Oil price discussion and analysis

[Agentm]

Re: OIL AGAIN!

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.

our arab friends had a tight leash on oil to induce the $60 -$80 range, and by contracting on controlling their oil production it sure had a great effect of oil prices, but if oil cartels actually produced free market, then $30 would be the norm in any case

the people are going green in the US, and not a result of taking the train to work, its because they dont have to go to work, they are unemployed.

contraction.........


Economic Highlights
3 August 2010
Page 1 of 3
1 Global Manufacturing Activities Continued To Ease,
Pointing To A Slower Global Growth In 2H 2010

2 US Manufacturing Activities Slowed Down In July
3 Euroland’s Manufacturing Activities Picked Up In July
4 Japan’s Manufacturing Activities Softened In July
5 China’s Manufacturing Activities Slowed Down In July
6 India’s Manufacturing Activities Inched Up In July

 

[Mr Z]

Re: OIL AGAIN!

but if oil cartels actually produced free market, then $30 would be the norm in any case

Look, given we are trading where we are you really need to support these assertions! $30 is a low, low number?!

BTW Russia is the swing producer these days... OPEC can do little to control the oil prices without Russia's compliance. They talk a lot but the reality is that they are constrained to the upside and have had trouble pumping enough to flatten price when it runs away (they don't like too high a price!) and they cheat like crazy on quotas so keeping price higher is not as easy as it may sound when demand softens. In the end OPEC's ability to swing price was down to Saudi, the only oil nation of enough size that its unilateral actions counted, today all the evidence points to the idea that Russia has taken that crown.

Discovery has been on the decline for 50 years, consumption growth has been exponential, much of the reserves we know about are unconventional and simply do not work at $30. I really don't know how a case can be made for $30???????????!

We are so far into our oil bank account it is not funny! Now we have Asia's rise to consider... India and China dwarf the USA in potential!

 

[Agentm]

Re: OIL AGAIN!

Look, given we are trading where we are you really need to support these assertions! $30 is a low, low number?!

BTW Russia is the swing producer these days... OPEC can do little to control the oil prices without Russia's compliance. They talk a lot but the reality is that they are constrained to the upside and have had trouble pumping enough to flatten price when it runs away (they don't like too high a price!) and they cheat like crazy on quotas so keeping price higher than is not as easy as it may sound when demand softens. In the end OPEC's ability to swing price was down to Saudi, the only oil nation of enough size that its unilateral actions counted, today all the evidence points to the idea that Russia has taken that crown.

Discovery has been on the decline for 50 years, consumption growth has been exponential, much of the reserves we know about are unconventional and simply do not work at $30. I really don't know how a case can be made for $30???????????!

We are so far into our oil bank account it is not funny! Now we have Asia's rise to consider... India and China dwarf the USA in potential!

just on fundamentals alone, in the US, if the market was priced on that alone, then oil there would be $30 right now.

the arabs have turned the screws on their supply and sure they cant control russia, nor anyone else, but they can spike it to these levels seen today and have done so to bail some of their own tribes out..

but in the US, just on the fundamentals alone, oil would be at $30 right now, but oil is not trading on fundamentals, its very much in the hands of hedge funds, they backed a huge hurricane season and have also called that wrong and recently been selling, so the pressure on the oil in the US is down the past week or so.. $84 to about $72 right now.. many say its probable to run at about $65 to $70 tops in ther very near term, and who knows, if fundamentals actually take hold of oil, the prices can easily ease right off..

lets see where it all goes, but not many are long on oil atm...

 

[Mr Z]

Re: OIL AGAIN!

but not many are long on oil atm...

OK... IMO you are so far off base it is not funny. No way can I see $30 remotely justified.

Anyway GOOD! I am buying... there is value out there ATM in the oilers.

You have not actually mention any fundamentals, really, its been more of an assertion.

FWIW... longs and shorts always balance, for every long there is a short and for every short a long, always in perfect balance.

 

[Whiskers]

Re: OIL AGAIN!

the people are going green in the US, and not a result of taking the train to work, its because they dont have to go to work, they are unemployed.

Yes quite true.

That on top of their huge malitary machine winding down activities and consumption and the world turning more 'green... their oil consumption rate will probably stagnate or maybe even go backwards for a little while.

Bearing in mind that because the US has been a huge comsumer of imported goods from developing countries, those countries economic growth and oil consumption will be blunted a bit. That would bring $60 into target.

As for the case for $30 to $40... market prices are set on 'sentiment' more so than some economic rational number. Don't rely on logic when sentiment rules.

I agree that the funds could quite easily get disillusioned with the rate of growth ánd the 'green' trend and 'spit the dummy' liquiditating underperforming oil assets in the same way as everyone (well most) went hypo when the prices started going up to new highs.

 

[Smurf1976]

Re: OIL AGAIN!

One thing which puts a floor on oil prices is fuel substitution in industry and especially power generation.

Oil at AUD 34.00 (about USD 30) is equivalent to good quality black coal at AUD 150.

How it compares to natural gas depends on the location. Gas is cheap in Australia, equivalent to oil at around AUD 20, but in some major overseas markets it is considerably more expensive.

If oil prices seriously drop, oil-fired power stations will be run baseload rather than as backup as they are now, plus some coal and gas-fired plants will switch to burning heavy fuel oil or diesel. End result = several million barrels per day of additional oil demand.

Oil won't be cheaper than coal, at least not for long. And will have great difficulty falling below the UK, Japan and US natural gas price. But of course, prices of coal and gas aren't fixed, and would likely also fall.

Bottom line? If oil prices are to crash then that will also affect coal and gas markets.

 

[Agentm]

Re: OIL AGAIN!

oil never goes to the $US prices in australia/asia, when oil was $30 in the us after the gfc and the hedges had a ban on shorting a lot of markets, oil became a popular one and down she went. the asia tapas prices stayed mice and high and we paid top dollar throughout the gfc.. i only wish we had $30 oil here

$65 - $70 imho is the near term stop..

$30 oil is where oil would have gone if fundamentals actually applied..

as b4, i have little faith in going long on oil, as some of the fundamentals take hold on the oil game it appears to me that the whiskers target of $60 is something i would look to for now.. and that will kill a lot of small caps projects in no time..

 

[basilio]

Re: OIL AGAIN!

Excellent article in Energy Bulletin which explores 3 separate reports on the question of future oil supplies and associated prices
[

B]
Major reports point to oil supply turmoil and price volatility[/B]
by Matthew Wild

Major energy reports published this year are pointing to a significant rise in the price of oil due to supply constraints sometime over the next three years – the only disagreement is how soon.

So far 2010 has seen three international reports considering the future of oil production, demand and prices. These were published by high profile groups that command widespread respect – in turn, a collection of UK industrialists, the US military and a joint effort between Europe’s most recognized insurance company and a politically connected think-tank.

Largely ignored by the media, and considered separately online as they came out, it is interesting to do a compare-and-contrast between documents produced for widely different audiences on each side of the Atlantic.

So what is the likelihood that they are all hopelessly wrong?

http://www.energybulletin.net/storie...ice-volatility

 

[Slipperz]

Re: OIL AGAIN!

Here's a interesting report I found from the US energy information administration http://www.eia.doe.gov/steo/contents.html

Of note is non OPEC production in decline. North Sea and some Russian fields are running out

 

[Slipperz]

Re: OIL AGAIN!

Crude oil at $81.75 a barrel and my oilers watchscreen is a red of red. Go figure

 

[jonojpsg]

Re: OIL AGAIN!

Crude oil at $81.75 a barrel and my oilers watchscreen is a red of red. Go figure

You got Nido on there? Nice move up today in anticipation of favourable EWT results from Tindalo...

Of course I hold so DYOR

 

[Slipperz]

Re: OIL AGAIN!

You got Nido on there? Nice move up today in anticipation of favourable EWT results from Tindalo...

Of course I hold so DYOR

Yup NDO was the exception to the rule today.

A very drab day for the oilers considering the spike in the price of oil.

Here's another interesting article with many a good sub link to follow on the current situation. This Kent Moor guy seems to move in some pretty elite circles.

http://seekingalpha.com/article/228180-what-crude-oil-prices-are-telling-us?source=feed

 

[Agentm]

Re: OIL AGAIN!

in may tapis was $69 now its $91

 

[Slipperz]

Re: OIL AGAIN!

I've just been looking into this weeks drop in US inventories.

http://ir.eia.gov/wpsr/overview.pdf

Not only did commercial inventories of 'domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks, and in transit to refineries.' decrease from 346 million barrels to 340.7 it did so against an increase in imports ......





Could that all be attributable to winter heating oil or is the US economy starting to fire up a bit?

 

[Naked shorts]

Re: OIL AGAIN!

I've just been looking into this weeks drop in US inventories.

http://ir.eia.gov/wpsr/overview.pdf

Not only did commercial inventories of 'domestic and Customs-cleared foreign crude oil stocks held at refineries, in pipelines, in lease tanks, and in transit to refineries.' decrease from 346 million barrels to 340.7 it did so against an increase in imports ......

View attachment 40522



Could that all be attributable to winter heating oil or is the US economy starting to fire up a bit?

good question,

Looking at the price seasonals in addition to that large drop in inventories (despite the increase in imports) suggests there is good underlying demand... price has been quite strong recently even though 10 year seasonal says price should be heading down.
http://www.timingcharts.com/

One thing to consider however is the fact that a bunch of the opec countries have indicated their willingness to let oil hit $100
http://www.bloomberg.com/news/2010-...-members-target-100-before-cairo-meeting.html

Could the recent increase in the strength of the US$ simply have made imports more attractive? might be worth plotting the price of oil against some other currencies besides the USD

heaps of variables in this

 

[pacestick]

Re: OIL AGAIN!

I am not surprised that oil is rising
Cantarell(mexico) is in decline it now produces 787,000 barrels a day( PEMEX figures) thats a 34%fall in 2008
Ghaawar (saudi arabia) the worlds largest field is using more and more sea water to extract oil as the easy and cheap oil has gone

new fields are smaller and not making up for the production decline let alone the increased demand from asia .

Stand by for heaps of screaming from the uninformed public about the oil companies profitering yet it is really just supply and demand pushing the price up

my only suggestion is buy companies producing oil

 

[kiwichick]

Re: OIL AGAIN!

or gas

or phosphate

 

[sails]

Re: OIL AGAIN!

or gas

or phosphate

are you reading from a dictionary?

 

[Smurf1976]

Re: OIL AGAIN!

are you reading from a dictionary?

I take it as a reference to two other commodities which both have a similar long term supply situation to that of oil.

With, for example, iron ore it is just case of production costs etc since there are plenty of known ore deposits. But in the case of phosphate, oil and gas there are real geological limits in terms of known resources, plus the political factors due to them being highly concentrated in a few countries.

 

[sails]

Re: OIL AGAIN!

I take it as a reference to two other commodities which both have a similar long term supply situation to that of oil.

With, for example, iron ore it is just case of production costs etc since there are plenty of known ore deposits. But in the case of phosphate, oil and gas there are real geological limits in terms of known resources, plus the political factors due to them being highly concentrated in a few countries.

I guessed that's what was meant too, Smurf. It would just be nice if he would offer some reasoning or research (as you have done) instead of just typing a few words with very little meaning.