Blind Optimism Leads To Malinvestment, Oil Glut, Collapsing Rig Counts

A recent report by Wood Mackenzie notes that cheap oil has barely made a dent in the global production of crude. Even though the price of oil has fallen like a rock, global oil production has barely budged. The problem of course is that many of the projects coming online were large projects with loads of sunk costs. And like … Read More

Odessa-Midland Home Prices See Double-Digit Declines From Bubble Peak

I was taking a look at home prices in the Odessa-Midland area this morning, and one thing is obvious. The bubble in the Petroplex is officially popping! Looking at the latest housing data from TAMU we can see that average home prices in Odessa have declined by 14 percent from their shale bubble peak of November 2014. Sales activity in … Read More

Fact vs Fiction: How Low Oil Prices Are Affecting Houston’s Housing Market

This morning I was reading a rather entertaining piece at the Houston Business Journal which purports to explain how low oil prices are affecting Houston’s housing market. The article from HBJ’s Paul Takahashi has some rather interesting comments from various industry players and the usual sell-side spin that you would expect from those with a vested interest in playing up … Read More

Oil Takes Out $41, Home Builders Walking Into A Trap Of Their Own Making

I was out home shopping with a client this past week, and something that was readily apparent is the dramatic shift in the new home market here in Katy, West Houston during the past year. As I have written in previous posts, home builders have been suffering from a serious bout of irrational exuberance. I’m of course referring to the … Read More

ExxonMobil Earnings, Revenue Plunge In Second Quarter As Production Rises

It looks like the much-ballyhooed recovery has a few kinks left to work out. Today we learned that the employment cost index (ECI) showed continued weakness in wage growth in the U.S. The quarterly increase in wages printed at just 0.2%, well shy of the 0.6% expected. This was also the smallest quarterly gain in the history of the series … Read More

Arthur Berman – Shale Oil & Gas And The End of the Beautiful Story

Arthur Berman offers an interesting if not contrarian point of view in this presentation. Speaking from Houston Texas,¬†Berman highlights the fact that the shale oil revolution was really not a revolution at all since we have known about the possibilities of shale oil and gas deposits for decades.. Berman suggests that high prices were a primary driver behind the surge … Read More

Falling Oil, Vanishing Jobs & The Counterfeit Recovery

This week the EIA noted yet another inventory build for crude oil stocks. We found out that retail sales fell for the third consecutive month. US Producer Price Index final demand actually fell 0.6 percent year-over-year. To top it all off the US rig count fell yet again, shedding another 67 rigs. Another 56 oil rigs were idled in the … Read More

Double-Edged Sword For Oil Producers As Supply Glut Continues

Oil producers are in an increasingly precarious position as the inventory of crude stocks continues to pile up. Today the EIA released the weekly crude oil inventory update showing that US crude stocks continue to pile up. The weekly petroleum status report from the EIA showed crude inventories rising by another 7.7 million barrels, nearlyy double analysts estimates. U.S. crude … Read More