Three Hidden Forces Pushing Oil Back Up

by | published May 19th, 2015

The overall trajectory for oil prices remains upward, despite taking a breather today. I still see prices reaching $65-68 for West Texas Intermediate (WTI, the benchmark traded on the NYMEX) and $73-78 for Dated Brent (the other major benchmark set daily in London).

But this is hardly going to be a straight, linear rise. Rather, it’s going to occur in what I call a “ratcheting” pattern: occasionally jerking downward along the way.

One of the primary concerns causing some of the sudden drops in oil prices is the impact of excess production.

The traditional belief has been that downward prices discourage forward commitments of capital expenditures, thereby reducing supply and more closely associating prices with demand.

Operating companies have been slashing the financing of new wells, and the number of rigs in the field are now down to levels not seen since the credit crunch. So we should have seen a corresponding drop in production.

That’s not what happened.

Just take a look at this chart…

This “Bubble” Is Set to Kick Off New Energy Profits

by | published May 15th, 2015

The tide is beginning to turn for crude oil prices.

Following some nice recent gains and despite leveling out yesterday, the market currently remains at just above $60 a barrel for West Texas Intermediate (WTI) crude oil futures in New York.

The recent rise in prices would seem to be just what the smaller operators in the U.S. need to avoid a sector meltdown.

A few months back, when prices were pushing lows of $40 a barrel, there was widespread talk of a wave of bankruptcies coming in the oil patch. The picture is now better, given a recovery in crude prices.

But there is another shoe about to fall in the ongoing fight by smaller companies to survive.

Here’s my take on the disaster that’s brewing… and the opportunities it may bring…