Current /CL:NMX Stock Info

The rig count is dropping, but crude inventories continue to grow. In fact, EnerCom’s Crude Oil Cuttings inventory report is at risk of expanding the maximum range of barrels, a move we’ve never been prompted to make.

The Energy Information Administration (EIA) announced yet another build that exceeded analyst estimates, reporting gains of 8,874 barrels for the week ended January 23, 2015. The gain pushed total inventories up to 406,727 barrels, the highest on record. Based on Bloomberg data reaching back to the 1980’s, the total has never c...

Analyst Commentary

KLR Group (1.28.15)

Thesis (as of January 13, 2015)

We expect Brent/NYMEX $62.50/$57.50 oil prices this year and $85/$80 next year. In our view, the negative supply implication of lower global oil resource capitalization over the next two years, evident in the U.S., supports a long-term Brent/NYMEX oil price forecast of $100/$92.50. A long-term Brent/NYMEX $100/$92.50 oil price is sufficient to generate an industry norm ~5% return on invested capital.

We believe from Saudi’s perspective, the magnitude of the necessary supply reduction, largely attributable to robust growth in U.S. tight oil, rendered the role of swing producer less economic than maintaining output and allowing oil prices to fall meaningfully below equilibrium in the near-term.  

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