Gas off nearly 10%.

Matt - I'm not seeing them crater in this article. It reads to me like OPEC is determined to see US shale production diminished. And they are willing to see prices drop to even $20 to attain their goal.

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Suppliers from outside (read US shale producers) the Organization of Petroleum Exporting Countries should cut "irresponsible" output, U.A.E. Energy Minister Suhail Al Mazrouei said in Abu Dhabi yesterday. Even if non-OPEC producers were to offer cuts, OPEC probably wouldn't follow suit, Saudi Oil Minister Ali Al-Naimi said

The highest U.S. crude output in at least three decades is contributing to a glut that Qatar estimates at 2 million barrels a day. Saudi Arabia is confident prices will rebound as economic growth boosts demand and "inefficient producers" trim output, Al-Naimi said.

"Irresponsible production from outside OPEC is behind the fall in prices," Mazrouei said. "We call on all other producers to stop the increase."
OPEC doesn't intend to cut its output "whatever the price is," Al-Naimi said in an interview with the Middle East Economic Survey. "Whether it goes down to $20/b, $40/b, $50/b, $60/b, it is irrelevant." Saudi Arabia has 265 billion barrels of oil reserves, and will increase refining capacity to 3.3 million barrels a day by 2017 from 2.1 million barrels in 2014, Al-Naimi said.

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"inefficient producers" is their term for US oil because we need higher prices to get our oil then they need to get their oil out of the ground. OPEC is determined to have low oil prices until US oil production stops increasing. So I expect low oil prices until US production stablizes or even declines. This will probably take a year and there won't be and rapid increase in price either. OPEC wants to make sure the US drilling activity declines a lot. They don't want new oil coming to the market when they have a 100 years of oil ready to sell. WTI traded between $80-110 since 2011. My guess is it trades between $40-70 for at least a year, quite likely 2 years. And I think $40 is more likely than $70.

I think their $20 figure is postering. They don't need it that low to get production in line with what they want to see. But I'm not sure $60 is low enough to get the production cuts they are determined to make happen.

CEO of Saudi aramco is an Aggie, wish he would take a stand against opec.

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CEO of Saudi aramco is an Aggie, wish he would take a stand against opec.

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That would be taking a stand against Saudi. I think he probably likes his job so I doubt that happens.

These charts show what OPEC's problem is - they don't need the US having a dramatic resurgence in oil production. OPEC has plenty of oil that they need to sell, so they don't need to give up marketshare to Americansand watch their oil sit in the ground. So I see the price dropping to a point that dramatically curtails shale drilling to the point that the upward trend line starts going down and continues down until supply equals demand.

I'm reading that a lot of shale projects can be profitable at $40-60, so my guess is prices stay in this range until supply drops. And right now supply continues to rise. I read where IEA projects US supply to rise an additional 300,000 to 1 million barrels a day in 2015. The world currently is producing an excess of 2 million barrels per day. So it looks to me like prices are headed lower!

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CEO of Saudi aramco is an Aggie, wish he would take a stand against opec.

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That would be taking a stand against Saudi. I think he probably likes his job so I doubt that happens.

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I know.

Oil stocks up about 10% from lows and oil still near lows. What bottoms first the stocks or the commodity?

Dan - the commodity. It takes 6 months to a year for the lower oil price to show up on the P&L statement. The rise you saw in oil stocks is 1)buyers trying to catch falling knives and 2) general reaction in all stocks to the fed announcement last week to keep rates low.

Rather ironic that OPEC was modeled after the original Texas RRC system - looks like things have come full circle...

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CEO of Saudi aramco is an Aggie, wish he would take a stand against opec.

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That would be taking a stand against Saudi. I think he probably likes his LIFE so I doubt that happens.

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FIFY

Frost Bank, Prosperity Bank, Texas Capital Bank some local bank stocks that have been hit last 3 months.

There is one out of Laredo. I'll have to look it up. It's almost all energy. I know there are still some Houston banks looking to go public in 2015. It'll be an interesting year.

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Quote:CEO of Saudi aramco is an Aggie, wish he would take a stand against opec.

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That would be taking a stand against Saudi. I think he probably likes his job so I doubt that happens.

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Aramco effectively IS OPEC.

Brent just dipped under $60...

Long term (2 yrs), what do you think impact of crude price is on nat gas?

Well, I picked a great time to get a job at an oil company.

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Well, I picked a great time to get a job at an oil company.

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Me too..

If you're scared get a dog. Why is it we are willing to pay a premium for everything that's American made but oil? We are producing 9 million bbls a day and using 24.

Lets pay $75 a bbl for our own and buy the rest from whoever's cheapest.

Seems like a nice happy medium that will keep this whole state working.

Worldwide market implies we can export our oil. Which we can't.

Most company's that are still drilling have their oil sold at $80 a bbl.

Such an easy solution to keep millions of people working.

But you're right it's impossible.

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If you're scared get a dog. Why is it we are willing to pay a premium for everything that's American made but oil? We are producing 9 million bbls a day and using 24.

Lets pay $75 a bbl for our own and buy the rest from whoever's cheapest.

Seems like a nice happy medium that will keep this whole state working.

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Bwahahahaha. BS, nobody in the US is willing to pay a premium for anything "Made in the USA", or at least not a significant enough number. Trust me, I have spent 23 years in the Textile and Apparel industries and watched them wither away to nothing so folks could pay $0.60 less on a pair of jeans. The American consumer wants the cheapest, the fastest and if that means getting it on Mars, by God build the rocket ship.

Now I completely agree with your premise, but it will not happen in the US, at least that is my experienced opinion. Over 800,000 former Textile and Apparel workers would back that up.

"Made in America" (by foreign workers).


Feel better? The whole "Made in America" push is a joke.

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People say they want "made in America", but in reality it's all BS and they aren't willing to pay for it (in aggregate, there are a handful of people who are).

It's the same ridiculous argument in the illegal immigration debate. People who are so opposed to illegals would throw a fit if they realized they would have to pay 10% more to buy their homes if all construction workers had to be legit. Things like "made in America" are a nice bumper sticker slogan but it's all talk.

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"Made in America" (by foreign workers).


Feel better? The whole "Made in America" push is a joke.

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Agree and absolutely right. I have seen different varieties and episodes of the resurgence of "made in America" stuff several times in my career, it seems to pop up every few years and then it will wither away. As mentioned, the majority of American consumers want the cheapest thing the fastest they can get it.

What?

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Please don't derail this fantastic thread with politics. Thanks and merry Christmas.

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This X ELEVENTY BILLION

Agree, I have been coming to this thread to follow a bad situation at the ground level and have learned a lot. Very good information posted here. Thanks to all the contributors.

On the rumor front....HK is looking for suitors, but no one is knocking on their door. The quarter results supposedly are beyond bleak. Doubling down at 8% over and over looks to have finally caught them.

The thread has already morphed into a largely investor type discussion ( NOT A COMPLAINT ..this is a business and INVESTING board) based on the oil price collapse. It was not meant to be an investor discussion but one oriented around the effect of the collapse on folks working in the industry and how it will affect the region. I largely quit reading it since Im not interested in how guys are going to make money off of many of us losing our jobs.
I'll give it a few weeks and perhaps start a new one as more and more layoffs and shut downs are announced.

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Oil is a fungible commodity. It goes into a worldwide "pool" and th eprice is set by that unbreakable law of supply and demand. EVERY attempt to interfere ( see the idiot Jimmy Cater's destruction of the domestic gasoline supply) causes supply interruptions and higher prices. Just leave the market alone and all will be OK.

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U.S. oil does not go into to the worldwide "pool". There is an export ban that means U.S. crude can only be sold to U.S. refiners. The refined products can be sold into your worldwide "pool", but the crude can not. Due to the increase in domestic sweet oil production, the inability to export this sweet oil, and U.S. refineries being setup for a blend using more sour oil, sour oil is worth more than sweet in the U.S. and WTI is worth less than Brent because it can't be exported to the refiners who would pay more for it. Historically, WTI traded at premium of several percent to Brent. Now we're at ~8% discount. The export ban has legislated U.S. producers selling their oil at ~10% less than if we could sell to the global market. This is good for U.S. refiners and their owners, but no one else. The U.S. consumer doesn't have any advantage because the refiners sell to whoever pays the most in the global msrket.