Venezuela and the slow down of US Shale ?
- Thread starter Stockolio
- Start date
There's a severe information shortage in the OP's original post. While I agree completely that certain Permian Basin shale oil formation sites are price sensitive at $50 per barrel approximately - Venezuelan oil exporting isn't like turning on a tap. There is literally no infrastructure and no qualified personnel to do it in the country at present. Even if a decision were made tomorrow, it will take years of engineering design and construction and billions of dollars of foreign investment and thousands of trained and qualified specialists to be brought in to the country. Wellheads, pumping, storage, pipelines, terminals - it's all shot to hell. Inoperable. In fact, Venezuela imports the majority of it's motor fuels, asphalt and lubricants from the United States.
Here's a very recent Bloomberg article that says as much:
https://www.bloomberg.com/opinion/a...oil-industry-faces-very-long-road-to-recovery
Another glaring oversight in the OP's original post is that the Bakken Field in North Dakota and Montana produces more oil currently than the State of Alaska, and it matches the output of Texas. It currently has 4,000 wells but has the capacity for 40,000 wells.
The Monterey shale formation in California has four times the proven reserves of the Bakken Fields. That hasn't been touched for production. Neither have recently discovered Alaskan formations.
Last edited:
Supply/Demand doesn't dictate the price of anything, you are absolutely right it would take a year or two to fully establish the whole thing efficiently... Political issues with Iran/Russia along with keeping a healthy economy dictates price of Oil and Gas, get it ? The Venezuela and American Oil Firms theme line is likely to come as the rhetoric to justify by mainstream media why Oil prices will be even lower, with this huge " abundance " of Oil, they will peddle overstocking to Bloomberg and Financial Times... I think you know to take absolutely nothing at face value with the markets, and always use imagination to see in between the lines the likely outcome, and who the players behind the winning side are
https://www.wsj.com/articles/goldma...elan-bond-deal-that-drew-criticism-1534683601
https://www.ft.com/content/c24aa260-2314-11e9-b329-c7e6ceb5ffdf
What are we talking about here ? I am not trying to be politically correct, I am trying to win... It's all fiction they tell us in the news, all of it, they ALL have an agenda... From the firm who sold swaps on the bonds, to the buyer of the bonds, to growth interest or political interest
Outcome is WTI isn't likely going anywhere much more then it's currently at, and with US Shale companies using Enron like accounting and estimates, it's clear as day some bonds and Shale companies will go to shit... That's all I am saying
Oil will fly few months after QE5, when the economies can handle it once again... Until then, it's massacre coming in the Shale Industry
LOL Exactly. Supply and demand doesn’t move energy markets
That would be news to John Arnold! Those Weekly EIA reports that all the serious commercial hydrocarbons traders pore over in minute detail and that move the markets don't really move the markets. 
Last edited:
I feel like we went through this exact thing with Iraq in the financial press? The whole "we can just turn the tap" concept, not understanding the difference in crude types...
LOL Exactly. Supply and demand doesn’t move energy markets
What happened ? Isn't there a WTI Shortage ? How come WTI is headed below 50 by end of month ? Haha
https://www.elitetrader.com/et/threads/crude-oil.326772/page-6
I have posted, quite literally, hundreds of times (including this week) over the past few years that the WTI contract is highly correlated to the US equity indicies (see the thread link above, and others). In fact, the correlation is well above positive 90%. So yeah, if the Dow is down 280 and the S&P is down 33.0 it's no great mystery that the CL contract will be down.
I have no idea where you got the notion that there is a WTI shortage - certainly not from me. North America is the number one oil producer in the world.
There is one thing for certain - the CL contract is not down on Venezuelan crude oil production flooding the markets
.It's quite obvious and well known within the trading community. I've been posting about it consistently for years now. And it has jack shit to do with Venezuela. There isn't some magic tap that you just turn on in Venezuela. Increased economic activity requires more fossil fuels in sophisticated Western economies.
