Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

THE Price of Crude pt 13

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 20 Apr 2017, 15:24:28

As pointed out numerous times while some in the fossil fuel industry are facing tough times others are doing great. Like those buying PROVED reserves for less then companies were spending to try to develop speculative reserves during the "boom". Thus the potential largest fossil fuel wealth transfer ever seen continues:

1Q Oil, Gas M&A Deals Hit Record $73 Billion

"Investors enter 2017 with renewed enthusiasm for oil and gas deals, pushing transaction value 160 percent above last year, but that excitement may be on the wane. Reassured by Donald Trump’s presidential agenda and the relative stability of oil prices once OPEC and non-OPEC countries settled on oil quotas, investors opened 2017 with a record $73.04 billion deals, according to findings by PwC.

The investment represents a 160 percent increase in mergers and acquisitions (M&A) deal value, year over year, which includes the return of foreign capital in U.S. shale assets. As for deal volume, 53 were announced during the first quarter, up 36 percent year over year."
User avatar
ROCKMAN
Expert
Expert
 
Posts: 10626
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: THE Price of Crude pt 13

Unread postby sparky » Thu 20 Apr 2017, 21:15:51

.
more sharp fluctuation in the price of crude
after a sharp drop due to ?????
there was a strong rise above 50$ and back to the 53$ line
now it's falling sharply again toward the 50$
I would put it to frenzied speculation ,
the upper and lower boundary seeming to be 50< >55
User avatar
sparky
Fission
Fission
 
Posts: 3265
Joined: Mon 09 Apr 2007, 02:00:00
Location: Sydney , OZ

Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 20 Apr 2017, 23:01:21

sparky - "...more sharp fluctuation in the price of crude...". You mean that range of a few $'s per bbl compared to 2011 when the price fluctuated from $90 to $83 to $105 to $112 to $98 to $90 to $100 to $80 to $90 to $78 to $102 to $94 to $102?

I gather oil price "stability" is in the eye of the beholder. LOL.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 10626
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: THE Price of Crude pt 13

Unread postby GoghGoner » Thu 04 May 2017, 09:09:53

WTI sub $47 for the first time in 2017. My guess is a quick bounce back above $50 but this decline has pushed past my lower boundary so I am start to question what is wrong with demand. Rising interest rates, less US automobiles on the road due to loan defaults, China manufacturing looks gloomy, ...

Hoping for a bounce back and not a collapse in demand.
GoghGoner
Light Sweet Crude
Light Sweet Crude
 
Posts: 1623
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 13

Unread postby onlooker » Thu 04 May 2017, 09:35:39

http://www.macrotrends.net/2516/wti-cru ... aily-chart
My question is why hasn't demand picked up especially since 2015 when oil has been at $60 dollars or less as illustrated by my link?
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
User avatar
onlooker
Fusion
Fusion
 
Posts: 7964
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 04 May 2017, 11:58:50

looked - Granted it's a simplistic answer but none the less valid IMHO: while pricing does modulate demand to some degree the vitality of the global economy ultimately dictates the price of oil: regardless of how low oil prices go if the buyers refuse to pay it and sellers want to max their revenue prices will decline until enough buyers increase their demand for oil.

IOW if me, an oil buyer, can't pay $50/bbl I ain't buying your oil. You want to sell more oil? OK, then lower your price and I'll buy some more.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 10626
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: THE Price of Crude pt 13

Unread postby onlooker » Thu 04 May 2017, 12:01:36

ROCKMAN wrote:looked - Granted it's a simplistic answer but none the less valid IMHO: while pricing does modulate demand to some degree the vitality of the global economy ultimately dictates the price of oil: regardless of how low oil prices go if the buyers refuse to pay it and sellers want to max their revenue prices will decline until enough buyers increase their demand for oil.

IOW if me, an oil buyer, can't pay $50/bbl I ain't buying your oil. You want to sell more oil? OK, then lower your price and I'll buy some more.

Rock, I know I will get in trouble with you for saying this, but isn't this what Etp at least in part is saying. That is my impression at least. Good to hear your take though as an Oil insider.
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
User avatar
onlooker
Fusion
Fusion
 
Posts: 7964
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: THE Price of Crude pt 13

Unread postby Observerbrb » Thu 04 May 2017, 12:07:42

WTI 45$ HANDLE -

I guess we can put the final nail in the coffin of OPEP's deal
Observerbrb
Heavy Crude
Heavy Crude
 
Posts: 347
Joined: Mon 08 Dec 2014, 14:24:48

Re: THE Price of Crude pt 13

Unread postby kublikhan » Thu 04 May 2017, 12:16:02

Observerbrb wrote:WTI 45$ HANDLE -

I guess we can put the final nail in the coffin of OPEP's deal
Actually, this time last year oil ranged from $25-$40. This year it's been $45-$55. Oil prices would have to fall another $20 to match the range we have seen pre-OPEC deal.

Jan-16 $25.27
Feb-16 $23.58
Mar-16 $31.08
Apr-16 $34.01
May-16 $39.88
Historical Crude Oil Prices (Table)
The oil barrel is half-full.
User avatar
kublikhan
Fusion
Fusion
 
Posts: 4013
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: THE Price of Crude pt 13

Unread postby Observerbrb » Thu 04 May 2017, 12:43:19

kublikhan wrote:
Observerbrb wrote:WTI 45$ HANDLE -

I guess we can put the final nail in the coffin of OPEP's deal
Actually, this time last year oil ranged from $25-$40. This year it's been $45-$55. Oil prices would have to fall another $20 to match the range we have seen pre-OPEC deal.


The OPEC deal was signed on November 30th last year. The oil price at that moment was around 47$

https://www.theguardian.com/business/li ... iness-live

We can say therefore that the deal has been a complete failure.

You're implying that Oil prices experience a high seasonal variability, but is this assertion backed by historical data?
Observerbrb
Heavy Crude
Heavy Crude
 
Posts: 347
Joined: Mon 08 Dec 2014, 14:24:48

Re: THE Price of Crude pt 13

Unread postby kublikhan » Thu 04 May 2017, 14:10:41

Observerbrb wrote:The OPEC deal was signed on November 30th last year. The oil price at that moment was around 47$

https://www.theguardian.com/business/li ... iness-live

We can say therefore that the deal has been a complete failure.

You're implying that Oil prices experience a high seasonal variability, but is this assertion backed by historical data?
No, that is not what I was implying. I am saying the OPEC deal was already largely priced into oil by the time of November 30th. The deal might not have brought prices up to the $60-70 range but it did bring prices up off their lows last year of $25 oil.

Nov. 29, 2016 - Two months ago, OPEC took the market by surprise by saying that it "agreed to agree" on a deal to cut production to between 32.5 and 33.0 million in a bid to reduce oversupply and lift oil prices. Should a deal fail, however, the oil market will see a “sharp correction” and oil prices may plunge to $20. A no-deal would be met with a very negative perception by the market.
Oil prices may plunge to $20 if OPEC fails to clinch deal
The oil barrel is half-full.
User avatar
kublikhan
Fusion
Fusion
 
Posts: 4013
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: THE Price of Crude pt 13

Unread postby Observerbrb » Thu 04 May 2017, 14:51:00

kublikhan wrote:
Observerbrb wrote:The OPEC deal was signed on November 30th last year. The oil price at that moment was around 47$

https://www.theguardian.com/business/li ... iness-live

We can say therefore that the deal has been a complete failure.

You're implying that Oil prices experience a high seasonal variability, but is this assertion backed by historical data?
No, that is not what I was implying. I am saying the OPEC deal was already largely priced into oil by the time of November 30th. The deal might not have brought prices up to the $60-70 range but it did bring prices up off their lows last year of $25 oil.

Nov. 29, 2016 - Two months ago, OPEC took the market by surprise by saying that it "agreed to agree" on a deal to cut production to between 32.5 and 33.0 million in a bid to reduce oversupply and lift oil prices. Should a deal fail, however, the oil market will see a “sharp correction” and oil prices may plunge to $20. A no-deal would be met with a very negative perception by the market.
Oil prices may plunge to $20 if OPEC fails to clinch deal


Well the last part is just pure speculation, but oil prices rose 8 $ during the next days after the deal was signed. That makes me think that it was not fully "priced-in". Anyway, the deal was a complete failure since these countries are running inmense deficits that could well threaten their survival 2-3 years from now on.
Observerbrb
Heavy Crude
Heavy Crude
 
Posts: 347
Joined: Mon 08 Dec 2014, 14:24:48

Re: THE Price of Crude pt 13

Unread postby kublikhan » Thu 04 May 2017, 15:06:18

Observerbrb wrote:Well the last part is just pure speculation, but oil prices rose 8 $ during the next days after the deal was signed. That makes me think that it was not fully "priced-in".
I did not say the deal was fully priced in. I said largely priced in. An $8 lift post deal signing vs a $20 run up in prices from earlier in the year from all the jawboning of a potential cut.

Observerbrb wrote:Anyway, the deal was a complete failure since these countries are running inmense deficits that could well threaten their survival 2-3 years from now on.
OPEC revenues are up this year. Saudi Arabia alone is looking at an increase of oil revenues of 46% compared to last year:

The Saudi 2017 budget sees higher oil prices this year lifting oil revenues by 46 percent compared to the 2016 estimates. In a sign that the higher oil prices are helping Saudi budget revenues, reports suggested last week that Saudi Arabia had reinstated perks for civil servants, after revenues for the first quarter turned out higher than expected.
The Saudis are losing market share to Iran and Iraq thanks to the OPEC deal
The oil barrel is half-full.
User avatar
kublikhan
Fusion
Fusion
 
Posts: 4013
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: THE Price of Crude pt 13

Unread postby Tanada » Fri 05 May 2017, 13:06:06

Observerbrb wrote:https://www.theguardian.com/business/live/2016/nov/30/bank-of-england-stress-tests-opec-meeting-oil-business-live

We can say therefore that the deal has been a complete failure.

You're implying that Oil prices experience a high seasonal variability, but is this assertion backed by historical data?


Not at all, look at the chart and prices were up from $3/bbl to $10/bbl for the months of December-April. A solid 5 month profit bump would be considered a great success on Wall Street, and somehow I think OPEC members feel the same way. They don't expect to win all the time, and by doing the deal they discovered that around the $50/bbl price point USA companies started rapid development in Texas/Permian once again. The question you should be asking is, will $45/bbl slow those Permian drilling activities back down? Currently those activities have the appearance of stabilizing USA oil output, though from such a short data set it is hard to really tell. In an ideal world from the OPEC POV the USA oil output would be declining no matter how much drilling goes on, like they saw from around 1990-2002, because in that situation they are in the driver seat by moderating their output into the world market. So long as USA oilco's can ramp up production with shale oil with times of just a few months the OPEC members are not in control, and they really hate that.

If the KSA/OPEC plays the long game they could cut production enough to drive prices up, watch the USA have a second shale boom and squander our shale resources as we ran out of drill-able locations, then go back to running things. If on the other hand they insist on playing the short game the shale resource could last for a decade or longer because we will keep bumping the ceiling where it pays to drill more, then drilling will drop the price a few dollars and drilling will slow for a few months until the bump is consumed.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
User avatar
Tanada
Site Admin
Site Admin
 
Posts: 14042
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: THE Price of Crude pt 13

Unread postby GoghGoner » Fri 05 May 2017, 13:45:47

OPEC has cut production, it just didn't result in significant export cuts. Iranian floating storage was drained and Saudi Arabia storage declined quite a bit. Also, it was winter in the Middle East so there is never much demand internally. They could have easily flooded the market and brought the price down under $40.
GoghGoner
Light Sweet Crude
Light Sweet Crude
 
Posts: 1623
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 13

Unread postby sparky » Fri 05 May 2017, 16:29:29

.
looking a the Cushing storage number , there is little sign of a significant seasonal variation
https://www.eia.gov/dnav/pet/hist/LeafH ... K_MBBL&f=W
which is a bit surprising as there are a well known refineries maintenance cycle liked to the driving season
User avatar
sparky
Fission
Fission
 
Posts: 3265
Joined: Mon 09 Apr 2007, 02:00:00
Location: Sydney , OZ

Re: THE Price of Crude pt 13

Unread postby GoghGoner » Mon 08 May 2017, 06:21:27

There were some pipeline reversals that affected Cushing 2012-2013. Instead of sending oil from the gulf to Cushing, it started sending it down. Need some timeline to properly understand those numbers, I would like to try and pull some seasonality out of it but I haven't gotten around to it...
GoghGoner
Light Sweet Crude
Light Sweet Crude
 
Posts: 1623
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 13

Unread postby Tanada » Fri 19 May 2017, 10:34:25

$50.40/bbl WTI contract price as of 11:15 AM EDT

It sure looks like the traders like this range of sale prices for contracts. We have been in the $45/bbl-$55/bbl range with brief excursion above or below for 13 months now.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
User avatar
Tanada
Site Admin
Site Admin
 
Posts: 14042
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: THE Price of Crude pt 13

Unread postby onlooker » Fri 19 May 2017, 10:47:50

Yes, seems to be the "goldilox" price range , good for both producers and consumers at least temporarily
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
User avatar
onlooker
Fusion
Fusion
 
Posts: 7964
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Fri 19 May 2017, 12:12:13

Looker - "...seems to be the "goldilox" price range , good for both producers and consumers at least temporarily". Exactly. And to be more specific it's the "goldilox" price the refineries are willing to pay. Too high and the consumers reduce consumption leading to lower revenue despite better profit margins per bbl. And too low an oil price and sales volumes increase but lower profit margins lead to lower net revenue.

Which is why I've always pointed out the oil buyers set the price...not the producers. Oil producers are free to sell oil for less then it cost then to develop. But refineries have no incentive to pay so much for oil that they lose money selling those products to the consumers.

Which means exactly what that implies: consumers, who actually don't buy oil, indirectly set the price of oil. And what consumers are capable of paying is controlled to a fair degree by the condition of the various economies. A capability not equally distributed: the US economy handled higher oil prices better then many others...like Greece.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 10626
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

PreviousNext

Return to Peak Oil Discussion

Who is online

Users browsing this forum: No registered users and 17 guests