Fracking fracked?

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Oil politics: While Gundlach acknowledged China's economic slowdown is hurting oil prices, he mostly pointed to geopolitical drivers to support his bearish energy call.

"I'm convinced that Saudi Arabia wants the price of oil at $70," said Gundlach, CEO and Chief Investment Officer of Los-Angeles-based DoubleLine.

That's because the Arab country's budget can withstand lower oil prices than some other oil-producing countries, including arch rival Iran. Saudi Arabia raised eyebrows recently by ramping up production in the face of plummeting prices.

"They don't care if they run a short-term deficit because they love turning the screws on the people that mean them harm in the Middle East," said Gundlach, hinting at Iran.

Another leg down in oil prices would also be bad news for Russia, which relies heavily on oil revenue to balance its budget. Last week, Moody's cited plunging oil prices in its decision to downgrade Russia's credit rating two notches to just above "junk" status.

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The shale is not going any where. I only feel bad for those making a living working in the shale sector whose jobs may be affected.

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The shale is not going any where. I only feel bad for those making a living working in the shale sector whose jobs may be affected.

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exactly. This is part of global econommics. changes can render sectors of the economy idle until demand resumes, which it will. Its jusy a matter of when.

Until then, the economy and consumer will benefit tremendously from lower prices at the pump.

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Fracking fracked?

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Not to frack the fracking fracked thesis, but at current NatGas pricing (~$3.60), crude would need to drop to around $20/Barrel for BTU equivalency.

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Sounds like fracking may not be fracked then.

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And the City of Denton (TX), which has a referendum on the November ballot to permanently frack fracking (ban it) within city limits, may get fracked at the polls (lose), yet end up fracking fracking anyhow (by having it die out due to lower oil prices).

Well shite

A fall in oil prices down to $70 would affect the unconventional oil plays - Bakken, Eagle Ford and the Permian Basin. But I think the floor is $80. I can list a host of factors to support my "guess", but I've already done it in other threads. This guy has latched onto factors that support his thesis, though I don't think the Saudis ramped up supply in this instance. What they did was cut pricing, they didn't cut production to defend price. The real source of the current excess supply comes from Libya which returned about 500,000 bbls/day to the market.

And WTI is up $1.75 and Brent, which is more affected by Saudi price cuts, is up $2.36.

So when should I throw down on some Oil Exploration/Production stocks. They are starting to look pretty tasty since the general consensus seems to be that everyone feels like this is temporary and they are just getting hammered.