The Ideal Moment In Oil Markets

There are moments – very very few moments – when a trader feels he’s got the markets pretty well sussed, has his positions all in the right places and believes that all roads lead to a very rosy endpoint. It’s not only rare, it’s also a little spooky w…

What Trump’s Iran Decision Tells Us About Oil Markets

There is only one oil story worth concentrating on this week, and the market’s reaction to it tells us so much about our oil positions that it deserves to be the only topic of discussion for this column: President Trump has decided to pull out of the Iran nuclear deal, a move he threatened to make throughout his presidential campaign. The first point I want to concentrate on is how predictable this move was from President Trump. If nothing else, our President has had one lone but consistent aim; to try faithfully to follow through on his…

Never Trust A Banker About Oil Prices

In recent weeks I’ve commented on the powerful bullish forces that have combined in oil and oil stocks and your need to increase your exposure to them. So, before going on to other topics, this has to be the start of any column until further notice, despite the weakness in stock indexes overall. OPEC and particularly Saudi Arabia continue to drop not so quiet hints about the importance of higher oil prices – for the cartel and the upcoming IPO of Saudi Aramco. In case anyone might have forgotten about their one-shot chance to remake…

Reflecting On The Oil Rally

A mélange of topics to be covered this week in the column, I cannot pick one that is more valuable than the other, so I’ll try to touch upon them all – forgive the necessary superficial treatment: We’ve been frankly awesome in some macro predictions about oil and oil stocks in the last several months and are really beginning to reap the rewards of those insights. We believed we’d see upwards of $75 oil this year, a prediction we’re already seeing in Brent oil in April, all while the bank analysts have only slowly…

The Bearish Case For Oil Stocks

It’s hard to imagine myself writing a more insightful column than the one I wrote last week on the energy markets and how to play them. I invite you to please read that one again before I continue on here: In that column I foresaw the continued strength that was likely to occur in oil prices, but even more importantly, the beginnings of the end of the strange and unfathomable disconnect that had been occurring between the prices for oil and the prices of oil stocks. This Wednesday’s and Thursday’s action in the markets couldn’t…

Minimizing Risk In Volatile Markets

Have you been experiencing a sickening feeling? The kind you get when a plane hits some unexpected turbulence, or when the roller coaster you’re on takes that high drop? That’s volatility. Some people like that feeling – if they’ve chosen to be on a roller coaster. Of course, they’ll come out just fine on the other end of the ride with big smiles on their faces. They might even run to get back on line for another trip. But if you’re investing in the market, volatility is nothing to enjoy. And definitely not something…

Look At Oil Majors As The Disconnect Continues

As a trader, you can sometimes get so frustrated with the market that you’ll do something impulsive – and stupid. I call this the “Screw it!!” impulse. It can come on suddenly, and make you move to double or triple down on stocks that are truly horrible and not likely to reward you, no matter how much commitment you have. With oil stocks not reacting very positively to oil prices, that instinct can be strong, as the disconnect between the two is truly unprecedented. With oil prices well above $64 a barrel here in the U.S.…

There’s No ‘New Normal’ In Oil Stocks

I’ve been following and trading oil and oil stocks for more than 35 years, and I’ve never seen it quite like this, where oil stocks are so completely hated. It doesn’t matter if the stock market goes up or down, it seems that oil stocks inevitably drift lower. Even if the underlying commodity – oil – shows some unexpected strength, as it has in recent weeks, oil stocks continue to drift away. I’ve never seen such a disconnect – both from the stock indexes and the price of the oil barrel. There are two ways…

Is It Time To Abandon Oil Stocks?

The news in the energy markets is very intense indeed – although for an oil stock investor, nothing seems to matter much – but more on that later. First, the news. There was a turnover in the U.S. Secretary of State. Former Exxon CEO Rex Tillerson is out, and CIA chief Mike Pompeo is in. Tillerson was no big fan of the Iran nuclear deal, but Pompeo is even less committed to it, calling the 2015 agreement ‘a disaster’. The deal is set to be “reviewed” by the Trump administration on May 12th. If that review results…

What Explains The Divergence Between Oil Prices And Oil Stocks?

These last few weeks have been confusing, even for a 35-year oil trading veteran like me. There are some things I’m recently seeing in energy stocks vis-a-vis the energy markets that I’ve rarely seen before. I’ve done exceedingly well during my career by investing in energy stocks using my understanding of the underlying energy markets. If I went back and charted both of them using data from 2010-2014, or 2003-2007, or 2013-2016, you’d be hard pressed to tell the difference between the two lines on the chart. But have a…

What Explains The Poor Performance Of Oil Stocks?

It’s amazing – I was so much more comfortable holding oil stocks last year – when oil was trading fifteen dollars lower and more, than I am right now. It’s certainly getting a lot tougher out there in energy land, with our stocks acting – well, actually pretty badly – despite all the positive analytics we can throw at them. So, what the heck is going on with our beloved energy stocks? Well, surely the new-found volatility in the markets at large have something to do with it. With the latest FED indications that…

How To Play The Next Oil Price Rally

I focus on the oil and gas markets and energy stocks. But that hardly immunizes me from the rest of the macro environment – the major stock averages, interest rates and the moves from the Fed, the dollar and other currencies. It would be just plain stupid to solely concentrate on my own little world while ignoring the bigger devils that might lurk outside. I’d look like a fool putting the final touches on my own sand castle, perhaps ignoring a big wave I would see coming, if only I took a moment to look up. And this last week was one…

How Exxon’s Bad Year Impacts Other Majors

You can’t help but look at the diving stock market averages this week – and the follow-up rallies – when you’re looking at oil and oil stocks. In the oil world, we don’t live in a vacuum, and any major move in the indexes will obviously affect oil as well. But as oil investors, these are the most important points to consider: The stock market gyrations almost perfectly coincided with the start of oil earnings reports from the majors for the 4th quarter of 2017. Concurrently, the dollar set off on a technical rally…

Which Oil Majors Are A Buy?

It’s all pretty much going to schedule. There have been overextended prices in oil and some oil stocks, with most of the speculative oil money pouring in to the market on the long side. And in response, like clockwork, oil stocks have looked to take a break from their move higher, just as the 4th quarter reports from the majors begin to come in. There’s a lot of moving parts but all of it is setting up to be a great opportunity to re-position ourselves in both E+P’s, as well as oil services stocks. We’re getting some mainstream…

Are Oilfield Services A Buy?

This has got to be my favorite part, where the pundits, bank analysts and columnists start to (quietly) revise their views on the oil markets. One after one, they’re losing their pessimistic views on oil and realizing what we’ve known for the last year: Oil is at the beginnings of another real price boom. Some are even mentioning (heavens!) $100 oil. So, the analysts are finally catching up. What does that mean for us? As an investor, if you’re going to take the best advantage of this rally and coming boom, the point is you need…

Momentum Matters: It’s Time To Ride The Wave

I happened to have dinner this week with a very dear old friend from my days trading crude oil on the floor of the New York Mercantile Exchange. Ultimately, our conversation turned on our life of trading oil, and the fascinating experiences we’ve had watching oil prices gyrate over the past nearly 40 years. We’d seen massive spikes together, equally disastrous crashes and years upon years when oil prices barely moved at all. And, despite the many years we’d been observers and participants, we struggled to make even a few generalizations…

How To Play The Oil Rally

We’ve been nearly alone in taking in some stellar gains in oil stocks since late October, benefiting from an oil rally that few analysts (besides myself) saw coming and positioned themselves for. And the watchword for today is: Let it ride. You know that I am a long-term bull on oil prices and oil stocks, and even the impressive extension of WTI prices near to $65 a barrel this week throws only a little cold water on my expectations. We’re in the driver’s seat now. You can take some money off the table, sure – but for the…

Is It Time To Get Aggressive On Oil Stocks?

It’s the start of the New Year, so here is my overview for your energy portfolio coming into 2018. I have written in the past six months in a far more aggressive slant than most on oil and oil stocks, and we’ve been rewarded as oil has rallied above $62 a barrel. For those who relied upon the forecasts of the bank analysts and government agencies, I’m afraid you’re well behind the curve – the oil train has already left the station. Which doesn’t mean you should give up on oil – this bull market that I have…

Identifying 2018’s Opportunities In Oil

For our last column of 2017, let’s take a look at 2018 – and see what might be in store for oil and oil stocks. There isn’t an analyst who doesn’t think that OPEC to continue to comply with production cuts for the coming year. That, considering OPEC’s long history of cheating, should be viewed as wildly bullish in itself. In addition, also widely agreed upon is the growth of global oil demand for next year, at a stunning and historically massive 1.5 million barrels/day. Using those two projections alone would indicate…

Tread Lightly In December’s Energy Markets

Lots of energy activity recently would look like opportunities anytime else during the year. But I warned you all in my last column about the trials of December investing – tax-loss selling, hedge fund managers looking to lock in profits, volatility without reason – and despite some weird action in some stocks that defy explanation, I’d still exercise caution instead of enthusiasm. One example is Centennial Resources (CDEV), a long-term favorite, dropping from $21 to $19 on nothing that I can see – except a likely desire…

Protecting Your Portfolio In December

As the year comes to a close there begins a very different part of the year for us as traders and investors. And I’m going to take a break from the discussion of oil stocks this week to give you my perspective on this time of the year, so you can avoid the many pitfalls that year end trading action often delivers. First, there is the vacation aspect. Many of the best capitalized traders and hedge fund managers will be going away on family holidays – and won’t be providing the kind of liquidity to the markets that they normally…

The Man Behind The Oil Price Rally

The OPEC meeting is over and the cartel has extended production cuts throughout 2018. The decision is obviously crucial to supporting oil prices, but perhaps an even bigger story is the relentless strategy from the young Saudi Prince, Mohammed bin Salman, being played out both inside OPEC and in his own country. And oil is the key to it all. Last Sunday premiered the newly formed Islamic anti-terrorism coalition, putting together leaders from Sunni Arab nations to denounce and combat fundamentalist terrorism throughout the Middle East and the world.…

The Man Behind The Oil Rally

The OPEC meeting is over and the cartel has extended production cuts throughout 2018. The decision is obviously crucial to supporting oil prices, but perhaps an even bigger story is the relentless strategy from the young Saudi Prince, Mohammed bin Salman, being played out both inside OPEC and in his own country. And oil is the key to it all. Last Sunday premiered the newly formed Islamic anti-terrorism coalition, putting together leaders from Sunni Arab nations to denounce and combat fundamentalist terrorism throughout the Middle East and the world.…

How To Play The Calm Before The OPEC Storm

The potential result of November 30th’s OPEC meeting is dominating oil trading and oil stocks for the next week, so while we continue to digest our Thanksgiving turkey and wait for that outcome, there are three important macro ideas I want to bring to you during the slow trading week to come. First is about the meeting itself. As a trader, the first question that always needs to be asked and answered is: Do I have any edge compared to the rest of the traders out there? Now, an edge can come from anywhere; it can come from superior research…

Investors Look To The Permian As Oil Bulls Take A Break

This week in energy was dominated by the predictions from two top energy sources – OPEC and the International Energy Agency. On the one side you had OPEC, which is meeting on November 30th to decide the fate of production guidelines going forward. It might be no surprise, in advance of that meeting that they would upgrade their view of the global demand picture and they did – seeing at least their share of demand increasing by more than 400,000 barrels a day. This prediction would bode very well for the Saudi/OPEC strategy of continued…

Saudi Conflict Sends Investors Back To Oil Stocks

By far, the most important news to the global energy markets this week were the arrests in Saudi Arabia. Others in the media will talk of this in political terms, but I could care less about Saudi Arabian politics. I only care about how it’s going to affect oil prices and our oil stocks. And it’s going to be great for both. Mohammed bin Salman (now referred to by the quick sobriquet MbS), is the 32-year old son of the 81-year old (relatively) new Saudi king. The centerpiece of the new father and son team is Vision 2030, a re-imagining…

It’s Time To Ride The Oil Stock Wave

We’re at a very important time, for our trading purposes – one that requires some discipline and experience to manage. I’ve always called this moment “riding the wave”. We’ve done just about everything right in establishing our energy portfolios: Buying only high-quality stocks in the correct subsectors; establishing positions at or very near to short-term, and in some cases, long-term lows and correctly foreseeing the major/macro trends that will drive the fundamental (oil prices) in our favor for a very long…

The Oil Investment For The Long Haul

Conoco-Philips started the ball rolling with 3rd quarter reports yesterday and most of the analysts buried the lede. Yes, there was a minor beat on earnings, but that was hardly the story that needed highlighting; it was the continued reduction of capex guidance, down 6% from Q2 reports, that has indicated a very, very critical trend for oil companies and oil’s price going forward from here. I have written in the past with much frustration about oil companies “lemmings-like” behavior. To quickly recap, oil companies were being…

Oil Stocks To Watch As Geopolitical Risk Mounts

This week in oil news continue to deliver nothing but ‘green lights’ for investors, and keeps me convinced as I have been for several weeks now that every dip in oil prices – and oil stock prices – is an opportunity to position oneself aggressively for the medium term. One story that added to my bullish attitude has been ongoing skirmishing in Kurdistan. Kurdish Independence has been an ongoing struggle, and the recent ISIS losses have given the Peshmerga renewed room to push back on the centralized Iraqi government and…

Are Oil Stocks Close To A Breakout?

If you’ve got a core energy stock portfolio like me, you’re mostly deployed right now, waiting for the continued re-balancing of the oil market that even the IEA now says will complete in 2018. But, I never tire of trying to find further investments that come up opportunistically. This last week, I thought I perhaps saw one in Apache energy (APA). Now, a few thoughts – first on the state of U.S. E+P’s in general and then on Apache specifically: U.S. exploration and production companies have been following what I termed a…

Are The Bulls Returning To The Oil Market?

In the last several weeks, we’ve enjoyed a turnaround in oil stocks, accelerated by the two major storms in Texas and Florida. And with a bit of a smile, we’ve seen more and more analysts convinced of the renaissance in oil prices that I advised you was coming months ago. In my last column I pointed out Ed Morse of Citibank and Evan Calio of Morgan Stanley changing their bearish tune. This week, we’ve seen a positive note on oil from Goldman Sachs, who only two weeks ago thought that the Harvey and Irma storms were going to kill…

Capitalizing On The Coming Oil Boom

It was in the last several columns here at Oilprice premium that I positively laid down my timeline for recovering oil markets. In Late August I noted to you that the negativity that was pummeling oil stocks was creating several fantastic value opportunities, and counseled to find price targets to either begin accumulating or add to already existing, but very specific energy positions. On September 1st, I sent out an email alert with a simple message: “…..a great opportunity has finally arrived”. Those that heeded this call have…

Was Goldman Sachs Wrong About Oil Demand?

In my last two columns for Oilprice.com premium subscribers, I was first very clear in the opportunity I thought I saw coming in oil stocks. First, I outlined how oil companies had finally retreated from full-speed-ahead capex increases, looking to raise production into an oil environment that hadn’t been able to support it for the last two years. I also pointed out that this retrenchment had come in a unified way from oil companies, continuing their lemmings-like behavior of rather bad decision making during this entire oil bust. The opportunity…

Is The Window Closing On Shale Opportunities?

The energy story this week is still centered in the aftermath of Harvey and Irma – and how those storms will continue to impact the energy markets from both a supply and demand side. The obvious outcome in the Gulf Coast of Harvey has been a lot of crude oil waiting to be turned into product. Much of that crude was intelligently shipped into the Gulf Coast in front of the storm, swelling storage there and in Cushing. There is now a tremendous pressure among the refiners to restart operations as quickly as possible and restore product inventories…

Now Is The Time To Rebuild Your Energy Portfolio

Last week, I wanted to give you a firm go-ahead signal to target and buy oil stocks. This week, we’ve already done fine in following that advice. For now, I have little to add to the recommendation I made last week, except to note that in some cases, the reaction of oil stocks was relayed (I think prematurely) to some of the oil services stocks (shale specialist Helmerich and Payne, notably) – and that bears watching for our next important opportunity down the road. With this very specific directive already out there and your work hopefully…

How Oil Traders Are Playing Hurricane Harvey

In my last column, I opined that oil was on the verge of the supply turnaround that we have been waiting on for the better part of a year, and that buying targets for a true renaissance in oil prices was the order of the day. In the interim, Hurricane Harvey decimated the Gulf Coast, sending all of the energy markets in as much of a state of panic as the residents of Houston have been forced to endure. All of the ‘sure things’ that oil traders have banked upon during storm season were multiplied tenfold, as crude oil got destroyed while…

How To Play The Imminent Rebound In Oil Prices

In my last column, I pointed out the lockstep insanity being followed by US oil companies in increasing production, no matter whether or not the end product was profitable in today’s depressed oil market. Happily, I was also seeing an end to that destructive strategy, with several independent E+P’s guiding lower on production and cutting capex yet again. I won’t replay last week’s column in its entirety. But now that oil is showing real signs of being ready to break out of its 2017 range, what oil companies do now will really…

Has Oil Finally Reached A Tipping Point?

The 2nd quarter reports from oil companies have been an eye-opener, in that they’ve confirmed to me everything I’ve been saying for months – oil companies are following a self-imposed road to ruin. But that is generating a major opportunity for us as investors. In 2014 and throughout 2015, oil companies didn’t plan well for an extended bust in oil, only marginally dropping production and continuing to increase leverage to pay dividends. But they have been forced to rely on their most prime production acreage to keep them…

Shale Lemmings Retreat As Price Recovery Stalls

If we could make up one bankable investment rule for oil stocks for the past three years – it would be to note precisely what oil companies are planning for and then plan on the opposite happening. Oil companies were sure that the oil collapse of 2014 was surely temporary, waiting more than 6 months to make extreme capex cuts and idle 1000 rigs. Their slow acceptance of the oil bust assured that 2015 would be a horrible year for oil stocks. In 2016, they came en masse to their senses, cutting capex on average nearly 70 percent and began selling…

The Key To Profiting In A Volatile Oil Market

Yesterday’s quarterly report from Conoco-Philips (COP) is showing a renewed trend among oil companies, mirroring the report of Anadarko Petroleum (APC) a few days earlier. Both are reporting negative earnings while cutting capex for the remainder of 2017. Capex cuts were epidemic in 2015 and 2016, as oil companies reeled from cratering oil prices. But 2017 was signaled by most oil companies as a green light year, where they chose to again increase capex in hopes that the bust cycle for oil was ending. It hasn’t turned out that way.…

Oil Market Aloof Despite Falling Inventories

The dog days of summer seem to be bringing on even more dog days for OIL. From my perch, there now seems to be very hard caps on where oil can go from here for the time being – both on the upside and, most probably, on the downside as well. On the downside, there is the fact that oil stocks are rebalancing. A continuing rebalancing of the global and U.S. oil supplies is what we’ve been waiting for the last 3 years and should stop any major drops in oil prices. We see that rebalancing in the domestic chart on oil stockpiles, now nearer…

The Break-Even Myth Is Suffocating Oil Stocks

Oil prices, as I have said for the last few columns, seem range-bound. But rarely do they remain range-bound for long. As oil’s pessimism begins to gain steam, oil stocks look less and less like an exciting investment, at least for the next few months of the summer. Last week we were able to predict and use a rally in oil prices that came from a very large financial short covering move from speculative hedge fund and energy traders. That was busted briefly on Wednesday as the markets, back from the July 4th holiday, decided to take advantage…

Have Oil Prices Stagnated?

Two events this week give us some insights on how to trade the oil markets and oil stocks for the next few weeks. First, there’s been a tremendous financial move in the oil futures market. Most energy hedge funds and other speculative non-commercial traders have been looking at the oil markets in 2017 much as I have – and betting that the OPEC production guidelines and an inevitable re-balancing of global oil supply would lead to a constructive price spike for oil. In CFTC commitment of traders’ reports, we’ve generally…

What To Do As Oil Prices Plunge?

Everyone is scrambling for a new plan now — now that oil is in its third mini-bust since the major bust cycle that began in 2014. (Click to enlarge)Since the lows in early 2106, oil has made three retreats; in July/August of 2016, in November of 2016 and right now, in June of 2017. But this retreat is different, in that it comes after the extension of OPEC production cuts that are scheduled to last until mid-2018. Those cuts have not helped oil to maintain prices above $50, they have in fact heralded this latest drop. And that’s bad news…

Oil Prices Fall, But The Macro Picture Looks Bright

Times are rough, if you’re an energy investor, there’s no doubt about it. But it’s important to remember why you’re a subscriber here at the Oilprice premium service and why you’re reading my columns every week. Hopefully, it’s to give you a much better long-term perspective on the oil markets and keep you ahead of the rest of the noise that floats around the energy markets. Look, if you’re looking for a trading insight of whether oil will be above $50 this week or below it, I will tell you that my column…

Bearish Markets: A Self-Fulfilling Prophecy

In my early days of trading, I had a ‘mentor’ of sorts who gave me all sorts of advice and useful tips about market action. One I remember clearly was him saying this: “In a bullish market, all news is bullish. In a bearish one, everything will drive the market lower”. Boy, this week proved again how incredibly right he was about that. We’ve just had a week of the most pessimistic reaction to what should have been very bullish news for oil. Instead, we’ve seen those bullish fundamentals rewritten as bearish indicators…

The Oil Market Is Destined To Re-Balance

It’s been one week after the ‘magic’ oil supply deal was extended between OPEC members and Russia and it’s been followed by just about the most pessimistic response I’ve ever seen to bullish news. Now as a trader, no one is more familiar with the axiom to ‘buy the rumor and sell the news’, so this drop in oil prices and even more vicious drop in oil stocks should not have come as much of a surprise to me. But quite frankly, it did, as has the pessimism that has surrounded the oil markets since the announcement…

It’s Not Over For OPEC Just Yet

OPEC extended production cuts that were originally agreed in December 2016 for another 9 months, delivering both OPEC members and Russian discipline that will last well into the Spring of 2018. And still the Saudis and OPEC continue to get no respect at all, like Rodney Dangerfield. The oil markets, in fact, after a two-week boom in prices, used the actual date of the meeting to retreat from their highs, ending the day below $50 a barrel. This could be a reaction to the very late speculative players trying to take advantage of a decision that was…

This Could Be Oil’s Last Trip Into The $40’s

No need to bury the lede in this week’s column: OPEC will extend production guidelines in next week’s meeting in Vienna, and extend them even more than originally planned. The oil market wondered whether the OPEC production cuts would even hold when they were first installed, now the market is about to get the added benefit of an 8-month extension instead of the planned on six months. But what has been the response from the oil markets? They’ve been tepid at best. .This reaction has been attributable to one physical and one financial…

North American Oil Stocks: Buy Or Sell?

Oil spent the last week in a fast funk before a resurgence of interest sent prices rising back towards $50 this week. As the 1st quarter reports of many of the U.S. E+P players come in, we have a great opportunity to assess which one of them, if any, we’d like to focus on to take advantage of an oil price that seems momentarily stuck between $45 and $53 dollars a barrel. In general, the story of earnings from each of them is exactly the same, although the differences, when there are some, are critical for knowing where to invest in the energy…

U.S. Oil Producers Becoming Increasingly Self-Destructive

It’s absolutely maddening watching the first quarter results float in from the large cap energy companies. And the one image I continue see in my mind that I can’t shake is of lemmings going over a cliff.This image alone truly sums up the complete idiocy of virtually all of the U.S. oil producers right now; they are showing no creativity or independence, doing what everyone else is doing, despite the fact that this behavior is leading them all to a very, very sad moment, if not their own ultimate demise. What has become increasingly…

Is Now The Time To Make Long Bets In The Oil Market?

Negativity has almost never been as high as I’ve seen it in the past several days for the oil space. And, to be fair, I can understand it easily – oil stocks have been real dogs. As the stock market has soared through 21,000, oil stocks have done more than just lag the major indexes, they’ve outright sagged against oil prices that continue to languish near $50 a barrel. It’s been a tough time to be a bull on oil stocks, but it also has been a time that would cause many to reconsider their strategy. After all, there’s…

Why Brexit, Bombs And Trump Can’t Move Oil Prices

2017 hasn’t seen much volatility in oil prices, something we might not have expected with a new administration, a change in Fed policy, Brexit and a hundred other smaller events this year. So, what’s left to move oil prices, if the most common inputs aren’t having much impact? Normally large global trends of production, OPEC plans, rumors of war and actual hostilities will have a significant impact on prices. In recent days, however, we’ve seen a large tomahawk missile strike on Syria and a use of the “Mother of all…

Why Oil Markets Are Not Recovering Much Faster

For several months, I’ve been trying to reconcile two divergent and counter-intuitive trends in oil, and it’s forced me towards a soberer outlook going forward. It’s not that I don’t think oil prices aren’t ultimately headed back to triple digits – I absolutely do. But the timeline for that move continues to lengthen, as oil companies find ways to survive and revive in this horrible market. Two quick charts will tell you what I mean: (Click to enlarge)Here’s the Haynes and Boone bankruptcy monitor charting…

Oil’s Catch-22 That Nobody Saw Coming

For several months, I’ve been trying to reconcile two divergent and counter-intuitive trends in oil, and it’s forced me towards a soberer outlook going forward. It’s not that I don’t think oil prices aren’t ultimately headed back to triple digits – I absolutely do. But the timeline for that move continues to lengthen, as oil companies find ways to survive and revive in this horrible market. Two quick charts will tell you what I mean: (Click to enlarge)Here’s the Haynes and Boone bankruptcy monitor charting…

U.S. Shale’s Breakeven Myth

Most oil analysts have one goal in mind, and it’s not to be right about predicting the future prices of oil. It’s about trying especially hard not to be wrong. The difference is important. Most analysts, including the IEA and EIA, cannot make any forecast that can be recalled months later to make them look foolish. The safest prediction you can make is always to see not much change at all, whether you see oil at $25 a barrel or $125 a barrel. If something dramatic changes, the worst you can be accused of is not seeing what virtually…