Somewhat surprised not to see links to articles declaring "...we now appear to have reached the bottom of the cycle..." as spoken by Paal Kibsgaard CEO of Schlumberger. That came from their Q2 earnings conf call, the same Q2 in whixh SLB posted earnings of ($2.16B), yep that is negative $2.16B and laid off another 8,000 workers bringing just their total layoffs to ~50,000. Halliburton gave similarly commentary regarding the oil bottom.
Somewhere in the back of my mind there is a demon saying that is a signal that the oil services companies have finished with accepting further cost cuts .... so for E&P companies don't count on further reductions from the service companies.
Have things gotten better in Q3? Doesn't look to bright so far. Oil prices have fallen close to 20% from the June (?) high of just over $51/Bbl. Economic growth in China and India is weak (very) and these were being counted upon to stimulate the demand needed for further price strengthening as tighter supply (i.e. shale production decline) and increasing demand will raise pricing.
How has tightening supply traveled recently? Yes shale is (mostly) reducing but then OPEC has been increasing (Jun saw increase in estimates to (I believe) 32.9MmBOpd).
Wasn't the US economy growing and therefore increasing demand? Maybe but if so that has not translated to increases in demand for refined products as seen by troublesome rises in both crude oil inventories and gasoline stocks. So now we have a gasoline glut in the USA - in the peak of the summer driving season - with upcoming post (USA) Labor Day fall maintenance schedules taking refineries offline (further increasing then crude inventories). Doesn't have the ring of good news there.
So we have seen the price of crude oil continue to drop. Real close to $40/Bbl now. Is this just the work of those "pesky shorts". Could be as short interest has resumed according to CFTC data.
Was the only "good news" for oil the supply disruptions such as Canada wildfires and Niger Delta Avengers attacks?
Q3 is not off to the flying start that Q2 once held for it. Just remember what pricing is needed for SSN to get through their bank hurdles.
GFTA
SSN Price at posting:
0.4¢ Sentiment: None Disclosure: Not Held
