# Oil price discussion and analysis



## wayneL

Oil seems to have gone off everybodies radar for the moment as the price has eased off. But the long term problems have not gone away as this article points out.

http://www.btinternet.com/~nlpwessex/Documents/peakoil2014.htm

Cheers


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## positivecashflow

*Re: OIL AGAIN!*



> I am always asked about Oil prices. Here is my prediction as it will affect the market as a Bullish catalyst. Oil prices will fall during the year to $35 and will likely bounce. Expect Volatility. If $35 is penetrated then strong support is at $30. $50 is major resistance here at the beginning of the year.



This was posted in another forum.  What do you think wayneL?


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## wayneL

*Re: OIL AGAIN!*

Well I'm not really one for forecasts, but I think the next 30 days will set the tone for the rest of the year, all things being equal...and barring any left field developments.

I see ~$40.50 (feb contract) being the critical level, and many suspition is that it will break to the downside... but I am on the sidelines at the moment.

Cheers


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## positivecashflow

*Re: OIL AGAIN!*



> Oil prices have fallen slightly Wednesday despite a rise in crude inventory levels last week. Crude inventory levels fell by 3.3 million barrels, but traders have been encouraged by a rise in distillate and gasoline inventory levels. Of late, oil prices have been fluctuating around the $43 a barrel level. There remain concerns about possible terrorist activity later this month during the Presidential inauguration and the election in Iraq.



 Here's another interesting quote from an article written Jan 5th 2005.


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## stefan

*Re: OIL AGAIN!*

Not to mention that it also depends on the rest of the winter which so far has been very mild. 

I don't see a major reason why oil would drop significantly as there is no indication other than the mild winter that demand will actually decrease anytime soon.

Happy trading

Stefan

PS: Very interesting article Wayne. Thanks for posting it.


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## Bonk

*Re: OIL AGAIN!*

No one can predict oil ? Price is back over USD $ 45 

OIL IS KING !


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## UraniumFuture

*Oil below $40! You must be joking!!!!*

Peak oil is forecast for this year or next according to Matt Simmons, adviser on energy to Bush/Cheney, and also Colin Campbell, respected oil industry figure from the UK. What does that mean for investing? It means get the f#ck out of stocks vulnerable to high oil prices and into stocks that benefit from high oil prices. They are few and far between but obviously oil stocks with good reserves will do very well. The other area is uranium and there is bricks and mortat fundamentals to support this. 

Global consumption has been steadily climbing up to around 60,000 tonnes per annum. Half of this is pulled from the ground and the rest comes from desembled weapons inventories maining in good old Russia! However these inventories are about to run down at a point in time where countries around the world ramp up nuclear power plans. The cost of uranium account for only 5% of the cost of nuclear energy with the rest coming from plant establishment and maintenance. Uranium recently hit a 20 year high of US$20.70 /lb and has continued to rally regardless of oil prices coming back from their US$57 /barrel highs in late 2004. Australia has around 45% of the known global resource that is currently able to be mined at these prices and only three mines are in production in Australia. One is the Beverley mine down in SA which is not listed on the ASX or anywhere for that matter. It is privately owned by the US giant General Atomics. The other two mines are WMC's Olympic Dam and ERA's Ranger Mine. All the market fundamentals point to a continued rally in uranium stocks this year. Keep an eye on the uranium price in particular (uxc.com). The best thing about this commodity unlike gold and silver is that if you want a piece of the action you have to buy shares. You can't physically buy uranium. There are some great Candian stocks also and investors over there are much more aware of the potential of this sector of the energy market.  

There are only 4 uranium stocks listed on the ASX. Paladin Resources (PDN) was up 17% today and the buy orders for tomorrow suggest more upside. ERA, Australia's biggest producer of Uranium were up 30c today to $6.70. No surprise WMC Resources is a takeover target. It has the largest Uranium reserves in OZ. And the other speculative is Summit (SMM). Speculative not because it is looking for uranium, speculative because it has proven reserves in Queensland where uranium mining is banned. Sustained periods of high oil prices and inevitable high uranium prices will see the QLD govt allow its reserves to be mined. So the value is there just they can't access it which is actually a strong positive if you consider the price of uranium will only get more expensive. Buy it and forget about it!


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## Joe Blow

*Re: Oil below $40! You must be joking!!!!*

UraniumFuture,

Please try and avoid posting the same cut and pasted information in more than one thread and lets try and keep the threads ON TOPIC. 

Other than that, welcome to the forums.


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## wayneL

*Re: OIL AGAIN!*

A different perspective:

http://www.radford.edu/~wkovarik/oil/index.html


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## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Oil seems to have gone off everybodies radar for the moment as the price has eased off. But the long term problems have not gone away as this article points out.
> 
> http://www.btinternet.com/~nlpwessex/Documents/peakoil2014.htm
> 
> Cheers




Timely to visit your remarks Wayne! January 2005 was a long time ago now but oil has again taken a breather. When will the speculators move in again and how far will it jump, if at all?

Chart suggests a descending wedge (also known as a bullish wedge), approaching a previous congestion zone, as occurs at previous support/resistance areas, I expect it'll consolidate or bounce off imo. Can't see it falling any lower than 56 (support level) when supply still seems to be low. I've been watching oil and gold recently and have to admit I never expected both to retrace this far so quickly.


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## wayneL

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> Timely to visit your remarks Wayne! January 2005 was a long time ago now but oil has again taken a breather. When will the speculators move in again and how far will it jump, if at all?
> 
> Chart suggests a descending wedge (also known as a bullish wedge), approaching a previous congestion zone, as occurs at previous support/resistance areas, I expect it'll consolidate or bounce off imo. Can't see it falling any lower than 56 (support level) when supply still seems to be low. I've been watching oil and gold recently and have to admit I never expected both to retrace this far so quickly.




The commercial traders are very long right now....the big boys are buying. So your analysis should prove correct RK

However, the commercial gold traders are nett short.

FWIW


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## wayneL

*Re: OIL AGAIN!*

RK my analysis:

Oil has been in a deep retracement since August, and in the last couple of sessions has dropped below .618 retracement, but is in a potential support level (monthly fibzone).

But Commitment of Traders Data (COT) is showing that the large commercial oil traders are nett long….and the longest they’ve been in the last 18 months. This is bullish.

The large spec traders are nett short, the shortest they’ve been for 18 months, this is also bullish.

View charts & COT data here  (file was too big to attach)


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## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> However, the commercial gold traders are nett short.
> FWIW




That's what I was about to checkout since the recent pattern has been a bit inconclusive for gold. Thanks!


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## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> RK my analysis:
> 
> Oil has been in a deep retracement since August, and in the last couple of sessions has dropped below .618 retracement, but is in a potential support level (monthly fibzone).
> 
> But Commitment of Traders Data (COT) is showing that the large commercial oil traders are nett long….and the longest they’ve been in the last 18 months. This is bullish.
> 
> The large spec traders are nett short, the shortest they’ve been for 18 months, this is also bullish.




Hi Wayne,
Just saw your posts, I forgot all about applying fib levels, was about to do a chart with standard straight edge trendlines too (intersect about 55 atm) but stuffed it up. Nice to see the overalapping support levels from different TA studies. Will post a chart soon with pretty lines and dazzling colours- if I can get it right.

Thanks for the COT info, always find it useful, saw some great explanations on what to look for by Nick Radge on Reefcap.

btw, great blog and nice charts, something to keep an eye on.


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## wayneL

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> Will post a chart soon with pretty lines and dazzling colours- if I can get it right.




Oh I like those dazzling colours on charts   Will look forward to it.


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## markrmau

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> ....the large commercial oil traders are nett long….
> The large spec traders are nett short, the shortest they’ve been for 18 months,




Hi Wayne, can you pls give rundown on who's who in the COT?

I guess the large spec traders are the hedge funds... Are the large commercial oil traders the refiners? 

If that is so, then perhaps the situation is not so bullish. The refiners/consumers have to be long to manage risk - they know how much oil will cost them in 6 months time. However, the spec hedge funds are the ones taking the other side of the trade - and they are supposed to know what they are doing.

Having said that, I want a cold US winter for my AMU shares (US gas+oil).


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## doctorj

*Re: OIL AGAIN!*

Crazy stuff last night.  Henry Hub spot gas up more than 20%, New York Gate prices up just a bee's **** short of 40%.


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## Smurf1976

*Re: OIL AGAIN!*



			
				doctorj said:
			
		

> Crazy stuff last night.  Henry Hub spot gas up more than 20%, New York Gate prices up just a bee's **** short of 40%.



I haven't done a serious analysis with the numbers but I VERY strongly doubt that it is possible to physically deliver the gas volumes which would be consumed in US/Canada in a normal or cold Winter due to the cumulative production losses in the Gulf of Mexico.

Substitution with fuel oil / LPG / kerosene / diesel in industry and power generation will help, but the capacity to do so is limited. Beyond that there is NO short term fix apart from demand destruction.

Given that the US gas-based chemicals industry has already been largely gutted in recent years (due to high gas prices) the remaining ability to cut demand relates mainly to non-energy intensive uses. For example, factories where gas is not a major cost or part of the business, offices, schools, houses etc. The easy options are already in permanent use and are thus unavailable as additional measures in a crisis.

The key things I would be watching for clues are the price of natural gas relative to diesel and crude oil and also the price of LPG gases. If nat gas goes significantly above the oil price in energy terms then that signals that the easy fuel switching is not sufficient. If the propane price takes off then that suggests that propane is being fed into the sales gas stream (sold as natural gas on a volume (not energy) basis) in order to beef up volumes.


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## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Oh I like those dazzling colours on charts   Will look forward to it.




Well Wayne, I'm afraid I couldn't find any bright ones ; ) alas, was looking forward to some painting, but here is what I've seen so far, wish I had a fib tool, hopefully they will correspond to the trendlines.  Still a bullish weekly chart, could fall a bit more (a straight edge trend line instead of the curve would see it able to fall closer to 50 without breaking the medium term trend imo), no consolidation yet so no long signal for short term entry.


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## TjamesX

*Re: OIL AGAIN!*

From a peak oil conference in Perth;



> GLOBAL oil demand could start outstripping supply in the next four years, according to the Association for the Study of Peak Oil and Gas (ASPO).
> 
> In Perth yesterday to launch the association's Australian chapter, ASPO president Professor Kjell Aleklett, a Swedish energy expert, said 54 of the 65 major oil-producing countries had already reached their peak production levels.
> 
> He warned that supply was likely to be unable to meet demand between 2010 and 2020.
> 
> "We think that 2010 is more likely than 2020 but when it comes to planning of energy issues, energy in the future and so on, this is a very short time and we must act now," Aleklett said.
> 
> He said four oil fields the size of the North Sea would need to be found for oil production to meet demand in 2025.
> 
> "This is just not possible," he said.


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## Smurf1976

*Re: OIL AGAIN!*

And right now the UK has a natural gas prices with prices now about double the price of oil on an energy content basis.

The UK made the most tragic of mistakes possible in power generation, heavy reliance on gas. Now they are paying the price and will pay, pay and pay again for years to come.

No doubt there are some good investment opportunities in gas and also non-gas power generation over there though. Just steer clear of anything which uses a lot of gas or electricity in the UK because it's getting rather expensive with wholesale spot gas price increases up to 50% in a day recently.

Closer to home, New Zealand is faced with a significant (but by no means certain) generation shortfall in 2006. This is a system energy constraint rather than a peak load constraint. It is likely that a government-owned oil-fired plant, the only thermal plant not already running flat out, will be online in a matter of weeks and after that there is no more. NZ is also faced with a long term gas supply shortfall as the Maui field depletes so good opportunities for anyone who finds gas over there.

And don't forget the USA, another country with a gas shortage.

Oh, and I almost forgot. There's an issue with oil too...


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## wayneL

*Re: OIL AGAIN!*

I reckon a good spot to live is where it's both windy and sunny....like Geraldton   

(.....plans for solar panels and windmill on roof.)


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## RichKid

*Re: OIL AGAIN!*

Chart of oil, prices have really tightened and bounced off the important 56 support level, downtrend not broken yet but I think we may see a higher swing low, we'll know next week....maybe a small double bottom as part of this swing.


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## RichKid

*Re: OIL AGAIN!*

Looks like this correction is over, nice higher swing but the price is a bit muddled atm. The Fat Prophets have a graph here showing the overall bull run, they expect it to go to $85+, don't you love the geometry in these commodity charts!!? Beuuudiful. 

http://www.fatprophets.com.au/content.aspx?page=Chart+of+the+Month+-+7+Dec+05


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## RichKid

*Re: OIL AGAIN!*

Just eyeballed the chart again, there's a moderate support/resistance line at about 62- shows up better on candle charts. If it can't get through it and re-establish it as support I expect it to range below till it gathers enough steam to press higher again. When all's quiet on the oil front is when it's time to get ready for the next bit of panic or euphoria imo- not that it's always an accurate guide.


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## mime

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> And right now the UK has a natural gas prices with prices now about double the price of oil on an energy content basis.
> 
> The UK made the most tragic of mistakes possible in power generation, heavy reliance on gas. Now they are paying the price and will pay, pay and pay again for years to come.
> 
> No doubt there are some good investment opportunities in gas and also non-gas power generation over there though. Just steer clear of anything which uses a lot of gas or electricity in the UK because it's getting rather expensive with wholesale spot gas price increases up to 50% in a day recently.
> 
> Closer to home, New Zealand is faced with a significant (but by no means certain) generation shortfall in 2006. This is a system energy constraint rather than a peak load constraint. It is likely that a government-owned oil-fired plant, the only thermal plant not already running flat out, will be online in a matter of weeks and after that there is no more. NZ is also faced with a long term gas supply shortfall as the Maui field depletes so good opportunities for anyone who finds gas over there.
> 
> And don't forget the USA, another country with a gas shortage.
> 
> Oh, and I almost forgot. There's an issue with oil too...




Hmmm I remember Kim Beazly had the idea of gas turning Australia more gas dependent. I didn't think it was such a bad idea but now I'm not so sure.


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## wayneL

*Re: OIL AGAIN!*

I don't know whether anyone's noticed, but we >$63 again.


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## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> I don't know whether anyone's noticed, but we >$63 again.




Sure did! Watching those swings very closely. Now for the retest of 62 and we're back firmly above a support level.

Here's a quick chart, has dipped a bit but still looking good, I'm looking for the higher swing low and for open interest to rise but I'm not sure how significant the latter is.


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## TheAnalyst

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> I don't know whether anyone's noticed, but we >$63 again.




tell me about it i sold my santos installments the other day at a reasonable profit having purchased them before xmas...if i waited a little longer i would have made 3 times as much...oh well must be happy becuase i have a few months supply of petrol for free now.


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## michael_selway

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> Sure did! Watching those swings very closely. Now for the retest of 62 and we're back firmly above a support level.
> 
> Here's a quick chart, has dipped a bit but still looking good, I'm looking for the higher swing low and for open interest to rise but I'm not sure how significant the latter is.




Hi looks good,

just wondering whether u can post a 2-3 year chart for crude

Thanks

MS


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## RichKid

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Hi looks good,
> 
> just wondering whether u can post a 2-3 year chart for crude
> 
> Thanks
> 
> MS




Hi MS,
You can try www.futuresource.com (that's where I get mine from- it's all free), they aren't flexible enough to allow you to get specific time frames but if you fiddle with the chart size and style you should be able to get what you need.

Or you can try www.morrisonsecurities.com.au but their charts aren't as clear for me.


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## wayneL

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Hi looks good,
> 
> just wondering whether u can post a 2-3 year chart for crude
> 
> Thanks
> 
> MS




Here is 2 years of the feb '06 futures contract


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## doctorj

*Re: OIL AGAIN!*

Monthly chart for rolling crude futures all the way back to midway through '94 and 3 yr weekly chart for same contract. 

Any more, please feel free to request.


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## michael_selway

*Re: OIL AGAIN!*



			
				doctorj said:
			
		

> Monthly chart for rolling crude futures all the way back to midway through '94 and 3 yr weekly chart for same contract.
> 
> Any more, please feel free to request.




Wow thanks doctorj/waynel

It appears than Crude has really taken off only in the last 2-3 yrs

Would you guys also be able to post chart for Crude since the 1980s till now? esp showing the all time high of $80/barrel?

Thanks again

MS


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## Smurf1976

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Would you guys also be able to post chart for Crude since the 1980s till now? esp showing the all time high of $80/barrel?



US Dollars I assume? Crude oil hasn't ever traded at US$80 per barrel. The all time high is around US$70 (approx) a few months ago prior to the announcement of the _temporary_ stock drawdowns by the IEA of both crude oil and refined products.


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## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> US Dollars I assume? Crude oil hasn't ever traded at US$80 per barrel. The all time high is around US$70 (approx) a few months ago prior to the announcement of the _temporary_ stock drawdowns by the IEA of both crude oil and refined products.




Oh, i thought i read somewhere that in the mid 1980's it reached (maybe equivalent) of $US80/Barrel? The recent $US70+/barrel didnt break the record i heard also. Can someone please confirm with a crude chart from the 1980 till now?

Thanks

MS

---------------------

"Even compared to 1981, when oil prices touched $80 in real terms, the U.S. bill for overseas oil is way up. That year, the EIA says the average oil price was $31.77, or $66.30 in today's prices.

http://www.forbes.com/2004/08/16/cx_da_0816topnews_print.html


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## Smurf1976

*Re: OIL AGAIN!*

Until recently the peak price was around $40 set in the mid-1980's prior to the effective collapse of OPEC control during that period as North Sea output ramped up and global demand fell as nuclear and coal-fired generation increased thus cutting demand for fuel oil.

In inflation adjusted terms this is somewhere around the equivalent of $90 now so I think that's what you're thinking of.

US$70 was a record in nominal terms but not in real terms. That is, the oil was worth a record volume of a depreciating unit of measurement (Dollars).

I'll post a chart if I can find one that's in nominal dollar values. I did have one somewhere which went back to 1859 (the beginning of the modern oil industry) so that ought to cover everything but it's a "real terms" chart and not a nominal price one so it shows everything in 2004's depreciated Dollars rather than actual price at the time which isn't much use here.


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## Smurf1976

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> "Even compared to 1981, when oil prices touched $80 *in real terms*, the U.S. bill for overseas oil is way up. That year, the EIA says the average oil price was $31.77, or $66.30 in today's prices.
> 
> http://www.forbes.com/2004/08/16/cx_da_0816topnews_print.html



I've highlighted the effective answer to your question. Nominal price versus real terms.


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## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> I've highlighted the effective answer to your question. Nominal price versus real terms.




oh ok do u (or others) have the normal (nominal one) from 1980 till now?

Thanks

MS


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## Smurf1976

*Re: OIL AGAIN!*

There's a nominal (not real terms) price chart here http://www.eia.doe.gov/emeu/cabs/chron.html

It's complete with chronology of major oil industry events back to 1970. Should be what you're looking for.

The chronology looks reasonable although I haven't read it all. Do bear in mind though that it's written from the perspective of the government (USA) of a major oil importing country and so sees price increases as "bad" whereas an exporting country would see them as "good". Like anything it depends which side of the trade you're on whether an increase is good or bad.

Regarding the EIA, their recording of actual events is fairly good in general but the track record of their forecasts isn't good especially where oil discovery is involved. 

Note also that the EIA (Energy Information Administration) is totally separate from the IEA (International Energy Agency) despite the similar abbreviation and both dealing with energy.


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## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> There's a nominal (not real terms) price chart here http://www.eia.doe.gov/emeu/cabs/chron.html
> 
> It's complete with chronology of major oil industry events back to 1970. Should be what you're looking for.
> 
> The chronology looks reasonable although I haven't read it all. Do bear in mind though that it's written from the perspective of the government (USA) of a major oil importing country and so sees price increases as "bad" whereas an exporting country would see them as "good". Like anything it depends which side of the trade you're on whether an increase is good or bad.
> 
> Regarding the EIA, their recording of actual events is fairly good in general but the track record of their forecasts isn't good especially where oil discovery is involved.
> 
> Note also that the EIA (Energy Information Administration) is totally separate from the IEA (International Energy Agency) despite the similar abbreviation and both dealing with energy.




Thanks for the info, thats a very good site and yes the right chart

i also came across article talking about "peak" oil today, where some experts think that "good" oil will run out withing 5 yrs while others 30+. Can also watch the video of the interview with experts. Quite interesting

http://www.abc.net.au/catalyst/stories/s1515141.htm
http://www.abc.net.au/science/broadband/catalyst/asx/oilcrisis_hi.asx


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## Smurf1976

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> i also came across article talking about "peak" oil today, where some experts think that "good" oil will run out withing 5 yrs while others 30+. Can also watch the video of the interview with experts. Quite interesting



I strongly recommend that anyone with an interest in this subject aim to get their mind around the bell curve of production that most oilfields follow and the geological limits to the extraction rate. Suffice to say that even the technologically advanced USA only manages to get 6% of proven reserves out of the ground per year and few can match that. So there needs to be over 20 years of reserves available to sustain a production rate which meets current demand (assuming 5% depletion rate which is still rather high). Do the maths on that and you'll understand why production falls slowly over time rather than suddenly running out.

Oil discovery peaked worldwide in the early 1960's and has steadily fallen ever since. It has been below the rate of discovery (assuming the OPEC constant figures are false - a huge topic in itself but suffice to say that most experts believe they report total recoverable oil _discovered_ rather than total oil _remaining_ since they have a financial incentive to do so and figures are implausibly constant from year to year) since 1985. 

It's a big topic with lots to get your mind around. Nobody with any credibility doubts that oil production will peak and then fall. It's happened in numerous countries already including those which once had huge oilfields. The USA has found about 10% of all oil to date - but production peaked in 1970 and has trended down ever since despite all manner of technical and economic efforts to halt the decline. It's much the same in other countries with the North Sea also now in steep decline.

So the question is when, not if, worldwide production peaks and what the consequences will be.


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## nizar

*Re: OIL AGAIN!*

Hi all,

Ok, i think most people share the view that world oil is running out, its just a matter of time... 

Based on this, do u think it would be a good strategy to slowly buy shares (like a parcel a month to avoid paying a high price) over like the next year or so in listed oil companies with the most oil reserves?

Which do u think is a better bet out of oil search and woodside?
For OSH, according to westpac broking research, 4 analysts rate it a strong buy, 5 a moderate buy, and 2 hold.
With WPL, its 6 strong buy, 3 moderate buy, 6 hold and 1 moderate sell. I can't view their comments unless i subscribe to "Premium Research", lol...

WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.

Which stock do you think is better? 
And do you think this is a good strategy?

I read an article on fortune regarding this guy who reckons world is running out of oil, a good read: 

http://money.cnn.com/magazines/fortune/fortune_archive/2005/12/26/8364646/index.htm

Another way to potentially benefit from the world running out of oil is to invest in alternative energy forms i think. Uranium (if it wasnt 4 strict aussie laws on it), or wind-generated (eg.BBW), which is starting to become popular with g'ments in europe.

ANy views would be appreciated


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## RichKid

*Re: OIL AGAIN!*



			
				nizar said:
			
		

> ...Which do u think is a better bet out of oil search and woodside?
> For OSH, according to westpac broking research, 4 analysts rate it a strong buy, 5 a moderate buy, and 2 hold.
> With WPL, its 6 strong buy, 3 moderate buy, 6 hold and 1 moderate sell. I can't view their comments unless i subscribe to "Premium Research", lol...
> 
> WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.
> 
> Which stock do you think is better?
> And do you think this is a good strategy?




Hi Nizar,
Might be good to start a new thread comparing OSH & WPL (or post in the individual stock threads for those companies) so we can keep this thread on Oil (rather than particular companies). Thanks!

Talking of oil, it's gone higher again, I'm waiting for the next swing top to see what type of support exists below, open interest is solid on the recent upswing.

RichKid
moderator


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## michael_selway

*Re: OIL AGAIN!*



			
				nizar said:
			
		

> Hi all,
> 
> WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.
> 
> ANy views would be appreciated




Ok so naturally WPL would have a higher P/E than OSH then, and it does!


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## RichKid

*Re: OIL AGAIN!*

Time to get back to price of oil folks. Chart for Feb06 contract (thanks for mentioning the correct contract Wayne, I was posting the wrong contract at one stage, us amateurs!! geez). Open interest is rising so I assume more traders are happy to open long positions at this level. If this a swing high then I expect open interest to drop on the way down to the next (higher?) swing low. Nice to see it above 64.


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## michael_selway

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> Time to get back to price of oil folks. Chart for Feb06 contract (thanks for mentioning the correct contract Wayne, I was posting the wrong contract at one stage, us amateurs!! geez). Open interest is rising so I assume more traders are happy to open long positions at this level. If this a swing high then I expect open interest to drop on the way down to the next (higher?) swing low. Nice to see it above 64.




I Still think that Oil will correct when the North America/Europe/Asia winter is over, most likely to $50+, But Long Term definitely need an Oil Stock, but not now thats all, wait for the correction first.


----------



## nizar

*Re: OIL AGAIN!*

yeh i agree with u michael...

last correction in october, wpl fell to $29-sumthing, i wouldve bought it if i had cash at the time...

hopefully next correction sees it drop to mid-35s, then ill buy big....

american/european winter finishes when? around feb-march? Im guessing its when we finish summer...


----------



## excalibur

*Re: OIL AGAIN!*

China has reported a 3% decrease in production expectations. Its one thing that is fact, that the chinese are bad liars. No, I think we`re gonna get a big surprise by the middle of this year. 
I`m expecting $80 a barrel for oil and then the first alarm bells will start ringing. :goodnight


----------



## michael_selway

*Re: OIL AGAIN!*



			
				excalibur said:
			
		

> China has reported a 3% decrease in production expectations. Its one thing that is fact, that the chinese are bad liars. No, I think we`re gonna get a big surprise by the middle of this year.
> I`m expecting $80 a barrel for oil and then the first alarm bells will start ringing. :goodnight




The thing about oil currently is that it is so susceptible to speculation more than metals imo. Any "bad news" will spike up oil prices even though there is no justification for it.

We saw that in the hurricane Katrina thing when it spiked to $70+/Barrel. But yet it fell down rapidly to $56+/Barrel or down 20%? i do think that oil is runnning out (PEAK OIL) but not yet, not for atleast for 3-5 yrs.

However due to its speculative nature, the price can spike up to $80/barrel yes, if there are "bad news". But the fundamentals are not there yet of rthese high prices. However there wont be "cheap oil" anymore i dont think but $50+ barrel is reasonable since the demand from China has increased indefinitely.


----------



## Smurf1976

*Re: OIL AGAIN!*

When I last did any forecasts for Chinese oil production (late 2003) I came to the conclusion that their known fields were approximately at peak at that time. I would expect them to decline at around 3.9% p.a. once they are properly over the peak. So an overall decline of 3% seems reasonable to me.

As for the oil market generally, don't forget about the release of US and IEA stocks during 2005 and the subsequent need to refill them. The impact of this ought to be significant especially if the US goes ahead with reported plans to boost the Strategic Petroleum Reserve (SPR) from 700 million barrels to 1000 million. China and others are also looking to build or increase inventory so the bottom line is a significant demand going into government stockpiles. This ought to support the oil price somewhat and could in itself absorb a large portion of the likely production increase (worldwide) in 2006.


----------



## Milk Man

*Re: OIL AGAIN!*

Does anyone know about any large untapped oil reserves under the darling downs (Roma I think). I heard a rumour to this effect and that the govt were keeping it in reserve. Dunno how true these rumours are, sounds a bit like BS to me.


----------



## excalibur

*Saudi king says oil price too high - NDTV*

*Here is an article that just came in 1 hour ago (european-time)
It just could give oil price a blunt cold shower on monday.
Any Comments down there in warm Australia?????*


 By Unni Krishnan and N. Ananthanarayanan

NEW DELHI (Reuters) - Saudi Arabia's King Abdullah said current global oil prices were too high and needed to be at a more moderate level, television channel NDTV 24X7 reported on Sunday.

"We want to strengthen the link between India and Saudi Arabia with regards to energy, and the ability to provide energy to India over a long term. From our perspective I personally feel that the current price of oil is too high," King Abdullah said in an interview with the channel, which was recorded in Riyadh.

"The price is damaging to developing countries who subsequently have to suffer. The price needs to be at a more moderate level."

King Abdullah's comments came ahead of his four-day trip to New Delhi starting on Jan. 24, the first by a Saudi monarch in 50 years.

Oil prices surged to $69 per barrel on Friday, the highest level since September as tensions mounted over OPEC-member Iran's nuclear ambitions.

The Organization of the Petroleum Exporting Countries on Friday forecast world oil demand would grow nearly 2 percent in 2006 to 84.8 million barrels per day.

The producer group, which meets at the end of the month to review its output policy, is considered unlikely to cut production, although hawkish Iran said on Friday that the market was oversupplied.

India maintains that developed nations are not doing enough to restrain oil-producing countries from pushing up prices but King Abdullah's comments are likely to bring some relief.

Ties between Saudi Arabia, Islam's birthplace, and India, Asia's third-largest economy and home to a large Muslim minority, have improved incrementally since the early 1990s.

The Saudis are looking to deepen economic ties with Asian giants China and India, whose energy needs are soaring as their economies maintain red-hot growth.

Saudi Arabia accounts for almost one-quarter of India's total imports of crude oil of 1.9 million barrels per day. In 2004, New Delhi bought crude worth $6.2 billion from the Saudis.

Riyadh, eager to hold on to its share of India's rising oil imports as the Indian economy grows at an expected rate of 6 to 7 percent in the next decade, has said it would continue to be a reliable supplier.


 © Reuters 2006. All Rights Reserved.


----------



## Knobby22

*Re: OIL AGAIN!*

There is nothing in it.
Just appeasment politics for US consumption.
They can't supply any more even if they wanted to. The tipping point is about three years away unless we are stupid enough to have a war with Iran. 

(I hope it's not sooner, the further away the better)


----------



## excalibur

*Oil Prices Retreat on Decline in Gas*

By Associated Press

January 23, 2006, 5:02 PM EST

LONDON -- Oil prices pulled back Monday in sympathy with a sharp decline in natural gas futures.

However, analysts said oil prices could resume their upward trend on supply fears linked to Iran's standoff with the West over its nuclear ambitions and continuing unrest in oil-rich Nigeria.

Light sweet crude for March delivery retreated 38 cents to settle at $68.10 a barrel on the New York Mercantile Exchange. March Brent crude at London's ICE Futures exchange fell 27 cents to settle at $66.16 a barrel.

Natural gas futures slid 70.6 cents, or about 8 percent, to settle at $8.574 per 1,000 cubic feet due to above-normal winter temperatures in the primary home-heating markets in the U.S.

"Warm temperatures now forecast to persist on into early February undercut physical demand for heating fuels," said analyst Tim Evans at IFR Energy Services in New York.

Nymex February heating oil futures declined by 2.63 cents to $1.8409 a gallon, while gasoline fell 2.38 cents to settle at $1.7932 a gallon.

Naimi told India's television news channel NDTV there is no fundamental reason for elevated oil prices given that there are enough supplies to meet the demand for oil.

"The (oil market) fundamentals today are in an excellent shape ... supply is plentiful and demand is well met by supply, so there's no reason why prices should be rising," he said.

However, analysts said market participants remain concerned Iran's dispute with the West over the restarting of its nuclear program could lead to supply disruptions in the second-largest oil producer within the Organization of Petroleum Exporting Countries, or OPEC.

They also pointed to worries about Nigeria, where militants holding four expatriate oil workers have threatened to launch rocket attacks on crude installations in the oil rich Niger Delta.

Such geopolitical worries, which have driven crude oil prices up at a time when global petroleum demand is high and the emergency supply cushion is thin, have overshadowed rising oil inventories and mild winter weather in the United States -- factors that would normally depress prices.

"The geopolitical drama over Iran and Nigeria is sending oil prices upwards," said energy analyst Victor Shum of Purvin & Gertz in Singapore.

The International Atomic Energy Agency's board of governors will meet Feb. 2 to discuss whether to refer Iran to the Security Council after it broke U.N. seals at a uranium enrichment plant and said it was resuming nuclear research after a two-year freeze.

Iran exports roughly 2.5 million barrels per day -- 1 million barrels more than current excess production capacity worldwide.

Oil jumped $1.52 to settle at $68.35 a barrel on Friday, the highest closing price since Sept. 1, just days after Hurricane Katrina made landfall.

Crude oil prices reached a record high of $70.85 a barrel on Aug. 30.


----------



## champ2003

*Re: OIL AGAIN!*

Good luck in trying to forecast the oil price guys. 

Under normal circumstances i'd agree with a drop down to say 50 dollars after the U.S oil winter season ends which is around the 20th of March. As you know, geopolitical unrest in Iran, Iraq, Nigeria and Russia, the oil price could well continue on at these current elevated levels far into 2006 which is great for oil stocks. 

Its just a matter of us all trying to keep on top of it as hard as it is. I'd personally recommend getting into oil stocks now as there is no time like the present. If you are in the right stock at the right time on an upward trend you'll make money anyway.

Cheers! 

P.s Don't just take my advise. Go on your own individual research.


----------



## Smurf1976

*Re: OIL AGAIN!*

Yet another attempt by the Saudis to talk down the price of oil.

Based on my own research in 2003 I believe that Saudi Arabia can not produce more than 9.6 million barrels per day (2003 figure). They claim to have 10.5 - 11.0 mmbpd capacity.

Production ramped up to 9.6 mmbpd in 2005 and fell towards the end of the year to 9.5mmbpd despite the effective suspension of OPEC quotas. The Saudi response to the US hurricanes and subsequent need to release emergency oil stocpiles was to slightly REDUCE production. Where's that spare capacity...

So IMO Saudi Arabia is running flat out. I looked through everything that I could find in order to estimate their capacity. Two years later they ramped up to that capacity with relative ease and then hit a brick wall. So I would want to see absolute proof that their claimed spare capacity does in fact exist. Evidence says otherwise and this latest attempt at talking down prices appears to be nothing more than an attempt to avoid pressure to use the (non-existant) spare capacity.

To put that simply, there is NO significant spare capacity anywhere IMO. At best, any spare capacity is all located in a single country which has thus far never produced at the claimed capacity. I think oil prices will go higher than most are expecting if Iran's supply is lost since it's an outright loss with no offsetting rise in production elsewhere at a time when demand is surging and emergency stocks aren't full.


----------



## excalibur

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Yet another attempt by the Saudis to talk down the price of oil.
> 
> Based on my own research in 2003 I believe that Saudi Arabia can not produce more than 9.6 million barrels per day (2003 figure). They claim to have 10.5 - 11.0 mmbpd capacity.
> 
> Production ramped up to 9.6 mmbpd in 2005 and fell towards the end of the year to 9.5mmbpd despite the effective suspension of OPEC quotas. The Saudi response to the US hurricanes and subsequent need to release emergency oil stocpiles was to slightly REDUCE production. Where's that spare capacity...
> 
> So IMO Saudi Arabia is running flat out. I looked through everything that I could find in order to estimate their capacity. Two years later they ramped up to that capacity with relative ease and then hit a brick wall. So I would want to see absolute proof that their claimed spare capacity does in fact exist. Evidence says otherwise and this latest attempt at talking down prices appears to be nothing more than an attempt to avoid pressure to use the (non-existant) spare capacity.
> 
> To put that simply, there is NO significant spare capacity anywhere IMO. At best, any spare capacity is all located in a single country which has thus far never produced at the claimed capacity. I think oil prices will go higher than most are expecting if Iran's supply is lost since it's an outright loss with no offsetting rise in production elsewhere at a time when demand is surging and emergency stocks aren't full.





Good observation there Smurf.
I think although that there argumentation is motivated by the fact that they do indeed, do not have any much further interest in bargaining with oil. More I suspect that they would like to hurt those oil producing countries by pulling the oil price down.

Why I think this is following.
As the french premier Chirac boasted about terrorizing Iran with nuclear weapons, if it would not cease to continue research in atomic energy, Iran responded in saying that they would not let themselves be pushed around from the europeans and proclaimed a Quote: " Economic war against the western world".
This phrase gave me alotta of thinking and certain political behaviour another looking eye.
Even though from politics, one cannot really understand very much, it could mean that something is stirring behind the curtain.
Time will tell


----------



## michael_selway

*Re: OIL AGAIN!*



			
				champ2003 said:
			
		

> Good luck in trying to forecast the oil price guys.
> 
> Under normal circumstances i'd agree with a drop down to say 50 dollars after the U.S oil winter season ends which is around the 20th of March. As you know, geopolitical unrest in Iran, Iraq, Nigeria and Russia, the oil price could well continue on at these current elevated levels far into 2006 which is great for oil stocks.
> 
> Its just a matter of us all trying to keep on top of it as hard as it is. I'd personally recommend getting into oil stocks now as there is no time like the present. If you are in the right stock at the right time on an upward trend you'll make money anyway.
> 
> Cheers!
> 
> P.s Don't just take my advise. Go on your own individual research.




Actually i wouldnt recommend gettign into oil stocks atm, since SP is so high, have to wait for a correction. Also imo, atleast 10% of the $68/barrel is speculation more than anything


----------



## champ2003

*Re: OIL AGAIN!*

Yes very true! That 10% worth that is over speculation won't be going away in a hurry either.

It doesn't necessarily mean not to invest in oil stocks at the mo.

I guess each to their own hey!


----------



## RichKid

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Yet another attempt by the Saudis to talk down the price of oil.




Agree with you Smurf, clearly diplomatic posturing for the West. Chart suggests another swing low is in place although the proportions are a bit uneven overall, might suggest the a very strong bull run as open interest is high too on up days but some down days have seen high volume too, not quite sure how to interpret OI yet.


----------



## wayneL

*Re: OIL AGAIN!*

This should be in the bears den, but:

http://money.cnn.com/2006/01/27/news/international/pluggedin_fortune/index.htm



> Ready for $262/barrel oil?
> Two of the world's most successful investors say oil will be in short supply in the coming months.
> Fortune Magazine
> By Nelson Schwartz, FORTUNE senior writer
> January 27, 2006: 4:24 PM EST
> 
> 
> DAVOS, Switzerland (FORTUNE) - Be afraid. Be very afraid.
> 
> That's the message from two of the world's most successful investors on the topic of high oil prices. One of them, Hermitage Capital's Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.
> 
> The other, billionaire investor George Soros, wouldn't make any specific predictions about prices. But as a legendary commodities player, it's worth paying heed to the words of the man who once took on the Bank of England -- and won. "I'm very worried about the supply-demand balance, which is very tight," Soros says.
> 
> "U.S. power and influence has declined precipitously because of Iraq and the war on terror and that creates an incentive for anyone who wants to make trouble to go ahead and make it." As an example, Soros pointed to the regime in Iran, which is heading towards a confrontation with the West over its nuclear power program and doesn't show any signs of compromising. "Iran is on a collision course and I have a difficulty seeing how such a collision can be avoided," he says.
> 
> Another emboldened troublemaker is Russian president Vladimir Putin, Soros said, citing Putin's recent decision to briefly shut the supply of natural gas to Ukraine. The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online.
> 
> Hermitage's Bill Browder doesn't yet have the stature of George Soros. But his $4 billion Moscow-based Hermitage fund rose 81.5 percent last year and is up a whopping 1780 percent since its inception a decade ago. A veteran of Salomon Bros. and Boston Consulting Group, the 41-year old Browder has been especially successful because of his contrarian take; for example, he continued to invest in Russia when others fled following the Kremlin's assault on Yukos.
> Doomsdays 1 through 6...................


----------



## michael_selway

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> This should be in the bears den, but:
> 
> http://money.cnn.com/2006/01/27/news/international/pluggedin_fortune/index.htm




hehe thx

"The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online."

Thansk interstign actually, so he isnt really a bear then


----------



## wayneL

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> hehe thx
> 
> "The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online."
> 
> Thansk interstign actually, so he isnt really a bear then




Ummmm....well he is actually:

http://today.reuters.com/business/n...56_RTRIDST_0_BUSINESSPRO-ECONOMY-SOROS-DC.XML





> NEW YORK (Reuters) - Billionaire financier George Soros told CNBC television on Friday U.S. consumer spending would slow sharply next year as a slowdown in housing hurts purchasing power.
> 
> "There's (a) problem that I think is brewing, and that is the end of the housing boom in the United States and the ability of households to spend more than they earn because the value of their house is rising," Soros said in the interview.
> 
> "So I expect that by '07 there will be a significant decline in U.S. consumer spending and I don't see what will take its place because it's so important as a motor of the world economy," he said.
> 
> Soros argued that a veneer of relative calm both in the United States and international financial markets masked some troubling patterns in the global economy.
> 
> "Everything looks to be just hunky-dory but I don't think the outlook for the next two years is very good," he said. "The downside risks are bigger than the upside potential."
> 
> Speaking at a the World Economic Forum in Davos, Switzerland, Soros said global leaders appeared overly optimistic.
> 
> "The conference is remarkable for its complacency. It's a bit like dancing on the Titanic. They're having a very good time and there's a very cheerful atmosphere."


----------



## Smurf1976

*Re: OIL AGAIN!*

Worldwide, there's quite a lot of new oil coming online over the next 18 months. This ought to be sufficient to offset declines in existing fields and allow for the likely demand growth. As Soros pointed out, much of that seems likely to come online in the first part of 2007.

However, beyond mid-2007 there doesn't seem to be much at all. That's when the real trouble is likely IMO since there's the declines in existing fields, demand growth and not enough new supplies to offset it.

Of course all this is complicated by:

1. The rate of demand growth. If you're a bear then you're probably expecting an economic slowdown which ought to at least slow the growth in demand if not reverse it. This could lead to a surplus of supply over demand lasting longer than expected, and being larger than expected, once it emerges. This could lead to a substantial price fall unless OPEC gets its act together again with quota enforcement (their track record is patchy to say the least).

2. Weather which influences demand both for heating and cooling (via power generation which at the margin in the US in particular affects oil demand).

3. Natural disasters, technical problems and the like affecting production.

4. The actions of various countries to boost strategic stockpiles, plus the refilling of emergency stocks drawn down in 2005, could add significant demand depending on the extent, rate and timing of refilling. The US has mooted a 300 million barrel increase in the size of the Strategic Petroleum Reserve. Add this to refilling of existing stocks and the potential for other countries to do likewise and it's a lot of oil.

5. Iran. I'm no expert on things concerning the military, wars etc. but quite clearly the situation has deteriorated over the past year and seems to be continuing to do so. Likewise there's always the threat of political / military strife in a number of other key producing countries.

Overall the key theme I see is volatility. There are scenarios which lead to sharp price rises and others which lead to substantial price falls. That said, oil does seem to be in a bull market.


----------



## Smurf1976

*Re: OIL AGAIN!*

A chart of the US oil stocks index. 

http://finance.yahoo.com/q/bc?s=^XOI&t=6m&l=off&z=m&q=b&c=


----------



## michael_selway

*Re: OIL AGAIN!*

http://www.aireview.com/index.php?act=view&catid=8&id=3499

General Analysts believe Oil will drop in the next few yrs

"...the broker is now forecasting a barrel of West Texan Intermediate to average US$60 throughout 2006. For 2007 the new forecast is US$53.50/bbl, for 2008 US$48/bbl and for 2009 US$45.00/bbl. The broker’s long-term oil price forecast remains at US$40/bbl from 2010...."

However others are forecasting $100 and higher a barrel i.e Peak Oil?

Who is right then? They both seem to be the opposite direction

Thx

MS


----------



## Smurf1976

*Re: OIL AGAIN!*

Having studied the subject in considerable depth my opinion is that production will rise over the short term (this year and next) and then peak and fall. The "peak" is likely to be somewhat bumpy rather than a nice smooth curve IMO. 

In this context of a largely fixed production base which does not meaningfully respond to conventional price signals, the actual price over the short term becomes largely a function of economic growth and hence oil demand. A forecast is complicated by the feedback of higher oil prices into that very economic growth which caused them. If the economy booms then oil prices should rise. But if the economy slowed over the next 18 months then that combined with rising production could give the oil price a decent hit. And then there's Iran etc... Longer term there's the issue of unconventional oil development (tar sands, bitumen etc) and end use substitution. An eventual frenzy to develop such things and a resultant oil price slump is plausible but many, many years away IMO.

You just can't keep taking oil out of the ground many times faster than it's being found and the actual level of planned new capacity after 2007 suggests that the game is over. Not surprising given the near total lack of major oil finds in the recent past. It really says it all when enough oil to run the world for literally a month or even a week is touted as a major discovery since it's bigger than anything else found in recent times.

For those who doubt the reality of a peak in production, I respectfully point out that it has already occurred in more than half of all major oil producing countries. It is incomprehensible how it wouldn't at some point occur globally and as the dominos keep falling one by one the date draws nearer. Timing is, of course, the question but even the optimists have trouble stretching the numbers beyond another 3 decades. And they are the optimists relying on unsubstantiated "political" claims of reserves rather than proper geology. The geologists tend to be somewhat more concerned.


----------



## mime

*Re: OIL AGAIN!*

I can't see the price dropping to $40 a barrel because the more China grows the more demand for oil. The price of oil is simply supply and demand(and speculation) Even if we find and drill more oil China will out grow what ever production is found, the result is the price never falling. The graph will be an upward trend.

Oil price is seasonal depending on what time of the year it is in the States. Mainly summer will increase demand for energy because of the huge amounts used for air conditioning. Just thought I would chuck that in.

Back to peak oil. I really don't believe that it will be the end of the world because the more expensive the price the less people can afford it. What it will do is cause an economic slow down. My


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				mime said:
			
		

> I can't see the price dropping to $40 a barrel because the more China grows the more demand for oil. The price of oil is simply supply and demand(and speculation) Even if we find and drill more oil China will out grow what ever production is found, the result is the price never falling. The graph will be an upward trend.
> 
> Oil price is seasonal depending on what time of the year it is in the States. Mainly summer will increase demand for energy because of the huge amounts used for air conditioning. Just thought I would chuck that in.
> 
> Back to peak oil. I really don't believe that it will be the end of the world because the more expensive the price the less people can afford it. What it will do is cause an economic slow down. My



In every bull market there are downturns from time to time. Look at the ASX... 

The seasonal demand for oil is due to both heating and cooling use in the Northern Hemisphere countries, most notably the US. The extent to which oil ends up fuelling heating and especially cooling partially depends on the price and availability of natural gas in North America since to a large extent (but not totally by any means) oil is used as a substitute for natural gas in power stations when it's cheaper than gas. Individuals use gas for heat so power generation switches to oil if there isn't sufficient gas. About 15% of US power generation is from gas (roughly) and typically 3% from oil (coal is dominant followed by nuclear then gas then hydro then oil then the minor sources). There is substantial direct use of oil for heating however. Some industrial plants also switch fuels according to which is cheaper - there has been quite a bit of oil used in the UK recently with the gas shortage (due to depletion of North Sea reserves) there. Even New Zealand falls back on oil for electricity when hydro and gas falls short (NZ's largest gas field is all but empty...). Under very high demand scenarios there is a small amount of oil used for power generation to the main grid in Australia - via peaking plants in Queensland and to a much lesser extent New South Wales and South Australia and via fuel substitution (away from gas) mostly in WA but under some circumstances also in SA and under rare circumstances in Vic. The absolute volumes of oil used for main grid power generation in Australia aren't large however but remote communities rely almost exclusively on it. 

Peak oil isn't the end of the world I agree. But it likely is the end, at least for a period of time, of unconstrained growth, mass tourism as a major growth industry and food flown in from the other side of the world at low cost. Not the end of the world but a significant change which will be somewhat painful since the world economy just isn't set up at present to cope with zero or negative growth in use of the products and services derived from oil, most notably transport. 

Personally I can see a scenario where constrained oil supply forces the price up until the economy contracts which then lowers demand and hence oil prices. Then the economy grows again, oil prices rise again to new highs and the cycle repeats. Just one possible scenario...


----------



## nizar

*Re: OIL AGAIN!*

http://www.bloomberg.com/apps/news?pid=10000100&sid=aI_eLD3AFz0s&refer=germany

Commodity Strategists: Oil May Reach $96 a Barrel (Update2) 
Feb. 7 (Bloomberg) -- Oil may rise to a record $96 a barrel in August, when hurricanes typically cut U.S. output, said Mitsui & Co., Japan's second-largest trading company. 

Crude oil prices, which have tripled since 2001, may gain 50 percent this year as storms add to supply concerns amid rising global demand, said Tetsu Emori, 39, a commodities strategist at Tokyo-based Mitsui. Oil, which traded at $64.90 today, may average $74 a barrel in New York in 2006, he said. 

Oil reached a record $70.85 on Aug. 30 the day after Hurricane Katrina made landfall on the U.S. Gulf Coast, wrecking oil platforms, pipelines and refineries, and cutting production in the world's largest energy market. Global oil demand may rise 2.2 percent this year, almost twice as fast as in 2005, the Paris-based International Agency said last month. 

``Oil may peak during the hurricane season in August or September,'' Emori said in a telephone interview yesterday. ``Economic growth will add to tightness in supply.'' 

Global growth, led by China and the U.S., will quicken to about 4.5 percent in 2006, the International Monetary Fund's Managing Director Rodrigo de Rato said on Jan. 30. 

Oil on the New York Mercantile Exchange has risen 6.2 percent this year after Iran, the world's fourth-largest producer, pressed ahead with its nuclear research program, defying the U.S. and European Union. Rebel attacks on oil facilities in Nigeria cut shipments from Africa's top exporter. 

Oil in New York averaged $56.70 a barrel in 2005. It traded 21 cents lower at $64.90 a barrel at 3:54 p.m. in Singapore. 

Iran Dispute 

Traders are concerned that the Iranian dispute may escalate, prompting the Middle East nation to cut its 2.5 million barrels a day of oil shipments, said Emori, who works at Mitsui Bussan Futures Ltd., the trading company's commodities futures unit. That equals almost 3 percent of daily global production. 

``It's geopolitical risk that's sustaining the market at these prices,'' said Emori, who started at Mitsui in 2000 and previously worked at Sumitomo Corp., Japan's third-largest trading house, and German commodity trader Metallgesellschaft AG. ``As long as the Iran issue is unresolved, it's hard for traders to sell,'' he said. 

Katrina, one of 26 named storms in the worst Atlantic Hurricane season on record, closed almost every production platform in the U.S. Gulf, where about 30 percent of the country's oil is produced. Hurricane Rita, almost a month later, did the same thing. 

On Jan. 26, a quarter of production, or 373,407 barrels a day, remained shut because of storm damage, the U.S. Energy Department said. 

Atlantic storms are becoming stronger and more frequent because ocean temperatures are rising, the Miami-based National Hurricane Center said last year. The hurricane season starts on June 1 and ends on Nov. 30. 

Rising Supply 

Not all analysts agree prices will increase. Rising supply may cause oil to fall this year, the Royal Bank of Scotland, the U.K.'s second-largest lender, said last month. Oil in New York may average $52.50 this year as global output increases, it said. 

``While traders and investors have focused on strong demand growth, sizable additions to supply have largely been ignored,'' Thorsten Fischer, a senior economic adviser at the Edinburgh- based bank said in a research note published on Jan. 13. 

U.S. oil inventories are 11 percent higher than their five- year average, according to the energy department. 

Still, concern about global supply is supporting investment in oil futures. Last week, hedge-fund managers and other large speculators increased their net-long positions in New York oil futures to the highest since September, according to U.S. Commodity Futures Trading Commission data. 

``Technical problems in Iraqi oilfields and ongoing concerns over production in Nigeria remain,'' said analysts led by Kevin Norrish at London-based Barclays Capital in a note to clients yesterday. ``Oil market participants will be extremely reluctant of being short crude oil.'' 

Barclays Capital, a unit of the U.K.'s third-largest bank, expects crude oil prices to average $68 this year. Norrish and his colleague Paul Horsnell were the most accurate forecasters of prices among analysts surveyed by Bloomberg last year.


----------



## wayneL

*Re: OIL AGAIN!*

Gold tanks....

.....meanwhile, so does oil, down ~3.2% and breaking key support.

This usually would be a positive for the US indecies...but alas and alak they're down too!

What IS the world coming to


----------



## michael_selway

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Gold tanks....
> 
> .....meanwhile, so does oil, down ~3.2% and breaking key support.
> 
> This usually would be a positive for the US indecies...but alas and alak they're down too!
> 
> What IS the world coming to




Resources, its all a speculation in disguise! a bubble?

http://www.smh.com.au/news/Business/Crude-oil-stocks-sharply-lower/2006/02/08/1139074255591.html


----------



## mime

*Re: OIL AGAIN!*

Ouch I'm getting really punished today. I was expecting a correction after a constant run of gains but not this much


----------



## nizar

*Re: OIL AGAIN!*

u aint seen nothing yet...

this may be a correction similar to october, in which case more carnage is coming..

dont worry abt it, think of it as buying opportunity


----------



## mit

*Re: OIL AGAIN!*

With peak oil on the way, I think that oil has one direction to go. I was looking for crude oil in the CMC instruments list and it has disappeared.

MIT


----------



## RichKid

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Gold tanks....
> 
> .....meanwhile, so does oil, down ~3.2% and breaking key support.
> 
> This usually would be a positive for the US indecies...but alas and alak they're down too!
> 
> What IS the world coming to




Yep, all at once, that key support level going is the issue for me with oil. Nothing to do but trade the plan. Interesting times.


----------



## rederob

*Re: OIL AGAIN!*

Oil retains its bullish status by holding above its 200dma.
Hopefully this WTIC chart link http://stockcharts.com/def/servlet/SC.web?c=$wtic will show readers that oil is not acting in a way it typically does: Note the significant number of gaps and reversals in the past 2 months, let alone some very narrow daily trading ranges.
It's a market decidedly indecisive with potential to break quickly and sharply either way.
I am with mit and many others in the longer term - there is *not * a compelling case right now for oil to be much lower in price going forward, unless a recession suppresses demand.
Even then, we need to realise that the dominance of America as a commodities consumer is being gradually broken down, commodity by commodity, by China specifically and Asia generally.
It does not take a genius to work out that as more and more vehicles hit the road, they need to be juiced up, and will burn more oil.  
So while a global contraction of industrial production may occur in the next few years, it may not be enough to knock the stuffing out of the oil bull.


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				rederob said:
			
		

> I am with mit and many others in the longer term - there is *not * a compelling case right now for oil to be much lower in price going forward, unless a recession suppresses demand.



That could be taken the next logical step to argue that any sharp fall in the oil price could be the first warning of impending recession. So oil might be a useful indicator as well as a commodity given the constrained supply.


----------



## wayneL

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> That could be taken the next logical step to argue that any sharp fall in the oil price could be the first warning of impending recession. So oil might be a useful indicator as well as a commodity given the constrained supply.




Well...

< $60

< 200 dma

Getting close to breaking major support

If your argument is valid then this is certainly a shot across the bow.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> That could be taken the next logical step to argue that any sharp fall in the oil price could be the first warning of impending recession. So oil might be a useful indicator as well as a commodity given the constrained supply.




Actually a fall in oil prices is good for the economy?


----------



## nizar

*Re: OIL AGAIN!*

http://afr.com/articles/2006/02/15/1139890768318.html

Oil prices drop below $US60
Feb 15 09:31
AP 

Oil prices sank below $US60 a barrel overnight, and US gasoline futures descended to their lowest price in almost a year as traders turned their attention to rising supplies, and away from geopolitical tensions.

The third straight day of declining oil prices took a toll on the stock prices of energy producers and refiners, while giving a lift to shares of airlines and other fuel-dependent sectors.

Light sweet crude for March delivery fell $US1.67 to settle at $US59.57 a barrel in afternoon trade on the New York Mercantile Exchange. That was the lowest close for front-month oil futures since December 27.

IFR Energy Services analyst Tim Evans said that "as prices drop toward the lower part of their recent range, we expect more than a glimmer of recognition that the downside for this market may be far more open than the average observer now believes."

Evans sees technical support at $US55.40 a barrel, but says if that level is breached, crude futures could potentially fall to $US40 a barrel.

The declines come as traders anticipate that the US Energy Department's weekly petroleum supply snapshot, due on Wednesday, would likely show climbing oil stocks for the seventh straight week. Already, the nation's commercial inventory of crude oil is nearly 11 per cent above year-ago levels.

Traders are still concerned, albeit less so, about the international dispute over Iran's nuclear activities and unrest in Nigeria.

The head of the International Energy Agency said on Tuesday that its member governments could coordinate a release of strategic oil reserves that would offset any shutdown of Iranian crude output for up to 18 months.

"We have 4 billion barrels in strategic stocks," Claude Mandil told Dow Jones Newswires. Even taking account lower estimates, he said, the IEA could keep oil supplies flowing for a year and a half.

The IEA, the Paris-based energy watchdog, has reported falling demand because of high costs of crude.


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Actually a fall in oil prices is good for the economy?



Agreed that a lower oil price would benefit the economy. But my thinking is that a falling oil price would itself be a sign of economic weakness. 

So it contributes to one thing (benefits economy) whilst being a sign of another (weakening economy). So over a period of several years per cycle the price of oil (and the economy itself) would presumably oscillate with an upwards trend in oil prices if I'm correct in my thinking. Only time will tell.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Agreed that a lower oil price would benefit the economy. But my thinking is that a falling oil price would itself be a sign of economic weakness.
> 
> So it contributes to one thing (benefits economy) whilst being a sign of another (weakening economy). So over a period of several years per cycle the price of oil (and the economy itself) would presumably oscillate with an upwards trend in oil prices if I'm correct in my thinking. Only time will tell.




Hi yeah thats true, hes some insight from WPL ceo:

Date: 18/1/2006 
Author: Robert Guy; Yvonne Ball 
Source: The Australian Financial Review --- Page: 13 

Woodside Petroleum is concerned that the spike in the crude oil price could threaten the global economy. CEO Don Voelte says high oil prices could have an adverse effect on global economic growth, and he would prefer the oil price to fall to around $US40 to $US45 a barrel in order to prevent a decline in the world economy. The oil price was trading at around $US65 a barrel on 17 January 2006. Although Woodside's earnings are boosted by a rise in the oil price,Voelte argues that demand for oil would slump if there was a slowdown in the global economy.


----------



## nizar

*Re: OIL AGAIN!*

http://www.lifeaftertheoilcrash.net/


----------



## emma

*Re: OIL AGAIN!*

This report makes GDY look like a good long term investment


----------



## mime

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Hi yeah thats true, hes some insight from WPL ceo:
> 
> Date: 18/1/2006
> Author: Robert Guy; Yvonne Ball
> Source: The Australian Financial Review --- Page: 13
> 
> Woodside Petroleum is concerned that the spike in the crude oil price could threaten the global economy. CEO Don Voelte says high oil prices could have an adverse effect on global economic growth, and he would prefer the oil price to fall to around $US40 to $US45 a barrel in order to prevent a decline in the world economy. The oil price was trading at around $US65 a barrel on 17 January 2006. Although Woodside's earnings are boosted by a rise in the oil price,Voelte argues that demand for oil would slump if there was a slowdown in the global economy.




He could be saying that to reduce the fall in the companys stock price if oil does continue to decline.


----------



## dutchie

*Re: OIL AGAIN!*

I'm waiting for a correlation between oil and gold.

When oil goes up - gold should correct and vice versa. - dream on!


----------



## wayneL

*Re: OIL AGAIN!*

Tonights Crude oil action.:

March futures down to $57.67 on the back of news of increasing stockpiles. The daily chart is looking dreadful with only $57 as the last technical support before technical no-mans land.

Smurf is not the only one worried that this is a sign of impending recession. (as if there aren't enough already) Futures traders are all a-buzz with the implications of this.

How are the aussie oilers fairing out of this?


----------



## dutchie

*Re: OIL AGAIN!*

Just off topic for a sec.

"Syriana" looks like an interesting movie for all oil followers.


----------



## mime

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> How are the aussie oilers fairing out of this?




Hurting.


----------



## mime

*Re: OIL AGAIN!*

I just heard on the news that Qantas has a contract to purchase fuel at $57 a barrel. I don't know if that includes refining and stuff but it makes me believe they don't think the price of oil will not drop.

What does the future hold??


----------



## nizar

*Re: OIL AGAIN!*

Commodity Strategists: Crude Oil May Reach Record $80 (Update1) 
Feb. 16 (Bloomberg) -- Oil may rise to a record $80 a barrel in the third quarter as an economic expansion in China boosts demand for fuel, according to Sumitomo Corp., Japan's third-largest trading company. 

China's oil demand growth may rebound from last year's 2.9 percent, said Keiichi Sano, Sumitomo's chief commodity analyst. Oil rose less than forecast in the past five months because Chinese refiners cut imports, he said. *Futures prices, down 5 percent this year, will bottom out this month, he said*. 

``Demand from China will continue to increase and support further rises in oil prices,'' said Sano. ``The country needs more heavy fuel oil for power plants, and fuel for trucks is needed too.'' 

Oil prices have tripled since 2001, helped by demand from China, the world's second-biggest energy user. Power use rose 13.5 percent last year while consumption of transport fuels soared as the growing economy boosted vehicle sales. China's economy may grow about 8.5 percent this year, the nation's statistics bureau said on Jan. 24. 

Oil on the New York Mercantile Exchange may set a record by October when hurricanes typically cut U.S. production, Sano said. Oil futures may trade between $75 and $80 a barrel in the third quarter of this year, said Sano, who became manager of the commodities research and strategy team in April 2005. 

Crude oil prices for March delivery rose as much as 49 cents, or 0.9 percent, to $58.14 a barrel in electronic trading on the New York Mercantile Exchange. It was $58.01 at 10:43 a.m. Tokyo time. 

Growth in the U.S. economy, buying by pension and index fund managers and the risk of supply disruptions in oil- producing nations such as Iran will help boost oil prices this year, Sano said. 

China 

In September last year, Sano forecast oil prices would rise to between $80 and $90 a barrel in the first quarter of 2006. He trimmed that projection as oil demand growth from China failed to keep pace with his expectations, he said. 

``China didn't buy much oil last year,'' Sano said. ``That could be the reason.'' 

Chinese imports fell 7.1 percent in November and 6.9 percent in December compared with a year earlier, according to Bloomberg data. Rising international prices discouraged refiners from buying because they were unable to pass on crude oil's 40 percent gain last year. China imposes curbs on product prices, limiting the price refiners can charge customers. 

Oil in New York traded as high $60.05 a barrel yesterday. The contract fell to its lowest closing price so far this year of $57.65 yesterday after U.S. oil inventories rose to 11 percent above the five-year average. 

Gasoline closed at $1.3848 a gallon yesterday, the lowest in almost a year, on speculation supplies increased for a seventh week. Natural gas stockpiles in the U.S. are 38 percent higher-than-usual for the time of year, according to the U.S. Energy Department last week. 

``Lowest Price'' 

``Now is the lowest oil price this year when we look at the fundamentals,'' said Sano, who joined Sumitomo in 1988 to trade metals. ``High inventories of gasoline and natural gas are weighing on oil prices now, but this situation won't persist.'' 

*As much as 750,000 barrels a day of U.S. refining capacity will be shut in March for scheduled maintenance, the 26-member IEA said on Feb. 10. ``The current high inventories will be consumed during the maintenance,'' Sano said. ``Gasoline demand remains strong in the U.S.,'' he said. * 

The U.S. economy will grow at a 4 percent annual rate from January through March, *almost four times the previous quarter's pace*, according to a Bloomberg survey on Feb. 9. Global growth, led by China and the U.S., will quicken to about 4.5 percent in 2006, the International Monetary Fund's Managing Director Rodrigo de Rato said on Jan. 30. 

Hurricanes 

Oil may rise to a record $96 a barrel in August, when hurricanes typically cut U.S. output, said Mitsui & Co., Japan's second-largest trading company on Feb. 6. 

``Oil may peak during the hurricane season in August or September,'' said Tetsu Emori, 39, a commodities strategist at Tokyo-based Mitsui. ``Economic growth will add to tightness in supply.'' 

Concern that oil supply from Iran, the world's fourth- largest producer, may be disrupted will also help boost prices, Sano and Emori said. Iran pressed ahead with its nuclear research program, defying the U.S. and European Union. The UN Security Council has delayed considering the dispute until after March 6. 

*``The risk related to Iran was just pushed back,'' Sano said. ``It can reappear'' in March. * 

Iran produced 3.89 million barrels a day of oil in January, making it the second-largest oil producer in the Organization of Petroleum Exporting Countries, according to Bloomberg data. The Middle Eastern nation exports 2.5 million barrels a day, or 3 percent of daily global production. 

Oil prices may stay high because buying by pension and index fund managers is adding a premium of $20 to $30 a barrel to prices, Sano said. 

``Funds keep putting in money and I think this trend may continue for one to two years,'' he said. ``Unlike hedge funds, index funds buy low and stay in the market for longer time.'' 

http://www.bloomberg.com/apps/news?pid=10000103&sid=avVV_bnPDsqU&refer=us


----------



## globevestor

*I don't know*

I cannot verify worldwide oil production has peaked. I do not know when alternative energy sources can compliment fossil fuels. I cannot predict when the world will reduce oil consumption significantly. I cannot image there will be a war or wars. However I know channel. I will sell 1/3 of my energy portfolio if the value of portfolio bounce off the top channel and buy 1/3 of my energy portfolio if the value of portfolio bounce off the bottom channel. See chart at http://www.flickr.com/photos/globevestor/100344100/


----------



## michael_selway

*Re: I don't know*



			
				globevestor said:
			
		

> I cannot verify worldwide oil production has peaked. I do not know when alternative energy sources can compliment fossil fuels. I cannot predict when the world will reduce oil consumption significantly. I cannot image there will be a war or wars. However I know channel. I will sell 1/3 of my energy portfolio if the value of portfolio bounce off the top channel and buy 1/3 of my energy portfolio if the value of portfolio bounce off the bottom channel. See chart at http://www.flickr.com/photos/globevestor/100344100/




http://www.lifeaftertheoilcrash.net
http://www.hubbertpeak.com/duncan/olduvai2000.htm

The chart says 2006 (2010 the latest in article)







Figure 1. World, OPEC, and Non-OPEC Oil Production
Notes: (1) World oil production is forecast to peak in 2006. (2) The OPEC/non-OPEC crossover event occurs in 2008. (3) The OPEC nations' rate of oil production from 1985 to 1999 increased by 9.33 times that of the non-OPEC nations. 






Figure 4. The Olduvai Theory: 1930-2030
Notes: (1) 1930 => Industrial Civilization began when (Ãª) reached 30% of its peak value. (2) 1979 => Ãª reached its peak value of 11.15 boe/c. (3) 1999 => The end of cheap oil. (4) 2000 => Start of the "Jerusalem Jihad". (5) 2006 => Predicted peak of world oil production (Figure 1, this paper). (6) 2008 => The OPEC crossover event (Figure 1). (7) 2012 => Permanent blackouts occur worldwide. (8) 2030 => Industrial Civilization ends when Ãª falls to its 1930 value. (9) Observe that there are three intervals of decline in the Olduvai schema: slope, slide and cliff - each steeper than the previous. (10) The small cartoons stress that electricity is the essential end-use energy for Industrial Civilization.






Global oil discovery peaked in 1962 and has declined to virtually nothing in the past few years. We now consume 6 barrels of oil for every barrel we find.


----------



## Smurf1976

*Re: OIL AGAIN!*

Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.

In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.

Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.

That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue. 

UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.

USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.

New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).

So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.
> 
> In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.
> 
> Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.
> 
> That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue.
> 
> UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.
> 
> USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.
> 
> New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).
> 
> So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.




Yeah, also alternative energies to oil could prelong the running out of oil as suggested above in those articles, eg hybrid cars

http://www.theage.com.au/news/business/green-machines/2006/02/18/1140151850971.html

Oil minnows are a fine catch 

Back 
Date: 1/2/2006 
Author: Trevor Hoey 
Source: The Australian Financial Review --- Page: 25-26 
Value can still be found in the Australian sharemarket, despite the surging price of many stocks. This is even the case in the oil and gas sector, which has risen strongly on the back of the rising crude oil price. Cooper Energy is one such stock that is worth considering. Its shares are currently trading at around $A0.65, compared with just $A0.23 in early 2005, and its South Madura oil field in Indonesia is estimated to contain 200 million barrels of oil equivalent. Stuart Petroleum, Anzon Australia, Arc Energy and Petsec Energy are other oil stocks that still offer value to the astute investor


----------



## nizar

*Re: OIL AGAIN!*

does any1 know a website to check 24-hr oil ?


----------



## wayneL

*Re: OIL AGAIN!*



			
				nizar said:
			
		

> does any1 know a website to check 24-hr oil ?




www.futuresource.com will give you the futures charts 20 mins delayed


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.
> 
> In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.
> 
> Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.
> 
> That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue.
> 
> UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.
> 
> USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.
> 
> New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).
> 
> So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.




http://www.lifeaftertheoilcrash.net
http://www.hubbertpeak.com/duncan/olduvai2000.htm

Yep the thing is that those views above are so diff to the below?

http://www.smh.com.au/news/Business...price-over-US59/2006/02/21/1140284043610.html

"Long-term forecasts showed analysts expect prices to fall by over $US16 by 2010.

US oil prices are expected to average $US42.92 in 2010, with Brent crude seen at $US39.75 a barrel.

Analysts' forecasts showed divergence of $US25 for 2010."

*Hm but in the first 2 articles 2012 is where "blackouts" occur due to supply/demand deficit? So by then, oil prices should be higher than now?

Does anyone know why the big difference in opinion/prediction?*

thx

MS


----------



## Smurf1976

*Re: OIL AGAIN!*

The first two articles are basically about geology and actual investment in oil production. That is, how much oil will be produced over the coming years.

The last article _assumes_ that the geology and investment issues are unchanged and will reflect the past. Like saying that stock xyz went up 10% in each of the past 10 years and therefore must go up 10% in each of the next 10 years.

Since the geological constraints are different now to those in the past, by virtue of conventional oil being a relatively limited resource (at least in terms of known and suspected recoverable deposits) ther two approaches will produce very different results for production volumes. Since the latter article focuses on price only, it's _possible_ that an economic slowdown (ie global recession) could also have been assumed thus lowering demand and likely price. 

Hence two very different forecasts from two very different methods. Without knowing exactly what assumptions have been made it's difficult to validate the latter article. They may be aware of the geological issues but simply predicting an economic slump. Or they may be totally unaware of the geological issues and predicting business as usual economic growth. They don't give enough detail in the article to say which is the case.


----------



## mime

*Re: OIL AGAIN!*

$42 a barrel by 2010?? Are they drunk? Did they factor in inflation, growth of Asia? I recon it will be at least $70 a barrel by then.


----------



## nizar

*Re: OIL AGAIN!*



			
				mime said:
			
		

> $42 a barrel by 2010?? Are they drunk? Did they factor in inflation, growth of Asia? I recon it will be at least $70 a barrel by then.




agree 100%..

"It's not a matter of when oil is going to touch US$100 a barrel -- though obviously it's going to do that some day -- it's to get people realizing this is not a spike, not like past developments like the Yom Kippur War or the invasion of Kuwait," Mr. Coxe said. "What we've done is transformed the demand side of the equation for oil permanently."

"When, not if, the residents of the coastal cities of China, that's 165 million people, have the same percentage of automobiles as South Koreans have today, we'll need two new Saudi Arabias operating flat out."

above taken from:

http://www.canada.com/nationalpost/news/story.html?id=e1184a08-779d-4427-aeab-be4c04268e59


----------



## wayneL

*Re: OIL AGAIN!*

Very quietly and without much ado, April oil slipped under the $60 mark last night. Trading at $60.02 at this precise moment.

Without some sort of supply shock, I can see Oil range bound between $55 & $65 for some time (a guess)

Comments?


----------



## professor_frink

*Re: OIL AGAIN!*

just had a quick look at the oil chart, and it looks like it might find some support(at least for the short term) around $58-$59. Could be interesting if goes below that!


----------



## nizar

*Re: OIL AGAIN!*

http://www.aireview.com/index.php?act=view&catid=8&id=3691


----------



## professor_frink

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Without some sort of supply shock, I can see Oil range bound between $55 & $65 for some time (a guess)
> 
> Comments?




looks like oil's on its way to the upper end of your range wayne. Will be curious to see how far it gets.


----------



## wayneL

*Re: OIL AGAIN!*



			
				professor_frink said:
			
		

> looks like oil's on its way to the upper end of your range wayne. Will be curious to see how far it gets.




Yes indeed, a strong move! Somebody probably read my comments and thought, what a load of cobblers...lets take it to 70


----------



## professor_frink

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> Yes indeed, a strong move! Somebody probably read my comments and thought, what a load of cobblers...lets take it to 70



 ha! don't be modest- you should say that everyone read your post, noticed that it was in the lower half of the range and decided to jump on board 
watch for them all to take profits at 65


----------



## pharaoh

*Re: OIL AGAIN! - Futures?*

Hi guys

What do you guys think of buying futures in oil?
I went to a seminar today, at the Masonic club in sydney, and the guy presenting on futures was really compelling. 

I want to buy heaps of contrtacts for oil, seems a bit of a no brainer at the moment, with global uncertainty on supply etc, and China's thirst. 

I am going to post a futures question along these lines also, but wouldn't mind a few opinions or guidance...

Any thoughts?

I have never bought futures, but am starting to learn.


----------



## nizar

*Re: OIL AGAIN! - Futures?*



			
				pharaoh said:
			
		

> Hi guys
> 
> What do you guys think of buying futures in oil?
> I went to a seminar today, at the Masonic club in sydney, and the guy presenting on futures was really compelling.
> 
> I want to buy heaps of contrtacts for oil, seems a bit of a no brainer at the moment, with global uncertainty on supply etc, and China's thirst.
> 
> I am going to post a futures question along these lines also, but wouldn't mind a few opinions or guidance...
> 
> Any thoughts?
> 
> I have never bought futures, but am starting to learn.




Hmm...

i dont know much about futures either...

Global uncertainty on supply? Hmm.. the Iran issue yeh they provide 4million barrels per day which is significant... US demand is about 25million per da....i think u have to look at Tar Sands in Canada, this is the largest oil field in the world after saudi arabia, at 175billion barrels. Thats the reserves. Some estimates reckon that in total can be more than 1trillion.

Tar Sands will add maybe 3million barrels of oil per day to the supply side of things by 2010. Problem lies with the cost. Tar Sands oil costs almost us$20 to produce per barrel as its much harder to extract as its heavier than the middle eastern type which costs less than us$2/barrel...

As to demand from asia, this has the potential to be much higher. I was reading from one economist that the coastal people of china number 165million, and when they have the same % of automobiles as korea, then we will need 2 more saudi arabias!

I think to do sumthing like this u have to know alot about oil, which u already may. If u havent already, try reading Jeremy Leggett's "Half Gone", i heard its a good read. This guy was former professor of geology, and used to work for oil companies and runs a renewable energy company and and is on the board of some UK energy regulatory body... seems to know his stuff better than most

Personally, i reckon oil seems to be heading down in the near future and is reliant on a one-off random attacks in saudi or nigerian militants to push it up. Its also good to keep in mind that higher oil prices, by default, mean that deposits that were previously subeconomical to become profitable, so more supply comes on line without new discoveries being made.

Good luck


----------



## wayneL

*Re: OIL AGAIN! - Futures?*



			
				pharaoh said:
			
		

> I want to buy heaps of contrtacts for oil,




I hope you have deep pockets

http://www.nymex.com/CL_spec.aspx

1 contract = 1000 barrels = 42,000 gallons

A $5 dollar move against you will see you down $5,000.00 PER CONTRACT

There is more supply coming on line over the next year and the world is creeping towards recession. It may or may not race up as fast as you  think. It could dribble down to $45-$50 over the next year before it eventually takes off. Could you hold on to several contracts in those circumstances?

There are very credible oil bears.

A great contract to trade but not something to staple to the bottom drawer.


----------



## Sir Burr

*Peak Oil*

*The oil is going, the oil is going!*

Today's Paul Reveres of "peak oil" aren't waiting for Washington to save us from apocalypse. They're already planting gardens and drafting city plans for the days when oil is gone.

http://www.salon.com/news/feature/2006/03/22/peakoil/

Interesting read, you have to view an advert to read the whole article.

The obvious solution to all this (the "deadline") is allowing oil to increase in price gradually, so that wind/nuclear becomes the cheapest source of electricity, gas is used in ground transport, then oil in air transport and shipping. With adequate management over the next half a century, oil supplies will last another 200 years at least?

SB


----------



## michael_selway

*Re: Peak Oil*



			
				Sir Burr said:
			
		

> *The oil is going, the oil is going!*
> 
> Today's Paul Reveres of "peak oil" aren't waiting for Washington to save us from apocalypse. They're already planting gardens and drafting city plans for the days when oil is gone.
> 
> http://www.salon.com/news/feature/2006/03/22/peakoil/
> 
> Interesting read, you have to view an advert to read the whole article.
> 
> The obvious solution to all this (the "deadline") is allowing oil to increase in price gradually, so that wind/nuclear becomes the cheapest source of electricity, gas is used in ground transport, then oil in air transport and shipping. With adequate management over the next half a century, oil supplies will last another 200 years at least?
> 
> SB




dude ist not over yet, there slots of supplies atm (esp US) as all the oilers are increasing production

wont run out yet also as some eg WPL has 1 billion in reserves i think

Prices may go high but not dangerously high yet

thx

MS


----------



## markrmau

*Re: OIL AGAIN!*

Iran.

Any thoughts here? If we loose Iran's supply, forget about oil below $100US. We are looking at $300-$500US/barrel. The demand side of the equation is VERY innelastic.

Perhaps, we are turning full circle. The ultimate arbiter of our moral dillemas (should we kill people to further our own needs?) will be decided using market place economics - world growth would collapse if we lost iranian oil. Hahahaha.

Pity how many Iraqis were collaterally damaged in order to protect oil supplies.


----------



## nizar

*Re: Peak Oil*



			
				Sir Burr said:
			
		

> *The oil is going, the oil is going!*
> 
> Today's Paul Reveres of "peak oil" aren't waiting for Washington to save us from apocalypse. They're already planting gardens and drafting city plans for the days when oil is gone.
> 
> http://www.salon.com/news/feature/2006/03/22/peakoil/
> 
> Interesting read, you have to view an advert to read the whole article.
> 
> The obvious solution to all this (the "deadline") is allowing oil to increase in price gradually, so that wind/nuclear becomes the cheapest source of electricity, gas is used in ground transport, then oil in air transport and shipping. With adequate management over the next half a century, oil supplies will last another 200 years at least?
> 
> SB





Read "Half Gone" by Jeremy Leggett

A compelling read, this guy is former Prof of Geology, consultant to big oil companies, and adviser on energy to UK government. He interviews top geologists and execs from Shell, Exxon, Saudi Aramco, Iranian and Kuwait oil officials and other government officials and experts in the field... He clearly knows his stuff, and speaks with heaps of credible references... His view is that peak oil is very close, but he actually speaks of 2 types of people, early toppers and late toppers, early toppers believe peak oil will come in this decade 2009-2010, while late toppers believe it will be 2025-2030...

MS: As of last count, WPL has 1.3billion barrels


----------



## Smurf1976

*Re: Peak Oil*



			
				nizar said:
			
		

> MS: As of last count, WPL has 1.3billion barrels



1.3 billion barrels of actual recoverable oil? Or are they including condensate, LPG etc?

Or is it oil equivalent including natural gas and everything else?

In financial terms it may not matter too much depending on the basis of their gas sales contracts but it matters hugely when it comes to assessing world oil supply since gas is not directly interchangeable for oil in most applications. This is a very common problem which leads to overestimation of oil reserves - effectively counting gas as "oil".


----------



## nizar

*Re: OIL AGAIN!*

sorry, oil equivalent


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				nizar said:
			
		

> sorry, oil equivalent



No worries.   

I wasn't making a point about your post by the way. Just wanting to draw general attention to the manner in which companies report oil reserves.  

It's reasonably common practice to report "oil equivalent" which basically means every flammable substance they have expressed in terms of the equivalent amount of oil that would provide the same energy when burned.

If we only used oil in furnaces or to generate electricity there would be no problem - butane, propane, methane, ethane or whatever will still fire the furnace as will oil. But those things aren't oil as such and in the context of the way oil is actually used they aren't a great deal of use as a replacement, at least not a "drop in" one. This is particularly the case with methane, which tends to be the dominant component of non-oil "oil equivalent" reserves. 

(Methane is "natural gas", ethane is petrochemicals industry feedstock, straight propane is household and commerical LPG, butane mixed with propane is automotive LPG).

It's a bit like a gold mining company including silver, iron, zinc and copper and reporting it as "gold equivalent" with all metals treated equal on the basis of weight. Since their uses aren't generally interchangeable it would be misleading to say the least. It would, however, give a nice big number for gold reserves and likely help the share price somewhat.

One of the great problems in the oil business is that it's virtually impossible to get accurate data. Even the oil majors themselves struggle with data beyond their own operations. Different companies report different things as "oil", they use different criteria for defining "proven" reserves, some intentionally understate discoveries to keep a "reserve" to announce if the share price starts to slide, others overstate their reserves and pray, some simply quote the same figures year after year to the point that they're meaningless, sometimes governments simply decree what the reserves will be with no scientific basis whatsoever. All of which makes serious forecasting and analysis somewhat difficult. 

Be careful with oil stocks - is it REALLY oil or just gas? Depending on where it's located, gas can be highly valuable or literally worthless whereas oil is universally valuable. In the Australian context, gas is moderately valuable (but nowhere near as valuable as gas in the US or UK) provided that it is within economic distance of existing infrastructure or consumers.


----------



## nizar

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> One of the great problems in the oil business is that it's virtually impossible to get accurate data. Even the oil majors themselves struggle with data beyond their own operations. Different companies report different things as "oil", they use different criteria for defining "proven" reserves, some intentionally understate discoveries to keep a "reserve" to announce if the share price starts to slide, others overstate their reserves and pray, some simply quote the same figures year after year to the point that they're meaningless, sometimes governments simply decree what the reserves will be with no scientific basis whatsoever. All of which makes serious forecasting and analysis somewhat difficult.
> 
> Be careful with oil stocks - is it REALLY oil or just gas? Depending on where it's located, gas can be highly valuable or literally worthless whereas oil is universally valuable. In the Australian context, gas is moderately valuable (but nowhere near as valuable as gas in the US or UK) provided that it is within economic distance of existing infrastructure or consumers.




Thanks for the info above Smurf...

Tend to agree with what you are saying about hard to find accurate data, apparently i read that Shell got fined a massive amount $100million+ a few years back for overstating reserves and a few of their execs had to quit over it saying they were ordered/pressure by the board to report the highest figures they could... surely other companies do the same thing...?

ANyway, which oilers are u holding at the moment?


----------



## crackaton

*Re: OIL AGAIN!*

Interesting article. I also note that China intends exporting cheap cars to Aus, something like 11K. If ever there was a time for alternative transport now is the time so come on guys get your thinking caps on!!!


Oil: the party is over

Gwynne Dyer
Wednesday, April 19th 2006

Welcome to the world of US$70-per-barrel oil. That's if there is no crisis in the Gulf over Iran's nuclear ambitions. If there is, then get ready for US$140 a barrel. Oil briefly breached the US$70 barrier eight months ago, but this time it is going up for good.

Exactly one year ago the investment bank Goldman Sachs put out a paper suggesting that the "new range'' within which oil prices will fluctuate is US$50-US$105 per barrel. (The old range, still used by most of the oil industry when deciding if a given investment will be profitable, was US$20-US$30.) The price could surge well past the upper end of the Goldman Sachs range if the United States actually does launch military strikes against Iran, but it's going up permanently anyway.

Transient events like the Iran crisis and the political unrest in Nigeria (which has cut that country's exports by a quarter) drive the daily movements in the oil price, but the underlying supply situation is so tight that oil would stay high even if Nigeria turned into Switzerland and Iran opted for unilateral disarmament. "On production, there is nothing we can do. (OPEC, the Organisation of Petroleum Exporting Countries, is) already producing at maximum output,'' said Abdullah al-Attiyah, Qatar's Oil Minister.

This is not about "peak oil,'' the notion that we are already at or near the point where total global oil production reaches its maximum and begins a long decline. That may well be true, but the present price rise is just about rising demand for oil as the big developing countries, especially the Asian ones, lift large parts of their populations into the middle class.

Middle-class people buy cars. They also run their air conditioners all summer, and take holidays abroad, and do other things that have big implications for total energy consumption, but above all they buy cars. For the foreseeable future most of the cars they buy will run on some form of refined oil.

The rising demand that drives the oil price up does not just come from the middle-class Americans (and, increasingly, Europeans) who insist on driving enormous SUVs with macho names like "Raider'', "Devastator'', and "Genocidal Exterminator''. It also comes from the new middle class of unassuming Chinese, Indian, Russian and Brazilian families who only want a modest family car for the school run and the weekend. There are just so many of them. This is the first big price rise that has been caused by rising demand rather than some temporary interruption of supply.

Goldman Sachs also predicted last year that in 20 years' time there will be more cars in China than in the United States -about 200 million of them. Ten years after that, India's car population will also overtake America's. Within 20 years Russia and Brazil will each have more cars than Japan. We are headed for a billion-car world (unless all the wheels fall off first), and that means permanently high oil prices.


Good. If the oil price rises gradually from US$70 to US$100 over the next five years, people and governments will start paying serious attention to energy conservation and alternate energy sources (including nuclear energy). The sooner that happens, the less extreme the global warming that we will have to contend with as the century progresses. But if the oil price leaps to US$100 or more in one swift jump we will have the mother of all recessions, and then there will be a desperate shortage of funding for developing alternative sources of energy.

A US attack on Iran is not the only threat to oil prices. If the markets should ever collectively decide that "peak oil'' is upon us and that the supply of oil is heading for actual decline, the price would soar out of sight overnight. The oil companies and the governments of OPEC reassure us that oil reserves are ample to cover consumption at the current rate of world economic growth for decades to come, but they would be saying that whether it was true or not, and there is reason to suspect that it is not.


Never mind the geology. Just consider the fact that in the years 1985-1990, when OPEC's declared reserves grew by a massive 300 billion barrels, no major new oilfields were brought into production. The "growth'' was achieved by recalculating existing reserves, and the incentive for exaggeration was provided by OPEC's decision to set production quotas in proportion to the total size of each member's reserves. So over a quarter of the world's total "proven'' oil reserves of 1.1 trillion barrels may be no more than an accounting fiction.

The best we can hope for in the coming years, therefore, is a relatively slow and steady rise in the oil price, rather than a steep, fast rise that upsets everybody's applecarts. The party is definitely over.


-Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*

Oh dear, don't rise too much or else you may de-rail this commoditites boom!


----------



## nizar

*Re: OIL AGAIN!*



			
				YOUNG_TRADER said:
			
		

> Oh dear, don't rise too much or else you may de-rail this commoditites boom!




Tend to agree, when oil gets to $100 or not even that high but higher than what its at now, then it will cause inflation...

After this happens, there will be a recession and demand for everything will go down, commodity prices will go down, company profits will be less, and the global stockmarkets will see a massive correction, unemployment up also, exports will be down due to decreased demand...

But gold - will go up..

But even though commentators such as Jim Rogers say that historically commodity bull runs last for btw 15-23yrs, these correlate inversly to global equity markets... now we have both - so something should give..

I would say commodity producers would be the way to go for big gains during commodity bull runs...(eg. Poseidon nickel in 1970s), but now we also have high oil prices - and if that curbs demand - that may ruin everything ?

The oil spike in 1980s was only short-lived, but speculators/economists/commentators say because of China and India's growth, the demand side of the equation is permanently changed forever. To quote some1 (i forgot who): "When the coastal people of china decide they want to have the same % of automobiles as Korea, and they number 165million+, we'll need 2 more Saudi Arabias pumping flat out"..

http://www.miningmx.com/energy/479408.htm

Thoughts ?


----------



## kgee

*Re: OIL AGAIN!*

I've been bullish on oil for a while and there's still a lot of well priced companies out there including a few juniors who are producing and with good exploration prospects...my guess is we will see some considerable gains in these over the next few weeks


----------



## crackaton

*Re: OIL AGAIN!*



			
				kgee said:
			
		

> I've been bullish on oil for a while and there's still a lot of well priced companies out there including a few juniors who are producing and with good exploration prospects...my guess is we will see some considerable gains in these over the next few weeks



I 'm banking on cue and to alessr degree PNo and ARQ


----------



## michael_selway

*Re: OIL AGAIN!*



			
				kgee said:
			
		

> I've been bullish on oil for a while and there's still a lot of well priced companies out there including a few juniors who are producing and with good exploration prospects...my guess is we will see some considerable gains in these over the next few weeks




hi which oil juniors u reffering to?

thx

MS


----------



## nizar

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> hi which oil juniors u reffering to?
> 
> thx
> 
> MS




A junior oiler i like is STX


----------



## michael_selway

*Re: OIL AGAIN!*



			
				nizar said:
			
		

> A junior oiler i like is STX




hehe yep, but just wondering which ones in particular kgee is reffering to

thx

MS


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*

Down Boy! Down! Sit! Sit! 

Looks like Oil will rebound strongly from $72.70 support to test previous high this week!


----------



## Fab

*Re: OIL AGAIN!*

Crakaton,

PNO is not an oiler as far as I am concerned ?! Maybe you are referring to another stock ??


----------



## crackaton

*Re: OIL AGAIN!*



			
				Fab said:
			
		

> Crakaton,
> 
> PNO is not an oiler as far as I am concerned ?! Maybe you are referring to another stock ??



Sorry my mistake. It was pan pacific oil. PNO is pharmaceuticals.


----------



## RichKid

*Re: OIL AGAIN!*

The retracement seems to be accelerating, OI increasing. Might be some local ASX oil co set ups to enter in anticipation of the next run up.


----------



## kgee

*Re: OIL AGAIN!*

Michael I like COE and maybe EPN depending on testing of fairbridge (next couple of weeks...)I hold AZA and the NXS takeover should be successful I can see it going to 1.60 shortly.
As to oil it will be interesting to see how the US and the markets react to Iran refusing to stop their Uranium enrichment isn't the 28th the deadline??


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*

Good boy, thats it sit sit!


----------



## markrmau

*Re: OIL AGAIN!*

Whats going on with oilers?

CL got smashed on nymex last night but WPL steady, AMU up HZN rocketing.

Not what I expected.

Or is it because CL was just having a fibonacci retracement?


----------



## Mumbank

*Re: OIL AGAIN!*

Interesting announcement by ROC, may have some bearing on why HZN has taken off.


----------



## markrmau

*Re: OIL AGAIN!*

I know, looks like i'll be opening more red tonight. 

But good grief. Crude dropped 3% and WPL is up almost 1% now   

What is going on


----------



## scsl

*Re: OIL AGAIN!*

i came across this very interesting article by Clif Droke, dated 18 Jun 2006:

"Oil and the 8-Year Cycle"
http://news.goldseek.com/ClifDroke/1150642920.php

what's encouraging is that it talks of _a distinctive if asymptotic upward move in oil from roughly 2007-2009_.

but having just gone long on Oil Search CFDs, i was a bit worried to read that he expected oil to bottom in September this year...

are these kind of sites credible? and are there any of you fundamentalist investors or technical analysts that think otherwise?

cheers


----------



## RichKid

*Re: OIL AGAIN!*



			
				scsl said:
			
		

> i came across this very interesting article by Clif Droke, dated 18 Jun 2006:
> 
> "Oil and the 8-Year Cycle"
> http://news.goldseek.com/ClifDroke/1150642920.php
> 
> what's encouraging is that it talks of _a distinctive if asymptotic upward move in oil from roughly 2007-2009_.
> 
> but having just gone long on Oil Search CFDs, i was a bit worried to read that he expected oil to bottom in September this year...
> 
> are these kind of sites credible? and are there any of you fundamentalist investors or technical analysts that think otherwise?
> 
> cheers



Hi scsl,
I don't really know much about that site but generally the chart looks bullish, currently appears to be correcting, still some more of it to go before a move out of this range- chances are an upward break but nothing is assured. Overall trend is certainly up. Maybe someone who has studied oil cycles will be able to comment.

....ok, I've just had a quick look and extracted the article in full below. It's a shame that chart wasn't annotated to reflect the commentary. 



> Oil and the 8-Year Cycle
> 
> By: Clif Droke, Gold Strategies Review
> http://news.goldseek.com/ClifDroke/1150642920.php
> -- Posted Sunday, 18 June 2006
> 
> In view of the approaching 8-year cycle bottom we’ve been discussing in recent articles let’s examine the crude oil market compared to previous cycles for ideas on what to expect in the weeks and months ahead.
> 
> Does oil follow the 8-year cycle as closely as the stock market does? Not as closely but the longer-term cycles with the Kress 120-year cycle series typically have a depressing effect on the oil price, not before but just after the final bottoming phase of the cycle. In other words, the oil price usually has a delayed reaction to the longer-term cycle bottoms.
> 
> For instance, the last long-term cycle bottom that we experienced this decade was the 12-year cycle bottom of October 2002. We all remember how bad the year 2002 was for stock prices as the bear market that had begun in 2000 was at its worst. Stock prices fell nine of out of 12 months in 2002 before bottoming in the fall of the year with the 12-year cycle low. During most of 2002 the oil price was actually rising off its late 2001 low price of approximately $17/barrel and made a high of just over $30/barrel in the fall of 2002 just as the 12-year cycle was bottoming. In the weeks immediately following the 12-year cycle bottom, the oil price experienced a rather sharp retracement or corrective pullback from about $31 down to about $25 (at that time a fairly sizeable decline). After finding support above the $25 level, oil continued its bull market into 2003.
> 
> What is the relationship between the 8-year cycle bottom and the price of oil? As discussed in the previous commentary entitled "A look at the upcoming 8-year cycle bottom," the previous 8-year bottom in autumn of 1998 saw an almost across-the-board bottom of what had been a severe decline in stocks and commodities that summer. The crude oil price had fallen from its high in January of that year to a low of around $10/barrel by the end of the year, making it one of the last to bottom among the fuels (natural gas bottomed in September-October along with the orthodox low of the 8-year cycle in ‘98 along with the broad stock market).
> 
> Despite the belated bottom in oil in 1998 you can see that there was downward pressure being exerted against the oil price throughout that year in response to the falling 8-year cycle. The slope of the oil price through 2006 has been upward, but even this year with the 8-year cycle bottoming you can see evidence that there is pressure against oil coming from this cycle. This has especially been evidence since late April/early May of this year as oil peaked at that time just over $74 and has been below that level since.
> 
> 
> 
> 
> What this testifies to is that the secular trend for oil is up while the short-term trend is coming under pressure from the "hard down" phase of the latest 8-year cycle that is due to bottom in September. Once the downward pressure from the 8-year cycle has lifted oil should eventually resume its upward bias with 2007 most like witnessing a rising trend. One reason for this assumption is that the 8-year cycle is really only a composite of the 2-year cycle. The 2-year cycle bottoms in even numbered years and peaks in odd numbered years. In response to the 2-year cycle you can see that the oil price tends to outperform in odd years (1985, 1987, 1989, 1999, 2005) and underperform in even years (1984, 1986, 1988, 1992, 1998).
> 
> One very notable exception to this was in 1990 when a previous 8-year cycle was bottoming. The oil price experienced a rather sharp drop from February through July of that year when downward pressure from the 8-year cycle was strong. That summer, however, the oil price made an about face and shot up to a major high at that time of $40/barrel. This was in the face of the Persian Gulf war of course and is an example of how political considerations can supercede strictly financial concerns in the oil market due to its extremely sensitive nature. Yet in keeping with the delayed reaction it often has to a longer-term cycle, the oil price declined sharply in the months following the bottom of the 8-year cycle in 1990, with oil dropping from $40 to a more subdued $18/barrel in early 1991.
> 
> With the secular trend of oil up relative to the comparable period in the previous decade, the upcoming 8-year cycle bottom should produce for oil a meaningful pullback followed by a resumption of the rising trend probably by sometime in early 2007. The previous 8-year cycle low in late ‘98 was followed by an explosive rally in the oil price from early 1999 until later 2000 with oil rising from $10 to almost $40 in that nearly 2-year period. At that time oil was coming off a major "oversold" extreme so it’s doubtful the rise in oil following the upcoming 8-year cycle low will be as pronounced. There should, however, be a distinctive if asymptotic upward move in oil from roughly 2007-2009.
> 
> This expectation is not only a function of the market being relieved of downward pressure from the 8-year cycle; it’s also a natural response to the tendency of inflationary commodities such as oil and gas to experience bull markets during the final three years of any given decade. This decennial pattern is not a cycle, properly speaking, but rather a recurring pattern within a longer-term cycle. Looking back at the past several decades you can see the tendency for stagflation, or the phenomenon of stagnant earnings growth and rising commodity prices, to rear its unsightly head from approximately the seventh year of the decade through the ninth year (e.g., 1977-1979, etc.) During this period stock prices often experience meaningful gains despite the fact that corporate earnings growth begins to slow noticeably, partly in response to rising commodity prices. This in turn eventually gives way to the bear market and/or economic recession that usually accompanies the onset of a new decade.
> 
> The upcoming 2007-2009 period will probably not be an exception to this historic pattern. Stock prices will likely benefit from the lifting of the 8-year cycle pressure in 2007 up until the peak in the 10-year cycle in 2009. But during this period we can also expect to see certain commodity prices pushing forward with stocks, gradually undermining corporate balance sheets along the way. The years 2007-2009 will be a transitional time for the U.S. for it will represent the final forward surge before the massive deflation beginning with the bottoming of the 60-year/120-year cycle in 2010-2014.
> 
> Clif Droke is the editor of the daily Durban Deep/XAU Report, a technical forecast and analysis of several leading gold and silver stocks, including DRDGold and the QQQ available at www.clifdroke.com.  He is also the author of numerous books, including "Gold Stock Almanac 2006."




This is the link to Droke's previous article on 8 year market cycles referred to above: http://news.goldseek.com/ClifDroke/1150297620.php


----------



## scsl

*Re: OIL AGAIN!*

ok thanks for that RichKid.

...i'm just banking on a short term spike out of the $68-70 region it's been trading in the past week or two.  

it's currently $70.12 as i post this, up about 80 cents!


----------



## Magdoran

*Re: OIL AGAIN!*



> *Originally posted by Captain G
> on the "Gold Price - Where is it heading?" thread*
> 
> Hi Magdoran, just very curious, but why will oil be poised to potentially run up to test $90 within 3 months ??
> Cheers, Capt.




This is in response to a question made about oil on the "Gold Price - Where is it heading?" thread.

I was projecting possible extensions to the bullish drive in Crude and Brent oil, and have attached 3 rough working charts to illustrate the potential levels oil may move to if the pattern in the current period gives a higher low, and moves bullishly out of the existing consolidation (see the charts). I am still working on this, so this is literally a work in progress.

Of course any bullish drive may fail around any of the extension divisions as shown in the chart, and would expect resistance at the 25%, 33%, 50% and 75% divisions.

The pattern looked initially to be accumulation to me, but it could be distribution for a pull back.  I tend to favour the concept that this is accumulation for a drive up, but recognise that a marginal high may come in and halt the move – and it may just move sideways from here.

The 100% extension target over the next 3 moths or so (still working on time projections) as a potential target is based on the concept that consolidations can form 50% levels in price into the future (this concept is not my idea by the way).

HUSpotV (Unleaded futures) is problematic for the bullish projection though.  I suspect that fuel is the primary driver in oil pricing above the ancillary products.  The last bar could be a false break, but if it only yields a small pull back and makes a higher low, or is exceeded in 3 trading days, this would be bullish.  If it pulls back, it could blunt a bullish drive in oil.

Ok, I’m going to be out of range for a few days, but will be interested to see what happens over the next couple of weeks.


Regards


Magdoran


----------



## rederob

*Re: OIL AGAIN!*

Magdoran
I think $90 is possible, but only if accompanied by geopolitical concerns that spill onto the world stage - Iran is the culprit to watch.
And then I thought about hurricanes: Put the two together and we have $100 as possible.
Otherwise I think POO over $85 this year will be a bit of a tall order.
I say this based on pragmatism, and not on natural demand, which I expect to be typically robust in the second half.
Pragmatism tells me that if POO soon hits $90 or $100 then we have a recipe for overheating the inflationary ingredients and cooking the US economy. 
My suspicion is that even the speculators know this ( I know the oil companies do), and will need to be careful about killing the goose that lays the golden eggs.
My other suspicion is that peak oil is so close that if the global economy sees clear weather over the next few years we will definitely seee POO over $100 later on in 2007.
Curiously, the ratcheting of prices to accommodate higher oil costs over recent years shows us that we may be able to survive a little longer at these ridiculous levels.  
Of the indicators I will be looking at to pre-emt a global market meltdown, oil will be my first gauge.  Followed by a DOW chart.

Gold will run its own course, and may rise irrespective of oil prices, interest rates and bourse movements.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				rederob said:
			
		

> Magdoran
> I think $90 is possible, but only if accompanied by geopolitical concerns that spill onto the world stage - Iran is the culprit to watch.
> And then I thought about hurricanes: Put the two together and we have $100 as possible.
> Otherwise I think POO over $85 this year will be a bit of a tall order.
> I say this based on pragmatism, and not on natural demand, which I expect to be typically robust in the second half.
> Pragmatism tells me that if POO soon hits $90 or $100 then we have a recipe for overheating the inflationary ingredients and cooking the US economy.
> My suspicion is that even the speculators know this ( I know the oil companies do), and will need to be careful about killing the goose that lays the golden eggs.
> My other suspicion is that peak oil is so close that if the global economy sees clear weather over the next few years we will definitely seee POO over $100 later on in 2007.
> Curiously, the ratcheting of prices to accommodate higher oil costs over recent years shows us that we may be able to survive a little longer at these ridiculous levels.
> Of the indicators I will be looking at to pre-emt a global market meltdown, oil will be my first gauge.  Followed by a DOW chart.
> 
> Gold will run its own course, and may rise irrespective of oil prices, interest rates and bourse movements.




Possible yes, but is it sustainable?

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=1DE6B75C-17A4-1130-F5CAF88306085114

thx

MS



> *Is There A Crude Oil Oversupply Or What?
> FN Arena News - June 29 2006
> By Greg Peel*
> 
> "There has been a contradiction evident in the oil market throughout [the second quarter]. On the one hand, a mass of analyst and oil company executive comment has talked of chronic over-supply and price crashes. Some press comments have taken that view on board, and run with it repetitively as if it were set in stone. However, on the other hand, physical markets have not manifested the supposed over-supply, there have been three straight monthly averages for WTI above [US]$70, and, rather than crashing in a suitably humble fashion, the market is now gaining strength."
> 
> And therein lies the dilemma. This is the way Barclays Capital currently reads the crude oil market.
> 
> The current state of the oil market can best be unravelled by simplifying into four distinct factors. (1) Supply – is it or is it not in a position of surplus? (2) Demand – are higher prices having any effect in lowering demand? (2) Products – regardless of crude supply, supply of gasoline and other products will remain tight. (4) Geopolitical tension is the wildcard (and throw hurricanes in there as well).
> 
> Merrill Lynch has just raised its oil price assumptions. The analysts now value oil companies on the basis of a 2006 price of US$67.50/bbl (up 8.5%), 2007 of US$65.00/bbl (up 18%) and 2008 of US$50/bbl (up 8%). The longer term assumption remains at US$42/bbl.
> 
> US$42/bbl might seem like wishful thinking, but Merrills insists that "the full cycle cost of large-scale marginal sources of supply" dictates that this is a realistic price. In English, it means that if the oil price stays high enough for long enough then peripheral oil sources such as Canadian oil sands (extensive resources) or gas-to-liquid conversion begin to look economic and worth pursuing.
> 
> It is on the supply side that Merrills go on to formulate its view, despite having just upped forecast prices, that over the next 18 months the crude oil price will drift lower. Merrills believes global oil production is set to expand rapidly over coming quarters. Production is declining in the North Sea and Mexico (largest supplier to the US) but substantial production is anticipated from the Former Soviet Union (specifically Russia, Azerbaijan and Kazakhstan), Africa (Angola and Sudan) and Canada. Brazil is also expected to increase production.
> 
> Merrills expects non-OPEC production to grow by about 1.5 million barrels per day in 2007.
> 
> Then we have OPEC, which is also bringing further production on-line. Nigeria, Kuwait, Algeria, Iran, UEA, Libya and Saudi Arabia all plan to increase production. This increase could be 1.1 mb/d, says Merrills.
> 
> However, increased production is not going to solve the problems at the pump. Global refining capacity is still woefully inadequate. Moreover, a lot of the supposedly excess oil being produced at the moment is "heavy" crude. Refiners gave up on heavy crude years ago. Turning excess heavy crude into useable product would mean major refinery rejigging. "Sweet, light" crude is what everyone's set up for, and that is not in excess. One of the biggest sources is Nigeria, and its production has been slashed by terrorists.
> 
> If heavy crude producers end up creating even more of a bottleneck at the refiners they will have to consider actually cutting production. Otherwise the price of crude really will collapse. OPEC would not let this happen. Merrills suggests the next round of OPEC production meetings could be feisty.
> 
> If there's currently such an excess, or an excess to come, says Barclays, why then is the oil price going up? Oil prices will finish higher in the second quarter of 2006 than where they started. When Barclays crunches all the available numbers, and the dust settles, it appears the market in the second quarter will be significantly tighter than last year.
> 
> One possible answer to the conundrum is gasoline. As suggested, you can pump out as much black gold as you like but if you can't refine, it's not worth much. Thus a tight gasoline market, and subsequently high gasoline price, is what's dragging up the oil price.
> 
> Logic dictates that the higher prices go, the more demand will fall. So turning to the demand side, many economists base their predictions of, for example, a slowing US economy, on the fact that ongoing high oil prices will lead to demand falls that will curtail economic activity. Is there any evidence of this? Not much.
> 
> The demand effect comes down to price elasticity. In other words if the relationship between oil price and demand is elastic, each dollar of oil price will directly force a fall in demand. If inelastic, it won't. The Australian example is one that shows just how inelastic the relationship is.
> 
> An average Sydney family may use a car to drive to and from work, and another to drive the kids to and from school. Although higher oil prices have affected some increase in public transport use, and motor scooter and bicycle sales, most Sydneysiders have continued to buy the same amount of petrol but give up something else. New clothes perhaps, or dining out. As the price of petrol has climbed ever higher, it is not petrol sales that have suffered.
> 
> Merrills finds that the global price elasticity of oil is very low. The analysts estimate that, on average, a 10% increase in the price of petroleum products affects only a 0.5% fall in demand. In parts of the world it's even less. The greatest guzzlers of them all – Americans – have seen 40% higher gasoline prices this summer from last, but demand has fallen 1%.
> 
> While most economists expect the US economy to slow from here – not recede, just slow – global economic growth forecasts are hardly leaden. Merrills expects 4.4% global growth in 2007, which is still "above trend". This is not a figure that suggests a significant fall in oil demand. In fact, Merrills forecasts 2007 demand growth of 1.9 mb/d. (If you recall, aggregate supply increases were tipped to be 2.6 mb/d).
> 
> Merrills does not believe the refinery bottleneck problems will be solved before the second half of 2008. The analysts thus reason that demand for gasoline, diesel and jet fuel will simply have to slow to match available supplies. Maybe it will, but where does that leave the price? Merrills calculates that supply growth of light crudes (that which can be turned into fuel at present) will only be 1.4 mb/d.
> 
> On that assumption, Merrills suggests oil prices will drift lower over 18 months. If the fuel simply isn't available, then other arrangements will have to be made. Price spikes in products will also curtail demand and make consumers think again. Get set for hybrid car sales to rocket. Once everyone's reassessed their oil usage, then there's no reason to pay up so much. At least that's the theory.
> 
> But what of our old friend, geopolitical tension? Iraq, Iran, Nigeria, the nationalisation of South American sources – all are sufficient unknowns that can make a lot of hard core analysis worthless. FN Arena published the view of Credit Agricole's Jean-Charles Lacoste on Tuesday which is that we are in for the next great global oil shock, just like the seventies, due simply to the risk of some further devastating event. Oil at US$100/bbl, says Lacoste.
> 
> And as we speak, the waters in the Gulf of Mexico are getting warmer, and warmer…


----------



## Magdoran

*Re: OIL AGAIN!*

Hello rederob and Michael, 


Markets are not rational. $90+ oil prices seem incredible, don’t they?  If you’d even mentioned this level a few years ago, people would have thought you were potty, wouldn’t they?  But speculators are focussed on the present to make money out of the market.  I really don’t think they’re thinking about the longer term effects.  In fact, a spike in oil prices and a resulting crash in the price will make some speculators who play the long side on the way up, and the short side on the way down rich. Very rich. 

So, good point, rederob and Michael, what would $90+ oil do to the global economy, combined with rising interest rates, and soaring commodity prices?  I fully agree with Michael and rederob, if we hit this level, it wouldn’t be sustainable.  Look at the way commodities exhaust up into highs, then fall sharply from these heady heights – perhaps even look at the “dot com” boom, this is a good illustration of how markets perform in “blow off trends”.

My contention is that our whole current economic system is stacked like a house of cards.  What we have is the perception of perennial demand based on the sustained growth in China.  But are we are at the crossroads right now?  Can the record levels of US debt be sustained without either an effective long term strategy in place where the US dollar loses value relatively against the Chinese currency, or that consumption rates are slowed considerably and debt levels are reduced?  Add the oil scenario spiking to equivalent levels to the 70’s oil shocks, what would the effect be?

Think about this – much of the current prosperity has been driven around the western world in part by the surge in real estate values, which in part was fuelled by low interest rates which allowed significant leveraging of capital to borrow to acquire both for domestic and business pursuits.  Add to this the equity in domestic households which sharply lifted the ability to purchase a range of household items, entertainment, luxury items etc.  While all this is going on the Chinese have built major industrial cities in very short periods of time to supply to this demand, and millions of Chinese workers toil for a pittance to keep prices competitive.

Are we at a point where this kind of economic demand will fall due to inflationary flow on from key commodities like oil, metals, and the effect of contracting or sluggish house prices and rising interest rates?  Are the internal domestic drivers in China sufficient for it to continue despite conditions in the US?  Essentially to what extent is China “addicted” to the US, and vice versa?  Where Australia’s economic future stands in my view is based on the commodity boom which has been the primary reason for the prosperity over the last 3 years.

A point lost on many people is that copper has increased price dramatically over the last year, almost quadrupling (see the attached chart).  This has to have an effect on key costs world wide.  Copper is often described as an economic barometer, just look at the attached chart, and tell me if this looks sustainable or exhaustive. 

Are the recent corrections in the metals an overbalance in time and price with further correction to come, or is this the mid point for a major boom?  Or is it the point where prices consolidate?  I’m kind of leaning to the corrective viewpoint currently in the metals charts, but if the metals rally and test their highs, this has to be inflationary.

The question is, is anyone going to say “the Emperor had no clothes”, or is the whole system going to be sustained by “faith” by turning a blind eye (like the Japanese did in the past to their “Zombie” company structures and in western terms bankrupt banking system).  Inflation rates are the key, and with key commodity prices soaring, this puts the question of how long inflation can be contained at the “desirable levels” before the base costs filter down and start having a marked impact?

I don’t think we’re at this point just yet, but consider a scenario where oil spikes up to that 90+ level, would this trigger a rather unpleasant set of economic events on a global scale?  How this might pan out is beyond my capacity to measure, but what I can imagine is a significant contraction in demand and a potential major slide in forward estimates across the board for earnings – resulting potentially in a significant correction.  But this is of course dependant on a range of variables playing out this way. Essentially it’s about perception and confidence above the fundamentals.

However I do think it is possible to maintain the current favourable economic conditions for years, especially if everyone maintains an optimistic outlook, and the structural strategies are addressed (particularly in the US) to reduce debt without sending the whole system into a recession or depression.  Another danger is if there is a wholesale sell off of US currency and bonds and what the effect of this might be.  Key holders are China and Japan.  The Chinese are unlikely to want to unsettle the current arrangement, so for the present this is not a likely scenario, but it is something to consider.

Certainly in the longer term, if the Chinese demand and expansion despite some fluctuations remain in place, this signals longer term growth.  The problem I think we have is in timing – when will corrections happen, how long and how deep will they go, and when and how far will a wider boom period last?

My controversial thinking at the moment is that the apparent lockstep of Gold with Crude oil prices may be about to diverge…  But this is way too preliminary, all I can do is to interpret what I’m seeing in the charts currently, and this is a possibility.  But what I see is oil looking bullish, and Gold in the short term looking like it should correct more.  Of course I could be completely wrong here, and I will adjust my forecasts over the next few days/weeks as the price action gives more clues where these commodities might head.

There are several key variables to consider which we have charts on:

•	Interest/Bond rates (particularly US – hence FED policy is a factor)
•	Currency movements – particularly the US Dollar (since we’re looking at NYMEX Gold, it’s in US dollars),
•	US indexes (DOW, NASDAQ, S&P 500)
•	Oil/Fuel Prices (CL and HU, and LBCA)
•	Metal Futures (Copper, Nickel, Aluminium, Zinc)

Of course this doesn’t cover the larger questions of the wider economic backdrop on issues like inflation, US debt levels (individual and national) and the relationship with China, and more broadly complex global economic cycles of supply and demand and the interrelationships between various countries and economic sectors.

In my undergraduate days I remember reading a book by Peter Gourevitch when it had just been released and was interested in the causes of depressions, and the responses by various governments to these situations.  I think some of these notions are relevant in the current period considering the nature of the Chinese political system since much of the commodity boom is based on accelerating demand from China.  That is that their system of government is not democratic, and policy can still be imposed.  Second guessing the policy direction in China then is a key element on the way the global economy will behave into the future (an obvious point I know, but never the less often neglected).

Another perspective of interest was the notions put forward by Jim Rodgers in “Hot Commodities” on China. (Rodgers had travelled around China on a motorbike for around a year doing comprehensive economic research, and wrote the “Investment Biker” and “Adventure Capitalist” – prior to this he had been George Soros’ key partner when the Soros fund quadrupled in value - see “Soros on Soros”).  Even Rodgers recognised that there will be periods of correction which can be marked by sharp pull backs.  The key question for us as investors and traders is “when, and how much” – this is what I’m attempting to do.

Regards


Magdoran
P.S.  I’ll look forward to returning to see how robust the debate becomes when I get back.  Hope you all have a prosperous week!  Mag


----------



## wayneL

*Re: OIL AGAIN!*

Oil hits record

http://www.marketwatch.com/News/Sto...BC1-43C8-B069-451AD2404D8C}&siteid=mktw&dist=



> Crude marks a record close on political concerns
> All-time closing high for front-month contract; natural gas sinks
> E-mail | Print | RSS Feed | Disable live quotes
> By Myra P. Saefong, MarketWatch
> Last Update: 3:24 PM ET Jul 5, 2006
> 
> SAN FRANCISCO (MarketWatch) -- Crude-oil futures closed at a new record Wednesday, finishing above $75 a barrel for the first time since mid-May, with developments in Iran and North Korea raising concerns among traders ahead of U.S. data expected to show a decline in crude inventories.
> "Over the last 24 hours, Israeli planes hit the Interior Ministry in Gaza City, the Arab League transferred $50 million in funds to the Palestinians, Iran rejected a July 12 deadline [to respond to a United Nations proposal] and North Korea launched seven missiles," said Michael Fitzpatrick, an analyst at Fimat USA, in a note to clients. "This is the opposing force to the thinking that ever-higher commodity prices will eventually choke off demand as central banks struggle to keep inflation in check."
> Crude for August delivery climbed as high as $75.40 a barrel on the New York Mercantile Exchange, matching the record intraday high for a front-month contract seen on April 24 and marking the contract's first rebound to that level since May 11, when prices reached an intraday level of $75.85. ...


----------



## Magdoran

*Re: OIL AGAIN!*

*Errata:  * 

The HUSpotV data on the last chart in post 141 was wrong.  The apparent spike up and close near open never happened.  The new chart shows the actual bar, and also last nights price action.

This paints a very different and bullish picture, and my reservations in my comments before on HU (Unleaded futures) are reversed.  Look at the attached chart with the now correct bar, and this looks bullish.


Regards


Magdoran


----------



## stockmaster

*Re: OIL AGAIN!*

How will oil price go for next week? Man, if it goes up even more, i can't afford the oil bill. Need to catch a train tomorow


----------



## Magdoran

*Re: OIL AGAIN!*

Behaving Technically as expected...  Please see charts - still working on the time projections...


----------



## wayneL

*Re: OIL AGAIN!*

Pretty sensible analysis there Mag.

Those time/price levels... what are they? They look similar to monthly pivots (though must be different)

Cheers


----------



## Magdoran

*Re: OIL AGAIN!*

Hi Wayne,


Thanks... How’s WA?

I’m not quite sure what you’re asking me.  Are you asking me what I'm working on, or what is showing in the chart - maybe my arrow musings about the pattern I'm expecting?

These charts are primarily aimed at price and wave projections.  The time factor needs a Gann based chart to project time with any precision.  Gannalyst can do time and price, but Advanced GET's time capacity is rudimentary, and inadequate from a Gann perspective.

I sometimes mark highs and lows with an arrow to make it easier to observe counter trends and wave counts manually.  The Elliott wave generation in GET is based on moving averages, and can have some odd labeling that I don’t agree with.

Essentially I manually work out time and price projections; hence I mark these with whatever text and drawing tools that is available on the chart.


Regards


Magdoran


----------



## wayneL

*Re: OIL AGAIN!*



			
				Magdoran said:
			
		

> Hi Wayne,
> 
> 
> Thanks... How’s WA?




:sleeping:



			
				Magdoran said:
			
		

> I’m not quite sure what you’re asking me.  Are you asking me what I'm working on, or what is showing in the chart - maybe my arrow musings about the pattern I'm expecting?
> 
> These charts are primarily aimed at price and wave projections.  The time factor needs a Gann based chart to project time with any precision.  Gannalyst can do time and price, but Advanced GET's time capacity is rudimentary, and inadequate from a Gann perspective.
> 
> I sometimes mark highs and lows with an arrow to make it easier to observe counter trends and wave counts manually.  The Elliott wave generation in GET is based on moving averages, and can have some odd labeling that I don’t agree with.
> 
> Essentially I manually work out time and price projections; hence I mark these with whatever text and drawing tools that is available on the chart.
> 
> 
> Regards
> 
> 
> Magdoran




OK 

One day I'll study this Gann stuff (time & price stuff only) to see if there's anything for me. To much on ATM though.

Nevertheless, any suggestions for a starting place will be appreciated.

Cheers


----------



## michael_selway

*Re: OIL AGAIN!*



			
				wayneL said:
			
		

> :sleeping:
> 
> 
> 
> OK
> 
> One day I'll study this Gann stuff (time & price stuff only) to see if there's anything for me. To much on ATM though.
> 
> Nevertheless, any suggestions for a starting place will be appreciated.
> 
> Cheers







http://www.abc.net.au/4corners/content/2006/s1680717.htm

Peak Oil?
Reporter: Jonathan Holmes

Broadcast: 10/07/2006

"The price of petrol is disgusting, absolutely disgusting…"

"It’s just going up and up…"

"It’s outrageous…"

"I get so mad – you ever get so mad you can’t even talk about it no mo’?"

(Vox pops – motorists in Australia, UK and US)

If, like these motorists, your fury rises with the numbers ticking over on the petrol bowser, get a grip. You may soon look back fondly on the good old days when petrol was $1.40 a litre.

The world is at the beginning of the end of the age of oil, according to a growing body of analysts. It stands at a precipice of "peak oil" – the point at which oil producing countries can no longer keep up with growing demand, where production climaxes and then plunges into irrevocable decline.

This, say the doomsayers, may send national economies spinning into turmoil, up-ending comfortable urban lifestyles that rely on oil for the cheap transport of people and goods and for the manufacture of thousands of mundane household and office items – from mousepads, banknotes and drink bottles to carpets, clothes, cosmetics and deodorants. 

The crunch will come some time in the next few years, without warning, they say. "The worst case is that it’s occurring now or very soon because the world is unprepared, it’s absolutely unprepared," says one of the most influential pessimists. 

But this is just scaremongering, say many authoritative oil industry voices. While they agree that oil is unlikely to get cheaper any time soon, they insist that oil production will keep pace with demand for decades to come. There is simply no end in sight to the black gold bonanza, according to these optimists.

They check off their list: vast untapped oil reserves claimed by Middle Eastern nations; the prospect of further discoveries; and smarter technology that will extend the life of existing oil fields and make new ones easier to exploit. 

Even the optimists concede that massive discoveries of easy-to-reach oil are a thing of the past. But, they say, higher prices will make other ways of producing oil and alternative fuels commercially viable. 

Who is right? Four Corners investigates a truly global issue that reaches into every home and every car and touches every human life. This special report* explains why oil prices are high right now and asks how long the world has left to prepare for a day when there is not enough oil to go around.

Reporter Jonathan Holmes goes in search of an answer in the Middle East, the US and Europe, interviewing the key protagonists. He asks if the world is being told the truth about the vast unexploited reserves that are claimed to lie beneath the desert sands of the Middle East. He looks at alternative oil sources and the obstacles to exploiting them. And he explains what peak oil means for Australians who depend so heavily on oil for transport and tourist income.

"Peak Oil?" … on Four Corners, 8.30 pm Monday 10 July, ABC TV.

This program will be repeated about 11 pm Wednesday 12 July; also on ABC2 digital channel at 7 pm and 9.30 pm Wednesday.

*Four Corners also presents a Broadband Edition on "Peak Oil?" … See the program in full; watch extended interviews with the experts; delve into interactive maps showing who produces the oil and who buys it; browse key reports about how much oil remains untapped; learn about the alternatives; and discover the impact of peak oil on Australia’s economy and way of life.

thx

MS


----------



## RichKid

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> ................
> .............
> 
> "Peak Oil?" … on Four Corners, 8.30 pm Monday 10 July, ABC TV.
> 
> This program will be repeated about 11 pm Wednesday 12 July; also on ABC2 digital channel at 7 pm and 9.30 pm Wednesday.
> 
> *Four Corners also presents a Broadband Edition on "Peak Oil?" … See the program in full; watch extended interviews with the experts; delve into interactive maps showing who produces the oil and who buys it; browse key reports about how much oil remains untapped; learn about the alternatives; and discover the impact of peak oil on Australia’s economy and way of life.
> 
> thx
> 
> MS



Thanks for that Michael, I didn't realise it was all on the web, missed most of the show so I will have to catch the repeat. It's a shame they didn't consult our resident expert Smurf as his posts had a hell of a lot of stuff that they could have used. Maybe you should do some consulting for these researchers and reporters Smurf? Your posts are top quality. Thanks for sharing your knowledge and expertise, it's very educational.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> Thanks for that Michael, I didn't realise it was all on the web, missed most of the show so I will have to catch the repeat. It's a shame they didn't consult our resident expert Smurf as his posts had a hell of a lot of stuff that they could have used. Maybe you should do some consulting for these researchers and reporters Smurf? Your posts are top quality. Thanks for sharing your knowledge and expertise, it's very educational.




NP u can watch it online below, its split into 6 parts

http://abc.net.au/4corners/special_eds/20060710/4c_interactive.swf

thx

MS


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*

A good read, I recommend it  

Talks about Coal to Oil, 

Tar Sands of Canada (Apparantly more Oil here than in Saudi region,



http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=66A21D5C-17A4-1130-F5EDC6317BAD1CAC



Enjoy


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> A company is worth the PV of all future cashflows (forecast EPS) discounted for time and risk, nothing more or less.
> 
> 1/PE = ROI. Money in the bank is about 5% return or PE of 20, but risk free.
> 
> Risk = high debt, commodity price sensitivity etc [/QUOTE]
> 
> What is PV?     :confused:
> 
> also, I like to value a company for what you would get if it was liquidated NOW!
> 
> i.e. Net tangible assets (all assets less liabilites (not including intanglibles) does that fall into your equation Michael?
> 
> There have been times when a compay is selling for less than what it is worth now - CMI for instance was selling at 97 cents - if you work that back you'd see that is less than what it is worth if you liquidated it. So any future profits (and it does make profits) are your for free.
> 
> I'm not having a go, I'm just interested in your thoughts. Thanks.   :)


----------



## michael_selway

*Re: OIL AGAIN!*



			
				YOUNG_TRADER said:
			
		

> A good read, I recommend it
> 
> Talks about Coal to Oil,
> 
> Tar Sands of Canada (Apparantly more Oil here than in Saudi region,
> 
> 
> 
> http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=66A21D5C-17A4-1130-F5EDC6317BAD1CAC
> 
> 
> 
> Enjoy




Hi YT thanks for that!

The article has alot of info from the ABC 4 corners show recently

http://abc.net.au/4corners/special_eds/20060710/4c_interactive.swf



> Will Coal Replace Oil?
> FN Arena News - July 13 2006
> 
> By Greg Peel
> 
> One of the reasons Hitler lost the war is because he ran out of fuel. As Germany had not been bestowed with oil reserves, Hitler was aware of the important part oil would play in his plan for world domination. The eastern front was very much about securing Russia's oil supply.
> 
> In the end he failed, but not before exploiting new technology that had been pioneered by two scientists called Fischer and Tropsch in the 1920s. They were able to turn coal into diesel. Rumour has it that when Patton made the final push into Germany, he did so using syphoned-off Nazi synthetic fuel.
> 
> Not long after, the Middle Eastern oil fields were opened up. There was seemingly an endless supply. The concept of coal conversion became irrelevant. It remained irrelevant right up until recently when oil could be purchased for US$16/bbl.
> 
> Except in South Africa. During the 1980s when South Africa was under the rule of an apartheid regime, oil imports were subject to international sanction. In order to overcome a lack of fuel, one company, Sasol Ltd, took advantage of the country's vast coal reserves and revisited the earlier German technology.
> 
> It was a long road, but for the last seven years aircraft flying out of Johannesburg International Airport have used a blend of jet fuel containing 50% converted coal. After decades refining the technology, and in a new oil price regime where US$70/bbl is beginning to feel like the norm, Sasol is making windfall profits. It hopes to win approval for a 100% synthetic jet fuel this year.
> 
> Sasol has become the leading world expert in coal conversion, and the US is very interested. For one thing, the US is keen to reduce its reliance on Middle East crude. But with a focus that only an American could have, the real push is coming from the military. Rummy wants in.
> 
> More than half of the fuel consumed by the US government is used by the air force. About US$4.5 billion per year's worth. The air force recently learnt its fuel bill would rise, as of June 1, by 57c per gallon. Last year it rose 40c.
> 
> While the military may be leading the charge, so to speak, commercial airlines are watching with acute interest. Rising jet fuel costs have threatened to all but cripple the global airline industry. The general thinking has always been that synthetic fuels, in various forms, only come under the radar when the oil price exceeds US$50/bbl. Any less and traditional jet fuel is the most economical. Will we see US$50/bbl again?
> 
> The US is, nevertheless, not without its coal conversion converts. One Pennsylvanian company, WMPI Pty Ltd, has been working on turning that state's waste coal into zero-sulphur diesel or jet fuel and is commissioning a plant this year. It is doing so finally due to a big, fat grant from George Bush. There are other coal or gas conversion plans being rolled out in other US coal-producing states.
> 
> It makes sense. While the US is a net importer of oil, and it's pretty light-on for gas as well, it boasts 27% of the world's known coal reserves. Russia has 17%, China 13%, India 10%, Australia 9% and South Africa 5%.
> 
> Why, then, has the US been so slow to adapt coal conversion technology when the concept should have been banging successive government's over the head? The US is far and away, daylight second, the world's biggest consumer of oil.
> 
> The answer lies largely in cost, as much as it might in a lack of foresight, or a blind belief in the God-given right to consume oil at will. Converted coal can produce oil at around US$35-40/bbl. Add in fixed costs and you reach the rough US$50/bbl figure for economic viability. Crude oil has never been higher than US$50/bbl until last year.
> 
> That's in nominal terms of course. The 1980 previous oil price peak generated a similar wave of panicky interest in alternative fuel sources, with one of the most predominant being shale. Shale oil was going to be the West's great saviour, and Sheik Yamani could go and stick it. The problem was, it was also expensive.
> 
> By the time anyone thought seriously about large-scale shale oil production, the oil price collapsed again when the OPEC supply-side shock was over. Shale oil became of minor historical interest.
> 
> When the oil price shot up again recently, one was hard pressed to find analysts who didn't see it as a short term phenomenon. Sure, China was suddenly buying lots of oil, but at higher prices demand would fall and supply would increase and everything would revert to normal, except at maybe a slightly higher average.
> 
> When Goldman Sachs issued its infamous US$101/bbl prediction two years ago, most fellow analysts laughed. They're not laughing anymore.
> 
> Governments, in the meantime, have relied on their respective energy agencies to keep them grossly misinformed. Only a year ago the US Energy Information Agency predicted crude would soon be back at US$30/bbl. The equally incompetent Australian agency, ABARE (Australian Bureau of Agriculture and Resource Economics), has said consistently in recent years that oil prices are about to fall.
> 
> "I have made the occasional mistake", said Dr Brian Fisher, executive director of ABARE, to a senate committee recently (source: Four Corners).
> 
> Coal is converted into oil by first mixing it with oxygen and steam at high temperature and pressure to produce carbon monoxide and hydrogen. The second step – the Fischer-Tropsch synthesis – uses a catalyst to transform the gas into a liquid synthetic crude, which is further refined.
> 
> By-products are mercury, sulphur, ammonia and other compounds that can be sold. The other major by-product is carbon dioxide, and herein lies a problem.
> 
> A coal-based power plant of equivalent size to WMPI's conversion plant in Pennsylvania discharges about four million tons of carbon dioxide per year. As greenhouse gas emission controls come into play, at least in some countries, the additional burning of coal may not be viable, particularly if carbon emissions are monetarily quantified.
> 
> However, there are environmentally positive outcomes for coal-conversion as well. The actual diesel fuel, when used in a car for instance, has been shown to produce only 10% of the carbon monoxide and 70% of the particulate emissions of conventional sulphur-free diesel (source: Scientific American). Moreover, the South African experience has shown that oil can be produced from waste coal.
> 
> In Pennsylvania, as an example, for every two tons of coal extracted, one ton is low-energy, useless waste coal. This sits in a stockpile – 260 million tons of it at present – that is in itself an environmental hazard.
> 
> While South Africa has refined the technology, the fact remains work needs to be done to sell coal-conversion as a cleaner alternative to regular crude. It has even been suggested that electricity be produced during the conversion process, and that carbon dioxide emission be collected to be pumped down oil wells. At least they're trying.
> 
> But when it comes to alternative non-renewable energy sources (ie other than wind, solar etc) pundits tend to overlook one thing. Nuclear energy might be clean, but uranium mining is far from clean. Coal-converted oil might be better than regular oil but coal mining is a very dirty business. The same can be applied to "clean coal" technologies.
> 
> What price might the earth pay to ultimately bring the oil price down?
> 
> There is little doubt that the demand side of the equation is what has been driving up the price of oil. No one quite anticipated just how much energy the world's emerging economies would require. It hasn't helped that geopolitical and religious conflict have further thrown supply into doubt. And supply itself has been a long time catching up to rising demand.
> 
> Could it be that China might be forced to utilise its extensive coal reserves for oil production?
> 
> The answer to this question might be, despite China's already drastic pollution problems: it might have to. The world's reserves of oil may indeed be dramatically low. If you believe some experts, we may have already reached "peak oil".
> 
> The question of peak oil has suddenly been a headline-grabber, even though scientists have been warning of the peak oil phenomenon for years. Peak oil may only be a decade away, or we may have passed it already.
> 
> What is peak oil?
> 
> When an oil reserve is first tapped, up from the ground comes a-bubbling crude. Or if you're more of a Jimmy Dean fan, it spurts high into the air. This is because underground oil reserves are trapped under a lot of pressure.
> 
> When the first well is drilled, the oil delivers itself. Maybe hundreds of barrels a day. The next step is to see just what sort of area the reserve might cover by drilling a lot of new wells. Eventually, the one reserve may have been accessed by hundreds of wells, delivering thousands of barrels per day under its own pressure.
> 
> After a period of time, natural laws dictate that the pressure will begin to subside and eventually reach equilibrium. From this point on, the oil needs to be pumped out. As the level in the well starts dropping, it may be necessary to pump water in to get the oil out. This becomes more costly and does not produce the same barrel-per day volume. In order to cover the shortfall, more wells need to be drilled to keep production levels up....
> .


----------



## wayneL

*Re: OIL AGAIN!*

The situation in the middle east is looking a lot more volatile as well.

Very dangerous... very sad.


----------



## michael_selway

*Re: OIL AGAIN!*



> ...Finally an oil reserve simply will not be able to produce the same volume per day and the cost of recovering the remaining oil will rise. The reserve has passed its peak. It's now all down hill. After a period of time any remaining oil left will not be able to be economically recovered. Game over...
> 
> The technology that allowed oil to be recovered from under the sea was a great leap forward for an oil-hungry world. Thanks to the North Sea, Britain became an oil exporter in 1981.
> 
> In 1999, production peaked at 4.5 million barrels per day. By 2005, it had slumped to 1.5 million. That was 14% less than 2004, and less than Britain's daily consumption. (Four Corners)
> 
> The US Department of Energy's stance on peak oil is that it's "decades away". But then one wouldn't want to start a panic. Because according to US oil company Chevron, in 33 of the world's 48 most important oil producing countries production has already peaked. Australia's peak was passed in 2000. (Four Corners)
> 
> The Association for the Study of Peak oil has visited every oil producing country and every well in the world and the downward trend is evident everywhere. One saviour may well be the next big oil discovery. When that happens we can all get some sleep.
> 
> The only problem is oil discovery has also been trending down – for the last 50 years in fact. Consumption has risen in the meantime, and it was in 1981 when the world last found more oil than it consumed. (Four Corners)
> 
> While the US doesn't want you to think oil has peaked, the Middle East doesn't either. Rather, the Middle East is gearing up its production capacity to be able to meet the needs of the emerging economies. Granted, it's taking some time, but new wells are being drilled and we'll get there eventually.
> 
> Middle Eastern oil reserves are one explanation offered by those who believe the oil price will eventually fall from its highs. Twenty years ago, Saudi Arabia claimed to have 260 billion barrels of oil under the ground. The Saudis produce over 9 million barrels per day, or 10% of world consumption.
> 
> No one is allowed in to assess Saudi's oil reserves for themselves. It is a closely guarded secret. Having pumped 10% of the world's oil needs for twenty years the Saudis now claim to have – 260 billion barrels of oil under the ground. That's right, it hasn't changed. (Four Corners)...
> 
> Suspicious? I would be. If the Saudis still have that much oil then why is the oil price up here? Even US$40/bbl seemed exorbitant a couple of years ago. And it is definitely not in the interest of Saudi Arabia or any other Middle Eastern oil producer to allow the price to go so high. It is at this price that the world starts talking about moving away from oil.
> 
> If the oil is really there, then the most sensible course of action would be to let the world assess that for themselves. Okay, it might take some time yet to ramp up production, but knowing definitively that there's nothing to ultimately worry about would ease pressure on the oil price. Yet the best the Saudis can come up with is a figure that never changes.
> 
> If the oil is not there, what happens next? There are the massive tar sands of Canada, but recovering oil from tar sand is expensive and environmentally unsound. There are reserves in the Arctic regions, and perhaps the Antarctic, but will that be a popular move?
> 
> If the world needs oil for its existence, then one possibility is clearly coal conversion. Coal is already used to produce electricity, and steel. Estimates suggest there is 200 years of known coal supply in the world, or 100 if it is used for conversion to oil.
> 
> From an environmental perspective, one would hope we can quickly move away from needing any form of oil. Realistically, the price of coal is not likely to drop much from here




PV = Present Value, basically adjusted for time

Yeah NTA is a another way to value a company. 

Lets say a company has in proven in-ground uranium worth 1 billion based on spot prices. But the thing is if not managed well they can actually make a loss when it comes to production and selling

Also a "cheap asset" can earn alot of money. And vice versa an expensive asset (if sold on market) could be making losses if not managed well (but it could be taken over, but then again it coudl ge bust)

Actually i have a question for you Realist

*Lets say an Aussie listed company with 100mil shares (fully diluted) can earn 100mil in NPAT per annum with near 100% certainty but no growth (so dividends are possible). Also assuming no disaster world events such as Terrorism, SARS, etc, whats the most you are willing to pay for each share roughly?*

Ill give u my answer after yours   

Thanks

MS



			
				Realist said:
			
		

> What is PV?
> 
> also, I like to value a company for what you would get if it was liquidated NOW!
> 
> i.e. Net tangible assets (all assets less liabilites (not including intanglibles) does that fall into your equation Michael?
> 
> There have been times when a compay is selling for less than what it is worth now - CMI for instance was selling at 97 cents - if you work that back you'd see that is less than what it is worth if you liquidated it. So any future profits (and it does make profits) are your for free.
> 
> I'm not having a go, I'm just interested in your thoughts. Thanks.


----------



## wayneL

*Re: OIL AGAIN!*

Oil futs punching through $76


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*

Hmmm I've got a value for that company Michael, but I'll wait as the question was not directed at me,


----------



## michael_selway

*Re: OIL AGAIN!*



			
				YOUNG_TRADER said:
			
		

> Hmmm I've got a value for that company Michael, but I'll wait as the question was not directed at me,




Hehe yep, wait for "Realist's" response first   

thx

MS


----------



## Realist

*Re: OIL AGAIN!*



> Lets say an Aussie listed company with 100mil shares (fully diluted) can earn 100mil in NPAT per annum with near 100% certainty but no growth (so dividends are possible). Also assuming no disaster world events such as Terrorism, SARS, etc, whats the most you are willing to pay for each share roughly?




First I will assume they do not have significant debt because that changes any valuation. Next I will assume they will make $100M NPAT per year for many years and have done so before with some slow growth (to cover inflation at least). 

The way I work the market cap out quickly for a company that continuosly makes $100M per year NPAT is 4 times 5 years NPAT so $2,000M is my quick estimate. 

$2 Bill Market cap so I'd pay roughly $20 a share.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> First I will assume they do not have significant debt because that changes any valuation. Next I will assume they will make $100M NPAT per year for many years and have done so before with some slow growth (to cover inflation at least).
> 
> The way I work the market cap out quickly for a company that continuosly makes $100M per year NPAT is 4 times 5 years NPAT so $2,000M is my quick estimate.
> 
> $2 Bill Market cap so I'd pay roughly $20 a share.




Hi thx for that, yep assuming what you mentioned as well

But when you say "4 times 5 years NPAT" what do u mean exactly? like how did u coem up with those numbers?

thx again

MS


----------



## Realist

*Re: OIL AGAIN!*

Right, I am back and 3/4 p*ssed after watching the rugby bloodbath at the pub.

First of all was I correct?

What is your answer?


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> when you say "4 times 5 years NPAT" what do u mean exactly? like how did u coem up with those numbers?




I mean what I say. Find a company that has made profits the last 5 years. I wont buy anything else.

Add up those last 5 years profits. Then multiply by 4.

That is the approximate market cap. 

If they are growing fast and a truly great prospect add a little to the market cap.... If they aint growing much subtract a little.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> I mean what I say. Find a company that has made profits the last 5 years. I wont buy anything else.
> 
> Add up those last 5 years profits. Then multiply by 4.
> 
> That is the approximate market cap.
> 
> If they are growing fast and a truly great prospect add a little to the market cap.... If they aint growing much subtract a little.




oh ok, its just a very different thought, esp multiply by 4, seems out of nowhere that number

anyway mine conincidently same asnwers as your about $20 per share

Bascially the hidden assumption is the current risk free interest, about 5% return p.a. For example if u put $1 in the bank u will get 5c interest, if u put $20 in the bank you will get $1 interest per annum

So thats why for this example since each share can earn $1 per share in NPAT every year (assumption was "near certainty" or "risk free"), thus peopel will be willing to pay up to about $20 for each share (PE of 20 = 5% return)

If the the market was only $10, people will quickly buy it up to around $20, beacuse at $10 they are getting 10% return pa, more than 5% in the bank

Obiviously in the real ASX, there are risks (external and company specific) and peopel have to factor that in and so most likely pay under 20, maybe 18 or so, depending on the risks of course. *But essentially depends on the current risk free interest rate*, thats the key

also yeah if its EPS grows (or downgrades) people might be willing to pay more/less than $20 per share, depending how much its forecast growth next yr or 2 is, and the risks to those growth in EPS forecast etc

thx

MS


----------



## michael_selway

*Re: OIL AGAIN!*

If the current interest rate was 10% pa, the max ill pay for that stock will be about $10

However you will still be paying $20? which will earn u $1 pa, but if u put that $20 in the bank it can earn u $2 pa?

Since they have no growth and can sustian earnings, they will likely pay most of their EPS out as dividends

thx

MS


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> oh ok, its just a very different thought, esp multiply by 4, seems out of nowhere that number
> 
> anyway mine conincidently same asnwers as your about $20 per share






What I do is find a company that has made a profit the past 5 years with regular growth.  I don't use foward or projected earnings, I use facts not speculation.

Say the last 5 years NPAT are roughly:  900K 950K 1000K 1050K 1100K

Then I add up the previous 5 years NPAT - and multpily by 4.   That gives you a market cap based on an *average PER of 20 on the last 5 years earnings*.

You see a PER should never be judged on 1 years worth of earnings. One great year can make an average company look cheaper than it really is, and one great year may have been for some unknown and possibly sinister reason (some weird sale, cooking the books who knows).  If a company has 5 great years in a row well it would have been no fluke.

Now a PER of 20 is higher than the market average of around 15.  But your company is growing and solid - you pay a slight premium for that.  And 20 is an indication of the most you'd pay not an average price.

Where did I get this from? - Graham initially, who else, he always says look at 5 years earnings, 10 years if possible. Never just 1.

And PER's are hugely important of course in valuing a company.  

 

*And that brings me back to the original question. How much importance do you place on NTA or debt? 

PER's can be misleading in valuing a company, a company with huge assets and no debt is obviously worth alot more than one with huge debts and little assets - regardless of their PER's or earnings power.*


----------



## rederob

*Re: OIL AGAIN!*



> And that brings me back to the original question. How much importance do you place on NTA or debt?
> 
> PER's can be misleading in valuing a company, a company with huge assets and no debt is obviously worth alot more than one with huge debts and little assets - regardless of their PER's or earnings power.



And I suggest those are just the tip of the iceberg of fundamental analysis.
If it was that easy for every stock we would all be quite rich and not looking here for inspiration!


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> *And that brings me back to the original question. How much importance do you place on NTA or debt?
> 
> PER's can be misleading in valuing a company, a company with huge assets and no debt is obviously worth alot more than one with huge debts and little assets - regardless of their PER's or earnings power.*




Hi Realist

Thanks for your thoughts

*ok imo, EPS  and forecast EPS(DPS) the most important, the NTA and Debt are "risks" to the earnings amoung other risks ofcourse, so i have to adjust the PER (up or down) to reflect that*

Btw what do u think of the below



			
				michael_selway said:
			
		

> If the current interest rate was 10% pa, the max ill pay for that stock will be about $10
> 
> However you will still be paying $20? which will earn u $1 pa, but if u put that $20 in the bank it can earn u $2 pa?
> 
> Since they have no growth and can sustian earnings, they will likely pay most of their EPS out as dividends
> 
> thx
> 
> MS




ALso another scenario about future EPS forecast

Lets say last 5 yrs it earns 100mil NPAT, but next yr forecast is 200mil NPAT(with near 100% certianty), , and after that 300mil NPAT (with near 100% certianty), then after that steadies at 300mil NPAT indefinetly (with near 100% certianty).

Assuming same facts apply from ealier. whats the max would u be willing to pay for it now?

thx

MS


----------



## Realist

*Re: OIL AGAIN!*



			
				rederob said:
			
		

> If it was that easy for every stock we would all be quite rich and not looking here for inspiration!




It is easy. Fundamental analysis is a *get rich slow* scheme.

It takes decades before you can retire filthy rich, not days unfortunately.

So I've got plenty of time to wait and post tripe here.


----------



## Realist

*Re: OIL AGAIN!*



> Originally Posted by michael_selway
> If the current interest rate was 10% pa, the max ill pay for that stock will be about $10
> 
> However you will still be paying $20? which will earn u $1 pa, but if u put that $20 in the bank it can earn u $2 pa?
> 
> Since they have no growth and can sustian earnings, they will likely pay most of their EPS out as dividends
> 
> thx
> 
> MS




Yeah, the way I look at it houses are a good investment when interest rates are higher because houses become cheaper - people can only afford so much in mortgage payments, and by definition if someone can afford $1000 a week in mortgage payments they can borrow less when interest rates are higher.

Why buy a house though when you're paying high interest rates?  Because you are paying off your mortgage over 30 years and interest rates will in all likelihood come down, making your payments easier. You get a cheap house and the likelihood of easy payments in a few years.

So how do interest rates affect shares? Hmm negatively I would think, Graham would move more money into bonds and have less in shares - because bonds are safer. 

If you can get the same return from a term deposit as you can on shares then I'd take the term deposit any day - no risk!

So I agree with you I'd pay less for a company when interest rates are high.

How much less - well I'd adjust the 5 years times 4 to maybe 5 years times 3.5 even 3.

I have never invested when interest rates are high, I may find out soon though...    

When interest rates rise I'd have less in shares, more in the bank - simple as that. So because I own less shares I'd be more discerning about what shares I bought, your company where we agreed the most we'd pay is $20 I'd be tempted to pay say $15 at the most.

There are no foolproof sharemarket calculations that work in all cases - common sense always comes first over any ratio.


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Also another scenario about future EPS forecast
> 
> Lets say last 5 yrs it earns 100mil NPAT, but next yr forecast is 200mil NPAT(with near 100% certianty), , and after that 300mil NPAT (with near 100% certianty), then after that steadies at 300mil NPAT indefinetly (with near 100% certianty).
> 
> Assuming same facts apply from ealier. whats the max would u be willing to pay for it now?




$20 is what I would pay at the most!!     

I may miss out on a good deal of course.

But there is no such thing as a 100% certainty of a company tripling their NPAT in 2 years.

Projected earnings are as likely to be wrong as they are to be right.

Analysts can only predit so much, they can not predict that war breaks out between China and Taiwan and there is a trade freeze on China and your company (that relies on China) goes under. The shares die, you paid too much, I didn't. You lose more than me.

But lets say they were right and your company does triple its NPAT, people that buy that company make big profits amd I miss out, those people are highly likely to buy a similar company where the projections did not work out and they make a loss.  Over time I will do better being safe, than people who punt on projections of stellar growth.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> $20 is what I would pay at the most!!
> 
> I may miss out on a good deal of course.
> 
> But there is no such thing as a 100% certainty of a company tripling their NPAT in 2 years.
> 
> Projected earnings are as likely to be wrong as they are to be right.
> 
> Analysts can only predit so much, they can not predict that war breaks out between China and Taiwan and there is a trade freeze on China and your company (that relies on China) goes under. The shares die, you paid too much, I didn't. You lose more than me.
> 
> But lets say they were right and your company does triple its NPAT, people that buy that company make big profits amd I miss out, those people are highly likely to buy a similar company where the projections did not work out and they make a loss.  Over time I will do better being safe, than people who punt on projections of stellar growth.




Whats you say is true

But thats also how we differ i think, and yes in alot of cases u will miss a great growth company, like above if those EPS did in fact occur 300 mil indefinitely would mean 60 max eventually (we both agree on this). But what i would be willing to pay now maybe 40 (which is 1 yr in advance only)

Its true that its not 100% certaintly, but close to it, and one shodul give it some credit atleast, u woudl think?

*Basically, looking at past earnings isnt everything, current and future EPS is much more important*

For example, a merger or takover or acquistion is announced, why does price go up? Why are people willing to pay more now after the news? According to what you said above u will still pay the same based on the last 5 yrs NPAT*4 etc?

The reason is because the new M&A actiavity has changed to future, i.e. its should be now more EPS accreditive than before, ie forecast EPS increases due to synergies etc

What do u think about this M&A point, are u willling to pay more after the news?

thx again

MS


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> What do u think about this M&A point, are u willling to pay more after the news?




Hi Michael, the answer is No.

It does not matter to me what the reason is. My reason was just an example.

I pretty much ignore future earnings forecasts. Much like I ignore anyone's tips on the Melbourne Cup.

I look at facts, not forecasts.

For every great opportunity I will miss I can show you just as many sour opportunities I'd avoid.

My first aim when investing : don't lose!!

If you are paying $40 a share for a company that has made $100M NPAT in our example you are paying up to $25 too much = maybe 62% too much.

Not wise.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> Hi Michael, the answer is No.
> 
> It does not matter to me what the reason is. My reason was just an example.
> 
> I pretty much ignore future earnings forecasts. Much like I ignore anyone's tips on the Melbourne Cup.
> 
> I look at facts, not forecasts.
> 
> For every great opportunity I will miss I can show you just as many sour opportunities I'd avoid.
> 
> My first aim when investing : don't lose!!
> 
> If you are paying $40 a share for a company that has made $100M NPAT in our example you are paying up to $25 too much = maybe 62% too much.
> 
> Not wise.




*Return (1/pe) is one thing, Risk is the other (Time or future is the 3rd)*, so as long as risk is low in the above example, i would be willing to pay up to $60 if it was 100% certain. if 90% certainn 55 maybe, 80% certain 50 maybe etc, see where im getting at? Depends on what you (or the market) think the Risks (upside or downside) to the Return is in the future.

One shoudl look at more than just 1 yr forecast but atleast 3 imo, 5-10 is optimal. I think most brokers use 10.

Also your point about not looking at forecasts, fine. Thats a fair opiion in that regard

*But all i know that the general market looks at forecats for sure, and thsu M&A news will usualy mean a jump in prices to reflect the change in the future (forecast EPS). Imo its important to understand how and why the market reacts to news and annoucements.*

anyway thanks for sharing your ideas! its been great knowing   

thx

MS


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> Yeah, the way I look at it houses are a good investment when interest rates are higher because houses become cheaper - people can only afford so much in mortgage payments, and by definition if someone can afford $1000 a week in mortgage payments they can borrow less when interest rates are higher.
> 
> Why buy a house though when you're paying high interest rates?  Because you are paying off your mortgage over 30 years and interest rates will in all likelihood come down, making your payments easier. You get a cheap house and the likelihood of easy payments in a few years.
> 
> So how do interest rates affect shares? Hmm negatively I would think...



Exactly. You want low interest rates AFTER you take out the mortgage, not before.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> *Return (1/pe) is one thing, Risk is the other (Time or future is the 3rd)*, so as long as risk is low in the above example, i would be willing to pay up to $60 if it was 100% certain. if 90% certainn 55 maybe, 80% certain 50 maybe etc, see where im getting at? Depends on what you (or the market) think the Risks (upside or downside) to the Return is in the future.
> 
> One shoudl look at more than just 1 yr forecast but atleast 3 imo, 5-10 is optimal. I think most brokers use 10.
> 
> Also your point about not looking at forecasts, fine. Thats a fair opiion in that regard
> 
> *But all i know that the general market looks at forecats for sure, and thsu M&A news will usualy mean a jump in prices to reflect the change in the future (forecast EPS). Imo its important to understand how much and why the market reacts to news and annoucements.*
> 
> anyway thanks for sharing your ideas! its been great knowing
> 
> thx
> 
> MS




Hi Realist

Actually forgot one thing, instead of using M&A (positive news) shoudl have used a negative news example

E.g. in the question where it can earn 100mil NPAT indefiently at near 100% certainty and the other assumptions etc

whats happens if all of a sudden the company issues a profit downgrade?

"Due to a sudden downturn in sales we now expect the next FY NPAT to be 
around 50mil NPAT, but expect 50mil NPAT to be maintained from then on indefiently"

Woudl u still be willign to pay max $20 per share now?

My answer is no, because the future has changed ie forecast EPS has decreased significanlty, so need to revalue once again etc, price downwards of course

thx

MS


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> Hi Realist
> 
> Actually forgot one thing, instead of using M&A (positive news) shoudl have used a negative news example
> 
> E.g. in the question where it can earn 100mil NPAT indefiently at near 100% certainty and the other assumptions etc
> 
> whats happens if all of a sudden the company issues a profit downgrade?
> 
> "Due to a sudden downturn in sales we now expect the next FY NPAT to be
> around 50mil NPAT, but expect 50mil NPAT to be maintained from then on indefiently"
> 
> Woudl u still be willign to pay max $20 per share now?
> 
> My answer is no, because the future has changed ie forecast EPS has decreased significanlty, so need to revalue once again etc, price downwards of course
> 
> thx
> 
> MS




Ahh to easy.    

Before I had even read the newspaper that morning the downgrade was announced the share price would have dropped. Many others hear news before I do. Market efficiency means the share price will dive - probably more than it needed to.

The share price may be $12 now (depending on the severity of the downgrade).

So would I now buy the company?

Hell yes, it makes $100M NPAT consistently year after year, and I get it at a discount. I'm planning to own it for the next 20 years so now is a great time to buy.

(the exception is if the NPAT becomes a loss) - if $100M becomes $40M so be it. But as I said before I do not like losses.


----------



## Realist

*Re: OIL AGAIN!*



			
				Smurf1976 said:
			
		

> Exactly. You want low interest rates AFTER you take out the mortgage, not before.




Interest rates are variable. What is 6 months or even 5 years of high interest out of a 30 year loan? Not much.


----------



## michael_selway

*Re: OIL AGAIN!*



			
				Realist said:
			
		

> Ahh to easy.
> 
> Before I had even read the newspaper that morning the downgrade was announced the share price would have dropped. Many others hear news before I do. Market efficiency means the share price will dive - probably more than it needed to.
> 
> The share price may be $12 now (depending on the severity of the downgrade).
> 
> So would I now buy the company?
> 
> Hell yes, it makes $100M NPAT consistently year after year, and I get it at a discount. I'm planning to own it for the next 20 years so now is a great time to buy.
> 
> (the exception is if the NPAT becomes a loss) - if $100M becomes $40M so be it. But as I said before I do not like losses.




"Due to a sudden downturn in sales we now expect the next FY NPAT to be 
around 50mil NPAT, but expect 50mil NPAT to be maintained from then on indefiently"

Thats the seveirty of the downgrade, the max ill pay is $10 based on those forecast numbers and the risk assumtions

So if it falls from 20 to 15 and stays there, i stilll wont buy, still too expensive. If it fall sbelow 10 then yeah one say probably buy it once dust settles.

Doesnt matter that it earned 100mil last year, future has changed now. Its not making a loss but just much less NPAT now than before

thx

MS


----------



## Realist

*Re: OIL AGAIN!*



			
				michael_selway said:
			
		

> "Due to a sudden downturn in sales we now expect the next FY NPAT to be
> around 50mil NPAT, but expect 50mil NPAT to be maintained from then on indefiently"
> 
> Thats the seveirty of the downgrade, the max ill pay is $10 based on those forecast numbers and the risk assumtions
> 
> So if it falls from 20 to 15 and stays there, i stilll wont buy, still too expensive. If it fall sbelow 10 then yeah one say probably buy it once dust settles.
> 
> Doesnt matter that it earned 100mil last year, future has changed now. Its not making a loss but just much less NPAT now than before
> 
> thx
> 
> MS




Hi Michael,

Yes you, and the majority of investors look at future earnings and give it great importance, so you are more likely to pay alot for a company with great prospects, and you are not willing to buy a company with poor prospects. It is the way most people invest and I can see why.

But I am the exact opposite though.

I am not willing to pay too much for a company with great prospects because prospects are merely future predictions - they are not facts.
I am however willing to buy a 'great' company with poor prospects for a cheap price. Because I know companies evolve and change, and I am willing to hold for a long time. 

Neither is right or wrong as such. But I believe my strategy can get me a great company for a great price. A couple of years of low earnings is irrelevant if you got it cheap and hold for 30 years, and I also know that predictions and projections are often wrong, and market sentiment can swing to extremes, severely overvaluing a company that has good prospects, and severely undervaluing a company that has poor prospects. And I know companies evolve and change to remedy poor longterm prospects - Coke used to sell just sugary drinks, now they sell water and diet drinks.  

What shares have you bought recently out of interest?

the last couple I bought were CDO and PRG.  CDO released a poor outlook, PRG a good one.


----------



## scsl

*Re: OIL AGAIN!*

oil is up sharply tonight! it's about $76.70 at the moment...

seeing as august and september are the peak months for Gulf Coast hurricanes and with the Middle East situation probably worsening, maybe this could be the start of the next leg up?


----------



## YOUNG_TRADER

*Re: OIL AGAIN!*



			
				scsl said:
			
		

> oil is up sharply tonight! it's about $76.70 at the moment...
> 
> seeing as august and september are the peak months for Gulf Coast hurricanes and with the Middle East situation probably worsening, maybe this could be the start of the next leg up?




Unfortunately it would appear so,

I shudder to think what a hurricane will do to the Oil Price, $100 US? ? 

Oil will most likely hit the target of $100 US before Gold reaches $1000 US


----------



## scsl

*Re: OIL AGAIN!*



			
				YOUNG_TRADER said:
			
		

> Unfortunately it would appear so,
> 
> I shudder to think what a hurricane will do to the Oil Price, $100 US? ?
> 
> Oil will most likely hit the target of $100 US before Gold reaches $1000 US



YT, it seems pretty likely that oil will break $100 before gold reaches $1000. but having said that, the tensions in the Middle East and further global inflation worries could make gold run up as well...

just saw a news update that petrol in Australia could reach $1.80! boy is that gonna be painful!! which will lead to inflation staying high, particularly headline CPI inflation, and another rate rise before the year's out.


----------



## doctorj

*Re: OIL AGAIN!*

For those that haven't seen the news, BP announced today (or yesterday perhaps) that they will have to shut in the Prudhoe Bay oil field in Alaska after detecting corrosion in the pipeline away from the field.  It's not known how long it will take to fix; Credit Suisse engineers estimate anywhere from weeks to months on the optimistic side.  BP have said that production won't recommence until the company/regulators are satisfied the problem has been rectified.

Prudhoe Bay is responsible for about 8% of US oil production or 400k barrels a day.

My understanding is that BP previously determined that normal corrosion prevention maintanence didn't need to be done on the pipes as their xrays/ultrasounds indicated the pipe was in satisfactory condition and they simply flushed it with an anti corrosive agent.


----------



## Smurf1976

*Re: OIL AGAIN!*

With the shutdown of 400,000 bpd of production at Prudhoe Bay due to corroding pipes the overall supply situation just got worse.

US hurricane season is on the way too, so no surprise to see rising prices.

Also, I'm yet to be convinced that the reason for production falls in Saudi Arabia, which seem to have been getting worse for months now, is really because they can't find anyone to buy the oil. Can't find a way to produce it more likely IMO.  

Iran is also reported to be drawing down stocks to meet demand.


----------



## Smurf1976

*Re: OIL AGAIN!*

Looks like doctorj was posting the same thing as I was typing...


----------



## doctorj

*Re: OIL AGAIN!*

Do you know if the Saudi's hold, or held, significant stock piles of oil?

If they didn't I'd have expected production to reduce/prices to increase much more sharply if their some of wells had started pumping water.

I don't think we've come to the Saudis running out of oil just yet.


----------



## pacer

*Re: OIL AGAIN!*

So shouild iI buy or sell WPL....Hurricaine season and all......I dont Know where they base most of thier opperations so would like a bit more info.......?


----------



## michael_selway

*Re: OIL AGAIN!*



			
				pacer said:
			
		

> So shouild iI buy or sell WPL....Hurricaine season and all......I dont Know where they base most of thier opperations so would like a bit more info.......?




Smurf, do u think $40/barrel is likely?



> *Woodside boss predicts fair oil prices*
> Email Print Normal font Large font August 20, 2006 - 11:49AM
> 
> Advertisement
> AdvertisementWoodside Petroleum boss Don Voelte says world oil prices will return to reasonable levels of about $US40 a barrel, but it won't happen any time soon.
> 
> The chief executive of Australia's biggest independent oil and gas producer said demand for the resource, with prices soaring in recent months, plus disruptions to supply and world-wide tensions, would keep prices up probably until next year.
> 
> "I'd say at least for the rest of this year, probably into next, what you see is what you'll get," Mr Voelte told ABC TV.
> 
> "(But) I do predict oil to come back down I think in a reasonable level.
> 
> "I think the area we have to prepare for is about $US40 a barrel, somewhere in that range."
> 
> Crude oil prices rose to $US71.14 per barrel in New York on Friday, up $US1.08...




http://www.smh.com.au/news/Business...fair-oil-prices/2006/08/20/1156012399198.html
http://www.abc.net.au/insidebusiness/content/2006/s1719280.htm
http://www.abc.net.au/reslib/200608/r101818_311329.asx (Video)


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				doctorj said:
			
		

> Do you know if the Saudi's hold, or held, significant stock piles of oil?
> 
> If they didn't I'd have expected production to reduce/prices to increase much more sharply if their some of wells had started pumping water.
> 
> I don't think we've come to the Saudis running out of oil just yet.



I'm not certain as to actual capacity (70 million barrels comes to mind) but to my understanding the Saudi's do have substantial tank farms for storage.

It is quite possible that the actual production never reached the 9.6 mmbpd or so that they were "producing" 6 months ago. They could have just been drawing down stocks which would explain why production has dropped significantly in recent times (official line is they can't sell the oil).

Official data puts Saudi wells on average declining at 8% per year. They can maintain production only by constant drilling of new wells. The main concern is that many of these wells are being drilled into the same reservoirs as the depleting wells - more holes in the ground to get at the same oil. If those reservoirs were to undergo a spectacular decline (quite possible - it's happened using the same technology in Oman and Russia) then they simply couldn't maintain production. That's a big "if" however since the West hasn't had proper (uncensored) data since the 1970's on key Saudi oil fields.

As for water, officially 30% of the liquids extracted at Ghawar (largest Saudi oil field) are water. This used to be somewhat higher until they (presumably) closed the wells that were flowing very high amounts of water.

Water itself isn't a problem (though it can be - look at the corrosion in Alaska with their reported 75% water cut) - it's how much oil that comes up with it that matters. That said, when water starts coming up it's a bit like having blood come out of your body. You feel fine but it's a warning sign of trouble.


----------



## WaySolid

*Re: OIL AGAIN!*

Smurf what are your sources for your quoted data?

Official data has the Saudi oil wells going down at 8% a year? How official exactly?

Seeing as the Saudi's are very secretive and the chief oil minister continues to tell the world don't worry be happy for the next 50 years, I can't think the source is that official!

The Saudi's huge push into the promotion of local tourism as an industry and their appetite for gold speak much louder than their words for me.


----------



## DB008

*Re: OIL AGAIN!*

I heard/read somewhere that some of the wells in Saudi are on the way out as they have been pumping to much water into them to extract the oil. 
Then again, l just saw on the news that discovered a new oil field off the US. Who knows where the price is going? If l knew where the price was heading, l'd be rich.


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				WaySolid said:
			
		

> Smurf what are your sources for your quoted data?
> 
> Official data has the Saudi oil wells going down at 8% a year? How official exactly?
> 
> Seeing as the Saudi's are very secretive and the chief oil minister continues to tell the world don't worry be happy for the next 50 years, I can't think the source is that official!
> 
> The Saudi's huge push into the promotion of local tourism as an industry and their appetite for gold speak much louder than their words for me.



That is the official line from Saudi Aramco. That their wells (as opposed to fields) are declining at 8% per annum.

It does seem to be perfectly reasonable number. Practically any individual oil well that isn't reasonably new will have ongoing continuous decline and those in Saudi Arabia would logically be no exception.

That they have quite a number of active drilling rigs and, at best, flat production capacity (though actuall production has declined - supposedly because nobody will buy their oil) adds considerable weight to this. It's perfectly normal to be drilling additional production wells to offset decline and this appears to be what they are doing.

If their fields, as opposed to individual production wells, start declining at that rate _then_ it's time to panic.

Likewise if they stated their wells were not declining at all then that would be clearly not true unless Saudi wells are incredibly different to those everywhere else. Unlikley.


----------



## DB008

*Re: OIL AGAIN!*

http://www.msnbc.msn.com/id/14678206/from/RS.1/


----------



## mime

*Re: OIL AGAIN!*

About that big find in the gulf. It will take years to get the feild running and make little change to the current demand for oil.


----------



## Smurf1976

*Re: OIL AGAIN!*



			
				DB008 said:
			
		

> IThen again, l just saw on the news that discovered a new oil field off the US. Who knows where the price is going? If l knew where the price was heading, l'd be rich.



Proper figures aren't available yet and won't be for some time. But when initial estimates show that the biggest oil discovery in years might ultimately produce enough oil to run the world for 5 WEEKS then you start to understand what the problem is...

It is a big discovery only in the context of disastrous discovery results in recent years. Based on what is announced so far, it's pretty much irrelevant compared to any real, major oilfield. Small even compared to Alaska and less than 2% of all oil discovered in the US to date. That this is the best the industry has done for a long time is the very nature of the oil problem...

It's still good news however. But it doesn't materially change the oil supply situation unless it is very much larger than initial estimates show. Producing less than 0.5% of world supply for 20 years isn't going to change everything although obviously it's good news for those involved with it.


----------



## Smurf1976

*Re: OIL AGAIN!*

Too late to edit...

Those figures are for the lower end of the estimated size, 3 billion barrels of liquids (oil and condensate). The upper end is 15 billion barrels - about what the world uses in 6 months. Better but still not something that will change the situation radically.


----------



## scsl

*Re: OIL AGAIN!*

Crude for October delivery is currently at about $64. Technically, I think it's oversold and a bounce from the support area of $62.50-$64.50 towards the $70 mark is possible. However, after that, fundamentals such as OPEC lowering its demand forecast again and a warmer than normal winter could see oil prices head below $60.

IMHO, the longer term will see oil go higher than its previous highs and head towards $90-100.

Any charting analysis or fundamental viewpoints would really be appreciated.


----------



## Magdoran

*Re: OIL AGAIN!*



			
				scsl said:
			
		

> Crude for October delivery is currently at about $64. Technically, I think it's oversold and a bounce from the support area of $62.50-$64.50 towards the $70 mark is possible. However, after that, fundamentals such as OPEC lowering its demand forecast again and a warmer than normal winter could see oil prices head below $60.
> 
> IMHO, the longer term will see oil go higher than its previous highs and head towards $90-100.
> 
> Any charting analysis or fundamental viewpoints would really be appreciated.



Tend to agree its found support.  The question is will it find a lower high and test down further, or find a higher low and try to resume bullishly?

On the one hand it looks pretty bearish, but when you look at it in the wider context, crude tends to correct hard, then base, then trend up… the problem is the magnitude and timing…


----------



## scsl

*Re: OIL AGAIN!*

This is an excerpt from a market (oil) report...



> In contrast, Morgan Stanley technical analyst Mark Newton said he thinks conditions are right for crude-oil prices to enjoy a bounce that could take prices back above $70 a barrel.
> 
> "The recent drop in crude oil ... to oversold territory over the last few months has reached a strong area of support that creates an attractive near-term buying opportunity," Newton said. "Factors such as momentum, sentiment and intermediate-term cycles all suggest that this pullback is buyable from a risk-vs.-reward perspective."
> 
> He said a rebound could reach initial resistance at the $68 to $70 a barrel level, while intermediate-term resistance sits in the mid-$70s.


----------



## mit

*Re: OIL AGAIN!*

On the other hand try

http://articles.moneycentral.msn.com/Investing/CNBC/Dispatch/LowGasolineMaybe.aspx



> If everything falls into place, crude could drop perhaps even to $15 a barrel, Verleger says. And then, he says, you would see gasoline at $1.15. Here's how that could occur.
> 
> * Oil and gasoline inventories continue to grow. They've been building up all over the world as users and refiners have scrambled to ensure enough supply in case, say, the Strait of Hormuz in the Persian Gulf is shut down. Tankers from Iran, Saudi Arabia, Kuwait, Iraq and other Gulf oil producing countries must pass through the strait to bring crude oil to the rest of the world.
> 
> * The weather cooperates. On top of a hurricane with few threats to the oil and gas fields in the Gulf of Mexico, weather cooperation means a warm winter like the winter of 2005-2006. That would drop demand for heating oil, a key heating source especially on the East Coast and in Europe. And that would create excess supplies of crude that refiners could use to make gasoline.
> 
> * Tensions in the Middle East continue to ease. This assumes conflicts between Israel and Hezbollah in Lebanon tail off and that Iran and the rest of the world come to an agreement over Iran's nuclear program. (Admittedly, the latter is a reason why the scenario could fall apart.)
> 
> * Drivers take the bus. There is anecdotal evidence that U.S. drivers are finding other ways to get around with gas prices above $3. The big question is if they will climb back behind the wheel as prices drop.
> 
> 
> Those four pieces are just the start. Beutel thinks two more catalysts are starting to emerge.
> 
> 1. At current prices, Beutel says, "you can drill a lot of dry holes before you give up on a field." And so, drawn by the potentially huge profits, energy companies are finally starting to make plans to drill for more oil.
> 
> 2. Beutel thinks buyers are already demanding more fuel-efficient vehicles. "They're not buying SUVs," he says.




I was going to buy oil at around the current prices but the trend continues downward. Globally, I think it will be a problem if oil drops too low in price. High prices have spured governments to find alternatives. I think it currently early enough to give us time to convert to a new economy while there is plenty of oil. 

With low oil prices consumption will go up and no doubt our Government will go back to sleep as far as oil is concerned and the next price rise may be caused by peak oil.

MIT


----------



## Halba

*Re: OIL AGAIN!*

$15 oil yeh right. still not too many commercialised discoveries and a lot of risks in the world still. also gulf of mexico still struggling from last years hurricanes. this hurricane season not over yet either(don't count your chickens before they hatch). Maybe likely $45oil/bbl possible, where it was before the run started. US winter coming also, and with the trend in weather extremes, likely to get pretty cold out there. 

Sustainable US$45 oil will result in some quite big economic expansions for many years, and still profitable for the oil producers. IT will lower costs for mining firms like BHP too.


----------



## Knobby22

*Re: OIL AGAIN!*

Agree 100%, Halba
Lower oil is good for the mining companies.
$45 is the best we can hope for.


----------



## nizar

*Re: OIL AGAIN!*



			
				Knobby22 said:
			
		

> Agree 100%, Halba
> Lower oil is good for the mining companies.
> $45 is the best we can hope for.




oil price wont stay below us$60/barrel for long as OPEC will turn off the taps


----------



## scsl

*Re: OIL AGAIN!*

Oil is now at $59.03!    It's even gone below $59. This big fall from above $63 is on news that there is ample supply going around.

Gold is also down considerably, holding just above $582. I'm not sure what's happening with base metals prices but these falls in oil and gold could signal a dark, dark October...


----------



## wayneL

*Re: OIL AGAIN!*



			
				scsl said:
			
		

> Oil is now at $59.03!    It's even gone below $59. This big fall from above $63 is on news that there is ample supply going around.
> 
> Gold is also down considerably, holding just above $582. I'm not sure what's happening with base metals prices but these falls in oil and gold could signal a dark, dark October...




Is that cash? I've got Nov futs closing at $58.675.

Must be less than that on cash.

Commods in freefall!


----------



## wayneL

*Re: OIL AGAIN!*



			
				scsl said:
			
		

> I'm not sure what's happening with base metals prices but these falls in oil and gold could signal a dark, dark October...




I don't follow nickel/zinc etc, but copper took a > 10c per pound hit

Chart:

http://charts.futuresource.com/cis/...=true&STUDY=VOI&STUDY0=1&STUDY1=1&random=9061


----------



## Shroomos

*Re: OIL AGAIN!*

can anyone recommend a good site to keep posted on current commodities prices, including oil? regards, shroomos


----------



## eMark

*Re: OIL AGAIN!*



			
				Shroomos said:
			
		

> can anyone recommend a good site to keep posted on current commodities prices, including oil? regards, shroomos




You should find these helpful

http://www.bloomberg.com/energy/

http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/commodities/default.stm

http://www.thebulliondesk.com/

eMark


----------



## vishaldon

*US cold takes oil soaring high above $60 a barrel*

Oil traded yesterday above $60 a barrel after news from OPEC said that it may be cutting oil supply by 1 million barrel a day from actual production with the cold US weather demanding more fuel to keep the heating going in the winter. 

With the OPEC cutting the supply the prices will rise again since th cut is coming at a time when demand is high , but one has to keep a watch whether the cut will be from the actual production or not. 

Oil has been going up since last week when some oil refineries had to shut down few units for maintenance , reducing crude oil consumption , this tren is carried forward by another possible oil supply cut by OPEC very soon. I feel this is a crucial time for people as OPEC has been quite lucky in keeping everyone's interest and if it happens the way OPEc wants then looks like the whole world is going to dance on the finger tips of OPEC .....


----------



## RichKid

*Re: OIL AGAIN!*

I've been tracking oil for a while now and as you can see from some of my older charts there were times when I had no idea at all about what it was doing!! The current charts are of oil using Elliott Wave. fyi the major wave 3 terminted just below 2.618 x Height of the major wave 1.

The monthly chart shows some nice trendlines and channels, that blue one intersects current price activity near the 0.382 retracement which is a typical wave-3 retracement level (also note the flip/flop congestion/support area circa $54). This chart was one of the easier ones to label for someone like me who's starting out in EW, so most traditional Elliotticians would have similar labelling imo.

I have an alternative count on this for the current decline, both counts show this first leg as a major wave A- the primary count of this decline shows oil correcting in a wave 4 (usually retraces to the level of the prior degree wave-4 per EW theory). 

The alternative count (marked a-b-c) suggests oil has completed this major wave A and is about to bounce into the wave B, which typically retraces 50% of the wave A. I may have to amend the last fortnight's very minor count.

Would be happy to see more of the chartists on ASF discuss this market from their particular field of TA.  I still use traditional TA and price/volume analysis, I believe I have gone beyond being an absolute beginner but I'm very much a learner still so will be happy to study with others. For some great EW charting see Wavepicker and MarketWaves charts elsewhere on ASF.

Magdoran has some charts in the Improving Chart Analysis thread so you can see an accomplished trader at work there, his time studies add that extra dimension to the charts and are well worth a look imo. 

Wayne, are you trading the swings in this market?


----------



## wavepicker

*Re: OIL AGAIN!*



			
				RichKid said:
			
		

> I've been tracking oil for a while now and as you can see from some of my older charts there were times when I had no idea at all about what it was doing!! The current charts are of oil using Elliott Wave. fyi the major wave 3 terminted just below 2.618 x Height of the major wave 1.
> 
> The monthly chart shows some nice trendlines and channels, that blue one intersects current price activity near the 0.382 retracement which is a typical wave-3 retracement level (also note the flip/flop congestion/support area circa $54). This chart was one of the easier ones to label for someone like me who's starting out in EW, so most traditional Elliotticians would have similar labelling imo.
> 
> I have an alternative count on this for the current decline, both counts show this first leg as a major wave A- the primary count of this decline shows oil correcting in a wave 4 (usually retraces to the level of the prior degree wave-4 per EW theory).
> 
> The alternative count (marked a-b-c) suggests oil has completed this major wave A and is about to bounce into the wave B, which typically retraces 50% of the wave A. I may have to amend the last fortnight's very minor count.
> 
> Would be happy to see more of the chartists on ASF discuss this market from their particular field of TA.  I still use traditional TA and price/volume analysis, I believe I have gone beyond being an absolute beginner but I'm very much a learner still so will be happy to study with others. For some great EW charting see Wavepicker and MarketWaves charts elsewhere on ASF.
> 
> Magdoran has some charts in the Improving Chart Analysis thread so you can see an accomplished trader at work there, his time studies add that extra dimension to the charts and are well worth a look imo.
> 
> Wayne, are you trading the swings in this market?





Some great work there Richkid, 

thanks for the charts, lets see if we can get some evidence of a rally starting to build up after this probable impulse down. Gold looks like it's had a bit of a prop up, so maybe oil might not be far behind.

Cheers


----------



## RichKid

*Re: OIL AGAIN!*



			
				wavepicker said:
			
		

> Some great work there Richkid,
> 
> thanks for the charts, lets see if we can get some evidence of a rally starting to build up after this probable impulse down. Gold looks like it's had a bit of a prop up, so maybe oil might not be far behind.
> 
> Cheers




Thanks! That's the crucial issue now, this impulse has clearly slowed down; but, as expected, if this is a w4, I'd suggest any further w5 lower will be short considering the extended nature of w3.

NB- Typo in original post, that 0.382 retracement level was in relation to w4, accidentally wrote w3! So w4 should retrace about 38.2% of w3 (vertical price displacement). Further evidence of this leg down being completed is that the midpoint of w3 is smack bang at the 50% level, note however that a truncated w5 could result in this measure remaining intact.


----------



## patanx

*Re: OIL AGAIN!*

Anticipated production cut by OPEC later this week, in addition to fast-approaching U.S. winter season sends crude higher.

Oil prices rose for a fourth straight session Tuesday, topping $60 a barrel as OPEC prepared to agree a production cut and the United States braced for winter.

U.S. light crude for November delivery rose 42 cents to $60.36 a barrel, adding to Monday's $1.37 rally and extending a recovery from a 2006 low of $57.22 touched last week. Brent crude added 21 cents to $61.87 a barrel.

The OPEC cut and winter fears are limiting the downside but at the same time, the upside is limited by the high crude inventories in the United States. In the short term, the market is going to find it hard to go up and equally hard to go down.

Ministers from the Organization of the Petroleum Exporting Countries are due to meet on Thursday in Qatar to finalize a deal to cut one million barrels from daily output to stem oil's rapid slide since a summer peak of $78.40 a barrel.

However, the question remains whether the group, which supplies a third of the world's oil, will cut from its nominal quotas or from current output. Wrangling over market share has delayed agreement on the curbs, first mooted more than two weeks ago.

Several members, including OPEC's largest producer Saudi Arabia, have been producing above their official quotas and have already trimmed production, while others like Indonesia pump far less than their limits and are loathe to cede market share.

The telling thing is that the big boys like Saudi Arabia have yet to say anything and the only noises are coming from those who are producing below quota.

Here you'll find a site with realtime information for free (registration needed and then go to the "Trade now!" section)


----------



## vishaldon

*Crude Oil price rises OPEC happy*

The prices of the crude oil rise in the US market as the members of the OPEC about to meet tomorrow in Qatar to discuss on the same issue that is weather to cut oil production or to continue with the same output. OPEC had already taken the decision of cutting the production but that was done before the prices were rise. So the market is waiting for tomorrow decision taken by the members. This group has decided to cut production by 3.6 % of the total OPEC production. Organization for Petroleum Exporting Countries  that pumps out about 40 % of world oil output. A small reduction in the output might effect to the greater extent to the US market. 
OPEC might be happy with the rise in prices and the decision taken by this members is more likely to be positive to the society


----------



## RichKid

*Re: Crude Oil price rises OPEC happy*



			
				vishaldon said:
			
		

> The prices of the crude oil rise in the US market as the members of the OPEC about to meet tomorrow in Qatar to discuss on the same issue that is weather to cut oil production or to continue with the same output. OPEC had already taken the decision of cutting the production but that was done before the prices were rise. So the market is waiting for tomorrow decision taken by the members. This group has decided to cut production by 3.6 % of the total OPEC production. Organization for Petroleum Exporting Countries  that pumps out about 40 % of world oil output. A small reduction in the output might effect to the greater extent to the US market.
> OPEC might be happy with the rise in prices and the decision taken by this members is more likely to be positive to the society




Vishaldon,
I've pm'd you about this before, please read the forum code of conduct and posting guidelines and post in the relevant thread, you can't create a new thread for every little news item that you publish elsewhere. I have now merged your post with the oil thread as you can see. I won't be issuing any further warnings, please browse through the forums to get a feel for how and what to post.

In relation to the oil chart- we may be completing an ending diagonal here on the dailies so look out for a quick bounce, I may have labelled this prematurely.


----------



## phoenixrising

*Re: OIL AGAIN!*

Talk around the Sydney Traders Expo last weekend (beside a lot of salesmanship) was that as soon as US Congressional elections are done oil will rebound, ie  the Whitehouse has a no high oil price word out to the world.

Interesting to see what happens post elections


----------



## Sodapop

*Re: OIL AGAIN!*

Not to mention that the Northern Winter is on the way - and if it is anything remotely  like last year - demand (for heating oil) will be very high (and early signs are not good - for a mild winter)... I don't beleive this blip will last long...

 :hide:


----------



## vishaldon

*OPEC DECIDED NOVEMBER BEWARE*

After dropping to the year low on Oct 20th drop by .9% reaching to  $57 a barrel oil prices got a little charged up in New York. The Organization for Petroleum Exporting Countries to cut production larger than expected. Oil prices gained sooner after OPEC meeting on Oct 19, agreement to cut output has been made because of the speculation agreement by the members such as Saudi Arabia and Kuwait  wont be enough to pare global inventories as the US Crude supplies are 14% more than the five years average. Saudi Arabia also intimated Japan refinery to expect lower shipment in November. Crude oil for December delivery fell as much as $1.07, or 1.8 percent, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. 

OPEC agreed to cut output to 26.3m barrels a day, if fully implemented, on November 1st. Saudi Arabia, the world’s biggest oil producer, warned a further production cut of 0.5m b/d could be made in December.

The U.S. gasoline pump price fell eight cents in the past two weeks to $2.20 a gallon, the lowest this year. Prices for regular gasoline have declined 82.5 cents from a record average $3.025 a gallon. Heating oil for November fell as much as 1.85 cents, or 1.1 percent, to $1.6615 a gallon in after-hours trading on the New York Mercantile Exchange. It was at $1.6796 a gallon


----------



## thestorm

*Re: OIL AGAIN!*



			
				phoenixrising said:
			
		

> Talk around the Sydney Traders Expo last weekend (beside a lot of salesmanship) was that as soon as US Congressional elections are done oil will rebound, ie  the Whitehouse has a no high oil price word out to the world.
> 
> Interesting to see what happens post elections




Yeah a lot of highly respected people are saying that the US Govt is manipulating both the oil and Gold price so they can stay in power. Very interesting times ahead after the elections especially if the Republicans lose control of Congress.


----------



## thestorm

*Re: OPEC DECIDED NOVEMBER BEWARE*



			
				vishaldon said:
			
		

> After dropping to the year low on Oct 20th drop by .9% reaching to  $57 a barrel oil prices got a little charged up in New York. The Organization for Petroleum Exporting Countries to cut production larger than expected. Oil prices gained sooner after OPEC meeting on Oct 19, agreement to cut output has been made because of the speculation agreement by the members such as Saudi Arabia and Kuwait  wont be enough to pare global inventories as the US Crude supplies are 14% more than the five years average. Saudi Arabia also intimated Japan refinery to expect lower shipment in November. Crude oil for December delivery fell as much as $1.07, or 1.8 percent, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
> 
> OPEC agreed to cut output to 26.3m barrels a day, if fully implemented, on November 1st. Saudi Arabia, the world’s biggest oil producer, warned a further production cut of 0.5m b/d could be made in December.
> 
> The U.S. gasoline pump price fell eight cents in the past two weeks to $2.20 a gallon, the lowest this year. Prices for regular gasoline have declined 82.5 cents from a record average $3.025 a gallon. Heating oil for November fell as much as 1.85 cents, or 1.1 percent, to $1.6615 a gallon in after-hours trading on the New York Mercantile Exchange. It was at $1.6796 a gallon




Read my lips. M.A.N.I.P.U.L.A.T.I.O.N


----------



## MalteseBull

*Re: OIL AGAIN!*

Up 3% over night...should see it to $70 this time:

Oil prices leapt more than three per cent to over $US61 on Wednesday after other OPEC members followed Saudi Arabia's lead in enforcing output cuts and US fuel stocks unexpectedly fell.

Prices also drew strength from news of fresh strife in Nigeria, where militant unrest has shut in more than a quarter of the OPEC member's production capacity.

US light crude settled up $2.05, or 3.45 per cent, to $US61.40 a barrel, the biggest one-day percentage gain since March 17. London Brent was $US2.19 higher at $US62.05 a barrel.

US crude had already risen 54 US cents on Tuesday after Abu Dhabi's state oil firm told major customers it would cut crude exports by about five per cent in November.

On Wednesday, an Iranian official said Iran had also informed customers it was cutting supplies by 176,000 barrels per day (bpd) in November.

Leading OPEC producer Saudi Arabia, which is shouldering the greatest part of a 1.2 million bpd production cut agreed last week, had told clients earlier this week it would reduce November supplies.

A Nigerian official said its national oil company would maintain a five per cent output cut in November after a voluntary 5 per cent cut to October supplies.

Nigeria's production has also been disrupted by militant attacks and on Wednesday oil company sources said villagers had invaded four pumping stations in Nigeria's southern Delta.

It was not immediately clear how much impact the invasion had on oil supplies.

Even without OPEC supply curbs, US oil imports fell last week, causing US crude inventories to fall by 3.3 million barrels, according to US government data released on Wednesday, above analyst expectations.

At the same time, distillate stocks, including heating oil, fell by 1.4 million barrels, compared with the 1.1 million barrel decline forecast.

Gasoline inventories, which had been expected to decrease by 600,000 barrels, dropped by 2.8 million barrels.

Doubts OPEC would abide by its agreement helped to push US crude down to $US56.55 a barrel last week, the lowest level this year.

Some analysts still say OPEC has yet to prove its determination, but others said the producer group had gained experience in how to stave off any price collapse that it would now put to good use.

"They have learnt a considerable amount in the last few years about micro-managing the market," said John Waterlow of Wood Mackenzie consultancy.

OPEC's success in shoring up the market could also depend on the weather.

Temperatures in the US Northeast, the biggest oil consuming region in the world, will be colder than usual and higher heating demand was expected over the next five days, US based private forecaster Meteorlogix said on Tuesday.

Private WSI Corp on Monday predicted warmer-than-normal Northeast temperatures in November, but said they would be followed by cooler weather in December and January.
-------------------------------------------

good time to accumulate on Oil stocks:

WPL, OSH, MOS, TAP, BKP


----------



## scsl

*Re: OIL AGAIN!*

I'm starting to feel as though the time is right to be buying oil stocks again. The oil price is holding above $60 and continuing to rise, and with demand set to increase as the US encounters cold weather, I think stocks like WPL and OSH will come into favour again. Whether or not OPEC decides to further cut oil production will not have a big an effect as the demand that is traditionally stronger in the coming months. 

I got this from Bloomberg, which gives the level at which a rally may gain support:


> January oil futures have traded between $57.80 and $63.21 this month. *The contract may need to push through $65.60 before investors gain confidence a rally is under way*, Waggoner said.



I'm bullish on oil but I'll probably wait and see where the oil price moves in the next week or two before jumping on WPL and OSH. (I don't own them atm but am looking to buy their shares and CFDs.)


----------



## scsl

*Re: OIL AGAIN!*

Oil's back up again, having dipped to about $60.70 on stock buildup and warmer weather in the US. The rise in the last three days is largely due to OPEC cutting production. Rises in the oil price are detrimental to the economy but (as sadistic as it sounds) we really need it to rise and rise noticeably before the likes of BHP, WPL, OSH etc can 'get going' again. 

I may have prematurely gone long on OSH (CFD position opened on Dec 4) but I still hold (although it's a sizeable paper loss atm) and am confident of OSH heading back up again after dropping to $3.10. 

Any technical or fundamental thoughts on oil or OSH? Thanks in advance.


----------



## Kauri

*Re: OIL AGAIN!*



> *Storm dumps ice and rain on US*
> 
> A massive storm front has blanketed much of the United States, resulting in freezing rain, snow, sleet, flash floods and at least one tornado.
> 
> At least 13 people have been killed in accidents on slick roads.
> 
> The ice, wind and snow has brought down trees, traffic signals and power lines.
> 
> It has also blocked roads and forced the cancellation of hundreds of flights.




I think the US has a RDO on monday, but I wonder if this will move the POO.


----------



## wayneL

*Re: OIL AGAIN!*



			
				Kauri said:
			
		

> I think the US has a RDO on monday, but I wonder if this will move the POO.




It still traded electronically... moved up a tad, but nothing out of the ordinary and has since moved back down.

One storm does not a winter make. (with apologies to Aristotle)


----------



## TheRage

*Re: OIL AGAIN!*

With the price of oil so cheap I was wondering if anyone else viewed the current Sp movement in all the oilers as an opportunity. I haven't been able to download and crude oil charts and was wondering if anyone could post one. I realise oil is at a 18month low but wondered when it could go up again. Any thoughts from the Techies. Also I am curious why all the forecasted earnings data for the oils over the next few years is progressively declining. Is this factoring in future price movements of crude oil or drying up of reserves. Two good examples of this are Santos (STO) and Tap Oil (TAP).


----------



## mime

*Re: OIL AGAIN!*

I would also love to know if oil is a good buy now. All those peak oil sites think it will start peaking in 2007. Any thoughts?


----------



## annalivia

*Re: OIL AGAIN!*



			
				mime said:
			
		

> I would also love to know if oil is a good buy now. All those peak oil sites think it will start peaking in 2007. Any thoughts?




Oil markets had built in a substantial risk premium of around US$10-$15 a barrel into prices during 2006, based on potential supply interruptions from both the US hurricane season and the Israeli-Lebanese war. Contrary to the fears of the market, both events were fizzers and had virtually no impact on crude oil supplies. In my view this premium has now been completely unwound, despite significant supply risks remaining.

"In the event of heightened geopolitical tensions, oil importing countries such as China and Japan will pay up for energy security."

In my view, it is essential that investors take a step back and look at the broader picture. That picture shows the world consuming oil at a much faster rate than it is replacing it. With oil consumption running at around 85 million barrels a day, annual consumption is now over 31 billion barrels of oil! Where are the new fields to sustain such consumption, when these days a find in the vicinity of a couple of hundred million barrels is noteworthy?

I believe consumption in China and India will continue to increase during 2007, helping to offset any US based consumption slowdown.

The truth is that oil companies have already found most of the 'easy oil' available in the world over the past century. While there may be vast reserves left, the extraction of this remaining oil will almost certainly be more challenging from a technical point of view and involve a higher cost of extraction and production.

As a result, the bottom line is that higher prices will be needed to justify commercial development of these new fields. Either way, world oil markets must face the harsh reality of higher prices for the oil that we have now and even higher prices to develop the more costly and more inaccessible fields of the future.

annalivia


----------



## Wysiwyg

*Re: OIL AGAIN!*

Hello annalivia....Could you tell me if the VIOZ forum has recently opened, like at the end of last year? :beklopptlease and thanks.


----------



## wayneL

*Re: OIL AGAIN!*



			
				mime said:
			
		

> I would also love to know if oil is a good buy now.




It is getting better by the minute.

I wouldn't mind betting we see crude prices in the hi 40's before the weekend.


----------



## annalivia

*Re: OIL AGAIN!*



			
				Wysiwyg said:
			
		

> Hello annalivia....Could you tell me if the VIOZ forum has recently opened, like at the end of last year? :beklopptlease and thanks.




Wysiwyg,

I have just started the forum a few weeks ago. Not many posts there now but I'm trying to ramp it up and get a few more posts going. Feel free to join and post any questions you like.

annalivia


----------



## comptec

*Re: OIL AGAIN!*



			
				mime said:
			
		

> I would also love to know if oil is a good buy now. All those peak oil sites think it will start peaking in 2007. Any thoughts?




Take a read at this: http://energyandcapital.com/reports/TruthAboutOil.pdf

Any truth in that report? What are your thoughts?

Btw, can anyone name me a few OIL stock that is anywhere near the $1 mark?


----------



## Sean K

*Re: OIL AGAIN!*



			
				comptec said:
			
		

> Btw, can anyone name me a few OIL stock that is anywhere near the $1 mark?



BPT is at 1.24, off highs with many many projects and maybe a long term good stock. Recently made a large acquisition (Delhi) which will turn it into one of the top, if not the top, mid tier producer - if that makes sence...

I have held it in the past but sold out when oil went pear.


----------



## Sean K

*Re: OIL AGAIN!*

Saudi have said they're not going to reduce production to prop up the POO. OPEC not happy....Oil holders not happy....4WD drivers may become happy.


----------



## chops_a_must

*Re: OIL AGAIN!*



			
				kennas said:
			
		

> 4WD drivers may become happy.



And that's something none of us deserve to see...


----------



## annalivia

*Re: OIL AGAIN!*



			
				comptec said:
			
		

> Take a read at this: http://energyandcapital.com/reports/TruthAboutOil.pdf
> 
> Any truth in that report? What are your thoughts?
> 
> Btw, can anyone name me a few OIL stock that is anywhere near the $1 mark?




I think this article is right on the money.

Something else to ponder.

Commodity guru Jim Rogers, who began spreading the word of an impending bull market in all things commodity related back in 1999 states in relation to oil..........
 "I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over $100. It will go over $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen.''

annalivia


----------



## Knobby22

*Re: OIL AGAIN!*

Amu, Comptec.


----------



## Wysiwyg

*Re: OIL AGAIN!*

The large expenditure on E&D has yet to catch up with demand. Motorists have been eased into future pricing at the pump. Does a better standard of living create more demand? Yes. More plane trips, more cars/trucks, more factories, more power stations.


----------



## Bush Trader

*Re: OIL AGAIN!*

Here's something of interest.  Pres Bush probably has this chart on his wall at home.

Cheers


----------



## Wysiwyg

*Re: OIL AGAIN!*



			
				Bush Trader said:
			
		

> Here's something of interest.  Pres Bush probably has this chart on his wall at home.
> 
> Cheers




Sorry to tell you but your graph is showing 0 euros for oil at one stage & 150 euros at another.


----------



## fleathedog

*Re: OIL AGAIN!*

Hi guys and gals

I am thinking now is reasonably good time to get into oil and gas stocks given the current selloff. 

I can't be bothered going through what I went through with the minerals co's trying to interpret all that technical data with the oilies so am looking for a conservative fund of large multinational oil and gas stocks.

I have had trouble so far so would appreciate any ideas.

Thanks!


----------



## Wysiwyg

*Re: OIL AGAIN!*

For those interested...It is obvious that oil prior to 2004 had ventured above $30 (average) 3 times.So I can only assume that we will NOT see the $70 +  again and possibly a $40 to $50 range soon.I think the PEAK oil scenarios may apply to some fields but others are being discovered to  keep the worlds machinery turning.Bags less than $50 by April.

Annual Average 
Crude Oil  Prices 
1946-Present 
  U.S. Average 
(in $/bbl.) 
Year Average/ Nominal Inflation Adjusted  
1946 $1.63 $16.68  
1947 $2.16 $19.60  
1948 $2.77 $23.38  
1949 $2.77 $23.61  
1950 $2.77 $23.36  
1951 $2.77 $21.65  
1952 $2.77 $21.17  
1953 $2.92 $22.10  
1954 $2.99 $22.59  
1955 $2.93 $22.17  
1956 $2.94 $21.96  
1957 $3.00 $22.66  
1958 $3.01 $21.09  
1959 $3.00 $20.88  
1960 $2.91 $19.98  
1961 $2.85 $19.35  
1962 $2.85 $19.12  
1963 $3.00 $19.29  
1964 $2.88 $19.63  
1965 $3.01 $19.37  
1966 $3.10 $19.38  
1967 $3.12 $18.98  
1968 $3.18 $18.52  
1969 $3.32 $18.37  
1970 $3.39 $17.72  
1971 $3.60 $18.04  
1972 $3.60 $17.47  
1973 $4.75 $21.53  
1974 $9.35 $38.42  
1975 $7.67 $46.01  
1976 $13.10 $46.72  
1977 $14.40 $48.19  
1978 $14.95 $46.53  
1979 $25.10 $69.51  
1980 $37.42 $92.26  
1981 $35.75 $79.89  
1982 $31.83 $66.97  
1983 $29.08 $59.26  
1984 $28.75 $56.17  
1985 $26.92 $50.77  
1986 $14.44 $26.72  
1987 $17.75 $31.69  
1988 $14.87 $25.55  
1989 $18.33 $29.99  
1990 $23.19 $35.91  
1991 $20.20 $30.10  
1992 $19.25 $27.84  
1993 $16.75 $23.54  
1994 $15.66 $21.43  
1995 $16.75 $22.31  
1996 $20.46 $26.45  
1997 $18.64 $23.57  
1998 $11.91 $14.83  
1999 $16.56 $20.12  
2000 $27.39 $32.26  
2001 $23.00 $26.37  
2002 $22.81 $25.71  
2003 $27.69 $30.55  
2004 $37.66 $40.42  
2005 $50.04 $51.94  
2006 $60.40  $60.78  
Source US DOE/ www.economagic.com and


----------



## chops_a_must

*Re: OIL AGAIN!*

The problem is from what I hear, is that cost of production on average, is now at about $40 per barrel. Is this true?


----------



## Wysiwyg

*Re: OIL AGAIN!*



			
				chops_a_must said:
			
		

> The problem is from what I hear, is that cost of production on average, is now at about $40 per barrel. Is this true?





Do not know mate....maybe the answer is in your signature.


----------



## Bush Trader

*Re: OIL AGAIN!*



			
				Wysiwyg said:
			
		

> Sorry to tell you but your graph is showing 0 euros for oil at one stage & 150 euros at another.





I did not draw the chart, however my interpretation is that the x axis is using an index not actual $ values to compare exchange rate and oil price US $/bbl, sorry for any confusion.  I posted the data to demonstrate a point that whilst the world quotes oil US $, the weaking of US exchange rate againt the Euro $, may see the OPEC nations in which currency they are actually paid.  It may be that gold may become the prefered currency.

Cheers


----------



## TjamesX

*Re: OIL AGAIN!*

This seems to have slipped under the radar....

Matthew Simmons stated last week that he believes we have reached the peak in Oil production, thanks to field declines in large fields and lack of new supply.....

http://www.youtube.com/watch?v=4IwtAQzrfiw

commentary on the video at;

http://www.theoildrum.com/node/2239

Oil is now back to $60 (20% above lows) - are we going to retest highs?

I think this is big news - this guy is not some 'oil expert' that has sprouted up in recent years with the high oil price. His company has been around since the 70's....

How does he think we solve the problem;

"Start from the ground - how did we get to 85mmb/day of consumption, and what would we do if supply went to 70, when we thought it was going to 100"

This is big news... according to him - we are at Peak Oil!

TJ


----------



## wayneL

*Re: OIL AGAIN!*

March Crude closing above $60.00 once again.


----------



## Knobby22

*Re: OIL AGAIN!*

Also there is a widening of prices between US (being lower) and Singapore, suggesting political influence?


----------



## Smurf1976

*Re: OIL AGAIN!*

Regarding peak oil, I'd say we're damn close to it right now.

Actual peak production to date is generally accepted as being May 2005. Since then we've seen serious geologically driven declines in major fields in Mexico, Kuwait and the North Sea as well as ongoing decline in the onshore US, Bass Strait etc.

So far, we've got by with growing supply from deepwater fields, increasing liquids extraction from natural gas, demand destruction in poorer countries (and amongst poorer people) and because peak production at that time was surplus to actual consumption (inventory building).

But the deepwater production boom is based on very rapid extraction of relatively limited resources and is expected to peak around 2011 if all goes to plan. Give it another 12 months for a few mishaps along the way. That's the final major source of free flowing, relatively cheap conventional crude oil.

After that there's really only growth in gas liquids in line with gas production (since the opportunity to increase the liquids extracted per cubic metre of gas produced instead of leaving it in the gas was a one-off opportunity) and unconventional oil (mostly tar sands but also heavy oil). Everything else seems likely to be either flat, in decline or is only a minor source of supply.

So a peak no later than 2012 seems likely. It will probably be earlier given production disruptions due to technical problems, accidents, wars, terrorism etc.

Have we already passed peak oil production? It's too early to say and no matter when it occurs we'll only know the timing of the peak in hindsight. But that Saudi Arabia was consistently reducing production in the face of very high prices and has cut more than its OPEC quota required ought to be sounding some very serious alarm bells. 

Their investment in massively expanded water injection capacity and several fold increase in active drilling rigs, which have so far resulted in nothing obvious other than falling total production, adds to the concern. A major expansion in drilling effort failing to result in rising production is exactly what happened at the time of the US peak in 1970 and is exactly what would be expected if Saudi production were in real trouble.

We know the North Sea is in serious decline. We know that Cantarell field (Mexico) is crashing faster than practically anyone expected. We know that the Burgan field (Kuwait) has peaked (it is freely admitted by Kuwait authorities). We know that Indonesia has seen substantial ongoing production falls as has the US (the US having for over a century been the world's largest oil producer) and we know that Russian and Iranian exports are now trending lower too.

We also know that apart from deepwater development over the next 5 years and the one-off development of Canada's tar sands (itself running into trouble with costs, emissions and gas shortages) there isn't much more expected to come online. The sole hope is that the OPEC members are sitting on capacity they are keeping quiet about but few believe that to be the case.

As for smaller fields, they help but it's just not realistic to expect an army of 10,000 barrels per day fields which run dry after 2 years to offset the major producers such as Ghawar (5 million barrels per day and flowing for decades). The world doesn't actually have enough drilling rigs to develop enough small fields even if we knew where to find them (a very important point). And drilling rigs don't get built in a day.

Hence my conclusion of a peak sometime between 2005 (actual peak to date) and 2012.


----------



## billhill

*Re: OIL AGAIN!*

And smurf you can add to that a higher then expected increase in demand this year.

http://www.greencarcongress.com/2007/02/iea_forecasts_i.html#more


----------



## Bush Trader

*Re: OIL AGAIN!*

This article may be of interest, for those bears out there.

Cheers

Consensus Building On A Much Lower Oil Price

Source: FN Arena News - February 16 2007 

By Greg Peel
In December 2005, analysts at Goldman Sachs predicted the crude oil price would rise to US$105/bbl. This was a bit of a shock, as the spot price had only moved into the US$50s at the time. But when oil passed US$75/bbl at the height of Middle East tensions, the Goldman prediction was starting to look quite plausible.
As tensions between the US and Iran appear to be simmering still, the fact that the oil price is now below US$60/bbl suggests the fear premium attached to crude pushed too far mid last year, and that supply is no longer as dire as it once was seen to be. A warm start to the northern hemisphere winter also served to trigger fund selling.
A return to winter cold may have restored order, but the spot crude price has lately been very volatile as supply-side news ebbs and flows. One minute OPEC is cutting production, the next minute it isn't. Then the US wants to increase reserves. And China too. Predicting where the oil price is going to land on any given day has become an impossible task.
One fact that is certain, however, is that the crude oil market is now locked into a steep contango. This has serious ramifications for the value of fund investment.
When life was normal long ago Ã¢â‚¬“ pre-China Ã¢â‚¬“ commodities usually traded in backwardation. This meant forward (or futures contract) prices traded at lower levels into time. As commodities can be stored for a rainy day, consumers would turn to inventory supplies if the spot price rose too high, and provided storage costs were economical they would not pay a higher price than spot for forward contracts.
But then the China factor hit and the demand surge caused panic. Consumers rushed to lock in prices into time, and subsequently pushed forward prices above spot prices Ã¢â‚¬“ known as a contango. Adding to contango conditions today is the fact that storage costs have materially increased. It is now not as economical to store oil rather than buy it on the spot market.
This causes a dilemma for investment funds. It you invest in crude oil now, you have to cover the contango gap before you are in the black. Rolling over contacts into time means paying a higher price. Unless the spot price has risen accordingly then you will actually roll over at a loss. If the spot price has fallen, you will suffer a double loss. To maintain a position under such circumstances is to be confident that oil prices will push ever higher.
Can investors be confident?
It didn't take a lot for the spot price to drop from US$78/bbl to US$49/bbl. Apart from a "blow-off top" that saw the overstretched fear premium wiped out, the world has become more optimistic that demand is ebbing and supply is flowing. New sources, alternative fuels, claims by Saudi Arabia that it has oil a-plenty, and a diminishing of the peak oil scare has bolstered the supply side, while predictions of a slowing global economy have dampened demand assumptions.
Where OPEC is involved, the supply side is always tenuous. Initial thoughts of an ease off in rampant Chinese growth have been put on hold, while the US economy appears in better shape than expected. And you can never discount the rapid growth of Chinese car ownership.
Yet the growing call is that demand is easing and supply is improving. There is not a great track record among analysts of getting these factors right, but you have to bow to expert opinion.
However, it is in the investment funds side that pressure may well be brought to bear. Net assets invested in the Goldman Sachs Commodity Index rose from US$15 billion in 2003 to nearly US$70 billion in 2006 (Bloomberg). Making money from commodities is not the walk in the park it used to be, and there is already evidence that the bubble has begun to burst.
Oil analysts at Sanford C. Bernstein & Co suggest a "breaking point" for oil could come in March if Saudi Arabia fails to make the production cuts it has indicated. If spare capacity widens, this could force the contango higher and cause an investor bail-out.
Bernstein & Co are predicting a 2007 average price of US$50/bbl. Other analysts share Bernstein's views and predict that oil could fall as low as US$30/bbl as time goes on and risk of severe supply disruption recedes.
But Goldman Sachs remains fairly resolute. While US$105/bbl has not been mentioned lately, Goldmans maintains producer investment is "significantly" short of requirements (Bloomberg). The analysts have set US$71.50/bbl as their 2007 target.

The market is poised.


----------



## CanOz

*Re: OIL AGAIN!*

Anyone getting bullish on oil? I am.

Cheers,


----------



## Dutchy3

*Re: OIL AGAIN!*

Me too ... there are a few oilers that a brewing nicely ...

Within a month I reckon we will be seeing breakouts


----------



## >Apocalypto<

*Re: OIL AGAIN!*

While ago I bought it at 54 then it went up to 61/62 then fell back to 57, I sold and yes it went back up!

So now I am looking at it but god it has been volatile as of late.

So I see the fundamentals look good. I have not looked at the chart much since I sold it

Are any of you guys in the market yet?


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Guys after looking at the monthly 4hour it looks toppy and has resistance at 63. Also current trend running out of pace with MACD dropping and topping into a straight line repulse also starting to drop, I will wait for the next swing off the MA.

see chart


----------



## It's Snake Pliskin

*Re: OIL AGAIN!*



CanOz said:


> Anyone getting bullish on oil? I am.
> 
> Cheers,




I am. 
Took a long on WPL.


----------



## chops_a_must

*Re: OIL AGAIN!*



Trade_It said:


> Guys after looking at the monthly 4hour it looks toppy and has resistance at 63. Also current trend running out of pace with MACD dropping and topping into a straight line repulse also starting to drop, I will wait for the next swing off the MA.
> 
> see chart



Or it could have been building for a breakout like it appears to have done. There was absolutely no way, with the circumstances at the moment, that oil was going to fall today. Until this Iran dealy is sorted, oil will remain high as a matter of precaution.

Energy stocks, the place to be right now.


----------



## CanOz

*Re: OIL AGAIN!*

No surprises here, just a fresh report.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJxaDVUVjcT8&refer=home

I just took a CFD position on the light crude mini tonight. You think i can sleep tight?

Cheers,


----------



## chops_a_must

*Re: OIL AGAIN!*



CanOz said:


> No surprises here, just a fresh report.
> 
> http://www.bloomberg.com/apps/news?pid=20601087&sid=aJxaDVUVjcT8&refer=home
> 
> I just took a CFD position on the light crude mini tonight. You think i can sleep tight?
> 
> Cheers,



I don't know man. Some pretty bad data out. Got some no-doz or gin-seng or whatever it is they have over there? All the best. Another very interesting week perhaps?


----------



## CanOz

*Re: OIL AGAIN!*

Heres Light Crude's chart for the last week.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



Trade_It said:


> Guys after looking at the monthly 4hour it looks toppy and has resistance at 63. Also current trend running out of pace with MACD dropping and topping into a straight line repulse also starting to drop, I will wait for the next swing off the MA.
> 
> see chart




Yeh from the chart I posted any break out above the resistance line would give a entry point

may look to get in if it can close above 63 and hold there

Oil could now be starting to rattle the equidies. interesting situation.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



It's Snake Pliskin said:


> I am.
> Took a long on WPL.




I am also long on wpl Snake what a day for them yesterday!


----------



## vishalt

*Re: OIL AGAIN!*

Yeah i'm keeping an eye on oil.. they're the only sector to not have rallied since the 4800 -> 6000 XAO run. 

It's a shame though because Australian oil stocks are ****! When Woodside was trending well it was hammered with bad production reports which really ****ted me (and other shareholders i'm pretty sure). 

But the company is looking pretty stable now and his broken past $38 resistance which is interesting, i'm going to buy it on a dip. 

Oil sector is the only sector to join the party.


----------



## CanOz

*Re: OIL AGAIN!*

WOW, what a thrust!


----------



## CanOz

*Re: OIL AGAIN!*

From Bloomberg......

"Crude oil traded at $64.12 a barrel at 6:24 p.m. in New York Mercantile Exchange electronic trading, up $1.19 from the day's settlement price of $62.93. The settlement price is set after the close of floor trading at 2:30 p.m. New York time. Transactions after 6 p.m. are considered part of the next-day's trading. 

Five trades were done between $68 and $68.09 a barrel just before 5 p.m., for the highest intraday price since September. 

``Right now the buyer of those barrels may not be very happy,'' said Andy Lipow, president of Lipow Oil Associates LLC, a consulting company based in Houston. "

Cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*



CanOz said:


> From Bloomberg......
> 
> "Crude oil traded at $64.12 a barrel at 6:24 p.m. in New York Mercantile Exchange electronic trading, up $1.19 from the day's settlement price of $62.93. The settlement price is set after the close of floor trading at 2:30 p.m. New York time. Transactions after 6 p.m. are considered part of the next-day's trading.
> 
> Five trades were done between $68 and $68.09 a barrel just before 5 p.m., for the highest intraday price since September.
> 
> ``Right now the buyer of those barrels may not be very happy,'' said Andy Lipow, president of Lipow Oil Associates LLC, a consulting company based in Houston. "
> 
> Cheers,




May not be happy he would be spitting chips!

CanOz well done on your buy you must be happy now.  

I will wait to buy on a dip back to trend line


----------



## CanOz

*Re: OIL AGAIN!*

Another big move in Crude.


----------



## wayneL

*Re: OIL AGAIN!*



CanOz said:


> Another big move in Crude.




<tongueincheek>This is gonna crash the stock market!</tongueincheek>

(I hope Realist reads that)


----------



## CanOz

*Re: OIL AGAIN!*



wayneL said:


> <tongueincheek>This is gonna crash the stock market!</tongueincheek>
> 
> (I hope Realist reads that)




I don't he'd ever ever think about visiting the oil thread would he? I mean it doesn't pay good dividends....unless you get into Exxon for the long haul.....although i shouldn't say anything...i wouldn't have the foggiest idea what pays good dividends.....couldn't care either. 

Go oil!

Cheers,


----------



## wayneL

*Re: OIL AGAIN!*

Not withstanding that some of us are making a motza on this oil run, I'm a bit concerned as to what it means.

There's more to this Iran situation than the 15 pommie sailors. Lots of soothing noises coming out, but I don't believe it, somethings up.


----------



## theasxgorilla

*Re: OIL AGAIN!*



wayneL said:


> Not withstanding that some of us are making a motza on this oil run, I'm a bit concerned as to what it means.
> 
> There's more to this Iran situation than the 15 pommie sailors. Lots of soothing noises coming out, but I don't believe it, somethings up.




You just couldn't put it past Bush to cook up a war before he leaves office.

A fitting swan song that the Texan oil cronies are sure to love.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Well I am now just about back to catching the train to work now!!

Well at least till it has a pull back to the trend line! 

WayneL

I remember last year when this happened and may/jun/july were not very nice months.

With a hike in inflation and a much more average US economy compared to last year it could mean very bad news.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

CanOz's

You must be living it up, riding the oil train!


----------



## >Apocalypto<

*Re: OIL AGAIN!*



Trade_It said:


> Guys after looking at the monthly 4hour it looks toppy and has resistance at 63. Also current trend running out of pace with MACD dropping and topping into a straight line repulse also starting to drop, I will wait for the next swing off the MA.
> 
> see chart




Yeh Chops I got that bloodly wrong!


----------



## theasxgorilla

*Re: OIL AGAIN!*



Trade_It said:


> Well I am now just about back to catching the train to work now!!
> 
> Well at least till it has a pull back to the trend line!




Now that is an inventive way to 'buy the dips'!


----------



## >Apocalypto<

*Re: OIL AGAIN!*

OIL,

I am seeing good signs Oil has more room for further gains also just about to go long.

As you can see in the Chart below retractment to a healthy 38% and now finding support.

The price action is also very nicely sitting on its Gann Line.

What r all your thoughts?

Just got into retractments and Gann on the weekend freaky stuff really leaves indicators out in the cold.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

My last chart was in accurate please disregard.

Updated trend line to show proper range there is still room to retract or consolidate.

Support found on 38.2% minor resistence at 6604

Still bullish in this time frame looking to renter after resistance broken.


----------



## CanOz

*Re: OIL AGAIN!*

Hi TI, i'm looking to add to my position. Just waiting for confirmation. I've moved my initial stop to breakeven too.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Are we seeing a new entry starting to build?

Price is now starting to show strengh. broke the Gann 45 degree down price&time harmony line. support found on the 38% retractment line.

Now building stating to move back up/off the 45 degree trend line once a break of the minor resistance (red dotted line) I see a continuation and a new entry.

See chart.

Its is starting to look good to me. What r your thoughts guys?


----------



## CanOz

*Re: OIL AGAIN!*

You been watching this at nite TI? Watching it during the day is like waiting for paint to dry. I'm thinking of just keeping my long position and then taking some intraNITE trades. Far more volitile.

Cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*



CanOz said:


> You been watching this at nite TI? Watching it during the day is like waiting for paint to dry. I'm thinking of just keeping my long position and then taking some intraNITE trades. Far more volitile.
> 
> Cheers,




lol I know what u mean! 

I am watching till it breaks its trend line or resistance then i am back in. not day trading right now i have another trade on the aussie 200 to monitor as well.

But the OIL set up looks good to me as long as it meets my entry requirement.

But good to see it showing strength at this time of the day.

Lets hope it breaks resistance before my bed time tonight!


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Oil has broken its 38% support and broke trend line i have gone short with a tight stop.

Have put in a 45 degree down trend line that is my guide.

But as a 50-60% is still a valid retractment i will be very tight on dropping this trade.

I have marked my entry with a red arrow.

* What r your opinions guys, do I need more confrimation too?*


----------



## CanOz

*Re: OIL AGAIN!*

I took profits today when it broke down and i was keen to go short, but given the volatile geo-polital issues at the moment I wasn't game. I'm looking for another entry point to go long.

Agree with your analysis though and if it pulls back to the 61.8% fibb, it also coincides with the larger moves 23.6% fibb retracement @ 64.96....confluence? I'm looking for a bounce there. Good luck TI.

Cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Realized that point CanOz and the overall mistake I made (I am as red faced as your Avatar!)  I pulled my profits out so all ends well ha ha ha jeez the market must have been looking the other way when I placed that short!


----------



## CanOz

*Re: OIL AGAIN!*

Still looking for some confirmation that this leg down is completed.....there might be a couple scenarios.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Iran has agreed to release the British sailors, that is stabilzing things so we will now see if that rally was just based on political tensions or in any over demand to supply is there.


----------



## CanOz

*Re: OIL AGAIN!*

Could Oil be close to finishing its leg down and this H&S pattern?


----------



## CanOz

*Re: OIL AGAIN!*

H&S certainly looks complete now, been long since last nite.


----------



## wayneL

*Re: OIL AGAIN!*



CanOz said:


> H&S certainly looks complete now, *been long since last nite.*



Good spot IMO. clk07 popped over 63 now.


----------



## CanOz

*Re: OIL AGAIN!*



wayneL said:


> Good spot IMO. clk07 popped over 63 now.




Do those guys on the Nymex take profits after every single session or what? Every morning i wake up to find its spiked and then retraced...all be it to support but still, would make some nice intranight trades Wayne?

Cheers,


----------



## wayneL

*Re: OIL AGAIN!*



CanOz said:


> Do those guys on the Nymex take profits after every single session or what? Every morning i wake up to find its spiked and then retraced...all be it to support but still, would make some nice intranight trades Wayne?
> 
> Cheers,



There is a lot of daytrading in oil now since NYMEX went electronic. (must admit to the odd daytrade in addition to my normal swingers )

I reckon that's why it's like that....just an unsubstantiated opinion though.


----------



## CanOz

*Re: OIL AGAIN!*

Well i'm out for 140 points and off to bed. Hope it retraces tonite and i can find another entry tomorrow...

cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*

aghhhhh

Man as soon as you don't look for 2 days bang off it goes jeez what a set up.

CanOz
Well done on your entry! 

Well I am now waiting for it to pull back a little to Gann line then look to hop in.


----------



## CanOz

*Re: OIL AGAIN!*

This is what i'm waiting on now, although the strength its showing today makes me wonder if the evenings session will be in decline.....hope so.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Oil,

Finding buyer support at its 38% retracement point. Looking like a ascending triangle could be forming.

So now looking for confirmation of a bounce off the Gann line.

**Wish IG could supply open interest or volume on their commodities charts.**


----------



## CanOz

*Re: OIL AGAIN!*



Trade_It said:


> Oil,
> 
> Finding buyer support at its 38% retracement point. Looking like a ascending triangle could be forming.
> 
> So now looking for confirmation of a bounce off the Gann line.
> 
> **Wish IG could supply open interest or volume on their commodities charts.**




Yes agree TI, volume would certainly be helpful. Did you notice the historical charts have changed? There is now a section for commodities, although nothing in it yet. Hopefully this will provide some better EOD analysis and long term trend. Eventually going to use AmiBroker for this.

Went long again in oil this morning. Have you ever rolled over a contract with IG?

Cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*



CanOz said:


> Yes agree TI, volume would certainly be helpful. Did you notice the historical charts have changed? There is now a section for commodities, although nothing in it yet. Hopefully this will provide some better EOD analysis and long term trend. Eventually going to use AmiBroker for this.
> 
> Went long again in oil this morning. Have you ever rolled over a contract with IG?
> 
> Cheers,




CanOz,

I have never held anything long enough to roll over yet but I don't think it would be any issue, but things jump and drop on change over sometimes.

Have gone long as well with tightish stop under the 38% retracement. Which i see as short term support.


----------



## CanOz

*Re: OIL AGAIN!*



Trade_It said:


> CanOz,
> 
> I have never held anything long enough to roll over yet but I don't think it would be any issue, but things jump and drop on change over sometimes.
> 
> Have gone long as well with tightish stop under the 38% retracement. Which i see as short term support.




Last trading day is the 20th, this Friday. I think i might just roll it over, depending on how the next day or two pans out.

Cheers,


----------



## >Apocalypto<

*Re: OIL AGAIN!*



CanOz said:


> Last trading day is the 20th, this Friday. I think i might just roll it over, depending on how the next day or two pans out.
> 
> Cheers,




Cheers for the heads up on that!

I will call them today. **You need to call and tell them to put the roll over on the trade, I think.**

I am with you on the couple of days thing as well, it still shows some possible down side action in my eye. I would like to see it build into the open of NYMEX tonight, I really don't want to widen my stop any more then it is.

aghhh commodities, so much fun!


----------



## wayneL

*Re: OIL AGAIN!*



Trade_It said:


> **Wish IG could supply open interest or volume on their commodities charts.**



They can't really, unless they supply the OI of the underlying "real" contract. You could just look up the open interest via futuresource or someone.

\/ May OI with chart on top, June OI underneath


----------



## >Apocalypto<

*Re: OIL AGAIN!*

crude is walking the tight rope on its trend.

got nailed on two stops other days on longs looks weak but it is still hanging in there!

my gut yells long but my eye's say WAIT! 

also saw OI dropped like hell, which also warns of a direction change, kind of looks like it gearing up for something. There has been alot of neutral news neither bullish or bearish. who of us technical chart traders care about reports! 

what do you guys make of it?


----------



## CanOz

*Re: OIL AGAIN!*



Trade_It said:


> crude is walking the tight rope on its trend.
> 
> got nailed on two stops other days on longs looks weak but it is still hanging in there!
> 
> my gut yells long but my eye's say WAIT!
> 
> also saw OI dropped like hell, which also warns of a direction change, kind of looks like it gearing up for something. There has been alot of neutral news neither bullish or bearish. who of us technical chart traders care about reports!
> 
> what do you guys make of it?




Same as you TI, got stopped out on longs, now expecting a short term bounce then weakness before i take another another long.


----------



## wayneL

*Re: OIL AGAIN!*



Trade_It said:


> also saw OI dropped like hell, which also warns of a direction change,



Which contract? Bear in mind OI will drop dramatically as notice period approaches and may have nothing to do with anything but traders rolling contracts.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



wayneL said:


> Which contract? Bear in mind OI will drop dramatically as notice period approaches and may have nothing to do with anything but traders rolling contracts.




In that case it was due to a roll over I would say as it was this may crude.


----------



## resourceboom

*Re: OIL AGAIN!*

Crude should stay in a nice range of $50-75.
Any higher and there could be a worldwide recession, any lower and OPEC will step in!!


----------



## >Apocalypto<

*Re: OIL AGAIN!*

weekly Crude fellas,

Make of it what you will in solid weekly ascending triangle volume dropping on a descending angle as well.

A break above 67.52$, says game on for the bulls in my view.

one to watch.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

the bullish continuation pattern i last posted on a weekly scale is now showing potency.

with volume building around the possible break out, at the 2/3 point in the triangle making it a strong and very strong confirmed pattern if the bulls manage to break out in this point in the pattern.

I was losing faith in this pattern but now with some fundermental news realised it could prove very valid.


----------



## dj_420

*Re: OIL AGAIN!*

hey guys

where do you go to get current crude prices

thanks


----------



## Smurf1976

*Re: OIL AGAIN!*



resourceboom said:


> Crude should stay in a nice range of $50-75.
> Any higher and there could be a worldwide recession, any lower and OPEC will step in!!



Step in and do what?  It's not as if they have any real ability to ramp up production these days beyond a few %.


----------



## CanOz

*Re: OIL AGAIN!*



Smurf1976 said:


> Step in and do what?  It's not as if they have any real ability to ramp up production these days beyond a few %.




I think he meant that they would cut production to keep the price in the range.

Cheers,


----------



## nizar

*Re: OIL AGAIN!*



Smurf1976 said:


> Step in and do what?  It's not as if they have any real ability to ramp up production these days beyond a few %.




They would step in and turn off the taps 
To keep the price high.
Like what Can said.

And plus they dont have to do anything.
What comes out of their mouth fluctuates the price more than what comes out of the ground!!


----------



## CanOz

*Re: OIL AGAIN!*



dj_420 said:


> hey guys
> 
> where do you go to get current crude prices
> 
> thanks




If i don't have IG open then i check here sometimes...

http://www.bloomberg.com/markets/commodities/energyprices.html

Or here

http://www.wtrg.com/daily/crudeoilprice.html

Cheers DJ.


----------



## Smurf1976

*Re: OIL AGAIN!*



CanOz said:


> I think he meant that they would cut production to keep the price in the range.
> 
> Cheers,



Misread the original post. 

I'm so used to hearing the "it's going back to $20" and "there's plenty of oil" types that I somehow read the original post as saying oil won't go up much because we'll just open the taps...


----------



## CanOz

*Re: OIL AGAIN!*

Interesting article on the Canadian Oil Sands resource. I had no idea the size of this....so many year it sat there virtually undeveloped because its so expensive to get the oil out..well now its worth it.

http://www.reuters.com/article/ousiv/idUSN2741612020070704?pageNumber=1

Cheers,


----------



## eagleou

*Re: OIL AGAIN!*



CanOz said:


> Interesting article on the Canadian Oil Sands resource. I had no idea the size of this....so many year it sat there virtually undeveloped because its so expensive to get the oil out..well now its worth it.
> 
> http://www.reuters.com/article/ousiv/idUSN2741612020070704?pageNumber=1
> 
> Cheers,




Hello CanOz ,

I am Chinese and in Aussie now. I want to consult you some questions.Could you mail me please?(I cannot find you email)My email is : eagleou@hotmail.com

Thanks.


----------



## BIG BWACULL

*Re: OIL AGAIN!*

Just thought i,d share this Graphic With you all , I thinkin of movin to Turkmenistan to fill up the Barina Lol NOT!, Americans dont use much per day in comparison to the rest of the world , Lets all get ourselves a hummer and try and set a new record 
*OIL CONSUMPTION GRAPHIC FROM THE ECONOMIST*


----------



## dutchie

*Re: OIL AGAIN!*

What we need is for the Americans to have to buy their petrol in Turkey!


----------



## theasxgorilla

*Re: OIL AGAIN!*

Hey BigBWACULL,

Thats a terrific graphic...hadn't seen that one before.

It's also disgusting when you look at it...and who started the war in Iraq???  I don't _hate_ America per se but there are some blatent things they could fix to be much less of a burden on the rest of the world.


----------



## CanOz

*Re: OIL AGAIN!*



theasxgorilla said:


> Hey BigBWACULL,
> 
> Thats a terrific graphic...hadn't seen that one before.
> 
> It's also disgusting when you look at it...and who started the war in Iraq???  I don't _hate_ America per se but there are some blatent things they could fix to be much less of a burden on the rest of the world.




Whats even more amazing to me is Canada's usage....if you think that Canada and Australia are very similar demographically. The big difference though, is the size of the North American cars/pickup trucks that the Canadians drive too.

Cheers,


----------



## theasxgorilla

*Re: OIL AGAIN!*



CanOz said:


> Whats even more amazing to me is Canada's usage....if you think that Canada and Australia are very similar demographically. The big difference though, is the size of the North American cars/pickup trucks that the Canadians drive too.
> 
> Cheers,




CanAus...I didn't see that...can you tell I just woke up over here??

Thats remarkable...I mean, I love a good V8 as much as anybody, but if we think global warming has addressable causes surely this one has to be priority, or?


----------



## CanOz

*Re: OIL AGAIN!*



theasxgorilla said:


> CanAus...I didn't see that...can you tell I just woke up over here??
> 
> Thats remarkable...I mean, I love a good V8 as much as anybody, but if we think global warming has addressable causes surely this one has to be priority, or?




Its the whole big pickup SUV thing i think. I had a Senator when i lived in Australia with the LS2 in it and it was great on fuel...until you put the boot into it.

But put one of those in a big Cadillac SUV with all the mod cons or drive a big hummer and your using some serious petrol.

The tax component is lower in Canada than Australia too i think...

Good on ya for just getting outa bed...i bets its a great place to wake up to.

Cheers,


----------



## CanOz

*Re: OIL AGAIN!*

Can someone look at my CL chart and confirm the prices.....I think i may be out a few dollers here and there? Check the low back in January, and the recent high. 

Cheers,


----------



## Pommiegranite

*Re: OIL AGAIN!*

My oil/gas portfolio has been showing some stellar returns this week, despite a fall in crude (EGO, CVI, CVN, EMR).

Does anyone know whether this has been the case for most oil/gas stocks, and if so offer reasons, because I'm stumped

Thanks


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

In its simplist form id say that OIL represents a 'safer' sector than most.

Every day we have less oil, every day demand gets stronger and the oil left in the ground becomes harder and more expensive to extract.

As the US dollar decreases in value the oil price must increase in value because payment is in US dollars, if it didnt sellers would be getting paid less per barrel of oil as the US dollar weakened.

The world loves OIL, almost everything requires oil, either to produce or transport.

Just wait until one day, out of the blue OPEC announces that they  can no longer increase output to help meet demand because ' there oil wells are in decline'. Essentially they are running out of the stuff!!!

Now, just hope you are holding oil shares on that day................

Go oil!!!

JW


----------



## Wysiwyg

*Re: OIL AGAIN!*



Pommiegranite said:


> My oil/gas portfolio has been showing some stellar returns this week, despite a fall in crude (EGO, CVI, CVN, EMR).
> 
> Does anyone know whether this has been the case for most oil/gas stocks, and if so offer reasons, because I'm stumped
> 
> Thanks




I see you already hold CVI pommiegranite???

Anyway here is a chart showing clearly the drop off in the price of crude.If I was a commodities trader then I would be watching closely for an entry but then again the rrrrrs is falling out of everything so it `ll prolly tank further.Hoo nose.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Guess the key is that there will always be fluctuations to price, more so in times of economic uncertainty and with folks being unsettled as they are at present. 

I still think that you have an over riding factor being that demand is increasing and supply is decreasing. America might go into recession?? but oil will still be getting gobbled up at alarming rates!

All the cheap easy to extract oil has nearly been used and we are not making new discoveries quickly enough to replenish proven and probable existing reserves. Basically we are in drawn down. Further, with the new discoveries they are making the oil costs more to extract and the discoveries are much, much smaller.

So, if your long on oil, its pretty much a given that the price will increase. Whats not a given is that the company you have invested in will be able to find future viable reserves.
Also, if the US dollar craps itself, which the Chinese may just play a part, the price of oil per barrel will increase proportianately.

I'd say oil above $60.00 a barrel is a safe bet for a long, long time yet.

Its a non renewalable resource, well, not renewalable in our lifetime anyway.....................

By about 2030 you'll know all about oil, it will be the single most talked about issue in the world and its not that long until we exhaust our supplies.


----------



## Smurf1976

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> By about 2030 you'll know all about oil, it will be the single most talked about issue in the world and its not that long until we exhaust our supplies.



I'm expecting it a bit earlier than that myself since I really don't see how demand is going to be met even in 5 years time if it keeps growing as it has been. For that matter, even six months from now is really only doable with stock drawdown which is unlikely to be able to be replaced in time for the following season.


----------



## explod

*Re: OIL AGAIN!*



Smurf1976 said:


> I'm expecting it a bit earlier than that myself since I really don't see how demand is going to be met even in 5 years time if it keeps growing as it has been. For that matter, even six months from now is really only doable with stock drawdown which is unlikely to be able to be replaced in time for the following season.




If we look at the changes to the world over the last 100 years (the phone for example) you will find that the changes in the last 20 (the internet/computers in mobile phones)  then in 30 years, if we have survived the pollution, oil will have been long forgotten


----------



## Sean K

*Re: OIL AGAIN!*

*Oil headed for $100 a barrel: Chavez*

August 12, 2007 - 7:29AM

Venezuelan President Hugo Chavez predicted that oil prices will hit $US100 a barrel, saying the world is facing an energy crisis.

"The price of oil is headed for $US100," Chavez told Caribbean leaders at an energy summit. "OPEC says so ... We should prepare ourselves for those prices."

He added that "the world is entering into an energy crisis" largely caused by a US-influenced "consumerist model and the limitless waste".

Venezuela, a member of the Organisation of Petroleum Exporting Countries, still counts the United States as its top buyer although Chavez has sought to diversify his clientele by selling more to Latin America, the Caribbean and as far away as China.....


----------



## Pommiegranite

*Re: OIL AGAIN!*



kennas said:


> *Oil headed for $100 a barrel: Chavez*
> 
> August 12, 2007 - 7:29AM
> 
> Venezuelan President Hugo Chavez predicted that oil prices will hit $US100 a barrel, saying the world is facing an energy crisis.
> 
> "The price of oil is headed for $US100," Chavez told Caribbean leaders at an energy summit. "OPEC says so ... We should prepare ourselves for those prices."
> 
> He added that "the world is entering into an energy crisis" largely caused by a US-influenced "consumerist model and the limitless waste".
> 
> Venezuela, a member of the Organisation of Petroleum Exporting Countries, still counts the United States as its top buyer although Chavez has sought to diversify his clientele by selling more to Latin America, the Caribbean and as far away as China.....






As we all know, there has been a sharp increase over the past 5 years in the price of crude. I'm wondering whether this has more to do with demand from the booming global economy and not from a lack finding new reserves.

If this is the case, by OPEC controlling the flow of oil, would it be fair to say that prices are being kept artificially low to keep their market from moving to other energy sources?

Surely, one day OPEC will have to open up and say "things are really bad...we've almost run out"



If this is the case, then isn't there a huge spike waiting to happen? When this will happen is anyone guess. It could be 2 years or it could be 20 years.


----------



## Smurf1976

*Re: OIL AGAIN!*



explod said:


> If we look at the changes to the world over the last 100 years (the phone for example) you will find that the changes in the last 20 (the internet/computers in mobile phones)  then in 30 years, if we have survived the pollution, oil will have been long forgotten



Agreed about the increasing pace of change.

But go to any car dealership in Australia and you will still find new petrol fuelled vehicles for sale. Now, if we've hit peak oil in 2005 as is starting to seem plausible then we really need to be not building petrol engines any more. We'll have trouble enough fuelling the ones we already have plus rising aviation, shipping and petrochemical demand without building more petrol engines.

So, I'll have confidence in the "technology will solve the problem" when I see Holden announce the end of production of petrol fuelled Commodores, Ford announcing no more petrol or LPG Falcons and Toyota saying no more petrol or diesel in anything. And not just that, but to see the exact same thing happen in the rest of the world too, developing countries included.

Look at the crashing production at Cantarell, North Sea etc and you'll see why I'm saying that if we keep building any significant number of petrol / diesel cars past the peak of oil production then we're in serious trouble. We'll need most of the oil to run vehicles already built plus ongoing use for aviation, trains, ships, portable generators and so on. 

Stand on any city street corner and pretty soon you'll see a car built back when lead was added to petrol and "internet" was a term few had heard. That's the problem - every engine built today requires fuel for the next 20 or so years. 

Oil heaters haven't generally been sold in Australia since 1979 (probably a few on here have never seen one). There's still enough of them around here in Hobart to warrant two fuel suppliers and a few repair guys being in business. And that's despite the wood boom of the 1980's, HydroHeat direct in the 90's and more recently heat pumps. Even the Boags brewery only recently stopped using oil to run the boilers. Oil using equipment doesn't turn over at anywhere near the rate of computers.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Spot on Smurf, that essentially captures how i feel about the issue myself.

Just to add to those comments and reinforce the dire situation that we are in most people only think of fuel (petrol) and the various types of oils (heating, lubricants) and so forth.

Now while i'll happily agree that a huge amount of oil is used through this process what they forget about is this.........

Oil is required for, platics (try and think of a product that does not contain plastic, it might just be the bubble wrap around it or the bag you carry it home in), all petrochemical products (this list includes detergents, pesticides and zillions more), some waxes. Road surfaces are made from, bitumen, which is oil.

Avaiation fuel, pretty important if you intend to travel..................

Another biggie is that to produce FOOD we use **** loads of oil and unless we return to the horse and plough i dont see a way out of this one. Also, to pump the water to irrigate the crops, we need, you guessed it, oil.
May as well include medicines while we are at it, most are plant extracts or petrochemical by products.

Now, thats pretty gloomy stuff but, and i hear a few people saying what about nuclear reactors, solar and wind power.

Now thats a fair call, but, to produce solar cells and wind generators, you need oil baby. They are made of plastic and you need oil to make plastic, then you need oil to transport them.
At present, these alternate energy sources only contribute a tiny fraction of the worlds energy demand.

As for nuclear reactors, dont quote me on this but i thought i heard somewhere that if you changed every single power plant in the world into nuclear we could only run them for about 100 years before we mined and used up all the worlds Urainium.

And, i'd agree that $100 a barrel is not far away. That will be considered CHEAP in the not to distant future.

Its a grim future unless we get our act together and develop technologies and alternate energy sources.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Pommiegranite wrote: 'As we all know, there has been a sharp increase over the past 5 years in the price of crude. I'm wondering whether this has more to do with demand from the booming global economy and not from a lack finding new reserves.'

Pommie, the answer to this is BOTH.
Demand is increasing but existing reserves are also being depleted and exasperating this is that new discoveries while being considerably smaller are not being discovered as quickly as we are using the existing reserves.

This why we are in draw down now.

Compounding the problem is that we have found and almost used up all the easy to find and extract oil.
The remaining oil and future discoveries cost more per barrel to extract and are typically in more difficult areas or further under ground. Either way the outcome is that it is going to cost MUCH more in the future to produce a barrel of oil, considerably more.

Put the increased extraction cost with more demand and less supply and BINGO, its a no brainer, UP GOES THE PRICE!!!!!!!!!

JW - Go oil


----------



## Smurf1976

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> At present, these alternate energy sources only contribute a tiny fraction of the worlds energy demand.



The vast majority of commercial energy worldwide is from oil, coal or natural gas. What is not from those sources is almost entirely nuclear and hydro.

The only real exceptions to this are firewood, dung etc used largely in developing countries and solar energy used directly for lighting (eg through windows). Virtually everything else is fossil, nuclear or hydro.

As for future supplies, hydro is sustainable under _some_ circumstances (most of the Australian schemes are reasonably sustainable) but fossil fuel is a dead cert to run out eventually. For oil and gas that's frighteningly close. For coal it's a bit longer.

As for running out of uranium, that depends on the technology that is used. I would argue that there has been massively less exploration for uranium than for oil / gas so there ought to be quite a bit still to discover. How it is used then becomes the key - the present throw away nuclear fuel cycle isn't sustainable that's for sure. Trouble is, go to breeder reactors and then you've got a bigger problem with hazardous waste.


----------



## ducati916

*Re: OIL AGAIN!*

Just watched the documentary detailing the death of the "Electric Car".

Battery distance 200 miles
Top speed 150mph
Acceleration 0-60mph 3.6secs

Cost of charging from home $200/month
Time taken ....overnight
Cost .....undisclosed

General Motors, Ford, Toyota, all had models.
Road tested by consumers, all were really positive [600+]
All TRIED to purchase their cars, all were refused.
All cars were taken back and destroyed within 3 years

In a single stroke the following problems solved;
*no CO2 emissions
*no petrol required
*no engine/no engine parts required
*no services required

Immediately you can see why the Oil Industry & Automotive Industry hated it
The Politicians [American] basically caved in to the pressure.

Interesting film.

jog on
d998


----------



## Aussiejeff

*Re: OIL AGAIN!*

Time to resurrect this old thread!

Oil up over $US83 barrel today. So, what price ULP to reach now in OZ? (it's currently around $1.34 ltr in Wodonga). A few months back when oil was *only* about $US80 we were paying over $1.45/ltr - before the price enquiry began. Might see $1.40+ again soon?

AJ


----------



## >Apocalypto<

*Re: OIL AGAIN!*

OiL bugs today marks a very interesting situation in Crude this is the frist sign of real weakness i have seen.

see the chart first time the new push down has penetrated the previous resistance area if it closes inside this area the trend is no longer and is starting to creep a sign the trend is slowing down.

I am watching crude interesting times coming in it!


Good trading


----------



## CanOz

*Re: OIL AGAIN!*

Interesting TI, i've been watching bean oil, and i thought it might retest the last break point, could be some correlation here?

Cheers,


----------



## Smurf1976

*Re: OIL AGAIN!*



Aussiejeff said:


> Time to resurrect this old thread!
> 
> Oil up over $US83 barrel today. So, what price ULP to reach now in OZ? (it's currently around $1.34 ltr in Wodonga). A few months back when oil was *only* about $US80 we were paying over $1.45/ltr - before the price enquiry began. Might see $1.40+ again soon?
> 
> AJ



Refined petrol is a market in itself. Contrary to popular belief, it's not simply the crude oil cost plus x. Crude's gone up - petrol could go either up or down given it's only a small change.

Obviously if the crude price doubles then petrol will rise since otherwise production would be unprofitable. But then this did happen once before where it was profitable to buy petrol, diesel, fuel oil etc and blend them together and sell the product as crude oil. In a similar way it was once more profitable to set fire to the stuff than pay the cost of transporting it from the refinery to service stations.

Lots of funny economics in the oil business.


----------



## Aussiejeff

*Re: OIL AGAIN!*

_UAE forced to slash oil output by a quarter
by Dylan Bowman on Sunday, 23 September 2007  
(Getty Images)Scheduled maintenance at three of the UAE's largest oilfields will cut oil output by 600,000 barrels per day (bpd) in November, the Abu Dhabi National Oil Company (Adnoc) said in a statement on Sunday.

Adnoc's statement confirmed work widely expected by the industry and reported by Reuters in August. At its peak, the maintenance would cut 810,000 bpd of output from the world's sixth-largest oil exporter, oil traders said last month.

The output reduction as detailed by Adnoc was about a quarter of the UAE's output. The Opec member produced about 2.56 million bpd in August, according to a Reuters survey._

This news confirming a looming significant drop in World Oil Production won't help the oil price to drop significantly any time soon.... especially with the odd hurricane hanging around and pipelines in Iraq being blown up regularly.

I wonder how many more Middle East oil fields are going to need maintenance over and above that guessed by the pundits, to keep flowing their sludge?

AJ


----------



## Trader Paul

*Re: OIL AGAIN!*



Warning:  Astrostuff ahead ..... 

Hi folks,

Crude price will likely see some hefty rises soon, particularly
between 24102007 and 09112007, where some expansive
time cycles (Jupiter/Neptune) come into play.

In particular, we'll be alert around 30102007, when a hike
in oil prices may also be accompanied by some negative
news in currency markets, as well (???)

Longer term outlook ... if you think oil prices are high now,
just wait until May and December 2009 ... !~!

have a great day

   paul

P.S. ..... be sure to be watching AZZ and ARQ, around the
             end of this month (Oct 2007), as Neptune goes
             direct on 31102007.... as, it has PROVEN to be a 
             trigger for BOTH of these stocks in the past !~!


=====


----------



## Wysiwyg

*Re: OIL AGAIN!*

OPEC said they will be boosting output by 500,000 barrels per day starting Nov. 1 .I`ll bet that prices fall on rising inventories and lower demand.


----------



## reece55

*Re: OIL AGAIN!*

Anyone trading Oil, wow it's a volatile night tonight..... All the way up to almost $88 for US light crude, now at about $86.50... looks like a break of that heavy trendline that has been in place for some time........ I have been shorting it at various times throughout the night..... Perhaps it's a case of so much bullish fever in relation to oil that when positive news comes out, we have a reaction that is the opposite of what would make economic sense.

Cheers


----------



## wayneL

*Re: OIL AGAIN!*

Oil closes at $89.60ish and is moving up in the after hours. I wouldn't mind betting we take out the big number before it opens again.

$90 Oil!


----------



## rederob

*Re: OIL AGAIN!*

Wayne
I ran.
I should have talked Turkey last year, instead!


rederob;55385 said:


> Magdoran
> I think $90 is possible, but only if accompanied by geopolitical concerns that spill onto the world stage - Iran is the culprit to watch.
> And then I thought about hurricanes: Put the two together and we have $100 as possible.
> Otherwise I think POO over $85 this year will be a bit of a tall order.
> I say this based on pragmatism, and not on natural demand, which I expect to be typically robust in the second half.


----------



## rederob

*Re: OIL AGAIN!*

Just another $9.97 and the and the menace a trois digits est ici.


----------



## Smurf1976

*Re: OIL AGAIN!*

Hmm...

Lots of new supply was going to come online if oil ever hit $40. So no need to worry.

And it was sure to happen at $50.

And it was guraranteed at $60.

And of course nothing would stop it at $70. 

And $80? Well of course it that ever happened we'd promptly be flooded by the stuff and we'd switch to alternatives anyway.

Been hearing this for years now. Plenty of oil, lots of alternatives blah blah...

Bottom line: Production essentially flat for the past 2 years, rising demand, soaring prices and now declining inventories too.

*PEAK OIL* seems to be either very near or perhaps even in the past.


----------



## kgee

*Re: OIL AGAIN!*

Find a cheaper alternative to oil?? 
Although it's not touted so much here (Australia)Bush would love to go into Iran and he's pushing for it .
Oil ;if its not the driving force behind the worlds econonomies it at least  is one of the major factors that lies behind our economy today.
I'm a firm believer that it has at least 50 years to run b4 "crunch" an if I had any money to put in the bottom draw it would be oil.
Good news both Pluto and Gorgon gasfields have being given the go ahead in WA and I wouldn't be surprised if a few more gems are found out there
To put the value of Gorgon into perspective $60 million has been allocated to the protection of greenback turtles- thats more than the market cap of my fav stock at the moment?!??!
Oil is massive if I had fears: it is that Bush is looking at Iran I don't know how that is going to pan out...but my thoughtss are that Russia and China just won't allow that to happen...mind you Israel has said it won't allow                                                                                                             Iran to have nucleur facillities not a nice "catalyst"


----------



## Wysiwyg

*Re: OIL AGAIN!*



Wysiwyg said:


> OPEC said they will be boosting output by 500,000 barrels per day starting Nov. 1 .I`ll bet that prices fall on rising inventories and lower demand.





Well I have to admit being wrong about the crude oil price falling. Record prices being smashed again.


----------



## Wysiwyg

*Re: OIL AGAIN!*

With the ever increasing reliance of present societies on the rotting organic matter deep below the earth it goes without saying that finite is the inevitable agreement.If it weren`t for my own share market participation i would not have an understanding of why fuel prices are so high.At first the discussion about peak oil seemed to me one of those `oh yeah, right` arguments over reacting to cyclical supply issues.After seeing crude prices nearing $100  and listening more intently to those apparently in the know, it is hard to ignore the theory as reason behind supply/demand issues.

Driving cars, using electricity and overall the industrial age has created a deep seated reliance on and expectation of fuel energy for people to exist.As long as people see cars and aeoroplanes burning fuel for pleasure  they surely will think that there `aint a problem.In fact it sends the message that fuel abuse is o.k., jump in the car and drive to the corner store.The truth is human beings are selfish and egotistical.Admit it, the majority want government or some other person/s  to `take care of it` .

Looking from an alternate perspective this present situation is just part of the evolution of human and whatever will be will be.Live your life to the fullest.

That`s my cuppla  and not even worth that.


----------



## Col Lector

*Re: OIL AGAIN!*

Coal to liquids (CTL) ...ie, prodn of synthetic diesel from insitu-coal, is a response to higher oil prices that seems likely to be more widely pursued/adopted...it seems maybe even by some of the most unlikely big energy consumers...... 


Quote:


> US air force eyes alternative fuel
> SMH October 27, 2007 - 5:49PM
> 
> The world's most powerful air force is seeking to wean itself from foreign oil and nearly wipe out its carbon dioxide output as part of a sweeping alternative energy drive, a senior Pentagon official said.
> 
> By early 2011, the US air force aims to make sure its entire fleet of bombers, fighters, transports and other aircraft can use a domestically produced 50-50 blend of synthetic and petroleum-based fuel.
> 
> William Anderson, an assistant air force secretary, said the goal was to reduce energy demand, look for cleaner power sources and to reuse captured carbon commercially, for instance to enhance the growth of biofuels or improve oil well production.
> 
> "We can get ourselves very close to a zero carbon footprint," said Anderson ahead of talks on the issue with counterparts in Britain and France next month.
> 
> "Not today. Not tomorrow. But maybe a decade or so down the road," he told a briefing at the State Department's Foreign Press Centre.
> 
> Anderson said the air force's economic clout as a purchaser could help promote sources of power that do not add to emissions of greenhouse gases. Such gases trap heat in the atmosphere.
> 
> The largest US solar-electric power array of 14.2 megawatts is to open in December at Nellis Air force Base in Las Vegas, and Anderson said Congress had asked the service to consider if its bases are appropriate sites for small nuclear facilities.
> 
> Anderson said the effort on synthetic jet fuel had been spurred by the 2006 challenge to the nation from President George W Bush to wean itself from its "addiction" to imported oil. Oil supplies are diminishing, Anderson said.
> 
> On Monday, a C-17 Globemaster cargo aircraft, workhorse of the US-led wars in Iraq and Afghanistan and the military's biggest user of jet fuel, flew for the first time with a coal-derived synthetic blend as the only fuel on board.
> 
> Anderson said jet fuel from coal produced 1.8 times more carbon dioxide between production and consumption as jet fuel from oil, but he said most of that additional amount could be captured during production of the synthetic fuel.
> 
> Coal was abundant in United States and renewable energy sources could not meet growing energy demands. "Coal is going to play big in the future, we believe, based on all projections," said Anderson, assistant secretary for installations, environment and logistics.
> 
> US air force global operations require a huge amount of energy. In fiscal 2006, the service consumed almost 2.6 billion gallons of aviation fuel at a cost of more than $US5.7 billion ($A6.3 billion), according to an air force fact sheet.
> 
> Jet fuel accounts for 81 per cent of the air force's total $US7 billion ($A7.7 billion) a year in energy spending, said Anderson.
> 
> For every $US10 ($A11) jump in the price of a barrel of oil, air force costs rise $US610 million ($A673 million), a sum that eats into modernisation efforts and other programs if not offset by additional funds from Congress, he said.
> 
> In France and in Britain, Anderson said he would reach out to industry as well as to sister air forces in the hope of speeding up energy-saving efforts worldwide.
> 
> "We believe that we have to find an environmentally friendly way to mine coal and to burn coal," he said. "We believe the technology is very close, and we believe that an organisation with the market size and presence of the United States air force can help move technology forward to make coal a much cleaner and greener alternative across the board."
> 
> © 2007 Reuters


----------



## rederob

*Re: OIL AGAIN!*

Brazil hit paydirt with a giant oil find last week: 8 billion possible barrels of recoverable oil/gas.
http://www.theaustralian.news.com.au/story/0,25197,22729385-5005200,00.html
Put into context, if we threw a switch and drew all oil from this field today until it ran out, we would be switching back next February: At 31billion barrels global consumption per year, the biggest oil find in many years is just a small blip on the "supply" side response.


----------



## ithatheekret

*Re: OIL AGAIN!*

I wince everytime I pull up to a pump and I traded the ute in an Astra Hatch , that at the time of deciding to do so would have cost me $40 to fill , that has risen by an average $15-$18 . Has it phased me ? No , just makes me uncomfortable at paying the high taxes attached per litre . Which the administration refuses to part with , no matter how hard a squeeze it is placing on economic conditions . There's your surplus ! 

But ..... looking at the oil price in a retroactive historical context in relation to our own situation here at home , pondering the thought that we are a small nation occupying a very large space , jammed packed with lots of goodies the globe needs right now . Escalate that into a situation where the rest of the globe starts to squabble about right of supply . ponder it enough and you could have nightmares . 

The thought of Iran being a target alone must be preciptated by the fact that in doing so it would also cut off another source the globe relies on , even if some of the global community may see them as a hinderance in the way of progress . Or was that democracy ?  

I saw the reports of that first appointed puppet installed , visiting an Iraqi police station and personally handing out a summary execution without a hearing , seven times in a row !
If that's Iraqi democracy you can keep it , because that will inflate anger within the region along with other act suchs as ....... not a good look when reflecting on Iraqi oil , which is still yet to make a contribution to the globes supply to meet demand .

Ergo , we should be happy , ney , estatic , that everyone wants to buy our commodities , instead of just taking them whilst the globes big stick is preoccupied .

Everyone is talking about $100 oil ........ I 'm more worried about $160 oil , but I will still drive that Astra 31kms to the shops in Gawler and 31kms back to take the missus shopping , paying the higher fuel cost , to avoid inflated convenience prices locally . We will still maintain our drive to Gawler Station to commute to Adelaide , which is 71kms away form home on a work day . We are always looking at reduction methods , but have 4 children and in our world they come first and last , so the grind continues , no matter the oil cost per barrel . 

It's just when the oil price stops me from doing my parental and marital duties , that I will finally spit the dummy , because any force that interfers with my families future will need decisive action by a government . That will and can only come by two means , a drop on petrol excise or a rise in wages to meet the expectations I must adapt to or be allowed be allowed to take some form of control over other than an election . The key element though is adaption . My faith lies not in governments to find a solution , but the oil companies , who will sell it to us , in doing so they will see organic growth .
At present I only have to adapt to a rising pump price , that I'm sure is the catayst for the 23% rise in the grocery bills , noting the weight reductions in packaged products , which is basically a way the company passes on its inflated costs to the consumers . 

That now leaves the other two previous matters firmly in the governments hands , be it either Blonk A or Blonk B that gets voted in , neither have yet mentioned anything in regards to an excise cut . And I know , that oil will surpass $100 a barrel , especially when I take into account , the price has been kept artificially low for decades , and calculations of it's fundamentals have it pointing to just over $116 a barrel already .


----------



## Knobby22

*Re: OIL AGAIN!*



ithatheekret said:


> I wince everytime I pull up to a pump and I traded the ute in an Astra Hatch ,
> 
> It's just when the oil price stops me from doing my parental and marital duties , that I will finally spit the dummy , because any force that interfers with my families future will need decisive action by a government . That will and can only come by two means , a drop on petrol excise or a rise in wages to meet the expectations I must adapt to or be allowed be allowed to take some form of control over other than an election . The key element though is adaption . My faith lies not in governments to find a solution , but the oil companies , who will sell it to us , in doing so they will see organic growth .
> At present I only have to adapt to a rising pump price , that I'm sure is the catayst for the 23% rise in the grocery bills , noting the weight reductions in packaged products , which is basically a way the company passes on its inflated costs to the consumers .
> 
> .




People need to change their behaviour. 

We already have low oil taxes compared to most other countries and it is a fair thing that road users be taxed as per a user pays basis. There is also the balance of payment problems exacerbated by the amount of oil imported. The more inefficient the car, the more tax paid. Seems fair to me!


----------



## Junior

*Re: OIL AGAIN!*

If you're concerned about the rising oil price make sure you own some WPL or have some exposure to oil stocks...share price gains will help pay for your tank of fuel.


----------



## CanOz

*Re: OIL AGAIN!*



BillNorman said:


> If you're concerned about the rising oil price make sure you own some WPL or have some exposure to oil stocks...share price gains will help pay for your tank of fuel.




Great idea, its called hedging. What does everyone think the airlines do in times of high fuel cost??? They go long oil futures...

The same can be done for home owners worried about rising interest rates...go long IR futures!

The above is not advice, but merely ideas...can anyone actually relate to personal types of hedging? I know one member here that is short on SPI futs, hedging their portfolio of ASX stocks.

Cheers,


----------



## Tysonboss1

*Re: OIL AGAIN!*



positivecashflow said:


> This was posted in another forum.  What do you think wayneL?




May I say I think you are completely wrong,

I don't believe oil will ever be below $65 a barrel ever again. 

Visit the thread below and you will see some very alarming charts that piont that the price of crude will only be going up.


http://www.propertyinvesting.com/forums/community/opinionated/4322125


----------



## BREND

*Re: OIL AGAIN!*

OPEC may be rising oil production.


----------



## Aussiejeff

*Re: OIL AGAIN!*



BREND said:


> OPEC may be rising oil production.




I have two observations on the above...

(1) If GWB attacks Iran, that news won't have much hope of stopping a rocket under the price. 

(2) OPEC are running almost flat-strap as it is. Any hiccups in production facilities after OPEC raises output to whatever level they think they can sustain in the short term and the price will leap....

AJ


----------



## BREND

*Re: OIL AGAIN!*



Aussiejeff said:


> I have two observations on the above...
> 
> (1) If GWB attacks Iran, that news won't have much hope of stopping a rocket under the price.
> 
> (2) OPEC are running almost flat-strap as it is. Any hiccups in production facilities after OPEC raises output to whatever level they think they can sustain in the short term and the price will leap....
> 
> AJ




Short oil futures does not need a long term view. You can check out my crude oil recommendation in my blog. 

And shorting oil futures does not mean that I'm bearish on oil in the long run.
I'm bullish on oil in the long term, I have invested in oil rigs and oil-related companies for years.


----------



## Aussiejeff

*Re: OIL AGAIN!*

Well, the dumping of carry trades in gold and oil commodities overnight might pull the rug from under the oil price in the short term, but it appears from this news that your tip about raising output is not on the agenda yet....


_"*OPEC Won't Raise Output at Summit, Gulf Officials Say (Update1) *

By Fred Pals and Tarek Al-Issawi

Nov. 12 (Bloomberg) -- OPEC, the producer of more than 40 percent of the world's oil, *has no plan to discuss raising production targets at its Heads of State Summit in Riyadh on Nov. 17-18*, oil officials from Iran and a Persian Gulf state said. 

The Organization of Petroleum Exporting Countries won't discuss raising supply at the summit and will instead discuss that during a Dec. 5 ministerial-level meeting in Abu Dhabi, United Arab Emirates, Iran's OPEC governor, Hossein Kazempour Ardebili, told the state-run Islamic Republic News Agency today. 

Separately, another oil official from a Persian Gulf state said by telephone today there was no plan to discuss or decide changes to production targets at the Riyadh summit, and that any such decision, should there be one, would wait until Dec. 5. "_


AJ


----------



## Tysonboss1

*Re: OIL AGAIN!*

The truth is that Opec really can't raise oil production,...

there really is not many oil feilds in the middle east that are not running 24/7 already. 

even if they did find some way to produce more,... it just means that the the other side of the "peak" will be much steeper,


----------



## BREND

*Re: OIL AGAIN!*

Saudi Oil Minister Ali al-Naimi said the Organization of Petroleum Exporting Countries will discuss output at a ministerial-level meeting in Abu Dhabi, United Arab Emirates, on Dec. 5. Saudi Arabia is the group's largest producer and the world's top oil exporter.

It looks as if OPEC will at least consider increasing oil production at the 5th of December OPEC conference. And if oil production is raised during the meeting on 5th of December, we are likely to see oil price falling below $90.


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> It looks as if OPEC will at least consider increasing oil production at the 5th of December OPEC conference. And if oil production is raised during the meeting on 5th of December, we are likely to see oil price falling below $90.



BREND
How many oil producers do you think are holding back production with oil prices at record highs?
My guess is *none* - although the Saudis may have some spare sour oil.
Assuming they could turn on a tap and more oil flows, exactly where do the extra supertankers appear from - we're talking about 30 more Suezmax vessels hitting the seas?
That said, producers can often eke out marginal extra output for short periods - but it's not a desirable way to run things in an industry fraught with safety concerns.  And it's not going to be a long term solution.
The run up to and over $90/bbl should have been short and sweet.
Currently it is more enduring than most expected.
This does not augur well for global economies.


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> BREND
> How many oil producers do you think are holding back production with oil prices at record highs?
> My guess is *none* - although the Saudis may have some spare sour oil.
> Assuming they could turn on a tap and more oil flows, exactly where do the extra supertankers appear from - we're talking about 30 more Suezmax vessels hitting the seas?
> That said, producers can often eke out marginal extra output for short periods - but it's not a desirable way to run things in an industry fraught with safety concerns.  And it's not going to be a long term solution.
> The run up to and over $90/bbl should have been short and sweet.
> Currently it is more enduring than most expected.
> This does not augur well for global economies.



Basically agreed.

And if output is pushed beyond sustainable limits then in due course it leads to serious damage to the oilfields with water breakthroughs etc.

But as for it being more enduring than most expected, the operative word is "most". Those who have been aware of the situation and predicting problems for quite some time (I'm one of them) aren't in the slightest bit surprised. Just as we won't be surprised when shortages start to appear - but again the markets etc will be "surprised".

Demand continues to rise. Production is flat for two and a half years. WHERE is that oil to meet demand coming from? Someone emptying above ground stocks, or at least ceasing to fill them, is the only plausible explanation. At some point that must end - just watch the oil price fly when it does. 

How long it can continue is anyone's guess but steadily increasing the drawdown of a diminishing inventory isn't sustainable that's for sure. IMO we're trying to maintain business as usual as long as possible. Then at some point we suddenly have no option but to cut consumption back to the (very slowly declining) rate of production. That's when the real trouble starts...

The debate about peak oil isn't about if it will happen. Few dispute that. The debate is about whether or not we saw the peak two and a half years ago or whether we'll see another, higher, peak at some point in the future.

What I'm more worried about though is not a fuel shortage, but what happens when the masses realise that there's a problem. Odds are that won't be until they can't buy petrol at ANY price because the tanks are dry. And nobody alive knows the exact state of affairs on a global basis - that's the greatest danger.


----------



## BREND

*Re: OIL AGAIN!*



Smurf1976 said:


> Basically agreed.
> 
> And if output is pushed beyond sustainable limits then in due course it leads to serious damage to the oilfields with water breakthroughs etc.
> 
> But as for it being more enduring than most expected, the operative word is "most". Those who have been aware of the situation and predicting problems for quite some time (I'm one of them) aren't in the slightest bit surprised. Just as we won't be surprised when shortages start to appear - but again the markets etc will be "surprised".
> 
> Demand continues to rise. Production is flat for two and a half years. WHERE is that oil to meet demand coming from? Someone emptying above ground stocks, or at least ceasing to fill them, is the only plausible explanation. At some point that must end - just watch the oil price fly when it does.
> 
> How long it can continue is anyone's guess but steadily increasing the drawdown of a diminishing inventory isn't sustainable that's for sure. IMO we're trying to maintain business as usual as long as possible. Then at some point we suddenly have no option but to cut consumption back to the (very slowly declining) rate of production. That's when the real trouble starts...
> 
> The debate about peak oil isn't about if it will happen. Few dispute that. The debate is about whether or not we saw the peak two and a half years ago or whether we'll see another, higher, peak at some point in the future.
> 
> What I'm more worried about though is not a fuel shortage, but what happens when the masses realise that there's a problem. Odds are that won't be until they can't buy petrol at ANY price because the tanks are dry. And nobody alive knows the exact state of affairs on a global basis - that's the greatest danger.




I think you all have mistaken, I already said that I'm bullish on oil in the long term. But that does not stop me from making money by shorting oil futures. Oil price has run up too fast and too steep, its due for a correction.

I'm an investor for Tranocean Inc (RIG), the biggest oil rig supplier in the world.


----------



## Aussiejeff

*Re: OIL AGAIN!*



BREND said:


> I think you all have mistaken, I already said that I'm bullish on oil in the long term. But that does not stop me from making money by shorting oil futures. Oil price has run up too fast and too steep, its due for a correction.
> 
> I'm an investor for Tranocean Inc (RIG), the biggest oil rig supplier in the world.




You got the short term correction right! 


Cheers,

AJ


----------



## BREND

*Re: OIL AGAIN!*



Aussiejeff said:


> You got the short term correction right!
> 
> 
> Cheers,
> 
> AJ




Yippie! Oil price down $3 last night.
Praise the Lord!


----------



## dj_420

*Re: OIL AGAIN!*



BREND said:


> Yippie! Oil price down $3 last night.
> Praise the Lord!




With oil having fallen quite a bit from its highs of $98 barrel I am tempted to go long again. What price frame are you looking at to go long BREND?

I might just try and catch some intraday movements until we find out what demand is doing, although it is certainly less volatile after that decrease in price. Do you trade current months or futures that fall in later months?

I think if we see demand slacken off again then a drop to the high 80's would be justified. It depends on the report of US demand which has been delayed by one day.


----------



## dj_420

*Re: OIL AGAIN!*

From todays chart oil has consolidated nicely between 91.25 and 91.50, it was trending nicely in that channel and then broke out to higher trading channel. Showed some consolidation here and has broken out again above 91.65 ish.

Looks good for a price rise tonight IMO with demand expected to rise, Im currently long on oil from that breakout of the higher trading channel.


----------



## dj_420

*Re: OIL AGAIN!*

Stopped out, seemed to be a false breakout, it seems volatility is returning to oil again, if it breaks short term support at 91.25 could go next leg down, found short term support around 90.20 ish earlier. 

Could this article have something to do with it?

A lot of people feel price of oil has been pushed way to high from speculation. I suppose if US dollar strengthens also or looks like it will stage a recovery oil prices will come off.

http://www.theglobeandmail.com/servlet/story/LAC.20071114.IBENERGYOPEC14/TPStory/TPBusiness/Africa/


----------



## Smurf1976

*Re: OIL AGAIN!*



BREND said:


> I think you all have mistaken, I already said that I'm bullish on oil in the long term. But that does not stop me from making money by shorting oil futures. Oil price has run up too fast and too steep, its due for a correction.
> 
> I'm an investor for Tranocean Inc (RIG), the biggest oil rig supplier in the world.



Not mistaken, just a different time perspective. I'm a long term investor (years) and not interested in day to day trading, hence I take a long term view of the oil price.

Nothing wrong with short term trading of course and if you're doing that then obviously you do want to be looking out for the drops in price when they come.


----------



## BREND

*Re: OIL AGAIN!*



dj_420 said:


> With oil having fallen quite a bit from its highs of $98 barrel I am tempted to go long again. What price frame are you looking at to go long BREND?
> 
> I might just try and catch some intraday movements until we find out what demand is doing, although it is certainly less volatile after that decrease in price. Do you trade current months or futures that fall in later months?
> 
> I think if we see demand slacken off again then a drop to the high 80's would be justified. It depends on the report of US demand which has been delayed by one day.




I think its too early to be bullish on oil price in the short term.
Tomorrow's inventory level may cause some volatility, but the crucial part is still result of OPEC meeting in December.

My next trading strategy is going long on S&P500 futures, you can check out the details in my blog.


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> I think its too early to be bullish on oil price in the short term.
> Tomorrow's inventory level may cause some volatility, but the crucial part is still result of OPEC meeting in December.
> 
> My next trading strategy is going long on S&P500 futures, you can check out the details in my blog.



BREND
I guess if you are trading then our daily posts make little difference to anyone's decision making processes.
Smurf recognises, rightly, that crude output peaked in 2005 and has since been flat.  The "oil" supply gap has been filled by natural gas liquids and oil sands.
However, presently we are seeing supply declines in so many mature oilfields that expected output appears to have been miscalculated.
Accordingly, the "gap fillers" need to ramp up output more significantly that anyone has forecast.
And the clincher here is that investment decisions needed to be made many years ago in order to ensure adequate future supply, because the oil tap takes year to tum on, not weeks or months.
Going into the northern summer, US has adequate "gas" (petrol) inventories, but is already tight on heating oils.  Should it be a harshly cold winter, the chances of inventory being adequate are not good: The US has not built a new oil refinery in almost 30 years and capacity expansions don't look like cutting it.
Moreover, with Asian demand increasing more rapidly than that for the US, it is possible that they get preference of supply.  You see, it's cheaper to ship oil to China than the US, so if Asian buyers matched the bids from US customers, the shippers make more delivering to Asia.
In a world of extremely tight supply, diverting one VLCC (very large Crude carrier) to Asia would take away 2 millions barrels of crude from the US market.  
That's enough to send an even bigger shiver to Americans suffering a bleak, 
cold winter over coming months.

But I digress.
I believe peak oil is now upon us.
2008 will, at best, see some price relief based solely on demand destruction that will consistently occur henceforth.
That said, there is still plenty of oil.
It just won't be produced quickly, or cheaply, anymore.
I am therefore going long term bullish copper as "electric" transport options based on gas, coal, renewables and nuclear power become the new paradigm.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> BREND
> I guess if you are trading then our daily posts make little difference to anyone's decision making processes.
> Smurf recognises, rightly, that crude output peaked in 2005 and has since been flat.  The "oil" supply gap has been filled by natural gas liquids and oil sands.
> However, presently we are seeing supply declines in so many mature oilfields that expected output appears to have been miscalculated.
> Accordingly, the "gap fillers" need to ramp up output more significantly that anyone has forecast.
> And the clincher here is that investment decisions needed to be made many years ago in order to ensure adequate future supply, because the oil tap takes year to tum on, not weeks or months.
> Going into the northern summer, US has adequate "gas" (petrol) inventories, but is already tight on heating oils.  Should it be a harshly cold winter, the chances of inventory being adequate are not good: The US has not built a new oil refinery in almost 30 years and capacity expansions don't look like cutting it.
> Moreover, with Asian demand increasing more rapidly than that for the US, it is possible that they get preference of supply.  You see, it's cheaper to ship oil to China than the US, so if Asian buyers matched the bids from US customers, the shippers make more delivering to Asia.
> In a world of extremely tight supply, diverting one VLCC (very large Crude carrier) to Asia would take away 2 millions barrels of crude from the US market.
> That's enough to send an even bigger shiver to Americans suffering a bleak,
> cold winter over coming months.
> 
> But I digress.
> I believe peak oil is now upon us.
> 2008 will, at best, see some price relief based solely on demand destruction that will consistently occur henceforth.
> That said, there is still plenty of oil.
> It just won't be produced quickly, or cheaply, anymore.
> I am therefore going long term bullish copper as "electric" transport options based on gas, coal, renewables and nuclear power become the new paradigm.




That's right, I'm bullish on oil in the long term. Looking to add on to my Tranocean Inc holdings if price goes lower.

The best time to go long on copper is end of Dec or early Jan, that is when demand for copper is at its most quiet stage. 

And usually rise during Chinese New Year period, this is because funds will come in and accumulate long positions in copper before Chinese merchants start to buy copper inventory for their operation. 

But I'm bullish on BHP Billiton, Rio Tinto, CVRD all year round. See the difference again? Trader for futures, but investor for equities.


----------



## rederob

*Re: OIL AGAIN!*

A short term look at oil suggest that it really cannot sustain itself in the plus$90 range.
That might sound good, but how does it look?
Tracking oil's trend over the past 3 years suggests that if it is to regain its former glory, then it presently remains underdone.
Below I have simply added a channel it could follow, were it to be truly bullish.
In fact, being under $100/bbl places it below trend!
So reaching $100 will be a formality - could even be tonight.
The question is what will oil average next year.
My view is that oil will average at least $120 in calendar 2008.
My suspicion is that I have underestimated.
Certainly, if POO returns to its trend channel next year, then a much higher average price is inevitable.


----------



## BREND

*Re: OIL AGAIN!*

My view: OPEC decision in Dec meeting on whether to increase oil production will have a major impact on the oil price till the end of winter season.

Yesterday shorted Comex copper and shorted S&P 500, stated in my blog. Working to short oil at $100, and buy silver at $14.00.


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> My view: OPEC decision in Dec meeting on whether to increase oil production will have a major impact on the oil price till the end of winter season.
> 
> Yesterday shorted Comex copper and shorted S&P 500, stated in my blog. Working to short oil at $100, and buy silver at $14.00.



BREND
OPEC's decision may have a very short impact.
The reality is that the Saudis may have some limited spare capacity.  But in the last 2 years they have made no meaningful contribution to a supply side response.
So if their words are not matched with results in 2008, the jig's up and you need to look long.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> BREND
> OPEC's decision may have a very short impact.
> The reality is that the Saudis may have some limited spare capacity.  But in the last 2 years they have made no meaningful contribution to a supply side response.
> So if their words are not matched with results in 2008, the jig's up and you need to look long.




Understand, and totally agree with u. 

By the way, I had done so backtesting on oil, and posted them in my blog, it might interest u with the results..


----------



## moneymajix

*Re: OIL AGAIN!*

*Oil shale may finally have its moment*

In a dusty corner of northwestern Colorado, an energy of the future is beginning to look like the real thing. Can oil shale work? 
Fortune's Jon Birger reports. 


http://money.cnn.com/2007/10/30/magazines/fortune/Oil_from_stone.fortune/index.htm


----------



## ithatheekret

*Re: OIL AGAIN!*



moneymajix said:


> *Oil shale may finally have its moment*
> 
> Can oil shale work?





It's sounds like an expensive way to get oil , but perhaps the supply stress and the pricing would make it feasible .


----------



## Tysonboss1

*Re: OIL AGAIN!*



moneymajix said:


> *Oil shale may finally have its moment*
> 
> Can oil shale work?
> ]




I think the real question is can the planet afford the carbon emmisions relating to oil shale and oil sands,....

these technoligies can be devasting to the environment both locally and gloablly,

1, oil sands and oil shale mining turns oil production into a mining operation,.... massive open cut mines are used to get at the oil shale,... 

2, Most of the current oil sands, oil shale and coal to oil production facilities burn about 6 times as much energy in natural gas than they produce in oil. so you still have all the emissions related to burn the oil as well as the burning of the natural gas to produce it.


----------



## rederob

*Re: OIL AGAIN!*

Am tipping $100 oil tonight.
Enough's enough.
The line just has to be crossed soon!


----------



## Smurf1976

*Re: OIL AGAIN!*



Tysonboss1 said:


> I think the real question is can the planet afford the carbon emmisions relating to oil shale and oil sands,....
> 
> these technoligies can be devasting to the environment both locally and gloablly,
> 
> 1, oil sands and oil shale mining turns oil production into a mining operation,.... massive open cut mines are used to get at the oil shale,...
> 
> 2, Most of the current oil sands, oil shale and coal to oil production facilities burn about 6 times as much energy in natural gas than they produce in oil. so you still have all the emissions related to burn the oil as well as the burning of the natural gas to produce it.



Carbon emissions are a bigger one than most seem to realise. 

If you looked only at resources in the ground then, for example, we'd be flat out (globally) building coal-fired power plants in order to close the gas-fired plants. Likewise we'd be converting industry to coal wherever possible too.

Trouble is, in a carbon constrained world we may find that most of our fossil fuel reserves may as well not be there. Coal, tar sands, shale etc. That's almost all of our fossil fuel resources. And all set to be effectively worthless. Indeed to some extent it already is - no many will invest in a major plant that could be outlawed in a decade or tow.

Oil and gas are a tiny fraction of the energy resources we have. And yet they represent the bulk of energy consumption. That, ultimately, is the problem. The good point with gas is that its development has lagged oil - but it ultimately is headed exactly the same way.


----------



## rederob

*Re: OIL AGAIN!*

Fire up the charts: http://http://news.bbc.co.uk/2/hi/business/7118323.stm


----------



## Captain_Chaza

*Re: OIL AGAIN!*

Crikey Rederob 

I hope you have a "Bloody Good Allibi?"

As you have documented in recent days 
You certainly have the motive  


Salute and Gods' speed


----------



## dj_420

*Re: OIL AGAIN!*

Oil seems to be falling now given the spike we saw yesterday due to exploding pipelines.

Overnight February contracts tested the broke through the $90 mark but found good buying support there.

Gone long on a couple of contracts, I think the market is still very tight and given the buying support at these levels it may prove to be cheap in the coming month.

I feel at these prices much easier to go long than be short on a commodity with tight supply.

Will be interesting if OPEC can commit the additional oil they say they can, given the fact that earlier they were stating they could not provide additional oil.


----------



## rederob

*Re: OIL AGAIN!*



dj_420 said:


> Oil seems to be falling now given the spike we saw yesterday due to exploding pipelines.
> 
> Overnight February contracts tested the broke through the $90 mark but found good buying support there.
> 
> Gone long on a couple of contracts, I think the market is still very tight and given the buying support at these levels it may prove to be cheap in the coming month.
> 
> I feel at these prices much easier to go long than be short on a commodity with tight supply.
> 
> Will be interesting if OPEC can commit the additional oil they say they can, given the fact that earlier they were stating they could not provide additional oil.



I think this is a case of "buying the rumour".
I hope oil drops another $10 as it will get excellent technical support around the $80 level.
Furthermore, I think the main players realise that despite the huffing and puffing of OPEC, oil has little downside left because demand is simply too strong.
China would ship in more oil if it could refine it - but it can't: It's relying more and more on refined product and as a result gas station queues are becoming a problem.
Oil has become a no brainer for longs: It's just a matter of riding this one down and hoping the bottom point will plateau long enough to get another strong push to $100 mark again.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> I think this is a case of "buying the rumour".
> I hope oil drops another $10 as it will get excellent technical support around the $80 level.
> 
> .




I would like to make a bet that oil will not trade a $80 ever again,...


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> I would like to make a bet that oil will not trade a $80 ever again,...



I will take your bet and double it.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> I will take your bet and double it.




Care to set a date that you believe oil should have dropped to $79.99 by


----------



## numbercruncher

*Re: OIL AGAIN!*



Tysonboss1 said:


> Care to set a date that you believe oil should have dropped to $79.99 by




The us senate just wrapped up a deal to improve US vehicle efficency by 40pc by 2010 .....

In Europe vehicles average about 37 miles per gallon and are set to get 50 miles a gallon by 2012 .....

US has turned millions of acres of farmland into Ethanol growing ...


Last price was 88.37



> In London, January Brent crude dropped $1.41 to $88.81 a barrel on the ICE Futures exchange.
> 
> Oil prices have tumbled this week amid speculation that supplies are rising and a slowdown in U.S. growth will undercut energy demand.
> 
> "If the price drops below $90, the correction process will no doubt accelerate rapidly, making a level of $80 a barrel quite likely in the next few weeks," said Commerzbank analyst Eugen Weinberg in Frankfurt.





http://money.cnn.com/2007/11/30/markets/oil.ap/index.htm?postversion=2007113015


Just armed with this info the natural assumption should be downward pressure on Oil prices.


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> The us senate just wrapped up a deal to improve US vehicle efficency by 40pc by 2010 .....
> 
> In Europe vehicles average about 37 miles per gallon and are set to get 50 miles a gallon by 2012 .....
> 
> US has turned millions of acres of farmland into Ethanol growing ...




Increasing vechicle efficiancy is good,... but the national car fleet has a very slow turnover the average life of a car is over 10 years,... so it takes years for any change in vehicle standards to become mainstream and have a large impact

even if you scrapped every car world wide and replaced it with a fuel sipping hybrid you would only extend the life of the oil reserves by 7 years due to the world wide economic growth, 

if demand for energy is growing by 5% / year,... in 7 years it has increased by 50%,... so within the next 7 years we have a few options,

1, Increase oil production by 50%,..(probally not going to happen)

2, every piece of machinery that uses oil needs to be using 50% less oil (maybe,.. but not likely)

3, we need to bring alternatives to market that are equal to about 15billion barrels of crude oil energy / year.


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> Increasing vechicle efficiancy is good,... but the national car fleet has a very slow turnover the average life of a car is over 10 years,... so it takes years for any change in vehicle standards to become mainstream and have a large impact
> 
> even if you scrapped every car world wide and replaced it with a fuel sipping hybrid you would only extend the life of the oil reserves by 7 years due to the world wide economic growth,
> 
> if demand for energy is growing by 5% / year,... in 7 years it has increased by 50%,... so within the next 7 years we have a few options,
> 
> 1, Increase oil production by 50%,..(probally not going to happen)
> 
> 2, every piece of machinery that uses oil needs to be using 50% less oil (maybe,.. but not likely)
> 
> 3, we need to bring alternatives to market that are equal to about 15billion barrels of crude oil energy / year.




Oddly enough, very few people understand the basis maths behind the impending energy crisis.
2008 will be great for oilers.
2009 fantastic.
2010 - could it get betterer!

It's also why I am bullish copper in medium term - best medium for electricity expansions and electric motors in particular.


----------



## numbercruncher

*Re: OIL AGAIN!*

I also have no doubt about the long term implications of peak oil, but was just showing some facts in response to the claim that oil under 80$ is impossible, which imho clearly isnt impossible,its only 10pc away from that.





> But the most closely-watched issue was fuel efficiency. The new standards could alter the economics of driving: The cost of new cars would at first increase but over time be offset by savings at the pump.
> 
> "The cost of the technology is dwarfed by the oil savings," said Ann Mevnikoff, Washington representative for the Sierra Club. "I think the American people would rather put that money into technology rather than see it disappear in oil."
> 
> Mevnikoff said by 2020 the country could save 1.2 million barrels of oil a day, or about the same amount the country currently imports from the Middle East. Even factoring in the technology costs, she said the savings would amount to $26.5 billion a year.




http://money.cnn.com/2007/12/01/news/economy/fuel_efficiencysat/index.htm

Gawd knows what the worlds Hungry are going to be eating once oil hits 200, and all the good farmland is planted out for fuel ....


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> I also have no doubt about the long term implications of peak oil, but was just showing some facts in response to the claim that oil under 80$ is impossible, which imho clearly isnt impossible,its only 10pc away from that.
> 
> :




I wasn't saying oil under $80.00 was impossible,.... after all nothing is certain in the markets except the madness of man,....

Oil will drop closer to $80 due to the end of the USA driving season after all  oil tends to take 3 steps forward one step back, 

I  just don't feel that it will drop below $80 and if it does it won't be far below and it won't be there for long.


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> http://money.cnn.com/2007/12/01/news/economy/fuel_efficiencysat/index.htm
> 
> :




By 2020 if we are to maintain oil production at todays levels we would have to have found over 300 Billion barrels of oil reserves just to replace the reserves we deplete between now and then and thats just to maintain production at current levels let alone growth in demand,..... 

Using grain to make ethanol doesn't take away much food production,.... one of the by products of ethanol production is "distillers grain" which is a high protein animal feed used in feed lots,.... ethanol can also be made from waste products from sugar cane milling,... flour milling,... grain husks and wood chips,..... we are just scratching the suface when is comes to biofuels,...

I think the energy industry will be very exciting over the next 10 years,... there will be no real silver bullet but biofuels do have a place in the future energy mix.


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> I wasn't saying oil under $80.00 was impossible,.... after all nothing is certain in the markets except the madness of man,.....



Technically a bounce off $80 will look good for more upside.
Fundamentally the fact oil has traded as long as it has as high as it is, is unusual.  The steepness of its rise - almost doubling in price under 12 months - suggests a sharp retrace was on the cards: The fact it doesn't even look likely at present is ominous (price-wise).


> Oil will drop closer to $80 due to the end of the USA driving season after all  oil tends to take 3 steps forward one step back,



I think driving season is long gone.  We are now into the distillates for heating oil. 


> I  just don't feel that it will drop below $80 and if it does it won't be far below and it won't be there for long.



The gold: oil link remains the current key to movements.  There is not much sway in one without the other.


----------



## BREND

*Re: OIL AGAIN!*

After closing short position on oil futures, looking to buy oil at US$80.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> Technically a bounce off $80 will look good for more upside.
> Fundamentally the fact oil has traded as long as it has as high as it is, is unusual.  The steepness of its rise - almost doubling in price under 12 months - suggests a sharp retrace was on the cards: The fact it doesn't even look likely at present is ominous (price-wise).
> 
> I think driving season is long gone.  We are now into the distillates for heating oil.
> 
> The gold: oil link remains the current key to movements.  There is not much sway in one without the other.




If you are so sure that oil will not reach $80 again, OR if it reaches $80, it will rebound, why don't u sell Crude Oil Jan08 Put options strike price $80? 

Its only a few days away from the expiration, and the premium looks still pretty decent. 

That's what we have been recommending to our clients these few days.


----------



## Whiskers

*Re: OIL AGAIN!*



moneymajix said:


> *Oil shale may finally have its moment*
> 
> In a dusty corner of northwestern Colorado, an energy of the future is beginning to look like the real thing. Can oil shale work?
> Fortune's Jon Birger reports.
> 
> 
> http://money.cnn.com/2007/10/30/magazines/fortune/Oil_from_stone.fortune/index.htm




How about oil sands in Alberta Canada???

Economical and more oil than all OPEC reserves!!!

I have heard of them before, but that they are now very economical to produce is news to me. What a hell of a pot of gold for Canada if it comes to fruition. More importantly, could we see a price war by OPEC to limit it's viability?



> The Oil Reserve 8 Times Bigger
> than Saudi Arabia's
> 
> All of a sudden, the oil sands in Alberta, Canada have become a veritable “black gold” mine. And Big Oil’s heavy hitters are wishing they acted sooner…
> 
> Just three years ago, when the average price of crude was $29.63 a barrel, producers didn’t find the profits to be worth the costs of processing the oil sands.
> 
> But improvements in mining technology have dramatically reduced the cost of extraction, rocketing bottom lines skyward. According to the Oil Sands Discovery Centre in Alberta, it now costs an average of just $13.21 to process each of the 2.5 trillion barrels of oil embedded in the sands – a reserve 8 times bigger than Saudi Arabia’s… containing more oil than all OPEC nations combined.
> http://www.investmentu.net/ppc/t4mideastoil.cfm?kw=X300GA05


----------



## GREENS

*Re: OIL AGAIN!*

Here is an interesting article about the oil sands in Alberta Canada (goes of track abit, but makes some good points throughout). From an economic point of view, it looks like the environmental costs (i.e. significant quantities of  land clearing, water use and high levels of carbon emissions) required in extracting the heavy oil will far outweigh the benefits. I think this is going too far to get at oil and looks like a very dirty industry. But everyone to there own. 

Here is an interesting article about the oil sands in Alberta Canada. From an economic point of view, it looks like the environmental costs (i.e. significant quantities of  land clearing, water use and high levels of carbon emissions) required in extracting the heavy oil far outweigh the benefits. I think this is going too far to get at oil and looks like a very dirty industry. No-one that even slightly places some value on the environment would accept this as a real possibility. But everyone to there own. 

Canada's oil: black gold with a black heart 
Date: November 11 2007 (SMH)
by Aida Edemariam 

You've only got to stroll down Hardin Street to the main drag, then hang a left and walk a couple more short blocks, to see what Fort McMurray is about. It wouldn't be the whole story, but you would catch the drift.
You'd pass the Boomtown Casino, strip malls, and a club called Cowboys proudly advertising "naughty schoolgirl nights". Then the Royal Canadian Mounted Police station, the municipal offices, the Oil Sands Hotel and Diggers bar, with its advertisement for exotic dancers.

You would be passed by Humvees and countless pick-up trucks, each more souped up than the next, many covered in dried mud, many carrying further four-wheel-drives - in winter, snowmobiles; in summer, all-terrain vehicles on which to go chasing through the bush, which is visible from the main street. And if the wind is from the north-west, you can smell oil on the air: heavy, slightly sour, unmistakable. Around here, they call it the smell of money.
As the Middle East has become more unstable and as Iraq has boiled into chaos, other, unexpected places have flourished, and none more so than Fort McMurray. Five hours' drive north of Edmonton, in Alberta, it has always been a frontier town, and even before the first white explorers came fur-trapping, the Indians knew that this place sat on oil - they used it to waterproof their canoes.

The trouble has always been that it's not conventional crude, easily liberated from the earth, but tar sands (also known as oil sands) - a mixture of sand, water and heavy crude that is much more difficult and expensive to extract. It can cost about $C26 ($30) a barrel to extract - so when that was comparable to the price of oil, there was no point in trying; but now that oil is close to breaking the $US100-a-barrel barrier ($108), there definitely is.
For years there were only two outfits mining the Athabasca Oil Sands, which occupies 141,000 square kilometres; now there are seven, including Shell. In total, 1.2million barrels are extracted each day from these sands, a number projected to rise to 3.5million. Eventually, Shell alone intends to extract 500,000 barrels a day.

The companies intend to invest $C100billion in the area in the next 15 years. If oil prices stay as they are, or rise, they're playing for possible profits of tens of billions of dollars a year - much of which will come from America, gleeful at this sudden access to so much "safe" oil right next door.
Current technology means companies can reach only about 10 per cent of deposits, but even that makes the Athabasca Oil Sands the second largest proven oil reserve in the world. Add in the so-far-unreachable 90 per cent, and Alberta's oil reserves would be at least six times the size of Saudi Arabia's. Already, Canada produces as much oil as Kuwait. Small wonder Canada is increasingly described as the world's next energy superpower.
Ask almost anyone why they're in Fort McMurray and the answer is the same. A quick rub of forefingers and thumb, a knowing look. Or, in the words of irrepressible 11-year-old Ron Mfoafo-M'Carthy, here with his sister and mother to visit his father, a Ghanaian engineer: "Cha-ching!"
Projects are going up so fast that there is a huge shortage of skilled labour, and the companies are paying way over the odds to get it. An engineer such as Johnny Mfoafo-M'Carthy can make up to $C220,000 a year here, compared with $C90,000 in Toronto. You only need a high-school education and a six-month certificate to qualify for a $C100,000-a-year job driving heavy equipment. One cocky 26-year-old I meet claims he sometimes earns $C1000 a day driving a truck.

That explains why people come from across the world, to a town whose weather can be, even by Canadian standards, brutal. In winter, temperatures fall below -40 for weeks.

Fort McMurray's population - average age 31, average family income $C135,000 (the highest in Canada; the national average is $C67,600) - includes representatives from more than 70 nations including Fijians and refugees from the wild Somali-Ethiopian borderlands.
In my first 24 hours in Fort McMurray, every conversation I overhear involves cash. Hourly rates; possible hourly rates; hourly rates the other guy is getting.

It is possible to have a very good life in Fort McMurray. You can treble your salary, buy two homes, dig a swimming pool, pay off your mortgages 20 years earlier than anyone else and retire.

You can go skiing, fishing, hunting and trapping in the vast outdoors you can see from any one of the sprawling new suburbs going up as fast as contractors can build them.

Just as the California gold rush came to define the American dream, so Fort McMurray defines a particular kind of Canadian dream: go west; Fort McMurray can change your life. But first, perhaps, consider what price you are willing to pay.

Apart from the smell, you get little sense of what the oil sands are like unless you drive 45 minutes up Highway 63 and take a site tour of, say, Syncrude, the world's largest producer of synthetic crude.

After the forest is cleared and the peat bog removed, what's left is dark, molasses-like, oil-saturated sand, which is transported by trucks with tyres as high as two-storey houses.

Mining this way is hard, boring, ugly work. In winter there can be so much steam that bulldozer drivers have to inch around, hoping not to topple into tar pits. In summer the dust has to be sprayed down.

The extraction of the oil requires heat, and thus the burning of vast amounts of natural gas. Some estimate that Fort McMurray and the Athabasca Oil Sands will soon be Canada's biggest contributor to global warming.

The oil sands excavations are changing the surface of the planet. The black mines can now be seen from space. Acid rain is already killing trees and damaging foliage. The oil companies counter that they are replanting grass for bison and 4.5 million trees by Syncrude alone.

Two barrels of water are required to extract one barrel of oil; every day as much water is taken from the Athabasca river as would serve a city of a million people. Although the water is extensively recycled, it cannot be returned to the rivers, so it ends up in man-made "tailings ponds" (tailings is a catch-all term for the by-products of mining), which are also visible from space.

Leigh Wild drives a bulldozer for Syncrude. It's a good job and she is grateful for it, but there are things that trouble her. The sandhill cranes, for example.
"When I'm at the end of a night shift, at dawn, or when the sun goes down, I see them walking out through the discharge from the coke line, eating insects. I try to scare them away, because it's so sad to see them in such a place. Almost heartbreaking."

Mayor Melissa Blake has the unenviable job of running a town that is buckling under the demands of a population that has doubled in the past 10 years from 32,000 to about 65,000. It is projected to grow by another 40,000 in the next five years. A new sewage treatment plant, begun before a credit agreement was even in place, will be finished in 2009 - and will be too small a year later. A school that took three years to build was too small a year before it opened.

This is an overwhelmingly male place: lots of cash, lots of men. A few come with partners; many do not. The persistent urban myth is that this is the divorce capital of Canada. There are no figures, but plenty of stories of women arriving to surprise husbands on anniversaries, only to find the marriage defunct; of one or both working such long hours that the marriage collapses out of sheer disuse; or the children spin out of control.
"Family life takes a beating here - big time," says Dave Drummond, president of the Communications Union. At the Lion's Den, a dark, dingy boozer full of tired men downing Labatt Blues, Kim Pabrelko, 21, says women are always having to defend themselves.

"That's a big reason why I like working behind the bar," she says. But she is sympathetic, too. She sees a lot of loneliness. "Eighty per cent have families back home."

The town is up in arms about a recent article in the Canadian magazine Chatelaine that noted that escorts make more here than anywhere in Canada, and described a dating atmosphere of rampant mistrust and betrayal. You can see why people are insulted, but it's not hard to understand how the piece came to be: there are 11 pages of escorts in the Yellow Pages (annotated, in my hotel room), and the subject often comes up with little prodding.

Men complain that women just want them for their money but, as one woman said tartly, if they will go out at night wearing a Syncrude badge (guaranteed $C100,000 a year), what do they expect? In their defence, it's a way of standing out from the crowd; it probably also provides a kind of armour, though not against gold-digging.


----------



## rederob

*Re: OIL AGAIN!*

With oil prices closing over $90 overnight - after dipping into the high eighties for a while - there seems little chance that $80 will get hit in the near term.
OPEC says it won't increase output.
I'm now going to read that as "code" for *cannot *increase output.
The Saudis are not silly.
They know high prices stymie demand.
They are not keen to kill the golden goose.
By the same token, if OPEC said it would increase output, and then failed to deliver, the whole world would panic prices to oblivion.
I think the big funds know which way is up: They will not gamble on oil's downside until there are real signs it has a downside.
Presently we are on track for $100 more quickly than $80 - that's if the latter ever gets another look in.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> I will take your bet and double it.




So does that mean for now I am ahead in our little bet,..


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> So does that mean for now I am ahead in our little bet,..



Yes!
But in taking the bet, I'm doubling the profit on a long, not a short, position.

Seriously though, it really looks as if the market has capitulated on the supply-side response: There isn't any.
Big deal dropping from over $99 to high $80s - it's hardly a blow-off top to write home about.
Moreover, buying support is very strong; it's non indecisive or wishy-washy.
The indications are that a stronger longer move is ahead.

On the flip side should $80 be hit, then I have put aside a very tidy sum to accumulate more oilers (BPT being my preference for now given its tardiness, but steadiness).


----------



## chops_a_must

*Re: OIL AGAIN!*



rederob said:


> I'm now going to read that as "code" for *cannot *increase output.



Indeed.

I think we have seen peak oil through the markets, this Australian Spring. Finally there is a recognition.

Bye bye US economy...


----------



## Tysonboss1

*Re: OIL AGAIN!*

I have setup an investment trust linked to one of my companies where I will be putting aside about 15% of profits from the business each week to be invested using the dollar costed averaging method,.... I want to use this trust to build up some longterm holdings in companies.

I am thinking of investing about 75% of the funds into companies that will benefit from the transition of energy over the coming years, Besides the oilers what what other companies to you think will benefit,


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> I am thinking of investing about 75% of the funds into companies that will benefit from the transition of energy over the coming years, Besides the oilers what what other companies to you think will benefit,



Besides the oilers, uranium producers.
Although PDN is battling to break out, I suspect that when oil prices have jumped the $100 hurdle there will be another rush, and price spurt for uranium.
Low debt, cashed up, long reserve, minimally hedged, low cost, producers is my investment rule of thumb. 
Outside chances are the renewables, where there is a smÃ¶rgÃ¥sbord to choose from.
My preference will be wave power over wind power and solar in the longer term, as wave power and desalination can work hand in glove.  I believe the need for fresh water will be a key investment theme within ten years, at a global level.  A glitch in my thinking is that Asia's proximity to coastline for its massive population increases is nothing like Australia's - so I might need a re-think.
Aside from the above, I think BHP's cash position (and uranium reserves) places it in a position to take advantage of whatever energy swings become evident as time goes by.


----------



## Smurf1976

*Re: OIL AGAIN!*



chops_a_must said:


> Indeed.
> 
> I think we have seen peak oil through the markets, this Australian Spring. Finally there is a recognition.



At the risk of appearing somewhat big headed, that would put the timing exactly as predicted by Smurf some years ago. 

Seriously though, I was hoping to be wrong about this one. 

It seems we're passed the point of maximum oil production. Next, and not far away, comes the point where combined production of oil and gas begins to slide as the growth in gas fails to offset declines in oil.

Then gas actually peaks. Probably sooner than most expect given a three quarters concentration of the resource in a very small number of countries plus the serious depletion of North American and North Sea reserves.

Sometime after that, and it will likely be a while yet, we get a situation where the combined availability of oil, gas and coal peaks as the growth in coal fails to offset declining oil and gas availability.

And then finally, we get a peak in coal itself. A situation that's already happened in a few places, most notably the UK about 90 years ago (though to this day that resource driven peaking is rarely acknowledged).

Hence my very long held view that we'll be using gas to replace oil for transport etc and will be scrambling to find anything other than oil and gas with which to run industry and especially generate electricity. 

And for the ordinary consumer, it's starting to get expensive. Power prices are starting to rise and there is plenty more to come. Petrol is up, so is diesel. LPG's getting expensive too. Natural gas is still relatively cheap - but it's increasingly acknowledged that Australian gas is undervalued so that won't last.


----------



## chops_a_must

*Re: OIL AGAIN!*



Tysonboss1 said:


> I have setup an investment trust linked to one of my companies where I will be putting aside about 15% of profits from the business each week to be invested using the dollar costed averaging method,.... I want to use this trust to build up some longterm holdings in companies.
> 
> I am thinking of investing about 75% of the funds into companies that will benefit from the transition of energy over the coming years, Besides the oilers what what other companies to you think will benefit,




I'm pretty biased, but mid-long term I don't think you can go past some of the Australian gas stocks, particularly ones with assets in Asia.

And as rederob said, renewables. But you still have to be quite selective in those I feel.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> With oil prices closing over $90 overnight - after dipping into the high eighties for a while - there seems little chance that $80 will get hit in the near term.
> OPEC says it won't increase output.
> I'm now going to read that as "code" for *cannot *increase output.
> The Saudis are not silly.
> They know high prices stymie demand.
> They are not keen to kill the golden goose.
> By the same token, if OPEC said it would increase output, and then failed to deliver, the whole world would panic prices to oblivion.
> I think the big funds know which way is up: They will not gamble on oil's downside until there are real signs it has a downside.
> Presently we are on track for $100 more quickly than $80 - that's if the latter ever gets another look in.




I read it another way, believe that high oil price is hurting demand. 
US and Europe oil consumption currently made up of 53% of world's oil demand, and both economies are getting weak. Hence no additional production is necessary.

Hence still holding on to my short position for Crude Oil futures Jan08 at US$89.25, not taking profit yet.  

But still positive on oil in the long run, I'm a great fan of Transocean Inc (world's biggest oil rig contractor).


----------



## ithatheekret

*Re: OIL AGAIN!*

I looked at the heating oil last night as it fell back , it did surprise me .

The summer drive time whilst a big event in the US for gasoline and oil , can be overlapped by extremely cold weather conditions in the Nthn Hem .

I havn't looked in to see if the retooling is under way readying for Santa and the snows etc. , but I expect the price to rise . IMHO


----------



## Tysonboss1

*Re: OIL AGAIN!*



chops_a_must said:


> I'm pretty biased, but mid-long term I don't think you can go past some of the Australian gas stocks, particularly ones with assets in Asia.
> .




Yeah, I believe gas will be strong to,.... I have already taken some long term positons in gas I believe gas will find strengh because it is a double edged sword,

Firstly natural gas can be used as an alternative transport fuel as compressed natural gas, and increasingly as a diesel and petrel alternative using "gas to liquid" technology.

And also the growing use of gas fired electricity and increasing household use as the national gas grid becomes a reality will ensure long term demand.

especially because of the large size of australias natural gas reserves when you take into account the develping  "coal seam methane" industry, and the existing gas networks which once linked will make gas the most readily available fuel to australias cities.

For a long term income hold I like AGL because the have a finger in Gas production,... Transport,... ,.. storage and retail of both natural gas and lpg,

Agl also has electricity generation assets and a growing protfolio of renewable generation assets ( hydro, wind and land fill gas projects).


----------



## bean

*Re: OIL AGAIN!*

Just listening to a program where they were mentioning peak of all kinds in July 2006 (oil, natural gas,ethonal etc) .... Also Doctor Hubbert's...june 6th  1974 Testomony to house of representatives  in 1974 that amount of energy from sun effecient amount of energy enough to meet needs of worlds .  

However as normal OIL US$ 150 and they may start doing something


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> I read it another way, believe that high oil price is hurting demand.
> US and Europe oil consumption currently made up of 53% of world's oil demand, and both economies are getting weak. Hence no additional production is necessary.



That's not a logical take.
It implies 47% of demand is not of consequence.
Moreover, it implies that non-OECD demand is not growing at a rate greater than OECD demand.
The table below (US DOE 2006 projections) shows that is *not *the case.
Most importantly, gross demand in non-OECD countries is of a greater actual volume.
Finally, while there may be both demand destruction through higher prices, and demand weakness in western economies, there is no indication that total demand will do other than rise.  That being the case, we need evidence that supply is up to the mark, *immediately*.  So far the indications favour concerns about supply - thus oil prices remain nearby $90 with all price weakness being well bought.


----------



## chops_a_must

*Re: OIL AGAIN!*



Tysonboss1 said:


> For a long term income hold I like AGL because the have a finger in Gas production,... Transport,... ,.. storage and retail of both natural gas and lpg,
> 
> Agl also has electricity generation assets and a growing protfolio of renewable generation assets ( hydro, wind and land fill gas projects).




I honestly don't like energy retailers at the moment. And I especially don't like AGL. I think people can do much better than them...


----------



## Tysonboss1

*Re: OIL AGAIN!*



chops_a_must said:


> I honestly don't like energy retailers at the moment. And I especially don't like AGL. I think people can do much better than them...




why don't you like energy retailers,.... I think as part of a long term income trust agl will perform fantastically


----------



## Knobby22

*Re: OIL AGAIN!*



Smurf1976 said:


> At the risk of appearing somewhat big headed, that would put the timing exactly as predicted by Smurf some years ago.
> 
> Seriously though, I was hoping to be wrong about this one.
> 
> It seems we're passed the point of maximum oil production. Next, and not far away, comes the point where combined production of oil and gas begins to slide as the growth in gas fails to offset declines in oil.
> 
> Then gas actually peaks. Probably sooner than most expect given a three quarters concentration of the resource in a very small number of countries plus the serious depletion of North American and North Sea reserves.
> 
> Sometime after that, and it will likely be a while yet, we get a situation where the combined availability of oil, gas and coal peaks as the growth in coal fails to offset declining oil and gas availability.
> 
> And then finally, we get a peak in coal itself. A situation that's already happened in a few places, most notably the UK about 90 years ago (though to this day that resource driven peaking is rarely acknowledged).
> 
> Hence my very long held view that we'll be using gas to replace oil for transport etc and will be scrambling to find anything other than oil and gas with which to run industry and especially generate electricity.
> 
> And for the ordinary consumer, it's starting to get expensive. Power prices are starting to rise and there is plenty more to come. Petrol is up, so is diesel. LPG's getting expensive too. Natural gas is still relatively cheap - but it's increasingly acknowledged that Australian gas is undervalued so that won't last.




Congrats Smurf. I have had a keen interest in this subject for years and I would say that you are probably one of the best informed on the issue within Australia. Do you have a job related to energy or education? 

The way I see us going long term is by using solar panel to create hrdrogen from water. The longer it takes us however the more difficult it will be to turn around the worlds economies. I am really a bit scared. I just don't think most people realise the enormity of what is happening.


----------



## rederob

*Re: OIL AGAIN!*

Oil leapt around 5% higher overnight.
Looks like the cold snap in parts of USA is reverberating into the minds of market makers.


----------



## rederob

*Re: OIL AGAIN!*

The below chart is rather compelling if you follow the peak oil debate.
Moving average data sets from the International Energy Agency, and the US Energy Information Agency clearly shows that crude oil output will have difficulty meeting increased demand in future years.
Each data set shows a peak, and we are now on the slope down.
Global demand is expected to be no less than one percent higher next year, so condensates and reserves will be filling the gap in supply.
Given that these data are openly available, there is a reasonable presumption that whatever measures could have been made to increase output, are now being made: And no dent is made to the chart patterns.
In the gold thread all sorts of reasons are put to explain price action, especially the resilience of prices under various pressures. 
My view is that market players are watching oil for clues as to whether or not to dump gold, and to date the goldil nexus is limiting gold's reasonable downside. 
I do not see this nexus being broken in 2008.


----------



## benwex

*Re: OIL AGAIN!*

It occurred to me why the Iranians would want to build nuclear reactors when they are sitting on such a large reserve...

Maybe they are smarter than we give them credit for and they realise saving their oil for a rainy day in the future. 

When Peak Oil has played out further and the current major suppliers are all in declinie, oil might be reaching $1000+ a barrel.

Could be in less than a decade from now.

Great doco on SBS tonight about the Oil industry. Did anyone catch it??

Benwex


----------



## Synergy

*Re: OIL AGAIN!*



benwex said:


> Great doco on SBS tonight about the Oil industry. Did anyone catch it??
> 
> Benwex




Yeah I was lucky enough to catch it. Outstanding I thought. Really opened my eyes to the devistation oil companies have caused to 3rd world countries and to the likelihood that major nations will be battling for the supply from these 3rd world counties in the future. Pretty scary stuff all in all. 

The population growth stats were also eye opening. Sure we know its growing fast, but its easy to see things aren't sustainable when the facts are spelt out.


----------



## numbercruncher

*Re: OIL AGAIN!*



> $3 gas: America's braking point
> After shrugging off high prices for years, American drivers are finally starting to cut back. Is it a sign of shifting habits, or looming recession?
> 
> NEW YORK (CNNMoney.com) -- Gasoline demand has fallen for the first time in years as drivers appear to recoil from near-record prices, throwing doubt on America's seemingly insatiable thirst for fuel.
> 
> Growth in gasoline demand has been slowing all year. In five of the last seven weeks, the amount of gas that Americans consume has actually fallen compared to the same time last year, according to retail sales data gathered by MasterCard SpendingPulse, a research report that tracks gasoline sales using MasterCard, other credit cards and cash purchases at approximately 140,000 service stations around the country.
> 
> "With prices over $3 a gallon, there seems to be some real resistance from the consumer," said Michael McNamara, director of research for MasterCard SpendingPulse.
> 
> In some weeks demand has fallen by as much as 3 percent.




http://money.cnn.com/2007/12/18/news/economy/gas_demand/index.htm


Might be the death of the SUV on the horizion ? US gov aiming for 40mpg vehicles ...


----------



## Tysonboss1

*Re: OIL AGAIN!*



benwex said:


> It occurred to me why the Iranians would want to build nuclear reactors when they are sitting on such a large reserve...
> 
> Maybe they are smarter than we give them credit for and they realise saving their oil for a rainy day in the future.
> 
> When Peak Oil has played out further and the current major suppliers are all in declinie, oil might be reaching $1000+ a barrel.
> 
> Could be in less than a decade from now.
> 
> Great doco on SBS tonight about the Oil industry. Did anyone catch it??
> 
> Benwex




Iran has already said the want to phase out oil and gas electricity so they can save the oil and gas for export,.... 

Makes sense to me,.... Import $1000 of uranium and export $50,000 worth of oil that you would have had to burn instead of the uranium.


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> Might be the death of the SUV on the horizion ? US gov aiming for 40mpg vehicles ...





Hopfully,... Bring on the 'plug in Hybrids' I say,

Say is it just a north shore sydney thing or has every body else noticed an explosion in the number of Toyota prius Hybrids,...... they are every where I look.


----------



## chops_a_must

*Re: OIL AGAIN!*



Tysonboss1 said:


> Hopfully,... Bring on the 'plug in Hybrids' I say,
> 
> Say is it just a north shore sydney thing or has every body else noticed an explosion in the number of Toyota prius Hybrids,...... they are every where I look.




I'm noticing it as well. Must have finally caught up with the back log. They don't look too bad on the road either.


----------



## Smurf1976

*Re: OIL AGAIN!*



benwex said:


> It occurred to me why the Iranians would want to build nuclear reactors when they are sitting on such a large reserve...
> 
> Maybe they are smarter than we give them credit for and they realise saving their oil for a rainy day in the future.
> 
> When Peak Oil has played out further and the current major suppliers are all in declinie, oil might be reaching $1000+ a barrel.
> 
> Could be in less than a decade from now.
> 
> Great doco on SBS tonight about the Oil industry. Did anyone catch it??
> 
> Benwex



It makes perfectly good sense for Iran, as a major holder of gas reserves, to avoid using the stuff for power generation. It makes even more sense for others to do likewise.

Iran is far, far smarter in this regard than most Western countries IMO.

Iran't present oil production is about 40% below its peak by the way.


----------



## Smurf1976

*Re: OIL AGAIN!*



Tysonboss1 said:


> Hopfully,... Bring on the 'plug in Hybrids' I say,
> 
> Say is it just a north shore sydney thing or has every body else noticed an explosion in the number of Toyota prius Hybrids,...... they are every where I look.



Noticed one yesterday. Only the second time I've ever noticed a privately owned one. Not a huge number out there, at least not near me, but it's increasing.


----------



## Tysonboss1

*Re: OIL AGAIN!*

Hi Guys,

Just read an alarming piece of triva,...

Apparantly Saudi Arabia has 3 times as many producing oil wells than they did in 2000 but are still producing about the same amount of oil each year.

this is the same thing that happened in texas in the 70's right before they announced that they had declining production levels,


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> Hi Guys,
> 
> Just read an alarming piece of triva,...
> 
> Apparently Saudi Arabia has 3 times as many producing oil wells than they did in 2000 but are still producing about the same amount of oil each year.
> 
> this is the same thing that happened in Texas in the 70's right before they announced that they had declining production levels,



Saudi production peaked several years ago.
At least they have never matched the highs of back then, and plateaued production is now edging down.
It is the primary reason I am very bullish on oil prices into 2008 and beyond.
The counter point is that the Saudis can add to OPEC output and keep oil prices stable, or lower than present.  That point is not one that holds water with me.


----------



## ta2693

*Re: OIL AGAIN!*



rederob said:


> Saudi production peaked several years ago.
> At least they have never matched the highs of back then, and plateaued production is now edging down.
> It is the primary reason I am very bullish on oil prices into 2008 and beyond.
> The counter point is that the Saudis can add to OPEC output and keep oil prices stable, or lower than present.  That point is not one that holds water with me.




I agree with you. but I do not which way we can expose to hiking oil price better? At least we have the following options.
1 oil future
2 big oil company like wpl sto
3 Small oil search company bucket strategy like CVN, EGO, CVI, DIO, MPO
4 Oil exploration service company like WOR ( I prefer to expose myself in this way)
5 Coal company like WHC, REY


----------



## Smurf1976

*Re: OIL AGAIN!*

Don't confuse the number of rigs operating with the number of wells producing as they're not the same.

Agreed with the overall point though. Drilling more and more wells faster and faster with no gain in production is the classic sign of peaking.

When you look at the available info on in-ground resources and then factor in the above ground issues, I just can't see any way that production will rise to match demand. 

Which reminds me that I need to buy some kero before I'm priced out of the market. :


----------



## rederob

*Re: OIL AGAIN!*

Chart for WTIC looks good:


----------



## Garpal Gumnut

*Re: OIL AGAIN!*



ta2693 said:


> I agree with you. but I do not which way we can expose to hiking oil price better? At least we have the following options.
> 1 oil future
> 2 big oil company like wpl sto
> 3 Small oil search company bucket strategy like CVN, EGO, CVI, DIO, MPO
> 4 Oil exploration service company like WOR ( I prefer to expose myself in this way)
> 5 Coal company like WHC, REY




Thanks ta2693,

A good summary of the options available at this present time in the Australian context.

I can't see oil getting any cheaper.

gg


----------



## ithatheekret

*Re: OIL AGAIN!*

Does any have a projected bottom for the oil price ?

I have one @ $72.40-$72.8/90 based on the lowest mean futures price .

Still pretty stiff though ............


----------



## BREND

*Re: OIL AGAIN!*



ta2693 said:


> I agree with you. but I do not which way we can expose to hiking oil price better? At least we have the following options.
> 1 oil future
> 2 big oil company like wpl sto
> 3 Small oil search company bucket strategy like CVN, EGO, CVI, DIO, MPO
> 4 Oil exploration service company like WOR ( I prefer to expose myself in this way)
> 5 Coal company like WHC, REY




Don't forget about oil ETF.

Oil futures rose above $97 a barrel Thursday after the government reported larger-than-expected declines in crude and heating oil inventories.

In its weekly inventory report, the Energy Department's Energy Information Administration said oil inventories fell by 3.3 million barrels last week, more than double the 1.3 million barrel decline analysts surveyed by Dow Jones Newswires had expected. Inventories of distillates, which include heating oil and diesel fuel, fell by 2.8 million barrels, much more than the expected 800,000 barrel decline.

Crude and heating oil supplies have declined more than expected for several weeks running, exacerbating a perception that supplies may be inadequate to meet demand.

My model is showing bullish signal for oil. Finally fundamental and technical agree with each other for crude oil, it has the potential to cross $100 within months.

Going long on crude oil now.


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> My model is showing bullish signal for oil. Finally fundamental and technical agree with each other for crude oil, it has the potential to cross $100 within months.
> Going long on crude oil now.



Methinks "within weeks".
Possibly within days.
Just need another cold snap in the US and away we go,

As for a "bottom" to oil's ongoing price structure, $80 is almost watertight!
Primary support is a shade over $85 and looks the most likely base.
Any pullback below $85 will trigger me dipping into the money box and topping up the oil.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> Methinks "within weeks".
> Possibly within days.
> Just need another cold snap in the US and away we go,
> 
> As for a "bottom" to oil's ongoing price structure, $80 is almost watertight!
> Primary support is a shade over $85 and looks the most likely base.
> Any pullback below $85 will trigger me dipping into the money box and topping up the oil.




What do you mean by "will trigger me dipping into the money box and topping up the oil"? Do you mean buying oil futures?

If you are talking about oil stocks, this may not be the case. Oil price can still rise when oil price falls to $85.

I'm still holding on to Transocean Inc (listed in NYSE), few companies have deep-sea drillers like this guy. This stock is a great buy if you believe oil price will continue rising in the long run.


----------



## numbercruncher

*Re: OIL AGAIN!*




Pretty much at the point of Heavy Crude being profitable, seems to be plenty of that stuff in the "stable" world !


----------



## rederob

*Re: OIL AGAIN!*



numbercruncher said:


> View attachment 16259
> 
> 
> Pretty much at the point of Heavy Crude being profitable, seems to be plenty of that stuff in the "stable" world !




n/cruncher
The problem for many years to come will not be that there is not enough oil.
The problem is getting it out of the ground in time to meet demand.
Heavy oils (ie oil sands like Athabasca) may be quite profitable at present oil prices, but its capital intensive compared to normal oil wells which  "flow" once they are drilled.
Oil sands are mined with bucket and shovel (a lot like mining any open pit ore), and the Athabasca oil sands are forecast to be producing around 5 million barrels/day by 2025.
Put into some perspective, Canada's oil sands will meet about 3-4% of global oil demand in 2025.  And put slightly differently again, assuming continuously ramping output, it will take around 300 years to exhaust Canada's oil sands.
My suspicion is that in another 50 years we won't have an "oil" economy, so those Canadians may be sitting on a lot more oil for a lot longer than they thought.

Meanwhile, the oil:gold nexus remains well in place and we are likely to see new gold highs early into 2008.


----------



## BREND

*Re: OIL AGAIN!*

In my view, now its a good time to sell Crude Oil put option, strike price $88, Feb08 contract, premium is USD490/lot. Expiration date is 16 Jan 08.

In the event that the options get assigned, the trader will get a long position at $88. Buying crude futures at $88 is a good level as well.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> n/cruncher
> My suspicion is that in another 50 years we won't have an "oil" economy, so those Canadians may be sitting on a lot more oil for a lot longer than they thought.
> 
> .




I agree on that point,...

Alternative technolgies will be coming on line if we are wise enough and quick enough to act.

In the mean time though I am of the opinion that there will be a major lag in the production increases of oil sands and oil shale mining when compared to the production decline of conventional oil.

The reason I believe this to be the case is because projects take years to plan finance and ramp up into full production,.... and I don't believe that large scale funding and investment will flow into the oil sands technology till there is no or limited options for new exploration of conventional oil reserves and there is clear signs that we have hit the peak of production from conventional oil.

So I believe we will hit the peak,.... prices will spike even more so,... and then over a few years a combination of alternative fuel technoligies and the ramp up of non conventional crude will steady energy prices into the future.

high energy costs may be unavoidable in the short term but I believe they are not sustainable when you look the longterm picture,.... but then again I don't really consider todays energy prices as overly high.


----------



## BREND

*Re: OIL AGAIN!*

Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Dec. 25, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 52,847 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 17,864 contracts, or *51 percent*, from a week earlier.


----------



## Smurf1976

*Re: OIL AGAIN!*

Don't forget upgrading and extraction losses for the heavy hydrocarbons are pretty high.

5.4 trillion barrels OK. Realistically that's maybe 3.5 trillion barrels actually recoverable after energy used in the upgrading, extraction etc. Allowing for constant growth at 2% well have burnt all that plus every last drop of conventional crude oil by 2075. (Ignoring the reality that we couldn't actually extract it that fast due to geology etc).

The more I think about this issue, the more I'm convinced we'll burn everything we can no matter what the consequences.


----------



## rederob

*Re: OIL AGAIN!*



rederob said:


> Meanwhile, the oil:gold nexus remains well in place and we are likely to see new gold highs early into 2008.



I guess $100 oil on the first trading day of 2008 is "early" - although the price was a spike and not a "close".
While gold followed closely with its PM fix at $846.75 - second highest recorded.
These are not one-offs, and further highs will continue through the year.


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> Don't forget upgrading and extraction losses for the heavy hydrocarbons are pretty high.
> 
> 5.4 trillion barrels OK. Realistically that's maybe 3.5 trillion barrels actually recoverable after energy used in the upgrading, extraction etc. Allowing for constant growth at 2% well have burnt all that plus every last drop of conventional crude oil by 2075. (Ignoring the reality that we couldn't actually extract it that fast due to geology etc).
> 
> The more I think about this issue, the more I'm convinced we'll burn everything we can no matter what the consequences.




Yup. The world is irretrievably (for the immediately foreseeable future) hooked on oil. Expect plenty more announcements like this over the coming years....

_Jan. 2 (Bloomberg) -- President George W. Bush doesn't plan to release oil from the Strategic Petroleum Reserve to counter crude oil prices that hit $100 a barrel today, his spokeswoman said. 

The reserve "is used for emergencies,'' White House press secretary Dana Perino said in response to a question at the regular White House briefing. The oil reserve is intended to cushion the U.S. in the event of a disruption of oil supplies and "this president would not use the SPR to manipulate'' prices, she said. 

*Crude oil rose to $100 a barrel for the first time in New York today as record global fuel consumption threatens to outpace production*. The price gained on concern that violence may further cut output in Nigeria, Africa's biggest producer, and on speculation U.S. petroleum inventories fell for a seventh week....

"We have to figure out a way to increase supplies here in the U.S.,'' she said. *World demand for oil is rising "at a really astronomical pace,''* and *"U.S. efforts toward increasing renewable and alternative fuels won't be enough to satisfy demand"*, she said. 
_

Those last assessments by White House Secretary Dana Perino won't do much to dampen the rising price of a barrel of oil either! Any one for $US120 barrel by March? 

Chiz,

AJ


----------



## Aussiejeff

*Re: OIL AGAIN!*

Something else I gleaned from the 'Net  - to think about with regard to the rising price of crude...

_"There are many products that obtained when a barrel of crude oil is refined. These include liquefied petroleum gas (LPG), naphtha, kerosene, gasoil and fuel oil. Other useful products which are not fuels can also be manufactured by refining crude oil, such as *lubricants* and *asphalt* (used in paving roads). A range of sub-items like *perfumes* and *insecticides* are also ultimately derived from crude oil. 

Furthermore, several of the products listed above which are derived from crude oil, such as naphtha, gasoil, LPG and ethane, can themselves be used as inputs or feedstocks in the production of petrochemicals. There are more than 4,000 different petrochemical products, but those which are considered as basic products include ethylene, propylene, butadiene, benzene, ammonia and methanol. The main groups of petrochemical end-products are *plastics*, *synthetic fibres*, *synthetic rubbers*, *detergents* and *chemical fertilisers*. Considering the vast number of products that are derived from it, crude oil is a very versatile substance. *Life as we know it today would be extremely difficult without crude oil and its vast array of (essential) by-products.*_ 

Have you noticed how CHEAP small desktop laser and inkjet printers have become (they generally are sold with a toner cartridge inclusive) compared to HOW EXPENSIVE their respective replacement toner cartridges are? Guess where the toners and inks come from..... 

I can see the day coming (soon) when it will be cheaper to THROW THE PRINTER AWAY when it runs out of ink and buy a new one (with it's included ink/toner), rather than fork out an exorbitant amount for a replacement ink/toner cartridge! Hell, may as well buy a bunch of cheapy printers, come to think of it! Ultimately, the garbage dumps will be overflowing with mountains of near new el-cheapo printers. 

Chiz,


AJ


----------



## jet328

*Re: OIL AGAIN!*



Aussiejeff said:


> Have you noticed how CHEAP small desktop laser and inkjet printers have become (they generally are sold with a toner cartridge inclusive) compared to HOW EXPENSIVE their respective replacement toner cartridges are? Guess where the toners and inks come from.....
> 
> I can see the day coming (soon) when it will be cheaper to THROW THE PRINTER AWAY when it runs out of ink and buy a new one (with it's included ink/toner), rather than fork out an exorbitant amount for a replacement ink/toner cartridge! Hell, may as well buy a bunch of cheapy printers, come to think of it! Ultimately, the garbage dumps will be overflowing with mountains of near new el-cheapo printers.




Nothing to do with oil prices.

Its a marketing technique. Just like mobile phones or foxtel or playstations.
They will give you a free phone, install foxtel for free (they lose initially), sell a playstation below cost of production. 
Why?
They make their money on the consumables, games, phone calls, subscriptions, ink cartridges

Printer companies are happy to give away printers, because they know once you've bought their printer, there is a good chance you'll keep coming back for the repeat high margin cartridges.


Cheers


----------



## numbercruncher

*Re: OIL AGAIN!*

Little trick for refilling you cartridges, helping the enviroment and saving a few bucks .....

Dust off your drill, drill hole in top of cartridge, get bottle of Ink, Syringe, Inject, hey presto ..... Printer/Ink manufacturers hate it lol 

But dont do like me and drop Ink bottle on carpet  destroying financial savings ! But atleast I did my bit for the enviroment


----------



## jet328

*Re: OIL AGAIN!*

In regards to oil....

I'm amazed that a lot of the small/medium oil producers are trading at the same prices as 8 months ago when oil was $55 a barrel.

I wonder if we will see a similar scenario to what happened with resources. ie analysts upgrading there long term forecasts was a big driver in the rerating


Cheers


----------



## Lucky_Country

*Re: OIL AGAIN!*

Feel like we will never see oil below $85 a barrel again .
Chinas oil consumption growing by 400,000 per day with no new substantial discoveries being found cheap oil days are gone


----------



## Tysonboss1

*Re: OIL AGAIN!*



Aussiejeff said:


> Have you noticed how CHEAP small desktop laser and inkjet printers have become (they generally are sold with a toner cartridge inclusive) compared to HOW EXPENSIVE their respective replacement toner cartridges are? Guess where the toners and inks come from.....
> 
> I can see the day coming (soon) when it will be cheaper to THROW THE PRINTER AWAY when it runs out of ink and buy a new one (with it's included ink/toner), rather than fork out an exorbitant amount for a replacement ink/toner cartridge! Hell, may as well buy a bunch of cheapy printers, come to think of it! Ultimately, the garbage dumps will be overflowing with mountains of near new el-cheapo printers.
> 
> Chiz,
> 
> 
> AJ




The cartridges you get with the printer not always full cartridges they are "Starter" cartridges.

Secondly buying the cheapest Printer is a false economy the cheaper range of printers normally use cartidges with a much smaller ink volume so you have to replace the cartridges more regularly,.... 

for example,..

HP 92 cartridge has 6ml of ink and sells for $28
hp 94 cartridge has 12ml of ink and sells for $39
hp 96 cartridge has 22ml of ink and sells for $50

the trick is if you buy the cheapest printer you can only use the 92 cartridge so you are locked into expensive per page printing, but if you buy the more expensive printer you can use any of them.

Any how if you aren't already doing so I recomend getting your cartridges refilled at cartridge world


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> Little trick for refilling you cartridges, helping the enviroment and saving a few bucks .....
> 
> Dust off your drill, drill hole in top of cartridge, get bottle of Ink, Syringe, Inject, hey presto ..... Printer/Ink manufacturers hate it lol
> 
> But dont do like me and drop Ink bottle on carpet  destroying financial savings ! But atleast I did my bit for the enviroment





The old ink on the carpet problem,....

I get mine done at Cartridge World,....


----------



## numbercruncher

*Re: OIL AGAIN!*



Tysonboss1 said:


> The old ink on the carpet problem,....
> 
> I get mine done at Cartridge World,....




Do you walk or drive there ?


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> Do you walk or drive there ?




Drive there most of the time,....

Or they arrange delivery of the laser's to my office,... why


----------



## lioness

*Re: OIL AGAIN!*



jet328 said:


> In regards to oil....
> 
> I'm amazed that a lot of the small/medium oil producers are trading at the same prices as 8 months ago when oil was $55 a barrel.
> 
> I wonder if we will see a similar scenario to what happened with resources. ie analysts upgrading there long term forecasts was a big driver in the rerating
> 
> 
> Cheers




Jet328,

I totally agree with you on this point, is it just me or why are these small players so cheap.

I fully expected a spec bubble in these stocks by now BUT this has not formed yet. Can someone tell me why or is it still coming??

Surely this sector is well overdue for a huge rise.


----------



## chops_a_must

*Re: OIL AGAIN!*

Anyone else want to have a punt on that gap fill about 96.20?


----------



## lioness

*Re: OIL AGAIN!*



lioness said:


> Jet328,
> 
> I totally agree with you on this point, is it just me or why are these small players so cheap.
> 
> I fully expected a spec bubble in these stocks by now BUT this has not formed yet. Can someone tell me why or is it still coming??
> 
> Surely this sector is well overdue for a huge rise.




Why can't someone answer this question??

Too Hard I suppose.


----------



## numbercruncher

*Re: OIL AGAIN!*



lioness said:


> Why can't someone answer this question??
> 
> Too Hard I suppose.





Maybe its just one of those things that are currently defying logic.

Or perhaps the Credit Crunch / Debt levels etc are at play. Perhaps having the oil is one thing but accessing rigs and actually pumping another one, seems to be a big shortage in rigging equipment , transport etc.

Bottlenecks in the System reflected in prices im thinking.


----------



## explod

*Re: OIL AGAIN!*



lioness said:


> Why can't someone answer this question??
> 
> Too Hard I suppose.




I can only speculate on you point.   Oil Search has been very rewarding to those early takers.  With the gas reserves they have I would have thought it would be much higher by now.   But are we too impatient perhaps, what a good run and a look at Kaltex shows the same thing.

A lot of oil infrastructure, rigs equipment etc have run down and due to poor quality reserves there may be reluctance to put too much in.  All  take and no give is the way of the times perhaps.

Just 2cents


----------



## lioness

*Re: OIL AGAIN!*



explod said:


> I can only speculate on you point.   Oil Search has been very rewarding to those early takers.  With the gas reserves they have I would have thought it would be much higher by now.   But are we too impatient perhaps, what a good run and a look at Kaltex shows the same thing.
> 
> A lot of oil infrastructure, rigs equipment etc have run down and due to poor quality reserves there may be reluctance to put too much in.  All  take and no give is the way of the times perhaps.
> 
> Just 2cents




Explod and Numbercruncher, If rig equipment and delays to poor drilling equip etc are involved, that would be a case for current producers to push even higher than current levels would it not??

I have invested heavily into oil stocks based upon producers.

I am wondering if this was a wise choice now. Should oil stocks act as a defensive action in these volatile times. Maybe a move to cash is better??

I still think the hot money will enter in oil stocks over the next month, similar to uranium stocks previously.


----------



## explod

*Re: OIL AGAIN!*



lioness said:


> Explod and Numbercruncher, If rig equipment and delays to poor drilling equip etc are involved, that would be a case for current producers to push even higher than current levels would it not??
> 
> I have invested heavily into oil stocks based upon producers.
> 
> I am wondering if this was a wise choice now. Should oil stocks act as a defensive action in these volatile times. Maybe a move to cash is better??
> 
> I still think the hot money will enter in oil stocks over the next month, similar to uranium stocks previously.





I find it hard to get a true picture.  The oil industry is very much an animal unto itself with the hand being the most wealthy of multinational companies who in turn turn the politicians.   Having said that on the oil price trend, and for example the Oil Search, Santos, Caltex etc.,  trends, a long position should be bullet proof and prifitable for some time.   The turning of this type of world trend is usually seen well before it comes.  It looks all go at the moment.

I have been wrong before and it is only my opinion.


----------



## lioness

*Re: OIL AGAIN!*



explod said:


> I find it hard to get a true picture.  The oil industry is very much an animal unto itself with the hand being the most wealthy of multinational companies who in turn turn the politicians.   Having said that on the oil price trend, and for example the Oil Search, Santos, Caltex etc.,  trends, a long position should be bullet proof and prifitable for some time.   The turning of this type of world trend is usually seen well before it comes.  It looks all go at the moment.
> 
> I have been wrong before and it is only my opinion.




Explod,

I have invested in INP also heavily. Surely this is just as good as others since it has near term production (June of 1500bopd) and may significantly increase this also. Wat are your thoughts on INP please.


----------



## numbercruncher

*Re: OIL AGAIN!*

Yah i find Oil in the short term a really hard call, sure demand is there, but the Worlds largest consumer teetering on the edge of recession, who knows ... Oil producers are going to refuse to lose their US denominated purchasing power, so the Fed lowers, Oils gos up, but if demand falters via recession price should drop. The theres the USD/AUD implications.

Ive got no exposure to oil atm except a little in biofuels recently.

I mean I accept and beleive the concept of Peak Oil but Western Governments seem to be working viciously to reduce demand via higher MPG vehicles , bio fuels etc , Governments seem to collectively agree on climate change and the need to reduce carbon emissions, Im not prepared to bet against seemingly determined Governments at the moment.

I mean in the medium term I can actually picture Oil demand reducing as result of Government policies and Technological advances.

I just dont get that "feeling" for oil anymore, anyone with me ? or am I all alone ...

Im sure some disasters/wars or whatever could get things barrelling along again!


----------



## lioness

*Re: OIL AGAIN!*



numbercruncher said:


> Yah i find Oil in the short term a really hard call, sure demand is there, but the Worlds largest consumer teetering on the edge of recession, who knows ... Oil producers are going to refuse to lose their US denominated purchasing power, so the Fed lowers, Oils gos up, but if demand falters via recession price should drop. The theres the USD/AUD implications.
> 
> Ive got no exposure to oil atm except a little in biofuels recently.
> 
> I mean I accept and beleive the concept of Peak Oil but Western Governments seem to be working viciously to reduce demand via higher MPG vehicles , bio fuels etc , Governments seem to collectively agree on climate change and the need to reduce carbon emissions, Im not prepared to bet against seemingly determined Governments at the moment.
> 
> I mean in the medium term I can actually picture Oil demand reducing as result of Government policies and Technological advances.
> 
> I just dont get that "feeling" for oil anymore, anyone with me ? or am I all alone ...
> 
> Im sure some disasters/wars or whatever could get things barrelling along again!





Numbercruncher,

You state you don't get that feeling. I totally disagree with you here.

Oil stocks are a great defensive play and with producers it will be a huge money spinner due to the defensive hedge and we will see fundies heading that way. Already happening look at OSH, STO and WPL.

Small juniors producing also will follow soon, such as INP.


----------



## explod

*Re: OIL AGAIN!*



lioness said:


> Explod,
> 
> I have invested in INP also heavily. Surely this is just as good as others since it has near term production (June of 1500bopd) and may significantly increase this also. Wat are your thoughts on INP please.




Oil and oil stocks are not my thing.  Except the oil economics as it effects the markets/currencies.

Have held OSH a number of times but that is as far as it goes.  INP to me is a spec stock that if the story they tell is correct could take off like a rocket.  I prefer to get on the rockets when they get going a bit (if I can catch them of course).

Sat arvo, time for us to have a drink.


----------



## Smurf1976

*Re: OIL AGAIN!*



numbercruncher said:


> I mean I accept and beleive the concept of Peak Oil but Western Governments seem to be working viciously to reduce demand via higher MPG vehicles , bio fuels etc , Governments seem to collectively agree on climate change and the need to reduce carbon emissions, Im not prepared to bet against seemingly determined Governments at the moment.
> 
> I mean in the medium term I can actually picture Oil demand reducing as result of Government policies and Technological advances.



Need to separate the politics from the reality IMO.

Governments say this, that and something else about carbon, carbon footprints and so on.

In the real world, energy demand continues to go up, up, up, up, up and up.

Up for oil
Up for coal
Up for gas
Up for nuclear
Up for hydro
Up for unconventional sources (non-hydro renewables etc).

And then there's China etc.

Also worth noting that virtually all of the action to reduce energy demand is focused on something other than oil and gas. Mostly it's about slowing the rate of growth (but still maintaining growth) in electricity consumption, especially that produced from coal.

And that is done largely by using MORE gas directly and also in gas-fired power plants. Very little of the focus is on reducing oil demand apart from the odd vehicle manufacturer with a hybrid and train/tram/bus companies trying to boost business. End result - oil demand continues to rise.

If you look at those places that have historically cut oil use, I'll tell you exactly how they did it. They either converted existing oil-fired power stations to coal or more commonly gas. Or they built new coal, nuclear or hydro plants. Or they changed from oil heating in houses to wood, gas or electricity. Now that those "easy" things are largely done, the only real way to cut oil consumption is to actually cut demand for energy in the transport sector especially. That's a _lot_ harder than simply switching fuels.

Australia is a fairly classic case in point, especially Tasmania. 30 years ago Tas was largely reliant on oil for everything except electricity (though _all _non-hydro power in the grid was from oil until late 2002) and the boiler at the Boyer pulp/paper mill. 

30 years later and there aren't many factory boilers still running on oil (mostly coal, some gas). Likewise most homes don't now use oil heating (mostly electric and wood). And the state's only thermal power station has been converted from oil to gas. But total oil consumption hasn't changed much at all - all the savings elsewhere being guzzled up by transport. 

I'd better stop now. First internet log in at the new house and it's _very_ hot in here right now. 35 outside and the room I'm in has a West facing window with lots of sun. Computer fan sounds like a plane about to take off so I'll log off and switch off before something breaks.


----------



## Smurf1976

*Re: OIL AGAIN!*



lioness said:


> Jet328,
> 
> I totally agree with you on this point, is it just me or why are these small players so cheap.
> 
> I fully expected a spec bubble in these stocks by now BUT this has not formed yet. Can someone tell me why or is it still coming??
> 
> Surely this sector is well overdue for a huge rise.



Long term bull markets - think 15 - 20 years.

Nobody was interested in oil stocks as recently as early this decade. IMO we're only in the second stage (of 3) of the bull - those with the knowledge on the subject have finished their accumulation (stage 1), now the institutional investors etc are buying. 

Joe public is still more interested in a new Hummer than buying oil stocks. When that changes, and in my opinion it will, well then you get your bubble. 

Right now, it's like sitting there in the late 1980's holding computer stocks and hearing some funny new words "information superhighway" and wondering if it would come to anything or was just a joke. Most didn't "get" computers beyond then existing uses back in 1988 just as they don't "get" peak oil beyond having to pay $1.50 a litre now. In due course that will change, and then they'll want to own oil stocks.


----------



## grace

*Re: OIL AGAIN!*

My uneducated view (I don't like getting into verbal fights with people I don't even know)......In 50 years we have used half of the oil available in the world, with the remaining being in harder to find places.  One doesn't have to be Einstein to work out what is going to happen.  It takes billions of years to make the stuff.........We will get higher highs and higher lows until the stuff runs dry.......IMHO


----------



## lioness

*Re: OIL AGAIN!*

Many thanks for everyone's comments on oil. If the US goes into recession and probably already is, it will be interesting if oil stocks are defensive given they would be expected to fall with the price ber barrel in a recession or do they become the next defensive play for long term yield and growth??


----------



## rederob

*Re: OIL AGAIN!*



lioness said:


> Many thanks for everyone's comments on oil. If the US goes into recession and probably already is, it will be interesting if oil stocks are defensive given they would be expected to fall with the price ber barrel in a recession or do they become the next defensive play for long term yield and growth??



Hello lioness
Most local oil producers are receiving much higher prices now for their oil, while their production costs are only fractionally higher.
The markets tend to get excited on "news", and not so much on regular reports that show them to be making money hand over fist.
It was the same with nickel a few years back: The producers were all re-rated and their prices today are running off significantly higher bases, despite the fact that nickel prices almost halved from their highs.
The short term difference with oil, and I define my short term here as 3 years, will be that a 50% price drop is almost impossible to contemplate - not even the bearest bears can see that as likelihood.
As a result, the oil producers are going to have a lot of cash on their hands come the end of financial year, and I anticipate most will review their dividends policy to determine what gives their shareholders a fair deal.
So, ignore the equity price action for now, and bathe in the knowledge that if you are invested in producers, you will receive many happy returns.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Yep i reckon oil stocks are the go, of course i am fully invested in CUE and have thought this for some time.

The equations are very simple, more demand, less easy to produce oil = increase in price.

You will see the smaller oilers make their BIG moves this year once they begin to report revenue. The reason is because they have been calculating revenues on about $55.00 a barrel, they have been getting $80 plus per barrel.

So, once you begin to get profit reports following into the market 50-80% above forecast what is going to happen?
I'll tell ya, every Tom, Dick and Harry will be wanting a piece of the action and BANG prices will rocket until the bubble pops................

Looking forward to it with glee!!

JW


----------



## nioka

*Re: OIL AGAIN!*



			
				rederob;241312
As a result said:
			
		

> Don't count on it. A lot will spend all the profit on the search for more oil. Take ARQ as an example where I believe they will continue the search until they spend the last dollar earned. Remember the directors don't need a dividend, they pay themselves regardless and the staff are well paid. Shareholders are considered a necessary evil by the way they are often treated.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Either way, oil has almost doubled in a year and costs have not doubled to extract that oil, so, profits will be higher this year.

Future extraction costs and exploration maybe higher but its this years profits you should be thinking of for your SP increases. 

I still think we are a few years away from the real crunch and possible super price hike to oil, hope it comes sooner.

Until this time, no one will put enough effort into alternative technologies. While i acknowledge they are developing some, it is not even a drop in the ocean compared to what is required to replace demand for oil.
We are a long way away from even plugging the yearly oil demand growth with alternate technologies never mind replacing it all together.

We have created an oil monster and a i intend to make a hansom profit due to man kinds reliance on this form of energy.

Go oil..........!!!!!

Go JW.......!!!!!!


----------



## lioness

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Yep i reckon oil stocks are the go, of course i am fully invested in CUE and have thought this for some time.
> 
> The equations are very simple, more demand, less easy to produce oil = increase in price.
> 
> You will see the smaller oilers make their BIG moves this year once they begin to report revenue. The reason is because they have been calculating revenues on about $55.00 a barrel, they have been getting $80 plus per barrel.
> 
> So, once you begin to get profit reports following into the market 50-80% above forecast what is going to happen?
> I'll tell ya, every Tom, Dick and Harry will be wanting a piece of the action and BANG prices will rocket until the bubble pops................
> 
> Looking forward to it with glee!!
> 
> JW




Go JW - that's nice. When do you expect the hot money to pour into these junior spec stocks such as CUE -  JW??


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hi Lioness,

That's the million dollar question....................

They have to already be a producer to benefit from the recent massive increase per barrel of oil and have calculated there expected revenue at about $55 per barrel and be getting significantly above this. 

If you aint already producing the stuff then price increases only affect projected revenue. This is also good but, my thoughts are that the bigger SP increases will happen to the oilers who are announcing large increases to their 2007/2008 profits 

So this being the case, i doubt the spec stocks will benefit as much as the producers. As it has been pointed for those who explore for and find oil in the future it will come at greater expense. Therefore, my guess is that those who will make the greatest profit from recent rises will be the current producers.

As for timing, see this link for company reporting requirements 2008 - should give you an idea of when some of this news may begin to flow into the market.

http://www.asx.com.au/research/pdf/company_reporting_dates_2008.pdf

My view is that you will see interest in oil stocks increase this year and i would expect that before end June 2008 there will be a shift towards this sector. 

If we get a further spike in oil prices towards $120.00 per barrel then this will really catch peoples eye. The trigger will come soon, i dont know when exactly but just look at what has happened this year................supply of sufficient cheap oil is going to be a huge problem, the world is as unstable as ever, we have taken all the cheap stuff already, China and India are growing like mad.

Go......JW, you bet ya, i plan to be pimping hares by years end!!!

Onassis would be proud!!


----------



## rederob

*Re: OIL AGAIN!*



nioka said:


> Don't count on it. A lot will spend all the profit on the search for more oil. Take ARQ as an example where I believe they will continue the search until they spend the last dollar earned. Remember the directors don't need a dividend, they pay themselves regardless and the staff are well paid. Shareholders are considered a necessary evil by the way they are often treated.



I don't think ARQ got a good hedge price:


> On 24 April 2007 the Company entered into a oil price swap covering 1.275 million barrels deliverable over five years at a fixed price of US$68.15 per barrel.



It's hedging affects over a quarter of production for next 5 years.
Avoid hedged producers who are pessimists!


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Good point Rederob,

Just for the record CUE has no hedging in place and will gain 100% of the recent price rises.

Yey for the optermists!


----------



## lioness

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hi Lioness,
> 
> That's the million dollar question....................
> 
> They have to already be a producer to benefit from the recent massive increase per barrel of oil and have calculated there expected revenue at about $55 per barrel and be getting significantly above this.
> 
> If you aint already producing the stuff then price increases only affect projected revenue. This is also good but, my thoughts are that the bigger SP increases will happen to the oilers who are announcing large increases to their 2007/2008 profits
> 
> So this being the case, i doubt the spec stocks will benefit as much as the producers. As it has been pointed for those who explore for and find oil in the future it will come at greater expense. Therefore, my guess is that those who will make the greatest profit from recent rises will be the current producers.
> 
> As for timing, see this link for company reporting requirements 2008 - should give you an idea of when some of this news may begin to flow into the market.
> 
> http://www.asx.com.au/research/pdf/company_reporting_dates_2008.pdf
> 
> My view is that you will see interest in oil stocks increase this year and i would expect that before end June 2008 there will be a shift towards this sector.
> 
> If we get a further spike in oil prices towards $120.00 per barrel then this will really catch peoples eye. The trigger will come soon, i dont know when exactly but just look at what has happened this year................supply of sufficient cheap oil is going to be a huge problem, the world is as unstable as ever, we have taken all the cheap stuff already, China and India are growing like mad.
> 
> Go......JW, you bet ya, i plan to be pimping hares by years end!!!
> 
> Onassis would be proud!!




JW - Pimping hares sounds dangerous!

Is CUE producing? I thought it was a spec stock??

That is why I bought INP. They expect 1000 bopd by June 08 without calculating any upside(which I expect to come in Jan/Feb). That is why I bought into this as a near term producer. I suspect this sector will have a major bubble if oil went to $120 soon. CUE and INP will explode if that happens.  Good Luck JW sounds like you won't need it with those lovely hares of yours!!


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Lioness,

CUE has two wells currently producing oil and will start production later this year from a third well called Maari. They are also involved in exploration and thats the speccy side of the business i guess.

Maari is much larger than the two exisitng wells and will increase production significantly.

Have a read of the CUE thread for more info.

Good luck with INP


----------



## lioness

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Lioness,
> 
> CUE has two wells currently producing oil and will start production later this year from a third well called Maari. They are also involved in exploration and thats the speccy side of the business i guess.
> 
> Maari is much larger than the two exisitng wells and will increase production significantly.
> 
> Have a read of the CUE thread for more info.
> 
> Good luck with INP




I had a read of the CUE thread, yes looks good but I will stay with INP as the upside is larger I think, but good luck with it.


----------



## rederob

*Re: OIL AGAIN!*



> Algeria's Oil Minister, Chakib Khelil, OPEC's new president, has ruled out any production increases, saying crude oil prices are likely to remain high for three months.
> Crude oil prices, which briefly topped $US100 a barrel for the first time last week, should "stabilise" in the second quarter, Mr Khelil said.
> The increase in market crude prices "is probably going to remain through the end of the first quarter of 2008", he said.



http://business.smh.com.au/oil-prices-to-remain-high-says-opec/20080106-1kgb.html


----------



## Smurf1976

*Re: OIL AGAIN!*

Now let's get this straight. 

OPEC had a target price of $22 - $28 not that long ago. Then they kept gradually increasing production as the price rose. Now when the price hits $100 they decide to stop increasing production.

Make sense? It sure does to those who have thought for years that OPEC has reached its limit and CAN'T pump more no matter what they would like to do.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Smurf i have read about and heard this several times as well. It makes sense.

I heard they can not be trusted with any of their figures relating to future projected oil reserves and are very prone to exaggeration?

I cant recall the reason but there was some benefit for them to nominate reserves at higher figures...................maybe someone else can expand.

If it could be quantified that they had reached their limit and could not pump anymore i wonder if we would hit $200.00 plus per barrel?

I understand that their wells are in decline and the decline is expodential, the hole in the ground cant pump oil forever.


----------



## Smurf1976

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Smurf i have read about and heard this several times as well. It makes sense.
> 
> I heard they can not be trusted with any of their figures relating to future projected oil reserves and are very prone to exaggeration?
> 
> I cant recall the reason



In short, their quota system works partly on claimed reserves. The more you claim, the more you are allowed to pump and the less other OPEC members are allowed to pump.

There was thus a major incentive for OPEC members to claim higher reserves when production quotas were held well below capacity. No surprise then to find that practically all of them literally doubled (or more) their reserves "overnight" one ofter the other in the mid-1980's without announcing any major discoveries.

Also no surprise to find that most of them report the same reserves year after year with no change whatsoever. Sure, they might be finding more oil but it just isn't likely that they discover _exactly_ as much oil as they pump out _every_ year and thus have unchanged reserves.

Due to the above, their true reserves are quite probably nowhere near their official claimed reserves. Many (including me) believe that they are simply quoting total oil discovered to date and ignoring that which has already been extracted. Others suspect they may be including oil which is technically unrecoverable.


----------



## ithatheekret

*Re: OIL AGAIN!*

I thought I'd pop this in here . 

I've just done a few very crude ( excuse the pun ) , figures on the gas futures applying 3 stages of the calculation process and I have positive numbers already , I've had a signal like this once before but it took to 7 stages , all were positive and it was on cocoa , when it looked like it was forming a cup , it is now at the second of those figures already , actually just past it . I can assume what it means easily on the weight of cocoa , but I just need more time or my daughter back to help me run the program , as it involves someone to calculate and someone to input the data .

But to spit it out has me hesitant , and I don't like that , ( he who hesitates loses ) ( but , fools rush in , where angels fear to tread ) , and indecision is a negative to me .

As this is a debate on views projections and anything else I can say , that softens this , it's not investment advice .

But , I think gas is poised to go higher , and I do mean higher .

The clean fundamentals could be added to the debate , but they're not in my data or figures .

In ending I must add , gas is as volatile as oil and gold , sometimes it just doesn't seem so . 

I've missed my POG entry tonight , so it was gas . Please don't follow me in just because I mentioned it , this will have a very high beta in this trade , I'm the guinea pig , well some profits are .


----------



## wayneL

*Re: OIL AGAIN!*



ithatheekret said:


> In ending I must add , *gas is as volatile as oil and gold* , sometimes it just doesn't seem so .
> 
> I've missed my POG entry tonight , so it was gas . Please don't follow me in just because I mentioned it , this will have a very high beta in this trade , I'm the guinea pig , well some profits are .




As volatile?

Gas is a beta monster when it wakes up.


----------



## ithatheekret

*Re: OIL AGAIN!*

I'm sure you understood my sly meaning Wayne . I am arrogant I know , but one must admit everything has evolved as I said ...... even Hilary 

I used to Mod on TNO forex , mining etc . the tag was spenceraus .

Not to brag , so please don't get me wrong here , but its a bit of history , that will help some understand my ability views .

Lets see If I can remember most of them .

Orica 4.75 stock entry and options the same price , bought all the way to $10plus change .

Gold first to call 400 and got pecked for saying it .

Called AMP a basket case pre the last 22 price and then into Kohn territory .

Called VCR when on the 3.60's as way over the top , you'll get this stock much cheaper soon , it started to decline that same day and has never recovered .

For 2 years I called that Barrick would take Placer Dome, it did .

I called that only a takeover would improve Consolidate Minerals price .

I've called 880 and 890 , it looks at present that I've called the bottom .

There are many more , some I've forgotten too .

It can be confirmed Traders Network Organization , ask for Austin Hu , say hello for me if you do anyone .


----------



## wayneL

*Re: OIL AGAIN!*

I wasn't having a go at you.


----------



## ithatheekret

*Re: OIL AGAIN!*

Sorry Wayne I'm tired and had a few too many digs for this month , probably my own arrogant syntax lingustics , thought you were having a shot mate .

I just try to get the grey matter going in people , especially in down markets or when opps. present themselves .

To be honest previous experience posting on stocks etc. has had me stay tight lipped until a ramping episode started once and got my wick up enough to comment strongly ( elsewhere let's say ) . It was yourself that caused me to restart too  , had you not asked for a chart I wouldn't have ever commented I think .

But anyway . sorry again .


----------



## BREND

*Re: OIL AGAIN!*

Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!! 

So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I think gas is poised to go higher , and I do mean higher .
> 
> The clean fundamentals could be added to the debate , but they're not in my data or figures .



You could always open a "gas' thread.


----------



## rederob

*Re: OIL AGAIN!*



BREND said:


> Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!!
> 
> So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.



US gasoline and distillate inventories were "up".
But crude oil inventories are at a 3 year low.
It's a recipe for a sharp run north again when someone works out that gas/distillates come from crude refining and not the reverse!


----------



## BREND

*Re: OIL AGAIN!*



BREND said:


> Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!!
> 
> So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.




Currently technical wins.


----------



## BREND

*Re: OIL AGAIN!*

Oil goes lower, technical wins again.
Short Mar Oil at 93.59, bought back at 91.97.


----------



## Smurf1976

*Re: OIL AGAIN!*



wayneL said:


> As volatile?
> 
> Gas is a beta monster when it wakes up.



Gas is massively undervalued IMO. I've posted the reasons before but essentially it's highly geographically concentrated in a very few countries and it's long term use is as automotive fuel whereas it's presently valued in most countries (including Australia) as nothing more than a substitute for coal in boilers. And even then, Australian gas is cheap by world standards especially compared to US etc.

I'd stay well clear of any company that's building gas-fired baseload power plants for this reason. But I'd certainly invest in those producing the gas as long as they haven't hedged their entire reserves.

And gas depletes just like oil. Indeed it's already seriously depleted in the US, UK etc.


----------



## josjes

*Re: OIL AGAIN!*

Just couldn't help asking, what shares in ASX should one held if one wants to be long gas ? Not penny stocks please. At least ASX100.


----------



## markrmau

*Re: OIL AGAIN!*

"ASX should one held if one wants to be long gas"

You have to ask yourself where? (Geographically speaking).

US? Have a look at AMU.
AUS? There is AOE but be careful. They have good international growth prospects but a lot of their AUS production has been sold at low gas price contracts.
Euroland? (this is the region to go for IMHO). EPG.


----------



## ithatheekret

*Re: OIL AGAIN!*

I had a $72 bottom median number in my figures on oil , I'm a bit perplexed by the latest slow down in prices , because after numerous calculations , I no longer have that in the solutions . The lowest median I have now is $81 .

That is the lead number in a tranch , 81/83/85/86/87 ( this is were the ratios become lower too [ the buying dip ? ] )

The only 72 I have is in the count line now , but note the above line is not yet complete no 80 or 84 . this could represent a $4 swing , but that is an assumption and I'm only prepared to consider it at present .

The countline has reached 76 so far .


----------



## rederob

*Re: OIL AGAIN!*



josjes said:


> Just couldn't help asking, what shares in ASX should one held if one wants to be long gas ? Not penny stocks please. At least ASX100.



WPL


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I had a $72 bottom median number in my figures on oil , I'm a bit perplexed by the latest slow down in prices , because after numerous calculations , I no longer have that in the solutions . The lowest median I have now is $81 .
> 
> That is the lead number in a tranch , 81/83/85/86/87 ( this is were the ratios become lower too [ the buying dip ? ] )
> 
> The only 72 I have is in the count line now , but note the above line is not yet complete no 80 or 84 . this could represent a $4 swing , but that is an assumption and I'm only prepared to consider it at present .
> 
> The countline has reached 76 so far .



Lots of numbers.
Perhaps I can fill the gaps and we can have something equally as meaningless.


----------



## BREND

*Re: OIL AGAIN!*



rederob said:


> Lots of numbers.
> Perhaps I can fill the gaps and we can have something equally as meaningless.




Then maybe we can look at the oil chart for some ideas.
Currently 1st support is at $90, and 2nd support is at $88.

Head and shoulders formed for 30min chart. After taking profit on my shorts for oil, I'll be looking to short again on slight rebound.


----------



## Tysonboss1

*Re: OIL AGAIN!*



josjes said:


> Just couldn't help asking, what shares in ASX should one held if one wants to be long gas ? Not penny stocks please. At least ASX100.




Queensland gas company,....

They are producing coal seam methane gas which is likly going to be eventually feed into the sydney grid to replace the declining moomba feilds,... they are also going to be building a gas fired power station that is fed by there gas fields so at different times of the day if the electricity spot price peaks they can up the elctricity production but is the gas price increases they can lower electricity production and feed more gas into the grid,

Also as a by product of the gas production they produce tonnes of water which the are exploring ways to sell into the drought ridden communities arounf there area of operations, This company is already producing gas and may be paying a dividend (double check that htough I am not 100% sure).


----------



## rederob

*Re: OIL AGAIN!*

A link:
http://online.wsj.com/public/resources/documents/info-oil100_0711.html
And a chart:


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> A link:
> http://online.wsj.com/public/resources/documents/info-oil100_0711.html
> And a chart:




Oil may hit some where between $80 - $85 before 10th of march.

But I still stand firm on our original bet,... I don't think it will drop below $80 ever again.

I know thats a big call but I am pretty confident.


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> Lots of numbers.
> Perhaps I can fill the gaps and we can have something equally as meaningless.




Go for it , but will you be calculating it on a steady state or periodic behaviour ?

Each price change is random and unpredictable ........ but instead of looking for a price area , I look for sequence over noted periods of distribution . These can be measured by their curves be it monthly , annually , or even weekly . It is fractals and a scaling factor that is the basis on the equations , these bring out the formula . It's just another form of physics .

But of course it's meaningless .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Go for it , but will you be calculating it on a steady state or periodic behaviour ?
> 
> Each price change is random and unpredictable ........ but instead of looking for a price area , I look for sequence over noted periods of distribution . These can be measured by their curves be it monthly , annually , or even weekly . It is fractals and a scaling factor that is the basis on the equations , these bring out the formula . It's just another form of physics .
> 
> But of course it's meaningless .



If it works for you, fine.
Although I am *not *"calculating" a price, if I were, neither steady state nor periodic behaviour functions would be useful.
Future oil prices will be over $200 within 5 years and if your equations cannot factor that figure in, then your present calculations are flawed.
I assume you are familiar with Taleb's views on probability and randomness and, if so, will have an idea of what I mean.
Tysonboss reckons there's a Maginot Line at $80, which is close to your low point, and very close to the ema support line in my earlier-posted chart.

Speaking mathematically, I have a probability case for oil hitting $60 again based on current chart data.
It's an exceptionally low probability, albiet within the bounds of previous price movements.


----------



## josjes

*Re: OIL AGAIN!*

Would anyone care give opinion on ETF USO ? Someone mentions that it is widely criticised. Any input ? I am currently doing some research on exposure to oil sector, and found these ETF in US market.
XLE - Energy Select SPDR, 
IXC - ishares S&P Global Energy, 
both ETF invest in Energy company with names like EXXON, Shell, BP etc. Both perform roughly the same for the last 3 years. (30 % 3 years, 27% 5 years, in US$ term)
I want to invest 50% in global company 50% in ASX listed shares. STO, WPL, OSH are 3 candidates on my list. 
What are your guys' views on these ?


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> If it works for you, fine.
> Although I am *not *"calculating" a price, if I were, neither steady state nor periodic behaviour functions would be useful.
> Future oil prices will be over $200 within 5 years and if your equations cannot factor that figure in, then your present calculations are flawed.
> I assume you are familiar with Taleb's views on probability and randomness and, if so, will have an idea of what I mean.
> Tysonboss reckons there's a Maginot Line at $80, which is close to your low point, and very close to the ema support line in my earlier-posted chart.
> 
> Speaking mathematically, I have a probability case for oil hitting $60 again based on current chart data.
> It's an exceptionally low probability, albiet within the bounds of previous price movements.





I think you're assuming I only use that as a basis , instead it is used as an argement to prove calculations wrong , I don't look for what shows the sequence is right , I look for anything that will show it to be wrong .

In reference to pioneers in their fields , I take a page out of Mandelbrots , Lorenz and Von Koch . I apply these to my system calculations and it's the curves that I measure , the ratios used are my own , but my findings are different to many to date . Now if I can use it to get within 2 to 3 points , I thinkk that's marvellous and do jigs I assure you . If I could get it to 4 points I would probably pass out .

But my case is that everything can be measured , even the VIX movements , this started the whole thing for me , I thought they had taken an obscure index to many and found a way to trade it for everyone .

I'm trying to create the same thing , it's not a predictomatic , but function is a factor that science itself says I must at least look at , periodic and steady state are an arguement that must be looked at IMO .

When it boils down to it all , what I'm trying to do , without meaning to as it may be a possible by-product , is patterns of self similar structure , where and I can only say possibly , show a dependence on a sequence levels or price etc. over many structures based againsts it initial condition/s .


This theory is put against another on distribution , which I won't go into and there are others , some more important , one I call the sentiment index , one that can be used as a measure over all sectors and hopefully anything else you can trade . This has taken years , I started in 1998 . One day it could be used effectively after complete backtesting has been done . But that too is in the future , right now it's make hay whilst the sunshines .

...and Red , nothing derog meant at all M8 .


PS... _if I tell you more I'd have to kill you  _


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I think you're assuming I only use that as a basis , instead it is used as an argement to prove calculations wrong , I don't look for what shows the sequence is right , I look for anything that will show it to be wrong .
> 
> In reference to pioneers in their fields , I take a page out of Mandelbrots , Lorenz and Von Koch . I apply these to my system calculations and it's the curves that I measure , the ratios used are my own , but my findings are different to many to date . Now if I can use it to get within 2 to 3 points , I thinkk that's marvellous and do jigs I assure you . If I could get it to 4 points I would probably pass out .
> 
> But my case is that everything can be measured , even the VIX movements , this started the whole thing for me , I thought they had taken an obscure index to many and found a way to trade it for everyone .
> 
> I'm trying to create the same thing , it's not a predictomatic , but function is a factor that science itself says I must at least look at , periodic and steady state are an arguement that must be looked at IMO .
> 
> When it boils down to it all , what I'm trying to do , without meaning to as it may be a possible by-product , is patterns of self similar structure , where and I can only say possibly , show a dependence on a sequence levels or price etc. over many structures based againsts it initial condition/s .
> 
> 
> This theory is put against another on distribution , which I won't go into and there are others , some more important , one I call the sentiment index , one that can be used as a measure over all sectors and hopefully anything else you can trade . This has taken years , I started in 1998 . One day it could be used effectively after complete backtesting has been done . But that too is in the future , right now it's make hay whilst the sunshines .
> 
> ...and Red , nothing derog meant at all M8 .
> 
> 
> PS... _if I tell you more I'd have to kill you  _



I think using steady state approaches to calculating time-based phenomena is silly.
If you have other approaches that work for you, good.
My earlier point about "meaningless" was exactly that, except perhaps for you and your secret formula.
That fact that a number does not appear in your formula has no bearing on whether or not it will come up in reality: And I specifically now refer to a calculated "bottom median number" and an actual low oil price that is possible to be reached at a future date.
That is, there is a clear distinction between a "calculated" median (using your approach) and the next meaningful low oil price that the markets will determine. 
The other distinction is between probability and predictability.
Your formula attempts to "predict" numbers that, for you, have meaning.
The probability that another number may be a better number to use, yet does not fit into your formula, is only something you can discover in retrospect.
These mathematical aspects, however, digress from general trading/investing themes in this thread unless you tell us how you intend to use the numbers you generate.
For example, what is the significance of your _*$72 bottom median number*_?
Or, if $80 and $84 don't come up, are the numbers discounted somehow?
I read and re-read you post to see what could be useful.
Having a wide range of bottom median numbers didn't do much for me, and a $72 figure that was no longer there made even less sense.
From an investing perspective my present trigger price for re-entry into oil equities is $85.  But in the present market I would not re-enter unless oil dipped below the annual average price, which is nearer $75.
Unless history does not repeat, the charts tell me that at some future point the oil price will again dip to (and below) its annual average.  I will then look at market sentiment to see what's worth doing.


----------



## ithatheekret

*Re: OIL AGAIN!*

Okay , Red .

The recent conditions have been the perfect testing ground on the indices ,  I have applied it over several instruments including 3 stocks entered , where a curve has been measured and a sequence found , the range of that sequence has been accurate to within in 3 points so far .

But as you believe it flawed I will no longer post on the matter .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Okay , Red .
> 
> The recent conditions have been the perfect testing ground on the indices ,  I have applied it over several instruments including 3 stocks entered , where a curve has been measured and a sequence found , the range of that sequence has been accurate to within in 3 points so far .
> 
> But as you believe it flawed I will no longer post on the matter .



You have completely missed my point.
And you didn't answer any of the questions I asked.
If something works for you and you don't want to share it, then don't.

If you want to make comprehensible and useful contributions to the oil thread, then that option is always open.


----------



## numbercruncher

*Re: OIL AGAIN!*



ithatheekret said:


> Okay , Red .
> 
> The recent conditions have been the perfect testing ground on the indices ,  I have applied it over several instruments including 3 stocks entered , where a curve has been measured and a sequence found , the range of that sequence has been accurate to within in 3 points so far .
> 
> But as you believe it flawed I will no longer post on the matter .





No hissy fits aloud .....

Keep posting or we will have to sacrifice your pet hamster to the capitalist gods.

Thankyou


----------



## ithatheekret

*Re: OIL AGAIN!*

Fair enough NC .

The other night there was what I thought techies called a divergence in the RSI and the weekly . It looked extremely overbought , but ........ I've thrown reams of calcs away on projections ..... up .


My count has reached 77 , but to pre-empt price declines oil was $94 , I discounted $2 from that and kept it at even dollar prices , there is a distinct change in the sequence doing it this way , but I get 83 and 84 out of 7/12 relationships inverse to it ....... normally one would think the oil decline would affect POG negatively , I think it might be a positive this time round .


----------



## BREND

*Re: OIL AGAIN!*

Shorted 2 lots of Mar crude again, at average price of US$92.22. I think we are likely to see oil falling to US$90 soon.


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> My count has reached 77 , but to pre-empt price declines oil was $94 , I discounted $2 from that and kept it at even dollar prices , there is a distinct change in the sequence doing it this way , but I get 83 and 84 out of 7/12 relationships inverse to it ....... *normally one would think the oil decline would affect POG negatively , I think it might be a positive this time round *.



If your relationships were not significantly time-lagged, then last night's falls of over 2% for both oil and gold suggest a strong positive correlation continues.
The importance of the correlation hinges on the fact that oil prices are significantly "demand" driven, so the Citi Bank Carnage of $20b writedowns and 4000 layoffs was a catalyst for the decline affecting US consumer confidence.  Conversely, gold is spectacularly "speculatively" driven at the moment and last night's decline was on the back of a strengthening greenback.


----------



## BREND

*Re: OIL AGAIN!*

Do take note that Feb is a weak month for gold and silver. If you are buying futures, its the last chance. If you are buying stocks or ETFs, might as well wait till mid- year.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



ithatheekret said:


> ....... normally one would think the oil decline would affect POG negatively , I think it might be a positive this time round .




I think so too, the correlation/linkage has just been broken. If the specs get a whiff of a global slowdown, as appears to happening, then I see the oil bull turning into a bear, for as long as this cycle plays out. It's a convincing double top on the chart. Whether or not you believe the peak oil argument it appears to be turning into semantics - if the US is slowing, there is going to be connected financial damage to the BRIC's no matter what, so oil demand will reduce.

The fundamentals for gold will still be there only their costs will literally halve due to the declining cost of fuel. I see oil testing sub $60 within the year.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



BREND said:


> Do take note that Feb is a weak month for gold and silver. If you are buying futures, its the last chance. If you are buying stocks or ETFs, might as well wait till mid- year.




I'm not sure history is any guide any more to seasonal strengths & weaknesses. Totally different climate of fear & emotion pervading now so precious metals in blue sky territory.


----------



## ithatheekret

*Re: OIL AGAIN!*



Uncle Festivus said:


> I think so too, the correlation/linkage has just been broken. If the specs get a whiff of a global slowdown, as appears to happening, then I see the oil bull turning into a bear, for as long as this cycle plays out. It's a convincing double top on the chart. Whether or not you believe the peak oil argument it appears to be turning into semantics - if the US is slowing, there is going to be connected financial damage to the BRIC's no matter what, so oil demand will reduce.
> 
> The fundamentals for gold will still be there only their costs will literally halve due to the declining cost of fuel. I see oil testing sub $60 within the year.




Everything will retest , I sure many chartists will agree there . But where are we retesting , at what level , this is important for hedgers like airlines . Just because a recession is on , it doesn't mean we're going back to horse and buggy , so we must assume that we will see a floor in oil soon , I don't think we've seen a ceiling yet . All we've done is get use to seeing oil at $100 at one time in a period . POG declined on higher oil too , but this time round I expect oil to find it's low and then proceed to rise again . Production is coping with high oil , parts of the finance sector isn't because it has speculated on its pricing movements and they can't all be winners . I have a list of $45 oil calls on the short side , they were blind as bats and probably just as poor now , but they have added to the infection , when covering .



Production has no choice , sure it can pass it on , but they've been absorbing as much of it as they could until they were forced to pass it on to the consumer .
When oil eats into GDP as it would have already , the data might actually start to mention it . In the mean time look for transport to lead , it was green in a sea of red on the US indices . That doesn't mean it's all over , but it does show signs of some growth extraction , how much will be interesting to see unwind in the data . The gold case is more a matter of instability in finance and geopolitical areas , higher oil has just emphasised it .

It's easy to find oils driving force , it's harder to find its chains , which are usually geopolitical . Policy and laws are the only thing that can hold oil back , but someone will have to absorb the swings , not many western governments are rushing to do that . In fact I find the opposite , just rhetoric and steam , but when we look closely the ones steaming the most are those who supported the policies , not those that implemented them .


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> I think so too, the correlation/linkage has just been broken. If the specs get a whiff of a global slowdown, as appears to happening, then I see the oil bull turning into a bear, for as long as this cycle plays out. It's a convincing double top on the chart. Whether or not you believe the peak oil argument it appears to be turning into semantics - if the US is slowing, there is going to be connected financial damage to the BRIC's no matter what, so oil demand will reduce.
> 
> The fundamentals for gold will still be there only their costs will literally halve due to the declining cost of fuel. I see oil testing sub $60 within the year.



What you think and what is, is different.
First, there is no break in the positive correlation between oil and gold, and the below chart - hourly - of the two shows how strong the correlation has been in the past 2 weeks.
Secondly, we have had more than 3 weeks of "meltdown", giving the specs a ringside seat of the global slowdown, yet oil has slumped less than 15% from its peak, while equity markets have declined more than 20%.  If oil was truly bearish then it would be "writing-in" its future demise, rather than riding out the present slump.
Thirdly, while we cannot avoid global economic connections, it is moot to indicate why financial damage to BRICs will be reflected in their oil demand.  The reality is that BRICs are increasing refining capacity because they are unable to meet demand.  Put another way, there is a big gap in demand that has yet to filled within BRICs, so it is possible they will continue to push the supply curb through the present depressed economic cycle.  
Finally, it's an absurd proposition to suggest that oil falling (to below $60) will halve the production costs for gold. This would only be true if we assumed that oil prices contributed 100% to the cost of gold, and then halved the present oil price to around $45. Methinks they are fairytales that won't come true.


----------



## ithatheekret

*Re: OIL AGAIN!*

I think $60 is wishing well stuff . Just the calcs in the options show a high Delta is on the price . We may have just seen the low , floor , bottom , but that is as much specualtion as the options are .

But if we look deeper into the driving force we will also note that many hedgers are just settling in or are about / waiting to . In the airlines it might pay to look into the models and haulage capabilities as something to judge against . These can be used much the same way the case schiller  index is for US housing .

When we look at the US for guidance , it will take months for them to stop speculating on a recession before they are all singing the same tune .

That's when the spin will return enmasse to say recessions are healthy , blah , blah , blah . 

The idea is to be able to whistle the tune before they all join in singing , once it's popular , we should have been set in nice Blueys and selling to them 

Did anyone see VLO fall into $40's ...... yeeehaaa ? Will it hold or buy the open ?  Time to drag out the old US oilers list , might need Micheal here too , some may have been gobbled up .

I think we could acheive a consenus , that the baltic dry index was affected by high oil prices , but it could be worth a view at those that mananged to keep margins contained . IMHO


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> I think so too, the correlation/linkage has just been broken. If the specs get a whiff of a global slowdown, as appears to happening, then I see the oil bull turning into a bear, for as long as this cycle plays out. It's a convincing double top on the chart. Whether or not you believe the peak oil argument it appears to be turning into semantics - if the US is slowing, there is going to be connected financial damage to the BRIC's no matter what, so oil demand will reduce.
> 
> The fundamentals for gold will still be there only their costs will literally halve due to the declining cost of fuel. I see oil testing sub $60 within the year.



If oil demand goes down by a significat amount then we're talking depression not recession or slowdown based on history.

The coal shortage in China and the nuclear plants in danger of shutdown in the US (one temporary shutdown has already occurred) due to drought will add to oil demand as the fuel of last resort even with zero economic growth.

As for the peak oil theory, IMO the only people who don't believe it are those who have never seen what happens in an acutal oil field or group of fields (eg a whole country). What most disagree on is the timing - 2005, 2008, 2010, 2015, 2030 and 2037 seem to be the popular dates. 

The closest thing to a credible "if" argument I've seen is the notion that demand may decline and thus drive the production peak, not the reverse as is normally assumed, due to either outright economic collapse or switching to an alternative fuel.

IMO if we get an economy-driven oil price crash then cheap petrol will be the last of our worries.


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I think we could acheive a consenus , that the baltic dry index was affected by high oil prices , but it could be worth a view at those that mananged to keep margins contained . IMHO



I don't understand this comment.
The Baltic Dry Index is a straight out supply/demand-based indicator, with a touch of "future" speculation.  That is, if there is a lot of dry commodity to be shipped, and not enough ships available, then lease prices go up.
Oil prices have a marginal impact on shipping costs as bunker fuel, which drives ships' engines, is nothing more than oil sludge, and is pretty cheap stuff.
If you mean something else, can you please elaborate.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



rederob said:


> What you think and what is, is different.
> First, there is no break in the positive correlation between oil and gold, and the below chart - hourly - of the two shows how strong the correlation has been in the past 2 weeks..




A convenient timescale for sure. Go out a bit to something meaningful & the data/chart is compelling that there has been a disconnection of the correlation. Whether this will be sustained is another matter. The gold/oil ratio suggests one of them will yield at some point. See chart 1.




rederob said:


> If oil was truly bearish then it would be "writing-in" its future demise, rather than riding out the present slump.




True, it hasn't regained it's highs has it? Looking at chart 2, which commodity has had a stellar run, and which is just starting out? Is that a head & shoulders forming, coinciding with the recent double top forming the head? How much is spec, how much is real?



rederob said:


> Thirdly, while we cannot avoid global economic connections, it is moot to indicate why financial damage to BRICs will be reflected in their oil demand.




So _if_ China has a recession/slowdown (their government is actively trying to cool their economy) their oil usage will not go down? Simple maths suggests that if the global economy contracts then demand will reduce. Do you really think China is going to take up the slack?

I believe in the peak oil ideal, but a global reccession will maybe prolong the day of reconing, at least if we havn't found an alternative in the meantime. Oil at $100 is it's own worst enemy, only hastening attempts to find alternatives and not be at the mercy of the oil exporting countries.



rederob said:


> Finally, it's an absurd proposition to suggest that oil falling (to below $60) will halve the production costs for gold. This would only be true if we assumed that oil prices contributed 100% to the cost of gold, and then halved the present oil price to around $45. Methinks they are fairytales that won't come true.




Right again, bad choice of wording. It will have a significant positive impact on the gold miners bottom line then .

The object of trading/investing is to be objective - if the data changes then adjust the perspective. Then again, I might be calling it too soon, coz they are both (gold & oil) on a tear tonight


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> I don't understand this comment.
> The Baltic Dry Index is a straight out supply/demand-based indicator, with a touch of "future" speculation.  That is, if there is a lot of dry commodity to be shipped, and not enough ships available, then lease prices go up.
> Oil prices have a marginal impact on shipping costs as bunker fuel, which drives ships' engines, is nothing more than oil sludge, and is pretty cheap stuff.
> If you mean something else, can you please elaborate.




Inflation .

It's in our faces everyday on shop shelves , inflation , sorry perhaps the syntax needed rearranging . If shipping want to save on fuel , they'll hug a coastline and I'd bet they were the first cabs off the rank to hedge . Bunker fuel accounts for around 25-30% of the up front cost to shipping . Somewhere in the equation it [ oil costs ] comes into play , but that's a case by case study . 

The impact from the high oil prices , is starting to show up in growth as a stymie , but we've also had semaphores in the price rises , such as coffee and sugar etc. , the ores have been the only respite this year in a way , iron ore contracts are now being negotiated higher , the same I expect for coal .
The dry cargo prices are a good measuring stick once on shore , because there prices are driven by inflation and a markets sentiment .

If you want to find something that affects both the BDI and the consumers " timely fashion delivery price " , that's easy just look out a window . Then you have demand , a simple look around the power stations want list for coal could be a starting point . That affects nearly half of the demand on top of it all alone .
The above mentioned and aggression / collisions etc. ,  in areas known to be choke points for shipping also affect prices , paired with high oil prices , it makes a hard pill for most industry to swallow .

We have no choice there , we just get it shoved down our throats . But inflation has seen demand slow , regearing towards higher prices is the key , but not the end . Transport was leading the way in a sea of red on th eUS boards , I even saw DRYS price moving , noted it was trading around nine times to earnings , probably 4-5 times future earnings . Thought it was cheap compared to others in the sector . But that's just an observation along the way . If you want to see a turn around watch transport , that's where it will start IMHO .


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> A convenient timescale for sure. Go out a bit to something meaningful & the data/chart is compelling that there has been a disconnection of the correlation. Whether this will be sustained is another matter. The gold/oil ratio suggests one of them will yield at some point. See chart 1.



No, the correlation is intact and your indexed chart is a blatant misuse of statistics/data/information.
What is markedly different is the relative movement in prices, which are clearly favouring gold for the moment. 


> True, it hasn't regained it's highs has it? Looking at chart 2, which commodity has had a stellar run, and which is just starting out? Is that a head & shoulders forming, coinciding with the recent double top forming the head? *How much is spec, how much is real*?



Oil is running mostly on fundamental.
Gold is running mostly on fear. 


> So _if_ China has a recession/slowdown (their government is actively trying to cool their economy) their oil usage will not go down? Simple maths suggests that if the global economy contracts then demand will reduce. Do you really think China is going to take up the slack?



I have heard this line trotted out for the past 3 years.
Your "simple maths" is not based on a reality reflecting oil supply and demand fundamentals.  The internal demand drivers of BRIC nations are incapable of meeting present requirements, so there is no issue of taking up the slack to deal with, at all.  On the other side of the equation, first world nations are putting millions more vehicles onto roads each year, so it will take a global meltdown, not a global slowdown, to put oil prices into a (short term) slide.


> I believe in the peak oil ideal, but a global reccession will maybe prolong the day of reconing, at least if we havn't found an alternative in the meantime. Oil at $100 is it's own worst enemy, only hastening attempts to find alternatives and not be at the mercy of the oil exporting countries.



What is your "meantime" period?
We already have lots of "alternatives" for oil in various applications.  Few of them are cost effective, but may be so when oil prices double.


> The object of trading/investing is to be objective - if the data changes then adjust the perspective. Then again, I might be calling it too soon, coz they are both (gold & oil) on a tear tonight



Hmmmmmm.........
If the data changes, the data changes.
Data changes are an outcome of a myriad of driving forces, and apart from black boxes reacting to other black boxes, data changes have little impact on key driving forces.
If oil's fundamentals change, then I might change perspective.


----------



## Kauri

*Re: OIL AGAIN!*

oil from nigh on $100 bb to near $86bb.... what would you need to call a short term slide????
oil is going to meet some of the prices quoted when ... next week.. next year... next decade??? 
calling peak oil is as ingenious as calling peak analysts... we don't make them anymore, just cheep?? alternatives...
of course the price of oil is going to increase.. exactly the same as any finite resource that is not readily replaceable... but when.. my old father once told me to back Frontiersman, he was going to win a city race... and he did... *eventually*.. (ahhh loved the 66/1 )..
a coorrelation between oil and any other commodity is only use full so long as it lasts.. my limited experience tells me that once it becomes obvious to the masses it usually breaks down..
how much will my favourite bottle of plonk cost next year... should I stock up now... or will it rain...
Hicupping...
..............Kauri


----------



## numbercruncher

*Re: OIL AGAIN!*

I still maintain that in the medium term there is loads of evidence pointing to downward pressure on Oil prices.

I fully understand and beleive peak Oil and clearly see demand growth short term as the masses clamber into the Industrilised world.

But on the downside a few things.

Car manufacturers seem to be in a desperate race to be pumping out high mileage, electric etc cars off the production line, many examples around , a French company starts production this summer of an Air powered car, Google founders started Tesla and already produce Electric sportscars - The only reason we dont see this stuff on bubblevision very much is (IMHO) that it would potentially crash the market of new car sales while people "hold off" on purchases if they believed Petrol powered cars where on the verge of redundancy.

The US has obviously declared war on Oil, planting out millions of acres of prime farm land with Bio fuel, passing through congress a mandate to make all cars 35mpg from 25mpg within years.

The tar sands of Canada which is a massive, massive resource apparently has a production cost of 33$pbl - effectively setting a ceiling on oil prices ?

Public sentiment - 100s of millions of people concerned with climate change want to reduce their carbon footprint.

The Middle East seems accutely aware of the fact the Oil age will at some point end, hence the huge money going into alternative Industries and sovereign wealth funds etc buying large stakes in foreign corporations.

Cheers


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Oil might decline further in the short term, but, you'd be foolish to think it will be down there for long regardless of whether the US goes into ression or not. 

Why, because oil is used to make many more products than just fuel. Population growth of the world increases yearly at an alarming rate and with this growth comes more demand.

Countries like China and India are evolving and becoming more westernised, this westernisation requires oil and lots of the stuff. Other countries will follow this trend.

Sooner or later the Saudis will announce they can't increase output, who knows when it will happen but it will signal the beginning of new times for oil.

Talk of alternate energies replacing the oil in the short term is just that, talk. Its going to take genius and invention to pull us out of the mess we are in.

I don't see demand for oil slowing much, maybe i'll be wrong but, if you do the math and look at simple supply and demand, world instability, increasing extraction expenses & scarcity of large new oil field finds its a strong argument for prices remaining high.

Go Oil, JW


----------



## Wysiwyg

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Oil might decline further in the short term,
> 
> I don't see demand for oil slowing much, maybe i'll be wrong but, if you do the math and look at simple supply and demand, world instability, increasing extraction expenses & scarcity of large new oil field finds its a strong argument for prices remaining high.
> 
> Go Oil, JW




Does anyone imagine that China is going to want less after this massive expansion has stabilised?This new infrastructure is gonna need fuel to `stay alive`.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Some of the products made from oil

http://www.anwr.org/features/oiluses.htm

http://www.3k88.com/products.htm

http://www.seed.slb.com/qa2/FAQView.cfm?ID=905

I agree that people will want to decrease their carbon footprint but i doubt many would know that these products listed here are made from oil...................

They will still drive to work, go on holidays, buy products that need to be transported. You can try all you like but we have built our society around oil, i dont see how you can avoid using it.

JW


----------



## numbercruncher

*Re: OIL AGAIN!*

Worlds population growth peaked in 1960, and seems to be dropping, if it remained the same from this day forth doubling would take about 60 years, but I suspect growth will continue falling, but its growth none the less.




At current prices it is clearly profitable to pursue on a larger scale " heavy Oil " , short term shocks , sure , I can see doubling of prices for Wars etc ... but so much downward pressure (well stagnation or limited growth) from my perspective on the situation.


----------



## rederob

*Re: OIL AGAIN!*



numbercruncher said:


> Worlds population growth peaked in 1960, and seems to be dropping, if it remained the same from this day forth doubling would take about 60 years, but I suspect growth will continue falling, but its growth none the less.
> 
> At current prices it is clearly profitable to pursue on a larger scale " heavy Oil " , short term shocks , sure , I can see doubling of prices for Wars etc ... but so much downward pressure (well stagnation or limited growth) from my perspective on the situation.



numbercruncher
You need to crunch some numbers.
Annual population growth has not fallen below 75 million for the past 20 years.  The rate might be declining, but the actual total numbers each year have increased recently.


On the oil front, what is Canada's contribution - from oil sands - to global total annual oil output?
Will Canada's contribution lead to an oversupply in oil at any point in the foreseeable future?

On the vehicle front, what number of electric/hybrid cars hit the roads last year?
What percentage of total was that?

While there may a perception that demand for oil might slow, there is very little statistically that will support such a case, short of a global depression.

Kauri
The "correlation" is important because it supports the price of gold, not vice versa.
A meaningful disconnection of the oil:gold correlation is most likely to see gold prices decline and may well be the trigger for gold's next spell in the wilderness.
I have responded to your other points accordingly.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Thanks for posting that image Numbercruncher.

I didnt realise there was so much heavy oil proportianately to conventional crude.

Just on the population growth, probably the most important thing is that the current population is using more oil or oil derived products than what it was in the past. I would be interested to know oil usage per person, now, compared to 1960.

I can only think we would be using more per person than ever before?

This is important if looking at population, because you could have a reduction in population size/growth but an increase in oil usage?

Something to ponder anyway....................


----------



## numbercruncher

*Re: OIL AGAIN!*



rederob said:


> On the vehicle front, what number of electric/hybrid cars hit the roads last year?
> What percentage of total was that?





Quite a few, but its going forward that we will see the serious numbers emerging







> US hybrid car sales for 2007 totalled 352,184 units



, this was out of a total of 16.14m units - so like 2pc but its growing!. Alot of Public sentiment is clearly with alternative energy, last year Toyota Prius sales grew 69pc! Ethanol use to growing rapidly too.

As an example, The Air Car I mentioned earlier thats due to come into production this European summer, has a AUD equivalent cost of 6 to 7k , that alone will make them massively popular.

Seems the World bank somewhat agrees with my view, Im not saying Oil is a bad long term investment by any means, but I think it will be far from stella as it has been in the past. I just look at the evidence and see Medium term downward pressure on prices. I maybe wrong and Im happy with being wrong ! 



> SINGAPORE —  Oil prices are likely to decline gradually this year and next as record crude prices weaken demand, the World Bank projected Wednesday.
> 
> "If you look at the fundamentals, there is scope for lower oil prices," said Hans Timmer, co-author of the bank's annual "Global Economic Prospects" report, at its launch in Singapore. "We forecast more or less a sustained, gradual decline."
> 
> A barrel of light, sweet crude surpassed $100 a barrel on the New York Mercantile Exchange for the first time last week.
> 
> The World Bank's report predicts that a barrel of crude oil will cost $84.10 on average this year and fall by 6.8 percent to $78.40 a barrel in 2009. It estimates that the average price of crude oil last year was $71.20 a barrel.
> 
> The forecasts are based an average of three benchmark oil prices: Dubai, Brent and West Texas Intermediate.
> 
> "On the demand side, what you are seeing is that the high oil prices start having an impact, in the sense that it slows down demand for oil," Timmer said. "You see that in high income countries, there's actually no growth any more in oil demand."




http://www.foxnews.com/story/0,2933,321229,00.html


----------



## numbercruncher

*Re: OIL AGAIN!*



rederob said:


> numbercruncher
> You need to crunch some numbers.
> Annual population growth has not fallen below 75 million for the past 20 years.  The rate might be declining, but the actual total numbers each year have increased recently.
> 
> 
> .





Hi Red ,

Maybe I worded that in unclear terms, I was talking growth in percentage terms had fallen, but its growth none the less, much of that growth is in the Middle East and Subsahran africa, so how much Oil demand this adds would be debateable, and lets face it , the swelling population of Sub Saharan Africa is never in your life time going to experience the standard of living that you do.


----------



## Kauri

*Re: OIL AGAIN!*



rederob said:


> Kauri
> The "correlation" is important because it supports the price of gold, not vice versa.
> A meaningful disconnection of the oil:gold correlation is most likely to see gold prices decline and may well be the trigger for gold's next spell in the wilderness.
> I have responded to your other points accordingly.




If indeed there isa correlation between oil and gold I would like to see a chart demonstrating this over a period of several years.... if they are moving in tandem over the recent short term time frame could it possibly be that they are both in fact actually responding/following some other factor, and that thier co-relationship (correlation?) is incidental?? If the posted estimates for poo are time-wise loosely in years would it not make sense to base/back this up with an historical chart using the same time-frame?? 
As the cost of buying and holding oil over the long-term would I imagine be quite prohibitive for most people I imagine that a short-term view would be more appropriate/helpfull for people trading here??
As Tim Treadgold(chickens mate  ) recently penned... brokers price-targets stating a price expectation for 12 months time-frame is misleading and in his opinion should be banned.
Most people would agree that oil is going to be more expensive into the _unqualified_ "*future*", any arguments quoting a myriad of reasons, whether they be right, wrong, or indifferent, is pure genius... in 3,4,5+ years oil is e.g.150% more than it was today so see,I was right...  in the meantime people actually trading on poo are working on for example the recent "short-term slide??" of roughly 14% from $100 to $86... and its subsequent recovery...
Cheers
........Kauri


----------



## rederob

*Re: OIL AGAIN!*

Kauri
You have the opportunity to show there is no meaningful correlation over the longer term.
Your other points are somewhat gratuitous.
I have held WPL for many years, OSH for several, and BPT for around a year.
I have a very long term investing time frame, so when I buy an equity I like to give it several  years to prove itself, unless it's very cyclical and the odds are against me.
I will add to my oil equity holdings this year and the only issue will be how much I pay at the time.


----------



## Kauri

*Re: OIL AGAIN!*



rederob said:


> Kauri
> You have the opportunity to show there is no meaningful correlation over the longer term.




Hi Red.. thanks for your replies... I am simply stating that I do not know if thre is a correlation, and unfortunately oil is not one of the commodities I chart or trade. You on the other hand, I think, have/are asserting the correlation exists, I am only asking if you can back it up with a simple chart that runs preferably for more than a couple of months, preferably a couple of years or more...
Thanks in advance
Cheers
.........Kauri


----------



## ithatheekret

*Re: OIL AGAIN!*

If I were to say the latest economic events in the financials markets , which have spread across nearly every sector so far , position resizing or whatever right . Just agree and bear with me here for a few moments .........

Now do you know what type of inflation has been at the force of the last run ?

I do , it's called demand - pull inflation . It's coming about Ben .

The economic shift caused in the markets by some of its participants , has also changed that inflation on a global scale .

There will be ripple effects , it's unavoidable and physically impossible to change or deflect in a way that is suffice .

We've watched a period where the Fed has raised rates , an administration that has cut taxes and a country go to war .

All costly to an economy in the first place .

The so called bull run was poured out of a bucket and turned into steam , equity that never existed was created .

The Fed tightened like the Almighty to slow it down , until it finally choked it , it's like interrogation gone too far , whoops .

Someone else on this site mentioned this in a thread prior to my sub. on stagflation , that's what America is faced with , the stimulus packages are a wild bet on a hand played too far .

Asia , more so China in this mention , which has boomed and will probably see continued growth as it spreads inland , albiet at a slower rate in the future , will have that inflation monster turned on them in the shift aforementioned to .

Do you know how it will turn ?  I do , and I know they can ride it out .

They will see what's known as push - cost inflation , the US will just have to add that to their stagflation .................

I think this would be another catalyst for the carry trade to unwind again eventually   , and hedge positions would be critical .

Why ? Because we have seen magical data from Japan that the herd has ran with and it has disappeared quicker than the Trillions of dollars on the markets last week . Japan is a model failure , you can't print your way out of a mess for twenty years .

So this weeks data and Fedspeak , will see a stampede either way on the Yen , we can be sure of that .

But ........ Japan will be and still is in deflation , US rates being dropped won't help it one bit .

This will see tightening controls in oil by certain countries , anything that upsets the apple cart , which is probably why there a $20+ Delta out there in the oil futures , will push oil prices harshly , for my view if it get's tighter it will get uglier , if it get's uglier , oil will rise .

This has nothing in relation to the summertime driving , heating , bear markets or recessions in the US ,  etc. etc. , it's about demand and the swing in inflation .


----------



## rederob

*Re: OIL AGAIN!*



Kauri said:


> Hi Red.. thanks for your replies... I am simply stating that I do not know if there is a correlation, and unfortunately oil is not one of the commodities I chart or trade. You on the other hand, I think, have/are asserting the correlation exists, I am only asking if you can back it up with a simple chart that runs preferably for more than a couple of months, preferably a couple of years or more...
> Thanks in advance
> Cheers
> .........Kauri



Kauri
You can google for information on the gold/oil correlation.
Correlations break down, and can turn negative: Time frames can be manipulated a little to give a preferred outcome, but negative correlations are typically brief in recent years.
UF mischievously used indexes and not correlations to make his point - which in principle I agree with.
My point about correlating oil and gold is that when a clear divergence occurs, that is a trend to the negative, the price of gold tends to meander.
The attached chart (a 4-year term based on weekly light crude and gold spot prices) shows both the overall positive correlation, and the importance of divergence:


----------



## ithatheekret

*Re: OIL AGAIN!*

I see exactly what your referring to Red , but correlations aren't always what they seem , and sometimes coincidental . I'm not directing this at you Red , but please feel free to debate this with me and whomever wishes .

It could also be argued that the moves are purely contemporaneous price shocks , which for some that would be a hard case to debate . Output shocks , there's another one .........

But that leads us to ..... what is the numerator in the correlation coefficient ?

That's a hard one to get past right there , I've spent hours on it already and still have got no closer than when I started , I've got a computer earning its cost right now , it's evaluated completion time states 19 hours . Even then it is only another piece of the jigsaw puzzle .

Even if it could be found relatively easily it would be of little value , unfortunately it is an important side figure needed for solutions elsewhere .

A sign of a correlation between output and prices by itself reveals nothing about the relative importance or frequency of supply and demand shocks.

We are then faced with the questions of whether they are output shocks , or just a kink in the aggregate supply and aggregate demand curves .

I know I'm talking talking about curves again ................. 


But , when a short run aggregate supply curve comes about into a long run aggregate supply curve , prices and output go in opposite directions .

Next question that then springs to mind is , what is the dynamic adjustment ?

We can strip down output and price , but it's a guesstimate which then has to calculate the effects of shocks in both supply and demand .

We can produce our own model using a VaR system , but first we'd need the variables . Of course we must be able to agree on which scenario we are rolling into , mine is the " their scared chitless about deflation and have let the dogs loose " . this has turned a demand - pull dream for the Fed ,  turn into a push -cost reality that will see shocks in both the supply and demand aggregates . 

How can we then correlate that with the price movements in gold within the terms of definition ? Are any variables present that show this , is it random or reoccurring ? A random variable should be able to give us a quantile and value , we could then find the parameters . That's a lot of work though .

Anyone got a couple of months to compute the distribution alone ?

What is its mean and what is the standard variation ? Are we looking at a long or short horizon ? 

If it is a correlation there must be a risk evaluation that can be computed , would one think ?

Just for another prospective correlation , try laying a composite of IPL over the oil , gold layout .


----------



## Uncle Festivus

*Re: OIL AGAIN!*



rederob said:


> Kauri
> UF mischievously used indexes and not correlations to make his point - which in principle I agree with.




Sorry, it's only that I couldn't find a suitable chart to show it directly, but the thrust was that over the last month oil has come off abit while gold has hit new highs. Again, we need more time to verify a secular divergence, meaning something more is in play ie gold hand in hand with oil because of the inflation correlation but now gold diverges because of economic disfunction?



ithatheekret said:


> We can produce our own model using a VaR system , but first we'd need the variables . Of course we must be able to agree on which scenario we are rolling into , mine is the " *their scared chitless about deflation and have let the dogs loose* " . this has turned a demand - pull dream for the Fed , turn into a push -cost reality that will see shocks in both the supply and demand aggregates .




The US in stagflation mode already, teetering on the deflation precipice? I still query the longevity of any meaningfull increase in the oil price (at least to test the recent high) whilever the severity of the US recession is unknown, perhaps which is being priced in now (from $100 to $88?). 

It is a double edged sword, in that if the US only has a short soft landing recession then oil will continue to advance (from this elevated level), impacting on costs of everyone globally _again (_as per peak oil ideals_)_.

What is the pain threshold for the world when it comes to paying for oil - was it $100? At what point do users look for alternatives, even though there may be none at this point in time? Were you/we happy paying $1.50 per litre for petrol?

Unlike gold, where speculation/fear plays a big part, would it be fair to say oil is priced on demand data these days, with a spec premium? And unlike gold, I would assume that there is an upper limit to the oil price because it simply becomes unprofitable to use it, whatever that price point may be. Are we now at a juncture where $100 oil is precipitaing a global reccesion, and hence will 'consolidate' for a while? 

Is oil the culprit this time or is it just the sideshow when compared to the credit/derivatives contagion taking place?


----------



## ithatheekret

*Re: OIL AGAIN!*



ithatheekret said:


> They will see what's known as push - cost inflation , the US will just have to add that to their stagflation .................




I read your stagflation posts Unc , thoroughly agreed too . Just because some nancy can't see the fly on its nose , it doesn't mean we can't , we're just not in a position where we can take a swipe at it .

Ben placating a market is a fools errand , it will swing around and slap him in the face and roll over the top of the US economy .

They can point all the fingers they like at oil , it's not the culprit . It's a product of their worldwide dreams .


----------



## ithatheekret

*Re: OIL AGAIN!*

Good night tonight oil easing off ( not as much as I'd like ) , Skippy rising , hopefully it will equate to some relief at the petrol pump here .

Be even better if we had a snip off the excise too !


----------



## So_Cynical

*Re: OIL AGAIN!*

Hey Kauri Red and others

I Did have a 15 yr POG / POO chart that showed both sort of trending together..with the ratio 
getting outa whack sometimes....lost it in the reformat i had to have last week.

2 year chart below...with an interesting gap opening of late with gold 
clearly leading oil....Is this a decoupling trend beginning?

Yahoo USO V POG


----------



## So_Cynical

*Re: OIL AGAIN!*

Hey i found that gold / oil chart...its 10 yrs not 15  ....ends in 2006
just before gold took the lead...again.


----------



## Smurf1976

*Re: OIL AGAIN!*



Kauri said:


> oil from nigh on $100 bb to near $86bb.... what would you need to call a short term slide????
> oil is going to meet some of the prices quoted when ... next week.. next year... next decade???
> calling peak oil is as ingenious as calling peak analysts... we don't make them anymore, just cheep?? alternatives...
> of course the price of oil is going to increase.. exactly the same as any finite resource that is not readily replaceable... *but when*.. my old father once told me to back Frontiersman, he was going to win a city race... and he did... *eventually*.. (ahhh loved the 66/1 )..
> a coorrelation between oil and any other commodity is only use full so long as it lasts.. my limited experience tells me that once it becomes obvious to the masses it usually breaks down..
> how much will my favourite bottle of plonk cost next year... should I stock up now... or will it rain...
> Hicupping...
> ..............Kauri



Production peak was May 2005 on a monthly basis, 2006 on an annual basis. Pretty close to most estimates, some of which were made decades ago.

We've been on the bumpy plateau for 3 years now. All this alternatives, economic theory that increasing price will mean increasing production etc simply hasn't worked in practice. Exactly as the geologists warned.


----------



## rederob

*Re: OIL AGAIN!*



So_Cynical said:


> Hey i found that gold / oil chart...its 10 yrs not 15  ....ends in 2006
> just before gold took the lead...again.



So_C
Everything can be correlated.
But not everything is usefully correlated.
Correlating monthly moving averages is not handy because it can smooth out disconnections.
The point I make about "disconnections" is that where well established relationships begin to break down, a statistically reliable signal is given to take a position (equally I mean quit a position).
Oil and gold remain positively correlated and only when (in a meaningful timeframe) there is a clear disconnection would I be selling down my gold equities.
As Smurf repeatedly points out, peak oil appears to have come and gone, so my long term view is that oil will keep rising.
Moreover, my suspicion is that oil will rise irrespective of what the USD is doing.  Whereas I suspect gold may disconnect from oil when the greenback gets on a more even keel.
My crystal ball tells me we have another year to go before the US situation begins to improve - and I think I might be an optimist.
If those scenarios play out, then gold will keep on its merry way, and so will oil.


----------



## So_Cynical

*Re: OIL AGAIN!*

Red 
Gold is moving away from oil to the upside....oil seems to have hit a 
wall at 100$USD while Gold is setting new records every week.

If the gold oil ratio is to hold, then gold will have to stall at 950$USD
or clearly decouple...at least for the short term.


----------



## rederob

*Re: OIL AGAIN!*



So_Cynical said:


> Red
> Gold is moving away from oil to the upside....oil seems to have hit a
> wall at 100$USD while Gold is setting new records every week.
> 
> If the gold oil ratio is to hold, then gold will have to stall at 950$USD
> or clearly decouple...at least for the short term.



Decoupling is when they move in different directions.
There has been no recent decoupling of POGOO but gold has been moving much more strongly.

Oil is being driven by fundamentals - supply and demand  Were this not to be the case, then the oil price would collapse sharply (and continue down) on each of the recessionary fears that have captured the markets attention of late. Instead, POO slumps for a day or two, then bounces back.

I don't expect oil to hit new highs until its fundamentals bite more firmly.  That said, it will run very strongly when the time comes.


----------



## numbercruncher

*Re: OIL AGAIN!*

Looks like Oil may play out how many of us suspected 




> U.S. gasoline supplies hit a near-14-year high of 227.5 million barrels last week, helped by falling demand for the fuel, the U.S. Energy Information Administration said on Wednesday.
> 
> "Something dramatic is occurring with consumer driving habits," Geoff Sundstrom, a spokesman for AAA motor club, said in a telephone interview. "These numbers, if sustained over next couple of weeks, should set the stage for a reversal of price forecasts."
> 
> He said U.S. gasoline prices in the spring could fall 50 cents a gallon from Wednesday's $2.98.




http://www.reuters.com/article/newsOne/idUSN0628259020080206


----------



## ithatheekret

*Re: OIL AGAIN!*

If they are so worried about the oil price . 

Why is there a small spread on oil contracts and a wide one on nat. gas?


----------



## wayneL

*Re: OIL AGAIN!*



ithatheekret said:


> If they are so worried about the oil price .
> 
> Why is there a small spread on oil contracts and a wide one on nat. gas?




Because it's just "us" in there most of the time with small lot sizes, and the MMs can get away with it. Watch it close up when "they" get active... 1-2 ticks.


----------



## numbercruncher

*Re: OIL AGAIN!*

I reckon Energy/Food prices are now permanently inseperable.

ie/ Natural Gas can make the fertilizer that grows the ethanol that takes away from food production .

The politicians obviously consider Oil prices too high, Geopolitically delivering to much financial clout to the Oil exporters, 3pc (ish) of the worlds energy needs coming from biofuel and rising rapidly. Western nations control the best farmland on the planet but alot is being lost to erosion, urbanisation etc as well as biofuel.

The human race is on a major collision course with reality imho, and as usual the people of the poorest nations are going to suffer big time, High Oil Prices = high food prices = famine.


----------



## numbercruncher

*Re: OIL AGAIN!*

Canadians starting to hook into the Oil sands now, very profitable seen as oil is way out there now a days !



> Feb. 6, 2008
> 
> Resource Extraction
> 
> Suncor drops $20 billion into oilsands project
> 
> Crude oil production is expected to begin ramping up in late 2011, with full production capacity of 550,000 bpd expected to be achieved in 2012.




http://www.journalofcommerce.com/article/id26303



> Alberta Government calculates that about 28 billion cubic metres (174 billion barrels) of crude bitumen are economically recoverable from the three Alberta oil sands areas at current prices using current technology. This is equivalent to about 10% of the estimated 1,700 and 2,500 billion barrels of bitumen in place
> 
> This volume places Canadian proven oil reserves second in the world behind those of Saudi Arabia.
> 
> The Alberta estimates in some ways are extremely conservative, since they assume a recovery rate of around 20% of bitumen in place, whereas oil companies using the new steam assisted gravity drainage (SAGD) method of extracting bitumen report that they can recover over 60% with little effort. These much higher recovery rates probably mean that the ultimate production could be several times as high as the already very large government estimates.




http://en.wikipedia.org/wiki/Athabasca_Tar_Sands

Well doesnt seem like we will run out of Oil in our lifetimes, combined with the vast array of alternatives such as Biofuel, Increased efficency, electric, Air, Hydrogen etc, nothing to worry about, still could see price shocks when production doesnt keep up, but safe in the knowledge we will never run out, kind of puts a downer on Peak Oil (for now), Peak Production is the problem if all the alternatives dont come online in time I guess!


----------



## Wysiwyg

*Re: OIL AGAIN!*



numbercruncher said:


> Well doesnt seem like we will run out of Oil in our lifetimes, combined with the vast array of alternatives such as Biofuel, Increased efficency, electric, Air, Hydrogen etc, nothing to worry about, still could see price shocks when production doesnt keep up, but safe in the knowledge we will never run out, kind of puts a downer on Peak Oil (for now), Peak Production is the problem if all the alternatives dont come online in time I guess!




Synthetic substitutes/additions may be the path taken.I`m sure the boffins will be working on a substitute lubricant to ultimately replace mineral oil.



> One form of synthetic oil is that manufactured using the Fischer-Tropsch process which converts carbon dioxide, carbon monoxide, and methane into liquid hydrocarbons of various forms. This process was developed and used extensively in World War II by Germany, which had limited access to crude oil supplies. Germany's yearly synthetic oil production reached millions of tons in 1944. It is today used in South Africa to produce most of that country's diesel.


----------



## rederob

*Re: OIL AGAIN!*

It's not a matter of running out of oil.
It's a matter of supply becoming only a small fraction of demand.
Anyone thinking that oil sands are the answer are dreaming.
The Saudi's have much cheaper oil, and billions of barrels at that.
The problem is getting enough out of the ground to meet rising demand: And lifting crude oil is much quicker and simpler than "mining" oil sands.
Peak oil is not about running out of oil.  It's about production peaking, and the inevitable downslope thereafter.


----------



## numbercruncher

*Re: OIL AGAIN!*

I want to buy the Air car the day its released in Australia and do my bit for the oil supply. Pre-Production is apparently this year.




> The air car is poised for mass production
> 
> If someone tried to sell you a zero-emissions car that costs around $10,000, you might think he was full of hot air. Turns out it’s the car that’s full of it: The vehicle runs on and emits nothing but air. Now, after more than fifteen years of languishing in automotive obscurity, it’s heading for mass production.
> The Air Car is the brainchild of Guy Negre, a French inventor and former Formula One engineer. In February, Negre’s company, Motor Development International (MDI), announced a deal to manufacture the technology with Tata Motors, India’s largest commercial automaker and a major player worldwide. “It’s an innovative technology, it’s an environment-friendly technology, and a scalable technology,” says Tata spokesperson Debasis Ray. “It can be used in cars, in commercial vehicles, and in power generation.”




http://www.insnet.org/ins_headlines.rxml?id=5991&photo=



> After fourteen years of research and development, Guy Negre has developed an engine that could become one of the biggest technological advances of this century. Its application to Compressed Air Technology(CAT) vehicles gives them significant economical and environmental advantages. With the incorporation of bi-energy (compressed air + fuel) the CAT Vehicles have increased their driving range to close to 2000 km with zero pollution in cities and considerably reduced pollution outside urban areas.
> The application of the MDI engine in other areas, outside the automotive sector, opens a multitude of possibilities in nautical fields, co-generation, auxiliary engines, electric generators groups, etc. Compressed air is a new viable form of power that allows the accumulation and transport of energy. MDI is very close to initiating the production of a series of engines and vehicles. The company is financed by the sale of manufacturing licenses and patents all over the world.




http://www.theaircar.com/


----------



## rederob

*Re: OIL AGAIN!*



numbercruncher said:


> Looks like Oil may play out how many of us suspected



Not sure what this meant!
Please explain.


----------



## numbercruncher

*Re: OIL AGAIN!*



rederob said:


> Not sure what this meant!
> Please explain.




That explosive price growth looks increasingly unlikely for a very long time.

I simply cant see how short of wildcards or artifical price stimulation, such as opec reducing quotas or an Iran/US war etc.


----------



## Smurf1976

*Re: OIL AGAIN!*

In the event that prices do fall significantly, quite a lot of presently priced out consumption will presumably come back into the market, particularly the poorer countries. So we'd have to see either a major increase in supply or fall in Western consumption to get back to cheap oil.

So far, the effects of production failing to meet underlying demand have been largely hidden in the wealthy countries since it's the poor countries where energy has become physically scarce as they are out bid by the wealthy nations.

I wonder how long until "poor" starts to include what most consider to be "wealthy" countries once we run out of genuinely poor ones to price out of the market? With booming demand and faltering production it will happen faster than most are expecting IMO. And it's not something we can collectively buy our way out of with money. On the downside of the slope someone HAS to be left without, that's the rules of the game. And the number left without has to constantly increase.


----------



## numbercruncher

*Re: OIL AGAIN!*



> CARACAS, Venezuela (AP) -- President Hugo Chavez on Sunday threatened to cut off oil sales to the United States if Exxon Mobil wins court judgments to seize billions of dollars in Venezuelan assets.
> 
> "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."
> 
> "If the economic war continues against Venezuela, the price of oil is going to reach $200 (a barrel) and Venezuela will join the economic war," Chavez said. "And more than one country is willing to accompany us in the economic war."




http://money.cnn.com/2008/02/10/news/international/chavez.ap/index.htm

Heres one of the wild cards im talking about


----------



## The Mint Man

*Re: OIL AGAIN!*

Thought you guys might be interested in this;


> *Oil Prices Jump on Chavez Threat*​Monday February 11, 4:07 pm ET
> By John Wilen, AP Business Writer
> *Oil Prices Spike Higher After Venezuelan President Threatens to Cut Off Oil to US *​
> 
> NEW YORK (AP) -- Oil futures shot higher for the third straight day Monday as concerns about potential supply disruptions overshadowed worries about the cooling economy.
> Venezuelan President Hugo Chavez threatened Sunday to cut off oil sales to the U.S. as retaliation for court orders freezing assets belonging to Venezuela's state oil company. Exxon Mobil Corp. has gone after Petroleos de Venezuela SA in U.S., British and Dutch courts, challenging the nationalization by Chavez's government of a multibillion dollar oil project. A British court last week issued an injunction freezing as much as $12 billion in Petroleos' assets.
> 
> "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States."
> 
> Mike Fitzpatrick, vice president of energy and risk management at MF Global LLC, said it was hard to weigh the comment.
> 
> "How much credence you want to give him is always a question mark," Fitzpatrick said.
> 
> But traders were clearly worried about the potential cutoff of Venezuelan oil. Light, sweet crude for March delivery jumped $1.82 to settle at $93.59 a barrel on the New York Mercantile Exchange after spiking to $94.72 earlier, a one-month high.
> 
> Word of power outages at a Valero Energy Corp. refinery in Delaware City, Del., and a Citgo Petroleum Corp. refinery in Lake Charles, La., also helped push prices higher. Both plants were being restarted Monday, Dow Jones Newswires reported.
> 
> Traders were unnerved by new violence in Nigeria, Africa's largest oil producer and a major supplier to the U.S. On Monday, unidentified gunmen attacked a naval vessel that was escorting petroleum industry boats, killing one sailor and injuring another. Militant attacks have cut Nigeria's oil output by nearly one quarter in the past two years, helping send oil prices to all-time highs.
> 
> Concerns about supply disruptions overseas have temporarily drawn investors' focus away from the weakening U.S. economy, which had been the market's dominant theme. Worries that the economy is slowing, and demand for energy is falling, pushed oil prices down from a record above $100 a barrel in early January to nearly $86 in recent weeks.
> 
> Still, some analysts believe tight global supplies and efforts by Congress and the Federal Reserve to stimulate the economy will keep oil prices high for the foreseeable future.
> 
> In a note to clients, analysts at Goldman Sachs said the impact of a recession on oil demand growth "is likely to be meaningful," but not enough to keep Nymex crude from trading at $105 a barrel a year from now, Dow Jones reported.
> 
> At the pump, gas prices slipped 0.4 cent overnight to a national average of $2.953 a gallon, according to AAA and the Oil Price Information Service. Prices have mostly fallen lately, following oil's decline from its January record. But the Energy Department and many analysts expect prices to rebound in the spring and rise to new records near $3.50 a gallon.
> 
> Other energy futures also rose Monday. March heating oil futures rose 5.03 cents to settle at $2.6044 a gallon on the Nymex, and March gasoline futures rose 3.9 cents to settle at $2.3962 a gallon. March natural gas futures rose 23 cents to settle at $8.531 per 1,000 cubic feet.
> 
> Analysts said the current cold snap in the Northeast and Midwest was supporting heating oil and natural gas prices.
> 
> In London, Brent crude rose $1.59 to settle at $93.53 a barrel on the ICE Futures exchange.
> 
> Associated Press writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.



I remain bullish on oil which is why I'm still holding OSH, plus it wasn't that long ago there were takeover talks circulating about OSH.

Cheers


----------



## noirua

*Re: OIL AGAIN!*

Speaking at a conference in Florida, Abdullah Alireza, Saudi Arabia's Minister of State, said that, with US$500 billion tied up in the U.S.A. currency, uncoupling the Saudi riyal would be like Saudi Arabia shooting itself in the foot.
  "The dollar is our currency of choice," he said.  "We have no reason to believe that currency re-evaluation would be a panacea."
  Alireza also said relations between Saudi Arabia and the US were worsening.


----------



## numbercruncher

*Re: OIL AGAIN!*



noirua said:


> Alireza also said relations between Saudi Arabia and the US were worsening.





Theyd get alot worse should Saudi run out of Oil


----------



## numbercruncher

*Re: OIL AGAIN!*



> Venezuela's state petroleum company PDVSA said Tuesday it suspended oil supplies to ExxonMobil in retaliation for the US energy giant's effort to freeze billions of US dollars in global PDVSA assets.
> 
> In a statement, the Venezuelan oil concern cited "judicial-economic aggression" by ExxonMobil as the reason for its action, which it described as an act of "reciprocity."




http://news.theage.com.au/venezuela-oil-firm-pdvsa-cuts-supplies-to-exxonmobil/20080213-1ry3.html


----------



## numbercruncher

*Re: OIL AGAIN!*



> World oil market could be set for lengthy slowdown: IEA
> PARIS (AFP) - The world oil market could be set for a lengthy slowdown, the International Energy Agency said on Wednesday, signalling a sharp shift in the climate which pushed the oil price to 100 dollars last month.
> 
> "Just as the demand shock of 2004 shaped the oil market for the next three years, so too could the pending slowdown," the IEA said in its monthly review of oil trends.




http://au.news.yahoo.com/080213/19/15tq0.html


----------



## Smurf1976

*Re: OIL AGAIN!*

PDVSA. A technologically brilliant company with more potential to boost production than any other company or country. Unfortunately it's been nothing short of ruined by government - a reality which in itself virtually guarantees a peak in global production IMO.


----------



## ithatheekret

*Re: OIL AGAIN!*

Gas shot up tonight .


----------



## Uncle Festivus

*Re: OIL AGAIN!*



> Oil Fundamentals
> ``The fundamentals of the oil market are a lot weaker than six weeks ago, when we first breached $100,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. ``The economy is slowing, inventory levels in the U.S. are more comfortable, we are further through the first quarter and closer to the downturn in demand that occurs in the second quarter.''



Can it break though on lower volume or are the speculators getting ready to take profits?


----------



## proinvestor

*Crude oil at $120 a barrel will be soon a reality*

Why are oil quotes so hot again? Some guys say OPEP is making all efforts to maintain prices above $80, others saying that US slowdown will not affect directly demand of Oil and just few of them anticipating a possible war in the Middle East (unlikely I'm sure but there is always a possibility), and do you know which is my point of view in all of this scenario, speculation....... to pump this commodity to high levels. Currently, surging oil prices have darkened the economic outlook in the United States and also have threatened economic growth in Europe, so the crude are very linked to the actual situation of instability in economy but some guys are trying for all ways to hide this fact and focus only the currently debility in economic with a problem of subprime. Presently, it appears that high prices are acceptable to the American and Europeans consumers, reports of demand still showing no signs of a dramatically cut by people who uses their cars as the main way of transport, on the other hand outside the US, demand increases are being led by India and China, where growing economies mean more cars and trucks and more factories that burn oil and gas. All these factors together are a good tone for traders, speculate and pump this commodity, even knowing that economy will slowdown. So, there is no reason to dream with Oil prices at $50, 60 or even $75 again, we are facing a lot of changes in our way of life and we will pay for that. Did you saw our governments providing economic incentives for alternative energies or creating new ways for consumers slowdown the use? I'm not; probably I'm blind and just seeing the Black liquid in front of me. Anyway, and I'm not a fundamental analyst of Oil neither like to talk about that, but I'm just alerting you for the prices that you will see soon in front of eyes when you'll have to go to a gas station with your car. From a technical perspective, Oil will soon spike again and next stop will be well above $100, probably near $120.


----------



## ithatheekret

*Re: OIL AGAIN!*

I'll buy that , the prices I've seen and the latest yeehaas by the market that Pickens has shorted oil are just a by-line for me . OPEC cuts production each March , they have to keep up maintenance .

I believe we have seen the low in oil , which we will get back to for a retest at some stage , but I don't think it will be until after March or further up the line , say somewhere between July to September .

To be honest , now that the market is used to seeing the $100 beacon flashing away , I wouldn't be surprised to see an event push oil into $150 , that would rattle all our cages .


----------



## Wysiwyg

*Re: OIL AGAIN!*

The questions i ask myself are will the Venezuelan government/Exxon Mobil issue be settled without supply disruption to the U.S. and will the OPEC`s maitain current production levels and will  the U.S. economy downturn tighten their fuel consumption overall ?

With the Venezuelan issue there is a 3 day court hearing scheduled for next week on the 27th. so unless there is more sabre rattling from Chavez, things should be quiet until after the hearing.

With the OPEC issue, a $100 per barrel floor is scary.Here is a snippet from their website :- 



> Opec still sticking to low output strategy
> 
> By Syed Rashid Husain RIYADH, Feb 22:
> 
> With crude prices hovering around $100 a barrel mark, the Organisation of Petroleum Exporting Countries (Opec), *due to meet to decide its output **quotas on March 5*, says it will wait and see whether prices stay at $100 a barrel, before making a decision on its output.
> 
> “With prices at these levels, the cartel will have to *wait and see if the $100 **a barrel level forms a floor*,” and whether prices will continue their latest rally or drop back below $100, Libyan oil minister Shokri Ghanem said.




The U.S. economic downturn will result in less fuel being used but with saying that, their (and ours to an extent) addiction to guzzolene is hard to break.

Just some thoughts.


----------



## rederob

*Re: OIL AGAIN!*



Wysiwyg said:


> The U.S. economic downturn will result in less fuel being used but with saying that, their (and ours to an extent) addiction to guzzolene is hard to break.
> Just some thoughts.



Neither the US nor Europe will have much to do with oil increasing in price.
Increasing demand is from the rest of the world, with the usual suspects being yet again guilty.  
Frankly, the US could experience a decline in demand, and the rest of the world will pick up any slack.
Little by little the importance of the US is diminishing in all areas where we typically expected them to lead: Although it must be noted that it will be very many years before total oil consumption by the US is eclipsed by China.

OPEC knows their oil is more valuable in the ground than out, so they won't be in any hurry to help the rest of the world with their energy concerns.  And while $100 is not yet a "floor", it's curious that with the spectre of recession about, oil is not being sold down!


----------



## ithatheekret

*Re: OIL AGAIN!*

* Greenspan's Latest: Oil Boom Will Likely 'Go on Forever'
*


http://seekingalpha.com/article/659...boom-will-likely-go-on-forever?source=d_email


Alan Greenspan is made headlines again on Monday after statements he made in a speech in Saudi Arabia. The former Fed Chairman said that economic growth in the US has stalled and that the recovery, when it happens, will take longer than usual. Even more interesting, however, are Mr. Greenspan's comments regarding oil. Even though he sees a more protracted than average decline in US economic growth, he believes the boom in oil prices is likely to "go on forever" because demand for the commodity is unlikely to weaken.

Before we all go out buying oil futures on Greenspan's comments, we would remind readers of some of his other calls. First, in December 1996 he made his famous irrational exuberance speech where he implied that the market, especially tech, might be overvalued. The bull market went on for another three plus years. While Greenspan seemed to be bearish on tech stocks in 1996, in March 2000, he couldn't stop singing tech's praises. As a result of technology's productivity enhancing characteristics, he said that "it has become increasingly clear that this business cycle differs in a very profound way from the many other cycles that have characterized post-World War II America." We all know what happened next.

Regarding interest rates, in February 2004, Greenspan highlighted the evolving trends in the mortgage industry and said "there are lots of innovative programs, especially targeting low-income and first time buyers." He went on to suggest that homeowners could save thousands of dollars by switching from fixed-rate to adjustable rate mortgages (We won't even go into how those comments were basically an endorsement about what is going on in the sub-prime mortgage industry). 

Below we highlight a chart of the Fed Funds rate over the last eight years. Almost right after Greenspan suggested homeowners switch to adjustable rate mortgages, the Fed then went on to raise the rates that these adjustable rate mortgages were tied to! While his ill-timed calls regarding the stock market are understandable, Greenspan's comments regarding short-term rates are especially puzzling. Unlike the stock market where he had no direct control, Fed Chairman Greenspan had ultimate control of where the Fed Funds rate was headed. 

Suggesting that homeowners migrate out of fixed rate and into adjustable mortgages right before a three-year 5.25% increase in the key short-term rate was not only a bad call, but also irresponsible.


----------



## rederob

*Re: OIL AGAIN!*

Greenspan or not, the oil price has shown little weakness, and little volatility during a remarkably weak and volatile period over the past few months.
My sense is that the surprises ahead will be to the upside.
The downside remains well bought into.
Although I won't yet concede $80 is confined to history, it would be a brave short to pull.
I will put up a chart over the weekend to get a better idea of support.
Otherwise it's more blue sky ahead.


----------



## 56gsa

*Re: OIL AGAIN!*

any thoughts on this article - specially given the fall in energy stocks on US last night...  coming on northern summer? etc etc

also does anyone know how to get oil and/or gold price charts on incredible charts (or is there another free charting service that gives you these??)

thanks



> Why The Market Has It Wrong On Oil Prices
> FN Arena News - February 27 2008
> 
> By Chris Shaw
> 
> Oil has again pushed above US$100 per barrel with Nymex West Texas Intermediate (WTI) futures for April closing at US$100.88 last night, but in the view of ANZ Bank senior economist Katie Dean the market has got it all wrong.
> 
> Dean suggests it is an anomoly that oil prices are rising at a time when the underlying fundamentals are moving the other way as global demand for oil, which continues to be driven primarily by demand in the US, is actually weakening. As for the China effect, Dean argues this too is being overplayed as the US and Europe, where demand is also slowing, account for 50% of global demand while the Chinese account for less than 10%.
> 
> As well, Dean doesn't agree emerging world demand is impervious to the global economic cycle as while it is reasonable to expect demand to increase as incomes rise in these nations there will still be an element of volatility based on business and consumer spending cycles.
> 
> Recent figures suggest US oil inventories are rising at a faster rate this year than any time in the past five years and Dean expects this trend to continue, an outcome that would be disappointing to speculators in the market taking the long side of the trade in the expectation of ongoing market tightness.
> 
> Finally, as higher oil prices directly impact on real income and spending levels the longer prices remain above US$100 per barrel the greater is the chance of a global recession, which in turn would see the oil price come back down as such an outcome would see demand fall.
> 
> As a result Dean suggests now is a good opportunity to take profits, with her forecast being for the oil price to fall back to around US$80 per barrel by the end of the year. The first potential trigger for such a move to weaker prices in her view is the upcoming OPEC meeting in early March, where it is expected OPEC will keep output at unchanged levels.


----------



## Temjin

*Re: OIL AGAIN!*



56gsa said:


> any thoughts on this article - specially given the fall in energy stocks on US last night... coming on northern summer? etc etc
> 
> also does anyone know how to get oil and/or gold price charts on incredible charts (or is there another free charting service that gives you these??)
> 
> thanks




Economists...don't they never learn??

“*Markets are never wrong* – opinions often are”

Who knows though, it could break over the $100 again and this time for good.


----------



## ShareIt

*Re: OIL AGAIN!*



Temjin said:


> Economists...don't they never learn??
> 
> “*Markets are never wrong* – opinions often are”
> 
> Who knows though, it could break over the $100 again and this time for good.




Totally agree! Play the price or pay the price


----------



## rederob

*Re: OIL AGAIN!*

Katie Dean might be an economist, but she is certainly ignorant of oil market fundamentals.
Her comments could have been made 3 or 4 years ago and, for her, been equally valid.
Although US oil inventories have some immediate impacts on price, these effects are shortlived as it's the global demand equation driving prices nowadays.


----------



## kransky

*Re: OIL AGAIN!*

Is there much speculation and manipulation in the oil market by big financials like there was in metals like Uranium and Nickel in the past year?


----------



## Temjin

*Re: OIL AGAIN!*



kransky said:


> Is there much speculation and manipulation in the oil market by big financials like there was in metals like Uranium and Nickel in the past year?




Good question, not sure about that, would like to know too.

But if there are, it wouldn't be as widespread and as concentrated for the gold and silver future. Everyone knows "big drop without reasons" tend to come at a certain time in a particular market when "da boyz" try to pull them down.  

On to oil, we are definitely going to feel the pain through our fuel price in the coming weeks. $1.40-$1.50/L here it comes!


----------



## Uncle Festivus

*Re: OIL AGAIN!*



56gsa said:


> any thoughts on this article - specially given the fall in energy stocks on US last night...  coming on northern summer? etc etc
> 
> also does anyone know how to get oil and/or gold price charts on incredible charts (or is there another free charting service that gives you these??)
> 
> thanks




I think she has very valid reasoning. Yes, the fundamentals _are_ changing, so to be an oil perma bull _investor_ these days is a bit risky. Trading is another matter. For me to be an active investor in things like oil stocks again I would like to see a definitive break through the $100 'cap'. (Although WPL ex div is looking a good short play today)




Temjin said:


> On to oil, we are definitely going to feel the pain through our fuel price in the coming weeks. $1.40-$1.50/L here it comes!




The advance in the Aussie dollar has mitigated the upside somewhat, but the oil companies will still use it as an excuse to ramp the local petrol prices eg the price went from 1.32 to 1.47 in one day on Wednesday! And they say they can't prove coordinated price manipulation??


----------



## Kauri

*Re: OIL AGAIN!*

just a little unconfirmed *rumour* from someone I talk to who should know better than to talk to me about things that ... aaahhhhhh.. thanks Bro...

a report out of NZ today of a geological report *suggesting* the *possibility *of a huge NZ oil field in the Raukumara basin, off the North Island"s east coast.... that is in a lease held sfh4ej mfeuuh
..ebewe
.........Whare Tekau


----------



## kransky

*Re: OIL AGAIN!*

seems its not a rumour...

http://www.stuff.co.nz/4420818a13.html


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> I think she has very valid reasoning. Yes, the fundamentals _are_ changing, so to be an oil perma bull _investor_ these days is a bit risky.



???  

Investor - someone with a _long term_ outlook who won't be worried about what happens in the next year or 3. More worried about what's happening in 2015 or 2020.

Fundamentals of production - either past the peak or quite near it according to most.

That leaves demand. Are you saying that the fundamentals are changing in that we'll see negative _world_ economic growth, that is recession, lasting more than a decade? Possible, but not exactly a common view. We'd need outright and steadily worsening depression in the US etc just to keep the supply and demand balanced post peak assuming moderate growth from developing countries.

IMO being a long term oil investor is pretty safe. Company risk sure, but are we really going to see an economy that is globally smaller 10 years from now than it is today? If that happens then somehow I think making a profit on investing will be the last of most people's worries.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



Smurf1976 said:


> ???
> 
> Investor - someone with a _long term_ outlook who won't be worried about what happens in the next year or 3. More worried about what's happening in 2015 or 2020.
> 
> Fundamentals of production - either past the peak or quite near it according to most.
> 
> That leaves demand. Are you saying that the fundamentals are changing in that we'll see negative _world_ economic growth, that is recession, lasting more than a decade? Possible, but not exactly a common view. We'd need outright and steadily worsening depression in the US etc just to keep the supply and demand balanced post peak assuming moderate growth from developing countries.
> 
> IMO being a long term oil investor is pretty safe. Company risk sure, but are we really going to see an economy that is globally smaller 10 years from now than it is today? If that happens then somehow I think making a profit on investing will be the last of most people's worries.




Hi Smurf,

Yes, it is indeed a period of generational change, possibly not for the better. I am trading not investing at the moment. _Investing_ entry point should still be relevant I think?

I guess that what I am implying is that, yes, there will possibly be a period of global recession to contend with in the short term and that to be _actively investing_ now may not be wise, as it's maybe a cycle top. I would assume that if all the info were out there ie the pricing in factor, and the current fundamentals dictated as such that supply wasn't meeting demand then the oil price would not only have easily broken $100 but would be still steadily rising?

My view is that the 3 attempts at $100 may indicate a short term weakness. I'm no t/a expert, but a triple top is bearish, is that correct, anyone? Or is it purely a by product of $US weakness and speculators?

On the longer time frame, the alternative energy issue becomes more relevant also, ie if oil prices were to breach $100 and beyond then common sense would dictate that alternative energy will be more attractive. On a micro level as an example, Prius manufacture is ramping up to meet demand now. If you get enough groundswell/micro level change it adds up to a change in fundamentals for the demand side of oil.

It's not out of the question that the Chinese junta will put out one of their mandates proclaiming that all motor vehicles must use 50% less fuel (they did this with food prices - capping inflation??). A billion Chinese driving cars only means a billion more health problems (not that it's ever going to happen)

High oil price = lower economic activity. For oil it's a negative feedback loop.
Locally, it's been observed (by Gerry Harvey no less) that consumers scale back their spending when petrol goes above $1.50 or so. Only the $AU has saved us from a recession inducing high fuel price. 

Right at this very moment, what would be the driving factor(s) to propel the oil price past this level, and sustainably keep it there ie apart from a geopolitical event? The peak oil theory hasn't been able to do so yet?

Rant finished now .


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> Right at this very moment, what would be the driving factor(s) to propel the oil price past this level, and sustainably keep it there ie apart from a geopolitical event? The peak oil theory hasn't been able to do so yet?



I'm thinking of actual peaking and decline in the years ahead as opposed to the theory that it will happen sometime. 

Much like the action that results from an actual bushfire heading toward you as opposed to the knowledge that it might happen someday. If you've seen a situation like that then you'll know that rubbish gets moved, gutters get cleaned of leaves etc at incredible speed when the need is clearly visible and immediate. No panic even on a 40 degree day - until the smoke appears and then it's action to the max.


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> I guess that what I am implying is that, yes, there will possibly be a period of global recession to contend with in the short term and that to be _actively investing_ now may not be wise, as it's maybe a cycle top. I would assume that if all the info were out there ie the pricing in factor, and the current fundamentals dictated as such that supply wasn't meeting demand then the oil price would not only have easily broken $100 but would be still steadily rising?



We must be on different planets!
In some 15 months oil has doubled in price.
During these same 15 months the US economy has been unravelling.
The US has a long way to go...........down...........
Yet oil has acted as though the global economy was running strongly.
Not surprisingly, when oil came within a whisker of $100 late last year, it pulled back.
It has consolidated over the period and now continues to close over $100.
I can't see any changes to the global fundamentals, yet.
However, if emerging economies falter, then I think oil will fall below $80 - perhaps to the low $70s.  But that is speculating on a grim future.
As the US economy weakens further, its dollar falls in value (coincident with Fed rate cuts), and its prospects of gaining previously lost exports will increase through price competitiveness.
I'm not suggesting the US will soon get out of its dire predicament, but I am suggesting that its infrastructure will allow it to quickly recapture lost markets: Thus, I don't see the US as slowing to the extent that it will have anything other than a marginal impact on global oil demand.
The maths that need to be done if you want to prove anything to yourself, relate to overall global trends.  The most alarming of these "actual" trends is the increasing rate of oil consumption, which keeps catching-out forecasters who can't seem to throw away lineal growth models. 
So we have some dumb forecasters, that get believed by dumb economists, who garner support from lying OPEC spin doctors, giving us credible headlines?
Now to the chart........


----------



## lioness

*Re: OIL AGAIN!*

No-one has been able to answer my question on here from 3 months ago.

If oil is heading to 120 plus which looks likely, why aren't the oil stocks whether producer/explorer moving much higher??

Instead, they are moving lower, some much lower.

No-one has bought into the trend yet, but why?


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> I'm not suggesting the US will soon get out of its dire predicament, but I am suggesting that its infrastructure will allow it to quickly recapture lost markets



Just one problem there and yes it relates to energy.

Right now, US gas production (which has peaked) is running flat out. Power generation is close to its limits in many parts of the country also. So to establish new productive industry, as in actually making something physical, they don't have the energy supply to do it. There's not much that can be manufactured without electricity and in most cases you need process heat (gas) as well.

So a bit of a problem there. They had the infrastructure but now it's used to supply houses etc and doesn't have capacity left for factories. Unless, that is, they run diesel generators on imported fuel...


----------



## rederob

*Re: OIL AGAIN!*



lioness said:


> No-one has been able to answer my question on here from 3 months ago.
> 
> If oil is heading to 120 plus which looks likely, why aren't the oil stocks whether producer/explorer moving much higher??
> 
> Instead, they are moving lower, some much lower.
> 
> No-one has bought into the trend yet, but why?




You might not have noticed, but there is a bit of problem with world markets which is likely to dampen oil demand.
Oil equities are doing pretty well, all things considered. And WPL, our largest producer, is just a shade off its record high.
Different story if you got on AED?


----------



## Wysiwyg

*Re: OIL AGAIN!*



lioness said:


> No-one has been able to answer my question on here from 3 months ago.
> 
> If oil is heading to 120 plus which looks likely, why aren't the oil stocks whether producer/explorer moving much higher??
> 
> Instead, they are moving lower, some much lower.
> 
> No-one has bought into the trend yet, but why?




I know what you mean, many producers collecting record crude prices are not appreciating in line with profit yet a sniff of gas from a pleb junior gets a s.p. multiplication.Oil and gas shares seem to appreciate in value when they `might` have something.


> No-one has bought into the trend yet, but why?



It`s a state of mind and the overall market sentiment.


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> You might not have noticed, but there is a bit of problem with world markets which is likely to dampen oil demand.
> Oil equities are doing pretty well, all things considered. And WPL, our largest producer, is just a shade off its record high.
> Different story if you got on AED?




Sorry Red , I disagree . I believe oil stocks have been treated just the same as gold stocks , *held back* . I'm rather critical at the behaviour on the markets major particpants ( instos etc. ) , they try very hard to create false realities . It's the models they have I'm sure , well that would be the legal excuse .

If anything some funds etc. would be taking up the drops in oilers etc. , those that have allocation room . Lot of overweight financials still out there , but those models have been run for decades . Margin calls or just weak markets always see everything suffer though . 

These stocks are talked down and bought , then talked up and sold , it's quasi legal ramping enmasse and Keystone cops police it , because it is a manipulation of a market .

If it didn't happen these sector stocks would be through the roof and the main market participants would have been caught under weight .


----------



## lioness

*Re: OIL AGAIN!*



ithatheekret said:


> Sorry Red , I disagree . I believe oil stocks have been treated just the same as gold stocks , *held back* . I'm rather critical at the behaviour on the markets major particpants ( instos etc. ) , they try very hard to create false realities . It's the models they have I'm sure , well that would be the legal excuse .
> 
> If anything some funds etc. would be taking up the drops in oilers etc. , those that have allocation room . Lot of overweight financials still out there , but those models have been run for decades . Margin calls or just weak markets always see everything suffer though .
> 
> These stocks are talked down and bought , then talked up and sold , it's quasi legal ramping enmasse and Keystone cops police it , because it is a manipulation of a market .
> 
> If it didn't happen these sector stocks would be through the roof and the main market participants would have been caught under weight .




A very interesting comment ithateekret(wierd name) and I am sure you are close to the mark.

Small juniors that are close to production such as OEX and INP have lost 50% of their value but are getting close to production.

INP in particular I have watched closely for 3 months and not only is it being capped, but it is being slammed down for accumulation.

Give it another 3-6 months and these will have doubled.


----------



## numbercruncher

*Re: OIL AGAIN!*

I mentioned earlier that the price of food and oil are now inseperable and will surely result in starvation, seems to be ringing a little more true after reading this ...




> Soaring prices force US to cut aid
> 
> March 02, 2008
> THE US will drastically reduce emergency food aid to some of the poorest countries this year due to soaring food prices, The Washington Post reports today.
> 
> Citing unnamed officials, the newspaper said the US Agency for International Development (USAID) was drafting plans to cut down the number of recipient nations and the amount of food provided to them.
> 
> A 41 per cent surge in prices of wheat, corn, rice and other cereals over the past six months has generated a $US120 million ($126.5 million) budget shortfall that will force the USAID to reduce emergency operations, the report said.
> 
> That deficit is projected to rise to $US200 million ($211 million) by the end of the year.




http://www.theaustralian.news.com.au/story/0,25197,23306070-643,00.html


Seems opec can charge what ever they want for Oil but it will be continually reflected in food prices.


----------



## ShareIt

*Re: OIL AGAIN!*



Uncle Festivus said:


> My view is that the 3 attempts at $100 may indicate a short term weakness. I'm no t/a expert, but a triple top is bearish, is that correct, anyone? Or is it purely a by product of $US weakness and speculators?




I wouldn't call a triple top bearish... it could mean a consolidation at the top before it makes its next run up.... If the price broke down, then that would confirm a bearish triple top... at this stage, I would say that the price is consolidating at the top (i.e. taking a breather to remove itself from an over bought situation) and then get ready for another push up...


----------



## bvbfan

*Re: OIL AGAIN!*



56gsa said:


> also does anyone know how to get oil and/or gold price charts on incredible charts (or is there another free charting service that gives you these??)
> 
> thanks




Sorry if already posted but you can on stockcharts, just need to to $XXX:$YYY to get a ratio
For Gold:Oil it's here under $GOLD:$WTIC

http://stockcharts.com/h-sc/ui?s=$GOLD:$WTIC&p=D&yr=1&mn=0&dy=0&id=p71630163787


----------



## Wysiwyg

*Re: OIL AGAIN!*

Short term support for Brent (may) at 99.60 and this has been hit more than ten times in the last cuppla days.Apparently more longs than shorts on as of last Friday but does that mean Jack beep.Don`t know if  it will be an easing or a capitulation.Should know soon.Stop Press.


----------



## Smurf1976

*Re: OIL AGAIN!*



numbercruncher said:


> I mentioned earlier that the price of food and oil are now inseperable and will surely result in starvation, seems to be ringing a little more true after reading this ...



The stupidity of turning food into fuel. Do the math and you'lll soon realise it's not just unsustainable but an outright farce. See my previous posts on the subject for more detail.


----------



## IFocus

*Re: OIL AGAIN!*



lioness said:


> No-one has been able to answer my question on here from 3 months ago.
> 
> If oil is heading to 120 plus which looks likely, why aren't the oil stocks whether producer/explorer moving much higher??
> 
> Instead, they are moving lower, some much lower.
> 
> No-one has bought into the trend yet, but why?




Wondering the same as I look through the charts is currency the issue?


----------



## Kauri

*Re: OIL AGAIN!*

Rumours persist...been doing the rounds for a week or so now... oil included???  may explain the POO and producers prices??

*Fears of a commodity crash grow*



Last Updated: 1:31am GMT 05/03/2008




*Fears of a commodity crash are growing as speculation continues to outstrip demand. Ambrose Evans-Pritchard reports....*

Links.... St Andrews
and ... http://www.telegraph.co.uk/money/ma...08/03/04/cccomms104.xml&CMP=ILC-mostviewedbox


----------



## rederob

*Re: OIL AGAIN!*

OPEC has held its output steady, clearly signifying it has no interest in global price concerns that could stymie demand.

Kauri's above link is yet another warning that things have got ahead of themselves, and could come back:  Similar to warnings that have opened new threads on this forum - and where the markets have shown ongoing disdain for them.

Markets are cyclical, and we would be silly to not be vigilant given oil is at record price levels.
However, my view is always to consider what forces will drive prices in the opposite direction, and what strength those forces have.
Presently there are two major negative forces: Potential demand weakness stemming fro the US subprime fiasco, and the (unknown) contribution of speculation to the fundamental price of oil.

On the first point, given that US oil inventories declined recently when a rise was expected, whatever demand concerns exist, they are not severe, nor are they persistent.
On the point of speculation, if we had significant price volatility in oil on a regular basis, I would say the speculators were important price contributors.  Instead the oil price patterns are consistent enough to suggest a reasonably "ordered" oil market where spot and futures are providing market players with confidence rather than concern, albeit the oil price is now very high.


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> OPEC has held its output steady, clearly signifying it has no interest in global price concerns that could stymie demand.
> 
> Kauri's above link is yet another warning that things have got ahead of themselves, and could come back:  Similar to warnings that have opened new threads on this forum - and where the markets have shown ongoing disdain for them.
> 
> Markets are cyclical, and we would be silly to not be vigilant given oil is at record price levels.
> However, my view is always to consider what forces will drive prices in the opposite direction, and what strength those forces have.
> Presently there are two major negative forces: Potential demand weakness stemming fro the US subprime fiasco, and the (unknown) contribution of speculation to the fundamental price of oil.
> 
> On the first point, given that US oil inventories declined recently when a rise was expected, whatever demand concerns exist, they are not severe, nor are they persistent.
> On the point of speculation, if we had significant price volatility in oil on a regular basis, I would say the speculators were important price contributors.  Instead the oil price patterns are consistent enough to suggest a reasonably "ordered" oil market where spot and futures are providing market players with confidence rather than concern, albeit the oil price is now very high.




I believe a lot of it comes down to T/A with speculators involved... it looks as if this strong support is building around that $100 mark... however a correction is called for as the fundamentals are not supporting price... but until then, ride the way


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> OPEC has held its output steady, clearly signifying it has no *ability to increase production*.



No proof but my alteration in bold fits more with what many have been saying for years than some apparent suddden desire to intentionally put themselves out of business as most seem to be suggesting.


----------



## rederob

*Re: OIL AGAIN!*



Smurf1976 said:


> No proof but my alteration in bold fits more with what many have been saying for years than some apparent suddden desire to intentionally put themselves out of business as most seem to be suggesting.



Oil hits new record high and presently trades at $107.
GWB is sending VP Cheney to the OPEC big guns to help out:


> AFX News Limited
> Cheney to urge Saudi Arabia to cool oil prices via OPEC crude production boost 10.3.08, 10:24 AM ET



This might resolve "won't versus can't" increase output.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

It's a bit like the US Fed, they (the oil producers) have lost control of the situation. The oil price is determined by the specs now as the fundamentals (at this point in time) do not align with price momentum. When the specs hit the exits it will be breathtaking. Until then.......great trading .

PS the oil stocks still lagging the action, still?? What gives? WPL a great day trade these days.


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> Oil hits new record high and presently trades at $107.
> GWB is sending VP Cheney to the OPEC big guns to help out:
> 
> This might resolve "won't versus can't" increase output.



I'll consider it proof that they have unused capacity if:

1. The increase is a round figure of at least 0.5 million barrels per day and

2. The increased production is sustained consistently for at least 6 months.

The reason being that any negotiations, political decision etc tends to produce a round figure outcome. If they decided to increase production by 432,754 barrels per day (for example) then that would reek of that being the limit of capacity - negotiations and political decisions just aren't that precise.

Anything less than 0.5 mmbpd could well be surge production (which is not sustainable) or simply emptying storage tanks. Likewise if the increase is not sustained.

If Saudi ramps up to 10mmbpd and stays there through at least 6 months then that's proof IMO. If they just add 0.1mmbpd or only increase output temporarily then that's highly suspicious - drawing down stocks etc.

My best guess is they'll either do nothing (if they really are having serious production problems) or will count new capacity already scheduled to come online as "increased production" carefully not mentioning that declining older fields will mean the boost is temporary.


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> It's a bit like the US Fed, they (the oil producers) have lost control of the situation. The oil price is determined by the specs now as the fundamentals (at this point in time) do not align with price momentum. When the specs hit the exits it will be breathtaking. Until then.......great trading .
> 
> PS the oil stocks still lagging the action, still?? What gives? WPL a great day trade these days.



I don't think the speculators have much control over oil prices at moment.
Furthermore, I believe the oil producers (larger nations and the multinationals) know exactly what they are doing, and that they are using the "fundamentals" to keep prices bidding upwards.
Why so?
The US has no option: It *must *buy oil because the wheels of its economy will fall off if it does not have enough.
To maintain its oil stocks it needs to keep outbidding other nations, who are also desperate for oil, but literally can't afford to outbid the US.  Oil is a sellers market; a producers market, and a speculators playground no more or less than it has been for years.
Yet from a speculators point of view, where black box trading has provided a degree of "predictability", there is now considerable risk as oil keeps moving into uncharted waters.
I won't try to temp an oil price meltdown by saying it won't happen. It surely can, and it might!
But the continuing strength of oil in a global market where recession is impending, and depression not out of the realms of possibility, suggests that there just isn't enough oil to go around.
OPEC used to curry favour with the US in past years by ensuring that any price hikes were checked by rising output.  There has been no suggestion that OPEC is even interested in this idea anymore. 
Smurf makes some valid points about what we should be looking for, irrespective of any lip service paid by the Saudis.
Next hurdle is $110, and looking like getting there with ease.


----------



## numbercruncher

*Re: OIL AGAIN!*

Im amazed by the price of oil and how rapidly its getting there, If recession sets in it surely can fall a long way and fast.


----------



## ithatheekret

*Re: OIL AGAIN!*

I'm amazed at the projection that came out in one of my formulas .

It had oil breaching $350 . That would shoot down the line up for shorts looking for $120-$150 .


Production as stated in one of Reds posts is a clear catalyst , but I don't buy into the latest reports on sand oils , especially the Canadian ones and have used the figures available for the argument against production levels rising .

The last lot of $100 shorts would have seen some quick position closing , could also explain the new high ............


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Is this phrase correct?



> The USA is already in recession.




Is this phrase correct?



> The simple fact is, the price of oil has not INCREASED.
> The value of the dollar has DECREASED.




Is there too much one way traffic? The data/fundamentals from the regulators themselves.



> Increasing speculation
> With inflation at their backs and equity markets slumping, investment funds have rushed into the oil market recently.
> 
> Recent data from futures regulators showed *speculation in the oil market is increasing*. Investors have turned to commodities as a safe haven from slumping equity markets and inflation, which is partly fed by the weaker dollar.
> 
> Government data showed speculators and managers of large investment funds, those who don't need physical oil, dominated bets on rising oil prices. Refiners and other oil users were betting oil prices would move lower.
> 
> The latest data from U.S. Commodity Futures Trading Commission showed long positions from speculators, in which investors expect oil prices to move higher, outnumbered short positions, or bets on lower prices, by nearly 100,000 contracts last week. Net long positions more than tripled in one month.
> 
> This was the fourth consecutive week marking an increase in net long positions from financial traders.


----------



## Smurf1976

*Re: OIL AGAIN!*

Timing of the peak. 

The way I see it, it's like the weather. It's now Autumn and while we may still get some very hot weather, it's only a matter of time before the inevitable slide in average weekly temperatures occurs. A chart may well forecast 80 degree days by June but fundamentals say otherwise.

Same with oil. With discovery consistently running below production we're in the Autumn. The weather hasn't cooled yet but that it will is a certainty. You can't produce what has not been discovered and 45 year trends don't generally turn around too quickly.

Flat production 2005 - 2007 despite a drilling frenzy doesn't look good IMO. Running faster and faster to stand still whilst demand keeps marching forward. Hence my long term bullishness on the oil price.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Yes, I agree Smurf. My time frame is a little shorter, like day trading, so while cognisant of the 'big' picture I think there is some 'froth' in the short term price. Either way, it looks like directly trading oil is prudent as the oil stocks are not following eg WPL today got hammered. Investors don't see any value there yet???


----------



## MRC & Co

*Re: OIL AGAIN!*



Uncle Festivus said:


> Either way, it looks like directly trading oil is prudent as the oil stocks are not following eg WPL today got hammered. Investors don't see any value there yet???




Yeh, these booming commodity equities are really being held back at the moment by the negative sentiment in the stockmarket in general.


----------



## ithatheekret

*Re: OIL AGAIN!*

.......... and Woodside is paid in AUD for its oil , that puts it well over the US price , but the US is getting very cheap LPG and has been for sometime now .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> .......... and Woodside is paid in AUD for its oil , that puts it well over the US price , but the US is getting very cheap LPG and has been for sometime now .



Isn't the question now, about the price of natural gas?
Although gas can act as an energy substitute for oil and coal, the reality is that you can't simply fill up tomorrow with lpg if your car has a petrol engine!
Of course the changeovers can be made, over time, and gas can take a higher profile.
The other reality is that as demand for gas increases, so too will its price.
And just as oil has peaked, so too will gas peak.


----------



## ithatheekret

*Re: OIL AGAIN!*

Taadaa , we finally totally agree on something Red , we're getting somewhere cobber .

Gas is my next pick for the run up . Got to get the gas off before we can extract the oil , still think the North Shelf projects are selling it too cheap via antiquated contracts going back aways now  . Chevron getting out of other projects to concentrate on an LPG project .........

Santos should have bought OilSearch and coughed up the $2 / share 

OSH may swoop on some of those Chevron offerings ..............? An assumption on my part , bit like the Oxiana swoop on the predator Zinifex ......... f..... marvellous . I'd like to see Lihir take Highlands and diversify further .


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> Isn't the question now, about the price of natural gas?
> Although gas can act as an energy substitute for oil and coal, the reality is that you can't simply fill up tomorrow with lpg if your car has a petrol engine!
> Of course the changeovers can be made, over time, and gas can take a higher profile.
> The other reality is that as demand for gas increases, so too will its price.
> And just as oil has peaked, so too will gas peak.



Agreed though I must point out that LPG is generally considered to be "oil" and not "gas" since it is (1) partly derived from crude oil (2) is a liquid fuel and (3) is used in a manner comparable to other liquid fuels but very different that of natural gas.

The oil production figures etc that you see quoted generally include LPG.

The level of LPG use, especially in the petrochemicals industry, is such that the spot LPG price is effectively tied to the spot oil price. 

The linkage to natural gas is really only there in a high gas price market - if LPG or fuel oil are cheaper than natural gas then that will tend to cap the natural gas price under most circumstances.


----------



## chops_a_must

*Re: OIL AGAIN!*

Anyone else looking at a short on oil? Looks like an off shape head and shoulders pattern.

A close below 100 and it might take a look at 90.


----------



## rederob

*Re: OIL AGAIN!*



chops_a_must said:


> Anyone else looking at a short on oil? Looks like an off shape head and shoulders pattern.
> 
> A close below 100 and it might take a look at 90.



A good day to seriously look at shorting oil!


----------



## Tysonboss1

*Re: OIL AGAIN!*

hows my $80 line looking,...


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> hows my $80 line looking,...




As safe as (American) houses!


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Things starting to hot up with oil again, getting closer to global growth capping territory ie a real economy recession. US pump prices biting even harder - 



> Crude oil for May delivery rallied more than $2 to the new high before closing up $2.03, or 1.8%, at $113.79 on the New York Mercantile Exchange, also a closing high.
> At the pump, the average U.S. retail gasoline prices rose to a new high of $3.386 a gallon, up 1.3 cent from the day before and well ahead of the month-ago price of $3.285 a gallon, according to the AAA Daily Fuel Gauge Report.
> Last week, a U.S. energy administration said gasoline could surpass $4 a gallon in some areas in the upcoming driving season.




Local prices now $1.50/l, about where the consumer starts to think twice about that trip to the country, or maybe even start to _plan_ things to conserve energy. Nothing like a recession caused by high energy prices to force energy conservation?


----------



## Kauri

*Re: OIL AGAIN!*



Uncle Festivus said:


> Things starting to hot up with oil again, getting closer to global growth capping territory ie a real economy recession. US pump prices biting even harder -
> 
> ?




Also weather in the Gulf has closed some Mex ports, curtailing 80% of their exports, along with a now repaired problem at a refinery in the US... should/could affect the DOE report that is due??
Cheers
..........Kauri


----------



## Smurf1976

*Re: OIL AGAIN!*

Oil prices have held up incredibly well compared to practically everything else. Worries about recession, falls in shares, gold etc but oil remains at or near record highs. Certainly looks like a strong market situation to me.

As for the "there's plenty of oil" argument, that seems to focus heavily on US stocks whilst ignoring the gap between production and consumption over the past 18 or so months. _Someone_ has been heavily drawing down stocks over that time since US data doesn't show a sufficient fall. Questions being who and how much more do they have left?

Meanwhile Japanese power stations are adding to demand with a major nuclear plant offline for quite some time (year or so) to come.


----------



## Kauri

*Re: OIL AGAIN!*

The part of the equation that always intrigues me is just how much of* all commodities* do hedgie types have locked up?? Would their holdings affect the supposed supply/demand eqution?? I really have no idea..  
Does oil form into a bubble easily, or is it too viscous??

Cheers
............Kauri


----------



## rederob

*Re: OIL AGAIN!*



Kauri said:


> The part of the equation that always intrigues me is just how much of* all commodities* do hedgie types have locked up?? Would their holdings affect the supposed supply/demand eqution?? I really have no idea..
> Does oil form into a bubble easily, or is it too viscous??
> 
> Cheers
> ............Kauri



Hedge funds are not producers.
They have nothing "locked up".
Therefore, their impact relates to price action.
Given that prices can impact supply or demand, where commodity price levels are sustained, producers can act in their best interests.
Similarly, producers can influence prices through market participation, and they do.
Importantly, where the commodity is scarcely able to satisfy demand, their physical reactions can be more powerful than mere speculative influences.
Wherein the conundrum lies.
Funds speculate on fundamentals.


----------



## ithatheekret

*Re: OIL AGAIN!*

Bizzillionaire Pickens has cancelled his shorts and gone long .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Bizzillionaire Pickens has cancelled his shorts and gone long .



The short covering game in oil is sending speculators broke.  It's almost a case of Chinese water torture....


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Oil hit $117.00 a barrel..................go oil!!!!!!!


----------



## numbercruncher

*Re: OIL AGAIN!*

Starvation, food riots, cropland to biofuels , going to be an interesting and painful future if this game continues.


nooone thinks Oil is looking toppy ?


----------



## rederob

*Re: OIL AGAIN!*

tysonboss
Although not discounting a chance return to $80, the likelihood is rarer by the week.
The chart below shows a rate of incline of moving averages that is increasing.  
If we were to assume (for discussion only) that yesterday was oil's near term peak, then we would expect a probable new low (support point) within 6 months.
Given the market is in strong buying mode it is difficult to see what would or could trigger any sustained price decline.
Oil is not gold and the "you can trade any commodity" argument becomes fanciful to the extent that there is a fundamental demand equation underpinning price action.
In this case we have suppliers either squeezing oil, or they may be simply unable to increase output to meet global demand.  I think there are feet in both camps.
Non-OPEC production appears to be severely constrained - perhaps diminishing.
High oil prices that supposedly are getting high cost projects into production are not materialising with meaningful contributions to global supply.
Increased exploration expenditure is less and less successful as all the known areas are well drilled and low probability, low resource outcomes are the rule of the day.
Exploration is tending to high risk, high cost projects on the chance of getting lucky.
Little wonder its the likes of WPL and OSH, with strong reserves and good production profiles, that are powering our equity market.
I think I last year tipped oil to average at $120 this year.  It was intentionally provocative.  Lest we get a sharp correction soon, it's 2008 average price - which is about $100 - looks like being a near term benchmark, with good prospects of rising steadily higher.


----------



## Smurf1976

*Re: OIL AGAIN!*



numbercruncher said:


> Starvation, food riots, cropland to biofuels , going to be an interesting and painful future if this game continues.



Long term it will continue. Short term anything's possible but as far as the logn term is concerned, this has been inevitable since the first well was drilled nearly 150 years ago. It's a finite resource...


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> tysonboss
> Non-OPEC production appears to be severely constrained - perhaps diminishing.
> High oil prices that supposedly are getting high cost projects into production are not materialising with meaningful contributions to global supply.
> Increased exploration expenditure is less and less successful as all the known areas are well drilled and low probability, low resource outcomes are the rule of the day.



What you have described is exactly what happened in every major region, US included, that has experienced a peak in oil production thus far. Trouble is, you're talking globally...


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> tysonboss
> Although not discounting a chance return to $80, the likelihood is rarer by the week.
> The chart below shows a rate of incline of moving averages that is increasing.
> If we were to assume (for discussion only) that yesterday was oil's near term peak, then we would expect a probable new low (support point) within 6 months.
> Given the market is in strong buying mode it is difficult to see what would or could trigger any sustained price decline.
> Oil is not gold and the "you can trade any commodity" argument becomes fanciful to the extent that there is a fundamental demand equation underpinning price action.
> In this case we have suppliers either squeezing oil, or they may be simply unable to increase output to meet global demand.  I think there are feet in both camps.
> Non-OPEC production appears to be severely constrained - perhaps diminishing.
> High oil prices that supposedly are getting high cost projects into production are not materialising with meaningful contributions to global supply.
> Increased exploration expenditure is less and less successful as all the known areas are well drilled and low probability, low resource outcomes are the rule of the day.
> Exploration is tending to high risk, high cost projects on the chance of getting lucky.
> Little wonder its the likes of WPL and OSH, with strong reserves and good production profiles, that are powering our equity market.
> I think I last year tipped oil to average at $120 this year.  It was intentionally provocative.  Lest we get a sharp correction soon, it's 2008 average price - which is about $100 - looks like being a near term benchmark, with good prospects of rising steadily higher.





I saw a news article the other week where a guy who owned one of the deepest ocean drilling rig there is said that he contracts it out at over $500,000 per 24h period of operation.

when asked hy he can charge so much he said " the world discovery rate is getting desparite, and the oil companies are equally as desprite to drill virgin feilds rigs like mine are few so wego to the highest bidder."


----------



## numbercruncher

*Re: OIL AGAIN!*

Our Iranian buddies reckon Oil is too cheap.



> TEHRAN (AFP) - Even at 115 dollars a barrel, oil is priced too low, Iranian President Mahmoud Ahmadinejad said in comments published on Saturday adding that the commodity "should find its real value".
> 
> "Oil at 115 dollars a barrel in today's market is a deceiving figure, oil is a strategic commodity and should find its real value," the state broadcaster's website quoted Ahmadinejad as saying on Friday.
> 
> "The dollar is no longer money, they just print a bunch of paper which is circulated in the world without any commodity backing," he said.
> 
> Late last year, Iran announced that it had stopped carrying out its oil transactions in dollars.
> 
> "At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies, " Nozari was quoted as saying in December.




http://au.news.yahoo.com/080419/19/16jfu.html

I find that reason or excuse for not dealing in USD interesting , they now deal in Euros which itself has little commodity backing ?


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> Our Iranian buddies reckon Oil is too cheap.
> 
> 
> 
> http://au.news.yahoo.com/080419/19/16jfu.html
> 
> I find that reason or excuse for not dealing in USD interesting , they now deal in Euros which itself has little commodity backing ?




What do you think will be the effect of oil being traded in euro's,


----------



## explod

*Re: OIL AGAIN!*



numbercruncher said:


> Our Iranian buddies reckon Oil is too cheap.
> 
> 
> 
> http://au.news.yahoo.com/080419/19/16jfu.html
> 
> I find that reason or excuse for not dealing in USD interesting , they now deal in Euros which itself has little commodity backing ?




Commodity backing is of course the prime weakness of currencies but Gross Domestic Product is the most accepted by current economists (but wont' be sustained long term though).   The Euro is backed by a reasonable manufacture base and ballance of trade whereas with the US$ 80% of GDP is now consumption and as times become harder for the spenders and discreationary dollars dry up it can only be further doom for that currency.

As a result the US$ is being increasingly shunned around the world and will continue to weaken.   China is particularly vulnerable as it holds an enourmous amount of US$ as exchange for thier goods, goods the US can no longer afford to import let alone pay for those supplied.   A lot of big problems to play out yet and the trade currency wars as the next phase will make the past 12 months seem like good times.

As for oil, without it the US would totally sieze up, can they aford it no, can they get it,  well the Middle East is where the war planes and ships are.


----------



## rederob

*Re: OIL AGAIN!*

Another week begins and another record closing price for oil makes the headlines.
Less than $3 away from $120 per barrel.
Remarkable is the lack of volatility in this run.
Scary is the fact that US driving season is around the corner.  Perhaps the penny will drop at US gas pumps and those still owning homes will stay there instead, for a change.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Near enough to $120 - good enough to take some profits here I think, nice big number for the specs to achieve before a spell. $1 in 10 minutes, there's your volatility eh . Maybe even a short is on the cards?  Yes, short @ $119.90.


----------



## vishalt

*Re: OIL AGAIN!*

Well I'm all in for oil stocks now hey, already have Beach but that's a slow mover. 

What's going on with SANTOS? 7% surge, almost topped $17! Woodside breaking records too. 

Oil is now becoming a big problem though, wow @ $120, it almost doubled in a year... lucky my car use is quite low otherwise I would be hurting. But I can feel it for people who fill up 200+ liters a week..

$1.80 @ a bowser near you soon I reckon.


----------



## ShareIt

*Re: OIL AGAIN!*



Uncle Festivus said:


> Near enough to $120 - good enough to take some profits here I think, nice big number for the specs to achieve before a spell. $1 in 10 minutes, there's your volatility eh . Maybe even a short is on the cards?  Yes, short @ $119.90.




i think so too, i think around $121 will be the shorting point... a nice head fake


----------



## Aussiejeff

*Re: OIL AGAIN!*



vishalt said:


> ....Oil is now becoming a big problem though, wow @ $120, it almost doubled in a year...




Then, let us pray that it won't almost double again in the next year! 

(US$240 would sorta hurt some at the bowser.... except if you hold mainly oil stocks and commute via walking, pushbike, public transport almost exclusively, that is!)

AJ


----------



## numbercruncher

*Re: OIL AGAIN!*



Aussiejeff said:


> Then, let us pray that it won't almost double again in the next year!
> 
> (US$240 would sorta hurt some at the bowser.... except if you hold mainly oil stocks and commute via walking, pushbike, public transport almost exclusively, that is!)
> 
> AJ





If it doubled again in the next year millions would die.


$240 _sorta_ hurt some ? lol


----------



## Tysonboss1

*Re: OIL AGAIN!*



vishalt said:


> Oil is now becoming a big problem though, wow @ $120, it almost doubled in a year... lucky my car use is quite low otherwise I would be hurting. But I can feel it for people who fill up 200+ liters a week..
> 
> $1.80 @ a bowser near you soon I reckon.




yeah it's gotta hurt,....

I use Lpg but even that has jumped up a bit,

Did you see the other night on the news a B double truck filled up with diesel and it cost $1100 to fill his tanks,.... thats got to flow through to us as consumers.

There has to be more money flowing into alternatives,... I like the sound of the gas to liquid technolgy, they can make synthetic diesel out of natural gas, we need to build a gas to liquid plants before it's to late.


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> There has to be more money flowing into alternatives,... I like the sound of the gas to liquid technolgy, they can make synthetic diesel out of natural gas, we need to build a gas to liquid plants before it's to late.



Gas is as finite as oil.
So all we do is delay the inevitable.
We need to move to electricity via renewables very quickly and conserve oil & gas as much as practicable.
We are presently on an energy merry go round: Jumping off one source for another, cheaper one. Until it's too expensive and they jump off that too.
Coal's price rise was inevitable, next will be gas as consumers flock too the cheapest alternative, and so the merry go round....


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> Gas is as finite as oil.
> So all we do is delay the inevitable.
> We need to move to electricity via renewables very quickly and conserve oil & gas as much as practicable.
> We are presently on an energy merry go round: Jumping off one source for another, cheaper one. Until it's too expensive and they jump off that too.
> Coal's price rise was inevitable, next will be gas as consumers flock too the cheapest alternative, and so the merry go round....



Agreed 100%. Electricity from renewables is the only technology we have that comes anywhere near being a viable alternative in the long term. And even it has a lot of problems - which makes the point that any alternative is inferior to oil in some way. 

As for gas, 30 years from now we're near certain to be in a very similar situation to that we are now for oil. That's been the general relationship  between the two industries for the past century or so.

As for LPG, I must point out that it is considered to be "oil" in most contexts. The 85 million barrels per day etc includes LPG.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> Gas is as finite as oil.
> So all we do is delay the inevitable.
> We need to move to electricity via renewables very quickly and conserve oil & gas as much as practicable.
> We are presently on an energy merry go round: Jumping off one source for another, cheaper one. Until it's too expensive and they jump off that too.
> Coal's price rise was inevitable, next will be gas as consumers flock too the cheapest alternative, and so the merry go round....




yes but it would buy us 20years or so,

I am not saying dump oil,... I am just saying use to gas to supplement the oil supplies till better tech can come on board.

There is alot of natural gas around especially when you take into account coal seam methane,... so using that to supplement existing supplies of crude would aleast bring about some sort of price stability, untill other longerterm soloutions can be phased in.

lets face it we need a furel that can be used in existing equipment,... synthetic diesel and ulp from gas can be used.


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> yes but it would buy us 20years or so,
> 
> I am not saying dump oil,... I am just saying use to gas to supplement the oil supplies till better tech can come on board.
> 
> There is alot of natural gas around especially when you take into account coal seam methane,... so using that to supplement existing supplies of crude would aleast bring about some sort of price stability, untill other longerterm soloutions can be phased in.
> 
> lets face it we need a furel that can be used in existing equipment,... synthetic diesel and ulp from gas can be used.



The idea, while seeming good, ignores the substitution effect.
There apears enough evidence to suggest that if oil has not yet peaked, it has plateaued, and will soon enough trend down.
Annual global energy demand is increasing at a rate requiring a minimum  extra million barrels per day.
The present shorfall in crude oil is going to continue to be taken up with condensates and gas in the main.  So the theoretical 20 years or so to peak gas is going to be shortened by energy substitution, and gas will increase in price in tandem with oil, as much as the market will bear.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Demand destruction lives......either that or the US is just FUBAR



> For 20 years now, county workers in Palm Beach County, Fla., have been counting cars with sensors at strategic points along its 4,000 miles of roads. Nearly every year traffic volume has climbed at least 2%. But in 2007 there was a slight decline in the number of vehicles on the roads. *This year traffic is down 7.5% through March*. "We're seeing a very significant change," says county engineer George Webb. "We're having a good time speculating why."
> It's not just Palm Beach. Traffic levels are trending downward nationwide. Preliminary figures from the Federal Highway Administration show it falling 1.4% last year. Now, with nationwide gasoline prices having passed the inflation-adjusted record of $3.40 a gallon set back in 1981, the U.S. Energy Information Administration is predicting that gasoline consumption will actually fall 0.3% this year. That would be the first annual decline since 1991. Others believe the falloff in consumption is steeper than the government's numbers show. "Our canaries out there tell us they are seeing demand drop much more considerably than the fraction the EIA is talking about," says Tom Kloza, chief oil analyst at Oil Price Information Service, a Gaithersburg (Md.) market research firm.
> Is oil-guzzling America changing its ways? Some think so, though it's worth noting the U.S. still consumes one-third of the world's annual gasoline output. "*It appears we've finally hit the ceiling that's causing the U.S. population to rethink how and where they use their vehicles*," says Paul Weissgarber, who heads the energy practice at consulting firm A.T. Kearney.



http://www.businessweek.com/magazine/content/08_18/b4082000518114.htm?campaign_id=rss_daily


----------



## wavepicker

*Re: OIL AGAIN!*

Unfortunately I don't have any raw data for oil an cannot number an EW chart but I have attached a chart drawn by Clive Maund from a recent article posted at safehaven:

http://www.safehaven.com/article-10087.htm

Clearly this chart is showing we could be completing an impulse from the 2001 with wave 5 approaching the bounds of the upper trendline at this juncture(he has not EW numbered the chart but the wave structure is easy to see). 
This chart gels very nicely with the charts I posted in the Gold forum calling for an imminant top in both Gold and bottom in the USD in the weeks and months ahead.

https://www.aussiestockforums.com/forums/showpost.php?p=284834&postcount=4035

That is not to say the bull is over in both Gold and Oil, very far from it. Oil still has an unfinished long term wave structure. But certainly a mutli years retracement possibly all the way back $65(span of previous wave 4) is not out of the question IMO.


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I see exactly what your referring to Red , but correlations aren't always what they seem , and sometimes coincidental . I'm not directing this at you Red , but please feel free to debate this with me and whomever wishes .



When themes recur, as is now the case with oil\gold it's handy to reflect on "positions".

wavepicker
A technical low exists in every chart pattern.
Can you tell us what might lead to demand falling to the extent indicated, if it is not demand destruction or a global economic depression.
As matters stand demand is being maintained at high levels due to developing countries trying to be like us.  Any significant declines in price are likely to be well bought into.

On Monday we will see the extent that the Grangemouth strike and closure of the Forties Pipeline System effects world oil prices.  This happened on top of continuining Nigerian supply disruptions and neverending Middle East tensions.

Somewhat analogous to the potential for oil to fall considerably is the example of nickel prices in recent years.  It shot to over $50k per tonne and has now settled in the high 20k-low 30k range.
The catalyst for the fall was substitution, whereby cheaper ferronickel now commands a robust market share.
There is still plenty of nickel, and plenty of ferronickel, with capacity expansions the key to driving prices lower.
I am not too sure we can say that oil in the foreseeable future will fall prey to rapid substitution effects.  We certainly can say that *there is no longer plenty of oil*.

My forecast is, therefore for a near term spike followed closely by a brief price drop on profit taking.  Thereafter the fundamentals kick back in and at worst we are likely to see consolidation around the $100 figure while surprises on the upside - on the assumption markets are not gripped by depression - will be the norm as we progress through the year.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Yep, i agree with Redrob.

Its a demand and supply thing and demand is going to outstrip supply, a no brainer. Every day that ticks by is another day in the favour of higher prices.

There will be volatility but, hard to see it dropping too far below $100.00 on a pull back, maybe $90.00 but i think even that is stretching things...............

OPEC cetainly wants high oil and i doubt they have capacity to increase production much more even if they wanted to.

Time will tell, $150.00 is the mark we should be considering in the short term.

JW


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Have a read of this, it sums my thoughts up

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/27/ccliam127.xml

JW


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Yep, i agree with Redrob.
> 
> 
> Time will tell, $150.00 is the mark we should be considering in the short term.
> 
> JW




Well then!!  That is a good case for you to both hang to your longs isn't it?

GOOD LUCK


----------



## wavepicker

*Re: OIL AGAIN!*



rederob said:


> *there is no longer plenty of oil*.




100 years ago, the world relied on Whale Blubber immensly. Whale blubber is as rare as today and it's price is how much?  A big fat zero amongst most of the worlds economies.

As prices reach an extremes, for one thing humans become more inventive and look for alternatives.  We don't have much alternetives ATM and the price of crude is defintely going higher in the long term. But not in a straight line like you see to think. 

Your criteria is simply based on supply and demand, and unfortuntely  that is only part of the whole market equation.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Wavester,

Want to have a case of beer on it?

I'll take oil hitting $150.00 before it hits $65.00.

Just say the word and the bet is on, monies or beverages to be issued upon price reaching target.............

Yum, free beer!!!     


JW


----------



## rederob

*Re: OIL AGAIN!*



wavepicker said:


> 100 years ago, the world relied on Whale Blubber immensly. Whale blubber is as rare as today and it's price is how much?  A big fat zero amongst most of the worlds economies.
> 
> As prices reach an extremes, for one thing humans become more inventive and look for alternatives.  We don't have much alternetives ATM and the price of crude is defintely going higher in the long term. But not in a straight line like you see to think.
> 
> Your criteria is simply based on supply and demand, and unfortuntely  that is only part of the whole market equation.



I don't think prices go in straight lines.
I also think your whale blubber analogy is way off the mark.  There are probably more people in India today that use cow dung as fuel as there were in the rest of the world at any point in time using whale oil.
Given that you didn't tackle my earlier question, perhaps you might like to tell us what price for oil is "extreme", and what might replace it in half a billion cars alone.
Then we will know why we should not use "demand" as a major determinant of the future oil price.


----------



## Tysonboss1

*Re: OIL AGAIN!*



wavepicker said:


> 100 years ago, the world relied on Whale Blubber immensly. Whale blubber is as rare as today and it's price is how much?  A big fat zero amongst most of the worlds economies.
> 
> As prices reach an extremes, for one thing humans become more inventive and look for alternatives.  We don't have much alternetives ATM and the price of crude is defintely going higher in the long term. But not in a straight line like you see to think.
> 
> Your criteria is simply based on supply and demand, and unfortuntely  that is only part of the whole market equation.




I think Oil will double in value before it halves in value,...


----------



## pilbara

*Re: OIL AGAIN!*



rederob said:


> On Monday we will see the extent that the Grangemouth strike and closure of the Forties Pipeline System effects world oil prices.  This happened on top of continuining Nigerian supply disruptions and neverending Middle East tensions.



yep before these supply problems there was a traceback going on late last week, and i was waiting to see how far crude oil futures and oil company shares would fall before entering the market to buy some oil shares.

The $120 per barrel was a technical barrier correlated to $1.60 euro barrier and once the dollar bounced against the euro we saw a major commodities selloff.  Lucky for Australia, the Anzac Day holiday saved the major mining companies getting hammered by 4% like they did in London and NY thursday night.  

With news of the oil supply problems oil shares rose fast in early Friday London/New York trading but this run was short lived as the entire market reacted badly to the news of the "worst USA consumer confidence in 25 years". 

The oil stocks immediately went down below previous lows, while at the same time oil futures rising up to $118 from $115.  

By the end of trading all oil stocks except Shell had risen again by 1% and I would expect a consolidation gain of 1% or 2% in oil shares on Monday trading while the market waits to see if the $120 can be breached at the same time as when the dollar is rising against world currencies.


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Wavester,
> 
> Want to have a case of beer on it?
> 
> I'll take oil hitting $150.00 before it hits $65.00.
> 
> Just say the word and the bet is on, monies or beverages to be issued upon price reaching target.............
> 
> Yum, free beer!!!
> 
> 
> JW




Gladly, send me a PM and we can work it out.  If the consensus here is against me, that's encouraging, I'll be drinking your beer.

 Rederob your short to medium term forecasts based on fundemental arguments have been far from impressive. i.e. have you forgotton your Gold episode with the duc a few years ago?


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Okay Wavepicker your on.

I'm good for the beer, no need for the PM yet, if we drop back to $65.00 you will get your beer guaranteed. I am a bunny of my word.

Should make for some interesting months ahead, more intersting than the monthly tipping comp.

Good luck and may oil decide our fate.


JW


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Okay Wavepicker your on.
> 
> I'm good for the beer, no need for the PM yet, if we drop back to $65.00 you will get your beer guaranteed. I am a bunny of my word.
> 
> Should make for some interesting months ahead, more intersting than the monthly tipping comp.
> 
> Good luck and may oil decide our fate.
> 
> 
> JW




I have never entered a tipping competition as I am no stock picker.

BTW I am no fundementalist.(for me the information given to us by the charts is enough in most cases) But this report by Ronald Bailey is quite interesting in comparsion to the never ending perma bull arguments.



Cheers

http://www.reason.com/news/show/125414.html


----------



## ShareIt

*Re: OIL AGAIN!*

oil doing it tough at $120, can't seem to break over and hold... if the FED signals a pause in cuts, dollar will rally and I think oil will hit $110... perhaps less...


----------



## numbercruncher

*Re: OIL AGAIN!*



> The president of Opec, the cartel of oil-producing countries, has given warning that the price of crude could hit $200 a barrel, sparking fears that rising fuel costs will force more businesses into bankruptcy.




http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article3830383.ece


Whoa, could you imagine the carnage if Oil hit $200 in the short term, the starvation, the riots, the recession.

Oh but thatd bring demand destruction surely ...


----------



## ithatheekret

*Re: OIL AGAIN!*

We already have most of that occurring right now , $200 oil will be a definite catalyst for higher tensions and starvation . It's a worry alright , but I don't see any great rushes by pollies on excise reductions .

I'd like to see a pile of rebate cheques mailed out to each registered vehicle owner , but the likelihood of that is somewhere between naught and zero .

But to quote Ashleigh Brilliant : 

" If things are not as bad as they seem , why do they seem so bad "

One of his Pot-shots fits too . " Try to relax and enjoy the crisis " .


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Sorry guys but the rest of the world is going to just have to suffer until we hit $150.00 per barrel and i get my beer, until then i don't want to hear any sob stories, this is beer after all!!

JW


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Sorry guys but the rest of the world is going to just have to suffer until we hit $150.00 per barrel and i get my beer, until then i don't want to hear any sob stories, this is beer after all!!
> 
> JW




My we are cocky tonight!!

Your $150 will start to look somewhat shaky soon. Gold going south, USD starting to show signs it might be going through a strengthening phase. 

Good luck, I will let you know what brew I like very soon JW


----------



## Kauri

*Re: OIL AGAIN!*

Oh Oh... thats gotta be good..?? 
  President Bush *beseeches* Congress to reconsider opening the Alaska National Wildlife Refuge and to increase domestic refinery capacity..

    Slipping
.............Kauri


----------



## wayneL

*Re: OIL AGAIN!*



Kauri said:


> Oh Oh... thats gotta be good..??
> President Bush *beseeches* Congress to reconsider opening the Alaska National Wildlife Refuge and to increase domestic refinery capacity..
> 
> Slipping
> .............Kauri



He's been brushing up on the Book of Common Prayer, obviously.


----------



## Kauri

*Re: OIL AGAIN!*



wayneL said:


> He's been brushing up on the Book of Common Prayer, obviously.




  Not from the King James version though..
.........Bush would not commit to a gas tax moratorium but said his 
Administration continues to consider it and other good ideas.  A moratorium 
would save Americans 18.4 cents on every gallon but would undercut federal 
revenues at a time when the full-year deficit is already aiming at a record...

  All he needs to do is increase the tax on Alco-pops... in the name of good health of coarse...

   Hiccup
.............Kauri


----------



## wayneL

*Re: OIL AGAIN!*



Kauri said:


> Not from the King James version though..
> .........Bush would not commit to a gas tax moratorium but said his
> Administration continues to consider it and other good ideas.  A moratorium
> would save Americans 18.4 cents on every gallon but would undercut federal
> revenues at a time when the full-year deficit is already aiming at a record...
> 
> All he needs to do is increase the tax on Alco-pops... in the name of good health of coarse...
> 
> Hiccup
> .............Kauri



Hey, whatever happened to supply side economics? He should reduce tax on alco-pops. 

Gordo should do the same on Kronenbourg 1664 I reckon, FWIW


----------



## Kauri

*Re: OIL AGAIN!*



wayneL said:


> Hey, whatever happened to supply side economics? He should reduce tax on alco-pops.
> 
> Gordo should do the same on *Kronenbourg* 1664 I reckon, FWIW




 All of those big words have lost me..  :alcohol:  ..

   Belch.. (it never sounds the same written)
...........Klaggi


----------



## wavepicker

*Re: OIL AGAIN!*

Oil down 2.8% on last nights session so far.
Not sure whether it wil happen, but from an EW perspective would not mind seeing a retest of the high or even a very minor new high before this thing goes the way of everything else traded in USD.

Have placed my short bets on oil stocks i.e STO.

Hang onto your bowsers and beer cases. Cheaper Oil is coming soon, albeit for a temporary period!!


----------



## ShareIt

*Re: OIL AGAIN!*



wavepicker said:


> Oil down 2.8% on last nights session so far.
> Not sure whether it wil happen, but from an EW perspective would not mind seeing a retest of the high or even a very minor new high before this thing goes the way of everything else traded in USD.
> 
> Have placed my short bets on oil stocks i.e STO.
> 
> Hang onto your bowsers and beer cases. Cheaper Oil is coming soon, albeit for a temporary period!!




Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?


----------



## Uncle Festivus

*Re: OIL AGAIN!*



ShareIt said:


> Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?




Be careful with the stock shorts a la Origin 40% in one day. WPL boss implies WPL is now worth $100. Commodity consolidation in progress! Short oil direct?


----------



## ShareIt

*Re: OIL AGAIN!*



Uncle Festivus said:


> Be careful with the stock shorts a la Origin 40% in one day. WPL boss implies WPL is now worth $100. Commodity consolidation in progress! Short oil direct?




I took a short on the stock.... might be worth $100 and I think it is a great stock long term, but for now it looks overbought and price speaks, it's worth what people are willing to pay and right now that is $57...... i think i will buy up if it hits $52 (20 MA on the weekly)... all speculation though 

ps... oil has more to drop in my opinion, needs to test $110


----------



## wavepicker

*Re: OIL AGAIN!*



ShareIt said:


> Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?




Hello Share It,

I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.

Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and small retrace should occur to 113-114

Cheers


----------



## ShareIt

*Re: OIL AGAIN!*



wavepicker said:


> Hello Share It,
> 
> I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.
> 
> Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and small retrace should occur to 113-114
> 
> Cheers




we got the test of the $110, so a bounce is expected.... oil is at $113 now... STO looks like a great short... way over extended! might take some PUT options on monday.... WPL failed to break above $57, the 20MA and 5MA...... also it has a M pattern plus the A pattern forming, so a drop is still on the cards


----------



## wavepicker

*Re: OIL AGAIN!*



ShareIt said:


> we got the test of the $110, so a bounce is expected.... oil is at $113 now... STO looks like a great short... way over extended! might take some PUT options on monday.... WPL failed to break above $57, the 20MA and 5MA...... also it has a M pattern plus the A pattern forming, so a drop is still on the cards





Got the the start of  the small rally as expected from the last chart. Could be short lived though.

STO extended slightly further than I thought. It's very hard to get the timing 100% spot on consistantly, I aim for 3-5 trading days. As mentioned earlier that is why I make partial entries and for that matter exits.  At this stage looks like it may topout togther with the broader market next week some time


----------



## ShareIt

*Re: OIL AGAIN!*



wavepicker said:


> Got the the start of  the small rally as expected from the last chart. Could be short lived though.
> 
> STO extended slightly further than I thought. It's very hard to get the timing 100% spot on consistantly, I aim for 3-5 trading days. As mentioned earlier that is why I make partial entries and for that matter exits.  At this stage looks like it may topout togther with the broader market next week some time




I'm calling the turn on STO monday or tuesday, just had a really good look at it in detail and I think i will run for those PUTs.... a beautiful hangman with heavy volume, all indicators overbought... higher highers on price but not on momentum.... what more could you want


----------



## rederob

*Re: OIL AGAIN!*



wavepicker said:


> Hello Share It,
> 
> I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.
> 
> Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and *small retrace should occur to 113-114*
> Cheers



Or a large retrace to over $116 which caught many short.


----------



## wavepicker

*Re: OIL AGAIN!*



rederob said:


> Or a large retrace to over $116 which caught many short.




Fair enough rederob, you can be as picky as you like. Yes it rallied 2 dollars more than I expected. Sometimes we do get slight overshoots. The method I am using is under development and I have not said at any time it is 100% accurate. But does it have to be 100% accurate to take a trade? The method is very dynamic not static. Targets are continually updated based on the price and cycles in play at any given time. Just understand that the perfect sytem does not exist, there have to be tradeoffs.

In this instance on the very short term (1 hr chart) it showed there was a high probablility for a short term rally. We got that rally. What else would you want?

For your info I did not trade oil the commodity  either long or short, these charts are for info. If I did trade it my initial target would have been 113-114, but then as more data came to hand it would have been easy to see that it was going slightly higher due to cycle expansion/contraction, so my strategy would be to take partial profits at 114 and then let the rest ride

Now if you have a better strategy than this for trading the market in the short term *I and others would sure like to see it*. If you do, it would surely have to be based on T/A because you long term F/A stuff simply does not cut it to trade this timeframe!!

As can be seen, I think this rally might be done on the very short term. If it is going north again then it has to pullback at least back to 113-114 anyway. This is a short term strategy


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> Or a large retrace to over $116 which caught many short.




I agree with Wavepicker... and the reason being is because a price quoted is just an area of resistance, could be more, could be less.... $115 to me is the resistance area and a rally to this point is what I have been expecting... 

ok, so it goes to $116.50... and that is totally fine in my books as the market is ALWAYS looking to throw out the weak hands and a break over $115 would have done just that if it now heads back below $115.... a lot of people would have jumped on board once it crossed $115, i know i would have in the past.... if the price can hold above $115 (a retrace to this level) for a couple days, then I would say Oil is going up further and it negates a drop.... but if it just continues up with no pause or retrace, then we have an overbought rally on emotion and they usually don't last


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> I agree with Wavepicker... and the reason being is because a price quoted is just an area of resistance, could be more, could be less.... $115 to me is the resistance area and a rally to this point is what I have been expecting...
> 
> ok, so it goes to $116.50... and that is totally fine in my books as the market is ALWAYS looking to throw out the weak hands and a break over $115 would have done just that if it now heads back below $115.... a lot of people would have jumped on board once it crossed $115, i know i would have in the past.... if the price can hold above $115 (a retrace to this level) for a couple days, then I would say Oil is going up further and it negates a drop.... but if it just continues up with no pause or retrace, then we have an overbought rally on emotion and they usually don't last



Oil has been overbought for months.
Oil has been rallying for months.
People have wanted to short it for months.
Whatever "emotion" is driving oil is obvious only to those getting emotional about its price.
As I only buy and sell equities, the oil price is only relevant to the extent it affects the equities I hold: WPL and OSH remain my major holdings and I have a small holding in BPT which I am considering adding more too when there is a major retrace - to well below $100 -  of the oil price.
I note that from time to time some commentator or analyst comes out with a view that oil prices will decline considerably for reasons they are hard pressed to explain.
Digging deeper, I usually discover these folk are latching onto the coat tails of peak oil debunkers.
It's intellectually possible to debunk peak oil because the "curves" that Hubbert and his adherents ascribe to are seldom shaped in the way commonly depicted.  Not surprisingly, when oil production is mapped over time for wells, or fields, production can jump about a fair bit.  For example, as modern extraction techniques are applied to maturing wells, it is possible to "re-peak" its output.
The debunkers seem less willing to debate the obvious.  That is, when production output is "averaged" over a reasonable period, a peak is always reached and wells\fields go into a prolonged period of decline.
The fundamentals for oil are relatively simple.
There is more than enough oil to meet present global demand.
There is inadequate capacity to induce enough oil out of the ground to meet that demand.
It is suggested that the Saudis can get another 3million barrels per day from their fields because many well heads have spare capacity.  Despite multibillion capacity expansions the Saudis appear to be struggling to maintain output, let alone increase it.
What is important about the data is that it is not "snapshot" stuff: It's based on information over recent years.  
If the Saudi's are struggling, with their massive reserves, little wonder other national producers are flat out, with minimal excess capacity.
Clearly this type of "fundamental" view does not make for short term trading.
It's not what I do, and I make no pretense to have a clue about short term movements in oil price.
On the other hand, I have a slight clue about when it's a better time to add to my existing oil holdings: And in the manner that I trade, it is not *now*.


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> Oil has been overbought for months.
> Oil has been rallying for months.
> People have wanted to short it for months.
> Whatever "emotion" is driving oil is obvious only to those getting emotional about its price.
> As I only buy and sell equities, the oil price is only relevant to the extent it affects the equities I hold: WPL and OSH remain my major holdings and I have a small holding in BPT which I am considering adding more too when there is a major retrace - to well below $100 -  of the oil price.
> I note that from time to time some commentator or analyst comes out with a view that oil prices will decline considerably for reasons they are hard pressed to explain.
> Digging deeper, I usually discover these folk are latching onto the coat tails of peak oil debunkers.
> It's intellectually possible to debunk peak oil because the "curves" that Hubbert and his adherents ascribe to are seldom shaped in the way commonly depicted.  Not surprisingly, when oil production is mapped over time for wells, or fields, production can jump about a fair bit.  For example, as modern extraction techniques are applied to maturing wells, it is possible to "re-peak" its output.
> The debunkers seem less willing to debate the obvious.  That is, when production output is "averaged" over a reasonable period, a peak is always reached and wells\fields go into a prolonged period of decline.
> The fundamentals for oil are relatively simple.
> There is more than enough oil to meet present global demand.
> There is inadequate capacity to induce enough oil out of the ground to meet that demand.
> It is suggested that the Saudis can get another 3million barrels per day from their fields because many well heads have spare capacity.  Despite multibillion capacity expansions the Saudis appear to be struggling to maintain output, let alone increase it.
> What is important about the data is that it is not "snapshot" stuff: It's based on information over recent years.
> If the Saudi's are struggling, with their massive reserves, little wonder other national producers are flat out, with minimal excess capacity.
> Clearly this type of "fundamental" view does not make for short term trading.
> It's not what I do, and I make no pretense to have a clue about short term movements in oil price.
> On the other hand, I have a slight clue about when it's a better time to add to my existing oil holdings: And in the manner that I trade, it is not *now*.





OK... you are obviously a long term investor and you are completely right in your views, oil stocks will continue to go up I believe in the long term, as you have pointed out... 

I am more about the short term and am simply stating that oil stocks are way over extended for now and I believe they will come in a little....


----------



## rederob

*Re: OIL AGAIN!*

Putting some numbers to the "fundamentals".
Monthly production peaks are:  
*All Liquids*: the peak is July 2006 at 85.47 mbpd (revised  0.07 mbpd), the year to date average production in 2007 (9 months) is  84.32 mbpd ( 0.04 mbpd), down 0.25 mbpd from 2006 for the same period. 
*Crude Oil *+ NGL: the peak date remains May 2005 at 82.09 mbpd (unchanged), the year to date average production for 2007 (9 months) is  80.99 mbpd ( 0.21 mbpd), down 0.35 mbpd from 2006. 
*Crude Oil *+ Condensate: the peak date remains May 2005 at 74.30 mbpd (unchanged), the year to date average production for 2007 (9 months) is 73.09 mbpd ( 0.14 mbpd), down 0.48 mbpd from 2006. 
*NGPL*: the peak date is February 2007 at 8.01 mbpd ( 0.02 mbpd), the year to date average production for 2007 (9 months) is  7.90 mbpd ( 0.07 mbpd), up 0.13 mbpd from 2006. 

The supply "gap" is mostly made up from oil sands and biofuels.
Each year the gap will grow larger unless crude makes a turnaround.
Given the unparalleled expenditure on drilling\exploration in recent years, with only moderate success on the oil front, that's not an easy ask.


----------



## wavepicker

*Re: OIL AGAIN!*



ShareIt said:


> OK... you are obviously a long term investor and you are completely right in your views, oil stocks will continue to go up I believe in the long term, as you have pointed out...
> 
> I am more about the short term and am simply stating that oil stocks are way over extended for now and I believe they will come in a little....




Ditto, Ditto, and Ditto.

I don't understand why the arguments exist between these long term investors and the shorter term swing traders on this forum. Their goals are more long term ours are short.

It's that simple. There is no right or wrong


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> The supply "gap" is mostly made up from oil sands and biofuels.



There's also an argument that someone, somewhere is drawing down stocks rather heavily to help close the gap as well. Not just oil companies or governments, but also consumers - home heating oil tanks not being filled to the top, electric utilities drawing down fuel oil inventory and so on.

My gut feeling (and that's after rather a lot of research) is that even if we held both producton and consumption flat from now on, we'll still hit the wall rather spectacularly. That is, once you count biofuels using up all the grain stocks, oil tanks not being filled etc I think we're already using more than we're producing. It will only get worse as you said.

Oil won't run out overnight, that's not how it works. But someday I do think we'll see physical shortages and they'll come out of "nowhere" much like the sub prime crisis and any other major event catches most by surprise. $2 or even $5 a litre is certainly a problem, but not being able to get petrol etc at _any_ price in your local area because the servo and the wholesaler that supplies it have run dry is a far more serious situation and one that I fear is coming.

...

Agreed with those commenting about short term versus long term. Different objectives.


----------



## rederob

*Re: OIL AGAIN!*

Although the US is getting less relevant to price considerations of commodities as time goes by, its consumption of oil will not be surpassed for a long time to come.
Irrespective of any technical considerations, the bottom line for many analysts is "inventory" followed by "capacity".
2008 sees US oil inventories below average.
It sees capacity utilisation below average.
Apart from gasoline, other fuel stocks are also below average - especially heating oil, which is regularly setting cyclical lows (as refiners overcompensate with gasoline output).
The question needs to be asked about what will change the present situation.
The immediate answer is that the US has no answer.
In fact, looking to the horizon you still won't find an answer.
If there is an answer, it will come from overseas - by tanker.... lots and lots more of them.
It's why the speculators can afford to speculate with some abandon.
You see, the consumers can still afford to pay through the nose.
And pay they will.


----------



## So_Cynical

*Re: OIL AGAIN!*

STO closed up 81 cents today...so much for the shorts.

Tomorrows another day right.


----------



## kransky

*Re: OIL AGAIN!*



Smurf1976 said:


> Oil won't run out overnight, that's not how it works. But someday I do think we'll see physical shortages and they'll come out of "nowhere" much like the sub prime crisis and any other major event catches most by surprise. $2 or even $5 a litre is certainly a problem, but not being able to get petrol etc at _any_ price in your local area because the servo and the wholesaler that supplies it have run dry is a far more serious situation and one that I fear is coming.




I dont think we will ever see full-on lack of availability of petrol (while there is demand for it)..

i think oil will simply get more and more expensive and we will learn to use less and less of it. Until we barely use any of it and petrol stations like they exist today no longer exist. You just wont use petrol for personal transport. But petrol will still be available for other things.. at a very high price.

I am thinking 20-50 years down the track mind you.


----------



## rederob

*Re: OIL AGAIN!*



wavepicker said:


> As can be seen, I think this rally might be done on the very short term. If it is going north again then it has to pullback at least back to 113-114 anyway. This is a short term strategy



Presently trading at yet another record high - over $120 as I post.


----------



## ShareIt

*Re: OIL AGAIN!*



So_Cynical said:


> STO closed up 81 cents today...so much for the shorts.
> 
> Tomorrows another day right.




closed up on very light volume.... just took some shorts on Monday.... a pull back looks due to the $15 - $16 area... could hit $20 then start... the risk of buying upside at those levels are way too risky.


----------



## Aussiejeff

*Re: OIL AGAIN!*



kransky said:


> I dont think we will ever see full-on lack of availability of petrol (while there is demand for it)..
> 
> i think oil will simply get more and more expensive and we will learn to use less and less of it. Until we barely use any of it and petrol stations like they exist today no longer exist. You just wont use petrol for personal transport. But petrol will still be available for other things.. at a very high price.
> 
> I am thinking 20-50 years down the track mind you.




Ummm....

Do you happen to remember what happened way, way back when - a few months ago - a refinery in Melbourne shut down production? - for a a few days? I DO vaguely remember LOTS of service stations and outlets ALL OVER the state of Victoria rapidly running out of fuel within a day or two. It caused chaos, especially in the transport industry. Lucky the refinery only reduced/stopped production briefly, eh? 

So, that scenario you are postulating is hardly "20-50 years down the track"! LOL


AJ


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Wavepicker don't you go losing all your money on shorting oil, make sure you leave at least $50.00 in the account for my beer.

I'm getting worried you won't be able to afford my beverages.

And just on that, my advice is for you to wait until oil is retracing and then jump on a short. Don't go trying to pick the change in direction, wait for the market to show you, then get on board.


JW


----------



## ShareIt

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Wavepicker don't you go losing all your money on shorting oil, make sure you leave at least $50.00 in the account for my beer.
> 
> I'm getting worried you won't be able to afford my beverages.
> 
> And just on that, my advice is for you to wait until oil is retracing and then jump on a short. Don't go trying to pick the change in direction, wait for the market to show you, then get on board.
> 
> 
> JW




I wouldn't ride him off just yet.... so far it is struggling to hold $120, if it fails to hold, we have a double top.... and your bullishness is actually a good case for bearishness


----------



## Smurf1976

*Re: OIL AGAIN!*



kransky said:


> I dont think we will ever see full-on lack of availability of petrol (while there is demand for it)..
> 
> i think oil will simply get more and more expensive and we will learn to use less and less of it. Until we barely use any of it and petrol stations like they exist today no longer exist. You just wont use petrol for personal transport. But petrol will still be available for other things.. at a very high price.
> 
> I am thinking 20-50 years down the track mind you.



20+ years time I can agree. But in the short term what I fear is that some combination of government and the oil industry will keep the true extent of the situation somewhat hidden as long as possible given the consequences of acknowledging that supply can't meet business as usual consumption.

I see something similar to what happened with major dams in Australia over the past decade. In short, they were progressively drawn down with Joe Average having no idea this was happening until very low levels were reached. Hence we went from seeming to have plenty of water, when in reality it was being drawn from storage, to outright shortage virtually overnight. 

With oil, I can certainly see a progressive emptying of tanks etc with most being unaware until a crisis erupts. And there's your shortage.

I live across the river from the only significant oil product storage facility in southern Tasmania. It's not on the scale of the facilities in the Middle East or even Melbourne, but there's a lot of tanks there nonetheless. And there's a boat there (no refineries in Tas) delivering petrol etc more than once per week. 

Bottom line is I just can't see how they're delivering full loads or even a third of what those tanks can hold. It's a lot of small deliveries going on using quite large boats. Now, the question is this, are those tanks full and being topped up every few days? Or have they been drawn down to empty and we're in real trouble if the boat is late? I don't know and nor does the average person. But if it's a case of being nearly empty then someday we'll end up with no fuel at any price because there simply isn't any available to sell.

Same with anywhere that doesn't have local oil fields and refineries nearby. That's all of Australia and most of the developed world.


----------



## pilbara

*Re: OIL AGAIN!*



ShareIt said:


> I wouldn't ride him off just yet.... so far it is struggling to hold $120, if it fails to hold, we have a double top.... and your bullishness is actually a good case for bearishness



nah this is the third time it's tried for the $120, and the first time it's gone through, and the $US has stopped rising against Euro, so the rally in oil is on again.


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Wavepicker don't you go losing all your money on shorting oil, make sure you leave at least $50.00 in the account for my beer.
> 
> I'm getting worried you won't be able to afford my beverages.
> 
> And just on that, my advice is for you to wait until oil is retracing and then jump on a short. Don't go trying to pick the change in direction, wait for the market to show you, then get on board.
> 
> 
> JW





ate ke whamisu


----------



## ShareIt

*Re: OIL AGAIN!*



pilbara said:


> nah this is the third time it's tried for the $120, and the first time it's gone through, and the $US has stopped rising against Euro, so the rally in oil is on again.




Exactly! Third trial and look what has happened... it has failed to close above each time..... that says "for now" that there is enough supply at those levels i.e. demand is being met.... having said that, we might see a close above $120 as a possible up fake.... another thing, when we are extremely bullish (which we are now), this makes a bearish bias because everyone has probably bought already....


----------



## kransky

*Re: OIL AGAIN!*

I wasn't considering short turn localized shortages of oil.. I was thinking more from a long term global perspective.

I'll think aloud here for a second and see where I get.

Say there was some supply interruption to Australia that meant there was only 20% of the usual oil supply for a month. This is a pretty bad short term shortage scenario.

The Govt steps in and temporarily sets the price of oil at $10/litre.. people get off their fat @rses and get the bus/train/bike to work and walk to the local shops..

Sure the buses/trains will be pretty damn full but so what if some people get to work late and home late.. 

I think the bigger issue is the whole economy and society learning to live without oil.. which is why I automatically look at the issue from a long term perspective.


----------



## kransky

*Re: OIL AGAIN!*

And I also dont think (I hope not) we are going to hit a point where all of a sudden out of nowhere there is no oil left.

It's supply will simply fall and fall over time (as has already started) and so its price will rise and rise... look at the price of oil over the last 2 years.. its risen a lot..

The world uses and produces around 85M barrels per day. Apparently at this level of consumption we have about 30 years left.

Hopefully the oil price will keep rising quickly over the next decade. Because high prices are the best way to make sure that we dont have a sudden shortage shock that results in anarchy on the streets. We need to be forced away from our wasteful consumption of oil... gradually


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> Exactly! Third trial and look what has happened... it has failed to close above each time..... that says "for now" that there is enough supply at those levels i.e. demand is being met.... having said that, we might see a close above $120 as a possible up fake.... another thing, when we are extremely bullish (which we are now), this makes a bearish bias because everyone has probably bought already....



Technical merit = nil.
Fundamental merit = nil.
Humour = top points.
Our esteemed former Premier, Joh, could not have put the case more succinctly.

Oil now at $122 - another record high.


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> Technical merit = nil.
> Fundamental merit = nil.
> Humour = top points.
> Our esteemed former Premier, Joh, could not have put the case more succinctly.
> 
> Oil now at $122 - another record high.




I like the humour bit 

But the challenge of the market is what I love... and I still think something is on the horizon.... this article is every contrarians dream

http://biz.yahoo.com/ap/080506/oil_prices.html 

I also like to monitor the DUG (is a short stock of oil & gas).... todays action was a sell off climax near a double bottom which held... possible reversal?


----------



## Aussiejeff

*Re: OIL AGAIN!*



kransky said:


> I wasn't considering short turn localized shortages of oil.. I was thinking more from a long term global perspective.
> 
> I'll think aloud here for a second and see where I get.
> 
> Say there was some supply interruption to Australia that meant there was only 20% of the usual oil supply for a month. This is a pretty bad short term shortage scenario.
> 
> The Govt steps in and temporarily sets the price of oil at $10/litre.. people get off their fat @rses and get the bus/train/bike to work and walk to the local shops..
> 
> Sure the buses/trains will be pretty damn full but so what if some people get to work late and home late..
> 
> I think the bigger issue is the whole economy and society learning to live without oil.. which is why I automatically look at the issue from a long term perspective.




Crikey! If fuel went to $10 litre overnight with supply of oil to OZ cut to only 20% for a whole month, our economy would damn near collapse, mate! Do you really think the train and bus fares wouldn't quadruple overnight as well? What about the more than quadrupling of every food item in the supermarkets? 

Your over-simplistic assertion that _"people get off their fat @rses and get the bus/train/bike to work and walk to the local shops.."_ should be amended to add _.."only those left who can afford it!"_ If only the world WAS so simplistic.


AJ


----------



## Junior

*Re: OIL AGAIN!*



kransky said:


> Say there was some supply interruption to Australia that meant there was only 20% of the usual oil supply for a month. This is a pretty bad short term shortage scenario.
> 
> The Govt steps in and temporarily sets the price of oil at $10/litre.. people get off their fat @rses and get the bus/train/bike to work and walk to the local shops..
> 
> Sure the buses/trains will be pretty damn full but so what if some people get to work late and home late..




The trains are already full!  I don't see how the system would cope with a sudden 400% increase in patronage.  

$10/litre petrol would be catastrophic, even if it was only for a month.


----------



## ShareIt

*Re: OIL AGAIN!*

hey wavepicker,

I think we can load up on stocks


----------



## nioka

*Re: OIL AGAIN!*



Junior said:


> The trains are already full!  I don't see how the system would cope with a sudden 400% increase in patronage.
> 
> $10/litre petrol would be catastrophic, even if it was only for a month.




 You'd be surprised how people would cope. During the petrol rationing that was in place during WW2 people soon learnt to cope. The black market price was well above $10/litre in relative currency. We managed on 2 gallons a month. A lot of walking, push bikes etc and when the car was used it was loaded with people. Car pools were the order of the day. Divide $10 by 5 persons and it becomes $2 litre per person.

 A lot of cars quickly converted to gas with gas producers running on coke attached to the vehicle. If you want to cash in on the situation then buy shares in a company selling gas conversion kits, we have plenty of gas.
Question; which companies are they. My pick is ACE.


----------



## Aussiejeff

*Re: OIL AGAIN!*



nioka said:


> You'd be surprised how people would cope. During the petrol rationing that was in place during WW2 people soon learnt to cope. The black market price was well above $10/litre in relative currency. We managed on 2 gallons a month. A lot of walking, push bikes etc and when the car was used it was loaded with people. Car pools were the order of the day. Divide $10 by 5 persons and it becomes $2 litre per person.
> 
> A lot of cars quickly converted to gas with gas producers running on coke attached to the vehicle. If you want to cash in on the situation then buy shares in a company selling gas conversion kits, we have plenty of gas.
> Question; which companies are they. My pick is ACE.




Well, those living closest to the CBD's would cope best. The further out, the harder to cope. There's not much point comparing apples with oranges either. In 1944 Australia's population was a mere 7.3 million - with a great proportion of those being relatively self-reliant rural folk on farms. Heck, most motors back then could run on chip oil or pig fat! Try doing that with a modern beast? Of course people coped better back then than they would today - with 21 million mostly all crammed into our major population centres today, it would be a chaotic scramble. Outer suburbs back in 1944 were only half the distance to the CBD's compared to todays fringe dwellers!

If demand for LPG conversions went up over 400% what price on a conversion then? Might have to wait 5 years in a queue? Also, back in WW2 people were far more sociable than todays insular society. I can remember car pooling being trialled in WA years ago when I was living there. Guess what. Even with financial incentives it barely made a difference (only a few percentage points). 


AJ


----------



## pilbara

*Re: OIL AGAIN!*



ShareIt said:


> Exactly! Third trial and look what has happened...



in my limited experience, after the second try there's a large downward correction as people lose hope, and this happened to oil at the same time as there was a brief rally in $US.  For oil to keep parity while $US rises in value, oil price must fall.  Once $US stopped rising, oil was again free to rise and less resistance at $120 than the previous two times.  I'd expect a consolidation and next breakout from the $122 to $125.


----------



## ithatheekret

*Re: OIL AGAIN!*

I wonder what the rising AUD will do for fuel costs . It should ease the bowser price , but it seems to have just held costs at bay .

I think of the companies like WPL that are producing and selling the oil in AUD and relish in the fact . Their coffers are in overflow due to this , as they are achieving a higher price for their oil .

The last time we went into parity mode on the USD was in the 70's , I remember an oil problem then too  , but this was before Skippy had been floated , not that I see any real difference that could sway an arguement out of me in relation to then and now comparisons .

The elusive correction in the oil price that's spruiked about the media may have come and gone ........... first , assuming that there is a $10-$20 premium built into the current price care of hostilities Inc. , perhaps it's higher , are we clear on developing events that the future holds ?

No

Are the analysts quite sure they know what they are dealing with in relation to oil demand and supply , with the variables that affect both ?

No

What can we be sure of then ?

Well , I'll stick to a law somewhat pertaining to the physics of a market , instrument or asset price . Bull markets see higher highs , with corrections supported by higher lows .

Bear markets see lower lows and this evaporation effect , known as completely disappearing , real bad bear markets see disintergration .

Oil just needs the FWs to stop invading countries that hold major percentages of the worlds oil and gas reserves . 

A simple change in law by Congress with regards to retaliatory powers of a President would have saved the USA billions of dollars . Left 13% of the globes reserves operating and could have had a ceiling for oil placed in the $80's .

Now they will end up with higher welfare payments at a time they needed to restructure them . All in the name of oil .

If we want to really know what oil is going to do , we just need to follow certain countries policies and their administrations agendas .

The second run of the problem is that inflation has swung about from demand-pull to cost-push , this can be seen as a by-product of oil , but not entirely , as other contributing factors have also projected , then brought about the rise in costs .

The bowser prices have dealt a heavy blow to industry and consumers , but if , and I say if , Iran was to be strategically hit , by whatever party/ies , the oil price would tap $200 on the shoulder real quick  , not to metion the gas price , which Iran has a massive reserve of ............

At the moment the US admin is now miraculously focussing on Zimbabwe and Muganybody , whilst I applaud it , it's decades late .

Our focus should be PNG and Timor ( Acheh ) .

But I do wonder what the backroom chaps in the US and Israel are upto .

As per the regulations I'd best show my holdings , looking for a couple of good gas plays ( suggestions welcome )

WPL , BHP , ABB , GNC , IPL , NUF , DXL , ORI , MCC , CEY and ASX since Feb.


----------



## chops_a_must

*Re: OIL AGAIN!*



ithatheekret said:


> As per the regulations I'd best show my holdings , looking for a couple of good gas plays ( suggestions welcome )
> 
> WPL , BHP , ABB , GNC , IPL , NUF , DXL , ORI , MCC , CEY and ASX since Feb.




FWIW itha, you know I've been very bullish nat gas lately, before all this ORG stuff... when I was setting up the options for Nat Gas, I was looking at a price target for oil at about 130. With a shorter term price target at 116. Was a few dollars off with that resistance, so I'd be looking between 130-135 for oil.

In regards to gas stuff, I don't really understand why people would be buying now. Nothing has changed in 18 months apart from BG making a bid for ORG. I thought last year was the time to buy the sector - my bullish posts from then look good now .But conditions might actually be worse for the next little while, given the prices for gas turbine generators are getting ridiculous.

Having said that, gas is the obvious transition product out of peak oil. And like I've said to you, canadian peak gas is just around the corner as well, which is around 60% of the US' gas. A double whammy effect is probably going to be felt best in gas.

So you want to be looking at producers/ suppliers, rather than those trying to get into generation. IMO at least. Stay as close to the raw product as possible.

It also depends on which location you want to choose. NSW gassies are perhaps the way to go with the de reg. So ESG and MEL will probably be the biggest winners. From memory ESG has a forward looking PE below 1 with MOU's. But with cap raisings, that might be nearer 3-4 in the end. The market has never seemed to like MEL, and I've never found out why.

AOE is still my favourite long term gas play. The biggest danger for them is that their LNG proposal gets refused, but with such large international prospects - India, China, Vietnam, Indonesia, it remains my favourite. MPO is another if you like international plays.

I don't know why QGC is a market darling, but it is. Personally, I think their management are lazy. They tried to sell 20% off at 1.50 for chrissake! I was waiting for them to dip to 2.50 to load up again recently, got that wrong, but have made a lot from them in the past. I just can't see why anyone would buy them now given they are at least 4-5 years away from really making any decent dough. And that even hinges on their LNG plant approval. Considering most others I know are 12-24 months away from really cranking it on, I just can't see the value in that.

SHG and PES are the two others worth a look. I know there are others, but these are the ones I know well.

Disclosure: hold a bucketload of AOE and ESG and am long options on Nat Gas once more.

Cheers,


----------



## Uncle Festivus

*Re: OIL AGAIN!*



ithatheekret said:


> Oil just needs the FWs to stop invading countries that hold major percentages of the worlds oil and gas reserves .
> 
> A simple change in law by Congress with regards to retaliatory powers of a President would have saved the USA billions of dollars . Left 13% of the globes reserves operating and could have had a ceiling for oil placed in the $80's .
> 
> Now they will end up with higher welfare payments at a time they needed to restructure them . All in the name of oil .
> 
> If we want to really know what oil is going to do , we just need to follow certain countries policies and their administrations agendas .




The cynics amongst us would put 2 + 2 together and come up with a US President with a history in oil, and possibly a vested interest in keeping the oil price high. Would a bunch of not so faceless men use the resources of the military (at no cost to themselves, in fact making billions in the process) and the lives of their fellow countrymen to wage a war so they could get rich? I haven't heard of a valid reason for the invasion of Iraq so far?? They just can't be so silly, or greedy - can they???

So far, the increase in the average price of oil is _only_? showing up in lower company profits & higher inflation. 110 was starting to hurt and brought on food riots; if the effect of the increasing price of oil is exponential there will be severe collateral damage to the global economy long before it reaches $200.


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> As per the regulations I'd best show my holdings , looking for a couple of good gas plays ( suggestions welcome )
> 
> WPL , BHP , ABB , GNC , IPL , NUF , DXL , ORI , MCC , CEY and ASX since Feb.



Given you mentioned PNG, you should add OSH.


----------



## pilbara

*Re: OIL AGAIN!*



Uncle Festivus said:


> I haven't heard of a valid reason for the invasion of Iraq so far?? They just can't be so silly, or greedy - can they???



QUOTE]USA has 2% of world oil supply but use over 20%, so oil security is foreign policy #1 priority.


----------



## ShareIt

*Re: OIL AGAIN!*



pilbara said:


> in my limited experience, after the second try there's a large downward correction as people lose hope, and this happened to oil at the same time as there was a brief rally in $US.  For oil to keep parity while $US rises in value, oil price must fall.  Once $US stopped rising, oil was again free to rise and less resistance at $120 than the previous two times.  I'd expect a consolidation and next breakout from the $122 to $125.




I won't say the US dollar has stopped rallying.... it looks to be more in a pullback point which is expected after a strong move and a very heathly sign for another leg up


----------



## Smurf1976

*Re: OIL AGAIN!*



kransky said:


> I wasn't considering short turn localized shortages of oil.. I was thinking more from a long term global perspective.
> 
> I'll think aloud here for a second and see where I get.
> 
> Say there was some supply interruption to Australia that meant there was only 20% of the usual oil supply for a month. This is a pretty bad short term shortage scenario.
> 
> The Govt steps in and temporarily sets the price of oil at $10/litre.. people get off their fat @rses and get the bus/train/bike to work and walk to the local shops..
> 
> Sure the buses/trains will be pretty damn full but so what if some people get to work late and home late..
> 
> I think the bigger issue is the whole economy and society learning to live without oil.. which is why I automatically look at the issue from a long term perspective.



What I'm more worried about is a scenario like that where government or oil companies *don't* send prices to the moon but instead draw stocks right down hoping the next tanker arrives in time. That's very plausible in my opinion, indeed it's exactly what's happened with minor disruptions in the past. 

Overall, I just don't think we're even 10% prepared to cope with any sort of oil disruption. We've got a few days worth of product stored and that's it. Last time a refinery in Vic broke down, we ended up with ambulances running out of fuel. And it's not unusual that Tas and even SA come damn close to running completely dry. If that's any indication then we're headed for outright chaos nationally sometime down the track.


----------



## ithatheekret

*Re: OIL AGAIN!*



chops_a_must said:


> I don't know why QGC is a market darling, but it is. Personally, I think their management are lazy. They tried to sell 20% off at 1.50 for chrissake! I was waiting for them to dip to 2.50 to load up again recently, got that wrong, but have made a lot from them in the past. I just can't see why anyone would buy them now given they are at least 4-5 years away from really making any decent dough. And that even hinges on their LNG plant approval. Considering most others I know are 12-24 months away from really cranking it on, I just can't see the value in that.
> 
> 
> Cheers,




I looked at QGC deeply , the market has run with it , but they ran with VCR too ................. I passed on QGC , basically ,  I agree with everything you've stated in regards to them and some ..............

Hey but how about NUF maaaate $17+ again and look at MCC right up there with em ......... $17+ , CEY fencing with the $5 area again .

I chat myself when OSH hit $5 and sold , did the same the last time it hit $4 for the first time .

FWIW I think IPL will go to $200 , if a distruption in supply occurs anywhere in the world , make that $240-$250 .

WPL at $60 yeeeefknhaaaaa 

It's all good , even ASX managed to stay in profit on my slab , the only thing is RIO and FMG , but I couldn't spread the funds that far this time round .
Next time though , FWIW again , I think RIO is headed to $200+ and it's a goldfish compared to the groper that is BHP .

One of my favourites quotes to beginners is , " If you don't stick your neck out , you'll never get ahead ." / " Just make sure you know where your heading ."

Regards ,

Mark


----------



## chops_a_must

*Re: OIL AGAIN!*



ithatheekret said:


> Hey but how about NUF maaaate $17+ again and look at MCC right up there with em ......... $17+ , CEY fencing with the $5 area again .
> 
> FWIW I think IPL will go to $200 , if a distruption in supply occurs anywhere in the world , make that $240-$250 .
> 
> It's all good , even ASX managed to stay in profit on my slab , the only thing is RIO and FMG , but I couldn't spread the funds that far this time round .
> Next time though , FWIW again , I think RIO is headed to $200+ and it's a goldfish compared to the groper that is BHP .




NUF certainly wasn't a bad tip was it?  Very very interesting technical times for NUF.

Same for IPL. Is staying level despite bad seasonality for grain prices, and dips in them. Just hope it isn't rolling over.

I'm not sure if you are saying RIO is better than BHP??? Most things I can find out seem to point to RIO being much better right the way down, in terms of their systems, management and procedures in just about every area. I really hope BHP doesn't get them. It will be a disaster. We will have Esperance like problems all around Australia. And no-one can touch them even with the massive breeches they get away with now. The industry is going to cause a lot of destruction to people's health and community welfare, if the biggest boy on the block is seen to not be abiding by any rules.

Back to gas, oil etc. I have between 12.00 and 12.70 as the next target for gas within the month. I know you do projections... got anything for oil? Or any alternates for gas?


----------



## rederob

*Re: OIL AGAIN!*

Just for interest:


----------



## rederob

*Re: OIL AGAIN!*

Another day, another record close; with chart attached so I can Share It:


----------



## ShareIt

*Re: OIL AGAIN!*




rederob said:


> Another day, another record close; with chart attached so I can Share It:




haha your funny... like the quote 

An impressive run, I never play the commodity itself but rather the stocks... and I am still sticking to my guns on the turn sometime soon as commodity stocks seem to be putting a short term top in place (starting to see some weakness... and yes, I know I am stubborn).... and usually I have noted that the commodity stocks are the first to drop or rise before the actual commodity.... I like to think of it as negative (or positive) divergence, when commodity stocks start to head lower but oil heads higher


----------



## rederob

*Re: OIL AGAIN!*

$125 and climbing.
Come on teccies, when's it going to stop........


----------



## wayneL

*Re: OIL AGAIN!*



rederob said:


> $125 and climbing.
> Come on teccies, when's it going to stop........



It is my expert technical opinion that oil will stop going up when it starts going down.

Meanwhile, this techie is happy to trail a stop.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



rederob said:


> Another day, another record close; with chart attached so I can Share It:




Would you believe $126? That chart reminds me of the saying - 'Up by the stairs, down by the firepole' or sim. Nice predictable stair pattern - who's gonna blink first?


----------



## ShareIt

*Re: OIL AGAIN!*

I think the fall is today


----------



## chops_a_must

*Re: OIL AGAIN!*



rederob said:


> $125 and climbing.
> Come on teccies, when's it going to stop........




I'm looking at just over 130 for oil. Nat Gas for mine has a slightly higher target.

Fundamentally it could go much higher. Even at these levels, supplies simply aren't keeping up. When you have the Saudi oil minister saying things like, "We don't have a problem with supply, we just can't keep up with demand", you know you have problems. Price thus far hasn't dampened the world's thirst for it.

Would love to see what happens if we get an acknowledgement of peak oil. You a peak oiler red?


----------



## Kauri

*Re: OIL AGAIN!*

Here's a relatively easy one for the people who fundementally follow oil... my beaten up old car is nearly empty of petrol..(if the guage is still working..   )..   when ... _*in the next 12 months*_...  would it be best to head off to the local to fuel up???...   
  anxiously and eagerly awaiting a _fundement_ al reply   
...................Cheers
.........Kauri


----------



## acouch

*Re: OIL AGAIN!*

some idea where it is heading
ac


----------



## rederob

*Re: OIL AGAIN!*



Kauri said:


> Here's a relatively easy one for the people who fundementally follow oil... my beaten up old car is nearly empty of petrol..(if the guage is still working..   )..   when ... _*in the next 12 months*_...  would it be best to head off to the local to fuel up???...
> anxiously and eagerly awaiting a _fundement_ al reply
> ...................Cheers
> .........Kauri



It's too easy.
There is no "best time" any more.
You will need to believe that petrol prices will come down.
In Australia that will not happen unless the refiner margin increases as at the moment there is marginal profit and considerable regulation (plus taxes).

I know wavepicker thinks there is antagonism between the two camps.  This could be because there is a tendency for teccies to be fair weather sailors - calling shorts when markets are significantly overbought.  While the strategy may sound good, when commodities power into bullish modes they appear to have a capacity to run "over-extended" for longer than equities typically would.
Furthermore, unlike equities - where we can measure forward profitability to determine reasonable pricing - commodities have complex global factors driving their prices.  With oil at present you will be hard pressed to find an analyst that believes fundamentals are the principal contributor to higher prices.
That does not mean high oil prices are not justified.  It does mean that speculators believe higher prices are more sustainable than they ever were, and are willing to bet some money on it. 

The most curious aspect of the price runup over the past few weeks has been its lack of volatility as the price ran higher.  There seems little logic to an orderly rise when prices push day after day into blue sky territory.  Anyone with an explanation................


----------



## Aussiejeff

*Re: OIL AGAIN!*



Kauri said:


> Here's a relatively easy one for the people who fundementally follow oil... my beaten up old car is nearly empty of petrol..(if the guage is still working..   )..   when ... _*in the next 12 months*_...  would it be best to head off to the local to fuel up???...
> anxiously and eagerly awaiting a _fundement_ al reply
> ...................Cheers
> .........Kauri




Now, Kauri, do it NOW!!!!  If what I have posted below is TRUE, then go fill the lil' ol' beastie NOW......

Just heard on ABC Radio news that some oil processing platform/transfer vessel in NW shelf is to be shut down immediately due to safety concerns! Now THAT won't help the local oil/fuel scene. I can't find ANY link on the Web apart from this one - am I pointing in the right direction?

http://www.bloomberg.com.au/apps/news?pid=20601081&sid=aKNmSuc8phd8&refer=australia

I'm presuming the 2-3 month disruption referred to in this article for the planned refurbishment or replacement of the Cossack Pioneer in 2009 has been brought forward, due to the recent inspection team's safety concerns? Can anyone enlighten me with further info regarding imminent shutdown? Hope I'm proved wrong with this headline....


----------



## ithatheekret

*Re: OIL AGAIN!*



chops_a_must said:


> Back to gas, oil etc. I have between 12.00 and 12.70 as the next target for gas within the month. I know you do projections... got anything for oil? Or any alternates for gas?




It's a struggle to keep up with the shifting parameters lately . Variables , well there's plenty to go about , but then isolating any of them is another huge task .

From what I can assume at present , we hit another peak in production a few years ago . Gas with regards to the US and Europe in my view has already peaked also . 

If I am somewhere near being right , the ongoing decline in production is the next catalyst to give the price the heebee geebees .

I believe the emphasis on US consumption is wrongly placed , as I believe Europe to be the main contributor to rising prices from the Western side . Gas is already under stress due to Europe and the added weight of US consumption only compounds the problem ....... then just add Asia , for an instant price shift .

Due to this , I see Gas playing the field , with a sharper rise expected than some would think . Oil is stuck in a bad spot , further production declines are the real worry that we need to bring a stick out to , but good luck with that .

Gas anywhere near $17 in the next few years would not surprised me , but oil stuck above $100 is not a good look with production waining . No OPEC spin will help the price out , no Administrations spin will conquer that lack of product . The high costs involved with gas are not a comforting factor either .

I am yet to see a fundamental arguement that supports a lower oil price , all I've heard to date are aspirations , nothing viable though , just noise .

That has me questioning when , not if , the oil price will be catapulted towards higher prices over the next ten or so years . Production numbers look glued for the period and with a growing user line up eating at the edges , the price is due for further shocks upwards .

My average price so far is $108-$112 for oil and $11.80-$12.40 for gas , which I have through to 2009 so far , and that's the good news .

Is oil being technically driven ? I don't think so at all . The only technicals actually taken note of were pre $100 .

But then , I believe there is a vested interest in keeping the price high , one that administrations can't contain .

At present I keep seeing the push towards $150 , but then this is just a position on the prices chart . I have a range between $138-$146 price in my model and that's $10 - $20 above prices achieved to date .

One heck of a macro problem for the globe to get over and I can't hear any fat lady singing yet ...............

There's a lot of screaming going on though , with more to come I would imagine .


----------



## Smurf1976

*Re: OIL AGAIN!*

There are some who have, for as long as I've known about the subject (1980's), been denying that peak oil is real. Despite all the evidence in fields, in countries etc they somehow think global production will keep growing forever.

They seem to have gone a bit quiet lately...


----------



## Tysonboss1

*Re: OIL AGAIN!*

Does anyone know of an Australian company with plans to start producing sythetic ULP and Diesel using GTL,...

Arrow energy mentioned they have done a study on it and it looks strong from both a technology and economic perspective.

I was just wondering if any company actually had laid plans to do it.


----------



## ShareIt

*Re: OIL AGAIN!*

Absolute genius... there is always one in a life time

http://www.youtube.com/watch?v=6Rb_rDkwGnU&feature=related
http://www.youtube.com/watch?v=Tf4gOS8aoFk&NR=1


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Either way, technically or fundamentally, a 15% surge in 6 days is stretching it a bit - some sort of relief pause is due? 

There has always been a proviso attached to any view of the oil price, that being, "barring any drastic downturn in the world economy". Well, that event may be closer than we think, as the US determines wether their recession will be mild or severe and the EU & the rest of the world attempts to smother the emergence of super stagflation.

When will the oil price factor in a synchronised global recession? A nice head & shoulders is _still_ developing - the fall will be spectacular?


----------



## MRC & Co

*Re: OIL AGAIN!*

I'm not so sure about spectacular, but some kind of pullback is definatley in order IMO.  Perhaps similar to gold, and I am waiting for it to try and catch a trend with this one.

I am still very long-term bullish on both oil and gold.

Very simple for me, production is simply not, and never going to catch demand IMO, whilst gold has to catch up sometime with the world inflation.


----------



## Hopeful

*Re: OIL AGAIN!*

Is the price of oil being kept artificially high? The oil companies are reporting astronomical profits, aren't they? OPEC controls the supply and are deliberately keeping it subdued as they reckon that even if they increased supply it wouldn't help prices  doesn't make a lot of sense. If you are interested in this sort of stuff look here : 

http://www.prisonplanet.com/archives/peak_oil/index.htm

The chart looks like it is in full-blast blow-off mode , it is making steeper and steeper uptrend lines on both the daily and weekly, I'm looking for a hellava pullback in oil, time to buy DUG (ultrashort oil & gas proshares), but timing is critical at this point - even if you are off a day or two you could get badly burnt .


----------



## ShareIt

*Re: OIL AGAIN!*



Hopeful said:


> Is the price of oil being kept artificially high? The oil companies are reporting astronomical profits, aren't they? OPEC controls the supply and are deliberately keeping it subdued as they reckon that even if they increased supply it wouldn't help prices  doesn't make a lot of sense. If you are interested in this sort of stuff look here :
> 
> http://www.prisonplanet.com/archives/peak_oil/index.htm
> 
> The chart looks like it is in full-blast blow-off mode , it is making steeper and steeper uptrend lines on both the daily and weekly, I'm looking for a hellava pullback in oil, time to buy DUG (ultrashort oil & gas proshares), but timing is critical at this point - even if you are off a day or two you could get badly burnt .




DUG looks to be forming that double bottom... so I would say it presents a low risk entry to the up side with a stop just below the bottom.


----------



## rederob

*Re: OIL AGAIN!*



Hopeful said:


> Is the price of oil being kept artificially high? The oil companies are reporting astronomical profits, aren't they? OPEC controls the supply and are deliberately keeping it subdued as they reckon that even if they increased supply it wouldn't help prices  doesn't make a lot of sense. If you are interested in this sort of stuff look here :
> http://www.prisonplanet.com/archives/peak_oil/index.htm



Linking to an article written in 2005 would be OK if there was some evidence its content held true.  Do you have some?


----------



## Tysonboss1

*Re: OIL AGAIN!*



ShareIt said:


> Absolute genius... there is always one in a life time
> 
> http://www.youtube.com/watch?v=6Rb_rDkwGnU&feature=related
> http://www.youtube.com/watch?v=Tf4gOS8aoFk&NR=1




Water is not a fuel source,...  It is simply a vehicle.

You have to use electricity to get the hydrogen from the water so your still using an outside fuel source,...

It's almost like saying that your equipment runs on batteries so it doesn't need any out side energy source,.... except you go home and plug your battery into the coal fired grid.


----------



## ShareIt

*Re: OIL AGAIN!*



Tysonboss1 said:


> Water is not a fuel source,...  It is simply a vehicle.
> 
> You have to use electricity to get the hydrogen from the water so your still using an outside fuel source,...
> 
> It's almost like saying that your equipment runs on batteries so it doesn't need any out side energy source,.... except you go home and plug your battery into the coal fired grid.




yeah i know... i was just making a point that he is a genius and this could be one of the many alternatives needed


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> yeah i know... i was just making a point that he is a genius and this could be one of the many alternatives needed



He's a dead genius if he was ever one.
His brother in law took the technology to Xogen to produce cars that ran on water.
The company (8 years on) is trying to maker water from waste water - not trying to make that dream car anymore.
It's a quantum shift.
Looks like a load of hogwash from the outset.


----------



## Smurf1976

*Re: OIL AGAIN!*



Hopeful said:


> OPEC controls the supply and are deliberately keeping it subdued



In the same way that I control the gold supply and am deliberately keeping it subdued by reducing to zero production from my backyard mine. Something which misses the point that *geology* has already made that decision for me and no amount of drilling, digging or other activity will substantially alter it.

Peak oil has been known about and understood by geologists for more than half a century. Im my view a conspiracy is far more likely amongst those who kept selling SUV's and cars in general in the pursuit of profit rather than a bunch of retired geologists with nothing to gain.

The car companies could easily have kept fuel prices down if they had wanted to. Just don't ever mass market any vehicle that doesn't do at least 100km on 10 litres. Not hard at all, most consumers just buy what they're sold by the industry, but smaller cars = smaller profits. 

Even in 2008 most car manufacturers still rate performance in terms of acceleration etc rather than efficiency - a point that will seem incredible in an historical context. Incredible that so many consumers fall for it despite wars for oil, climate change, soaring prices and so on.

Nothing "wrong" with that guzzler as such though. It's a free society and so on where we all make choices. But anyone complaining about the cost of petrol for private motoring (farmers etc have a valid point though) has a lot in common with the person who leaves school at age 16 and then complains that they're not earning at least $100K. 

All of this is said in a friendly manner though. Kind of a sort of payback for all those "why'd you buy a 4 cylinder car" comments. Funny how nobody has asked me that in the past few months... :


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> .... All of this is said in a friendly manner though. Kind of a sort of payback for all those "why'd you buy a 4 cylinder car" comments. Funny how nobody has asked me that in the past few months... :




Smurf, listen to moi.. listen to moi! Now, I've got ONE word to say to you...

*G.O.G.G.O.M.O.B.I.L.E.* 



AJ


----------



## Aussiejeff

*Re: OIL AGAIN!*

More of the same.....

_"Oil surged to a record peak near *$US127* [overnight] after OPEC producer Iran said it was studying a plan to cut output despite signs record-high prices are hurting consumer nations."_

http://business.theage.com.au/oil-hits-record-after-iran-threat/20080514-2dyb.html

How service stations in Wodonga, VIC, have been holding ULP under $1.45 for the past week and a half while oil has spiralled up into the stratosphere is beyond me....I seem to remember way back when oil was at a mere $95 barrel or so, ULP here had climbed at one point to $1.47 litre!! 

Is there a "ULP Price vs Oil Price Dartboard Game" that someone in a higher place is playing?


AJ


----------



## Tysonboss1

*Re: OIL AGAIN!*



Smurf1976 said:


> The car companies could easily have kept fuel prices down if they had wanted to. Just don't ever mass market any vehicle that doesn't do at least 100km on 10 litres. Not hard at all, most consumers just buy what they're sold by the industry, but smaller cars = smaller profits.




Exactly, it can be shown by the fact that General motors stopped manufacturing electric vechicles as soon as the californian mandate that forced them to do it was dropped,....

Once the clean Air mandate was dropped they stopped production on the electric vehicles and Bought the rights to manufacture Hummers.


----------



## Tysonboss1

*Re: OIL AGAIN!*



Aussiejeff said:


> More of the same.....
> 
> _"Oil surged to a record peak near *$US127* [overnight] after OPEC producer Iran said it was studying a plan to cut output despite signs record-high prices are hurting consumer nations."_
> 
> http://business.theage.com.au/oil-hits-record-after-iran-threat/20080514-2dyb.html
> 
> How service stations in Wodonga, VIC, have been holding ULP under $1.45 for the past week and a half while oil has spiralled up into the stratosphere is beyond me....I seem to remember way back when oil was at a mere $95 barrel or so, ULP here had climbed at one point to $1.47 litre!!
> 
> Is there a "ULP Price vs Oil Price Dartboard Game" that someone in a higher place is playing?
> 
> 
> AJ




Lets hope and pray that the Aussie $$$ doesn't weaken to the US$$$...

It's the only thing that has been insulating us over the past 5 years,...

Imagine what the fuel price would be if we went back to 2002 when it was nearly A$1.00 for US$0.50 a barrel of oil would be costing $240 Australian dollars,...

The fuel tax system also should be changed,... It should be a set figure per litre sold,... say 30c per litre,.... not a 30% per litre tax,..... it's just making it worse.


----------



## ShareIt

*Re: OIL AGAIN!*

why do you keep posting charts up acouch... anyways, what ever makes you happy!

Wanted to point out that oil has failed this whole week to make a new closing high and has tried on several occassions... with caution, this top is looking set in place...


----------



## Aussiejeff

*Re: OIL AGAIN!*



ShareIt said:


> why do you keep posting charts up acouch... anyways, what ever makes you happy!
> 
> Wanted to point out that oil has failed this whole week to make a new closing high and has tried on several occassions... with caution, this top is looking set in place...




What about the Saudis overnight snubbing GWB's plea for more oil production? Might set another takeoff point?

AJ


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> why do you keep posting charts up acouch... anyways, what ever makes you happy!
> 
> Wanted to point out that oil has failed this whole week to make a new closing high and has tried on several occassions... with caution, this top is looking set in place...



Lucky it's not three strikes and you are out!
Presently the oil market is being well bought into on price weakness, as evidenced by a dip into the low $120s during the week that was very, very shortlived.
It shows that oil's "bullishness" is not yet exhausted in the short term, although a correction is warranted.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Or a classic megaphone top/whipsaw?


----------



## ShareIt

*Re: OIL AGAIN!*




rederob said:


> Lucky it's not three strikes and you are out!
> Presently the oil market is being well bought into on price weakness, as evidenced by a dip into the low $120s during the week that was very, very shortlived.
> It shows that oil's "bullishness" is not yet exhausted in the short term, although a correction is warranted.




yes, your right... lucky for me Correction is warranted... but overall long trend is bullish... a pullback to $100 - $115 would be great buying... It wouldn't suprise me to see a drop to $100 so the institutions can load up.

That rebound, mmmm I think it has more to do with options expiration... but now that is out of the way, we shall see.


----------



## ShareIt

*Re: OIL AGAIN!*



Uncle Festivus said:


> Or a classic megaphone top/whipsaw?




well spotted.... the bears "usually" get the upper hand in this one


----------



## Uncle Festivus

*Re: OIL AGAIN!*

And a possible negative demand fundamental 'going forward' 

http://www.oecd.org/dataoecd/18/44/40600016.pdf


----------



## ithatheekret

*Re: OIL AGAIN!*

I think we're just a few weeks away from the US Memorial day , the last Mem. day , oil had peaked then corrected . It could be the same catalyst for a correction coming up again , but it does not mean the oil bull market is finished , just taking a cyclical pause .....................


----------



## Tysonboss1

*Re: OIL AGAIN!*

Does anybody have any thoughts on beach petroleum.ltd.

I thinking of taking a postion just looking for any thoughts or opinions people had on ths stock.


----------



## ShareIt

*Re: OIL AGAIN!*



Tysonboss1 said:


> Does anybody have any thoughts on beach petroleum.ltd.
> 
> I thinking of taking a postion just looking for any thoughts or opinions people had on ths stock.




Definately in a bullish pattern... break out, pull back, break out, pull back... the problem is that the last day has shown some weakness (heavy volume on a topping tail candle)... it is going to pull back again... i would be a buyer at the $1.25 - $1.27 ish mark


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

*Iran oil minister sees no need for OPEC meeting*

TEHRAN, May 18 (Reuters) - The Iranian oil minister said in remarks published on Sunday that he did not see the need for an emergency meeting of OPEC and expected crude prices to rise with any weakening in the U.S. dollar. 

Oil prices shot to a record high on Friday near $128 despite an offer of more supply from Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.

"I believe there is no need for an (emergency) OPEC meeting, until/or after oil breaches $150.00 per barrel and Jessica Wabbit and i share an icy cold beer" Gholamhossein Nozari told Fars News Agency when asked if the group should meet before a scheduled gathering in September. "Why should there be this meeting when oil prices go up and ice cold beer is only $23.00 away?"

"Currently, OPEC members are using their full capacity and are supplying their oil (to the market) ... With oil at $126 (a barrel), it is not wise for those who have oil not to supply it," he said in an interview that Fars said took place last week.

"As long as the decrease in the dollar's value continues, oil prices will continue to rise. I believe that it is not oil becoming more expensive, it is the dollar becoming cheaper," the minister said. (Reporting by Zahra Hosseinian; Editing by Alan Raybould) 

Wasikly Wabbits


----------



## professor_frink

*Re: OIL AGAIN!*

From the telegraph today - 

http://www.news.com.au/dailytelegraph/money/story/0,26860,23717490-5015799,00.html



> *Profit from the oil price boom*
> THE price of oil is hitting new highs, crippling motorists and businesses across the world.
> 
> According to the first Sensis Consumer Report for 2008 -- one of the nation's best indicative surveys -- rising petrol costs are officially the number one concern for Australian residents.
> 
> Last week crude oil reached a staggering $127 a barrel, and experts say these record highs appear well supported in the short term by healthy demand and concerns about supply.
> 
> But rather than moan and groan, analysts are suggesting savvy consumers adopt a classic, perhaps even cliched, approach to hedge themselves against the surging prices.
> If you can't beat them, join them. Or in this case, buy them.




"Death of equities" anyone??

:run:


----------



## ShareIt

*Re: OIL AGAIN!*



professor_frink said:


> From the telegraph today -
> 
> http://www.news.com.au/dailytelegraph/money/story/0,26860,23717490-5015799,00.html
> 
> 
> 
> "Death of equities" anyone??
> 
> :run:




nope, correction just around the corner


----------



## Uncle Festivus

*Re: OIL AGAIN!*

If you can believe OPEC????

*LONDON:* Opec yesterday trimmed its forecast for global growth in oil demand in 2008, the latest sign that record oil prices are slowing consumption in the industrialised world. 

The exporter group also cut its estimate for oil supply from non-member countries in 2008, leading to a slight increase in the amount of crude its 13 members need to pump to balance the market. 
World oil demand will rise by 1.16mn bpd this year led by Asia, the Middle East and Latin America, 40,000 bpd less than the previous forecast

http://www.gulf-times.com/site/topi...=218653&version=1&template_id=48&parent_id=28

___________________________________

The Bush administration yesterday halted purchases of crude oil for the nation's Strategic Petroleum Reserve, reversing its policy on the emergency reserve three days after Congress voted overwhelmingly in favor of suspending the purchases to ease the upward pressure on oil prices. 

Bush's reversal came on the day that Saudi Arabia announced that it was increasing its output by 300,000 barrels a day for the month of June

Oil markets treated both announcements skeptically

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/16/AR2008051603579.html


----------



## professor_frink

*Re: OIL AGAIN!*



ShareIt said:


> nope, correction just around the corner




 By death of equities, I meant this.

I know that the Sunday telegraph isn't exactly businessweek, but it was pretty much what the article reminded me of


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> nope, correction just around the corner



Is it the corner after last night's record close I wonder.
Or is it a blind corner.
Short sighted!


----------



## Uncle Festivus

*Re: OIL AGAIN!*

All roads lead to Goldman Sachs in this little market manipulation excercise. 

It's still hitting intraday records, but the daily thrust's we have been used to are losing momentum. When GS determines the time is right they will dump like they did before, or are memories that short? 

It's getting very ICEy? Follow the money trail?


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> Is it the corner after last night's record close I wonder.
> Or is it a blind corner.
> Short sighted!




If you look at price action and volume, prices have remained at the current approx level, but volume is increasing... looks like a transfer of risk from the big guy to the little...


----------



## haunting

*Re: OIL AGAIN!*

http://www.engdahl.oilgeopolitics.net/print/Oil%20Speculation.html

- PERHAPS 60% OF TODAY'S OIL PRICE IS PURE SPECULATION


----------



## rederob

*Re: OIL AGAIN!*



haunting said:


> http://www.engdahl.oilgeopolitics.net/print/Oil%20Speculation.html
> 
> - PERHAPS 60% OF TODAY'S OIL PRICE IS PURE SPECULATION






> By F. William Engdahl, 2 May 2008
> _By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.
> 
> As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices._



Engdahl has a classic case of manipulating information to suit a purpose.
It would surprise few people to learn that US oil stocks (reserves of oil squirreled away) have increased in the past 8 years.
So too has the US population, the number of vehicles on the road, and the size of their engines.
He forgot to notice, however, that in the past 2 years, oil inventories have actually been declining.  In fact commercial crude inventories are down over 16% in the past year.
Maybe 60% of the writers on oil believe what they spruik.
Shame they are not too bright.


----------



## haunting

*Re: OIL AGAIN!*

Not seeking an argument here. I was focusing on this section. The subprime problem was caused by the deregulation of banks and the loss of control and monitoring on the sector (esp. on the CDO). No one can rule out a similar problem in the unregulated exchanges in the futures market.

_As that US Senate report noted:

“Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called “futures look-alikes.”

The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.

The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC’s primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: “The Commission’s Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation.”

In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts (“open interest”) at the end of each day.”

Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration’s CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London – called “ICE Futures.”

Previously, the ICE Futures exchange in London had traded only in European energy commodities – Brent crude oil and United Kingdom natural gas. As a United Kingdom futures market, the ICE Futures exchange is regulated solely by the UK Financial Services Authority. In 1999, the London exchange obtained the CFTC’s permission to install computer terminals in the United States to permit traders in New York and other US cities to trade European energy commodities through the ICE exchange._


----------



## rederob

*Re: OIL AGAIN!*



haunting said:


> Not seeking an argument here. I was focusing on this section. The subprime problem was caused by the deregulation of banks and the loss
> 
> _As that US Senate report noted:..._



Me neither.
The senate Report is 2 years old.
The "facts" of the linked article are dubious.
A lot has happened in fundamental terms since crude output peaked in 2005.
To lay the price increase mostly on speculation is drawing a long bow, in my book.
There is speculation in all markets.
However, where the speculators are also taking delivery of oil somewhat debunks the concept of speculation!


----------



## rederob

*Re: OIL AGAIN!*



ShareIt said:


> If you look at price action and volume, prices have remained at the current approx level, but volume is increasing... looks like a transfer of risk from the big guy to the little...



If you look at price action, prices have been constantly increasing.
wavepicker's retrace to the "teens" before another rally never occurred.

Another record close overnight - $129.01 as I post and knocking on the door of $130


----------



## Uncle Festivus

*Re: OIL AGAIN!*



> Crude oil rose above $129 a barrel in New York for the first time after billionaire hedge-fund manager Boone Pickens said oil will reach $150 a barrel this year because supply isn't keeping up with demand.




He's got a great track record - 



> Pickens's BP Capital Energy Equity Fund fell 14 percent in the first two months of the year amid soaring prices for natural gas and crude oil. He told CNBC on Feb. 21 that he was short on both oil and natural gas.
> ``Pickens is well respected in the industry, even though he made the mistake of shorting oil in February,'' said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Kentucky.




Self perpetuating bull ramp speculation?



> The weakening dollar prompted the purchase of commodities as a hedge against the currency's decline.




Which is it - demand or a $US play?

Where are these demand figures that seemingly go up every day??


----------



## Aussiejeff

*Re: OIL AGAIN!*



Uncle Festivus said:


> He's got a great track record -
> 
> 
> 
> Self perpetuating bull ramp speculation?
> 
> 
> 
> Which is it - demand or a $US play?
> 
> Where are these *demand* figures that seemingly go up every day??




I *demand* an explanation!


----------



## pilbara

*Re: OIL AGAIN!*



Uncle Festivus said:


> Which is it - demand or a $US play?



I have heard this year there's has been a 95 percent correlation between $US and Euro exchange rate movements, and the price in $US of oil.  Hedging $US is a major factor in the oil price.

Regarding demand, there are no large stockpiles of oil sitting around.  Whatever is refined is consumed.  There is only a small shortfall between supply and demand but it's the fragility of supply that's putting a price premium, there's no slack in the system and there's continual supply problems like North Sea, Nigeria etc.

Also already built into the price is the projected future growth in demand from BRIC nations.

The demand for oil is unresponsive to price increases, it's inelastic demand, so we need very large price increases for demand to fall significantly.  In the commercial sector there is already a major trend towards substitition of oil to natural gas, which is now the hottest energy sector.

From my own investment point of view, I needed to know whether oil was gonna break through the $120 level, before making investments in oil company stocks.  It was a big decision for me because I had to sell some tech stocks to buy the oil stocks and I wanted to make sure oil wasn't going to rebound down into the teens, or down to the $100 mark.


----------



## ShareIt

*Re: OIL AGAIN!*



rederob said:


> If you look at price action, prices have been constantly increasing.
> wavepicker's retrace to the "teens" before another rally never occurred.
> 
> Another record close overnight - $129.01 as I post and knocking on the door of $130




Just get ready.... the more I see it go up, the bigger the smile on my face


----------



## karundus

*Re: OIL AGAIN!*

What goes up must come down...


----------



## agro

*Re: OIL AGAIN!*



karundus said:


> What goes up must come down...




lol, they been saying that for a while now - although in the best interest of the consumer i would like to see it down, i can't see it happening

i herd they marked 150 for oil


----------



## Uncle Festivus

*Re: OIL AGAIN!*



pilbara said:


> The demand for oil is unresponsive to price increases, it's inelastic demand, so we need very large price increases for demand to fall significantly. In the commercial sector there is already a major trend towards substitition of oil to natural gas, which is now the hottest energy sector.




Isn't substitution responsive?? Each dollar it goes up someone either has to pay more for something or someone else gets less profit (apart from the suppliers), to the point where it's unprofitable eg airlines going bankrupt or passing the costs on resulting in fewer customers and so on down the line.

The daisy chain negative vortex sucking the global economy down?


----------



## MRC & Co

*Re: OIL AGAIN!*

Yes Uncle, that is correct.

Oil, as far as direct consumption from your local service station is inelastic.

However, oil is part of the value added in just about every product produced throughout the world, so as such, will show elasticity.


----------



## pilbara

*Re: OIL AGAIN!*

I agree substitution is responsive but not yet happening enough in consumer sector.  In industry it's already happened ... for decades taxis have run on natural gas but it's gonna take a while to replace every petrol guzzling car in the world.  Another problem is that Chinese government subsidizes petrol cost to the consumer, so no slowdown there yet. In Brazil diesel is heavily subsidized by the government.



> The struggle to find oil coincides with a boom in demand from places like China and the Middle East, where it will rise 4.9 percent this year, making up for a drop in demand from North America and Europe, the International Energy Agency said in a report May 13.



http://www.bloomberg.com/apps/news?pid=20601087&sid=a79UU6p.il.s&refer=home


----------



## michael_selway

*Re: OIL AGAIN!*



Uncle Festivus said:


> Isn't substitution responsive?? Each dollar it goes up someone either has to pay more for something or someone else gets less profit (apart from the suppliers), to the point where it's unprofitable eg airlines going bankrupt or passing the costs on resulting in fewer customers and so on down the line.
> 
> The daisy chain negative vortex sucking the global economy down?




They will pass it onto consumers

Thing is Australian's have accumulated quite a bit of wealth over the last few years, so these higher costs wont be felt as such, maybe later on

thx

MS



> May 21 (Bloomberg) -- Oil prices are heading to almost $140 a barrel in the next eight years, according to futures contracts on the New York Mercantile Exchange, on concern that growth in supply may fail to keep pace with rising demand.
> 
> Oil for delivery in December 2016 surged $17.08, or 14 percent, in the three trading days since Goldman Sachs Group Inc., the world's biggest securities firm by market value, forecast oil would average $141 in the second half of 2008 on constraints in production and a lack of substitutes. Crude for July 2008 climbed 1.9 percent in the same period.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Looking forward to $150.00 oil and cracking the top off one of Wavepickers beers, if we break $130.00 tonight a change of underwear could be in order for the shorters.....................

'Just get ready.... the more I see it go up, the bigger the smile on my face', must agree with you there Shareit, my Cue Energy Resources shares are well on their way to showing me a 200% profit. 

Its been a dream ride.................and i reckon there is plenty more in the tank yet!

The smaller oilers are going to need to be revalued if oil holds above $120.00 or increases towards $150.00. CUE based there revenue projections on $55.00 a barrel, not much more needs to be said.


JW - happy days


----------



## michael_selway

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Looking forward to $150.00 oil and cracking the top off one of Wavepickers beers, if we break $130.00 tonight a change of underwear could be in order for the shorters.....................
> 
> 'Just get ready.... the more I see it go up, the bigger the smile on my face', must agree with you there Shareit, my Cue Energy Resources shares are well on their way to showing me a 200% profit.
> 
> Its been a dream ride.................and i reckon there is plenty more in the tank yet!
> 
> The smaller oilers are going to need to be revalued if oil holds above $120.00 or increases towards $150.00. CUE based there revenue projections on $55.00 a barrel, not much more needs to be said.
> 
> 
> JW - happy days




How long have you held CUE for an whats the expected mine life of CUE atm?

thx

MS


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hi Michael,

Held Cue since December 2006, bought at 12.5cents

Go to this link and read the 2007 Annual Report/Operations - easier than me trying to type it all. It provides a good outline of whats happening. Check out a few of the more recent announcements as well.

http://cuenrg.onlinepublicity.net/index.php?id=13

Singapore Pertoleum Company was buying large quantities ofstock but since prices have recently increased they have gone quiet. They were buying anything 22.5 cents or lower.

We are currently drilling Cobra 1 well and looking to begin production in the Maari field before years end.

Gas to begin to come on stream next year and ramping up through 2009.

Looks pretty good and if we can find a large oil or gas deposit along the way it should give the SP a nice kick along.

Mind you, $150.00 oil should go a long way to providing a catalyst.

JW


----------



## wayneL

*Re: OIL AGAIN!*

Just a point that most won't have noticed, oil futures have gone into contango right throughout the whole strip. This is not normal for oil, backwardation is normal.

http://www2.barchart.com/dfutpage.asp?sym=CL&code=BSTK&section=energies

Make of that what you will.


** Contango => deferred contracts are more expensive as you get further out in expiry

** Backwardation => deferred contracts are cheaper as you get further out in expiry


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> *LONDON:* Opec yesterday trimmed its forecast for global growth in oil demand in 2008, the latest sign that record oil prices are slowing consumption in the industrialised world.




A very convenient justification for OPEC to not raise production - because they can't.



> Bush's reversal came on the day that Saudi Arabia announced that it was increasing its output by 300,000 barrels a day for the month of June




Hmm... A one month increase. Anyone with a few tanks can draw 300,000 barrels per day out of them for a month. This would certainly fit with the recent pattern of short term output hikes that aren't sustained.



> Oil markets treated both announcements skeptically




Starting to wake up... 

A few observations of my own on this subject:

1. For the past couple of weeks petrol seems to be _the_ hot topic wherever I go - and that's mostly amongst non-energy people. The notion that the days of cheap oil are over seems to be setting in even amongst those with boats or performance cars, both of which use lots of the stuff.

2. I ordered a large volume of a common plastic product this week. Bottom line is none in stock with the usual supplier, none in the state (Tas) and none immediately available from that company in Melbourne either. And, this is what really set the alarm bells ringing, the manufacturer (in Vic I assume) has run out of raw materials thus can not quote a delivery date. 

Whilst I ended up paying a 20% price premium to go with another supplier who had stock, it's a worrying sign to realise that the situation has come to this. It could be a coincidence, but they've never run out before to my knowledge. 

At best the manufacturer was speculating on a fall in materials prices and got it wrong. At worst there's an outright shortage that is starting to show up.


----------



## wayneL

*Re: OIL AGAIN!*

Another view fwiw (for interest sake):



> I was an oil trader and this contango is not, I repeat NOT a positive sign for the oil market.
> 
> When the prompt price of any commodity falls below the futures price that is a strong fundamental inidicator that people who wish to buy real physical commodity for real immediate use are not concerned about the availability of supply. If people were concerned then the market would be in a very strong backwardation - with prompt prices far higher than futures prices. It has not been in that position for the whole of the last year. This rise in futuires prices is purely speculative in my view.
> 
> In the case of the fundamental physical oil market we know that US refineries are not running at full capacity, we know that Iran is storing heavier crudes on oil tankers because they cannot find a market for it.
> 
> The run up in futures prices is being driven by speculative investors who have absolutley no intention of taking delivery of that oil or have any physical end use for it.
> 
> We also know that real physical oil demand in the US is below that of last year. High prices are doing their work - creating a slump in demand at the same time as new capacity is being brought on the market.
> 
> I expect a very sharp and rapid collapse in the oil market when speculators attempt to close their positions.
> 
> At the moment it costs about 10c per barrel per day to store oil and no one wil be able to just take delivery and hope for the best - futures positions will have to be closed as the price slumps and I fully expect to see the NYMEX go limit down with positions being forced to mass liquidation and bankruptcies of some speculative funds.
> 
> I have a vested interest in taking this view point and no one should be under any illusion that I know anything 'secret'. This is a high risk market and not one that anyone should take positions on unless thay are willing to accept very severe losses. My positions are in long dated put options - I am expecting a very large 'black swan' event drop in prices at some point but the timing is very uncertain. Fundamentals are ultra bearish in my view but the timing of the sell off to return the market to fundamentals cannot be predicted.


----------



## MRC & Co

*Re: OIL AGAIN!*



michael_selway said:


> They will pass it onto consumers
> 
> Thing is Australian's have accumulated quite a bit of wealth over the last few years, so these higher costs wont be felt as such, maybe later on
> 
> thx
> 
> MS




Not always, depends on the market structure.  Many can simply not pass it on, this is why Monopoly (both buyer and seller) power is of such paramount importance in these times.  

Only certain Australian's have accumulated wealth, I bet many in rural areas are really struggling!


----------



## MRC & Co

*Re: OIL AGAIN!*



wayneL said:


> Just a point that most won't have noticed, oil futures have gone into contango right throughout the whole strip. This is not normal for oil, backwardation is normal.
> 
> http://www2.barchart.com/dfutpage.asp?sym=CL&code=BSTK&section=energies
> 
> Make of that what you will.
> 
> 
> ** Contango => deferred contracts are more expensive as you get further out in expiry
> 
> ** Backwardation => deferred contracts are cheaper as you get further out in expiry




Good point Wayne, this is genearlly bullish is it not?  No bother, just read your next post.  

Not sure how long Contango has been in effect, but I just noticed the same earlier this afternoon......


----------



## wayneL

*Re: OIL AGAIN!*



MRC & Co said:


> Good point Wayne, this is genearlly bullish is it not?
> 
> Not sure how long Contango has been in effect, but I just noticed the same earlier this afternoon......




The reasons for contango/backwardation are not always straightforward and/or transparent, that's why I posted the bearish trader's view. I don't know whether it's bullish or not, but worth highlighting anyway.


----------



## MRC & Co

*Re: OIL AGAIN!*

Ah k.

Who knows, that bearish trader may have a way out of the money, long dated put, so he stands to loose little and make a dime or two!


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Gentlemen,

You know i have my money on $150.00 oil, but, the way i see it is that you just trade the trend no matter which way it goes whether you are buying/selling commodities or equities.

You have to be bonkers to get in the way of a strongly trending commodity or equity thinking you can pick the top or bottom. I would have thought it would be much wiser to go with the trend with a trailing stop loss then once you get closed out wait for the market to clearly show you it has reversed then go short and ride the opposite direction.

Well, thats my plan. If you take profits along the way and slowly reduce your holdings as the price rises you put yourself in an even stronger position and reduce your risk.

Obviously oil will take a breather or have a reversal at some time but i thought that with very strong trending patterns the biggest push is always just before the reversal. If thats the case then oil should run further and stronger before it reverses.

So my opinion is that you should be long with a trailing stop until it clearly shows you it has reversed the trend, then just go short?

Regardless of what the bears are saying the price is still rising, i will get off when it is clearly falling.

Seems logical to me.........................


----------



## wayneL

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Gentlemen,
> 
> You know i have my money on $150.00 oil, but, the way i see it is that you just trade the trend no matter which way it goes whether you are buying/selling commodities or equities.
> 
> You have to be bonkers to get in the way of a strongly trending commodity or equity thinking you can pick the top or bottom. I would have thought it would be much wiser to go with the trend with a trailing stop loss then once you get closed out wait for the market to clearly show you it has reversed then go short and ride the opposite direction.
> 
> Well, thats my plan. If you take profits along the way and slowly reduce your holdings as the price rises you put yourself in an even stronger position and reduce your risk.
> 
> Obviously oil will take a breather or have a reversal at some time but i thought that with very strong trending patterns the biggest push is always just before the reversal. If thats the case then oil should run further and stronger before it reverses.
> 
> So my opinion is that you should be long with a trailing stop until it clearly shows you it has reversed the trend, then just go short?
> 
> Regardless of what the bears are saying the price is still rising, i will get off when it is clearly falling.
> 
> Seems logical to me.........................




Absolutely.

But fundamental ruminations and technical trading can be be at odds with each other... in other words, just discussion here. So far this year, probably 80% of my trades have been against my fundamental opinion (clearly, the majority disagree ).

So "Never fight the tape", is the best opinion... in my opinion.


----------



## MRC & Co

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> If you take profits along the way and slowly reduce your holdings as the price rises you put yourself in an even stronger position and reduce your risk.
> 
> Obviously oil will take a breather or have a reversal at some time but i thought that with very strong trending patterns the biggest push is always just before the reversal. If thats the case then oil should run further and stronger before it reverses.




Or you can pyramid into more positions as it goes your way, helps also to decrease risk, and dramatically increase reward!

This could well be the biggest push, oil has gone para lately!  But that, you never know.  

Just ensure you have your stop trailed as you say, which is the hardest part of the entire game IMO!


----------



## rederob

*Re: OIL AGAIN!*



wayneL said:


> The reasons for contango/backwardation are not always straightforward and/or transparent, that's why I posted the bearish trader's view. I don't know whether it's bullish or not, but worth highlighting anyway.




A similar trend has been occurring in the aluminium market.
There is plenty aluminium.
There is plenty oil.
The forward costs of production for aluminium are responding to the price of energy.
The cost of energy is also responding to energy costs.  That is, nobody sees these costs as decreasing into the future, so the unit cost of extraction must increase and is reflected in futures contracts.

The oil trader's comments on refinery capacity and Iranian crude storage were furpheys.  US refineries are not running at capacity because they cannot extract a reasonable price margin on the finished ("cracked") product.  That is, refineries are refusing to crack crude at a loss.  Meanwhile, the quantity of crude that Iranian tankers could store (if they are indeed storing any\much) will have no impact on present prices: The US goes through 10 supertankers of oil per day.

There is little doubt that oil MUST correct.
The questions of relevance are when, and by how much.
My vested interest lies in a good sum of money waiting in the wings for " fair value" to return to the underlying oil equities I typically invest in.

Closing remark: Oil now traded over $130 for a few hours without let up.


----------



## michael_selway

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Gentlemen,
> 
> You know i have my money on $150.00 oil, but, the way i see it is that you just trade the trend no matter which way it goes whether you are buying/selling commodities or equities.
> 
> You have to be bonkers to get in the way of a strongly trending commodity or equity thinking you can pick the top or bottom. I would have thought it would be much wiser to go with the trend with a trailing stop loss then once you get closed out wait for the market to clearly show you it has reversed then go short and ride the opposite direction.
> 
> Well, thats my plan. If you take profits along the way and slowly reduce your holdings as the price rises you put yourself in an even stronger position and reduce your risk.
> 
> Obviously oil will take a breather or have a reversal at some time but i thought that with very strong trending patterns the biggest push is always just before the reversal. If thats the case then oil should run further and stronger before it reverses.
> 
> So my opinion is that you should be long with a trailing stop until it clearly shows you it has reversed the trend, then just go short?
> 
> Regardless of what the bears are saying the price is still rising, i will get off when it is clearly falling.
> 
> Seems logical to me.........................




The thing is sometimes with shares like BKN, AED and many others, share price can drop 40% in one day (stop loss wont work) 

It all comes down to risk/reward, or what you percieve the risk/reward are when you buy or sell a stock at any given time 

thx

MS


----------



## nizar

*Re: OIL AGAIN!*



michael_selway said:


> The thing is sometimes with shares like BKN, AED and many others, share price can drop 40% in one day (stop loss wont work)




Like in life, there can be, and is, no guarantees in the markets.

Those who bought BKN based on earnings, or management, or whatever it is they looked at, ALL WOULD HAVE copped the 40% loss.

These black swan events happen to even the very best traders, the key is to be able to survive them.

And this actually has nothing to do with risk/reward.


----------



## Whiskers

*Re: OIL AGAIN!*



wayneL said:


> Another view fwiw (for interest sake):
> 
> 
> 
> 
> Quote:
> I was an oil trader...
> 
> 
> We also know that real physical oil demand in the US is below that of last year. High prices are doing their work - creating a slump in demand at the same time as new capacity is being brought on the market.
Click to expand...



I saw and posted an article somewhere a few months ago about huge oil-sand deposits in Canada gearing up production. I wonder if this is the new capacity he is talking about.

I recall they were producing well over 1m barrels per day from reserves of something like the Saudi's... I think it was over 700 billion barrels and increasing.

Recent reports are indicating that the available oil-sand leases are just about all taken up, the big players are moving in and that exponential production increases are likely over the next few years. Some weeks ago production was estimated to increase to 4m bpd by abt 2020. Given that production started there at much lower prices... I think more like $40... if prices remain at these levels, I would imagine production could and would be geared up more quickly. 

The US consumption has fallen close to 1m bpd in the last year and from reports consumers and airlines are cutting back trips and flying time. Quite probably demand destruction setting in. If the yanks get serious about oil conservation and ditch their gas guzzlers for fuel efficient smaller fours, and with more fuel efficient aircraft coming on stream and if they got out of Iraq, they surely could easily cut their demand by another 2 or 3m bpd, back to maybe 17m bpd... that would be a decrease of about 20%.

Then if Canada's oil-sands produced 3 to 4m bpd in a few years , not counting any other new supplies, that would be getting near 20% of US consumption 

So if high prices are driving exponential development of non OPEC sources, alternatives to oil and demand destruction... what is the likely outcome?

Well if nothing else, a weakening of OPEC's cartel. 

Apparently they have large oil and gas reserves off the 85% of their coastline that congress has banned from drilling. Cuba in partnership with China are drilling closer to the US coast than the US is. http://www.chron.com/disp/story.mpl/editorial/outlook/5793614.html

Then there is the large national parks in Alaska that reportedly contain oil.  

The US just isn't that desperate yet... and I doubt OPEC would want to push them that far.

I believe there is still a slight excess supply over demand even as the US slowly builds reserves which leads me to also believe this is something of a speculative/panic driven oil price bubble which will burst soon.


----------



## Tysonboss1

*Re: OIL AGAIN!*



Whiskers said:


> I saw and posted an article somewhere a few months ago about huge oil-sand deposits in Canada gearing up production. I wonder if this is the new capacity he is talking about.
> 
> I recall they were producing well over 1m barrels per day from reserves of something like the Saudi's... I think it was over 700 billion barrels and increasing.
> 
> Recent reports are indicating that the available oil-sand leases are just about all taken up, the big players are moving in and that exponential production increases are likely over the next few years. Some weeks ago production was estimated to increase to 4m bpd by abt 2020. Given that production started there at much lower prices... I think more like $40... if prices remain at these levels, I would imagine production could and would be geared up more quickly.
> 
> The US consumption has fallen close to 1m bpd in the last year and from reports consumers and airlines are cutting back trips and flying time. Quite probably demand destruction setting in. If the yanks get serious about oil conservation and ditch their gas guzzlers for fuel efficient smaller fours, and with more fuel efficient aircraft coming on stream and if they got out of Iraq, they surely could easily cut their demand by another 2 or 3m bpd, back to maybe 17m bpd... that would be a decrease of about 20%.
> 
> Then if Canada's oil-sands produced 3 to 4m bpd in a few years , not counting any other new supplies, that would be getting near 20% of US consumption
> 
> So if high prices are driving exponential development of non OPEC sources, alternatives to oil and demand destruction... what is the likely outcome?
> 
> Well if nothing else, a weakening of OPEC's cartel.
> 
> Apparently they have large oil and gas reserves off the 85% of their coastline that congress has banned from drilling. Cuba in partnership with China are drilling closer to the US coast than the US is. http://www.chron.com/disp/story.mpl/editorial/outlook/5793614.html
> 
> Then there is the large national parks in Alaska that reportedly contain oil.
> 
> The US just isn't that desperate yet... and I doubt OPEC would want to push them that far.
> 
> I believe there is still a slight excess supply over demand even as the US slowly builds reserves which leads me to also believe this is something of a speculative/panic driven oil price bubble which will burst soon.





I would think we would need all of the factors you mentioned just to maintain oil price in the low $100's,... Even with the ramping up of oil sands the fact that conventional oil is declining willbe offsetting any extra production from the oil sands,...

I would hate to see oil sands mining become wide spread, it's just to destructive, open cut strip mines scar the earth for to long.


----------



## Aussiejeff

*Re: OIL AGAIN!*

*"Oil Companies Say Prices Should Be $35-$90 a Barrel"* 

Who is pulling who's big foot????

Link to a good laugh... http://www.bloomberg.com/apps/news?pid=20602099&sid=actpv8pjkuWQ&refer=energy


----------



## ShareIt

*Re: OIL AGAIN!*



Aussiejeff said:


> *"Oil Companies Say Prices Should Be $35-$90 a Barrel"*
> 
> Who is pulling who's big foot????
> 
> Link to a good laugh... http://www.bloomberg.com/apps/news?pid=20602099&sid=actpv8pjkuWQ&refer=energy




Iran could be behind all this.... if you think about it, higher prices weakens the US....  US is talking up a military strike on Iran (actually, whispering)... US most likely won't take action with prices already this high... oil is a very strategic play, but prices will pop


----------



## Whiskers

*Re: OIL AGAIN!*



Tysonboss1 said:


> I would hate to see oil sands mining become wide spread, it's just to destructive, open cut strip mines scar the earth for to long.




Yes, that is one of the issues slowing approval of some projects apparently.

But an insitue extraction method involving pumping steam into the deposit to melt the oil seems very sustainable, but this method relies on enough depth and suitable cover to trap in the steam and currently is the minor part of production.

Also Qld has considerable shale oil deposits. The Qld gov has previously said some estimates put reserves well over 20 billion barrels and potential production at 1m bpd. While greenpeace claimed credit for shutting down the Southern Pacific Petroleum  project a couple of years ago, I believe this project is under consideration for revival by new owners and another using new technology near Julia Creek is considering an IPO soon.


----------



## Tysonboss1

*Re: OIL AGAIN!*



ShareIt said:


> Iran could be behind all this.... if you think about it, higher prices weakens the US....  US is talking up a military strike on Iran (actually, whispering)... US most likely won't take action with prices already this high... oil is a very strategic play, but prices will pop




USA is still fighting in iraq and afganistan,..... forget about a strike on iran till it has cleaned up it's current mess in those two wars,...


----------



## haunting

*Re: OIL AGAIN!*



haunting said:


> _Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration’s CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London – called “ICE Futures.”_




http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/22/ccoil122.xml

-  Oil's perfect storm set to blow over. The following para catches my eyes, 2006 it seems is when it all started, with energy speculation mostly increased 3 times over since.

_Lehman's latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion's share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said._


----------



## Temjin

*Re: OIL AGAIN!*



haunting said:


> http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/22/ccoil122.xml
> 
> - Oil's perfect storm set to blow over. The following para catches my eyes, 2006 it seems is when it all started, with energy speculation mostly increased 3 times over since.
> 
> _Lehman's latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion's share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said._




That's what happens when central banks is flushing the economy with more bail-outs and free credit in an attempt to pop up the market, only to realise that the money is being flown to the commodity markets instead.


----------



## ithatheekret

*Re: OIL AGAIN!*

No I don't think so  , more down the line of where ever whenever we'll make a profit from you ................. sounds a bit like a Blooomberters ad .

I'm sticking with my projections and they're only based on a phase one catalyst at present .

Dr. Nelson has come out with an excise cut .... whooo fknhooo stuff 2 years too late and 2 years too early ,

Mind you I think the sun shines out his ......... 

If I were a sober and astute investor I'd be buying the dips , but at present I'm too pissed to give a ....

But even though the State has paid for my nights entertainment , I'm more than certain that oil will achieve a price average of $140 pb ....... actually $142.80 , so IMHO $120.60 -$142.80 will see us out until 2014 at least in the median range ...... unless the unexpected pops up and chits all over my calculations .

Margins will be protected ! The rest is in our Lords hands .......... apologies to our athiest members , but the pri.ks keep shifting the goal posts , the more they shift them the closer $200 will get !


----------



## ShareIt

*Re: OIL AGAIN!*

$5 dollar drop and counting, no bounce off the $130 mark.... channel 10 news dedicates 10 min of their late edition to oil, time to take profits... but caution still needed


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Na, still long on oil Shareit.

$5.00 drop in the scheme of $130.00 is not a sign of a reversal, you'll just have to keep your fingers, toes, arms and eyes crossed it goes down as you want, but, i reckon your wrong and $150.00 is on the cards.

Maybe you would also like to put a carton of beer on your prediction, i need to stock up the fridge and i'm long on beer futures at the moment and looking to take further positions.


JW


----------



## MRC & Co

*Re: OIL AGAIN!*

How are you trailing your stop Jessica and which instrument are you invested through?  

I'm 'hoping' for a retracement, I was thinking something more than 5 dollars, but it's back up a little as I type.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

I dont have a trailing stop set on my shares at present because i do not believe we are anywhere near the top of this bull run. Thats how confident i am that my Cue Energy Resources have only just commenced their run.

My profit is large enough tp take a correction if it was to happen, the money is all mine so i am under no pressure to sell. No need for a trailing stop for me because at present i think it is more of a risk and i am doing well with my discretional trades.

I could be wrong but i am backing myself, so far i have been correct and i am confident that i am right at present. If i am wrong i will wear it on the chin.

I think that China and India will grow quicker than expected and with it will come massive oil demand. I dont think people realise the scale of these countries as they evolve and westernise, lots of people and lots of demand.

The American economy and dollar looks nasty, so hedging against it buying oil looks likely to continue. The funny thing is, when they do turn around their economy, oil dmand will increase............ironic.

Sentiment, i think speculators want oil to go to between $150 -200, whether it is justified is irrelevant, if enough people think it will reeach these prices it will reach it.

The Saudis, can they actually pump more oil, got my doubts, i reckon its all smoke and mirrors. Just wait untl they say, sorry we just cant pump any more oil and our reserves are declining quicker than we realised. Oh dear, we will have a problem. 

Its not an infinate resource. People need to change their thinking, its not that oil is expensive, it is that it has been way too cheap for way too long. Start thinking like that and its a different picture.

But, if i was entering new positions at the moment i would put on a trailing stop, where and at what level depends on your individual situation and level of acceptable risk.

I would most likely set different stops as i pyramided into the market. Hard question to answer because there are many different answers and it depends on your own circumstances.

as for the high of oil before it turns, time will tell.


JW


----------



## MRC & Co

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> My profit is large enough to take a correction if it was to happen, the money is all mine so i am under no pressure to sell.
> 
> But, if i was entering new positions at the moment i would put on a trailing stop, where and at what level depends on your individual situation and level of acceptable risk.




Same difference, no?  Either way, you are loosing your own money!  Whether that be money you have earnt at work, or money made in the markets........

It appears you are more looking at long-term fundametals of oil and investing (which is also a very good idea IMO), as opposed to trading.

I gather by your reply, you are exposed to oil through direct shares?  Not through an ETF or futures contracts?  More prone to equity movements, for better or for worse.


----------



## michael_selway

*Re: OIL AGAIN!*



nizar said:


> Like in life, there can be, and is, no guarantees in the markets.
> 
> Those who bought BKN based on earnings, or management, or whatever it is they looked at, ALL WOULD HAVE copped the 40% loss.
> 
> These black swan events happen to even the very best traders, the key is to be able to survive them.
> 
> And this actually has nothing to do with risk/reward.




Nono, not only earnings but the price you pay for those earnings, its called expected return

some companies have great earnings, but there is a certain price you should pay for it otherwise, its nto worth buying (i.e. risk/reward)

thx

MS


----------



## Aussiejeff

*Re: OIL AGAIN!*



ShareIt said:


> $5 dollar drop and counting, no bounce off the $130 mark.... channel 10 news dedicates 10 min of their late edition to oil, time to take profits... but caution still needed




Not even the news that March US driving miles have plummeted the MOST EVER could prevent oil climbing back up another $1.38 to close at $131.59 (WTI)
http://www.bloomberg.com/apps/news?pid=20602099&sid=aITA.IZ8Acpo&refer=energy

Then there is the latest comment by the US Energy Secretary that even if the US dollar strengthened significantly, it wouldn't stop the oil price from rising... http://www.bloomberg.com/apps/news?pid=20602099&sid=asrGXF7ezZow&refer=energy

Throw in the self-fulfilling pressure from funds looking for a $150+ price within 6 months and it is hard to see any other way but up over that period....

IMO of course.


----------



## ShareIt

*Re: OIL AGAIN!*



Aussiejeff said:


> Not even the news that March US driving miles have plummeted the MOST EVER could prevent oil climbing back up another $1.38 to close at $131.59 (WTI)
> http://www.bloomberg.com/apps/news?pid=20602099&sid=aITA.IZ8Acpo&refer=energy
> 
> Then there is the latest comment by the US Energy Secretary that even if the US dollar strengthened significantly, it wouldn't stop the oil price from rising... http://www.bloomberg.com/apps/news?pid=20602099&sid=asrGXF7ezZow&refer=energy
> 
> Throw in the self-fulfilling pressure from funds looking for a $150+ price within 6 months and it is hard to see any other way but up over that period....
> 
> IMO of course.




Come on Aussie Jeff... do you really think markets drop in one day by huge % (unless we have some really bad unexpected news / good)? This $5 drop is a start... but it will go up and down, up and down... then the fear kicks in some where down the track and that's where you get the big drop.... you are trading the market i.e which is emotion, not the news


----------



## haunting

*Re: OIL AGAIN!*

Back to the Future - Steam Rules! A working external combustion engine!

http://www.popsci.com/scitech/article/2008-05/steam-under-hood

_By zealously reusing every possible bit of heat, steam engines can convert up to 46 percent of incoming energy into torque. Most gas-powered internal combustion engines, in contrast, are only about 25 percent efficient. Schoell’s prototype also emits much cleaner exhaust than a standard gas engine; unburned fuel sits in the combustion chamber until the engine fires up again, and eventually nearly all the waste particles and unused fuel are incinerated._


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> But even though the State has paid for my nights entertainment , I'm more than certain that oil will achieve a price average of $140 pb ....... actually $142.80 , so IMHO $120.60 -$142.80 will see us out until 2014 at least in the median range ...... unless the unexpected pops up and chits all over my calculations .



By 2014 if oil is not over $200 per barrel it will only be because demand destruction led more quickly to a viable energy alternative for motor vehicles.
Frankly, I can't see that happening so soon, but perhaps by 2020 our technologists have gotten their acts together and oil prices could stabilise.

Technically we all know that oil is extremely overbought.
So I checked the charts to see the potential range of a selldown, and it suggests a drop of 35% is possible over longer terms.  In other words, when the present oil price peaks, it is possible that a $50 fall could occur over a term around 6 months (to $85 if oil has already peaked). To get there, oil will need to crash through some interesting price points: Support at $120, at $110, and at $100
At $85 oil has formidable support.  If oil gets that low in coming months a mortgage on the house will be in order.
For the moment it is apparent that traders are buying into all of oil's dips, so there remains further upside before any blow-off top.  I am tipping a minor correction of $15 within the month, and a cycle peak of $170 before a major correction and period of consolidation.  I believe that $120 will prove support in the second half of 2008.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> I think that China and India will grow quicker than expected and with it will come massive oil demand. I dont think people realise the scale of these countries as they evolve and westernise, lots of people and lots of demand.
> 
> The American economy and dollar looks nasty, so hedging against it buying oil looks likely to continue. The funny thing is, when they do turn around their economy, oil dmand will increase............ironic.
> 
> Sentiment, i think speculators want oil to go to between $150 -200, whether it is justified is irrelevant, if enough people think it will reeach these prices it will reach it.
> 
> The Saudis, can they actually pump more oil, got my doubts, i reckon its all smoke and mirrors. Just wait untl they say, sorry we just cant pump any more oil and our reserves are declining quicker than we realised. Oh dear, we will have a problem.
> 
> Its not an infinate resource. People need to change their thinking, its not that oil is expensive, it is that it has been way too cheap for way too long. Start thinking like that and its a different picture.
> 
> But, if i was entering new positions at the moment i would put on a trailing stop, where and at what level depends on your individual situation and level of acceptable risk.
> 
> I would most likely set different stops as i pyramided into the market. Hard question to answer because there are many different answers and it depends on your own circumstances.
> 
> as for the high of oil before it turns, time will tell.
> 
> 
> JW




The Chindia 'call option' is not looking too flash at the moment. These countries have subsidised fuel, so they (the governments) are taking big hits, along with input price pressures & inflation. They would love to raise prices but risk civil unrest eg Indonesia. Wages are stagnating or going backwards. It's not going to happen in this cycle now. 

If this was a genuine lack of supply/increasing demand equation we would have global rationing going on. Queue's outside servos'? I still haven't seen any of this going on. For eg, Shell recently couldn't supply premium from their outlets - Caltex had plenty.

Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?


----------



## michael_selway

*Re: OIL AGAIN!*



Uncle Festivus said:


> The Chindia 'call option' is not looking too flash at the moment. These countries have subsidised fuel, so they (the governments) are taking big hits, along with input price pressures & inflation. They would love to raise prices but risk civil unrest eg Indonesia. Wages are stagnating or going backwards. It's not going to happen in this cycle now.
> 
> If this was a genuine lack of supply/increasing demand equation we would have global rationing going on. Queue's outside servos'? I still haven't seen any of this going on. For eg, Shell recently couldn't supply premium from their outlets - Caltex had plenty.
> 
> Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?




Have you heard this before:

"Global Recession with increasing prices in OIL, GOLD, COAL etc?"

thx

MS


----------



## haunting

*Re: OIL AGAIN!*

http://www.mcadforums.com/forums/files/michael_masters_written_testimony.pdf

- here is a report outlining how CFTC deregulation has created a commodity speculative "monster".

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3934155.ece

- here is a report on a country's reaction to rampant speculation in the commodity futures market. They resorted to barter trade! If this practice spreads, it would mean most of the commodity exchanges will be in trouble eventually. More than likely this will exert a lot of pressure on the law makers to "fix" the loop holes as reported in the Michael Masters' testimony.

Should the law makers go to work on fixing the regulatory loophole, I think, it is not going to be "pretty" for the big time speculators and the commodity market.

Not pretty at all.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Thanks Haunting,

interesting reading.

Only problem is that those bods in congress have close ties with the folks who are making money from high oil prices, so, i dont see them closing any loop holes anytime soon.

Its time for the world to feel the pain for being dumb asses for becoming so reliant on oil, i still think oil is cheap, just wait to the real price increases kick in then you'll here them screaming.

People are whinging at the moment but they can still cope, i think we need to go to $200.00 plus before they really have to change ther life styles. Plenty left in the tank!!!!

Well, it cost me $5.46 to fill my scooter last week, which gets me to and from work for the entire week. Food is going up but i am not hurting enough yet to change my habits.

Time will tell.........................still think $150.00 before any turn around.

JW


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?



You are assuming that supply will be able to meet demand in 12 months time.
Just remember that present crude output is unable to satisfy demand, which is supplemented by biofuels, NGLs and condensates.
In 5 year's time the jig's up: The numbers don't stack up and the shortfall will be in millions of barrels per day.
In 3 years time we might still be scraping by, as demand destruction caps global consumption and supply finds a tense equilibrium.
Unless there is a major paradigm shift, and soon, oil at $200 will be a certainty within 5 years.


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> In 5 year's time the jig's up: The numbers don't stack up and the shortfall will be in millions of barrels per day.



I'm convinced we'll see physical shortages at some point.

Anecdotally, there's plenty of evidence that non-oil industry (that is, consumer) stocks are already being seriously drawn down. And oil industry stocks are still falling despite that - consumption is clearly higher than production.

To make it worse, we've also been drawing down coal, uranium and hydro (water) as well. And guess what you do in the power industry when you don't have enough output from hydro, coal and nuclear sources? Yep, that's when you fire up those old oil-fired plants built in the 60's and 70's.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



michael_selway said:


> Have you heard this before:
> 
> "Global Recession with increasing prices in OIL, GOLD, COAL etc?"
> 
> thx
> 
> MS



Out of the 2 commodities and the currency, only one of those will keep going up?

High oil prices = global recession = low oil prices? Self correcting through demand destruction and/or supply substitution with newly viable technologies? The only questions now are how high is high enough for a global recession, or has it arrived already? It doesn't really matter why the price is high (demand or spec), the end result is the same.


----------



## MRC & Co

*Re: OIL AGAIN!*

I think the point of rederob is despite high oil prices, how fast can substitution take effect?  Probably very little impact over the short to medium-term.  

Demand destruction will occur, but how much of an impact will China/India have on this?  In the form of both increased consumption and far more personal transportation.  

Surely somebody has run some regression analysis on this, with available data (FWIW), which can be found in a report somewhere........it would have to be a hot debate amongst the economic community these days, of which I no longer partake.


----------



## haunting

*Re: OIL AGAIN!*

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml

-  Germany in call for ban on oil speculation

_German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities._

The first shot has been fired. Next, wait for the rush to the door.


----------



## rederob

*Re: OIL AGAIN!*



> By Ambrose Evans-Pritchard
> Last Updated: 1:40am BST 26/05/2008
> 
> Speculators are split, with some betting that oil will fall. The mass of money coming into the commodity indexes is mostly from pension funds and long-term investors.
> 
> Oil markets are likely to shrug off the moves as political posturing, instead focusing on Norway’s suspension of crude output at three platforms, cutting supply by 138,000 barrels a day.
> 
> The news comes as Lloyd’s Marine Intelligence reported Opec oil shipments fell by 1m barrels per day in the four weeks to May 4, confirming suspicions that the market has been chronically short of supply.



If OPEC is falling short by a million barrels a day, and it has spare capacity, how much is really "spare".
Is the market only being driven up because funds are piling in, or are funds piling in because they realise the market still has further to climb on supply concerns?
If the market was being driven mostly on speculation, it would have had a few large corrections in recent months while it was heavily overbought.  It might be waiting for the big blow off, but will it get to $150 or higher before that happens?
Already today oil prices have inched up another dollar, so if the markets are reacting to the news, it's the news that the oil market is getting tighter.
I'm enjoying the ride - no stops!


----------



## Hopeful

*Mclaren on OIL*

This is available for free on his site http://www.mclarenreport.net.au/articles/articles/181/1/May-23-2008-CNBC-SquawkBox-Europe/Page1.htmlso I'm sure posting it here shouldn't be a problem:



> This is an identifiable trend and can be qualified as the exhaustion phase of a blowoff trend.  Anytime a market can show three or four ascending trendlines it is in the exhaustion phase of a trend.  Since most markets like to exhaust into highs this is not unusual.  The previous exhaustion occurred in November 2007 and the final leg was 90 calendar days and was followed by a small sideways consolidation rather than a change in trend.  This leg up has now exceeded 90 calendar days and is now 105 days, if we start the count from the last low the date is way out to June 30th and that seem a bit long to continue this exhaustion style of trend.  I believe the longest it could go is June 21st but could end any thrust up now.  If it corrects back more than 4 trading days the exhaustion will be complete.  It will then correct back either  ¼ of the last leg up or 1/3 to 3/8 of the last trend up.  If you are looking for a top in oil the history of this market is tops take many months to form even when following an exhaustion phase, sometimes even closer to a year.  So if the top where in today it would only be vulnerable to 115 before coming back up to form a very large topping pattern or even a consolidation before moving higher.  But make no mistake this is an exhaustion phase of this trend and will end very soon.  The dollar is looking vulnerable again and the base in T-BONDS is now questionable.




He's a bit ambiguous but can't complain - it's free.

First he targets late June for a top, then he says a top can take months or even a year to form even during exhaustion , then says this up trend will end very soon. Double Dutch. 

Anyone else want to have a go at interpreting this?


----------



## CamKawa

*Re: OIL AGAIN!*

There's a video entitled "Wendt of Fat Prophets Says Oil Price May Rise Above $150" I think this may be sell signal. I saw this guy predicting gold could go to 2, 3, or 4000 right before it started its biggest weekly decline in 25 years. 
http://www.bloomberg.com/index.html?Intro=intro3


----------



## michael_selway

*Re: OIL AGAIN!*



CamKawa said:


> There's a video entitled "Wendt of Fat Prophets Says Oil Price May Rise Above $150" I think this may be sell signal. I saw this guy predicting gold could go to 2, 3, or 4000 right before it started its biggest weekly decline in 25 years.
> http://www.bloomberg.com/index.html?Intro=intro3




Hm so you are bearish on OIL? Short Term or Long Term?

Thanks

MS


----------



## agro

*Re: OIL AGAIN!*



michael_selway said:


> Hm so you are bearish on OIL? Short Term or Long Term?
> 
> Thanks
> 
> MS




how can one be bearish on oil - that must be joke of the day


http://www.cnbc.com/id/24723260

"The Saudis claim they have more oil," Pickens told CNBC. "They don't. The President wasted his time to go to Saudi Arabia, to say, 'Give us more oil.' They can't give any more oil...they're stacking up the money as fast as they can stack it up."

Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million,

they have 150-200$ a barrel target by end of the year

looking at energy prices you can see already up:

http://www.bloomberg.com/energy/


----------



## CamKawa

*Re: OIL AGAIN!*



agro said:


> how can one be bearish on oil - that must be joke of the day



That's the sort of attitude that forms bubbles.

"Emotional and cognitive biases (see behavioral finance) seem to be the causes of bubbles. But, often, when the phenomenon appears, pundits try to find a rationale, so as not to be against the crowd. Thus, sometimes, people will dismiss concerns about overpriced markets by citing a new economy where the old stock valuation rules may no longer apply. This type of thinking helps to further propagate the bubble whereby everyone is investing with the intent of finding a greater fool."
source: http://en.wikipedia.org/wiki/Stock_market_bubble

Just had a quick flick through the history books and found one of oils corrections. Not a bad one from just over $80 back down to $55, a little 32% drop, nothing to be scared of really.


----------



## Smurf1976

*Re: OIL AGAIN!*

Long term, I'm absolutely bullish on oil given the geological fundamentals and the inherent problem of energy - we just don't have any real alternative anywhere near ready for mass implementation.

But short term, I keep hearing everyone from funds managers to the local council work crew saying oil's going up, up and away. That's a sell signal IMO if you're a short term trader (which I'm not by the way). Everyone bullish, who's left to buy?


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> Long term, I'm absolutely bullish on oil given the geological fundamentals and the inherent problem of energy - we just don't have any real alternative anywhere near ready for mass implementation.
> 
> But short term, I keep hearing everyone from funds managers to the local council work crew saying oil's going up, up and away. That's a sell signal IMO if you're a short term trader (which I'm not by the way). Everyone bullish, who's left to buy?




Ahhh, Smurf... but being a Peak Oil pundit, wouldn't you say gizmos such as market "signals", "fundamentals" and "charting T/A" might fly out the window under that scenario?

This is the nub. AFAIK humankind has never reached THIS point in it's history of energy DEMAND vs SUPPLY before. So it's really not going to be much use looking into the past for market direction, statistical patterns etc, IMHO!


----------



## Trembling Hand

*Re: OIL AGAIN!*



Aussiejeff said:


> So it's really not going to be much use looking into the past for market direction, statistical patterns etc, IMHO!




Well then I'm throwing T/A out the window.


----------



## Tysonboss1

*Re: OIL AGAIN!*



Tysonboss1 said:


> I would like to make a bet that oil will not trade a $80 ever again,...




I would like to raise the stakes in this bet to oil never falling below $95


----------



## haunting

*Re: OIL AGAIN!*

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article3980797.ece

- They're wrong about oil, by George

_Now consider the situation today in oil markets: the Gulf, according to Mr Rothman, is crammed with supertankers chartered by oil-producing governments to hold the inventories of oil they are pumping but cannot sell. That physical oil is in excess supply at today's prices does not mean that producers are somehow cheating by storing their oil in tankers or keeping it in the ground. All it suggests is that there are few buyers for physical oil cargoes at today's prices, but there are plenty of buyers for pieces of paper linked to the price of oil next month and next year. This situation is exactly analogous to the bubble in credit markets a year ago, where nobody wanted to buy sub-prime mortgage bonds, but there was plenty of demand for “financial derivatives” that allowed investors to bet on the future value of these bonds._

The disconnect between "real" supply/demand and virtual supply/demand will break the "system" eventually, depending on how soon the law makers decide to act.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



Tysonboss1 said:


> I would like to raise the stakes in this bet to oil never falling below $95



 That is indeed a brave call, one too good to pass up  - put me down for one of whatever you are wagering .



> Mr Soros warned that the oil bubble would not burst until both the US and Britain were in recession, after which prices could fall dramatically."You can also anticipate that [the bubble] will eventually correct but that is unlikely to happen before the recession actually reduces the demand.
> "The rise in the price of oil and food is going to weigh and aggravate the recession."



http://www.telegraph.co.uk/money/ma...08/05/26/cnsoros126.xml&CMP=ILC-mostviewedbox



> "I think this is probably more serious than anything in our lifetime," he says. In short, his feeling is that the United States and Britain are facing a recession of a scale greater than the early-1990s, greater even than the 1970s.
> "I think the dislocations will be greater because you also have the implications of the house price decline, which you didn't have in the 1970s - so you had *stagflation* and transfer of purchasing power to the oil producing countries, but here you also have the housing crisis in addition to that."



And some insight about contango and what it may be foretelling?

http://www.hussman.net/wmc/wmc080527.htm


----------



## wayneL

*Re: OIL AGAIN!*

FWIW:

The view of one Mr George Soros.





> George Soros: rocketing oil price is a bubble
> 
> By Edmund Conway, Economics Editor
> Last Updated: 12:53am BST 27/05/2008
> 
> Speculators are largely responsible for driving crude prices to their peaks in recent weeks and the record oil price now looks like a bubble, George Soros has warned.
> 
> The billionaire investor's comments came only days after the oil price soared to a record high of $135 a barrel amid speculation that crude could soon be catapulted towards the $200 mark.
> 
> In an interview with The Daily Telegraph, Mr Soros said that although the weak dollar, ebbing Middle Eastern supply and record Chinese demand could explain some of the increase in energy prices, the crude oil market had been significantly affected by speculation..... FULL TELEGRAPH ARTICLE


----------



## wayneL

*Re: OIL AGAIN!*



wayneL said:


> FWIW:
> 
> The view of one Mr George Soros.




... and the Germans want to ban Oil Speculation.  Hands off my income you bastids!!!!



> Germany in call for ban on oil speculation
> 
> By Ambrose Evans-Pritchard
> Last Updated: 12:53am BST 27/05/2008
> 
> German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
> 
> It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
> 
> Car lights are seen streaking past an oil rig extracting petroleum
> Speculators are split, with some betting that oil will fall
> 
> Uwe Beckmeyer, transport chief for Germany's Social Democrats, said his party would call for joint measures by the G8 powers to prohibit leveraged trading on energy contracts. "It's an extreme step but it has to be done," he told the Berlin media. FULL ARTICLE


----------



## Temjin

*Re: OIL AGAIN!*



Smurf1976 said:


> Long term, I'm absolutely bullish on oil given the geological fundamentals and the inherent problem of energy - we just don't have any real alternative anywhere near ready for mass implementation.
> 
> But short term, I keep hearing everyone from funds managers to the local council work crew saying oil's going up, up and away. That's a sell signal IMO if you're a short term trader (which I'm not by the way). Everyone bullish, who's left to buy?




I am in the exact position as Smurf. Extreme bullish on oil for the long term but short term wise, there are way too many "contrarian" and "technical" signals that SHOULD NOT BE IGNORED. It's all in the front news now, even mums and dads are talking about it. Technical wise, it is way overbrought and similarly correlated commodities such as natural gas is showing negative divergences. All these are pointing me to a potential short term bearish view on oil/energy stuff. Nothing go straight up forever anyway. Oil need to take a breath before it tries to hit for $200. 

For those who just want to buy and hold for the long term, just ignore us.

For those who want to trade in a shorter time frame, it's time to tighten the stops.


----------



## haunting

*Re: OIL AGAIN!*

http://internationalnews.over-blog.com/article-19853375.html

- The real reason behind high oil prices by William Engdahl



> At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population.






> Goldman Sachs again in the middle
> 
> The oil price today, unlike twenty years ago, is determined behind closed doors in the trading rooms of giant financial institutions like Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank or UBS. The key exchange in the game is the London ICE Futures Exchange (formerly the International Petroleum Exchange). ICE Futures is a wholly-owned subsidiary of the Atlanta Georgia International Commodities Exchange. ICE in Atlanta was founded in part by Goldman Sachs which also happens to run the world’s most widely used commodity price index, the GSCI, which is over-weighted to oil prices.




If I have to point  my finger at someone and blame them for the current high oil price, I would point it at GS. They have every self-interest to see the oil price reaching 200. Still remember when sub-prime based CDO was at its "prime", GS was selling the deadly product while shorting the heck out of the stuffs they were selling? 

The $200 call coming from them stands out like a sucker rally cry, while the rest of the speculators are pushing hard for the target, they are all set, ready to dump the whole crap on the late comers.


----------



## wayneL

*Re: OIL AGAIN!*



> At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population.




Sorry to be such a pedagogue, but the above statement is nonsense.

The point about leverage of course is accurate, but could equally create a panick sell-off as well as drive prices higher. Such leverage is available at all times in every futures market, yet prices can be extremely depressed, as well as have a blue flame coming out of it's @rse. Leverage is not the reason oil prices are high.

Never forget that for every long contract that is leveraged to this degree, there must be a corresponding short contract, leveraged to the same degree, otherwise the long cannot exist.

My main challenge however, is the assertion that a futures trader "borrows" $120. This is nonsense.

If a trader goes long on 1 futures contract, he/she is not, at that point in time, buying oil in any way, shape, or form; therefore is not borrowing money. S/he is not buying an asset.

All a futures trader is doing is entering into a contract to buy a quantity of oil at a specific price. Oil is only purchased at the expiry of the contract, IF the trader has not closed it out (this happens in the absolute minimum of cases).

The $8k is purely a performance bond to cover the broker's @ss should the trader default. It is not a deposit. The 120k is NOT a loan.

The effect may be similar, but in actual fact, it is incorrect and should not be printed in an allegedly "authoritative" article.


----------



## ithatheekret

*Re: OIL AGAIN!*

Well I saw oil fall back to $129 , now just back above $130 , we've had a small drop back in the lead upto Memorial Day , after that is the US summer fun time ......... , but , I am interested to see if oil holds $130 , dipped under already and just recovered to it . I see $130 as "the" support area , if it gets shoved below it and closes , I would assume it would eventuate in a lower price action again ......... IMHO ........

But Summer fun time is almost on us ........ is it worth another $12 from here ? pondering ............


----------



## Uncle Festivus

*Re: OIL AGAIN!*



ithatheekret said:


> Well I saw oil fall back to $129 , now just back above $130 , we've had a small drop back in the lead upto Memorial Day , after that is the US summer fun time ......... , but , I am interested to see if oil holds $130 , dipped under already and just recovered to it . I see $130 as "the" support area , if it gets shoved below it and closes , I would assume it would eventuate in a lower price action again ......... IMHO ........
> 
> But Summer fun time is almost on us ........ is it worth another $12 from here ? pondering ............




All together now..............who's your oil daddy??



> Well you knew all along
> That your dad was gettin wise to you now
> (you shouldnt have lied now you shouldnt have lied)
> And since he took your set of keys
> Youve been thinking that your fun is all through now
> (you shouldnt have lied now you shouldnt have lied)
> 
> But you can come along with me
> cause we gotta a lot of things to do now
> (you shouldnt have lied now you shouldnt have lied)
> 
> And well have fun fun fun now that daddy took the t-bird away
> (fun fun fun now that daddy took the t-bird away)






> May 23 (Bloomberg) -- U.S. motorists, who are paying record prices for gasoline, drove 4.3 percent less in March for the biggest monthly drop ever, a government estimate showed.




U.S. fuel consumption averaged 20.3 million barrels a day in the four weeks ended May 16, down 1.3 percent from a year earlier, the Energy Department said last week.


----------



## MRC & Co

*Re: OIL AGAIN!*

Just saw a talking head make a good point on the 50% increase in iron prices this year, despite no futures markets and hence, speculation.  

With oil prices increasing and speculation being blamed, where is the excess supply?

While I think we will get some kind of correction, this trend is up and bullish is the only way to be for long-term investors.  

As a trader, I am still looking for my entry


----------



## Smurf1976

*Re: OIL AGAIN!*



Aussiejeff said:


> Ahhh, Smurf... but being a Peak Oil pundit, wouldn't you say gizmos such as market "signals", "fundamentals" and "charting T/A" might fly out the window under that scenario?
> 
> This is the nub. AFAIK humankind has never reached THIS point in it's history of energy DEMAND vs SUPPLY before. So it's really not going to be much use looking into the past for market direction, statistical patterns etc, IMHO!



Agreed that it's possible. But I still think we'll see dips along the way rather than a constant, relentless rise. There will still be other economic factors influencing the market as well as stagnant then declining oil production. Just my opinion but I can't see a situation where oil goes up, say, another 10 cents or even $10 literally every day and does that consistently and forever. Possible I suppose...

On the other hand, there's a little voice in the back of my head questioning the recently popular notion that some OPEC countries are hiring tankers to store oil they can't sell. I see two possibilities:

1. The tankers aren't being used for that at all. They're simply queued there waiting to be filled because those countries can't pump any faster than they already are. With a lack of alternative suppliers, the tankers might as well wait on the doorstep of a major producer rather than sit somewhere else - they're empty either way.

2. OPEC governments are hiring the tankers, thus taking them off the market for actual shipping of oil, simply to hide the reality that they can't fill them.

3. It's short term storage only so that an apparent increase in exports can arise at some point in the future, thus hiding the reality they're flat out already.

I personally see the notion that they can't sell the oil as the least likely scenario. When something's in short supply, and it's hard to argue that oil isn't at least moderately scarce at the moment, it's generally not too hard to sell at the market price. They had no trouble selling at a tenth of that price in a flooded market a decade ago so the "no buyers" argument doesn't really stack up for me.

That's unless the credit crunch is far worse than we think and the likes of Exxon etc literally can not pay for crude oil. If that's the situation then we're headed for production cuts when they run out of storage and physcial shortages of petrol etc no matter what happens with the price. The refineries have no choice but to close once their crude oil tanks run dry and it's only a short step from that to outright shortage in first world countries.


----------



## barney

*Re: OIL AGAIN!*

Just a bit of tangental thinking, and happy to be shot down in flames here, but ............

Is it feasible that the large funds/buyers etc who have been pushing the POO up lately are also buying discounted shares in Companies directly affected by the POO ....

For eg. I notice this morning that a large US fund has just completed  a 5+% share position in Qantas ... That equates to about $350,000,000 worth of stock ................. So with the POO going ballistic, they have possibly picked up what might turn out to be very cheap shares down the track .......

And that is just one stock .......... Makes me wonder how many other "discounted" stocks suffering from the POO are being snapped up?

If the above is the case, would it not be reasonable to expect a fairly healthy retrace in the POO once the required shares have been accumulated?

Just thinking out aloud... but Oil looks more like a short than a long atm.


----------



## Tysonboss1

*Re: OIL AGAIN!*

Some of the so called speculaters are probally refining companies or companies working on behalf of refiners trying to hedge the cost of there feedstock or lock in contracts for oil supply


----------



## ithatheekret

*Re: OIL AGAIN!*



Uncle Festivus said:


> All together now..............who's your oil daddy??






@ $1.60 / litre he can have the keys to the Astra too 

If it keeps it up I might move to Venezuela just for the subsidised fuel , which works out to be around 20 cents a gallon , but then I'd have to listen to Chavez TV all day , second thoughts , I'll pay the $1.60 and make do with the Kev show .


----------



## rederob

*Re: OIL AGAIN!*

Seems that oil is struggling to break into "expected correction" mode, instead correcting higher overnight after a brief dabble around $126. 
No sooner had it bottomed than it added another $5, before eventually closing the day around the high $130 area.
At least we have some price volatility, suggesting the speculators have returned with thoughts of driving the market one way or the other.
Whatever the outcome in weeks to come, the scene is set for medium term prices to rise from a substantially higher platform than most readers would have dreamed of.
Tysonboss, you are a chicken playing with a $95 downside bet.... surely there's room to wind it higher!


----------



## wayneL

*Re: OIL AGAIN!*



rederob said:


> Seems that oil is struggling to break into "expected correction" mode, instead correcting higher overnight after a brief dabble around $126.
> No sooner had it bottomed than it added another $5, before eventually closing the day around the high $130 area.
> At least we have some price volatility, suggesting the speculators have returned with thoughts of driving the market one way or the other.
> Whatever the outcome in weeks to come, the scene is set for medium term prices to rise from a substantially higher platform than most readers would have dreamed of.
> Tysonboss, you are a chicken playing with a $95 downside bet.... surely there's room to wind it higher!



To me it looks as though the dip buyers have taken control, the pattern is very much like stocks through most of 2007, with one very pleasing difference for those of us daytrading the contract...

VOLATILITY!!

But there is more and more talk of the speculative component of the crude price. It's a daily feature on the Beeb at the moment. I have no idea what that means for the price in the medium term, but for now it seems it means up!!!


----------



## CamKawa

*Re: OIL AGAIN!*



ithatheekret said:


> @ $1.60 / litre he can have the keys to the Astra too
> 
> If it keeps it up I might move to Venezuela just for the subsidised fuel , which works out to be around 20 cents a gallon , but then I'd have to listen to Chavez TV all day , second thoughts , I'll pay the $1.60 and make do with the Kev show .



I dunno are you sure Chavez TV is *that* bad?


----------



## brty

*Re: OIL AGAIN!*

Hi,

One factor that makes me suspicious of this move up is what is happening in the sugar market.

Sugar that is made into ethanol for fuel is languishing at 10-11 c lb, and has fallen over the last couple of months. When oil was $65-75 a barrel a couple of years ago, sugar rose to 17-19 c as an energy play. Seeing as oil is now double, then why is sugar so low. 
Something is amiss and I expect oil to be very near it's peak and would think the correction will be bigger than most expect. This will be especially so if tied into a general recession around the world.

brty


----------



## rederob

*Re: OIL AGAIN!*



brty said:


> Hi,
> 
> One factor that makes me suspicious of this move up is what is happening in the sugar market.
> 
> Sugar that is made into ethanol for fuel is languishing at 10-11 c lb, and has fallen over the last couple of months. When oil was $65-75 a barrel a couple of years ago, sugar rose to 17-19 c as an energy play. *Seeing as oil is now double, then why is sugar so low*.
> Something is amiss and I expect oil to be very near it's peak and would think the correction will be bigger than most expect. This will be especially so if tied into a general recession around the world.
> 
> brty



When you can grow a million barrels of oil in a few months, as you can with sugar in a paddock, you might have a point.


----------



## pilbara

*Re: OIL AGAIN!*



brty said:


> Seeing as oil is now double, then why is sugar so low.



Because in most places except Brasil, corn is twice as cheap to make ethanol compared to sugar ... see table on page (iv) of this report:

http://www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> Tysonboss, you are a chicken playing with a $95 downside bet.... surely there's room to wind it higher!




lol,... I am not sure.

 I think the $95.00 mark is as safe. But I am really not sure where oil will go over the next 1/4,... there is scope for it to drop towards the $100 - $110 area if these "speculaters or conspiritors" change mood.

I believe 100% oil will be trending up longterm, but there is always the chance that the short markets will come off these highs or that we are not quite at the peak and production will lift causing a sell off.

saying that though I thinka safe move would be to start investing in the energy sector using the dollar cost averaging method to build a postion, thats what I have been doing anyway.


----------



## rederob

*Re: OIL AGAIN!*



pilbara said:


> Because in most places except Brasil, corn is twice as cheap to make ethanol compared to sugar ... see table on page (iv) of this report:
> 
> http://www.usda.gov/oce/EthanolSugarFeasibilityReport3.pdf




You point escapes me.
Neither corn nor sugar are grown mostly for ethanol: They are food crops.
It does not take long to open up new lands or rotate crops to grow corn or sugar to satisfy the ethanol market. 
Furthermore, I'm not convinced that US data on production costs is reliable as the quoted report forgot to mention that billions of dollars are paid in subsidies - about $5b in 2006 and an estimated $10b this year,
An unintended consequence of US crop rotation from soy to corn has been an escalation in prices for soy as a result of less land globally being available (for the near term).
The other reality we are now faced with is that growing crops for fuel is a better economic alternative than growing it for food - all the while as countless millions are starving.
My suspicion is that a social conscience will cut in at some point, curbing the volume of agricultural feedstocks diverted to global fuel production.


----------



## Adam A

*Re: OIL AGAIN!*

My suspicion is that a social conscience will cut in at some point, curbing the volume of agricultural feedstocks diverted to global fuel production. 

You would assume that this would be the case, however,social conscience,is great untill it directly effects your hip pocket and way of life.

Could you imagine the reaction if say the un or some other type organization said o by the way with oil being at $200 a barrel and inflicting pain world wide,we have now going to reduce or ban food from fuel

It will be interesting to see how it all plays out,i believe,bio fuels will be an important part of the short term future ie next 10 years untill allternatives can be planned and brought on stream


----------



## Tysonboss1

*Re: OIL AGAIN!*



Adam A said:


> My suspicion is that a social conscience will cut in at some point, curbing the volume of agricultural feedstocks diverted to global fuel production.
> 
> You would assume that this would be the case, however,social conscience,is great untill it directly effects your hip pocket and way of life.
> 
> Could you imagine the reaction if say the un or some other type organization said o by the way with oil being at $200 a barrel and inflicting pain world wide,we have now going to reduce or ban food from fuel
> 
> It will be interesting to see how it all plays out,i believe,bio fuels will be an important part of the short term future ie next 10 years untill allternatives can be planned and brought on stream




Lack of food is not why people are staving,... It's local political instability in there region that is the cause,... you can Half the price of grain and they will still be starving.

It's a myth that biofuels take food away from people, Making food is much more profitable than making fuel,... Biodiesel production almost stop last year due to the high price of soy how ever the food compainies were still producing food profitably,.... Adding to that, what is the point of having a surplus of global grain stocks if we can't afford to transport it due to high fuel costs,...

Biofuels will never be a dominent part of the energy mix but they will be a part that helps offset the shortfall of other energy sources, especially the biofuels made from waste products.

Alot of the biofuel production comes from waste from sawmills, flourmills and sugar mills,.... and the grain fed plants often produce a waste product called distillers grain which is then feed to cattle in feed lots, so biofuels do not take food from mouths.


----------



## GREENS

*Re: OIL AGAIN!*

In my view biodiesel and ethanol are definitely not long term or even short term solutions (substitute) for oil as a source of energy. Using food sources as a supply of energy will only lead to even greater price rises in food prices which in turn would lead to massive famine across the globe 10x worse than it is now. Food is more important than energy. The world is struggling to produce enough food to eat yet alone use it as a source of energy. 

Therefore I could not see why there would be a relationship between the price of sugar and oil. The only reason such sources of energy are economical at the moment, is largely the result of huge government subsidies. It’s definitely not an environmentally friendly source of energy either with the amount of land clearly that is occurring so that crops can be grown purely for biodiesel and ethanol production. I think you will eventually see such sources of energy fade out over time as they are clearly not an alternative that solves the current issues faced from conventional sources. 

Tysonboss1. How can you say biodiesel does not take away food from mouths? While you say it can come from other sources, this would only make up a very small fraction of total inputs used for biodiesel and ethanol production at this point in time.  Countries such as Austria, Switzerland, Germany which have voted as some of the most environmentally conservative countries in the world have raised brave concern in terms of these alternative fuels because of its impact on food prices in the long term and its effect on land clearing as farmers start pulling out crops for basic foods in exchange for planting crops that can be used as an input for biodiesel  to take advantage of the higher current and forecasted prices for such agricultural commodities. Doing so indirectly causes rises in all other agricultural commodities which in turn flows through to end food prices and means less food for human consumption. 

I was having a very in depth discussion about these issues with an Austrian economist in January, and a few weeks later I found this excellent article which further sums up the points I’m trying to get across. (refer to next post for article).


----------



## GREENS

*Re: OIL AGAIN!*

*Studies conclude that biofuels are not so green* 

http://www.iht.com/articles/2008/02/07/healthscience/biofuel.php?page=1

Thursday, February 7, 2008 

Almost all biofuels used today cause more greenhouse gas emissions than conventional fuels if the pollution caused by producing these "green" fuels is taken into account, two studies published Thursday have concluded.

The benefits of biofuels have come under increasing attack in recent months as scientists have evaluated the global environmental cost of their production. The new studies, published by the journal Science, are likely to add to the controversy.

These studies for the first time take a comprehensive look at the emissions effects of the huge amount of land that is being converted to cropland globally to support biofuels development. The destruction of natural ecosystems - whether rain forest in the tropics or grasslands in South America - increases the release of greenhouse gases into the atmosphere because the ecosystems are the planet's natural sponge for carbon emissions.

"When you take this into account, most of the biofuel that people are using or planning to use would probably increase greenhouse gasses substantially," said Timothy Searchinger, the lead author of one of the studies and a researcher on the environment and economics at Princeton University. "Previously, there's been an accounting error: Land use change has been left out of prior analysis."

Plant-based fuels were originally billed as better than fossil fuels because the carbon released when they are burned is balanced by the carbon absorbed when the plants grow. But even that equation proved overly simplistic because the process of turning plants into fuel causes it own emissions - through refining and transport, for example.

The land-use issue makes the balance sheet far more problematic: The clearance of grassland releases 93 times the amount of greenhouse gas that would be saved by the fuel made annually on that land, said Joseph Fargione, the lead author of the other study and a scientist at the Nature Conservancy. "So for the next 93 years, you're making climate change worse, just at the time when we need to be bringing down carbon emissions."

The United Nations Intergovernmental Panel on Climate Change has said that the world has to reverse the increase of greenhouse gas emissions by 2020 to avert disastrous environmental consequences.

Together, the two studies offer sweeping conclusions: It doesn't matter if it is rain forest or scrub land that is cleared, although the former releases more emissions than the latter. Taken globally, the production of almost all biofuels resulted in such clearing, directly or indirectly, intentionally or not.

The European Union and a number of national governments have recently tried to address the land-use issue with proposals for regulations stipulating that imported biofuels cannot come from land that was previously rain forest, for example.

But even with such restrictions, Searchinger's study said, the purchase of biofuels in Europe and the United States leads indirectly to the destruction of natural habitats. If vegetable oil prices go up globally, as they have because of increased demand for biofuel crops, new land is inevitably cleared as farmers in developing countries switch production. Crops from old plantations and fields go to Europe for biofuels, but new fields and plantations are created to feed people at home.

Fargione said that the dedication of so much cropland in the United States to growing corn for bioethanol had caused indirect land-use changes far away. Previously, U.S. farmers rotated corn with soybeans in their fields, alternating years. Now many grow only corn, meaning that soybeans must be grown elsewhere. That elsewhere, Fargione said, is increasingly Brazil, on land that was previously forest or savanna. 
"Brazilian farmers are planting more of the world's soybeans - and they're deforesting the Amazon to do it," he said.

International environmental groups and the United Nations responded cautiously to the studies, saying that biofuels could still be useful. "We don't want a total public backlash that would prevent us from getting the potential benefits," said Nicholas Nuttall, spokesman for the UN Environment Program.

"There was an unfortunate effort to dress up biofuels as the silver bullet of climate change," he said. "We fully believe that if biofuels are to be part of the solution rather than part of the problem, there urgently needs to be better sustainability criterion." He added that the United Nations had recently created a panel to study the evidence.

The EU has mandated that countries use 5.75 percent biofuel for transport by the end of 2008. In the United States, a proposed energy package would require that 15 percent of all transport fuels be made from biofuel by 2022. To reach these goals, biofuels production is heavily subsidized at many levels on both continents. On Thursday, Syngenta, a major global agricultural conglomerate in Switzerland that is involved in biofuel crops reported that its annual profit rose by 75 percent in the past year.

Bob Dineen, president of the Renewable Fuels Association in Washington, said the studies had "failed to put the issue in context."

"While it is important to analyze the climate-change consequences of differing energy strategies, we must all remember where we are today, how world demand for liquid fuels is growing, and what the realistic alternatives are to meet those growing demands," he said. "Biofuels like ethanol are the only tool readily available that can begin to address the challenges of energy security and environmental protection."

Most of the biofuel sold in Europe is biodiesel made from vegetable oils. Most of the biofuel in the United States is ethanol made from corn. "EU decision makers cannot ignore that the EU fuel market" is experiencing "an enduring diesel deficit - the EU is more and more dependent on Russia for conventional diesel imports," the European Biodiesel Board, a major industry group, said. The group has pushed for a sustainability certification program for biofuels, as well as criteria for assessing the greenhouse gas performance of such fuels, with input from industry.

But the new studies suggested that when land use is taken into account few, if any biofuels, will be acceptable.

"This land-use problem is not just a secondary effect," Searchinger said. "It is major. The comparison with fossil fuels is going to be adverse for virtually all biofuels on cropland."

The only possible exception he could see for now, he said, was sugar cane grown in Brazil, which takes relatively little energy to grow and is readily refined into fuel. He added that governments should quickly turn their attention to developing biofuels that did not require raising crops, such as those made from agricultural waste products.

The land-use debate started in the Netherlands in 2006, when researchers from Wetlands International and elsewhere found that imported palm oil used to generate "clean" electricity was often grown on palm plantations in Southeast Asia created from cleared peat land. The Dutch government has since canceled the palm oil subsidy and banned imports of the fuel, while hoping to develop better criteria to support sustainable biofuels. Even Wetlands does not support a total ban on biofuels, noting that some may be helpful.

Alex Kaat, a spokesman for the group, said: "If the whole point of biofuels directives was to reduce greenhouse gas emissions, we've found out that most biofuels are not really better than conventional fuels at that."


----------



## Trembling Hand

*Re: OIL AGAIN!*



GREENS said:


> Therefore I could not see why there would be a relationship between the price of sugar and oil.





You are kidding?

Its very simple. Traders see Governments throwing money at farmers to "help" the POO so as OIL runs up they throw their money on anything remotely related. Corn ,Sugar, solar panels whatever. SIMPLE.


----------



## GREENS

*Re: OIL AGAIN!*



Trembling Hand said:


> You are kidding?
> 
> Its very simple. Traders see Governments throwing money at farmers to "help" the POO so as OIL runs up they throw their money on anything remotely related. Corn ,Sugar, solar panels whatever. SIMPLE.





No Jokes TH!

You may be right in terms of some traders such as hedge funds looking to have a short term bet. But quite frankly I could not see how investors with any fundamental knowledge on the area would sink their money into it. As I have stated biodiesel and ethanol just don’t stake up economically, socially and environmentally as an alternative to conventional sources and I think the majority of smart money investors realise this and why the money is pouring into more conventional sources and not into agricultural commodities which are inputs for alternative fuels. However I do see long term rises in agricultural commodities but not as a direct result of rising biodiesel and ethanol demand due to higher oil and gas prices, there are stronger forces that will potentially drive these markets.


----------



## brty

*Re: OIL AGAIN!*

Fuel ethanol has gone up in price by 50% in the last 6 months, it has followed crude.

One of the materials you make fuel ethanol out of is sugar. The Brazilians are good at it, they also produce a fair bit of sugar at a low price. It doesn't take Einstein to work out that making ethanol has become more profitable for them, and you would expect less sugar would be made available for foodstuffs.

Cost of production in Brazil is estimated at 81 cents a gallon according to the USDA article by Pilbara. If you can sell it for $2.40 a gallon, you would think they are pinning the ears back.

Like I said, something is amiss in current pricing of sugar and oil, either sugar will rise in price or oil will fall because of these fundamentals. Because sugar was following oil up last year, but has been falling for the last couple of months, I'm leaning towards sugar being a leading indicator for the price of oil at present.

brty


----------



## Tysonboss1

*Re: OIL AGAIN!*



GREENS said:


> While you say it can come from other sources, this would only make up a very small fraction of total inputs used for biodiesel and ethanol production at this point in time.  ).




nearly 100% of Australias enthanol production comes from waste.

The malandra group who are Australias largest producer of enthanol use waste from there flour mills,... CSR are also a producer and use the by product from there sugar mill as a feed stock for the ethanol plant.


----------



## Trembling Hand

*Re: OIL AGAIN!*



GREENS said:


> As I have stated biodiesel and ethanol just don’t stake up economically, *socially and environmentally *




LOL

since when have the last two ever mattered to a trader??

If they did coal & oil would be worthless. But last time I checked they were going alright.


----------



## rederob

*Re: OIL AGAIN!*



brty said:


> Fuel ethanol has gone up in price by 50% in the last 6 months, it has followed crude.
> 
> One of the materials you make fuel ethanol out of is sugar. The Brazilians are good at it, they also produce a fair bit of sugar at a low price. It doesn't take Einstein to work out that making ethanol has become more profitable for them, and you would expect less sugar would be made available for foodstuffs.
> 
> Cost of production in Brazil is estimated at 81 cents a gallon according to the USDA article by Pilbara. If you can sell it for $2.40 a gallon, you would think they are pinning the ears back.
> 
> Like I said, something is amiss in current pricing of sugar and oil, either sugar will rise in price or oil will fall because of these fundamentals. Because sugar was following oil up last year, but has been falling for the last couple of months, I'm leaning towards sugar being a leading indicator for the price of oil at present.
> 
> brty



I think your understanding of "fundamentals" in this area is poor.
Short term correlations may not be causal.
If there is a glut of sugar the price will go down.
The same would occur for oil, except that at the moment there is not enough to meet demand, and biofuels are just a small part of the equation to supplement crude inventories.
If *sugar *was the "silver bullet" that prevented peak oil from exacerbating oil prices, you would not find sugar cane farmers leaving the industry, and Australian data shows that they are.  I don't think you will find any oil producers leaving their industry!
Apart from the above, the fact is that ethanol can be produced from many feedstock sources, and simply concluding that sugar and oil prices must be linked because there may have been some previous positive correlation is unlikely to be the smartest way to make investment\trading decisions.  You could equally apply that type of conclusion to sugar beet, soy or corn.


----------



## Tysonboss1

*Re: OIL AGAIN!*



brty said:


> It doesn't take Einstein to work out that making ethanol has become more profitable for them, and you would expect less sugar would be made available for foodstuffs.
> 
> at present.
> 
> brty




Firstly there is no shortage of sugar,

secondly with the same amount of sugar that it would take to make $1 worth od ethanol could be used to make $5 of food, so even if there was a shortage then food companies would win.


----------



## pilbara

*Re: OIL AGAIN!*



rederob said:


> You point escapes me.
> Neither corn nor sugar are grown mostly for ethanol: They are food crops.



yep rich feedstocks are still too "valuable" (high efficiency) ... we need to be able to break down cellulose ... some animals that can break down cellulose (cows, horses, kangaroos etc) and it's great if you can live by eating grass ... wowee free food, but the problem with this "free" food is you have to eat all day and have no time for anything else (low efficiency)!!


----------



## rederob

*Re: OIL AGAIN!*

It might be true that "speculation" is driving oil prices to regular higher highs, but US data on inventories continue to underpin these same fools.
Below is taken from the latest EIA report:


> Highlights
> U.S. crude oil refinery inputs averaged nearly 15.3 million
> barrels per day during the week ending May 23, up 214 thousand
> barrels per day from the previous week’s average. Refineries
> operated at 87.9 percent of their operable capacity last week.
> Gasoline production moved higher compared to the previous
> week, averaging about 9.1 million barrels per day. Distillate fuel
> production decreased last week, averaging 4.3 million barrels
> per day.
> U.S. crude oil imports averaged 9.0 million barrels per day last
> week, down 278 thousand barrels per day from the previous
> week. Over the last four weeks, crude oil imports have averaged
> nearly 9.7 million barrels per day, 579 thousand barrels per day
> below the same four- week period last year. Total motor gasoline
> imports (including both finished gasoline and gasoline blending
> components) last week averaged 1.0 million barrels per day.
> Distillate fuel imports averaged 250 thousand barrels per day
> last week.
> U.S. commercial crude oil inventories (excluding those in the
> Strategic Petroleum Reserve) decreased by 8.8 million barrels from
> the previous week. At 311.6 million barrels, U.S. crude oil
> inventories are in the lower half of the average range for this time of
> year. The drop was due to temporary delays in crude oil tanker
> off-loadings on the Gulf Coast. Total motor gasoline inventories
> decreased by 3.2 million barrels last week, and are near the lower
> limit of the average range. Finished gasoline inventories remained
> unchanged last week while gasoline blending components
> inventories decreased during this same time. Distillate fuel
> inventories increased by 1.6 million barrels, and are in the lower
> half of the average range for this time of year.


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> It might be true that "speculation" is driving oil prices to regular higher highs, but US data on inventories continue to underpin these same fools.
> Below is taken from the latest EIA report:



So the US alone is drawing down combined crude and refined product stocks at the rate of 1 million barrels per day. And that's only oil companies etc, it doesn't include what consumers might also be doing - running down stocks of heating oil, petrol etc either hoping for a price drop or because they simply can not pay the current price.

It's not conclusive proof, the US is only 25% of the oil market, but added to outright shortages in China, India etc of refined product it does suggest that global inventories are more likely falling than rising. 

And with not even OPEC now saying we're about to see a production rise that leaves only one option in the long term regardless of price. Lower consumption.


----------



## rederob

*Re: OIL AGAIN!*



Smurf1976 said:


> And with not even OPEC now saying we're about to see a production rise that leaves only one option in the long term regardless of price. *Lower consumption*.



Ummm
I am confused.
Consumption remains high as inventories are dwindling.
The option to me is "higher prices".
Note that although the US is a major consumer, the emerging economies of China, India, Russia and the Middle East combined *now *have a bigger consumption footprint.
It means the US can consume less all the while as global consumption rises.
More simply put, it means we need to pay less attention to the US and more to emerging economies as their role has become pivotal in the oil equation.
It might also mean that as the US slides deeper into the statistically invalid recession it has to have, the oil market will continue to run its own race.

As a sidebar point, you might not have noticed that "Iran" is not the big talking point it was for many months previous. Isn't that a coincidence!


----------



## MRC & Co

*Re: OIL AGAIN!*

I think that is Smurfs point, higher prices = lower consumption.  How much effect that will in turn have on prices............surely there is some regression analysis on this somewhere!

How about algae?  Anybody read much about this option to the Co2 emissions problem and it's use in the production of biofuel?


----------



## Tysonboss1

*Re: OIL AGAIN!*



MRC & Co said:


> I think that is Smurfs point, higher prices = lower consumption.  ?




Well thats how the capitalist system works,... Higher prices is supposed to encourage lower consumption, either that or we have to start rationing like back in WW2.

But lower consumption won't mean a price drop because as soon as the price drops then consumption will increase again and forcethe price up again.


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> Well thats how the capitalist system works,... Higher prices is supposed to encourage lower consumption, either that or we have to start rationing like back in WW2.
> 
> But lower consumption won't mean a price drop because as soon as the price drops then consumption will increase again and forcethe price up again.



The theory is interesting, but does not explain why, when the US has had its highest ever gasoline prices, inventories have been declining - substantially.
Inventories will generally increase if consumption falls by the wayside.
As the opposite has occurred, is it telling us that not only is consumption decreasing, but supply is decreasing at a faster pace!
If the latter were to prove true, then we will see $200 oil this year.
I am not convinced this is the case.
US driving season, which is almost on us, should give rise to some salutary data on the elasticity of oil prices.


----------



## Smurf1976

*Re: OIL AGAIN!*



> rederob said:
> 
> 
> 
> Ummm
> I am confused.
> Consumption remains high as inventories are dwindling.
> The option to me is "higher prices".
> QUOTE]
> 
> 
> 
> 
> My point is simply about the physical flow of oil.
> 
> Statistics vary but the world is extracting about 31 billion barrels each year and doesn't seem to have the capacity to extract much, if any, more than this. It doesn't matter how much is in the ground, what alternative technogies we have etc. The installed production capacity and actual production are 31 billion barrels per year.
> 
> And we have a few billion barrels in above ground storage. Hard data is very hard to get on this one, but I'd guess that we couldn't take much more than 2 billion barrels from storage before serious problems arose. It's just not practical to have every tank virtually empty, every car running with 2 litres left in the tank and so on.
> 
> So, 31 billion barrels of production and 2 billion barrels sitting in storage.
> 
> Simple math now... Over the next 12 months there is no way, at _any_ price, the world can use more than 31 + 2 = 33 billion barrels. $130 a barrel, $50 a barrel or $1 million a barrel doesn't make any difference - we're limited to the actual rate of production plus what we have in storage. We're not going to build 10 billion barrels p.a. of new production overnight no matter what oil fields are discovered and what the price is - it just doesn't happen that quickly (and if we're at peak then it's not going to happen at all).
> 
> So we seem to be using more than we're extracting. No matter how much is actually in storage, it will run dry eventually if we keep doing that.
> 
> It's like saying someone earns $31,000 per annum. No matter how much they have in the bank (ignoring interest since oil in a tank doesn't grow by itself), they can't sustainably spend more than they earn. If they spend $32,000 this year, $33,000 next year and so on then sooner or later the bank acount will be empty. And from that point on their spending must be no higher than their income which isn't increasing. (Don't say borrow - oil can't be borrowed into existance).
> 
> Same with anything. Water in a dam, water in a tank, food in the cupboard and so on. You have some in storage, a rate of inflow and a rate of consumption. If your rate of consumption exceeds inflow then at some point the storage will be empty and from then on your consumption can't exceed inflows.
> 
> Price is simply the means of matching supply and demand. Sure, price will probably head to the moon to reduce consumption to match production. But the key point in physical (not financial) terms is that ultimately consumption just can not exceed production in the long term. If we're at peak oil and consumption is higher than production then it means at some point consumption must reduce to the level of production - there's just no other option.
> 
> I'm talking globally here of course. One individual or one country can outbid another and maintain their consumption. But as a planet that doesn't work.
Click to expand...


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

I am hearing you Smurf, good point.

It seems simple to me, i dont see how prices will not continue to increase.


JW


----------



## GREENS

*Re: OIL AGAIN!*



Tysonboss1 said:


> nearly 100% of Australias enthanol production comes from waste.
> 
> The malandra group who are Australias largest producer of enthanol use waste from there flour mills,... CSR are also a producer and use the by product from there sugar mill as a feed stock for the ethanol plant.




I do agree with you that if we can turn significant amounts of waste into biofuels, this is a great alternative, but I just can’t see it happening on a large enough scale. Who cares about the Oz market we are completely insignificant in a global context. What about the US where most of its ethanol comes from corn. 



Trembling Hand said:


> LOL
> 
> since when have the last two ever mattered to a trader??
> 
> If they did coal & oil would be worthless. But last time I checked they were going alright.




Your 100% right traders couldn’t give two hoots, but traders care about what governments think because they are the ones that are going to be sinking the money into such alternatives and guess what the governments are placing increasing weighting on social and environmental issue associated with biofuels. So there you see all 3 issues I have talked about tie back in. There are more than just first round effects of biofuels not being economical.  Put it this way my point is that biofuels no matter what way you look at it will never be a major source of energy  and rival the likes of conventional fuels such as oil and gas (there contribution will always be relatively meaningless on a global scale). Also I must say although this comment is relatively insignificant more and more investment funds are becoming social and ethically conscious whether it is initiated from within the company or because of unit holders pushing them to do so.


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> The theory is interesting, but does not explain why, when the US has had its highest ever gasoline prices, inventories have been declining - substantially.
> Inventories will generally increase if consumption falls by the wayside.
> As the opposite has occurred, is it telling us that not only is consumption decreasing, but supply is decreasing at a faster pace!
> .




The official US line is that inventories have decreased due to shipping delays.

Oil is really one of the most non elastic resources when it comes to supply and demand pressures, but the priciple is still the same.

 I mean when bananas doubled in price I stopped eating bananas, but if you double the price of fuel I will still have to purchase some fuel, fuel consumption will be reduced but not stopped completely, we have seen this already with qantas canceling routes, alot more use of buses in sydney, and I can bet alot of the people who like to show pony there V8's are making alot less trips round the block these days, and on thursday a parcel of mine was late from the courier when asked why he said that the truck from brisbane was delayed 24 hours because it was not full enough to pay for the fuel so they delayed it till the next night


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> The official US line is that inventories have decreased due to shipping delays.
> 
> Oil is really one of the most non elastic resources when it comes to supply and demand pressures, but the priciple is still the same.



Not just shipping delays, but maybe also the extortionate costs of landing oil: http://www.marsoft.com/high_tanker.htm


> _
> The recent surge in tanker rates has most likely been brought on by a combination of strong market fundamentals and special factors such as floating storage._



So let's summarise:

US crude inventories on continuing decline
US gasoline stock at lowest band of multi-year average levels
Global oil demand (consumption) still rising, albeit at a decreasing rate
Non-OPEC producers experiencing progressively diminishing output
Reserves replacement being outstripped by consumption
Drilling success rates dwindling year on year
Drilling costs rising sharply and rig availability low
Lifting prices and transport costs continuing to increase
Non-conventional crude supplements (NGLs, biofuels, etc) barely filling the gap
Crude output actually peaked 3 years ago
Oil price manipulated upwards by speculators


----------



## Tysonboss1

*Re: OIL AGAIN!*



rederob said:


> Not just shipping delays, but maybe also the extortionate costs of landing oil: http://www.marsoft.com/high_tanker.htm
> 
> 
> [/LIST]




It's funny how the cost of oil can increase as transport costs increase,... but then the transport costs will increase further due to the oil incrasing,... kind of a self fulfilling cycle, considering so much oil is used at every stage of production bringing the oil from "well to wheels".

Considering that as feilds peak they can as much as triple the number of wells drilled just to maintain the rate of production, does anybody know of a company involved in leasing rigs or drilling equipment,.... might make a good investment.


----------



## Smurf1976

*Re: OIL AGAIN!*



Tysonboss1 said:


> I mean when bananas doubled in price I stopped eating bananas, but if you double the price of fuel I will still have to purchase some fuel, fuel consumption will be reduced but not stopped completely, we have seen this already with qantas canceling routes, alot more use of buses in sydney, and I can bet alot of the people who like to show pony there V8's are making alot less trips round the block these days, and on thursday a parcel of mine was late from the courier when asked why he said that the truck from brisbane was delayed 24 hours because it was not full enough to pay for the fuel so they delayed it till the next night



What seriously worries me with this situation is that we've already done the low impact changes to cut oil consumption (eg moving away from oil heating and oil-fired power generation) and now we're doing the moderate impact ones - cancelling flights and delaying trucks.

But the oil consumption and price are clearly still trending UP despite all of this. That means we're headed straight for the high impact ways of limiting demand - car bans, rationing, recession and so on. The easy options just aren't having enough effect. 

I will go as far as to argue that most places are a lot LESS able to implement a cut in oil consumption now than was the case in the 70's. The so-called "post-industrial" economy doesn't work well with public transport and it guzzles oil in every possible way for things that were unthinkable only 3 decades ago. 

Looking at the Australian context, the industrial economy we had 30 years ago largely ran on coal and hydro, at least in all the Eastern states. Today's post-industrial economy needs oil more than ever.

On a slightly different point, it's not just oil stocks that are being run down (above ground). Coal's much the same and rather a lot of hydro schemes (globally) have been depleted through over-production. That's another hidden form of stock drawdown - draining the lakes has kept coal and oil consumption artificially low but it can't be kept low any longer.


----------



## kransky

*Re: OIL AGAIN!*



Smurf1976 said:


> What seriously worries me with this situation is that we've already done the low impact changes to cut oil consumption (eg moving away from oil heating and oil-fired power generation) and now we're doing the moderate impact ones - cancelling flights and delaying trucks.
> 
> But the oil consumption and price are clearly still trending UP despite all of this. That means we're headed straight for the high impact ways of limiting demand - car bans, rationing, recession and so on. The easy options just aren't having enough effect.
> 
> I will go as far as to argue that most places are a lot LESS able to implement a cut in oil consumption now than was the case in the 70's. The so-called "post-industrial" economy doesn't work well with public transport and it guzzles oil in every possible way for things that were unthinkable only 3 decades ago.




Australias most popular cars: Ford Falcon and Holden Commodore.
The V6 versions burn 10 to 11  L/100km
V8's burn about 14L/100km
Honda Civic for example burns 7 L/100km
Honda Jazz burns 6 L/100km
I think there is still a lot that people in Australia can do to reduce their rate of energy consumption in a short time frame...

BUT

The structure of our cities is going to make adapting to much higher energy prices very hard compared to the high density cities of Europe in the longer term. And that is where the real problem lies imo.


----------



## Smurf1976

*Re: OIL AGAIN!*



kransky said:


> Australias most popular cars: Ford Falcon and Holden Commodore.
> The V6 versions burn 10 to 11  L/100km
> V8's burn about 14L/100km
> Honda Civic for example burns 7 L/100km
> Honda Jazz burns 6 L/100km
> I think there is still a lot that people in Australia can do to reduce their rate of energy consumption in a short time frame...



I take your point that we can use less in the long term, but I really doubt that Joe Average with a Falcon, Commodore or whatever will be scrapping a perfectly good car that may still be under warranty. By scrapping I mean crushing / landfill or at least wrecking and not simply selling it as a working vehicle. I just don't see how we're going to afford to do that.

It took years to phase out a relatively small number of oil-fired boilers and power stations following the last oil crisis. Took 3 years to achieve anything, 8 years to become significant, 13 years to get any major infrastructure built and 30 years to largely complete. And that's with a gas and electricity industry already well set up to build pipelines and coal-fired generation in a country that has plenty of those two fuels. 

I'd argue that replacing millions of vehicles is somewhat more difficult than converting a far smaller number of power stations and factories to coal or gas or building replacements.


----------



## numbercruncher

*Re: OIL AGAIN!*

Ive always said retrofitting existing vehicles is the solution, maybe even with Gov subsidies similar to the LPG sub ?

And lo n behold I find a Sydney company that is now retrofitting Cars with Electric engines !

http://bev.com.au/


----------



## Knobby22

*Re: OIL AGAIN!*

One of my friends has converted his car to electricity and plugs it into his solar system on his house. The guy also has his own water.


----------



## Tysonboss1

*Re: OIL AGAIN!*



numbercruncher said:


> Ive always said retrofitting existing vehicles is the solution, maybe even with Gov subsidies similar to the LPG sub ?
> 
> And lo n behold I find a Sydney company that is now retrofitting Cars with Electric engines !
> 
> http://bev.com.au/




$32,000 for the retrofit,.... I think I ill wait for the production model.


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Monetary inflation is responsible for the majority of oil's price gains???

Paul Van Eeden offers his view.

http://watch.bnn.ca/trading-day/may-2008/trading-day-may-30-2008/#clip56474

http://www.youtube.com/watch?v=iwAHnpIR8is

Dan Denning -



> We’re even more sure that global central banks are either unable or unwilling to take steps that might lead to a lower oil price. Hiking rates would slash global economic growth, and inevitably lead to lower oil demand. And there’s also the fact that the oil price””like all commodity prices””is closely correlated with money supply growth.
> 
> Cut the growth in broad money supply and you knock at  least one leg out from commodity prices.



http://www.dailyreckoning.com.au/


----------



## kransky

*Re: OIL AGAIN!*



Smurf1976 said:


> I'd argue that replacing millions of vehicles is somewhat more difficult than converting a far smaller number of power stations and factories to coal or gas or building replacements.




I dont know if i agree... firstly the supply of more fuel efficient replacement cars isnt an issue. 

Getting the bigger cars off the road is the issue. Falling sales of larger cars and rising sales of small and light cars is the start and we have been seeing that for quite a while now and its accelerating.

With 1 Million new cars sold per year and around 11 million passenger cars on the road it wont take that long to adapt surely..

http://www.fcai.com.au/sales.php/2008/04/segmentation.html

year to date sales of "large" and "upper large" cars is down from 48,900 in 2007 to 38,700 this year (Huge drop of 20%)... while "small" and "light" cars are up from 115,000 in 2007 to 124,000 this year (rise of 7%)

I think that the used prices of large cars will fall and their use will simply dwindle.

Holden need to make a smaller 4cyl version of the commodore!


----------



## Tysonboss1

*Re: OIL AGAIN!*



kransky said:


> Holden need to make a smaller 4cyl version of the commodore!




The holden Astra is a good size 4cyl,...

I would love to see a hybrid or EV holden commodore in production.

Holden made a hybrid commadore back in 2000,... never went to production though, maybe it's time to bring the concept car into production.

I don't know if it is still there but the original prototype commodore hybrid was in the power house museum for a while.


----------



## rederob

*Re: OIL AGAIN!*

It's in production, it's all electric, and its very fast.
http://en.wikipedia.org/wiki/Tesla_Roadster#cite_note-Associated_Press_Air_Bag-17
But it's not here yet, and not in my price range.
Maybe 2010!


----------



## boy123

*Re: OIL AGAIN!*

OPEC president Chakib Khelil again blamed speculators for the steep rise in oil prices on Saturday, insisting that supply was not a problem. "There is no problem of supply, the problem is much more linked to speculation," he told a press conference with visiting French ecology and energy minister Jean-Louis Borloo.

_Is oil price really a bubble that is created by speculators? Why do some experts say that the world is not lacking of oil and yet oil price has been rising at a fast pace._

Let us analyse oil using Economics 101: 
The world can now produce 85 million barrels a day, and that's it. Global demand is 87 million barrels a day and growing.

Now let us put this into the perceptive of an employee: 
Say David is earning $4000 a month, but he is spending $5000 every month. Does this mean that he is poor now? No. 
Does this mean that he is going to get bankrupt in the next few years? Not sure, depending on how much reserves he has in his bank account, and whether his pay will rise in future.
But one thing is for sure, if he continues to spend more than he earns, his reserves is going to drain off one day. 

The world is certainly not lacking of oil now. But the amount that the world is consuming now is more than the amount that it is producing. Let us not forget that the global demand is now 87 million barrels a day, this number can rise to 100 million barrels a day when China and India population become more affluence in the next few years. 

So this means deficit (demand > supply) is going to widen. If this trend continues, oil price is going to rise higher as a reflection of its fundamental, and world oil reserves is going to drain off one day.

It is not the evil oil companies or the futures market speculators that have pushed crude oil to $125 a barrels. It's forward looking on the basic supply and demand.

Let's us get ready for $150 oil, $250 oil...


----------



## Uncle Festivus

*Re: OIL AGAIN!*

Consumers in Chindia about to pay real prices for their fuel as their governments try to reduce the burden of subsidies? Demand side negative?



> India and China are starting to get the message that they cannot buy oil cheap and sell by-products like gas and diesel low. When the deficits start to hit hundreds of billion of dollars, the action is a little harder to swallow
> China has already started to back off of the practice of supplying more and more capital to support state-controlled oil operations like PetroChina (PTR) and China Petroleum (SNP). Now, India is matching that. *According to* MarketWatch, "The latest moves are expected to ease the losses at state-controlled oil-refining and marketing firms like Indian Oil Corp."
> 
> The fact that consumers and businesses in the two huge countries will have to pay significantly more for the gas that runs their cars, the diesel that runs their truck, and the oil that heats their homes could do some real damage to consumer spending and GDP growth in those countries. It is not totally unlike the choices that are being made in the US.
> 
> The net impact on the economies in India and China is that they may have to raise export prices to offset a decline in consumer spending. There are very few other alternatives to keep GDP improvements in hand.
> 
> Those more expensive exports will be marketed into the US and other parts of the West where there are buyer's strikes due to poor credit markets and rising commodities prices.
> 
> Keeping fuel prices low may have pushed economic growth higher in China and India, but it is time to pay the piper. His compensation has been deferred for too long.




http://www.marketwatch.com/news/sto...x?guid={C1D685F3-2C91-45E1-A49F-F200A5D68AB9}


----------



## Aussiejeff

*Re: OIL AGAIN!*

_Crude oil for July delivery rose 22 cents to *$128.01* a barrel at 8:35 a.m. Sydney time in after-hours trading on the New York Mercantile Exchange. Futures reached a record $135.09 a barrel on May 22 and are up 94 percent from a year earlier. 

Yesterday, oil rose $5.49, or 4.5 percent, to *$127.79* a barrel, the highest close since May 28. It was the biggest one- day gain since March 26. Prices rose as much as $6.08 a barrel in after-hours electronic trading. 

"This huge move is attributed to the weaker dollar,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. "If the Europeans decide to raise interest rates, the dollar will be back on skid row.''_

http://www.bloomberg.com/apps/news?pid=20602013&sid=a0mQZbkMoMc4&refer=commodity_futures


The roller-coaster continues.... 

One question I have is * what alternative to oil based jet fuel do airlines have?*

Seems if prices head up towards $150 barrel and beyond, many airlines including Qantas, VB etc are going to find it tough to keep flying. The flow-on effect to the tourism industry world-wide will be catastrophic if prices remain high. All the focus seems to be on alternative fuels for land based transport, but _WHAT ABOUT THE AIRLINES?_ 

Will Rudd & Co. have to bail out our fearless flyers?

Or.....biodiesel powered blimps perhaps? Now there's a thought. Anyone remember the affectionately? named "Bondy's Blimp" from WA? LOL 


AJ


----------



## brty

*Re: OIL AGAIN!*

Boeing are working on using bio fuel in existing engines.

http://www.boeing.com/news/releases/2007/q3/070928b_nr.html

Might be a bit more powerful than a blimp.

brty


----------



## Aussiejeff

*Re: OIL AGAIN!*



brty said:


> Boeing are working on using bio fuel in existing engines.
> 
> http://www.boeing.com/news/releases/2007/q3/070928b_nr.html
> 
> Might be a bit more powerful than a blimp.
> 
> brty




Unfortunately, apart from a viable biofuel for aviation probably not being widely available for an unknown number of years, the new "20% more fuel efficient" jets won't be available until sometime into 2010 either. Will airlines survive till then if oil continues to push higher?


AJ


----------



## Tysonboss1

*Re: OIL AGAIN!*



Aussiejeff said:


> Unfortunately, apart from a viable biofuel for aviation probably not being widely available for an unknown number of years, the new "20% more fuel efficient" jets won't be available until sometime into 2010 either. Will airlines survive till then if oil continues to push higher?
> 
> 
> AJ




yeah,... Just less flights every day, planes won't take off unless fully booked with expensive seats and big fuel levies,

The days of sydney to brisbane flights for $49 are numbered.


----------



## Wysiwyg

*Re: OIL AGAIN!*

All the small cap. oilers on my watchlist got chopped down today.I don`t know if this means a dropping crude price next week but there was some desperate exits right up to the close.
Thought I would share that observation.






.


----------



## rederob

*Re: OIL AGAIN!*



Wysiwyg said:


> All the small cap. oilers on my watchlist got chopped down today.I don`t know if this means a dropping crude price next week but there was some desperate exits right up to the close.
> Thought I would share that observation.




Likely that many are taking profits, believing $128 will not hold.
I think oil is still a bit pricey, but the bottom line seems to be that upside risk continues to be the norm, with shorters being severely punished. 
Last nights 6% gain was not on the back of USD weakness:  The USD was simply a catalyst that wrong-footed speculators who kept running to cover.
Looking at the US situation with regard to inventories, there is no good news.
Almost across the board inventories are down, imports are lower, and available days of stock is in decline.  Although there is little doubt that high prices are impacting demand, the other reality is that the US puts many millions of trucks and cars on the road each year, and to accommodate this it is essential that inventories rise year on year: This is not happening.
Charts and data can be found at:
http://tonto.eia.doe.gov/oog/info/twip/twip.asp


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> I think the $95.00 mark is as safe. But I am really not sure where oil will go over the next 1/4,... there is scope for it to drop towards the $100 - $110 area if these "speculaters or conspiritors" change mood.



Surely we can now punt on $120 being the absolute minimum it will fall to!
Maybe too early to call that one....
Ok, but we're over $130 again tonight, meaning the dip to low '20s was well bought into.
This is a heavy bull, rather than a powerful bull.
That is, it can hold an overweight position for long periods without smashing up the China shop.
I note from some threads on oil equities that there was selling pressure today.
I can only say that if you are still just a casual observer of where oil is heading, and reluctant to dip your toe into the water, you might just miss some good buying opportunities: Oil equities are still being priced on sub $100 oil and this is a massive failure from the analytical community.  For 2009 if you are pricing an equity's reserves at $150 per barrel, you will still be making a conservative estimate of value.


----------



## wayneL

*Re: OIL AGAIN!*

Holey Dooley!

I hope all you CL and QM traders are on this run. Just one contract would have paid for fuel for the Bentley for months.


----------



## MRC & Co

*Re: OIL AGAIN!*



wayneL said:


> Holey Dooley!
> 
> I hope all you CL and QM traders are on this run. Just one contract would have paid for fuel for the Bentley for months.




Where was my reminder Wayne?  

It was one of those, 'head was turned' moments!  

Few equity oil positions were triggered, but with the market tumbling, they aren't much help!


----------



## wayneL

*Re: OIL AGAIN!*



Anyone want to buy my Hummer?


----------



## MRC & Co

*Re: OIL AGAIN!*

Talk about parabolic!!!!!!

I don't think I have ever seen so many consecutive flags in such a short period of time!

Cannot possibly run any further in the short-term, can it?  

Cannot believe I slept and didn't keep a firm eye on oil after waiting around for it's run!  What a missed opportunity!    Will have to make do with my lousy oil equities now.

Hope you weren't trading the mini contract Wayne!

I'm trying to flog off my private jet now, but cash converters even turned me down!


----------



## wayneL

*Re: OIL AGAIN!*



MRC & Co said:


> Talk about parabolic!!!!!!
> 
> I don't think I have ever seen so many consecutive flags in such a short period of time!
> 
> Cannot possibly run any further in the short-term, can it?
> 
> Cannot believe I slept and didn't keep a firm eye on oil after waiting around for it's run!  What a missed opportunity!    Will have to make do with my lousy oil equities now.
> 
> Hope you weren't trading the mini contract Wayne!
> 
> I'm trying to flog off my private jet now, but cash converters even turned me down!



QM is not liquid enough out of hours... CL all the way for me.

I had a potential buyer for the Hummer, but he wanted me to send him the fuel to come and look. As he lives on the other side of Cheltenham (3 miles) it was going to cost me more than the Hummer is worth.

... in talks with the Museum of Human Lunacy.


----------



## Sean K

*Re: OIL AGAIN!*



wayneL said:


> Anyone want to buy my Hummer?



You selling Hummers now Wayne?

You must be doing it tough at the moment.

Or, perhaps I have a different definition of a 'hummer'.


----------



## wayneL

*Re: OIL AGAIN!*



kennas said:


> You selling Hummers now Wayne?
> 
> You must be doing it tough at the moment.
> 
> Or, perhaps I have a different definition of a 'hummer'.



Now I have to get that image out of my mind. 

So the rumour in the financial media is that Israel is about to arrack Iran.

Of course this will send oil etc Ape ****. 

But if that happens, our world will change folks, the money we make from trading oil won't matter. Mark my words.


----------



## Sean K

*Re: OIL AGAIN!*



wayneL said:


> So the rumour in the financial media is that Israel is about to arrack Iran.
> 
> Of course this will send oil etc Ape ****.
> 
> But if that happens, our world will change folks, the money we make from trading oil won't matter. Mark my words.



Do any ministers in the Middle East or West Asia understand the word 'deplomacy'? 

I can't help but think that _eventually_, they will get what they all want. 

And I can't imagine where oil and gold will go...


----------



## Aussiejeff

*Re: OIL AGAIN!*



kennas said:


> Do any ministers in the Middle East or West Asia understand the word *'deplomacy'*?
> 
> I can't help but think that _eventually_, they will get what they all want.
> 
> And I can't imagine where oil and gold will go...




"Diplomacy" - the building of workable international relationships.

"_De_plomacy" - the dismantling of workable international relationships.


LOL




AJ

PSsssttt: I AM NOT a Middle East or West Asian Minister!!!


----------



## Sean K

*Re: OIL AGAIN!*



Aussiejeff said:


> "Diplomacy" - the building of workable international relationships.
> 
> "_De_plomacy" - the dismantling of workable international relationships.
> 
> 
> LOL
> 
> 
> 
> 
> AJ
> 
> PSsssttt: I AM NOT a Middle East or West Asian Minister!!!



 LOL. Damn spell cheacker!!! he he


----------



## Tysonboss1

*Re: OIL AGAIN!*



wayneL said:


> Anyone want to buy my Hummer?




Sims Group will be able to help you on that one... I can see them buying alot of quality cars over the next 10years,...


----------



## Aussiejeff

*Re: OIL AGAIN!*



wayneL said:


> Anyone want to buy my Hummer?




Are you sure you didn't mean "_Bummer_"? 

Now there's a nickname that could "stick".


----------



## Wysiwyg

*Re: OIL AGAIN!*



wayneL said:


> So the rumour in the financial media is that Israel is about to arrack Iran.
> 
> But if that happens, our world will change folks, the money we make from trading oil won't matter. Mark my words.




I just read a story on that about the comments from an Israeli deputy minister below .... Is a mans sanity measured by his wantoness to kill?




> JERUSALEM (Reuters) - An Israeli attack on Iranian nuclear sites looks "unavoidable" given the apparent failure of sanctions to deny Tehran technology with bomb-making potential, one of Prime Minister Ehud Olmert's deputies said on Friday.
> 
> "If Iran continues with its programme for developing nuclear weapons, we will attack it. The sanctions are ineffective," Transport Minister Shaul Mofaz told the mass-circulation Yedioth Ahronoth newspaper.
> 
> "Attacking Iran, in order to stop its nuclear plans, will be unavoidable," said the former army chief who has also been defence minister



.


----------



## MRC & Co

*Re: OIL AGAIN!*

I read about that news just after oil went para.

I knew something big was up, but that kind of talk is insane!  Perhaps another continuation on Monday............

I'm now looking for gold to catch up!  Since I missed the oil run (at least the futures), might be consolation at least to catch a decent gold run.

This weekend is going to be a long one!


----------



## Wysiwyg

*Re: OIL AGAIN!*



MRC & Co said:


> I read about that news just after oil went para.
> 
> I knew something big was up, but that kind of talk is insane!  Perhaps another continuation on Monday............
> 
> I'm now looking for gold to catch up!  *Since I missed the oil run *(*at least the **futures*), might be consolation at least to catch a decent gold run.
> 
> This weekend is going to be a long one!




MrC. & co., a while back I was severely whipsawn a few times shorting crude at $108.I`m never going to try for highs and lows again and really should have hedged my bets.Ouch.


----------



## Temjin

*Re: OIL AGAIN!*



MRC & Co said:


> I read about that news just after oil went para.
> 
> I knew something big was up, but that kind of talk is insane!  Perhaps another continuation on Monday............
> 
> I'm now looking for gold to catch up!  Since I missed the oil run (at least the futures), might be consolation at least to catch a decent gold run.
> 
> This weekend is going to be a long one!




It's crazy! It just seem oil doesn't want to "correct" itself and keep going up. It doesn't fit me at all to put any new positions in. I guess I got out too early.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Oh dear.....................anyone seen Wavepicker?

I want you boys to keep a close eye on him, keep checking his pulse and make sure you have the defibrillators on standby just incase he needs a zap. Got to ensure that he stays in good condition until oil hits $150.00 and i get my beverages.


JW


----------



## MRC & Co

*Re: OIL AGAIN!*



Wysiwyg said:


> MrC. & co., a while back I was severely whipsawn a few times shorting crude at $108.I`m never going to try for highs and lows again and really should have hedged my bets.Ouch.




Yep, big mistake and a good lesson learnt.  Occassionally I will try and pick a swing against the direction of the larger trend, but only if I see a lot of confluence.  Other than that, definately better to go with the direction of the larger trend.

Though not really a whipsaw.


----------



## M34N

*Re: OIL AGAIN!*

It's a give in that oil will hit $150 p/barrel, but who is willing to guess where it will stop? Last 7 years shown below...







Insane to say the least. Why bother raising interest rates when oil will do a better job to slow down the economy!


----------



## golfmos123

*Re: OIL AGAIN!*

Don't know whether this should go in the oil or gold threads....

With oil up strongly, do we expect to see gold chasing it now???  Or do we look for oil to come back to meet the POG???


----------



## rub92me

*Re: OIL AGAIN!*

So we have a parabolic chart, and something that looked to me a bit like a blow-off top. Not short yet, but a possibility for a bit of a pull-back perhaps before it goes to 500 dollar


----------



## rederob

*Re: OIL AGAIN!*



Tysonboss1 said:


> The official US line is that inventories have decreased due to shipping delays.
> 
> Oil is really one of the most non elastic resources when it comes to supply and demand pressures, but the priciple is still the same.



I wonder what the reason was this week....
If it's not "fundamentals" then the speculators will be in for a hiding soon.


----------



## Aussiejeff

*Re: OIL AGAIN!*



rederob said:


> I wonder what the reason was this week....
> If it's not "fundamentals" then the speculators will be in for a hiding soon.




For whatever reason, "US inventories" apparently have declined for 4 weeks straight. Could have some fundamental effect.... 

It would appear that "shorting" speculators would be the ones copping the hiding ATM.

AJ


----------



## MRC & Co

*Re: OIL AGAIN!*



Aussiejeff said:


> It would appear that "shorting" speculators would be the ones copping the hiding ATM.
> 
> AJ




Rederob means copping a hiding in so far as being blamed for the price rise, despite no excess supply.  If I interpreted correct.


----------



## Temjin

*Re: OIL AGAIN!*

Just read an interesting article from Ted Butlet (yes, an ultra silver bug).

http://www.investmentrarities.com/06-10-08.html

But it's a bit related to oil futures and speculations. 

It seems that the rise in oil prices aren't necessary blamed on the index funds speculating the commodity market by adding more and more long positions, but rather due to the people on the short side trying to cover their positions. It's amazing what a few short covering would do to a commodity price.


----------



## rub92me

*Re: OIL AGAIN!*

I looked at a chart a couple of days ago (can't remember where exactly, maybe the NYMEX) that showed a historical overview of the size of short positions of large institutional investors. That chart seemed to indicate that it was at a relatively low level, so I'm not convinced that this is a huge overhang (risk of short squeeze) at the moment. If anyone has the data/facts on this it would be great. I'll have another look this evening to see if I can track it down.


----------



## Smurf1976

*Re: OIL AGAIN!*



Aussiejeff said:


> For whatever reason, "US inventories" apparently have declined for 4 weeks straight. Could have some fundamental effect....



Yep. Rising consumption without a corresponding rise in production. The only way you can do that is by drawing down inventories.

It's no different to water in a dam, something Austalia has already learnt about the hard way. If you start with a balanced situation (outflow equal to inflow) then the inflow drops whilst outflows increase then the level in the dam must go down. Until, that is, it's empty. Then you get outright shortage, something I'm convinced we'll see with oil at some point (though probably not for a while yet).


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> Yep. Rising consumption *without a corresponding rise in production*. The only way you can do that is by drawing down inventories...




No probs, Smurf. Those sly, secretive Saudis appear to have unlimited unspecified crude capacity and will simply up the output whenever the West whimpers.... 

I'm beginning to wonder whether I'll actually be around to see what happens the first time they say "Errr.... no....Mr President....we have been lying. In fact, our reserves have declined more than we would admit and we actually have have no more capacity to increase output....period! "


AJ


----------



## Tysonboss1

*Re: OIL AGAIN!*



Aussiejeff said:


> No probs, Smurf. Those sly, secretive Saudis appear to have unlimited unspecified crude capacity and will simply up the output whenever the West whimpers....
> 
> AJ




Well for now that seems to be the case,.... with another 500,000 Barrels a day coming out of saudi feilds it should ease some upward pressure on prices,

Will this extra production be enough to spook the speculaters into dumping oil,... who knows time will tell. If it does then we may see oil drop to $110.00, 

Saudi feilds can't continue to increase production indefiantly though, as the rest of the world declines. interesting to see where we are at by XMAS.


----------



## ithatheekret

*Re: OIL AGAIN!*

 The Saudis say they'll raise output by 200K/bpd , but capacity globally has peaked . 

Personally I feel the only way oil output will rise , is if they hold it above their heads !

The only move within OPEC that I've liked to date is Indonesia declaring an exit , a move which I applaud .


----------



## rederob

*Re: OIL AGAIN!*

Despite politicians trying to knock down oil prices, the reality is that market players are running a risky, quasi-speculative agenda, underpinned by wafer thin fundamentals.
US inventories are failing to build for yet another week, and driving season is nearby.
Nigerian oil platforms were yesterday attacked, despite them being 100km offshore.
The US continues to push for more sanctions against Iran, despite  their control over Straits of Hormuz, responsible for about 20% of Arabian oil outflows via tanker.
China and other fuel subsidising nations are gradually moving oil prices to more commercial levels, and we have yet to see if this will impact demand.
Tanker oil movements suggest a recent outflow peak, and that the Saudis are running at production capacity: Short term, even if they could pump more oil they probably couldn't get their hands on more tankers to deliver it.
Then there's the chart action:
This shows RSI moving to neutral - an area which has generated each of the recent northbound price impulses.


----------



## Smurf1976

*Re: OIL AGAIN!*



ithatheekret said:


> The Saudis say they'll raise output by 200K/bpd , but capacity globally has peaked .
> 
> Personally I feel the only way oil output will rise , is if they hold it above their heads !
> 
> The only move within OPEC that I've liked to date is Indonesia declaring an exit , a move which I applaud .



You applaud the depletion of Indonesia's oil fields?  They've only left OPEC because they're now a net oil _im_porter with declining production. They've peaked...


----------



## Smurf1976

*Re: OIL AGAIN!*



Tysonboss1 said:


> Well for now that seems to be the case,.... with another 500,000 Barrels a day coming out of saudi feilds it should ease some upward pressure on prices,



That the timing of this extra production corresponds with them bringing a new field online is as close as we'll get to proof that their existing fields are running flat out. 

It's like someone saying they've got plenty of cash. But for some strange reason they don't want to pay you the $100 they owe until _their_ next pay day. It makes it look awfully like they're close to being broke no matter what claims of wealth they make. Actions speak louder than words and what the Saudi's are doing is awfully similar.

What ought to ring some really big alarm bells though is this. Saudi is brining on new fields to raise production to a level that is still below their peak. That very strongly suggests their other fields have lost production capacity (that is, peaked). If that's true then we're seeing close to the worst case scenario for oil production actually playing out.


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> That the timing of this extra production corresponds with them bringing a new field online is as close as we'll get to proof that their existing fields are running flat out.
> 
> It's like someone saying they've got plenty of cash. But for some strange reason they don't want to pay you the $100 they owe until _their_ next pay day. It makes it look awfully like they're close to being broke no matter what claims of wealth they make. Actions speak louder than words and what the Saudi's are doing is awfully similar.
> 
> *What ought to ring some really big alarm bells though is this. Saudi is brining on new fields to raise production to a level that is still below their peak. That very strongly suggests their other fields have lost production capacity (that is, peaked). If that's true then we're seeing close to the worst case scenario for oil production actually playing out*.




Agreed. Major oil producers all over the world are losing production capacity at an ever increasing rate. The Saudis are one of the few who have any capacity to "put a finger in the dyke" - for now - as it were. But the rate of worldwide production decrease at the same time as a rocketing world demand must _surely_ over-run whatever capacity the Saudis have left in the short term....

AJ


----------



## Smurf1976

*Re: OIL AGAIN!*



Aussiejeff said:


> Agreed. Major oil producers all over the world are losing production capacity at an ever increasing rate. The Saudis are one of the few who have any capacity to "put a finger in the dyke" - for now - as it were. But the rate of worldwide production decrease at the same time as a rocketing world demand must _surely_ over-run whatever capacity the Saudis have left in the short term....
> 
> AJ



I think we have pretty much reached that point now where it's all too hard. That is, to keep the game going is going to require such incredible effort (GTL, CTL, bitumen, shale, tar sands etc) that in practice it just won't happen. In theory it might be possible, but not in practice.

I'd compare it to the gas situation in WA right now. In theory it is technically possible to work around that and keep just about everything up and running. But it's nowhere close to happening in practice, hence the unfolding economic disaster with job losses etc.

Unrelated to that, I just re-read my previous post in reply to ithatheekret. Should have been a  in there somewhere otherwise it reads a bit harsh I think.


----------



## nioka

*Re: OIL AGAIN!*



Smurf1976 said:


> I'd compare it to the gas situation in WA right now. In theory it is technically possible to work around that and keep just about everything up and running. But it's nowhere close to happening in practice, hence the unfolding economic disaster with job losses etc.




 Now there's a thought. If that did happen at one of the major production oil production facilities we would have proportional results. The chances that it will happen are high. A small war in the wrong place  is probable and a big one possible. Even a rebellion or sabotage is likely in some of the producing states.

 Damn!!! I've just sold a 1000ltr fuel tank I thought I had finished with. Maybe I should have filled it up and had a buffer supply.


----------



## ithatheekret

*Re: OIL AGAIN!*



Smurf1976 said:


> You applaud the depletion of Indonesia's oil fields?  They've only left OPEC because they're now a net oil _im_porter with declining production. They've peaked...




What you don't think the major OPEC producers have a vested interest in keeping prices high ......... 

Indonesia at least produces light sweet , but on the depletion side , every nation that drills for black gold is facing depletion problems . The move was a protest on the inflation caused by OPEC refusing to drop prices . Not all of OPEC are buddies with Uncle Sam , there are those that would rather see it pay $500 a barrel if it could .

Let's get past the spin here at least . Iraq was a 13% swoop , just across the border in Iran is Basra Light . The Saudis already have US military protection , so they're not that much of a hurdle . And the Turks want the northern fields in Iraq to use the pipeline and tap into that Basra light and the massive gas reserves in Iran , pump it all into Europe and make a quid out of it . The US does not like this option , it hampers their subsidy from the rest of the world whilst it attempts to attain CHEAP oil once again .


----------



## Smurf1976

*Re: OIL AGAIN!*



ithatheekret said:


> What you don't think the major OPEC producers have a vested interest in keeping prices high .........
> 
> Indonesia at least produces light sweet , but on the depletion side , every nation that drills for black gold is facing depletion problems . The move was a protest on the inflation caused by OPEC refusing to drop prices.



I think there's a point being missed here... 

OPEC - Organization of Petroleum *Exporting* Countries.

Due to production having peaked and declined, Indonesia is now an oil *importer*.

10 years ago Indonesia gained from OPEC achieving higher prices. Now Indonesia is involuntarily on the other side - the same side as the US and every other oil importing country.

One by one, we'll see the others go the same way eventually. There's no point being in an exporters' cartel once you're no longer an exporter. That fact, that an exporter is now an importer, is what ought to be ringing the alarm bells far and wide. 

The USA, UK etc have gone the same way, both no longer being oil exporters. Mexico looks to be next. Many don't realise that the US did in fact have its own version of OPEC (the TRC), which limited production to hold up prices, until their production peaked and it became a pointless entity.

In short, a key exporter becoming an importer is yet another sign of overall oil depletion.


----------



## rederob

*Re: OIL AGAIN!*

The US is facing an interesting dilemma in relation to crude oil and petroleum stocks.
Although demand is declining, stocks are not building.
One reason is because global output is constrained.
The other reason is straightforward price: Commercial stocks are priced too high.  Commercial buyers are reluctant to keep taking delivery at present high prices while there remains an inventory buffer (about 20 days worth excluding the SPR).
However, as the buffer shrinks, speculators take positions and know they are safe in the short term.
They are very safe because inventories remain near or below 5-year average ranges for this time of year: And we are soon to enter into the "driving season".
Elsewhere people are finding excuses for "high prices", and many are saying there is no rational reason for them to be anywhere near where they are.
Well, it's a carefully calculated gamble on short term fundamental grounds specifically focussed on the US market.
Given the nature of the present trend, which is not at all flash in the pan, there remains a strong likelihood that 2 things will occur. 
 First, it is improbable that oil will dip below $120 in the short term (as commercial buyers must bid it up on price weakness).  
 Secondly, a new peak near the $150 mark should be reached.

I regard these probabilities as enduring for the next 2 weeks, and up to 2 months.


----------



## ithatheekret

*Re: OIL AGAIN!*



Smurf1976 said:


> Unrelated to that, I just re-read my previous post in reply to ithatheekret. Should have been a  in there somewhere otherwise it reads a bit harsh I think.




 I wouldn't be too worried Smurf , this is only a debate , you put forward some valid points and we must remember that typing an answer in a post does not bring out the emphasis of a discussion as it would over a few drinks with friends .

Your points on depletion are well accepted , we'd be fools to think otherwise , it's just a shame that the top echelon ranks have limitless fools running around with outdated policies that they stick to like glue .

I'd prefer someone to argue their point , rather than have someone who follows the mantra of the top brass .

I could argue a point that I feel is closer to the truth on Iraq than the oil swoop ( Iraq ended up importing oil too ) , but the fact that it's head honcho chose to attempt to remove a President with extreme prejudice I believe the term goes , was an idiotic move on Sadmatts part. He thought he was a swinger , and that's exactly what he ended up doing . But the fact that a small group of top shelf families are in control of a global asset whilst the rest of their populus are sidelined and live in sub human conditions is a nasty truth . Which in one way or another , we are all complicit to the act at some level . All for the sake of driving around in guzzling cars and the simplicity of which technological advances have taken our nations too .
I take for granted the fact that I can simply turn a switch to attain light and warmth etc. , etc. 

I look at Indonesia and note the land that is being taken up for palm oil , sure it's used for dishwashing liquids etc., but the fact that it makes a fantastic alternative fuel does not escape me . The cost of the venture may be well measured in dollars , but ...... the real cost is hidden in living standards .

I don't see too many OPEC nations following the lead  , instead they're building airports and hotels etc., chucking in the odd desalination plant here and there . Great lot of good it will do them when they finally have nothing to sell us except dates .

Strewth even the Kiwis have come up with an alternative for avgas and bloody good one 'em too , shame they can't play cricket or rugby yet  ( tongue in cheek ) 

If we look at the OPEC nations , pick any one of them and I'll show you a western nation that exports more oil to the US burn off than that member does . That nation is Canada . So how long until the depletion factor comes home to roost there ?

No , you keep the posts coming mate , I'm thick skinned and if I'm wrong will be the first to admit it , after all it's no use following a flawed theory and I will change my views once proven wrong . It's just a shame we can't get administrations to do so also .

I listen to that Obama chap and like some of the things he has to say , but I feel that a country that is built around military supremacy should have a military minded leader at the helm . The US hasn't had one of those for eons .

If we look at the nofly zone that was in place after the Kuwait invasion , the costs there would have been outrageous , but they had to do something to contain the situation . If it was me who had the say so , I would have simply got Congress to change a simple ruling and allowed a covert force to extract the problem . 

The way one great leader of Iraq was disposed of was nothing but barbaric , since that day in 1963 there has been constant turmoil , which had been in the making since the British occupations in the middle east .

A quote that I have always remembered " you can always rent an Arab , but you can never buy one " , seems to have been lost an many an administration .

To see how backwards the middle east has gone over the centuries is amazing ,  streets of main cities there were lined with gas lamps , whilst Londoners were still walking around with candles . But technological advancement helped to quell the forward thinking , it was a military one , which was seized upon and turned on each of the squabbling tribes one by one , until those who wanted control finally got it .

There have been many advancements made throughout history , but each one that was pushed to the side was done by one group intent on their own train of thought ( profits ) , one that predates most governments and theories . The result as usual was higher costs and lower living standards .

So perhaps and just perhaps , the day they finally run out of oil , we will see peace in the middle east , but don't hold your breath waiting for it . If it does happen the western world will probably be paying a sun tax on solar systems by then .

Could you imagine what would happen if certain middle eastern countries got caught in a land rights situation as many of the western world nations have ?


----------



## Smurf1976

*Re: OIL AGAIN!*



ithatheekret said:


> If we look at the OPEC nations , pick any one of them and I'll show you a western nation that exports more oil to the US burn off than that member does . That nation is Canada . So how long until the depletion factor comes home to roost there ?



If you exclude the tar sands then Canada is pretty much depleted. Production peak was, I think (from memory), 1973 or thereabouts. The only thing keeping their total production up is tar sands and a bit of conventional heavy oil. 

But there's a problem too, the tar sands operations use massive amounts of natural gas. And yep, you guessed it, Canada's production of gas seems to have peaked too. Hence the calls for nuclear power to run the tar sands operations.


----------



## ithatheekret

*Re: OIL AGAIN!*



Smurf1976 said:


> If you exclude the tar sands then Canada is pretty much depleted. Production peak was, I think (from memory), 1973 or thereabouts. The only thing keeping their total production up is tar sands and a bit of conventional heavy oil.
> 
> But there's a problem too, the tar sands operations use massive amounts of natural gas. And yep, you guessed it , Canada's production of gas seems to have peaked too. Hence the calls for nuclear power to run the tar sands operations.





yep yep yeppers


----------



## rederob

*Re: OIL AGAIN!*

The Saudi's oil conference on Sunday failed to put a damper on prices.
The market's immediate response was to move oil over $136, where it seems to be very comfortable.
Given that every industry heavyweight was in attendance, the immediate outcome should have resulted in a quantum shift lower, to a less speculative price outcome: This never happened.
Apart from some spare Saudi capacity - to produce more sour crude which is *not *what industry needs now - the consensus is that there is no quick fix.  Worse, there was no long fix either!
The Saudis reckon they can crank out 12.5 million barrels a day in a few years, and the Iraqis hope to double output within 5 years.  Although both are possible, the likelihood of success in the nominated time frames is very, very, very low.
Luckily the western world is in a recessionary phase, else the oil price would be significantly higher.
In a few years time the western world will have worked through it woes and be humming along - if the oil price doesn't slow down the recovery phase.
I think $200 oil by 2010 is likely.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Good news, seems the world is finally seeing through the sleek sheiks of tweek and their rubbery production and oil forecasts. Bring on $150.00.

You can fool some of the people some of the time but you cant fool all of the people all of the time, should have been the moto from that oil conference. Not sure who they think they are fooling, its pretty obvious we have a big problem. 

I'm edging closer to the free beer from Wavepicker with each passing week. Don't think $150.00 can be too far away now, just need one substantial event or piece of news to send the markets into panic.

Just hoping he is still solvent and hasn't waged all his funds on shorting the oil markets, i dont want to have to haggle with the liquidators.

JW


----------



## Uncle Festivus

*Re: OIL AGAIN!*

There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.

Why would you fill your inventories at these prices when demand is falling as well?


----------



## ithatheekret

*Re: OIL AGAIN!*



Uncle Festivus said:


> There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.
> 
> Why would you fill your inventories at these prices when demand is falling as well?






Consumption is waning in some areas , but I would have attributed that to the higher costs involved for the average consumer cutting back , but only due to the fact that their dollars can only be stretched so far . 

Is this another conundrum ? 

Hmmm ... could be , but that oil price is measured against a declining USD , one which is under assault from higher and higher inflation tapping on the worlds front door each day with it's dues being asked for .

Or is it that the market sets the price ?

There's always the fact that a price paid is one that the buyer is willing to pay and if the buyer is willing to pay a higher price .
The speculators side story I've been hearing since oil jumped out of its $22 comfort zone and rolled around $40 .

The same line has been put forward by the respective spinners ever since then , all the way through to the current price , where now they have turned up the rhetoric volume , just prior to the US elections ( of course ) . But are they willing to really do something about it or is this just more blah blah blah from those who want to be endorsed and have their party rolled into the White House Oval Office ?

We could form many opinions on this matter and it is viable to say that each point could be right , each being ingredients to what is really happening in the world today .
How much of the latest price could we say is built into Israels stick waving at Iran ?
How much is due to the Nigerian problem ? 
Cut those portions out and then we'd have to find out how much is built into inflation and the declining USD .

The latest rocket attacks to add to the many , it has me wondering how long until Israel finally says " Enoughs enough " .

Well it's enough to have people banging their heads on the wall of worry ........

Whilst they go into headbanger mode , we have to keep paying the rises in price or life starts grinding to a halt . To stop this we are getting more conservative in our thoughts on what we are spending our money on . 

Why ? Well to get that money in the first place we have to fill up the petrol tank to go and earn it . So we now have the weekly juggling act to perform with ones budget , firstly we have to be able to afford to get to that place of work , then we have to afford to keep ourselves fit enough to work , as inflation eats its way into our lifestyles .

Imagine how those that have been accustomed to subsidized fuel prices and budgeted on the formula , are now having to reshuffle that into something sustainable for them to survive the onslaught of higher costs across the board . 
Now they also have to deal with the fact that those jobs they have are threatened as companies slash jobs .

Just one big nasty circuit , just like the 70's but with more colours in the spectrum this time round .


----------



## Uncle Festivus

*Re: OIL AGAIN!*



ithatheekret said:


> ..........we have to keep paying the rises in price or life starts grinding to a halt.
> 
> Just one big nasty circuit , just like the 70's but with more colours in the spectrum this time round .




I think that this is were we are now, it is working, grinding through the global system - $140 is enough/sufficient to do this? Pivot....to negative circuit? Throw in a global credit crunch, housing bust, credit card defaults, CDS's - the monetary expansion/debasement end game?


----------



## ithatheekret

*Re: OIL AGAIN!*



Uncle Festivus said:


> I think that this is were we are now, it is working, grinding through the global system - $140 is enough/sufficient to do this? Pivot....to negative circuit? Throw in a global credit crunch, housing bust, credit card defaults, CDS's - the monetary expansion/debasement end game?




Polynomial .......... with a constant being multiplied by a swag of variables ?


----------



## Tysonboss1

*Re: OIL AGAIN!*



Smurf1976 said:


> What ought to ring some really big alarm bells though is this. Saudi is brining on new fields to raise production to a level that is still below their peak. That very strongly suggests their other fields have lost production capacity (that is, peaked). If that's true then we're seeing close to the worst case scenario for oil production actually playing out.




There are also concerns from leading geologists that the saudis have done longterm damage to the gawfer field by pumping salt water into the field in a way that has separted the pockets of oil which will slow production... its a bit concerning considering how much we rely on this mamoth of an oil field.


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.
> 
> *Why would you fill your inventories at these prices when demand is falling as well*?



If there is ignorance of the data it relates to people who do not understand that where demand exceeds consumption, the price of goods typically rise.

It is fallacious to infer that declining rates of demand actually means less demand than before.  The reality is that crude oil demand from BRIC's in particular means that total global demand year on year is still increasing.

Even with higher fuel prices the *expanding economies *are going to keep expanding at rates significantly greater than western economies.  In fact the capacity of emerging economies to slow down will only be marginally affected by higher fuel costs as their infrastructure is intrinsically less dependent on fuel.

The other factor to consider is that the BRICs are not debt laden to the extent that western economies are, while some of the emerging economies are bristling with cash (the Middle East in particular).

Finally, inventories provide a buffer, and maintaining buffers in uncertain times is a commercial imperative.  In a previous post I indicated that price weakness (short term) will be well bought into, because oil reserves need to be filled with "actual" oil - not futures contracts. While futures themselves will also be well bought into on price weakness, because in the commercial sector it is increasingly important to hedge costs: Put another way, the likes of QANTAS need to know they can afford to fly their planes in 2009 because they have some certainty over how much they will pay for aviation gas.


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.
> 
> Why would you fill your inventories at these prices when demand is falling as well?



Agreed in a technical sense but anecdotally there's rather a lot of priced out demand out there. Drop the price back to $50, and it's not long ago that oil was selling for $50, and watch consumption soar.

You can't do ANYTHING without energy. And there's not much you can do without transport. In my opinion the slowdown in consumption is indicative of a slowing economy. It's not as if we're actually mass producing electric cars or running around ripping out oil heaters and building coal / nuclear plants early 1980's style.

So I think what we're seeing is the economy adjust. We get less economy since we don't have enough oil to keep growing the economy. 

That the mainstream view is still very much "this is a temporary shock caused by a few speculators" leads me towards the notion that it's the real, long term situation many have long feared. I'd be less convinced of this if everyone was running around talking about peak oil - the masses usually get it wrong.


----------



## Smurf1976

*Re: OIL AGAIN!*



Tysonboss1 said:


> There are also concerns from leading geologists that the saudis have done longterm damage to the gawfer field by pumping salt water into the field in a way that has separted the pockets of oil which will slow production... its a bit concerning considering how much we rely on this mamoth of an oil field.



I'm quite familiar with this one. The concern relates to water break throughs which effectively kill the wells. Water flows more easily than oil, so once it breaks through it's much like water going through a rock tunnel - the water flows through but the rock wears very slowly. 

I have some computer generated images from 2004 which show the oil/water saturation in a cross section of Ghawar (at the northern end). Also the comparable image (produced 2004 from historic data) for circa 1980 and also for when the field was originally discovered.

I'd better not post them for legal etc reasons (I think someone may hold copyright on the computer work as well as issues about leaked data etc) but let's just say that it was something of a defining moment when I first saw them. Denial was no longer possible in the face of this...

Pre-extraction the bulk of the field is shown as having a water saturation in the order of 5 - 15% apart from the lowest points which are 90% plus (that is, no useful oil there to start with). 

Ignoring the lower parts, in 1980 about half shows water saturation in the order of 50%, rest not much different from original.

2004 the vast majority is 50 to 75% (effectively depleted for practical purposes) with only a very small area below 25% at the higher points. 

This is only for the northern end. It's generally accepted that the southern parts are a lot less depleted, largely due to the far greater difficulty in getting the oil to flow in the first place. The southern parts thus represent a long term source of low volume production compared to the rapidly flowing wells in the north.

I can't confirm the accuracy of this but I'm roughly three quarters confident it's based on legitimate data.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*



Uncle Festivus said:


> There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.
> 
> Dunno Uncle, looks pretty solid to me.
> 
> Care to join Wavepicker and put some beer on it?
> 
> 
> JW


----------



## ithatheekret

*Re: OIL AGAIN!*



ithatheekret said:


> I'm sticking with my projections and they're only based on a phase one catalyst at present .
> 
> 
> 
> 
> If I were a sober and astute investor I'd be buying the dips , but at present I'm too pissed to give a ....
> 
> But even though the State has paid for my nights entertainment , I'm more than certain that oil will achieve a price average of $140 pb ....... actually $142.80 , so IMHO $120.60 -$142.80 will see us out until 2014 at least in the median range ...... unless the unexpected pops up and chits all over my calculations .
> 
> Margins will be protected ! The rest is in our Lords hands .......... apologies to our athiest members , but the pri.ks keep shifting the goal posts , the more they shift them the closer $200 will get !




Well we've seen in the first target , yuck ...... 

I don't like this projection stuff anymore , best pick out a red .... maybe a port ...... ah f**k this where's the whiskey !

I have 156 2nd 162 3rd 168 running in 4th place next . If we get there , I'm hiring slaves to carry me  petrol will be too expensive and it will be cheaper to get rolling drunk . Unfortunately , I could get pinched if drunk on a horse around here . They'd probably breatho the horse too in this district .

Somone wake George and tell him it's Groundhog day , if they can find Blair slap him with Cherie ......... forget about Johnny , he's not worth it .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Well we've seen in the first target , yuck ......
> 
> I have 156 2nd 162 3rd 168 running in 4th place next.



It is a curious mathematical convenience that number from 140 rise to 156, 162 and 168, and even higher.
My preference for the next high is a figure greater than the last one.
I have no difficulty projecting higher highs without needing a drink.

On a more sane level, the issue with oil is the price it reaches to trigger sustainable demand destruction.  Clearly Western countries are curtailing non-essential travel and reducing oil demand.  That reduction needs to flow back into inventory re-builds before the oil price stabilises/declines.
It is likely that once this trend reveals itself to oil speculators, the price will collapse considerably.
That collapse will be relatively short-lived, however, as it is quite clear from OPEC spokesmen and industry insiders that output will have difficulty matching demand in the near years.  In the distant years - 2012 and beyond - the mismatch will climb incrementally until other energy sources render oil to price equilibrium.  
Because oil delivers incredible portable power by weight/volume, it is not likely that its price will ever decline to previous historical levels unless matched or bettered by a technology we have yet to discover.


----------



## ithatheekret

*Re: OIL AGAIN!*

Hmmm .... hypothesis or taking the p...


I wonder how I got a certain projection on IPL the same way . 

I measured certain curves , but those curves are a result of ... what data ?


Sure it is not 100% perfect , I doubt that it's higher than for arguements sake ....... 73.2248 % 

But so far it has only failed three times and those instruments were in the realm of others doings . The timeframe is where it seems to get muddled the most . But the combinations are so far ..... doing quite nicely .

I wonder if I should now add the change on the end of those sums ......

But right now I'm satisfied with achieving a record intra day high area !


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Hmmm .... hypothesis or taking the p...



Given your post suggested a price "average" and, separately, a "median range" to 2014 I can't work out exactly what you have achieved.
We have a 2008 average price of about $112; and you are proposing?
It is a mathematical certainty that the average price  for 2008 will rise if the present price remains higher than the average to date - a strong short term probability.


----------



## Trader Paul

*Re: OIL AGAIN!*



Hi folks,

Looking at the oil price forecast, our astroanalysis has us expecting a few 
negative cycles for the oil price in 2008, but fill your tanks now, because 
it would not be surprising to see POO hit $200/bbl, in 2009. 

Here's SOME of the time cycles expected for oil in 2008 and 2009:

      August 2008 ... expecting negative cycles on 01-07-15082008

 September 2008 ... expect 2 positive cycles 17-19092008

    October 2008 ... volatile oil price in October and  November 2008:

                          10-13102008 ... negative cycle

                               14102008 ... positive cycle

                               30102008 ... positive cycle

 November 2008 ... 04-05112008 ... negative cycle

                          13-14112008 ... negative cycle

                          17-18112008 ... negative cycle

                          25-30112008 ... positive cycle 

December 2008 ...      01122008 ... minor cycle

                         05-08122008 ... minor and positive news

                         12-16122008 ... 2 minor and positive cycles

                         26-29122008 ... 2 significant and positive cycles - strong POO



More later about POO in 2009, but here's a preview of timing for extreme 
prices, next year .....  

 21 May - July 10 2009 ... POO will likely make its first attack at peak  prices,
followed by another try, particularly around 16-25122009 ... !~!


have a great weekend

   paul



=====


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> Given your post suggested a price "average" and, separately, a "median range" to 2014 I can't work out exactly what you have achieved.





I understand this ..........

We have a 2008 average price of about $112; and you are proposing?
It is a mathematical certainty that the average price  for 2008 will rise if the present price remains higher than the average to date - a strong short term probability.


I have $108-$110 .

But it's how or what you do with the data . If you take that data and for example ..... placed it on a line chart ( linear ) . What can you do with it ?
Not much , depending on where you are extrapolating data from and what type of chart your using , I use my own input data ( points ) , where I can within reason identify long data rows , to interpolate between data points , then extrapolate beyond known data values (  I believe it's called projection / forecasting ) . It can be used for comparing different charts . To find and compare trends over time periods and the changes over periods of time . It can recognize correlations and covariations between variables . It can be only used when the X axis requires and interval scale and it’s useless unless the X axis has a numerical value . When convention  defines a meaningful pattern it is of great benefit . The little straight lines we seen drawn all over linear charts are only of use to connect data points but when using a series of curves as well you are then able see just what represents functional relations between data points or to interpolate data ……… you know achieve an estimated value of a mathematical function with further input . But I pay more attentions to the curves as these can be measured ! IMHO .


PS.. and speaking of trends , the trend is firmly intact and has not broken down at all , the exponential hasn't budged either .


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> I have $108-$110 .
> 
> But it's how or what you do with the data . If you take that data and for example ..... placed it on a line chart ( linear ) . What can you do with it ?
> Not much , depending on where you are extrapolating data from and what type of chart your using , I use my own input data ( points ) , where I can within reason identify long data rows , to interpolate between data points , then extrapolate beyond known data values (  I believe it's called projection / forecasting ) . It can be used for comparing different charts . To find and compare trends over time periods and the changes over periods of time . It can recognize correlations and covariations between variables . It can be only used when the X axis requires and interval scale and it’s useless unless the X axis has a numerical value . When convention  defines a meaningful pattern it is of great benefit . The little straight lines we seen drawn all over linear charts are only of use to connect data points but when using a series of curves as well you are then able see just what represents functional relations between data points or to interpolate data ……… you know achieve an estimated value of a mathematical function with further input . But I pay more attentions to the curves as these can be measured ! IMHO .



What a load of mathematical mumbo jumbo!
A chart is just a 2-dimensional price map with axes that show the information you select, and are typically lineal or semi-log.
You don't "extrapolate" data *from *anywhere at all; you extrapolate date *to* some point/s.
Your "interpolation" doesn't explain anything, and if you are actually using interpolated data, you are using information that is not reliable and may have never existed. 
To do justice to what you purport you do there will be some exceptionally complex maths.
I trust your maths is better than your explanations.


----------



## Smurf1976

*Re: OIL AGAIN!*



Trader Paul said:


> Looking at the oil price forecast, our astroanalysis has us expecting a few
> negative cycles for the oil price in 2008, but fill your tanks now, because
> it would not be surprising to see POO hit $*200/bbl, in 2009*.
> 
> 21 May - July 10 2009 ... POO will likely make its first attack at *peak  prices,
> followed by another try, particularly around 16-25122009* ... !~!



I very much doubt that $200 will represent a long term peak price. Unless, that is, it causes the economy and thus oil consumption to fall in a heap (possible...).


----------



## MRC & Co

*Re: OIL AGAIN!*

I keep hearing oil is being driven by speculation........?  I have seen references to this in both the gold and XAO threads, not to mention, has become a news mantra.

I am a bit confused, if prices are soaring due to speculation (unlike Iron, which has no futures market and is also soaring), then where is the excess supply?

This latest talk and action to limit speculation, is simply the means to the ends of creating a fall in crude prices.

If price falls, demand rises and we get a massive supply shortage, leading to higher prices?

Political games?


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> What a load of mathematical mumbo jumbo!
> A chart is just a 2-dimensional price map with axes that show the information you select, and are typically lineal or semi-log.
> You don't "extrapolate" data *from *anywhere at all; you extrapolate date *to* some point/s.
> Your "interpolation" doesn't explain anything, and if you are actually using interpolated data, you are using information that is not reliable and may have never existed.
> To do justice to what you purport you do there will be some exceptionally complex maths.
> I trust your maths is better than your explanations.




Yes my math is passable , I actually had an apology for you , the current median is $111.63 .

But after that load of cods , well what was it Neumann said ....... " In mathematics you don’t understand things. You just get used to them "


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> Yes my math is passable , I actually had an apology for you , the current median is $111.63 .
> 
> But after that load of cods , well what was it Neumann said ....... " In mathematics you don’t understand things. You just get used to them "



Passable!
Then you would know that the arithmetic average is not the median.
Given the median oil price is about $101 this calendar year you have erred well beyond one standard error.
My favourite from your earlier post is where your magic can recognise "covariations between variables".  Oddly enough the linear difference between variables is the covariation.
In hindsight calling that post "mathematical mumbo jumbo" was overly generous.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Uncle Festivus said:
> 
> 
> 
> There appears to be a fait accompli by some posters regarding the future of the oil price & an ignorance of the data showing that consumption is falling in established western economies and that the _rate_ of consumption is also falling in the so called 'expanding' countries.
> 
> Dunno Uncle, looks pretty solid to me.
> 
> Care to join Wavepicker and put some beer on it?
> 
> 
> JW
> 
> 
> 
> 
> Well if the oil bulls are placing all their bets on Chindia to continue to propel the POO over $200 without any hint of global DEPRESSION then you will be right, but I can't bet against myself as a trader of the instrument in the meantime .
> 
> Don't laugh, but I actually think there is a hint of truth in the comment by Libya/OPEC that there could actually be an oil glut forming??
> 
> On a longer timescale, think of a sawtooth chart for oil with the dips corresponding to global recessions ie the dips will be almost vertical and severe, then a gradual climb again ...... there is no sustainable 'high' price for oil that the world can endure before economic contraction set's in... a peak oil cycle?
Click to expand...


----------



## rederob

*Re: OIL AGAIN!*



Uncle Festivus said:


> JeSSica WaBBit said:
> 
> 
> 
> On a longer timescale, think of a sawtooth chart for oil with the dips corresponding to global recessions ie the dips will be almost vertical and severe, then a gradual climb again ...... there is no sustainable 'high' price for oil that the world can endure before economic contraction set's in... a peak oil cycle?
> 
> 
> 
> 
> I have thought about it.
> There is a chance that the present malaise will spread and that oil will fall steeply in price - near term.
> However, as in future years there appears no credible chance that crude oil can match demand the "sawtooth" scenario will be confined to rather small dips and *not *severe declines.
> Until a viable (and cheap) alternative to oil for energy is found the world of commerce will bid up oil until demand destruction rather than recessions will be responsible for price dips.
> As for the "oil glut", there is one building for sour crude - but it's not what the refiners want, so sweet light oil will continue to attract an expanding premium.
Click to expand...


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> Passable!
> Then you would know that the arithmetic average is not the median.
> Given the median oil price is about $101 this calendar year you have erred well beyond one standard error.
> My favourite from your earlier post is where your magic can recognise "covariations between variables".  Oddly enough the linear difference between variables is the covariation.
> In hindsight calling that post "mathematical mumbo jumbo" was overly generous.




Now I see , you have a problem with the incorrect syntax in my post , well you could have simply corrected it . Sorry about that , you see I thought you were being pedantic . Is there anything else you see in the post that you feel is incorrect ?


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Redrob,

The last post of yours, they were Uncle Festivus's words, you accidently quoted them from me................


JW


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Uncle,

so you are bullish oil in the short term as per your investments but bearish oil in the long term?

Am i reading your post correctly?

Well, let me know when you turn bearish long term on oil and i will propose a little wager for a carton of cold amber beverages just to keep you focused on your bearish thoughts.

Until then, $150.00 is within reach and the top will soon be knocked off the first of Wavepickers coldies...................

JW


----------



## rederob

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Redrob,
> 
> The last post of yours, they were Uncle Festivus's words, you accidently quoted them from me................
> JW



Sorry Ms Wabbit, it must have been a syntax error :22_yikes:
I didn't notice it earlier as I was regressing the covariants to determine the median from the interpolated data I had extrapolated from the exponentials


----------



## michael_selway

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Uncle,
> 
> so you are bullish oil in the short term as per your investments but bearish oil in the long term?
> 
> Am i reading your post correctly?
> 
> Well, let me know when you turn bearish long term on oil and i will propose a little wager for a carton of cold amber beverages just to keep you focused on your bearish thoughts.
> 
> Until then, $150.00 is within reach and the top will soon be knocked off the first of Wavepickers coldies...................
> 
> JW




Hey Jess, you seem super bullish on oil

I for some reason have a similar view that energy prices now, will be considered very low in the next 3-5 years etc...cant cant put my house on it etc!

thx

MS


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*



rederob said:


> Sorry Ms Wabbit, it must have been a syntax error :
> I didn't notice it earlier as I was regressing the covariants to determine the median from the interpolated data I had extrapolated from the exponentials




Crikey Rob (poindexter of the ASF i'll be calling you soon), one too many parabolic equations or a little too much pythagerous theorum will do that to you. I dont want you fooling about with any quantum physics, perpetual motion or cold fusion. And, fart gas can not be substituted as fuel for your car.........even if your friends tell you it can..... 

Its school holidays so i thought id decipher for the young ones reading the commodties forum.

regressing – intransitive verb to move backwards

covariants – exhibiting a tendancy to change in conjunction with another statistical variable

median – a point, line, part or plane that is in the middle

interpolated – transitive verb to add one thing, often an unnessary item, between the existing parts of something else

extrapolated (great word) – both a transitive and intransitive verb to use known facts as the starting point from which to draw inferences or conclusions about something unknown

exponentials – rapidly growing in size, typically involves numbers or quantities raised to an exponent

JWcool: right back at ya


----------



## MRC & Co

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Its school holidays so i thought id decipher for the young ones reading the commodties forum.
> 
> 
> median – a point, line, part or plane that is in the middle




I'm sure many of the young ones learnt these in school.

Median, in this instance, is the middle number occuring.  

Though 'middle' is a subjective word, I think 'mean' may have been what was meant, didn't read it thoroughly.  

Then again, they could have used the correlation coefficient as opposed to covariants 

I'm also surprised no complex algorithms or neural networks were taken into account, looks like simple regression analysis did suffice.

ha ha, nerd forum!


----------



## subaru69

*Re: OIL AGAIN!*

I thought that the MODE was the middle number in an ordered set...
School was a while ago though.


----------



## MRC & Co

*Re: OIL AGAIN!*



subaru69 said:


> I thought that the MODE was the middle number in an ordered set...
> School was a while ago though.




Most frequently occuring.

Add in some hocus pocus and a voodoo doll, and you may get your answer!


----------



## subaru69

*Re: OIL AGAIN!*

DOPE
With this level of statistical knowledge you are currently outperforming the skills of certain politicians


----------



## >Apocalypto<

*Re: OIL AGAIN!*

Demo trade,

Shorted the hell out of Oil 30 min ago. thinking it's time to see some value shaved off.


----------



## Vondelpark

*Re: OIL AGAIN!*

Gee App - see Eur thread......i think it will bounce.  140 has been holding firm recently and hard not to see Oil continuing its rise.

Missed the buy at 14080 level (14092 as I type) but looking to get in around 14070 to slot out at 14150 or higher on a trailing stop.


----------



## MRC & Co

*Re: OIL AGAIN!*

Yeh, talk about a risky trade!

140 is definately the support at the moment, any move below and a short is plausable IMO.  

You would think there would be some type of correction, unless we are establishing another base to take off from.  Stranger things have happened.


----------



## MRC & Co

*Re: OIL AGAIN!*

Anybody going long or short at this point?

Right as I type, it's having another crack at the $143 mark, but volume looks unconvincing.  Perhaps a low risk small shorting opportunity..........

Unless volume comes in all of a sudden, cannot see this one breaking out tonight.  No effort whatsoever ATM.

If anything, POG looks like it may be ready to try and play some catch up.


----------



## bigdog

*Re: OIL AGAIN!*

We should all stop flying on middle eastern airlines for increasing oil prices!


----------



## rederob

*Re: OIL AGAIN!*



MRC & Co said:


> Anybody going long or short at this point?
> 
> Right as I type, it's having another crack at the $143 mark, but volume looks unconvincing.  Perhaps a low risk small shorting opportunity..........



 Yet another unconvincing record high reached overnight with a record closing price - over $144 - to boot.
The shorts are in tatters..... again.


----------



## Temjin

*Re: OIL AGAIN!*



rederob said:


> Yet another unconvincing record high reached overnight with a record closing price - over $144 - to boot.
> The shorts are in tatters..... again.




Just like the good old wisdom, the market can become illogical longer than you can stay solvent.  

I am definitely not buying into oil, at least for the short term. Just look at what the current oil prices are doing to everybody right now. You have airlines going bankrupt, riots in developing countries, fuel rationing, ultra bullish sentiment amoung the general public and even practical high fuel price jokes swarming the internet blogs. 

Not to mention the US Dollars is now reaching critical support (been tested at least 3 times now) and is in extremely oversold position. 

I'm definitely on the sideline right now. Though I know if Israel do attack Iran, I will miss all the juicy profits.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



>Apocalypto< said:


> Demo trade,
> 
> Shorted the hell out of Oil 30 min ago. thinking it's time to see some value shaved off.




Smashed to high hell! lucky it was a demo trade!


----------



## drasicjazz

*Re: OIL AGAIN!*

bloody hell i just got a call from flightcentre
i booked a ticket to paris for about 1600AUD on way
now they want more  than 250 extra      ''taxes'' they call it
that's  more than 15 % increase than the month ago when i actual booked it


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*



michael_selway said:


> Hey Jess, you seem super bullish on oil
> 
> I for some reason have a similar view that energy prices now, will be considered very low in the next 3-5 years etc...cant cant put my house on it etc!
> 
> thx
> 
> MS




Yep, i am Bullish on oil Michael. Well, to $150.00 anyway...............but seriously, recession, depression, whatever happens, we unfortunately have built our life around the stuff and no matter what the bears say, its a finite resource and i just dont see supply keeping up with demand.

The oil might be there but it takes time to find new wells and it ill be much more costly to extract. Being more costly to extract, that needs to be passed on to the consumer and the price will go up.

Call me crazy but, i just dont agree with the bears and think there are some serious fundamentals in the bullish favour.

Throw in a bombardment of Israel, more attacks on pipe lines in Nigera, on going tensions in Iraq and the recepie is there for anything to happen.

I also think people have underestimated the demand from India and China, ever seen how big these places are? 
It is mind blowing and beyond comprehesion for most people. 

Further to that, the US dollar looks very shaky, further underpinning hedging in oil. Europe is increasing interest rates, to weaken the dollar again.
And one day when the good old USA does recover, guess wha, they will need even more oil. They will also begin filling their national emergency reserves also.

I dont see any surplus quality oil laying around and even with high prices demand is still there, it may have slowed a little but in the scheme of things not much.

People comnplain that oil is too expensive, but, i assure you, they can afford it and will make cuts in other areas before they stop filling the tank with fuel. It is a necessary evil, you need fuel to get to work to earn the money you need to fill the tank so you can go to work and earn more money.

Seems like a no brainer to me.

Obviosly it can not keep going up forever.

I still think your averageguy on the street can take more pain yet, no doubt about it. I filled the car a few weeks ago and had to queue behind 3 cars before i could get to the bowser.......i had to fight my way through the crowds.......they have the money to support $150.00 i would say, no worries.

Lets bring on $200.00 and see how they go. I think you would be suprised at how much people can afford, they just need to trim off a few luxuries. Dont worry, they will cut back on other things before they begin riding bikes, we are after all, a very lazy society and we have it easy.

My scooter costs me just over $5.00 a week and i ride it to work each day, the car is used by my partener and cost about $100.00 to fill the tank every two weeks. Can we afford to pay more for fuel, of course we can.

And agree with you, in 5 years time these fuel prices will seem soooo cheap. 

JW   $150.00 Oil, not a doubt in my mind...........


----------



## Smurf1976

*Re: OIL AGAIN!*

Short term I can see a lot of signs that oil may be heading for a fall. Sentiment is way to bullish right now with even car fanatics proclaiming an imminent end to petrol. So I can see a fall is possible.

But I'm a long term investor not a trader. So if it falls then that means I can buy into oil companies at a discount to present prices. That's a good thing not bad.


----------



## Broadway

*Re: OIL AGAIN!*

I swear Osama B.L. is sitting in a palace with a billion  'leant' to him from his friends, just mashing the BUY OIL button..... laughing at how easy it is to hurt the yanks this way.

Wonder why he didnt think of this sooner..


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Whoops, that should have said bombardment of Iran by Israel, damn red wine...............

Smurf, they can afford it mate, go down to any petrol station and have a look. The cars just stream in one after the other, they have the money to fill the tank. You will know when it is too expensive because they wont be fighting to get to the bowser on a Tuesday evening, i still think we have some way to go before the punters really begin to scream.

Keep an eye on Latte sales at your local coffee shop, if they can still afford them then they have the money for fuel.

JW


----------



## Whiskers

*Re: OIL AGAIN!*



Smurf1976 said:


> Short term I can see a lot of signs that oil may be heading for a fall. Sentiment is way to bullish right now...




I agree smurf.

From a TA perspective there are some gaps to be filled back to about $80 and there is a good prospect of an evening star forming on the weekly chart. 

Fundamentally, I reckon when the US congress gets back to work next week, probably about Wednesday sounds like a good time for the POO to start it's exponentional decline back to about 80. By then there should be more news of further regulation of oil speculation. 

I have a theory. 

The mega hedge funds are using the POO to capitalise on the subprime confidence drop to drive down the stock markets a bit extra. 

They will be wanting to short step the suckers buying into oil contracts by getting out early and back into stocks before most people wake up to what's happening.

Sorry Jess. but I think you might just get pipped before the post with your bet.

PS: Fwiw I think the really smart investers have already started retreating. I've noticed the price of Rhodium, the ultimate precious metal, came off the boil a few days ago. The POG is just hanging up because of the POO.


----------



## michael_selway

*Re: OIL AGAIN!*



Smurf1976 said:


> Short term I can see a lot of signs that oil may be heading for a fall. Sentiment is way to bullish right now with even car fanatics proclaiming an imminent end to petrol. So I can see a fall is possible.
> 
> But I'm a long term investor not a trader. So if it falls then that means I can buy into oil companies at a discount to present prices. That's a good thing not bad.




Its funny how you say short term, but thing is how come come its setting new highs of $146.00 today?

What do you define as short term?

Thanks

MS


----------



## Aussiejeff

*Re: OIL AGAIN!*



michael_selway said:


> Its funny how you say short term, but thing is *how come come its setting new highs of $146.00 today*?
> 
> What do you define as short term?
> 
> Thanks
> 
> MS




Ummm... this might help....

*July 3 (Bloomberg) -- Crude oil rose above $145 a barrel to a record amid signs global demand for fuels, particularly from China, may strain supplies. * http://www.bloomberg.com/apps/news?pid=20602013&sid=a9BZ55pFTT1w&refer=commodity_futures

Then you have yet another Saudi some-one-or-other claiming they *cannot* increase output enough to match demand...

Put 2+3 together and you get $145!

Simple eh?


----------



## Aussiejeff

*Re: OIL AGAIN!*

The other factor I think a lot of oil-price-watchers might be forgetting is that an awful lot of crude from Saudi Arabia is exactly that ... VERY CRUDE. It ain't the light, sweet variety, which is what most refineries crave.

Speaking of cravings, if the world started to run out of light, sweet chocolate, the price of Cadbury's went sky high and yet someone declared _"Hey! No problem! We've got an over-abundance of bitter dark cooking chocolate we can supply the world with instead."_ Well. You get my drift! 

Chiz.



AJ


----------



## rederob

*Re: OIL AGAIN!*



Whiskers said:


> I agree smurf.
> 
> From a TA perspective there are some gaps to be filled back to about $80 and there is a good prospect of an evening star forming on the weekly chart.
> 
> Fundamentally, I reckon when the US congress gets back to work next week, probably about Wednesday sounds like a good time for the POO to start it's exponentional decline back to about 80. By then there should be more news of further regulation of oil speculation.
> 
> I have a theory.
> 
> The mega hedge funds are using the POO to capitalise on the subprime confidence drop to drive down the stock markets a bit extra.
> 
> They will be wanting to short step the suckers buying into oil contracts by getting out early and back into stocks before most people wake up to what's happening.
> 
> Sorry Jess. but I think you might just get pipped before the post with your bet.
> 
> PS: Fwiw I think the really smart investers have already started retreating. I've noticed the price of Rhodium, the ultimate precious metal, came off the boil a few days ago. The POG is just hanging up because of the POO.



Despite "speculation" being blamed for oil prices going higher week after week there are some key facts that the smart investors are locked into.
First, despite gloom and doom in the US - the world's largest energy user - its oil inventories are almost 20% lower than at the same time last year.
Secondly, global oil production "replacement" needs to run at higher than 3.5 million barrels a day on an annualised basis from now onwards just to keep up with demand.
Thirdly, consumption data clearly shows that emerging economies are taking up the slack in demand from western economies.
(This latter point may not prevent an inventory build in the medium term, but it will mean that when the "recession is over" there will be a rapid demand spike that will catapult oil prices more sharply higher than we have experienced to date.)
Finally, apart from "shut-in oil" in Nigeria and Iraq due to skirmishes, the US hurricane season is nearing, and almost always shuts-in some production for some period.  The effects of global warming exacerbate hurricane strength, so anything hitting the Gulf of Mexico will add an immediate fear premium to oil prices, apart from any premium arising from shut-ins.


----------



## michael_selway

*Re: OIL AGAIN!*

Hm interestign article

The Saudis say they can ramp up production to 12.5 million barrels a day. But a field-by-field breakdown obtained by BusinessWeek shows that's not likely 







thx

MS



> Saudi Arabia's ability to calm panicky oil markets has been waning for years. With oil prices doubling since last summer, to more than $140 a barrel, Saudi King Abdullah on June 22 convened an extraordinary meeting (BusinessWeek.com, 6/22/08) of OPEC members, international oil industry CEOs, and foreign leaders in an effort to calm the markets. The kingdom's message was clear: Saudi fields can pump oil to market quickly, if demand warrants.
> 
> However, it appears that for at least the next five years, and possibly longer, the Saudis are likely to produce less crude than promised, according to fresh data on the kingdom's oil fields obtained July 9 by BusinessWeek. Saudi officials have said they would increase production to 12.5 million barrels a day next year, from the current 9.5 million barrels a day, and could even ramp up to as much as 15 million barrels a day if the market demanded it. As proof to a skeptical audience, the normally highly secretive Saudis were a bit more more open, escorting journalists on a visit to their new Al Khurais field (BusinessWeek.com, 6/23/08), east of Riyadh, and disclosing some field data.
> 
> Oil companies want in
> But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.
> 
> Saudi Aramco officials in the kingdom could not be reached for comment on July 9.
> 
> Three industry analysts in the U.S. said the document's overall conclusion””that the Saudis cannot sustain higher than 12 million barrels a day maximum production for the next few years””appeared to be reasonable. "My view is that when they finish their expansion program they are unlikely to be above 12" million barrels per day, says Roger Diwan, a Middle East energy expert with PFC Energy, a consultancy in Washington, D.C. Lawrence Goldstein, an analyst with the Energy Policy Research Foundation, an industry-funded research group, said that uncertainty about Saudi production remains a problem for the market. "The only ones who know could be the Saudis," Goldstein says, "and they might not know because they haven't tested the deliverability system in as much as a decade."
> 
> A principal reason for the dramatic surge in world oil prices has been a tight balance of global supply and demand, combined with a lack of spare capacity to produce more crude in a pinch. So that what previously might be considered a barely consequential guerrilla attack in oil-rich Nigeria, or an empty Iranian threat to close the strategic Strait of Hormuz, results in a far more dramatic oil market reaction than ever before.
> 
> Once again Saudi Arabia has emerged as the central energy player, the only oil producer on the planet seen as having the spare capacity to rapidly boost crude exports. The kingdom also has close ties to the West, and until 1980 the precursors of Exxon (XOM), Chevron (CVX), and Mobil were partners with the Saudi state oil company. Now most of the major oil giants are hoping to get back in, and one way they have suggested is by helping the Saudis maintain the fields, an overture that has been rejected.
> 
> "A Bunch of Empty Boasts"
> On oil matters, the kingdom's credibility has been clouded by intense secrecy. The Saudis, for instance, refuse, unlike Russia, Venezuela, and Norway, to release detailed assessments of their oil reserves, which has made many skeptical. "They are just a bunch of empty boasts," Matthew Simmons, chairman of Houston investment bank Simmons & Co. International, says of the kingdom's recent promises of 12.5 million barrels a day. He is also skeptical of Saudi reserve estimates.
> 
> One dramatic part of the data concerns a site called Ghawar, which has been the kingdom's workhorse field for decades. It shows the field producing 5.4 million barrels a day next year, but the volume then falling off rapidly, to 4.475 million daily barrels in 2013. "That's why Khurais is so important””to make up for that decrease," said the oil industry executive who released the data. He was referring to a supergiant field that is to come online later this year and produce an estimated 500,000 barrels a day of crude. In last month's gathering in Saudi Arabia, officials of the kingdom told journalists that Ghawar had produced just under 5 million barrels a day from 1993 through 2007.
> 
> Mainly the data show flat production; apart from the addition of Khurais and a heavy oil field called Manifa, no increases appear in any of the fields during the next five years. Production at Manifa is to begin in 2011 with 125,000 barrels a day, according to the data, and rise rapidly to 900,000 barrels a day two years later. Though 2014 is not included in the data, one of the fields listed””Shaybah””is to have a volume increase to 1 million barrels a day that year, from 750,000 barrels a day from 2009 to 2013, according to the oil executive.
> 
> Still, despite its enormous reserves and bullish statements, Saudi Arabia appears likely to fall well short of the daily production it has targeted in the near term.
> 
> LeVine is a correspondent in BusinessWeek's Washington bureau.


----------



## Aussiejeff

*Re: OIL AGAIN!*

_*Crude Oil Jumps More Than $5 as Trading Programs Trigger Buying *

By Mark Shenk

July 10 (Bloomberg) -- Crude oil rose more than $5 a barrel in the last hour of New York floor trading as prices breached a level that triggered computer-generated buying programs. _

http://www.bloomberg.com/apps/news?pid=20602013&sid=aiico.empSD0&refer=commodity_futures

Good grief! Any other day you are likely to get the same rise of $5 being touted by the media as being triggered by "speculators".  So, the truth is out. All these "speculators" are in fact mindless COMPUTERS set to AUTO-PILOT!!!! Hahahaha!

Here is a wicked analogy - how many airliners have crashed in turbulent weather while under the command of dumb auto-pilots? Hmmmm. Maybe new laws should be drafted to ban auto stock trading buy/stops!?? LOL

MAN YOUR PC'S!! STOP THE ROT!!!

:hide:


AJ


----------



## kengaikl

*Re: OIL AGAIN!*



Aussiejeff said:


> _*Crude Oil Jumps More Than $5 as Trading Programs Trigger Buying *
> 
> By Mark Shenk
> 
> July 10 (Bloomberg) -- Crude oil rose more than $5 a barrel in the last hour of New York floor trading as prices breached a level that triggered computer-generated buying programs. _
> 
> http://www.bloomberg.com/apps/news?pid=20602013&sid=aiico.empSD0&refer=commodity_futures
> 
> Good grief! Any other day you are likely to get the same rise of $5 being touted by the media as being triggered by "speculators".  So, the truth is out. All these "speculators" are in fact mindless COMPUTERS set to AUTO-PILOT!!!! Hahahaha!
> 
> Here is a wicked analogy - how many airliners have crashed in turbulent weather while under the command of dumb auto-pilots? Hmmmm. Maybe new laws should be drafted to ban auto stock trading buy/stops!?? LOL
> 
> MAN YOUR PC'S!! STOP THE ROT!!!
> 
> :hide:
> 
> 
> AJ




IT's IRAN TO BLAME EVERYTIME OIL DROPS THEY"LL COME UP WITH SOMETHING TO SPOOK THE MARKETS. AND EVERYONE FALLS FOR IT.


----------



## ithatheekret

*Re: OIL AGAIN!*

So the smart investors are .... chip orientated black box programs .

If they have that information then they'd also know who the trading houses behind it all are as well .

So why are they paying mega dollars to the boards and executives when all they need is a progammer and a computer ?

Crikey how many times has that gone through the old whirlpool before it got squeezed through the wringer ?

A couple of days on the line should dry that one up .

It would have been easier to blame it on Jeff Kennett ..............


----------



## rederob

*Re: OIL AGAIN!*



ithatheekret said:


> So the smart investors are .... chip orientated black box programs .
> 
> If they have that information then they'd also know who the trading houses behind it all are as well .
> 
> So why are they paying mega dollars to the boards and executives when all they need is a progammer and a computer ?
> 
> Crikey how many times has that gone through the old whirlpool before it got squeezed through the wringer ?
> 
> A couple of days on the line should dry that one up .
> 
> It would have been easier to blame it on Jeff Kennett ..............



I think their black boxes are short the odd covariation.
Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?

Meanwhile, in the world of fundamental analysis the US retains its crown for gluttony amongst oil consumers.  Not only cannot it get enough, it can't keep it long enough when it does, and thinks nothing of paying through the nose because it can.

Despite US consumption declining, oil product inventories fell markedly during the previous week and mostly sit at the bottom of average ranges.  Needless to say, the smarter analysts have worked out that if demand is falling and stocks are falling, the price will keep rising.

US inventory reports don't and won't tell you "why" things are so bad.  For example, they don't tell you that Canada (the major supplier to USA - greater than Saudi Arabia by a million barrels of product per day) will increasingly become an internal user of its oil output, and that the US should not rely on this market too far into the future. Or that Mexico, which supplies the US with 1.2m barrels per day, will not be capable of supplying any within 5 years.

It's taken a while, but the funds have worked out that fundamentals rule.... and they are going long.  So long in fact that the present bull run in oil has not succumbed: It's having another crack at a record close tonight and likely will rise well over $150 before a major retrace befalls it.

In the meantime geopolitical jitters simply underpin the capacity of oil to catch out anyone trying to short it to bejeebers.  To the extent that previous posters predicting tops or significant retraces are conspicuous by their absence!


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Arghhhhhh, yibbidy yibbidy folks, $145.00...................looking like $150.00 is going to be a formality in the next two weeks.

Must put a call through to my mates in Iran and tell them to test fire a few more rockets!

Too much instability and demand to see the price going anywhere but forward!


JW


----------



## michael_selway

*Re: OIL AGAIN!*



rederob said:


> I think their black boxes are short the odd covariation.
> Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?
> 
> Meanwhile, in the world of fundamental analysis the US retains its crown for gluttony amongst oil consumers.  Not only cannot it get enough, it can't keep it long enough when it does, and thinks nothing of paying through the nose because it can.
> 
> Despite US consumption declining, oil product inventories fell markedly during the previous week and mostly sit at the bottom of average ranges.  Needless to say, the smarter analysts have worked out that if demand is falling and stocks are falling, the price will keep rising.
> 
> US inventory reports don't and won't tell you "why" things are so bad.  For example, they don't tell you that Canada (the major supplier to USA - greater than Saudi Arabia by a million barrels of product per day) will increasingly become an internal user of its oil output, and that the US should not rely on this market too far into the future. Or that Mexico, which supplies the US with 1.2m barrels per day, will not be capable of supplying any within 5 years.
> 
> It's taken a while, but the funds have worked out that fundamentals rule.... and they are going long.  So long in fact that the present bull run in oil has not succumbed: It's having another crack at a record close tonight and likely will rise well over $150 before a major retrace befalls it.
> 
> In the meantime geopolitical jitters simply underpin the capacity of oil to catch out anyone trying to short it to bejeebers.  To the extent that previous posters predicting tops or significant retraces are conspicuous by their absence!




Hi Red, do you think $1000 bbl oil is possible?

http://www.abc.net.au/lateline/content/2008/s2301777.htm



> Petrol may hit $8 in a decade: CSIRO
> Print Email
> Australian Broadcasting Corporation
> 
> Broadcast: 11/07/2008
> 
> Reporter: Karl Hoerr
> 
> The CSIRO have forecast petrol could hit $8 a litre within the next decade, based on the assumption that world oil production will peak in about five years. Researchers say that will have a much greater effect on petrol prices than any emissions trading scheme.
> 
> Transcript
> VIRGINIA TRIOLI, PRESENTER: If current petrol prices aren't bad enough, there's now a prediction they could hit $8 a litre within a decade.
> 
> The CSIRO forecast is based on the assumption that world oil production will peak in about five years and the researchers say that will have a much greater effect on petrol prices than any emissions trading scheme.
> 
> Karl Hoerr reports.
> 
> KARL HOERR, REPORTER: It's a dire prediction, but one expert fears it could become a reality.
> 
> BRUCE HARRISON, BIOFEULS ASSOCIATION: We're on that plateau and very close to peak oil production which means we've got to find
> some alternative supplies of fuel.
> 
> KARL HOERR: Peak oil means annual production has reached its maximum level, and that could mean an $8 a litre petrol price, which could lift
> the average weekly fuel bill to $220.
> 
> MOTORIST: Ridiculous. Really ridiculous; like, what are you going to do?
> 
> KARL HOERR: But the "Fuel for Thought" report says the price hike could yield some benefits, increasing the use of biofuels, LPG and hybrid
> technology.
> 
> JOHN WRIGHT, CSIRO: There's a huge economic incentive to produce alternative fuels once the price starts to really climb in oil.
> 
> MARK REUSS, CHAIRMAN, GM HOLDEN: We have to lead in the industry with equipment that unleverages our foreign oil dependency.
> 
> KARL HOERR: And as debate rages over emissions trading, the report says pricing carbon at $40 a tonne would only add 10 cents a litre at
> the bowser.
> 
> JOHN WRIGHT: While they're an imposition and they do increase the price of petrol, it's really relatively small compared to the movements of
> oil price itself.
> 
> KARL HOERR: While $8 a litre is a worst case scenario, drivers say prices anywhere near that high would force them to find alternative transport.
> 
> MOTORIST II: Coming into the city every day, you'd have to catch the train then, wouldn't you?
> 
> MOTORIST III: Take transport. No way, transport for sure.
> 
> 
> KARL HOERR: What's less clear than the trend of rising petrol prices is whether public transport systems are ready for more commuters.




http://www.abc.net.au/reslib/200807/r270708_1137751.asx

thx

MS


----------



## rederob

*Re: OIL AGAIN!*



michael_selway said:


> Hi Red, do you think $1000 bbl oil is possible?
> thx
> MS



We are already at a price point precipiting some demand destruction. 
I think that oil up to $200/barrel could still be "affordable" within the next few years for those needing to "burn oil" for a living.
But $1000 simply prices out of reach of everyone.
I think that other energy options will start to cut into oil's dominance in 3 to 5 years, allowing oil demand to "plateau" and the oil price to stabilse.
If I had to punt on a top price for oil, I would say around $300/barrel within the next 6-8 years.


----------



## ithatheekret

*Re: OIL AGAIN!*



rederob said:


> I think their black boxes are short the odd covariation.
> Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?




seek and you will find .......

http://www2.unil.ch/icfis/


----------



## Whiskers

*Re: OIL AGAIN!*

Well I'm getting more confident that Oil has peaked... although from my new interest in EW, the peak looked somewhat unclear and unconvincing at first.

Anyway, this is what I came up with. I'd be interested particularly in EW'ers comments. 

It looks to my eager but still untrained eye that we may have completed one minor leg down and maybe into the 'b' of a minor a b c... ie probably edge up around 140 again in a couple of days before a serious retreat.


----------



## MRC & Co

*Re: OIL AGAIN!*

lol, that is one MOTHER of an impulse wave 5 Whiskers!  

Not much comparison to it's usually similar brother wave 1........



Oh, I see you have taken away that bottom chart on Brent.


----------



## Whiskers

*Re: OIL AGAIN!*



MRC & Co said:


> lol, that is one MOTHER of an impulse wave 5 Whiskers!
> 
> Not much comparison to it's usually similar brother wave 1........
> 
> 
> 
> Oh, I see you have taken away that bottom chart on Brent.




I messed up. I didn't get them all in the right order the first time. 

But yeah, I recall Wavepicker using the term 'blowoff top' to describe the oil chart. 

That's what those speculators did to wave 5. :

It looks pretty right to me, since it's going with the trend at the moment, but I'd like to get some conformation.

I think I like EW, I think I can get a bit of a grip on it... but those P&F charts, I can't glean a lot out of them. Sorry Motorway... maybe they'll come to me one day.


----------



## MRC & Co

*Re: OIL AGAIN!*



Whiskers said:


> But yeah, I recall Wavepicker using the term 'blowoff top' to describe the oil chart.
> 
> That's what those speculators did to wave 5. :




Yep, most para charts are followed by blow-offs.  

lol, you and your speculators.

Oil approaching some support now, will be interesting to see if it gains some traction and some buying volume comes in.

What a market eh!  Sidelines sound good to me at the moment.  I'm sure a few of the highly leveraged would have seen some margin calls come in over the last few days!  Maybe a few more hedge funds to role............?  Anyways off topic.  Back to oil.


----------



## Whiskers

*Re: OIL AGAIN!*



MRC & Co said:


> Oil approaching some support now, will be interesting to see if it gains some traction and some buying volume comes in.
> 
> What a market eh!  Sidelines sound good to me at the moment.  I'm sure a few of the highly leveraged would have seen some margin calls come in over the last few days!  Maybe a few more hedge funds to role............?  Anyways off topic.  Back to oil.




I'm banking on a slight rise in the next day or two to finish that minor a b c, to throw a bit of doubt over the markets once more, so I can finish filling one outstanding order at my preferred price rather than having to take out a higher seller... then I'll be 100% back into shares and ready to ride the bull as bears get into oil.


----------



## wayneL

*Re: OIL AGAIN!*

Did anyone happen to notice Natural Gas?

Please make a big noise so that energy suppliers notice before northern hemisphere winter.


----------



## Temjin

*Re: OIL AGAIN!*



wayneL said:


> Did anyone happen to notice Natural Gas?
> 
> Please make a big noise so that energy suppliers notice before northern hemisphere winter.




Yep, I got a profit out of the run but got out too early. Was playing discretionary so it was impossible to identify the top. That was the reason why I didn't bother going shorting it because I didn't know when it will turn. (nor do I have a mechanical system to take advantage of this, yet...)


----------



## chops_a_must

*Re: OIL AGAIN!*



Temjin said:


> Yep, I got a profit out of the run but got out too early. Was playing discretionary so it was impossible to identify the top. That was the reason why I didn't bother going shorting it because I didn't know when it will turn. (nor do I have a mechanical system to take advantage of this, yet...)



Went higher than any point I was prepared to trade it at.

Should have been more awake to it getting pumped however. 

Still, long term, Nat Gas >>>>>>> Oil.


----------



## rederob

*Re: OIL AGAIN!*

Oil has finally succumbed to the speculators cashing out on early news that US oil inventories were building again.
With the average oil price for 2008 hitting $115 - and rising - you will see from the chart below that there are strong levels of support as the price drops.  Accordingly, were the price to dip under $115 it probably would be a reasonable re-entry point for anyone wanting to top up on local producer equities.
On fundamentals alone, US inventory data still shows crude stocks at the lower levels of its average range.  This is a bit disappointing given that gasoline demand is down a few percent on the previous year, and it's rumoured driving season is already seeing more stay at home due to high gas prices.  
Counterbalancing gasoline demand weakness is diesel demand strength - up 2.5% on the previous year.  In fact global demand for diesel is increasing markedly in a climate of supposed demand destruction.
Whatever the short term outcome - and I'm talking the next month or so - the probability of oil prices stabilising at a level around $120 look very high in my calculations.  Thereafter we need to see the extent that global recessionary pressures curtail overall demand. 
For the moment it is clear that prices in the $140+ range are not affordable to the average person (in terms of downstream fuel prices) and decisions to buy more economical vehicles will have a slight (marginal) impact on oil demand going forward. 
Geopolitical rumblings have subsided somewhat, and local skirmishes that shut in supplies at various locations are less of an issue for the moment.  Add to this a calmness in the Gulf of Mexico and we have the ingredients for further price declines in the near term.
Longer term the signs are getting more and more ominous.  Anticipated supply is substantially lagging forecasts and the gap between maximum supply and forecast demand is shrinking.  Any major event affecting supply as we go forward has the potential to spike oil prices sharply higher.  Let's hope the GOM hurricane season is kind to us all this year.


----------



## Smurf1976

*Re: OIL AGAIN!*




wayneL said:


> Did anyone happen to notice Natural Gas?
> 
> Please make a big noise so that energy suppliers notice before northern hemisphere winter.



I'm sure the energy suppliers have noticed. They'll just be hoping that you and all their other customers _didn't_ notice...


----------



## MRC & Co

*Re: OIL AGAIN!*

Is that a great example of T/A?

After this, consolidated and then broke down a bit further.  A run to 122.50 this week?


----------



## Whiskers

*Re: OIL AGAIN!*



rederob said:


> *Oil has finally succumbed to the speculators*...




Sorry to misrepresent your quote rederob... well not really, I just couldn't resist. 

On a serious note, I picked up the jist of the EW count from cycle *IV* and primary *1, 2, 3 & 4* from an EW site and tried to fill in the detail up to date. 

I have modified my EW count a bit while attempting to back-fill the earlier waves from limited data, since I don't trade and consequently don't have specific 'Oil' software. 

*The question I am posing is whether we have in fact completed cycle **V* *and maybe supercycle* *(I)*?

Although my earlier minute wave i seems to be going lower than I first thought and the correction is yet too come... my FA and intuition says yes... OIL IS BUGGED. :hide:


----------



## michael_selway

*Re: OIL AGAIN!*



Whiskers said:


> Sorry to misrepresent your quote rederob... well not really, I just couldn't resist.
> 
> On a serious note, I picked up the jist of the EW count from cycle *IV* and primary *1, 2, 3 & 4* from an EW site and tried to fill in the detail up to date.
> 
> I have modified my EW count a bit while attempting to back-fill the earlier waves from limited data, since I don't trade and consequently don't have specific 'Oil' software.
> 
> *The question I am posing is whether we have in fact completed cycle **V* *and maybe supercycle* *(I)*?
> 
> Although my earlier minute wave i seems to be going lower than I first thought and the correction is yet too come... my FA and intuition says yes... OIL IS BUGGED. :hide:




Hey great charts, thanks

Looks like long term, oil prices will likely be alot higher?

But maybe short term just a correction?

thx

MS


----------



## professor_frink

*Re: OIL AGAIN!*

just found this article and thought it might be of interest - 

Congress pursues $80 oil with trading limits, disclosure rules



> July 23 (Bloomberg) -- Congress may outlaw elements of oil futures trading that lawmakers found distorted demand and contributed to the 69 percent surge in prices in the past year.






> Proposals being debated this week in the Senate would bring prices more in line with demand, proponents say. Excluding the effect of speculation, oil would be around $80 a barrel, 38 percent lower than yesterday's price, according to Jesus Reyes Heroles, the chief executive officer of Petroleos Mexicanos. Critics say restrictions may interfere with the functioning of a $4 trillion annual market for crude oil.


----------



## rederob

*Re: OIL AGAIN!*



professor_frink said:


> just found this article and thought it might be of interest -



If it was useful it might be interesting.
It's old news.
It's a political ploy.
It has no capacity to influence supply or demand.
It can only have impact in the USA and oil is traded globally.
There is as much chance that the proposed legislation will force prices higher.  That's because speculators play both sides of the market, and once downside risk has been mitigated the tendency for an undersupplied oil market to keep climbing higher will feed on itself.


----------



## Tysonboss1

*Re: OIL AGAIN!*

the speculaters are annoying, they are a bit like concert ticket scalpers, get in early buy all the tickets and then drip feed us Oil groupies.

The oil price surly can't be maintained at higher than fair price forever though, eventually it must return to fair market price, If that fair market price is $130 then thats just what we have to pay.


----------



## wavepicker

*Re: OIL AGAIN!*

After a $23 drop, I think there might be a chance of a countertrend back up to the nominal or beyond here. Prices have made an excursion to the outer extremeties of the Cyclic Bands. Also looks like we may have a completed impulse here, although counting waves in the lower timeframes can be difficult. See what happens this evening


----------



## MRC & Co

*Re: OIL AGAIN!*

ha ha ha, love the drip feeding quote!  

But what is 'fair value', that is the million/billion dollar question?


----------



## wavepicker

*Re: OIL AGAIN!*



JeSSica WaBBit said:


> Hey Uncle,
> 
> 
> Until then, $150.00 is within reach and the top will soon be knocked off the first of Wavepickers coldies...................
> 
> JW




Hey JW, 

You worked up a bit of a sweat waiting for $150 which missed by a bees d.ck.
So close but so far, don't you go getting too thirsty now will you!! Soon the shoe might be on the other foot!!

Let's see what happens in the months ahead.


----------



## MRC & Co

*Re: OIL AGAIN!*

lol, the 'I told you so' statements in both gold and oil have been sure fire fade opportunities lately, both ways.  

Probably no other more predictable method out there.  

Interesting to see how oil does now.  Volume and patterns will be great to watch, though I still get a feeling 122.50 maybe on offer before it's next bounce.  So fade me!


----------



## wavepicker

*Re: OIL AGAIN!*

Here we go again.......

Once more, trying to stir poo.


----------



## MRC & Co

*Re: OIL AGAIN!*



wavepicker said:


> Here we go again.......
> 
> Once more, trying to stir poo.




No, not at all.  This was just an observation which I found uncanny yet cliche at the same time.  

I completely agree with you, oil does look overdone now, as does gold, so a quick bounce may be about to occur.


----------



## wavepicker

*Re: OIL AGAIN!*



MRC & Co said:


> No, not at all.  This was just an observation which I found uncanny yet cliche at the same time.
> 
> I completely agree with you, oil does look overdone now, as does gold, so a quick bounce may be about to occur.





Nice to see you are so observant MRC. I hope you have as much attention to detail within your trading.....If you do you must be an outstanding trader

:


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Looking forward to it Wavepicker................yep, nearly got across the line but no cigar!!

It will be interesting to see if it pulls up and holds above $120.00. I am still confident we will push back up in the coming months. If for nothing else, surely the arabs have realised they can get a lot more for their oil from the west and will be reluctant to sell below $100.00? Why would you, just turn off the taps until the price rises, no need to give the stuff away. 

I need those crazy folks in Iran to issue a few more senseless threats or start playing around with missles again to cause a bit of panic. 

JW


----------



## Whiskers

*Re: OIL AGAIN!*



Tysonboss1 said:


> the speculaters are annoying, they are a bit like concert ticket scalpers, get in early buy all the tickets and then drip feed us Oil groupies.




Good analogy... in the end they serve no good, just currupting the 'real' market. 



> The oil price surly can't be maintained at higher than fair price forever though, eventually it must return to fair market price, If that fair market price is $130 then thats just what we have to pay.




Fair value... I nominated about $80, but it may well go below that in the not too distant future depending how fast congress enacts more new regulations and how quickly the price comes back from speculative 'manipulators' exiting the market.

Firstly because despite all the hype about inventories steadily falling supposidly indicating a slow supply, I believe inventories were dropping because of demand destruction, people were refusing to pay that price and consume the same amount, consequently processors save some costs by holding less inventory.

There was no real evidence of fuel shortages despite the price. 

Secondly, the big vehicle manufacturers in the US have undertaken to srcap larger fuel guzzling vehicles and make more small economical vehicles. The effect of this along with strong demand in the US for smaller imported vehicles and less air planes in the air is having a significant impact on US fuel consumption and could easily knock a couple of million bpd off their demand.

Finally, the world wasn't anywhere near running out of oil and there are many alternatives such as Canadas huge tar sands deposits that were profitable before $100, plus similar huge undeveloped deposits in Aus and natural gas, ethanol, electric and hybrids that are currently available that would develop exponentially and carve a huge chunk out of oil demand the longer the price stayed above $100, certainly within a couple of years.

That's the biggest flaw with the pro high oil arguement... it does not recognise that a period of sustained $130/140 plus prices would precipitate a dramatic paradigm shift in the transport industries in particular... akin to the transition from the horse and buggy to the first piston driven motor vehicles or from steam trains to diesel then electric trains.

There's a little thing that most of us do to some extent without realising that is a managerial speciality in successful large organisations... ie _Change Management_... that guarantees that nothing stays the same in the face of opportunity or adversity.

PS: Nah, I don't think it'll change much now Jessica, the moves for an oil substitute and alternative energy have started in earnest now I think. Sorry, but I think the best you can hope for now is that you don't have to shout the carton.


----------



## Trembling Hand

*Re: OIL AGAIN!*



Whiskers said:


> Good analogy... in the end they serve no good, just currupting the 'real' market.




LOL. What a gem. Of course every dollar you put into the market is at the IPO stage or Cap raising or Venture Cap?


----------



## rederob

*Re: OIL AGAIN!*



Whiskers said:


> Firstly because despite all the hype about inventories steadily falling supposidly indicating a slow supply, I believe inventories were dropping because of demand destruction, people were refusing to pay that price and consume the same amount, consequently processors save some costs by holding less inventory.



Strike 1:
Demand destruction leads to rising inventories.
Commercial inventories remain in the lower band of the average range, meaning it will be difficult to sustain the trend of decreasing fuel prices unless there is a corresponding inventory build.


> There was no real evidence of fuel shortages despite the price.



Strike 2:
There never has been evidence of fuel shortages in this cycle



> Secondly, the big vehicle manufacturers in the US have undertaken to srcap larger fuel guzzling vehicles and make more small economical vehicles. The effect of this along with strong demand in the US for smaller imported vehicles and less air planes in the air is having a significant impact on US fuel consumption and could easily knock a couple of million bpd off their demand.



Strike 3:
The impact of changeover will be many years in the making.  Present "demand destruction" relates to around a 2% decline in gasoline consumption.  Diesel consumption is on a rising trend this year.



> Finally, the world wasn't anywhere near running out of oil and there are many alternatives such as Canadas huge tar sands deposits that were profitable before $100, plus similar huge undeveloped deposits in Aus and natural gas, ethanol, electric and hybrids that are currently available that would develop exponentially and carve a huge chunk out of oil demand the longer the price stayed above $100, certainly within a couple of years.
> 
> 
> 
> 
> 
> 
> 
> 
> Strike 4:
> Not a scintilla of evidence to support the "alternatives'" case.  The ramp up period will be extensive and the supply:demand gap will increase to the point that an equilibrium will occur only when true demand destruction kicks in globally.  The signs are that $140-$150 has had a rather marginal impact.
> 
> 
> 
> 
> That's the biggest flaw with the pro high oil arguement... it does not recognise that a period of sustained $130/140 plus prices would precipitate a dramatic paradigm shift in the transport industries in particular... akin to the transition from the horse and buggy to the first piston driven motor vehicles or from steam trains to diesel then electric trains.
> 
> 
> 
> 
> Strike 5:
> There is no paradigm shift.   There might be later on.
> Demand destruction does not equal a paradigm shift.
> If there was a paradigm shift you would be plugging your car into a power point when you got home.  I doubt you did!
> 
> 
> 
> There's a little thing that most of us do to some extent without realising that is a managerial speciality in successful large organisations... ie _Change Management_... that guarantees that nothing stays the same in the face of opportunity or adversity.
> 
> Click to expand...
> 
> 
> Um... what's changed?
> A dip in the oil hardly constitutes a change.
> Make that Strike 6.
> 
> 
> 
> PS: Nah, I don't think it'll change much now Jessica, the moves for an oil substitute and alternative energy have started in earnest now I think. Sorry, but I think the best you can hope for now is that you don't have to shout the carton.
> 
> Click to expand...
> 
> 
> Lucky it's not baseball.
> The moves to alternatives gained their traction years ago.
> In the meantime the US has almost 15% less crude oil in commercial inventories than a year ago.
> And this is happening when demand destruction reduced consumption when oil climbed over $140?????  Does not add up, does it!
> Bottom line remains one of oil in undersupply and a propensity for prices to rise on every bit of bad news.
> An interim saviour will be the less occasional rise in the greenback.
> 
> Click to expand...
Click to expand...


----------



## Whiskers

*Re: OIL AGAIN!*



Trembling Hand said:


> LOL. What a gem. Of course every dollar you put into the market is at the IPO stage or Cap raising or Venture Cap?




Who me! 

Definately not. :

Hello 'grumpy'... you sure have a thing about 'speculators' don't you. 

The context I am referring to, and I thought I had made it pretty clear by now, is that of deliberately manipulating the market for self gain... as in the above example.

Do ticket scalpers buy heaps of all events tickets? No, only the ones that they know will be in high demand that they can resell to desperate patrons. The point being that they are carrying on an illegal business in competition to genuine ticket sellers who have paid for all their busines liscenses and other overheads and also with the intent of deliberately creating an artifically high market (manipulation) for an item where the price and quantity have been regulated to a set level.

There have been many attempts to corner the markets over the years. Just recently Goldman Sacks has been mentioned as one descretely using offshore exchanges to corner the oil market.

If for example Goldmans have been heavily leveraging and manipulating the oil market up, I suppose it wouldn't do their image at home any good now if it were publically known, would it!... I suspect they would be almost run out of town and business.

I have nothing against futurers and shorters or black sheep or muslims or most things for that matter. But I do have a thing against anyone who abuses the rules to manipulate the normal/fair operation of a system/market for their self gain. 

Look TH, what is there in anything I have said, bearing in mind that I'm only calling the politics and market as I see it unfolding... that reflects badly on, or suggests that I dislike, 'genuine' futures and short traders? Nothing.

If these guys that are trading the oil market have nothing to hide then for the life of me I cannot see how they could see anything wrong with bringing the margins on all exchanges whether within or outside the US up to the same level and also improving the accountability and transparency in the market to a level closer to other markets.

What could be fairer than a level playing field where everyone plays by the same rules!

For heavens sake man, your behaving a bit parinoid about this if you ask me.


----------



## Whiskers

*Re: OIL AGAIN!*

Wow. your another emotional one Rederob! 

Well, we'll agree to dissagree and see who's right in the end.

If your prepared to put your money where your mouth... er convictions are, let's have a slab of beer on it too.

I say it'll go below $100 before the end of the year. No chance of going above $150 this year.


----------



## wayneL

*Re: OIL AGAIN!*

If there is price manipulation in the oil market, I wish folks would stop blaming speculators.

If there is price manipulation IT AIN'T THE SPECULATORS DOING IT!!!

As TH alluded to earlier, this unhealthy obsession with oil speculation is duplicitous and hypocritical.

Anyone long on anything is happy if speculators push prices in their favour.

Our Mr Tysonboss who is so annoyed at speculators, is ecstatic that property speculation has pushed RE prices to economically perilous and sociologically damaging levels, because it is in his favour, yet annoyed at oil being pushed up by buyers?

If any one of us buys some two-bit tin-pot guano juice miner, we hope speculators push it from 2c to $150

Yet oil speculators are all bums?

WTF?

You're happy to be capitalists when it suits you, but scream for socialism if it costs you another $3.50 to fill up the commodore!

FFS!


----------



## rederob

*Re: OIL AGAIN!*



Whiskers said:


> Wow. your another emotional one Rederob!
> 
> Well, we'll agree to dissagree and see who's right in the end.



Your points made little sense and were not supported by anything of substance.
I put money into oil equities long ago and have been adding to them.
As for the price of oil, my posts have clearly stated my views so I have nothing to prove.
On the other hand, if you are going to spout "alternatives" you need to have half a clue about their likely impact.


----------



## Whiskers

*Re: OIL AGAIN!*



rederob said:


> Your points made little sense and were not supported by anything of substance.




Obviously not to your satisfaction, but there are plenty with similar views.



> I put money into oil equities long ago and have been adding to them.
> As for the price of oil, my posts have clearly stated my views so I have nothing to prove.




Yeah, but oil equities haven't inflated to the same extent as crude and they'll still make good money with oil at $80... so you won't loose there.



> On the other hand, if you are going to spout "alternatives" you need to have half a clue about their likely impact.




I agree... one needs to have more than half a clue. Half a clue is only 'on the balance of probability'.

I reckon I have three quarters of a clue... getting near 'beyound a reasonable doubt'. 

So your gonna weeze out of the bet... er giving me a slab of beer eh.


----------



## Trembling Hand

*Re: OIL AGAIN!*



wayneL said:


> If there is price manipulation in the oil market, I wish folks would stop blaming speculators.
> 
> If there is price manipulation IT AIN'T THE SPECULATORS DOING IT!!!
> 
> As TH alluded to earlier, this unhealthy obsession with oil speculation is duplicitous and hypocritical.
> 
> Anyone long on anything is happy if speculators push prices in their favour.
> 
> Our Mr Tysonboss who is so annoyed at speculators, is ecstatic that property speculation has pushed RE prices to economically perilous and sociologically damaging levels, because it is in his favour, yet annoyed at oil being pushed up by buyers?
> 
> If any one of us buys some two-bit tin-pot guano juice miner, we hope speculators push it from 2c to $150
> 
> Yet oil speculators are all bums?
> 
> WTF?
> 
> You're happy to be capitalists when it suits you, but scream for socialism if it costs you another $3.50 to fill up the commodore!
> 
> FFS!






A counter to the above Whiskers?? :grenade:


----------



## rederob

*Re: OIL AGAIN!*



Whiskers said:


> Obviously not to your satisfaction, but there are plenty with similar views.



Cut yourself a break and deliver something that supports your views.  The fact that many people regurgitate the same crap doesn't make what they say valid.


> Yeah, but oil equities haven't inflated to the same extent as crude and they'll still make good money with oil at $80... so you won't loose there.



I get reasonable dividends from my long term holdings, so the face value of the equity is not the whole story.  Accordingly, the higher the oil price, the better the dividend stream.



> So your gonna weeze out of the bet... er giving me a slab of beer eh.



I will bet you that oil cannot sustain a price below $100 for more than a week.
I already have a bet with Tysonboss that oil will get back to $80: Admittedly it was made well before oil went ballistic, and  I thought I was in with a chance.  I reckon I have no chance at that one.
I think, in the present climate, that any oil price dip under $120 is a good buying opportunity.  There is reasonable - but not rock solid - support at $120, and then at $110.
At $100 there is exceptionally strong support, and this price point is where I will look at rebidding on some oil equities.


----------



## AlexanderPop

*Re: OIL AGAIN!*

Oil is gone for mine. the top is set.


----------



## rederob

*Re: OIL AGAIN!*



AlexanderPop said:


> Oil is gone for mine. the top is set.




Good to see you can read and write.
Shame about your capacity to think.


----------



## Smurf1976

*Re: OIL AGAIN!*

An example for those expecting "alternatives" to make oil obsolete anytime soon.

It took a quarter century after acknowledging the problem just to switch household heating, 14% of the electricity supply and a handfull of factories to some alternative energy source (to oil) in Tasmania. 

And the alternatives ended up being hydro, wood, coal and gas - none of which are in any way revolutionary. And yes, they ended up harder to do, took longer to implement and had more side effects than most anticipated back in the 1970's. A landmark environmental battle and ending up with a valley full of smoke weren't among the intended consequences that's for sure.

So good luck with any transition that's actually difficult. Other than swapping coal power for nuclear, there really isn't anything that could be completed in less than 20 years even if we were tooled up to make the alternative fuel equipment right now. 

And that's assuming we have an alternative to switch to in the first place. Tassie had plenty of wood, quite a few rivers and some coal so all that had to be done was get production going then set industry and homes up to use them. And wood heat in the home or coal in a factory boiler is, whilst less convenient, a perfectly adequate replacement for oil. All that's massively easier than replacing a billion or so cars plus aeroplanes, bus and so on with an as yet unknown alternative that's sure to be inferior to the oil it replaces. 

Any switch away from oil isn't going to be easy that's for sure.


----------



## rederob

*Re: OIL AGAIN!*

Smurf
Points well made.
Just because there are "alternatives" doesn't make them better, or easier to adopt - again as you point out.
Unfortunately there are some rather poorly informed people that make easy off the tongue statements that get swallowed by the gullible.
Whatever "alternative" there is for vehicle transport will need to be swapped into something like 800 million units.  That's not going to happen too fast.
I guess the good news will be that the "alternative" will spawn new industries and be a filip to industrial production.
Let's hope the subprime doesn't melt us down first!


----------



## Tysonboss1

*Re: OIL AGAIN!*

Smurf and rederob,

I admit that there will be alot of challenges in the future, However I feel that the decline of oil will be slow enough to allow alternatives to take up the slack.

I think that that Lpg and natural gas will take up alot of the slack and they will be extended by more effiect technologies suchas hybrids and electric cars...


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> Smurf
> Unfortunately there are some rather poorly informed people that make easy off the tongue statements that get swallowed by the gullible.
> Whatever "alternative" there is for vehicle transport will need to be swapped into something like 800 million units.  That's not going to happen too fast.
> I guess the good news will be that the "alternative" will spawn new industries and be a filip to industrial production.
> Let's hope the subprime doesn't melt us down first!



Totally agreed there.

Medium term, I think natural gas is the only real alternative that can be implemented for transport. And even then it's far from ideal. But it's the only thing that even comes close in that it's compatible with most of the existing systems - engines etc. Everything else is either totally uncompatible with existing vehicles (electric) or is technically flawed in energy terms (hydrogen, biofuels). 

I'm totally convinced that most people just don't get it when it comes to energy. They fail to realise that the oil, gas and electricity industries are the foundations upon which our entire modern society has been built. 

I think the only way more than 1% or so of the population will ever grasp this is for a major system failure - electricity, gas or oil, to occur that shatters their world big time. All of a sudden they'll find that their job in the city, the food on their table and even that trip to the dentist just don't happen if the alternators, which they've never seen or really even thought about, stop turning. All of a sudden interest rates, inflation and traffic jams don't matter as they realise there's a far bigger problem.

As was once said to me in relation to electricity during an imminent crisis - "It's jobs. It's industry. If we cut output then people lose their jobs. People lose their houses. It's not about hot showers and keeping the lights on at home, it's about keeping a home to have lights and a shower in. If we can't meet demand, people can't meet their mortgages."


----------



## Whiskers

*Re: OIL AGAIN!*



Trembling Hand said:


> A counter to the above Whiskers?? :grenade:




Gaud, you futures traders are a touchy, sensitive lot. :

For the umptheninth time, I am using 'speculators' in the loose sense of the word as opposed to the strict technical 'speculator'... the same as wayneL is when referring to the property and share market.

The fundamental difference between the oil market and us speculating as in trading on shares or property, is that the oil market is not near as uniformly, accountable and transparent... the details of which I have repeated before.

Since there has been numerous charges laid for speculative manipulation of the property and financial sectors in the US, I suspect it will only be a matter of time to see if there has been fraud, insider trading, corruption or manipulation of the oil market.


----------



## Whiskers

*Re: OIL AGAIN!*



rederob said:


> I will bet you that oil cannot sustain a price below $100 for more than a week.




Your on!


----------



## Muschu

*Re: OIL AGAIN!*

Almost as an aside to this vigorous and interesting thread:

Can someone please point me to a site that gives a live, or very recent, tracking of the price of oil?

[That info is probably here somewhere but it's a loooonnngg thread].

Many thanks 

Rick


----------



## Whiskers

*Re: OIL AGAIN!*



Muschu said:


> Almost as an aside to this vigorous and interesting thread:
> 
> Can someone please point me to a site that gives a live, or very recent, tracking of the price of oil?
> 
> [That info is probably here somewhere but it's a loooonnngg thread].
> 
> Many thanks
> 
> Rick




There are a number Muschu, but this is one that I use quite often... because it's free and can do a bit of charting http://www.usagold.com/live.html


----------



## rederob

*Re: OIL AGAIN!*



Muschu said:


> Can someone please point me to a site that gives a live, or very recent, tracking of the price of oil?
> Rick



http://www.bloomberg.com/energy/
http://www.livecharts.co.uk/MarketCharts/crude.php


----------



## Trembling Hand

*Re: OIL AGAIN!*



Whiskers said:


> The fundamental difference between the oil market and us speculating as in trading on shares or property, is that the oil market is not near as uniformly, accountable and transparent... the details of which I have repeated before.




Just goes to show that you haven't a clue what you are talking about. Commodities Futures have a FAR higher disclosure of holders than that of other futures markets. :burn:

Never let a fact get in the way of your biases hey Whiskers?


----------



## Whiskers

*Re: OIL AGAIN!*



Trembling Hand said:


> Just goes to show that you haven't a clue what you are talking about. Commodities Futures have a FAR higher disclosure of holders than that of other futures markets. :burn:




Geez TH, obviously FUTURES seems to be all you think about, consequently screwing everything out of context. 

Firstly, I was specifically talking about the oil market in particular, not the commodities market in general.

Second, wayneL's comments which you asked me to respond to were in relation to property and share speculation as in "_some two-bit tin-pot guano juice miner".

_* How many two-bit tin-pot guano juice miners do you know are available to trade futurers in!?* Answer: Absolutely, bludy fat zero none.

As I have told you before, you're trying to compare apples to oranges. 

Clearly trading these types of shares on the ASX is much more uniformly, accountable and transparent than the oil trading market. 



> Never let a fact get in the way of your biases hey Whiskers?




You really need to get out more TH to see that there is more to the real world than just futures. 

Then you might more easily see the context and facts... er see the difference between apples and oranges. :

...and that :behead: your biased, out of context, sarcasm.


----------



## Trembling Hand

*Re: OIL AGAIN!*

LOL Whiskers again a non answer.

I am not screwing anything out of context. YOU clearly and plainly said that "the oil market is not near as uniformly, accountable and transparent" Which when compared to the ASX is Absolutely FALSE. But You haven't stated why you think this because if you did lay out the facts, first you may have to find them and secondly you would see that you are wrong.

What are the reportable requirements in the ASX?? Nothing other than above 5% holding. You do not have to declare if you are a spec or industry member, when you held then, what likely period(expiry) you hold them for.

With an Index futures which moves/manipulates equities you don't even have to declare if you are a hedger or a speculator unlike Commodities Futures.

As for getting out more.................................


----------



## Whiskers

*Re: OIL AGAIN!*

As I said TH, you see and relate everything to the narrow context of futures. 

Love to keep ya company in a trivial nit-pickin sideshow, 'Grumpy', but I'm pretty busy in some heavy research for a few some 'speculative' little gems that are about to shine soon. Gotta go, see ya! :


----------



## Smurf1976

*Re: OIL AGAIN!*



Muschu said:


> Almost as an aside to this vigorous and interesting thread:
> 
> Can someone please point me to a site that gives a live, or very recent, tracking of the price of oil?
> 
> [That info is probably here somewhere but it's a loooonnngg thread].
> 
> Many thanks
> 
> Rick



www.kitco.com is primarily a precious metals site but it does have the price of oil as well as various other financial indicators.


----------



## Whiskers

*Re: OIL AGAIN!*

Well WP called the little a, b, c closer than me... as one would expect ... but it looks like it's near complete now, so... watch out belooooooow. 

... and similarly for the AUD

... and on your blocks for the start of the Aus market resource stocks rally.


----------



## Whiskers

*Re: OIL AGAIN!*



Whiskers said:


> Well WP called the little a, b, c closer than me... as one would expect ... but it looks like it's near complete now, so... watch out belooooooow.
> 
> ... and similarly for the AUD
> 
> ... and on your blocks for the start of the Aus market resource stocks rally.




Darn, I painted all over a chart and forgot to post it.

Oil shot up to about 127.75 to qualify for the end of that little a, b, c.


----------



## wavepicker

*Re: OIL AGAIN!*



Whiskers said:


> Darn, I painted all over a chart and forgot to post it.
> 
> Oil shot up to about 127.75 to qualify for the end of that little a, b, c.





Anything goes Whiskers and it does qualify for an abc. But it also may turn into a double an abc. This scenario caught me out often when I first started using EW and so one must be aware of that. The average retrace for a wave 2 is 0.382-0.618 and at the moment we are nowhere near this. I personally was expecting 130-134, but as you say the market might be in a hurry to go down.

Will se waht early next week brings!

Cheers


----------



## Sean K

*Re: OIL AGAIN!*

Whiskers you are saying that this is a 1 of 5 downward move?


----------



## Porper

*Re: OIL AGAIN!*



Whiskers said:


> Darn, I painted all over a chart and forgot to post it.
> 
> Oil shot up to about 127.75 to qualify for the end of that little a, b, c.





Also could quite easily be a,b,c to the wave A, more likely i.m.o.

I don't have data though so only going by your charts.

Also looking back to a larger time frame this impulse down looks more like 5 waves down to a wave A, we are now maybe in the minor degree wave a, should bounce to around 135ish for that scenario to play out.Then the final push down into wave C. to around 100 or just below.


----------



## wavepicker

*Re: OIL AGAIN!*



Porper said:


> Also could quite easily be a,b,c to the wave A, more likely i.m.o.
> 
> I don't have data though so only going by your charts.
> 
> Also looking back to a larger time frame this impulse down looks more like 5 waves down to a wave A, we are now maybe in the minor degree wave a, should bounce to around 135ish for that scenario to play out.Then the final push down into wave C. to around 100 or just below.




This another common scenario:

Assuming we are in the early stages of a major correction, as you say we have had 5 waves down, now 3 waves up as whiskers mentions, we can also move down in another 3 and make an unorthodox new low and after that have a fast move back up in an impulse(wavec) to complete an irregular flat . These are quite common in commodities and FX, but just an alternate at this stage and favour the first scenario.

We should now by Mon/Tued 

Cheers


----------



## wayneL

*Re: OIL AGAIN!*



Whiskers said:


> Darn, I painted all over a chart and forgot to post it.
> 
> Oil shot up to about 127.75 to qualify for the end of that little a, b, c.




Waves i & ii not valid IMO


----------



## wayneL

*Re: OIL AGAIN!*

Aside from the preponderance of impulses in the last 3 years, one is better off looking for corrective patterns in Commodities IMO.

BWTFDIK


----------



## wavepicker

*Re: OIL AGAIN!*

Oil seems to be tracking the currencies traded against USD quite well on this last leg down. The EW for the euro analysis appears to be quite clear at present. The Crude alternate count (mentioned in the last post) to what whiskers mentioned appears to be playing out in the euro at present( ie an irregular flat). It's common for an upward correction to end at the span of the wave 4 on the way down or between the 0.382  and 0.618 levels marked on the chart.

Cheers


----------



## rederob

*Re: OIL AGAIN!*

While Shell and Exxon Mobil hit some big profit numbers in the last quarter not much attention was paid to the fact that their production levels are declining and their reserves are not being replenished.
Given that Exxon has been responsible for 19 out of the 20 largest quarterly profits posted in the US you might think they had the clout to keep up production. Instead, output fell by 8%.

General market commentators are making much of the decreased demand for oil in the US, and the inevitable softness in economic conditions that will suppress demand for some time to come.  In their willingness to promote a return of oil to $100 they forget that a key ingredient of sustainable low prices is inventory.  Crude oil inventories in the US are 14% lower than a year ago so until such time there is a consistency of inventory build the likelihood of a return to high oil prices is strong.

Although us oil inventory movements are major price determinants globally, that sentiment will wane over the next few years.  That's because the demand equation from emerging economies is significantly more important than what's happening in the US presently, and that equation is increasingly in favour of developments in those emerging economies.

I note that recent posts are focusing on EW and not fundamentals.  Apart from supply and demand factors on the fundamentals front, a significant proportion of oil's recent price decline can be attributed to a short term strengthening of the greenback. The greenback does not have a chance in hades of recovering from the mess its in over the next few years, while in the short term its strong cycle is nearing an end.  So there is a good chance that near term the price of oil will be as much influenced by speculators hedging oil against the dollar as any other factors.

Finally, the "premiums" attributed to oil through geopolitical tensions have been discounted recently and could easily return with Iran being targeted by the UN for harsher sanctions. And the hurricane season has kicked off in the Gulf of Mexico to add one final ingredient to upside risk.


----------



## Whiskers

*Re: OIL AGAIN!*



kennas said:


> Whiskers you are saying that this is a 1 of 5 downward move?




Gees, a long day yesterday and I messed up my scribblings on that chart. Obviously that red 1 should be the 2 and going down to 3 ... thats a minor count kennas. 

I'm trying to adopt to a standard EW count code. Attached is a chart from earlier where I picked up on the *primary 5* leg. The count from *cycle IV*, I got from an EW site... not sure about the earlier count. I just tried to see how they arrived at there count and if anyone could confirm it. 



wavepicker said:


> Anything goes Whiskers and it does qualify for an abc. But it also may turn into a double an abc. This scenario caught me out often when I first started using EW and so one must be aware of that. The average retrace for a wave 2 is 0.382-0.618 and at the moment we are nowhere near this. I personally was expecting 130-134, but as you say the market might be in a hurry to go down.
> 
> Will se waht early next week brings!
> 
> Cheers




Yeah your right WP. I should have pasted my legend on it, but ultimately combining my FA with what I'm picking up with EW, as Porper says, it should be part of a correction... I think a major *corrective* *cycle* .



wayneL said:


> Waves i & ii not valid IMO




If your right, that would make this abc minute wave iv... which probably fits better (come to think about it) with my FA, in that it's not near low enough yet for any substantial support or reversal. 

I just feel that it's not gonna beat last night's high again... as WP mentions the way the currencies are turning, I'm confident from a FA point of view that we have reached a critical turning point in the world economy this last week or so.


----------



## wavepicker

*Re: OIL AGAIN!*



Whiskers said:


> Gees, a long day yesterday and I messed up my scribblings on that chart. Obviously that red 1 should be the 2 and going down to 3 ... thats a minor count kennas.
> 
> I'm trying to adopt to a standard EW count code. Attached is a chart from earlier where I picked up on the *primary 5* leg. The count from *cycle IV*, I got from an EW site... not sure about the earlier count. I just tried to see how they arrived at there count and if anyone could confirm it.
> 
> 
> 
> Yeah your right WP. I should have pasted my legend on it, but ultimately combining my FA with what I'm picking up with EW, as Porper says, it should be part of a correction... I think a major *corrective* *cycle* .
> 
> 
> 
> If your right, that would make this abc minute wave iv... which probably fits better (come to think about it) with my FA, in that it's not near low enough yet for any substantial support or reversal.
> 
> I just feel that it's not gonna beat last night's high again... as WP mentions the way the currencies are turning, I'm confident from a FA point of view that we have reached a critical turning point in the world economy this last week or so.





Good chart Whiskers.  I have the same count as this, and quite interestingly the span of the previous(blue wave) ranges from 55-75. As corrections often find support at these ranges I have used it as a basis for a (min downside target) which spurred my little wager with Jessica Wabbit.

Cheers


----------



## Muschu

*Re: OIL AGAIN!*



Smurf1976 said:


> www.kitco.com is primarily a precious metals site but it does have the price of oil as well as various other financial indicators.




Many thanks Smurf.  I use kitco to check base metal prices and went back to the site to find an oil link but was unsuccessful.  Further tuterage welcome!
I appeciate your response.

Oil seems something of a dictactor.  How can it be charted [not saying it can't be] when there are "factors" like Iran in the air?

Rick


----------



## Smurf1976

*Re: OIL AGAIN!*



Muschu said:


> Many thanks Smurf.  I use kitco to check base metal prices and went back to the site to find an oil link but was unsuccessful.  Further tuterage welcome!



Oil price is quoted on the main page in the "indicators" box along with the DJIA, Nasdaq etc. About two thirds of the way down on the right hand side.


----------



## Muschu

*Re: OIL AGAIN!*



Smurf1976 said:


> Oil price is quoted on the main page in the "indicators" box along with the DJIA, Nasdaq etc. About two thirds of the way down on the right hand side.




Your exceptional intelligence is very transparent [thanks mate]


----------



## wayneL

*Re: OIL AGAIN!*



Muschu said:


> Oil seems something of a dictactor.  How can it be charted [not saying it can't be] when there are "factors" like Iran in the air?
> 
> Rick



 Same way anything is charted. 

Why can't it be charted?


----------



## Sean K

*Re: OIL AGAIN!*



wayneL said:


> Same way anything is charted.
> 
> Why can't it be charted?



I think this is the argument from the non chartists, in that black swan events, or any swan close to black, will blow TA out of the water. Like a 9/11, or Israel nuking Iran, or aliens landing in Utah.

But as WP says, if you had this information before hand, then you couldn't trade it.

So, charts rule.




One thing that is very interesting right now, is that the 'fundamentals' of gold and the 'technicals' are diverging quite significantly.

The technicals are saying plunge, while the funnies are saying up, up and away.....

Someone will win the prize.


----------



## Muschu

*Re: OIL AGAIN!*



wayneL said:


> Same way anything is charted.
> 
> Why can't it be charted?




Didn't say it can't be.  Of course it can.


----------



## Smurf1976

*Re: OIL AGAIN!*



kennas said:


> One thing that is very interesting right now, is that the 'fundamentals' of *gold* and the 'technicals' are diverging quite significantly.
> 
> The technicals are saying plunge, while the funnies are saying up, up and away.....



Thought this was an oil thread? 

Anyway, as a long term investor I still believe the fundamentals in the long term (5+ years) are pointing strongly up for oil. That assumes, of course, that the wheels don't completely fall off the economy and there's still an ongoing trend towards more cars on the road (globally) etc. Unless there's a massive oil discovery real soon or a major economy collapses then it's rising demand without rising production. That ought to lead to higher prices.

Short term though I'm leaning toward the plunge notion somewhat. Anything's possible but markets are made at the margin and a proper global recession would create a temporary glut of oil, quite likely leading to a temporary price plunge.

How low? Anyone's guess. Depends on the broader economy IMO.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> Short term though I'm leaning toward the plunge notion somewhat. Anything's possible but markets are made at the margin and a proper global recession would create a temporary glut of oil, quite likely leading to a temporary price plunge.
> 
> How low? Anyone's guess. Depends on the broader economy IMO.




I lean the same way with the reasoning being; the general populace are coming to realisation of how finite oil is.The hip pocket asks questions.A reassessment of personal wants and a conservative stance.India continues to raise interest rates which curbs expansion/investment, China has inflation running at 8% and America has their credit crisis in which the IMF says ; 



> The International Monetary Fund (IMF) says there is no end in sight to the credit crisis gripping world financial markets, predicting that banks are in for more pain as mortgage defaults soar and economies slow.


----------



## BentRod

*Re: OIL AGAIN!*

Anyone have a daily bar chart of Crude?
I don't have that data. 

Been hammered the last couple of days.

Bluddy Speculators


----------



## Whiskers

*Re: OIL AGAIN!*



BentRod said:


> Anyone have a daily bar chart of Crude?
> I don't have that data.
> 
> Been hammered the last couple of days.
> 
> Bluddy Speculators




Yeah, I know. 

This is one I use. http://www.usagold.com/live.html

It comes up as a bar chart by default, but I prefer candles.


----------



## Wysiwyg

*Re: OIL AGAIN!*

What about a bounce off the line for a right shoulder formation??Nothing in a straight line down!


----------



## Whiskers

*Re: OIL AGAIN!*



Wysiwyg said:


> What about a bounce off the line for a right shoulder formation??Nothing in a straight line down!




Nah, they're all falling over themselves diving and somersaulting trying to get a look at a short underneath it.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



Whiskers said:


> Nah, they're all falling over themselves diving and somersaulting trying to get a look at a short underneath it.



Well she's bounced of $118 this morning, seems to be trying to gather some strength for another assault?


----------



## BentRod

*Re: OIL AGAIN!*

Thanks for the Chart Whiskers


----------



## Whiskers

*Re: OIL AGAIN!*



Uncle Festivus said:


> Well she's bounced of $118 this morning, seems to be trying to gather some strength for another assault?




No chance Unc. 

She's doomed. :

Relating in my newfound interest in EW, I reckon she'll go below 100 on this leg v of 3, in a week or so. Then it might pop up and down around 100 for awhile while wave 4 sorts itself out, then 5 could take it back to my FA target of 80.

Also bearing in mind that this is (little doubt) a major cycle correction, that will probably only be a minor wave A. So B could make it back around 100 before C takes it probably sub 80. 

Hows that for sticking one's neck out for a forcast.


----------



## wayneL

*Re: OIL AGAIN!*



Whiskers said:


> No chance Unc.
> 
> She's doomed. :
> 
> Relating in my newfound interest in EW, I reckon she'll go below 100 on this leg v of 3, in a week or so. Then it might pop up and down around 100 for awhile while wave 4 sorts itself out, then 5 could take it back to my FA target of 80.
> 
> Also bearing in mind that this is (little doubt) a major cycle correction, that will probably only be a minor wave A. So B could make it back around 100 before C takes it probably sub 80.
> 
> Hows that for sticking one's neck out for a forcast.




A couple of EW points

1/ What makes you believe this is an impulse?

2/ If it is, It can't be a Wave A of a larger degree corrective.

You really should be labeling this as corrective to be in tune with your view.


----------



## MRC & Co

*Re: OIL AGAIN!*



wayneL said:


> A couple of EW points
> 
> 1/ What makes you believe this is an impulse?
> 
> 2/ If it is, It can't be a Wave A of a larger degree corrective.
> 
> You really should be labeling this as corrective to be in tune with your view.




Looks like those big words didn't save your skin when creating EW training material Wayne 

On that note, I'm surprised you even muse over EW anymore.  Impulse?


----------



## >Apocalypto<

*Re: OIL AGAIN!*

what a surprise.

Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING

so after all the fights who's analysis is proving correct?

don't tell me as i know already


----------



## chops_a_must

*Re: OIL AGAIN!*



>Apocalypto< said:


> what a surprise.
> 
> Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING
> 
> so after all the fights who's analysis is proving correct?
> 
> don't tell me as i know already



Oh right... so he wasn't on the wrong side of the trade for 18 months?

Yes, yes, yes... no need to hear the response banner boy.


----------



## MRC & Co

*Re: OIL AGAIN!*



chops_a_must said:


> Oh right... so he wasn't on the wrong side of the trade for 18 months?
> 
> Yes, yes, yes... no need to hear the response banner boy.




ha ha, yes, these appearances seem to be pretty timely.

How about once your target is hit, come back and gloat?

Until then, you probably just made back the money you lost, if that.  Like the bugs who gloat which turns out to be the perfect fade opportunity, this EW 'I told you so' is the same.  

Watch, a fade is coming and less than 18 months away


----------



## chops_a_must

*Re: OIL AGAIN!*



>Apocalypto< said:


> you are a Tosser chops a little wannabe tosser.
> 
> you will never get to WP level mate
> 
> dream on.



Ah well.

With great calls like WP's, why would I want to be like him hey?


----------



## Tysonboss1

*Re: OIL AGAIN!*



>Apocalypto< said:


> what a surprise.
> 
> Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING
> 
> so after all the fights who's analysis is proving correct?
> 
> don't tell me as i know already




When oil was at $120 WP said that it was going to drop below $100 it then trended up to within a whisker of $150,...... and has only now dropped back to the level where it was at when he was predicting a slump, so really we haven't seen the slump that he predicted at all yet.

Apocalyto are you really WP with a new log in.


----------



## Whiskers

*Re: OIL AGAIN!*



wayneL said:


> A couple of EW points
> 
> 1/ What makes you believe this is an impulse?




Ahh ha, your testing me? 

If I pass, can I toss my 'L' plate and move up to a 'P' plate? 

Well, it's been tracking in minute waves of 5 so far. Also my FA suggested it will be a rapid decline at least to start with, because as the USD strengthens it compounds the rate of decrease, suggesting to me a good chance of a zig zag.



> 2/ If it is, It can't be a Wave A of a larger degree corrective.
> 
> You really should be labeling this as corrective to be in tune with your view.




A zig zag is 5 impulsive, 3 corrective and 5 impulsive isn't it! Since according to EWI the high OF 147 was a cycle V which equates to supercycle (I). So that suggests to me that the first corrective A will probably be made up of an impulse leg of one of the higher degrees, at least of a minor or intermediate wave count. I am anticipating if it makes it to minor wave 5 (about $80), that will probably equate to corrective leg A.

Do you think it isn't measuring up as impulsive so far in the lower degree counts?


----------



## rederob

*Re: OIL AGAIN!*



>Apocalypto< said:


> what a surprise.
> 
> Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING
> 
> so after all the fights who's analysis is proving correct?
> 
> don't tell me as i know already



Oil was significantly overbought as early as May, and a correction was on the cards for months thereafter.
Many posts noted this.

As for analysis, the EW team was conspicuous by its absence for many weeks while new highs were being hit; and it was probably whiskers who called the peak several days after it happened. 

Several keys open the door to analysis:
First, US oil inventories have sustained slight but regular rebuilds since the oil price high was hit - showing 11% less oil now compared to 20% six weeks ago.  This was due to the dual effect of record Saudi oil output coinciding with some demand destruction.
Secondly, the USD has firmed against the euro and a large transfer of moneys from funds has impacted on oil's price.

What's happened to oil is blind Freddy stuff: It was inevitable, it was discussed, and it happened.
For me the only question of relevance is if there is a price dip under $100 that can be sustained: That's my trigger point for a re-entry.


----------



## Smurf1976

*Re: OIL AGAIN!*



>Apocalypto< said:


> what a surprise.
> 
> Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING
> 
> so after all the fights who's analysis is proving correct?
> 
> don't tell me as i know already



As a long term investor I wouldn't say that anything exciting has really happened. Price got ahead of itself and has now come back. If the price drops below the point it was at 12 months earlier then I'll be paying more attention.


----------



## Smurf1976

*Re: OIL AGAIN!*



>Apocalypto< said:


> what a surprise.
> 
> Wavepicker told me and u all, oil would fall gold will fall and aud eur will fall to usd on back of usd rising and fancy that, IT'S ALL HAPPENING
> 
> so after all the fights who's analysis is proving correct?
> 
> don't tell me as i know already



As a long term investor I wouldn't say that anything exciting has really happened. Price got ahead of itself and has now come back. If the price drops below the point it was at 12 months earlier then I'll be paying more attention.


----------



## Buster

*Re: OIL AGAIN!*

Hey Rederob,



rederob said:


> Oil was significantly overbought as early as May, and a correction was on the cards for months thereafter [Stuff Deleted]
> and it was probably whiskers who called the peak several days after it happened. .




Ha ha.. Yeah, Whiskers seems to cop a bit of a flogging in some of these threads, but I tend to think that he's got a far better grasp on what's going on than many here give him credit..  Interestingly it's the same individuals that find it necessary to try and cut him down time and time again.. 




rederob said:


> What's happened to oil is blind Freddy stuff: It was inevitable, it was discussed, and it happened.
> For me the only question of relevance is if there is a price dip under $100 that can be sustained: That's my trigger point for a re-entry.




Ohhh, I don't know about Blind Freddy.. I've read report after report tipping $200 a barrel within 2008..and some big names amongst them.  Just goes to show that nobody really knows, just need to use some common sense..   (Apparently so rare these days, you're considered a Superhero if you posess this ability.. ) 

Unfortunately I'm not what you'd call a 'sophisticated investor' and therefore wouldn't know how to invest directly in commodities.. I'll probably have a go in the next couple of months or so (If I can generate the stomach for it..) When I do, you can be assured that the commodity of choice will plummet.. 

Regards,

Buster


----------



## numbercruncher

*Re: OIL AGAIN!*

Demand being destroyed as widely tipped !




> A report from China on Monday that the country's crude oil imports in July were down 7% from last year fueled expectations that the economic slowdown affecting the U.S. and Europe may be spreading to Asia and cutting demand for oil.




http://money.cnn.com/2008/08/12/markets/oil.ap/index.htm


----------



## Whiskers

*Re: OIL AGAIN!*



numbercruncher said:


> Demand being destroyed as widely tipped !
> 
> 
> 
> 
> http://money.cnn.com/2008/08/12/markets/oil.ap/index.htm




Yes, I think you're right there, numbercruncher.

What with the big US car makers scraping those big gas guzzler models and bringing in more smaller engine models overall demand will probably stay pretty flat for a couple of years. 

But I hear a lot of talk about switching a lot more public transport to gas or electric in the coming years also. 

The days of oil as first choice energy source are on the way out I'm afraid.


----------



## Tysonboss1

*Re: OIL AGAIN!*



Whiskers said:


> But I hear a lot of talk about switching a lot more public transport to gas or electric in the coming years also.
> 
> The days of oil as first choice energy source are on the way out I'm afraid.




Use of alternatives is fantastic, stable energy prices is good for every body, However what generally happens is that once the oil price stabilises peoples attention is taken away from these alternatives and they get forgotten, atleast until the next oil shock.


----------



## Whiskers

*Re: OIL AGAIN!*

Oil is just about to go poof... wooosh... gurgle, gurgle,  again. 

I'll give it til 119, 120 at most... then look out 100.


----------



## CanOz

*Re: OIL AGAIN!*



Whiskers said:


> Oil is just about to go poof... wooosh... gurgle, gurgle,  again.
> 
> I'll give it til 119, 120 at most... then look out 100.




Yep, and the buck is correcting.


----------



## MRC & Co

*Re: OIL AGAIN!*



Whiskers said:


> I'll give it til 119, 120 at most... then look out 100.




Double top formed tonight so far.  Some strong resistance came in on the cent!  Nice fade play!  

Well fade just got stopped out with a change in position after it broke above, nice breakout to catch even if it was a bad fill!  Quick scalp, nothing more in this environment!


----------



## wayneL

*Re: OIL AGAIN!*



Whiskers said:


> Oil is just about to go poof... wooosh... gurgle, gurgle,  again.
> 
> I'll give it til 119, 120 at most... then look out 100.



Maybe we should give it till 130?

...140?

...250?


----------



## wayneL

*Re: OIL AGAIN!*

One blokes view (not that I necessarily agree will it all):

http://www.citywire.co.uk/personal/...unds/content.aspx?ID=312001&re=3545&ea=199083



> The Daily Interview: Commodity correction nothing to do with fundamentals, says JPM fund's Henderson
> 
> By Danielle Levy | 12:16:00 | 21 August 2008
> 
> JPM Natural Resources manager Ian Henderson believes the upward trend in energy prices is set to continue, seeing the recent sell-off in commodities as a short-term situation caused by forced selling.
> 
> Henderson (pictured), who is Citywire A-rated, says the recent correction in commodities prices does not take into account continued demand from the emerging world and is more an over-reaction to global financial markets and negative statistics from the US and Europe. ‘Today the emerging world is where all the growth is coming from,’ he says.
> 
> He does not see any evidence that China is facing a slowdown in growth. In fact, he labels bottlenecks in energy supply as the main problem for the emerging markets rather than a decline in demand growth.
> 
> Henderson believes recent commodities price falls are a result of forced selling by investors in the ‘flip flop between banks and commodities stocks’, as he calls it.............................


----------



## Aussiejeff

*Re: OIL AGAIN!*



numbercruncher said:


> Demand being destroyed as widely tipped !
> 
> 
> 
> 
> http://money.cnn.com/2008/08/12/markets/oil.ap/index.htm





Maybe part of the reason for demand slow down in China in July is simply a result of their Big Push to lower pollution in Beijing during the Olympics? August figures might show the same reduction. We're talking *millions* of vehicles being taken off the road at the moment. Has to have some effect, surely?

Hmmm. I also wonder whether their Oct/Nov "oil demand" stats will jump again when all of Beijings factories and motorways ramp back up to the max, post Olympics?




aj


----------



## Whiskers

*Re: OIL AGAIN!*



wayneL said:


> Maybe we should give it till 130?
> 
> ...140?
> 
> ...250?




Nah, I'm still going with a minute abc in a minor 5 wave down. That will probably be a minor wave A... but it won't make much difference if this is a minor ABC forming now. It'll just be a more complex intermediate and primary corrective waves, down to the same area.



wayneL said:


> One blokes view (not that I necessarily agree will it all):
> 
> http://www.citywire.co.uk/personal/...unds/content.aspx?ID=312001&re=3545&ea=199083




I agree that there's been some forced selling, but I think it will go more back into equities.

Agree also that bottlenecks in supply is probably the biggest problem looming for commodities, particularly coal, iron ore and natural gas. 

All in all though, I think the wheels are finally in motion, particularly in the US to reduce oil consumption and also to decrease their dependence on foreign oil, if the reported bids for new liscenses in the Gulf of Mexico is anything to go by.


----------



## wayneL

*Re: OIL AGAIN!*



Whiskers said:


> Nah, I'm still going with a minute abc in a minor 5 wave down. That will probably be a minor wave A... but it won't make much difference if this is a minor ABC forming now. It'll just be a more complex intermediate and primary corrective waves, down to the same area.



I vehemently disagree.

I think it's part a complex wave X; a wave 3 of a larger degree wave C flat of a larger degree Wave B triple zig-zag of a larger degree wave 2 of a leading diagonal.... ummm where am I?


----------



## GreatPig

*Re: OIL AGAIN!*

You missed the bit about the moon being in the 7th house and Jupiter aligning with Mars... oh sorry, that's Gann I believe, not EW.

Might make a good stage show though... 

GP


----------



## Stillworkin

*Re: OIL AGAIN!*

Please explain

If China has closed so many factories and reduced car usage etc for olympics? how can their demand reduce after the olympics? Surely it must increase as all the workers go back to work!

As we are now entering summer in Oz, and winter in the north. How can demand in the most populus part of the world ie the north increase and have no effect on price.

Also what OPEC country recently said they would table reducing production at the next OPEC meeting?

Gee Russia has made a grab for the oil pipeline into Europe? Do you think they will increase the cost or reduce it?

Isn't this the tornado season in the gulf of Mexico? Do you think we will go the whole cyclone season with no interuption to supply.

Oh yeah and that whole debate with Iran re nuclear thing. Is that really over?

I love technicall analysis. The whole embedded stochastic looks great. But is their more to this?

PS the bars open. Beers are my preference

Stillworkin


----------



## rederob

*Re: OIL AGAIN!*



> *This Week In Petroleum     *
> Released on August 20, 2008
> So, where do we expect prices to go from here? While we are not quite as confident in forecasting the near-term path for oil prices as Michael Phelps might be about winning his next race, we do think that crude oil prices may settle in the $120 - $130 per barrel range for most of the remainder of the year, barring any additional major supply disruptions from hurricanes or other events such as the current conflict in Georgia. This is largely due to our projection that year-over-year declines in U.S. oil consumption will not be as large in the second half of the year, in part due to relatively weak consumption in the second half of last year and also to the perceived end of the upward surge in prices. Balancing out the forecasted decreases in U.S. consumption, we project relatively strong continued demand growth in non-OECD countries. Finally, as prices drop, Saudi Arabia may cut back on its recent increase in production, which could halt the most recent price decline. Of course, whether or not this scenario unfolds is anyone’s guess, but understanding the factors behind the increase and recent decline in oil prices is important in understanding what might come next in the prices we pay at the pump.




The principal difference between oil and the metals in the commodity stakes is that it's relatively easy to respond to metal demand.  This was not always the case, as oil supply until 2005 was just a matter of filling the tankers and sending them on their way.

With Angola, Iraq and the Saudis being about the only nations that can meaningfully increase output in a world where production peaks have set well in, it does not take much nowadays to spike oil prices.  It takes a little more for the speculative longs to unwind positions and force prices back down.  The volatility of this theme will increase over the next few years as it becomes ever clearer that the supply tap is wound almost to capacity.

But back to the above quote for a moment.  When the world's greatest oil consumer comes out and suggests that we are destined for prices in the present range and higher for the rest of the year, you must wonder what they are thinking about in terms of next year's prices. 

At present I favour a relatively flat to declining demand response from Western nations, and a continuing demand increase from the emerging economies regardless of global economic conditions.  I believe average oil prices will increase by about 20% next year under these conditions.  

Irrespective of pump prices, the cost of oil extraction will increase dramatically in coming years as the next wave of oil supply will come from both offshore and deeper drilling activities.  All aspects of the supply curve - exploring, producing and landing - must add significantly to per barrel costs.  Ultimately these costs will be expressed at the bowser until demand destruction is matched by the essential needs of users and we reach a price equilibrium.  My sense is that this is around 5 years  and another $100 dollars a barrel away.  Until then, I will not be quitting any of my oil equities.


----------



## CAB SAV

*Re: OIL AGAIN!*



rederob said:


> The principal difference between oil and the metals in the commodity stakes is that it's relatively easy to respond to metal demand.  This was not always the case, as oil supply until 2005 was just a matter of filling the tankers and sending them on their way.
> 
> With Angola, Iraq and the Saudis being about the only nations that can meaningfully increase output in a world where production peaks have set well in, it does not take much nowadays to spike oil prices.  It takes a little more for the speculative longs to unwind positions and force prices back down.  The volatility of this theme will increase over the next few years as it becomes ever clearer that the supply tap is wound almost to capacity.
> 
> But back to the above quote for a moment.  When the world's greatest oil consumer comes out and suggests that we are destined for prices in the present range and higher for the rest of the year, you must wonder what they are thinking about in terms of next year's prices.
> 
> At present I favour a relatively flat to declining demand response from Western nations, and a continuing demand increase from the emerging economies regardless of global economic conditions.  I believe average oil prices will increase by about 20% next year under these conditions.
> 
> Irrespective of pump prices, the cost of oil extraction will increase dramatically in coming years as the next wave of oil supply will come from both offshore and deeper drilling activities.  All aspects of the supply curve - exploring, producing and landing - must add significantly to per barrel costs.  Ultimately these costs will be expressed at the bowser until demand destruction is matched by the essential needs of users and we reach a price equilibrium.  My sense is that this is around 5 years  and another $100 dollars a barrel away.  Until then, I will not be quitting any of my oil equities.



I tend to agee with what you thoughts are. In regards to  oil companies, I prefer the big boys like WPL,STO,OSH & AWE. Oil may have dropped off a bit lately, but so has our dollar,so has oil fallen? The smaller companies and their shareholders will suffer as you pointed out, costs keep rising.


----------



## Whiskers

*Re: OIL AGAIN!*



wayneL said:


> I vehemently disagree.
> 
> I think it's part a complex wave X; a wave 3 of a larger degree wave C flat of a larger degree Wave B triple zig-zag of a larger degree wave 2 of a leading diagonal.... ummm where am I?






LOL I bludy hope not. It'll take me a month of sundays to figure that one out. 

Since I've been doing my homework and studying damn hard, I'm gonna have a shot at $105/6 for the end of this five minor waves down, obviously based on the length of the previous waves which just happens to coincide with support.

Probably due to call that the first corrective leg A... cos if we don't get a corrective leg soon it could go worthless,  negative value, before all these cycles unwind seeing as it seems the top was a supercycle *(I)*

So it looks like we're gonna be stuck with the POO going sideways between say 105 and maybe 120 for a few weeks while it sorts out a corrective pattern, say B leg.


----------



## deadset

*Re: OIL AGAIN!*

This response is based on my gut feel only after observing related events.

It looks like oil wants to get down to at least $105, but there has been an event almost every second day since it hit $114 which has temporarily halted the falls.  Georgia, 3rd Hurricane risk in the Gulf since then, BP pipeline getting turned off, then reopened, Russian delays withdrawing and verbals via media.  Wether it ever gets there, depends on how quiet the related news is.

So, as soon as the Hurricane clears, assuming it does no damage, I'd expect it to fall in the near term.  But now its Spring in the Northern Hemisphere, so I'd expect it to rise back to around $120.  $125 seemed the highest for the market to bear last time before it caused too many problems above this level.  No point getting great returns on oil if it kills everything else in the process, that will plummet demand.

*My feeling is that $125 causes market and financial problems for the world, replacement technologies will rapidly develop at this level.  Oil producers know this and won't want to see prices above $120*, otherwise the replacement technologies kill their goose quicker than need be.

Medium Term : Russia/Georgia ok ?

Long Term : Obama declarred his intention for "energy independance" if he wins.  That's a HUGE statement if you missed it yesterday.

Oil and Commodities, they are decoupled now for normal price changes, but large swings in oil affects everything.

---------
verbal - Aussie slang for argumentative dispute.
goose - you know the Goose that lays the golden eggs, that goose.


----------



## Kauri

*Re: OIL AGAIN!*

The UAE C/B Gov has noted that he sees oil prices moving back into a $60/80 band and that there are "more reasons to stick with USD pegs" now that the US unit is strengthening.  _and I'm buying that line_..  

 Incidentally...UBS is recommending gold for a target of 850...

Cheers
.........Kauri


----------



## Whiskers

*Re: OIL AGAIN!*



Kauri said:


> The UAE C/B Gov has noted that he sees oil prices moving back into a $60/80 band




I like these fellas. They agree with me. 



> Incidentally...UBS is recommending gold for a target of 850...




Don't like that though... at least not for a week or two. 

Meanwhile, it's looking like THE POO has snuck in a little i, ii, in the shadow of that abc.

As soon as Gustav nicks off, I'd say she is gonna finally rip her fingernails out and break loose for a new low.


----------



## rederob

*Re: OIL AGAIN!*



Whiskers said:


> As soon as Gustav nicks off, I'd say she is gonna finally rip her fingernails out and break loose for a new low.



I'm sure you mean a short-term cyclical low!
Gustav is Category 4 and will intensify over the next 24 hours.
Chances are that it can make landfall in region nearby to where Katrina struck, but at intensity 5: Katrina struck New Orleans at intensity 3.
Irrespective of possible damage directly from Gustav, GOM rigs will shut it most oil output over the next few days, and there is a chance that Bush will immediately release some oil from the strategic reserve.
These actions will ensure the oil price first spikes higher on Monday, and then stay high until US data on inventories shows a return to normal - possibly in the next fortnight.
Should Gustav knock out refining capacity through a direct hit, then expect a return to plus$130 prices for a while.

Aside from Gustav, US inventory data has been subdued given the slowdown of its economy and some demand destruction in the transport sector in particular.  What is important in reading the data is that most analysts take the year-on-year changes as best indications of trend.  And in this regard we are now getting into the period a year ago whereby the "slowdown" was gathering pace.
Accordingly, if new data is not showing inventory builds from a year ago, then the US will be in diabolicals when, eventually, its economy does recover.  
Whatever Whiskers might hope for in the short run is getting increasingly less likely as weeks pass.  The only ray of hope for oil is that the US goes to hell in a handbasket more quickly than most expect: Only then would we have a meaningful global surplus of oil for an extended period, before the rot truly settles in (and the oil price takes off again).


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> Accordingly, if new data is not showing inventory builds from a year ago, then the US will be in diabolicals when, eventually, its economy does recover.
> ...
> 
> Only then would we have a meaningful global surplus of oil for an extended period, before the rot truly settles in (and the oil price takes off again).



I am unable to post more details due to confidentiality reasons so you'll have to take (or ignore) my word for it but:

It is my understanding that a significant and credit worthy organisation has found itself unable to obtain a substantial but not huge quantity (multiple full road tanker loads) of bitumen _at any price_ from one of the major oil companies because they don't have, and can not get, enough of it. 

I've long thought that we'd see storage run to zero at some point. With at least one product in one Australian state that seems to already have happened. Odds are that won't be the only product or location where stocks are running low.


----------



## Kauri

*Re: OIL AGAIN!*

The U.S. Minerals Management Service said Saturday 998,000 of 1.3 million barrels per day (bpd) of oil production (76.8%) and 2.75 BLN of 7.4 BLN cubic feet per day of gas (Bcfd) production (37.2%) had been shut in anticipation of Gustav. That is up from 6.62% of oil and 1.84% of gas Friday. CNN reports that energy producers have shut in approximately 77% of oil output and 37% of natural gas production in the Gulf of Mexico. Most of the shut-in production is unlikely to return before the end of next week. According to the report, nearly 1 MLN barrels of daily oil production is now shut down. The last time this happened was in November 2005, after Hurricanes Katrina and Rita. In addition, 2.75 BLN cubic feet of daily natural gas production is now shut down.
       Traders on the floor of NYMEX noted on Friday that crude futures actually moved substantially lower before Katrina hit only to surge higher when the storm finally arrived. The near-total shutdown of offshore oil and gas production is likely to last through the end of next week, even if Gustav causes little damage. Producers must fly workers back to offshore installations by helicopter, a process that can take days. Platforms also take several days to return to full output.

Now.. oil and the Dow/SP500.. what relationship.. or dare I say coupling.. do they have??

Cheers
............Kauri

  MMMmmmm
...................Kauri


----------



## Whiskers

*Re: OIL AGAIN!*

Gustav's a bit of a fizzer, looks like it's not intensifyiny.

Probably be close to 109/10 in a day or two... leg iii of 5. 

Shaping up for a bit of support just above 100... end of wave 5... wave A?


----------



## Whiskers

*Re: OIL AGAIN!*



Whiskers said:


> Gustav's a bit of a fizzer, looks like it's not intensifyiny.
> 
> Probably be close to 109/10 in a day or two... leg iii of 5.
> 
> Shaping up for a bit of support just above 100... end of wave 5... wave A?




Not sure whether wave iii completed and got in a whippy iv today or iii is extending... either way 100 is about to come under pressure.


----------



## Kauri

*Re: OIL AGAIN!*



Whiskers said:


> Not sure whether wave iii completed and got in a whippy iv today or iii is extending... either way 100 is about to come under pressure.




your'not alone... a negative forecast from one of the leading New York energy analysts impaired overnight sentiment. The forecast that oil prices could hit $70-80 bbl over the next six months irrespective of a probable OPEC production cut next week helped drive oil back down from yesterday afternoon's $110.50 peak

cheers
...........Kauri


----------



## numbercruncher

*Re: OIL AGAIN!*

$107.76 at last check !

Can we get under 100 tonight ??


No oil shortages , maybe soem refinery shortages , but we got Oil coming out our ears and leaps in technology to smash demand in coming years .....

Oil bulls need a war now more than ever !


----------



## jonojpsg

*Re: OIL AGAIN!*



numbercruncher said:


> $107.76 at last check !
> 
> Can we get under 100 tonight ??
> 
> 
> No oil shortages , maybe soem refinery shortages , but we got Oil coming out our ears and leaps in technology to smash demand in coming years .....
> 
> Oil bulls need a war now more than ever !




World oil production (mmbopd      world oil demand (mmbopd)           *POO*                            2004	83.10	                                        82.33
2005	84.58	                                        83.65     *50*
2006	84.54	                                        84.70     *58*
1Q 07	83.96	                                        85.52 
2Q 07	84.20	                                        84.65
3Q 07	84.27	                                        85.23
4Q 07	85.32	                                        86.75
Av	84.44	                                        85.54     *64*
1Q 08	85.38	                                        85.69     *97*

Hey numbercruncher, how about you crunch these numbers!!  Doesn't look like oil coming out our ears to me.  Even with declining US & other developed countries demand, I think developing countries, esp China, increases are going to outdo these.

Only points one way to me!  Read my post on Peak Oil and then we'll see what happens when countries with only marginal export capacity and increasing demand decide to stop exporting and start stockpiling!!!


----------



## BentRod

*Re: OIL AGAIN!*



> Oil bulls need a war now more than ever !




They already had one....oil sold off:


----------



## rederob

*Re: OIL AGAIN!*

LAst week US oil inventory data was propped up slightly by inflows from the SPR after Gustav shut-in Gulf output.
Gulf output is presently around 10% of capacity, which means about a million barrels a day are still shut-in.
The Gulf remains at risk of further weather disruptions:
A twist in Hurricane Ike's path set it west-southwest overnight after earlier suggesting it would run up the Florida panhandle.  Right now it's on a trajectory that puts it on a landfall point to the east of Gustav, but it really is too early to take bets.
What it means is that the imminent return of personnel to Gulf rigs and platforms may be on hold for another week.
Presently funds are playing with the USD in preference to oil, but as cycles go, this one is nearing an end. An interesting aside is that almost $20 of oil's price demise is directly attributable to USD strength after oil peaked some months back.
While $100 oil is strongly in play for now, the other reality is that inventory builds across the globe are failing to happen.  The funds will be reluctant to dip into oil while economic weakness pervades the markets, although they will also recognise that downside risks from here are at price margins.
From a long term perspective the oilers are well priced again, yet short term a bit more can whittle off their tops.  Still a time to watch rather than buy, as the bottom has not set-in.


----------



## rederob

*Re: OIL AGAIN!*

Hurricane Ike was heading up the Florida panhandle when I posted the other day: It's now on a path that will put it south of New Orleans in 5 day's time, with a chance it will head northwards thereafter.
Ike was originally forecast to follow close on Hanna's track but has deviated south-westerly and on consensus trends will head into the Gulf of Mexico, and possibly intensify further unless it downgrades substantially as it passes over Cuba tonight/tomorrow.
What is interesting about Ike is that keeps moving out of its forecast window, making it difficult to work out when it will landfall in USA.  If it stays on its present path it will move into an area riddled with rigs and platforms, and may do as much damage as Katrina did 3 years ago. 
I again expect that the SPR will release a near-equivalent amount of oil to that shut-in as Ike moves into the Gulf. While this may reduce the chance of oil spiking, the main lookout will be on possible rig damage, and impacts on refining capacity.  
Either way, oil's move to $100 will be on hold for a few more weeks unless US inventories show signs of improvement.


----------



## jonojpsg

*Re: OIL AGAIN!*

What, noone going to comment on my figures showing world demand exceeding supply for the last two years and extremely unlikely to go back to the good old days??!!


----------



## Whiskers

*Re: OIL AGAIN!*



jonojpsg said:


> What, noone going to comment on my figures showing world demand exceeding supply for the last two years and extremely unlikely to go back to the good old days??!!




Why? Ya want an arguement about them do yer?  

I think there's more at work here than simply just supply and demand. The oil cartel is trying to balance between keeping a strangle hold on the supply of oil and continuing to make a good profit while watching their industry probably starting to give way to alternative energy sources, and not to mention a lot of 'horse trading' power politics.

All the surveys I've seen show people are overwhelmingly going to continue to save 'oil' and switch to more economical vehicles even if the price comes back. The oil producers would no doubt be noticing such surveys too.

In the short term, I think there will be some consolidation around 100 to maybe 120 for a couple of weeks not necessairly because of, but coinciding with the hurricanes as rederob points out, before it ultimately falls further.


----------



## rederob

*Re: OIL AGAIN!*

This map show's Ike's likely path over the coming week.
You can see it's headed smack into the oil rig/platform region off southern US states.
I expect that by tomorrow most oil and gas in the Gulf will be again shut-in, halting inventory builds for another week.
The oil price saviour is GWB and his oil mates releasing oil to the domestic market through the SPR.


----------



## Kauri

*Re: OIL AGAIN!*

Oil and crude contracts have gone bid after the news that a 6.1 magnitude earthquake struck southern Iran. The quake has hit near Bandar Abbas, site of a major Iranian oil refinery, with Iran"s state-owned TV describing the tremor as "strong". No casualties have been reported but prices are back on the rise in the wake of the news

Cheers
............Kauri


----------



## rederob

*Re: OIL AGAIN!*

With OPEC cutting back on output by a half million barrels a day and Hurricane Ike moving closer to the US coast it looks as though $100 oil will not be breached on closing prices for a little while longer.
Ike has slowed considerably today and is quickly decreasing in pressure, which means it's intensifying in strength, again.  Forecasters put Ike at a category 2 within 24 hours, with a strong probability of category 3 being reached, and a chance at category 4 in the next few days.
While intensity will be important when Ike crosses the coast, the more critical aspect of its life is its direction. Although consensus forecasts put Ike as a safe crossing on the Texas coast in about 3 days, the history of September hurricanes shows a very high probability of a sharp north turn, rather than a steady norwesterly path.
Ignoring the forecasters, my preference is for Ike to dwell a little longer than expected nearby Cuba and intensify into a category 3 before following a path more north-reaching than projected below.  Having viewed September Hurricane paths, I think a coastal crossing in Louisiana is a reasonable chance.


----------



## Kauri

*Re: OIL AGAIN!*

I've seen a touch of COT talk on tother treads doin the rounds... here's a tad more..
$49bn "non- commercial" interests have bowed out of the oil futures markets, and prices collapsed 30%....  hey "*welcome back Kotters*"..   just reinforces for me that trading the chart is the only way to travel... I love the news and data... butt it usually* follows* the moves..  I thunk anyways...  and thunks Joe for opening the gates..   

Slainte
.............Kauri


----------



## CAB SAV

*Re: OIL AGAIN!*

Yikes. Or should I say Ike's. Hurricane Ike hasn't had the attention in regards to oil/gasoline disruption as most concentration is on the Lehman's etc. and oil prices will keep coming down forever.
Fed's better "oil" up the money printing machine, Ike is going to cost a "fist full of dollars".


----------



## wayneL

*Re: OIL AGAIN!*

You heard it here first:

Spot NYMEX Crude is < $100

Has traded as low as $98.50

Demand Destruction??


----------



## rederob

*Re: OIL AGAIN!*



wayneL said:


> You heard it here first:
> 
> Spot NYMEX Crude is < $100
> 
> Has traded as low as $98.50
> 
> Demand Destruction??



Given that demand destruction was just kicking in at plus $140 it's hardly likely to be important at sub$100.
Last time I looked at the window another wall crumbled onto the street and melted into a subprime mire.
Stories are neatly packeaged into beginning, middle and end.
The beginning was just on a year ago and ended with with Lehman's collapse.  The middle began with AIG's demise a few day's ago and will end when the gold price trends sharply down.
The end will be marked with a quarter on quarter turnaround in the US housing market.  I think we are looking at 2010, or later.


----------



## rederob

*Re: OIL AGAIN!*

US oil inventories and petroleum stocks are down considerably after Ike and the next report will still include data reflecting refinery constraints.  So I expect some steadiness around current price levels for the near term.


----------



## chops_a_must

*Re: OIL AGAIN!*

Watch that pennant there Red!

Could easily see a move to about $125.


----------



## deadset

*Re: OIL AGAIN!*

The oil price has been twitching about alot lately, I'm expecting more of the same between $95 and $125.  below $95 and its in the zone.


----------



## deadset

*Re: OIL AGAIN!*

It's in the 90-95 bracket now on Friday.  Is that still the buy zone ?
With markets closed on Monday.

It turned out earlier in the week that US inventories were high.


----------



## BentRod

*Re: OIL AGAIN!*

Oil just cracked $85.

Aren't a few cartons supposed to be exchanged or something now??  :


----------



## IFocus

*Re: OIL AGAIN!*

This is the ETF USO oil has closed below support

Bent I didn't see any replies......

.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Hey Wavepicker,

you are fast closing in on that slab of beer...............................good luck with it.

It would be ironic if you missed by the skin of your teeth like i did with $150.

A complete reversal, well forcast, i didnt see it coming myself. I only hold shares in CUE and therefore exposed to oil but still in profit at this stage. Monday will take my portfolio into the RED once CUE falls below 13 cents. With oil off $9.00 over night that will be a certainty.

JW


----------



## woltage

*Re: OIL AGAIN!*

Here's some notes taken from a guy who attended the most recent 'Peak Oil' conference on Sep 21st

http://www.getreallist.com/notes-from-the-2008-aspo-usa-peak-oil-conference.html

Interestingly, EIA have gotten their oil forecast consistently wrong for last 12 years, up to 127% out, average error 54%


----------



## Kauri

*Re: OIL AGAIN!*

A dawning realization for the erstwhile 'buy oil wear diamonds" traders that last year"s heady days have surrendered to the realities that tripling the price of the nation"s industries" life blood does to all levels of economic activity.
    Oil is not a commodity, it is THE commodity, and now high prices have done their damage, the speculators can repent at leisure their sins whilst European and US GDP barely registers a beep on the heart monitor for the next six to nine months. The fact of the matter is that oil and Euros (or for that matter any currency) are not created equal; oil should reflect supply and demand pressures of global economic activity, not the whims of financial intermediaries that reckon it"s a good punt.   

Cheers
...........Kauri


----------



## Reealjrd

*Re: OIL AGAIN!*

Hello All,

         As every body is aware that oil and gold are the major product which play a major role in the ups and downs of the market. As most of you have discussed above that oil will be down in the coming times. It is true but here i would like to say that in this market any thing can happen. As the present sceario is saying that oil prices are going to dip more and he gold prices will go upwards to some extent.


----------



## seasprite

*Re: OIL AGAIN!*



Reealjrd said:


> Hello All,
> 
> As every body is aware that oil and gold are the major product which play a major role in the ups and downs of the market. As most of you have discussed above that oil will be down in the coming times. It is true but here i would like to say that in this market any thing can happen. As the present sceario is saying that oil prices are going to dip more and he gold prices will go upwards to some extent.




BAGHDAD (AP) -- An Iraqi official says Iraq believes that the $100 a barrel is a "fair and acceptable" oil price for both producers and consumers.

Oil Ministry spokesman Assem Jihad says that if crude prices continue to fluctuate, OPEC will cut its production.

Last Monday, Iraq's Oil Minister Hussain al-Shahristani told reporters in London that production of oil at its current levels could not be justified if demand slackened.

Oil for November delivery was trading around $73 per barrel on Thursday - far below a record $147 in July.

Current estimates put Iraq's proven oil reserves at 115 billion barrels. Its daily production stands near 2.4 million barrels a day.


----------



## CAB SAV

*Re: OIL AGAIN!*

OPEC rescheduled meeting now to Friday next week. Look for big drop in production to sure up prices.


----------



## Page

*Re: OIL AGAIN!*

Seeing the present market scenario crude market is going up but still suggesting not to go for holding positions only intraday.


----------



## JeSSica WaBBit

*Re: OIL AGAIN!*

Where is Wavepicker?

He is about to win the slab of beer off me, $3.00 to go and we will be under $60.00.

Got to take my hat of to him, it was a great call..............thems the breaks in this commodity game.

JW


----------



## kransky

*Re: OIL AGAIN!*

must be holidaying on his new island that he got from going all in short on oil...

why do things makes so much sense in hindsight?


----------



## Aussiejeff

*Re: OIL AGAIN!*

Here's a couple of interesting graphs.

The first one shows the World Rotary Rigs count up to Sep 2008. The graph shows the rig count at an all time high. Of course, we now know what happened to the oil price after from Sep onwards to now!

Interestingly, the US Rig Count to Oct shows a significant downtrend kicking in from Sep.

By now, I would have thought many rigs worldwide are in the process of being mothballed and announcements being prepared to inform investors that current prices cannot sustain many of the existing exploration projects or those planned to be started when the price was at least double the current price. 

I think the downturn of rigs after the 2001 World slump might be a guide...


----------



## Glen48

*Re: OIL AGAIN!*

The more the World recession bites (don't know why it isn't called a depression now)  the more Oil will come down when it hits $30.00 a Barrel you know things have bottomed.


----------



## Smurf1976

*Re: OIL AGAIN!*



Aussiejeff said:


> Here's a couple of interesting graphs.
> 
> The first one shows the World Rotary Rigs count up to Sep 2008. The graph shows the rig count at an all time high. Of course, we now know what happened to the oil price after from Sep onwards to now!



Far more alarming is that the surge in the rig count didn't translate to anything more than a trivial increase in production. We're running faster and faster to essentially stand still at the global level - exactly what happened in individual countries that have previously peaked.

Cut the rig count and watch production capacity fall. Low prices won't last long in my opinion unless there's a serious fall in demand.


----------



## Whiskers

*Re: OIL AGAIN!*

Yes, it's a morning star on the hourly.

Don't think this is the bottom, but looks like it may be for a little while.

Haven't looked at an EW count... better do it I suppose.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Whiskers said:


> Yes, it's a morning star on the hourly.
> 
> Don't think this is the bottom, but looks like it may be for a little while.
> 
> Haven't looked at an EW count... better do it I suppose.




Who would have thought 54 bucks would have been reached.
Bags into the 40`s too. (later)


----------



## sinner

*Re: OIL AGAIN!*

Forgive me if this has been asked/answered before but I don't have time to go back through 50+ pages to find it.

Are there any ASX listed shares which mirror the price of crude closely and consistently?


----------



## sinner

*Re: OIL AGAIN!*

Nobody answer my question, it's alright, I forgot about it!

Have a chart


----------



## BentRod

*Re: OIL AGAIN!*

Anyone got a bar chart of OIL??

BTW...where is Rederob and Jess Wabbit????


----------



## noirua

*Re: OIL AGAIN!*

Another meeting for OPEC on 17th December in Ora, Algeria, with promises of hefty oil production cuts.
In the past OPEC were in disarray when prices fell as many cheated on their quotas.

Trouble is most countries are cutting back due to an increasing worldwide recession. Pay cuts in the Ukraine steel industry of 40%.
Lots of spare coal in China and elsewhere now. Oil could hit US$40 per barrel for Texas light before recovering a bit.


----------



## CFDTrading

*Re: OIL AGAIN!*

Monday, 01 December 2008 20:10:51 GMT
Written by David Rodriguez, Quantitative Analyst 
Full Article

The NYMEX Crude Oil contract may continue its decline if it is unable to recover recent losses, as the break of a 10-year uptrend channel leaves it vulnerable to further drops. Next downside targets include recent spike-lows at the 48.25 mark, while further price floors are shaky. If we trust continuous contract data, crude oil could test previous support at the 46.20 mark, while further declines would likely eye a move towards the psychologically significant 40.00 level. Short-term forecasts remain dim for the crude oil contract, as it remains in a clearly pronounced multi-month downtrend.

*Short-Term Technical Forecast for Crude Oil*







CFDTrading.com provides free news, trading resources, and market analysis to the trading community.


----------



## jonojpsg

*Re: OIL AGAIN!*



CFDTrading said:


> Monday, 01 December 2008 20:10:51 GMT
> Written by David Rodriguez, Quantitative Analyst
> Full Article
> 
> *The NYMEX Crude Oil contract may continue its decline if it is unable to recover recent losses*, as the break of a 10-year uptrend channel leaves it vulnerable to further drops. Next downside targets include recent spike-lows at the 48.25 mark, while further price floors are shaky. If we trust continuous contract data, crude oil could test previous support at the 46.20 mark, while further declines would likely eye a move towards the psychologically significant 40.00 level. Short-term forecasts remain dim for the crude oil contract, as it remains in a clearly pronounced multi-month downtrend.
> 
> *Short-Term Technical Forecast for Crude Oil*
> 
> 
> 
> 
> 
> 
> CFDTrading.com provides free news, trading resources, and market analysis to the trading community.




If this isn't the most ridiculous statement i have heard - hmm, oil will keep going down if it doesnt go up.  although i guess it could just stay steady


----------



## wayneL

*Re: OIL AGAIN!*



jonojpsg said:


> If this isn't the most ridiculous statement i have heard - hmm, oil will keep going down if it doesnt go up.  although i guess it could just stay steady




Well... if you can hedge a stock holding, why not hedge a market call?


----------



## IFocus

*Re: OIL AGAIN!*

Funny it was a case not long ago of how high oil can go, now its I guess how low can oil go.

Has to have been one of the easier trends that I have traded, chart of USO an ETF on the US exchange below that Nick Radge put me onto when oil was headed up way back in March this year.

Seems a life time ago........


.


----------



## Alan Shearer

*Re: OIL AGAIN!*

if oil dropped to something like $10 or $20 a barrel, could WPL or our aussie oil companies survive at this rate?
i was thinking it would be a great time to buy their shares if oil was so low but is there a risk that they go under at such a low price for a period of time?


----------



## MRC & Co

*Re: OIL AGAIN!*

Great trending instrument to trade lately hey!

Unfortunately, I didn't take advantage enough of it.  Good work Ifocus!


----------



## drsmith

*Re: OIL AGAIN!*

History would suggest the oil price could return to $20 (inflation adjusted) but that ignores any fundamental long term change in the balance between supply and demand.

http://en.wikipedia.org/wiki/File:Oil_Prices_1861_2007.svg


----------



## wayneL

*Re: OIL AGAIN!*

January futures are printing < $40.00


----------



## numbercruncher

*Re: OIL AGAIN!*

36.50 !


Getting close to fair value now


----------



## TradeDaily

*Re: OIL AGAIN!*

Say if i wanted to invest and buy Oil, not in a company that drills for it, but rather like buying 1000 barrels of Oil. How would one go about this?


----------



## aleckara

*Re: OIL AGAIN!*



TradeDaily said:


> Say if i wanted to invest and buy Oil, not in a company that drills for it, but rather like buying 1000 barrels of Oil. How would one go about this?




I asked this question some time back. Bascially you need to find either an ETF (none in Australia which is a shame), get a CFD account that has oil as a product listed, and/or get a futures account.

I have yet to do it. I know nothing about good futures brokers, or which brokers are good for very occassional US stock trades (plus I want to sleep at night). The CFD's that do provide it here are either ASX CFD's or companies I have never heard of. Maybe someone could point you to a good provider here.


----------



## >Apocalypto<

*Re: OIL AGAIN!*

It's amazing how Wavepicker called this, what a sell off.

the chart looks better then the AUD/USD chart in terms of the fall.

The trend looks to have nothing stopping it. any one thinking of a bottom? 25-35$ area?


----------



## >Apocalypto<

*Re: OIL AGAIN!*



TradeDaily said:


> Say if i wanted to invest and buy Oil, not in a company that drills for it, but rather like buying 1000 barrels of Oil. How would one go about this?




Futures are a option TradeDaily


----------



## IFocus

*Re: OIL AGAIN!*



TradeDaily said:


> Say if i wanted to invest and buy Oil, not in a company that drills for it, but rather like buying 1000 barrels of Oil. How would one go about this?




For the average punter open an Interactive Brokers account and gain access to the US exchanges where there are ETF's that mimic the price of oil.

Futures positions maybe a little large for most if trading commodities where as as with an ETF you can take small positions.


----------



## trillionaire#1

*Re: OIL AGAIN!*

i was just imagining 1000 barrels of  bargain priced  crude oil
packed in to Tradedailys  backyard

would makes for interesting conversation at the holiday  bbq,
which must now be at the nearest park


----------



## IFocus

*Re: OIL AGAIN!*



trillionaire#1 said:


> i was just imagining 1000 barrels of  bargain priced  crude oil
> packed in to Tradedailys  backyard
> 
> would makes for interesting conversation at the holiday  bbq,
> which must now be at the nearest park




Reminds me in the early 80's I was living in a caravan park in Carnarvon (surfing at the time secret locations in the northwest of course) another group of people in the park were stock piling enormous amounts of diesel in 44's behind their caravan.........could never happen today I guess.


----------



## hotbmw

*Re: OIL AGAIN!*

so how does futures trading work?
is it if you bought oil at $20 for example. invested 20 grand.
if it dropped to $15 after purchasing u need to cover this 25% drop with cash in your interactive brokers account so adding another 5 grand to the account to keep it?

is that how it is?

and if it sits at around $15 for weeks u pay nothing , u just hold?


----------



## sinner

*Re: OIL AGAIN!*

From http://www.safehaven.com/article-12134.htm







Bullish...


----------



## Wysiwyg

*Re: OIL AGAIN!*



IFocus said:


> Reminds me in the early 80's I was living in a caravan park in Carnarvon (surfing at the time secret locations in the northwest of course) another group of people in the park were stock piling enormous amounts of diesel in 44's behind their caravan.........could never happen today I guess.




When I was younger, being a goofy footer I wanted to go to the Bluff but the winter trip north never eventuated.


----------



## IFocus

*Re: OIL AGAIN!*



Wysiwyg said:


> When I was younger, being a goofy footer I wanted to go to the Bluff but the winter trip north never eventuated.




Wysiwyg you would have loved it I left in 85 as it got to crowded


----------



## hobo-jo

*Re: OIL AGAIN!*

Without having to read 60 pages worth of history in this thread is anyone able to give me a list of ASX companies which are heavily exposed to movement in oil prices? ie somewhere to start some research on good stocks to be buying in this sector...


----------



## Aussiejeff

*Re: OIL AGAIN!*

Wow!

Oil currently down almost $US6 overnight (or > -12.0%) 

Going to hurt some Ozzie producer's SP's today?


----------



## rederob

*Re: OIL AGAIN!*



hobo-jo said:


> Without having to read 60 pages worth of history in this thread is anyone able to give me a list of ASX companies which are heavily exposed to movement in oil prices? ie somewhere to start some research on good stocks to be buying in this sector...




If an oil company produces oil its "heavily exposed" to the oil price.

The more oil it produces the greater its exposure.

Start with companies beginning with "a" and work through.  Then, if you find a short cut to good research, let us know.


----------



## Sean K

*Re: OIL AGAIN!*



hobo-jo said:


> Without having to read 60 pages worth of history in this thread is anyone able to give me a list of ASX companies which are heavily exposed to movement in oil prices? ie somewhere to start some research on good stocks to be buying in this sector...



Have a look at these one's for a start:

WPL
OSH
STO
BPT
AED
PPP
ROC
NWE
EGO

There's a long list


----------



## boyley

*Re: OIL AGAIN!*

Certainly short on oil stocks today could be nasty


----------



## Out Too Soon

*Re: OIL AGAIN!*



kennas said:


> Have a look at these one's for a start:
> 
> WPL
> OSH
> STO
> BPT
> AED
> PPP
> ROC
> NWE
> EGO
> 
> There's a long list



Then there's OEX & CVN. Oils got to start climbing again soon downturn recession or whatever the world is still hungry for oil


----------



## Glen48

*Re: OIL AGAIN!*

Every thing I have been reading tells me Oil is going up guess you need to form a partnership and back it both ways to survive.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Out Too Soon said:


> Then there's OEX & CVN. *Oils got to start **climbing again soon* downturn recession or whatever the world is still hungry for oil




Well it did jump about 43.85% (brent crude) from recent lows so there is a decent climb of near 50%.Gotta be on the ball with all these lows around at the moment.


----------



## The Edge

*Re: OIL AGAIN!*

Wednesday  7 January 2009

There may be some downside relief for oil around $40, +/-, as a reasonable area 
of support.  The short-term "bubble" that went from 80 to 150+, 
and then collapsed back to 32, in a hyperdermic fashion, lacks reality, editorially
speaking.  The close on a monthly chart, December, was the first time oil was
able to close at mid-range since its peak, 5 months prior, and the close was
above 40.

On a weekly chart, the second week in December was an inside bar with a notable
spike in volume.  Interesting.  The next week was a large range bar to the lows 
for the move that closed near the bottom of the range.  Volume was strong,
but less than the previous week.  It could be buying entering, a reasonable
assumption, but in need of proof.

A daily chart clearly shows no base built from which to support a sustainable
rally.  Mid-December highs at 51 is where initial resistance turned up, and
that is precisely where Tuesday's rally failed.

It appears a trading range would be the likely scenario for oil, according to what
the market activity seems to be saying.  If that is true, support should make
its presence known around 39-40.  Daily ranges should narrow, and volume
should lessen.  Those would be clues for which to watch over the next several
trading days, for starters.

This is akin to putting the cart before the horse, but the cart assumption is
predicated on what the horse has been doing, so this is idle speculation.  The 
market has not yet fully revealed its intent.


----------



## Aussiejeff

*Re: OIL AGAIN!*

Oil hammered down again, along with oilers SP's.

US$37.29 a barrel atm


----------



## Aussiejeff

*Re: OIL AGAIN!*



Glen48 said:


> *Every thing I have been reading tells me Oil is going up* guess you need to form a partnership and back it both ways to survive.




The elevator broke down again.

Back OTIS shares?

LOL


----------



## The Edge

*Re: OIL AGAIN!*

Tuesday  13 January 2009

Oil epitomizes why one should never engage in bottom-picking, and instead, let
the market play itself out and prove a bottom is in place.  While lower today, 
the recent lows are still intact.  The volume preceding the low was much greater
than the volume as the low was made, a fact.  Last week, volume picked up
again, yet price did not get pushed down to new lows, another fact.

It is too soon to know if the recent lows will be final, but activity does seem to
be indicating it could be near, if not past.  Even if one knew with certainty that
the low was in, it would not be reason to be buying, at least not until some kind
of base is apparent, but that is just me.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Aussiejeff said:


> Oil hammered down again, along with oilers SP's.
> 
> US$37.29 a barrel atm




Feb. futures crashed through  US$37 now.Watching for a base whenever.


----------



## boyley

*Re: OIL AGAIN!*

Short to $30


----------



## Lachlan6

*Re: OIL AGAIN!*

I have placed Crude Oil in what looks to be setting up as a consolidation in the wave (4), possibly a triangle. This consolidation also sits on some historical support around the $40 mark. Looking for new lows once this triangle is complete then a big corrective bounce to the upside. First things first let's see how this wave (4) pans out.


----------



## drillinto

*Re: OIL AGAIN!*

How diabolically desperate are the oil exporting states ?

http://brontecapital.blogspot.com/2009/01/how-diabolically-desperate-are-oil.html


----------



## boyley

*Re: OIL AGAIN!*



Lachlan6 said:


> I have placed Crude Oil in what looks to be setting up as a consolidation in the wave (4), possibly a triangle. This consolidation also sits on some historical support around the $40 mark. Looking for new lows once this triangle is complete then a big corrective bounce to the upside. First things first let's see how this wave (4) pans out.




Interesting chart, keep us posted, cheers


----------



## Aussiejeff

*Re: OIL AGAIN!*



boyley said:


> Short to $30




You're lookin' good....

DOWN to $34.85 overnight.


----------



## Agentm

*Re: OIL AGAIN!*

http://www.oil-price.net/

2008 oil recap. and what is next by Steve Austin - 2009/01/05

It took only 5 months for the price of oil to plummet from $150 to under $40 in the second part of the year. Meanwhile oil consumption did not even decrease 10%, so what is the real cause of this collapse you may ask?

Hedge funds. Let me explain.

During the first part of 2008, Western economies were already slowing down noticeably and hedge funds gradually pulled trillions of dollars out of the market and parked them in energy ETFs. At the time Chindia's insatiable thirst for oil and the "decoupling" of east/west economies had many believe commodities were a "sure thing", a sound enough tangible insurance to protect overinflated assets scavenged from made-up bubbles. On top of that, by using leverage, profits were multiplied as oil went up, not a bad deal in a recession.
But when the banking industry collapsed, hedge funds had to raise cash by "deleveraging", liquidating their leveraged energy ETF positions sending the price of oil tumbling. Anecdotally shorting of banking ETFs was suspended by the US Securities Commission during that time but not shorting of energy prices, and the leverage mania soon found an escape route in utrashort oil ETFs, compounding the speed of this downward spiral. By December 2008 the oil price had collapsed 75% and frankly, who would complain about cheap gas these days?
As we enter 2009 the oil landscape has reversed dramatically from a year ago. The price of oil is lower than production costs and new exploration projects are being cancelled. China flush with cash is currently buying all the oil it can get its hands on to pump into its strategic reserves. Once arrogant OPEC countries are willing to sell oil at any price to fund government programs and prevent political instability.
One constant however is the depletion of major oil fields, worse than predicted at 9.1% year over year as we close 2008. It's a matter of when not if the economy recovers and when it does, expect a strong bounce back in the price of oil.


----------



## cogs

*Re: OIL AGAIN!*

Thanks for that agentm,

I work in mechanical design and drafting for the oil and gas industry and it is just flat out as normal, not enough hrs in a week.

Keeping a close eye on oil waiting for the (main) upswing again, meanwhile been having a ball with the swings.


----------



## sinner

*Re: OIL AGAIN!*

Worth a look at this chart from this link

http://www.safehaven.com/article-12380.htm

"Yellow gold vs crude black gold, who's ready for a rally"







Bounce from long term support and off the 200 MA.

and this one useful to indicate lots of volume


----------



## Mr Capital

*Re: OIL AGAIN!*

Thanks for the link & charts


----------



## Agentm

*Re: OIL AGAIN!*



cogs said:


> Thanks for that agentm,
> 
> I work in mechanical design and drafting for the oil and gas industry and it is just flat out as normal, not enough hrs in a week.
> 
> Keeping a close eye on oil waiting for the (main) upswing again, meanwhile been having a ball with the swings.





i follow the price of oil as i need it a touch higher for one of my major investments to be able to be economic. (chalk/shale horizontal drilling)

my personal feeling is that its closer to bottom if not showing signs of a bounce back up.. the graphs above seem to point to it as well imho.  great stuff sinner


----------



## bazollie

*Re: OIL AGAIN!*

Me three. Altough we have all been happy about the oil price at the bowser, there are clearly numeorus projects that have been put on hold or even profits at levels that are impacting heavily on the S.P. of many junior oil and gas stocks. 

A happy medium in the oil price would make me happy as well!

Regards
bazollie


----------



## sinner

*Re: OIL AGAIN!*

Just keep a close eye on the long term indicators...

MACD has not crossed over yet!


----------



## alphaman

*Re: OIL AGAIN!*

I've decided to pay more attention to oil, as its price is obviously closer to the bottom than to the peak (not saying it's bottomed though).

Is there any website that provides long term charts of oil spot prices?


----------



## agathos

*Re: OIL AGAIN!*

Hi everyone,

Thanks for the charts and interpretations.
I too, own quite a few Oil & Gas stocks, and have accumulated some recently.

I have a relative who works in the Oil & Gas storage industry in Singapore.
He is still saying that there are lots of ships (super tanker carriers) that have not been utilized in the last couple of months. Many ship owners are NOT running their ships as the cost of running it is huge. So, it's ships @ dry docks in Singapore and else where. 

I guess , if the predictions and the stochastics and MACD is correct, we should be able to see some movement soon.

Sorry, I don't have much to contribute except the bit on the ship in the dry dock. Let's hope the ships will be OUT at the seas soon................

Agathos......


----------



## nick2fish

*Re: OIL AGAIN!*

Cheers, and this begs the question on fallen demand. 
Have the traders got it right????? 
It's a fact that demand has fallen and US oil inventories are on the rise
The brokers that I'm hearing are pointing to a $32 bottom resistance Test. But surely fundamentals like population and car ownership growth and heating requirements and OPEC cuts.....have me thinking that up is the only way to go.

Wishful thinking I suppose but we'll see


----------



## boyley

*Re: OIL AGAIN!*



alphaman said:


> I've decided to pay more attention to oil, as its price is obviously closer to the bottom than to the peak (not saying it's bottomed though).
> 
> Is there any website that provides long term charts of oil spot prices?





Try nymex.com for charts, keep in ming warehouse inventories in the US are still 1.9% overstocked, this is even with a blisteringly cold winter in the US.

I would say by autumn here there will be a significant rally, but untill then its choppy waters.


----------



## seasprite

*Re: OIL AGAIN!*



sinner said:


> Just keep a close eye on the long term indicators...
> 
> MACD has not crossed over yet!




what n1,n2 and n3 figures are you using Sinner , are they the default 12,26 and 9 or something else,  thanks .


----------



## Smurf1976

*Re: OIL AGAIN!*

I can't provide firm proof of this, but there's a lot of anecdotal evidence emerging that US natural gas drilling has basically fallen off a cliff in the aftermath of the financial crisis and oil price plunge.

US gas supply depends significantly on small wells that deplete rapidly so this suggests that production will fall in the not too distant future.

What it means for price obviously depends on demand, but it's a situation worth watching in my opinion.


----------



## alphaman

*Re: OIL AGAIN!*



boyley said:


> Try nymex.com for charts, keep in ming warehouse inventories in the US are still 1.9% overstocked, this is even with a blisteringly cold winter in the US.
> 
> I would say by autumn here there will be a significant rally, but untill then its choppy waters.



Thanks for the reminder. I'm starting my preparation now because I feel there are easy opportunities from the long side in the medium term, not planning to do a "idea today, trade tomorrow" thing.

How do I find spot prices at Nymex? All I can see are prices for futures contracts.


----------



## CanOz

*Re: OIL AGAIN!*



alphaman said:


> Thanks for the reminder. I'm starting my preparation now because I feel there are easy opportunities from the long side in the medium term, not planning to do a "idea today, trade tomorrow" thing.
> 
> How do I find spot prices at Nymex? All I can see are prices for futures contracts.




Spot month for light crude is CLH9.

You can find a chart here:

www.futuresource.com

Look for Light Crude Oil.

CanOz


----------



## CanOz

*Re: OIL AGAIN!*

Here's the current hourly chart, FWIW.


----------



## CanOz

*Re: OIL AGAIN!*



Smurf1976 said:


> I can't provide firm proof of this, but there's a lot of anecdotal evidence emerging that US natural gas drilling has basically fallen off a cliff in the aftermath of the financial crisis and oil price plunge.
> 
> US gas supply depends significantly on small wells that deplete rapidly so this suggests that production will fall in the not too distant future.
> 
> What it means for price obviously depends on demand, but it's a situation worth watching in my opinion.




Came across this about NG:


> If you want to see how sick the economy is just take a look at the natural gas. The gas market that usually responds favorably to cold temperatures is fading away against the backdrop of one of the coldest winters in recent memory... if natural gas cannot rally when it is well below zero, it is hard to imagine what will turn this market around. Still, it is possible that if gas falls quickly to the 410 area this week we should see a technical bounce back to 450. Buy only a hard break.




CanOz


----------



## Page

*Re: OIL AGAIN!*

We can see a bounce in crude oil till $62 bbl in a week or two. Crude Oil is once again going to move towards its high.


----------



## alphaman

*Re: OIL AGAIN!*



CanOz said:


> Spot month for light crude is CLH9.
> CanOz



Thanks. I guess I should have clarified about spot prices. What I want is cash price over the years, so that if I want to know the lowest price in the past 10 years, I can look at the chart and find it.


----------



## Aussiejeff

*Re: OIL AGAIN!*



Page said:


> We can see a bounce in crude oil till $62 bbl in a week or two. Crude Oil is once again going to move towards its high.




DOWN  *-$3.95* (*-8.64%*) to *$41.78*  bbl as I type.


----------



## nick2fish

*Re: OIL AGAIN!*



boyley said:


> I would say by autumn here there will be a significant rally, but untill then its choppy waters.




That is the outlook that I most favor. While the low 30's were shown to be a very strong price floor the high 40's provided a strong price ceiling.
Can't expect much to change in the short-term
OPEC cuts will take time to effect inventories and those cuts as well as a reduced supply from non - OPEC producers coupled with increased consumer confidence should blow the price roof away before the floor, IMO

Nice link Basilio, cheers


----------



## basilio

*Re: OIL AGAIN!*

This thread began in 2005 with Waynes posting of a Peak Oil report which saw oil production peaking by 2014.

*In fact the evidence seems to be that oil production has peaked  far earlier than that - probably in June 2006*.  There are also huge problems in the industry with aging infrastructure and an aging workforce. This all points to a very rapid rise in oil prices within the next 1-2 years as major oil fields deplete.

Excellent slide show presentation  Matthews Simmons to Committee on Foreign relations encapsulates all the issues.

http://www.simmonsco-intl.com/files/Dallas Committee On Foreign Relations.pdf

Page 14 has a great table which outlines the orgin and amount of oil supplied to the world market since the early 70's. Matthew points out the peak oil production in June 2006


----------



## Page

*Re: OIL AGAIN!*

I was having news on Crude oil till $25 but it has moved unexpectedly. Cannot tell the reason why it has jumped back. Seeing the US market conditions it was predicted $25 per bbl.


----------



## sinner

*Re: OIL AGAIN!*



Page said:


> I was having news on Crude oil till $25 but it has moved unexpectedly. Cannot tell the reason why it has jumped back. Seeing the US market conditions it was predicted $25 per bbl.




Hi Page,

My guess is after 7 months of continuous selling pressure bottom pickers and energy/commod opportunists have moved in to put a floor on the price (for now).

Hi guys,

Back once again with the weekly chart for oil. Technically, I should be posting this tonight after the final NY session for the week, but I will be at work tonight so take what you can get.

The weekly MACD still showing signs of crossing the trigger, with high volume continuing at the current prices.

Please remember, this is an oil ETF not any of the oil spot prices or a basket of such! DYOR!


----------



## seasprite

*Re: OIL AGAIN!*

thanks for that sinner , I didn't read your graph properly from the 22nd Jan , So that answers my question from the 26 Jan about n1=12 n2=26 n3=9. good work.


----------



## awg

*Re: OIL AGAIN!*



basilio said:


> This thread began in 2005 with Waynes posting of a Peak Oil report which saw oil production peaking by 2014.
> 
> *In fact the evidence seems to be that oil production has peaked  far earlier than that - probably in June 2006*.  There are also huge problems in the industry with aging infrastructure and an aging workforce. This all points to a very rapid rise in oil prices within the next 1-2 years as major oil fields deplete.
> 
> Excellent slide show presentation  Matthews Simmons to Committee on Foreign relations encapsulates all the issues.
> 
> http://www.simmonsco-intl.com/files/Dallas Committee On Foreign Relations.pdf
> 
> Page 14 has a great table which outlines the orgin and amount of oil supplied to the world market since the early 70's. Matthew points out the peak oil production in June 2006






Nothing rocked my market confidence more than the oil price fluctuation.

In trying to determine oil price fundamentals and likely direction, when you look at price falling from $140+ to $40, this cannot IMO be explained by supply/demand factors, as they have not changed anywhere near that amount.

which leaves speculation as a major factor.

can it account for a 70% fall?

I dont think it can account fully, which means oil is probably oversold, and would be expected to rise again, to what level I dont know


----------



## sinner

*Re: OIL AGAIN!*

Hi guys, here is the daily chart by Chris Vermeulen with his commentary appended

http://www.safehaven.com/article-12462.htm









> Oil is such a hot topic and investment, although I think most people are losing their shirts trying to pick a bottom. Buying at support when risk is very low after a trend line breakout and reversal candle, change in momentum, and everything else for that commodity looks to be in my favor is when I put my money to work. Oil Looks really tempting right here but I don't have a buy signal and I think its about to continue its slide lower in the next few days.
> 
> ...
> 
> I don't want to sound like a broken record but it seems like everyone is bullish on Gold & Oil right now and if that's the case, almost everyone should be long, leaving only one way for it to go, down. We all work way too hard for our money and to toss our money in when things are like a yo-yo is just silly. Patients are a must in times like this.


----------



## sinner

*Re: OIL AGAIN!*

Hi guys,

It's been a week and no activity on this thread?

I will continue with a couple of charts if that's ok with you.

The first chart is the USO daily, I have included it because the last volume bar is *huge*. I believe it is a record high volume.

The daily MACD is coasting the trigger line not really looking like it wants to cross down.

Second chart is the weekly, RSI and MACD included. Both are at a crucial juncture, and will either cross up or things become very bearish for oil.


----------



## Go Nuke

*Re: OIL AGAIN!*

Your MACD line looks the same as my STO one....which is why I bailed from Santos on Friday.

Everything on the chart is leading to either UP or DOWN.

I'll look at getting back into an oil stock when the direction is clearer.


----------



## Page

*Re: OIL AGAIN!*

Crude oil once again troubling investors. Crude oil is expected to come down till $25 were as we have seen it touching $45.


----------



## sinner

*Re: OIL AGAIN!*

Hi again,

Are you referring to the daily or weekly MACD, Go Nuke?

I have tried to model the scenario in another light. 

The gold-oil ratio (how many oils for 1 gold) is one I have been watching for a long time now. It is probably one of the industrial worlds original economic indicators. Usually, I use the RSI as a good indicator, but with this chart (thanks to StockCharts.com) I have included the MACD to highlight a severe market dislocation.

As you can see, gold-oil used to trade happily +/-20 from 50 on the RSI. When the RSI turned red and dropped below 30 (gold only buys 6.5 oils), I thought at the time there was to be a BIG market dislocation. I never really predicted an overshoot like this. My guess at the time was actually a straight price rise in gold to return the ratio to normal levels.

What happened was a destruction of the oil price *and* strength in gold. We are now in result, and the phrase "market overshoot" has never applied more.

I fully expect the gold-oil ratio to return to normal levels. This will either involve a massive drop in the value of gold from current levels, a massive spike in the oil price, or a bit of both.

If oil is to jump to meet the historical 1 gold:10 oil norm we would need to see it at $90!

The Arabs will not be happy they need 23 barrels of oil to get their 1 gold.


----------



## Phillip

*Re: OIL AGAIN!*

If anyone recalls before 2000 [1996-2000 period] when oil was trading at complete lows, we saw the emergence of growth sectors such as techs. The oil price in my opinion will not do much over the course of the next five years. It was the bubble of bubbles and will take time to sort itself out. I am unsure on the gold-oil ratio in bear markets. I do see growth sectors [non commodity based sectors] being sought after.


----------



## kransky

*Re: OIL AGAIN!*

hey sinner, keep the graphs coming. great stuff!

why do gold and oil need to trade at a certain ratio fundamentally speaking?
energy is needed for most/all production and thus human survival so oil does have some standing.. 

but if we fall into a global depression and the usd tanks then energy demand could stay low for years and gold could replace usd as the global wealth store

?


----------



## Phillip

*Re: OIL AGAIN!*

In my opinion we need to seperate the wood from the trees and analyse what the markets would like six months moving forward. These are 'Big Ideas'.

Such as the big falls in inflation, technological innovation, emerging economies, and China’s appetite for raw materials are just a few. The 'Big Idea' that is now coming into fruition are the global stimulus packages; China inclusive. The only issue with 'Big Ideas' is the markets are slow to react  for they are big. Pumping multi trillions globally into the economy is big.

As for gold being a store of wealth in future; I think we need to see some evidence in form of exchange other than trying to flog your cold coins on ebay...as banks certainly don't accept gold as a form of exchnage and you pay a fee for them to store it.


----------



## sinner

*Re: OIL AGAIN!*

Hi Phillip, thanks for your input. I share a lot of your views I see you posting about on various threads.



Phillip said:


> In my opinion we need to seperate the wood from the trees and analyse what the markets would like six months moving forward. These are 'Big Ideas'.
> 
> Such as the big falls in inflation, technological innovation, emerging economies, and China’s appetite for raw materials are just a few. The 'Big Idea' that is now coming into fruition are the global stimulus packages; China inclusive. The only issue with 'Big Ideas' is the markets are slow to react  for they are big. Pumping multi trillions globally into the economy is big.




Hi Phillip, I unfortunately disagree that stimulus packages are the next "big thing". They are helicopter cash drops to big business and banks, an inflationary drop in a deflationary pond. Might make a ripple or two but soon submerged into the whole.

Not sure how you anticipate this will affect oil.



> As for gold being a store of wealth in future; I think we need to see some evidence in form of exchange other than trying to flog your cold coins on ebay...as banks certainly don't accept gold as a form of exchnage and you pay a fee for them to store it.




The only people who should be selling their gold on ebay now are those who were smart enough to buy at $400 and sell at $1500 thanks to the frenzied buying that goes on there. My bank might not accept a gold bar but I can take it to any jeweller who deals in gold or a bullion bank and get "first in line" service as they try and give me some cash to sell the gold on to the next sucker. 

Again, not sure how small time gold has anything to do with oil.



> why do gold and oil need to trade at a certain ratio fundamentally speaking?
> energy is needed for most/all production and thus human survival so oil does have some standing..
> 
> but if we fall into a global depression and the usd tanks then energy demand could stay low for years and gold could replace usd as the global wealth store




Hi kransky,

I had planned to write a long reply on this issue because it is a very interesting one to me. In the course of my research I discovered this link

http://www.incrediblecharts.com/economy/gold_oil_ratio.php

Which covers pretty much everything I had to say over a very good timeframe (several decades) and fundamental issues. You will note the very last line in the article puts us at a sell for gold right now (if you follow the ratio closely).

EDIT: Also, according to the Daily Reckoning editors, the ratio norm is closer to 1:15, which gives oil a price target of roughly 60USD, a bit more reasonable!


----------



## sinner

*Re: OIL AGAIN!*

Hi guys,

Once again another week and no activity on this thread? I had planned a small market wrapup on Saturday morning after the final NYMEX session for the week but got distracted by currency pairs.

It has been an interesting week for oil. USO has continued making lower lows since I last posted the chart. Not much has changed technically on the daily and the MACD refuses to budge so I will ignore it for now.

Instead I will focus on a new indicator I have been watching. My IG account does fixed capital trades, such as "Crude Oil to finish Up >someprice" the idea is the contract starts at 50 points and as the probability of the statement coming true increases or decreases the contract approaches 100 or 0 respectively. 

I have found this to be a very good "smart money" indicator. The sentiment it displays is rarely incorrect and can detect very fast flows in oil sentiment. As an example, we can see the latest contract below, has already approached 100 and expired. I have included this to demonstrate short term bullishness on oil. Next time I will include a live contract.

As for longer term sentiment, I have once again included the USO weekly chart. The MACD has finally generated a buy signal despite last weeks bearish price action, with the line holding a smigden above the trigger (-13.963 > -14.029). RSI is also slowly trending up. Only time will tell whether this is a buy opportunity or a bear trap.

It seems the market is waiting to see whether OPEC nations will comply with announced production cuts. Apparently compliance rates for the last announced production cut was around 55%, so that means 45% of production by OPEC nations was still at pre-crash levels! Coupled with surging US stockpile inventories which undermine these cuts, things are not looking pretty. 

Here is an article addressing this issue:
http://www.google.com/hostednews/ap/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD96CIM0G0

The final chart I have included to illustrate some interesting divergence between WTIC and USO which normally track together very well. Chart and small article from here

http://seekingalpha.com/article/120745-pay-attention-to-divergence-between-oil-price-and-etf

I believe this divergence can be well explained by this article:
http://seekingalpha.com/article/120724-trading-the-crude-oil-contango-with-two-etfs

Disclosure that I hold both oil and gas stocks but no direct exposure to oil price. So far my oil plays are doing pretty badly but the holdings are relatively small and derived from profit so not too concerned with holding them until the situation reverses (I am looking for the gold-oil ratio to normalise). On the other hand my gas plays are doing excellently! 

Happy trading folks.


----------



## Wysiwyg

*Re: OIL AGAIN!*



sinner said:


> Hi guys,
> It seems the market is waiting to see whether OPEC nations will comply with announced production cuts. Apparently compliance rates for the last announced production cut was around 55%, so that means 45% of production by OPEC nations was still at pre-crash levels! *Coupled with surging US stockpile inventories which undermine these cuts, things are not looking pretty. *




Another great anaysis.Oil dropping + 6% in line with gold rocketing up.Putting the fades away for a sunny day now.


----------



## sinner

*Re: OIL AGAIN!*

Thanks Wysiwyg. 

From my markets eye view tonight watching CNBC and trading the early half of the US session, things are still pretty bearish on oil but oil traders on TV seem convinced 30 is a strong price floor. The last few weeks of volume would confirm this.

USO has gapped down today thanks to this bearish price action and I expect this gap to be filled at some point.


----------



## Aussiejeff

*Re: OIL AGAIN!*



sinner said:


> ...It seems the market is waiting to see whether OPEC nations will comply with announced production cuts. Apparently compliance rates for the last announced production cut was around 55%, *so that means 45% of production by OPEC nations was still at pre-crash levels! Coupled with surging US stockpile inventories which undermine these cuts, things are not looking pretty*...




A Classic Catch-22.

Many of those OPEC nations are maintaining output "at any cost" just to try and survive, since oil sales are their only source of income. As the price falls, they still have to try and keep their production & sales UP even more than when the price was high, to maintain a viable cash inflow (in the short term) into their respective economies.

In any case, some of them will really be hurting now and if current oil prices continue to fall or languish on and on for much longer, I wonder which of the OPEC producers will become insolvent first? 



aj


----------



## sinner

*Re: OIL AGAIN!*

Hi guys, as promised I have included a screenshot showing the state of a fixed capital oil contract (the current one, to be precise). To specify again, the contract spread approaches 100 if the statement is expected to be true and 0 if expected to be false.

Less than an hour before NYSE open, the market is moderately bullish on light crude finishing >3741 tonight.

Current contract for light crude at a bid/ask of 3554/3567, up 2.84% from yesterday close.


----------



## nulla nulla

*Re: OIL AGAIN!*

Closed this morning our time at US$39.48.


----------



## seasprite

*Re: OIL AGAIN!*

at $39.02 now , fair bit of buying on futures so far.


----------



## Page

*Re: OIL AGAIN!*

Oil prices have covered little bit and is moving towards its uptrend.


----------



## sinner

*Re: OIL AGAIN!*

Hi guys,

If it is ok with everyone I will post another small market wrap for the week. I have included both weekly (first) and daily (second) charts to highlight some interesting features.

The pressure on oil for the last two days of the week was up and with good volume, after strong downward pressure earlier in the week. However traders were confident oil would not finish upwards of 4012, as the fixed capital contract for Friday was very bearish from open.

The weekly contract for USO has ended giving us a nice Doji on high volume.

For those not familiar with candlestick patterns, I recommend a quick look here. http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_pattern

If you place any faith in these patterns we could be setting up for a Morning-Star Doji on the weekly. I am cautiously optimistic at this point as this weeks Doji is almost an exact opposite (upward pointing) of the ones produced in the last two weeks of April which began this trend. We will need to see *strong and consistent* buying pressure all next week for this to eventuate.

The MACD continues to trend up (-13.767 > -13.977) offering a buy signal but Relative Strength has actually *declined* from last week (25.59 < 26.22).

However, when we turn our attention to the daily chart I am not so sure about a bullish outlook. For the first time since the financial crisis, the USO daily MACD has not bounced off the trigger line like it managed to the previous four times and has generated a sell signal (-2.2 < -1.944) despite strong volume and buying pressure in the last two days of trading. 
This is very worrying to me (based on my trading rules) and the best I am willing to offer in terms of direction guess would be a small move up to fill the chart gap then who knows. I know Chris V (thegoldandoilguy.com) is looking for a setup to short USO if this week does not provide bullish action.

I have given up on support/resistance lines for oil as the chart has become too technically damaged and relying solely on dynamic indicators for the moment.

So, I hope that has been helpful to someone. Tomorrow before the London market opens I will post the numbers for the fixed capital contract to see how the market outlook is for the weeks start.

Chris V has included a WTI crude chart showing a descending wedge contained by the 40MA and some bearish divergences in his latest article, I have included it here for posterity:






From: http://www.safehaven.com/article-12639.htm

I think watching for WTI crude to break the 40MA could be a good indicator.


----------



## J.B.Nimble

*Re: OIL AGAIN!*

This article paints an interesting picture 
http://seekingalpha.com/article/119034-big-oil-dark-skies-ahead

If the oil majors are struggling with negative cash flow at 35 USD/bbl, what does it say about the sustainability of supply at these prices, and therefore what conclusion would you draw about where oil prices will go...? Must be a lot of investment being written off in biofuels, tar sands, deep water oil, exploration, etc, etc. Only a matter of time before the chart turns...


----------



## numbercruncher

*Re: OIL AGAIN!*

I see Mitsibishi is intending to launch a 100pc electric car here next year ..... this is happening all over the globe, should help push these pesky oil prices down a little


----------



## jonojpsg

*Re: OIL AGAIN!*



numbercruncher said:


> I see Mitsibishi is intending to launch a 100pc electric car here next year ..... this is happening all over the globe, should help push these pesky oil prices down a little




Hmm, yeah i reckon a few electric cars will make a big difference - NOT.  The world fleet is what, 1 billion and growing at 5% conservatively.  Of the existing fleet, only 3% operate on non-oil based fuels including electric.  Even if ALL of the new cars made each year were electric, it would still take a long time until all the oil-based cars were gone, and besides, the car fleet (inclusive of trucks etc.) only accounts for 28% of world oil use.


http://www.serendipity.li/fe/car_fact_sheet.htm

So IMO the only way the POO is going medium-long term (>12 months) is UP UP and AWAY!


----------



## numbercruncher

*Re: OIL AGAIN!*



> 1 billion and growing at 5% conservatively






Ahhhh so thats the reason for the mega discounts and bail outs of auto manufactorers ?




There will probably be supply shocks in the distant future because of lack of investment now, but as always people ability to pay will cap the price .... no more world wide debt fueled binges pumping prices for a few decades atleast ....


----------



## Wysiwyg

*Re: OIL AGAIN!*

Any piece of steel that comes in contact with another piece of steel needs lubrication (a barrier).Grease, mineral oil or synthetic oil.
The industrial age has become cleverer in regards to bulky - energy wasteful - inefficient machinery but with more people will come more demand and the reliance on crude oil for the industrial age will go on beyond our lifetime and x amount of lifetimes after that.Synthetic oil anyone.


----------



## Agentm

*Re: OIL AGAIN!*

http://business.watoday.com.au/business/markets/oil-jumps-to-1month-high-20090227-8jfs.html?page=2


Oil jumps to 1-month high
February 27, 2009 - 5:35AM

Page 1 of 2 Single page view

Crude oil rose to the highest level in a month and gasoline surged 11% after US stockpiles of the motor fuel dropped.

Declining US pump prices have spurred demand and cut inventories. Gasoline supplies fell 3.32 million barrels last week, the biggest reduction since September, an Energy Department report showed yesterday. Crude-oil imports dropped as OPEC members cut production in an effort to increase prices.

``The most import factor behind this three-day rally is the improving gasoline fundamentals,'' said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan Connecticut. ``Inventories are dropping and demand is coming back at an impressive rate.''

Crude oil for April delivery increased $US2.73, or 6.4%, to $US45.23 a barrel at the close of floor trading on the New York Mercantile Exchange. Futures touched $US45.30, the highest since Jan. 27. Prices are up 8.5% this month and 1.4% this year.

Gasoline futures for March delivery increased 13.28 cents to $US1.2995 a gallon in New York. Futures are heading for the biggest increase since Dec. 31. The contract reached $US1.307, the highest since Feb. 11.

The average US pump price for regular gasoline dropped 0.9 cent to $US1.882 a gallon yesterday, AAA, the nation's largest motorist organization, said on its Web site. Prices have declined 54% from the record $US4.114 a gallon reached in July.

``Prices are very low compared to where they were six months ago, said Bill O'Grady, chief markets strategist at Confluence Investment Management in St. Louis. ``The improvement in gasoline demand is being driven more by lower prices than any economic recovery.''

Gasoline consumption

US gasoline consumption averaged 9 million barrels a day over the past four weeks, up 1.7% from a year earlier, yesterday's report showed. The department measures shipments from refineries, pipelines and terminals to calculate demand.

``This is a gasoline-led rally,'' said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant. ``There's been a lot of hoopla about the improvement in gasoline demand. There's a difference between implied demand, which is measured in the report and actual consumption.''

Crude oil supplies rose 717,000 barrels to 351.3 million barrels last week, the department said yesterday. Inventories were forecast to increase by 1.25 million barrels, according to the median of responses in a Bloomberg News survey. In January stockpiles increased by a weekly average 5.46 million barrels.

Imports dropped 0.3% to 8.77 million barrels a day, the lowest since the week ended Sept. 18, when ports were shut in the aftermath of hurricanes Gustav and Ike, the report showed.

OPEC production

OPEC agreed on Dec. 17 to reduce oil supplies starting Jan. 1 to bolster prices. The 11 members of the Organization of Petroleum Exporting Countries with quotas, all except Iraq, cut output 3.8% to 25.3 million barrels a day in February, consultant PetroLogistics Ltd. of Geneva said Feb. 23. Members have a quota of 24.845 million barrels a day.

OPEC will reduce crude-oil shipments by 1.7% in the month ending March 14, according to Oil Movements. Members will load 22.8 million barrels a day in the period, down from 23.2 million a day in the month ended Feb. 14, the Halifax, England- based based tanker tracker said in a report today.

Iran, Venezuela and Iraq said last week that OPEC is prepared to cut production again when it meets on March 15. Ecuador Oil and Mines Minister Derlis Palacios said today that no new additional reduction was needed ``US crude-oil supplies aren't building like they were and it appears that the OPEC cuts are translating into lower US import levels,'' said Tim Evans, an energy analyst with Citi Futures Perspective in New York.

Reduced shipments

Abu Dhabi National Oil Co. will reduce exports of crude oil in April. The United Arab Emirates state-owned producer will export 17% less of Upper Zakum crude oil than contracted, following a 15% reduction in March, the company said in a faxed statement today. Shipments of Umm Shaif, Lower Zakum and Murban crude will be cut by 15%.

Companies are slashing jobs and orders at a faster pace in the US, reports today showed. Orders for durable goods fell 5.2% in January, more than twice as much as forecast, Commerce Department figures showed in Washington. The Labor Department said 667,000 Americans filed initial applications for jobless benefits last week.

``I think we are seeing investors desperately latch onto anything bullish,'' said Stephen Schork, president of Schork Group Inc. of Villanova, Pennsylvania. ``We are looking forward to more economic pain in the months ahead and that will lead to weaker demand.''

Brent crude oil for April settlement increased $US2.15, or 4.9%, to $US46.44 a barrel on London's ICE Futures Europe exchange. Futures reached $US46.63, the highest since Feb. 10.


----------



## CFDTrading

*Crude Oil Forecast Turns Bullish On Break Higher*

Thursday, 26 February 2009 21:36:28 GMT
Written by David Rodriguez, Quantitative Analyst 

*Short-Term Technical Forecast for Crude Oil*






Crude oil prices continue to trade within an especially volatile range, and sizeable intraday moves have been thus far unable to force major breaks. Our range-trading bias would suggest that current rallies are best sold-especially within the context of an overall downtrend. Clear resistance can be found at the confluence of recent spike-highs and the 38.2 percent Fibonacci retracement of the 48.00-37.10 move at 41.00. A break of this level would negate our bearish bias, while nearest support can be found at the bottom of the contract's recent trading range at 37.10.

*Short-Term Technical Forecast for Gold*






Gold prices recently reached heavily overbought territory, and the COMEX contract's pullback signals that further losses are likely. Indeed, RSI on the daily chart reached its highest levels since July of last year-at which point gold prices set a significant top near the 1,000 mark. The sharp uptrend in price suggests that we may expect further gains through the medium term, but the short-term favors further losses. Subsequent support can be found at previous spike-highs at the 930 mark, while resistance is at recent spike-highs above 1,000.

*Short-Term Technical Forecast for Silver*






COMEX silver prices find themselves in much the same situation as gold, as the contract has reached significantly overbought territory and is at risk for a sharper retracement. The contract now trades at previous Fibonacci resistance and spike-highs at 13.80, while a break lower would signal that a move towards the psychologically significant 13.000 mark is likely. Near-term resistance can be found at recent highs of14.585.


----------



## waz

*Re: OIL AGAIN!*

Oil has past the $48 mark (MAY contract price). Gone up a dollar just in the last hour.
We dont normally get such a jump on a monday morning. Especially since I cant find any news on the subject of oil from the past few hours.

For the technicals out there. Do you think the long term bear trend has come to an end?

Could this be the catalyst for other commodities to start rising again?


----------



## vincent191

*Re: OIL AGAIN!*

Waz, at long last oil inventory has started to drop. It dropped by 2.5% last week and OPEC is looking at another cut.

However, just because you see one swallow flying past  does not mean it is now Summer. We will have to wait to see a few more positive and substained signs. 

I think the Baltic index has gone up i.e. more tankers moving supplies out of the oil fields, this is only based on 3rd nad info I have heard while having a swallow of beer at the local. I have not research the index myself.


----------



## sinner

*Re: OIL AGAIN!*

Hi guys,

It has been a while since I wrote to you here.

Looks like plenty of people have filled in place of my absented soothesaying.

I will not comment on those analysis. Worth noting that "CFDTrading.com" was bearish on gold from the 800s based on the same analysis they use in the above post. They were very quick to change their stance to be "correct". Is that we are seeing again here?

Anyway I will rely on my own analysis and let you be the judge. I have included a fair few charts and screenshots, please forgive me if this is too much.

When I last left you the two main points was a bullish upward pointing Doji on the weekly for USO and a bearish downward break on the MACD on the USO daily. I also noted some comments by Chris V that he was looking to go short.

In the end the MACD breakdown which worried me resolved itself as yet another bounce from the trigger region. 
Also as we can see, the Doji did not fail to disappoint and we have had strong upwards price action since then. 

Now we must look forward. The current rally in oil/gas from a fundamental perspective has been due to declining stockpiles, finally giving the market some hope that OPEC production cuts might have some affect on the supply/demand curve.

Weekly volume for USO since the Doji has been declining despite this promising price action. Last week was in fact the lowest volume for this instrument in seven weeks. 

The weekly MACD for both USO and WTI crude is extremely bullish and beginning to show hopeful signs of a rally in oil. Weekly Relative Strength has also increased significantly in the past fortnight. 

If you have been following my postings on these two indicators for this instrument you should be able to follow what I am saying here, no need for me to explain it all again.

USO was previously strongly constrained by the 40MA, it has broken through this (bullish) and is now constrained by the 50MA with selling pressure above this point. A break and close above 50MA would be a buy signal for me. 
Unfortunately all this bullish price action has created some ugly gaps which I expect to be filled just the same as the last down-facing gap I expected got filled by an up move (in this case we would be expecting a down move to fill up-facing gaps).

We can also see that unfortunately daily volume for this rally has been *very very* low if you were exposed via USO instrument. I remain unsure if this is because buy-and-holders were longing on the other side of the down curve or this could be an unconvinced market.

I have also included a screenshot of tonights fixed capital contract. As you can see the "smart money" is extremely bullish on WTIC finishing up tonight again.

Good luck.


----------



## CFDTrading

*Re: OIL AGAIN!*

*Crude Hits 3-Month Highs On US Market Rally, OPEC Compliance Expectations*

Tuesday, 17 March 2009 21:29:04 GMT
Written by Stefan Tifigiu, CFDTrading Research
Full Article

Crude prices rose to 3-month highs today on expectations of better OPEC compliance coupled with rallies in US equity markets pushed prices higher. Gold prices continued modest declines today following strong US equity market rallies.Silver continued to fall in value following gold’s decline.

*Commodities - Energy*

*Crude Gains On Housing Starts Data And OPEC Pledge For Compliance*

*Crude Oil (WTI)                        $48.910            +1.560           +3.29%*
Crude prices rose to 3-month highs today on expectations of better OPEC compliance coupled with rallies in US equity markets. Some supply-side strength was provided by comments from Algeria’s Oil Minister Chakib Khelil in which he stated OPEC would reach 95% compliance by its next meeting in May. Given the current compliance rate of only 80%, this increase in compliance acts as some support for oil prices in lieu of production cuts. Further price strength was provided by a better-than-expected US Housing Starts release that rallied equity markets across all sectors. Price swings were extremely volatile but most of the market noise could be more attributed to traders excercising options contracts on the final day of front-month April futures contracts. Market noise aside, fundamentals are still in favor of lower crude prices for the near future. Even with supply pressures that greater compliance from OPEC will provide in the coming months, there is still significant amount of crude already in the markets. Those stockpiles will take time to be absorbed. Even with worldwide market rallies that have lasted most of the week, global crude demand will remain weak until a significant tangible economic turnaround occurs. So far there is little evidence of this. Tomorrow’s DOE numbers may be market moving as they are expected to show increases and could perhaps signal even further oversupply. If stockpiles rise more than forecasted, bearish pressures will return to the market and place pressure on prices back toward the psychologically significant $40 level.





*
Commodities - Metals*

*Gold And Silver Continue Decline On Unexpected US Equity Rallies*
*
Gold                                        $916.450            -6.705           -.73%*
Gold prices continued modest declines today following strong US equity market rallies. The Producer Price Index in the US rose less than expected and could have offset some growing concerns of future inflation that might have provided gold with some strength. However prospects for medium to long-term growth remain fundamentally strong. Much of the market rallies that have weakened gold were fueled by leaked memos and expectations of operating profits under current conditions. Nonetheless, there is very little in the way of evidence that fortunes at financial institutions have reversed. There is evidence to the contrary in Monday’s news of increased credit-card delinquencies. Growth in delinquencies hints at the growing risks of credit-card related securities that many financial institutions hold. Losses there could derail positive sentiment and reverse market momentum. The relatively modest declines in Gold may be evidence of this. In the meantime, if global markets continue to rally, gold will likely trade flat.

*Silver                                      $12.745             -.18000          -1.39%*
Silver continued to fall in value following gold’s decline. As we noted earlier, silver may be poised for a much stronger rally than gold given its historically lagging gains. There is however significant potential for upside if there are any market moving reports released that could derail positive sentiment. If that occurs, safe-haven metals will benefit.


----------



## kransky

*Re: OIL AGAIN!*

If oil keeps going the way it is it will point the way ahead for inflation... and a BIG rush back into commodities...


----------



## cuttlefish

*Re: OIL AGAIN!*

So whats the consensus - are the lows for oil behind us or are we just experiencing a correction in a long term down trend?   I like what its been doing over the past month - my vote is for the former - the lows are behind us and its going to meander its way back north.   The volume in the cirlced area is positive imo - and the current retraction will be an interesting test.


----------



## kransky

*Re: OIL AGAIN!*

right now that is the $64M question... (is the current rise in oil and commodities the real deal or just a blip in a longer road of deflation)

i hope its a false start of the great hard asset inflation escalator to the moon that will eventually happen as they keep "printing" more money.. and when that fails "printing" more...  that's because i am not on this one  not yet at least.

it feels too early.

some learned commentators are saying this... but if its not a false start and its the real deal then i need to pull my shorts and pump that hard earned cash sitting in the bank earning diddly into some stocks and commodities...

any comments? i would love to hear others thoughts on this very important question.


----------



## sinner

*Re: OIL AGAIN!*

Hi cuttlefish,

The pattern that oil is forming on the longer term charts is not unique in fact very similar to the ones we have seen developing on some forex pairs, stocks etc.

A very W type shape but unconvincing after the huge technical damage to the charts.

By my own reasoning (which has been posted earlier in this thread, DYOR) I would expect to see oil trading around $60 sooner or later. While this call might not seem so crazy now I have consistently held to this number for some months now. 

I think only fundamental factors will push us up any higher than that.


----------



## basilio

*Re: OIL AGAIN!*

There are some interesting fundamentals happening with oil demand and supply in the near future. This analysis from Matt Simmons suggests that oil will spike far quicker than we may imagine because mature fields are depleting very quickly and new developments are being stalled.


> *Financier (Matt Simmons) sees oil shock from credit crunch*
> Christopher Johnson, Reuters
> The global financial crisis and collapse in the oil market have stalled vital investment in oil exploration and production and are likely soon to lead to a sharp spike in prices, an energy consultant and financier says.
> 
> Matt Simmons, founder of Houston-based investment bank Simmons & Co, argues the underlying rate of decline of the world's aging oilfields is as much as 20 percent a year and only high levels of investment can reduce that to single digits.
> 
> With credit tight and oil prices almost $100 a barrel below their highs last year, oil companies are unable to sustain previous levels of spending and the result is falling production, he said in an interview on Thursday.
> 
> "We are three, six, maybe nine months away from a price shock. We are not talking about three to five years away -- it will be much sooner," Simmons told Reuters in London.
> (26 March 2009)




http://www.energybulletin.net/node/48467

Of course what will happen to a depressed economy with absolute scarcities of oil seems pretty grim.


----------



## jonojpsg

*Re: OIL AGAIN!*

Mmm hmm, I've been hearing stuff about a "super contango" with regard to oil futures - looking at heading back towards $100 again before end 2009.  

I guess this makes perfect sense - if the major fields are producing say 50% of world production and are declining at even 10% p.a. we are looking at a 4-5% reduction in supply over the rest of the year, or around 3-4 million bopd 

Compare this with quibbling over whether OPEC is producing 1 million a day more than quota and it's pretty darn obvious where we are heading price-wise.  Especially adding in the cuts due to high-cost production being stopped 

Could be BAD


----------



## Nero64

*Re: OIL AGAIN!*

Sorry if this has already been mentioned.

Can anyone point out a link or give me some information on Australia's biggest Oil/Petroleum producers in terms of Barrel produced etc.

I might be way off base but does it go something like this. 

BHP
Woodside
Santos
Oil Search
AWE
Beach Petroleum
the rest etc etc

thanks


----------



## phong_01

*Re: OIL AGAIN!*

An article from CNBC about the future oil price:

Although oil prices should remain low for the next three to six months, the threat of surging prices remains, said John Hofmeister, former Shell president and CEO of U.S. operations.

"It's really sad," Hofmeister said, in an interview with CNBC. "We've lost half the drilling rigs in the country in the last seven months. The prices are probably going to stay down for some time."


However, this is setting the scene for another potential in spike in gasoline. 

Although demand for oil has slipped, the world is still consuming more than 80 million barrels a day, he said. Hofmeister expects March numbers to show that demand was a little less than supply.

"The good news is the gasoline supply and demand is almost in equilibrium," he said. "But the refineries are operating about 80 percent."

If the Obama administration is successful with its economic recovery plan, oil prices will rebound, said Hofmeister.

"We're all going to have whiplash on gasoline prices and we'll be right back where we were a year ago," he said.


----------



## bowman

*Re: OIL AGAIN!*

Quote:

" Crude oil: My new crude oil setup goes to bullish with execution on Monday's open of trading. This is based on a combination of super-bullish positioning by the commercial hedgers and small trader crowd (both of whom appear to be the "smart money" in this market, at least according to the timeframes I'm using to view them). "

http://cotstimer.blogspot.com/


----------



## Woroni

*Re: OIL AGAIN!*

Hi,

Just wondering if anyone can show me a free chart that displays oil prices for the past 2 years or more. I've used this http://www.quote.com/us/futures/chart.action?chartUi.minutes=&chartUi.bardensity=HIGH&chartUi.bartype=BAR&s=CL+%23F&chartUi.period=D&chartUi.size=650x450 but it only goes for 12 months. Something similar but going for 24 months or more would be great, the longer the better.

Thanks.

PS: I do think Oil is heading up, the momentum is pretty strong. It is likely only to be stopped by some external event, eg pandemic, financial meltdown, etc.

EDIT: $100 by end of 2009? Who is paying that price? I'd take that bet!


----------



## seasprite

*Re: OIL AGAIN!*



Woroni said:


> Hi,
> 
> Just wondering if anyone can show me a free chart that displays oil prices for the past 2 years or more. I've used this  but it only goes for 12 months. Something similar but going for 24 months or more would be great, the longer the better.
> 
> Thanks.




have you tried changing the period to weekly or monthly , unsure of your question you ask.


----------



## Woroni

*Re: OIL AGAIN!*

Sorry, I should clarify. I would like DAILY for longer than a year. Does that make sense?


----------



## seasprite

*Re: OIL AGAIN!*



Woroni said:


> Sorry, I should clarify. I would like DAILY for longer than a year. Does that make sense?




try this one , just change the number of days to view http://stockcharts.com/charts/performance/perf.html?$WTIC


----------



## sandybeachs

*weekly oil chart one year*

we've seen markets improve over the past month, thus oil price has also improved.

*weekly oil chart one year.*


----------



## sandybeachs

*oil price US$57.20bbl*

not so long ago oil was below US40bbl..

most would be happy with US$70bbl ~ US$80bbl..

who knows if the markets keep improving the above may not be far off..


----------



## Agentm

*Re: OIL AGAIN!*



Woroni said:


> Hi,
> 
> Just wondering if anyone can show me a free chart that displays oil prices for the past 2 years or more. I've used this http://www.quote.com/us/futures/chart.action?chartUi.minutes=&chartUi.bardensity=HIGH&chartUi.bartype=BAR&s=CL+%23F&chartUi.period=D&chartUi.size=650x450 but it only goes for 12 months. Something similar but going for 24 months or more would be great, the longer the better.
> 
> Thanks.
> 
> PS: I do think Oil is heading up, the momentum is pretty strong. It is likely only to be stopped by some external event, eg pandemic, financial meltdown, etc.
> 
> EDIT: $100 by end of 2009? Who is paying that price? I'd take that bet!




the US has their fill of oil, their stockpiles are to the brim, and despite that, they see the price rise as a result of hedge funds no longer prepared to run a short on oil, (oil became a hip thing to short when hedge funds were banned from many markets- oil was one of a few places they could go, and did they ever come into it hey!! heavily impacting on the downside of the oil price) 

the summer driving season in the US is looking like adding to speculation, and there is a massive decrease in production from the worlds 3 major fields, with no new drilling to adequately replace declines, the supply is there for now but the numbers are low on the future supply side should the world wake up.

if a economic recovery is seen to be occurring, world demand will increase in a heartbeat, and the oil will be at $150 in months.. then we should see the secondary effect of what happens when there is real short supply for the demand!  i hear that you can say good bye to $150 and see a double of that once the worlds thirst for oil comes back..

in the usa, the declines in fields have never been so steep.. and add to that  the rigs being stacked up and the fields depleting, and no real exploration happening.. the moment recovery is being touted in the markets then oil companies will be a brilliant investment.. 

there are some great shares out there right now in the oil sector


----------



## nikemi

*Re: OIL AGAIN!*



Agentm said:


> the US has their fill of oil, their stockpiles are to the brim, and despite that, they see the price rise as a result of hedge funds no longer prepared to run a short on oil, (oil became a hip thing to short when hedge funds were banned from many markets- oil was one of a few places they could go, and did they ever come into it hey!! heavily impacting on the downside of the oil price)
> 
> the summer driving season in the US is looking like adding to speculation, and there is a massive decrease in production from the worlds 3 major fields, with no new drilling to adequately replace declines, the supply is there for now but the numbers are low on the future supply side should the world wake up.
> 
> if a economic recovery is seen to be occurring, world demand will increase in a heartbeat, and the oil will be at $150 in months.. then we should see the secondary effect of what happens when there is real short supply for the demand!  i hear that you can say good bye to $150 and see a double of that once the worlds thirst for oil comes back..
> 
> in the usa, the declines in fields have never been so steep.. and add to that  the rigs being stacked up and the fields depleting, and no real exploration happening.. the moment recovery is being touted in the markets then oil companies will be a brilliant investment..
> 
> there are some great shares out there right now in the oil sector




But then again if oil hits double 150 what effect is that going to have on inflation and interest rates again and we'll we be able to fully recover from the current recessions before we go into another one. After all consumers need money to spend to keep economy going, if all that goes on oil what will the consequences be?


----------



## basilio

*Re: OIL AGAIN!*



> But then again if oil hits double 150 what effect is that going to have on inflation and interest rates again and we'll we be able to fully recover from the current recessions before we go into another one. After all consumers need money to spend to keep economy going, if all that goes on oil what will the consequences be?




not.... very....pretty....

The issue of an irreversible decline in oil production from mostly peaked fields facing a continual increase in demand can only mean a severe and continued contraction of the whole economic system. Unfortunately on my research Agentums analysis is spot on. For a short time at least the biggest deal in town will be energy stocks but I fear even these will be overcome by the overall effects of a steeply declining energy supply. 

But hey maybe its all a commie plot ! ?


----------



## Wysiwyg

*Re: OIL AGAIN!*

Are we hearing governments pushing alternatives to oil, oil derivatives and oil consuming machines? I wonder if it will be too late by the time our chosen tribe leaders start implementing practical changes. As consumers we (the tribe) just take what is there in front of us.


----------



## jonojpsg

*Re: OIL AGAIN!*



Wysiwyg said:


> Are we hearing governments pushing alternatives to oil, oil derivatives and oil consuming machines? I wonder if it will be too late by the time our chosen tribe leaders start implementing practical changes. As consumers we (the tribe) just take what is there in front of us.




It's unbelievable to me that the Australian government is not doing something serious about Peak Oil, eg implementing a hydrogen economy.  I sent the minister of energy an email a few months back asking whether that was on their agenda and he (well his aide) fobbed me off with "we are currently undertaking a Energy security audit and will consider the options when it is complete blah blah blah.  Two of our major oil suppliers (Vietnam and Malaysia) are going to be net *importers * of oil within five years, which puts us at least *30% below current supply levels*.  

There is NO doubt in my mind that Peak Oil is going to hit the world and hit it hard - supply peaked pretty much exactly when the theory predicted (2005) and *will not* reach that level again.  

Now that the economic outlook out at the 6-12 month horizon is looking more stable (and even improving?) POO is going just where Agentm put it - $150 again and more.  FOr me, I'm in on every oil opportunity I can get over the next 12 months.

And I'll buy everyone on here a beer if I can't make at least a 1000% return over that time on my oil trades!


----------



## Tradesurfer

*Re: OIL AGAIN!*

Oil has been in a huge downtrend generating nice potential profits for those that rode is down with a short position. After a quick entry/exit- my indicator is again showing a long position entry in OIL. By the way I use the SYMBOL: OIL which is an oil ETN(exchange traded note) from Barclays which looks to track the price of oil but trades like a stock on the us market.

The key to catching large moves is to define your strategy and take the signals understanding we don't know which moves are going to be big and which one result in small losses or gains. Always maintain an exit!!!

Enjoy


----------



## sandybeachs

*Re: OIL AGAIN!*

IMO the markets need oil around $US80bbl, why..????

Supermajors, Majors and even Juniors really can't do any exploration/development with an oil price at current levels.

quote taken from recent article:

"The carnage among the oil supermajors continued today as Shell reported a 62% profit slump in the first quarter, hard on the heels of the 59% dive reported by arch-rival BP.
Profits at Shell in the first three months of the year plunged to $2.9 billion (£2 billion) from $7.8 billion on the back of a more-than-halved oil price, around $42 a barrel versus $90, and Shell's continuing woes in Nigeria, its once-great hope."

also i wouldn't like to see US$150bbl in the near term. we need to see the world markets improve before any price like US$150bbl.


----------



## Magdoran

*Re: OIL AGAIN!*



Woroni said:


> Hi,
> 
> Just wondering if anyone can show me a free chart that displays oil prices for the past 2 years or more. I've used this http://www.quote.com/us/futures/chart.action?chartUi.minutes=&chartUi.bardensity=HIGH&chartUi.bartype=BAR&s=CL+%23F&chartUi.period=D&chartUi.size=650x450 but it only goes for 12 months. Something similar but going for 24 months or more would be great, the longer the better.
> 
> Thanks.
> 
> PS: I do think Oil is heading up, the momentum is pretty strong. It is likely only to be stopped by some external event, eg pandemic, financial meltdown, etc.
> 
> EDIT: $100 by end of 2009? Who is paying that price? I'd take that bet!



Hi Woroni,

You wouldn't happen to be an ex-ANU student would you?

Please find two CL charts as requested:

Sorry I don't know a free site that publishes what you are looking for...

Mag


----------



## rederob

*Re: OIL AGAIN!*



Magdoran said:


> Hi Woroni,
> 
> Sorry I don't know a free site that publishes what you are looking for...
> 
> Mag



Hello Magdoran
This site has a java chart - just play with it a bit and it does some clever things depending on what you want to achieve:
http://futures.tradingcharts.com/javachart/CO/69

Although prices have been climbing steadily my view is that there is a fool's paradise unfolding and I find it difficult to conceive that global markets will make any headway for months to come.  
Actually, I think we are about to see some protracted declines in the near term.  That may not impact too heavily on crude prices as OPEC has done an exceptionally good job of cutting output and putting a "floor" in place.
The Saudis reckon they can knock our 12.5m barrels a day if they have to, when the market turns.  I think they will have to do that and more, as unconventional oil is presently too expensive and monies to ramp output are not being invested.
When the global economy gets back on an even keel there will be many fields that are in such decline that "replacement" is unlikely to meet demand - a result of the present recession that has cut both exploration and development.
For me it's still very much a watching and waiting game.  While the bargains may be behind us, I would rather some certainty that a turnaround was firmly established before moving from cash to equities.


----------



## Smurf1976

*Re: OIL AGAIN!*



rederob said:


> The Saudis reckon they can knock our 12.5m barrels a day if they have to, when the market turns.  I think they will have to do that and more, as unconventional oil is presently too expensive and monies to ramp output are not being invested.



Worth noting that they have claimed 12 - 12.5 mmbpd capacity for around three decades now and have _never_ actually produced at that level, at least not for any significant period, according to accepted data sources. 

Even more worth noting that Saudi output during 2007 and 2008's high prices was lower than in 1980 and well below the claimed 12.5 million barrel per day capacity.

So I'd say that if they really do have that capacity then either there's some technical reason why they don't want to use it (can't be sustained, poor quality oil, ports can't handle the volume etc) or they've decided that $145 per barrel was not a high enough price to warrant that level of production.

My personal thinking is that this is their capacity to export from all sources which includes drawdown of above ground stocks. That is, they can ship 12.5mmbpd but the amount taken from the ground would be lower. So in effect it's the capacity of the ports and not the capacity of the oil fields.

That observation is simply based on the evidence that, for whatever reason, they have never appeared to want to go to that level and that whenever production approaches 10.0 mmbpd it is soon scaled back even if prices and demand are still rising, a scenario that points to them not being able (or willing) to sustain output at that level no matter what the market situation at the time.

Time will tell but I'll be truly surprised if we see Saudi production average more than 10.0 mmbpd over any calendar year. If they really do have the capacity then they've been incredibly disciplined at not using it thus far.


----------



## gooner

*Re: OIL AGAIN!*



Smurf1976 said:


> Worth noting that they have claimed 12 - 12.5 mmbpd capacity for around three decades now and have _never_ actually produced at that level, at least not for any significant period, according to accepted data sources.
> 
> Even more worth noting that Saudi output during 2007 and 2008's high prices was lower than in 1980 and well below the claimed 12.5 million barrel per day capacity.
> 
> So I'd say that if they really do have that capacity then either there's some technical reason why they don't want to use it (can't be sustained, poor quality oil, ports can't handle the volume etc) or they've decided that $145 per barrel was not a high enough price to warrant that level of production.
> 
> My personal thinking is that this is their capacity to export from all sources which includes drawdown of above ground stocks. That is, they can ship 12.5mmbpd but the amount taken from the ground would be lower. So in effect it's the capacity of the ports and not the capacity of the oil fields.
> 
> That observation is simply based on the evidence that, for whatever reason, they have never appeared to want to go to that level and that whenever production approaches 10.0 mmbpd it is soon scaled back even if prices and demand are still rising, a scenario that points to them not being able (or willing) to sustain output at that level no matter what the market situation at the time.
> 
> Time will tell but I'll be truly surprised if we see Saudi production average more than 10.0 mmbpd over any calendar year. If they really do have the capacity then they've been incredibly disciplined at not using it thus far.




Smurf1976

I agree with your analysis as I do not think they are that disciplined. 

Peak oil is coming (or is here) and we better get used to it


----------



## Smurf1976

*Re: OIL AGAIN!*



gooner said:


> Peak oil is coming (or is here) and we better get used to it



High oil prices in the recent past resulted in only very slight production growth. 

Given the fall in oil prices has made many projects uneconomic (the small and hard to get ones that were the only thing pushing total output up) and the financial crisis has made financing even the better projects much harder, I think it's fair to assume that total world production capacity would trend down once the effects of all this flow through to actual wells in production.

Given that scenario, which I do think is what's happening, we've just passed at least an interim peak in oil production that won't easily be surpassed.


----------



## Wysiwyg

*Re: OIL AGAIN!*



jonojpsg said:


> It's unbelievable to me that the Australian government is not doing something serious about Peak Oil, eg implementing a hydrogen economy.



Either there isn`t any near to medium term oil problems or the powers-that-be are blind to any near to medium term oil supply problems. I can`t believe it is the latter. Especially the Americans.







> And I'll buy everyone on here a beer if I can't make at least a 1000% return over that time on my oil trades!



 Ha! Profits should cover the higher fuel costs then. :


----------



## Smurf1976

*Re: OIL AGAIN!*



Wysiwyg said:


> Either there isn`t any near to medium term oil problems or the powers-that-be are blind to any near to medium term oil supply problems. I can`t believe it is the latter. Especially the Americans.



In my opinion the "is there a problem" debate has been settled and the answer is "yes". The world didn't produce enough oil at $20 to keep prices at that level in the face of surging consumption - that in itself is a problem.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> In my opinion the "is there a problem" debate has been settled and the answer is "yes". The world didn't produce enough oil at $20 to keep prices at that level in the face of surging consumption - that in itself is a problem.



I see what you type Smurf but Chinese new car sales are out pacing the Americans at present which doesn`t indicate any government concern about lack of oil. Jobs and money is of far greater importance if there is a real oil problem.

Over I million cars in March this year!



> Published: April 14, 2009
> 
> New York, NY, United States, — For three months in a row China has sold more cars than the United States. According to statistics released by the China Association of Automobile Manufacturers, the country’s March new car sales reached a record of 1.11 million, compared to the United States’ 858,000, making China the world’s largest automobile market, at least for the time being.





> Second, rising car ownership is not good news for China, which already is heavily dependent on foreign oil. Not only does the oil come from the Middle East and travel over sea routes controlled by the U.S. Navy, increasing gasoline consumption in China is likely to drive up oil prices again in the international market. Eventually, drivers as well as ordinary consumers will feel the pain caused by skyrocketing fuel prices.




Can you pinpoint why any of these large countries are adding more and more fuel guzzlers to the world if there is an oil supply problem? Thanks Smurf.


----------



## gooner

*Re: OIL AGAIN!*



Wysiwyg said:


> I see what you type Smurf but Chinese new car sales are out pacing the Americans at present which doesn`t indicate any government concern about lack of oil. Jobs and money is of far greater importance if there is a real oil problem.
> 
> Over I million cars in March this year!
> 
> Can you pinpoint why any of these large countries are adding more and more fuel guzzlers to the world if there is an oil supply problem? Thanks Smurf.




wysiwyg

The issue is that China is much more free market now, so if the punters want cars, they get cars. Governments tend not to interfere in these decisions. The GFC choked off some demand so oil price fell. But as demand rises and given inelasticity of oil price, the price will start going through the roof


----------



## Wysiwyg

*Re: OIL AGAIN!*



gooner said:


> But as demand rises and given inelasticity of oil price, the price will start going through the roof




This consumption chart (someone may have better) shows, there is a steep rise for the Chinese. With car sales presently going beserk then we can expect this rise to be massive AND immediate!



> China's frightening consumption rise from chart C8 is made clearer when it has its own scale. An increase of 3,328%, from *0.08 Gb in **1965 to **2.72 Gb in **2006.* It is frightening to extrapolate into the next decade.
> Source: BP


----------



## lsj84

*Re: OIL AGAIN!*

China remains as a wild card. The past years growth was mainly driven by the export led activities. around 50% of the products made in China are sold overseas, of which 1/3 is to the US. domestic consumption is weak and remains weak until the gov. can dish out a proper welfare system. Car sales growth wont be sustainable if there is no more roads to be built as quickly. 

but with money printing going on in the US, there is a fundamental support to the oil price. but in aussie terms, oil price remains calm, which may not be relevent to the stock prices though.


----------



## jonojpsg

*Re: OIL AGAIN!*



Wysiwyg said:


> I see what you type Smurf but Chinese new car sales are out pacing the Americans at present which doesn`t indicate any government concern about lack of oil. Jobs and money is of far greater importance if there is a real oil problem.
> 
> Over I million cars in March this year!
> 
> 
> 
> 
> Can you pinpoint why any of these large countries are adding more and more fuel guzzlers to the world if there is an oil supply problem? Thanks Smurf.




The problem is that most, if not all, governements don't look more than a few years ahead.  Agreed the Chinese might look further ahead than most given their centralised government, but the issue still stands.  People want to drive around, they need affordable cars, and at this point the only way car makers can make cheap cars is petrol power.  The crunch is coming, they (governments) just put their heads in the sand ala GFC.


----------



## Smurf1976

*Re: OIL AGAIN!*



Wysiwyg said:


> I see what you type Smurf but Chinese new car sales are out pacing the Americans at present which doesn`t indicate any government concern about lack of oil. Jobs and money is of far greater importance if there is a real oil problem.
> 
> Over I million cars in March this year!
> 
> Can you pinpoint why any of these large countries are adding more and more fuel guzzlers to the world if there is an oil supply problem? Thanks Smurf.



If the roof blows of my house tomorrow then I have a rather big problem. That I took shelter in the garden shed doesn't change the fact that I've still got a rather big problem with the house.

What most don't realise is that oil has become increasingly uneconomic for many uses. The roof has been coming off piece by piece for the past 35 years and by 2007 even those in the basement realised something was happening.

It's no longer economic to heat the house, run industry or generate electricity from oil, all of which were once major uses of it that have since been abandoned. Now it's getting expensive to run transport but we don't have an alternative for that one.

Whilst switching to alternative heating, boiler fuel etc softened the blow, the reality is that we didn't use them in the first place because oil was better and/or cheaper. The world didn't spend a fortune on polluting, dangerous and/or controversial coal, nuclear, hydro and wood energy systems for the fun of it. It was done because oil could no longer economically perform that role and alternatives were urgently needed.

The world has an awful lot of huge coal-fired power plants that came online in the 1980's. Likewise there's still a lot of oil-fired plants sitting around that haven't regularly run since those coal-fired plants came online. That was a fairly direct swap along with plenty of nuclear and some hydro plants.

Closer to home, we had the debates about uranium and hydro dams. Uranium to fuel an international switch from oil to nuclear. And the most controversial dam ever proposed in Australia was for the specific purpose of switching household heating and industrial fuel in Tasmania from oil to electric. The dam wasn't built, industry went almost exclusively to coal and households went largely to wood, the latter at massive cost in terms of urban air pollution. 

Oil was easier than all of those. As long as it's not spilled into the water, it's a lesser evil environmentally than most of the alternatives. No flooded valleys, no radioactive waste, no mountain tops chopped off and, compared to wood, minimal air pollution when it's burned. Add to that it's easy to transport and store and that's why we relied so heavily on it in the first place.

That we keep going with petrol-fuelled vehicles is due to two reasons. We don't have a low capital cost alternative that can be rolled out on a large scale. Even if the roof comes off, you'll likely stay in or near the house if you have no alternative place to live. 

And it's for the same reason people bought dot.com stocks in 1999 or speculative shares in 2008 - most people do not realise what's going on and governments aren't about to tell them until it becomes undeniable as with every other foreseeable disaster. It's profitable to sell SUV's today and nobody's stopping anyone from doing that.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> Oil was easier than all of those. As long as it's not spilled into the water, it's a lesser evil environmentally than most of the alternatives. No flooded valleys, no radioactive waste, no mountain tops chopped off and, compared to wood, minimal air pollution when it's burned.




Thanks for your input. 
Two things on this that I think you over-looked and they be 1) the environmental impact with oil e/p   i.e. land & sea clearing for e/p, the fracturing fluids (oils/acids/polymers).
and 2) the derivatives, mainly petrol and diesel, when burnt emit toxic fumes which are both visible and invisible and from a daily global view would have to be the largest air polluter.  Also oil burns a thick, black, acrid smoke and a good example was the wells in Iraq set alight during the wars.

$$


----------



## Smurf1976

*Re: OIL AGAIN!*



Wysiwyg said:


> Thanks for your input.
> Two things on this that I think you over-looked and they be 1) the environmental impact with oil e/p   i.e. land & sea clearing for e/p, the fracturing fluids (oils/acids/polymers).
> and 2) the derivatives, mainly petrol and diesel, when burnt emit toxic fumes which are both visible and invisible and from a daily global view would have to be the largest air polluter.  Also oil burns a thick, black, acrid smoke and a good example was the wells in Iraq set alight during the wars.
> 
> $$



Agreed that oil pollutes. But I've seen what happens when households switch from oil to wood. The end result is the cleanest air in the country becomes officially unsafe and far worse than Sydney's.

If you want to see what household use of wood does then here's a photo of Launceston about a decade ago. It was clean before wood replaced oil (and it's getting clean again now with the switch from wood to electric).


----------



## sandybeachs

*price of oil again moving up US$59.53bbl*

i'm sure plenty of investors are happy with seeing the POO increasing.

short term i'd like to see it settle around US$80bbl.


----------



## weatherbill

*Re: OIL AGAIN!*

price of oil should continue on a slight path up in price this season.

I think it take s abreak this spring and comes back down after us travel season is over and more financial woes are announced in a october.
aug sept is hurricane season in US and sometimes, oil spikes if a gulf of mexico hcane takes out oil refineries and platforms


----------



## trendtrader

*Re: OIL AGAIN!*

Any technical traders think thats a double top forming on oil???


----------



## MRC & Co

*Re: OIL AGAIN!*

Sheesh!  Is this oil sell-off a result of the G8 committment to reduce emissions?  It's the only thing I can think of.


----------



## Naked shorts

*Re: OIL AGAIN!*



MRC & Co said:


> Sheesh!  Is this oil sell-off a result of the G8 committment to reduce emissions?  It's the only thing I can think of.




I think deflation sentiment is coming back a little bit, Gold has fallen recently aswell


----------



## MRC & Co

*Re: OIL AGAIN!*



Naked shorts said:


> I think deflation sentiment is coming back a little bit, Gold has fallen recently aswell




Ah yes, sorry, I mean just the open of tonight in the pit.......


----------



## Trembling Hand

*Re: OIL AGAIN!*



MRC & Co said:


> Sheesh!  Is this oil sell-off a result of the G8 committment to reduce emissions?  It's the only thing I can think of.




Some good volume last night. As many contracts traded as on the 1st when the busting of the rouge trades took place.

Probably just the busting of the trades put on following the busting of the rouge trades which caused the false break. :


----------



## Uncle Festivus

*Re: OIL AGAIN!*



Trembling Hand said:


> Some good volume last night. As many contracts traded as on the 1st when the busting of the rouge trades took place.
> 
> Probably just the busting of the trades put on following the busting of the rouge trades which caused the false break. :




Is that like when some women with rosy cheeks get together and trade in a pack to manipulate the market?


----------



## Trembling Hand

*Re: OIL AGAIN!*



Uncle Festivus said:


> Is that like when some women with rosy cheeks get together and trade in a pack to manipulate the market?




yes they were trades that went very red.


----------



## MRC & Co

*Re: OIL AGAIN!*



Trembling Hand said:


> Some good volume last night. As many contracts traded as on the 1st when the busting of the rouge trades took place.
> 
> Probably just the busting of the trades put on following the busting of the rouge trades which caused the false break. :




ha ha, very cheeky TH!    I know, you know, what I know!  

But that rogue trader was a mini fish.

I really think this G8 sentiment and then subsequent 'action' or at least talk of and signatures, is affecting price right now.  Just saw China and India also came on board last night....


----------



## Smurf1976

*Re: OIL AGAIN!*



MRC & Co said:


> Sheesh!  Is this oil sell-off a result of the G8 committment to reduce emissions?  It's the only thing I can think of.



If emissions are cut then, strange though it may seem, oil prices ought to go up in the medium term rather than down.

Most emissions cuts would likely be from power generation, households, industry etc. That's coal and to some extent gas consumption, not oil.

But all the non-conventional oil production such as tar sands, shale, coal liquefaction etc becomes either far more expensive or off limits altogether if we're cutting emissions. That's most future supply sources...

So, a bit of a cut in demand but with China, India etc total consumption would almost certainly continue rising. Meanwhile new supply sources get hit hard, especially the big ones like tar sands.


----------



## MRC & Co

*Re: OIL AGAIN!*

Ah, interesting, thx Smurf.  Definately something to consider over the medium-term.  But I think short-term, this is just being driven by sentiment.....


----------



## sam76

*Re: OIL AGAIN!*

Time to buy that V12 according to this bloke


Verleger Predicts $20 Oil This Year on ‘Devastating’ Crude Glut 


By Grant Smith

July 16 (Bloomberg) -- Crude oil will collapse to $20 a barrel this year as the recession takes a deeper toll on fuel demand, according to academic and former U.S. government adviser Philip Verleger. 

A crude surplus of 100 million barrels of will accumulate by the end of the year, straining global storage capacity and sending prices to a seven-year low, said Verleger, who correctly predicted in 2007 that prices were set to exceed $100. Supply is outpacing demand by about 1 million barrels a day, he said. 

“The economic situation is not getting better,” Verleger, 64, a professor at the University of Calgary and head of consultant PKVerleger LLC, said in a telephone interview yesterday. “Global refinery runs are going to be much lower in the fall. If the recession continues and it’s a warm winter, it’s going to be devastating.” 

more here:
http://bloomberg.com/apps/news?pid=20601087&sid=auTu3RI8WC1A


----------



## gooner

*Re: OIL AGAIN!*



sam76 said:


> Time to buy that V12 according to this bloke
> 
> Verleger Predicts $20 Oil This Year on ‘Devastating’ Crude Glut




My share portfolio will be a small fraction of its current value if $20 oil comes to bear, as I only hold energy shares (oh and $1k each of GMG and MIG, in case of a SPP)

Always interesting to understand contrarian views. My positive confirmation bias is always very strong, so I genuinely make an effort to analyse other points of view. Always end up discounting them though.


----------



## Uncle Festivus

*Re: OIL AGAIN!*



gooner said:


> My share portfolio will be a small fraction of its current value if $20 oil comes to bear, as I only hold energy shares (oh and $1k each of GMG and MIG, in case of a SPP)
> 
> Always interesting to understand contrarian views. My positive confirmation bias is always very strong, so I genuinely make an effort to analyse other points of view. Always end up discounting them though.




I'm not sure there is any overwhelming sentiment that oil is going to rise substantially any time soon, at least the global trade figures and consumption don't support that view. It all very much depends when or if consumers start to consume again? Energy will always be the dampener of any sustained economic revival, maybe before it even starts by speculative pre-emptive bullishness?

What is positive confirmation bias? What is the reasoning behind your bullish view and the discounting of bearish views?


----------



## jonojpsg

*Re: OIL AGAIN!*



Uncle Festivus said:


> I'm not sure there is any overwhelming sentiment that oil is going to rise substantially any time soon, at least the global trade figures and consumption don't support that view. It all very much depends when or if consumers start to consume again? Energy will always be the dampener of any sustained economic revival, maybe before it even starts by speculative pre-emptive bullishness?
> 
> What is positive confirmation bias? What is the reasoning behind your bullish view and the discounting of bearish views?




I'm starting to think I agree Uncle  I was all set to ride the oil price back to $90-$100 but am thinking now that unless demand picks up that it will fall back somewhat.  Probably can't see $20 given the underlying costs of production would make OPEC cut back supply significantly if price did head back under $50 again.  

Oh well, just have to be patient and wait for signs of increasing demand - although stockpiles in US have been falling so...


----------



## MRC & Co

*Re: OIL AGAIN!*

CFTC apparently in the first of 3 meetings tonight, talking of their new report about banning some speculation (namely the carrying of too larger positions by Goldman Sachs and USO I believe).

The new report apparently states the report conducted last time (after the parabolic rise to 150 and the subsequent crash) was based upon mis-information.  Whereas the old report stated speculators were not to blame, the new one states they are (according to rumour).

I thought I remembered WayneL arguing that they are not to blame, but can't remember the line of argument.  

Anyone have any opinions on this?  Being a new trader of oil, I really hope it does not place any kind of restriction on commodity speculation, as it would definately cause a fall in both volume and volatility IMO.  

Thoughts?


----------



## Trembling Hand

*Re: OIL AGAIN!*

Any of you Texas tycoons get a runner on oil last night??

What was it 11%


----------



## MRC & Co

*Re: OIL AGAIN!*



Trembling Hand said:


> Any of you Texas tycoons get a runner on oil last night??
> 
> What was it 11%




I didn't trade last night unfortunately


----------



## Wysiwyg

*Re: OIL AGAIN!*

December Crude up 9 bucks in 8 days to US$78 per barrel. There will come a day when 100/bbl will be the base. Humans up = oil supply down.


----------



## jonojpsg

*Re: OIL AGAIN!*



Wysiwyg said:


> December Crude up 9 bucks in 8 days to US$78 per barrel. There will come a day when 100/bbl will be the base. Humans up = oil supply down.




Good call Wys!  There is no doubt that we will look back in a couple of years and shake our heads in disbelief that oil was $40 a barrel, or even $80.  Seriously, when you look at how ubiquitous the use of oil is and how intertwined with almost everything we do, it seems incredible that the majority stick their heads in the sand and say "no problems, we've got enough oil to last another 50 years at least"

With oil production peaking in 2005, it is ONLY the GFC and associated dip in demand that has prevented POO from staying well above $100.  Assuming demand growth returns, which is inevitable IMO, oil will become THE commodity to be in over the next five-ten years.  

How our society copes with loss of security of supply is another matter


----------



## WilliamKong

*Re: OIL AGAIN!*



jonojpsg said:


> I'm starting to think I agree Uncle  I was all set to ride the oil price back to $90-$100 but am thinking now that unless demand picks up that it will fall back somewhat.  Probably can't see $20 given the underlying costs of production would make OPEC cut back supply significantly if price did head back under $50 again.
> 
> Oh well, just have to be patient and wait for signs of increasing demand - although stockpiles in US have been falling so...




Yesterday Chinese Custom just published their monthly report, which stated that Chinese increased their monthly import of crude oil by 14%. This can be seen as an evidence that the demand is still there, and is likely to persist for sometime now.


----------



## basilio

*Re: OIL AGAIN!*

Have many forum members been following the recent discussions on the overstatement of world wide oil reserves by the International Energy Agency?

Has a couple of implications in terms 

1) Tightening of oil supplies in the near future and pressure on prices
2)  Pressure on all world economies as the energy base of our economies grinds downwards.




> Global oil supply 'far worse than admitted
> TERRY MACALISTER, LONDON
> November 11, 2009
> 
> Oil price forecast to rise
> 
> THE world is much closer to running out of oil than official estimates admit, says a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.
> 
> The senior official claims the United States has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oilfields while overplaying the chances of finding new reserves.
> 
> The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply, to be published overnight.
> 
> The outlook is used by many governments to help guide their energy and climate change policies.
> 
> In particular, the allegations cast a shadow on the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its present level of 83 million barrels a day to 105 million.
> 
> External critics have frequently said this cannot be substantiated by firm evidence and that the world has already passed its peak in oil production. Now the ''peak oil'' theory is gaining support at the heart of the global energy establishment.




http://www.theage.com.au/world/global-oil-supply-far-worse-than-admitted-20091110-i7gu.html

Also came across a quite astute analysis of why the rising price of oil may result in less investment in oil and more in the financial markets. 

Check it out.



> A Gesture from the Invisible Hand
> John Michael Greer,
> 
> The claim that market forces will inevitably take care of energy shortfalls due to peak oil is common enough these days. Unfortunately for such optimistic notions, there's reason to think that in an environment of economic contraction caused by geological limits to energy, market forces may well push money away from any investments that could help the situation





http://www.energybulletin.net/50678


----------



## Smurf1976

*Re: OIL AGAIN!*



basilio said:


> Have many forum members been following the recent discussions on the overstatement of world wide oil reserves by the International Energy Agency?



Those who have followed the oil debate have for many years argued that official reserves are overstated, that conclusion being based on the fact that the numbers just don't stack up.

That the IEA is admitting to this does suggest that they know that problems are (1) unavoidable and (2) not far away since otherwise they have no real reason to admit something like this now.


----------



## jonojpsg

*Re: OIL AGAIN!*

With an annual decline in production of 5% from all existing production, which I believe is reasonable based on figures from IEA and other research, this equates to about 4m bopd decrease each year.  

There is no way that new discoveries/production will be able to match this AND provide an extra 1-2m bopd each year to get to any stated target in the 100+mbopd range (IMO of course).

In which case, there is some serious .... going to hit the fan over the next few years as net importing countries face up to limited supply as well as a steadily, if not rapidly, increasing POO.


----------



## Largesse

*Re: OIL AGAIN!*

This may seem like an obvious question, but are we as Australian's net importers or exporters of Oil?


----------



## Wysiwyg

*Re: OIL AGAIN!*



Largesse said:


> This may seem like an obvious question, but are we as Australian's net importers or exporters of Oil?



Importers.


----------



## white_goodman

*Re: OIL AGAIN!*

ahh hmmmm


----------



## Wysiwyg

*Re: OIL AGAIN!*



jonojpsg said:


> With an annual decline in production of 5% from all existing production, which I believe is reasonable based on figures from IEA and other research, this equates to about 4m bopd decrease each year.
> 
> There is no way that new discoveries/production will be able to match this AND provide an extra 1-2m bopd each year to get to any stated target in the 100+mbopd range (IMO of course).
> 
> In which case, there is some serious .... going to hit the fan over the next few years as net importing countries face up to limited supply as well as a steadily, if not rapidly, increasing POO.



You may not have read this article. Brazil has deep offshore and they say Iraq will come into its own with increased future production. The war thing possibly avoided a dictator using oil as a bargaining chip when peak oil really peaks. Pumping more and more of what's known should speed that scenario up. Assuming we aren't being lied too so there is no panic.





> The Energy Report - 13 November 2009 -
> 
> Opec has 6m barrels a day (b/d) of spare capacity in store. Oil demand from OECD countries may have peaked in 2005. Crude oil stocks are sitting at record levels. Iraq aims to add another 4.5m b/d of production within five years. A host of new, large oilfields have been discovered in recent months. And governments will soon gather in Copenhagen to search for an agreement on cutting global emissions of greenhouse gases, with carbon-rich oil one of the culprits.
> 
> Despite all this, the peak-oil story is making front-page news again.


----------



## Whiskers

*Re: OIL AGAIN!*



white_goodman said:


> ahh hmmmm




I'll post an EW count on a chart again sometime, to support my view that POO may probe a bit higher into the $90.00's before sliding back again.

On Iraq, I believe a large contract was let recently to re-develop most of the fields shut down by the war.

Also, I suggest many forecasts of future demand may not factor in enough for savings in technological efficiencies in future consumption.


----------



## Smurf1976

*Re: OIL AGAIN!*



Largesse said:


> This may seem like an obvious question, but are we as Australian's net importers or exporters of Oil?



Net importer. Domestic production peaked early this decade and is now in decline due to depletion.


----------



## jonojpsg

*Re: OIL AGAIN!*



Wysiwyg said:


> You may not have read this article. Brazil has deep offshore and they say Iraq will come into its own with increased future production. The war thing possibly avoided a dictator using oil as a bargaining chip when peak oil really peaks. Pumping more and more of what's known should speed that scenario up. Assuming we aren't being lied too so there is no panic.





You may not have read these articles...basically we are being lied to 



> http://www.theoildrum.com/node/2470
> Depletion Levels in Ghawar
> Posted by Stuart Staniford on May 15, 2007 - 11:52am
> 
> In particular, Saudi oil production has been falling with increasing speeed since summer 2005, and overall, since mid 2004, about 2 million barrels of oil per day in production has gone missing (about 1mbpd in reduction in total production, and about another 1mbpd in that two major new projects, Qatif and Haradh III, failed to increase overall production).






> Cantarell, The Second Largest Oil Field in the World Is Dying
> by G.R. Morton
> 
> In 2004, the complex produced 2.136 million bbl/day which declined to 1.525 million by 2007. Production declines as the expanding gas cap intersects the well bores. Considering that the gas/oil contact is level across the field, many wells are affected simultaneously. Today the end is near with expectations that Cantarell will become uneconomic as early as 2014 and no later than 2019. The three field sub-complex Ku-Maloob-Zaap is expected to begin its terminal decline in 2010. All in all, especially with crude oil prices down sharply, the future looks grim for the complex.






> http://www.peakoil.net/headline-news/iea-whistleblower-says-peak-oil-nearing
> IEA ‘whistleblower’ says peak oil nearing
> Submitted by Mikael HÃ¶Ã¶k on Tue, 2009-11-10 15:49. Headline news
> The world is closer to a peak in oil supply than International Energy Agency estimates admit, UK newspaper The Guardian reported in today’s edition, citing an unidentified "whistleblower" at the IEA.
> 
> The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.
> 
> "Many inside the organisation believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further," the Guardian quoted the IEA source as saying.




OPEC may well say they have 6mbopd spare capacity, but with depletion of 5%, this will not be there by the end of 2011.  Iraq may well be able to bring 4mbopd online by 2015 but Cantarell is going to be pretty much down to a dribble by then.

If Brazil can bring more than 1mbopd online from their deep water over the next five years, I'll give you $100.

I tell you, we are up to our eyeballs in .... if we don't seriously start looking for alternatives NOW!


----------



## MRC & Co

*Re: OIL AGAIN!*

Long oil @ $77


----------



## cornnfedd

*Re: OIL AGAIN!*

Another stupid question - if the Oil price does rise which share prices could be affected on the ASX? If say oil went up to $85 per barrell would Woodside's share value increase for example?

or is it all irrelevant to Australian Companies?


----------



## Wysiwyg

*Re: OIL AGAIN!*

Excerpt from news article that might interest oil bugs in reference to the seriously out of proportion gas price and what Exxon's future direction is.



> Yesterday's big news in the commodities world was Exxon's $31 billion takeover of XTO Energy.
> 
> The acquisition is a big endorsement by the world's largest energy company. The majority of XTO's assets are U.S. shale gas properties. With the buyout, Exxon is essentially saying they see a big future in shale.
> 
> It's certainly true that shale gas is one of the biggest "new things" to come along in the energy space for some time.
> 
> However, there are a few factors that should give investors pause when they consider natural gas.
> 
> One of the chief considerations being the oil-to-gas price ratio. And its unusual effects on drilling costs.







cornnfedd said:


> Another stupid question - if the Oil price does rise which share prices could be affected on the ASX? If say oil went up to $85 per barrell would Woodside's share value increase for example?
> 
> or is it all irrelevant to Australian Companies?



I don't know the answer to that one. Some rally, some don't.


----------



## Smurf1976

*Re: OIL AGAIN!*



jonojpsg said:


> You may not have read these articles...basically we are being lied to



That is essentially what many have been saying for years now. 

OPEC figures are fudged, "reserve" figures seeming to be total oil discovered to date, not that which remains. 

And the oil that exists in places such as Venezuela, Iraq etc, and that is a very large portion of the undeveloped known oil fields globally, aren't likely to be developed for political reasons, at least not at anything approaching present oil prices.

Meanwhile true underlying oil demand continues to soar as China, India etc industrialise. Almost as soon as there's significant growth in Western economies as the economic slump ends, we'll slam straight into the ceiling imposed by oil production capacity.


----------



## jonojpsg

*Re: OIL AGAIN!*

To be honest and add some balance to my view, I did read an article the ohter day re Iraq's fields being let out to Shell etc and they were putting forward figures of up to 12m bopd from current 2.5m bopd by 2015.  

Obviously if that happened there would be a lot less pressure on the supply side, although if major fields are declining at 5% (and assuming the majors supply 40% of our oil) then we are losing 2% of supply a year which is 1.7m bopd lost each year.  By 2015 that equates to 8.5m bopd which pretty much negates Iraq's extra capacity.


----------



## Smurf1976

*Re: OIL AGAIN!*

In a technical sense, I've no doubt that Iraq and others (most obviously Canada and Venezuela) can certainly ramp up oil production to a considerable extent and offset declines elsewhere.

But taking the pragmatic approach, just how likely is that to actually happen in the timeframe it's needed (ie when the recession ends)? 

It would seem to be a monumental task in itself even if the political issues weren't there. But all three of those countries are subject to political issues (mostly environmental ones in the case of Canada) that are likely to delay if not outright cancel such developments in my opinion.

One thing's reasonably certain though and that is that we will find out whether or not oil is going to be a problem in the not too distant future. This is no longer in the "30 years away" category, it's as soon as the economy (globally) simply recovers to where it was 18 months ago. How long that will take is anyone's guess, but I'd be thinking of perhaps two or three years, not two or three decades.


----------



## condog

*Re: OIL AGAIN!*

My money is on oil largely trading between $75 - $90 in the medium term but volatility and instability pushing it outside those zones...

In stable circumstances , anything above $90 opens too many new opportunities for prodction for it to stay there long term ....


----------



## pacestick

*Re: OIL AGAIN!*

Looking ahead in 2010 there appears to be the possibility of trouble with supplies from the middle east as the west moves to put sanctions on iran 
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/29/AR2009122903415.html

Iran although a large oil producer is a importer of refined product. However cocnsistent with stratfor analysisis  it may be  that the administrations reluctance to impose sanctions on refined product may be related to russia having a large  border with iran and being quite willing to sell refined product to the iranians if only to annoy the americans and tie down us resources  that would otherwise be used in the new nato members sucha s poland on russias borders .
If the iranians counter a sanctions move with limited military activity they have the ability courtesy of some russian equipment including  relativly modern mines to seriously disrupt shipping through the straits of hormuz
This would leave the pipleline from iraq through turkey and the second across saudi territory  as the main conduits  for mid east oil exports 
I dont know how much they carry but presumably not enough to replace the supertankers  sailing out of the gulf


----------



## ectoplasm

*Re: OIL AGAIN!*

Hi pacestick

Looks like oil's recent consolidation (since early november) is finishing: has broken out from the flag and may just test support before moving higher.

Daily WTIC Chart:


----------



## Naked shorts

*Re: OIL AGAIN!*

anyone get caught out by that 5% move?

http://ftalphaville.ft.com/blog/2010/02/05/143216/wti-friday-meltdown/

Rumor was it was some fund liquidating a large position... This I don't believe, who the hell would cause so much pain to their own account if they were in trouble.. Im looking to go short from here..


----------



## jonojpsg

*Re: OIL AGAIN!*



Naked shorts said:


> anyone get caught out by that 5% move?
> 
> http://ftalphaville.ft.com/blog/2010/02/05/143216/wti-friday-meltdown/
> 
> Rumor was it was some fund liquidating a large position... This I don't believe, who the hell would cause so much pain to their own account if they were in trouble.. Im looking to go short from here..




Nuh, I'm long.  Seems to me like there's going to be increasing demand, at least from everywhere except the PIGS, but hey they can't use much of the stuff anyway can they?  With Chindia churning out more cars per year now than just about the rest of the world, even with a percentage of those electric, demand has got to increase IMO.  

Don't get me started on the supply side, I'm a firm holder of the Peak Oil hypothesis with peak supply being 2005 and it ain't gonna be topped.


----------



## Atlas79

*Re: OIL AGAIN!*

I'd like to suggest some hypothetical situations:

-war breaks out, Venezuala vs Columbia

-Iran is hit by certain concerned folk eager to halt the nuclear program, potential hotspots in the M.E. igniting

-Russia/Ukraine go at it

If one or all of these happens, what are the implications for our oil companies here in Aus?


----------



## basilio

*Re: OIL AGAIN!*

Re: OIL AGAIN!


> I'd like to suggest some hypothetical situations:
> 
> -war breaks out, Venezuala vs Columbia
> 
> -Iran is hit by certain concerned folk eager to halt the nuclear program, potential hotspots in the M.E. igniting
> 
> -Russia/Ukraine go at it
> 
> If one or all of these happens, what are the implications for our oil companies here in Aus?




They would rub there hands with glee, scoop up the lube and.....  well, we would certainly feel it..

Your quite right.  These are all major  oil suppliers in what is still a very tight market with almost no extra swing capacity left. Supply constraints would lead to immediate jumps in price with very little capacity to increase local supply. Let's not think about it shall we ? arn't there enough problems already ?


----------



## Wysiwyg

*Re: OIL AGAIN!*



jonojpsg said:


> With Chindia churning out more cars per year now than just about the rest of the world, even with a percentage of those electric, demand has got to increase IMO.
> 
> Don't get me started on the supply side, I'm a firm holder of the Peak Oil hypothesis with peak supply being 2005 and it ain't gonna be topped.




Burgeoning demand and depleting supplies. Yep, makes sense to me. At what price per bbl do you think a western country's economy would start to go into decline? US$140 - $150 was a tough price at the filling station. 

Loved those Mad Max movies. Guzzolene, MFP, V8 Interceptors etc. etc.


----------



## Whiskers

*Re: OIL AGAIN!*

Time for a quick  revisit.



Whiskers said:


> I'll post an EW count on a chart again sometime, to support my view that POO may probe a bit higher into the $90.00's before sliding back again.
> 
> On Iraq, I believe a large contract was let recently to re-develop most of the fields shut down by the war.
> 
> Also, I suggest many forecasts of future demand may not factor in enough for savings in technological efficiencies in future consumption.




Anyone else think it's run out of steam and headed back to the low 60's?


----------



## Uncle Festivus

*Re: OIL AGAIN!*



Whiskers said:


> Time for a quick revisit.
> Anyone else think it's run out of steam and headed back to the low 60's?




After 12 months of global recovery and one of the most severe Northern Hemisphere winters - and the best it could do was pop it's head above 80 for a while?? Net US import of petroleum is down 9% YOY - that's the demand side of the equation. Let's see if 73 support holds, although there could be one more upside test of 83 before short? (Light Crude Futs)


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> After 12 months of global recovery and one of the most severe Northern Hemisphere winters - and the best it could do was pop it's head above 80 for a while?? Net US import of petroleum is down 9% YOY - that's the demand side of the equation. Let's see if 73 support holds, although there could be one more upside test of 83 before short? (Light Crude Futs)



I don't have a link handy, but the production charts I've seen show that production is back up to the pre-GFC plateau levels. So either stockpiles are building up somewhere (?) or demand must also be at those levels. Time will tell...


----------



## Uncle Festivus

*Re: OIL AGAIN!*

I think the next few weeks heading into April will be crunch time for a lot of indexs as the 'recovery' momentum has been tapering off a bit? Oil has to break 83 or be channel bound again? The FTSE is way overbought again so oil may get dragged back down when it corrects too?


----------



## leedskalnin

*Re: OIL AGAIN!*

is this a joke , the boys down at CME will be loving this provided it is actual live footage and not 15 different camera's pre recorded. Thanks rep Markey , Im gonna get my popcorn and fried chicken out.
http://www.bp.com/liveassets/bp_int...local_assets/bp_homepage/html/rov_stream.html


----------



## Smurf1976

*Re: OIL AGAIN!*



Uncle Festivus said:


> After 12 months of global recovery and one of the most severe Northern Hemisphere winters - and the best it could do was pop it's head above 80 for a while??



A price at half that level would have been considered outrageously expensive just a few years ago. If the end result of a worldwide economic slowdown is that we still have oil at incredibly high prices by historic standards, then that sounds awfully like there's a fundamental supply problem ahead to me...


----------



## Aussiejeff

*Re: OIL AGAIN!*



Smurf1976 said:


> A price at half that level would have been considered outrageously expensive just a few years ago. *If the end result of a worldwide economic slowdown is that we still have oil at incredibly high prices by historic standards, then that sounds awfully like there's a fundamental supply problem ahead to me...*




Indeed.

For sure, the POO will rise again.

Just like BP's mud / oil mix.....
http://www.bp.com/liveassets/bp_int...local_assets/bp_homepage/html/rov_stream.html


----------



## jonojpsg

*Re: OIL AGAIN!*



Smurf1976 said:


> A price at half that level would have been considered outrageously expensive just a few years ago. If the end result of a worldwide economic slowdown is that we still have oil at incredibly high prices by historic standards, then that sounds awfully like there's a fundamental supply problem ahead to me...




I'm with you smurf!  The graph attached shows pretty damn clearly where we're at now and IMHO there is only one way from here.  My BIG concern continues to be Australia's response to the threat of limited oil supply from our current importers:

		Production (bpd)	Consumption (bpd)
Vietnam    	314k			288k
Malaysia	             727k			547k
Indonesia	             1051k			1159k
UAE		3046k			463k
PNG		38k			33k

Looking at these 2008 figures, and given that our net imports are at about 500kbpd, methinks we are in the .... to say the least.  While UAE has truckloads of excess, I'm sure there are plenty of other countries knocking on their door asking for a few k barrels a day more!!  I have yet to see any concrete actions from the Feds on this issue and expect that they are probably sticking their heads in the sand

My prediction is that POO will go above $100 within six months and stay there


----------



## Wysiwyg

*Re: OIL AGAIN!*

Yes the (more) machines still need oil.




jonojpsg said:


> My BIG concern continues to be Australia's response to the threat of limited oil supply from our current importers:




Wondering where this threat exists exactly? Was it a news article or something?


----------



## jonojpsg

*Re: OIL AGAIN!*



Wysiwyg said:


> Yes the (more) machines still need oil.
> 
> 
> 
> 
> Wondering where this threat exists exactly? Was it a news article or something?




The threat exists in the numbers Wys, not in any news article...well except this one  If the countries we import oil from have decreasing net balances of oil available to export then the logical conclusion is that there will be decreasing amounts of oil for us to import.  On the figures in my last post, it's only UAE that's keeping us above water, although I don't have exact or official data to back that up.

Regardless, there is little doubt that peak oil supply has occurred and that from here there will be an increasing gap between demand and supply.  The fact that we are in the transition phase where supply appears to be matching demand is just maintaining the false sense of security that the world has held on to for the last few years IMO.


----------



## Smurf1976

*Re: OIL AGAIN!*



jonojpsg said:


> The threat exists in the numbers Wys, not in any news article...well except this one  If the countries we import oil from have decreasing net balances of oil available to export then the logical conclusion is that there will be decreasing amounts of oil for us to import.  On the figures in my last post, it's only UAE that's keeping us above water, although I don't have exact or official data to back that up.



Agreed with what you're saying.

An example of how this works for those not familiar with the concept.

Country x produces 3 million barrels per day in 2010 and uses 1 million bpd itself, leaving 2 million bpd for export. However, this country has a rapidly growing economy...

In 2020 country x's production has dropped to 2.5 million bpd due to natural field decline. Internal consumption meanwhile has increased to 2.0 million bpd, a 7% annual growth rate.

The end result of this example is that exports from country x drop from 2.0 million bpd in 2010 to just 0.5 million bpd in 2020. Now, for those countries (such as Australia) that need to import oil... well let's just say they've got a problem!

The figures are hypothetical, but there are plenty of countries in essentially that situation. Falling production and rising consumption thus rapidly cutting exports. Mexico and the UK are classic examples - production dropped and exports didn't just drop, they came to an outright halt as internal demand soaked up domestic production. Even Saudi Arabia has the same situation of surging demand whilst production is stagnant.

I don't have the exact details of the plant in question, but there's a power station under construction in the Middle East that will consume fully 300,000 barrels per day when in operation. That alone is a scary thought and it's going to happen - every drop it burns is a drop less available to the rest of the world. (In case you're wondering why they're burning oil to generate power, it's because they can't produce enough gas without causing pressure problems in the oilfields and they have no significant coal or hydro).

Some will argue that markets will allocate resources to the highest bidder and that we will always be able to obtain oil at a price. Sounds good in theory but it hasn't historically worked in practice - just ask Americans trying to buy gasoline or Germans trying to buy heating oil in the 1970's when adequate supply wasn't physically available at _any_ price. 

Closer to home, BHP had a lot of trouble getting heavy fuel oil back then (they ended up burning some tar / pitch muck to keep running...). The electricity industry (and don't forget that at that time this was part of government) also had problems. Now, if BHP (which is itself an oil producer, though not of sufficiently heavy oil to meet their requirements at the time) and state governments can't get supplies, then there's not much hope for anyone else if we find ourselves in that situation again.

Or to put it another way, suppose that someone goes to the Victorian (for example) government and offers to buy up all of Melbourne's water supply at market prices. Do you honestly think they will be able to buy it? Or do you think that Melbourne will keep the water for it's own use first, only selling any that is surplus to requirements? My bet is firmly with the latter.

Free trade works nicely until there's a shortage, at which point "look after your own" becomes the order of the day. That's the lesson of history where critical resources are concerned.

Bottom line is the Arabs etc won't be walking or sitting in the dark just because someone offered a good price for the oil. Nope, they'll only sell what is surplus to their own (rapidly increasing) needs. And that means they'll be selling quite a bit less than they do now, a problem for those hoping to import the stuff.


----------



## Wysiwyg

*Re: OIL AGAIN!*



jonojpsg said:


> The threat exists in the numbers Wys, not in any news article...well except this one



Okay thanks. I couldn't find more recent figures on the net but in the short term ...



> *Debt crisis will cut global oil demand*
> 
> By Francisco Blanch , Financial Times, 25 May 2010
> 
> Europe's sovereign debt crisis is likely to translate into a slowdown in global demand for oil this year – and lower prices, says Francisco Blanch, head of commodities research at Bank of America-Merrill Lynch.



While America picks up demand maybe?

================

Producing countries open up new fields while old fields deplete but this obviously can't continue eternally; feeding a global expansion to accommodate the human psyches desire for more. Hard to see what the powers are working toward in the longer term. Still a strong push toward greater fossil fuel consumption along with the reawakening of renewable energies. Certainly no hurry according to the powers that be. 

With such vast supposed human intelligence, there is a distinct lack of forward thinking. The government says, "more bridges, more tunnels, more roads, more buildings, more dams, more electricity, more industry". You see, they are human beings just like you and I.


----------



## Smurf1976

*Re: OIL AGAIN!*



Wysiwyg said:


> Producing countries open up new fields while old fields deplete but this obviously can't continue eternally; feeding a global expansion to accommodate the human psyches desire for more. Hard to see what the powers are working toward in the longer term. Still a strong push toward greater fossil fuel consumption along with the reawakening of renewable energies. Certainly no hurry according to the powers that be.
> 
> With such vast supposed human intelligence, there is a distinct lack of forward thinking. The government says, "more bridges, more tunnels, more roads, more buildings, more dams, more electricity, more industry". You see, they are human beings just like you and I.



Let's look at a few fundamentals...

1. Assuming that you don't believe OPEC's "political" reserve figures that just happened to all double in the 1980's and have remained exactly constant ever since, oil discovery (globally) peaked in the 1960's and has been running below the rate of consumption for about the past 25 years.

2. Tar sands (Canada), natural bitumen (Venezuela), coal liquefaction (eg Linc Energy's proposed operations in Australia), ethanol, GTL (Gas To Liquids - totally different to LNG, GTL produces diesel, petrol etc), the various attempts at oil shale and so on all fundamentally have one thing in common - they are an attempt to effectively manufacture light sweet crude oil from some more abundant resource.

3. If there was plenty of oil available, anywhere, then nobody would bother with any of the things listed in point 2 above beyond perhaps proving technologies and patenting them for possible future use. You don't set up an ice making plant in Antarctica, you don't try and make sand in the desert and you don't spend $ billions on highly risky ventures to make oil if you have the alternative of simply drilling a hole and watching it come out of the ground.

4. As light sweet crude oil runs short, refineries have been forced to accept heavy, sour oil which is far more costly to process into products such as petrol (and which many refineries can't process at all). 

5. Oil has priced itself out of virtually every discretionary market. At one point it was widely used for power generation, industrial boilers, space heating in houses etc but not anymore. As prices have risen, we've switched practically every possible use to something else (gas etc) - and once that was finished prices rose once more.

On the basis of the above and other anecdotal evidence I see all around, I conclude that oil is a _relatively_ scarce resource in relation to present and likely future consumption. Prices are sitting at around 4 times historic levels, production from conventional sources has declined and the growth in unconventional sources has been barely sufficient to maintain any growth at all in total production. That sounds awfully like we're somewhere in the ballpark of peak oil.

The fundamental problem however really comes down to the finanical system and its' requirement for constant growth regardless of the consequences.

I've made this point before but I still think it's a very valid one. We've already faced this constant growth dilemma in a few areas, most notable in the Australian context being energy production in Tasmania and water in the the Murray. 

All those big resource use debates come down to one fundamental point - anyone, on either side, who has done the math realises that a point is reached, generally when about half the total resource has been developed, then a fundamental dilemma arises. Either we develop all that remains virtually overnight so as to prolong growth by another 10 years, at which point an abrupt end to growth must occur since no undeveloped resources remain, or we pull the plug on constant growth now and try to effect some sort of orderly transition. 

That is what happened with the controversial woodchip industry. That is absolutely what the Franklin River debate was about. That is what's happened with water in the Murray. That is what is very fast approaching in many other areas.

The whole world is staring down the barrel of essentially the same dilemma, albeit involving a different resource. We've maxed out conventional crude oil, we've maxed out condensates, we've gone perhaps a bit too far offshore, we're turning human food into fuel for cars and now we've started messing about with all sorts of heavy hydrocarbons as well. 

So either we really are going to drill Antarctica etc, or this is it, the game is essentially over. The turning point is basically now. Either we're going to trash everything that is left, in order to prolong the inevitable perhaps another decade, or we're going to end constant growth.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> Let's look at a few fundamentals...
> 
> 
> 4. As light sweet crude oil runs short, refineries have been forced to accept heavy, sour oil which is far more costly to process into products such as petrol (and which many refineries can't process at all).
> 
> 5. Oil has priced itself out of virtually every discretionary market. At one point it was widely used for power generation, industrial boilers, space heating in houses etc but not anymore. As prices have risen, we've switched practically every possible use to something else (gas etc) - and once that was finished prices rose once more.



As always your posts show you think for yourself. I thought the cost of drilling a well to be inhibitive so looked up some present time figures. These offshore figures would price out all but the major oil companies which only target large pools. Meanwhile the small capitalised oilers siphon what they can regardless.  

Quote Begin.

With *deepwater drilling rig rates in 2010 of around $420,000/day*, and similar additional spread costs, a deep water well of duration of 100 days can cost around US$100 million.

With *high performance jack up rig rates in 2010 of around $150,000*, and similar service costs, a high pressure, high temperature well of duration 100 days can cost about US$30 million.

Onshore wells can be considerably cheaper, particularly if the field is at a shallow depth, where costs range from less than $1 million to $15 million for deep and difficult wells. 

Quote End.

Those rates are hefty and could only be justified with a substantial resource target. Leaving only the Majors, whom I assume would have their own rigs, to take the larger pools.     



> The fundamental problem however really comes down to the finanical system and its' requirement for constant growth regardless of the consequences.
> 
> So either we really are going to drill Antarctica etc, or this is it, *the game is* *essentially over*. The turning point is basically now. Either we're going to trash everything that is left, in order to prolong the inevitable perhaps another decade, or we're going to end constant growth.



So there can't be world economic growth without increasing oil consumption rates. China and to a lesser extent India are creating a huge dependence on oil for themselves. Motor vehicle sales figures are breaking records. The industries to employ these people that have entered the high consumer cycle (like America) have been created and will need to be maintained. They have built huge underground holding tanks for oil. Where is their wisdom and foresight if oil supply can't be maintained? Such a paradox.


----------



## Knobby22

*Re: OIL AGAIN!*

The only way is up but the Aussie companies produce gas mainly.

I know a few of them are doing wildcat wells overseas hoping for better but it is really hard to pick a way to get on board.

I hold Woodside Nexus Amadeaus and AWe.


----------



## jonojpsg

*Re: OIL AGAIN!*



Knobby22 said:


> The only way is up but the Aussie companies produce gas mainly.
> 
> I know a few of them are doing wildcat wells overseas hoping for better but it is really hard to pick a way to get on board.
> 
> I hold Woodside Nexus Amadeaus and AWe.




That's why I'm trying to get my hands on a list of ASX listed oil companies and their production/reserve figures...anyone got one or know where I can get one?

For mine, I'm holding Nido and hoping they can hit a billion with Gindara in the next year or two


----------



## Smurf1976

*Re: OIL AGAIN!*



Wysiwyg said:


> So there can't be world economic growth without increasing oil consumption rates. China and to a lesser extent India are creating a huge dependence on oil for themselves. Motor vehicle sales figures are breaking records. The industries to employ these people that have entered the high consumer cycle (like America) have been created and will need to be maintained. They have built huge underground holding tanks for oil. Where is their wisdom and foresight if oil supply can't be maintained? Such a paradox.



The link between energy and _real _economic growth (as distinct from speculation etc which doesn't actually produce real wealth and which would appear to consume little energy) is fairly solid. There will be efficiency improvements over time, but if we make more things then ultimately we'll be using more materials to do it.

Also there's a huge paradox with efficiency. Install a heat pump for heating and then people leave it running 24/7 (very common in practice). Switch to energy saving lights, then they get left on a lot more than the old lights were. Double the efficiency of an engine, then consumers and car manufacturers will decide to (a) have engines twice as big (b) have more cars and (c) drive their cars further. That's pretty much the lesson of history - resource consumption goes up despite improvements in efficiency. Look what happened when TV's became more efficient. Use 30% less energy for the same size screen maybe, but when you end up with a screen that's 3 times as big that's still a doubling of energy consumption and that's exactly what has to a large extent happened.

The link between oil and economic activity isn't absolute, but since oil fuels most transport it's pretty strong. Make more things and they'll need to be transported which will use oil.

As for what happens with China, that's going to be interesting to say the least. But I do note that even the more extreme optimists aren't predicting a doubling of oil production as would be necessary if China were to attain US per capita oil consumption levels.

I do note however that China has a key advantage in that whilst they are urbanising and developing, they are doing so in a world where oil isn't overly cheap and (presumably) in the knowledge that problems likely lie ahead. They're building an economy that works with $80+ oil whereas the USA (as the largest but not only example) has an economy based upon $20 oil. That pattern of development, plus China's very heavy reliance on coal and to some extent hydro for their non-transport energy, is very much in China's favour. The US is in economic trouble with oil at $80 whereas it would need to be somewhat higher to meaningfully hurt China. 

In terms of physical supply, with China doing deals with Saudi Arabia, Venezuela etc they are certainly taking steps to secure supplies. Such action, effectively taking oil off freely traded spot markets and locking it up under long term deals, pushes the rest of the world further down the "no oil at any price" track that has already been mentioned. That's the scary bit, and that's what seems to be actually happening.


----------



## Agentm

*Re: OIL AGAIN!*

US oil reserves in crude and petroleum products are at a 27 year high

1.13 billion is a pretty high number

a while back, the US had 1.12 billion barrels in July 2009, and then the price per-barrel was $10 lower than today

eventually oil must follow fundamentals imho.. currently it is not.

any attack by israel in the near term will be a save for the price imho


----------



## Mr Z

*Re: OIL AGAIN!*

Its an odd situation really, the US cannot export oil from its system so when they slow inventory builds. Then their markets tends to go short oil and pressure the price, in the mean time Asia is trucking along fine with consumption. Its a weird tension in the oil market, when the US was the totally undisputed king pin it worked just fine. Now they are going soft and Asia is rising its a bit deceiving having US traders dominate commodities trading so much. They often make very myopic calls IMO but might has right so at least in the short term they are a self fulfilling prophecy. I get the feeling that something has to change in the way these things are traded. LOL... quotes in Chinese...oi vey!


----------



## Smurf1976

*Re: OIL AGAIN!*



Mr Z said:


> Its an odd situation really, the US cannot export oil from its system so when they slow inventory builds.



They can export at least small amounts that I'm sure of. Australia, specifically Tasmania, used to import heavy fuel oil from the US (albeit in fairly small 33,000 tonne tanker loads).  No doubt others were doing the same thing (presumably).

But they certainly could achieve the same effect by simply reducing imports given that imports are a major source of supply into the US oil distribution system.


----------



## Mr Z

*Re: OIL AGAIN!*

The WTIC contracts delivery point is Cushing so they look at inventory there. When Cushing backs up due to domestic slow down there is no means of getting the oil (at least with any degree of ease) to export markets where there may be an arbitrage opportunity. Once the build up  occurs it tends to drive WTIC lower, which unduly influences many other parts of the industry. It is a recognized problem and was a part of the dynamic that crashed oil to the 30's. The  WTIC contract is not as representative of world demand as it once was and it would seem it needs to change. Its become an odd situation, anyway US inventory builds talked about are Cushing and may or may not be that representative of the global state of play. Once it was gospel...

Anyway... thats what I was referring too, mostly they have a one way system... in. I guess when you use 25% of world supply you don't spend alot on export facilities, although I am sure they could move some oil if required, its just not the norm for most of these guys.

2c


----------



## Mickel

*Re: OIL AGAIN!*

Interesting article in Time Magazine (Aug 23) by Michael Mandelbaum
proposing reducing US's comsumption of oil as a part of a Foreign Policy to reduce the importance of the Middle East.

It summarises with - 
"Reducing oil consumption by raising the gasoline tax would once again make the U.S. a resolute and effective global leader. Unlike the Administration's fall diplomatic initiatives, it would not require the cooperation of the governments or people of other countries. Most important of all, as a strategy for shielding Americans from the dangers of the Middle East, it would certainly succeed."

Mandelbaum's new book, The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era, from which this essay is adapted, was just published by PublicAffairs.

http://time-px.rtrk.com.au/time/world/article/0,8599,2009895,00.html


----------



## Agentm

*Re: OIL AGAIN!*

Jonathan Barratt was reported in the sydney morning herald  saying he thinks $70 to $68  is the next spot in the near term


i tend to think he is right

there is a lot of speculators that have thought oil would rise and have now decided to sell out.. nothing in the US is inspiring the oil price atm..

1.13 billion barrels and increasing is a heck of a lot of excess oil imho.. could run down some what more than that..


----------



## Sdajii

*Re: OIL AGAIN!*

With China, India and just about everyone increasing their oil consumption, and the USA currently importing far more than they consume, global consumption could (will) make those reserves look insignificant in a few years. Short term it's difficult to predict. Medium term I fail to see how anyone could be anything but bullish on oil. I hope the wells are mothballed in the short term! I'll buy up big and cheap in the short term and buy that mansion in the soon after. I'm not optimistic about that big an oil crash, so I'll maintain a substantial holding regardless. Very big global changes are on the way... says Sdaji anyway.


----------



## Mr Z

*Re: OIL AGAIN!*

I guess the point is in Asian terms that stock build up means little and says little about their consumption.

I think its around a weeks supply for the US, nothing huge really. Oil, the numbers are mind boggling


----------



## Mr Z

*Re: OIL AGAIN!*



Mickel said:


> Reducing oil consumption by raising the gasoline tax would once again make the U.S. a resolute and effective global leader.




Yeah but in what time frame, first up it would be a slap in the chops to a fragile population and would set them back until they adjusted. It would be a brave ex-president that pulled that stunt IMO. In the long run maybe its a good thing but it should have been done in strong economic times.


----------



## Agentm

*Re: OIL AGAIN!*



Mr Z said:


> I guess the point is in Asian terms that stock build up means little and says little about their consumption.
> 
> I think its around a weeks supply for the US, nothing huge really. Oil, the numbers are mind boggling




wow.. thats really well researched...  one week!!!  is that with or without the spr?    i thought the minimum spr was for 60 days to protect the US economy??

man thats really churning some huge oil dont you think??

the SPR for the US is 727 million barrels.. and thats about 60 days of oil reserves..

having 1.13 billion barrels of oil is equivalent to nearly 90 plus days or 3 months of supply according to my calculations..

can you let me know where your figures are coming from ?

the 1.13 billion is climbing every week and the real issue is who is going to use the oil now the economy is slowing and the busy period of oil is drawing past its close and it slows down traditionally?

i am hearing the levels are at record highs, not seen since 1990??

fundamentally the price of oil should be in the $30 range if it was not interfered with


----------



## Sdajii

*Re: OIL AGAIN!*



Agentm said:


> fundamentally the price of oil should be in the $30 range if it was not interfered with




That would make sense, assuming we had unlimited resources to tap. Unfortunately, oil is going to run out. Do you think oil is going to keep a stable price right up to the point where it becomes unavailable? Perhaps the reason oil is more than $30 per barrel is the fact that there isn't all that much left in the world. If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.

That's my take anyway.


----------



## Mr Z

*Re: OIL AGAIN!*



Agentm said:


> wow.. thats really well researched...  one week!!!  is that with or without the spr?    i thought the minimum spr was for 60 days to protect the US economy??
> 
> man thats really churning some huge oil dont you think??
> 
> the SPR for the US is 727 million barrels.. and thats about 60 days of oil reserves..
> 
> having 1.13 billion barrels of oil is equivalent to nearly 90 plus days or 3 months of supply according to my calculations..
> 
> can you let me know where your figures are coming from ?
> 
> the 1.13 billion is climbing every week and the real issue is who is going to use the oil now the economy is slowing and the busy period of oil is drawing past its close and it slows down traditionally?
> 
> i am hearing the levels are at record highs, not seen since 1990??
> 
> fundamentally the price of oil should be in the $30 range if it was not interfered with




LOL sorry, missed zero on the calculator!   Poo happens! Don't go the throat quite that readily dude. I was using around 21 million a day consumption so that would be 53 days... that sounds better! I thought a week sounded low, teach me to hurry eh? but we are not all perfect. No that is using the 1.13, which by the way they don't measure... they computer model it based on all the other numbers they get in. Some argue that its easily manipulated... conspiracy and all that. I dunno what to think about that one!

No way 727 is 60 days, that infers 12 million a day.... maybe with rationing in an emergency but not normal numbers.

That last statement is a big one! Why $30?

Man $30 would shut in a heap of capacity... I just can't see that being true.


----------



## Mr Z

*Re: OIL AGAIN!*



Sdajii said:


> If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.




If that happened Saudi Arabia would become a failed state, their expenditure requires oil up around where it is (surprise, surprise?!) to support their welfare state and all the rest. People often think of oil in pure supply demand terms but many countries that rely on oil income are in a similar boat. For a while the lower the price the more they have to pump... then beyond a certain point the whole things stops working and that (according to some) will cause bigger issues. Saudi is full of frustrated, bored, social welfare dependent youth... look at youtube search Saudi Drifting... yikes!  Anyway... cut back the welfare and they reckon the whole thing would get very snaky. The Saudi family all have bolt holes in Europe, they know when the oil ends the place stops working! It is not a slow decline to the end there is a drop off point... due to social factors not physical... well currently that appears to be the case, unless they develop more strings to the bow... which they are doing but it all seems to be around oil. These days they are talking conservation for 'the kids', some say its because they just can't pump harder. The terrifying thing is only they know and they lie to us about reserves... we know that much. Oil... its an odd situation for such a vital supply.


----------



## Agentm

*Re: OIL AGAIN!*



Sdajii said:


> That would make sense, assuming we had unlimited resources to tap. Unfortunately, oil is going to run out. Do you think oil is going to keep a stable price right up to the point where it becomes unavailable? Perhaps the reason oil is more than $30 per barrel is the fact that there isn't all that much left in the world. If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.
> 
> That's my take anyway.




i follow cameron hanover a lot, and posted up another oil thread that i cannot find anymore in the forum a while back his views on $30 oil, and very easily, if the oil price was based on fundamentals alone as it used to be, then $30 oil is where we would be right now.

i agree if the US had demand for more, then the price would go up.. but even today, despite the massive money on the oil going up, the price has gone from $84 to $73 in a week or so,  and right now they are selling again, as the oil reserves are increasing at alarming rates.

i saw that the arab friends were dropping their rates to asia also, a reaction to their slowdown as well.




Mr Z said:


> LOL sorry, missed zero on the calculator!   Poo happens! Don't go the throat quite that readily dude. I was using around 21 million a day consumption so that would be 53 days... that sounds better! I thought a week sounded low, teach me to hurry eh? but we are not all perfect. No that is using the 1.13, which by the way they don't measure... they computer model it based on all the other numbers they get in. Some argue that its easily manipulated... conspiracy and all that. I dunno what to think about that one!
> 
> No way 727 is 60 days, that infers 12 million a day.... maybe with rationing in an emergency but not normal numbers.
> 
> That last statement is a big one! Why $30?
> 
> Man $30 would shut in a heap of capacity... I just can't see that being true.





$30 is the figure it should be based on the fundamentals, we had $30 oil a while back with far less in way of reserves. but as you know, there is no such thing as fundamentals in the US markets atm, but in the oil sector, its starting to lean towards it as these reserves . 1.13 billion, are increasing still more and more... as one commentator said, "what on earth are we going to do with all this oil?"

3 hindenburg omens in one week, very very reminiscent of the numbers in the previous gfc..

$74 looks a tad rich to many, and thats why its selling, i expect big drops in very short periods ahead myself.


----------



## Mr Z

*Re: OIL AGAIN!*

Where are you getting your reserve numbers from? There is no way we have more in terms of light sweet crude. We have good unconventional sources but the majority of them don't work at $30. We also have no real idea what opec have because they play political games internally. The more reserve you have under opec rules the more you can pump. They all want the freedom to pump what they need when they need so they NEVER report any draw down and always tend to creep up BUT IT IS NOT REAL! Fact is we have not got a clue about the real state of reserves. We have some good guesses based on 1950's geological work in the ME but that is about it.

On the flipside we could double all known reserves tomorrow and the exponential growth in Asia will chew through it in a couple of decades! There is no way we have enough oil at any where near $30 to keep that beast happy... in fact we don't have enough supply for a heck of a lot longer without new and hopefully fully renewable supplies of energy.

Once you get past half reserve the flow rate starts to slow its growth (stops growing), the price starts to rise and it starts to pressure us into new sources of energy. We are there, at around halfway... the pressure is building, by 2014 we should be at uncomfortable oil prices and hopefully doing a heap more about it.

$30.... man I hope not, the last trip down that way in the GFC did a lot of damage to the industry. We actually lose capacity in events like that, you just can't shut these things down and then fire them right back up again without issues, its not like a tap.

Jeez... we aren't drilling deep ocean because we are flush with the stuff, and deep ocean, oil sands etc is not $30 oil FWIW

Not saying it can't happen... the futures market can get crazy but if it does it ain't for real.


----------



## Smurf1976

*Re: OIL AGAIN!*

I think there's some confusion as to what constitutes "reserves" here.

Underground reserves, the "source" of crude oil available to man, are a bit of a mystery. In theory engineers can do fairly accurate estimates but politics precludes them from doing so in many countries.

Underground reserve estimtes in non-OPEC countries are likely to be reasonably accurate, especially in the more developed, Westernised countries with sound governments etc. But reserves in the OPEC members we can only guess at, since they are very clearly manipulated for political and internal OPEC reasons. The odds do seem very high that reserves are probably significanly less than claimed. 

Personally, I suspect that in many instances the OPEC claimed "reserves" are in fact "total discovered to date" from which production needs to be deducted in order to calculate what remains. Such a concept fits reasonably well with many Western estimates of OPEC's actual  reserves.

Then theres the short term reserves, that which are above ground sitting in tanks, or are simply stored underground in the US SPR etc. In this case it's a fairly simple matter of someone checking how much is actually in the tanks. Simple in theory, but whether or not it is done accurately in practice is anyone's guess.

One thing's for sure in all of that though. Discovery of light, sweet crude oil hasn't been keeping pace with consumption for quite some time. Regardless of how much remains in reserve, such a situation is ultimately unsustainable.


----------



## Whiskers

*Re: OIL AGAIN!*

Not sure that reserves are the main issue atm with the US struggling to avoid falling back into recession. I'd say consumption/demand will be the focus of Oil producers... another attempt at production cuts maybe.

Probably the most significant thing to affect short term oil prices is the US withdrawing from Iraq and soon scaling back in Afganastan. I don't know the exact numbers, but all those fuel hungry planes, APC's, Tanks and Humvees etc guzzle down an enormous amount of fuel.

Together with increased fuel economy measures particularly in the US and as I understand an increasing number of Deisel gas conversions and talk of phasing out ULP with more ethernol blend usage, I see more downward pressure on Oil prices in the short term.


----------



## Whiskers

*Re: OIL AGAIN!*



Agentm said:


> fundamentally the price of oil should be in the $30 range if it was not interfered with




$40 to $60 range has been my view for the bottom.

I wouldn't expect it to hit $40 though unless the US and or Europe economy bumped along verging on recession for a considerable time.


----------



## iced earth

*Re: OIL AGAIN!*

*Oil WTI - 24 Aug 2010:*

Another upward channel in Daily Graph been broken again, the target would be around 66 $

on 12 Aug 2010 while Oil was trading 78$ , it was predicted that oil will slip to 74 $ ( https://www.aussiestockforums.com/forums/showpost.php?p=573835&postcount=44)


----------



## Agentm

*Re: OIL AGAIN!*

my view is the trend down is where is will continue.

agree that $40 - $60 is very possible.

i cant see anyone talking up their plans to go long on oil atm..


----------



## Sdajii

*Re: OIL AGAIN!*



Agentm said:


> my view is the trend down is where is will continue.
> 
> agree that $40 - $60 is very possible.
> 
> i cant see anyone talking up their plans to go long on oil atm..




I hope you're right! I'll be stocking up on mothballed wells no one wants... for a year or two!


----------



## Agentm

*Re: OIL AGAIN!*



Sdajii said:


> I hope you're right! I'll be stocking up on mothballed wells no one wants... for a year or two!




it sure will be a tough time for onshore and offshore oil in many regions if the wheels continue to fall off globally.

stripper wells will be hit hard again, as they always are when the oil prices plummet. but all operators have economic models that either green light or terminate projects.. 

lots of operations on fields, and services attached to them like pipelines companies will be scrapping programs and side-lining ops all over the place like they did b4.  they also work on the same economics, if the operators costs are not viable for a project, then its all over for a lot more folk as well.

many small cap oilers turn to cash value in a heart beat...


----------



## Mr Z

*Re: OIL AGAIN!*

$40 is unrealistic for so many reasons it is not funny. If it where to happen it will be the fastest route to permanent 3 digit oil. We did it once on the back of a paper chase and not a lot to do the fundamentals of oil really more the financials of the market participants. $40 oil is a world you don't want to live in because of what it spells for economic activity, a very negative outlook IMO.


----------



## Smurf1976

*Re: OIL AGAIN!*



Agentm said:


> my view is the trend down is where is will continue.
> 
> agree that $40 - $60 is very possible.
> 
> i cant see anyone talking up their plans to go long on oil atm..



If both oil production and prices are heading down then that means either (1) people are suddenly going "green" and taking the train to work rather than driving etc or (2) the global economy is contracting.


----------



## Agentm

*Re: OIL AGAIN!*



Smurf1976 said:


> If both oil production and prices are heading down then that means either (1) people are suddenly going "green" and taking the train to work rather than driving etc or (2) the global economy is contracting.




our arab friends had a tight leash on oil to induce the $60 -$80 range, and by contracting on controlling their oil production it sure had a great effect of oil prices, but if oil cartels actually produced free market, then $30 would be the norm in any case

the people are going green in the US, and not a result of taking the train to work, its because they dont have to go to work, they are unemployed.

contraction.........


Economic Highlights
3 August 2010
Page 1 of 3
1 Global Manufacturing Activities Continued To Ease,
Pointing To A Slower Global Growth In 2H 2010

2 US Manufacturing Activities Slowed Down In July
3 Euroland’s Manufacturing Activities Picked Up In July
4 Japan’s Manufacturing Activities Softened In July
5 China’s Manufacturing Activities Slowed Down In July
6 India’s Manufacturing Activities Inched Up In July


----------



## Mr Z

*Re: OIL AGAIN!*



Agentm said:


> but if oil cartels actually produced free market, then $30 would be the norm in any case




Look, given we are trading where we are you really need to support these assertions! $30 is a low, low number?!

BTW Russia is the swing producer these days... OPEC can do little to control the oil prices without Russia's compliance. They talk a lot but the reality is that they are constrained to the upside and have had trouble pumping enough to flatten price when it runs away (they don't like too high a price!) and they cheat like crazy on quotas so keeping price higher is not as easy as it may sound when demand softens. In the end OPEC's ability to swing price was down to Saudi, the only oil nation of enough size that its unilateral actions counted, today all the evidence points to the idea that Russia has taken that crown.

Discovery has been on the decline for 50 years, consumption growth has been exponential, much of the reserves we know about are unconventional and simply do not work at $30. I really don't know how a case can be made for $30???????????!







We are so far into our oil bank account it is not funny! Now we have Asia's rise to consider... India and China dwarf the USA in potential!


----------



## Agentm

*Re: OIL AGAIN!*



Mr Z said:


> Look, given we are trading where we are you really need to support these assertions! $30 is a low, low number?!
> 
> BTW Russia is the swing producer these days... OPEC can do little to control the oil prices without Russia's compliance. They talk a lot but the reality is that they are constrained to the upside and have had trouble pumping enough to flatten price when it runs away (they don't like too high a price!) and they cheat like crazy on quotas so keeping price higher than is not as easy as it may sound when demand softens. In the end OPEC's ability to swing price was down to Saudi, the only oil nation of enough size that its unilateral actions counted, today all the evidence points to the idea that Russia has taken that crown.
> 
> Discovery has been on the decline for 50 years, consumption growth has been exponential, much of the reserves we know about are unconventional and simply do not work at $30. I really don't know how a case can be made for $30???????????!
> 
> 
> 
> 
> 
> 
> We are so far into our oil bank account it is not funny! Now we have Asia's rise to consider... India and China dwarf the USA in potential!




just on fundamentals alone, in the US, if the market was priced on that alone, then oil there would be $30 right now. 

the arabs have turned the screws on their supply and sure they cant control russia, nor anyone else, but they can spike it to these levels seen today and have done so to bail some of their own tribes out.. 

but in the US, just on the fundamentals alone, oil would be at $30 right now, but oil is not trading on fundamentals, its very much in the hands of hedge funds, they backed a huge hurricane season and have also called that wrong and recently been selling, so the pressure on the oil in the US is down the past week or so.. $84 to about $72 right now.. many say its probable to run at about $65 to $70 tops in ther very near term,  and who knows,  if fundamentals actually take hold of oil, the prices can easily ease right off..

lets see where it all goes, but not many are long on oil atm...


----------



## Mr Z

*Re: OIL AGAIN!*



Agentm said:


> but not many are long on oil atm...




OK... IMO you are so far off base it is not funny. No way can I see $30 remotely justified.

Anyway GOOD! I am buying... there is value out there ATM in the oilers.

You have not actually mention any fundamentals, really, its been more of an assertion.

FWIW... longs and shorts always balance, for every long there is a short and for every short a long, always in perfect balance.


----------



## Whiskers

*Re: OIL AGAIN!*



Agentm said:


> the people are going green in the US, and not a result of taking the train to work, its because they dont have to go to work, they are unemployed.




Yes quite true.

That on top of their huge malitary machine winding down activities and consumption and the world turning more 'green... their oil consumption rate will probably stagnate or maybe even go backwards for a little while. 

Bearing in mind that because the US  has been a huge comsumer of imported goods from developing countries, those countries economic growth and oil consumption will be blunted a bit. That would bring $60 into target.

As for the case for $30 to $40... market prices are set on 'sentiment' more so than some economic rational number. Don't rely on logic when sentiment rules.

I agree that the funds could quite easily get disillusioned with the rate of growth Ã¡nd the 'green' trend and 'spit the dummy' liquiditating underperforming oil assets in the same way as everyone (well most) went hypo when the prices started going up to new highs.


----------



## Smurf1976

*Re: OIL AGAIN!*

One thing which puts a floor on oil prices is fuel substitution in industry and especially power generation.

Oil at AUD 34.00 (about USD 30) is equivalent to good quality black coal at AUD 150. 

How it compares to natural gas depends on the location. Gas is cheap in Australia, equivalent to oil at around AUD 20, but in some major overseas markets it is considerably more expensive.

If oil prices seriously drop, oil-fired power stations will be run baseload rather than as backup as they are now, plus some coal and gas-fired plants will switch to burning heavy fuel oil or diesel. End result = several million barrels per day of additional oil demand.

Oil won't be cheaper than coal, at least not for long. And will have great difficulty falling below the UK, Japan and US natural gas price. But of course, prices of coal and gas aren't fixed, and would likely also fall.

Bottom line? If oil prices are to crash then that will also affect coal and gas markets.


----------



## Agentm

*Re: OIL AGAIN!*

oil never goes to the $US prices in australia/asia, when oil was $30 in the us after the gfc and the hedges had a ban on shorting a lot of markets, oil became a popular one and down she went. the asia tapas prices stayed mice and high and we paid top dollar throughout the gfc.. i only wish we had $30 oil here

$65 - $70 imho is the near term stop..

$30 oil is where oil would have gone if fundamentals actually applied.. 

as b4, i have little faith in going long on oil, as some of the fundamentals take hold on the oil game it appears to me that the whiskers target of $60 is something i would look to for now.. and that will kill a lot of small caps projects in no time..


----------



## basilio

*Re: OIL AGAIN!*

Excellent article in Energy Bulletin which explores 3 separate reports on the question of future oil supplies and associated prices
[







> B]
> Major reports point to oil supply turmoil and price volatility[/B]
> by Matthew Wild
> 
> Major energy reports published this year are pointing to a significant rise in the price of oil due to supply constraints sometime over the next three years – the only disagreement is how soon.
> 
> So far 2010 has seen three international reports considering the future of oil production, demand and prices. These were published by high profile groups that command widespread respect – in turn, a collection of UK industrialists, the US military and a joint effort between Europe’s most recognized insurance company and a politically connected think-tank.
> 
> Largely ignored by the media, and considered separately online as they came out, it is interesting to do a compare-and-contrast between documents produced for widely different audiences on each side of the Atlantic.




So what is the likelihood that they are all hopelessly wrong?

http://www.energybulletin.net/storie...ice-volatility


----------



## Slipperz

*Re: OIL AGAIN!*

Here's a interesting report I found from the US energy information administration http://www.eia.doe.gov/steo/contents.html

Of note is non OPEC production in decline. North Sea and some Russian fields are running out


----------



## Slipperz

*Re: OIL AGAIN!*

Crude oil at $81.75 a barrel and my oilers watchscreen is a red of red. Go figure


----------



## jonojpsg

*Re: OIL AGAIN!*



Slipperz said:


> Crude oil at $81.75 a barrel and my oilers watchscreen is a red of red. Go figure




You got Nido on there?  Nice move up today in anticipation of favourable EWT results from Tindalo...

Of course I hold so DYOR


----------



## Slipperz

*Re: OIL AGAIN!*



jonojpsg said:


> You got Nido on there?  Nice move up today in anticipation of favourable EWT results from Tindalo...
> 
> Of course I hold so DYOR




Yup NDO was the exception to the rule today.

A very drab day for the oilers considering the spike in the price of oil. 

Here's another interesting article with many a good sub link to follow on the current situation. This Kent Moor guy seems to move in some pretty elite circles.

http://seekingalpha.com/article/228180-what-crude-oil-prices-are-telling-us?source=feed


----------



## Agentm

*Re: OIL AGAIN!*

in may tapis was $69  now its $91


----------



## Slipperz

*Re: OIL AGAIN!*

I've just been looking into this weeks drop in US inventories. 

http://ir.eia.gov/wpsr/overview.pdf 

Not only did commercial inventories of 'domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks, and in transit to refineries.' decrease from 346 million barrels to 340.7 it did so against an *increase* in imports ......






Could that all be attributable to winter heating oil or is the US economy starting to fire up a bit?


----------



## Naked shorts

*Re: OIL AGAIN!*



Slipperz said:


> I've just been looking into this weeks drop in US inventories.
> 
> http://ir.eia.gov/wpsr/overview.pdf
> 
> Not only did commercial inventories of 'domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks, and in transit to refineries.' decrease from 346 million barrels to 340.7 it did so against an *increase* in imports ......
> 
> View attachment 40522
> 
> 
> 
> 
> Could that all be attributable to winter heating oil or is the US economy starting to fire up a bit?




good question,

Looking at the price seasonals in addition to that large drop in inventories (despite the increase in imports) suggests there is good underlying demand... price has been quite strong recently even though 10 year seasonal says price should be heading down.
http://www.timingcharts.com/

One thing to consider however is the fact that a bunch of the opec countries have indicated their willingness to let oil hit $100
http://www.bloomberg.com/news/2010-...-members-target-100-before-cairo-meeting.html

Could the recent increase in the strength of the US$ simply have made imports more attractive? might be worth plotting the price of oil against some other currencies besides the USD 

heaps of variables in this


----------



## pacestick

*Re: OIL AGAIN!*

I am not surprised that oil is rising
 Cantarell(mexico)  is in decline it now produces  787,000 barrels a day( PEMEX figures) thats  a 34%fall in 2008 
Ghaawar (saudi arabia) the worlds largest  field is using more and more sea water to extract oil  as the easy and cheap oil has gone

new fields are smaller  and not making up for the production decline let alone the increased demand from asia . 

Stand by for heaps of screaming  from the uninformed public about the oil companies profitering  yet it is really just supply and demand  pushing the price up

my only suggestion is buy companies producing oil


----------



## kiwichick

*Re: OIL AGAIN!*

or gas 

or phosphate


----------



## sails

*Re: OIL AGAIN!*



kiwichick said:


> or gas
> 
> or phosphate




are you reading from a dictionary?


----------



## Smurf1976

*Re: OIL AGAIN!*



sails said:


> are you reading from a dictionary?



I take it as a reference to two other commodities which both have a similar long term supply situation to that of oil.

With, for example, iron ore it is just case of production costs etc since there are plenty of known ore deposits. But in the case of phosphate, oil and gas there are real geological limits in terms of known resources, plus the political factors due to them being highly concentrated in a few countries.


----------



## sails

*Re: OIL AGAIN!*



Smurf1976 said:


> I take it as a reference to two other commodities which both have a similar long term supply situation to that of oil.
> 
> With, for example, iron ore it is just case of production costs etc since there are plenty of known ore deposits. But in the case of phosphate, oil and gas there are real geological limits in terms of known resources, plus the political factors due to them being highly concentrated in a few countries.




I guessed that's what was meant too, Smurf.  It would just be nice if he would offer some reasoning or research (as you have done) instead of just typing a few words with very little meaning.


----------



## kiwichick

*Re: OIL AGAIN!*

don't want to deprive you of the opportunity to exercise those little grey cells sails

and i prefer the gender i have already (thanks all the same)


----------



## iced earth

*Re: OIL AGAIN!*

Oil (WTI)   07.04.11

Oil is passing up the important 61.8% Fibo and next resistance will be 78.6% Fibo (around 123$) 




in monthly chart, after we had the buy signal we haven't had sell signal




Oil is also testing upper line of the upward channel , if it passes up successfully the target will be around 140$


----------



## Frank D

*Re: OIL AGAIN!*

*OIL monthly and Weekly*

Fundamentally OIL can continue to push higher...

Technically, I'm not sure, as it's now moving into the highs in the 2nd Quarter,
 which often can see a rotation back towards trailing support levels.


----------



## Slipperz

*Re: OIL AGAIN!*



iced earth said:


> Oil (WTI)   07.04.11
> 
> Oil is passing up the important 61.8% Fibo and next resistance will be 78.6% Fibo (around 123$)
> 
> View attachment 42300
> 
> 
> in monthly chart, after we had the buy signal we haven't had sell signal
> 
> View attachment 42299
> 
> 
> Oil is also testing upper line of the upward channel , if it passes up successfully the target will be around 140$
> 
> View attachment 42301




Still tracking along pretty bullishly. $113.05 at close of the week. That price target is looking reasonable to me. Glad I've got an oiler in the portfoilio!


----------



## BrightGreenGlow

*Re: OIL AGAIN!*

These oiler stock will take a while to gain on these prices though.. I'm waiting for the next round of financial reports..


----------



## Slipperz

*Re: OIL AGAIN!*



BrightGreenGlow said:


> These oiler stock will take a while to gain on these prices though.. I'm waiting for the next round of financial reports..




I realise with forward hedging contracts the price of oil isn't going to have an immediate impact on a companys share price .... but.... realisticly if you are wanting to put a dollar figure valuation on a company the simple equation is what are the assets worth divided by how many shares.

Forgetting for the moment we have to keep finding more oil to sustain growth and I'll use SSN here  as my example (it's what I hold) their as yet unproven field in the Niobrara is estimated at 36 million barrels.

So the simple equation is if they are sitting on a good reserve every dollar on the POO equates to 36 million of value to the company.

That's how I see it anyway!


----------



## Frank D

*Re: OIL AGAIN!*

*OIL Primary and Secondary cycles*

Break & extend pattern complete in the Secondary cycles and looking for a
 rotation back down into support levels @ $98.00 to $100

*Note:- *There is a week low support pattern @ $104 (not shown), that could
 support the current reversal pattern this week only....

However a larger reversal pattern would see OIL back down into support levels, and as
 low as $95.98 in the month of MAY.

If the 2nd Quarter holds support @ $96-$98.00 then I'd look for more gains later 
in 2011 towards new highs in 2012


----------



## rheaseo25

*Re: OIL AGAIN!*

with the chaos happening in Middle East, the price of oil will continue to escalate to the level where no one can predict.


----------



## iced earth

*Re: OIL AGAIN!*

*Oil-WTI : 4 August 2011*

Oil-WTI is in a very sensitive situation, if the lower line of the channel (support line) and psychological price level at $90 cannot hold the short and channel break down , the target of the short would be around $70.


----------



## skc

*Re: OIL AGAIN!*



iced earth said:


> *Oil-WTI : 4 August 2011*
> 
> Oil-WTI is in a very sensitive situation, if the lower line of the channel (support line) and psychological price level at $90 cannot hold the short and channel break down , the target of the short would be around $70.




Very nice call, Iced Earth.

Got a short in at $90.7 last night


----------



## iced earth

*Re: OIL AGAIN!*



Frank D said:


> *OIL monthly and Weekly*
> 
> Fundamentally OIL can continue to push higher...
> 
> Technically, I'm not sure, as it's now moving into the highs in the 2nd Quarter,
> which often can see a rotation back towards trailing support levels.




..............................


----------



## iced earth

*Re: OIL AGAIN!*



skc said:


> Very nice call, Iced Earth.
> 
> Got a short in at $90.7 last night




Nice SKC, Unfortunately I have no active Forex account at the moment but I am happy you used the situation...


----------



## Aussiejeff

*Re: OIL AGAIN!*

WTI now *$81* with a brick!! 

Who woulda thunk it?

Wonder how many drilling sites will become un-economical at these plummeting prices?

Of course, the rebound when it DOES come (maybe on some "unexpected drop in ME reserves" news down the track) will be even more breathtaking and take us back into massive Oil Spike contagion territory...again.

I'm getting dizzy.....


----------



## iced earth

*Re: OIL AGAIN!*



iced earth said:


> *Oil-WTI : 4 August 2011*
> 
> Oil-WTI is in a very sensitive situation, if the lower line of the channel (support line) and psychological price level at $90 cannot hold the short and channel break down , the target of the short would be around $70.
> 
> View attachment 43838




9 August , 12:46 pm WTI CRUDE FUTURE = $76.670  (Not too far from $70.00)


----------



## drillinto

*Re: OIL AGAIN!*

Goldman Sachs cuts oil price outlook

http://economictimes.indiatimes.com...ts-oil-price-outlook/articleshow/10231511.cms

*******


----------



## drillinto

*Re: OIL AGAIN!*

Oil breakout !

http://www.bespokeinvest.com/thinkbig/2012/2/21/oil-breakout.html
***


----------



## drillinto

*Re: OIL AGAIN!*

Oil To Natural Gas Ratio

http://www.bespokeinvest.com/thinkbig/2012/2/27/oil-to-natural-gas-ratio.html
***


----------



## drillinto

*Re: OIL AGAIN!*

No shortage of oil yet

http://www.bespokeinvest.com/thinkbig/2012/3/7/no-shortage-of-oil-yet.html
***


----------



## Smurf1976

*Re: OIL AGAIN!*

1. That chart seems to be only for stockpiles in the USA, a country somewhat awash with oil at the moment and where prices are lower than the rest of the world. Does anyone have info on stocks held in other countries?

2. There is absolutely a shortage of cheap oil and that has always been the concern of those worried about peak oil. We won't run out of oil, but it will get expensive. I can't find any oil for sale at $20 per barrel or even $50. The cheap stuff is gone and what's left is increasingly expensive.


----------



## drillinto

*Re: OIL AGAIN!*



Smurf1976 said:


> 1. That chart seems to be only for stockpiles in the USA, a country somewhat awash with oil at the moment and where prices are lower than the rest of the world. Does anyone have info on stocks held in other countries?
> 
> 2. There is absolutely a shortage of cheap oil and that has always been the concern of those worried about peak oil. We won't run out of oil, but it will get expensive. I can't find any oil for sale at $20 per barrel or even $50. The cheap stuff is gone and what's left is increasingly expensive.




For OECD inventories at end-December 2011, please see page 26 in the link below:
http://omrpublic.iea.org/currentissues/full.pdf
***


----------



## Mr Z

*Re: OIL AGAIN!*

It is called stock piling, a normal response to a possible threat to supply. Inventory tells you very little in isolation.


----------



## drillinto

*Re: OIL AGAIN!*

US crude oil inventories

http://www.bespokeinvest.com/thinkbig/2012/3/28/crude-oil-inventories-shoot-higher.html
***


----------



## Joules MM1

*Re: OIL AGAIN!*

excerpt


> Next week, the Seaway pipeline between Cushing, Oklahoma and the Gulf of Mexico will reverse, directing 150,000 barrels of oil per day (400,000 by 2013) from the bottleneck at Cushing to the Gulf.  As my colleague Dan Brusstar wrote last November after the initial announcement, this is major change to the North American oil complex that will enhance the value and global availability of West Texas Intermediate crude.







Video
http://openmarkets.cmegroup.com/3356/impact-of-the-seaway-pipeline-reversal


----------



## drillinto

*Re: OIL AGAIN!*

US oil inventories still rising

http://www.bespokeinvest.com/thinkbig/2012/5/23/oil-inventories-still-rising.html


----------



## drillinto

*Re: OIL AGAIN!*

US: The spread between the price of WTI and Brent crude oil prices over the last year


http://www.bespokeinvest.com/thinkbig/2012/6/12/the-one-two-punch-of-lower-oil-prices.html


----------



## Mr Z

*Re: OIL AGAIN!*

They have just reversed a pipeline to get oil out of Cushing, that should close the spread over time IMO.


----------



## drillinto

*Re: OIL AGAIN!*

Global crude demand should rise sharply in coming months – Oil Market Report

http://www.iea.org/newsroomandevents/news/2012/june/name,27691,en.html


----------



## Rumberg

*Re: OIL AGAIN!*

Oil, oil, oil...
Oil price at the moment is on the 9 months lowest, well almost - it was 78.82 in the end of September 2011 and then kept raising until 19th of Feb 2012, when the peak was 109.35 and after that it started falling again and came down to the lowest point of 80.39 on the 18th of June 12. I'm trying to predict the oil "direction" at the moment. I know that EUR/USD has lots of power to influence the course of the Oil price, when EUR up/USD down and Oil price goes up, right? My question is, how much more it can sink? Or is it gonna start gaining again or is it more likely to keep falling after this short raise, that is happening at the moment (well, today's change is -1,50%, but from 28th of June until 29th of June it gained from 78.41 to 84.66). I wanna buy some oil in Forex and I'm trying to hit a jackpot. I mean that I'm not planning to make Millions or something but I'm trying to get at least 50% profit and at the moment I'm planning to predict when it is the right time to buy. This current gain is probably related to the Merkel and Co comments in media about Euro Zone, right? 
My theory is (and what I'm betting on) is that there is eventually going to be war in Syria, which has a major impact to Oil prices, for example when armed conflict started in Libya in 2011, oil price gained from 85.57 to 113.98, which was the peak. War might be short, like in Libya or even shorter OR longer (since Russia is on Syrias side) but it has a impact for the oil price. Besides Syria, I'm betting on the war with Iran and it also has something to do with Syria. What I see at the moment is that (if you look on the Middle-East map), take a look where Iran is, take a look where Israel is. What do you see? Between Israel and Iran there are two nations, one of them is Iraq (which is Pro-USA) and second one is Syria. Syria obviously isn't gonna allow Israel to use their airspace to attack Iran. Israel also has a choice to attack through Turkey airspace but like we know then their relations are not very "shining" after that Turkish Humanitarian boat incident. My ultimate-bet is that there is gonna be a war between Israel and Iran, since both of them hate each other and Israel isn't gonna stand there and look how Iran is trying to get their hands on the Nuclear weapon(power). When that happens, then Iran is most probably gonna block the Strait of Hormuz, WHICH means that OIL price is gonna skyrocket beyond your wildest dreams and that is the reason why I wanna buy oil NOW! Well, not NOW but within few weeks. What is your guess about Oil price and where is it gonna head now, before there is gonna be war between those two nations (which probably takes 2-3 months until it begins).


----------



## CanOz

*Re: OIL AGAIN!*

Amazing....Oil spikes on news...







> Headlines crossing that Iranian lawmakers are drafting a bill to propose blocking the Strait of Hormuz for oil tankers
> 
> Read more: http://www.briefing.com/GeneralCont...Briefing.aspx?CustomPageId=3734#ixzz1zTT0Nm4N




CanOz


----------



## prawn_86

*Re: OIL AGAIN!*

Very interesting article saying that increased production methods and usage efficiencies will help maintain oil and gas as the main energy status for years to come:

http://www.wired.com/business/2012/08/mf_naturalgas/


----------



## OGRooney

*Re: OIL AGAIN!*



prawn_86 said:


> Very interesting article saying that increased production methods and usage efficiencies will help maintain oil and gas as the main energy status for years to come:
> 
> http://www.wired.com/business/2012/08/mf_naturalgas/




That's interesting about the rise of natural gas, hasn't global oil production already peaked?
http://www.smh.com.au/business/peak-oil-its-closer-than-you-think-20110429-1e0gt.html

PS is this the right thread to discuss October Oil Futures or should I be over in derivatives?


----------



## baby_swallow

*Re: OIL AGAIN!*

Fat Finger strikes again???


----------



## CanOz

*Re: OIL AGAIN!*

From Jason Leavitt's site 



> At 1:52 EST, the bottom fell out. Thirteen thousand contracts traded in one minute; the previous minute had a grand total of 131 contracts. One traders said, "I've been doing this for 14 years and that's the fastest move I've ever seen." ICE, where Brent crude oil trades in London, declined to comment. The CME, where West Texas oil primarily trades, said it was unaware of any technical issues that may have contributed to the selling. As of now, nobody knows anything...or they're just not saying.




CanOz


----------



## notting

*Re: OIL AGAIN!*

No idea other than Saudi pumping.
Didn't expect this so soon or so fast.
Bodes well for sustained rally in everything else longer term but all seems a bit strange.


----------



## BrianFXman

*Re: OIL AGAIN!*

i guess it will move down to $80 around the start of November


----------



## Joules MM1

*Re: OIL AGAIN!*

saudi america...that's catchy....may become true too.....

http://blog.uncommonwisdomdaily.com...years-imports-drop-to-20-year-low-charts-9130

*US Oil Production Hits Highest Level in 18 Years, Imports Drop to 20-Year Low ”” Charts*

by Sean Brodrick on December 1, 2012

and

*9 Charts That Show Why People Have Begun To Whisper About 'Saudi America'*
Joe Weisenthal	| Dec. 1, 2012, 12:15 PM

http://www.businessinsider.com/why-...bout-saudi-america-2012-12?op=1#ixzz2DsRIhwVI


----------



## DB008

*Re: OIL AGAIN!*

Go to Google, search, 'American energy independence'

a result...



> A new world of American energy independence
> 
> 
> THE UNITED States is soon to be awash in oil and natural gas, positively brimming with the stuff whose scarcity and unreliability of supply has plagued us since the end of World War II. It is a remarkable, stunning turn of events ”” largely unforeseen just a few years ago yet now an imminent although still hard-to-believe reality. And the implications of this new reality will be dramatic too ”” almost all of them positive although not without some risks. Remember when the United States once trembled at the power of OPEC? In a short while, we may be running the thing.
> 
> Last month the well-respected International Energy Agency declared, “A new global energy landscape is emerging . . . redrawn by the resurgence in oil and gas production in the United States.” Within eight years, the America is expected to be the planet’s largest producer of oil. By 2030, we’ll be producing more than we need ”” exporting, not importing. The reason is technology. Techniques such as hydraulic fracturing have been invented and improved so that they can now economically unlock the vast stores of oil and natural gas across the middle of the country. The flyover states may finally start getting some respect.
> 
> http://www.bostonglobe.com/opinion/2012/12/02/new-world-american-energy-independence/CkO3pcKNOfB9s2IpW8HlXP/story.html




Oil short?


----------



## CanOz

*Re: OIL AGAIN!*

Stunning turn of events....


One could have some fun speculating what the world would look like with the USA as the worlds biggest oil supplier....

A. Even bigger SUVs for soccer moms
B. changing the navy's boats back to bunker c from nuclear.
C. Foreign aid for Saudi Arabia and Kuwait after thier suppliers dry up
D. The end of Iran

Or, new supplies of oil are found in other countries using fracking...countries like:
Argentina
China
Canada (the oil sands could be rendered too expensive to extract)
Russia

Oil drops to $30 a barrel

On and on....

CanOz


----------



## brty

*Re: OIL AGAIN!*

There is a vast difference between the many opinions offered about oil, like the one above, and what is actually happening with the price.

The 2012 average price for crude, based on brent, as that is the most realistic price, will end at a record high of ~$111/bbl. This is about 10 times the price of 1998.

What everyone needs to ask themselves is why would the price be so high if all the rosy news about supplies were accurate? As a hint, the stories about all the wonderful new technologies fail to mention that they were used 40-50 years ago in areas of the US. What makes them viable now is the price of crude.


----------



## Smurf1976

*Re: OIL AGAIN!*



brty said:


> As a hint, the stories about all the wonderful new technologies fail to mention that they were used 40-50 years ago in areas of the US. What makes them viable now is the price of crude.



Bingo!

There's plenty of oil in a physical sense, but what many have been concerned about for quite some time is that cheap supplies are running out.

So we have a somewhat interesting situation. One one hand there's plenty of supply available. On the other, it is available only at prices which hamper the economy. And if we do get prices down, then that will be because demand (ie the economy) fell in a heap such that we don't actually need the new supplies anyway.

Looking at the broader economic situation it is somewhat alarming. Even though most Western economies have struggled (at best) in recent years, there is still practically no spare oil production capacity and we still have high prices. 

Just imagine what would have happened if the economy had been growing more strongly? (In my opinion such an outcome is impractical since the resultant oil price spike would have promptly whacked the economy back down again).

I can see that there's a benefit for the US to have expensive domestic production rather than expensive imports. But it's still expensive oil no matter how you look at it. Oil is still uncompetitive for anything other than transport fuels and chemicals, to the point that in most countries non-transport use is fairly limited these days whereas it used to be major. 

So we'll have oil. Just not _cheap_ oil.


----------



## burglar

*Re: OIL AGAIN!*



brty said:


> ... What everyone needs to ask themselves is why would the price be so high if all the rosy news about supplies were accurate? ...




That's right.

OPEC countries have for years not shown significant drawdown on their reserves.

The reason is simple.
Their quota is linked to their reserves!


Read more:
http://www.csmonitor.com/Environmen...-have-80-percent-of-the-world-s-oil-Maybe-not


----------



## Smurf1976

*Re: OIL AGAIN!*

An awful lot of people from the likes of governments through to individuals have tried to work out the truth on OPEC reserves.

In short, my own conclusion (after rather a lot of research) is that "official" reserves as stated are actually "total discovered and economically recoverable" reserves. That is, the total amount of oil they have found to date and which can be extracted profitably (bearing in mind that the definition of "profitably" becomes interesting when you have the ability to control the selling price of the product).

So if you take the "official" reserves and deduct cumulative production then you'll have a rough figure for what they have left. Suffice to say that the difference is significant. 

Also, the quality of the oil is not taken into account. That is, they don't differentiate between heavy sour (thick with lots of sulphur) oil versus light sweet (what the refineries prefer). That's a bit like discussing your gold stockpile and saying you have 100 tonnes of metal, conveniently neglecting to mention that 50 tonnes of that is copper and most of the rest is lead. It creates an impression not matched with reality.

My "gut feel" says that this seems plausible although I certainly don't have any firm proof. I do know that many others have reached similar conclusions, but again there is no real way of proving it. The odds are that we'll never know - any actual oil shortage will be attributed to anything from environmental protection through to payment disputes. You're not likely to turn on the evening news one day and find there's an announcement from the Saudi's that they've peaked. (That said, Kuwait has sort-of made such an announcement some years ago which itself speaks volumes as to the overall supply situation....)


----------



## DB008

*Re: OIL AGAIN!*

Saw this on the BBC, can't remember if I posted it on ASF.



> Petrol from air: Will it make a difference?
> 
> An idea has hit the news on Friday to produce petrol from air and water - removing CO2 from the atmosphere, combining it with hydrogen split from water vapour and turning it into a fuel that can go straight back into the petrol tank.
> 
> It's like combustion in reverse, and in essence it is what powers plants: CO2 and water in, energy-rich sugar molecules out.
> 
> But in matters of energy, nothing comes for free.
> 
> Just as plants need sunlight to pull off the trick, Air Fuel Synthesis, the firm profiled in the UK's Independent newspaper, need to use good old-fashioned electric energy to pull off theirs.
> 
> As with any novel fuel production or energy storage method, it is the numbers that matter: efficiency is king.
> 
> http://www.bbc.co.uk/news/science-environment-20003650


----------



## DB008

*Re: OIL AGAIN!*

Could this put downward pressure on oil prices???



> Fracking Pushes U.S. Oil Production to Highest in 20 Years
> 
> U.S. oil production exceeded 7 million barrels a day for the first time since March 1993 as improved drilling techniques boosted exploration across the country and reinforced a shift toward energy independence.
> 
> Bloomberg


----------



## boofis

*Re: OIL AGAIN!*

well it certainly dropped sweet light crude after the announcement last night if nothing else lol.


----------



## CanOz

*Re: OIL AGAIN! - Spread Trading*

Has anyone here considered the spread play between Brent and WTI lately?

I'm just updating my data to see if there is an ETF for both, but i was thinking there could be a trade in shorting Brent and going long on WTI?

SKC, might be something up your alley?



CanOz


----------



## DB008

*Re: OIL AGAIN!*

The US will be self-sufficient in energy by 2030, with only 1% coming from imports, the company's analysts predict



> Peak oil theories 'increasingly groundless', says BP chief
> 
> The US will be self-sufficient in energy by 2030, with only 1% coming from imports, the company's analysts predict




http://www.guardian.co.uk/environment/2013/jan/16/peak-oil-theories-groundless-bp

The only thing that comes to mind, if the price of oil falls too far, then it becomes unconventional for tar sands to be extracted.


----------



## Mr Z

*Re: OIL AGAIN!*

LOL!

IF you believe that oil is a finite resource then peak oil is more fact than anything else. The only way that peak oil cannot apply is if there is NEVER peak production which can only occur IF oil supply is limitless..... only the abiotic crowd think that oil is limitless.

Kind of a silly thing to say really... peak oil theory was developed to explain what would happen with US conventional oil supplies, Hubbert was pretty well spot on... now how can the same model not apply to global conventional supplies at some point?

Peak oil theory has always been about the end of cheap oil, not the end of all oil. It always gets twisted in the media!

+ they always seem to fix demand at current levels or project in a linear fashion... really growth of consumption is exponential, that is the killer, that is the thing that tends to stuff up most predictions.

US has been becoming energy independent for close to 50 years now... leme know when it happens. If it ever happens it will prolly be because they are broke and don't need energy, color me skeptical on that one!


----------



## Ann

*Re: OIL AGAIN!*

I have been watching the POO for a long time now as it developes into a Summetrical Triangle. Will it rise, will it fall? My thoughts are it will fall downward from the Triangle. Reason.... http://www.nasdaq.com/article/oil-futures-weaker-on-high-us-stocks-opec-flow-20130514-00810

If it falls I have done a potential target price using a swing trade calculation. By my estimates the stuff is going to be worthless!


----------



## CanOz

*Re: OIL AGAIN!*



Ann said:


> I have been watching the POO for a long time now as it developes into a Summetrical Triangle. Will it rise, will it fall? My thoughts are it will fall downward from the Triangle. Reason.... http://www.nasdaq.com/article/oil-futures-weaker-on-high-us-stocks-opec-flow-20130514-00810
> 
> If it falls I have done a potential target price using a swing trade calculation. By my estimates the stuff is going to be worthless!




Yeah, its been in relative balance for a few sessions now, even rejecting lower prices Friday...

Will pop up a TPO later once i've had my coffee.

NG is also one to watch, unless i missed it last night.


----------



## CanOz

*Re: OIL AGAIN!*

Here's the COT for Oil this week...


----------



## Ann

*Re: OIL AGAIN!*



CanOz said:


> Here's the COT for Oil this week...




I just checked my COT charts for Oil and the Open Interest is very high and has had a very small drop from last week. I think it is getting ready to fall away and perhaps take the POO with it. Let's see!

OI for 30/4/13 = 1,771,193
OI for 5/7/13   = 1,770,442

(Open Interest definition: http://www.investopedia.com/terms/o/openinterest.asp ) Just for anyone wondering what the heck we are talking about!


----------



## CanOz

*Re: OIL AGAIN!*

This is setting up nicely today Ann, hope your alerts are working!


----------



## Ann

*Re: OIL AGAIN!*



CanOz said:


> This is setting up nicely today Ann, hope your alerts are working!




I wonder if $94.40 is going to be its nemesis today?


----------



## CanOz

*Re: OIL AGAIN!*



Ann said:


> I wonder if $94.40 is going to be its nemesis today?




94.32 is current value, 94.50 is resistance, the spike high...

93.85 is the spike low support.

The key really is the DX....bottom chart



> Late in the day the index traded and settled above the 3-month high at 83660; the breakout level now becomes support.  This doesn’t have to be taken as an exact number but rather a level;
> If the market goes straight up the breakout is confirmed
> If the market balances around this level for a few days the breakout remains an open question.
> A sharp selloff on Wednesday would represent an upside breakout failure.


----------



## Ann

*Re: OIL AGAIN!*



CanOz said:


> 94.32 is current value, 94.50 is resistance, the spike high...
> 
> 93.85 is the spike low support.
> 
> The key really is the DX....bottom chart




I said $94.40 because looking at your chart there is clearly an inverted flagpole with a pennant formed (very bearish). The price had one only false breakout above that $94.40 and fell back. This is not a heartening view.

...and as pretty as those last charts are they mean absolutely nothing to me, sorry. I prefer to keep my charting as spartan and simple as possible. Otherwise I have no idea what I am looking at! Simple soul you see!


----------



## CanOz

*Re: OIL AGAIN!*



Ann said:


> ...and as pretty as those last charts are they mean absolutely nothing to me, sorry. I prefer to keep my charting as spartan and simple as possible. Otherwise I have no idea what I am looking at! Simple soul you see!




Its just volume plotted as a vertical histogram, quite a simple concept, in order to structure the market a little more accurately. 

Anyway, back to bearish on oil...


----------



## Ann

*Re: OIL AGAIN!*

It fell out of the bearish inverted flagpole and pennant as expected!  

(This is a ten minute price chart, don't have the 5 minute one but it looked sufficiently similar to call the shape)

Now will it recover?


----------



## CanOz

*Re: OIL AGAIN!*

Whats your measured move target Ann? 93.85 should be the minimum...but we've broken a major TL as well.


----------



## Ann

*Re: OIL AGAIN!*



CanOz said:


> Whats your measured move target Ann? 93.85 should be the minimum...but we've broken a major TL as well.




A rough guestimate $93.40 maybe...at a very quick glance.


----------



## CanOz

*Re: OIL AGAIN!*

Can't for the life of me figure out why Nat Gas is going the other way... 

It was looking bearish while CL was looking bullish, and now the other way around....


CanOz


----------



## Ann

*Re: OIL AGAIN!*



Ann said:


> A rough guestimate $93.40 maybe...at a very quick glance.




Well it didn't quite make the $93.40 but nearly!


----------



## CanOz

*Re: OIL AGAIN!*



Ann said:


> Well it didn't quite make the $93.40 but nearly!




Yeah this time i was ready, had my TP at .50, a little early again but getting better.

We seem to be in a channel on the 60m....

More data out soon...


----------



## Ann

*Re: OIL AGAIN!*

The 10 minute oil chart looks like another inverted flagpole with a flag is forming. Maybe another $1 drop if it falls.

Edit: No not going to fall...broken into the upside of the flag formation!


----------



## Ann

*Re: OIL AGAIN!*



Ann said:


> The 10 minute oil chart looks like another inverted flagpole with a flag is forming. Maybe another $1 drop if it falls.
> 
> Edit: No not going to fall...broken into the upside of the flag formation!




Well that rally upwards failed and now the POO is plunging. I have got to stop watching!


----------



## Ann

*Re: OIL AGAIN!*

There is a fully formed inverted head and shoulders pattern on the POO chart. A potential target price of $102.50 is the calculation, however I don't think it will evolve into a completed trade as the IH&S was not formed after a long fall and is not at a low level but formed from a sideways/rising line. Plus there is that long term overhead resistance line from the symmetrical triangle about to be touched. Finally there is that very, very high OI on the COTs which I am watching. Let's see!


----------



## Ann

*Re: OIL AGAIN!*

The POO is getting very close falling below the 200MA around the 92.33 level at the moment. That might set off some stops perhaps.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

_American Petroleum Institute showed a 4.4-million barrel increase in US crude inventories for the week to May 24. That was much higher than a Reuters forecast for a fall of 400,000 barrels.

We have to closely watch an upcoming meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and China’s official purchasing managers index (PMI) to get some indications on global oil supply and demand/.

EIA expects that the Brent crude oil spot price will average $104 per barrel over the second half of 2013 and $101 per barrel in 2014.

However these projections can change at any time due to new developments. Energy price forecasts are highly uncertain.

My ideas are not a recommendation to either buy or sell any security, commodity  or currency. Please do your own research prior to making any investment decisions_


----------



## MARKETWINNER

*Re: OIL AGAIN!*

http://www.marketwatch.com/story/oil-futures-up-as-weekly-crude-inventory-falls-2013-06-05

Oil futures up as weekly crude inventory falls 

My ideas are not a recommendation to either buy or sell any security,commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked site.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

_http://www.nation.com.pk/pakistan-n.../16-Jun-2013/oil-prices-end-week-on-high-note

Oil prices end week on high note

Please note that I do not endorse or take responsibility for material in the above hyper-linked sites._


----------



## Trembling Hand

*Re: OIL AGAIN!*

Something is standing out by not taking part in the last few smack downs.


----------



## CanOz

*Re: OIL AGAIN!*

It didn't like the data last night though, it was going nicely until then too....

CanOz


----------



## Trembling Hand

*Re: OIL AGAIN!*

Very interesting pattern here,




Considering the smack down everything else has had.


----------



## CanOz

*Re: OIL AGAIN!*



Trembling Hand said:


> Very interesting pattern here,
> 
> View attachment 53118
> 
> 
> Considering the smack down everything else has had.




Yeah oil has down really well and is the best performing commodity in the face of the rising dollar...

Below is the DX, the CI (commodity index), and the ES from top to bottom....just for interest sake.

CanOz


----------



## CanOz

*Re: OIL AGAIN!*

Oil up to 101.61 this morning....


----------



## skyQuake

*Re: OIL AGAIN!*

Anyone saw that 75c sweep on crude just then


----------



## CanOz

*Re: OIL AGAIN!*



skyQuake said:


> Anyone saw that 75c sweep on crude just then




Which way?


----------



## skyQuake

*Re: OIL AGAIN!*



CanOz said:


> Which way?




straight down, and back up halfway almost instantly


----------



## Smurf1976

*Re: OIL AGAIN!*

The oil price in USD is going up, meanwhile the AUD is going down against the USD. So the extent of the recent price rise is somewhat larger in AUD than it appears in USD-based charts.

Should be good news for Australian oil producers. Not so good news for airlines or anyone who drives a petrol guzzler although I haven't noticed a price rise at the pumps (yet.....).


----------



## CanOz

*Re: OIL AGAIN!*

Wow, CL's lost a buck tonight...


----------



## Trembling Hand

*Re: OIL AGAIN!*

A month ago this was a good break out. Now its looking like it has ran out of puff. 




Looking for a short entry.


----------



## Trembling Hand

*Re: OIL AGAIN!*

Well it doesn't look like a short now!


----------



## CanOz

*Re: OIL AGAIN!*

Oil's smokin'!


----------



## db94

*Re: OIL AGAIN!*



CanOz said:


> Oil's smokin'!




If US go to war in Syria, i can see this only being the beginning. However, I cant see how the US could fund going to war in Syria with so much debt and with the debt ceiling forecasted to be met in November (if i recall correctly). I think its all a bit of a frantic rush to get out of equities (which were over-priced) and into some commodities, which were under-priced IMO. I would have loved to get on the oil bandwagon but the oil etf in australia (OOO) has bugger all liquidity  Ill be watching from the sidelines.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

I believe we will see volatility in the oil market in the short run. Syria is not a major oil producer. If oil go up it will be very short term spike. It is time to study development in oil market during next six months.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

I believe oil will trade below $100 sooner than later due to new development. Consumer purchase power will increase due to less energy cost and some sectors in global markets will benefit lot in the coming quarters. 

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.


----------



## DB008

*Re: OIL AGAIN!*

*Move over, Russia: U.S. is now the world’s biggest oil and gas producer*



> The U.S. will end 2013 as the world’s largest producer of petroleum and natural gas, surpassing Russia and Saudi Arabia, the Energy Information Administration said Friday.
> 
> The EIA estimated combined U.S. petroleum and gas production this year will hit 50 quadrillion British thermal units, or 25 million barrels of oil equivalent a day, outproducing Russia by 5 quadrillion Btu.
> 
> Petroleum production includes crude oil, natural gas liquids, condensates, and biofuels.
> 
> U.S. and Russian energy production over the past two years have been roughly equivalent. Since 2008, U.S. petroleum production has increased 7 quadrillion Btu, with “dramatic” growth in Texas and North Dakota, the EIA said.






http://blogs.marketwatch.com/energy-ticker/2013/10/04/move-over-russia-u-s-is-now-the-worlds-biggest-oil-gas-producer/


----------



## 13ugs13unny

*Re: OIL AGAIN!*



DB008 said:


> *Move over, Russia: U.S. is now the world’s biggest oil and gas producer*
> 
> http://blogs.marketwatch.com/energy-ticker/2013/10/04/move-over-russia-u-s-is-now-the-worlds-biggest-oil-gas-producer/




Interesting how the politics of the middle east has changed, now that the superpowers are not reliant of middle eastern oil as much as they once did.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

Oil prices may stay $80- $100 in the coming years. Not only USA but also Iran too will increase oil production. Some heavy industries in the USA and Europe should benefit lot and there may investment opportunities in some areas. Global economy will expand from 2015 onwards and USD dollar may start their next major rally during next 18 months. 

http://www.bloomberg.com/news/2013-...-100-a-second-day-as-u-s-stockpiles-gain.html

WTI Oil Trades Below $100 a Second Day as U.S. Stockpiles Gain

My ideas are not a recommendation to either buy or sell any security or currency. Please do your own research prior to making any investment decisions.Please note that I do not endorse or take responsibility for material in the above hyper-linked site.


----------



## liamstone28

*Re: OIL AGAIN!*



MARKETWINNER said:


> Oil prices may stay $80- $100 in the coming years. Not only USA but also Iran too will increase oil production. Some heavy industries in the USA and Europe should benefit lot and there may investment opportunities in some areas. Global economy will expand from 2015 onwards and USD dollar may start their next major rally during next 18 months.
> 
> http://www.bloomberg.com/news/2013-...-100-a-second-day-as-u-s-stockpiles-gain.html
> 
> WTI Oil Trades Below $100 a Second Day as U.S. Stockpiles Gain
> 
> My ideas are not a recommendation to either buy or sell any security or currency. Please do your own research prior to making any investment decisions.Please note that I do not endorse or take responsibility for material in the above hyper-linked site.




I believe you and a few others on here are right. The target is around $90/barrel, checkout this chart from a broker in the US.


----------



## CanOz

*Re: OIL AGAIN!*

Why are your charts not up to date?

CL CC...


----------



## MARKETWINNER

*Re: OIL AGAIN!*

The U.S. could surpass Russia and Saudi Arabia as the world’s top oil producer by 2015 due to booming output from shale. It is expected to produce large scale shale gas production by the 2020s to boost the UK’s energy security. I believe oil could stay below $100 level in 2014 and it could go down to around $80 dollar Pb. 

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.


----------



## Smurf1976

*Re: OIL AGAIN!*

An interesting point is that if the USA is excluded, then total oil production of the rest of the world is actually falling slightly. There are individual countries with rising output and others with significant falls, but collectively they're going down (albeit very slightly) if the US is taken out of the picture.

Also, apart from a modest amount of spare capacity, every country except Saudi Arabia is running at or very close to capacity so there isn't a lot to spare.

So what happens in the US is rather critical to oil markets and prices it would seem. The notable point about the US is, of course, that the rising production is coming from shale rather than more conventional sources. That plus it's a relatively stable country and so on.

This is my own research from various sources. Use at your own risk etc.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



Smurf1976 said:


> An interesting point is that if the USA is excluded, then total oil production of the rest of the world is actually falling slightly. There are individual countries with rising output and others with significant falls, but collectively they're going down (albeit very slightly) if the US is taken out of the picture.
> 
> Also, apart from a modest amount of spare capacity, every country except Saudi Arabia is running at or very close to capacity so there isn't a lot to spare.
> 
> So what happens in the US is rather critical to oil markets and prices it would seem. The notable point about the US is, of course, that the rising production is coming from shale rather than more conventional sources. That plus it's a relatively stable country and so on.
> 
> This is my own research from various sources. Use at your own risk etc.




according to the current price moves the market feels it way over supplied.


----------



## MARKETWINNER

*Re: OIL AGAIN!*

I can remember when oil was trading over $135pb some analysts including experts predicted it could go to $200pb. If I am correct when airlines were struggling to carry out their business during period of higher oil prices one Airline spokesman in Europe said we can run our airline even if oil goes to $200pb.At that time I became very bearish and oil went down to below $50pb. Many including Airlines hedged their oil when they heard about oil price of $200pb. When oil tumbled below $50pb they had to make huge losses. Later it rebounded to $80pb. In addition there could be volatility in oil market time to time due to different factors. In the mean time both Iran and USA could produce more oil in 2014 and 2015.  We could see era of lower oil prices most probably around $80pb or below in 2014 and 2015.Lower oil prices is very good for the global economy. Especially it could improve global purchasing power. 

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.


----------



## >Apocalypto<

*Re: OIL AGAIN!*



MARKETWINNER said:


> I can remember when oil was trading over $135pb some analysts including experts predicted it could go to $200pb. If I am correct when airlines were struggling to carry out their business during period of higher oil prices one Airline spokesman in Europe said we can run our airline even if oil goes to $200pb.At that time I became very bearish and oil went down to below $50pb. Many including Airlines hedged their oil when they heard about oil price of $200pb. When oil tumbled below $50pb they had to make huge losses. Later it rebounded to $80pb. In addition there could be volatility in oil market time to time due to different factors. In the mean time both Iran and USA could produce more oil in 2014 and 2015.  We could see era of lower oil prices most probably around $80pb or below in 2014 and 2015.Lower oil prices is very good for the global economy. Especially it could improve global purchasing power.
> 
> My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions.




read the same ideas regarding the USA also remember IRAQ once they get there act together and full production is going there's fair bit more added to supply. Russia another factor in energy rpices.


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> Also, apart from a modest amount of spare capacity, every country except Saudi Arabia is running at or very close to capacity so there isn't a lot to spare.



My thoughts drifted into the future when oil becomes scarce. Would a militarily strong country take oil by force? Will price continue in an upward curve until uneconomically viable as an energy source? Considering mechanical movement requires lubrication and mostly combustion to move, the very existence of human beings will be threatened. Alternatives seem very slow and heavily reliant on changing light, heat or gravity to manageable energy. All of which convert comparatively poorly.

However when we read this - 


> Current generations of nuclear submarines never need to be refueled throughout their 25-year lifespans.



then nuclear powered stuff appears the only real way in the future. This will take care of fuel issues but lubrication will still be needed. Electricity from nuclear power stations will be the way.


----------



## CanOz

*Re: OIL AGAIN!*



Wysiwyg said:


> My thoughts drifted into the future when oil becomes scarce. Would a militarily strong country take oil by force? Will price continue in an upward curve until uneconomically viable as an energy source? Considering mechanical movement requires lubrication and mostly combustion to move, the very existence of human beings will be threatened. Alternatives seem very slow and heavily reliant on changing light, heat or gravity to manageable energy. All of which convert comparatively poorly.
> 
> However when we read this -
> then nuclear powered stuff appears the only real way in the future. This will take care of fuel issues but lubrication will still be needed. Electricity from nuclear power stations will be the way.




It would only take something like fusion to change the world dramatically....


----------



## Smurf1976

*Re: OIL AGAIN!*



>Apocalypto< said:


> according to the current price moves the market feels it way over supplied.



On that point I'll have to disagree.

Looking at history since WW2 (so that's nearly 70 years), oil "should" be around the $20 - $30 mark in 2014 USD. And yet there doesn't seem to be much oil available at this price, to the point that oil has become priced out of many markets (eg boiler fuel) as it's just too expensive.

If there's an over supply then why is it selling for 3 - 4 times the price it ought to be at? More to the point, why isn't there an outright flood of new oil coming on stream at such a high price?

I suspect the depletion of cheap oil has a lot to do with it. That is, we have oil but only if we're willing to pay sustained high prices for it, there just isn't much available at $30 or thereabouts that would have the economy humming along with an abundance of cheap energy.

It's possible of course that it's just a speculative bubble that we've seen over the past decade and that at some point it pops and oil prices drop 70% and stay there. Time will tell.....


----------



## Wysiwyg

Beachlife (thanks the poster) gave an alert to a consolidation triangle (WTI) on another thread and a break out in price has since occurred. It has been about a three month consolidation with resistance around $105. Shall be interesting to see if this present breakout continues and price hits above $110.


----------



## DeepState

*Re: OIL AGAIN!*



Smurf1976 said:


> Looking at history since WW2 (so that's nearly 70 years), oil "should" be around the $20 - $30 mark in 2014 USD.




Curious.  How did arrive at this?


----------



## Smurf1976

*Re: OIL AGAIN!*



DeepState said:


> Curious.  How did arrive at this?




Long term actual prices in "real" terms (inflation adjusted).

In real terms the price didn't exceed $20 per barrel from the 1920's to the 1970's. That's a 50 year period prior to which there was minimal use of oil anyway.

Then in the 1970's prices spiked amidst political conflict, the oil embargoes, situation in Iran and so on. But by the mid-1980's prices were back down and stayed in the $10 - $30 range until this century. Now we're seeing prices around $100 as "normal" and that's a huge change.

A search for "long term real oil price chart" will bring up plenty of links covering this one.

Another one is the price of oil relative to other fuels. There was a time when industry was abandoning coal since oil was a cheaper way to fire boilers etc. Oil heating was everywhere, even power generation was using oil as the second largest fuel. But nobody would even think of doing that today since oil is prohibitively expensive when compared to coal or gas for firing boilers etc and there's very few places still running oil-fired power stations apart from as backup or for peak loads (run for short periods only). 

So the price of oil has increased both relative to overall inflation and relative to the price of other fuels (coal and gas). That's a large part of the reason for the boom in LNG - nobody would bother with the hassle of gas liquefaction, specially built ships and so on if fuel oil was still cheaply available as an alternative.


----------



## DeepState

Just ran a few things on PCE vs WTI.  Thought you might find this of interest.  I was looking to see if the sensitivity of PCE to changes in WTI had changed in the last 30 years.  I calculated 'beta' of PCE to WTI on a rolling 3 year 




Apart from the spike leading into and during the GFC, sensitivities have been fairly stable.


----------



## tradernor

IRAQ helps the oil price a lot. and the conflict in Iraq is not going to end anytime soon.


----------



## qldfrog

I will always remember a quote  from a chemistry teacher at uni:
*oil is too precious to be burnt;*
indeed, you can not easily or even ever create all the plastics, extract all the chemicals we can get from petrol from gas or coal;
Oil is full of very complex aromatics ; it is a chemist golden dream;
To think we just burn the lot to get heat is actually very troubling;
I do believe that this fact alone means that even with plentiful supply of coal/gas (that I am not that sure we have) peak oil means oil price will increase and increase until such time that no one in a sane mind would even consider burning it in a car.


----------



## Smurf1976

qldfrog said:


> I will always remember a quote  from a chemistry teacher at uni:
> *oil is too precious to be burnt;*



There's also the question of how you burn it, some uses being more valuable than others. 

The key point there is that if you compare now with 40 years ago well:

Power generation - oil was the second largest source behind coal. Oil is now a minor source of electricity in most countries. Looking at it in the Australian context, Kwinana (WA), Torrens Island (SA), Spencer Street (Vic), Richmond (Vic), Bell Bay (Tas) and Stokes Hill (NT) power stations are all either gone completely or now run on gas. Oil is used only for peak generation or in remote areas these days.  

Heating buildings - oil was the dominant means in much of the developed world. Oil heating is now almost completely phased out in many countries and is declining practically everywhere. There's still the odd Vulcan etc oil heater here and there, but you don't see tankers going from house to house all down the street and reeling out the hose to top the tanks up as was once the case.

Industrial boilers etc - oil was the dominant fuel for new or retrofitted facilities. Nobody uses it today unless they have no alternative available. You'd have to look pretty hard to find anyone still running a large oil-fired boiler these days, they've pretty much all gone now.

Shipping - practically every ship ran on oil. Now there's a definite trend toward powering ships with LNG.

So we've already got rid of much of the discretionary oil use for electricity, heating, boilers etc and now have only the higher value (as fuel) uses left with the lowest of those (ships) now going to gas. That trend alone tells you that oil has, relative to other fuels at least, become more scarce over the past 40 years.


----------



## LockNLoad

Looks like oil price has more legs. Not good for US indexes, looking toppy.


----------



## Wysiwyg

Wysiwyg said:


> Beachlife (thanks the poster) gave an alert to a consolidation triangle (WTI) on another thread and a break out in price has since occurred. It has been about a three month consolidation with resistance around $105. Shall be interesting to see if this present breakout continues and price hits above $110.



To bulls disappointment, the breakout was met by resistance forcing price down to breakout area twice in the last 4 days. Do you buy the initial breakout or wait for a possible revisit to the breakout area? Pay the latter on WTI maybe.


----------



## beachlife

volume has been leaving the July contract and moving to the Aug contract.  If you look at the Aug chart the pull back isnt too bad. (disclosure I am still long)


----------



## MARKETWINNER

http://online.barrons.com/news/articles/SB50001424053111904544004579642562781676606?mod=BOL_twm_mw

U.S. Resists Rising Oil Prices


----------



## Wysiwyg

> U.S. Resists Rising Oil Prices



Yeah that was a terrible breakthrough of month on month resistance. Price has now fallen below previous resistance. Maybe support in the 103 range.


----------



## beachlife

62% Fib level that acted as resistance didnt hold tonight as support so 50% level is possible place to watch.


----------



## beachlife

It came back and closed right on the 62% line...interesting.


----------



## MARKETWINNER

http://www.bloomberg.com/news/2014-...gest-oil-producer-after-overtaking-saudi.html

U.S. Seen as Biggest Oil Producer After Overtaking Saudi Arabia


----------



## Smurf1976

A few comments about oil shale (rock that is mined etc, as distinct from shale oil being extracted in the US).

Here in Tasmania we have a known, proven deposit of very high quality oil shale. 

It is right next to a river so water for processing is not a problem. 

It is also very near a rail line and suitable road. 

There is plenty of power available, with high voltage lines within walking distance and a number of hydro-electric plants nearby.

It is within commuting distance of a significant town and port (Devonport). Oil could easily be shipped to refineries in Victoria, or exported overseas.

There are plenty of unemployed workers in the area, indeed lack of work has long been a problem. Many of these unemployed workers are "blue collar" having a background in now defunct heavy manufacturing industries.

Natural gas is also available if required from a nearby pipeline.

There is a nearby factory still operating, only 10km away, that is the largest non-electricity energy user in the state. Current fuel used is coal.

Surrounding land has nothing of value on it, and is not protected from development.

The oil shale has actually been mined and liquids extracted in the past, so it's a very proven resource.

So it's basically as good it gets so far as shale is concerned. It ticks all the boxes in every way and you'd be hard pressed to find a better spot to mine oil shale anywhere really.

But the harsh reality is that numerous companies, from large mining companies to exploration juniors, have had a look and all reached the same conclusions. The state government once had a look too, also reaching the same conclusion. And so did those who, back in the 1920's and 30's, actually mined shale and extracted oil until they went broke.

It's just not viable financially. When oil was at $20 it needed to be $25 to make shale worthwhile. Now it's at $100 and that's still not enough. Quite likely, we'll never get there.

As a source of liquid fuel - it can't produce petrol etc at anything approaching the current market price.

As a source of furnace fuel - not viable at the nearby factory without first extracting the oil due to the very high non-combustible portion of the shale. And if you're going to fire the kilns with oil then you may just as well buy it more cheaply rather than extract it from shale. Or just take the much cheaper route of using coal.

As a means of electricity generation it can be done, but again it's more costly than coal. Or gas. Or hydro. Or wind. Etc.

Over 150 years after it was discovered, 99%+ of this stuff is still in the ground and the trivial amount that was extracted was done at a financial loss and with considerable air pollution too (must have been pretty bad if it was causing concern back in the 1930's, a time when the environment just wasn't thought about usually). And everyone who has tried to revive the idea has walked away rather than blowing their money.

Now, if shale doesn't stack up in an "ideal" situation like this one then I very much doubt that it's going to stack up anywhere in the foreseeable future other than Estonia (by far the largest shale user in the world) burning raw shale in power stations. Maybe someone can make it work, but the idea that we'll be mining rocks and turning them into petrol doesn't seem too likely anytime soon.


----------



## DeepState

Why has the bottom fallen out of the oil market recently?


----------



## CanOz

no link, but the bloomy says no demand...refinery maintenance...blah blah


----------



## qldfrog

DeepState said:


> Why has the bottom fallen out of the oil market recently?




unsure but a months or so ago, china was buyinmgh as much as it could to fill some new storage capacity, maybe this phase is over?
just speculation...


----------



## CanOz

We could be very 'risk off' at the moment, that would put upward pressure on the USD which would put downward pressure on commodities...will check the DX and see what its been up to the last coupla days...


----------



## CanOz

DX up, CL down....Risk off?


----------



## DeepState

CanOz said:


> DX up, CL down....Risk off?




Thanks.  More sellers than buyers!

I'm trying to deflate the oil prices by something which makes sense (to me).  Does anyone know where I can source a decent history of World GDP PPP adjusted into USD?  The Economist EIU has something as does Haver Analytics. The IMF should.  I can find forecasts of such, but not history. 

:1zhelp:


----------



## CanOz

Or maybe this RY....

Here's why crude oil could get even cheaper



> Oil prices are near their four-month lows. But could they get even lower than that?
> 
> With recent tensions in large oil producers Iraq and Libya plus natural gas powerhouse Ukraine, one would expect the price of oil to spike. Instead, a barrel of West Texas Intermediate (WTI) crude oil is trading at $98 per barrel, a price not seen since March.
> 
> According to two oil-watchers, the price of oil may be headed even lower.
> 
> “The fundamentals would support a much lower oil price,” said Gina Sanchez, founder of Chantico Global. “We’re looking at a very well-supplied if not potentially oversupplied market.”
> 
> Although Iraq is facing a wave of political violence, the country has actually been turning up the pumps, notes Sanchez, a CNBC contributor. And they’re not the only ones. Libya, another country in turmoil, is also upping its output. Plus, there’s the United States ratcheting up its oil production.
> 
> “We have an oil shale boom going on in the U.S.,” Sanchez said, adding, “Iraq is up to their 30-year high after they’ve been rebuilding.”
> 
> View photo
> .
> But trading oil has been a difficult proposition since the start of 2014, according to Richard Ross, global technical strategist at Auerbach Grayson.
> 
> “It’s flat on a year-to-date basis,” said Ross, a “Talking Numbers” contributor. “There’s really no trend in WTI.”
> 
> Ross notes that oil has traded more or less in a range between $98 and $105 per barrel since the start of 2014 with one exception.
> 
> “Back in June, we had a false breakout above that resistance on some of these geopolitical fears,” Rosssaid. “But somewhat counter-intuitively, we’re right back at the low-end of that trading rage testing this key support. If we break down below this $98 level with a little authority, I think we’re look at low $90s - $92, maybe even $90 a barrel.”
> 
> Yet Ross believes it’s just a little too early to get bearish on crude oil. “We’ve gotten burned before,” he said. “You don’t want to lean too heavily when any instrument – a stock or a commodity – is sitting right on this key support.”
> 
> But Ross’ $90 price level isn’t beyond the realm of possibility as far as Sanchez is concerned. “We’re looking at a potential glut here,” she said. “That mans that oil prices should be quite substantially lower than they are today. So I think $90 is very reasonable.”


----------



## Stratanu

WTI Crude Oil threatens a more bearish turn in its broader multi-year range. WTI has come under increasing pressure in its multi-year range. Removal of trendline support at $97.30 would see a deeper sell-off to the $91.24 low, below which would aim at $85.61. Resistance shows at $105.25 then $107.73/75. with the top of the range at $111.20/$112.24 expected to cap.


----------



## MARKETWINNER

As I expected oil prices are in down trend now. NZD, AUD and CAD should follow oil next. Oil could go down to around $80 per barrel. This is good news for the global economy.

http://www.forbes.com/sites/thomasl...comes-cheaper-oil-why-prices-are-set-to-fall/

Here Comes Cheaper Oil: Why Prices Are Set to Fall

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites. Please do your own research.


----------



## Sean K

Long term short signal for fossil fuels?

*Rockefeller family to sell oil investments to reinvest in renewables*
Updated Tue at 11:45amTue 23 Sep 2014, 11:45am

The heirs of the Rockefeller family, who made their vast fortune in oil, have joined in a pledge to divest more than $56 billion of fossil fuel investments to reinvest in clean energy on the eve of a major climate change summit in New York.

http://www.abc.net.au/news/2014-09-...-oil-investments-to-reinvest-in-renew/5761966


----------



## Smurf1976

kennas said:


> Long term short signal for fossil fuels?



Or a recognition by those who know more than most, that there simply isn't much opportunity left to invest profitably in oil?

The US is awash with tight oil (aka "shale" oil") right now but there's plenty of reports coming through to the effect that even at $100 per barrel, there's no real money to be made in it. And at $80 per barrel, it's just not worth drilling wells that have truly horrendous decline rates. They flow rapidly at first, but within months that sharply declines. So you have to keep drilling more and more wells just to maintain production. Hence even the official US government reports predicting a peak and decline in output just 3 years away. The companies just don't have the cash to keep drilling faster and faster.

And it's even more telling if you take out the US shale boom. Without that, global oil production has gone nowhere since 2005. Take out the Canadian tar sands too, also a high cost source of production, and production would be down in total. Then there's what looks to be an imminent peak in Russian output.

I think we've reached a point where (1) the economy can't withstand higher oil prices but (2) production can't continue growing, or possibly even be maintained, without prices going up. That leaves us with a decline in output in the years ahead - peak oil....

The problem isn't that there's no oil left in the ground, there's still plenty of that. The problem is that there isn't much left which isn't already being extracted and which could be developed at a price that's low enough for the economy to afford it. There's still oil to drill for, but not enough at $90 per barrel to keep the game going.

My prediction? Price falls, the drilling of new shale and other high cost projects falls in a heap, production stagnates, then the price goes up until it kills demand. Then a few have another go at shale, but probably not enough and not quickly enough to bring about a major rise in total production. Rinse and repeat the cycle.


----------



## DeepState

Anyone know, or want to hazard a guess as to, why this relationship broke (as in opposing directional movement rather than magnitude) in 2013?  It compares WTI price with US Oil and Petroleum stocks (ex SPR).  Please note that right hand axis relating to stocks is inverted.




Thanks.


----------



## Trembling Hand

DeepState said:


> Anyone know, or want to hazard a guess as to, why this relationship broke (as in opposing directional movement rather than magnitude) in 2013?  It compares WTI price with US Oil and Petroleum stocks (ex SPR).  Please note that right hand axis relating to stocks is inverted.
> 
> View attachment 59766
> 
> 
> Thanks.




Was it due to the start of the Shale boom. US stock piles were the indicator for world stock piles but as the shale production increased the US stockpile it didn't increase to the same degree the worlds stock piles thus the disconnect between the historical link.


----------



## DeepState

Trembling Hand said:


> Was it due to the start of the Shale boom. US stock piles were the indicator for world stock piles but as the shale production increased the US stockpile it didn't increase to the same degree the worlds stock piles thus the disconnect between the historical link.




Good one.  Thanks very much. Lemme check out a few things.  I'll report back.


----------



## qldfrog

USD oil price fell again in the US now below $84.5.Is there any asx listed ETF/proxy for oil;
With this price, I would be keen to get some investment parked there, and the AUD/USD trend might also give me a bit of a buffer if the oil trend carries a bit longuer.
any thought?
I doubt there is much cheap oil available to be extracted in that price range anymore..but i am maybe wrong.


----------



## DeepState

qldfrog said:


> USD oil price fell again in the US now below $84.5.Is there any asx listed ETF/proxy for oil;
> With this price, I would be keen to get some investment parked there, and the AUD/USD trend might also give me a bit of a buffer if the oil trend carries a bit longuer.
> any thought?
> I doubt there is much cheap oil available to be extracted in that price range anymore..but i am maybe wrong.




Buy WTI futures vs USD
Buy AUD/USD for same notional


----------



## DeepState

qldfrog said:


> USD oil price fell again in the US now below $84.5.Is there any asx listed ETF/proxy for oil;
> With this price, I would be keen to get some investment parked there, and the AUD/USD trend might also give me a bit of a buffer if the oil trend carries a bit longuer.
> any thought?
> I doubt there is much cheap oil available to be extracted in that price range anymore..but i am maybe wrong.




Also:

http://cms.betashares.com.au/cms-admin/_images/776299834ec5f13f5473e.pdf

Please note that the underlying is hedged and that you have mentioned currency movement as a benefit, implying the desire for an unhedged position.  This is essentially a WTI futures contract.


----------



## Smurf1976

To me, the lower oil price at the moment says more about the economy and demand than it does about production.

The figures vary a bit, but if you look at worldwide oil production then it's only up slightly. We're talking 1%, 2% or something like that, the exact figure depending on which dates you use and whose data. But nobody is saying that it's up even 5%, we're talking much smaller numbers than that. There's a boom in the USA yes, but then there are other countries where production has gone down - globally it's very limited growth.

So if the price is dropping then that points to demand or speculation rather than an actual boom in supply.

And so far as demand is concerned, well there's basically nowhere left that uses oil as a major component of its' electricity supply. You'd have to look at an awful lot of countries before you found one where it's even 10% of the total, in most places these days it's way down the list behind coal, gas, hydro and nuclear (which combined account for most power generation in just about all countries). For that matter, even wind outranks oil as a source of electricity in many places these days.

So it's not a case of switching away from oil in power stations to something else. That has already been done just about everywhere (and the few places where it hasn't, don't use that much power to start with). And to the extent that someone has scrapped an oil-fired boiler or two recently, well you've got post-nuclear Japan to offset that (though even in Japan, most of the non-nuclear power is coming from coal and gas, not oil, though there's some oil being used).

Much the same could be said for running factory boilers, cement kilns and heating buildings. There's still some use for that, but just about everyone who has the physical option of switching to something else did it years ago. All that's left are a few late adopters - places that had no gas infrastructure but are now building it. There's the odd one here and there, but not a lot.

So it points more toward underlying non-substitutable demand in the real economy. Production is going up a little bit but the price is going down. Either it's the actions of the markets per se (ie not based on anything of a fundamental nature), or the economy just isn't doing that well. I suspect it's the latter.


----------



## qldfrog

Smurf1976 said:


> . Either it's the actions of the markets per se (ie not based on anything of a fundamental nature), or the economy just isn't doing that well. I suspect it's the latter.



Agree with you but still 84 USD (aka a worthless digital currency being diluted by a couple of dozen of billions a month) for a gallon of relatively rare , finite resource..I am a taker.....


----------



## qldfrog

DeepState said:


> Also:
> 
> http://cms.betashares.com.au/cms-admin/_images/776299834ec5f13f5473e.pdf
> 
> Please note that the underlying is hedged and that you have mentioned currency movement as a benefit, implying the desire for an unhedged position.  This is essentially a WTI futures contract.



Thanks a lot
yes would be better unhedged but  OOO will be fine
being synthetic may see bigger variations than the real WTI as I understand it but it will do.


----------



## Trembling Hand

http://www.ft.com/fastft/221302



> "A riveting side story to the slump in oil prices this year is that Brent is down 50 per cent more than WTI," Stuart Kirk, managing director at Deutsche Bank, said.




Maybe somewhat related to what RY has posted above.


----------



## McLovin

qldfrog said:


> I doubt there is much cheap oil available to be extracted in that price range anymore..but i am maybe wrong.






> Only about 4 percent of U.S. shale oil production needs prices above $80 for drillers to break even, the International Energy Agency said today in its monthly oil market report. Producers are getting more oil per dollar spent drilling, driving costs down as much as $30 a barrel since 2012, Morgan Stanley (MS) analyst Adam Longson said in a report yesterday.




http://www.bloomberg.com/news/2014-10-14/u-s-shale-oil-output-growing-even-as-prices-drop-eia.html


----------



## Smurf1976

Economics 101 tells me that however much oil production was profitable at $100 per barrel, there will be a smaller amount that's profitable at $50 per barrel. I won't claim to know how much at what price, but as a general principle that should be true.

Continued low prices would thus seem dependent on there not being any real growth in consumption. In other words, the economy remains weak.


----------



## qldfrog

being an engineer, I tend to trust more facts than Morgan stanley;
fracking wells production is boom and crash aka after an initial huge production flow, it crashes within 3 years or so
so you drill another well
which costs a lot;
a few reports were hinting that the oil surge in the us is in fact a capex surge;
I would take a step back and says:
if it is still so profitable, aka even at 30$ , where are the billions? Where are the companies with the marvelous dividends??
"reinvested in new fields are they?that must be surely a great sign....
In my opinion, the QE has produced a flow of cheap USD that were transformed via capex intensive fracking into a flow of oil (and a destroyed earth)
the oil is out, the debt remains and the whole bandwagon will have to stop.


----------



## Echidna50

Interesting bullish article on oil prices from U.S. Seeking Alpha:

http://seekingalpha.com/article/2581505-8-major-reasons-why-the-current-low-oil-price-is-not-here-to-stay


----------



## tradernor

Another bold bet on oil, from CLR's CEO:


http://www.businessinsider.com/r-us-oil-ceo-hamm-goes-out-on-a-limb-scraps-hedges-2014-11


----------



## Wysiwyg

tradernor said:


> Another bold bet on oil, from CLR's CEO:



Interesting to read about old Hamm in the midst of a divorce. One wonders what influence if any this has had on his decision to drop all oil hedges. 

"Hamm, who founded the Oklahoma City-based company in 1967, is in the midst of a bitter divorce battle with his wife Sue Ann.

Since Hamm owns about 68 per cent of the company, the divorce settlement holds vast implications. During much of August and September, the CEO spent most days in court to attend his divorce trial, which may result in one of the largest divorce judgments in U.S. history".


----------



## CanOz

On the monthly you can see that the next solid support is 40 ish. That would have a dramatic effect on communities from North Dakota to Northern Alberta, countries from Norway to Nigeria. Traders will be flocking to the intraday volatility in the oil and gas markets with new shorts being cleaned out from time to time. Transport stocks will move, air tickets will be cheaper again, palm oil prices will plunge, consumers will have new spending power, the industrial stocks will rally with less energy costs, currencies of oil producing nations will plummet.

this is big...

If you're an intraday trader, you need to be watching these markets and these currencies in the next few days/weeks.


----------



## Smurf1976

qldfrog said:


> fracking wells production is boom and crash aka after an initial huge production flow




There's a few reports starting to emerge, and that was when oil was in the 70's, about rigs being idled since it's just not profitable to drill some of these well in the US at that price.

Also in the Australian today, Russia is struggling economically with the falling oil price (apparently that's having a far bigger impact than the sanctions) and needs about $100 per barrel to balance the budget.

The price could certainly fall a lot further in the short term, but I can't see it staying down in the longer term.


----------



## So_Cynical

CanOz said:


> Transport stocks will move, air tickets will be cheaper again, palm oil prices will plunge, consumers will have new spending power, the industrial stocks will rally with less energy costs, currencies of oil producing nations will plummet.
> 
> this is big...
> .




Bigger picture, maybe this is the kick that the western economies need to get going again...winners and losers all round i suppose...consumption is such a large part of western GDP, a low oil price = a pay rise that's not inflationary or coming out of the bosses pocket.


----------



## DeepState




----------



## DeepState

So_Cynical said:


> Bigger picture, maybe this is the kick that the western economies need to get going again...winners and losers all round i suppose...consumption is such a large part of western GDP, a low oil price = a pay rise that's not inflationary or coming out of the bosses pocket.




Inflation expectations are a strange thing.  They are now concerned that deflationary pressures will be exacerbated in EZ and Japan by these developments.  If true, this may be the more powerful force than the tax cut or pay rise you are raising.  We have reasons locked and loaded to explain any outcome in the weaker Western economies...  

One view: Lower oil prices will bring down inflation expectations in EZ...increase chances of full bore QE....hopefully a tick up in GDP.


----------



## Uncle Festivus

I think there are 3 points at play here - demand, US import independance due to shale, and currency wars.

Demand - essentially the global economy is in recession, or at least not growing, and depending on how you interpet the data, the US is as well. No demand from the US due to shale.

US shale oil - the Saudis won't blink first, they will force as many US shale companies out of business as they can. 
Shale companies won't be able to just shut down and sit idle, they either make money to pay debt or go broke.

Currency wars - commodity producers margins are getting squeezed because of the flight to the worst best currency.

It's now officially getting very ugly, even between allies, in a  last desperate attempt to grow economies on debt (QE) when there is no demand for it, apart from blowing non productive bubbles? I expect to wake up one day and see the bastions of irrational exuberance, the US equity markets, halted on limit down very soon...........


----------



## McLovin

DeepState said:


> View attachment 60510




Can you explain that chart, RY? Is that the oil price where the govt runs a balanced budget?

TIA


----------



## CanOz

The Saudi's are among the cheapest for operational costs, but I'm guessing that when you throw the economy in there, they are not as competitive?


----------



## Smurf1976

McLovin said:


> Can you explain that chart, RY?



Looks like it shows the price per barrel (presumably in USD) required to balance their government's budget? That's my guess, since all those countries are substantially dependent on oil revenue to fund non-oil related things.

A point many miss is that in 2014 "big oil" is in fact government. The likes of Shell and ExxonMobil are small players these days in terms of upstream production. They produce some yes, but the likes of Saudi Aramco make the "big oil" companies look trivial in comparison. And even where the oil is produced by private companies, in some countries there's still a lot of government involvement particularly with where the profits go.

As for what's going on, I suspect that Russia has something to do with it. Pure speculation here, but an agreement between the US and the Saudi's and possibly other major producers to crash the price of oil, crippling Russia economically, seems plausible to me. When you look at Russia's economy, they're very much an "oil country" in terms of exports and to a significant extent government revenue too. Oil is more important to Russia than coal or iron ore is to Australia. Many would argue that the mid-1980's oil price crash had a lot to do with the unraveling of the USSR given the economic stress imposed. History repeats?


----------



## CanOz

Smurf1976 said:


> Looks like it shows the price per barrel (presumably in USD) required to balance their government's budget? That's my guess, since all those countries are substantially dependent on oil revenue to fund non-oil related things.
> 
> A point many miss is that in 2014 "big oil" is in fact government. The likes of Shell and ExxonMobil are small players these days in terms of upstream production. They produce some yes, but the likes of Saudi Aramco make the "big oil" companies look trivial in comparison. And even where the oil is produced by private companies, in some countries there's still a lot of government involvement particularly with where the profits go.
> 
> As for what's going on, I suspect that Russia has something to do with it. Pure speculation here, but an agreement between the US and the Saudi's and possibly other major producers to crash the price of oil, crippling Russia economically, seems plausible to me. When you look at Russia's economy, they're very much an "oil country" in terms of exports and to a significant extent government revenue too. Oil is more important to Russia than coal or iron ore is to Australia. Many would argue that the mid-1980's oil price crash had a lot to do with the unraveling of the USSR given the economic stress imposed. History repeats?




Agree, I've heard this about Iran and Russia already in a few Bloomy podcasts...

Spot on also on the fiscal cost.

Really interested in this shift in energy costs. I don't think it is dire but the opposite, especially coming into winter in Europe. Interesting that Nat gas can sometimes trade inversely to oil, however I wonder if this shock can bring the two back to closer correlation....


----------



## TheUnknown

Oil price collapsing has nothing to do with shale oil, economy or recession. This is a repeat of the 1980s when the USSR collapsed it is to starve the Russian economy by the scumbag western governments supported and agreed with king of terror and king of human rights abuser saudia arabia.

It is also aimed at Iran to try and tame them from getting nuclear.


What will happen?  

* Smaller countries that produce Oil and rely on Oil will soon starve if price stays this level or drops more.
* One side of the world will give in and in 3-4 months oil will be back up again

In other news oil has been its lowest since 4-5 years but in aus we are still paying $1.30 +p/l work that one out.


----------



## Smurf1976

CanOz said:


> Really interested in this shift in energy costs. I don't think it is dire but the opposite, especially coming into winter in Europe. Interesting that Nat gas can sometimes trade inversely to oil, however I wonder if this shock can bring the two back to closer correlation....




One thing about oil is that it's the universal fuel. Apart from making steel and a few other things like that, what you can do with coal or gas can be done with oil in a technical sense. Eg in Australia we generate electricity from coal, gas and renewables (mostly hydro and wind) but if oil became cheap enough then we do have capacity to burn it in a few current power stations, and if it stayed down long enough then it's not difficult to convert most coal and gas plants to run on oil.

We're not at that point yet, the price of black coal  is equivalent to oil at USD18 per barrel (roughly, depends on the quality of the coal etc).

For gas it's a bit more complex, since there's no real "single" global price for gas and gas prices themselves are in some circumstances (particularly LNG) set simply as a fixed % of the oil price. But looking at the EU, gas is currently equivalent to oil at about $57 per barrel. For the US it's equivalent to oil at $22.

If the oil price continues falling then the EU may end up using more oil and less gas in industrial facilities, power generation etc. The ability to switch in the short term does have definite limitations, but it's not zero. Now, if the EU starts using more oil and less gas, then they need to import less gas from a recently troublesome supplier - Russia. 

The more I think about this one, the more I see politics being involved as a cause.


----------



## TheUnknown

Smurf1976 said:


> One thing about oil is that it's the universal fuel. Apart from making steel and a few other things like that, what you can do with coal or gas can be done with oil in a technical sense. Eg in Australia we generate electricity from coal, gas and renewables (mostly hydro and wind) but if oil became cheap enough then we do have capacity to burn it in a few current power stations, and if it stayed down long enough then it's not difficult to convert most coal and gas plants to run on oil.
> 
> We're not at that point yet, the price of black coal  is equivalent to oil at USD18 per barrel (roughly, depends on the quality of the coal etc).
> 
> For gas it's a bit more complex, since there's no real "single" global price for gas and gas prices themselves are in some circumstances (particularly LNG) set simply as a fixed % of the oil price. But looking at the EU, gas is currently equivalent to oil at about $57 per barrel. For the US it's equivalent to oil at $22.
> 
> If the oil price continues falling then the EU may end up using more oil and less gas in industrial facilities, power generation etc. The ability to switch in the short term does have definite limitations, but it's not zero. Now, if the EU starts using more oil and less gas, then they need to import less gas from a recently troublesome supplier - Russia.
> 
> The more I think about this one, the more I see politics being involved as a cause.




Oil cartel is going against Russia nothing else. You can only push a super power so far until it really hits you back.


----------



## Value Collector

TheUnknown said:


> Oil cartel is going against Russia nothing else. You can only push a super power so far until it really hits you back.




Russia is not a superpower,


----------



## explod

Value Collector said:


> Russia is not a superpower,




I would question that from a military perspective.   If they were easy to bowl over the US would have done that. 

Check out "zero hedge"  for a week or two.


----------



## DeepState

explod said:


> I would question that from a military perspective.   If they were easy to bowl over the US would have done that.
> 
> Check out "zero hedge"  for a week or two.




Why wait?




But, really, nuclear arms use is off the table.  It would be MAD to use them.  Or, if used, will obliterate the table anyway.

Russia still runs a current account surplus of $50bn.  It has USD 429bn in FX reserves.  IT has a very small sovereign debt load.

Russia's private sector does have substantive foreign debt.  I do not know at this time whether that is substantively hedged one way or another.  In the event of sovereign distress which prevents these from rolling, FX reserves will have to be tapped to prevent these enterprises from folding for lack of foreign sourced funds.  Pressure from this issue will also arise as a result of the sanctions which are now in place.  Somehow, I suspect that FX will be available via friendly trade partners, so it is not as big an issue as might appear to be the case.  A certain country to the south is a major buyer and seems to have a stack of USD in its coffers looking for productive uses.


----------



## CanOz

RY, what do you think $50 oil would do to the industrials in developed markets? What effect do you think it would have on emerging markets? Love to hear your view!


----------



## DeepState

CanOz said:


> RY, what do you think $50 oil would do to the industrials in developed markets? What effect do you think it would have on emerging markets? Love to hear your view!




In isolation, a marginal move in energy costs consumed in the production process will clearly be beneficial to industrials. However, there is a real concern that this can wash through to weaken inflationary expectations in countries/regions like Europe and Japan.  In circumstances of excess capacity, profitability gains from reduced energy input costs will get passed along to consumers who will experience a disinflationary outcome...purportedly leading to reduced demand if the orthodoxy is believed.  This effect would generally be bigger in the near to medium term than the relatively small savings made on input costs.  Hence, lower energy costs do not necessarily have to be a good thing.  It depends a lot on whether consumers extrapolate the deflationary effect.  The authorities are clearly very concerned.  If they are correct, $50bbl would be great for the economy in the very long term if sustained.  In the nearer term, it isn't good for industrials serving the domestic market.  You would also see a bunch more monetary stimulus, weakening the currency further.

For export manufacturers, all of this is generally good as their profitability improves with competitive positioning.

In countries like UK and US where things are much better, the lower input costs and final costs serve as more of a tax cut and encourage further demand. It is more likely that these companies can hang on to some of the benefit arising from lower input costs.  Hence, industrials in these countries which serve the domestic market can be expected to benefit.

For EM, it is mixed.  Depends on the country by country scenario with straightforward translations from importance of energy to the listed market and economy more generally.


All of the above is just thinking about things as the impact from marginal movements in oil.  If a $50bbl scenario arose because there was an aggregate destruction in demand on a major scale, everything is screwed.

Cheers


----------



## Uncle Festivus

TheUnknown said:


> Oil price collapsing has nothing to do with shale oil, economy or recession. This is a repeat of the 1980s when the USSR collapsed it is to starve the Russian economy by the scumbag western governments supported and agreed with king of terror and king of human rights abuser saudia arabia.
> 
> It is also aimed at Iran to try and tame them from getting nuclear.
> 
> 
> What will happen?
> 
> * Smaller countries that produce Oil and rely on Oil will soon starve if price stays this level or drops more.
> * One side of the world will give in and in 3-4 months oil will be back up again
> 
> In other news oil has been its lowest since 4-5 years but in aus we are still paying $1.30 +p/l work that one out.




Really? Russia is not desperate -yet, refer RY's post above.

Do you think that the US would be part of a scheme that would jeopardise their new found oil independence and put at risk 10's of thousands of jobs in the burgeoning shale oil industry? The Saudi's will sit this out until the shalers capitulate. The figure I have for shalers 'pain' point is about $80 due to futures hedging etc so a lot of them are getting very nervous right now.

The global economy speaks for itself - borderline recessions everywhere, Japan in recession already.

The US only needs 1 polar vortex event every qtr to be officially in recession. This qtr is going to get trashed too. All this talk about low 'gas' prices meaning more consumer spending is marginal at best - they have to get to the store in the first place but for the last few weeks thay have been snowed in. And online purchases make up an increasing share of sales these days.

It's still about demand and it's been slowing for the last 6 months while supply has been increasing.......plus a few traders getting caught on the wrong side.....

http://www.brookings.edu/blogs/planetpolicy/posts/2014/10/17-world-oil-demand-ebinger

http://www.marketwatch.com/story/op...on-oil-2014-11-28?mod=MW_story_more_headlines


----------



## Smurf1976

Uncle Festivus said:


> Do you think that the US would be part of a scheme that would jeopardise their new found oil independence




Agreed with the rest of your post but the US is not "independent" so far as oil is concerned.

The shale boom has certainly boosted US production of oil whilst consumption has dropped. So net imports have declined greatly that's certainly true, but they're not independent as such as they still import more than they export. Also there's issues with the grade of oil, that from shale being too light to produce many products (works well mixed with the very heavy oil from Canada however, production of which has also increased). 

It's a bit similar with gas. They're largely self sufficient but still a net importer (all of which comes from Canada so not generally considered to be a problem as such) overall.

As for the future, they'll keep operating the wells already drilled certainly since most of money has already been spent. But at prices below $80, drilling shale wells in the first place doesn't really make a profit to my understanding. At a guess based on history, they'll cut back on drilling, causing an over supply of rigs and forcing the price of drilling as such down (basic supply and demand - drilling itself is a competitive market in the US), in order to make drilling viable at a lower price. End result = less drilling but not zero with the "pain" effectively spread between the oil field operators (lose money on wells previously drilled or at least contracted to be drilled at higher prices), and the drillers themselves (less work and paid less for it).


----------



## Value Collector

explod said:


> I would question that from a military perspective.   If they were easy to bowl over the US would have done that.
> 
> Check out "zero hedge"  for a week or two.




Russia is a power, but not a super power. Generally the USA is considered the only remaining super power, Although a lot of people think china will eventually become a super power.

When it comes to military, Russia's military doesn't have the ability to project it's self globally as the USA can, the entire US armed services are basically setup up as an expeditionary force, and have the systems and infrastructure to support anything from small engagements to large invasion forces any where on the planet.

But military is just one part, the economic influence is a major aspect of power, and no one has the economic levers to pull like the USA does at the moment, right now even opec has lost its shine.

generally a super power is-



> A superpower is a state with a dominant position in international relations and is characterised by its unparalleled ability to exert influence or project power on a global scale. This is done through the means of both military and economic strength, as well as diplomatic and soft power influence. Traditionally, superpowers are preeminent among the great powers


----------



## Sdajii

A lot of people have been talking about the various reasons for the drop in oil price, some of it political and deliberate and some of it obviously due to the shale boom increasing supply etc. That side of the price decrease is not intentional (obviously the shale producers don't want a price decrease), it's incidental.

As for the intentional side of it, especially Saudi Arabia's choice to allow prices to fall, the speculations of motive tend to be hurting Russia, Iran, marginal production such as US shale, etc. 

Something which I haven't seen speculated on is that low prices may well trigger more drastic action by nations which require higher prices to balance their budgets. It would be easy enough (relative to what they have to gain) for some countries or even companies to initiate a war or terrorist action in the right place which would dramatically hurt production and boost prices. Just as a random example, Russia stares at a difference between however many billions of dollars depending on the oil price, a false flag attack which initiates a conflict in an oil producing region or any other excuse to attack or trigger an attack on an oil producing region may cost a lot less than they have to gain. There are many countries and companies each with many many billions of dollars on the line, and a lot of oil producing centres would be easy to trigger into disarray. I can't help but wonder if this may be part of the strategy of allowing lower prices. Probably not their primary consideration, but it may be part of the mix. I'm sure a simple display of power is also part of the game - "Look at us, we can push prices up, but we can also keep prices low, you're at our mercy, don't **** with us"

One thing we can be pretty sure of is that Saudi Arabia/OPEC and all other oil producers will act in whatever way brings in the most money. OPEC/Saudi Arabia have deliberately allowed prices to fall. It may not be quite as easy as it used to be for them to manipulate prices, but they certainly still could if they wanted to, and they have chosen not to. This means that regardless of the short term, they believe this period of lower prices will lead to higher average prices over the medium to long term. I certainly don't think they would take action which would decrease their bottom line in the big picture.

For many years the analysts have agreed that as time goes on oil prices will increase on average and see higher volatility, with big peaks and dips. It really does seem to be playing out that way. In the dips, especially at this stage, which is exactly what has been predicted for a long time, it is going to seem like oil prices are collapsing entirely, but it's probably just part of a very bouncy upwards trend.


----------



## Wysiwyg

Sdajii said:


> One thing we can be pretty sure of is that Saudi Arabia/OPEC and all other oil producers will act in whatever way brings in the most money. OPEC/Saudi Arabia have deliberately allowed prices to fall. It may not be quite as easy as it used to be for them to manipulate prices, but they certainly still could if they wanted to, and they have chosen not to.



The plan would be to squeeze U.S. shale oil producers out of the market. The growth of production in U.S. has been strong but the cost for exploration, development and ongoing production is getting prohibitive now according to some sources. $40 - $60 according to this 16th Oct. 2014 article. I new of an oil shale extraction plant in Queensland that has started up and shut down a few times due to environmental issues and extraction process costs. A demonstration plant is the most recent attempt to continue down this path using the Paraho 2 extraction process.

I would think the dirty process could be struggling now.



> It would take a drop in crude prices to about $50 a barrel before U.S. oil production growth would be choked off.
> 
> That's the finding in a new report from Citigroup energy analysts. They said the two-year low in U.S. oil prices is not yet stalling growth of U.S. crude production, and even at $70 per barrel, the industry would continue to increase production.
> It would have to fall to $50 or even lower, to fully halt shale production growth, the report said. At a level of $40 to $60 a barrel, production growth would fall toward zero as producers shut less productive wells. Citi said, in fact, this break-even price could get lower over time as producers focused on more intensive drilling in more productive areas. http://www.cnbc.com/id/102094881#.


----------



## rimtas

As all commodities (CRB constituents) including oil were squeezed down due to rising US dollar, I think the bottom in Oil is very close, most likely it is in terminal wave, as US Dollar just reversed and probably will start the biggest correction in the last 6+ months.  Gold silver, cocoa and other commodities changed  their respective medium term downtrends already.

Longer term US dollar should rise into triple digit territory, and oil below GFC bottom of ~30, most likely to $17 area. But for now, the extreme sentiment towards these markets should return to the mean.

(Chart below is US DOLLAR index and WTI Crude)


----------



## So_Cynical

Hows this for some out of the box thinking.

I saw a video yesterday of Saudi police whipping a blogger who has recently been found guilty of blasphemy.

http://edition.cnn.com/2015/01/12/middleeast/saudi-arabia-activist-flogging/

This got me thinking about double standards etc and the thought occurred to me that if Saudi Arabia was subjected to a regime of sanctions like Russia or Iran, or for some other reason was to become politically unstable and oil production/exports were somehow in jeopardy...how that would be a near perfect storm for the western allies.

For the last 60 years the west needed a politically stable Saudi Arabia, the west absolutely needed that oil and needed it cheap, and now they dont..put simply if the Saudis are taken out of the current picture it would be a massive positive for the western allies, US/Canadian and OPEC (less SA) could easily cover the short term oil needs of planet earth.

Regime change in Saudi would be a good thing, keep all those Sunni jihadists busy in Saudi for a decade or more, suck in fighters from all over the world, the US, Russia and China will sell lots of arms, POO lifts and the US takes the crown as the world 2nd or 3rd largest producer...every one come out a winner except the peoples of the Arabian peninsular and wanabe Sunni jihadists...its perfect.


----------



## notting

They use the air bases to bomb people from there too.
The high price of oil has been a bit of a trade off.
Maybe the Yanks have realised that if they leave 'em all alone they will all just start blowing each other up so the Yanks don't need to be there.
Now they can use their own oil and forget about the lunatics.


----------



## jank

Sorry if this has been asked already but what is the safest way to play the reversal of oil prices, say I want to go long on oil in a few weeks if it goes under $40 a barrel. ETF? Stock? Options? 

USO ETF is interesting and so is IXC.


----------



## qldfrog

try OOO and ETPOIL on the asx
OOO is betashare and currency edged
etpoil is based on brent

Note I own both.


----------



## explod

Oil is back on the rise. 

Markets,  particularly the DOW were looking shakey so oil will save the day and the DOW could even hit 20,000 in the next run.  Yeehaaaar. 

Just my very humble opinion of course.   DYOR


----------



## CanOz

explod said:


> Oil is back on the rise.
> 
> Markets,  particularly the DOW were looking shakey so oil will save the day and the DOW could even hit 20,000 in the next run.  Yeehaaaar.
> 
> Just my very humble opinion of course.   DYOR




Oil has finally had its first decent short covering rally....a good start, but one rally makes not a bull market mate!


----------



## explod

CanOz said:


> Oil has finally had its first decent short covering rally....a good start, but one rally makes not a bull market mate!




Commodities are a manipulated market by the bankster cartels in my humble view. 

Was simply making a bit of a joke of the joke.  DYOR

Out today by the MSM in the US "... economic confidence improves slightly"  what a revelation,,  and just when the Dow was down about 300 and looking grim.  People walking the streets and on food stamps everywhere,   ya gotta be joking.


----------



## shouldaindex

This is a week by week of the month analysis since June.

1st week: -2, 0, -3, -3, -1, -5, -5 = -19
2nd week: -3, -2, -1, -10, -6, -7, 0 = -29
3rd week: +2, -2, -2, +1, 0, +1 = 0
4th week: -1, +1, +2, -1, -3, -4 = -6
5th week: -5, +1, -3, -3, -2, -1 = -13

(5th week is partial) 


Days 29th to 14th has seen oil drop $61
Days 15th to 28th has seen oil drop $6


----------



## explod

shouldaindex said:


> This is a week by week of the month analysis since June.
> 
> 1st week: -2, 0, -3, -3, -1, -5, -5 = -19
> 2nd week: -3, -2, -1, -10, -6, -7, 0 = -29
> 3rd week: +2, -2, -2, +1, 0, +1 = 0
> 4th week: -1, +1, +2, -1, -3, -4 = -6
> 5th week: -5, +1, -3, -3, -2, -1 = -13
> 
> (5th week is partial)
> 
> 
> Days 29th to 14th has seen oil drop $61
> Days 15th to 28th has seen oil drop $6




Yeh,  when the serious traders were away for the festive. 

This is all about the currency war,  particularly the west NATO alliance against Russia.   But its backfiring,  Russia are producing with infrastructure in place,  the west with new shale etc.,  and heavy borrowing to boot are in trouble. Only just announced that Russia are now supplying via Turkey and bypassing the Ukraine. 

We live in interesting times.  Just noted gold pop up $25 in the lasr hour.   Be interesting to see the Dow Jones wipsaws tonight and two trading days to go hey.


----------



## notting

CanOz said:


> Oil has finally had its first decent short covering rally....a good start, but one rally makes not a bull market mate!




Do ya reckon this current action is also short covering, well it might be for me tomorrow  But a spike in gold and a spike in oil and everything else getting f#$%ed.
Got me wondering what's going to hit next?




Maybe Poo Poo has plans. (Putin)


----------



## CanOz

notting said:


> Do ya reckon this current action is also short covering, well it might be for me tomorrow  But a spike in gold and a spike in oil and everything else getting f#$%ed.
> Got me wondering what's going to hit next?
> 
> View attachment 61141
> 
> 
> Maybe Poo Poo has plans. (Putin)




SNB....news, check out the usd/chf


----------



## Wysiwyg

*Re: OIL AGAIN!*



Smurf1976 said:


> The link between energy and _real _economic growth (as distinct from speculation etc which doesn't actually produce real wealth and which would appear to consume little energy) is fairly solid. There will be efficiency improvements over time, but if we make more things then ultimately we'll be using more materials to do it.
> 
> *Also there's a huge paradox with efficiency. Install a heat pump for heating and then people leave it running 24/7 (very common in practice). Switch to energy saving lights, then they get left on a lot more than the old lights were. Double the efficiency of an engine, then consumers and car manufacturers will decide to (a) have engines twice as big (b) have more cars and (c) drive their cars further. That's pretty much the lesson of history - resource consumption goes up despite improvements in efficiency. Look what happened when TV's became more efficient. Use 30% less energy for the same size screen maybe, but when you end up with a screen that's 3 times as big that's still a doubling of energy consumption and that's exactly what has to a large extent happened.*
> 
> The link between oil and economic activity isn't absolute, but since oil fuels most transport it's pretty strong. Make more things and they'll need to be transported which will use oil.
> 
> As for what happens with China, that's going to be interesting to say the least. But I do note that even the more extreme optimists aren't predicting a doubling of oil production as would be necessary if China were to attain US per capita oil consumption levels.
> 
> I do note however that China has a key advantage in that whilst they are urbanising and developing, they are doing so in a world where oil isn't overly cheap and (presumably) in the knowledge that problems likely lie ahead. They're building an economy that works with $80+ oil whereas the USA (as the largest but not only example) has an economy based upon $20 oil. That pattern of development, plus China's very heavy reliance on coal and to some extent hydro for their non-transport energy, is very much in China's favour. The US is in economic trouble with oil at $80 whereas it would need to be somewhat higher to meaningfully hurt China.
> 
> In terms of physical supply, with China doing deals with Saudi Arabia, Venezuela etc they are certainly taking steps to secure supplies. Such action, effectively taking oil off freely traded spot markets and locking it up under long term deals, pushes the rest of the world further down the "no oil at any price" track that has already been mentioned. That's the scary bit, and that's what seems to be actually happening.




I found this post on the money considering the POO lately. The cheaper fuel prices will likely see an increase in consumption. I know I put more in the tank at present but drive no more than usual so it is longer between refills.


----------



## Smurf1976

BHP is cutting back on oil drilling in the USA, other companies are doing the same and the number of drilling rigs in operation is now at a 6 year low.

http://www.abc.net.au/news/2015-01-21/bhp-billiton-to-cut-us-drilling-rigs-due-to/6031236

Slowly but surely, producers are reacting to the drop in prices and curtailing future supply. Assuming at least some level of ongoing demand growth, prices head back up at some point.


----------



## notting

Oilers having a day on.  
Oil itself did not do much last night on the back of the ECB ramp but is doing OK whilst major Western markets are in bed.
Is this the buying opportunity?


----------



## qldfrog

saudi king death means  unwrapping of power struggle in the next few weeks
with potential unstable time ahead
oil should be at 200$ not 40$
should the saudis fall to IS, forget the overproduction, unless the west decides suddenly that IS imams are actually quite nice guys..would not be a first
look at qatar/saudis as they are now...


----------



## waterbottle

qldfrog said:


> saudi king death means  unwrapping of power struggle in the next few weeks
> with potential unstable time ahead
> oil should be at 200$ not 40$
> should the saudis fall to IS, forget the overproduction, unless the west decides suddenly that IS imams are actually quite nice guys..would not be a first
> look at qatar/saudis as they are now...




Regardless of what happens politically, I can't see why they would decide to shut off supply. They would be allowing the smaller players to survive and ensuring their loss of market share, effectively signing off on their own demise.


----------



## qldfrog

waterbottle said:


> Regardless of what happens politically, I can't see why they would decide to shut off supply. They would be allowing the smaller players to survive and ensuring their loss of market share, effectively signing off on their own demise.




if IS is taking over Saudia Arabia, who is going to be the "they"?
it is not an implosible scenario;
people have very short memory and even less understanding of the current civilisation war happening now..
anyway, it would not be completely crazy to put a few dollars on 100$ a baril in a year time.
but true, not according to a nice gentle slow reduce of production....


----------



## Smurf1976

waterbottle said:


> Regardless of what happens politically, I can't see why they would decide to shut off supply.




Two major oil crises, which came to be simply known as "the energy crisis" dominated the oil industry and much of the resultant politics of the 1970's and well into the 1980's.

October 1973 the OPEC nations roughly tripled the price then in 1979 Iran (second largest producer in OPEC at the time) cut off supply and sent the price through the roof. 

In practically every country there are coal / hydro / nuclear power stations or gas pipeline projects built as a direct response and still in use today. Prior to 1973, there was no such thing as "energy" in terms of politics, it just wasn't an issue that anyone thought about. That changed real fast when the oil became expensive and supplies ran short. Coal and gas were most certainly seen as "alternative" energy back then, indeed 30 years ago Australia did have a national policy to maximise the use of coal (in preference to using oil in boilers etc) and like most industrialised  countries we pledged to minimise the use of oil wherever possible.

The Saudi's weren't the cause last time but there's a definite precedent for oil supply shocks.


----------



## Bintang

Smurf1976 said:


> Two major oil crises, which came to be simply known as "the energy crisis" dominated the oil industry and much of the resultant politics of the 1970's and well into the 1980's.
> 
> October 1973 the OPEC nations roughly tripled the price then in 1979 Iran (second largest producer in OPEC at the time) cut off supply and sent the price through the roof.
> 
> The Saudi's weren't the cause last time but there's a definite precedent for oil supply shocks.




Since 1973 and prior to the current oil price malaise there have been three major downturns in oil price – Q1 1986,  Q4 1998 and  Q4 2008. Each time the price recovery period was about 12 to 18 months. I don’t expect much difference this time round unless the great recession – bordering on depression keeps going much, much longer. At any time, the best way to actually reduce oil consumption enough to lower the price (especially in the USA) is to put people out of work. When people are unemployed they have a tendency not to drive cars to places of work everyday.


----------



## notting

According to the price of Tesla shares, the markets are pricing in electric cars to be significant modes of private transport. 
The US is a major oil producer once again. 
OPEC is boken. 
Tactical cutting is no longer and option it has little to do with trying to break the little guys.  It's a paradigm shift. 
The Saudi king probably died of shock! 
Russia and a few others are insolvent.
No wonder the Europeans are actually starting to print money, with all the bad debts coming from a few sovereign defaults, there going to need plenty of cash around to cover it!


----------



## Smurf1976

Something to consider about oil, is that most of the time it hasn't really been a free market a such.

The Railroad Commission of Texas formally regulated prices 1930 - 1970, and by 1973 OPEC had stepped in to do essentially the same. 

So over the past 85 years, there have only been 3 years when oil hasn't been under some degree of direct, reasonably coordinated efforts to control price. And nothing really happened in those 3 years anyway, the Railroad Commission didn't officially announce that they'd stopped regulating prices, they just lost the ability to effectively do it as US oil production peaked although even that wasn't recognised at the time, so we may as well say that it's been regulated since 1930 in a practical sense.

So in any discussion of oil prices, we are talking about a market where there has always (well, unless you want to go back pre-1930) been a single entity with the ability to raise prices, an most of that time the same entity has also had the ability to raise output and drop the market price should they wish to do so. That is manipulation of the market as such, in addition to direct price controls imposed by various governments over the years.

Thus far, nothing has changed. OPEC still exists, their largest member is simply choosing to over supply the market and drop prices. It may well be that OPEC never regains control, but thus far nothing extraordinary has happened in that regard. If the Saudi's really wanted oil at $100 then they would have no trouble doing so. Simply refuse to sell below that price, get the other OPEC members to do likewise, and they'll still find plenty of buyers. 

I'm always wary of any market where government is the largest player. And if you look at who "big oil" actually is, it's not the likes of Exxon at all. It's governments which dominate the upstream industry in many of the major producing countries either directly, or via very close association with "private" oil companies.


----------



## waterbottle

Article reporting on a survey of market participants. States that most think $30/bl will lead to recession. Last time we saw this was during the GFC. Cause and effect unclear, but its not hard to imagine alot of people other than drillers losing money

http://www.marketwatch.com/story/if...ssion-2015-01-22?cb=logged0.34395162272267044


----------



## Wysiwyg

WTI going north in a hurry. Don't know why news wise but could be shorts exiting. Those greedy buggers.


----------



## notting

Wysiwyg said:


> WTI going north in a hurry. Don't know why news wise but could be shorts exiting. Those greedy buggers.




Oil has a history of not making U shaped recoveries after big falls.  Tends to like Vs.
Big Oil unions striking in USA, may be the trigger this time.


----------



## StockTrader010

Nice rally in oil the last couple of days (+20% since low). Although it seems to have lost some of its momentum :-(


----------



## qldfrog

StockTrader010 said:


> Nice rally in oil the last couple of days (+20% since low). Although it seems to have lost some of its momentum :-(



and nice collapse last night!


----------



## StockTrader010

qldfrog said:


> and nice collapse last night!




Still, I doubt we'll touch the low levels of last month again. Oil seems to have bottomed out.


----------



## qldfrog

an interesting view which I tend to agree on
2017 or 2020 to ,y opinion
but  it will happen


----------



## Smurf1976

qldfrog said:


> an interesting view which I tend to agree on




What view is that?

Missing link or did I miss something somewhere?


----------



## qldfrog

Smurf1976 said:


> What view is that?
> 
> Missing link or did I miss something somewhere?




indeed missing link
my apologies
http://jdmarkman.tumblr.com/post/110525085978/why-solar-eclipsing-oil-may-first-cause-a
and the resulting cascade of effect on the economic are going to be unheard of IMHO


----------



## Smurf1976

An interesting view but I can't see it happening just 2 years from now. There's a few issues.

Solar produces electricity, it does not produce liquid fuels. As such it competes against other means of producing electricity. Most electricity is produced from coal, gas, hydro and nuclear with a small contribution from wind and a minor amount from other sources. Oil is only a few % of total electricity generation, and much of that is off the main grids (eg mining industry). Very, very few places use oil as a major fuel for generation into the grid these days.

I can see that solar does threaten other means of electricity generation. It certainly has the potential to kill nuclear for dead and take significant market share away from gas. It won't kill hydro and it won't kill coal for quite a while yet. Oil is already dead and largely buried so far as power generation is concerned.

Simply being cheaper doesn't make it automatically viable technically. We've had ridiculously cheap electricity available off-peak for decades but that hasn't yet prompted an abandoning of internal combustion engines in vehicles. Even in places with a strong incentive and policy support for the use of non-oil energy haven't really managed to do it. 

It will happen someday for sure, we're not likely to be using oil to produce petrol to run cars 100 years from now, but I very much doubt that we'll see anything drastic in 2017. If oil does peak in 2017 (certainly plausible) then it will be driven by geology and politics and the consequent price of oil rather than solar panels.


----------



## qldfrog

two years seems optimistic but let's say the tide turning within 5 years;
What will happen then is millions and millions of small SME/household will just switch off the grid as we know it today and move to electric cars/light trucks;
once that tide starts, it will grow very powerfully;
The author's view is that by that time even coal electricity will be more expensive than solar so coal will be dead as you do not use coal but for power ( coking for steel will remain)
Oil role in transport will decrease and slowly be reduced from its unique role nowadays to just a part of the mix.
Do not forget the role oil has for heating in colder climates:
US/europe still use an enormous amout of oil in furnace in winter;
we are talking thousands of litres per year per household living in individual houses, and even appartment blocks
The market always react in advance and this means the asset values of coal producers and oil  producer will be decimated, even before they become irrelevant.
Side effect are numerous and tidal/huge
increase in electric cars means far far fewer car services, no more transmission repair garages and a lot of the current car industry will be decimated
This will happen and much sooner than people realises, the effect will be immense and coupled with the automatisation of new works(self driven car/truck/taxis, white collar jobs disintegration) we are in for a roller coaster ride due to technology advances
Nothing new but transition period are now well within a lifetime.
That might explain the saudi strategy, collapse price eliminate competition then cash on the next and maybe last inevitable oil price surge before it is too late;


----------



## So_Cynical

qldfrog said:


> indeed missing link
> my apologies
> http://jdmarkman.tumblr.com/post/110525085978/why-solar-eclipsing-oil-may-first-cause-a
> and the resulting cascade of effect on the economic are going to be unheard of IMHO




WOW - makes perfect sense...and no one sees it coming.
`
[video=youtube_share;pxHKRI2Cbas]http://youtu.be/pxHKRI2Cbas[/video]

One thing i have learned over the last 10 years is that when the turn is on its on, 5 cents per kilowatt-hour = most new power generation will be solar based, particularly in the lower latitudes, coincidently the latitudes where most people live.


----------



## Smurf1976

At 5c / kWh:

Coal - existing plants are viable to run, not really attractive to build new ones in countries with high labour costs for construction.

Gas - not viable at that price for baseload generation. Game over.

Oil - forget it. Not even anywhere close to being competitive.

Wind - not viable at that price.

Hydro - very competitive for schemes already built but new ones are economic at that price only in places with cheap labour with which to build them.

Nuclear - never really was viable financially and it sure isn't at 5 cents / kWh. Existing plants tend to have operating costs below that so they'd continue but nobody in their right mind would build a new one.

But as for electric cars etc, well bulk electricity is already below 5 cents / kWh, it's 3 - 4 cents right now at the time of posting depending on which state you're in, so being able to produce it at that price from solar doesn't really change anything there so far as economics are concerned. It remains an issue of battery costs and technology etc and charging infrastructure.


----------



## qldfrog

Smurf1976 said:


> But as for electric cars etc, well bulk electricity is already below 5 cents / kWh, it's 3 - 4 cents right now at the time of posting depending on which state you're in, so being able to produce it at that price from solar doesn't really change anything there so far as economics are concerned. It remains an issue of battery costs and technology etc and charging infrastructure.



bulk is below 5c but no household got power at anywhere near that price, if solar panels go down in $, then the households can benefit and not only the AGL/smelters of the world;
as a result you can get panels to charge your car and/or battery and that changes the deal
in any case existing assets value will collapse; as a qld I believe it would have been very good for that reason to get rid of the power generators by selling them for big $...
was making economic sense


----------



## Smurf1976

qldfrog said:


> bulk is below 5c but no household got power at anywhere near that price, if solar panels go down in $, then the households can benefit and not only the AGL/smelters of the world




Agreed although the cost of the grid remains so long as it physically exists. One way or another, consumers will end up being charged for it.

We did try a high fixed supply charge and selling the actual electricity at bulk prices in Tas 20 years ago. Single most unpopular thing the industry has ever tried, it prompted quite a lot of outrage, so there's a lot of reluctance in the industry (nationally) to try it again although I think it will happen at some point. Worth noting in that context that practically every internet and mobile phone service provider in the country has done exactly that and so far they've managed to get away with it.


----------



## qldfrog

Smurf1976 said:


> Agreed although the cost of the grid remains so long as it physically exists. One way or another, consumers will end up being charged for it.
> 
> We did try a high fixed supply charge and selling the actual electricity at bulk prices in Tas 20 years ago. Single most unpopular thing the industry has ever tried, it prompted quite a lot of outrage, so there's a lot of reluctance in the industry (nationally) to try it again although I think it will happen at some point. Worth noting in that context that practically every internet and mobile phone service provider in the country has done exactly that and so far they've managed to get away with it.



on first point, people will go off the grid.
And be charged for the fact that they may have accees to it if they want:
water situation here in qld
on second point, the difference is people data use is always increasing so they see it as a good deal and do not bother paying a fee then unlimited call/data.The figures are not exactly in the same range either.
Going back to oil, went up again last night


----------



## Wysiwyg

notting said:


> Oil has a history of not making U shaped recoveries after big falls.  Tends to like Vs.
> Big Oil unions striking in USA, may be the trigger this time.



No V on a daily this time. Maybe OPEC will consider an output cut this time. Not even the Crimean "annexation" or the ongoing Iraq & Syria conflicts has effected the price tumble. China's growth rate being checked, still.


----------



## Wysiwyg

Price broke January low briefly about 10 minutes ago. Short personally hoping for a decent descent.


----------



## notting

*Beep beep beep beep dum dum dum dum bum ba bam pa* - that's an intro to a news announcement attempting to reflect a tune in words.

Breaking News -

Today a new commodity was floated around the world with a great stag result.

It's called the 'headline.'

Today a coalition of forces took action in Yemen, with a difference.

Prior to the action it was decided that the headline would be 'Saudi Arabia and its Gulf Arab allies start military action with air strikes in Yemen.'

Rather than use the usual USA and it's allies it was worked out by some clever geeks that if the words *Saudi Arabia* and Arab allies was used it would make the algo's go berserk and put a rocket under the oil prices.  
Saudi Arabia was very happy with day ones stunning result as was the FED allowing it to maintain an easy stance with the oil doing a little tightening for it.

And yes the Saudi's did fly a Cessna over Yemen and dropped a fire cracker, whilst allied forces peppered Yemen with ballistic missiles and oil went up 5% due to the headline.  

Job well done boys!


----------



## robert1982

*Oil Prices are Going Down*

As we have seen recently, there is a general trend that presents a constant fall in oil prices. The reasons for that are twofold:
1)	A genuine decrease in world demand for crude oil which might indicate the possibility of a recession.
2)	An American pressure on OPEC countries not to cut supplies to keep prices low in order to exert economic pressure on Russia as a result of its aggressive policy in the Ukraine crisis.
Nevertheless, the trend is not definite. There are some fluctuations in oil prices as the commodity is going up and down. Last week (March 22-27, 2015), there was a rise in prices until Friday on which the commodity's bullishness reached an abrupt end with significant loses. What happened last week was a direct result of the market's balancing mechanism. On Friday, investors felt that crude oil was overvalued and so it was time to ditch it.
It will be interesting to keep record of the commodity's performances in the coming week.

Source: FMTrader's financial reviews


----------



## robert1982

*Big drop in crude prices during Tuesday's trading session*

There was a big drop in crude prices during Tuesday's trading session. Investors decided it was a

good idea for them to go short on the news that Iraq's exports rebounded and the Saudis are now 

pumping at near record rates. This allowed oil prices to go lower and lower from the $50.00 mark. 

US stocks ended up making some notable losses during Tuesday's trading session. When looking to 

Europe there were also some big losses. The thing is that stocks in Europe posted a very impressive 

quarter. What was very important was the German DAX Index posting its best quarter since its 1988 

inception. The Japanese Nikkei Index posted quarterly gains, but dropped yesterday as traders 

decided that it was better for them to take out their profits of the index.

Source: FMTrader's financial reviews


----------



## waterbottle

*Re: Big drop in crude prices during Tuesday's trading session*

US and Iran on the road to achieve a deal on nuclear development.
Promises of lifting economic sanctions for the Iranians!!!

According to this wikipedia article, Iran is capable of adding 3% to the world's total crude oil production. This is on a background of increased supply from OPEC. 

Maybe this will be the final leg down for oil?


----------



## CanOz

Starting to look like the bottom's already in...We could have years in a range though.


----------



## wayneL

Unleaded Gasoline though.

And an AD in a swan dive is why we're still paying $1.40 at the pump.


----------



## luutzu

*Re: Big drop in crude prices during Tuesday's trading session*



waterbottle said:


> US and Iran on the road to achieve a deal on nuclear development.
> Promises of lifting economic sanctions for the Iranians!!!
> 
> According to this wikipedia article, Iran is capable of adding 3% to the world's total crude oil production. This is on a background of increased supply from OPEC.
> 
> Maybe this will be the final leg down for oil?




I heard it's going to take at least two years for Iran to get its production and logistics up and ready. By then, the current glut will have crippled Russia (and Venezuela) enough, and also put a few potential competitors through the ground. Nobody wants to sell their goods cheap when they no longer have to.


----------



## StockTrader010

Increase in oil reserves is hurting oil today, -$3 CME Crude :frown:.


----------



## CanOz

CanOz said:


> On the monthly you can see that the next solid support is 40 ish. That would have a dramatic effect on communities from North Dakota to Northern Alberta, countries from Norway to Nigeria. Traders will be flocking to the intraday volatility in the oil and gas markets with new shorts being cleaned out from time to time. Transport stocks will move, air tickets will be cheaper again, palm oil prices will plunge, consumers will have new spending power, the industrial stocks will rally with less energy costs, currencies of oil producing nations will plummet.
> 
> this is big...
> 
> If you're an intraday trader, you need to be watching these markets and these currencies in the next few days/weeks.




I guess it was big indeed....


----------



## waterbottle

CanOz said:


> I guess it was big indeed....


----------



## StockTrader010

Oil is recovering nicely the last couple of weeks. But I don't think it will last. Especially if the pending agreement with Iran allows them to export oil again


----------



## tanti

Everyday I wake up to check Crude and cry my face off.. 

My guess is a sideways trend at least until Dec.. Supports have already been blown out for this month..


----------



## Wysiwyg

WTI Crude up US $10 from last weeks ultimate low. Missed the botty again.


----------



## tanti

Wysiwyg said:


> WTI Crude up US $10 from last weeks ultimate low. Missed the botty again.




Who are you long on?


----------



## Wysiwyg

tanti said:


> Who are you long on?



I am not long on WTI at present. I do like having a stab at pivot lows though. The ultimate low is very difficult to pick.  Gotta go in and wait see.


----------



## Smurf1976

In the medium to longer term at least, I'm thinking that the only way is up.

In recent years if you look at production then for the world as a whole but excluding the US and Canada it was flat at best despite the high prices. So it was really only the US and Canada that were growing.

Now we've got a huge slump in US drilling that is already resulting in production declines, various reports suggest that production is now 0.3 - 0.5 million barrels per day below the recent peak and falling fast. Shale wells rapidly deplete, so you have to keep drilling in order to keep production up, but drilling has collapsed as the price has fallen.

For Canada it has been the tar sands projects leading to growth. But they're coming to a halt for new development since costs are high and at the present price it's just not a goer.

Then there's Shell pulling out of Arctic exploration.

Also I wonder if the VW emissions scandal will have an effect on future sales of diesel passenger cars generally? VW itself was a leader in that market but it's plausible that other brands may also see a shift away from diesel. Trouble is, petrol engines are almost always less efficient than diesel, especially when compared to VW's artificially efficient engines (one upside of the high emissions was reduced fuel consumption).

So overall it's demand rising, production falling, and a possible additional source of future demand if there's a shift away from diesel and back to petrol.

What about the Saidis etc? Well if they and everyone else is already pumping flat out then they can't easily increase production like they did in the past. Today, the Saudis are basically sitting just below their all time peak output which suggest they probably don't have too much, if anything, that could be added without spending $$$ to do so.

Anything could happen to the oil price in the short term, it could well go lower from here, but I don't see how the current price can be sustained if it's leading to falling production and rising consumption. At some point it goes up surely? When and how high - that's the hard part.

The big wildcard would be if the global economy really fell in a heap and kills demand. 

Just my thoughts. Plenty of sources online relating to the situation with US shale drilling and the more recent production falls.


----------



## sptrawler

Just on your note, of the reduction of diesel cars.

http://www.theguardian.com/world/20...lgo-plans-ban-diesel-cars-french-capital-2020

overall consumption will increase markedly.IMO If there is a total ban on diesels, unfortunately it would make my car worthless, but hey, it's a Jeep.


----------



## luutzu

Smurf1976 said:


> In the medium to longer term at least, I'm thinking that the only way is up.
> 
> In recent years if you look at production then for the world as a whole but excluding the US and Canada it was flat at best despite the high prices. So it was really only the US and Canada that were growing.
> 
> Now we've got a huge slump in US drilling that is already resulting in production declines, various reports suggest that production is now 0.3 - 0.5 million barrels per day below the recent peak and falling fast. Shale wells rapidly deplete, so you have to keep drilling in order to keep production up, but drilling has collapsed as the price has fallen.
> 
> For Canada it has been the tar sands projects leading to growth. But they're coming to a halt for new development since costs are high and at the present price it's just not a goer.
> 
> Then there's Shell pulling out of Arctic exploration.
> 
> Also I wonder if the VW emissions scandal will have an effect on future sales of diesel passenger cars generally? VW itself was a leader in that market but it's plausible that other brands may also see a shift away from diesel. Trouble is, petrol engines are almost always less efficient than diesel, especially when compared to VW's artificially efficient engines (one upside of the high emissions was reduced fuel consumption).
> 
> So overall it's demand rising, production falling, and a possible additional source of future demand if there's a shift away from diesel and back to petrol.
> 
> What about the Saidis etc? Well if they and everyone else is already pumping flat out then they can't easily increase production like they did in the past. Today, the Saudis are basically sitting just below their all time peak output which suggest they probably don't have too much, if anything, that could be added without spending $$$ to do so.
> 
> Anything could happen to the oil price in the short term, it could well go lower from here, but I don't see how the current price can be sustained if it's leading to falling production and rising consumption. At some point it goes up surely? When and how high - that's the hard part.
> 
> The big wildcard would be if the global economy really fell in a heap and kills demand.
> 
> Just my thoughts. Plenty of sources online relating to the situation with US shale drilling and the more recent production falls.




The US is using its old tactic back in the late 80s - telling Saudis to pump more, flood the market and collapse Russia's economy. 

This time round Putin thought... let's join in the fight in Syria. Protect our sphere of influence and see how war and conflict drive demand for the black gold.


----------



## Stratanu

WTI Crude Oil finally confirmed the expected overshooting of the 50 level after the strong closing last night that aborted the previous days’ negative day reversal. Expect an extension toward the 100 days line at 51,30 but the real attraction is in our view the 200 days line at 54,50!!
The indicators of the daily chart are still well positive for now but also still showing potential negative reversals; nevertheless favour an overshooting of the present move up. The indicators of the s/t charts are also positive with bearish divergences even in the 4h chart still supporting a positive tone.
The move above 50 has again resumed the target at 54,85. I Try therefore to remain long with the stop still at 47,65! In case of an hourly closing above 51, move the stop to 49,45.


----------



## Stratanu

WTI Crude Oil confirmed a weak closing last night again below the low of the previous session suggesting we have again a s/t top in place. Further weakness is probable suggesting at least a retest of the 55 days line at 45,59!!
The indicators of the daily chart are however still well positive for now but those of the s/t charts turned instead below the line supporting lower levels. Fresh bullish divergences in the hourly chart support a negative tone. A possible return toward the 200 hours line at 47,71 is therefore corrective and a selling opportunity.
I stay on the sideline; I avoided a long position as suggested just because the hourly RSI plunged to 28% before rebounding!


----------



## DeepState

Is there some reason anybody knows that explains why contango for WTI is high in the Nov/Dec forward?  It is pretty flat Oct/Nov.


----------



## Trembling Hand

DeepState said:


> Is there some reason anybody knows that explains why contango for WTI is high in the Nov/Dec forward?  It is pretty flat Oct/Nov.




Wishful thinking of a cut announcement coming?


----------



## daytradeprofit

*Did Oil finish drip down?*

From my last post:
 a technical perspective, an impulsive decline back beneath 46 support is required for bears to take control This would bring $42.70-43.20 into consideration, with it having been a key level of support throughout September. We shouldn’t forget that last week’s strong performance in WTI means this could just be a retracement., the trend line is not yet confirmed spite that, it would complete the reversal of last week’s gains and offer more support for the view that the bulls are being out muscled once again by the bears.
personally my thoughts are that we are going to see 52-53 area again if 46 level will hold
update for today:
we witness high vol and Quantum Price if the usdcad will.....


----------



## John Trader

*Crude oil per 26.11 (overview)*

Hi folks 

it's very similar that 40 USD is psychological level of support. Price is second time rebound from it. Looking for buying from 40,7-41,75.


----------



## Wysiwyg

WTI just broke 35 bucks.


----------



## notting

https://www.aussiestockforums.com/forums/showthread.php?t=1921&p=892717&viewfull=1#post892717

Chinese communist Party , which, believe it or not, is a surplussed producer of oil, they export more than they import and hence has a vested interest in keeping oil prices high enough not to be losing too much money, has decided The Chinese people should pay a tariff to cover Party interests.  
Nothing new about that. 

http://www.bloomberg.com/news/articles/2015-12-16/china-has-something-to-tell-opec-oil-prices-have-fallen-too-far
What is interesting is that it is the third big gun in as many days deciding that it is the end of the oil price fall. 
Time to cover and buy for a short term spike.


----------



## notting

notting said:


> https://www.aussiestockforums.com/forums/showthread.php?t=1921&p=892717&viewfull=1#post892717
> 
> Chinese communist Party , which, believe it or not, is a surplussed producer of oil, they export more than they import and hence has a vested interest in keeping oil prices high enough not to be losing too much money, has decided The Chinese people should pay a tariff to cover Party interests.
> Nothing new about that.
> 
> http://www.bloomberg.com/news/articles/2015-12-16/china-has-something-to-tell-opec-oil-prices-have-fallen-too-far
> What is interesting is that it is the third big gun in as many days deciding that it is the end of the oil price fall.
> Time to cover and buy for a short term spike.




I forgot to add that -
http://www.businessspectator.com.au/news/2015/12/10/china/*chinese-car-sales-spike-november*


----------



## Uncle Festivus

notting said:


> Time to cover and buy for a short term spike.




Not while there is a global glut - WTI down 5% today!!

Big probs for US shalers/frackers at this level.....


----------



## qldfrog

Uncle Festivus said:


> Big probs for US shalers/frackers at this level.....



not only US, think about the aussie oil and gas industry here with all these loans in USD..
and the banks worldwide with the billions/trillion? invested in projects and assets now bleeding daily..
and ultimately to the peons like you and I if these now junk bonds collapse...the sparks may not be the fed raising the rates, but the oil price collapse for our next GFC


----------



## syllable

WTI at $35.5..


----------



## notting

Oil price has already collapsed.
They are not going to let it fall further.
That's a bottom.

Caltex payed off today!

as expected, though not quite so perfectly.

https://www.aussiestockforums.com/forums/showthread.php?t=1921&p=892717&viewfull=1#post892717


----------



## CanOz

A heads up for energy traders, CL and other energy contracts could catch a nice bid tomorrow as events over the weekend in the middle east could spark a short covering rally. The recent sharp declines would have trapped a decent supply of shorts, they could be screaming to hit the exits in low liquidity once CL opens in the morning, especially if the market gaps high enough.


----------



## Modest

CanOz said:


> A heads up for energy traders, CL and other energy contracts could catch a nice bid tomorrow as events over the weekend in the middle east could spark a short covering rally. The recent sharp declines would have trapped a decent supply of shorts, they could be screaming to hit the exits in low liquidity once CL opens in the morning, especially if the market gaps high enough.




Nice call!


----------



## CanOz

Modest said:


> Nice call!




Not allot of follow thru but some good size resting bids getting hit. Might see some more activity in the EU session, especially if there is more rhetoric between Iran and S.Arabia...


----------



## skyQuake

CanOz said:


> Not allot of follow thru but some good size resting bids getting hit. Might see some more activity in the EU session, especially if there is more rhetoric between Iran and S.Arabia...




The energy equities took their sweet time to get rolling


----------



## luutzu

So according to latest figures from the IEAE, world oil supply was 96.91 million b/day; demand 96.71 million b/day. 

The chart also show similar trend past few quarters. There's maybe an average of 1m b per day oversupply... and the US alone consumes about 19M a day in 2014. 

So according to my calculation, haha, the total excess in past two years couldn't even supply the US demand for one day.

I'm guessing the analysts and those in the know includes forecast drop in demand and forecast supply growth by OPEC and the rest. 

Strange... I'd imagine that if I were to drink water and I overfill the cup to the brim instead of slightly under it I'd just sip it too. I wouldn't call that slight excess a glut. Two cups would be a glut. 


https://www.iea.org/oilmarketreport/omrpublic/


----------



## Smurf1976

If it rains then someone will say we've got too much water. Didn't need desal. Built too many dams. Etc.

As soon as the next drought comes along the same people start screaming about shortages.

Just my observation. Been there, seen that one play out (water / power) and I expect it's much the same with oil. Humans tend to be pretty short sighted when it comes to this stuff.

A 0.2 mmbpd supply surplus. That'll turn into a shortage real quick as soon as some country has a revolution or natural disaster. For that matter, it won't take too long for US shale production to drop sufficiently as it's already down 0.5 mmbpd and falling.


----------



## shouldaindex

So is everyone wanting to supply that 0.2% to the extent they're willing to get paid 80% less?

That doesn't make much sense?


----------



## syllable

Crude oil prices to remain relatively low through 2016 and 2017
https://www.eia.gov/todayinenergy/detail.cfm?id=24532


----------



## shouldaindex

That's probably more optimistic that I thought.

It suggests a 50 / 50 chance of being above / below $60 in 2018 (Oil Futures indicate more like $45)

And also not a deterioration of supply to increase prices, but an increase in demand.

Interesting.


----------



## CanOz

shouldaindex said:


> That's probably more optimistic that I thought.
> 
> It suggests a 50 / 50 chance of being above / below $60 in 2018 (Oil Futures indicate more like $45)
> 
> And also not a deterioration of supply to increase prices, but an increase in demand.
> 
> Interesting.



Forward futures do not indicate the future price, only cost plus current price to hold....


----------



## notting

If we can just get Iran on line and get the sell the news buy the fact done.  

Then see. 

http://www.cnbc.com/2016/01/14/warren-buffett-digs-deeper-into-his-big-oil-bet.html

Crude currently 29.44!

You know when you look back at the GFC and think, why didn't I buy?  Well why?


----------



## skc

notting said:


> You know when you look back at the GFC and think, why didn't I buy?  Well why?




We hear a lot 3 years after the GFC that someone has bought the bottom... 

Well.... I have built a small exposure (~5% of portfolio) in STO and ORG about a month ago... so while I am down the overall risk level remains small. I don't mind increasing overall energy exposure to 10%, but I will build the remainder on the way up I think.

STO and ORG have raised capital at such a low point they'd never really recover their former glory. Much like the REITs that were forced to raise capital at the bottom of the GFC. The REITs remain 'cheap' for some time thereafter, some yielding 10%, until the great chase for yield began in 2013. May be oil stocks will mirror that path?


----------



## luutzu

notting said:


> If we can just get Iran on line and get the sell the news buy the fact done.
> 
> Then see.
> 
> http://www.cnbc.com/2016/01/14/warren-buffett-digs-deeper-into-his-big-oil-bet.html
> 
> Crude currently 29.44!
> 
> You know when you look back at the GFC and think, why didn't I buy?  Well why?




Because this time it's different


----------



## shouldaindex

Problem is most Oil & Gas stocks are still priced for above Oil above $50.  

Also keep in mind the impact of time:

EG. If Oil rebounds to $50 in 2018, STO is still unprofitable and will have been for 3 years.

There will be a big initial rebound whenever Oil bounces, but if it doesn't double to and sustain @ $60+ these companies won't be making enough to earn a PE under 20.


----------



## luutzu

shouldaindex said:


> Problem is most Oil & Gas stocks are still priced for above Oil above $50.
> 
> Also keep in mind the impact of time:
> 
> EG. If Oil rebounds to $50 in 2018, STO is still unprofitable and will have been for 3 years.
> 
> There will be a big initial rebound whenever Oil bounces, but if it doesn't double to and sustain @ $60+ these companies won't be making enough to earn a PE under 20.




I read that UBS has estimates of STO and other oil companies under various oil price scenarios. According to that broker's mail-out from UBS, they value STO at -$1.67 per share when oil is $US30/b.

That's a negative -$1.67 per share. So according to UBS, when oil is $30, the seller would be paying the buyer $1.67 per share to take it off them. Good one 



Looking to top up on STO Monday. Yea it'll probably go down further but you can't be too careful  

You got to feel bad for long term investors though. If a takeover is coming within a year, they're stuffed.


----------



## shouldaindex

How much does contango affect an Oil ETF?

EG if Oil goes from $20 to $40 in 3 years, how close to 100% gain would you actually make?


----------



## luutzu

Smurf1976 said:


> If it rains then someone will say we've got too much water. Didn't need desal. Built too many dams. Etc.
> 
> As soon as the next drought comes along the same people start screaming about shortages.
> 
> Just my observation. Been there, seen that one play out (water / power) and I expect it's much the same with oil. Humans tend to be pretty short sighted when it comes to this stuff.
> 
> A 0.2 mmbpd supply surplus. That'll turn into a shortage real quick as soon as some country has a revolution or natural disaster. For that matter, it won't take too long for US shale production to drop sufficiently as it's already down 0.5 mmbpd and falling.




I haven't been looking at it hard, maybe don't know where to look... but couldn't figure out where the glut of oil is based on news report and those figures from IEA.

There's the strategic reserves each country tend to have. Wiki sources estimate these reserves last a couple of months at most - for Australia and most countries there's only 3 weeks reserves before the generals will be called in and some small countries will be taken over [guess that's not funny]

Then there's the excess being stored on tankers and they're almost to the brim with estimate of some 100M barrel floating around.

So let say these two major storage are filled; the refiners and landbased tanks also filled... can't really use the strategic reserves so these glut over past two years may last a week of oil consumption around the world.

With established wells being pumped to the max and others depleted; small high costs rivals losing cash and about to close shop; then the need to shut down for maintenance now and then... 1 to 2 million barrel in excess per day is merely 2 percent of daily consumption.

Anyway, maybe my maths is too simple and missing a bunch of stuff.


----------



## Smurf1976

luutzu said:


> for Australia and most countries there's only 3 weeks reserves




So far as I'm aware, Australia is the only OECD country that adopts the "leave it to the market" approach and fails to keep the Internaional Energy Agency's (IEA) recommended 90 days of imports in stock at all times.

Many lesser developed countries also do it or at least come as close as they can afford.

Should there be a supply disruption, Australia is the least prepared developed country in the world and even many Third World nations are better prepared than we are.


----------



## Junior

Smurf1976 said:


> So far as I'm aware, Australia is the only OECD country that adopts the "leave it to the market" approach and fails to keep the Internaional Energy Agency's (IEA) recommended 90 days of imports in stock at all times.
> 
> Many lesser developed countries also do it or at least come as close as they can afford.
> 
> Should there be a supply disruption, Australia is the least prepared developed country in the world and even many Third World nations are better prepared than we are.




Is this true?  Why??

Surely we can afford to stockpile at $29/barrel.... what's the 'use by' date on a barrel of oil?


----------



## skc

luutzu said:


> I read that UBS has estimates of STO and other oil companies under various oil price scenarios. According to that broker's mail-out from UBS, they value STO at -$1.67 per share when oil is $US30/b.
> 
> That's a negative -$1.67 per share. So according to UBS, when oil is $30, the seller would be paying the buyer $1.67 per share to take it off them. Good one




They are saying the equity value of STO is negative... given that STO has lots of debt, the enterprise value is still positive (I think).


----------



## luutzu

skc said:


> They are saying the equity value of STO is negative... given that STO has lots of debt, the enterprise value is still positive (I think).




Equity value is Book value right? Wait, investopedia define it with a share price factoring in.

Based on its 2014AR, book value (net asset) was $9.72/share. If we add the $2.5B new cash, and the new shares issued... based on net assets in that 2014 it's around $7.27/share. Since then oil has halved further (almost) so that leaves $3.65/share book.

So based on my thinking, and it could be wrong, is that this $3.65 book assumes all the reserves and assets of STO are being sold on market right now at current prices.

Assuming that scenario, it's still a bargain at $2.65... but we know what accounting standards may not, is that these reserves are meant to be extracted and sold off over next few decades - at presumably higher prices.

Anyway... out of flowers to cut for this weed.

btw, scanning through IEA's reports on worlds' proven oil reserves and pretty much all countries, except the US, have shown incrase in reserves past decade. All other countries pretty much somehow keep discovering more and more oil each year. 

Not sure if that's improved technologies or good consultants at work


----------



## Smurf1976

luutzu said:


> All other countries pretty much somehow keep discovering more and more oil each year.
> 
> Not sure if that's improved technologies or good consultants at work




There are many who have looked at the OPEC reserve claims over the years and are extremely suspicious as to accuracy.

In short, many of them report _exactly_ the same reserve figures for many consecutive years and then have a sudden rise, which then remains constant again for many years to come.

The basic conclusion drawn is that they may be reporting "total oil discovered to date" rather than what actually remains. If that's the case then the world's known oil reserves are substantially lower than the official claims.

Due to the workings of the OPEC quota system, member countries gain economically simply by reporting larger reserves. So there's a definite incentive to come up with the highest number possible.

There's also political influence. Eg if the Saudi's dropped their reserve numbers by 90% then all of a sudden they'd be a lot less influential in global politics. Same with the others so there's another incentive to come up with high numbers.

That OPEC wasn't able to significantly raise production even when prices stayed over $100 for a considerable period adds to the suspicion. They've supposedly got vast reserves, but chose not to develop them and only offered a bit of very poor quality oil to the market. Hmm...


----------



## luutzu

Smurf1976 said:


> There are many who have looked at the OPEC reserve claims over the years and are extremely suspicious as to accuracy.
> 
> In short, many of them report _exactly_ the same reserve figures for many consecutive years and then have a sudden rise, which then remains constant again for many years to come.
> 
> The basic conclusion drawn is that they may be reporting "total oil discovered to date" rather than what actually remains. If that's the case then the world's known oil reserves are substantially lower than the official claims.
> 
> Due to the workings of the OPEC quota system, member countries gain economically simply by reporting larger reserves. So there's a definite incentive to come up with the highest number possible.
> 
> There's also political influence. Eg if the Saudi's dropped their reserve numbers by 90% then all of a sudden they'd be a lot less influential in global politics. Same with the others so there's another incentive to come up with high numbers.
> 
> That OPEC wasn't able to significantly raise production even when prices stayed over $100 for a considerable period adds to the suspicion. They've supposedly got vast reserves, but chose not to develop them and only offered a bit of very poor quality oil to the market. Hmm...




Trying hard to see if I'm making a case seeing how I'm eyeball deep in oil but na, I seriously think all these oversupply is a bluff.

Yup, the numbers are all suspect; the real figures are definitely State Secret stuff. 

And here's the conspiracy thing:

For all the talk of ramping up production to flood the market, all they have managed to do is increase production by some 1.5M barrel a day above demand, or a mere 1.6%.

I mean we're not expecting God's wrath that left Noah and family alive, but come on, 1.6%? 

Such small figure meant two things: One is it does not take much to oversupply (bad for oil price if they pump a bit more); but two, the best they could do is this 2% increase and it's stretching their infrastructure and reserves and economy to do it.

If we take geo-politics into account... why are the sanctions against Iran lifted? So the West can access Iranian oil that's what.

To get friendly with Iran now really upsets Saudi Arabia and Israel. But the US still does it. Why?
Since they can't invade it for oil as they have; since China is cuddling Iran (and setting up airbases and soon oil platforms all over a couple of seas)... If the US and the West are not friendly, others will take Iranian oil in their place.

Why Iranian oil, why now?

Their oil are not the sweet stuff. Poorer quality. That was why the US permitted the UK to stay around a while in Iran after WW2. That is why American oil companies do not want to touch Iranian oil when they can have Saudis and other Gulf states oil back when Eisenhower first decided to liberate it from a parliamentary system towards the glorious Shah and his Persian Imperial system.. .and force the oil companies to get back in their and pump some oil!

Iranian oil was so undesirable that after the Mullah take over, there was no need for US to liberate its people again.

Until now... Why? Running out of oil.

----

So why does the US allow its oilers to export? Why does it tell Saudi Arabia to pump it up? First, to hurt Russia and Venezuela; Second is to make it look convincing.

Why does the big oil corporations not call up their friends in high places to put an end their pain?
Because it will allow them to buy the little fishes with big untapped reserves on the cheap; to write down their assets and claim losses and pay no income tax.

Those who don't or won't sell completely will be glad to sign futures delivery on the cheap; glad to get a partner with bigger balance sheet. 

And of course to kick Iron Man and his electric car and solar panels and storage batteries back down a few notch. Keep investors away from alternative sources; keep delaying R&D into new sources and new infrastructures etc.


... and that, my friend, is how you weave a bedtime story to your liking from a few numbers 


More seriously, oil is a finite resource. Kingdoms and national security are literally dependent on it for revenue. To pump it up for cheap now but not expect to manipulate the market later for greater gain is just beyond reason.


----------



## qldfrog

http://www.brisbanetimes.com.au/business/banking-and-finance/oil-price-fall-will-be-costly-for-australian-banks-morgan-stanley-says-20160118-gm8s89.html
impact of low oil on australian banks
CBA the worst affected ...


----------



## Tom32

qldfrog said:


> http://www.brisbanetimes.com.au/business/banking-and-finance/oil-price-fall-will-be-costly-for-australian-banks-morgan-stanley-says-20160118-gm8s89.html
> impact of low oil on australian banks
> CBA the worst affected ...




It is amazing with the global economy propped up on a mountain of debt what should be good news for most economies has investors rattled, me included. 

Imagine how catastrophic it would be if tommorrow we discovered an infinite free power source? You would think the world economies would boom with a few exceptions. Massive developments in fresh water / agriculture in deserts etc ect. No famine no droughts just big pumps and big pipelines and a bucketload of new consumers. In stead we are panicking with one of the most important inputs of production becoming cheaper???

Ones first thought is that surely with oil at 28dollars surely the global economy in aggregate is better off than it is with oil at 100dollars.

The single problem with this is the amount of debt in the system. In stead of the oil and coal industry collapsing to be replaced by new industries we see risks to the behemoth finance industry and then risks knocking on to the whole world economy. This seems to be what spooks everyone due to finance being such a huge part of all developed economies. I can think of no other cause for concern. (Outside of oil and thermal coal stocks).

Yeh if one did invent an unlimited power machine the scary thing is it would seem the worlds economies would collapse due to massive bad debts...

Something serious has to be wrong with my 1990 economics textbooks when in 2015-16 - an oil shock is considered; the price of oil becoming too cheap...


----------



## Value Collector

Tom32 said:


> It is amazing with the global economy propped up on a mountain of debt what should be good news for most economies has investors rattled, me included.
> 
> Imagine how catastrophic it would be if tommorrow we discovered an infinite free power source? You would think the world economies would boom with a few exceptions. Massive developments in fresh water / agriculture in deserts etc ect. No famine no droughts just big pumps and big pipelines and a bucketload of new consumers. In stead we are panicking with one of the most important inputs of production becoming cheaper???
> 
> Ones first thought is that surely with oil at 28dollars surely the global economy in aggregate is better off than it is with oil at 100dollars.
> 
> The single problem with this is the amount of debt in the system. In stead of the oil and coal industry collapsing to be replaced by new industries we see risks to the behemoth finance industry and then risks knocking on to the whole world economy. This seems to be what spooks everyone due to finance being such a huge part of all developed economies. I can think of no other cause for concern. (Outside of oil and thermal coal stocks).
> 
> Yeh if one did invent an unlimited power machine the scary thing is it would seem the worlds economies would collapse due to massive bad debts...
> 
> Something serious has to be wrong with my 1990 economics textbooks when in 2015-16 - an oil shock is considered; the price of oil becoming too cheap...




Yeah it's weird hey, I see it as a net plus, sure the energy businesses in my portfolio are taking a hit, but every thing else will be doing better, eg I am sure Disney has sold more tickets to the force awakens due to the low oil price etc


----------



## luutzu

Tom32 said:


> It is amazing with the global economy propped up on a mountain of debt what should be good news for most economies has investors rattled, me included.
> 
> Imagine how catastrophic it would be if tommorrow we discovered an infinite free power source? You would think the world economies would boom with a few exceptions. Massive developments in fresh water / agriculture in deserts etc ect. No famine no droughts just big pumps and big pipelines and a bucketload of new consumers. In stead we are panicking with one of the most important inputs of production becoming cheaper???
> 
> Ones first thought is that surely with oil at 28dollars surely the global economy in aggregate is better off than it is with oil at 100dollars.
> 
> The single problem with this is the amount of debt in the system. In stead of the oil and coal industry collapsing to be replaced by new industries we see risks to the behemoth finance industry and then risks knocking on to the whole world economy. This seems to be what spooks everyone due to finance being such a huge part of all developed economies. I can think of no other cause for concern. (Outside of oil and thermal coal stocks).
> 
> Yeh if one did invent an unlimited power machine the scary thing is it would seem the worlds economies would collapse due to massive bad debts...
> 
> Something serious has to be wrong with my 1990 economics textbooks when in 2015-16 - an oil shock is considered; the price of oil becoming too cheap...




Good point.

Cheap oil cannot be bad for the economy, it wouldn't be bad for oil (in the long term) either - what with getting more people addicted to it, sell more of the stuff, turn the tap off a bit and make more money later...

I think you're right that collapsing oil is being blame for current economic/market stuff up... but it can't be true. 

Maybe they can't really blame bad economic management and things like Austerity and free trade agreements that ruin jobs everywhere.


----------



## Tom32

Value Collector said:


> Yeah it's weird hey, I see it as a net plus, sure the energy businesses in my portfolio are taking a hit, but every thing else will be doing better, eg I am sure Disney has sold more tickets to the force awakens due to the low oil price etc




Exactly. 

That is unless, first small specialist resource heavy banks start collapsing followed by bigger banks and then funding dries up for otherwise profitable business. In competing for scarce funding interest rates rise independent of Government rates and finally consumers cannot buy a car or house with finance and then our world (esp Australia) really gets rocked to its core.

Kicking the can of the Gfc down the road by allowing funding to become too cheap, I believe is the root cause for the more extreme overshoot in resource and oil production than what would happen in a higher interest rate environment. It was two pronged cheap funding allowed many businesses to consume many resources plus it allowed the resource companies including oil ones to build massive capacity that is still coming on line now.

We berated US banks for lending money to people to buy houses they couldn't afford in 08, I expect at some point in the next 6 months we will have coined a term for loans to oil companies that could only be repayed if oil maintained a price level of 60dollars plus...

OASIS loans perhaps? Oil At Sixty or InSolvency....

Yeh it isn't quit as neat as NINJA but give me time.


----------



## luutzu

Was watching an old docu the other day on Peak Oil - just to see if their argument back then make sense.

I know there are reports of oil glut and some IEA spokeman reportedly said the world may drown in oil during 2016, China worries, Iran sanction lifted etc.

But if we were to take it that there is just too much oil in the world; not just too much that's being pumped now and oversupplying it, but too much oil in the ground - hence the world's producers just pump and flood the market because they have too much of the stuff.

If that were true, why do they pump it now and not pump it then when oil was 4 or 5 times the price now?

If they have abundant oil, why did they go towards Fracking/Shale, Tar Sand and offshore - high cost oil to bring it to market? Yes the high price of oil then meant it was economic to get those stuff, but you would think they could still save that and make more profit/high margin with conventional stuff they're now pumping.

If we were to assume, as some Lefty would (haha) that Iraq was liberated for control of its oil; that Iran was put on the Evil watchlist and being smack bang between a rock and a hardplace so it'd behave (with its oil)...

Then you see the phony proven reserve figures; the merely 1.5% oversupply when they pump at full speed.

What am I missing? A lot I know, but what are they?

Has new major reserves been discovered last couple years? I heard a while back we've used 1/3 of all known oil reserves, the other 1/3 are at places we can't get to or spread over too large an area it's not economical to get; and so there's only 1/3 left to use.


if that's true, then there isn't much left in the gas tank. But if there isn't much left, you shouldn't be revving the engine... Unless you only do it to big up the babes.

Anyway, interesting... don't know why people gamble when they can invest in stocks


----------



## Tom32

luutzu said:


> Good point.
> 
> Cheap oil cannot be bad for the economy, it wouldn't be bad for oil (in the long term) either - what with getting more people addicted to it, sell more of the stuff, turn the tap off a bit and make more money later...
> 
> I think you're right that collapsing oil is being blame for current economic/market stuff up... but it can't be true.
> 
> Maybe they can't really blame bad economic management and things like Austerity and free trade agreements that ruin jobs everywhere.




My recollection is that the theory definitely says cheap inputs for production makes us all better off but in the modern world of international debts and funding and reliance on finance it seems this is no longer true.

I suspect cheap oil may be the catalyst for our current problems, but this is only exposing the underlying problem of high corporate debt levels used for building excess capacity. 

What should be good is only bad because of debt. The odd thing is everyone seems to be onto this counterintuitive logic and markets are being smashed across the board.

The scary thing is that if it starts to hurt too much we will go to war with a major oil producing country, burn their oil wells and order will be restored.


----------



## Tom32

luutzu said:


> Has new major reserves been discovered last couple years? I heard a while back we've used 1/3 of all known oil reserves, the other 1/3 are at places we can't get to or spread over too large an area it's not economical to get; and so there's only 1/3 left to use.
> 
> 
> if that's true, then there isn't much left in the gas tank. But if there isn't much left, you shouldn't be revving the engine... Unless you only do it to big up the babes




the infrastructure set up on a reserve is usually balanced to get the best cost / time outcome. 

This means there are some fields with reserves that will supply for decades (big reserves) with massive amounts of infrastructure. Why build double the infrastructure to rush this extraction when you can extract it over double the time? There is no good reason to make this investment.

Sorry to harp on about it yet again, but it comes back to a stupid low time cost for money... Might as well build double the plant and double production even if it means running out in half the time. 

We possibly have brought forward a future scarcity in oil but between now and this future scarcity there will be pain due to this mis allocation of capital.


----------



## luutzu

Tom32 said:


> My recollection is that the theory definitely says cheap inputs for production makes us all better off but in the modern world of international debts and funding and reliance on finance it seems this is no longer true.
> 
> I suspect cheap oil may be the catalyst for our current problems, but this is only exposing the underlying problem of high corporate debt levels used for building excess capacity.
> 
> What should be good is only bad because of debt. The odd thing is everyone seems to be onto this counterintuitive logic and markets are being smashed across the board.
> 
> The scary thing is that if it starts to hurt too much we will go to war with a major oil producing country, burn their oil wells and order will be restored.




Maybe debt being so cheap is also another cheap input, so cancels out? Never mind, haven't had fresh air all day.

Ey, maybe that's what these planners are doing - burning oil. Instead of Saddam on Kuwait, they're a bit nicer and not burn it in the open but pump it out, sell it so consumers around the world could burn it faster - more civilised and practical that way.

All these aside, it's not going to be good for the alternative energy guys. They'll be set back a decade and then some while to get the engineers trained right for alternative sources.


----------



## Smurf1976

luutzu said:


> Was watching an old docu the other day on Peak Oil - just to see if their argument back then make sense.




Fundamentally it's a finite resource, there's no serious question about that.

How much we can economically extract, and at what rate are the key unknown questions noting that it's far more complex than simply geology. Not all reserves can be put into production due to factors such as politics (and that includes everything from dictatorships, wars thorough to environmental objections) and then there's things like finance as another constraint. But ultimately there's a limit, that's a given, we're just not sure what that limit is and if it's low enough to be a problem or not.

Logic tells me that if there was plenty of oil outside the Middle East then the West wouldn't pay anywhere near as much attention to what goes on there. That we do says rather a lot about how much oil we don't have elsewhere.

All that said, investing on oil simply because it's a finite resource could well send you broke in the meantime.


----------



## Tom32

luutzu said:


> Maybe debt being so cheap is also another cheap input, so cancels out? Never mind, haven't had fresh air all day.
> 
> .




That is as good a way to look at it as any in that cheap inputs drive activity.

The difference is a cheap input like oil drives down production costs and likely drives increased production and consumption of just about everything including (esp) oil in the longer run. All this with no future repayment to worry about. 

Cheap money drives down investment costs driving more investment but at some point you still have to pay the debt off. It remains after the investments are made.

It's the portion of those unable to pay it off is where the issue was in 08 and could well be again in 2016.

we have had the benefit of cheap funding driving both stock and economies in the recovery since 08 In the same way cheap inputs should drive outputs and consumption due to more abundant / cheap goods. Trouble is funding is going to get more expensive this year and perhaps this is what has investors even more rattled than the oil price.


----------



## Value Collector

Tom32 said:


> Cheap money drives down investment costs driving more investment but at some point you still have to pay the debt off. It remains after the investments are made.
> 
> .




Yeah, but that's the same with an investment funded by equity too, equity investments aren't charitable donations that don't have to be paid back.

I mean if a project costs $1000. whether that's funded by ($1000 equity/cash) or ($700 Bonds + $300equity/cash) doesn't really matter, either way the project will be expected to earn enough cash to return the $1000 to both equity and debt investors along with a return on investment, eg interest to debt holders and dividends or equity reinvested into new projects for the equity holders.

----------------------------------------------------------

Debt only becomes a problem when low interest rates cause companies to do silly things like overpaying for assets, but over paying for assets will be a bad move regardless of whether its funded by debt or equity.


----------



## notting

Perhaps the Saudi's and co have deliberately let the oversupply run so that they can bring Iran into line as Iran starts to pump.
When everyone is on their knees begging for some food they tend to forget about ideologies and will be more conciliatory when it comes to agreeing on behaving so we can all eat!

On the demand side it would be interesting to see the numbers on 'mean' fuel consumption per car these days compared to say 2007 when oil peaked at $150 and global warming became of critical concern setting off a whole new design paradigm based on more fuel efficient cars.
I'd guess cars on the road these days are using about 1/3rd less fuel than back in 2007.
You'd imagine that even if there are more cars on the road now, the over all fuel consumption would be a far bit less!

Still that can be address by an oil cartel when everyone sees you can make twice the money pumping 10% less!
Who wouldn't want to make that deal once we ensure market share is not going to be shifted by mavericks!


----------



## luutzu

Smurf1976 said:


> Fundamentally it's a finite resource, there's no serious question about that.
> 
> How much we can economically extract, and at what rate are the key unknown questions noting that it's far more complex than simply geology. Not all reserves can be put into production due to factors such as politics (and that includes everything from dictatorships, wars thorough to environmental objections) and then there's things like finance as another constraint. But ultimately there's a limit, that's a given, we're just not sure what that limit is and if it's low enough to be a problem or not.
> 
> Logic tells me that if there was plenty of oil outside the Middle East then the West wouldn't pay anywhere near as much attention to what goes on there. That we do says rather a lot about how much oil we don't have elsewhere.
> 
> All that said, investing on oil simply because it's a finite resource could well send you broke in the meantime.




Yea, in the meantime I'd be fired if I managed anyone else's money.

In terms of going broke though, was planning for payback over two years. One down so 5 to go, haha. But for retirement fund it'll be another 20+ years (it's no longer 65 ey?)... Anyway, I can wait longer than the OPEC and oilers can so might work out pretty good - unless Sceptre or others lop an offer now then it'll only be somewhat good.

---

Since we both agree that oil is a finite resource that runs the world, what are these producers doing pumping it all out just to make less money?

I think it might be more than merely defending their market share against unconventional and alternative energies. It will do that but also more important to the oilers it is a way for them to whack small and weaker operators then take them over to gain their reserves and rights.

Another potential gain would be to appear like you have a lot of the stuff left (that's why you pump it out like you don't care), then attract a few Chinese corporations to take it off you or partner with you. 

Saudi Arabia has a the world's best/largest reserves, they've been pumping it out since WW2. If we take that broad estimate of the world already consuming 1/3, the other 3rd can't get to, only 1/3 to last etc... how much oil could there still be in the place?

Interesting these investing stuff.


----------



## Smurf1976

luutzu said:


> what are these producers doing pumping it all out just to make less money?




My guess is that they expect to end up making more money overall.

Crash the price, put a halt to US shale, Canadian tar sands and any other source of supply that was actually growing, then let the price go back up.


----------



## luutzu

Smurf1976 said:


> My guess is that they expect to end up making more money overall.
> 
> Crash the price, put a halt to US shale, Canadian tar sands and any other source of supply that was actually growing, then let the price go back up.




I may have newfound respect for the games these guys are playing.


----------



## Tom32

Value Collector said:


> Yeah, but that's the same with an investment funded by equity too, equity investments aren't charitable donations that don't have to be paid back.
> 
> I mean if a project costs $1000. whether that's funded by ($1000 equity/cash) or ($700 Bonds + $300equity/cash) doesn't really matter, either way the project will be expected to earn enough cash to return the $1000 to both equity and debt investors along with a return on investment, eg interest to debt holders and dividends or equity reinvested into new projects for the equity holders.
> 
> ----------------------------------------------------------
> 
> Debt only becomes a problem when low interest rates cause companies to do silly things like overpaying for assets, but over paying for assets will be a bad move regardless of whether its funded by debt or equity.




The difference is:

With debt there is a promise to repay that debt.

With equity there is only a duty to do the best you can with other people's money.

Equity.

While it is not be this simple, to summarise: This difference between the two is important in that equity losses generally only effects the single investors in that stock. Potentially banks loan assets through margin lending but banks are cautious enough here to close large positions out in this area.

Loan assets.

When a loan asset (bank asset) is destroyed through liquidation of the borrower it requires the bank to cover the position through raising further capital or reining in deposit liabilities and loan assets shrinking both sides of the banks balance sheet to maintain the capital requirement it requires to operate as a bank. 10bn loss in bank capital roughly equates to 100bn less deposit liabilities allowed. 

This the effects asset prices and hurts other banks balance sheets and then we enter the potential spiral of doom we came close to in 2008.

I am far from certain there is going to be a lack of funding for business in 2016 due to Shrinking balance sheets especially considering I have been mostly cash since early 2015. I have got it wrong to date. 

That said less wrong than I have been with my godfreys (  ) . 

I am just not comfortable with where this heads when a few major oil companies go broke. They all have loads of debt and this is what worries me so far as the market more generally is concerned. Not destruction of equity but destruction of banks loan assets. 

While this will sound absurd: that bhp has seen 10s of billions of dollars equity wiped due to its fall from grace doesn't hurt Woolworths shares directly. However If 10s of billions of working capital (what stands in place to balance deposit liabilities at banks when loan assets are destroyed) was was wiped from commbanks balance sheet, Australia including woolworths would be in more trouble than Flash Gordon. This is why I posted in this oil thread at first instance. The reference to CommBank above.

btw Woolworths is only a reference to a broader market stock that of course has no special relationship with oil stocks if that isn't clear from my post.

Finally what people I move with find most perverse about my view on this is that I am considering again hitting oil producers hard with my smsf. 

As I see it if oil stays where it is or moves lower oil stocks along with most of the market will be hit pretty hard. Oil worse sure but; if oil moves up only oil stocks will rally hard. 

I see only limited upside for the time being in stocks (broad world economies) except oddly enough oil stocks (oil economies) assuming oil price moves positive.


----------



## shouldaindex

Few interesting links:

1. http://www.biofuelsdigest.com/bdigest/wp-content/uploads/2015/01/US-Saudi-total-011315.png

2. https://www.eia.gov/finance/markets/supply-nonopec.cfm

3. http://www.reuters.com/article/us-opec-idUSTRE5BJ1AA20091220 

The 3rd has a twist if you pay attention to detail.


----------



## fiftyeight

shouldaindex said:


> The 3rd has a twist if you pay attention to detail.




I think I get the gist of the 3rd link, is the twist?

"The kingdom is estimated to need only around $50 a barrel to balance its books and avoid deepening foreign debts"

The kingdom has already run up foreign debts even when prices were at much higher levels


----------



## CanOz

shouldaindex said:


> The 3rd has a twist if you pay attention to detail.




Deja vu


----------



## CanOz

Tom32 said:


> It is amazing with the global economy propped up on a mountain of debt what should be good news for most economies has investors rattled, me included.
> 
> Imagine how catastrophic it would be if tommorrow we discovered an infinite free power source? You would think the world economies would boom with a few exceptions. Massive developments in fresh water / agriculture in deserts etc ect. No famine no droughts just big pumps and big pipelines and a bucketload of new consumers. In stead we are panicking with one of the most important inputs of production becoming cheaper???
> 
> Ones first thought is that surely with oil at 28dollars surely the global economy in aggregate is better off than it is with oil at 100dollars.
> 
> The single problem with this is the amount of debt in the system. In stead of the oil and coal industry collapsing to be replaced by new industries we see risks to the behemoth finance industry and then risks knocking on to the whole world economy. This seems to be what spooks everyone due to finance being such a huge part of all developed economies. I can think of no other cause for concern. (Outside of oil and thermal coal stocks).
> 
> Yeh if one did invent an unlimited power machine the scary thing is it would seem the worlds economies would collapse due to massive bad debts...
> 
> Something serious has to be wrong with my 1990 economics textbooks when in 2015-16 - an oil shock is considered; the price of oil becoming too cheap...




These are good points, however the decline in oil energy prices are really hiding a bigger issue, the overall decline in commodities prices. Sure it might be good for consumers, but there is a mountain of debt associated with commodity related business. From Iron ore, to copper and energy. 

The culprit is double whammy of glut due to overproduction, weak demand and a strong USD driven by "lift off"...

It is arguable that most of the world is actually in recession or on the brink, especially the commodity producing countries....that debt is not getting paid back any faster at these prices....


----------



## Value Collector

Tom32 said:


> The difference is:
> 
> With debt there is a promise to repay that debt.
> 
> With equity there is only a duty to do the best you can with other people's money.
> 
> Equity.
> 
> While it is not be this simple, to summarise: This difference between the two is important in that equity losses generally only effects the single investors in that stock. Potentially banks loan assets through margin lending but banks are cautious enough here to close large positions out in this area.
> 
> Loan assets.
> 
> When a loan asset (bank asset) is destroyed through liquidation of the borrower it requires the bank to cover the position through raising further capital or reining in deposit liabilities and loan assets shrinking both sides of the banks balance sheet to maintain the capital requirement it requires to operate as a bank. 10bn loss in bank capital roughly equates to 100bn less deposit liabilities allowed.
> 
> This the effects asset prices and hurts other banks balance sheets and then we enter the potential spiral of doom we came close to in 2008.
> 
> I am far from certain there is going to be a lack of funding for business in 2016 due to Shrinking balance sheets especially considering I have been mostly cash since early 2015. I have got it wrong to date.
> 
> That said less wrong than I have been with my godfreys (  ) .
> 
> I am just not comfortable with where this heads when a few major oil companies go broke. They all have loads of debt and this is what worries me so far as the market more generally is concerned. Not destruction of equity but destruction of banks loan assets.
> 
> While this will sound absurd: that bhp has seen 10s of billions of dollars equity wiped due to its fall from grace doesn't hurt Woolworths shares directly. However If 10s of billions of working capital (what stands in place to balance deposit liabilities at banks when loan assets are destroyed) was was wiped from commbanks balance sheet, Australia including woolworths would be in more trouble than Flash Gordon. This is why I posted in this oil thread at first instance. The reference to CommBank above.
> 
> btw Woolworths is only a reference to a broader market stock that of course has no special relationship with oil stocks if that isn't clear from my post.
> 
> Finally what people I move with find most perverse about my view on this is that I am considering again hitting oil producers hard with my smsf.
> 
> As I see it if oil stays where it is or moves lower oil stocks along with most of the market will be hit pretty hard. Oil worse sure but; if oil moves up only oil stocks will rally hard.
> 
> I see only limited upside for the time being in stocks (broad world economies) except oddly enough oil stocks (oil economies) assuming oil price moves positive.




My point is that at the time of capital allocation, ie when the investment is being made, the investment is expected to generate enough cashflow to return the initial investment to the investor, whether that be a debt investor or an equity investor.

Offcourse if you are using debt to buy assets, the life of the debt should match the life of the assets or be very long term debt if assets are long term.

Debt in the form of bonds etc can be a permanent part of a companies capital make up, it's just another level of investment really, equity investment suits some people, bond investment suits others, there is no problem with a company taking on some bond holders as part of their capital structure, yes bonds all expire at some point in time, but you can migrate risk by spreading out maturities, and having multiple options for handling the maturity.

Anyone, I am not trying to have a conversation about debt vs equity, just pointing out that when allocating capital the point of making an investment is that the asset should generate enough cashflow to pay back both debt and equity holders, and the debt holders have the equity holders capital as a buffers, if the assets can't earn enough to pay back the equity and debt, well you made a bad investment.


----------



## Value Collector

Also, a companies share price falling doesn't = equity being destroyed.

A share price falling just means investors are not willing to pay as much for a company's equity as they were earlier.

There is a difference between market cap and share holders equity.

------------------

Also the big oil companies have enjoyed years of high oil prices, and retained billions of dollars to fund their growth, so there is a huge equity buffer before bond holders will take a haircut, I mean yes most of the big oil companies have debt on their balance sheet, but large amounts of their cap ex has been cashflowed,


----------



## Smurf1976

The way I see it:

1. When oil was at roughly $100 per barrel, it was only US shale and Canadian tar sands that were leading to overall production growth. Sure, some other sources were growing but in aggregate supply was going down if you exclude Canada + USA.

2. If you only exclude US shale, that is you do include Canada's tar sands, then production was about flat over a period of several years.

3. At $30 per barrel it us no longer profitable to develop new tar sand or shale oil projects. Assuming that investors don't choose to fund something that is expected to be unprofitable right from the start, logically there will be little or no further development of these sources at the current price or anything close.

4. Tar sands production has an extremely long life and does not peak and decline in the way that conventional oil fields do. It's more akin to a metal smelter or a coal-fired power station than to conventional oil production. You build a great big processing plant and run a mine (normal mining methods) to get the feedstock that goes into it. Apart from maintenance outages, that gives you a very stable rate of production.

5. Shale on the other hand peaks and declines _extremely_ fast. We're talking months not years or decades as is the case with conventional oil fields. Already we're seeing a drop somewhere around 0.5 - 0.7 mmbpd (depending on whose numbers you use) and that's just the beginning.

6. It is highly probable that at $30 per barrel we'll see less conventional oil fields developed than we'd see developed at a higher price. Basic economics there.

Adding all that up, declining production capacity would seem to be pretty much certain unless OPEC and other government oil producers, who tend to be less focused on short term financials, decide to increase capacity despite the lower prices

Now, if production capacity goes down then unless demand also drops (but the trend is definitely up not down) then at some point the "surplus" disappears. Then the Saudi's etc will be making some serious money once again.

I do think there's a definite plan being pursued here. It's not rocket science to work out that collapsing the price will kill off supply growth whilst encouraging higher consumption. That helps get rid of the competition whilst maintaining a large market for those still producing oil who can then decide what price they'd like to charge with the confidence that buyers have no real choice other than to pay up at least in the medium term.


----------



## notting

My personal take on oil over the last week or so is best illustrated by this short animaltion - 

[video]https://pbs.twimg.com/tweet_video/CZT2aZTWAAAcVSb.mp4[/video]


----------



## luutzu

Two Ways to Look at Oil (over)Supply:

If a major, “pioneering” $US18B project to turn coal seam gas to LNG could only manage to produce 7.8million tonnes LNG per year (with 1 mt being  8.873 mmboe, GLNG produces 69.209 mmboe per year), then a 1.5mmboe per day oversupply is obviously a glut – right? Not quite.

The1.5mmboe oversupply is equivalent to 41 days of GLNG production (69.2/365 days = 0.19Mb/day). That is, in a single day the world over produces the equivalent of 41 days production from a new $US18B project at Gladstone.

Looking at it in that scale and that perspective, alone, then it appear the current over production is one heck of a flood. But look at it as a mere 1.5% oversupply and ask ourselves: Can the oil producers of the world afford to do this for an extended period of time? That is, can they afford the equivalent of an $US18B investment’s 41 days of production flooding the market and reducing their profit for the trouble? The average 1.5Mb/day oversupply caused oil to crash by more than half within a year since late 2014. Some 15 months later it reduces the price of oil by about 70% to under $30/barrel.

Again, taking Santos as an example – According to its Q4-2015 report,  the entire company currently produces 57.7mmboe per year from all its assets. Under key facts on its website Santos has 622 mmboe reserves (1P),  1,245 mmboe (2P reserves) and 1,721 mmboe (contingent 2P reserves). Standard definition define 1P as proved reserves, 2P as the sum of proved and probable reserves. This mean that from its proved and probable reserves, a multi-billion dollar company the size of Santos could only supply the world’s current demand of 96M barrel for some 18 days – with it more than doubling its 2014 production (from 57.7 mmboe with additional 69.209 mmboe when GLNG is at full capacity), Santos would only be able to achieve this 18 days demand over some 10 years.

It seem that the world is quickly running out oil and gas, all this glut is to simply shock the analysts, crash the market and take over rivals on the cheap.


----------



## Smurf1976

Also consider the difference between hydrocarbons.

The Qld LNG plants are producing LNG (methane) only. They aren't producing oil, condensate, propane, butane or ethane, just methane as LNG.

LNG is certainly a substitute for oil in industry and power generation and for direct use as gas (homes etc) but it doesn't power aircraft and natural gas powers only a minor portion of the ships, trucks and cars in use. We need actual crude oil and/or condensate for that.


----------



## Smurf1976

luutzu said:


> Santos would only be able to achieve this 18 days demand over some 10 years.




Bingo!

Oil in the ground is really only a useful thing to know to the extent that it influences how much oil can be brought above ground on a daily basis. The two are related but not in a linear manner.

We could well run short of oil, even if there's plenty still in the ground, if we simply aren't extracting it fast enough. There are geological limits there, you can't pump a field dry in just a year or two, as well as the limits imposed by infrastructure, politics, finance, availability of labour and materials and so on.

A country might have enough oil in the ground to supply their consumption for 10 years. But that doesn't mean they can actually use it to supply their use for all of that 10 years and then suddenly stop. In practice the flow rate will be lower and it will take far longer than 10 years to extract all of that oil.

Bass Strait (for example) started production in 1966 and peaked in 1985. It still produces small amounts of oil, and a lot of gas, today and will still be producing for a long time to come. But we couldn't get all that remains out quickly even if there was a crisis situation and we desperately needed fuel - there's geological limits there.


----------



## Smurf1976

This seems a bit like a conspiracy theory article but I think it's worth a read given the nature of it. If true, then it would explain what's been going on in all markets (not just oil) thus far in 2016.

http://peakoil.com/publicpolicy/the-secret-behind-the-next-global-crash



> Persian Gulf traders, and that includes Westerners working in the Gulf confirm that Saudi Arabia is unloading at least $1 trillion in securities


----------



## Smurf1976

Have a look at this chart of OPEC proven oil reserves and ask yourself a few questions.

How plausible is it that the UAE has discovered exactly the same amount of oil as they have extracted each and every year since 1986?

How plausible is it that with one exception they all had sudden, huge jumps in proven reserves all about the same time (1980's)?

The data looks seriously manipulated to me. Qatar's might be OK but the rest look dubious at best. 

My personal suspicion is that they probably did it accurately in the past, until the 1980's, then switched to reporting the total of what's been discovered to date as "reserves" and ignoring what has already been extracted. That is just a theory but it seems more plausible than the official data does. 

https://upload.wikimedia.org/wikipe...px-OPEC_declared_reserves_1980-now_BP.svg.png


----------



## luutzu

Smurf1976 said:


> This seems a bit like a conspiracy theory article but I think it's worth a read given the nature of it. If true, then it would explain what's been going on in all markets (not just oil) thus far in 2016.
> 
> http://peakoil.com/publicpolicy/the-secret-behind-the-next-global-crash




Would those trillions include their downstream/refining assets in Aramco?

Read, probably just before Xmas, that they're thinking of floating those downstream assets but keeping the oil assets.

Might not be much of a stretch to think that, beside the other pluses, in crashing the oil price their refining businesses will be making bucketloads more. High margin, high growth... analysts love those growth and margins so they will be offloaded for a pretty penny.

Use proceeds to buy more oil assets (and weapons and mercenaries) then turn the tap down and some people will get the short end of the stick.

If so, well play tyrants. Well play.


----------



## luutzu

Smurf1976 said:


> Bingo!
> 
> Oil in the ground is really only a useful thing to know to the extent that it influences how much oil can be brought above ground on a daily basis. The two are related but not in a linear manner.
> 
> We could well run short of oil, even if there's plenty still in the ground, if we simply aren't extracting it fast enough. There are geological limits there, you can't pump a field dry in just a year or two, as well as the limits imposed by infrastructure, politics, finance, availability of labour and materials and so on.
> 
> A country might have enough oil in the ground to supply their consumption for 10 years. But that doesn't mean they can actually use it to supply their use for all of that 10 years and then suddenly stop. In practice the flow rate will be lower and it will take far longer than 10 years to extract all of that oil.
> 
> Bass Strait (for example) started production in 1966 and peaked in 1985. It still produces small amounts of oil, and a lot of gas, today and will still be producing for a long time to come. But we couldn't get all that remains out quickly even if there was a crisis situation and we desperately needed fuel - there's geological limits there.




True true. Having the rights, knowing where it is is one thing. Getting to it, and does it economically (pipelines, rail etc.) is another matter. Read that Santos is pumping a lot of water out of one of their fields to release the trapped gas to then feed their GLNG second train.

It is somewhat insane when you think about it. We're almost completely dependent on a finite resource that by some estimate will run out within a century... and we're in not much of a hurry to ramp up alternatives.


----------



## luutzu

Smurf1976 said:


> Have a look at this chart of OPEC proven oil reserves and ask yourself a few questions.
> 
> How plausible is it that the UAE has discovered exactly the same amount of oil as they have extracted each and every year since 1986?
> 
> How plausible is it that with one exception they all had sudden, huge jumps in proven reserves all about the same time (1980's)?
> 
> The data looks seriously manipulated to me. Qatar's might be OK but the rest look dubious at best.
> 
> My personal suspicion is that they probably did it accurately in the past, until the 1980's, then switched to reporting the total of what's been discovered to date as "reserves" and ignoring what has already been extracted. That is just a theory but it seems more plausible than the official data does.
> 
> https://upload.wikimedia.org/wikipe...px-OPEC_declared_reserves_1980-now_BP.svg.png




Are you going to trust them or your lying eyes? 

We must have bought the wrong fuel. Ours tend to run empty after we use it - these ones keep on growing or stay the same.

Kuwait should at least drop a bit when Saddam burnt their oil fields in the First Gulf War.


----------



## explod

Of course it is manipulated. 

The move down to try and cut the Russians out.   But once at that level let to rise to keep the markets bubbling and keep kicking the can down the road further yet. 

On the monthly chart the opening drop on the Dow for the start of the year is greater than any month on the ten year chart which includes 2007/08. 

Oil will be put wherever they like for political ends. 

Time to move on and keep working on that camouflaged cave in the outback Hills.


----------



## Smurf1976

luutzu said:


> It is somewhat insane when you think about it. We're almost completely dependent on a finite resource that by some estimate will run out within a century... and we're in not much of a hurry to ramp up alternatives.




A key issue there is rate of extraction.

Say that you have 50 oil fields each with 500 million barrels (to keep it simple). That's 25 billion barrels all up.

If they are located onshore in a country with massive oil infrastructure, and the USA is the only such country although individual regions within some other countries (notably Canada) come close, then realistically you can produce somewhere up to 3 billion barrels a year from that reserve base. So that's 8.2 million barrels per day.

If it's in some other reasonably developed country with favourable politics (eg Australia) but without the massive oil infrastructure then somewhere around 5 million barrels per day is a likely limit. You're not going to build an entire new pipeline system just to cater for one year of peak production, instead you'd build lower capacity and extract the oil over a longer period.

If it's somewhere that's hard to access or which is subject to political factors well then the production rate will be even lower. You extract maybe 4% or even just 1% of the reserves each year because that's all you can make happen with all the issues you have to deal with (like people blowing your pipelines up).

So we're using 35 billion barrels per year at present. That includes conventional crude oil from all locations (onshore and offshore including the arctic), condensate (from natural gas extraction), natural gas liquids (ethane, propane, butane - the latter two being commonly known as LPG), tar sands (Canada), upgraded natural bitumen (Venezuela) and US "shale" oil (not to be confused with oil shale, that's entirely different).

Some of that is cheap and easy (onshore oil either large fields in places like Saudi, or small ones in places with infrastructure already nearby such as USA) whilst some of it is high cost (Canadian tar sands, US shale, anything in very deep water).

Not included is oil shale. Estonia is the only country using that as a major energy source but they're just mining the shale (conventional mining methods to do that) and burn most of it "as is" to generate electricity in a process that's essentially the same as using coal for electricity. A little bit does get used for chemicals and liquid fuels, but most is just burnt as a solid in boilers.

So, 35 billion barrels per day all up. To achieve that extraction rate we need at least 350 billion barrels of proved reserves (if it were all in the USA or Canada), or make that closer to 600 billion barrels if it's distributed among mostly developed countries (or undeveloped ones that are at least politically stable). 

To the extent that there's x amount in the hands of politically less stable countries, you can't really assume any given rate of extraction. Venezuela claims the second largest reserves, and they certainly have a vast amount of natural bitumen which can be upgraded to produce crude oil, but with the political situation in that country production is going nowhere. Some yes, but it's trivial compared to their claimed reserves.

So it's not a case of saying that we've got x years worth of oil left in the ground. For all sorts of reasons, geological, financial and political, there's a very real limit to how quickly we can get that out of the ground. If we're going to have a shortage it will thus begin well before the last barrel is pumped from the ground. 

A bit off topic but I've got three types of suspect looking rocks sitting in the garage at the moment. I think (hope) this includes oil shale although I'm not certain which is which at the moment. Now I'm just working out how to do some testing to confirm what's what (preferably without burning anything down or gassing myself as apparently this particular shale is about 5% sulphur in the actual oil content). I'm not planning to use it for anything, just curious. At this stage I'm very sure I was looking in the right place, not so sure what the rocks I've got actually are (even if one is shale, then what are the other two?).


----------



## qldfrog

Smurf1976 said:


> A bit off topic but I've got three types of suspect looking rocks sitting in the garage at the moment. I think (hope) this includes oil shale although I'm not certain which is which at the moment. Now I'm just working out how to do some testing to confirm what's what (preferably without burning anything down or gassing myself as apparently this particular shale is about 5% sulphur in the actual oil content). I'm not planning to use it for anything, just curious. At this stage I'm very sure I was looking in the right place, not so sure what the rocks I've got actually are (even if one is shale, then what are the other two?).



would not that be your worst nightmare to find oil  shale? In qld do not know about tasmania, you can not own the resources, so the "Close the gates" here in qld/nsw; finding resources under your property is a nightmare..
This is a fundamental right which needs to change if Australia  was to become more that a colony laws wise. I believe this is different in WA but on the east coast what can you do when prospective licenses are already covering most of places+ oil shale is usually quite a dirty resource!


----------



## Smurf1976

The oil shale I've got (assuming it actually is oil shale, to be confirmed) is from a very well known resource that was actively mined from sometime in the late 1800's to about 1935 with several companies operating and more holding claim over land under which the shale is present.

It was a significant operation at the time, to the point that they refined petrol etc on site. Little trace of it remains today apart from a few random concrete and brick structures in the bush, some old pipes lying in pieces and a lot of (uncapped and unmarked so potentially hazardous - definitely need to watch where you're stepping) ventilation shafts. 

There were thoughts circa 1916, at a time when the state had just gone into the electricity business, that government may also be interested in buying out one of the shale operators or alternatively setting up a new operation. One of the owners was actively pushing the idea, the basic concept being that several private operators running independently was inevitably less efficient than a single large operation that government could achieve, but it didn't go anywhere beyond some reports and debate in parliament, economics being the reason. Why the companies didn't then pursue some sort of merger I'm not sure, presumably some were keen and others weren't interested for whatever reasons.

The main products of the old operations were petrol, turpentine, various grades of fuel oil and lubricants. The waste shale after processing was apparently used very successfully as fertilizer.

Since that time numerous companies have taken an interest in it, mostly after the 1970's oil shocks although there was some interest prior to that. CRA (now Rio Tinto) was one, more recently Boss Energy have taken a look and even the Hydro had a look at it back in the 1980's (with thoughts of producing petrol, diesel, jet fuel and LPG, not for electricity generation). Others had ideas of producing road bitumen or using it to fire the kilns in the nearby large scale cement works (now owned by Cement Australia). None of those efforts went anywhere for economic reasons although they all reached the conclusion that it's technically viable.

Personally I have zero interest in starting any oil shale companies or otherwise doing anything with it. Just went for a walk in the bush (nothing wrong with that, the area is fully accessible to the public these days), came across various ruins from the former operation and then spotted a few suspect looking rocks lying on the ground so picked them up and brought them home. Nothing major, just shoved some smaller ones in my pockets and carried the rest in my hands. 

There are numerous known small deposits of oil shale in Tasmania although only one area that's large enough to have attracted any serious interest. It's fairly well known that "there's oil on Bruny Island" but in practice it's just a minor shale deposit near the surface. 

Apart from the former shale industry, every few years someone comes up with the idea of drilling for conventional oil in Tas but thus far nobody has found it and no major oil company has shown any interest. I doubt there's much if any to be found but guess what's in today's newspaper? Yep, here's the latest attempt:

http://www.themercury.com.au/news/t...s/news-story/16f28a3b310b7a6ca3780a7e52c84d56

Suffice to say I won't be investing in this.


----------



## daytradeprofit

For a long time, I analyze the relationship between the Canadian currency prices and oil
I spoke about this correlation many times in recent years.
now i see  there two patterns who catch my eye:
oil chart is in Type of building wedge, it could leading to prices corrections over 50 $
Another thing that watched in Canadian dollars charts
It seems, which makes the same move that was in 2006-7, which led a sharp correction.
As a reminder,  you can watch my post on the usdcad in the 1.07  price level That noted usdcad is going to  1:31.
Now, remains to be seen whether this time too it will come......
If yes, then I predict targets, 1.24-1.19 in usdcad  area with oil prices  in 51-55"

now lets face with the situation we have:


----------



## luutzu

Smurf1976 said:


> The oil shale I've got (assuming it actually is oil shale, to be confirmed) is from a very well known resource that was actively mined from sometime in the late 1800's to about 1935 with several companies operating and more holding claim over land under which the shale is present.
> ...




Are you a chemical engineer or a geologist Smurf?

My sister is married to a Geologist and he got the same kick out of finding some rock too


----------



## luutzu

Smurf1976 said:


> A key issue there is rate of extraction.
> 
> Say that you have 50 oil fields each with 500 million barrels (to keep it simple). That's 25 billion barrels all up.
> 
> If they are located onshore in a country with massive oil infrastructure, and the USA is the only such country although individual regions within some other countries (notably Canada) come close, then realistically you can produce somewhere up to 3 billion barrels a year from that reserve base. So that's 8.2 million barrels per day.
> 
> If it's in some other reasonably developed country with favourable politics (eg Australia) but without the massive oil infrastructure then somewhere around 5 million barrels per day is a likely limit. You're not going to build an entire new pipeline system just to cater for one year of peak production, instead you'd build lower capacity and extract the oil over a longer period.
> 
> If it's somewhere that's hard to access or which is subject to political factors well then the production rate will be even lower. You extract maybe 4% or even just 1% of the reserves each year because that's all you can make happen with all the issues you have to deal with (like people blowing your pipelines up).
> 
> So we're using 35 billion barrels per year at present. That includes conventional crude oil from all locations (onshore and offshore including the arctic), condensate (from natural gas extraction), natural gas liquids (ethane, propane, butane - the latter two being commonly known as LPG), tar sands (Canada), upgraded natural bitumen (Venezuela) and US "shale" oil (not to be confused with oil shale, that's entirely different).
> 
> Some of that is cheap and easy (onshore oil either large fields in places like Saudi, or small ones in places with infrastructure already nearby such as USA) whilst some of it is high cost (Canadian tar sands, US shale, anything in very deep water).
> 
> Not included is oil shale. Estonia is the only country using that as a major energy source but they're just mining the shale (conventional mining methods to do that) and burn most of it "as is" to generate electricity in a process that's essentially the same as using coal for electricity. A little bit does get used for chemicals and liquid fuels, but most is just burnt as a solid in boilers.
> 
> So, 35 billion barrels per day all up. To achieve that extraction rate we need at least 350 billion barrels of proved reserves (if it were all in the USA or Canada), or make that closer to 600 billion barrels if it's distributed among mostly developed countries (or undeveloped ones that are at least politically stable).
> 
> To the extent that there's x amount in the hands of politically less stable countries, you can't really assume any given rate of extraction. Venezuela claims the second largest reserves, and they certainly have a vast amount of natural bitumen which can be upgraded to produce crude oil, but with the political situation in that country production is going nowhere. Some yes, but it's trivial compared to their claimed reserves.
> 
> So it's not a case of saying that we've got x years worth of oil left in the ground. For all sorts of reasons, geological, financial and political, there's a very real limit to how quickly we can get that out of the ground. If we're going to have a shortage it will thus begin well before the last barrel is pumped from the ground.
> 
> A bit off topic but I've got three types of suspect looking rocks sitting in the garage at the moment. I think (hope) this includes oil shale although I'm not certain which is which at the moment. Now I'm just working out how to do some testing to confirm what's what (preferably without burning anything down or gassing myself as apparently this particular shale is about 5% sulphur in the actual oil content). I'm not planning to use it for anything, just curious. At this stage I'm very sure I was looking in the right place, not so sure what the rocks I've got actually are (even if one is shale, then what are the other two?).




So fossil fuel price will skyrocket within next decade then?

I'm still a bit surprised by how much infrastructure it takes to supply 1 day's worth of oil consumption. I mean, Santos' GLNG $26B project only produces equivalent of 69M barrel a year, the world consumes at its current low demand at 96M barrel a day! 

With these rates of extraction and constraints you're talking about... maybe oilers don't mind the melting ice-caps to make extraction easier for them. Some people are just a bit messed up. Too bad they also run the place.


----------



## luutzu

Saudi Aramco is thinking of offloading its downstream assets, not its reserves.

I'm betting that soon after these IPOs and the cash has been transferred and no possibility of a backsy, they'll start to crank up oil prices again.

http://www.reuters.com/article/us-saudi-aramco-idUSKCN0V20AB


> An initial public offering of Saudi Aramco, the world's biggest oil company, could be on the local or international markets but would not include Saudi energy reserves, the company's chairman told Saudi-owned al-Arabiya television.
> 
> "The reserves would not be sold, but the company's ability to produce from the reserves is being studied," Khalid al-Falih told the channel in an interview from Davos, Switzerland where the annual World Economic Forum was held last week.
> 
> In an interview with The Economist earlier this month, Saudi Deputy Crown Prince Mohammed bin Salman said Riyadh might sell shares in Aramco as part of a privatization drive.
> 
> Aramco has crude reserves estimated at about 265 billion barrels, over 15 percent of all global oil deposits, so it could become the first listed company valued at $1 trillion or more if it went public, analysts have estimated...


----------



## Smurf1976

luutzu said:


> So fossil fuel price will skyrocket within next decade then?




No guarantees there.

If the economy falls in a hole and consumers simply can't pay then we won't get more expensive oil, we'll just be using a lesser volume of cheap oil.

Electric cars may well become mainstream.

Never underestimate the abilities of central banks to pump money out. Now, if that money at a negative interest rate happens to end up invested in tar sands...

Something dramatic happens politically and we end up with Western oil companies back in the Middle East with no restraint on extraction rates.

I do think prices are more likely to go up than down but I don't see it as a certainty.


----------



## luutzu

Smurf1976 said:


> No guarantees there.
> 
> If the economy falls in a hole and consumers simply can't pay then we won't get more expensive oil, we'll just be using a lesser volume of cheap oil.
> 
> Electric cars may well become mainstream.
> 
> Never underestimate the abilities of central banks to pump money out. Now, if that money at a negative interest rate happens to end up invested in tar sands...
> 
> Something dramatic happens politically and we end up with Western oil companies back in the Middle East with no restraint on extraction rates.
> 
> I do think prices are more likely to go up than down but I don't see it as a certainty.




Yea, can't really predict anything really.

Like the price of oil tomorrow. 

The headlines tend to say oil is also low because of the mild winter up North. This weekend just saw a blizzard shutting down NE USA... will demand for oil now go up or down from this snowstorm?

Can't really say how the market will interpret it. Flights are cancelled, cars off the road, schools closing etc. mean less consumption... but then will need more heat for showers and comfort.


----------



## DeepState

Smurf1976 said:


> Something dramatic happens politically and we end up with Western oil companies back in the Middle East with no restraint on extraction rates.




What is the expected supply profile for new Iranian output?
What is the all-in cost of production like for Iran relative to RoW?
What is the Iranian appetite to share the oil field development costs with foreign, including Western, interests now that the embargo has largely been lifted?  Chinese FDI being an indication of what a major buyer is permitted/encouraged to do before the embargo was lifted.


----------



## daytradeprofit

crude oil  jumped from a near 13-year low of $27 a barrel last month to as high as $35 last week, yesterday it fell down and broke major support at 29.30 as i mention on my last post this is crucial and I'm expecting to see some more downside moves 
we can from the technical aspect Butterfly Pattern:
extension harmonic pattern where sometimes can be found near key market reversal points
D would need to be an extension of BC in the magnitude of 1.618 or 2.618. This should align with an extension of XA in the magnitude of a 1.27 or 1.618.
the bright spot for oil bulls is the dollar. With expectations of a second US interest rate rise also falling, the greenback has fallen back against other countries, which reduces the cost of oil for overseas buyers in critical industrial markets such as China.
crude oil next stop suggest at ....http://www.*********************/


----------



## notting

OOOOOhh.  Now dat's gonna hurt anyone who covered their shorts today.-




Take heart, what's a few % points between on off on again?  go to town on 'em again tomorrow. 
But check the reals first!
It's rarely perfect.


----------



## notting

Killing Americans 9/11 etc - rarely has a good result....................

We killed OPEC!

[video]http://money.cnn.com/2016/02/17/investing/opec-dead-texas-congressman/index.html[/video]


----------



## luutzu

notting said:


> Killing Americans 9/11 etc - rarely has a good result....................
> 
> We killed OPEC!
> 
> [video]http://money.cnn.com/2016/02/17/investing/opec-dead-texas-congressman/index.html[/video]




I thought the Saudis are to do what Uncle Sam tells them to - being one of the unofficial colonies and what not.

Crashing the market certainly hurt Russia and Venezuela, and put those high cost producers into bankruptcy, but I heard from a few geo-political guys (on YouTube of course) that oil is low because the US want it so. With a couple of brigades and a handful of bases on the ground in the ME, I don't think sheiks and sultans could do things because they wanted to.

Maybe the current talk of a "freeze" is for show and Russia got a few more hurting to go; That or Uncle Sam thought maybe it benefits the Chinese too much to have low oil prices - can't really hurt a diminished giant but fed a growing one that's stirring a few islands with great strategic and energy reserves.

Anywho... I have no idea how oil will do next couple years, definitely certain it won't be around this level in the medium term though.


----------



## notting

Saudis are Frenemies not colony.  Muslim nutcases like all the others -They just know where the money comes from.
Bin Laden was the great son who they privatly loved, but publicly condemned.
Plenty of terror money comes from Saudi land woman stoning nut jobs.



luutzu said:


> definitely certain it won't be around this level in the medium term though.




Medium term, - Where will it be?


----------



## luutzu

notting said:


> Saudis are Frenemies not colony.  Muslim nutcases like all the others -They just know where the money comes from.
> Bin Laden was the great son who they privatly loved, but publicly condemned.
> Plenty of terror money comes from Saudi land woman stoning nut jobs.
> 
> 
> 
> Medium term, - Where will it be?




US chose Ibn Saud and his clan to rule it ever since WW2. US been there and done all that. Have also seen it in a George Clooney movie - Syrianna    Based on an ex-CIA guy's account of who and what run those countries.

But alright, they're nasty people we don't really like but have to kinda get along because they got lots of the stuff we want.

Medium term... say 3 to 5 years, oil will be higher 

If it does not, well a lot of those oil countries will go broke. And going broke mean you don't have money to buy guns to suppress your people and keep waging a couple wars and fund terrorists. Not to mention the palaces and all them jets and yachts. 

But I would gladly trade my few bucks if they'd decided to go broke, pack up and head to the US as all former puppets of colonies tend to after the fall.


----------



## notting

Kinda liking this analysis - 

[video]http://video.cnbc.com/gallery/?video=3000494880[/video]


----------



## Smurf1976

luutzu said:


> And going broke mean you don't have money to buy guns to suppress your people and keep waging a couple wars and fund terrorists. Not to mention the palaces and all them jets and yachts.




It also means you don't have money to reinvest in sustaining oil production.

If you look at oil producing countries that have collapsed in some way in the past, well one of the first and most significant things that happens is that oil production crashes.


----------



## luutzu

Smurf1976 said:


> It also means you don't have money to reinvest in sustaining oil production.
> 
> If you look at oil producing countries that have collapsed in some way in the past, well one of the first and most significant things that happens is that oil production crashes.




You mean to maintain (sustain) the existing infrastructure/wells or reinvest in new ones? I think you mean new exploration/dev?

But yea, it would make sense that maintenance of exisiting production facilities are also cut. Sense but kind of strange given how it's their lifeline and they're neglecting it. But then maybe there's not much that could be done to sustain it given how reserves are finite and the more you pump the less there are to pump up - no matter how well you oil the engine or come up with greater efficiency.

---

Looks like oil has hit its bottom and on its way back up past week. 

Just read that Saudi just raise its price to Asia; Putin just said Russian oilers all want to freeze production this year at January's level; OPEC seems to also want that. 

50% of Russia's revenue are from oil and gas; Saudi and other OPEC maybe up to 80% (guessing there). If they won't be reinvesting towards existing production and some $200Billion worth of exp/dev projects have been cancelled... that an ME and Russia and NATO are fighting wars on all fronts, it is just not possible to keep oil at this level.

On the good news, and one I hope is right for people's sake, is that since oil is being use as a weapon in these current wars: "glutting" the market to drive down the price to bankrupt the other guy(s). Since they can't keep fighting for too long without money; and since money for them comes from oil and oil don't buy as much as they used to... the wars will soon have to stop.

Once it stop and their account is almost empty, better work together to bring prices up to replenish the treasuries (hurrah for innocent people). With high oil comes greenlights for alternatives and renewables (hurrah for Mother Earth and all her children); with higher prices I might start to break even (hurrah for getting back to zero).

That or they decided $40 is a good level that afford both wars and palaces... and so freeze production to bring it there. Dam it. 

This is why I don't buy into casinos and weapons manufacturers. But ey, only reason I buy oil is that high oil prices is actually good for the world


----------



## tanti

luutzu said:


> You mean to maintain (sustain) the existing infrastructure/wells or reinvest in new ones? I think you mean new exploration/dev?
> 
> But yea, it would make sense that maintenance of exisiting production facilities are also cut. Sense but kind of strange given how it's their lifeline and they're neglecting it. But then maybe there's not much that could be done to sustain it given how reserves are finite and the more you pump the less there are to pump up - no matter how well you oil the engine or come up with greater efficiency.
> 
> ---
> 
> Looks like oil has hit its bottom and on its way back up past week.
> 
> Just read that Saudi just raise its price to Asia; Putin just said Russian oilers all want to freeze production this year at January's level; OPEC seems to also want that.
> 
> 50% of Russia's revenue are from oil and gas; Saudi and other OPEC maybe up to 80% (guessing there). If they won't be reinvesting towards existing production and some $200Billion worth of exp/dev projects have been cancelled... that an ME and Russia and NATO are fighting wars on all fronts, it is just not possible to keep oil at this level.
> 
> On the good news, and one I hope is right for people's sake, is that since oil is being use as a weapon in these current wars: "glutting" the market to drive down the price to bankrupt the other guy(s). Since they can't keep fighting for too long without money; and since money for them comes from oil and oil don't buy as much as they used to... the wars will soon have to stop.
> 
> Once it stop and their account is almost empty, better work together to bring prices up to replenish the treasuries (hurrah for innocent people). With high oil comes greenlights for alternatives and renewables (hurrah for Mother Earth and all her children); with higher prices I might start to break even (hurrah for getting back to zero).
> 
> That or they decided $40 is a good level that afford both wars and palaces... and so freeze production to bring it there. Dam it.
> 
> This is why I don't buy into casinos and weapons manufacturers. But ey, only reason I buy oil is that high oil prices is actually good for the world





So where will oil stop at? $40pb? 
I think and its pretty obvious that there is some good coin to be made in oil atm. But will turf wars fire back up again?


----------



## luutzu

tanti said:


> So where will oil stop at? $40pb?
> I think and its pretty obvious that there is some good coin to be made in oil atm. But will turf wars fire back up again?




From memory, some OPEC oil minister was thinking $45 to $65 over next two years is where they'd preferred it. But, he goes on, market forces etc. mean it'll go where "the market" takes it.

From Chomsky, yes, Noam Chomsky, oil is priced at where the US want it priced at. And the US want it where the oilers tell them to want it: Not too high that it will hurt other US (and some favoured Western) corporations' profits, but not too low that ExxonMobils and other big and little Rockefellers can't make much money either.

Oil is too important to be determined by the market. (that's totally my saying )... so with a lingering global economic recession, with greater offshoring of jobs and manufacturing that need to be brought back home to consume (as observed by ViJay Prashad, a leftwing professor of politics) - because let's face it, if we in the West think we're doing it tough, imagine the poor bastards in the developing countries on $1 or two a day... Then with something like a seven or eight wars happening across the ME and Eastern Europe... we all could do with lower oil prices.

As said before, short term low oil price will not hurt big oilers. They will take the opportunity to write down their assets as impaired (and pay no taxes), then using their muscles they will take over weaker rivals with lots of undeveloped fields or newly developed assets with big debt they can't repay... It's like a steal. Much cheaper than developing in the Arctic and deep offshore (think of the animals and Mother Nature, they'd say).

So that's oil. Or we can hire a few consultant and analysts and do the economics of supply and demand so that a 1.5% oversupply is somehow a glut in a world with increasing demand for a finite resource that's due to be emptied in another 100 year (right about when Global Warming needs to be stopped too).


----------



## notting

Not only is it all about supply and demand.
But this would be freaking out the Arabs more than anything ever has.
It's like the final middle finger offered up from the States to Allah Land after it's decade of  go blow yourselves up, may as well just blow ourselves  up and try to look scary - 

http://www.bbc.com/news/business-35953817

Boo!

And oil plummets again.


----------



## notting

Ooooops.
I took profits and went short on about 5 oilers yesterday. 
WTF

Covering ask question later

One answer,  China is increasing consumption and is pumping a lot less.
Another - The Doha 'Dho' was priced in, it wasn't all about the strike in Kuwait.


----------



## luutzu

notting said:


> Ooooops.
> I took profits and went short on about 5 oilers yesterday.
> WTF
> 
> Covering ask question later
> 
> One answer,  China is increasing consumption and is pumping a lot less.




ouch.

Just to rub salt to injury, I've been doing pretty well on oil lately. Almost break even 

Read oil is going down over in the US though, so might be good for you next week.


----------



## CanOz

47 for a minimum target on WTI.


----------



## Smurf1976

luutzu said:


> You mean to maintain (sustain) the existing infrastructure/wells or reinvest in new ones? I think you mean new exploration/dev?
> 
> But yea, it would make sense that maintenance of exisiting production facilities are also cut. Sense but kind of strange given how it's their lifeline and they're neglecting it. But then maybe there's not much that could be done to sustain it given how reserves are finite and the more you pump the less there are to pump up - no matter how well you oil the engine or come up with greater efficiency.




The basic thing with oil is that you have to keep investing in order to maintain flat production. If you stop investing then production starts to fall pretty quickly as the wells deplete if you're not drilling any new ones.

So if a country falls into crisis and stops spending, then it's a given that oil production drops simply due to natural depletion of whatever fields they have in production. In reality that can also be hastened by things like people blowing up pipelines etc but production still falls (slowly) even if that doesn't occur.


----------



## luutzu

Smurf1976 said:


> The basic thing with oil is that you have to keep investing in order to maintain flat production. If you stop investing then production starts to fall pretty quickly as the wells deplete if you're not drilling any new ones.
> 
> So if a country falls into crisis and stops spending, then it's a given that oil production drops simply due to natural depletion of whatever fields they have in production. In reality that can also be hastened by things like people blowing up pipelines etc but production still falls (slowly) even if that doesn't occur.




I knew it was silly to think they just need to drill a couple of holes in an entire field 

The oil rally this week was unexpected by me... not that I'm ever good at expecting it. With the freeze falling sideways Monday's drop was expected, but then the massive gain right after. Read on Reuters it's due to worker's strike in Kuwait (?) and drop in stockpile in the US.

Again, oil literally moves the world and its economies and militaries. How a 1.5 to 2% oversupply become a glut is just beyond me.


----------



## Smurf1976

luutzu said:


> I knew it was silly to think they just need to drill a couple of holes in an entire field




My basic point is that oil differs from most other commodities in terms of how a resource is extracted.

Anything mined as a solid material - you build a mine that produces (for example) 5 million tonnes per year based on a 50 million tonne resource. It then does just that, you get 5 million tonnes of the stuff every year for the next 10 years and it's at a pretty constant rate until very close to the end. It's not quite constant but it's reasonably close.

Oil differs in that production tapers off over time from any given field and doesn't have the "flat" profile that most other things do. Whatever flow you get at the start, pretty quickly that comes down unless you keep drilling more and more wells to tap surrounding deposits (or to inject water, CO2 etc to enhance oil recovery).

So oil is very much a case of having to keep investing just to maintain a constant output. The world is producing somewhere around 96 million barrels per day at the moment (varies a bit depending on the data source). If we stop all investment in new wells etc tomorrow, then that figure will start coming down almost immediately.


----------



## craiggary

Hi guys

I booked some really nice profits on WTI this month.  Adam button from forex live has 5 top seasonal trades every month.  one of them for April was oil.  So i had a close look and got in right at the bottom.


----------



## CanOz

craiggary said:


> Hi guys
> 
> I booked some really nice profits on WTI this month.  Adam button from forex live has 5 top seasonal trades every month.  one of them for April was oil.  So i had a close look and got in right at the bottom.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 66422
> View attachment 66422




I actually got the bottom, full size. I'm retired now


----------



## luutzu

Smurf1976 said:


> My basic point is that oil differs from most other commodities in terms of how a resource is extracted.
> 
> Anything mined as a solid material - you build a mine that produces (for example) 5 million tonnes per year based on a 50 million tonne resource. It then does just that, you get 5 million tonnes of the stuff every year for the next 10 years and it's at a pretty constant rate until very close to the end. It's not quite constant but it's reasonably close.
> 
> Oil differs in that production tapers off over time from any given field and doesn't have the "flat" profile that most other things do. Whatever flow you get at the start, pretty quickly that comes down unless you keep drilling more and more wells to tap surrounding deposits (or to inject water, CO2 etc to enhance oil recovery).
> 
> So oil is very much a case of having to keep investing just to maintain a constant output. The world is producing somewhere around 96 million barrels per day at the moment (varies a bit depending on the data source). If we stop all investment in new wells etc tomorrow, then that figure will start coming down almost immediately.




Thanks Smurf. I feel better hearing that


----------



## IamSurri

*Crude going to 90$*

Does anyone belive that Crude is going to go 

to 90$ by the end of 2016? I read that on news headlines today.
????


----------



## lusk

*Re: Crude going to 90$*



IamSurri said:


> Does anyone belive that Crude is going to go
> 
> to 90$ by the end of 2016? I read that on news headlines today.
> ????




That would be the same news that said it was going to $20 a couple of
months ago? Basically everything you hear in the news is NFI.


----------



## CanOz

CL is hanging around a bracket now after rejecting close to 47. We could see another test of the 47 area in the coming weeks. Tonights reaction to the inventories might give us some clue on how sustainable this move could be. A move above 46.20 should get some momentum going again....

I was quite bearish when we sold off at the first of the month, but its caught a bit of a bid and the USD Index looks to be weakening somewhat, which should help CL. 

The chance of a Fed rate rise in June is very low at the moment, around 4%. Even September is less than 50% i believe. This should put downward pressure on the USD, upward pressure on commodities.


----------



## CanOz

Latest CL composite, looks like a nice level in the making here...


----------



## notting

The herd is turning!!

http://www.cnbc.com/2016/05/16/oil-prices-jump-as-goldman-sachs-says-market-flips-into-deficit.html


----------



## CanOz

$50 has got to be a sell! Maybe on Brent first....


----------



## gartley

I believe there is a nice fibonacci/Lucas time cycle running through Crude ATM

For anyone not familiar with the Lucas Series of numbers:  4, 7, 11, 18, 29, 47, 76......
Every number divided by the preceding number is very close to the golden ratio number of 0.618

Looking at the link below a chart crude has just completed 5 waves up from the $26 low. Waves 1 and 3 where Lucas numbers for traded days. Wave 5 looks also to have been a Lucas number.

Wave 1= 29 days
Wave 3= 19 days
Wave 5= 12 Days

On this chart this appears to be strong confirming mechanism for EW which I beleive should never be used in isolation. Normally when we have relationships like this (and they are rare) they suggest a good move coming.

Allow plus or minus 1 day for each. If the pattern holds then crude should begin it largest correction since the rally started. This is not trading advice as anything is possible at all times but I am short as of yesterday.

http://invst.ly/1silt


----------



## notting

Such a comedy of errors all over the joint, in the oil industry, since the price got too low for everybody 


> Right now, the market is sensitive to any kind of supply disruption," he told CNBC, noting the oil trade had already been roiled by sabotage on Nigeria.





http://www.cnbc.com/2016/06/05/stumbling-dollar-lifts-oil-prices-but-uptick-in-us-drilling-caps-gains.html

Play the game cause that's what it is!


----------



## JohnITMS

The psychology of people involved in the stock market never ceases to amaze me. On February 11, 2016 crude oil traded as low as $26.00 a barrel, but people in the stock market were terrified to buy it at that level. In fact, many of the financial talking heads on television were saying that oil would go down to $10.00 a barrel. These types of remarks caused people in the public to avoid investing in crude despite the commodity trading at new yearly lows and being severely oversold. Now crude is trading above $50.00 a barrel and people are afraid to sell it short despite crude rallying higher by nearly 100 percent since February. 

Many of the financial talking heads are now saying that oil will go to $75.00 a barrel before peaking out. Isn’t it funny how these so called experts come up with these levels? What are they using to say these statements. The truth is that they are probably hoping it comes back to that level so their investments can work out or recover from the 2016 decline earlier this year. If anyone looks at a chart of crude oil they could clearly see oil has major resistance around the $50 to $55.00 dollar area. Today, crude oil is trading around $51.00 a barrel. 

There are many factors that affect the price of crude oil. Some of these factors include oil production output, weather, geopolitical events, and the U.S. Dollar. Out of all of these factors the strength and weakness in the U.S. Dollar seems to be most important. Please understand, most of the oil in the world is traded in U.S. Dollars. So if the U.S. Dollar is strong against most other currencies in the world the oil price will likely decline. That was certainly the primary reason for the decline in crude throughout the past two years. 

There are many ways to trade oil despite using oil futures these days. ETF's and ETN's such as the United States Oil Fund LP (ETF)(NYSEARCA:USO), iPath S&P GSCI Crude Oil Total Return(NYSEARCA:OIL), and the ProShares Ultra DJ-UBS Crude Oil(NYSEARCA:UCO) are just a few different vehicles that can be used to trade oil on the long side. Some short side trading equities for crude include the ProShares UltraShort Bloomberg Crude Oil ETF(NYSEARCA:SCO), and the DB Crude Oil Double Short ETN (NYSEARCATO).

Full disclosure: I currently own SCO shares.


----------



## qldfrog

JohnITMS said:


> The psychology of people involved in the stock market never ceases to amaze me. On February 11, 2016 crude oil traded as low as $26.00 a barrel, but people in the stock market were terrified to buy it at that level. In fact, many of the financial talking heads on television were saying that oil would go down to $10.00 a barrel. These types of remarks caused people in the public to avoid investing in crude despite the commodity trading at new yearly lows and being severely oversold. Now crude is trading above $50.00 a barrel and people are afraid to sell it short despite crude rallying higher by nearly 100 percent since February.
> 
> Many of the financial talking heads are now saying that oil will go to $75.00 a barrel before peaking out. Isn’t it funny how these so called experts come up with these levels? What are they using to say these statements. The truth is that they are probably hoping it comes back to that level so their investments can work out or recover from the 2016 decline earlier this year. If anyone looks at a chart of crude oil they could clearly see oil has major resistance around the $50 to $55.00 dollar area. Today, crude oil is trading around $51.00 a barrel.
> 
> There are many factors that affect the price of crude oil. Some of these factors include oil production output, weather, geopolitical events, and the U.S. Dollar. Out of all of these factors the strength and weakness in the U.S. Dollar seems to be most important. Please understand, most of the oil in the world is traded in U.S. Dollars. So if the U.S. Dollar is strong against most other currencies in the world the oil price will likely decline. That was certainly the primary reason for the decline in crude throughout the past two years.
> 
> There are many ways to trade oil despite using oil futures these days. ETF's and ETN's such as the United States Oil Fund LP (ETF)(NYSEARCA:USO), iPath S&P GSCI Crude Oil Total Return(NYSEARCA:OIL), and the ProShares Ultra DJ-UBS Crude Oil(NYSEARCA:UCO) are just a few different vehicles that can be used to trade oil on the long side. Some short side trading equities for crude include the ProShares UltraShort Bloomberg Crude Oil ETF(NYSEARCA:SCO), and the DB Crude Oil Double Short ETN (NYSEARCATO).
> 
> Full disclosure: I currently own SCO shares.



on the ASX:OOO
disclosure, I sold last week the last of my OOO but had a sizeable amount I purchased relatively low, and sold as it went up to $50;that trade has been good for me this year;
I see oil going up to $60 max in the short term;
 so my decision to get my profits


----------



## Value Hunter

People like Jim Rickards, T Boone Pickens, and many others suggest that the long-term equilibrium price of oil is in the $50-$80 USD per barrel range. An *extended period* at a price less than  $50 and a lot of supply will shut down due to operational losses. An *extended period* of a price above $80 USD and a lot of new supply will come onto the market due to strong profitability. For those that are interested in trading oil by that analysis you should be buying at or below $40 USD or less and selling at $60 - $80 USD per barrel. I personally tend to stay away from oil because in the long-term the cost of alternative energy will come down due to new technology and this could perhaps gradually lower the long-term sustainable ceiling price of oil.


----------



## luutzu

Value Hunter said:


> People like Jim Rickards, T Boone Pickens, and many others suggest that the long-term equilibrium price of oil is in the $50-$80 USD per barrel range. An *extended period* at a price less than  $50 and a lot of supply will shut down due to operational losses. An *extended period* of a price above $80 USD and a lot of new supply will come onto the market due to strong profitability. For those that are interested in trading oil by that analysis you should be buying at or below $40 USD or less and selling at $60 - $80 USD per barrel. I personally tend to stay away from oil because in the long-term the cost of alternative energy will come down due to new technology and this could perhaps gradually lower the long-term sustainable ceiling price of oil.




How long is your long term? Long enough and oil won't be around at all to extract.

I get what you're saying but part of the current "self-inflicted wounds" have more to do with geopolitics, mergers/acquisition, and as a bonus defeating investment into alternative energy.

Geopolitics in terms of the US and its dependencies (Saudi Arabia, Iraq and other ME kingdoms) wanting to hurt Russia, Venezuela, Brazil etc. The Arab states comply because, well they have to, but also because it will mean sanctions and ruining competitors will be good for business down the line.

With low enough oil, small players with big reserves get taken over for cheap, very cheap. Almost a steal.

Then with energy being so low, costly investment and switching of major infrastructure, or replacement decision to replace aging plants with alternatives... most would be delayed or cancelled.

Once consolidation of both market share and reserves are complete, oil will rise to make up for current losses... give that a decade before people start to seriously consider alternative sources, invest in them big time and crash again.


OPEC and all procuders are in pain at the moment. They're hoping things will work out as they planned... but if you're right and, say, the Chinese make greater investment into alternative sources - because they have to since all major reserves are either controlled by other powers or access to them carries great risk of transporting them home... if these countries make great gains into alternatives, and some are saying that the Chinese is way ahead and getting better at Solar. Then yes, oil may suffer this decline and won't be up to where it was and would.


----------



## Smurf1976

Value Hunter said:


> People like Jim Rickards, T Boone Pickens, and many others suggest that the long-term equilibrium price of oil is in the $50-$80 USD per barrel range. An *extended period* at a price less than  $50 and a lot of supply will shut down due to operational losses.




The USA is an example of that with production declining significantly in recent months. Low prices killed drilling for new projects and in due course those already underway when the price collapsed were completed. After that, it's a simple case of the slow but steady decline in output from existing fields being greater than the now small amount of new production being brought online. End result = production goes down.


----------



## Smurf1976

luutzu said:


> Then with energy being so low, costly investment and switching of major infrastructure, or replacement decision to replace aging plants with alternatives... most would be delayed or cancelled.




Oil is almost always the easiest option to deploy at the consumption end (industrial fuel, power generation etc) simply because it's an energy dense liquid that's very easily transported, stored and used. Apart from a few things like making steel, you only bother with coal, gas, nuclear, hydro or whatever unless it's cheaper than the easy option of oil. And for something else to be cheaper, well oil has to be reasonably expensive to start with since the non-fuel cost of every other option is almost always higher than it is with oil due to the infrastructure required. 

Coal needs handling, emissions controls, ash disposal, means to move and store a large volume of a solid material (coal) and so on. Gas needs a pipeline as a minimum, LNG (huge capital cost) at worst. Nuclear or renewables are incredibly capital intensive to set up with all that's required. Oil is almost always far simpler (cheaper) to get running since less infrastructure is required such that any advantage in using something else depends on the oil itself being sufficiently expensive that the higher capital cost (and longer lead time) of some other option ends up cheaper overall.

We've got 3 temporary (hired) gas turbine generators sitting here in Tasmania at the moment due to the power supply problems. They're literally right next to a major gas pipeline but to cut a long story short it wasn't worth the cost and hassle of actually connecting gas to them given that they're just as happy firing oil (diesel) as fuel and there's plenty of that on hand just up the road which can easily be trucked to the site. If oil cost $200 per barrel then we'd have connected the gas to those generators for sure, but with oil at the present price it just wasn't worth the cost and hassle of doing so.

Same logic applies to any situation in industry, power etc. Oil is the easiest (cheapest) to set up almost always, you only use something else if the saving on fuel cost justifies the additional expense of setting it up. That's an easy decision if oil is expensive but it's much harder to make the economics work in favour of something else if oil is reasonably cheap.


----------



## luutzu

Smurf1976 said:


> The USA is an example of that with production declining significantly in recent months. Low prices killed drilling for new projects and in due course those already underway when the price collapsed were completed. After that, it's a simple case of the slow but steady decline in output from existing fields being greater than the now small amount of new production being brought online. End result = production goes down.




Recently, some groups in Nigeria have their own terrorising ways of shutting down production, a bit like other groups in Libya: they blow up and sabotage pipelines and facilities.

The Nigerian terrorists said they want to bring production there to zero. IF that happens, 500K barrels comes off the global supply. 

Bushfires in the Canadian tar sands region put something around 1.5M bbd offline.

I think those two alone lifted oil prices recently. So it doesn't take much to disrupt doesn't it.

Then there's Venezuela economy and politics going to heck as intended - seems it's only standing thanks to Chinese backing it up.

There's a bunch of delayed maintenance in the ME, and exploration and development are getting way down to zero. As you said previously, that's not going to do supply any good.

With natural rate of depletion further accelerated by the recent/current ramp up, all for some 2% above demand (demand that's predicted to further increase due to cheap supplies), it's going to come back with greater demand and drastically reduced supply with negligible supplies from alternatives. 

But yea, I wouldn't want to put money on a specific range of dates when it'll happen.


----------



## luutzu

Smurf1976 said:


> Oil is almost always the easiest option to deploy at the consumption end (industrial fuel, power generation etc) simply because it's an energy dense liquid that's very easily transported, stored and used. Apart from a few things like making steel, you only bother with coal, gas, nuclear, hydro or whatever unless it's cheaper than the easy option of oil. And for something else to be cheaper, well oil has to be reasonably expensive to start with since the non-fuel cost of every other option is almost always higher than it is with oil due to the infrastructure required.
> 
> Coal needs handling, emissions controls, ash disposal, means to move and store a large volume of a solid material (coal) and so on. Gas needs a pipeline as a minimum, LNG (huge capital cost) at worst. Nuclear or renewables are incredibly capital intensive to set up with all that's required. Oil is almost always far simpler (cheaper) to get running since less infrastructure is required such that any advantage in using something else depends on the oil itself being sufficiently expensive that the higher capital cost (and longer lead time) of some other option ends up cheaper overall.
> 
> We've got 3 temporary (hired) gas turbine generators sitting here in Tasmania at the moment due to the power supply problems. They're literally right next to a major gas pipeline but to cut a long story short it wasn't worth the cost and hassle of actually connecting gas to them given that they're just as happy firing oil (diesel) as fuel and there's plenty of that on hand just up the road which can easily be trucked to the site. If oil cost $200 per barrel then we'd have connected the gas to those generators for sure, but with oil at the present price it just wasn't worth the cost and hassle of doing so.
> 
> Same logic applies to any situation in industry, power etc. Oil is the easiest (cheapest) to set up almost always, you only use something else if the saving on fuel cost justifies the additional expense of setting it up. That's an easy decision if oil is expensive but it's much harder to make the economics work in favour of something else if oil is reasonably cheap.




That was worth more than 2 cents Smurf. Packed with info and analysis, much like oil


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## notting

Oil puts in it's worst overnight action for over 6 months and our oiler's, most of whom can't and arn't making any money in this environment, just meander around like it 's  walk in the park


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## notting

notting said:


> Oil puts in it's worst overnight action for over 6 months and our oiler's, most of whom can't and arn't making any money in this environment, just meander around like it 's  walk in the park




Guess someone was front running the US jobs report.
Which, bye the way is backward looking. 
China has finished buying global oil to max out it's reserves and oil broke 45 and support for the first time since May.
Short


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## CanOz

notting said:


> Guess someone was front running the US jobs report.
> Which, bye the way is backward looking.
> China has finished buying global oil to max out it's reserves and oil broke 45 and support for the first time since May.
> Short




Oil was steaming along well until Brexit...i think that was the high. Makes you wonder if what oil is saying about global growth is true or not, doesn't look good though for oil. Maybe even retest the lows again now?


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## notting

CanOz said:


> Oil was steaming along well until Brexit...i think that was the high. Makes you wonder if what oil is saying about global growth is true or not, doesn't look good though for oil. Maybe even retest the lows again now?




Not sure about the lows but it's certainly hard to see it getting through any resistance.
Rigs were increasing in US and Arabs would not have liked to see that!
PS I meant to add the jobs report data is largely pre BREXIT too.


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## CanOz

I've never seen a bid like this in CL before....wtf? Contract roll?


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## daytradeprofit

I want to be noticed in trading volume and price behavior on two specific dates
11/05/2016 and 06/09/2016
Any upward movement of oil trading volume - either higher or lower if Underlined the amount of volume testing performed during the period.
Only twice found abnormal amount of transactions - Attention candles:
05/11/2016 candle marks on buying (Acquisition of goods),While 09/06/2016 candle show sales sign (Release of goods),If this is the case so expect to see crude oil move down
And oil is on its way to 34*36+


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## CanOz

CanOz said:


> I've never seen a bid like this in CL before....wtf? Contract roll?





Ho hum, back to my question....wtf is with that huge bid?


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## peter2

You're probably right regarding roll-over as this contract is near expiry/first notice day.


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## Ann

Time for a chart update, now everyone knows oil is a goner but back in March 2013 it was still anyone's guess....I put up a chart and said down because it was clear it was not going to be a viable long term resource. Also the Peak Oil Pundits were setting off my bullpoo meter and annoying me! 

Here is a link to the old chart I put up back in 2013 https://www.aussiestockforums.com/forums/showthread.php?t=797&p=771940&viewfull=1#post771940

This is a very long term weekly chart coming from 2006 and shows the same sort of swing trade figures I drew in the first chart. I guess oil is still going to be of no value....

.....Maybe these two charts are saying it will cost $10 a barrel and not $20 a barrel to get rid of the stuff! :


----------



## notting

What a load of absolute BS.
How many times do you have to cry wolf before the community realizes there is no wolf?
It's a death ship.

Look at all the sideways glances.




They have no ability to make deals any more.
Oil is having a day in the sun because traders are trading this short term.
Longer term it's a funeral march.
They have always been so slimy and due to the massive investment in it all over the world it will be hard to pick a top.
The only way they will really get the price down is if they go to war with each other.
They could play that card for year or two, pretend to be about to go to war.
They con and bribe and fudge and lie till Telsa is 1000 per share.


----------



## BarneyChambers

What is everyone's opinion on the change in oil price after the US election? I feel like it's going to spike if/when Hilary wins the election in November.


----------



## Ann

BarneyChambers said:


> What is everyone's opinion on the change in oil price after the US election? I feel like it's going to spike if/when Hilary wins the election in November.




G'day Barney, I really have no thought on the POO's direction using fundamental guesswork however I work with charts and see potential for price direction. The price has hit the same upper level three times, this is very weakening for any stock or commodity and can cause a price to retrace. There is also a rising trendline support and if this is broken on the retrace there may be a solid downward fall.

As much as I do not use fundamentals to guess at prices I have noticed the phrase 'Peak Oil Demand' being bandied around this is not conducive to higher prices unlike the old 'Peak Oil' scare campaign. Plus you have Iran back into the game and Iraq refusing to scale back production, plus I believe the $US is going to be flying high.

Anyway here is the chart....


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## CanOz

CL is arguably in a spike and channel now, if we can reject the current level then we should trade lower to 48.35.

Expect short covering above 49.57


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## CanOz

CL setting up for a possible throw back after a range balance breakout, levels to watch posted in the ASF playbook. Important to remember that these throw backs can fail spectacularly and i wouldn't recommend taking a blind trade on the throw back without watching the order flow.


----------



## CanOz

Throw back or bull trap....watch the order flow....


----------



## Quant

Surprised this thread is not active , with the multi year lows in many international indice ( US in particular ) Oil has been a go to instrument to get a range to exploit . Now oil also is at multi year lows volatility wise but this is a positive in my eyes , the manic chaotic oil price action is now something much more structured and controlled making it a little easier to find an edge .  We have seen a lot more mean reversion recently which is exactly what i desire as a daytrader  . Using some simple measurements i think oil has been one of the best traders on my watchlist

top indi atr  
next is median measure
next is short term trend/ trade signal generator  
couple other things i use left of to keep it simple to follow


----------



## Quant

Quant said:


> View attachment 70189
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Surprised this thread is not active , with the multi year lows in many international indice ( US in particular )



that should read  " multi year volatility lows "    . sorry


----------



## Quant

The curve on forwards has a nice hump in it now after being full contango a couple months back . Opec pumps worn of  and the future not quite as rosy  now


----------



## Quant

What a move on CL last night and i was lucky enough to catch a slice of that   . The series of LH and LL with the bear flag break saw the downside was open but never in a million years did i  expect a waterfall like that , have to get lucky sometimes


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## Quant

Interesting net speculative longs recently at highs , last night's data initiated the squeeze , the probability of this having legs to downside remains high  as many bulls now underwater with much of the growth in net bulls at prices higher than today


----------



## skyQuake

Quant said:


> that should read  " multi year volatility lows "    . sorry



Volatility explosion!


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## Quant

what a difference a week makes in forwards curve , the crowded trade is the riskiest  ... Speculative trader figures out later today , should be a drop in net longs obviously given the big volumes last week


----------



## Quant

key levels in focus


----------



## Modest

You reckon a short term bottom is in place for CL?


----------



## skyQuake

Gut feel is this recent break < $50 from the consolidation is too 'obvious' 
My moneys on new highs nxt month


----------



## Quant

If Oil isnt the best traders instrument about atm i'd love to know what is , and that applies to either swing or intra .


----------



## MARKETWINNER

http://host.madison.com/business/investment/markets-and-stocks/oil-and-gas-stock-roundup-crude-wobbles-taking-oil-stock/article_8f7ff1c0-687b-5c88-b69f-075458e2e4f6.html

Oil and Gas Stock Roundup: Crude Wobbles, Taking Oil Stock Down With It

http://appsforpcdaily.com/2017/04/oil-prices-fall-to-11-day-low-on-us-shale-output-surge/

OIL PRICES FALL TO 11-DAY LOW ON US SHALE OUTPUT SURGE


----------



## Quant

https://www.bloomberg.com/news/arti...=social&cmpid==socialflow-twitter-commodities


----------



## Quant

Oil got a pounding in Asian session today , you don't see that very often , back to pre opex cut levels


----------



## ducati916

Short term, next 10-15 days, bullish on oil, maybe 10% move

jog on
duc


----------



## Quant

ducati916 said:


> Short term, next 10-15 days, bullish on oil, maybe 10% move
> 
> jog on
> duc



Yeah I tend to agree as my bull/bear count was close to rolling bull yesterday , today key


----------



## Quant

Opec failing to lift oil  , wouldn't be long into upcoming opec meet

https://www.breakingviews.com/considered-view/opecs-oil-price-conundrum-requires-new-bargain/


----------



## Quant

Quant said:


> Opec failing to lift oil  , wouldn't be long into upcoming opec meet
> 
> https://www.breakingviews.com/considered-view/opecs-oil-price-conundrum-requires-new-bargain/







 Russia, which has led a group of non-Opec member producers in assisting with the cuts, also appears to be backing an extension, which is expected to be agreed at the next Opec ministerial meeting on May 25.


----------



## ducati916

Today's price action [to my mind] simply confirms that a short-term bottom is in. An 'oversold' condition. Therefore, a small bounce, in the short-term [10-15 days] of about 10%, still looks to be the trade.

The 'fundamentals' are important to this market, but not necessarily in this timeframe.

jog on
duc


----------



## ducati916

Nice initial move higher in oil today. I'd be a seller [of a long position] circa $50.

jog on
duc


----------



## CanOz

ducati916 said:


> Nice initial move higher in oil today. I'd be a seller [of a long position] circa $50.
> 
> jog on
> duc




It had a bid before the announcement but it was acting too short anyway. These are the times that holding through might not be a bad idea....


----------



## Quant

Model flipped as anticipated , what an instrument ..


----------



## CanOz

Trying to hang on to these longs .....


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## Quant

Oil the lovely trender . Such a clean chart  , 10 days to opec meet


----------



## ducati916

I'd be selling the position at circa $50.42. Realistically, as soon as it broke through $50 I'd be selling the [long] position.

jog on
duc


----------



## CanOz

I'd want to have a trailer on, there could be a mass of short covering above that level duc. It might get defended but if it pops look out. Very big psychological level.


----------



## Quant

CanOz said:


> I'd want to have a trailer on, there could be a mass of short covering above that level duc. It might get defended but if it pops look out. Very big psychological level.



Spot on , don't limit yourself with a " prediction " , take what the market " gives " . That's why I love my counts , its not predictive , IT IS reactive ...   be dynamic for what is what markets are ... Well outside US indice   . US indice are at multi decade lows of volatility  , like watching paint dry  . SPX not much better than 1% range in almost 3 weeks  ..


----------



## ducati916

While both the above comments are, or can be true, this [for me] was always a target trade. Therefore I will stick to that target, if it is hit.

jog on
duc


----------



## ducati916

Still looking for that $50.......

jog on
duc


----------



## CanOz

Actually CL is what clued me onto the start of the bounce last night....around 21:30


----------



## ducati916

CanOz said:


> Actually CL is what clued me onto the start of the bounce last night....around 21:30




Correlations come and go. Oil [for a while] drove the market, then faded, now who knows. I don't really bother overmuch with 'leading' markets/indicators/etc. I either like the trade, or not. If I like it...I take it.

jog on
duc


----------



## Quant

ducati916 said:


> Correlations come and go. Oil [for a while] drove the market, then faded, now who knows. I don't really bother overmuch with 'leading' markets/indicators/etc. I either like the trade, or not. If I like it...I take it.
> 
> jog on
> duc




Yes I agree , trade each instruments on its merits , I use correlation coefficients to gauge and there isn't a lot of real rock solid correlations outside the obvious   . Oil still holding daily bullcount so buy the dips is still the MO  ..


----------



## CanOz

Yeah, I guess they work when they work. In this case it tipped me off so I got out of my cl short and stuck to my GC and bond shorts.


----------



## ducati916

Almost to my 'sell' point.

jog on
duc


----------



## ducati916

And sold......

jog on
duc


----------



## Quant

Oil bid continues with daily  count remaining bull, Opec meet days away  , probably wise to book some profits into it if you've been long


----------



## ducati916

The short term trend [last 3 mths] remains downward sloping. The long trade [last 1 week'ish] was an "oversold" bounce trade, at least until the short term trend sloped upwards. Therefore, if long, discretion is the better part of valour and taking profits is the correct [technical] response to the current price.

jog on
duc


----------



## Garpal Gumnut

Quant said:


> Oil bid continues with daily  count remaining bull, Opec meet days away  , probably wise to book some profits into it if you've been long
> 
> 
> 
> View attachment 71240




That looks like an EW 5 about to begin, bearish on oil. 

gg


----------



## Quant

I see no reason to be short oil at this stage . The daily Bullcount is still alive , the old cliché , trend / friend / bend / end  . Naturally opec meet is a key point in time but the only prediction i'm making is a lift in volatility  .  Direction is still clear as day  atm


----------



## minwa

Garpal Gumnut said:


> That looks like an EW 5 about to begin, bearish on oil.
> 
> gg




Nice one. This is what price action has over indicators that don't turn until after price has turned (strongly in this case).


----------



## CanOz

The volatility was certainly welcomed. Oil continued to slide but it's seems more of "sell the news" and " crowded trade" .... my bet is crude settles in a summer range now....bloody ranges.


----------



## ducati916

The trend, for the moment, is still downward, hence the requirement for alacrity if trading the long side. It is entirely possible that the trend down flattens, and thereby provides a trading channel.

I see no sign of the end of the trend as of today.

jog on
duc


----------



## Garpal Gumnut

minwa said:


> Nice one. This is what price action has over indicators that don't turn until after price has turned (strongly in this case).




Sorry, I can't upload charts, but it has turned down and looks on EW to be headed for $40.

gg


----------



## Quant

I think the point here is my Lagging indicator is rarely wrong , it only lags 1 bar but will beat the **** out of any Subjective EW , Fib , astrology type voodoo .. reactive not predictive , clearly it doesn't take anything groundbreaking to acknowledge and declare an opec meet as a key event on an oil chart  , no need to be a psychic ..  If you make subjective things work for you great but it isn't part of my evidence based world  , I can produce evidence (  I am not going to as that would involve revealing more about what I do than I am willing to ) , I can tell you my expectancy .  I know the voodoo arts cant  .  Anecdotes are meaningless so please no 1 offs  ...  from one of my fave books 
*Evidence*-_Based Technical Analysis  


_


----------



## Triathlete

Are you able to share with us your positive expectancy based on the  amount of trades using your system.????


----------



## minwa

Faith > evidence for most managers as a whole


----------



## Quant

Triathlete said:


> Are you able to share with us your positive expectancy based on the  amount of trades using your system.????



Well I have multiple systems that perform differently depending on the Beta of the instrument traded but I have baseline measurements for R ( 1:1 ) and % ( 65 ) so effectively the baseline for expectancy is 0.3  ..  I don't think I curve fit and use price action patterns as a basis for all my code , the majority of my indicators are custom written by myself ( why I will not divulge or discuss ) and represent tangible price action events . Median reversion is the basis of my systems and I filter what I see as important aspects of price action . The counts used in charts here are only a part of the process but they do measure trend and reversals and are integral part of what I do on every time frame . I have built a long only  algo I call the buffet beater based on counts that beats buffet returns over 40 years whilst in market 20% of the time whilst not suffering the debilitating drawdowns ( outside the 87 crash which is near impossible to avoid given basically an instant 50% crash from ATH ) . I was a decent discretionary trader for a long time but became aware of my weaknesses in regime changes , I sought to get a binary decision to identify regime changes and I saw the effectiveness of the yes/no signal that I then learnt to produce that type of binary signal to the entire trading process , an incredible eye opener . How better can it get to measure every aspect of your trading , the path this leads to is mindboggling  . Has been a long and arduous path but I see a time ( not that distant ) where I trade markets without human intervention . The time frame involved in this path to custom code has taken 5 years , I am also taking the steps  of applying these same principles to fundamentals of big cap stocks and automating that process . A virtual fund manager type of thing . Obviously this is only for some who are willing to push through the difficult learning curve required  .  Pros and passionate only need apply , its difficult to find others well down this same road , outside Canoz here I see few here travelling this path   . Anyway that's the limit of words I'm willing to post here in 1 day    ... rock on


----------



## barney

Quant said:


> _Median reversion is the basis of my systems and I filter what I see as important aspects of price action . The counts used in charts here are only a part of the process but they do measure trend and reversals and are integral part of what I do on every time frame ._
> 
> _I was a decent discretionary trader for a long time but became aware of my weaknesses in regime changes , I sought to get a binary decision to identify regime changes _
> 
> _where I trade markets without human intervention . The time frame involved in this path to custom code has taken 5 years , I am also taking the steps  of applying these same principles to fundamentals of big cap stocks and automating that process_




Quant,  I personally don't have the dedication (or knowledge/ability) to follow through with your own adaptations/refinements on how to "attack" the market, but everything you state makes a lot of sense even for an "old school" guy like me.  Whether electronically deduced or whether constructed from previous experience, I think successful trading has more to do with firstly realising one's (previous) failings (call that experience!!) followed by a simple plan of not making the same errors in the future! ...

My main fight and I would guess the fight of many "traders" would be to ...  "NOT" do what I would have done in the past even though it seemed to make sense at the time! (I still make so many bad decisions it annoys the crap out of me ... but,  those decisions are usually at a *position size* that means bugger all because I recognise the decision is "dodgy" .... even though I still take it

In trading you need to constantly take a backward step and question yourself as to why you are thinking of taking a position.  Quite often, doing the exact opposite of what seems natural is what you should be doing ..... and then of course .... at times you should be doing exactly what seems the natural thing to do!  Seeing the difference is probably where the "holy grail" lies  lol .....

Friday night and rambling!! Apologies if slightly off topic

PS On topic ... I have a Short on Oil (tonight only) at $50.08 ......   Will it get hit ... probably not .... If it does will I lose (much) ...probably not


----------



## Garpal Gumnut

barney said:


> Quant,  I personally don't have the dedication (or knowledge/ability) to follow through with your own adaptations/refinements on how to "attack" the market, but everything you state makes a lot of sense even for an "old school" guy like me.  Whether electronically deduced or whether constructed from previous experience, I think successful trading has more to do with firstly realising one's (previous) failings (call that experience!!) followed by a simple plan of not making the same errors in the future! ...
> 
> My main fight and I would guess the fight of many "traders" would be to ...  "NOT" do what I would have done in the past even though it seemed to make sense at the time! (I still make so many bad decisions it annoys the crap out of me ... but,  those decisions are usually at a *position size* that means bugger all because I recognise the decision is "dodgy" .... even though I still take it
> 
> In trading you need to constantly take a backward step and question yourself as to why you are thinking of taking a position.  Quite often, doing the exact opposite of what seems natural is what you should be doing ..... and then of course .... at times you should be doing exactly what seems the natural thing to do!  Seeing the difference is probably where the "holy grail" lies  lol .....
> 
> Friday night and rambling!! Apologies if slightly off topic
> 
> PS On topic ... I have a Short on Oil (tonight only) at $50.08 ......   Will it get hit ... probably not .... If it does will I lose (much) ...probably not




I like your style. Each trader comes from a different life experience. None are all knowing.

For what it's worth on the charts Olive Oyle is headed to sit on the knee of a guy called Forty before she jumps up again. 

gg


----------



## barney

Garpal Gumnut said:


> For what it's worth on the charts Olive Oyle is headed to sit on the knee of a guy called Forty before she jumps up again.
> 
> gg




Indeed you may well be correct Garpal ..... I was taunting the market to make one more little thrust before a short term bust so I could get in at a discount!


----------



## Modest

It would really make my day if we flush to 47.50 - 47.58 soon


----------



## ducati916

Quant said:


> I think the point here is my Lagging indicator is rarely wrong , it only lags 1 bar but will beat the **** out of any Subjective EW , Fib , astrology type voodoo .. reactive not predictive




From the little that you have disclosed:

(a) the programme is inductive;
(b) over 'x' timeframe [1 bar being mentioned]

Two points arise arise:

(a) an inductive programme relies on 'n' observations; and
(b) the confidence of 'n' observations advances as the square root of 'n' observations.

Now the 1 bar could be anything from a 1-tick bar, to a 1-year bar [or more]. The length of the bar is important in that:

(a) the shorter the time-frame of the bar, the more noise and less information is contained; and
(b) the longer the time-frame, the more lagging the signal; which
(c) still does not solve the issue of 'n' observations, speaking statistically, which is inductively.

jog on
duc


----------



## Triathlete

Quant said:


> Well I have multiple systems that perform differently depending on the Beta of the instrument traded but I have baseline measurements for R ( 1:1 ) and % ( 65 ) so effectively the baseline for expectancy is 0.3  ..  I don't think I curve fit and use price action patterns as a basis for all my code , the majority of my indicators are custom written by myself ( why I will not divulge or discuss ) and represent tangible price action events . Median reversion is the basis of my systems and I filter what I see as important aspects of price action . The counts used in charts here are only a part of the process but they do measure trend and reversals and are integral part of what I do on every time frame . I have built a long only  algo I call the buffet beater based on counts that beats buffet returns over 40 years whilst in market 20% of the time whilst not suffering the debilitating drawdowns ( outside the 87 crash which is near impossible to avoid given basically an instant 50% crash from ATH ) . I was a decent discretionary trader for a long time but became aware of my weaknesses in regime changes , I sought to get a binary decision to identify regime changes and I saw the effectiveness of the yes/no signal that I then learnt to produce that type of binary signal to the entire trading process , an incredible eye opener . How better can it get to measure every aspect of your trading , the path this leads to is mindboggling  . Has been a long and arduous path but I see a time ( not that distant ) where I trade markets without human intervention . The time frame involved in this path to custom code has taken 5 years , I am also taking the steps  of applying these same principles to fundamentals of big cap stocks and automating that process . A virtual fund manager type of thing . Obviously this is only for some who are willing to push through the difficult learning curve required  .  Pros and passionate only need apply , its difficult to find others well down this same road , outside Canoz here I see few here travelling this path   . Anyway that's the limit of words I'm willing to post here in 1 day    ... rock on




Thanks for your previous reply Quant....
Can you expand a little in regards to:
Once a signal is given to buy what is the average length of holding time based on your
results / testing of your system currently.??


----------



## Quant

Big build inventories , oil getting spanked


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## Quant

Oil still nice clean daily trends , the flip to bearish was a massive range on opec meet but settled in a couple days


----------



## Modest

So what's your play?


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## Joules MM1

CL in the COT ......just a tad extreme ?



data courtesy timingcharts.com


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## Modest

CL...


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## Joules MM1

not much of a collapse coming here.......nope......not much at all....


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## Modest

Have you seem anything like that before (extremes)?


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## CanOz

Looking for CL to retrace that low volume spike.....


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## CanOz

More chatter on the Shanghai Crude Oil futures....

*We Don't Need No Speculation: China Aims to Skirt Oil Bubble*

*How China Is About to Shake Up the Oil Futures Market*


----------



## Joules MM1

CanOz said:


> More chatter on the Shanghai Crude Oil futures....
> 
> *We Don't Need No Speculation: China Aims to Skirt Oil Bubble*
> 
> *How China Is About to Shake Up the Oil Futures Market*



ah, the new go-to excuse for the next phase of the $DX bear 
"There are implications for the U.S. dollar’s well-established role as the global currency of the oil market."


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## CanOz

Keeping an eye on the volatility and volume of CL during the Shanghai hours, yesterday was a good start. Almost identical 5 minute ATR as the US session for the first few hours. Decent Volume too. Looks like the someone has their Arb bots going already.


----------



## Ann

I started charting the POO back in 2013 and called a huge fall after working out a swing chart calculation. The very long term as in years and years is minus US$10. This makes me think anyone holding large reserves in their back paddock is likely to have to pay around US$10 to be rid of the stuff. Now back to reality. My first chart back in May 2013 saw the POO at $95.17 it ultimately fell to $26.14 in February 2016 which was a near as dammit double bottom from  December 2008 of $30.81. 

Now I am putting up the same daily twelve year long term view of POO which is about to hit the long term overhead falling resistance line from 2008. The shorter term view which started at the time of the February 2016 double bottom is travelling within and almost at the top of a bearish Rising Wedge.
I believe in the very short term, days perhaps, the POO will start to fall and eventually hit the long term support line of $20 or just above. This will then be a triple bottom and should see a final dead cat bounce up to the falling resistance line.
I say all this because of what I see on the chart not through any other means, information or advice.


----------



## luutzu

Ann said:


> I started charting the POO back in 2013 and called a huge fall after working out a swing chart calculation. The very long term as in years and years is minus US$10. This makes me think anyone holding large reserves in their back paddock is likely to have to pay around US$10 to be rid of the stuff. Now back to reality. My first chart back in May 2013 saw the POO at $95.17 it ultimately fell to $26.14 in February 2016 which was a near as dammit double bottom from  December 2008 of $30.81.
> 
> Now I am putting up the same daily twelve year long term view of POO which is about to hit the long term overhead falling resistance line from 2008. The shorter term view which started at the time of the February 2016 double bottom is travelling within and almost at the top of a bearish Rising Wedge.
> I believe in the very short term, days perhaps, the POO will start to fall and eventually hit the long term support line of $20 or just above. This will then be a triple bottom and should see a final dead cat bounce up to the falling resistance line.
> I say all this because of what I see on the chart not through any other means, information or advice.
> 
> View attachment 89810




Wait, you're saying that oil could crash/correct down to the $20s? In days or months.. not in decades and such?

I think the break-even for most oilers is around $30? They have been either broke or starving the past few years...

So unless there's a quick and major alternative to oil and its derivatives, replacing most of the world's energy need. I just can't see how or why people would sell a vital resource for less than what it costs them to extract.


----------



## ducati916

I'm currently [again] interested in the oil price, but only indirectly as I hold AMZA. They are essentially pipelines, but the POO does have some relevance, just quantifying how much though is speculative.

As to the POO, there is a reduction in supply currently due to various political issues. What is the current shale price break even/profit?

On a chart basis [OMG] I'd say it could still go somewhat higher, $85+/-

jog on
duc


----------



## Smurf1976

luutzu said:


> So unless there's a quick and major alternative to oil and its derivatives, replacing most of the world's energy need. I just can't see how or why people would sell a vital resource for less than what it costs them to extract.



There’s a difference between total cost of extraction versus the (much lower) cost of just continuing production from wells already drilled.

My approach is fundamental not technical but if we are to see a major decline in the oil price then, from a fundamental perspective, that’s going to need a major shock of some sort.

Possibilities: 

US (or someone else but most likely the US) floods the market by releasing oil held in storage.

The Saudi’s really do have quite a bit of spare capacity and decide to use it.

The real economy falls in a heap and demand declines.

Or some combination of the above. Eg Donald Trump orders the US Strategic Petroleum Reserve to be completely emptied as fast as possible and the OPEC countries respond by maximising production and making oil worth not much. That includes, by whatever means, Iran continuing to pump flat out.

That’s not to say I’m convinced by the notion of a price crash, it’s just considering how it could occur.

The other route would be purely via the actions of speculators and automated trading. A financial event with no physical origins as such. Possible......


----------



## Ann

luutzu said:


> Wait, you're saying that oil could crash/correct down to the $20s? In days or months.. not in decades and such?




G'day Luutzu, no it won't be days or months to get to the $20s, it may well be a year or two but not decades. I am thinking it may start falling or maybe doing a zig-zag toward all the resistance and support lines in the very short term. Any dramatic falls are unlikely to happen until it breaks below the rising support of the rising wedge which would be around $60. I can't see anything really dramatic until that stage. If it breaks through and has a dramatic fall let's remind ourselves how quickly it fell after dropping through support from $98.22 on July 31 2014 to a low of $26.14 on February 11 2016.  I feel rightly or wrongly the start of a fall will happen in the shorter term  as in days, perhaps. Then I said it would eventually (meaning a longer time) hit the long term support line of $20 or just above. Nothing on very long term charts is instantaneous it all takes months and years to evolve. I enjoy the very long term view of things, sort of looking at the whole forest to see the health of individual trees, so-to-speak.  

However it may totally shock me and make me look a total tit and proceed to break up through the falling long term overhead resistance and head up to $100 to form a double top coming from June 2014 or even if we really want to go to the moon let's say it keeps heading up to try for a triple top of February 1980 and July 2008 and that would be about $140. It is all possible folks! 




Ann said:


> I believe in the very short term, days perhaps, the POO will start to fall and eventually hit the long term support line of $20 or just above. This will then be a triple bottom and should see a final dead cat bounce up to the falling resistance line.


----------



## ducati916

Smurf1976 said:


> My approach is fundamental not technical but if we are to see a major decline in the oil price then, from a fundamental perspective, that’s going to need a major shock of some sort.




Agreed. Currently the trend higher looks to continue. I would say with a pretty high probability to the $85+/- level.

Of course, if as you say, some major supply comes into the market that could all change.

jog on
duc


----------



## Ann

ducati916 said:


> On a chart basis [OMG] I'd say it could still go somewhat higher, $85+/-
> jog on
> duc




G'day duc, that is a very interesting chart with the COTs display. Purely on the fact that the COTs are contracting actually confirms a fall to me. Not sure what on the chart indicates a rise to $85+/- to you. What is it you see on the charts to make you bullish?


----------



## CanOz

Ahh, its all in the interpretation...

I can see a bullish case if this turns into a cup and handle, as it is its a rounded bottom and is typically bullish more often than not. BTW we just missed that VPOC by a few ticks....

Shorter term i see a nice bear flag in a channel that makes sense for context....


----------



## Ann

CanOz said:


> View attachment 89828
> View attachment 89829
> View attachment 89830
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Ahh, its all in the interpretation...
> 
> I can see a bullish case if this turns into a cup and handle, as it is its a rounded bottom and is typically bullish more often than not.




G'day CanOz, I would be very disinclined to call a potential C+P with the kind of long term overhead falling resistance line this chart has. It is the unseen, long term resistance lines that can kill a good chart call. I speak from painful experience. That is why I began looking as far back as I possibly could just in case there was a poised sword ready to smash my cup to smithereens!


----------



## Ann

Brain fart...should have typed C+H not C+P!


----------



## CanOz

Yup, got you there....i agree there is now significant resistance...i don't believe though that it has seen a good retest yet....therefore i can see the channel continuing until at least the test of that resistance. Short term i'm still watching the the bear flag. Appreciate the points of view Anne.


----------



## ducati916

Ann said:


> G'day duc, that is a very interesting chart with the COTs display. Purely on the fact that the COTs are contracting actually confirms a fall to me. Not sure what on the chart indicates a rise to $85+/- to you. What is it you see on the charts to make you bullish?




Nothing particular on the chart, rather in the COT data, which is why I posted it. It is the interplay of the commercial hedgers, the larger speculators, commodity index traders and of course the little chaps.

I'm not seeing an inflection point yet where the most important [commercial hedgers] are indicating that a trend break is imminent. So I would expect the trend to continue, in a random walk pattern, to that $85 area and then reconsider the analysis.

Of course, as Smurf indicated, a substantial change in supply or geopolitical issue could negate the current environment entirely, in which case, this analysis would need to change. 

jog on
duc


----------



## CanOz

Bear flag triggered....


----------



## luutzu

Smurf1976 said:


> There’s a difference between total cost of extraction versus the (much lower) cost of just continuing production from wells already drilled.
> 
> My approach is fundamental not technical but if we are to see a major decline in the oil price then, from a fundamental perspective, that’s going to need a major shock of some sort.
> 
> Possibilities:
> 
> US (or someone else but most likely the US) floods the market by releasing oil held in storage.
> 
> The Saudi’s really do have quite a bit of spare capacity and decide to use it.
> 
> The real economy falls in a heap and demand declines.
> 
> Or some combination of the above. Eg Donald Trump orders the US Strategic Petroleum Reserve to be completely emptied as fast as possible and the OPEC countries respond by maximising production and making oil worth not much. That includes, by whatever means, Iran continuing to pump flat out.
> 
> That’s not to say I’m convinced by the notion of a price crash, it’s just considering how it could occur.
> 
> The other route would be purely via the actions of speculators and automated trading. A financial event with no physical origins as such. Possible......




Just out on Reuters:
*Exclusive: OPEC, allies struggle to fully deliver pledged oil output boost - internal document*

LONDON (Reuters) - OPEC is struggling to add barrels to the market after agreeing in June to increase output, an internal document seen by Reuters showed, as an increase in Saudi Arabia was offset by declines in Iran, Venezuela and Angola...
https://www.reuters.com/article/us-...-output-boost-internal-document-idUSKCN1MT1G0

---

They have a similar article couple days back saying that there's no more extra, ready, capacity to increase supply without much needed investment in new field development etc.

The past few years of low prices have seen depletion in existing field. Where they tap, as you say, the more economical wells head nearby.

Judging by what the guys at OPEC and a couple engineering support companies presentation I read said, activities are, and needs to be, picked up else supply from existing operating fields cannot supply demand.. and not when Iran get sanctioned again in a couple weeks, knocking 2 to 3M barrels a day off the inventory?

----

No idea how much reserves the US has in its strategic tanks. But it did, for the first time since ever if I remember right, sold part of those reserves a couple years back though. 

Read then that some of those reserves were not really high quality oil... I guess that's they sold it. 

That and the station Venezuela is only a few clicks away, waiting to be liberated.


----------



## Smurf1976

There’s no real spare capacity to my understanding but it must be said that thus far the T/A approach is looking more likely than the fundamental one.

There’s approximately 650 million barrels in the US Strategic Petroleum Reserve. That’s one possible source of more supply.

Sanctions on Iran either not happening or not in practice affecting oil exports are another possible scenario.

That the Saudis or others release oil from above ground stockpiles is another.

Or is the real economy, as distinct from the financial markets, considerably weaker than is commonly thought? Lack of demand?


----------



## Ann

*Reuters     Monday October 22, 2018 11:00*

*Oil slips below $80 after Saudi pledges rapid output rise*

https://www.kitco.com/news/2018-10-22/Oil-slips-below-80-after-Saudi-pledges-rapid-output-rise.html

The Article finishes by saying....

The outlook for demand next year, meanwhile, is deteriorating.

OPEC estimates demand for its crude will fall to an average of 31.8 million bpd next year, from an average 32.8 million bpd this year.

"The full impact of the U.S.-China trade war will hit markets in 2019 and could act as a considerable drag on oil demand next year," Emirates NBD bank said in a note.


----------



## Smurf1976

So we've got demand rising, US production running into bottlenecks with pipeline capacity, Saudi using up the last of the world's spare production capacity, collapsing production in Venezuela, an imminent disruption to exports from Iran and the price is going down.

The charts don't lie so far as the actual price drops so no argument there. 

The Iran sanctions aren't really going to stop oil being exported in practice or someone's about to release significant oil from storage is my guess. Every other reasonable explanation, such as the economy falling in a heap, seems a bit premature at the very least. 

Either that or this is just a pullback and after that it's up, up and up some more?


----------



## $20shoes

Ann said:


> I started charting the POO back in 2013 and called a huge fall after working out a swing chart calculation. The very long term as in years and years is minus US$10. This makes me think anyone holding large reserves in their back paddock is likely to have to pay around US$10 to be rid of the stuff. Now back to reality. My first chart back in May 2013 saw the POO at $95.17 it ultimately fell to $26.14 in February 2016 which was a near as dammit double bottom from  December 2008 of $30.81.
> 
> Now I am putting up the same daily twelve year long term view of POO which is about to hit the long term overhead falling resistance line from 2008. The shorter term view which started at the time of the February 2016 double bottom is travelling within and almost at the top of a bearish Rising Wedge.
> I believe in the very short term, days perhaps, the POO will start to fall and eventually hit the long term support line of $20 or just above. This will then be a triple bottom and should see a final dead cat bounce up to the falling resistance line.
> I say all this because of what I see on the chart not through any other means, information or advice.
> 
> View attachment 89810




Morning Ann. That's an interesting chart. 
You could put an Elliott count on that has Supercycle Wave 1 at your 2008 high, and then a massive ABC correction ending Supercycle Wave 2 in Jan 2016. In which case, you could make an argument that POO is in now in Cycle wave 1 of Supercycle Wave 3 - so early stages of a bull market. 

Because we are potentially in a Cycle Wave 1, we'd expect Cycle Wave 2 - when it occurs - to be deep and last for well over a year (perhaps many years?). This concurs with your analysis because the retracement could be up to 100%. 

Before that though, and from an Elliott perspective, the current move up looks like it has some many months yet to complete its move up, and if the count is valid the broader move up should see POO get close to $100 (or perhaps exceed it slightly).


----------



## Ann

$20shoes said:


> Morning Ann. That's an interesting chart.
> You could put an Elliott count on that has Supercycle Wave 1 at your 2008 high, and then a massive ABC correction ending Supercycle Wave 2 in Jan 2016. In which case, you could make an argument that POO is in now in Cycle wave 1 of Supercycle Wave 3 - so early stages of a bull market.
> 
> Because we are potentially in a Cycle Wave 1, we'd expect Cycle Wave 2 - when it occurs - to be deep and last for well over a year (perhaps many years?). This concurs with your analysis because the retracement could be up to 100%.
> 
> Before that though, and from an Elliott perspective, the current move up looks like it has some many months yet to complete its move up, and if the count is valid the broader move up should see POO get close to $100 (or perhaps exceed it slightly).




G'day $20shoes, I find the Elliot Wave fascinating, over the years I have looked at it. A little while back I got a book by Frost and Prechter about the Elliot Wave Principle and read it through. For a while, using the historic Dow Jones chart, I was looking into the pattern and drawing it. I really wasn't fully grasping it until Porper and a few other EW experts offered their advice. I sort of got it at that stage but for some reason it never stuck in my brain. I guess my brain's eye just can't see it. I tend to go into a kind of trance when I chart and just see what I see but never intellectualize. So I stick to my simple shapes which I can see, draw them and share my thoughts. However I always enjoy looking at the Elliot Wave charts drawn up by people who can see it and translate it onto a chart. 

I am not sure I agree with you about any further moves upward. I am just about to upload a chart for the ASX 200 XEJ Energy Index in the ASX Stock Chat Forum shortly. It simply confirms what the POO is telling me. Of course miracles happen and I may be wrong!


----------



## $20shoes

Ann said:


> G'day $20shoes, I find the Elliot Wave fascinating, over the years I have looked at it. A little while back I got a book by Frost and Prechter about the Elliot Wave Principle and read it through. For a while, using the historic Dow Jones chart, I was looking into the pattern and drawing it. I really wasn't fully grasping it until Porper and a few other EW experts offered their advice. I sort of got it at that stage but for some reason it never stuck in my brain. I guess my brain's eye just can't see it. I tend to go into a kind of trance when I chart and just see what I see but never intellectualize. So I stick to my simple shapes which I can see, draw them and share my thoughts. However I always enjoy looking at the Elliot Wave charts drawn up by people who can see it and translate it onto a chart.
> 
> I am not sure I agree with you about any further moves upward. I am just about to upload a chart for the ASX 200 XEJ Energy Index in the ASX Stock Chat Forum shortly. It simply confirms what the POO is telling me. Of course miracles happen and I may be wrong!




Thanks Ann. I only have my "L" plates when it come to Elliott waves so take my count as a consideration only. Would like to see your take on the XEJ too. Thanks


----------



## Smurf1976

$20shoes said:


> if the count is valid the broader move up should see POO get close to $100 (or perhaps exceed it slightly).



Is that referring to Brent or WTI?

From a fundamental perspective, one issue is that much of the recent supply growth has taken place in the US and that is reaching the limits of infrastructure. In simple terms, there's a lack of pipeline capacity to move the oil from where it comes out of the ground to anywhere that can refine, export or otherwise use it and alternative means of transport, eg road tankers, are expensive and of limited scale.

So it's not just oil per se but where it is located is becoming a definite issue at the moment which is affecting prices.


----------



## $20shoes

Smurf1976 said:


> Is that referring to Brent or WTI?
> 
> From a fundamental perspective, one issue is that much of the recent supply growth has taken place in the US and that is reaching the limits of infrastructure. In simple terms, there's a lack of pipeline capacity to move the oil from where it comes out of the ground to anywhere that can refine, export or otherwise use it and alternative means of transport, eg road tankers, are expensive and of limited scale.
> 
> So it's not just oil per se but where it is located is becoming a definite issue at the moment which is affecting prices.




I was looking at WTI smurf.


----------



## Ann

Smurf1976 said:


> Is that referring to Brent or WTI?
> 
> From a fundamental perspective, one issue is that much of the recent supply growth has taken place in the US and that is reaching the limits of infrastructure. In simple terms, there's a lack of pipeline capacity to move the oil from where it comes out of the ground to anywhere that can refine, export or otherwise use it and alternative means of transport, eg road tankers, are expensive and of limited scale.
> 
> So it's not just oil per se but where it is located is becoming a definite issue at the moment which is affecting prices.




G'day Smurf, I would have thought, taken in Global isolation, that difficulty of supply in the states would see a price rise for oil if you look at it in simple terms of supply and demand. Currently this is not happening over the last couple of weeks. I think the larger picture of a threat of a slow down from China in response to the increase in tarrifs from the USA and potential reduced demand for oil by China, added to the upcomming increase in output from the Saudies would more than compensate for supply chain difficulties in the US. Just the thoughts of a chartist though.


----------



## Ann

The POO has taken a bit of a wack since I posted my last chart on the 17th of October. The price then was 71.91, now it is down to 63.14 on the last close of 2nd of November. I would have expected a bounce up by now or very soon, but let's see.


----------



## luutzu

Ann said:


> The POO has taken a bit of a wack since I posted my last chart on the 17th of October. The price then was 71.91, now it is down to 63.14 on the last close of 2nd of November. I would have expected a bounce up by now or very soon, but let's see.
> 
> View attachment 90143




Maybe politics is at work here. 4th of November the sanctions came back. 6th November is the mid-term... need oil prices to stay low; the other Axis of Evil to remain evil again. Then... opps... it's oil, there ain't much of it left so what can ya do.

The US currently permit some 8 state to still import Iranian oil. That's quite interesting. 

I mean, Uncle Sam is planning regime change in Tehran, so why are they allowing some friends to still buy Iranian oil and thereby contribute to not totally starve the Iranians. 

Maybe 'cause Saudi Arabia and other alliances can't pump that much given the years of under-investment and oil fields having a certain finite amount to them.


----------



## Ann

I think the POO is likely to bounce up sooner rather than later. WTI is around its support/resistance of 60 and Brent Oil is sitting on its support/resistance level of 70. Let's see how it trades tonight.

This is a daily chart of the WTI POO coming from December 2014.


----------



## Ann

Okey dokey, the POO held at the 60 level. It had a low on the day of 59.26 and closed at 60.19. The around 60 held as the support/resistance line as I felt it might. Now I am going to be very interested to hear what kind of "fundamental info" will come out to force the price upward. (Nothing to do with the support/resistance line of course. Note sarcasm). However I may be wrong.


----------



## luutzu

Ann said:


> Okey dokey, the POO held at the 60 level. It had a low on the day of 59.26 and closed at 60.19. The around 60 held as the support/resistance line as I felt it might. Now I am going to be very interested to hear what kind of "fundamental info" will come out to force the price upward. (Nothing to do with the support/resistance line of course. Note sarcasm). However I may be wrong.




A judge in the US just blocked the construction of Keystone XL pipeline. Demanding the Trump admin doing (any) environmental studies on leakage etc. 

THe KXL is to link those dirty oil sands from Canada down to Houston [?]. So might affect oil supplies in some distant future? 

Repeating stuff said before, but I don't think there's any serious over supply of oil. Unfortunately the world's big wigs aren't going to allow the switch to any clean energy anytime soon. 

You can kind of see that in Trump's policies and rhetoric. In their interests in countries like Venezuela and Iran - two of the world's largely untapped oil giants who aren't taking orders from the US. 

In the shorter/immediate term, the price might be pushed low due to politics and brinkmanship. Next year or two, it's going to have to be at a level where offshore extraction plus years of starvation needs to be recovered, then some.


----------



## ducati916

Ann said:


> Okey dokey, the POO held at the 60 level. It had a low on the day of 59.26 and closed at 60.19. The around 60 held as the support/resistance line as I felt it might. Now I am going to be very interested to hear what kind of "fundamental info" will come out to force the price upward. (Nothing to do with the support/resistance line of course. Note sarcasm). However I may be wrong.





An excellent [technical] call earlier, from which after reversing my position, I took a nice profit. Based on your earlier call I took profits on Friday, so now long.

Fundamentals that could create upward pressure:

_*U.S. oil production surges. *_The EIA reported that U.S. oil production skyrocketed to 11.6 million barrels per day (mb/d) for the week ending on November 2. Despite fears that shale output would plateau because of pipeline constraints, the shale industry is firing on all cylinders. The figures also help explain the recent downturn in prices.

_*Russia could benefit from OPEC+ cut. *_Russia’s oil production is at a post-Soviet record high, but a cut in output may actually work to the benefit of Russian producers. “Producing less at $80 per barrel is better than producing at current levels and at $70 per barrel,” Alexander Losev, chief executive officer of Sputnik Asset Management, told Bloomberg. “A certain output decline will also help the companies to reduce operating costs and further improve their financials, including free cash flow.”

_*OPEC+ cut would be third reversal.*_ Saudi Arabia increased production in 2015, 2016 and again this year. The first two times, the kingdom backtracked as oil prices sank amid swelling inventories. The potential third production cut in four years suggests Saudi Arabia once again ramped up too quickly, Bloomberg argues. A technical committee for OPEC+ is set to meet this weekend to consider options for 2019, including a possible production cut.

_*Chevron considers Venezuela exit. *_*Chevron (NYSE: CVX) *is one of a handful of oil majors that have stuck it out in Venezuela even as the country continues to fall apart. The oil major’s assets are no longer profitable, and the Wall Street Journal reports that the company is growing weary of the problems. In response to the article, Chevron denied the potential exit. “We’re committed to Venezuela and we plan to be there for many years to come,” Clay Neff, Chevron’s president for Africa and Latin America, said in an interview late Thursday with Bloomberg. The reporting that Chevron might pack up and leave “is not accurate.”

So my data suggests [in agreement with your technicals] as of 6 Nov, that selling pressure is still high but slowing after very heavy selling pressure in the 23 Oct and 30 Oct reports. I am waiting for the next report which should be due early next week to confirm whether the selling pressure on the 13 Nov has changed significantly.

jog on
duc


----------



## Ann

ducati916 said:


> An excellent [technical] call earlier, from which after reversing my position, I took a nice profit. Based on your earlier call I took profits on Friday, so now long.
> 
> Fundamentals that could create upward pressure:
> 
> _*U.S. oil production surges. *_The EIA reported that U.S. oil production skyrocketed to 11.6 million barrels per day (mb/d) for the week ending on November 2. Despite fears that shale output would plateau because of pipeline constraints, the shale industry is firing on all cylinders. The figures also help explain the recent downturn in prices.
> 
> _*Russia could benefit from OPEC+ cut. *_Russia’s oil production is at a post-Soviet record high, but a cut in output may actually work to the benefit of Russian producers. “Producing less at $80 per barrel is better than producing at current levels and at $70 per barrel,” Alexander Losev, chief executive officer of Sputnik Asset Management, told Bloomberg. “A certain output decline will also help the companies to reduce operating costs and further improve their financials, including free cash flow.”
> 
> _*OPEC+ cut would be third reversal.*_ Saudi Arabia increased production in 2015, 2016 and again this year. The first two times, the kingdom backtracked as oil prices sank amid swelling inventories. The potential third production cut in four years suggests Saudi Arabia once again ramped up too quickly, Bloomberg argues. A technical committee for OPEC+ is set to meet this weekend to consider options for 2019, including a possible production cut.
> 
> _*Chevron considers Venezuela exit. *_*Chevron (NYSE: CVX) *is one of a handful of oil majors that have stuck it out in Venezuela even as the country continues to fall apart. The oil major’s assets are no longer profitable, and the Wall Street Journal reports that the company is growing weary of the problems. In response to the article, Chevron denied the potential exit. “We’re committed to Venezuela and we plan to be there for many years to come,” Clay Neff, Chevron’s president for Africa and Latin America, said in an interview late Thursday with Bloomberg. The reporting that Chevron might pack up and leave “is not accurate.”
> 
> So my data suggests [in agreement with your technicals] as of 6 Nov, that selling pressure is still high but slowing after very heavy selling pressure in the 23 Oct and 30 Oct reports. I am waiting for the next report which should be due early next week to confirm whether the selling pressure on the 13 Nov has changed significantly.
> 
> jog on
> duc




Thanks duc, be careful. I have been reviewing both the FAR chart and the BPT chart today and both of those look a bit nasty to me, it has made me a bit more bearish since looking at them. It wouldn't surprise me if that 60 line failed in the next few sessions. I can't find the figures for the COT's OI for November 9 which would have been a help. I had an excellent site for the figures but my computer died a while back with all those links and no backup, sadly.


----------



## ducati916

Ann said:


> Thanks duc, be careful. I have been reviewing both the FAR chart and the BPT chart today and both of those look a bit nasty to me, it has made me a bit more bearish since looking at them. It wouldn't surprise me if that 60 line failed in the next few sessions. I can't find the figures for the COT's OI for November 9 which would have been a help. I had an excellent site for the figures but my computer died a while back with all those links and no backup, sadly.





Well here is the data: https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

The next COT report is due 13 Nov. Certainly the 6 Nov report showed [still heavy] but slightly reduced selling. I'm [guessing, educated] that the commercials, the chaps that matter, are counter-trend traders and that prices are now where they would start to reverse.

We'll see.

jog on
duc


----------



## Sdajii

I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.


----------



## Ann

ducati916 said:


> Well here is the data: https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
> 
> The next COT report is due 13 Nov. Certainly the 6 Nov report showed [still heavy] but slightly reduced selling. I'm [guessing, educated] that the commercials, the chaps that matter, are counter-trend traders and that prices are now where they would start to reverse.
> 
> We'll see.
> 
> jog on
> duc




Thanks duc, yes, I know that site. I used to follow the COTs for gold and they published the report quickly. I have found the site again but sadly they don't have the new COT for WTI. http://news.goldseek.com/COT/1541795365.php    It is much easier to read.



Sdajii said:


> I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.



That's a brave call Sdajii.


----------



## Smurf1976

Sdajii said:


> I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.



Fundamentals of supply and demand tells me that the $100 is at least plausible but wondering where the $50 comes from?

Why not $60 or $40?

The $50 is based on technical analysis?


----------



## Sdajii

Ann said:


> That's a brave call Sdajii.




I'm a brave guy.


----------



## Sdajii

Smurf1976 said:


> Fundamentals of supply and demand tells me that the $100 is at least plausible but wondering where the $50 comes from?
> 
> Why not $60 or $40?
> 
> The $50 is based on technical analysis?




Not sure it will quite hit $50, and if so only briefly, but I reckon it will get into the low 50s, at least briefly, before the end of February, maybe sooner.

Not $60 because I think it will get lower. Not $40 because I have very high confidence it won't get that low.

I didn't say $50, but no, not based on technicals. Based on fundamentals. Long story, too long to type.

Call me crazy if you like, but wait until August to say it, and if you still want to, by all means do, but if not, say wow or something appropriate.


----------



## ducati916

Sdajii said:


> I expect WTI to drop to the low $50s (won't be too much longer) before it bounces, and then I'm tipping it will hit $100 within about 6 months of hitting low $50s.




Well it has now 'bounced', before hitting $50s. I can see $100 [again] but I doubt it will be straight up, there will be the usual wiggles or random walk to get there, if it gets there. That $75 level will probably be [technically] a test area.

jog on
duc


----------



## ducati916

Ann said:


> Thanks duc, yes, I know that site. I used to follow the COTs for gold and they published the report quickly. I have found the site again but sadly they don't have the new COT for WTI. http://news.goldseek.com/COT/1541795365.php    It is much easier to read.




The new WTI is due out 13 Nov. Does your site carry it?

Anyway, I am 'expecting' [guessing] that the reduction in the volume of commercial selling from last week will be continued this week, which will result in a [strong] bounce.

We have the [weak] bounce today, which was suggested from last week's reduction in selling pressure and when combined with your technical call, was sufficient for me to rebalance the short position. It remains to be seen, based on the numbers, just how strong that bounce might be. My guess, strong enough to head back towards $65 if the numbers confirm a [significant] easing in the previous very heavy selling.

I'll post the numbers when they come through.

jog on
duc


----------



## ducati916

ducati916 said:


> Well it has now 'bounced', before hitting $50s. I can see $100 [again] but I doubt it will be straight up, there will be the usual wiggles or random walk to get there, if it gets there. That $75 level will probably be [technically] a test area.
> 
> jog on
> duc





Spoke too soon, the bounce is gone!

jog on
duc


----------



## Smurf1976

The oil price isn't wasting any time in going down. $57.25 at the moment.

Considering the speed of it and that the price is pretty much just going straight through anywhere that it could be expected to pause or reverse, I'm starting to think this is going to end up as a pretty major fall.


----------



## PZ99

So it's back to Feb 2015 levels and for much the same reason - gotta be good for airline stocks.

It's tempting to reinvest in the ETF (ASX:OOO) which is even less than it was in 2015.


----------



## Sdajii

Just about at those low 50s I was talking about...


----------



## Smurf1976

PZ99 said:


> It's tempting to reinvest in the ETF (ASX:OOO) which is even less than it was in 2015.



Looking at that chart I note that the ETF hasn't tracked the oil price too accurately over the years.

Eg Oil's roughly half the 2014 price, give or take a bit, but the ETF is far lower.


----------



## Smurf1976

Sdajii said:


> Just about at those low 50s I was talking about...



We're about to find out if you're right it seems.

The sheer speed of the drop would, if it occurred with a major share index or something like house prices, be commonly referred to as a crash. Just saying.


----------



## Ann

OK folks, time for a chart. The POO fell below the $60 support line and now the potential support line is $55. It now has huge overhead resistance from the $60 level, the rising support/resistance line heading toward $60. I see $65 as another resistance line (not drawn as the chart would start to look like a cat's cradle sooner than a market chart!) Then another rising resistance going beyond $75 and finally the major long term falling resistance line heading down toward $75. The POO has a massive weight on its head. 




It will be interesting to see if Saudi Arabia decides to move away from OPEC and if so what will that do to the POO? No idea myself.


----------



## Darc Knight

Ain't nothin sexier than a Woman who can chart!


----------



## tinhat

Darc Knight said:


> Ain't nothin sexier than a Woman who can chart!



I know you don't mean any offense with your humour and even though none may have been taken, it's worth considering that your comment would not be considered appropriate in most workplaces these days. (your preferences are set not to allow private messages).


----------



## Darc Knight

tinhat said:


> I know you don't mean any offense with your humour and even though none may have been taken, it's worth considering that your comment would not be considered appropriate in most workplaces these days. (your preferences are set not to allow private messages).




This is a community, not a workplace. From my experience Ann isn't that sensitive. My prefences DO allow messages as Joe and others can verify, unless they have changed automatically over the last few days. I have asked for post to be deleted, but no one is at the helm.

While you're there Joe, I'll have another voluntary ban pls. I've got a bit to do
 Thanks.


----------



## Smurf1976

tinhat said:


> I know you don't mean any offense with your humour and even though none may have been taken, it's worth considering that your comment would not be considered appropriate in most workplaces these days.



Much as I don't like the degree to which everyone is somewhat precious these days, I do agree with the sentiment you are expressing. Some may laugh it off, others may take it seriously. Always remember that with an online forum you don't have the body language aspect so it's harder to judge someone's true reaction.

Back on topic, I note that the Saudi's seem to have found a convenient reason to cut production, that being the price falls.

I say "convenient" since if you look at the whole of the past 40 years the same pattern has played out. Daily production rates over 10 million barrels are not sustained for long and that is even truer for rates over 10.5 million barrels per day. This observation has lead many to suspect that they don't really have the 12.5 million barrels per day capacity they claim and that true capacity is somewhere around 10 million, anything above that simply being oil released from storage not taken from the ground and thus limited in duration.

That's not an original thought, the thinking has been around for many years but I do note that it has happened once again. Production hits what has historically not been sustained for long and suddenly there's a relaxation in practice of US sanctions on Iran and the oil price collapses thus justifying a production cut.

The theory is at least plausibly correct in my view. No proof that it is, but there have been many occurrences and not one single instance which proves otherwise.

Add in the emerging constraints on production growth in the US, in short they're running out of capacity in pipelines to transport the oil which puts an effective cap on production, plus the lack of investment elsewhere I'm still long term bullish. That said, the speed of the recent falls has me standing aside certainly.


----------



## fiftyeight

This may provide some insight to the recent price action

https://www.themacrotourist.com/posts/2018/11/13/chipper/


----------



## luutzu

tinhat said:


> I know you don't mean any offense with your humour and even though none may have been taken, it's worth considering that your comment would not be considered appropriate in most workplaces these days. (your preferences are set not to allow private messages).




Were you just being really cautious from experiences at work, or was it just me, and a few others, who doens't find that offensive at all?

I find woman who fixes cars, play chess or do things women "traditionally" don't do... to be sexy. It's not that I don't think women could be good at such work, just that in my experience it' rare to see and in me liking it... it's a form of admiration. 

Alright, maybe you don't say "sexy" to the lady. But I would've thought it's be more offensive to women,and girl power, if men see women in such fields and goes nuts over it.


----------



## Joe Blow

Darc Knight said:


> This is a community, not a workplace. From my experience Ann isn't that sensitive. My prefences DO allow messages as Joe and others can verify, unless they have changed automatically over the last few days. I have asked for post to be deleted, but no one is at the helm.
> 
> While you're there Joe, I'll have another voluntary ban pls. I've got a bit to do
> Thanks.




I noticed this at the bottom of your post:




Given that your post was obviously in reference to Ann's previous post and Ann liked your post, I think we can safely assume that no offence was either intended, nor taken. On that basis I'll leave it where it is and we can all move on.

My decision to leave the post intact was similarly not intended to offend and I hope none was taken.


----------



## barney

Darc Knight said:


> This is a community, not a workplace. From my experience Ann isn't that sensitive. My prefences DO allow messages as Joe and others can verify, unless they have changed automatically over the last few days. I have asked for post to be deleted, but no one is at the helm.
> 
> While you're there Joe, *I'll have another voluntary ban pls*. I've got a bit to do
> Thanks.




Definitely no ban required for you @Darc Knight  ….. Your above post was humorous and taken in that vein by the person responded to …… A bit of minor "flirting"/compliment to another member on a Forum over the Internet is exactly how the Internet should be ….. nothing too personal, but a bit of fun …… thumbs up from me!!

PS Ann is a good scout … She extracted $50 bucks from me a while back to help ASF 

PPS Don't bet with her on the direction of GOLD lol!


----------



## Sdajii

If even Luutzu doesn't see something as offensive, you know you need to get the stick out of your arse if you think it is.

So many people are so desperate to find something to call offensive these days!


----------



## Smurf1976

Sdajii said:


> So many people are so desperate to find something to call offensive these days!




Personally I'm not even slightly offended by that or indeed most things.

I'm just wary, in view of recent discussion about ASF needing more on-topic posts, more members and so on, that others may see it differently and be discouraged.


----------



## notting

Pathetic that this is even talked about as if it could be an issue.
Women are awesome traders cause they are not full of testosterone in the mornings, it's a fact. Now Ff9% 0$f and that's sexy!
Re oil.  Jesus Christ the next time I hear Donald Trump call out to the Soudis on Twitter to get the oil price down. My God Go Short!!!!!
It's unbelievable how much control they have over the price irrespective even of OPEC. I heard this a while back from Exxon.  I reeeeeaaaaaally believe it now!!
How much do the US frackers hate Trump now!!?


----------



## ducati916

fiftyeight said:


> This may provide some insight to the recent price action
> 
> https://www.themacrotourist.com/posts/2018/11/13/chipper/




That would certainly qualify in my book as a 'likely' causative factor. There have been a number of Hedge Fund blow-ups in the commodity space. If that [does] turn out to be the reason, then I would expect a return to $65'ish.

The 'fundamentals' would seem to indicate a needed readjustment from over supply and slowing growth. 

Intra-day bounce currently, see what happens for the close. Still no COT numbers.

jog on
duc


----------



## notting

ducati916 said:


> The 'fundamentals' would seem to indicate a needed readjustment from over supply and slowing growth



Kind of but all those hedge funds and just about everyone else on earth was saying how great the fundamentals were 6 weeks ago!!  All of a sudden, what there has been a revolution in the way experts and all measure the fundamentals. NOPE
All that's happened is that the Saudis ran the taps, and Trump didn't restrict the Iranians as much as people were expecting, I should add. I suppose there is something fundamental about that!


----------



## Smurf1976

notting said:


> Trump didn't restrict the Iranians as much as people were expecting



Hasn’t restricted them at all in practice, the whole “Iran sanctions” thing turned out to be a non event really and that alone adds a lot more supply than had been assumed.


----------



## fiftyeight

notting said:


> Kind of but all those hedge funds and just about everyone else on earth was saying how great the fundamentals were 6 weeks ago!!




They would be saying how great the fundamentals are so they can unwind their positions?


----------



## ducati916

If it was a Hedge Fund unwinding, then the bounce today will signal the end of the puke. 

Still no COT numbers.

jog on
duc


----------



## Smurf1976

fiftyeight said:


> They would be saying how great the fundamentals are so they can unwind their positions?



That raises the question of who this hedge fund is?

If they're able to get the US President to threaten sanctions on a foreign country then that's not your average run of the mill hedge fund. It would have to be someone _very_ influential to be able to command that sort of influence.

I'm not saying that is or isn't the case, just that if the "fundamentals" story was really just market manipulation then some very high up people are in on this one. _If_ that is the case then literally anything could happen going forward.

Alternatively, it could simply be that the fall in oil is prompted by enough people losing faith in the "growth" story overall. Stocks down likewise.


----------



## fiftyeight

Smurf1976 said:


> That raises the question of who this hedge fund is?
> 
> If they're able to get the US President to threaten sanctions on a foreign country then that's not your average run of the mill hedge fund. It would have to be someone _very_ influential to be able to command that sort of influence.
> 
> I'm not saying that is or isn't the case, just that if the "fundamentals" story was really just market manipulation then some very high up people are in on this one. _If_ that is the case then literally anything could happen going forward.
> 
> Alternatively, it could simply be that the fall in oil is prompted by enough people losing faith in the "growth" story overall. Stocks down likewise.




I guess the "hedge fund story" is more compelling when looking at CL and Nat Gas. Something funky is going.

Trump threatening sanctions and more LNG coming on to the market are all well know by the trading community. I am sure a few smart people put all the pieces of the puzzle together and made some big $$$. But then again I am not one for conspiracy theories so I could be blind as to what is going on.


----------



## Ann

Smurf1976 said:


> Looking at that chart I note that the ETF hasn't tracked the oil price too accurately over the years.
> 
> Eg Oil's roughly half the 2014 price, give or take a bit, but the ETF is far lower.




G'day Smurf, I don't believe the OOO ETF is tracking the spot price which is in $US. They would be using a hedged $A dollar and buying into the futures market as they would be one of the large traders. However, I am sure one of our oiler experts could explain it better...where is CanOz?


----------



## Ann

fiftyeight said:


> I guess the "hedge fund story" is more compelling when looking at CL and Nat Gas. Something funky is going.
> 
> Trump threatening sanctions and more LNG coming on to the market are all well know by the trading community. I am sure a few smart people put all the pieces of the puzzle together and made some big $$$. But then again I am not one for conspiracy theories so I could be blind as to what is going on.




G'day fiftyeight, it appears they have announced that there is going to be a particularly cold winter this year and the traders are rushing to cover short positions. This may also drag the POO up with it.


----------



## Ann

I had a glance at the five minute charts for Natural Gas, Heating Oil, WTIC and Brent. At around 2.30pm New York time there was a single tall volume spike on each of these charts. This will be interesting I think.


----------



## Smurf1976

Looking further ahead there are some significant technical, and by technical I mean regulations, engineering and chemistry sort of technical not price charts, changes coming which could potentially have a significant impact on oil prices.

The change is that International Maritime Organisation (IMO, an agency of the United Nations) regulations will reduce the allowable sulfur content in bunker fuels from 3.5% to 0.5% effective January 2020 so just over a year away.

Here's the relevant facts and figures. Sources are the BP Statistical Review of World Energy, the International Energy Agency and some of my own knowledge arising from other sources.

Ships consume about 3.4% of all oil used or 3.34 million barrels per day.

84% of the fuel used in ships is heavy fuel oil (also known as bunker oil or No.6 fuel oil). In layman's terms this is the residue left after crude oil is refined into petrol, diesel, kerosene etc. It's thick black stuff which looks a lot like Vegemite or black grease and won't flow at all unless heated which is the standard practice.

That shipping use of heavy fuel oil represents about 2.8 million barrels per day or 40% of all heavy fuel oil consumption. Other major uses are as boiler fuel in industry, military vessels and to a declining extent power generation and heating of large buildings.

Now it's not impossible to remove most of the sulfur from heavy fuel oil. It costs money and requires significant additional equipment at refineries but it can be done. Thing is, since there hasn't been much demand for such a product it is assumed that refineries in general won't have invested to be able to produce it since businesses generally don't build expensive facilities to produce something nobody wants to buy.

So that raises the question of what happens?

One option would be that ships switch to diesel since technically that isn't particularly difficult, diesel is readily available and it meets the regulations. That would however mean a 10% rise in global diesel consumption or 2.8 million barrels per day.

Producing that diesel requires more crude oil, rather a lot of crude oil actually. It also raises the question of what to do with the fuel oil no longer being burned in ships but which will still be coming out of refineries? Burning it for power generation in countries which don't have regulations precluding it would be the obvious answer. Or burn it for power generation in Japan, the only country that has significant oil-fired power generating capacity fitted with flue gas scrubbers to remove the sulfur.

Ultimately this is all resolvable with a technical approach, just take the sulfur out of heavy fuel oil, but it would seem at least possible that there's going to be quite a bit of disruption in oil and refined product markets around the end of 2019 until it sorts itself out with the required changes to refineries. 10% more diesel and 40% less heavy fuel oil consumption is a pretty huge change to happen virtually overnight.


----------



## ducati916

Sanford C Bernstein [a research firm] undertook an analysis of the US fracking companies. At $80+/barrel 9/12 of the largest firms were cash-flow positive after capital spending. However only 3/16 of the smaller firms were cash-flow positive after capital spending.

So with oil again at $55/$60, even the larger firms that were positive, may no longer be so. Will they continue to sell below cost?

If the answer is no, then significant supply will come off the market, pushing price higher, despite I suspect lower growth estimates for the various economies going forward as there are supply issues in a number of swing producers world-wide.

How will the steel tariffs effect capital expenditures? If negatively, then Cash-flow which is only marginally profitable after CapEx will potentially not be even at the $80 mark

jog on
duc


----------



## ducati916

_*U.S. shale finally profitable.*_ The U.S. shale industry suffered from years of red ink but is now becoming profitable – at least some companies are. A Reuters survey of 32 shale companies found that a third of them are cash flow positive, up from just 3 out of 32 a year earlier. However, the 32 companies still posted a collective cash flow deficit of $945 million in the third quarter, although that was sharply lower than the $4.92 billion deficit a year earlier.

Now, any OPEC output cuts that lift global prices should benefit U.S. shale producers. They have become so lean they can profit on each new barrel of oil pumped from West Texas shale fields at $36 a barrel and from North Dakota’s Bakken field at $43 a barrel, according to RS Energy Group.

Seems about right. Pioneer [PXD] financials:

*                                                      2013* *2014* *2015* *2016* *2017*
 Sales/Revenue                               3.49B              4.33B      3.14B     3.51B     5.29B


Cost of Goods Sold (COGS) incl. D&A 2.17B             2.8B         3.35B    3.49B       4.14B
COGS excluding D&A                        1.24B            1.72B       1.94B     1.99B       2.71B
Depreciation & Amortization Expense 924.82M        1.09B      1.41B      1.5B         1.43B
Gross Income                                  1.32B             1.52B      (212M)    20M         1.16B

POO Range                                    $80-$110     $85-$110   $100-$55  $40      $35-$45

But of course that does not include the other costs, SG&A, Interest, Tax, Extraordinaries. All of which push the Net lower.

The average price for 2018 is circa $70. That price point would keep oil flowing from US shale, which, if the below is accurate will be needed to offset the Saudi cuts. If POO drops, or holds at $50 a lot of marginal producers will think about it.

_*Saudi Arabia angered by Trump waivers. *_Reuters reports that Saudi officials were reportedly caught off guard by the degree to which the Trump administration offered waivers on Iran sanctions. The waivers to eight countries will largely allow Iran to continue exporting oil and it effectively caps the potential outages from Iran in the short run. Those waivers are widely cited as one of the most important drivers in the recent oil price meltdown, something that Riyadh is not happy about. Saudi Arabia ramped up supply on the understanding that Iran’s exports would be going offline. Saudi sources told Reuters that the Saudi government feels betrayed by the Trump administration and that they are more determined than ever to engineer a production cut in order to put a floor beneath prices. Riyadh already announced that it would cut exports by 500,000 bpd in December.

jog on
duc


----------



## ducati916

So the COT numbers came out today. A significant increase [+24%] in selling pressure. On that basis, lower prices to come.

Correct orientation: short.

*Just a note, this was my favourite reversal set up for stocks, so this really is the opposite of what I would expect from a pure chart analysis.

jog on
duc


----------



## Ann

OK time for a chart for the POO (oil price). It failed the support of $55 and now the next support level of any strength appears to be $42. It will be interesting to see if this will be a quick fall or a slow death-by-a-thousand-cuts fall. My guess.....look out below!


----------



## rnr

MACD Bullish Divergence now evident on the H1,H4,Daily & Weekly.


----------



## Sdajii

Smurf1976 said:


> We're about to find out if you're right it seems.
> 
> The sheer speed of the drop would, if it occurred with a major share index or something like house prices, be commonly referred to as a crash. Just saying.




Well, we've hit the low I was predicting, so I'm right so far. I'll restate my prediction and say it won't drop further (at least not significantly). I'm fairly sure it won't go below $50 again and if so it won't be by much.

It may linger around here around $50/low 50s for a while, or it may not waste too much time, but again I restate my prediction, it will be $100 or close to it before the end of August. Could be earlier, but won't be later.

Not expecting to be taken seriously until it happens, but I'm posting it all so in hindsight you'll be able to go back and read the posts.


----------



## Ann

Sdajii said:


> It may linger around here around $50/low 50s for a while, or it may not waste too much time, but again I restate my prediction, it will be $100 or close to it before the end of August. Could be earlier, but won't be later.
> 
> Not expecting to be taken seriously until it happens, but I'm posting it all so in hindsight you'll be able to go back and read the posts.



Sdajii, it is always more impressive if someone explains why they think something is likely to happen. Without a real explanation it just sounds like you are listening to another forecaster and passing on their opinion. I know you said it was too complicated or too hard to explain...try it. Otherwise you get no kudos.


----------



## Sdajii

Ann said:


> Sdajii, it is always more impressive if someone explains why they think something is likely to happen. Without a real explanation it just sounds like you are listening to another forecaster and passing on their opinion. I know you said it was too complicated or too hard to explain...try it. Otherwise you get no kudos.




Okay, no kudos for me


----------



## Sdajii

Oh, and if I was blindly listening to someone else, couldn't I just repeat their reasoning anyway? *shrug* If you can find someone else saying the same thing, please let me know, I'd be interested to know if someone has come up with the same analysis.


----------



## ducati916

Sdajii said:


> Oh, and if I was blindly listening to someone else, couldn't I just repeat their reasoning anyway? *shrug* If you can find someone else saying the same thing, please let me know, I'd be interested to know if someone has come up with the same analysis.




There is no analysis. There are simply two statements. The first of which is [essentially] correct. It remains to be seen whether the second statement becomes true in time.

So instead of being able to accord you credit for excellent analysis, all that can be said is that it could be a lucky guess. Randomness, luck, serendipity.

jog on
duc


----------



## Sdajii

ducati916 said:


> There is no analysis. There are simply two statements. The first of which is [essentially] correct. It remains to be seen whether the second statement becomes true in time.
> 
> So instead of being able to accord you credit for excellent analysis, all that can be said is that it could be a lucky guess. Randomness, luck, serendipity.
> 
> jog on
> duc




I really don't care about getting credit. I'm just telling you what's going to happen. It is too specific a statement to just randomly get right as a guess. 'Credit' from anonymous strangers via the internet is of no value to me. I don't expect anyone to take interest until what I'm saying has played out. Feel entirely free to ignore me until then. I invite and welcome that.


----------



## ducati916

Sdajii said:


> I really don't care about getting credit. I'm just telling you what's going to happen. It is too specific a statement to just randomly get right as a guess. 'Credit' from anonymous strangers via the internet is of no value to me. I don't expect anyone to take interest until what I'm saying has played out. Feel entirely free to ignore me until then. I invite and welcome that.





Well your response illuminates the lie.

You made your prediction [statement] weeks ago. There was no need to revisit the thread. But you did. You came back to claim 'credit' for being right and to restate the second half of your prediction to us anonymous strangers on the internet.

However you are only right in as far as price is +/- $50 currently. It may still go lower. In which case you would be wrong as your initial statement was $50 and no lower. The jury is still out. Your seeking credit is at the moment premature.

Specificity is no defence to the charge of randomness and luck. I bet on 8 playing roulette. It comes up. Luck or analysis?

As to interest, of course I and probably others are interested. If you have a methodology that accurately predicts price, or even with a high probability, why would I not be interested if you were willing to discuss it.

jog on
duc


----------



## Ann

Sdajii said:


> Oh, and if I was blindly listening to someone else, couldn't I just repeat their reasoning anyway? *shrug* If you can find someone else saying the same thing, please let me know, I'd be interested to know if someone has come up with the same analysis.



Well Sdajii, for a start you have given us no analysis of any kind, just made a blind statement of fact without any substantiation. The thing is, if you can't explain something in a simple manner so everyone can understand, because it is too complex, then that tells me you don't understand it yourself, but merely accept something with blind faith. Maybe someone is just sucking you in to make you look like a dumb tit!


----------



## Smurf1976

Ann said:


> if you can't explain something in a simple manner so everyone can understand, because it is too complex, then that tells me you don't understand it yourself



Communicating the precise details can be difficult but the broad concepts, of anything, are always explainable in layman's terms.

Visit a NASA site that's open to the public and yep, they do indeed explain in simple terms how a man was put on the moon and so on. And that really is rocket science.


----------



## Sdajii

ducati: Indeed, if it goes to the low 40s you can indeed tell me I am wrong. I am confident it will not.

Yes, if you bet 8 on roulette and win, it may be luck. If you confidently say 8 then 17 then 0, and get it right, I'd believe you knew what you were doing, though I wouldn't know how. I wouldn't take you seriously or expect anyone to take you seriously until after it happened. If you knew it but stayed silent then said you knew it was going to happen after it did, everyone would call you a liar. I'm saying what will happen before it happens. I am unaware of anyone publicly stating the same predictions I am making. If you know of anyone, please show me.

As I said, I don't expect anyone to take me seriously until it has played out. I'm surprised at anyone commenting on it at this stage, but you're choosing to.

Perhaps in your roulette analogy, 8 was the low, 17 is the high, and 0 is the timeframe.

As I said, feel free to ignore me until we're around $100. I welcome that. Or you are welcome to tell me I am wrong if events turn out differently from my predictions before August. I don't expect that to happen, but it gives you an alternative reason to talk to me, which perhaps gives you a reason not to talk to me about this before then.

If no one talks about it I won't make much noise, I'll just quietly post something short and sweet, probably less than once per month on average. If people do complain about it, then it gets blown up a little and I'll make posts like this one. I'd prefer not to have to bother


----------



## ducati916

Sdajii said:


> I am unaware of anyone publicly stating the same predictions I am making. If you know of anyone, please show me.




So here are two that I found in less than 5mins using Google. 
	

		
			
		

		
	





jog on
duc


----------



## ducati916

Sdajii said:


> Yes, if you bet 8 on roulette and win, it may be luck. If you confidently say 8 then 17 then 0, and get it right, I'd believe you knew what you were doing, though I wouldn't know how.




Assuming a fair table [wheel] it is all luck. No skill at all. Which is rather my point. However low the probability, it is still possible.

You have taken two numbers for oil, $50 and $100. That markets fluctuate, the probabilities of hitting those two numbers could be calculated. They will be significantly higher than 8, 17 and 0. 

So whether they hit or not, is fairly irrelevant.

Of far more relevance, which potentially demonstrates something more than luck, is if you said: if 'X' then 'Y'. If this causal relationship was repeatable, viz a methodology, well, that is something else again.

jog on
duc


----------



## Sdajii

Okay, so you've found two separate articles by two separate people saying two separate things, and those two articles contradict each other. One is saying the low price will last for years, the other gives a high price with far less chronological specificity than I am giving, violating the conditions of your own first example. One of them disagrees with me, the other partially agrees with a part of what I am saying.

Please, if you're going to do stuff, keep it sensible and relevant. I said I would be interested if you found anyone who when I was first saying it said the same thing. You haven't done that at all. Cherry picking 'sort of almost' matches of some of the parts of what I'm saying and stitching them together ignoring them contradicting each other is just plain silly.

It is with great irony that you repeatedly encourage me to continue conversing with you, yet end these invitations with the ironic and condescending message of 'jog on'. By all means, take your own ironic advice and act on it.


----------



## ducati916

Sdajii said:


> Okay, so you've found two separate articles by two separate people saying two separate things, and those two articles contradict each other. One is saying the low price will last for years, the other gives a high price with far less chronological specificity than I am giving, violating the conditions of your own first example. One of them disagrees with me, the other partially agrees with a part of what I am saying.
> 
> Please, if you're going to do stuff, keep it sensible and relevant. I said I would be interested if you found anyone who when I was first saying it said the same thing. You haven't done that at all. Cherry picking 'sort of almost' matches of some of the parts of what I'm saying and stitching them together ignoring them contradicting each other is just plain silly.
> 
> It is with great irony that you repeatedly encourage me to continue conversing with you, yet end these invitations with the ironic and condescending message of 'jog on'. By all means, take your own ironic advice and act on it.




My point, is that predictions are dime-a-dozen. They may pan out, they may not. Unimportant. Very often they do not, or take unexpected twists, which although they do eventually pan out, make the journey far too difficult. The articles simply illustrate that those two numbers are out there and have been for some time.

That is not however your position. Your position is, stated with great conviction, that price will hit $50  and no lower, then $100 by August, no later. Could do. In the absence of any analysis, simply random luck, of pretty fair probability.

On the other hand you may have a methodology. You don't want to discuss it. Fine. All that needs to be said is: 'I have a methodology, but I'm not prepared to discuss it.' Case closed.

You seek credit for your call and any claims to the opposite are simply disingeneous. To receive credit it has to be more than random luck, which has no skill attached.

jog on
duc


----------



## Ann

OK let's do a sensible analysis of WTI with proper reasons to substantiate what I say instead of argie bargie bullsh!t. I won't bother with a chart you can scroll back to my last if you really want to. The oil price has fallen below the support line of $55 I drew on my chart. As I said on my previous chart the next major support line that I can see is $42. There is a Fibonacci Retracement line of 61.8% sitting on $45, the 50% Fibonacci line was $51, so at $50.79 the price of oil is just a little bit below F50% . (Ignore this folks unless you are into Fibonacci stuff. It really only means potential support or resistance lines before it goes up or down again). 

However the very important indicator I look at if I really want a proper price forcast are the COTS (Commitments of Traders). This is a report issued by Commodity Futures Trading Co in New York once a week for all futures (contracts) in the market. Such as cocoa, wheat, gold, oil, anything which is bought and sold. On one side is the supplier as in farmer or oil producer, so on and so forth. The other side is the buyer like a bakery or a customer who needs oil to refine or whatever. You have sellers and buyers. Then there is a little category of speculators and they tend to be disregarded as having no idea aka prats. The most important figure to look at is the total Open Interest. That means how many contracts have been written between the buyers and the sellers for that week. When the price of oil, is going up then the producers will be selling more as the buyers can see the price is going up, so they want to buy more at the lower price. This is when you will see a lot of OI (contracts). However when the price is falling the buyers buy less because they are waiting for a better price, therefore as the OI falls, it tells you fewer contracts will be opened.
So the important thing to look out for are Open Interest Orders falling or rising. Where you see short sellers they tend to be the suppliers who are selling their wares to those who are going long, the buyers. You must have a buyer to equal a seller. It is a two sided contract.

What causes a price hike or drop? Well the last hike for WTI was a report saying it was going to be an extra cold winter in the Northern Hemisphere. Up went oil for a bit with extra demand and then it settled back down again. However natural gas didn't drop back as that is great for heating. That keeps rising so far.

OK, let's recap briefly, when the price of any commodity goes up = more OI (contracts)when the price of a commodity drops = less OI (contracts).

Now back to the POO (Price of Oil) in the last COT report, the quantity of OI is really falling, now what does that mean again? The POO is going to fall. It really isn't hard.  I know not to buy a big jar of coffee until next week when it is on special. It's a woman thing! 

If you want to confirm what I say you will need to Google the site Commodity Futures Trading site (it won't let me link for some reason). Make sure you scroll down to "Crude Oil-light sweet WTI. Be prepared for a dreary read!

Right, with all my substantiation I am now going to make a call that the Price of Oil is going to drop. How far down depends on any shock to the market.  

Next question, if the POO is falling how come the petrol is going up at the petrol station? Because our dollar is falling so it will cost us more because our dollar is worth less. Why is our dollar falling? Because the price of gold is falling and our dollar is arm and arm with the POG (Price of Gold). Hope that clarifies it a little bit for you?


----------



## Miner

ducati916 said:


> So here are two that I found in less than 5mins using Google.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 90584
> View attachment 90585
> 
> 
> jog on
> duc



It was only few years back Caltech CEO predicted to go $200 barrel and oil dipped down significantly . Unless OPEC manipulates oil price probably not go nearer to what bank of America predicted. I think.


----------



## Sdajii

ducati916 said:


> My point, is that predictions are dime-a-dozen. They may pan out, they may not. Unimportant. Very often they do not, or take unexpected twists, which although they do eventually pan out, make the journey far too difficult. The articles simply illustrate that those two numbers are out there and have been for some time.
> 
> That is not however your position. Your position is, stated with great conviction, that price will hit $50  and no lower, then $100 by August, no later. Could do. In the absence of any analysis, simply random luck, of pretty fair probability.
> 
> On the other hand you may have a methodology. You don't want to discuss it. Fine. All that needs to be said is: 'I have a methodology, but I'm not prepared to discuss it.' Case closed.
> 
> You seek credit for your call and any claims to the opposite are simply disingeneous. To receive credit it has to be more than random luck, which has no skill attached.
> 
> jog on
> duc




You're really quite a comical character, aren't you?

You may be able to do it, but find me a prediction as specific as a low lower than the current price followed by a high within a specified timeframe, even if it isn't the same one as mine. Sure, predictions are everywhere, and if I simply said "Oil will say in the $xx-xx range for the next 1-6 months" it would be possible due to random chance, but mine is far more specific. I'm not simply stating a one direction target with one time limit. Even in retrospect, find me a prediction this specific any time in the last 10 years which has turned out to be correct. Go on, show us one single example!

Again, the irony of encouraging me to post when it's obvious to anyone smarter than a third wave feminist that I am not going to do so if you stop effectively begging me to is most amusing. I really don't care if you want to behave that way, and I'll probably stop responding if you keep it up long enough, but for now it's still fun to laugh at your posts.

I'd say 'on ya bike' but honestly, I don't care whether or not you stop being silly.


----------



## ducati916

Sdajii said:


> You're really quite a comical character, aren't you?
> 
> You may be able to do it, but find me a prediction as specific as a low lower than the current price followed by a high within a specified timeframe, even if it isn't the same one as mine. Sure, predictions are everywhere, and if I simply said "Oil will say in the $xx-xx range for the next 1-6 months" it would be possible due to random chance, but mine is far more specific. I'm not simply stating a one direction target with one time limit. Even in retrospect, find me a prediction this specific any time in the last 10 years which has turned out to be correct. Go on, show us one single example!
> 
> Again, the irony of encouraging me to post when it's obvious to anyone smarter than a third wave feminist that I am not going to do so if you stop effectively begging me to is most amusing. I really don't care if you want to behave that way, and I'll probably stop responding if you keep it up long enough, but for now it's still fun to laugh at your posts.
> 
> I'd say 'on ya bike' but honestly, I don't care whether or not you stop being silly.




It is clear that you are taking my criticisms to heart and becoming somewhat emotional. That was not my intention, so my apologies.

I look forward to chatting again when oil hits $100 in July.

jog on
duc


----------



## ducati916

Miner said:


> It was only few years back Caltech CEO predicted to go $200 barrel and oil dipped down significantly . Unless OPEC manipulates oil price probably not go nearer to what bank of America predicted. I think.




As Mr Graham said: 'In the short term the market is a voting machine, in the long term a weighing machine."

Even then, in hindsight, with attribution to causation being applied, how accurate is that? Prices are not cardinal, they are ordinal, reflecting momentary values attached.

My attitude is that prices are essentially random. I trade accordingly. I will change my mind very quickly nowadays. In my early days as a trader I thought I could be 'right'. There is no right/wrong, only making money/losing money.

If prices are random, then any number postulated could be correct. Some numbers have a higher 'probability' attached. Once I would have argued that 'negative' numbers were not possible, then the GFC and quantitative easing turned interest rates negative.

Try to catch [a chunk] of the trend, avoid the chop and all will be well.

jog on
duc


----------



## Smurf1976

Ann said:


> However when the price is falling the buyers buy less because they are waiting for a better price, therefore as the OI falls, it tells you fewer contracts will be opened.



Referring to the entire post not just that bit but that's among the more useful insights I've gained in my entire time on ASF. Accurate information explained in layman's terms. Like it. 

As someone who tends to focus on the fundamentals, particularly with oil, you've prompted me to give this whole "technical" caper another look. 

On the fundamental side, one issue of relevance is that there are really two "break even" prices for US shale and they are drastically different.

1. Total cost of the whole operation.

2. Cost of continuing to operate a well that has already been drilled.

The latter is a lot lower than the former so we won't likely see existing wells shut in unless the US goes back to production quotas which still "officially" exist but haven't in practice been applied since 1970. 

Where it gets complex is that much of the inputs to the total cost are themselves subject to variable market prices. Drilling costs vary with demand and that of course is influenced by the oil price. Lower oil price = less demand to drill wells = cost of drilling comes down since that's also a market with supply and demand at work, it's not a fixed price service.

So something that is borderline at $40 per barrel could well be rather profitable if prices actually drop to $40 since those things that were borderline at $50 will already have failed to proceed, thus lowering the demand for drilling and the cost of doing so.

There are other cost inputs which also have the same underlying dynamic at work in that they are themselves subject to market forces.

This works in both directions of course and tends to add to wild price swings as a result. A well that would be viable at $80 per barrel using present costs won't actually be viable at that point in reality the costs will have increased. It'll be well over $100 before that gets drilled, and then only if the same company doesn't have better prospects for the use of limited finances and drilling rigs.

Then there are things like pipeline capacity. Exceed the limits and you're up for huge costs either to add another pipeline or for road / rail transport instead. That said, if the price drops and other new wells don't get drilled such that production drops then you may find that all of a sudden there is indeed sufficient pipeline capacity now available.

So overall, the costs of bringing a new well into production are highly variable and tend to move in the same direction as the oil price itself. Oil price goes up = cost of adding supply goes up and vice versa. Hence the "momentum" or "herd" aspect applies not only to speculators but to fundamental production costs as well.


----------



## Ann

Sdajii said:


> Well, we've hit the low I was predicting, so I'm right so far. I'll restate my prediction and say it won't drop further (at least not significantly). I'm fairly sure it won't go below $50 again and if so it won't be by much.
> 
> It may linger around here around $50/low 50s for a while, or it may not waste too much time, but again I restate my prediction, it will be $100 or close to it before the end of August. Could be earlier, but won't be later.
> 
> Not expecting to be taken seriously until it happens, but I'm posting it all so in hindsight you'll be able to go back and read the posts.




Never say I don't give credit where credit is due Sdaji!


----------



## Sdajii

Ann said:


> Never say I don't give credit where credit is due Sdaji!
> 
> View attachment 90615




Hahaha! That's pretty funny 

Actually, if I gave my reasons you'd call me a conspiracy theorist and call me insane, but the proof is in the pudding, unless you want to believe an unusually specific prediction was a lucky guess.


----------



## ducati916

Sdajii said:


> Hahaha! That's pretty funny
> 
> Actually, if I gave my reasons you'd call me a conspiracy theorist and call me insane, but the proof is in the pudding, unless you want to believe an unusually specific prediction was a lucky guess.





I'm surprised to see you back so soon. Obviously you returned to bask in your accolades having become less emotional. Welcome back.

I'm still in the 'lucky guess' camp. However if you can prove otherwise, I'll recant.

jog on
duc


----------



## notting

Ann said:


> I know not to buy a big jar of coffee until next week when it is on special. It's a woman thing!




I'm sorry but this in no way resembles reality.


----------



## Sdajii

ducati916 said:


> I'm surprised to see you back so soon. Obviously you returned to bask in your accolades having become less emotional. Welcome back.
> 
> I'm still in the 'lucky guess' camp. However if you can prove otherwise, I'll recant.
> 
> jog on
> duc




Your vivid imagination about me being emotional doesn't mean I was. Your posts are consistently most peculiar. Among other things it's bizarre that you feel the desperate need to repeat again and again and again that I'm merely taking a random guess. Thou doth protest too much. Perhaps it's a veiled attempt to extract more information? Who knows? 

I genuinely don't care what you think. You are the one continually posting to me, and I guess I respond, but I've never once decided to address you, and I doubt I ever would. Your interest in me is remarkable, whatever the reason.


----------



## Ann

Sdajii said:


> Hahaha! That's pretty funny
> 
> Actually, if I gave my reasons you'd call me a conspiracy theorist and call me insane, but the proof is in the pudding, unless you want to believe an unusually specific prediction was a lucky guess.



No actually I wouldn't Sdajii, I am open to this sort of thing. Sometimes we see or hear things that make one go...hmmm. You just need to be careful not to fall into the rabbit hole. Many years ago when I was in my regular Chinese restaurant full of suits, one I used to go to after going to the stock exchange talks, I overheard a conservative, non piss-in-your-pocket type guy saying matter-of-factly that the gold price would rise after the Swiss had completed the Jewish reparation of gold. I found that fascinating. Sure enough a while later, up went the price of gold. I guess that was inside information but it sort of came out in a conversational manner. Just for the record, I did not act on that information even though I was 100% confident it was fact. An integrity thing for me.


----------



## Ann

notting said:


> I'm sorry but this in no way resembles reality.



Does at my place notting. I designed my kitchen with a tiny space for dry food storage as I work by a just-in-time stock replacement. I live in the city close to heaps of food markets, so I have the luxury to be able to do this.


----------



## Ann

The oil price shot up a bit overnight before settling back again, I am wondering if it had anything to do with this piece of news and maybe this was something that caused rumours in the first place, who would know?...


*Veteran Energy Analyst Retires, Saddened by Canadian Oil Policy*
By
Michael Bellusci
December 8, 2018, 3:36 AM GMT+11

_Martin King is spending his final day at GMP FirstEnergy after nearly twenty-two years with the firm, frustrated at the direction Canadian energy policy is going.

Known simply as “Marty” throughout Canada’s oil patch in Alberta, King currently serves as director of institutional research, focusing on oil and gas, where he’s watched Alberta recently mandate an OPEC-style production cut to boost weak domestic commodity prices._

https://www.bloomberg.com/news/arti...alyst-retires-saddened-by-canadian-oil-policy


----------



## Smurf1976

Perhaps overlooked is that OPEC isn't the only organisation which aims to regulate the price of oil.

The Texas Railroad Commission did that officially from 1891 to 1970 indeed "on paper" they still do it's just that they keep setting production limits above actual production anyway, but they still exist as such.

OPEC of course. They've been around for longer but in became effective in 1973. In more recent times they've gained some non-OPEC allies, most notably Russia.

Alberta (Canada) now seems to have what amounts to its own version of the TRC.

Various others regulate the industry not so much with a price objective in mind but still with the effect of reducing production so as to benefit their own national interests. Norway is an example of that.


----------



## Ann

Smurf1976 said:


> Various others regulate the industry not so much with a price objective in mind but still with the effect of reducing production so as to benefit their own national interests. Norway is an example of that



That is really interesting, thanks Smurf, I had no idea Norway had so much oil.


----------



## luutzu

Oil look to be straight up again after today's OPEC cut. 

There's report of a car bomb in Iran yesterday [?]... With the stated intention of taking out Iran's "regime", sporadic attacks to start a retaliation you can send boots in... With Trump being friendlier to the fossil industry than most... another war with another Arab state, one that can cut, or drastically disrupt supply from the Persian Gulf if war breaks out... oil and fossil energy looks primed to shoot up.


----------



## Garpal Gumnut

luutzu said:


> Oil look to be straight up again after today's OPEC cut.
> 
> There's report of a car bomb in Iran yesterday [?]... With the stated intention of taking out Iran's "regime", sporadic attacks to start a retaliation you can send boots in... With Trump being friendlier to the fossil industry than most... another war with another Arab state, one that can cut, or drastically disrupt supply from the Persian Gulf if war breaks out... oil and fossil energy looks primed to shoot up.




I believe the car bomb was a Sunni attack on the Iranians who are majority Shia and not Arabs but Persians. I take your point though, any instability can drive the price of oil up.

It occurred at Chabahar which is the Wild East of Iran with many different tribes of Sunni and Shia and is not too far from the border with Pakistan and an area which is unstable in the Wild Southwest of Pak.

If Trump's advisers are wise which may be a longshot knowing the Washington landscape they would be best to ignore this bit of fireworks. 

gg


----------



## luutzu

Garpal Gumnut said:


> I believe the car bomb was a Sunni attack on the Iranians who are majority Shia and not Arabs but Persians. I take your point though, any instability can drive the price of oil up.
> 
> It occurred at Chabahar which is the Wild East of Iran with many different tribes of Sunni and Shia and is not too far from the border with Pakistan and an area which is unstable in the Wild Southwest of Pak.
> 
> If Trump's advisers are wise which may be a longshot knowing the Washington landscape they would be best to ignore this bit of fireworks.
> 
> gg




They should stay out of Iran but some want to follow in the footsteps of Alexander. 

Yea, there's the usual sectarian opposition. But given the friendly Trump in the White House, if you're Israel or Saudi Arabia and want a potential rival [independent nation] out of the way without risking too much of your own blood and treasure... now's about the time to fund a few terrorists and freedom fighters to get the party started.


----------



## Smurf1976

Ann said:


> That is really interesting, thanks Smurf, I had no idea Norway had so much oil.



They're not in the same league as Russia or Saudi but still a significant producer and exporter of oil. 

The approach they've taken differs from OPEC or the US which allow unconstrained development but then apply (or used to apply in the US case) quotas on production. What Norway has done is to regulate the pace of development in the first place but not apply quotas once it's up and running.

So it's still a "don't flood the market" approach, just with a different way of achieving it.


----------



## Ann

Thanks Smurf, I find it very interesting to see where the highest density of plant and animal life was centred back when oil was first being formed. Hard to imagine all those now desert areas being teeming with plants and animals.


----------



## Ann

The oil price looks as though it is tiring. There appears to be a Megaphone shape forming which could mean further falls. It continues to struggle to get to test the $55 resistance line. We will see what this coming week brings.


----------



## Sdajii

Ann said:


> The oil price looks as though it is tiring. There appears to be a Megaphone shape forming which could mean further falls. It continues to struggle to get to test the $55 resistance line. We will see what this coming week brings.
> 
> View attachment 90691




I won't stir up ducati by going into my predictions about oil having extreme fundamental support at around $50 at the moment, but even ignoring that, I don't think your megaphone pattern looks valid. Extrapolating the bottom edge of the megaphone from those two early points is stretching it a bit too far. Even if it fell through the bottom edge of the megaphone now (which I don't think it will, for multiple reasons), it wouldn't really count as a megaphone pattern in my opinion. It would need to touch the bottom then bounce back up (at that point it would count as a megaphone, especially if the top of the megaphone was touched another time) then after that fall through.


----------



## Ann

Sdajii said:


> I won't stir up ducati by going into my predictions about oil having extreme fundamental support at around $50 at the moment, but even ignoring that, I don't think your megaphone pattern looks valid. Extrapolating the bottom edge of the megaphone from those two early points is stretching it a bit too far. Even if it fell through the bottom edge of the megaphone now (which I don't think it will, for multiple reasons), it wouldn't really count as a megaphone pattern in my opinion. It would need to touch the bottom then bounce back up (at that point it would count as a megaphone, especially if the top of the megaphone was touched another time) then after that fall through.




Sdajii, I called the end to gold back in 2012 on the quarterly charts using the start of a rising megaphone pattern with much, much less information than this chart.

I say put up or shut up on your call, show me the reason for your call or just go away.


----------



## Smurf1976

Ann said:


> Thanks Smurf, I find it very interesting to see where the highest density of plant and animal life was centred back when oil was first being formed.



The US would be the most interesting one in terms of having literally millions of mostly tiny oil deposits. That compares to a small number of huge fields in places like Saudi Arabia.

Some of those wells in the US have production that's literally under 100 litres per day. They're viable only because there's massive oil infrastructure there, that is it's easy to sell the oil to someone to refine not far away, and due to being on easily accessible flat ground and so on.

A lot of those tiny oil wells are literally just pumping into what any Australian seeing it would at first think to be a rural household water tank. All rather unimpressive to look at. When the tank nears full a truck comes and takes the oil away. Incidentally there's a few of those within walking distance of downtown LA (well, not that walking around LA is a good way of getting around but they're in a very urban area yes).

At the other end of the scale is the huge flow rates from a small number of fields in the Middle East.

For the record every Australian state plus the NT has at some time produced oil either conventional crude oil (Vic, WA, SA, Qld, NT) or oil shale (NSW, Tas, Qld).

Back to the price topic, from a fundamental perspective I question what has really changed to warrant the ~ one third drop in price?

The US backed down on sanctions against Iran. That seems to be the main argument for lower prices - Iran's production won't be curbed as had been expected. However:

Venezuela is still falling apart in every possible way both with oil production and the country in general.

OPEC + Russia just cut 1.2 million bpd of production. Separate to that, since they are not part of or associated with OPEC, is a 325,000 bpd production cut from Canada.

Most of the OPEC countries need prices to be higher than at present in order to balance their budgets and same with Russia. So they're likely to at least try and keep the price up.

The recent price drop has already resulted in falling drilling activity in the USA which will curb future supply. It's only a very minor drop thus far but it's still a drop in what was a rising trend and if price remains where it is now then we can expect further drops as current projects are completed and new ones not started due to poorer economics.

Demand is still trending up.

There has been talk of an oil glut but there is no actual physical glut since almost as soon as production exceeded demand production has been cut back.

Even after the cuts, global spare capacity remains in the order of 2.5% of consumption by most estimates. This is low by historic standards.

So from a fundamental perspective my thinking is that whilst price may well go lower in the short term, which would be more of a "technical" sort of occurrence, before too long it'll be higher than it is now.


----------



## luutzu

Ann said:


> Thanks Smurf, I find it very interesting to see where the highest density of plant and animal life was centred back when oil was first being formed. Hard to imagine all those now desert areas being teeming with plants and animals.




Climate Change?


----------



## luutzu

Smurf1976 said:


> The US would be the most interesting one in terms of having literally millions of mostly tiny oil deposits. That compares to a small number of huge fields in places like Saudi Arabia.
> 
> Some of those wells in the US have production that's literally under 100 litres per day. They're viable only because there's massive oil infrastructure there, that is it's easy to sell the oil to someone to refine not far away, and due to being on easily accessible flat ground and so on.
> 
> A lot of those tiny oil wells are literally just pumping into what any Australian seeing it would at first think to be a rural household water tank. All rather unimpressive to look at. When the tank nears full a truck comes and takes the oil away. Incidentally there's a few of those within walking distance of downtown LA (well, not that walking around LA is a good way of getting around but they're in a very urban area yes).
> 
> At the other end of the scale is the huge flow rates from a small number of fields in the Middle East.
> 
> For the record every Australian state plus the NT has at some time produced oil either conventional crude oil (Vic, WA, SA, Qld, NT) or oil shale (NSW, Tas, Qld).
> 
> Back to the price topic, from a fundamental perspective I question what has really changed to warrant the ~ one third drop in price?
> 
> The US backed down on sanctions against Iran. That seems to be the main argument for lower prices - Iran's production won't be curbed as had been expected. However:
> 
> Venezuela is still falling apart in every possible way both with oil production and the country in general.
> 
> OPEC + Russia just cut 1.2 million bpd of production. Separate to that, since they are not part of or associated with OPEC, is a 325,000 bpd production cut from Canada.
> 
> Most of the OPEC countries need prices to be higher than at present in order to balance their budgets and same with Russia. So they're likely to at least try and keep the price up.
> 
> The recent price drop has already resulted in falling drilling activity in the USA which will curb future supply. It's only a very minor drop thus far but it's still a drop in what was a rising trend and if price remains where it is now then we can expect further drops as current projects are completed and new ones not started due to poorer economics.
> 
> Demand is still trending up.
> 
> There has been talk of an oil glut but there is no actual physical glut since almost as soon as production exceeded demand production has been cut back.
> 
> Even after the cuts, global spare capacity remains in the order of 2.5% of consumption by most estimates. This is low by historic standards.
> 
> So from a fundamental perspective my thinking is that whilst price may well go lower in the short term, which would be more of a "technical" sort of occurrence, before too long it'll be higher than it is now.




Heard that the shale and those small pockets of oil you pointed to... it's more cost effective to transfer by pipes. They tried using rail and a few got derailed, setting a town or two on fire. Truck aren't much safer but I guess the distance is a bit shorter and it's only a freighter at a time. 

With multi-billion dollar pipelines being greenlighted, unless the US gov't want to go the way of Canada and socialise a pipeline or two, oil better be at a price that's both profitable for shale and the pipeline kings.


----------



## Ann

Smurf1976 said:


> A lot of those tiny oil wells are literally just pumping into what any Australian seeing it would at first think to be a rural household water tank. All rather unimpressive to look at. When the tank nears full a truck comes and takes the oil away. Incidentally there's a few of those within walking distance of downtown LA (well, not that walking around LA is a good way of getting around but they're in a very urban area yes).



They sound more like underground storage tanks. I reckon there are ship loads of little storage areas where investors have thought they will make a fortune, buying low selling high as with any other commodity. That is what I was saying ages ago, it will probably cost them dollars to have the stuff removed. 



Smurf1976 said:


> Back to the price topic, from a fundamental perspective I question what has really changed to warrant the ~ one third drop in price?




I think the greater proliferation of EVs on the road added to a warmer period in the climate cycle, a lot less demand for heating. If there is a ship load of stored stuff in underground tanks, they are likely to be selling the stuff back to whomever they bought from which may reduce the amount of OI as it will be done privately. Just a thought.



luutzu said:


> Climate Change?




Many a true word said in jest luu.


----------



## Smurf1976

Ann said:


> They sound more like underground storage tanks



No I mean actual naturally occurring oil wells or “stripper wells” in industry  terminology.

It’s a situation mostly confined to the US due to geology, regulations and oil infrastructure.

Added up all those tiny wells produce a significant amount.


----------



## Sdajii

Ann said:


> Sdajii, I called the end to gold back in 2012 on the quarterly charts using the start of a rising megaphone pattern with much, much less information than this chart.
> 
> I say put up or shut up on your call, show me the reason for your call or just go away.




If you called something a megaphone with much less information than this, you have no business telling anyone else to shut up or go away. You will be wrong here.


----------



## Smurf1976

From a fundamental perspective there's a case for a bottom around here.

What concerns me with that idea however is that the "everything down" trend is still very much alive, the ASX is down ~2% thus far today, and there are also the various "technical" arguments being made to the effect that further downside is likely with oil.

I'm thus sitting on the fence for now.


----------



## Ann

Sdajii said:


> If you called something a megaphone with much less information than this, you have no business telling anyone else to shut up or go away. You will be wrong here.



The thing is Sdajii, it doesn't matter if my call of a megaphone is right or wrong, at least I demonstrate why I am saying something. I don't just curl up like a coy little girl and say, "I have a secret and I know more than youhoo, nahnenahnenah." You have no idea how foolish you are making yourself look.


----------



## Ann

Smurf1976 said:


> From a fundamental perspective there's a case for a bottom around here.
> 
> What concerns me with that idea however is that the "everything down" trend is still very much alive, the ASX is down ~2% thus far today, and there are also the various "technical" arguments being made to the effect that further downside is likely with oil.
> 
> I'm thus sitting on the fence for now.




I can find no hand drawn levels at or around $50 Smurf but I have very carefully laid a Fibonacci level and that is showing 50% at $51. That may give it the support it needs to move up and try for the overhead resistance lines, now with a Megaphone shape to overcome as well, but anything is possible if it is a big enough shock, like another major terrorist attack. I guess we then need to look in Sdajii the rapa's direction.


----------



## Smurf1976

Ann said:


> I can find no hand drawn levels at or around $50 Smurf but I have very carefully laid a Fibonacci level and that is showing 50% at $51.



Whilst we're looking at this from a very different perspective I must say I'm finding your analysis interesting and informative. That comment stands no matter what the eventual outcome with the market (since we both know that the probability of being correct isn't 100% no matter what method is used). 

Putting oil market fundamentals aside, I'm reminded of the more technically inclined comment that "markets don't go up or down in a straight line". Indeed that is generally true, except that this one has pretty much gone straight down thus far.

That aspect pushes me somewhat toward the "technical" view that there's more downside to come after a bounce or sideways movement such that it's no longer a "straight down" thing. Reason = because it generally is true that markets don't go straight down, especially not with a literally straight line decline.

Now back to the fundamentals and specifically politics, something to bear in mind is strategic reserves held by governments. In particular and noting current global politics:

USA = 660 million barrels able to be released at at a rate of 4.4 million barrels per day.

China = 270 million barrels.

Many other countries, most notably Japan, South Korea, India and EU member countries, also have large stockpiles but the US in particular is the one I'm focused on.

In short the notion that US President Donald Trump decides to dump 4.4 million bpd of oil on the market is not totally out of the question in my view. That may seem an odd thing to do but we are living in a time when many "unthinkable" things do tend to happen "just like that" and in that sense I note the apparent tensions between Trump and OPEC and Trump's repeated calls for lower oil prices.

As background to that theory, booming US oil production does substantially remove the original rationale for having the strategic reserve stockpile. At the very least it substantially reduces the size it needs to be in order to cover any given period. That being so, and adding in the political factors, my thinking is that a substantial release of oil is not out of the question. A slump in price would put a stop to the US production boom yes, but never count on politicians of any persuasion to think too far ahead.

I'm not saying it's something that will happen but the possibility is not zero in my opinion. We're living in interesting times politically that's very clear and to the extent that anyone other than the Saudis have an "atomic bomb" to depress oil prices, this is it and Trump's the man who makes the call.

As for what it would do to the price, well I won't claim to know the detail there but there would be a significant impact I'd expect.


----------



## Sdajii

Ann said:


> The thing is Sdajii, it doesn't matter if my call of a megaphone is right or wrong, at least I demonstrate why I am saying something. I don't just curl up like a coy little girl and say, "I have a secret and I know more than youhoo, nahnenahnenah." You have no idea how foolish you are making yourself look.




It's funny how you seem to be throwing a tantrum and making a big deal about it. I just stated what was going to happen. I didn't expect anyone to comment at all at this point. It clearly seems to upset you, I find this amusing. It upsets you to the point of throwing tantrums involving silly mudslinging and getting defensive. This is also funny. I am only commenting beyond simply stating my prediction and perhaps very brief updates less than monthly because people like you are whinging. It's also comical that you try to say I look foolish in an apparent attempt to get me to be quiet, ironically, causing me to respond.

Your megaphone prediction is flawed and the outcome will prove you wrong. You've stated your case, bravo, whatever. You're upset that I am not sharing my explanation. A polite request may have brought out some explanation, but whingy tantrums won't work. If you don't want to take me seriously, by all means, ignore me. If you want to ignore me after I'm proven right, great, good for you. And of course, in the hypothetical that I'm wrong, berate me to no end and I'll gladly take it 

But really, your motives for calling me foolish are obvious and ironic.


----------



## Ann

*A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019*

A team of currency, fixed income and economic analysts at Nomura came up with a list of so-called grey swans for clients.
These close cousins of black swans are foreseeable risk events that end up having a much more drastic impact than expected, Nomura says.
https://www.cnbc.com/2018/12/11/a-b...f-nomuras-grey-swan-predictions-for-2019.html


----------



## Smurf1976

Ann said:


> *A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019*



Interesting.

An issue that comes up at those sort of levels is fuel substitution. 

Without getting too far into engineering, in short there are situations where one fuel can be substituted for another either in the same facility or via shifting production to a different facility. 

Examples include industrial boilers or district heating schemes with the ability to use more than one type of fuel. Where that is the case oil is usually one of the options with the other being coal or gas.

On a larger scale is power generation. Some plants do have the ability to switch between multiple fuels, indeed being able to burn coal, oil and gas all at once in the same boiler has been done right here in Australia. In other situations it's a case of shifting production from one plant to another - run whichever is cheapest flat out 24/7 and adjust the output of the more costly facilities to match demand.

The ability to switch fuels is not unlimited, there are many facilities which don't have the option, but it's a real thing and of relevance is that markets are made at the margin. 

Coal is trading at just over USD 100 at the moment which on an energy content basis is equivalent to oil at about $23 per barrel. Coal costs a bit more to handle and use though, there's ash to dispose of among other issues, so let's round that to $25 as the point below which oil would start displacing coal thus raising demand for oil and/or forcing down the coal price.

That seems a rather interesting number: 

First because it's not too far from the $20 figure that someone else has predicted as a "grey swan".

Second because it's very close to the previous bottom so a 100% retrace of the up move.

Third because it would mean that the current stalling of the oil price fall after a "straight down" move is at exactly the half way point if we're heading down to $25 or so. 

Fourth because that number comes up rather a lot in the history of oil. Adjusting for inflation, the price of oil has been $25 +/- 50% for about 65% of the entire history of large scale commercial oil production which dates back to 1859.

None of that should be taken as an actual prediction and from a fundamental perspective I do see a bullish case. But with the US stockpiles and world politics thrown in the "drop to the 20's" scenario would seem at least plausible and certainly not unprecedented, indeed historically it's the "normal" price for oil to the extent there is one.


----------



## Ann

Ann said:


> *A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019*
> 
> A team of currency, fixed income and economic analysts at Nomura came up with a list of so-called grey swans for clients.
> These close cousins of black swans are foreseeable risk events that end up having a much more drastic impact than expected, Nomura says.
> https://www.cnbc.com/2018/12/11/a-b...f-nomuras-grey-swan-predictions-for-2019.html




I shouldn't be here (problems with concussion), but I need to say this. I posted this quickly yesterday morning and for the life of me I can find no reason or substantiation for their view of $20. If we want to talk about bloody swans.....I have a lake full of black swans way down the end of the High Street where I live. Bit far for me to walk...would need a tram. Can't take m' LittleDog on a tram . I don't give a toss if it is some fancy band of young turks or a little rapa (latin for turnip) who says something. Give me bloody substantiation!  

I saw someone who sounded "expert" on CBS or whatever saying the S+P500 was in a head and shoulders with a death star or cross or whatever. I looked at it and it looked like it was heading toward a sideways consolidation.  However at least they gave me their reasoning with a chart, which was admirable.


----------



## Smurf1976

Ann said:


> I can find no reason or substantiation for their view of $20.



I can come up with plausible (though that doesn’t mean probable) scenarios for $25 but not $20 for the reasons I’ve mentioned.

At $20 oil would be the cheapest fuel around and physical consumption would rise significantly and do so quickly.


----------



## Skate

Ann said:


> *I shouldn't be here (problems with concussion), but I need to say this.* *I posted this quickly yesterday morning and for the life of me I can find no reason or substantiation for their view of $20*. If we want to talk about bloody swans.....I have a lake full of black swans way down the end of the High Street where I live. Bit far for me to walk...would need a tram. Can't take m' LittleDog on a tram . I don't give a toss if it is some fancy band of young turks or a little rapa (latin for turnip) who says something. Give me bloody substantiation!
> 
> I saw someone who sounded "expert" on CBS or whatever saying the S+P500 was in a head and shoulders with a death star or cross or whatever. I looked at it and it looked like it was heading toward a sideways consolidation.  However at least they gave me their reasoning with a chart, which was admirable.




@Ann thanks for apology - the post was out of character for you, lets put that one down to concussion.

*Response *
I didn't respond to your earlier post but I was tempted but thought better of it...

The saying goes, "If you don't have something nice to say, don't say anything at all."

*Journalist make stuff up*
There is a high demand for financial news & unfortunately some journalist make stuff up.

Skate.


----------



## Ann

Smurf1976 said:


> I can come up with plausible (though that doesn’t mean probable) scenarios for $25 but not $20 for the reasons I’ve mentioned.
> 
> At $20 oil would be the cheapest fuel around and physical consumption would rise significantly and do so quickly.




I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf, except for the massive amount of underground tanks I imagine are buried or in peoples sheds. You know, the stuff they are currently calling 'shale oil' aka spek quantities hoarded by the Preppers. No doubt they can see the writing on the shed wall....EVs....phone home!  



Skate said:


> @Ann thanks for apology - the post was out of character for you, lets put that one down to concussion.
> 
> *Response *
> I didn't respond to your earlier post but I was tempted but thought better of it...
> 
> The saying goes, "If you don't have something nice to say, don't say anything at all."
> 
> *Journalist make stuff up*
> There is a high demand for financial news & unfortunately some journalist make stuff up.
> 
> Skate.




G'day Skate may I say very catagorically and emphatically that was absolutely no apology from me and had no relation to my concussion. I was intending to go to a financial lecture and had to leave quickly and early. I put up an alternative view of the  silly high levels suggested by others on this thread with a news release. Later on my return home I decided to look deeper to see on what basis they suggested that particular level as there was nothing on my charts that suggested that price as either a support or a resistance. On my recent post I was simply stating yet again I was seeing an unsubstantiated price level and again I was stating unless a particular price can be substantiated with either a chart, fundamentals, tea leaves, rumours from Aunty Shirley, or some gypsy palm reading don't bloody put it up onto a forum with no basis. Hope you manage to understand what I am trying to say. I am not chucking a hissy-fit, having a melt-down or the female vapours. I just would like any price by anyone substantiated....not angry, see...smiling


----------



## Darc Knight

Ann said:


> I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf, except for the massive amount of underground tanks I imagine are buried or in peoples sheds. You know, the stuff they are currently calling 'shale oil' aka spek quantities hoarded by the Preppers. No doubt they can see the writing on the shed wall....EVs....phone home!
> 
> 
> 
> G'day Skate may I say very catagorically and emphatically that was absolutely no apology from me and had no relation to my concussion. I was intending to go to a financial lecture and had to leave quickly and early. I put up an alternative view of the  silly high levels suggested by others on this thread with a news release. Later on my return home I decided to look deeper to see on what basis they suggested that particular level as there was nothing on my charts that suggested that price as either a support or a resistance. On my recent post I was simply stating yet again I was seeing an unsubstantiated price level and again I was stating unless a particular price can be substantiated with either a chart, fundamentals, tea leaves, rumours from Aunty Shirley, or some gypsy palm reading don't bloody put it up onto a forum with no basis. Hope you manage to understand what I am trying to say. I am not chucking a hissy-fit, having a melt-down or the female vapours. I just would like any price by anyone substantiated....not angry, see...smiling




Don't worry Ann, its all quite amusing, except for the concern for your health. Take care


----------



## Smurf1976

Ann said:


> I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf



Anything below the mid-50's starts making it not worthwhile depending on the oil field in question.

Where it gets difficult though is that financial markets do go to prices where things don't make sense. Eg oil in the $30's in early 2016 was below the cost of production but it happened. 

My comments about prices in the mid-20's are in that context. Logic says no but that doesn't mean it can't happen. Logic says a lot of things shouldn't happen but they do in practice.


----------



## Skate

Ann said:


> *don't bloody put it up onto a forum with no basis.*




Hi @Ann

Yes, you nailed it...

Skate.


----------



## Ann

Skate said:


> Hi @Ann
> 
> Yes, you nailed it...
> 
> Skate.



Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.


----------



## Ann

Ann said:


> Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.



I did say "endeavour" sometimes I fail a touch....sorry Sdajii no excuse for name calling!


----------



## Skate

Ann said:


> Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.




Hi @Ann

*Clarification is needed*
1.  "_Come and tell that to Turnip Top Skate!"_
I don't understand what you are saying with this comment..
2. "_I endeavour to post here with integrity"_
True and you prosecute your case well (most times) - that's a given but your post in this thread (#1941) was out of character for you - as I stated in my post (#1945)

If I could make a few additional comments..

*Misinformation*
There is so much misinformation & fanciful stories on the internet, remembering journalists make most stuff up - I want to draw your attention to this fact as some investors will make financial decisions on what they read.

*Integrity*
When forum members with integrity post articles or hyperlinks it gives those article more weight than sometimes they deserve.

*Reference*
As a reference - your comment in the thread [PO3 - Purifloh Limited - post(#11)]* "In my own opinion this appears to be deception by suggestion" *

*Hyperlinks*
Hyperlinking to an article without clarification sometimes deceives the reader because they perceive (it's their perception & I'm not implying your intent) that you endorse the article.

*Quantity versus Quality* 
Some forum members (posters) go for quantity over the quality of their post and I tend to enjoy reading the latter.

*In your own words*
1. You gave yourself good advice "*don't bloody put it up onto a forum with no basis"

Forum members*
All forum members should prosecute their case forcefully with conviction & civility - members would be well served to remember to meter their responses  "If you don't have something nice to say, don't say anything at all."

*Ideas*
ASF as the name suggest is a Stock Forum but @Joe Blow has kindly allowed the forum to incorporate a discussion of ideas.

Skate.


----------



## Sdajii

Ann said:


> Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.




Heh heh heh


----------



## Ann

Skate said:


> Hi @Ann
> 
> *Clarification is needed*
> 1.  "_Come and tell that to Turnip Top Skate!"_
> I don't understand what you are saying with this comment..
> 2. "_I endeavour to post here with integrity"_
> True and you prosecute your case well (most times) - that's a given but your post in this thread (#1941) was out of character for you - as I stated in my post (#1945)




Skate, the reference Turnip Top was in reference to Sadjii's Avatar, he has a Turnip but directly after my post I apologised to Sdajii as it sounded as though I was being rude to him in the re-reading, so I added an appology to him which you may have missed. He is constantly calling out unsubstiantiated comments about massive high price levels of oil in an adament, unequivocal way with no substantiating facts or reason behind the very high price level. I added that news story and link as a vastly opposing opinion of Sadjii's. As my time was limited on that morning and news stories get lost under other articles, I added it quickly. When I got home I then took time going through the article carefully and found no basis for a $20 call I then called that also an unsubstantiated call, lacking in any evidential basis for their call.



Skate said:


> If I could make a few additional comments..



 Comments are always welcome Skate

*


Skate said:



			Misinformation
		
Click to expand...


*


Skate said:


> There is so much misinformation & fanciful stories on the internet, remembering journalists make most stuff up - I want to draw your attention to this fact as some investors will make financial decisions on what they read.



 I am very aware of this Skate. In fact all outlets from any source, not just journalists can be full of fabrications, even respected bodies of education, governement and sciences are rife with biased and misleading information. It is a minefield or half truths and mis-thruths. It takes a lot of focus to see the difference between information and propaganda.

*


Skate said:



			Integrity
		
Click to expand...


*


Skate said:


> When forum members with integrity post articles or hyperlinks it gives those article more weight than sometimes they deserve.



I take this point Skate and try to be responsible whenever I post something. Generally I have the time to vet information and links carefully and make a decision if it is reasonable information or just junk. That is why I wanted to re-visit that $20 article on my return home and made further opined comments.

*


Skate said:



			Reference
		
Click to expand...


*


Skate said:


> As a reference - your comment in the thread [PO3 - Purifloh Limited - post(#11)]* "In my own opinion this appears to be deception by suggestion" *




Yes, that was and is my opinion for reasons I outlined, hopefully clearly. (I worry about the clarity to others slightly as I have recently had a fall and am being troubled by concussion, so I am endeavouring to take extra care when I speak).

*


Skate said:



			Hyperlinks
		
Click to expand...


*


Skate said:


> Hyperlinking to an article without clarification sometimes deceives the reader because they perceive (it's their perception & I'm not implying your intent) that you endorse the article.



Any hyperlink I add is not meant as an endorsement or proof of point, merely why, where and what is my point of reference. This is important as it gives the reader the opportunity to see where the information was derived and judge for themselves the merit of anything I may say. Any comment or opinion should be fairly scrutinized by others in my opinion. That can only be healthy.

*


Skate said:



			Quantity versus Quality
		
Click to expand...


*


Skate said:


> Some forum members (posters) go for quantity over the quality of their post and I tend to enjoy reading the latter.



I am sure we all have our favourite posters and subjects and that is how I see a living vibrant community, Joe has achieved a remarkable forum by tending the tiller with a very deft hand.

*


Skate said:



			In your own words
		
Click to expand...


*


Skate said:


> 1. You gave yourself good advice "*don't bloody put it up onto a forum with no basis"*



Exactly and that was my reason to re-visit the post to make sure there was proper substantiation, when there wasn't I felt it behooved me to make sure to all it was not of any value for the forum, as I have said more than once now, the only reason it was there was not to make mischief but to save it for proper scrutiny. It may have had some interesting and valuable insights but the time I had available was not there at the fist instance and on my return home it would not have been possible to find as the news articles are gone after a number of articles.
*


Skate said:



			Forum members
		
Click to expand...


*


Skate said:


> All forum members should prosecute their case forcefully with conviction & civility - members would be well served to remember to meter their responses  "If you don't have something nice to say, don't say anything at all."



I totally concure with you Skate, and I will also extend it further to add the style and implication of responses also can appear slightly less than civil. However that can be quite a tricky thing on a forum where the reader adds their own accentuation and interpretation to comments and phrases. For example me using the term Turnip Top was said with affection to Sdajii but you had no idea what I was talking about and to Sdajii it may have sounded like a jeer, hence I felt in an immediate post I put up I needed to clarify how rude I appeared and gave Sdajii my appology. Gosh I hope this is all making sense, I am dyslexic and struggling trying to read what I am saying!

*



Skate said:



			Ideas
		
Click to expand...


*


Skate said:


> ASF as the name suggest is a Stock Forum but @Joe Blow has kindly allowed the forum to incorporate a discussion of ideas.
> 
> Skate.




Isn't Joe great, I would love to say I am first in line as his biggest fan but I think first place may be a crowd scene jostle!


----------



## Sdajii

Ann said:


> Skate, the reference Turnip Top was in reference to Sadjii's Avatar, he has a Turnip but directly after my post I apologised to Sdajii as it sounded as though I was being rude to him in the re-reading, so I added an appology to him which you may have missed. He is constantly calling out unsubstiantiated comments about massive high price levels of oil in an adament, unequivocal way with no substantiating facts or reason behind the very high price level.




Constantly? I made my prediction which was that oil would drop to around $52 and then up to around $100 before August 2019. I made that statement once, and then posted again when the first part of my prediction (the fall) had played out. That's literally all I would have posted, but additionally, I have responded to the abuse, accusations, etc I've received from people including yourself. It's funny, I started saying oil would fall to about $52 and not much less by around the turn of 2018/2019 back in mid 2018, and it's only recently everyone is banging on about the big fundamental support oil has at $50, which makes it an obvious turning point, which people are just starting to talk about now (though a few are obviously going to say $20 or whatever nonsense, because there will always be someone to say any conceivable thing). By August 2019 I think a lot of people will consider some more things obvious which the majority are not seeing now.

I don't expect to be taken seriously until we see prices around $100. I am a bit surprised anyone bothered even responding to me this early (sure, just one single price figure and timeframe alone could be a lucky guess). It's interesting that people only got bees in their bonnets when my prediction started actually playing out.

Feel entirely free to ignore my prediction, and me in this thread, until my prediction has played out. That would make sense and I welcome it, and if it happens, you'll hear very little from me until we're around $100.

Hopefully you can resist provoking me until then 

Oh, one last thing, you're welcome to call me 'Turnip Top', I sort of like it actually, but I'd appreciate it if you spelled my name correctly if you do choose to use it. Thanks


----------



## Ann

Oh gosh, sorry Sdajii, I didn't notice the typo, or I would have altered it, I think I mentioned your name once or twice again, hopefully I got the spelling correctly on those ensuing mentions. No offence intended, shall be extra careful in future.


----------



## Smurf1976

I learned long ago that when discussing the future "will" is a word that is almost never appropriate.

We're dealing with possible outcomes here not certainties. Sure, some are more likely than others but nobody's able to be certain about the future price unless they're in a credible position to manipulate the market. There are few such people and those who are likely won't be posting the details of their plans here.


----------



## Sdajii

Smurf1976 said:


> I learned long ago that when discussing the future "will" is a word that is almost never appropriate.
> 
> We're dealing with possible outcomes here not certainties. Sure, some are more likely than others but nobody's able to be certain about the future price unless they're in a credible position to manipulate the market. There are few such people and those who are likely won't be posting the details of their plans here.




If things are sufficiently certain, or the context is appropriate, the word 'will' is often fine when talking about the future. You certainly wouldn't tell your girlfriend you might take her out for dinner tomorrow night or that it's a possibility you'll remember her birthday. The sun will come up tomorrow, we will see the market do some interesting things over the next 12 months, people on this forum will argue and bicker, I will piss people off, people will be irrational and stupid...


----------



## ducati916

Sdajii said:


> If things are sufficiently certain, or the context is appropriate, the word 'will' is often fine when talking about the future. You certainly wouldn't tell your girlfriend you might take her out for dinner tomorrow night or that it's a possibility you'll remember her birthday. The sun will come up tomorrow, we will see the market do some interesting things over the next 12 months, people on this forum will argue and bicker, I will piss people off, people will be irrational and stupid...




However, when talking about the POO, 'will' is not appropriate, as you cannot control its price or anything else relevant to oil. You use an example that has no relevance to the issue, viz dinner/girlfriend.

Possibly English is not your first language, in which case the error is understandable.

jog on
duc


----------



## Ann

ducati916 said:


> However, when talking about the POO, 'will' is not appropriate, as you cannot control its price or anything else relevant to oil. You use an example that has no relevance to the issue, viz dinner/girlfriend.
> 
> Possibly English is not your first language, in which case the error is understandable.
> 
> jog on
> duc



Sorry duc, I have to do this...you have made it too tempting for me. 

With every will in the world I will need to step into POO and will make a firm prediction the price will rise and then it will fall and will range through a series of prices. This will please some but will not please others, this will be the way of the world and will go on forever, thy will be done!


----------



## Smurf1976

Sdajii said:


> If things are sufficiently certain, or the context is appropriate, the word 'will' is often fine when talking about the future.



That's true but in the case of going to a restaurant, most surrounding circumstances are under our control and the probability of it being cancelled is very low. Not zero, the restaurant could burn down or the chef is ill, but it's unlikely.

There's also no major consequence if it is cancelled. Eat somewhere else, we won't starve, it's a nuisance at most. In contrast someone investing $ whatever based on expected movement in the oil price stands to lose real, actual money if that forecast turns out to be wrong.

There's also a difference in that I'm not posting on a forum somewhere which is being read by people hoping to learn how I chose which restaurant to eat at and so on. If I was doing that however, well I'd be talking about the chef, menu, location, decor, reputation of it, cost and so on so that others could understand how I reached a decision to choose that restaurant and not simply saying I called them and booked a table.


----------



## Sdajii

ducati916 said:


> However, when talking about the POO, 'will' is not appropriate, as you cannot control its price or anything else relevant to oil. You use an example that has no relevance to the issue, viz dinner/girlfriend.
> 
> Possibly English is not your first language, in which case the error is understandable.
> 
> jog on
> duc




I have no control over the sun either, but I still say the sun will rise tomorrow. Your words are irrelevant. Perhaps your IQ is one or two standard deviations below average, in which case your error is understandable.


----------



## Sdajii

Smurf1976 said:


> That's true but in the case of going to a restaurant, most surrounding circumstances are under our control and the probability of it being cancelled is very low. Not zero, the restaurant could burn down or the chef is ill, but it's unlikely.
> 
> There's also no major consequence if it is cancelled. Eat somewhere else, we won't starve, it's a nuisance at most. In contrast someone investing $ whatever based on expected movement in the oil price stands to lose real, actual money if that forecast turns out to be wrong.
> 
> There's also a difference in that I'm not posting on a forum somewhere which is being read by people hoping to learn how I chose which restaurant to eat at and so on. If I was doing that however, well I'd be talking about the chef, menu, location, decor, reputation of it, cost and so on so that others could understand how I reached a decision to choose that restaurant and not simply saying I called them and booked a table.




My ability to control something is not generally related to how certain it is. As I said above, I have absolutely no control over the sun or any other heavenly bodies, but I can say the sun will rise tomorrow. I can say the price of oil will indeed fluctuate over time. I can say that peak oil will inevitably occur. I have no control over any of these things, but even you would agree they are certain.

The more we know and the smarter we are, the more sure we can be about our predictions. I think the predictions dependent on our future influence are among those we can't be too certain of. My actions have effectively zero impact on the price of oil. They will do what they will do regardless of any input from me or lack thereof. If we can be sure enough that we will still be alive next week and take someone out to dinner (even this is not a 100% guarantee), then certain things relating to the price of oil, which are obviously far more inevitable, can be said to be 'definite'.

I may be unable to predict when a total solar eclipse will occur. Honestly, I have a complete inability to do it, but astronomers can do it thousands of years in advance with precision literally to the second. They have no ability to influence it, but they can predict it effectively perfectly. Some people are better at predicting some things than others. I can't predict the price of oil to anything resembling the accuracy of astronomers predicting heavenly events, but there are varying degrees to which different people can predict them. The point at which certain people can predict certain things is grey. I would consider it to be healthy to treat the first astronomer who claimed to be able to predict a total solar eclipse with open-minded scepticism, and a reasonable astronomer would accept that until his predictions had turned out to be correct. But, these days I have no hesitation in believing the predictions about total solar eclipses long into the future. Assuming the astronomer was intelligent and entirely sure about his first prediction, I would not berate him until after the prediction had been proven or disproven if he said "the eclipse *will* occur at time x and place y". After time x I would either congratulate or perhaps berate/mock, but not before.


----------



## ducati916

Sdajii said:


> I have no control over the sun either, but I still say the sun will rise tomorrow. Your words are irrelevant. Perhaps your IQ is one or two standard deviations below average, in which case your error is understandable.





Interesting.

Now that it has been demonstrated that your dinner/girlfriend argument was fallacious, you a fortiori advance the 'sun/rising' argument. 

This argument is also incorrect in that the causation attributed for the outcome is incorrect. The earth orbits the sun and additionally the earth rotates on its axis eastward. So while the sun does 'appear' in the east, your argument is rendered otiose.

I note also that in your post to Smurf that you [now] adopt Ann's 'fluctuation' theory. This predisposition to plagiarise other peoples ideas and words is unfortunate and invariably weakens your case.

Currently you [seemingly] wish to take credit for and be accorded respect, for nothing more than a lucky guess. There is no evidence yet, that it was anything more. Of course any retrospective evidence carries little to zero weight, so only evidence of the $100 call, if provided prior to the price being reached, would be accorded any weight.

I on the other hand would accord your earlier call of $50 equal weight as I am a very generous chap.

jog on
duc


----------



## ducati916

$49.27.

Confirmation of the megaphone and the dark arts?

jog on
duc


----------



## Ann

ducati916 said:


> $49.27.
> 
> Confirmation of the megaphone and the dark arts?
> 
> jog on
> duc



Sadly no spooky dark arts this time duc....it was turning into a Alphorn sooner than a Megaphone! 

The price is still in play, it is sort of doing a snake dance around the 50% Fibonacci line. This can actually strengthen the price at this level, lots and lots of tests. I just checked the 5 minute price and it is still pole dancing the 50% line. Interestingly I noticed this morning Stockcharts have the closing price of $50.20. It is wrong I was watching the closing bell this morning. Just after 2pm NY time it gave up the $50 level. I guess Stockcharts had a hiccup. Pleased to see IC was on top of things.


----------



## ducati916

Ann said:


> Sadly no spooky dark arts this time duc....it was turning into a Alphorn sooner than a Megaphone!
> 
> The price is still in play, it is sort of doing a snake dance around the 50% Fibonacci line. This can actually strengthen the price at this level, lots and lots of tests. I just checked the 5 minute price and it is still pole dancing the 50% line. Interestingly I noticed this morning Stockcharts have the closing price of $50.20. It is wrong I was watching the closing bell this morning. Just after 2pm NY time it gave up the $50 level. I guess Stockcharts had a hiccup. Pleased to see IC was on top of things.
> 
> View attachment 90809




The low was $49.16, currently trading circa $49.24. There is not much volume in the out of hours, so you can't read too much into it.

However what I do set store by is how quickly and easily a trade moves into profit. I had two long trades which made money, but it was a struggle for pennies.

I flipped short, before I knew it I was $1 in profit. That is always a good indication that I am on the right side of the prevailing price action.

Therefore I would not be surprised to see $48 be hit and price head towards $45. What happens then? I guess we'll post analysis closer to and if, it hits.

jog on
duc


----------



## ducati916

Looking at this, $40 looks entirely possible. Not much support from this point.




jog on
duc


----------



## Darc Knight

So the consensus is we should delay filling up for as long as possible?


----------



## Ann

Darc Knight said:


> So the consensus is we should delay filling up for as long as possible?




This is a bit of a pat-your-head rub-your-tummy exercise DK. Looking at the gold chart in $US for the quarter, it looks like it will fall, if it falls, the Aussie dollar will fall. Even if the Price of Oil stops at around this level petrol will cost us more because of the reduced buying power of the A$.

If the Price of Oil falls and the $A falls we may not see any massive savings. However there are so many variables it is a hard call to make....Although usually petrol goes up over the holiday period so might be a good idea to fill up anyway!


----------



## ducati916

Currently trading at $48.11, with a low at $47.85

It will be interesting to see once the US starts trading whether it retraces, or accelerates.

jog on
duc


----------



## Smurf1976

Darc Knight said:


> So the consensus is we should delay filling up for as long as possible?



I filled a tank with No.1 fuel oil. 477 litres of the stuff.

I also filled 3 jerry cans with petrol for mowers etc and filled the car as well.

Managed to do all this pretty much right at the highest price for oil just before it turned down. 

OK, so it would only be $100 or so difference but still. I bought the fuel to burn not to speculate on the price though.


----------



## ducati916

Sdajii said:


> Well, we've hit the low I was predicting, so I'm right so far. I'll restate my prediction and say it won't drop further (at least not significantly). I'm fairly sure it won't go below $50 again and if so it won't be by much.
> 
> It may linger around here around $50/low 50s for a while, or it may not waste too much time, but again I restate my prediction, it will be $100 or close to it before the end of August. Could be earlier, but won't be later.
> 
> Not expecting to be taken seriously until it happens, but I'm posting it all so in hindsight you'll be able to go back and read the posts.




Well it is below $50 again. I'm showing a low of $47.01.

Support at $50 is gone. Support or resistance levels are formed by three psychological variables:

(a) recency bias; and
(b) anchoring; and
(c) disposition effect.

It is (c) that I find interesting and I suffer from it myself. It is the desire to lock-in profits. Traders see a support or resistance level in the chart and as price approaches, they close the trade and take the profit. This [of course] reinforces that level. The more times it holds, the stronger the effect.

However, later, if that level is breached, then the run through that level tends to accelerate. The breach can turn into a new directional trend that has legs to run.

That is, I think, what has happened here. $50 was a support point. It held, for a while, but now it is gone. The move lower is already fast, and I think now [in hindsight] it could move a lot further. There is nothing but air until $40.

Ann put up the Fib at $45. They do have a habit of being accurate, so $45 may provide a pausing point, I'm not sure in the absence of something significant on the fundamental side, that it will hold.




jog on
duc


----------



## PZ99

Brent doing the same. Financial equivalent of underarm bowling.

I have the OOO etf in my stock holdings - happy to add a few more


----------



## Sdajii

ducati916 said:


> Well it is below $50 again. I'm showing a low of $47.01.
> 
> Support at $50 is gone. Support or resistance levels are formed by three psychological variables:
> 
> (a) recency bias; and
> (b) anchoring; and
> (c) disposition effect.
> 
> It is (c) that I find interesting and I suffer from it myself. It is the desire to lock-in profits. Traders see a support or resistance level in the chart and as price approaches, they close the trade and take the profit. This [of course] reinforces that level. The more times it holds, the stronger the effect.
> 
> However, later, if that level is breached, then the run through that level tends to accelerate. The breach can turn into a new directional trend that has legs to run.
> 
> That is, I think, what has happened here. $50 was a support point. It held, for a while, but now it is gone. The move lower is already fast, and I think now [in hindsight] it could move a lot further. There is nothing but air until $40.
> 
> Ann put up the Fib at $45. They do have a habit of being accurate, so $45 may provide a pausing point, I'm not sure in the absence of something significant on the fundamental side, that it will hold.
> 
> View attachment 90815
> 
> 
> jog on
> duc




I was talking about (and bluntly specified) fundamental support, not technical or sentimental support. The fundamental support and the overall global events and structures in place are what I see as relevant. Technicals and sentiment can throw things this way or that in the short term, but the overall picture is controlled by fundamentals. None of what you say I'm basing my thoughts on are relevant to me, regardless of how important you may think they are, or assume (often correctly) others do. 

I didn't expect it to go below $50 again, but I acknowledged it wasn't a particularly unlikely thing, and if it did, I didn't expect it to go too far below. If it goes much below $40 (say, $35 or below $40 for longer than briefly), you can say I was wrong about that, but it's not the big overall picture I have spoken about.

The big statement I made back around $70 on the uptrend which I absolutely stand by as much as before is: WTI oil drop below $52 before the end of February, and that before the end of August we'd see $100 or close to it (you can stake $95 as the goal post for me being right or wrong if you like, since you seem Hell bent on me being wrong). 

Technicals/sentiment/unexpected global events may throw it much higher than $100 in the short term, I don't know, no one can predict that sort of thing, but we'll be seeing $100 by my deadline.


----------



## ducati916

This was your initial guess.




Incorrect.

jog on
duc


----------



## ducati916

This was your modified guess:




So I suppose the accuracy of your guess is how the word 'significantly' would be interpreted. The low [so far] is $45.75. That is in my book significantly lower, as I would not [could not] hold a long position with that sort of move against the position when trading [unhedged] a position in futures.

But, from the first guess, the second guess is simply trying to give you wiggle room anyway.

In your last post, you still seem to be trying to preserve your guess as valid. It would be far more honest just to admit that you are wrong.

The whole guess, modified or not, is simply incorrect.


jog on
duc


----------



## Sdajii

ducati916 said:


> This was your modified guess:
> 
> View attachment 90833
> 
> 
> So I suppose the accuracy of your guess is how the word 'significantly' would be interpreted. The low [so far] is $45.75. That is in my book significantly lower, as I would not [could not] hold a long position with that sort of move against the position when trading [unhedged] a position in futures.
> 
> But, from the first guess, the second guess is simply trying to give you wiggle room anyway.
> 
> In your last post, you still seem to be trying to preserve your guess as valid. It would be far more honest just to admit that you are wrong.
> 
> The whole guess, modified or not, is simply incorrect.
> 
> 
> jog on
> duc




Good grief, you're a real piece of work. I stated it in various places as 'it will drop to $52' or 'it will drop to the low 50s'

Now it doesn't take a genius to understand that if I say it will drop to $52 I don't mean to say exactly $52. By your reasoning, $52.01 would mean my target wasn't hit, and $51.99 would mean I'd overshot!

It doesn't take a genius to understand what was meant, but because of your apparent mental condition (I'm not sure if it's a form of retardation or a form of borderline HFautism or something else) and your obsession with me prediction, I've tried to explain it in terms you can fathom. It seems it has been insufficient so far, and you seem incapable of ignoring it, so let's go a little further.

If you want to get technical on details for some bizarre reason, for my prediction to be correct, according to the initial and all wordings, the price had to fall to or below $52. I didn't say it would stop at $52 and only someone with a peculiar mental condition or someone being silly would interpret it that way. Because of your tantrums I specified bottom predictions, although these weren't really part of my initial predictions which I am absolutely sure about.

If you want to hold me to my initial predictions inclusive of everything I've said, to be correct, oil must hit $100 by the end of August. And that's not to say it has to stop at $100. I'm not saying it will hit $100 and not a cent more. This would seem to go without saying, but since you couldn't understand it on the lower end, and dragged it out to an absurd extent, I'm making an attempt to be clear on the other end.

Does that all make sense? Do you need any more clarity? Are you capable of making a response without consulting a thesaurus in an attempt to look smart? (yes, I'm joking, some of your posts do appear to be written without a thesaurus being involved, it's okay, I was just being facetious  ).


----------



## Smurf1976

Seasonality is something that works until it doesn't but worth noting in that context that there's often a bit of a dip in the oil price between Christmas and New Year.


----------



## ducati916

It is apodictic that your '$50' guess is wrong.

_Good grief, you're a real piece of work. I stated it in various places as 'it will drop to $52' or 'it will drop to the low 50s'

Now it doesn't take a genius to understand that if I say it will drop to $52 I don't mean to say exactly $52. By your reasoning, $52.01 would mean my target wasn't hit, and $51.99 would mean I'd overshot!_

These are now attempts at diverting attention from the facts.

So your assertion(s) in seriatim:

_If you want to get technical on details for some bizarre reason, for my prediction to be correct, according to the initial and all wordings, the price had to fall to or below $52. I didn't say it would stop at $52 and only someone with a peculiar mental condition or someone being silly would interpret it that way. Because of your tantrums I specified bottom predictions, although these weren't really part of my initial predictions which I am absolutely sure about._

Smurf challenged you on the specificity of $50. Also refer to post #1977 [above].




Not $40. Well true it has not reached $40, but it is in the $40s. So did you mean exactly $40, or anything with a "4" before it?

So the next piece of evidence would be this:




Which was responded to in this way:




This rather implies that the line drawn in the sand was $50. Now that we are sitting at circa $46.30 and looking to be heading into the $45s, your guess is simply incorrect.

Now instead of simply accepting that you are wrong...you make excuses. A dangerous trait in someone on a trading forum.

_If you want to hold me to my initial predictions inclusive of everything I've said, to be correct, oil must hit $100 by the end of August. And that's not to say it has to stop at $100. I'm not saying it will hit $100 and not a cent more. This would seem to go without saying, but since you couldn't understand it on the lower end, and dragged it out to an absurd extent, I'm making an attempt to be clear on the other end.
_
I think you have rather missed the point. Your guess is over. It is broken. It is wrong. The second part is irrelevant, because the first part never came to fruition.

jog on
duc


----------



## Sdajii

You can't just pretend that I meant to imply that oil would never drop below $50 even though I've multiple times, starting from months ago, said it might and my rough guess was $52 several months out. Do you honestly think that anyone would say oil was going to drop a massive amount to an exact figure of $52 and absolutely positively not below $50? Your posts truly are just a stupid waste of space. Trying to 'disprove' me by deliberately (or literally insanely) taking me gratuitously out of context just because you hate someone having make a prediction is stupid. With whatever little respect is due, you have demonstrated that you are not a person of sufficient quality or substance to be worth engaging with and I'll respond to your posts accordingly from now on.


----------



## ducati916

Sdajii said:


> You can't just pretend that I meant to imply that oil would never drop below $50 even though I've multiple times, starting from months ago, said it might and my rough guess was $52 several months out. Do you honestly think that anyone would say oil was going to drop a massive amount to an exact figure of $52 and absolutely positively not below $50? Your posts truly are just a stupid waste of space. Trying to 'disprove' me by deliberately (or literally insanely) taking me gratuitously out of context just because you hate someone having make a prediction is stupid. With whatever little respect is due, you have demonstrated that you are not a person of sufficient quality or substance to be worth engaging with and I'll respond to your posts accordingly from now on.





The evidence of your failed guess is everywhere on this thread. Here is a further example:




So what you're trying to argue is that $46 and change is 'not much less'.

Well you may give yourself such a margin for error and still claim to be 'right', but for me, that is a major miss.

jog on
duc


----------



## CanOz

He sounds like a fundamental investor with no skin in the game...


----------



## Smurf1976

Down to $45.38 now so we're about to see what happens with the idea of a bottom around $45.

Given the speed of it all, I'm not at all confident that we'll see the bottom there. Anything's possible of course but it would just be too fast I think. 

Time will tell. Smurfs were only to promote BP petrol*, they didn't set the price.

*For those too young to know, Smurfs were heavily used for marketing by BP circa late 1970's - early 80's.


----------



## Ann

CanOz said:


> He sounds like a fundamental investor with no skin in the game...



CanOz, bless, where have you been? I have missed you so much! You are one of my all time favourite posters and we have ridden POO for so, so long together. 
Hey guys, leave Sdajii be. He clearly has an earnest belief about something and is becoming very defensive. This could leave disputes happening and ugly words exchanged, is this what Joe wants? I don't think so. We are having a meeting at Joe's place so we should be polite to each other even just for Joe's sake. Time will sort the answer for all and time will leave no bad feelings.

I will pop up a chart for POO tomorrow with the Fibonaccis again.


----------



## qldfrog

Agree


Ann said:


> CanOz, bless, where have you been? I have missed you so much! You are one of my all time favourite posters and we have ridden POO for so, so long together.
> Hey guys, leave Sdajii be. He clearly has an earnest belief about something and is becoming very defensive. This could leave disputes happening and ugly words exchanged, is this what Joe wants? I don't think so. We are having a meeting at Joe's place so we should be polite to each other even just for Joe's sake. Time will sort the answer for all and time will leave no bad feelings.
> 
> I will pop up a chart for POO tomorrow with the Fibonaccis again.



 With Ann 100pc , not sure i  follow sdajii but hey everyone can get emotional or have strong conviction.time will tell.i have been beaten with poo.i thought that the saudis would keep price around 60, just enough to kill US shale drilling, but big enough for their mega sale of the century: saudis saudis oioik assets..have been proven wrong..and now out after loss cut


----------



## Ann

qldfrog said:


> Agree
> 
> With Ann 100pc , not sure i  follow sdajii but hey everyone can get emotional or have strong conviction.time will tell.i have been beaten with poo.i thought that the saudis would keep price around 60, just enough to kill US shale drilling, but big enough for their mega sale of the century: saudis saudis oioik assets..have been proven wrong..and now out after loss cut



I have some fundamental stuff which may explain why POO fell. I will pop that up tomorrow as well. We can chuck it around for consideration.


----------



## ducati916

Ann,

You wrote:

"_Hey guys, leave Sdajii be. He clearly has an earnest belief about something and is becoming very defensive._"

Yes he is. Irrelevant.

He wants to play in the markets with the big boys? Then grow-up. Stop crying like a little baby because POO didn't work out and confirm his random guess.

It is actually an important lesson to learn. When proven wrong, change your mind and become right.

jog on
duc


----------



## Ann

duc, what I said was this......



Ann said:


> Hey guys, leave Sdajii be. He clearly has an earnest belief about something and is becoming very defensive. This could leave disputes happening and ugly words exchanged, is this what Joe wants? I don't think so. We are having a meeting at Joe's place so we should be polite to each other even just for Joe's sake. Time will sort the answer for all and time will leave no bad feelings.




It is all about Joe and his hospitality, sometimes we just need to shut the f u c k up. There is stuff on the forum at the moment I would be delighted to take a major swing at, knowing full well I could win but it would leave none of us looking too flash. Think poise, good manners and reserve. In other words, think like Joe.


----------



## Sdajii

You guys are so weird! Oil is doing what I predicted so far and you say I'm sooking? You literally call yourself "big boys" and say that I'm not and say I'm the emotional one? Impressive projection.

I didn't call a bottom, I didn't try to. I said oil would fall to $52/low 50s, I didn't say it would stop there. I said it would then go back up to $100 (and it may go higher, if you are insane enough to need me to point out that I didn't mean to say it would go to exactly $100 and not a cent more.

If it hadn't gone as *low* as the low 50s, yes, I'd have been wrong. If it doesn't go as *high* as $100, yes, I will be wrong. If you think I am trying to predict absolute exact prices of tops and bottoms, then... well, it explains a lot.

As I have said all along, I just decided to share my predictions, and literally wouldn't have posted more than one or two short posts per month if it wasn't for the tantrums some of you have thrown in response to what I said. It's so weird that my predictions have ruffled feathers so, and that you would accuse me of being the emotional one, or having no skin in the game (I'm currently heavily invested in oil, why wouldn't I be if I'm sure oil is going to be $100 by August next year?).

There are some bizarre personalities here.


----------



## Smurf1976

There's possibly some differences of communication here. 

For the record though, if someone informs their boss, partner or whoever that they'll be arriving "after 10am" then I'm pretty sure most people would take that to mean _shortly_ after 10am. If you don't turn up until 4pm then you're going to have an unhappy boss, wife or whoever wondering why you mislead them. Yes 4pm is indeed "after 10am" but that's not how most will interpret the original statement.

But yeah, it's Christmas so let's not get too unhappy about it.


----------



## sptrawler

I know nothing about the price of oil, and I'm sure if any of the posters knew difinitively where the price was going and when it was going, they would be very rich.
It just appears from the outside, everyone is beating each other up, it's Christmas be happy.


----------



## ducati916

Sdajii said:


> You guys are so weird! Oil is doing what I predicted so far and you say I'm sooking? You literally call yourself "big boys" and say that I'm not and say I'm the emotional one? Impressive projection.
> 
> I didn't call a bottom, I didn't try to. I said oil would fall to $52/low 50s, I didn't say it would stop there. I said it would then go back up to $100 (and it may go higher, if you are insane enough to need me to point out that I didn't mean to say it would go to exactly $100 and not a cent more.
> 
> If it hadn't gone as *low* as the low 50s, yes, I'd have been wrong. If it doesn't go as *high* as $100, yes, I will be wrong. If you think I am trying to predict absolute exact prices of tops and bottoms, then... well, it explains a lot.
> 
> As I have said all along, I just decided to share my predictions, and literally wouldn't have posted more than one or two short posts per month if it wasn't for the tantrums some of you have thrown in response to what I said. It's so weird that my predictions have ruffled feathers so, and that you would accuse me of being the emotional one, or having no skin in the game (I'm currently heavily invested in oil, why wouldn't I be if I'm sure oil is going to be $100 by August next year?).
> 
> There are some bizarre personalities here.





Save some time:




jog on
duc


----------



## Ann

Geez, not even a good fcuk could shut these boys up! 

OK let's look at the chart...the POO has plopped down to close on $45 which is the 61.8% Fibonacci level, it now has some very powerful overhead resistance to fight back up through if there is to be an attempt at a rise, which I feel is most unlikely. The next level of support below $45 is my green line around the $42 level. If this is failed then it will be interesting to see how quickly it heads down to the 100% Fibonacci level of around $26. My feeling is it could be quite rapid if it breaks below the $42 level but I could be wrong, time will tell.


----------



## Ann

I found this article a few days ago but felt it could wait. As I am reading this I am also thinking perhaps China has mountains of oil it has been sitting on in case of peak oil playing out. Now that it looks like Peak Oil was just another good story (bullsh!t) they can see there is not much point saving it, so now they are bringing in the professionals to pull the stuff up out of the ground and feed their own economy. With such a vast labour force and possibly government subsidies they might be able to get oil up far cheaper than most other places. If I am not fantasizing too much, then this would give a fair reason to see the POO fall into a hole. If the worlds biggest emerging economy doesn't need to buy oil then who will the Saudis sell it to? Just my thoughts and I may be thinking on the wrong path, I am never any good at fundy stuff, too much imagination.

_
*China Signs Oil Deals With Majors as Xi Underscores Open Trade*
 Bloomberg News 
 December 18, 2018, 6:14 PM GMT+11 Updated on December 18, 2018, 8:31 PM GMT+11

China signaled its openness for business with a raft of deals that’ll give oil majors including Royal Dutch Shell Plc new opportunities to develop fields in partnership with the nation’s biggest offshore explorer.

China National Offshore Oil Corp. said in Beijing on Tuesday that it had inked oil and gas accords with nine firms. The signing ceremony followed President Xi Jinping’s address to party cadres marking 40 years of reform and broadly underlining the nation’s commitment to global trade.

The agreements cover 64,000 square kilometers in the Pearl River basin, to a depth of up to 3,000 meters. In addition to the Netherlands-based Shell, France’s Total SA and U.S.-based Chevron Corp. were also awarded parcels. All three majors hold existing production sharing contracts with CNOOC. The other firms involved are: ConocoPhillips, Equinor ASA, Husky Energy Inc., Kuwait Foreign Petroleum Exploration Co., Roc Oil Co., and SK Innovation Co.

https://www.bloomberg.com//news/art...-as-xi-underscores-open-trade?srnd=markets-vp_


----------



## qldfrog

Plus the fact that with both Germany  and Japan in negative growth, I would not be surprised to learn real neg growth in China (do not worry, we will never be told that).The mood there is definitively down, many expats going back home, business slowing down....And I assume oil consumption down too


----------



## Smurf1976

Ann said:


> Now that it looks like Peak Oil was just another good story



The basic concept that oil is a finite resource is beyond doubt in my view and is backed up by the many locations, including Australia, the UK and many more, where production has indeed risen, peaked and declined.

Australian oil production has declined over 60% since its year 2000 peak. That's depletion right there.

Then there's price. By historic standards oil at $45 is not cheap indeed it's extremely expensive. Look back over the entire history of oil since 1859 and to the extent there's a "normal" price it's about half the current level. That most oil fields today wouldn't be viable at that price is more evidence that we've used the cheapest and best and now we're forced to use lesser quality or more costly to extract sources.

So I don't think there's any doubting that it's ultimately a finite resource and we're heading down the curve. That said, I'd also be the first to point out that we're not running out of oil next week or next year - the issues are far longer term than the time frames that financial markets tend to work on.

So I'm still bullish based on long term fundamentals but from a short term perspective I'm not at all convinced that this decline is finished yet. It's just too fast and too direct.

I'm still thinking that a drop down to the 20's, so that would be a 100% retrace for the technically focused traders, is a possibility here. We're at $45 now and if we do fall further well it's not too far until we are indeed looking at a number that starts with 2. 

I could be wrong of course - we're dealing with uncertainties I don't claim to know more than what I'm posting.


----------



## Sdajii

ducati916 said:


> Save some time:
> 
> View attachment 90880
> 
> 
> jog on
> duc




It's flattering that you have such a fixation on me, though a little creepy that despite it being incredibly obvious that you're misinterpreting me, you are maintaining this fixation. Well, to be honest I'm finding it more amusing than creepy.

Honestly, do you really believe yourself when you think that I would predict, several months out, that the price would drop to $52 and not any lower? Your own quote which you've put amusing effort into showing, does not say this. A simple 3 seconds of thought is more than sufficient for it to be obvious that I wouldn't mean that, and a simple 3 seconds of reading your own post which apparently you've read many times now shows that I never said it.

Jog on... over to the December competition leaderboard  

(no, I'm not suggesting it actually means anything, but you seem to love reading stuff after my name, so you might enjoy the sight  ).


----------



## Ann

Smurf1976 said:


> The basic concept that oil is a finite resource is beyond doubt in my view and is backed up by the many locations, including Australia, the UK and many more, where production has indeed risen, peaked and declined.
> 
> Australian oil production has declined over 60% since its year 2000 peak. That's depletion right there.




Smurf, I am asking a question more than making a statement as I don't know the FA about pulling the stuff out of the ground or sea. Is Australia actually running out or is there very little oil to be had in Australia in the first place or/and was it just getting too expensive with the cost of labour and all that goes with it here to continue to extract the stuff? 



Smurf1976 said:


> Then there's price. By historic standards oil at $45 is not cheap indeed it's extremely expensive. Look back over the entire history of oil since 1859 and to the extent there's a "normal" price it's about half the current level. That most oil fields today wouldn't be viable at that price is more evidence that we've used the cheapest and best and now we're forced to use lesser quality or more costly to extract sources.




I can't go back to 1859 but I can go back from 1946 with an historic chart I found. It is adjusted for inflation and as you can see the current price is about average (inflation adjusted). In the early, early days I thought oil just leaked naturally from the ground, so recovery could have been done by anyone with a bucket and scoop. I doubt there would have been much demand for it without vehicular demand in those very early years. 



Smurf1976 said:


> So I don't think there's any doubting that it's ultimately a finite resource and we're heading down the curve. That said, I'd also be the first to point out that we're not running out of oil next week or next year - the issues are far longer term than the time frames that financial markets tend to work on.




I don't think anyone would doubt this stuff is very short term and finite and in the grander time scale an alternative source of energy would be required, which is where we are heading at the moment with EVs. We will have weaned ourselves off oil long before it is anywhere near running out. This is what I could see very clearly while all the "Peak Oil" bullsh!t was going on. Obviously all good cons need to have even a grain of truth from which to drive a fairy tale for the kiddies. I guess a huge player wanted to exit oil and needed enough mug punters to support the price during the exodus. Now they (whoever they are) is out, let the POO fall where it may. I think it is for the long drop! (Country toilets are called 'long drops'. A deep hole in the ground with a toilet seat on top, not great in summer).


----------



## aus_trader

Ann said:


> Smurf, I am asking a question more than making a statement as I don't know the FA about pulling the stuff out of the ground or sea. Is Australia actually running out or is there very little oil to be had in Australia in the first place or/and was it just getting too expensive with the cost of labour and all that goes with it here to continue to extract the stuff?
> 
> 
> 
> I can't go back to 1859 but I can go back from 1946 with an historic chart I found. It is adjusted for inflation and as you can see the current price is about average (inflation adjusted). In the early, early days I thought oil just leaked naturally from the ground, so recovery could have been done by anyone with a bucket and scoop. I doubt there would have been much demand for it without vehicular demand in those very early years.
> 
> 
> 
> I don't think anyone would doubt this stuff is very short term and finite and in the grander time scale an alternative source of energy would be required, which is where we are heading at the moment with EVs. We will have weaned ourselves off oil long before it is anywhere near running out. This is what I could see very clearly while all the "Peak Oil" bullsh!t was going on. Obviously all good cons need to have even a grain of truth from which to drive a fairy tale for the kiddies. I guess a huge player wanted to exit oil and needed enough mug punters to support the price during the exodus. Now they (whoever they are) is out, let the POO fall where it may. I think it is for the long drop! (Country toilets are called 'long drops'. A deep hole in the ground with a toilet seat on top, not great in summer).
> 
> View attachment 90912



Nice historical chart Ann. Looks like all the peak stuff is over and we are nicely back near the baseline.


----------



## Ann

Sdajii said:


> Jog on... over to the December competition leaderboard
> 
> (no, I'm not suggesting it actually means anything, but you seem to love reading stuff after my name, so you might enjoy the sight  ).




Well Sdajii, I did a little jog over to the leaderboard and had a wee bit of a looksee. I looked and I saw. Get ready for this, little one!


----------



## Smurf1976

It is Christmas Eve, almost Christmas Day, so I don't wish to cause upset but I think it needs to be said.

It is not my role to police this forum, I am not the owner or a moderator, but the extent to which this thread has morphed into some sort of personal crusade to be "proven right" and reacting aggressively toward alternative views is annoying at best and that is putting it politely. 

OPEC themselves are based in a modest, unimpressive looking building in Vienna. Not a bad approach really - it's always good to keep both feet firmly on the ground.

Photo = mine.


----------



## ducati916

POO




So it's Christmas and volumes are thin...

jog on
duc


----------



## aus_trader

Smurf1976 said:


> Photo = mine.



Nice photo. Thanks for posting it, so that's what the OPEC building looks like


----------



## Ann

Smurf1976 said:


> Photo = mine.
> 
> View attachment 90925




Love the reflection in your photo Smurf.  The OPEC logo just rocks! I love those big doovie thingos. Full marks to the graphic designer. I did a pic in Ann's Gallery of big doovies. (I don't know what they are, they just appeal to me).


----------



## Smurf1976

Ann said:


> Love the reflection in your photo Smurf.



Location is Vienna (Austria) for anyone who happens to be there.

Austria isn't an OPEC member by the way and never has been, the country producing only trivial amounts of oil (about 0.013% of world production so pretty much irrelevant).

Elsewhere, in Canada the suggestion seems to be that the 325,000 barrel per day production cut is likely to be in place for about the first 3 months of 2019. Exactly what happens after that, a gradual increase versus going flat out, doesn't seem clear.

As for the price, well we're at the $45 level that has seen a bit of discussion.


----------



## Ann

...and now a fairly boring chart of the POO clinging onto the Fibonacci 61.8% line.


----------



## Ann

Just for fun I have calculated a swing trade for the POO. If it succeeds in breaking above $51 and stays above it then the swing trade suggests a high of $61 which is interesting as that will take it right up to the level of the long term overhead rising resistance line (red line). I have drawn the swing trade in vertical orange lines just so you can see how I worked it out. Sometime these things can be quite magic they way they react so perfectly. Let's see if this is one of the good ones.


----------



## Smurf1976

Ann said:


> Just for fun I have calculated a swing trade for the POO. If it succeeds in breaking above $51 and stays above it then the swing trade suggests a high of $61



As someone who tends to look at the fundamentals, particularly with oil, you're starting to convince me with this technical caper.... 

Now I haven't really got my mind around how you worked out the $51 up to $61 bit, I'll need to get my mind around that a bit more which I will but perhaps not right now at 3am, but presumably after the $61 is hit the price then goes down again by a significant amount? So down from $75 to $42, back up to $61, then down again?

Or I'm seriously over thinking this?


----------



## Ann

Smurf1976 said:


> As someone who tends to look at the fundamentals, particularly with oil, you're starting to convince me with this technical caper....
> 
> Now I haven't really got my mind around how you worked out the $51 up to $61 bit, I'll need to get my mind around that a bit more which I will but perhaps not right now at 3am, but presumably after the $61 is hit the price then goes down again by a significant amount? So down from $75 to $42, back up to $61, then down again?
> 
> Or I'm seriously over thinking this?




G'day Smurf,

Careful, we may make a techi of you yet, relax and breath deeply, it will pass! 

OK I have done a tight closeup of how I drew it. I didn't draw it as close as the current close up so I can see I did a really bad job of measurements. The first orange line from the low point should be to the purple line I then moved that first orange line up on top of the purple line around the general area I thought the price would travel, if it travels up....bit of a positon guestimate with that. Others call it a 'measured move' it is the same thing. On reflection it may not go as high as $61 but should be darn close. If it hits and falls back from the $61 red line then I think it may crash back down and even fall below the green line of $42. This will then become a line of resistance, a red line if you wish. This may be a barrier for a rise and then it will be likely headed down to $23 to $25 as a first floor. I may be entirely wrong about this, it may not evolve as I see it and I would ask people not to base any trades on this swing trade calculation as it may not evolve as I am expecting.


----------



## Ann

Now for all you FAers out there, check this out, I found it fascinating!

_*Mexico Finance Ministry Completes Oil Hedges at $55 a Barrel*
By
Dale Quinn

January 11, 2019, 8:07 AM GMT+11



The Mexican government paid 23.5 billion pesos, or about $1.23 billion, for the hedges as part of its strategy to ensure oil revenue against falls in prices, the Finance Ministry said in a statement.

Mexico hedged at $55 a barrel, equivalent to the price approved by lawmakers for the 2019 budget, protecting the country’s revenue if oil falls below that level, the statement says.

https://www.bloomberg.com/news/arti...-ministry-completes-oil-hedges-at-55-a-barrel_

.....and this is even more fascinating

_*Uncovering the Secret History of Wall Street’s Largest Oil Trade*

Year after year, Mexico places a multi-billion-dollar bet in a deal that big banks lust after. This is the untold story of how the “Hacienda hedge” happens. 

 By 
Javier Blas 

April 4, 2017, 2:01 PM GMT+10

https://www.bloomberg.com/news/feat...et-history-of-wall-street-s-largest-oil-trade
_


----------



## Ann

This is a very interesting chart. As I am understanding it, when the oil rig count goes down it appears the price of oil also falls. This is a very interesting piece of information if it is so. Am I misreading/misinterpreting this?

The chart came from this article.
https://www.calculatedriskblog.com/...mpaign=Feed:+CalculatedRisk+(Calculated+Risk)


----------



## Smurf1976

Ann said:


> This is a very interesting chart. As I am understanding it, when the oil rig count goes down it appears the price of oil also falls.



I interpret it as saying that there's a 9 week lag between a fall in the price and a subsequent fall in the rig count.

Whilst the two appear to line up on the chart, they're shifted the price by 9 weeks to show that.

That's how it looks to me at least.


----------



## Ann

Smurf1976 said:


> I interpret it as saying that there's a 9 week lag between a fall in the price and a subsequent fall in the rig count.
> 
> Whilst the two appear to line up on the chart, they're shifted the price by 9 weeks to show that.
> 
> That's how it looks to me at least.



Yes there did appear to be a lag, it sounds in his comments the reduction in rigs are planned to be continued. It will be interesting to watch the price _• "The model continues to predict big rig roll-offs in the next several weeks." 
_
Although the big thing will be when the US government goes back to work and begins to release the COTs. I am wondering if it will all blast outward like a blocked drain. This stuff is so interesting!


----------



## aus_trader

Ann said:


> Yes there did appear to be a lag, it sounds in his comments the reduction in rigs are planned to be continued. It will be interesting to watch the price _• "The model continues to predict big rig roll-offs in the next several weeks."
> _
> Although the big thing will be when the US government goes back to work and begins to release the COTs. I am wondering if it will all blast outward like a blocked drain. This stuff is so interesting!



Certainly interesting stuff Ann, it also shows how the drillers are keeping costs down by keeping the rig count down when POO is down these days. In the good old days most rigs stayed on and any excess oil was kept as stockpile/inventory for times of higher oil prices.

I wonder if there is doubts about the future of oil with the rise of renewables and Electric Vehicles etc for such short term thinking. i.e. only spend on rigs if there is immediate profits to be made by selling at spot prices.


----------



## Smurf1976

aus_trader said:


> I wonder if there is doubts about the future of oil with the rise of renewables and Electric Vehicles etc for such short term thinking.



An alternative explanation is that pretty much all business has a short term focus these days compared to what it used to be.

There aren't many CEO's around these days who will invest heavily in something that will reap bumper profits for their successor's successor. 

The downside of that approach is best explained by saying that such long term strategic thinking is what made huge corporations so successful. The short term approach comes at a huge long term cost but that's another subject.


----------



## Ann

aus_trader said:


> Certainly interesting stuff Ann, it also shows how the drillers are keeping costs down by keeping the rig count down when POO is down these days. In the good old days most rigs stayed on and any excess oil was kept as stockpile/inventory for times of higher oil prices.



I guess it would depend on the profit margin, if oil had a better return, I would imagine they would be able to absorb the costs. These days with squeezed margins they would need to control costs where they could. Plus stockpiling may not be of benefit if they can see a long term fall in the price of oil.



aus_trader said:


> I wonder if there is doubts about the future of oil with the rise of renewables and Electric Vehicles etc for such short term thinking. i.e. only spend on rigs if there is immediate profits to be made by selling at spot prices.




That is my thinking aus_trader, not so much the renewables but certainly the rapid proliferation of EVs.  These guys are the people who sell the stuff, they would know what orders are coming through and would have weeks of prior knowledge of peak and reduced demand simply from their order book. It could be a nine week turn around for orders, so people who follow the switching on and off of the rigs would likely be able to time the market. I have heard about the switching on and off of rigs for a long time now but I haven't put in an effort to find a regular site where it is reported. If I was a commodity trader of oil, it would certainly be a key indicator for me with my trades.  I guess that is why the price leads the shutting and opening of rigs. They know what is going on simply watching rig action and timing the market.



Smurf1976 said:


> .....long term strategic thinking is what made huge corporations so successful. The short term approach comes at a huge long term cost but that's another subject.




I am sure the oilers have a long term strategic plan Smurf, they would certainly not have the delusion oil is going to be a meaningful commodity in the long term. It will be very interesting to see where big oil money lands next. I guess their short term approach is still producing sufficient quantities to supply a diminishing market without it costing them too much. I imagine the modern oil rigs can be switched on and off easier than older equipment.  

What are your thoughts on the short term approach and its consequences?


----------



## Smurf1976

Ann said:


> What are your thoughts on the short term approach and its consequences?



More volatility basically. Good for traders but not so good for those who just want to buy the stuff.

Price goes down a bit > drilling activity is slashed rather heavily > creates a supply squeeze > price goes up > drilling activity goes up but not enough > price goes up even more > boom in drilling > price goes down a bit > rinse and repeat.

Noting in there that the price of drilling itself is a market and follows the same cycle. The higher the level of drilling activity, the higher the cost to drill - supply and demand as with anything else.

So the average oil company is drilling most of its wells when the cost of drilling is highest and stops drilling when the cost of drilling is lowest.

If management of any once company took a longer term view and had sufficient cash backing to stand the short term pain then they'd get their drilling done when oil and drilling prices were down and save rather significant $ on the cost of doing it.

In the longer term, as someone who has followed the whole energy story for over three decades now my view is really quite simple. Yes there's going to be a revolution with electric road vehicles. It won't kill oil demand anytime soon though and there's a few reasons for that:

*EV's do nothing at all to reduce oil consumption by ships, aircraft, petrochemicals, plastics, road construction and so on.

*The notion that people buy a new car every few years is something that relatively well off people in wealthy countries do. In reality most stuff that gets built is in use for 20+ years (cars, planes) and for anything heavy industrial we're looking at double that.

The latter is a point worth stressing. When it comes to heavy stuff, and by that I mean locomotives, large ships, heavy industry and so on things last decades not a few years. The life cycle there is a lot longer than the "throw away" consumer products life cycle among the wealthy.

For that matter, go to the poorer suburbs of any Australian city and take a good walk around of an evening. You'll find no shortage of 1990's cars parked and yes they're still in daily use. Likewise there's still buses from last century in daily service in Australia, depending on the state they're kept for ~25 years and then sold off overseas where they'll still be running many years later.

Overall I don't doubt that we're going to move away from oil but I also don't doubt that it will take quite some time to happen since we're still building new stuff that relies on it and which has a lone lifespan.


----------



## aus_trader

Good analysis Smurf, so looks like oil demand is not going away anytime soon... but I also haven't seen those crisis reports about oil running out on Earth and "Peak Oil" and stuff like that that used to plague us a few years back. Just to refresh the memories, below are a few of those pics:











*Please note:* The above images are out of date, so don't panic. I posted just for fun


----------



## Ann

aus_trader said:


> Good analysis Smurf, so looks like oil demand is not going away anytime soon... but I also haven't seen those crisis reports about oil running out on Earth and "Peak Oil" and stuff like that that used to plague us a few years back.




I am seeing another term being used now, "peak use" suggesting we are at the peak period of oil use and it will gradually fall away but as Smurf says there are going to be heavy users around for a long time as in boats, planes, etc. These won't be running on a battery any time soon I shouldn't think.


----------



## ducati916

So if you wanted to work it out as an estimate:














There are currently [approximately] 1 billion cars driving each day worldwide.

So with that information you should be able to roughly estimate [calculate] what % of the oil usage is consumed by passenger cars currently.

Then simply find out an estimate of EVs. Their uptake rate and you will have an estimate on oil usage.

jog on
duc


----------



## rederob

ducati916 said:


> There are currently [approximately] 1 billion cars driving each day worldwide.
> So with that information you should be able to roughly estimate [calculate] what % of the oil usage is consumed by passenger cars currently.
> Then simply find out an estimate of EVs. Their uptake rate and you will have an estimate on oil usage.



I hope you do other calculations with better data.
Cars do not represent the total consumption of transport fuels.  In the USA it's less than 60%, and in other countries with significantly lesser driving miles (kilometres) than the USA, the share could be markedly different.
The ICE vehicle legacy effect means that the small numbers of EVs hitting the roads will need to ramp to well over 10 million per year before impacting the small vehicle sector by one percentage point of the less than 60% contribution of transport use, which accounts for around 65% of total use


----------



## ducati916

rederob said:


> I hope you do other calculations with better data.
> Cars do not represent the total consumption of transport fuels.  In the USA it's less than 60%, and in other countries with significantly lesser driving miles (kilometres) than the USA, the share could be markedly different.
> The ICE vehicle legacy effect means that the small numbers of EVs hitting the roads will need to ramp to well over 10 million per year before impacting the small vehicle sector by one percentage point of the less than 60% contribution of transport use, which accounts for around 65% of total use





No I didn't do any calculations at all.

I stated if 'you wanted to' and 'roughly estimate'.

jog on
duc


----------



## rederob

ducati916 said:


> No I didn't do any calculations at all.
> 
> I stated if 'you wanted to' and 'roughly estimate'.
> 
> jog on
> duc



I agree.
Your idea can lead to an estimate roughly 100% different to actual.
I will give that a miss.


----------



## ducati916

rederob said:


> I agree.
> Your idea can lead to an estimate roughly 100% different to actual.
> I will give that a miss.





Maybe yes, maybe no.

The fact of the matter is however you have no idea how far out or not any calculation might be, simply because I have not completed one.

So your 'estimate' of '100%' is simply nonsense.

jog on
duc


----------



## Ann

Gotta love this internet, you can find anything in seconds!
I was talking about watching the oil rig count as a possible lead indicator of the oil price and saying I didn't know where the information came from, now I do so I shall share it here and hope someone may find it of value.
Baker Hughes, a GE company (NYSE:BHGE)

*Press here for the link*

(WhooHoo! Thanks for the magic linking instructions Rob.  )


----------



## rederob

ducati916 said:


> Maybe yes, maybe no.
> 
> The fact of the matter is however you have no idea how far out or not any calculation might be, simply because I have not completed one.
> 
> So your 'estimate' of '100%' is simply nonsense.
> 
> jog on
> duc



In the USA in 2017 cars accounted for about 40% of total oil usage.
On USA data alone you method cannot be better than 60% accurate.
I don't know the global use of oil for cars, but statistically the USA is significantly higher given it's transport sector consumes over 70% compared to a global average of maybe 65% (given the data is a few years old).
It is not outside the bounds of probability that global data might show that nearer 50% of oil is consumed by cars.
So if cars accounted for 50%, then 100% of that needs to be added to get the global total for transport use.


----------



## Ann

Cars use petrol and planes use a special kerosene mix which are both made from light sweet oil which have high inventories in the States at the moment apparently. Ships and trucks need diesel fuel which comes from the heavier oil. That is oil from the Gulf states and Venezuela. This is in shorter supply at the moment.
So does that mean cars and planes will pay less at the pump and trucks and ships needing diesel will be paying more? What then does all that mean for the POO?  Maybe Brent will split from the trail of WTIC and do its own thing? I should have a look at a chart for Brent.

*America Is Producing the Wrong Kind of Oil*
_
The shale boom has created a world awash with crude, putting a lid on prices and markedly reducing U.S. dependence on imported energy. But there’s a growing problem: America is producing the wrong kind of oil.

Texas and other shale-rich states are spewing a gusher of high-quality crude -- light-sweet in the industry parlance -- feeding a growing glut that’s bending the global oil industry out of shape.

Refiners who invested billions to turn a profit from processing cheap low-quality crude are paying unheard of premiums to find the heavy-sour grades they need. The mismatch is better news for OPEC producers like Iraq and Saudi Arabia, who don’t produce much light-sweet, but pump plenty of the dirtier stuff........_


----------



## Smurf1976

Ann said:


> Cars use petrol and planes use a special kerosene mix which are both made from light sweet oil which have high inventories in the States at the moment apparently. Ships and trucks need diesel fuel which comes from the heavier oil. That is oil from the Gulf states and Venezuela. This is in shorter supply at the moment.



A point often forgotten is that cars do indeed run on petrol and likewise your computer is running on electricity not coal or uranium.

Refineries do have the ability to do some whiz bang chemistry with all this but there are limits certainly.

One such limit is with the feedstock as you mention.

Another looming one is the demand for ~3 million barrels per day of heavy fuel oil used in shipping which is required to be low sulfur from the beginning of 2020 which isn't far away now. It's certainly possible to remove the sulfur from heavy fuel oil but 3 millions barrels per day is a huge volume, it's ~40% of the entire heavy fuel oil market, and I very much doubt that refineries have desulfurisation capacity just sitting around doing nothing.

If they can't do it then the workaround for ship owners is to switch to diesel. That's easy for the ship but then creates the issue of the significant increase in consumption of diesel and decrease in the consumption of heavy fuel oil so there's another thing to upset the markets.

If it gets cheap enough then the fuel oil will find its way into power stations in places that either have no emissions laws precluding it or which have flue gas scrubbers on the facilities (Japan being basically the only place to do so in a big way in the context of oil-fired power stations - but for them to want it that oil will need to undercut LNG and coal which then shifts the problem to those markets). Beyond that, well yeah it gets interesting with the market impact.


----------



## rederob

Smurf1976 said:


> Another looming one is the demand for ~3 million barrels per day of heavy fuel oil used in shipping which is required to be low sulfur from the beginning of 2020 which isn't far away now. It's certainly possible to remove the sulfur from heavy fuel oil but 3 millions barrels per day is a huge volume, it's ~40% of the entire heavy fuel oil market, and I very much doubt that refineries have desulfurisation capacity just sitting around doing nothing.



This was mandated by the IMO in 2016 so as to give all players time to transition.
The impact will be more expensive fuel oil for ships due to refining costs, plus additional compliance costs to implement new fuel and machinery systems.
I'm not see other displacement effects.


----------



## Smurf1976

rederob said:


> I'm not see other displacement effects.



That depends on whether or not refineries have invested the $, and it's rather a lot of $, before demand for heavy fuel oil substantially switches to a much lower sulfur requirement due to the rule change.

It's one of those things where we'll only know in hindsight but given the scale it seems at least plausible that there will be issues.


----------



## rederob

Smurf1976 said:


> That depends on whether or not refineries have invested the $, and it's rather a lot of $, before demand for heavy fuel oil substantially switches to a much lower sulfur requirement due to the rule change.
> It's one of those things where we'll only know in hindsight but given the scale it seems at least plausible that there will be issues.



I meant earlier that I did not see much potential for the gross volume of marine bunker fuel demand to change, and therefore was of the view that total oil demand would remain largely unchanged .  That is, I was not buying into a *substitution *argument because while the shipping industry would prefer LNG, it would require an infrastructure overhaul for the 70000 strong global fleet, which is a transitional magnitude exponentially greater than introducing low sulfur fuel oil.
My rationale is that whatever refined fuels are available to meet the LSFO requirement *will be paid for* by the shipping industry because they are simply going to pass the additional costs on their customers.  Further, I see the shipping industry outbidding market competitors for whatever product they need, so if there is going to be substitution it is more likely to be in other market segments.
If my rationale is borne out then it may mean that producers of high sulfur oils can no longer find the market they relied upon prior to 2020.
I don't have data on the amount of HFO presently consumed by the shipping industry, but removing it from the market is likely to lead to POO moving a lot higher than average prices to 2020.


----------



## rederob

Found a useful reference to help on the IMO mandate, writing:
"We expect that this lack of timely investment will cause a need, at least over the short term, for lower sulfur product blending in order to meet the new fuel standards. Thus, we expect the ~4MBD bunker fuel market will see 1.5-2 MBD lower High Sulfur Fuel Oil (HSFO) demand and be replaced with lower sulfur products (Diesel, Marine Gasoil, Straight Run Fuel Oil, and potentially Light Vacuum Gasoil). This required blending could generate YoY diesel demand growth near 1.2-1.5 MBD, as compared to a longer-term average of 300-350 KBD. 
In this scenario, the petroleum complex must push HSFO towards a waste product and replace it with higher cost diesel/low sulfur products. In simple terms, until increased significant investments are made, the industry will replace the lowest value refined product with a blended compliant fuel that is among the highest, at approximately $40-50/bbl higher. With limitations to a diesel or middle distillate yield shift, we expect this will act like higher oil demand as refiners increase runs to meet higher value product demand (we estimate 1.0-1.5 MBD increase in runs). 
Lastly, this is a large yet limited duration event, in our opinion, as wide product and crude spreads should encourage appropriate capital investment to close the gap over a 3-5 year time horizon."​Seems to confirm a resilient price structure for POO leading into 2020 and until the EV market squashes oil demand.


----------



## Ann

rederob said:


> LNG, it would require an infrastructure overhaul for the 70000 strong global fleet, which is a transitional magnitude exponentially greater than introducing low sulfur fuel oil.




I had no idea ships would consider LNP as a fuel. Are there any LNG fired cargo vessels around now or is it a future thing? Would LNG be lighter to carry, it would certainly be environmentally cleaner if there was a shipping accident or would it?


----------



## Ann

Oil Rig count down, will that mean a fall in the price, let's see?


----------



## Smurf1976

Ann said:


> I had no idea ships would consider LNP as a fuel. Are there any LNG fired cargo vessels around now or is it a future thing?



There's one on the Victoria - Tasmania freight run (a conventional freight ship powered by LNG) and LNG powered large catamarans have been built for overseas customers at the Incat shipyard in Hobart.

http://www.mastermariners.org.au/ne...road-launches-new-era-in-bass-strait-shipping

https://www.incat.com.au/world-first-incat-lng-ship/

My point about fuel substitution wasn't really about ships using LNG though, it's more short term and fundamental than that.

*New law limits sulfur in fuel oil used by ships from 2020.

*There seems to be a broad thinking, as per the link quoted by rederob, that in the short term at least refineries probably don't have the capacity to simply strip the sulfur out of heavy fuel oil. It can be done technically but it's very doubtful that $$$ worth of equipment to do so is just sitting there. If that's correct then some heavy fuel oil consumption will in practice need to be replaced with other things eg diesel.

*Which then raises the big question of who will be using the heavy fuel oil? It's still going to be produced and if ships aren't using it then who will?

That last bit is where the potential for disruption to other markets arises. Regardless of who ends up buying it, in practice they're going to burn it as fuel to run furnaces (eg for cement production) or boilers (most obviously power stations) instead of using some other fuel which would usually be coal or gas.

There's a lot of ifs and assumptions in all of this and I'm by no means 100% convinced it will happen but it does seem plausible and I note I'm certainly not the only one thinking this way. 

To the extent that it does occur then it's bullish for crude oil, even more bullish for diesel, but bearish for heavy fuel oil and whatever flow on effect that has to other fuels via substitution.


----------



## Sdajii

Ann said:


> Oil Rig count down, will that mean a fall in the price, let's see?
> 
> View attachment 91880




Why would less rigs mean a fall in price? Low prices mean less rigs mean higher prices.

I'm still calling $100 oil before the end of July (less than 6 months to go now), and I expect some of the reasons are becoming more obvious.


----------



## Ann

Sdajii said:


> Why would less rigs mean a fall in price? Low prices mean less rigs mean higher prices.
> 
> I'm still calling $100 oil before the end of July (less than 6 months to go now), and I expect some of the reasons are becoming more obvious.




What are those reasons Sdajii, let's have them lad? Nothing is becoming obvious to me. China is having a slow down, so less oil consumption, the US has huge inventories of WTIC, there is a stand off in Venezuela but that has not sent the price skyward, ships will move away from heavy crude so the OPEC countries will have less demand for their product.  The only thing I can see which will raise the POO is further extremes of cold temperatures in the Northern Hemisphere and oil will be required for heating.

The reason I am watching what will happen with the oil rig count was a chart which showed the price appeared to travel with the oil rig count on this chart.  I am yet to be convinced it is a lead indicator but will be interested to watch. I am always on the lookout for lead indicators in any area.


----------



## Parse

Ann noticed there was a past correlation that when the oil rig count was reported as down then often a drop in the oil price followed. So this is just to see if that case is going to continue.

My problem is that everywhere you look the number of oil rigs is different in the USA. Take a look at this article on oilprice.com True they agree the oil rig count is down but...
"The total number of active oil and gas drilling rigs fell by 14 rigs, according to the report, with the number of active oil rigs falling by 15 to reach 847 and the number of gas rigs increasing by 1 to reach 198."
That's certainly different figures to what Ann has found.


----------



## Ann

Parse said:


> Ann noticed there was a past correlation that when the oil rig count was reported as down then often a drop in the oil price followed. So this is just to see if that case is going to continue.
> 
> My problem is that everywhere you look the number of oil rigs is different in the USA. Take a look at this article on oilprice.com True they agree the oil rig count is down but...
> "The total number of active oil and gas drilling rigs fell by 14 rigs, according to the report, with the number of active oil rigs falling by 15 to reach 847 and the number of gas rigs increasing by 1 to reach 198."
> That's certainly different figures to what Ann has found.




Damn, I stuffed up, that was the chart for Consumer Confidence! I wonder if I put the Oil Rig count in Economics! 

Let's look at a rig count this time! Thank you very much Parse for calling this out!


----------



## Smurf1976

A chart showing petroleum use in Australia by refined products:

https://www.eia.gov/beta/internatio...Australia/images/petroleum_demand_product.png

There's considerable variation between countries however so that's really just for interest. For example Australia doesn't use much fuel oil due to our relative lack of domestic shipping and the dominance of coal and gas as industrial fuels whilst we use more aviation fuel, as a % of the total, than many other countries due to distances etc.

There's also considerable change over time. Eg 50 years ago diesel was a very minor thing lumped in with "other" whereas fuel oil was more significant, aviation fuel was far less than it is now and LPG was basically irrelevant. Those old enough may remember that many years ago trucks and especially buses used to run on petrol not diesel as they do now.

Back to crude oil itself, do those looking at it from a technical perspective have any further thoughts now that WTI is trading around $55?


----------



## Ann

This was sort of what I was seeing, high inventories and lower rig count.

*WTI Holds Losses After Inventory Builds Across The Board*

_WTI turned lower today as traders weighed output cuts from OPEC and its partners against expectations for rising U.S. crude inventories and a slowing US services economy.

"My guess would be that some of the refiners may cut back on some of their runs so crude supply ought to build a bit" said Stewart Glickman, an energy equity analyst at CFRA Research. "They’re probably limited in their ability to substitute away from Venezuelan heavy crude"
A small crude build last week (and product draws) surprised traders and tonight's API saw builds across all cohorts (with crude inventories rising more than expected).........._
*
*


----------



## Parse

Yes but, that was a minor drop and then overnight we have POO up again on reports of the OPEC cuts. I feel the API reports and Opec reports really only do minor changes to the POO. I don't think these last couple of days have anything to do with that rig count report.


----------



## Parse

Baker Hughes reported an increase in the number of active oil and gas rigs in the United States this week.

The total number of active oil and gas drilling rigs rose by 4 rigs, according to the report, with the number of active oil rigs increasing by 7 to reach 854 and the number of gas rigs decreasing by 3 to reach 195.


----------



## Smurf1976

WTI is now over $57 so getting close to the previously discussed $61 target.

Is that thinking in terms of a likely top around that point still current for those with those thoughts? Or have things changed?

I'm not holding any oil, just taking a keen interest at the moment. I do have a couple of oil related stocks however.


----------



## Ann

Smurf1976 said:


> WTI is now over $57 so getting close to the previously discussed $61 target.
> 
> Is that thinking in terms of a likely top around that point still current for those with those thoughts? Or have things changed?
> 
> I'm not holding any oil, just taking a keen interest at the moment. I do have a couple of oil related stocks however.




I can see a couple of resistance lines...one is coming from February 2016 (red) and the other is the 200 day SMA (simple moving average) around the $62 to $63 level. 
I am wondering if some of these oilers are hedged in a negative way like some of the goldies. Rederob knows about this sort of thing. He can read the ARs and find the hidden secrets.

Chart...


----------



## Ann

Then there is Brazil.....

*Next OPEC Headache Is Brazil's Burgeoning Crude Production*

_When the giant P-67 floating oil production vessel lit its flare tower earlier this month, it marked the start of a Brazilian supply boom that’s poised to challenge OPEC’s efforts to balance the global market.

The mammoth facility -- long and wide enough to fit an American football field -- is the first of four similar platforms to begin pumping crude this year, lifting Brazilian output by roughly 365,000 barrels a day, its largest annual increase in at least 20 years, International Energy Agency estimates show. A second platform, P-76, has also started production, according to a regulatory filing Wednesday.


The Brazilian surge, combined with more oil from shale fields from Texas to North Dakota, is set to create a headache for the Organization of the Petroleum Exporting Countries. In the worst-case scenario, it may force Saudi Arabia and Russia to roll their production cuts over into the second half of the year, testing the strength of the Riyadh-Moscow oil relationship.


“Brazil is on the verge of major supply growth,” said Francisco Blanch, head of commodities research at Bank of America Corp. in New York. “U.S. shale is not the only driver of increased volumes.”_

*More....*


----------



## Ann

Oil rig count down four this week.


----------



## CanOz

Ni Hao!


----------



## Parse

Ann said:


> Oil rig count down four this week.




So does this mean the oil price is going to keep going up 

An interesting point is with this chart overall showing a decrease in rigs, that they reckon oil production is at an all time high...


----------



## Parse

Argh.. should be oil price to go down. Sorry, that's the correlation we are tracking - lower rig count = lower oil price


----------



## Ann

Parse said:


> Argh.. should be oil price to go down. Sorry, that's the correlation we are tracking - lower rig count = lower oil price



That is the thought but it may not be correlated, it is just a point of interest to watch. To feel confident that it could be a lead indicator is going to take a lot to convince me...only early days yet.


----------



## Ann

*Crude Oil Plummets as President Trump Warns Against High Prices*

_Oil tumbled the most in four weeks after U.S. President Donald Trump tweeted that prices are too high and called on OPEC to “relax and take it easy.”

Futures in New York declined 3.1 percent on Monday. Trump’s war of words with the Organization of the Petroleum Exporting Countries punctuated big price swings last year, as he pressured the group to keep the taps open to help consumers. On Monday, he warned the world cannot take a price hike. More...


(_I wonder if he noticed the rig count was down as well and decided to make himself look powerful and controlling?)


----------



## Parse

I guess he wants $50 oil (WTI). Odd thing is, the USA is the country that has increased production the most in recent times. Since it's now an exporter you'd think the oil companies would be in his ear as they'd like higher prices for export.


----------



## Ann

Parse said:


> I guess he wants $50 oil (WTI). Odd thing is, the USA is the country that has increased production the most in recent times. Since it's now an exporter you'd think the oil companies would be in his ear as they'd like higher prices for export.




I think they aim for lower prices as high prices impact negatively on the whole economy. More money spent on expensive fuel, less to buy other goods, also higher costs for shipping, manufacturing and all of this puts an upward pressure on inflationary figures. There is a big economic negative for high fuel costs.


----------



## Smurf1976

Ann said:


> I think they aim for lower prices as high prices impact negatively on the whole economy.



Agreed - it's much simpler for someone like the Saudi's or Kuwait for whom oil is the dominant pillar of the economy so hihger prices are clearly of benefit.

Or somewhere like Japan that imports virtually all the oil they use so lower prices are always good.

For those with a foot in both camps such as the US it's more complex. The structure of the US industry with numerous private owners and the nature of US politics adds to the complexity versus, say, Saudi Aramco which is a government entity so very different in that regard. The President of the US won't in practice direct private companies in the way the Saudis and others with that structure can direct their national oil company to do certain things.


----------



## Ann

Smurf1976 said:


> Agreed - it's much simpler for someone like the Saudi's or Kuwait for whom oil is the dominant pillar of the economy so hihger prices are clearly of benefit.
> 
> Or somewhere like Japan that imports virtually all the oil they use so lower prices are always good.
> 
> For those with a foot in both camps such as the US it's more complex. The structure of the US industry with numerous private owners and the nature of US politics adds to the complexity versus, say, Saudi Aramco which is a government entity so very different in that regard. The President of the US won't in practice direct private companies in the way the Saudis and others with that structure can direct their national oil company to do certain things.




I read something a while back about US oil companies not being permitted to export their oil to other countries in the past. If this is so then I guess anything they get from export income is a bonus.

Here is an interesting pie-chart I found a week or two ago as to who are the main suppliers of crude oil the Europe in 2018.


----------



## Ann

This is interesting. There appears to be about 300 people worldwide with enough money to be able to control how the hedge funds invest. They have a green agenda and are demanding hedge funds do not support the oil industry. (This is not new news to me I just haven't posted anything about it yet). However this article offers a salient warning how pushing the green agenda could end up making big oil stronger with no competition who are answerable to no-one and destroy the smaller independent players who up to now have been answerable to their shareholders and give the big boys competition.

I can see this whole green political agenda ending in tears. We are likely to be held to ransom in a false peak oil scenario.  Although this will be longer term, I will no doubt be dead by the time it is serious but all the youngsters of school age and future generations will have to wear this.

*The $32 Trillion Push To Disrupt The Entire Oil Industry*
_
Global oil and gas companies are increasingly facing an uphill battle as global warming policies are taking their toll. Most analysts and market watchers are focusing on peak oil demand scenarios, but the reality could be much darker. International oil companies (IOCs) are likely to face a Black Swan scenario, which could end up being a boon for state-owned oil companies (NOCs).

Increased shareholder activism, combined with global warming policies of institutional investors and NGOs, are pushing IOCs in a corner, constricting financing options for oil companies. 

The first signs of a green revolution in the shareholder-investors universe are there, as investors have forced Dutch oil and gas major Shell to officially change its strategy, investing in more renewable energy and energy storage. The Dutch IOC wasn’t forced by to do so because of mismanagement or a lack of reserves but due to a well-orchestrated investor/stakeholder offensive. Several other peers, such as BP, ENI or Total, are expected to experience comparable situations.

And it has become clear that not only oil and gas giants are being targeted, after one of the world’s largest mining and commodity trading companies, Glencore, decided to put a limit on its thermal coal investment. The group stated that this was done after it was confronted by a largely unknown shareholder network called Climate Action 100+, which claims to be backed by more than 300 investors, managing assets of around $32 trillion. The group was founded a little over a year ago but has already forced oil majors’ boardrooms to take radical decisions. More..._


----------



## Knobby22

Good article. Your comment of 300 people sounds strange. I thought it was people pressure on pension funds hence it is the European  companies like Shell , BP and Total being affected.


----------



## Smurf1976

Ann said:


> I read something a while back about US oil companies not being permitted to export their oil to other countries in the past.



There was a ban on exporting crude oil in place for many decades. The ban didn't apply to refined products however, only unprocessed crude.

Something separate I'll throw into the mix is methanol and in particular its use as fuel in China.

The main use of methanol in recent decades (worldwide) has been as a petrochemical feedstock and virtually all production has been based on natural gas. Only fairly minor amounts of methanol have been used as fuel.

China however now seems to be using 600 - 700 thousand barrels of methanol fuels per day which is not insignificant in terms of the oil that replaces. Further, 85% of China's methanol production is reported to be based on coal rather than gas as is used practically everywhere else.

Without turning this into a chemistry lesson, the basic ways to use methanol as a fuel are blended with petrol for automotive use, as straight methanol to run engines, as additives to petrol, via a conversion process turning it into petrol as such, or in other forms such as dimethyl ether which is a workable alternative to LPG for the same uses.

So it could sort-of be said that China is "making" oil. Well, they're not making actual crude oil but they're making a direct substitute for a major end use of oil and doing so on a large scale which has thus far replaced around 5% of the oil China would otherwise be consuming.

Depending on how far they scale this up there maybe some oil market implications. Indeed there probably already are - if demand were ~650,000 barrels per day higher then price would probably be higher too.


----------



## Ann

Smurf1976 said:


> Without turning this into a chemistry lesson, the basic ways to use methanol as a fuel are blended with petrol for automotive use, as straight methanol to run engines, as additives to petrol, via a conversion process turning it into petrol as such, or in other forms such as dimethyl ether which is a workable alternative to LPG for the same uses.
> 
> So it could sort-of be said that China is "making" oil. Well, they're not making actual crude oil but they're making a direct substitute for a major end use of oil and doing so on a large scale which has thus far replaced around 5% of the oil China would otherwise be consuming.




Thanks Smurf, that is very interesting. It appears they are trying to wean themselves off oil. Probably not such a silly thing to do. The fact they use coal to produce the methanol is also very interesting. We have loads of the stuff, it may be a saving grace for us down the distant track.

_*Oil Market Bright Spot Gets Dimmed by Korea, China Supply Surge*

South Korea and China just served oil traders with a little reminder that one the market’s brighter trades -- diesel -- is far from a one-way bet.

Combined exports from the two nations soared to an all-time high of about 34 million barrels in January, according to government data. South Korea’s shipments surge was the most eye-catching, reaching a record 20 million barrels.

An emerging theme in the oil market over the past year has been how increasingly light crude production, particularly in the U.S., is resulting in a gasoline glut, while supplies of products like diesel have remained more constrained. China’s shipments surge was in part caused by weak domestic demand for transport fuel, according to JBC Energy GmbH, a Vienna-based researcher. More..._


----------



## Ann

Knobby22 said:


> Good article. Your comment of 300 people sounds strange. I thought it was people pressure on pension funds hence it is the European  companies like Shell , BP and Total being affected.



No it is not 'people' pressure, it is the few with massive green dollars intimidating the funds and banks and stirring up the people. I guess the people who are being intimidated know exactly who the 300 are worldwide but I haven't the time or the inclination to work through it all and find out who they all are. I have found many many names but not the entire 300. I haven't worked out who is behind all the tax free not-for-profit charities which are heading the push. I enjoy irony, so wouldn't it be a laugh if it turned out to be the big privately owned oilers trying to get rid of all the pesky little publicly owned companies by using gullible environmentalists to do their dirty work so they can control the POO without competition! 
This is just a tiny sample of things I have found about the kind of intimidation that is going on....

*Tell BlackRock's CEO: Stop Funding the Climate Crisis*
*
BlackRock plans environmentally conscious money market fund

Global Investors Driving Business Transition

Throwing stones at BlackRock’s fossil fuel investments
.....The Sunrise Project, Sierra Club, Friends of the Earth and Amazon Watch kicked off the BlackRock’s Big Problem campaign in New York yesterday to coincide with global leaders gathering for Climate Week in New York.....




*


----------



## Parse

Looks like the Donald's oil tweets are starting to be ignored. The price drop lasted about one day and the POO has now increased due to a surprise crude oil draw. Also of significance is the belief that the Saudi's are no longer listening. One train of thought is that after last year when Donald convinced the Saudi's to pump more to keep the price down and they agreed, the Saudi's were then a little put off when the sanctions against Iran didn't really happen as the Donald handed out all these waivers. Thus oil production went high and prices went low. Now, the Saudi's are still talking of possibly more cuts to come.


----------



## Smurf1976

Parse said:


> Looks like the Donald's oil tweets are starting to be ignored.



I'll avoid outright political comment in this thread but it's the "boy who cried wolf" syndrome at work.


----------



## Sdajii

I was surprised to see people react so much to Mr. Trump's tweet, but less surprised to see them forgetting it. 

Oil is set to skyrocket within the next 4 months.


----------



## rederob

Sdajii said:


> Oil is set to skyrocket within the next 4 months.



Ok, what will drive it to "*skyrocket*" highs?
The USA has more than enough oil while the Saudis and OPEC's others can crank out excess at will.
I think reaching into the low $60s is possible, but beyond that we need a global incident.
I see oil range-bound in the $50s for most of this year until something signals a break one way or the other.


----------



## Ann

Baker Hughes Oil Rig count shows a big drop today of ten rigs....


----------



## Ann

_*Oil Slump Catches Funds Off Guard in Longest Bull Run Since 2012*

Oil’s sudden slump seems to have caught optimists by surprise.

Hedge funds increased wagers on rising Brent crude prices for an eighth straight week, the longest streak since 2012, according to ICE Futures Europe data for the seven days through Feb. 26.


But the enthusiasm has proved to be misplaced, at least for now. The international benchmark posted a weekly loss for the first time since early February as President Donald Trump warned OPEC to “take it easy" in cutting supplies and U.S. economic data fell short of expectations. Brent lost 3.1 percent for the week, after rising 25 percent to start the year. More...._


----------



## Ann

Oil Rig count down 9 to 834



*Oil Sputters as Economic Woes Outweigh U.S. Drilling Slowdown*
_......“The bearish signs are more prevalent than any kind of bullish ones right now,” said William Rhind, chief executive officer at GraniteShares, a commodity-focused exchange traded fund. “You have a world that is slowing.”

Crude prices climbed more than 25 percent for the year through mid-February as the Organization of Petroleum Exporting Countries and its partners curbed output, and American sanctions on Iran and Venezuela tightened supplies.




But the rally has sputtered since then. This week alone, the European Central Bank cut economic forecasts, China reduced its goal for expansion and the OECD lowered its global projections. The U.S. also reported a surprisingly big jump in oil inventories.......

*Norway Gives $1 Trillion Wealth Fund Approval to Dump Some Oil Stocks*

Fund approved to sell $7.5 billion in smaller oil explorers
Big Oil dodged a bullet.

Norway took a partial step in divesting oil and gas stocks in its massive $1 trillion wealth fund, approving the sale of smaller exploration companies while sparing the biggest producers such as Royal Dutch Shell Plc and Exxon Mobil Corp.

After more than a year of deliberation, the government on Friday approved excluding 150 companies that are held by the fund and classified as exploration and production companies by FTSE Russell. These include Cairn Energy Plc, Anadarko Petroleum Corp., Chesapeake Energy Corp., Cnooc Ltd. and Tullow Oil Plc. The proposal would see the fund sell about $7.5 billion in stocks...........

_


----------



## Ann

*Shale Boom Drives U.S. to Take Least OPEC Crude in Three Decades*

.......OPEC supply cuts that started in 2017 were extended in 2018. The end result was Saudi Arabia cutting exports to the U.S. by 9 percent to about 870,000 barrels a day in 2018. OPEC as a whole sent 17 percent less than the year before, and the least since 1987, according to the latest U.S. government data.

Rapid production growth in the prolific Permian oil patch also sapped interest among American refiners for OPEC’s deliveries. With the help of light oil, U.S. crude production hit a record 12 million barrels a day and is expected to grow more into 2020, based on data from the Energy Information Administration.......more


----------



## Ann

*Oil's Big Reset: Energy Majors Learn to Thrive After Price Crash*

_When OPEC started an oil-price war in late 2014, most people believed U.S. shale was doomed. In reality, the giant oil majors suffered most -- burdened by expensive mega-projects, Chevron Corp., BP Plc and the rest struggled to adapt to the fall in energy prices.

Slowly, those companies figured out how to survive in the lower-for-longer price era. They cut costs and, more importantly, learned how to stop them from rising again. In an industry that favored tailored solutions for every project, companies started to talk about standardization. At closed-door sessions in Davos, Switzerland, Big Oil bosses didn’t waste time on self-important talk, but instead discussed how to share the design of anything from underwater valves to pumps.....More._


----------



## Ann

*World's biggest fund to dump Woodside, Santos and others*
_
The world's largest sovereign wealth fund will divest $8 billion worth of oil and gas holdings, which could include stakes in Australian companies such as Woodside Petroleum, Santos, Oil Search and Beach Energy.

Norway's $US1 trillion sovereign wealth fund announced on Friday evening it would seek to phase out holdings classified as exploration and production companies from the portfolio in order to "reduce the aggregate oil price risk in the Norwegian economy".
_
(The rest you will need an AFR subscription.)


----------



## Smurf1976

Ann said:


> _The world's largest sovereign wealth fund will divest $8 billion worth of oil and gas holdings, which could include stakes in Australian companies such as Woodside Petroleum, Santos, Oil Search and Beach Energy._



So logically we may see a disconnect going forward between the price of oil and the value of oil stocks. Eg the stocks go down due to this significant selling even if the oil price itself remains exactly the same or if the oil prices goes up then the stocks go up less than they otherwise would have. Etc.


----------



## Ann

Smurf1976 said:


> So logically we may see a disconnect going forward between the price of oil and the value of oil stocks. Eg the stocks go down due to this significant selling even if the oil price itself remains exactly the same or if the oil prices goes up then the stocks go up less than they otherwise would have. Etc.



It is hard to say Smurf, the fund won't be panic selling, they will sell off into the market over a long period of time and potentially selling these stocks up into higher price levels. They won't want to damage their fund with a fire sale. I would doubt we will see any major reaction. I think the problem will be longer term when the oilers want to finance new projects. Those are my thoughts and I may be dreadfully wrong.


----------



## Ann

This whole POO thing is a tug of war between price manipulators.
However, if the Saudis et al keep reducing their output and delivering less than was ordered, I feel two things might happen, one, the countries will fall into recession with reduced oil income or the customers for the oil will just go elsewhere for the product, or both. 

*Saudi Arabia to Extend Deep Oil Output Cuts Into April*

_Saudi Arabia will supply its clients with significantly less oil than they requested in April, extending deeper-than-agreed production cuts into a second month, a Saudi official familiar with the policy said.

The move is the latest sign Riyadh is determined to regain control of the oil market as prices remain well below the level that many OPEC members need to cover their government spending.  


Saudi Arabia plans to produce well below 10 million barrels a day in April, a similar pace to March, when it cut output by 500,000 barrels a day from February, the same official said, asking not to be named discussing internal deliberations. Last year, Riyadh agreed with OPEC and its partners, including Russia, to cap production at 10.31 million barrels a day. More...._


----------



## Ann

*The Climate Change Policy Disconnect - Will It Lead To An Energy Crisis?*


_Summary
Focus on curbing supply as opposed to demand for fossil fuels may lead to permanent under investment in new supply projects.

This creates the risk of a supply-shock and energy crisis in the next decade.

For investors, this will create an opportunity to generate superior returns as supply-side constraints lead to higher prices and profit margins for existing fossil fuel companies. More..._


----------



## Smurf1976

Ann said:


> *The Climate Change Policy Disconnect - Will It Lead To An Energy Crisis?*



I'll add my observation that this is true but it's actually a broader movement.

That is, it's not simply climate change versus oil supply but it's a broader set of environmental concerns versus energy supply in general.

Coal, oil, gas and in many places electricity are all in the same mix really. Just about everyone wants to consume but there's quite a bit of opposition to production.

I'll leave the politics out of it and just make that observation. Eg There's presently a debate about offshore oil and gas drilling in South Australia. What nobody mentions is that the state's production of both fuels is below the rate of consumption and is declining. Quite a fuss about wanting to stop drilling but not a word said about getting petrol guzzlers off the road etc.

I'll keep out of the politics and simply make that observation. Everyone wants to consume, few are willing to do otherwise, but there's considerable opposition to production. That's a pretty sure fire way to get a supply crunch and price shock.


----------



## Ann

*Trading Surge in Oil Options Creates a Whirl of Speculation*
_
Global oil options markets this week were the busiest since November after a flurry of buying from what appeared to be a large producer protecting against a drop in prices.


Trading on Monday was dominated by $60 puts -- which give the owner the right to sell oil contracts for the rest of 2019, with a total of 16 million barrels changing hands in June, August and September, ICE Futures Europe exchange data show. More than 8 million barrels of similar contracts traded in the over-the-counter market, said people familiar with the matter.
More..._


----------



## Ann

Just one oil rig down this week from 834 to 833. This may be a reason for the falling rig count....

*U.S. Oil Explorers Scale Back Drilling as Shale Weakness Emerges*

_Oil explorers settled into the deepest drilling hibernation in more than a year as the U.S. shale patch struggles to maintain its explosive growth.

Working oil rigs fell by one this week to 833, according to data released Friday by oilfield-services provider Baker Hughes. The four-week decline is the longest since May 2016.


The U.S. government cut its oil production forecast for the first time in six months as drillers scale back in smaller shale plays and the U.S. Gulf of Mexico. While crude output is still expected to reach record levels, the Energy Information Administration trimmed its 2019 forecast to 12.3 million barrels a day -- 110,000 barrels-a-day lower than its previous forecast. More..

_
One would imagine this may see a reason for a bit of a hike in the POO.....

*Fires Hit Exxon, Phillips 66 Refineries in Texas, California*
_
The third-biggest refinery in the U.S. suffered a fire Saturday near Houston, hours after a Los Angeles plant was partially shut by a blaze, potentially boosting gasoline prices from Texas to California.

Exxon Mobil Corp.’s Baytown, Texas, refinery was fighting a furnace fire at a gasoline hydrofiner, which removes sulfur from fuel to meet clear-air regulations, people familiar with the matter said. Phillips 66 shut a crude unit Friday night at its Carson plant after a fire.


The fires, which come at a time when gasoline inventories are in decline with a number of refineries closed for seasonal maintenance, threaten to further increase gasoline pump prices that have already risen 31 cents a gallon since early January to edge above year-ago levels. More..._


----------



## Smurf1976

To me this signals higher prices ahead if oil companies aren't keen to drill at the current price.

It might take a while to play out but less drilling ultimately = less production and from there it's just supply and demand economics.

That doesn't preclude the price doing literally anything in the short term though. Could well go down before it goes up etc.


----------



## Ann

Oil traders seem to be going to great lengths to work out the POO going by this article, look at the article site for a pictorial example....

*Oil Traders Are Now Watching Workers’ Phones to Spot Problems at Refineries*

_In the $40 trillion global oil-trading market, the smallest clue can be worth millions.

Take the number of people working at a refinery: Outside contractors are brought in for routine maintenance or to handle accidents that could limit demand for crude oil or curb the supply of fuels. While oil companies rarely reveal such sensitive information, traders can gain insight into refinery operations by tracking the number of mobile phones at the plant, a proxy for the arrival of support crews.


It’s the latest example of how traders, rival companies and analysts are turning to new sources of information to get an edge in markets where trading is increasingly driven by algorithms that crunch vast troves of data. By using so-called geolocation information that can originate from mobile apps, data scientists can track human behavior, from shopping habits to hotel occupancy rates.


“For oil traders, knowing where the workers are and how many there are will absolutely help traders know how much output the refinery is producing,” Claire Curry, BloombergNEF’s head of digital industry, said in an email. “Unconventional forms of data -- like where people are in a plant, or the levels of oil in tankers -- will become available not to just large companies who collect the data, but to the cleverest data scientist with the best algorithms.”  More..._


----------



## Ann

Oil Rig count down nine from 833 to 824

*Oil refining sector to recover but could be facing last upcycle*


_*Angela Macdonald-Smith*Senior Resources Writer
Mar 25, 2019 — 12.00am

Oil refining margins will recover from their current slump and the sector will then enjoy an extended rosy patch, but it could be its last as improving fuel efficiency and the aggressive shift to electric vehicles in the huge Chinese market take their toll.

That's the view of Fereidun Fesharaki, founder and chairman of respected consultancy FGE, who recently explained his outlook for the sector to the Caltex board._

(This is as far as the article goes without a subscription)


----------



## Ann

*A Flood of U.S. Oil Exports Is Coming*

_American petroleum exports to overtake Russia within 5 years.

Oil trader Paul Vega is at the vanguard of shale’s next revolution.

Driving his pick-up truck through the heartland of the Permian basin -- the vast tract of west Texas scrub where one of history’s greatest oil booms means miles-long traffic jams -- Vega says there’s more crude being pumped than America’s refineries can absorb. Today, the primary task of trading houses like his is getting the stuff overseas.


"We buy it, we truck it, we put it on a pipeline, and there it goes to the port -- and from there to the world," said Vega, who heads the office of global commodities trader Trafigura Group in Midland, the region’s oil industry hub.


What started as an American phenomenon is now being felt around the world as U.S. oil exports surge to levels unthinkable only a few years ago. The flow of crude will keep growing over the next few years with huge consequences for the oil industry, global politics and even whole economies. OPEC, for example, will face challenges keeping oil prices high, while Washington has a new, and potent, diplomatic weapon.

American oil exports stepped up a gear last year, jumping more than 70 percent to just over 2 million barrels a day, according to government data. Over the past four weeks, U.S. oil exports have averaged more than 3 million barrels a day --- more than what Middle East petro-state Kuwait sells. More..._


----------



## Smurf1976

I see a divergence!

USA rig count continues to trend down, dropping a few each week.

USA oil production continues to go up.

You need the rigs to drill for the oil in order to be able to extract and sell it so at some point at least one of those trends has to come to an end and I'd be surprised if some movement in price wasn't associated with that either as leading or lagging thing depending on which way it goes.


----------



## Ann

Oil Rig count down eight from 824 to 816


----------



## Parse

And the oil production down for the first time since mid 2018...

"January oil production for the United States averaged 11.871 million bpd for January—down from 11.961 million bpd in the month prior."

Seems to take them a while to get this data, guess the guy with the measuring cup is taking a little while to count it all up.


----------



## Smurf1976

Parse said:


> And the oil production down for the first time since mid 2018




If you keep having fewer and fewer rigs working then at some point you produce less oil.

There a lot of time lag in that due to the time the cycle of exploration > discovery > drilling > completion > production ramp up takes to play out but if you're doing less drilling the ultimately it's going to matter.

Which brings me to the point that at ~$60 per barrel it would seem that the price is too low to encourage a sufficient level of drilling to maintain production rates. That being so, at some point either consumption goes down or the price goes up.


----------



## Sdajii

Smurf1976 said:


> If you keep having fewer and fewer rigs working then at some point you produce less oil.
> 
> There a lot of time lag in that due to the time the cycle of exploration > discovery > drilling > completion > production ramp up takes to play out but if you're doing less drilling the ultimately it's going to matter.
> 
> Which brings me to the point that at ~$60 per barrel it would seem that the price is too low to encourage a sufficient level of drilling to maintain production rates. That being so, at some point either consumption goes down or the price goes up.




Yep yep and yep.

The price of oil is already going up, strong uptrend over the last three months. There are big lags in cause and effect, as you say. The consumption of oil is not as elastic as the production of oil, this is true both in absolute amount and the time it takes to change.

This is shaping up for quite the rally. Mid year the POO should be much higher.


----------



## Sdajii

Anyone watching the POO over the last few hours? It keeps smacking exactly $60.50. Really looks like it wants to break out.


----------



## Ann

Looking at a five year chart, we can see the wedge the POO failed, the original support line (red line) was failed and now I am wondering if this will become the rising resistance line as a barrier for further rises beyond that red line.


----------



## Sdajii

Ann said:


> Looking at a five year chart, we can see the wedge the POO failed, the original support line (red line) was failed and now I am wondering if this will become the rising resistance line as a barrier for further rises beyond that red line.
> 
> View attachment 93475




I think you focus too much on long term technicals when it comes to oil. If you look hard enough at any data set, including literally randomly generated ones, you can find all sorts of patterns. When it comes to companies which are difficult to value, yep, technicals are very relevant and can be the main driving force over any timeframe, but when it comes to oil, the fundamentals area really what drives the big picture. Technicals will come into it, but mostly over shorter term timeframes. Ultimately, there are plenty of players willing to sell whatever they can at whatever price they can get. The market is obviously manipulated heavily, but that's the fundamentals, not the technicals. Those players manipulating the price may engineer the price to follow technical patterns giving the illusion that technicals are the actual driver, but ultimately, for a commodity like oil it doesn't make sense. If there's an oil shortage, people aren't just going to sell oil cheaply because the technicals tell them to. That's not why prices go down unless you're looking at short term and relatively small movements.


----------



## Ann

Sdajii said:


> I think you focus too much on long term technicals when it comes to oil. If you look hard enough at any data set, including literally randomly generated ones, you can find all sorts of patterns. When it comes to companies which are difficult to value, yep, technicals are very relevant and can be the main driving force over any timeframe, but when it comes to oil, the fundamentals area really what drives the big picture. Technicals will come into it, but mostly over shorter term timeframes. Ultimately, there are plenty of players willing to sell whatever they can at whatever price they can get. The market is obviously manipulated heavily, but that's the fundamentals, not the technicals. Those players manipulating the price may engineer the price to follow technical patterns giving the illusion that technicals are the actual driver, but ultimately, for a commodity like oil it doesn't make sense. If there's an oil shortage, people aren't just going to sell oil cheaply because the technicals tell them to. That's not why prices go down unless you're looking at short term and relatively small movements.




I have been charting and calling oil for many years using TA, mostly right calls as well. My old computer died with my older charts but I found one of my earlier calls for POO from May 2013. It was a swing trade calculation and was meant to be a very, very long term call beyond this time and still into the future.




I had to adjust the equilateral triangle slightly as the price went sideways for a bit but essentially the lines are still pretty close to what was drawn and it did fall as I called in 2013. I am not new to this Sdajii! 

Same chart with more lines a few years later...


----------



## Sdajii

I reckon you were just lucky and your current red line will be crossed. Let's watch and see


----------



## Ann

Sdajii said:


> I reckon you were just lucky and your current red line will be crossed. Let's watch and see




Possibly I was lucky, and then I called a bearish wedge pattern in October 2018 and was lucky again....




and then I got lucky when I called the support for a falling POO at $42




and then I got really lucky when it bounced off the $42 support line...




I guess I am just a really lucky chartist! Having said that, it may well push on through the red line and head onto the long term falling overhead resistance line and challenge it for the fifth time. Sdajii a chart is a chart is a chart, doesn't matter what you are charting you will get patterns and if your are a 'lucky' chartist it may give a small indication of a potential outcome.


----------



## Sdajii

Heh, you've accused me being the one 'desperate to be right' and then *after* you say that pull up a prediction you made 6 years ago! When I predict something in the moment and it *later* turns out to be correct you throw a tantrum and try to find an excuse to say it's wrong!

I can cherry pick stuff I've got right over the last 10 years too if you'd like me to play the absurd game. Well, no, I'm not going to bother, but you get the concept. Well, maybe.

So where will oil be in 3 months, 6 and 12 months, Miss Genius charter who knows charts control future commodity prices rather than fundamentals?


----------



## Ann

Sdajii said:


> Heh, you've accused me being the one 'desperate to be right' and then *after* you say that pull up a prediction you made 6 years ago! When I predict something in the moment and it *later* turns out to be correct you throw a tantrum and try to find an excuse to say it's wrong!





I have never accused you of being 'desperate to be right' Sdajii. The only admonishment I have given to you is when you have plucked a figure from the ether and then not offered any substantiation for your  call. All I got was 'it is too hard to explain'.  Yogi-in-Oz was the first one to call a rise in oil back in around 2003-4 as I remember it. He did it with some astrological stuff I couldn't quite fathom but he gave his reasons. It was very weird stuff but he did substantiate his calls and he was right.
There was no tantrum thrown on my part, you were implying charts could be done for things other than oil because oil is a special case, no it isn't. It has an EOD price which can be tracked on a chart. I brought up my old charts up as a proof a result could be called from a POO chart the same as any other chart. It actually doesn't matter if I had called the price wrong back then, it just meant I would have failed to read the chart correctly. The POO was still moving in the same pattern as any other kind of chart.



Sdajii said:


> I can cherry pick stuff I've got right over the last 10 years too if you'd like me to play the absurd game. Well, no, I'm not going to bother, but you get the concept. Well, maybe.




All I asked from you was just a little substantiation for your call. I was simply showing you how I substantiated what I was saying. If you want, I am more than happy to trot out charts where I made a wrong call. That has nothing to do with the efficiency of a chart, it means I simply I missed something when I read it. I was illustrating one can call an oil chart as well (or badly) as any other chart and oil is not a special case.



Sdajii said:


> So where will oil be in 3 months, 6 and 12 months, Miss Genius charter who knows charts control future commodity prices rather than fundamentals?




I am not a genius, I am just a practiced chartist. Where in any post did I say charts 'controlled' commodity prices? Charts are a reflection of where the price of a commodity or stock (or anything) has traveled. Events control prices. It just seems at times, events and chart shapes coincide.  However, there are occasions when I have mused that there is a mass of money going in and out of stocks and commodities using chart shapes by people who may not speak English and therefore won't be able to pick up on any of the Fundamantals. Maybe it's little old non-English speaking grannies who have lots of money and plenty of time to play in the markets using charts. Charts are a universal language, even little old ladies can use them if they practice hard enough!  

The way I call a chart is just to suggest which way I think it will go on the short term related to the various support and resistance lines I have drawn on the chart. Currently the speed at which the price is rushing up to the red line makes me think it will exhaust itself before it manages to push through the red rising overhead, time will tell, it might break through. I am never adamant about any outcome, I know better.


----------



## Sdajii

Wow, you give credit to someone using astrology to predict oil prices. That says a lot.

Okay, I confess, by pet frog told me. It was his dying message to me. He said a magical clairvoyant mushroom conveyed the message to him via a high tech fungus-to-brain linkup provided by a particularly gifted sasquatch who was experimenting such such technology.


----------



## Ann

Sdajii said:


> Wow, you give credit to someone using astrology to predict oil prices. That says a lot.
> 
> Okay, I confess, by pet frog told me. It was his dying message to me. He said a magical clairvoyant mushroom conveyed the message to him via a high tech fungus-to-brain linkup provided by a particularly gifted sasquatch who was experimenting such such technology.




Rightio, that will give everyone a basis on which to judge your information, see it wasn't so hard was it Sdajii?


----------



## Ann

Sdajii said:


> Wow, you give credit to someone using astrology to predict oil prices. That says a lot.




Found Yogi-in-Oz on another forum back in 2004 this is Yogi speaking about his trading style. He copped **** everywhere, he was a Gann Trader but he used to get his calls right.

_Hi folks, 

There's been a lot of banter about the "law of vibration", 
in relation to Gann's work, in recent times. 

To find out more about this line of thinking, here's some 
sources for light reading on the subject ..... 

FWIW ..... in TTTTA, Gann told us where to find a bunch of 
information, about the laws of vibration, periodicity, sex 
and a whole lot more. 

..... he directed us to the works of Sepharial and a 
quick examination of his booklist reveals a mountain of 
other information, referring to these laws. 

For example: 

"The science of numerology, through the law of vibration" 
..... John C Laurie 

"Sound and Number: Law of Destiny and Design" 
Mabel L Ahmad 

"Thought Vibration" ..... William Walker Atkinson 

"Vibration: The Law of Life" ..... W H Williams 

Not forgetting Sepharial's own works, especially: 

"The Kabala of Numbers I and II" and 

"The Science of Foreknowledge" 

----- 

Many of the modern "experts" have jumped on the 
Gann band-wagon, using only one aspect of 
his work, as a selling point ..... such as 
the law of vibration. 

..... 

It can now be proven, that such laws have 
their roots in the works of Pythagoras and 
later texts, like the bible, Oahspe, TTTTA 
and more ..... 

..... common to all of these is the use of 
the astrological bible codes, which exist 
in all versions of these texts, English 
versions included. 

hope this helps you some 

yogi _


----------



## ducati916

Ann said:


> Looking at a five year chart, we can see the wedge the POO failed, the original support line (red line) was failed and now I am wondering if this will become the rising resistance line as a barrier for further rises beyond that red line.
> 
> View attachment 93475




So essentially what you are saying is that as the red line is a rising line, the POO will continue to rise, but just not above [break through] that red line?

So it will either (a) grind higher with the red line over time; or (b) it will rise, pullback, and re-rise to the red line but (c) never break through.

On that analysis: you would be a buyer of oil?

If none of the above, what is the relevance of the red line?

Of more interest [long term] would be the $80'ish resistance/support line [horizontal] of a chart based analysis?

jog on
duc


----------



## Parse

I was going to ask a similar question. The red line is a constantly rising metric which I assume means the POO will vary up and down but slowly increase over the next few years as the red line indicates a higher price. Well thats how I read it.

I assume at some point some other marker might show up so a chartist can see that as a variance to some other change, like a declinig price etc.


----------



## Ann

G'day duc



ducati916 said:


> So essentially what you are saying is that as the red line is a rising line, the POO will continue to rise, but just not above [break through] that red line?




The rising red line was a failed support line from the base of the rising wedge. This is now a resistance line, a barrier which it needs to push back up through. It may do it easily, it may bash at it a couple of times and break through, it may try and fall back. I see the run up to the red line is very rapid and wonder if it has the stamina to break through.



ducati916 said:


> So it will either (a) grind higher with the red line over time; or (b) it will rise, pullback, and re-rise to the red line but (c) never break through.



...or it will just break through the red line and then the red line will resume being a support line for further upward moves. I see the red line as either a confirmation of weakness or a signal of higher levels with an effort to reach and overcome the long term falling resistance line which it failed when it fell from the rising wedge.



ducati916 said:


> On that analysis: you would be a buyer of oil?




Once the red line is overcome and proven to be a support line again with either a retrace touch or a good clear jump up from that red resistance/support level, yes I would be a cautious buyer (if I was a buyer which I am not, other than timing my petrol purchases). If there is no break through of that red line then I would not buy but short (which I don't do either).



ducati916 said:


> If none of the above, what is the relevance of the red line?




As I said early but just to reiterate the relevance of the red line is that it was once a tested support line which was failed and now it is a resistance line which needs to be overcome. If it is overcome, it should offer a degree of confidence to trade into higher prices. However the risk of a bull trap should never be forgotten.



ducati916 said:


> Of more interest [long term] would be the $80'ish resistance/support line [horizontal] of a chart based analysis?



Once the red line is overcome then yes I can see a horizontal level of around $77 could be another resistance area. This level has had a few long term tests of support and resistance. Also I measured it with a Fibonacci retracement and that level has been confirmed as the 38.2% level as well. However the POO is more likely to hit the long term falling resistance line before the horizontal $77 resistance. This will add an extra risk to watch for if it does break above the falling resistance, only to be knocked on the head with the horizontal $77. Edge of seat stuff! 

I will put up a chart showing the long term $77 support/resistance line in purple. I won't keep the Fibonacci retracement in place it becomes too messy unless someone wants to see where I took my measurements of course, then I will include them in a chart.


----------



## Ann

*Oil hits 2019 high as supply squeeze looms; Brent nears $70 per barrel*

_NEW YORK (Reuters) - Oil prices on Tuesday hit their highest level so far in 2019, with Brent crude approaching $70 a barrel, on the prospect that more sanctions against Iran and further Venezuelan disruptions could deepen an OPEC-led supply cut.

Brent futures reached a session peak at $69.52 a barrel, the highest since Nov. 13. The global benchmark rose 36 cents, or 0.52 percent, to settle at $69.37 a barrel. 

U.S. West Texas Intermediate (WTI) crude rose 99 cents, or 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since Nov. 7. 

The United States is considering more sanctions against Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), an official said. 

Three of the eight countries to which Washington granted waivers to import Iranian oil have now cut their shipments from Iran to zero, a U.S. special representative said on Tuesday. 

Meanwhile, a crude terminal in Venezuela, also under U.S. sanctions, halted operations again due to power problems. 

“The latest driver appears to be the idea that tightened supplies are going to create a stronger fundamental picture,” said Gene McGillian, director of market research at Tradition Energy. “The market keeps pushing higher.” More..._


----------



## Ann

Parse said:


> I was going to ask a similar question. The red line is a constantly rising metric which I assume means the POO will vary up and down but slowly increase over the next few years as the red line indicates a higher price. Well thats how I read it.
> 
> I assume at some point some other marker might show up so a chartist can see that as a variance to some other change, like a declinig price etc.



Sorry Parse, I missed your post this morning, did I answer all your questions when I replied to duc?


----------



## Smurf1976

Ann said:


> I will put up a chart showing the long term $77 support/resistance line in purple.



There would seem to be rather a lot of lines around $77 do if it did top out at that point then we might never know which line that could be attributed to?

On the other hand, if the price passes through that level then there's not too many more obstacles in the way above other than the previous actual highs and lows at nominal value?


----------



## ducati916

Ann said:


> G'day duc
> 
> 
> 
> 
> Once the red line is overcome then yes I can see a horizontal level of around $77 could be another resistance area. This level has had a few long term tests of support and resistance. Also I measured it with a Fibonacci retracement and that level has been confirmed as the 38.2% level as well. However the POO is more likely to hit the long term falling resistance line before the horizontal $77 resistance. This will add an extra risk to watch for if it does break above the falling resistance, only to be knocked on the head with the horizontal $77. Edge of seat stuff!
> 
> I will put up a chart showing the long term $77 support/resistance line in purple. I won't keep the Fibonacci retracement in place it becomes too messy unless someone wants to see where I took my measurements of course, then I will include them in a chart.
> 
> View attachment 93512




I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.

Anyway, the COT chart: which looks to indicate [currently] a weakening in commercial support for higher prices.

jog on
duc


----------



## Ann

Smurf1976 said:


> There would seem to be rather a lot of lines around $77 do if it did top out at that point then we might never know which line that could be attributed to?




From the perspective as if the POO was going to challenge that convergence of lines imminently but that isn't the case, POO is traveling at its own pace as are the falling and rising lines. When the price gets to one of those lines they will be far enough away from the other lines to be able to tell which one has had an effect on the POO, if in fact there is an effect.  


Smurf1976 said:


> On the other hand, if the price passes through that level then there's not too many more obstacles in the way above other than the previous actual highs and lows at nominal value?




If it gets past this immediate red line then the next challenge will be the long term falling overhead resistance line and then the $77 line. After that there will be a number of horizontal resistance lines it will need to overcome. I don't want to start drawing more lines on the chart yet for fear it will just look like a 'cat's cradle'.



ducati916 said:


> I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.



The red line wasn't always a red line, it was a support line for two touches. The touches (or low points of a retrace) formed the lower rising support for a rising wedge pattern which is a bearish pattern and which did result in a  fall out of the bearish rising wedge. The red line is not a random line but made up part of a pattern which resolved in the expected bearish outcome. The upper line of what became the rising wedge was drawn as a bullish symmetrical triangle, then it became a bullish Ascending Triangle at an earlier time before becoming a bearish Rising Wedge. The lower red support stayed in place through all the upper line incarnations. I hope this makes sense? I will draw a chart on the weekly POO and show how it evolved into various patterns over time and each pattern resolved as I would have expected. I wasn't posting on the forum at that time I was just watching it myself and readjusting the upper resistance line.
I have drawn a chart using the weekly POO to illustrate why the red line was a constant and important support line as it remained in place over a number of proven chart patterns.

Looking at the POO from the long term Big Picture perspective, I can see a Bearish Descending Triangle forming.



ducati916 said:


> Anyway, the COT chart: which looks to indicate [currently] a weakening in commercial support for higher prices.




That is a really interesting COT chart with the bars showing the + and - 
The Net Positions still appear to be broadening which I see as bullish. Where did you find the chart?


----------



## Ann

*Oil prices edge lower after U.S. inventories build*

_TOKYO (Reuters) - Oil prices dipped on Thursday, with Brent edging away from the psychologically important $70 level after easing in the previous session on data showing a surprise build in U.S. inventories. 

Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70. 

U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November. 

Crude oil inventories in the United States rose by 7.2 million barrels last week, as net imports climbed, the Energy Information Administration said on Wednesday. Analysts had forecast a decrease of 425,000 barrels. [EIA/S] More...._


----------



## Ann

ducati916 said:


> I would have thought that it made more sense from a charting perspective to place the red line below the low of $42 [or whatever] and then extend it, forming, eventually a triangle. The rising red line, drawn where it is seems more confusing than useful.




I should have mentioned I will move that red line eventually once it is out of play as a potential resistance/support line. Currently it is still in play, so I will leave in place. Once it is no longer a potential line of support or resistance I will move it down under the recent retrace to around $42 as you mentioned. At that stage I will also remove the upper resistance line from the ageing rising wedge.


----------



## Ann

This is a chart for Brent Crude. It is heading toward a long term overhead horizontal resistance line just slightly above $70. That same resistance line is sitting right on the Fibonacci retracement line of 38.2%.


----------



## ducati916

Ann said:


> Looking at the POO from the long term Big Picture perspective, I can see a Bearish Descending Triangle forming.
> 
> 
> 
> That is a really interesting COT chart with the bars showing the + and -
> The Net Positions still appear to be broadening which I see as bullish. Where did you find the chart?
> 
> 
> View attachment 93539




In the long term I would guess oil will average somewhere in the mid 60's. This guess would be based on the fact that the US shale oil will produce enough to keep the price down below the spike levels that we have seen viz $100+ and that the economies that are reliant upon oil revenues [currently] will continue to sell oil at those sorts of prices [Arabs, Russians and South Americans]. Which accounts for the supply side of the equation.

Re. demand, I am assuming [possibly incorrectly] that demand will continue to grow, but at a much slower rate than previously. The growth will come from India and Africa potentially as they increase their per capita wealth.

On that basis, the technicals that you refer to are probably accurate.

The COT charts are found here: http://commitmentsoftraders.org/cot-charts/


jog on
duc


----------



## Ann

*Baker Hughes Crude Oil Rigs Count .....*


increased to 831 from 816 up 15 this week.


----------



## Ann

*Trump tries fresh approach with long-delayed Keystone XL pipeline*

_WASHINGTON (Reuters) - U.S. President Donald Trump on Friday signed a new permission for TransCanada Corp to build the long-delayed Keystone pipeline for imports of Canadian oil, replacing his previous permits in a fresh attempt to get around the blocking of the $8 billion project by a court in Montana.

In granting the permission in an executive order, Trump revoked a previous permit for the pipeline issued in March 2017 and an executive order approving the project he issued two days after taking office in January that year. More...
_
In this article it mentions the Sierra Club. This is a very old and established environmental group who get involved in politics. They endorsed Hillary Clinton in the 2016 election.

Hillary Clinton is a supporter of Nuclear Power Plants.
_Clinton wants to renew permits for existing nuclear power plants that are safe to operate and increase public investment in advanced nuclear power._

The Sierra Club also supporters of Nuclear Power Plants...

_Although the Club had played the leading role blocking PG&E's nuclear power plant proposed for Bodega Bay, California in the early 1960s, that case had been built around the local environmental impact and earthquake danger from the nearby San Andreas fault, not from opposition to nuclear power itself. In exchange for moving the new proposed site from the environmentally sensitive Nipomo Dunes to Diablo Canyon, the board of directors voted to support PG&E's plan for the power plant. A membership referendum in 1967 upheld the board's decision.  Link...
_


----------



## MARKETWINNER

https://oilprice.com/Energy/Energy-General/Sharp-Rise-In-Rig-Count-Pressures-Oil-Prices.html
Sharp Rise In Rig Count Pressures Oil Prices


----------



## ducati916

_*Potential turmoil in Libya threatens supply.*_ The head of the Libyan National Army, Khalifa Haftar, ordered his troops to march on Tripoli on Thursday, dramatically escalating the risk of turmoil in the country. If oil production in the country is disrupted, it would “noticeably increase the pressure on Saudi Arabia to open up the oil tap again, as it did in the autumn”, Commerzbank said in a note.

Possibly putting upward pressure on price.

jog on
duc


----------



## Ann

...and just as the chart resistance levels for both the Brent and WTI get to their resistance lines, in comes the Russians to tell us they won't be doing the cuts they said they would, in fact they may raise output. I wonder if the POO will begin to fall away from resistance now? My bet, yes! Let's see.

*Russia signals OPEC and allies could raise oil output from June*

_MOSCOW/LONDON (Reuters) - One of the key Russian officials to foster a supply pact with OPEC, Kirill Dmitriev, signaled on Monday that Russia wanted to raise oil output when it meets with OPEC in June because of improving market conditions and falling stockpiles.....

........
“It is quite possible that given the improving market situation and falling stocks, (OPEC and its allies) could decide in June this year to abandon supply cuts and subsequently increase output,” Dmitriev told a conference in Moscow. 

“This decision will not mean the end of the deal, but a confirmation that participants continue their coordinating efforts when it is important not only to cut but to increase output depending on market conditions,” he told the conference. 

Speaking to reporters on Monday evening, Dmitriev added that it could be appropriate for Russia to increase output by 228,000 barrels per day, by which it had previously cut production, “and maybe even further”. More.._


----------



## Ann

Another little bit of confirmation of POO getting flushed! 

*American Drivers Set to Pay Less at the Pump This Summer*

American drivers will probably pay less to fill up this summer as oil prices are forecast to be lower than last year.

Retail gasoline prices are expected to average $2.76 a gallon, down from $2.85 last year, according to the Energy Information Administration. Brent crude, the world benchmark, is seen averaging $7 a barrel lower this season than last. More...


----------



## MARKETWINNER

https://www.spglobal.com/platts/en/...es-rangebound-amid-gloomy-imf-growth-forecast
Crude oil futures rangebound amid gloomy IMF growth forecast


----------



## Ann

MARKETWINNER said:


> https://www.spglobal.com/platts/en/...es-rangebound-amid-gloomy-imf-growth-forecast
> Crude oil futures rangebound amid gloomy IMF growth forecast



It will be interesting now that Robert Mueller’s investigation is over Putin and Trump can resume international relations again. One wonders if that will affect the POO. It is well known Trump wants oil cheaper.

*Putin Hopes For Fresh Start With Trump After "Notorious" Mueller Commission Found Nothing*


----------



## MARKETWINNER

Ann said:


> It will be interesting now that Robert Mueller’s investigation is over Putin and Trump can resume international relations again. One wonders if that will affect the POO. It is well known Trump wants oil cheaper.
> 
> *Putin Hopes For Fresh Start With Trump After "Notorious" Mueller Commission Found Nothing*



Hi Ann: It is going to be very interesting. I like to see everybody get together and bring down oil prices and then bring peace and sustainable development.

The EIA forecast that Brent crude oil spot prices would average 65 U.S. dollars per barrel in 2019 and 62 dollars per barrel in 2020, compared with an average of 71 dollars per barrel in 2018. If that is so WTI crude would average 57 dollars per barrel in the first half of 2019 and 53 dollars per barrel in the second half of 2019 and in 2020.


----------



## MARKETWINNER

https://oilprice.com/Latest-Energy-...nt-Could-Trigger-Free-Fall-In-Oil-Demand.html
Paris Agreement Could Trigger Free Fall In Oil Demand

https://www.aa.com.tr/en/americas/oil-prices-fall-with-rising-us-stocks-record-output/1448817
Oil prices fall with rising US stocks, record output


----------



## Ann

Possibly more reason for further falls? 


*Proponents of Anti-OPEC Bill Say Risk of Retaliation Is Exaggerated*
A report commissioned by proponents of U.S. anti-OPEC legislation said that fears of retaliation by the oil cartel are overblown.
_
The "No Oil Producing and Exporting Cartels Act," or NOPEC, would subject the group of oil producers to possible antitrust action by the Justice Department. Opponents warn that its passage would hurt U.S. diplomatic interests and provoke retaliation against U.S. producers. But a new white paper written on behalf of Securing America’s Future Energy, which advocates for curtailing oil dependence, argues that those fears are overblown. More...
_


----------



## Ann

I meant to add a comment to the last post. With the Venezuelan sanctions and assorted other problems, Brent is less plentiful. A while back I suggested there may be a disconnect in the price of WTI and Brent. There does appear to be a price disconnect. On a Y.O.Y basis as of today price of Light Crude is down 5.36% but Brent is only down 2.18% for the same period. 
Just thought I would say.


----------



## Smurf1976

Ann said:


> Possibly more reason for further falls?



I think the Americans have lost the plot with this one.

US outlaws OPEC.

Next move - some other country decides to nationalise American Airlines or to socialise healthcare in the US and gives Trump the orders to get it done.

Crazy stuff really.

The USA has no proper jurisdiction over the business practices of other countries just as they have no control over the US.

If the Arabs want an oil cartel then so be it, that’s their call not someone else’s.

I foresee some market turbulence and political fallout if this goes ahead.


----------



## Ann

Smurf1976 said:


> I think the Americans have lost the plot with this one.
> 
> US outlaws OPEC.
> 
> Next move - some other country decides to nationalise American Airlines or to socialise healthcare in the US and gives Trump the orders to get it done.
> 
> Crazy stuff really.
> 
> The USA has no proper jurisdiction over the business practices of other countries just as they have no control over the US.
> 
> If the Arabs want an oil cartel then so be it, that’s their call not someone else’s.
> 
> I foresee some market turbulence and political fallout if this goes ahead.




I think it is just sabre rattling, putting it in polite terms. Every day there is a new story of why it is going up and then why it is going down. It is like watching a game of ping pong.


----------



## Ann

Today it is going up!

*Oil Bullishness Is at 2019 High as Rally Shows Signs of Sticking*

_Oil optimists pushed bullish wagers to a six-month high as the rally in prices continued.

Money managers raised optimistic wagers on Brent crude for a fifth straight week while closing out pessimistic bets by the most since January as turmoil in major oil-producing nations heightened supply concerns. Short-selling bets on the global benchmark plunged by 18 percent, according to data released Friday. More..._

*Exxon and Others Say U.S. Government Sold Toxic Crude Oil*

_Exxon Mobil Corp. is the latest company to raise concerns that a stockpile of U.S. government crude is tainted with poisonous gas.

The American energy giant said some of the oil it purchased last year from the Energy Department’s Strategic Petroleum Reserve, or SPR, contained "extremely high levels" of hydrogen sulfide, according to emails obtained by Bloomberg under the Freedom of Information Act. In some cases, the gas level was 250 times higher than government safety standards allow.


"The Department of Energy takes safety, security and environmental impacts involving SPR activities very seriously," agency spokeswoman Jess Szymanski said. "Last fall, an SPR cargo received by Exxon Mobil was found to contain higher-than-expected levels of hydrogen sulfide. Since then, the Department has worked with Exxon to resolve this concern, and find alternate options for the cargo’s delivery." More..._


----------



## Ann

Time for a couple of three month charts at this critical juncture of support/resistance lines. This next week is going to be an interesting week, will Brent Crude move up further and will WTI break above the red line? 

The WTI has slipped back under the red rising resistance line but is still above the important 200dsma (orange line)



Brent Crude has successfully lifted above the Fibonacci 38.2% and my horizontal support resistance line, which comes in at the same level. It also is above the important 200dsma


----------



## MARKETWINNER

https://www.dailyfx.com/forex/marke...eat-on-Potential-End-to-OPEC-Supply-Cuts.html
*Crude Oil Price Under Threat on Potential End to OPEC Supply Cuts*

https://www.marketpulse.com/20190415/oil-slides-weaker-economy-production-cut-outlook/
Oil slides on weaker economy and production cut outlook


----------



## ducati916

Article where Bank of America argues that POO could spike to $100+ essentially on shipping demand.

https://oilprice.com/Energy/Oil-Prices/The-Case-For-100-Oil.html

If Trump were to lose next election: 

_*Warren proposes ban on new drilling on public lands.*_ Democratic presidential candidate Senator Elizabeth Warren (D-MA) has proposed to ban new oil and gas drilling on public lands. “The Trump administration is busy selling off our public lands to the oil, gas and coal industries for pennies on the dollar — expanding fossil fuel extraction that destroys pristine sites across the country while pouring an accelerant on our climate crisis,” she wrote. “That’s why on my first day as president, I will sign an executive order that says no more drilling — a total moratorium on all new fossil fuel leases, including for drilling offshore and on public lands.”    

jog on
duc


----------



## Ann

*Brent nears $72 amid tightening supplies; surprise draw in U.S. crude stocks*

*SEOUL (Reuters) - Oil prices rose on Wednesday, supported by concerns over tightening global supply due to U.S. sanctions and fighting in Libya, as well as an unexpected fall in U.S. crude inventories. 

International benchmark Brent crude oil futures rose 21 cents, or 0.3 percent, to $71.93 a barrel by 0034 GMT. Brent earlier hit a fresh five-month high of 71.96 a barrel, the highest since Nov. 8 when prices topped $72 a barrel. More..
*


----------



## MARKETWINNER

https://www.cnbc.com/2019/04/18/oil-market-us-crude-inventories-in-focus.html
Oil prices slip amid ample US output, Brent drifts away from five-month high

https://oilprice.com/Latest-Energy-...000-Bpd-Heavy-Oil-Output-By-January-2020.html
Kuwait Could Add 400,000 Bpd Heavy Oil Output By January 2020

https://www.reuters.com/article/us-...lies-ample-us-output-caps-gains-idUSKCN1RU041
Oil rises on tightening supplies; ample U.S. output caps gains


----------



## Smurf1976

So there seem to be a lot of conflicting things at work here.

Tightening supplies, Kuwait ramping up production capacity, etc. A lot of things pushing in opposite directions.

The trend at the moment seems up though and given that oil prices typically surge toward the end of an economic cycle I'm more bullish than bearish.

The one thing that does concern me in that is what politics could bring.


----------



## MARKETWINNER

Smurf1976 said:


> So there seem to be a lot of conflicting things at work here.The one thing that does concern me in that is what politics could bring.




I expect oil to remain in the range bound until end of 2019. Two sets of oil producers are trying for dominance.
https://www.marketpulse.com/20190418/oil-volatility-kick-high-gear/
Oil volatility is about to kick into high gear


----------



## Ann

Let's look at the WTI and the Brent. First the WTI, this appears stuck under the red overhead rising resistance line, it made a good effort to overcome that level and may yet.
The Brent got above the horizontal support/resistance line I drew, which is the same level as the Fibonacci 38.2%. It is now just hovering above that line, one would have expected a lot more vigour from a price which has overcome such an important resistance line. 

Looking at both these charts there appears to be a degree of 'fatigue' in the POO.


----------



## Sdajii

Ann said:


> Let's look at the WTI and the Brent. First the WTI, this appears stuck under the red overhead rising resistance line, it made a good effort to overcome that level and may yet.
> The Brent got above the horizontal support/resistance line I drew, which is the same level as the Fibonacci 38.2%. It is now just hovering above that line, one would have expected a lot more vigour from a price which has overcome such an important resistance line.
> 
> Looking at both these charts there appears to be a degree of 'fatigue' in the POO.
> 
> 
> View attachment 94000
> View attachment 94001




Fatigue isn't the first word which comes to my mind when looking at the POO today. Nice rally. I expect it to continue for a while longer


----------



## ducati916

Oil taking a hammering today.

"_Oil prices fell sharply in early trading on Friday as the market reassessed the impact of U.S. sanctions on Iran. Analysts argue that Iran may succeed in mitigating the impact, maintaining some degree of exports. Also, expectations of OPEC swinging into action are also on the rise. Oil prices fell nearly 2 percent on Friday_."

Just over 3% currently

jog on
duc


----------



## ducati916

ducati916 said:


> Oil taking a hammering today.
> 
> "_Oil prices fell sharply in early trading on Friday as the market reassessed the impact of U.S. sanctions on Iran. Analysts argue that Iran may succeed in mitigating the impact, maintaining some degree of exports. Also, expectations of OPEC swinging into action are also on the rise. Oil prices fell nearly 2 percent on Friday_."
> 
> Just over 3% currently
> 
> jog on
> duc





Should come as no major surprise, if you follow the COT

The commercials dropped their buying pressure by 49% [still +ve] but I suspect they will via this week's reporting turn [-ve].

The chart:


----------



## Ann

The Oil Rig count dropped by 20 rigs this week..



The POO made a valiant effort to overcome the red rising resistance line but eventually gave up and slumped below it again.


----------



## Smurf1976

Ann said:


> The Oil Rig count dropped by 20 rigs this week..



There seems to be a definite divergence of thought here.

Price has been trending up until the past few days. 

Rig count trending down. 

Less drilling ultimately means less production which, assuming demand isn't going to fall in a heap suddenly, means higher prices.

So the price drops in the short term but rises in the longer term?


----------



## tinhat

ducati916 said:


> Should come as no major surprise, if you follow the COT
> 
> The commercials dropped their buying pressure by 49% [still +ve] but I suspect they will via this week's reporting turn [-ve].
> 
> The chart:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 94125




Given that there are no X or Y axes displayed in that graphic I am not sure that it qualifies as a graph.


----------



## Ann

Smurf1976 said:


> Less drilling ultimately means less production which, assuming demand isn't going to fall in a heap suddenly, means higher prices.



In amongst all the speculators there are actually companies doing business. The way I look at it is the genuine orders for product comes in, the producers tally the orders, work out if they will need to pump more or less to fill the legit orders. If the demand isn't in the order book then why build up inventories, just shut some of the pumps down until the new orders are in? I am simply musing with all of this and have no firm basis for my opinion but my thought is, supply and demand in the order books. Others suggest the rig numbers are simply a reaction to the price. This seems too inefficient when these people would know who is ordering stuff well in advance, they would need to organize workers and haulage and a host of other stuff to run the pumps. Surely the oiler couldn't possibly be telling a worker to pop down and turn the tap off because the price dropped this week!  



Smurf1976 said:


> So the price drops in the short term but rises in the longer term?




The Northern Hemisphere are coming into the warmer months so there is likely to be less demand for heating oil I should have thought. However we can throw into the mix new pipelines, new skirmishes, new alliances, Saudi/Canada needing money in a hurry and dropping the price, Iran coming on board and flooding the market.  My guess is lower prices but I could be quite wrong of course. The Baltic Dry Index is rising, so that means more demand for shipping fuel.

That most recent rise in the POO happened with light volumes in the middle of a holiday period. With everyone back on board again let's see where the price goes this week.


----------



## Ann

....and a bit more back and forth...

*Trump Wants Cheap Oil. IMF Data Show Saudis Need Higher Prices*
_
Saudi Arabia needs oil prices to be higher than what U.S. President Donald Trump may be comfortable with as the government increases spending to bolster economic growth.

International Monetary Fund data released on Monday show the world’s biggest oil exporter needs prices at about $85 a barrel to balance its budget this year, up from a forecast of $73 in September.


The estimates highlight the tricky task facing Crown Prince Mohammed bin Salman as he tries to forge closer ties with Trump and, at the same time, finance a plan to revive economic growth and create jobs at home. The kingdom, which reiterated last week its commitment to balance its books by 2023, plans to increase spending by 7 percent this year. More..._


----------



## Sdajii

Ann said:


> ....and a bit more back and forth...
> 
> *Trump Wants Cheap Oil. IMF Data Show Saudis Need Higher Prices*
> _
> Saudi Arabia needs oil prices to be higher than what U.S. President Donald Trump may be comfortable with as the government increases spending to bolster economic growth.
> 
> International Monetary Fund data released on Monday show the world’s biggest oil exporter needs prices at about $85 a barrel to balance its budget this year, up from a forecast of $73 in September.
> 
> 
> The estimates highlight the tricky task facing Crown Prince Mohammed bin Salman as he tries to forge closer ties with Trump and, at the same time, finance a plan to revive economic growth and create jobs at home. The kingdom, which reiterated last week its commitment to balance its books by 2023, plans to increase spending by 7 percent this year. More..._




With Saudi Arabia needing an average of $85 in 2019 to balance its budget, the longer we spend below $85, the higher above $85 they need to spend *some* of the year, and the year is quickly slipping by.


----------



## Ann

...and today!

*A New Mega Cartel Is Emerging In Oil Markets*

_China and India—two of the world’s largest oil importers and the biggest demand growth centers globally—are close to setting up an oil buyers’ club to have a say in the pricing and sourcing of crude oil amid OPEC’s cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.

This is not the first time that the two major oil importers are working to create such an oil club.

India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil in order to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said in June 2018. More..._


----------



## Ann

POO, goodness me what a challenge is this commodity to chart?
Let's have a look at the 6 month daily chart first, this is the one we have been following with the red rising resistance/support line. It dropped back below the line but it may just be doing a pole dance around it to fool us! 





Now let's look at the five year Weekly chart. This shows a rising wedge aimed at the long term falling overhead resistance line. The POO fell out of the wedge as expected, but now it is climbing back on board again. Resilient little sucker!





...and finally lets look at the thirteen year monthly chart. I thought it would be interesting to look at it with only the Fibonacci levels and the long term falling overhead resistance line shown. Nice and simple. Note the POO is sitting just under the 61.8% level which it had failed end of October '18.


----------



## Ann

On my very long term charts I suggest oil may fall into negative figures per barrel. One would have to ask how could something cost -$20 for instance? Cleanup costs....

*Canadian Oil Driller Abruptly Shuts Down, Abandons 4,700 Wells*
_
A junior Canadian gas E&P company has shut down abruptly, leaving as many as 4,700 wells behind, CBC reports, quoting the Alberta Energy Regulator, which said it had sent Trident Exploration Corp. an order to manage its wells, to which the company did not respond.

Trident closed two days ago and announced it would not be returning any money to shareholders or holders of unsecured bonds, adding it had well abandonment and reclamation liabilities of US$244.78 million (C$329 million) to deal with. More..._


----------



## Sdajii

Ann said:


> On my very long term charts I suggest oil may fall into negative figures per barrel. One would have to ask how could something cost -$20 for instance? Cleanup costs....




This is a demonstration of what I was saying about charts not always being relevant to a commodity like crude. I really can't see crude having a negative value in our (or out grandkids') lifetimes.

On a different topic, and a much much shorter term technical look at the POO, does anyone see a current head and shoulders on oil, with a near term WTI target of around $58.50?


----------



## Ann

Sdajii said:


> This is a demonstration of what I was saying about charts not always being relevant to a commodity like crude. I really can't see crude having a negative value in our (or out grandkids') lifetimes.




I am not so sure, everything is happening very quickly with the abolition of fossil fuels from funds so no money for capital raising for junior oilers and if these are the sort of figures for cleanup I can see how a minus figure per barrel/whatever could happen.



Sdajii said:


> On a different topic, and a much much shorter term technical look at the POO, does anyone see a current head and shoulders on oil, with a near term WTI target of around $58.50?




It does a bit but I only call a true head and shoulders when the shape is actually at the all time pinnacle of a price level. It may resolve as a H&S, let's see how your call goes. I have added a short term falling resistance line just for fun.


----------



## Sdajii

Ann said:


> It does a bit but I only call a true head and shoulders when the shape is actually at the all time pinnacle of a price level. It may resolve as a H&S, let's see how your call goes. I have added a short term falling resistance line just for fun.
> 
> View attachment 94360




It's not exactly my call, if I had to bet on it (which I suppose indirectly I am) I'd say it won't play out, but if it was a purely technical play and I was ignoring the fundamentals I would expect it to. Not a perfect H&S but good enough that it would count.

What timeframe are you looking at oil being at negative value? I just can not see technicals being at all relevant for something like that happening. As you say, it could only happen if oil was a liability somehow, and chart technicals can influence how much people pay for something, but can't turn a commodity into a liability. Only fundamentals can do that.


----------



## Smurf1976

Sdajii said:


> IWhat timeframe are you looking at oil being at negative value? I just can not see technicals being at all relevant for something like that happening. As you say, it could only happen if oil was a liability somehow, and chart technicals can influence how much people pay for something, but can't turn a commodity into a liability. Only fundamentals can do that.




From a fundamental perspective and noting that oil can be stored physically, and oil fields can be shut down or at least wound back greatly, I can't really get my mind around why anyone would produce oil and then pay someone to take it?

It's not like a steam turbine power station with a minimum output that's 20% - 55% of capacity (depending on design) and can't easily go below that. Oil's not like that, it can be stored, transported etc quite easily or just shut down so the idea of it having negative value seems odd indeed.

That said, well Ann's been right before so I'm not going to say it's wrong but my thoughts are along the lines that to have a negative price for oil, or indeed any commodity that isn't mostly just a by-product of producing something else, implies a "world's gone to hell" sort of scenario doesn't it? The sort of scenario where cheap petrol will be the least of anyone's concerns most likely.


----------



## Sdajii

Smurf1976 said:


> From a fundamental perspective and noting that oil can be stored physically, and oil fields can be shut down or at least wound back greatly, I can't really get my mind around why anyone would produce oil and then pay someone to take it?
> 
> It's not like a steam turbine power station with a minimum output that's 20% - 55% of capacity (depending on design) and can't easily go below that. Oil's not like that, it can be stored, transported etc quite easily or just shut down so the idea of it having negative value seems odd indeed.
> 
> That said, well Ann's been right before so I'm not going to say it's wrong but my thoughts are along the lines that to have a negative price for oil, or indeed any commodity that isn't mostly just a by-product of producing something else, implies a "world's gone to hell" sort of scenario doesn't it? The sort of scenario where cheap petrol will be the least of anyone's concerns most likely.




Obviously no one would produce it and pay someone to take it. Hypothetically (completely unrealistic hypothetical IMO) some amazing invention could make oil obsolete almost overnight, which would make oil a toxic waste product/liability. But it would literally need to happen so quickly that oil would be obsolete before current inventories were depleted. I can't actually come up with an hypothetical 'world gone to Hell' scenario where people would pay to have oil taken away, at least not without getting into ridiculous levels of unrealistic on multiple facets. Technicals/charting can control prices within a range of plausible value or sometimes even a little outside plausible value, but it can't make people pay people to take a commodity product with intrinsic value away. And hey, if that ever happens, I'll personally be glad to take the lot for whatever money anyone is happy to give me.

Actually, I just thought of a hypothetical which is almost sort of plausible... or plausible enough to put into the plot of a C grade dystopic sci fi movie. Governments going mad for renewable energy actually ban fossil fuels and demand that they be disposed of or denatured to their specifications. Again though, this would have to happen so suddenly that existing inventories can't be used up before the date the new rules are enforced.


----------



## Ann

Sdajii said:


> What timeframe are you looking at oil being at negative value? I just can not see technicals being at all relevant for something like that happening. As you say, it could only happen if oil was a liability somehow, and chart technicals can influence how much people pay for something, but can't turn a commodity into a liability. Only fundamentals can do that.




What sort of time frame? Good question. My figure of minus was worked out using a swing trade calculation. This really only gives you a target figure more so then a time frame. At a wild guess maybe toward the end of next year to mid 2021. When the POO falls it tends to fall hard and fast. Between July and December 2008 it fell from around $145 down to around $30. In June 2014 it was around $106 by January 2015 is was down to around $44. Six month can see the POO slaughtered.

Chart technicals are purely and simply a reflection of the historical fundamantals in picture form. They are not separate from the fundamantals they are a pictorial representation of that same information. As an astute fundamentalist can look at the companies' balance sheets for a number of years and see a pattern, the chart reader is looking at this same information in picture form and seeing a pattern. Both can be wrong in their estimates or right for that matter.



Smurf1976 said:


> That said, well Ann's been right before so I'm not going to say it's wrong but my thoughts are along the lines that to have a negative price for oil, or indeed any commodity that isn't mostly just a by-product of producing something else, implies a "world's gone to hell" sort of scenario doesn't it? The sort of scenario where cheap petrol will be the least of anyone's concerns most likely.




I can see a rapid change but I have a more optimistic view, I liken it to the change from horse transport to motor transport. That basically happened overnight. There were a lot of associated industries that had to adapt quickly into other avenues of work and people into other professions. I don't see it in a world of chaos but I think it will happen quickly which might distress a few people resistant to change. I think people will begin seeing the potential for change and may not be so supportive of oil companies. These may fold up camp and become lithium miners after a share consolidation and capital raising! There will be cleanup costs with a rapid closing down of oil fields/refineries and service stations, these will probably be the '$minus' aspect of the POO. I also think there is an enormous amount of hoarded oil by the preppers and those with doomsday scenarios in the hope they will make a fortune. This is where there will be costs per barrel to remove and dispose of the stuff.



Sdajii said:


> .  But it would literally need to happen so quickly that oil would be obsolete before current inventories were depleted.




Yes this is how I am thinking, especially after that previous article I put up about the Canadian oiler walking away from viable oil wells and now having to leave provision for the cleanup which will leave nothing for the investors.



Sdajii said:


> Actually, I just thought of a hypothetical which is almost sort of plausible... or plausible enough to put into the plot of a C grade dystopic sci fi movie. Governments going mad for renewable energy actually ban fossil fuels and demand that they be disposed of or denatured to their specifications. Again though, this would have to happen so suddenly that existing inventories can't be used up before the date the new rules are enforced.




Oh yes, I can see this happening with the climate change hysterics in charge. That C grade dystopic sci fi movie may well be called 'Soylent Green 1984'. It will have more subplots other than oil, no doubt!


----------



## Sdajii

The logic makes sense, but I just don't think it's at all realistic to say it could happen within 2-3 years. It would require either apocalypse or some unfathomable new technology which could be implemented to make the combustion engine completely redundant within 6 months. Even in the incredibly unlikely event that it played out, charting couldn't predict that and if it did happen to coincide with the charts it would only be by coincidence. I think we can comfortably say that the historical data of oil prices were not caused by a future invention of unfathomable technology, or that they caused such an invention. Even cold fusion may not be enough, because even if electricity became effectively free and no new ICE vehicles were being produced, it would still take several years to convert everything over. Unless we invented super intelligent robots which were able to work on physical and conceptual issues incredibly efficiently, and they were both able to invent cold fusion and produce extremely efficient electric vehicles extremely quickly... but then presumably they'd also be able to clean up all the oil for us. Anyway, these are the sort of ridiculous hypotheticals required to fit the model.

I think a lot of charting is basically like tarot card reading. There are many different chart patterns, and people often just apply the one which looks most like the thing which happened. Usually when they play out it is because of the self-fulfilling prophesy effect. It's easy to retrospectively apply patterns to things, or to be vague enough that whatever happens you can say you predicted it.


----------



## Ann

Sdajii said:


> It's easy to retrospectively apply patterns to things, or to be vague enough that whatever happens you can say you predicted it.



Yes it is and that is why I like long term established charts which I watch for years as the forward lines have already been drawn years ago and not drawn retrospectively, this is what I find so fascinating when the price reacts to the old lines on one of my charts. Do they always? No! That is why I am never adamant but more....this _may _happen. Mostly it does, sometimes it doesn't with shorter term stuff. 

I am not trying to defend charting or convince others to use them, I am simply putting up an opinion about something with substantiation from a chart. Accept it or not I don't particularly care, I do it for the sake of it and for my own fun.


----------



## Ann

This is interesting....

*Why Your Gasoline Won’t Take You As Far As it Used To*
_
Over the weekend, I saw a passing reference on Twitter to the declining energy content of gasoline. Intuitively I know this to be correct for reasons I discuss below. But the poster linked to data from the Energy Information Administration (EIA) that I hadn’t previously seen.

The EIA doesn’t directly tabulate the energy content of gasoline. But they do provide two pieces of data that let us calculate it ourselves from two relevant tables in the April 2019 Monthly Energy Review. More..._

....Oil rig count up two this week.


----------



## Ann

Oil rig count fell 2 from 807 to 805 this week....

*The Trade Fight Between the U.S. and China Is Weighing on Oil Prices*

_Crude explorers deployed fewer rigs in U.S. fields this week amid an escalating U.S.-China trade war that weighed on oil prices.

Working American oil rigs fell by two this week to 805, according to data released Friday by oilfield-services provider Baker Hughes. It was the third drop in four weeks. Drillers in the world’s biggest oil field, the Permian Basin, idled two rigs to bring the regional tally to 457 while activity in the Eagle Ford shale in South Texas remained steady.

Pressed by investors to show more austerity and return profits to shareholders, explorers spent the first five months of this year idling almost 10 percent of the onshore U.S. rig fleet. The outlook for oil demand has soured amid a protracted trade dispute between the U.S. and China, the world’s largest economies. More..._


----------



## Ann

This article is a rather bleak look for Crude, I will put in a chart for Brent as it is right at a critical level.

*Oil Short-Selling Jumps as Sputtering Trade Talks Darken Outlook*

_Pessimism is back in vogue in the oil markets, as investors bet sputtering trade talks and swelling U.S. output can kill crude’s rally._

_Hedge funds lifted bearish bets on West Texas Intermediate crude by 39%, the biggest short-selling surge in more than eight months. Meanwhile, bets on a rally retreated for the second straight week._


_Crude futures slipped to their third weekly loss in a row on Friday after high-level talks between the U.S. and China broke up, with President Donald Trump’s administration giving China a month to reach an agreement or face expanded tariffs. More..._

This is a one month view of Brent, it is right on the 38.2% Fibonacci line and a very long term support/resistance line coming from 2007


----------



## Miner

Interesting thread, very powerful and value adder. I somehow was missing this and now have started to ready some of the issues last 3 months.
I must disclose my interest on oil stocks with BPT, HZN, BRU CVN, FAR are on my portfolio and son (exactly opposite to a miner)   is a senior drilling engineer in a large oil producer.
As a miner, I would make this unscientific points :

 China and India relationship would do something to bring down the oil price for sure specially Indian election will be over in 7 days. So oil price support could be released upwards.
US needs its $100 Billion weapon sale to Saudi. So they need Saudi to make  money from increased sale.
As per there is an unwritten rule - if there is a political problem, need to stop oil price going down , create political hot environment bringing down the stability. That automatically triggers gold and oil to go up.
North Korea is going back to square one, US is pushing China to impose more duty- Trump is doing rhetoric with Kim, Iran,  market, China and Mueller- divert attention with a mini war or some instability - oil disobeys all charts and go up.
Once again, the above are my unscientific speculations to make myself happy with oil stocks.


----------



## Ann

Oil Rig count down from 805 to 802 this week...

*Trade Jitters Kill Global Crude's Longest Bull Run Since 2011*
_
The U.S. and China have just killed the longest run of bets on a global oil rally since 2011.

Money managers cut their bullish wagers on Brent crude for the first time in 10 weeks after tensions escalated between the world’s two-largest energy consumers. The optimism hadn’t lasted so long in more than eight years.

The trade spat came back to the fore this week as the Trump administration imposed new tariffs on Asia’s economic powerhouse. Fears that the dispute will undermine oil consumption were reinforced by the International Energy Agency, which lowered its global demand estimate for the first time since October. To make matters worse, crude stockpiles in the U.S. are at their highest since September 2017. More..._


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## Smurf1976

There seem to be two major opposing forces at work here.

One one side it’s China Vs USA trade war threatening demand.

On the other side it’s trouble in Iran, Venezuela and elsewhere threatening production.

Then throw issues with contaminated oil from Russia into the mix and if all gets complex.

My main thought is that the strength of forces involved this is going to end with an earthquake, the only question being whether that’s up or down (or one then the other)?


----------



## Sdajii

Smurf1976 said:


> There seem to be two major opposing forces at work here.
> 
> One one side it’s China Vs USA trade war threatening demand.
> 
> On the other side it’s trouble in Iran, Venezuela and elsewhere threatening production.
> 
> Then throw issues with contaminated oil from Russia into the mix and if all gets complex.
> 
> My main thought is that the strength of forces involved this is going to end with an earthquake, the only question being whether that’s up or down (or one then the other)?




I'm tipping one then the other. Up first.


----------



## Ann

Slowly the transition starts? How long does it take to recharge an EV?

*Oil Giant Chevron Offering Electric Car Charging at Stations*

_Big oil is shifting, ever so slightly, toward the electric car business.

Chevron Corp. is offering electric car charging ports at a handful of gasoline stations in its home state of California, according to a statement Monday. The fast-charging spots, located at five stations in the Los Angeles and San Francisco Bay areas, are being installed by EVgo, which has a car charging network that spans 34 U.S. states.

While Chevron’s focus clearly remains on oil and gas, it’s following a trend of sorts in the industry as the price of battery-fueled cars shrinks. In January, Royal Dutch Shell Plc agreed to buy Greenlots, which will make it the first oil major to own a U.S.-based charging service, according to BloombergNEF. More..._


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## Smurf1976

Oil down heavily at the moment to $57.80 so seems the answer for the short term direction at least is down.


----------



## Sdajii

Smurf1976 said:


> Oil down heavily at the moment to $57.80 so seems the answer for the short term direction at least is down.




I'm tipping it like this: small swing down (I doubt it will go below $55, we may not go below $57, I'd be very surprised by sub $50) then big/huge spike up then big/huge crash down. All within a short time. Over $70 next month.


----------



## Ann

Sdajii said:


> I'm tipping it like this: small swing down (I doubt it will go below $55, we may not go below $57, I'd be very surprised by sub $50) then big/huge spike up then big/huge crash down. All within a short time. Over $70 next month.




It has smashed down through the all important 200dsma, I have a support line a few cents under $55. If it falls below $55 it will then have to battle back up through a $55 overhead resistance, the 200dsma and then there is the rising overhead resistance line at around $66. IMO $70 would be a big ask from the POO. I will try to put up a chart after tomorrow's trade and see how it is going. My thoughts are it could bounce back up off $55 and then get smacked down by the 200dsma. Interesting to watch.

*Energy Stocks on Pace for Worst Day in 5 Months as Crude Sinks*

_Energy stocks were poised for their worst day of the year, with the S&P 500 Energy Index extending its two-day loss to as much as 5%.

The sector has been battered by plunging crude prices, as futures in New York fell below $60 a barrel for the first time since March. Hess Corp., Concho Resources Inc., Cimarex Energy Co., and National Oilwell Varco Inc. were among stocks which slid more than 6%._ More...


----------



## Sdajii

Ann said:


> It has smashed down through the all important 200dsma, I have a support line a few cents under $55. If it falls below $55 it will then have to battle back up through a $55 overhead resistance, the 200dsma and then there is the rising overhead resistance line at around $66. IMO $70 would be a big ask from the POO. I will try to put up a chart after tomorrow's trade and see how it is going. My thoughts are it could bounce back up off $55 and then get smacked down by the 200dsma. Interesting to watch.




I agree, June will be a very interesting month to watch.

The whole global system is so precarious at the moment, I think we can all agree on that. Tensions are high in the middle east, sure this is nothing new or unusual, but we are seeing push likely coming to shove in the near future from Iran, we have Saudi Arabia needing an average of over $80 in 2019 and so far we've seen way under that (we haven't even touched $80 all year!) with H1 2019 getting near to the end, we have some low level acts of sabotage which could well be taken further in the near future (it wouldn't be difficult and it wouldn't need to be much more extreme at all to cause a huge impact), we have Venezuela, Libya and others outside the middle east with the potential of throwing a spanner in the works, there are plenty in the middle east who would not be upset to see one of Russia's major pipelines have an explosive mishap (it's actually surprising this doesn't happen more often given the nature and proximity of the middle east and the motives to do it). Trump has literally tweeted threats of putting an end to Iran, and Iran is certainly a crazy nation under extreme pressure.

While oil prices were steadily increasing as they were from the start of the year until recently, it was easy for those nations wanting oil prices to just allow it to happen. Even if it wasn't as much as they would like, as long as things are going in the right direction for them there is low incentive to upset the apple cart. If prices are not only too low but have also taken a turn from up to down, there will be a greatly heightened tendency for them to take action to push it up, and given the 'tinder box' nature of the oil producing world at present, I think we're likely to see some extreme action which will bring an answer to that 'big ask'. I'm not as sure about it as I was 6 months ago, but I still think $100+ in the near future (mid 2019) is a very real possibility, and $80+ is highly likely, I would still say probable.

If any of the many potential catalysts for skyrocketing oil prices is realised, well, that's what oil will do, and technical analysis will have little to do with prices in that scenario. I think given the number of big players with such strong interests in setting one or more of these off, and how easily many of them can be set off, we are likely to see it happen.


----------



## Ann

Sdajii said:


> If any of the many potential catalysts for skyrocketing oil prices is realised, well, that's what oil will do, and technical analysis will have little to do with prices in that scenario. I think given the number of big players with such strong interests in setting one or more of these off, and how easily many of them can be set off, we are likely to see it happen.




I would hate to try and guess at the POO simply using fundamentals, it is so chaotic and reactive to a variety of tensions. I like looking at the chart, not that the chart influences the price but it offers a potential area where activity may occur. I am very happy for people to think it is akin to reading tea-leaves in a cup as in cross-my-palm-with-silver-and-I-will-tell-you-your-future, kind of thing! 

This article illustrates the current tensions in the POO....
*Trump Sparks Oil Rally With Iran Tension, Then Rout With Trade War*

Then we have further complications of possible supply restrictions or in the future a possible glut coming from Russia....

*Russia’s Dirty Oil Crisis Is Worse Than Almost Anyone Predicted*

Or the POO may simply be in the hands of profoundly influential price manipulation who use the various news announcements to cover their games. I truly would have no idea other than to trust what my charts tell me. Easier that way, it is less stress on the brain!


----------



## Ann

Oil Rig count down five this week to 797.

Looking at the 6 month daily chart you can see how the POO has really pulled down away from that red overhead resistance line quite dramatically.



Then looking at the weekly chart we can see it has fallen out of the rising wedge a second time, it was so desperately trying to climb back on board, I will be astounded if it can get back up a second time...


----------



## Parse

This is an interesting article https://oilprice.com/Energy/Crude-Oil/The-Oil-Market-Isnt-As-Weak-As-It-Appears.html

It's the kind of thinking I agree with.


----------



## ducati916

Well for the moment, trade war trumps all. Yield curve inverts on 3mth/10yr, 1yr/10yr and very close on 2yr/10yr.

Inversions [prolonged] = recession, which = less demand for oil on an economic contraction.

jog on
duc


----------



## Ann

Oil rig count up 3 to 800 this week.

Let's look at the daily chart for POO...

It has fallen through that old support line of around $55 after making a very valiant effort to overcome the rising red line of the old rising wedge pattern. Now I am wondering if it will manage to get back above the $55ish support/resistance line or will we see it moving down to retest the green support line of $42 again?




Let's look at the Weekly POO....

It is slamming down out of that rising wedge. It did well to get back into it after the previous fall, now it is just blasting down with no hesitation. There feels like a lot of down impetus happening. 




Now let's look at the weekly with the very long term view.  After an appropriate fall I think the next leg up will see POO trying to fight through the very, very long term falling overhead resistance.  It will be beyond the resistance of the rising wedge by then.
The POO tends to have massive drops when it falls. I wouldn't be surprised if $30 or near was a floor but I could be very, very wrong!


----------



## Smurf1976

Ann said:


> I wouldn't be surprised if $30 or near was a floor



Looking at other fuels on an energy content basis (all prices in USD):

US natural gas is equivalent to oil at about $14 per barrel

Australian export coal is equivalent to oil at $20 per barrel

EU natural gas is equivalent to about $28 per barrel

Japan LNG import spot price is equivalent to oil at about $30 per barrel

Australia south-eastern states natural gas is equivalent to oil at $38 per barrel

So anything for oil below about $30 would see switching of fuels, primarily for power generation, from gas to oil noting that Japan in particular does have the ability to fire raw crude oil in power stations if the economics warrant doing so and between Japan and the EU that's a significant amount of potential additional oil use if it became cheap enough. Either that or the gas suppliers will need to cut their prices to remain competitive.


----------



## Ann

*The Bastion of Oil-Market Bullishness Is Starting to Crack*
_
For much of May, nearly each and every time that oil prices tanked amid concerns about the deepening U.S.-China trade war, one corner of the market held up: timespreads.

The spreads -- the price difference between contracts for immediate delivery and forward ones -- reflected tightness in the physical market, with refineries willing to pay large premiums to secure barrels straight away. As such, the oil curve was in a steep backwardation, where spot crude trades above later contracts.

For most of May, oil refiners bid up the front of the oil curve to keep North Sea crude in north-west Europe in order to replace Urals crude from Russia that was lost due to an unprecedented contamination inside the Druzhba pipeline. Now, as Urals flows slowly restart to some parts of Europe and a plan takes shape for a wider resumption, the tightness in the physical market is starting to ease -- and timespreads are following suit. Refinery cuts in Germany are also helping to reduce demand. More..._


----------



## Smurf1976

Down heavily again on US markets - now $51.63

This step-like movement seems to be becoming a pattern. Sudden drop, sideways, another sudden drop of a few %, rinse and repeat.

It doesn't seem to be having much difficulty falling straight through anything that might be expected to act as support so down it goes.


----------



## ducati916

Smurf1976 said:


> Down heavily again on US markets - now $51.63
> 
> This step-like movement seems to be becoming a pattern. Sudden drop, sideways, another sudden drop of a few %, rinse and repeat.
> 
> It doesn't seem to be having much difficulty falling straight through anything that might be expected to act as support so down it goes.





Would seem to be correlated to the US 2yr Note currently.

jog on
duc


----------



## rederob

ducati916 said:


> Would seem to be correlated to the US 2yr Note currently.



Was better correlated with my wood pile .
I have a practice of ignoring ephemeral correlations.


----------



## PZ99

Smurf1976 said:


> Down heavily again on US markets - now $51.63
> 
> This step-like movement seems to be becoming a pattern. Sudden drop, sideways, another sudden drop of a few %, rinse and repeat.
> 
> It doesn't seem to be having much difficulty falling straight through anything that might be expected to act as support so down it goes.



It's a beast of a bear at best > https://www.marketwatch.com/story/o...-market-heres-why-2019-06-05?siteid=rss&rss=1


----------



## ducati916

rederob said:


> Was better correlated with my wood pile .
> I have a practice of ignoring ephemeral correlations.




Indeed.

However, because the 2yr has not yet inverted, but is very close to it, the fluctuations in the 2yr are [possibly] relevant to a recession through an inversion and reduced demand for oil.

jog on
duc


----------



## rederob

ducati916 said:


> Indeed.
> However, because the 2yr has not yet inverted, but is very close to it, the fluctuations in the 2yr are [possibly] relevant to a recession through an inversion and reduced demand for oil.



Anything is possible.
However the logic of the idea suggests previous declines may have aligned with possible recessions, and none seem apparent in the past 10 years.


----------



## Ann

Oil rig count down to 789 from 800 this week.

*Oil Drillers Scale Back U.S. Activity as Crude Falls Into Bear Market*
_
U.S. crude explorers reduced drilling to a 15-month low as oil dipped into bear-market territory.

Working American oil rigs fell by 11 this week to 789, according to data released Friday by oilfield-services provider Baker Hughes. More than half the decline happened in the Permian Basin, the biggest source of American crude.

Crude futures traded in New York fell into a bear market on June 5 as they dropped to levels not seen since mid January. The slump comes as the Organization of Petroleum Exporting Countries and allied suppliers prepare to discuss output controls in a matter of weeks. More..._


----------



## rederob

Ann said:


> Oil rig count down to 789 from 800 this week.



Maybe this is a partial explanation:



"_The larger universe of fracking companies suffered even worse results, as a wave of corporate bankruptcies (not captured in this sample) wiped away billions of additional dollars in debt and equity. Since 2015, 174 North American oil and gas producers have filed for bankruptcy protection, restructuring nearly $100 billion in debt, largely through write-offs._"


----------



## CanOz

Oil failed to even get into the upper value area. Now a test of the value area low is probable....monthly chart


----------



## Ann

Oil appears more like a weapon than a commodity, good luck to the FAers I say!...

*Iran has no plans to leave OPEC despite tensions: oil minister*
_
GENEVA (Reuters) - Iran has no plans to leave the Organization of the Petroleum Exporting Countries despite being treated like an enemy by some fellow members, Oil Minister Bijan Zanganeh said in an interview published on Saturday. 

“Iran has no plans to leave OPEC...and regrets that some members of OPEC have turned this organization into a political forum for confronting two founding members of OPEC, meaning Iran and Venezuela,” Zanganeh told the Iranian parliament news site ICANA. More..._

Looking at the chart this week I am wondering if that $55 ish level will become a resistance line for further rises or a point to hook onto in order to stop the free fall.

I see the RSI is in oversold but in the past during really big falls it has been happy enough to bounce around oversold for quite a while. I don't believe it has the strength to get back up and challenge that red resistance line. I think its next rise will see it challenge the very, very long term falling resistance line (not shown in this chart).


----------



## Ann

*Bulls Beware: The 2020 Oil Market Is Quickly Turning Ugly*
_
Oil bulls thought 2020 would be their year.

After half a decade of lower spending on new projects, oil production growth was supposed to slow to a trickle just as demand was supercharged by a once-in-a-generation shake up in the shipping fuel market. Many market commentators predicted that if $100 a barrel-oil was going to make a come back, it would happen in 2020.


Excitement is fading fast. The first official assessment of 2020 comes from the International Energy Agency on Friday, but a first look at forecasts from consultants and traders for supply and demand balances show persistent surpluses, not the deficit that was expected to underpin rising prices. More..._


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## Smurf1976

I'm thinking of how to interpret the market's response, or more to the point the lack of any real response, to the tanker attack.

Focusing on the price rather than politics I'm thinking that the lack of any real response to what would seemingly be a trigger for prices to rise is itself further evidence of market weakness? Price went nowhere when it would reasonably be expected to go up.

Just a random thought really.


----------



## Ann

Smurf1976 said:


> I'm thinking of how to interpret the market's response, or more to the point the lack of any real response, to the tanker attack.
> 
> Focusing on the price rather than politics I'm thinking that the lack of any real response to what would seemingly be a trigger for prices to rise is itself further evidence of market weakness? Price went nowhere when it would reasonably be expected to go up.
> 
> Just a random thought really.




I agree Smurf, it was a very lack-luster bounce given the problems for supply if there was any sort of blockage in that area. Looking at the Brent this week for a change, it just looks like it was having a bit of a bounce related to the 61.8% Fibonacci level. As you can see in the past, it has been an area where the price has paused for a bit of a jiggy-jig dance.


----------



## Ann

Oil Rig count down 1 to 788 this week.

*Oil Short-Selling Surges as Global Demand Outlook Deteriorates*

_Oil skeptics are gaining ground fast as the outlook for global demand worsens.

Hedge funds boosted their bets that West Texas Intermediate crude will fall by 46%, the most since August, according to U.S. Commodity Futures Trading Commission data for the week ended June 11. The balance between bullish and bearish wagers was the most pessimistic since February. 


“Outside the United States it’s unmistakable world growth is slowing down,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. “The more trade tensions arise, the greater the likelihood that growth is slow, and if Chinese growth slows, it’s not good for oil." More..._


----------



## Smurf1976

China's using a lot less diesel it seems:

https://www.cnbc.com/2019/05/28/falling-diesel-fuel-demand-in-china-paints-bleak-picture.html



> Diesel demand in China fell 14% and 19% in March and April respectively, reaching levels not seen in a decade, according to data compiled by Wells Fargo.




If correct then it would suggest a much deeper economic slowdown is underway with consequences extending far beyond the oil market. 14%, 19% in a month - that's massive by any definition.


----------



## Ann

Smurf1976 said:


> China's using a lot less diesel it seems:
> If correct then it would suggest a much deeper economic slowdown is underway with consequences extending far beyond the oil market. 14%, 19% in a month - that's massive by any definition.




Right at the bottom of that last article I put up was this line...._"the net-bearish position on diesel jumped by 46% to the most pessimistic in almost two years."_

Made me raise my eyebrows slightly, although I have noticed a downturn in the Baltic Dry Index over the last few sessions.


----------



## Kryzz

Lets see if oil can have a bit of a run like gold...good risk for reward trade on offer.


----------



## Smurf1976

Kryzz said:


> Lets see if oil can have a bit of a run like gold...good risk for reward trade on offer



The chart looks interesting but what worries me is the politics of it all.

Apart from central bank interest rates, it's hard to think of a market more prone to political goings on right now than oil given the tensions with Iran and the USA plus a few other situations globally.


----------



## Kryzz

Kryzz said:


> Lets see if oil can have a bit of a run like gold...good risk for reward trade on offer.
> View attachment 95593




One week on, still holding. Not looking to hold for close to a month like last time. Limit order in around prior swing low at $60ish. A political tweet or two might help get this one across the line.


----------



## Parse

These "experts" really don't have a clue do they. We just had the oil price up a fair bit at the beginning of the month and on oilprice.com we had an article that started like this:
"Oil prices jumped to their highest point in more than a month, pushed higher by an OPEC+ deal and the ceasefire between Trump and Xi"
Of course, overnight oil has dropped a few percent so now it's:
"OPEC+ Fails To Reassure The Oil Market"

Wish they would make up their mind.


----------



## Sdajii

Parse said:


> These "experts" really don't have a clue do they. We just had the oil price up a fair bit at the beginning of the month and on oilprice.com we had an article that started like this:
> "Oil prices jumped to their highest point in more than a month, pushed higher by an OPEC+ deal and the ceasefire between Trump and Xi"
> Of course, overnight oil has dropped a few percent so now it's:
> "OPEC+ Fails To Reassure The Oil Market"
> 
> Wish they would make up their mind.




Both titles are accurate. The price did hit that high and the reasons given were accurate.

However, the price then dropped, and it is correct to say that those things which pushed it to the highs were insufficient to hold them.

It is not the fault of the people reporting what is happening that what is happening is happening. If anything can't make up its mind it's the market. The folks at oilprice.com are just telling you what is happening, and at least as far as the titles go, they are correct.

Incidentally, it's now July and we can see I got my predictions wrong for H1 2019. I put my money where my mouth was too, very painful. It's possible that what I was expecting may still play out, just on a slightly different timeline and likely less extreme (or maybe still just as extreme), but I definitely got at least the timing wrong.


----------



## Smurf1976

> Oil supply exceeded demand by 0.9 million barrels per day (MMbpd) in the first half of 2019, according to the International Energy Agency’s (IEA) latest oil market report.




https://www.rigzone.com/news/oil_supply_exceeds_demand_in_1h-12-jul-2019-159290-article/

On the other hand, it seems growth in production in the USA, or parts of it at least, is set to slow:



> The promise of the Permian is shrinking




https://www.bloomberg.com/news/arti...permian-s-promise-as-shale-producers-retrench


----------



## PZ99

Down around 7%. Will be topping up on the OOO etf today. LOL


----------



## Kryzz

Smashed through the recent July pivot low, all eyes on any potential short opportunities. Wednesday last week worked out well, interesting viewing here at the moment too:


----------



## ducati916

Looks like WTI headed towards that $40 again.

jog on
duc


----------



## Sdajii

Surprised no one commented here on the very obvious head and shoulders which has just finished playing out (unless it drops further in the very near future, which seems possible). If it has indeed just finished, we may see a recovery in the immediate future. Actually, despite how obvious it looks on the chart I don't think I've seen anyone comment on it anywhere.

Left shoulder around late June, head around mid July, right shoulder late July, nasty downward sloping neckline. If you just look at the chart and ignore all else (which I'm not inclined to do, but some would) it's certainly possible to see it crashing much further, and I do see it as a possibility.


----------



## Smurf1976

Sdajii said:


> Surprised no one commented here on the very obvious head and shoulders which has just finished playing out



I think the lack of comment is probably due to not having spotted it and/or not seeing it as having played out fully yet?

If I'm seeing it correctly, and I sure don't claim to be an expert on this pattern then (all prices in USD):

Neckline seems to be about $46 reached in June 2017 and December 2018.

Head peaks at $74 in June 2018.

If I've understood correctly this then gives us a target low of $18.

If that's correct and we're going to have $18 oil then I think we're going to be in "interesting" times more broadly than just the oil price. In that context I'm thinking:

*$18 oil is cheaper than coal or gas as boiler or furnace fuel in most places so that will force coal and gas prices down. Not good news for countries which export coal and gas and Australia is number 1 globally for both.

*To have $18 oil does imply some broader goings on outside the purely financial aspects of the oil market. Specifically, I'm thinking that it means either a lifting of sanctions on Iran and/or Venezuela so more oil production, a substantial collapse in the "real" economy and thus physical oil consumption, or a major release of stockpiles so as to intentionally flood the market. Any of those has broader implications well beyond the oil price itself.

*The last time we saw prices close to that level was at the end of 2001 so rather a long time ago. Allowing for the effects of inflation etc, rather a lot of oil producers would be seriously unprofitable at that price today particularly those in Western countries.

On the point of storage release, if anyone did it then it would almost certainly be the USA - everyone else either doesn't have a sufficient volume in storage that's surplus to own needs or has an economy substantially based on oil exports such that they've no incentive to be flooding the market.

*Changes in other markets. In a world of $18 oil it seems hard to believe that any major share index, bonds or the AUD would be trading at about the present level. There will be impacts on other markets almost certainly either due to the price of oil or due to whatever other circumstances surround a collapse in the oil price. 

Or am I completely misunderstanding how this pattern's supposed to work?


----------



## Sdajii

Smurf1976 said:


> Or am I completely misunderstanding how this pattern's supposed to work?




Please read my post again, noting the times of the head and shoulders; these were all within the last two months.


----------



## Smurf1976

Sdajii said:


> Please read my post again, noting the times of the head and shoulders; these were all within the last two months.



That is true but that seems to have already played out and whilst looking at oil on a chart the far from perfectly formed but much larger one is also apparent especially on a monthly chart so I've drawn attention to it.

Or in other words, there's the short term one you've mentioned and there seems to be a possible longer term one too albeit incomplete at present. I could of course be wrong but on a monthly chart this is what I see:


----------



## Sdajii

Smurf1976 said:


> That is true but that seems to have already played out and whilst looking at oil on a chart the far from perfectly formed but much larger one is also apparent especially on a monthly chart so I've drawn attention to it.
> 
> Or in other words, there's the short term one you've mentioned and there seems to be a possible longer term one too albeit incomplete at present. I could of course be wrong but on a monthly chart this is what I see:
> 
> View attachment 96680




Yep, it (the recent one I was talking about) does seem to have completed, and now we seem to be seeing a recovery (predicting the nature of that recovery and how long it will last is a fun gave for anyone wanting to have a go!).

The one you're talking about is a completely different one, and I'm a little dubious about such long term patterns, but yes, if we see a drop to around $45 before the end of the year with a few other conditions met, it does seem possible that your pattern may play out, and if it does, there should be a moderate drop.Between the timeframe and the left shoulder not being that much of a shoulder, I'm not convinced it will play out. The right shoulder is significantly higher than the left, so even if it does play out we wouldn't expect a dramatic result. Interesting pattern to look at all the same, and yes, if the necessary conditions are met and we do see a drop below $45 I would expect to see it fall at least a little bit lower.


----------



## Sdajii

Thoughts on the WTI chart? Bars are weekly, shorter line with steeper gradient goes back to April, the longer one goes back to September 2018.

Personally I think $50 should hold as support, and if not, I don't think we'll go below the low 40s. According to the chart we should test $50 within 3 months and $42.50 within about 6 months (I'm going by the gradient of the shorter trendline, but if you use the other it stretches out further).

What would be expect to happen when this line is broken? (or is the line valid at all?)


----------



## Smurf1976

Sdajii said:


> and if not, I don't think we'll go below the low 40s.



Rationally I agree and I wouldn't be surprised if we ended up with a double bottom, so basically the same low as last time or very close to it.

Pragmatically though the international political situation could change dramatically at any time and oil is very caught up in that.

One one hand there's supply from the Middle East and the potential for disruption.

On the other there's demand from China in particular and of course the rest of the world too. If the economy slows, so does oil demand.

Then there's stockpiles in particular those in the USA. If the US President wanted to flood the world market and crash the price then he could do so simply by ordering a release of the stocks.

All that political stuff does make me wary of looking at it based on either what I'll call "normal" fundamentals or technicals since it only needs one missile or one presidential order and everything changes just like that.

Other commodities in general are at least somewhat less exposed to politics. Not totally immune but less directly tied up in it than oil.


----------



## Sdajii

Smurf1976 said:


> Rationally I agree and I wouldn't be surprised if we ended up with a double bottom, so basically the same low as last time or very close to it.
> 
> Pragmatically though the international political situation could change dramatically at any time and oil is very caught up in that.
> 
> One one hand there's supply from the Middle East and the potential for disruption.
> 
> On the other there's demand from China in particular and of course the rest of the world too. If the economy slows, so does oil demand.
> 
> Then there's stockpiles in particular those in the USA. If the US President wanted to flood the world market and crash the price then he could do so simply by ordering a release of the stocks.
> 
> All that political stuff does make me wary of looking at it based on either what I'll call "normal" fundamentals or technicals since it only needs one missile or one presidential order and everything changes just like that.
> 
> Other commodities in general are at least somewhat less exposed to politics. Not totally immune but less directly tied up in it than oil.




100% I agree with you here.

Obviously if Trump orders a strike on Iran or Saudi Arabia has a bloody revolution or whoever decides to blow up a tanker in Hormuz, the technicals go out the window, and I should have pointed out that my post only applies in the scenario of nothing like this happening. I really don't think Trump is going to flood the market using the US strategic reserves in a way which would crash prices. It would be a crazy move, it wouldn't be helpful, and he would get negative press with no benefit.

Do you think the chart that we see is like it is entirely by coincidence or do you think technicals do play a part?


----------



## Smurf1976

Sdajii said:


> Do you think the chart that we see is like it is entirely by coincidence or do you think technicals do play a part?



I think technicals are valid certainly. I wouldn't be the best person to forecast based upon it but it's a valid concept under normal circumstances definitely.

For the politics, I agree it's unlikely that Trump decides to flood the market etc but I'm conscious that we're living in an era where what seemed unthinkable not too long ago now routinely happens. Australia's revolving door of Prime Ministers, Brexit and Trump being President - practically nobody would have picked any of those a decade ago, they all seemed too far fetched for anyone to even be thinking about the concept and yet here we are.

That being so I'm factoring that risk into my thinking especially with things like oil. However unlikely any scenario seems, we're living in a time when what seems unthinkable could well happen and of all commodities oil seems the most exposed there.


----------



## Sdajii

Smurf1976 said:


> I think technicals are valid certainly. I wouldn't be the best person to forecast based upon it but it's a valid concept under normal circumstances definitely.
> 
> For the politics, I agree it's unlikely that Trump decides to flood the market etc but I'm conscious that we're living in an era where what seemed unthinkable not too long ago now routinely happens. Australia's revolving door of Prime Ministers, Brexit and Trump being President - practically nobody would have picked any of those a decade ago, they all seemed too far fetched for anyone to even be thinking about the concept and yet here we are.
> 
> That being so I'm factoring that risk into my thinking especially with things like oil. However unlikely any scenario seems, we're living in a time when what seems unthinkable could well happen and of all commodities oil seems the most exposed there.




The world is becoming insane in many ways, but I don't really find Australian PMs playing musical chairs, Brexit or President Trump to be either particularly surprising or with the exception of Trump particularly relevant to specific dramatic events effecting the oil price. What do ephemeral Australian PM terms have to do with WTI prices? That's an Australia-specific issue. Does Brexit really change that much? Trump is clearly having an effect through the tariff war with China and keeping the US economy afloat etc, but just because you find these things surprising (I don't find any of these three things particularly surprising, there was talk about Trump becoming president well before 10 years ago, and the day he announced he was running I confidently said he was going to win, I thought it was quite obvious (some people of course said I was crazy). The whole EU situation is insane and many people thought so from the start, and countries wanting to leave don't surprise me. I think a lot of why people are surprised by things these days is that despite them not being particularly surprising, the media has become so dishonest and tells people that things won't happen or are/were unlikely or crazy, not because it's true but because they want people to think it. If the media hadn't told people Trump would never be president and it couldn't possibly happen, I don't think it would have surprised anyone. 15-20 years ago I don't think it would have been surprising to people at all if they found out he would be a future president, because the media portrayed him as a successful and likeable person. Most people liked and respected him right up until the media told us not to, starting from the day he announced he was running for president. I don't find it surprising that a country being told to do things which are not in its best interests wants to leave the thing telling it those things. I found the formation of the EU surprising, it seemed like a bad idea, but I was young enough to assume that I just didn't understand the situation properly. Every day it seems worse and worse, although the media tells us otherwise (which if anything should confirm in our minds that it's terrible!).

Regardless, even if you think these things were difficult to see coming, this doesn't mean we can just pick random hypotheticals and say that everything is a reasonable likelihood now, or that all hypotheticals have equal likelihoods. Trump isn't the complete lunatic the mainstream media tries (successfully with half the world) to tell everyone he is. He does sometimes say stupid things without thinking, but he doesn't just flippantly make major tangible moves. I can't see any tangible reason to think Trump would use the strategic oil reserves in any scenario other than an emergency shortage, in which case oil prices are going to be sky high. Hypothetically anything is possible, he could hypothetically nuke Beijing tomorrow or declare himself dictator or invade Australia, but we can still reasonably assume that these are extraordinarily unlikely things with effectively zero chance of happening. We can still rank future potential events on a basis of probability with some level of confidence. I think the chance of Trump using the strategic oil reserves to lower prices in any scenario not involving high WTI prices are low enough to assume it's not going to happen. So, if he does release strategic reserves we can safely assume oil prices are going to be high.


----------



## Smurf1976

Sdajii said:


> Hypothetically anything is possible, he could hypothetically nuke Beijing tomorrow or declare himself dictator or invade Australia, but we can still reasonably assume that these are extraordinarily unlikely things with effectively zero chance of happening.



My point is not about the detail but about the reality that oil is very heavily influenced by politics and that politics itself has turned on its head, with the "unthinkable" now happening routinely in all sorts of areas.

Oil is a commodity where the biggest producer is government owned, the listed "big oil" companies being relative minnows in comparison in terms of crude oil production, and where governments and a very visible cartel collectively control most oil reserves, a decent chunk of global production, virtually all spare production capacity and a rather large stockpile.

That's a dynamic that's very different to other commodities so whilst I do see that technical analysis or normal means of fundamental analysis are valid, we should bear in mind that oil isn't actually a free market on the supply side given the involvement of governments and a cartel whose motives aren't necessarily limited to financial profit. 

I'm not aiming to predict the outcome but I'm consciously aware of the risk.


----------



## basilio

Saudi Oil refineries have been attacked by drones. Huge fires.  How much damage, how much impact on global oil supplies yet to be determined but one would think there would be fallout.  Too early yet to see how the oil price will go but I think  there could be a very sharp spike when the markets reopen.

Also of course the fact that one drone attack has been successful suggests  the risk of further attacks. Also raises the risks of expanding wars and economic crises either in Saudi Arabia or countries affected by increasing oil prices.

*Saudi Arabia's largest oil processing facility on fire after drone attacks*
Updated about an hour ago



*Video:* Drone attack in Saudi Arabia causes fire at an Aramco factory in Abqaiq (ABC News) 
*Related Story:* Saudi-led strike hits Yemen prison, killing more than 100 people
*Related Story:* Drone drops bombs on Yemen military parade, killing at least six people
*Related Story:* Australian defence company denies weapons system being used in the Yemen war
Drone attacks have struck the world's largest oil processing facility in Saudi Arabia as well as an oilfield operated by Saudi Aramco, sparking huge fires at a processor crucial to global energy supplies.

https://www.abc.net.au/news/2019-09...-arabia-biggest-oil-facilities-fires/11513728


----------



## Smurf1976

And there I was thinking only yesterday that the wedge in the oil price would have to break one way or the other pretty soon.

Abqaiq, one of the facilities reported to be on fire, processes around 7 million barrels per day when running at full capacity to my understanding. Suffice to say that's substantially more than spare capacity at all other facilities globally.

If it's substantially damaged then the world has a crisis yes. Need to get the Iran issue sorted ASAP and the oil flowing again, same with Venezuela, otherwise it's a price shock and recession here we come.


----------



## HelloU

Off topic random thought: DRO


----------



## qldfrog

HelloU said:


> Off topic random thought: DRO



DRO??? Sorry for my ignorance


----------



## Smurf1976

qldfrog said:


> DRO??? Sorry for my ignorance



I assume a reference to Drone Shield (ASX: DRO).


----------



## qldfrog

Ok, thanks makes perfect sense, i just thought i was missing something due to my non English speaking background


----------



## ducati916

_Drone strikes on the heart of the Saudi oil industry forced the kingdom to shut down half its crude production on Saturday, amounting to a loss of about 5M barrels a day, or roughly 5% of the world's daily production of crude oil, WSJ reports.

Yemen's Iranian-aligned Houthi rebels claimed credit for the attack, saying they sent 10 drones to strike at important Aramco (ARMCO) facilities, including the world's largest oil processing plant and a major oil field.

Crude prices will be on watch when trading reopens on Sunday evening.
_
You would expect a jump higher. Petrol prices to follow.

jog on
duc


----------



## HelloU

HelloU said:


> Off topic random thought: DRO



Before someone misunderstands - that was tongue in cheek (but I do expect DRO to pip on open tomoz).

I have not read the articles and do not know if we are talking 'drones' or 'Unmanned Aerial Vehicles'. There is a difference between the two, and that would be important information if making investment decisions.


----------



## Cashfarmer

Given the media reported a "drone attack" DRO should spike on open tomorrow, traders love these kinds of news releases, they provide an opportunity to pump and then dump.
Oil should spike too, I'll be buying oilers early, but wont chase the price action very far because I don't want to get caught buying at the peak.


----------



## Smurf1976

Some assorted comments and thoughts on the situation in Saudi at present:

Firstly, the Abqaiq facility is primarily an oil stabilisation plant. 

In layman's terms when crude oil comes out of the ground is is not ready to be refined and contains an assortment of problematic materials, in particular

Water. 

Grit, sand etc.

Hydrogen sulphide. This is a seriously nasty gas in quite a few ways. First because it's toxic to humans in relatively low concentration. Second because it outright stinks in even trace amounts. Third because in the presence of water it forms sulphuric acid which rusts the absolute crap out of, among other things, oil storage tanks, pipelines and refineries. So removing the hydrogen sulphide is critical before the oil can be processed further.

Methane, ethane, propane and butane are also present with the oil. They need to be removed since having them present creates a high vapour pressure and associated major fire / explosion hazard. Plus they're useful gases (methane is natural gas, ethane is a petrochemical feedstock, propane and butane are LPG) so it's preferable to not have them simply bubbling out of the oil and going to waste.

Now enough of the chemistry lesson and looking at the market, it's a bit more complex than it seems at first:

Media reports range from 5 to 5.7 million barrels of oil production per day has been stopped. I'll take it as 5 million from here since nobody seems to be saying it's less than that and it's an easy round number.

Now it is also reported that around 50% of Saudi LPG production has been disrupted. The energy content of this is equivalent to about 300,000 barrels of oil per day noting that using other liquids derived from oil is the main substitute for LPG in practice.

There's also a substantial disruption to natural gas production reported and this is the one with a bigger impact. In the Saudi context, natural gas is primarily an alternative to the use of crude oil or fuel oil as fuel, particularly for power generation, and the Saudis already burn all the gas they can manage to produce and that's still not enough (that is, they routinely burn crude oil in power stations under normal circumstances). To cut a long story short, the oil equivalent of the lost gas production amounts to about 900,000 barrels per day. If the Saudis keep their industries running, apart from oil obviously, then without the gas we can expect to see them burn 900,000 barrels of additional oil per day mostly in power stations but also other factories and so on.

Adding this up:

Saudi oil production before the attack = 10 million barrels per day
Saudi internal oil consumption before the attack = 3 million barrels per day
Exports before the attack = 7 million barrels per day

Oil production after the attack = 5 million barrels per day
Saudi oil consumption after the attack if oil is used to replace lost gas production in full = close to 4 million barrels per day.
Exports after the attack = 1 million barrels per day.

So my point is that it's a 50% drop in oil production yes but allowing for internal use it's a far greater % cut in exports and that's what matters so far as the rest of the world is concerned.

Estimates of spare production capacity around the world vary but they're all very much less than the 5 - 7 million barrel per day total impact (depending on which figures you use and what assumptions are made about keeping the lights on in Saudi) of the attacks. Even if we take the bottom of that range, just the 5 mmbpd lost and ignoring what the Saudis themselves do about the lack of associated gas production, then that's still a big impact.

Note that I'm not predicting that your local service station will be out of fuel by this time tomorrow but this is going to have a significant market impact most certainly. The question is thus about what happens next?

How long will the outage be?

Will there be further attacks?

To what extent will Saudi and/or other OPEC members release whatever stockpiles they have?

To what extent will IEA member countries release stocks?

In the case of the latter, if the IEA does act, what happens with regard to the one member that's known to be swimming naked and doesn't actually have the stockpile it agreed to have? That country being Australia. Buying from the USA, at whatever price they ask which likely won't be a purely financial one, is plausibly Australia's only option to retain compliance with the agreement.

This could all get interesting.....


----------



## rederob

Smurf1976 said:


> Some assorted comments and thoughts on the situation in Saudi at present:....



There may be a *market price *reaction to the attacks, but unless the damage has been substantial, which to date appears not to be the case, then global oil reserves will be more than adequate to make up the temporary shortfall.
If the Saudis have sugar coated the situation then I am with you smurf, and will sell some of my BPT shares at $3 each .


----------



## ducati916

_Following this weekend's attack on Saudi oil production, WTI crude (NYSEARCA:USO) is ahead 14.5% to $63 per barrel in early Sunday trades.

S&P 500 (NYSEARCA:SPY) futures are down 0.5%, and Nasdaq 100 (NASDAQ:QQQ) futures are off 0.7%._

Also, I wonder at the timing: if the (attackers) have a branch of their business trading futures, then, an attack on Saturday would allow a long position Friday, to reap the profit when markets re-open. The ultimate in inside trading. A bit James Bondesque.



jog on
duc


----------



## rederob

POO was up over 10% at start of trade this morning - to around $61.50 - but quickly came off its peak.
Most of the early price action after opening has been downwards, so there is not much at present suggesting POO has legs to run much higher than it has.
This seems a case where a lot more light needs to be shed on the actual damage done to Aramco's refineries before markets will get serious.
The Donald has tweeted here, so nothing to worry about  .
POG also spiked at open, and since then has traded flat.
Let's see what the Fed says later this week, as a rate cut might keep commodities across the board a tad higher than usual.


----------



## Garpal Gumnut

rederob said:


> POO was up over 10% at start of trade this morning - to around $61.50 - but quickly came off its peak.
> Most of the early price action after opening has been downwards, so there is not much at present suggesting POO has legs to run much higher than it has.
> This seems a case where a lot more light needs to be shed on the actual damage done to Aramco's refineries before markets will get serious.
> The Donald has tweeted here, so nothing to worry about  .
> POG also spiked at open, and since then has traded flat.
> Let's see what the Fed says later this week, as a rate cut might keep commodities across the board a tad higher than usual.




Even in a worse case scenario after this attack damage-wise to oil stock and infrastructure , the Saudi's have protected themselves well by hedging.

In fact with so many Wombats of Wall St. attempting to profit, the POO may in fact contrarily decrease as other players increase their output/sales.

gg


----------



## Smurf1976

rederob said:


> There may be a *market price *reaction to the attacks, but unless the damage has been substantial, which to date appears not to be the case, then global oil reserves will be more than adequate to make up the temporary shortfall.



Agreed yes. Physically there's enough oil in storage in various places and to clarify, my comments are in regards to price and other (eg political) impacts.

Price is self explanatory. Short term anything could happen. Medium term, if production stays down, well a diminishing inventory of anything tends to push the price up eventually.

Politics could be interesting particularly in the case of Australia which seems plausibly backed into a corner. It's the only country known to be non-compliant with its obligations with the IEA and, as a major exporter of energy commodities other than oil, also can't really afford to thumb its nose at the IEA.

Thus far the only apparent escape route, should the IEA direct a release of stocks (as is the intended mode of operation) and Australia be caught out, looks to be a deal with the USA to access their strategic stockpile. Deal as in Australia simply agrees to whatever the US wants, having zero choice in practice.

Being cornered in an emergency situation with no options other than to simply agree to what someone else wants is never a good place to be in.......

Back to price and politics together, the other interesting one is to what extent will the market apply a "risk premium"? 

The attack itself is a bit like September 11 or Chernobyl in that regardless of the actual impact, it's proof of concept. Those incidents proved beyond all doubt that flying a plane into an office building is one way to demolish it and that yes a large nuclear reactor can in fact blow up. The aviation and nuclear industries have never reverted to their pre-2001 and 1986 status respectively.

With oil, well we now have proof that whoever with relatively simple equipment can set large oil facilities on fire. There's no erasing that proof from the minds of all involved in the oil market so it'll be interesting to see how the market responds there. Regardless of how quickly Saudi fixes the plant, the threat remains that the same occurs again at any time.


----------



## basilio

Price of oil has jumped .. No surprise here. US trying to blame Iran. Iran saying eff off and making it clear there will be consequences if they are attacked.

Depending on how long it will take to repair the Saudi refinery losing 5m barrels of oil a day will turn the oil market on its head.
Implications for world economies are ........ (chose own word.)

*Iran warns US it’s ‘ready for fully-fledged war’ after drone attack on oil rig*
Before and after pictures show how armed drones carried out a devastating attack that wiped out five per cent of the world’s crude oil supplies.

https://www.news.com.au/world/middl...g/news-story/694f6273aa01140c66cb715516475c3b

*US ‘locked and loaded’ after blaming Iran for Saudi oil attack*
September 16, 2019
30
Share
       






The United States doubled down on its claim that Iran was behind attacks on Saudi oil refineries on Sunday, despite Houthi rebels saying they launched the attack from Yemen.
https://chinapost.nownews.com/20190916-747038


----------



## basilio

"A significant volume of oil production can be restored within days but the company would need weeks to reach full output again, Bloomberg News reported Sunday, citing unnamed sources."

https://www.theguardian.com/world/2...a-oil-attack-as-crude-prices-soar-iran-aramco


----------



## Smurf1976

Looking at the overall situation thus far, oil's trading at ~10% higher price than it was on Friday before the attacks. That's a jump but not a massive one.

What I do think could fairly be said though is that there's more risk to the upside than to the downside at this point. If the situation escalates then it's not hard to foresee scenarios involving ongoing disruption to oil production in Saudi or some other country nearby. In contrast, it's somewhat harder to come up with a scenario where anyone floods the market and substantially drops the price.

Oil at $60 becomes oil at $90 = plausible, it could happen if this escalates.

Oil at $60 becomes oil at $30 = seems extremely unlikely to me. Anyone who could actually flood the market to that extent loses by doing so.

In view of the political circumstances anyone who shorted oil right now would be brave in my view.


----------



## Garpal Gumnut

basilio said:


> "A significant volume of oil production can be restored within days but the company would need weeks to reach full output again, Bloomberg News reported Sunday, citing unnamed sources."
> 
> https://www.theguardian.com/world/2...a-oil-attack-as-crude-prices-soar-iran-aramco




F#$k anything from the Guardian. Communist bastards all of them.

gg


----------



## rederob

WTI was sitting at $62.90 as I began this post, which was over a dollar higher than same time yesterday.  (But it lost a dollar between beginning this and finishing it!)
What is significant?
First, that as the *details* came in regarding the "damage," POO began to climb again.  So we know that the probability of returning to full production quickly is improbable, otherwise the price would have fallen further away.
Next, the last report I read this morning had about half the 5.7MB loss in production mitigated, so we are looking at a bit less than 3MB/day to be made up.  
The Saudis have a strategic reserve of approx 60mb, or 20 days, should they dip into it.  And the USA has some 645MB in their strategic reserve, so more than enough to counter the present supply disruption if it lasted many months.  Both nations are prepared to dip into their reserves.
Next, the advantage of the Saudi's reserves is that they are at the ports, so continuing deliveries as normal can be achieved.  That is not the case for the USA's reserves in that tanker re-routing would be necessary, so any release from it's massive reserves would be incremental.
So we know that there are not going to be any oil supply shortages in the near term.
For our Oz oilers, the extra dollars per bbl will be welcome profits, but how long it lasts nobody knows.  My tea leaves are saying a month or two are quite possible.  However the contractors just engaged by the Saudis have yet to make a thorough assessment and when that news becomes known we will have our next major price movement - direction tba .
The real take away is that production will be constrained, so a return to "normal" will take twice as long because any reserve depletion will need to be topped back up.
The political perspective is less clear.
If it is shown that the Iranians were responsible for the drone (more likely cruise missile) attacks I expect POO to move higher as a war risk premium will be factored in.  It's likelihood is very low imho however Iran also controls the Straits of Hormuz and this point cannot be taken lightly in a tinderbox environment.
Difficult to see POO under $60 for a while, and the upside risk premium should remain while the likes of Trump continue to send mixed messages.


----------



## basilio

Garpal Gumnut said:


> F#$k anything from the Guardian. Communist bastards all of them.
> 
> gg




Did you notice the quote came from Bloomberg news Gummie ?  Or are they Commie bastards as well


----------



## qldfrog

I 


basilio said:


> Did you notice the quote came from Bloomberg news Gummie ?  Or are they Commie bastards as well



Assume gg was ironic, when The guardian quotes Bloomberg, what's next? Real world reports and news,?


----------



## Garpal Gumnut

qldfrog said:


> I
> 
> Assume gg was ironic, when The guardian quotes Bloomberg, what's next? Real world reports and news,?




If I can influence the market to my advantage, I will, via comments on Newspapers.

The Grauniad (Guardian ) believe I am related to Lenin, the Times of London to minor Royalty, the Courier Mail to Gorden Tallis and the New York Times to Obama ( not the bin, but the Barak ) .

It is essential to "play" these news outlets.

The Guardian writers are on 3 mo. contracts atm and the "paper" is about to go arse up. 

For a leftie rag such as the Grauniad to comment on the POO is in itself an an indictment of the volatility we experience. 

Tally ho, anyone for Florentine at the open tomorrow?

gg


----------



## Smurf1976

Giving this some further thought.....

I ponder to what extent end users of oil, from the general public with cars etc through to ships and industry, will engage in hoarding in anticipation of price rises?

At any given time most end user fuel tanks won't be full. Check 1000 random cars on the street and perhaps 5% will have been filled within the past 50km but the vast majority at any given time will have space in the tank.

Likewise it's not uncommon in the northern hemisphere in places where oil heating is used that tanks aren't filled to capactiy even after a delivery. Someone has a 1000 Gallon tank, knows they use 700 Gallons a year and there's a bit still in the tank, so orders 700 Gallons which fills it to 800. Etc, that's not uncommon.

Now my thinking is that if consumers are widely expecting price rises then at least some will choose to increase their stocks. They're driving past the servo, the tank's a third full but they decide to fill it up to beat the price rise. Someone ordering heating oil says "fill it up" rather than buying a specific quantity. Industrial and agricultural users decide to fill their tanks to capacity.

Not everyone will do so of course but it's fair to assume that literally nobody will do the opposite. Nobody's rationally going to run down their fuel inventory on account of the current circumstances. Rather, they'll either do nothing different or some will choose to fill up their tanks etc. End result should thus be some level of increased sales in the short term.

Whilst that's a temporary effect, since it moves the fuel from one tank to another without changing underlying consumption, my thinking is that we may see more oil removed from reported stocks than expected due to this phenomenon of end users increasing their physical holdings of oil products.

Time will tell how significant it is or isn't but I wouldn't expect the effect to be zero. At least some consumers will fill tanks to higher levels than they otherwise would have thus creating a short term rise in apparent demand and consequent drop in reported stocks.


----------



## SirRumpole

Also interesting will be if our government makes any moves to increase our oil reserves from 28 days to the recommended 90 days.

They will probably have to wait until the price settles down again, they have blown any chance to do it quickly on the cheap.


----------



## qldfrog

Got full tank
Son
mentioned he filled up this week end after the attack and got a jerry can 50pc full for the machinery


----------



## Garpal Gumnut

And after all the kerfuffle, it's on at last in the Middle East. 

Monsters fighting monsters with the Donald, Putin and Xi supplying the hardware. 

For us in ASF.

*BUY OILERS*

gg


----------



## Smurf1976

Another thought is about the broader economy in Australia and elsewhere.

Bearing in mind that the Australian economy was already somewhat shaky before this, my thinking is that there's two impacts really.

One is the practical one. To the extent that fuel prices actually rise that's an increase in costs for consumers and businesses. Consumers spend less on discretionary purchases, business has higher costs = not a good combination.

The other is the psychological one. Fear of not only further hikes in fuel prices but of the broader economic impacts of that could plausibly lead to consumers reigning in spending beyond the direct impact of petrol etc prices on household budgets. Again any reduction there will mean less spending on discretionary purchases.

So a restaurant for example doesn't have much direct use of oil, beyond transporting food etc to it, but is likely to be a victim if consumers reduce spending on non-essentials.  

Note that I'm not aiming to be overly pessimistic, and to be sure it's only a few $ per barrel at this stage, but I'm just looking at the potential consequences given the apparent _possibility _that the situation could escalate.


----------



## PZ99

Smurf1976 said:


> Another thought is about the broader economy in Australia and elsewhere.
> 
> Bearing in mind that the Australian economy was already somewhat shaky before this, my thinking is that there's two impacts really.
> 
> One is the practical one. To the extent that fuel prices actually rise that's an increase in costs for consumers and businesses. Consumers spend less on discretionary purchases, business has higher costs = not a good combination.
> 
> The other is the psychological one. Fear of not only further hikes in fuel prices but of the broader economic impacts of that could plausibly lead to consumers reigning in spending beyond the direct impact of petrol etc prices on household budgets. Again any reduction there will mean less spending on discretionary purchases.
> 
> So a restaurant for example doesn't have much direct use of oil, beyond transporting food etc to it, but is likely to be a victim if consumers reduce spending on non-essentials.
> 
> Note that I'm not aiming to be overly pessimistic, and to be sure it's only a few $ per barrel at this stage, but I'm just looking at the potential consequences given the apparent _possibility _that the situation could escalate.



On the practical impact: Hikes in fuel prices result in higher inflation which delays the need for further interest rate reductions. I could be wrong here but it seems people are more worried about their power bills rather than the fuel costs at present.

PS, I'm looking forward to re-buying the oilers today


----------



## rederob

PZ99 said:


> On the practical impact: Hikes in fuel prices result in higher inflation which delays the need for further interest rate reductions. I could be wrong here but it seems people are more worried about their power bills rather than the fuel costs at present.
> 
> PS, I'm looking forward to re-buying the oilers today



There are mixed messages about the timeline for Aramco returning to full production, so overnight the POO dropped.
That might see the oilers come off the boil, so you could be in luck.
I do not believe anything reliable will come out until Aramco's contractors have done a full assessment so we are truly in speculators' territory.
POO is holding above $59 at time of posting, but remains in a downward trend over the past 6 hours.


----------



## InsvestoBoy

SirRumpole said:


> Also interesting will be if our government makes any moves to increase our oil reserves from 28 days to the recommended 90 days.




FWIW, as an International Energy Agency member country and net oil importer, it isn't a recommendation to hold 90 days in SPR, it is an IEA* obligation* that we have consistently failed to meet.

Despite having a lot of crude energy resources, we don't have the appropriate refining capacity to meet domestic demand and import quite a lot from overseas, including the Gulf region.


----------



## Sdajii

The speculation all seems to be focussed on how long it will take Saudi Arabia to get repairs finalised and get back to normal operations. This is obviously important, but less focus than I would have expected is being put on the likelihood of further attacks.

There's a lot of evidence now confirming Iran was behind the attack and that they did their best to cover their tracks but it wasn't sufficient. It seems Iran attacked Saudi Arabia out of desperation; Iran is hurting due to sanctions and likely wants to bring about a situation where the world is forced to accept their oil. Given that sanctions are now being increased and Iran is going to hurt even more, making it even more desperate, and given that they often boast that if things get too extreme they will bring the oil situation to a standstill, often talking about bringing transport through the strait of Hormuz to a halt, it's difficult to now see this escalation cooling down.

Can anyone see how Iran is going to calm down and do nothing when the situation is escalating in terms of how desperate they are becoming, giving them more motive, and having been caught out in the drone and missile attack, giving the US and her allies incentive to take military action? What realistic alternative outcomes are there to military action? I can't see Iran just rolling over and accepting defeat and sitting around in poverty. Iran also seems far too proud to simply accept US dominance and bark to Trump's tune, going along unconditionally with everything Trump dictates in exchange for being able to go about business freely. The only other option seems to lead to escalating military action.

Thoughts? Am I missing something? The market seems to be assuming there's a low chance of things escalating, but I see it as the clearly most likely scenario.


----------



## jbocker

Sdajii said:


> Thoughts? Am I missing something? The market seems to be assuming there's a low chance of things escalating, but I see it as the clearly most likely scenario.



 I think the market is on the money, otherwise if they saw it the same as your most likely scenario then I think we would already be in POO $100+ already. Not to say there is a lot of shouting and niggling going on and if it continues and someone pushes too hard the real fight might begin. I think all parties would be very cautious about making that big shove. 
Lets hope it settles and everyone backs off. That may take some time … giving the weapons sellers time to cash in.


----------



## Sdajii

jbocker said:


> I think the market is on the money, otherwise if they saw it the same as your most likely scenario then I think we would already be in POO $100+ already. Not to say there is a lot of shouting and niggling going on and if it continues and someone pushes too hard the real fight might begin. I think all parties would be very cautious about making that big shove.
> Lets hope it settles and everyone backs off. That may take some time … giving the weapons sellers time to cash in.




I'm not sure we're going to see $100 and if we do I'm almost certain we're going to see something well below $50 within a few months of it after the economy crashes, demand dwindles and supply increases. So, (keep in mind this is a hypothetical, not what I expect) if we assuming oil will be $120 in 2-6 months after USA and SA strike Iran, Iran fights back and it spreads somewhat in the middle east, and then in 4-10 months oil is $30, what price would it make sense for the market to set now? You can say that since we know (in this hypothetical) it's going to $110 within 6 months it makes sense to take a massive long position at anything more than about 10-20% below $110, and since it's currently trading at $58-60 the market is sure it won't go about $70-80, but we can see this doesn't make sense since if it does go to $110 (which is a real life possibility in the next few months), we also can be very confident it will crash the market and with it the oil price, presumably to around $40 or less, so surely the market would be so full of shorters that the price couldn't get above about $50-60 even in all out war. Clearly it doesn't work that way for several reasons.

But regardless of what the market thinks, I'd be interested to hear people's own thoughts here and why they expect it rather than just 'the market thinks x'. Will Iran just accept the increased sanctions and economic pain and do nothing? They were already willing to stage an attack and blame Yemen. Presumably that means they didn't want to take credit because fear a military response, and having been caught out they are very vulnerable to a counterstrike given how thin their ice now is, but the pressure is on more than ever. It has seemed to me for several months that Trump wants a war with Iran, he's just being absolutely sure to make it look to the majority of people that he really didn't want it, so he has to make the first move subtly to ensure it looks like they made the first move.


----------



## rederob

Sdajii said:


> I'm not sure we're going to see $100 and if we do I'm almost certain we're going to see something well below $50 within a few months of it after the economy crashes, demand dwindles and supply increases. So, (keep in mind this is a hypothetical, not what I expect) if we assuming oil will be $120 in 2-6 months after USA and SA strike Iran, Iran fights back and it spreads somewhat in the middle east, and then in 4-10 months oil is $30, what price would it make sense for the market to set now? You can say that since we know (in this hypothetical) it's going to $110 within 6 months it makes sense to take a massive long position at anything more than about 10-20% below $110, and since it's currently trading at $58-60 the market is sure it won't go about $70-80, but we can see this doesn't make sense since if it does go to $110 (which is a real life possibility in the next few months), we also can be very confident it will crash the market and with it the oil price, presumably to around $40 or less, so surely the market would be so full of shorters that the price couldn't get above about $50-60 even in all out war. Clearly it doesn't work that way for several reasons.
> 
> But regardless of what the market thinks, I'd be interested to hear people's own thoughts here and why they expect it rather than just 'the market thinks x'. Will Iran just accept the increased sanctions and economic pain and do nothing? They were already willing to stage an attack and blame Yemen. Presumably that means they didn't want to take credit because fear a military response, and having been caught out they are very vulnerable to a counterstrike given how thin their ice now is, but the pressure is on more than ever. It has seemed to me for several months that Trump wants a war with Iran, he's just being absolutely sure to make it look to the majority of people that he really didn't want it, so he has to make the first move subtly to ensure it looks like they made the first move.



Cutting to the chase, Iran can choke off the the Strait of Hormuz, which is the world's single most important oil passageway, being the only route for over 15% of global oil and one-third of the world's LNG.
And Iran has *VERY *powerful allies who are also not overly fond of the USA.
So for the USA to think that attacking Iran will achieve what they want is exceptionally naive.
Oil under a scenario of Iran under attack would reach all time highs.  And if the war was prolonged, oil prices would stay high for a longer time still as all the US's strategic reserves would be depleted and replenishment required.
*And*, that's assuming Iran had zero opportunity to damage Saudi or UAE production facilities.

The very separate business as usual scenario should still see oil hold at and above $50/bbl for some time as the USA's Permian producers are not profitable at lesser prices, and producer debt is leading to record bankruptcies because the costs of borrowings are crippling them.  Any dips into the $40 will see Permain production decline and cause prices to again rise.


----------



## Smurf1976

I'm in the camp expecting that there's a price rise, although I won't try and predict when beyond saying that it'll be in the not to distant future.

My reasoning is firstly the political situation as has already been mentioned. It's not only the actual loss of production, and that is certainly not insignificant of itself, but that there's now an effectively permanent threat of similar attacks. Well, it's permanent until there's a radical change in the overall situation which probably won't happen quickly. 

Second reason is that nobody would dispute that this current (USA) business cycle is getting rather old, indeed it's the longest on record, and if we look back over the entire period since the end of WW2 then there seems to be only one occasion when the oil price didn't increase toward the end of the business cycle, that being in 1960. The one thing missing that would signal the end of this business cycle has been a rise in the oil price.

Note that in saying this I'm not counting the brief period between the two early 1980's "double dip" recessions as a cycle given how short it was. That said, whilst it didn't increase the oil price was most certainly very high during that period.

Third reason is that I note that the US has been a major source of production growth in recent years but that a trend seems to be emerging of companies wanting greater returns to investors now, so that is to pay dividends, and a lesser focus on production growth. That factor ought to slow future gains in US production.

Putting all that together, well nothing is ever certain but there seems a lot more reasons why price would go up than reasons why it would go down. 

If any major increase does occur though well it'll kill the economy no doubt. Things were looking a bit shaky economically even before the Saudi attacks.


----------



## Sdajii

rederob said:


> Cutting to the chase, Iran can choke off the the Strait of Hormuz, which is the world's single most important oil passageway, being the only route for over 15% of global oil and one-third of the world's LNG.
> And Iran has *VERY *powerful allies who are also not overly fond of the USA.
> So for the USA to think that attacking Iran will achieve what they want is exceptionally naive.
> Oil under a scenario of Iran under attack would reach all time highs.  And if the war was prolonged, oil prices would stay high for a longer time still as all the US's strategic reserves would be depleted and replenishment required.
> *And*, that's assuming Iran had zero opportunity to damage Saudi or UAE production facilities.




Yes, as I said, the strait of Hormuz is one of the big cards they hold and repeatedly flaunt.

You say it's naive to think attacking Iran will achieve their goals, but do you think that's what they think? I don't think they're stupid... well, sort of... maybe... but either way, I don't think anyone especially wants to go to war, but it seems to be a situation which is escalating and I find it difficult to see a likely scenario where it settles down. The USA can't at this point just say 'Hey, actually, don't worry, let's just bury the hatchet and forget that surveillance drone you shot down and the drones and cruise missiles you attacked our ally with and tried to use a scapegoat and you know what, don't worry about those sanctions, just sell what you like, we don't care now'. Similarly, Iran (which jokes aside is more controlled by pride and arrogance even than the USA) can't exactly say 'Hey, look, we're really sorry about everything, can we just put it all behind us, be friends, and have a deal that allows us to operate our economy freely? No more silly business, pinky promise!'

Unless Trump has some clever plan up his sleeve to diffuse the situation and play peacekeeper to look amazingly wonderful on the global stage (and I can't even imagine how he'd do that now), I don't see it calming down.



> The very separate business as usual scenario should still see oil hold at and above $50/bbl for some time as the USA's Permian producers are not profitable at lesser prices, and producer debt is leading to record bankruptcies because the costs of borrowings are crippling them.  Any dips into the $40 will see Permain production decline and cause prices to again rise.




Agreed.


----------



## Sdajii

Smurf1976 said:


> I'm in the camp expecting that there's a price rise, although I won't try and predict when beyond saying that it'll be in the not to distant future.
> 
> My reasoning is firstly the political situation as has already been mentioned. It's not only the actual loss of production, and that is certainly not insignificant of itself, but that there's now an effectively permanent threat of similar attacks. Well, it's permanent until there's a radical change in the overall situation which probably won't happen quickly.




I'm not sure the market will care too much about the little scuffle unless there are further attacks. It will probably put a small risk premium on the price for a while but the market is pretty fickle. If there are further attacks at this point I think the market response will be significant. At this point it can be seen (well, not reasonably, but it is being seen) as a one off/isolated incident. Another attack now would really put a piece into the picture and make it look like a bigger issue. Currently a direct attack with drone bombers and cruise missiles on the world's largest oil refinery is being taken surprisingly mildly.



> Second reason is that nobody would dispute that this current (USA) business cycle is getting rather old, indeed it's the longest on record, and if we look back over the entire period since the end of WW2 then there seems to be only one occasion when the oil price didn't increase toward the end of the business cycle, that being in 1960. The one thing missing that would signal the end of this business cycle has been a rise in the oil price.




We certainly live in strange times. We're well overdue for a crash, and I was expecting one 4, 3, 2 years ago, but the rules seem to have changed and we've deviated from the usual pattern. Trump is certainly a big part of the unorthodox situation, and part of that is because he is so desperate to be seen as the best president in the history of his country that he'll do whatever it takes to make it happen, and like him or not, he's a pretty good business man with a good grasp of economics and management. A crash in the near future wouldn't surprise me, neither would 5 more years of Trump and economic growth.



> If any major increase does occur though well it'll kill the economy no doubt. Things were looking a bit shaky economically even before the Saudi attacks.




I totally agree with this, and I think it's a likely scenario. As you say we're overdue for a crash, we have events which are likely to push the price of oil up, that as a rule signals a crash, and I have no doubt that's what would happen if oil spiked now.

Thanks for sharing your thoughts, I appreciate your post.

I still see no ideas about a scenario where the situation in the middle east is diffused though.


----------



## Smurf1976

Sdajii said:


> We certainly live in strange times



I think that's the one thing that can be said with certainty. 

I'll steer clear of politics itself and simply note that we're in an era with a US President who could be fairly described as extremely unconventional when compared to predecessors and where Britain has become effectively irrelevant in world affairs to the point that it doesn't really even rate a mention.

It's an era where all manner of "unthinkable" things, and knocking out much of Saudi Arabia's oil production is one of many such examples, now happen fairly routinely and life just carries on regardless.

We're on the same page I think yes. Various risks seem very obvious but there's no certainty what actually happens next.


----------



## Smurf1976

Something else I'll throw into the mix is the upcoming change to regulations regarding fuel used on ships which greatly reduces the allowable sulfur content.

In theory it's just a matter of removing the sulfur from #6 fuel oil and that's the logical approach. There is however a lot of uncertainty as to the capacity of refineries to do so, given that historically (and at present) there has been no such requirement. Industry doesn't generally spend $ billions on equipment that isn't needed and it's apparent that a lot of refineries haven't done upgrades for this recently.

Where that ends is with the idea that considerable volumes of #2 fuel oil, aka diesel or light fuel oil, which is normally much lower in sulfur will be blended in so as to meet the specifications. Technically that's a workable solution but it has the effect of significantly increasing demand for diesel and leaving a surplus of heavy fuel oil.

One possible outcome, especially if we see ongoing reductions in crude production, is that Saudi Arabia ends up _importing_ heavy fuel oil at a price lower than the crude oil from which it came and using that to run power generation. Saudi is the biggest potential market for doing that, odd though the concept of them importing oil may seem. 

What effect all that has on price is a good question but it's another disturbance to the market most certainly given that fuel use by ships is not insignificant.


----------



## Smurf1976

So the oil price is back roughly where it started.

I'll avoid making political comments as such but just noting the situation:

*Drone, missle or whatever you want to call it attack on the oil facilities in Saudi.

*Drums of war being given a bash with various countries blaming Iran.

*Attempts to impeach the President of the USA.

Things that in any previous time would have been in the news for months but in 2019 everyone just shrugs their shoulders, the markets move 1% or so, the Federal Reserve throws around a few $ billion and life carries on.

We're living in a very strange times and in the context of the price of oil I can't avoid thinking that the price is being "managed". OK, so we all know OPEC is a cartel but I mean beyond that. It's just seems too stable at present really - world goes mad and the oil price is as consistent as the sun rising each morning. That just doesn't seem right.


----------



## Smurf1976

https://finance.yahoo.com/news/ships-set-burn-raw-crude-230100180.html


----------



## rederob

Smurf1976 said:


> So the oil price is back roughly where it started.
> 
> I'll avoid making political comments as such but just noting the situation:
> 
> *Drone, missle or whatever you want to call it attack on the oil facilities in Saudi.
> 
> *Drums of war being given a bash with various countries blaming Iran.
> 
> *Attempts to impeach the President of the USA.
> 
> Things that in any previous time would have been in the news for months but in 2019 everyone just shrugs their shoulders, the markets move 1% or so, the Federal Reserve throws around a few $ billion and life carries on.
> 
> We're living in a very strange times and in the context of the price of oil I can't avoid thinking that the price is being "managed". OK, so we all know OPEC is a cartel but I mean beyond that. It's just seems too stable at present really - world goes mad and the oil price is as consistent as the sun rising each morning. That just doesn't seem right.



"*Managed*" to the degree that oil under $50/bbl becomes to marginal for lots of North American production (eg Permian Basin and Canada's oil sands), but still profitable for most of OPEC, especially in the Middle East.
Separately there is the issue of energy substitution between oil and gas.  I have not yet worked it out, so won't speculate on what it means - I know it's happening, but have no idea how it moves their respective prices.
Maybe the other issue that is seldom covered is that it's US money that significantly dabbles in the oil markets.  And if you live in the USA you will know that oil and gas production are not just at record highs, but able to swing higher if the market were to tighten.
What is certainly true is that OPEC's dominant role in price setting has gone, and they are now reacting to US production/capacity.  
That said, it's such a different world out there, as you say.
All because of who holds the Trump card .


----------



## Smurf1976

rederob said:


> Maybe the other issue that is seldom covered is that it's US money that significantly dabbles in the oil markets.  And if you live in the USA you will know that oil and gas production are not just at record highs, but able to swing higher if the market were to tighten.



I heard a commentator a few months ago nothing that the US shale industry has effectively done what was always thought to be impossible.

He was nothing that the business model gives rise to a situation where, in practice, the US can turn money into oil.

There’s plenty of shale oil just waiting for someone to throw money at it. Add the Federal Reserve into the equation and follow the argument - production can be ramped up so long as money itself is cheap enough.

Now add in all the international political stuff and it gets rather complex with actual production costs being almost a side issue.

Meanwhile the Saudi’s are talking about prices going to huge but unspecified levels but the actual spot price is down over the past day.

My basic conclusion is that this is not a normal market being driven by supply and demand and that the level of “other” factors at work today seems to far exceed OPEC’s quotas which were at least a straightforward concept.


----------



## ducati916

_*Falling hotel rates in Midland a sign of the times. *Liam Denning of Bloomberg Opinion wrote about the double-digit decline in hotel rates in West Texas. That magnitude of a percentage decline is “very, very rare,” said Jan Freitag, a senior VP at STR. “Normally, you get that when something like a hurricane hits; like a natural disaster.” The negative trend for hotel rates coincides with the contraction in drilling activity. _
_
jog on
duc_


----------



## ducati916

_*U.S. SPR more limited than expected.* The U.S. strategic petroleum reserve is thought to be a massive trove of oil that can be readily deployed. For instance, in a hypothetical outage in the Strait of Hormuz, the U.S. should be expected to withdraw 3.5 mb/d of oil from the SPR. But the reserve might not be able to pull that off. Changes in pipeline flows, and huge increases in upstream production mean that only about 1.5 mb/d can be drawn down at a time, according to Platts.

*OPEC production fell most in 16 years in September.* Largely due to the Abqaiq attack, OPEC’s oil production fell sharply in September. It was the single-largest disruption in history when it occurred, although its short duration meant that the outage fell short of the PDVSA strike in 2002 in terms of total volumes lost. Still, oil prices languish as demand continues to weaken. “Oil-demand growth is hitting the skids as macroeconomic, trade, and political risk drivers continue to intensify, from Brexit to impeachment through Persian Gulf conflict risk and the U.S.-China trade war,” Bob McNally, president of Rapidan Energy Group, told Bloomberg. 

jog on
duc_


----------



## ducati916

So the latest COT data:




Would suggest that while not a clear buying opportunity, on balance, it would seem to be preferable to be long than short.

jog on
duc


----------



## ducati916

_*EP Energy Corp. files for bankruptcy.* *EP Energy Corp. (OTCMKTS: EPEG)* filed for bankruptcy protection, and with debt at $4.6 billion, it is the largest bankruptcy filing in more than three years. 

*Credit redetermination could hurt U.S. shale.* For the first time since 2016, lenders could cut the credit available to shale drillers, which could tighten the noose on the shale boom. According to a survey from Haynes and Boone, a majority of respondents – including both oil and financial executives – expect tighter credit conditions in the latest redetermination period. 

*Oil shipping costs soar. *The cost of chartering a very large crude carrier (VLCC) from the U.S. Gulf Coast to Asia has spiked by $10 million, or $5 per barrel, in the wake of American sanctions on a Chinese shipping giant. The move comes at a time when another portion of tankers are sidelined as they are undergoing maintenance ahead of IMO regulations on maritime fuels. The soaring cost of shipping could curtail U.S. oil exports, which may depress WTI relative to other benchmarks. “Asia has been pulling barrels from everywhere,” Michael Tran, an analyst with RBC Capital Markets, told the WSJ. “If it becomes uneconomical to ship U.S. barrels to Asia, that essentially leaves barrels stranded in the U.S.”_

So while POO could fall as easily as rise, the greater volatility move (potential) would seem to be higher, even though that may take a little time to manifest.

jog on
duc


----------



## notting

What is clear is that the US has achieved independence from the mad Arabs oil.
The fact that the bombing of the Saudis did nothing for the oil price proved the point.
Thus it makes perfect sense the Trump can just leave the region and tell them all to get F&*)ed.
We no longer need you lunatics and you can go on killing each other as much as you like.
Renewable energies and fracking are now taking over so stay in your Muhammad arse licking terrorist hell without us providing security and we'll carry on civilizing the civilized.


----------



## Smurf1976

notting said:


> We no longer need you lunatics and you can go on killing each other as much as you like.
> Renewable energies and fracking are now taking over so stay in your Muhammad arse licking terrorist hell without us providing security and we'll carry on civilizing the civilized.




An issue there is the divergence between what's good for the USA versus what's good for anyone else.

Australia for example has never imported more oil in absolute volume terms than it does now and as a net % of consumption you'd have to go back to the 1960's to find a time when we were more reliant on imports than we are today.

So heading in opposite directions there.


----------



## qldfrog

Smurf1976 said:


> An issue there is the divergence between what's good for the USA versus what's good for anyone else.
> 
> Australia for example has never imported more oil in absolute volume terms than it does now and as a net % of consumption you'd have to go back to the 1960's to find a time when we were more reliant on imports than we are today.
> 
> So heading in opposite directions there.



could the Australian position be a reflection of policy trends..no fracking, bad Australia stealing Timor resources, fossil fuel is bad, big us corporation taking over or have we really exhausted all our resources?


----------



## IFocus

qldfrog said:


> could the Australian position be a reflection of policy trends..no fracking, bad Australia stealing Timor resources, fossil fuel is bad, big us corporation taking over or have we really exhausted all our resources?




Australia's current position is a complete failure of planing and policy all sides complicit a great example is the Eastern Seaboard issues with Nat Gas supply and prices complete and total failure this extending to all thing energy generally IMHO.


----------



## ducati916

Still more risk to the upside than the downside.




Not heavy buying...but just enough to keep prices at or about current price. Again, indicating probably more risk to the upside than downside.

jog on
duc


----------



## ducati916

Technically (which can change quickly in the face of news) setting up nicely for a move higher. A number of indicators are demonstrating a divergence, which often (technically) portends a move against the divergence...in this case higher prices.

jog on
duc


----------



## Smurf1976

The US rig count continues to fall which should curb production going forward:

https://oilprice.com/Energy/Energy-General/The-Oil-Rig-Count-Collapse-Continues.html

Meanwhile Russia could gain control of Venezuela's oil, notable since if extra heavy grades are included (the Orinoco bitumen) then Venezuela has the largest oil reserves of any country. 

https://oilprice.com/Geopolitics/In...ntrol-Of-The-Worlds-Largest-Oil-Reserves.html


----------



## ducati916

Two charts: (i) refining and (ii) price





As can be seen, refining at the lowest point for the 5yr average. POO, also at the low end, but it has reduced its volatility in the face of increasing evidence of weak demand.

So demand could either: (a) increase or (b) decrease.

If it continues to decrease, then, POO will also decrease, but probably not in a linear response. To the downside, volatility could well remain muted as the Commercials (COT) have plenty of spare capacity to support prices.

On the other hand, if demand starts to uptick, POO will move higher, but again, possibly not in a linear manner, but this time volatility could well be higher as supply is still constrained, but has not yet been discounted by the market, as the story (so far) has been slowing demand.



Imports are far below the 5yr average.

Which, if demand starts to uptick, where will supply come from? True the US is now (probably) self sufficient, but, it will still require time for those shale supplies to be supplied, this supply is still being developed (as far as I can tell...I am available to be corrected on this point however).

Bottom Line.

If demand picks up (and geo-political forces always push for expansion) then there is more upside risk than downside risk unless demand falls into a deep recession and even then, if POO falls too low, producers simply do not sell at a loss and supply falls quicker than demand, stabilising (at a lower) POO.

jog on
duc


* OPEC commits to reduced supply into 2020

https://www.reuters.com/article/us-...op-up-prices-as-economy-weakens-idUSKCN1TW1LF


----------



## ducati916

Commercials continue to support POO




Still trading in a tight range. The move, when it comes, will reflect that volume caught on the wrong side of the move, adding to it.

jog on
duc


----------



## Smurf1976

Up a bit over 56 USD now. Not a big move but it's up nonetheless.


----------



## ducati916

I would say that there is a higher probability of touching $60 than $50 currently.

If it does touch $60, then, the probabilities will start to favour a lower price, possibly back the the $55 or even lower if there is more 'bad' news (new supply or old supply coming back). Essentially I think POO is going to be rangebound for a while, at least until the 'growth' meme resolves.

jog on
duc


----------



## ducati916

Latest COT




Continued Commercial support. POO moving higher. Nothing to get too excited about currently. POO would need to break out of this range before anything exciting might happen.

However absent any real news, $50 would seem to be a fairly stable support price going forward.

I'm guessing that either $60 or $65 will be the resistance point going forward and POO will chop inside that range for a while. If that (turns out to) be true, then lots of money can be made in that range.

jog on
duc


----------



## ducati916

Latest COT. Commercials still (buying) providing support to POO. But their buying support is weaker (lower). Suggesting that the closer to $60, the weaker their support will be.




POO could inch higher. $60 is when I lighten up a bit (assuming it reaches $60).

jog on
duc


----------



## ducati916

POO still inching higher.




Commercials still providing some buying support.






Rigs are falling, indicating the lack of profitability (largely) in shale.

There are other issues, some production, some political, but the sum (so far) seems to be even in the face of 'Peak Demand' rhetoric, that price continues to inch higher.

https://finance.yahoo.com/news/offshore-oil-peak-2020-then-113000831.html

jog on
duc


----------



## Smurf1976

ducati916 said:


> Rigs are falling, indicating the lack of profitability (largely) in shale.
> 
> There are other issues, some production, some political, but the sum (so far) seems to be even in the face of 'Peak Demand' rhetoric, that price continues to inch higher.




The great problem with shale is that as one observer put it, it has done the opposite of what the oil industry has traditionally done.

Traditional sources effectively turn oil into money whilst shale has thus far involved turning investors money into oil. Ignoring the physics and just looking at the financials that's close enough to the truth to be a fair comment.

Shale has certainly flooded the market with oil but what it hasn't done is flooded anyone's bank account with profit. Well, not the investors in the shale companies at least - to the extent there's a profit it seems to have largely ended up in the hands of drilling contractors, steel companies (pipelines), rail and road haulage companies, workers, hotels and basically everyone doing anything involved with extracting the oil except those who invested their capital into it.

As the shale companies come under pressure to pay dividends and as the best spots have to considerable extent already been drilled, that necessarily crimps production growth.

Meanwhile a lot of other oil projects, deepwater and tar sands, aren't particularly attractive financially at current oil prices. Then there's the political situation in places like Venezuela.

On the demand side, it seems pretty clear that there's going to be a move away from oil especially as a means of powering road vehicles. That's only a very minor thing at present however since whilst electric vehicles are a thing, the total consumption of petrol and diesel is still going up and the majority of vehicle sales globally still use oil-based fuels. 

My thinking is thus that there's more chance of the price going up rather than down at this point unless the real (as distinct from the financial markets) economy falls in a heap and kills consumption.


----------



## qldfrog

I think the idea we are going to use less oul because we start having a few ev on the road is a pipe dream
That is what bhp was saying 2 days ? Ago..from memory


----------



## Smurf1976

qldfrog said:


> I think the idea we are going to use less oul because we start having a few ev on the road is a pipe dream




A practical observation about all things relating to energy supply is that everything tends to evolve rather slowly. The sheer physical scale and capital requirements of it all tend to ensure that's the case. 

Pick any past major change in energy and at the global level none of them were particularly quick. In the context of oil, well we've had mass production of hybrid cars for over 20 years now but they're still a minority of what's on the roads.


----------



## ducati916

Commercials not as enthusiastic. Their buying support is waning.




POO is in a very tight range and very choppy. Essentially going nowhere atm. Shown more clearly on the weekly chart.




I would (guess) that there is a slightly higher chance of prices moving lower (without buying support of commercials) than higher.

jog on
duc


----------



## Smurf1976

ducati916 said:


> POO is in a very tight range and very choppy. Essentially going nowhere atm.




Agreed although my thought is "this can't last forever surely" since it does seem to be a very tight range at the moment.


----------



## ducati916

POO jumping around. Mostly just on news.

https://www.reuters.com/article/us-...gn=Feed:+reuters/businessNews+(Business+News)

jog on
duc


----------



## ducati916

Just in...

"The weekly inventory report was more supportive of prices than it appeared at first glance," Again Capital's John Kilduff tells CNBC. "The overall rise in crude oil inventories was distorted by 2M barrels of oil that came out of the SPR. Inventories at the Cushing, Okla., delivery hub actually fell, markedly, by over 2M barrels. Exports of crude oil also rebounded back above 3M barrels per day."

jog on
duc


----------



## qldfrog

As the result, poo is up significantly in a falling market where even gold is down..weird


----------



## ducati916

Looking at the last 20 days intra-day, the last big expansion of intra-day volatility took us to the tight range that we have been in for the past couple of weeks intra-day.

The current volatility expansion is starting from a slightly higher low. As such, it could break POO through to the $60 mark. The sharp reversal on the news over the last couple of days potentially trapped some shorts the wrong way.

Daily, at resistance again, but the constant pressure against this resistance will give at some point, unless there is news that changes perception/reality.

Weekly, POO just moving off of low end into mid-range. Plenty of 'technical' room to reach $60. It is (usually) the longer time frames that play out.

My feeling, this breaks to $60+ this time of asking.

jog on
duc


----------



## ducati916

The oil market (NYSEARCA:USO) is far tighter than many observers assume, and oil prices and energy companies could be set for a bounce, Spencer Jakab writes at _WSJ_'s Heard On The Street.

The number of oil-specific drilling rigs just hit the lowest level since March 2017, but more than 7K drilled but uncompleted wells remain available to pump crude fairly quickly, which tells most analysts that U.S. producers could respond rapidly to an unexpected surge in oil prices.

"Many people look at that and see that huge backlog that's going to flood us [but] the scale is just much lower," says Marshall Adkins, head of energy investment banking at Raymond James.

Adkins thinks the changes in drilling methods that have made the industry more efficient also mean that many DUCs should not be counted; a more accurate barometer would be months of supply, on which basis the number of DUCs is slightly lower than average.

If he is correct, then the market is drawing false solace from DUCs and, unless something happens to dent demand, the oil market is far tighter than many observers assume.

Adkins sees the trend as bullish for crude prices and especially for shares of oilfield service providers such as Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BKR), and for sand mining firms directly tied to shale fracking activity such as U.S. Silica (NYSE:SLCA) and Hi-Crush (NYSE:HCR).

jog on
duc


----------



## ducati916

A bit of selling from the Commercials.




Probably not enough to create a major price retracement, but certainly enough to slow down any further rises.

So possibly a week of (even further) contracted volatility.

jog on
duc


----------



## ducati916

So through $60, which was my target. Reduce position size.

jog on
duc


----------



## Smurf1976

ducati916 said:


> So through $60, which was my target. Reduce position size.



Price went up to around $63 but has fallen sharply in the past few hours and is now back under $60.

With the tensions between the USA and Iran as they are, politics outweighs anything else at the moment in my view and things could escalate at any time. Well it does unless someone actually blows up oil pipes etc.


----------



## ducati916

Smurf1976 said:


> Price went up to around $63 but has fallen sharply in the past few hours and is now back under $60.
> 
> With the tensions between the USA and Iran as they are, politics outweighs anything else at the moment in my view and things could escalate at any time. Well it does unless someone actually blows up oil pipes etc.





Longer term, I see POO in a range of $60 - $80 with occasional forays higher/lower. Which (excepting the extremes driven by geopolitical issues) makes trading in oil much harder.

The correct play now...are the majors (XOM etc via XLE/XRX) which can make improvements in margins and earnings from POO in a range.

The reason: financing for the shale explosion is over. Volumes pumped/produced will fall, thus stabilising the price as a range.

jog on
duc


----------



## Smurf1976

It seems that the new shipping fuel regulations are having some impact and sending different fuel grades to very different pricing levels.

On one hand we've got WTI around $58 per barrel but then some low sulfur grades, including that from Australia, have shot up to over $90 per barrel since they're usable as a direct part of the heavy fuel oil pool (that is, without needing to refine the oil). ASX listed Santos is one producer of such oil.

https://www.spglobal.com/platts/en/events/emea/middle-east-bunker-fuel

On the other hand high sulfur fuel oil is trading at a ~$30 discount to the crude from which it came. One consequence of that is Saudi Arabia _importing_ more high sulfur fuel oil for power generation, replacing the use of unrefined crude oil for that purpose given that the crude's now worth far more than fuel oil. So import more fuel oil > burn less crude > export more crude = effectively halved their cost of fuel going into power stations.


----------



## Smurf1976

The heading of this article says it all:

*



			OPEC, IEA or EIA Completely Wrong in 2020 Oil Market Analysis
		
Click to expand...


*
*https://www.rigzone.com/news/wire/o...l_market_analysis-20-jan-2020-160838-article/*

They can't all be right so someone's in for a big surprise, the question being who?


----------



## ducati916

Smurf1976 said:


> The heading of this article says it all:
> 
> 
> 
> *https://www.rigzone.com/news/wire/o...l_market_analysis-20-jan-2020-160838-article/*
> 
> They can't all be right so someone's in for a big surprise, the question being who?




Inventories will rise and fall. 

Longer term, I think supply will reduce because the financing for shale is drying up. The Shale patch will consolidate with the Majors buying up distressed supply. Thus supply, will over the next year or so reduce, before coming back somewhat.

Demand will (I think) continue to grow. The question is whether the alternatives grow faster than this demand growth.

jog on
duc


----------



## Smurf1976

It seems that concern over the virus situation in China (and increasingly elsewhere) is adding to downward pressure on the oil price:

https://www.rigzone.com/news/wire/alarm_over_virus_pushing_down_oil-23-jan-2020-160868-article/

I do think there will be a buying opportunity at some point in the not too distant future though. Oil's still being used, it still has value, the shale producers seem to be having issues with cash drying up and so on.


----------



## ducati916

Smurf1976 said:


> It seems that concern over the virus situation in China (and increasingly elsewhere) is adding to downward pressure on the oil price:
> 
> https://www.rigzone.com/news/wire/alarm_over_virus_pushing_down_oil-23-jan-2020-160868-article/
> 
> I do think there will be a buying opportunity at some point in the not too distant future though. Oil's still being used, it still has value, the shale producers seem to be having issues with cash drying up and so on.




Oil is not going to lose all of its demand overnight. Possibly oil demand will wane over time. Until then I would expect a range between $50 odd and $70 odd. There will be spikes higher and lower based on geopolitical events I'm sure.

I'm a buyer at $50 and below and a selling at $60+. Not selling short...just selling longs.

jog on
duc


----------



## ducati916

Just saw this:

https://oilprice.com/Energy/Energy-General/The-Oil-Industrys-Radioactive-Secret.html#

jog on
duc


----------



## ducati916

_*Refiners cut back on insurance.*_ Refiners and petrochemical facilities have cut back on insurance because it has become too costly, which is the result of a string of explosions and accidents in recent years. Running without insurance puts them at risk of tens of millions of dollars of liabilities. In some cases, insurance rates have increased 100 percent, according to Reuters.

jog on
duc


----------



## ducati916

POO taken a bit of a hammering. I'm now interested. Could well fall further on negative sentiment and falling demand from China, but probably nearer a bottom now.

I'll add back to my position here.

jog on
duc


----------



## Smurf1976

If this is even half right then it's a rather substantial shock to the oil market:

https://www.bloomberg.com/news/arti...-is-said-to-have-plunged-20-on-virus-lockdown



> Chinese oil demand has dropped by about 3 million barrels a day, or 20% of total consumption




So about 20% of China's consumption or 3% of world consumption. That's about as big as it gets in terms of sudden drops in consumption. Now just have to see how OPEC responds.


----------



## ducati916

Smurf1976 said:


> If this is even half right then it's a rather substantial shock to the oil market:
> 
> https://www.bloomberg.com/news/arti...-is-said-to-have-plunged-20-on-virus-lockdown
> 
> 
> 
> So about 20% of China's consumption or 3% of world consumption. That's about as big as it gets in terms of sudden drops in consumption. Now just have to see how OPEC responds.





Assuming it is correct:

The bounce (or return to the upper end of the range) once the virus loses ground should be worthwhile.

jog on
duc


----------



## Smurf1976

A rather dramatic view on the situation sees oil at $30 per barrel.

Given the reasoning relates partly to the virus situation in China, I really don't have anything to add to what the article says since I'm no expert on that but they're saying that China's consumption could drop 18% to 25% which is significant given that China represents about 14% of global oil consumption and has been a major source of rising demand.

Related to that would be possible falls elsewhere. Eg fewer planes and ships leaving other countries bound for China so they won't need fuel. Possibly a broader economic slowdown and so on. 

In practice I think what OPEC does will have a fairly major bearing, the risk being that they're not sufficiently organised (willing) to make major production cuts in the event that demand really does fall in a heap. OPEC has historically been pretty good when it comes to minor adjustment but has tended to struggle with anything major. 

https://www.ameinfo.com/industry/en...-notice-for-gcc-countries-to-heed-imf-warning


----------



## ducati916

Smurf1976 said:


> A rather dramatic view on the situation sees oil at $30 per barrel.
> 
> Given the reasoning relates partly to the virus situation in China, I really don't have anything to add to what the article says since I'm no expert on that but they're saying that China's consumption could drop 18% to 25% which is significant given that China represents about 14% of global oil consumption and has been a major source of rising demand.
> 
> Related to that would be possible falls elsewhere. Eg fewer planes and ships leaving other countries bound for China so they won't need fuel. Possibly a broader economic slowdown and so on.
> 
> In practice I think what OPEC does will have a fairly major bearing, the risk being that they're not sufficiently organised (willing) to make major production cuts in the event that demand really does fall in a heap. OPEC has historically been pretty good when it comes to minor adjustment but has tended to struggle with anything major.
> 
> https://www.ameinfo.com/industry/en...-notice-for-gcc-countries-to-heed-imf-warning





Definitely possible. Markets overshoot higher/lower regularly.

If it drops to $30, will it bounce back? I would say yes. 
What is the chance that any government hits their 2% global warming target? Zero.

jog on
duc


----------



## Smurf1976

Down to $44 per barrel now (WTI).

At this rate there's going to be at least a few companies that are unprofitable once all their costs (eg drilling wells in the first place) are included. 

So I can't see that being a sustainable price, it's not a price where adding more supply is attractive for most, but given the overall market sentiment at the moment we could well see even lower.


----------



## ducati916

Buyer (averaging down) all the way down. Showing (obviously) losses currently, but, once the dust settles, POO will return to range. There will (no doubt) be upside shocks at some point also.

jog on
duc


----------



## ducati916

Lots of supply issues moving forwards:







Oil reserves now at lower end. Petrol moving lower from oversupply.

_*Apache quits Alpine High. *_*Apache (NYSE: APA) *is pulling the plug on a highly-publicized oil discovery in the Permian basin. In 2016, the company announced a 2-billion-barrel discovery, the largest in a decade. At the time, Apache said Alpine High could be worth $8 billion, by conservative estimates. Three and a half years later, the company took a $3 billion writedown on the project and said it has “no current plans for future drilling at Alpine High.” 

OPEC talking further cuts. Russia (stopout) could well be forced to join due to lower prices.

_*BofA: Oil demand and supply to slow through 2025.*_ A report from Bank of America Merrill Lynch sees oil demand slowing in the years ahead as EVs take hold. But it also sees supply growth slowing as U.S. shale slams on the brakes. The bank sees oil bouncing around between $50 and $70 through 2025.

Possible further supply drop:

_*Trump admin could end Chevron waiver in Venezuela. *_The Trump administration has repeatedly extended a waiver for *Chevron (NYSE: CVX)* to operate in Venezuela despite U.S. sanctions, but that could soon come to an end. Bloomberg reports that the administration could let the waiver expire in April as a way of increasing pressure on the government of Venezuela. 

Price will return to that $50/$60 range in time.

jog on
duc


----------



## Smurf1976

ducati916 said:


> Price will return to that $50/$60 range in time.




Agreed these low prices aren't sustainable. 

Short term though, it seems that the OPEC deal with Russia has fallen apart and the price has plunged to $42 per barrel (WTI).

https://www.kitco.com/news/2020-03-...rt-as-Russia-resists-crude-prices-plunge.html


----------



## tinhat

You know what is unsustainable? Oil!


----------



## ducati916

Commercials have been all over this move lower.




It is 1 week out of date. I'll be looking at this week's when it comes out, they will probably catch (pretty close to) the lows.

Plenty of gas left in Oil over the next few years, possibly even decades.

Unsustainable or not, we will continue to use it.

jog on
duc


----------



## qldfrog

AMZA has been bashed last night..10pc in a session


----------



## Smurf1976

tinhat said:


> You know what is unsustainable? Oil!



Well ultimately it is yes as are rather a lot of things, the current level of food production being one of them.

I was however referring to the price being unsustainable in that it appears to be unprofitable to develop new supply at this price and, since oil wells deplete, ultimately that cannot continue indefinitely.


----------



## Smurf1976

Relating to the oil price are other energy sources.

Without getting into in depth engineering and so on, there's a not insignificant ability to substitute one fuel for another in the short term and a much greater ability in the longer term.

Industrial boilers fulled by gas not always but often have oil as a backup fuel. In the event that oil became cheaper than gas, they'd rationally switch to using it. LNG prices are commonly set relative to the oil price for that reason with a guarantee that gas is always cheaper.

Within the power industry, and that's the biggest single user of fuel, there are two ways of doing it:

1. In some cases there's the ability to switch fuels at the same plant. Firing some oil in a coal boiler for example or the ability to switch completely between gas and oil.

2. Changing the priority order of generation dispatch. Whilst it's well known that coal plant tends to run constantly and oil or gas are used for peaking, if the oil price drops low enough then it could certainly be run a lot more than it is now (globally).

So point is that as we see oil down to low prices, that puts a cap on the thermal coal and gas prices also. Something to bear in mind if you're investing in either industry and I'll note that we're seeing Australian east coast (all states except NT and WA) gas prices back down around $5 / GJ now so that's around half what they were not too long ago. Reason = the LNG exporters are losing enthusiasm to produce and export given international market factors.


----------



## ducati916

Latest COT




Commercials starting to buy. Supply will be starting to contract. After all, if you are a producer, would you sell at a loss? If the answer is yes...how long can you sell at a loss for? If you are a Sovereign (Russia etc) probably quite some time if all you care about is having some revenue irrespective of the longer term damage.

However, the US shale supply is now less debt and more private ownership (the majors) who will not indiscriminately sell at a loss. US shale is (possibly) along with the Arabs, the marginal producer.

COVID-19 isn't going anywhere fast, so lower prices are here for a while (weeks/months) but will rebound nicely once the all clear is given.

jog on
duc


----------



## PZ99

What in the name of utter fudge is this ?


----------



## greggles

PZ99 said:


> What in the name of utter fudge is this ?
> 
> View attachment 101123




Down, down... oil prices are down!


----------



## basilio

The Saudis are opening the tap.
Smurf noted that the OPEC price arrangements had failed

* Oil price to plunge as Saudis vow to step up production *
Move follows Russian refusal to join Opec-led production cut aimed at keeping prices high
https://www.theguardian.com/busines...uch-as-20-as-saudis-vow-to-step-up-production


----------



## MrChow

Russians have to respect how cold blooded they are.

They didn't beat U.S shale 3 years ago but with Coronavirus led demand drop see another chance to take them out.


----------



## moXJO

Jesus that's lower then a snakes hard on.
That's insane. 

How long will Russia hold out?
That price will send everyone to the wall it's just not sustainable.

WPL anyone know their cost of production?


----------



## Smurf1976

So far as production cost are concerned there’s threemeasures really.

Total cost to discover, develop and operate an oil field. This gives the highest number.

Cost to develop and operate an oil field that you’ve already found, considering the cost of exploration to be irrelevant given the money’s already spent and the question now is whether to develop what’s been found or not.

Cost to keep producing from an existing well that’s already been found, drilled, infrastructure put in place etc.

The first would be unprofitable for most at this price, only reason for anyone to keep going is with an eye to the future and if they want to retain expertise and so on.

Development of known resources wouldn’t stack up in a lot of cases at this price. Since it’s typically contractors doing it, there’ll be a bit of a battle between owners deciding to not develop versus contractors soashing prices to try and get work. Not a good time to be invested in an oil field service company.

Simply running what’s already there would still beat shutting it in in virtually all situations other than some stripper wells so we won’t see a sudden plunge in production unless it’s a conscious decision by someone to try and raise prices. 

It’s a standoff basically. Flood the market, send price right down, and keep doing so until either the other side goes broke as such or comes back to the negotiating table and agrees to cut production and raise prices.


----------



## MrChow

Crude Oil is now $28 just off the 2016 low of $26.

Wasn't there a mass panic about that in 2016 and today it's only a minor story.


----------



## Smurf1976

A one third drop in price in a matter of hours - there's probably an example somewhere but I can't recall any prior examples of anything major (eg major indices, oil, gold etc) losing quite that much value in a matter of just hours.

Looking at some other impacts though (with the discussion here being both physics and finance -* skip to the last paragraph if you just want the financial conclusion*):

Energy content of a barrel of crude oil is about 6 GJ. It varies a few % either way, not all crude oil is exactly the same, but it's roughly 6 GJ per barrel. Some is 5.8, some is 6.2, etc but none of it's too far from that.

Oil is currently trading at $27.75 and the AUD is at about 65 cents which gives an AUD oil price of $42.50 per barrel or just over $7 per GJ.

Looking at the Australian domestic (excl WA and NT) market, natural gas has been mostly in the range of $5 - $6 in recent days. A year ago it was more like $10 - $12 but, and this is the point, you won't generally see gas prices exceeding oil prices at least not for long.

That's due to the reasons I've previously mentioned. LNG prices linked to oil prices under contract is a big one. Industrial users able to switch between fuels is the other. 

Note in this context that there's more than one gas price globally and in this context I'm referring to seaborne LNG and the onshore domestic market in countries (including Australia excl WA and NT) where the LNG price sets the domestic price. From a trading perspective I'll draw attention there to the fact that the USA is not in this situation, the gas price there is driven by other factors primarily.

Gas costs more to transport, simply because it's a low density gas and to move it you either need pipelines and compression stations along the way (which are basically just pumps of a sort but they use quite a bit of energy to operate) or you can turn it into liquid at -161 degrees C. All that takes energy though and has other costs when compare to oil that can be stored in a simple low tech and low cost tank. Hence the general case of gas selling at a discount to oil.

Bottom line is that oil at ~USD 28 per barrel supplies energy at AUD 7 per GJ and that's not far from the AUD domestic market gas price of $5 - $6. It's going to put downward pressure on that gas price and thus on Australian gas producers.

For some users, those paying higher pipeline costs, gas would need to come down toward AUD 4 per GJ to match the current oil price whilst for most it is capped at no more than AUD 6 per GJ with oil at the present price.

This situation may also put some pressure on bulk pipeline owners. If they want to keep gas going through them then ultimately the price at the customers' end needs to be competitive. A contract that the customer pays $x per GJ transported only works if the customer still wants gas transported.

Looking at thermal coal, it has been trading at about USD 65 per tonne or AUD 100 per tonne recently. As with oil the energy content varies a bit, not all coal is chemically identical, but for thermal coal the official specification is 26.35 GJ / tonne.

So coal at USD 65 is equivalent in energy terms to oil at USD 14.77 per barrel. Or in AUD it's equivalent to oil at $22.70 or gas at $3.77 per GJ. That sounds good but I'll add some caution in that there's two issues which complicate it.

First, coal is more costly to handle. There's ash to dispose of, there's a greater need to control pollutants, operation requires more physical plant maintenance and staff, etc. Coal needs to trade at a discount to oil for that reason since low price relative to oil and gas is ultimately the only reason there's any serious market for thermal coal in the first place.

Second, in some uses there's a significant efficiency difference. Worst case using oil or gas in a boiler gets the same efficiency as using coal. Best case gas or oil gain a significant advantage and that's especially so in power generation in situations where it's a purpose built gas-fired power station competing in the same grid against a purpose built coal-fired one. Gas does have an efficiency advantage there such that it skews the break even fuel prices.

There's also a third level impact. In short cheaper oil and cheaper gas, and pressure on the coal price, is likely to push wholesale electricity prices down in many countries including Australia. That then has impacts for power producers using other resources, eg wind, hydro, solar, brown coal (which is not a traded market) or nuclear. They get zero reduction in costs but the value of their production drops unless they're very well hedged.

Long story short = oil at USD 27.75 is going to put pressure on the price of gas at current levels and it wouldn't need to fall too much further to squeeze the thermal coal price too. Oil at this price is going to put the entire energy sector, gas, coal and electricity as well as oil, under price pressure.


----------



## Smurf1976

Do those of you who look only at the charts, so not the fundamentals of the industry etc, see anything of note?

I had been thinking that circa $30 would be the bottom but the I sure wasn't expecting to see a one third drop in price in a matter of hours, I'd been thinking it would be far more gradual than that.

On one hand it seems like a plausible value for a bottom. Low enough to cause pain, it's near some previous low points, it's a 50% drop since start of the year, etc. On the other hand it seems far too fast.....


----------



## rederob

Smurf1976 said:


> Do those of you who look only at the charts, so not the fundamentals of the industry etc, see anything of note?
> 
> I had been thinking that circa $30 would be the bottom but the I sure wasn't expecting to see a one third drop in price in a matter of hours, I'd been thinking it would be far more gradual than that.
> 
> On one hand it seems like a plausible value for a bottom. Low enough to cause pain, it's near some previous low points, it's a 50% drop since start of the year, etc. On the other hand it seems far too fast.....



The USA recently became the swing producer as OPEC had reduced output to keep prices in the $50-$65 range.  They achieved this through LTO which is relies on +$50/bbl to be profitable.  And the USA is awash with LTO so anyone thinking POO can climb to high sustainable levels in the next few years has rocks in their head imho.
However, with prices at $30 as I post, USA's LTO producers will, overall, be producing at massive losses. 
Conventional oil does not have high ongoing lifting costs, so the selldown in most Australian equities seems extremely overdone. For example field operating costs/boe for Beach (BPT) are expected to be around $9/boe in FY 2020.
I expect POO to return to the low $40s in a few months and anticipate a trading rang to settle later in a $45-$55 range.


----------



## rederob

Overnight WTI dipped as low as $27.34 before bouncing.
It sits around $31 as I post so has recovered a tad.

An open secret in the USA's oil industry resurgence has been the amount of debt financing the fracking of shale formations to squeeze out light tight oil (LTO) embedded within its formations and make it flow to the surface.  It's a very expensive process. Many smaller LTO outfits have never been able to get adequate returns on their outlays have gone belly up in the relatively short period fracking has boomed.
With WTI at around $30/bbl only the biggest producers with the best fields will be able to survive as most industry observers regard that price as a production cost that fails to cover debt obligations.  Producers either try to maintain a cash flow through production until prices recover, or file for bankruptcy. Those that choose the option of shutting up shop instead, and waiting for a price recovery, face the whammy of an increasing debt burden and essentially just delay the inevitable.
USA's LTO producers were already  getting nervous as WTO steadily dipped from over $60 at the beginning of the year to $45 by end February.  Marginal producers will have already worked out their game plan if prices dropped further, and they clearly now have.  
What now remains to be seen is how long they can keep producing before they go belly up and the POO bounces decisively.


----------



## basilio

I think the real  looming disaster is the huge debt overhang particularly in the fracking industry. It was already precarious. It is now totally untenable. 

On top of that if/when the companies fall over there will be huge clean up liability left for... yep the taxpayer. This story is 3 months old when POO was still $60 per B

*As Fracking Companies Face Bankruptcy, US Regulators Enable Firms to Duck Cleanup Costs*
Read time: 9 mins
By Justin Mikulka • Friday, December 20, 2019 - 08:45 
https://www.desmogblog.com/2019/12/20/fracking-oil-gas-bankruptcies-cleanup-costs-regulators


----------



## qldfrog

With the aud low, i bough ooo osh and beach petroleum today..my only  buy foray.
Amza got slammed 40pc last night in the us market and i had a decent exposure so it hurts
50pc down in 2 sessions
Duc must not be happy


----------



## Smurf1976

Something to note about the US "shale" wells is that they have an extremely rapid decline in output initially, it falls like a rock basically, but they do ultimately stabilise at a low but steady rate that goes on for a very long period.

I won't put figures on it since it seems to be highly variable between regions and between wells but bottom line is bring it online today and a year later you've lost two thirds - three quarters of the flow rate. A year after that it's down by half again. Roughly. Keeping overall production up thus requires a lot of capital and ongoing physical activity.

It's plausible that in a forced sale situation someone will buy them up with the intention of operating for low costs rather than maximum flow rate. Keep them going, there's stuff all costs to keep an existing well running, and it just plods along trickling out for many years. An unexciting but still profitable business if you can buy them at the right price.

So in that scenario the well that flowed at 100 barrels / day ends up sitting there doing 5 - 10 barrels / day for a very long time as essentially a passive operation. Someone goes and checks the equipment once every now and then but it's otherwise just a low cost passive operation not aiming for high production rates but rather, aiming for low cost. Unexciting but not dead. 

Such operations already do exist in the US, commonly known as stripper wells, and are typically owned by small operators operating them in a passive manner. 

I can see that as being an uncertain but plausible scenario. Stop drilling, total production drops rapidly with the lack of new wells and there still being many relatively new ones undergoing rapid decline, but it's not heading to zero if they're kept in operation as such. Possible.....


----------



## ducati916

qldfrog said:


> With the aud low, i bough ooo osh and beach petroleum today..my only  buy foray.
> Amza got slammed 40pc last night in the us market and i had a decent exposure so it hurts
> 50pc down in 2 sessions
> Duc must not be happy




No not happy at all. However, that is the reality currently. I will step in tomorrow and buy some additional shares with February's dividend and possibly use some of the current cash (AMZA).

I did buy ERX today at $2.52 (down 60%). This (in time) will provide a good return (leveraged x 3 ETF) to oil producers. If it is down tomorrow, I'll buy some more.

jog on
duc


----------



## ducati916

basilio said:


> I think the real  looming disaster is the huge debt overhang particularly in the fracking industry. It was already precarious. It is now totally untenable.
> 
> On top of that if/when the companies fall over there will be huge clean up liability left for... yep the taxpayer. This story is 3 months old when POO was still $60 per B
> 
> *As Fracking Companies Face Bankruptcy, US Regulators Enable Firms to Duck Cleanup Costs*
> Read time: 9 mins
> By Justin Mikulka • Friday, December 20, 2019 - 08:45
> https://www.desmogblog.com/2019/12/20/fracking-oil-gas-bankruptcies-cleanup-costs-regulators





US oil production was always going to either slow through bankruptcy or consolidate into the Majors through acquisitions. The Majors, one would hope, would manage their reserves better. 

Given that they are buying distressed assets, they should be accretive over time to the bottom line. Buying the Majors in this decline should work out well over time.

jog on
duc


----------



## rederob

ducati916 said:


> Given that they are buying distressed assets, they should be accretive over time to the bottom line. Buying the Majors in this decline should work out well over time.



There seems little logic in this idea.
The reason the assets are distressed is because they have failed to return a profit.
Moreover, from 2017 until recently WTI prices averaged over $55/bbl, so they failed to return a profit in a relatively stable environment.
The oil majors would do well to avoid the Bakken and Permian formations and look to more recent  conventional plays where total lifting costs are estimated at mid-teens (eg Guyana, Ghana and Mauritania).  These are also long-life fields that do not suffer the rapid declines of LTO wells.
Until better technology gets more oil for longer from fracking it's difficult to see banks lending to them to maintain these fields, and it's not as profitable as conventional oil.


----------



## sptrawler

Looks like a deal has been signed with the U.S for access to their strategic oil reserves.

https://www.theage.com.au/world/nor...s-gain-angus-taylor-says-20200310-p548mp.html


----------



## SirRumpole

sptrawler said:


> Looks like a deal has been signed with the U.S for access to their strategic oil reserves.
> 
> https://www.theage.com.au/world/nor...s-gain-angus-taylor-says-20200310-p548mp.html




Just shows how vulnerable we are.

More drilling in Bass Strait ?


----------



## frugal.rock

WTI at 30.17
Apparently down 27.3%....
The POO is in the ....

F.Rock


----------



## rederob

frugal.rock said:


> WTI at 30.17
> Apparently down 27.3%....
> The POO is in the ....
> 
> F.Rock



That was pretty much yesterday's news.
POO recovered today, as noted below in the minute-by-minute chart from its collapse:


WTI was sitting over $33/bbl at time of posting.
I added some BPT at $1.40 in late trading.


----------



## ducati916

rederob said:


> 1. There seems little logic in this idea.
> 
> 2. The reason the assets are distressed is because they have failed to return a profit.
> Moreover, from 2017 until recently WTI prices averaged over $55/bbl, so they failed to return a profit in a relatively stable environment.
> 
> 3. The oil majors would do well to avoid the Bakken and Permian formations and look to more recent  conventional plays where total lifting costs are estimated at mid-teens (eg Guyana, Ghana and Mauritania).  These are also long-life fields that do not suffer the rapid declines of LTO wells.
> 
> 4. Until better technology gets more oil for longer from fracking it's difficult to see banks lending to them to maintain these fields, and it's not as profitable as conventional oil.




1. Let me try and explain the logic.

2. They have failed to return a profit because the assets were too expensive. Lower the price (distressed sales) and they can be profitable.

3. All valid points. Re. Bakken etc: it is the price you pay. If the price is low enough, they can be profitable.

4. Banks have stopped lending on this class. That is the point. That is why the Majors can buy select assets at fire-sale prices.

jog on
duc


----------



## rederob

ducati916 said:


> 1. Let me try and explain the logic.
> 
> 2. They have failed to return a profit because the assets were too expensive. Lower the price (distressed sales) and they can be profitable.
> 
> 3. All valid points. Re. Bakken etc: it is the price you pay. If the price is low enough, they can be profitable.
> 
> 4. Banks have stopped lending on this class. That is the point. That is why the Majors can buy select assets at fire-sale prices.
> 
> jog on
> duc



I suggest you examine the share prices of those oil *majors *largely responsible for getting the USA to world dominance in the last few years, where LTO has been instrumental.
If the massive volumes of LTO being extracted were profitable then their share prices would reflect this.
But they do not.
This link gives an idea of the relative cost differences between LTO and conventional oil. 
So lets look at your logic.
The distressed asset is now cheap to pick up.  It was distressed even though WTI prices averaged about $55/bbl over recent years and, on a near term best case scenario, are going to be about $45/bbl ($34 at time of  posting).
As the decline rate of LTO wells is extremely sharp, the distressed assets will have already sold off their best production.
So, the purchaser would be gambling on new finds on the same patch that were now going to be profitable, and an oil price ideally a lot higher than $55.
The oil industry is not risk averse, but the fixed costs of fracking suggest that oil majors would be locking in losses on the gamble that global oi prices rise to at at least former average levels and that they are sustainable.
In that regard they are also gambling on the Russians and Saudis playing the OPEC game again, and *managing supply* though quotas.


----------



## ducati916

rederob said:


> 1. I suggest you examine the share prices of those oil *majors *largely responsible for getting the USA to world dominance in the last few years, where LTO has been instrumental.
> 
> 2. If the massive volumes of LTO being extracted were profitable then their share prices would reflect this.
> But they do not.
> 
> 3.This link gives an idea of the relative cost differences between LTO and conventional oil.
> 
> 4. So lets look at your logic.
> The distressed asset is now cheap to pick up.  It was distressed even though WTI prices averaged about $55/bbl over recent years and, on a near term best case scenario, are going to be about $45/bbl ($34 at time of  posting).
> 
> 5. As the decline rate of LTO wells is extremely sharp, the distressed assets will have already sold off their best production.
> 
> 6. So, the purchaser would be gambling on new finds on the same patch that were now going to be profitable, and an oil price ideally a lot higher than $55.
> 
> 7. The oil industry is not risk averse, but the fixed costs of fracking suggest that oil majors would be locking in losses on the gamble that global oi prices rise to at at least former average levels and that they are sustainable.
> 
> 8. In that regard they are also gambling on the Russians and Saudis playing the OPEC game again, and *managing supply* though quotas.




1. The share prices have been in a bear market for a number of years.

2. The Majors are profitable. They do have issues (absolutely). Share prices do not always reflect value (up or down).

3. 

4. That information will now be available. It is not tough to calculate what you need to pay, to make that purchase profitable. Of course part of that calculation will include a selling price for oil (on aggregate). 

5. Quite possibly. But there will still be recoverable oil. It comes down to what you pay for the asset with a best guess where you think average prices for oil will sit.

6. Not necessarily at all. Prices to be profitable could easily sit in the $45-$55 range. Higher would obviously be better and lower worse.

7. At $20 oil that is probably true. At $60 oil false. The question is where on aggregate does it settle. I'm guessing circa $50-$60.

8. Quite possibly.

jog on
duc


----------



## rederob

ducati916 said:


> 1. The share prices have been in a bear market for a number of years.
> 
> 2. The Majors are profitable. They do have issues (absolutely). Share prices do not always reflect value (up or down).
> 
> 3.
> 
> 4. That information will now be available. It is not tough to calculate what you need to pay, to make that purchase profitable. Of course part of that calculation will include a selling price for oil (on aggregate).
> 
> 5. Quite possibly. But there will still be recoverable oil. It comes down to what you pay for the asset with a best guess where you think average prices for oil will sit.
> 
> 6. Not necessarily at all. Prices to be profitable could easily sit in the $45-$55 range. Higher would obviously be better and lower worse.
> 
> 7. At $20 oil that is probably true. At $60 oil false. The question is where on aggregate does it settle. I'm guessing circa $50-$60.
> 
> 8. Quite possibly.
> 
> jog on
> duc



Your points overlook the reason the LTO asset was distressed.  That is, the wells consistently failed to deliver enough oil at a price that covered all obligations.
Remember that these asset's best volumes from existing wells have already been extracted, so any purchaser is now *gambling *on more profitable wells being newly drilled.  In an oil environment which is already unsupportive such a purchase does not make much sense.
Your idea that "*to be profitable (oil) could easily sit in the $45-$55 range*" is a further gamble, on two fronts.
First, amongst LTO analysts the consensus is that former prices that averaged nearer $55/bbl were already unprofitable.  No doubt some oil patches might be producing at half that, but they are the outliers and only become known of *after *the event.  This is where there is a major difference between conventional oil (CO) and LTO, as the effort (cost) of lifting CO is relatively easy to calculate.  Whereas fracking involves a massive upfront cost and an element of luck in that they need to get compliant geology, correct proppant (cost vary considerably between regular sand, resin-coated, and ceramic proppants), and hit the best formations. 
Secondly, if Russia and the Saudis decide to flood the market with cheap oil then the USA's LTO industry will be brought to its knees.  The only saving grace here is that at a global level business-as-usual case a large amount of LTO will be essential for our total energy needs.  That will become WTI's pivot price going forward.


----------



## ducati916

rederob said:


> 1. Your points overlook the reason the LTO asset was distressed.  That is, the wells consistently failed to deliver enough oil at a price that covered all obligations.
> 
> 2. Remember that these asset's best volumes from existing wells have already been extracted, so any purchaser is now *gambling *on more profitable wells being newly drilled.  In an oil environment which is already unsupportive such a purchase does not make much sense.
> 
> 3. Your idea that "*to be profitable (oil) could easily sit in the $45-$55 range*" is a further gamble, on two fronts.
> 
> 4. First, amongst LTO analysts the consensus is that former prices that averaged nearer $55/bbl were already unprofitable.  No doubt some oil patches might be producing at half that, but they are the outliers and only become known of *after *the event.  This is where there is a major difference between conventional oil (CO) and LTO, as the effort (cost) of lifting CO is relatively easy to calculate.  Whereas fracking involves a massive upfront cost and an element of luck in that they need to get compliant geology, correct proppant (cost vary considerably between regular sand, resin-coated, and ceramic proppants), and hit the best formations.
> 
> 5. Secondly, if Russia and the Saudis decide to flood the market with cheap oil then the USA's LTO industry will be brought to its knees.  The only saving grace here is that at a global level business-as-usual case a large amount of LTO will be essential for our total energy needs.  That will become WTI's pivot price going forward.




1. Incorrect. But the 'reason' is now unimportant. That is the entire point in buying distressed assets.

2. If the price to be paid does not create a profitable asset, it will not be purchased.

3. That is not a price that I said was required for distressed assets to be profitable. However, an estimation of the aggregate price ($45-$55) will allow a calculation as to how profitable the potential is.

4. So what. That is the entire point when buying a distressed asset, you get it cheap.

5. That is a speculation that is being tested as we speak. I think it will fail for economic axioms. However we shall see.

jog on
duc


----------



## rederob

ducati916 said:


> 1. Incorrect. But the 'reason' is now unimportant. That is the entire point in buying distressed assets.
> 
> 2. If the price to be paid does not create a profitable asset, it will not be purchased.
> 
> 3. That is not a price that I said was required for distressed assets to be profitable. However, an estimation of the aggregate price ($45-$55) will allow a calculation as to how profitable the potential is.
> 
> 4. So what. That is the entire point when buying a distressed asset, you get it cheap.
> 
> 5. That is a speculation that is being tested as we speak. I think it will fail for economic axioms. However we shall see.
> 
> jog on
> duc



Your analysis is a crock of cobblers.
I won't bother taking you seriously.


----------



## rederob

Except for a period in 2018 the POO has seldom been near or above $65/bbl.
Most global oil majors have struggled in recent years due to low average prices.
In the current standoff on production curtailments to prop up the price, all analysts agree that USA's  LTO producers will be the biggest losers: their fixed costs are too high.  That said, the winner will be Russia over the Saudis.  The reason for this is because in recent years the Saudis have not made the investments necessary to match Russian output. Despite the Saudis claims that they can ramp up production, it has never been tested at the levels it claims, and has instead relied on its reserves to meet demand.  In the present environment Russia is probably the only major producer that can survive oil prices at $30/bbl.


----------



## jbocker

rederob said:


> Except for a period in 2018 the POO has seldom been near or above $65/bbl.
> Most global oil majors have struggled in recent years due to low average prices.
> In the current standoff on production curtailments to prop up the price, all analysts agree that USA's  LTO producers will be the biggest losers: their fixed costs are too high.  That said, the winner will be Russia over the Saudis.  The reason for this is because in recent years the Saudis have not made the investments necessary to match Russian output. Despite the Saudis claims that they can ramp up production, it has never been tested at the levels it claims, and has instead relied on its reserves to meet demand.  In the present environment Russia is probably the only major producer that can survive oil prices at $30/bbl.



They ARE sharp spring-backs, but it is the sharper drops that worry me.


----------



## rederob

jbocker said:


> They ARE sharp spring-backs, but it is the sharper drops that worry me.



I think that is mostly behind us - see below:


There was an attempt at a bounce back after the crash on Monday, but the past 2 day's carnage put a damper on it.
Even in a COVID-19 affected world, demand for oil will still be high as it remains the principal source of energy for transport.  However, only a few nations are going to be wanting to sell it at a loss, and that used to be the power that OPEC had.
What is interesting now is that the USA had been eating into former OPEC markets, but it was based on the expensive LTO's surplus position.  You will not find any analysts suggesting that LTO can come close to keep doing that at market prices under $45/bbl.
The other point to bear in mind from a longer-term perspective is that the low oil price of recent years has led to reduced exploration.
The flipside to oil, however, is natural gas.  There's plenty and it's cheap.  I do not know how substitution will affect comparative prices.  However, my guess will be that it will keep the average price of WTI lower for longer.


----------



## ducati916

rederob said:


> Your analysis is a crock of cobblers.
> I won't bother taking you seriously.




Which is more or less the standard of reply that I was expecting.
Avoid any analysis.
Post a personal insult.

jog on
duc


----------



## ducati916

Price (after the initial plunge) seems to be holding at $30'ish. I will post the latest COT whan it becomes available, I am interested to see where the Commercials are on this. My guess is that they are buyers and are currently supporting the price.

If they are...who has the deeper pockets? Common sense would suggest the Arabs. Yet their pockets are not bottomless either. They require oil revenues to diversify their society away from oil, which they have been doing for a while. If Russia does not capitulate and reduce supply, then they will cannibalise their own industries, which will eventually have the effect of reducing supply anyway.

The question is really: does this price war last weeks or months and does the loser (or winner) actually lose in the longer term?

jog on
duc


----------



## ducati916

So:

_*Hedges offer shale drillers a lifeline. *_A study of 30 shale drillers accounting for 38 percent of total U.S. oil production finds that roughly 50 percent of their output is hedged an average price of $56 per barrel. If WTI averages $40 this year, the hedges would save the companies a combined $10.5 billion; or $17 billion if WTI averages $25.

Interesting if accurate. Can the Arabs and Russians (although they may also have hedges in place) sustain a price war for this duration?

jog on
duc


----------



## ducati916

Further issues:

_*Oil-producing countries at risk of downgrade. *_The collapse of oil prices could set off a wave of sovereign credit downgrades. Countries like Saudi Arabia, Iraq, Oman, Nigeria and Angola are at most risk.

jog on
duc


----------



## rederob

ducati916 said:


> 1. Incorrect. But the 'reason' is now unimportant. That is the entire point in buying distressed assets.
> 
> 2. If the price to be paid does not create a profitable asset, it will not be purchased.
> 
> 3. That is not a price that I said was required for distressed assets to be profitable. However, an estimation of the aggregate price ($45-$55) will allow a calculation as to how profitable the potential is.
> 
> 4. So what. That is the entire point when buying a distressed asset, you get it cheap.
> 
> 5. That is a speculation that is being tested as we speak. I think it will fail for economic axioms. However we shall see.
> 
> jog on
> duc



Here's why your analysis is so poor:
*1.* You claimed that an asset that cannot meet its financial obligations is *not *distressed, then say *"the 'reason' is now unimportant," *and then follow it with a baseless conclusion*.
2.  *You *cannot *know beforehand if an oil patch that was previously unprofitable at a higher oil price and now requires new wells to be drilled to determine capacity will ever be profitable.  Your claim has no logical merit.
*3.*  The point is that until you have drilled new wells *you do not even know what you are dealing with*.  The oil price becomes a secondary consideration.  Brownfield purchases can only be determined to profitable in advance if you have all the metrics at your fingertips, and the distressed asset does not give you the data you need.
*4. * Buying anything cheaply does *not *of itself confer the purchaser a profit from the transaction.
*5.*  Your link suggests that less than 20% of the USA's LTO output is hedged at an average $56/bbl excluding the average 12% royalty at well head.  The maths give an average oil price of around $40 for the average hedged producer, which most analysts suggest is unsustainable.  Clearly those who are not hedged are now haemorhaging.  *Economic axioms do not trump real world bankruptcies*.


----------



## ducati916

rederob said:


> Here's why your analysis is so poor:
> *1.* You claimed that an asset that cannot meet its financial obligations is *not *distressed, then say *"the 'reason' is now unimportant," *and then follow it with a baseless conclusion*.
> 
> 2. *You *cannot *know beforehand if an oil patch that was previously unprofitable at a higher oil price and now requires new wells to be drilled to determine capacity will ever be profitable.  Your claim has no logical merit.
> 
> *3.*  The point is that until you have drilled new wells *you do not even know what you are dealing with*.  The oil price becomes a secondary consideration.  Brownfield purchases can only be determined to profitable in advance if you have all the metrics at your fingertips, and the distressed asset does not give you the data you need.
> 
> *4. * Buying anything cheaply does *not *of itself confer the purchaser a profit from the transaction.
> 
> *5.*  Your link suggests that less than 20% of the USA's LTO output is hedged at an average $56/bbl excluding the average 12% royalty at well head.  The maths give an average oil price of around $40 for the average hedged producer, which most analysts suggest is unsustainable.  Clearly those who are not hedged are now haemorhaging.  *Economic axioms do not trump real world bankruptcies*.




1. Nonsense. What I said was:

_Given that they are buying distressed assets, they should be accretive over time to the bottom line. Buying the Majors in this decline should work out well over time._
_
2. They have failed to return a profit because the assets were too expensive. Lower the price (distressed sales) and they can be profitable.

4. Banks have stopped lending on this class. That is the point. That is why the Majors can buy select assets at fire-sale prices.
_
The original owners (investors) overpaid. They incurred losses and are now selling distressed assets. Those distressed assets will be cheap(er). That lower price can make the asset profitable.

2. But again, it depends on the price paid for that asset. If you pay pennies on the dollar, there is every likelihood that it can be profitable.

3. See above.

4. No it does not. But it certainly improves the odds.

5. From the article:

_Looking at the hedging positions of the considered companies, we conclude that they hedged almost 50% of their guided 2020 output at an average price floor of $56 per barrel._
_
“The industry is well-positioned to mitigate the effects of an oil-price collapse in the short term thanks to the material cash flow support from derivative contracts,” says Artem Abramov, Rystad Energy’s Head of Shale Research.
_
So, depending on how long the Arabs can maintain their own losses (reduced revenue) will see how this plays out.

I'll address the 'axioms v bankruptcy' is a separate post.

jog on
duc


----------



## rederob

ducati916 said:


> 1. Nonsense. What I said was:
> 
> _Given that they are buying distressed assets, they should be accretive over time to the bottom line. Buying the Majors in this decline should work out well over time.
> 
> 2. They have failed to return a profit because the assets were too expensive. Lower the price (distressed sales) and they can be profitable.
> 
> 4. Banks have stopped lending on this class. That is the point. That is why the Majors can buy select assets at fire-sale prices.
> _
> The original owners (investors) overpaid. They incurred losses and are now selling distressed assets. Those distressed assets will be cheap(er). That lower price can make the asset profitable.
> 
> 2. But again, it depends on the price paid for that asset. If you pay pennies on the dollar, there is every likelihood that it can be profitable.
> 
> 3. See above.
> 
> 4. No it does not. But it certainly improves the odds.
> 
> 5. From the article:
> 
> _Looking at the hedging positions of the considered companies, we conclude that they hedged almost 50% of their guided 2020 output at an average price floor of $56 per barrel.
> 
> “The industry is well-positioned to mitigate the effects of an oil-price collapse in the short term thanks to the material cash flow support from derivative contracts,” says Artem Abramov, Rystad Energy’s Head of Shale Research.
> _
> So, depending on how long the Arabs can maintain their own losses (reduced revenue) will see how this plays out.
> 
> I'll address the 'axioms v bankruptcy' is a separate post.
> 
> jog on
> duc



You simply *do not get it* because you do not understand what is being purchased.  You cannot make a purchase that was not profitable all of a sudden profitable because you bought it cheaply.  There is zero logic to the idea, and even less when you understand the steps of the process in regard to LTO plays, which are very different to CO.
This is sobering reading and was written months before the collapse of oil prices.
The statement that  *“The industry is well-positioned to mitigate the effects of an oil-price collapse in the short term thanks to the material cash flow support from derivative contracts,” *is not well founded (excuse pun) as I have already demonstrated and is reiterated in my previous link.  To presume that 80% of unhedged LTO output can survive sub-$40 oil is unrealistic. Production costs vary considerably, but according to Dayen, “the best players in the Permian Basin need crude north of $50 a barrel in order to be cash flow positive.”


----------



## ducati916

rederob said:


> 1. You simply *do not get it* because you do not understand what is being purchased.  You cannot make a purchase that was not profitable all of a sudden profitable because you bought it cheaply.  There is zero logic to the idea, and even less when you understand the steps of the process in regard to LTO plays, which are very different to CO.
> 
> 
> 2. This is sobering reading and was written months before the collapse of oil prices.
> The statement that  *“The industry is well-positioned to mitigate the effects of an oil-price collapse in the short term thanks to the material cash flow support from derivative contracts,” *is not well founded (excuse pun) as I have already demonstrated and is reiterated in my previous link.  To presume that 80% of unhedged LTO output can survive sub-$40 oil is unrealistic. Production costs vary considerably, but according to Dayen, “the best players in the Permian Basin need crude north of $50 a barrel in order to be cash flow positive.”




1. Yes, that is exactly what can happen. If the original purchase of asset 'X' cost $100 and needed an oil price of $50 to be profitable: then a purchase price of that same asset priced at $10 does not need oil to be priced at $50 to be profitable. It can be (oil) priced lower.

That is what has been happening and will likely continue to happen: there will be significant consolidation in the industry. The high cost producers are and will, go out of business.

2. The situation is that some of the higher cost producers have hedged their production for somewhere between 6 months and a year.

The question therefore becomes: can the Arabs maintain this level of production, or higher, to keep prices at $30 or less?

In my opinion, the answer is no...not even close. As these smaller producers go bust, supply will contract, putting upward pressure on prices. The Arabs have to increase their supply further to keep prices down. So it goes until what is left are companies that can produce profits at $30 or less.

Second, at some point, COVID-19 runs its course. Economic activity picks up. Demand returns. Supply has been curtailed, prices rise.

In the longer term, the Arabs are doomed to failure. Longer term being circa 1yr, possibly less. We will then see prices aggregate somewhere around that $50-$60 mark. If supply is badly damaged for whatever reason...then we may see a price spike higher.

jog on
duc


----------



## rederob

ducati916 said:


> 1. Yes, that is exactly what can happen. If the original purchase of asset 'X' cost $100 and needed an oil price of $50 to be profitable: then a purchase price of that same asset priced at $10 does not need oil to be priced at $50 to be profitable. It can be (oil) priced lower.
> 
> That is what has been happening and will likely continue to happen: there will be significant consolidation in the industry. The high cost producers are and will, go out of business.
> 
> 2. The situation is that some of the higher cost producers have hedged their production for somewhere between 6 months and a year.
> 
> The question therefore becomes: can the Arabs maintain this level of production, or higher, to keep prices at $30 or less?
> 
> In my opinion, the answer is no...not even close. As these smaller producers go bust, supply will contract, putting upward pressure on prices. The Arabs have to increase their supply further to keep prices down. So it goes until what is left are companies that can produce profits at $30 or less.
> 
> Second, at some point, COVID-19 runs its course. Economic activity picks up. Demand returns. Supply has been curtailed, prices rise.
> 
> In the longer term, the Arabs are doomed to failure. Longer term being circa 1yr, possibly less. We will then see prices aggregate somewhere around that $50-$60 mark. If supply is badly damaged for whatever reason...then we may see a price spike higher.
> 
> jog on
> duc



Read this very carefully as I have said it before and will not repeat it.
Until you drill new wells on the patch you cannot determine whether or not it is possible to turn a profit.
*It is a gamble.*
You only know that significantly elevated prices were insufficient, and that these were based on the strongest flows (wells decline between 75-90% in the first three years, and field declines without new drilling typically range from 25-50% per year).
You appear to not understand how these metrics initially led to the asset being distressed and somehow think that the underlying nature of the asset remains intact if repurchased cheaper.
I repeat that I find your analytical abilities deficient.


----------



## Smurf1976

ducati916 said:


> _*Hedges offer shale drillers a lifeline. *_A study of 30 shale drillers accounting for 38 percent of total U.S. oil production finds that roughly 50 percent of their output is hedged an average price of $56 per barrel.




In that case the effect of low prices would be to stop new developments but not to really harm the operation of existing production. 

In that case, it'll be a slower decline in output compared to a scenario where existing producers go broke.


----------



## rederob

Smurf1976 said:


> In that case the effect of low prices would be to stop new developments but not to really harm the operation of existing production.
> 
> In that case, it'll be a slower decline in output compared to a scenario where existing producers go broke.



I cannot see that as the case.
Output will cease as costs cannot be recovered by the operators.
Furthermore, a point not previously made is that the heaviest debt burden is presently carried by those companies providing infrastructure/services.
For the last few years I have been following the shale oil story and there are 2 competing camps amongst those who contribute to forums.  The data heavily sides with shale oil being a very risky business, with luck playing a huge part in profitability as fracking costs are incredibly high.  What forum contributors tend to overlook, however, are the separate costs of exploration and corporate overheads.  So when you see breakeven costs of $50/bbl in the Permian (according to the Federal Reserve Bank of Dallas), it applies only to the producing well, and reflects the lowest breakeven prices achieved (not the average).


----------



## Smurf1976

rederob said:


> I cannot see that as the case.
> Output will cease as costs cannot be recovered by the operators.




If they've hedged their production then, assuming the nature of those arrangements require physical delivery (acknowledged that's an "if"), nothing has really changed in the short term. However profitable it is or isn't, there's no immediate change if they're fully hedged.

For anyone wanting to develop new production though they'd be completely out of luck given that nobody's likely to enter any sort of hedging arrangement at double the current spot price.


----------



## ducati916

rederob said:


> 1. Read this very carefully as I have said it before and will not repeat it.
> 
> 2. Until you drill new wells on the patch you cannot determine whether or not it is possible to turn a profit.
> *It is a gamble.
> *
> 3. You only know that significantly elevated prices were insufficient, and that these were based on the strongest flows (wells decline between 75-90% in the first three years, and field declines without new drilling typically range from 25-50% per year).
> 
> 4. You appear to not understand how these metrics initially led to the asset being distressed and somehow think that the underlying nature of the asset remains intact if repurchased cheaper.
> I repeat that I find your analytical abilities deficient.




1. Ok, let me put my glasses on.

2. OMG....that just leapt off of the page. However, if you have paid pennies on the dollar for an asset that becomes a much better gamble. Think about it: your costs are (a) cost of the land/asset and (b) extraction costs: (b) is more or less consistent but if (a) is low then your breakeven costs will be lower, that is simple arithmetic.

3. You are talking about 2 totally different positions: (a) new land/asset and (b) already existing well. If (b) and you pay less, your breakevens are lower. If you are buying an already depleted asset for residual flow, you'll pay virtually nothing.

4. Give it a rest.

jog on
duc


----------



## qldfrog

Smurf1976 said:


> If they've hedged their production then, assuming the nature of those arrangements require physical delivery (acknowledged that's an "if"), nothing has really changed in the short term. However profitable it is or isn't, there's no immediate change if they're fully hedged.
> 
> For anyone wanting to develop new production though they'd be completely out of luck given that nobody's likely to enter any sort of hedging arrangement at double the current spot price.



One devil thought:
Could the Saudis and Russia have edged part of their output before moving into that price war?
That would be diabolical and silly for edge providers but
 with neg interest rates, 2 months ago, money did not know where to go...
Banks would be the great losers now....until they collapse..then what become of edging contracts?


----------



## ducati916

COT




Commercials are still (currently) supportive of price.

jog on
duc


----------



## fiftyeight

This thread may be a better place to ask about hedging.

Once the tanks are full, there must be a limit to how far out and how much of your production you can hedge or would want to hedge at these current prices? 

Surely when the big boys entered into a price war they knew this and have planned to keep price low until hedges expire.


----------



## rederob

Smurf1976 said:


> If they've hedged their production then, assuming the nature of those arrangements require physical delivery (acknowledged that's an "if"), nothing has really changed in the short term. However profitable it is or isn't, there's no immediate change if they're fully hedged.
> 
> For anyone wanting to develop new production though they'd be completely out of luck given that nobody's likely to enter any sort of hedging arrangement at double the current spot price.



The physical producer may have gone belly up and closed shop.  In that case the owner of the contract needs to source the oil from elsewhere to meet their obligation.

Some useful info and links from *The Hill *last week:
"*Moody’s estimates that the U.S. oil and gas industry has almost $90 billion of rated debt coming due in next few years. Most is junk or rated just above junk, according to CNBC. Well before COVID-19 became a household name, the industry faced a wave of bankruptcies.
Oil companies, for example, have simply walked away from more than a million uncapped oil and gas wells across the country, leaving governments to try to plug the wells and clean up the drill sites...."
*​Here's the best recent data I could find as a chart on LTO breakeven costs:


The breakeven applies only to the cash costs associated with those wells drilled and excludes other overheads, such as sustaining capital/loan expenses, exploration expenses, general/admin expenses and site rehabilitation costs. As there is no way to attribute these additional costs to the above chart, here's a snapshot from the gold mining sector that shows they can add up to 40% more:


----------



## Smurf1976

This may cushion the situation slightly. Don't really know how the market will react though.

Physical space in the SPR is 77 million barrels currently unused so that's what's available to be filled.




https://www.energy.gov/sites/prod/files/2020/03/f72/Memo from the Secretary to Assistant Secretary Winberg.pdf


----------



## rederob

There is no doubt that right now there is a glut of oil sloshing around global markets as the transport sectors are grinding to a halt.
Some analysts are tipping POO in the teens, and they will probably be right.
The patches to watch closely will be US shale regions, as even those with hedges as discussed previously will not be profitable once their other overheads are taken into account.  As it stands, the present POO is less than this chart's cheapest producing well's breakeven cost, and the trend remains firmly downwards.  Very few LTO producers are going to survive this, which in a fashion is a bonus for our bigger Oz conventional crude plays which are still profitable in the teens (eg Santos has unit production costs of about 7.50/boe and Beach is under $12/boe).
Here's POO mapped over the past 20 years:


----------



## Dona Ferentes

Smokin' OPs


----------



## Smurf1976

Whilst this discussion focuses on the price of crude oil, there's also a looming issue with specific products since the demand decline will not be uniform and refineries have only modest ability to shift production around in the short term.

It's a fair assumption that jet fuel consumption is going to drop sharply for example so that'll upset the economics of refining. They can shift production more toward other products to some extent but that capability isn't unlimited whereas demand destruction for jet fuel in particular looks to be pretty brutal at the moment.


----------



## rederob

An immediately contradictory reaction of producers of almost anything when prices collapse is to produce more so as to achieve cash flow and remain in business.  I expect this is the same with the oil market.
Unlike previous POO bottoms which quickly recovered, the present market literally has nothing to sell in to, unless they have the USA's SPR (as per @Smurf1976's post above) as a life raft.
Nevertheless, those USA LTO producers who have been struggling to cover costs for some time are merely crystalising increased losses by selling in to the SPR, and it's not a bottomless pit anyway.
Here's where POO's presently heading:


----------



## ducati916

There are 2 factors that account for the current price of oil:

(a) COVID-19; and
(b) Price war within OPEC.

Neither will last. When they end, POO will recover.

In the interim, will there be casualties? Yes. 

That in itself will contribute to the recovery in POO. In fact, the greater the destruction, the higher could be the POO...essentially a price spike in the opposite direction.

jog on
duc


----------



## rederob

With a $3/bbl increase in the last hour, WTI bounced strongly overnight. In fact the daily change represents a 24% increase:


The question is what has it jumped in to?
There is nothing to sustain it.
Worse, whatever there is, it will actually decline near term.
This has all the ingredients of a dead cat bounce.



ducati916 said:


> ...factors that account for the current price of oil:
> (b) Price war within OPEC.



The price war is predominantly *between non-OPEC members*; namely Russia, but with the USA as a defacto casualty.  Only Russia is in profit at these low prices as although the Saudis have a low lifting cost, their whole economy is predicated on POO nearer $50/bbl.  Russia and the USA have more diversified economies, however the USA's LTO sector is unique and will be a significant casualty.


----------



## wayneL

For me it's a game of minimum price discovery. I've taken a few *small CFD positions between 22s and 29s.


----------



## Smurf1976

wayneL said:


> For me it's a game of minimum price discovery. I've taken a few *small CFD positions between 22s and 29s.




I bought some OOO yesterday but at this stage I'm only seeing this as a bounce. Time will tell.

As an outside the box thought, at the moment we have three powerful forces at work.

First is the sell off in everything and the flight to safety amidst an unknown future with the virus.

Second is the price war and in that context I note that "big oil" as per a previous post is largely "big government" in practice and broadly speaking the government owned companies own the lower marginal production cost assets globally. Even though their national economy might tank at $20 per barrel, if the marginal cost of production is $3 then they are still better off pumping flat out unless restricting production actually raises global prices significantly, an outcome which in practice requires agreement among producers to act collectively.

Add in the political and strategic aspect, that they may well be willing to run at a massive loss in order to intentionally bankrupt competitors, and the idea that they just keep pumping no matter what the value is a definite possibility. Governments with a political or strategic agenda aren't worried about share prices or quarterly profits and tend to play a much longer game than private enterprise.

Third is demand destruction. Nobody knows for sure at this point but reality is the aviation sector has fallen in a heap rather spectacularly, private car use will be down at least somewhat, all forms of freight transport will be down to some extent, industrial production is down, etc. Oil consumption will have dropped very substantially and I'll say there that whilst the figure is unknown, it's not implausible that the drop is to the point that no single producing country or company is now critical to supply. It would only need a 10% or so drop globally to do that and we may well find out once statistics are available that this has in fact occurred given the extent to which the economy, particularly that which involves physically doing or moving things, is grinding to a halt.

That being so, I'm not going to try and predict prices but I do think that at the bottom it's not out of the question that we see something in the category of being truly ridiculous. All it needs is everyone to keep pumping long enough that the physical market is literally flooded, finding somewhere to store the oil starts to become a problem, and then someone credible releases some data which shows a huge drop in consumption at a moment that coincides with another broad sell off in all assets and plausibly the price ends up at a ridiculously low point.

There's a lot of "what if" speculation there and that's all it is but point is nobody on earth really knows how much oil is being used by consumers right now but it's safe to say it will have dropped quite a bit. Add in producers ramping up production with the objective of sending others broke and the price ends up at ???


----------



## Smurf1976

Another thought - what about the Texas Railroad Commission?

The TRC, for those not aware, has nothing to do with railways these days despite retaining that name but does regulate oil production by the imposition of quotas. Since about 1970 those quotas have been constantly at maximum, so there's no limit in practice, but the TRC most certainly still exists as does its power to impose restrictions on output as they routinely did from 1930 to 1970.

It's not impossible that they could act to raise prices if they wanted to, the legal ability to do so and the organisation to do it still exists despite having not done so for half a century.


----------



## ducati916

_*Citi: $5 oil is possible. *_Citigroup laid out a pessimistic scenario in which WTI falls to $5 per barrel. Energy Aspects said Brent could fall to $10. Mizuho Securities said some oil could even fall into negative territory absent shale shut ins. “This is Operation Desert Storm, Enron, 9/11, Hurricane Katrina/Rita, Lehman Bros, combined,” Stephen Schork, president of the energy consultancy Schork Group Inc., told Bloomberg. 

_*Majors could store jet fuel at sea.*_ Oil companies are rushing to store oil at sea, but the glut has become so severe that the majors are looking at even storing jet fuel at sea. That practice is rare because jet fuel degrades more quickly than other fuels and is sensitive to contamination. “The industry generally expects products will be used within three months of being produced,” said George Hoekstra, an independent consultant, told Reuters.

_*Texas considers the unthinkable – regulating production. *_Several oil executives have reached out to the Texas Railroad Commission, which regulates oil and gas in the state, asking for regulation on production in order to rescue prices, according to the WSJ. In Bloomberg Opinion, Texas Railroad Commissioner Ryan Sitton proposed rationing production, cutting output in the state by 10 percent. 

_*North Dakota to keep inactive wells inactive.*_ North Dakota regulators are considering moves that would allow oil producers to keep their wells inactive, rather than forcing them to choose between producing and reclamation. The logic would be trying to keep unwanted production offline.

_*Shale drillers getting crushed. *_More shale drillers are exploring debt restructuring as WTI sinks into the mid-$20s.  

_*Shale industry lost $2.1 billion last year. *_A survey of 34 North American shale-focused drillers reported a combined $2.1 billion in 2019, according to IEEFA. That capped off a decade in which they spent $189 billion more than they generated. 

_*Capex cuts top $31 billion. *_The global oil and gas industry has already slashed $31 billion from spending plans this month, following the historic collapse in prices. 

jog on
duc


----------



## rederob

The below chart shows the dead cat bounce coming to fruition:
	

		
			
		

		
	




However, it appears it is now much worse for oil prices as they slumped further in late trading, falling under US$20 a barrel to settle at $US19.84.


----------



## CBerg

Is there anyway for a mere mortal to take delivery of some oil at these prices? 
I know oil is not the same thing as unleaded petrol but my god, $20 USD let alone $5 USD per barrel!

Any of you more involved oil watchers care to guess what we'll be paying at the pump soon?


----------



## Sdajii

CBerg said:


> Is there anyway for a mere mortal to take delivery of some oil at these prices?
> I know oil is not the same thing as unleaded petrol but my god, $20 USD let alone $5 USD per barrel!
> 
> Any of you more involved oil watchers care to guess what we'll be paying at the pump soon?




At this point prices won't fall as much as you might expect. Normally, petrol prices are approximately half oil, half a combination of refining, distribution, middle men, taxes and retail costs. If oil goes to zero you don't get free petrol, you still have a fairly pricey product. I don't think petrol prices can full much below about a dollar (varying state to state due difference in taxes, distribution and retail costs).


----------



## rederob

This links to some big picture machinations over the weekend.
On the oil front, early action has not been good. 
This chart is a continuation of the March trend:


----------



## basilio

With such a world wide lockdown particularly in First world countries oil demand would have to plummet. 
Bugger all air traffic. Huge numbers of cars off roads. Much industry closed down. 

Only country that seems to have got on top of it is China. But now of course no one else will be buying their stuff becasue they are in lock down so their industries will  be closing as well.


----------



## peter2

E'gads, I've selected OOO for the April comp, forgetting that the whole world is shutting down. No-one will want oil. With Joe being tougher than the Saudi's I can't change my pick. That being said the Saudi's will dictate the POO and April is a good time to increase it.


----------



## frugal.rock

Is April a good time to increase the poo again because the northern hemisphere goes into winter?
Just wondering your thoughts behind the April scenario P2.?
Does oil still travel the seasonal path?


----------



## peter2

Actually the northern hemisphere is going into summer. You may notice that it's getting cooler in Aust. In the US, April marks the start of driving season. Petrol/diesel retailers would normally have stocked up by now. However this year I don't think US citizens will drive very far at all.

My selection of OOO was in response to the selections of the inverse ETFs BBUS, BBOZ. The Saudi's will do what they like, when they like to the POO. I had to comment on OOO in this thread as there wasn't a stock specific thread for OOO.

I don't the POO will go much lower, however the general market selloff has proven me so very wrong.


----------



## PZ99

When the Saudi's draw their trump card, the POO will hit the fan.


----------



## Smurf1976

PZ99 said:


> When the Saudi's draw their trump card



What are you expecting them to do?


----------



## rederob

If oil demand is decreasing, as we can be sure is presently happening, and producers are in a price war which is "won" by outproducing each other, the very simple question is "where will it be stored?"


----------



## Smurf1976

There's not a lot of detail given but the following link suggests a circa 20% or 20 million barrels per day drop in oil consumption due to the virus.

https://www.offshore-technology.com/news/covid-19-triggers-20-drop-in-oil-demand/

If that's true then, well, um....... 

With planes grounded, people quarantined, the entire tourism industry pretty much halted and so on it doesn't seem out of the question that it could be right. If so then the implications are huge - for a start Saudi Arabia could cut their oil production literally to zero, importing all their own fuel needs, and we'd still have a huge supply surplus. So no one country alone can reign that in.

This could all get rather interesting going forward and the next obvious question is about physical storage capacity. Price is one thing but if you run out of anywhere to put the oil well then that's quite a problem.


----------



## ducati916

Some of the news:

*Oil has more room to fall as storage fills up. *Multiple reports from analysts and investment banks see further room to fall for oil because of fears over a lack of adequate storage. “Any traders with the capacity to store oil are probably putting their hands up, looking at the contango,” Stephen Innes, chief Asia market strategist at Axicorp Ltd., told Bloomberg. “Oil could head to $10 to $15 a barrel very quickly” if OPEC and Texas can’t reach an agreement on cutting production.

_*OPEC speaks with Texas RRC.*_ OPEC Secretary-General Mohammed Barkindo spoke with Texas Railroad Commissioner Ryan Sitton, raising speculation about mandatory cuts in Texas. “Just got off the phone with OPEC SG Moh[ammed] Barkindo. Great conversation on global supply and demand,” Sitton said on Twitter. “We all agree an international deal must get done to ensure economic stability as we recover from COVID-19.“ The Texan official said the OPEC chief had invited him to the next meeting of the organization in June. Most analysts see such a Texas-OPEC deal as highly unlikely. 

_*U.S. sends envoy to OPEC.*_ The Trump administration will appoint Victoria Coates as a special envoy to Saudi Arabia on energy issues, in an effort to negotiate an end to the price war. 

_*Russia’s weaker rouble helps sustain price war. *_Russia’s currency has lost 20 percent of its value in the past three weeks, a trend that cushions the blow for Russian oil producers as it deflates costs. Saudi Arabia has to defend a fixed exchange rate. 

_*U.S. airlines prepare for total shutdown. *_According to the Wall Street Journal, major U.S. airlines are “drafting plans for a potential voluntary shutdown of virtually all passenger flights across the U.S.” No decisions have been made. 

_*Oil majors cut spending.*_ *Royal Dutch Shell (NYSE: RDS.A)*, *Total (NYSE: TOT) *and *Chevron (NYSE: CVX) *all said they would cut capex by roughly 20 percent each, while also suspending share buybacks. Chevron said it would cut spending in the Permian in half, which would translate into 125,000 bpd less by the end of this year than previously expected. With analysts predicting $10 oil, more cuts are expected. 

_*10 percent of global oil supply uneconomic. *_Roughly 10 percent of global oil supply would become uneconomic if oil prices remain below $25 per barrel, according to Wood Mackenzie. “If prices don’t rebound, the taps will inevitably be turned off or strategically choked back in some areas,” WoodMac analysts said. “The industry’s ability to keep higher-cost barrels flowing will be severely tested.”

_*Spending cuts could reach 70 percent.*_ E&Ps could cut capex by 68 percent this year, relative to 2019, according to Rystad Energy.

_*Exxon could delay Mozambique LNG. *_*ExxonMobil (NYSE: XOM) *may delay the FID for its massive $30 billion LNG project in Mozambique. The project, which includes an LNG export terminal and offshore gas drilling, was thought to receive a greenlight in the first half of 2020. Mozambique is one of a few key projects in Exxon’s portfolio. 

_*S&P cuts WTI forecast to $25.*_ S&P cut its oil price forecast for 2020 by $10 per barrel since its last estimate. The firm now sees WTI averaging $25 this year, with $30 for Brent. 

_*Refiners cut processing. *_Refineries around the world are reducing processing rates because of narrowing margins as demand collapses. Jet fuel margins turned negative recently. 

_*Oil-producing countries ask IMF for help. *_Around a dozen oil-producing countries in the Middle East and Central Asia have turned to the IMF for financial assistance amid the collapse in crude prices. The Fund said that it was ready to mobilize its $1 trillion lending capacity to help countries in need. 

_*Natural gas to balance before oil. *_The cut in natural gas production could be faster than for oil, helping to balance the market sooner. Shale gas drillers in Appalachia are reducing drilling, but the contraction in the Permian for oil drilling will also cut associated gas output. “As we move into 2021, this path of declining oil and gas production, if sustained, will likely result in an exceptionally tight summer 2021, which suggests current forward prices are not sustainable,” Goldman Sachs wrote in a report. The bank said that natural gas prices could “rally sharply” next winter. 

_*China’s SPR can’t save oil market. *_China has repeatedly taken advantage of past market downturns to buy cheap oil for its strategic reserve, but this time around the rate of SPR stockpiling is expected to be half as large as previously. 

_*Canada braces for cuts. *_Western Canada may need to lower production by around 440,000 bpd beginning in April as storage fills up, according to Rystad Energy. 

_*U.S. banks could face credit issues from oil bankruptcies. *_Regional banks in Texas, Louisiana and Oklahoma have seen their share prices fall and may face credit issues later this year as a result of the downturn. 


jog on
duc


----------



## ducati916

Russia's B/E




jog on
duc


----------



## ducati916

Nigeria




jog on
duc


----------



## rederob

Crude oil and its derivatives have to be stored in an oversupplied market, so here's a few recent articles covering issues and costs:

Reuters
Alaskajournal
FR24 news.
The irony is that an oversupplied market increases storage costs, so speculative purchasers will bargain down producers to offset these.  
Focusing specifically on the USA's LTO producers who will store mostly at Cushing and sell into the SPR, we get a double whammy effect.  That is, in a recovering market purchasers are initially more likely to tap directly in to producers as the costs of stored crude will be at least a few dollars higher.  As the prices near parity then purchasers will tap more in to stored crude.  This flattens the price curve for LTO producers such that those debt laden have no hope of recovery.


----------



## rederob

POO has steadied over the week as intra-day volume spikes disappeared:


The trend is downward and, frankly, it would be a brave person thinking a recovery is likely for months to come.
The USA's lackadaisical approach to tackling COVID-19 will sheet home in coming weeks and I expect WTI to hit the teens and remain there for a while.  I do hope I am wrong, but the difference between this market and past crashes was that global demand was always comparatively robust.


----------



## ducati916

Could there be a 3'rd Black Swan?

Would Putin invade the Arab states and take over their oil? I doubt there would be much help from Trump and the US, Europe wouldn't want to know.

jog on
duc


----------



## Sdajii

ducati916 said:


> Could there be a 3'rd Black Swan?
> 
> Would Putin invade the Arab states and take over their oil? I doubt there would be much help from Trump and the US, Europe wouldn't want to know.
> 
> jog on
> duc




Maybe I slept in for a few days or I haven't peeked out from under my rock for too long. I'd heard of a virus issue but what was the second black swan?

It's a crazy world in crazy times, so anything could happen, but I can't see Russia doing that. The west would hate them, the middle east would hate them, Asia would become very wary of them, and even if no one stopped them (and that wouldn't be a 100% certainty), they'd be seen by the world as evil and untrustworthy.

If it did happen and no one stopped them or did particularly much about it, it could certainly trigger all out hot WWIII, if other superpowers say 'hey, look at that, Russia just significantly expanded its empire, it seems that the rules have gone back to what they were pre WWII where countries could legitimately use military powers to conquer others'.

WWIII is inevitable and can't be too far off, so hey, that could be how it starts. It does seem a bit unlikely for Russia to target oil at a time when oil is at such low value and arguably it won't be terribly valuable going forward other than in brief spikes.


----------



## ducati916

Sdajii said:


> 1. Maybe I slept in for a few days or I haven't peeked out from under my rock for too long. I'd heard of a virus issue but what was the second black swan?
> 
> 2. It's a crazy world in crazy times, so anything could happen, but I can't see Russia doing that. The west would hate them, the middle east would hate them, Asia would become very wary of them, and even if no one stopped them (and that wouldn't be a 100% certainty), they'd be seen by the world as evil and untrustworthy.
> 
> 3. If it did happen and no one stopped them or did particularly much about it, it could certainly trigger all out hot WWIII, if other superpowers say 'hey, look at that, Russia just significantly expanded its empire, it seems that the rules have gone back to what they were pre WWII where countries could legitimately use military powers to conquer others'.
> 
> 4. WWIII is inevitable and can't be too far off, so hey, that could be how it starts. It does seem a bit unlikely for Russia to target oil at a time when oil is at such low value and arguably it won't be terribly valuable going forward other than in brief spikes.




1. (a) COVID-19 and (b) Oil price war.

2. _*Senators accuse Saudi Arabia of economic warfare.*_ A group of Republican senators sent Sec. of State Mike Pompeo a letter, accusing Saudi Arabia of economic warfare because of Riyadh’s decision to increase oil production. The letter said the U.S. could explore antitrust authority as well as revisit _support for the war in Yemen_, a clear threat to Saudi Arabia. 

3. We have had any number of limited hot wars. If Putin phoned Trump and said...let's bomb them back to the stone age...who exactly would stop them? China gets 90% of its oil from Russia. I'm sure the US could stump up the 10%

4. A world war is unlikely if the US/China/Russia are all on the same page.

jog on
duc


----------



## rederob

Below is the near term trend on a 15-minute chart:


Those who trade should consider shorting oil (somewhat obvious I guess).  
On Monday evening US COVID-19 numbers will have doubled so their exchanges are going to open into a brutal week.
I expect support to fail next week.  The paper market and the physical market are too far out of kilter.
Onshore storage of crude is tightening, so again producers will be taking a haircut if they want to avoid shutting-in their wells and avoiding high restart costs.
Once things are back up and running globally, the best we can hope for is a recessionary market to sell in to, so suppressed prices look like being the norm well into 2021.


----------



## barney

rederob said:


> Those who trade should consider shorting oil (somewhat obvious I guess).  so suppressed prices look like being the norm well into 2021.




Can't argue with that Red.  

On the flip side, somewhere down the track there will come a point where accumulating long Oil futures could be the trade of the decade.

I remember telling a family member back in January 2016 that's what we should all be doing, when OIL hit $28.   

I didn't follow my own advice did I  Probably be retired now if I did! 

As you say, its a long way from being LONG just yet, but when it turns, it could turn into a very lucrative trade.


----------



## jbocker

Sdajii said:


> ...WWIII is inevitable and can't be too far off, ...



We ARE in WWIII have no doubt it. One against Humanity.


----------



## Smurf1976

ducati916 said:


> A group of Republican senators sent Sec. of State Mike Pompeo a letter, accusing Saudi Arabia of economic warfare because of Riyadh’s decision to increase oil production.



So in other words the US is accusing the Saudi’s of doing the exact same thing the US has done but on a smaller scale.

I wonder what actions the US will take against the US? Probably not overly much.....


----------



## fiftyeight

ducati916 said:


> 3. We have had any number of limited hot wars. If Putin phoned Trump and said...let's bomb them back to the stone age...who exactly would stop them? China gets 90% of its oil from Russia. I'm sure the US could stump up the 10%




Does it even need Putin and Trump to say lets bomb them back to the stone age? There is enough tension in that part of the world, surely one the proxy wars could spill over. Few attacks on key infrastructure would change things.

A super low oil price definitely wont make things more stable???


----------



## ducati916

fiftyeight said:


> Does it even need Putin and Trump to say lets bomb them back to the stone age? There is enough tension in that part of the world, surely one the proxy wars could spill over. Few attacks on key infrastructure would change things.
> 
> A super low oil price definitely wont make things more stable???





Indeed, without a doubt one of the most unstable regions of the world.

jog on
duc


----------



## rederob

WTI is going to get absolutely hammered this week:


Just to put the early decline into perspective: it reflected a 10% dip in price before recovering.


----------



## Country Lad

Five days ago we were paying $1.48 for diesel in Tassie, and then $1.39 in Vic and NSW on the way home.  Either the middle men or retailers are making a nice profit.


----------



## rederob

Country Lad said:


> Five days ago we were paying $1.48 for diesel in Tassie, and then $1.39 in Vic and NSW on the way home.  Either the middle men or retailers are making a nice profit.



It looks like prices at the pump are a bit like COVID-19, and will take a few weeks to take effect!


----------



## rederob

This chart magnifies yesterday's and is at the one-minute trading level:


Overnight, support was again broken but WTI has since recovered, albeit not fully.
A series of lower highs is evident.
I expect the trend will continue through the week.


----------



## ducati916

The Majors have stopped reacting to the POO.




They are (in my opinion) a buy. If you want the leverage ERX (was x3 now x2).

In contradistinction to Gold, where you want to buy the physical, in Oil, you want to buy the producers. They have the financial muscle to survive the price war and come out the other side with vastly reduced competition in their markets.

jog on
duc


----------



## ducati916

Might just be short covering in the overnight market, or, there is news afoot that hasn't made the newswires yet.




jog on
duc


----------



## ducati916

Shut-ins almost here.

_*Pipeline companies tell drillers to cut. *_Texas pipeline companies have told shale drillers to cut upstream production because pipelines and downstream storage and refineries are reaching capacity. The move is a sign that shut ins are just around the corner.

_*10 mb/d of production to be shut-in. *_IHS Markit says that 10 mb/d of global production could be shut in between April and June. Other analysts have smaller numbers. OPEC+ is expected to add 4 mb/d this year, but total global production could fall by 200,000 bpd, according to Energy Aspects, which highlights just how much supply needs to contract in non-OPEC countries. Goldman Sachs puts global decline at 900,000 bpd, “with the true number likely higher and growing by the hour.” Goldman said production capacity could shrink by 5 mb/d this year.

If, (when) that happens a certain % will never come back, resulting in a permanent loss of supply. Good for those still in business.

jog on
duc


----------



## jbocker

ducati916 said:


> If, (when) that happens a certain % will never come back, resulting in a permanent loss of supply. Good for those still in business.



I wonder what the impacts on companies in the alternative energy supply/development will be, as oil becomes cheap for any extended period of time. (I will ask this question in Alternative energy? Thread.)


----------



## rederob

This week's price action, by the minute:


The above chart is a continuation of the trend posted last Saturday.
Support has been resilient during the week.
Still early days in the US LTO story, so bankruptcies are ahead.


----------



## basilio

This analysis opens up the discussion on whether the oil industry can survive the rupture caused by CORVID 19.

*Will the coronavirus kill the oil industry and help save the climate? *
Analysts say the coronavirus and a savage price war means the oil and gas sector will never be the same again

*Damian Carrington, Jillian Ambrose and Matthew Taylor*
*Analysts say the coronavirus and a savage price war means the oil and gas sector will never be the same again*
*The plunging demand for oil wrought by the coronavirus pandemic combined with a savage price war has left the fossil fuel industry broken and in survival mode, according to analysts. It faces the gravest challenge in its 100-year history, they say, one that will permanently alter the industry. With some calling the scene a “hellscape”, the least lurid description is “unprecedented”.*
A key question is whether this will permanently alter the course of the climate crisis. Many experts think it might well do so, pulling forward the date at which demand for oil and gas peaks, never to recover, and allowing the atmosphere to gradually heal.

The boldest say peak fossil fuel demand may have been dragged into the here and now, and that 2019 will go down in history as the peak year for carbon emissions. But some take an opposing view: the fossil fuel industry will bounce back as it always has, and bargain basement oil prices will slow the much-needed transition to green energy.
https://www.theguardian.com/environ...s-broken-will-a-cleaner-climate-be-the-result


----------



## Smurf1976

jbocker said:


> I wonder what the impacts on companies in the alternative energy supply/development will be, as oil becomes cheap for any extended period of time.



As a broad statement there's uncertainty in the industry same as there is with pretty much everything else.

In the context of an oil price crash, given that such a thing has actually occurred, I'll broaden the definition of alternative energy from it's recent (2019) meaning of wind, solar etc back to it's 1970's meaning of "anything that isn't oil". 

So to clarify, coal, gas and nuclear are "alternative energy" using that old definition. Alternative in that they're an alternative to oil.

In that context I'll point out that on a purely financial basis the alternatives, all of them, are going to struggle at the margin in this low oil price environment. With oil at $20 per barrel, a problem with natural gas or coal isn't just the cost of the fuel but that of transporting it. If it's already there then it's different but if someone's planning a new gas pipeline or a new rail line to move coal, well bottom line is it's incredibly cheap to ship oil in to any coastal location. The rationale for moving coal or gas over any great distance always did depend on the notion that oil itself, as a commodity, was at least somewhat costly. If it isn't well then that undermines the logic behind building international gas pipelines and so on, it becomes cheaper to just ship in oil to run industry etc.

Looking at the other sort of alternative energy, renewables, well it really depends on what happens with government policy other than for those projects which are stand alone profitable against now considerably cheaper fossil fuels. On that point I doubt you'll find anyone willing to make a serious bet at this stage - if could go either way. We could see governments push climate change right up the list of priorities in the pandemic aftermath or we could see the issue all but forgotten amidst severe recession. I won't speculate beyond saying that taking a neutral perspective, some pretty decent arguments can be made for either case at this stage.


----------



## Smurf1976

ducati916 said:


> Shut-ins almost here.
> 
> _*Pipeline companies tell drillers to cut. *_Texas pipeline companies have told shale drillers to cut upstream production because pipelines and downstream storage and refineries are reaching capacity. The move is a sign that shut ins are just around the corner.




A particular issue which may seem counter-intuitive is that the drop in oil consumption is stretching the limits of infrastructure capacity.

Using round numbers to make the point simply, suppose that country x produces 10 million barrels per day and consumes 9 million barrels. So a net export of 1 million barrels per day.

Now why would that country have export infrastructure able to cope with 4 million barrels per day of exports? In short they don't and that creates an issue that whilst they might be able to double exports to say 2 million bpd, ultimately if demand drops by a third then there's nowhere for some of that domestic crude oil production to go. Once the storage is full, the forced situation becomes a production cut or a drop in the domestic price below international pricing and using the oil to fire boilers and furnaces in place of coal or gas. There isn't the physical ability to export in the required volume even if doing so were profitable.

The US would seem to be at that point already, an interesting point in itself since it suggests that US domestic oil consumption must be down quite a lot for this to have occurred so quickly.

The US has massive oil infrastructure, far more than any other country, but ultimately it's substantially geared to extract oil from the ground and move it around the US with a network of pipelines crossing the country. The ability to export the stuff isn't overly great and there are also localised issues where the only outlet for oil from a particular field is that it's hauled (by road tankers) to the refinery 50km away. Etc.

If that refinery can't use it, and they won't if there isn't reasonably local demand for their output, then there's no outlet for that crude oil other than to truck it somewhere else in the US and when you're hauling 150 barrels at a time in a tanker truck, there's a limit to how far you can drive that truck before the whole idea becomes uneconomic to the point that the oil ends up literally worthless. Every extra mile further devalues the oil itself as the transport costs mount up.

Point there being that it's not just WTI traded on an exchange, at a local or regional level oil can have quite a different price.

Looking at a local level within the US, here's some pricing which illustrates that. All prices are in USD per barrel and all this is crude oil.

WTI spot price "on paper" = $21.90
WTI physically at Cushing, Oklahoma = $14.10 (30 March)

Buena Vista (California) = $25.96
Midway-Sunset (California) = $21.28
North Louisiana Sweet = $13.75
Michigan Sweet = $13.50
Michigan Sour = $8.75
Arkansas Extra Heavy = $8.75
NW Kansas Sweet = $8.25
Central Montana = $7.99
Colorado South East = $7.25
Oklahoma Sour = $4.75
Upper Texas Gulf Coast = $4.56
Williston Sour (North Dakota) = $1.39

So lower quality oil in the wrong place already is basically worthless. The abundance of supply means nobody actually _needs_ it in a physical sense so it has to be dirt cheap to be worth anyone buying it given transport and refining costs (which will be higher for sour oil).

Internationally it's much the same. Heavy sour oil in the wrong place is down close to $10 whilst light sweet in the right place, where someone can actually use it, is close to $30. So we're seeing quite a lot of oil the value of which is reduced by the collapse of local demand and the inability to physically move it somewhere else either at all or at least without incurring high costs (road tankers etc).

Price data sourced from the Energy Information Administration (US Government) and the site oilprice.com


----------



## peter2

While I'm cheering for a higher POO there's no demand to sustain any meaningful rally. The US is shutting down with no airlines, no driving. Yet their oil production hasn't slowed. The numbers quoted by the commentators indicate that soon they'll have so much oil and nowhere to store it. Shut downs are inevitable and there's going to be some consolidations between companies to survive.


----------



## Smurf1976

peter2 said:


> soon they'll have so much oil and nowhere to store it.



A point often overlooked with commodities is that with oil there's a hard, physical limit to how much can be stored given that it's a liquid. You need a tank or other container to put it in.

In contrast the ability to stockpile coal or iron ore is for practical purposes unlimited given that it can be simply piled up out in the open on any reasonably flat land.

If nobody wants to blink in this production war then oil's going to get interesting.....


----------



## rederob

Our oilers should take a brief ride higher today after an overnight bounce in WTI:


Support at $20 has only once been meaningfully breached, yet many times  challenged.
We are very much in the early days of oil's market glut and I am not as optimistic about the overnight bounce as the move higher would suggest.
Detailed report on COVID-19 effects is here.


----------



## SirRumpole

Apparently some service centres in Sydney were selling ULP for 47c a litre this morning.


----------



## PZ99

SirRumpole said:


> Apparently some service centres in Sydney were selling ULP for 47c a litre this morning.



That price doubles if you step outside the car


----------



## jbocker

SirRumpole said:


> Apparently some service centres in Sydney were selling ULP for 47c a litre this morning.



Typical. Just when car and driver is in lock down.


----------



## ducati916

From an Grant's:

Rozencwajg says that in contrast to the 2014 to 2016 period, the corporate response has been swift and severe:

_You’ve got cash flows across the industry collapsing by more than 50%, budgets have been slashed, and there is no ability to tap capital markets.  They’ve got to cut the rigs. Companies are going back and cutting capex a second time.  Diamondback Energy did it today.   Budgets are down 50% to 70%.  At that level you’re going to see massive declines. The shale era is over.  It probably peaked in the fourth quarter and is set to begin a long terminal decline.
_
While COVID-19 is current, there will be a demand contraction. That will return once this virus issue is in the rearview mirror and pretty quickly.

The supply contraction has lagged the demand contraction. But it has been hastened and deepened by the Saudi price war. As a a result of that price war the supply contraction has been vastly accelerated.  Bye and large, that supply contraction is not going to return quickly, if ever.

Similarly, the supply boost from the current price war may be less severe than believed, as Goehring explains:

_The impact of $20 oil is so extreme that Saudi must be thinking twice about what they did. In waging the 2014 to 2016 price war, crown prince Mohammed Bin Salman contradicted his advisors and it led to a 33% decline in FX reserves.  This version will further strain internal government finances and risk emboldening political opposition. Interestingly, MBS had four senior officials arrested the day before commencing the price war.

A deal will be eventually announced. The market believes that Saudi Arabia can increase production to 12 mbpd from 9.6, we don’t think they can get above 10.5 mbpd on a sustained basis. Remember that processing facilities equivalent to 500,000 bpd are still offline due to the drone attack last fall.

How much more oil can they really put into the market?  It may not be that much.
_
The Arabs have probably achieved already what they set out to accomplish, vis-a-vis a reduction in total supply and will look for a way to exit gracefully now, rather than run the risk of self-inflicted damage to their own interests.

If this is not the absolute bottom in the oil war, it is close enough. Things will settle out re. the price war and the real acceleration of prices higher will come with the resolution of COVID-19 and a return of demand.

jog on
duc


----------



## Country Lad

Smurf1976 said:


> A point often overlooked with commodities is that with oil there's a hard, physical limit to how much can be stored given that it's a liquid. You need a tank or other container to put it in.




There could be 2 issues in the gas industry as well.  Assuming the downturn in industrial use, the first is the capacity to store gas similarly to oil.  It has been quite a few years since I had an involvement in the development years of the CSG industry but the second is that it was the case in the early days that gas contracts escalation clauses were tied to the price of oil.  If that is still the case then some of our gas producers could have an issue.


----------



## Skate

ducati916 said:


> From an Grant's:
> 
> Rozencwajg says that in contrast to the 2014 to 2016 period, the corporate response has been swift and severe:
> 
> _You’ve got cash flows across the industry collapsing by more than 50%, budgets have been slashed, and there is no ability to tap capital markets.  They’ve got to cut the rigs. Companies are going back and cutting capex a second time.  Diamondback Energy did it today.   Budgets are down 50% to 70%.  At that level you’re going to see massive declines. The shale era is over.  It probably peaked in the fourth quarter and is set to begin a long terminal decline._
> 
> While COVID-19 is current, there will be a demand contraction. That will return once this virus issue is in the rearview mirror and pretty quickly.
> 
> The supply contraction has lagged the demand contraction. But it has been hastened and deepened by the Saudi price war. As a a result of that price war the supply contraction has been vastly accelerated.  Bye and large, that supply contraction is not going to return quickly, if ever.
> 
> Similarly, the supply boost from the current price war may be less severe than believed, as Goehring explains:
> 
> _The impact of $20 oil is so extreme that Saudi must be thinking twice about what they did. In waging the 2014 to 2016 price war, crown prince Mohammed Bin Salman contradicted his advisors and it led to a 33% decline in FX reserves.  This version will further strain internal government finances and risk emboldening political opposition. Interestingly, MBS had four senior officials arrested the day before commencing the price war._
> 
> _A deal will be eventually announced. The market believes that Saudi Arabia can increase production to 12 mbpd from 9.6, we don’t think they can get above 10.5 mbpd on a sustained basis. Remember that processing facilities equivalent to 500,000 bpd are still offline due to the drone attack last fall._
> 
> _How much more oil can they really put into the market?  It may not be that much._
> 
> The Arabs have probably achieved already what they set out to accomplish, vis-a-vis a reduction in total supply and will look for a way to exit gracefully now, rather than run the risk of self-inflicted damage to their own interests.
> 
> If this is not the absolute bottom in the oil war, it is close enough. Things will settle out re. the price war and the real acceleration of prices higher will come with the resolution of COVID-19 and a return of demand.
> 
> jog on
> duc




Hey @ducati916 is it possible to go back to the standard font size as it's much easier for me to read. I make a point to read your posts more than once..

Skate.


----------



## Smurf1976

Country Lad said:


> There could be 2 issues in the gas industry as well.



Agreed.

Looking at the Australian east coast market the spot price has dropped although that wasn't purely in response to the oil plunge, it started well before that. Prices are hovering around circa AUD $4.75 / GJ at the moment versus $10 - $12 a year or so ago.

That price is roughly equivalent to oil at USD $17.50. Given that some industrial and power generation uses do have the ability to switch, plus LNG prices being oil-linked as you mention, there's not much room for oil to drop further without taking gas down with it. That said, I'll add that gas pipeline charges and the cost of moving oil to site do complicate the economics there so it's not just about the commodity price.

In terms of gas storage in Australia:

Roma (Qld) holding 35 PJ (65% full)
Silver Springs (Qld) holding 22 PJ (48% full)

Moomba (SA) holding 21 PJ (30% full)

Iona (Vic) holding 19 PJ (74% full)
Dandenong LNG (Vic) holding 0.657 PJ (97% full)

Newcastle LNG (NSW) holding 1.492 PJ (96% full)

None of those would normally or officially be considered concerning at present levels. Personally though I'd rather Iona was higher - but then I'm more concerned about keeping the lights on than holding gas prices up.

As a technical clarification, Dandenong and Newcastle LNG facilities are not import or export terminals but peak shaving plants. That is, they comprise an LNG tank, a tiny on site LNG plant and a much greater capacity regasification capacity. Their function is to discharge at high rates to meet peak gas demand (extreme weather, failure of gas production or pipelines, etc) but the vast majority of the time they're either slowly filling or sitting idle. The gas stored comes from the same place it goes back into - they're storage only, not import or export. Gas > LNG > back to gas.

The others are all underground gas storage as gas not as LNG. That is, they're using natural underground reservoirs.


----------



## ducati916

As usual, into the w/e, which means that if a deal is reached, shorts will be trapped into a squeeze come Sunday night.

_*A 10 mb/d cut after all?* By early Friday, there seemed to be some momentum on negotiations. Bloomberg reported that Russia was open to a global pact. At the time of this writing, OPEC was rumored to be exploring a scenario in which Saudi cuts by 3 mb/d, Russia cuts by 1.5 mb/d, non-Saudi Gulf States cut by 1.5 mb/d, and the U.S., Canada and Brazil cut by nearly 2 mb/d. _


_*Whiting Petroleum goes bankrupt, dishes out executive pay. **Whiting Petroleum (NYSE: WLL)* became the first major victim of the unfolding collapse in oil prices, filing for bankruptcy this week. The board approved roughly $14.6 million in executive bonuses just days before the Chapter 11 filing. _

_*BP slashes spending 20 percent.* *BP (NYSE: BP)* said it would cut spending by 20 percent, including a 50 percent cut in U.S. shale spending. “This may be the most brutal environment for oil and gas businesses in decades,” CEO Bernard Looney said in a statement._

jog on
duc


----------



## rederob

Where is the US oil patch heading?



We are not yet back over $30/bbl so the bottom line scenario is the best that could be hoped for.


----------



## Smurf1976

ducati916 said:


> *A 10 mb/d cut after all?* By early Friday, there seemed to be some momentum on negotiations. Bloomberg reported that Russia was open to a global pact. At the time of this writing, OPEC was rumored to be exploring a scenario in which Saudi cuts by 3 mb/d, Russia cuts by 1.5 mb/d, non-Saudi Gulf States cut by 1.5 mb/d, and the U.S., Canada and Brazil cut by nearly 2 mb/d.




A problem I can see that the market will probably overlook at least initially is that the extent of supply surplus almost certainly exceeds 10 million bpd and plausibly by a fairly large amount given the extent to which things are shut down.

So if there's a 10 million barrel per day cut then the market will get excited sure but if that leaves a remaining 20 million barrel per day supply surplus then reality will bite in due course. 

So price up then down again?


----------



## rederob

The above charts of WTI's near-term perspective show that the longer-term trend channel is actually more bearish.  However, everything this week will rest on further "talks" as COVID-19 continues to add to demand destruction.
Last week showed the power of positive sentiment over fundamentals.


----------



## rederob

The US response to low oil prices is evident below:



It is interesting to note that oil rig numbers rose slightly from January to mid March, possibly indicating a need to keep finding more oil in response to lower prices, in the hope that cashflows could be maintained.
Rystad see a potential decline in the rig count to a few hundred, so LTO output will fall dramatically as it's an industry that relies on strong returns within the first few months, and a sharp tailing off afterwards.


----------



## ducati916

_*Citi: Short-term supply cuts of 10 mb/d. *Citi estimates that supply curtailments because of logistical bottlenecks and low prices could force 10 mb/d offline temporarily in April. Goldman Sachs put the figure at 5 mb/d. Goldman warned that eventually the market will snap back because of the shut ins. “This will likely be a game-changer for the industry,” the Goldman analysts said. “Once you damage the capital stock in oil it is an expensive and time-consuming process to rebuild, assuming it can be rebuilt at all.”_

_

_

The cure for low prices, is low prices. 

With all the damage done and being done, there will be a price spike higher going forward.

jog on
duc


----------



## ducati916

jog on
duc


----------



## ducati916

_Saudi Arabia's sovereign-wealth fund has amassed stakes worth roughly $1 billion in four major European oil companies, according to people familiar with the matter, buying assets it perceives as undervalued in a market depressed by the coronavirus pandemic and low oil prices._

_The stakes in Equinor ASA, Royal Dutch Shell PLC, Total SA and Eni SpA were all bought by the Public Investment Fund on the open market in recent weeks, said the people, who added that the fund may continue to make stock purchases._

_"The PIF is getting active again in the market..I would not be surprised if we see similar deals again," said a Saudi official._

_The investments mark a significant tactical shift for the roughly $300 billionPublic Investment Fund, tasked by Crown PrinceMohammed bin Salman with diversifying the country's economy away from oil by largely investing in companies and industries untethered to hydrocarbons._

_The purchases also come at a precarious financial moment. Saudi Arabia's budget deficit is expected to widen this year as oil revenue falls and the kingdom increases spending to fund a stimulus package to combat economic damage caused by a countrywide coronavirus lockdown._

_PIF bought a stake worth around $200 million in majority-state-owned Norwegian oil giant Equinor in the days around a sharp rally in oil prices last week. A Saudi-based nominee account with JPMorgan Chase & Co. accrued around 14.5 million shares -- or 0.43% of the total shares -- between March 30 and April 6, according to data from Oslo Market Solutions. The move made that account Equinor's 12th largest shareholder._

_It couldn't be determined what size stakes PIF had bought in Royal Dutch Shell, Total and Eni, but people familiar with the investments said the combined stakes were worth about $1 billion._

_Spokespeople from Equinor, Royal Dutch Shell, Eni and J.P. Morgan declined to comment while the Saudi Public Investment Fund and Total didn't respond to a request for comment._

_The purchases came during a tumultuous few weeks in the oil markets. Petroleum prices have fallen nearly 30% since early March, when Saudi Arabia mounted a price war with Russia, but staged historic rallies last week._

_U.S. crude oil notched its largest ever daily percentage gain last Thursday after President Trump and the Saudi regime expressed optimism about the possibility of a deal between the Organization of the Petroleum Exporting Countries and other oil-exporting nations to address a global oil glut._

_The $300 billion Saudi sovereign-wealth fund is controlled by Prince Mohammed and run by Yasir al-Rumayyan -- who is also chairman of majority-state-owned Saudi Aramco. On Monday the fund disclosed an 8.2% stake in Carnival Corp., the world's largest cruise operator, whose shares have dropped more than 75% this year._

_That investment came after high-profile deals in recent years, including a $3.5 billion stake in Uber Technologies Inc. and a $45 billion commitment to SoftBank Group Corp.'sVision Fund._

_Stocks in the travel and energy sectors have been among those hammered by government-imposed lockdowns and travel bans motivated by the coronavirus pandemic. Equinor shares pared some of their heavy losses so far this year last week, but remain down 23% for 2020. Shares closed 0.3% lower at 135.80 Norwegian kroner Wednesday._

_Shell, Total and Eni have respectively shed 35%, 31% and 33% of their value in 2020, while Brent crude, the global benchmark, is down 52%._

_OPEC and other oil-producing countries including Russia are due to convene a teleconference Thursday, before the Group of 20 nations host an energy ministers meeting Friday to debate the conclusions of the OPEC+ meeting._

_Write to David Hodari at David.Hodari@dowjones.com, Summer Said at summer.said@wsj.com and Rory Jones at rory.jones@wsj.com_

_(END) Dow Jones Newswires_

_April 08, 202018:00 ET (22:00 GMT)_

jog on
duc


----------



## ducati916

jog on
duc


----------



## Smurf1976

So how far is demand down? I'll let the quotes do the talking since the numbers say it all really.



> U.S. oil demand has now fallen to 14.4 million barrels a day, the lowest in data going back to 1990 and a drop of more than 30% from pre-crisis levels, government figures showed Wednesday.






> Crude demand in the world’s third-biggest consumer has collapsed by as much as 70% as India......






> In Spain, one of the countries hit worst by the disease, oil product demand fell by 23% in March






> Italy - With the nation under strict restrictions of movement, retail fuel sales have plunged 85%, according to service station union estimates.






> Sales of gasoline and diesel in the U.K. were down by 66% and 57%, respectively, as of March 31, according to the U.K. Petrol Retailers Association




https://www.bloomberg.com/news/arti...andemic-wiped-out-oil-demand-around-the-world

The article is also reproduced on this site: https://peakoil.com/consumption/how-the-pandemic-wiped-out-oil-demand-around-the-world

My conclusion is that any likely OPEC + Russia + US agreement is in practice unlikely to be sufficient to bring supply down to match demand. Depending on whose estimates you prefer, demand has dropped by 16 - 35 million barrels per day globally which is massive (pre-crisis demand was almost spot on 100 million barrels per day).


----------



## ducati916

This thread started considering 'Peak Oil' (in 2005). I was definitely in that camp. Wrong. The evidence (at the time) certainly seemed to support the thesis though. This argument pretty much carried through to 2009.







We had Barrons marking the top with a cover:




Then came the 'shale' oil, driven by high prices:




With currently shale going bust.

The truism of the commodity markets: the cure for high prices are high prices. The cure for low prices are low prices. Oil will bounce about, possibly (probably) going lower and if so, those low prices will destroy the ability to hold and maintain (control) low prices. This will set the scene for higher prices.

Currently the thesis seems to be that China's demand is already at peak. I doubt that. China wants to be the #1 economy in the world. To achieve that, cheap energy is the key. China never baulked at burning coal because it was cheap, China I doubt will worry about using oil if it is cheap, which will of course increase over time as its population increasingly uses oil based goods and services.



Economies are built on the cheap (est) source of energy.




Once the virus issue is resolved and economies start to function again, the current glut will resolve itself and pricing power will return to oil, particularly given the fact that a certain percentage of supply is likely incapacitated permanently.

jog on
duc


----------



## ducati916

News out over the long w/e:

_OPEC+ agreed to the largest oil production cuts in history on Thursday, but oil prices crashed towards $20 as markets decided that a 10 million bpd cut was insufficient to balance the demand deficit. Today, the G20 will meet to discuss more cuts and more details will likely come out about the OPEC+ deal. Markets are closed today and so all eyes will be on developments over the weekend.

*OPEC+ strike 10 mb/d deal, oil prices fall. *OPEC+ agreed to joint cuts on the order of 10 mb/d, a historic agreement. The deal calls for both Saudi Arabia and Russia capping production at 8.5 mb/d for May and June, after which cuts would ease in phases – down to 8 mb/d and then to 6 mb/d of cuts. The deal was not received well by the markets, which sold off WTI and Brent over fears that the reductions are inadequate. “The supply and demand fundamentals are horrifying,” said OPEC Secretary-General Mohammed Barkindo. 

*G20 meets to chip in. *OPEC+ is also looking for help from other non-OPEC countries in the G20. Mexico temporarily held up the OPEC+ deal because it does not want to cut. At the time of this writing, Mexico’s president said that he spoke with President Trump, who promised to contribute to the cuts on Mexico’s behalf. “First they asked us for 400,000, then 350,000” Mexico’s President Lopez Obrador said. Mexico was only able to cut by 100,000 barrels a day, and Trump “very generously expressed to me that they were going to help us with an additional 250,000 to what they are going to contribute. I thank him.”

*Demand loss at 20-30 mb/d.* The OPEC+ deal is historically large, but still insufficient to plug a 20 to 30 mb/d decline in demand. Inventories are set to rise in the coming months. “The proposed 10 million bpd cut by OPEC+ for May and June will keep the world from physically testing the limits of storage capacity and save prices from falling into a deep abyss, but it will still not restore the desired market balance,” Rystad Energy said._

jog on
duc


----------



## ducati916

So the 'majors' and oil look to breaking their correlation. This makes sense as the majors will survive (largely intact) the shakeout in the oil patch.




They are far from out of trouble, but, probably the worst is now behind them.

jog on
duc


----------



## Smurf1976

ducati916 said:


> This thread started considering 'Peak Oil' (in 2005). I was definitely in that camp. Wrong. The evidence (at the time) certainly seemed to support the thesis though. This argument pretty much carried through to 2009.



A point often missed in that discussion was that reserves are not just a function of geology but also of politics and finance.

In defence of those who expected production to peak, nobody at the time would have accepted the idea of the Fed engaging in QE or having interest rates below 1% as credible. It would have been rejected outright as an incorrect input since it was not even remotely plausible in the mindset of someone from the 1950's - early 00's. Anyone spotting 1% in the calculations would have corrected that to 10% since obviously it was an error, nobody would buy a bond paying 1% that can't be right.....

Apply a pre-2008 financial environment to the oil industry and the chance that we'd have seen a peak in production becomes far more likely since an awful lot of what has been developed since then, US shale most notably, wouldn't have occurred in a world where finance costs 10% and companies don't survive long without making a profit. 

I'm not saying there's a proven case there for an actual peak, but applying what would historically have been considered as a normal financial environment would almost certainly have seen lower production than has been the case.


----------



## rederob

This chart is a continuation from my post on 5 April:


WTI seems likely to break below support and fall through the sideways trend channel which has held for the past month.
It looks like demand destruction presently trumps production cuts.  
The worst remains ahead of us.


----------



## ducati916

Just a snippet from the 'Spectator': https://spectator.us/saudi-arabia-oil-truce-greater-conflict-looms/

_Then there is the prospect of Saudi-hating Joe Biden taking the White House in November. He has stated that he will stop selling arms to the kingdom and consider it a ‘pariah state’. The Saudis have started spending massively on Democratic lobbyists in Washington, but no amount of money is going to hide the fact that the Saudis effectively went to war against the US shale industry during the country’s biggest economic downturn since the 1930s. Whoever wins the presidential election in November, as the coronavirus peters out, a radical reassessment of US-Saudi relations seems inevitable._

jog on
duc


----------



## qldfrog

ducati916 said:


> Just a snippet from the 'Spectator': https://spectator.us/saudi-arabia-oil-truce-greater-conflict-looms/
> 
> _Then there is the prospect of Saudi-hating Joe Biden taking the White House in November. He has stated that he will stop selling arms to the kingdom and consider it a ‘pariah state’. The Saudis have started spending massively on Democratic lobbyists in Washington, but no amount of money is going to hide the fact that the Saudis effectively went to war against the US shale industry during the country’s biggest economic downturn since the 1930s. Whoever wins the presidential election in November, as the coronavirus peters out, a radical reassessment of US-Saudi relations seems inevitable._
> 
> jog on
> duc



Interestingly, while the market was falling reasonably strongly in the us this morning, oil was one of the few green, even gold was down


----------



## rederob

Looks like *support *is proving to be something of a Maginot Line:


Smaller US LTO producers will be running out of cash at a rate of knots as it's now almost 6 weeks since WTI prices fell off a cliff.
The maths of reopening shut-in production does not look good until WTI is significantly over $60/bbl, and it's a long stretch seeing that happening this year.


----------



## Smurf1976

Looking at Australian consumption of petroleum products during February 2020 versus February 2019 for comparison shows only the beginnings of COVID-19 related change with aviation.

Government has only just released the February figures, that's the latest, so I'm posting it despite the limitations of timing. Next month's release, data for March, should be more useful.

All figures are year on year % change.

LPG (sold for automotive use) = +2.2%
LPG (all other uses) = +0.8%

Petrol (all normal consumer grades) = +1.2%

Diesel = +4.8%

Aviation turbine fuel (domestic) = -1.4%
Aviation turbine fuel (international) = -8.9%
Aviation gasoline (the fuel that small planes use) = -7.8%

Fuel oil (ships, industry) = -13.9%

Lubricants = -5.4%

All other products (chemicals, minor fuels such as heating oil and racing gasoline, agricultural spray oils, bitumen, direct burning of crude oil, etc) =  -14.6%

Total all products = +1.1%

*Note that this data is for Australia only*.

Calculated by Smurf from data available at www.energy.gov.au


----------



## Sdajii

rederob said:


> Smaller US LTO producers will be running out of cash at a rate of knots as it's now almost 6 weeks since WTI prices fell off a cliff.
> The maths of reopening shut-in production does not look good until WTI is significantly over $60/bbl, and it's a long stretch seeing that happening this year.




This is definitely a crazy, unpredictable year, just about anything could happen, and I think $60+ WTI is definitely possible. With such a massive crash in prices, production is going to crash. We can be pretty sure about that much. If demand does return (a very big if, absolutely), it's easy to imagine the POO utterly skyrocketing beyond $60. Of course, it's also easy to imagine getting to 2021 with planeless skies and a world full of people going crazy with cabin fever, wishing they could take advantage of the dirt cheap fuel but only being able to use it to drive to the nearest shop for some toilet paper.

If we were sitting in lockdown for the next 4 months (enough for production to be wiped out) and then suddenly there was a medical miracle curing the virus, allowing us all to be free again quite suddenly, $100+ before the end of the year wouldn't be surprising. Unfortunately I don't see that medical miracle coming, but sooner or later we'll hopefully be let out!


----------



## ducati916

Sdajii said:


> 1. This is definitely a crazy, unpredictable year, just about anything could happen, and I think $60+ WTI is definitely possible.
> 
> 2. With such a massive crash in prices, production is going to crash. We can be pretty sure about that much. If demand does return (a very big if, absolutely), it's easy to imagine the POO utterly skyrocketing beyond $60.
> 
> 3. Of course, it's also easy to imagine getting to 2021 with planeless skies and a world full of people going crazy with cabin fever, wishing they could take advantage of the dirt cheap fuel but only being able to use it to drive to the nearest shop for some toilet paper.
> 
> 4. If we were sitting in lockdown for the next 4 months (enough for production to be wiped out) and then suddenly there was a medical miracle curing the virus, allowing us all to be free again quite suddenly, $100+ before the end of the year wouldn't be surprising. Unfortunately I don't see that medical miracle coming, but sooner or later we'll hopefully be let out!




1. Certainly the (a) COVID-19 issue and (b) the oil war were two unforeseen events (at least by me).

2. The cure for low prices, are low prices. Demand will return. Some supply will never return. Hence, depending on just how much supply is lost permanently, will determine just how high prices will spike. Predictions are always prone to error but $60+ seems pretty reasonable as an estimate given the damage that is being currently incurred.

3. Very unlikely and almost 'impossible'. Economic (permanent or extended) shutdown is essentially suicide. The few (if necessary) will be sacrificed for the many.

4. Possibly (probably) higher.

jog on
duc


----------



## rederob

Rystad see a demand uptick occurring from May.
That is consistent with many nations flagging a relaxation of lockdown arrangements.
Nevertheless, on the basis of their data that's still about 300Mbbls of excess production in May alone, based on agreed oil production cuts going ahead.



To date, excess production that's gone directly into storage would sustain normal global demand for around 15 days.  We need to find the pivot point; ie where present low cost production cannot satisfy demand. 
After that point there will be a balancing act between storage and production to meet demand, so this means oil in the $20 ballpark is possible for a few more months.
Should that be the case, my reckoning is that US LTO will have shut in a lot of their supply potential, so at some point there will be a sharp breakout as the shortfall will be met from storage that might not cope due to physical constraints. 
Oil storage costs have many variables - onshore, at terminal, tanker, cavern - but a safe ballpark figure is 50cents/bbl/month, so we have a fundamental price driver as the oversupply situation drags out.


----------



## ducati916

Well currently WTI up 33%




jog on
duc


----------



## peter2

I see that also, but it must be wrong. I'm not seeing that in other charts nor has OOO moved up.


----------



## ducati916

peter2 said:


> I see that also, but it must be wrong. I'm not seeing that in other charts nor has OOO moved up.




True. Just been looking also, could well be an error. It was after all, the sign of the beast!

jog on
duc


----------



## rederob

ducati916 said:


> Well currently WTI up 33%



Not according to Oil Price and other sites:


----------



## peter2

Looks like _finviz_ has jumped to the next month futures contract without any adjustment yet. 




Thanks to @InsvestoBoy for the alert.


----------



## rederob

peter2 said:


> Looks like _finviz_ has jumped to the next month futures contract without any adjustment yet.
> 
> View attachment 102368
> 
> 
> Thanks to @InsvestoBoy for the alert.



Yep, I am tracking WTI by the minute and spot is $19.45 @ 3:47pm.


----------



## rederob

Support just capitulated:


----------



## OmegaTrader

rederob said:


> Oil storage costs have many variables - onshore, at terminal, tanker, cavern - but a safe ballpark figure is 50cents/bbl/month, so we have a fundamental price driver as the oversupply situation drags out.




 .50 during normal times ?? 
Now spread is blown out.Is it expectation or is it storage?
do you think oil will be at 26-30 in next 1-2 months? well that is only break-even at the moment.









This is one  not as accurate based on last weeks data






front month spread only.









IV options index


My two cents only this not advice only hypothesise

play 1 :Shorting call options strategies  to take advantage of high IV and spread at the same time
a bit risky and requires capital in case iv spikes again,  hard and complex

Play 2: Buying put options on further along the curve to take advantage of spread but still losing on high iv.

I can take a 30 put for 1-2 months and break even at 24-25 mark. Ie oil has to go past 24-25 for me to lose money because of the large spread. 

simpler


----------



## OmegaTrader

chart I found online for front month spread. -7 mark atm


----------



## Smurf1976

Oil's at $12.50 a barrel now (WTI) and some grades are substantially lower than that for physical delivery. 

This is about to get "interesting" in that the AUD price of oil on an energy content basis is now significantly cheaper than the Australian domestic market wholesale gas price. That hasn't happened in the US yet, since their gas prices are lower, but the gap's narrowing rapidly.

Now regarding that gas issue, a few points come to mind that may not be obvious.

1. LNG prices linked to oil prices and the impact on the LNG exporters is one.

2. Pipeline companies is another. If the LNG producers cut physical production or gas-fired power stations shift to oil-based fuels then that's potentially an issue. Pipeline costs are largely fixed but in at least some cases payment is based on throughput volume where a third party owns the pipeline.

The impact of those are company specific whereas my comment is intended as a general "heads up" that if you're investing in LNG or pipeline companies they are potentially impacted by the oil price crash depending on the detail of their contractual arrangements. Tread carefully......


----------



## Smurf1976

I should have added to my previous post that given the speed of the price plunge, there's an assumption on my part that oil for physical delivery follows the spot price at least roughly and that the situation isn't limited to the US.

I acknowledge there's some risk in that given the sheer speed of it all unfolding at the moment. Oil has after all dropped 10% in price during the 20 minutes since my previous post, now at USD 11.25 per barrel (WTI).

So I'm assuming that we'll see at least a broadly similar move globally.

For the US at least, oil is now just above the inflation adjusted price last seen in 1931 based on historic data I can find online. Below that, there's doesn't seem to be anything lower going back to 1861 which is the furthest back records seem to go (unsurprising given the first well was drilled only 2 years prior to that). So we're on the edge of the lowest price ever, it would only need to fall a few more cents to get there.


----------



## $20shoes

When you're on the right Elliott Wave, it has some very accurate forward looking targets. 

This posted from Lara @ Elliottwavegold in June 2019.



Her target has since been modified to 9.77


----------



## Smurf1976

Anyone willing to try and pick the bottom here?

At any other time in the history of the intentionally produced (by drilling) oil industry, oil at current prices would have been a bargain buy. 

That doesn't mean it couldn't go lower however, we're living in an era when financial matters overall are different to those prevailing historically. 

Anyone got any thoughts?

Personally I have no firm view. Fundamentals of producing oil say it's massively undervalued at this price but given the money printing and major political considerations of it all it would be brave to assume that something won't happen just because it's unprofitable.


----------



## peter2

The perfect storm for oil, starting with the Saudi/Russia tiff and escalating with the economic shutdown by almost every country. OPEC did not see this coming. It's been fascinating watching this unfold. Oil storage is filling up fast and nobody is prepared to stop pumping. The economic reboot is going to take many months and the progress will be slow. Slower, if there's further waves of infections.

What happens next? I don't think anyone knows. The oil industry has never seen this situation before. Miners can shut down and farmers can plow their crops into the ground when there's too much supply or no demand. You can't get rid of oil so easily. 

When that $20 support level was breached, what a cascade, down through $15 and ending near $10. This 50% fall should have sent all leveraged oil ETFs to zero. If their goal is to track the price of oil x2 then 2 x 50% is 100%. There's going to be some rocket scientists scratching their heads tonight. They'll be working overtime to recalculate their ETF prices. Luckily they can change the rules to stay in business. 

I'm like most here in thinking that the price of oil will go up at some stage, but it's months away. 

Can the POO go to $5/bbl?  Suitable acronym as the industry is neck deep in the poo.


----------



## Smurf1976

peter2 said:


> Can the POO go to $5/bbl?




Barely an hour after you made that comment and it has actually happened.

WTI has plunged to $4.97 per barrel.

That doesn't seem to be an error as I've checked more than one source and all saying the same.

Add that to the list of things which I never thought I'd see but which have now actually happened. Amazing. 

At this level I think the oil price itself will trigger a broader crisis if it's sustained for long. Pretty much nobody in the industry, large companies or small, is profitable at that price.


----------



## Smurf1976

Well that $4.97 didn't last long.

Down to $2.06 now.

If this keeps up then I'll be able to go to the servo down the road, fill the tank and they'll hand me money for taking the stuff off them. 

Posted the following since the $2.06 could be anything from negative to a million $ a barrel by the time the sun comes up.


----------



## peter2

The current May futures contract expires tomorrow and it seems nobody wants to take delivery so all the holders have to sell before then. I don't know who they're selling to as there has to be a buyer.
Edit: perhaps China might buy them at cheap price if they've got storage available.

Another example of panic in the oil market.
btw: The cfd spot prices remain at $12


----------



## peter2

Now <$1 bbl. 



The next months contract has dropped >10% this morning (US time). 

Equity indices and oil cfds are starting to react as I type. This is fascinating stuff.


----------



## ducati916

Smurf1976 said:


> Well that $4.97 didn't last long.
> 
> Down to $2.06 now.
> 
> If this keeps up then I'll be able to go to the servo down the road, fill the tank and they'll hand me money for taking the stuff off them.
> 
> Posted the following since the $2.06 could be anything from negative to a million $ a barrel by the time the sun comes up.
> 
> View attachment 102499




Even the Arabs will feel this pain.

The big exporters that rely on oil revenues for their budgets (Saudi's & Russia) who pretty much triggered the war in the first place, must be regretting that decision now. 

However, the cure for low prices, are low(er) prices.

Military action ahead?

jog on
duc


----------



## ducati916

Well they went negative:

_NEW YORK (AP) — Oil prices plunged below zero on Monday as demand for energy collapses amid the coronavirus pandemic and traders don’t want to get stuck owning crude with nowhere to store it.

Stocks were also slipping on Wall Street in afternoon trading, with the S&P 500 down 0.9%, but the market’s most dramatic action was by far in oil, where benchmark U.S. crude for May delivery plummeted to negative $3.70 per barrel, as of 2:15 pm. Eastern time.

https://www.barchart.com/story/news/4726154/oil-price-goes-negative-as-demand-collapses-stocks-dip_

But the June contract:

_Benchmark U.S. crude oil for June delivery, which shows a more ”normal” price, fell 14.8% to $21.32 per barrel, as factories and automobiles around the world remain idled. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough._

jog on
duc


----------



## Smurf1976

Price is now at -$6.90 per barrel down more than 100% for the day.

Yes, negative.

Edit - beat me to it.


----------



## peter2

Still going down, settling at -$37.63/ bbl down 300% in a day.

We're watching price movement that'll be remembered forever (unless it happens again next month).


----------



## PZ99

Burn it all and start again 



"Be careful what you wish for"


----------



## qldfrog

This is so mind-blowing, and a sign in my view how screwed and irrational markets can become in crisis time


----------



## ducati916

For posterity:




jog on
duc


----------



## wayneL

In the US

Diesel demand down 20%
Gasoline demand down 50%
Aviation fuel/kero down 80%
And nowhere left to store surplus.

Interesting times alright.


----------



## $20shoes

peter2 said:


> Still going down, settling at -$37.63/ bbl down 300% in a day.
> 
> We're watching price movement that'll be remembered forever (unless it happens again next month).




Absolutely incredulous. Never thought Id see anything like this.


----------



## rederob

*Medic...*
*Medic...*
*Medic...*
*

*


----------



## tonyparis

Hopefully they can revive him


----------



## InsvestoBoy

peter2 said:


> Still going down, settling at -$37.63/ bbl down 300% in a day.
> 
> We're watching price movement that'll be remembered forever (unless it happens again next month).




On the day before contract expiry, it's just a register of desperation for a very small handful of longs that need physical storage. They're basically saying "I will pay any price for you to take this oil that is about to be delivered to me, off my hands".

I wouldn't read all that much into it (other than, demand for storage is very high and supply of storage is very low), it's an illiquid low OI contract. Nobody is posting "we're watching price movement that'll be remembered forever" when some illiquid ASX microcap jumps 500% in a day.


----------



## rederob

tonyparis said:


> Hopefully they can revive him



Not soon.
WTI is the benchmark oil price for mostly landlocked US crude.
When forward prices go negative it means producers are needing to pay for their oil to be "taken."
It means that storage is either not available or too expensive.
It means that pipelines will stop flowing.
It means that wells will start to be shut in.
It will add an unprecedented level of debt to US oil producers and kill off a great deal of LTO for some considerable time.


----------



## wayneL

InsvestoBoy said:


> On the day before contract expiry, it's just a register of desperation for a very small handful of longs that need physical storage. They're basically saying "I will pay any price for you to take this oil that is about to be delivered to me, off my hands".
> 
> I wouldn't read all that much into it (other than, demand for storage is very high and supply of storage is very low), it's an illiquid low OI contract. Nobody is posting "we're watching price movement that'll be remembered forever" when some illiquid ASX microcap jumps 500% in a day.



That's true we do see that in various commodities futures contracts from time to time... Huge moves into expiry etc.

It's still historic and it does serve as an analysis point for the future of supply and demand however.

The June contract still looks pretty dreadful and if we subtract the decay factors inherent in the forward oil price, we are still at pretty diabolical lows.


----------



## rederob

InsvestoBoy said:


> On the day before contract expiry, it's just a register of desperation for a very small handful of longs that need physical storage. They're basically saying "I will pay any price for you to take this oil that is about to be delivered to me, off my hands".
> 
> I wouldn't read all that much into it (other than, demand for storage is very high and supply of storage is very low), it's an illiquid low OI contract. Nobody is posting "we're watching price movement that'll be remembered forever" when some illiquid ASX microcap jumps 500% in a day.



It's not that often that the physical realities of production and storage collide with paper speculators.
That game was being played out over the last month as WTI not only bounced off support, it leapt to $28/bbl and held its own for a week.  It did that while demand was continuing to be destroyed and storage got more expensive and harder to find.
The question that will be answered in a month's time is if we have a rerun of this collapse after the forward contract rolls over.
And the question now is "what's stopping it?"
IMHO there is nothing right now that makes June contract which is around $20/bbl any safer.

A separate earlier issue regarding LTO producers related to them have in the money hedges.  Some of these producers may not actually be able to deliver, so this crunch will hit hard despite what they hoped would "protect" them.


----------



## InsvestoBoy

rederob said:


> When forward prices go negative it means producers are needing to pay for their oil to be "taken.".




Huh?

Here is a completely different take to what I think is your laughably wrong take:

When forward prices of WTI go negative on the day before the contract expiry session while Cushing is full, a bunch of financial participants who thought they were so smart or could find storage, got caught with their pants down.

The trading desks at energy producers are not *long*, they are *short* in the futures market. They will be the ones delivering the oil to those pants down longs and they don't care that the price is -$30 or whatever, they rolled into shorts in late March or early April, not yesterday morning.

They already got paid whatever the price was when they rolled in.

*That is the whole point of the futures market.*


----------



## rederob

InsvestoBoy said:


> Huh?
> 
> Here is a completely different take to what I think is your laughably wrong take:
> 
> When forward prices of WTI go negative on the day before the contract expiry session while Cushing is full, a bunch of financial participants who thought they were so smart or could find storage, got caught with their pants down.
> 
> The trading desks at energy producers are not *long*, they are *short* in the futures market. They will be the ones delivering the oil to those pants down longs and they don't care that the price is -$30 or whatever, they rolled into shorts in late March or early April, not yesterday morning.
> 
> They already got paid whatever the price was when they rolled in.
> 
> *That is the whole point of the futures market.*



My point related to the interplay, and it affects what a producer with physical can sell, and at what price.
How traders speculate their positions to profit is a different matter.
What is at issue at this moment in time is tangible production: can it be moved and will a profit be turned..


----------



## InsvestoBoy

rederob said:


> My point related to the interplay, and it affects what a producer with physical can sell, and at what price.




An energy producer with physical oil to sell is not selling it into the about-to-expire May contract which is pretty much no bid. *THEY ALREADY SOLD IT.*

$-30 or whatever WTI the day before expiry does not mean producers need to pay for their oil to be taken.

Stop spreading crap.


----------



## explod

InsvestoBoy said:


> An energy producer with physical oil to sell is not selling it into the about-to-expire May contract which is pretty much no bid. *THEY ALREADY SOLD IT.*
> 
> $-30 or whatever WTI the day before expiry does not mean producers need to pay for their oil to be taken.
> 
> Stop spreading crap.



So are they to try and pour the excess oil into some sort of paper made contract tank.


----------



## Betavegeta

What happened to the oil price? wtf


----------



## sptrawler

How will Santos go if this continues? Its balance sheet looks o.k but if this goes on long term?
A lot of oil producers will be $hitting bricks,big overheads, big debts, bugger all income.
Sounds like a Virgin airlines script.


----------



## rederob

InsvestoBoy said:


> An energy producer with physical oil to sell is not selling it into the about-to-expire May contract which is pretty much no bid. *THEY ALREADY SOLD IT.*
> 
> $-30 or whatever WTI the day before expiry does not mean producers need to pay for their oil to be taken.
> 
> Stop spreading crap.



There is a spot market and a futures market. 
As you know, if physical delivery is required then traders who already own their assets can tender them to their clearing agent. Traders who don't are obligated to purchase them at the current price.  This happens:
*“It’s like trying to explain something that is unprecedented and seemingly unreal!,” wrote Louise Dickson, oil markets analyst Louise at Rystad Energy, in emailed comments.

“The most simple explanation for negative oil prices is that midstream players are now paying ‘buyers’ to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar!” the analyst said.
*​*The spot market has now bounced back:
*


----------



## InsvestoBoy

rederob said:


> *“It’s like trying to explain something that is unprecedented and seemingly unreal!,” wrote Louise Dickson, oil markets analyst Louise at Rystad Energy, in emailed comments.
> 
> “The most simple explanation for negative oil prices is that midstream players are now paying ‘buyers’ to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar!” the analyst said.*​




Wow, Louise Dickson, what a storied analyst...previous work experience includes English teacher in Moscow before she graduated to contract writing for "Investment Club" and "Coffee Mania".

I am sure she knows what she is talking about after 2 years as an analyst for BP and Rydstad.

Oh wait, her "most simple explanation" (great English skills there) doesn't actually match how *MIDSTREAM *(note, not even she is saying producers, only you @rederob) oil players operate in reality.

Good job.


----------



## IFocus

Locally I can get fuel for 80 cents a lt today could that be lower tomorrow?

Starting to wonder if cheap energy will fire up economies or burn them? 

Also anyone have a guess at the capital destruction involved and could that follow through into financial markets or are the sums to low?


----------



## rederob

InsvestoBoy said:


> Wow, Louise Dickson, what a storied analyst...previous work experience includes English teacher in Moscow before she graduated to contract writing for "Investment Club" and "Coffee Mania".
> 
> I am sure she knows what she is talking about after 2 years as an analyst for BP and Rydstad.
> 
> Oh wait, her "most simple explanation" (great English skills there) doesn't actually match how *MIDSTREAM *(note, not even she is saying producers, only you @rederob) oil players operate in reality.
> 
> Good job.



You are just arguing with yourself, not me.
I will let you work it out.


----------



## sptrawler

The price of fuel has to be a huge plus, for those that have a high fuel component in their bottom line, QUBE (QUB)?


----------



## Dona Ferentes

sptrawler said:


> The price of fuel has to be a huge plus, for those that have a high fuel component in their bottom line, QUBE (QUB)



A while ago, we visited this, the truckies etc. And Aurizon 







> Aurizon and Linfox  have increased the number of weekly intermodal services by 20 per cent.





> Australian Rail Track Corporation CEO John Fullerton recently said national general freight movements on its 8500km network had increased 14 per cent in March.
> 
> “The COVID-19 outbreak has sparked an unprecedented challenge for Australia’s freight and transport industry, with the country’s demand for critical supplies prompting a surge in rail freight,” Fullerton said. .“Moving freight to cities and regional towns across the country has never been so important, which is why the government has deemed our industry an essential service.
> 
> “This puts a lot of responsibility on our shoulders; but in collaboration with our rail freight customers, government and industry partners it’s been wonderful to see our teams rise to the challenge to keep Australia’s supply chain intact and our economy moving.



Maybe this should be in a different thread?


----------



## InsvestoBoy

IFocus said:


> Locally I can get fuel for 80 cents a lt today could that be lower tomorrow?






sptrawler said:


> The price of fuel has to be a huge plus, for those that have a high fuel component in their bottom line, QUBE (QUB)?




Fuel at the pump here is priced on different benchmarks, namely Tapis Crude and Singapore Mogas (refined product).

The economics are different. Forget the financial media if you want to track this stuff for the Aussie economy.

You can see how Tapis trades here on a 21 hour delay https://oilprice.com/oil-price-charts so check back tomorrow morning to see how it is faring.

Don't forget to factor AUD in.


----------



## rederob

Dona Ferentes said:


> A while ago, we visited this, the truckies etc. And Aurizon
> Maybe this should be in a different thread?



Maybe, but diesel prices are at least 20% higher than unleaded in most places - generally still over $1.20 - so the savings to date don't seem that significant...yet.

A handy guide to fuel prices "at the gate" is here.


----------



## Smurf1976

peter2 said:


> I don't know who they're selling to as there has to be a buyer.




One possibility would be the US government.

Trump wanted to fill the Strategic Petroleum Reserve but couldn't get the relevant approvals from Congress to spend the money so the plan was shelved.

If the price is negative however well then he doesn't need anyone to approve the spending I assume (note that's an assumption on my part, I'm not familiar with the detail of how US laws work with that sort of thing). If that's the case, he doesn't need approval to spend no money, then removes the obstacle to filling the SPR.

There's space to add approximately 77 million barrels to the SPR.

Unrelated to that, I won't name the facility since the info isn't public but an Australian facility recently ran a large boiler up to full output firing oil in what could be considered as a test of sorts. Oil isn't the normal fuel used at this facility but the potential is there if it becomes cheap enough.

Plausibly there will be possible users in the US with the same idea noting that depending on the boiler and what emissions controls it has, it's not impossible to burn raw (unrefined) crude oil as boiler or furnace fuel in heavy industry or for power generation. It would normally be uneconomical to do so but technically it can certainly be done if you've got the right equipment (which some certainly would have).


----------



## Smurf1976

wayneL said:


> Diesel demand down 20%
> Gasoline demand down 50%
> Aviation fuel/kero down 80%



I'll note there that this also adds some difficulties in refining.

The refineries do have the technical capability to move the product split around to some extent but it would be stretching the limits to adapt to such a drastic change. That's going to cause some disruption in the refined product markets as well and upset the relative pricing of those fuels.


----------



## Country Lad

wayneL said:


> In the US
> Aviation fuel/kero down 80%




hmm, I wonder how that affects Qantas' hedging seeing they are not using any real quantity of fuel


----------



## InsvestoBoy

Country Lad said:


> hmm, I wonder how that affects Qantas' hedging seeing they are not using any real quantity of fuel




Qantas hedging program would be long to avoid being exposed to rising fuel costs.

As long as they exited their hedges as demand went down, they're probably fine. They probably ate a bit of pain in March. The joys of hedging.


----------



## rederob

Am posting this for "posterity" - note that highs and lows are highlighted:


----------



## Garpal Gumnut

It's a day old but the New York Times reported that there is no more room to store imported oil in the US.

gg


----------



## wayneL

Don't look now, but the June (etc) contract is copping a shellacking now too.


----------



## rederob

June futures shaken after being stirred:


----------



## cutz

Hi rederob,

Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !


----------



## rederob

cutz said:


> Hi rederob,
> 
> Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !



Best I have free access to is here, others might have a better link.

WTI's future is not well:


----------



## Smurf1976

This suggests that the point where storage capacity physically runs out, regardless of what arrangements exist financially, is at most weeks away indeed we're already at least half way there. 

https://www.zerohedge.com/s3/files/inline-images/total storage capacity_0.jpg?itok=w1KaPpRs


----------



## frugal.rock

I paid 59.9 cents per litre for E10 Unleaded petrol around 10 days ago.
Was on my way to a cheaper priced servo as well! I thought thistle doo.!
And it was then I realised that the POO was really in the poo.
Got the numbers on the pump mixed up, thinking had only squeezed in 30 litres for $50... it's a good shock to be getting 50 litres for $30 !
There was petrol spilling overflowing everywhere...!

F.Rock


----------



## ducati916

cutz said:


> Hi rederob,
> 
> Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !




There was 108K OI for May still open yesterday.

jog on
duc


----------



## tinhat

The smell of your own **** is beautiful.


----------



## rederob

cutz said:


> Hi rederob,
> 
> Are you able to throw up a chart with the open interest superimposed ? I have OI data but I cannot seem to be able to chart it. Looks like there's quite a bit on the front month !



If you subscribed to Barcharts you can get chart like this for free:


----------



## rederob

Smurf1976 said:


> This suggests that the point where storage capacity physically runs out, regardless of what arrangements exist financially, is at most weeks away indeed we're already at least half way there.
> 
> https://www.zerohedge.com/s3/files/inline-images/total storage capacity_0.jpg?itok=w1KaPpRs



I was curious about what happens to a contract when no storage is available, because the NYMEX WTI has a delivery point at Cushing.  If it's full and people who hold the contract at the end of the trading window have to take physical delivery of the oil they bought, does NYMEX wear any loss?


----------



## rederob

Just a morning refresh on the June futures chart over the last day - looks bleak:


----------



## BlindSquirrel

With the oversupply of oil they'll run out of places to put it all. How about investing in oil tanker companies?


----------



## cutz

I'm not sure what I'm missing but the producers need to shut down wells and go into hibernation just like the rest of the global economy??

Why is this not happening ??


----------



## Boggo

Cadogan, take or leave him but his videos are somewhat entertaining and often informative.
His summary of the oil crisis.


----------



## tonyparis

cutz said:


> I'm not sure what I'm missing but the producers need to shut down wells and go into hibernation just like the rest of the global economy??
> 
> Why is this not happening ??




I cant work this out either...I have been reading that it is cheaper to keep them running than to stop production,. Surely there is a negative barrel price where this no longer applies!
When the nozzle of your water hose accidentally comes off, you close the tap. The oil industry seems to madly run around looking for buckets??


----------



## PZ99

They should just let it run back into the ground


----------



## InsvestoBoy

cutz said:


> I'm not sure what I'm missing but the producers need to shut down wells and go into hibernation just like the rest of the global economy??
> 
> Why is this not happening ??




Because it isn't an off switch.

Shutting in a well can damage it. You need capital to restart. You have hedges on that mean you have contracts you need to deliver on. You need cash flow to pay bankers their interest. You lose market share to companies that don't shut.

I'm not saying what should be done or what is right or wrong.


----------



## Value Collector

cutz said:


> I'm not sure what I'm missing but the producers need to shut down wells and go into hibernation just like the rest of the global economy??
> 
> Why is this not happening ??




Because the "cost if production" is largely front loaded.

Meaning when some one says a shale oil play produces oil at $40 per barrel, most of that $40 is the sunk cost of the original drilling and setup of the well, that is amortised over the life of the well.

Those oil companies that own a bunch of these wells with high sunk costs, also have high fixed costs on their debt, leasing payments, land access fees, wages etc etc.

So even though the price may drop below the $40 break even point, they may have to continue to pump the oil to generate cashflow to pay the fixed costs, even it it means they are bleeding the equity value of the well, by accepting less in cashflow than what it originally cost to set up the well.


----------



## cutz

InsvestoBoy said:


> Because it isn't an off switch.




Yeah I get that there is no off switch !!

Thinking along the lines of buying back future contracts and putting the well into low output maintenance only state, conserving as much cash as possible, sort of like what the biggest consumers of the stuff have done, sounds counter-intuitive to keep pumping, bit like flying empty planes around.

Anyhow definitely no expert on oil matters, more of a curiosity for me.

Also thank's Value Collector for your reply.


----------



## PZ99

*Australia says first in line to buy crude to store in U.S. strategic reserve*

MELBOURNE (Reuters) - Australia is at the head of the queue to buy oil and store it in the U.S. Strategic Petroleum Reserve (SPR), taking advantage of a glut that has hammered oil prices to 21-year lows, Energy Minister Angus Taylor said on Wednesday.

Australia is close to finalizing an agreement announced in March with the Trump administration to lease capacity in the SPR, part of an effort by Canberra to meet its fuel security obligations with the International Energy Agency and a U.S. effort to help U.S. crude producers. 

https://www.reuters.com/article/us-...-store-in-u-s-strategic-reserve-idUSKCN2240AA


----------



## Junior

PZ99 said:


> *Australia says first in line to buy crude to store in U.S. strategic reserve*
> 
> MELBOURNE (Reuters) - Australia is at the head of the queue to buy oil and store it in the U.S. Strategic Petroleum Reserve (SPR), taking advantage of a glut that has hammered oil prices to 21-year lows, Energy Minister Angus Taylor said on Wednesday.
> 
> Australia is close to finalizing an agreement announced in March with the Trump administration to lease capacity in the SPR, part of an effort by Canberra to meet its fuel security obligations with the International Energy Agency and a U.S. effort to help U.S. crude producers.
> 
> https://www.reuters.com/article/us-...-store-in-u-s-strategic-reserve-idUSKCN2240AA




Is it just me, or is it incredibly stupid to store emergency reserves on the other side of the planet?


----------



## Junior

Just saw this in AFR, maybe there'll be some common sense here:  
"
*Australia to build strategic energy reserve: Taylor*
Luke Housego

The Energy Minister Angus Taylor has announced plans for Australia to build a strategic energy reserve while oil prices remain at historic lows.

Speaking to the media at a press conference taking place now, the minister said: "now is the time to get in and build strategic fuel reserves".

Under the plan, the government will spend close to $100 million on the initiative initially, with crude purchases to be stored at facilities in the US *while options for storage in Australia are considered*.
"


----------



## HelloU

Junior said:


> Is it just me, or is it incredibly stupid to store emergency reserves on the other side of the planet?



probably makes strategic sense when that is where all the factories and workers are located  (sarcasm)


That Taylor announcement was so painful to watch that i feel embarrassed to be an Australian (not sarcasm)


----------



## PZ99

Junior said:


> Is it just me, or is it incredibly stupid to store emergency reserves on the other side of the planet?



We're just paying the bills to big brother - I don't think any of this is for our benefit


----------



## InsvestoBoy

We don't have the storage here now so they need to store it somewhere.

Personally, given how terrible we have been on the SPR front, I am happy they are doing *anything* about it.


----------



## Smurf1976

cutz said:


> I'm not sure what I'm missing but the producers need to shut down wells and go into hibernation just like the rest of the global economy??
> 
> Why is this not happening ??




The problem is a technical one of doing so without damaging the well.

Not something I'm an expert on by any means but the basics of it are that for the lower pressure wells, stopping production has a good chance of killing it outright which then means a huge cost to restart.

For many operators, shutting in production is effectively closing for good and writing off the assets. From a financial perspective, they're better off keeping going if they see any long term average price above the marginal cost of operation which is fairly low. That it means a loss overall is irrelevant when that money is already spent at the exploration and development stage.

Most of the energy industry has that characteristic financially. Nuclear, hydro, wind, solar, gas production and in some cases coal all have at large portion of total costs being incurred before anything is produced. Actually running once its built is pretty cheap, hence once built there's generally a reluctance to close. Even if it turns out that the operation is uneconomic over its lifespan, most of the money's already spent so the question in deciding to continue, so long as the company isn't literally bankrupt, is about ongoing costs versus ongoing income noting that the ongoing costs aren't much. 

There's a lot of ways overall energy production could be curtailed but they mostly have the same basic economics. Eg nuclear and coal could be reduced and more oil used to generate electricity, that works from an engineering perspective in places where the required infrastructure exists, but the problem is that nuclear and coal also have most of their costs up front and are cheap to continue operating. So the same basic economics applies, there's a reluctance to halt production be it oil or anything else.

Ultimately I think we'll see a bit of everything. Some oil production reduced, storage filled to the max, some reduction in the production of non-oil energy (eg coal, gas) and some substituting the use of oil as furnace fuel etc. We'll see some of all the above at the global level is my expectation but probably not without some financial crises associated with it.


----------



## qldfrog

Smurf1976 said:


> it are that for the lower pressure wells, stopping production has a good chance of killing it outright which then means a huge cost to restart.



Was going to answer but @Smurf1976  had the answer already.some of the wells are "helped with injection of water gas to build a flow thru porous rocks.
Once stopped it might be impossible to restart,.the reserve is gone and lost forever.
So no real choice..


----------



## Value Collector

Junior said:


> Is it just me, or is it incredibly stupid to store emergency reserves on the other side of the planet?




emergency reserves yes, investment no.


----------



## Smurf1976

Smurf1976 said:


> There's a lot of ways overall energy production could be curtailed but they mostly have the same basic economics.




Posting this just as one of many possible examples which illustrates the concept of substitution in the energy industry. For illustration of the point only - there are numerous comparable examples globally.

In south-west Victoria there's an underground natural gas storage facility, Iona, currently 72% full. Pipelines from this connect to both Melbourne and Adelaide.

Victoria and SA both have a number of gas-fired power stations which are technically capable of firing fuel oil, diesel and/or jet fuel instead of gas. The reason to not do so normally is economic but from a technical perspective the switch is easy, indeed in some cases it can be done whilst the plant remains at uninterrupted full production. Likewise some manufacturing plants have boilers or furnaces able to switch between various fuels most commonly oil and gas.

To cut a long story short, if oil was used to generate power, fire boilers in industry etc and the gas saved was put into Iona then the gas required to fill it completely is equivalent to 1.2 million barrels of oil.

That amounts to effectively downgrading the resource. Take 1.2 million barrels of oil, burn it in power stations, industry etc and store the gas that was saved. Since gas normally has a lower value per unit of energy than does oil that would normally make zero sense financially but it sure would if the oil price dropped low enough. It's another way to store something, albeit one that involves getting rid of the oil as such and replacing it with lower value gas but it does provide a solution which retains some value.

That is just one example, there are others in Australia and plenty more globally where instead of storing oil physically it's a case of burning the oil and storing the gas, coal or water (hydro) that was saved. It effectively downgrades the resource, you can't turn it back into oil, but it's better than not being able to do anything with it at all.

So if the price for physically delivered oil gets low to the point that the economics stack up then some other physical options for what to do with it do open up.


----------



## IFocus

Junior said:


> Is it just me, or is it incredibly stupid to store emergency reserves on the other side of the planet?




Not only that but if the US wants the oil anyone think they will hand it over?

Cringe worthy, still take IB points anything is better than nothing.


----------



## Value Collector

IFocus said:


> Not only that but if the US wants the oil anyone think they will hand it over?




The USA is the worlds largest Oil Producer, the have it on tap, hence they aren’t rushing to use the strategic reserve themselves.


----------



## sptrawler

Smurf1976 said:


> Posting this just as one of many possible examples which illustrates the concept of substitution in the energy industry. For illustration of the point only - there are numerous comparable examples globally.
> 
> In south-west Victoria there's an underground natural gas storage facility, Iona, currently 72% full. Pipelines from this connect to both Melbourne and Adelaide.
> 
> Victoria and SA both have a number of gas-fired power stations which are technically capable of firing fuel oil, diesel and/or jet fuel instead of gas. The reason to not do so normally is economic but from a technical perspective the switch is easy, indeed in some cases it can be done whilst the plant remains at uninterrupted full production. Likewise some manufacturing plants have boilers or furnaces able to switch between various fuels most commonly oil and gas.
> 
> To cut a long story short, if oil was used to generate power, fire boilers in industry etc and the gas saved was put into Iona then the gas required to fill it completely is equivalent to 1.2 million barrels of oil.
> 
> That amounts to effectively downgrading the resource. Take 1.2 million barrels of oil, burn it in power stations, industry etc and store the gas that was saved. Since gas normally has a lower value per unit of energy than does oil that would normally make zero sense financially but it sure would if the oil price dropped low enough. It's another way to store something, albeit one that involves getting rid of the oil as such and replacing it with lower value gas but it does provide a solution which retains some value.
> 
> That is just one example, there are others in Australia and plenty more globally where instead of storing oil physically it's a case of burning the oil and storing the gas, coal or water (hydro) that was saved. It effectively downgrades the resource, you can't turn it back into oil, but it's better than not being able to do anything with it at all.
> 
> So if the price for physically delivered oil gets low to the point that the economics stack up then some other physical options for what to do with it do open up.



A lot of power stations have strategic reserve oil tanks, one would assume they are being filled ATM, which most operators would never have seen in their careers.


----------



## frugal.rock

Am wondering about the physical state of some/ most of these oil storage tanks. In good repair are they? Ready to use?
More delays on top of shutdowns to modify / installation of oil burning systems.
A sorry state of affairs really.


----------



## sptrawler

IFocus said:


> Not only that but if the US wants the oil anyone think they will hand it over?
> 
> Cringe worthy, still take IB points anything is better than nothing.



That is for sure, where are we going to store 90 days worth?
Not only store it but ensure it is useable when it is required, at least when you lease something, there is every expectation it is in a serviceable condition when you receive it.

I'm no expert on oil, but I have had a bit to do with stored diesel and from my limited knowledge, stored refined oil products have a shelf life and require constant monitoring for algae and maintaining correct temps for moisture and waxing etc.

If you store them as unrefined then they are brought to spec during refining, so IMO having strategic reserves in the U.S isn't a bad idea and holding enough here to ensure the reserves arrive well before the reserves on hand runs out.
There may be a case for building more storage here as the population grows, that is something that is always overlooked in planning, things get bigger and there is always something that gets missed in the upgrade.
Someone will correct me if I'm wrong.
Just my opinion.


----------



## sptrawler

frugal.rock said:


> Am wondering about the physical state of some/ most of these oil storage tanks. In good repair are they? Ready to use?
> More delays on top of shutdowns to modify / installation of oil burning systems.
> A sorry state of affairs really.



That is for sure, the tanks will have to be surveyed, as they may well be corroded above the low level which is where many would have been filled to, due to the cost of oil. But I'm sure many GT's will have standby oil tanks and management will be looking at filling them as smurf has pointed out.
A lot of coal fired stations light up on fuel oil, so they also will take the opportunity, cement works, alumina refineries etc, where fuel oil is the standby fuel it is just as easy to fire on oil as gas if it's cheap enough again as smurf has already pointed out.


----------



## Smurf1976

sptrawler said:


> I'm no expert on oil, but I have had a bit to do with stored diesel and from my limited knowledge, stored oil products have a shelf life and require constant monitoring for algae etc.



Likewise I'm not expert on that but from what I do know, the heavier the product is, the less hassle storing it long term.

I know of 45,000 tonnes of heavy fuel oil that was left sitting for 7 years and was just fine after that. It fired the boilers as it was supposed to without any drama. Nothing bad happened to the steel tanks it was in either.

Crude oil likewise no drama. It has been underground for a very long time after all and goes through refining which will sort it out. Hence the US stockpile simply stored in salt domes.

At the other extreme, with petrol there can be a lot of issues with storage and the loss of volatile components if it's not airtight. Meanwhile diesel has issues with microbes, algae, sludge etc if there's a water:diesel contact layer which there often is given that any water sinks to the bottom of the tank.


----------



## Smurf1976

sptrawler said:


> I'm sure many GT's will have standby oil tanks and management will be looking at filling them



For those which fire oil only they'll already have fuel in known good tanks and it's really a question about them potentially running a lot more to displace gas etc used elsewhere.

For those with dual or triple fuel systems it will depend on how well it has all been maintained which will depend on who owns it.

Main point of relevance here though is that at the global level there's some ability to use oil to replace the use of other fuels either directly (eg instead of gas or coal in the same boiler) or indirectly (running oil-fired power generation instead of hydro and storing the water etc).

Even if it doesn't all work there's going to be some ability to do that which is the relevant point in the context of oil prices and what happens at very low levels.


----------



## bluekelah

Just spend the money on more solar panels and batteries  
Dont you know, excess electricity can be stored in Energon cubes and be exported for a tidy profit.


----------



## ducati916

For the history books:






jog on
duc


----------



## rederob

Morning WTI snapshot:


It's going to be a long and slow haul back, but producers able to survive this massacre will see strong rebounds in their share prices.


----------



## cutz

Looks like traders are rolling early, can someone post a chart of the jun/july calendars showing volume, I can only get price action..

@Smurf1976 good info mate.

BTW, last night I come across a recent segment on AlJez. inside story, its appears US wells are being closed and mass oil industry lay offs happening already !! 

Regards.


----------



## rederob

cutz said:


> Looks like traders are rolling early, can someone post a chart of the jun/july calendars showing volume, I can only get price action..



Hope this helps:


----------



## cutz

Thanks mate.

I was actually the volume on the calendar spread with the price candles.

Regards.


----------



## rederob

Here's the morning update on progress towards a sustainable oil price:



Baker Hughes' rig count for action to this Friday is not yet available, so here it shows that nowhere in North America did any new drilling occur last week. As we all know, without this investment there is a good chance that at some point ahead there will be a spike north in WTI prices as demand overtakes supply.


----------



## Smurf1976

rederob said:


> nowhere in North America did any new drilling occur last week



If it's literally gone to zero well then that's another thing in the "unprecedented" category so far as I'm aware.

Drilling has its ups and downs like most industries but actually going to zero is certainly rather extreme.


----------



## rederob

Smurf1976 said:


> If it's literally gone to zero well then that's another thing in the "unprecedented" category so far as I'm aware.
> 
> Drilling has its ups and downs like most industries but actually going to zero is certainly rather extreme.



It will be interesting to see when LTO plays begin to kick in with fresh drilling as it would suggest the chance that it's near break-even, and with the hope of price upside.


----------



## Noob69

Ok y'all. With all that's transpired, ASX:OOO is currently at $2.85. Who's having a punt?


----------



## wayneL

rederob said:


> Here's the morning update on progress towards a sustainable oil price:
> 
> 
> 
> Baker Hughes' rig count for action to this Friday is not yet available, so here it shows that nowhere in North America did any new drilling occur last week. As we all know, without this investment there is a good chance that at some point ahead there will be a spike north in WTI prices as demand overtakes supply.



That is an absolute certainty. As long as one can wait and weather possible margin calls in the meantime.


----------



## Smurf1976

rederob said:


> It will be interesting to see when LTO plays begin to kick in with fresh drilling as it would suggest the chance that it's near break-even, and with the hope of price upside.



Another aspect there is the extent to which the oilfield services companies, those who physically do the work, are willing to do it cheaply.

They've got fixed costs as with any business so if there's zero work at the moment then they'll probably be cutting prices to get anything that is available rather than having a competitor get the work.

Or in other words, the cost of actually drilling a well should come down at least temporarily.


----------



## Knobby22

Too many traders, they will be taken to the cleaners again next month. Truth is they don't want and can't take the oil and their is no where to put it.


----------



## rederob

Last night Baker Hughes reported that the number of active U.S. rigs drilling for oil dropped by 60 to 378 this week, a sixth straight weekly decline which also represents a 53% decline over the year.


----------



## Dona Ferentes




----------



## rederob

Although we all know that POO under $20/bbl is _lala_ land, what we do not know is how long it will take to once and for all put it to bed!



As this chart for the past fortnight shows, oil is in very poor shape.
Producers got excited about an earlier bounce that has now totally fizzled out.
As the US LTO drilling rig count continues to decline sharply, I expect earlier forecasts of how much oil was likely to be shut in will now be revised upwards.  While this will be a bonus to the industry recovering in the short term, in the medium term there will be a massive overhang of oil storage feeding back into the pool and preventing the types of spike that occurred in the past when demand was, for all intents and purposes, not materially affected.


----------



## InsvestoBoy

Did anyone listen to the most recent Macrovoices Hot Topic with Jim Bianco?

I would suggest any OOO or USO investors take a listen.


----------



## Dona Ferentes

https://www.macrovoices.com/podcast...14-crude-oil-black-swan-alert-with-jim-bianco

Good one

_oh for a bit of disruption. Actions and consequences_


----------



## ducati916

Meanwhile the (major) producers inch higher in anticipation of higher (profitable) prices.

jog on
duc


----------



## rederob

ducati916 said:


> Meanwhile the (major) producers inch higher in anticipation of higher (profitable) prices.
> 
> jog on
> duc



Not a single large Oz oil producer is in profit today.  
They have lost from 1% to over 4%.


----------



## ducati916

rederob said:


> Not a single large Oz oil producer is in profit today.
> They have lost from 1% to over 4%.





Well when I say majors, are there any major Australian oil producers? If there are, then if their share prices are depressed and their Balance Sheets strong, they would be a buy (for me).

The second point being I did say in 'anticipation', the market is after all forward looking. So while there are (probably) few if any profitable oil producers currently,  ARAMCO (possibly) being the exception to the rule, that is not the point. The point is you buy them today (the majors, not some rinky dink outfit) when prices are low. Suck it up for a year and then see where you are.

jog on
duc


----------



## rederob

ducati916 said:


> Well when I say majors, are there any major Australian oil producers? If there are, then if their share prices are depressed and their Balance Sheets strong, they would be a buy (for me).
> 
> The second point being I did say in 'anticipation', the market is after all forward looking. So while there are (probably) few if any profitable oil producers currently,  ARAMCO (possibly) being the exception to the rule, that is not the point. The point is you buy them today (the majors, not some rinky dink outfit) when prices are low. Suck it up for a year and then see where you are.
> 
> jog on
> duc



This is called Aussie Stock Forums.
Yes, we anticipate many things, and no doubt oil price increases are likely.  But that's not today, and it's not happening to US equities at the moment as it's nearing midnight.


----------



## ducati916

rederob said:


> 1. This is called Aussie Stock Forums.
> 
> 2. Yes, we anticipate many things, and no doubt oil price increases are likely.
> 
> 3. But that's not today, and it's not happening to US equities at the moment as it's nearing midnight.




1. If I'm not mistaken, oil is hardly uniquely Australian, yet we discuss a oil and a variety of commodities on this forum. You wish to take issue with my discussing non-Australian major oil companies, then I suggest you make a formal complaint to Mr Blow.

2. Therefore, if prices are currently low and we seem to be agreed that they could rise going forward, then a trade in the majors would seem to be a reasonable position to take. I accept that it may not be everyone's cup of tea, or they may feel the timing is still too soon, but those are for the individuals to assess for themselves.

jog on
duc


----------



## aus_trader

ducati916 said:


> 1. If I'm not mistaken, oil is hardly uniquely Australian, yet we discuss a oil and a variety of commodities on this forum. You wish to take issue with my discussing non-Australian major oil companies, then I suggest you make a formal complaint to Mr Blow.
> 
> 2. Therefore, if prices are currently low and we seem to be agreed that they could rise going forward, then a trade in the majors would seem to be a reasonable position to take. I accept that it may not be everyone's cup of tea, or they may feel the timing is still too soon, but those are for the individuals to assess for themselves.
> 
> jog on
> duc



Go on Duc, discuss US Oil, Saudi Oil (ARAMCO) and Aussie Oil and any other oil to your heart's content. I am sure no one minds here on ASF. I certainly don't, in fact I am learning a lot from it.

You are not wrong in assessing Aussie Oil producers on a global scale: there is very few. Woodside Petroleum Limited (WPL) is probably the only major who is up there with international oil producers. My favourite mid-tier Oil/Gas producer is Beach Energy Ltd (BPT) on the asx, debt free to withstand these crippling times and has low cost of production with added benefit of gas credits. Also have traded asx: OOO and always keep an eye out on "USO" ETF in the US to see what the hell is going on, especially in these WTF? times in Oil price history.


----------



## qldfrog

InsvestoBoy said:


> Did anyone listen to the most recent Macrovoices Hot Topic with Jim Bianco?
> 
> I would suggest any OOO or USO investors take a listen.



Was indeed very instructive


----------



## Smurf1976

aus_trader said:


> You are not wrong in assessing Aussie Oil producers on a global scale: there is very few.




Using Australian Government official statistics for 2018-19 financial year, Australia produced:

6568 ML of crude oil

11,725 ML of condensate

4058 ML of naturally occurring LPG (that is, LPG which came out of the ground not including LPG produced at oil refineries).

That's all we produce which fits within the broad definition of "oil" as used by most countries and it comes to 385,000 barrels per day all up or less than 0.4% of global oil (including LPG) production.

Note that crude oil and condensate aren't the same thing but they can be considered as such for practical purposes. Condensate goes into oil refineries along with crude and ends up as petrol etc. In contrast naturally occurring LPG is distinctly different, it's useful as LPG not as feedstock for refineries, but it's classified with oil by most governments and others since it's stored and transported as a liquid (whereas in contrast natural gas is never considered to be oil and is classified as "gas").

Given that's our entire national output, we've got no chance of having a "major" oil producing company in Australia unless the majority of its operations are located overseas.

Looking at crude oil and condensate only and where it is produced within Australia:

Browse / Carnarvon / Perth basins (WA)  = 235,000 barrels / day
Cooper Basin (SA) = 38,000 barrels / day
Gippsland / Otway / Bass basins (Vic) = 28,000 barrels / day
Bonaparte basin (NT) = 11,000 barrels / day
Amadeus / Canning basin (NT) = 1600 barrels / day
Surat-Bowen basin (Qld) = 140 barrels / day

From Australian Government data. Rounded to the nearest 1000 barrels / day except those under 10,000 (rounded to the nearest hundred barrels) and those under 1000 (rounded to the nearest ten barrels). Note these figures are crude oil and condensate only and do not include naturally occurring LPG hence do not add to the same value as other figures which include LPG.


----------



## cutz

InsvestoBoy said:


> Did anyone listen to the most recent Macrovoices Hot Topic with Jim Bianco?
> 
> I would suggest any OOO or USO investors take a listen.




Thanks,

It was a good podcast, good but alarming !


----------



## qldfrog

Smurf1976 said:


> Using Australian Government official statistics for 2018-19 financial year, Australia produced:
> 
> 6568 ML of crude oil
> 
> 11,725 ML of condensate
> 
> 4058 ML of naturally occurring LPG (that is, LPG which came out of the ground not including LPG produced at oil refineries).
> 
> That's all we produce which fits within the broad definition of "oil" as used by most countries and it comes to 385,000 barrels per day all up or less than 0.4% of global oil (including LPG) production.
> 
> Note that crude oil and condensate aren't the same thing but they can be considered as such for practical purposes. Condensate goes into oil refineries along with crude and ends up as petrol etc. In contrast naturally occurring LPG is distinctly different, it's useful as LPG not as feedstock for refineries, but it's classified with oil by most governments and others since it's stored and transported as a liquid (whereas in contrast natural gas is never considered to be oil and is classified as "gas").
> 
> Given that's our entire national output, we've got no chance of having a "major" oil producing company in Australia unless the majority of its operations are located overseas.
> 
> Looking at crude oil and condensate only and where it is produced within Australia:
> 
> Browse / Carnarvon / Perth basins (WA)  = 235,000 barrels / day
> Cooper Basin (SA) = 38,000 barrels / day
> Gippsland / Otway / Bass basins (Vic) = 28,000 barrels / day
> Bonaparte basin (NT) = 11,000 barrels / day
> Amadeus / Canning basin (NT) = 1600 barrels / day
> Surat-Bowen basin (Qld) = 140 barrels / day
> 
> From Australian Government data. Rounded to the nearest 1000 barrels / day except those under 10,000 (rounded to the nearest hundred barrels) and those under 1000 (rounded to the nearest ten barrels). Note these figures are crude oil and condensate only and do not include naturally occurring LPG hence do not add to the same value as other figures which include LPG.



Does this includes all the Timor sea production?
WPL is big because of these...
And in comparison, what is our consumption?
I think we are not self sufficient anymore..in sheer equivalent, as we always imported specific light or heavy crude


----------



## Smurf1976

qldfrog said:


> Does this includes all the Timor sea production?



I'm not sure on the details there but it includes everything that the Australian Government deems to be be Australian production. I'm not sure of the details of how that's worked out up there given the politics and so on. I'll see what I can find out.

Woodside and the WA fields are large in an Australian context but not large in a global context so far as the oil is concerned. Worth a mention yes but not large. The gas they produce is more significant there. 

On the consumption side for Australia in 2018-19 it was a 1.044 million barrels per day.

As a bit of trivia, some of the oil from WA does meet spec for use as bunker fuel "as is" and I'm told that some has in recent times been sold on that basis. That is, the crude oil meets the technical and legal requirements for use as fuel on ships, that is any ship not necessarily an oil tanker, without refining it beyond basic water removal, filtering etc so apparently some has indeed been sold for that purpose by ship owners needing to find fuel which meets the new rules which came into effect at the start of this year. That's not all Australian oil, just the oil from some specific wells and it has attracted a price premium because of that.

That aspect, having crude oil that can be used "as is", is another one of those things which lead to what might seem strange things happening when it comes to oil. Eg export that oil and import other crude oil with different properties rather than refining the Australian produced oil locally. So the tankers sail in both directions carrying oil.

Saudi Arabia has in recent times imported fuel oil for a similar reason - they've been buying it at a price lower than the crude from which it came. Since they're only burning it to fire boilers (for power generation mostly), they really couldn't care less about the technical details of it. So long as it's cheaper than crude it makes sense for them to buy it even though the idea of Saudi importing oil sounds rather strange as a concept.


----------



## ducati916

With POO where it is currently and for the 2 primary reasons (a) COVID-19 and (b) Price war, most on this forum recognise that this is one of those times where it is different this time. If you want to try and capitalise on this rather unique situation then you have 2 options:

The options are (a) invest directly in oil, or (b) the producers. To invest directly in oil: (a) Futures, (b) ETFs, (c) Options. 

If going the futures route, then Brent is better than WTI as Brent is cash settlement, whereas (everyone is now aware) WTI is delivery settlement. The ETFs track the futures: with futures we have currently contango issues complicating these instruments to such a degree, I would avoid them. Options are fine, but, this scenario is likely to take 6mths-1yr to play out, so depending on your strategy of course, Options may not be optimal currently (especially if IV is high).

Which leaves the producers.

The majors are cutting (a) dividends, (b) CapEx, (c) Expenses (employees) and (d) selling new debt. They will survive. Their profits currently will be non-existent. Some will take the big bath and dump all their rubbish in write-downs. Going forward, they will have a number of advantages: (a) their Balance Sheets should be in reasonable shape, (b) production worldwide will be reduced and will likely remain so for some time, which will increase POO and boost their profitability.

The Majors have weathered the current storm in oil well (no pun intended).



Its constituents:




For those that don't like the concentration in CVX/XOM, there is RYE which is equi-balanced. Or for the thrill seekers ERX x2 of XLE (was x3 now just x2).

Both options involve (to be successful) that POO rise into the future. The choice is simply how to play that passage of time, the most profitable (or low risk) way, while the oil market sorts itself out.

Therefore, if you want to play oil, for my money the producers are the way forward. (I hold ERX and am still a little underwater on this re. disclosure). The producers could still be choppy, but I think less choppy than physical oil, as direct investment in oil will be leveraged via Futures/Options and drag in direct oil ETFs due to contango issues. With the producers there may still be some dividend going forward and you can choose your leverage, which is far lower.

jog on
duc


----------



## ducati916

If playing the producers sounds a possibility, probably wait until earnings season for the majority is out of the way. They are going to be bad (worse than the Banks). There could well be a pullback providing a better entry price.

 Some news:


-   *Dominion (NYSE: D)* says a massive 2.6 GW offshore wind project is on track to begin construction in 2024.

-   *Diamond Offshore (NYSE: DO)* declared bankruptcy on Monday. *Transocean (NYSE: RIG)* and *Valaris (NYSE: VAL)* saw their share prices fall by 14 and 15 percent, respectively.

-   *CNX Resources (NYSE: CNX)* reported a $329 million loss, or a loss of $1.76 per share.

_*Banks rule out Arctic oil. *_In the face of withering pressure from environmental groups, a growing number of big banks are cutting out Arctic oil from their lending programs. Morgan Stanley became the latest major bank to declare that it would end financing for Arctic oil. 

_*Tanker rates soar. *_The cost of storing refined products at sea has soared amid the glut. “The VLCC market continues to be strong . . . but we are starting to see demand flow over into the product market,” Lois Zabrocky, CEO International Seaways, told the FT. “Refiners are facing challenges recalibrating supply and demand.”

_*BP’s profit falls, debt rises.*_ *BP (NYSE: BP)* saw its profit fall by two-thirds in the first quarter, and its debt soared to the highest level on record. Still, the oil major didn’t touch its dividend. Stuart Joyner, equities analyst at Redburn, told Reuters that BP’s “large rise in net debt overshadows (its) underlying earnings beat.”

However, going forward:

_*Shut ins increase.*_ Storage is filling up and forcing larger shut ins. “We are moving into the end-game,” Torbjorn Tornqvist, head of commodity trading giant Gunvor Group Ltd., told Bloomberg. “Early-to-mid May could be the peak. We are weeks, not months, away from it.” According to Goldman Sachs, global oil storage could be completely full within the next three weeks. The investment bank said that upwards of 18 mb/d of supply would need to be shut in by then. Up until now, the shut ins have been relatively minor compared to what is expected. 

And

https://oilprice.com/Energy/Energy-General/Three-Scenarios-That-Could-Push-Oil-Back-Above-30.html

jog on
duc


----------



## wayneL

If also go producers. Direct investment in oil is okay for trading, but using "buy right and sit tight", you'll get eaten alive by cost of carry, no matter which avenue you choose.


----------



## Smurf1976

Adding to comments about buying oil producers, make sure that's what you're actually buying.

Energy as an industry covers many things from crude oil through to retailing electricity and at the risk of stating the obvious, not all of those benefit from a rising oil price.

So make sure that the companies you're buying do actually produce oil or at least something directly linked to it (LNG) as their core business. I've seen professional analysts fooled by that one - commenting about energy companies with reference to the oil price, completely missing the point that the company in question produces no oil at all. Not all "energy" companies produce oil so look into the details of what the company actually does. 

Also look into whatever hedging arrangements they have in place, especially so if they have LNG as part of their business as that's commonly sold under contract.


----------



## InsvestoBoy

Smurf1976 said:


> Adding to comments about buying oil producers, make sure that's what you're actually buying.
> 
> Energy as an industry covers many things from crude oil through to retailing electricity and at the risk of stating the obvious, not all of those benefit from a rising oil price.
> 
> So make sure that the companies you're buying do actually produce oil or at least something directly linked to it (LNG) as their core business. I've seen professional analysts fooled by that one - commenting about energy companies with reference to the oil price, completely missing the point that the company in question produces no oil at all. Not all "energy" companies produce oil so look into the details of what the company actually does.
> 
> Also look into whatever hedging arrangements they have in place, especially so if they have LNG as part of their business as that's commonly sold under contract.




I kind of think the other way, if a businesses operational leverage is to the oil price, then I don't care too much whether it's an up/mid/down stream entity. Hedging caveats do apply in all cases though.

If what people are looking for is beta to the oil price without having to pay contango, then look for the tightest fit, ignore the underlying business


----------



## aus_trader

ducati916 said:


> With POO where it is currently and for the 2 primary reasons (a) COVID-19 and (b) Price war, most on this forum recognise that this is one of those times where it is different this time. If you want to try and capitalise on this rather unique situation then you have 2 options:
> 
> The options are (a) invest directly in oil, or (b) the producers. To invest directly in oil: (a) Futures, (b) ETFs, (c) Options.
> 
> If going the futures route, then Brent is better than WTI as Brent is cash settlement, whereas (everyone is now aware) WTI is delivery settlement. The ETFs track the futures: with futures we have currently contango issues complicating these instruments to such a degree, I would avoid them. Options are fine, but, this scenario is likely to take 6mths-1yr to play out, so depending on your strategy of course, Options may not be optimal currently (especially if IV is high).
> 
> Which leaves the producers.
> 
> The majors are cutting (a) dividends, (b) CapEx, (c) Expenses (employees) and (d) selling new debt. They will survive. Their profits currently will be non-existent. Some will take the big bath and dump all their rubbish in write-downs. Going forward, they will have a number of advantages: (a) their Balance Sheets should be in reasonable shape, (b) production worldwide will be reduced and will likely remain so for some time, which will increase POO and boost their profitability.
> 
> The Majors have weathered the current storm in oil well (no pun intended).
> View attachment 103025
> 
> 
> Its constituents:
> 
> View attachment 103026
> 
> 
> For those that don't like the concentration in CVX/XOM, there is RYE which is equi-balanced. Or for the thrill seekers ERX x2 of XLE (was x3 now just x2).
> 
> Both options involve (to be successful) that POO rise into the future. The choice is simply how to play that passage of time, the most profitable (or low risk) way, while the oil market sorts itself out.
> 
> Therefore, if you want to play oil, for my money the producers are the way forward. (I hold ERX and am still a little underwater on this re. disclosure). The producers could still be choppy, but I think less choppy than physical oil, as direct investment in oil will be leveraged via Futures/Options and drag in direct oil ETFs due to contango issues. With the producers there may still be some dividend going forward and you can choose your leverage, which is far lower.
> 
> jog on
> duc



Amazing coverage on the Oil subject, thank duc. You've pretty much looked at it from all angles as to how to play it.
I could only add one other way to play it, looking at the situation and that is using Oil tankers.
Um... none in Australia I could find, but there are Tanker stocks like Teekay Tankers Ltd (*TNK*) in the USA market that is getting a share price boost at the moment.


----------



## InsvestoBoy

aus_trader said:


> Amazing coverage on the Oil subject, thank duc. You've pretty much looked at it from all angles as to how to play it.
> I could only add one other way to play it, looking at the situation and that is using Oil tankers.
> Um... none in Australia I could find, but there are Tanker stocks like Teekay Tankers Ltd (*TNK*) in the USA market that is getting a share price boost at the moment.




STNG, EURN, TNK, DHT, LPG, DSSI, INSW, FRO on the NYSE

OET and HUNT on the OSE.

I'm holding some EURN.


----------



## InsvestoBoy

XOP wasn't mentioned and has been doing better than XLE off the lows.


----------



## ducati916

InsvestoBoy said:


> XOP wasn't mentioned and has been doing better than XLE off the lows.





XOP:

_This ETF offers exposure to the exploration and production sub-sector of the domestic energy market, making it a potentially useful tool for those looking to target stocks of companies responsible for discovering and accessing new deposits of oil and gas. XOP is likely too targeted for those with a long-term focus, but can be useful as a tactical overlay or as part of a sector rotation strategy. XOP is unique in that it seeks to replicate an equal-weighted benchmark. As such, the exposure offered by this fund is considerably more balanced than IEO, which includes many of the same stocks but assigns weighting based on market capitalization. It often costs more to pursue an equal-weighted strategy, but that isn't the case here; XOP is also very appealing from a cost perspective, making it the most attractive option for those seeking to bet on this corner of the U.S. energy market._

_

_

_

_

XOP has a different focus. Over a 5yr period both XOP & XLE are pretty close with regard to performance. I guess the argument is: how much of a jump in POO is required to drive further exploration over and above existing supply, given that there will be some excess supply to work off in the short term.

Also, a number of companies appear in both ETFs. XLE has a far heavier weight in XOM & CVX. This may appeal or repel.




Off the bottom, XOP is outperforming currently. 

jog on
duc


----------



## aus_trader

aus_trader said:


> My favourite mid-tier Oil/Gas producer is Beach Energy Ltd (BPT) on the asx, debt free to withstand these crippling times and has low cost of production with added benefit of gas credits.




Well, it's one thing liking and doing research on stocks but another thing to put your money down and buy it. 

Decided to buy some shares of Beach Energy (BPT) today given that it's trading at nearly 50% lower in price to the January peak. As I mentioned earlier, this one is likely to come out OK in this Oil downturn, given it's financial strength and cheap production costs. Will detail the purchase amount in the Speculative Stock Portfolio later tonight when I get some time.


----------



## derangedlawyer

Anyone else got burned with OOO not replicating actual price swings?
I have written some of my findings here if anyone wants to contribute or get in touch OOO - Betashares Crude Oil Index ETF - Currency Hedged (Synthetic)


----------



## ducati916

XOM & CVX report earnings on Friday 1 May. With XLE carrying a high % of these 2, interesting to see how market will respond to the report. Current figures will be ignored (as we know they will be shocking). It will be the forward guidance that will be parsed.

jog on
duc


----------



## wayneL

ducati916 said:


> XOM & CVX report earnings on Friday 1 May. With XLE carrying a high % of these 2, interesting to see how market will respond to the report. Current figures will be ignored (as we know they will be shocking). It will be the forward guidance that will be parsed.
> 
> jog on
> duc




If absolutely diabolical they will rally hard. That's how it works these days isn't it?


----------



## qldfrog

wayneL said:


> If absolutely diabolical they will rally hard. That's how it works these days isn't it?



I got some XOM and they went up last night , expecting good news maybe?


----------



## rederob

WTI contracts relate to deliver to and storage at Cushing's hub, and below charts its present state of affairs at 24 April, plus each of the USA's storage districts (PADDs):







Clearly the USA has a lot of overall storage capacity, but Cushing does not.
Here's an article on its implications.


----------



## aus_trader

qldfrog said:


> I got some XOM and they went up last night , expecting good news maybe?



I think today pretty much all Oil/Gas stocks rallied on the ASX as well.

Including, wait for it... 
.
.
.

"OOO"


----------



## rederob

Current trading within the trend is looking good so far:


Looks like traders don't want to come close holding next-month WTI futures again, with USO being a former casualty and having to restructure its portfolio.


----------



## Smurf1976

It seems that the inevitable is happening with wells now being shut in in the US:



> Oil production in the country tumbled sharply to 12.2 million bpd in the third week of April, a good 900,000 bpd less than the record peak of 13.1 million bpd recorded just a month prior.




https://oilprice.com/Energy/Crude-Oil/The-Wave-Of-Shale-Well-Closures-Has-Finally-Begun.html

Given the lack of drilling of new wells and the reality that oil wells do deplete, there'll be zero chance of a prompt return to that 13.1 million bpd production rate anytime soon. It'll be some years after we see a return to much higher prices before there's any real chance of that sort of production being back on.


----------



## qldfrog

So next in line is what is happening to the massive debt of fracking oilers


----------



## rederob

Nice gap up at the start of this week's trading:



*Baker Hughes rig count for 1 May saw a 7th week of declines for North America - 57 fewer were drilling for LTO.*


----------



## jbocker

qldfrog said:


> So next in line is what is happening to the massive debt of fracking oilers



Its going to be a big problem for the frackers unless they can afford to hold the debt long enough for a big price recovery and they would be praying that will be quick. Into the future it might only be done by the BIG oilers only.


----------



## rederob

WTI crude has bounced over 20% since last week's close:


----------



## aus_trader

Local ETF is up as well...



Beach Energy Ltd (*BPT*) is also up, which is in the Speculative Stock Portfolio.


----------



## Kryzz

Anyone else's CFD broker stopped the ability to trade west texas and only have brent crude available to place orders with??


----------



## rederob

Traders have taken a firm grip on oil prices:


A consistent uptrend within the lower band in the above chart suggests oil could be tracking where producers need it to go.
Demand has not returned,however, and supply cuts have barely taken effect.  While current momentum is promising, I see POO struggling in the short term as it nears $30/bbl.
The other factor that will weigh in in months to come is the curtailment of production agreed by OPEC nations and others in order to lift prices.  Given *all *nations are struggling with cashflows, those who have cut back will as quickly as possible try to recover their losses.


----------



## ducati916

News:




_Oil prices shot up on Tuesday on signs of rebounding demand and supply shut ins. President Donald Trump was notably excited by the news, tweeting the demand was returning. But it may not only be demand that is driving oil prices higher. DNB analyst Helge Andre Martinsen highlighted that “We are currently seeing accelerating oil-production curtailments outside the OPEC+ countries,”. He went on to suggest that the supply side of global oil markets “is about to change quite quickly.”

*Bakken output down 400,000 bpd. *Roughly a third of North Dakota’s oil production has been shut in so far, down 400,000 bpd since March. The Bakken has some of the highest costs out of all U.S. shale, with an average breakeven price of about $46, according to Reuters and Deutsche Bank. 

*Lockdown easing boosts demand.* Data is still scarce, but the loosening of stay-at-home orders across the world are thought to be boosting demand. Marco Dunand, the co-founder of oil trader Mercuria said that the oil market has “turned a corner,” according to the FT. “But if we have a second wave of pandemic then all bets are off,” he added._

jog on
duc


----------



## rederob

Too high too fast...


Here's what the US LTO producer's need to get oil back into production:


For the sake of simplicity, I think I will use $30 as the magic minimum for LTO when assessing the earliest any players are likely to return to drilling.
In reality an average of $50/bbl is required for the  US oil industry to break even, so the margin of overall debt to be suffered until we get back there is massive.


----------



## Garpal Gumnut

I find it difficult to imagine any country moving on from coronavirus once it settles without oil. 

I'm awaiting a wouldn't be buying oil at any price to buy oilers. 

gg


----------



## rederob

Another update on POO:



Looks like stability has returned, albeit at very low prices.
Meanwhile the rig count continues to decline:


----------



## rederob

North America's rig count continues to tumble, down 38 in total (35 USA LTO plays) over the week to 15 May.
This may be playing a part in WTI's price recovery:


----------



## rederob

Here's info on US fracking activity, to marry with the Baker Hughes rig count:


----------



## rederob

Great start to the week for WTI, with a new high posted since prices were floored.  This chart is a continuation of yesterday's, but at 30 minute intervals:




That's more than a 15% increase from lows a few days ago and is likely to see Oz producers continue to bounce back.


----------



## cutz

That's great !!

Can't believe the Jun/Jul spreads have collapsed to 1 cent from a peak of 8 dollars a few weeks ago ! I guess no negative prices this expiry ..


----------



## ducati916

US energy consumption in 2019. 




If the price war has imparted permanent damage to the production infra-structure, then oil/gas producers that survive are likely to do well. The 'rest' simply do not come close (currently) to step-up.

jog on
duc


----------



## Smurf1976

ducati916 said:


> If the price war has imparted permanent damage to the production infra-structure, then oil/gas producers that survive are likely to do well.




The big unknown is, of course, to what extent production capacity really has been lost as distinct from shut in with the ability to restart. In some cases even the operators themselves won't actually know at this point with absolute certainty.

That's one of the biggest risks to the real economy in my view.

If it's a 1% loss then no big deal. Price goes up and ultimately the market sorts it.

If it's 10% well then from a broader economic perspective the physical lack of fuel would be one of, perhaps the, biggest barriers to recovery. If it's not being produced then it can't be burned no matter what the price, some end use simply doesn't occur in that scenario.

Note that I'm not predicting any particular level of capacity loss here, just noting the possibility of physical, as distinct from purely financial, supply constraints emerging.


----------



## Smurf1976

Looking at Australian consumption data (in the absence of reliable global figures) and comparing March 2020 with March 2019:

LPG: +2.6% (automotive use down 4.0%, other uses up 6.1%)
Petrol (all grades): -7.6%
Aviation turbine fuel: -28.5%
Aviation gasoline: -11.7%
*Diesel: +8.6%*
Fuel oil: -34.7%
Lubricants: -10.4%
Other products: +16.5%
*Total: -3.0%*

That wasn't the result I was expecting, I was expecting a far greater drop than 3% in total consumption.

A plausible explanation is that the figures are calculated on the basis of bulk sales not consumption as such and there could well be a lot more fuel sitting in tanks at service stations, fuel depots, mines, farms and even in the hands of consumers (eg in vehicle tanks) than there was previously.

For diesel in particular, it's hard to come up with an explanation which doesn't involve at least some degree of stock building at the distributor, retailer or consumer level taking place. That plausibly would also have occurred to some extent with petrol given it's primarily purchased by private consumers (unlike say fuel oil or aviation fuel) but it's the diesel figure that's most surprising.

Diesel is particularly significant given that it represented 53.4% of all petroleum products supplied in Australia during March 2020.

If consumers, fuel distributors etc have increased their stock levels then we may see a slower return to normal levels of consumption, as measured in terms of bulk deliveries, assuming there's some running down of that inventory back to more normal levels.

Figures compiled by Smurf from Australian Government data available at www.energy.gov.au 

To what extent the international situation differs I really don't know but I've posted this since it's data which is available and should be accurate within its limitations (bulk sales being the point of measurement).


----------



## qldfrog

Smurf1976 said:


> Looking at Australian consumption data (in the absence of reliable global figures) and comparing March 2020 with March 2019:
> 
> LPG: +2.6% (automotive use down 4.0%, other uses up 6.1%)
> Petrol (all grades): -7.6%
> Aviation turbine fuel: -28.5%
> Aviation gasoline: -11.7%
> *Diesel: +8.6%*
> Fuel oil: -34.7%
> Lubricants: -10.4%
> Other products: +16.5%
> *Total: -3.0%*
> 
> That wasn't the result I was expecting, I was expecting a far greater drop than 3% in total consumption.
> 
> A plausible explanation is that the figures are calculated on the basis of bulk sales not consumption as such and there could well be a lot more fuel sitting in tanks at service stations, fuel depots, mines, farms and even in the hands of consumers (eg in vehicle tanks) than there was previously.
> 
> For diesel in particular, it's hard to come up with an explanation which doesn't involve at least some degree of stock building at the distributor, retailer or consumer level taking place. That plausibly would also have occurred to some extent with petrol given it's primarily purchased by private consumers (unlike say fuel oil or aviation fuel) but it's the diesel figure that's most surprising.
> 
> Diesel is particularly significant given that it represented 53.4% of all petroleum products supplied in Australia during March 2020.
> 
> If consumers, fuel distributors etc have increased their stock levels then we may see a slower return to normal levels of consumption, as measured in terms of bulk deliveries, assuming there's some running down of that inventory back to more normal levels.
> 
> Figures compiled by Smurf from Australian Government data available at www.energy.gov.au
> 
> To what extent the international situation differs I really don't know but I've posted this since it's data which is available and should be accurate within its limitations (bulk sales being the point of measurement).



Diesel is surprising until i remembered what i saw around.
None of the tradies seem to have slow down(yet), all building sites mines farms are and were still going full speed.
So except trains and buses,most diesel users are hardly affected.
The office guys do not commute to the city train station but they nevertheless fill up as price was low.
Increase was unexpected, but flat was my expectation.
We saw that at the pump price:
Record low for unleaded, hardly moved for diesel.
We saw opposite move during part of GFC: diesel smashed then due to economic activity down while unleaded less affected as people were still driving
Conclusion: diesel in Australia is a clear indicator of economic industrial activity..tradies included.
Not sure i get a seat at the RBA with that demonstration


----------



## Smurf1976

qldfrog said:


> Increase was unexpected, but flat was my expectation.



Yep - flat or a small decline (due to some being used in private vehicles) I could understand but the increase was a surprise.


----------



## rederob

What a difference a day makes (and a fortnight).
Although it's not obvious from the below chart, the circled increase since yesterday's open represents an 8% price increase, which is substantial in market terms.
Over the fortnight WTI has now gained over 60%, which is massive in anyone's terms:


It will be interesting to see what happens to the rig count by week's end.


----------



## frugal.rock

I put a few dollars in OOO today.
Fingers crossed!
Hoping that the supply and demand situation continues.


----------



## rederob

frugal.rock said:


> I put a few dollars in OOO today.
> Fingers crossed!
> Hoping that the supply and demand situation continues.



I believe it will for a while to come.
However, as WTI crude has increased over 100% in a little over 3 weeks, I expect a pullback is looming.
Here's the hourly chart showing the incredible price increase:


----------



## rederob

Further overnight gains are giving WTI's chart a welcome makeover:


----------



## frugal.rock

Thanks for the daily updates @rederob 
I wasn't to worried about a pull back. Am thinking any pull backs are gaps filling, so won't last long before the updraft continues. 
Am guessing that production versus consumption trends are equalising, but am waiting for the production drop lag to kick in properly over the coming days/ weeks.
Looking forward to hearing the well count again.
Need some profit to help pay for impending higher fuel costs!

F.Rock


----------



## qldfrog

We are soon reaching the 40usd a barrel.might stay there for a while


----------



## frugal.rock

The figures get interesting from the start of April after peaking.
Around 11.5% drop in production from end of March to last date recorded 15th May.
"*Weekly U.S. Field Production of Crude Oil"

*


----------



## pavilion103

Hello friends. I have questions about oil... 

Recently I bought into the Betashares crude oil index ETF on the ASX. 
I bought $10,000 @ $2.90 and
$5,000 @ $2.97
For an average price of around $2.93.

I know about the risks with contract expiry and prices. 

I have a question however. 
From my calculations the dividend of 5.978c in April means a yield on my average purchase price of 8.12%.
However I saw that this was slashed from over 40c the previous quarter.
Is this almost certain to fall further next quarter?

Also why doesn't the price on this ETF reflect the percentage increase in the WTI futures. 
For example I bought in when WTI was around $12 and its now $34.
BUT I do know that the ETF is linked to the June July and August contracts. 
Is the reason why prices don't move the same percentage wise have anything to do with the ETF costs, dividend payment and potential costs when moving from one month's contract to the next?
Still it is much lower than the WTI movement.

Any thoughts would be a tremendous help

Has anyone else purchased?


----------



## qldfrog

pavilion103 said:


> Hello friends. I have questions about oil...
> 
> Recently I bought into the Betashares crude oil index ETF on the ASX.
> I bought $10,000 @ $2.90 and
> $5,000 @ $2.97
> For an average price of around $2.93.
> 
> I know about the risks with contract expiry and prices.
> 
> I have a question however.
> From my calculations the dividend of 5.978c in April means a yield on my average purchase price of 8.12%.
> However I saw that this was slashed from over 40c the previous quarter.
> Is this almost certain to fall further next quarter?
> 
> Also why doesn't the price on this ETF reflect the percentage increase in the WTI futures.
> For example I bought in when WTI was around $12 and its now $34.
> BUT I do know that the ETF is linked to the June July and August contracts.
> Is the reason why prices don't move the same percentage wise have anything to do with the ETF costs, dividend payment and potential costs when moving from one month's contract to the next?
> Still it is much lower than the WTI movement.
> 
> Any thoughts would be a tremendous help
> 
> Has anyone else purchased?



@pavilion103 , on that thread, look back toward end April, we have discussed OOO a lot then with plenty of valuable information


----------



## pavilion103

qldfrog said:


> @pavilion103 , on that thread, look back toward end April, we have discussed OOO a lot then with plenty of valuable information



Which thread my friend? Is there a specific one for OOO?
How can I find it?
Thanks so much


----------



## Joe Blow

pavilion103 said:


> Which thread my friend? Is there a specific one for OOO?
> How can I find it?
> Thanks so much




Hi pav, welcome back! 

You can find the OOO thread here: https://www.aussiestockforums.com/t...il-index-etf-currency-hedged-synthetic.35340/


----------



## rederob

pavilion103 said:


> Which thread my friend? Is there a specific one for OOO?
> How can I find it?
> Thanks so much



It's also laid out clearly at their website:
*The price of oil futures contracts is not the same as the “spot price” of oil. As such, OOO does not aim to, and should not be expected to, provide the same return as the performance of this spot price. The performance of an ETF that is linked to oil futures may be materially different to the performance of the spot price of oil itself. This is because the process of “rolling” from one futures contract to the next to maintain investment exposure can result in either a cost or benefit to the Fund, affecting returns. 
*​Note also that OOO is, until further notice, exposed to the 3-month ahead contract rather than the next month as was previously the case.


----------



## qldfrog

pavilion103 said:


> Which thread my friend? Is there a specific one for OOO?
> How can I find it?
> Thanks so much



Hi @Pavilion, much of the talk was within this thread, looking at US similar ETF changing its rules, and the way OOO does NOT match oil price curve, in any way etc Especially the way it is NOT a tool for any even medium term holding.I learnt a lot


----------



## pavilion103

Thanks a lot guys


----------



## debtfree

Excuse my post everyone. Great to see you back @pavilion103.


----------



## pavilion103

debtfree said:


> Excuse my post everyone. Great to see you back @pavilion103.



Thank you
I have been absent with 5 years of chronic illness. Lyme Disease. Slowly recovering finally
Forced to move away from trading but using the same skills to invest in the markets


----------



## pavilion103

qldfrog said:


> Hi @Pavilion, much of the talk was within this thread, looking at US similar ETF changing its rules, and the way OOO does NOT match oil price curve, in any way etc Especially the way it is NOT a tool for any even medium term holding.I learnt a lot



There are a lot of pages

With my chronic illness I struggle to read through lots of text on web pages. 

If anyone did want to provide a summary of pointers/thoughts I'd welcome it.
However I don't expect it, as it seems it has ready been hammered and I know that people are busy!!

Thanks for letting me know where to look though


----------



## qldfrog

A good podcast about ooo
https://www.aussiestockforums.com/t...ussion-and-analysis.797/page-128#post-1070033


----------



## pavilion103

qldfrog said:


> A good podcast about ooo
> https://www.aussiestockforums.com/t...ussion-and-analysis.797/page-128#post-1070033



Thanks so much


----------



## qldfrog

pavilion103 said:


> Thanks so much



All credits to @InsvestoBoy  for that gem, but please, if you can, follow the discussion around that time, a lot of knowledge.


----------



## peter2

Did I read this correctly?  DTO a double short oil ETN that last traded >$50 is now zero?


----------



## Smurf1976

qldfrog said:


> All credits to @InsvestoBoy for that gem, but please, if you can, follow the discussion around that time, a lot of knowledge.



I'll second that one - anyone considering buying OOO should read everything that's been said regarding it very, very carefully to understand exactly what they're investing in.

Depending on circumstances, this ETF may or may not effectively track movements in the price of crude oil. 

Buying OOO is not buying crude oil or even a guarantee of tracking its price. Make sure to understand the detail of it.


----------



## rederob

Baker Hughes reported that the *n*umber of active U.S. rigs drilling for oil has now fallen for 10 weeks in a row, dropping by 21, to 318.
That is likely to keep the POO within the trading range below:


----------



## pavilion103

qldfrog said:


> All credits to @InsvestoBoy  for that gem, but please, if you can, follow the discussion around that time, a lot of knowledge.



I had a listen.
A lot more involved than I (or my financial adviser ) realised.

I’m interested to hear further updates in this thread now.

It’s been a month since that podcast. So much must have happened since then?


----------



## pavilion103

does anyone know what the storage situation is as of now?


----------



## fiftyeight

pavilion103 said:


> does anyone know what the storage situation is as of now?




Oil is always discussed on Macrovoices, just listen to the most recent podcast


----------



## Chronos-Plutus

pavilion103 said:


> does anyone know what the storage situation is as of now?




I go to oilprice.com for oil price news: https://oilprice.com/

Also, if you have the time you can monitor the oil tankers in oil refinery hubs like Singapore to see if they are building up:




https://www.myshiptracking.com/


----------



## ducati916

Boost for oil:

https://www.city-journal.org/covid-19-will-intensify-dominance-of-oil

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Boost for oil:
> 
> https://www.city-journal.org/covid-19-will-intensify-dominance-of-oil
> 
> jog on
> duc





Oil price is just so chaotic, not even tenured traders can know the movements. All it takes is the Saudis or Russians to make an announcement; if you're on the wrong side of the trade, your financial position is burnt. Same with FX; and Central Banks making announcements.

I stay away from FX and oil CFDs.


----------



## Chronos-Plutus

ducati916 said:


> Boost for oil:
> 
> https://www.city-journal.org/covid-19-will-intensify-dominance-of-oil
> 
> jog on
> duc




I think the oil price will rise over the next decade; I would much prefer to buy into a listed oil producing entity. I haven't done enough research yet to choose the oil producer.

I am emotionally attached to Shell though, I love that company for some reason; actually it is because of their exceptional scenario analysis ( but always take emotion out of investment, I was trained.

However the BP Statistical Reviews are absolutely outstanding metrics to work off: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html


----------



## ducati916

News:




_*U.S. shale permanently damaged?*_ “_February was peak shale,” Daniel Yergin, vice chairman of IHS Markit, told the WSJ. Already struggling with a poor track record of profits, U.S. shale may not rebound to previous levels for years, if ever. More than 70 companies could file for bankruptcy this year at $30 WTI._

Supply damaged. Demand coming back:

_*Demand on the upswing.*_ _Roughly 4.1 billion people went into lockdown at its peak, but more than 90 percent of them live in areas that have seen some sort of a reopening. Driving activity and gasoline demand are rising, boosting bullish sentiment._

_*IEA: No peak demand yet.* The IEA said that oil demand has not yet peaked. “In the absence of strong government policies, a sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” the IEA’s Fatih Birol told Bloomberg._

_*U.S. air traffic picking up. *While still a fraction of pre-pandemic levels, TSA data shows that passenger throughput at U.S. airports is increasing. On May 25, more than 340,000 people passed through American airports, nearly triple the low levels seen in April. But that number still stands at about 15 percent of year-ago levels. _

_*Gap between physical oil and contracts shrinks.* In a sign of a tightening market, the price between physical oil and the Brent contract has narrowed in recent weeks, after a huge gap in April. “A few weeks ago, we had armageddon pricing when nobody wanted physical barrels apart from for storage,” Richard Fullarton, chief investment officer at hedge fund Matilda Capital Management Ltd., told the WSJ._

Importantly the Producers are above their (albeit from a low level) 50DMA and heading back towards the 200DMA.




A new bull market? Possibly. With the level of supply destruction, the survivors should do very well.

jog on
duc


----------



## ducati916

Chronos-Plutus said:


> I think the oil price will rise over the next decade; I would much prefer to buy into a listed oil producing entity. I haven't done enough research yet to choose the oil producer.
> 
> I am emotionally attached to Shell though, I love that company for some reason; actually it is because of their exceptional scenario analysis ( but always take emotion out of investment, I was trained.
> 
> However the BP Statistical Reviews are absolutely outstanding metrics to work off: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html






Simply go for an ETF that holds 30 odd and will rebalance. I hold ERX simply because I seek the additional volatility.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Simply go for an ETF that holds 30 odd and will rebalance. I hold ERX simply because I seek the additional volatility.
> 
> jog on
> duc




Not a bad play. You are also exposed to currency volatility.

I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.

Which broker/trading house do you use?


----------



## rederob

Possible retest of $28 is in play:


----------



## ducati916

Chronos-Plutus said:


> 1. Not a bad play. You are also exposed to currency volatility.
> 
> 2. I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.
> 
> 3. Which broker/trading house do you use?




1. Re. currency: correct.

2. This could help with your research: https://etfdb.com/etfs/issuers/state-street-spdr/

3. Several.

jog on
duc


----------



## qldfrog

Chronos-Plutus said:


> Not a bad play. You are also exposed to currency volatility.
> 
> I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.
> 
> Which broker/trading house do you use?



Please please please unless you have followed the OOO story for the last 3 4 months, be very careful and understand where you go with ooo or similar.plenty of info on this forum


----------



## Chronos-Plutus

A


qldfrog said:


> Please please please unless you have followed the OOO story for the last 3 4 months, be very careful and understand where you go with ooo or similar.plenty of info on this forum




Absolutely, I will do a significant amount of research before I buy into the ETF. Betashares have a reputation for being a bit dishonest with their ETFs.


----------



## rederob

WTI crude broke into a new near-term high overnight:


That's great news for our Aussie producers, most of whom were already above break even on production costs alone, but in bad need of ongoing exploration capital.
The week again saw a decline in the US rig count, dropping a net 17 (one gain in the Utica shale basin), so this may have led to the small spike near close of trade.
All round good news for those jumping in on the oilers.


----------



## frugal.rock

US Production


----------



## qldfrog

frugal.rock said:


> US Production
> View attachment 103982



Interesting,what was the sudden fall a bit earlier in 2019, on the graph: hurricane?
Sounds as bad as now?


----------



## rederob

Getting better each day for WTI crude:


Even so, it's a 15% climb to the cliff fall of 8 March.  However, don't expect those percentage increases to be replicated in equities.


----------



## gartley

An oil top is imminent here. The USDCAD is inversely correleated to the price oil and appears to have completed a textbook abc correction.


----------



## frugal.rock

frugal.rock said:


> US Production
> View attachment 103982



Down again.
As long as production is dropping, I don't see the poo dropping... much.
Hard to tell with the delayed data.
How's the rig count @ducati916 ?
Cheers


----------



## Smurf1976

gartley said:


> The USDCAD is inversely correleated to the price oil



There's another way to trade the oil price for those looking at ways to do so (noting the discussion about the issues with OOO).


----------



## rederob

Another fantasticweek for those long oil:


And that was helped by further contraction in US drilling operations, with US LTO numbers declining by 18 over the past week.
The question we should soon be able to resolve it the inflection point for shale oil drillers to re-enter the market.  It will be a strong guide to breakeven prices in the USA for LTO.


----------



## ducati916

frugal.rock said:


> Down again.
> As long as production is dropping, I don't see the poo dropping... much.
> Hard to tell with the delayed data.
> How's the rig count @ducati916 ?
> Cheers
> 
> View attachment 104328




Still falling:




jog on
duc


----------



## rederob

As you can see from WTI's prices over the past year, we have avery long way to go before hitting what I have labelled below as "resistance" (actually being 2019 *support*):


We are sill a few dollars away from the low prior to WTI falling off a cliff, and I suspect we will hover around here for a while as those who bought into storage continue to resupply the market at a nice profit.
My take on prices next year will be based on the extent and speed that US LTO producers swing into action. 
What we know definitively is that OPEC+ has the willingness to price them out of the market.
The other caveat on next year's prices is the extent that conventional exploration spend has set back supply.  This gets a bit tricky as just because prices have recovered somewhat does not mean they have the necessary cashflow to inject into what was previously planned.


----------



## gartley

In my last post: https://www.aussiestockforums.com/posts/1075743/  I looked the USDCAD which has a negative correlation to POO as it appeared this was approaching an EW completed abc pattern.
After looking at POO today, the cycles routines I look at suggest this might trigger a sell in the next few days as cycle detrends have turned down although the trend indicator still suggests trend is  intact it will be interesting to see if flags a trend change in the weeks ahead. All that is required is for the FT swing chart to cross below the upper pink line. If it does trigger this sets up a favourable  R/R with a target of 31.42 @ the previous 4th wave of one less degree


----------



## rederob

US oil inventories defied pundits during the week with a 5.7mbbl build, when a 1.7mbbl decline was expected, so WTI crude prices fell away sharply on Thursday:


While it appears that COV19 has stymied US demand in particular, WTI price support is being maintained by a continued lack of new drilling activity in North America; the US LTO rig count dipped by 5 over the week according to Baker Hughes.
Bigger news globally was a weekly decline of 12% in the rig count, and as these are not the nimble rigs that operate in the North American shale patches, getting those numbers back to "normal" will take much longer.

As you can see from the EIA chart below, after massive global stock builds in the first half of this year, we are likely in a global supply shortage that will carry through well into 2021:






In that light I see oil continuing to rise steadily over the next 6 months at least based on the supply:demand situation.


----------



## frugal.rock

Some more bias confirmation...
Down another tick...100,000 barrels down. Still a steady fall.
A reminder on the data lag.


----------



## rederob

Although WTI crude dipped in early trade yesterday, it recovered itself to close slightly higher, in the +$37 range.
Below I have focussed on how trading volumes may have reflected what the market was thinking as COV19 began to physically affect demand:


The above trend channel shows the path to price recovery, and I expect the incline to become less steep over coming weeks as the market digests the interplay between OPEC+ and US LTO supply on anticipated demand increases.


----------



## Smurf1976

InsvestoBoy said:


> I kind of think the other way, if a businesses operational leverage is to the oil price, then I don't care too much whether it's an up/mid/down stream entity. Hedging caveats do apply in all cases though.



My point was more about things which don't necessarily track the spot price of crude oil. For example the OOO ETF.

I'm not saying don't buy it, just make sure you understand what it is and how it works before doing so.


----------



## Smurf1976

LNG isn't oil but it's fairly closely tied to it from a financial perspective so I'll post here that there are various reports that the Australian LNG exporters are having trouble selling it. There's media reports about ships sailing as slowly as possible, being re-directed to other countries or simply going nowhere.

https://smallcaps.com.au/global-gas-market-extraordinarily-oversupplied-hitting-australian-exports/

The main data I can add to that is that raw gas volumes going into the Queensland LNG plants, all of them collectively, are currently running about 16% below levels pre-pandemic. The drop in LNG production should be proportional to that.

Some of the gas not going into LNG is being shut-in in Queensland, a bit's going into storage at Roma (Qld) and quite a bit is going south via the pipeline to Moomba. Gas consumption varies considerably day to day but for 17th June gas from Queensland should supply just on 20% of the total volume consumed across NSW, ACT, SA, Vic & Tas combined so it's significant. That's resulting in reduced production in both SA and Vic with that gas staying in the ground for now.

I don't have any figures for LNG production in WA or NT to add.


----------



## frugal.rock

US Petroleum and Other Liquids
Weekly supply estimates.
https://www.eia.gov/dnav/pet/PET_SUM_SNDW_DCUS_NUS_W.htm

I note, the US became a net importer again (of oil) around early May. Imports have been rising slightly. If storage capacity was full, would you import? Hmm, something seems awry. Eagerly awaiting production update later today. (expecting downtrend to continue) 

F.Rock


----------



## frugal.rock

Down 6 ticks from last reported period...
From 11,100 to 10,500 ( x 10,000)
This is one of the largest drops over the last few months... and from the chart, the biggest drop in production since around 1983 or chart start... bigger than Ben Hur.
If I get excited, I might chart this year's results...


----------



## rederob

Another dip in the Baker Hughes North American rig count should keep oil ticking higher:


LTO drilling rig numbers declined by 10 in the USA and 2 in Canada.
132 operating Permian Basin rigs are now one-third the number of last year, while Canadian rig numbers are down 80% on a year ago, albeit from a base of 119.


----------



## Smurf1976

Australian consumption data April 2020 compared with April 2019:

LPG (Automotive use) = -40.7%
LPG (all other uses) = -12.9%
LPG total = -20.7%

Petrol = -42.7%

Aviation turbine fuel (domestic aircraft) = -78.8%
Aviation turbine fuel (international aircraft) = -80.1%
Aviation turbine fuel total = -79.7%

Aviation gasoline = -71.2%

Diesel = -9.8%

Fuel oil = -36.5%

Lubricants = -6.9%

All other refined products (bitumen, minor fuels, solvents, chemicals etc) = -11.9%

Total all products = -30.9%

So overall a 30.9% drop in consumption but with very considerable variation between products.

Data source = Australian Government statistics available from www.energy.gov.au


----------



## rederob

US crude today hit its highest price since being floored in April:


Without the return of drilling rigs to the shale patches crude prices are likely to maintain the trend in place for over 2 months.


----------



## frugal.rock

I've changed my opinion.
If I traded oil, I'd be going short now faster than a rabbit down the hole... (rabbit down the hole is the gold safe haven analogy)
Oil inventorys are peaking. Way over estimates. India is nearly chockers as is the US.
Expecting US Weekly Production figure overnight, am expecting another big (bigger?) drop. Has to be.
Still have absolutely no idea about futures though. Not my area.
Loving the investing.com site
@Joe Blow .
Good move. 
https://m.au.investing.com/news/com...ries--rose-17m-barrels--last-week-api-2144203
and
https://m.au.investing.com/news/commodities-news/oil-snaps-3day-rally-on-crude-build-worries-2144136

Reminds me of my cousin years ago, pretending with my first mobile phone (brick)...
He mashes some buttons...beep boop bip beeeep, (ringing the broker)...
"Yep, buy gold, sell oil" ... never forgotten that, was funny as. 

Now, trading 23 years later, it seems like he might have made the right call...


----------



## frugal.rock

Oh no, US weekly production for the week of 19/6/2020, apparently production went UP...! by 500
to 11,000 (x 10,000)
I think the figures are getting fudged!
That just makes the "going short" conviction even stronger, in my opinion. The previous panic was a case of "much ado about nothing".
It's getting very real, storages are chockers. POO down overnight.
Who's ready to take delivery of oil and get paid for it.... again?


----------



## rederob

POO is back to its price levels 3 weeks after declining from its recent high on Tuesday:


Clearly noticeable is the loss of interest in oil trading during the week.
Price "resistance" does not appear in the above chart and is almost $15/bbl away from Friday's close. 

The North American rig count did decline, but by only one LTO drilling rig in the USA and Canada respectively.  
More importantly, another massive decline in the international rig count occurred during the month to end-May: down 110 units to 805 operational.  It will be interesting to see if the uptick in Brent and WTI crude since then sees a return.

While its clear that COV19 continues to dampen demand, it's also likely the case that curtailed international exploration will extend the period of supply recovery beyond earlier estimates.


----------



## Smurf1976

rederob said:


> it's also likely the case that curtailed international exploration will extend the period of supply recovery beyond earlier estimates



I haven't seen any figures but I wonder how much of the drilling is for exploration (finding new resources) versus how much is for development (putting previously discovered oil into production)?

One's about the short term and the other is about the long term. What the companies, particularly the larger ones, are doing in that regard might have some relevance.


----------



## frugal.rock

Smurf1976 said:


> I haven't seen any figures but I wonder how much of the drilling is for exploration (finding new resources) versus how much is for development (putting previously discovered oil into production)?
> 
> One's about the short term and the other is about the long term. What the companies, particularly the larger ones, are doing in that regard might have some relevance.



The whole situation is a little uncertain to me.
The EV market is growing, even the bigger fuel companies see it and are acting.
Ampol (caltex getting rebadged iirc) are looking at strategic locations for fast chargers.
Is oil going to run out before the EV fully takes over?
It seems like the environmental push side of things means oil won't run out, which would suggest that long term isn't a great outlook.
However, short to medium term should be reasonably safe, is my guess...


----------



## over9k

Oil is not going to run out. Shale's added another century or so even at current levels.

Electric vehicles are the future in the U.S (the only market left of any size) thanks to the move to using gas to produce power for $peanuts. 

I wouldn't be going anywhere near any oil producers with a bargepole for months - we had the early june bump, and that's it, we're now over the hill and heading into winter in the northern hemisphere.


----------



## Dona Ferentes

The disruption in global energy markets has claimed its biggest victim so far *– Chesapeake Energy Corp filed for Chapter 11 bankruptcy protection on Sunday in the US, *ending life as a fallen pioneer of the fracking boom and now bust.

Now it will try and recreate itself by cutting billions of dollars in debt and taking on $US3.1 billion in fresh debt as part of the refinancing deal and hopefully raise more than half a billion dollars in a share issue once the Chapter 11 revamp ends.

It joins other independents in Chapter 11, including Whiting Petroleum which was the first well-known listed oil fracker to collapse several months ago.

https://www.sharecafe.com.au/2020/0...peake-energy-files-for-chapter-11-bankruptcy/


----------



## over9k

The saudi's couldn't have dreamed of this.


----------



## frugal.rock

US Weekly Oil production figures are flat for the week of 26/6/2020.

Starting to indicate a bottom, however without it rising, this isn't clear cut yet.
Time to fence sit, erring on expecting a comeback. 
"a report showed US crude stockpiles posted a bigger drop than expected" (Morningstar 2/6/20)


----------



## frugal.rock

@rederob @Smurf1976 
Would you guys concur with a macro analysis that I think we have largely seen the bottom of the poo?
Based on;
1. Production fall now seemingly leveling out (based on US production and rig counts)
2. Storages starting to get used
3. The worst of covid19 seemingly behind us (for now)
4. Economic activity increasing 
5. Poo consolidation
6. Retailers discounting automotive lubricants

Interested on thoughts as I am looking to enter ooo when funds permit or cull some underperformers and rotate.
Cheers


----------



## rederob

frugal.rock said:


> @rederob @Smurf1976
> Would you guys concur with a macro analysis that I think we have largely seen the bottom of the poo?
> Based on;
> 1. Production fall now seemingly leveling out (based on US production and rig counts)
> 2. Storages starting to get used
> 3. The worst of covid19 seemingly behind us (for now)
> 4. Economic activity increasing
> 5. Poo consolidation
> 6. Retailers discounting automotive lubricants
> 
> Interested on thoughts as I am looking to enter ooo when funds permit or cull some underperformers and rotate.
> Cheers



US domestic production of crude is rising slightly from over a fortnight ago - some 500kbbl/day.
Net crude imports are down significantly over the month.
Remember that crude is principally a product feedstock, and that refiners try to balance each market sector in accordance with demand.
Presently all refiner products have more than adequate supplies.
The fundamentals for near term declines in WTI crude prices remain firm, so prices declines in excess of 10% would not surprise me atm.
Factoring in probable COV19 impacts on US demand gives me no confidence that present prices will hold.  
On the potential plus side, LTO drillers never returned to the shale patches with prices averaging $38/bbl, so maybe tomorrow's rig count will keep speculators interested in POO at present levels.


----------



## Smurf1976

rederob said:


> Factoring in probable COV19 impacts on US demand gives me no confidence that present prices will hold.




That's the elephant in the room in my view. What happens with the overall situation (pandemic, real economy) and demand.

That plus there's some degree of uncertainty about storage and by that I mean while the US does publish what should be accurate figures, it's far less certain how much oil is or isn't being stored in many other countries where there's either no data or it's merely a third party estimate based on tracking tankers etc.

Then there's the political situation which is anything but stable.

I'm presently not invested in oil unless an individual stock comes up on its own merits (as distinct from me seeing it as a play on the oil price).


----------



## Dona Ferentes

I usually read him and move on. This caught my eye with driving season upon the nth hemisphere


> AAA expects we will take 700 million trips this summer. That’s about 120 million, or 15%, fewer outings than we embarked on last summer.
> *That sounds like good news for the economy until you realize that 683 million of those trips will* *be in a car. *Airlines, cruise ships, rail, and other forms of mass transportation are missing out—with business expected to come in at 86% below last year’s levels



 J_ohn Mauldin_


----------



## over9k

Northern hemisphere is now heading into winter - heating energy use will be up but not a lot of caravans being driven around in snow. Very basic seasonality. 

I've bought santos here in aus though.


----------



## rederob

rederob said:


> LTO drillers never returned to the shale patches with prices averaging $38/bbl, so maybe tomorrow's rig count will keep speculators interested in POO at present levels.



And so it proved to be. 
LTO rigs in the USA declined by 3 net, and increased in Canada by 2.
Gas rigs for North America increased by 4 net.
Last year the US rig count stood at 963, and today it's at 263.   
From the chart below we can probably surmise that with WTI crude averaging a shade over $38/bbl over the past month that it's nowhere close to enticing US drillers back to shale:


Most surprising of all from the chart above is the incredibly low trading volumes which have persisted over the past fortnight.  Anyone with an explanation?
The international rig count fell by 24 in the month to June so confidence is yet to return to conventional oil.
While the USA continues to be deeply mired in another round of COV19 shutdowns I reckon the WTI crude price is in for a lot more sideways action.  A few weeks ago I would have suggested the "driving season" could have lifted prices, but now I am not sure that this season is going to see anywhere near the traditional traffic.


----------



## ducati916

So:




Possibly having found a bottom in production, combined with:

_*OPEC+ scheduled to ease production cuts.* OPEC+ is scheduled to ease production cuts beginning in August, and sources told Reuters that the group will likely refrain from an extension. Saudi Arabia also reportedly put pressure on Nigeria to increase its compliance. On Thursday, Russian energy minister Alexander Novak reiterated that position. “At present, there are no decisions to prepare any changes…Next, under the current agreements we should have a partial restoration of the volume of reductions starting August 1,” he said, according to TASS.

*Russia’s oil exports to Europe near two-decade low. *Russia is set to cut oil exports to Europe to just 900,000 bpd in July, the lowest level since 1999, as supplies from elsewhere continue to gain market share. U.S. oil, in particular, has gained a foothold.

*Libya restarts eastern oil field. *Libya brought the Mesla field back online, adding a small amount of idled production. _

_*Saudi Arabia and Kuwait restart Neutral Zone. *_Saudi Arabia and Kuwait have restarted production at the Al-Khafji oil field in the neutral zone between the two countries.

jog on
duc


----------



## rederob

Oil traders must be in lockdown, or their keyboards are broken:


All in all I see this as positive for prices going forward as we should continue to see US oil output declining in months to come irrespective if they returned to the shale patches in big numbers in the interim.  The decline rate of unconventional oil wells is stellar:


----------



## rederob

More sideways price action in oil over the week:


----------



## over9k

Yeah there's seasonality to think about now too - northern hemisphere heading into winter and with coronavirus depressing movement so much about the only bounce I can see will be in heating oil.


----------



## qldfrog

over9k said:


> Yeah there's seasonality to think about now too - northern hemisphere heading into winter and with coronavirus depressing movement so much about the only bounce I can see will be in heating oil.



Which is big and covid unaffected
Whereas driving is always reduced.
I see consumption in October onward remaining very similar to last winter in northern hemisphere.a return to pre covid numbers


----------



## over9k

Yep we're in agreeance on something again frog!


----------



## qldfrog

over9k said:


> Yep we're in agreeance on something again frog!



Stop it , I don't like it
;-)
Nice to see some convergence on some subject, open minded on both sides


----------



## rederob

over9k said:


> Yeah there's seasonality to think about now too - northern hemisphere heading into winter and with coronavirus depressing movement so much about the only bounce I can see will be in heating oil.



The "winter" effect in the northern hemisphere peaks late January - 6 months away.
In the USA most space heating is via propane/gas.  Winter demand for gas usually doubles.  Throughout an average year (not 2020) there is not a great deal of monthly change to petroleum product supply:



Overnight the rig count showed 18 consecutive weeks of oil well drilling decline: net loss of 5 to LTO.  Canada added 8 gas rigs but none to oil.
That news lifted WTI crude prices by 2.5% to close out the week at $40.57.
It seems as close to certain as can be that LTO at around $40/bbl is not economic given that we have been hovering up to and over this figure for about 5 weeks.


----------



## over9k

There's also the breakeven price of the shale wells too - I'm not an oil specialist so I don't know them off the top of my head but I do know the small producers are all heading to the wall because they just don't have the sheer size to be able to weather an economic storm like this. 

Same thing as all the mum & dad convenience stores getting swallowed up by bigger chains etc - the whole economy's laying waste to the little guys while the big companies raise capital etc and ride things out.


----------



## rederob

over9k said:


> There's also the breakeven price of the shale wells too - I'm not an oil specialist so I don't know them off the top of my head but I do know the small producers are all heading to the wall because they just don't have the sheer size to be able to weather an economic storm like this.
> 
> Same thing as all the mum & dad convenience stores getting swallowed up by bigger chains etc - the whole economy's laying waste to the little guys while the big companies raise capital etc and ride things out.



Just an FYI: LTO is oil from shale, otherwise called Light Tight Oil (ie. needing fracking) or unconventional oil.


----------



## over9k

Gotcha. Though afaik, the big players can (and are) easily able to raise the capital necessary to ride out the storm and in doing so squeeze the little guys no? Just like in basically every other sector at the moment? 

I seem to recall what I think was chesapeake going bust not long ago? 

And that's before we even start on what the saudi's are up to.


----------



## Smurf1976

rederob said:


> In the USA most space heating is via propane/gas. Winter demand for gas usually doubles. Throughout an average year (not 2020) there is not a great deal of monthly change to petroleum product supply:




Agreed although I'll add that there's some shift between refined products seasonally. That gasoline peaks when heating oil is at minimum masks that in terms of total product volume (though gasoline is by far the larger in absolute volume terms). 

Heating oil in the US and indeed most countries is effectively diesel by the way. It's either actual road diesel as such from the same tanks (typically in places with low sales volume) or it's diesel with some additives left out and/or dye added for tax identification purposes. In a few places it also has a higher sulfur limit but ultimately it's still diesel of a sort.

In the UK however, and Australia to the extent of the very limited use of it, heating oil is a different product. It's No.1 fuel oil that is supplied as "heating oil" in the UK and Australia and in Japan it's kerosene sold for that purpose. 

#1 can be used in place of the diesel type oil without technical problems so any surplus of that is easily gotten rid of by the oil companies but going in the other direction ends in a world of hurt and isn't an option.


----------



## rederob

Smurf1976 said:


> Heating oil in the US and indeed most countries is effectively diesel by the way. It's either actual road diesel as such from the same tanks (typically in places with low sales volume) or it's diesel with some additives left out and/or dye added for tax identification purposes. In a few places it also has a higher sulfur limit but ultimately it's still diesel of a sort.



US household fuel oil consumption is only 5% of energy use compared with about 45% for propane/natural gas.


----------



## Smurf1976

rederob said:


> US household fuel oil consumption is only 5% of energy use compared with about 45% for propane/natural gas.



No argument there, fuel oil consumption is relatively minor compared to gas in the US and indeed most places. 

Propane is of course petroleum and included in the petroleum volumes for statistical purposes by most countries. Likewise butane.


----------



## ducati916

News:

_*China’s oil imports surged. *China’s crude imports surged to 11.93 mb/d in June, a record high, and up 25 percent from a year earlier. A separate estimate put imports at 12.9 mb/d for the month. 

*Explosions in Iran. *Multiple explosions have hit Iranian nuclear facilities in the past few weeks, and at least one study suggests it could set the Iranian nuclear program back by two years. Analysts widely suspect either Israel or the U.S., or both working together. The clandestine confrontation with Iran raises new geopolitical risks to the region. _

_*Kansas City Fed survey finds ongoing stress.* Roughly 32 percent of oil executives responding to the Kansas City Fed survey said that they would be insolvent within one year if current crude prices remain steady. _

_*Libya declares force majeure again.* Just two days after it lifted the force majeure on all oil exports, Libya’s National Oil Corporation has declared force majeure again, citing a renewed blockade on its oil export terminals and blaming it on interference from the United Arab Emirates.

*Drilling hits 20-year low. *The number of oil and gas wells drilled globally is expected to hit 55,350 this year, the lowest level in two decades, according to Rystad Energy. That represents a 23 percent drop from 2019 levels. The number of wells drilled does not return to 2019 levels through at least 2025, as far out as the Rystad forecast goes. _

_*OPEC+ leans towards easing cuts.* OPEC+ is right now leaning towards allowing the production cuts to drop from 9.7 mb/d to 7.7 mb/d beginning in August. The group’s technical committee meets this week. The challenge for the group is that while they don’t want to cede market share to other producers bringing production back, if they ease the cuts they risk pushing oil prices down. Other analysts believe that because the market is technically seeing a supply deficit, there is room for the group to ease. _

_*Oil write-downs on the rise. *The oil majors have announced a slew of impairment charges as they revise down their long-term oil price assumptions, with an eye on energy transition. The companies are dealing with this challenge in different ways, but impairments may continue to rise for a while. On Tuesday, *Woodside Petroleum (ASX: WPL)* announced a US$4.37 billion write-down. 

*IMF: Middle East loses $270 billion on downturn.* Oil-producing countries in the Middle East are set to earn $270 billion less in oil revenues this year compared to 2019, with losses led by Saudi Arabia, according to the International Monetary Fund. The region’s overall GDP could contract by 7.3 percent this year. Oil-importing countries in the Middle East, such as Egypt, will suffer less, with GDP expected to contract by just 1.1 percent._

Real mixed bag. Some positive for higher prices, some less so.

jog on
duc


----------



## Telamelo

OPEC will roll back production cuts by 2.1 million barrels per day from August.

Crude stockpiles fell 7.5 million barrels for the week ending July 11.

The outsize draw propelled crude prices up by 2.2%

“Crude prices jumped (after) following both the OPEC+ recommendation to slowly bring back some oil supplies, and after the EIA crude oil inventory report showed a much larger draw and some signs that demand is improving,” said Ed Moya, an analyst at New York’s OANDA.

Another positive for the likes of  SXY  (I hold) no doubt.

https://m.investing.com/news/commod...draw-overwhelms-opec-rollback-on-cuts-2230471

Cheers tela


----------



## Telamelo

SXY storming higher.. up another +9.62% !!! Cheers tela


----------



## rederob

Despite the above news, speculators appear to be avoiding the oil markets:


----------



## Telamelo

SXY +11.54% with a big line wipe @28.5c happy day's  perhaps into the 30's by later today into next week (finger's crossed) "trade the trend" Cheers tela


----------



## ducati916

News:


_-   *Marathon Petroleum’s (NYSE: MPC)* Tesoro High Plains pipeline was ordered to shut down for the first time in 67 years after the U.S Department of Interior’s Bureau of Indian Affairs determined the pipeline trespassed on Native American land. The pipeline moves Bakken oil through North Dakota. 

-   *Halliburton (NYSE: HAL)* jumped more than 8 percent after reporting second-quarter results that beat expectations. Halliburton "inked simply outstanding results vs. expectations... [as] structural cost cuts are clearly bearing fruit," Tudor Pickering Holt analysts say. Halliburton took a $2.1 billion impairment. 

-   *Total (NYSE: TOT) *secured financing for its $15 billion Mozambique LNG project. 

*Tuesday, July 21, 2020*

Oil prices rose sharply on Tuesday. Despite bad coronavirus news in the U.S., which could weaken demand, there are high hopes for economic stimulus. The European Union agreed to a historic stimulus, and the U.S. Congress appears intent on passing yet another trillion-dollar economic package. Crude prices hit four-month highs on Tuesday. 

*Chevron buys Noble for $5 billion.* *Chevron (NYSE: CVX)* announced the purchase of *Noble Energy (NASDAQ: NBL)* for $5 billion, an all-stock deal worth $13 billion when including debt. The move adds U.S. shale assets in the DJ Basin and, crucially, a large presence in the Eastern Mediterranean. The deal was the first major M&A move since the onset of the pandemic. 

*Australian LNG hit by impairments. *Australia’s LNG sector has been hit hard by multiple impairments from domestic and international gas companies. *Woodside Petroleum (ASX: WPL)* recorded a $4.37 billion impairment, and *Royal Dutch Shell’s (NYSE: RDS.A) *massive $15-$22 billion write-down was led by Australian LNG. "Realized prices have dropped dramatically due to global oil oversupply and demand destruction from the pandemic,” a Woodside executive said on an investor call. 

*Natural gas prices fall. *Natural gas prices fell sharply on Monday after data showed another dip in U.S. LNG exports. 

*Fewer canceled U.S. LNG cargoes for September.* The volume of U.S. LNG cargoes canceled by buyers for September slowed compared to preceding months. The exact number is unclear, but Reuters reports that somewhere between 15 and 26 cargoes have been canceled for September delivery, a smaller number than the 40 to 45 reported for July and August. *Cheniere Energy (NYSE: LNG) (NYSEAMERICAN: CQP) *has the most canceled cargoes. 

*Brazil boosts oil exports to Asia.* Brazil’s oil exports to Asia averaged 1.07 mb/d in the first six months of 2020, a 30 percent year-on-year increase. 

*Saudi Arabia wants more than $40.* The OPEC+ deal has succeeded in tightening up the market and boosting oil past $40, but Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, has highlighted that although OPEC itself does not have a price target, current prices are not sustainable for the industry, leading to potential insecurity of supply in the long term._

jog on
duc


----------



## rederob

Price consolidation continues:



Here's Baker Hughes' rig count summary.
With COV19 rearing its ugly head big time in the USA again, it's difficult to see demand prompting a WTI price rise of any magnitude.  Maybe the international rig count data out in a few weeks can provide that prop.
What remains dead certain is that the curtailment of exploration is going to eventually bite and a price spike will occur.  I can't see it holding for long as LTO drillers will quickly fill any supply shortfall until the next yoyo.


----------



## over9k

Shale wells take what, 6 weeks to come online? 

And we have how many weeks of storage capacity? 

We'll be fine.


----------



## rederob

over9k said:


> Shale wells take what, 6 weeks to come online?
> 
> And we have how many weeks of storage capacity?
> 
> We'll be fine.



There is plenty oil.
The issue is *at what price*.
The existing fracking industry remains burdened in debt.
So which investors are game to stump up again knowing how quickly things can go sour?
This article calculates current break even prices for LTO by region and by category of field.  When we match that with recent LTO rig counts it is seems that the lowest cost tier 1 wells at $20 wellhead breakeven need significantly more than another $20/bbl to spur more drilling.


----------



## over9k

Drilling a shale pad is loose change to the supermajors. They'll start drilling as soon as there's a whiff of return. It's nothing to them if the return doesn't eventuate. 

It's the little guys that are getting cleaned out, just like in basically every other sector.

I'm not an oil specialist, but I can't see the ridiculousness we've already seen repeating.


----------



## rederob

over9k said:


> Drilling a shale pad is loose change to the supermajors. They'll start drilling as soon as there's a whiff of return. It's nothing to them if the return doesn't eventuate.
> 
> It's the little guys that are getting cleaned out, just like in basically every other sector.
> 
> I'm not an oil specialist, but I can't see the ridiculousness we've already seen repeating.



The oil majors are all doing poorly and, as shown below, were not performing that well when oil prices were much higher:


While it might be loose change for the majors to drill for LTO, they are not going to be in a hurry to drill anywhere unless the numbers stack up, else they just compound existing losses.  Because the decline rate is so rapid for fracked wells, it makes no sense to start drilling on the off chance prices will rise.


----------



## over9k

Yes but it's relative.


----------



## tinhat

over9k said:


> Yes but it's relative.




Relativity, if true, states that all things that will be already are. We are all dead already.


----------



## Knobby22

tinhat said:


> Relativity, if true, states that all things that will be already are. We are all dead already.



Or born yesterday.


----------



## tinhat

Knobby22 said:


> Or born yesterday.



So sorry for your loss. Justice is not personal.


----------



## Knobby22

tinhat said:


> So sorry for your loss. Justice is not personal.



Justice is a philosophical construct based on revenge.


----------



## tinhat

Knobby22 said:


> Justice is a philosophical construct based on revenge.



clap hands.


----------



## rederob

Back on topic, nothing positive in sight for oil prices:


Another week goes by with little action in US shale oil patches, with the a zero net change to their rig count. 
Adding to supply seems unwise anyway, as crude oil stock levels remain historically high:


----------



## Muckman

Is oil becoming redundant? 
Australia has basically an unlimited amount of natural gas, and having new gas to liquid fuels that are more cleaner and cheeper, does  anyone even see oil on the market in 50 years ?Synthetic fuels are far more superior then crude oils and are getting much cheeper to produce. Not to mention more and more emission regulations banning current petrol and Diesel engines. Last time I saw this was when leaded fuel was being fazed out.
I see shell even investing huge into gas energy and from the looks of it are gearing up for the future with there new prelude off shore gas refinery. 
Not to mention modular reactors on the horizon suppling cheep energy alternatives. 

I just don’t see the use for oil anymore other then the fact it needs to be traded.


----------



## Smurf1976

Muckman said:


> I just don’t see the use for oil anymore other then the fact it needs to be traded



Long term you may well be right.

Short term though well pretty much every motorbike, car, truck, bus, plane, helicopter and ship is going nowhere without petroleum-based fuels. Then there's diesel powered trains and farm machinery.

Then there's the various relatively minor uses of fuels such as mowers and so on. Minor but not zero.

Whilst not the major method, some oil is used for electricity generation (it's a minor source in Australia but not zero) and in some places it's a significant fuel for space heating (minor in Australia but it's significant in the north-eastern US in particular and also parts of Europe it's a major method of heating).

Then there's all manner of lubricants, chemicals, bitumen (road sealing) and so on from the computer you're using right now (plastic) through to the paint on the walls, there's oil involved somewhere with all of that.

Ultimately I agree with the idea that there'll be a move away from it but it'll be a gradual thing is my thinking. It's going to take a long time to see all that machinery etc replaced with something else that uses some other form of energy be it gas, electricity or whatever and in the meantime there's still a need for oil-based fuels to run what we've got.


----------



## frugal.rock

Smurf1976 said:


> Long term you may well be right.
> 
> Short term though well pretty much every motorbike, car, truck, bus, plane, helicopter and ship is going nowhere without petroleum-based fuels. Then there's diesel powered trains and farm machinery.




It's a bit of a "let's revisit this conversation every 10 years" case, me thinks. See how much things have changed.

Oil isn't disappearing any time quickly, it's a multi billion $ industry that fuels economies. 
All required infrastructure is already in place, generally.
Gas requires pressure vessels for storage. A bit of an issue in itself. 

You make a good point Muckman, in that the big players are starting to move to hedge themselves for the future, be it gas or electric vehicles and whatever else they are delving into, noting that there's environmental push behind it which currently has been temporarily forgotten about.


----------



## frugal.rock

ducati916 said:


> News from the oil patch:
> 
> View attachment 106926
> 
> 
> _*BP cuts dividend, says it will cut production over time. *_*BP (NYSE: BP) *reported a replacement cost loss (similar to net loss) of $6.7 billion in the second quarter, down from a $2.8 billion profit a year earlier. BP also cut its dividend for the first time since the Deepwater Horizon disaster a decade ago. The company cut its dividend to 5.25 cents per share, down by half. BP’s CEO Bernard Looney said he looks to accelerate the company’s low-carbon transition, including a 10-fold increase in investment on renewables while shrinking oil and gas production by 40 percent over the coming decade. BP will also not expand exploration to any more countries.
> 
> _*U.S. oil production plunged to 10 mb/d in May.*_ Newly released data from the EIA shows that U.S. oil production plunged to just 10 mb/d in May, down from 11.9 mb/d in April. Also, weekly estimates by the agency at the time pegged production at over 11 mb/d, so the downward revision is significant. In other words, the depth of the collapse in May was much more substantial than analysts thought at the time.
> 
> _*Marathon to close two refineries, and sell retail chain.*_ *Marathon Petroleum (NYSE: MPC)* said it would permanently close two small refineries in California and New Mexico. The move would eliminate 800 jobs. Marathon also agreed to sell its gas station chain to the owners of 7-Eleven convenience stores for $21 billion in the largest U.S. energy deal so far this year.
> 
> _*India’s fuel consumption stalls.*_ Demand for refined fuels from state-owned refiners in India fell by 13 percent in July compared to June. Higher prices and coronavirus-related shutdowns impacted consumption.
> 
> _*Saudi Arabia may have to cut prices again. *_After three consecutive months of raising its crude oil prices, the world’s largest oil exporter, Saudi Arabia, is widely expected to make the first cut to its official selling prices (OSPs) since the OPEC+ group started their record production cuts to prop up the market and prices amid crashing demand.
> 
> _*Oil industry embraces remote work. *_The pandemic could induce significant changes to the operations of the oil and gas industry. *Schlumberger (NYSE: SLB)*, *Halliburton (NYSE: HAL)* and *Baker Hughes (NYSE: BKR) *are shifting more tasks to remote work. The changes could mean the elimination of operational and manufacturing jobs while increasing employment for data analysts and engineers.
> 
> _*Carbon prices rise in Europe, hitting coal. *_Carbon prices have rebounded from recent lows, raising the cost of coal-fired generation. “The carbon market is working: it’s doing its job,” Lueder Schumacher, head of European utilities Société Générale, told the WSJ. “Many coal plants are no longer profitable at these kinds of levels.” Globally, more coal capacity was taken offline than was added in the first six months of 2020, for the first time ever.
> 
> *U*_*AE brings the first nuclear plant on the Arabian Penisula online.*_ The UAE has started up its $20 billion Barakah nuclear power plant. The project, built with the help of South Korea, will be the first nuclear plant on the Arabian Penisula.
> 
> _*GM to build 2,700 EV recharging stations.*_ *GM (NYSE: GM)* said it would build 2,700 fast-charging EV stations, equipped to recharge 60 miles of driving in 20 minutes. The move is intended to bolster sales of GM’s EVs. Unlike *Tesla (NASDAQ: TSLA)*, which built stations only for Tesla models, the stations will be open to any type of EV.
> 
> _*Report: rapid U.S. decarbonization would create 25 million jobs.*_ “Rapid and total decarbonization” could create 25 million jobs in an all-out effort to eliminate emissions by 2035, according to a new report.
> 
> _*Range Resources selling shale fields for pennies on the dollar.*_ *Range Resources (NYSE: RRC) *agreed to sell its Louisiana shale fields for $245 million, after buying them for $3.3 billion just four years ago.
> 
> _*Fieldwood Energy nears bankruptcy. *_Offshore oil driller *Fieldwood Energy *is nearing bankruptcy, which would be its second chapter 11 filing in two years.
> 
> _*Energy shrinks as share of S&P.*_ Tech giants reported huge earnings last week just as *ExxonMobil (NYSE: XOM) *and *Chevron (NYSE: CVX) *reported massive losses. Tech now makes up 27 percent of the S&P. “Energy was once the largest sector in the S&P 500,” Matt Stucky, portfolio manager Northwestern Mutual, told the FT. “When we sit here today, it is less than 3 percent…What’s going to drive market trends is some of the largest tech companies.”
> 
> _*More shale bankruptcies coming. *_So far this year, 23 North American oil and gas companies have filed for bankruptcy, representing more than $30 billion. But more are coming. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy even if oil prices recover over the next few months,” Haynes and Boone said in a report.
> 
> 
> jog on
> duc



Thanks Duc.


----------



## Muckman

Smurf1976 said:


> Long term you may well be right.
> 
> Short term though well pretty much every motorbike, car, truck, bus, plane, helicopter and ship is going nowhere without petroleum-based fuels. Then there's diesel powered trains and farm machinery.




Not sure if your understanding what I’m talking about.
Gas to liquid fuels are already underway and being used.
Synthetic fuels are a replacement for oil based fuels but much cleaner. So all your cars, trucks,plains, busses, ships, and so on still go on. On a marketing point of view it’s just a name change. You will still be going to the same service station as you normally go to. It just won’t be called diesel. It will be renamed as something like E-diesel or something. 
I can’t help think that this covid lock down has some part to play in all this because they already have announced in Britain that they are thinking of using the down time to switch all the aviation industry to the new fuel platform. 

NASA has been trialing synthetic jet fuel for over 7 years now. It’s safe for aviation to use and it’s cleaner and it’s co2 neutral. Zero sulphur. 




Even my engine oil is made with co2 neutral 
No one makes engine oil out of crude anymore it’s a terrible substance to work with and needs a lot of processing to clean it up. 
Synthetics are far cheeper and cleaner


----------



## rederob

WTI crude is back above pre-crash levels:


Still another 20% price increase for POO to break through resistance, so recovery is not close.
Nevertheless, as most Oz producers have breakeven prices significantly lower than US LTO producers they won't be burning through their cash.
On the plus side, producers have worked out that they need to review their cost of doing business, and their recent belt tightening should allow them to become profitable at lower crude prices than previously.


----------



## Garpal Gumnut

rederob said:


> WTI crude is back above pre-crash levels:
> Still another 20% price increase for POO to break through resistance, so recovery is not close.
> Nevertheless, as most Oz producers have breakeven prices significantly lower than US LTO producers they won't be burning through their cash.
> On the plus side, producers have worked out that they need to review their cost of doing business, and their recent belt tightening should allow them to become profitable at lower crude prices than previously.




Agree. We are moving in to a global wartime phase so time to move out of gold and pure IT and into oilers, defence and defence/IT stocks. 

The rush has begun.

gg


----------



## qldfrog

Muckman said:


> Not sure if your understanding what I’m talking about.
> Gas to liquid fuels are already underway and being used.
> Synthetic fuels are a replacement for oil based fuels but much cleaner. So all your cars, trucks,plains, busses, ships, and so on still go on. On a marketing point of view it’s just a name change. You will still be going to the same service station as you normally go to. It just won’t be called diesel. It will be renamed as something like E-diesel or something.
> I can’t help think that this covid lock down has some part to play in all this because they already have announced in Britain that they are thinking of using the down time to switch all the aviation industry to the new fuel platform.
> 
> NASA has been trialing synthetic jet fuel for over 7 years now. It’s safe for aviation to use and it’s cleaner and it’s co2 neutral. Zero sulphur.
> View attachment 106943
> 
> 
> 
> Even my engine oil is made with co2 neutral
> No one makes engine oil out of crude anymore it’s a terrible substance to work with and needs a lot of processing to clean it up.
> Synthetics are far cheeper and cleaner
> 
> View attachment 106944



Co2 neutral? No way, i do not really see how it is cleaner, we will need to use a lot of energy to go from gas to liquid, longuer chains of aromatics etc or even a very basic one will need energy
I never really understood the gas attraction vs co2
Yes less sulfur etc so cleaner for the air, but the energy released by breaking chxxx into co2 and h2o remains the same
And petrol is already liquid wo having to be compressed.
Petrol might be on the way out but gas is just an in between trandition phase
H2 made by solar sure, but not yet there by far


----------



## rederob

A bit of gap between posts here, but WTI just broke through resistance.



While US drillers have added the odd handful of rigs per week over recent months, Canadian oil and gas drillers last week added bumper numbers.  I have not looked for a reason, so if others know, please add.


----------



## Smurf1976

Muckman said:


> Not sure if your understanding what I’m talking about.
> Gas to liquid fuels are already underway and being used.



In physical sense GTL is a thing certainly.

From a financial market perspective though, and this is my point, liquid fuels are what runs pretty much every aircraft, car, motorbike and so on on the planet. No chance that demand's disappearing overnight unless we're talking about lockdowns etc.

If someone could find a way to turn clay into gold then the product of that process would be priced according to the gold price not the clay price.

Much the same with GTL - from a financial perspective it's effectively a source of oil given that its outputs are direct substitutes, used without any modification of equipment, for oil and things derived from it. A barrel of diesel fuel produced from gas would fit much better into the "oil" classification than it fits into the "gas" classification given that it's a liquid at ambient temperature and pressure.

My point's a financial one not a chemistry or engineering one. There's an ongoing demand for oil-like things for quite some time yet be they produced from actual crude oil or some other feedstock.


----------



## Garpal Gumnut

Smurf1976 said:


> In physical sense GTL is a thing certainly.
> 
> From a financial market perspective though, and this is my point, liquid fuels are what runs pretty much every aircraft, car, motorbike and so on on the planet. No chance that demand's disappearing overnight unless we're talking about lockdowns etc.
> 
> If someone could find a way to turn clay into gold then the product of that process would be priced according to the gold price not the clay price.
> 
> Much the same with GTL - from a financial perspective it's effectively a source of oil given that its outputs are direct substitutes, used without any modification of equipment, for oil and things derived from it. A barrel of diesel fuel produced from gas would fit much better into the "oil" classification than it fits into the "gas" classification given that it's a liquid at ambient temperature and pressure.
> 
> My point's a financial one not a chemistry or engineering one. There's an ongoing demand for oil-like things for quite some time yet be they produced from actual crude oil or some other feedstock.



You took the words out of my mouth.

The USA is heading in to chaos and the geopolitical situation with China, N Korea and the Islamic Countries is darkening

Oil and gas, available and with the infrastructure in place, will remain the primary fuel for military and civilian use worldwide.

I’m ramping up the oilers in my SMSF.

gg


----------



## Dona Ferentes

reports of its demise are premature (I know it's LNG not oil, but ...)



> Asian spot prices for liquefied natural gas (LNG) jumped nearly 50% this week to a record high, based on available data going back to 2009, as *logistical issues *disrupt supply to the world’s top consuming region.
> The average LNG price for February delivery into northeast Asia LNG-AS is estimated to be around $21.45 per million British thermal units (mmBtu), according to pricing agency S&P Global Platts, up 47% from the previous week ($14.60)











						GLOBAL LNG-Asian spot prices rise to record high
					

Asian spot prices for liquefied natural gas (LNG) jumped nearly 50% this week to a record high, based on available data going back to 2009, as logistical issues disrupt supply to the world's top consuming region.




					www.reuters.com
				




Plus, there were reports that  an Australian cargo of LNG from the $US54 billion ($70 billion) Gorgon plant in WA reportedly changed hands over the weekend for an incredible price of about $US37 per million British thermal units, more than 18 times higher than the price about six months ago.

- _logistical issues? Not enough thermal coal, perhaps_


----------



## Smurf1976

Dona Ferentes said:


> reports that an Australian cargo of LNG from the $US54 billion ($70 billion) Gorgon plant in WA reportedly changed hands over the weekend for an incredible price of about $US37 per million British thermal units



Well that leaves me wondering what's going on?

On an energy equivalent basis that's equivalent to about $215 per barrel of oil.

Whoever wanted that gas must be (1) desperate for supply (2) needs it "as gas" and can't substitute oil or coal.


----------



## Dona Ferentes

Smurf1976 said:


> Well that leaves me wondering what's going on?
> 
> On an energy equivalent basis that's equivalent to about $215 per barrel of oil.
> 
> Whoever wanted that gas must be (1) desperate for supply (2) needs it "as gas" and can't substitute oil or coal.



and as its Gorgon, it's probably on long term contract. Got an offer they couldn't turn down <_ Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and JERA (0.417 percent)_ > and, likely, another tanker on its way soon.

  ... so, the lights going out all over Asia? Colder than usual winter and disruption to Malaysian LNG production, according to Reuters


----------



## qldfrog

Dona Ferentes said:


> and as its Gorgon, it's probably on long term contract. Got an offer they couldn't turn down <_ Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and JERA (0.417 percent)_ > and, likely, another tanker on its way soon.
> 
> ... so, the lights going out all over Asia? Colder than usual winter and disruption to Malaysian LNG production, according to Reuters



Actually both Asia and Europe are experimenting colder than usual winters snows everyxhere etc.as it conflicts with the global warming narrative, no news here, but yes oil and gas usage going higher and higher there


----------



## over9k

Ok couple of big posts coming up as I've been moving into a lot more oil & energy trades of late so here's the culmination of several weeks' of research:



In 2019, coal was the principal fuel for chinese electricity generation, providing more than half (60%) of China’s electricity generation. In that same year, over 89% of Australia's coal exports went to china.

Although changing natural gas prices and renewable costs generally produce proportional shifts in the electricity sector’s fuel mix, regionally-specific fuel dynamics and *resource availability* are also important factors.

Decreases in natural gas prices produce the largest changes in the generation mix. Natural gas is relatively insensitive to changes in renewable costs in China, and the largest driver of natural gas generation remains natural gas fuel prices.

Solar could become the predominant source of electricity generation by 2050 if renewable costs are low and natural gas prices are high or at the reference level, however:





A combination of geographic unsuitability plus significant natural gas reserves (which are yet to be extracted) makes this unlikely.

At the 2019 Paris climate change conference, China also pledged to reach peak carbon output by 2030, however, China has nearly 250 gigawatts (GW) of coal-fired power now under development, *more than the entire coal power capacity of the United States.* So when Xi says China will peak…what he is preparing us all for is a massive (they never stopped) and continued investment.

Our Chinese friends now have 97.8 GW of coal-fired power under construction, and another 151.8 GW at the planning stage. And so while some poor sap was penning Xi’s carefully crafted speech to the UN, Xi and his underlings were busy. Busy financing and building out what is likely to be the worlds most impressive global energy infrastructure.

Just this year plants accounting for some 17 GW began construction in China. To put this into context this is *more than the total amount approved during the previous two years*. But they are not only investing in their backyard. Nope… according to a Boston University database they have made more than $244 billion in energy investments abroad since 2000 with the bulk of that in recent years going into oil and gas.

(Yeah not wind, solar or renewable and recyclable Unicorn farts. Good 'ol O&G…)

A healthy $50 billion of has gone toward *dirty old coal*!

They’ve done all of this, and will continue to do more, while paying lip service to “carbon emission reductions”. That our western leaders are as gullible as they are is a tragedy but simply ensures the west is going to end up being a source of houseboys for their Chinese overlords by the next decade.

As mentioned by the institute for energy research:

_These Chinese corporations are building or planning to build more than 700 new coal plants at home and around the world, some in countries that today burn little or no coal, according to tallies compiled by Urgewald, an environmental group based in Berlin. Many of the plants are in China, but by capacity, roughly a fifth of these new coal power stations are in other countries. In total there are 1,600 new coal-fired plants planned or under construction in 62 countries, according to Urgewald’s tally, which uses data from the Global Coal Plant Tracker portal. The new plants would expand the world’s coal-fired power capacity by 43 percent. _

https://www.instituteforenergyresea...ement-china-india-continue-build-coal-plants/

So the question becomes, why?

Well, there's more to it than economics. Specifically, it's about the aforementioned *resource security: *






As you can see, shipping coal from australia is nowhere near the gauntlet that has to be run from the persian gulf all the way to east asia - to get an oil tanker from saudi arabia to china you have to pass no fewer than 11 different countries, all of which hate you, and keep _several _major shipping choke points/routes open all at once, and do so thousands upon thousands of KM from home.

Oil tankers are a lot of things, but nimble a 500,000 ton tanker is not:




And when they _have _to pass through _multiple_ choke points that can be closed without even so much as needing a navy, straits just a couple of dozen KM wide where just a handful of beach-launched missile batteries (even 100 year old artillery guns have that kind of range) are enough to cut almost the entirety of your oil supply off literally over night:














You can see why china, and indeed, all of asia, is so desperate to get off oil dependence. The problem is that, as I showed before, renewable energy just doesn't work in asia - the climate simply doesn't give them enough wind/sunlight in order for renewables to be able to do the job, which means that coal is the next best option.

Even if that means coal dependence, coal's a hell of a lot more secure/easier to get from australia than oil is from the persian gulf.

The middle-east is also acutely aware of this fact and it is why Iran's Revolutionary Guard Corps troops on monday seized a south-korean oil tanker and forced the vessel to a nearby Iranian port in order to hopefully make the koreans release billions of dollars of Iranian assets frozen in South Korea under US sanctions:









						South Korea presses Iran over seized oil tanker as Gulf tensions rise | DW | 07.01.2021
					

Iran's seizure of a South Korean-flagged oil tanker comes after Tehran urged Seoul to release billions of dollars of Iranian assets frozen in South Korea under US sanctions.




					www.dw.com
				




In Other Non-OECD Asia, the main dynamic driving the region’s generation mix is a three-way competition between coal, natural gas, and renewable technologies. Without a unitary emissions policy in this region, natural gas and renewables are only *economically* competitive with coal generation when their respective fuel prices and capital costs are low. Decreasing natural gas fuel prices by 50% by 2050 makes natural gas the primary fuel for electricity generation in the region. Conversely, raising natural gas fuel prices, particularly when combined with lowered renewable capital costs, raises the aggregate generation share of solar, wind, and hydro technologies to 61%, more than double the Comparative Reference case levels (29%). Solar resources are generally the most economically competitive and available renewable technology in this region. Unlike China, however, this region can develop economically attractive hydro resources to help balance intermittent generation produced from wind and solar technologies.



			https://www.eia.gov/outlooks/ieo/pdf/IEO2020_IIF_Asia.pdf
		



So in other words, even now, renewables _still _aren't _economically _competitive with oil, but it isn't _economics _that's driving asia's energy policies, so we can expect endless subsidies for basically everything except oil (and obviously the more secure the energy type the more it will be favoured) until _some _form of secure energy becomes _economically _viable in asia, but simple geography (climate) means that that is still a _long _way off.

It actually looks like it's going to be coal that's the "transition" energy production fuel between oil & renewables as whilst coal isn't great from a supply security perspective, it's still a hell of a lot more secure than oil.

It also explains why collective governments throughout asia (china especially) are throwing everything including the kitchen sink at electric car production as electric cars can indirectly run on the much more supply-secure coal whereas ICE cars cannot.

But even if we take the whole energy-security question out of it completely, they still have a major problem just producing enough energy in the first place even now, which I'll cover in the next post.


----------



## over9k

So if things weren't bad enough when your energy supply isn't secure, imagine if you couldn't keep up with energy demand even when it _is: _







__





						Bloomberg - Are you a robot?
					





					www.bloomberg.com
				




_China’s roaring industrial rebound from the pandemic has an unforeseen consequence -- the surge in power demand has left factories, office buildings and street lights in some areas straining under an electricity shortage.

The country’s local governments are cutting power to some industrial and commercial customers in several provinces. State-owned companies are sending an army of workers to inspect power lines, and authorities are urging coal miners to produce more.

But that’s done little to quell the stream of domestic media reports on struggling cities. With the rest of the world growing ever-more dependent on China’s medical equipment and electronics exports as their pandemic-ravaged economies suffer, the focus abroad is also increasingly turning to the Asian manufacturing giant’s power supply.

“As the global economy recovers, it will be imperative for China to stabilize its power supplies,” said Rana Mitter, professor of Chinese politics at the University of Oxford. “There is a move in the West to re-shore supply chains and unreliability of power supply in China could be another motivation to do this.”

The world is relying on China’s factories like never before. As one of the first economies to emerge from a pandemic induced lockdown, and as a leading producer of protective gear and medical equipment, China’s exports have soared to record levels. That’s led to surging demand for power, with November consumption up 9.4% over the previous year, the highest level in more than two years.

On top of that, colder-than-normal weather is now adding to winter demand as people heat their homes, and ice is also wreaking havoc on grid infrastructure. Meanwhile, some parts of the country are curtailing electricity to keep emissions in check. That’s left some regions without enough power during peak hours, with two expected to have lasting shortfalls.

“Weather conditions for the following months will be the key factor to determine the scale of the outage,” said Hanyang Wei, an analyst with BloombergNEF. “Peak load would drop quickly if cold weather lasts for just a few days.”

This is all happening as coal, the fuel of choice for a majority of China’s power generation, remains in short supply. The government had limited imports to support domestic miners, and imposed an unofficial ban on Australian shipments amid a diplomatic spat. But domestic supplies haven’t risen as much as needed following a recent spate of deadly mining accidents.

That’s left the country grappling with surging energy prices. Local coal futures have soared to a record, while the costs for natural gas, another heating and power fuel, have also jumped. State-owned energy giants have gone so far as to warn firms against publicly discussing the supply-demand issue on concern prices will rise further, and the government has urged major mining regions to boost output.

Nearly all major cities are facing colder temperatures this winter, with some as much as 5 degrees Celsius below last year’s levels, Morgan Stanley analysts including Sara Chan said in a Dec. 23 research note. This is the main reason behind the surge in coal prices and is helping drive government intervention in power allocation.

In Hunan and Jiangxi provinces, power supplies have been cut to some industrial and commercial customers after demand rose at least 18% from a year earlier and transportation issues curtailed coal supplies, a National Development and Reform Commission official said Monday. Hunan’s power supply could be short by as much as 12%, according to BNEF.

The power crunch “will probably linger as an issue for a couple more months,” said James Stevenson, senior director for coal, metals and mining at IHS Markit. “When you get this short, really what you need to do is curtail demand, and that is what we are seeing.”

Big industrial users are on the front-lines of being cut off from electricity, followed by commercial buildings, in order to keep supply safe for residential consumers, according to BNEF’s Wei said. “Local industries will take a hit if the outage lasts for long,” Wei said._

Result?

Everyone are buying diesel (yes, *diesel*) generators to produce their own electricity as the grid simply can't provide enough of it even now:





__





						Bloomberg - Are you a robot?
					





					www.bloomberg.com
				




_A frigid winter is leading to power shortages in parts of China, driving up demand for diesel as factories rush to install generators to keep the lights on.

Some provinces have started rationing electricity to industrial and commercial users to make sure there’s enough power to heat homes during a colder-than-typical winter. That’s prompting factories to snap up portable generators and the diesel they run on to ensure their plants stay open to meet orders amid record-high exports from the country.

The Chinese meteorological authority earlier issued an orange alert nationwide - the second-highest level in its four-tier system - as a cold wave sweeps through the nation. With temperatures still expected to dip further, grid operators are prioritizing the supply of energy to homes and the community, leaving other customers to scramble for alternative power sources.

“Power cuts have brought us extra orders,” Huang Yu, a sales manager at Shandong Dianyuan Village Power Technology Co., a company that supplies generators of different sizes. “We have been quite busy since November, receiving non-stop orders from customers in Jiangsu and Zhejiang,” she said via phone.

The company, which has a wide range of generators including some large enough to power a small town, has sold more than 20 a day recently, more than triple the normal level, Huang said. Its social media account posted a video Dec. 17 showing trucks loading dozens of power generators getting ready for shipment to power-cut regions.

Wholesale diesel prices in China rose to the highest level since April, according to data from the country’s National Bureau of Statistics. Inventories of the fuel across the country fell 5.26% in the month to Dec. 25 to 20.76 million tons, according to information provider OilChem.

“If there is a shortfall in electricity, diesel is the most responsive energy to fill the gap,” Sengyick Tee, an analyst with Beijing-based SIA Energy said. “Even 0.5% of China’s electricity switching to power by diesel would make a large impact on diesel demand.”

China’s power demand has surged in the second-half of this year as its economy recovered from the pandemic and global demand for protective gear and medical equipment it produces soared. A colder-than-normal winter caused by a La Nina weather pattern added to that, boosting consumption by 11% in December, more than double the growth of a year ago, according to National Development and Reform Commission.

*Coal supplies have also been tight amid safety checks at domestic mines and import restrictions, *and natural gas has also been rationed to ensure supplies for heating. Governments cut electricity to some businesses in Hunan and Jiangxi provinces because of shortages, while Zhejiang officials also curtailed industrial power in order to meet emissions and efficiency goals for the five-year plan ending Thursday.

Beyond China, low temperatures are also affecting other nations across Northeast Asia. Japan’s spot power price extended its record-breaking rally as utilities struggle to keep pace with higher demand for heating, while South Korea is prepared to release state reserves of kerosene should supply of the heating fuel remain tight._






In short, climate change and economics might be what's driving the electric car and renewable energy phenomenon over here in the west where renewable energy is actually economically viable and we also actually care about the whole climate change thing, but in asia, it has absolutely _nothing _to do with _either_ of these things. They simultaneously have a completely vulnerable/insecure energy supply line and still can't produce enough power for themselves even when their supply _is _secure like it is now, let alone when it isn't.

You can also see how the moment any oil supply that has to transit the persian gulf/strait of malacca/sunda strait/lombok strait/the entire indonesia-timor-PNG-etc archipelago gets cut off anyone who produces oil anywhere else will be able to charge absolutely exorbitant prices as they'll effectively have the only deliverable oil supply left. This includes us in the west because the oil companies will just go hey, if you won't pay 4x the previous price (or whatever) then the asians will.

Until asia gets off its oil dependence, that is.


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## over9k

Smurf1976 said:


> Well that leaves me wondering what's going on?
> 
> On an energy equivalent basis that's equivalent to about $215 per barrel of oil.
> 
> Whoever wanted that gas must be (1) desperate for supply (2) needs it "as gas" and can't substitute oil or coal.





Dona Ferentes said:


> and as its Gorgon, it's probably on long term contract. Got an offer they couldn't turn down <_ Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and JERA (0.417 percent)_ > and, likely, another tanker on its way soon.
> 
> ... so, the lights going out all over Asia? Colder than usual winter and disruption to Malaysian LNG production, according to Reuters




Pure guesswork here:

Was it perhaps to refine some kind of daughter product that you can _only _derive from natural gas?




Other than that, the only other thing I could think of is what you already said - it _having _to be a gas, i.e for gas powered engines or turbines or something.


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## Smurf1976

over9k said:


> Ok couple of big posts coming up as I've been moving into a lot more oil & energy trades of late so here's the culmination of several weeks' of research:



Agreed with all you've said. "Like" x 10.

Aiming to add to it with the following, not play it down etc so don't misinterpret..... 

This isn't new however.

Some random examples from the past:

France is well known for having so many nuclear plants, indeed they have a higher % of power from nuclear than anyone else. Less well understood is why they were built - in short yes France had electricity before they had nuclear but they'd reached a conclusion that the supply of oil from the Middle East was at risk. With few resources of their own, they dived head first into nuclear as the solution.

Japan much the same as a country with few resources. That Japan turned to Australia to supply coal and effectively initiated the global LNG business, and also aggressively pursued nuclear, was due to the same concerns about the ongoing supply of oil that was at the time generating virtually all of Japan's electricity.

That there is an International Energy Agency is a direct consequence of past concerns about oil supply disruption. Its formation has nothing at all to do with climate change, that concern coming later.

The US Strategic Petroleum Reserve was a direct response to actual supply cut-off from the Middle East. Likewise there's quite a few circa 1980 pop culture references to the "energy crisis" - it gets a passing mention in a few Hollywood movies from that era in a matter of fact sort of way, it had entered the public consciousness by that point enough for a few movie scriptwriters to reference it.

Closer to home, Torrens Island power station in SA was very nearly converted to coal due to concerns about oil and gas supply security and that it was too precious to burn for electricity. Yep, SA very nearly had a coal-fired power station 15km from the Adelaide CBD.

Perth actually did it at Kwinana, an industrial region in the Perth metro area and the site of the state's then largest power station. It was built to fire oil only but due to supply security concerns 4 of 6 boilers were adapted to also use coal and in due course all were set up for gas as well. SECWA, the state utility which owned the plant, received considerable attention internationally for the success of that - mostly in regard to how quickly they did it, that it was triple fuel not just two, and that it was done by superimposing a coal setup over an oil-fired plant at a site that really wasn't at all well suited physically. It was the model on which many such conversions overseas were subsequently based. FWIW there's another member of this forum with far more intimate knowledge of it than me.

Central Australia to Darwin gas pipeline was built due to concerns about fuel oil supply to power stations, noting that the NT was 100% reliant on oil for power prior to the pipeline commencing operation in 1986. Coal was also seriously considered, it was that or gas in practice.

In Victoria there was a pilot plant actually built by Japanese interests to turn brown coal into oil. It went beyond lab scale, it was actually in production to get the process fully sorted, and whilst no longer in use it's still sitting there today.

Tasmania circa 1987 the state government took a pretty serious look at the viability of oil production in the state based on the numerous known shale deposits, one of which saw limited production in the early 20th Century. In short it was technically viable to produce petrol, diesel, LPG, bitumen and so on but the economics didn't stack up. Since then various private companies have done essentially the same thing, some digging a few holes in the ground, and reached the same conclusions. Actually the state has a type of shale named after it - Tasmanite shale is a thing yes, it's real, that's what it's called.

The idea of converting cars in Australia to use LPG came about due to fuel supply security concerns, any benefit to the environment was incidental to that primary reason.

There's some more controversial ones I've left out but I've made the point. There's an awful lot of organisations who've held very real concerns about this for a long time now and just how completely stuffed we are if the oil does stop arriving for whatever reason. Thus far it hasn't happened but then someone could have said that about pandemics barely a year ago. At some point if it does happen well then....

Something I'll add is about governments. I say that because when a crisis arrives, governments tend to get involved. Looking at the past, well one company that I'm aware of having found itself with no fuel was in fact a company producing large volumes of crude oil but which also had other industrial operations. Yep, government directed where it was going and that wasn't to the company's own use. Right or wrong, it is what it is, trade accordingly.


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## Smurf1976

Whilst the issue here is with LNG, it will (already is) drive a shift in favour of oil as a fuel where that can be substituted with consequent impacts on the oil market.

Not all uses of gas can switch to oil, but between heavy industry and power generation there's a significant ability to substitute heavy fuel oil (#6 fuel oil), light fuel oil (aka diesel), kerosene or LPG in lieu of natural gas.









						Record LNG prices push South Asia nations to ration gas, seek other fuels
					

* Industry users seek alternative fuels such as LPG, fuel oil




					www.reuters.com
				




It's a somewhat bizarre situation and the exact opposite of what's normal but it is what it is.


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## Smurf1976

Another one, this time in Iran (of all places.....).









						Blame Bitcoin? Iran hit by blackouts and smog amid electricity production woes
					

Power-heavy cryptocurrency mining and a shortage of natural gas have been blamed for outages and pollution amid COVID crisis




					www.timesofisrael.com
				




If the smog as shown is really due to emissions from power stations then I do ponder what on earth they're burning to do that. I've seen rather a lot of power stations, including those without any emissions controls, and none pollute on that scale so whatever they're burning must be something pretty shocking. Bitumen? Garbage?

Nonetheless, sticking to the financial aspects well there's a pattern emerging here of yet another place with an energy supply problem. China, France, Japan, Iran all with power problems so it's starting to become a theme.

Of relevance to the oil price is that oil is in most places the last resort option for electricity generation. Oil's what you burn in lieu of normally much cheaper coal or gas when supply runs short. Plus dedicated oil-fired plant is what gets run when there's nothing else left that isn't already maxed out.

It's also a warning that energy infrastructure in general is stretched at the moment and I come back to my previous point about oil production capacity. Whatever the actual limit on production is, it's almost certainly lower now than it was before the pandemic hit. The rig count in the US is still 60% down from pre-pandemic levels so that's not at all sustainable.


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## frugal.rock

Smurf1976 said:


> It's also a warning that energy infrastructure in general is stretched at the moment and I come back to my previous point about oil production capacity. Whatever the actual limit on production is, it's almost certainly lower now than it was before the pandemic hit. The rig count in the US is still 60% down from pre-pandemic levels so that's not at all sustainable.



And that's why I have a love hate relationship with this forum....
Thanks for the update Mr Smurf.


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## jbocker

...and the oil price keeps creeping up... around $47.60 this time last month, touching through $55 last night. 
The Green Biden Bogeyman hasn't stomped on it yet.


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## Smurf1976

jbocker said:


> The Green Biden Bogeyman hasn't stomped on it yet.



I'll avoid political comment as such and simply note that any US President is far more likely to influence production than consumption in the short to medium term at least.

Short of grounding aircraft and stopping anyone driving, there's not much they can really do to influence the consumption end right now. Any impact there would be a very long term one - encouraging a shift to electric vehicles and things like that.

On the production side though, well they can certainly impose tighter regulations in the industry, not make Federal lands available and things like that. Doing so will push production down not up.

The previous US President was at an extreme in terms of being favourable to production. Anything this one does can't realistically exceed that, it can realistically only be somewhere between the same and less favourable to production in practice.


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## over9k

Most of this is states' rights stuff though. Think about the land rights texas has vs california. Texas has wells all over the place on all kinds of private property as in texas you actually own the stuff below the surface of your land down to a certain depth as well, hence the massive energy production. 

In california meanwhile, producing energy is usually illegal.


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## rederob

Comfortably over support again:



Last week's Baker Hughes rig count added 10 more horizontal drillers, most in the Permian.  The USA still has less than half the number of horizontal rigs drilling than a year ago, so it's going to be a t least a year before it gets back to 2019 production levels:
US Crude Oil Field Production (10.90M bbl/d for week of Jan 29 2021)​


The EIA expects crude oil production to decline again in 2021, averaging 11.1 million b/d before increasing to an annual average of 11.5 million b/d in 2022, as prices and drilling conditions become more favorable.  I don't think the US oil market acts so evenly, and expect that once POO sits comfortably above $60/bbl the ramp up in drilling will easily add over 1Mbbl over the following 12 months.  A possible fly in the ointment is that field decline rates have not been adequately factored in, meaning that it is possible that the full effect of fewer rigs plus field decline rates is yet to bite.


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## jbocker

@rederob  I love your chart and I watch it with interest. I did borrow it and added some prices to a few ASX stocks at the times around the $52 WTI support line. Asking myself is there  any 'correlation'. So firstly forgive me for borrowing your chart and secondly for any probable invalid attempt trying to correlate price to WTI, in this instance to look for any shortfall in stock pricing.
Anyway I thought WPL was interesting it may have some way to go, STO and BPT probably had many other things rattling their price at those times for any correlation to be valid.
I appreciate this is a crude match up attempt and that there would far better overlays of Company price data to WTI. (which I have not yet looked for.


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## Smurf1976

rederob said:


> A possible fly in the ointment is that field decline rates have not been adequately factored in, meaning that it is possible that the full effect of fewer rigs plus field decline rates is yet to bite.



Without wanting to be political as such, the change of President may also have some implications.

The Trump administration substantially reduced environmental regulation to a point less stringent than that applied under any previous President, either Democrat or Republican, in many years.

My point there is not partisan politics but simply observing that for many oil projects the break even cost will have gone up. Arguments for or against such regulations aside, compliance doesn't add to profit, if it did then they'd do it anyway, and usually adds to costs in some way.


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## over9k

There's also the keystone pipeline getting KO'd. GUSH ran in response.


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## over9k

jbocker said:


> @rederob  I love your chart and I watch it with interest. I did borrow it and added some prices to a few ASX stocks at the times around the $52 WTI support line. Asking myself is there  any 'correlation'. So firstly forgive me for borrowing your chart and secondly for any probable invalid attempt trying to correlate price to WTI, in this instance to look for any shortfall in stock pricing.
> Anyway I thought WPL was interesting it may have some way to go, STO and BPT probably had many other things rattling their price at those times for any correlation to be valid.
> I appreciate this is a crude match up attempt and that there would far better overlays of Company price data to WTI. (which I have not yet looked for.
> View attachment 119688



Just FYI on this one: I think you'll find that the points you've noted on this chart are at or are very close to the breakeven production price for a lot of shale wells. There was a big carryon not long ago about how oil had finally cracked the breakeven production price for shale wells/that this would mean a whole ton of wells could be brought back online, i.e that this was the beginning of the recovery for the oil sector.

I'm sure you'll find it if you run a search of some of my previous posts.


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## jbocker

over9k said:


> Just FYI on this one: I think you'll find that the points you've noted on this chart are at or are very close to the breakeven production price for a lot of shale wells. There was a big carryon not long ago about how oil had finally cracked the breakeven production price for shale wells/that this would mean a whole ton of wells could be brought back online, i.e that this was the beginning of the recovery for the oil sector.
> 
> I'm sure you'll find it if you run a search of some of my previous posts.



That's cool. I can understand the $52 support line now. I was just curious to know if some ASX 'hydrocarbon' stock prices were at a 'similar price' coincidently at those same times points 1 to 4 and therefore at what price were they at point 5. WPL interesting in it being short of the price, but it is a long bow to draw a conclusion from, that the price would repeat.


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## rederob

jbocker said:


> That's cool. I can understand the $52 support line now. I was just curious to know if some ASX 'hydrocarbon' stock prices were at a 'similar price' coincidently at those same times points 1 to 4 and therefore at what price were they at point 5. WPL interesting in it being short of the price, but it is a long bow to draw a conclusion from, that the price would repeat.



*Here's what the Dallas Fed regularly produce:*





*The concept of "breakeven" is, however, a bit rubbery, as explained in the linked article.  For example, it may not necessarily include all the costs of doing business, as shown below:*





*I don't believe the Dallas Fed use "full cycle costs" in their breakeven, as this chart shows from them shows costs over time:*



*A more complete picture of LTO economics is found here.*


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## over9k

Mmm but if you're ever in doubt about the costs of production, I feel like a support price would be a very good thing to look for.


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## Smurf1976

A lot also depends on existing infrastructure.

Drilling a new well that's right next to existing oil and wet gas pipelines which have unused capacity is a very different proposition to drilling the same well but having no such infrastructure nearby. It substantially alters the economics.

Cost of capital is another factor. If investors start expecting higher returns and/or interest rates go up then so does the price required for it to be worthwhile. That may seem obvious but I'll note that there are certainly people in high places who've overlooked that one in the past.


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## over9k

I wouldn't expect that any time soon though smurf, the only conversation they're having at the moment is about how much more money they should print. 

And no, this is not going to spike inflation & therefore interest rates. Things will deflate soon as production can actually come back online for, well, everything.


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## over9k




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## over9k

Peter Zeihan's latest newsletter:




If there is one thing most Americans agree on in this age of social media screaming, it is that they want the United States to get out of the Persian Gulf. The challenge is finding a way to do so that also avoids sucking America back in in a few years.

There are two general approaches to consider:

The first strategy is the one Biden's immediate predecessor, Donald Trump, attempted: appoint a strategic successor to manage the region. Trump decided the successor should be Israel. That…that was a poor choice.

Is Israel very militarily competent and _blam_-heavy for its size? Undeniably. But it is neck deep in managing its own micro-neighborhood of the Palestinian Territories, Jordan, Lebanon, and Syria. It cannot execute an American-style policy in the Persian Gulf that keeps the oil flowing while preventing Iraq from collapsing while keeping Iran down.

It is clear that at least to a degree TeamTrump grasped that Israel was not up to the task, so the administration worked to rig the game. Trump greatly intensified sanctions on Iran, largely preventing the Iranians from selling…anything internationally. An economic crash resulted. Trump also worked to build a coalition of Arab states to buttress the Israelis. That required Trump convincing the Arabs that they should recognize Israel as something other than the "Zionist entity" and treat it as an actual country that had an actual right to exist.

Trump met with some success and deserves some serious diplomatic kudos, but let's not get crazy. Consider the countries Trump flipped:

Morocco – a state that is literally over a continent away from the drama of the Persian Gulf.
Bahrain – an island statelet that has run out of oil and has but 1.6 million people.
The United Arab Emirates – a confederation of city states who collectively are _Iran's largest _(non-oil)_ trading partner_.
A coalition, yes, but not a strategically effective one. Strategically, Trump's achievements changed little.

The second option for American extraction from the region is the one selected by Trump's predecessor, Barack Obama: establish a regional balance of power so the region's countries contain one another. Israel aside, consider the other major players:

Saudi Arabia, as the world's largest oil exporter and the keeper of the holy cities of Mecca and Medina, asserts that it should lead the entire region. That's an assertion which aggravates everyone, but in particular aggrieves…
Iran, the country with the largest population on the Persian Gulf, and whose dominant religion – Shia Islam – clashes with that of the Wahhabi Sunni Islam of the Saudis. Problematic for the Saudis, Shia Islam is practiced by the majority of people who live within 100 miles of the Persian Gulf's shores. Even Saudi Arabia itself has a large Shia minority.
But neither of these countries are the region's most powerful. That title goes to Turkey, a country which doesn't even border the Gulf itself. Turkey has the broader region's largest and most sophisticated economy, largest and most capable military, and a population slightly larger than even Iran.
The whole point of Obama's 2015 nuclear deal between the United States and Iran was to bring Iran in from the cold, enable it to economically develop, and re-establish Iran as a formal player in the Middle East space. Then, as the logic goes, Israel, Saudi Arabia, Turkey, and Iran would all counter one another, leaving the Americans to play an eclectic variety of Middle East-news-driven drinking games.



There was nothing wrong with the idea, but there was plenty wrong with the execution. The nuclear deal was (in)famously light on details of anything beyond the nuclear program itself. It didn't address Iran's paramilitary and assassination activities throughout the region, the status of Israel, or the religious splits among the region's populations the Iranians exploited as a matter of course.

Obama (in)famously found speaking with people – _any _people – tedious, and so tended to toss out grand ideas and then walk away forever. Establishing a regional balance of power in which you do not plan to actively participate requires a _lot_ of upfront work and a _lot _of lengthy conversations. Under Obama that just didn't happen. Far from generating a balance of power, the Obama plan was little more than an unstable deal which made an unstable region even more unstable.

My goal here isn't to condemn the strategies of both Trump and Obama (that's more of a side bonus), but instead to highlight that the Middle East is difficult. My point is that for the approaches the pair of American presidents chose, they simply did things wrong.

For the successor strategy to work, Trump should have picked a different country. Israel lacks the military capacity to control its own neighborhood, much less the distant Persian Gulf where the populations are four times as large. Saudi Arabia might look good on paper, but it is broadly militarily incompetent. The _only_ regional power that could even theoretically fill the role would have been Turkey, and America's relationship with the Turks under Trump (and under Obama) descended into such a deep freeze to the point that the two are no longer even functional allies.

For a balance of power strategy to work in the Persian Gulf, it must be like all the other successful balances of power throughout human history. It _cannot be purely military_. There must be excessive entanglement on multiple fronts. There must be an economic angle. A political angle. A diplomatic angle. For Obama's strategy to work, any Iran "deal" was really only the first baby step. He would then have had to build relationships _among_ the regional players. That'd require some seriously uncomfortable diplomacy not simply with Iran and Turkey, but also Saudi Arabia and Israel. That would require a lot of political capital and even more face time. Considering how much Obama loathed speaking to people, especially about uncomfortable issues, it’s a minor miracle he made it as far as he did in the region.

So now we get to try this again with a new president: Joe Biden.

Believe it or not, there may be some room for progress – in part because of the efforts of Biden's predecessors.

As part of Trump's "maximum pressure" campaign to crush Iran, the Iranian economy has been absolutely devastated. The Iranians cannot even sell pistachios any longer, to say nothing of large-scale oil sales. With Iran proving to be an unreliable oil supplier, traditional customers like Italy, Greece, India, China, Korea, and Japan have all turned elsewhere for crude. Then COVID reduced global oil demand, crushing Iranian finances. No oil income means the Europeans have zero interest in participating in a revised nuclear deal because there is literally nothing in it for them. No oil income also means Iran has proven unable to sustain many of its paramilitary efforts in Lebanon, Syria, and Iraq. Iran hasn't been this weak since the rise of the ayatollahs in 1979.

America has changed as well. Politically, there is no longer an American faction pushing for deep regional involvement. While the shale revolution was little more than a glimmer in some oilmen's eyes when Obama stepped into the White House the first time, twelve years later the United States is functionally energy independent. The energy cord has been cut. The Forever Wars are…over. Both Americ_a_ and America_ns _can tolerate a far higher degree of chaos in the Persian Gulf than they previously could.

Which means TeamBiden might actually have a third option that hasn't existed since the early days of American involvement in the region in the 1950s. To simply leave.

America will still play at the margins. Just because the United States doesn't need a stable global oil market doesn't mean having a knife to the region's pulse isn't useful. So, Biden has already announced it is maintaining every speck of the sanctions Trump enacted. If there is to be a new deal, TeamBiden has made it clear they won't be following the Obama script because Biden's negotiating power is already far superior to that of _any_ of his predecessors. Nor is Biden playing favorites like Trump did; the new president has already cancelled advanced weapons sales to both Saudi Arabia and the United Arab Emirates (two states that were supposed to be at the core of Trump's Israel-coalition).

Consider what this means: The Israelis are appalled Biden is even talking about talking to the Iranians. The Iranians are appalled that Trump's exit hasn't ushered them back into the world. The Saudis are appalled they can't purchase weapons. Just a couple weeks on the job Biden has done something none of his predecessors would have dared: pissed off _everyone_ in the _entire_ region. It’s unclear if this general pissing-off effort is part of a broader plan, or nothing more than a series of tactical decisions TeamBiden believes are unrelated. It is also unclear whether it matters. And if it does matter, it’s unclear if the administration even cares.

Will that have consequences down the road? Certainly. But not for the United States, or at least not for the United States on anything less than a decade time scale. The global superpower has _barely_ been able to keep the region's many fires on smolder. No one else has within an order of magnitude the necessary power or reach to step in, suggesting flare ups will be the new norm. Fires in the part of the world responsible for the majority of globally traded crude oil will absolutely reverberate.


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## over9k

NYMEX now over 60:


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## rederob

With WTI now well above breakeven in the fracking patches you would think rigs would be mobilised in greater number.
Instead, North American numbers actually declined last week:


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## over9k

Energy/oil companies>crude oil etf's directly. I bought all three a couple of months ago so I'm currently wearing my smug face. We'll see how long they last though.

3x oil etf's were delisted a while back. They still haven't announced their return anywhere other than the ftse as far as I know.

Also:




No idea how much the snowstorm has played merry hell with (caused) all of this, but we'll see soon enough. I'm in it for the long term so continuing to hold.


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## BlindSquirrel

If Texas is frozen, WTI supply is offline, that should help lift price (all else being equal).


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## over9k

Mmm it dumps demand significantly as well though. 

Energy et al were on a solid uptrend beforehand so I'm not selling.


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## Smurf1976

BlindSquirrel said:


> If Texas is frozen, WTI supply is offline, that should help lift price (all else being equal).



Regarding the overall energy production situation in Texas:

A nuclear plant tripped offline.

Widespread reduction in wind and solar power generation due to the weather.

Some coal-fired power stations ceased operating due to coal stockpiles freezing up and becoming a solid mass. There are ways to stop that happening but wasn't done. 

Power production from natural gas fell in a heap and that was the largest cause of the widely reported electricity outages. In short, there simply wasn't enough natural gas available to fully operate Texas' gas-fired power generation facilities. Hence their output progressively rose as the weather cooled and then rapidly collapsed - that's what happens when you run out of gas. Gas production is reported to have dropped circa 40% meanwhile consumption increased dramatically = ran out of gas in the pipes basically.

Oil - every report I can find puts it in the 0.5 to 1.2 million barrels per day range for lost crude oil production. For refining there's a much tighter range of estimates around 3 million barrels per day for refinery throughput lost.


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## over9k

Yeah, but as if they're not going to build cold redundancy into the system now. 

This will simply never happen again. It's a golden buying opportunity. 


It also took a lot of microchip production offline as they had to close the factories/stop production. Same story there - as if they're not going to build some kind of redundancy and/or local power generation in now. 

The whole thing is a, er, storm, in a teacup.


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## Smurf1976

over9k said:


> This will simply never happen again. It's a golden buying opportunity



Last time it happened, 2011, they did think it would happen again - just didn't actually do much about it.

A lot will come down to one business group versus another as well as politics. Those who'd spend $ billions to avoid it happening aren't the same people losing $ billions when it happens. Depends who has the upper hand politically.


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## over9k




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## qldfrog

Smurf1976 said:


> Gas production is reported to have dropped circa 40% meanwhile consumption increased dramatically = ran out of gas in the pipes basically.



the irony being: I have read that the gas production fall was due to this "non critical" area of the grid being subjected to rolling blackout..talk about idiotic measure..obviously, you can cut energy producers for a few minutes wo issues, but not hours on end


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## BlindSquirrel

Smurf1976 said:


> A lot will come down to one business group versus another as well as politics. Those who'd spend $ billions to avoid it happening aren't the same people losing $ billions when it happens. Depends who has the upper hand politically.



This is Texas we're talking about. 
If the Govmint pays for anything it's automatically going to have the state fall under socialist rule...


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## rederob

Great article on present state of play is here.
Very much a "_watch this space_" for covid related global demand rebound.

My  take on the trend is below:



It will be interesting to see what the Baker Hughes rig count has for us this week, as for most of the past few months slow and steady numbers of fracking rigs were returning, the majority to the Permian region which has been hardest hit by adverse weather.


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## over9k

Rob - are you a technicals/algorithms trader?


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## over9k

Need to find some data on what oil wells are coming back online soon. It might be time to buy UCO.


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## over9k

Snowstorm KO'd demand for a bit. Nothing to worry about - plenty more rigs to come online yet.


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## rederob

What's interesting about the recent rig count (below) is that POO at $60 is not generating a mass return to fracking.  Also, Canada got in early with a return to drilling, but maybe the financial returns have not stacked up as numbers declined markedly last week.




Pricewise POO is very much within its trend channel from April last year:



			https://www.tradingview.com/x/ZkxXPuGL/


----------



## over9k

Too many unforeseeable events possible yet to be worrying about tech analysis man. We're nowhere near normal market conditions.


----------



## rederob

over9k said:


> Too many unforeseeable events possible yet to be worrying about tech analysis man. We're nowhere near normal market conditions.



That applies to every day of the trading week.
Oil prices will more likely rise over coming months, but on Monday it's a crap shoot.  And Tuesday as well.
Furthermore, whether you think so or not, technical indicators are called that because they have a track record of "indicating" a most probable movement.
In any case, I have simply mapped the "trend," which has a $25 range, so we are not talking rocket science.


----------



## Smurf1976

rederob said:


> What's interesting about the recent rig count (below) is that POO at $60 is not generating a mass return to fracking. Also, Canada got in early with a return to drilling, but maybe the financial returns have not stacked up as numbers declined markedly last week.



A possible issue there is that the cost to drill is itself highly variable.

Drilling rigs and crews to operate them are a market in themselves which goes up and down like other markets. At least some rigs have probably been scrapped and experienced workers permanently left the industry with the downturn, available capacity to drill is almost certainly lower now than it was pre-pandemic.

Cost of all materials to drill and subsequently develop the well.

Cost of finance is a big one.

Regulation's another one. I don't want to make a political comment as such but in the US context the present administration is going with stricter regulations compared to the previous one. Compliance with rules usually costs at least something.

Oil company managers are humans and at least some have probably bought into the "oil demand is falling in a heap quickly and permanently" line of thinking. Rationally no, it's clear that for the medium term demand exists, but there's a definite theme around to that effect and it's probable that some are reluctant to commit to new projects as a result. There's plenty of past precedents for senior managers of businesses getting caught up in that sort of thing after all, including within the oil industry, it wouldn't be the first time it happened.


----------



## frugal.rock

Smurf1976 said:


> Cost of finance is a big one.



Finance to oil/petroleum industry appears to be considering environmental/ carbon concerns moving forward.

I believe current conditions are the only thing stimying these concerns for the time being.

Will be a much bigger issue further down the track imo.


----------



## rederob

Exactly a year ago WTI broke above long term support after a calamitous pandemic collapse.
In January it broke through resistance, and since then has remained true to trend.
The next level of resistance doesn't appear far off but, given we were at the same price 2 months ago, progress from here may well drag out until demand perks up.  Typically US driving season - a few months away - brings that on.  And given Americans are now getting over covid via high vaccination rates, internal driving holidays could reach their highest ever levels.



*The drilling rig count suggests elevated prices are not adding much:*



*As a result, US production remains flat:*


----------



## rederob

Another month passes and POO keeps climbing, while sticking close to its median price on trend:



Today it reached its highest price since 24 October 2018 and still seems to have petrol in its tank... just as US driving season is underway and Americans are back on the road in a big way,  shaking off their pandemic blues.
By my reckoning quite a few Oz oilers are underpriced given where POO presently is.  They all tightened their belts and are much leaner than before, so should turn some decent profits when next reporting, even BPT.


----------



## Smurf1976

rederob said:


> View attachment 123616




The big story in my view is that ~2 million barrels per day of production in the US has disappeared and thus far at least, there's no sign of it coming back.  

Either producers aren't confident of the price staying up or it's not high enough yet to prompt them into action with drilling etc.


----------



## frugal.rock

Smurf1976 said:


> The big story in my view is that ~2 million barrels per day of production in the US has disappeared and thus far at least, there's no sign of it coming back.



Biden seems to be a spanner in the works, there was some news about him hindering some future supply out of Alaska or something like that...general gist.

The US only just got to the stage of being a net exporter not long before covid, so net importer again for a while.

Should mean certain interests are willing to push the price up before re-establishing supply.
Meanwhile, Iran keeps having "accidents"... August at the earliest for it for any legal OPEC oil exports.
OPEC are now meeting monthly rather than the previous 6 monthly in an attempt to keep a finger on the pulse and definitely more inclined to make decisions...

I'm wondering if the market is getting ahead of itself  price wise. 
Is the price going up from speculation of demand return or actual demand? Mixed opinions.
For now, it seems the Saudi Prince is influencing things again.
I figure the key is probably India getting back to some normalcy and I imagine they will be the last big influence to do so.


----------



## Gunnerguy

frugal.rock said:


> Biden seems to be a spanner in the works, there was some news about him hindering some future supply out of Alaska or something like that...general gist.
> 
> The US only just got to the stage of being a net exporter not long before covid, so net importer again for a while.
> 
> Should mean certain interests are willing to push the price up before re-establishing supply.
> Meanwhile, Iran keeps having "accidents"... August at the earliest for it for any legal OPEC oil exports.
> OPEC are now meeting monthly rather than the previous 6 monthly in an attempt to keep a finger on the pulse and definitely more inclined to make decisions...
> 
> I'm wondering if the market is getting ahead of itself  price wise.
> Is the price going up from speculation of demand return or actual demand? Mixed opinions.
> For now, it seems the Saudi Prince is influencing things again.
> I figure the key is probably India getting back to some normalcy and I imagine they will be the last big influence to do so.



Due to fracking I believe the US has been a net exporter for several years (8+).
I’m not sure but I believe at current prices they still are.
Fracking was a game changer  a few years ago (technology).
For frackers to be positive they need about $50+ To survive.
GG


----------



## frugal.rock

Gunnerguy said:


> Due to fracking I believe the US has been a net exporter for several years (8+).



Fracking or no fracking, my memory has them only tipping the net exporter mark December 2019....  check it if you like.
Was following it closely at the time....



The missing actual figure above is around -5.2 ... unless I'm mistaken.
(Investing dot com has been a bit of a pain lately.... missing figures etc)
I'm vested 25% of my portfolio long on oil price rising.... hope I know what I'm doing.🤪


----------



## rederob

Below I have indexed some Oz oilers against POO, based on pre-pandemic pricing.
As you can see, none are close to matching the relative performance of POO after WTI prices fell off a cliff.


	

		
			
		

		
	
https://www.tradingview.com/x/NqScsuf1/
I don't know if @frugal.rock is long equities, or just POO. 
But as I posted earlier, our oilers have a lot of catching up to do, and they usually do *do*.


----------



## Gunnerguy

frugal.rock said:


> Fracking or no fracking, my memory has them only tipping the net exporter mark December 2019....  check it if you like.
> Was following it closely at the time....
> 
> View attachment 125488
> 
> The missing actual figure above is around -5.2 ... unless I'm mistaken.
> (Investing dot com has been a bit of a pain lately.... missing figures etc)
> I'm vested 25% of my portfolio long on oil price rising.... hope I know what I'm doing.🤪



Fair enough.
I was working in O&G for many years and I seem to remember very well in about 2015 or so seeing graphs of production and usage. I was long oil fir many years up to $150 then pulled out at about $60


----------



## over9k

I posted this over in the virus thread, seems relevant:


----------



## Smurf1976

frugal.rock said:


> Fracking or no fracking, my memory has them only tipping the net exporter mark December 2019.... check it if you like.
> Was following it closely at the time....



There's few complicating factors in it all which lead to different answers from the same data.

First and most significant is that some US data doesn't treat imports from Canada or Mexico as an import due to economic treaties. 

Some goes a step further and includes all production in the Canada and Mexico regardless of where it goes. So it's North American oil production in total not specifically the US alone.

Can't really argue with the above, it's factually correct so long as it's clearly stated that's what it is. Can be misleading though if it's not stated and the reader assumes it's US specifically.

Some does do something "dodgy" however and includes biofuels as oil. Now I don't care what anyone thinks about the merits biofuels but no, ethanol made from agricultural crops most certainly is not crude oil just as timber is not steel. An alternative to it arguably yes but not the actual thing itself.

How LPG is counted is another gotcha in all this. International convention is that propane and butane are "oil" and that applies regardless of the source of those gases (LPG being both a by-product of oil refining and of natural gas production). But then some put LPG in the "gas" category to confuse things....

Another gotcha is crude oil versus refined products and omitting one or the other from the data.

It's pretty easy to work out that New Zealand is a net oil importer for example but it's somewhat harder to crunch the numbers for the US due to the above. You need to be very careful as to what data's being used and make sure it's including everything that is oil and nothing that isn't.


----------



## frugal.rock

Thanks for your insights Smurf.
Your a proper Oil (data) Barron ! 😁

At the end of the day, I'm only interested to know if the POO is likely going up, down or sideways.
I was thinking if I consider that supply is relatively inelastic, then US crude oil inventories would be a good measure of US consumption.
As a basic metric @Smurf1976        is that a fair assumption?
Or would you or @Gunnerguy have other simple metrics I could use to speculate?
Cheers.


----------



## qldfrog

frugal.rock said:


> Thanks for your insights Smurf.
> Your a proper Oil (data) Barron ! 😁
> 
> At the end of the day, I'm only interested to know if the POO is likely going up, down or sideways.
> I was thinking if I consider that supply is relatively inelastic, then US crude oil inventories would be a good measure of US consumption.
> As a basic metric @Smurf1976        is that a fair assumption?
> Or would you or @Gunnerguy have other simple metrics I could use to speculate?
> Cheers.



A very stupid suggestions: i do not believe there is a pipeline bringing south america (Venezuela) oil to the US, so a clear indication of the US (more specifically north america) net importer exporter status should be available by tracking the oil tankers traffic?..and as you say, on the ground storage.


----------



## Smurf1976

frugal.rock said:


> Thanks for your insights Smurf.
> Your a proper Oil (data) Barron ! 😁



Oil baron - now there's an idea!  

The official EIA (US Government) data for import and export is here:





__





						U.S. Imports & Exports
					





					www.eia.gov
				




Trouble is, once you start looking at other EIA data for product supplied to consumers, US production, imports and exports well the basic problem is the figures don't add up. US production + net imports falls a long way short of consumption which is the problem.


----------



## frugal.rock

frugal.rock said:


> And so it came to be.
> A rather bullish night last night with a small sell down towards the close, but still closing up somewhere around
> + 1.8%
> 1 month chart, 5 hour bars
> 
> View attachment 125742



Looking good on the long stance.
US Job openings also up 12% for April also beating expectations by approximately the same amount.


----------



## frugal.rock

Quite happy with the way the POO is travelling uphill. No pointy stick needed.
Should see a decent rise tomorrow out of the ETF named OOO which is designed to follow the POO, as long as the cow on the left says MOO... 🐮


----------



## Gunnerguy

frugal.rock said:


> Quite happy with the way the POO is travelling uphill. No pointy stick needed.
> Should see a decent rise tomorrow out of the ETF named OOO which is designed to follow the POO, as long as the cow on the left says MOO... 🐮
> 
> View attachment 126038



Finally got some dividends from OOO.
The fund got really messy last year when the futures went negative.
As a ‘thematic emotional ETF investor’ I’m gonna stay in for another 3-6 month and see how it goes and then use my OOO capital losses against my other gains fir next FY.
Gunnerguy


----------



## rederob

WTI is likely to meander sideways and down after news came out last night that OPEC is considering easing supply caps.  Not a surprising outcome in that POO is at its highest price in almost 3 years, with long term resistance just $4 away:



On the other hand, the North American rig count is not showing the US shale producers returning at the rate anticipated considering the POO.
Even more surprising is that Canada has been outpacing the USA in adding rigs over recent weeks:


----------



## frugal.rock

Big dump last night around 7+%
My theory is OPEC news (or lack of) was already priced in, so jitters have arisen from Delta variant numbers.
Boing dropped nearly 5% adding weight to this theory.

Not sure what, if any, correlation the USD has, but I suspect it added momentum.

Oil chart was getting ahead of itself by any account also.
Was out of all oil trades last week missing the highs of last Monday....grrr.

While it's very tempting to consider buying today after our markets dump, but I will be waiting for the chop to subside and bullish direction to reconfirm.

Thinking it may be a week to 4 weeks for this to occur, maybe more? but will want all the applicable indicators to confirm, or at least getting close to it.

Am expecting for OOO to pay a very decent 2nd half divvy around September, regardless of what happens with poo, so that is my future trade planned to capture the anticipated re rise.


----------



## rederob

Failed to breach near term resistance a fortnight ago but sitting perfectly on the 14-month trend price:


High probability of continuation as US drilling rigs are not flooding back to their oil patches at +$70bbl prices:


----------



## frugal.rock

rederob said:


> High probability of continuation as US drilling rigs are not flooding back to their oil patches at +$70bbl prices



It was enough to spur some action amongst the shalers though.
Poo not bouncing around as much as I had hoped though, but it's not pushing far from the 70 mark either.
Hoping I am positioned to be able to take advantage of any price plunging again below around the 68 mark.


----------



## rederob

WTI still trending nicely, but our Oz oilers are not matching it!


Reiterating that drilling rigs are not flooding back to shale oil:


This bodes well for oil prices in the medium term.


----------



## frugal.rock

frugal.rock said:


> It was enough to spur some action amongst the shalers though.



Probably should have put "some"


rederob said:


> Reiterating that drilling rigs are not flooding back to shale oil



My comment was based off seeing a figure of 400% increase in shale something ?... I didn't clarify what, why etc my apologies

It may have been an increase of shale rigs, however if an increase of 1 rig was followed by 5 rigs, that's a 400% increase...impressive, but not!

Some explanation,
I am having issue with the data presentation by investing dot com.
In articles, it would seem data may be presented by a "machine" and data that is a rise is often shown as a red figure with arrow down etc.

The issues seem to be concentrated around negative figures,
 ie; a previous negative goes further into negative and they present it as a positive, showing it as green with an up arrow.
True only in a mathematical sense, reality is opposite.
I should alert them to it, because it's just dumb and misleading...


----------



## divs4ever

such interesting mathematical quirks are not limited  to oil data or Investing.com 

 ( not defending them just saying  be careful there are spin doctors at work everywhere )


----------



## frugal.rock

divs4ever said:


> such interesting mathematical quirks are not limited to oil data or Investing.com



Indeed, and as @peter2 has pointed out, many companies are reporting marvellous growth figures off the back of horrendous figures over the covid and or previous corresponding period. 
Separating the wheat from the chaff becomes the issue.


----------



## frugal.rock

So, it would seem new waves of covid ARE having an effect on the oil usage scenarios.
Watching this current downturn in poo closely...
A position opened up today, so will hold it open so as to be ready for entry back into OOO as that's the way I am trading oil, and as such, relying on the purported correlation and intention of the ETF. Trade intention (medium term up to 12 months)  to catch a rise in SP as well as expected half previous financial year distribution. 🤫


----------



## StockyGuy

Hmmm also watching the downturn for a buy opportunity.  Last price 62.25 USD.  Looking at chart over last couple years makes me glad I don't use leverage.  Given all the weirdness around this commodity, I doubt I could bring myself to buy any OOO for a long term contrarian position/gamble unless price is under 50 USD (and preferably well under).


----------



## divs4ever

PETRODOLLAR ON ITS LAST LEGS AS U.S. LOSES SUPPORT OF MAJOR ALLIES



 DYOR


----------



## Smurf1976

StockyGuy said:


> Given all the weirdness around this commodity



Something to always remember with oil is that if you look at a list of the largest companies by production volume then you're substantially looking at a list of governments.

Looking at the top ten, only ExxonMobil (6th place) and Chevron (9th place) are companies owned by shareholders and operated with the focus being to make a profit.

The rest are either outright government owned or are quasi-governmental enterprises in practice.

Saudi Aramco, Rosneft, Kuwait Petroleum Company, National Iranian Oil Company, China National Petroleum Company, Petrobras, Abu Dhabi National Oil Company and Pemex. All are either tied to governments at least partially.

Never forget that when investing in oil, you're playing alongside governments. Plus the reality that price has been influenced by a cartel for more than 90 years now. Texas set the quotas from 1930 until the early 1970s and since then OPEC has done so.

I'll trade oil but always with that in mind.


----------



## StockyGuy

Cheers, Smurf, you put much better than I could.  The weirdness I had in mind was definitely that it's a heavily manipulated commodity - also specifically that it's gone to a notionally negative price last year AND you'd be betting on something that's supposed to be on the way out, which might seem odd to do long term.

For manipulation level I'd say it's more than Shanghai Composite Index, less than silver, much less than diamond price - but I'm pretty sure the cartel never wanted oil to go negative.

My sense of the muscle memory of this one, looking where it's been, is that it will get up nicely again before its day is done.  But unless one is a diehard, pure chartist, it might be inappropriate to study the patterns too obsessively with something so manipulated/influenced.  That being said, I'm sure some will say  e v e r y t h i n g  is in the chart - almost "as I look at the price of oil I can tell which of his wives the sheikh was with last night and what she wore" etc.  So, as always,  DYOR


----------



## frugal.rock

Bull flag pennant thingy.
WTI up around 5.5% overnight.
Action more in line with diminished US crude stockpiles reported last week.
Will it hold, or will it continue the trend. Stay tuned.
4 hour bars


----------



## frugal.rock

So after oils peak around 2 months ago I have been keeping a lazy eye on it.
Had anticipated a more solid move up than we've seen, together with it got a lot more volatile than I had expected, for a longer period than expected.

Current conditions are pushing the price up (lower US crude weekly stockpiles and fallout from hurricane Ida).
OPEC hasn't changed their stance yet and production will increase each month as agreed.
The weekly stockpiles are seemingly the best indicator at the moment for pointing the immediate price, although refinery runs and imports are also used. It's noted that both of these were down for the week.
Of interest, US gasoline stockpiles were slightly up indicating a slow down in US driving (seasonal) and or a slowing from Delta damage.

Have entered OOO again on Wednesday and nearly added to it yesterday on the slight price weakness seen yesterday. I'm kicking my hindsight this morning, stupid ass!
I know not to follow the poo from our market and the slight weakness yesterday stalled me.
Divergence between WTI and Brent noted to be around $3.07, hopefully this scenario will pull WTI up to around $71 in the short term.


----------



## frugal.rock

Update.
The POO pushing up again.
Fallout from hurricane Ida still apparent. Most refineries are back online after power outages stalled their return, however the Biggie, supply out of the gulf of Mexico is damaged badly.
Some supply has come back, but full restoration is unlikely to occur any time soon due to damaged sustained.
Thee POO got shocked by the Saudi news of selling to China at a minor discount, and then China announcing it has started releasing strategic reserves, funny how the market took this news with a sell down.
In reality, I see it as China securing a future supply line AND current shortages necessitate releasing strategic reserves.
What was the market thinking?
Typical panic first, ask questions later scenario, in my opinion.

So that leaves the other elephant in the room, delta covid.
Everyone's getting tired of hearing it. Governments are turncoating policy again to the realities of "living with covid" and the scenario of "in vaccinations we trust". A true, living with covid, but dying from debt, world.

 So, with Saudi, China and covid delta already largely factored into the POO, we have yet still to get full ramifications of a large supply withdrawal due to hurricane Ida.

Am anticipating oil to go for a further run this week, especially after mid week snapshot of US reserves are out.

Cautiously bullish on the oil ETF OOO. End of the month sees FY21 results out.
Going by last year's results timing, investors had very little time to peruse results and make a dividend based trade decision...


----------



## Smurf1976

> China announces first public state oil auction to stabilise prices​












						China announces first public state oil auction to stabilise prices
					

China plans its first public auction of state crude oil reserves to a select group of domestic refiners, the reserves administration announced, as Beijing looks to cool high raw material costs for manufacturers.




					www.reuters.com
				






> China plans its first public auction of state crude oil reserves to a select group of domestic refiners, the reserves administration announced




Given there doesn't seem to be any physical shortfall of supply in China, at least not that has been reported in Western media, this would seem to be an attempt to influence price and nothing else.

How much oil they plan to sell is the question. Apart from China's government itself, I doubt anyone knows that with any certainty indeed even how much oil they have in storage in the first place isn't certain (though various estimates do exist).

Also of relevance to oil is that spikes in the price of natural gas are popping up all over the place. It's happened in Japan, it happened in Australia recently, now it's happening in Europe. Also prices in the US are slowly but surely creeping up.

Now natural gas isn't oil but if you can't get enough gas physically, or it becomes too expensive, then for industrial and power generation users the workaround is to burn oil-based fuels, particularly diesel, instead. So any physical shortfall of gas supply does have the potential to spill over into increased physical oil consumption with associated price impacts.


----------



## Dona Ferentes

Record-breaking prices for energy commodities have exposed structural weakness and under-investment in the gas, coal and oil markets as the world grows more power-hungry, translating to a supply problem for which there are no easy answersRecord-breaking prices for energy commodities have exposed structural weakness and under-investment in the gas, coal and oil markets as the world grows more power-hungry, translating to a supply problem for which there are no easy answers.

S&P Global Platts’ Japan-Korea-Marker or JKM, widely used as a benchmark for spot LNG contracts, soared 8.9 per cent to a record $US34.47 per million British thermal units (mmBtu). 
US natural gas surged 8.2 per cent to $US5.92 per mmBtu.


----------



## rederob

Things are looking up across the energy complex:



	

		
			
		

		
	
https://www.tradingview.com/x/7rujMZJH/

*Meanwhile the North American OIL rig count has shown steady increases since October last year but remains well below pre-pandemic levels (note that this chart does not include gas drilling rigs).*


What the chart does not show is when the fracking frenzy began.
In May 2016 a decadal low oil rig count of 316 occurred, and within a year it had increased to 722.  It peaked at 888 in November 2018 before declining due to POO dropping some $30/bbl in a matter of months from its peak in October 2018.
Many frackers  never made a profit and banks today remain wary of the industry.
Although POO remains well above breakeven prices there has not been a flood of drillers returning to the oil patches.
However, as noted from 2016, frackers are nimble and the right price trigger can quickly change the picture.  If and when it does any oil stock you hold will be susceptible to what happened back in October 2018.


----------



## qldfrog

US market in deep red and oil still up 2.3%


----------



## rederob

Well that didn't take long:


----------



## rederob

Good times ahead for our oilers, with over a dollar added to yesterday's high:


Could be a lot more money jumping on the bandwagon given that long term resistance was so decisively taken out.


----------



## Ann

Way back in May 2013 I put up a chart for the POO showing it would dump into minus territory, it was way too early for the call as the price hadn't broken out of its symmetrical triangle, it took some time to make a move as it just jogged along sideways for some time. The symmetrical triangle had to be redrawn eventually but the overall pattern remained consistent and the outcome recently concluded the way I suggested from what I read in the chart back in 2013 to minus -$13.10. I tend to remember I had people scoffing at me at the time but meh, it wasn't the first time (gold's fall call in 2012) and undoubtedly won't be the last! 
So now just for fun I have done a measured move/swing trade for the POO for the upside. It is suggesting it could hit around $168, let's see how it goes! I am holding an oiler after the POO broke above the long term 13-year falling overhead trendline. So money and mouth so to speak! 




And just to substantiate what I am saying about my 2013 call, it turns out it wasn't a breakthrough with solar it was an oil fund caught on the wrong side of a trade! Here is my old chart just for a laugh!


----------



## KevinBB

Ann said:


> So now just for fun I have done a measured move/swing trade for the POO for the upside. It is suggesting it could hit around $168, let's see how it goes! I am holding an oiler after the POO broke above the long term 13-year falling overhead trendline. So money and mouth so to speak!



I'm long oil too. If oil hits $168 I will be retiring for the second time, this time on the Gold Coast sipping martinis every day!

KH


----------



## greggles

WTI Crude over $80 a barrel as supply tightens and demand surges. Increasing energy prices is only going to see inflation continue to rise and keep a lid on economic growth.

Looks like we're in for an expensive Christmas at the petrol bowser.


----------



## rederob

The POO chart has 3 times previously moved between these resistance levels:


Assuming trend continuation then we are looking around April 2022 for POO to again be at $100/bbl.
OPEC is not ramping output and frackers are slow returning to their shale oil patches.
Hitting a +$100/bbl target again is no longer pie in the sky.


----------



## rederob

POO hit a new closing high overnight - its best since November 2014:


Surprisingly, the Baker Hughes rig count actually declined:


Looks like another good start for our oilers on Monday.


----------



## Garpal Gumnut

Just out of interest has anyone ever charted POO against Price At Bowser (PAB).

Is their a direct comparison and is there a lag?

gg


----------



## rederob

Garpal Gumnut said:


> Just out of interest has anyone ever charted POO against Price At Bowser (PAB).
> 
> Is their a direct comparison and is there a lag?
> 
> gg



It could be done manually using the "terminal gate price, and vary a bit depending on city, eg


----------



## KevinBB

I'm going to guess that:

when prices are rising there is a direct comparison in the rate of increase between the price of oil and the price at the bowser
when prices are falling, the rate of change of the price at the bowser will lag significantly behind the the rate of change of the price of oil
I really need to get to the next meeting of Cynics Anonymous.

KH


----------



## frugal.rock

KevinBB said:


> I really need to get to the next meeting of Cynics Anonymous.



I don't see much that's cynical...

Scenario
The servo gets a load of fuel delivered into tank at X $ set cost, but variable.
Servo sells with a margin.
POO goes up, servo puts prices up in quick fashion and attract a higher margin from fuel in tank.
OR
POO goes down, fuel in tank still cost the same, so price recedes slower to reduce the pinch on the servos margins.

And then you have the weekly price cycles which I'm guessing aren't really a thing, outside of major metro areas.


----------



## KevinBB

Petrol station economics have changed considerably over the past 20 years. Possibly longer, I can't remember those exact details.

In the good old days, the petrol station made most of their money on selling fuel and the mechanical side of things, prices were set by the owners to get them the maximum margin. I remember one of my first jobs was as a bowser boy, filling up cars as they rolled in to the bowser.

Now-a-days, in the age of electronic control, the wholesalers (generally) dictate what price the petrol station will charge for its fuel, and the gross margin to the owner is sometimes so low it doesn't pay all the bills. The modern petrol station owner relies heavily on income from the "store", something which the owners (generally) control, and from which the owners reap huge margins. The old time owners / mechanics are gradually pushed out and, when they are, the first thing the modern owner will do is upgrade the store and, especially in the country areas, put in some sort of hot take away food service. That's what helps them survive.

KH


----------



## rederob

IF you own WPL, STO, BPT, OSH or any other OZoiler does its year to date chart look like this?
	

		
			
		

		
	



What is really interesting about WTI pricing is that for the time being all news relates to more upside ahead.
International travel - air and cruises - is opening up and will add to vehicle demand as national economies continue to fully open up.
While the likes of WPL etc., may not be heading north, they are very profitable at current pricing, so maybe shareholders will get rewarded by decent dividends rather than price appreciation.


----------



## rederob

It's been a while in the making, but WTI crude oil's support price was broken overnight:


North America's oil patches are not in overdrive to find more to pump:



New northern hemisphere pandemic lockdowns might have assisted the overnight decline, but crude oil demand is always naturally weaker heading into the northern winter.


----------



## noirua




----------



## rederob

Looking at next level of support being tested?


Same chart on a 2-hourly scale:


Nowhere to hide!


----------



## Ann

The POO is still riding above that very long term falling trendline, so far making higher highs and higher lows. 

"Goldman Remains Bullish On Oil Despite OPEC+ Decision"









						Goldman Remains Bullish On Oil Despite OPEC+ Decision | OilPrice.com
					

Goldman Sachs commodity analysts remain bullish on oil prices despite yesterday’s decision by OPEC+ to add another 400,000 bpd to combined production next month




					oilprice.com
				




...and the 15-year POO chart with no comments.


----------



## divs4ever

i am surprised OPEC+ promised to add , i would have expected them to take advantage of the 'lull ' and do any needed repairs/upgrades  while the price is soft  and maximize margins  as the Northern storm/hurricane season limits US and North Sea production 

 but maybe they see a reason to delay delivery on that promise


----------



## frugal.rock

@Ann @divs4ever 

I noticed some news outlets ran with somewhat misleading headlines...

It has been widely covered, but OPEC decided to add the 400 k bbl each month way back in August I think? 
The increase each month was going to start  September?
(I'm a little unsure of exact months/dates, so don't shoot me, just approximates)

So, the "increase" was what was already in place, old news!
Now, there were calls to increase above the already old agreement of the 400k, which OPEC ignored.

So with Omicron and misleading news headlines, oil dumps.

Still bullish on the weekly though and looking like a nice place in the cycle for a longer term entry (months) imo. 
Daily has it starting to turn up, but I would expect a bit more bouncy bouncy ©® @finicky on the daily.


----------



## divs4ever

given the warm relations with the EU and US( sarcasm ) with some OPEC+ producers  i am surprised  OPEC+  will deliver that  increase  in the light of lower current prices ,  true some would ramp up output ,  but will all that extra be delivered 

 PS not that long back there was a fleet of tankers with no buyer to deliver to  , i wonder what happened to them  , you would have thought they sold into the recent highs , but did they ??


----------



## rederob

Uptrend remains intact:


----------



## rederob

16 more rigs added to North America's count over the last month:


Hardly a hive of activity and a bit surprising given what prima facie appear to be profitable oil prices.
So here's an explanation:


----------



## rederob

Nice end of year rally:


Interestingly the 1 January low of $47.20 was never breached in 2021.
Support at around $62 was tested 3 times from May and held up on each occasion.
A cold northern hemisphere winter could propel WTI back over $80, and beyond that we need to what the fundamental price drivers are suggesting.
2022 might be the first year we see see a decisive demand decline in oil due to EV penetration into the ICEv market, and if that's the case then POO might be stuck in the $60 - $80 range for a good while.  Below $60 there's not much profit for the oilers so that's a price point which looks sustainable.


----------



## rederob

Been a while since the last post so here's the trend from 2015's resumption of an upside after falling precipitously from its 2014 high:



The short term trend remains bullish and it will be interesting to see if POO can push back over $100/bbl.
I see it as possible unless US drillers get back into it, which for the time being is *not* the case.
The other observation is that the BPs and Shells of the world appear to see less risk and easier returns by putting electricity into cars via charging stations rather than via petrol at the pump.


----------



## Smurf1976

It seems that something's gone missing. Crude oil in fact and 200 million barrels of it at that.



			Bloomberg - Are you a robot?
		




> The adviser to energy-consuming nations said on Wednesday that observable global oil inventories plunged by more than 600 million barrels last year. That would be fine were it not for the fact -- based on its estimates of supply and demand -- that the decrease should only have been 400 million.




I've had a look in the back shed and it seems that no, I don't have 200 million barrels of oil sitting there that I'd failed to notice. That's a shame since it means that (1) I don't have an unexpected USD 17 billion and (2) the IEA estimates do in fact seem to be in error.

So it would seem that the market's somewhat tighter than the IEA and thus many others have been thinking.


----------



## ducati916

So by my analysis, $WTI will probably be weak this week. The bull remains intact, simply vol.




If you are wanting to get long oil...hang off for about a week or so and look for circa 15% decline before buying-the-dip.




You will be looking for about $74 +/- to get in. On the chart, $75 looks like a short term support. Watch that level.

jog on
duc


----------



## rederob

ducati916 said:


> You will be looking for about $74 +/- to get in. On the chart, $75 looks like a short term support. Watch that level.



Support is a shade over $76/bbl and last night's close was another medium term record high:


On the North American front there was a return of Canadian drillers but not much new action in America's oil patches.
I will post the Baker Hughes rig count on Saturday to see if these high prices trigger a renewed drilling response.
Technically the oil price is stretched so a dip is due.  However, the northern hemisphere winter might sustain demand a bit longer so getting back under support could be a month away.


----------



## over9k

Smurf1976 said:


> It seems that something's gone missing. Crude oil in fact and 200 million barrels of it at that.
> 
> 
> 
> Bloomberg - Are you a robot?
> 
> 
> 
> 
> 
> I've had a look in the back shed and it seems that no, I don't have 200 million barrels of oil sitting there that I'd failed to notice. That's a shame since it means that (1) I don't have an unexpected USD 17 billion and (2) the IEA estimates do in fact seem to be in error.
> 
> So it would seem that the market's somewhat tighter than the IEA and thus many others have been thinking.



Or someone has a hell of a lot more in reserve than they're letting on.


----------



## Smurf1976

over9k said:


> Or someone has a hell of a lot more in reserve than they're letting on.



One unknown is to what extent end users have stockpiled?

Given the shortage of various other goods, it's at least possible that there's a lot of cars, trucks, buses, ships, industrial fuel oil tanks, heating oil tanks and so on that are fuller than they'd otherwise be. Individually minor but there's an awful lot of them so collectively it could be substantial.


----------



## divs4ever

Smurf1976 said:


> One unknown is to what extent end users have stockpiled?
> 
> Given the shortage of various other goods, it's at least possible that there's a lot of cars, trucks, buses, ships, industrial fuel oil tanks, heating oil tanks and so on that are fuller than they'd otherwise be. Individually minor but there's an awful lot of them so collectively it could be substantial.



 there would be SOME stockpiling ( like Glencore ) some sitting  on viable wells waiting for a better price ( i am guessing many of those are in the US ) now end-users  is the tricky one  , in some places demand is down ( folks with travel restrictions ) in some places labour shortages , and SOME would  be worried on the implications of a war ( they might need extra reserves for insurance )


----------



## over9k

Aaaand brent just cracked 90/barrel. 

Full steam ahead folks!


----------



## over9k

Smurf1976 said:


> One unknown is to what extent end users have stockpiled?
> 
> Given the shortage of various other goods, it's at least possible that there's a lot of cars, trucks, buses, ships, industrial fuel oil tanks, heating oil tanks and so on that are fuller than they'd otherwise be. Individually minor but there's an awful lot of them so collectively it could be substantial.



No doubt of this at all, but I was more thinking along the lines of person/company/country XYZ not wanting some particularly hostile and/or powerful neighbours to even know they have it.


----------



## divs4ever

How The IEA Lost 200 Million Oil Barrels​








						How The IEA Lost 200 Million Oil Barrels | OilPrice.com
					

Estimates from the IEA showed last week that 200 million barrels of oil were unaccounted for based on its inventory calculations, but where did these barrels go?




					oilprice.com


----------



## over9k

over9k said:


> Aaaand brent just cracked 90/barrel.
> 
> Full steam ahead folks!



Scratch that, it just clipped 91.


----------



## Smurf1976

over9k said:


> o doubt of this at all, but I was more thinking along the lines of person/company/country XYZ not wanting some particularly hostile and/or powerful neighbours to even know they have it.



Agreed.

Another possibility I have in mind is the prospect of governments intervening.

I'm not keen on conspiracies and tin foil hats, covering oneself with highly conductive metal seems to be asking for trouble really, but I can certainly foresee someone thinking that if only they could get the oil price down well that takes some pressure off inflation.

The missing 200 million barrels isn't in the hands of or otherwise accessible to the Fed by any chance, ready to make a sudden appearance on the market? 

Time will tell, it's just a random thought.


----------



## qldfrog

Smurf1976 said:


> Agreed.
> 
> Another possibility I have in mind is the prospect of governments intervening.
> 
> I'm not keen on conspiracies and tin foil hats, covering oneself with highly conductive metal seems to be asking for trouble really, but I can certainly foresee someone thinking that if only they could get the oil price down well that takes some pressure off inflation.
> 
> The missing 200 million barrels isn't in the hands of or otherwise accessible to the Fed by any chance, ready to make a sudden appearance on the market?
> 
> Time will tell, it's just a random thought.



Well it was a one horse trick in that case.oil price will not slow now.


----------



## qldfrog

qldfrog said:


> Well it was a one horse trick in that case.oil price will not slow now.



And to go geo political 200mt probably in China, Russia voluntarily slowing production ..maybe..or selling some unrecorded to China which would make more sense..
Do you need more alarm bells..and no the rotten regime of Ukraine the Democrats like so much ,especially POTUS family is not that critical, the real power play is China..and oil reflects that in my opinion.
But could be just POO manipulation by the US as @Smurf1976  explained..true possibility...or a mix of both


----------



## rederob

Strong uptrend remains intact but presently a bit overstretched:



US *oil rig* (excluding gas) count rising steadily, but still a long way off historical highs:


----------



## Ann

rederob said:


> Strong uptrend remains intact but presently a bit overstretched:



Tend to agree with you Rob. Wondering if this may turn into a rounding top. Got my SELL trigger finger on the ready given the market conditions as they stand, or should I say fall?!


----------



## rederob

Ann said:


> Tend to agree with you Rob. Wondering if this may turn into a rounding top. Got my SELL trigger finger on the ready given the market conditions as they stand, or should I say fall?!



*POO *up strongly overnight with Ukranian tensions and Texas cold snap affecting Permian production as major influences, along with apparent OPEC+ constrained supply:


----------



## frugal.rock

rederob said:


> along with apparent OPEC+ constrained supply:



Apparent is the key word here...

OPEC sources have stated that supply is there and rising prices are being caused by geocrap. 
Add the Permian shalers to the geo mix.

China customs have reported (finally) receipt of oil from Iran and Venezuela to stock recently depleted (auctioned) reserves.... US sanctions seen as a toothless tiger. 

Iraq not pumping as much as it is able to. 
Africa didn't maintain enough infrastructure last year and is struggling to get back online.

US gas stocks much lower than expected. 
Like @ducati916 I expected a pullback (I was eying 77-78) which didn't happen.

I can see poo possibly hitting a ton next week, but likely to be choppy.


----------



## rederob

Repeat of last Friday with another recent record high closing price.  Ukranian tensions may well push POO over $100  in the weeks ahead:


And just like last week, POO's price is again overstretched so we need geopolitical tensions to rise if POO is to remain elevated.


----------



## Ann

rederob said:


> Repeat of last Friday with another recent record high closing price. Ukranian tensions may well push POO over $100 in the weeks ahead:



I was thinking a top of $105 maybe Rob, the pundits are saying $100. I think it is all a bit stretched at the moment and needs to consolidate for a while. But who knows what Putin will want? Amazing how he can control both the international stock markets and the oil and gold price with such a small amount of effort!

Now the real reason I am here is to put up a chart for the POO with some well-considered long term calculations using swing trade calculations for the top for the POO and then when that has been reached and it resumes its downward trajectory, I can see a bottom of around $18 dollars. This last calculation is based on the level of a massive volume spike on the day prior to the POO's collapse into negative territory. I have drawn a horizontal line from that price level of volume spike. I may be right, I may be wrong but this is going to be many years into the future and I very much doubt I will still be alive and kicking then. Some youngster may come across my chart one day and find it of interest many years down the track, and perhaps find the joy of a swing trade calculation and the strength of a long term volume spike level?


----------



## qldfrog

Ann said:


> I was thinking a top of $105 maybe Rob, the pundits are saying $100. I think it is all a bit stretched at the moment and needs to consolidate for a while. But who knows what Putin will want? Amazing how he can control both the international stock markets and the oil and gold price with such a small amount of effort!
> 
> Now the real reason I am here is to put up a chart for the POO with some well-considered long term calculations using swing trade calculations for the top for the POO and then when that has been reached and it resumes its downward trajectory, I can see a bottom of around $18 dollars. This last calculation is based on the level of a massive volume spike on the day prior to the POO's collapse into negative territory. I have drawn a horizontal line from that price level of volume spike. I may be right, I may be wrong but this is going to be many years into the future and I very much doubt I will still be alive and kicking then. Some youngster may come across my chart one day and find it of interest many years down the track, and perhaps find the joy of a swing trade calculation and the strength of a long term volume spike level?
> 
> View attachment 137819



Not specifically targetting your work Ann, but i think if inflation carries on in the 10% to 20% pa range, any long term channel, support and roof level especially on longer periods will be twisted and made irrelevant.
Not sure how it was solved in the past?, maybe just express everything in 2022 $ then add an inflation factor in the scale for any future date?
So your $18 2022 target might be a $40 price in 2030..and you would be spot on.
Same for all stocks actually


----------



## Ann

__





						Oil price discussion and analysis
					

Re: OIL AGAIN!   ... What everyone needs to ask themselves is why would the price be so high if all the rosy news about supplies were accurate? ...  That's right.  OPEC countries have for years not shown significant drawdown on their reserves.  The reason is simple. Their quota is linked...




					www.aussiestockforums.com
				




Froggy, I first gave a potential outcome for the POO back in 2013 with a chart. I don't care about inflation or any other worldly events, I simply read the chart. I said back in 2013 the price would go into minus, it did not go into minus $20 plus because the fall from the symmetrical triangle didn't happen until some time later and the rising support was a bit higher from which I calculated the fall, so my calculations came from a higher level, same chart, same prices same price vertical. The actual low for oil was minus ($13.10). Now I think we all can agree there has been substantial inflation since 2013 and now but it was still minus, regardless of inflation. Notice how my charted price outcome was pretty near as dammit.
I hold with my calculations whatever decade they may fall. I reckon $18.00 will be the low regardless of inflation. When $18 happens it may be worth in your hand at the time $1.80. I am not talking value, I am talking price outcome according to my chart. I can see how it can get into minus or down to a ridiculously low price if a fundie gets caught on the wrong side of a trade.

This was my first chart from 2013 talking about oil and minus prices. You can imagine how brave that call was as a symmetrical triangle is seen as a continuation pattern and the price of oil had been rising as it created that pattern. I could see the price kept trying to break up above that falling overhead trendline and I could feel the POOs exhaustion, so not a hard call for me a make.


----------



## rederob

Ann said:


> I was thinking a top of $105 maybe Rob, the pundits are saying $100. I think it is all a bit stretched at the moment and needs to consolidate for a while. But who knows what Putin will want? Amazing how he can control both the international stock markets and the oil and gold price with such a small amount of effort!



Let's see what the post-invasion wash up offers, as we are presently only $10 off long term resistance:


Given that $100/bbl is in sight, a jump over $105 as a consequence of Russia's role in the oil market along with a possible trade embargo on their goods might even see a new record price within the month.
A fall back to support is more likely in the medium term unless things in eastern Europe flare up.


----------



## rederob

Barely an hour later and POO breaks through $100/bbl.
Here's the hourly chart showing a 10% rise today:


 The maroon shaded area is from the chart in my previous post, so we know WTI's price is way above its trend going back to March 2020.
At time of posting more upside looks likely.


----------



## noirua

*OIL*

The energy complex is soaring, with UK natural gas futures up almost 30%, while Brent crude has aggressively broken through psychological resistance at $100 a barrel with a 7% surge, hitting the highest level since August 2014. After Russia’s invasion sparked an initial spike higher, oil prices have continued to travel north as markets assess the hit to energy supply that is likely to come as a result of the conflict.

Underlying bullish fundamentals coupled with a deepening military conflict would likely exacerbate the existing imbalance between demand and supply with the potential for oil prices to journey towards $110, possibly even $120 a barrel.


----------



## Smurf1976

noirua said:


> The energy complex is soaring



With oil, Russia produces about 10 million barrels per day and consumes a third of that, exporting the rest.

Now there are various estimates of how much spare oil production capacity exists globally but bottom line is whilst there's a degree of uncertainty, I've not seen any estimate which puts present spare capacity, excluding Russia itself for obvious reasons, at a level that could offset loss of Russia's exports of oil. The question's about the extent of a supply deficit not whether there'd be one.

So if Russian exports were to stop then we get some combination of inventory drawdown and price rising to the point where it kills demand. At least we do unless someone's sitting on more spare capacity than is generally accepted to be the case _and_ is willing to use it.


----------



## mullokintyre

Smurf1976 said:


> With oil, Russia produces about 10 million barrels per day and consumes a third of that, exporting the rest.
> 
> Now there are various estimates of how much spare oil production capacity exists globally but bottom line is whilst there's a degree of uncertainty, I've not seen any estimate which puts present spare capacity, excluding Russia itself for obvious reasons, at a level that could offset loss of Russia's exports of oil. The question's about the extent of a supply deficit not whether there'd be one.
> 
> So if Russian exports were to stop then we get some combination of inventory drawdown and price rising to the point where it kills demand. At least we do unless someone's sitting on more spare capacity than is generally accepted to be the case _and_ is willing to use it.



Russian exports may slow down or even stop, but maybe not because of Russia's decision, but external forces.
From  Star Tribune


> Minnetonka-based Cargill has 500 employees in the country. It sent many people home and told others not to come in to work Thursday so they, like all Ukrainians, could try to secure a safe location for themselves and their families.






> A shipping vessel chartered by Cargill Inc. was struck by a missile early in the day as it was leaving a strategic Black Sea port on Ukraine's southern border.



So not surprising then that that rates for the Big Oil carriers into Russia and Ukraine have gone thru the roof, but the price increases have gone up for other routes.
From Oil Price . com


> Amid a general unwillingness of tanker owners to send their vessels to Russian ports, the freight rates for a medium-sized tanker to load Russian crude jumped nearly threefold on Thursday from Wednesday, shipbrokers and traders told Bloomberg.
> 
> The freight rate to hire an Aframax tanker on the Baltic Sea to Europe route surged after Russia invaded Ukraine, while owners of oil tankers had already started to avoid Russian ports because of both the military invasion of Ukraine and apprehension that sanctions for oil could also come soon.
> 
> As a result of the surging Baltic-Europe tanker rates, the Middle East to Europe rates also rose.
> 
> 
> Two-thirds of Russia's crude oil exports are seaborne, from ports in the Black Sea and the Baltic Sea. The Russian flagship Urals crude grade loads from ports in the Baltic Sea, and most of it is sold in Europe.



So much interconnectedness, nothing is easy to analyse any more.
Mick


----------



## Ann

rederob said:


> A fall back to support is more likely in the medium term unless things in eastern Europe flare up.



After looking at my chart this weekend I agree with you Rob. I have been fiddling with volumes as an indicator of future price direction. When there is high volume at either the top or bottom of the price it appears to cause a reversal in the price. I am looking at this concept closely. I see the identical thing on gold this week as well. Perhaps gold and oil are now in for a spell of falling prices. I see a massive volume spike at the bottom price of the S&P 500. I am wondering if this is going to be a total reversal for the stock market or just a dead cat bounce for the S&P et al?


Smurf1976 said:


> So if Russian exports were to stop then we get some combination of inventory drawdown and price rising to the point where it kills demand. At least we do unless someone's sitting on more spare capacity than is generally accepted to be the case _and_ is willing to use it.



...Or unless Putin decides to dump shiploads of oil at whatever price he decides is fair. I think he mentioned $70 to $80 ( I think, could be wrong). China appears to be willing to trade with Russia, correct me if I am wrong but I think China is a massive consumer of oil and would potentially influence the price if they traded with Russia at an agreed price of say $75. It is all very interesting.


----------



## rederob

Ann said:


> ...Or unless Putin decides to dump shiploads of oil at whatever price he decides is fair. I think he mentioned $70 to $80 ( I think, could be wrong). China appears to be willing to trade with Russia, correct me if I am wrong but I think China is a massive consumer of oil and would potentially influence the price if they traded with Russia at an agreed price of say $75. It is all very interesting.



With SWIFT not available to Russia nobody will be able to pay for their oil via conventional means.
However, there are a number of ways to bypass SWIFT so it remains to be seen where Russia's oil tankers will be heading in coming weeks. And, given these are rather visible things, it won't be hard to shame nations who continue to deal with Russia.
Here's what are leaving their Black Sea oil ports now:


----------



## Smurf1976

Ann said:


> .Or unless Putin decides to dump shiploads of oil at whatever price he decides is fair. I think he mentioned $70 to $80 ( I think, could be wrong). China appears to be willing to trade with Russia, correct me if I am wrong but I think China is a massive consumer of oil and would potentially influence the price if they traded with Russia at an agreed price of say $75. It is all very interesting.



A thought I've had for quite some time now is that we'll see countries seeking to lock in supplies of scarce raw materials and in doing so those commodities are for practical purposes no longer on the market. That is, they are not for sale to others_ at any price _unless both parties to the contract agree which they'll only do in the context of any surplus they have, that being the point to secure their own supply first and foremost.

In that context China is the most obvious buyer who'd potentially be willing to do long term deals given they tend to take a strategic approach and there's government involvement in the oil industry. Deals as in buy the entire output of an oilfield over its lifetime, all sold in a single contract, or at least buy x amount for 30 years sort of thing.

There are plenty of precedents doing that with gas so it wouldn't be a big step to do it with oil, indeed Venezuela was selling natural bitumen on that basis 25 years ago (at least two companies in Australia gave some brief thought to buying some at the time since pricing was contract in no way linked to the spot market).


----------



## Smurf1976

rederob said:


> With SWIFT not available to Russia nobody will be able to pay for their oil via conventional means.



Another practical observation is that looking at history, when any country with a significant oil production industry went to crap one thing that always happens is oil production volume falls in a heap.

The country doesn't have to be bankrupt or at war to do it, eg the breakup of the USSR took production down from about 11 million barrels / day in 1988 to a bit under 6 million barrels per day by 1994. It didn't even start to rebound until the very late 1990's so a lost decade basically.

So depending on what happens next with the overall situation, it may not just be a question of where Russia's production goes but of how much is produced in the first place.


----------



## rederob

Been a few weeks since I last posted US drill rig counts, so here's the latest:


As you can see from the separate chart below for US crude oil (excluding gas) rigs, we are still a long way below the pre-pandemic rig numbers, although they had been declining in the year prior:


	

		
			
		

		
	
 Not sure why we aren't getting bigger numbers returning given the oil price is so high now, but maybe getting finance isn't as easy as it was.
Grateful for others to find better reasons than this because I can't make sense of it.


----------



## Smurf1976

rederob said:


> Grateful for others to find better reasons than this because I can't make sense of it.



My understanding is there's been quite a bit of pressure applied to the companies on two similar fronts.

First is from investors, fund managers and so on looking purely at the finances and who want to see dividends rolling in rather than that money being reinvested into drilling etc.

Second is from the so-called "activist investors" who are applying pressure to not invest in oil at all.

That's just my understanding having read quite a bit about the goings on with the US shale companies. They're under pressure from both of those, the first dating back a few years now and the latter being more recent.

That would raise the cost of finance if they still went ahead and drilled given that those two categories, the big fund managers and "activist investors" may well dump the stock if they're unhappy.

Related to that, the industry has been getting production up by completing previously drilled wells, leading to a fairly rapid decline in the inventory of drilled uncompleted (DUC) wells. Obviously that can't continue so, if drilling doesn't increase, then in due course the rate of completions (new production brought on) must slow.

I won't post an image since the chart is copyright but this shows it pretty clearly. Yellow line is DUC's with scale on the left:



			https://img1.wsimg.com/isteam/ip/5ce6d220-2793-4de8-aa9e-8c7aa850eda4/The%20DUC%20Dillema%20-%20Charts%20copy%203-1.png/:/cr=t:0%25,l:0%25,w:100%25,h:100%25/rs=w:1280
		


Note that chart applies specifically and only to the US but still, the US is big enough to be a reasonable representation of the likely situation more generally.


----------



## rederob

Charts often repeat patterns, so I overlaid the shaded area from 2011's peak and put it into where we are now.  Support post February 2011 is almost identical to now.
If it's going to be similar then anything after $110/bbl would be a good time to let go of oil for a while.


Back in 2011 support failed, so any buying back in would be in the $75 - 77 range.


----------



## wayneL

Back to the future?

I'm even starting to grow a beard and have bought the Mrs a bonnet...

... And for those in the Swan valley, come and see me to keep your Clydesdales running sweetly


----------



## Captain_Chaza

Crikey!
I have never bought an Oil share in my life because it is so closely manipulated  by a FEW

Who needs to be MANIPULATED?  Certainly Not me!

IMHO

MANIPULATED markets can always pull the carpets from under you without any warning 

AND often do !

OIL Buyers be WARNED

"Safety at Sea is Parramount"


----------



## rederob

I only posted the equivalent of this chart yesterday, so here it is with a black background:


The previous high to this was almost 11 years ago - May 2011.


----------



## wayneL

LPG bottle swaps (I go through about two a week) have surged from average $29 to $32 too.


----------



## wayneL

Captain_Chaza said:


> Crikey!
> I have never bought an Oil share in my life because it is so closely manipulated  by a FEW
> 
> Who needs to be MANIPULATED?  Certainly Not me!
> 
> IMHO
> 
> MANIPULATED markets can always pull the carpets from under you without any warning
> 
> AND often do !
> 
> OIL Buyers be WARNED
> 
> "Safety at Sea is Parramount"



my long-term strategy with commodities has been to determine what minimum production is and buy it with your farken ears back at or near the price.

Oil Spot at less than $20 was a no-brainer. Yep it did get less than that briefly... *briefly*.

But depending at your buy price and a bit of cojonies, that's at least a 5 bagger now.


----------



## Captain_Chaza

Well Done!
Was it a long time ago?

Ever thought of Averaging Up?


----------



## Captain_Chaza

Just to keep the Juices rolling over

 I have never met anyone who has made any real money in  The Insurance Sector
eg  AMP included 

or the Airlines Industry
I guess they are just simply UNLUCKY!


----------



## Smurf1976

Captain_Chaza said:


> I have never bought an Oil share in my life because it is so closely manipulated by a FEW



Oil is manipulated but it's about as open and visible as it gets so far as that manipulation is concerned.

OPEC has a physical, clearly signed office building in Vienna and makes no secret of its existence. Production data is routinely reported in almost all countries and likewise most national governments with strategic reserves either publish data or there are credible third party estimates.

It's not like penny stocks or cryptos where it's all done discreetly.


----------



## mullokintyre

From Freightwaves


> In September 2019, the U.S. sanctioned tanker company Cosco Dalian, a division of Chinese shipping giant Cosco, for carrying Iranian crude. The sanctions only covered the 20 tankers owned by Cosco Dalian, but that didn’t matter. As a precaution, charterers shunned the entire 150-tanker fleet of the Cosco parent, causing tanker spot rates to spike.
> 
> Shipping execs don’t just refuse vessels or cargoes based on what’s definitely sanctionable. They do so based on what they believe might possibly be sanctioned now or later. Sanctions are written in precise language, but they’re messy in practice.
> 
> That precept is now on full display. Sanctions have yet to specifically target Russian energy exports or (non-dual-use, i.e., non-military) containerized goods, but that doesn’t matter. Many tanker owners and container liner operators are preemptively pulling out of Russia.
> 
> On Tuesday, MSC, Maersk and CMA CGM — the top three liner companies in the world — temporarily suspended Russian bookings. Yang Ming, the ninth largest, suspended Russian bookings on Wednesday; ONE, the sixth largest, on Sunday; and Hapag-Lloyd, fifth largest, on Thursday. These six carriers control 62% of global capacity, according to Alphaliner data.
> 
> The world’s largest container lines are dropping Russia “to manage sanctions risk but also perhaps manage reputational risk,” said Michelle Linderman, partner of law firm Crowell & Moring, during a panel presented by shipping association BIMCO on Tuesday. “Do they want to be seen as supporting Russia? Or are they going to say at this moment, while this is going on, we don’t want to go anywhere near there.”
> 
> The tanker sector is seeing the same pattern of behavior among shipowners and operators. Many are refusing to load Russian oil cargoes even though sanctions don’t bar them from doing so.
> 
> 
> “Few owners are now willing to transport Russian oil, resulting in an undersupply of ships [at Russian export terminals],” said Clarksons Platou Securities.







This will have flow on effects to both the availability of fuel and the price.
Price and availability going in opposite directions.
These are the sorts of things that will hurt Putin far more than UN resolutions or confiscating the assets of Russian oligarchs.
Mick


----------



## Dona Ferentes

_Sanctions on Russia have deliberately stayed away from oil, gas and soft commodities, but traders’ refusal to touch Russian goods could cause big dislocations in global markets.  _

On Wednesday night an oil trading giant called Trafigura Group offered to sell a cargo of the Russian Urals oil at a discount of $US18.60 ($25.50) a barrel to the Brent Crude benchmark, which sits at about $US113 ($155) a barrel at present, with futures sitting near 10-year highs.

A report in Bloomberg described the discount as being the biggest ever seen in oil markets. *But the cargo drew no bids*. Zero. Nada. Nothing.

Another problem is actually moving Russian oil around, with a large number of tanker owners simply refusing to load Russian cargoes, at least until the impact of financial sanctions becomes clearer. The number of ships booked to load cargoes in March is reportedly less than a quarter of the number at the same time last month.....


----------



## Garpal Gumnut

Dona Ferentes said:


> _Sanctions on Russia have deliberately stayed away from oil, gas and soft commodities, but traders’ refusal to touch Russian goods could cause big dislocations in global markets.  _
> 
> On Wednesday night an oil trading giant called Trafigura Group offered to sell a cargo of the Russian Urals oil at a discount of $US18.60 ($25.50) a barrel to the Brent Crude benchmark, which sits at about $US113 ($155) a barrel at present, with futures sitting near 10-year highs.
> 
> A report in Bloomberg described the discount as being the biggest ever seen in oil markets. *But the cargo drew no bids*. Zero. Nada. Nothing.
> 
> Another problem is actually moving Russian oil around, with a large number of tanker owners simply refusing to load Russian cargoes, at least until the impact of financial sanctions becomes clearer. The number of ships booked to load cargoes in March is reportedly less than a quarter of the number at the same time last month.....



Excellent. 

If I want to know the direction of POI I just check my local bowser. 

Similar to the weather and sticking your head out the window.

Bowser is a leading indicator of POI. 

gg


----------



## Dona Ferentes

Garpal Gumnut said:


> Excellent.
> 
> If I want to know the direction of Po0 I just check my local bowser.
> 
> Similar to the weather and sticking your head out the window.
> 
> Bowser is a leading indicator of POI.



Always hold a few oil shares.  For same reason, petrol up and pay a bit more to fill tank but, hey, aren't those BPT, WPL shares looking pretty.


----------



## frugal.rock

Dona Ferentes said:


> Always hold a few oil shares.  For same reason, petrol up and pay a bit more to fill tank but, hey, aren't those BPT, WPL shares looking pretty.



My thoughts as well.
Is it hedging or offsetting ? 🤔


----------



## qldfrog

mullokintyre said:


> These are the sorts of things that will hurt *the west* far more than UN resolutions or confiscating the assets of Russian oligarchs.
> Mick



Mick, a small mistake i corrected above 😊
Russian production will temporarily slow, oil prices go up the roof,then flows will be redirected toward China,at a discount but still well above last year prices, the lot not in USD.
outch says USD
results:

Russians even, China winner with new competitive edge, OPEC chartering Ukrainian ladies toward the Gulf,in a move widely applauded as helping the refugees crisis, Europe freezing,the West economy crashing.
Western leaders are clowns,and if they try to blow the russian china pipelines : here comes WWIII


----------



## divs4ever

BPT look pretty to me  ( my av. SP is just under 52.5 cents )

 WPL well i am in the green again finally  only up 7%  on them 

  don't forget NHC  sells a bit of oil as well ( through Bridgeport Energy  ) but that mostly  stays in QLD to supply the local markets


----------



## rederob

I post a lot of my commodity charts for historical - "as it happened" - purposes rather than to make any particular point.
In this case a bit of both, as there is no doubt that the Ukranian conflict has had a major influence in recent weeks, and is likely to for some weeks to come.  So, as you can, a new recent record high was hit today, and the all time record price is a mere $35 away:


At the current rate of ascent that $35 is only 2 weeks away!
As a holder of STO, BPT and WPL I am pleased with the price action, but regret what has caused it.


----------



## pavilion103

Bought OOO ETF at $2.90 low.
Still holding 🙂


----------



## JohnDe

Smurf1976 said:


> With oil, Russia produces about 10 million barrels per day and consumes a third of that, exporting the rest.
> 
> Now there are various estimates of how much spare oil production capacity exists globally but bottom line is whilst there's a degree of uncertainty, I've not seen any estimate which puts present spare capacity, excluding Russia itself for obvious reasons, at a level that could offset loss of Russia's exports of oil. The question's about the extent of a supply deficit not whether there'd be one.
> 
> So if Russian exports were to stop then we get some combination of inventory drawdown and price rising to the point where it kills demand. At least we do unless someone's sitting on more spare capacity than is generally accepted to be the case _and_ is willing to use it.




There is plenty of crude oil to meet world consumption. The only real issue is, how much are we willing to pay? And the cost is not just a monetary issue, it's also a moral issue and an environmental issue.

Sourcing the cheapest oil has lead us to supporting corrupt and vicious regimes, which in turn has caused environmental disasters.

Russian oil exports will slowly diminish, no country has completely stopped importing it yet. No until they have new contracts with the other oil countries that they have put oil embargos on.

*Oil Reserves by Country 2022*

Venezuela (300.90 Bn)​Saudi Arabia (266.50 Bn)​Canada (169.70 Bn)​Iran (158.40 Bn)​Iraq (142.50 Bn)​Kuwait (101.50 Bn)​United Arab Emirates (97.80 Bn)​Russia (80.00 Bn)​Libya (48.40 Bn)​Nigeria (37.10 Bn)​


			Oil Reserves by Country 2023


----------



## Smurf1976

JohnDe said:


> There is plenty of crude oil to meet world consumption.



In the ground agreed there's plenty.

What matters however is the ability to extract that oil and that's where the constraints are. Take Russia out of the picture and by most estimates total extraction capacity can't meet present demand.

I say that noting nobody knows for sure. The details aren't audited, it's just a case of official claims and best estimates so there's a lot of uncertainty but most estimates of capacity are such that without Russian exports supply falls short of global demand ex-Russia. 




JohnDe said:


> Sourcing the cheapest oil has lead us to supporting corrupt and vicious regimes, which in turn has caused environmental disasters.



Agreed.

I generally avoid political comment on financial threads on this forum but suffice to say I'm no supporter of what amounts to a NIMBY approach of ensuring we don't spoil the local scenery meanwhile funding horrific outcomes overseas. I acknowledge some bias, I'm not exactly a fan of oil and gas, but being objective well I'd risk a mishap oiling the local beach over starting a war yes, it's the lesser of the available evils.

Back to the price well I see that the retail prices at a local service station have just gone up significantly today:

LPG = 109.9
Diesel = 207.9
91 = 219.9
95 = 236.9
98 = 244.9

Just a few days ago diesel was 182.9 and 91 was 184.9 so a substantial and rapid increase. It'll have some broader economic impacts no doubt.


----------



## waterbottle

POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....


----------



## qldfrog

waterbottle said:


> POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....



BTD?
Irrespective of Ukraine, are we not a bit short of oil anway?


----------



## mullokintyre

we have been very near peak oil for the last 50 years.
Mick


----------



## Garpal Gumnut

waterbottle said:


> POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....



No matter in what circumstances a gentleman or lady may find themselves, one should enjoy the ride. It will be down and up. 



gg


----------



## qldfrog

mullokintyre said:


> we have been very near peak oil for the last 50 years.
> Mick



True but here not really peak oil as such, but more a bad timing of wells abandoned, bankruptcy ,divestment and exploration canned
I do not think anyone thinks we are running out of oil yet, weare just not able to get it now when we need it
Just In Time temporarily  broken imho


----------



## waterbottle

qldfrog said:


> BTD?
> Irrespective of Ukraine, are we not a bit short of oil anway?




Not sure. Fundamentally we'll be in a deficit as Russian and Ukrainian exports are locked out. Iranian nuclear deal doesn't look promising. UAE calling for more output and the Saudis may facilitate this. Then there's Venezuela as the wild card, if the US manages to make a deal there then they'll the world could get away without Russian oil. 

Last time there was a big dip was when there were peace talks.
Also keep on mind that equities are falling too and bonds on the rise given Fed expected to hike rates on Wednesday.


----------



## rederob

For those bullish on oil and disappointed that the run has died, don't be.
As can be seen from the chart below, WTI crude prices are at the upper end of their northbound trend May 2021 (which commences from about the same level as POO was at in December 2018):



Support is at $85, so another $16 as a safety net to stay on track is available.
I don't think anyone is yet in a position to work out what the "fundamental" situation is in Europe at the moment, and that will likely determine the next major move for POO.
I'm not fussy either way as even though lots more drillers returned to North America's oil patches, output still is not at pre-pandemic levels.  Until that happens POO's downside will be regularly constrained.


----------



## Telamelo

Sanctions against Putin/Russia ? Nah it's business as usual

https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html

Nice to know yet another Russian oil supertanker docked in the UK overnight

P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...


----------



## JohnDe

Telamelo said:


> Sanctions against Putin/Russia ? Nah it's business as usual
> 
> https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
> https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
> 
> Nice to know yet another Russian oil supertanker docked in the UK overnight
> 
> P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...




As asked in the other thread - What is the price of this "cheap" Russian oil?


----------



## Garpal Gumnut

Some interesting commentary from Oilprice.com in this and sister articles. 

Of course one must remember that finance and commodity journalists and commentators are as good at predicting the future as you or I. 









						Speculators Massively Cut Their Bullish Bets On Oil | OilPrice.com
					

According to Bloomberg data, portfolio managers cut their bullish bets on Brent Crude by the most in years in the week to March 8




					oilprice.com
				




gg


----------



## Dona Ferentes

Garpal Gumnut said:


> .
> f course one must remember that finance and commodity journalists and commentators are as good at predicting the future as you or I.




But there's a lot of them. (wonder how they'll cope on the front line)


----------



## Smurf1976

mullokintyre said:


> we have been very near peak oil for the last 50 years.
> Mick



Biggest problem with peak oil is that the concept is almost universally misunderstood. (Not having a go at you or anyone there, just noting it).

Common perception is that it means we're running out of oil or that prices are going to the moon. In reality the actual basis behind it is far simpler.

Pick any resource from land to timber to dam sites to oil and humans pick the low hanging fruit first. 

Go to pretty much any city in the world and you'll find that the oldest part is that closest to the center. If you're looking for the oldest building then it generally won't be 50km away in the outer suburbs and if by sheer chance it is, then that building won't have been part of the city at the time but was a farmhouse etc which only became part of the urban area a long time after it was built.

Now find the oldest dams built for water supply. They'll be the sites closest to the city center almost always. Nobody builds a dam 200km away if they can build one in the hills next to the city.

And so on. Pick any resource and it's what humans do. 

Same with oil.

The first wells were shallow, onshore and not far from existing cities and towns. In other words, the simplest, easiest, cheapest options available. Then as those run out, progressively further away, deeper or more technically difficult sources were developed.

That being so, with any resource that's working down the list of available options the cost inevitably rises. More materials, more labour, greater technical challenges and it's further away. The fundamental costs of developing each new source are higher than the best, now already used, one that came before it.

Same goes for things like environmental conservation or war zones and so on. Nobody's going to come up with a plan to drill in a National Park or set up operations in a war zone if there's a far less contentious and safer option sitting right in front of them that's dead easy. Such ideas only make business sense if there's no better option.

The "peak oil" theory is simply that as cost rises over time, a point would logically come where consumers can no longer afford increasing consumption and sometime after that, as cost continues to rise even further, consumption rolls over. That maybe either because the higher price prompts the development of alternatives or simply because it's unaffordable as such - if it cost $1000 per barrel then I think we all agree there'd be a drop in use.

So where are we then?

Looking at inflation-adjusted oil prices in USD, to the extent there's a "normal" price for oil it's between $20 and $30 per barrel. Excluding wars, sanctions, embargos and so on then prior to the year 2000 the industry was consistently able to operate profitably with prices in that range. Highly profitably in fact.

If we're not seeing companies excited at the prospect of $30 oil well that says all you need to know really. It says that the options available today aren't as good as the ones available previously. In truth well even at double that, $60, there was no great rush of drilling.

I'm no doomer and there's still plenty of oil on the planet but the evidence does point to it being past its economic best. The price required to make drilling viable has increased on a per barrel extracted basis despite improvements in technology. Prices that would have seen a flurry of drilling in the past don't prompt that response these days, the available options just aren't so good.


----------



## divs4ever

Telamelo said:


> Sanctions against Putin/Russia ? Nah it's business as usual
> 
> https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
> https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
> 
> Nice to know yet another Russian oil supertanker docked in the UK overnight
> 
> P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...



 plenty of oil  produced in Australia  , shame  that most of it is refined  overseas ( and some of it sold back to Australia )

 maybe we should stop electing sell-out politicians


----------



## JohnDe

divs4ever said:


> plenty of oil  produced in Australia  , shame  that most of it is refined  overseas ( and some of it sold back to Australia )
> 
> maybe we should stop electing sell-out politicians




Sadly the oil under Australian soil is low quality. How much are you willing to pay for Aussie refined fuel from Aussie oil?

Australian crude oil and condensate is insufficient/incompatible for our needs and is largely exported


Domestic crude production has been in decline for some time and Australia does not produce enough compatible crude oil to run existing domestic refineries.
Most crude oil production is located long distances from Australian refineries and has better transport proximity to key Asian markets.
Bass Strait crude oil is refined in Victorian refineries given transport proximity and economics (delivered via pipeline) and some local condensates are trucked to refineries.
Much of Australia’s crude oil production is also of a quality (light sweet) which is very commercially attractive for processing in other countries. Australian refineries require a blend of crude oils to produce the product slate demanded by Australian fuel users.
In general, it is more commercially attractive to use a majority of imported crude oils in Australian refineries to meet the balance of transport fuels needed by Australian fuel users, and this imported crude diet better matches Australian refinery processing capabilities.
Transport fuel security depends on flexible supply chains and diversity of product supply, not domestic refining of domestic crude oil.






						Australian Crude Production and Refining | Australian Institute of Petroleum
					






					www.aip.com.au


----------



## rederob

Smurf1976 said:


> Biggest problem with peak oil is that the concept is almost universally misunderstood. (Not having a go at you or anyone there, just noting it).
> 
> Common perception is that it means we're running out of oil or that prices are going to the moon. In reality the actual basis behind it is far simpler.
> 
> Pick any resource from land to timber to dam sites to oil and humans pick the low hanging fruit first.
> 
> Go to pretty much any city in the world and you'll find that the oldest part is that closest to the center. If you're looking for the oldest building then it generally won't be 50km away in the outer suburbs and if by sheer chance it is, then that building won't have been part of the city at the time but was a farmhouse etc which only became part of the urban area a long time after it was built.
> 
> Now find the oldest dams built for water supply. They'll be the sites closest to the city center almost always. Nobody builds a dam 200km away if they can build one in the hills next to the city.
> 
> And so on. Pick any resource and it's what humans do.
> 
> Same with oil.
> 
> The first wells were shallow, onshore and not far from existing cities and towns. In other words, the simplest, easiest, cheapest options available. Then as those run out, progressively further away, deeper or more technically difficult sources were developed.
> 
> That being so, with any resource that's working down the list of available options the cost inevitably rises. More materials, more labour, greater technical challenges and it's further away. The fundamental costs of developing each new source are higher than the best, now already used, one that came before it.
> 
> Same goes for things like environmental conservation or war zones and so on. Nobody's going to come up with a plan to drill in a National Park or set up operations in a war zone if there's a far less contentious and safer option sitting right in front of them that's dead easy. Such ideas only make business sense if there's no better option.
> 
> The "peak oil" theory is simply that as cost rises over time, a point would logically come where consumers can no longer afford increasing consumption and sometime after that, as cost continues to rise even further, consumption rolls over. That maybe either because the higher price prompts the development of alternatives or simply because it's unaffordable as such - if it cost $1000 per barrel then I think we all agree there'd be a drop in use.
> 
> So where are we then?
> 
> Looking at inflation-adjusted oil prices in USD, to the extent there's a "normal" price for oil it's between $20 and $30 per barrel. Excluding wars, sanctions, embargos and so on then prior to the year 2000 the industry was consistently able to operate profitably with prices in that range. Highly profitably in fact.
> 
> If we're not seeing companies excited at the prospect of $30 oil well that says all you need to know really. It says that the options available today aren't as good as the ones available previously. In truth well even at double that, $60, there was no great rush of drilling.
> 
> I'm no doomer and there's still plenty of oil on the planet but the evidence does point to it being past its economic best. The price required to make drilling viable has increased on a per barrel extracted basis despite improvements in technology. Prices that would have seen a flurry of drilling in the past don't prompt that response these days, the available options just aren't so good.



As you note, the low hanging fruit has been picked.
The other aspect affecting exploration is the willingness of financiers to risk lending to drillers when success rates decrease and new finds don't have the volumes to be profitable given the volatility of oil prices in the market.  
Another way of putting it is that there are much safer bets for financiers nowadays.
That also has a flow-on effect to investors who are less willing to pour into oil companies, thereby deflating stock prices.
And all this in an environment where FF industries are increasingly problematic due to climate change concerns.


----------



## Smurf1976

Whilst the thread subject is oil and this chart's about coal, it's a pretty good illustration of the underlying concept of resource constraints.

I'm posting it since it's one of the few examples from a developed country with accurate data where a resource has been almost completely exploited. It's a good illustration of the concept.

Now there's still plenty of coal as such in the UK today. It's just that what's left is of poor quality and/or costs a fortune to mine due to depth and so on. With minor exception there's nothing left of any real value.

Note also that Margaret Thatcher, popularly associated with the demise of the industry during the 1980's, wasn't even born until 12 years after production peaked in 1913 with production having already declined 58% from the peak by the time she became Prime Minister (1979). She may have slightly accelerated the inevitable but ultimately it was resource constraints that killed the British coal industry, it was already doomed - she was just the one who decided to pull the pin on its life support.




Ultimately oil ends the same way. Not now but ultimately it has the same fundamental limit that "production" is really just extraction of a constantly diminishing natural resource. At some point it rolls over the peak, it will happen with the only question being when and under what circumstances - UK coal peaked just before WW1 and may have gone marginally higher if not for the war but ultimately resource limits are just that.


----------



## Garpal Gumnut

Without getting on to the EV vs ICE debate, I believe Oil is going to be around for longer than many anticipated. 

Globalisation and progress is fine, until you get a loon like Putin unleash a European war and a mob of old men in Beijing unable to remove themselves from the dream of hegemony.

Then there is the USA which seems more intent on a race to the bottom both in terms of IQ and picking the least suitable person to be President. Not to mention the Saudi cousins who do not need to hark back to the good old days, they are living it, and still control a goodly percentage of the black stuff.

All in all the POI will remain high, $90-$120 with occasional fitful falls and rises above those two levels imo.

gg


----------



## Tyre Kicker

Totally agree with you gg.

Oil will be around much longer than many have foolishly begun to think in recent times.


----------



## qldfrog

Smurf1976 said:


> Whilst the thread subject is oil and this chart's about coal, it's a pretty good illustration of the underlying concept of resource constraints.
> 
> I'm posting it since it's one of the few examples from a developed country with accurate data where a resource has been almost completely exploited. It's a good illustration of the concept.
> 
> Now there's still plenty of coal as such in the UK today. It's just that what's left is of poor quality and/or costs a fortune to mine due to depth and so on. With minor exception there's nothing left of any real value.
> 
> Note also that Margaret Thatcher, popularly associated with the demise of the industry during the 1980's, wasn't even born until 12 years after production peaked in 1913 with production having already declined 58% from the peak by the time she became Prime Minister (1979). She may have slightly accelerated the inevitable but ultimately it was resource constraints that killed the British coal industry, it was already doomed - she was just the one who decided to pull the pin on its life support.
> 
> View attachment 139133
> 
> 
> Ultimately oil ends the same way. Not now but ultimately it has the same fundamental limit that "production" is really just extraction of a constantly diminishing natural resource. At some point it rolls over the peak, it will happen with the only question being when and under what circumstances - UK coal peaked just before WW1 and may have gone marginally higher if not for the war but ultimately resource limits are just that.



I agree with the overall idea but just believe due to the unique richness of oil in carbon chain varieties, we will have ongoing use longuer than expected by most ...
Even at 1000$ a barrel..not for burning in ICE or home furnace but for chemical feedstock.
So a greater emphasis on the type of oil bituminous,light etc with specific purposes will determine the future of explorers/oilers.


----------



## Smurf1976

qldfrog said:


> I agree with the overall idea but just believe due to the unique richness of oil in carbon chain varieties, we will have ongoing use longuer than expected by most ...
> Even at 1000$ a barrel..not for burning in ICE or home furnace but for chemical feedstock.
> So a greater emphasis on the type of oil bituminous,light etc with specific purposes will determine the future of explorers/oilers.



Oil use as such is not going away agreed.

Case in point, a couple of days ago I did some brazing at home and that's using propylene gas, a manufactured (that is, not naturally occurring) petroleum gas. Decades from now, someone may well be brazing something and using propylene gas to do it and same goes for lots of other uses.

For relatively low value things though it's days are numbered in my view. The ultimate example:




Location: Cooper Basin (South Australia). Image: Santos

Even if you're literally producing your own oil, and that is a real working oil field, it's still cheaper to power the pump by some other means rather than burning some of your oil as used to be done.

Short term though, well the ACCC's LNG netback pricing for the next year was updated today.

Those figures are in AUD and are the value of natural gas "as gas" before it's turned into LNG. Multiply by 6.1 to get an equivalent oil price in AUD.

There's plenty of reports emerging regarding fuel switching _from_ gas _to_ oil in some countries due to the situation with natural gas and that's going to put upward pressure on oil consumption so long as it remains the cheaper option for firing boilers and so on.

How long it persists is anyone's guess really - the ACCC figures are just market data (see link below for the methodology etc). Throughout 2022 price is seriously high and at present oil's the cheaper fuel of the two.


April 202244.55May 202241.59June 202240.19July 202239.32August 202238.84September 202238.66October 202237.37November 202237.51December 202236.57January 202333.29February 202331.38March 202326.25April 202323.47May 202321.89June 202322.46July 202321.89August 202322.14September 202322.67October 202322.14November 202322.33December 202322.37January 202421.03February 202421.29March 202420.75

Data from https://www.accc.gov.au/regulated-i...as-inquiry-2017-2025/lng-netback-price-series


----------



## rederob

Overnight we saw WTI rise about 10% from yesterday's low of $94, so expect our oilers to have a bumper day.
As you can see from the chart below, which shows the price trend for 2022, WTI is presently trading on the low side.
I still think it's far too early to draw any meaningful conclusions about POO's fundamentals while the Ukranian conflict remains in play, but clearly the market believes we are going to see further upside ahead.




With 5% - 10% price movements over 24 hours becoming frequent in recent weeks we could easily end up over $130/bbl next week.  That's not a prediction, merely an observation of volatility.
On the flipside, I can't see support being challenged near term.


----------



## over9k




----------



## over9k

_"Think the Europeans will need to get by without Russian crude? You are 100% correct. But you are not thinking anywhere near big enough.

Most of Russia’s oil fields are both old and extraordinarily remote from Russia’s customers. Fields in the North Caucasus are either tapped out or were never refurbished in the aftermath of the Chechen Wars, those of Russia’s Tatarstan and Bashkortostan provinces are well past their peak, and even western Siberian fields have been showing diminishing returns since the 2000s. With few exceptions, Russia’s oil discoveries of the last decade or three are deeper, smaller, more technically challenging, and even farther from population centers than the older fields they would be expected to replace. Russian output isn’t in danger of collapsing, but maintaining output will require more infrastructure, far higher up-front costs, and ongoing technical love and care to prevent steady output declines from becoming something far worse.

While the Russians are no slouches when it comes to oil field knowledge, they were out of circulation from roughly 1940 through 2000. Oil technology came a long way in those sixty years. Foreign firms—most notably supermajors BP and Shell, and services firms Halliburton and Schlumberger—have collectively done work that is probably responsible for half of Russia’s contemporary output.

The Western supermajors have left. All of them. Just as the Ukraine War began, Exxon and BP and Shell have walked away from projects they’ve sunk tens of billions of dollars into, knowing full well they won’t get a cent of compensation. Halliburton and Schlumberger’s operations today are a shadow of what they were before Russia’s previous invasion of Ukraine in 2014. Between future sanctions or the inability of the Russians to pay them with hard currency, those operations now risk winding down to zero. The result is as inevitable as it is damning: at least a 50% reduction in the ability of Russia to produce crude. (No. Chinese oilmen cannot hope to keep things flowing. The Chinese are worse in this space than the Russians.) The outstanding question is how soon?

Sooner than you think. It’s an issue of infrastructure and climate.

First, infrastructure. All of Russia’s oil flows first travel by pipe—in some cases for literally thousands of miles—before they reach either a customer or a discharge port. Pipes can’t . . . dodge. Anything that impedes a single inch of a pipe shuts the whole thing down. In the post-Cold War globalized Order when we all got along, this was something we could sing-song-skip right by. But with the Russians dropping cluster bombs on civilian targets - as they started doing on Feb 28 - not so much. Whether the Russians destroy the pipes with their indiscriminate use of ordinance (like they damaged a radiation containment vessel at Chernobyl!!!) or Ukrainian partisans target anything that brings the Russians income, much of this system is doomed.
Second, climate. Siberia, despite getting cold enough to literally freeze your nose off in October, doesn’t get cold enough. Most Russian oil production is in the permafrost, and for most of the summer the permafrost is inaccessible because its top layer melts into a messy, horizon-spanning swamp. What the Russians do is wait for the land to freeze, and then build dike-roads and drill for crude in the long dark of the Siberian winter. Should something happen to consumption of Russian crude oil or any of the millions of feet of pipe that take that crude from wellhead to port or consumer, flows would back up through the literally thousands of miles of pipes right up to the drill site. There is no place to store the stuff. Russia would just need to shut everything down. Turning it back on would require manually checking everything, all the way from well to border.

The last time this happened was the Soviet collapse in 1989. It took millions of manhours of help from the likes of BP and Halliburton – and thirty-two years – for Russia to get back to its Cold War production levels. And now, with war on in Ukraine, insurance companies are cancelling policies for tankers carrying anything Russian on Seas Black and Baltic while the French seize Russian vessels, and the Russian Central Bank under the strictest financial sanctions ever, it is all falling apart. Again.

Even in the sunshine and unicorn scenario that Putin duct tapes himself to a lawn chair and throws himself into a pool, and a random band of kindly kindergarten teachers take over the Russian government, we should not expect the energy supply situation in Russia to begin to stabilize before 2028, and for us to return to what we think of as the status quo before 2045.

In the meantime, the debate of the moment is expanded energy sanctions. Once everyone concludes that Russian crude is going away regardless, there’s something to be said about pre-emptively sanctioning Russian energy before reality forces the same end result. Moral high road and all that. Bottom line: Uuuuugh! The disappearance of some four to five million Russian barrels of daily crude production will all by itself kick energy prices up to at least $170 a barrel. A global energy-induced depression is in the wind.

But probably not an American one. In the bad ol’ days before World War II there wasn’t a “global” oil price. Each major country or empire controlled its own production and maintained its own - sequestered - market. Courtesy of the American shale revolution and preexisting legislation, the U.S. president has the authority to end American oil exports on a whim and return us to that world. An American export ban would flood U.S. refiners with relatively cheap shale oil. Those refiners will certainly bitch - their facilities have a taste for crude grades different from what comes out of Texas and North Dakota - but having a functional price ceiling within the United States of roughly $70 a barrel will achieve precisely what Joe Biden is after: cheaper gasoline prices.

The rest of the world? They’ll have to grapple with losing Russian and American crude at the same time. If the “global” price stays below $200, I’d be shocked".

 - _Peter Zeihan


----------



## rederob

*This *article gives a good overview of the North American drilling situation, including crude oil projections for the next 2 years.
Here's the Baker Hughes rig count for last week, showing yet another decline despite POO over $100/bbl:


I could not find an explanation for the huge drop in Canada's numbers, so if anyone knows, please post.

Meanwhile there are workarounds - known as "carve outs" - to *SWIFT sanctions* on Russia that allows many economies to continue buying their oil and gas.  How much in total and at what price remains unknown.


----------



## rederob

Steady continuation of an upward trend can be seen in this short term chart for POO:


Nothing on the horizon to indicate it will fall off a cliff.
Also, the* world's 3 largest oil services companies* are now pulling out of Russia.  That's not a skill gap easily backfilled, so producers are going to have to push their luck to maintain output.


----------



## rederob

If patterns repeat then POO has a bit more upside before tailing off and going sideways for a short while.
Below I have shaded in white the TSI trends that show how this could play out:


----------



## qldfrog

‘Wakey, wakey. We are not going back to normal business in a few months’: A top hedge-fund manager says crude oil prices could hit $250 this year
					

Top commodities experts met at the Commodities Global Summit in Lausanne, Switzerland this week and many predicted oil's price will top $200 this year.




					finance.yahoo.com
				



Interesting as on mainstream financial site.


----------



## wayneL

qldfrog said:


> ‘Wakey, wakey. We are not going back to normal business in a few months’: A top hedge-fund manager says crude oil prices could hit $250 this year
> 
> 
> Top commodities experts met at the Commodities Global Summit in Lausanne, Switzerland this week and many predicted oil's price will top $200 this year.
> 
> 
> 
> 
> finance.yahoo.com
> 
> 
> 
> 
> Interesting as on mainstream financial site.



I remember they were predicting 200$ oil back in 2008 (the last time I was looking around for a good second hand buggy and a pair of Clydies)... got to around 150ish IIRC.

This time probably has a lot more potential to actually get there and even more.

The big question is will it be really temporary like last time or will there be a permanently high Plateau of prices (like they predicted for the Dow in 1929).

I'm leaning towards believing there is something more sinister behind it all this time.


----------



## Smurf1976

wayneL said:


> I'm leaning towards believing there is something more sinister behind it all this time.



Never attribute to malice what can be explained by incompetence.

Not always true but usually is.


----------



## Smurf1976

I know the thread's about oil but I'll mention gas too since it's related.

International LNG prices have gone crazy as per my previous post and the ACCC data.

Now it looks like the Australian east coast domestic market is just starting to move.

A year or two ago prices were in the $6 - $8 range per GJ and have generally risen slowly to around $10 since then. Until a few days ago.....

Current price in Victoria is $10.99 and projected at $12.49 on Tuesday this week. Much the same for other states. That's only a small movement but if it were on a chart (which I don't have...) then it would be a breakout.

My personal view there is prices are headed a lot higher and will get there quickly once some cold weather arrives and pushes demand up (Melbourne being the most critical location in that regard). Reason being physical supply capacity just isn't there without diverting gas away from the export market that values it over $40 per GJ.


----------



## divs4ever

don't forget the dollar ( US and Aus ) are plummeting in spending power  especially compared to 2008


----------



## qldfrog

Could be in that thread, or in the "russian invasion" one.
As we are talking facts and not Ukrainian PR, i prefer that place.
Mirroring my thinking, 








						The PetroYuan and the Rise of a New Economic Order - PanaTimes
					

We are witnessing incredible developments in the global economy, driven by geopolitics. The




					panatimes.com


----------



## frugal.rock

It would seem the US and Iran are both rather keen to conclude nuke talks so Iran can get on with oil exports to other than the back hand China deals and whoever else buys off them, despite sanctions (N Korea etc)....

Saudi's not keen for it, but having trouble with Houthi rebels running amok at the behest of... 🦊 so don't see Iran as a threat to POO, just a general threat...
(you would need a degree to study/ understand all the historical tribal stuff going on over there & secret US business )
 The US has released reserves recently, and may do again.
Not really an emergency, unless you consider Biden's political grip is urgent. Befuddling old fool...
The Whiteho's are starting to disown him.... 😅🤫

China Sinopec looking at spending a record amount in investment for down the line.
Most spare Russian oil is going to find a new home fairly easily, mostly India/ China,although China will be slowing down again.

POO?  Expecting to see it head lower for a little while, before it resumes an uptrend again.


----------



## bluekelah

wayneL said:


> I remember they were predicting 200$ oil back in 2008 (the last time I was looking around for a good second hand buggy and a pair of Clydies)... got to around 150ish IIRC.
> 
> This time probably has a lot more potential to actually get there and even more.
> 
> The big question is will it be really temporary like last time or will there be a permanently high Plateau of prices (like they predicted for the Dow in 1929).
> 
> I'm leaning towards believing there is something more sinister behind it all this time.



I like to look for simpler explanations. For oil it will be the lack of investment and CAPEX past 2 years, remember when oil dropped to zero during covid? so for 2020 u could say no spending at all, and probably some extra investment only starting to flow in during 2H2021 as oil prices slowly recovered past 40USD mark and up to 70-80 by end of the year. 

Shale needs more than 40USD to be profitable. Likely higher at $45USD now considering cost of labour and inflation on goods used. But the supply doesnt just kick in, it will take time to permit new wells and get the funding and staff to restart old ones. 

I monitor some oil rig makers as well, and only toward 2H2021 have they started getting some interest and smallish orders for new rigs.

So with underinvestment for 2020 and most of 2021, i reckon we are going to see a continued climb in oil prices for at least next 1-2years. Russia problems, Saudi problems will compound the problem but unless there is a sudden recession happening, imho POO will slowly trend up this year due to supply limits from prior underinvestment into the sector, just like it had in 2021 on the back of covid recovery. 

I believe a repeat of history where oil prices went up to $180 before the GFC hit will happen again, only this time likely to breach $200 from inflation and just the amount of printed money sloshing around.


----------



## Garpal Gumnut

bluekelah said:


> I like to look for simpler explanations. For oil it will be the lack of investment and CAPEX past 2 years, remember when oil dropped to zero during covid? so for 2020 u could say no spending at all, and probably some extra investment only starting to flow in during 2H2021 as oil prices slowly recovered past 40USD mark and up to 70-80 by end of the year.
> 
> Shale needs more than 40USD to be profitable. Likely higher at $45USD now considering cost of labour and inflation on goods used. But the supply doesnt just kick in, it will take time to permit new wells and get the funding and staff to restart old ones.
> 
> I monitor some oil rig makers as well, and only toward 2H2021 have they started getting some interest and smallish orders for new rigs.
> 
> So with underinvestment for 2020 and most of 2021, i reckon we are going to see a continued climb in oil prices for at least next 1-2years. Russia problems, Saudi problems will compound the problem but unless there is a sudden recession happening, imho POO will slowly trend up this year due to supply limits from prior underinvestment into the sector, just like it had in 2021 on the back of covid recovery.
> 
> I believe a repeat of history where oil prices went up to $180 before the GFC hit will happen again, only this time likely to breach $200 from inflation and just the amount of printed money sloshing around.



Thanks @bluekelah , a good summary of where we are at. 

One other factor I might add, and it is a black swan. Then we live in an age of black swans. 

I do not believe that Saudi stability is as good as it is portrayed. I cannot think of a country nor leadership around the world that is more hated than that sandy pit pilfered by the Saud cousins, all two or three thousand of them. Their only friends are the English upper class who come from a similar source of unearned wealth and such as Trumpers who are equally tarnished.

I could very well see a coup in Saudi Arabia which would send oil through the roof. 

gg


----------



## bluekelah

Garpal Gumnut said:


> Thanks @bluekelah , a good summary of where we are at.
> 
> One other factor I might add, and it is a black swan. Then we live in an age of black swans.
> 
> I do not believe that Saudi stability is as good as it is portrayed. I cannot think of a country nor leadership around the world that is more hated than that sandy pit pilfered by the Saud cousins, all two or three thousand of them. Their only friends are the English upper class who come from a similar source of unearned wealth and such as Trumpers who are equally tarnished.
> 
> I could very well see a coup in Saudi Arabia which would send oil through the roof.
> 
> gg



It's quite messy there much like it was in afghanistan due to the harsh deserts and often mountainous terrain, excellent for small ground forces to hide from airstrikes and guerilla type warfare..

Apparently the fighting there has been going on for 7 years now since the Houthis gained control of most of Yemen in 2015. They have in the past year been gaining ground in controlling the important Marib Province which has american oil interests and provides quite a bit of energy to Yemen. Marib is held by the remnants of the previous saudi/american backed gov troops.

Funny thing is houthis are supposedly supported by Iran and Saudi-coalition has american backing. Yet the Americans are trying to discuss lifting sanctions for oil with Iran, perhaps thats why Saudis are reaching out to the Chinese.

I dont see a coup in Riyadh for now, the crown prince who did the coup in 2017 had rounded up some other family members for plotting a coup in 2020, i doubt they would try again so soon,  but yeah oil markets would go crazy, like nickel markets now if that happens.

However I do see advancement of the houthi/yemen forces to perhaps take Marib by this year. It is very very hard to defend cities in that region and much like Afghanistan, Yemen is now a broken nonprofitable country which Americans will not be interested to send troops in to get killed, they had enough of that in Afghanistan. And a lot of saudi oil infrastructure is above ground, easy to be hit and detroyed if the aim of the opponent is to destroy and not to take the facilities intact.

But as I mentioned, supply constriants from underinvestment past couple years should be enough to bring oil price up to at least $150 this coming year.In any case I am accumulating oil plays now. JUST IN CASE


----------



## Garpal Gumnut

Well I’ve only flown in to one country that was all hunky dorey when I boarded and in full coup mode when I landed. 

It only took five to six bullets, there was some dispute about the number, but none about the outcome. 

I was a civilian and spent a rather uncomfortable six hours being guarded by some illiterate anxious young men in an airport hanger. 

We took off again and my only regret about the change of ghouls running said country was that I was unable to replenish my duty free grog which allayed my anxiety. 

So the point I’m making is that change of leadership particularly in countries like Saudi which is led by peasants little different from their grandparents can be quite sudden. 

And this will suddenly affect the oil price. 

gg


----------



## qldfrog

Coming soon near you:
Only so much i can stockpile:
https://oilprice.com/Energy/Energy-General/Rationing-Looms-As-Diesel-Crisis-Goes-Global.html


----------



## over9k

Oil down 6% and counting with the first round of peace talks agreed to start. 

There's going to be a hell of a dip to buy once there's a lull here before the saudi's & iranians start shooting at one another. That facility that was hit by the yemeni's or whoever it was over the weekend was only the beginning.


----------



## Garpal Gumnut

over9k said:


> Oil down 6% and counting with the first round of peace talks agreed to start.
> 
> There's going to be a hell of a dip to buy once there's a lull here before the saudi's & iranians start shooting at one another. That facility that was hit by the yemeni's or whoever it was over the weekend was only the beginning.



That sudden drop in POI is more due to COVID lockdowns in Shanghai than anything else atm. 

Interesting times.

Markets will whipsaw. 

The main thing is not to be on the wrong side of history. The world atm depends on Oil, Gas and Coal to turn the wheels of industry.

And will for some years to come. 

gg


----------



## rederob

POG and POO are both nicely volatile atm, and not too far off their all time highs given both have lost a lot of ground in recent weeks.
As I like to put things into proper perspective, POO's *hourly *chart is below, and the band colours will become clear in the chart afterwards, which is monthly:


Now let's go back 65 years and get the big picture:


There are three distinct phases, which need little explanation.
In this last phase which we are now in OPEC ceases to be the dominant player and market power fluctuations lead to continuing crazy price volatility.  Russian and then US production spikes after 2014 pushed down the POO to unsustainable levels, and that's why I have a horizontal grey band in the chart above.  The cost of finding new wells of quality (outside of the volume rich North American fracking patches), *and *being profitable is imho above $75/bbl.  You only need to look at the price charts of all the global (and Australian) oil majors to see their wealth destruction over the last decade.

The fourth phase will be the NEV transition.  
We are some years away and the likely trend as it dawns will see only those oil majors with low production costs surviving unless they too start buying into transitional opportunities, like both Shell and BP have with major investments in EV charging station rollouts.
I see the fourth phase as where oil prices will have a floor greatly over $100/bbl, as there will no longer be enough demand to fund the increasingly higher costs of exploration for consistently poorer ROI.


----------



## over9k

Garpal Gumnut said:


> That sudden drop in POI is more due to COVID lockdowns in Shanghai than anything else atm.
> 
> Interesting times.
> 
> Markets will whipsaw.
> 
> The main thing is not to be on the wrong side of history. The world atm depends on Oil, Gas and Coal to turn the wheels of industry.
> 
> And will for some years to come.
> 
> gg



Precisely


----------



## bluekelah

Garpal Gumnut said:


> Well I’ve only flown in to one country that was all hunky dorey when I boarded and in full coup mode when I landed.
> 
> It only took five to six bullets, there was some dispute about the number, but none about the outcome.
> 
> I was a civilian and spent a rather uncomfortable six hours being guarded by some illiterate anxious young men in an airport hanger.
> 
> We took off again and my only regret about the change of ghouls running said country was that I was unable to replenish my duty free grog which allayed my anxiety.
> 
> So the point I’m making is that change of leadership particularly in countries like Saudi which is led by peasants little different from their grandparents can be quite sudden.
> 
> And this will suddenly affect the oil price.
> 
> gg



Thanks for the personal story, indeed thats why the middle eastern  region seems to be in constant conflict. The oil wells are like gold mines, and there are so many different 'tribes'

Another sudden coup in saudi would definitely send pog to crazy prices. 

But I think just basic lack of ability of oil sector to increase supply significantly post covid will edge price much higher than today.

Oil rationing could happen soon as well if we have a breakdown of supply chains worldwide and gov like China start hoarding oil.


----------



## qldfrog

bluekelah said:


> Thanks for the personal story, indeed thats why the middle eastern  region seems to be in constant conflict. The oil wells are like gold mines, and there are so many different 'tribes'
> 
> Another sudden coup in saudi would definitely send pog to crazy prices.
> 
> But I think just basic lack of ability of oil sector to increase supply significantly post covid will edge price much higher than today.
> 
> Oil rationing could happen soon as well if we have a breakdown of supply chains worldwide and gov like China start hoarding oil.



As i remember it, China was filling up like mad less than a year ago..
Not just starting hoarding, and australia was starting to reflect wd had not even recommended reserve..so we signed a IOU with the US to use their own reserve...sure..


----------



## qldfrog

https://finance.yahoo.com/news/russian-oil-tankers-vanished-tracking-185404054.html


----------



## CityIndex

Oil prices have reversed the last two days of gains on reports that the US is weighing a plan to release a million barrels a day. WTI is down 4.67% at the time of writing. 

Trendline support for US crude coming from the December lows is around the key psychological level of $100, and price could be at risk of a downside breakout if the market sees this as enough to anticipate to offset the loss of Russian supply. 

All trading carries risk, and headlines out of Eastern Europe will surely continue to play a massive role in direction, but should be interesting to see how price moves from here, especially with the OPEC+ meeting today as well.


----------



## Garpal Gumnut

CityIndex said:


> Oil prices have reversed the last two days of gains on reports that the US is weighing a plan to release a million barrels a day. WTI is down 4.67% at the time of writing.
> 
> Trendline support for US crude coming from the December lows is around the key psychological level of $100, and price could be at risk of a downside breakout if the market sees this as enough to anticipate to offset the loss of Russian supply.
> 
> All trading carries risk, and headlines out of Eastern Europe will surely continue to play a massive role in direction, but should be interesting to see how price moves from here, especially with the OPEC+ meeting today as well.



Mate,

With respect,

In this climate the little old lady sitting outside Coles on a bench checking her purse has as much chance of predicting the future as the latest market insights from your team of expert analysts.

gg


----------



## Garpal Gumnut

Mr. Biden will make a statement early tomorrow morning re. his thoughts on releasing US Oil Reserves to combat price rises and inflation. 

The POO and oil stocks here have retreated today. 

@CityIndex and others have predicted this. Well done. 

My only thoughts are whether the USA will keep sufficient in reserve for war should they be dragged in to the present Russian push for hegemony. 

This may impact how much they release and the POO. 

Seesawing is normal in unpredictable times. 

gg


----------



## Smurf1976

CityIndex said:


> Oil prices have reversed the last two days of gains on reports that the US is weighing a plan to release a million barrels a day.



Just my opinion but I've long thought that at some time we'd see the US draw down the Strategic Petroleum Reserve (SPR) in a big way and that doing so would mark a turning point of historical significance far beyond the oil itself.

580 million barrels in storage at present so 81% full (nominal capacity is 714 million barrels). Draw out the reported 1 million barrels per day for six months and that drops it down to just below 400 million barrels or 56% of capacity.

My underlying thought being that it'll never be refilled and at some point, perhaps a decade from now, ends up being completely emptied amidst an environment of broader problems. That might seem a bit far fetched but they haven't put back the release in 2011 yet, that's the last time it was full and the present level is lower than any time since 2002.

Drop it to 400 million barrels and that'll take it down to a point last seen in 1984.


----------



## Garpal Gumnut

Smurf1976 said:


> Just my opinion but I've long thought that at some time we'd see the US draw down the Strategic Petroleum Reserve (SPR) in a big way and that doing so would mark a turning point of historical significance far beyond the oil itself.
> 
> 580 million barrels in storage at present so 81% full (nominal capacity is 714 million barrels). Draw out the reported 1 million barrels per day for six months and that drops it down to just below 400 million barrels or 56% of capacity.
> 
> My underlying thought being that it'll never be refilled and at some point, perhaps a decade from now, ends up being completely emptied amidst an environment of broader problems. That might seem a bit far fetched but they haven't put back the release in 2011 yet, that's the last time it was full and the present level is lower than any time since 2002.
> 
> Drop it to 400 million barrels and that'll take it down to a point last seen in 1984.



Good points especially in relation to switch to EV, Hydrogen ICE and renewables. 

Many commentators on Bloomberg today however believe it will not change much the problems faced this year as it will increase demand without other measures. 

And that is just during the summer months led by motorists and trucks. 

It is looking very much like the 70's Oil Crisis.

gg


----------



## over9k

Smurf1976 said:


> Just my opinion but I've long thought that at some time we'd see the US draw down the Strategic Petroleum Reserve (SPR) in a big way and that doing so would mark a turning point of historical significance far beyond the oil itself.
> 
> 580 million barrels in storage at present so 81% full (nominal capacity is 714 million barrels). Draw out the reported 1 million barrels per day for six months and that drops it down to just below 400 million barrels or 56% of capacity.
> 
> My underlying thought being that it'll never be refilled and at some point, perhaps a decade from now, ends up being completely emptied amidst an environment of broader problems. That might seem a bit far fetched but they haven't put back the release in 2011 yet, that's the last time it was full and the present level is lower than any time since 2002.
> 
> Drop it to 400 million barrels and that'll take it down to a point last seen in 1984.



Won't be necessary once all their new shale capacity is built out. 

They could also block exports to dump domestic prices, refill, then reenable exports. Or even just tell the producers to refill them at $70/barrel and tell them they'll block exports if they don't and won't reenable them until they do. Wouldn't be difficult. 

The uppermost echelons being beholden to the interest of big business might be the only reason why we haven't seen this already. 

But yeah, some more domestic capacity and this all goes away. Very simple supply & demand.


----------



## Gunnerguy

over9k said:


> Won't be necessary once all their new shale capacity is built out.
> 
> They could also block exports to dump domestic prices, refill, then reenable exports. Or even just tell the producers to refill them at $70/barrel and tell them they'll block exports if they don't and won't reenable them until they do. Wouldn't be difficult.
> 
> The uppermost echelons being beholden to the interest of big business might be the only reason why we haven't seen this already.
> 
> But yeah, some more domestic capacity and this all goes away. Very simple supply & demand.



The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.
I don’t know if POO will go down or up in the short /medium time. But the US reserves release will not have any significant effect.
Gunnerguy.


----------



## over9k

Gunnerguy said:


> The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.
> I don’t know if POO will go down or up in the short /medium time. But the US reserves release will not have any significant effect.
> Gunnerguy.



I was talking about the producers. Cutting their access to foreign markets off would give the yanks a domestic oil price of about $70/barrel. The rest of the world would be looking at more like $170. 

Opec's just opened the taps by another 400k/day though, which is good.


----------



## Smurf1976

over9k said:


> Won't be necessary once all their new shale capacity is built out.



When will that happen though?

Latest figures I can find puts the US drilling rig count, for rigs specifically drilling for oil (not gas) at 531.

That compares to about 700 immediately prior to the pandemic and almost 900 at the end of 2019.

Unless that changes, it's going to be pretty slow going in terms of any production increase in the US.


----------



## Smurf1976

Gunnerguy said:


> The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.



Agreed but realistically it's more than any other single measure is likely to do in practice.

1 million barrels per day from the SPR for six months seems to be what they're suggesting.

Versus 0.432 million barrels per day just announced by OPEC (and not really a new announcement anyway) with the reality that in recent times OPEC has underdelivered on output hikes so the real increase will likely be somewhat less.

A related issue with OPEC is that of spare capacity and how much they can really produce? There'd be few if any people on the planet who know the actual truth there as a whole given that OPEC itself can really only take its own members' word for it and nobody audits this stuff.

What can be said though is that looking at recent data, a number of OPEC members are failing to meet quotas which suggests they're maxed out so far as their actual usable production is concerned. Not all, there's some that are doing it so clearly have had spare, but some are struggling.


----------



## Smurf1976

There is of course a good side to this:


----------



## Garpal Gumnut

Gunnerguy said:


> The US release of strategic reserves is SOOOOOO insignificant to the daily US or global current supply/demand.it will have a blip of affect on the oil price.
> I don’t know if POO will go down or up in the short /medium time. But the US reserves release will not have any significant effect.
> Gunnerguy.



Just now.




I'm happy.

gg


----------



## JohnDe

> Unprecedented US oil release to ‘make a difference’
> 
> US President Joe Biden will tap up to 180 million barrels of government oil reserves to help tamp down near-record high fuel prices, an unprecedented government intervention into oil markets following Russia’s invasion of Ukraine
> 
> In remarks from the White House on Thursday (US time), Mr Biden framed high energy prices as a wartime issue that requires a robust and wide-ranging response.
> 
> The oil release – about 1 million barrels a day for six months, starting in May – would be the biggest-ever drawdown from the country’s emergency stockpile of roughly 568 million barrels
> 
> Mr Biden said he would also invoke the Defence Production Act – a Korean War-era national security mobilisation law – to boost domestic output of minerals used in batteries for electric vehicles and other clean-energy technology
> 
> And he called on Congress to pass a new law that would push oil companies to drill faster when they have leases on federal lands, including by imposing fees on companies for unused leases
> 
> “The action I’m calling for will make a difference over time,” Mr Biden said
> 
> “But the truth is it takes companies months, not days to increase production … This is a wartime bridge to increase oil supply until production ramps up later this year.
> 
> Mr Biden’s remarks drew criticism from the oil industry, which said that he unfairly blamed US energy companies for not pumping more oil in response to shortages stemming from the Russian invasion and the economic rebound from the Covid-19 pandemic
> 
> “The best thing the White House can do right now is to remove barriers to investment in American energy production and infrastructure,” Mike Sommers, leader of the American Petroleum Institute, said in a statement.
> 
> “Unfortunately, today we heard more mixed signals about developing affordable, reliable and secure American natural gas and oil.
> 
> Charging companies for unused leases would only add to rising costs that oil producers face due to inflation and supply-chain delays, said Tyler Glover, chief executive of Texas Pacific Land Corp., a big landowner in the Permian Basin in West Texas.
> 
> The Biden administration has also repeatedly asked the Organisation of the Petroleum Exporting Countries to speed up production increases, which the cartel has repeatedly rejected. OPEC decided again Thursday to stick with a production plan it has arranged with Moscow in which members will raise their collective oil output by a modest 432,000 barrels a day.


----------



## over9k

Posted this in the inflation thread too but the two are obviously quite interlinked. Well worth a watch.


----------



## JohnDe

over9k said:


> Posted this in the inflation thread too but the two are obviously quite interlinked. Well worth a watch.





Pretty much the same as it has always been. 

Yes, countries releasing there reserves this year are going to have to replenish next year. Meaning that they may cause the price to stay high because of increased demand. However, if prices fluctuate the purchases could be made when on the low side and stopped as it increases. It wasn't long a go when oil prices where in the negative.

Shale production, the President is asking a lot for companies to ramp up production immediately. First there is labour shortages, wells have been capped will require workers and time to put back into production, prices a fluctuating too much to ensure a profit will be made once the extra sites are up and running, other oil nations are increasing supply, which could reduce prices.

Perfect storm?

What all this leads to is massive investment and development of alternative energy sources and storage. Watch the prices of materials for electrics and batteries.


----------



## over9k

JohnDe said:


> Pretty much the same as it has always been.
> 
> Yes, countries releasing there reserves this year are going to have to replenish next year. Meaning that they may cause the price to stay high because of increased demand. However, if prices fluctuate the purchases could be made when on the low side and stopped as it increases. It wasn't long a go when oil prices where in the negative.
> 
> Shale production, the President is asking a lot for companies to ramp up production immediately. First there is labour shortages, wells have been capped will require workers and time to put back into production, prices a fluctuating too much to ensure a profit will be made once the extra sites are up and running, other oil nations are increasing supply, which could reduce prices.
> 
> Perfect storm?
> 
> What all this leads to is massive investment and development of alternative energy sources and storage. Watch the prices of materials for electrics and batteries.



You'd think the government could promise to buy X amount at A price, Y amount at B price, Z amount at C price etc etc as reserve topups to give the oil companies some kind of certainty. 

It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.


----------



## JohnDe

over9k said:


> You'd think the government could promise to buy X amount at A price, Y amount at B price, Z amount at C price etc etc as reserve topups to give the oil companies some kind of certainty.
> 
> It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.




Are you saying that the government should force the seller to sell at a certain price?


----------



## over9k

JohnDe said:


> Are you saying that the government should force the seller to sell at a certain price?



Well they could, but no. I'm saying the producers aren't going to want to up capacity without some kind of assurance that there will actually be a market for said capacity. If the government promised to refill the reserves at price X (which bolsters demand) then that would obviously be quite a large carrot and create a bit of a price floor for the producers. 

So if producers wanted a floor of $80/barrel to up production capacity then the government could promise to buy X million barrels at that price at whatever moment the market rate gets to that point.  

The stick approach is the fact that biden has the power to unilaterally ban all U.S oil exports which would relegate U.S producers to a domestic market only and at around $70/barrel. Simply threatening to do this could be the stick necessary to refill the reserves cheaply.


----------



## Smurf1976

over9k said:


> It strikes me as lunacy not to both A: top the reserves up if prices drop and B: not promise to do so as well, but there could be more going on than I know about.



My thinking is simply that they won't actually do it regardless of what opportunities they might have.

The US hasn't replaced the drawdown in 2011 yet and that's despite having had Presidents from both parties during that time and an oil price crash as well.

Hence my thinking that once it's drawn out, it'll very likely never be refilled or at least not in a timeframe relevant to discussion today.

That is just an assumption in my part though looking at the past 11 years. Politics will no doubt come into it. 

Data is here: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCSSTUS1&f=M


----------



## over9k

Smurf1976 said:


> My thinking is simply that they won't actually do it regardless of what opportunities they might have.
> 
> The US hasn't replaced the drawdown in 2011 yet and that's despite having had Presidents from both parties during that time and an oil price crash as well.
> 
> Hence my thinking that once it's drawn out, it'll very likely never be refilled or at least not in a timeframe relevant to discussion today.
> 
> That is just an assumption in my part though looking at the past 11 years. Politics will no doubt come into it.
> 
> Data is here: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCSSTUS1&f=M



Seems unnecessary seeing as all the production is now onshore I agree, but still, if there's going to be more events like this they could at least use it to smooth prices out a bit.


----------



## qldfrog

And preaching to convert:
https://panatimes.com/the-man-who-will-kill-the-us-dollar 
And the interactions USD POO and also POG... interesting times


----------



## qldfrog

At a loss of a good thread for this link...
Loosely related to oil cocoal infustry conversion.
Anyone free to move to a better location
:
The wet dream that Australia will become the H2 provider of the world with FMG turning into a tree hugging saviour is to face a rude shock
https://theconversation.com/austral...to-asian-markets-but-they-dont-need-it-179381


----------



## rederob

Bottom was in last week, so after a bit of equivocation yesterday we have now got POO pivoting to the upside:


If 2022's trend continues then we see this rise headed over $120/bbl.
North American drillers are not especially keen to ramp up output despite a sustained high POO:


So with Biden releasing oil from strategic reserves for the time being, and those oils needing to be replaced, then the good times for producers look set for months ahead.


----------



## frugal.rock

Smurf1976 said:


> There's plenty of reports emerging regarding fuel switching _from_ gas _to_ oil in some countries due to the situation with natural gas and that's going to put upward pressure on oil consumption so long as it remains the cheaper option for firing boilers and so on.



Weekly. Might be chopping and changing between sources lately Smurf?
Looks like gas is going for another harder run.






frugal.rock said:


> POO? Expecting to see it head lower for a little while, before it resumes an uptrend again.



I wouldn't be surprised to see $80 tested, $90 probably a given.
I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.
Poo's recent "stiff peaks" (seen on weekly as ranging bars) have been over whipped the last few weeks by the "entities" and geo fears, but reality is melting it down again.
AEI announcements in coming days will, imo, dampen prices.
I'm trying to drive as little as possible these days.
Don't think it's a "Zoolander" style bowser fest going on out there, like it was mid 2020, if you had dared to leave your home that is!...? 😅

"A Model, Idiot?" haha.


----------



## qldfrog

And this has real life impact from sri Lanka to americas..
https://www.reuters.com/world/ameri...five-fuel-price-rises-stoke-anger-2022-04-06/

And give it 3 to 6 months and we will have hunger riots.. oil IS food


----------



## CityIndex

frugal.rock said:


> I wouldn't be surprised to see $80 tested, $90 probably a given.
> I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.



The IEA’s decision to bolster the US’s oil release adds to the bearish pressure being created by the Covid surge in China, so you may very likely be correct in expecting a bigger decline.

The break below the key psychological $100 level and uptrend support coming from early December really opens the door for this, especially as volume was higher on the day.

However, volatility is likely to continue as price remains closely tied with headlines relating to Russia, so it’s important to keep in mind that all trading carries risk as there’s no telling what the next development will be.


----------



## Garpal Gumnut

frugal.rock said:


> Weekly. Might be chopping and changing between sources lately Smurf?
> Looks like gas is going for another harder run.
> View attachment 140057
> 
> View attachment 140058
> 
> 
> I wouldn't be surprised to see $80 tested, $90 probably a given.
> I'm giving this corrective pricing pattern time to play out properly (a few weeks, even months, perhaps?), before expecting a resumption of longer term trend.
> Poo's recent "stiff peaks" (seen on weekly as ranging bars) have been over whipped the last few weeks by the "entities" and geo fears, but reality is melting it down again.
> AEI announcements in coming days will, imo, dampen prices.
> I'm trying to drive as little as possible these days.
> Don't think it's a "Zoolander" style bowser fest going on out there, like it was mid 2020, if you had dared to leave your home that is!...? 😅
> 
> "A Model, Idiot?" haha.






CityIndex said:


> The IEA’s decision to bolster the US’s oil release adds to the bearish pressure being created by the Covid surge in China, so you may very likely be correct in expecting a bigger decline.
> 
> The break below the key psychological $100 level and uptrend support coming from early December really opens the door for this, especially as volume was higher on the day.
> 
> However, volatility is likely to continue as price remains closely tied with headlines relating to Russia, so it’s important to keep in mind that all trading carries risk as there’s no telling what the next development will be.



I must admit @frugal.rock and @CityIndex that the POO is extremely volatile. 

I do not share the hope that Brent will fall to $80. 

The recent chart indicates it is still rising and unless it gets lower highs and a lower low from the technical view it is still a bullish proposition. 

Fundamentally the Western Europeans need more oil and gas to avoid a recession and it would seem that less will come from Russia. 

The USA under the Democrats will not be able to reposition quickly and the release of their reserves is a pittance, so in terms of the Aussie Dollar, even if the Petrodollar aka $USD is worth less our petroleum assets will appreciate. 

As to the Saudis, Iranians, Chinese and Russians, their supply and demand, who knows?

Uncertainty increases prices generally.

gg


----------



## frugal.rock

Garpal Gumnut said:


> I do not share the hope that Brent will fall to $80.



Surely you'd like to fill the Arnage up at lower prices GG ?
I don't follow Brent. Just WTI.
I have no oilers on the books at the moment.
Have noticed the biggest spread between WTI and Brent lately that I have ever seen. (not offering any take aways on that...don't have any😋, apart from the obvious)

I  dunno Mr Gumnut, it's just the vibe, and the rising peaks and subsequent dropoffs over a longer term chart has me thinking this recent volatility may settle into some form of regularity again, but geo factors may keep playing it?
With the chop, either way play.

Just because I have an opinion on something, doesn't mean it's correct and going to play out the way I think. It's just when it does, the trade plan is triggered.
Oil and coal, such filthy products that traders are loving at the moment...🤔
Cheers.


----------



## Garpal Gumnut

I don't know if any ASF members have ever been in an Oil Crisis similar to that following the 6 Day War between Israel and the Arab States. It was a time of wild fluctuations in price, pushing cars in to servos and fisticuffs even between godbotherers who would normally just say a prayer, do the hokey pokey,, hop on a mat or chant oooom. 

We have less Oil now than then and greater consumption ergo a repeat of the 70's is upon us. 

Nonetheless the IEA has released more stores of Oil but there is a catch, the Oil released from the US reserves is included. 

So the Oil price fell and is now recovering. 

Get ready to forget god and push your cars.

https://oilprice.com/Latest-Energy-...grees-To-120-Million-Barrels-SPR-Release.html 

gg


----------



## Smurf1976

Garpal Gumnut said:


> I don't know if any ASF members have ever been in an Oil Crisis similar to that following the 6 Day War between Israel and the Arab States. It was a time of wild fluctuations in price, pushing cars in to servos and fisticuffs even between godbotherers who would normally just say a prayer, do the hokey pokey,, hop on a mat or chant oooom.



Whilst I do think we've a lot of problems with oil, the thought that comes to mind is "markets don't move in a straight line".

If governments trying to get the price down and making no secret of that can't actually lower the price then that would be a massively bullish signal longer term.


----------



## rederob

Smurf1976 said:


> Whilst I do think we've a lot of problems with oil, the thought that comes to mind is "markets don't move in a straight line".
> 
> If governments trying to get the price down and making no secret of that can't actually lower the price then that would be a massively bullish signal longer term.



Below is the big picture back to the GFC:


The present trend is very bullish and the all time record high POO can be hit in a matter of weeks given the right circumstances.
However, an interesting question to now ask is if we have entered a new paradigm: one of pervading high POO?
Right now it looks like neither the frackers nor OPEC are overly keen to add more production.  Most frackers are still paying down debt so in a fashion welcome high prices, insteading of pushing out more oil for less.  Meanwhile conventional drillers know that every year the cost of replenishing reserves increases, so to stay in business they need their shareholders to get decent returns and not continue their downward share price  spirals.


----------



## ducati916

rederob said:


> Below is the big picture back to the GFC:
> View attachment 140104
> 
> The present trend is very bullish and the all time record high POO can be hit in a matter of weeks given the right circumstances.
> However, an interesting question to now ask is if we have entered a new paradigm: one of pervading high POO?
> Right now it looks like neither the frackers nor OPEC are overly keen to add more production.  Most frackers are still paying down debt so in a fashion welcome high prices, insteading of pushing out more oil for less.  Meanwhile conventional drillers know that every year the cost of replenishing reserves increases, so to stay in business they need their shareholders to get decent returns and not continue their downward share price  spirals.




Here is an inflation adjusted POO




The argument could be made that between $60 - $80 is the new sustainable price. There will be price shocks.

jog on
duc


----------



## DaveTrade

Looking at Oil through the lens of the USO etf, the FIB levels are lining up nicely with price action. The near term trend is down making the 68 area next support if the current level doesn't hold. I have an oil stock in my list that I'm waiting to go long on when oil turns.


----------



## Garpal Gumnut

That she blows again or something similar. 

Brent comfortably above $100 again. 




gg


----------



## Jeda

better get used to it, going to be a roller coaster ride for a long time 🎢


----------



## Garpal Gumnut

For those of you who didn't live through the 70's, this Oil "Shock" is going to last a long, long, time. 

Once out of the bottle too many players interfere with the Genii. This Jinn ain't for stopping. 




gg


----------



## DaveTrade

Oil (USO chart) moving higher and showing no sign of slowing. The reaction to minor resistance above will give feedback on the possible length of the move.


----------



## qldfrog

There are many signs that further sanctions on Russian energy exports inc gas in the EU are being delayed past the french election second round to ensure the reelection of Macron (wef alumni and euro deep state rep)
As such , expect these sanctions to be announced in a week, and so be followed by a jump in oil prices then.
Buy cheap oil and oilers in the next 4 days


----------



## qldfrog

And remember:
https://www.wsj.com/articles/green-...estVariant=cx_4&cx_artPos=0&mod=WTRN#cxrecs_s


----------



## rederob

qldfrog said:


> And remember:
> https://www.wsj.com/articles/green-...estVariant=cx_4&cx_artPos=0&mod=WTRN#cxrecs_s



What are we supposed to remember?
Lomborg has no credibility on oil matters, and the whole premise of his quoted article was arrant nonsense.
America does not represent "*the world*", for starters.  This is especially true for the NEV transition where it remains a laggard, and remain until legacy auto gets it head out of the sand.
But what makes Lomborg continue to look more stupid by the year is the simple fact that green energy gets cheaper via R&D plus scaling, while fossil fuels get more expensive because the low hanging fruit has been eaten and the orchards are increasingly more scarce.

The upshot of the above is the cost of reserves replacement has to be balanced with *capital discipline* and ESG considerations in order to retain shareholder confidence:
*"**The task** is becoming more and more challenging as investments in exploration shrink and success rates slump. The declining proven reserves could create serious challenges for Big Oil (ExxonMobil, BP, Shell, Chevron, Total and Eni) to maintain stable production levels in coming years. This would in turn cause revenue to dwindle and pose a major threat to the financing of the group’s energy transition plans."*​


----------



## Telamelo

qldfrog said:


> There are many signs that further sanctions on Russian energy exports inc gas in the EU are being delayed past the french election second round to ensure the reelection of Macron (wef alumni and euro deep state rep)
> As such , expect these sanctions to be announced in a week, and so be followed by a jump in oil prices then.
> Buy cheap oil and oilers in the next 4 days



RE: "Buy cheap oil and oilers in the next 4 days" 

I agree with you mate as think/believe that is a wise call

P.S. I'm getting more BYE & CVN tomorrow to name a few (not investment advice per say)


----------



## bluekelah

Garpal Gumnut said:


> I must admit @frugal.rock and @CityIndex that the POO is extremely volatile.
> 
> I do not share the hope that Brent will fall to $80.
> 
> The recent chart indicates it is still rising and unless it gets lower highs and a lower low from the technical view it is still a bullish proposition.
> 
> Fundamentally the Western Europeans need more oil and gas to avoid a recession and it would seem that less will come from Russia.
> 
> The USA under the Democrats will not be able to reposition quickly and the release of their reserves is a pittance, so in terms of the Aussie Dollar, even if the Petrodollar aka $USD is worth less our petroleum assets will appreciate.
> 
> As to the Saudis, Iranians, Chinese and Russians, their supply and demand, who knows?
> 
> Uncertainty increases prices generally.
> 
> gg



So does massive underinvestment in the oil sector past couple years due to covid. That will be the main MACRO trends next 1-2years driving POG up, not to mention the inflation driving the USD devaluation. 

You cant just turn on the tap and increase production by millions of barrels a day from the oil fields. I believe the arabs are maxxed out and so are the Russians. And as you said the underground reserves cant be pumped fast enough and are also at multiyear lows.


----------



## frugal.rock

I'm happy for oil bulls that my pricing prediction range was well wrong. Timing was very ordinary also.

That happiness is accentuated when I go to the servo! 
( sarcasm meter goes "sproing" for this latter comment...)


----------



## Smurf1976

Garpal Gumnut said:


> For those of you who didn't live through the 70's, this Oil "Shock" is going to last a long, long, time.



For those not aware, it was a 12 year event in practice. 

October 1973 it got underway and late 1985 was the effective end with the price crash.

Physical energy infrastructure doesn't get built in a day or two indeed it's generally more time consuming to build a project today than it was back then (exceptions but in general it is).


----------



## Student of Gann

Hello here is a recent Forecast issued 14th April calling counter trend top for Oil  on the  19th April and attached Curve extending out till the end of May including primary trend and minor Cycles . 
Regards Grant 



student of Gann twitter 
studentofgann.com.au
https://twitter.com/studentofgann
https://twitter.com/studentofgann
19th April could be counter trend Top for Crude Oil.


----------



## qldfrog

Sorry, but for you, oil trades at $US250 a barrel
					

The oil market is projecting a false sense of stability when it comes to energy inflation. Just look to the refining industry.




					www.afr.com
				



Very interesting paper imho


----------



## Student of Gann

Crude Oil Forecast for May :

On the 30th April a letter was posted on the website calling Top for the 5th May five days in advance  and a supplement was sent out on this date confirming 111.37 as Top .  Price is currently down around 11% or 12.37 from the High . Forecast for Crude Oil is now  complete with a projected date for Low including detailed notes and other calculations . studentofgann.com.au


----------



## rederob

Using the past year's trend as a basis, WTI crude's price is smack on the median:


Looks like Europe is going to continue to be the price maker given it's taken Russia's oil off the table and is hunting everywhere else for whatever it can get.


----------



## rederob

Up over 3% on Friday, and the 5-year trend remains positive:


Still some headroom left to reach all time record high.
However, note the average price during this charted period is a tad under $60/bbl, so potential downside risk is severe.
If we assume Russian oil is largely locked out of Europe from now onwards then the downside risk is way off.  In terms of black swan events, should Ukraine remove all Russian presence plus recapture Crimea *and *win war reparations, then it's possible to see a complete reversal of Europe's position.

Back in North America the US rig count is slowly creeping upwards, while Canada's is trending opposite


----------



## waterbottle

I'm not sure if the price is oil will be predictable... 
If Russia is locked out of Europe then they will only be able to sell to China and India - both of whom will be asking for a bargain, and both of whom will probably not be seeking the same oil supply as the rest of the world. 
Interestingly, price limits on gas have been introduced in Spain. Whether that will catch on to other EU nations and also extend to oil remains to be seen. 
Meanwhile rig counts are steadily increasing...


----------



## rederob

waterbottle said:


> I'm not sure if the price is oil will be predictable...
> If Russia is locked out of Europe then they will only be able to sell to China and India - both of whom will be asking for a bargain, and both of whom will probably not be seeking the same oil supply as the rest of the world.
> Interestingly, price limits on gas have been introduced in Spain. Whether that will catch on to other EU nations and also extend to oil remains to be seen.
> Meanwhile rig counts are steadily increasing...



US Oil Output Slips as Higher Costs Hit Drillers​Fracking also requires a continuous and high *new-*drilling regimen to maintain output due to the well production curve which is shaped thus:


The Dallas Fed Energy Survey’s first quarter 2022 report, revealed that firms needed $56 per barrel on average to profitably drill in the country. Across regions, average breakeven prices to profitably drill a new well ranged from $48 per barrel to $69 per barrel, with breakeven prices in the Permian Basin averaging $52 per barrel. Eagle Ford drilling was shown to have the lowest breakeven price at $48 per barrel, and ‘other U.S. shale’ had the highest at $69 per barrel.
With US inflation now running over 8% and material supply constraints preventing a rush to more drilling activity, the light tight oil industry will need present high prices to prevail for some time in order to cover previous costs and maintain an exploration profile.


----------



## Garpal Gumnut

Well @waterbottle and @rederob , I had done all the whatifs and the calculations on PO Oil and Gas a few weeks ago, and frankly I was more confused than when I started.

Trying to work Oil out is a bit like trying to work out POG.

There are so many seemingly stable and unstable actors. It is a bit like ole Rumsfeld's known knowns only squared.

Stable that we know to be unstable.
Stable that we know to be unstable that many believe to be stable etc etc...

I lived through part of the 70's in Europe when you had to put a large deposit on a motor three months prior to delivery because if you didn't it would have gone up in price by 10-20%.

Basically we are headed for rampant inflation. It has started in fact. and if you don't buy from the last mug you will pay 10-20% more from the next.

Gold, Oil and Materials, and not necessarily in that order, I am accumulating.

Cash will be a peasant unless you want to earn 2-3% as the Fed and our Bank and rates are being held to ransom by the markets and construction. 

Unfortunately charts will not be much use as there is panic in the air, events will overtake any chart while you sleep.

I like when others are in panic mode. Long live panic.

Just go on your gut and devil takes the hindmost to ride this out.

BYO.

gg


----------



## frugal.rock

I've noticed that diesel seems to be floating around 10-15% above petrol prices. 
I'm considering a 2nd hand vehicle purchase, but am wondering how long the price disparity may stick around?

Previously, I would be inclined to go a diesel vehicle, but now, not so sure!

Slightly off topic I know, but probably relevant in the bigger picture.
Thanks in advance to the remarkable knowledge bank here at ASF.
Hats off and a salute. 👏


----------



## divs4ever

rederob said:


> US Oil Output Slips as Higher Costs Hit Drillers​Fracking also requires a continuous and high *new-*drilling regimen to maintain output due to the well production curve which is shaped thus:
> View attachment 141627
> 
> The Dallas Fed Energy Survey’s first quarter 2022 report, revealed that firms needed $56 per barrel on average to profitably drill in the country. Across regions, average breakeven prices to profitably drill a new well ranged from $48 per barrel to $69 per barrel, with breakeven prices in the Permian Basin averaging $52 per barrel. Eagle Ford drilling was shown to have the lowest breakeven price at $48 per barrel, and ‘other U.S. shale’ had the highest at $69 per barrel.
> With US inflation now running over 8% and material supply constraints preventing a rush to more drilling activity, the light tight oil industry will need present high prices to prevail for some time in order to cover previous costs and maintain an exploration profile.



there will be others wanting to buy Russian oil  , i am thinking Russia would prefer sending via pipelines ( so greater Asia , Afghanistan and Pakistan ) , Russia's worst weakness is hardly any 'warm water ' ports

 Russia is ( or potentially )  fully self-sufficient , and Russia in general isn't awash with luxury goods  , so i think if Russia can lock in the equivalent  of $US 100 a barrel for oil  for most of what they sell  they will be fairly happy  , and have  a so-so but not harsh standard of living , Chinese and Indian  goods filling most voids that Russia doesn't produce themselves


----------



## divs4ever

frugal.rock said:


> I've noticed that diesel seems to be floating around 10-15% above petrol prices.
> I'm considering a 2nd hand vehicle purchase, but am wondering how long the price disparity may stick around?
> 
> Previously, I would be inclined to go a diesel vehicle, but now, not so sure!
> 
> Slightly off topic I know, but probably relevant in the bigger picture.
> Thanks in advance to the remarkable knowledge bank here at ASF.
> Hats off and a salute. 👏



 research bio-diesel  , it might be the solution you are after ( you might even be able to produce it yourself if you have the right rural property )


----------



## frugal.rock

divs4ever said:


> research bio-diesel  , it might be the solution you are after ( you might even be able to produce it yourself if you have the right rural property )



To my left sits a chemical mixer.
In front sits a settling drum. 
I sold the rest of the methanol.
Been there, done that.
Pushing clay up hill with modern high pressure direct injection systems.
Not impossible I know, but climate etc are limiting factors. 
Prefer a "cleaner" method.
Cheers


----------



## Smurf1976

rederob said:


> Fracking also requires a continuous and high *new-*drilling regimen to maintain output due to the well production curve which is shaped thus:​



A point often missed is that oil fields aren't a case of once built that's it, they're built.

Rather they're somewhat more akin to building wooden houses and installing a termite nest during construction. 

You have to keep constantly building new ones to replace all that fall down and with light tight oil they don't last long at all. Stop or even just slow the pace of drilling and production starts to slip.



rederob said:


> With US inflation now running over 8% and material supply constraints preventing a rush to more drilling activity, the light tight oil industry will need present high prices to prevail for some time in order to cover previous costs and maintain an exploration profile.




A major issue in the 1970's oil crisis and inflation situation was that there were an abundance of projects that were almost viable and just needed oil to be a few $ higher in order to get the go ahead.

Trouble is, the rising price of materials and labour pushed the cost of the project up in line with the price of oil rising. Then the rising interest rates ratcheted up the required rate of return to gain board approval.

End result is that the higher the oil price went, the further away those "almost there" projects became.


----------



## Smurf1976

frugal.rock said:


> I've noticed that diesel seems to be floating around 10-15% above petrol prices.
> I'm considering a 2nd hand vehicle purchase, but am wondering how long the price disparity may stick around?



Short answer is refining capacity itself, as distinct from the supply of crude oil to be refined, is maxed out.

Governments releasing crude from inventories helps suppress the price of crude but it does nothing to get more through refineries, thus widening the gap between crude and refined products.

Diesel's particularly scarce for several reasons:

Along with fuel oil it's the primary direct substitute for natural gas in boilers etc. Consumption is being driven higher by the gas situation.

Russia exports refined products not just crude and its oil yields a high portion of diesel. Versus the lighter grades of oil, such as the US light tight oil, which has yield biased more toward the gasoline end of the spectrum.

At the consumption level to the extent there have been lockdowns etc due to Covid that has far more effect on petrol than on diesel. For example, data for Australia comparing April 2020, lowest point of consumption, versus same time a year earlier:

Aviation turbine fuel ("jet fuel") down 79.7%
Aviation gasoline (what small planes use) down 71.2%
Petrol down 42.7%
Fuel oil down 36.4%
LPG down 20.7%
Diesel down 9.8%
Lubricants down 7%
Other products (bitumen, solvents etc) down 11.9%
TOTAL down 30.9%

Data from Australian Government statistics.

So diesel consumption tends to hold up relatively well compared to others under lockdown conditions, at least it did in Australia, thus skewing the inventory of refined products toward less diesel / more petrol and aviation fuel.


----------



## frugal.rock

Thanks Smurf.
Legend.

So, I guess petrol will be the go for a few years, what with EV's on the rise, which I would take to be largely replacing petrol vehicles, owing to diesel being a more industry based fuel, rather than a consumer based fuel.

Shame lpg is on its last legs also..


----------



## Smurf1976

frugal.rock said:


> I guess petrol will be the go for a few years



Given the international situation, predictions of the future are particularly problematic at this time.....

Current wholesale pricing for the record. This includes excise and GST and is the bulk price for tanker loads to be delivered to service stations. Price does not include delivery. Price is AUD cents per litre.

Location = Sydney

Diesel = 200.63

Petrol:
E10 = 181.18
91 = 183.69
95 = 197.42
98 = 204.42

Source = Ampol. Prices as at 14 May 2022 and change daily.


----------



## qldfrog

Smurf1976 said:


> Short answer is refining capacity itself, as distinct from the supply of crude oil to be refined, is maxed out.
> 
> Governments releasing crude from inventories helps suppress the price of crude but it does nothing to get more through refineries, thus widening the gap between crude and refined products.
> 
> Diesel's particularly scarce for several reasons:
> 
> Along with fuel oil it's the primary direct substitute for natural gas in boilers etc. Consumption is being driven higher by the gas situation.
> 
> Russia exports refined products not just crude and its oil yields a high portion of diesel. Versus the lighter grades of oil, such as the US light tight oil, which has yield biased more toward the gasoline end of the spectrum.
> 
> At the consumption level to the extent there have been lockdowns etc due to Covid that has far more effect on petrol than on diesel. For example, data for Australia comparing April 2020, lowest point of consumption, versus same time a year earlier:
> 
> Aviation turbine fuel ("jet fuel") down 79.7%
> Aviation gasoline (what small planes use) down 71.2%
> Petrol down 42.7%
> Fuel oil down 36.4%
> LPG down 20.7%
> Diesel down 9.8%
> Lubricants down 7%
> Other products (bitumen, solvents etc) down 11.9%
> TOTAL down 30.9%
> 
> Data from Australian Government statistics.
> 
> So diesel consumption tends to hold up relatively well compared to others under lockdown conditions, at least it did in Australia, thus skewing the inventory of refined products toward less diesel / more petrol and aviation fuel.



In short diesel is industry demand,retail is petrol..using Australian linguo..always confusing when reading US news.
If you buy a car/ute,
Remember the consumption difference as well.
10+y old ute: a diesel 4wd,
had to do a return trip to Brisbane lately.
One way freeway,return going up and down the great dividing range 2 times,nearly 3..average real consumption below 8l/100km as when brand new.. 
Diesel has a huge consumption advantage $ $ and can run on cooking oil...
But it can not run on synthetic fuel.
Does not really matter as this carbon neutral option is fully cancelled in our Brave New World...


----------



## over9k

Also worth noting that crude oil isn't just crude oil - it's on a matrix of heavy/light and sweet/sour, so a refinery might be tooled to be extra efficient at light/sweet if it usually refines light/sweet and then now be faced with having to start refining heavy/sour as a replacement for the light/sweet it used to get, so its refining capacity effectively drops dramatically. 

So if you're replacing say, russian crude with something else, and it's a different grade of crude, you might be in for a real headache, and that's before we even start talking about how different grades are easier/better to refine into different daughter products - you want heavy for bitumen but light for petroleum for example. 

So yeah, just like castrol's "oils ain't oils", refining capacity ain't refining capacity either.


----------



## Telamelo

frugal.rock said:


> I've noticed that diesel seems to be floating around 10-15% above petrol prices.
> I'm considering a 2nd hand vehicle purchase, but am wondering how long the price disparity may stick around?
> 
> Previously, I would be inclined to go a diesel vehicle, but now, not so sure!
> 
> Slightly off topic I know, but probably relevant in the bigger picture.
> Thanks in advance to the remarkable knowledge bank here at ASF.
> Hats off and a salute. 👏



Did you have to remind me @frugal.rock !? lol as I drive a diesel car.. makes me regret my decision now with talk/rumour that diesel heading towards $2.50  more wallet pain to come it seems


----------



## rederob

Looking at POO's trend from 1 December 2021 we see the present price smack on the median, in a nice uptrend:


Still too early to work out how much Russian oil can't be sold into western markets, but the threat of not buying it is keeping prices nicely elevated.


----------



## waterbottle

Not too sure what everyone's play is here, but here's a bearish warning for the oil bulls









						Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65 | OilPrice.com
					

Lack of internal support for a full EU embargo on Russian crude oil may take out one of the key fear factors for oil, which may send prices crashing back to $65 per barrel




					oilprice.com
				




An oil price crash would put the brakes on any inflationary pressure and could see the rate hike cycle prematurely interrupted. 
$65 a barrel might be hyperbole, but I'd agree with the sentiment that several EU countries would veto any Russian oil ban (which is currently driving the run up in prices) if it meant their populace was disadvantaged....


----------



## divs4ever

my main oil plays  are BPT , NHC ( via Bridgeport Energy ) and WPL


----------



## qldfrog

waterbottle said:


> Not too sure what everyone's play is here, but here's a bearish warning for the oil bulls
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65 | OilPrice.com
> 
> 
> Lack of internal support for a full EU embargo on Russian crude oil may take out one of the key fear factors for oil, which may send prices crashing back to $65 per barrel
> 
> 
> 
> 
> oilprice.com
> 
> 
> 
> 
> 
> An oil price crash would put the brakes on any inflationary pressure and could see the rate hike cycle prematurely interrupted.
> $65 a barrel might be hyperbole, but I'd agree with the sentiment that several EU countries would veto any Russian oil ban (which is currently driving the run up in prices) if it meant their populace was disadvantaged....



we have the fundamentals: less and less exploration and greenwash of the economy conflicting with real world and POO..and Ukraine.
Even if Ukraine issue fades, the fundamentals remain..but we would then see POO crash until reality prevails..a bit like POG will imho
That would be a great opportunity to double up on oil...
FWIW, sold my last OOO this morning...nice profit and 48c distribution per share today..the cherry on the cake


----------



## divs4ever

qldfrog said:


> we have the fundamentals: less and less exploration and greenwash of the economy conflicting with real world and POO..and Ukraine.
> Even if Ukraine issue fades, the fundamentals remain..but we would then see POO crash until reality prevails..a bit like POG will imho
> That would be a great opportunity to double up on oil...
> FWIW, sold my last OOO this morning...nice profit and 48c distribution per share today..the cherry on the cake



 will Russia ever sell to the West ( 'unfriendly' countries ) again 

 i might be a total bastard but i WOULDN'T ( price is irrelevant when they try to steal AND avoid payment , they  are VERY likely to try it again in the future )

 that would mean the West would have to invest in other 'heavy crude ' projects  investment into Venezuela  might be a bit .. tense 
 Canada with their tar sands  might ( or might not ) be a push-over  , so 'green-wash policies' MIGHT be relaxed or reversed ( policies don't work when groups are removed from power )

 remember Russia now heavily sanctioned MIGHT embrace trade with other heavily sanctioned nations ( who might likely remain resentful to the West  )

 does anyone know how much of the global diesel comes from Russian oil ??

 nice work on the trade .. i wouldn't have  considered OOO in the current climate


----------



## Telamelo

Oil Prices Surge Past $113 As Shanghai Signals End Of Lockdown | OilPrice.com
					

Oil prices have topped $113 per barrel on optimism that China’s lockdowns are coming to an end and demand will not take a prolonged hit




					oilprice.com


----------



## qldfrog

Telamelo said:


> Oil Prices Surge Past $113 As Shanghai Signals End Of Lockdown | OilPrice.com
> 
> 
> Oil prices have topped $113 per barrel on optimism that China’s lockdowns are coming to an end and demand will not take a prolonged hit
> 
> 
> 
> 
> oilprice.com



And if anyone read the news, the last Ukrainian troops in Mariupol have surrendered which is translated in our lolly pops woke news in


			https://www.abc.net.au/news/2022-05-17/mariupol-ukraine-troop-evacuation-azovstal-steelworks/101072336.
		

Amazing or pathetic based on how you judge truths and media..
An evacuation ...
However heroic etc etc they have been, they had to surrender..which is better than getting annihilated..
But that is not exactly the Russian deroute the west wants  and thiswill free heaps of Russian troops to carry on battle elsewhere..so no wet dream of quick end of conflict...and so no quick end to oil diesel shortage.
I believe this is the key reason of today's jump then the EU will have to stop considering boycott of oil and poo will fall.
My reason for selling ooo today.

I kept my WPL stocks..just because any strategic move by BHP in the last decade has been a flop...if they get rid of oil, it must be a great opportunity for WPL.


----------



## rederob

qldfrog said:


> But that is not exactly the Russian deroute the west wants  and thiswill free heaps of Russian troops to carry on battle elsewhere..so no wet dream of quick end of conflict...and so no quick end to oil diesel shortage.



Russia needs the complement of troops in Mariupol it has irrespective of the steel works as it's a major city and will fall to Ukraine in due course simply because Russia does not have the population base it needs in Ukraine to be successful.


qldfrog said:


> I believe this is the key reason of today's jump then the EU will have to stop considering boycott of oil and poo will fall.
> My reason for selling ooo today.



The more likely reason is that European oil and gas supplies remain constrained, and while some smaller nations might  be purchasers of Russian oil by necessity, most European nations have come to the realisation that Russia cannot be trusted.  Perhaps in years to come this may change, but for the time being Putin's sway will rule.
At a different end of the spectrum, Shanghai's easing of *lockdowns *will be stimulatory and cause a demand increase with a multiplier effect.
Further afield again, *American oil stockpiles are diminishing* rapidly.  And given releases from their strategic reserve have barely dampened "gas" prices Biden may have to dig deeper yet into their holdings.


----------



## divs4ever

qldfrog said:


> And if anyone read the news, the last Ukrainian troops in Mariupol have surrendered which is translated in our lolly pops woke news in
> 
> 
> https://www.abc.net.au/news/2022-05-17/mariupol-ukraine-troop-evacuation-azovstal-steelworks/101072336.
> 
> 
> Amazing or pathetic based on how you judge truths and media..
> An evacuation ...
> However heroic etc etc they have been, they had to surrender..which is better than getting annihilated..
> But that is not exactly the Russian deroute the west wants  and thiswill free heaps of Russian troops to carry on battle elsewhere..so no wet dream of quick end of conflict...and so no quick end to oil diesel shortage.
> I believe this is the key reason of today's jump then the EU will have to stop considering boycott of oil and poo will fall.
> My reason for selling ooo today.
> 
> I kept my WPL stocks..just because any strategic move by BHP in the last decade has been a flop...if they get rid of oil, it must be a great opportunity for WPL.



 i hadn't thought of the demerger in that light , but in general have been disappointed with  WPL , so far ( but probably would still hold since they are only a small holding  , but BPT and NHC   have been  much better performers for me )

 the EU MIGHT unwind the sanctions  , but will Russia renew ( most of ) the contracts  , Russia has increased deliveries to the east  , and i am not  sure how much spare capacity Russia has ( short-term )


----------



## divs4ever

rederob said:


> Russia needs the complement of troops in Mariupol it has irrespective of the steel works as it's a major city and will fall to Ukraine in due course simply because Russia does not have the population base it needs in Ukraine to be successful.
> 
> The more likely reason is that European oil and gas supplies remain constrained, and while some smaller nations might  be purchasers of Russian oil by necessity, most European nations have come to the realisation that Russia cannot be trusted.  Perhaps in years to come this may change, but for the time being Putin's sway will rule.
> At a different end of the spectrum, Shanghai's easing of *lockdowns *will be stimulatory and cause a demand increase with a multiplier effect.
> Further afield again, *American oil stockpiles are diminishing* rapidly.  And given releases from their strategic reserve have barely dampened "gas" prices Biden may have to dig deeper yet into their holdings.



 they are had better be satisfied with Putin , Lavarov and Medvedev  are much more hawkish ( and i bet there aren't many doves in the rest of the Duma , either )  some are saying the most likely reason to bump Putin in Russia , is because he is too SOFT


----------



## Smurf1976

From my various reading in regards to Russia and noting this is referring to the pre-war situation:

Russian crude oil production unlikely to see further growth due to ageing fields and insufficient investment. Future production trend expected to be flat to down and this is supported by official Russian government projections as well as various analysts.

At present, gas fields linked to the EU and nearby markets are in no way connected to fields linked to China. That is, Russia does not have an internal pipeline system linking the two. New gas pipelines to China are being accompanied by internal linking of the production zones within Russia to overcome this constraint, thus enabling gas previously supplied to the EU to be directed to China instead once it's built.

Put those two together and it looks to me that China has shored up its supply of oil and gas via deals with Russia and is going to be top priority going forward. Anything offered to others over the long term will just be the diminishing leftovers.

Short term the price could do anything. 

Longer term there seem to be more wanting oil than there's likely to be supply available and of particular consequence is supply which is sold on open markets. If it's locked up under contract well then you can't buy it at any price.....


----------



## divs4ever

am not sure Russian investment  in new projects and infrastructure  will continue to decline  BUT if it does ramp up  i do not see the production increase  to move the needle much  and mostly likely China and India would inhale any increase easily 

 BTW it is probably in Chinese ( and Indian ) interests to help build energy pipelines to the factories/power plants 

 but contracts v. spot ??

 factor in 'any price ' is unlikely to be helped near-term  by increased production OR reduced demand 

 AND Roubles/Rupees/Yuan are liable to be a more stable  cross-trade currencies


----------



## Smurf1976

divs4ever said:


> but contracts v. spot ??
> 
> factor in 'any price '



Another example of this concept is India's wheat export ban. Offer as much money as you like but it's not for sale.

A few months ago Indonesia temporarily did that with coal to shore up domestic supplies.

USA banned crude oil exports constantly from 1975 to 2015 with only minor exceptions as another example of that. Not that they had much oil to sell, but nonetheless exports were banned as such.

I expect we're going to see a lot more of this going forward. Resource nationalism has been rising for years and the Russia - Ukraine war has given it another push.


----------



## waterbottle

United States To Release Venezuela From Some Oil Sanctions | OilPrice.com
					

Washington will start to relax restrictions placed on U.S.-based oil company Chevron with regards to its crude business in sanctioned Venezuela




					oilprice.com
				




US making exceptions for Venezuelan oil









						EU could combine tariffs on Russian oil with embargo, Yellen says
					

The European Union could combine import tariffs on Russian oil with the phased oil embargo it is trying to put in place to shrink Russia's energy revenues, U.S. Treasury Secretary Janet Yellen said on Tuesday.




					www.reuters.com
				




The US now conceding that a Russian oil ban won't work and is suggesting tarrifs instead!


----------



## qldfrog

Interesting article i think








						Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65 | OilPrice.com
					

Lack of internal support for a full EU embargo on Russian crude oil may take out one of the key fear factors for oil, which may send prices crashing back to $65 per barrel




					oilprice.com


----------



## Telamelo

qldfrog said:


> And if anyone read the news, the last Ukrainian troops in Mariupol have surrendered which is translated in our lolly pops woke news in
> 
> 
> https://www.abc.net.au/news/2022-05-17/mariupol-ukraine-troop-evacuation-azovstal-steelworks/101072336.
> 
> 
> Amazing or pathetic based on how you judge truths and media..
> An evacuation ...
> However heroic etc etc they have been, they had to surrender..which is better than getting annihilated..
> But that is not exactly the Russian deroute the west wants  and thiswill free heaps of Russian troops to carry on battle elsewhere..so no wet dream of quick end of conflict...and so no quick end to oil diesel shortage.
> I believe this is the key reason of today's jump then the EU will have to stop considering boycott of oil and poo will fall.
> My reason for selling ooo today.
> 
> I kept my WPL stocks..just because any strategic move by BHP in the last decade has been a flop...if they get rid of oil, it must be a great opportunity for WPL.



N


qldfrog said:


> Interesting article i think
> 
> 
> 
> 
> 
> 
> 
> 
> Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65 | OilPrice.com
> 
> 
> Lack of internal support for a full EU embargo on Russian crude oil may take out one of the key fear factors for oil, which may send prices crashing back to $65 per barrel
> 
> 
> 
> 
> oilprice.com



No chance I think of oil price crashing that low not in the foreseeable future - Ukraine war ain't stopping anytime soon as believe in fact going to spread to neighbouring NATO backed countries instead - I still think Putin will use nuclear weapons at some stage. Just my opinion of course.


----------



## qldfrog

Telamelo said:


> N
> 
> No chance I think of oil price crashing that low not in the foreseeable future - Ukraine war ain't stopping anytime soon as believe in fact going to spread to neighbouring NATO backed countries instead - I still think Putin will use nuclear weapons at some stage. Just my opinion of course.



US pushing for it.
I expect tactical nuke if std army is not enough..the reason i would have oreferred a quick russian win then peace treaty with neutral country wo Donbass/Crimea.now it is war till the last Ukrainian alive, and maybe European..
And that's hoping the software for balistic missiles from Russia NATO and China do not have bugs
 how do you wage war but let road and rail access bring neighbouring weapons  and soldiers in ukraine...soon the hard core Russian hawks will take countrol..it would be naive to think there are no special forces involved from the west either
Anyway i wait for poo fall before replaying dame buy sell game on fake news

clever for them dumb as fxck for EU but EU is US muppet, unelected, cronysm and narrative.


----------



## divs4ever

waterbottle said:


> United States To Release Venezuela From Some Oil Sanctions | OilPrice.com
> 
> 
> Washington will start to relax restrictions placed on U.S.-based oil company Chevron with regards to its crude business in sanctioned Venezuela
> 
> 
> 
> 
> oilprice.com
> 
> 
> 
> 
> 
> US making exceptions for Venezuelan oil
> 
> 
> 
> 
> 
> 
> 
> 
> 
> EU could combine tariffs on Russian oil with embargo, Yellen says
> 
> 
> The European Union could combine import tariffs on Russian oil with the phased oil embargo it is trying to put in place to shrink Russia's energy revenues, U.S. Treasury Secretary Janet Yellen said on Tuesday.
> 
> 
> 
> 
> www.reuters.com
> 
> 
> 
> 
> 
> The US now conceding that a Russian oil ban won't work and is suggesting tarrifs instead!



 well tariffs won't effect Russia , it normally results on being a tax on the consumer 
 and the  oil/gas  has ready  buyers outside the 'unfriendly  nations ' bloc 

 now if China placed tariffs on Australian  ( say ) iron ore or wine  that would be uncomfortable  for Australia and Chinese customers ( but a windfall for the Chinese  government  )

 now regarding Venezuela  i am surprised that Russia  has not already ignored those sanctions and started  bring the badly scarred  Venezuela into the India/China/Russia/North Korea  group of 'rogue nations'  ( that are trading outside the US dollar )


----------



## waterbottle

Telamelo said:


> N
> 
> No chance I think of oil price crashing that low not in the foreseeable future - Ukraine war ain't stopping anytime soon as believe in fact going to spread to neighbouring NATO backed countries instead - I still think Putin will use nuclear weapons at some stage. Just my opinion of course.




The war doesn't have to be over for oil to crash. Though the threats of an oil ban do.
The current state of play is that political rhetoric re: Russian oil ban is receding from both EU and US sides and more importantly, extra supply is coming online (Venezuela, increased US shale rig counts + potential Iran nuclear deal), so interruptions to supply are unlikely...


----------



## over9k

Everything I've read (from some very smart people) suggests that their infrastructure is simply going to crumble now as there's nobody left to maintain it.


----------



## Smurf1976

over9k said:


> Everything I've read (from some very smart people) suggests that their infrastructure is simply going to crumble now as there's nobody left to maintain it.



And even if there was someone to maintain it, they were maxed out anyway:









						Russia may have passed peak oil output
					






					thebarentsobserver.com
				




Note the date of this is 12 April 2021 so well before the war.



> Russian oil production might never recover to pre-coronavirus levels, the country’s Energy Ministry has forecast






> In the scenario labeled most probable, the Energy Ministry predicts Russia’s oil output will grow over the rest of the decade — but fail to hit the record output of 2019, with production hitting a post-coronavirus peak of 11.1 million barrels a day in 2029 before decreasing to 9.4 million barrels a day by 2035.






> In its most optimistic scenario, the Energy Ministry expects production to pass pre-coronavirus levels, peaking in 2030 at 12.8 million barrels a day before starting to decline. In every scenario presented, the Energy Ministry said Russian oil production had either already peaked, or would hit its maximum level within the next decade,




So they were struggling anyway. Now add the effects of the war, sanctions and so on and it's game over for Russia as a source of oil supply growth. The only question is how rapidly it contracts.


----------



## over9k

Smurf1976 said:


> And even if there was someone to maintain it, they were maxed out anyway:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Russia may have passed peak oil output
> 
> 
> 
> 
> 
> 
> 
> thebarentsobserver.com
> 
> 
> 
> 
> 
> Note the date of this is 12 April 2021 so well before the war.
> 
> 
> 
> 
> 
> 
> 
> So they were struggling anyway. Now add the effects of the war, sanctions and so on and it's game over for Russia as a source of oil supply growth. The only question is how rapidly it contracts.



This is where seasonality comes in. Something tells me we're going to see a repeat of last winter (northern hemisphere winter) but far worse when the cold wrecks everything and it just stays wrecked.


----------



## rederob

Manipulation or madness?


With a $5 trading range each 5 minutes in the past few hours, WTI oil's price is seriously different to normal.
I will just watch and wait to see if the downtrend is locking in, or if the longer-term bull trend will win out.


----------



## frugal.rock

rederob said:


> Manipulation or madness?
> View attachment 141877
> 
> With a $5 trading range each 5 minutes in the past few hours, WTI oil's price is seriously different to normal.
> I will just watch and wait to see if the downtrend is locking in, or if the longer-term bull trend will win out.



Looks like data/chart error?
Like the long bars are on a different price scale to the chart.
WTI futures. 5 minute and 30 minute.
I note your chart is CFD's.


----------



## divs4ever

rederob said:


> Manipulation or madness?
> View attachment 141877
> 
> With a $5 trading range each 5 minutes in the past few hours, WTI oil's price is seriously different to normal.
> I will just watch and wait to see if the downtrend is locking in, or if the longer-term bull trend will win out.



probably futures/options  action ( stress )  remember this is oil  .. the stuff that went to negative $US 43 a barrel not that long back

 i would say one or more cornered sellers but not yet totally trapped  so am guessing there are still some genuine buyers ( willing to take delivery , like say the US Strategic Reserve )


----------



## Mohammed Hazabig'un

U.S. Baker Hughes Oil Rig Count
Act: _576_ Cons:  Prev.: _563_

U.S. Baker Hughes Total Rig Count
Act: _728_ Cons:  Prev.: _714_


----------



## waterbottle

EU Gives OK To Pay For Russian Gas In Rubles | OilPrice.com
					

The EU has put an end to the lingering ambiguity surrounding how EU members can pay for Russian gas without violating sanctions




					oilprice.com
				




Meanwhile China continuing to buy Russian oil, along with India. Not much of a ban...


----------



## over9k

waterbottle said:


> EU Gives OK To Pay For Russian Gas In Rubles | OilPrice.com
> 
> 
> The EU has put an end to the lingering ambiguity surrounding how EU members can pay for Russian gas without violating sanctions
> 
> 
> 
> 
> oilprice.com
> 
> 
> 
> 
> 
> Meanwhile China continuing to buy Russian oil, along with India. Not much of a ban...



They can't get much of it though. No pipelines from russia to china or india - it's gotta be shipped to india and actually moved by railcar to china.


----------



## waterbottle

over9k said:


> They can't get much of it though. No pipelines from russia to china or india - it's gotta be shipped to india and actually moved by railcar to china.




True, but it's better than a total export ban on Russian oil, which I believe is what is being priced into crude oil contracts (particularly an EU oil ban).


----------



## over9k

waterbottle said:


> True, but it's better than a total export ban on Russian oil, which I believe is what is being priced into crude oil contracts (particularly an EU oil ban).



Listening/reading to some very smart people, the belief is that most of the russian infrastructure is going to be wrecked by the cold this winter and simply remain broken if they can't get the western companies like schlumberger etc back in to fix it, which they won't be able to. So even if there's not a total russian ban, they simply won't be able to supply it even if we want it. 

Either way, the entirety or nearly the entirety of the russian supply goes.


----------



## waterbottle

over9k said:


> Listening/reading to some very smart people, the belief is that most of the russian infrastructure is going to be wrecked by the cold this winter and simply remain broken if they can't get the western companies like schlumberger etc back in to fix it, which they won't be able to. So even if there's not a total russian ban, they simply won't be able to supply it even if we want it.
> 
> Either way, the entirety or nearly the entirety of the russian supply goes.



Why won't they be able to get western countries in? EU energy security is dependent on Russian oil supply - it would make no sense to allow that supply to disappear without having obtained an alternative (which they haven't). Furthermore, the EU now officially allows they're members to transact with Russia, so unless there is a bank on all business between the two, I don't see why that would ever eventuate.


----------



## over9k

waterbottle said:


> Why won't they be able to get western countries in? EU energy security is dependent on Russian oil supply - it would make no sense to allow that supply to disappear without having obtained an alternative (which they haven't). Furthermore, the EU now officially allows they're members to transact with Russia, so unless there is a bank on all business between the two, I don't see why that would ever eventuate.



The alternative is north sea, american, and saudi oil. The saudi's are already pumping at their highest levels ever (easy to go and check) and the yanks are not far behind. There's LOTS of moves being made by the yanks and the western companies have actually all left of their own volition. Oil isn't the issue, it's gas that's the problem because there essentially *isn't* a gas unloading port for all of continental europe because gas is something you only ship if you have no other choice on account of how difficult moving it actually is. It has to be under temperature, pressure etc. Oil's not like that and europe's been getting stacks of oil from both the saudi's and the north sea for ages so the unloading, refining etc infrastructure is mostly already there. All they need to do is top up the supply (aka buy some oil) from the north sea/middle east/america. This costs a bit, but there no non-financial reason stopping them from doing it. 

This isn't true for gas. 

This is why you see all these sanctions on oil already in place but virtually nothing on gas, and also why the russians are responding by threatening to shut the gas pipes. 


Reference companies leaving - It's actually been quite surprising how much the private sector has responded to all of this. They have well and truly GONE. They've just written billions and billions of dollars of losses off (pretty easy to go and check their quarterly statements/reports if you can be bothered) and just moved on. 

But let's assume you're right - that the russians do manage to get schlumberger etc back in after everything crumbles. How long do you think it takes to fix/check/pressure test etc etc thousands of km worth of oil pipeline in -40 degree winter? With blizzards, permafrost etc? Not five minutes I can assure you of that. This is a process that takes YEARS, and that's if you can even convince them to do it in the first place. 

As far as the rest of the sanctions go, they have only stalled, not been KO'd permanently. It wasn't a "no", it was a "not yet". I'll explain this part in depth in a moment. They're even trying to figure out how to (and from everything I've seen, they're doing a pretty good job of it) connect the european energy grid to the ukrainian one. 

But the really big one, which has remained for the next phase of the sanctions, is tanker insurance:

If a tanker enters what an insurance company has deemed to be an active warzone, its insurance is null/void instantly. So this has shut down a tremendous amount of russian oil exports from novorossiysk (black sea port). Then you really only have primorsk (st petersburg) on the baltic sea and nakhodka (vladivostok) over at the pacific side. These have so far been continuing to operate. 

Turns out that 95% of the world's tanker shipping is done by european companies for some reason. I'm not in the tanker insurance business so I don't know why but there's obviously some kind of tax or whatever reasons why. But, why doesn't actually matter either, we just need to focus on the fact that this is the case. 

Through an over-arching organization called the International Group of P&I Clubs in *London*, vessel owners collectively purchase cover from 80 reinsurers, including from more than 20 of the 25 largest providers in the world. 

As such, an insurance ban, which has remained as a non-negotiable in the next phase of the european sanctions, would make it all but impossible to obtain such cover.

The International Group’s members sort out cover for 95% of the tanker fleet for spills and other maritime liabilities. If they could no longer do so, then it would force the russians to insure their customers' tankers themselves or the purchasers to get/use sovereign indemnification (so if you were shipping the oil to india then the indian government would have to insure the tanker itself, basically). 

But the thing is, the baltic sea port is too shallow to put a big supertanker in, so they can't ship any decent quantity from it. Certainly not enough to supply india and china and whoever else. 

This means that the only option left is the pacific port at vladivostok, which means they essentially pump the oil all the way from western russia to the far east, and then ship it all the way back some 20,000km or whatever it is to get it to india or whoever is buying. This is at the very least, expensive as hell, and considering that the saudi's/middle east is only a few hundred KM from india, so not exactly economical. This basically leaves their only option left to really competitively sell to as china/asia. 

So my point here is that even if the tankers get the sovereign indemnification, pure economics means that russian oil simply isn't competitive anywhere other than china/asia any more, and we haven't even begun to think about the geopolitical implications of buying oil off a country that all of your allies have sanctioned/condemned beyond belief. 

This is a particular tightrope india is trying to walk at the moment as the russians offer their oil to them for cheap and everyone else glares at them saying "you better not take it". 




The indians are obviously trying to see what they can squeeze each side for on this.


----------



## waterbottle

over9k said:


> The alternative is north sea, american, and saudi oil. The saudi's are already pumping at their highest levels ever (easy to go and check) and the yanks are not far behind. There's LOTS of moves being made by the yanks and the western companies have actually all left of their own volition. Oil isn't the issue, it's gas that's the problem because there essentially *isn't* a gas unloading port for all of continental europe because gas is something you only ship if you have no other choice on account of how difficult moving it actually is. It has to be under temperature, pressure etc. Oil's not like that and europe's been getting stacks of oil from both the saudi's and the north sea for ages so the unloading, refining etc infrastructure is mostly already there. All they need to do is top up the supply (aka buy some oil) from the north sea/middle east/america. This costs a bit, but there no non-financial reason stopping them from doing it.
> 
> This isn't true for gas.
> 
> This is why you see all these sanctions on oil already in place but virtually nothing on gas, and also why the russians are responding by threatening to shut the gas pipes.
> 
> 
> Reference companies leaving - It's actually been quite surprising how much the private sector has responded to all of this. They have well and truly GONE. They've just written billions and billions of dollars of losses off (pretty easy to go and check their quarterly statements/reports if you can be bothered) and just moved on.
> 
> But let's assume you're right - that the russians do manage to get schlumberger etc back in after everything crumbles. How long do you think it takes to fix/check/pressure test etc etc thousands of km worth of oil pipeline in -40 degree winter? With blizzards, permafrost etc? Not five minutes I can assure you of that. This is a process that takes YEARS, and that's if you can even convince them to do it in the first place.
> 
> As far as the rest of the sanctions go, they have only stalled, not been KO'd permanently. It wasn't a "no", it was a "not yet". I'll explain this part in depth in a moment. They're even trying to figure out how to (and from everything I've seen, they're doing a pretty good job of it) connect the european energy grid to the ukrainian one.
> 
> But the really big one, which has remained for the next phase of the sanctions, is tanker insurance:
> 
> If a tanker enters what an insurance company has deemed to be an active warzone, its insurance is null/void instantly. So this has shut down a tremendous amount of russian oil exports from novorossiysk (black sea port). Then you really only have primorsk (st petersburg) on the baltic sea and nakhodka (vladivostok) over at the pacific side. These have so far been continuing to operate.
> 
> Turns out that 95% of the world's tanker shipping is done by european companies for some reason. I'm not in the tanker insurance business so I don't know why but there's obviously some kind of tax or whatever reasons why. But, why doesn't actually matter either, we just need to focus on the fact that this is the case.
> 
> Through an over-arching organization called the International Group of P&I Clubs in *London*, vessel owners collectively purchase cover from 80 reinsurers, including from more than 20 of the 25 largest providers in the world.
> 
> As such, an insurance ban, which has remained as a non-negotiable in the next phase of the european sanctions, would make it all but impossible to obtain such cover.
> 
> The International Group’s members sort out cover for 95% of the tanker fleet for spills and other maritime liabilities. If they could no longer do so, then it would force the russians to insure their customers' tankers themselves or the purchasers to get/use sovereign indemnification (so if you were shipping the oil to india then the indian government would have to insure the tanker itself, basically).
> 
> But the thing is, the baltic sea port is too shallow to put a big supertanker in, so they can't ship any decent quantity from it. Certainly not enough to supply india and china and whoever else.
> 
> This means that the only option left is the pacific port at vladivostok, which means they essentially pump the oil all the way from western russia to the far east, and then ship it all the way back some 20,000km or whatever it is to get it to india or whoever is buying. This is at the very least, expensive as hell, and considering that the saudi's/middle east is only a few hundred KM from india, so not exactly economical. This basically leaves their only option left to really competitively sell to as china/asia.
> 
> So my point here is that even if the tankers get the sovereign indemnification, pure economics means that russian oil simply isn't competitive anywhere other than china/asia any more, and we haven't even begun to think about the geopolitical implications of buying oil off a country that all of your allies have sanctioned/condemned beyond belief.
> 
> This is a particular tightrope india is trying to walk at the moment as the russians offer their oil to them for cheap and everyone else glares at them saying "you better not take it".
> 
> View attachment 141995
> 
> 
> The indians are obviously trying to see what they can squeeze each side for on this.




Good points re: oil, all of which points to a downtrend in POO IMO, but doesn't explain what Europe does RE: Gas.
Essentially Europe will be cutting their nose to spite their face. Does not make sense to me.

Re: geopolitics, the US has already given their blessing for not imposing an oil ban on Russia. They've proposed tarrifs instead.


----------



## Telamelo

The world’s top investor, Warren Buffet, this week loaded up on oil stocks ahead of what is expected to be another upward surge in the commodity’s price, with a leading Dutch bank tipping a potential rise from an already inflated US$113 a barrel to an all-time high of US$200/bbl.









						Big-name investors, politicians embracing oil and gas, as price tipped to surge
					

Follow the money (and follow the politics) because this week’s hot advice is that when it comes to investing in energy, money and politics are heading in




					smallcaps.com.au


----------



## over9k

waterbottle said:


> I take y
> 
> 
> Good points re: oil, all of which points to a downtrend in POO IMO, but doesn't explain what Europe does RE: Gas.
> Essentially Europe will be cutting their nose to spite their face. Does not make sense to me.



Gas is the real thorn in the side. There's very little they can do about it and they know it, hence the russians threatening it. 




"Quickly" still means bloody ages as it's not exactly an easy thing to construct a gas unloading facility.


----------



## Telamelo

over9k said:


> Gas is the real thorn in the side. There's very little they can do about it and they know it, hence the russians threatening it.
> 
> View attachment 141996
> 
> 
> "Quickly" still means bloody ages as it's not exactly an easy thing to construct a gas unloading facility.



Bloomberg reporter Javier Blas says US *diesel* prices are now trading at the equivalent of US$175 a barrel. The current diesel dilemma is not enough global refining capacity.

Lo & behold China can come to the rescue if it chooses too - but the US & allies decided to label China as our enemy so good luck with China helping us out regarding diesel.

If you think about it - just about everything runs on diesel - so watch this space.


----------



## divs4ever

over9k said:


> They can't get much of it though. No pipelines from russia to china or india - it's gotta be shipped to india and actually moved by railcar to china.



don't worry those pipelines will be built soon enough ( both China and Russia  have a BIG incentive  AND can be single-minded pursuing a target )

 watch for signs  of Russia-India pipeline rumors ( that should be a logical  moves for both nations ( i would have included Pakistan but after the regime change  , i am not so sure about the intelligence of the new leadership )

 BTW  there is a cross Russia railway system  , time will tell if Russia-China-India think that system needs to be upgraded


----------



## divs4ever

waterbottle said:


> Good points re: oil, all of which points to a downtrend in POO IMO, but doesn't explain what Europe does RE: Gas.
> Essentially Europe will be cutting their nose to spite their face. Does not make sense to me.
> 
> Re: geopolitics, the US has already given their blessing for not imposing an oil ban on Russia. They've proposed tarrifs instead.



 LOL

 tariffs are a tax on the end-user  ( they are nuts it they think it will have a happy ending )

 but yes of course  , tariffs  they NEED the income to prop up the Ukraine washing machine ( operation )

 Europe hasn't made sense for over a decade  , even Bozo the clown  saw the UK had to desert the EU


----------



## over9k

divs4ever said:


> don't worry those pipelines will be built soon enough ( both China and Russia  have a BIG incentive  AND can be single-minded pursuing a target )
> 
> watch for signs  of Russia-India pipeline rumors ( that should be a logical  moves for both nations ( i would have included Pakistan but after the regime change  , i am not so sure about the intelligence of the new leadership )
> 
> BTW  there is a cross Russia railway system  , time will tell if Russia-China-India think that system needs to be upgraded



Nah you're off the mark here divs, you have to first of all find someone able and willing to build them (aka the western companies) and even then, we're talking multi year projects. 

You need both the skills and the time and the russians have neither.


----------



## over9k

Telamelo said:


> Bloomberg reporter Javier Blas says US *diesel* prices are now trading at the equivalent of US$175 a barrel. The current diesel dilemma is not enough global refining capacity.
> 
> Lo & behold China can come to the rescue if it chooses too - but the US & allies decided to label China as our enemy so good luck with China helping us out regarding diesel.
> 
> If you think about it - just about everything runs on diesel - so watch this space.



Yep, tractors and trucks run on diesel and it's tractors and trucks that grow and transport food. 

Combine this with the fact that gas is used to make fertiliser and we see huge food price inflation/shortages.


----------



## divs4ever

over9k said:


> Nah you're off the mark here divs, you have to first of all find someone able and willing to build them (aka the western companies) and even then, we're talking multi year projects.
> 
> You need both the skills and the time and the russians have neither.



 the Saudis are much more friendly  , the Chinese have back-doors everywhere ( worthwhile ) and you forget  who has the lead in the space race ( it ISN'T the US )

 AND China-India-Russia  have close to one third of the global population  and as long as US dollars are avoided they can print PLENTY of money  .. MMT  will work for something like a massive pipeline system or rail system ( if constructed properly )

 AND if they are short of workers  there are some North Koreans  who would probably sign up for some foreign income  ( nice and handy to the Siberian end of the project )


----------



## over9k




----------



## Garpal Gumnut

According to the Financial Times the Saudis are pushing for Russia to stay in OPEC +



> Saudi Arabia has signalled it will stand by Russia as a member of the Opec+ group of oil producers despite tightening western sanctions on Moscow and a potential EU ban on Russian oil imports. Prince Abdulaziz bin Salman, the energy minister, told the Financial Times that Riyadh was hoping “to work out an agreement with Opec+ . . . which includes Russia”, insisting the “world should appreciate the value” of the alliance of producers. A new production deal is on the agenda as Opec+ output quotas put in place in April 2020 are set to expire in three months while energy consumers grapple with oil prices at their highest levels in a decade. Prince Abdulaziz’s comments are an important sign of support for Russia from a traditional US ally as the west tries to isolate the country and its oil production falls, raising questions about its place in the Opec+ group. Riyadh has been resisting western pressure to raise crude output to help bring down prices in the wake of Russia’s invasion of Ukraine, insisting there is not a lack of supply. Prince Abdulaziz said it was too early to say what a new agreement might look like given the uncertainties in the market, but added that Opec+ would increase production “if the demand is there”.




I've never been able to work out the price of oil. 

Can anyone enlighten me?

gg


----------



## over9k

over9k said:


> Listening/reading to some very smart people, the belief is that most of the russian infrastructure is going to be wrecked by the cold this winter and simply remain broken if they can't get the western companies like schlumberger etc back in to fix it, which they won't be able to. So even if there's not a total russian ban, they simply won't be able to supply it even if we want it.
> 
> Either way, the entirety or nearly the entirety of the russian supply goes.






HMMMMMM. 

And it's not even winter yet.


----------



## waterbottle

over9k said:


> View attachment 142119
> 
> 
> HMMMMMM.
> 
> And it's not even winter yet.




Yes but why? Oil output was expected to fall with self imposed EU sanctions


----------



## over9k

waterbottle said:


> Yes but why? Oil output was expected to fall with self imposed EU sanctions



Infrastructure requires maintenance.


----------



## waterbottle

over9k said:


> Infrastructure requires maintenance.



Is that the actual cause or assumed?


----------



## divs4ever

well Nordstream 2 and the branch that the Ukraine helpfully made safe , won't be maintained , you can bet on that  ,
 i am guessing the line to Finland ( does it carry on to Sweden ?? )   won't get a lot of servicing either 

 and MAYBE Russia will have to create some workarounds  for worn-out parts  that are sanctioned  so that could take some time


----------



## over9k

waterbottle said:


> Is that the actual cause or assumed?



Actual


----------



## Smurf1976

waterbottle said:


> Yes but why? Oil output was expected to fall with self imposed EU sanctions



The nature of the oil and gas business is that you have to keep running in order to stand still. It has a lot in common with trying to run up an escalator that's going the wrong way, it's actively fighting against you.

Drill a well, put it on production and out comes oil or gas. Then as pressure drops and water cut rises oil production falls off. You need to keep up the effort in order to maintain flat production, it's not like say a house where once you've built it it deteriorates only very slowly. 

Then there's all the infrastructure that needs ongoing maintenance.

Stop putting resources into it and that's akin to standing still on the escalator. You're going straight back down starting immediately.

Now in a country that's at war and which has seen a fairly widespread suspension of trade with others, it's rather difficult to keep up an uninterrupted effort at the oil fields. Doubly so when they're struggling to sell it all anyway such that production won't be a national priority.


----------



## over9k

Smurf1976 said:


> The nature of the oil and gas business is that you have to keep running in order to stand still. It has a lot in common with trying to run up an escalator that's going the wrong way, it's actively fighting against you.
> 
> Drill a well, put it on production and out comes oil or gas. Then as pressure drops and water cut rises oil production falls off. You need to keep up the effort in order to maintain flat production, it's not like say a house where once you've built it it deteriorates only very slowly.
> 
> Then there's all the infrastructure that needs ongoing maintenance.
> 
> Stop putting resources into it and that's akin to standing still on the escalator. You're going straight back down starting immediately.
> 
> Now in a country that's at war and which has seen a fairly widespread suspension of trade with others, it's rather difficult to keep up an uninterrupted effort at the oil fields. Doubly so when they're struggling to sell it all anyway such that production won't be a national priority.



Also worth noting that if you do nothing it can/will fall apart to the point where it *cannot* be repaired and you have to start the whole process again from scratch.


----------



## waterbottle

Yeah, I'm not buying it until I see some evidence...

EU can't even get a ban on Russian oil, plans to keep consuming it for the next few years, but will allow supply lines to fall apart because?
Meanwhile, Russia, dependent on the exportation of commodities to keep its economy floating, will intentionally stop pumping oil/maintaining infrastructure because? 
And the cherry-on-top, we have evidence that India & China continue to purchase Russian oil.

Too many questions. Answers being replaced by speculation.


----------



## waterbottle

More weakness from the EU... looks like they're aiming for price caps rather than an outright ban









						Weltwirtschaftsforum: Habeck wirbt für einen Öl-Höchstpreis
					

Die großen Ölverbraucher-Staaten sollen sich auf einen Höchstpreis einigen, zu dem sie Öl kaufen – das schlägt der deutsche Wirtschaftsminister in Davos vor. Er ist nicht der Einzige.




					www-faz-net.translate.goog


----------



## over9k

waterbottle said:


> Yeah, I'm not buying it until I see some evidence...
> 
> EU can't even get a ban on Russian oil, plans to keep consuming it for the next few years, but will allow supply lines to fall apart because?
> Meanwhile, Russia, dependent on the exportation of commodities to keep its economy floating, will intentionally stop pumping oil/maintaining infrastructure because?
> And the cherry-on-top, we have evidence that India & China continue to purchase Russian oil.
> 
> Too many questions. Answers being replaced by speculation.



The EU doesn't maintain their network and neither does the russian government specifically. It was western companies that went into russia (schlumberger, halliburton etc) and they have all gone. 

The EU is set up in such a way that member states have veto rights. It was the eastern states like hungary and poland that said no, but they didn't even say no outright, they said "not yet". 

India and china are purchasing the oil at a steep discount and they do not have the pipeline network running into them that europe does.


----------



## Smurf1976

waterbottle said:


> Too many questions. Answers being replaced by speculation.



Or simply an observation of what actually happens in pretty much any country that's at war.

It's not a coincidence that the all time peak for UK coal production was the year immediately prior to the outbreak of WW1 for example. Once the war started, they just couldn't keep up the effort at the coal mines and never recovered. 

Plenty of examples for all this. USSR itself was one - once it fell apart, oil production fell in a heap and has thus far not fully recovered. When you see someone say that production is at a record high, they mean a post-collapse high, not a real all time high. The actual high was in the late-1980's at about 12 million bpd , collapsing to a low of about 6 million bpd by 1994 and beginning a recovery from the year 2000 onward. In the following 20 years it never exceeded or even matched the highs of the 1980's however. It came close but didn't actually get there according to most data sources.

Oil by its nature requires constant investment to maintain even flat production. Stop that investment and production slides. Even worse in a country such as Russia where production's near peak anyway according to government projections.

Same reason the US hasn't returned to the oil production levels of early 2020 thus far. Amidst the Covid situation and oil price collapse, oil drilling and related work decreased dramatically with the end result being production capacity decreases. Now it requires a sustained sprint to recover.


----------



## Mohammed Hazabig'un

USD
U.S. Baker Hughes Oil Rig Count
Act: _574_ Cons:  Prev.: _576_

USD
U.S. Baker Hughes Total Rig Count
Act: _727_ Cons:  Prev.: _728_


----------



## waterbottle

I wonder if this hit piece was written in response to the commentary from Goldman Sachs RE:lithium. 









						Citi: Oil Is Overvalued By $50 Per Barrel | OilPrice.com
					

Brent crude, trading Wednesday at over $116 per barrel, should be closer to $70, according to Citi’s global head of commodity research, Ed Morse




					oilprice.com


----------



## Garpal Gumnut

waterbottle said:


> I wonder if this hit piece was written in response to the commentary from Goldman Sachs RE:lithium.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Citi: Oil Is Overvalued By $50 Per Barrel | OilPrice.com
> 
> 
> Brent crude, trading Wednesday at over $116 per barrel, should be closer to $70, according to Citi’s global head of commodity research, Ed Morse
> 
> 
> 
> 
> oilprice.com



I'd agree with the assessment that the POI is overvalued.

Once the fat lady takes off her hajib and sings, the show will be over, for this round.

MSB is smarter than the average MBA, and will want to keep the US oil industry guessing between the need to ramp up or down.

gg


----------



## waterbottle

Anyone have a link to the OPEC meeting? I can't seem to get access to their webcast


----------



## waterbottle

OPEC agrees to hike output by 648k barrels/d, 50% increase in agreed output!



This will be interesting... Russia is obviously still able to supply some purchasers (China + India), and now oil supply is increasing via "legitimate" means... One would expect price of oil to fall (particularly as it has been driven by speculation RE: tightening supply).
It would also mean that inflation would also be expected to fall, ergo rate hike pathway should not be too prolonged.
And finally, a third interesting development is the continuation of Resource Nationalism, where we now have Russia serving China & India (as they too export to Russia), and the West further pulling away from Russia and China (not yet India).

That's assuming we don't get another pandemic or global/regional war....


----------



## divs4ever

waterbottle said:


> OPEC agrees to hike output by 648k barrels/d, 50% increase in agreed output!
> 
> 
> 
> This will be interesting... Russia is obviously still able to supply some purchasers (China + India), and now oil supply is increasing via "legitimate" means... One would expect price of oil to fall (particularly as it has been driven by speculation RE: tightening supply).
> It would also mean that inflation would also be expected to fall, ergo rate hike pathway should not be too prolonged.
> And finally, a third interesting development is the continuation of Resource Nationalism, where we now have Russia serving China & India (as they too export to Russia), and the West further pulling away from Russia and China (not yet India).
> 
> That's assuming we don't get another pandemic or global/regional war....




 BUT the price of oil  ( except to 'friendly nations ' ) is priced in US dollars  so MOST of the big oil customers  are trapped in a system  that limits acceptable sources of oil  ( China and India can buy off whoever they please )

 the increase in crude  ( to Western customers ) is straight BS and will not happen soon  ( remember that oil glut not so long back , where dozens of tankers were floating around waiting for a port to off-load )

 oil production is not done by switching on a turbocharger and just filling up a tanker or two 









						Europe's Energy Suicide | Peak Prosperity
					

Europe banned all Russian oil. About 40% of their energy needs come from Russia. This is not just self-destructive, it's energy suicide.




					peakprosperity.com


----------



## divs4ever

one might also point out that  with the latest round of sanctions and asset seizures  Europe and the US risk being seen as unreliable customers


----------



## qldfrog

divs4ever said:


> one might also point out that  with the latest round of sanctions and asset seizures  Europe and the US risk being seen as unreliable customers



And OPEC /oil producing nations change.Europe via uk/north sea fields used to be a huge non OPEC producer..,oil now gone..same for our own domestic production here in Oz
So who else can counter OPEC cartel.. Russia? Venezuela? All good friends of the west


----------



## divs4ever

from memory BPT is sitting on a few undeveloped  wells , while NHC ( through Bridgeport Energy ) has upped output ( but probably not enough to shift the dial even inside Queensland )

 MAYBE Australia has a little bit of reserve capacity  if the price and government forces align  ( am not so sure about the current government policy on that )

 ALSO Australia is an energy exporter  , so we could turn back time and start building a new refinery or two  for local consumption


----------



## Smurf1976

waterbottle said:


> OPEC agrees to hike output by 648k barrels/d, 50% increase in agreed output!



On this one I'll reserve judgement.

Not arguing it's wrong or right, only that I'm unconvinced they can actually do it sustainably (versus a temporary release from storage).


----------



## divs4ever

Smurf1976 said:


> On this one I'll reserve judgement.
> 
> Not arguing it's wrong or right, only that I'm unconvinced they can actually do it sustainably (versus a temporary release from storage).



 yes  i have been watching those dips into strategic reserves as well , however  many years back a friend alerted me the fact  crude oil ( above ground ) tends to go 'stale'  after a while and needs to be used within a reasonable amount of time 

 in years gone by i noticed the US strategic reserves were discreetly sold down  and refreshed  in the resultant dip  , providing a predictable buying dip ( for selected oil stocks )

 i am wondering if this year  all that really happened was that such a reserve sell-down was publicized  to fit a political agenda 

 ( sadly no ' dip opportunities' have appeared for me this year )


----------



## qldfrog

divs4ever said:


> yes  i have been watching those dips into strategic reserves as well , however  many years back a friend alerted me the fact  crude oil ( above ground ) tends to go 'stale'  after a while and needs to be used within a reasonable amount of time
> 
> in years gone by i noticed the US strategic reserves were discreetly sold down  and refreshed  in the resultant dip  , providing a predictable buying dip ( for selected oil stocks )
> 
> i am wondering if this year  all that really happened was that such a reserve sell-down was publicized  to fit a political agenda
> 
> ( sadly no ' dip opportunities' have appeared for me this year )



The dip might have been relative,just keeping POO flat, before the next overdue jump


----------



## divs4ever

well we are in an unusual perversion of supply and demand  AND what if the thing that breaks  are the commodity trading desks ( because  so much it being traded in rupees , yuan and roubles  and in genuine expected delivery contracts )


----------



## Stockbailx

Anyone trading the Light Grude Oil - OSO/USD might find this of some interest, share price sitting on a keen 118.9 and been rising for most of the day. EightCap see it as a bye opportunity, although it overbought on most time-frames only the H4 has room to move and the daily is moving in the opposite direction. A bit sus but interest to see if it concurs against the grain, giving the current economics?
I think there dreaming and it won't hold momentum?

Eightcap mailed this a short time ago;

_Thanks for tuning in, readers. Today we’re looking at USOUSD oil and wondering if yesterday’s price rejection could lead to a new leg higher from buyers.
_
So far this week, we have seen mixed trade with buyers coming close to breaking last week’s high before sellers took hold and set up a two-day retracement. It would have been three, but buyers had other ideas yesterday, stopping sellers once they tested 112.75. Buyers quickly took price back up above 117 and posted a higher close for the session.

Today so far price has been on the quieter side. If we can see a new move above yesterday’s high, we will be looking for a new up leg, but if sellers can close below 115.14 this could be a warning that the current retracement could have further to go.

If we do see a new leg higher would look for price to possibly get back into the 120/21 area if buyers can maintain momentum.


Happy Friday, all. We hope everyone has a lovely weekend and good trading.


----------



## Telamelo

W


Stockybailz said:


> Anyone trading the Light Grude Oil - OSO/USD might find this of some interest, share price sitting on a keen 118.9 and been rising for most of the day. EightCap see it as a bye opportunity, although it overbought on most time-frames only the H4 has room to move and the daily is moving in the opposite direction. A bit sus but interest to see if it concurs against the grain, giving the current economics?
> I think there dreaming and it won't hold momentum?
> 
> Eightcap mailed this a short time ago;
> 
> _Thanks for tuning in, readers. Today we’re looking at USOUSD oil and wondering if yesterday’s price rejection could lead to a new leg higher from buyers._
> 
> So far this week, we have seen mixed trade with buyers coming close to breaking last week’s high before sellers took hold and set up a two-day retracement. It would have been three, but buyers had other ideas yesterday, stopping sellers once they tested 112.75. Buyers quickly took price back up above 117 and posted a higher close for the session.
> 
> Today so far price has been on the quieter side. If we can see a new move above yesterday’s high, we will be looking for a new up leg, but if sellers can close below 115.14 this could be a warning that the current retracement could have further to go.
> 
> If we do see a new leg higher would look for price to possibly get back into the 120/21 area if buyers can maintain momentum.
> 
> 
> Happy Friday, all. We hope everyone has a lovely weekend and good trading.
> 
> View attachment 142996




Well both oil & natural gas fell -6% overnight..


----------



## Stockbailx

Telamelo said:


> W
> 
> Well both oil & natural gas fell -6% overnight..



OSO/USD Fell like a ton of bricks, turned the 4H chart around, following daily momentum, looking at that Oil likely to fall further more...EightCap just another forex broker trying to catch people out!


----------



## Stockbailx

I notice after further analysis, of the OSO/USD it might well be collapsing, weekly analysis suggest it might well be exhausted sitting on a overbought market for the last couple of months and a bit, and I wouldn't be surprised to see oil prices decline over the month.
That's a good thing I guess for consumers, bringing the price of petrol down. Interesting to see how it all pan out!


----------



## Stockbailx

Stockybailz said:


> I notice after further analysis, of the OSO/USD it might well be collapsing, weekly analysis suggest it might well be exhausted sitting on a overbought market for the last couple of months and a bit, and I wouldn't be surprised to see oil prices decline over the month.
> That's a good thing I guess for consumers, bringing the price of petrol down. Interesting to see how it all pan out!
> 
> View attachment 143008



As suggested and predicted the forecast for Oil is on the long dance south. I Think with the war in Ukraine and other economics that have been holding oil up. Have been manipulated to a collapse of oil prices is long over due. Watching it today after consolidating it's position yesterday in a range sideways it has broken down. Looks to be re considering it's position at this present time, but I see further bearish activity obsolete...


----------



## Captain_Chaza

Stockybailz said:


> As suggested and predicted the forecast for Oil is on the long dance south. I Think with the war in Ukraine and other economics that have been holding oil up. Have been manipulated to a collapse of oil prices is long over due. Watching it today after consolidating it's position yesterday in a range sideways it has broken down. Looks to be re considering it's position at this present time, but I see further bearish activity obsolete...
> 
> View attachment 143184



Great charts but could you please TIME STAMP the latest Data point

It would help me to see if it is Past History  or Current Time  / Real time at the point of Publishing
ie  Giving them any relevance in the short term

Many thanks in advance  if possible


----------



## Stockbailx

Captain_Chaza said:


> Great charts but could you please TIME STAMP the latest Data point
> 
> It would help me to see if it is Past History  or Current Time  / Real time at the point of Publishing
> ie  Giving them any relevance in the short term
> 
> Many thanks in advance  if possible
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 143186



All charts data is established at the same time as post. In current time, (Real time at the point of Publishing) although if you don't have MT4 you will not have the advantage of different time frames, exasperating the image. I post my charts at the best convenience of the signal or point I'm trying to make. As for short term relevance, don't dig so deep, there manly long term plus I have trouble producing tech analysis. To time consuming, I'm posting on the run...

e,g. OSO/USD looks like over sold bouncing of 0 fib on the 1h time frame but is weighing in on the 4h time frame and above with room to move on fib to go further south, my moneys on that occurring, because there is little resistance...


----------



## mullokintyre

According to Bloombergs via Zero Hedge , the easing of lockdowns has caused a surge in traffic , and thus demand for petroleum products. And global oil markets may remain tight for the next three to five years.


> A surge in road traffic has been seen in China after two of the largest cities reopened following two months of lockdowns and restrictions, indicating the economy could be restarting and refined crude product demand is rising.
> 
> BloombergNEF examined Baidu traffic data and found Beijing and Shanghai roadway congestion jumped once travel restrictions under the zero-tolerance strategy to combat infections eased in early June.
> 
> The return of the two most important cities sent an index monitoring congestion of 15 Chinese cities with the highest vehicle registration above a January 2021 baseline.
> The reopening of China comes as COVID infections in Shanghai and the rest of mainland China have dramatically receded after spiking in March, peaking in April, and moving lower through May.
> As China eases COVID restrictions in top cities and congestion data soars, it'll boost demand for crude and refined products.
> 
> Dai Jiaquan, a director at the oil research department at CNPC, recently said a roadway recovery could boost demand by 1.6 million barrels a day on a quarterly basis from July to September. This comes as the US summer driving season is well underway, and North America, as well as much of the world, is structurally short refined products, such as gasoline, diesel, and jet fuel, mainly because of refinery capacity woes.
> 
> Vitol Group Chief Executive Officer Russell Hardy told the audience Tuesday at the Qatar Economic Forum that China's increasing fuel demand in an already tight global market means prices won't drop that much.
> 
> "The market's a little bit concerned that we're running out of spare capacity and is beginning to factor that into prices," Hardy said.
> 
> He continued: "It depends on lockdowns, but we'd expect it to steadily come back through the second half of the year."
> 
> Hardy's similarly bullish message was echoed by Exxon Mobil CEO who said this week that global oil markets may remain tight for another three to five years largely because of a lack of investment since the pandemic began.



Given that China seems to be leading the EV market, there will come a time when the surge in traffic does no peroduce a surge in petroleum products, unless of course its to burn said petroleum products  to produce the Electricity to power all the EV's .....
Mick


----------



## divs4ever

mullokintyre said:


> According to Bloombergs via Zero Hedge , the easing of lockdowns has caused a surge in traffic , and thus demand for petroleum products. And global oil markets may remain tight for the next three to five years.
> 
> Given that China seems to be leading the EV market, there will come a time when the surge in traffic does no peroduce a surge in petroleum products, unless of course its to burn said petroleum products  to produce the Electricity to power all the EV's .....
> Mick



 so where are the tyres coming from then ??  just asking


----------



## mullokintyre

divs4ever said:


> so where are the tyres coming from then ??  just asking



Well. whether we have ICE cars or EV's , they will still need tyres (made out of real rubber rather than the Butadiene and styrene that comes from  petroleum products).
Just saying for a friend.
Mick


----------



## divs4ever

i would suggest  a trend to more synthetic  rubber  to handle the increased potential acceleration  of EVs  since my vision of EVs bring mostly glammed up mobility scooters  is unpopular


----------



## Smurf1976

So we have the US releasing 1 million barrels per day from the Strategic Petroleum Reserve, rapidly drawing it down, but US commercial stocks of oil are barely increasing:




Either someone else is accumulating an increasing physical stockpile of oil or global supply is falling short of global consumption, the SPR releases doing nothing more than to temporarily hide the problem from view.

Adding to that, the increasingly dire gas supply situation in many countries (though the US is not one of them) will drive at least some increase in oil consumption as industry and power generation adopts an "anything that works" approach out of necessity. Not every gas user can switch but certainly some can, between them we should see an increased consumption of diesel, kerosene (including jet fuel), fuel oil and even direct burning of raw crude oil if fuel oil runs short. 

Ending the war won't fix it either since the bottom line is most Russian oil is still being produced and someone's buying it. Production being down only about 700,000 barrels per day or 7% in May:









						Russia: crude oil production monthly 2022 | Statista
					

In May 2022, monthly crude oil production in Russia was estimated at 9.3 million barrels per day.




					www.statista.com
				




Various reports (Google will find them if you want to read it) are to the effect that one country buying more oil from Russia is Saudi Arabia. From a business perspective it's purely logical on their part - buy Russian oil and use it themselves, thus freeing up more of their own oil to export and gaining a pat on the back from the West for that increase in export volume. 

Only reasons I can see why the oil price would fall would be as a purely financial market event or if the market thinks the economy's really going to fall in a heap big time and/or it is in fact piling up somewhere unnoticed. In the absence of one of those, supply seems incredibly tight.


----------



## waterbottle

Anyone know where I can get access to data on seasonal usage of crude/gas by country? 
Asking for a friend...


----------



## divs4ever

waterbottle said:


> Anyone know where I can get access to data on seasonal usage of crude/gas by country?
> Asking for a friend...



 not me , but please be careful 

 there is a general trend to manipulate data  , to suit political agendas ( China for instance  would consider the real figures as strategically important    and sensitive to potential trade sanctions )


----------



## Stockbailx

How's Crude Oil traveling. Been watching for further lower lows. Or Will support be consumed with resistance in the near term as the lows continue.  
WTI Crude (cash) has continued to oscillate within a medium-term descending channel since its 14 June 2022 swing high of 124.15 and tumbled by -29% to print a recent low of 88.22 on 5 August.
 
The recent rebound of +9% from the 5 August 2022 low of 88.22 has shown signs of exhaustion as it retested and reintegrated below its intermediate resistance of 93.50, which is defined by the former range support in place since the 15 March 2022 low that has been broken down on 3 August 2022.
 
*Bearish bias below 98.00 key medium-term pivotal resistance for another potential leg of impulsive down move sequence within its ongoing medium-term downtrend phase since 14 June 2022 high towards the next support zone of 85.35/83.60.*
 
On the other hand, a clearance with a 4-hour close above 98.00 negates the bearish tone to see an extension of the rebound towards the next resistance at 106.20 (also the 50% Fibonacci retracement of the down move from 14 June 2022 high to 5 August 2022 low).
 
Negative elements; price actions on last Friday, 12 August ended the US session with a daily bearish reaction candlestick that almost wiped out the entire gains of the prior session recorded on 11 August, the daily bearish reaction candlestick has taken shape right below the 200-day moving average, and the 4-hour RSI oscillator has shaped a retreat after a retest on its corresponding key resistance at the 62% level which indicates a revival of short-term downside momentum that may lead to a further down move in the price actions of WTI Crude (cash).

 
WTI Crude (cash) has continued to oscillate within a medium-term descending channel since its 14 June 2022 swing high of 124.15 and tumbled by -29% to print a recent low of 88.22 on 5 August.
 
The recent rebound of +9% from the 5 August 2022 low of 88.22 has shown signs of exhaustion as it retested and reintegrated below its intermediate resistance of 93.50, which is defined by the former range support in place since the 15 March 2022 low that has been broken down on 3 August 2022.
 
*Bearish bias below 98.00 key medium-term pivotal resistance for another potential leg of impulsive down move sequence within its ongoing medium-term downtrend phase since 14 June 2022 high towards the next support zone of 85.35/83.60.*
 
On the other hand, a clearance with a 4-hour close above 98.00 negates the bearish tone to see an extension of the rebound towards the next resistance at 106.20 (also the 50% Fibonacci retracement of the down move from 14 June 2022 high to 5 August 2022 low).
 
Negative elements; price actions on last Friday, 12 August ended the US session with a daily bearish reaction candlestick that almost wiped out the entire gains of the prior session recorded on 11 August, the daily bearish reaction candlestick has taken shape right below the 200-day moving average, and the 4-hour RSI oscillator has shaped a retreat after a retest on its corresponding key resistance at the 62% level which indicates a revival of short-term downside momentum that may lead to a further down move in the price actions of WTI Crude (cash).


----------



## Knobby22

Buffett is investing heavily in Occidental, a US oiler.
Suggests he doesn't see the oil price retracing long term.


----------



## divs4ever

maybe Buffet sees Agenda 2030 unraveling 

 and besides  5 years might be the rest in his investment ( manager ) career 

 for example i bought my last parcel of BPT in January 2016  @ 40 cents a share 

 and   the last parcel of WHC in August 2020 @ $1.29 a share 

 and both companies are ( allegedly ) earmarked for extinction 

 if 'forever ' now translates to 5 years for Warren , maybe Warren  has one more big winner in the bag


----------



## Stockbailx

Grude Oil testing near term resistance 95.515 hovering at price 93.931. looking at the daily 4h chart, I don't think it will retrace any time soon either. Oil looks locked in for a rebound 104.318 Imo. Where to from there I couldn't tell you. If I had any idea about oils economy, I d say it will fall again. Buffet a bit of a betting man?


----------



## gartley

POO looks to have reached a critical juncture and a counter trend rally looks to be on the cards. Weekly Elliott Wave count shows it to have completed a zigzag pattern from the 8th March top. I am looking for a rally to about 110 if this works out.




Drilling down to the daily chart and zooming in on the EW count, The decline from the 14 June counter trend peak looks to be a completed impulse. That's my favoured wave count. How can we be sure it's correct? Well we can't but we can add some weight to the analysis with some Hurst cycles analysis and price projections.




Both the weekly and daily Hurst cycles price projection ranges have been met. So that does not mean to take a bullish trade once price trades within these ranges. Firstly we need momentum indicator confirmation.









I believe we have that momentum confirmation at this point, and a long maybe justified with a stop just below the last low of 85.77


----------



## Garpal Gumnut

gartley said:


> POO looks to have reached a critical juncture and a counter trend rally looks to be on the cards. Weekly Elliott Wave count shows it to have completed a zigzag pattern from the 8th March top. I am looking for a rally to about 110 if this works out.
> 
> View attachment 145879
> 
> 
> Drilling down to the daily chart and zooming in on the EW count, The decline from the 14 June counter trend peak looks to be a completed impulse. That's my favoured wave count. How can we be sure it's correct? Well we can't but we can add some weight to the analysis with some Hurst cycles analysis and price projections.
> 
> View attachment 145880
> 
> 
> Both the weekly and daily Hurst cycles price projection ranges have been met. So that does not mean to take a bullish trade once price trades within these ranges. Firstly we need momentum indicator confirmation.
> 
> View attachment 145876
> 
> 
> 
> View attachment 145877
> 
> 
> 
> I believe we have that momentum confirmation at this point, and a long maybe justified with a stop just below the last low of 85.77



Thanks @gartley 

Great charts.

All I can see from the top chart is the imminent beginning of a Wave 3. 

gg


----------



## gartley

Garpal Gumnut said:


> Thanks @gartley
> 
> Great charts.
> 
> All I can see from the top chart is the imminent beginning of a Wave 3.
> 
> gg



Thanks. There is an error which I was too late to ammend. The weekly price projection on the chart should read 81.7-88.73 not 73.79 to 81.7. So far so good let's see what happens!  Wave Y ( or C's) are akin to wave 3's many times


----------



## Stockbailx

gartley said:


> POO looks to have reached a critical juncture and a counter trend rally looks to be on the cards. Weekly Elliott Wave count shows it to have completed a zigzag pattern from the 8th March top. I am looking for a rally to about 110 if this works out.



Resistance may but a halt to that rally today? US economics suggest that Oil and Gasoline a bit of a mixed bag if not in the red;




If I didn't know any better this and any other economics may call for Oil to retrace in the near term. Not saying that Oil won't fight back, but statistics like this may put a damper on future movement. Imo


----------



## gartley

Stockybailz said:


> Resistance may but a halt to that rally today? US economics suggest that Oil and Gasoline a bit of a mixed bag if not in the red;
> 
> View attachment 145926
> 
> 
> If I didn't know any better this and any other economics may call for Oil to retrace in the near term. Not saying that Oil won't fight back, but statistics like this may put a damper on future movement. Imo



Anything is possible we know that. But generally I tend to stay away from macro/ economic nuances as it's too much to focus on both. Not only that news can be interpreted in different ways by the market , too bloody hard.
Who knows what makes prices move as long as they move.
My wave maybe incorrect and you could be right, but the price projection have been met so we should get a bit of a bounce up here.
This offers a short term long but more importantly a chance to position for the next leg down.


----------



## Stockbailx

gartley said:


> Anything is possible we know that. But generally I tend to stay away from macro/ economic nuances as it's too much to focus on both. Not only that news can be interpreted in different ways by the market , too bloody hard.
> Who knows what makes prices move as long as they move.
> My wave maybe incorrect and you could be right, but the price projection have been met so we should get a bit of a bounce up here.
> This offers a short term long but more importantly a chance to position for the next leg down.



Fair call, respect your insight to market analysis. i too take the notion of future high, looking 104 range in the nearest term though?


----------



## gartley

Stockybailz said:


> Fair call, respect your insight to market analysis. i too take the notion of future high, looking 104 range in the nearest term though?


----------



## gartley

We never know if will make money when we take trade ever so I tend to focus on risk management more.
I usually break my trade I into two parts or two trades. I take partial profits or exit the first half has reached 1.5 times the daily ATR.
That's has almost been reached now so if it does I will move the remaining portion to break even.
As for how far it will go I should think between the 38.2 and 61% retracement from the peak. 50% is 104 as you say and 61% is 110.
Either way I will then do a price projection analysis using the 3hr and that should tell us approx how far it will travel. But need to wait a bit first


----------



## Stockbailx

gartley said:


> We never know if will make money when we take trade ever so I tend to focus on risk management more.
> I usually break my trade I into two parts or two trades. I take partial profits or exit the first half has reached 1.5 times the daily ATR.
> That's has almost been reached now so if it does I will move the remaining portion to break even.
> As for how far it will go I should think between the 38.2 and 61% retracement from the peak. 50% is 104 as you say and 61% is 110.
> Either way I will then do a price projection analysis using the 3hr and that should tell us approx how far it will travel. But need to wait a bit first



Good luck with that, it sounds believable and ambitious, I look forward to see oil reach 104 in the shorter term and 110 in the long run...  Have a good one!


----------



## Stockbailx

Watching the last leg higher from *$87.50 – $95.75*, which broke out of the downtrend. The previous two days of trade last week continue to paint a bullish picture for oil as we have now seen a retracement and a new HL. Today’s price action so far has continued to catch our attention, as it looks like buyers are trying to get a new move going.

From here, we would like to see a break of Friday’s high and a new move back to test resistance at *$95.80 – $96.* A break of those resistance points could start suggesting that we have a new short-term uptrend underway.

If we see a new move lower that closes below last Friday’s low, this would be a worry that seller numbers are still very high. A new move below *$90* would most likely cancel out bullish momentum in the short term.


----------



## frugal.rock

There's been some paranormal forces holding down the Poo.
Corrective chanel broken.
Pullback in.
Where to now?
2 clues. Seasonality and old bill EU


----------



## Garpal Gumnut

frugal.rock said:


> There's been some paranormal forces holding down the Poo.
> Corrective chanel broken.
> Pullback in.
> Where to now?
> 2 clues. Seasonality and old bill EU
> 
> View attachment 146195
> 
> View attachment 146196



Up, up and away. And soon.



gg


----------



## Smurf1976

frugal.rock said:


> Where to now?



A key issue at present is Europe (including the UK).

Whilst gas is the primary problem, ultimately they're desperate for anything that burns and oil fits the bill.

So we're likely to see some ongoing use of oil (and coal) in lieu of gas. Sweden put an oil-fired power station back into operation recently and there's plenty more like that, collectively burning rather a lot of oil thus adding to demand.

On the other side of the coin, the economic fallout from the situation there may dampen demand for vehicle fuels etc simply because consumers can't afford to drive anywhere, their funds being drained trying to keep warm at home.


----------



## over9k

Smurf1976 said:


> On the other side of the coin, the economic fallout from the situation there may dampen demand for vehicle fuels etc simply because consumers can't afford to drive anywhere, their funds being drained trying to keep warm at home.



Aka demand elasticity, or "you can only squeeze them for so much".


----------



## Garpal Gumnut

Smurf1976 said:


> A key issue at present is Europe (including the UK)........
> On the other side of the coin, the economic fallout from the situation there may dampen demand for vehicle fuels etc simply because consumers can't afford to drive anywhere, their funds being drained trying to keep warm at home.



That was not the (and my shared) "lived experience" of many young Europeans during the last oil crisis in the 70's. 

Nothing worse than being home in the cold with old rellies whingeing. Beg, borrow or steal fuel just to get out. Demographics may have changed since then.

gg


----------



## CityIndex

Smurf1976 said:


> A key issue at present is Europe (including the UK).
> 
> Whilst gas is the primary problem, ultimately they're desperate for anything that burns and oil fits the bill.
> 
> So we're likely to see some ongoing use of oil (and coal) in lieu of gas. Sweden put an oil-fired power station back into operation recently and there's plenty more like that, collectively burning rather a lot of oil thus adding to demand.
> 
> On the other side of the coin, the economic fallout from the situation there may dampen demand for vehicle fuels etc simply because consumers can't afford to drive anywhere, their funds being drained trying to keep warm at home.



China’s ongoing lockdowns and global slowdown concerns have also played a big part in creating this dull outlook for demand. Oil prices have fallen for 3 months straight as a result, the first time since early 2020.

Buyers did step-in last month to support WTI as it neared the 2021 highs above $84, a possible signal that demand is still expected to remain stronger than it was during the pandemic. This could help prices form a low around the current levels, and potentially attempt to rebound.

Of course, all trading carries risk, and the ability to hold this support will likely depend on whether or not traders think recession fears have been fully priced-in.


----------



## noirua

Oil Rig Count Sees Small Jump Amid Crash In Crude Prices | OilPrice.com
					

The number of total active drilling rigs in the United States rose by 1 this week, as drillers turned more cautious amid a selloff in crude




					oilprice.com


----------



## Garpal Gumnut

Oil is volatile. 

gg


----------



## KevinBB

Garpal Gumnut said:


> Oil is volatile.
> 
> gg



Especially when you set a match to it!


----------



## noirua

OIL (BRENT) PRICE CHART








						Crude Oil Price Today | BRENT OIL PRICE CHART | OIL PRICE PER BARREL | Markets Insider
					

Oil Price: Get all information on the Price of Oil including News, Charts and Realtime Quotes.




					markets.businessinsider.com
				



OIL PRICE continues its downward path.


----------



## divs4ever

noirua said:


> OIL (BRENT) PRICE CHART
> 
> 
> 
> 
> 
> 
> 
> 
> Crude Oil Price Today | BRENT OIL PRICE CHART | OIL PRICE PER BARREL | Markets Insider
> 
> 
> Oil Price: Get all information on the Price of Oil including News, Charts and Realtime Quotes.
> 
> 
> 
> 
> markets.businessinsider.com
> 
> 
> 
> 
> OIL PRICE continues its downward path.



 until somebody needs delivery ( apart from China and India )

 watch out  for rigs ( in the west ) being moth-balled because they are not currently economic


----------



## frugal.rock

Bought some OOO on the ASX today at close.
Hurricane IAN is likely to sort out the current POO manipulations for a while.
WTI POO now $0.5 higher than when I purchased OOO, and yes, I know OOO isn't oil itself. 🤨

1 hourrly bars


----------



## frugal.rock

The yellow and red is all oil infrastructure, rigs and pipelines etc












						Hurricane Ian updates: Florida death toll climbs
					

The remnants of Ian are charging up the East Coast on Saturday after making landfall as a Category 1 hurricane in South Carolina on Friday afternoon.




					abcnews.go.com


----------



## qldfrog

frugal.rock said:


> The yellow and red is all oil infrastructure, rigs and pipelines etc
> 
> View attachment 147370
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Hurricane Ian updates: Florida death toll climbs
> 
> 
> The remnants of Ian are charging up the East Coast on Saturday after making landfall as a Category 1 hurricane in South Carolina on Friday afternoon.
> 
> 
> 
> 
> abcnews.go.com



cuba has moved..Is it Putin's map??? ;-)


----------



## frugal.rock

Hurricane Ian downgraded and heads East. A mess for the residents, but at least all the oilfields to west were spared.

Will the POO break out of its daily trend range, or is the bottom in for now?
I was quite surprised it got so low... as was OPEC apparently.
5 hourly



Daily


----------



## qldfrog

thanks to Mr @ducati916 :


so we reach a new low of strategic reserves at the level of 1980s...all that to try to support USD and wage a war against Putin..
I let you judge of the success when filling up...
More worrying,  you will remember that our own Australian strategic reserves are  virtual ones LOL..aka a paper signed by the USA.
So if we get a blockade, the USA will send us the fuel we need at the end of the month to run our ambulances and fire trucks
Yes I know, but bipartisans and elected by you guys..
Now, even wo blockade, if US reserves are halved ..what about our "part"?...just saying
Next time your servo pumps run empty, be proud it is part of our effort to help the US ....


----------



## qldfrog

PS: I am long oil mid term


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## noirua

Oil Rout Intensifies As China Cuts Oil Purchases | OilPrice.com
					

The selloff in oil continued on Friday, with WTI prices falling more than 5% as China reportedly asked the Saudis to ship less crude in December




					oilprice.com


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## bigdog

EXPLAINER: What's the effect of Russian oil price cap, ban?
					

FRANKFURT, Germany (AP) — Western governments are aiming to cap the price of Russia's oil exports in an attempt to limit the fossil fuel earnings  that support Moscow's budget, its military and the invasion of Ukraine .




					apnews.com
				




EXPLAINER: What’s the effect of Russian oil price cap, ban?​By DAVID McHUGH

FRANKFURT, Germany (AP) — Western governments are aiming to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.

The cap is set to take effect on Dec. 5, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.

The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.

Here are basic facts about the price cap, the EU embargo and what they could mean for consumers and the global economy:

WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?

U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim is to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.

Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most of the insurers are located in the EU or the United Kingdom and could be required to participate in the cap. Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it

HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?

Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.

Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.

One purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.

“It is essential for the global crude markets that Russian oil still finds markets to be sold, after the EU ban is operative,” he added. “In the absence of that, global oil prices would skyrocket.”

WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?

A cap of between $65 and $70 per barrel could let Russia keep selling oil and while keeping its earnings to current levels. Russian oil is trading at around $63 per barrel, a considerable discount to international benchmark Brent.

A lower cap — at around $50 per barrel — would make it difficult for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”

However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.

WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?

Russian has said it will not observe a cap and will halt deliveries to countries that do. A lower cap of around $50 could be more likely to provoke that response, or Russia could halt the last of its remaining natural gas supplies to Europe.

China and India might not go along with the cap, while China could form its own insurance companies to replace those barred by U.S., U.K. and Europe.

Galimberti says China and India are already enjoying discounted oil and may not want to alienate Russia.

“China and India get Russia’s crude at a huge discount to Brent, therefore, they don’t necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”

Russia could also turn to schemes such as transferring oil from ship to ship to disguise its origins and mixing its oil with other types to skirt the ban.

So it remains to be seen what effect the cap would have.

WHAT ABOUT THE EU EMBARGO?

The biggest impact from the EU embargo may come not on Dec. 5, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.

Europe will have to turn to alternative supplies from the U.S., Middle East and India. “There is going to be a shortfall, and this will result in very high prices,” Galimberti said.

Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy


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