I really have no clue what's going to happen next oil price

[fifthcolumn]

It's a total unknown. Canada is hemoragging money and Shale is getting spanked. It's just the low leverage players who are surviving purely on their operational pumping. If storage fills up then contrary to the story of oil prices tanking more I suspect they will in fact cause a slight spike due to having nowhere to put the oil unless they are able to export it. There will literaly be nowhere for it to go meaning pumping and lift have to come to a stop for the market to achieve equilibrium. But I might be wrong and it might plummet if somehow the continued increases can make it to the market.

The Saudis have some game going on, given that they're killing the rest of OPEC with their prices. Obviously Saudi can't do it for ever but they certainly *could* continue over supplying the market for a couple of years. So does it remain flat till 2017 thus killing US shale and the oil sands then SPIKE to high heavens because the US and Canada cannot respond fast enough due to a drought of CAPEX funding from the money markets? Who know.

And then there's Putin, who appears not to give two shits about stirring things up in Europe.

Interesting times.

[PS_RalphW]

I dont know how much storage space is left in the us, but even if they do start exporting I think they will be disappointed in the market take up for their shale condensate. Diesel is king in the real word and shale does not contain enough. Shale prices could collapse and Brent go up .

Shale production has already started to decline and demand is rising in us and uk. Libya is a basket case, Russia has peaked, Iraq is back in civil war, and Yemen could block a major oil and gas pipeline or even the straits of Hormuz.

Rigs are being laid up world over, except Saudi Arabia. We could see major war and Alex scarrow events, or we could see a 2008 financial crisis and global deflation or both.

I suspect we will look back on 2015 as an interesting year in the Chinese sense.

[adam2]

In the very near term, like later today, I don't believe that anyone can accurately forecast the oil price.
In the longer term, like the next few months or years, I expect significant increases up to at least $100.
I suspect that the recent fall as at least partly caused by a short term glut of shale oil. As others have posted, this looks VERY short term.

Political events seem to be worsening, with a small but real risk of an Alex Scarrow event, as noted in a previous post.

[raspberry-blower]

It's just the low leverage players who are surviving purely on their operational pumping.

So this is how Limits to Growth is panning out. An economy that continually requires more debt to extract ever dwindling net energy sources will ultimately fail.

What is happening is the peaks and troughs are becoming increasingly exaggerated resulting in increased oil price volatility. This is what the likes of Heinberg, Foss, Kunstler, Greer projected.

Given a benign geopolitical situation the current pressure on oil prices is downwards. This is due to shale oil producers pumping as fast as they can to raise as much revenue as they can to fulfil their debt obligations.
Bank exposure to these companies is huge and has the potential to magnify the on-going financial crisis that started in 2008 (the reason why it is on-going is because the causes of the first crash have not been addressed at all.)
Unfortunately we do not have a benign geopolitical situation.

The likelihood of an ASE is increasing - around Yemen is a very real possibility.

[adam2]

And remember that an ASE could even start by mistake !
Consider for example the consequences of an oil tanker transiting the Straights of Hormuz and then blowing up and sinking, even if this was an accident due to questionable standards of seamanship or maintenance.

Then consider a mistaken or malicious eye witness who states that they observed missile or rocket fire from nearby land toward the sunk tanker.

And then Islamic State falsely claiming that they had sunk the tanker, and would sink more vessels if not paid a ransom.

A world war could be started in effect by an ill trained seaman smoking in the presence of oil fumes !

Or what about a contagious bank run that starts a general financial panic and great crash.
That would be foreseeable if the bank simply ran out of cash, as nearly happened in the UK.
But what about it starting by mistake to a solvent bank due an IT failure that prevented access to cash that the bank did in fact possess, there have been a number of near misses.
It would be ironic indeed if the great crash was started by a value engineered, outsourced software upgrade.

Or what about ordinary criminals, not terrorists, high jacking a number of cash delivery vans and murdering the drivers in pursuit of theft. That could result in delays supplying cash whilst extra security precautions are put in place.
Meanwhile, cash machines empty and branches run out of cash and a panic starts and ends very badly.

[kenneal - lagger]

I'm glad I don't have your imagination, Adam. I find it hard to sleep at night on occasions with mine!!

[raspberry-blower]

Further to Adam's post:

1): Replace oil tanker scenario with LNG tanker. These vessels do sail through the area and hold the energy equivalent of 50 Hiroshima atomic bombs.
If one of these decides to go bang - well it just doesn't bear thinking about.

2): Bank runs - this is more a question of timing of when not if - for reasons I have already stated.

Also there is a possibility of a cyber attack, discussed here

[cubes]

It's unlikely an LNG tanker would go BANG (at least, hiroshima sized) - lack of available oxygen in the environment to set all of that off in one go.

[PS_RalphW]

http://www.netl.doe.gov/publications/pr ... uillen.pdf

Obviously this is from a Pro-LNG source, but LNG does not readily go bang by itself. (You can get explosive decompression but not chemical explosion).

[adam2]

Neither oil nor natural gas tankers are able to make an explosion as large as the energy content would suggest. As posted above, there is not enough oxygen in the surrounding air to initially explode more than a tiny percentage of the cargo.
A large oil or gas tanker does indeed contain energy equivalent to numerous nuclear weapons, but it would take at least some minutes and likely hours or even days for most of the cargo to burn violently.
A nuclear weapon releases most of its energy in a small fraction of a second.

However an explosion on board an oil or gas tanker is still a dramatic blow up and could easily be mistaken for a military or terrorist attack even if the cause was in fact an accident.
My concern is not so much the actual destruction resulting from an accident, but the likely consequences that could easily start a major war in a region already unstable and well supplied with weapons.