Wednesday, June 21, 2017

$43/BBL and going lower

I haven't posted on the price of fossil commodities for some time and I've felt bad about it.

The reason for this is that I posted regularly on this as the price was falling last year and the year before but have remained mute as prices stabilize and recovered a bit. Certainly coal, which was really bad off last year, pulled out of a near crash and has recovered somewhat to everyone's surprise.  Oil stabilized before that and was hovering around $50/bbl for quite awhile.  Oil in Wyoming recovered a bit however and things weren't doing as poorly as they were.  The sell off, by some big producers, of Wyoming fields continues to go on, but there are buyers. The big producers are concentrating on the Permian Basin in Texas, but even that should give some older Wyoming fields a boost as the Permian has been in production for a long time and remains hot.

And then, oil dropped to $43/bbl.

That's right, today oil dropped down to $43/bbl.  

Libyan production going on line big time has a lot to do with that.  Libya is a mess right now and there's no reason to believe that Libya, or whoever is in control in Libya, will control production as long as overproduction brings in money, and that it will do.  The New York Times further reports:
HOUSTON — The price of oil keeps sinking, and there is no shortage of reasons: American oil companies are producing too much petroleum. The Organization of the Petroleum Exporting Countries has not cut production enough. Motorists around the globe are not driving enough to shrink crude and gasoline inventories as quickly as expected.
There's no earthly way that American producers can economically sustain $43/bbl.  And there's some thought it will go even lower.

I feel bad for coming in and mentioning that. But my gosh, $43/bbl.  

That's unsustainable.

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