Active Rigs Drop Below 60 -- August 14, 2018

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Market: the market opened strong on Home Depot's second-quarter earnings, but then faded. Mid-morning the Dow was up all of 32 points, after several days of huge "down" days. Analysts forecast EPS at $2.84; came in at $3.05, and guidance for full year was raised to $9.42 from $9.31 by the company.


Timing the market: Mark Cuban says he has sold off all his equity investments, except for a few, including Amazon and Netflix. No specific dates were mentioned, but must have sold near recent market tops.


The saga continues: Saudi cuts oil output as OPEC points to 2019 surplus -- and for the past year, we've heard nothing but --

• supply will tighten; and,
• lack of megaprojects coming on line by majors means shortages (see below, from oilprice)

Great commentaries today:

• first, the RBN Energy post today (see below)
• second, one over at oilprice: the real reason behind the next oil squeeze;

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Back to the Bakken

The Director's Cut is scheduled to be released tomorrow.

Wells coming off the confidential list today:

• 34054, SI/NC,  BR, Rink 6-1-5 MBH, Pershing, no production data,
• 33231, 1,856, CLR, Vardon 3-14H2, Siverston, Three Forks, 62 stages; 14.8 million lbs, another huge Vardon well; the Vardon wells are tracked here; t3/18; cum 120K  -- 120K in four months -- and not too long ago the folks over at SeekingAlpha were all agog at EOG targeting first-year production of over 100,000 bbls in the Bakken; the completion is instructive -- CLR, in its 2Q18 corporate presentation said this: optimized completion, 60 stages; Whiting, in its 2Q18 corporate presentation said this (slide 16):

• wells stimulated with less than 3 million lbs were underperformers
• strong production increase going to 7.5 million lbs
• no apparently production increase seen at 15 million lbs

Active rigs:

$68.12↑	8/14/2018	08/14/2017	08/14/2016	08/14/2015	08/14/2014
Active Rigs	59	57	33	74	194

RBN Energy: is it time to panic over falling Cushing oil?

Crude oil inventories at Cushing have been in a free fall. After last peaking at more than 69 MMbbl in April 2017, stockpiles have decreased to less than 22 MMbbl recently, nearing all-time lows for tank utilization at the Oklahoma crude-trading hub. While we’ve seen volumes drop quickly in the past, inventories have now declined for 12 straight weeks at a staggering pace. Traders, refiners, and other market participants are starting to fret. Is this just another cyclical trend or are market factors exacerbating the impact? Today, we examine the influence of historical pricing trends on Cushing inventories and why it seems that demand factors are speeding up the drop.

Cushing inventories, a leading benchmark for U.S. crude oil stockpile analysis, are measured weekly as part of the Energy Information Administration’s (EIA) Weekly Petroleum Status Report. Stockpiles at Cushing averaged just under 65 MMbbl from 2016 through the beginning of 2017. Inventories ramped up to 69.4 MMbbl in April 2017 (Figure 1 below), an all-time high for volume at the trading hub. That high was quickly followed by a sharp drop, then a rebound towards 64 MMbbl in October 2017. But since October, we’ve seen an almost relentless decline in crude inventories at Cushing, with stocks falling 30 out of the last 42 weeks and for the last 12 weeks straight