Oil Over/Under for 2015...

[badcompany]

The bet is whether it breaks the number in 2015:

$30 WTI

Which way do you go?

I go: Under

[lamboguy]

i made it $32, so i have to say over

[JustRalph]

Over

I think it's done ....hope it stays where it is now. I don't see a 10% swing either way unless the Saudi's do something. I think they are in this for the long haul though. At least a year.

[plainolebill]

I'll take the over just based on how much it's dropped already. I think there would need to be a world wide major recession for it to drop that low.

[_______]

I agree with over but if you had asked 3 months ago about over/under $60, I would have laughed at how easy that over was. It's already fallen more than I imagined was possible. If you asked me to rate my confidence with a 2015 low over $30, I'd say 55-60%. When I've already been this wrong, it tempers my opinion of my own opinion.

[Valuist]

I say it doesn't go below $40. Some strong support levels in the low 40s.

Two years from now, many will be kicking themselves for not buying some of these stocks at distressed prices.

Having said that, I'm not ready yet to try to catch this falling knife. I think we will have a little bit of time. Doubtful we see a complete reversal and it rocket back up right away.

[JustRalph]

40 dollar oil will shut down the fracking business

They are already laying off here in Texas

[Robert Goren]

You tell me what is going to happen with the Economies of China and Europe and I will tell you a price. My guess is that Europe stays in a recession because their central banks are too worried about inflation. They are at least several months away from doing a QE. China's GDP growth has slowed to 5-6% after years of double digit growth. The bloom is of the onion as my grandmother used to say there. Americans like to think our production increases caused this fall in prices, but the truth is while it had a small effect, what happened in China has caused most of it. I am guessing that turning around China is going to be harder than most people think. I will say $24, but that is a number that I pulled out my rear end. It could be $19 or it could be $44.

[reckless]

The markets always overshoots well beyond the prevailing expert predictions and thinking --in both up and down markets-- so who really knows how low oil could go.

I have always felt the lack of demand was the real driver when oil started the descent last summer. The hedge funds, wildcatters, traders and speculators has caused the current precipitous drop but the world-wide depression/recession has caused this fall in oil, no question about it.

Yes, of course, the advanced technology and horizontal drilling has made our production prowess the envy of the world. But the production dialogue has been out there for years now. OPEC going into overdrive is a geo-political move as much as a (bad) economic move. If the Saudis didn't hate and fear Iran, Russia, Syria as they do, then they'd have stopped this overproduction by now.

The USA has not grown to any respectable levels for the past six or so years, especially when compared against the GDP bottom in 2008-09. There seems to be a bump up in the most recent quarter, but a lot of that is political hokus-pokus. If there was any real growth there would no longer be any QE. Descending interest rates is another clue that tells the real story -- the USA and world economy is stuck.... therefore, no demand for all commodities, especially oil. No demand mean interest rates go low, stay low, go lower.

Oil gets all the attention on CNBC and Bloomberg right now but other commodities such as corn, copper, and others are at multi-year lows. This is the result of a lack of demand.

European interest rates are even lower.... the EU is still in a depression thanks to failed socialist governments. It's the worst since the late 1920-30s there. 'No one is working anywhere' in Italy, according to a family friend who lives in Puglia. It's like 40-50 per cent for men 35 and under. In Germany, the investor pays the gov't for the right to hold their bonds and paper -- negative interest rates in the leading manufacturing country in the EU! Are you kidding me?

Japan is a joke, plain and simple. Abenomics is a abject failure yet the prime minister gets reelected. He promises more intervention. The billions didn't work the first time, so he's now talking trillions! Their 30-year depression is another driver for a lack of demand. An aging demographic doesn't help nor does trillions in QE, sino-style.

China has stopped growing to anywhere near previous levels and that has been the main driver for the big drop in all commodities. This has hurt all producing nations but especially Australia and the USA.

The markets will stabilize market oil prices at times, but until there is real free-market growth, and not lies and stunts played by all central governments, oil prices will continue its descend, in my opinion.

[upthecreek]

The bet is whether it breaks the number in 2015:

$30 WTI

Which way do you go?

I go: Under

T Boone Pickens predicts it will be up to around $100 in 12-18 months

[badcompany]

T Boone Pickens predicts it will be up to around $100 in 12-18 months

I believe that's more wishful thinking than a prediction, but, you never know.

[tucker6]

I agree with over but if you had asked 3 months ago about over/under $60, I would have laughed at how easy that over was. It's already fallen more than I imagined was possible. If you asked me to rate my confidence with a 2015 low over $30, I'd say 55-60%. When I've already been this wrong, it tempers my opinion of my own opinion.
Not to pick on your post specifically, but this thinking is exactly why the price of oil is near its low. When people give up the ghost, the end of movement in that direction is at hand. Put another way, when everyone is fearful, that is the time to buy.

[badcompany]

Not to pick on your post specifically, but this thinking is exactly why the price of oil is near its low. When people give up the ghost, the end of movement in that direction is at hand. Put another way, when everyone is fearful, that is the time to buy.

They're not fearful. They think they're getting a bargain.

IMO, they're falling into a trap.

As for me, I'll be using bounces as opportunities to go short.


http://i95.photobucket.com/albums/l142/thinlizzy21/0387F98B-AC73-4AC2-8414-CB422C7FB658_zpsjasdeowp.png (http://s95.photobucket.com/user/thinlizzy21/media/0387F98B-AC73-4AC2-8414-CB422C7FB658_zpsjasdeowp.png.html)

[_______]

Not to pick on your post specifically, but this thinking is exactly why the price of oil is near its low. When people give up the ghost, the end of movement in that direction is at hand. Put another way, when everyone is fearful, that is the time to buy.

To clarify my post, I continue to hold every energy related stock I've acquired and am not selling.

Putting a confidence rating on my opinion isn't giving up the ghost. It's just being more detailed than the simple A/B choice any over/under represents.

Re: the un-killable meme that lower demand is causing the drop in oil. Can someone with this belief point me to a source that shows worldwide usage of petroleum products has actually dropped or will do so on a year over year basis in 2015?

Not that projections for growth have been revised down. That is still growth. But an actual "less oil will be used in the future" source.

And absent any such source, how do you square this seemingly unshakeable belief with the lack of any evidence to support it?

[tucker6]

Re: the un-killable meme that lower demand is causing the drop in oil. Can someone with this belief point me to a source that shows worldwide usage of petroleum products has actually dropped or will do so on a year over year basis in 2015?

Not that projections for growth have been revised down. That is still growth. But an actual "less oil will be used in the future" source.

And absent any such source, how do you square this seemingly unshakeable belief with the lack of any evidence to support it?
Oil demand is not dropping, but its growth expectations are less than previously anticipated. Conversely, oil supply growth expectations are higher than previously anticipated. Small differences on the face of it, but in the absence of any foreseeable checking of either projection, investors must bet that the gap will widen before closing. Personally, I believe the correction is overplayed. Already we are seeing institutional investors coming back into oil stocks as we get into the mid 40's.

http://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

[lamboguy]

They're not fearful. They think they're getting a bargain.

IMO, they're falling into a trap.

As for me, I'll be using bounces as opportunities to go short.


http://i95.photobucket.com/albums/l142/thinlizzy21/0387F98B-AC73-4AC2-8414-CB422C7FB658_zpsjasdeowp.png (http://s95.photobucket.com/user/thinlizzy21/media/0387F98B-AC73-4AC2-8414-CB422C7FB658_zpsjasdeowp.png.html)those guys are going to get destroyed chasing oil. this major increase of production has more to do with the unknown and less to do with punishing Putin. my guess is that fossil fuels are on the way out. in other words in 10 years there will be very few gas stations this side of the grass.

[Mystic]

40 dollar oil will shut down the fracking business

They are already laying off here in Texas

This is a good thing.

http://static.echonest.com/insights/elvis/elvisualization.html

[_______]

Interesting strategy. Incur $40,000 day rates for a year anticipating a higher delivery price. Talk about the big leagues.

As the article notes, this will relieve some short term pricing pressure.

http://www.reuters.com/article/2015/01/08/us-oil-tankers-storage-idUSKBN0KH1M520150108

[reckless]

This is a good thing.

http://static.echonest.com/insights/elvis/elvisualization.html

Why do you think shutting down the fracking business is a good thing, Mystic?

[badcompany]

those guys are going to get destroyed chasing oil. this major increase of production has more to do with the unknown and less to do with punishing Putin. my guess is that fossil fuels are on the way out. in other words in 10 years there will be very few gas stations this side of the grass.

People act as though $100 oil is the norm, but, looking at the past 25 years, it's really an aberration.

http://i95.photobucket.com/albums/l142/thinlizzy21/dc5c28d97aebb411a73b7f2ac2785467_zps4b5bd3b9.jpg

[Mystic]

Why do you think shutting down the fracking business is a good thing, Mystic?

Sorry.. Looks like I posted the wrong link earlier.

http://www.usnews.com/debate-club/is-fracking-a-good-idea

Another that explains the dangers of it.

http://serc.carleton.edu/NAGTWorkshops/health/case_studies/hydrofracking_w.html

[badcompany]

$30 doesn't really seem that far away, does it?

http://i95.photobucket.com/albums/l142/thinlizzy21/FE9A0D79-43FF-4803-8EB2-F5D19D4AF438_zps0osssnaa.png (http://s95.photobucket.com/user/thinlizzy21/media/FE9A0D79-43FF-4803-8EB2-F5D19D4AF438_zps0osssnaa.png.html)

[barn32]

$30 doesn't really seem that far away, does it?

http://i95.photobucket.com/albums/l142/thinlizzy21/FE9A0D79-43FF-4803-8EB2-F5D19D4AF438_zps0osssnaa.png (http://s95.photobucket.com/user/thinlizzy21/media/FE9A0D79-43FF-4803-8EB2-F5D19D4AF438_zps0osssnaa.png.html)I think we're approaching the bottom.

[badcompany]

I think we're approaching the bottom.

I've been hearing that since oil was at $70.

I've also been hearing that Silver has bottomed since it was at $30.

[lamboguy]

I've been hearing that since oil was at $70.

I've also been hearing that Silver has bottomed since it was at $30.there is a big difference between the 2 commodity's, oil will go to ZERO eventually, silver won't.


there were a lot of people that piled into oil as a safe haven play instead of metals.

if there is anything that i have learned about markets is that there is nothing safe about them at any time.

[dlivery]

there is a big difference between the 2 commodity's, oil will go to ZERO eventually, silver won't.


there were a lot of people that piled into oil as a safe haven play instead of metals.

if there is anything that i have learned about markets is that there is nothing safe about them at any time.

Talk to any Saudi Oil Baron and they know exactly what they are doing Squeezing the lemon and all there will be left is the pulp.


Taking from the many to give to the few.

[_______]

Talk to any Saudi Oil Baron and they know exactly what they are doing Squeezing the lemon and all there will be left is the pulp.


Taking from the many to give to the few.

That's a curious take. Care to expand on your theory?

[barn32]

I've been hearing that since oil was at $70.Not from me.

[tanner12oz]

From a chart perspective breaking $40 will be a bloodbath...btw oil isn't going to zero..that is laughable

[ReplayRandall]

I've been hearing that since oil was at $70.

I've also been hearing that Silver has bottomed since it was at $30.


Silver's ultimate barrier was, and still is, $15 and still won't be breached, per previous points discussed 3 months ago. Concerning oil, all controlled output agreements have been broken and will not cease until oil goes below $40. Once that occurs, a "cease-produce" agreement will then be discussed by all major producing entities. When said agreement is finally reached, (which will never be publically announced), oil will settle at a bottom of $35 which will slowly rise over the next 2 years........the evidence of a controlled output agreement.

[lamboguy]

From a chart perspective breaking $40 will be a bloodbath...btw oil isn't going to zero..that is laughable


you aren't the first person to laugh. when i predicted regular gas below $2.00 per gallon 6 months ago here by the end of the year, they were laughing. i am guessing oil will be very close to worthless 10 years from now.

[tanner12oz]

So not only are we going to completely reinvent the auto industry but also the home heating industry, industrial machinery, plastics industry etc etc? Your precious silver has been much closer to "almost worthless" in modern times.

and gas @$2 isn't oil at zero or oil @ almost worthless

[badcompany]

Silver's ultimate barrier was, and still is, $15 and still won't be breached, per previous points discussed 3 months ago. Concerning oil, all controlled output agreements have been broken and will not cease until oil goes below $40. Once that occurs, a "cease-produce" agreement will then be discussed by all major producing entities. When said agreement is finally reached, (which will never be publically announced), oil will settle at a bottom of $35 which will slowly rise over the next 2 years........the evidence of a controlled output agreement.

You might end up being right. If so, I'll have no problem jumping on the long side as I did back in 2010, but 3 months bouncing around a low is not evidence that an absolute bottom has been reached. Look at how long Silver bounced around $20 only to head lower.

http://i95.photobucket.com/albums/l142/thinlizzy21/c079b1199c04e89ac22f2f592f29eab9_zpsa473126a.jpg

[tanner12oz]

Silver rattled around $12-$15 and then got crushed into $8 before the monster run into $40's...i dont think silver is a horrible bet in the low teens however you might have to wait awhile for it to do anything interesting. The last run was alot of fun but look at the chart to see how long it took for that to happen

[ReplayRandall]

You might end up being right. If so, I'll have no problem jumping on the long side as I did back in 2010, but 3 months bouncing around a low is not evidence that an absolute bottom has been reached. Look at how long Silver bounced around $20 only to head lower.

http://i95.photobucket.com/albums/l142/thinlizzy21/c079b1199c04e89ac22f2f592f29eab9_zpsa473126a.jpg

BC, at this point nothing surprises me anymore......what's good is bad, and what's bad is good. The world economy looks bleak, needs a good correction cleansing along with a total currency reset......

[ReplayRandall]

http://thefelderreport.com/wp-content/uploads/2015/01/Screen-Shot-2015-01-13-at-9.32.03-AM.png


According to Jim Paulsen of Wells Capital, Chart via wellscap.com (http://wellscap.com/docs/emp/20150108.pdf?utm_source=PAID+The+Idea+Farm&utm_campaign=135aa3afa3-First_Email8_14_2012&utm_medium=email&utm_term=0_ac58d173d8-135aa3afa3-411828517)
There you have it: the most overvalued stock market of all time, based on median price-to-earnings. For what it’s worth, Paulsen also demonstrates in his analysis that on a price-to-cash flow basis stocks have also never been as highly priced as they are today......

[badcompany]

http://thefelderreport.com/wp-content/uploads/2015/01/Screen-Shot-2015-01-13-at-9.32.03-AM.png


According to Jim Paulsen of Wells Capital, Chart via wellscap.com (http://wellscap.com/docs/emp/20150108.pdf?utm_source=PAID+The+Idea+Farm&utm_campaign=135aa3afa3-First_Email8_14_2012&utm_medium=email&utm_term=0_ac58d173d8-135aa3afa3-411828517)
There you have it: the most overvalued stock market of all time, based on median price-to-earnings. For what it’s worth, Paulsen also demonstrates in his analysis that on a price-to-cash flow basis stocks have also never been as highly priced as they are today......

Interesting paper. Good find.

His premise seems to be that the median S&P p/e is more relevant than the average.

While I need to look into it further, one explanation for why the median stock is so high is the ETF and Index Fund revolution. Fewer people these days invest in individual stocks. So, more capital gets spread around across sectors and industries, and as a result, more money flows into mediocre companies.

[lamboguy]

oil should get some type of a bounce in this area. so far it has rejected the $44 level. getting a dead cat bounce up to $54 seems pretty reasonable here, especially with the cold weather lately in the northeast

[Ocala Mike]

Won't be a bottom until everyone holds up the white flag and capitulates. Chart looks like this would be at 1998 levels, around $19/$20 a barrel.

[tucker6]

Looks like the market has found a bottom around $45/barrel. Currently sitting at $48.69.

http://www.bloomberg.com/news/2015-01-16/oil-heads-for-longest-weekly-losing-streak-since-1986-amid-glut.html

"Non-OPEC oil producers will boost output this year at a slower rate than previously forecast, aiding a recovery in crude prices, the IEA said in its monthly market report. Rigs targeting oil in the U.S. fell for the eighth time in nine weeks, by 55 to 1,366 this week, Baker Hughes Inc. said on its website. They are at the lowest level since October 2013."

[Robert Goren]

Looks like the market has found a bottom around $45/barrel. Currently sitting at $48.69.

http://www.bloomberg.com/news/2015-01-16/oil-heads-for-longest-weekly-losing-streak-since-1986-amid-glut.html

"Non-OPEC oil producers will boost output this year at a slower rate than previously forecast, aiding a recovery in crude prices, the IEA said in its monthly market report. Rigs targeting oil in the U.S. fell for the eighth time in nine weeks, by 55 to 1,366 this week, Baker Hughes Inc. said on its website. They are at the lowest level since October 2013."Unless you know some thing about the economy of China and Europe that the rest of us don't know, I would be a little cautious about calling a bottom just yet. Oil prices fell because of sharp decline in demand in the last 6 months, not a sharp increase in supply in the last 6 months. I heard the number 1.2M barrels a day as the amount that is being overproduced a day being bandying about yesterday a lot. The world produces 85M barrels a day of which the US produces 7.5M barrels. Currently the US is increasing production every day. Any slow downs have been in the rate of increase so far. I do not believe the US has the ability to cut production enough to bring supply and demand in balance let alone make a dent in the supply of already drilled oil. The math is not there.

[tucker6]

Unless you know some thing about the economy of China and Europe that the rest of us don't know, I would be a little cautious about calling a bottom just yet. Oil prices fell because of sharp decline in demand in the last 6 months, not a sharp increase in supply in the last 6 months. I heard the number 1.2M barrels a day as the amount that is being overproduced a day being bandying about yesterday a lot. The world produces 85M barrels a day of which the US produces 7.5M barrels. Currently the US is increasing production every day. Any slow downs have been in the rate of increase so far. I do not believe the US has the ability to cut production enough to bring supply and demand in balance let alone make a dent in the supply of already drilled oil. The math is not there.
The math is not there because your math is incorrect. Demand is not sharply down. Demand growth has slowed. Huge difference between those two. Also, I never said oil had reached absolutely bottom. I said it had reached a bottom where it has good support. I have previously stated that oil would bottom in the mid 40's short term, so am happy to see it rebound there. No one can forecast what will happen in 12 months with any accuracy. Oil could be $35 or $45 or $60. Personally, I see the likelihood that we see oil at $60 to be much higher than it will be $35 in a year.

[_______]

Unless you know some thing about the economy of China and Europe that the rest of us don't know, I would be a little cautious about calling a bottom just yet. Oil prices fell because of sharp decline in demand in the last 6 months, not a sharp increase in supply in the last 6 months. I heard the number 1.2M barrels a day as the amount that is being overproduced a day being bandying about yesterday a lot. The world produces 85M barrels a day of which the US produces 7.5M barrels. Currently the US is increasing production every day. Any slow downs have been in the rate of increase so far. I do not believe the US has the ability to cut production enough to bring supply and demand in balance let alone make a dent in the supply of already drilled oil. The math is not there.

Please provide just one source that shows the world is using less oil than this time last year or is projected to use less oil 1 year from now.

You have been beating the drum that a drop in demand is causing the price drop. Show me that demand has actually dropped. If you can't, why do you continue to believe something that is unsupported by any evidence?

[lamboguy]

Please provide just one source that shows the world is using less oil than this time last year or is projected to use less oil 1 year from now.

You have been beating the drum that a drop in demand is causing the price drop. Show me that demand has actually dropped. If you can't, why do you continue to believe something that is unsupported by any evidence?i would like to bet that oil consumption in 2015 will be at least 5% more than 2014 and average price will be down.

[_______]

Worldwide demand will be up on the order of 1%. Given that the average price in 2014 included 6 months of $100+ oil, it's a no brainer that the average price in 2015 will be lower.

I am just trying to find out the reasoning of those insisting there is a demand collapse versus an oversupply. China will use more oil in 2015 as will all of non-Russia Europe. Yet, they insist it's a demand issue, not supply.

[Robert Goren]

Worldwide demand will be up on the order of 1%. Given that the average price in 2014 included 6 months of $100+ oil, it's a no brainer that the average price in 2015 will be lower.

I am just trying to find out the reasoning of those insisting there is a demand collapse versus an oversupply. China will use more oil in 2015 as will all of non-Russia Europe. Yet, they insist it's a demand issue, not supply. You are correct. What is happening is that the demand for is not raising at the rate expected. However the it still be produced for those old out of date projections and it will be for some time because unlike demand of oil, production can not turn on a dime. production will raise but the rate of growth will slow, unfortunately for the producers, the rate of growth of demand will/has slowed faster. Demand is the issue because everybody was banking on a higher growth rate of demand. It is easy to forget that we are not talking about huge differences in demand and production. So it easy to read the numbers differently, but I believe I have read them correctly. Oil prices will stay low until the economies of Europe and China turn around. (Your guess is good as mine on when that will happen) They just can not slow production fast enough to make a difference any time soon. There still be another jolt to the price oil. What happens if the US falls into a recession? I think that is very likely right now.

[davew]

maybe production can not turn on a dime in TX, but it can in ND
there are many that say this 40 below crap is worth a 4 month vacation and bosses are saying good idea

Some have said if it gets to $30/ it will swing the world into a deep recession, I don't know

I put the bottom at $38 as a guess

[barn32]

Some have said if it gets to $30/ it will swing the world into a deep recession, I don't know

How can saving consumers billions of dollars a year put the world into a deep recession?

What would happen if in say five or ten years electric cars suddenly were able to get 700 miles to the charge, while at the same time bringing cost per vehicle down to $25,000? Would the world come to an end?

To my way of thinking the opposite is true. Lower prices is a great thing.

Where is the doom and gloom coming from?

What if gasoline were suddenly free? Wouldn't this be the biggest economic stimulus the country (world) has ever seen?

[reckless]

maybe production can not turn on a dime in TX, but it can in ND there are many that say this 40 below crap is worth a 4 month vacation and bosses are saying good idea

Some have said if it gets to $30/ it will swing the world into a deep recession, I don't know

I put the bottom at $38 as a guess

If oil drops to $30 or even below, it is because there is a recession. It will not be the cause of the recession.

[badcompany]

If oil drops to $30 or even below, it is because there is a recession. It will not be the cause of the recession.

A few years ago, someone I know, who is very knowledgable about the oil market said to me, "We'll pay for oil what the Saudis want us pay." History seems to have proved him right.

[JustRalph]

What would happen if in say five or ten years electric cars suddenly were able to get 700 miles to the charge, while at the same time bringing cost per vehicle down to $25,000? Would the world come to an end?

I wish. And let's hope they are self driving by then. One thing I can't stand to do is drive over about an hour. And I can't stand to fly, that's even worse.

Markets adjust. Look at calculators and computers. Oil would be much bigger, but eventually it would adjust, or we would.

I hope your prediction of electric and $25k comes true.....

[_______]

The Bakken (North Dakota) wil produce more oil this year than in 2014 and more in 2016 than it does this year.

What is happening is that rigs are being moved out of speculative areas and into the core plays at the anticline. They will drop 4 rigs on a pad and zipper frac all of them at once, which is the most efficent use. Many of the wells already producing in the core have paid off the drilling cost and remain profitable even at $20 oil. Newly drilled wells in the anticline can be profitably drilled at today's price assuming a 3 year payoff of drilling costs (18 months has been the standard target up to now) and use of the technique described above.

The Permian core play is even cheaper than the Bakken.

The Saudis may have controlled the price of oil in the past but until there is an actual drop off in North American production the top price is going to be controlled by the free market. That won't occur until 2020 at the earliest (it will plateau between 2016 and 2020 assuming no increase in prices).

The Saudis can always cut back production and that will increase the price of both Brent and WTI. But the spread between the two would also increase and the Saudis would face a substantial loss of market share.

The simple model of lower prices meaning the end of shale ignores what is actually happening in the market.

[badcompany]

Don,

If I'm not mistaken, you're scenario would indicate low oil prices for a long time to come?

[_______]

Market prices are lower than cartel prices so I do agree with the Saudi oil minister that you won't see $100 oil anytime soon (he said ever again but forever is a bit longer than I would try to forecast)

I think you could see some recovery in prices in 2H 2015 once there's a clearer picture of reduced capex but you aren't going to see oil over $80 in the next several years.

[davew]

Wasn't it just about 30 years ago the greenies said the world would run out of oil by 2025? and later gave up and decided to proclaim global warming?

[reckless]

Wasn't it just about 30 years ago the greenies said the world would run out of oil by 2025? and later gave up and decided to proclaim global warming?

The greenies and the socialists always change their 'concern' once their (prior) theory is cut to shreds, either by common sense, unviolated science or the non-partisan market place.

davew, you seem to be a younger guy than I am but at one time or another nuclear power was the liberals cause celebre for progress; then global cooling with the earth freezing over was their threat; then Enron became the 'clean' energy company and a hero to the greenies and socialists until that company proved to be a fraud; then global warming, of course; then natural gas became the real 'clean and cheap' energy source to tie all these libs together against dirty and villainous Exxon, Shell, Chevron, et al. Now, nat gas is a huge, huge problem for them because horizontal drilling (fracking to the lunatic fringe) causes all sorts of social diseases and earth quakes and dirty water, so says the liars and whiners.

It never ends with the liberals because their left wing theories and policies are as defunct as their true non-concern for people.

This is why these same lunatics depend on nitwits and numbskulls to parrot this bankrupt ideology.

[plainolebill]

Reckless, I don't disagree with anything you said but horizontal drilling and fracking aren't the same thing.

[tucker6]

at $46.23 for WT crude, it appears a bottom has been reached for the time being. I don't see this going below $40/barrel this year.

http://www.cnbc.com/id/102370083

"It looks like crude is trying to stabilize out here in the mid-$40 level, thanks to the weaker dollar," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York.

Traders said some bears appeared to be getting out of some of their short positions in U.S. crude with the market persistently staying above the $45 level in recent sessions.

"I think there's some short-covering going on, with WTI likely to break nearer to the $50 upside in the near-term," Dominick Chirichella, senior partner at Energy Management Institute in New York said, referring to U.S. futures.

[reckless]

Reckless, I don't disagree with anything you said but horizontal drilling and fracking aren't the same thing.

Thanks for correcting me. I often 'confuse' horizontal drilling and hydraulic fracturing because ....well.... because I confuse easily :) .

[badcompany]

The two go hand in hand. First you horizontal drill, then you frack to free up the oil. This complex process is why the Saudis have an edge. They just have to stick a straw in the ground.

[davew]

If oil drops to $30 or even below, it is because there is a recession. It will not be the cause of the recession.

I can't disagree with that. I suspect that their thought was there are a few country economies that rely on their oil sales. If the money coming into their country is too low, they will not have the money to import stuff from other countries (like food and manufactured goods). This would cause a cascade effect, where there would become surpluses of many things and less money floating around to buy them off the market. People will start selling stuff to pay their bills, stock market will crash, loans will default, world will go into depression.

Time will tell if any of this happens, I hope not. Russia has gotten into very bad shape with their credit rating dropping to just above junk.

[tucker6]

Looks like the worst may be over for oil boys. Should have gotten in at $45 when you could. Ended the day at $53/barrel.

http://www.cnbc.com/id/102390585

[badcompany]

Yeah, I saw Bloomberg post a headline that said "Bull Market in Oil."

I'm thoroughly unconvinced:

http://i95.photobucket.com/albums/l142/thinlizzy21/B3358CE8-E7D5-48FD-B4C9-3961944F451E_zpshk3zevga.png (http://s95.photobucket.com/user/thinlizzy21/media/B3358CE8-E7D5-48FD-B4C9-3961944F451E_zpshk3zevga.png.html)

[tucker6]

I'm certainly not convinced we're in a bull market. I am convinced that odds are better that we see $60 before we see $40. That said, I think it spends time +/-5 from $50/barrel for a period of time here. Market forces are working to erase any surplus gaps, but these things take time. However, the market is building that eventuality into today's pricing. Take it for what it is worth.

[reckless]

Basically, oil has been dropping for 7-8 months now....

Gas prices at the pump has basically fallen from $4 per gallon to $2, give or take....

Now, with an uptick in oil prices and miniscule gas price increases these past two days, it sounds like the nitwits on CNBC and Bloomberg are falling all over themselves calling the oil crisis over! :bang:

These financial 'experts' and 'journalists' now belong alongside the crowd in the political and sports arena who simply don't have a real clue.

[Ocala Mike]

Can you say "dead cat bounce"? Most likely will be trading in a range for a while, then new lows.

[badcompany]

I just can't believe what I'm seeing, here.

By this bizarre logic, if oil had gone down to 10, then rose to 12.5, it would be in a Bull Market.

http://i95.photobucket.com/albums/l142/thinlizzy21/34ae07ec3f3635d85ec9c9f3934811c5_zps66997f54.jpg

[badcompany]

Who knew that oil could be in a Bull Market and still be ~40% below the 500 & 1000 day Moving Averages?

You just learn something new every day in this game ;)

http://i95.photobucket.com/albums/l142/thinlizzy21/9bc1128f3d10b8bbb7857718656903dc_zps859fe14c.jpg

[badcompany]

This company was one of the darlings of the shale play. It looks bad on every level. The chart shows a double top then a falling off a cliff.

The Balance Sheet shows exploding debt.

The Income Statement shows an Interest Expense which is almost half of Net Income.

They'll probably keep pumping oil at a loss in order to pay fixed costs, but this helps keep prices down, and I'm sure that debt wasn't incurred on the basis of $50 oil.

In summary, they're screwed.

http://i95.photobucket.com/albums/l142/thinlizzy21/178fd952d79eef3e6f05fa42a2ce5ad6_zpsf9ff83a3.jpg


http://i95.photobucket.com/albums/l142/thinlizzy21/959cedbb08a75e7cc328985fe6b77605_zpsd25021c3.jpg

http://i95.photobucket.com/albums/l142/thinlizzy21/a6a749a2e8fd1094f4852d0f3499a393_zpsc9c2fe52.jpg

[Valuist]

Gotta think the refiners could be a good play.

[plainolebill]

Oasis issuing 25 million new shares and up half a buck. I guess the reasoning is that at least they won't go broke this year.

[badcompany]

Oasis issuing 25 million new shares and up half a buck. I guess the reasoning is that at least they won't go broke this year.

Nice slope for skiing. Whiting (WLL) down big after hours, as well.

http://i95.photobucket.com/albums/l142/thinlizzy21/31cdbf5caf81da3bf30453f72b7d5b26_zpsqitfkxq2.jpg

[tucker6]

I'm certainly not convinced we're in a bull market. I am convinced that odds are better that we see $60 before we see $40. That said, I think it spends time +/-5 from $50/barrel for a period of time here. Market forces are working to erase any surplus gaps, but these things take time. However, the market is building that eventuality into today's pricing. Take it for what it is worth.
That was three months ago. WTI ended today at $59.21 and $60 is near at hand. Those crying wolf are in sorry shape today if they actually played on their feelings. Never panic. Never.

[badcompany]

That was three months ago. WTI ended today at $59.21 and $60 is near at hand. Those crying wolf are in sorry shape today if they actually played on their feelings. Never panic. Never.


If you go back to 1986, there was a similar collapse of oil prices due to Saudis protecting market share. While there were a couple of intermediate up trends in between, oil stayed down for a decade.

[tucker6]

If you go back to 1986, there was a similar collapse of oil prices due to Saudis protecting market share. While there were a couple of intermediate up trends in between, oil stayed down for a decade.
The 80's and 90's sideways period had a completely different set of variables attached to it than this era. So much so that there is nothing to glean from your chart. For one, you didn't have China's demand back then. Second, the political turmoil in the ME and elsewhere around the world was actually more pleasant than now. There are a bunch of others, but you get my drift.

I believe oil trades in the 50-70 range for a good part of the remainder of the year.

[badcompany]

The 80's and 90's sideways period had a completely different set of variables attached to it than this era. So much so that there is nothing to glean from your chart. For one, you didn't have China's demand back then. Second, the political turmoil in the ME and elsewhere around the world was actually more pleasant than now. There are a bunch of others, but you get my drift.

I believe oil trades in the 50-70 range for a good part of the remainder of the year.

You're kinda agreeing with the point I was trying to make, that market crashes usually don't come back to the previous high for an extended period. 50-70 is a long way from $100.

[tucker6]

You're kinda agreeing with the point I was trying to make, that market crashes usually don't come back to the previous high for an extended period. 50-70 is a long way from $100.
well, $100/barrel is an anomaly, not a rule. From a low of $45 just 3 months ago, the current ~$60 is a bull market of 33% gain. Those are the more relevant numbers I would say.

[badcompany]

well, $100/barrel is an anomaly, not a rule. From a low of $45 just 3 months ago, the current ~$60 is a bull market of 33% gain. Those are the more relevant numbers I would say.

Using percentages when a stock/commodity has taken a huge hit can be deceptive.

Does this look like a Bull Market?

[tucker6]

Using percentages when a stock/commodity has taken a huge hit can be deceptive.


Using $100 as a benchmark is equally deceptive IMO. Oil was way too frothy at $100.

[barn32]

.

http://oi61.tinypic.com/fnfeb5.jpg

[badcompany]

.

http://oi61.tinypic.com/fnfeb5.jpg


How can you be sure it's accumulation and not a tiring out of short sellers?

[badcompany]

Using $100 as a benchmark is equally deceptive IMO. Oil was way too frothy at $100.

I'm hearing a lot of this after the fact. I didn't hear any of it beforehand, definitely not on this board.

[tucker6]

I'm hearing a lot of this after the fact. I didn't hear any of it beforehand, definitely not on this board.
You didn't hear that oil was unnaturally high? I sure did. Unsustainable in the face of a world recession, China or no China. I also know that what goes up must come down, and vice versa. Learned that lesson the hard way in 2000 with tech stocks.

[_______]

Article in Barron's (paywall, no link) details bullish calls of two analysts who were net sellers of oil stocks in the 6 months prior to mid 2008 and 2014 peaks and net buyers 6 months prior to the January 2009 bottom.

The article notes that most oil analysts simply follow momentum and were bearish at bottoms and bullish at tops.

One is strictly technical and feels the bottom was likely in January with the March retest confirming it. He hedges somewhat stating that if the January low holds through August, that will be final confirmation.

The other looks at American shale as the swing producer and states the cutback in rigs will begin impacting production going forward. He looks at oil between $70-$75 by next March.

Both recommend accumulating oil stocks now. CVX and SLB mentioned as favorites.

Having held some shares since the June top, buying more in October and December, will personally be rooting for them, lol.

[JustRalph]

Re-opening wells and resuming fracking/shale production all over Texas. The big boys have dropped their profit point another 20 bucks a barrel. If things go right you might see under $2 gas at Xmas

[Valuist]

Whats interesting is that a number of big oil companies are priced now where they were several years ago; when oil was $90-$95/barrel. Oil can't break the resistance around $60. I think the big oils are a short for rest of 2015.

[PaceAdvantage]

Anecdotally, I've noticed quite a number of homes going solar where I live...never something that caught on all that much, even in the 70s oil crisis...

[_______]

Anecdotally, I've noticed quite a number of homes going solar where I live...never something that caught on all that much, even in the 70s oil crisis...

It's becoming an economically viable alternatitive for individual consumers. Just my .02 for anyone considering this: Do not sign a long term lease where a company owns the panels and provides power to you at a discounted price compared to your local utility (the solar city model).

You will be better off in the long run incurring the upfront cost to own the panels and sell excess power to the utility yourself. Lots of utilities are putting up bars to this model as they want to get in the business themselves but if it's possible where you live, it's the way to go.

Your southfacing rooftop is going to be like having mineral rights to oil in your backyard. Don't sell it cheap.

[tucker6]

It's becoming an economically viable alternatitive for individual consumers. Just my .02 for anyone considering this: Do not sign a long term lease where a company owns the panels and provides power to you at a discounted price compared to your local utility (the solar city model).

You will be better off in the long run incurring the upfront cost to own the panels and sell excess power to the utility yourself. Lots of utilities are putting up bars to this model as they want to get in the business themselves but if it's possible where you live, it's the way to go.

Your southfacing rooftop is going to be like having mineral rights to oil in your backyard. Don't sell it cheap.
This is where the battle lines are being drawn on solar these days. Unless govt bans utilities from competing in the marketplace against private consumers, those who own solar panels may see the benefits dry up. I am of the opinion that eventually, govt will weigh in to stop utilities from freezing out consumers by charging high buyback rates.

[reckless]

It's becoming an economically viable alternatitive for individual consumers. Just my .02 for anyone considering this: Do not sign a long term lease where a company owns the panels and provides power to you at a discounted price compared to your local utility (the solar city model).

You will be better off in the long run incurring the upfront cost to own the panels and sell excess power to the utility yourself. Lots of utilities are putting up bars to this model as they want to get in the business themselves but if it's possible where you live, it's the way to go.

Your southfacing rooftop is going to be like having mineral rights to oil in your backyard. Don't sell it cheap.

What do you do when your neighbor across the street refuses to take down or trim dearly the tree in his backyard that has grown over the years to the point where that tree now blocks sunlight that you need for your solar panels?

[tucker6]

What do you do when your neighbor across the street refuses to take down or trim dearly the tree in his backyard that has grown over the years to the point where that tree now blocks sunlight that you need for your solar panels?
I guess that is why they invented copper nails

[davew]

how is oil doing now?

is iran going to be able to flood the market once Big0 gets his nuclear deal?
or is it isis?

[lamboguy]

you aren't the first person to laugh. when i predicted regular gas below $2.00 per gallon 6 months ago here by the end of the year, they were laughing. i am guessing oil will be very close to worthless 10 years from now.i just saw a gallon of regular gas under $1.30 and i see under $1.00 by March this year and highly think oil will still be close to worthless 10 years from now. my guess is that a gallon of gas will be about $10.00 a gallon in 10 years but that will be in the face of some very hyper inflation with much less demand for that commodity.

just 2 things, i hope i am right because i would not like the way the world would look like if i happen to be wrong and i hope i am still here 10 years from now, i have already beaten my odds by 30 years so far!

[lamboguy]

Won't be a bottom until everyone holds up the white flag and capitulates. Chart looks like this would be at 1998 levels, around $19/$20 a barrel.great call Mike.

[Ocala Mike]

Wish I could pick a winner or two at Tampa today!

[PICSIX]

i just saw a gallon of regular gas under $1.30 and i see under $1.00 by March this year and highly think oil will still be close to worthless 10 years from now. my guess is that a gallon of gas will be about $10.00 a gallon in 10 years but that will be in the face of some very hyper inflation with much less demand for that commodity.

just 2 things, i hope i am right because i would not like the way the world would look like if i happen to be wrong and i hope i am still here 10 years from now, i have already beaten my odds by 30 years so far!

Just saw, on CNBC, a gallon of gas wholesale is $1.04.

[tucker6]

great call Mike.
how is it a great call? We are nowhere near that number now. It may get there, but we aren't there now. :confused:

[lamboguy]

how is it a great call? We are nowhere near that number now. It may get there, but we aren't there now. :confused:it looks like that's where its heading, maybe a lot sooner than i think.

[Secondbest]

Front month futures at $27.66

[Ocala Mike]

Right, not there YET. Still have a few oil bulls to shake out of the trees.

[lamboguy]

$26.40 right now

[PaceAdvantage]

Right, not there YET. Still have a few oil bulls to shake out of the trees.Agree...this particular chart hasn't found a bottom yet...

[_______]

It's below the cost of production for the overwhelming majority of producers in the world at $27.00.

I'm not saying it can't go lower but it's unlikely to stay lower for long. Balance with demand won't take long at this level.

(Says the guy who thought the bottom was in at $50)

[tucker6]

as expected, oil making a strong rally.

http://www.bloomberg.com/news/articles/2016-01-21/oil-extends-gain-near-30-after-weekly-u-s-crude-inventory-data

imo, ~$27/bbl was its low. Too much support to get much lower. The blended cost to produce oil is ~$34/bbl, so the price can't be too low for very long before supply shrinks to account for the losses.

[davew]

could be a correction before dropping more

it does not matter if it is below cost of production for 90% of producers, there are too many that will try to make up for it with more volume and cutting expenses - until their equity is gone and lenders pull the plug on their operation. Once enough operations close up shop, then the price will spike as production lags consumption and the surplus in storage is used up.

(at least that is how it works with many agricultural commodities)

[tucker6]

"Last note, we shared that focus on the charts should be based on the 2016 opening range high of 38.36. Given today’s sharp move higher, another key level, which is taken from the 38.2 Fibonacci retracement levels of the November-January range is at 35.50. Therefore, the burden of proof that a bottom has been put in is on the bulls given the very sharp drop in unsustainable production prices causing more aggressive producing. If price can make it through 35.50-38.36 zone, a strong argument can be made on the technical side that this late January move was more than a ‘dead cat bounce.’"

https://www.dailyfx.com/forex/technical/home/analysis/usoil/2016/01/28/WTI-Crude-Oil-Price-Forecast-Slippery-When-Bid-as-Oil-Pushes-Past-34-bbl-Levels.html

closed today at $33.72/bbl. Interesting times ahead.

[tucker6]

https://www.dailyfx.com/forex/technical/home/analysis/usoil/2016/02/01/WTI-Crude-Oil-Price-Forecast-Watching-For-Signs-of-a-Lower-High.html

"we shared that the sharp move above $34/bbl would likely lead to unstable price action. Given today’s sharp move low of +4%, another key level worth watching is the key higher low on the chart of 29.23. The March contract pivots off that level before hitting $34.79, and if Bullish momentum is to remain at all, that price should hold as well. Some have claimed that the late January move was little more than a ‘dead cat bounce,’ this week should help resolve that issue, and we will keep an eye on last week’s high and the YTD high of $38.36 to validate the Bears view."

[Ocala Mike]

The oil patch is playing very tough for technicians. It's all about fundamentals and supply/demand right now.

[tucker6]

The oil patch is playing very tough for technicians. It's all about fundamentals and supply/demand right now.
yep. Lots of supply and not enough demand. The double whammy this week has been the complete breakdown of any momentum by oil producers to stem the flow of oil into the marketplace. At the same time, China came in with dismal economic numbers, and with their penchant to shade the truth (we do it too), the outlook there looks dicey at best. I still don't think we see much below $27/bbl, but if resistance is broken then who knows. Whatever happens, I see oil trading in the $60-80 range (maybe higher) two years from now and will be betting accordingly. At some point Saudi Arabia and the cartel will scale production as they realize that they are losing the war as they win the battle.

[barahona44]

yep. Lots of supply and not enough demand. The double whammy this week has been the complete breakdown of any momentum by oil producers to stem the flow of oil into the marketplace. At the same time, China came in with dismal economic numbers, and with their penchant to shade the truth (we do it too), the outlook there looks dicey at best. I still don't think we see much below $27/bbl, but if resistance is broken then who knows. Whatever happens, I see oil trading in the $60-80 range (maybe higher) two years from now and will be betting accordingly. At some point Saudi Arabia and the cartel will scale production as they realize that they are losing the war as they win the battle.
You also have to factor in the Iranians turning back on the spigot., although I'm sure that reality has been part of oil's nosedive. I agree with you on your oil price projection, oil is not going away anytime soon.Not only is the infrastructure to get it out of the ground, ship it, process it and sell it already in place, oil has hundreds of uses(guaranteed that right now, just about everybody is wearing petroleum in some form,unless you post naked :) ) ; I read that gasoline is actually one of the most inefficient uses of oil there is.Get in pronto.

[lamboguy]

oil got toasted and roasted today, now under $29. i still say this is going to under $25 this winter and under $20 next year.

[PICSIX]

oil got toasted and roasted today, now under $29. i still say this is going to under $25 this winter and under $20 next year.

Broke below symmetrical triangle pattern on the daily chart.....it's going to get ugly!

[PICSIX]

Tell the people the bottom's in but sell all holdings :confused:

http://finance.yahoo.com/news/despite-bold-predictions-t-boone-170352374.html;_ylt=AwrC1CrlY7pWIzQA.4OamolQ;_ylu= X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYw Nzcg--

[davew]

Tell the people the bottom's in but sell all holdings :confused:

http://finance.yahoo.com/news/despite-bold-predictions-t-boone-170352374.html;_ylt=AwrC1CrlY7pWIzQA.4OamolQ;_ylu= X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYw Nzcg--


You need buyers when you sell big holdings, otherwise it makes the market drop even more. I am not sure of the 'ethics' or legality of touting a position to help liquidate your holdings.

[Tape Reader]

You need buyers when you sell big holdings, otherwise it makes the market drop even more. I am not sure of the 'ethics' or legality of touting a position to help liquidate your holdings.

From memory: Reminisces of a stock operator.

Jessy Livermore is on the subway going to work trying to figure out how to get out of a huge position he was long cotton (I think). Across from him was a rider reading a newspaper that was not his regular read. “Livermore corners cotton” read the headline. He was out at the opening.

[ReplayRandall]

Tell the people the bottom's in but sell all holdings :confused:

http://finance.yahoo.com/news/despite-bold-predictions-t-boone-170352374.html;_ylt=AwrC1CrlY7pWIzQA.4OamolQ;_ylu= X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYw Nzcg--

T. Boone Pickens, the biggest liar and con man in modern history. Remember when this jackass said, "You'll never see gas below $3 again"? He'll have a lot of explaining to do, when his number's up, standing in front of the Big Guy upstairs......Buh-bye wiseguy, and don't worry, it's a dry heat.

[tucker6]

I am not sure of the 'ethics' or legality of touting a position to help liquidate your holdings.
Sure you do. Completely unethical. Problem is the penalty is far lower than the benefit.

[lamboguy]

From memory: Reminisces of a stock operator.

Jessy Livermore is on the subway going to work trying to figure out how to get out of a huge position he was long cotton (I think). Across from him was a rider reading a newspaper that was not his regular read. “Livermore corners cotton” read the headline. He was out at the opening.you heard it right! i read that book every 6 months to keep my head in the right perspective, especially when i make a wrong call on some of these markets, and i make plenty of wrong moves.

[reckless]

From memory: Reminisces of a stock operator.

Jessie Livermore is on the subway going to work trying to figure out how to get out of a huge position he was long cotton (I think). Across from him was a rider reading a newspaper that was not his regular read. “Livermore corners cotton” read the headline. He was out at the opening.

I read the book in the 1970s, one of the great books of finance and investing.

This means nothing but after reading the book, I went to the Sherry Netherland Hotel to get a haircut! (I stayed away from the cloakroom where Livermore killed himself, of course.)

[lamboguy]

Broke below symmetrical triangle pattern on the daily chart.....it's going to get ugly!it couldn't hold price at all today, now under $28.

[PICSIX]

WTI 26.40 this morning

[lamboguy]

WTI 26.40 this morningi did't realize that wholesale unleaded is now .70 and driving seasons projections aren't that great either. this thing is in basic free fall.

[lamboguy]

today looks like a breakaway gap for gold while oil looks like its going to hell. this is happening on the same day, i could have never dreamt that one up in a million years.

[tucker6]

http://oilprice.com/Energy/Crude-Oil/OPEC-Will-Not-Blink-First.html

[lamboguy]

oil at the lowest price since 2003 and heading much lower.

[PICSIX]

Here's what caused the huge spike up this afternoon :mad:

http://www.zerohedge.com/news/2016-02-11/even-wsj-admits-opec-production-cut-story-may-be-bogus

[tucker6]

Here's what caused the huge spike up this afternoon :mad:

http://www.zerohedge.com/news/2016-02-11/even-wsj-admits-opec-production-cut-story-may-be-bogus
does anyone seriously believe the rumor wasn't planted by OPEC?

[Hoofless_Wonder]

does anyone seriously believe the rumor wasn't planted by OPEC?

IMHO, I'd lay money on that rumor originating from a trading desk deep within the bowels of Goldman Sachs before OPEC.

But that's because I'm a bit skeptical of numbers around oil and gold. With those two commodities heading in opposite directions (and quickly), I'm beginning to think we're getting closer to the end game, when the framework of the economic system comes flying apart like a termite infested roller coaster on the beach in a hurricane and storm surge. But I've been wrong a lot of the last nine years when it comes to the market.

Being a believer in the theory of peak oil, there should come a time when the price will head back up. Near term, perhaps triggered by a war in the Middle East. Longer term, and after most of the debt has been wiped out due to a deflationary collapse, due to scarcity. If I owned and oil well and thought I was going to be around another 40-50 years, I'd cap that bad boy and wait for the price to head back up.

[tucker6]

IMHO, I'd lay money on that rumor originating from a trading desk deep within the bowels of Goldman Sachs before OPEC.

But that's because I'm a bit skeptical of numbers around oil and gold. With those two commodities heading in opposite directions (and quickly), I'm beginning to think we're getting closer to the end game, when the framework of the economic system comes flying apart like a termite infested roller coaster on the beach in a hurricane and storm surge. But I've been wrong a lot of the last nine years when it comes to the market.

Being a believer in the theory of peak oil, there should come a time when the price will head back up. Near term, perhaps triggered by a war in the Middle East. Longer term, and after most of the debt has been wiped out due to a deflationary collapse, due to scarcity. If I owned and oil well and thought I was going to be around another 40-50 years, I'd cap that bad boy and wait for the price to head back up.
good post. Demand is heading down faster than supply, and has been for some time. With China on the skids, I don't see demand correcting the imbalance any time soon. So, it MUST be the supply side that reconfigures itself at some point. Last summer, it was estimated that Saudi Arabia, the instigator in all this, could go another 5 years at $63/bbl before their reserves ran out. At $28/bbl, that number is now down to next year sometime. I would be astounded if oil was under $45/bbl come 7/1/2016.

[PaceAdvantage]

IMHO, I'd lay money on that rumor originating from a trading desk deep within the bowels of Goldman Sachs before OPEC.Definitely my thinking as well...it's amazing how a little "flash crash" or a well placed false rumor can help someone out of a huge, horrible position...I think this happens way more than anyone would care to admit.

[Secondbest]

Definitely my thinking as well...it's amazing how a little "flash crash" or a well placed false rumor can help someone out of a huge, horrible position...I think this happens way more than anyone would care to admit.
Every day .Be it the market or a single stock or commodity

[tucker6]

Oil inventory at 86 year high and price goes up. Hmm......

http://www.bloomberg.com/news/articles/2016-02-15/oil-speculators-shrug-off-huge-stockpiles-to-bet-on-price-climb


The International Energy Agency increased its estimate for excess global supply during the first half of the year by 250,000 barrels a day. Concern that the glut is worsening drove the discount for front-month futures versus a month later to the widest since 2011. The bigger contango has encouraged traders looking to store oil to sell at a higher price in the future to rent more-expensive supertankers as onshore tanks fill up.

Inventories at Cushing, Oklahoma, the delivery point for WTI, rose to a record in the week ended Feb. 5, and nationwide supplies hover near the highest since 1930, Energy Information Administration data show.
Speculators’ long position in WTI rose by 1,152 contracts to 302,384 futures and options in the week ended Feb. 9, CFTC data show. Shorts, or bets that prices will decline, slipped 2.1 percent. Net-longs increased 5 percent to a three-month high.

Trading volume jumped to a record high on Thursday when prices sank to the lowest level since 2003. Volatility is also surging. The CBOE Crude Oil Volatility Index, which measures expectations of price swings, climbed to the highest level in seven years Friday.

[Hoofless_Wonder]

You can go crazy trying to figure out the daily or even weekly moves, but oil could just be bouncing after being oversold, could be the banks coming to the rescue (again) with the need to buy SOMETHING, or.....it could be war on the horizon.

http://www.bloomberg.com/news/articles/2016-02-14/yen-holds-retreat-with-asian-stocks-outside-china-set-to-rebound

http://www.zerohedge.com/news/2016-02-14/road-world-war-iii-turkey-shells-syria-second-day-saudi-warplanes-arrive

Lot of moving parts here - kinda like those global climate models.... :)

[tucker6]

You can go crazy trying to figure out the daily or even weekly moves, but oil could just be bouncing after being oversold, could be the banks coming to the rescue (again) with the need to buy SOMETHING, or.....it could be war on the horizon.

http://www.bloomberg.com/news/articles/2016-02-14/yen-holds-retreat-with-asian-stocks-outside-china-set-to-rebound

http://www.zerohedge.com/news/2016-02-14/road-world-war-iii-turkey-shells-syria-second-day-saudi-warplanes-arrive

Lot of moving parts here - kinda like those global climate models.... :)
indeed. One thing is a certainty though. The Powers That Be all want higher oil prices, so at some point, that shall be.

[tanner12oz]

Going to be a strong push tomorrow to break through some resistance tomorrow after drawdown numbers and the opec production news. Should continue this move with shorts hitting the panic button.

[Hoofless_Wonder]

i did't realize that wholesale unleaded is now .70 and driving seasons projections aren't that great either. this thing is in basic free fall.

Goldman on gas prices:

http://www.bloomberg.com/news/articles/2016-02-17/gasoline-is-trading-as-if-u-s-nearing-recession-goldman-says

Contracts for delivery in the summer months are currently priced less than $20 a barrel higher than crude oil. If those premiums were realized, they would be the smallest since 2010, when the U.S. unemployment rate was above 9 percent.

...

...


“The demand implied by such margins would be consistent with a U.S. recession, which our U.S. economist team estimates has only a 15 percent to 20 percent probability of occurring,” Courvalin said in the note.

GS thinks only a 20 percent chance of a recession? :D

I'm on the other side of that bet.

[tucker6]

Oil currently at $34.74/bbl

https://www.dailyfx.com/forex/technical/home/analysis/usoil/2016/03/01/WTI-Crude-Oil-Price-Forecast-Can-Oil-Break-Through-Where-It-Failed-in-2015.html

However, the technical picture provides a specific focus at the $34.79/bbl level. Not only did we turn lower from that level in late January, but also that is nearly where we find ourselves now, and it happens to be 34% off the low in February. Why is 34% significant, you ask? That is the move from the low in 2015 that preceded a 49% drop from October to February.

Therefore, if we turn lower from this level again, it is fair to say that we could be about to break back below $30, and possibly $26. However, if we break above that level, we will turn focus on the top of the price channel shown on the chart below that aligns with the Weekly R2 pivot at $37.30. A move above that level would favor not only a channel breakout but also a potential behavior shift that could turn into an all-around risk-on rally.

[tanner12oz]

Breakout

[tucker6]

Oil currently at $34.74/bbl

https://www.dailyfx.com/forex/technical/home/analysis/usoil/2016/03/01/WTI-Crude-Oil-Price-Forecast-Can-Oil-Break-Through-Where-It-Failed-in-2015.html

However, the technical picture provides a specific focus at the $34.79/bbl level. Not only did we turn lower from that level in late January, but also that is nearly where we find ourselves now, and it happens to be 34% off the low in February. Why is 34% significant, you ask? That is the move from the low in 2015 that preceded a 49% drop from October to February.

Therefore, if we turn lower from this level again, it is fair to say that we could be about to break back below $30, and possibly $26. However, if we break above that level, we will turn focus on the top of the price channel shown on the chart below that aligns with the Weekly R2 pivot at $37.30. A move above that level would favor not only a channel breakout but also a potential behavior shift that could turn into an all-around risk-on rally.
A barrel is going this morning for $38.75, and has been trading in this range for several days now.

Saudi Arabia had $600B in monetary reserves before 2015, but gave $100B of that back last year trying to force the market. How much more are the Arabs willing to spend to break the market? What we are finding is that lowering the price does not stem the flow of oil to below a certain supply line. For political stability and employment reasons, many countries are producing and selling oil at any price by deficit spending their way through this crisis. I bet the Arabs didn't plan for that! Just look at the last two months. Price has increased 50% as supply has INCREASED. IMO, this is due to the expectation by insiders that the OPEC experiment will end in failure and supplies will slow over time.

[lamboguy]

oil prices look pretty strong for now. low $24 high $45? can't call it a bear market any longer, far from it.

[tanner12oz]

I'm still not convinced that oil is set for this "rip your face off" rally some have predicted. still a glut of supply..united states producers are going dark but have said they will be back online in the $45-50 level. the Saudi's are damned if they do and damned if they don't. I think this is about as good as it gets for awhile which is still going to create some serious issues for even large producers like the COP, BP, XOM's of the world. eventually thinks are going to unclog but I think we are still a ways off from another "bull market" for oil

[_______]

I'm still not convinced that oil is set for this "rip your face off" rally some have predicted. still a glut of supply..united states producers are going dark but have said they will be back online in the $45-50 level. the Saudi's are damned if they do and damned if they don't. I think this is about as good as it gets for awhile which is still going to create some serious issues for even large producers like the COP, BP, XOM's of the world. eventually thinks are going to unclog but I think we are still a ways off from another "bull market" for oil

Rig counts in the U.S. have continued down and actual on shore production has declined everywhere except the Permian basin. Some of that supply decline has been offset by long term off shore projects coming on line.

On the other hand, it doesn't appear that fears about Iranian supplies flooding an already oversupplied market are going to play out in anything but the very long term. They just aren't going to be able to ramp up production as quickly as the fear mongers wanted you to think.

There is still an imbalance but demand continues to rise. I posted earlier that below $30/barrel most of the worlds production is uneconomic. That doesn't mean the price can't go below that number but it does mean it can't stay there long.

BP and XOM have midstream and downstream business that continue to offset losses in the upstream segment. They are profitable corporations even in this environment. COP is a pure play E and P since spinning off PSX and is much more exposed to commodity prices.

[tucker6]

BP and XOM have midstream and downstream business that continue to offset losses in the upstream segment. They are profitable corporations even in this environment. COP is a pure play E and P since spinning off PSX and is much more exposed to commodity prices.
^^^^
this


Oil companies have become much more vertical in the last 15 years, and can stave off oil price declines via affiliated transportation and storage company fees.

[tanner12oz]

^^^^
this


Oil companies have become much more vertical in the last 15 years, and can stave off oil price declines via affiliated transportation and storage company fees.

why are they cutting capex, divebda and such? Seems like they are in panic mode vs. Setup to withstand price fluctuations

[tucker6]

why are they cutting capex, divebda and such? Seems like they are in panic mode vs. Setup to withstand price fluctuations
why do you believe such cuts are mutually exclusive to sound recessionary planning?

[davew]

If 0bama places a $10/barrel greenie/global scamming tax on oil, will this change anything except the retail cost to consumers?

As far as selling at below cost of production, companies can continue to do it until they can't. There are many agricultural products that sell from the farm below the cost of average production over 60% of the time. It is also harder for agricultural producers to turn down the production valve when low prices and then open valve all the way with high prices. There are too many independent competing producers who feel they can make up for low prices with more volume.

[tanner12oz]

If 0bama places a $10/barrel greenie/global scamming tax on oil, will this change anything except the retail cost to consumers?

As far as selling at below cost of production, companies can continue to do it until they can't. There are many agricultural products that sell from the farm below the cost of average production over 60% of the time. It is also harder for agricultural producers to turn down the production valve when low prices and then open valve all the way with high prices. There are too many independent competing producers who feel they can make up for low prices with more volume.

aren't alot of those below cost products heavily subsidized though?

[tucker6]

oil ended the day at $40.23/bbl. First time in a long time. IMO, looks like a breakout to $46-48/bbl in the near term. Then probably back down to $36-38 thereafter. Back and forth, but over time sweeping higher with each tide cycle. That's my prediction anyway.

[davew]

The International Energy Agency says 800,000 barrels a day that was thought to be 'oversupply' can not be accounted for. The big surplus is not a big surplus?

[davew]

aren't alot of those below cost products heavily subsidized though?

Most direct subsidies set a 'floor' purchase price near 75% of average cost of production. This only includes a few of the 'main' crops. It does not really help the farmers in local areas of heavily hit crop failure, as they have little to sell.

There are many indirect subsidies such as CRP set aside programs (paid to leave acres fallow for 10 years), crop insurance, and research and development through the land grant colleges. There are even export programs to help sell farm products overseas.

The government has an incentive to keep prices lower, as they are an end purchaser of over 15% farm products. These go to institutionalized, military, and SNAP (food stamps) people. They also do not want to have a starving population and being put into a bad political situation as part of 'terms' for import purchase from another country.



It looks like some big oil companies want to keep the market well supplied by turning on some of their idle sources.

http://finance.yahoo.com/news/dreaded-stealth-supply-becomes-reality-051540032.html

[Donttellmeshowme]

Going on 17 months with no end in sight

[tucker6]

Going on 17 months with no end in sight
what's going on for 17 months with no end in sight?