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Can We Expect Another Oil Price Dip Soon?

Oil

Friday August 25, 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. Frac sand use declining

(Click to enlarge)

- The spike in drilling activity this year compared to last has caused the price of frac sand to sky rocket. Prices are expected to rise 62 percent this year to $47 per ton, according to IHS Markit, cited by Reuters.

- As a result, shale drillers are cutting back on the use of sand in order to restrain cost inflation. Sand use represents about 12 percent of the cost of drilling, according to Reuters.

- But as drillers become more efficient with their sand use, it could spell trouble for sand producers at a time when new mines are coming online.

- The share prices of Hi-Crush Partners LP (NYSE: HCLP) and U.S. Silica Holdings (NYSE: SLCA), two top sand suppliers, have plunged this year.

2. Investors’ optimism on oil flat lines

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- Bets on rising WTI prices stagnated in the most recent data release, a sign that the uptick in bullishness surrounding oil prices since June has reached a temporary ceiling.

- That has corresponded with flat, and at times, flagging oil prices. WTI briefly hit $50 per barrel in late July, but has since fallen…

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