Energy Prospectus

Oil trades in U.S. dollars. The Euro/Dollar ratio has a strong correlation to oil prices. Based on where the Euro/Dollar is today, WTI should be at $58/Bbl.

Read this: https://www.oilandgas360.com/oil-price- ... ply-demand

Art Berman now thinks oil prices are going up. 10/11/2017: "Oil prices will be lower for longer—that is the conventional wisdom. Data suggests, however, that oil supplies are tightening and that higher prices are likely in the relatively near-future."


Art has been a BEAR on oil for most of the year, so this is encouraging.

Read Art's latest prediction: http://www.artberman.com/higher-oil-pri ... arly-2018/

As I have been telling you for several months..... Comments below are from Art Berman.

Misplaced Concern About Shale Supply Fears about burgeoning U.S. supply from shale reservoirs has been a consistent drag on market sentiment about price for at least a year. This has been based more on rig count than real evidence. Continental Resources chairman Harold Hamm has loudly blamed overly optimistic EIA supply forecasts for low U.S. oil prices. This is misplaced and typical of the hyperbole regularly heard from shale company executives.

The fact is that U.S. output has been flat since early 2017 and the EIA has adjusted its forecasts as data replaces sampling algorithms in their accounting. < My bet is that EIA is still over-estimating U.S. oil production each week. - Dan


The reason is that despite increased drilling, frack crews and equipment are not sufficient to meet demand for well completions. Pressure pumping equipment was not maintained and parts were cannibalized after the oil price collapse, and crews were laid off. It may take another year of strong demand to rebuild this capacity. The result is that far more tight oil wells are being drilled than completed and I expect that this pattern will continue.

"Fears that DUCs (drilled uncompleted wells) will flood the market with supply are unrealistic. When these wells are completed, it will be gradual and the natural ~30% annual decline in legacy shale production will be difficult to overcome. Moreover, production from the Eagle Ford and Bakken plays is declining. Only Permian production is increasing and on balance, it is unlikely that net shale production will increase much unless production trends outside the Permian basin somehow reverse." - Art Berman on 10/11/2017

I've seen quite a bit of commentary about U.S. exports of crude oil reaching almost 2 million barrels per day for the week ending 9/29. In my opinion, it will be a big deal if they stay that high.

However, my guess is that a lot of those exports were just catching up after the impact of Hurricane Harvey. Harvey took exports way down from landfall on 8/25 to 9/8.

Regardless, U.S. inventories of crude oil and refined productions are WAY DOWN since February and that is a BIG DEAL.