Key Dates With Regard To Slump In Oil Prices -- June 26, 2015

Previously posted (June 22, 2015) but I wanted to re-post for various reasons.

It's pretty clear, based on:

• new permits
• number of active rigs
• production profiles
• number of wells coming off confidential list
• number of wells on fracklog

... that new Bakken production has shut down. 

Key dates:

• October 1, 2014: Saudi slide starts
• June 20, 2015: new Bakken production shuts down

The next key point is when we reach bottom; we won't know that date until one month to six months after it has happened. The "bottom" won't be affected by weather in North Dakota until January - February, 2016, time frame. Until then, the operational data coming out of the Bakken won't be affected by weather. Between late December, 2015, and June, 2016, weather will play a factor. Data between now and December 1, 2015, is still meaningful when trying to assess when the bottom has been reached or will be reached; but data between late December, 2015, and June, 2016, will make "predictions" difficult.

For example, one might see a small uptick in the number of rigs by the end of November, 2015, but then be frustrated to see that rig count drop again in the winter. Likewise, we may start to see an increase in fracking later this summer and into December, but after that, all bets are off.  

With regard to key dates above, production was tapering off between October, 2014, and June 20, 2015, but "new Bakken production shuts down" is finally here. By "new Bakken production shuts down," I mean that operators are producing only what they absolutely need to produce to survive. They may not even be producing all the oil they need to produce to meet refinery contracts; they could be buying cheaper oil on the "spot" market. There are obviously contracts with regard to transportation (pipeline or CBR) but the former (pipeline) is less flexible, and the latter (CBR) is more flexible.