of the headlines and the last headline will always govern prices. Continue reading
Lack of Jobs, No Lack of Demand
The disappointing payroll numbers for March may not be good for the equity markets or the immediate price of oil but the lack of jobs is only a temporary drag on oil demand. Continue reading
Strong Dollar, Weak Oil
It has not been a good week for the energy sector or the market in general. The Fed minutes appeared to show a lot of disagreement among FOMC members on the future course of Fed monetary policy. The chances of QE3 declined significantly in the eyes of traders even though analysts only lowered estimates slightly. Continue reading
Gas Suffocating Energy Stocks
Natural gas prices at ten year lows. Gas production increasing despite a massive rig shift to oil and voluntary curtailment by producers. Falling nat gas prices are weighing heavily on all energy equities even if they have no gas components. When will this end? Continue reading
Seasonal Cycles and Political Ambitions
Political posturing, rising inventories and falling markets pushed oil prices lower on Wednesday but it was all smoke and no fire. Continue reading
Expect Volatility in Oil Prices
The IEA said they expect oil prices to remain volatile because of very tight supplies and the expected decline in Iranian oil sales. Continue reading
Iran Making Us Money Today
Crude futures rocketed higher this afternoon after Iran News claimed a major oil pipeline in Saudi Arabia had been blown up and was on fire. WTI rocketed to more than $110 and Brent crude traded at $128. Continue reading
Crude Prices Rebound Sharply
WTI crude prices traded down to $104.84 intraday, down from $109.95 on Friday. Buyers immediately bought the dip pushing WTI back to $107.09. Is the profit taking over? Continue reading
Prices Rise Despite Inventory Build
No stealth rally in Crude today. WTI rallied to $108.65 before easing back a few cents at the close. Continue reading
Driving To Disaster
Auto sales for December came in at 13.53 million units on an annualized basis. This was slightly less than the 13.6 million rate in November but still a strong close for the year. This was the strongest pace since 2008. Sales for the year were impacted by the Japanese earthquake and the resulting parts shortage. Continue reading
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