You’d never guess it if you just listen to the blowhards on CNBC. But U.S. oil production in key regions is actually starting to fall! And oil prices are actually starting to surge!
==> Just look at the headline that crossed my screen in the late morning hours on Tuesday, April 14: “North Dakota’s oil production in February was 1,175k bpd, 15k bpd lower than Jan, according to state regulator.”
|This week the EIA predicted further declines in oil production.|
==> Or how about this little-noticed report from the Energy Information Administration (EIA)? Released earlier this week, it predicted a decline of 23,000 barrels per day in production in the previously booming Bakken Shale. The Eagle Ford Shale in Texas? Down 33,000 BPD. Niobrara in Colorado and Wyoming? Down 14,000 BPD.
==> Or how about the Baker Hughes (BHI, Weiss Ratings: B+) rig count figures, released last Friday? They showed the U.S. oil rig count falling by another 42 to 760. That’s the 18th week in a row of declines, and it leaves utilization down a whopping 53 percent from its fall peak!
And how about the total rig count, which includes oil and gas rigs and activity in Canada? It’s plunging at an annualized rate of 69 percent. As you can see in the chart here, that’s worse than the declines we saw during the Great Recession … worse than the decline in the 2001 recession … and worse than the late-1990s collapse in energy prices, which sent oil prices to $10 a barrel.
The only previous decline that even remotely compares? You guessed it: The 1986 collapse that I have compared this energy plunge to over and over again!
If you recall, that drop was followed by one of the biggest rallies in energy stocks ever! Even stodgy names like Chevron (CVX, Weiss Ratings: C) and ExxonMobil (XOM, Weiss Ratings: C) roughly doubled in the coming few quarters, while smaller-capitalization names exploded in value.
Now let me ask you something:
If you have oil production starting to fall in the key regions that led us into this glut …
If you have oil and gas rig utilization plunging at its fastest rate in three decades …
If you have refineries now coming out of their seasonal maintenance period, and getting ready to buy up millions of barrels of crude to produce gasoline …
AND you have global demand that’s hanging in there …
What do you think is going to happen? Do you think oil inventories are going to keep surging? Do you think oil prices are going to keep plunging? Do you think energy stocks are a sucker’s bet?
No one knows the future. But what I do know is that while the talking heads on CNBC keep pooh-poohing oil, U.S. futures prices have already started surging! Crude was trading for around $57 yesterday afternoon, versus around $42 in mid-March. That’s a rally of more than 35 percent!
Many of the energy stocks I’ve been targeting in my trading services are rallying even more. Heck, one liquid, foreign energy stock that everyone and his sister (but not me!) had given up on has exploded by more than 66 percent in just over a month!
The way I see it, you have two choices. You can start profiting from this move … from seeking out bargains the likes of which we haven’t seen in three decades. Or you can let the rally pass you by. It should be pretty clear what makes more sense to me!
Until next time,
P.S. My mission with the Safe Money Report is to make sure YOU are prepared to protect your wealth and keep it growing even in the worst of times. And for a limited time you can save 75 percent off our regular membership rate. Plus, you’ll get 5 special bonuses — absolutely FREE. Click here to join now.