• 4 minutes Why Trump will win the wall fight
  • 9 minutes Climate Change: A Summer of Storms and Smog Is Coming
  • 12 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 16 minutes Washington Eyes Crackdown On OPEC
  • 9 hours is climate change a hoax? $2 Trillion/year worth of programs intended to be handed out by politicians and bureaucrats?
  • 47 mins Ayn Rand Was Right
  • 28 mins Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 7 hours Sanctions or Support: Despite Sanctions, Iran's Oil Exports Rise In Early 2019
  • 1 hour Solar and Wind Will Not "Save" the Climate
  • 15 mins Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 19 hours Some Good News on Climate Change Maybe
  • 19 hours Expected Breakdown: Israel-Central Europe Summit Canceled After Polish Pullout
  • 11 hours Regular Gas dropped to $2.21 per gallon today
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

The Break-Even Myth Is Suffocating Oil Stocks

Oil

Oil prices, as I have said for the last few columns, seem range-bound. But rarely do they remain range-bound for long. As oil’s pessimism begins to gain steam, oil stocks look less and less like an exciting investment, at least for the next few months of the summer.

Last week we were able to predict and use a rally in oil prices that came from a very large financial short covering move from speculative hedge fund and energy traders. That was busted briefly on Wednesday as the markets, back from the July 4th holiday, decided to take advantage of the rally to re-initiate short positions. And while that move has also been punished on Thursday by the unexpected 6 million barrel drop in stockpiles, that return above $46 has not managed to pull oil stocks strongly along.

We’ve been quick to note why, in several previous columns: I don’t care what oil executives say, including this frankly hilarious graphic that supposedly outlines ‘break-even’ costs in the Permian and other shale plays:

(Click to enlarge)

The idea that U.S. shale producers make money at less than $40, and that more than 6 respondents are claiming break-evens in Midland BELOW $24 is beyond laughable. If that were true, Lord knows we would have seen far better 1st and 2nd quarter results from these Permian producers, and far higher stock prices.

For while the oil price in 2017 has been range-bound, the stock prices for U.S. shale have hardly been…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin



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