>$50 Oil anyone?

[Smurf1976]

Not to mention the heavy transport industry which is having all sorts of problems sourcing reliable diesel supplies. Apparently there are truckies from Qld etc being stranded in Victorian towns that have unexpectedly run out of diesel and they have to wait until truck loads from other areas can be delivered - whenever that is!

If this is what happens when one refinery has a problem, it doesn't bode well for our National Security now, does it?

AJ

Exactly. Fair enough a bit of a shortage maybe. But when it gets to the point of no diesel fuel at all in some areas with essential services being affected then it shows how totally unprepared we are.

Oil refineries are inherently risky operations. It's not out of the question that one blows up tomorrow due to an accident etc. Given all the fuss we've heard about national security in recent years, I would have thought there would at least be a proper plan for allocation of the available fuel in an emergency situation.

In addition to a proper plan do deal with such a situation, there ought to be a requirement that the oil companies hold decent stocks of refined products near major markets in this country. Obviously that will add slightly to retail prices since storage isn't free, but given the global oil situation it would seem a very worthwhile insurance policy in my opinion.

At present, it's not uncommon that the bulk fuel storage in Hobart is run to literally empty waiting for the boat to arrive. Now, if the tanker breaks down, sinks or something else happens then we're completely stuffed. It's much the same anywhere else that doesn't have a local refinery. Given the essential nature of fuel and increasing risks to supply security I think it's time to review that approach. Even Sydney only has a few days worth in storage most of the time (so I'm told).

 

[Aussiejeff]

...
In addition to a proper plan do deal with such a situation, there ought to be a requirement that the oil companies hold decent stocks of refined products near major markets in this country. Obviously that will add slightly to retail prices since storage isn't free, but given the global oil situation it would seem a very worthwhile insurance policy in my opinion.

At present, it's not uncommon that the bulk fuel storage in Hobart is run to literally empty waiting for the boat to arrive. Now, if the tanker breaks down, sinks or something else happens then we're completely stuffed. It's much the same anywhere else that doesn't have a local refinery. Given the essential nature of fuel and increasing risks to supply security I think it's time to review that approach. Even Sydney only has a few days worth in storage most of the time (so I'm told).

Good points. You know, we always hear about the huge reserves of oil and gasoline that America has stashed away in all manner of storages - even huge underground caverns - to last them "x" number of weeks in the case of a disaster, catastrophe or war. These emergency reserves are so huge they seriously affect the price of oil worldwide depending on whether they increase or decrease more than market expectations in any one week.

Well, I Googled "Australian emergency oil reserves" and guess what - nada. I guess the only "Emergency" oil and fuel we hold is what is left in the few tanks scattered around the country waiting for export or local refining. This really is a bit of a worry.

Where is "The Plan", as you say? For the sake of our OWN National Security, not having a substantial reserve of crude stashed away in to see us through any unforeseen nasty shocks beggars belief (again I might add - there seems to be so many things that our governments DON'T prepare for).

Oh well, I'm sure our leaders know best....

 

[Aussiejeff]

Well, I should have Wiki'ed instead, shouldn't I?

According to Wikipedia, apparently Australia has just 10 days strategic oil and petroleum reserves in total. Given the current heavy transport fiasco caused right now by only one refinery running out of diesel, I would bet that those 10 days of supposed strategic reserves would not be spread evenly across Australia! Some areas might last out a bit longer with many others running out within a week. Let's face it - you need mobile fuel tankers to distribute those reserves in a big hurry if some catastrophe or disaster occurs. If you are outta diesel, as we have seen today it's going to be pretty much game over as far as distribution by road transport of unleaded or Lpg goes too, regardless of how much is left in the strategic reserve tanks!

PS: The European Union members are required to hold at least 90 days strategic reserves. The US reserves will last 60 days if full. Even India is listed at 14 days! In comparison with many other Western nations, Australia seems to be running on a knife's edge. It seems clear that one day this substantial lack of strategic fuel supplies to fall-back on could hurt us something chronic, while many other nations seem to have a better chance to weather a major fuel shortage crisis.

AJ

 

[bvbfan]

Sorry about that
Here's the chart again

 

[Smurf1976]

Well, I should have Wiki'ed instead, shouldn't I?

According to Wikipedia, apparently Australia has just 10 days strategic oil and petroleum reserves in total.

10 days is outright asking for trouble IMO. There's just so many things that can go wrong and 10 days is nowhere near enough to fix them.

An unrelated example. At this time 5 weeks ago the Myer building was still burning in Hobart. Assuming all goes to plan, it will have taken 55 days to simply reopen a department store using other buildings in the CBD.

And yet we think we'll fix a major fuel supply problem in less than 10 days? Oil refineries are complex and technical. They need the right parts and the right people to fix problems. Same with the whole oil industry. Department stores are relatively simple - but still not able to be fixed in even close to 10 days.

 

[BREND]

With the oil price rising from $86 to $92 in just a few days, a lot of bad news had already priced in. I believe this is a good opportunity to short crude oil futures, place at stop at $96.

 

[rederob]

With the oil price rising from $86 to $92 in just a few days, a lot of bad news had already priced in. I believe this is a good opportunity to short crude oil futures, place at stop at $96.

True
But the northern winter influence has yet to get its cut.
If climate change brings on a more severe winter than average, then a long to $100 is possibly an even bet.
Although that ignores some of the earlier points in this thread, which indicate that national strategic reserves are not capable of staving off any brief supply interruption of even moderate magnitude.
I am not sure the funds are ready yet to throw in the towel.
I suggest a wait until POG has tipped over $800 before pulling off the shorts.

 

[Kauri]

Just out of interest...
Cheers
............Kauri

Reuters Sydney, October 28: Reuters reports that Turkish Prime Minister Tayyip Erdogan threatened on Saturday to order an incursion into northern Iraq against Kurdish guerrillas after the failure of talks with Iraq aimed at averting a cross-border raid. The talks collapsed late on Friday after Turkey rejected proposals by Iraqi Defence Minister General Abdel Qader Jassim for tackling guerrillas based in northern Iraq as insufficient and because they would not yield results quickly enough. Turkey has massed up to 100,000 troops, backed by fighter jets, helicopter gunships, tanks, and mortars, on the border for a possible offensive against about 3,000 rebels using Iraq as a base from which to carry out attacks in Turkey.
Army sources told Reuters on Saturday that military planes were making reconnaissance flights along the mountainous border to photograph PKK camps in northern Iraq. Helicopters were patrolling villages and soldiers sweeping roads for mines. According to the Reuters report senior Turkish diplomats say Erdogan has given Washington and Baghdad a limited time to show concrete results or steps to be taken against the PKK. The meeting in Washington on Nov 5 will be the last chance, they told Reuters.

 

[Sean K]

Just out of interest...
Cheers
............Kauri

Yep, combine this with the Iran standoff and oil is set to keep running. And usage of the stuff continues to rise....

 

[BREND]

Rise in oil price last week is due to short covering by hedge funds, rather than building up new long positions. And OPEC & many oil experts had commented that oil price is driven by sentiment rather than fundamental, there is sufficient oil supply around.

Of course if the war at Iraq blows up into a major warfare, then oil price will stay high.

Futures trading is never safe, stop loss level must be in-placed. When the coast is clear, might be too late to take up a short position.

 

[CanOz]

Rise in oil price last week is due to short covering by hedge funds, rather than building up new long positions. And OPEC & many oil experts had commented that oil price is driven by sentiment rather than fundamental, there is sufficient oil supply around.

Of course if the war at Iraq blows up into a major warfare, then oil price will stay high.

Futures trading is never safe, stop loss level must be in-placed. When the coast is clear, might be too late to take up a short position.

Sounds like your trading has taken on new dimension Brend, good luck.

Cheers,

 

[BREND]

Sounds like your trading has taken on new dimension Brend, good luck.

Cheers,

No worries, just place a stop at $94.

 

[awg]

With regard to oil price, I may be simplistic, but it seems to me virtually impossible but for the price to go anywhere else but upwards, based on the simple law of supply and demand.

The worldwide demand for oil is increasing steadily.

The supply of oil seems definately not to be increasing enough to keep up.

As soon as the lines of supply and demand cross over,(as they are now doing) there will be relentless upward pressure on price.

Any hedge fund or other purchaser will not want to sell if the price is continually rising, and would only do so if forced to by a very short position,(into a rising market).

I am unable to forsee any factor that could:
a) cause demand to fall (more than very slightly and short term)
b) cause supply of crude oil to increase (enough)

I understand that extraction of oil from shale or coal is not feasible until the price reaches at least $120+

If the consensus I read on peak oil is true, price rise will be continous.

I would be very interested to hear from anyone who wants to punch holes in this argument.

regards tony

 

[BREND]

Crude oil fell from a record on speculation that a U.S. government report this week will show an increase in stockpiles in the world's largest energy consumer.

Oil inventories in the U.S. probably rose last week by 400,000 barrels, according to a Bloomberg News survey of 12 analysts. State-owned Petroleos Mexicanos, or Pemex, will start early today to return to daily production 600,000 barrels of crude shut in by storms in the Gulf of Mexico, spokesman Carlos Rameriez said yesterday by telephone.

``The indications from Pemex are that production will resume so it's not surprising to have some pullback,'' said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore. ``If the crude oil stocks show an increase that should temper the oil futures.''

Crude oil for December delivery declined as much as 95 cents,
or 1 percent, to $92.58 a barrel in after-hours trading on the
New York Mercantile Exchange. It was at $92.69 at 9:48 a.m.
Singapore time.

Yesterday the contract rose $1.67, or 1.8 percent, to close
at a record $93.53 a barrel. Futures climbed to $93.80 earlier in
the session, the highest intraday price since trading began in
1983.

Gale-force winds from a weather system between Florida and the Yucatan peninsula forced Pemex to close in their production. At least 21 workers died last week when a rig hit an offshore platform in the Gulf of Mexico during a storm that produced waves as high as 26 feet and wind gusts of 81 miles per hour.

Brent crude oil for December settlement dropped as much as 73 cents, 0.8 percent, to $89.59 a barrel on the London-based ICE Futures Europe exchange at 9:39 a.m. Singapore time.

 

[BREND]

With regard to oil price, I may be simplistic, but it seems to me virtually impossible but for the price to go anywhere else but upwards, based on the simple law of supply and demand.

The worldwide demand for oil is increasing steadily.

The supply of oil seems definately not to be increasing enough to keep up.

As soon as the lines of supply and demand cross over,(as they are now doing) there will be relentless upward pressure on price.

Any hedge fund or other purchaser will not want to sell if the price is continually rising, and would only do so if forced to by a very short position,(into a rising market).

I am unable to forsee any factor that could:
a) cause demand to fall (more than very slightly and short term)
b) cause supply of crude oil to increase (enough)

I understand that extraction of oil from shale or coal is not feasible until the price reaches at least $120+

If the consensus I read on peak oil is true, price rise will be continous.

I would be very interested to hear from anyone who wants to punch holes in this argument.

regards tony

I fully agree with u if your time frame is more than 1 years. For the past 2 years, I had focused my investment theme in stocks into 3 areas: growth in oil price, growth in metal resources and growth in China. Those themes have earned a lot of money for me.

I had invested in oil rig companies listed in Singapore and in NYSE, business is good & order book last till 2013.

Whereas for crude oil futures trading, where the time frame can be very short, ie 2 days to 2 weeks, I may not agree with you. Short-term price is driven by sentiment, fear, news, rather than fundamental in the long run.

 

[rederob]

No worries, just place a stop at $94.

Didn't take too long to hit the stop!
It was only ever a gamble while the oil price was trending higher.
And near term there is still a bit more bullishness left in the price - especially if US oil inventory trends don't turn positive.

 

[BREND]

Didn't take too long to hit the stop!
It was only ever a gamble while the oil price was trending higher.
And near term there is still a bit more bullishness left in the price - especially if US oil inventory trends don't turn positive.

Noted. I know its a big problem after reading that oil inventory in US falls again last night.

 

[rederob]

Noted. I know its a big problem after reading that oil inventory in US falls again last night.

If inventories cannot pull higher in coming weeks I revise my high side to a possible $120 top beofre this year's end.
Low-ball price to $70 a slight probability.
Probable new base of $80 for oil going forward.

 

[SevenFX]

Anyone care to speculate on the prospect of >$50 oil and the effect this will have on rthe economy?

Astonishing to think of Oil approaching $100, and can onlyspeculate where it will be another 2years from now...???

Hopefully back down to $50 if alternative fuels take off, namely hydrogen made from clean waste water or better still sea water (countering rising sea levels

Hope you don't have copyright on this chart below Wayne

SevenFX

 

[Smurf1976]

Hopefully back down to $50 if alternative fuels take off, namely hydrogen made from clean waste water or better still sea water (countering rising sea levels

Even if you build and operate the hydrogen plant at literally no cost and use the cheapest electricity you can get (coal) then it still costs the equivalent of $120 per barrel of oil.

More realistically in a world where the hydrogen plant doesn't come free, where employees get paid etc and using wind or nuclear energy to run the plant it's more like $400 per barrel.

Oil at $93 is still cheap compared to the alternatives. That's the problem.