Oil Price - Sept 9

[dan_s]

Crude oil gave up much of Thursday's gains when traders realized that the big drop in crude oil inventories was caused by much lower imports. Imports were down 1.9 million barrels per day because on the tropical storm in the Gulf of Mexico (as I said yesterday).

Today there are 3 tropical waves heading toward the U.S. and the first one may enter the Gulf of Mexico early next week. There is very warm water south of Cuba, so it the storm moves through that are it could intensify. The 3rd wave is the big one, but it is expected to move up the east coast. Regardless, all three will cause some disruption in tankers delivering oil to the U.S.

According to EIA, U.S. oil production is holding fairly steady at just under 8.5 million barrels per day. NEVER take EIA production numbers as gospel truth. They are nothing more than SWAGs as EIA does not have field level production data. Actual production is not known for at least 60 days after a month ends when operators report their production to the states. Operators DO NOT report production data to EIA.

The EIA's own Drilling Productivity Report, which tracks drilling & completion activity in the seven largest producing U.S. basins, has shown lower oil and natural gas production month-after-month for more than two years now. It predicts that U.S. oil production will decline by 85,000 BOPD from August to September. It also predicts that U.S. natural gas production will decline by 373,000 mcfpd from August to September. The report does not track activity in SCOOP & STACK where we know production is increasing, but all of the other areas not include in the report are definitely on decline (especially the Barnett and Fayetteville where drilling activity is almost totally shut down and has been all year).

The IEA's monthly Oil Market Report will come out early next week. It will impact the oil price.

I cannot stress enough that the oil market has nothing to do with the natural gas market in the U.S. Supply & demand for natural gas (and to a lesser extent NGLs) will be MUCH TIGHTER this coming winter.

[dan_s]

Your homework assignment: Late Saturday or Sunday, go to http://www.weatherbell.com/premium/ and listen to the Saturday Summary.

[setliff]

i for one do not think all of that import decline was due to the storm. 1st the location of the storm and. and how about the drop on west coast and east coast (storm didn't get to northeast coast until after friday. something else is going on imo.