Author Topic: Let's talk about oil  (Read 13356 times)

Keith123

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Let's talk about oil
« on: February 06, 2016, 07:31:33 AM »
Am I the only one who thinks this a huge opportunity to buy into the oil/energy sector?

Here's how I see it:

Oil prices have crashed due to consistent oversupply.  Oversupply happened because OPEC, particularly Saudi Arabia, wanted to put the US oil industry out of business as they were worried about losing market share as the US oil industry grew.  OPEC is accomplishing this by producing oil at full capacity and flooding the world with supply.  This was followed by every other oil producing nation, also trying to not lose market share, going to full production capacity which created even more supply.  Oversupply still exists but looks to be coming into balance by the end of 2016.  This is because with the sustained downturn in oil prices, new wells and exploration were cancelled or delayed, especially in the US.  It affects the US oil industry so much because they have higher costs to produce oil that the Middle East countries do.  Sustained low oil prices should force the higher cost producers to scale back production.  Some have already declared bankruptcy and more will.  We are talking about possibly a third of the US oil industry (http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335).  At current prices, it is believed most of the US oil producers are losing money.  That would explain why the US oil rig count has gone from a high of 1600 in late 2014 to just under 467 now (see attached chart).   Supply production is currently being destroyed fast.  Another problem is the existing stored inventory (503 million barrels at last count - http://money.cnn.com/2016/02/04/investing/oil-prices-space-us-inventories-supply-glut/index.html?iid=surge-story-summary).  The most in 80 years.  Even after the supply and demand picture is back in balance, it will take time to draw down on the inventory reserves. 

Outside the supply and demand picture, there is another reason why the price of oil should have trouble staying this low.  OPEC countries need the revenue from higher oil prices.  It's not that their production costs are high, they aren't.  In fact, they are very low.  Maybe as low at $1 per barrel in some places.  The problem is that OPEC countries support their budgets from the oil revenue.  They need much higher prices - http://www.bloomberg.com/news/articles/2015-11-30/oil-states-need-price-jump-to-balance-budget-opec-reality-check.  It's getting so bad that 6 OPEC nations are requesting and emergency meeting - http://oilprice.com/Latest-Energy-News/World-News/Six-OPEC-Members-Plus-Russia-Now-Open-to-Emergency-Meeting.html

In conclusion, it looks like there are supply and demand forces that will bring the price of oil higher eventually.  It is likely to start over the next 2 year period if nothing affects the global demand picture such as a global recession.  There are also political forces at work that should push the price up also.  While I'm sure the price of oil could go down from here over the next 2 years, it seems like a solid bet that oil should be significantly higher 5 years from now.  Any geopolitical problem in any oil producing country would also push the price up.  Also, the world is literally pumping oil at full capacity.  There is no room for increased production at the moment and it will take time to create new supply by exploration and drilling new wells. 

Any thoughts?  Am I missing something?

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mrpercentage

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Re: Let's talk about oil
« Reply #2 on: February 06, 2016, 07:57:20 AM »
No... you are not the only one. Many including myself have been trying to catch that falling knife. Two points if you are interested:

1. stick to the strongest and most unlikely to go out of business, you will pay a premium but its worth it
2. make sure you average in, no one knows how long this will last exactly and it is extremely risky to drop a lot in at once

also, we are not a full capacity, deactivating that huge rig count proves that-- business demands profit and there isn't enough to go around so there is a limit to this glut, but its hard to say how long this will last and who will go under. Make no mistake-- many will go under first. I think we are set up for extreme gas prices a few years out. Thats what Saudi Arabia wants. Monopolies always set extreme prices. With our new production I don't understand why we just don't buy our own oil and legally limit the amount of foreign oil we can purchase. That would ensure more stable prices for both the consumer and companies and support USA energy independence. USA-pec/Uncle Sam should get on this

Give the Saudi's the finger. We have been plundered and pillaged by them and their buddies for a decade and our economy depends on reasonable oil (for now anyway)

Keith123

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Re: Let's talk about oil
« Reply #3 on: February 06, 2016, 08:08:29 AM »
No... you are not the only one. Many including myself have been trying to catch that falling knife. Two points if you are interested:

1. stick to the strongest and most unlikely to go out of business, you will pay a premium but its worth it
2. make sure you average in, no one knows how long this will last exactly and it is extremely risky to drop a lot in at once

also, we are not a full capacity, deactivating that huge rig count proves that-- business demands profit and there isn't enough to go around so there is a limit to this glut, but its hard to say how long this will last and who will go under. Make no mistake-- many will go under first. I think we are set up for extreme gas prices a few years out. Thats what Saudi Arabia wants. Monopolies always set extreme prices. With our new production I don't understand why we just don't buy our own oil and legally limit the amount of foreign oil we can purchase. That would ensure more stable prices for both the consumer and companies and support USA energy independence. USA-pec/Uncle Sam should get on this

Give the Saudi's the finger. We have been plundered and pillaged by them and their buddies for a decade and our economy depends on reasonable oil (for now anyway)

Obama kind of tried to do that recently with the bill with for a $10 tax a barrel on imported oil.  It would give US producers a $10 advantage over foreign oil and would probably save some of them, and with them US oil jobs.  Of course every dummy in the world will scream about how the government is trying to screw them at the pump and this will go nowhere because we seem to be a country of ignorant fools sometimes. 

mrpercentage

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Re: Let's talk about oil
« Reply #4 on: February 06, 2016, 08:11:27 AM »
I believe he wants to tax every barrel of oil-- USA or otherwise and use the tax money to fund alternative energy projects

Retire-Canada

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Re: Let's talk about oil
« Reply #5 on: February 06, 2016, 08:19:17 AM »
I believe he wants to tax every barrel of oil-- USA or otherwise and use the tax money to fund alternative energy projects

Carbon taxes are coming in all over the place. Putting them in place while oil is cheap makes the pain minimal.

There is going to be a lot of pressure on the carbon economy aside from simply the supply demand issue. Technology disruption and government policy will not be in its favour.

mrpercentage

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Re: Let's talk about oil
« Reply #6 on: February 06, 2016, 04:11:26 PM »
I believe he wants to tax every barrel of oil-- USA or otherwise and use the tax money to fund alternative energy projects

Carbon taxes are coming in all over the place. Putting them in place while oil is cheap makes the pain minimal.

There is going to be a lot of pressure on the carbon economy aside from simply the supply demand issue. Technology disruption and government policy will not be in its favour.


That's just masking how bad it will be when instead of $4 a gallon you will have $5. Expect a huge economic slowdown if it goes that way. It's not one guy making a hundred grand keeping all the resteraunts and malls open. It's millions of guys and gals making $30,000. Those will be hit hard on on oil leading to lay offs and less people making $30k and more making $20k

It wouldn't be a terrible idea if they did it right but seeing how they treat social security as the whatever fund 6% American pyramid scheme tax-- I don't trust them with the pump. The most efficient cities and states will reap the rewards from good old fashion competition

excuse the edits: I suck at typing on my phone. I had to go to the desk top
« Last Edit: February 06, 2016, 04:43:02 PM by mrpercentage »

sol

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Re: Let's talk about oil
« Reply #7 on: February 06, 2016, 04:37:26 PM »
That's just masking how bad it will be when instead of $4 a gallon you will have $5.

Let's not be hyperbolic here.  A barrel of oil produces many gallons of gas, so a $10/barrel would add about 25 cents per gallon.  I don't know what fuel prices look like where you are, but I sometimes see more than 25 cent price difference between gas stations in the same town and those higher priced stations still manage to stay in business. 

Asking consumers (or oil company profit margins) to pay an extra 25 cents per gallon seems to me like an entirely reasonable way to start including the actual costs of burning carbon, rather than our current policy of subsidizing cheap consumer gas by making the taxpayers pay for the cleanup instead.  It's the lowest-cost and most efficient way to implement a carbon tax, utilizing the classical conservative mantra "market-driven solution".

But they'll never go for it.  Climate change, just like health care, presents an existential threat to the conservative movement because it means the free market has created a problem it can't solve.  They would rather watch the whole thing burn than admit that we need government to regulate this market, even a tiny bit, even with market-driven solutions incentivized by revenue-neutral tax restructuring. 
« Last Edit: February 06, 2016, 04:50:59 PM by sol »

mrpercentage

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Re: Let's talk about oil
« Reply #8 on: February 06, 2016, 04:54:07 PM »
That's just masking how bad it will be when instead of $4 a gallon you will have $5.

But they'll never go for it.  Climate change, just like health care, presents an existential threat to the conservative movement because it means the free market has created a problem it can't solve.  They would rather watch the whole thing burn than admit that we need government to regulate this market, even a tiny bit, even with market-driven solutions incentivized by revenue-neutral tax restructuring.

Im not sure I agree with your conclusion; although, I must admit that I am not a conservative anymore. The denial of science and failure to address real problems fairly has painted the group as dishonest and uncaring for the common good.

If they really used it (and I mean all of it) for building rails and other forms of transportation and energy for the common good-- I would say do it. The problem is they won't. They will buy another million dollar missile like the hundreds I have seen launched from a ship, or spend millions to restore a perfectly good Aegis Destroyer and then sink it for a corral reef 2 years later. They waste money like you wouldn't believe in almost every area of government I have seen. The only thing they don't waste money on is their non-administrative workers. Give me a labor party vote man, seriously.

And many Americans now work two part time jobs and are forced to buy their own health insurance without any real assistance at an age they don't need it-- WTF is that?!

Sorry I derailed

MustacheAndaHalf

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Re: Let's talk about oil
« Reply #9 on: February 06, 2016, 06:13:23 PM »
OPEC countries need the revenue from higher oil prices.  It's not that their production costs are high, they aren't.  In fact, they are very low.  Maybe as low at $1 per barrel in some places.  The problem is that OPEC countries support their budgets from the oil revenue.
I'm happy a thread about oil finally mentions OPEC.  But by way of correction, Kuwait is listed in this chart as having the lowest cost of production at $8.50/barrel:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

Have you considered your strategy if OPEC doesn't treat this in an all or nothing manner?  What if they hike oil prices to $40/barrel for the medium term future?

To me, it's a risk of under-performing the stock market even when guessing correctly.  You can guess there will be a future gain, but can you outguess everyone else as to when?

bobechs

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Re: Let's talk about oil
« Reply #10 on: February 06, 2016, 06:49:20 PM »
That's just masking how bad it will be when instead of $4 a gallon you will have $5.

But they'll never go for it.  Climate change, just like health care, presents an existential threat to the conservative movement because it means the free market has created a problem it can't solve.  They would rather watch the whole thing burn than admit that we need government to regulate this market, even a tiny bit, even with market-driven solutions incentivized by revenue-neutral tax restructuring.

Im not sure I agree with your conclusion; although, I must admit that I am not a conservative anymore. The denial of science and failure to address real problems fairly has painted the group as dishonest and uncaring for the common good.

If they really used it (and I mean all of it) for building rails and other forms of transportation and energy for the common good-- I would say do it. The problem is they won't. They will buy another million dollar missile like the hundreds I have seen launched from a ship, or spend millions to restore a perfectly good Aegis Destroyer and then sink it for a corral reef 2 years later. They waste money like you wouldn't believe in almost every area of government I have seen. The only thing they don't waste money on is their non-administrative workers. Give me a labor party vote man, seriously.

And many Americans now work two part time jobs and are forced to buy their own health insurance without any real assistance at an age they don't need it-- WTF is that?!

Sorry I derailed

Unfortunately (or not) these oil price threads go political almost immediately.  But I will endorse everything you've said, and fwiw add that I have seen, as a well-paid contractor who got his job on the strength of his prior military service, the vista over Fort Hood in the winter, watching the shimmer of heat rising from the post buildings and imagining the stoking of the fires with actual tax dollars being burned.  And knowing that that would not do justice to the actual burn rate.

It is sobering (or intoxicating, depending on where you stand on the ladder) to see up close what the largest military budget in the history of civilization actually buys, and costs.

mrpercentage

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Re: Let's talk about oil
« Reply #11 on: February 06, 2016, 08:35:50 PM »

It is sobering (or intoxicating, depending on where you stand on the ladder) to see up close what the largest military budget in the history of civilization actually buys, and costs.
like 400,000 gallons of marine diesel ever week or two for a single smaller warship and maybe another 20,000 of JP-5?

Im not antimilitary. I just think we need to pull out of places we don't belong, reduce the size by half, and take better care of wounded veterans. Then spend the savings (half the military budget) on infrastructure, public transportation, and cyber security/warfare split equally. Our military is only superior if China can't steal our secrets. They are growing faster than us. Writing is on the wall-- less military and huge cyber security department, and for God sake send us to Mars and give Nasa more money

sol

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Re: Let's talk about oil
« Reply #12 on: February 06, 2016, 08:55:41 PM »
I just think we need to pull out of places we don't belong, reduce the size by half

I think half might be a bit much, but we could probably take a 5% haircut on our military spending with zero noteworthy consequences.  There are C-17 flights over my house every hour on the hour, which they claim are vital to "maintain operational readiness" but I'm pretty sure they could cut them to every 90 minutes without the Russians going all Red Dawn on us.  Would save about $13,000 of fuel per hour, which they currently burn for no apparent reason.  Don't complain to me about $400 hammers on the ISS.

Quote
cyber security/warfare split equally. Our military is only superior if China can't steal our secrets. They are growing faster than us. Writing is on the wall-- less military and huge cyber security department

I don't claim to have any inside information on this, but I'm pretty confident the US military cybersecurity folks are running circles around everyone else in the world.  Yes, US corporations are vulnerable.  So is everyone else on the planet, and I have a sneaking suspicion our hackers are better than theirs.

Quote
and for God sake send us to Mars

The Chinese would just steal that from us too.  We'd spend $10billion putting a team of three astronauts on Mars, and two years later the Chinese would be pumping out knock-off Mars landers for anyone who wants to go on a long quiet vacation.

mrpercentage

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Re: Let's talk about oil
« Reply #13 on: February 07, 2016, 06:26:26 PM »


I don't claim to have any inside information on this, but I'm pretty confident the US military cybersecurity folks are running circles around everyone else in the world.  Yes, US corporations are vulnerable.  So is everyone else on the planet, and I have a sneaking suspicion our hackers are better than theirs.


US Defense companies like Boeing, Lockheed, NorthropGrummun, and General Dynamics should be defended by US Military Cyber Security. If its not, its the height of stupidity.

Sorry for highjacking the thread on oil. We have had a few in here. Its going up eventually and if you get in on the right companies you will eventually get paid huge is the general consensus for the bulls, and oil is screwed and you are going to lose everything due to innovation and government intervention is the consensus of the bears. I look impartially at the millions of non electric vehicles, warships with 450,000 gallon gas tanks, cruise liners, shipping companies, semi-trucks, and the UPS and Fed Ex guys not to mention trains and think--- oil going away in a few years.... NFW

faramund

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Re: Let's talk about oil
« Reply #14 on: February 07, 2016, 10:32:44 PM »
OPEC countries need the revenue from higher oil prices.  It's not that their production costs are high, they aren't.  In fact, they are very low.  Maybe as low at $1 per barrel in some places.  The problem is that OPEC countries support their budgets from the oil revenue.
I'm happy a thread about oil finally mentions OPEC.  But by way of correction, Kuwait is listed in this chart as having the lowest cost of production at $8.50/barrel:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html?iid=EL

Have you considered your strategy if OPEC doesn't treat this in an all or nothing manner?  What if they hike oil prices to $40/barrel for the medium term future?

To me, it's a risk of under-performing the stock market even when guessing correctly.  You can guess there will be a future gain, but can you outguess everyone else as to when?

I assume in the future, prices will increase, but that shale oil will be the swing producer, i.e. once the price of oil reaches the production price of shale oil, it won't go sustainably above that price - because simply more shale oil will be produced. If I wanted to play this, I'd be looking at companies, with low PEs and probably conventional reserves, that can be produced at prices less than what shale oil can be (and I wouldn't put more than about 4-6% of my investable assets into this anyway - there's lots of other fish in the ocean).

I'd be cautious about energy sector funds - they could be stacked full of shale oil producers, that will either be unprofitable if the price is below their breakeven, and otherwise will probably never make much money, as the price won't ever be much above their breakeven.

And of course, this is all only IMHO.

TheAnonOne

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Re: Let's talk about oil
« Reply #15 on: February 08, 2016, 12:15:49 PM »
To a degree, by owning a lot of VTSAX, (or other stock index funds) you own a bunch of this anyway.

The price was flat last year, because quite a few sectors grew and energy died. This, recent 10% drop happened for a few reasons, one being energy again. So, I don't think I am going to go grab any extra energy funds...

marty998

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Re: Let's talk about oil
« Reply #16 on: February 08, 2016, 01:22:57 PM »
Interesting the perspective in this thread is "those bad Arabs... trying to bankrupt us with cheap oil", when if you consider what is actually going on, it is that many of those Middle Eastern Oil dependant states are the ones going bust.

Saudi Arabia is burning through billions in budget reserves trying to placate their population with the enormous subsidies that the people have come to expect. Heaven forbid SA may actually have to introduce income taxes one day.

No guys. The problem is not a couple of US oil prospectors going under. The real problem is the destabilisation of the Middle East, and the social unrest caused by throwing hundreds of millions of Arabs back into poverty.

Ask yourself who they are blaming for the drop in oil prices? They'll probably tell you it's North American shale producers...


Keith123

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Re: Let's talk about oil
« Reply #17 on: February 08, 2016, 01:30:41 PM »
Interesting the perspective in this thread is "those bad Arabs... trying to bankrupt us with cheap oil", when if you consider what is actually going on, it is that many of those Middle Eastern Oil dependant states are the ones going bust.

Saudi Arabia is burning through billions in budget reserves trying to placate their population with the enormous subsidies that the people have come to expect. Heaven forbid SA may actually have to introduce income taxes one day.

No guys. The problem is not a couple of US oil prospectors going under. The real problem is the destabilisation of the Middle East, and the social unrest caused by throwing hundreds of millions of Arabs back into poverty.

Ask yourself who they are blaming for the drop in oil prices? They'll probably tell you it's North American shale producers...

Boom!  Fully agree.  One of the reasons oil will have a very hard time staying this low also.

MasterStache

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Re: Let's talk about oil
« Reply #18 on: February 08, 2016, 01:56:15 PM »
That's just masking how bad it will be when instead of $4 a gallon you will have $5.

Let's not be hyperbolic here.  A barrel of oil produces many gallons of gas, so a $10/barrel would add about 25 cents per gallon.  I don't know what fuel prices look like where you are, but I sometimes see more than 25 cent price difference between gas stations in the same town and those higher priced stations still manage to stay in business. 

Asking consumers (or oil company profit margins) to pay an extra 25 cents per gallon seems to me like an entirely reasonable way to start including the actual costs of burning carbon, rather than our current policy of subsidizing cheap consumer gas by making the taxpayers pay for the cleanup instead.  It's the lowest-cost and most efficient way to implement a carbon tax, utilizing the classical conservative mantra "market-driven solution".

But they'll never go for it.  Climate change, just like health care, presents an existential threat to the conservative movement because it means the free market has created a problem it can't solve.  They would rather watch the whole thing burn than admit that we need government to regulate this market, even a tiny bit, even with market-driven solutions incentivized by revenue-neutral tax restructuring.

Eh, call me crazy (as many already have) but I am in agreement, about the carbon tax especially.

doggyfizzle

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Re: Let's talk about oil
« Reply #19 on: February 08, 2016, 03:17:55 PM »
Am I the only one who thinks this a huge opportunity to buy into the oil/energy sector?

Here's how I see it:

Oil prices have crashed due to consistent oversupply.  Oversupply happened because OPEC, particularly Saudi Arabia, wanted to put the US oil industry out of business as they were worried about losing market share as the US oil industry grew.  OPEC is accomplishing this by producing oil at full capacity and flooding the world with supply.  This was followed by every other oil producing nation, also trying to not lose market share, going to full production capacity which created even more supply.  Oversupply still exists but looks to be coming into balance by the end of 2016.  This is because with the sustained downturn in oil prices, new wells and exploration were cancelled or delayed, especially in the US.  It affects the US oil industry so much because they have higher costs to produce oil that the Middle East countries do.  Sustained low oil prices should force the higher cost producers to scale back production.  Some have already declared bankruptcy and more will.  We are talking about possibly a third of the US oil industry (http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335).  At current prices, it is believed most of the US oil producers are losing money.  That would explain why the US oil rig count has gone from a high of 1600 in late 2014 to just under 467 now (see attached chart).   Supply production is currently being destroyed fast.  Another problem is the existing stored inventory (503 million barrels at last count - http://money.cnn.com/2016/02/04/investing/oil-prices-space-us-inventories-supply-glut/index.html?iid=surge-story-summary).  The most in 80 years.  Even after the supply and demand picture is back in balance, it will take time to draw down on the inventory reserves. 

Outside the supply and demand picture, there is another reason why the price of oil should have trouble staying this low.  OPEC countries need the revenue from higher oil prices.  It's not that their production costs are high, they aren't.  In fact, they are very low.  Maybe as low at $1 per barrel in some places.  The problem is that OPEC countries support their budgets from the oil revenue.  They need much higher prices - http://www.bloomberg.com/news/articles/2015-11-30/oil-states-need-price-jump-to-balance-budget-opec-reality-check.  It's getting so bad that 6 OPEC nations are requesting and emergency meeting - http://oilprice.com/Latest-Energy-News/World-News/Six-OPEC-Members-Plus-Russia-Now-Open-to-Emergency-Meeting.html

In conclusion, it looks like there are supply and demand forces that will bring the price of oil higher eventually.  It is likely to start over the next 2 year period if nothing affects the global demand picture such as a global recession.  There are also political forces at work that should push the price up also.  While I'm sure the price of oil could go down from here over the next 2 years, it seems like a solid bet that oil should be significantly higher 5 years from now.  Any geopolitical problem in any oil producing country would also push the price up.  Also, the world is literally pumping oil at full capacity.  There is no room for increased production at the moment and it will take time to create new supply by exploration and drilling new wells. 

Any thoughts?  Am I missing something?

You are missing the dramatic increase in operation efficiency for drilling tight wells in the onshore US and appreciation of the US dollar vs international currencies. 

EOG reports a 60% decrease in drilling time for its Bakken wells, and a 20% decrease in drilling time for its Permian wells (costs are down between 15-20%).  While this doesn't entirely explain the precipitous drop in US onshore rig utilization rates (pricing pressure has certainly played a part in that), fewer rigs are needed now in 2015/2016 than between 2010-2014 to maintain/expand crude oil production.  Rig utilization rates have also been affected by infrastructure bottlenecks (lack of available pipeline/train takeaway capacity) from many isolated tight plays.  So, just because the rig count has dropped from an all-time high, there is no guarantee this will influence future oil prices.  There is several million BOD in slack domestic/export capacity (think Kashagan, Canadian bitumen, pre-drilled uncompleted tight wells - numbering more than 1,000 across most major tight US plays, Libya, Iraq, and Iran, and Saudia Arabia) that can put downward pressure on global prices (think Brent, Bonny, Arabian Sweet, etc) that can keep a lid on local WTI prices as refiners work through cheaper global alternatives.  If you look at the previous supply/demand dislocation in the oil market that started with the Arab oil embargo of the 70s, you see price expansion (70s to early 80s) then correction (late 80s to late 90s) through a 20-year cycle.  This current correction is a year in, after a 14-year period of price expansion (with a rapid swing in prices during the 2009 global recession), and no assurance that support will be quick to form at pricing levels seen between 2010-2014.

Additionally, the US dollar has appreciated roughly 30% against a basket of foreign currencies, which also puts downward pressure on commodities (such as oil) that are almost exclusively traded on a dollar basis globally.

Moreover:

1) US fuel economy standards will continue to improve
2) European oil demand remains stagnant to slightly contracting
3) Chinese oil demand failed to grow YOY 2014/2015
4) Russia cannot shut in wells due to temperature challenges of developing Western Siberian fields; if there is any cooperation between OPEC/Russia Russia will have to agree to shelve any new drilling plans in Western Siberia
5) OPEC has been unable maintain production at its target quota for years
6) Lack of capital discipline among most majors (BP, Shell, Conoco!, Chevron) - these companies are run by people who for some reason seem to think each leg up in the commodity cycle will not be followed by a leg down.  Conoco raised its dividend last year, only to cut it this year to a 10-year low.  A similar corporate landscape was present in the 80s/90s downturn (last period of mega-mergers for survival of low oil prices -  Gulf, Cities Services, Amoco, Sohio, ARCO).  This needs to work itself out - these companies spent hundreds of billions of dollars on megaprojects like Gorgon, Kashagan, Kizomba, PNG LNG (many of which are just coming onstream) that need to produce at design capacity ASAP for cash flow reasons, which will continue to add global supply pressure. 

Combine this all together and recovery of sustained WTI/Brent prices around $60/bbl seems unlikely.  The US onshore situation is going to take some time to work through the excess of 2009-2014 (negative cash flow wells financed with debt, etc, some corporate bankruptcies - just like the 80s).  If something cataclysmic were to happen to supply (rapid inflation against USD purchasing power, Saudis take Ghawar offstream,  Kuwait takes Burgan offstream, a direct non-proxy Iran/Saudi war) you could approach $100/bbl, but probably not for a sustainable period of time without a significant OPEC shut-in (like the 4 MM bbl a day cut in 2009) and some downward pressure on the US dollar.

« Last Edit: February 08, 2016, 03:30:35 PM by doggyfizzle »

nobodyspecial

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Re: Let's talk about oil
« Reply #20 on: February 08, 2016, 04:26:03 PM »
Interesting the perspective in this thread is "those bad Arabs... trying to bankrupt us with cheap oil", when if you consider what is actually going on, it is that many of those Middle Eastern Oil dependant states are the ones going bust.
....
Ask yourself who they are blaming for the drop in oil prices? They'll probably tell you it's North American shale producers...
But now that the US can export oil it can join OPEC and the Texans can provide a peaceful influence to the middle east

Keith123

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Re: Let's talk about oil
« Reply #21 on: February 08, 2016, 04:30:05 PM »
Am I the only one who thinks this a huge opportunity to buy into the oil/energy sector?

Here's how I see it:

Oil prices have crashed due to consistent oversupply.  Oversupply happened because OPEC, particularly Saudi Arabia, wanted to put the US oil industry out of business as they were worried about losing market share as the US oil industry grew.  OPEC is accomplishing this by producing oil at full capacity and flooding the world with supply.  This was followed by every other oil producing nation, also trying to not lose market share, going to full production capacity which created even more supply.  Oversupply still exists but looks to be coming into balance by the end of 2016.  This is because with the sustained downturn in oil prices, new wells and exploration were cancelled or delayed, especially in the US.  It affects the US oil industry so much because they have higher costs to produce oil that the Middle East countries do.  Sustained low oil prices should force the higher cost producers to scale back production.  Some have already declared bankruptcy and more will.  We are talking about possibly a third of the US oil industry (http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335).  At current prices, it is believed most of the US oil producers are losing money.  That would explain why the US oil rig count has gone from a high of 1600 in late 2014 to just under 467 now (see attached chart).   Supply production is currently being destroyed fast.  Another problem is the existing stored inventory (503 million barrels at last count - http://money.cnn.com/2016/02/04/investing/oil-prices-space-us-inventories-supply-glut/index.html?iid=surge-story-summary).  The most in 80 years.  Even after the supply and demand picture is back in balance, it will take time to draw down on the inventory reserves. 

Outside the supply and demand picture, there is another reason why the price of oil should have trouble staying this low.  OPEC countries need the revenue from higher oil prices.  It's not that their production costs are high, they aren't.  In fact, they are very low.  Maybe as low at $1 per barrel in some places.  The problem is that OPEC countries support their budgets from the oil revenue.  They need much higher prices - http://www.bloomberg.com/news/articles/2015-11-30/oil-states-need-price-jump-to-balance-budget-opec-reality-check.  It's getting so bad that 6 OPEC nations are requesting and emergency meeting - http://oilprice.com/Latest-Energy-News/World-News/Six-OPEC-Members-Plus-Russia-Now-Open-to-Emergency-Meeting.html

In conclusion, it looks like there are supply and demand forces that will bring the price of oil higher eventually.  It is likely to start over the next 2 year period if nothing affects the global demand picture such as a global recession.  There are also political forces at work that should push the price up also.  While I'm sure the price of oil could go down from here over the next 2 years, it seems like a solid bet that oil should be significantly higher 5 years from now.  Any geopolitical problem in any oil producing country would also push the price up.  Also, the world is literally pumping oil at full capacity.  There is no room for increased production at the moment and it will take time to create new supply by exploration and drilling new wells. 

Any thoughts?  Am I missing something?

You are missing the dramatic increase in operation efficiency for drilling tight wells in the onshore US and appreciation of the US dollar vs international currencies. 

EOG reports a 60% decrease in drilling time for its Bakken wells, and a 20% decrease in drilling time for its Permian wells (costs are down between 15-20%).  While this doesn't entirely explain the precipitous drop in US onshore rig utilization rates (pricing pressure has certainly played a part in that), fewer rigs are needed now in 2015/2016 than between 2010-2014 to maintain/expand crude oil production.  Rig utilization rates have also been affected by infrastructure bottlenecks (lack of available pipeline/train takeaway capacity) from many isolated tight plays.  So, just because the rig count has dropped from an all-time high, there is no guarantee this will influence future oil prices.  There is several million BOD in slack domestic/export capacity (think Kashagan, Canadian bitumen, pre-drilled uncompleted tight wells - numbering more than 1,000 across most major tight US plays, Libya, Iraq, and Iran, and Saudia Arabia) that can put downward pressure on global prices (think Brent, Bonny, Arabian Sweet, etc) that can keep a lid on local WTI prices as refiners work through cheaper global alternatives.  If you look at the previous supply/demand dislocation in the oil market that started with the Arab oil embargo of the 70s, you see price expansion (70s to early 80s) then correction (late 80s to late 90s) through a 20-year cycle.  This current correction is a year in, after a 14-year period of price expansion (with a rapid swing in prices during the 2009 global recession), and no assurance that support will be quick to form at pricing levels seen between 2010-2014.

Additionally, the US dollar has appreciated roughly 30% against a basket of foreign currencies, which also puts downward pressure on commodities (such as oil) that are almost exclusively traded on a dollar basis globally.

Moreover:

1) US fuel economy standards will continue to improve
2) European oil demand remains stagnant to slightly contracting
3) Chinese oil demand failed to grow YOY 2014/2015
4) Russia cannot shut in wells due to temperature challenges of developing Western Siberian fields; if there is any cooperation between OPEC/Russia Russia will have to agree to shelve any new drilling plans in Western Siberia
5) OPEC has been unable maintain production at its target quota for years
6) Lack of capital discipline among most majors (BP, Shell, Conoco!, Chevron) - these companies are run by people who for some reason seem to think each leg up in the commodity cycle will not be followed by a leg down.  Conoco raised its dividend last year, only to cut it this year to a 10-year low.  A similar corporate landscape was present in the 80s/90s downturn (last period of mega-mergers for survival of low oil prices -  Gulf, Cities Services, Amoco, Sohio, ARCO).  This needs to work itself out - these companies spent hundreds of billions of dollars on megaprojects like Gorgon, Kashagan, Kizomba, PNG LNG (many of which are just coming onstream) that need to produce at design capacity ASAP for cash flow reasons, which will continue to add global supply pressure. 

Combine this all together and recovery of sustained WTI/Brent prices around $60/bbl seems unlikely.  The US onshore situation is going to take some time to work through the excess of 2009-2014 (negative cash flow wells financed with debt, etc, some corporate bankruptcies - just like the 80s).  If something cataclysmic were to happen to supply (rapid inflation against USD purchasing power, Saudis take Ghawar offstream,  Kuwait takes Burgan offstream, a direct non-proxy Iran/Saudi war) you could approach $100/bbl, but probably not for a sustainable period of time without a significant OPEC shut-in (like the 4 MM bbl a day cut in 2009) and some downward pressure on the US dollar.

Whoa.  Lot of info.  You seem very well informed.  What range do you see oil settling around for the long term?

doggyfizzle

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Re: Let's talk about oil
« Reply #22 on: February 08, 2016, 05:02:37 PM »
Barring another major war in the Middle East, I can see oil trading range-bound within 25% of $50/bbl ($35-$75/bbl) for the next decade, especially as the best drillers (EOG, Devon) exploiting tight US plays are able to achieve 35%-45% RORs at $50 bbl.  EOG in fact is able to generate a better ROR in the Permian at $50/bbl today than at $95/bbl in 2012.  The improvement in understanding of these huge fields is only going to improve during the next decade.  Workover rigs are having a field day in the Bakken and Permian and Eagle Ford simply re-fracing the most compelling well intervals to boost production, without requiring much in the way of operator investment.  I base my price assumptions on the forecasting of the best-run companies in the business (Exxon, EOG, Devon) that have consistently evaluated projects in investor presentations at price points between $30-$50, and then add 25% or so for some potential supply constrain etc.

You have to account for 4 MMbbl/day in production that used to be destined for US refineries that now has to find a home elsewhere in the world, on top of Mexico now exporting oil to Europe and  Asia that competes with Middle East supplies, and Russian production that used to be destined for Europe competing with Saudi crude exports in Asia.  Japan and Europe aren't much help there, India has fairly strict refining controls which constricts consumption growth, so unless Chinese demand can start growing several percent YOY again, I find it hard to believe that oil will see-saw back to $100 anytime soon.

Keith123

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Re: Let's talk about oil
« Reply #23 on: February 08, 2016, 06:16:22 PM »
Barring another major war in the Middle East, I can see oil trading range-bound within 25% of $50/bbl ($35-$75/bbl) for the next decade, especially as the best drillers (EOG, Devon) exploiting tight US plays are able to achieve 35%-45% RORs at $50 bbl.  EOG in fact is able to generate a better ROR in the Permian at $50/bbl today than at $95/bbl in 2012.  The improvement in understanding of these huge fields is only going to improve during the next decade.  Workover rigs are having a field day in the Bakken and Permian and Eagle Ford simply re-fracing the most compelling well intervals to boost production, without requiring much in the way of operator investment.  I base my price assumptions on the forecasting of the best-run companies in the business (Exxon, EOG, Devon) that have consistently evaluated projects in investor presentations at price points between $30-$50, and then add 25% or so for some potential supply constrain etc.

You have to account for 4 MMbbl/day in production that used to be destined for US refineries that now has to find a home elsewhere in the world, on top of Mexico now exporting oil to Europe and  Asia that competes with Middle East supplies, and Russian production that used to be destined for Europe competing with Saudi crude exports in Asia.  Japan and Europe aren't much help there, India has fairly strict refining controls which constricts consumption growth, so unless Chinese demand can start growing several percent YOY again, I find it hard to believe that oil will see-saw back to $100 anytime soon.

Thank you for sharing that.  I feel like I owe you some money.   

ender

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Re: Let's talk about oil
« Reply #24 on: February 08, 2016, 06:43:14 PM »
No... you are not the only one. Many including myself have been trying to catch that falling knife. Two points if you are interested:

1. stick to the strongest and most unlikely to go out of business, you will pay a premium but its worth it
2. make sure you average in, no one knows how long this will last exactly and it is extremely risky to drop a lot in at once

also, we are not a full capacity, deactivating that huge rig count proves that-- business demands profit and there isn't enough to go around so there is a limit to this glut, but its hard to say how long this will last and who will go under. Make no mistake-- many will go under first. I think we are set up for extreme gas prices a few years out. Thats what Saudi Arabia wants. Monopolies always set extreme prices. With our new production I don't understand why we just don't buy our own oil and legally limit the amount of foreign oil we can purchase. That would ensure more stable prices for both the consumer and companies and support USA energy independence. USA-pec/Uncle Sam should get on this

Give the Saudi's the finger. We have been plundered and pillaged by them and their buddies for a decade and our economy depends on reasonable oil (for now anyway)

Obama kind of tried to do that recently with the bill with for a $10 tax a barrel on imported oil.  It would give US producers a $10 advantage over foreign oil and would probably save some of them, and with them US oil jobs.  Of course every dummy in the world will scream about how the government is trying to screw them at the pump and this will go nowhere because we seem to be a country of ignorant fools sometimes.

Ignoring potential ramifications of destabilization around the world for countries which heavily rely on oil revenue (many of which are less than friendly to the USA), it seems a pretty strong strategic position for the United States.

It would be interesting to see an in-depth political analysis of all this oil stuff. It seems like a fascinating game of chicken, which while it will clearly affect some American businesses short term, will do far more damage to the countries who are more dependent on oil revenue.

DavidAnnArbor

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Re: Let's talk about oil
« Reply #25 on: February 08, 2016, 06:56:07 PM »
I sure hope electric cars become more popular, which might cause oil prices to go even lower.

bobechs

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Re: Let's talk about oil
« Reply #26 on: February 08, 2016, 07:02:09 PM »
I sure hope electric cars become more popular, which might cause oil prices to go even lower.

Or even better, drive the price of domestic natural gas up a bit.  'Cuz that electricity will have to come from somewhere. 

Other than the fairy dust kind of electric juice, of course.

DavidAnnArbor

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Re: Let's talk about oil
« Reply #27 on: February 08, 2016, 07:15:10 PM »
I sure hope electric cars become more popular, which might cause oil prices to go even lower.

Or even better, drive the price of domestic natural gas up a bit.  'Cuz that electricity will have to come from somewhere. 

Other than the fairy dust kind of electric juice, of course.

As it turns out the perfect storm of stagnant electricity demand in the US, the extension of the federal production tax credits for wind and solar energy, and the ability of the federal government to require utilities to offer discounts for consumers who are willing to have brief electric shutdowns during peak demand, is going to prevent demand for natural gas that would have fostered higher natural gas prices.

mrpercentage

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Re: Let's talk about oil
« Reply #28 on: February 08, 2016, 07:26:18 PM »
Did everyone forgot how many years it took to bring 1,500 rigs online. Just wait until companies start going out of business, and all those employees work for Dial or Procter & Gamble making soap and whatever else instead. Then Saudi Arabia will decide to stop giving away stuff for free. Smile while you can at these prices. If it seems to good to be true what?

faramund

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Re: Let's talk about oil
« Reply #29 on: February 08, 2016, 08:25:47 PM »
Did everyone forgot how many years it took to bring 1,500 rigs online. Just wait until companies start going out of business, and all those employees work for Dial or Procter & Gamble making soap and whatever else instead. Then Saudi Arabia will decide to stop giving away stuff for free. Smile while you can at these prices. If it seems to good to be true what?
This is the essence of the commodity cycle. A commodity is expensive so lots of companies build mines/wells, at some stage lots of those companies are operational and prices go down, so then over time resources get used up/demand increases, and then we're back at the start of the cycle again.

So at the bottom of the cycle, its a good time to buy into resources - just try to make sure they have a low cost of production, so they'll make more money in the boom, and hopefully will survive the downturn.

doggyfizzle

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Re: Let's talk about oil
« Reply #30 on: February 08, 2016, 09:01:11 PM »
Did everyone forgot how many years it took to bring 1,500 rigs online. Just wait until companies start going out of business, and all those employees work for Dial or Procter & Gamble making soap and whatever else instead. Then Saudi Arabia will decide to stop giving away stuff for free. Smile while you can at these prices. If it seems to good to be true what?

It took about a decade from the start of the widespread application of hydraulic stimulation by Mitchell Energy (now part of Devon) in the Barnett gas play in TX to the 2014 rig count peak.  Land rigs are much easier to cold stack and reactivate than a deep water drillship.  More importantly, the average duration of well spud to TD has dropped by 30-60%, so 1,500 rigs are no longer necessary to maintain or expand right production in 2016 like they were in 2010-2014.  NOV still maintains a 1-2 year onshore backlog, so the expertise in rig fabrication isn't going anywhere.  As MMM said in one article, we aren't going to forget how to build our nail guns.

mrpercentage

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Re: Let's talk about oil
« Reply #31 on: February 08, 2016, 09:15:16 PM »
Did everyone forgot how many years it took to bring 1,500 rigs online. Just wait until companies start going out of business, and all those employees work for Dial or Procter & Gamble making soap and whatever else instead. Then Saudi Arabia will decide to stop giving away stuff for free. Smile while you can at these prices. If it seems to good to be true what?

It took about a decade from the start of the widespread application of hydraulic stimulation by Mitchell Energy (now part of Devon) in the Barnett gas play in TX to the 2014 rig count peak.  Land rigs are much easier to cold stack and reactivate than a deep water drillship.  More importantly, the average duration of well spud to TD has dropped by 30-60%, so 1,500 rigs are no longer necessary to maintain or expand right production in 2016 like they were in 2010-2014.  NOV still maintains a 1-2 year onshore backlog, so the expertise in rig fabrication isn't going anywhere.  As MMM said in one article, we aren't going to forget how to build our nail guns.

Im glad for the bears. Without you guys, I would never have my opportunity to buy.

doggyfizzle

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Re: Let's talk about oil
« Reply #32 on: February 08, 2016, 09:56:52 PM »
Did you not read anything I wrote?  I in no way advocated an at all "bearish" stance.  What I did bring up was the rapid pace of technological change within the industry, which most of the general public (and retail investors) are completely unaware of, so invest accordingly.  If you know how to read 10k, 10q, and cash flow statements, then I'm sure you were already on top all of the companies drilling tight wells that weren't even profitable at $90/bbl, or the great MBA rationalization of Conoco and Marathon divesting their downstream operations during a cyclical high for the industry.  Good luck bottom fishing with the likes of Whiting and Chesapeake...

mrpercentage

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Re: Let's talk about oil
« Reply #33 on: February 08, 2016, 10:23:14 PM »
I'm holding Conoco and Kinder and buying Exxon. I really like Cheveron but am not buying. That's it. I would bottom fish RIG before Cheasapeake.

Simulated I did already bottom fish Freeport @ $3.75 and sold at $5.79 #Stockfuse
Boo yah!

Added later: yes I read what you said. I saw the key word innovation. Innovation and carbon regulation is the case of the bear. Sorry that key word poked me in the eye
« Last Edit: February 08, 2016, 11:00:40 PM by mrpercentage »

powskier

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Re: Let's talk about oil
« Reply #34 on: February 09, 2016, 12:34:35 AM »
Since this is all speculation :If it goes on too long there is potential for civil upheaval in Saudi Arabia, that would change the game.

Crazydude

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Re: Let's talk about oil
« Reply #35 on: February 10, 2016, 07:01:09 AM »
I bought BP last year, nice dividend, they were at a low.

spud1987

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Re: Let's talk about oil
« Reply #36 on: February 11, 2016, 10:36:11 AM »
I've been DCA-ing into VDE over the past few weeks. Not a huge amount, about 3-5% of my portfolio. I think there is a higher upside potential and lower downside risk compared to other investments right now. That being said, the bulk of my money is staying in index funds.

protostache

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Re: Let's talk about oil
« Reply #37 on: February 17, 2016, 06:55:23 AM »
I'm holding Conoco and Kinder and buying Exxon. I really like Cheveron but am not buying. That's it. I would bottom fish RIG before Cheasapeake.

Simulated I did already bottom fish Freeport @ $3.75 and sold at $5.79 #Stockfuse
Boo yah!

Added later: yes I read what you said. I saw the key word innovation. Innovation and carbon regulation is the case of the bear. Sorry that key word poked me in the eye

Looks like your KMI may be worth something after all, mrpercentage: http://www.bloomberg.com/news/articles/2016-02-16/buffett-s-berkshire-hathaway-discloses-stake-in-kinder-morgan

acroy

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Re: Let's talk about oil
« Reply #38 on: February 17, 2016, 07:28:11 AM »
To a degree, by owning a lot of VTSAX, (or other stock index funds) you own a bunch of this anyway.
Bingo
Chasing sectors is a dangerous game; most players will loose. Except the finance industry. They always win by 'skimming the cream' in the form of transaction fees.
Please don't feed the financial leaches.

mrpercentage

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Re: Let's talk about oil
« Reply #39 on: February 17, 2016, 08:15:24 AM »
I'm holding Conoco and Kinder and buying Exxon. I really like Cheveron but am not buying. That's it. I would bottom fish RIG before Cheasapeake.

Simulated I did already bottom fish Freeport @ $3.75 and sold at $5.79 #Stockfuse
Boo yah!

Added later: yes I read what you said. I saw the key word innovation. Innovation and carbon regulation is the case of the bear. Sorry that key word poked me in the eye

Looks like your KMI may be worth something after all, mrpercentage: http://www.bloomberg.com/news/articles/2016-02-16/buffett-s-berkshire-hathaway-discloses-stake-in-kinder-morgan

Yeah, its worth 10% more than I bought it for. Im keeping it. Great assets. I have a long term conviction but its nice to see near term positive reinforcement.

Conoco is my riskier play-- it is the most tied to the price of oil (reward and risk are directly correlated). Only time will tell. I give Houston the benefit of the doubt. They are making the right moves lately. Cant blame them for trying to live up to a promise. Sounds like they like their shareholders but we will see what happens. Still buying Exxon and glad to see utilities chilling out a little. I don't like chasing

Metric Mouse

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Re: Let's talk about oil
« Reply #40 on: February 18, 2016, 12:19:25 AM »
Thoughts on OPEC/Russia's 'production level freeze' will affect this?  Or will Iran scramble the deal like a bad omelet?

Retire-Canada

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Re: Let's talk about oil
« Reply #41 on: February 18, 2016, 07:15:43 AM »
Thoughts on OPEC/Russia's 'production level freeze' will affect this?  Or will Iran scramble the deal like a bad omelet?

The deal is contingent upon the other major suppliers agreeing to freeze production levels at Jan's high levels of over production. Iran has said it plans to start increasing its production to make up the difference between pre-sanction levels and its current production. None of the other major suppliers have agreed.

The best analysis I have heard/read about this is that the deal is unlikely to succeed, but that it's a signal to the major oil producers that there is a willingness to come up with a plan to get production under control. That gives some capital to the backroom operatives in the industry to try and figure something out that their leaders can agree to.

nobodyspecial

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Re: Let's talk about oil
« Reply #42 on: February 18, 2016, 09:21:00 AM »
All it would take is Iran and Saudi Arabia, Iraq and Russia, Venezuela and the USA to all agree to work together in an atmosphere of mutual trust and understanding.

ie. $20 oil forever

Metric Mouse

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Re: Let's talk about oil
« Reply #43 on: February 18, 2016, 07:49:16 PM »
All it would take is Iran and Saudi Arabia, Iraq and Russia, Venezuela and the USA to all agree to work together in an atmosphere of mutual trust and understanding.

ie. $20 oil forever

The problem is, Venezuela doesn't have anything anyone wants. Their oil is some of the lowest quality, hardest to refine in the world. If we can get over that hurdle, your vision for world peace sounds wonderful!

EarlyStart

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Re: Let's talk about oil
« Reply #44 on: February 20, 2016, 08:14:03 PM »
I've yet to see anyone concretely explain whether or not the oil companies are undervalued.

"down a lot" =/= undervalued


« Last Edit: February 20, 2016, 08:29:40 PM by EarlyStart »

mrpercentage

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Re: Let's talk about oil
« Reply #45 on: February 20, 2016, 08:26:24 PM »
That is because OIL is the thing everyone of those PE's depends on. Something happens to majorly disrupt that oil production and those PE ratios get slashed into thirds. The more cyclical an industry is the less likely the PE ratio will help you.

There are a lot of hands in it and it is hard to say what will happen. I bet it goes much higher in the next two years with lots of things going offline that will take years to bring back up-- hire the people to do it, get the financing for banks that have been burned, ect.... thats an insight-- perhaps a gamble. There are no guarantees

EarlyStart

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Re: Let's talk about oil
« Reply #46 on: February 20, 2016, 08:33:02 PM »
That is because OIL is the thing everyone of those PE's depends on. Something happens to majorly disrupt that oil production and those PE ratios get slashed into thirds. The more cyclical an industry is the less likely the PE ratio will help you.

There are a lot of hands in it and it is hard to say what will happen. I bet it goes much higher in the next two years with lots of things going offline that will take years to bring back up-- hire the people to do it, get the financing for banks that have been burned, ect.... thats an insight-- perhaps a gamble. There are no guarantees


Or the earnings estimates are reduced further... I'm just saying it's possible for crude prices to bottom without the equities doing the same.

mrpercentage

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Re: Let's talk about oil
« Reply #47 on: February 20, 2016, 11:05:12 PM »
That is because OIL is the thing everyone of those PE's depends on. Something happens to majorly disrupt that oil production and those PE ratios get slashed into thirds. The more cyclical an industry is the less likely the PE ratio will help you.

There are a lot of hands in it and it is hard to say what will happen. I bet it goes much higher in the next two years with lots of things going offline that will take years to bring back up-- hire the people to do it, get the financing for banks that have been burned, ect.... thats an insight-- perhaps a gamble. There are no guarantees

Or the earnings estimates are reduced further... I'm just saying it's possible for crude prices to bottom without the equities doing the same.

Touche. Im averaging in right now because of that reason. Im not sure we have bottomed. I think we are in the general area. I am sure that in a few years we will look back and laugh at the idea. That is unless our positions go out of business. We wont be laughing then. Best of luck to all who enter the field

Retire-Canada

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Re: Let's talk about oil
« Reply #48 on: February 23, 2016, 01:28:18 PM »
The Saudis comment on the current low oil prices at US O&G conference:

http://www.cbc.ca/news/business/saudi-oil-minister-in-houston-1.3459539