Current Oil Price

[RevdTess]

This is likely to drop the price of WTI crude a bit, but leave most other grades still strong.

I think run-cuts in the US (and Europe) have been ongoing for a while, and increasingly so. A recent research report I read suggested run cuts of around 300kbd in the US already, mostly due to reduced gasoline demand.

WTI is suffering more than many grades because it's a particularly gasoline-rich crude and not so good for diesel.

[Keela]

For a few weeks I'll be on garden leave and watching prices from the sidelines.

Best wishes with the new job Tess. And enjoy "garden leave"! I can almost see the rambling rose growing over the door of your narrow boat!

[biffvernon]

I'll be on garden leave.

What, on a boat? We'll expect an updated avatar showing tubs of herbs on the roof.
Good luck.

[Vortex]

For a few weeks I'll be on garden leave and watching prices from the sidelines.

Best wishes with the new job Tess. And enjoy "garden leave"! I can almost see the rambling rose growing over the door of your narrow boat!

[Miss Madam]

Just wanted to let folks know that yesterday I resigned from the investment bank I was working for. Unfortunately I can't say what I'm doing next for contractual reasons but it'll still be commodity-market related. For a few weeks I'll be on garden leave and watching prices from the sidelines.

Wow, good luck with the new job Tess. Resigning feels good doesn't it.... enjoy the gardening leave.

[RevdTess]

I'll be on garden leave.

What, on a boat? We'll expect an updated avatar showing tubs of herbs on the roof.
Good luck.

There are few pots indeed. Basil, Parsley, Chives...

[Andy Hunt]

Gardening leave . . . sounds like heaven. Good luck with the new job Tess!

[Vortex]

Tess, now you can (almost!) speak freely again:

Do people in your prior workplace / industry know of and understand Peak Oil?

Is there a general awareness of energy descent?

Do they know that come 2010 or 2012 the whole energy situation will be decidedly dodgy?

[RevdTess]

Tess, now you can (almost!) speak freely again:

Do people in your prior workplace / industry know of and understand Peak Oil?

Is there a general awareness of energy descent?

Do they know that come 2010 or 2012 the whole energy situation will be decidedly dodgy?

Everyone knows about peak oil now, but this wasn't the case when I started analysing oil markets back in early 2005. When I first heard I was likely to get a job on the oil desk I started searching for oil news websites to give me a feel for the market. The first I encountered was LATOC, and that's how I found out about peak oil. I went through that 'oh my god' revelatory sense of shock we all seem to have when we discover just how dependent our lives are on this oil stuff we probably never even thought about before. I sometimes wonder how I would now be feeling if I'd experienced the current rise in petrol prices without having known about peak oil in advance.

At the start of '05, oil had just recently gone through $40 which was considered a spike in those days. I remember meeting a couple of guys at a conference who'd been reporting on the oil market for years and joked about how since I'd only just recently started looking at oil, $40 would always seem like the 'correct' price for a barrel of oil, rather than the $10-30 range they had been used to for many years. Everyone in the industry I spoke to seemed to believe oil would go back down from the heady heights of $45 pretty quickly. Personally, having internalised the LATOC message, I was never as confident of this 'return to long term average' that people kept talking about. But I was inexperienced and hadn't yet observed how traders and analysts would always expect recent equilibria to always be restored. Then suddenly, it would become clear that we weren't going back to 'normality', and prices would move like a rocket as everyone tried to reposition themselves to take advantage or prevent losses.

In 05-06, analysts would never say 'peak oil', that was only for crazies. You could talk about peak production but the opinion shapers always said it would never be reached because crude at $60 made even the most marginal crude viable for production. By '07 and especially this year, peak oil is now being spoken of as one of the primary causes behind high prices. I'd still have to say that the majority of market analysts and commentators don't really believe that peak oil is imminent - the market always provides after all - but they do accept that enough people now believe in peak oil that betting on prices going down is like standing in front of a freight train. Even if you think the train is going the wrong way and will eventually turn around, you don't argue with it until it figures out the problem itself.

Now that respected oil market analyst companies such as PIRA are starting to show supply & demand forecasts that align with those coming from ASPO et al, I think the 2010-2012 timeframe is starting to attract a lot of attention as a period when OPEC and oil companies will really have to step up to the plate and demonstrate that they can continue to deliver. I get the sense right now that most mainstream analysts still believe that prices near $150 will suppress global demand sufficiently to allow prices to gradually fall. At least, there is no sense of urgency that we're driving into a dead-end road with few opportunities to take a different route.

The potential implications of peak energy (as opposed to peak oil) are still not really on most analyst's radar screens.

[skeptik]

I get the sense right now that most mainstream analysts still believe that prices near $150 will suppress global demand sufficiently to allow prices to gradually fall.

My own feeling (no more than that!) is that the combination of high energy prices and the ongoing global credit crunch will at some point tip the world into a recession, led by the downturn in the USA. A commodities crash will follow on from a stock market crash. Exactly when I've no idea. Certainly the credit crisis is not really abating, even though it has gone a bit quiet on the news front after the Bear Stearns and Northern Rock busts, and it is feeding through to real economies.

http://online.wsj.com/article/SB1215210 ... us_opinion

I'm nervous enough that I'm only going to ride commodities for a few more weeks, then I'm out to 100% cash, and some of thats going to be in a sock under the bed - I'm not even 100% confident in my own Spanish bank as it's heavily exposed to construction loans and mortgages in Spain, where property is now tanking. At least banks in Spain are fairly heavily regulated. Capital requirements are high and off balance sheet SIV's are not allowed.

http://www.reuters.com/article/rbssFina ... 5720080618

[grinu]

Skeptik you're correct the oil price is already tipping the financial system into an abyss.

I'd say certain commodities will still rise in price because they will be more difficult to get out of the gorund and process with higher energy prices, there are less of them around and demand is likely to hold steady or increase for some of them.

e.g. molybdenum which will be required in huge amounts to harden metals used in oil extraction equipment, pipelines, infrastructure etc. in extreme environments such as deepwater and polar etc. Also used for mining equipment - tar shale anyone?

Also metals such as gallium and copper which are used in 'thin-film' solar which is significantly reducing cost per watt to levels competetive without subsidies.

Also agricultural commodities - ethical issues aside these are likely to rise to horrendous levels as the green revolution goes into reverse in a context of population explosions, lack of water, soil depletion.

A huge amount of resources will be required for infrastructural works to engineer down the energy supply systems and transport systems - e.g. lot of metal required to lay new rail tracks, trams, light rail - and it's happening now. Also an awful lot of metal required to fabricate turbines and the associated transmission lines etc. etc. How many batteries will be required to store wind and solar energy? How often will these need to be replaced in future - they have a finite life.

I think that we will live in a different world in 2010.

I have built up a small portfolio of solar stocks, geothermal, copper/gallium/polymetal/platinum/gold miners, fertiliser producers, agricultural equipment manufacturers. Also a sizeable allocated gold holding (10k when I bought it but now worth over 20k).

I am happy enough to risk keeping hold of these because I think they are more tangible than cash. I wouldn't be surprised if the euro starts dropping somewhat towards the end of the year as Ireland, Spain & Italy fall apart at the seams and the franco-german economies start to slow.

[skeptik]

Saudi cuts Aug light crude prices to Asia and U.S.
http://www.reuters.com/article/GCA-Oil/ ... 9420080706

Well... 55cents is no more than a gesture In the context of $144 a barrel. The King of Saudi's 'Happy Independence day' present to Dubya, maybe.

I have built up a small portfolio of solar stocks, geothermal, copper/gallium/polymetal/platinum/gold miners, fertiliser producers, agricultural equipment manufacturers. Also a sizeable allocated gold holding (10k when I bought it but now worth over 20k).

That looks like a good long term hold. Hang on tight and ride that bear!

I'm only interested in the next couple of years, then I'll be buying a property here in Spain - by which time the property market should have sunk considerably.

[Andy Hunt]

Oil price dropping like a stone, what's going on?!?!

[SunnyJim]

Gordon has told us to eat our scraps. The world is going to be OK.

It's a mystery this game isn't it?

Could it be to do with the US economy an stocks etc taking a dive? i.e. More talk of recession induced demand destruction?

[RevdTess]

It's since I quit my job, I can't make everyone buy oil any more