Oil price discussion and analysis

[michael_selway]

Re: OIL AGAIN!

That could be taken the next logical step to argue that any sharp fall in the oil price could be the first warning of impending recession. So oil might be a useful indicator as well as a commodity given the constrained supply.

Actually a fall in oil prices is good for the economy?

 

[nizar]

Re: OIL AGAIN!

http://afr.com/articles/2006/02/15/1139890768318.html

Oil prices drop below $US60
Feb 15 09:31
AP

Oil prices sank below $US60 a barrel overnight, and US gasoline futures descended to their lowest price in almost a year as traders turned their attention to rising supplies, and away from geopolitical tensions.

The third straight day of declining oil prices took a toll on the stock prices of energy producers and refiners, while giving a lift to shares of airlines and other fuel-dependent sectors.

Light sweet crude for March delivery fell $US1.67 to settle at $US59.57 a barrel in afternoon trade on the New York Mercantile Exchange. That was the lowest close for front-month oil futures since December 27.

IFR Energy Services analyst Tim Evans said that "as prices drop toward the lower part of their recent range, we expect more than a glimmer of recognition that the downside for this market may be far more open than the average observer now believes."

Evans sees technical support at $US55.40 a barrel, but says if that level is breached, crude futures could potentially fall to $US40 a barrel.

The declines come as traders anticipate that the US Energy Department's weekly petroleum supply snapshot, due on Wednesday, would likely show climbing oil stocks for the seventh straight week. Already, the nation's commercial inventory of crude oil is nearly 11 per cent above year-ago levels.

Traders are still concerned, albeit less so, about the international dispute over Iran's nuclear activities and unrest in Nigeria.

The head of the International Energy Agency said on Tuesday that its member governments could coordinate a release of strategic oil reserves that would offset any shutdown of Iranian crude output for up to 18 months.

"We have 4 billion barrels in strategic stocks," Claude Mandil told Dow Jones Newswires. Even taking account lower estimates, he said, the IEA could keep oil supplies flowing for a year and a half.

The IEA, the Paris-based energy watchdog, has reported falling demand because of high costs of crude.

 

[Smurf1976]

Re: OIL AGAIN!

Actually a fall in oil prices is good for the economy?

Agreed that a lower oil price would benefit the economy. But my thinking is that a falling oil price would itself be a sign of economic weakness.

So it contributes to one thing (benefits economy) whilst being a sign of another (weakening economy). So over a period of several years per cycle the price of oil (and the economy itself) would presumably oscillate with an upwards trend in oil prices if I'm correct in my thinking. Only time will tell.

 

[michael_selway]

Re: OIL AGAIN!

Agreed that a lower oil price would benefit the economy. But my thinking is that a falling oil price would itself be a sign of economic weakness.

So it contributes to one thing (benefits economy) whilst being a sign of another (weakening economy). So over a period of several years per cycle the price of oil (and the economy itself) would presumably oscillate with an upwards trend in oil prices if I'm correct in my thinking. Only time will tell.

Hi yeah thats true, hes some insight from WPL ceo:

Date: 18/1/2006
Author: Robert Guy; Yvonne Ball
Source: The Australian Financial Review --- Page: 13

Woodside Petroleum is concerned that the spike in the crude oil price could threaten the global economy. CEO Don Voelte says high oil prices could have an adverse effect on global economic growth, and he would prefer the oil price to fall to around $US40 to $US45 a barrel in order to prevent a decline in the world economy. The oil price was trading at around $US65 a barrel on 17 January 2006. Although Woodside's earnings are boosted by a rise in the oil price,Voelte argues that demand for oil would slump if there was a slowdown in the global economy.

 

[nizar]

Re: OIL AGAIN!

http://www.lifeaftertheoilcrash.net/

 

[emma]

Re: OIL AGAIN!

This report makes GDY look like a good long term investment

 

[mime]

Re: OIL AGAIN!

Hi yeah thats true, hes some insight from WPL ceo:

Date: 18/1/2006
Author: Robert Guy; Yvonne Ball
Source: The Australian Financial Review --- Page: 13

Woodside Petroleum is concerned that the spike in the crude oil price could threaten the global economy. CEO Don Voelte says high oil prices could have an adverse effect on global economic growth, and he would prefer the oil price to fall to around $US40 to $US45 a barrel in order to prevent a decline in the world economy. The oil price was trading at around $US65 a barrel on 17 January 2006. Although Woodside's earnings are boosted by a rise in the oil price,Voelte argues that demand for oil would slump if there was a slowdown in the global economy.

He could be saying that to reduce the fall in the companys stock price if oil does continue to decline.

 

[dutchie]

Re: OIL AGAIN!

I'm waiting for a correlation between oil and gold.

When oil goes up - gold should correct and vice versa. - dream on!

 

[wayneL]

Re: OIL AGAIN!

Tonights Crude oil action.:

March futures down to $57.67 on the back of news of increasing stockpiles. The daily chart is looking dreadful with only $57 as the last technical support before technical no-mans land.

Smurf is not the only one worried that this is a sign of impending recession. (as if there aren't enough already) Futures traders are all a-buzz with the implications of this.

How are the aussie oilers fairing out of this?

 

[dutchie]

Re: OIL AGAIN!

Just off topic for a sec.

"Syriana" looks like an interesting movie for all oil followers.

 

[mime]

Re: OIL AGAIN!

How are the aussie oilers fairing out of this?

Hurting.

 

[mime]

Re: OIL AGAIN!

I just heard on the news that Qantas has a contract to purchase fuel at $57 a barrel. I don't know if that includes refining and stuff but it makes me believe they don't think the price of oil will not drop.

What does the future hold??

 

[nizar]

Re: OIL AGAIN!

Commodity Strategists: Crude Oil May Reach Record $80 (Update1)
Feb. 16 (Bloomberg) -- Oil may rise to a record $80 a barrel in the third quarter as an economic expansion in China boosts demand for fuel, according to Sumitomo Corp., Japan's third-largest trading company.

China's oil demand growth may rebound from last year's 2.9 percent, said Keiichi Sano, Sumitomo's chief commodity analyst. Oil rose less than forecast in the past five months because Chinese refiners cut imports, he said. Futures prices, down 5 percent this year, will bottom out this month, he said.

``Demand from China will continue to increase and support further rises in oil prices,'' said Sano. ``The country needs more heavy fuel oil for power plants, and fuel for trucks is needed too.''

Oil prices have tripled since 2001, helped by demand from China, the world's second-biggest energy user. Power use rose 13.5 percent last year while consumption of transport fuels soared as the growing economy boosted vehicle sales. China's economy may grow about 8.5 percent this year, the nation's statistics bureau said on Jan. 24.

Oil on the New York Mercantile Exchange may set a record by October when hurricanes typically cut U.S. production, Sano said. Oil futures may trade between $75 and $80 a barrel in the third quarter of this year, said Sano, who became manager of the commodities research and strategy team in April 2005.

Crude oil prices for March delivery rose as much as 49 cents, or 0.9 percent, to $58.14 a barrel in electronic trading on the New York Mercantile Exchange. It was $58.01 at 10:43 a.m. Tokyo time.

Growth in the U.S. economy, buying by pension and index fund managers and the risk of supply disruptions in oil- producing nations such as Iran will help boost oil prices this year, Sano said.

China

In September last year, Sano forecast oil prices would rise to between $80 and $90 a barrel in the first quarter of 2006. He trimmed that projection as oil demand growth from China failed to keep pace with his expectations, he said.

``China didn't buy much oil last year,'' Sano said. ``That could be the reason.''

Chinese imports fell 7.1 percent in November and 6.9 percent in December compared with a year earlier, according to Bloomberg data. Rising international prices discouraged refiners from buying because they were unable to pass on crude oil's 40 percent gain last year. China imposes curbs on product prices, limiting the price refiners can charge customers.

Oil in New York traded as high $60.05 a barrel yesterday. The contract fell to its lowest closing price so far this year of $57.65 yesterday after U.S. oil inventories rose to 11 percent above the five-year average.

Gasoline closed at $1.3848 a gallon yesterday, the lowest in almost a year, on speculation supplies increased for a seventh week. Natural gas stockpiles in the U.S. are 38 percent higher-than-usual for the time of year, according to the U.S. Energy Department last week.

``Lowest Price''

``Now is the lowest oil price this year when we look at the fundamentals,'' said Sano, who joined Sumitomo in 1988 to trade metals. ``High inventories of gasoline and natural gas are weighing on oil prices now, but this situation won't persist.''

As much as 750,000 barrels a day of U.S. refining capacity will be shut in March for scheduled maintenance, the 26-member IEA said on Feb. 10. ``The current high inventories will be consumed during the maintenance,'' Sano said. ``Gasoline demand remains strong in the U.S.,'' he said.

The U.S. economy will grow at a 4 percent annual rate from January through March, almost four times the previous quarter's pace, according to a Bloomberg survey on Feb. 9. Global growth, led by China and the U.S., will quicken to about 4.5 percent in 2006, the International Monetary Fund's Managing Director Rodrigo de Rato said on Jan. 30.

Hurricanes

Oil may rise to a record $96 a barrel in August, when hurricanes typically cut U.S. output, said Mitsui & Co., Japan's second-largest trading company on Feb. 6.

``Oil may peak during the hurricane season in August or September,'' said Tetsu Emori, 39, a commodities strategist at Tokyo-based Mitsui. ``Economic growth will add to tightness in supply.''

Concern that oil supply from Iran, the world's fourth- largest producer, may be disrupted will also help boost prices, Sano and Emori said. Iran pressed ahead with its nuclear research program, defying the U.S. and European Union. The UN Security Council has delayed considering the dispute until after March 6.

``The risk related to Iran was just pushed back,'' Sano said. ``It can reappear'' in March.

Iran produced 3.89 million barrels a day of oil in January, making it the second-largest oil producer in the Organization of Petroleum Exporting Countries, according to Bloomberg data. The Middle Eastern nation exports 2.5 million barrels a day, or 3 percent of daily global production.

Oil prices may stay high because buying by pension and index fund managers is adding a premium of $20 to $30 a barrel to prices, Sano said.

``Funds keep putting in money and I think this trend may continue for one to two years,'' he said. ``Unlike hedge funds, index funds buy low and stay in the market for longer time.''

http://www.bloomberg.com/apps/news?pid=10000103&sid=avVV_bnPDsqU&refer=us

 

[globevestor]

I don't know

I cannot verify worldwide oil production has peaked. I do not know when alternative energy sources can compliment fossil fuels. I cannot predict when the world will reduce oil consumption significantly. I cannot image there will be a war or wars. However I know channel. I will sell 1/3 of my energy portfolio if the value of portfolio bounce off the top channel and buy 1/3 of my energy portfolio if the value of portfolio bounce off the bottom channel. See chart at http://www.flickr.com/photos/globevestor/100344100/

 

[michael_selway]

Re: I don't know

I cannot verify worldwide oil production has peaked. I do not know when alternative energy sources can compliment fossil fuels. I cannot predict when the world will reduce oil consumption significantly. I cannot image there will be a war or wars. However I know channel. I will sell 1/3 of my energy portfolio if the value of portfolio bounce off the top channel and buy 1/3 of my energy portfolio if the value of portfolio bounce off the bottom channel. See chart at http://www.flickr.com/photos/globevestor/100344100/

http://www.lifeaftertheoilcrash.net
http://www.hubbertpeak.com/duncan/olduvai2000.htm

The chart says 2006 (2010 the latest in article)

Figure 1. World, OPEC, and Non-OPEC Oil Production
Notes: (1) World oil production is forecast to peak in 2006. (2) The OPEC/non-OPEC crossover event occurs in 2008. (3) The OPEC nations' rate of oil production from 1985 to 1999 increased by 9.33 times that of the non-OPEC nations.

Figure 4. The Olduvai Theory: 1930-2030
Notes: (1) 1930 => Industrial Civilization began when (ê) reached 30% of its peak value. (2) 1979 => ê reached its peak value of 11.15 boe/c. (3) 1999 => The end of cheap oil. (4) 2000 => Start of the "Jerusalem Jihad". (5) 2006 => Predicted peak of world oil production (Figure 1, this paper). (6) 2008 => The OPEC crossover event (Figure 1). (7) 2012 => Permanent blackouts occur worldwide. (8) 2030 => Industrial Civilization ends when ê falls to its 1930 value. (9) Observe that there are three intervals of decline in the Olduvai schema: slope, slide and cliff - each steeper than the previous. (10) The small cartoons stress that electricity is the essential end-use energy for Industrial Civilization.

Global oil discovery peaked in 1962 and has declined to virtually nothing in the past few years. We now consume 6 barrels of oil for every barrel we find.

 

[Smurf1976]

Re: OIL AGAIN!

Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.

In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.

Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.

That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue.

UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.

USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.

New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).

So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.

 

[michael_selway]

Re: OIL AGAIN!

Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.

In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.

Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.

That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue.

UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.

USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.

New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).

So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.

Yeah, also alternative energies to oil could prelong the running out of oil as suggested above in those articles, eg hybrid cars

http://www.theage.com.au/news/business/green-machines/2006/02/18/1140151850971.html

Oil minnows are a fine catch

Back
Date: 1/2/2006
Author: Trevor Hoey
Source: The Australian Financial Review --- Page: 25-26
Value can still be found in the Australian sharemarket, despite the surging price of many stocks. This is even the case in the oil and gas sector, which has risen strongly on the back of the rising crude oil price. Cooper Energy is one such stock that is worth considering. Its shares are currently trading at around $A0.65, compared with just $A0.23 in early 2005, and its South Madura oil field in Indonesia is estimated to contain 200 million barrels of oil equivalent. Stuart Petroleum, Anzon Australia, Arc Energy and Petsec Energy are other oil stocks that still offer value to the astute investor

 

[nizar]

Re: OIL AGAIN!

does any1 know a website to check 24-hr oil ?

 

[wayneL]

Re: OIL AGAIN!

does any1 know a website to check 24-hr oil ?

www.futuresource.com will give you the futures charts 20 mins delayed

 

[michael_selway]

Re: OIL AGAIN!

Basically agreed with the charts posted re discovery and production but disagree with the notion that electricity is the main problem with lack of oil.

In order of importance, coal, nuclear, hydro and natural gas all produce far greater amounts of electricity worldwide than oil.

Australia's electricity is primarily from coal (around 80%), hydro (about 10% in total, 60% of that in Tasmania), natural gas (most of the rest). Apart from remote communities, the role of oil is limited to peak and backup generation (without which blackouts would occur for a few hours per year only) and startup of coal-fired plant for which there are other, albeit less ideal, means available.

That said, there is the threat of future greater dependence on limited resources in Australia's electricity industry. Queensland is actively encouraging reliance on limited resources(!) whilst understanding of the problem seems to be limited to the Victorian energy unions and Hydro Tasmania which have both made public comments on the issue.

UK electricity is mainly from coal (nearly 50% in recent months), natural gas (around 30%) and nuclear (most of the rest). Coal use is up sharply as gas supplies decline although lack of coal-fired plant limits this trend in the near future. Oil is a minor fuel for backup of gas-fired plant, coal-fired plant startup and limited peak load generation.

USA electricity is mainly from coal (about 54%), nuclear (about 20%), natural gas (15%), hydro (8%) with only 3% from oil although some of that is used in place of gas due to gas shortages from time to time.

New Zealand electricity is mainly from hydro (two thirds of the total), geothermal (about 6%) with the remaining 30% or so from a mix of gas and coal (gas is historically dominant) according to availability. Oil serves as backup only with actual use normally quite low (though lack of oil would cause blackouts when the backup generation is needed since it runs hard for relatively short periods).

So electricity isn't the real problem in my opinion. By aviation (100% oil fuelled), shipping (nearly 100% oil fuelled apart from gas tankers), land transport (close to 100% oil fuelled apart from electric trains and small amounts of biofuels and natural gas) are real problems. And of course the non-fuel uses of oil - everything from paint stripper to bitumen for roads and lubricants are produced from oil.

http://www.lifeaftertheoilcrash.net
http://www.hubbertpeak.com/duncan/olduvai2000.htm

Yep the thing is that those views above are so diff to the below?

http://www.smh.com.au/news/Business...price-over-US59/2006/02/21/1140284043610.html

"Long-term forecasts showed analysts expect prices to fall by over $US16 by 2010.

US oil prices are expected to average $US42.92 in 2010, with Brent crude seen at $US39.75 a barrel.

Analysts' forecasts showed divergence of $US25 for 2010."

Hm but in the first 2 articles 2012 is where "blackouts" occur due to supply/demand deficit? So by then, oil prices should be higher than now?

Does anyone know why the big difference in opinion/prediction?

thx

MS