Oil price discussion and analysis

[Ann]

A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019

• A team of currency, fixed income and economic analysts at Nomura came up with a list of so-called grey swans for clients.
• These close cousins of black swans are foreseeable risk events that end up having a much more drastic impact than expected, Nomura says.

https://www.cnbc.com/2018/12/11/a-b...f-nomuras-grey-swan-predictions-for-2019.html

 

[Smurf1976]

A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019

Interesting.

An issue that comes up at those sort of levels is fuel substitution.

Without getting too far into engineering, in short there are situations where one fuel can be substituted for another either in the same facility or via shifting production to a different facility.

Examples include industrial boilers or district heating schemes with the ability to use more than one type of fuel. Where that is the case oil is usually one of the options with the other being coal or gas.

On a larger scale is power generation. Some plants do have the ability to switch between multiple fuels, indeed being able to burn coal, oil and gas all at once in the same boiler has been done right here in Australia. In other situations it's a case of shifting production from one plant to another - run whichever is cheapest flat out 24/7 and adjust the output of the more costly facilities to match demand.

The ability to switch fuels is not unlimited, there are many facilities which don't have the option, but it's a real thing and of relevance is that markets are made at the margin.

Coal is trading at just over USD 100 at the moment which on an energy content basis is equivalent to oil at about $23 per barrel. Coal costs a bit more to handle and use though, there's ash to dispose of among other issues, so let's round that to $25 as the point below which oil would start displacing coal thus raising demand for oil and/or forcing down the coal price.

That seems a rather interesting number:

First because it's not too far from the $20 figure that someone else has predicted as a "grey swan".

Second because it's very close to the previous bottom so a 100% retrace of the up move.

Third because it would mean that the current stalling of the oil price fall after a "straight down" move is at exactly the half way point if we're heading down to $25 or so.

Fourth because that number comes up rather a lot in the history of oil. Adjusting for inflation, the price of oil has been $25 +/- 50% for about 65% of the entire history of large scale commercial oil production which dates back to 1859.

None of that should be taken as an actual prediction and from a fundamental perspective I do see a bullish case. But with the US stockpiles and world politics thrown in the "drop to the 20's" scenario would seem at least plausible and certainly not unprecedented, indeed historically it's the "normal" price for oil to the extent there is one.

 

[Ann]

A big market collapse and $20 oil make the list of Nomura's 'grey swan' predictions for 2019

• A team of currency, fixed income and economic analysts at Nomura came up with a list of so-called grey swans for clients.
• These close cousins of black swans are foreseeable risk events that end up having a much more drastic impact than expected, Nomura says.

https://www.cnbc.com/2018/12/11/a-b...f-nomuras-grey-swan-predictions-for-2019.html

I shouldn't be here (problems with concussion), but I need to say this. I posted this quickly yesterday morning and for the life of me I can find no reason or substantiation for their view of $20. If we want to talk about bloody swans.....I have a lake full of black swans way down the end of the High Street where I live. Bit far for me to walk...would need a tram. Can't take m' LittleDog on a tram . I don't give a toss if it is some fancy band of young turks or a little rapa (latin for turnip) who says something. Give me bloody substantiation!

I saw someone who sounded "expert" on CBS or whatever saying the S+P500 was in a head and shoulders with a death star or cross or whatever. I looked at it and it looked like it was heading toward a sideways consolidation. However at least they gave me their reasoning with a chart, which was admirable.

 

[Smurf1976]

I can find no reason or substantiation for their view of $20.

I can come up with plausible (though that doesn’t mean probable) scenarios for $25 but not $20 for the reasons I’ve mentioned.

At $20 oil would be the cheapest fuel around and physical consumption would rise significantly and do so quickly.

 

[Skate]

I shouldn't be here (problems with concussion), but I need to say this. I posted this quickly yesterday morning and for the life of me I can find no reason or substantiation for their view of $20. If we want to talk about bloody swans.....I have a lake full of black swans way down the end of the High Street where I live. Bit far for me to walk...would need a tram. Can't take m' LittleDog on a tram . I don't give a toss if it is some fancy band of young turks or a little rapa (latin for turnip) who says something. Give me bloody substantiation!

I saw someone who sounded "expert" on CBS or whatever saying the S+P500 was in a head and shoulders with a death star or cross or whatever. I looked at it and it looked like it was heading toward a sideways consolidation. However at least they gave me their reasoning with a chart, which was admirable.

@Ann thanks for apology - the post was out of character for you, lets put that one down to concussion.

Response
I didn't respond to your earlier post but I was tempted but thought better of it...

The saying goes, "If you don't have something nice to say, don't say anything at all."

Journalist make stuff up
There is a high demand for financial news & unfortunately some journalist make stuff up.

Skate.

 

[Ann]

I can come up with plausible (though that doesn’t mean probable) scenarios for $25 but not $20 for the reasons I’ve mentioned.

At $20 oil would be the cheapest fuel around and physical consumption would rise significantly and do so quickly.

I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf, except for the massive amount of underground tanks I imagine are buried or in peoples sheds. You know, the stuff they are currently calling 'shale oil' aka spek quantities hoarded by the Preppers. No doubt they can see the writing on the shed wall....EVs....phone home!

@Ann thanks for apology - the post was out of character for you, lets put that one down to concussion.

Response
I didn't respond to your earlier post but I was tempted but thought better of it...

The saying goes, "If you don't have something nice to say, don't say anything at all."

Journalist make stuff up
There is a high demand for financial news & unfortunately some journalist make stuff up.

Skate.

G'day Skate may I say very catagorically and emphatically that was absolutely no apology from me and had no relation to my concussion. I was intending to go to a financial lecture and had to leave quickly and early. I put up an alternative view of the silly high levels suggested by others on this thread with a news release. Later on my return home I decided to look deeper to see on what basis they suggested that particular level as there was nothing on my charts that suggested that price as either a support or a resistance. On my recent post I was simply stating yet again I was seeing an unsubstantiated price level and again I was stating unless a particular price can be substantiated with either a chart, fundamentals, tea leaves, rumours from Aunty Shirley, or some gypsy palm reading don't bloody put it up onto a forum with no basis. Hope you manage to understand what I am trying to say. I am not chucking a hissy-fit, having a melt-down or the female vapours. I just would like any price by anyone substantiated....not angry, see...smiling

 

[Darc Knight]

I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf, except for the massive amount of underground tanks I imagine are buried or in peoples sheds. You know, the stuff they are currently calling 'shale oil' aka spek quantities hoarded by the Preppers. No doubt they can see the writing on the shed wall....EVs....phone home!



G'day Skate may I say very catagorically and emphatically that was absolutely no apology from me and had no relation to my concussion. I was intending to go to a financial lecture and had to leave quickly and early. I put up an alternative view of the silly high levels suggested by others on this thread with a news release. Later on my return home I decided to look deeper to see on what basis they suggested that particular level as there was nothing on my charts that suggested that price as either a support or a resistance. On my recent post I was simply stating yet again I was seeing an unsubstantiated price level and again I was stating unless a particular price can be substantiated with either a chart, fundamentals, tea leaves, rumours from Aunty Shirley, or some gypsy palm reading don't bloody put it up onto a forum with no basis. Hope you manage to understand what I am trying to say. I am not chucking a hissy-fit, having a melt-down or the female vapours. I just would like any price by anyone substantiated....not angry, see...smiling

Don't worry Ann, its all quite amusing, except for the concern for your health. Take care

 

[Smurf1976]

I would have thought at $20 it just wouldn't be worth pulling out of the ground Smurf

Anything below the mid-50's starts making it not worthwhile depending on the oil field in question.

Where it gets difficult though is that financial markets do go to prices where things don't make sense. Eg oil in the $30's in early 2016 was below the cost of production but it happened.

My comments about prices in the mid-20's are in that context. Logic says no but that doesn't mean it can't happen. Logic says a lot of things shouldn't happen but they do in practice.

 

[Skate]

don't bloody put it up onto a forum with no basis.

Hi @Ann

Yes, you nailed it...

Skate.

 

[Ann]

Hi @Ann

Yes, you nailed it...

Skate.

Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.

 

[Ann]

Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.

I did say "endeavour" sometimes I fail a touch....sorry Sdajii no excuse for name calling!

 

[Skate]

Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.

Hi @Ann

Clarification is needed
1. "Come and tell that to Turnip Top Skate!"
I don't understand what you are saying with this comment..
2. "I endeavour to post here with integrity"
True and you prosecute your case well (most times) - that's a given but your post in this thread (#1941) was out of character for you - as I stated in my post (#1945)

If I could make a few additional comments..

Misinformation
There is so much misinformation & fanciful stories on the internet, remembering journalists make most stuff up - I want to draw your attention to this fact as some investors will make financial decisions on what they read.

Integrity
When forum members with integrity post articles or hyperlinks it gives those article more weight than sometimes they deserve.

Reference
As a reference - your comment in the thread [PO3 - Purifloh Limited - post(#11)] "In my own opinion this appears to be deception by suggestion"

Hyperlinks
Hyperlinking to an article without clarification sometimes deceives the reader because they perceive (it's their perception & I'm not implying your intent) that you endorse the article.

Quantity versus Quality
Some forum members (posters) go for quantity over the quality of their post and I tend to enjoy reading the latter.

In your own words
1. You gave yourself good advice "don't bloody put it up onto a forum with no basis"

Forum members
All forum members should prosecute their case forcefully with conviction & civility - members would be well served to remember to meter their responses "If you don't have something nice to say, don't say anything at all."

Ideas
ASF as the name suggest is a Stock Forum but @Joe Blow has kindly allowed the forum to incorporate a discussion of ideas.

Skate.

 

[Sdajii]

Come and tell that to Turnip Top Skate! I endeavour to post here with integrity.

Heh heh heh

 

[Ann]

Hi @Ann

Clarification is needed
1. "Come and tell that to Turnip Top Skate!"
I don't understand what you are saying with this comment..
2. "I endeavour to post here with integrity"
True and you prosecute your case well (most times) - that's a given but your post in this thread (#1941) was out of character for you - as I stated in my post (#1945)

Skate, the reference Turnip Top was in reference to Sadjii's Avatar, he has a Turnip but directly after my post I apologised to Sdajii as it sounded as though I was being rude to him in the re-reading, so I added an appology to him which you may have missed. He is constantly calling out unsubstiantiated comments about massive high price levels of oil in an adament, unequivocal way with no substantiating facts or reason behind the very high price level. I added that news story and link as a vastly opposing opinion of Sadjii's. As my time was limited on that morning and news stories get lost under other articles, I added it quickly. When I got home I then took time going through the article carefully and found no basis for a $20 call I then called that also an unsubstantiated call, lacking in any evidential basis for their call.

If I could make a few additional comments..

Comments are always welcome Skate

Misinformation

There is so much misinformation & fanciful stories on the internet, remembering journalists make most stuff up - I want to draw your attention to this fact as some investors will make financial decisions on what they read.

I am very aware of this Skate. In fact all outlets from any source, not just journalists can be full of fabrications, even respected bodies of education, governement and sciences are rife with biased and misleading information. It is a minefield or half truths and mis-thruths. It takes a lot of focus to see the difference between information and propaganda.

Integrity

When forum members with integrity post articles or hyperlinks it gives those article more weight than sometimes they deserve.

I take this point Skate and try to be responsible whenever I post something. Generally I have the time to vet information and links carefully and make a decision if it is reasonable information or just junk. That is why I wanted to re-visit that $20 article on my return home and made further opined comments.

Reference

As a reference - your comment in the thread [PO3 - Purifloh Limited - post(#11)] "In my own opinion this appears to be deception by suggestion"

Yes, that was and is my opinion for reasons I outlined, hopefully clearly. (I worry about the clarity to others slightly as I have recently had a fall and am being troubled by concussion, so I am endeavouring to take extra care when I speak).

Hyperlinks

Hyperlinking to an article without clarification sometimes deceives the reader because they perceive (it's their perception & I'm not implying your intent) that you endorse the article.

Any hyperlink I add is not meant as an endorsement or proof of point, merely why, where and what is my point of reference. This is important as it gives the reader the opportunity to see where the information was derived and judge for themselves the merit of anything I may say. Any comment or opinion should be fairly scrutinized by others in my opinion. That can only be healthy.

Quantity versus Quality

Some forum members (posters) go for quantity over the quality of their post and I tend to enjoy reading the latter.

I am sure we all have our favourite posters and subjects and that is how I see a living vibrant community, Joe has achieved a remarkable forum by tending the tiller with a very deft hand.

In your own words

1. You gave yourself good advice "don't bloody put it up onto a forum with no basis"

Exactly and that was my reason to re-visit the post to make sure there was proper substantiation, when there wasn't I felt it behooved me to make sure to all it was not of any value for the forum, as I have said more than once now, the only reason it was there was not to make mischief but to save it for proper scrutiny. It may have had some interesting and valuable insights but the time I had available was not there at the fist instance and on my return home it would not have been possible to find as the news articles are gone after a number of articles.

Forum members

All forum members should prosecute their case forcefully with conviction & civility - members would be well served to remember to meter their responses "If you don't have something nice to say, don't say anything at all."

I totally concure with you Skate, and I will also extend it further to add the style and implication of responses also can appear slightly less than civil. However that can be quite a tricky thing on a forum where the reader adds their own accentuation and interpretation to comments and phrases. For example me using the term Turnip Top was said with affection to Sdajii but you had no idea what I was talking about and to Sdajii it may have sounded like a jeer, hence I felt in an immediate post I put up I needed to clarify how rude I appeared and gave Sdajii my appology. Gosh I hope this is all making sense, I am dyslexic and struggling trying to read what I am saying!

Ideas

ASF as the name suggest is a Stock Forum but @Joe Blow has kindly allowed the forum to incorporate a discussion of ideas.

Skate.

Isn't Joe great, I would love to say I am first in line as his biggest fan but I think first place may be a crowd scene jostle!

 

[Sdajii]

Skate, the reference Turnip Top was in reference to Sadjii's Avatar, he has a Turnip but directly after my post I apologised to Sdajii as it sounded as though I was being rude to him in the re-reading, so I added an appology to him which you may have missed. He is constantly calling out unsubstiantiated comments about massive high price levels of oil in an adament, unequivocal way with no substantiating facts or reason behind the very high price level.

Constantly? I made my prediction which was that oil would drop to around $52 and then up to around $100 before August 2019. I made that statement once, and then posted again when the first part of my prediction (the fall) had played out. That's literally all I would have posted, but additionally, I have responded to the abuse, accusations, etc I've received from people including yourself. It's funny, I started saying oil would fall to about $52 and not much less by around the turn of 2018/2019 back in mid 2018, and it's only recently everyone is banging on about the big fundamental support oil has at $50, which makes it an obvious turning point, which people are just starting to talk about now (though a few are obviously going to say $20 or whatever nonsense, because there will always be someone to say any conceivable thing). By August 2019 I think a lot of people will consider some more things obvious which the majority are not seeing now.

I don't expect to be taken seriously until we see prices around $100. I am a bit surprised anyone bothered even responding to me this early (sure, just one single price figure and timeframe alone could be a lucky guess). It's interesting that people only got bees in their bonnets when my prediction started actually playing out.

Feel entirely free to ignore my prediction, and me in this thread, until my prediction has played out. That would make sense and I welcome it, and if it happens, you'll hear very little from me until we're around $100.

Hopefully you can resist provoking me until then

Oh, one last thing, you're welcome to call me 'Turnip Top', I sort of like it actually, but I'd appreciate it if you spelled my name correctly if you do choose to use it. Thanks

 

[Ann]

Oh gosh, sorry Sdajii, I didn't notice the typo, or I would have altered it, I think I mentioned your name once or twice again, hopefully I got the spelling correctly on those ensuing mentions. No offence intended, shall be extra careful in future.

 

[Smurf1976]

I learned long ago that when discussing the future "will" is a word that is almost never appropriate.

We're dealing with possible outcomes here not certainties. Sure, some are more likely than others but nobody's able to be certain about the future price unless they're in a credible position to manipulate the market. There are few such people and those who are likely won't be posting the details of their plans here.

 

[Sdajii]

I learned long ago that when discussing the future "will" is a word that is almost never appropriate.

We're dealing with possible outcomes here not certainties. Sure, some are more likely than others but nobody's able to be certain about the future price unless they're in a credible position to manipulate the market. There are few such people and those who are likely won't be posting the details of their plans here.

If things are sufficiently certain, or the context is appropriate, the word 'will' is often fine when talking about the future. You certainly wouldn't tell your girlfriend you might take her out for dinner tomorrow night or that it's a possibility you'll remember her birthday. The sun will come up tomorrow, we will see the market do some interesting things over the next 12 months, people on this forum will argue and bicker, I will piss people off, people will be irrational and stupid...

 

[ducati916]

If things are sufficiently certain, or the context is appropriate, the word 'will' is often fine when talking about the future. You certainly wouldn't tell your girlfriend you might take her out for dinner tomorrow night or that it's a possibility you'll remember her birthday. The sun will come up tomorrow, we will see the market do some interesting things over the next 12 months, people on this forum will argue and bicker, I will piss people off, people will be irrational and stupid...

However, when talking about the POO, 'will' is not appropriate, as you cannot control its price or anything else relevant to oil. You use an example that has no relevance to the issue, viz dinner/girlfriend.

Possibly English is not your first language, in which case the error is understandable.

jog on
duc

 

[Ann]

However, when talking about the POO, 'will' is not appropriate, as you cannot control its price or anything else relevant to oil. You use an example that has no relevance to the issue, viz dinner/girlfriend.

Possibly English is not your first language, in which case the error is understandable.

jog on
duc

Sorry duc, I have to do this...you have made it too tempting for me.

With every will in the world I will need to step into POO and will make a firm prediction the price will rise and then it will fall and will range through a series of prices. This will please some but will not please others, this will be the way of the world and will go on forever, thy will be done!