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Oil price discussion and analysis

Re: OIL AGAIN!

The large expenditure on E&D has yet to catch up with demand. Motorists have been eased into future pricing at the pump. Does a better standard of living create more demand? Yes. More plane trips, more cars/trucks, more factories, more power stations.
 

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Re: OIL AGAIN!

Here's something of interest. Pres Bush probably has this chart on his wall at home.

Cheers
 

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Re: OIL AGAIN!

Bush Trader said:
Here's something of interest. Pres Bush probably has this chart on his wall at home.

Cheers

Sorry to tell you but your graph is showing 0 euros for oil at one stage & 150 euros at another.
 
Re: OIL AGAIN!

Hi guys and gals

I am thinking now is reasonably good time to get into oil and gas stocks given the current selloff.

I can't be bothered going through what I went through with the minerals co's trying to interpret all that technical data with the oilies so am looking for a conservative fund of large multinational oil and gas stocks.

I have had trouble so far so would appreciate any ideas.

Thanks!
 
Re: OIL AGAIN!

For those interested...It is obvious that oil prior to 2004 had ventured above $30 (average) 3 times.So I can only assume that we will NOT see the $70 + again and possibly a $40 to $50 range soon.I think the PEAK oil scenarios may apply to some fields but others are being discovered to keep the worlds machinery turning.Bags less than $50 by April.

Annual Average
Crude Oil Prices
1946-Present
U.S. Average
(in $/bbl.)
Year Average/ Nominal Inflation Adjusted
1946 $1.63 $16.68
1947 $2.16 $19.60
1948 $2.77 $23.38
1949 $2.77 $23.61
1950 $2.77 $23.36
1951 $2.77 $21.65
1952 $2.77 $21.17
1953 $2.92 $22.10
1954 $2.99 $22.59
1955 $2.93 $22.17
1956 $2.94 $21.96
1957 $3.00 $22.66
1958 $3.01 $21.09
1959 $3.00 $20.88
1960 $2.91 $19.98
1961 $2.85 $19.35
1962 $2.85 $19.12
1963 $3.00 $19.29
1964 $2.88 $19.63
1965 $3.01 $19.37
1966 $3.10 $19.38
1967 $3.12 $18.98
1968 $3.18 $18.52
1969 $3.32 $18.37
1970 $3.39 $17.72
1971 $3.60 $18.04
1972 $3.60 $17.47
1973 $4.75 $21.53
1974 $9.35 $38.42
1975 $7.67 $46.01
1976 $13.10 $46.72
1977 $14.40 $48.19
1978 $14.95 $46.53
1979 $25.10 $69.51
1980 $37.42 $92.26
1981 $35.75 $79.89
1982 $31.83 $66.97
1983 $29.08 $59.26
1984 $28.75 $56.17
1985 $26.92 $50.77
1986 $14.44 $26.72
1987 $17.75 $31.69
1988 $14.87 $25.55
1989 $18.33 $29.99
1990 $23.19 $35.91
1991 $20.20 $30.10
1992 $19.25 $27.84
1993 $16.75 $23.54
1994 $15.66 $21.43
1995 $16.75 $22.31
1996 $20.46 $26.45
1997 $18.64 $23.57
1998 $11.91 $14.83
1999 $16.56 $20.12
2000 $27.39 $32.26
2001 $23.00 $26.37
2002 $22.81 $25.71
2003 $27.69 $30.55
2004 $37.66 $40.42
2005 $50.04 $51.94
2006 $60.40 $60.78
Source US DOE/ www.economagic.com and
 
Re: OIL AGAIN!

The problem is from what I hear, is that cost of production on average, is now at about $40 per barrel. Is this true?
 
Re: OIL AGAIN!

chops_a_must said:
The problem is from what I hear, is that cost of production on average, is now at about $40 per barrel. Is this true?


Do not know mate....maybe the answer is in your signature.
 
Re: OIL AGAIN!

Wysiwyg said:
Sorry to tell you but your graph is showing 0 euros for oil at one stage & 150 euros at another.


I did not draw the chart, however my interpretation is that the x axis is using an index not actual $ values to compare exchange rate and oil price US $/bbl, sorry for any confusion. I posted the data to demonstrate a point that whilst the world quotes oil US $, the weaking of US exchange rate againt the Euro $, may see the OPEC nations in which currency they are actually paid. It may be that gold may become the prefered currency.

Cheers
 
Re: OIL AGAIN!

This seems to have slipped under the radar....

Matthew Simmons stated last week that he believes we have reached the peak in Oil production, thanks to field declines in large fields and lack of new supply.....

http://www.youtube.com/watch?v=4IwtAQzrfiw

commentary on the video at;

http://www.theoildrum.com/node/2239

Oil is now back to $60 (20% above lows) - are we going to retest highs?

I think this is big news - this guy is not some 'oil expert' that has sprouted up in recent years with the high oil price. His company has been around since the 70's....

How does he think we solve the problem;

"Start from the ground - how did we get to 85mmb/day of consumption, and what would we do if supply went to 70, when we thought it was going to 100"

This is big news... according to him - we are at Peak Oil!

TJ
 
Re: OIL AGAIN!

Also there is a widening of prices between US (being lower) and Singapore, suggesting political influence?
 
Re: OIL AGAIN!

Regarding peak oil, I'd say we're damn close to it right now.

Actual peak production to date is generally accepted as being May 2005. Since then we've seen serious geologically driven declines in major fields in Mexico, Kuwait and the North Sea as well as ongoing decline in the onshore US, Bass Strait etc.

So far, we've got by with growing supply from deepwater fields, increasing liquids extraction from natural gas, demand destruction in poorer countries (and amongst poorer people) and because peak production at that time was surplus to actual consumption (inventory building).

But the deepwater production boom is based on very rapid extraction of relatively limited resources and is expected to peak around 2011 if all goes to plan. Give it another 12 months for a few mishaps along the way. That's the final major source of free flowing, relatively cheap conventional crude oil.

After that there's really only growth in gas liquids in line with gas production (since the opportunity to increase the liquids extracted per cubic metre of gas produced instead of leaving it in the gas was a one-off opportunity) and unconventional oil (mostly tar sands but also heavy oil). Everything else seems likely to be either flat, in decline or is only a minor source of supply.

So a peak no later than 2012 seems likely. It will probably be earlier given production disruptions due to technical problems, accidents, wars, terrorism etc.

Have we already passed peak oil production? It's too early to say and no matter when it occurs we'll only know the timing of the peak in hindsight. But that Saudi Arabia was consistently reducing production in the face of very high prices and has cut more than its OPEC quota required ought to be sounding some very serious alarm bells.

Their investment in massively expanded water injection capacity and several fold increase in active drilling rigs, which have so far resulted in nothing obvious other than falling total production, adds to the concern. A major expansion in drilling effort failing to result in rising production is exactly what happened at the time of the US peak in 1970 and is exactly what would be expected if Saudi production were in real trouble.

We know the North Sea is in serious decline. We know that Cantarell field (Mexico) is crashing faster than practically anyone expected. We know that the Burgan field (Kuwait) has peaked (it is freely admitted by Kuwait authorities). We know that Indonesia has seen substantial ongoing production falls as has the US (the US having for over a century been the world's largest oil producer) and we know that Russian and Iranian exports are now trending lower too.

We also know that apart from deepwater development over the next 5 years and the one-off development of Canada's tar sands (itself running into trouble with costs, emissions and gas shortages) there isn't much more expected to come online. The sole hope is that the OPEC members are sitting on capacity they are keeping quiet about but few believe that to be the case.

As for smaller fields, they help but it's just not realistic to expect an army of 10,000 barrels per day fields which run dry after 2 years to offset the major producers such as Ghawar (5 million barrels per day and flowing for decades). The world doesn't actually have enough drilling rigs to develop enough small fields even if we knew where to find them (a very important point). And drilling rigs don't get built in a day.

Hence my conclusion of a peak sometime between 2005 (actual peak to date) and 2012. :2twocents
 
Re: OIL AGAIN!

This article may be of interest, for those bears out there.

Cheers

Consensus Building On A Much Lower Oil Price

Source: FN Arena News - February 16 2007

By Greg Peel
In December 2005, analysts at Goldman Sachs predicted the crude oil price would rise to US$105/bbl. This was a bit of a shock, as the spot price had only moved into the US$50s at the time. But when oil passed US$75/bbl at the height of Middle East tensions, the Goldman prediction was starting to look quite plausible.
As tensions between the US and Iran appear to be simmering still, the fact that the oil price is now below US$60/bbl suggests the fear premium attached to crude pushed too far mid last year, and that supply is no longer as dire as it once was seen to be. A warm start to the northern hemisphere winter also served to trigger fund selling.
A return to winter cold may have restored order, but the spot crude price has lately been very volatile as supply-side news ebbs and flows. One minute OPEC is cutting production, the next minute it isn't. Then the US wants to increase reserves. And China too. Predicting where the oil price is going to land on any given day has become an impossible task.
One fact that is certain, however, is that the crude oil market is now locked into a steep contango. This has serious ramifications for the value of fund investment.
When life was normal long ago – pre-China – commodities usually traded in backwardation. This meant forward (or futures contract) prices traded at lower levels into time. As commodities can be stored for a rainy day, consumers would turn to inventory supplies if the spot price rose too high, and provided storage costs were economical they would not pay a higher price than spot for forward contracts.
But then the China factor hit and the demand surge caused panic. Consumers rushed to lock in prices into time, and subsequently pushed forward prices above spot prices – known as a contango. Adding to contango conditions today is the fact that storage costs have materially increased. It is now not as economical to store oil rather than buy it on the spot market.
This causes a dilemma for investment funds. It you invest in crude oil now, you have to cover the contango gap before you are in the black. Rolling over contacts into time means paying a higher price. Unless the spot price has risen accordingly then you will actually roll over at a loss. If the spot price has fallen, you will suffer a double loss. To maintain a position under such circumstances is to be confident that oil prices will push ever higher.
Can investors be confident?
It didn't take a lot for the spot price to drop from US$78/bbl to US$49/bbl. Apart from a "blow-off top" that saw the overstretched fear premium wiped out, the world has become more optimistic that demand is ebbing and supply is flowing. New sources, alternative fuels, claims by Saudi Arabia that it has oil a-plenty, and a diminishing of the peak oil scare has bolstered the supply side, while predictions of a slowing global economy have dampened demand assumptions.
Where OPEC is involved, the supply side is always tenuous. Initial thoughts of an ease off in rampant Chinese growth have been put on hold, while the US economy appears in better shape than expected. And you can never discount the rapid growth of Chinese car ownership.
Yet the growing call is that demand is easing and supply is improving. There is not a great track record among analysts of getting these factors right, but you have to bow to expert opinion.
However, it is in the investment funds side that pressure may well be brought to bear. Net assets invested in the Goldman Sachs Commodity Index rose from US$15 billion in 2003 to nearly US$70 billion in 2006 (Bloomberg). Making money from commodities is not the walk in the park it used to be, and there is already evidence that the bubble has begun to burst.
Oil analysts at Sanford C. Bernstein & Co suggest a "breaking point" for oil could come in March if Saudi Arabia fails to make the production cuts it has indicated. If spare capacity widens, this could force the contango higher and cause an investor bail-out.
Bernstein & Co are predicting a 2007 average price of US$50/bbl. Other analysts share Bernstein's views and predict that oil could fall as low as US$30/bbl as time goes on and risk of severe supply disruption recedes.
But Goldman Sachs remains fairly resolute. While US$105/bbl has not been mentioned lately, Goldmans maintains producer investment is "significantly" short of requirements (Bloomberg). The analysts have set US$71.50/bbl as their 2007 target.

The market is poised.
 
Re: OIL AGAIN!

Anyone getting bullish on oil? I am.

Cheers,
 
Re: OIL AGAIN!

Me too ... there are a few oilers that a brewing nicely ...

Within a month I reckon we will be seeing breakouts
 
Re: OIL AGAIN!

While ago I bought it at 54 then it went up to 61/62 then fell back to 57, I sold and yes it went back up!

So now I am looking at it but god it has been volatile as of late.

So I see the fundamentals look good. I have not looked at the chart much since I sold it

Are any of you guys in the market yet?
 
Re: OIL AGAIN!

Guys after looking at the monthly 4hour it looks toppy and has resistance at 63. Also current trend running out of pace with MACD dropping and topping into a straight line repulse also starting to drop, I will wait for the next swing off the MA.

see chart
 

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