Oil price discussion and analysis

[Chronos-Plutus]

Boost for oil:

https://www.city-journal.org/covid-19-will-intensify-dominance-of-oil

jog on
duc

Oil price is just so chaotic, not even tenured traders can know the movements. All it takes is the Saudis or Russians to make an announcement; if you're on the wrong side of the trade, your financial position is burnt. Same with FX; and Central Banks making announcements.

I stay away from FX and oil CFDs.

 

[Chronos-Plutus]

Boost for oil:

https://www.city-journal.org/covid-19-will-intensify-dominance-of-oil

jog on
duc

I think the oil price will rise over the next decade; I would much prefer to buy into a listed oil producing entity. I haven't done enough research yet to choose the oil producer.

I am emotionally attached to Shell though, I love that company for some reason; actually it is because of their exceptional scenario analysis ( but always take emotion out of investment, I was trained.

However the BP Statistical Reviews are absolutely outstanding metrics to work off: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

 

[ducati916]

News:



U.S. shale permanently damaged? “February was peak shale,” Daniel Yergin, vice chairman of IHS Markit, told the WSJ. Already struggling with a poor track record of profits, U.S. shale may not rebound to previous levels for years, if ever. More than 70 companies could file for bankruptcy this year at $30 WTI.

Supply damaged. Demand coming back:

Demand on the upswing. Roughly 4.1 billion people went into lockdown at its peak, but more than 90 percent of them live in areas that have seen some sort of a reopening. Driving activity and gasoline demand are rising, boosting bullish sentiment.

IEA: No peak demand yet. The IEA said that oil demand has not yet peaked. “In the absence of strong government policies, a sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” the IEA’s Fatih Birol told Bloomberg.

U.S. air traffic picking up. While still a fraction of pre-pandemic levels, TSA data shows that passenger throughput at U.S. airports is increasing. On May 25, more than 340,000 people passed through American airports, nearly triple the low levels seen in April. But that number still stands at about 15 percent of year-ago levels.

Gap between physical oil and contracts shrinks. In a sign of a tightening market, the price between physical oil and the Brent contract has narrowed in recent weeks, after a huge gap in April. “A few weeks ago, we had armageddon pricing when nobody wanted physical barrels apart from for storage,” Richard Fullarton, chief investment officer at hedge fund Matilda Capital Management Ltd., told the WSJ.

Importantly the Producers are above their (albeit from a low level) 50DMA and heading back towards the 200DMA.



A new bull market? Possibly. With the level of supply destruction, the survivors should do very well.

jog on
duc

 

[ducati916]

I think the oil price will rise over the next decade; I would much prefer to buy into a listed oil producing entity. I haven't done enough research yet to choose the oil producer.

I am emotionally attached to Shell though, I love that company for some reason; actually it is because of their exceptional scenario analysis ( but always take emotion out of investment, I was trained.

However the BP Statistical Reviews are absolutely outstanding metrics to work off: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

Simply go for an ETF that holds 30 odd and will rebalance. I hold ERX simply because I seek the additional volatility.

jog on
duc

 

[Chronos-Plutus]

Simply go for an ETF that holds 30 odd and will rebalance. I hold ERX simply because I seek the additional volatility.

jog on
duc

Not a bad play. You are also exposed to currency volatility.

I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.

Which broker/trading house do you use?

 

[rederob]

Possible retest of $28 is in play:

 

[ducati916]

1. Not a bad play. You are also exposed to currency volatility.

2. I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.

3. Which broker/trading house do you use?

1. Re. currency: correct.

2. This could help with your research: https://etfdb.com/etfs/issuers/state-street-spdr/

3. Several.

jog on
duc

 

[qldfrog]

Not a bad play. You are also exposed to currency volatility.

I think I may buy into such an ETF with a weighted position towards another ETF that tracks the oil price, like OOO. Example a 60% ERX to 40% OOO split in capital allocation.

Which broker/trading house do you use?

Please please please unless you have followed the OOO story for the last 3 4 months, be very careful and understand where you go with ooo or similar.plenty of info on this forum

 

[Chronos-Plutus]

A

Please please please unless you have followed the OOO story for the last 3 4 months, be very careful and understand where you go with ooo or similar.plenty of info on this forum

Absolutely, I will do a significant amount of research before I buy into the ETF. Betashares have a reputation for being a bit dishonest with their ETFs.

 

[rederob]

WTI crude broke into a new near-term high overnight:

That's great news for our Aussie producers, most of whom were already above break even on production costs alone, but in bad need of ongoing exploration capital.
The week again saw a decline in the US rig count, dropping a net 17 (one gain in the Utica shale basin), so this may have led to the small spike near close of trade.
All round good news for those jumping in on the oilers.

 

[frugal.rock]

US Production

 

[qldfrog]

US Production
View attachment 103982

Interesting,what was the sudden fall a bit earlier in 2019, on the graph: hurricane?
Sounds as bad as now?

 

[rederob]

Getting better each day for WTI crude:

Even so, it's a 15% climb to the cliff fall of 8 March. However, don't expect those percentage increases to be replicated in equities.

 

[gartley]

An oil top is imminent here. The USDCAD is inversely correleated to the price oil and appears to have completed a textbook abc correction.

 

[frugal.rock]

US Production
View attachment 103982

Down again.
As long as production is dropping, I don't see the poo dropping... much.
Hard to tell with the delayed data.
How's the rig count @ducati916 ?
Cheers

 

[Smurf1976]

The USDCAD is inversely correleated to the price oil

There's another way to trade the oil price for those looking at ways to do so (noting the discussion about the issues with OOO).

 

[rederob]

Another fantasticweek for those long oil:

And that was helped by further contraction in US drilling operations, with US LTO numbers declining by 18 over the past week.
The question we should soon be able to resolve it the inflection point for shale oil drillers to re-enter the market. It will be a strong guide to breakeven prices in the USA for LTO.

 

[ducati916]

Down again.
As long as production is dropping, I don't see the poo dropping... much.
Hard to tell with the delayed data.
How's the rig count @ducati916 ?
Cheers

View attachment 104328

Still falling:



jog on
duc

 

[rederob]

As you can see from WTI's prices over the past year, we have avery long way to go before hitting what I have labelled below as "resistance" (actually being 2019 support):

We are sill a few dollars away from the low prior to WTI falling off a cliff, and I suspect we will hover around here for a while as those who bought into storage continue to resupply the market at a nice profit.
My take on prices next year will be based on the extent and speed that US LTO producers swing into action.
What we know definitively is that OPEC+ has the willingness to price them out of the market.
The other caveat on next year's prices is the extent that conventional exploration spend has set back supply. This gets a bit tricky as just because prices have recovered somewhat does not mean they have the necessary cashflow to inject into what was previously planned.

 

[gartley]

In my last post: https://www.aussiestockforums.com/posts/1075743/ I looked the USDCAD which has a negative correlation to POO as it appeared this was approaching an EW completed abc pattern.
After looking at POO today, the cycles routines I look at suggest this might trigger a sell in the next few days as cycle detrends have turned down although the trend indicator still suggests trend is intact it will be interesting to see if flags a trend change in the weeks ahead. All that is required is for the FT swing chart to cross below the upper pink line. If it does trigger this sets up a favourable R/R with a target of 31.42 @ the previous 4th wave of one less degree