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The Oil and Energy Price Thread

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Oil still going down. Hell, anyone would think it was going out of fashion!

 

Money Morning asks, what's behind the oil price collapse, and if you like the conspiracy side of it, here's a new take.

 

BP021006.gif

 

Shortly after Goldman Sachs changed the way it calculates its Commodity Index, the price of oil began to collapse. Could the two be related? The GSCI is used as a benchmark by the Oppenheimer Real Asset Fund - worth $1.7bn - as well as two of the world's largest pension funds, which manage some $200bn between them.

 

Until this summer, US unleaded gasoline accounted for 8.45% of the GSCI. Now that's shrunk to 2.3%. "Goldman's changes probably induced arbs, commercial hedgers, and other traders to sell September and October unleaded gasoline future contracts," says Bill King in the King Report.

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Russ Winter is suggesting the oil price has been manipulated.

 

First go to this Raymond James site. You will need to hit DOE Petroleum Inventory Update. You will then see that total petroleum inventory is running quite high. In fact it has risen for seven straight weeks during a period when normally it declines. Next go to Strategic Petroleum Reserve, and you will see that number is down substantially from last year. I'm not saying that's a bad policy, given the minor Bubble in oil prices at $75, but it clearly is a rob Peter, to pay Paul factor in the inventory picture. And do you think Iranian intelligence watches the SPR as an indicator of US seriousness and intentions? Next look at imports, and you will see that the US has effectively imported in a good chunk of the world's inventory. Don't think so? Well, next go to RJ, energy stat of the week, and hit Sept. 5. The last chart shows worldwide inventory measured in days of demand. Also consider this event, China is now ready to start filling it's own 200 million barrel SPR, and they will be price conscious about it, they've said as much. Now connect the dots, and considering the US has very high inventories (and uses 25% of world oil consumption), what's the picture elsewhere (75% of consumption)? Obviously exceedingly low.

 

Link: Click

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Are the Saudis Approving Cheaper Oil?

 

"Why would the kingdom, which boasts the world's largest oil reserves, cheer a price slump? In fact, the Saudis never felt comfortable with $70 oil, fearing that sky-high prices might kill off the global appetite for their single source of wealth.

 

"There is concern that the volatility in the markets is so beyond anyone's control that it could cause severe damage to the world economy," says Sadad Al Husseini, the retired exploration and production chief of Saudi Aramco, the national oil company. The Saudis, he says, "are determined to try and manage better."

 

http://www.businessweek.com/globalbiz/cont...z_europe_energy

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Are these reasonable vehicles for oil trading?

Any comments

Thanks

OILB.L ETFS OIL SECURITIES London 8:17 $54.58 -2.03 -3.59%

OILW.L WTI ETFS OIL SEC London 8:10 $60.97 -2.08 -3.30%

 

I'm interested in oilb as well, the management fee seems to be 0.49% pa, is that good?

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I am at a conference at the moment (sensors) and there is a guy from Shell talking about the needs for their systems - really quite interesting. But as an aside the speaker mentioned that the average age of an oil engineer is 55. This means in 5-10 years half of their staff will retire!

 

They are talking about all new wells having sensors and analysis will be done remotely by engineers....

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Looks like we have seen a low in Oil already

 

these charts are persuasive to me: http://www.greenenergyinvestors.com/index.php?showtopic=925

 

A bounce to at least mid-$60's, then ... we shall see

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OIL NEWS LOOKS HORRIBLE - MIGHT BE TIME TO BUY

- Why? this could galvanise opec into some real cuts

 

But dont jump straight in. The selling volume on USO was too heavy.

Needs a day or two- at least- to make a decent bottom. More, if heavy

selling continues

 

 

=====

 

Oil Falls Most Since August 2005 on Signs OPEC Won't Make Cuts

 

By Mark Shenk

 

Nov. 16 (Bloomberg) -- Crude oil had the biggest one-day decline since August 2005 in New York on expectations OPEC members may not reduce production and a warm U.S. winter will curb demand.

 

Shipments from members of the Organization of Petroleum Exporting Countries were forecast to rise in a weekly report by Halifax, England-based consulting company Oil Movements. Geneva- based consultant PetroLogistics Ltd. said OPEC shipments would fall this month, in a report released today. OPEC agreed last month to cut output by 1.2 million barrels a day starting Nov. 1.

 

``The Oil Movements report added uncertainty about OPEC's cuts back into the market,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``We saw a lot of fund liquidation after the report today. The surging stock market has attracted a lot of the dollars that would otherwise be moving into energy markets.''

 

Crude oil for December delivery fell $2.50, or 4.3 percent, to $56.26 a barrel on the New York Mercantile Exchange, the lowest close since Nov. 18, 2005. Oil had the biggest one-day decline since Aug. 17, 2005. Prices are down 2.8 percent from a year ago.

 

Investors pushed prices higher the past four years as they poured money into energy, where returns outpaced other markets.

 

U.S. stocks rose for a fifth day and are heading for the seventh weekly advance in the past eight weeks. The Dow Jones Industrial Average climbed 54.11, or 0.4 percent, to 12,305.82 in New York. The Standard & Poor's 500 Index added 3.19 to 1399.76. The Nasdaq Composite Index rose 6.31, or 0.3 percent, to 2449.06.

 

Higher Temperatures

 

Above-average temperatures will cover the northern third of the U.S. from coast to coast this winter as an El Nino weather pattern persists, the U.S. Climate Prediction Center said in a report that covers December through February. A warmer-than- normal winter in the region would reduce demand for fuels used to run household and commercial furnaces.

 

El Nino refers to the warming of the ocean surface off the western coast of South America. The phenomenon affects the jet stream, alters storm tracks and creates unusual weather patterns. A moderate to strong El Nino typically brings mild winters to the northern U.S.

 

OPEC shipments will rise 0.9 percent in the month to Dec. 2 to 24.8 million barrels a day, compared with 24.6 million barrels a day in the four weeks ended Nov. 4, Oil Movements said today.

 

Divergent Views

 

According to PetroLogistics, crude oil shipments from 10 OPEC members with production targets, all except Iraq, will probably fall 1.1 million barrels a day, or 3.9 percent, to 27.2 million barrels a day this month.

 

OPEC will discuss production at its next meeting, which is scheduled for Dec. 14 in Abuja, Nigeria.

 

Natural-gas stockpiles rose 5 billion cubic feet to 3.45 trillion cubic feet last week, an Energy Department report showed. Some users switch between oil-based fuels and natural gas depending on cost. Crude-oil supplies rose last week, the department said yesterday.

 

``We are building natural-gas supplies as we get closer to winter, which is bearish,'' said Ric Navy, a broker at BNP Paribas SA in New York. ``Also, yesterday's report showed a big gain in crude oil. There's just too much stuff around for prices to move higher.''

 

Crude-oil inventories rose 1.2 million barrels to 336 million barrels last week, the Energy Department report showed. It left stockpiles 12 percent higher than the five-year average for the week, the department said.

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I'm sorry but this an opportunity.

 

The good lord gave us one with the miners a month or so ago and now he has seen fit to do the same with the energy sector.

 

What are the juniors to look at?

 

I have the oil/gas ETF; I have BP, Shell and Antrim (CA:AEN or LSE:AEY). I owned FOGL. Made money on it , but rubbish. And own TXO, piece of turd.

 

What's there to look at?

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Coal miners? if the get knocked down too, by falling oil

 

Royalty trusts, but wait for more tax-selling maybe?

 

And here are some advfn threads:

 

OIL : http://www.advfn.com/cmn/fbb/thread.php3?id=9832422

GAS: http://www.advfn.com/cmn/fbb/thread.php3?id=1456608

 

The Wall Street mob is still bidding Wall St. higher. Will that last, if oil rises?

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I'm sorry but this an opportunity.

 

The good lord gave us one with the miners a month or so ago and now he has seen fit to do the same with the energy sector.

 

What are the juniors to look at?

 

I have the oil/gas ETF; I have BP, Shell and Antrim (CA:AEN or LSE:AEY). I owned FOGL. Made money on it , but rubbish. And own TXO, piece of turd.

 

What's there to look at?

 

Check the motley fool www.fool.co.uk -> discussion boards. I hold Dana Petroleum DNX, Soco SIA (up 50% since I bought) , Aminex AEX (longer term and very risky) and I have a spread bet on Burren. An aim stock (which is currently down 25% since I bought it) is Imperial Energy. Finally there is Faroe Petroleum (down a mere 30% since I bought it).

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TIME TO START SHIFTING...?

 

Out of precious metals into energy?

Maybe.

See charts and comments: WTI-to-Oil Cross market intelligence

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Is BP going to spoil the party or will perceived bad news like this represent a buying opportunity?

 

ADVFN Market report.

 

BP also fell back to close 4-1/2 lower at 552-1/2 and is expected to tell investors on Tuesday that trading in the fourth quarter has been tough, owing to falling oil and gas prices and refining margins.

 

Quarterly production figures are also unlikely to cheer the market as BP has already warned in October that output for 2006 is to reach 3.95 mln barrels of oil equivalent per day, down from 3.997 mln boepd in 2005 and below its guidance of 4.1-4.2 mln boepd.

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Russia cuts off oil exports to Belarus

 

08 January 2007 18:00

Russia has shut off crude exports to its western neighbour, Belarus, in a trade row that has halted supplies to Poland and Germany.

 

Russia's pipeline monopoly Transneft claimed that it was forced to act because Minsk had been siphoning off oil illegally as payment in kind for a new oil shipment tax.

 

The company says the charges are illegal.

 

The European Commission said the cuts posed no immediate risk to European supplies but it was seeking an urgent explanation from Belarus and Russia.

 

 

http://www.rte.ie/news/2007/0108/oil.html

 

http://top.rbc.ru/english/index.shtml?/new...85027_bod.shtml

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Russia cuts off oil exports to Belarus

 

08 January 2007 18:00

Russia has shut off crude exports to its western neighbour, Belarus, in a trade row that has halted supplies to Poland and Germany.

 

Russia's pipeline monopoly Transneft claimed that it was forced to act because Minsk had been siphoning off oil illegally as payment in kind for a new oil shipment tax.

 

The company says the charges are illegal.

 

The European Commission said the cuts posed no immediate risk to European supplies but it was seeking an urgent explanation from Belarus and Russia.

http://www.rte.ie/news/2007/0108/oil.html

 

http://top.rbc.ru/english/index.shtml?/new...85027_bod.shtml

 

I'm not sure you can trust anything with Russia right now, or the surrounding ex-Soviet states. They see the money in energy and want it. They benefit right now, but in years to come many governments and companies will think twice about doing business with them. Given their differences in the past, Russia v China down the road is going to be very interesting to watch (preferably from as far away as possible if some of the hardliners get into power).

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U.S. crude-product supplies up a fourth week: Energy Dept.

Jan 10, 2007

 

SAN FRANCISCO (MarketWatch) -- The Energy Department said distillate supplies rose for a fourth week, up 5.4 million barrels to 141 million for the week ended Jan. 5. Motor gasoline supplies rose 3.8 million barrels to 213.3 million, also up a fourth week. Crude stocks fell for a seventh week, down 5 million barrels to total 314.7 million barrels. Following the news, February crude dropped $1.39 to $54.25 a barrel. February reformulated gasoline fell 4.21 cents to $1.4275 a gallon and February heating oil traded at $1.527 a gallon, down 2.95 cents

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Crude now headed for $50. I have ridden along part of this slide with small shorts, but got out too early. In my view, this is fundamentally totally unjustfied. The trigger seems to have been inventory figures, not actually for crude oil, but for distillate products such as heating oil. What's happening now in my view is hedge funds bailing out. When this is over, it will be a great opportunity to get into oil / oil shares.

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Zapata George, being interviewed on FS, talks about...

 

"The Talking heads on CNBC have just rung the bell"

 

They are so bearish on oil, that it must be a bottom.

He says the volume spikes on oil and oil derivatives show an Apex has been reached- "we have seen the bottom" in Oil.

 

"The next significant number in oil is $80."

(would make those BP calls look rather good.)

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Yes, some interesting comments from George and others on FS. I certainly pricked up my ears when I heard that comment. :lol:

 

Another one from Jim later in the show was something about a relative trucking in Oil or Gas supplies to Pheonix, who apparently have only a seven days supply there!! How bullish is that.

 

I hear that Goldman Sachs has been behind the recent moves downwards in the Oil price. Something which might may sense because certainly the fundamentals have not changed as far as I can see. That the weather has been mild in the USA recently does not reflect oil consumption elsewhere in the world.

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Not nessecarily. OPEX are not very good at actually implementing production cuts. They talk a lot about them, but when it actually comes to cutting production, they tend to take a "not in my back yard" attitude, i.e. everybody wants the others to make the cuts.

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Seriously considering buying OILB the Brent Crude ETF

 

http://www.advfn.com/cmn/fbb/thread.php3?id=9520234

 

I feel confident Oil could be back up past $60 later this year and will see $100 at some time in the next 2-3 Years.

 

Thinking of trying the ETF as have become fed up with the time erosion of Warrants.

 

Have heard some reports that the Saudi's have threatened to flood the market if the US pull out of Iraq early although I believe they are running near capacity already.

 

Anyone think Oil will go down further or are aware of any other oil ETFs.

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My first post here.

 

Oil looks overdone. These days with Paulson at the controls a good part of the move may be due to an attempt to engineer the US economy. Since the man has all the resources and he knows all the right buttons to push to move markets through resistance points and knows the trend followers will pile on maybe we will take a further plunge even if the fundamentals don't support but who knows.

 

Some of the Canadian o&g trusts are plunging not only due to product price factors but also because the Canadian government changed tax regulations on the trusts last October.

 

I bought True Energy Trust today on the TSX: tui.un The company has decided to change from a trust to a regular operating company and the sp has been pummelled as the people who were in it for the big dividend dump their shares. At the end of 2006 they were producing at an annual rate of 20,000 boe per day. 70 million shares out. Plan on paying out a 24 cent dividend. More information on company website including a pdf presentation on the conversion: http://www.trueenergy.ab.ca/

Share closed today at C$5.85.

 

DYOR & DD and all that jazz.

 

EDIT: Subsequent to posting I see you have a thread on Canadian o&g trusts, sorry.

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I'm watching that one quite closely at the minute, even if oil doesn't go up in price it seems like a good buy, anyone see any major negatives or is it just due to the oil price decrease?

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