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THE Price of Crude pt 14

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

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Sat 12 May 2018, 13:21:38

TrueBeliever wrote:As for me, I hope to keep driving my Diesel pickup, my 200HP outboard equipped fishing boat, other cars, motorcycle, for the foreseeable future ... and be thankful I live in a part of the world that's only 5% of the World's population across 3.7 million plus square miles, borders two seas, and has enough Oil Sands to help us limp along while the rest of the world whimpers! (This scenario requires we assimilate Canada)

Or we just trade and process oil as normal (no assimilation necessary), and folks of modest means simply drive a relatively fuel efficient car, or take a bus, etc.

With the median US household income near $60,000, even if gasoline returns to $4, or even $5 a gallon, it's hardly a Greek tragedy, though the chorus of whining might make you wonder.

Gas at $5 a gallon on on average on a sustained basis would imply oil at something like $160 or so. Is it realistic to think that oil WELL above $100 on a sustained basis won't spur MANY big producers to up both production and exploration by a considerable amount? I vote no.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby onlooker » Sat 12 May 2018, 15:48:48

So nobody is anticipating a possible crash in the oil price?
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Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Sat 12 May 2018, 18:54:25

onlooker wrote:So nobody is anticipating a possible crash in the oil price?

It has crashed before for no good or fundamental reason so you should never say never but at present I see no looming possibility that would make it decline much less crash. Even if some new huge mega field was discovered it would take years to bring it on line and all the mega fields currently producing are controlled by people with no interest in seeing prices fall.
On the other hand I see numerous places in the oil producing regions where political instability could shut off supplies from those regions creating a shortage and the corresponding price spikes.
So on balance I see little down pressure and more then enough up pressure.
The above analysis and advise is worth about two cents. 8)
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Sat 12 May 2018, 23:12:55

onlooker wrote:So nobody is anticipating a possible crash in the oil price?

I've seen predictions all over the place, but the downside predictions look like minor to moderate declines, not crashes.

1). Global demand is expected to continue to increase meaningfully, which on balance, should squeeze supply and prices. This has been the trend for about the past two years.

2). A valid concern peak oil advocates have pointed out is how with low prices in recent years, new oil found isn't replacing what we're using. The best way to fix that is with higher prices to incent the profit motive for more exploration. (e.g. supply, demand, and the pricing function, taking care of business over time, as they have, although erratically, since oil became highly volatile in the 70's).

As vts said, it's not that a crash couldn't happen -- but the factors known, on balance, including geopolitical risks, seem to make increasing prices more likely.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby tita » Fri 25 May 2018, 16:18:32

Quite a big drop today. -4.5% on the WTI (67.5$) and -3.2% on the Brent (76.3$)

KSA and Russia announced the want to ease the market by increasing output by 1Mb/d, and the latest rig count increased by 13 (15 oil rigs, -2 gas rigs).

I'm not sure of the strategy of KSA here...
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Fri 25 May 2018, 17:24:24

tita wrote:Quite a big drop today. -4.5% on the WTI (67.5$) and -3.2% on the Brent (76.3$)

KSA and Russia announced the want to ease the market by increasing output by 1Mb/d, and the latest rig count increased by 13 (15 oil rigs, -2 gas rigs).

I'm not sure of the strategy of KSA here...

Yup. To me, oil dropping meaningfully on that news makes sense. It's been climbing rather steadily through 2018 on net bullish factors, including likely less supply elsewhere.

I'm not sure what you mean by KSA strategy here. Clearly they'd like to sell more at what they consider "reasonable" prices. With Brent recently touching $80, now might be their chance.

If they can increase their market share at, say, $70 or higher Brent, then it's good for them and their national budget. If not, they can always decline to produce more. Once the market doesn't see the extra supply, it should go back to rising again.

OTOH, if they just wait for the price to pass, say, $100 or $120, that might be inviting massive new oil fracking various places. Surely they'd rather not just open the door wide for that competition, at least not any sooner than necessary.

I could be dead wrong, but that's the kind of thinking various articles I've read in recent months have alluded to.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby Tanada » Sat 26 May 2018, 08:37:30

Outcast_Searcher wrote:
tita wrote:Quite a big drop today. -4.5% on the WTI (67.5$) and -3.2% on the Brent (76.3$)

KSA and Russia announced the want to ease the market by increasing output by 1Mb/d, and the latest rig count increased by 13 (15 oil rigs, -2 gas rigs).

I'm not sure of the strategy of KSA here...

Yup. To me, oil dropping meaningfully on that news makes sense. It's been climbing rather steadily through 2018 on net bullish factors, including likely less supply elsewhere.

I'm not sure what you mean by KSA strategy here. Clearly they'd like to sell more at what they consider "reasonable" prices. With Brent recently touching $80, now might be their chance.

If they can increase their market share at, say, $70 or higher Brent, then it's good for them and their national budget. If not, they can always decline to produce more. Once the market doesn't see the extra supply, it should go back to rising again.

OTOH, if they just wait for the price to pass, say, $100 or $120, that might be inviting massive new oil fracking various places. Surely they'd rather not just open the door wide for that competition, at least not any sooner than necessary.

I could be dead wrong, but that's the kind of thinking various articles I've read in recent months have alluded to.


You said it better than I could have myself. I agree with your analysis, now is the time for the producers with marginal excess capacity to exploit higher prices for the most benefit. Hopefully they learned the lesson well that attempting to end fracking by opening the taps wide only makes them poorer and plenty of Frackers would still be around afterwards if they tried it again.
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Re: THE Price of Crude pt 14

Unread postby Cog » Sat 26 May 2018, 10:42:34

I would rate this as a temporary drop in price. Oil consumption is definitely bullish for now. However good time to buy some oil stocks if you think the bleeding has stopped. I do and picked up some more XOM.
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Fri 29 Jun 2018, 15:00:23

$10 spike since OPEC ended it's session two weeks ago.

https://www.cnbc.com/2018/06/29/us-oil-near-3-12-yr-high-markets-remain-tight.html

US crude rises 1%, settling above $74 for first time since Nov 2014 as sanctions on Iranian oil loom
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Re: THE Price of Crude pt 14

Unread postby pstarr » Fri 29 Jun 2018, 19:16:59

GoghGoner wrote:$10 spike since OPEC ended it's session two weeks ago.

https://www.cnbc.com/2018/06/29/us-oil-near-3-12-yr-high-markets-remain-tight.html

US crude rises 1%, settling above $74 for first time since Nov 2014 as sanctions on Iranian oil loom

Sanctions? Not really, Sanctions against Iran have nothing to do with this price explosion. Not when the rest of OPEC (and especially SA) promised just last week to add 1 mbpd.

This is peak. Get over it.
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Fri 29 Jun 2018, 21:34:19

pstarr wrote:
GoghGoner wrote:$10 spike since OPEC ended it's session two weeks ago.

https://www.cnbc.com/2018/06/29/us-oil-near-3-12-yr-high-markets-remain-tight.html

US crude rises 1%, settling above $74 for first time since Nov 2014 as sanctions on Iranian oil loom

Sanctions? Not really, Sanctions against Iran have nothing to do with this price explosion. Not when the rest of OPEC (and especially SA) promised just last week to add 1 mbpd.

This is peak. Get over it.

Just making stuff up without any reference to the facts or the timing of things as usual, I see. You're on the internet. You COULD look at the news.

https://www.nasdaq.com/markets/crude-oi ... meframe=1m

First, WTI had slid from about $72 to below $65 on the news that OPEC was going to add supply.

Then the news came out that OPEC was going to raise prices by about a million barrels, on June 22nd. There are all kinds of stories about it like the following link.

https://www.usnews.com/news/business/ar ... n-increase

That day WTI jumped about $3 in response. Given that it had fallen about 10% in response to the news that OPEC/Russia were going to produce more oil, apparently the $1 million wasn't as much additional production as expected, so the price jumped.

Then oil was relatively steady for a couple days as this news was digested by the market.

Then, the 26th, you had the story that the US was telling all countries not to accept oil imports from Iran.

https://www.cnn.com/2018/06/26/politics ... index.html

and from there we've had WTI steadily rise about another $5 a barrel in the past few days.

That's called news events. That's called geopolitics. And the Iranian sanctions are clearly a significant chunk of that whether you deny it or not.

...

And whether it's peak (which we can't know at this point) or not, we DO know the world will continue to demand more oil along with GDP growth, just as it has for many years, which (all things being equal) will tend to push up oil prices over time. Peak or not.

https://www.eia.gov/outlooks/steo/report/global_oil.php

And below the global consumption chart for the decade, the additional production by non-OPEC countries is shown. An additional 4 million BPD in the US for 2016 through 2018, with about a third of that for 2018. How is that peak, again?

Show me a few years of globally declining production. THEN we can talk about the possibility of a peak. Not necessarily THE peak long term, but THAT would at least be a real sign of a peak and not just your endless FUD with zero citations or facts.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Mon 16 Jul 2018, 10:51:17

Speaking or sanctions and Iran and worries about shortages and the price of oil:

I noticed WTI was down well over $2 again today and wondered why.

Well, it appears that sanctioning Iran isn't that important in this administration (which has an attention span about as long as a gnat's eyebrow), if it might be a wee bit inconvenient.

Naturally, the world takes notice re probably higher oil supply later this year:

Oil falls 3%, below $69, as Treasury says importers may get leeway to buy Iranian crude, despite sanctions


https://www.cnbc.com/2018/07/16/oil-fal ... ivers.html

So much for principle, or doing the "right thing". So much for punishing Iran for its behavior. Oil prices a little high? Up the supply at ANY cost, even while we pretend we have principles.

Just another example of how, even outside pure free market principles, the price of oil matters a LOT to governments. (And thus my premise that ALL the economically frackable oil formations of any size will be fracked (including the areas banned and restricted today) -- it's just a question of what price pulls the necessary levers to get it to happen.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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