55.00 WTI

[Old-Ruffneck + 1,223]

Well @Tom Kirkmanit looks like we are back to last Februarys' pricing. Seems our comfort level just keeps going back to that magic spot. One of the reasons I don't care for long range predictions as is still a volatile market. Rigs may be dropping but output still hanging in there and seems world is still adequately supplied. Russia and KSA are going to start pumping more, in an already saturated market. India just announced it's cutting back on refining. So I digress that 55.00 seems to be the comfort spot for all.

[Guest]

5 minutes ago, Old-Ruffneck said:

55.00 seems to be the comfort spot for all.

Unless you've had a bet with a friend about oil direction that's been ongoing for months ...  then 53 - 57 is boring.

Otherwise agreed. 

[Old-Ruffneck + 1,223]

1 minute ago, DayTrader said:

Unless you've had a bet with a friend about oil direction that's been ongoing for months ...  then 53 - 57 is boring.

Otherwise agreed. 

Tom and several others back in Feb. we were guessing 55 range-bound and is good pricing for the consumers, of course the investors aren't getting wealthy but still money to be made... So it's back to close to where we figured it would end up. Though anything like Houthis blowing a ship outta the water could be an issue. But the offset is 50bbl just found in southern Iran lol. Okayyyyyy

[Tom Kirkman + 8,860]

MBS and OPEC will keep trying to push up oil prices, likely to little avail.  

But 55 WTI seems about right to me for the present.

And yes, this was discussed at length at the beginning of this year.  My preferred "Goldilocks" spot this year was for 70 Brent and 55 WTI.

[footeab@yahoo.com + 2,187]

1990's lots of crude and it went to ~$20ish. Persian gulf had zero leverage at that time as projects around the world were finally coming online, started when prices were much higher.

Crude sold in USD and is still sold in USD

USD has inflated by roughly 2.5 times due to the ol' digital printing press since then.

Today: Lots of crude. 

WTI is sitting in the 50's....  

Not exactly rocket science why it is sitting at $55. 

Now if inflation ramps up(printing press), crude dries up, or conflict in the Gulf?   😜

[Gerry Maddoux + 3,627]

I understand what you're saying, and I agree with the premise. However, I have always maintained that nobody can make money at $55 WTI. Exxon, Chevron, Occidental and Pioneer all say that their lifting costs are <$20-30, but that's for their sweet spots and generally verbiage reserved exclusively for investor day shindigs. In reality, when you consider cost of minerals, leases, drilling and completion, the breakeven point on all but the very best spots is $50-55 in the Permian. It's the same in the Bakken, or the Granite Wash, or down in the Eagle Ford. Switch to the KSA. They say their lifting cost is $12, and I believe them, but they have to dole money out to 15,000 princes who are used to living high on the hog and a few bucks each to millions of pissed-off male citizens who have never known a day's work, so their societal cost for a barrel of Brent crude oil is about $85. For Iran, it has gone up to $135. If Iran has actually discovered the Mother Lode, then that number will drop. For the Syncrude guys up in the Canadian oilsands, using the thermal gravity system that is so clever, their cost has dropped below $20 but it's bitumen, for Pete's sake, barely better than road tar, and by the time they process it, the cost has gone up. I repeat what I have maintained all along: the price of oil is going to wallow lower until there is sudden tightening, and then fly . . . probably past $100. That's horrible for the industry, for fleet managers, for ordinary consumers. Despite these great At-Bit NeoSteer drilling units that have refined MWD systems and machine learning, drilling holes faster and cheaper--despite going from 10% to 20$ recovery, laying down 300 US rigs in a year is a daunting thing. Exploration is at a 70-year low. The Middler East is on tenterhooks. You're all right--and it's not rocket science why WTI is sitting at $55. But there's zero energy policy, the strategic reserves have been partially depleted, and all it would take to put us in very tight oil supply-demand straits would be a conflict. I don't think $55 WTI is a sustainable price point, not today, not with stealth inflation. I'm sure you're sick of hearing the analogy, but if you were to roll a brand new oil drum into Starbucks and fill it with latte, it would cost you $4,700. There's just something intrinsically wrong with that story! 

[El Nikko + 2,145]

We're one year away from some major volatility and the media will act surprised when it happens