I don't mind thisThis isn't that bad of a spot to pick away at $8.50. I think maybe a little more downside risk at $8.25 and further support at $7.77 if that fails time to stop out.
The big question is what do you think of oil over the next year or two?
If you think oil will stabilize around $50 $55 latter this year into 2017 Cardinal has great upside torque. That is the camp i'm in $60 oil in 2017. I think the downside risk has begun to shift towards economic world wide growth versus over supply. I say begun to shift, I am not saying we do not have over supply issues still, however, we can begin to see the draw down potential into 2017. The market I believe will begin to look forward toward draw down as we get into January and February.
I don't see many places where production can increase at these price points $45 and under.
I think Iran has brought back most of the easy to pump capacity that it had ready for when sanctions lifted. However, I think more production growth out of Iran will take more time, investment dollars etc. They will grow but slow now.
I think Iraq is mostly topped out around three and a half million a day, and I think Saudi Arabia has been pumping to the max. I don't believe that they could safely bring on another 1 million barrels a day for long periods of time. Same for Russia too, I don't see growth there without more investment dollars.
I think North America has more production set to fall, Alaska has been declinning persistently. The shale can't make much around $40 a barrel so there won't be a great deal of shale until price is over $50.
Maybe some growth out of Africa, but that is just a guess, Libya Maybe plus maybe minus production. Who is investing in Nigeria at these prices the Majors were pulling out of there with 100 dollar oil.
Brazil is a basket case, hard to see much growth out of South America, Columbia et al. Ask yourself what would happen if there is a big civil upset in Brazil, what would happen to there millions of barrels?
I have not said this for almost 2 years, however, the next 18 months look constuctive for the oil story as long as global growth stays steady. Cheers Matthew