The rate of U.S. oil production decline will accelerate in the 3rd quarter. It has already started.
In the last six weeks:
> U.S. oil production has declined 222,000 barrels per day.
> U.S. oil imports have increased by 512,000 barrels per day.
Crude oil in U.S. storage facilities has declined 10 of the last 11 weeks, despite a sharp increase in imports.
“The decline curve never sleeps, and always wins.” – David Demshur, Core Labs CEO in their 2nd quarter conference call. “The inevitability of the decline curve guarantees that oil production will slow and the market will find a balance.” Coupled with declining production, we live in a world where demand for oil increases “relentlessly” by 1.0 to 1.5 million barrels per day year after year after year. Continue reading →
The price of West Texas Intermediate (WTI) finally found the bottom in February for this oil price cycle. It won’t be straight up from here, but with global supply & demand heading toward a balance by yearend, we should see higher oil prices.
Later this week, the International Energy Agency (IEA) will publish their monthly Oil Market Report. In their April report, IEA forecast an increase in demand for hydrocarbon based liquid fuels (primarily made from crude oil) of 1,800,000 million barrels per day from the first quarter to the third quarter of this year. If that happens, the global oil market will be back in balance.
On April 25th, Terry Starling from Raymond James presented his firm’s official oil price forecast for 2016 and 2017. Like IEA, Raymond James predicts a significant tightening of the oil market this summer. They believe WTI will reach $50/bbl. by the end of June and spike to $70/bbl. in late 3rd quarter.
For over a year, crude oil prices under $60/bbl. are unsustainable. We’ve seen an incredible decline in drilling activity that is going to result in an acceleration of Non-OPEC oil production declines that began a year ago. The number of rigs operating in North America is now at the lowest level since Baker Hughes (BHI) started tracking it over 70 years ago.
Keep in mind that the United States and Canada are not the only two countries where oil production has rolled over. Oil production in Venezuela was down 188,000 barrels per day year-over-year in the first quarter due to natural declines and an economic crisis (caused by low oil prices). Latin America on the whole lost 441,000 barrels per day in the first quarter. We’ve seen many deepwater projects cancelled, enough to all but guarantee an oil shortage in 2018.
Investing in oil may be something you’ve thought of doing for a long time, but you didn’t know how to do it. When most people thinking of making an oil investment, they generally think of hiring a stock broker and investing that way. It’s ok to invest in oil stocks, if you know what you’re doing or you have a broker who knows what he’s doing. But you need to realize that any time you add another person to the mix, you’re going to end up paying fees you don’t need to pay. And that’s one more reason to talk to the team at Fossil Oil Company, so you can invest directly with them.
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Whether you’re looking for safe oil and gas investing for yourself, your institution or your equity funding group, Fossil Oil Company is the company you want to talk with before you make any other decisions. Call our team of oil investing experts at 832-919-6459 and let us explain what you need to know before you put your money into oil and gas. We’ll be happy to explain the process to you and let you know about the current projects we have available for qualified investors.