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Energy / Oil Prices

  • Readjusting Targets And Preparing For The Next Oil Boom

    Nothing in the past two weeks has changed my outlook on oil and oil stocks in that I believe this 'bust' cycle which started in August of 2014 still has a long way to go.  But various financial factors are beginning to pick at the outskirts of the numbers and begging us to reevaluate some targets as we position ourselves for the next great oil boom. We've isolated several financial factors, having little to do with fundamental oil, that are affecting the current price of oil, especially the dollar which has looked somewhat toppy of late:   This has added to…

  • Former BP Chief Sees Oil Price Rebound Soon

    BP’s former CEO Tony Hayward agrees with OPEC that its strategy of maintaining the oil glut and thereby helping to drive down prices will quickly crush the US shale boom and that oil prices will rally sooner than many people expect. Hayward, one of 42 speakers at the Financial Times’ Global Summit in Lausanne, Switzerland, on April 20-22, said the average global price of a barrel of crude will soon be around $80, up from the current price of about $60, demonstrating that OPEC is “the most successful cartel in history.” The key, Hayward said, was deciding at its meeting…

  • High Debt And Low Oil Prices Create Perfect Storm For Canadian Economy

    TORONTO: For years, the global community praised Canadian financial conservatism and the country’s success in skirting the global financial crisis. Canadian banks were seen as among the world’s finest, appropriately capitalized, and well-run. They still are. Globalization and interdependency, however, are perniciously eating away at the fortress of stability that Canada once was. The country is today one of the world’s most vulnerable large economies, and there are three key reasons for this precarious position: First, Canadian household debt levels are extremely high by almost any measure. Second, housing prices are elevated and continue to rise, driven by both confident…

  • How The Majors Are Playing The Oil Price Slump

    The largest oil and gas companies are employing different strategies to weather the downturn and plan for the future. Each strategy has its risks, and not all may work out. Which companies will emerge stronger after an oil price rebound and which will fall further behind because of bad decisions? There are different ways to play a down cycle. With oil prices half of what they were in 2014, revenues are significantly lower for everyone across the board. As a result, the oil industry has collectively implemented an estimated $114 billion in spending cuts. But oil executives are also trying…

  • Oil Prices Won’t Recover Anytime Soon Says Exxon CEO

    There is mounting evidence that oil prices are poised to rebound from a historic bust. Rig counts hit new lows each week. For the week ending on April 17, Baker Hughes says the U.S. lost an additional 34 oil and gas rigs, bringing the total down to 954. Domestic crude oil production appears to have plateaued and the EIA expects a contraction in May. Nearly every driller is dramatically scaling back spending, which should increasingly cut into new output. And oil consumption is finally picking up, as drivers far and wide take advantage of cheap fuel. But what if the…

  • Oil Price War May Benefit Both US Shale And Saudi Arabia

    Even as financial commentators on CNBC are starting to come around to the idea of a bottom in oil prices, the key question for US oil producers remains one of timing. How long will the oil price slump last? Is this a relatively short term event like 2008, or a longer term slump like the one in the mid 1980’s? After the oil price crash in 1985, it took almost twenty years for prices to revert to previous levels. If oil does not return to $100 a barrel until 2035, there will be a lot less shale companies around. Some…

  • What Happens To US Shale When The Easy Money Runs Out?

    Today we will take a look at both Whiting Petroleum (WLL) and Continental Resources (CLR) as far as their Bakken economics. Overall the numbers will show that, despite claims of low cash costs per MBOE ($16 or so for CLR) and high IRRs on $60 WTI, the facts say otherwise. In addition, the analysis will show how very high depletion rates combined with falling rig counts spells trouble for Bakken production growth despite better efficiencies per well. The analysis will be based on April presentations of both companies from which the graphs below are taken. I should note these economics…

  • Saudi Price War Strategy May Blow Up In Their Face

    This morning markets woke to rising Middle East tensions which cause upward pressure on prices offset by headlines via Reuters “Naimi says Saudi oil production near record high in April”. OPEC output is up 810,000 barrels from the previous month while Saudi Arabia has seen output eclipse 10.4M/D, up from 10.3M/D the previous month, setting a new record. What Reuters fails to report is that demand is also soaring and that is why OPEC is increasing production. After all, the Saudi Oil Minister stated that the uptick was in response to what their customers (mostly in Asia and in particular…

  • Is This Where Investors Should Be Looking When Oil Recovers?

    When oil prices recover—and plenty of analysts think the climb back up will start soon—Canada’s western frontier of Saskatchewan and neighboring Alberta will ‘still have the edge’, according to a report from TD Economics. Depressed oil prices may have skewed the view from Canada’s oil-producing west, but this will be one of the better places to bet on the oil rebound. Saskatchewan remains the last highly accessible onshore North American oil frontier and it is home to part of the prolific Williston Basin. And as the industry gears up for the Williston Basin Petroleum Conference (WBPC) on 28 April, the…

  • OPEC Says US Oil Boom Will End This Year

    OPEC says the demand for oil – its oil – will rise during 2015 because the cartel is winning its price war against US shale producers by driving them out of business. “Higher global refinery runs, driven by increased [summer] seasonal demand, along with the improvement in refinery margins, are likely to increase demand for crude oil over the coming months,” the cartel said in its Monthly Market Report, issued, April 16. OPEC forecasts demand at an average of 29.27 million barrels per day in the first quarter 2015, a rise of 80,000 bpd from its previous prediction made in…