• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 10 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 hour CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 9 hours If hydrogen is the answer, you're asking the wrong question
  • 13 hours How Far Have We Really Gotten With Alternative Energy
  • 2 days Natural gas mobility for heavy duty trucks
  • 2 days Ocean Heat Could Supply Endless Clean Energy
Editorial Dept

Editorial Dept

More Info

Bad Year For Shale Stocks Despite Rebound

Friday August 11, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Disappearing contango

(Click to enlarge)

- The oil futures market has been in contango pretty much since early 2015. A contango – when front-month oil futures trade at a discount to futures further out – suggests a state of oversupply.
- But the contango has narrowed substantially recently, with Brent tipping slightly into a state of backwardation – in which front-month contracts trade at a premium to longer-dated futures.
- The reason this is important is that the futures curve is telling us that the oil market is getting tighter. And the backwardation itself will help accelerate that tightening by taking away the incentive to store oil.
- Backwardation will also make hedging by shale players less attractive since 2018 prices could fall below today’s spot price.
- In summary, the sudden narrowing of the contango, and the possibility of backwardation, is a leading indicator of higher oil prices ahead.

2. Bad year for E&P stocks continues

(Click to enlarge)

- It has been a rough year for energy investors, and the poor performance of U.S. shale companies continues, with a steep…




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News