Happy Dance! Brent Breaks $70! YEEEEEE HAAAAAAA!!!

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My endless blatherings about $70 oil [Brent] this year are finally justified : )

Great news for the global Oil & Gas industry!

Even WTI is doing far better than I expected.

2019 is turning out to be a slowly steady, incrementally *POSITIVE* year for International Oil & Gas.

$70 oil [Brent] is the optimal balance between global oil producers and global oil consumers, in my opinion.  Previously I have commented ad nauseum (almost 1,000 times in the past year) about this global optimal balance of Brent oil at $70.
 

Brent crude oil tops $70 for first time since November as supply tightens

Brent oil prices rose on Thursday, topping $70 per barrel for the first time in nearly five months, as expectations of tight global supply outweighed pressure from rising U.S. production and less robust global demand indicators.

Brent futures touched $70.03, its highest level since Nov. 12, when it last traded above $70. The international benchmark for oil prices settled 9 cents higher at $69.40 a barrel.

U.S. West Texas Intermediate crude settled 36 cents lower at $62.10 a barrel on Thursday. The contract dropped 12 cents in the previous session after briefly hitting $62.99, also the highest since November.

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In this case, I am in the 'glass is half full' catagory.

We've been at $70 before...and nothing really happened. Until there is confidence that this price can sustain itself without the unpredictable stimuli of things such as what is happening in Venezuela and Libya, sanctions on Iran and the constant 'fine tuning' by OPEC+, there will be no impetus for players to get back in the game.

That said, back in 2014-2015, when oil was in the $20-30 range, many players said they needed $40/bbl to get back in the game. When oil eventually hit $40, they then decided they needed $50 before picking up their hand. At $70 there still does not seem to be enough confidence to drill either onshore or offshore.

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Sure appears to be some interest in oil industry here in south Texas. Either that or I am imagining all these trucks as I try to pull out from the cattle guard at our ranch each day. Seems to be more semis than pickups and that says a lot for this part of the world where pickups are king. 

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Butasha,

US tight oil may continue to increase, but a little less quickly than some analysts seem to believe.  It will probably be more like 750 kb/d each year for the next 4 years or so, about half the rate forecast by Rystad (at about a 1.5 Mb/d annual increase in US tight oil output).  I expect US tight oil output will peak in 2025 at about 10.9 Mb/d and will increase about 3 Mb/d from Dec 2018 to Dec 2022.  

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It should not go any higher. Oil at $60-70 is the best range. If it gets too high, that will have negative impact on demand. 

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On 4/5/2019 at 9:52 AM, Douglas Buckland said:

In this case, I am in the 'glass is half full' category.

We've been at $70 before...and nothing really happened. Until there is confidence that this price can sustain itself without the unpredictable stimuli of things such as what is happening in Venezuela and Libya, sanctions on Iran and the constant 'fine tuning' by OPEC+, there will be no impetus for players to get back in the game.

That said, back in 2014-2015, when oil was in the $20-30 range, many players said they needed $40/bbl to get back in the game. When oil eventually hit $40, they then decided they needed $50 before picking up their hand. At $70 there still does not seem to be enough confidence to drill either onshore or offshore.

Well sustain for how long - next 2 qtrs (2Q-3Q) looks good basis our models.

It is not rocket science - 3Q is seasonally high for oil prices (link 1). Why it is seasonally high in 3Q is link 2... 4Q/3Q demand should be flattish even as supply catches up - then it depends on US pipelines coming through (or not!).

https://www.topdowncharts.com/single-post/2019/03/06/Tis-The-Season-For-Crude-Oil

https://determinedinvest.wordpress.com/2019/03/19/the-case-for-black-gold-part-4/

 

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(edited)

I remember than back in 2014 T. Boon Pickens said shale needs a price of 70 $ to be profitable so long term this will be a new average price for oil.

Goldman Sachs about 3 years ago said that 70 $ oil is best for world economy if we take economic interests of exporters amd importers combined.

Also EIA and IEA predict 80 $ oil in constant 2017 prices in 2025 and about 90 $ in 2030- look on yearly energy reports from both organizations.

.

Edited by Tomasz
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On 4/6/2019 at 12:18 AM, butasha said:

Sure appears to be some interest in oil industry here in south Texas. Either that or I am imagining all these trucks as I try to pull out from the cattle guard at our ranch each day. Seems to be more semis than pickups and that says a lot for this part of the world where pickups are king. 

Rig count in the week ending today, up 15 to 831. Highest level in 3 weeks and largest one-week increase in 11 months. Sure looks like US interest in producing oil. I'm just not sure if its hitting a peak short term or not. Thoughts?

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8 hours ago, Elon Musk said:

Rig count in the week ending today, up 15 to 831. Highest level in 3 weeks and largest one-week increase in 11 months. Sure looks like US interest in producing oil. I'm just not sure if its hitting a peak short term or not. Thoughts?

Elon Musk,

Thoughts, batteries are the future right Elon ?

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2 hours ago, Auson said:

Elon Musk,

Thoughts, batteries are the future right Elon ?

In defense of EM,

Things take longer to happen than you thing they will, and then they happen faster than you thought they could.

Norway going majority EV was a surprise - China you may think has been a setback given lost subsidies, but China you never know when the EV agenda comes back with a bang (especially now when they are not happy with US$70 brent).

EM/Tesla has outperformed skeptics for a time (though not lately) - foolhardy to count them out.

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On 4/8/2019 at 4:09 PM, AcK said:

In defense of EM,

Things take longer to happen than you thing they will, and then they happen faster than you thought they could.

Norway going majority EV was a surprise - China you may think has been a setback given lost subsidies, but China you never know when the EV agenda comes back with a bang (especially now when they are not happy with US$70 brent).

EM/Tesla has outperformed skeptics for a time (though not lately) - foolhardy to count them out.

Ack,

I agree things do happen a lot faster than you think. For Elon his margin call on his stock could happen a lot faster than he thought.

https://cloverchronicle.com/2019/03/03/is-elon-musk-about-to-go-bankrupt/

https://www.inc.com/erik-sherman/1-reason-why-elon-musk-might-want-to-take-tesla-private-its-personal.html

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8 hours ago, Auson said:

Ack,

I agree things do happen a lot faster than you think. For Elon his margin call on his stock could happen a lot faster than he thought.

https://cloverchronicle.com/2019/03/03/is-elon-musk-about-to-go-bankrupt/

https://www.inc.com/erik-sherman/1-reason-why-elon-musk-might-want-to-take-tesla-private-its-personal.html

Ok this I didnt know. Yeah margin calls are happen faster than all else 😉

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