Oil price discussion and analysis

[Aussiejeff]

Re: OIL AGAIN!

The other factor I think a lot of oil-price-watchers might be forgetting is that an awful lot of crude from Saudi Arabia is exactly that ... VERY CRUDE. It ain't the light, sweet variety, which is what most refineries crave.

Speaking of cravings, if the world started to run out of light, sweet chocolate, the price of Cadbury's went sky high and yet someone declared "Hey! No problem! We've got an over-abundance of bitter dark cooking chocolate we can supply the world with instead." Well. You get my drift!

Chiz.



AJ

 

[rederob]

Re: OIL AGAIN!

I agree smurf.

From a TA perspective there are some gaps to be filled back to about $80 and there is a good prospect of an evening star forming on the weekly chart.

Fundamentally, I reckon when the US congress gets back to work next week, probably about Wednesday sounds like a good time for the POO to start it's exponentional decline back to about 80. By then there should be more news of further regulation of oil speculation.

I have a theory.

The mega hedge funds are using the POO to capitalise on the subprime confidence drop to drive down the stock markets a bit extra.

They will be wanting to short step the suckers buying into oil contracts by getting out early and back into stocks before most people wake up to what's happening.

Sorry Jess. but I think you might just get pipped before the post with your bet.

PS: Fwiw I think the really smart investers have already started retreating. I've noticed the price of Rhodium, the ultimate precious metal, came off the boil a few days ago. The POG is just hanging up because of the POO.

Despite "speculation" being blamed for oil prices going higher week after week there are some key facts that the smart investors are locked into.
First, despite gloom and doom in the US - the world's largest energy user - its oil inventories are almost 20% lower than at the same time last year.
Secondly, global oil production "replacement" needs to run at higher than 3.5 million barrels a day on an annualised basis from now onwards just to keep up with demand.
Thirdly, consumption data clearly shows that emerging economies are taking up the slack in demand from western economies.
(This latter point may not prevent an inventory build in the medium term, but it will mean that when the "recession is over" there will be a rapid demand spike that will catapult oil prices more sharply higher than we have experienced to date.)
Finally, apart from "shut-in oil" in Nigeria and Iraq due to skirmishes, the US hurricane season is nearing, and almost always shuts-in some production for some period. The effects of global warming exacerbate hurricane strength, so anything hitting the Gulf of Mexico will add an immediate fear premium to oil prices, apart from any premium arising from shut-ins.

 

[michael_selway]

Re: OIL AGAIN!

Hm interestign article

The Saudis say they can ramp up production to 12.5 million barrels a day. But a field-by-field breakdown obtained by BusinessWeek shows that's not likely

thx

MS

Saudi Arabia's ability to calm panicky oil markets has been waning for years. With oil prices doubling since last summer, to more than $140 a barrel, Saudi King Abdullah on June 22 convened an extraordinary meeting (BusinessWeek.com, 6/22/08) of OPEC members, international oil industry CEOs, and foreign leaders in an effort to calm the markets. The kingdom's message was clear: Saudi fields can pump oil to market quickly, if demand warrants.

However, it appears that for at least the next five years, and possibly longer, the Saudis are likely to produce less crude than promised, according to fresh data on the kingdom's oil fields obtained July 9 by BusinessWeek. Saudi officials have said they would increase production to 12.5 million barrels a day next year, from the current 9.5 million barrels a day, and could even ramp up to as much as 15 million barrels a day if the market demanded it. As proof to a skeptical audience, the normally highly secretive Saudis were a bit more more open, escorting journalists on a visit to their new Al Khurais field (BusinessWeek.com, 6/23/08), east of Riyadh, and disclosing some field data.

Oil companies want in
But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.

Saudi Aramco officials in the kingdom could not be reached for comment on July 9.

Three industry analysts in the U.S. said the document's overall conclusion””that the Saudis cannot sustain higher than 12 million barrels a day maximum production for the next few years””appeared to be reasonable. "My view is that when they finish their expansion program they are unlikely to be above 12" million barrels per day, says Roger Diwan, a Middle East energy expert with PFC Energy, a consultancy in Washington, D.C. Lawrence Goldstein, an analyst with the Energy Policy Research Foundation, an industry-funded research group, said that uncertainty about Saudi production remains a problem for the market. "The only ones who know could be the Saudis," Goldstein says, "and they might not know because they haven't tested the deliverability system in as much as a decade."

A principal reason for the dramatic surge in world oil prices has been a tight balance of global supply and demand, combined with a lack of spare capacity to produce more crude in a pinch. So that what previously might be considered a barely consequential guerrilla attack in oil-rich Nigeria, or an empty Iranian threat to close the strategic Strait of Hormuz, results in a far more dramatic oil market reaction than ever before.

Once again Saudi Arabia has emerged as the central energy player, the only oil producer on the planet seen as having the spare capacity to rapidly boost crude exports. The kingdom also has close ties to the West, and until 1980 the precursors of Exxon (XOM), Chevron (CVX), and Mobil were partners with the Saudi state oil company. Now most of the major oil giants are hoping to get back in, and one way they have suggested is by helping the Saudis maintain the fields, an overture that has been rejected.

"A Bunch of Empty Boasts"
On oil matters, the kingdom's credibility has been clouded by intense secrecy. The Saudis, for instance, refuse, unlike Russia, Venezuela, and Norway, to release detailed assessments of their oil reserves, which has made many skeptical. "They are just a bunch of empty boasts," Matthew Simmons, chairman of Houston investment bank Simmons & Co. International, says of the kingdom's recent promises of 12.5 million barrels a day. He is also skeptical of Saudi reserve estimates.

One dramatic part of the data concerns a site called Ghawar, which has been the kingdom's workhorse field for decades. It shows the field producing 5.4 million barrels a day next year, but the volume then falling off rapidly, to 4.475 million daily barrels in 2013. "That's why Khurais is so important””to make up for that decrease," said the oil industry executive who released the data. He was referring to a supergiant field that is to come online later this year and produce an estimated 500,000 barrels a day of crude. In last month's gathering in Saudi Arabia, officials of the kingdom told journalists that Ghawar had produced just under 5 million barrels a day from 1993 through 2007.

Mainly the data show flat production; apart from the addition of Khurais and a heavy oil field called Manifa, no increases appear in any of the fields during the next five years. Production at Manifa is to begin in 2011 with 125,000 barrels a day, according to the data, and rise rapidly to 900,000 barrels a day two years later. Though 2014 is not included in the data, one of the fields listed””Shaybah””is to have a volume increase to 1 million barrels a day that year, from 750,000 barrels a day from 2009 to 2013, according to the oil executive.

Still, despite its enormous reserves and bullish statements, Saudi Arabia appears likely to fall well short of the daily production it has targeted in the near term.

LeVine is a correspondent in BusinessWeek's Washington bureau.

 

[Aussiejeff]

Re: OIL AGAIN!

Crude Oil Jumps More Than $5 as Trading Programs Trigger Buying

By Mark Shenk

July 10 (Bloomberg) -- Crude oil rose more than $5 a barrel in the last hour of New York floor trading as prices breached a level that triggered computer-generated buying programs.

http://www.bloomberg.com/apps/news?pid=20602013&sid=aiico.empSD0&refer=commodity_futures

Good grief! Any other day you are likely to get the same rise of $5 being touted by the media as being triggered by "speculators". So, the truth is out. All these "speculators" are in fact mindless COMPUTERS set to AUTO-PILOT!!!! Hahahaha!

Here is a wicked analogy - how many airliners have crashed in turbulent weather while under the command of dumb auto-pilots? Hmmmm. Maybe new laws should be drafted to ban auto stock trading buy/stops!?? LOL

MAN YOUR PC'S!! STOP THE ROT!!!

:hide:


AJ

 

[kengaikl]

Re: OIL AGAIN!

Crude Oil Jumps More Than $5 as Trading Programs Trigger Buying

By Mark Shenk

July 10 (Bloomberg) -- Crude oil rose more than $5 a barrel in the last hour of New York floor trading as prices breached a level that triggered computer-generated buying programs.

http://www.bloomberg.com/apps/news?pid=20602013&sid=aiico.empSD0&refer=commodity_futures

Good grief! Any other day you are likely to get the same rise of $5 being touted by the media as being triggered by "speculators". So, the truth is out. All these "speculators" are in fact mindless COMPUTERS set to AUTO-PILOT!!!! Hahahaha!

Here is a wicked analogy - how many airliners have crashed in turbulent weather while under the command of dumb auto-pilots? Hmmmm. Maybe new laws should be drafted to ban auto stock trading buy/stops!?? LOL

MAN YOUR PC'S!! STOP THE ROT!!!

:hide:


AJ

IT's IRAN TO BLAME EVERYTIME OIL DROPS THEY"LL COME UP WITH SOMETHING TO SPOOK THE MARKETS. AND EVERYONE FALLS FOR IT.

 

[ithatheekret]

Re: OIL AGAIN!

So the smart investors are .... chip orientated black box programs .

If they have that information then they'd also know who the trading houses behind it all are as well .

So why are they paying mega dollars to the boards and executives when all they need is a progammer and a computer ?

Crikey how many times has that gone through the old whirlpool before it got squeezed through the wringer ?

A couple of days on the line should dry that one up .

It would have been easier to blame it on Jeff Kennett ..............

 

[rederob]

Re: OIL AGAIN!

So the smart investors are .... chip orientated black box programs .

If they have that information then they'd also know who the trading houses behind it all are as well .

So why are they paying mega dollars to the boards and executives when all they need is a progammer and a computer ?

Crikey how many times has that gone through the old whirlpool before it got squeezed through the wringer ?

A couple of days on the line should dry that one up .

It would have been easier to blame it on Jeff Kennett ..............

I think their black boxes are short the odd covariation.
Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?

Meanwhile, in the world of fundamental analysis the US retains its crown for gluttony amongst oil consumers. Not only cannot it get enough, it can't keep it long enough when it does, and thinks nothing of paying through the nose because it can.

Despite US consumption declining, oil product inventories fell markedly during the previous week and mostly sit at the bottom of average ranges. Needless to say, the smarter analysts have worked out that if demand is falling and stocks are falling, the price will keep rising.

US inventory reports don't and won't tell you "why" things are so bad. For example, they don't tell you that Canada (the major supplier to USA - greater than Saudi Arabia by a million barrels of product per day) will increasingly become an internal user of its oil output, and that the US should not rely on this market too far into the future. Or that Mexico, which supplies the US with 1.2m barrels per day, will not be capable of supplying any within 5 years.

It's taken a while, but the funds have worked out that fundamentals rule.... and they are going long. So long in fact that the present bull run in oil has not succumbed: It's having another crack at a record close tonight and likely will rise well over $150 before a major retrace befalls it.

In the meantime geopolitical jitters simply underpin the capacity of oil to catch out anyone trying to short it to bejeebers. To the extent that previous posters predicting tops or significant retraces are conspicuous by their absence!

 

[JeSSica WaBBit]

Re: OIL AGAIN!

Arghhhhhh, yibbidy yibbidy folks, $145.00...................looking like $150.00 is going to be a formality in the next two weeks.

Must put a call through to my mates in Iran and tell them to test fire a few more rockets!

Too much instability and demand to see the price going anywhere but forward!


JW

 

[michael_selway]

Re: OIL AGAIN!

I think their black boxes are short the odd covariation.
Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?

Meanwhile, in the world of fundamental analysis the US retains its crown for gluttony amongst oil consumers. Not only cannot it get enough, it can't keep it long enough when it does, and thinks nothing of paying through the nose because it can.

Despite US consumption declining, oil product inventories fell markedly during the previous week and mostly sit at the bottom of average ranges. Needless to say, the smarter analysts have worked out that if demand is falling and stocks are falling, the price will keep rising.

US inventory reports don't and won't tell you "why" things are so bad. For example, they don't tell you that Canada (the major supplier to USA - greater than Saudi Arabia by a million barrels of product per day) will increasingly become an internal user of its oil output, and that the US should not rely on this market too far into the future. Or that Mexico, which supplies the US with 1.2m barrels per day, will not be capable of supplying any within 5 years.

It's taken a while, but the funds have worked out that fundamentals rule.... and they are going long. So long in fact that the present bull run in oil has not succumbed: It's having another crack at a record close tonight and likely will rise well over $150 before a major retrace befalls it.

In the meantime geopolitical jitters simply underpin the capacity of oil to catch out anyone trying to short it to bejeebers. To the extent that previous posters predicting tops or significant retraces are conspicuous by their absence!

Hi Red, do you think $1000 bbl oil is possible?

http://www.abc.net.au/lateline/content/2008/s2301777.htm

Petrol may hit $8 in a decade: CSIRO
Print Email
Australian Broadcasting Corporation

Broadcast: 11/07/2008

Reporter: Karl Hoerr

The CSIRO have forecast petrol could hit $8 a litre within the next decade, based on the assumption that world oil production will peak in about five years. Researchers say that will have a much greater effect on petrol prices than any emissions trading scheme.

Transcript
VIRGINIA TRIOLI, PRESENTER: If current petrol prices aren't bad enough, there's now a prediction they could hit $8 a litre within a decade.

The CSIRO forecast is based on the assumption that world oil production will peak in about five years and the researchers say that will have a much greater effect on petrol prices than any emissions trading scheme.

Karl Hoerr reports.

KARL HOERR, REPORTER: It's a dire prediction, but one expert fears it could become a reality.

BRUCE HARRISON, BIOFEULS ASSOCIATION: We're on that plateau and very close to peak oil production which means we've got to find
some alternative supplies of fuel.

KARL HOERR: Peak oil means annual production has reached its maximum level, and that could mean an $8 a litre petrol price, which could lift
the average weekly fuel bill to $220.

MOTORIST: Ridiculous. Really ridiculous; like, what are you going to do?

KARL HOERR: But the "Fuel for Thought" report says the price hike could yield some benefits, increasing the use of biofuels, LPG and hybrid
technology.

JOHN WRIGHT, CSIRO: There's a huge economic incentive to produce alternative fuels once the price starts to really climb in oil.

MARK REUSS, CHAIRMAN, GM HOLDEN: We have to lead in the industry with equipment that unleverages our foreign oil dependency.

KARL HOERR: And as debate rages over emissions trading, the report says pricing carbon at $40 a tonne would only add 10 cents a litre at
the bowser.

JOHN WRIGHT: While they're an imposition and they do increase the price of petrol, it's really relatively small compared to the movements of
oil price itself.

KARL HOERR: While $8 a litre is a worst case scenario, drivers say prices anywhere near that high would force them to find alternative transport.

MOTORIST II: Coming into the city every day, you'd have to catch the train then, wouldn't you?

MOTORIST III: Take transport. No way, transport for sure.


KARL HOERR: What's less clear than the trend of rising petrol prices is whether public transport systems are ready for more commuters.

http://www.abc.net.au/reslib/200807/r270708_1137751.asx

thx

MS

 

[rederob]

Re: OIL AGAIN!

Hi Red, do you think $1000 bbl oil is possible?
thx
MS

We are already at a price point precipiting some demand destruction.
I think that oil up to $200/barrel could still be "affordable" within the next few years for those needing to "burn oil" for a living.
But $1000 simply prices out of reach of everyone.
I think that other energy options will start to cut into oil's dominance in 3 to 5 years, allowing oil demand to "plateau" and the oil price to stabilse.
If I had to punt on a top price for oil, I would say around $300/barrel within the next 6-8 years.

 

[ithatheekret]

Re: OIL AGAIN!

I think their black boxes are short the odd covariation.
Is it true that Interpol are investigating their numerical "polarities" as an exigency measure, given the forecast integers bifurcated tangentially from normative fractals?

seek and you will find .......

http://www2.unil.ch/icfis/

 

[Whiskers]

Re: OIL AGAIN!

Well I'm getting more confident that Oil has peaked... although from my new interest in EW, the peak looked somewhat unclear and unconvincing at first.

Anyway, this is what I came up with. I'd be interested particularly in EW'ers comments.

It looks to my eager but still untrained eye that we may have completed one minor leg down and maybe into the 'b' of a minor a b c... ie probably edge up around 140 again in a couple of days before a serious retreat.

 

[MRC & Co]

Re: OIL AGAIN!

lol, that is one MOTHER of an impulse wave 5 Whiskers!

Not much comparison to it's usually similar brother wave 1........



Oh, I see you have taken away that bottom chart on Brent.

 

[Whiskers]

Re: OIL AGAIN!

lol, that is one MOTHER of an impulse wave 5 Whiskers!

Not much comparison to it's usually similar brother wave 1........



Oh, I see you have taken away that bottom chart on Brent.

I messed up. I didn't get them all in the right order the first time.

But yeah, I recall Wavepicker using the term 'blowoff top' to describe the oil chart.

That's what those speculators did to wave 5. :

It looks pretty right to me, since it's going with the trend at the moment, but I'd like to get some conformation.

I think I like EW, I think I can get a bit of a grip on it... but those P&F charts, I can't glean a lot out of them. Sorry Motorway... maybe they'll come to me one day.

 

[MRC & Co]

Re: OIL AGAIN!

But yeah, I recall Wavepicker using the term 'blowoff top' to describe the oil chart.

That's what those speculators did to wave 5. :

Yep, most para charts are followed by blow-offs.

lol, you and your speculators.

Oil approaching some support now, will be interesting to see if it gains some traction and some buying volume comes in.

What a market eh! Sidelines sound good to me at the moment. I'm sure a few of the highly leveraged would have seen some margin calls come in over the last few days! Maybe a few more hedge funds to role............? Anyways off topic. Back to oil.

 

[Whiskers]

Re: OIL AGAIN!

Oil approaching some support now, will be interesting to see if it gains some traction and some buying volume comes in.

What a market eh! Sidelines sound good to me at the moment. I'm sure a few of the highly leveraged would have seen some margin calls come in over the last few days! Maybe a few more hedge funds to role............? Anyways off topic. Back to oil.

I'm banking on a slight rise in the next day or two to finish that minor a b c, to throw a bit of doubt over the markets once more, so I can finish filling one outstanding order at my preferred price rather than having to take out a higher seller... then I'll be 100% back into shares and ready to ride the bull as bears get into oil.

 

[wayneL]

Re: OIL AGAIN!

Did anyone happen to notice Natural Gas?

Please make a big noise so that energy suppliers notice before northern hemisphere winter.

 

[Temjin]

Re: OIL AGAIN!

Did anyone happen to notice Natural Gas?

Please make a big noise so that energy suppliers notice before northern hemisphere winter.

Yep, I got a profit out of the run but got out too early. Was playing discretionary so it was impossible to identify the top. That was the reason why I didn't bother going shorting it because I didn't know when it will turn. (nor do I have a mechanical system to take advantage of this, yet...)

 

[chops_a_must]

Re: OIL AGAIN!

Yep, I got a profit out of the run but got out too early. Was playing discretionary so it was impossible to identify the top. That was the reason why I didn't bother going shorting it because I didn't know when it will turn. (nor do I have a mechanical system to take advantage of this, yet...)

Went higher than any point I was prepared to trade it at.

Should have been more awake to it getting pumped however.

Still, long term, Nat Gas >>>>>>> Oil.

 

[rederob]

Re: OIL AGAIN!

Oil has finally succumbed to the speculators cashing out on early news that US oil inventories were building again.
With the average oil price for 2008 hitting $115 - and rising - you will see from the chart below that there are strong levels of support as the price drops. Accordingly, were the price to dip under $115 it probably would be a reasonable re-entry point for anyone wanting to top up on local producer equities.
On fundamentals alone, US inventory data still shows crude stocks at the lower levels of its average range. This is a bit disappointing given that gasoline demand is down a few percent on the previous year, and it's rumoured driving season is already seeing more stay at home due to high gas prices.
Counterbalancing gasoline demand weakness is diesel demand strength - up 2.5% on the previous year. In fact global demand for diesel is increasing markedly in a climate of supposed demand destruction.
Whatever the short term outcome - and I'm talking the next month or so - the probability of oil prices stabilising at a level around $120 look very high in my calculations. Thereafter we need to see the extent that global recessionary pressures curtail overall demand.
For the moment it is clear that prices in the $140+ range are not affordable to the average person (in terms of downstream fuel prices) and decisions to buy more economical vehicles will have a slight (marginal) impact on oil demand going forward.
Geopolitical rumblings have subsided somewhat, and local skirmishes that shut in supplies at various locations are less of an issue for the moment. Add to this a calmness in the Gulf of Mexico and we have the ingredients for further price declines in the near term.
Longer term the signs are getting more and more ominous. Anticipated supply is substantially lagging forecasts and the gap between maximum supply and forecast demand is shrinking. Any major event affecting supply as we go forward has the potential to spike oil prices sharply higher. Let's hope the GOM hurricane season is kind to us all this year.