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Oil Pops & Drops As Rig Count Decline Reaccelerates But Production Hits Record
Even though production has hit new record highs (and Saudis threatening to increase further), the machines remain transfixed by rig counts and inventories. The total rig count dropped 9 to 859 - declining at a faster rate than the prior week. Oil prices initially popped on the rig count drop but then everyone remembered this is just a sign of how bad the malivestment is given the surging production.
- *U.S. OIL RIG COUNT FALLS 7 TO 635, BAKER HUGHES SAYS
- *U.S. TOTAL RIG COUNT FALLS 9 TO 859 , BAKER HUGHES SAYS
Another week of declines...
But production just keeps rising...
And the result...
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60.50 has a heavy hanging offer... maybe it is Crescat Capital.. they 'nailed it'
http://hedgeaccordingly.com/2015/06/crescat-capital-up-26-in-2014-after-nailing-oil-trade-uso.html
Whenever wti breaks out of this $57-$62 range, there will be a lot of pain for either bears or bulls, however rarely does a "big trade" work twice so the danger might be on the short side this time.
Abiotic oil is floating to the surface at a faster rate than ever.
The problem on the upside is China and the US have already started cutting oil imports. The Brent/WTI gap has almost closed. It was as wide as $15 at one point. That shows the oil glut has flowed from the US to the rest of the world. The global economy is slowing while E&P companies and OPEC keep increasing production. I think Brent crude will eventually fall below WTI by fall and that will be the signal for the real crash. With higher health insurance, utilities, taxes, food, and housing costs, people simply don't have money for $4 gasoline. Something will have to break. Obamacare and taxes are law. People have to eat before anything else. They also need a place to live and water and electricity. Nobody will give up their mobile phones and internet. The first thing they will cut is vacations and travel. Then there will be more carpooling, teleworking, and mass transit. With less money to buy crap, there will be less driving to the malls and stores and less shipping of crap. The global economy cools off. The idiot central bankers print more. It does nothing to help the consumers as they don't have money. My bet is demand for oil will collapse.
You nailed it but there is one guy on this site will ask you if Cushing is full yet. He thinks it is the tell tale of oil. Poor guy, I pity him when it backfires.
That dude is hilarious. Always says is Cushing full yet? Is oil at $20 yet? LOL. He kills me with that. However I do miss the Tyler chart porn of the inventory numbers.
You know of him too.haha. I tired telling him guys in the know who read ZH laugh at his comment everytime.
maybe someday "rig count" will actually mean something and have some significance......
until that day..... :-)
The game is rigged?
There is a huge backlog of already drilled yet untapped wells that needs to be exhausted before the rig count decline will matter.
Its coming, just not today.
Bakken data release day:
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
December 2014 v December 2013 up about 34%
April 2015 (most current) v April 2014 up about 18%.
Production will fall; give it time.