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re: Oil stocks, oversupply and the Iran deal
Posted on 3/16/15 at 7:21 pm to Northwestern tiger
Posted on 3/16/15 at 7:21 pm to Northwestern tiger
The one certainty, at the risk of being trite, is an increase in volatility.
My impression is that we are going to continue to see downward pressure as a result of storage capacity constraints as well as persistently growing production, and one thing people kind of overlook, a strengthening dollar. The question now is to what extent those developments are offset by a sharp drop in drilling, as we are now approaching a 50% decline in US oil-focused land rig count In 5 months.
A new trend emerging for producers is to delay well completion until prices rise and it becomes sensible to do so. So any uplift we see late in the year and in 2016 could be mitigated or possibly erased by a supply response.
My impression is that we are going to continue to see downward pressure as a result of storage capacity constraints as well as persistently growing production, and one thing people kind of overlook, a strengthening dollar. The question now is to what extent those developments are offset by a sharp drop in drilling, as we are now approaching a 50% decline in US oil-focused land rig count In 5 months.
A new trend emerging for producers is to delay well completion until prices rise and it becomes sensible to do so. So any uplift we see late in the year and in 2016 could be mitigated or possibly erased by a supply response.
Posted on 3/16/15 at 7:39 pm to Lou Pai
Yes there is a big back log in the Permian and ND on completions as well as most of the other liquid shale plays. To my angst I think these low prices are going to persist longer than most think.
Posted on 3/17/15 at 7:57 am to Lou Pai
quote:
My impression is that we are going to continue to see downward pressure as a result of storage capacity constraints as well as persistently growing production, and one thing people kind of overlook, a strengthening dollar. The question now is to what extent those developments are offset by a sharp drop in drilling, as we are now approaching a 50% decline in US oil-focused land rig count In 5 months.
I think the x factor could be interest rates. If rates start to tick upwards, a lot of these marginal shale players will die quickly and supply will drop.
I also don't see how this trend of delayed well completion will continue for very long. I don't think it matters how cheap drilling gets, that is pure expense with no revenue. Bankers, and investors, won't support that.
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