CME Oil: Is Climbing U.S. Production About to Peak?

Oil: Is Climbing U.S. Production About to Peak? - [AUTOLINK]CME[/AUTOLINK] Group

Those hoping to see a continued rise in U.S. production should have two immediate concerns:
The number of operating oil rigs has stopped growing (Figure 1)
The marginal productivity of operating oil rigs is falling quickly (Figure 2)

Reuters - Kemp // Mind the gap: Brent and WTI point in opposite directions

https://www.reuters.com/article/us-oil-prices-kemp/mind-the-gap-brent-and-wti-point-in-opposite-directions-kemp-idUSKCN1BN1RS

Interesting (but short) discussion on Brent-WTI and Brent vs WTI curve shapes.

Front up over a $1 while the way back is down about 35c.
Right now May18 thru thru Aug20 are all within a few pennies of each other.
We're getting close to that wierd curve shape where the front is contango, the middle in backwardation, and the back in contango, like we saw earlier in the year.

SMCJB 

Front up over a $1 while the way back is down about 35c. Right now May18 thru thru Aug20 are all within a few pennies of each other. We're getting close to that wierd curve shape where the front is contango, the middle in backwardation, and the back in contango, like we saw earlier in the year.

Front Up $1, way back unchanged.
Dec17 still 30c under Jun18 which is 30c over Jun20 which is 30c under Jun21

SEPTEMBER 14, 2017
EIA projects 28% increase in world energy use by 2040

The U.S. Energy Information Administration's latest International Energy Outlook 2017 (IEO2017) projects that world energy consumption will grow by 28% between 2015 and 2040. Most of this growth is expected to come from countries that are not in the Organization for Economic Cooperation and Development (OECD), and especially in countries where demand is driven by strong economic growth, particularly in Asia. Non-OECD Asia (which includes China and India) accounts for more than 60% of the world's total increase in energy consumption from 2015 through 2040.

More...
https://www.eia.gov/todayinenergy/detail.php?id=32912

Thanks for the valuable info update.

SMCJB 

Front Up $1, way back unchanged. Dec17 still 30c under Jun18 which is 30c over Jun20 which is 30c under Jun21

Its getting steeper now in the near term, about 54c between Dec17 and Jun18 and flatter between Jun18 and Jun20. Do you have a butterfly in place? Are you looking for the curve to flatten in the near term? I am trying to understand how you play the different shapes of the curve. Any advice is much appreciated.

Regards.

After a long summer, including two international weddings, and our friend Harvey (did you stay dry?), I actually haven't been very active in a couple of months. z7m8z8 is getting too close to expiry for my liking but my models all think it's cheap. The next few flys are all really flat and liquidity further back is to poor to trade - so virtually no 6mth fly positions.

The 12 month flys z890, z901, z012, z123 are also all very flat. No way z123 is 40c over z345 but that's just bad settelements and you can't trade it.

Even the 1mth flies are all pretty even.

So I have very little on - without doubt the least in years.

SMCJB 

n. So I have very little on - without doubt the least in years.

Interesting, thank you

-William

this is the Z7 12 month calendar in Crude

Buy when stochastic is below 20 and sell above 80 - last indicator at the bottom

Why calendars: less risk and partially hedged (still directional)

Of course this doesnt take into account any external factors that could influence overshoot.. but i calculated there are about 10 cycles this year