Saturday, March 21, 2015

Rig count continues fall; production beginning to fall


 It’s official: The shale oil boom is starting to waver. And, in a way, it may have souped-up rigs and more efficient drilling technologies to thank for that.

Crude production at three major U.S. shale oil fields is projected to fall this month for the first time in six years, the U.S. Energy Information Administration said Tuesday.

It’s one of the first signs that idling hundreds of drilling rigs and billions of dollars in corporate cutbacks are starting to crimp the nation’s surging oil patch.

The media likes headlines about oil storage filling up but that will not happen. There is plenty of storage for crude oil and refined products. This difference between reality ans media hype is currently depressing sentiment and prices in oil stocks. I would be looking to get long quality oil stocks as the herd begins to realize that we have reached inflection point in oil production growth. In addition, the maintenance turnaround season at refineries is coming to end and this will result in refineries coming back online and sucking down inventories as they build gasoline production for the summer driving season. The increased demand will run into declining supply and will result in higher oil prices by yearend. 

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