With NYMEX oil floating in the high US$50s and low US$60s right before the election day, forecasts range from “going down more” to “going way up after,” but no one seems to really know what is going on there. On the G.U.N. gold versus barrel of goods chart from today, we can see how far NYMEX fell versus all the commodities in just the past 60 days. If you watch the graph, you’ll see that NYMEX crude oil stuck with the barrel of goods average fairly well from the start of the chart, May 9, 2006, until September 6, 2006. At that point (about 60 days ago), it really fell sharply.

OPEC President Edmund Daukoru said on Sunday that “all the group’s members will fully implement their production cuts, while market conditions may force the Organization of the Petroleum Exporting Countries to cut output further next month.”¹. A reduction in OPEN output would realistically push prices up (lower supply, higher price) unless there is either a cut in demand (unlikely) or an equal rise in supply from other resources.

With the recent drop in Natural Gas prices, some drillers and miners in the Texas shale region are cutting output. “Chesapeake says it will shut in 6 percent of its production, or EnCana Oil & Gas of Canada says it will drop four of its Barnett Shale rigs.”², says an article at the DFW Star-Telegram. As NYMEX prices went up, experimental wells and other new energy sources in the US increased. Now as Natural Gas and Oil prices fall, more companies are considering pulling back in some regions, which is changing news from just a week ago.

In E85 news, Tennessee approved a $4 million budgetary increase to boost production of E85 fuels and other alternative fuels.³From a free market perspective, State-initiatives are usually more cronyism and paternalism than an actual response to demand.

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ROSEMONT, IL

By A.B. Dada
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Look like things are heating up in Texas as more U.S. companies work for oil extraction rights within the continental states. Morgan Creek Energy Corp has initiated the process of permitting a twin well for drilling on a key lease in central Texas, according to an article at OilOnline. Upon execution, this well would be the first to be drilled on the Company’s newly acquired leases in the region, which it has targeted as part of the Ouachita (Wash-A-Taw) gas trend. The company has another well dating back to pre-1923 on the same property, which drilled over 200 feet of natural gas. The new well will drill down to 3,600 feet where Morgan Creek Energy believes there are significant gas resources. Natural gas prices have more than doubled, leading more companies to try to discover more supply in the Texas region.

Also in Texas in the Midland region, we see more shale research going on. Robert Cluff of spoke at the Barnett Shale Symposium and talked about the opportunity to discover 800 trillion cubic feet of gas supply. Cluff said That’s enough gas to support thousands of wells to the crowd of 200 at the symposium.

Again in Texas, Knight Energy completed wells in Stephens County, also part of the Barnett Shale region.

Finishing off the Texas oil news is a report from Saxon Oil covering its October operations. Saxon is using a new completion technique called Radial Jet Drilling, which creates a larger drainage area for the flow of oil and gas. Saxon has leased 2000 acres in the Hudson Hills region in Central Texas.

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