# Crude Oil price



## samso (8 September 2018)

I am starting to keep an eye on the pricing for a trade.

late last year, I read that all the Funds were rushing in to buy.  As life got busy I never followed and now that I look again, it is at $70.

I was wondering if there were any traders out there that would have some thoughts to share.

Cheers


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## greggles (8 September 2018)

What sort of trade are you looking for? It's hard to tell where oil is headed in the short term. It could go either way IMO.


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## samso (8 September 2018)

greggles said:


> What sort of trade are you looking for? It's hard to tell where oil is headed in the short term. It could go either way IMO.
> 
> View attachment 89221





Am looking to buy.  waiting for a good time to get in.


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## greggles (8 September 2018)

samso said:


> Am looking to buy.  waiting for a good time to get in.




So what would your conditions for an entry be? What are you looking for?


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## samso (11 September 2018)

greggles said:


> So what would your conditions for an entry be? What are you looking for?




Am looking for a pull back.  just watching for now.

What are your thoughts?


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## greggles (11 September 2018)

samso said:


> Am looking for a pull back.  just watching for now.
> 
> What are your thoughts?




There's been some large volume and selling down so far this month. It looks like it's consolidating at the moment, so this could be a good time for a possible entry.

If it breaks down through $67, I'd be getting out quickly.


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## samso (12 September 2018)

look like it is going back up.. some people have told me that in 2019, you will see 80+  

Do you think that also?


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## luutzu (12 September 2018)

samso said:


> look like it is going back up.. some people have told me that in 2019, you will see 80+
> 
> Do you think that also?




I don't think oil price is one of those thing you'd leave to the free-market, supply/demand stuff. It's too valuable, and too powerful, for that kind of nonsense.

So its price is determined on some sort of grand strategy - both in the fight for market share, for control over supply, for reserves, to get rid of potential competitive sources (wind, solar etc.)... and for geo-political purposes.

So in the short to medium term, the chess players get to muck around with the prices. That play time is almost over... so they will soon either go broke or reduce supplies to start making money or else the entire industry will go broke and be replaced with alternatives.

For one thing, the oil service providers are either broke or very close to it over the past 3 to 4 years. Keep that up any longer and the oilers will see a mass merger among them that will soon enough clobber them. So they got to starve but not completely kill their subcontractors. 

Can't pay your subbie adequate returns if you yourself can't make crazy profit. 

Can't make crazy profit supplies are all over the place.

The past few years have seen, I think, enough small wildcatters getting skinned. They have either sold out on the cheap, giving up their reserves... or gone broke. The great sweating is about done. 

So those with deep pockets, or with friends and gov't with deep pockets... would have taken out rivals and small timers. They would also have taken out the funders of  alternatives... or made themselves into white knights that future innovation will be at their control, and also to their benefit. 

It should be feast time soon.


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## samso (12 September 2018)

so are you saying that it may be time to short ?


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## peter2 (12 September 2018)

_luutzu : you devil._

I'd like to mention more immediate concerns. There's a bloody big cat 4 cyclone heading for the southern states. This has the potential to temporarily stop production, reducing supplies.


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## luutzu (12 September 2018)

samso said:


> so are you saying that it may be time to short ?




I always go long on things. Because if you hang on long enough, you will eventually be right... well, unless the company goes broke, in which you I'd still be right if only the company have enough money 

I don't know where oil will be really, but if I have to put money on it - and I do have money on it so I am biased - it wouldn't be short. There's just too many things going against oil going down or staying down.

The only thing I can think that might make oil go down for a few hours is a few Tweets from Trump saying he ordered the Saudis to pump more because the average Americans are hurting. And he weep for their pain. Yeahhh... that's for the birds man.

The Saudis got an uprising on their hands if oil is kept at these level.

They've managed to get Iran's supplies off the shelves. Meaning that any rise in oil will not benefit Iran, the world's worst enemy of freedom and stuff. World peace and starving Iranians. Win-lose-win?

That and they've looted all they can from the Saudi royals to make up for the recent pain. Those bombs and ammo and mercenaries got to get paid. So too are new wells head, new oil fields needing to be tapped... You can't expect the current crown prince to, I don't know, sell a few of his European castles to pay for that now do you?

Then there's Venezuela... being sanctioned and broke and rusted their fields cannot pump anything until Uncle Sam drop Haliburton and a few boots into the place to help out a bit.

So supplies from offshore have yet been replaced by new source, times are running out.
Iran and Venezuela is going off-line...


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## luutzu (12 September 2018)

peter2 said:


> _luutzu : you devil._
> 
> I'd like to mention more immediate concerns. There's a bloody big cat 4 cyclone heading for the southern states. This has the potential to temporarily stop production, reducing supplies.




I... understand the devil? Maybe?


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## samso (13 September 2018)

i am thinking of long too.  Was going to go in before the run. I was distracted and forgot to watch.
Anyway, there will be another settling of the dust and I will go in then.


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## Smurf1976 (13 September 2018)

Main thing I’ll add is that there’s not a lot of spare capacity at the moment and that leads to a situation where individual companies and countries all effectively have the market cornered.

USA, Russia, Saudi Arabia, Iran, Iraq,
China, Canada, UAE and Kuwait are each individually critical to maintaining the balance between production and consumption. Take any of those countries out and there’s not enough spare capacity to offset the loss.

In addition to looking at it on a country basis there are quite a few companies, both publicy listed ones and others owned by governments, whose production exceeds spare capacity.

So there’s at least 9 countries and a similar number of companies who could each spike the oil price if their production stopped. Throw politics and things like weather and conflict into the mix and it’ll happen sometime.

It’s only a matter of time until there’s a price spike in my view. I won’t try and predict the timing but I’m thinking in the order of a year or two.


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## samso (13 September 2018)

a friend of mine who is in the oil exploration part tells me that there is no easy targets anymore.  This tells me that there has got to be a long position to take


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## Value Collector (13 September 2018)

samso said:


> a friend of mine who is in the oil exploration part tells me that there is no easy targets anymore.  This tells me that there has got to be a long position to take




Well, the industry has become very good at extracting oil from the "Hard targets".


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## CanOz (13 September 2018)

Just a year or so back and the world was awash in oil. What's changed?


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## CanOz (13 September 2018)

Quarterly profiles for CL. Target is 81.12.


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## CanOz (13 September 2018)

samso said:


> a friend of mine who is in the oil exploration part tells me that there is no easy targets anymore.  This tells me that there has got to be a long position to take




Bias is relatively straight forward, but how do you intend on managing risk?


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## samso (13 September 2018)

Am not saying it is easy, but it will cost more to explore and the price will have to follow.  That I assume.


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## samso (13 September 2018)

CanOz said:


> View attachment 89317
> 
> 
> 
> ...





How do you read this ?


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## CanOz (13 September 2018)

The market tends to auction toward last agreed value. The high volume nodes or points of control tell where value was most agreed upon. 81.12 is the last untested point.


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## luutzu (13 September 2018)

CanOz said:


> Just a year or so back and the world was awash in oil. What's changed?




Ran out of gas? 

From memory, the "glut" was about 2m or less barrel a day. That sounds like a lot but that's about 2% over supply of demand. 

Once you crash the price, put small operators out of business; put a halt to investment in more energy efficient machineries, halt new investment into alternatives... drive more demand of the good stuff by diverting their need for someone else's green energy. 

Further at low prices, small oilers need to pump more out to break even or not go broke... that in itself quicken the depletion.

On top of that... the new increased demand and fossil burning also soften up the Arctic, giving easier access the last drop God giveth (hidden from?) to man....

Then once you're ready to make the killing, prices will be so high that those hippy tree hugging greenpeace terrorists will find little moral support or funding to make any noise.


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## tobeyhw (15 September 2018)

What's the point? NYMEX CL price right now is like in between of low(20+) and high(150). Better buy near the low and sell near the high. My 0.02.


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## tobeyhw (15 September 2018)

Plus long crude oil basically equals betting on overheating of global economy. My personal view is the odds of that is not really meaningfully high. my 0.02.


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## samso (15 September 2018)

tobeyhw said:


> Plus long crude oil basically equals betting on overheating of global economy. My personal view is the odds of that is not really meaningfully high. my 0.02.



True

But i think there are good arguments that there will be an 8 in front next year


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## CanOz (15 September 2018)

There are many elements that affect the price, current and future supply and demand, the USDX...makes for great intraday volatility. I’m not fussed where it’s going, only that it’s moving.


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## Trading Athlete (16 September 2018)

How do you know when oil is cheap or expensive?

Stocks are so much easier. You could look at Price to Earnings or something like this.

Does anyone have a ratio for oil equivalent to Price to Earnings?


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## luutzu (16 September 2018)

Trading Athlete said:


> How do you know when oil is cheap or expensive?
> 
> Stocks are so much easier. You could look at Price to Earnings or something like this.
> 
> Does anyone have a ratio for oil equivalent to Price to Earnings?




Formula is Value = Oil Price / eE

Where eE is earning Expectation. i.e. what much the buyer is expecting to make from the price.

So if oP/eE <1, it's good to buy.




--------

PE doesn't really tell you much about the value/price of the business. It just give you an idea of what the market is thinking/expecting. And even then, it doesn't really tells much more than a wet finger in the wind. 

So if PE is "high"... it indicate that the market is expecting the E in the future to be higher, thus bringing the PE ratio down to a more "reasonable" level. i.e. they're buying it for cheap given what they see the future will be.

But then what is cheap and what is reasonable? We all have our different ideas of it... What is that exepcted E and when do we, the market, know it's been reached? Did anyone send a memo about it?

So if you're to rely on PE ratio, you will still need to know for yourself what your E is. And that's assuming that P is the current market price.


Should price it in two ways...

*1. Perpetual bond..*... Value = Earning Power/rr.... where rr is your required rate of return, say 10 or 15%p.a. from now into eternity.

You work out, under a few scenario and assumptions, what you reckon the company's earning is likely to be for you as the owner taking over the entire company.

Plug in that EP, divvy it over your rr... that's about how much a reasonable price is.

If Mr. Market is offering lower than that... all else being equal... you strike a deal.

*2. Ben Graham's estimation. *

Value = EP * [8.5 + 2g]

where g is the expected p.a. growth rate over next decade.


So valuation is pretty simple and straight forward. If you find you're doing too much maths to value the business, you're doing it wrong. Modesty, I know.

The difficult and most  challenging part is not the valuation... it's in the understanding of the business.

How to judge its financial position; can the business maintain its market share/position; grow without too much risk; shifting tastes, technological changes etc. etc.

All that is to ensure that you can somewhat get the estimate of its earning power within the ball park.

Then there's the little to no debt.

Some leverage is good and expected. Some debt are good... some will kill the business. At a certain leverage ratio, you're just playing with fire... or rather, the management is playing with fire.

How are you going to have any clue where interest might be over the next decade, or into enternity? You can't... so you avoid those with too much debt.

So while it will eventually boils down to a P/E ratio, or any ratio... what lies behind it must be understood else you're going to get hurt and don't know why.



oh, there's also the asset play.


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## noirua (16 September 2018)

Oil Price Hourly - Brent crude: https://twitter.com/OilPriceHourly

OilPrice.com: https://twitter.com/OilandEnergy

OPEC News: https://twitter.com/OPECnews

World Oil Online: https://twitter.com/WorldOil

Russian Oil and Gas: https://twitter.com/search?q=russian oil price&src=typd

Siberian Oil: https://twitter.com/search?q=Siberian oil&src=typd


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## noirua (16 September 2018)




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## Value Collector (17 September 2018)

samso said:


> Am not saying it is easy, but it will cost more to explore and the price will have to follow.  That I assume.




There is another line of thinking that says the industry already has a back log of resources that have already been found, but were never exploited due to being "too Hard", but now with fracking and other new tech, these "resources" are being transformed into "reserves" at minimal cost, not to mention well that were considered "depleted are having their lives extended, or are even being brought back to life in some cases.


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## Trading Athlete (17 September 2018)

luutzu said:


> Formula is Value = Oil Price / eE
> 
> Where eE is earning Expectation. i.e. what much the buyer is expecting to make from the price.
> 
> So if oP/eE <1, it's good to buy.




Hi luutzu,

Thanks for your comprehensive explanation regarding the PE ratio.

I just have a question about your formula: *Value = Oil Price / eE*

When it comes to oil how would one work out the eE? 

Oil is not a company so how would a person work out earnings expectation?

Thanks


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## luutzu (17 September 2018)

Trading Athlete said:


> Hi luutzu,
> 
> Thanks for your comprehensive explanation regarding the PE ratio.
> 
> ...




Sorry man, I was just pulling a bad joke.


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## Trading Athlete (18 September 2018)

Actually I think you are onto something.

If someone has a way of working out eE for oil please share


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## CanOz (18 September 2018)

We actually have an accepted method for establishing what the price of CL should be.


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## Trading Athlete (18 September 2018)

Any chance of sharing this?


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## fiftyeight (18 September 2018)

Trading Athlete said:


> Any chance of sharing this?




It is a place where all market participants get together and argue about the price all day. The number they come up with changes frequently though


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## CanOz (18 September 2018)

Yup! The auction!


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## Trading Athlete (19 September 2018)

But what if the participants are wrong?


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## CanOz (19 September 2018)

Only half are wrong


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## samso (22 September 2018)

Any of you guys trade the ASX 200?


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## luutzu (23 September 2018)

Looks like oil is going to have a good week or year ahead.

*OPEC and allies struggle to pump more oil as Iran supply falls*
https://www.reuters.com/article/us-...e-oil-as-iran-supply-falls-idUSKCN1M20FJ?il=0

I think China is also putting a 10% tariff on US LNG import.


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## CanOz (24 September 2018)

Keep an eye on the oil price...decent probability for a move higher...


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## samso (24 September 2018)

Didnt I start this conversatiopn about the oil preice going up ????


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## Ann (16 October 2018)

CanOz said:


> Keep an eye on the oil price...decent probability for a move higher...




G'day CanOz, you may be right in the very short term. The twelve year chart which I started to draw in 2013 is showing me the POO is about to fall and I believe quite profoundly within a fairly short time span. It is currently travelling in and moving toward the top of a bearish rising wedge as well as about to hit the long term overhead falling resistance line coming from 2008. I will put up a chart on the main Oil price discussion thread tomorrow.


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## CanOz (16 October 2018)

Hope you're right Ann, these bowser prices are annoying!


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## Smurf1976 (16 October 2018)

Ann said:


> the POO is about to fall and I believe quite profoundly within a fairly short time span.



A clarification of what you mean by profound?

You mean the price drops from ~$80 down to something like $20?

Or you mean it drops 10% to the low $70’s?

Just wanting to clarify since my interpretation of the word “profound” is to mean an outright crash not just a few %.


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## Ann (17 October 2018)

CanOz said:


> Hope you're right Ann, these bowser prices are annoying!




Sure are CanOz! I have now stopped filling my car with a full tank, my last purchase of fuel was only $20 worth as I reckon it is going to fall, subject to where the Aussie dollar goes of course. (Must look at it, haven't done so for a while.)



Smurf1976 said:


> A clarification of what you mean by profound?
> 
> You mean the price drops from ~$80 down to something like $20?
> 
> ...




G'day Smurf, I would be surprised if it made it to $80 but it is possible, just. Yes I think it is heading over time to the long term support line which will likely be $20 to $22 and that will then be a triple bounce support line if it holds, which I think it will.

I have put up a chart and comment over in the 'Oil Price Discussion and Analysis thread.

Oil price discussion and analysis


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## Student of Gann (18 September 2021)

Crude Oil


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## Joules MM1 (27 November 2021)

TradingView Chart
					






					www.tradingview.com
				



we fell out of the channel, we sold out of the channel
in the above chart there is a channel snapped
an inverted ratio met and price rotated on concisely
4200-4400 appears the nearest zone for buyers to get bargains
..we clearly have an impulsive sell exiting the channel


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## Joules MM1 (30 November 2021)

am short brent front month 72.40's, price attempted to climb back in the channel, we have several instruments pointing to
 liquidity contraction
..am mindful that end of month may play a role but the impulsive sell structure says we have more to go


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## Joules MM1 (15 December 2021)

brent and xauusd going for dip

get em down, pig


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## Joules MM1 (20 December 2021)

rolling over finally !


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## rederob (28 May 2022)

Almost six months and many dollars increase since last posting here, albeit below is the WTI crude price and not Brent (a correlated chart of the two is attached at the bottom of this post):


As can be seen above WTI crude's price is again over its 2011 peak and climbed strongly this past week.

Although we have had high WTI crude prices for months, the American rig count has not shown a corresponding stellar increase in numbers, in fact falling marginally in the last week:


We can clearly see from the *above *that we are over 100 rigs below the 2020 rig count collapse point, and over 300 below the late 2018 peak.  From the chart below we can surmise a rough rule of thumb that it takes around 12 months for production to peak from rig count increases:


Bottom line is that the US is some 1500 barrels per day off its peak some years back and not recovering all that fast.


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## rederob (31 May 2022)

Past 2 months price action for WTI crude suggests more upside:



EU's negotiations with member countries on Russian oil supply have not been resolved.  However, if ship-based oil movements are sanctioned then there goes two thirds of its production.
As noted in another thread, oil field service companies have left Russia to their own devices, so the certainty we are left with is that their oil  production is going to decline.
Elsewhere *OPEC+ *members are set to meet again - Wednesday - and the smart money is they will do very little:
*"Despite continued requests from consumer states to add more oil, Opec-plus is expected to keep production policy unchanged this week, according to delegates, meaning the group will likely agree to a further easing of the cuts by 430,000 b/d.*​


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## rederob (4 June 2022)

Unfortunately a poster has banned me posting to any of his threads, so my "oil price discussions" will be here for the time being.
Below is the past month's price action for WTI crude (via CFDs) - 2-hourly - and as you can see the uptrend is solid, although a tad overstretched:



At the end of this post I have attached a chart showing the correlation with Brent crude, which today has Brent less than a dollar higher :



Interestingly, we see no additional rigs added to the US count for the week, but 17 were added to Canadian oil patches with 3 gas rigs withdrawn:


It's hard to contemplate why, with sustained high oil prices, American drillers are not clamouring back for a quick million bucks or more.
Off topic, gas prices are another thing, and so is refining capacity.  When these jigsaw pieces are put together, along with America's present "driving season," Russia's declining oil output, and Europe's transition away from Russian supply chains, then prices are destined to go higher still.
Although OPEC+ did agree yesterday to add about 680k bpd, the market digested the news and finally worked out it was inadequate:


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## waterbottle (4 June 2022)

rederob said:


> It's hard to contemplate why, with sustained high oil prices, American drillers are not clamouring back for a quick million bucks or more.





It's possible we don't have the complete picture and that they don't see it as a sustainable price to justify restarting a rig?


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## rederob (4 June 2022)

waterbottle said:


> It's possible we don't have the complete picture and that they don't see it as a sustainable price to justify restarting a rig?



*This *article covers that point.
Depending which analyst to go with, US production reaches pre-pandemic levels some time between 2023 and 2024:


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## rederob (8 June 2022)

Posted only to show the continuing uptrend, and that the average price of WTI in the past month is firmly over $110/bbl:



This looks like translating into another good day tomorrow for the likes of WDS, STO and BPT.  In fact STO is just a shade of its 2020 pre-pandemic peak of $9.07.


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## Garpal Gumnut (8 June 2022)

rederob said:


> Posted only to show the continuing uptrend, and that the average price of WTI in the past month is firmly over $110/bbl:
> View attachment 142668
> 
> 
> This looks like translating into another good day tomorrow for the likes of WDS, STO and BPT.  In fact STO is just a shade of its 2020 pre-pandemic peak of $9.07.



Thanks @rederob, silly me sold the WDS that I got from BHP to clear the decks and just an hour later some hotshots in a London trading house must have woken up, had a few snorts of coke, and read their emails from yesterday from some Arabs or Boris-Russians in the Lords or hidden from sanctions in Londongrad to buy WDS.

I believe I missed the bus there, maybe not, lotsa different opinions on oilprice.com as to what ole MBS and Putin are up to with supply and pricing.

The Europeans are as all over the place now with Oil and Gas as they were with the Euro and the Pensions of Italians and Greeks who were quite rightly retiring at 42 and living off the rest of them.

Oil moves during all wars no matter what sanctions are put in place, like cigarettes, I've seen it.

gg


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## rederob (9 June 2022)

Garpal Gumnut said:


> Thanks @rederob, silly me sold the WDS that I got from BHP to clear the decks and just an hour later some hotshots in a London trading house must have woken up, had a few snorts of coke, and read their emails from yesterday from some Arabs or Boris-Russians in the Lords or hidden from sanctions in Londongrad to buy WDS.
> 
> I believe I missed the bus there, maybe not, lotsa different opinions on oilprice.com as to what ole MBS and Putin are up to with supply and pricing.
> 
> ...



Up another $2/bbl overnight and just $25 off all time record high:


Although high prices cause demand destruction, the real story is supply and distribution.
As Sir Garpal notes, wars are good for oi prices.  And in this case, where one of the top oil producers is not only sanctioned, but has lost its principal oil and gas service contractors, there can only be a consequential decline in output.
Our fracking American friends are reluctant to reinvest heavily in their oil patches despite these high prices, possibly because they know that once the Ukrainian war is settled the POO will be flushed down the dunny, along with their potential to profits. 

The bottom line that holds is that present global circumstances hold minimal downside risk for oil and gas prices.


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## rederob (14 June 2022)

Despite the stock market tumbling, we can't say the same has happened with the POO:


Shaded above is the past 4 month's trend, which remains firmly positive.
Not that I have charted it but, for interest's sake, natural gas prices are presently $5.30 higher than the same time last year.
Accordingly, today's ASX stumble will not affect the profit profile of the likes of STO, WDS and BPT, to name several of our oilers.


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## rederob (16 June 2022)

Traded through a $9/bbl price range in past few days, and short term looks weak.
Compare that with where WTI crude has traded from 1 January this year:



The theme since April has been a series of higher lows, *and *highs.  
Again, nothing on the horizon is suggesting this trend will be broken in coming months.
Moreover, the plus-8% inflation rate will keep raising the breakeven cost for US fracking companies, so in the event WTI collapses some may end up holding stranded assets.  That's not an investment environment bankers are likely to prop up having been badly burnt already.


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## Smurf1976 (17 June 2022)

rederob said:


> natural gas prices are presently $5.30 higher than the same time last year.



Even greater for those selling it as LNG.

About AUD $28 per GJ at present versus under $10 same time last year.


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## Country Lad (17 June 2022)

Smurf1976 said:


> About AUD $28 per GJ at present versus under $10 same time last year.



versus $2.50 pr Gj we were paying in 2006.


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