Energy Prospectus

This interview on Bloomberg TV is very good. Not only does he straighten out the group that U.S. energy independence is a fantasy, but he clearly lays out why the current oil prices are unstainable.

You all need to watch this video interview: bloomberg.com/video/oil-price-decline-is-unsustainable-gramatovich-says-hQ33CzbbQWSfgAgEJiPiQw.html

The price of any commodity cannot stay below the finding & development of new supply for long. This is especially true of crude oil since current supply is depleting at the rate of 5% to 6% per year and much faster in the shale plays, which have been the major source of new supply for the last five years.

Read this: http://www.investorvillage.com/smbd.asp ... d=14523030

It is very important to remember that the markets look forward. As the E&P companies come out with their sharply reduced 2015 capital programs and production guidance (already happening), it will become very clear that U.S. production will be peaking in the 2nd quarter this year. Also, harsh winter weather can impact well completion schedules. This is already happening in North Dakota’s Williston Basin.

In a note to their clients on January 2nd energy sector analysts at Sterne Agee said, “We believe the current oversupply in the global crude oil markets will persist until signs of U.S. production decreases become evident, which is unlikely to occur before mid-2015”.

re: video, when commenting on Canadian oil, Tim Gramatovich mentions that the Canadian production is heavy crude whereas US shale is light crude. Is
heavy crude preferable? I thought light crude was easier and more cost effective to process and refine. Is light crude used more for everyday use, i.e, automobiles, home heating, vs heavy crude more necessary to industrial use?

Locate this article written in 2012 that seems to explain the need for heavy crude by Gulf refiners.

US refiners hunting for heavy sour crude

http://www.arabnews.com/us-refiners-hun ... sour-crude

Light crude is better and sells at a premium to heavy crude oil. It is just that many of the Gulf Coast refineries were built to handle heavy crude from Canada and Venezuela. See the BTE forecast model for the price differential.

What all the fuss about lifting the ban on U.S. oil exports is all about us having to much light crude for our refineries to handle. Producers what to ship it to Europe where they can get a better price. Eagle Ford oil is VERY LIGHT; some of it is clear.

The U.S. is a net importer of crude oil and it always will be. Today we import about 7 million bbls per day of crude oil. We do export a lot of NGLs and refined products.

Houston area is expecting the ban on oil exports to be lifted and the Keystone XL pipeline approved when the Republicans gain full control of Congress. Article in today's paper says Keystone could be approved this month.

Lucid overview of the s/d situation + production logic:


http://www.investorvillage.com/groups.a ... d=14526650