Oil price discussion and analysis

[michael_selway]

Re: OIL AGAIN!

There's a nominal (not real terms) price chart here http://www.eia.doe.gov/emeu/cabs/chron.html

It's complete with chronology of major oil industry events back to 1970. Should be what you're looking for.

The chronology looks reasonable although I haven't read it all. Do bear in mind though that it's written from the perspective of the government (USA) of a major oil importing country and so sees price increases as "bad" whereas an exporting country would see them as "good". Like anything it depends which side of the trade you're on whether an increase is good or bad.

Regarding the EIA, their recording of actual events is fairly good in general but the track record of their forecasts isn't good especially where oil discovery is involved.

Note also that the EIA (Energy Information Administration) is totally separate from the IEA (International Energy Agency) despite the similar abbreviation and both dealing with energy.

Thanks for the info, thats a very good site and yes the right chart

i also came across article talking about "peak" oil today, where some experts think that "good" oil will run out withing 5 yrs while others 30+. Can also watch the video of the interview with experts. Quite interesting

http://www.abc.net.au/catalyst/stories/s1515141.htm
http://www.abc.net.au/science/broadband/catalyst/asx/oilcrisis_hi.asx

 

[Smurf1976]

Re: OIL AGAIN!

i also came across article talking about "peak" oil today, where some experts think that "good" oil will run out withing 5 yrs while others 30+. Can also watch the video of the interview with experts. Quite interesting

I strongly recommend that anyone with an interest in this subject aim to get their mind around the bell curve of production that most oilfields follow and the geological limits to the extraction rate. Suffice to say that even the technologically advanced USA only manages to get 6% of proven reserves out of the ground per year and few can match that. So there needs to be over 20 years of reserves available to sustain a production rate which meets current demand (assuming 5% depletion rate which is still rather high). Do the maths on that and you'll understand why production falls slowly over time rather than suddenly running out.

Oil discovery peaked worldwide in the early 1960's and has steadily fallen ever since. It has been below the rate of discovery (assuming the OPEC constant figures are false - a huge topic in itself but suffice to say that most experts believe they report total recoverable oil discovered rather than total oil remaining since they have a financial incentive to do so and figures are implausibly constant from year to year) since 1985.

It's a big topic with lots to get your mind around. Nobody with any credibility doubts that oil production will peak and then fall. It's happened in numerous countries already including those which once had huge oilfields. The USA has found about 10% of all oil to date - but production peaked in 1970 and has trended down ever since despite all manner of technical and economic efforts to halt the decline. It's much the same in other countries with the North Sea also now in steep decline.

So the question is when, not if, worldwide production peaks and what the consequences will be.

 

[nizar]

Re: OIL AGAIN!

Hi all,

Ok, i think most people share the view that world oil is running out, its just a matter of time...

Based on this, do u think it would be a good strategy to slowly buy shares (like a parcel a month to avoid paying a high price) over like the next year or so in listed oil companies with the most oil reserves?

Which do u think is a better bet out of oil search and woodside?
For OSH, according to westpac broking research, 4 analysts rate it a strong buy, 5 a moderate buy, and 2 hold.
With WPL, its 6 strong buy, 3 moderate buy, 6 hold and 1 moderate sell. I can't view their comments unless i subscribe to "Premium Research", lol...

WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.

Which stock do you think is better?
And do you think this is a good strategy?

I read an article on fortune regarding this guy who reckons world is running out of oil, a good read:

http://money.cnn.com/magazines/fortune/fortune_archive/2005/12/26/8364646/index.htm

Another way to potentially benefit from the world running out of oil is to invest in alternative energy forms i think. Uranium (if it wasnt 4 strict aussie laws on it), or wind-generated (eg.BBW), which is starting to become popular with g'ments in europe.

ANy views would be appreciated

 

[RichKid]

Re: OIL AGAIN!

...Which do u think is a better bet out of oil search and woodside?
For OSH, according to westpac broking research, 4 analysts rate it a strong buy, 5 a moderate buy, and 2 hold.
With WPL, its 6 strong buy, 3 moderate buy, 6 hold and 1 moderate sell. I can't view their comments unless i subscribe to "Premium Research", lol...

WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.

Which stock do you think is better?
And do you think this is a good strategy?

Hi Nizar,
Might be good to start a new thread comparing OSH & WPL (or post in the individual stock threads for those companies) so we can keep this thread on Oil (rather than particular companies). Thanks!

Talking of oil, it's gone higher again, I'm waiting for the next swing top to see what type of support exists below, open interest is solid on the recent upswing.

RichKid
moderator

 

[michael_selway]

Re: OIL AGAIN!

Hi all,

WPL has forecast earnings growth of 59% in FY2006 with OSH 22%.

ANy views would be appreciated

Ok so naturally WPL would have a higher P/E than OSH then, and it does!

 

[RichKid]

Re: OIL AGAIN!

Time to get back to price of oil folks. Chart for Feb06 contract (thanks for mentioning the correct contract Wayne, I was posting the wrong contract at one stage, us amateurs!! geez). Open interest is rising so I assume more traders are happy to open long positions at this level. If this a swing high then I expect open interest to drop on the way down to the next (higher?) swing low. Nice to see it above 64.

 

[michael_selway]

Re: OIL AGAIN!

Time to get back to price of oil folks. Chart for Feb06 contract (thanks for mentioning the correct contract Wayne, I was posting the wrong contract at one stage, us amateurs!! geez). Open interest is rising so I assume more traders are happy to open long positions at this level. If this a swing high then I expect open interest to drop on the way down to the next (higher?) swing low. Nice to see it above 64.

I Still think that Oil will correct when the North America/Europe/Asia winter is over, most likely to $50+, But Long Term definitely need an Oil Stock, but not now thats all, wait for the correction first.

 

[nizar]

Re: OIL AGAIN!

yeh i agree with u michael...

last correction in october, wpl fell to $29-sumthing, i wouldve bought it if i had cash at the time...

hopefully next correction sees it drop to mid-35s, then ill buy big....

american/european winter finishes when? around feb-march? Im guessing its when we finish summer...

 

[excalibur]

Re: OIL AGAIN!

China has reported a 3% decrease in production expectations. Its one thing that is fact, that the chinese are bad liars. No, I think we`re gonna get a big surprise by the middle of this year.
I`m expecting $80 a barrel for oil and then the first alarm bells will start ringing. :goodnight

 

[michael_selway]

Re: OIL AGAIN!

China has reported a 3% decrease in production expectations. Its one thing that is fact, that the chinese are bad liars. No, I think we`re gonna get a big surprise by the middle of this year.
I`m expecting $80 a barrel for oil and then the first alarm bells will start ringing. :goodnight

The thing about oil currently is that it is so susceptible to speculation more than metals imo. Any "bad news" will spike up oil prices even though there is no justification for it.

We saw that in the hurricane Katrina thing when it spiked to $70+/Barrel. But yet it fell down rapidly to $56+/Barrel or down 20%? i do think that oil is runnning out (PEAK OIL) but not yet, not for atleast for 3-5 yrs.

However due to its speculative nature, the price can spike up to $80/barrel yes, if there are "bad news". But the fundamentals are not there yet of rthese high prices. However there wont be "cheap oil" anymore i dont think but $50+ barrel is reasonable since the demand from China has increased indefinitely.

 

[Smurf1976]

Re: OIL AGAIN!

When I last did any forecasts for Chinese oil production (late 2003) I came to the conclusion that their known fields were approximately at peak at that time. I would expect them to decline at around 3.9% p.a. once they are properly over the peak. So an overall decline of 3% seems reasonable to me.

As for the oil market generally, don't forget about the release of US and IEA stocks during 2005 and the subsequent need to refill them. The impact of this ought to be significant especially if the US goes ahead with reported plans to boost the Strategic Petroleum Reserve (SPR) from 700 million barrels to 1000 million. China and others are also looking to build or increase inventory so the bottom line is a significant demand going into government stockpiles. This ought to support the oil price somewhat and could in itself absorb a large portion of the likely production increase (worldwide) in 2006.

 

[Milk Man]

Re: OIL AGAIN!

Does anyone know about any large untapped oil reserves under the darling downs (Roma I think). I heard a rumour to this effect and that the govt were keeping it in reserve. Dunno how true these rumours are, sounds a bit like BS to me.

 

[excalibur]

Saudi king says oil price too high - NDTV

Here is an article that just came in 1 hour ago (european-time)
It just could give oil price a blunt cold shower on monday.
Any Comments down there in warm Australia?????


By Unni Krishnan and N. Ananthanarayanan

NEW DELHI (Reuters) - Saudi Arabia's King Abdullah said current global oil prices were too high and needed to be at a more moderate level, television channel NDTV 24X7 reported on Sunday.

"We want to strengthen the link between India and Saudi Arabia with regards to energy, and the ability to provide energy to India over a long term. From our perspective I personally feel that the current price of oil is too high," King Abdullah said in an interview with the channel, which was recorded in Riyadh.

"The price is damaging to developing countries who subsequently have to suffer. The price needs to be at a more moderate level."

King Abdullah's comments came ahead of his four-day trip to New Delhi starting on Jan. 24, the first by a Saudi monarch in 50 years.

Oil prices surged to $69 per barrel on Friday, the highest level since September as tensions mounted over OPEC-member Iran's nuclear ambitions.

The Organization of the Petroleum Exporting Countries on Friday forecast world oil demand would grow nearly 2 percent in 2006 to 84.8 million barrels per day.

The producer group, which meets at the end of the month to review its output policy, is considered unlikely to cut production, although hawkish Iran said on Friday that the market was oversupplied.

India maintains that developed nations are not doing enough to restrain oil-producing countries from pushing up prices but King Abdullah's comments are likely to bring some relief.

Ties between Saudi Arabia, Islam's birthplace, and India, Asia's third-largest economy and home to a large Muslim minority, have improved incrementally since the early 1990s.

The Saudis are looking to deepen economic ties with Asian giants China and India, whose energy needs are soaring as their economies maintain red-hot growth.

Saudi Arabia accounts for almost one-quarter of India's total imports of crude oil of 1.9 million barrels per day. In 2004, New Delhi bought crude worth $6.2 billion from the Saudis.

Riyadh, eager to hold on to its share of India's rising oil imports as the Indian economy grows at an expected rate of 6 to 7 percent in the next decade, has said it would continue to be a reliable supplier.


© Reuters 2006. All Rights Reserved.

 

[Knobby22]

Re: OIL AGAIN!

There is nothing in it.
Just appeasment politics for US consumption.
They can't supply any more even if they wanted to. The tipping point is about three years away unless we are stupid enough to have a war with Iran.

(I hope it's not sooner, the further away the better)

 

[excalibur]

Oil Prices Retreat on Decline in Gas

By Associated Press

January 23, 2006, 5:02 PM EST

LONDON -- Oil prices pulled back Monday in sympathy with a sharp decline in natural gas futures.

However, analysts said oil prices could resume their upward trend on supply fears linked to Iran's standoff with the West over its nuclear ambitions and continuing unrest in oil-rich Nigeria.

Light sweet crude for March delivery retreated 38 cents to settle at $68.10 a barrel on the New York Mercantile Exchange. March Brent crude at London's ICE Futures exchange fell 27 cents to settle at $66.16 a barrel.

Natural gas futures slid 70.6 cents, or about 8 percent, to settle at $8.574 per 1,000 cubic feet due to above-normal winter temperatures in the primary home-heating markets in the U.S.

"Warm temperatures now forecast to persist on into early February undercut physical demand for heating fuels," said analyst Tim Evans at IFR Energy Services in New York.

Nymex February heating oil futures declined by 2.63 cents to $1.8409 a gallon, while gasoline fell 2.38 cents to settle at $1.7932 a gallon.

Naimi told India's television news channel NDTV there is no fundamental reason for elevated oil prices given that there are enough supplies to meet the demand for oil.

"The (oil market) fundamentals today are in an excellent shape ... supply is plentiful and demand is well met by supply, so there's no reason why prices should be rising," he said.

However, analysts said market participants remain concerned Iran's dispute with the West over the restarting of its nuclear program could lead to supply disruptions in the second-largest oil producer within the Organization of Petroleum Exporting Countries, or OPEC.

They also pointed to worries about Nigeria, where militants holding four expatriate oil workers have threatened to launch rocket attacks on crude installations in the oil rich Niger Delta.

Such geopolitical worries, which have driven crude oil prices up at a time when global petroleum demand is high and the emergency supply cushion is thin, have overshadowed rising oil inventories and mild winter weather in the United States -- factors that would normally depress prices.

"The geopolitical drama over Iran and Nigeria is sending oil prices upwards," said energy analyst Victor Shum of Purvin & Gertz in Singapore.

The International Atomic Energy Agency's board of governors will meet Feb. 2 to discuss whether to refer Iran to the Security Council after it broke U.N. seals at a uranium enrichment plant and said it was resuming nuclear research after a two-year freeze.

Iran exports roughly 2.5 million barrels per day -- 1 million barrels more than current excess production capacity worldwide.

Oil jumped $1.52 to settle at $68.35 a barrel on Friday, the highest closing price since Sept. 1, just days after Hurricane Katrina made landfall.

Crude oil prices reached a record high of $70.85 a barrel on Aug. 30.

 

[champ2003]

Re: OIL AGAIN!

Good luck in trying to forecast the oil price guys.

Under normal circumstances i'd agree with a drop down to say 50 dollars after the U.S oil winter season ends which is around the 20th of March. As you know, geopolitical unrest in Iran, Iraq, Nigeria and Russia, the oil price could well continue on at these current elevated levels far into 2006 which is great for oil stocks.

Its just a matter of us all trying to keep on top of it as hard as it is. I'd personally recommend getting into oil stocks now as there is no time like the present. If you are in the right stock at the right time on an upward trend you'll make money anyway.

Cheers!

P.s Don't just take my advise. Go on your own individual research.

 

[Smurf1976]

Re: OIL AGAIN!

Yet another attempt by the Saudis to talk down the price of oil.

Based on my own research in 2003 I believe that Saudi Arabia can not produce more than 9.6 million barrels per day (2003 figure). They claim to have 10.5 - 11.0 mmbpd capacity.

Production ramped up to 9.6 mmbpd in 2005 and fell towards the end of the year to 9.5mmbpd despite the effective suspension of OPEC quotas. The Saudi response to the US hurricanes and subsequent need to release emergency oil stocpiles was to slightly REDUCE production. Where's that spare capacity...

So IMO Saudi Arabia is running flat out. I looked through everything that I could find in order to estimate their capacity. Two years later they ramped up to that capacity with relative ease and then hit a brick wall. So I would want to see absolute proof that their claimed spare capacity does in fact exist. Evidence says otherwise and this latest attempt at talking down prices appears to be nothing more than an attempt to avoid pressure to use the (non-existant) spare capacity.

To put that simply, there is NO significant spare capacity anywhere IMO. At best, any spare capacity is all located in a single country which has thus far never produced at the claimed capacity. I think oil prices will go higher than most are expecting if Iran's supply is lost since it's an outright loss with no offsetting rise in production elsewhere at a time when demand is surging and emergency stocks aren't full.

 

[excalibur]

Re: OIL AGAIN!

Yet another attempt by the Saudis to talk down the price of oil.

Based on my own research in 2003 I believe that Saudi Arabia can not produce more than 9.6 million barrels per day (2003 figure). They claim to have 10.5 - 11.0 mmbpd capacity.

Production ramped up to 9.6 mmbpd in 2005 and fell towards the end of the year to 9.5mmbpd despite the effective suspension of OPEC quotas. The Saudi response to the US hurricanes and subsequent need to release emergency oil stocpiles was to slightly REDUCE production. Where's that spare capacity...

So IMO Saudi Arabia is running flat out. I looked through everything that I could find in order to estimate their capacity. Two years later they ramped up to that capacity with relative ease and then hit a brick wall. So I would want to see absolute proof that their claimed spare capacity does in fact exist. Evidence says otherwise and this latest attempt at talking down prices appears to be nothing more than an attempt to avoid pressure to use the (non-existant) spare capacity.

To put that simply, there is NO significant spare capacity anywhere IMO. At best, any spare capacity is all located in a single country which has thus far never produced at the claimed capacity. I think oil prices will go higher than most are expecting if Iran's supply is lost since it's an outright loss with no offsetting rise in production elsewhere at a time when demand is surging and emergency stocks aren't full.

Good observation there Smurf.
I think although that there argumentation is motivated by the fact that they do indeed, do not have any much further interest in bargaining with oil. More I suspect that they would like to hurt those oil producing countries by pulling the oil price down.

Why I think this is following.
As the french premier Chirac boasted about terrorizing Iran with nuclear weapons, if it would not cease to continue research in atomic energy, Iran responded in saying that they would not let themselves be pushed around from the europeans and proclaimed a Quote: " Economic war against the western world".
This phrase gave me alotta of thinking and certain political behaviour another looking eye.
Even though from politics, one cannot really understand very much, it could mean that something is stirring behind the curtain.
Time will tell

 

[michael_selway]

Re: OIL AGAIN!

Good luck in trying to forecast the oil price guys.

Under normal circumstances i'd agree with a drop down to say 50 dollars after the U.S oil winter season ends which is around the 20th of March. As you know, geopolitical unrest in Iran, Iraq, Nigeria and Russia, the oil price could well continue on at these current elevated levels far into 2006 which is great for oil stocks.

Its just a matter of us all trying to keep on top of it as hard as it is. I'd personally recommend getting into oil stocks now as there is no time like the present. If you are in the right stock at the right time on an upward trend you'll make money anyway.

Cheers!

P.s Don't just take my advise. Go on your own individual research.

Actually i wouldnt recommend gettign into oil stocks atm, since SP is so high, have to wait for a correction. Also imo, atleast 10% of the $68/barrel is speculation more than anything

 

[champ2003]

Re: OIL AGAIN!

Yes very true! That 10% worth that is over speculation won't be going away in a hurry either.

It doesn't necessarily mean not to invest in oil stocks at the mo.

I guess each to their own hey!