Pet Peeve -- Fake News -- Even When It Comes From Rigzone -- May 14, 2018

Link here.

The graphic above: ten years of data. By the way, look at the volume being traded. That may be a bigger story than today's price. Contango, backwardation, the tango, flamingo, you say po-TAE-to, you say po-TAW-to, it's all Greek to me. But it certainly doesn't look like folks are jumping into the WTI market to sell their positions.

This is the headline:

$140 ten years ago.

$110 seven years ago.

$100 five years ago.

$70 today.

And Rigzone: crude prices continue to soar to multi-year highs. And Rigzone is an "expert" in this arena.

If one looks at the graph, it appears that over the most recent 10-year period, $70 oil is right where we need to be.

For me:
$55 oil is the sweet spot for global economy / US economy / oil companies.

$70 oil is really, really nice for US oil companies / international oil companies.

$83 oil: that's what Saudi Arabia needed last year (2017) to balance their budget for one year.

$88 oil: that is what Saudi Arabia says it needs for this year's budget (2018)

$100 oil -- wow. If there's an orderly climb to $100-oil, we won't see it for five years. $100-oil in less than two years (2020) will be loved/hated -- depending on one's perspective.

I'll probably my sweet spot for oil from $55 to $70 if WTI moves to $80.

Predicting the price of oil is a fool's errand. All data points above are historical. No predictions implied or given.

Disclaimer: this is not an investment site.

EOG is flirting with its all-time highs. Art Berman should be happy.

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Making America Great Again

I can get a feeling for the state of the US economy by following the railroads, particularly Burlington Northern or UNP. Unfortunately, BNI was bought by Berkshire Hathaway and we no longer get much information regarding that railroad except maybe a little during the annual BRK meeting.

So, now I follow UNP:

When oil prices surge, transportation stocks -- such as UNP -- then begin to fall. So far, we are not seeing that. Also, railroads -- particularly BNI and UNP seem to correlate well with how the auto industry is doing.