Crude oil is $86 today.... beginning of the end?

My concern is the lag time. Drilling typically slows down this time of year, and gets back up around March. Now, today we are looking at $66 WTI, which is below the break even point for most smaller companies and just above it for the larger players like Cimarex and Pioneer. Most say $60 is the cutoff point, and new drilling will pretty much stop.
So, all these drilling rigs will get mothballed, some of the drilling companies for sure will go under, and quite possibly even some existing wells will be shut down instead of being worked over. Now, the crude haulers may see some reduction, but the oilfield services companies like the one I work for will bear the brunt of it. I work on sewer and water trucks, mobile home toters and winch trucks. If nobody's drilling, nobody needs a house in the desert or their crap hauled off.
Once the price stabilizes, OPEC will cut their output at the next meeting and prices will jump through the roof. It'll be six months to get this area rolling again, and in that six months we may well see prices that will cause fond memories of 2008.
I'm planning on getting out of the oilfield, I'm leaving the company I'm at anyways because the dispatcher would have to improve to be a douche, but I may just move back home for Christmas.
I wonder if I can sell seats in my Durango, I'm going all the way to Seattle.

 

you do realize that fracking technology is NOT new...has been in use since the 1950's.

The change is the depth of the drill, the cost of the rigs that can support the weight for that depth. The change in technology is being able to closer approximate where the drill bit is, and being able to steer that drill bit.

West texas intermediate crude, which is the benchmark for US produced crude trades for less than brent sea crude, which is the bench mark for international trade. The arabs can afford very cheap crude. The US oil industry can not.

Yes the world uses crude...

Companies will only risk their capital if there is a return on investment... that is not possible at current prices in many areas. And with the discount pricing from the Arabs, the refineries will be purchasing that crude over the US crude...

Also US Crude can NOT be exported, except for very limited amounts from very limited areas.

 

Better check your facts... US proven reserves of OIL, 33 billion barrels, Saudi Arabia, 265 billion barrels.

• Saudi Arabia has 16% of the world's proved oil reserves, is the largest exporter of total petroleum liquids in the world, and maintains the world's largest crude oil production capacity.
• More than half of Saudi Arabia's oil reserves are contained in eight fields. The giant Ghawar field, the world's largest oil field with estimated remaining reserves of 75 billion barrels, has more proved oil reserves than all but seven other countries.

http://www.eia.gov/countries/country-data.cfm?fips=sa

 

I foresee the possibility of a "suckers" rally in the market next week, but it will be just that...unless of course you bought into it Friday and sell into it next week . Then I would slap ya on the back and say "atta boy"!

The oversupply is still there. I do think it will change quickly, but at least for now, oil is worth $60 or less IMO.

Over supply is always good for the consumer, it is never good for the supplier. I don't think OPEC is too concerned. Their oil is cheaper to produce. At least Saudi Arabia is in well financed to wait it out. The American producers will have to take the cut, I believe. Some of them will take more than a cut, some will disappear. Some of the ones that disappear might surprise us all.

So far, only OPEC has shown their hand in this high stakes competition. It will be interesting to see the rest of the cards.

For now, enjoy the cheap gas, save your money and be prepared for good .... or bad... developments.

 

I sold Valero Oil stock after it dropped again Friday. Watch the rig count. It's going to plunge like it did in the 1980s after Jan 1.
US West Texas Intermediate (WTI) light crude settled down US$7.54 at US$66.15 a barrel, and fell further post-settlement, reaching a four-year low of US$65.69. The last time the market lost 10% in a day was in March 2009. North Sea Brent finished down US$2.43, or 3.3%, at US$70.15. It fell to as low as US$69.78 on the day, a bottom
since May 2010. YEEHAW! I can go on vacation with my travel trailer and drive 65 in the Left lane and weave around and look at all the cows and point. I'll have to sit on my hands to keep from wving at everyone.

Read more: http://www.therakyatpost.com/business/2014/11/29/us-crude-oil-price-fall-worst-5-years/#ixzz3KWDj3o00



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That is wonderful news. $2 would be even better.

 

Your buying and selling on the wrong ends of the market.

A few years back...can't remember when...we were at deer camp shootin the bull when a neighbor who had a pile of money to play with said "whatever you don't buy anything oil related, they can't give that stuff away right now". Ive always wondered how he managed to have that pile of money and I'm still a working slug.

Buy low, sell high.

 

Makes me wish I had purchased some Continental stock a few years ago. How the hell are you, Arky? Long time, no see.

 

Hey fuzz face Sittin on my butt, trying to get rid of a head cold. Ruined my holiday trip home..lol. Back to work wednesday. I'll give ya call. Been wandering how the new job is working out for ya?

 

It WAS going great, until Koby started jerking people around. I was getting around 80-85 hours a week. They liked me so much on the winch truck, they moved me to their tool side (I didn't really want to move). My hours dropped to around 60/week, then picked up where I didn't get a day off for 3 weeks, then it died. Then someone got the great idea to put everybody on salary, and things went downhill fast, well #### fell off a cliff. They parked almost all of their rigs, they weren't selling any jobs. There was around 10-12 of us that quit/got fired in a 3 week span.
I'm considering going back to pulling a hopper or hauling cows. I love being home every night, but I don't like changing jobs every 3-6 months in the patch, it's getting old. I've even considered buying another truck and going back OTR/Regional. For now, I'm going to try to find something where I can get home most weekends or at least every 10-12 days.