Crude Oil on the rise

[Snagglefoot]

WTI (West Texas Intermediate) closed today at $54/ bbl, up from $42.50 at Christmas. Gasoline futures rose as well closing at $1.47 per gallon up from $1.20 at Christmas. Latest word on the street is that a certain president wants to curtail heavy oil imports from a country that starts with "V". It turns out its a perfect storm because Alberta is currently curtailing production by 325,000 bbls a day to get rid of our glut.

You might want to gas up this weekend.

 

[Imp4]

Keep making predictions like this and with some success I'll hire you to cut my grass.

I mean, really, come on man!!!!!

Neither you nor I have any idea which direction oil prices are going to go. Technology, delivery, and innovation in exploration and discovery make just about any predictions over the next 10 years a meaningless attempt at impressing our neighbors.

But good thought!!!

 

[PimTac]

I don't think the loss of crude oil imports from Venezuela will affect the prices that much.

https://www.eia.gov/dnav/pet/PET_MOVE_IMPCUS_A2_NUS_EP00_IM0_MBBL_M.htm

 

[sloinker]

Price goes up.....drilling/fracking go up. Price tumbles. Price tumbles, drilling/fracking stop, price goes up. The tar sand oils are too expensive to compete nowadays. The United States is now a net exporter of crude. My prediction hat says less than $80 a bbl over the next 20 years with averages less than $60.

 

[Snagglefoot]

Originally Posted by sloinker
Price goes up.....drilling/fracking go up. Price tumbles. Price tumbles, drilling/fracking stop, price goes up. The tar sand oils are too expensive to compete nowadays. The United States is now a net exporter of crude. My prediction hat says less than $80 a bbl over the next 20 years with averages less than $60.


The USA is not a net exporter of crude. It is a net exporter of Petroleum which is crude plus refined products. It exports 2 million bbls per day of crude but imports 10 million bbls a day of crude. The "tar sands" compete just fine. I'd be more worried about the oil companies in the Permian basin. Most have no net profit.

 

[Snagglefoot]

Originally Posted by PimTac
I don't think the loss of crude oil imports from Venezuela will affect the prices that much.

https://www.eia.gov/dnav/pet/PET_MOVE_IMPCUS_A2_NUS_EP00_IM0_MBBL_M.htm


6% of total US imports but a much higher percentage of the heavy crude that the US refineries need.

 

[Snagglefoot]

Originally Posted by Imp4
Keep making predictions like this and with some success I'll hire you to cut my grass.

I mean, really, come on man!!!!!

Neither you nor I have any idea which direction oil prices are going to go. Technology, delivery, and innovation in exploration and discovery make just about any predictions over the next 10 years a meaningless attempt at impressing our neighbors.

But good thought!!!

Ha,ha. My prediction extends to Monday.

 

[KneeGrinder]

Copper is a leading economic indicator, so is oil. So, anyone that thinks oil plunging to lower lows is good, well its not! You might be happy when you put fuel in your vehicle, but in reality, it means the economy is going down the dumpster, or Wallstreet is predicting so.

Exploration, discovery, and existing oil producing wells have a "very" limited amount of storage capacity "Above ground". It does not matter how much oil they discover, they aren't going to pull it out of the ground till it is needed, and till it is "Profitable"...


Last, I think some need to understand oil a little better. Oil is the MOST manipulated commodity on the face of the earth!

No one that buys oil futures can actually take possession of the product because it is a hazardous material. Oil futures can only be bought and sold with the intention of buying at a lower price, and selling at a higher price, with the exception of mass users fuel that use futures for hedging fuel prices, transportation co's, air line co's, ect. I will step off my soap box! You guys can go back to 5w20 vs 5w30...lol, j/k

 

[69GTX]

Oil just went through a huge correction from $76 to $41/bl. It's only logical that a 38-50% retrace of that correction was going to occur. Getting close to the 38% retrace of $54. When this rebound is over, I'd sort of expect a significant drop again to re-test that recent low of around $41. No idea when that comes though. This is just simple cycle analysis. Regardless of immediate supply and demand...these cycles occur like clockwork. So yes, you can make a pretty reasonable estimate of what is coming up the next several weeks/months.

Not sure I'd agree that oil is the most heavily manipulated commodity out there. I think silver, gold, coffee, sugar, etc. have a claim to that title too. Supply and demand have lesser roles in commodity pricing today. The proprietary trading of big banks and dark pools of over the counter derivatives and options/futures are the 800 lb gorilla in the room. The big banks carry monstrous paper positions in many commodities that dwarf the physical markets. For instance back in July 2008 JPMorgan almost single handedly carried the equivalent of 13 yrs of world silver production via otc derivatives valued at $200 BILL. You can't determine true supply and demand when markets are imbalanced via paper trading routines. Why does a bank even need hedges amounting to 13X world annual production? And no doubt the banks' oil positions in July 2008 were pretty outlandish as well. Just as their positions in Real Estate over the counter derivatives in 2006-2008 (and credit default swaps) helped to blow up the RE markets and almost sink the world banking system.

 

[pitzel]

Sounds like its just traders covering their shorts, at least temporarily. Because there's certainly no evidence of any shortage of physical supply. And as implied, there's lots of capacity shut-in which should continue to imply lower pricing.

The recently slowing economy (I have access to somewhat proprietary rail traffic indicators) should speed up and increase utilization of rail-borne capacity from Alberta.

 

[Snagglefoot]

Speaking of rail indicators, in the spring of 2008 I took a drive through Montana along side the Missouri River. There were miles and miles of empty flatbed cars parked on the train tracks. I remember commenting about this to my son. After the economic collapse of 2008, I read a story that the prescence of those empty rail cars was actually an indicator that the economy was slowing down and the rail cars were not needed. Has anyone checked the rail lines along the Missouri lately?

 

[Y_K]

There is also a known accounting cycle: they sell the inventory they are taxed on by the end of the year and replenish it slowly as needed later. A known factor in oil, copper and lumber industries, i.e. sell on Thanksgiving and buy on valentines day, etc.

 

[4WD]

Originally Posted by pitzel
Sounds like its just traders covering their shorts, at least temporarily. Because there's certainly no evidence of any shortage of physical supply. And as implied, there's lots of capacity shut-in which should continue to imply lower pricing.

The recently slowing economy (I have access to somewhat proprietary rail traffic indicators) should speed up and increase utilization of rail-borne capacity from Alberta.


Some are just in the business of flipping paper barrels … numbers are mixed with huge long term investments when you are talking integrated oil companies …

 

[Imp4]

Originally Posted by Snagglefoot
Ha,ha. My prediction extends to Monday.

Yep, right up until the markets open...