Author Topic: Where is the bottom for crashing oil prices?  (Read 44738 times)

DrF

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Where is the bottom for crashing oil prices?
« on: November 04, 2014, 08:42:08 AM »
I was going to post this in the day trader's thread, but thought it might get lost there.

Anyone here trade commodities, oil specifically, that could provide some good rationale on when to get in on the price of oil?

I know oil is not very Mustachian, but getting FI is. Also, taking a long position in oil (driving up the price so that it is more expensive for everyone to use), seems pretty Mustachian to me. If I can make a profit while doing so, well I am very comfortable with that.

1. Will oil go lower first?

2. DCA into an oil ETF?

3. Should I hedge (how would I do that)?

4. Stop loss at a % (what %)?

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #1 on: November 04, 2014, 11:04:44 AM »
LOL, can you just write me a check instead of wasting your money on this trade?

Let me share with you a trader's secret: nobody knows what's going to happen in the future. Nobody.
« Last Edit: November 04, 2014, 11:10:03 AM by hodedofome »

megamomo

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Re: Where is the bottom for crashing oil prices?
« Reply #2 on: November 04, 2014, 11:18:22 AM »
Only the King of Saudi Arabia knows that answer.  Currently he seems intent on putting the squeeze on the rest of OPEC and anyone else who thinks they want to be in the oil business.

If you read the glut of stories on oil today, the break-even price for the US producing its own oil is between $70-$80, which is pretty much where we are at now.  I'm guessing this is the motivation for the question in the first place.

CowboyAndIndian

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Re: Where is the bottom for crashing oil prices?
« Reply #3 on: November 04, 2014, 11:32:59 AM »
Right now the US and Saudi Arabia have decided to put the squeeze on Iran/Russia.

Even though there is only limited oil coming from Libya/Iraq, there is an excess of oil in the market and it is causing the drop in prices.

Iran needs oil to be $120/barrel to run the country.

My feeling is that the US/Saudi squeeze will not stop till $60/barrel.

Again, this is what I think, who knows what will happen.

2Birds1Stone

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Re: Where is the bottom for crashing oil prices?
« Reply #4 on: November 04, 2014, 11:38:12 AM »
I would avoid trying to catch a falling knife.

RichMoose

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Re: Where is the bottom for crashing oil prices?
« Reply #5 on: November 04, 2014, 12:12:11 PM »
Right now the US and Saudi Arabia have decided to put the squeeze on Iran/Russia.

Even though there is only limited oil coming from Libya/Iraq, there is an excess of oil in the market and it is causing the drop in prices.

Iran needs oil to be $120/barrel to run the country.

My feeling is that the US/Saudi squeeze will not stop till $60/barrel.

Again, this is what I think, who knows what will happen.

This is the way I see it as well. This whole thing is a Saudi / US collusion that I believe specifically targets Russia, Venezuela, and Iran. These countries all need oil over $100 to run profitably and continue expansion on social programs, military spending, and political corruption. If oil stays at the $80 mark for even a couple years it might be painful for US & Canadian producers and the Saudi budget, but it almost guarantees a regime change in Russia and social unrest "Arab spring style" in Venezuela and Iran. Its an easy way to kill three enemies with one stone and come out strong at the end of the day.

I would never invest in a commodity because they are too volatile. I'm sworn to indexing, but if you like to gamble invest in an oil company...maybe? I believe the chances for success are better as some oil companies can produce profitably at $50 a barrel, others need $75-$80 a barrel, but all will get clobbered based on the price of oil.

gimp

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Re: Where is the bottom for crashing oil prices?
« Reply #6 on: November 04, 2014, 12:55:29 PM »
The only trading I do on oil prices is delay filling up if it looks like they're going down. It's my little 50 cent gamble and I wouldn't want to spend more than that.

dragoncar

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Re: Where is the bottom for crashing oil prices?
« Reply #7 on: November 04, 2014, 04:32:13 PM »
LOL, can you just write me a check instead of wasting your money on this trade?

Let me share with you a trader's secret: nobody knows what's going to happen in the future. Nobody.

Wait, aren't you the stock picking proponent on this board?  Or are you just saying nobody knows 100%?

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #8 on: November 04, 2014, 06:18:06 PM »
I am a trader but I don't predict the future. There are ways to make money in the market without knowing what going to happen. I may have an edge but the win rate may be 50% or less. I wouldn't exactly say that gives me any certainty as to what is going to happen in the future. Some systems may have win rates up to 70-80%, but even then, on an individual trade basis, it's totally random as to whether it could be a winner or a loser.

Therefore it's foolish for someone to say 'oil is going to bottom at $75.'  Nobody can know that, as it's just 1 individual trade. Your methodology might say that there's a good chance that oil bottoms at that price, but you can't be for certain. What this poster wants is for someone to tell him that oil will bottom at a certain price and then he's gonna put a big chunk of money on that bet. But no matter how certain you think you are, anything can happen on this individual trade. How much are you willing to lose if you're wrong?
« Last Edit: November 05, 2014, 07:28:17 AM by hodedofome »

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #9 on: November 05, 2014, 03:17:34 PM »
I don't really care what the price ends up being at the bottom, what I'm really after are people's opinions on whether or not oil will go back up. Obviously oil is an important commodity for everyday modern life. So, if this is just an over correction, then oil will go back up. If oil goes back up to even $85 in the next 6 months, I've made a >10% profit. So, if I DCA into a position then I can assure that I'm not going to get snagged with too many losses right up front.

It is intellectually interesting to speculate on what is happening with a commodity that has geopolitical and financial implications. If I can make a buck doing it, then I'm all in.

MMM likes to pontificate on the impact of oil (http://www.mrmoneymustache.com/2012/11/05/mmm-interviews-ere-on-peak-oil/)!

The stock market fluctuates, commodity prices fluctuate, and sometimes we can take advantage when prices over correct. I think this may be one of those times.

Ooops, did I just accidentally call the bottom yesterday?
« Last Edit: November 05, 2014, 03:44:56 PM by DrFunk »

Bob W

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Re: Where is the bottom for crashing oil prices?
« Reply #10 on: November 05, 2014, 03:35:40 PM »
My crystal ball says around 40 a barrel.  I read a piece by a respected oil forecaster today.  He wrote it in December 2013.  He basically predicted $110 a barrel at this point.   I certainly couldn't be more wrong than him.

Here is why I say 40.   Although we use more oil now than in 2008 we (us) no longer use much for power plants or heating.   Car driving drops worldwide during the late winter months Jan - Feb.

Production keeps increasing in the US while most of the world remains in the great recession mode. 

The Saudis have to keep pumping in order to pay their debts.   The statement that it costs $50 to pump a barrel of oil is complete BS.  The cost of the infrastructure stays the same no matter what the price is, so one needs to keep pumping.   What costs the 50-60-70-80 a barrel is new drilling.   That will most definitely slow.   

As always,  I could be completely wrong on this but it was just a few years ago that they said it could never go above 40 and 100 was just too incredible to imagine.   

Runge

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Re: Where is the bottom for crashing oil prices?
« Reply #11 on: November 05, 2014, 05:25:41 PM »
I'm of the camp that I don't invest in commodities because I don't want to invest in the time and energy to figure out what's going on in that industry. And one of the best ways to figure out what's going on in that particular industry is to work for that industry, but then you've already got a high exposure to that industry because it's your employer...

Your best "hedge" is to invest in the ETFs that are broad spectrum. i.e. VTSAX or what have you.

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #12 on: November 05, 2014, 08:33:44 PM »
I don't really care what the price ends up being at the bottom, what I'm really after are people's opinions on whether or not oil will go back up. Obviously oil is an important commodity for everyday modern life. So, if this is just an over correction, then oil will go back up. If oil goes back up to even $85 in the next 6 months, I've made a >10% profit. So, if I DCA into a position then I can assure that I'm not going to get snagged with too many losses right up front.

It is intellectually interesting to speculate on what is happening with a commodity that has geopolitical and financial implications. If I can make a buck doing it, then I'm all in.

MMM likes to pontificate on the impact of oil (http://www.mrmoneymustache.com/2012/11/05/mmm-interviews-ere-on-peak-oil/)!

The stock market fluctuates, commodity prices fluctuate, and sometimes we can take advantage when prices over correct. I think this may be one of those times.

Ooops, did I just accidentally call the bottom yesterday?

It may very well be that oil bottoms soon, but how you structure the trade will determine if it will ultimately be profitable. The thing about a lot of commodities, and oil specifically, is that it's not like you can buy the spot price today, watch the spot price go up 10%, and expect that to be your return. Commodities are bought and sold as futures contracts, with beginning and expiring dates. There's a contract that expires every month. And, because it cost a lot of money to store oil, the future month is probably going to be a little more expensive than the current month. Since you can't just buy and hold a commodity contract forever (since it expires), you'll constantly have to sell the current contract and buy the future one. If the market is in contango http://www.investopedia.com/terms/c/contango.asp then you'll constantly be buying the future month contract at a higher price, and losing money each month as the price falls to the spot price. (I think I've got this right. I've never bought a futures contract for more than a few hours, but I've read a lot about it)

So you say, well who cares about futures contracts, I'll just buy the ETFs. Well what do you think the ETFs are buying? Futures contracts. And losing a bunch of investors' money in the process. Read more here: http://www.followingthetrend.com/2012/08/how-to-rob-commodity-investors/ and http://www.followingthetrend.com/2014/01/etfs-are-not-what-you-think-they-are/ and http://www.followingthetrend.com/2014/02/term-structure-the-forgotten-piece-of-the-puzzle/

There's really no great way that I know of off the top of my head to structure the trade to where you won't lose your butt if oil continues to fall or just hangs out, going nowhere for a while in contango (maybe some sort of option on the spot price?). Look at the longer term charts on UNG, the natural gas ETF. Say at the end of 2008 you thought natgas was a smoking deal. It was down over 30% from the highs I think. You go out and buy UNG as a "long term hold." The spot price has fallen another 45% since then but the ETF is DOWN 88%. During that time you also plan to DCA? Just throwing money down the drain.

Trust me, I was one of the idiots that didn't understand commodity ETFs and bought some in '09. After losing enough money I said forget it, then I educated myself on how they work. About the only physical commodity ETF I'd consider as an investment is one where they take physical possession of it (like GLD or SLV) or one where they invest in actual companies in the commodity space (like XLE).

arebelspy

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Re: Where is the bottom for crashing oil prices?
« Reply #13 on: November 05, 2014, 08:42:55 PM »
It's interesting and amusing watching people jump from one hot investment to another. 

Today it's apparently shorting oil.  That reminds me, it's been awhile before we had a good bitcoin thread.
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dragoncar

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Re: Where is the bottom for crashing oil prices?
« Reply #14 on: November 05, 2014, 09:45:41 PM »
It's interesting and amusing watching people jump from one hot investment to another. 

Today it's apparently shorting oil.  That reminds me, it's been awhile before we had a good bitcoin thread.

All aboard the real estate train!  Choo choo!
 
;)

arebelspy

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Where is the bottom for crashing oil prices?
« Reply #15 on: November 05, 2014, 11:39:44 PM »
I think most people shouldn't invest in RE.

But if you do, definitely don't hop in and out!  (A business - like rehabbing - aside, I'm talking strictly as an investment.)  :)
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hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #16 on: November 06, 2014, 07:50:55 AM »
it's been awhile before we had a good bitcoin thread.

There's a good reason for that! The speculative fever is gone along with a trail of tears... http://bitcoincharts.com/charts/bitstampUSD#rg730ztgCzm1g10zm2g25zv

SnackDog

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Re: Where is the bottom for crashing oil prices?
« Reply #17 on: November 06, 2014, 08:18:39 AM »
Buy an integrated oil company stock.  If prices fall, they clean up on refining.  If prices rise, they mint money in the upstream. Brilliant.

dragoncar

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Re: Where is the bottom for crashing oil prices?
« Reply #18 on: November 06, 2014, 08:44:40 AM »
Buy an integrated oil company stock.  If prices fall, they clean up on refining.  If prices rise, they mint money in the upstream. Brilliant.

What if demand falls?  Lol just joking!

I think most people shouldn't invest in RE.

But if you do, definitely don't hop in and out!  (A business - like rehabbing - aside, I'm talking strictly as an investment.)  :)

I bet you enter and leave your real estate almost everyday.  Hippo crite

AssetGrinder

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Re: Where is the bottom for crashing oil prices?
« Reply #19 on: November 06, 2014, 10:17:25 AM »
Tough to say where it will bottom out but I would think we are getting close. At 60$ a barrel many of the small guys will just stop production as their cost is that close. The squeeze is really affecting Canada's economy so hopefully it will rebound soon enough.

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #20 on: November 06, 2014, 11:25:57 AM »
Before I even posted this query I read a bit on what the pundits thought was going on.

This paragraph struck me as *possibly* being correct, and as to why we would see a rebound shortly. Pulled from this article (http://seekingalpha.com/article/2566465-5-reasons-the-oil-sector-is-due-for-a-big-rebound).

"Here are a few other points to consider which also make the recent oil sector crash appear to be overdone: The oil price may have overshot to the downside because of traders in the futures market. With oil futures it is possible to control about $85,000 with only around $2,000. That is a huge amount of leverage, which can really accelerate losses when markets plunge. If there has been a significant amount of forced or fear based selling in the oil market, the current price may not last long and rebound soon. Many small oil companies have hedges in place, which means that unless the decline in oil is sustained for many months, the impact from the recent drop could be fairly immaterial. Also, some smaller oil companies are growing so fast that production is increasing at levels that offset any price reductions. Major oil companies can also choose to increase production in order to offset any profit margin loss. Also, consumers are likely to quickly increase oil usage when prices drop and this could end up taking a significant amount of supply off of the market."

I attached a screen-shot of one major oil ETF over the past year and also 3 months. Pretty accelerated drop there, maybe caused by traders covering their position? When that happens, once it gets cleared out we should see a nice bump (IMO).
« Last Edit: November 06, 2014, 11:27:40 AM by DrFunk »

waltworks

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Re: Where is the bottom for crashing oil prices?
« Reply #21 on: November 06, 2014, 01:31:20 PM »
Let us know how that crystal ball of yours works out.

-W

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #22 on: November 06, 2014, 02:11:16 PM »
Ok, so how are you gonna play the 'bounce?' Look at these 2 charts:

http://www.barchart.com/chart.php?sym=CLZ14&t=BAR&size=M&v=2&g=1&p=MN&d=X&qb=1&style=technical&template=

http://www.barchart.com/chart.php?sym=USO&t=BAR&size=M&v=2&g=1&p=MN&d=X&qb=1&style=technical&template=

The most popular ETF for oil is USO. It's really not much higher than the lows in 2009. It's just a horrible investment unless the term structure for oil futures is in your favor.

You gonna buy some barrels and put them in your garage?

Bob W

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Re: Where is the bottom for crashing oil prices?
« Reply #23 on: November 06, 2014, 03:04:00 PM »
As recently as January 2009 it was as low as 36.51.   Inflation hasn't added up to more than 20% since then and most of that inflation is directly attributed to oil prices themselves.

Add that to the fact that US production and Russian energy production has increased dramatically since 09.   Add again that the rest of the world is in recession.   Add again that Russia and Saudi "need" the cash flow to remain solvent and to keep their people happy, and you can see that there is really no reason that prices cannot plummet from here.   

What is amazing is that oil prices have stayed as high as they have with the US pumping it like crazy now and adding natural gas at a massive pace.   (can you say price fix?)

Don't feed into those "cost of production" bs lines.  No one is every going to fully be honest about their cost of production.  It is a poker game and their all liars.   You'll know their true cost of production when they actually quit pumping.   Which should be right around $40.  Then they'll deal another hand and start the game over. 

Hope I'm right!   would love to see $1.50 on a gas pump.   Probably wrong as usual. 

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #24 on: November 06, 2014, 03:29:35 PM »
Ok, so how are you gonna play the 'bounce?' Look at these 2 charts:

http://www.barchart.com/chart.php?sym=CLZ14&t=BAR&size=M&v=2&g=1&p=MN&d=X&qb=1&style=technical&template=

http://www.barchart.com/chart.php?sym=USO&t=BAR&size=M&v=2&g=1&p=MN&d=X&qb=1&style=technical&template=

The most popular ETF for oil is USO. It's really not much higher than the lows in 2009. It's just a horrible investment unless the term structure for oil futures is in your favor.

You gonna buy some barrels and put them in your garage?


I think this chart illustrates the point I am trying to make a bit better. If we see a bump up to ~35, then that's a pretty sweet profit in little time/effort.
http://www.barchart.com/chart.php?sym=USO&t=BAR&size=M&v=2&g=1&p=WO&d=X&qb=1&style=technical&template=

Oil seems to be near it's cyclical bottom. Link to a bunch of mumbo jumbo technical indicators supporting this (http://etfdailynews.com/2014/11/06/are-commodities-at-a-major-turning-point/)

Plus supply doesn't seem to be all that more than usual per http://seekingalpha.com/article/2576505-3-reason-to-buy-the-bottom-in-crude
-inventory image attached

So...all I'm saying is that I think** that maybe** oil is going to correct soon** and if you bought an ETF with a little bit of cash dedicated for riskier type investment stuff... well you probably could do a lot worse.

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #25 on: November 07, 2014, 07:54:16 AM »
Well if you're just dead set on this, and even though you are choosing a poor method (USO), at least size it and risk/reward it like a real trader would.

A real trader would look at where it is now ($30), look at the potential profit (you say $35), and determine that you need at least a 1:3 risk/reward ratio to make it worth it. That means your reward is $5, divide that by 3 and you get $1.67 as your risk. So subtract $1.67 from $30 and $28.33 would be your stop loss if you are wrong. If USO trades below $28.33, you sell. Once it hits $35, you sell. Never let it turn into an investment as USO is a piss poor investment vehicle.

As for position sizing, a real trader would never risk more than 1-2% of his account on any 1 trade. So if you have a $10k account, that means you'd risk no more than $200. Divide $200 by your $1.67 risk and you get 119 shares of USO that you'll buy.

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #26 on: November 07, 2014, 09:05:15 AM »
Finally!!!

Some actual advice. Thank you hodedofome for that reluctant tidbit. Very succinct explanation on how to structure the trade, I appreciate it.

Is there a better vehicle (pun intended) other than USO to take advantage of spot oil/oil futures?

Just curious if I have swayed anyone?

waltworks

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Re: Where is the bottom for crashing oil prices?
« Reply #27 on: November 07, 2014, 09:31:52 AM »
ROFL. "I don't even know how to execute this trade. Who's gonna jump in with me?"

-W

Is there a better vehicle (pun intended) other than USO to take advantage of spot oil/oil futures?

Just curious if I have swayed anyone?

rmendpara

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Re: Where is the bottom for crashing oil prices?
« Reply #28 on: November 07, 2014, 10:10:43 AM »
I don't really care what the price ends up being at the bottom, what I'm really after are people's opinions on whether or not oil will go back up. Obviously oil is an important commodity for everyday modern life. So, if this is just an over correction, then oil will go back up. If oil goes back up to even $85 in the next 6 months, I've made a >10% profit. So, if I DCA into a position then I can assure that I'm not going to get snagged with too many losses right up front.

It is intellectually interesting to speculate on what is happening with a commodity that has geopolitical and financial implications. If I can make a buck doing it, then I'm all in.

MMM likes to pontificate on the impact of oil (http://www.mrmoneymustache.com/2012/11/05/mmm-interviews-ere-on-peak-oil/)!

The stock market fluctuates, commodity prices fluctuate, and sometimes we can take advantage when prices over correct. I think this may be one of those times.

Ooops, did I just accidentally call the bottom yesterday?

Whether it will go up? Almost definitely yes (my opinion, anyway).

When it will go up? Anyone's guess.

Personally, I think 70-80 is a likely low range. It may dip below that, but on a 5-10 year horizon, I see demand being higher than that.

Regardless of my "guess" (which is exactly what it is), the real question is whether oil/energy stocks are a good value. In that area, it's a definite yes. A 20% dip since summer is undoubtedly a better value. The only reason that I can predictably see it wouldn't work is if oil stays depressed for an extended period of time (as in constantly low for next several years)... my bet is it will not.

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #29 on: November 07, 2014, 12:48:25 PM »
ROFL. "I don't even know how to execute this trade. Who's gonna jump in with me?"

-W

Is there a better vehicle (pun intended) other than USO to take advantage of spot oil/oil futures?

Just curious if I have swayed anyone?

I believe this ^^ is referred to as a false analogy.

You are completely evading the underlying argument.

Here I thought I was posting an investment idea/question in a forum that supports out of the box thinking. I guess I was wrong. Everyone!!, back to your boxes.

waltworks

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Re: Where is the bottom for crashing oil prices?
« Reply #30 on: November 07, 2014, 12:57:43 PM »
How is speculating on something that is inherently unpredictable "out of the box thinking"? I can do that by playing the lotto. Lots of out-of-the-box thinkers out there, I guess. 

TANSTAAFL. You might make a fortune. But you're taking a big risk and the odds aren't in your favor.

-W

DrF

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Re: Where is the bottom for crashing oil prices?
« Reply #31 on: November 07, 2014, 01:06:55 PM »

Ohio Teacher

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Re: Where is the bottom for crashing oil prices?
« Reply #32 on: November 07, 2014, 06:31:05 PM »
I had this same thought process back in the fall of 2008 as oil had fallen off its peak by about 50% and I didn't think it had anywhere to go but up.  I was new to investing and was eager to pick winners.  Boy was I wrong.  I kick myself every day for not taking the thousands I gambled in OIL and USO and just put it in VTI.

Even as oil did finally start to go up, I still got hammered by a futures phenomenon known as contango.  Look it up.  It's brutal when future demand is greater than current demand.  Traders were renting out oil tankers, filling them with oil at current prices, parking them off the coast, and then selling the oil for a huge profit xx months later.  Seeing as I couldn't afford to buy thousands of barrels of oil and rent a tanker, I couldn't profit from the contango and watched USO continue to slip or go sideways as the price of oil rose.
« Last Edit: November 07, 2014, 06:33:18 PM by Ohio Teacher »

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Re: Where is the bottom for crashing oil prices?
« Reply #33 on: November 08, 2014, 03:00:44 PM »
Commodity trading is pure speculation. If you want to hold a portion of your portfolio in commodities (5%-15%) for diversification purposes, that's a different matter. But what you're talking about is pretty much a recipe for losing money. However, if you're dying to gamble on oil I'd put my money in the Vanguard Energy ETF (VDE) which holds 150+ oil and gas stocks and will see fluctuations according to the price of oil but will also produce dividends and (hopefully) larger capital increase than a fund which holds only commodity futures.

BEN_BANNED

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Re: Where is the bottom for crashing oil prices?
« Reply #34 on: November 08, 2014, 03:32:19 PM »
What Saudi Arabia and OPEC are trying to do is akin to what the Japanese and Chinese did to the steel industry back in the 70s and late 80s.

They're "dumping" crude into the markets at a loss to artificially lower prices in order drive the U.S. fracking industry out of business.


ElMono

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Re: Where is the bottom for crashing oil prices?
« Reply #35 on: November 23, 2014, 12:33:38 AM »
I bought some shares of VDE. Have we bottomed -> who knows. If it goes even lower with OPEC meeting this week - I'll buy more. Be it as it may -  A LOT of the oil companies stock are "for sale" and the majority pay nice steady dividends. So, at the end of the day - pretty safe bet. Definitely much safer than that BABA stuff...

Bob W

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Re: Where is the bottom for crashing oil prices?
« Reply #36 on: November 24, 2014, 09:06:34 AM »
Bought gas for $2.45 today in Missouri.  I don't really track oil barrel prices but I assume they continue to drop.

NPR had a story on the price of gas in the 30s (I think) this morning.  Oil was selling for 10 cents a barrel, so I assume gas was like 2 cents.   Gas stations were giving away chickens with fill ups!   The crony capitalist were able to end this by having the feds assign the Texas Railroad commission to restrict supply of oil.   

The point of the story was that this is where OPEC learned the concept of restricted production.   It appears that with the US now the worlds leading energy producer that OPECs influence is fading.   Could be a pipe dream of mine but I was looking into my crystal ball and saw $2.25 gas by Xmas and sub $2 for 2015 in the US. 

I also saw a Ram truck commercial touting 29 MPG for their pick up (hwy).   I'm thinking that US demand is on a flat or downward arrow at this point, in that every 12 mpg truck replaced by a 25 mpg truck has an incremental effect.  Not just with trucks but with cars in general,  but I understand that SUV and pick up sales are going up. 

My crystal ball also saw a US stock market above 20K in 2015.   The reason being is that energy is such a large component of business costs and that consumers will have an additional 150B to spend on things other than gas prices.   Deflation in the food market, inflation in the stock and housing market,  deflation in energy,  deflation in electronics,  bad times for Huston and Dallas, inflation in wages as unemployment continues to slide.

Could be that 2015 is the year the great recession heads for another expansion period? 

dragoncar

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Re: Where is the bottom for crashing oil prices?
« Reply #37 on: November 24, 2014, 09:55:32 AM »
Bought gas for $2.45 today in Missouri.  I don't really track oil barrel prices but I assume they continue to drop.

NPR had a story on the price of gas in the 30s (I think) this morning.  Oil was selling for 10 cents a barrel, so I assume gas was like 2 cents.   Gas stations were giving away chickens with fill ups!   The crony capitalist were able to end this by having the feds assign the Texas Railroad commission to restrict supply of oil.   

The point of the story was that this is where OPEC learned the concept of restricted production.   It appears that with the US now the worlds leading energy producer that OPECs influence is fading.   Could be a pipe dream of mine but I was looking into my crystal ball and saw $2.25 gas by Xmas and sub $2 for 2015 in the US. 

I also saw a Ram truck commercial touting 29 MPG for their pick up (hwy).   I'm thinking that US demand is on a flat or downward arrow at this point, in that every 12 mpg truck replaced by a 25 mpg truck has an incremental effect.  Not just with trucks but with cars in general,  but I understand that SUV and pick up sales are going up. 

My crystal ball also saw a US stock market above 20K in 2015.   The reason being is that energy is such a large component of business costs and that consumers will have an additional 150B to spend on things other than gas prices.   Deflation in the food market, inflation in the stock and housing market,  deflation in energy,  deflation in electronics,  bad times for Huston and Dallas, inflation in wages as unemployment continues to slide.

Could be that 2015 is the year the great recession heads for another expansion period?

Mixed feelings on this.  I agree with everything you said, but I hope cheap oil doesn't stall the ramp up in alternative energy sources -- carbon emissions are still bad for the world. 

I can't remember if there's a consensus here (as much as there can be on an internet website) on global warming (yes I'm an 80's kid so I'm going to call it that and not climate change or whatever).  So hopefully I didn't open a can of worms there.

bacchi

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Re: Where is the bottom for crashing oil prices?
« Reply #38 on: November 24, 2014, 10:50:49 AM »
Is there a better vehicle (pun intended) other than USO to take advantage of spot oil/oil futures?

Buy a long-term futures call. You can get some serious leverage and your loss is reasonably capped. The Dec 2023 90 call is selling for $10.70 (=$10700).

RichMoose

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Re: Where is the bottom for crashing oil prices?
« Reply #39 on: November 24, 2014, 10:54:26 AM »
Bought gas for $2.45 today in Missouri.  I don't really track oil barrel prices but I assume they continue to drop.

NPR had a story on the price of gas in the 30s (I think) this morning.  Oil was selling for 10 cents a barrel, so I assume gas was like 2 cents.   Gas stations were giving away chickens with fill ups!   The crony capitalist were able to end this by having the feds assign the Texas Railroad commission to restrict supply of oil.   

The point of the story was that this is where OPEC learned the concept of restricted production.   It appears that with the US now the worlds leading energy producer that OPECs influence is fading.   Could be a pipe dream of mine but I was looking into my crystal ball and saw $2.25 gas by Xmas and sub $2 for 2015 in the US. 

I also saw a Ram truck commercial touting 29 MPG for their pick up (hwy).   I'm thinking that US demand is on a flat or downward arrow at this point, in that every 12 mpg truck replaced by a 25 mpg truck has an incremental effect.  Not just with trucks but with cars in general,  but I understand that SUV and pick up sales are going up. 

My crystal ball also saw a US stock market above 20K in 2015.   The reason being is that energy is such a large component of business costs and that consumers will have an additional 150B to spend on things other than gas prices.   Deflation in the food market, inflation in the stock and housing market,  deflation in energy,  deflation in electronics,  bad times for Huston and Dallas, inflation in wages as unemployment continues to slide.

Could be that 2015 is the year the great recession heads for another expansion period?

My crystal ball says S&P 500 at $1400 by May 2015. What brand of crystal ball do you have?

Or maybe its just me hoping to buy a load of ETF units at 14x earnings...

hodedofome

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Re: Where is the bottom for crashing oil prices?
« Reply #40 on: November 24, 2014, 10:59:33 AM »
At this point the trend of oil prices is down at all timeframes. I wouldn't personally try to catch this falling knife unless you have traded counter-trend before and know what to look for. It's broken the support levels from 2011 and 2012 as well as gone through the highs of 2006. There's some positive RSI and MACD divergence on the daily chart but the weekly and monthly show no signs up letting up. I haven't looked at any fibonacci levels but I'd never trade on those alone anyways. (If the past 3 sentences are gobbly gook to you, I probably would stay away from trading this!)

If you don't know what to look for, at least wait until there's some sort of bottoming process/bounce. It may not be THE bottom but it'll at least save you from buying something that's just going down every week.

http://stockcharts.com/h-sc/ui?s=$WTIC&p=D&b=5&g=0&id=p82108072352
« Last Edit: November 24, 2014, 11:06:12 AM by hodedofome »

dungoofed

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Re: Where is the bottom for crashing oil prices?
« Reply #41 on: November 26, 2014, 04:10:59 AM »
I bought some shares of VDE. Have we bottomed -> who knows. If it goes even lower with OPEC meeting this week - I'll buy more. Be it as it may -  A LOT of the oil companies stock are "for sale" and the majority pay nice steady dividends. So, at the end of the day - pretty safe bet. Definitely much safer than that BABA stuff...

Was going to suggest this, if OP really wanted to gamble.

edit: alternatively QAT, which gives you exposure cheaply via the richest nation in the world.
« Last Edit: November 26, 2014, 04:21:11 AM by dungoofed »

Bob W

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Re: Where is the bottom for crashing oil prices?
« Reply #42 on: November 26, 2014, 07:29:42 AM »
Bought gas for 2.41 in Missouri last night.  Let the knife keep falling!

juuustin

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Re: Where is the bottom for crashing oil prices?
« Reply #43 on: November 26, 2014, 07:46:59 AM »
I bought some shares of VDE. Have we bottomed -> who knows. If it goes even lower with OPEC meeting this week - I'll buy more. Be it as it may -  A LOT of the oil companies stock are "for sale" and the majority pay nice steady dividends. So, at the end of the day - pretty safe bet. Definitely much safer than that BABA stuff...

Was going to suggest this, if OP really wanted to gamble.

edit: alternatively QAT, which gives you exposure cheaply via the richest nation in the world.

Surely you could have picked a better written article on the virtues of the Qatari economy.  There are fifth graders who write better than the "Nomad Capitalist"

dungoofed

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Re: Where is the bottom for crashing oil prices?
« Reply #44 on: November 26, 2014, 02:27:06 PM »
You think the article is bad, you should have seen the clickbait.

ElMono

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Re: Where is the bottom for crashing oil prices?
« Reply #45 on: November 26, 2014, 08:08:47 PM »
I bought some shares of VDE. Have we bottomed -> who knows. If it goes even lower with OPEC meeting this week - I'll buy more. Be it as it may -  A LOT of the oil companies stock are "for sale" and the majority pay nice steady dividends. So, at the end of the day - pretty safe bet. Definitely much safer than that BABA stuff...

Good people, my crystal ball from Amazon just arrived. This is what it shows me:

1)OPEC cuts production: Price per barrel steadies a bit +-5. Then per usual, some other skirmish is manufactured somewhere in the world and prices go back up come Summer 2015 despite the increase in production of oil domestically. Saying that oil prices stay in this rough range, more people will make stupid lifestyle choices and buy SUV's with the shiny RIMS and the monster nutz in the back - and this will give me much laughter - and thus better health.

2) OPEC does NOT cut production Prices continue to go way down - and supply beats demand. Then more people will spend money on more stupid crap they already have and don't need and hopefully buy moar monster nuts for their SUVs. People will spend like crazy and once Oil prices start to come back up because the demand starts to go up again, these 'smart spenders' (a smart spender - go figure... lol) will realize "crap, I can't afford to continue to drive my truck for errands that can be done walking or on a bike." Then, just like magic - people start using credit more to pay some of their crazy consumer bills. And Visa, AXP, stocks will climb.

Good people, this crystal ball is really good - it was on amazon prime!

On a more serious note, I allocate about 5% of portfolio to 'fun money'. Being that a few companies are at 4 year lows or so, they are 'for sale'- and I'm in. Is the current price of ~122 per share of VDE  a  a bottom? I don't know and no one does, but if prices are lower come December, January, February.. I'll probably buy a little bit more. Truth is, you shouldn't put the non-funny money part of your portfolio into investments like these - way to risky. If its the funny money part of the portfolio, then by all means. And yes, I still think investing in energy (Oil) is a much much safer bet than some holding company in the cayman islands.

Disclaimer: I didn't buy a crystal ball, but I do hope you got a good chuckle or two. Happy Thanksgiving :)
« Last Edit: November 26, 2014, 08:11:39 PM by ElMono »

ScroogeMcDutch

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Re: Where is the bottom for crashing oil prices?
« Reply #46 on: November 27, 2014, 03:22:38 PM »
Bought gas for 2.41 in Missouri last night.  Let the knife keep falling!

Bought gas at 1.71 in Europe today. Per liter. When do we get some benefits off these falling oil prices? ;)

On this topic, no idea where the bottom is of the oil prices. I have no idea about all of these lines, except if you squint your eyes, they tend to go up in general.

Bob W

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Re: Where is the bottom for crashing oil prices?
« Reply #47 on: November 29, 2014, 09:21:48 AM »
I bought some shares of VDE. Have we bottomed -> who knows. If it goes even lower with OPEC meeting this week - I'll buy more. Be it as it may -  A LOT of the oil companies stock are "for sale" and the majority pay nice steady dividends. So, at the end of the day - pretty safe bet. Definitely much safer than that BABA stuff...

Good people, my crystal ball from Amazon just arrived. This is what it shows me:

1)OPEC cuts production: Price per barrel steadies a bit +-5. Then per usual, some other skirmish is manufactured somewhere in the world and prices go back up come Summer 2015 despite the increase in production of oil domestically. Saying that oil prices stay in this rough range, more people will make stupid lifestyle choices and buy SUV's with the shiny RIMS and the monster nutz in the back - and this will give me much laughter - and thus better health.

2) OPEC does NOT cut production Prices continue to go way down - and supply beats demand. Then more people will spend money on more stupid crap they already have and don't need and hopefully buy moar monster nuts for their SUVs. People will spend like crazy and once Oil prices start to come back up because the demand starts to go up again, these 'smart spenders' (a smart spender - go figure... lol) will realize "crap, I can't afford to continue to drive my truck for errands that can be done walking or on a bike." Then, just like magic - people start using credit more to pay some of their crazy consumer bills. And Visa, AXP, stocks will climb.

Good people, this crystal ball is really good - it was on amazon prime!

On a more serious note, I allocate about 5% of portfolio to 'fun money'. Being that a few companies are at 4 year lows or so, they are 'for sale'- and I'm in. Is the current price of ~122 per share of VDE  a  a bottom? I don't know and no one does, but if prices are lower come December, January, February.. I'll probably buy a little bit more. Truth is, you shouldn't put the non-funny money part of your portfolio into investments like these - way to risky. If its the funny money part of the portfolio, then by all means. And yes, I still think investing in energy (Oil) is a much much safer bet than some holding company in the cayman islands.

Disclaimer: I didn't buy a crystal ball, but I do hope you got a good chuckle or two. Happy Thanksgiving :)
.    Well it seems your ball was correct on at least part of 2!  Bought gas for 2.35 today and expect a post OPEC drop 2.15 buy new years.   My ball now says 40 per barrel around march 20th with pump prices less than 1.75.  It appears the gig is up and OPEC no longer drives this train.   Look forward to the biggest boom year in the stock market in you lifetime.  With cheap gas and cheap money this economy is set to burn records.  Dow could go up 40%.

dividendman

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Re: Where is the bottom for crashing oil prices?
« Reply #48 on: November 29, 2014, 02:35:50 PM »
I have VDE as one of my 10 index funds.... it fell a shitload on friday.... time to rebalance i guess.

dungoofed

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Re: Where is the bottom for crashing oil prices?
« Reply #49 on: November 29, 2014, 10:54:48 PM »
If I were to do the crystal ball thing I'd say that supply will remain high for a long time yet. The reason is two-fold:

1) Russia and Saudi Arabia want to keep the US out of fracking. At $70 a barrel it's barely profitable for the US energy companies to get in, despite the benefits on a national security front from being diversified/self-sufficient in terms of energy.

2) Many oil nations have enough wealth invested in their sovereign wealth funds that they could theoretically draw down 4% per year and their population would never have to work again and would have a higher standard living than anywhere else in the world. They've "won" essentially, and anything they make going forward is just cream (of course, these nations also tend to have high levels of corruption, but the point is they've nothing to lose by selling at a lower price).

Anyone else who'd like to play CNBC please be my guest.