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Faust
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PostPosted: Dec 23, 2015 5:08 am    Post subject: Oil Reply with quote

Lots of people are trying to predict the bottom... what do the wakeboarder.com forum members predict?
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ohsix
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PostPosted: Dec 23, 2015 6:11 am    Post subject: Reply with quote

$1 Bob.

I really don't know. GS is calling for $20 oil, so I don't think there's any way it gets to $20. Maybe high 20s, maybe low 30s. Longer term, $30-$40 oil is not sustainable at current consumption. Either global consumption has to decrease 10-15 million barrels/day over the next 3-7 years or price has to go >$50 barrel, maybe even $60+. I'd bet on $100 oil again in the next 10 years.
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Bambamski
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PostPosted: Dec 23, 2015 7:54 am    Post subject: Reply with quote

Rig counts were up the last time we looked a week ago? WTF. The oil companies are wining about low oil prices and they keep drilling. There still isn't crazy activity like a couple of years ago but still...

I know in our parts the refiners are putting the boots to us pretty good. We are still paying 90 cents a liter.

It's really hard to feel sorry for the oil companies if they continue to keep drilling at this point.

I think 2016 is going to be an ugly year if you work in the oil and gas industry in our part of the country. Should see some bankruptcies and some take overs pretty soon.

As for the price of oil. we'll see a 2 handle at some point in the next few months. Mid 20's for a low maybe? Long term it's easy to say 100 dollar oil I don't know though. There's so much drilled and just sitting there. Back in the day it was all about exploration and trying to find it. We know where it all is now and it's just a matter of drilling and tying it in. I think we'll see 60-70 bucks but 100? Something more drastic has to happen I think.

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ohsix
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PostPosted: Dec 23, 2015 9:48 am    Post subject: Reply with quote

Bambamski wrote:
Rig counts were up the last time we looked a week ago? WTF. The oil companies are wining about low oil prices and they keep drilling. There still isn't crazy activity like a couple of years ago but still...

It's really hard to feel sorry for the oil companies if they continue to keep drilling at this point.

As for the price of oil. we'll see a 2 handle at some point in the next few months. Mid 20's for a low maybe? Long term it's easy to say 100 dollar oil I don't know though. There's so much drilled and just sitting there. Back in the day it was all about exploration and trying to find it. We know where it all is now and it's just a matter of drilling and tying it in. I think we'll see 60-70 bucks but 100? Something more drastic has to happen I think.


Companies are drilling because of lease obligations or because they're still making attractive rates of return. I don't know anyone that's purposely throwing away money.

I'm not sure what companies are asking for people to feel sorry for them, but it's not me.

Looks like you have a mighty fine Jump to Conclusions Mat with your oil price predictions. Where can I get one? How many CLG16 and CLH16 calls have you sold? With your certainty on prices, you could make a few million dollars in the next few months real easy.
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jt09
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PostPosted: Dec 23, 2015 10:48 am    Post subject: Reply with quote

Bambamski wrote:
Rig counts were up the last time we looked a week ago? WTF.


do what?
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother

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nmballa
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PostPosted: Dec 28, 2015 10:13 am    Post subject: Reply with quote

ohsix wrote:
$1 Bob.

I really don't know. GS is calling for $20 oil, so I don't think there's any way it gets to $20. Maybe high 20s, maybe low 30s. Longer term, $30-$40 oil is not sustainable at current consumption. Either global consumption has to decrease 10-15 million barrels/day over the next 3-7 years or price has to go >$50 barrel, maybe even $60+. I'd bet on $100 oil again in the next 10 years.


In the late 90s we were sitting at $20. Since then the average efficiency of cars have gone up somewhere between 15% and 25% and continue to climb at an accelerating rate. Couple this with winding down (hopefully) in the middle east and I don't think we have seen the bottom yet. And when we do I would predict that it hovers there for a long time.

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PostPosted: Dec 29, 2015 8:23 am    Post subject: Reply with quote

This week, Kaletsky has a new suggestion for oil-watchers to consider: Iran may be able to produce oil for just $1 a barrel, he wrote in a column for The Guardian (emphasis ours):

ExxonMobil, Shell, and BP can no longer hope to compete with Saudi, Iranian, or Russian companies, which now have exclusive access to reserves that can be extracted with nothing more sophisticated than nineteenth-century "nodding donkeys." Iran, for example, claims to produce oil for only $1 a barrel. Its readily accessible reserves — second only in the Middle East to Saudi Arabia's — will be rapidly developed once international economic sanctions are lifted.

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ohsix
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PostPosted: Dec 30, 2015 7:51 am    Post subject: Reply with quote

That $1/barrel is to move the oil from the ground to the surface once millions of dollars of infrastructure is in place. My comparable cost (lifting cost) in the U.S. is $4-$7/barrel, but you also have to consider the $1.3-$6 million development cost of a new (onshore) well. Lifting cost is typically cheaper in the middle east where labor and environmental compliance is cheaper, but compared to the U.S., foreign countries have little, if any, development cost advantage.

If Iran could develop and produce oil for $1/barrel, why wouldn't they already be producing all those $1 barrels?

No one can bring additional barrels to market at $1/barrel and Iran doesn't have the spare capacity that the world thinks as most of those barrels are already being produced, smuggled into Iraq and sold as Iraqi barrels.

I don't know what the bottom price will be, when it will get there, or how long it will stay there, and no one does. Oil always overshoots to the upside and downside though. I tend think we have already overshot the downside as very few projects are profitable at these prices globally. Global demand continues to increase and global developed (proven developed producing) supply is being depleted without being replaced. Enjoy cheap oil while you can, because the longer it stays down, the harder it will be for production to catch up to demand when price turns around which creates a shortage and even higher prices.
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nmballa
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PostPosted: Dec 30, 2015 1:44 pm    Post subject: Reply with quote

ohsix wrote:
That $1/barrel is to move the oil from the ground to the surface once millions of dollars of infrastructure is in place. My comparable cost (lifting cost) in the U.S. is $4-$7/barrel, but you also have to consider the $1.3-$6 million development cost of a new (onshore) well. Lifting cost is typically cheaper in the middle east where labor and environmental compliance is cheaper, but compared to the U.S., foreign countries have little, if any, development cost advantage.

If Iran could develop and produce oil for $1/barrel, why wouldn't they already be producing all those $1 barrels?

No one can bring additional barrels to market at $1/barrel and Iran doesn't have the spare capacity that the world thinks as most of those barrels are already being produced, smuggled into Iraq and sold as Iraqi barrels.

I don't know what the bottom price will be, when it will get there, or how long it will stay there, and no one does. Oil always overshoots to the upside and downside though. I tend think we have already overshot the downside as very few projects are profitable at these prices globally. Global demand continues to increase and global developed (proven developed producing) supply is being depleted without being replaced. Enjoy cheap oil while you can, because the longer it stays down, the harder it will be for production to catch up to demand when price turns around which creates a shortage and even higher prices.


I believe they are already sitting on something like 50+ million barrels stashed at sea. So they are not currently able to move what they produce. I believe they are moving it from the ground at $1 per barrel currently but sanctions have prevented them from getting it to market. Also, don't forget the infrastructure is already there. The USA is retooling since we stopped relying on our own oil for 30+ years. So Irans investment in infrastructure is already depreciated some if not all.

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eeven73
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PostPosted: Jan 02, 2016 9:49 am    Post subject: Reply with quote

The global supply, and regional costs to produce are the knowns. The unknown is the amount of premium that will be placed on the barrels by "institutional" investors. There is a huge global commodity bubble deflating as we type(has been for a year). The liquidity in commodity markets is drying up(less dollars chasing the commodities).
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Faust
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PostPosted: Jan 06, 2016 5:25 am    Post subject: Reply with quote

This may be a dumb question, but would it be correct to say that any entity that can wait out these low oil prices (eg Big US Oil Companies), would 'like' these low oil prices, because it is driving out smaller competition?
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PostPosted: Jan 06, 2016 6:08 am    Post subject: Reply with quote

Faust, I don't know if you could get any oil company to say they like low oil prices, but the business has always been cyclical, so they should be expected. The healthy companies will likely come out of this bust in better shape than they went in. Low prices aren't any tougher on smaller companies than bigger companies. They're tougher on bad balance sheets versus good ones. Debt to earnings is a better indicator of an oil company's health than market cap.
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jt09
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PostPosted: Jan 06, 2016 6:08 am    Post subject: Reply with quote

no. it costs money to store all that oil (as i understand it, all of our storage facilities are pretty much full now), so they lose money as time goes on, as well as the fact that they spend money to drill based on receiving money when they sell it. that expense is a loss until it's recovered by the sale of the product.

as far as driving out the smaller competition, that costs money too. while big oil would be able to buy up leases and wells, they don't want to drill and produce because it's not worth it financially. it's painful to spend and wait.

don't get me wrong - there is plenty of a&d going right now. but not so much at a strategic level, more opportunistic.
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Faust
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PostPosted: Jan 15, 2016 3:53 pm    Post subject: Reply with quote

Well I took the plunge today. Picked up a few hundred shares of VDE, a little under $74. Going long (1-2 years)... wish me luck Cool
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RampageWake
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PostPosted: Jan 18, 2016 7:53 am    Post subject: Reply with quote

Wishing you luck. I am contemplating same as the energy sector is pretty beaten up. Wife and I get paychecks from bigoil, real estate investments are in an oil town; my genius strategy is further diversification into an energy fund. Confused Laughing
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ohsix
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PostPosted: Mar 11, 2016 7:01 am    Post subject: Reply with quote

What I said on December 30th:

ohsix wrote:

No one can bring additional barrels to market at $1/barrel and Iran doesn't have the spare capacity that the world thinks as most of those barrels are already being produced, smuggled into Iraq and sold as Iraqi barrels.


From the TPH report today:

Quote:
IEA Monthly Report….strong like bull (WTI $38.85/bbl, Brent $40.85/bbl) – Global demand revised higher in 2015 and 2016 with net result still +1.2mmbpd growth in ’16 (vs. TPHe +1mmbpd) but ’15 demand growth revised to +1.8mmbpd (shrinking missing barrels). Non-OPEC supply decreased 100kbpd (now down 700kbpd y/y). More good news - Jan’16 OECD inventories +20mmbbls vs. normal +34mmbls and preliminary Feb’16 indicating the first draw in a year (Feb inventories avg. 25mmbbls draw). Finally - and saving the best for last - Feb’16 OPEC supply down 100kbpd as post-sanctions Iran production gains +220kbpd offset by Iraq decline (210kbod). Since Dec’15, Iran +300bpd and Iraq down 130kpd. Two points 1) Iran not producing +1mmbpd and 2) Iraq production is down suggesting some cross-border “leakage” exists. One more report like this and it is “game on” for the oil markets.


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Faust
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PostPosted: Jan 02, 2017 7:34 am    Post subject: Reply with quote

Approaching the 1 year mark of my little oil investment, which has been relatively successful. Thanks to everyone for the advice and insight.

So wakeboarder.com forum members... What do you foresee with the price of oil in 2017?
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ohsix
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PostPosted: Jan 02, 2017 9:42 am    Post subject: Reply with quote

It's hard to say where oil will be in a year. I will guess higher, but I'm not sure if that's $60 or $90 or somewhere in between. I think the lows are behind us for 2-3 years.

I think it's going to be a volatile market very reactive to inventory numbers and rig count to a lesser extent. I think U.S. land market share will climb for the next several years as it's turned into the safest place to look for oil during this downturn. Deepwater may pick up, but I wouldn't risk money on it for a while.
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