Current Oil Price

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kenneal - lagger
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Post by kenneal - lagger »

Welcome Welly160. We await your positive contributions. We are usually a bit wary, though, until we get some.
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PS_RalphW
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Post by PS_RalphW »

$85. How low will it go?
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biffvernon
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Post by biffvernon »

That's the bottom. Buy oil futures now.*

See, for instance, http://www.zerohedge.com/news/2014-10-1 ... price-cuts

(*advice may be rubbish)
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clv101
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Post by clv101 »

I'm wondering where such low prices leave the economics of unconventionals... as we know the extraction rate from tight oil/gas is much more tightly aligned with the short term availability of finance; low prices could fairly quickly undo a lot of recent US extraction rate growth.
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Post by vtsnowedin »

clv101 wrote:I'm wondering where such low prices leave the economics of unconventionals... as we know the extraction rate from tight oil/gas is much more tightly aligned with the short term availability of finance; low prices could fairly quickly undo a lot of recent US extraction rate growth.
When NG prices hit the floor in the US due to the success of fracking they laid down a lot of drill rigs and redirected some to going for tight oil which had not dropped in price. This brought supply down to demand rather quickly but not over night. I expect any sustained low WTI price will have the same effect on all of the unconventionals that have a higher production cost. What bank would lend to a tar sands operation if the math showed a loss from the getgo? Some will keep operating of course being committed to their plan but start ups and expansions will be on hold until the price recovers.
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biffvernon
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Post by biffvernon »

biffvernon wrote:That's the bottom. Buy oil futures now.*

(*advice may be rubbish)
I told you that advice may be rubbish. The WTI ticker just dropped another $4 to $81.84.

Somebody must be panicking some where.
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Post by RenewableCandy »

The Times sheds a spot of light:

Leader, October 14 2014

http://www.thetimes.co.uk/tto/opinion/l ... 235668.ece
Saudi Arabia has lost its role as the world’s biggest energy producer but not its power to send tremors of anxiety from Washington to Moscow. Riyadh has indicated that it plans to break its habit of the past three decades and let world oil prices remain low. To achieve this end it will resist calls to cut its output despite slack demand. Many of the results will be welcome.

Relatively cheap oil helps energy-intensive exporters including Britain’s chemicals sector, just as it helps consumers at the pump. Opec will be weakened by infighting over average crude prices of $80-$85 a barrel that may be acceptable to Arab producers but painful for Iran and Venezuela. Most importantly, prices at this level will exaggerate the effect of sanctions on Russia’s economy and intensify pressure on Vladimir Putin to change his behaviour after a year of unwarranted aggression towards Ukraine.

At the same time the new Saudi tolerance for low oil prices may deter further western investment in fracking by making it less profitable. Indeed, this is almost certainly part of the Saudi intention. This is understandable given the market share that conventional oil producers have lost to the fracking revolution in the past five years, but it cannot be allowed to bring that revolution to a halt. World demand for petrol and petroleum products is expected to soar by 40 per cent over the next three decades. That demand can only be met by finding new sources of supply and greater efficiencies in how they are exploited and how the oil and gas they produce is burnt.

The Saudi oil price gambit is a challenge to the booming shale oil and gas sector, which must respond in kind by finding new reserves and new economies of scale. A glut of unsustainably cheap Middle East oil may help Saudi Arabia to recover lost custom in the short term, but in the longer term it will leave the world unprepared for an energy-intensive future.

American oil production has jumped by 65 per cent since 2008. The US overtook Saudi Arabia as the world’s leading producer this summer and will become a major energy exporter over the next two years. Fracking has thus underpinned the United States’ recovery from recession. It has insulated it from political turmoil in the Arab world, and it offers Europe a crucial alternative to dependence on Russian gas.

It has also been a big reason for the precipitate 20 per cent fall in world oil prices since June. Other factors include weak European demand linked to non-existent growth in much of the eurozone and lower-than-expected demand from China. All have helped to shift the balance of power on world energy markets in favour of Saudi Arabia’s traditional export customers. Riyadh is now manoeuvring to win them back, despite howls of protest from Caracas (where the Maduro government needs oil prices closer to $115 a barrel to balance its books) and from Moscow, which claimed yesterday that the Saudis were being “manipulated” to punish Russia.

Mr Putin is acutely vulnerable to falling oil prices even though gas prices have remained broadly stable this year. His ministers admit that for a balanced budget Russia would need to sell oil at $98 a barrel this year and $105 next. Normally timid opposition figures are demanding defence cuts instead of raids on Russia’s cash reserves to make up the shortfall.

Conspiracy theories to the effect that Saudi Arabia is in league with Washington in an energy price war with Russia may be wide of the mark, but the effect will be salutary nonetheless. The effect of the new Saudi tactics on the fracking industry, meanwhile, must be to spur more of the ingenuity that has already transformed the American economy. Returning to old patterns of dependence is not an option.
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emordnilap
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Post by emordnilap »

40%? :cry:
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PS_RalphW
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Post by PS_RalphW »

Cloud cuckoo land.

Looks like somebody is buying as soon as the price drops to $83. We'll see if this forms a floor price for now.
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Post by biffvernon »

Maybe the Saudi's have realised the truth of the carbon bubble / stranded assets thing and would rather sell cheap now than not sell at all later.
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Post by Mean Mr Mustard »

Some analysis form the Graun -

http://www.theguardian.com/news/datablo ... -economies

Venezuela was already screwed. Even with no Ebola in Caracas. Airlines already stopped flying there, what with the dysfunctional economy...
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Post by PS_RalphW »

Now that there is a (temporary ?) lull in the ebola panic, the oil price is gently recovering. It's testing $87 (brent) today, from a bottom of $83.

There is talk of blaming Saudi Arabia for the 'flood' of oil, when in practice their production has been declining for months and is 0.5Mbpd down from recent peak 1 year ago.

In fact, it is US shale that has been flooding the market, almost exactly matching the global decline of conventional oil production over the last 3 years.

If Ebola is contained, and the next crash does not materialize, I can see $100 oil in 6 months.
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Post by PS_RalphW »

we're saved!

BP gloats over enough oil to supply the whole country - for month. Maybe.

http://www.theguardian.com/business/201 ... 0m-barrels

Brent price is volatile. Up $2 today, down $2 yesterday...
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Post by kenneal - lagger »

It's something when 50miliion barrel oil discovery is news! And a 5000 bbpd production rate is hardly noticable in our usage terms, let alone world wide usage. Can that we worth the infrastructure costs to get it out?
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Post by vtsnowedin »

kenneal - lagger wrote:It's something when 50miliion barrel oil discovery is news! And a 5000 bbpd production rate is hardly noticable in our usage terms, let alone world wide usage. Can that we worth the infrastructure costs to get it out?
Perhaps not today but at some future time at a higher future price it probably will be.
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