Current Oil Price

PS_RalphW · Post by **PS_RalphW** » 06 Jul 2015, 11:49

I would say the Chinese are Comical Ali to the West's Geobels.

PS_RalphW · Post by **PS_RalphW** » 06 Jul 2015, 22:38

Oil was the big loser today, down 3/7 %, Brent/WTI

Chinese market held, Europe markets down 2%, Euro UP.

This is going to hurt shale companies who thought they could ride out $60 oil.

biffvernon · Post by **biffvernon** » 07 Jul 2015, 07:30

Ooops, our WTI ticker has dropped 10% since last week, now at $52.53. Brent about $56.

It had reached a recent low of $44 in January 2015.

Some views: http://www.wsj.com/articles/oil-prices- ... 1436175365

PS_RalphW · Post by **PS_RalphW** » 07 Jul 2015, 15:33

WTI down another $2 to below $51

Post by **kenneal - lagger** » 07 Jul 2015, 16:09

I was getting worried while the rise was on. The longer the price stays low the better the chance of a complete collapse of the PONZI shale industry.

biffvernon · Post by **biffvernon** » 07 Jul 2015, 18:24

Turbulent Tuesday

http://uk.businessinsider.com/crude-oil ... 015-7?r=US

3rdRock · Post by **3rdRock** » 23 Jul 2015, 08:01

http://www.bbc.co.uk/news/business-33629292

Oil prices hit as US data raises oversupply fears

Oil prices have slipped after official US government data showed an unexpected rise in oil stocks last week.

The price of Brent crude dropped 1.2% to $56.24 a barrel, while US crude oil was down 0.4% after dipping below $50.

US crude oil stocks unexpectedly rose by 2.5 million barrels last week, according to Energy Information Administration data.

Analysts had expected a drop of 2.3 million barrels, and said the data had reinforced fears of oversupply.

johnhemming2 · Post by **johnhemming2** » 23 Jul 2015, 08:35

Global oil production was really high in June at 92.6mb/d (according to the IEA oil market report). The growth in production is, however, is mainly from the USA.

Hence I don't see prices going up any time soon.

PS_RalphW · Post by **PS_RalphW** » 23 Jul 2015, 09:48

John,

There are many definitions of oil. The one used by IEA is by far the most inclusive, including biofuels, natural gas liquids, GTL and CTL, and most bizarre of all, 'refinery gain' which is simply the increase in volume (combined with a net LOSS of energy) when oil is refined into petrol and other liquid products. None of these come out of an oil well, and most are chemically quite different from oil, and are put to completely different uses.

Since 2008, the entire growth of global Crude and Condensate production (which includes all reasonable forms of oil, including shale, tar sands, etc) has come from the US LTO boom. As US shale oil is 38% condensate (which is used for petrol but no other transport fuel) the global crude oil production has been more or less on a bumpy plateau since 2008.

Also, it is worth remembering that the energy content by volume of these very light 'liquids' is significantly lower than crude, and a more representative measure of production would be by weight or by BOE, (a measure of energy content) both figures are used by many countries.

next, we need to consider oil in term of the global energy supply, with oil still vying with coal as the largest single source of primary energy, about 30% each. As the easy sources of oil are used up first, the EROEI of all fossil energy sources decline, new technology notwithstanding. Therefore the net energy available to the world economy outside the energy sector itself grows less quickly than the figures suggest, and will peak before global energy production peaks. With time, the global economy does use energy more efficiently, but efficiency gains suffer from diminishing returns, and when machines replace humans doing the same work, can have a negative value on society as a whole.

There is overwhelming evidence of an extremely tight correlation between GDP and primary energy production over the last century and beyond. Peak net energy will be peak global GDP.

Finally, the LTO boom has been funded by cheap credit and has resulted in massive write downs, as the price has fallen to a point where the production is no longer economic (if it ever was). As these debt write-offs will adversely affect the global economy, weakening demand, we can confidently say we are passed peak economic oil, which is the maximum oil production that a stable global economy can afford to buy.

johnhemming2 · Post by **johnhemming2** » 23 Jul 2015, 10:20

I am not sure we disagree substantially on the issues that you refer to. However, the IEA figures are helpful in terms of monitoring the market.

We may disagee on the following:

Obviously when the market gets tight, prices go up and possibly spike causing a recession, potentially a financial crisis and some level of austerity.

biffvernon · Post by **biffvernon** » 23 Jul 2015, 18:17

Our WTI ticker dipped below 50 to $49.19

raspberry-blower · Post by **raspberry-blower** » 23 Jul 2015, 23:02

johnhemming2 wrote: Obviously when the market gets tight, prices go up and possibly spike causing a recession, potentially a financial crisis and some level of austerity.

It may not come to that, John.
As Ralph has rightly pointed out, it was the availability of cheap credit that has funded the exploration of LTO. This was the net result of investors chasing high returns - trouble is, companies that offer high coupon rates regularly turn out to be fly-by-night operations and the first coupon payment turns out to be, in fact, nothing more than a liquidation payment.
There is growing evidence that this may be true of LTO operatives in the US.
They are drilling like crazy, experiencing rapid depletion rates, and have chronically distorted the oil markets.

There was an interesting essay posted by Charles Hugh-Smith yesterday: Will the Oil Patch Bust Trigger a Recession?

Charles Hugh-Smith wrote: But what's different this time is the $550 billion that has been loaned to energy producers: Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year.

This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that's coming due and has to be rolled into new loans: Is The US Shale Industry About To Run Out Of Lifelines? (Zero Hedge).

Should oil resume its slide (and there are plentiful reasons this is likely--Saudi Arabia's stated intention to increase market share, Iran's plans to double its production and shale oil producers needing to maintain cash flow to make interest payments), then the well of ready credit could quickly dry up completely, pushing marginal producers and their lenders into insolvency.

What's also different is a looming global recession, a $900 billion subprime auto-loan bubble that's about to burst and an echo-bubble in housing that's threatening to follow the first housing bubble's trajectory of crash and burn.

The row of dominoes swaying unsteadily in these stiff winds won't take much to topple

Bottom line: everything is interconnected. The banks have loaned billions to LTO companies in the US - a wave of defaults among them will spark another financial crash without the need for a price spike. Then we will see another round of quantitative easing - which will happen before any rate rise

Post by **kenneal - lagger** » 24 Jul 2015, 02:05

And the recession will trigger cheaper oil prices.

emordnilap · Post by **emordnilap** » 24 Jul 2015, 10:06

kenneal - lagger wrote:And the recession will trigger cheaper oil prices.

Whichever way it goes, it points out the need to try and do without it altogether.

On the transport front alone, lower prices for someone like me, who does little car driving, means it's an even tinier percentage of my income. Higher prices don't really bother me either.

The percentage of our food that travels a long distance is small too, so the same applies.

Buying very few but high-quality hard goods also means transport costs are mostly irrelevant.

So whatever, bring it on.

Post by **clv101** » 24 Jul 2015, 12:12

The good news aspect is this is that sub-$50 oil keeps a lot of unconventional and deep water oil (carbon) in the ground. $50 reserves are far smaller than $100 reserves.