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Thread: Oil price bottom prediction 2016

  1. #1

    Default Oil price bottom prediction 2016

    So what are you folks thinking oil will bottom out at? Not what it will be at the end of this year but what the bottom will be?

    I'm going with $20.25 as a shot in the dark.

  2. #2

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    Conditionally, if Trump becomes president, I predict he gives it away for free to U.S. toddlers of certain backgrounds in starter packs, like "baby boxes". So, zero?

    But I'll go with $26 USD for WTI as the 2016 market bottom.
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    cannot predict the prices at all
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    My father is a non-initiate in the mysteries of the market, however he did venture a guess: $20 oil and CAD 0.40 USD. I think we should hear him.

    Incidentally my investment are perfectly undiversified and on track to mark -80% return.

    Goes to show that knowing a little is worst than knowing nothing.

    My dad has ended up having a stash of USDs. He felt it in his water.
    Last edited by Safir; 20-01-2016 at 10:17 AM.

  5. #5

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    However if you must know what is causing this oil price and assume is this Saudi vs shale spat..think again.

    Here’s a 5-year chart of the broad-weighted US dollar index (this is the index the Fed publishes, which – unlike the DXY index and its >50% Euro weighting – weights all US trading partners on a pro rata basis) versus the price of WTI crude oil. The red line marks Yellen’s announcement of the Fed’s current tightening bias in the summer of 2014.



    http://www.salientpartners.com/epsil...-you-can-fight

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    ^ A 20% increase in the value of the US dollar does not explain a 70% decrease in the price of oil. If that were the only factor, oil would be selling for ~US$80 right now. The alignment of the change in US monetary policy and the change in market strategy by OPEC is just coincidental.

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    ^ agreed. Whether it's vs shale oil or whatever else, it's got nothing to do with Fed policy.
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    Quote Originally Posted by JayBee View Post
    ^ agreed. Whether it's vs shale oil or whatever else, it's got nothing to do with Fed policy.
    "nothing" is a pretty strong word. If you don't think that Fed policy has in impact on the US dollar and in turn commodities priced in US dollars, I don't know what to tell you.

  9. #9

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    Quote Originally Posted by Titanium48 View Post
    ^ A 20% increase in the value of the US dollar does not explain a 70% decrease in the price of oil. If that were the only factor, oil would be selling for ~US$80 right now. The alignment of the change in US monetary policy and the change in market strategy by OPEC is just coincidental.
    There is an interesting correlation with Canadian dollar versus US though. Its seems almost perfectly 0.5 of late. For example, some are predicting oil will drop to 20$. That would be about a 33% drop, which would imply about a 15% drop in CDN dollar, which would imply about a trading price of 59c US, which just happens to be what some analysts are predicting as the bottom.

  10. #10

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    In the other thread I also tried to highlight the mistake in assigning the oil fall blame on the US Fed, but apparently it is hard for some people to admit their mistake.

    Here is a chart of that same broad USD trade-weighted index (shaded white line), the WTI price (yellow line) and the interest rate that US Fed taregts, known as the Fed Funds rate in green (data source: Bloomberg):



    What you is there, is a constantly changing relation between these variables. During 2004 rate hike cycle (started Jan 2004 till June 2007), for example, Fed was continuously hiking interst rates, yet the USD was mostly falling and oil was also rising. That was a (positive) demand shock episode: China's commodity supercycle. During 2007-2008 financial crisis, you have the opposite effect, while Fed was cutting rates, USD was rallying and oil was falling. It was a (negative) demand shock on oil side, and the flight to safety in the market meant people kept buying USD. etc. For most of 90s, oil was mostly flat while USD was rallying. That bump in 1990 is when US invaded Iraq. and so on.

    So in short, it is very simplistic to think a single or even a couple of variables are all that matters to oil prices. I think the best explanation of the current oil episode is the (positive) supply side shock.
    Last edited by FamilyMan; 20-01-2016 at 12:04 PM.

  11. #11

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    Quote Originally Posted by FamilyMan View Post
    . I think the best explanation of the current oil episode is the supply side shock.
    Sure hope so, because if true it will clear itself out by year end and will cause the downfall of Saudi Barbaria (always a bonus).

    Last time there was a 'supply shock' of this magnitude the Iran/Iraq war started, and the Soviet Union collapsed.

    P.S. I think you are not considering at all that oil prices started crashing months before the OPEC 2014 meeting.
    Last edited by Safir; 20-01-2016 at 12:08 PM.

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    How about a low of $19.95. Call it a sale price if you like.

  13. #13

    Default Oil price bottom prediction 2016

    I think we are very close to the bottom now, but it will probably get a bit worse before it gets better.

    My prediction is $25/barrel.

    What is the prize for the person who guesses closest - a free barrel of oil?

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    I called for a low of $19 in another thread.

    But... I'm not seeing any oil companies go bankrupt yet. It could go lower. Carnage is needed before supply tightens up.

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    Quote Originally Posted by AAAAE View Post
    I called for a low of $19 in another thread.

    But... I'm not seeing any oil companies go bankrupt yet. It could go lower. Carnage is needed before supply tightens up.
    And they wont either. There is too much at risk for the banks to foreclose on any loans to the oil patch, who will buy their assets to pay off the debt? And even if people do buy the assets, will the discount in price even cover enough of the debt to not drag the banking system down as well? Also, who will pay for the reclamation of the abandoned Wells?

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    My prediction for the bottom of WTI in 2016 is USD $22.37

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    Something I found interesting is how Suncor, at the centre of the oilsands, supposedly hurt worse than anywhere in the world, just happens to have a spare 6.5 billion dollars sitting around and buys up Canadian Oil Sands Ltd. http://www.cbc.ca/news/business/sunc...deal-1.3408250
    Last edited by Drumbones; 20-01-2016 at 03:12 PM.

  18. #18

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    Well china is publicly declaring that market instability is here to stay so that may drive oil further lower.

    India may be the only saving grace here. If they can get off coal and onto something cleaning burning that may turn things around. China may not be happy with India growing at 8+% a year given the current trends and becoming a bigger regional player and threat.

    I wonder how long Russia can hold out, I feel like they are teetering on the edge of something. The Ruble just spiked down even lower today (I guess good for commodity prices for them). It is just how long can their population hold on with such a depressed economy and currency.

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    The real reason that US have saved much oil and haven't sold any of their oil for more than 40 yrs , so Saudi wants oil prices to stay low till US start selling oil.
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    Quote Originally Posted by jagators63 View Post
    The real reason that US have saved much oil and haven't sold any of their oil for more than 40 yrs , so Saudi wants oil prices to stay low till US start selling oil.
    And where do you get this information from?

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    Quote Originally Posted by LoebsPeugot208 View Post
    just how long can their (Russia's) population hold on with such a depressed economy and currency.
    The Rus think suffering has a salutary effect on the soul. Don't worry about them. Worry about Arabs and Albertans.

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    OK, I'll bite.

    $21.75.

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    Where is all the excess oil being stored. The holding tanks must be full, rail tankers etc. oil tankers must be sitting in the water full. Surely their has to be a limit of how much storage there is for oil OPEC is pumping out.
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    Quote Originally Posted by Gemini View Post
    Where is all the excess oil being stored. The holding tanks must be full, rail tankers etc. oil tankers must be sitting in the water full. Surely their has to be a limit of how much storage there is for oil OPEC is pumping out.
    Tankers are currently full, floating in the ocean with oil. We are nearing the limits of storage right now, so that is one reason the price has dipped so much. Cushing Oklahoma is also nearly full.

  26. #26

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    To make it really interesting I will buy a beer for the person who's prediction is closest.

  27. #27

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    Quote Originally Posted by AAAAE View Post
    Quote Originally Posted by Gemini View Post
    Where is all the excess oil being stored. The holding tanks must be full, rail tankers etc. oil tankers must be sitting in the water full. Surely their has to be a limit of how much storage there is for oil OPEC is pumping out.
    Tankers are currently full, floating in the ocean with oil. We are nearing the limits of storage right now, so that is one reason the price has dipped so much. Cushing Oklahoma is also nearly full.
    Yup, it's getting pretty ugly. Though more tanks keep getting built, though not enough to keep up with the pump rate.

  28. #28

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    Quote Originally Posted by Marcel Petrin View Post
    Quote Originally Posted by JayBee View Post
    ^ agreed. Whether it's vs shale oil or whatever else, it's got nothing to do with Fed policy.
    "nothing" is a pretty strong word. If you don't think that Fed policy has in impact on the US dollar and in turn commodities priced in US dollars, I don't know what to tell you.
    Ha ha, okay, okay, "nothing" is a pretty strong word for the largest internal mover of the largest oil consuming economy, but how about "nothing to do with the coincidental supply increase which is much more responsible for the drop in oil prices."
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    I agree that the supply increase is the biggest culprit. But many commodities have been impacted by the strength of the US dollar recently. Oil being one of them.

  30. #30

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    ^ would we not suppose the increased buying power in the USD ultimately lead to higher consumer commodity prices, ceteris paribus?

    Whichever we assume though, nearly unmeasurable against the supply changes, methinks.
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  31. #31

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    Quote Originally Posted by Drumbones View Post
    Something I found interesting is how Suncor, at the centre of the oilsands, supposedly hurt worse than anywhere in the world, just happens to have a spare 6.5 billion dollars sitting around and buys up Canadian Oil Sands Ltd. http://www.cbc.ca/news/business/sunc...deal-1.3408250
    Maybe they were thinking ahead.

    In comparison, how much cash did the PCs sock away in Alberta's Contingency / Sustainability Fund?

    The answer is here (see below). This was to sustain the whole province and not just one company. (Though the two may have similar operating expenses...)

    http://www.edmontonsun.com/2014/12/1...il-prices-fall
    Last edited by KC; 21-01-2016 at 11:16 AM.

  32. #32

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    Quote Originally Posted by Marcel Petrin View Post
    I agree that the supply increase is the biggest culprit. But many commodities have been impacted by the strength of the US dollar recently. Oil being one of them.
    Please don't get me wrong. My argument was not that USD or Fed don't matter. On the contrary. What I said was the strength of these relationships vary over time. If Fed didn't create a cheap credit environment post 2008, we might not have seen the shale revolution in the first place, and by extension the current crash.
    Last edited by FamilyMan; 21-01-2016 at 11:52 AM.

  33. #33

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    From the thread on mass layoff, Saturday Jan. 16:

    Quote Originally Posted by FamilyMan View Post
    For a number of reasons, I think we will see a short term rally in oil prices soon.

    Firstly, effect of Iran's oil in short term is almost priced in. The sharp sell-off on Friday was due to expectations of sanction relief which happened today. The big question now is longer term oil futures prices. Iran has some storage in tankers than can immediately be sold on the market, estimates range from 15-30 million barrels, that was known by markets. We also know they can add around 500k barrels in short term. How much new capacity they can bring online in the next 12-18 months determines if markets should adjust longer term prices. Also bear in mind that although Iran wants its market share back, they don't want too much lower prices. I am reading/hearing analysis that they might actually use other sales techniques than directly selling on the international oil markets to avoid too much affecting prices. Examples are they barter for machinery and tool/system they need domestically. For example they seems to want to buy a lot of new Airbus planes. Can they arrange a deal with France, given Total is active in Iran, to get planes and deliver oil to Total? Another mechanism is buying shares in refineries in Europe, in exchange for their oil revenue. In this manner they also secure a client for their oil going forward. Iranian Oil eventually affects markets, but their hope is not as dramatically as just using oil markets. So in short, the effect of Iranian oil on markets in short term might already be priced in.

    Another reason for a possible short term rally is market's sentiment. When markets are too pessimistic, they can be over-sold. Then a small move upward, can force people to close their short positions. To do that, they need to buy futures, pushing prices up.

    I repeat that this is a short term effect I am thinking about. Long term I am still bearish oil.
    hmmmm...seems the short-term bounce has started, at the moment WTI is back above $30/barrel...

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    Oil down another $1.91 to $26.55 per barrel today. $3 drop in 2 days

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    ^ I think you are looking at yesterday's prices not today.

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    That darn Yahoo. lol What's happening today?

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    an over-sold market was itching for an excuse to rally...then Mario Draghi, head of European Central Bank, said they "might" expand their quantitative easing measures in "March" (i.e., more cheap money)...BoooM

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    Bloomberg is still showing 29.62

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    29.75 close today and canbuck back up over 70 cents.

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    http://money.cnn.com/2016/01/21/inve...hp-toplead-dom

    article title: defiant saudi arabia says it can handle oil prices for a 'long long time'

    quote from article: "If the prices continue to be low, we will able to withstand it for a long long time...obviously we hope it will not happen,"

  41. #41
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    Interesting thought... what if companies that produce oil and obviously have storage capacity and (hopefully) cash reserves instead of producing own expensive oil, buy cheap saudi oil for as long as saudis pump it out for cheap. When the saudis cut production and prices rise, sell it at higher prices...

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    ^interesting thought..

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    Why do you think they are stashing it wherever they can. For just that reason.

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    I read in the newspaper from other day that oil price $ 25 will bottom out then may start going up at the end of this year ??
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  45. #45

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    Quote Originally Posted by grish View Post
    Interesting thought... what if companies that produce oil and obviously have storage capacity and (hopefully) cash reserves instead of producing own expensive oil, buy cheap saudi oil for as long as saudis pump it out for cheap. When the saudis cut production and prices rise, sell it at higher prices...
    To some degree big multinationals like BP and Total have been doing that in various countries (Russia, Nigeria, Iran, Kuwait, Iraq, Oman, etc.). Pump out the cheap stuff when oil prices are low and try to store some of it for when prices are high. Build out the infrastructure of expensive production when oil prices high (and interest rates are low for cheap financing) and you can hopefully quickly pay off big projects so if oil tanks you can still pump because now it's just in production mode with minimal maintenance instead of the costly part of exploration and setup. Over simplifications throughout this statement but largely that is how the big players try to swing it.

    De Beers does this with diamonds in their diamond vaults. They store huge volumes of them to artificially inflate the price and only release a few to the market. Of course oil has the problem of the huge volume of storage that is required. Thus why you see huge tank farms and massive floating oil tankers. Instead of scrapping a large tanker that is not cost effective to traverse the sea you just anchor it in a protected harbour and fill it to the brim and let it sit. Almost zero maintenance and huge volumes of storage.

    Some analysts have speculated that there actually isn't enough storage available in the current market given how quickly the current stored volume could be sucked up given even a slight drop in output from a few nations and a slight uptick in usage from china and india or the US deciding to march a few thousand tanks across a desert somewhere. There is a fairly fine balancing act of available storage and production capacity and use capacity. More storage would help buffer the market better and prevent such wild swings and give the market more time to adjust instead of flash crashes about maxed out storage and over production. Of course this only works if there isn't proxy wars being fought by using oil as the tool of war. So, not the typical supply and demand dynamics that are usually seen.

  46. #46

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    Quote Originally Posted by LoebsPeugot208 View Post
    http://money.cnn.com/2016/01/21/inve...hp-toplead-dom

    article title: defiant saudi arabia says it can handle oil prices for a 'long long time'

    quote from article: "If the prices continue to be low, we will able to withstand it for a long long time...obviously we hope it will not happen,"

    Saudi officials have said that if they cut production and prices go up, they will lose market share and merely benefit their competitors. They say they are willing to see oil prices go much lower, but some oil analysts think they are merely bluffing.

    If prices remain low for another year or longer, the newly crowned King Salman may find it difficult to persuade other OPEC members to keep steady against the financial strains. The International Monetary Fund estimates that the revenues of Saudi Arabia and its Persian Gulf allies will slip by $300 billion this year.

    http://www.nytimes.com/interactive/2...ices.html?_r=0
    (highlighted by me).

    I tend to agree with this article, the Saudi's could be bluffing. Surely they have to blink at some point if $300 billion is at stake.
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  47. #47

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    well given an article I read about them needing 100+/bbl (think it was $120/barrel actually but i may be mis-remembering im drowning in numbers at work) to balance their budget somethings going to have to give. Giant global game of chicken...

  48. #48

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    Seems we've climbed up out of a bottom and are hovering around $30/bbl

    I can sense a nervousness in the market just waiting for something to happen to bottom the price again. Feels like this bump is just profit taking from short positions.

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    Quote Originally Posted by LoebsPeugot208 View Post
    Seems we've climbed up out of a bottom and are hovering around $30/bbl

    I can sense a nervousness in the market just waiting for something to happen to bottom the price again. Feels like this bump is just profit taking from short positions.
    Dead cat bounce. $25 by the end of February.
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  51. #51

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    Oil dropped to 26.33 up to 27.18 now. Tumultuous commodity and stock markets my gawd.

  52. #52

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    Quote Originally Posted by LoebsPeugot208 View Post
    Oil dropped to 26.33 up to 27.18 now. Tumultuous commodity and stock markets my gawd.
    US equity markets were substantially overvalued by a whole host of historic indicators so a collapse in their market shouldn't be a surprise.

    Slowing growth in China shouldn't be a surprise either.

    What surprises me is the negative view of the economic effect of falling oil prices in the US. Mana from heaven and people are just seeing the market's decline (which us somewhat just a rebalancing) and are getting fearful of the future.

  53. #53

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    Seems it actually hit 26.21 lower than I saw in late night trading. But back up to 27.50 right now.

    I am surprised at how negative everyone is reacting to oil and how close oil is tying into the overall picture of the market. China I get as a concern but the slamming of tech stocks despite the earnings reports that are being posted. It's crazy.
    Last edited by LoebsPeugot208; 11-02-2016 at 11:57 PM.

  54. #54

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    ^ ergo a good time to buy tech?
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    Given that tech is often subject to rapid obsolcence, and recessions can lead to undervaluation, the risk is that your tech shares will drop below cost during a recession and then become obsolete before a recovery has the chance to bout up the share price. In comparison, a tech company destined for obsolcence can still hit new highs during a growth phase. As they say, a tide raises all ships ...



    "Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett
    Last edited by KC; 12-02-2016 at 08:11 AM.

  56. #56

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    ^Indeed.

    Some companies that are heavily future leaning are good buys, the Googles and FBs that are in large research mode and investing heavily in really advanced tech tend to be the better options. Go-pros and the like would be bad buys. Don't consider this tech investment advice as it's a very different world from more slow movers like banks, mining, energy companies, etc.

    Oil bounced again, seems the desperation to grab some profits caused a slight upswing of about 12% or so. With no change in fundamentals though when does the selling start up again? Monday may not be a fun day unless something interesting happens over the weekend.

    Though Russia threatening to shoot an asteroid with a nuke may rattle some chains. Pretty sure it's not for scientific or earth protection research but just a way to test a nuke and **** off the U.S. War is good for oil prices... Blergh.

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    Oil prices may rise depending on agreement between Venezuela and non and member of OPEC because Venezuela is on the brink of total economic collapse
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  58. #58

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    Quote Originally Posted by jagators63 View Post
    Oil prices may rise depending on agreement between Venezuela and non and member of OPEC because Venezuela is on the brink of total economic collapse
    Storage everywhere is apparently near full, so the prognosis base on that one variable is a further dip in prices.

    Let's all pray, again, for government interference in the free markets.

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    ^^I think you fail to realize that OPEC wouldn't be sad if venezuela fell apart. If they collapse they will stop producing at nearly any meaningful level, guess who gets that market share? Venezuela also has the problem of heavy oil that they mix with lighter crude in order to sell it. They get that crude from the U.S. If they stop producing as much they also stop using less light crude. Net effect is that someone grabs market share and prices don't shift by the huge margins we all would love to see. That also means that someone is taking less crude out of storage and moving inventory (which costs money to do further freezing capital in place) and thus further exacerbating the storage dilemma that KC pointed out.

    If SA puts more troops on the ground that costs more, thus pump more. Russia has threatened war (starting to sound like best korea they are) if Arab nations get involved in Syria with boots on the ground, moar oil! Small scale skirmishes result in more oil being pumped to pay for them but large movements burn it all jacking prices.

    Some outcomes are that Russia wanting to nuke an asteroid (something something start/salt violations) causes further sanctions and there is economy totally collapses and they cease producing. Conversely the sanctions cause enough economic pressure to induce revolution/rebellion against current leadership and Kasparov gets his shot at a presidency. Additionally the sanctions just cause all out war (oil sky rockets because of everyone using it to power machines of death). Finally they become mired (again) in the middle east (and have their modern enduring freedom) and spend money they don't have but have no exit strategy because they don't want to look weak in the face of OPEC nations and NATO resulting in economic ruin.

    There are so many market forces that everyone is trying to account for and any one event isn't going to make the market better, but likely could make it much worse given the bear market state. People are looking for that positive feedback loop of negativity to further tank the market.

    I still think we could see ~$20 oil if everyone gets really panicky and china wigs, and someone does something really stupid. There is a pretty high amount of market fear and everyone is waiting to jump ship at the first sign of trouble. It's that "itchy trigger finger" problem.

    It's ugly. This game of chicken continues.

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    this link tells you why Venezuela is now world's worst economy


    http://money.cnn.com/2015/02/20/news...omy-inflation/
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    The article is a year old. Venezuela doing any better since?

  62. #62

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    Rumours of a Russia-OOEC meeting sometime.... I wonder if Russia might ever consider joining OPEC or vice versa.


    I'm back. Found this...


    OPEC has sought Russian cooperation on oil output levels in the past, offers that Russia has thus far declined.

    Most recently, Saudi Arabia has dangled the prospect of real oil production cutbacks in front of Russia in exchange for Russia dropping its support for Syrian President Bashar al-Assad. “If oil can serve to bring peace in Syria, I don’t see how Saudi Arabia would back away from trying to reach a deal,” a Saudi diplomat told The New York Times.

    http://oilprice.com/Energy/Crude-Oil...With-OPEC.html
    Last edited by KC; 15-02-2016 at 09:58 PM.

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    Watch oil tank further this upcoming week (my prediction). Storage is reaching dangerously high levels.

  64. #64

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    opec and russia have talked of collaboration which caused a market spike and then realization that nothing was happening and a quick sloughing off of gains.

    Even if they agree to stop pumping more they are all still pumping too much given storage and usage. More storage is needed and more usage is needed along with a drop in production. Storage is needed to absorb price and production shocks.

    Storage is ugly though.

  65. #65

  66. #66

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    Quote Originally Posted by LoebsPeugot208 View Post
    Cheaters get rewarded in the short term. After their resources are depleted, they may wish that they held back on production.

  67. #67

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    Husky thinks $30:

    http://www.bnn.ca/News/2016/2/26/Hus...il-prices.aspx

    Interesting article, the price used has a huge impact on financial statements, as downgrades in price can lead to impairments of oil field assets. Its perhaps not surprising that companies with worse credit ratings will sometimes have the highest oil price expectations.

    Husky Energy’s fourth-quarter earnings release on Friday included an oil price assumption for 2016 that is far lower than just about every one of its peers. The Calgary-based oil producing and refining giant plans to balance its cash flow with spending at West Texas Intermediate prices of no more than US$30 per barrel for the rest of this year.

    Canada’s largest oil and gas producer, Suncor Energy, is using US$39 per barrel as a comparable figure for its budgeting this year. For its part, Cenovus Energy is using US$49 as its planning figure for WTI crude. Governments have also been paring their price assumptions. This week alone, Ottawa lowered its average WTI forecast for 2016 to US$40 per barrel, while Alberta is basing its planning on crude at US$45 per barrel.

  68. #68

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    From 2009...

    Moahunter nailed it back then.

    Oil at $20 bbl

    http://www.connect2edmonton.ca/forum...ad.php?t=13667




    ~

  69. #69

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    $30/barrel will keep the 'hogs' but kill the 'dogs'. It will be 30s until these guys in the US start going belly up. Fraklog is the wildcard

    U.S. shale’s resiliency

    LeBlanc, who noted that U.S. oil production could have held flat at $43, emphasized the “hogs and dogs” in U.S. shale. Hogs are the high productivity wells, while dogs are higher cost and lower productivity. “There’s a small number of good wells, and a large number of bad wells. You’re always running up a down escalator,” LeBlanc said, to describe the need for continuous investment to sustain shale oil production.



    According to LeBlanc, “In 2015, dropping from $100 per barrel to $50 per barrel was enough to slow the U.S. shale growth juggernaut. But it wasn’t enough, and now we need to eliminate barrels. We think that $30 per barrel does the trick.”

    Roger Diwan said, “Prices have to be low enough to impact the cash available to a company. We calculate that there have been $2 trillion in capex cuts already—although about 40 percent of that is because of lower production costs.” He added: “Right now we are seeing the holy trinity of low cost, cash suffocation, and the reactivity of the barrel. High cost producer or wells in the world are starting to be under real stress, and the real question is how fast we see these wells being taken down, being capped.”

    However, he noted that these volumes are “invisible,” creating a lag between when these volume are taken offline, and when the market reacts to their removal.

    http://energyfuse.org/ihs-analysts-s...-of-the-cycle/
    Last edited by Safir; 26-02-2016 at 03:41 PM.

  70. #70

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    Quote Originally Posted by Safir View Post
    $30/barrel will keep the 'hogs' but kill the 'dogs'. It will be 30s until these guys in the US start going belly up. Fraklog is the wildcard

    U.S. shale’s resiliency

    LeBlanc, who noted that U.S. oil production could have held flat at $43, emphasized the “hogs and dogs” in U.S. shale. Hogs are the high productivity wells, while dogs are higher cost and lower productivity. “There’s a small number of good wells, and a large number of bad wells. You’re always running up a down escalator,” LeBlanc said, to describe the need for continuous investment to sustain shale oil production.



    According to LeBlanc, “In 2015, dropping from $100 per barrel to $50 per barrel was enough to slow the U.S. shale growth juggernaut. But it wasn’t enough, and now we need to eliminate barrels. We think that $30 per barrel does the trick.”

    Roger Diwan said, “Prices have to be low enough to impact the cash available to a company. We calculate that there have been $2 trillion in capex cuts already—although about 40 percent of that is because of lower production costs.” He added: “Right now we are seeing the holy trinity of low cost, cash suffocation, and the reactivity of the barrel. High cost producer or wells in the world are starting to be under real stress, and the real question is how fast we see these wells being taken down, being capped.”

    However, he noted that these volumes are “invisible,” creating a lag between when these volume are taken offline, and when the market reacts to their removal.

    http://energyfuse.org/ihs-analysts-s...-of-the-cycle/
    I'd say they are leaving out the third order consequences.

    1st was less new investment and financing, cost cutting and halting more costly expansions,

    2nd was/is using up cash reserves, survival mode on cash flow issues, and asset sales where possible, etc.

    3rd I'd say is bankruptcy and bankruptcy protection which leads to continued production and reserve liquidation - which I figure can bring supply back onto the market under new owners

  71. #71

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    Quote Originally Posted by Cyborne View Post
    Well ,With oil prices still down more than 40% since last June and the Organization for Economic Co-operation and Development downgrading global growth forecasts, many are wondering where oil prices will be in 2016. While predictions for oil at $20.00 per barrel seem a little too bearish, a return of oil to $100.00 a barrel in 2016 might be a little too bullish.When it comes to an oil price forecast in 2016, $65.00 may be the new $85.00.

    what's your take on these guys????????
    Don't trust anyones predictions. OPEC said they were going to try an output freeze.

    Russia and Saudi Arabia both are pumping more now than when those talks started.

    Iran openly mocked them.

    Demand dropped by 600,000 bbls (I think, maybe it was 200,000 I am sure I saw it on reuters so if you're wondering check there?)

    We have found the bottom, but haven't found growth or stability in the market. China is still having problems and growth in Europe (or lack there-of) isn't helping.

    Though China is going on a buying spree of foreign assets to the tune of about 85 billion so far this year, more than half of all of last year. So there is some serious movement going on there. But that may be a response to fears in the value of the currency and investors (especially large institutional ones) being locked into the home market with china's gov crack down on money outflows and "safe havening" and corruption, etc. This could be a sign of a few conflicting things. But not a lot of them are necessarily good for the oil valuation prospects in the short term and chinas consumption of it.

    Lots of turmoil to contend with (all puns aside).

  72. #72

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    Quote Originally Posted by JayBee View Post
    Conditionally, if Trump becomes president, I predict he gives it away for free to U.S. toddlers of certain backgrounds in starter packs, like "baby boxes". So, zero?

    But I'll go with $26 USD for WTI as the 2016 market bottom.
    Quote Originally Posted by Drumbones View Post
    Oil down another $1.91 to $26.55 per barrel today. $3 drop in 2 days
    Quote Originally Posted by LoebsPeugot208 View Post
    Oil dropped to 26.33 up to 27.18 now. Tumultuous commodity and stock markets my gawd.
    Quote Originally Posted by LoebsPeugot208 View Post
    Seems it actually hit 26.21 lower than I saw in late night trading. But back up to 27.50 right now.

    I am surprised at how negative everyone is reacting to oil and how close oil is tying into the overall picture of the market. China I get as a concern but the slamming of tech stocks despite the earnings reports that are being posted. It's crazy.
    Hang on a second here, I know the year's not over yet, but am I actually winning one of these prediction things?

    (Now I've gone and jinxed it with 9 months to go...)
    Let's make Edmonton better.

  73. #73

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    ^ well done! Dave was at $25, and most other calls were around $20. Yeah, now you have 9 months of free bragging rights...enjoy it!

  74. #74

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    ^ Thanks , but we'll see if there isn't another storm ahead.
    Let's make Edmonton better.

  75. #75

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    Finally some good news:



    Oil jumps as OPEC reaches deal to limit output at meeting in Algiers

    OPEC agreed to cut production for the first time in eight years, according to a delegate briefed on the matter, sending oil prices more than 6 percent higher as Saudi Arabia and Iran wrong-footed traders who expected a continuation of the pump-at-will policy the group adopted in 2014.


    http://edmontonjournal.com/business/...ing-in-algiers
    "The man who does not read has no advantage over the man who cannot read." –Mark Twain

  76. #76
    C2E SME
    Join Date
    Mar 2007
    Location
    Sherwood Park, AB
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    10,409

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    It's all the NDP's fault!
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

  77. #77

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    lol.
    Let's make Edmonton better.

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