Some assume that as US oil production increases, imports will decrease by that amount. However, Shell produces oil in West Africa, transports on Shell tankers to Shell refineries, and that's not going to change. Saudi's do the same to their refinery in Houston, Venezuelan's do the same to their refinery, etc.
I noticed in the latest EIA inventory report that despite historically large inventory numbers for crude oil, imports of crude oil actually increased during the last week. Just because an E&P company can pump oil, it doesn't mean that a refiner is going to buy it.
Really, you need to get out more. 99.9% of Americans love cheap oil. What politician is ever going to upset 99.9% of the American voting public ?
Even better, Israel bombs Iran, US defends Israel, Arabs impose oil embargo, oil goes to $200, Linn trades slightly down on the news.
Bloomberg is a shill for Wall Street. Hedge funds tell them what to say and they parrot the so called "news". Oil won't go much lower but it probably won't go much higher either.
Line is hedged 100% in Nat Gas through 2017, but, next year their Nat Gas hedges will pay $200 million LESS than this year. Oil is hedged 90% this year but 65% next year. If Oil stays at theses prices oil revenue declines $200 million next year. NGL pricing is just in the toilet this year and next. So, if revenue declines $400 million next year, there goes the dividend. Linn is in no danger of BK but the dividend is toast.
I am an Economist and can tell you in one word, contagion. Italy, Spain, Ireland, Portugal, all are in over their heads in debt and if they default, its in the trillions of dollars. That would have an impact on world financial markets. I doubt it will happen but markets are driven by fear and greed.
"Lots of drama about China and central banks creating a commodity collapse" . . . Iron Ore collapse is due to over production of Iron Ore from new mines that can produce for $20/ton. BHP, VALE are a couple of names that come to mind, opening new mines which has just about doubled the world production of Iron Ore. MSB has a unique position that gives it an advantage in North America but eventually the long term contracts have to be renewed and pricing will change.
My point is that Greece cannot pay back what it already owes. The day of reckoning has been put off by Greece getting to borrow enough money to finance this debt for a little while longer.
Reserve life depends on price of Oil. If oil goes to $20, than less oil is recoverable and trust is unprofitable. If oil goes to $100, than more oil becomes recoverable and reserve life extends.
GS sold mortgage backed securities to their customers while they were shorting these very same secuities. GS will do anything to make money, including stock manipulation. Wouldn't surprise me to discover GS puts a sell rating on Linn while they buy with both hands.
Problem is LNCO owns 40% of Linn shares and CEO votes LNCO shares. Ellis isn't going anywhere, which is too bad.
What smells bad is the fact that every time oil rallies, articles come out of the woodwork about the oil glut and demand destruction and price collapse, etc. Some of the articles are dated 3-6 months ago but get re-released to the media. Something tells me that there are certain investors (Goldman Sachs) that have heavy bets on oil going lower and they will do anything to make their bets payoff. Remember, Goldman was the investment house that sold mortgage backed securities to their customers while shorting these very same securities. There are no controls on what happens on Wall Street, its the wild west.
I hesitated to post because someone always jumps in with off the wall comments about how the sky is falling. This is a normal oil industry cycle and it will run its course.