Oil Falls to Six-Week Low on China Slowdown, Supply Surge at Bloomberg.
Oil Looks Ready To Collapse on the chart by Armo Trader. Oil Looks Ready to Part Ways With Stock Market at WSJ.
Iran’s oil minister says crude exports rebounding at Fuel Fix.
“Existing technology and government policies can cut vehicles’ fuel needs in half by 2030, according to a report from the International Energy Agency released Wednesday.” (Fuel Fix) Western world oil demand may be in terminal decline, but not Asia (index mundi)!
Meanwhile, the Saudi’s used a record amount of expensive crude to generate electricity this summer (Reuters).
Oil rig count drops sharply in North Dakota: regulator at Reuters. Not quite: First, this is not new info. 1) 214 to 194 is not sharp. 2) Drilling days per rig continues to fall (efficiency gains) 3) The move to pad drilling is the driver in the rig decline. 4) The lower rig count will not quickly lead to a fall in production as asserted.
A look at the Bakken by Exxon Mobil. The Bakken boom in pictures.
Commodities Boom May Have Peaked as Fed Stimulus Fades at Bloomberg. BHP says “Scarcity prices will not happen again.” at Reuters.
Interestiningly, after yesterday’s first look at the rails Norfolk Southern (NSC) chopped its outlook on coal. The group should get beat up today.
Oil-the pull back was to $80 ($77-ish) and it was a nice run to $100. Most traders see $100 as a great sell point. Like with Gold and other stocks-you don’t usually blast through $100. I look at stocks like PWE, FST, and PBR and they are close to nice, low risk buying points. I am putting these on the watch list. Example: PWE – 200 day resistance with a pull back to the 20 dma could be a nice set up. A break through the 20 dma would push me more into a bearish camp, but still worth watching.
When I read commentary on the oil price referencing WTI I can’t help but be disappointed over the infrastructure lag and money left on the table by US producers. Frankly, $80 is not going to get it done for while current (world) Brent pricing near near $110 completely changes the story.
Ironically, Dan Fitzpatrick stated the same thing regarding Oil-watch list. He is looking at the OIH (oil service). The point is, just because Oil looks broken, don’t take it off your radar screen yet.
JJ – good call on NSC, pre-trade looks grim trading below its $70 low earlier this month.
This article by Simone Sebastian (fuel fix) is dead wrong. While it is probably true that existing technology and government policies can cut vehicles’ fuel needs in half by 2030, he leaves out the fundamental problem – the thirst by the American consumer for an affordable, powerful, and comfortable vehicle. Here are some of the things he is missing. 1. The cost of this technology by the admission of the auto companies themselves say it will add thousands of dollars to the cost of each vehicle. 2. Look at the attempt by GM to introduce and sell the Chevy Volt. They have only sold 13,000 for 2012 after for casting 40,000. They say they are temporarily stopping production because of poor sales. It is estimated it costs the company 40-50000 for every sale they make. 3. $4.00 gas no longer seems to bother anyone. 4. Americans are in love with there SUV vehicles. Just look in your neighbors driveway. 5. Look at how much oil has been discovered and the new technology of extracting it from the ground. 6. The U.S. government will ease drilling regulations for oil at some point. And the pipeline will happen as well. These are just some of the arguments as to why the article is misleading.
Where you stand is a function of where you sit. First, remember Mr. Sebastian is reporting from the vantage point of lowering carbon emissions because of a chief concern over global warming. Those in the US Midwest do not realize to the East Coast and European obsession. ISA has continuously noted the inexorable decline in US and OECD oil demand against the rise in Asian oil thirst. US demand peaked in 2006 and continues lower. Less cars are on the road. The Camry model one year newer than mine is 8% more fuel efficent. In short, government mandates will mean smaller cars.
Meanwhile, the inability to meaninfully raise oil supply coupled with Asian demand is why ISA tracks the investment thesis.
The ‘fuel needs cut in half’ headline is sensational, yet the fundamentals and trends are interesting.