Oil price discussion and analysis

[Mickel]

Re: OIL AGAIN!

Interesting article in Time Magazine (Aug 23) by Michael Mandelbaum
proposing reducing US's comsumption of oil as a part of a Foreign Policy to reduce the importance of the Middle East.

It summarises with -
"Reducing oil consumption by raising the gasoline tax would once again make the U.S. a resolute and effective global leader. Unlike the Administration's fall diplomatic initiatives, it would not require the cooperation of the governments or people of other countries. Most important of all, as a strategy for shielding Americans from the dangers of the Middle East, it would certainly succeed."

Mandelbaum's new book, The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era, from which this essay is adapted, was just published by PublicAffairs.

http://time-px.rtrk.com.au/time/world/article/0,8599,2009895,00.html

 

[Agentm]

Re: OIL AGAIN!

Jonathan Barratt was reported in the sydney morning herald saying he thinks $70 to $68 is the next spot in the near term


i tend to think he is right

there is a lot of speculators that have thought oil would rise and have now decided to sell out.. nothing in the US is inspiring the oil price atm..

1.13 billion barrels and increasing is a heck of a lot of excess oil imho.. could run down some what more than that..

 

[Sdajii]

Re: OIL AGAIN!

With China, India and just about everyone increasing their oil consumption, and the USA currently importing far more than they consume, global consumption could (will) make those reserves look insignificant in a few years. Short term it's difficult to predict. Medium term I fail to see how anyone could be anything but bullish on oil. I hope the wells are mothballed in the short term! I'll buy up big and cheap in the short term and buy that mansion in the soon after. I'm not optimistic about that big an oil crash, so I'll maintain a substantial holding regardless. Very big global changes are on the way... says Sdaji anyway.

 

[Mr Z]

Re: OIL AGAIN!

I guess the point is in Asian terms that stock build up means little and says little about their consumption.

I think its around a weeks supply for the US, nothing huge really. Oil, the numbers are mind boggling

 

[Mr Z]

Re: OIL AGAIN!

Reducing oil consumption by raising the gasoline tax would once again make the U.S. a resolute and effective global leader.

Yeah but in what time frame, first up it would be a slap in the chops to a fragile population and would set them back until they adjusted. It would be a brave ex-president that pulled that stunt IMO. In the long run maybe its a good thing but it should have been done in strong economic times.

 

[Agentm]

Re: OIL AGAIN!

I guess the point is in Asian terms that stock build up means little and says little about their consumption.

I think its around a weeks supply for the US, nothing huge really. Oil, the numbers are mind boggling

wow.. thats really well researched... one week!!! is that with or without the spr? i thought the minimum spr was for 60 days to protect the US economy??

man thats really churning some huge oil dont you think??

the SPR for the US is 727 million barrels.. and thats about 60 days of oil reserves..

having 1.13 billion barrels of oil is equivalent to nearly 90 plus days or 3 months of supply according to my calculations..

can you let me know where your figures are coming from ?

the 1.13 billion is climbing every week and the real issue is who is going to use the oil now the economy is slowing and the busy period of oil is drawing past its close and it slows down traditionally?

i am hearing the levels are at record highs, not seen since 1990??

fundamentally the price of oil should be in the $30 range if it was not interfered with

 

[Sdajii]

Re: OIL AGAIN!

fundamentally the price of oil should be in the $30 range if it was not interfered with

That would make sense, assuming we had unlimited resources to tap. Unfortunately, oil is going to run out. Do you think oil is going to keep a stable price right up to the point where it becomes unavailable? Perhaps the reason oil is more than $30 per barrel is the fact that there isn't all that much left in the world. If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.

That's my take anyway.

 

[Mr Z]

Re: OIL AGAIN!

wow.. thats really well researched... one week!!! is that with or without the spr? i thought the minimum spr was for 60 days to protect the US economy??

man thats really churning some huge oil dont you think??

the SPR for the US is 727 million barrels.. and thats about 60 days of oil reserves..

having 1.13 billion barrels of oil is equivalent to nearly 90 plus days or 3 months of supply according to my calculations..

can you let me know where your figures are coming from ?

the 1.13 billion is climbing every week and the real issue is who is going to use the oil now the economy is slowing and the busy period of oil is drawing past its close and it slows down traditionally?

i am hearing the levels are at record highs, not seen since 1990??

fundamentally the price of oil should be in the $30 range if it was not interfered with

LOL sorry, missed zero on the calculator! Poo happens! Don't go the throat quite that readily dude. I was using around 21 million a day consumption so that would be 53 days... that sounds better! I thought a week sounded low, teach me to hurry eh? but we are not all perfect. No that is using the 1.13, which by the way they don't measure... they computer model it based on all the other numbers they get in. Some argue that its easily manipulated... conspiracy and all that. I dunno what to think about that one!

No way 727 is 60 days, that infers 12 million a day.... maybe with rationing in an emergency but not normal numbers.

That last statement is a big one! Why $30?

Man $30 would shut in a heap of capacity... I just can't see that being true.

 

[Mr Z]

Re: OIL AGAIN!

If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.

If that happened Saudi Arabia would become a failed state, their expenditure requires oil up around where it is (surprise, surprise?!) to support their welfare state and all the rest. People often think of oil in pure supply demand terms but many countries that rely on oil income are in a similar boat. For a while the lower the price the more they have to pump... then beyond a certain point the whole things stops working and that (according to some) will cause bigger issues. Saudi is full of frustrated, bored, social welfare dependent youth... look at youtube search Saudi Drifting... yikes! Anyway... cut back the welfare and they reckon the whole thing would get very snaky. The Saudi family all have bolt holes in Europe, they know when the oil ends the place stops working! It is not a slow decline to the end there is a drop off point... due to social factors not physical... well currently that appears to be the case, unless they develop more strings to the bow... which they are doing but it all seems to be around oil. These days they are talking conservation for 'the kids', some say its because they just can't pump harder. The terrifying thing is only they know and they lie to us about reserves... we know that much. Oil... its an odd situation for such a vital supply.

 

[Agentm]

Re: OIL AGAIN!

That would make sense, assuming we had unlimited resources to tap. Unfortunately, oil is going to run out. Do you think oil is going to keep a stable price right up to the point where it becomes unavailable? Perhaps the reason oil is more than $30 per barrel is the fact that there isn't all that much left in the world. If oil went to $30, consumption would scream up, inventories would drop, and they would be harder than ever to replace, and fairly suddenly oil would jump to record highs.

That's my take anyway.

i follow cameron hanover a lot, and posted up another oil thread that i cannot find anymore in the forum a while back his views on $30 oil, and very easily, if the oil price was based on fundamentals alone as it used to be, then $30 oil is where we would be right now.

i agree if the US had demand for more, then the price would go up.. but even today, despite the massive money on the oil going up, the price has gone from $84 to $73 in a week or so, and right now they are selling again, as the oil reserves are increasing at alarming rates.

i saw that the arab friends were dropping their rates to asia also, a reaction to their slowdown as well.

LOL sorry, missed zero on the calculator! Poo happens! Don't go the throat quite that readily dude. I was using around 21 million a day consumption so that would be 53 days... that sounds better! I thought a week sounded low, teach me to hurry eh? but we are not all perfect. No that is using the 1.13, which by the way they don't measure... they computer model it based on all the other numbers they get in. Some argue that its easily manipulated... conspiracy and all that. I dunno what to think about that one!

No way 727 is 60 days, that infers 12 million a day.... maybe with rationing in an emergency but not normal numbers.

That last statement is a big one! Why $30?

Man $30 would shut in a heap of capacity... I just can't see that being true.

$30 is the figure it should be based on the fundamentals, we had $30 oil a while back with far less in way of reserves. but as you know, there is no such thing as fundamentals in the US markets atm, but in the oil sector, its starting to lean towards it as these reserves . 1.13 billion, are increasing still more and more... as one commentator said, "what on earth are we going to do with all this oil?"

3 hindenburg omens in one week, very very reminiscent of the numbers in the previous gfc..

$74 looks a tad rich to many, and thats why its selling, i expect big drops in very short periods ahead myself.

 

[Mr Z]

Re: OIL AGAIN!

Where are you getting your reserve numbers from? There is no way we have more in terms of light sweet crude. We have good unconventional sources but the majority of them don't work at $30. We also have no real idea what opec have because they play political games internally. The more reserve you have under opec rules the more you can pump. They all want the freedom to pump what they need when they need so they NEVER report any draw down and always tend to creep up BUT IT IS NOT REAL! Fact is we have not got a clue about the real state of reserves. We have some good guesses based on 1950's geological work in the ME but that is about it.

On the flipside we could double all known reserves tomorrow and the exponential growth in Asia will chew through it in a couple of decades! There is no way we have enough oil at any where near $30 to keep that beast happy... in fact we don't have enough supply for a heck of a lot longer without new and hopefully fully renewable supplies of energy.

Once you get past half reserve the flow rate starts to slow its growth (stops growing), the price starts to rise and it starts to pressure us into new sources of energy. We are there, at around halfway... the pressure is building, by 2014 we should be at uncomfortable oil prices and hopefully doing a heap more about it.

$30.... man I hope not, the last trip down that way in the GFC did a lot of damage to the industry. We actually lose capacity in events like that, you just can't shut these things down and then fire them right back up again without issues, its not like a tap.

Jeez... we aren't drilling deep ocean because we are flush with the stuff, and deep ocean, oil sands etc is not $30 oil FWIW

Not saying it can't happen... the futures market can get crazy but if it does it ain't for real.

 

[Smurf1976]

Re: OIL AGAIN!

I think there's some confusion as to what constitutes "reserves" here.

Underground reserves, the "source" of crude oil available to man, are a bit of a mystery. In theory engineers can do fairly accurate estimates but politics precludes them from doing so in many countries.

Underground reserve estimtes in non-OPEC countries are likely to be reasonably accurate, especially in the more developed, Westernised countries with sound governments etc. But reserves in the OPEC members we can only guess at, since they are very clearly manipulated for political and internal OPEC reasons. The odds do seem very high that reserves are probably significanly less than claimed.

Personally, I suspect that in many instances the OPEC claimed "reserves" are in fact "total discovered to date" from which production needs to be deducted in order to calculate what remains. Such a concept fits reasonably well with many Western estimates of OPEC's actual reserves.

Then theres the short term reserves, that which are above ground sitting in tanks, or are simply stored underground in the US SPR etc. In this case it's a fairly simple matter of someone checking how much is actually in the tanks. Simple in theory, but whether or not it is done accurately in practice is anyone's guess.

One thing's for sure in all of that though. Discovery of light, sweet crude oil hasn't been keeping pace with consumption for quite some time. Regardless of how much remains in reserve, such a situation is ultimately unsustainable.

 

[Whiskers]

Re: OIL AGAIN!

Not sure that reserves are the main issue atm with the US struggling to avoid falling back into recession. I'd say consumption/demand will be the focus of Oil producers... another attempt at production cuts maybe.

Probably the most significant thing to affect short term oil prices is the US withdrawing from Iraq and soon scaling back in Afganastan. I don't know the exact numbers, but all those fuel hungry planes, APC's, Tanks and Humvees etc guzzle down an enormous amount of fuel.

Together with increased fuel economy measures particularly in the US and as I understand an increasing number of Deisel gas conversions and talk of phasing out ULP with more ethernol blend usage, I see more downward pressure on Oil prices in the short term.

 

[Whiskers]

Re: OIL AGAIN!

fundamentally the price of oil should be in the $30 range if it was not interfered with

$40 to $60 range has been my view for the bottom.

I wouldn't expect it to hit $40 though unless the US and or Europe economy bumped along verging on recession for a considerable time.

 

[iced earth]

Re: OIL AGAIN!

Oil WTI - 24 Aug 2010:

Another upward channel in Daily Graph been broken again, the target would be around 66 $

on 12 Aug 2010 while Oil was trading 78$ , it was predicted that oil will slip to 74 $ ( https://www.aussiestockforums.com/forums/showpost.php?p=573835&postcount=44)

 

[Agentm]

Re: OIL AGAIN!

my view is the trend down is where is will continue.

agree that $40 - $60 is very possible.

i cant see anyone talking up their plans to go long on oil atm..

 

[Sdajii]

Re: OIL AGAIN!

my view is the trend down is where is will continue.

agree that $40 - $60 is very possible.

i cant see anyone talking up their plans to go long on oil atm..

I hope you're right! I'll be stocking up on mothballed wells no one wants... for a year or two!

 

[Agentm]

Re: OIL AGAIN!

I hope you're right! I'll be stocking up on mothballed wells no one wants... for a year or two!

it sure will be a tough time for onshore and offshore oil in many regions if the wheels continue to fall off globally.

stripper wells will be hit hard again, as they always are when the oil prices plummet. but all operators have economic models that either green light or terminate projects..

lots of operations on fields, and services attached to them like pipelines companies will be scrapping programs and side-lining ops all over the place like they did b4. they also work on the same economics, if the operators costs are not viable for a project, then its all over for a lot more folk as well.

many small cap oilers turn to cash value in a heart beat...

 

[Mr Z]

Re: OIL AGAIN!

$40 is unrealistic for so many reasons it is not funny. If it where to happen it will be the fastest route to permanent 3 digit oil. We did it once on the back of a paper chase and not a lot to do the fundamentals of oil really more the financials of the market participants. $40 oil is a world you don't want to live in because of what it spells for economic activity, a very negative outlook IMO.

 

[Smurf1976]

Re: OIL AGAIN!

my view is the trend down is where is will continue.

agree that $40 - $60 is very possible.

i cant see anyone talking up their plans to go long on oil atm..

If both oil production and prices are heading down then that means either (1) people are suddenly going "green" and taking the train to work rather than driving etc or (2) the global economy is contracting.