Jump to content
Sign in to follow this  
drbubb

OIL PRICES: could stay down thru 2016-19

Recommended Posts

The Death of the Green Energy Movement

 

The green energy movement in America is dead. May it rest in peace. No, a majority of American energy over the next 20 years is not going to come from windmills and solar panels. One important lesson to be learned from the green energy fad’s rapid and expensive demise is that central planning doesn’t work.

. . .

What crushed green energy was the boom in shale oil and gas along with the steep decline in the price of fossil fuel that few saw coming just a few years ago.

A new International Energy Agency report concedes that green energy is in fast retreat and is getting crushed by “the recent drop in fossil fuel prices.” It finds that the huge price advantage for oil and natural gas means “fossil plants still dominate recent (electric power) capacity additions.”

This wasn’t supposed to happen.

 

398e1_moorechart3.png

 

> More: http://greenenergyinvesting.net/the-death-of-the-green-energy-movement

Share this post


Link to post
Share on other sites

The Saudi "squeeze" on Oil production is working

 

Saudi Arabia sees success in fight to retain dominance of global Oil - SCMP, pg.1 headline

+ Output strategy squeezes US shale

+ Expectation of tighter supply fuels price rally

 

Brent_zpsf917ykiw.png

 

+ The kingdom's production rose to a record high of 10.3mn barrels a day

+ The price fall has deterred investors away from expensive oil, including US shale

+ Working oil rigs have plunged by 60 percent

+ "Saudi Arabia wants to extend the age of oil... we want to be the major producer"

+ Expectations are that the market may start to tighten by mid-year, and

the IEA says the "oil reached rockbottom (at $45)... doesn't look like it is going back"

Share this post


Link to post
Share on other sites

TWENTY Year OIL ... update

 

OIL-20yr_zpsjqlijnxp.png

Share this post


Link to post
Share on other sites

Oil : Too much optimism?

 

AB_zpska32kayu.png

 

Oil producers hoping OPEC will cut output Friday to boost sagging prices are likely to be disappointed: The cartel's Gulf powers aren't about to surrender.

Saudi Arabia, Kuwait, the United Arab Emirates and Qatar are leading a fierce battle to protect OPEC's global market share by forcing others, like U.S. shale producers and Russia's state energy giants, to live with lower prices.

Years of $100 a barrel oil allowed the four exporters to amass reserves of $2.4 trillion, according to the Sovereign Wealth Fund Institute, a huge war chest for countries with a combined population of fewer than 50 million people.

They also used the windfall revenues to invest in infrastructure that gives them new weapons in the oil market fight.

. . .

Saudi Arabia's veteran oil minister Ali al-Naimi led the charge at the OPEC meeting back in November to keep pumping in the face of falling prices. That decision accelerated the price collapse, as it became clear the Saudis were playing a long game.

"We're not going to cut production, certainly Saudi Arabia is not going to cut," Ali al-Naimi told CNN in December. Asked if that position would hold for the first half of 2015, he bluntly stated, "No, it's the position that will hold forever."

Related: Smart money is buying energy stocks

Forever is a long time, but after discovering oil nearly eight decades ago, many believe Saudi Arabia is out to protect its legacy.

 

> http://money.cnn.com/2015/06/03/investing/opec-gulf-producers/index.html

Share this post


Link to post
Share on other sites

Exxon may buy a rival

 

Exxon's crude choice: Drift along, or buy a rival - FT, pg 17

 

XOM / Exxon Mobil ... All : 10yr : 5yr : 3yr : 12mos

XOM-all_zpsdk3wep78.gif

 

"The decline in the number of shares outstanding (from 7bn to 4bn) ... may make it look like a company that is slowly winding itself up."

 

On the contrary:

+ Exxon's resource base is 92bn barrels of oil and gas

+ Dividends have been increased aggressively for years

+ The falling share base has made that easier

+ Some say: "The guy who owns the last share of Exxon is going to be the richest guy in the world"

 

However:

+ Production is now less than when Exxon took over Mobil

+ It has cutback on capital spending from $38.5bn in 2014, to an estimated $34bn in 2015,

and that is less than "smaller" rival Chevron, who plans $35bn

 

Rex Tillerson has to make a decision: except the fate of declining production, or buy a rival.

BP is seen as the most likely target. Others talk of Pioneer Natural Resources, Hess, Occidental Petroleum

and even Conoco Phillips, a large company.

 

BP / British Petroleum ... All : 10yr : 5yr : 3yr : 12mos

BP-all_zpsqdtogdgi.gif

 

CVX / Chevron ... All : 10yr : 5yr : 3yr : 12mos

CVX-all_zpsnergtawi.gif

Share this post


Link to post
Share on other sites

Oil risks becoming deeper thorn in markets’ side

 

Published: July 23, 2015

MW-DB861_oil_ba_20141218110209_ZH.jpg?uuBloomberg

barbKollmeyer_100.png

By BARBARA KOLLMEYER , MARKETS REPORTER

 

Another day, another tech rout? Investors would be forgiven for some tech apprehension today after a really ugly day for Apple.

After suffering its worst one-day loss on Wednesday, Apple AAPL, -4.23% is headed for its worst week since nearly the start of the year.

. . .

Commodities — that other developing thorn in investors’ side — may provide a distraction from the tech turmoil. Only not a real happy one. U.S. crude settled at under $50 a barrel for the first time since early April yesterday on rising supplies. It‘s still below that marker this morning, as some worry $40 oil could be here in a month.

> http://www.marketwatch.com/story/oil-risks-becoming-deeper-thorn-in-markets-side-2015-07-23?siteid=bigcharts&dist=bigcharts

 

BNO / United States Brent Oil Fund LP (NAR) ... update

 

BNO_zpswjks3ukl.gif

Share this post


Link to post
Share on other sites

Oil : Too much optimism?

 

AB_zpska32kayu.png

 

Oil producers hoping OPEC will cut output Friday to boost sagging prices are likely to be disappointed: The cartel's Gulf powers aren't about to surrender.

Saudi Arabia, Kuwait, the United Arab Emirates and Qatar are leading a fierce battle to protect OPEC's global market share by forcing others, like U.S. shale producers and Russia's state energy giants, to live with lower prices.

Years of $100 a barrel oil allowed the four exporters to amass reserves of $2.4 trillion, according to the Sovereign Wealth Fund Institute, a huge war chest for countries with a combined population of fewer than 50 million people.

They also used the windfall revenues to invest in infrastructure that gives them new weapons in the oil market fight.

. . .

Saudi Arabia's veteran oil minister Ali al-Naimi led the charge at the OPEC meeting back in November to keep pumping in the face of falling prices. That decision accelerated the price collapse, as it became clear the Saudis were playing a long game.

"We're not going to cut production, certainly Saudi Arabia is not going to cut," Ali al-Naimi told CNN in December. Asked if that position would hold for the first half of 2015, he bluntly stated, "No, it's the position that will hold forever."

Related: Smart money is buying energy stocks

Forever is a long time, but after discovering oil nearly eight decades ago, many believe Saudi Arabia is out to protect its legacy.

 

> http://money.cnn.com/2015/06/03/investing/opec-gulf-producers/index.html

 

 

That would be crushing news for smaller oil producers. But like the BOE and other talking heads, don't listen to what they say but what they do. When money and power is involved, inside knowledge is the key. We are all outsiders, and can only follow the trend after the price action. Do I believe Ali al-Naimi 100%? No. Their position can change, once their objectives are met.

Anyone proficient at shorting might be looking at frackers/shalers with no positive cashflow. That could be where the Sauds are hedging their losses in oil production. Net, net, they are either breaking even or still making tons of money. That is the beauty of market monopoly.

Share this post


Link to post
Share on other sites

http://www.icis.com/blogs/chemicals-and-the-economy/2015/07/iran-deal-highlights-massively-oversupplied-oil-market/

'The oil market was the first to feel the impact of the Great Unwinding of policymaker stimulus nearly a year ago. It had completely lost its key role of price discovery due to the liquidity being supplied by the central banks. This had overwhelmed the fundamentals of supply/demand. And we are still living with the consequences today.

Many traders have only ever known a world where central banks aim to dominate the financial markets – and so they jumped on the recent technical rally in the belief that somehow markets would repeat the 2009 rally.

What it is about the world “massively oversupplied” that these traders find so difficult to understand, you might ask?

This, after all, was the phrase used by the International Energy Agency (IEA) last Friday to describe the current state of oil markets. And yet prices actually ended higher on the day, even though the IEA’s monthly report was crystal clear on the outlook:

It remains that the oil market was massively oversupplied in 2Q15, and remains so today. It is equally clear that the market’s ability to absorb that oversupply is unlikely to last. Onshore storage space is limited. So is the tanker fleet. New refineries do not get built every day. Something has to give.”

Now a further test of oil markets is underway, with today’s historic agreement between Iran and the major global powers on the nuclear issue. As The Guardian reports:

In terms of Iran’s ability to sell crude, I think that is where we will see the most immediate loosening up of restrictions. Iran has between 40 and 50 million barrels of crude at sea. Expect this crude to come to the market in short order. They will start competing fiercely to regain market share that they have lost to their Persian Gulf neighbors. Unfortunately for Iran the timing couldn’t be worse. Oil prices are depressed and already there is a glut of oil on the market. Adding Iran’s crude will put further downward pressure on oil prices.”

The Guardian thus confirms that Iran already has around 40mb of oil in floating storage, as I noted 2 weeks ago. It will not be long before this oil starts finding its way to market, even if sanctions are still officially in place. And this volume will be appearing as we move into the seasonally weaker Q3 period for demand. Plus the IEA forecasts that Iran could increase production by up to 800kb/day within a few months of sanctions being lifted.

I have forecast for some time that oil prices would return to their historical $30/bbl or lower level, I see no reason to change my mind today.'

Share this post


Link to post
Share on other sites

http://www.icis.com/blogs/chemicals-and-the-economy/2015/03/oil-price-rally-head-fake-says-international-energy-agency/

'

HEAD FAKE
“Behind the façade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly. Steep drops in the US rig count have been a key driver of the price rebound. Yet US supply so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations. Output estimates for 4Q14 North American supply have been revised upwards by a steep 300 kb/d.

The projection of 1Q15 supply has also been raised. Plunging US crude throughputs – due to seasonal and unplanned refinery outages, as well as weak margins and high gasoline stock builds in December – have seen US crude inventories soar, compounding the impact of robust supply growth. At last count, total US crude stocks stood at 468 mb, an all-time record.”

The chart above highlights the key issue. It shows oil prices in dollars of the day, and $2015, since oil was first commercialised in 1861:

  • They were very high in the first 20 years, and volatile, as exploration and refining were very new
  • Then they settled down into a sustainable range around $20/bbl until the mid-1970s
  • The arrival of the BabyBoomers in the 25 – 54 Wealth Creator cohort caused demand to surge
  • OPEC took advantage of this to boost prices back to their mid-19th century level
  • But this proved only temporary, and prices fell back again to normal levels in 1985

Why should central banks prove any more successful than OPEC in keeping asset and commodity prices high? That is really the question. They can create temporary once-off wealth effects by adding debt. But once the wealth has been spent, it has gone. Only rising incomes can create sustainable new demand.

As the IEA notes, data on falling rig counts is irrelevant to current prices. Instead, we need to focus on what is actually happening on the ground in terms of the fundamentals of supply and demand.

The central banks’ misguided stimulus policies have destroyed price discovery mechanisms in many major markets. But now, as I have argued since August, the Great Unwinding of these policies is well underway. The oil price is falling again, and the dollar is rising sharply. And as the IEA suggests, this is not going to be an easy ride.'

Share this post


Link to post
Share on other sites

"why... should central banks prove any more successful than OPEC in keeping asset and commodity prices high?"

 

why indeed:

 

SAUDI Needs Money

 

They will tap the debt markets for $27 billion ($5.3mn per month, first since 2007), and meantime;

 

+ They are "prioritizing" spending with the idea to make some cuts, as

+ Their oil production has pushed over 10 million bpd, previously a ceiling

 

Of course, this borrowing need is triggered by oil dropping from $115 last June, to under $50 now.

 

It will be interesting to see if oil producing keeps rising, as Iranian oil comes back into markets

Share this post


Link to post
Share on other sites

THE National Iranian Tanker Co's (NITC) 317,000-dwt Starla, with two million barrels of oil aboard, is heading to Asia after sitting in Iranian waters for months, the first vessel storing crude offshore to sail after the recent nuclear accords.

First Iranian ship sets sail for Asia with 2 million barrels of oil aboardTHE National Iranian Tanker Co's (NITC) 317,000-dwt Starla, with two million barrels of oil aboard, is heading to Asia after sitting in Iranian waters for months, the first vessel storing crude offshore to sail after the recent nuclear accords.

 

> http://www.seanews.com.tr/news/151576/First-Iranian-ship-sets-sail-for-Asia-with-2-million-barrels-of-oil-aboard.html

Share this post


Link to post
Share on other sites

OIH could be bottoming soon, near $27-30

 

OIH / Oil Service index ... update : 5-yrs : 3-year :

OIH_zps74tuhe1n.gif

Share this post


Link to post
Share on other sites

Some BIG OIL companies - bouncing off key support ?

 

Co.- : $-Last : Bk.Val : P/BkV : MktVal : $-Cash : $Debt : Ebitda : OperCF : 5E-C/D : trP/E : Yield :

MUR: $32.30 ====: $46.10 : 70.0% : $10.0b : $1.37b : $2.61b : $2.79b : $2.91b : XXXXXX : 7.86 : 4.20%

 

Then one day after saying "these stocks are touching key support", we saw these moves:

 

Co.- : $Last : change : PEGr : Bk.Val : P/BkV : MkValue : $-Cash : $-Debt : Ebitda : OperCF: 6oc-D+C: MV/? : trP/E : fw.Yld :
BP-- : $36.28 +0.60 : 1.90 : $36.26 : 98.0% : $110.4b : $32.7b : $57.8b : $24.7b : $26.4b : $123.1b : 89.7% : 39.0 : 6.60% :
COP : $50.20 +1.36 : -648 : $39.48 : 124.%: $61.89b : $2.66b : $22.5b : $15.7b : $12.3b : $54.0bn : 115.% : 12.5 : 5.70% :
CVX : $89.89 +2.14 : -3.99 : $82.85 : 101.%: $161.5b : $13.1b : $33.9b : $31.8b : $25.4b : $132.bn : 122% : 9.38 : 4.28% :
MUR: $33.81 +1.51 : -2.10 : $46.10 : 70.0%: $6.02bn : $1.37b : $2.61b : $2.79b : $2.91b : $15.5bn : 100% : 8.23 : 4.20% :
OXY : $71.28 +2.50 : -12.4 : $44.48 : 155.%: $54.75b : $2.15b : $6.84b : $8.58b : $8.93b : XXXXXX : 100% : n / a : 4.40% :
====

* Note: for the 6xOCF calc. use lesser of Oper.CF or EBITDA (will normally be OCF)

 

BP ... update

BP_zpsjgh3qem6.gif

 

COP ... update

COP_zps3ocqsydx.gif

 

CVX ... update

CVX_zpsbfmyvcbx.gif

 

MUR ... update

MUR_zpses4jipix.gif

 

OXY ... update

OXY_zpskapkohtn.gif

Share this post


Link to post
Share on other sites

Could Russia join OPEC?

(THAT would be bullish for Oil prices)

 

This is what William Engdal and Joseph Farrell speculate

 

NEWS AND VIEWS FROM THE NEFARIUM SEPT 17 2015

 

OILB / Brent etf ... update / Last: $27.00arrow_up_sm.gif +0.70 / Brent is $

 

OILB_zpsthlsn8ts.gif

 

Driving Saudi Arabia into the hands of Russia would change the world

(and be a disaster for the US - let's get past the post 911 nonsense, say Farrell)

Share this post


Link to post
Share on other sites

Kurt Wulff speaks with Jim Puplava about his McDep Valuations

 

XLE -- all-data : 5yr : 2yr : 6mo / 10d - Last: $63.85 +2.53 : +4.13% - near important low perhaps

ab_zpsj7goiuvl.gif

 

Some oil stock may have touched important lows already

 

Here's a podcast which includes a discussion with Kurt Wulff (at 36 minutes):

 

MP3 : http://www.financialsensenewshour.com/broadcast/fsn2015-1003-1.mp3

>source: http://www.financialsense.com/financial-sense-newshour/gary-dorsch/us-downturn-made-in-china

 

NOTES:

======

Q: How safe are big oil co dividends?
A:
No question that co's like XON and CHV have safe dividends. The fact that they are being questioned is a sign of the low.
XOM says: buybacks depend on cashflow, but divs are safe.
Only risk is a drop to $20, which is unlikely and how long could it last
RECOMMENDS: European co's: RD and TOT. TOT has underperformed for years, but is turning around

 

Q: BP, is it a takeover candidate?

Maybe too big to t/o. Doesnt cover it. Has good assets, but there might be liability issues

Q: Rest of industry... Mid-tier co's?

Likes EOG- "probably the best", Marathon, Devon have even lower mcDep ratio's

Q: Royalties trusts? They are less liquid.
"Completely forgotten". Paying 7% income. Have no debt.
Recommends: CrossTimbers, Permian. wud like Dorchester (at $0.50 lower),

 

It's good to diversify across various sectors

Timing: maybe just one month to go (seasonally speaking)
to get to the weighting you want to have.
==

> McDep website: http://McDep.com

Share this post


Link to post
Share on other sites

KITCO

 

The 6PM Recap With Gary Wagner: Watching The River Of Crude Oil. Does Anyone Know The Real Story? Ask Putin. - Kitco News, Oct 7 2015

Silver Prices React To Strong Oil Prices; Gold Notches Another 2-Week High - Peter Hug - Kitco Video News, Oct 7 2015 4:35PM

Gold To Suffer By Year-End, 2016 Due To U.S. Rate Hikes - Top Gold Forecaster - Kitco News, Oct 7 2015 1:35PM

=== ===

 

A mainstreamer type view on Putin ?

 

The U.S. government's Energy Information Administration (EIA) reported that crude inventories in the country’s storage facilities jumped by 3.1 million barrels last week, versus a 2.2 million-barrel build predicted by analysts in the weekly Reuters survey.

Being off by 33% is bad enough, isn’t it? But just yesterday, preliminary inventory data by the American Petroleum Institute suggested a drawdown of 1.2 million barrels. So, if you compare the EIA report and the API records, the swing is 4.3 million barrels. We’re not talking about pebbles on a beach here. We’re talking about 55-gallon drums of an expensive commodity.

Not surprisingly, oil prices slid after the EIA report.

At first prices seesawed in volatile trading today, trying to cling to a third day of gains even after government data showed the large U.S. crude inventory build. Perhaps traders panicked a touch, but the whole scenario speaks to the fears and inconsistencies within the energy markets when it comes to predictive data.

cl107.png

We would like to turn to the situation in Syria being fomented by the Russians. We believe that Putin is working hard to destabilize a tottering region in the hope that he can lean on Iraq, gain the complicity of Iran and threaten Saudi Arabia and the Gulf States in order to push energy prices back up to beefier levels.

Russia is on the brink of insolvency. This is why Putin decided to risk a war with NATO

???

(To me, and maybe to Paul Craig Roberts this doesn't fit the facts. Why are Russian stocks hold up so well.

Nice try, by another Zionist tool? probably. Saudi Arabia is in trouble without any help from Putin.)

Share this post


Link to post
Share on other sites

Saudi Arabia is chewing through its reserves at an unsustainable rate. Unless oil prices move up in the not too distant future, they will have to make cuts to domestic spending. Rather paradoxically, any resulting political instability in Saudi Arabia would (likely) push oil price up.

Share this post


Link to post
Share on other sites

Political instability seems inevitable in Saudi - have you listened to Abby Martin's report?

 

(welcome back. hope you are well)

 

Empire Files: Inside Saudi Arabia: Butchery, Slavery & History of Revolt

By Abby Martin on October 5, 2015 Podcasts & Videos, The Empire Files

rise.jpg

Podcast: Play in new window | Download (Duration: 27:12 — 12.5MB) | Embed

Abby Martin takes us inside the brutal reality of this police-state monarchy, and tells the untold people’s histo

Share this post


Link to post
Share on other sites

It's been a while. I had a few issues which limited the amount of time I was spending on line.

 

Thanks for the link - interesting and well presented but not exactly news (except to US policy makers).

 

Daniel Yergen's The Prize is a great read on the history of the oil industry and gives some background on its development in the middle east.

Share this post


Link to post
Share on other sites


Oct 26 8:33am:

The Rockefeller Brothers Fund stunned the world just over a year ago.


The foundation that was built on a Big Oil fortune announced that it would no longer invest in fossil fuels.


More


Share this post


Link to post
Share on other sites

Top chart - 5 year USD dollar / Saudi SAR exchange rate

Bottom Chart - Crude Oil ETF

 

Untitled.png

 

You can see the birth pangs of trouble appearing after the red line, that I've drawn, once Crude fell down in the 3rd quarter of 2014 (at around $90 a barrel the ETF uses a different value), Saudi currency reserves might have been used to keep that dollar/SAR peg. That is why we might be seeing that volatility in recent years. Hold onto your gold bars - as Rothschild once said in 2008.

Share this post


Link to post
Share on other sites

Gold has held up better than Oil for the last several months

 

GLD / Gold ... all-data : 5-yrs : 3-yrs

GLD-wk_zpshpne7rwj.gif

 

GLD vs. OilB (etf for Brent Oil) ... all-data : 5-yrs : 3-yrs

Gld-vsOilB_zpshr3moacp.gif

 

Gold-to-Brent ratio has run up to a resistance level (near 27:1);

Gold-toBrent_zpstxugzje9.png

 

It may make sense to consider shifting from Gold to Oil (or oil shares?)

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×