The Energy Information Administration (EIA) reported that February crude oil production averaged 10.264 million barrels per day (mmbd), up 260,000 b/d from January, setting a new all-time record for the U.S. The large increase reflected a gain from a level that was constrained by weather issues.
The largest increases were recorded in Texas (106,000 b/d), the Gulf of Mexico (89,000 b/d) and New Mexico (46,000 b/d).
The EIA-914 Petroleum Supply Monthly (PSM) figure was 26,000 b/d lower than the weekly data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged over the month, of 10.290 mmbd. EIA’s most recent weekly estimate for the week ending April 20th was 10.586 mmbd. Continue reading "US February Crude Production Shows Big Gain"→
Back in December, I deduced that the Saudis had budgeted a little less than $53 for oil in 2017. Their budget was based on their belief that they didn't expect to see any U.S. shale oil production response in 2017. Saudi Energy Minister Khalid A. Al-Falih said it in answer to a question in the press conference after the OPEC/non-OPEC meeting (see video starting at 51:35). He backed-up his belief basing it on the time lag of when oil prices had peaked in 2014 and when production peaked in 2015.
After the deals went into effect on January 1st, oil prices remained above $50 per barrel. According to the EIA’s weekly production data, U.S. crude production rose by 318,000 b/d between the last week of December and the week ending March 3rd, just before Al-Fahil’s speech in Houston during on March 7th.
He said he is optimistic about the global oil market in the weeks and months ahead, but "I caution that my optimism should not tip investors into 'irrational exuberance' or wishful thinking that OPEC or the Kingdom will underwrite the investments of others at our own expense." Continue reading "What Oil Price Band Do The Saudis Want?"→
General Electric Co. (NYSE:GE) announced a deal to combine its oil-and-gas business with Baker-Hughes, creating one of the world's largest providers of equipment, technology, and services to the oil and gas industry. Worldwide drilling activity had peaked in November 2014, the same month that Saudi Arabia had started the war for market share, which eventually caused oil prices to collapse.
As oil prices plummeted, so did the rig count. Active rigs worldwide fell from 3,670 to 1,405 in May 2016, a 62% drop. In the U.S., rigs fell from 1,930 t0 408, a 79% drop.
The surge in natural gas production has changed the energy landscape in the United States. Production jumped 44% between 2005 and 2014 compared to a decline of 4.5% over the previous nine-year period.
Prices for natural gas at the Henry Hub in Louisiana jumped 162% between 2002 and 2008 on lower production and an economic boom in emerging markets. By 2012, prices had fallen nearly 70% to $2.75 per million BTU. Beyond a few spikes on colder weather, prices have flatlined between $2.50 and $3.50 for the past two and a half years.
Futures prices on the Chicago Mercantile Exchange (CME) suggest traders are not expecting much to change this year, with the December contract priced at $3.17. But two catalysts may prove speculators wrong and spark a rally in natural gas prices. Traders who get positioned now stand to make up to 50% profits without ever touching a futures contract. Continue reading "A Small Bet On Natural Gas Could Make Traders Big Profits"→