Bro, we need you to give up hope for a fundamentals-driven market, it'll get us one step closer!

Huge draw last week, debt deal seemingly done and oil is down 3.5% this morning? Anecdotally, the lake was insanely busy this weekend as were the highways and Air Travel surpassed 2019 pre-pandemic numbers.

Nickw8586 said:

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Huge draw last week, debt deal seemingly done and oil is down 3.5% this morning? Anecdotally, the lake was insanely busy this weekend as were the highways and Air Travel surpassed 2019 pre-pandemic numbers.

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Im sitting here wondering the same thing. Dropped another 9 rigs last week too.

Nickw8586 said:

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Huge draw last week, debt deal seemingly done and oil is down 3.5% this morning? Anecdotally, the lake was insanely busy this weekend as were the highways and Air Travel surpassed 2019 pre-pandemic numbers.

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AND they literally streamlined energy project approvals.

OPEC meeting June 4 also. Will be interesting to see what comes from that. Conflicting rumors coming from Saudis and Russia regarding if there will be more production cuts.

Cyp0111 said:

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Going to continue to see more rigs drop in the US. Economics make close to zero sense to continue to deploy discretionary capital into this at current cost structure.

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At some point there has to be a reckoning. Just not right now, it seems.

I'm not sure I follow your post.

Cyp0111 said:

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I'm not sure I follow your post.

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Prices should eventually go up based on increased demand and decreased production. But not right now. I think we're still feeling the effects of market manipulation.

Got it, agree that being short bbls and further cuttings into inventories is going to need to lead the way when paper sentiment is so short for recession fears

You would think the paper guys would know that recession implications for oil are negligible in the medium term.

While the average recession length is something like 18 months (based on economic terms) I don't believe that equates to demand picking back up in that time length.

Seems that could drag on lower for years based on wealth destruction, changed habits, and high inflation / borrow rates.

Hell, that lasted almost 2 decades in the 70's and '80s and the economics professors only shows 2 years worth of recession each of those decades.

if you want to short the economic cycle, you short oil. There is also what appears to be a long tech/short oil trade out there.

Cyp0111 said:

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Got it, agree that being short bbls and further cuttings into inventories is going to need to lead the way when paper sentiment is so short for recession fears

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I've seen speculation that Biden will tap the reserve again in an attempt to keep gas prices from spiking too high for the election.

AgLA06 said:

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BiochemAg97 said:

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Cyp0111 said:

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Got it, agree that being short bbls and further cuttings into inventories is going to need to lead the way when paper sentiment is so short for recession fears

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I've seen speculation that Biden will tap the reserve again in an attempt to keep gas prices from spiking too high for the election.

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I thought they never refilled them from the last time?

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Biden didn't empty it. Just the lowest it has been in decades.

Looks like the lowest since the opening build point in 1983. Sitting at around 51% of max in 2011.

He never stopped.

jagvocate said:

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Biden will keep tapping SPR until he collapses a salt dome

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I'm not sure I buy that (dome collapsing, not Biden).

jagvocate said:

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Biden will keep tapping SPR until he collapses a salt dome

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AgLA06 said:

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While the average recession length is something like 18 months (based on economic terms) I don't believe that equates to demand picking back up in that time length.

Seems that could drag on lower for years based on wealth destruction, changed habits, and high inflation / borrow rates.

Hell, that lasted almost 2 decades in the 70's and '80s and the economics professors only shows 2 years worth of recession each of those decades.

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I still think the US data looks strong. The big difference historically is that the US was by and large the primary driver of crude demand. Today China is a much bigger player on both an absolute and a relative basis, and I get the sense that their economy might be in much worse shape than we realize. And it's not just crude oil, China's demand for all commodities keeps surprising to the downside.

Of course what happens there almost certainly will spill over into a global recession, but the point I'm making is that it is not the American consumer that seems to be failing here. And there's no telling if we see the Japanification of the Chinese economy, on a global basis that would be very bearish for commodities for longer than we'd want to admit.

Oil companies are only reinvesting 30% of cashflows into the drill bit whereas that used to be 80%

Thoughts on what these "promising new technologies" might be?

https://energynow.com/2023/06/exxon-ceo-says-5-year-program-could-double-its-shale-output/?amp

probably some version of EOR

For anyone wanting to know, the SPR can be filled (and is) from royalty oil, not necessarily buying on the market and pumping it down hole.

SPR Crude Oil Acquisition Procedures

~egon

Yes- but that is not something i think they could do effectively as the would have to take bbls in kind.

U.S. Rig Count is down 15 from last week to 696 with oil rigs down 15 to 555, gas rigs unchanged at 137 and miscellaneous rigs unchanged at 4.

Is the current rig count expected to support current production levels? I'm not really sure how you gauge that at all. Know it would be polluted by DUC completions and would take a while to show as the recent drills are being fracked and put online (and then taking a bit to hit declines). Drops over the last 4 weeks have been pretty significant.

It's a combination of rig drop and completions. You will see a bigger duc build on the gas side.

Western closing their Denver office.