Oil price discussion and analysis

[rederob]

Re: OIL AGAIN!

Don't count on it. A lot will spend all the profit on the search for more oil. Take ARQ as an example where I believe they will continue the search until they spend the last dollar earned. Remember the directors don't need a dividend, they pay themselves regardless and the staff are well paid. Shareholders are considered a necessary evil by the way they are often treated.

I don't think ARQ got a good hedge price:

On 24 April 2007 the Company entered into a oil price swap covering 1.275 million barrels deliverable over five years at a fixed price of US$68.15 per barrel.

It's hedging affects over a quarter of production for next 5 years.
Avoid hedged producers who are pessimists!

 

[JeSSica WaBBit]

Re: OIL AGAIN!

Good point Rederob,

Just for the record CUE has no hedging in place and will gain 100% of the recent price rises.

Yey for the optermists!

 

[lioness]

Re: OIL AGAIN!

Hi Lioness,

That's the million dollar question....................

They have to already be a producer to benefit from the recent massive increase per barrel of oil and have calculated there expected revenue at about $55 per barrel and be getting significantly above this.

If you aint already producing the stuff then price increases only affect projected revenue. This is also good but, my thoughts are that the bigger SP increases will happen to the oilers who are announcing large increases to their 2007/2008 profits

So this being the case, i doubt the spec stocks will benefit as much as the producers. As it has been pointed for those who explore for and find oil in the future it will come at greater expense. Therefore, my guess is that those who will make the greatest profit from recent rises will be the current producers.

As for timing, see this link for company reporting requirements 2008 - should give you an idea of when some of this news may begin to flow into the market.

http://www.asx.com.au/research/pdf/company_reporting_dates_2008.pdf

My view is that you will see interest in oil stocks increase this year and i would expect that before end June 2008 there will be a shift towards this sector.

If we get a further spike in oil prices towards $120.00 per barrel then this will really catch peoples eye. The trigger will come soon, i dont know when exactly but just look at what has happened this year................supply of sufficient cheap oil is going to be a huge problem, the world is as unstable as ever, we have taken all the cheap stuff already, China and India are growing like mad.

Go......JW, you bet ya, i plan to be pimping hares by years end!!!

Onassis would be proud!!

JW - Pimping hares sounds dangerous!

Is CUE producing? I thought it was a spec stock??

That is why I bought INP. They expect 1000 bopd by June 08 without calculating any upside(which I expect to come in Jan/Feb). That is why I bought into this as a near term producer. I suspect this sector will have a major bubble if oil went to $120 soon. CUE and INP will explode if that happens. Good Luck JW sounds like you won't need it with those lovely hares of yours!!

 

[JeSSica WaBBit]

Re: OIL AGAIN!

Lioness,

CUE has two wells currently producing oil and will start production later this year from a third well called Maari. They are also involved in exploration and thats the speccy side of the business i guess.

Maari is much larger than the two exisitng wells and will increase production significantly.

Have a read of the CUE thread for more info.

Good luck with INP

 

[lioness]

Re: OIL AGAIN!

Lioness,

CUE has two wells currently producing oil and will start production later this year from a third well called Maari. They are also involved in exploration and thats the speccy side of the business i guess.

Maari is much larger than the two exisitng wells and will increase production significantly.

Have a read of the CUE thread for more info.

Good luck with INP

I had a read of the CUE thread, yes looks good but I will stay with INP as the upside is larger I think, but good luck with it.

 

[rederob]

Re: OIL AGAIN!

Algeria's Oil Minister, Chakib Khelil, OPEC's new president, has ruled out any production increases, saying crude oil prices are likely to remain high for three months.
Crude oil prices, which briefly topped $US100 a barrel for the first time last week, should "stabilise" in the second quarter, Mr Khelil said.
The increase in market crude prices "is probably going to remain through the end of the first quarter of 2008", he said.

http://business.smh.com.au/oil-prices-to-remain-high-says-opec/20080106-1kgb.html

 

[Smurf1976]

Re: OIL AGAIN!

Now let's get this straight.

OPEC had a target price of $22 - $28 not that long ago. Then they kept gradually increasing production as the price rose. Now when the price hits $100 they decide to stop increasing production.

Make sense? It sure does to those who have thought for years that OPEC has reached its limit and CAN'T pump more no matter what they would like to do.

 

[JeSSica WaBBit]

Re: OIL AGAIN!

Hey Smurf i have read about and heard this several times as well. It makes sense.

I heard they can not be trusted with any of their figures relating to future projected oil reserves and are very prone to exaggeration?

I cant recall the reason but there was some benefit for them to nominate reserves at higher figures...................maybe someone else can expand.

If it could be quantified that they had reached their limit and could not pump anymore i wonder if we would hit $200.00 plus per barrel?

I understand that their wells are in decline and the decline is expodential, the hole in the ground cant pump oil forever.

 

[Smurf1976]

Re: OIL AGAIN!

Hey Smurf i have read about and heard this several times as well. It makes sense.

I heard they can not be trusted with any of their figures relating to future projected oil reserves and are very prone to exaggeration?

I cant recall the reason

In short, their quota system works partly on claimed reserves. The more you claim, the more you are allowed to pump and the less other OPEC members are allowed to pump.

There was thus a major incentive for OPEC members to claim higher reserves when production quotas were held well below capacity. No surprise then to find that practically all of them literally doubled (or more) their reserves "overnight" one ofter the other in the mid-1980's without announcing any major discoveries.

Also no surprise to find that most of them report the same reserves year after year with no change whatsoever. Sure, they might be finding more oil but it just isn't likely that they discover exactly as much oil as they pump out every year and thus have unchanged reserves.

Due to the above, their true reserves are quite probably nowhere near their official claimed reserves. Many (including me) believe that they are simply quoting total oil discovered to date and ignoring that which has already been extracted. Others suspect they may be including oil which is technically unrecoverable.

 

[ithatheekret]

Re: OIL AGAIN!

I thought I'd pop this in here .

I've just done a few very crude ( excuse the pun ) , figures on the gas futures applying 3 stages of the calculation process and I have positive numbers already , I've had a signal like this once before but it took to 7 stages , all were positive and it was on cocoa , when it looked like it was forming a cup , it is now at the second of those figures already , actually just past it . I can assume what it means easily on the weight of cocoa , but I just need more time or my daughter back to help me run the program , as it involves someone to calculate and someone to input the data .

But to spit it out has me hesitant , and I don't like that , ( he who hesitates loses ) ( but , fools rush in , where angels fear to tread ) , and indecision is a negative to me .

As this is a debate on views projections and anything else I can say , that softens this , it's not investment advice .

But , I think gas is poised to go higher , and I do mean higher .

The clean fundamentals could be added to the debate , but they're not in my data or figures .

In ending I must add , gas is as volatile as oil and gold , sometimes it just doesn't seem so .

I've missed my POG entry tonight , so it was gas . Please don't follow me in just because I mentioned it , this will have a very high beta in this trade , I'm the guinea pig , well some profits are .

 

[wayneL]

Re: OIL AGAIN!

In ending I must add , gas is as volatile as oil and gold , sometimes it just doesn't seem so .

I've missed my POG entry tonight , so it was gas . Please don't follow me in just because I mentioned it , this will have a very high beta in this trade , I'm the guinea pig , well some profits are .

As volatile?

Gas is a beta monster when it wakes up.

 

[ithatheekret]

Re: OIL AGAIN!

I'm sure you understood my sly meaning Wayne . I am arrogant I know , but one must admit everything has evolved as I said ...... even Hilary

I used to Mod on TNO forex , mining etc . the tag was spenceraus .

Not to brag , so please don't get me wrong here , but its a bit of history , that will help some understand my ability views .

Lets see If I can remember most of them .

Orica 4.75 stock entry and options the same price , bought all the way to $10plus change .

Gold first to call 400 and got pecked for saying it .

Called AMP a basket case pre the last 22 price and then into Kohn territory .

Called VCR when on the 3.60's as way over the top , you'll get this stock much cheaper soon , it started to decline that same day and has never recovered .

For 2 years I called that Barrick would take Placer Dome, it did .

I called that only a takeover would improve Consolidate Minerals price .

I've called 880 and 890 , it looks at present that I've called the bottom .

There are many more , some I've forgotten too .

It can be confirmed Traders Network Organization , ask for Austin Hu , say hello for me if you do anyone .

 

[wayneL]

Re: OIL AGAIN!

I wasn't having a go at you.

 

[ithatheekret]

Re: OIL AGAIN!

Sorry Wayne I'm tired and had a few too many digs for this month , probably my own arrogant syntax lingustics , thought you were having a shot mate .

I just try to get the grey matter going in people , especially in down markets or when opps. present themselves .

To be honest previous experience posting on stocks etc. has had me stay tight lipped until a ramping episode started once and got my wick up enough to comment strongly ( elsewhere let's say ) . It was yourself that caused me to restart too , had you not asked for a chart I wouldn't have ever commented I think .

But anyway . sorry again .

 

[BREND]

Re: OIL AGAIN!

Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!!

So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.

 

[rederob]

Re: OIL AGAIN!

I think gas is poised to go higher , and I do mean higher .

The clean fundamentals could be added to the debate , but they're not in my data or figures .

You could always open a "gas' thread.

 

[rederob]

Re: OIL AGAIN!

Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!!

So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.

US gasoline and distillate inventories were "up".
But crude oil inventories are at a 3 year low.
It's a recipe for a sharp run north again when someone works out that gas/distillates come from crude refining and not the reverse!

 

[BREND]

Re: OIL AGAIN!

Fundamental is telling me that oil price should be up (since oil inventory is down again), but technical is telling me that oil price should be down. Dilemma!!!

So I short 1 lot Crude oil mini first, and see if fundamental or technical wins.

Currently technical wins.

 

[BREND]

Re: OIL AGAIN!

Oil goes lower, technical wins again.
Short Mar Oil at 93.59, bought back at 91.97.

 

[Smurf1976]

Re: OIL AGAIN!

As volatile?

Gas is a beta monster when it wakes up.

Gas is massively undervalued IMO. I've posted the reasons before but essentially it's highly geographically concentrated in a very few countries and it's long term use is as automotive fuel whereas it's presently valued in most countries (including Australia) as nothing more than a substitute for coal in boilers. And even then, Australian gas is cheap by world standards especially compared to US etc.

I'd stay well clear of any company that's building gas-fired baseload power plants for this reason. But I'd certainly invest in those producing the gas as long as they haven't hedged their entire reserves.

And gas depletes just like oil. Indeed it's already seriously depleted in the US, UK etc.