COMMON SENSE INFO. EXCERPTS FROM NEWS TODAY AND YESTERDAY.
The department says while U.S. crude oil production increased to an average of 7.6 million barrels per day in August, the highest monthly level of production since 1989, monthly average crude oil prices increased for the fourth consecutive month in August, as supply disruptions in Libya increased and concerns over the conflict in Syria intensified. Also the total volume of world crude production that is offline because of unplanned outages among OPEC and non-OPEC producers in August was the highest since at least January 2011.
The forecast for Brent crude oil spot price, which averaged $108 per barrel during the first half of 2013, is forecast to average $109 per barrel over the second half of 2013 and $102 per barrel in 2014, $5 per barrel and $2 per barrel higher than forecast in last month's prediction, respectively.
Projected West Texas Intermediate crude oil prices should average $101 per barrel during the fourth quarter of 2013 and $96 per barrel during 2014.
“Global crude supply — notwithstanding the Libyan problems — looks set for an upward jump in 4Q13, thanks to a heady mix of seasonal, cyclical, political and structural factors,” added the energy and oil strategic reserve monitoring arm of the Organization for Economic Cooperation and Development which groups advanced economies
The rise in oil prices was also supported by production of Libyan crude, which is a top-rated blend that is highly-prized by European refineries, fell from 1 million barrels per day (mbd) in July to just 150,000 in early September due to labor disputes, civil unrest and political discord.
“Despite this pressure, emerging market oil demand is still expected to rise at a relatively brisk pace in 2H13, particularly compared with OECD countries, but at around 2.6 percent year-on-year the trend is well down on the previous five-year average of roughly 3.6 percent,” it said.
So far geopolitical price increases in Brent have not moved the needle on HK. HK isn't really about that.
I've learned it's about quick growth on borrowed money and flip. There's a window.
Like in the real estate market, at some point it stops working. Many small up-stream shale companies are in the same predicament .
It's going to come down to the debt ratios to glee a winner. WTI must stay above $100 for this to be sustainable. I don't see it happening. The majority of forecasts are at an average of $92 in 2014.
I've change my mind on this. I owned it for a hedge on DAL against oil price moves. That didn't work because of the disconnect. I'm out for now.
This is just what I think. Not any kind of recommendation. Do your own thing. I've been wrong plenty of times.
I also might change my mind and buy it again. Ya da ya da
P.S. Upstream MLPs, the traditional buyers of shale assets are currently under intense scrutiny as well. Suspected of selling to unsophisticated yield hunger seniors the unsustainable, inflated, debt burdened, quickly depleting assets these companies have so easily shed. That's the accusations anyway. For me, it puts into doubt the easy "sellers market" which has existed for companies like HK.