A Random List Of Data Points Newbies May Want To Consider

For newbies, some data points to consider.

• The crawler on your television screen for NYMEX WTI has dropped precipitously from $110 to $90/bbl (rounding)

• Halcon said yesterday that their new completion techniques are resulting in production doubling in some areas; increasing by 35- to 50-percent in other areas

• Lower crude oil prices --> perhaps less demand destruction --> more oil sold, all things being equal, perhaps

• Lower crude oil prices --> perhaps lower energy costs in the US --> perhaps a better economy overall; perhaps

• 500,000 bbls x $110 = $55 million

• 1.25 x 500,000 = 625,000 

• 625,000 x $90 = $56.25 million

• Cost of drilling is coming down significantly even without the fall in oil prices

• When oil prices fall, the cost of drilling generally goes down

• RBN Energy recently talked about the netbacks Bakken oil operators receive through CBR

• There appears to be a glut of takeaway capacity in the Bakken

• Interest rates appear to be at or near all-time lows

• As the economy improves, airlines will book more miles, using more aviation fuel (which comes from oil)

• As the price of oil / gasoline drops, consumers tend to drive more (back to demand destruction argument noted above)

• Bakken operators hedge their oil contracts; Halcon has a floor of just under $90

• Weather is unpredictable; weather can play a significant role in oil production in the Bakken; falling oil prices can actually help an operator's bottom line if weather interrupts oil production in the Bakken

• There is a difference between investing and trading

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here.