Oil Field Workers Testing Red Wing Boots
The mood at the Fort Worth Oilfield Christian Fellowship is normally upbeat. They generally have speakers who have something uplifting to share.
However, on Monday the mood at the meeting was in a word… gloomy.
In looking for something positive to share I found a technical analysis chart that says crude oil price – next stop $80 or $130. I did not put much stock in the chart as it ended on April 23, 2014.
There is a divergence of opinon whether or not the market has factored in Iran’s re-entry into the market already. No one agrees what impact Iran will have in the short term.
In my opinion (you are free to get your own opinion if you don’t like mine), the factors moving the market are supply, demand, and speculation. Twenty years ago, 21% of the oil contracts were purchased by speculators. Today, oil speculators purchase 66% (or more) of all oil futures contracts.
In looking for some good news on oil pricing, I did find one item of interest.
Energy analysts Wood MacKenzie said last week that low oil prices have now caused the delay of 68 planned petroleum projects worldwide. This represents $380 billion in frozen capital expenditures.
What is interesting is that this is not just represented by private sector shutting future projects. Governments are also holding off on developing new projects. Brazil said it will discontinue offering new offshore projects in a target area the yielded several of the biggest multi-billion barrel finds.
That should help. But, not anytime too soon.