Cog wrote:I prefer LOMR or Line of Maximum Retardation. Have none of you doomers heard of supply/demand affecting oil price just like it does every single commodity on the planet?
Since 2008, five oil price maxima exist, which are points of demand destruction. A these points the oil price crashed because it got too high for the economy. They can be connected by a straight line. LODD, which stands for "Line of Demand Destruction", is a good name for this line.
Because oil in storage remains elevated. When a large amount of oil is in storage, prices go down. Conversely, when there is a smaller supply cushion of oil, prices rise:Baduila wrote:Distractions and red herrings.
Please explain, why the Points of Demand Destruction are on a line.
And explain, why the line is going down.
Oil Supply to Swamp Demand, Squeeze OPEC in 2020* Demand to grow 1.4 million b/d in 2020, supply by 2.3 million
* OPEC now pumping more than what will be needed next year: IEA
Even though growth in world oil demand will accelerate to 1.4 million barrels a day in 2020, it will be eclipsed by a 2.3 million barrel-a-day surge in output, as the ongoing boom in U.S. shale is augmented by new fields in Brazil, Norway and Canada.
“A clear message from our first look at 2020 is that there is plenty of non-OPEC supply growth available to meet any likely level of demand, assuming no major geopolitical shock,” said the Paris-based IEA. “This is welcome news for consumers and the wider health of the currently vulnerable global economy, as it will limit significant upward pressure on oil prices.” The IEA expects that demand will pick up markedly, averaging 1.2% in 2019 as a whole and 1.4% next year.
If we could predict the future we would all be billionaires by playing the stock market. Nothing can predict the future. That goes double for the maximum affordability nonsense where if you followed short's investment advice you would have lost a buttload of money by now:Baduila wrote:It always 100% correct for the past, but is inaccurate. It is totally useless for prediction of the future.
The Etp Model, Q & A Pt. 7shortonoil wrote:Sat Feb 11, 2017 - As we have previously stated we expect a major crisis to appear in the market later on in 2017. That will result from the ongoing inventory build that has now extended itself into the finished products sector. We are presently setting up a trading desk to take advantage of this upcoming situation by employing the trading of options on 3x ETFs. This method will allow anyone with a trading account to participate for as little as a couple hundred dollars. Once our positions are in place (so we aren't bidding against our own clients) we will be sending emails explaining the transactions used to our present clients. If you have acquired an unregistered copy of our report you may register it by sending an email to "contact" at our site.
Feb 14, 2017 - By the way, we are presently going to be playing put options on 3x ETFs. It gives about 7 to 1 leverage. Since they are six month options they give good lead time. The down pressure from the Max Affordability function should trigger the market about the next OPEC meeting, which is in May. We will probably take the position about the 1st of April. Let's hope that it doesn't crash before then. If it moves to $50 before then we will assume that who ever is keeping it propped up has finally given up, and jump in.
Nov 03, 2018
Fund YTD Return
ProShares Daily 3x Inverse Crude -51.01%
United States 3x Short Oil Fund -52.47%
VelocityShares 3x Inverse Crude -74.56%
June 15, 2019
Fund YTD Return
ProShares Daily 3x Inverse Crude -28.38%
United States 3x Short Oil Fund -43.53%
VelocityShares 3x Inverse Crude -74.56%
What price climb? The price was $58 in Jan 2018 and $61 in August 2018. That's only a 5% change in price. That is easily explained by Trump rhetoric at the time of upcoming Iran sanctions. IE, the market priced in an upcoming supply cut. Turns out, Trump granted a buttload of waivers that pretty much nullified the sanctions. So the expected supply cut did not happen. So what happened when the market forecast was readjusted to reality? Prices crashed to $48 by Feb 2019. Nothing surprising here.Baduila wrote:Lets look at the price crash octobre 2018. The price climbed up from Q1 to Q3 2018 despite over supply. Here the market recognized at the end of the supply phase that the supply is higher. They did not see the future. Sorry, but your explanation is full of wormholes.
OPEC production cuts were offset by production rises from non OPEC sources. Total global production actually went up despite the OPEC cuts. Here's the production breakdown:Baduila wrote:And the crash in may 2019? Your forgot to mention the massive crude production cut of OPEC+ in Dec 2018, which up to now has cost 3 million barrel per day.
Global Oil production in million barrels per day
year OPEC Non-OPEC Total
2017 37.4 63.4 98.1
2018 37.3 63.4 100.7
2019 35.3 65.5 100.9
OPEC cuts oil supply steeply but sees growing 2019 headwindsWorried by a drop in oil prices and rising supplies, the Organization of the Petroleum Exporting Countries and its allies including Russia agreed in December to make supply cuts. In a sign of excess supply, OPEC’s report said oil inventories in developed economies were above the five-year average in December.
OPEC said in the report that 2019 demand for its crude would decline to 30.59 million bpd, a drop of 240,000 bpd from its last report, as rivals such as the United States boost output. OPEC forecast global oil demand would grow by 1.24 million bpd in 2019. Non-OPEC producers will boost output by 2.18 million bpd, 80,000 more than expected previously.
OECD commercial inventory in million barrels per day
year stocks
2017 2844
2018 2861
2019 2871
You mean your "line of demand destruction"? There is no demand destruction. Oil consumption has continued to grow year after year. You picked the year in which oil prices were the highest ever and then act surprised when oil prices didn't hit that high again a few years later? When oil prices last hit that level in 1980 it took 3 decades for the prices to go that high again. Don't act so surprised that after only 1 decade we have not breached those levels again.Baduila wrote:Your improved explanation gives a rough estimate for the timing of the first four price crashes. They may happen during over supply phases. Again, there is no explanation for the oil prices at the point of crash. Why are the five points on a line ?
The oil supply in 2013 was tighter than today. In 2013, we were sitting on around 55 days of oil supply. In May it spiked up to around 62 days of supply. It might not sound like much of a change, but the worst it ever got to when oil prices crashed to the $20 range was in feb 2016 oil supply hit 66 days of supply. Then there is the trade war which doesn't look to be ending anytime soon and is hurting demand.Baduila wrote:And: Why is the oil price today only half of 2013 ?
Oil Prices Fall Amid Fears of OversupplyOil prices erased an early advance Monday, falling on continued worries of a supply glut. Prices are down 20% from their April peaks on fears that crumbling demand and steady production will lead to excess supply and entered a bear market.
Fears about trade tensions between the U.S., Mexico and China hurting the world economy and crimping commodity demand have hurt oil and industrial materials recently. Many analysts remain wary that uncertainty about trade policies between the U.S. and China will cause an economic slowdown overseas to spread to the U.S. Domestic inventories have risen to their highest level in nearly two years amid tepid gasoline demand and record U.S. output, adding to the pressure on oil in recent weeks.
The falling maximum oil price (green line) in Baduila's graph is perhaps the maximum oil price that the economy can pay generated by the the energy mix?
The maximum price is falling by USD 20 every three years...
1 Jan 2019 - USD 75
1 Jan 2022 - USD 55
1 Jan 2025 - USD 35
...which equals USD 6.66 annually. We are plunging into darkness.
Yoshua wrote:The maximum price is falling by USD 20 every three years...
1 Jan 2019 - USD 75
1 Jan 2022 - USD 55
1 Jan 2025 - USD 35
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