OIL PRICES, the echonomic view

[Frankn]

Well, it's happening as I called it. I said the price would drop and the world would recover economically.
I think it will drop to about $36 a bbl and stabilize there. That's what it was before Opec goosed it to $140 or whatever it got to. The shale oil helped and Shell has just discovered a huge oil reserve in the Gulf of Mexico. Now if the pipeline goes thru and perhaps some areas in Alaska are opened for drilling, the US will probably be the worlds largest producer of oil. I would add more, but it would only turn out to be bait for the political hunter. Please don't feed him here. Frank

 

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[Mackaydon]

Frankn,

$36?
Reuters reported yesterday that prices received by oil producers in North Dakota’s Williston Basin have averaged less than $34 per barrel so far this month, according to the list of posted prices issued by Plains Marketing.
Source: http://www.reuters.com/article/2015/01/08/us-oil-prices-bakken-kemp-idUSKBN0KG1Y720150108
Reuters also reminds the reader that the recent decline has been almost as rapid and brutal as the second half of 2008 and early 2009 when Williston prices crashed from $116 in July 2008 to average less than $17 in December. (Note: $17 is not a typo.)
I wont venture a guess on the possibility that we could see $30 PB within 45 days, but it's possible. Likewise, I can imagine a rebound to over $50 sometime during the 2nd half of '15.
Don....

 

[UncleMatt]

OPEC didn't goose anything anywhere. They simply refused to cut production to keep manipulating the price. If third world demand and middle eastern threats are real market forces that keep prices high, why isn't the price high right this minute? The lesson revealed is those were just excuses by oil companies to raise the price much higher than real demand and market conditions would ever support. That is why it fell so quickly when the Saudis refused to cut production: the game was up!

 

[bill from lachine]

Folks,

That's one of those things that's pretty hard to predict the highs and lows in the commodity game.....regardless of what games go on in the background.

They usually overshoot on the upside and likewise on the downside....at some point supply and demand will get back in balance.....it's a great boost to consumers and certain companies with the lower prices....downside lots of cutbacks and job loses for the drillers and oil well workers and those are all pretty high paying jobs.....it'll be interesting to see how this all shakes out.

Regards + HH

Bill

 

[UncleMatt]

If supply and demand were the only market forces impacting the oil market, we would not see such swings in price. If you removed all the speculation and manipulation from oil markets, they would be lower and stable than they have been for the last decade. Its the greedsters that make the situation much more complex and uncertain than it otherwise would be in my humble opinion.

 

[Dave44]

If supply and demand were the only market forces impacting the oil market, we would not see such swings in price. If you removed all the speculation and manipulation from oil markets, they would be lower and stable than they have been for the last decade. Its the greedsters that make the situation much more complex and uncertain than it otherwise would be in my humble opinion.

Greedsters ? Lol. I like that class warfare word! I watch the stock market undulate and wonder what is moving it too. I am sad to say I don't really see much fundamental capitalism anymore. I believe we are looking more at cronyism.

But the oil situation looks very strange. I don't really see the supply and demand thing that much, where did all of the " supply" really come from? I think we will see it go lower too, and I think we will see it skyrocket whenever the " objective" is achieved .

 

[Peyton Manning]

my understanding is that the pipeline is to carry canadian oil just to be shipped to china so it isn't US oil.
it is not the kind of oil we use here

 

[Dave44]

My understanding is the pipeline will also carry oil from the new oil fields in America too?

And it goes to where the most refineries are in this country, maybe we should spread the refineries out and build more pipelines?

 

[Frankn]

I watched the oil price on the market today. It fluctuated between $48 & $47/bbl.
The majority of the oil used in the US comes from the US, Canada and Mexico.
A lot of our oil from Alaska goes to Japan.
The oil that comes from OPEC is sold to the companies that own the tankers. The tankers then work the best deal they can get from the refineries. That is what drives the futures game. Frank

 

[Frankn]

Well, It's down to $45 today. I picked $36 for the probable bottom. Any other guesses?
Frank

 

[Mad Machinist]

Frankn,

You got the idea. Just a heads up, we ARE the largest producer of oil in the WORLD now. We are currently producing 9.1 million barrels of oil a day with more still to come on line during the first half of this year.

What is going on right now is OPEC, specifically Saudi Arabia, are trying to drive the shale oil guys out of business, this removing supply from the market, driving prices back up due to a "short supply".

One of the main problems we face is our refineries are not set up to refine the light sweet crude produced from fracking. Once that is taken care of, the oil we prodice will be worth more. Once we get pipelines in place, the price paid for "our" oil will go up to the commodities market price.

If the price of oil remains where it is now, the companies drilling and fracking here will gain more experience and get more efficient this bringing the price to drill down. When horizontal drilling and fracking started, it took 17 days to drill a well. It now takes 6 days. Gotta love efficiency.

OPEC is now in the ultimate catch 22 situation, which may very well spell the end of OPEC. Many members of OPEC need oil at $100 plus a barrel to pay for their budgets. Without the high prices, they suffer badly. But with the high prices, it is profitable for us to drill and frack. If OPEC cuts production, they lose market share and we could very well pick it up.

Gonna be interesting to watch. Like you, I see low oil prices coming. How low? I see sub $30 a barrel oil. The Saudi Oil Minister said they don't care if oil goes under $20 a barrel, they are not cutting production. And if any OPEC or non-OPEC member cuts production, they will boost production to keep prices deflated.

 

[Frankn]

Frankn,

You got the idea. Just a heads up, we ARE the largest producer of oil in the WORLD now. We are currently producing 9.1 million barrels of oil a day with more still to come on line during the first half of this year.

What is going on right now is OPEC, specifically Saudi Arabia, are trying to drive the shale oil guys out of business, this removing supply from the market, driving prices back up due to a "short supply".

One of the main problems we face is our refineries are not set up to refine the light sweet crude produced from fracking. Once that is taken care of, the oil we prodice will be worth more. Once we get pipelines in place, the price paid for "our" oil will go up to the commodities market price.

If the price of oil remains where it is now, the companies drilling and fracking here will gain more experience and get more efficient this bringing the price to drill down. When horizontal drilling and fracking started, it took 17 days to drill a well. It now takes 6 days. Gotta love efficiency.

OPEC is now in the ultimate catch 22 situation, which may very well spell the end of OPEC. Many members of OPEC need oil at $100 plus a barrel to pay for their budgets. Without the high prices, they suffer badly. But with the high prices, it is profitable for us to drill and frack. If OPEC cuts production, they lose market share and we could very well pick it up.

Gonna be interesting to watch. Like you, I see low oil prices coming. How low? I see sub $30 a barrel oil. The Saudi Oil Minister said they don't care if oil goes under $20 a barrel, they are not cutting production. And if any OPEC or non-OPEC member cuts production, they will boost production to keep prices deflated.

Good post and I see another problem for the OPEC crew. They have obtained a big spending habit so as the price goes down they must sell more to match the past income. It death spiral mode for them. They are building skyscrapers, super highways into the desert to nowhere, and artifical islands in the shape of palm trees. The scare is on for them. They have even stopped working on there solar city in the desert. What they don't under stand is our oil industry works at least 6 Months ahead with there financing. It gives them time to improve efficiency. Frank

 

[Dave44]

It would be nice to pay for oil from somewhere that doesn't hate us so much.

 

[bill from lachine]

Folks,

One thing to keep in mind is the Saudis have somewhere between $600/$800 billion is cash reserves and other investments as a cushion to ride this out.....but yeah we haven't hit bottom yet.....but opec is on shaky ground because Russia and Venuzuela don't have the cash reserves to ride this out.....the bottom is not yet here.....if it dips below $30.....it might be time to consider buying some dirt cheap shares in Exon or one of the other majors and make a nice profit when the prices start rising again.....just my 2 cents.

Regards + HH

Bill

 

[diverrick]

What I don't understand is why people are against the pipeline? It is the safest, and best way to move the product. It will be moved, no matter what, by rail, or truck or by pieline. I'd rather have a quite pipeline going by, than a bunch of noisy, polluting trains and trucks, keeping me up 24/7.

 

[bill from lachine]

diverrick,

Yeah and with all the hype about the refined product being shipped overseas is bs.....the refined product is required to stay in the US by law....if that makes North America less dependent on imported oil and gas from countries that hate us everyone wins.

Regards + HH

Bill

 

[Mad Machinist]

What I don't understand is why people are against the pipeline? It is the safest, and best way to move the product. It will be moved, no matter what, by rail, or truck or by pieline. I'd rather have a quite pipeline going by, than a bunch of noisy, polluting trains and trucks, keeping me up 24/7.

It has to do with the cost of oil. If it has to be shipped by truck or train, it becomes more expensive and accidents more visible thus making "renewables" more "cost competitive" and "socially acceptable". Every dirty trick in the book is being used right now. Way too big of a deal is being made over Keystone. What's one more international pipeline? There's already 20 here now. United States Pipelines map - Crude Oil (petroleum) pipelines - Natural Gas pipelines - Products pipelines

I could post more but I am not sure if it would be better here or under the global warming forum. Have to think about it for awhile.

 

[Frankn]

What I don't understand is why people are against the pipeline? It is the safest, and best way to move the product. It will be moved, no matter what, by rail, or truck or by pieline. I'd rather have a quite pipeline going by, than a bunch of noisy, polluting trains and trucks, keeping me up 24/7.

It's the green and global warming crowd trying to pinch the supply of a carbon base material which they see as a threat to the Earth. Even the Pres. goes along with this. I think they are trying to gore the use of oil. lol Frank

 

[bill from lachine]

Frank,

We don't have a viable alternative or at least not a cost effective one yet to replace fossil fuels......solar, wind, thermal, etc....works but the costs are exorbitant compared to fossil fuels.

A buddy of mine has a farm on the south shore of Montreal about 250 acres I believe just in hay for the local dairy farmers.....there's a wind farm not that far away and he says it's wrecking havoc on the bee population because the audio noise is driving them away from the nearby areas.....that type of stuff doesn't make the press.....you solve one problem and create another.

Regards + HH

Bill

 

[Frankn]

Frank,

We don't have a viable alternative or at least not a cost effective one yet to replace fossil fuels......solar, wind, thermal, etc....works but the costs are exorbitant compared to fossil fuels.

A buddy of mine has a farm on the south shore of Montreal about 250 acres I believe just in hay for the local dairy farmers.....there's a wind farm not that far away and he says it's wrecking havoc on the bee population because the audio noise is driving them away from the nearby areas.....that type of stuff doesn't make the press.....you solve one problem and create another.

Regards + HH

Bill

Hay, we had an answer, atomic power, but the dark side of it showed up. That is storage of used fuel and the extreme cost of gov. regulations.
Bio fuel didn't do much better. It was costly to make, drove up food costs and didn't run as well or age well after made.
I think the final answer will be in a new type of energy conversion. Perhaps a break-thru in solar and battery technology followed by a break-thru in fusion tech.
Frank