Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

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 ROCKMAN » Sun 12 Nov 2017, 12:37:37

Far from my end of the business but I do know the vast majority of oil sold in the international market is done via long term contracts. Contracts that are indexed to some benchmarked price. Spot oil sales are structured anyway the two sides of the trade agree. If an oil owner (a producer or new buyer) hauls 2 million bbls of spot market oil half way around the world it doesn't mean he's doing so without a contract in place. Just means it was an unscheduled sale. He and the next buyer may also have the sale price adjustable to some index price when the oil reaches the delivery point.

Just like long term sales contracts I doubt we would ever see the details of those spot market sales. Both are considered trade secrets. In fact I would be suspicious of any such details offered by anyone involved in the process.

And I think most understand but for those how done: a far amount of physical oil buyers use the futures market to buffer volatile markets. The goal isn't to make a profit on those futures contracts but to minimize any loss potential. Just my guess but I suspect many buyers from the spot markets who ARE NOT end users take advantage of changes in the futures market to lock smaller but guaranteed profits.

This conversation takes me back to the days decades ago when the govt tried to fix the price of imported oil: a buyer shipping oil to the US could only mark it up X%. I forget the actual amount. As a result "daisey chains" were created: while in transit a load of oil might change hands 6 or 7 times. And each time the price was marked up X%. One Houston oil trader for a oil company quit his $25,000/yr job and became an international oil broker. Made countless $millions and started his own domestic exploration company. But eventually the feds caught up with him. A friend was working as his Chief Geophysicist at the time so I accept his story as true. The feds offered him a deal: pay a $120 million fine and they would drop all charges. The story: he wrote them a draft for $120 million that day and continued BAU. Just an indication of how much money someone that has never produced or refined a bbl of oil can make in the oil "marketing" business.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11112
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Wed 22 Nov 2017, 06:29:57

Well, looks like the WTI just hit $58 in intraday trading. See what the EIA reports but I think we will close at a new high today.

Meanwhile, my fellow consumers are grumbling a bit around me already.

Thanksgiving Gas Prices At 3-Year High

GasBuddy’s newest report pegs gas prices at their highest average since 2014, the year oil prices crashed from their highs of over $100 per barrel.

Gasoline prices are up a full 20 percent compared to last year, just in time for the busiest driving weekend of the year in the United States – Thanksgiving weekend.

On Thursday, as families dig into their turkey, gas prices should reach an average of $2.53 per gallon. In 2012, the Thanksgiving-weekend national average cost of a gallon of gas was $3.44.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby kublikhan » Wed 22 Nov 2017, 11:07:49

Outcast_Searcher wrote:
tita wrote:I was looking at data (bp statistics and world bank) about what represent the oil expenses (consumption x oil price) against the nominal global GDP between 1965 and today all in US$. It's a bit the same as looking the inflation-adapted crude oil price, but doesn't tell the same story. It is more direct.
...
So, in conclusion, the risk of oil on economic growth is supply disruptions (which of course end up with price increase). A slow increase of the price, even at 100-120$ won't affect growth if supply follows. This feels a bit obvious, but... not so much for everybody.
Nicely done. Objective, data based, and as you say, more direct than merely looking at the oil price, as far as overall economic impact.

Given the experience of 2010-2014, your conclusion seems a bit obvious, but as you imply, for some folks (who ignore real world economics) -- the obvious is ignored.

The point about the 2015-2016 percentage being on the low end of the range for the past several decades SHOULD be an OBVIOUS flag to those who claim "people can't afford oil based products at current oil prices". But again, the intersection of economic reality (real world data) and impacting such folks' beliefs is pretty much an empty set.
Indeed. nice post Tita. It's always refreshing to find someone who can look at the data with an objective eye and come to an informed opinion. We were talking about how much more damaging oil volatility was earlier in the thread:

kublikhan wrote:
ROCKMAN wrote:Even within segments of an economy the impact is time dependent. In the US high oil prices initially seemed rather positive for our oil patch. Now obviously low prices are inflicting much pain. But imagine if those earlier high oil prices had not developed and led the shale players to take on so much debt. Debt servicing which is now eating disproportional large portions of surviving companies and completely destroying many others. Which leads to a somewhat philosophical question: did the higher oil prices and boom in drilling activity help or hurt the oil patch? IOW pick your time frame.
Seems like you are saying it was more the volatility that screwed over the oil patch. The extreme swings from high to low and vice versa(a few years of high oil prices not worth the bubble mentality that later leads to bankruptcies). I think this applies to the consumer side of the equation as well. Consumers suddenly seeing their fuel bill double is much more damaging than a gradual increase that gives consumers time to adapt. Or a sudden plunge in prices deludes consumers to thinking low prices are here to stay and they splurge on new gas guzzlers. An earlier post I made:
kublikhan wrote:The absolute price of oil is only one factor the determines the impact of oil on the economy. Other factors are:
1. The magnitude and direction of the price swing.
2. The oil intensity of the economy.
3. Monetary and fiscal response.
4. Duration of oil price spike/plunge.
Absolute oil prices today are slightly cheaper than they were during the first oil crisis in the 70s. However back then the world was looking at a 210% magnitude increase in the price of oil. Today, we are looking at a 60% decrease in price. Today's environment is stimulatory for oil importers and harmful for oil exporters. The opposite of the first oil crisis.

ROCKMAN wrote:"Seems like you are saying it was more the volatility that screwed over the oil patch."Exactly. A very long time ago I pointed out that such up swings in oil prices gain much less for the GENERAL INDUSTRY then we lose from the price collapse.
THE Price of Crude pt 12
The oil barrel is half-full.
User avatar
kublikhan
Master Prognosticator
Master Prognosticator
 
Posts: 4222
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: THE Price of Crude pt 14

Unread postby Tanada » Wed 22 Nov 2017, 11:23:18

GoghGoner wrote:Well, looks like the WTI just hit $58 in intraday trading. See what the EIA reports but I think we will close at a new high today.

Meanwhile, my fellow consumers are grumbling a bit around me already.

Thanksgiving Gas Prices At 3-Year High

GasBuddy’s newest report pegs gas prices at their highest average since 2014, the year oil prices crashed from their highs of over $100 per barrel.

Gasoline prices are up a full 20 percent compared to last year, just in time for the busiest driving weekend of the year in the United States – Thanksgiving weekend.

On Thursday, as families dig into their turkey, gas prices should reach an average of $2.53 per gallon. In 2012, the Thanksgiving-weekend national average cost of a gallon of gas was $3.44.



Given that WTI contracts were selling for a little over $60/bbl at Thanksgiving 2014 it does seem 'interesting' that gas prices are not extremely dissimilar today. I think it is telling they point out prices had crashed from over $100/bbl but leave out the fact that the peak price was hit in July 2014 and this was five months after peak and after the KSA declared they would defend market share and not price.

They then go on to talk about the OPEC cut of fall 2016 without mentioning the fact that world wide demand has grown by a substantial quantity over the last three years while supply since Iran came bak online in January 2016 has been pretty static.
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: 14876
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Wed 22 Nov 2017, 12:07:16

GoghGoner wrote:Well, looks like the WTI just hit $58 in intraday trading. See what the EIA reports but I think we will close at a new high today.

Meanwhile, my fellow consumers are grumbling a bit around me already.

Thanksgiving Gas Prices At 3-Year High

Good. If prices are high enough for people to grumble about, then MAYBE they'll stop switching in huge numbers to giant SUV's and pickup trucks that get (compared to efficient cars) terrible gas mileage.

Maybe while they're at it, if a 5 passenger car would do it for them, they could get a good, efficient midsized HEV sedan, and basically TRIPLE their gas mileage in the city. Oh, and likely save $10 to $20+ grand on the vehicle if they shop prudently.

Doomers should note that a bit of grumbling does NOT mean people "can't afford" oil based products like gasoline, and certainly not that the economic crash is due in 5 minutes, days, weeks, etc.

It really is too bad that the vast majority of people can't seem to plan decently a few years out (like, maybe plummeting gasoline prices won't last forever), much less over several decades, like to financially plan for their retirement via adequate savings.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 5653
Joined: Sat 27 Jun 2009, 20:26:42

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Thu 23 Nov 2017, 14:12:16

Yeah, these gas hog buyers have very short memories.

U.S. oil hits two-year high on pipeline outage, lower inventories

U.S. crude hit a two-year high in thin trade on Thursday as the shutdown of a major crude pipeline from Canada and a draw on fuel inventories pointed to a tightening market, despite rising output from U.S. producers.

U.S. crude was up 35 cents at $58.39 per barrel by 10:58 a.m. EST (1548 GMT), close to a two-year peak of $58.44 touched earlier in the session.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby Subjectivist » Fri 24 Nov 2017, 19:27:17

New daily high $59.05/bbl. There may be hope for my standings in the rankings aftercall!
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
User avatar
Subjectivist
Light Sweet Crude
Light Sweet Crude
 
Posts: 4312
Joined: Sat 28 Aug 2010, 06:38:26
Location: Northwest Ohio

Will oil touch $100 a barrel again?

Unread postby AdamB » Thu 30 Nov 2017, 22:46:33


This seems unlikely, both in the short and long term, and in the context of new energy sources. But there’s always politics It took the better part of a year but the production cut effected by the 14-member cartel, Organisation of Petroleum Exporting Countries (OPEC), in January is beginning to show results. Prices of the benchmark Brent grade crude have shot up by 36 per cent since the middle of this year and went within touching distance of the $65-a-barrel mark before retracing steps in the last few trading sessions. On Friday, Brent was trading in the $61-62-a-barrel range. Exactly a year ago OPEC decided to take 1.2 million barrels a day off the market through production cuts in an effort to bring down output to around 32.5 million barrels a day. The cartel persuaded the 11 non-OPEC oil-producing countries led by


Will oil touch $100 a barrel again?
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 4304
Joined: Mon 28 Dec 2015, 16:10:26

Beware of the Dip: Oil Prices Could Go Lower

Unread postby AdamB » Thu 30 Nov 2017, 23:00:55


The spike in oil prices since August provides U.S. producers an attractive opportunity to hedge their 2018 capital program. With a typical lag, it will likely result in an acceleration in U.S. oil production growth starting 2Q18. Coupled with a seasonal dip in global demand in 1Q18, which will cause sizable excess oil inventories to increase, a correction in oil prices is likely. Surplus oil inventories are likely to remain through 2018, taking the steam out of the recent upward momentum in prices without an actual supply disruption. Inventories will still be above the 5-year average in 4Q18, but smaller. WTI is $58/bbl in response to increased geopolitical anxiety, up from an average of $49.33/bbl for the first 9 months in 2017. Without high geopolitical risk or an actual supply reduction, oil prices have a downside risk. Fundamentals alone suggest an


Beware of the Dip: Oil Prices Could Go Lower
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 4304
Joined: Mon 28 Dec 2015, 16:10:26

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Mon 11 Dec 2017, 13:07:49

Brent hit a new high in intra-day trading this afternoon: $64.82. Looks like Brent has pulled further away from WTI because of a temporary pipeline shutdown in the North Sea. Tightness in the fundamentals may be causing volatility.

Oil Prices Rise On Solid Chinese Demand

Oil prices rose on Friday morning after Chinese data showed that China’s crude oil imports rose to the second-highest on record in November, and after U.S. total non-farm payroll employment increased last month.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby Cog » Mon 11 Dec 2017, 13:10:37

This news will make some folks sad.
User avatar
Cog
Fission
Fission
 
Posts: 10752
Joined: Sat 17 May 2008, 02:00:00
Location: Northern Kekistan

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Fri 22 Dec 2017, 16:24:40

Nothing spectacular but Brent inched up a new high.

Brent crude futures, the international benchmark for oil prices, ended the session up 35 cents at $65.25 a barrel, its highest close since June 2015.

U.S. West Texas Intermediate (WTI) crude futures settled 11 cents higher at $58.47 a barrel. WTI has also been touching values not seen since mid-2015 over the past two months.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Fri 22 Dec 2017, 16:44:12

!2-22-17 WTI close $58.47 ETP MAP price $54.25. No excitement noticed at the gas pumps. 8)
User avatar
vtsnowedin
Fission
Fission
 
Posts: 8928
Joined: Fri 11 Jul 2008, 02:00:00

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Tue 26 Dec 2017, 15:43:47

$16 higher than June. Nice 6 month move, no big fireworks just plodding higher. At this rate, will be closing in on $100 before the end of 2018...

WTI crude oil hits $60 per barrel for the first time since mid-2015

Brent crude, the international benchmark for oil prices, rose $1.69, nearly 3%, to $66.42 a barrel at 2:30 p.m. ET. West Texas Intermediate Crude oil, the US benchmark, added nearly 3% and briefly hit $60 per barrel.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby GoghGoner » Sat 30 Dec 2017, 16:12:49

WTI ended the year above $60 and Brent above $66.

https://oilprice.com/Energy/Oil-Prices/The-Biggest-Oil-Story-Of-2017.html

Nevertheless, the U.S. has averaged exports of 1.5 mb/d in the fourth quarter, which is very high historically and makes the U.S. a significant player in the global oil market. At that level, the U.S is shipping more oil than 6 of the 14 OPEC members.

Moreover, even as U.S. oil exports may ease a bit next year, there are some forces working in its favor. The WTI discount remains exceptionally large, with front-month prices still trading almost $7 per barrel lower than Brent. That will keep exports high. Argus Media notes that transport costs of very large crude carriers (VLCCs) run at about $3.75 per barrel, which means the differential between WTI and Brent is supportive of U.S. exports.

The discount is helped along by the fact that U.S. shale output is surging, which acts as a drag on WTI. The EIA predicts that the U.S. will average 9.9 mb/d in 2018, an all-time high. OPEC and other analysts expect growth of U.S. shale by about 1 mb/d; the IEA sees slightly less but still robust growth of about 870,000 bpd.
GoghGoner
Heavy Crude
Heavy Crude
 
Posts: 1737
Joined: Thu 10 Apr 2008, 02:00:00
Location: Stilłwater subdivision

Re: THE Price of Crude pt 14

Unread postby Subjectivist » Sun 31 Dec 2017, 12:45:20

2018 here we come!
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
User avatar
Subjectivist
Light Sweet Crude
Light Sweet Crude
 
Posts: 4312
Joined: Sat 28 Aug 2010, 06:38:26
Location: Northwest Ohio

Ten Years Ago Oil Was Worth $100 More Than Today

Unread postby AdamB » Tue 02 Jan 2018, 10:22:42


As the calendar changes, the price of West Texas Intermediate oil (WTI) is hovering around $60 per barrel. WTI is the U.S. benchmark oil and the underlying commodity used by the New York Mercantile Exchange in oil futures contracts. It is based on a type of light, sweet oil that was produced primarily in Texas in the first part of the 20th century. After WTI fell at the end of 2014 and ultimately hit prices below $30 less than two years ago, most oil traders and oil producers are thankful for what is seen as a rebound. A trader wearing 2018 glasses works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Dec. 29, 2017. (Michael Nagle/Bloomberg) About a decade ago, though, WTI was trading at $145 per barrel (in July 2008). In inflation-adjusted dollars


Ten Years Ago Oil Was Worth $100 More Than Today
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
AdamB
Volunteer
Volunteer
 
Posts: 4304
Joined: Mon 28 Dec 2015, 16:10:26

Re: THE Price of Crude pt 14

Unread postby Tanada » Tue 02 Jan 2018, 17:12:03

Unless my math is screwy the difference between 145-60 is $85, not $100.
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: 14876
Joined: Thu 28 Apr 2005, 02:00:00
Location: South West shore Lake Erie, OH, USA

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Tue 02 Jan 2018, 18:54:22

Accidental double post. The site was acting slow and a bit screwy.
Last edited by Outcast_Searcher on Tue 02 Jan 2018, 19:00:07, edited 1 time in total.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 5653
Joined: Sat 27 Jun 2009, 20:26:42

Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Tue 02 Jan 2018, 18:57:00

Tanada wrote:Unless my math is screwy the difference between 145-60 is $85, not $100.

They cited inflation as the difference (across time, even just a decade, constant dollars or PPP dollars need to be used to compare prices).

About a decade ago, though, WTI was trading at $145 per barrel (in July 2008). In inflation-adjusted dollars for November 2017, that $145 would be worth over $160. In other words, WTI is today valued at $100 less than it was valued nine and a half years ago.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 5653
Joined: Sat 27 Jun 2009, 20:26:42

PreviousNext

Return to Peak Oil Discussion

Who is online

Users browsing this forum: No registered users and 36 guests