December 23, 2015

CRUDE OIL INVENTORY/’000 bbls (Week Ended 12/18/15)

Current: 484,780
Actual Build/(Withdrawal): (5,877)
Economist Average Estimate: 1,363
Previous: 490,657

Click here for the chart with five year averages.

Stephens Investment Banking - Building Blocks of a Stronger Oil & Gas Industry


*Why are You Drilling? – Oil & Gas 360®

Does the term “bearish” even begin to describe commodity prices anymore? Oil prices are generating most of the headlines, but natural gas has it just as tough: spot prices for Henry Hub are trading at 16-year lows. The story remains the same, as the supply/demand imbalance remains tilted towards the former with headwinds applying additional downward pressure. The tightened margins are translating to dwindling company balance sheets, similar to the difficulties experienced by OPEC members dependent on oil revenue to fuel their social programs. – Read More

*The Global Battle for Oil Market Share – The Wall Street Journal

What will the global oil market look like in 2016? This year is closing out with the industry in turmoil. The price of oil is hovering in the mid-$30s a barrel, supplies are swamping the market, the U.S. is on the cusp of ending its decades-old oil-export ban, and geopolitical rivalries continue to sow uncertainty. The lifting of the U.S. ban on crude exports is likely to be part of the omnibus spending bill Congress is working on this week, one the White House signaled it is inclined to sign. This important step reflects recognition of the new reality in world oil: the U.S. shale revolution and its impact on global markets. –Read More

*CNBC: Oil back at $95 — but only in 24 years’ time – CNBC

Oil prices will take decades to recover and will still not reach the peak seen in recent years, according to the latest World Oil Outlook (WOO) from OPEC. In the group’s latest outlook on supply, demand and prices to 2020 and 2040, OPEC predicted that a barrel of oil would cost (in real terms) around $70 by 2020 and $95 by 2040, a far cry from a high point of $114 a barrel last seen in June 2014 before prices began to plunge on oversupply. On Wednesday, a barrel of benchmark Brent crude cost $36.51, a shade above WTI at $36.47. – Read More

*Oil and Gas Bankruptcy Climbs to More than $15 Billion in 2015 – Oil & Gas 360®

Saying that 2015 has been a difficult year for the oil and gas sector would be an understatement. U.S. crude oil benchmark WTI averaged $91.23 per barrel in 2014, while in 2015 it has, to date, averaged $49.12. That’s a 46% decline, and it shows no signs of recovering soon. WTI today stands at $36.08, 34% lower than the year-ago price of $55.26.  Future crude oil prices for December 2024 currently sit at just $54.96. This sharp decline in prices has put the oil and gas industry in a difficult position. Many companies have adapted to the new reality of low oil prices, but that’s easier to accomplish for companies with right-sized balance sheets. – Read More

*Cheap Oil’s Great, Except When It Isn’t – Bloomberg

Brent crude hit an 11-year low of $36.20 on Tuesday, in part because OPEC has ceased to function. So, ding dong, the cartel is dead. By all means sing and ring the bells out. Just not too loudly. This isn’t, of course, the first time that oil prices have suddenly taken a tumble. Nor would the Organization of Petroleum Exporting Countries be the first oil cartel to go limp. So we — or at least the energy guru and Pulitzer prize-winning author Daniel Yergin — know something about what to expect. In the short term, the answer is straightforward and zero-sum: Cheap oil is good for growth in consumer economies and bad for producers. – Read More

*Race is on: Iraq cements Asia oil market share with $1.4 billion India deal – Reuters

Iraq has signed deals worth $1.4 billion to ship about 160,000 barrels per day of crude to two Indian refiners in 2016, sources said, upping the ante in a race among exporters to cement their market share in Asia – the world’s top oil consuming region. Asia uses half the world’s oil and has become a hotspot for a price war among producers who are offering steep discounts to lock in buyers in the face of bulging global supplies, slowing demand and crumbling prices. – Read More

*U.S. Oil Prices: Export Ban Lifts, See What Happens – Oil & Gas 360®

Last Friday, Dec. 18, the United States Senate adopted the Omnibus Appropriations Act by a vote of 65-33 as did the House of Representatives by a 316-113 vote. Later that day, President Obama then signed into law the $1.1 trillion funding bill.  Those actions brought an end to the 40 year old law that had banned exporting of U.S. crude oil, a ban that was in effect since the Arab Oil Embargo in 1974. “The Arab Oil Embargo of 1973-74 caused long gas station lines, soaring fuel prices and rationing for American drivers. – Read More

*U.S., Global Oil Prices Reach Parity – The Wall Street Journal

U.S. oil surpassed prices on the global market Tuesday for the first time in four years, another sign that a supply glut that originated in the U.S. is firmly entrenched world-wide. But some analysts said parity between U.S. and global oil benchmarks could signal the start of a recovery, as companies pumping in the U.S trim production in response to low prices while oil demand continues to stay strong. The U.S. government’s move last week to end a 40-year ban on crude-oil exports helped speed the closing of the price gap, which had been narrowing for months as the pace of the nation’s oil output declined from a June peak. – Read More

*The Oil Price Crash Is Taking a Heavy Toll On Canada. And the Worst Is Yet to Come – Bloomberg

Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. And the worst isn’t yet over in the heart of Canada’s oil patch. Some of the city’s largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago. “We all know someone who has lost a job,” Naheed Nenshi, the city’s mayor, said in a speech this month, lamenting the “funeral”-like atmosphere in the business community. – Read More

*Putin Gives His Outlook on Oil and Gas, Russia’s Economy – Oil & Gas 360®

During his time in office, both as the Russian president and prime minister, President Vladimir Putin has held a conference every year. The conference is held with members of the press, both Russian and international, and typically involves reporters asking questions of Putin who then responds off the cuff, though it is thought that Putin likely agrees to some questions ahead of time. Last week, many topics were addressed in this year’s press conference, Putin’s 11th. Topics ranged from ISIS and Syria’s President Assad, to Putin’s feelings on the quality of work being done by his government and the economic crisis facing Russia. – Read More

*Sheffield: Permian Basin will benefit most from lifting of export ban – Midland Reporter-Telegram

This past week, Congress finally completed and passed legislation that ended the decades-long oil exports ban. One of those industry leaders most vocal about the end of the ban was Pioneer Natural Resources Chairman and CEO Scott Sheffield. During a visit to Midland earlier this year, he described efforts taking place in Washington, including the creation of Producers for American Crude Oil Exports to educate lawmakers and the Obama administration about lifting the ban and keeping the oil industry in America on equal footing with the rest of the world. – Read More

*Interested in Acquiring STACK Acreage? Range Resources is Listening. – Oil & Gas 360®

Less than one month after selling its Nora assets in Virginia for $876 million, Range Resources (ticker: RRC) has another attractive piece of acreage on the block. The Fort Worth-based E&P is marketing its leasehold in the STACK (Sooner Trend Anadarko Basin Canadian and Kingfisher Counties) trend of Oklahoma, according to a recent company presentation titled “STACK Opportunity.” RRC’s position consists of 28,493 acres that are entirely held by production (76% operated) and is delivering net production of 6.6 MMcfe/d (83.5% gas). – Read More

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable.  This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note.  This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results.  EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services.  In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies.  As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note.

Legal Notice