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OIL : threads, links, data, charts - the Notable ones

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OIL : threads, links, data, charts - the Notable ones

An index is in the Header / what shall I add ? / Find this under the GEI logo as "OIL"
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WTI Crude : at 5/19/2014

WTI_zpsd80048f5.png


GEI's Top Oil-related threads
======================
Hits--- :
18,100 : Kerr's Oil thread : $200-400 Oil : http://www.greenenergyinvestors.com/index.php?showtopic=3164
+6,600 : Major Low in Oil Coming : http://www.greenenergyinvestors.com/index.php?showtopic=5014
+1,400 : Be Careful with the Oil Etfs : http://www.greenenergyinvestors.com/index.php?showtopic=5612
+1,000 : Gold-to-Oil Ratio : http://www.greenenergyinvestors.com/index.php?showtopic=1157
++ 800 : Signals for Oil : OIH as a Bellwether : http://www.greenenergyinvestors.com/index.php?showtopic=5412


Chart : WTI Crude ... update .................... : Chart : WTI-to-OIH Ratio ... update
27211595ix0.png.29773520ih3.png

Chart : XLE leads OIH and WTI ... update
bignd3.gif

aaaku3.jpg

*Oil Link?
DubaiFM vs. Oil/USO ... update
zzzzu.gif
Funnily enough, DubaiFM sometimes leads oil

LINKS
++++
Nymex WTI.. : Closing prices : http://www.nymex.com/lsco_fut_csf.aspx
ICE Brent..... : Closing prices : https://www.theice.com/marketdata/reportcen...4&hubId=403
Google news : http://news.google.com.hk/news?hl=en&q...sa=N&tab=wn
Oil related.... : McDep : Zman Notes
How wti Futs : http://progressive.powerstream.net/008/001...rude/index.html
CHARTS
+++++
Ratios:
http://tinyurl.com/gei-gold-wtic
http://tinyurl.com/gei-GDX-OIH
http://tinyurl.com/gei-GDX-XLE

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SUPER CONTANGO

 

According to Goldman though the steepening has more to do with credit constraints than anything else. They write:

 

While historically these extreme degrees of contango, often referred to as super-contango, are associated with full inventories and therefore due to constraints on available storage, this time they are likely attributable to constraints on available credit. This indicates that the impact of the credit crunch on the oil market is not waning and continues to exacerbate the pressure on prices coming from weakening economic fundamentals.

 

Credit constraints are not only distorting the incentives to hold inventories but also limiting the ability to close arbitrage opportunities along the forward curve. The recent worsening of the dislocation in the oil forward curve indicates that the impact of the credit crunch on the oil market is not waning to any significant degree and continues to exacerbate the pressure on prices coming from weakening economic fundamentals.

 

2861.jpg

 

They highlight the fact that timespreads have now breached the limit typically set by the cost-of-carry, which means those buying oil in the future are willing to pay a premium beyond and above the cost-of-carry and storage of oil bought today in the spot market.

 

Goldman says that in the past 20 years this has only happened in 1998 and temporarily at the end of 2001 and 2006. Each of those times, storage capacity was an issue. There wasn’t enough of it available meaning if you wanted to buy oil today to store and sell into tomorrow, you expected a premium for your efforts. But there is no such storage shortage today. The reason people are expecting a premium to sell oil into the future this time is due to limited access to credit and strong preference for cash.

 

As this intensifies Goldman says producers will be increasingly incentivised to shut-in their own production.

 

As the contango gets steeper, breaching the cost-of-carry, it becomes ever clearer that the structure of the forward curve is providing incentives for the highest-cost form of storage, namely production shut-ins. The “underground storage” is typically considered the most expensive because of the costs associated with shut-ins and start-ups of the oil fields and, more importantly, because it is normally far from the refinery centers

 

/see: http://ftalphaville.ft.com/blog/2008/11/11...super-contango/

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FIND THE "OIL" LINK THREAD??

 

It gives the key OIL-related threads and links.

 

To find it in a hurry, look at the GEI Logo

aa5oi3or0mx2.gif

.......................................... OIL .............................

 

...and right below "I" in global edge Investors, the "E" in green Energy,

you will find a Link to this thread

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OIL Charts that I want to save - this shows the slide from US-Peak-Oil production, and why imports have risen.

 

USproduction.gif

 

Notable Charts : http://www.chartsrus.com/

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Hello all,

 

Oil, and to a lesser extent OIH, have taken a hammering today in stockmarket falls. And gold has leapt up. I'm beginning to wonder whether this might be the time to hop from Gold to Oil?

 

I'm nervous about it. But I was nervous about adding to my losses when I tripled my holding in SLW almost at the nadir - best investment I've ever made as it turns out.

 

Remember, this doesn't mean I think that Gold is necessarily at a peak or Oil at the bottom, but the pair might be approaching a point where the potential upside for oil is greater than the potential upside for Gold, with correspondingly reduced downside risk for Oil than Gold.

 

There is a lot of Oil demand just 'baked in the cake' as a result of the sheer number of cars out there on the road and the sheer number of McHouses in the suburbs.

 

What do others think?

 

Wanderer

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I was thinking the same and started buying back in to USO last week. I think I made a mistake though - both in timing and choice of instrument. I think USO gets killed by contango, but I'm not sure I understand how. I'm not sure what the best symbol is to trade oil.

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I got hammered on LOIL.L this week too. To say I am an amateur at this is giving me too much credit! I guess I need to try and understand the differences between the different oil ETF's.

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I sold half of my USO position for 12% loss today. I only had a few thousand dollars anyway. Apparently, USL is a better ETF since the contracts are spread evenly over 12 months rather than front loaded on the earlier months. USL should therefore decay less than USO during contango.

 

I also sold my 200 shares of GLD today. I'm not sure if this was the right move. I've been sitting on it for so long, since trading at the peak last year, I took the opportunity to get out. I failed to average down much on the ETF as I started buying physical instead. I am hoping for a pull back to start rebuilding the position with physical gold.

 

Perhaps Dr. Bubb can advise of the best ETF for tracking the oil price?

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regarding oil contango.

I know DrBubbs pointed out that its tough to make money on oil futures, but I thought I'd drop in my 2c on what I am seeing happening atm.

spot oil is sticking around the high end of $35-40 (weep ye oil nations) but futures are still much higher than this (contango).

But, as we roll closer to the futures expiry the futures are being sucked down (only some downside to the futures at the moment, and not worth trading imho) towards spot (as opposed to spot being pushed up to the futures), I believe this is due to LEH holding a lot of long oil futures prior to its demise and those futures are being gradually unwound. (damn those weak American slaves for not Nuking Iran in time :blink: ).

 

 

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Lehman's position would have been unwound a long time ago.

 

Optimism about the medium term and long term price of oil is what holds prices up. (LT near $70)

A glut of spot supply holds the front end of the curve down.

 

Let's see what lasts longer. I think the glut will ease first

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GOLD/OIL RATIO : New Range (over 25!) - A Level not seen for many years

===========

 

Gold - in Barrels of WTI Crude - with gaps up

001xz6.png

 

This chart (from Goldfinger) shows brief spikes to 30 and even one to 33.

003bit8.png

That was typically followed by a collapse in the Ratio back below current levels.

 

Gold Stocks relative Oil Service Stocks : Ratio of GDX-to-OIH - w/ gap breakout

001ht6.png

 

Gold Stocks relative Major Oil Stocks : Ratio of GDX-to-XLE - w/ gap breakout

001dc4.png

 

I think that there are some relative bargains in the Oil sector, and I plan to continue a gradual shift

of my portfolio in that direction, while simulatneously boosting cash levels for a possible early March

low in stocks.

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Lehman's position would have been unwound a long time ago.

 

Optimism about the medium term and long term price of oil is what holds prices up. (LT near $70)

A glut of spot supply holds the front end of the curve down.

 

Let's see what lasts longer. I think the glut will ease first

hmm, depends how big a position it was doesn't it?

Most of their trading desks were sold on to the likes of Barc et al, better to trickle out a massive net long position built up over 3 or 4 years over many months (Leh collapse was only just 5 months ago) than dump it all in a few, especially if they were buying multi year dated futures.

 

I'm sure I read somewhere in the past that several fields sold their entire estimated lifetime production through futures contracts.

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I'm sure I read somewhere in the past that several fields sold their entire estimated lifetime production through futures contracts.

Sure. I used to be in that business (in fact, I suppose I "invented" the oil swap contract back in 1986, believe it or not.)

 

Lehmans was not a big player in the oil swaps business. For example, Morgan Stanley is far larger.

Whomever assumed the Lehman's oil swaps, would also have taken over their oil futures books.

So the Oil futures shorts covering any purchase of an oil swap, would be gradually wound down as the swap expires.

 

The net oil futures position would have been far smaller.

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Sure. I used to be in that business (in fact, I suppose I "invented" the oil swap contract back in 1986, believe it or not.)

 

Lehmans was not a big player in the oil swaps business. For example, Morgan Stanley is far larger.

Whomever assumed the Lehman's oil swaps, would also have taken over their oil futures books.

So the Oil futures shorts covering any purchase of an oil swap, would be gradually wound down as the swap expires.

 

The net oil futures position would have been far smaller.

I have no trouble with removing Leh from that post and replacing it with other firms with net longs.

My main source for this assumption is how much oil was bid up during all the Iran/Israel debacle.

Before Iran started to rattle its sabre back at us.

 

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I have no trouble with removing Leh from that post and replacing it with other firms with net longs.

My main source for this assumption is how much oil was bid up during all the Iran/Israel debacle.

Before Iran started to rattle its sabre back at us.

 

All banks have position limits which restrict their "net long" or "net short" oil bets to a reasonable percentage of their Net Equity.

They are set up to manage and control these positions in a sensible way. But that is not the end of the stoty, unfortunately.

They get into trouble, when they think they have a hedged or low risk position and it turns out not to be so.

 

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I got hammered on LOIL.L this week too. To say I am an amateur at this is giving me too much credit! I guess I need to try and understand the differences between the different oil ETF's.

 

 

I discovered this on the google finance chat board:

 

http://finance.google.com/group/google.fin...6eba68c1ac43f30

 

In Jan LOIL was at $5.60 when spot was approx $39 a barrell

After rollover, In early Feb LOIL was approx $4.00 when spot was £39 a

barrell

As we approach the next rollover $39 a barrel would equate to LOIL at

approx $3.45 (currently it's much lower though)

 

Learn quick.

CONTANGO = LOIL goes down

This is explained v eloquently above

 

The professionals (ie guys like the ones at ETFS controlling LOIL's

performance) sell spot close to rollover (otherwise they'd have to

take delivery of this stuff and who wants that?) and they then buy the

next month at a HIGHER price thus reducing the value of the fund!

 

The very act of these professionals selling en-masse at the same time

drives the price down even further

 

It is not so much the fund tracks the index which tracks the price of

a barrel of oil.

More - the spot price of a barrel - especially near rollover - is

influenced by the movement of funds in an out of these ETFs which is

then reflected in the index.

 

Any one thinking that it'll all be OK in the end because the price of

oil will go up in 6 mths time hasn't understood what's going on

 

Next month the price of a barrel of oil will again be approx $39 (at

some point) and LOIL will be at approx $2.00

 

By May - your stash is worth pennies - and the price of a barrel of

oil will still be around $39

 

The good news is that the reverse is true when CONTANGO is reversed -

probably 2010 at the rate were going

 

(assuming you have any stash left to take advantage of it)

 

I guess I should sell my LOIL position.

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All banks have position limits which restrict their "net long" or "net short" oil bets to a reasonable percentage of their Net Equity.

They are set up to manage and control these positions in a sensible way. But that is not the end of the stoty, unfortunately.

They get into trouble, when they think they have a hedged or low risk position and it turns out not to be so.

you mean like:

http://emac.blogs.foxbusiness.com/2008/06/...ehman-brothers/

*Lehman booked profits on its liabilities. Yes, you read that right–it’s a perfectly legit accounting move (under SFAS 157 and SFAS 159) that tosses out the window the concept “quality of earnings.” Accounting rules let investment banks count as gains in profits the amount they forgo in their liabilities. When debt falls in value, companies get to book in earnings the difference. Lehman recorded $600m in profits from this move, again, allowed under accounting rules. Meanwhile, it posted $489m in profits. When you see accounting moves like these–again perfectly legit–you should ask, how healthy are the profits from continuing operations?

 

*Wrong way bets on its hedges. Lehman is estimated to have lost $500m to $700m on hedges in the second quarter, potentially widening its anticipated losses in the second quarter, losses that would be the first since Lehman went public in 1994. Lehman apparently used the hedges to offset losses in real estate and other credit.

 

Specifically, the firm reportedly bet that “indexes tracking markets such as real-estate securities and leveraged loans would fall. If that happened, it would book profits that would make up some of its losses from holding these securities and loans,” the Wall Street Journal reports.

 

Yet some of the indexes actually rose, even though the assets they were supposed to hedge against continued to lose value or stayed relatively flat. Coupled with Lehman’s losses from write-downs on assets and ineffective hedges, you may see a profit hit topping $2b, the Journal says. The paper added you may see more layoffs as well.

 

Footnote: You should ask yourself, how can any firm think it can hedge illiquid assets? Doesn’t this sort of sound like the “chaos trade,’ basically bets on chaos in the markets, that Bear Stearns entered into to hedge its risk exposures before it nearly collapsed? Shouldn’t Lehman just devote its energies to selling those frozen solid assets instead?

and

http://wallstreetpit.com/2008/07/platts-ba...-oil-contracts/

Platts Bars Lehman Brothers From Trading Oil Contracts

 

By Ron Haruni · Jul 7, 2008 · Author's Website

 

From Reuters: Platts review bars Lehman from key oil trade window

 

Energy pricing agency Platts has put Lehman Brothers (LEH) under a temporary review that effectively excludes it from trading benchmark-setting oil contracts, four sources close to the matter said on Monday.

 

The exact cause of this move, it is not clear yet at this point. But, regardless of this fact - with asset writedowns expected to amount close to $3 billion for the second quarter, followed by the current exclusion from trading during Platt’s price-setting window ; this latest episode for Lehman Brothers, as the number 4 Wall Street Bank, it’s obviously quite a setback.

 

Lehman Brothers and Platts - a unit of McGraw-Hill Co Inc (MHP), have yet to comment on the matter. It will be interesting to see how this story will develop from here.

 

Hmm, something interesting happened to oil futures a week later didn't it.

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I guess I should sell my LOIL position.

 

There's no easy way to escape the contango, aprt from "buying oil on the ground"

 

As I said weeks ago, in my article for FS:

"Al":

I am bullish on oil at under $40, and have been looking to buy the dip soon.

I think there's alot of money to be made on Oil's rise, if we see it, by late 2009.

 

"Bob":

How do you go long oil at $40? Have you got a tanker to store it in?

 

Al:

I am talking about using one of the many oil ETFs that are available.

 

Bob:

You cannot truly "buy oil at $40" that way. You merely buy an etf whose price "relates" to Oil.

EXAMPLE:

Here's yesterday's Oil Futures Curve:

Feb.09 : $40.83

Jan.10 : $59.48

What sort of profit do you expect if oil hits $59.48 in Dec. (using the Jan10 contract as your price measure)?

 

Al:

For simplicity I am going to change those prices to $40 & $60, the difference between them is 50%.

So I might make 50%. Or using a 2x leveraged ETF that should be approaching 100%. Based upon your real figures (for current futures prices) I would reckon at least 90%.

 

Bob:

Sorry - but that's not true.

Chances are: You will breakeven or lose money with USO, or one of the other oil etfs.

= =

/more: http://www.financialsense.com/fsu/editorials/2009/0115.html

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The Oil ETF issue is important, esp. for USO and DXO.

 

I think USL might be better as it operates on the futures contracts of the next 12 months.

 

Now, this isn't a trading paper, imho.

 

But if one doesn't think the counterparty risk is high, then this could be a fairly easy way to tap into the long term oil upside with an ETF, without taking on all the current contango risk that USO brings along.

 

Then again, if we continue to slide downwards and there is no bear rally, and the depression really prolongs for long - then one could be sitting on any of these ETFs for a loooong time (several years).

 

However, if there's a big rally, rapid depreciation of dollar or a recovery - then one is more likely to win than to lose on this.

 

I consider oil to be the ultimate tradable investment (assuming proper instrument): there is no way it can stay down forever for 10+ years, without the whole world coming to an end as we know it. Still, it has tradable qualities, esp. if you use leverage.

 

 

 

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Oil Supply Crunch in 2010

Tuesday, February 17, 2009

 

The Executive Director of the International Energy Agency (IEA), Nobuo Tanaka, has made public a harrowing forecast that foresees a global energy supply crisis in 2010, when demand is expected to begin rising up once more.

 

Nobuo Tanaka, the Executive Director of the IEA, expects that in 2010, global oil demand will recover and increase next year by about 1 million barrels per day (bpd). Tanaka also warned OPEC: "If you think about a rapid increase of prices through supply cuts, this will not aid in world recovery."

 

Since July of last year, a dramatic drop in the price of oil from its $147 a barrel record peak, has scared away potential investment in alternative energy projects, and in already existing fields.

 

"While the economic slowdown itself serves to reduce CO2 emissions, if we don’t invest now we will have serious problems in the future," continued Tanaka.

 

The Paris-based agency, which advises 28 industrialised nations, has expressed concern that some oil producing companies in the ruthless pursuit of pushing up prices are internationally deferring projects that would help expand supply.

 

Tanaka also predicted that even assuming absolutely no growth in oil demand, the world's oil-producing nations need to bring on line an extra 45 million bpd of crude production by the year 2030 – in order to compensate for declines in fast aging oilfields.

 

In line with its rhetoric the IEA has advised the Organisation of Petroleum Exporting Countries (OPEC) to resist the urge – and the obvious short-term benefits – to make further output cuts.

 

The cartel has already made supply cuts of 4.2 million bpd, since September last year, in attempt to prop up dropping prices. Thus far the series of cuts have been largely unsuccessful in achieving their intended goal, and questions over implementation remain prevalent.

 

Cause for particular concern for the IEA is the undeniably damaging impact that the delay of 35 new oil projects, from within the Organisation’s twelve member nations, will have on future supply levels.

 

However, some of OPEC’s more outspoken members have already made their voice heard about the prospect of yet another round of cuts, which would be rubber stamped if approved at their next scheduled meeting in Vienna on March 15.

 

In a statement – which only serves to further highlight the severity of the issue – Mr. Tanaka, said: "If OPEC is aiming at a rapid price increase by cutting supply, maybe it would not be a good thing for the global economic recovery."

 

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Hello all,

 

I'm beginning to wonder whether this might be the time to hop from Gold to Oil...

 

Remember, this doesn't mean I think that Gold is necessarily at a peak or Oil at the bottom, but the pair might be approaching a point where the potential upside for oil is greater than the potential upside for Gold, with correspondingly reduced downside risk for Oil than Gold.

 

There is a lot of Oil demand just 'baked in the cake' as a result of the sheer number of cars out there on the road and the sheer number of McHouses in the suburbs.

 

 

I agree. Bought into OIH today. Not sure if I've jumped the gun a bit on this one though...

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