# Oil Spike



## jonojpsg (24 February 2011)

Hi all,
Just wanted to raise the current spike in the price of oil as a potential trade that everyone should be either on or looking seriously at.

Obviously most, if not all, of you would be aware of the current situation in the middle east and the disruptions, both realised and potential, to oil supply that this poses.  Since Monday the oil price has spiked from around $88ish to currently $98ish and could go much higher.

It was pointed out to me the other day however that on IEA (International Energy Agency) data for the last qtr of 2010, world oil supply was 88.2 mbpd (million barrels per day) whereas world oil demand was 88.9 mbpd.  Forecast demand for 2011 is 89.1 mbdp with q3 and q4 demand peaking around 89.8 mbpd.

This being the case COMBINED with supply disruptions from the worlds main oil producing region could definitely see oil prices heading north towards 2008s highs of $150 and possibly beyond.  As I and no doubt others watched this occur and did not take advantage of it, I am on board this time and thought I'd bring it up as a possible trade.

Happy trading


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## Agentm (24 February 2011)

my original target without the M/E situation was for WTI to go $140


with lybia crude being pretty darn spectacular, to replace the 2% of world turnover with that level of crude is not going to happen.  800,000 per day is already offline right now, about half of the lybian turnover.

imho the $220 region that some have speculated is pretty hair raising,,


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## matty77 (24 February 2011)

Question is, what companies benefit from a spike in oil prices? (what companies on the ASX... that is)


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## Tysonboss1 (24 February 2011)

matty77 said:


> Question is, what companies benefit from a spike in oil prices? (what companies on the ASX... that is)




First thought would lead you to think the oil producers, Bhp , woodside, beach etc.etc. But most of them have the bulk of their production hedged at fixed prices, So the upside is somtimes limited unless it is a sustained increase. Also temparary spikes have limited effect on earnings when looking back at an entire years production.

If you wanted to speculate on the commodity itself you may see bigger wins (or loses)


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## nukz (24 February 2011)

Been long on Brent & WTI Crude quite a significant amount since things started in Egypt got out today with Brent at 112 and Crude touching 100 briefly before. 

If there is even a touch of things spreading to Saudi Arabia i will be going long again for sure. 

I would also look at the recent declines in Sugar/Rice as a possible entry point as well.


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## ThingyMajiggy (24 February 2011)

Awesome....must be time to short then


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## ThingyMajiggy (24 February 2011)

$4 rally in the last hour and a half....not bad!


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## Smurf1976 (24 February 2011)

I hold quite a few oil and other energy stocks. 

As a whole, they've gone nowhere since this started and for today they are down. All of these are stocks that have historically been correlated to the oil price.


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## jonojpsg (24 February 2011)

ThingyMajiggy said:


> $4 rally in the last hour and a half....not bad!




Ohhhhh mannnnn did I love that spike  That was the quickest $6k I have ever made  Been trading oil long over the last couple of months and was actually down a bit up until the start of this week then have been actively in and out a few times.

Was out this morning again but had an alert on at $99.60 which went off at dinner.  Got on after dinner and bought 20 A$1 contracts at $100.10 then in 15 minutes watched it go to $103!!!  Unbelievable sitting there watching it - never seen anything like it???  Maybe spikes on the HangSeng index TH?  Anyway, my hourly rate after closing out at $102.50 came to $24000/hr for that 15 minutes of fame hahaha


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## DB008 (24 February 2011)

Smurf1976 said:


> I hold quite a few oil and other energy stocks.
> 
> As a whole, they've gone nowhere since this started and for today they are down. All of these are stocks that have historically been correlated to the oil price.




+1
I sold TAP the other day as it hasn't moved much for the past few weeks (will skyrocket now). I wish that there was a OIL ETF (like precious metal etf's).


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## IFocus (24 February 2011)

nukz said:


> If there is even a touch of things spreading to Saudi Arabia i will be going long again for sure.





Saudi Arabia  is the big one.


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## nukz (24 February 2011)

Speaking of precious metals, gold has almost had the same effect in the last few days as oil so it cant be ruled out as a trade. 

Anyway anybody trade the vix? i used to just use it as a reference point for trading but i decided to go long on Wednesday which has been ok so far.


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## DB008 (24 February 2011)

I trade though my SMSF, and l am bullish on oil. What would be the best way to go about getting exposure to oil?


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## Bullion Money (24 February 2011)

nukz said:


> Speaking of precious metals, gold has almost had the same effect in the last few days as oil so it cant be ruled out as a trade.
> 
> Anyway anybody trade the vix? i used to just use it as a reference point for trading but i decided to go long on Wednesday which has been ok so far.




Dont forget the little brother Silver as well.

It rose 9% over 3 days then dropped 4% then up 2% now down again 1%  (rough percentages)

Im not chartist but it looks like classic wedge patterns.

Both gold and silver look bullish.


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## Slipperz (24 February 2011)

DB008 said:


> I trade though my SMSF, and l am bullish on oil. What would be the best way to go about getting exposure to oil?





Invest in an oil company.


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## skyQuake (25 February 2011)

Looks like that spike post Au session yesterday was the last hurrah to squeeze everyone out..


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## Slipperz (12 March 2011)

The trajectory of Libyan oil production remains concerning. Estimates of current shut in production vary from a low of 500,000 barrels/day (b/d) to over 1 million, from a total production of 1.6 million barrels/day (mmb/d).

Company withdrawal of expatriate production workers appears to be a major contributing cause of the production decline, not damage to producing fields, although other factors are in play. Though Libya is a small producer, its oil is highly prized in the Mediterranean basin by Italian, French, and other regional buyers, as well as in northwest Europe for use by heavy, sour-based refiners as a blending crude.

Libyan export terminals appear still to be able to accept export cargoes, but with fighting around Ras Lanuf--home to the largest refinery and the country's largest oil export facility--tanker owners are likely to be hesitant to commit tankers to begin loading in the face of potential harm to ships and crews. In addition, there are reports of buyers being unable to decide who to pay, and some may be having trouble obtaining insurance coverage.


Foreign buyers of Libyan oil, primarily refiners, as well as spot and forward traders, appear to have bid up global market prices of the higher-quality sweet crudes, similar to those produced by international oil companies (IOCs) in Libya, as they try to cover demand for future refining activities or purely to speculate by betting on continuation, if not spreading, of current market disruption to other suppliers in the Arabian gulf.

Refiners' efforts to cover their crude needs from alternative suppliers reflect the shortage of Libyan crude oil, which is attractive for its higher production of gasoline and diesel for the major consuming markets.

These alternative, and generally similar, sweet crudes are from Algeria and Nigeria in the Atlantic Basin and Azerbaijan in the Caspian. The increased demand for these crudes comes at a time when parts of Nigerian production are already shut in. The increased demand reflects requirements from European and probably Asian buyers. Nigerian crude is purchased by select U.S. refiners, who are competing to maintain supply of the higher-quality crude oils prized at this time of the year.

Not surprisingly, sweet crude prices in Singapore are also up, reflecting in part China's refinery requirements for higher-quality sweet crude. Chinese companies are estimated to import about 11 percent of Libyan production--or close to 200,000 b/d.

Chinese refineries were historically dependent on domestic sweet crude to charge their refineries. It would not be surprising if Chinese traders are contributing to the price run-up as they seek to cover forward requirements with purchases of alternative European and African sweet crudes.

Seasonal factors contribute substantially to the price run-up, as refiners have begun producing gasoline and diesel for the summer driving season in the Northern Hemisphere following normal seasonal maintenance.

For those refiners lacking deep conversion capacity, Libyan and related sweet crudes are used to blend with less attractive crude oil to reduce sulfur content and to increase production of higher-end transportation fuels for the summer driving season.

All of these factors contribute to the general increase in global oil prices, particularly for the higher-valued crude oil.

U.S. officials have indicated that the United States may draw from the Strategic Petroleum Reserve to address current high crude oil prices. Saudi Arabia also indicated it may increase production to meet the shortage.

Unfortunately, current high prices are not related to the current shortage of global crude oil supplies. Rather, some market participants appear to believe that the political trouble in Libya may increase, as well as spread to the other major producers with excess capacity, leading to a major physical shortage in global crude supplies and a further increase in prices--and that any crude that may come to the market as a result of increased production, or from the U.S. Strategic Petroleum Reserve, may not be of the appropriate quality or sufficient quantity to meet current demand.

Alan S. Hegburg is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.


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## Wysiwyg (17 June 2011)

We are still paying the same at the fuel depots as when the price per barrel of WTC was $110 USD. 

Why are the producers of oil charging so much nowadays?


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## MARKETWINNER (14 September 2013)

We cannot avoid currency and commodity volatility time to time due to demand and supply situations, global short term events and speculation link to currencies and commodities.

In the short run oil prices will have spikes due to short term events and in the long run oil will come down due to new developments in the oil sector.

I have noticed many countries such as USA, Europe and Asian countries are trying their best to become either energy self sufficient or reduce dependence on imports by developing their domestic alternative energy sectors including domestic bio-diesel.  

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.


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## CanOz (15 September 2013)

Oil and all markets have price changes due to the structure of the market, as well as fundamental factors....

- - - Updated - - -



jonojpsg said:


> Hi all,
> Just wanted to raise the current spike in the price of oil as a potential trade that everyone should be either on or looking seriously at.
> 
> Obviously most, if not all, of you would be aware of the current situation in the middle east and the disruptions, both realised and potential, to oil supply that this poses.  Since Monday the oil price has spiked from around $88ish to currently $98ish and could go much higher.
> ...




What would you say now?

I wonder if that was a short term top? Lol...


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## noirua (4 March 2022)

How oil price boom could put global economy at risk
					






					www.ii.co.uk
				



Oil prices are at another eight-year high, with the world seemingly powerless to stop the rise. Today's 7% increase came despite only the fourth-ever coordinated oil release from the International Energy Agency since its founding in 1974 – the others being the Gulf War in 1991, Hurricanes Rita and Katrina in 2005, and the Libyan civil war in 2011.


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## Dona Ferentes (8 March 2022)

Not sure the supply response will be as rapid?
(What's the answer to higher oil prices? Higher oil prices)


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## waterbottle (8 March 2022)

Dona Ferentes said:


> Not sure the supply response will be as rapid?
> (What's the answer to higher oil prices? Higher oil prices)
> 
> View attachment 138751




Does Shale oil compensate for this?


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## Dona Ferentes (8 March 2022)

many of the rigs are involved in tight oil. The issue is the spending by the companies.

The last $100-per-barrel cycle lasted around three years, from March 2011 to August 2014. 


*oil producers have no plans to ramp up production. *
_They changed their spending plans after the last energy bear market. Instead of plowing money into exploration and production, they’re returning cash to shareholders through dividends and share buybacks. Oil majors like BP (BP), Exxon Mobil (XOM), and Chevron (CVX) plan to spend $38–$41 billion on buybacks this year, according to the Financial Times .

Looking at BP, and you’ll see how this is playing out…_

_From 2011 to 2014, BP spent an average of $27.5 billion annually on capital expenditures and acquisitions. In 2021, it spent less than half that—just $12 billion. Analysts expect that figure to stay low for the next few years._
_Meanwhile, BP plans to pour $3–$5 billion annually into alternative energy investments for the next eight years. And it could spend over $4 billion on buybacks this year alone. That’s more money pulled away from oil production._


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## rederob (8 March 2022)

waterbottle said:


> Does Shale oil compensate for this?



It could.
But so far it has not.
Note that the international rig count excludes North America:


As @Dona Ferentes points out above, oil majors are consolidating their position in the market rather than breaking new ground.
Meagre profits in the past led to massive slide in oil company share prices over recent years and I think they are trying to turn this around.  But if they get back into a drilling frenzy, oil prices will again collapse.


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## waterbottle (10 March 2022)

Do spikes down count?

Crude down 11%.... USA is working Venezuela for oil, UAE calls for more output from OPEC, meanwhile EU admits they can't give up Russian oil immediately so are phasing it out over 2022


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## qldfrog (10 March 2022)

waterbottle said:


> Do spikes down count?
> 
> Crude down 11%.... USA is working Venezuela for oil, UAE calls for more output from OPEC, meanwhile EU admits they can't give up Russian oil immediately so are phasing it out over 2022



I think Russia should ban oil export to Europe.they can sell it to china..same same but with opacity 
Oil price will rise,china gets it at a discount but even discount higher than pre crisis, and paid in real money
does anyone realised US has just voluntarily remove the trust in usd.
It is just another fiat  at the mercy of a change of government

Win win for China and Russia imho


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## Dona Ferentes (10 March 2022)

Urals crude is high sulphur; Chinese refineries are not set up for it.


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## qldfrog (10 March 2022)

Dona Ferentes said:


> Urals crude is high sulphur; Chinese refineries are not set up for it.



Do not worry too much about that.our coal was low ash and sulfur 
and has been replaced in China within 3 months with crappy one.


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## Country Lad (10 March 2022)

_Crude oil prices rose sharply again as the prospect of an early peace faded, and the United Arab Emirates appeared to backtrack on comments that it may break with the OPEC+ pact on production discipline.

Iraq’s Energy Minister also repeated his country’s adherence to the pact, which had been criticised for not raising output quickly enough to accommodate the recovery in global demand after the pandemic. U.S. inventories fell again last week as record high gasoline prices failed to make a noticeable dent in consumption.

By 6:25 AM ET, U.S. crude futures were up 3.4% at $112.40 a barrel, while Brent crude was up 4.3% at $115.89 a barrel._


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## Smurf1976 (10 March 2022)

waterbottle said:


> USA is working Venezuela for oil, UAE calls for more output from OPEC, meanwhile EU admits they can't give up Russian oil immediately so are phasing it out over 2022



Key issue here is production capacity.

Oil in the ground is one thing but all it really amounts to is a potential source of oil.

What matters to the market is oil above ground and in that context there's a lot of constraints. Estimates do vary but in short:

*There's effectively zero unused oil production outside OPEC + Russia (before the invasion). Anywhere else, if someone's got the capacity to produce then they're producing.

*OPEC spare capacity falls a long way short of Russian export volumes. Russia exports (pre-invasion) 7.5 million barrels per day and whilst estimates do vary, most put OPEC spare capacity at very much less than that.

This one claims 2.3 million bpd spare: https://oilprice.com/Energy/Oil-Prices/OPECs-Shrinking-Capacity-Could-Send-Oil-Above-100.html



> OPEC+ will see its spare capacity reduced to just 2.3 million bpd by July 2022, at the height of the driving season, according to Bloomberg estimates.




Other estimates are order of magnitude similar.

For Iran, the country claims capacity of 3.8 million bpd versus present production around 2.4 million on recent figures. As a one-off it's also generally thought that Iran's above ground oil storage facilities are full or very close to it, meaning that they could achieve a temporary surge of exports by draining those if sanctions were lifted. Obviously that's a one-off boost but it's a boost nonetheless.

Anyone's guess what Venezuela could produce and by when - the wheels have basically fallen off their oil industry pretty spectacularly. There's plenty in the ground but not a lot of ability to get it out.

The one thing I really disagree with is the EU's claim that they'll free themselves from Russian oil and gas by the end of 2022. Well, OK, they might stop importing it, they might have no choice in that, but I disagree that they'll have an alternative actually in place in that time. It's simply war propaganda in my view there - talking tough but without any real backing in practice with gas being the biggest problem of the lot.

My reasoning there is simply the scale of what's required. There's too many cars, trucks, buses, boilers and so on using oil or gas throughout the EU + UK to convert any serious number of them to some other fuel in the time available meanwhile the worldwide production capacity for oil and LNG, excluding Russia, isn't sufficient to end reliance on Russia simply through logistics.

Time will tell but in my view if there's to be no buying from Russia in the near term, and in this context "near term" means the next few years, then it'll be done in a chaotic manner not "business as usual" with alternative energy or alternative sources of oil or gas.

There's no quick and easy fix here, it's not like saying that if Coles is out of stock of pasta then you just go to Woolworths instead. Doesn't work like that when what you're trying to buy is an additional 45% output of the entire worldwide LNG industry excluding Russia. Things just don't get built that quickly.

45%?

To replace Russian gas supplied to Europe by pipeline with LNG would add about a third to worldwide LNG use. With the added problem that 8% of present worldwide LNG production is indeed from Russia. Add those two up and it's a 45% increase in non-Russian production required.

That's simply too massive to do that quickly. Even China with its well known ability to build things quickly can't build refineries, petrochemical plants or anything else with a maze of pipes and so on full of high pressure flammable gas in just a few months and 45% worldwide is an epic task. At least it is unless pretty much every country with gas in the ground declares a wartime emergency and "just do it no matter what" - possible I suppose but unlikely in practice.


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## Smurf1976 (11 March 2022)

Current Ampol terminal gate prices for reference.

Price is for bulk loads, minimum 35,000 litres, and includes taxes but does not include delivery (it's the price to fill the tanker at the bulk terminal).

Location = Sydney

E10 = 197.40

91 = 200.82

95 = 213.39

98 = 220.13

Diesel = 213.88

Add delivery and whatever margin the service station adds and it's getting rather costly.


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