Monday, July 6, 2015 -- Call It A Night, The Party's Over -- The Day Greece Collapsed; The EU Collapsed: Asian Stock Markets Crashed; And The Usual Big Daytona 500 Crash

Active rigs:

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RBN Energy: don't expect any increase in the price of crude oil any time soon.

U.S refiners have been processing a lot of crude so far this summer and utilization rates remain high. Crude production has leveled off and is expected by the Energy Information Administration’s (EIA) Short Term Energy Outlook to decline slightly during the second half of 2015. But the early summer market sentiment that drove crude prices up to $60/Bbl on the back of these fundamentals appears to have lost steam. Today we conclude our analysis of short term crude price prospects.

In the first part of this two-part series (see Why Are WTI Prices Stuck at $60/Bbl?) we looked at the evolution of crude prices for domestic benchmark West Texas Intermediate (WTI) since they began falling a year ago from a high over $107/Bbl in June 2014 to a low under $44/Bbl on March 17, 2015 – recovering since then to the $60/Bbl range in May and June.  

Last October falling crude prices set in motion a market condition known as contango where future prices are expected to be higher than spot prices today – encouraging the use of storage to “save” cheap crude today for use when prices recover (see Skipping The Crude Contango). This contango incentive led to a huge build up in crude oil inventory – especially at the Cushing, OK trading hub (where CME/NYMEX WTI futures contracts are delivered) as well as in the Gulf Coast region. Our analysis showed that since March 2015 – as the contango spread has narrowed – demand for crude has picked up as high margins encouraged refiners to process more oil nationwide.

Higher demand for oil contributed to an end to the crude inventory build and a stock drawdown at Cushing and the Gulf Coast since April. With demand higher and an inventory drawdown combined with a narrowing contango - some analysts expected the WTI crude price “rehab” to $60/Bbl in April to continue towards $70 or even $75/Bbl. But prices have remained range bound close to $60/Bbl over the past two months amid continued concerns about an overall supply surplus versus demand.

Regular readers know what is coming next:

The Party's Over, Willie Nelson

The Daytona 500 crash described as vicious. Dale Earnhardt wins. Early crash ends hope for several drivers.

This time we look at crude production as well as imports to understand the demand for crude versus available supply and then relate these changing fundamentals back to prospects for a further crude price “rehab” this year.

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Willie Nelson Trivia

From wiki:

In 1956, Nelson moved from Fort Worth, Texas to Portland, Oregon. He soon found a job on KVAN, in Vancouver, Washington, hosting the show The Western Express. Nelson became a popular DJ, while he continued to make live performances. During this time he wrote "The Party's Over".

When he moved to Houston, Texas, Nelson stopped by the Esquire Ballroom to sell his original songs to house band singer Larry Butler. Butler refused to purchase the songs, and instead signed Nelson to his band.

Butler would at the end of the show let Nelson sing solo "The Party's Over" as a closer.
During his time in Fort Worth, Nelson was signed by Pappy Daily to D Records. While in Houston, he recorded sides for the label. Nelson was also hired by guitar instructor Paul Buskirk to work as an instructor in his school.

Released in 1967, I would have been in high school; I don't recall if I heard Willie Nelson singing this at the time. I didn't really start listening to music until I got to college, and even then, I really didn't start listening to music until I got my first car.