Oil - WTI / Brent Crude
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andyfuller
- Posts: 4619
- Joined: Wed Mar 25, 2009 12:23 pm
Sure I heard this morning on 'Wake Up To Money' that they reckon the Saudi's could go to $6 a barrel if needs be 
It was quite early though so I may have miss heard but sure I didn't.
It was quite early though so I may have miss heard but sure I didn't.-
superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
'think that's true Andy. Middle East oil is very easy/cheap to extract by comparison, the Ghawar field in Saudi being by far the biggest in the world. just shows how much profit they must have made over the years just from being lucky enough to be sat on it all!andyfuller wrote:Sure I heard this morning on 'Wake Up To Money' that they reckon the Saudi's could go to $6 a barrel if needs be
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
US crude at $50 today. I wouldn't be in any rush to buy it though; $40-$60 may be the new norm for some time and if Germany don't allow the ECB to print too much (and OPEC stick to their guns) then it could go a fair bit lower (imho).
Happy new year to all traders (who don't work for a bank).
Happy new year to all traders (who don't work for a bank).
Found a source for that remark:andyfuller wrote:Sure I heard this morning on 'Wake Up To Money' that they reckon the Saudi's could go to $6 a barrel if needs be
http://www.economist.com/news/finance-a ... -low-priceBut Saudi Arabia can also weather a low price: its production costs are $5-$6 a barrel
Does anyone trade Us futures oil CL market?
http://www.gmo.com/websitecontent/GMO_Q ... r_4Q14.pdf
The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand. It became clear that OPEC, mainly Saudi Arabia, must cut back production if the price were to stay around $100 a barrel, which many, including me, believe is necessary to justify continued heavy spending to find traditional oil. The Saudis declined to pull back their production and the oil market entered into glut mode, in which storage is full and production continues above demand. Under glut conditions, oil (and natural gas) is uniquely sensitive to declines toward marginal cost (ignoring sunk costs), which can approach a few dollars a barrel — the cost of just pumping the oil.
Oil demand is notoriously insensitive to price in the short term but cumulatively and substantially sensitive as a few years pass. The Saudis are obviously expecting that these low prices will turn off U.S. fracking, and I’m sure they are right. Almost no new drilling programs will be initiated at current prices except by the financially desperate and the irrationally impatient, and in three years over 80% of all production from current wells will be gone! Thus, in a few months (six to nine?) I believe oil supply is likely to drop to a new equilibrium, probably in the $30 to $50 per barrel range. For the following few years, U.S. fracking costs will determine the global oil balance. At each level, as prices rise more, fracking production will gear up. U.S. fracking is unique in oil industry history in the speed with which it can turn on and off. In five to eight years, depending on global GDP growth and how quickly prices recover, U.S. fracking production will start to peak out and the full cost of an incremental barrel of traditional oil will become, once again, the main input into price. This is believed to be about $80 today and rising. In five to eight years it is likely to be $100 to $150 in my opinion. U.S. fracking reserves that are available up to $120 a barrel are probably only equal to about one year of current global demand. This is absolutely not another Saudi Arabia.
The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand. It became clear that OPEC, mainly Saudi Arabia, must cut back production if the price were to stay around $100 a barrel, which many, including me, believe is necessary to justify continued heavy spending to find traditional oil. The Saudis declined to pull back their production and the oil market entered into glut mode, in which storage is full and production continues above demand. Under glut conditions, oil (and natural gas) is uniquely sensitive to declines toward marginal cost (ignoring sunk costs), which can approach a few dollars a barrel — the cost of just pumping the oil.
Oil demand is notoriously insensitive to price in the short term but cumulatively and substantially sensitive as a few years pass. The Saudis are obviously expecting that these low prices will turn off U.S. fracking, and I’m sure they are right. Almost no new drilling programs will be initiated at current prices except by the financially desperate and the irrationally impatient, and in three years over 80% of all production from current wells will be gone! Thus, in a few months (six to nine?) I believe oil supply is likely to drop to a new equilibrium, probably in the $30 to $50 per barrel range. For the following few years, U.S. fracking costs will determine the global oil balance. At each level, as prices rise more, fracking production will gear up. U.S. fracking is unique in oil industry history in the speed with which it can turn on and off. In five to eight years, depending on global GDP growth and how quickly prices recover, U.S. fracking production will start to peak out and the full cost of an incremental barrel of traditional oil will become, once again, the main input into price. This is believed to be about $80 today and rising. In five to eight years it is likely to be $100 to $150 in my opinion. U.S. fracking reserves that are available up to $120 a barrel are probably only equal to about one year of current global demand. This is absolutely not another Saudi Arabia.
Found this interesting this week..
http://www.ft.com/cms/s/0/9b9a4b62-ae46 ... z3RZHHuGvM
Anyone own an oil tanker?
http://www.ft.com/cms/s/0/9b9a4b62-ae46 ... z3RZHHuGvM
Anyone own an oil tanker?
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marksmeets302
- Posts: 527
- Joined: Thu Dec 10, 2009 4:37 pm
As weird as it sounds, I do.Anyone own an oil tanker?
Well, not exactly. It's a cape sized freighter and I only own a part of it. If you thought oil got hit hard, take a look at the baltic dry index. It's an index that tracks the shipping rates for cape sized freighters. In 2008 it dropped 95% in a matter of months, and so far it hasn't recovered. Worse, today it's at an all time low.
As with all investments, sometimes you win, sometimes you lose. To date, this has been my worst. I've had a stake in a couple of ventures that eventually went bankrupt, but at least I got some payments out of them before things got ugly. With this ship, all I ever got was a so-called construction-finished dividend that didn't even cover the travel expenses when I got there to watch it baptised. Taught me to stay away from boats
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marksmeets302
- Posts: 527
- Joined: Thu Dec 10, 2009 4:37 pm
Oil at a 5 months high now. Brent did $69 yesterday.
Personally, I'm more worried about the interest rates. Last week I tried to get out of a couple of bonds. There were just no buyers other than the market maker. In the end I hit his bid, giving up a huge spread.
Personally, I'm more worried about the interest rates. Last week I tried to get out of a couple of bonds. There were just no buyers other than the market maker. In the end I hit his bid, giving up a huge spread.
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marksmeets302
- Posts: 527
- Joined: Thu Dec 10, 2009 4:37 pm
crude taking a plunge today. CL august contract trading at 53.50
