900% Increase in Oil Production, Gas Below $3, and Oil to Zero? by Attain Capital

Crude Oil is once again making moves that could finally break out of it’s 80-120 range. Gas Prices are below 3 dollars a gallon on average in at least a dozen states.

Oil Production

Chart Courtesy: Triple AAA

Crude Oil Futures are down more than 21% since July, now hovering around the 80 point mark {past performance is not necessarily indicative of futures results).

Oil Production

(Disclaimer: Past performance is not necessarily indicative of future results)
Chart Courtesy: Finviz

Hedge Fund managers are dramatically predicting Crude Oil prices to Zero, and oil production is up 15% in 2013, now producing 7.4 million barrels a day.

Oil Production

Chart Courtesy: EIA

But the mindblowing chart of oil comes from production in North Dakota. Over the past ten years, the average annual oil production has increased 967% (2003-2013) WHAT?! That can’t be. Here’s a visual look at oil production from “The Legendary State,” as well as an explanation as to why and how via Five Thirty Eight.

“In the mid-2000s, companies in Texas had figured out how to extract natural gas from dense shale rock near Fort Worth. A few enterprising oil men figured the same approach might work in North Dakota’s oil fields, and after a few false starts, they proved correct. Between 2004 and 2008, North Dakota’s oil production doubled. Then it doubled again. And again.”

Oil Production

Chart Courtesy: Five Thirty Eight

The more shocking stat is that the EIA predicts that oil production in North Dakota will continue to rise at this rate until 2020, and gradually fall off because this major uptrend in production is unsustainable. But it’s not just North Dakota that’s experiencing an increase in Oil Production, Texas produced 16 million more barrels this past July, compared to the same time the year prior.

Does this mean we’ll see crude prices drop to zero like some are claiming? Or even to 50? Or at least break lower than than the 80-120 range it’s been stuck in North Dakota crude oil production has been exploding since the late 2000’s, which makes us skeptical to believe it’s the cause behind Crude moving from 105 in July to 82 over the past three months.  Crude oil could be dropping because of a major uptrend in the U.S. Dollar, and growing economy, both of these reasons, or none of these reasons.

We won’t try to string together a real reason for the fall, but we will encourage the downward trend to continue. Not because we can fill up at the pump for less, but for the Managed Futures strategies that can capitalize off of shorting energy markets. Something that’s not even an option for some claiming to be “Managed Futures” strategies.

“The Managed Futures Blog is a compilation of thoughts, research, attempts at humor, and more from the team at Attain Capital Management (“Attain”). Attain pairs high net worth individuals, RIA’s, and institutional investors with alternative investments in commodities, managed futures, and global macro strategies through privately offered funds and managed accounts. Click here to sign up for their insight and analysis.”