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OIL, Discussion
apache123
post Posted: Feb 10 2015, 03:53 PM
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Latest Oil Theory.....

Pump out as much as you can before the Climate Apocalypse even if you only make a fraction of the $ from before as there will be a point in the future where 82% of known oil reserves needs to be left in the ground..... blink.gif

http://reneweconomy.com.au/2015/saudi-arab...e-horizon-11769







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Buyer beware: Do your own research before investing....

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Alethia
post Posted: Feb 10 2015, 08:48 AM
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In Reply To: triage's post @ Feb 10 2015, 07:11 AM

Sadly the article does not touch on the rapid and massive shift from oil to solar.
Would be interesting if he factored that into his otherwise comprehensive analysis.



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The caterpillar does all the work but the butterfly gets all the publicity.
 
triage
post Posted: Feb 10 2015, 07:11 AM
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Some analysis from Jeremy Grantham, in Barrons:

http://online.barrons.com/articles/SB51367...443772734531324

(if that link does not work you can get to it via this page on Barry Rithotz's site:

http://www.ritholtz.com/blog/2015/02/10-monday-am-reads-127/ )

I will quote his opening two sentences:

QUOTE
The simplest argument for the oil price decline is for once correct. A wave of new U.S. fracking oil could be seen to be overtaking the modestly growing global oil demand.


then I will rely on his final sentence...:

QUOTE
Disagreeing with experts should not be intimidating if we remind ourselves how many expert bankers nailed the financial crash!


...to dispute his conclusions.

as Mr Grantham himself says, all things being equal the Saudis would have been just as well off if they had cut their production by a half to allow oil prices to be twice or more what they are now. They would be bringing in as much revenue as they are now but would be keeping back lots of oil for future times when the price of oil will most probably be much higher still. They would know that as soon as oil prices go back up again the US frackers will quickly start producing more oil so having the oil price so low only delays production of oil by the US shale sector.

I still think that the Saudis are using low oil prices primarily as a political weapon: whilst the yanks can bide their time for oil prices to go back up the current situation is far more painful for the likes of the Russians, the Qataris and the Iranians who are far more reliant on high oil prices than are either the Saudis or the US (as a whole, creative destruction not withstanding).



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

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flower
post Posted: Feb 10 2015, 01:06 AM
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Clip from the FT (web) 9th Feb
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Oil prices rise after Opec cuts US supply forecast3 hours ago Oil prices are rising after Opec said in its latest monthly report that US supply will drop.

US oil futures have risen by 2.3 per cent to $52.9 per barrel.

Brent crude, which had been trading at just under $58 a barrel prior to the report's release, rose to $58.40.

In its latest monthly report, Opec forecast world oil demand would rise by 1.17m barrels per day this year, slightly up from its estimates published in January, when it forecast demand of 1.15m barrels.

The group increased its forecast for demand for its own oil by 400,000 barrels per day for 2015 to 29.2m barrels, but it crucially reduced its forecast for non-Opec members, including US-based shale energy producers.

The oil-producing cartel has maintained its own output to defend market share amid the dramatic slide in prices since mid-June, while many other producers have slashed investment budgets and mothballed projects.

It lowered its estimate for non-Opec production to 850,000 barrels per day, down by 420,000 barrels per day from its previous assessment. It also reduced its estimate of US production by 170,000 barrels daily. .



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Combining Fundamental comments with Fundamental charts.
 
boy
post Posted: Feb 6 2015, 06:17 AM
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In Reply To: boy's post @ Feb 5 2015, 04:47 AM

From Food doc daily September 14 2012

Conclusion

The level of energy prices plays a central role in determining the long-run profitability of ethanol production in the U.S. This analysis shows that crude oil prices above $60 per barrel will provide support for corn prices at or above $4 per bushel. If crude oil prices are higher, as many analysts expect, this is likely to further pressure corn prices upward. This has important implications for other users of corn, such as the livestock industry, that now compete with the transportation fuel use of corn. It also points towards the importance of continued public and private investment in technologies to increase the efficiency of corn production.

Issued by Scott Irwin
Department of Agricultural and Consumer Economics
University of Illinois

Corn prices seem to be about $3.80 bushel. Prices were under $4 for much of 2014 but were over $5 for most of the preceding 3 years.

From EIA, energy information agency US;

In 2013, about 135 billion gallons of motor gasoline (3.2 billion barrels) were consumed in the United States, which contained about 13 billion gallons of ethanol. Ethanol accounted for about 10% of the total volume of finished motor gasoline consumed.

Cheaper oil prices will bring down the costs of producing corn.

From The Sustainabilitycooperative Dec 2013;

. Almost all gasoline currently sold in the U.S. is 10% ethanol due to the Renewable Fuel Standard (RFS) which dictates the amount of renewable fuel refiners are required to blend. Requirement was put in place in 2005, but expanded as part of the 2007 Energy Dependence and Security Act. As of 2012, 12.95 billion gallons of bioethanol are produced domestically. Industry received strong support (including subsidies) with the 2008 Farm Bill, but this support will probably decrease in 2014. New Farm Bill is in the works and EPA’s preliminary ruling to reduce the Renewable Fuel Standard (RFS) threatens support for ethanol; farmers and investors are worried. Ethanol is a complicated issue, but overall is helping ease demand on fossil fuels.

 
eshmun
post Posted: Feb 5 2015, 01:07 PM
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In Reply To: balance's post @ Feb 5 2015, 10:51 AM

This article from the FT 3/2/2015 is very telling to the story of the oil price. The junk bond restructure specialists are saying 2013-2014 have been lean times for their business. When people like Ken Buckfire start making good money from the shale oil patch, we will see the real pop in the oil price. Keep an eye out for what happens in March and April as


"Restructuring advisers are now watching for banks’ twice yearly “borrowing base” determinations for credit facilities, which happen in March and April. Borrowing bases are determined by the value of oil reserves and the fall in prices could reduce lending capacity on credit facilities."

This statement from the article however does not bode well for a pop in the oil price soon.

"But falling bond prices may not prove to be enough to push companies into comprehensive restructurings. The flood of refinancings pushed most maturities to 2017 or beyond and “covenant-light” bonds are more tolerant of poor financial performance."

These guys make their bread and butter from defaults in the oil patch and other junk bonds so I'd rather listen to them to get clues to were the oil price is going than listen to a plethora of pseudo experts, who time and time again get proven to be completely wrong.

http://www.ft.com/intl/cms/s/0/d51a3d08-aa...l#axzz3QpfCtn8c

Eshmun




 


balance
post Posted: Feb 5 2015, 10:51 AM
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In Reply To: early birds's post @ Feb 5 2015, 10:14 AM

Never mind EB. Post as you see it. I welcome and respect your opinions whether they turn out right or wrong smile.gif

World markets have forced the RBA to play currency wars by the look of it. On the data, I did not think it was warranted but they know a lot more than I ever will about the real game.



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wren
post Posted: Feb 5 2015, 10:33 AM
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In Reply To: flower's post @ Feb 5 2015, 10:23 AM

" Odd thing was that as the sub prime saga developed those of us who said "This will end in tears" were laughed out of court. "

Was that the same old wise flower that said (amongst a hundred or so bizarre utterances ),Hyperinflation is just around the corner …that was one from 5 years ago,Gold will be $3000 in double quick time,the USD would collapse and become worthless…that one was about 4 years ago,the US Economy would collapse in the near future….name your time, and very recently that a strong AUD would be great news for Australian resource companies!


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flower
post Posted: Feb 5 2015, 10:23 AM
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In Reply To: early birds's post @ Feb 5 2015, 02:07 AM

QUOTE
yeah, there always will be unknown consequences to come, but one thing i know for sure that is most of us here will see it come and take action before you!!


Very reassuring. Odd thing was that as the sub prime saga developed those of us who said well before the GFC started "This will end in tears" were laughed out of court.



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Combining Fundamental comments with Fundamental charts.
 
early birds
post Posted: Feb 5 2015, 10:14 AM
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In Reply To: balance's post @ Feb 5 2015, 09:15 AM

oil went down 'steeply" last session, just like it went up "steeply" two sessions before. no complain??? is it down "steeply"?? wink.gif

B
i know a lot people think RBA shouldn't cut and they have their reasons i respect that. you read flower's post that respond to mine----------a lecrure to me like to a pupil with loud "NO CUT" at the end.
i was try to let it go after RBA went my way. but he just keeps coming with his "silly lecture" to me last night after PBOC cut chinese RRR 50PIPS.. i was like "what a F$%^& sour losser this guy is". weirdsmiley.gif
i'm bit fed up!!


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