Oil Prices

[specuvestor]

EIA adjust downwards their US oil production in their May report marginally:

"Total U.S. crude oil production averaged an estimated 9.3 million barrels per day (b/d) in March, but it is expected to decline from June through September before growth resumes. Given EIA's price forecast, projected total crude oil production averages 9.2 million b/d in both 2015 and 2016, 40,000 b/d (0.5%) and 100,000 b/d (1.1%) lower than in last month's STEO, respectively"
http://www.eia.gov/forecasts/steo/?src=home-b1

That means oil production is estimated to be around 9.1m bpd in 2H15. I think they are still too optimistic when shale is contributing to 4m+ bpd and they expect growth to resume in 4Q15 and plateau in 2016 around 9.2m bpd after a -0.1m revision. IIRC their original forecast towards end last year was 9.4m bpd for entire 2015.

[BlueKelah]

Oil's Not Coming Back. Here's Why

[CityFarmer]

Goldman projection on oil price, basically around $50-60 per barrel in the next few years...

Goldman sees oil at US$50 at the end of the decade

(May 19): As oil prices fell from more than US$100 a barrel to a low of US$43.46 over the past year, analysts and economists constantly tried to pick a bottom and had little success.

Now, they are trying to forecast a recovery, but Goldman Sachs is out with a note titled "New Oil Order" predicting oil will stay at lower levels for the rest of the decade.

"We see potential for OPEC/the US to gain share longer term, even as WTI falls from US$60 to US$50 by the end of the decade," it said.

The note is meant to predict what companies are poised to do well in an environment with lower oil prices, but the call for US$50 just by itself is notable.

Other market analysts have made predictions for oil to move at least slightly higher over the longer term, as they forecast that non-OPEC related supply will start to shrink.

Goldman, on the other hand, reckons that the shale boom will continue even as OPEC refuses to cut back on production.

"While the sharp reduction in US drilling activity is likely unsustainable, greater productivity in shale, startups of already sanctioned other non-OPEC projects and a greater willingness of OPEC to keep production levels elevated create a confluence of deflationary pressures for both oil and North American natural gas prices," Goldman analysts led by Brian Singer said in the report.

"We now assume WTI oil prices of $57/$60/$60 per barrel in 2016/17/18."
...
http://www.theedgemarkets.com/sg/article...end-decade

[Curiousparty]

If there is really a structural or tectonic shift in the oil production dynamics, then the oil and gas related counters might remain depressed and even be hit badly...

[CityFarmer]

If there is really a structural or tectonic shift in the oil production dynamics, then the oil and gas related counters might remain depressed and even be hit badly...

My view is, one key to deter spending of oil majors, either in capex or opex, is uncertainty of oil price trend. Once the trend is cleared, the spendings will resume, either back to normal, or to a "new normal".

[jjlim84]

If there is really a structural or tectonic shift in the oil production dynamics, then the oil and gas related counters might remain depressed and even be hit badly...

My view is, one key to deter spending of oil majors, either in capex or opex, is uncertainty of oil price trend. Once the trend is cleared, the spendings will resume, either back to normal, or to a "new normal".

looking at o&g counters now, it seems like the market is not expecting oil price to recover soon

[specuvestor]

It will take some time for SUBSTANTIAL exploration capex to resume... of course those selling widgets for explorations would want them to resume soon...

^^agree. Capex cycle is not going to restart just because oil hits $80. It will only restart when majors see oil price sustainable at >$70 for next 18 months. There is a difference. So choose and TIME the instruments carefully. I wont be surprised most will rise in tandum but i wont be holding them for quarterly results

If one been reading this thread past 6 months, one would have a good idea where the dynamics and catalysts are coming from.

Vested in WTI futures

A Mother Fracker of a Presentation by David Einhorn

Frackers do not make money in general, not by a long stretch. However, methinks that there are quite a few frackers that are in a much, much worse position than PXD, CLR or CXO.

Interesting to see what they do rather than what they say... even the best minds are divided on oil:

(Bloomberg) -- Baupost Group took a new stake in Pioneer
Natural Resources Co. in the first quarter as the hedge fund run
by Seth Klarman added to its beaten-down energy holdings.
Baupost bought shares of Pioneer valued at $517.8 million
at the end of March, according to a regulatory filing, helping
to lift the value of its publicly-disclosed energy holdings by
$678 million.
David Einhorn, who runs hedge fund Greenlight Capital, this
month slammed shale explorers, including Pioneer for spending
too much money without returns.
“Pioneer burns cash and isn’t growing,” Einhorn said at
the Sohn Investment Conference in New York. “Why is the market
paying $27 billion for this company?” He referred to the
Irving, Texas-based company as the “mother fracker.”
Pioneer shares fell 0.9 percent to $151.82 at 9:38 a.m. in
New York, extending declines since the end of the quarter to 7
percent.
Klarman and Dan Loeb, who runs Third Point, led hedge funds
that bought energy stocks in the fourth quarter after a slump in
oil prices drove down stock prices. Baupost also increased its
stake in Antero Resources Corp. by 1.5 million shares to 9.35
million, worth $330.2 million at the end of the first quarter.
Diana DeSocio, a spokeswoman for Baupost, declined to
comment on the investments.
Baupost’s disclosed U.S. equity holdings rose in value by
16.5 percent to almost $6 billion during the quarter, a period
when the Standard & Poor’s 500 Index of U.S. equities rose 0.4
percent.
Baupost also added to its stake in Atara Biotherapeutics
Inc. The value of its position increased by $131.2 million to
$198 million as of March 31, the biggest gain among previously
disclosed holdings. It sold stock in Veritiv Corp. and exited
Syneron Medical Ltd.
Money managers who oversee more than $100 million in
equities in the U.S. must file a Form 13F within 45 days of each
quarter’s end to list those stocks as well as options and
convertible bonds. The filings don’t show non-U.S. securities,
holdings that aren’t publicly traded, or cash.

[specuvestor]

Market focusing on inventory while the real McCoy US production went below estimated 9.3m for the 1st time since Feb. i think the turn has finally been made from plateauing to declining

Vested in WTI

U.S. crude stocks fell by nearly 2.7 million barrels last week, down for a third consecutive week, as refineries hiked output, the government-run Energy Information Administration said. Gasoline and distillate inventories also declined.

While the crude draw was nearly triple that estimated by analysts in a Reuters survey, it was only about half of the 5.2 million-barrel drop reported by industry group American Petroleum Institute, disappointing some market bulls.

http://www.cnbc.com/id/102692898

[BlueKelah]

Iraq About to Flood Oil Market in New Front of OPEC Price War

(Bloomberg) -- Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.

The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.

While shipping schedules aren't a promise of future production,

[Behappyalways]

The Tanker Market Is Sending a Big Warning to Oil Bulls
http://www.bloomberg.com/news/articles/2...s-ia7cvht4