Shale Unbelief

Oil Near Two-Week High on U.S. Supplies; Brent Rises Above $110 at Bloomberg.

“But Helms emphasized that oil production in the Bakken is consistently increasing by 15,000 to 20,000 b/d every month, and that thousands of additional wells will be drilled there in the coming years.”  Platts

Raymond James Energy Stat of the Week:  “this oversupply simply shifting from the Mid-Continent to the Gulf Coast.”  Raymond James

“Eagle Ford crude production is close to 600 Mb/d as of July 2012…Takeaway projects being developed today to go online by 2013 have capacity for 1,650 Mb/d…”  These numbers will receive push-back, of course, as they are not months old and government issued.  RBN Energy

The media has been having a field day with Ohio Gov. John Kasich’s claim that a single energy company could recover $1 trillion worth of oil and gas from the state’s shale.  Interestingly, the only ‘expert’ to disagree is Arthur Berman, who last I knew was in denial the natural gas market continues to be oversupplied by 10% or so.  Oops.    Washington Post and Huffington Post.  Shhh..don’t tell them the Marcellus is a monster:  John Hanger.  Or that the natural gas oversupply continues while the Haynesville rig count has collapsed:  Haynesville Play.

An extensive piece on global gas dynamics for the next decade at Forbes.

Chesapeake reported second quarter results.  Three things stand out: 1) CHK’s asset base is monstrous. 2)  They are pretty good at drilling NG wells and 3)  CHK still needs to crack the horizontal shale oil code.  CHK

Oil Supply & Demand Balance

Oil Drops After Biggest Gain in 5 Weeks as Storm Slows at Bloomberg.

Mark Papa oil market commentary:  “Regarding oil, we still think the global supply-demand balance is tight, and we expect prices to strengthen throughout the remainder of the year. Two recent concerns I’ve heard from oil bears involve horizontal shale oil. One concern is will the U.S. create enough shale oil to affect global supply. EOG’s forecast is an increase in the U.S. of 2 million barrels of oil per day by 2015, which, we believe, will not impact a 90 million barrel of oil a day global market…The second concern relates to possible international horizontal oil shale plays and their potential impact on supply. My answer there is maybe it will happen, but it’s not likely for another 10 years at least.”  SA

Mark Papa on the US horizontal oil plays:  “We think there are only 3 consequential horizontal oil plays in North America, the Eagle Ford, Bakken and Permian, and all other alleged oil plays are either inconsequential on a national scale or really NGL plays.”

Papa is on target, only he missed the Mississippian via Million Dollar Way.

Monterey shale in California will likely not match the BakkenBakken Zone.

US Crude Production Has Grown 13% In The Past 18 Months, chart at Business Insider.

Good for the Bakken:  Seaway Reversal & Expansion Project on Schedule for Mid 2014 at RBN Energy.  The Eagle Ford may have the best economics, but the Bakken is the largest.  Perspective from Million Dollar Way.

“Oil rigs were up 13 to 1,429 gas rigs were down seven to 498…”  Haynesville Play.

Fuel economy standards have affected vehicle efficiency at the EIA.

How to Play Energy from Barron’s.  (Google the title to be able to read the entire article.)

Eagle Ford Oil

Oil Rises From Three-Week Low on Forecasts U.S. Hiring Increased at Bloomberg.

The Eagle Ford rig count is 270, a good 50+ higher than the Bakken with more productive geology.  Eagle Ford Shale

PXP Eagle Ford “second-quarter daily sales volumes averaged 25.7 thousand BOE per day net to PXP compared to second-quarter 2011 average daily sales volumes of 2.3 thousand BOE per day net to PXP.”  Results

EOG Resources continues to kill it, led by their Eagle Ford resultsMarathon’s Eagle Ford Production Grows 50% in Three Months at Eagle Ford Shale.

“Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.”  And it’s only accelerated since.  EIA

How high would oil prices be without the US horizontal drilling bonanza?  Pemex Reports Production Declines again at E&P Magazine.

A large swatch of the developing world still uses expensive oil products for electricity generation.  India sucks in diesel as poor monsoon triggers massive power shortage at Platts.

“For the first time, London is overtaking New York as the global hub for trading oil futures.”  Financial Post

International Oil

Oil Rises a Second Day as U.S. Inventories Decline, ECB Meets at Bloomberg.

Blackout Highlights India’s Diesel Dependence at the WSJ.

“NLG Bloodbath…rippling across the oil and gas industry” at Bloomberg.

Devon JV’s some Permian acreage.  Remember, time value is a key componet in these deals.  Rigzone

“Anadarko also set a record with a weekly net production rate of 32,300 boe/d in the quarter. Gross processed production is approaching 100,000 boe/d.”  Eagle Ford Shale

Mississippi lime play sprawls northward into Nebraska at the Oil & Gas Journal.

Nexen bid part of China’s plan to become resources powerhouse at US NewsChina’s Energy Grab Is About Know-How, Not Resources at Business Week.  Never mind Nexen is a Canadian company with only 10% of its assets in the U.S. and most of its properties flung throughout the rest of the world, U.S. senator urges Washington to use China’s bid for Nexen as leverage at Globe and Mail.  Perhaps Keystone pipeline politics plays into this too.

The last 50 S&P points were based on European promises.  This morning they show their cards.

U.S. Oil & Gas

Crude Oil Set for First Monthly Advance in Three at Bloomberg.

U.S. oil production for May was higher by 13% year over year (EIA).  May net petroleum imports were down 11% year over year (EIA).  These trends are strong and are accelerating a bit.

“…KKR has committed to providing drilling carry equivalent to $25,000 per acre for the next 100 wells drilled on Comstock’s Eagle Ford shale acreage…”  Penn Energy

“China’s state-controlled oil producers are targeting struggling energy companies and projects world-wide, opening up production that might not otherwise happen.”  WSJ  Also, “Saudi Arabia is on track to surpass its record oil output this year…”  WSJ

“The report by Bentek Energy for the North Dakota Pipeline Authority estimated that current production of 536 million cubic feet of gas per day will balloon to 3.1 billion cubic feet per day by 2025.”  Star Tribune  Sounds like Bakken gas will displace U.S. Canadian imports, with Canadian gas heading to Asia through British Columbia as LNG.  RBN Energy

“The glut of shale gas in the United States has been a double-edged sword for earnings this week, cutting into profit for producers such as Exxon Mobil and Chevron, but benefiting chemicals makers and power producers.”  Reuters  Additionally, I see the natural gas producers are continuing their ceiling test write-downs as they report results this morning.

“I think that the steady state equilibrium price for natural gas in the United States is probably somewhere between $4 and $4.50 an Mcf.”  Jim Tisch on the Loews conference call.  Invest accordingly.

The big money of environmentalism at CS Monitor.

Booming Oil & a Treadmill

Yesterday I asserted shale is being underestimated in the press and public, and I received push-back from knowledgeable investors.  The world has changed fast.  Perhaps the estimates quoted and linked were aggressive.  But not by much.  “The Eagle Ford produced no oil in April 2008. This April it accounted for 4.6 percent of U.S. production.”  The Texas RRC estimates May Eagle Ford production was 262,563 barrels of crude a day and April’s production was 279,000 bbl/d.  Yet they are so far behind that April’s number was revised higher by 56,000 bbl/d.  Oops.  Expect May to be revised much higher too.  Fuel Fix.

The Eagle Ford compares favorably with the Bakken:  Oil & Gas Journal.  Forbes piece on Continental’s (CLR) Harold Hamm:  Forbes.

Cenovus Energy Inc. Target $44 for Bakken and Oil Sands Values at AMP 2012.

The shale boom is remarkable, but it is not a panacea for world oil production rates.  The treadmill is too fast Exxon Mobil (XOM) and ConocoPhilips (COP) who reported second quarter production was lower by 5.6% and 6.5%, respectfully.  Mighty Suncor (SU) is holding back in the oil sands and Shell scales back Arctic drilling plans at Fuel Fix.

Commentary: How much oil growth do we need to support world GDP growth?  ASPO

Largest crude oil producers:  API  Who owns big oil?  API

Margins by industry:  API.  Effective tax rates by industry:  API.

Later today we’ll have more on natural gas with its relationship with coal.

Shale Underestimated

Despite yesterday’s EIA oil report showing an increase in inventory, the price reversed higher.  Bloomberg  New oil sands development requires a very high oil price:  Financial Post.

“A new study says North Dakota’s oil production could jump more than threefold by 2025 to more than 2 million barrels a day.”  (Dickinson Press)  “Production there averages around 800,000 barrels per day.”  (Oil Price)  Meanwhile, “Eagle Ford crude production is close to 600 MB/d.”  (RBN Energy)  That gets us to 1.4 million barrels per day between only the Bakken and Eagle Ford and heading higher.  The shale story is being underestimated!

“Oil integrateds/refiners are set to report later this week…Equity Analysts have paired back expectations not only for the balance of 2012 but for 2013 as well.”  AMP 2012

“In the past 20 days, 40 of 43 stocks energy stocks have outperformed relative to the S&P 500, making it one of the best performing sectors.”  Who knew?  Street Insider

A map showing IEA country strategic oil reserves:  Business Insider.

Why is natural gas supply still high?  Think productivity!  Newfield (NFX) has long since stopped drilling dry gas wells, but gas associated with oil production kept their second quarter natural gas rate at 440 mmcf/d, similar to their first quarter of 447 mmcf/d.  Meanwhile, Encana is North America’s largest natural gas producer and had .5 bcf/d of ng shut-in in the second quarter.  Sounds like the gas markets needs a bunch more time

Is Natural Gas Going To $4.00?  Not before winter!  But enjoy the chart-fest:  Globe Trend Capital.

S&P 500 chart technically ‘looking blurry’:  ChartologyCommodities reaching a “Counter Trend Peak” and about to fall once again?  Deflation trend going to continue?  Kimble Charting Solutions.

Here at Independent Stock Analysis we inform and educate.  Perhaps you find ISA a great productivity tool.  You are a big boys.  I don’t shout at you do something.  What you won’t find here:  Anatomy of A Vancouver / OTC  Penny (PAID) Stock Promotion.

High on Oil

Oil Advances From One-Week Low on Chinese Manufacturing Outlook at BloombergOil-Price Surge Is All About Iran from the WSJ.

Blackrock:  US Shale Boom:  A Case of (Temporary) Indigestion at Scribd.

Eagle Ford crude pricing:  RBN Energy.  Natural gas liquids hit dry patch as prices sink at Fuel Fix.

Emerging market demand is higher; developed world demand shrinks.  “US oil demand in June declined by 3% from a year earlier, according to the latest monthly statistical report from the American Petroleum Institute. During this year’s first 6 months, demand fell by 2.6%.”  Oil and Gas Journal

The last nine months has seen a steady rig count, with the gas rig count dropping while the oil rig count has risen.  Oil and Gas Journal

“If you thought 2008 was a heyday for deepwater drilling, you ain’t seen nothin’ yet.”  Platts

Slowly but surely the anti-fracking fear mongering zealots are being put to bed by reputable mainstream publications.  Newsday  Russia’s Gazprom continues to talk their interests regarding the shale gas boom at Platts.

Is Saudi Arabia succumbing to the resource curse?  Financial Post  Iraq’s Oil Exports To Fall For A 3rd Month In July at MEES.

Big Oil & Gas

Holy crap!  Nexon agrees to $15.1B takeover by Cnooc.  Marketwatch  The Chinese are coming!  The American Shale Conundrum Facing China’s Energy Champions at WSJ (google the title to read the whole article).

Oil Plunges to Four-Day Low as European Debt Turmoil Intensifies at Bloomberg.

Raymond James Energy Stat of the Week:  Iraq oil production is actually ramping up.  Raymond James

U.S. oil below $80 could slow shale oil drilling boom: Baker Hughes at ReutersWill tight oil change the world?  Financial Post.  The rig count at Haynesville Play.

Much detail and the blip in the Eagle Ford rig count:  Eagle Ford Shale.  Petroleum products shipped by rail were up 54.8% the first week of this month (AAR).

“The number of oil drilling rigs at work in North Dakota is leveling off, and a state regulator says that’s a good thing.”  Fuel Fix

Demand destruction is real as today’s teens have different habits (The Atlantic).   Yet, “Travel on all roads and streets changed by +2.3% (5.7 billion vehicle miles) for May 2012 as compared with May 2011.”  Calculated Risk

A natural gas loaded stat-fest at Zman’s Energy Brain.

We’re Headed To $8 Natural Gas at Forbes.  And he says we get there before winter!  I do not think so.  First, the glut will keep $8 natty far away this year.  But the current down cycle has set up the market for a big bull cycle.  The rigs have been moved to oil reservoirs and balance sheets have been stretched.  However, the economics are off the charts at $8 natty and would make oil returns pale.  The E&P’s would hedge and drill their brains out.  Moreover, the E&P’s really did not get crushed in this down cycle.  The coal stocks were the losers and look to be the big winners going forward…fuel switching and all.  So we’ve been looking at coal every afternoon.

For the beating the energy industry takes in the press and by the politicians, U.S. energy policy is actually quite good.  Especially next to much of the rest of the world.  Yet I found this ExxonMobil piece to shed light without being propagandish.

Independent Stock Analysis gets some love at Bakken blog Million Dollar Way.

Oil Energy

Crude Oil Futures Drop From One-Week High at Bloomberg.

The Supply Side of Oil by Elliot Gue.

“The course of US production into 2020 will be more dependent than usual on price. An increasing portion of total global production is crowded into the marginal price band of $80-$100 a barrel, and yet the world economy appears to struggle-on the demand side-at that very same level.”  Gregor

Off-shore dayrates very strong:  Fuel Fix.

Energy Stat of the Week:  When Should E&Ps Slow Down Oily Activity? Cost Curve Says Not Soon Enough by Raymond James.

Shale will free US from oil imports, says ex-BP boss at BBC.

The best rig count charts:  Haynesville Play.  The Eagle Ford rig count is huge at 280 at Eagle Ford Shale.

“…natural gas liquids producers may report second-quarter earnings below analysts’ estimates as tumbling prices…”  Bloomberg

Competition among fuels for power generation driven by changes in fuel prices at the EIA.

LNG big picture look from the Economist.  “A nosedive in natural gas spot prices in Asia over the last month…”  Reuters

More Energy

Oil Rebounds as Norway Strike Looms at BloombergStatoil Prepares to Shut Down Production As Strike Continues at the WSJ.

“Problem is, the rebound last year was fuelled at least in part by an average deficit of 800,000 barrels a day for the year as a whole.  This year, that has reversed with an average surplus of 1.9 million barrels a day during the first five months of the year.”  At least shoulder season is over.  Financial Post

Opec’s gift to oil sands producers: high oil prices also at the Financial PostGulf OPEC States Oppose Prices Meeting at the WSJ.

Raymond James Energy Stat of the Week addresses NGL’s:  Raymond James.  The rig count from Haynesville Play.

The EIA is wildly underestimating horizontal drilling:

The oil price will determine the pace of development, but looks like a million barrels in the Bakken by 2015:  Prairie Business  Certainly the Eagle Ford production will higher than the Bakken under every oil price scenario with 60 more rigs running on more productive land commanding premium pricing (Gonzales Cannon).  Plains just announced quarter over quarter oil production up 17%, no doubt driven by the Eagle Ford (Yahoo).  With the weather cooperating and the industry backlog under control, growth with be a big theme as the E&P’s announce second quarter results.  Utica, Mississippi lime, and the smorgasbord of wolf/dog/bone Permian plays?  Anyone?

Bakken down-spacing at Ryder Scott with a hat tip to Million Dollar Way.  I do not follow Triangle Petroleum in the Bakken:  AMP 2012.

Pick you stocks, and countries, carefully.  Why Brazilian Oil Struggles to Catch Fire  at the WSJ.

Energy to start your week

“…oil futures posted their biggest quarterly declines since the fourth quarter of 2008…while (of Friday) U.S. crude jumped by more than $7…the fourth-largest daily gains in dollar terms since the contracts were launched.”  Globe and Mail

“But if oil prices resume their recent slides, Bill Herbert, co-head of research for Simmons & Company said the excited spending on expensive shale play developments will likely taper off.”  Fuel Fix

Directly related are Eagle Ford well starts:  EIA.

Details on the Mississippi Lime have been hard to find to this point:  E&P.

U.S. April 2012 crude production was down 5% from March, yet up 10% over April 2011:  EIA.

Booming production and declining demand means U.S. net petroleum imports were down 15% April over AprilEIA.

U.S. NGL production also up 10% April over April.  Be careful!:  EIA

U.S. Rig Count: -7 (all Gas Rigs) to 1,959 at Haynesville Play.

This heat sure is helping burn off the excess natty in storage, meanwhile Cities That Wouldn’t Exist Without Air Conditioning at Atlantic Cities.

Canada’s natural gas dreams closer to reality after Petronas moves at the Financial Post.

No Energy Yet in the Energy SectorDragonfly.

Earnings, Meet Cliff: Energy’s Contribution to S&P 500 Earnings Is Plummeting, the Raymond James Energy Stat of the Week.

I was published at Seeking Alpha:  Forest Oil: A Speculative Idea.

Oil Price, Undulating Plateau

Yesterday a report by Leonardo Maugeri created big buzz in the oil and gas community.  The Oil and Gas Journal actually used the ridiculous 17 million number in a headline.  The executive summery forgets about priceThe WSJ and economist Mark Perry tease the peak oil idea in their headlines.

One not obvious idea missed is the idea of natural decline rates.  I haven’t found what what number Mr. Maugeri used, but I speculate it is too low.  Also, we live in a world of corrupt governments and politically rivalries.  Venezuela production is going to increase?  Iraq’s production was supposed to boom enough to pay for the Bush’s militarism using $25 oil…how’d that work out?

But the main idea missed in shale oil is price.  With $100+ oil pricing the North American E&P industry will increase production robustly.  They have aggressively broke down technological barriers.  But those barriers require high prices for economic returns.  Today’s WTI price near $80 means many Bakken and Canadian tight oil players are receiving maybe $70 for their oil, a price at which economic returns are very skinny.  If prices stay the same or fall, capex budgets will be scaled back when they report results in a month.  These guys as a group already outspend their cashflow…

So the oil price may crash, but it would be a function of a poor economy, not because production rose by many millions of barrels a day.  Moreover, OECD oil consumption will continue to shrink at these high prices, while booming emerging markets and oil producing countries increase their consumption.

Shale oil has created an undulating plateau in oil production, the shape of which will be a function of price.

Marginal oil production costs are heading towards $100/barrelFT Alphaville

Clearly the world is not short of BTU’s, per Monty’s excellent notes:  World of Wallstreet.

Fortunately horizontal drilling technology has advanced so much.  As the Land Export Model predicted, 2 million barrels less a day of oil production is available to the world than 2005.  Oil exporting nations have been seeing their own consumption boom.  Energy Bulletin

Meanwhile, the EIA is a decade and half behind:  “Tight oil production is expected to rise past 1.3 million barrels of oil per day (bopd) in 2027…”  Um, U.S. tight oil production surpass that level by the end of this year!  Rigzone

Chasing arctic oil illustrates the easy and inexpensive oil era is history imo:  WSJ.

A really cool 15 page oil presentation chart-fest:  Business Insider.

A land owner caught between energy giantsGlobe and Mail.

Oil Heavy

Oil Trades Little Changed as Storm Threat to U.S. Gulf Crude Supply Fades at Bloomberg.

Annual Energy Outlook 2012 (Only 252 pages long):  EIA

This would only be the tip of the iceberg:  Oil price fall slowing oilfield activity at Calgary Herald.

I have little idea when the Saudi’s will cut oil production, but here is a look at the coming monarchy change:  Economist.  Update:  OPEC may hold emergency meeting if oil prices continue to decline, Khatibi says per Platts at Twitter.

China Stockpiling masks tepid oil-demand growth:  Petroleum Economist.  However, “Both Malaysia’s A-P Tapis Crude and Indonesia’s A-P Minas crude are pegged to Brent crude and currently trade at an $8 premium.”  Peter Pham.

Gas at the pump should head down to near $3.00 stateside:  Econbrowser.

Meanwhile, a Japanese company is paying $5000 an acre for South Texas acreage.  They have to drill through the Eagle Ford (which rights they do not receive) to get the Pearsall.  Two words:  Time-value and WOWOil and Gas Journal.

A look at how Canadians are handling the CHK & ECA crisis:  Financial Post.  Southeastern thinks Chesapeake is worth $50 and eventually $100:  CNBC.  Technical look at CHK:  Roberty Sinn

Oil & Gas Dozen

Oil, coal and solar in China at Bloomberg.  Oil demand in India:  Reuters.

North American spot crude oil benchmarks likely diverging due to bottlenecks from the EIA.

“Vast fortunes await those willing to quickly claim Canada’s still-unknown troves of tight oil reserves, though it may cost them a small fortune first.”  Financial Post  Drug tests coming to the oil sands this fall at Mining.

Oil and stock market divergence:  Sober Look.

A month old, but Investing in the Eagle Ford Shale Oil Play from Oil and Gas Investments.

I’m not sure posting this is a good idea:  Oil and the CRB Approaching a Final Bottom.  Gold Scents

Statoil: Natural Gas to be Fuel of the FutureRigzoneLNG seen viable fuel for heavy-duty trucks at Oil and Gas Journal.

Oil and natural gas ratio:  Bespoke.

A fascinating look at Chesapeake’s MLP sale:  MLP Guy.

Oil & Gas

Energy investors have one final straw to possibly grasp:  Brent oil spent the previous fourteen months over $100; the 200 day moving average is $112.  Brent now having a $91 handle wouldn’t feel so good.  Perhaps the Saudi’s will cut production.  Meanwhile, US producers are suffering with a WTI price which dipped under $80 last night.  So if mid-continent realizations might be around $70, IRR’s are skinny and capex budgets are underfunded.  Natty will be depressed until injection season ends with the onset of next winter.  Incredibly, Ecana just increased 2012 capex for ‘liquids’:  Globe and Mail.

I do not expect the Iran sactions to mean squat.  Bloomberg

Oil Boom: North Dakota is the Next Hub of U.S. EnergyPopular Mechanics.  (I apologize for forgetting to whom I owe a hat tip for this one.)

Booming US production, you ask?  Did you know the Eagle Ford rig count is about 60 higher than the Bakken?  Eagle Ford Shale

On the one hand, given the opportunity, US gassers would kill LNG pricing in short order.  Yet Apache’s LNG Kitmat was just pushed back a year to get the marriage right:  Financial Post.  However, every commodity for which China becomes a large importer has seen a new higher price deck.  Perhaps natural gas is next at Oil Price.  Additionally, Statoil: Natural Gas to be Fuel of the Future at Rigzone.

Calling this ‘reseach’ on Chevron is a generous term, but perhaps worth a skim:  Turnkey Analysis.

Jaw-Dropping Panoramic Photos Of America’s Early Oil BoomBusiness Insider.

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How Real Is Shale?

About yesterday’s mess in the patch:  Barrons.  UBS went the other way, with less analysis:  Reuters.

“Valero could stop importing light, sweet crude to its Gulf Coast refineries as soon as 2013 and fully rely on U.S. production,”  Fuel Fix.

Rail shipments of oil up 36% this year:  Globe and Mail.  Thus the strengths in the rails:  ChessNwine.

Part III on Bakken crude pricing:  RBN Energy.  Brent-WTI spread at Bespoke.

Commentary on OPEC’s meeting last week:  FT Alphaville.

The Duvernay shale is a colossal oil and gas play in Canada:  Mining

At last, a bottom in Natural Gas:  “I believe strongly that the low at 1.902 will not be seen again in my trading lifetime.”  Peter Brandt

Haynesville rig count at Haynesville Play.


Futures are higher this morning, one take:  Reformed Broker.

Raymond James Energy Stat of the Week pertains to thermal coal:  Raymond James.  Coal export perspective from the EIA.

Oil Gains Most in Five Months on Spain Bailout, China at Bloomberg.

Bakken and Eagle Ford Oil Help Push U.S. Crude Oil Production in Q1 2012 to the Highest in 14 Years; expect this chart to keep going higher.  Mark Perry

Friday’s rig count saw a increase in oil rigs and drop in gas rigs:  Haynesville Play.

China May car sales up 22.6 percent year-on-year at Reuters.

Ten year oil price chart:  ChessNwine.

Energy and a Cut

Eagle Ford human interest article:  Fuel Fix  As production ramps higher in a new play, operators get behind before a maintenance level of backlog inventory is found.  The Eagle Ford backlog at Eagle Ford Shale.

Crude oil and refined product charts by BMO courtesy of Pedriven and Land Lubber at Investor Village.

More on the Russian shale Bazhenovf at Forbes.

Shortages of Guar Gum at 24/7 Wall Street.

Dodge the Bullet.  Natgas Supply Overhang Correcting at RBN EnergyMusings: After 7 1/2 Months of Lower Gas Rigs, Production Finally Falls at Rigzone.  However, “A report from Bentek Energy, which examines national industry trends,  estimates that even if companies stopped drilling new wells in northeast Pennsylvania, production could grow by 31 percent over the  next 16 months as the partly drilled wells get hooked up.” at Triblive.

Chesapeake mid-stream sale could be announced this week.  Financial Times

Sector relative strength at Bespoke.

“No one knows whether we are headed down to 800 on the S&P 500 within a year, or are going to 1700 by 2013.”  ChessNwine.  Fed’s Yellen:  “Scope remains for further policy accommodation” per Calculated Risk.

While I was putting this post tegether, China cut lending rates for the first time since 2008.  See Bloomberg.  Think materials stocks.

Macro Oil and Stimulus

Horizontal drilling changing the game:  “The global oil market looks very bearish…The exploration and production guys now are saying $4.50 (natural gas) is a good number.”  Oil and Gas Journal with a hat tip to Million Dollar Way

Full cost and successful efforts accounting in the oil patch.  I sure expected to see much more depth in this article at the WSJ.  (To read the full article you will need to google the title and click through.)

“Saudi Arabia has overtaken Russia as the world’s biggest producer of oil for the first time in six years as the kingdom tries to compensate for declining Iranian exports and attempts to push crude prices lower.”  The National

“Asian markets were mostly in positive territory early on Monday, which was widely attributed to comments by Chinese premier Wen Jiabao on Sunday, emphasising the need for more support amid signs that growth is sputtering.”  This is, of course, the catalyst the materials sector needs.  FT Alphaville  Or won’t the Stimulus help?  FT Alphaville

Waiting for QE3 stateside:  Chris Puplava