Gear Energy Ltd T.GXE

US rigs drop 15 down to 555

[lovehockey]

THere are some smart producers out there. No need to waste money and drill if the price of oil is manipulated through SPR injections. Couple of years ago I did my calculations and came up with number of 540 rigs what was required to make sure oil production in US is not falling. Everything above 540 was to increase the production. I am not sure how that number may have changed due to better technology or other factors but assuming the number is still correct if the number of rigs drops another 20 we won't see any growth in 2024 from the US.

[Roscoe747]

US shale is done except for select Permian acreage. Cost of capital, skills shortage, tier 2 and 3 acreage, operating cost expansion are all creating a difficult environment for US shale, not to mention investor sentiment is negative for growth. WTI is going Brent due to declining production from the 5 Brent blends down to 700k bbl/day, Euro WTI import volumes and WTI similarity to Euro refining

[Roscoe747]

Cost of capital and inflationary pressures are also making it difficult to make a profit on the storage trade, both land and water. Look to see declining inventory in storage and unwinding of shorts as well. Awarding of contracts for  SPR refill will show capitulation on the part of political manipulation.

[lovehockey]

In general you are right but the devil is in details. US shale was estimated to have a capability to produce oil for 200 years, it all comes down to price and effort. Where we know shale is not profittable long term, however it will be used by the US governement to save petrodollar. They utilize many different tools to motivate oil producers to produce unprofittable oil. I wouldn't discount

[Roscoe747]

Yeah, the devil is in a lot of details but overall, US shale has lost its ability to act as a shock absorber ie: to ramp up production quickly when oil prices rise. Maybe Iran, Venezuela or Nigeria will become that swing producer but in that case, there will be no benefit to US or western policy