Australian (ASX) Stock Market Forum

>$50 Oil anyone?

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dirty_harry said:
It's running out pretty fast now, just a matter of time. 7% depletion per year, won't be long. I suggest buying petrol cars in Australia, because they can be converted to gas which is abundant here.
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Newbie question: I assume the current economic crises is to blame for the recent decline in oil prices... But I thought if we are running out of oil and we depend on it so much wouldn't that drive prices higher? So you could expect prices to increase alot once demand picks up?
 
Yes exactly. We saw what happened last year when demand outpaced supply. Because of the crash demand has dropped off for now. Supply won't be able to be increased enough when demand increases again. Also goes for other commodities.
 
dirty_harry said:
Yes exactly. We saw what happened last year when demand outpaced supply. Because of the crash demand has dropped off for now. Supply won't be able to be increased enough when demand increases again. Also goes for other commodities.
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Demand has never outpaced supply that I am aware of.
What happened last year was the potential for demand to outstrip supply, as global inventories started to tighten.
Speculators were betting on a continuation of trend. We know that changed dramatically, and the price of so many things has subsequently collapsed.
Each year roughly an additional 5% of new oil output is required to match present demand. While high oil prices allowed significant investment in new capacity and exploration, present low prices are doing the opposite.
The most probable scenario for 2009 is a continuation of excessive production capacity, and a correspondingly low oil price.
The jury is out in 2010 as various national stimulus packages are yet to get off the ground.
I suspect 2010 will be a much better year than 2009, but I don't think we have seen the worst of things yet. So there is a prospect that 2010 will look pretty much like things are right now.
I see oil prices rising steadily over the next 18 months, but doubt if $80 could be reached unless there is a major change in global markets.
Within 3-4 years I expect it will be back to a business as usual approach with supply thereafter unable to match demand.
 
It's hard to tell exactly what happened last year because we can't know how much demand destruction the escalating prices were causing along the way. For example people were driving less, and flying less because of fuel surcharges. So the market removed demand that would have been there at lower prices. I think it's safe to say that due to the natural production declines we are now seeing for example in Mexico and the North Sea, at some point when the recovery comes there will be trouble.
What do you guys think we should do about it - accumulate Woodside and Santos?
 
dirty_harry said:
It's hard to tell exactly what happened last year because we can't know how much demand destruction the escalating prices were causing along the way. For example people were driving less, and flying less because of fuel surcharges. So the market removed demand that would have been there at lower prices. I think it's safe to say that due to the natural production declines we are now seeing for example in Mexico and the North Sea, at some point when the recovery comes there will be trouble.
What do you guys think we should do about it - accumulate Woodside and Santos?
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Not today ;)
 
Even though mods have deleted "sales advice post" my post of complaint still fits :D Sorry Jeff, happy that you can get away with it and as you can see from my signature, much can be said in just a few words ;) Congrats on your weight lost and keep up the good health. Oh and very amusing Baboon, but no one likes a show off:D
 
if you're into conspiracy, big oil men wanted to drop the price of oil in a plan to bankrupt Iran, who recently thwarted the control of london and NYMex exchanges to opentheir own, so dropping the oil price below the break even price for Iran was the hidden reason for this last drop in oil.
 
Hi, anyone know which instruments to watch which correlate with the price of crude oil (CL)?

Cheers
 
These ETFs

LOIL.L
CRUD.L
OILB.L

all on LSE.

But you will likely get affected by contango if you hold longer than short term.
 
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