Somewhat Tedious -- He Said, She Said -- April 7, 2015

Updates

Later, 10:43 a.m. CT: so, how is the Hatfield-McCoy war-of-words on the price of crude oil playing out. After a 6% gain yesterday, the market is now showing:

Original Post

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here. The blog was my way of following the Bakken, trying to make sense of it, trying to learn what it was all about. See expanded disclaimer for additional background. I had not intended to get into the investment stories or even the price of oil when the blog started, but I soon realized that one can't follow the Bakken, if one doesn't follow the money.

Predicting the price of oil is a fool's errand and I try not to do that, but I have on numerous occasions and haven't learned anything from that, except to confirm that predicting the price of oil is a fool's errand. Having said that, oil companies do their best to predict the price of oil .... but enough of this.

These thoughts come in response to the Hatfield-McCoy feud among those writing stories on the price of crude oil. Yesterday, by mid-day, the price of oil spiked almost 6%. Pundits suggested this was due to the fact that Iranian sanctions have not been lifted, and another tsunami of oil did not flood the market. Within hours, Goldman Sachs put out a bearish report on the price of oil. It seemed pretty obvious they were spooked by that 6% spike, especially if they had put their money where their analysis was some weeks ago when they predicted $40-oil. And now this morning, OilPrice has an article by Leonard Brecken which pretty much puts into perspective all that's been said on the price of crude oil over the past few weeks.

I'm not familiar enough yet with OilPrice or Leonard Brecken. Googling Leonard Brecken: first hit -- a short call on Netflix back in 2011. The site also notes that Leonard Brecken is the founder of small NJ based hedge fund Brecken Capital.

The picture becomes clearer. Superficially we have Goldman Sachs bearish, and a hedge fund calling them on that.

For me this is the big story: at $150-oil, Bakken operators can afford to be inefficient, where time is the issue, not money.  At $40-oil, Bakken operators need to become more efficient, and where money, not time, is the issue.

One can argue it anyway one wants but $40-oil was probably necessary. Whether it's necessary for $40-oil to be the new norm is another question for another day. But consumers should enjoy it while they can.

By the way, how did that Netflix article work out.

• March 21, 2011: $230
• July 4, 2011: $295 (big miss by Leonard Brecken)
• November 28, 2011: $66 (huge win by Leonard Brecken)
• March 3, 2014: $448 (wow)
• Today: $422 (whatever)