Commodity Trade Mantra

Posts Tagged ‘Fracking’

The Oil Price Ceiling Has Been Set: "Above $40 And We Start Pumping Again"

The cure for low oil prices is low oil prices & as more shale companies halt production, the 3 mmb/d oversupplied oil market will slowly return to equilibrium. The oil price war is about to enter its far more vicious, and far more lethal phase, and while it is unclear who ultimately wins, whether it is Shale or the Saudis, the loser is clear: anyone who bought into bets of an imminent oil bounce.

The Top 12 Media Myths On Oil Prices

The upstream oil and gas industry is not a black hole. Its only when the media gets a hold of it, it all becomes complicated. There is so much hyperbole and unsupported guesswork that investors don’t have a chance. So, in a small effort to set the record straight, let’s see if we can’t dispel some of the misinformation.

Low Oil Prices Are A Saudi Attack On Iran — But You Can Defend Yourself

The Saudis’ primary motivation in crashing oil prices last November was to harm Iran. In other words, low oil prices are not about hurting Russia because of Ukraine; nor slowing the advance in North American fracking. The Saudi idea is to squeeze the bank accounts of the Mullahs in Teheran.

Beware: Fracking Is Where Money Goes to Die

The fracking boom has been cash-flow negative for oil and gas drillers from the very beginning. The steep decline rates of fracked wells force producers to drill more wells just to keep production and revenues flat. They fund this drilling with debt. To support that growing debt, they have to produce more & take on even more debt.

Chevron Terminates All Shale Gas Exploration In Europe

The US Energy Information Agency first estimated that Romania had enough shale gas reserves to supply the country for more than a century, but on exploration failures it looks like Romania does not have shale gas. So a SHALE ENERGY BANG turned into a WHIMPER as Chevron’s shale gas exploration projects turned out to be an utter failure.

Fracking — A New Bubble for a New Year

Oil and natural gas exploration and extraction via fracking or hydraulic fracturing is a highly capital-intensive venture. Given the tentative strategy of the Federal Reserve in raising the benchmark interest rate, a sudden and unexpected increase in borrowing costs for businesses in the high-yield debt space is a serious cause for concern.

Why Oil Can’t Stay Cheap

Oil market gyrations touch everything. So you have to either figure out how to ride the train… or get crushed beneath the wheels. How long can you expect low oil prices to last? Over the long haul, it is simply too valuable a commodity to stay “cheap.” Any number of events could trigger prices to rebound. Anything could happen.

Ponzi Finance and $50 Oil - James Rickards

Oil below $50 is more than low enough to do an enormous amount of damage in financial markets. There are about $5.4 trillion dollars of costs incurred in the last five years for exploration drilling and infrastructure in the alternative (fracking) energy sector. It’s been largely financed with corporate and bank debt.

Oil - The Black Gold Loses Glitter

If oil stays low, it may turn out that entire U.S. oil boom was just one of many Federal Reserve inflated bubbles. If it pops, the job losses & debt defaults that would ensue could have a far greater impact on the economy & the credit markets than ever before. Ultimately then, QE 4 may need to be much larger than QE1, 2 & 3 combined!

Why OPEC Will Tolerate Cheap Oil

While the current dip in energy prices clearly does hurt Saudi Arabia, it hurts her enemies far more, particularly Iran & Russia, which has been a key enabler of Iranian power. Putting pressure on Russia has also become a key strategic interest of Washington. Cheap oil likely will protect & increase Saudi Arabia’s oil market share.

US Shale Under Pressure From More Than Just Low Prices

Denton’s ban prohibits drilling within the city limits and joins other local referendums passed. The lasting effect of such local referendums is yet to be seen, but they come at a difficult time for an oil and gas industry. New well permits issued in November fell nearly 40%t from the previous month which indicates a slowdown in shale plays across the US.

Shale Oil 2015 = Subprime Mortgages 2008

There is a nearly 100% chance that oil prices will remain mired in “shale oil death” territory for as long as the low cost Middle Eastern producers need to recapture market share – and the longer this takes, the more catastrophic losses will occur to shale oil investors – the only viable American industry in the post-2008 world of QE.

Everyone Loves a Discount—But Where’s the Support for Oil Prices?

Since June, crude oil has tumbled 30% to prices we haven’t seen in about three years. And if crude oil were to fall to $60 per barrel? An estimated 80 percent of U.S. companies that extract tight oil, or shale oil, through fracking would be shut down and all new supply would diminish quickly due to the rapid decline rate.

The US Shale Oil Miracle Disappears

The EIA has placed a hefty downward revision on its estimate of the amount of recoverable oil in the #1 shale reserve in the US, the Monterey in California. EIA now estimates these reserves to be 96% lower than it previously claimed. Only 4% of the original estimate is now thought to be technically-recoverable at today’s prices.

Global Fresh Water Volume

Water is a commodity whose scarcity will have a profound effect on the world within the next few decades – this makes the reevaluation of our values regarding fresh water use not voluntary but mandatory. We will have to drastically change the way in which we view our freshwater as a resource.

Why the Rising Tide in Oil Hasn’t Been as Good for Offshore Ventures

Thanks to additional new U.S. pipeline capacity and the growing volume of oil product exports from American refineries, the glut of excess storage at Cushing is shrinking. With crude oil prices continuing to rise, you would think that’s good news for both onshore and offshore drilling ventures.

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