Four Reasons Oil Could Fall to $40 a Barrel

The OPEC oil cartel's meeting in Vienna on Friday went largely as expected. Production was maintained at 30 million barrels per day with unofficial production numbers about 1.5 million barrels above that as Saudi Arabia opens the spigots and redoubles its price war against U.S. shale oil producers who, for their part, are also increasing production. Moreover, if Iranian economic sanctions are dropped later this month as part of a nuclear deal, another million barrels per day would be pumped.

Long story short: While oil prices have held near the $60-a-barrel level thanks to a slight inventory drawdown associated with the start of the U.S. summer driving season, a combination of deepening oversupply, still high inventories, extended bullish positioning and the regular demand slowdown at the end of the summer suggests prices should start sliding again soon. Storage tank capacity could be tested as soon as September.

Related: Why the Saudis and OPEC Want Cheaper Oil​

According to research by Credit Suisse, futures market positioning suggests downside price risk of about 30 percent — which would be enough to take West Texas Intermediate back toward $40 a barrel in a test of the March lows.

The chart above puts OPEC's decision in the context of an epic supply glut. Remember also that while the U.S. drilling rig count is down about 60 percent from its peak, total production increased in the week of May 22 to a new all-time high of 9.6 million barrels per day.

Via: The Fiscal Times

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Texas Now Produces More Natural Gas Than All Of OPEC

Everything is bigger in Texas, especially natural gas production. The Lone Star State alone produces more natural gas than every country in the world, except Russia, and that includes every member state of OPEC.

The American Petroleum Institute has released a graphic showing that Texas produces 18.81 billion cubic feet of natural gas per day, well above any member of OPEC. The graphic is meant to show how hydraulic fracturing and horizontal drilling into shale formations has made the U.S. the world’s top oil and gas producer.

Source: The American Petroleum Institute

“This is what energy security looks like,” Tracee Bentley, head of the Colorado Petroleum Council, said of the graphic. “Thanks to innovations in hydraulic fracturing and horizontal drilling, Colorado now outpaces seven of 12 OPEC nations in natural gas production.”

Individual U.S. states now produce so much natural gas, they outrank whole countries when it comes to daily production. Iran, the largest OPEC gas producer, only produces 15.43 billion cubic feet of natural gas per day. Qatar, OPEC’s number two gas producer, produces 15.09 billion barrels per day.

Via: California Political Review

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[VIDEO] US energy could be a $500 billion boon: FedEx CEO

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SAFE Conference takes aim at OPEC

Wednesday, 16 Oct 2013 | 7:37 AM ET

Retire Marine Corps Gen. James Conway and FedEx Chairman and CEO Fred Smith discuss progress on U.S. energy independence.

Developing a comprehensive plan to achieve U.S. energy independence is the "single biggest" way to boost the economy, FedEx Chairman and CEO Fred Smith told CNBC on Wednesday.

"Oil is at the center of everything we do," Smith said in a "Squawk Box" interview. "If we produce more in the U.S. and use less and develop alternatives … you allow the United States within our economy a half a trillion dollars more in GDP."

Smith opened the OPEC Oil Embargo 40 summit, sponsored by Securing America's Future Energy, in Washington on Wednesday. He's the co-chair of the advocacy group's Energy Security Leadership Council of retired generals, admirals and CEOs of oil-using companies.

(Read more: Keystone would make OPEC obsolete, says Pickens)

"When OPEC instituted the oil embargo 40 years ago … we were only importing about 35 percent of our oil," he said. "Withholding those oil supplies threw the U.S. economy into complete chaos." The U.S. now imports less than 40 percent, he added.

Less reliance on foreign oil "allows us the flexibility to conduct our international affairs and our foreign policy without regard to be hostage to these national oil companies," Smith said.

Via: CNBC

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