Oil

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SkaSka
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Re: Oil

Post by SkaSka » 12 Feb 2016 22:39

retireat50 wrote:So can someone explain the 10%+ increase in WTI today? Or the 5%+ drop the last day. Oy, this volatility is getting more and more perplexing
I mean, I tend not to pay attention to why these things happen because, deep down, I don't think anyone really knows, but here is what the BBC had to say.

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Re: Oil

Post by Shurville » 13 Feb 2016 08:06

SkaSka wrote:
retireat50 wrote:So can someone explain the 10%+ increase in WTI today? Or the 5%+ drop the last day. Oy, this volatility is getting more and more perplexing
I mean, I tend not to pay attention to why these things happen because, deep down, I don't think anyone really knows, but here is what the BBC had to say.
Nor sure I would trust any public message from a desperate guy from Venezuela!

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Re: Oil

Post by Wallace » 18 Feb 2016 21:59

BofA: The Oil Crash Is Kicking Off One of the Largest Wealth Transfers in Human History
Says Blanch: "Alternatively in a lower oil price scenario, e.g. if prices were to average just $40 over the next five years which is close to the current forward curve, demand would grow by 1.5 million barrels per day,
<snip>
Meanwhile, in emerging markets, where much of the story of late has been about disappointing economic growth, Blanch still sees huge upside potential in terms of automobile penetration and consumption.

Take China for example, where the strategist sees the oil plunge helping to fuel a boom in SUV sales: "Moreover, the low oil price is encouraging Chinese consumers to buy increasingly larger cars. Sales of SUVs, the heaviest passenger vehicles category, are up 60 percent year-on-year in the last three months, while overall passenger vehicle sales are growing robustly at 22 percent."
With the exception of the oil companies, the people who work for them, and the institutions who lend to them, the low oil price might end up benefiting a large chunk of society. :| Maybe news of the death of the market have been exaggerated.....
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Re: Oil

Post by ghariton » 18 Feb 2016 22:52

Wallace wrote:With the exception of the oil companies, the people who work for them, and the institutions who lend to them, the low oil price might end up benefiting a large chunk of society. :| Maybe news of the death of the market have been exaggerated.....
Have the environmentalists heard about this?

I mean, wasn't tidal assuring us, a couple of years ago now, that the vast majority of oil reserves would stay in the ground forever?

(Disclosure: I advocate a stiff carbon tax -- not cap and trade -- and have done so for some three decades now. I will believe we are serious when I see the number of SUVs and recreational pickup trucks go down.)

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Descartes
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Re: Oil

Post by Descartes » 23 Feb 2016 13:52

“This went from the Arctic, to Canadian oilsands, to Venezuela’s Orinoco tar sands, to deep water frontiers,” the Minister said during a speech to oil executives. “It also led to the development of shale oil resources in some parts of the U.S.”

Producers of those high-cost barrels must find a way to lower their costs, borrow cash or liquidate, Al Naimi warned.

“It sounds harsh, and unfortunately it is, but it is the most efficient way to rebalance markets,” the minister said. “Cutting low-cost production to subsidize higher cost supplies only delays an inevitable reckoning.”
http://business.financialpost.com/news/ ... =4d3e-7083

ok.. but has anyone considered a nice little war in the middle east to rebalance the markets efficiently? Not to sound harsh or anything...
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Re: Oil

Post by AltaRed » 23 Feb 2016 19:47

It could be any number of things such as civil upheaval in Venezuela or Nigeria or any number of oil producers with a million barrels per day of production that could be disrupted.

On more boring principles, some are speculating a turn as early as 2Q16 when gasoline demand takes off. Somehow that seems optimistic with Iran as a wild card.
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gwynne dyer on oil

Post by Profit not Prophet » 25 Feb 2016 11:49

http://gwynnedyer.com/2016/oil-downturn/
start
“The market can stay irrational longer than you can stay solvent,” said John Maynard Keynes (or maybe it wasn’t him, but no matter). At any rate, that was the eternal verity the Saudi Arabians were counting on when they decided to let oil production rip – and the oil price collapse – in late 2014.

The Saudi objective was to keep the oil price low enough, long enough, to drive American shale oil producers out of business and preserve the OPEC cartel’s market share.
end
'It was a specific strategy that was conceived and promoted by particular powerful individuals, most notably high-ranking Saudi individuals. They would lose a great deal of face if they had to abandon it, so it will be with us for a while yet'.

The site has the latest complex made simple on the Syrian situation if that one tickles your fancy too.

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Re: Oil

Post by Descartes » 25 Feb 2016 12:45

Eric Nuttal, who is sometimes right about energy at Sprott, is calling for $50 WTI by end of the year.

He puts his thesis forward at bnn: http://www.bnn.ca/Video/player.aspx?vid=814525
Stockchase has the usual mangled abbreviated transcript here: http://www.stockchase.com/expert/view/1 ... -an-Expert
The talk about whether Saudi is going to cut or freeze is all noise. The following is walking through how the fundamentals of supply/demand is going to take care of the oversupply by the end of the year. Today the market is oversupplied by about 1-1.5 million barrels per day. Consuming 95 million the oversupply represents about 1.6%. Demand this year is estimated to grow between 1 to 1.4 million which suggests that the current supply is largely taken care of by one year of demand growth. There is only one meaningful country that is adding volumes this year, Iran at 500,000 barrels per day. Where else are barrels coming off the market which are going to not only counteract the barrels coming from Iran, but also aid in the remaining barrels generated in the oversupply? The largest area of growth last year is estimated to be zero this year, Iraq and Saudi Arabia. The final remaining component is the US, where the rig count is down about 73%-74% from its highs. Volumes are now down on a year-to-year basis. 2 weeks ago, using weekly estimates, US production was at negative. From 40,000 barrels a day to now 140,000 barrels a day, that trend will continue until we get a resumption in drilling activity. Expects we will be at $50 by the end of the year, which is the beginning level required in the most economic base in the US. Between now and end of the year, we have another 1-1.5 months of crummy fundamentals. Twice a year Gulf Coast refineries go down for semi-annual maintenance and oil demand goes down and then comes back in April. Coming out of that refinery downturn, there will be a continuation of falling US supply, by 50,000 barrels per day per month, plus there will be an uptick in demand from those refineries, plus we have the continuation of global demand growing by about 1.2 million barrels per day.
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Re: Oil

Post by AltaRed » 25 Feb 2016 13:17

I agree Eric is occasionally right but the trouble with forecasting oil is there are way too many variables that pretty much make forecasters look like fools. Been there and done that in my oil career. That said, I will stick my neck out and suggest what Eric says makes sense from a fundamentals perspective.

How it will shake out remains to be seen, but I expect to see some wild roller coaster swings in pricing as the traders and speculators try to find the inflection point. We need to also remember there is a hell of a lot of oil in storage that also needs to be worked out. Perhaps that will temper the swings when the inflection point occurs.
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Re: Oil

Post by nisser » 29 Feb 2016 19:50

He was also calling for 75$ oil by end of LAST year. He's just guessing, like everyone else.

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Re: Oil

Post by Flaccidsteele » 29 Feb 2016 22:34

Interesting perspective from shale

U.S. shale's message for OPEC: above $40, we are coming back

Continental Resources Inc (CLR.N), led by billionaire wildcatter Harold Hamm, is prepared to increase capital spending if U.S. crude CLc1 reaches the low- to mid-$40s range, allowing it to boost 2017 production by more than 10 percent, chief financial official John Hart said last week.

(snip)

Nimble shale drillers are now helping mitigate the nearly 70-percent slide crude price rout by cutting back output, but may also limit any rally by quickly turning up the spigots once prices start recovering from current levels just above $30.

The threat of a shale rebound is "putting a cap on oil prices," said John Kilduff, partner at Again Capital LLC.
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Re: Oil

Post by AltaRed » 01 Mar 2016 19:49

nisser wrote:He was also calling for 75$ oil by end of LAST year. He's just guessing, like everyone else.
Sure, he is guessing just like EIA is and IEA and everyone else. There are way too many variables to call an end to overly soft prices. It only takes about a 1-2% change in the supply/demand equation to change trader/speculator/arbitrage sentiment for a commodity priced so unstable at the margin. The fundamentals WILL change picing sentiment though, at least at the bottom, once 'tightness' returns.
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Re: Oil

Post by DenisD » 11 Apr 2016 01:00

Saudi Oil Gambit Moves to Phase Two
Baker Hughes updated its monthly international drilling statistics last week. Unsurprisingly, they showed another steep drop in rigs drilling for oil, a 12 percent decline between February and March. There were 1,551 rigs active last month in the countries covered by Baker Hughes, the least since September 1999 and down nearly 60 percent in little more than a year.

But one part of the world is bucking the trend and drilling furiously to add the capacity needed when demand once again exceeds supply.

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Re: Oil

Post by Flaccidsteele » 17 Apr 2016 23:03

Oh well.

Oil producers fail to agree deal to freeze output after Saudi Arabia-Iran standoff
What producers had hoped would be the first deal in 15 years ran into difficulty after Saudi Arabia – the largest exporter of oil – demanded that Iran join an agreement to freeze output.

Iran has been reluctant to agree to hold back on oil production while it attempts to return its market share to pre-sanction levels.
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Re: Oil

Post by AltaRed » 18 Apr 2016 09:47

There is no reason for Saudi to agree. They want to recover (maintain) their market share. And besides, more hedges have been rolling off as of Dec 31, and more will roll off June 30. Production declines are starting to gain traction in some countries/locations. The USA has finally dipped below the 9 million barrels per day threshold, from a peak of 9.6 a year and a half ago. Watch for the trend to continue bit by bit.
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Re: Oil

Post by Dudsy » 20 Apr 2016 20:00

US oil production continues it's downward trend. The EIA drilling productivity reports showed a distinct "high-grading" last fall, however, eventually the continued drop in rig count has worked its magic.
US Oil Production.JPG
US Rig Count.JPG

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Re: Oil

Post by Flaccidsteele » 21 Apr 2016 00:25

The economics of the situation will "balance itself".
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Re: Oil

Post by OnlyMyOpinion » 05 May 2016 09:53

Fort McMurray wildfires are moving global markets as investors fret about world’s oil supply
A huge wildfire near Canada’s oil sands region and escalating tensions in Libya stoked concern among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday.
Brent crude futures rose US$1.11 on the day to US$45.73 a barrel by 1105 GMT, while U.S. West Texas Intermediate (WTI) futures gained US$1.36 to US$45.14.
“The difference today compared with a year ago is the market is starting to price in supply disruptions, whereas in a market that is totally oversupplied, you don’t care about losing half a million barrels a day (in production),” Petromatrix strategist Olivier Jakob said.
“The market is becoming much more sensitive to supply disruptions.”
... U.S. production continues to fall, with the latest official figures showing a decline by over 8 per cent since mid-2015 to 8.825 million bpd.

Article: http://business.financialpost.com/news/ ... =7ae9-be1d

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Re: Oil

Post by Descartes » 27 May 2016 13:27

“I think in ten years’ time someone is going to write a great book and make a great movie about the shale industry in the U.S. because I think it is, quite frankly, one of the biggest Ponzi schemes known to mankind,” Gavin Wendt, founding director & senior resource analyst at MineLife, told CNBC on Thursday.
Shale oil industry a ‘Ponzi scheme’ or can it boom again?
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Re: Oil

Post by AltaRed » 27 May 2016 13:40

As the article alludes too, it is inappropriate to broad brush the entire US shale oil industry as a Ponzi scheme. Clearly a lot of cheap money was chasing promises and the prospect of promises, but that is being (has been) flushed out of the system. What I see happening is a levelling off of production to some sustainable level. The good players with good acreage and good balance sheets will do all right. Where this levels off obviously depends on oil prices but I wouldn't be surprised if US oil production settles out somewhere in the 8+ million barrels/day range. It won't fall back to historic lows as the technologies to extract shale oil have evolved and matured.
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Re: Oil

Post by kcowan » 27 May 2016 14:43

It is amazing (disgusting?) what some analysts will say to get an article published. The fact was that shale oil made sense when oil was priced higher, and now it doesn't.

Throwing around the term Ponzi scheme does injustice to Bernie Madoff and his brilliant cheat over many years and with many "knowledgeable" clients and intermediaries.
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Re: Oil

Post by Descartes » 28 May 2016 09:51

Eric Nuttall still calling for $60. Seems more likely now, eh?
In my opinion, he is always worth a listen regarding O&G.
..once again China’s weak global economy is perceived to be weak, and yet demand is growing by about 1.4 million barrels per day. The issue was oversupply which is now almost approaching zero, courtesy of very strong demand and supply falling off the cliff, not just in the US. US production is now down to about 800,000 barrels a day from the peak. That trend will continue until we get a high enough oil price to allow for an increase in activity in the US. The rig count now is at about half of where it needs to be able to maintain flat production, let alone to grow production. For 2017, 2018 and 2019, unless we incentivize an increase in activity in the US, he thinks we will be short of oil and we will get a price hike. He thinks we are going to see $60-$65 in the next 6-12 months. January and February was the worst period in the history of the oil and gas business. We have come through that period and the worst is over.
partial transcript here: http://www.stockchase.com/expert/view/1 ... -an-Expert

video here: http://www.bnn.ca/Video/player.aspx?vid=879113
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Re: Oil

Post by AltaRed » 28 May 2016 10:09

I agree Eric is worth a listen but he seldom gets much right. He is too optimistic overall in both his projections and his view of companies, but in the O&G, or any commodity, business, one pretty much has to be. He needs to learn to call a spade a spade and resist the pressure of the anger from companies that he should denigrate. That said, much of what he says could have value to traders (as compared to investors). The stock price of a company like Baytex, for example, might jump 100% on a string of upward moves in oil price, but the company should probably still be thrown under the bus.
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Re: Oil

Post by SoninlawofGus » 30 May 2016 18:03

What do the oil pundits here think about today's CBC story on fossil fuel decline? Anything to it?

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Re: Oil

Post by like_to_retire » 30 May 2016 18:51

SoninlawofGus wrote:What do the oil pundits here think about today's CBC story on fossil fuel decline? Anything to it?
I think they said it all in this statement:

One criticism Moore had of the report was what he described as a tendency to "gloss over" challenges that still exist with renewable energy on a large scale.

"They just act as though the more renewable energy you build, the more people will use, and the more fossil fuel we'll take offline, and we'll all be better off — and it just doesn't work that way," the U of C professor said.

"Renewable technologies are not substitutable for fossil technologies one-to-one."

Due to the intermittent output from solar panels and wind turbines, making a major shift to renewables would require "vast, vast storage technology," Moore said, which adds to the cost and viability of such a change.


Sure, they will build better batteries, and try schemes like dragging trains up a hill, but it's hard to power a jetliner with a battery. There's a long way to go yet.
"It is increasingly plausible to foresee a future in which cheap renewable electricity becomes the world's primary power source and fossil fuels are relegated to a minority status,"
If you live in Ontario, you know the cheap electricity claim is simply not true.

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