Oil price discussion and analysis

[qldfrog]

These are the sorts of things that will hurt the west far more than UN resolutions or confiscating the assets of Russian oligarchs.
Mick

Mick, a small mistake i corrected above ?
Russian production will temporarily slow, oil prices go up the roof,then flows will be redirected toward China,at a discount but still well above last year prices, the lot not in USD.
outch says USD
results:

Russians even, China winner with new competitive edge, OPEC chartering Ukrainian ladies toward the Gulf,in a move widely applauded as helping the refugees crisis, Europe freezing,the West economy crashing.
Western leaders are clowns,and if they try to blow the russian china pipelines : here comes WWIII

 

[divs4ever]

BPT look pretty to me ( my av. SP is just under 52.5 cents )

WPL well i am in the green again finally only up 7% on them

don't forget NHC sells a bit of oil as well ( through Bridgeport Energy ) but that mostly stays in QLD to supply the local markets

 

[rederob]

I post a lot of my commodity charts for historical - "as it happened" - purposes rather than to make any particular point.
In this case a bit of both, as there is no doubt that the Ukranian conflict has had a major influence in recent weeks, and is likely to for some weeks to come. So, as you can, a new recent record high was hit today, and the all time record price is a mere $35 away:

At the current rate of ascent that $35 is only 2 weeks away!
As a holder of STO, BPT and WPL I am pleased with the price action, but regret what has caused it.

 

[pavilion103]

Bought OOO ETF at $2.90 low.
Still holding ?

 

[JohnDe]

With oil, Russia produces about 10 million barrels per day and consumes a third of that, exporting the rest.

Now there are various estimates of how much spare oil production capacity exists globally but bottom line is whilst there's a degree of uncertainty, I've not seen any estimate which puts present spare capacity, excluding Russia itself for obvious reasons, at a level that could offset loss of Russia's exports of oil. The question's about the extent of a supply deficit not whether there'd be one.

So if Russian exports were to stop then we get some combination of inventory drawdown and price rising to the point where it kills demand. At least we do unless someone's sitting on more spare capacity than is generally accepted to be the case and is willing to use it.

There is plenty of crude oil to meet world consumption. The only real issue is, how much are we willing to pay? And the cost is not just a monetary issue, it's also a moral issue and an environmental issue.

Sourcing the cheapest oil has lead us to supporting corrupt and vicious regimes, which in turn has caused environmental disasters.

Russian oil exports will slowly diminish, no country has completely stopped importing it yet. No until they have new contracts with the other oil countries that they have put oil embargos on.

Oil Reserves by Country 2022

Venezuela (300.90 Bn)​

Saudi Arabia (266.50 Bn)​

Canada (169.70 Bn)​

Iran (158.40 Bn)​

Iraq (142.50 Bn)​

Kuwait (101.50 Bn)​

United Arab Emirates (97.80 Bn)​

Russia (80.00 Bn)​

Libya (48.40 Bn)​

Nigeria (37.10 Bn)​

Oil Reserves by Country 2024

worldpopulationreview.com

 

[Smurf1976]

There is plenty of crude oil to meet world consumption.

In the ground agreed there's plenty.

What matters however is the ability to extract that oil and that's where the constraints are. Take Russia out of the picture and by most estimates total extraction capacity can't meet present demand.

I say that noting nobody knows for sure. The details aren't audited, it's just a case of official claims and best estimates so there's a lot of uncertainty but most estimates of capacity are such that without Russian exports supply falls short of global demand ex-Russia.

Sourcing the cheapest oil has lead us to supporting corrupt and vicious regimes, which in turn has caused environmental disasters.

Agreed.

I generally avoid political comment on financial threads on this forum but suffice to say I'm no supporter of what amounts to a NIMBY approach of ensuring we don't spoil the local scenery meanwhile funding horrific outcomes overseas. I acknowledge some bias, I'm not exactly a fan of oil and gas, but being objective well I'd risk a mishap oiling the local beach over starting a war yes, it's the lesser of the available evils.

Back to the price well I see that the retail prices at a local service station have just gone up significantly today:

LPG = 109.9
Diesel = 207.9
91 = 219.9
95 = 236.9
98 = 244.9

Just a few days ago diesel was 182.9 and 91 was 184.9 so a substantial and rapid increase. It'll have some broader economic impacts no doubt.

 

[waterbottle]

POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....

 

[qldfrog]

POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....

BTD?
Irrespective of Ukraine, are we not a bit short of oil anway?

 

[mullokintyre]

we have been very near peak oil for the last 50 years.
Mick

 

[Garpal Gumnut]

POO now approaching $100. Insane volatility over the past 2 weeks. Hopefully no one has lost their shirt....

No matter in what circumstances a gentleman or lady may find themselves, one should enjoy the ride. It will be down and up.



gg

 

[qldfrog]

we have been very near peak oil for the last 50 years.
Mick

True but here not really peak oil as such, but more a bad timing of wells abandoned, bankruptcy ,divestment and exploration canned
I do not think anyone thinks we are running out of oil yet, weare just not able to get it now when we need it
Just In Time temporarily broken imho

 

[waterbottle]

BTD?
Irrespective of Ukraine, are we not a bit short of oil anway?

Not sure. Fundamentally we'll be in a deficit as Russian and Ukrainian exports are locked out. Iranian nuclear deal doesn't look promising. UAE calling for more output and the Saudis may facilitate this. Then there's Venezuela as the wild card, if the US manages to make a deal there then they'll the world could get away without Russian oil.

Last time there was a big dip was when there were peace talks.
Also keep on mind that equities are falling too and bonds on the rise given Fed expected to hike rates on Wednesday.

 

[rederob]

For those bullish on oil and disappointed that the run has died, don't be.
As can be seen from the chart below, WTI crude prices are at the upper end of their northbound trend May 2021 (which commences from about the same level as POO was at in December 2018):


Support is at $85, so another $16 as a safety net to stay on track is available.
I don't think anyone is yet in a position to work out what the "fundamental" situation is in Europe at the moment, and that will likely determine the next major move for POO.
I'm not fussy either way as even though lots more drillers returned to North America's oil patches, output still is not at pre-pandemic levels. Until that happens POO's downside will be regularly constrained.

 

[Telamelo]

Sanctions against Putin/Russia ? Nah it's business as usual

https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html

Nice to know yet another Russian oil supertanker docked in the UK overnight

P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...

 

[JohnDe]

Sanctions against Putin/Russia ? Nah it's business as usual

https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html

Nice to know yet another Russian oil supertanker docked in the UK overnight

P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...

As asked in the other thread - What is the price of this "cheap" Russian oil?

 

[Garpal Gumnut]

Some interesting commentary from Oilprice.com in this and sister articles.

Of course one must remember that finance and commodity journalists and commentators are as good at predicting the future as you or I.

Speculators Massively Cut Their Bullish Bets On Oil | OilPrice.com

According to Bloomberg data, portfolio managers cut their bullish bets on Brent Crude by the most in years in the week to March 8

oilprice.com

gg

 

[Dona Ferentes]

.
f course one must remember that finance and commodity journalists and commentators are as good at predicting the future as you or I.

But there's a lot of them. (wonder how they'll cope on the front line)

 

[Smurf1976]

we have been very near peak oil for the last 50 years.
Mick

Biggest problem with peak oil is that the concept is almost universally misunderstood. (Not having a go at you or anyone there, just noting it).

Common perception is that it means we're running out of oil or that prices are going to the moon. In reality the actual basis behind it is far simpler.

Pick any resource from land to timber to dam sites to oil and humans pick the low hanging fruit first.

Go to pretty much any city in the world and you'll find that the oldest part is that closest to the center. If you're looking for the oldest building then it generally won't be 50km away in the outer suburbs and if by sheer chance it is, then that building won't have been part of the city at the time but was a farmhouse etc which only became part of the urban area a long time after it was built.

Now find the oldest dams built for water supply. They'll be the sites closest to the city center almost always. Nobody builds a dam 200km away if they can build one in the hills next to the city.

And so on. Pick any resource and it's what humans do.

Same with oil.

The first wells were shallow, onshore and not far from existing cities and towns. In other words, the simplest, easiest, cheapest options available. Then as those run out, progressively further away, deeper or more technically difficult sources were developed.

That being so, with any resource that's working down the list of available options the cost inevitably rises. More materials, more labour, greater technical challenges and it's further away. The fundamental costs of developing each new source are higher than the best, now already used, one that came before it.

Same goes for things like environmental conservation or war zones and so on. Nobody's going to come up with a plan to drill in a National Park or set up operations in a war zone if there's a far less contentious and safer option sitting right in front of them that's dead easy. Such ideas only make business sense if there's no better option.

The "peak oil" theory is simply that as cost rises over time, a point would logically come where consumers can no longer afford increasing consumption and sometime after that, as cost continues to rise even further, consumption rolls over. That maybe either because the higher price prompts the development of alternatives or simply because it's unaffordable as such - if it cost $1000 per barrel then I think we all agree there'd be a drop in use.

So where are we then?

Looking at inflation-adjusted oil prices in USD, to the extent there's a "normal" price for oil it's between $20 and $30 per barrel. Excluding wars, sanctions, embargos and so on then prior to the year 2000 the industry was consistently able to operate profitably with prices in that range. Highly profitably in fact.

If we're not seeing companies excited at the prospect of $30 oil well that says all you need to know really. It says that the options available today aren't as good as the ones available previously. In truth well even at double that, $60, there was no great rush of drilling.

I'm no doomer and there's still plenty of oil on the planet but the evidence does point to it being past its economic best. The price required to make drilling viable has increased on a per barrel extracted basis despite improvements in technology. Prices that would have seen a flurry of drilling in the past don't prompt that response these days, the available options just aren't so good.

 

[divs4ever]

Sanctions against Putin/Russia ? Nah it's business as usual

https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html
https://www.independent.co.uk/news/uk/home-news/russia-oil-tanker-import-southampton-b2034286.html

Nice to know yet another Russian oil supertanker docked in the UK overnight

P.S. Perhaps Australia should also consider getting cheap oil from Russia to ease fuel prices here at home...

plenty of oil produced in Australia , shame that most of it is refined overseas ( and some of it sold back to Australia )

maybe we should stop electing sell-out politicians

 

[JohnDe]

plenty of oil produced in Australia , shame that most of it is refined overseas ( and some of it sold back to Australia )

maybe we should stop electing sell-out politicians

Sadly the oil under Australian soil is low quality. How much are you willing to pay for Aussie refined fuel from Aussie oil?

Australian crude oil and condensate is insufficient/incompatible for our needs and is largely exported

• Domestic crude production has been in decline for some time and Australia does not produce enough compatible crude oil to run existing domestic refineries.
• Most crude oil production is located long distances from Australian refineries and has better transport proximity to key Asian markets.
• Bass Strait crude oil is refined in Victorian refineries given transport proximity and economics (delivered via pipeline) and some local condensates are trucked to refineries.
• Much of Australia’s crude oil production is also of a quality (light sweet) which is very commercially attractive for processing in other countries. Australian refineries require a blend of crude oils to produce the product slate demanded by Australian fuel users.
• In general, it is more commercially attractive to use a majority of imported crude oils in Australian refineries to meet the balance of transport fuels needed by Australian fuel users, and this imported crude diet better matches Australian refinery processing capabilities.
• Transport fuel security depends on flexible supply chains and diversity of product supply, not domestic refining of domestic crude oil.

Australian Crude Production and Refining | Australian Institute of Petroleum

www.aip.com.au