• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 7 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 11 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 14 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 4 hours Trump needs to educate US companies and citizens on Chinese Communist Party and People's Liberation Army. This is real ECONOMIC WARFARE. To understand Chinese warfare read General Sun Tzu's "Art of War" . . . written 500 B.C.
  • 5 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 1 hour Level-Headed Analysis of the Future of U.S. Shale Oil Industry
  • 3 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 7 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 9 hours Asia Oil Refiners Mull Run Cuts With Margins At 16 yrs. Low For Season
  • 9 hours IMO2020 To scrub or not to scrub
  • 9 hours IMO 2020 could create fierce competition for scarce water resources
  • 8 hours Trump bogged down in Mideast quagmire. US spent $Trillions, lost Thousands of lives, and lost goodwill. FOR WHAT? US interests ? WHAT INTEREST ? . . . . China greatest threat next 50 years.
  • 2 hours Apple Boycott in China
  • 4 hours Prosecutors Fine Bosch 90 Million Euros For Emissions Cheating Role
  • 8 hours Misunderstanding between USA and Iran the cause of current stand off, I call BS
  • 8 hours Why is Strait of Hormuz the World's Most Important Oil Artery
Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

More Info

How Cool Heads Can Prevail In This Panic

The oil market’s in freefall, the stock market is in freefall.  You’re taking losses, big losses, in stocks that you bought – not at the top of the market where valuations were high – but at areas you thought were terrific long-term propositions.  What do you do now?

I am precisely where you are right now, because I am an oil trader, first and foremost.  And I can’t tell you what is going to be right for you, I can only tell you what is right for me.  And for right now, I’m standing pat and even committing a little more capital into these markets here.  And I’m going to tell you why.

Panic.  It is clearly what has inspired the last several big drops in both the oil market and with stocks.  I saw Professor Schiller of Yale University on CNBC comparing this selloff with 2008 and 2000.  Really?  Are P/E ratios in the 40’s?  Is there a structural credit market problem about to explode?  If there is, I’ve missed it.  Nothing fundamental has changed, instead, there are only rumors and speculation about what is the new reality on oil.    Let’s look at some of them.

One is the perception that OPEC is coming apart and the Saudis are engaged in a war for market share with the rest of the Cartel and the shale producers here in the US.  A letter from Saudi prince Al Waleed has warned of the dangers of $80 oil and squelched the idea that this is a new Saudi policy.  What I believe has happened is that the Saudis have worked to retain market share first before even considering unilateral or Cartel-wide ceiling cuts. They’ve learned that jumping the gun on production adjustments doesn’t help them or the markets.  See the useless increases in 2005 and 2010 as proof of that.  The OPEC meeting in late November will certainly be interesting.  

But $80 oil is not sustainable. Harold Hamm, CEO of Continental Resources (CLR), was interviewed on Bloomberg TV saying that $75 oil would require ‘adjustments’.  You bet it would.  Even with the strong capital position of Continental, capex for 2015 would need to be slashed – and there are multiple players in the Bakken with far less strong positions than Harold Hamm.  Weak players ultimately drop production, ending the glut that seems to be so worrying the market today (although there’s been a structural…




Oilprice - The No. 1 Source for Oil & Energy News