Comments and questions under the wrap will be addressed in the Monday post.
A few notes:
Oil Rig drop. The drop in rigs has begun in the lower 48 although it's in part normal seasonality. Look for rig counts on the oil side to move lower through at least April. We see deferred completions during winter having a more direct impact on 1Q15 US production with the lower rig counts helping with 2Q15 and beyond levels as well. Having been through 8 winters when shale operators were trying to grow with only mixed sequential growth results from 4Q to 1Q it will be interesting to see what happens to volumes when the companies are not trying as hard.
Speculators increase net oil long position . CFTC data showed another rise in the weekly net long position with both shorts and longs adding (with longs outpacing again) as speculators, well, speculated about a bottom. The speculative net long position began falling in late June, roughly corresponding to the move in oil prices. This marks the 3rd week of modest increase in that position.
12 Month Strip Flat on the week. Not that one week matters that much but wanted to point out that the 12 month strip was flat to the penny with the prior week's close (not a typo in the table below) despite a 5% further drop in the front month on the week as the contract close affected pricing more than what we saw in the strip. Meanwhile, the OPEC basket fell another 7%, another week of high double digit percentage drops there as the powers that be in OPEC (Saudi, UAE, Kuwait) all gave what amounts to shoulder shrug comments with regard to the recent drop.
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