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WTI Crude Breaks To $43 Handle After Another Rise In Oil Rig Count (To 3 Month Highs)
Having hovered around the $43/$44 level all morning, new from Baker Hughes that the oil rig count in the US rose 6 to 670 (its highest in over 3 months) has sent it back down to a $43 handle...
- *U.S. OIL RIG COUNT UP 6 TO 670, BAKER HUGHES SAYS
- *U.S. TOTAL RIG COUNT UP 10 TO 884 , BAKER HUGHES SAYS
The rig count has now risen for 5 of the last 6 weeks... with Texas, Louisiana, and Kansas seeing the biggest rises...
Pressing crude back below $44..
Charts: Bloomberg
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Something doesn't smell right ... every 10k I am scanning for these shale operators is a cash flow disaster...obviously.
Why are they persisting in this behavior?
Sweet my f150 King Ranch loves it....keep it coming manpulators
There's a lag between the decision to drill and when they drill/bring the well online. As oil hung out in the ~$60 range the last few months some of them decided they could make money at that price and laid plans to shove some more pipe in the ground.
A lot of leases have a clause requiring you to drill in a certain time span or lose the lease...
That's a fact. I am personally aware of a lease or two with those conditions in it.
All of them have clauses. Nobody will give you mineral lease rights and let you sit on it for 100 years. The signing bonus is nice, but they want their royalties
Sunk costs literally.You may as well pump the oil after those have been spent, instead of writing off
the investment.
like everything else in this "market", there no price discovery...
don't overthink this one...
You might as well ask "Why does a gambler on a losing streak keep playing?' as ask why shale fracking companies keep spending from $60 to $80 to extract each barrel of oil they can only sell for $40. If they shut down their operations, they may never be able to restart the drilling. Then bankruptcy is in the cards. The behaviour of fracking drillers is an example of a Morton's Fork. As you know, a Morton's Fork is a specious piece of reasoning in which contradictory arguments lead to the same (unpleasant) conclusion [wikipedia]. Drill and go bust eventually or don't drill and still go bust eventually.
They're desperately trying to pull in enough cash to service their debt. Otherwise, they cease to exist.
The frackers took on hundreds of billions in debt with oil at $100. Now they have to pay that debt by selling $45 oil to get cash. What other option do they have? They can't work at the titty bar.
If you scanned the rest of the report, you would have noticed that these shale operators INCREASED production from 20-35% over the same period last year. Look at continental Resources report yesterday. They increased production by 34%
Now the shale squad is boosting output to break Saudi...
Saudi needs approx $106 to fund its government social programme. So right now they are burning reserves to pay for this price war.
Something is going to snap.
You assume that if the Saudis cut production, then they would make more money. The fact is, if oil prices head to $70, the frackers will go full steam ahead and take up any slack from OPEC and the Saudis would be in even more trouble
Oil Is a Barbarous Relic
All commodities are. Digits, electrons and paper fiat rule!
Cash flow is more important than operating losses
Uber smart central planers are in full control ... what can go wrong?
Except whole industry collapse :-)
In related news is today the slowest most orderly selloff you have ever seen or what?
We are edging down past the 200DMA on no volume like my feed is in slow motion.
I think you can say that about the last five months...
WTI Crude Breaks To $43 Handle
*U.S. OIL RIG COUNT UP 6 TO 670, BAKER HUGHES SAYS
*U.S. TOTAL RIG COUNT UP 10 TO 884 , BAKER HUGHES SAYS
Is that even 10,000 barrels a day? That does not even add 0.01% to world oil production of 94 million barrels a day. It is the Nobel Prize Winner's war against energy-exporting Russia.
there you go, but that is what you get when you allow market manipulation on such a large scale.
look, none of these fuckers are going to indict themselves...
Oil prices rose partly due to expectations of fallng rig counts and a dramatic drop in production. This shows they are ramping up production again. Continental Resources reported yesterday and production is up 34% from the same period last year. Same with all the other frackers.
Uncle Sam: "Alright you damn Russia bear, say uncle or I'll tighten the sanctions!"
Russkie Bear: "You get screwed yourself, we now take large parcel of the Arctic."
Prices at the pump are staying the same. Bullish for rich people!
$2.19 for me
looking like it will be under $2 by september
The Frackers know from the bank bailouts,that it's better to lose billions of dollars,than millions of dollars.At this point,it's a race to lose as much money as you can,as fast as you can,so you can become one of the "too big to fail" success stories..
There's plenty of oil, there's no reason oil shouldn't drop in the $20s.
The plan is to get everybody out of their cars, that would incite them to buy hummers.
They cant have that as they are wanting to cut highway funding for rail.
The plan, as i see it, is to hurt some players and then bring it back up after consolidation.
Big players win.
If Iran is able to get sanctions dropped, and go into full production, downward pressure will mount. America's Fracking miracle is about to savage oil investors, and junk bond holders. Not to mention the labor force. People will lose 75-150K $$ jobs and go back into the 8-10 dollar an hour service sector! Local business that lived off of highly paid oil workers in the fracking patches, they will all go Bankrupt.
The taxpayer needs to bail out the oil investors and junk bond holders, they are TBTF, no-one could have seen this coming.
Seriously though, a gallon of gas where i live in Ireland is still $5 which is why all my commuting is now done on bicycle and I would have cancelled my gym membership if I had a gym membership.
Oil prices have brought down for the resuscitation of the deceased dollar.
Low oil prices make it possible to keep low prices for gold mining.
Low prices for gold - the last thing that can hold faith in the dollar.
Really, this is feeling more like a leverage unwind than anything dealing with market fundamentals (supply/demand). Margin calls are a bitch.
I posted yesterday that all those numbnuts hedge funds that leveraged long will cause oil to fall into the $30's and that will be the real bottom. This time the recovery will be more like the 80's oil crash and burn due to a global recession. The central bankers are out of ammo. All the have left is the nuclear option, which is to go Zimbabwe.
Hurt being placed now on the PMs. Gotta keep the $ from losing too much face.
Christina in Argie Land nationalizes some leases from Parabas that they weren't developing.So the Media calls her a Commie.She tries to make amends with Wall Street (debt bonds) and the hedgies hold out for full payment and screw up the deal.Now the price of oil is in half these countries will need to pump more oil and cut down more forests to make ends meet.Great.Because of the undeclared war in Syria,and to pressure Russia,the rest of the world gets shafted.
And yet in CA gas is easily 3.75-4.00++ in many cities like Los Angeles.
I would not be suprised if oil dumped to $25 that gas did not stay at 3.00 in CA or higher. Go back to the 80s, 90s and even early 2000s - map oil price v gas price. You will see a sudden departure from before until now.
Every spike the highs get higher, but on the fall, the lows get higher also.
And yet in CA gas is easily 3.75-4.00++ in many cities like Los Angeles.
I would not be suprised if oil dumped to $25 that gas did not stay at 3.00 in CA or higher. Go back to the 80s, 90s and even early 2000s - map oil price v gas price. You will see a sudden departure from before until now.
Every spike the highs get higher, but on the fall, the lows get higher also.