Oil holds $40

[_______]

Doha failed and oil still trades above $40.

It's interesting to see that the Brent/WTI spread has widened.

I can understand that no one thought Doha would succeed and it was priced in but why would the spread widen afterwards?

The Saudi's threaten to pump more oil into an oversupplied market and that hits U.S. production harder?

Does anyone have a theory?

[PaceAdvantage]

Maybe the instability in the Middle East and the empowerment of Iran by the Obama administration is putting a floor into the price of oil with the anticipation of a coming shit storm...

[tucker6]

https://www.dailyfx.com/forex/technical/home/analysis/usoil/2016/04/27/Title-WTI-Crude-Oil-Price-Forecast-China-Optimism-Pushes-Oil-Past-45bbl.html

WTI Crude Oil broke above $45/bbl on a mixture of factors including a weak US Dollar, strong demand out of China, and a more balanced supply and demand picture than we’ve had in nearly two years. Now that we’ve crossed above the 200-DMA, which acted as such strong resistance since crossing below in early 2014, it appears there is little looking back. This change in market sentiment is significant because a move above $50 would likely start to see the low number of active rigs, a number that declined to balance the global supply glut, could start to rise again.

[tucker6]

One of my clients is in the oil and gas compression equipment supply business, and they are pumping out the proposals these days and a couple of them are starting to come in. For two years, customers have been on the sidelines. No longer. The industry is betting on higher prices.

[barn32]

One of my clients is in the oil and gas compression equipment supply business, and they are pumping out the proposals these days and a couple of them are starting to come in. For two years, customers have been on the sidelines. No longer. The industry is betting on higher prices.They have to bet on higher prices...it's their only hope.

[tucker6]

They have to bet on higher prices...it's their only hope.
True, but when they start using real money I notice.

[tanner12oz]

True, but when they start using real money I notice.

the extremes are the norm anymore..you have had a couple insane spikes and collapses in oil over the last 8 years...it wouldn't surprise me at all to see another mega spike to $100 followed by another epic crash. Wash rinse repeat.

[tucker6]

the extremes are the norm anymore..you have had a couple insane spikes and collapses in oil over the last 8 years...it wouldn't surprise me at all to see another mega spike to $100 followed by another epic crash. Wash rinse repeat.
I agree with you and would be very happy to have the price go to $100. Bought oil and related stocks when oil was in the low 30's and so far so good.

[tanner12oz]

I agree with you and would be very happy to have the price go to $100. Bought oil and related stocks when oil was in the low 30's and so far so good.

I started buying in August and averaged down..currently green and have collect a couple dividends in the process. If we can hit a $50 handle on oil I think the majors can make it work, keep dividends in place and just grind it out. I think we are close to being out of the danger zone for the well run companies. The rogue, reckless companies though will continue to feel pain and need to be killed off

[tucker6]

I started buying in August and averaged down..currently green and have collect a couple dividends in the process. If we can hit a $50 handle on oil I think the majors can make it work, keep dividends in place and just grind it out. I think we are close to being out of the danger zone for the well run companies. The rogue, reckless companies though will continue to feel pain and need to be killed off
I think there were 60 oil related companies that filed for bankruptcy or receivership two weeks ago. Most people don't realize that companies going out of business is healthy for stocks and the industry as it frees up needed capital for the healthiest in the group.

[tanner12oz]

I think there were 60 oil related companies that filed for bankruptcy or receivership two weeks ago. Most people don't realize that companies going out of business is healthy for stocks and the industry as it frees up needed capital for the healthiest in the group.


goldman (who are probably the biggest conmen on wallstreet) flipped there stance on oil today and believe that we are now beginning to work our way through the glut of oil. U.S., Candada, Nigeria, Venezula are all dealing with falling production numbers while OPEC countries continue to pummel the market with barrels. They said this is a sweet spot for oil cuz at $60 you'll see more projects coming back online and create another surplus

[tucker6]

goldman (who are probably the biggest conmen on wallstreet) flipped there stance on oil today and believe that we are now beginning to work our way through the glut of oil. U.S., Candada, Nigeria, Venezula are all dealing with falling production numbers while OPEC countries continue to pummel the market with barrels. They said this is a sweet spot for oil cuz at $60 you'll see more projects coming back online and create another surplus
Yeah, I read that. With Goldman on board, it makes me want to jettison my holdings at $55 and buy in again at $40. :D

At some point, the spigot will turn off in the Middle East (either voluntarily or involuntarily), and you'll want to own oil and lots of it on that day.

[tucker6]

Oil is sniffing $50 this week. Ended the day at $49.39. I think it holds here (give or take) for awhile. I think it trades low/mid 60's by year end though. Time is on the side of the bulls here. If low economic growth worldwide in conjunction with a huge vast oil supply surge didn't kill off everybody, I don't see what will. There is no long term reason to short oil. None.

[PaceAdvantage]

Every single time oil plunges, people (like me) are left wondering how the hell they didn't load up when it was, once again, down near historical lows...

Pardon me while I go kick some sand...

[tucker6]

Every single time oil plunges, people (like me) are left wondering how the hell they didn't load up when it was, once again, down near historical lows...

Pardon me while I go kick some sand...
Mike, I said the same thing after the 2008 crash when the auto industry stocks (and many others) could be purchased for pennies on the dollar. I kicked myself then, and said it wasn't going to happen to me this time with oil. Still took my broker to give me a backbone to do it. Easy to say 'buy' on a message board. Much more difficult when you have to write the check. :D

[barn32]

When oil bottomed around $26, all of the pundits were saying $20 oil is almost a certainty.

I think that scared a lot of people off.

My personal low was around $25, but I failed to buy as well.

What do I know from oil?

[tanner12oz]

The thing is even though you might have missed it another opportunity always comes along. Same applies to racing...

[tucker6]

When oil bottomed around $26, all of the pundits were saying $20 oil is almost a certainty.

I think that scared a lot of people off.

My personal low was around $25, but I failed to buy as well.

What do I know from oil?
The price of oil has been artificially dampened so that the cartel can re-corner the market again. There are two outcomes here that stem from that attempt.

1. The cartel pumps up production and succeeds in driving out the fracking and smaller players by having extended low priced oil. Longer term, production would be cut back and oil prices would zoom.

2. The cartel pumps up production and fails in driving out the fracking and smaller players by having extended low priced oil. Longer term, production would be cut back and oil prices would zoom.

The end game for oil prices longer term is the same without regard to whether the cartel succeeds or not. The cartel countries are losing a lot of potential profits at these low prices, so artificially low prices cannot be sustained forever (more than 2-3 years), and when the price got to $26-27 a bbl, that was my thought. I still think oil is cheap compared to what it will be in 2-3 more years. I believe it will reach $100/bbl again in that time.

[tucker6]

Closed today for the first time in a while above $50/bbl.

[JBmadera]

Looking for $54, then a very sharp reversal. Great spot for a swing short imo.

[_______]

Closed today for the first time in a while above $50/bbl.

Nice to see it back above the price I thought it would never go below.

[tucker6]

Nice to see it back above the price I thought it would never go below.
I thought it would never get below $35. The cartel wouldn't have started the oil flood if they didn't think they could get the price under $50. That's the rough number for many fracking operation to begin closing down. I agree with the previous poster that a correction is coming soon. Imo, all the cartel did was produce a shakeout in the fracking industry which will allow for better economies of scale going forward, thus reducing costs of production.

[Parkview_Pirate]

Oil down to $42 and change, retracing back to about the 61.8 from the February lows. Also appears to be a key support level around $42.

Where does it go from here? My guess is down, after a weak bounce to maybe $45. Just got back from a 4,000 mile road trip to the Midwest and back. Gas was cheap all the way. No demand, so methinks the economy is sputtering. Backed up by this article.

http://www.reuters.com/article/us-usa-gasoline-flows-idUSKCN1040G1


But mixing more winter gasoline now threatens to worsen the glut later, a risk willingly taken by an industry left with few other choices.

Big imports and a massive overhang in gasoline inventories have turned the market on its head and pushed gasoline stockpiles to the highest levels for this time of the year in a quarter of a century, even as demand from U.S. motorists during the busy summer is near a record.

Independent U.S. refiners are expected to post another quarter of weak earnings en route to possibly the worst year since the shale boom began in 2011.

[_______]

Oil down to $42 and change, retracing back to about the 61.8 from the February lows. Also appears to be a key support level around $42.

Where does it go from here? My guess is down, after a weak bounce to maybe $45. Just got back from a 4,000 mile road trip to the Midwest and back. Gas was cheap all the way. No demand, so methinks the economy is sputtering. Backed up by this article.

http://www.reuters.com/article/us-usa-gasoline-flows-idUSKCN1040G1

I have posted so many times trying to correct this meme that will not die about weak demand causing the drop in oil that I should just give up.

But...one more time.

The world will use more oil in 2016 than it did in 2015. Just as it used more oil while prices dropped throughout 2015 than it did in 2014. The issue isn't demand. It has never been demand.

You can blame pricing weakness on the success of American capitalism capsizing cartel pricing. Smart guys figured out technologies (fracking and horizontal drilling) to extract oil from shale. We have a legal system where mineral rights are held privately and can be sold or leased by the owner. The result of that is the US now has the largest reserves of recoverable oil in the world.

My bet (no one should pay attention to this as no one here has been more wrong about oil than me) is that prices will be near $60 next January.

The late summer downturn in prices is cyclical.

I can be very wrong about the direction of prices. But the fact of growing demand is irrefutable.

[tanner12oz]

I have posted so many times trying to correct this meme that will not die about weak demand causing the drop in oil that I should just give up.

But...one more time.

The world will use more oil in 2016 than it did in 2015. Just as it used more oil while prices dropped throughout 2015 than it did in 2014. The issue isn't demand. It has never been demand.

You can blame pricing weakness on the success of American capitalism capsizing cartel pricing. Smart guys figured out technologies (fracking and horizontal drilling) to extract oil from shale. We have a legal system where mineral rights are held privately and can be sold or leased by the owner. The result of that is the US now has the largest reserves of recoverable oil in the world.

My bet (no one should pay attention to this as no one here has been more wrong about oil than me) is that prices will be near $60 next January.

The late summer downturn in prices is cyclical.

I can be very wrong about the direction of prices. But the fact of growing demand is irrefutable.

but if supply exceeds the growth in demand then you have falling prices. Rigs are more efficient now then they have ever been and we get more from each hole, need less holes to satisfy demand. The rig count needs to drop because we can simply do more with less.

[tucker6]

but if supply exceeds the growth in demand then you have falling prices. Rigs are more efficient now then they have ever been and we get more from each hole, need less holes to satisfy demand. The rig count needs to drop because we can simply do more with less.
That's the classical equation, but anyone who has paid any atten tion to oil the last couple years will tell you that market has not behaved theoretically.

[Valuist]

Oil down to $42 and change, retracing back to about the 61.8 from the February lows. Also appears to be a key support level around $42.

Where does it go from here? My guess is down, after a weak bounce to maybe $45. Just got back from a 4,000 mile road trip to the Midwest and back. Gas was cheap all the way. No demand, so methinks the economy is sputtering. Backed up by this article.

http://www.reuters.com/article/us-usa-gasoline-flows-idUSKCN1040G1

I agree that the strongest support level appears to be around $42.

[Parkview_Pirate]

I have posted so many times trying to correct this meme that will not die about weak demand causing the drop in oil that I should just give up.

But...one more time.

The world will use more oil in 2016 than it did in 2015. Just as it used more oil while prices dropped throughout 2015 than it did in 2014. The issue isn't demand. It has never been demand.

You can blame pricing weakness on the success of American capitalism capsizing cartel pricing. Smart guys figured out technologies (fracking and horizontal drilling) to extract oil from shale. We have a legal system where mineral rights are held privately and can be sold or leased by the owner. The result of that is the US now has the largest reserves of recoverable oil in the world.

My bet (no one should pay attention to this as no one here has been more wrong about oil than me) is that prices will be near $60 next January.

The late summer downturn in prices is cyclical.

I can be very wrong about the direction of prices. But the fact of growing demand is irrefutable.

I get that the overall demand for oil has been rising, but it did take a brief downturn in 2008/2009 during the Great Recession. IMHO, the global economy is running on fumes as the Central Banks are out of ammo, and a great deflationary event is coming soon. Contrary to the media spin and .GOV's insistence that the economy is doing great, there are plenty of numbers indicating that not everything is rosy.

Since consumption numbers lag behind production and supply, a drop in demand won't be apparent until well after it's underway. Maybe the low prices are completely due to overproduction or the late summer cycle, but with all the uncertainty in the economy persisting, I think demand is dropping off too.

One thing I did see while driving through eastern Montana and North Dakota (the Williston Basin), were plenty of idle oil pumps. Waiting for higher prices I guess, assuming it's not a fracked out dry well.

I would bet that oil will drop back down to low/mid 30s before heading back up again. There will come a day, perhaps in three to five years, that oil will head north of $100 and may never see double digits again.....

[lamboguy]

I get that the overall demand for oil has been rising, but it did take a brief downturn in 2008/2009 during the Great Recession. IMHO, the global economy is running on fumes as the Central Banks are out of ammo, and a great deflationary event is coming soon. Contrary to the media spin and .GOV's insistence that the economy is doing great, there are plenty of numbers indicating that not everything is rosy.

Since consumption numbers lag behind production and supply, a drop in demand won't be apparent until well after it's underway. Maybe the low prices are completely due to overproduction or the late summer cycle, but with all the uncertainty in the economy persisting, I think demand is dropping off too.

One thing I did see while driving through eastern Montana and North Dakota (the Williston Basin), were plenty of idle oil pumps. Waiting for higher prices I guess, assuming it's not a fracked out dry well.

I would bet that oil will drop back down to low/mid 30s before heading back up again. There will come a day, perhaps in three to five years, that oil will head north of $100 and may never see double digits again.....i agree with oil going back up to $100 some day. probably the biggest reason why oil has been down is because oil is priced in dollars and the dollar has become strong for some reason.