No surprise here: WTI Crude Oil has spent more than two months in a trading range. And when it attempted rallies above $55 a barrel, it was clobbered by heavy selling pressure.
No ifs, ands, or buts about it: That’s bearish action.
I’m not one bit surprised. Here’s why …
The recent excitement over OPEC production cuts is petering out, despite multiple attempts by the cartel to broadcast how well members are complying.
The fact is each crafted OPEC headline offers less and less support to oil prices. And that’s due to larger forces at work beyond their control. Like I said before, OPEC is losing relevance in the oil market.
Status of OPEC Cuts
Word on the street is that compliance of proposed cuts in January is estimated around 65% to 70%.
I don’t buy that for a second.
In fact, I think compliance is much, much lower: OPEC members can’t afford to play along with proposed production cuts and suffer lower oil revenues from lower prices.
Instead, they’re likely to abandon the deal, ramp up production and take what they can get. And that will ultimately put even greater downside pressure on oil.
Now, consider …
- Unexpected production increases from Libya, Nigeria and Iran, estimated at 400,000 barrels per day.
-
Iraq has not fulfilled their end of the deal and plans to boost oil exports this month toward record levels.
- Surging U.S. oil supplies.
In fact, those ballooning U.S. supply figures are even surprising me …
First: A groundswell of new U.S. oil production is coming online, up 400,000 barrels per day since October and running near 9 million. This figure is sure to rise higher given the 85% increase in U.S. crude oil drilling activity from the May 2016 low. This view is backed by the latest monthly outlook from the U.S. Energy Information Administration (EIA) that anticipates next year’s production at the highest level since 1970.
Second: Explosive corporate investment into the U.S. oil patch.
In fact, you don’t have to look any further than fourth-quarter earnings from Pioneer Natural Resources earlier this week, highlighting a 33% increase in 2017 capital spending compared to last year. The company now expects to boost production by 15% to 18% on a year-over-year basis.
And they’re not alone: Energy research company Wood Mackenzie predicts U.S. oil investment of around $61 billion this year.
Third: President Trump’s America First Energy Plan, with the goal of boosting U.S. production and reducing America’s dependence on foreign oil.
Part of the plan is to tap into America’s vast energy reserves, estimated at $50 trillion and includes untapped shale, oil, and natural gas reserves, especially those on federal lands.
In addition to these bearish factors pointing to lower oil prices, my artificial intelligence models have been saying the same thing all along: The intermediate term direction for oil is down. And my members know just how to play it.
Best wishes,
Larry
Williams Henson March 23, 2017
So when is the time to buy oil stocks
Jesper February 21, 2017
Can a collapse in oil prices come at a later date – say july?
Stuart February 17, 2017
Down down down, I don’t know of one average American who doesn’t love those words when it comes to oil.Bring it on,lower prices and I hope OPEC chokes on it.
nobody important February 14, 2017
Larry,
Your the BEST at writing articles that get to the point and in short order.
Too many advisor clowns YAK, YAK, YAK on and on and on nothing but BS.
I DELETE them all !!!
I know you need to make money but I only wish you would help the poor-white-trash,
like me, at a discount cost.
OK if I send my IRS tax form for proof. I am 68 and surviving so far.
No, this is not a “feel sorry for me” message. I don’t push that.
tere February 11, 2017
http://theeconomiccollapseblog.com/archives/why-the-melted-fuel-under-fukushima-could-poison-our-planet-with-nuclear-radiation-for-1000s-of-years
Linda Flowers February 11, 2017
Half of my monthly income is from the oil royalties. I’m already tapping into my retirement fund to get by each month. I do wish oil would get back up to $70 a barrel. Instead, I cut my TV package, my phone carrier to reduce my monthly bill, and my shopping habits. Ouch!
Bruce Currington February 11, 2017
Do you believe there will be a correction on the US stock market soon
Brian Farmer February 10, 2017
According to your earlier commentaries, your artificial intelligence model predicts a major move down in oil during February. This will be a good test of the accuracy of your model!
Michael Allen February 10, 2017
Just a hard working man .Raised my 6 kids without government assistance.Worked average 60 to 70 hours a week for last 26 years.Not much to show for it but my name and respect from others.Survived through Andrew and Katrina.Probably never get out of debt.What little money I have,I help my Kids and grand kids as much as i can.I read as much as I can,really enjoy your insight.The schools do not educate what they should.We are a country going nowhere.
Mike February 11, 2017
If you claimed 6 dependents and child tax credits on your income taxes you got government assistance.
Steve R February 14, 2017
Silly…If you sent them to public schools there may have been government assistance. And don’t forget that home mortgage deduction on taxes.
KINNEY February 10, 2017
LARRY…WHAT DO YOU SUGGEST WE SELLLIN THE NEXT 2 WEEKS ??????
Thibaut Moutier February 10, 2017
Thanks, right on Larry. Your AI probably also noticed that solar is below grid parity in the southern USA and breaking below grid parity in the north to add a bit of insult to injury! All it would take is a cut of ALL those subsidies (including on oil & gas) to see renewable crush traditional energy at an even faster rate.
Nick February 10, 2017
You missed it Larry. When Trump puts a tarrif on oil imports, domestic crude will sky rocket. Just watch, WTI will outpace Brent Crude. You heard it from me on 2/10/17. Make a note.
Mike February 11, 2017
When Trump puts a tariff on crude oil 10 million pick up trucks will crash through the gates of the White House with each driver carrying a noose.
Steve R February 14, 2017
Trump shouting about tariffs on everything, not just oil. It all seems to be for show and will not likely happen. He’s gaining amens from his followers but they don’t need real action they just need to hear what they want to hear. Like building another wall that costs taxpayers $21 billion in debt. We already have a wall and it’s 650 miles long.
joan casson February 10, 2017
Could RW members have some recs to play this, as you say. I have not recd any. Have I missed a communication?
IndyAndy February 10, 2017
Glad to read your comments, as JR Crooks reco to go short oil has not worked to-date.
Llalon Gary Miller February 10, 2017
Can’t wait for your new project on gold minors I am in.
Llalon Gary Miller February 10, 2017
keep up the great work Larry. You are the best
James Jensen February 10, 2017
When one spends a little more time looking at the demand side of the equation you develop a very different picture.
While the is a substantial selling right now above $55 BBL–There is also heavy buying demand in the high $40’s.