Tom Kirkman

Oil Heads for Its Best First Quarter Since 2002

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You're just lurking out there waiting for the next Trump tweet that will bring WTI down to $65, admit it. That's what I'm doing, anyway.

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But I wonder if this is built on sand? We have already lived through one production cut during this slump. Apparently the surplus was dried up, then we found ourselves in the same situation again.

We can not depend on 'temporary' production cuts to end this persistent slump. 

The production cuts dry up the surplus, the price of oil rises, everyone increases production to take advantage of the price increase (including the jokers in the shale oil fiasco), we end up with surplus oil...and here we go again!

The is no confidence in a stable, long term price, so everyone cuts their drilling budget. Drill costs money while producing no revenue. Drilling is also the only real method to find 'replacement barrels'. Demand is fairly constant. At some point we run out of stored oil, have no way to replace it, the price spikes....welcome to Oilfield 2012 version 2.

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