Wrap – Week Ended 12/19/14 (in progress)



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. 

CFTC oil 121914

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.  

Please click the link right below this to.

wrap 121914



16 Responses to “Wrap – Week Ended 12/19/14 (in progress)”

  1. 1
    zman Says:

    Saudi and OPEC talking down oil prices again today. 

  2. 2
    PackMan Says:

    Any idea why Nat Gas getting pummeled now ?   (not that there needs to be a reason…)

    My phone app is showing 3.30's this evening ?

  3. 3
    zman Says:

    re 2 – unknown, could be a little follow through on Friday's drop, weather forecast is improving but its not exactly bitterly cold at this point in the heavy gas consuming areas yet. Would expect less near term downside from here.  

  4. 4
    RMD Says:

    Saw a Barclay's summary piece estimation oil production growth exceeding EIA edt. of ~+700mm/d  despite ~-25% capx cuts.

    +70mm/d would be definitely the 'wrong way' if USA production needs to be cut 1mm/d to make OPEC happy.

  5. 5
    zman Says:

    re 4 – bad firm and a bad premise. I have seen nothing good out of Barclays for some time. 

  6. 6
    Baylor Says:

    Why is it 700mm/day instead of 700m/day?

    i assume trying to say 700,000,correct?

  7. 7
    zman Says:

    re 6 – yes, he's saying 700,000 bopd. I contend that Barclays has been less than useful in the space for a long time. 

  8. 8
    PackMan Says:

    SWN in Barrons:  http://online.barrons.com/articles/southwestern-energy-shares-offer-60-upside-1419051844

  9. 9
    zman Says:

    Lots of bottom talk again, even as OPEC tries to talk it lower; bottom chatter likely inspired by CFTC figures.  OPEC has little incentive to want crude up near term. 


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