The Nut Of The Argument -- December 4, 2015

I'll come back to this article later (if I remember) but it's about as good an explanation as I've seen.

Bloomberg is reporting why OPEC has to keep pumping. It's a long article and a great article but I think these two paragraphs are the nut (as Hunter S Thompson would say) of the argument:

Oil's finite nature has proven remarkably slippery. Peak Oil theories dictate that there can only be so many barrels beneath the ground, and at some point the world will have pumped more than half of them, and it's all downhill from there. But how many barrels are available is a function of money as well as rocks: If you make it cheaper to get at barrels, then more of them "exist." Consider that since 1980, the world has produced just under 900 billion barrels of oil -- and its proved reserves actually went up by just over 1 trillion barrels in that time.

Are some countries overstating their proved reserves? Probably. Yet there's a recent example of new oil reserves suddenly showing up that is hard to overlook: Advances in technology, financing (particularly the use of hedging to raise capital), and operational efficiency have made a mockery of the notion that U.S. oil production is in terminal decline.

Reuters is reporting that the number of active rigs in North Dakota likely to fall further following the most recent NOPEC meeting:

North Dakota's drilling rig count is expected to fall further after OPEC failed to agree on a unified output cap on Friday, the state's oil regulator said.

The drilling rig count in the second-largest U.S, oil producing state has dropped in the past year to 64 from 191, due to falling oil prices and improving efficiencies.

The state sees OPEC as one of its biggest rivals, and on Friday the 13-member group failed to agree on an oil production ceiling, effectively flooding the global market with even more crude.

Lynn Helms, head of North Dakota's Department of Mineral Resources, said he was "disappointed" with the OPEC meeting's outcome and added that it likely serves as an ominous harbinger for the state's drilling rig count.

"This will most likely increase downward pressure on the state's rig count and potentially effect additional wells requesting not-completed status," Helms said in an email to Reuters.

Venezuela ... tick, tick, tick.