Oil ( Hall of Fame Articles )

Oil ( Hall of Fame Articles )

Postby winston » Sat Sep 17, 2011 9:37 am

Falling Oil Prices: Worrying Trend or Saving Grace? by Marin Katusa,

The “warning signal” that is currently flashing red is the Oil Expense Indicator, which is the share of oil expenses as a proportion of worldwide gross domestic product (specifically, it is oil price times oil consumption divided by world GDP).

Since 1965, this indicator has averaged roughly 3% of GDP and has only exceeded 4.5% during three periods: in 1974; between 1979 and 1985; and in 2008. Each period saw severe global recessions.

In 1973/‘74, the Arab oil embargo sent oil prices rocketing skywards in the world’s first “oil shock.” In 1979, a revolution in Iran knocked out much of that country’s oil output and catalyzed the world’s second oil shock.

And, of course, in 2008 the housing bubble collided with speculative buying of new debt instruments and a commodities boom to propel oil prices to a record high of US$147 a barrel, which helped to trigger the global financial crisis and the worst slump since World War II.

So where are we right now? Well, Brent crude prices would have to fall to the low US$90s per barrel for the Oil Expense Indicator to drop below 4.5%.

Instead of that, Brent prices have been above US$100 per barrel for more than six months (aside from an intraday low of US$98.97 on August 9) and are still hovering between US$105 and US$110.

Merrill Lynch analysts agree, writing in a recent note: “The last two times that energy as a share of global GDP neared … the current level, the world economy experienced severe crises: the double dip recession of the 1980s and the Great Recession of 2008.”

So we face two options: oil prices come down sharply, or we enter a recession, which will drag oil prices down. Either way, crude has to get cheaper.

On top of that, no one is yet predicting a reduction in global oil demand. The International Energy Agency (IEA) reduced its forecast for demand growth, but still expects the world to consume 1.2 million more barrels of oil each day next year than this year.

Similarly, OPEC reduced its demand growth estimate, but still foresees oil demand rising by more than 1 million barrels of oil a day over the next 12 months.

So, oil prices will come down when the economy falls too, but if oil goes on a tailspin à la 2008, expect to see OPEC step up to the plate, tighten the market, and support prices, so that its members can continue to pay their bills.

http://www.caseyresearch.com/editorial. ... 417ED0911A
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Re: Oil ( Hall of Fame Articles )

Postby winston » Fri Jul 27, 2012 8:47 am

Energy Fact of the Day: North Dakota Oil Could Offset All Persian Gulf Imports by 2025

BISMARCK, N.D. (AP) — "A new study says North Dakota's oil production could jump more than threefold by 2025 to more than 2 million barrels a day.

The study released Wednesday by Bentek Energy LLC of Colorado also says natural gas production could more than quintuple by 2025 in the Williston Basin. The basin includes the Dakotas and Montana."

MP: If oil production in North Dakota increases to 2 million barrels per day from current daily production of 639,000 barrels, that would be more than enough domestic oil to completely offset current daily U.S. imports of 1.86 million barrels from all of the Persian Gulf countries combined (for 2011, EIA data here)!

Peak what?

http://mjperry.blogspot.com/2012/07/ene ... a-oil.html
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Re: Oil ( Hall of Fame Articles )

Postby winston » Sat Mar 01, 2014 4:08 am

Why Triple-Digit Oil Prices Are Here to Stay By Frank Curzio

If you believe oil prices are due for a correction, you may want to read this first…

Crude oil has had an amazing start to the year. Prices are up 8% and are now trading above the $100-a-barrel mark. Analysts in the media are talking about colder weather and political unrest in the Middle East as temporary reasons for the recent push higher.

But if you take a closer look at oil's global supply and demand, you'll see these triple-digit prices are here to stay.

Let me explain…

Over the past few years, we've seen a massive boom in U.S. oil production. New technologies, like horizontal drilling and fracking, have allowed the U.S. to tap into incredible oil reserves that were unreachable less than a decade ago. I have gotten a close look at these technologies over the last 18 months in the Permian Basin, Eagle Ford, and the Bakken Shale.

These technologies have allowed the U.S. to produce more than 8 million barrels of oil a day. That's the most oil America has produced in over 25 years.

But despite this massive boom, the U.S. isn't even close to producing enough oil to meet current global demand. The world consumes over 92 million barrels of oil per day. The U.S. only produces about 11.5% of global consumption.

This is a big deal.

You see, most of the world (outside the U.S.) is having a tough time finding oil. I'm not suggesting the world is running out of crude. But the cost to produce a barrel of oil outside America is surging.

For example, according to the International Monetary Fund, the breakeven point to produce a barrel of oil in Russia is $110. The breakeven point to produce oil in Iraq, Iran, Algeria, and the United Arab Emirates is $90.

In short, if oil prices fall below $90 a barrel, these countries will not make money producing oil. That could result in a massive amount of supply coming off the market. And if oil prices fall below $80 a barrel, we could see production go offline in places like the Permian Basin and the Bakken Shale – which would further weaken supply.

And contrary to popular opinion, demand for oil is increasing. Many thought the economic slowdown in developed nations and China (the second-largest oil consumer in the world) would cut demand. But the data tell a different story.

China's imports for crude oil jumped 12% in January. That amounts to 6.6 million barrels a day – a record high.

Meanwhile, most of the developed nations are growing again. The U.S. economy is growing at its fastest pace since 2011. Manufacturing in Europe and Japan has been strong over the past few months. And we're seeing record global airplane and car sales. Airbus and Boeing, the two largest airplane manufacturers in the world, said orders are at record highs. And global car sales recently topped 80 million for the first time ever.

Oil prices are moving higher not because of temporary factors like weather and political concerns, but because of rising demand and supply concerns as oil companies have difficulty finding crude oil that's economical.

Unless these trends reverse, oil is likely to average triple-digit prices over the next few years. In other words, I would think twice before betting on a huge correction in oil prices.


Source: Growth Stock Wire
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Re: Oil ( Hall of Fame Articles )

Postby winston » Sat May 16, 2015 7:51 pm

Notes:-

a. Global Oil Production vs Demand: 95m bpd vs 94m bpd
b. Global Stockpiles: 4.1b barrels ( 43 days if no more global production )
c. Global Government Stockpile: 1.4b barrels
d. US Oil Production vs Demand: 10m bpd vs 20m bpd
e. US Strategic Petroleum Reserve: 690m barrels out of max 727m barrels
f. US Private Industry Reserves: 485m barrels
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Re: Oil ( Hall of Fame Articles )

Postby winston » Fri Sep 02, 2016 7:55 am

Contango

Contango simply means that oil for immediate delivery trades at a discount to oil to be delivered in the future. In other words, as you go further along the 12-month strip, oil for delivery on consecutive months gets more expensive.

This discount for oil for immediate delivery is typically a sign of a supply glut, because when oil storage fills up, putting more oil in storage gets more and more expensive. That makes storing oil for delivery in the future more expensive than delivering it now, creating the contango discount.

Straightforwardly, oil prices for future delivery being higher than for immediate delivery also means that the market expects oil prices – if left to their own devices – will rise.
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Re: Oil ( Hall of Fame Articles )

Postby winston » Fri Sep 02, 2016 7:58 am

Bacwardation

Bacwardation, on the other hand, is the name for oil for immediate delivery trading at a premium to oil for delivery in the future.

This is typically a sign of shortage fears – the market is so worried about being able to get oil today, it’s willing to pay a premium over oil for delivery tomorrow.

The implication is that oil prices will go down in the future. on the other hand, is the name for oil for immediate delivery trading at a premium to oil for delivery in the future.

The implication is that oil prices will go down in the future.
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Re: Oil ( Hall of Fame Articles )

Postby winston » Fri Sep 02, 2016 8:01 am

The NYMEX Strip tells us what to expect from US prices.

The Brent spread, on the other hand, is a key indicator of what to expect internationally, as Brent is used more often than WTI as the benchmark against which global oil deals are made.
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Re: Oil ( Hall of Fame Articles )

Postby winston » Sat Feb 18, 2017 12:26 pm

Trump left Saudi Arabia off his immigration ban; Heres the shocking reason why

Source: Daily Crux

http://thecrux.com/trump-left-saudi-ara ... eason-why/
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