Cartoon Of the Week
The price of WTI this week fell to below $60.00, down 22% in the past month. Price differentials to WTI range from - $9.00 to - $14.85 suggesting LTO producers in America's largest two shale basins are now getting a little a north of 50 bucks a barrel in the Permian and a little south of $45 in the Bakken. These negative differentials are due mostly to market bottlenecks from over production and the shale oil industry's eyes being bigger than its stomach. Gas flaring of associated gas in the Permian is at an all time high and it is losing something around $1.2MM per day in revenue from wasted gas.
Suffering from memory loss (2013-2015 wasn't that long ago, really), or attention deficit disorder, take your pick, the US shale oil industry added 12 HZ drilling rigs to the rig count for the week ending 9 November and according to the EIA will continue to increase LTO production in America thru the end of the year. This keen market 'awareness' will most likely test new oil price lows in coming months, but hopefully not send folks home for Christmas out of work.
Next week we should expect the following MSM news: a.) "breakeven prices" have magically fallen for US shale oil producers, again, b.) OPEC and Russia will cut its production and try and stabilize the price of oil, again, c.) Forbes, the Wall Street Journal, the IPAA, etc. will tout the wonders of shale "resilience" and how much of a boon the shale oil phenomena is to American consumers, again, and d.) Trump will take credit for the entire thing. Again.
Lost in the hysteria will be that the shale oil growth "machine" continues to run entirely on credit/debt and that conventional production in America, including the Gulf of Mexico, is taking another price volatility bath. The other 50% of our nations domestic oil production, now buried in shale exuberance, continues to not know which end is up and will defer capital expenditures on new exploration and/or minimizing decline rates from conventional fields.
The American shale oil
industry "fires back" at OPEC and Russia with more LTO production.