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THE Price of Crude pt 13

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

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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 29 Dec 2016, 15:20:31

Goner - You're a braver man then I, Gunga Din. LOL
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Re: THE Price of Crude pt 13

Unread postby Tanada » Thu 29 Dec 2016, 22:23:22

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Re: THE Price of Crude pt 13

Unread postby GoghGoner » Fri 30 Dec 2016, 11:51:58

Oil prices face some pretty stiff winter winds in the coming month.

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Re: THE Price of Crude pt 13

Unread postby GoghGoner » Tue 03 Jan 2017, 07:57:07

Another jump to start the year. It will be fun to see how many reports say OPEC is cheating and how many find they are sticking it to the consumer (all the while being applauded by the central bankers who seem to think rising oil prices are good).

Oil Climbs to 18-Month High as Kuwait and Oman Fulfill OPEC Cuts

West Texas Intermediate for February delivery gained as much as $1.52 to $55.24 a barrel on the New York Mercantile Exchange and was at $55.04 as of 11:35 a.m. London time. There was no trading Monday because of the New Year holiday. Total volume traded Tuesday was about 28 percent above the 100-day average.

Brent for March settlement climbed $1.38 to $58.20 on the London-based ICE Futures Europe exchange, trading at a $2.22 premium to WTI for the same month. The global benchmark contract rose 52 percent last year, the most since 2009.
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Re: THE Price of Crude pt 13

Unread postby Subjectivist » Tue 03 Jan 2017, 15:11:40

Clearly someones sell orders dropped at 10 am eastern time, which is stangley enough 3 PM in the London market.
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Re: THE Price of Crude pt 13

Unread postby GoghGoner » Wed 04 Jan 2017, 08:40:56

Yeah, Sub, I think the December quiet is over, stormy seas ahead.

Rising gas prices should be okay for the economy, just as long they don't rise too quick and wages go up. There is the possibility they rise too fast and cut off too much income to allow consumers to pay their on their loans.

GasBuddy Forecasts Highest Gas Prices in Three Years for 2017

Motorists may get some sticker shock in 2017 and will shell out $52 billion more over the course of the year compared to 2016 as the national yearly average rises to $2.49 per gallon, according to GasBuddy’s 2017 Fuel Price Outlook.
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Re: THE Price of Crude pt 13

Unread postby Subjectivist » Thu 12 Jan 2017, 19:23:42

You know prices dipped for two days on the rumors of major oil strikes in Iraq. Then someone realized how foolish that was and things climbed back up to the $53/bbl level we have been hanging around since early December.
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Re: THE Price of Crude pt 13

Unread postby Tanada » Tue 17 Jan 2017, 11:59:30

The 52 week low is still the bottom we hit last January, which for the week of January 18, 2016 was $35.10/bbl WTI contract price.

When that price rolls off the 52 week list the next weekly low is for January 25, 2016 at
$37.97/bbl WTI contract price.

When that price rolls off the 52 week list the next weekly low is for February 22, 2016 at
$38.90/bbl WTI contract price.

After that all the rest of the lows in the last 52 week list are $40/bbl and above.

It doesn't make a huge difference to anything, but the rolling average low for the last 52 weeks will go up a bit over the next six weeks as these extreme lows from January and February 2016 roll off of the calculation table. In fact since OPEC made their quota announcement the lowest weekly period in December 2016 or January 2017 so far was $50.76 for the week of December 5, 2016. Even that wacky event on January 10, 2017 was only able to push things down to $50.71 for one contract that day. I never did figure out what the big discount sale push was but other than January 10 and 11 the contract price has stayed at $52/bbl and above so far this month. No matter how you slice it a contract price of $51.71 is a heck of a lot more profit for OPEC than the contract price of $35.10/bbl they got a year ago this week.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Tue 17 Jan 2017, 12:40:49

T - "No matter how you slice it a contract price of $51.71 is a heck of a lot more profit for OPEC than the contract price of $35.10/bbl they got a year ago this week." And more important then profit per bbl is total revenue. Based on total OPEC production 12 months ago of 34.75 mm bopd compared to 35.71 mm bopd and using your prices the yearly value of OPEC production has increased from around $495 BILLION to around $675 BILLION.

Revenue might not be as high as the former peak but a 35% increase in value in 12 months helps. Of course that's the value of OPEC production and not the value of its exports.
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Re: THE Price of Crude pt 13

Unread postby kublikhan » Thu 26 Jan 2017, 22:19:02

Rising oil prices and spending cuts over the past two to three years have improved the cash flow position for many of the oil majors, lessening the prospects of a deeper debt spiral, credit downgrades and dividend reductions. the oil majors can now meet spending levels and dividends with their cash flow, meaning that they no longer have to take on more debt. For example, French oil giant Total is expected to report positive cash flow of $1 billion in 2017 if oil prices average $55 per barrel.

Fourth quarter earnings reports will be revealed in the next few days, and Bloomberg estimates that at least three of the oil majors will post an increase in year-on-year profits for the first time since 2014. It is difficult to overstate the significance of this development for the oil majors. Oil has reliably traded above $50 per barrel, pushing the largest companies out of the danger zone.

The oil majors will respond to the sudden improvement in fortunes in different ways. BP is eyeing growth after years of contraction. The financial improvement for the oil industry is not limited to just the majors. The IEA said in its December Oil Market Report that the U.S. shale industry as a whole became cash flow neutral in the third quarter of 2016 – for the first time ever. They added that higher oil prices will push many of the strongest shale companies well into profitable territory this year.
Is The Oil Crisis Over? Oil Majors Report Positive Cash Flow
The oil barrel is half-full.
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Re: THE Price of Crude pt 13

Unread postby Subjectivist » Fri 27 Jan 2017, 16:05:49

OPEC for the last nine weeks has suceeded in keeping the price of oil over $50/bbl WTI. It has been tempting for them to ask each over, how high can they get prices without reigniting the Fracking drilling boom. Opinions?
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Fri 27 Jan 2017, 16:29:54

"...how high can they get prices without reigniting the Fracking drilling boom. Opinions?" No opinion...fust fact. There is no one price that justifies drilling/frac'ng a shale well. Each $1 increases creates accerptable economics for a number of wells. IOW a $10/bbl increase leads to a unique number of new wells. Same true for a $20/bbl, $30/bbl, $40/bbl, etc with each producing a unique upramping.

Just as the current price of oil is generating a number of new shale completions. There is no magic number...never was and never will be one. Essentially Dog gave us Excel spreadsheets so we can keep changing the oil price on our economic runs. LOL.
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Re: THE Price of Crude pt 13

Unread postby sparky » Fri 27 Jan 2017, 17:50:11

.
@ Rockman , while you speak the truth , as I understand it ,the rhetorical question was
"at what price of crude will there be a new fracking frenzy "

There will be a fracking frenzy when the price jump from the 50$ to the 150$ in a week !
the speed of price change create the speed of the response .

since the international crude price hang around 51$ , those who make money at that price will produce and look for profitable opportunities ,
if the price is expected to rise to 55$ some operators will set this as their expected bottom line .
I am sure there are some who are betting on a higher price still ,
quite willing to take a small operating loss but expecting a windfall if they hit the jackpot
after all, what good is high prices if you cannot deliver then and there to your customers .
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Fri 27 Jan 2017, 18:17:32

Sparky - I agree the question itself itself is somewhat silly. And then there's the question of the definition of "frenzy". Today the estimate is that 450 Eagle Ford horizontal wells per year are currently being drilled and frac'd compared to ZERO horizontal EFS wells being drilled and frac'd not much more then 10 years ago. So is there a shale "frenzy" going on now? Or maybe just a little frenzy drilling...like being a little pregnant. LOL.
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Re: THE Price of Crude pt 13

Unread postby Subjectivist » Thu 16 Feb 2017, 09:59:23

Am I the only one who finds it interesting that Oil contracts have been in the 50-55 zone for over two months now? There have been a couple bounces a little higher, but only for a day.

So far as I can tell this is the kind of stable trading range that used to hold sway for the 1990's before the run up in the aughties. Drillers and others in the industry need this kind of stability, it lets them build an economic case when they apply for loans to poke more holes in the ground.
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Re: THE Price of Crude pt 13

Unread postby pstarr » Thu 16 Feb 2017, 10:48:38

Subjectivist wrote:Am I the only one who finds it interesting that Oil contracts have been in the 50-55 zone for over two months now? There have been a couple bounces a little higher, but only for a day.

So far as I can tell this is the kind of stable trading range that used to hold sway for the 1990's before the run up in the aughties. Drillers and others in the industry need this kind of stability, it lets them build an economic case when they apply for loans to poke more holes in the ground.

Yes, you are the only one who finds it interesting.

Your somewhat erudite analysis would have seemed reasonable . . . back in the 1990's. Except now new production (of which we have precious little) requires $70/barrel to drill.
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Re: THE Price of Crude pt 13

Unread postby KaiserJeep » Thu 16 Feb 2017, 11:02:41

So we just leave it in the ground until the price goes up, then...drill/pump/refine/sell/burn, baby burn.

If a bunch of oil companies go bust while waiting for the price to go up, we had too many anyway.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Mon 20 Feb 2017, 22:43:09

Had to pick an appropriate thread and this seemed close enough. Although the back story deals with the KSA "production cut" it gives a hint about what oil they a cutting and the effect no only on its price arena but that in others some might be surprised to hear about. Such as KSA production putting a bit of UPWARD PRICE PRESSURE on US and Canadian oil prices:

"Chinese refiners are bringing in cargoes of North American heavy crude in a new long-distance flow that traders say has only been made possible by OPEC's output cuts and ample supplies in Canada and the United States.

In April, at least 1 million barrels of the heavy crude Mars, pumped from the U.S. Gulf of Mexico, are expected to land in China's Shandong province and 1 million barrels of a second unidentified heavy grade will arrive in China, trade and shipping sources said last week. This follows the arrival in January of 600,000 barrels of U.S. Gulf Blend, a heavy crude made up of a blend of various U.S. and Canadian grades loaded onto ships on the U.S. Gulf Coast, according to the sources and shipping data.

Heavy crude is typically more dense and viscous than other oil grades. Refiners with facilities that can process these grades value heavy crude because its lower cost results in higher margins from producing fuels from these grades.

OPEC output cuts have targeted heavy crude, with linchpin producer Saudi Arabia and Venezuela reducing their exports of heavy crude. That has increased the price of Middle East heavy crudes for Asian delivery, making it economical for traders to ship crude from Russia, the Atlantic Basin and the United States to Asia. "The OPEC cuts started from medium and heavy grades and Venezuela (a key supplier to China) is exporting less," said a Singapore-based crude oil trader.

The tightening heavy crude supplies are occurring at a time when demand for these types has increased after refiners upgraded their plants, the trader said. Heavy crude typically yields a higher percentage of residue fuels when first processed at a refinery and that residue is then reformulated into higher-value fuels such as gasoline and diesel fuel in so-called cracking units. Since late last year, China, the world's second-largest oil consumer, has stepped up imports from North America, one of the few regions where oil production is growing. Asia's strong pull for heavy sour crude from the Americas led Mars to hit its highest level in a year relative to North American price benchmark West Texas Intermediate (WTI) as traders forecast increased export demand from Asia.

The Ligurian Sea, a Suezmax tanker, loaded 600,000 barrels of U.S. Gulf Coast Blend from Port Arthur in Texas. The cargo contained Canadian Access Western Blend, a heavy sour grade with an API gravity of about 22 degrees and nearly 4 percent sulfur. The tanker arrived in China in early January after a 55-day journey."

So the KSA production cut played a part in Alberta dilbit made from oil sands production being shipped from Texas to China. I guessing no one saw that story mixed with the tens of thousands of words in stories about the Saudi Arabia production cut hurting North American oil producers. LOL.
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Re: THE Price of Crude pt 13

Unread postby Cog » Mon 20 Feb 2017, 22:50:18

pstarr wrote:
Subjectivist wrote:Am I the only one who finds it interesting that Oil contracts have been in the 50-55 zone for over two months now? There have been a couple bounces a little higher, but only for a day.

So far as I can tell this is the kind of stable trading range that used to hold sway for the 1990's before the run up in the aughties. Drillers and others in the industry need this kind of stability, it lets them build an economic case when they apply for loans to poke more holes in the ground.

Yes, you are the only one who finds it interesting.

Your somewhat erudite analysis would have seemed reasonable . . . back in the 1990's. Except now new production (of which we have precious little) requires $70/barrel to drill.


You should get on the horn to all the oil companies and tell them they are losing money on every oil well they drill.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Mon 20 Feb 2017, 23:03:53

"Except now new production (of which we have precious little) requires $70/barrel to drill." The Rockman is currently reviewing a prospect that would make a huge profit if oil were selling for $5/bbl. Of course, in the exploration biz you can't avoid that word: IF.

OTOH a few years ago I saw a well that wouldn't be profitable if oil was selling for $120/bbl. And it was a $154 million Deep Water dry hole the company obviously felt had a good chance of working.

It still amazes me that anyone thinks there's a fixed oil price that alone justified drilling any specific well. There is not, and never has been, an "average oil well" and thus no average price that would cause it to be drilled.
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