04 Apr Back in Black!
Oil has been on a little bit of a roller coaster for the past few months. A warm winter throughout the world prevented the EU from purchasing Russian product and the dark cloud of a possible recession has been part of the lower WTI prices this year.
Saying that, it appears at this time we’re on a trajectory that shows some strength coming back into market price. I mentioned this in January in my yearly prediction:
“Speed is the name of the game to be ready for price rebound in late Q2.”
Why are we seeing this “rebound”?
|▪||All oil companies didn’t press too hard on development in Q1 since there was no relief in consumables and labor cuts. Debt to Asset ratios are in great shape for the Big Boys|
|▪||OPEC+ declared this week it will be cutting production for the entire year (kinda the big one)|
Although China, Russia and other BRIC countries are making their own deals on currency and natural resources, their alliance is new and unstable. Since our “Petrodollar” is backed up by decades of historic worldwide prosperity and the US Military, it would a hard press for the short term to see these countries leave the US Dollar entirely. No one will be that bold!
Talking about not being that bold, many are declaring $100 oil by end of Q2. I don’t see it…I’ve been saying $85 in May for a month and I’m sticking to it.
So, what’s the move?
Natural gas price is super low, but we’re not seeing the pinch yet for really good deals. I say, start looking for drilling deals now that factor in $75 oil as a barometer for payout. If it has natural gas, take it! We all know it won’t stay at $2 per mcf for long!
I should have some vertical and hz plays in Kansas in 2 weeks and if you’re really feisty, I got 2 points left in a re-entry that gets fracked on Tuesday ($14,800 a point…see KE 1219 on the website).
For those about to invest, we salute you!