Charts Of the Week
America is literally about ready to party in the streets to celebrate 11MM BOPD of oil production and becoming the No. 1 producer in the world. If America decided to quit printing money and call all shale oil loans, however, this 11MM BOPD would be down to 7.5 MM BOPD this time next year, and falling like a rock; but never mind that. Forbes and Bloomberg are ecstatic about this accomplishment and about to wet their collective pants:
What happens to oil prices when the market is oversupplied? They go down, naturally. The US shale oil industry didn't learn didly squat in 2013-2014 and after shooting itself in both feet ( and the rest of the domestic oil industry in the back) is now set to shoot itself in the knee with more overleveraged LTO oversupply. US inventories rose the week of by nearly 6MM BO.
Part of the reason for increasing US inventories, as I outlined here a few weeks ago: https://www.oilystuffblog.com/single-post/2018/07/10/Cartoon-Of-the-Week might be that Trump's trade wars are kicking in big time now and a pissed off world, especially China, is retaliating by not buying US LTO. In other words, exports are down by 50%.
The Permian shaley carbonate industry keeps adding more rigs every week and increasing production, but bottlenecks have now become so bad they can't hardly sell the oil. I have no idea where they are putting all that stuff out there; in empty buckets, I guess. When they can sell it they essentially take a $16.50 per barrel discount to NYMEX WTI.
While the rest of the world is controlling gas flaring, in the good 'ol US of A, the greatest industrialized nation in the world, we are wasting 7% MORE associated gas than ever before, all of that from shale oil wells; https://www.upi.com/Energy-News/2018/07/17/Wasteful-gas-flaring-starting-to-decline-World-Bank-says/6671531821305/
From Art Berman's meticulous work, what Pioneer's annual base decline rates in the Midland Basin might look like if no new wells were added for one year.
The IEA, always on top of everything oily in the world, now predicts that the US LTO industry will for the FIRST time ever become profitable, or at least cash flow positive. The E at the end of 2018, by the way, stands for Estimated. It must have made this chart before the price of oil fell $7 per barrel and did not check-in with those boys out in the Permian Basin who can't even sell their oil. 8,439 more BOEPD X 0 = 0. No word yet on whether the shale oil industry will be profitable enough to pay down nearly $400 billion in public, corporate and private long term debt.
In case you missed an earlier post, this from shaleprofile.com: above is the ultimate recovery profiles of 88,610 shale oil and shaley carbonate wells that have been drilled in all of America's shale oil basins since 2003. This is from known realized production data and algorithms for historic annual decline rates. If you happen to be standing behind these kind of decline rates you'll likely get sucked plum off your feet.
And finally, there is some good news to report but not in the oil business, unfortunately.
Scientists have figured out why cats are afraid of cucumbers: https://www.rd.com/advice/pets/why-cats-afraid-of-cucumbers/.