Current Oil Price

raspberry-blower · Post by **raspberry-blower** » 18 Oct 2015, 19:48

Wolf Richter: Schlumberger CEO's dismal view on US Oil

Wolf Richter wrote: Three months ago, Paal Kibsgaard, CEO of oil-field services giant Schlumberger, figured the oil industry in the US had bottomed out. But on Friday during the earnings call, he changed his tune.

The business environment “clearly got worsened in the third quarter,” he said. It’s going to get even worse in the US in the fourth quarter. And 2016 is going to be very tough. He doesn’t see a recovery until 2017.

As other players in the sector, Schlumberger was hit hard: global revenues dropped 33% year-over year; in North America, revenues plunged 47%, “as customer budget cuts and service pricing erosion impacted results,” he said, “still in the midst of what may well turn out to be the most severe downturn in several decades….”

Seems like there is a lot of straw clutching in the hydrocarbon sector as to when the next price spike will be. Many of the current small scale operators won't be around for it and quite probably there will be another couple of mega mergers involving the major ones

johnhemming2 · Post by **johnhemming2** » 18 Oct 2015, 21:46

I suppose Sclumbergers are a lagging indicator as they respond to capital spend as well as revenue. I would think the price jolt will be quite big. It may stimulate calls for the Texas Railroad Commission to take over again - although in the end Opec will revert to operating a cartel.

Post by **adam2** » 28 Oct 2015, 16:01

Brent up 4.8% and WTI up 6% in the last couple of hours.
Nothing remarkable in the actual price reached, but the sudden change seems a bit odd. Anyone know why ?

PS_RalphW · Post by **PS_RalphW** » 28 Oct 2015, 16:23

US stock levels rose less than pundits predicted. If this sort of thing happens on the last trading session before monthly contract roll-over, you can get wild swings as speculators cover their bets. Usually the effect is transient.

The US has finally reverses the long term decline in its oil imports and is importing more each month, as domestic production declines.

AutomaticEarth · Post by **AutomaticEarth** » 03 Nov 2015, 21:47

Oil (Brent) up $1.57 to 50.36 - a sudden jump a few hours back. Anyone know why?

AutomaticEarth · Post by **AutomaticEarth** » 10 Nov 2015, 22:19

Telegraph predicting an oil crunch going forward:-

http://www.telegraph.co.uk/finance/news ... ehold.html

biffvernon · Post by **biffvernon** » 11 Nov 2015, 08:01

The article says

Renewables made up half of all new electricity generation worldwide last year

but the diagram Fig.2.15, just above that line, tells a different story.

The last part of the article is the important part, particularly the final paragraph.

Mr Birol said that if there is any company in the energy industry that thinks it can safely ignore the fast-changing political landscape on climate change and dismiss the subject as the fringe obsession of green activists, they are making a “grave mistake”.

johnhemming2 · Post by **johnhemming2** » 11 Nov 2015, 09:26

The interesting question is how high the price goes before people start investing in more extraction. My own view is that at about $80 for Brent we should see a bit of movement. This may keep the price under $100 for a while.

I don't, however, have a good source on US Shale.

vtsnowedin · Post by **vtsnowedin** » 11 Nov 2015, 10:53

johnhemming2 wrote:The interesting question is how high the price goes before people start investing in more extraction. My own view is that at about $80 for Brent we should see a bit of movement. This may keep the price under $100 for a while.

I don't, however, have a good source on US Shale.

It not only has to get up to levels that make shale oil profitable but it has to stay at or above that level long enough for investors to see that profits are likely even given the long development time between the infusion of cash and the first barrel delivered. The trigger price might be $80 but in the interim while investors watch and see if it is going to hold it may go way past that, perhaps up to new records.

biffvernon · Post by **biffvernon** » 11 Nov 2015, 11:10

The wonderful thing about history is that it shows that most people who forecast the price of oil got it wrong most of the time.
Of course, we all like to think that we are not like most people.

PS_RalphW · Post by **PS_RalphW** » 11 Nov 2015, 13:46

IN the short term oil price is more about global demand than supply. Supply is falling, US shale oil production is finally beginning to fall off the cliff of very high decline rates. However, global supply has held up until now because supply increases were already baked in when the price crashed, and outside of shale, oil is a long term investment. Since the price crash, and with the expiry of most oil price hedges, ALL oil developments are being tightly squeezed, and significant declines in global production are being baked in at the moment. More than will be easily reversed than by re-investment in shale at $80, or $100 or even more.

That leaves demand. At present global storage is still rising, and will continue to do so for a few months at least, whilst supply still exceeds demand, That should then put a bottom on prices, but but significant rises will only come when storage levels fall significantly. By then it will probably be too late to avoid the next oil price spike, as supply will have years of decline baked in, and any recovery in demand will need to be choked off by unaffordable price. The question then is how high will they get before the next global financial crash?

That of course assumes the crash has not already happened due to some other pin prick.

johnhemming2 · Post by **johnhemming2** » 11 Nov 2015, 14:37

vtsnowedin wrote:
johnhemming2 wrote:The interesting question is how high the price goes before people start investing in more extraction. My own view is that at about $80 for Brent we should see a bit of movement. This may keep the price under $100 for a while.

I don't, however, have a good source on US Shale.
It not only has to get up to levels that make shale oil profitable but it has to stay at or above that level long enough for investors to see that profits are likely even given the long development time between the infusion of cash and the first barrel delivered. The trigger price might be $80 but in the interim while investors watch and see if it is going to hold it may go way past that, perhaps up to new records.

]
To some extent you are right. There is, of course the question as to what extent current projects have been mothballed rather than shut down, of course.

biffvernon · Post by **biffvernon** » 15 Nov 2015, 11:30

While back in the actual world, our WTI ticker is back where it was in August at $40.74 and Brent at $43.60, just two dollars off a six year low.

PS_RalphW · Post by **PS_RalphW** » 16 Nov 2015, 16:42

Both Brent and WTI prices are falling sharply after the US market opened, once more threatening to 5 year lows we saw last month.

I guess US storage numbers are up again, and demand for jet fuel is forecast to fall on lower tourist demand following Paris and the Egypt bombing.

Japan is back in recession, and UK is flirting with deflation once more.
Greece has just missed its latest repayment date.

biffvernon · Post by **biffvernon** » 21 Nov 2015, 11:52

Some folk think low prices are here for a while:

http://www.reuters.com/article/2015/11/ ... V9H4pzM.97