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

 

[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?

 

[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

 

[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.

 

[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.

 

[Bonk]

Re: OIL AGAIN!

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

OIL IS KING !

 

[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!

 

[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.

 

[wayneL]

Re: OIL AGAIN!

A different perspective:

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

 

[RichKid]

Re: OIL AGAIN!

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.

 

[wayneL]

Re: OIL AGAIN!

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

 

[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)

 

[RichKid]

Re: OIL AGAIN!

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!

 

[RichKid]

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.

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.

 

[wayneL]

Re: OIL AGAIN!

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.

 

[markrmau]

Re: OIL AGAIN!

....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).

 

[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%.

 

[Smurf1976]

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%.

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.

 

[RichKid]

Re: OIL AGAIN!

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.

 

[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.