General Discussion

Asking Exxon what the oil price will be and them respond $200 a barrel is like asking a peanut farmer what he thinks the price of peanut butter should be….

I was with some of the Exxon talking heads a few weeks ago. There is at least a 4 million barrel overhang per day of oil next year when this is resolved. The world is consuming 10 million barrels less a day due to some demand destruction, conservation, and other chemical technologies filling in.

We are a lot closer to $70 barrel oil than $200 when the straights open…and $70 is not a barrier. Volume in the US directly translates to production costs. They aren’t as quick to stop drilling as you think. Lower prices will shut off some well starts, but it won’t cap production.

The story as I’ve said now is the restructuring of global supply. Who is going to turn down rates to raise prices? The US won’t. Russia can’t. Canada is largely captive to the US. Venezuela continues to increase. The Middle East need to make up for lost revenue and they already lost UAE from OPEC.