Energy Prospectus

Read the article below. Wall Street is in love with the Permian Basin for good reason. The well results keep getting better with EUR's now over a million boe per well and some companies saying wells will produce 1.5 to 2.0 MMBoe. With completed well costs under $5 million the economics are fantastic, even if oil stays in the $40s. The only area matching the Permian are SCOOP & STACK.

SM and PDCE recently announced big acquisitions in the Permian, which draws a lot more Wall Street attention. Both companies are trading at much lower multiples of operating cash flow per share already, so fund managers looking to get into the Permian are buying up the shares.

Just cut and paste the link below into your browser.

http://www.fool.com/investing/2016/09/0 ... ce=yahoo-2

We are entering shoulder season, I believe, which is a weak time for oil shares. Also, Yellin is talking about an interest increase, which will further strengthen the dollar. In this environment, how do you see the market playing out to get us to $55-60 oil?

Non-OPEC supply continues to fall and there is no way that OPEC can meet global demand on their own. All OPEC has to do is "say" they are going to go back to production quotas and the price will jump over $50/bbl.

Oil below $50/bbl is unsustainable for much longer. Yes, there are some area in the Permian and STACK where well level economics are good in the $40-$45 range, but declining production everywhere else cannot be offset by growth in those two areas.
See the demand chart at: https://www.iea.org/oilmarketreport/omrpublic/

Yes, U.S. demand for transportation fuels softens a bit after Labor Day, but much of the world still heats their homes by burning oil. 90% of humans live in the Northern Hemisphere. Heating oil demand is still a big deal. This is why the chart at the link above shows higher demand in Q4 each year.

BTW it has been an increase in imports (not U.S. production) that has caused the crude oil storage level to go up the last two weeks. See for yourself at this link: http://www.eia.gov/dnav/pet/pet_sum_sndw_dcus_nus_w.htm

Speculators set the near-term oil price and many things impact their trading.