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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 Cog » Fri 19 May 2017, 15:37:04

And we are right back to supply and demand. Where we were always were in reference to oil or any other commodity bought and sold on the world market. Something the ETP modelers reject but has always been the case.
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Re: THE Price of Crude pt 13

Unread postby kublikhan » Thu 25 May 2017, 13:46:50

OPEC agreed to extend the production cut for another nine months, but with no deeper cuts. Oil traders were not impressed and oil prices actually fell on the news, with WTI falling into the $40s again.

Oil-producing nations belonging to Opec have agreed to extend production cuts for a further nine months. Energy ministers have been meeting in Vienna to discuss extending the cut, which was due to expire next month. Non-Opec members, led by Russia, have also agreed to another nine-month production cut.

Chris Beauchamp at online trading firm IG, described Mr Falih's belief that greater reductions were not needed "quaint", while Alexandre Andlauer of equity research firm Alphavalue said Opec's strategy was "old-fashioned". Neil Wilson at ETX Capital said Opec members "bottled it", adding: "A nine-month extension just isn't enough to really lift oil prices as we'll continue to see US shale fill the gap. Having said they'd do whatever it takes, Opec is looking a bit toothless now.

Brent crude is 1.6% lower at $52.35 a barrel following confirmation of the extension until March 2018, while US oil is down 3.2% at $49.73.
Opec extends oil production cuts
The oil barrel is half-full.
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Re: THE Price of Crude pt 13

Unread postby Cog » Thu 25 May 2017, 14:57:50

They are determined to keep it out of first place in the oil price guessing game.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 01 Jun 2017, 11:33:17

Perhaps more companies are adjusting to the fairly stable oil price environment and putting more capex into play:

Canada's Husky Approves $1.6 Billion West White Rose Project

Reuters - Canada's Husky Energy Inc said on Monday it is proceeding with its delayed $1.6 billion West White Rose project off the Atlantic coast. Husky said that the first oil is expected in 2022 and the project could achieve a gross peak production rate of about 75,000 bopd by 2025. The company, which is controlled by Hong Kong billionaire Li Ka-shing, also said that a new oil discovery has been made at the Northwest White Rose production area.

Husky shares were up 1.6 percent in afternoon trading, while the benchmark Canadian share index was flat. {Apparently the market liked the news.}
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Re: THE Price of Crude pt 13

Unread postby rockdoc123 » Thu 01 Jun 2017, 18:46:05

My understanding is that Husky got some pretty exceptional concessions from the NS provincial gov't which made it economic.
I guess the NS gov't figured out that a small piece of the pie is better than nothing at all.
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Re: THE Price of Crude pt 13

Unread postby sparky » Thu 01 Jun 2017, 21:23:11

.
My understanding is that the Canadian tar sands are in financial trouble below 60$/b
I'm sure that the already established operators can make a buck at less
for new projects it's got to be very dicey ,
unless the thinking is that in two years building time it will be profitable with a new spike in price
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 01 Jun 2017, 22:44:38

Sparky - Remember the first 1 million bbls per day from the oil sands was developed in 2004 when oil prices were lower then the current price. From

http://www.canadasoilsands.ca/en/what-a ... milestones

1967: First GCOS (Suncor) production; 32,000 barrels/day.

1978: First Syncrude production; 109,000 barrels/day.

2001: First commercial steam-assisted gravity drainage (SAGD) in situ drilling project

2004: Oil sands production reaches 1 million barrels/day.
"
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Re: THE Price of Crude pt 13

Unread postby sparky » Fri 02 Jun 2017, 05:14:15

.
Yep , I see that but tar sands came on the stage as an after-wash of the great oil scare of the 70ies
then it survived on "research " grants until the early 2000
when the rising tide of crude price was taking everything up with it
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Fri 02 Jun 2017, 10:10:01

Sparky - "when the rising tide of crude price was taking everything up with it".

2004: Oil sands production reaches 1 million barrels/day. Oil sands prices did not increase until after 2004: In fact fell a bit in 2002.

http://www.infomine.com/investment/meta ... e-oil/all/
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Re: THE Price of Crude pt 13

Unread postby sparky » Sat 03 Jun 2017, 11:06:56

.
Pretty good , I concede ,
that leave the question of the floor price for tar sands mining
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Sat 03 Jun 2017, 15:44:52

Sparky - Still not easy to do IMHO: lots of variables and not a lot of details. And no two oil sand deposits will cost the or generate the same ROR at the same oil price.
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Re: THE Price of Crude pt 13

Unread postby sparky » Sat 03 Jun 2017, 19:58:56

.
from the horse 's mouth
Canada production is still rising , some of it is Saskatchewan heavy oil but most would be tar sands

https://www.iea.org/oilmarketreport/omrpublic/charts/
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Sun 04 Jun 2017, 00:10:11

Sparky - I'm not that familiar with the actual day to day operations. But I suspect there's a significant lag factor. A company might have been caught by the price drop. But if it had already sunk $200 million in a project but needed to spend $10 or $20 million to finish it and start producing they would. Similar to what a company developing a DW GOM field: once they've sunk $1 BILLION in the field they won't stop the process. At that point those sunk costs are not used in the "go forward" economic analysis.
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Re: THE Price of Crude pt 13

Unread postby sparky » Mon 26 Jun 2017, 05:52:38

.
Well well , I reckon we might just as well call Peak Oil cancelled for the next couple of years !
I'm a believer but do not stand in front of the interstate truck loaded with numbers
prices have been dropping sharply for a month and struggling since February.

Some say it's the demand which is soft , but it has risen to a shade under 98m/b , a new record
meanwhile supply is at a shade above 98m/b , also an all time record
the difference is struggling to find a buyer or a storage
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Tue 08 Aug 2017, 09:06:20

The Peak Oil News story, "Is This the Beginning of the End for the Oil Industry?" is a tad old so might not be followed by too many now. So I thought I would offer an alternative perspective here:

Wow! Another “beginning of the end” for the petroleum industry. LOL. Just like the BOTE we experienced in 1946 when the inflation adjusted price dropped to $18/bbl. But then increased until 1973 when we hit the BOTE in 1973 when it hit $20/bbl. But then we jumped to $119/bbl. Until the BOTE hit once more in 1986 when it fell to $25/bbl. But then the real BOTE hit in 1998 when it fell to $13/bbl. But that BOTE lasted only to 2008 when the price increased to $139/bbl.

But son of a bitch, the BOTE hit again in Feb ’09 when it dropped to $35/bbl. Of course that BOTE lasted just a few years until oil went above $100/bbl. Of course then the price plunged to $28/bbl…a nasty hit but still not as bad as $13/bbl as 1998. And then recovered to the current price of $45-$50 per bbl.

But now I’m confused: the current oil price is 2X to 3X higher then when we reached the BOTE multiple times in the last 70 years. So is this the really, not f*cking kidding, BOTE for the industry or are we in a recovery mode and doing better then we have for the majority of the time over the last 7 decades?

The words of this armchair expert say we are seeing the BOTE today but the statistics don’t seem to support that proposition. The most amusing part of the author's ignorance: the periods of very high oil prices are just as good (or better) an indication of future trouble for the industry. But realizing that would require a basic understanding of the E&P process.

Knowledge sadly lacking by so many "experts". LOL.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Tue 08 Aug 2017, 14:27:05

And apparently filing bankruptcy was not the "beginning of the end" for the drilling contractor Tidewater: The company's stock price jumped to $24.82 in morning trade, up 18% from an opening trade of $21. The stock had closed Monday at 93 cents.

More at good-news-about-oil-company-bankruptcies-t73515-60.html
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Re: THE Price of Crude pt 13

Unread postby GoghGoner » Mon 06 Nov 2017, 09:16:24

When I fill up the tank today, it will be more than I have paid in over 2.5 years for a gallon of gasoline. I don't see anything on the horizon as far as supply goes to swing the fundamentals back to price declines -- this will be up to the consumer. With the US job picture strong right now, maybe we will see some strong price movements over the next few months.

Oil prices hit two-year high as Saudi graft probe widens
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Re: THE Price of Crude pt 13

Unread postby Tanada » Mon 06 Nov 2017, 11:50:17

Crude oil has been on a roller coaster ride over the past few years, ranging in price from about $110 per barrel, all the way down to $26 a barrel. Over the last year and a half oil has traded in a relatively narrow range of about $40 and $55. Oil has made several attempts to break out of this pattern, yet every time just when it seemed like the black gold was poised to move higher, it got sold off, back down to the lower end of the range.

Well, nothing lasts forever and with crude oil testing $55 once again, this time it really does look different, as this trading range appears to have exhausted itself. With the materialization of favorable fundamental developments pertaining to crude oil, and a very attractive technical setup, a breakout to new highs appears increasingly likely.

The Supply and Demand Dynamic

The supply and demand phenomenon appears to be the most prevalent price moving factor in oil markets today. And demand for oil appears to be gaining momentum, as worldwide demand grew by 2.3 million barrels per day, or by 2.4% in the second quarter of 2017, higher than previously expected by the IAEA. The IAEA now sees oil demand increasing by 1.6 million barrels or 1.7% for the full year in 2017, and is expecting growth to continue in 2018, with demand increasing an additional 1.4 million barrels, or 1.4%.

The world economy is expanding, as growth is robust and is expected to continue. This year, the world GDP is expected to increase by 4% from $75.278 trillion to $77.988 trillion. Moreover, next year’s growth is projected to be around 5%, expanding the world’s GDP to $81.962 trillion. With this kind of growth in the world economy it is probable that the IAEA’s projections are a bit conservative and a growth rate for world oil demand is could be closer to 2% next year.

Supply Restraints

One of the primary reasons why oil prices have gathered positive momentum in recent months is because of the Russia, OPEC oil cut arrangement. The major oil producing countries have signed an agreement to essentially cap oil production at a specified level, to prevent oversupply, and to provide price stability in the oil markets. The deal appears to be working, and the countries are planning to extend this arrangement after it expires in March 2018.

Iran Tensions Pose a Possible Supply Disruption

Another element that could further decrease supply in the oil markets are renewed tensions with Iranian. President Trump recently disavowed the nuclear deal reached between Iran and the Obama administration. This suggests that possible frictions between the U.S. and Iran could cause the nuclear deal to fall apart, and thus lead to renewed sanctions on Iran which would likely take supply away from the oil market.

Inflation Heating Up

Aside from the supply and demand picture, other elements such as inflation and dollar strength or weakness play important roles in the overall oil dynamic. Inflation has been trending higher in recent months, with the latest reading coming in at 2.23% yoy according to the CPI. Moreover, wage growth had been increasing as well, with a recent employment report showing 2.9% in wage growth, the highest in about 8 years.

This indicates that the overall inflation picture is looking much better for oil going forward. Firstly, oil is priced in dollars and increased inflation ultimately leads to a weaker dollar, which makes oil cheaper to purchase in other currencies. Secondly, inflation signals higher prices in the future, and higher prices going forward equate to elevated gasoline, heating oil and other fuel related figures, and thus a higher crude oil price as well.


This Time Is Different
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Mon 06 Nov 2017, 12:33:39

"Crude oil has been on a roller coaster ride over the past few years, ranging in price from about $110 per barrel, all the way down to $26 a barrel." Actually oil prices have been on a roles coaster ride for more then a few years: from $17/bbl to $147/bbl. What's old is new again.
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Re: THE Price of Crude pt 13

Unread postby GoghGoner » Mon 06 Nov 2017, 16:26:51

That's a good synopsis, T.

This year has had very low volatility compared to every year since at least 2005 -- quite the opposite from a roller coaster over the past 12 months or longer. I guess this latest rise officially makes the low price doomers wrong 8) 8) 8) 8).

Not that I haven't been wrong myself -- I still predict that prices are going to run away and crash the economy before too long.
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