Chicago Boyz

What Are Chicago Boyz Readers Reading?

  •   Enter your email to be notified of new posts:
  •   Problem? Question?
  •   Contact Authors:

  • CB Twitter Feed
  • Blog Posts (RSS 2.0)
  • Blog Posts (Atom 0.3)
  • Incoming Links
  • Recent Comments

    • Loading...
  • Authors

  • Notable Discussions

  • Recent Posts

  • Blogroll

  • Categories

  • Archives

  • Change

    Posted by Jonathan on September 7th, 2018 (All posts by )

    A CFTC report explains that open interest in long-dated NYMEX West Texas Intermediate crude oil futures continues a long-term decline.

    Jessica Summers on Bloomberg:

    That’s because oil extraction has become more efficient in tight oil fields compared to conventional wells and producers have more flexibility in turning on and off the taps in response to oil prices.
    The increasing amount of crude coming in from tight oil in portfolios of production firms has left them with less crude to sell five or more years forward, reducing their need for long-dated futures contracts, according to the study. U.S. weekly production has skyrocketed to 11 million barrels a day, the highest level on record, according to Energy Information Administration data.


    6 Responses to “Change”

    1. Mike K Says:

      Drill, baby, drill.

    2. Grurray Says:

      A ceiling at $70-$75/bbl has held well for the past several months. OPEC was talking about more production cuts over the summer, but now Trump has compelled the Saudis to ramp up instead. What choice do they have? Fracking is now profitable below $50, and deep water’s breakeven point is even lower. Any sustained rise in price is quickly met by domestic supplies.

      The big issue is reserves. It’s becoming clear that there’s more oil under the conterminous United States then anyone ever wanted to acknowledge. Only a relatively few places currently have the will to bring it to the surface, but technology and infrastructure can change that.

    3. Mike K Says:

      Only a relatively few places currently have the will to bring it to the surface,

      Does not include New York State, which would solve the economic woes of upstate New York residents.

    4. Grurray Says:

      Same in Illinois. Oil has been pumping downstate for over a century and a half. The geology prevented production from scaling. Now the only thing preventing it are government regulations acting as a de facto ban. Loopholes in the laws allow small conventional drillers to operate, of which there are still thousands, but with a Democrat likely to take over as governor in November most of that potential will stay in the ground.

    5. ed in texas Says:

      “most of that potential will stay in the ground”
      Until time passes, and prices appreciate enough, and then somebody’s principles will get stepped on.

    6. MCS Says:

      WTI (West Texas Intermediate) is limited by availability of pipeline transport right now and supplies without a pipeline commitment are trading at a pretty steep discount. More pipeline capacity will be online sometime next year.

      This is a distinct contrast with Western Canada, where B.C. and Alberta are at the point of civil war, and hope of obtaining any pipeline outlet has just been killed in the courts.

      Secondary considerations are probably going to be more important now. The holdouts like New York might find it hard to attract interest when they do change their mind. If I was looking where to drill next, I don’t think I’d find them attractive from just the standpoint of transportation and regulatory atmosphere. Look how welcoming California is.

    Leave a Reply

    Comments Policy:  By commenting here you acknowledge that you have read the Chicago Boyz blog Comments Policy, which is posted under the comment entry box below, and agree to its terms.

    A real-time preview of your comment will appear under the comment entry box below.

    Comments Policy

    Chicago Boyz values reader contributions and invites you to comment as long as you accept a few stipulations:

    1) Chicago Boyz authors tend to share a broad outlook on issues but there is no party or company line. Each of us decides what to write and how to respond to comments on his own posts. Occasionally one or another of us will delete a comment as off-topic, excessively rude or otherwise unproductive. You may think that we deleted your comment unjustly, and you may be right, but it is usually best if you can accept it and move on.

    2) If you post a comment and it doesn't show up it was probably blocked by our spam filter. We batch-delete spam comments, typically in the morning. If you email us promptly at we may be able to retrieve and publish your comment.

    3) You may use common HTML tags (italic, bold, etc.). Please use the "href" tag to post long URLs. The spam filter tends to block comments that contain multiple URLs. If you want to post multiple URLs you should either spread them across multiple comments or email us so that we can make sure that your comment gets posted.

    4) This blog is private property. The First Amendment does not apply. We have no obligation to publish your comments, follow your instructions or indulge your arguments. If you are unwilling to operate within these loose constraints you should probably start your own blog and leave us alone.

    5) Comments made on the Chicago Boyz blog are solely the responsibility of the commenter. No comment on any post on Chicago Boyz is to be taken as a statement from or by any contributor to Chicago Boyz, the Chicago Boyz blog, its administrators or owners. Chicago Boyz and its contributors, administrators and owners, by permitting comments, do not thereby endorse any claim or opinion or statement made by any commenter, nor do they represent that any claim or statement made in any comment is true. Further, Chicago Boyz and its contributors, administrators and owners expressly reject and disclaim any association with any comment which suggests any threat of bodily harm to any person, including without limitation any elected official.

    6) Commenters may not post content that infringes intellectual property rights. Comments that violate this rule are subject to deletion or editing to remove the infringing content. Commenters who repeatedly violate this rule may be banned from further commenting on Chicago Boyz. See our DMCA policy for more information.