US production doesn't have to fall to fix the price problem. it just has to decline to less than the growth in world oil demand . so less than say 0.5 MM B/D per year. We are almost there, and depletion will take us there in months not weeks.
the us rig count means little as this is world wide supply demand balance issue. unlike Nat Gas where the market is geographically limited to NAmerica. Supply from other producing areas will drop as well. eventually.
VLO spreadsheet shows expanding crack spreads, increasing heavy crude discounts, and widening WTI/ Brent spread. Triple whammy. Look for earnings estimates to rise quickly by end of March, and expect we could see better than Q1 2014 earnings results.
learn not to trust the one day price action on heavy volume days. These stocks will eventually follow fundamentals, and high volume means some stupid computer thinks it spotted something, that is likely transitory.
VLO spread sheet shows crack margins rising to top of cycle levels. West Coast Gas crack( Brent) above $30, with impressive heavy crude discounts as well. WTI discount widening as well, so a triple bonus. Expect lots of Q1 earnings estimate increases going into the end of what should be price madness as we end March.
VLO weekly spread sheet shows my point. not only has WTI/Brent expanded, but discounts for marker heavy Crudes vs. WTI have widened significantly. Gas and Diesel Crack spreads are at top of cycle highs, and Mogas crack is expanding at about $5/bbl each of last several weeks. West Coast Gas Crack is above $30, and the price on the street keeps moving higher with Torrance KOd.
the pull back from the fast run up sounds right. But anybody with volume on the West Coast should be getting special attention. Mogas sales in Ca are 1 MM Bbl/day. Prices are $40/bbl above US avg. Thats $40MM./ day of added margin. PSX should get at least 10% of that.
gas to liquids and , ( worse) coal to liquids are the ultimate high cost energy products. No reason to think that SSL will come out well until oil goes back into shortage. Don't expect any licensing wins either for the Syn technology suite. They have a good project in progress for USGC petrochem, but its years and billions away from completion.
its not just the spread. The crack margin on the forward curve is as high as i can remember. diesel and mogas at $82/bbl, Crude at $51/bbl minus discounts.
we are up 25% in past 30 days. that should dispel the doubts about how this story ends. A short program cannot survive that kind of momentum.
lots of good info here, but still failing to highlight the key point. Not only is CBI not levered to oil price, nor to oil drilling, nor land based exploration; rather it IS levered to the price of North America Natural Gas, and NG Liquids. Specifically to the relative price of North Amer nat gas vs. world energy prices. That is the driver that spurs clients to do LNG, and big scale petrochem, pipelines, Gogen Power, and gas plants. It is also reliant on low interest rates to provide funding for large multiyear projects. All of those factors remain in place for now, so no change in award momentum, and no cancelled projects. If anything the slowdown in Fracland may improve the availability of craft labor, and reduce some labor costs on jobs already priced.