Long term OIL

[criptix]

People talking about alternatives to oil arising due to oil falling in price don't have a clue that low oil prices beat the shit out of these alternatives

Long story short, there might not be tomorrow for oil

as that moron said?

Has [...] really got so mentally deranged?

the irony is really stronk in this one 

[NorrisK]

well totally agree with you as far as you short term prediction as Iran has a unique goal which it wants to accomplish by not cutting down the supply of oil in the global markets in spite of having a very low demand for oil globally, but I still doubt hour long term prediction I would say oil might touch $100 or even less before we find some efficient alternative to oil.

It is not that simple. Oil is a key economic commodity and the most important building block of the economies today at that. But if the economies are crashing, there is no use for such blocks. The problem, ultimately, is not in the supply side (over-supply or under-supply), it is the demand side that is collapsing (this is another reason why the prospects for oil alternatives are grim as much)...

Long story short, there might not be tomorrow for oil

Isn't that oversimplifying it? There is is still a demand for oil and it is still growing every year, the only thing is that it is not growing as fast as expected. Combined with the overproduction that is occuring now by the cartels to try to put brakes on the American oil production (they can't continue to invest if the prices stay low and need to shut down their digging platforms), is what causes the price decline.

Oil demand will likely rise again and is expected to happen already by the end of next year if I remember correct. I wouldn't buy in yet, as we are not near the bottom yet ofcourse.

[Fesatmas]

I think we'll see one last pump with oil because the prices are too tempting for speculators to not stack up with, pump, and then sell to idiots that think we'll still be running stuff with gas in the next decades. I can't wait to have clean cities, my city is now a clusterfuck full of cars vomiting smoke 24/7, running is suicidal in the big cities as you breathe all the trash. Death to oil.

There are too much oil at present, most storage places are full. So the price might drop or stable around current price before rise later.

[bryant.coleman]

well totally agree with you as far as you short term prediction as Iran has a unique goal which it wants to accomplish by not cutting down the supply of oil in the global markets in spite of having a very low demand for oil globally, but I still doubt hour long term prediction I would say oil might touch $100 or even less before we find some efficient alternative to oil.

Oil will never reach $100 again. OPEC has lost its control of the crude oil supplies, as they now produce less than 25% of the daily crude output. The United States is the largest producer of crude oil right now, and Russia is at #2 position. And drilling / oil extraction technology has progressed immensely, making it profitable to extract crude oil from shale formations even if the price is $20 per barrel.

[deisik]

well totally agree with you as far as you short term prediction as Iran has a unique goal which it wants to accomplish by not cutting down the supply of oil in the global markets in spite of having a very low demand for oil globally, but I still doubt hour long term prediction I would say oil might touch $100 or even less before we find some efficient alternative to oil.

It is not that simple. Oil is a key economic commodity and the most important building block of the economies today at that. But if the economies are crashing, there is no use for such blocks. The problem, ultimately, is not in the supply side (over-supply or under-supply), it is the demand side that is collapsing (this is another reason why the prospects for oil alternatives are grim as much)...

Long story short, there might not be tomorrow for oil

Isn't that oversimplifying it? There is is still a demand for oil and it is still growing every year, the only thing is that it is not growing as fast as expected

It has been growing till now. But when the world economy comes to a halt (in fact, it is already there), there will be no need for so much oil, and demand will collapse (what's left of it). It is not about overproduction per se, it is about over-everything, so the game is set to be over as well...

We have yet to see the pain (and blood in the streets)

[deisik]

Combined with the overproduction that is occuring now by the cartels to try to put brakes on the American oil production (they can't continue to invest if the prices stay low and need to shut down their digging platforms), is what causes the price decline

Why people continue to repeat that bullshit about Saudis (since they are the major miscreant in OPEC) crowding out the American oil production? Because the talking heads told you so in a half whisper? The US has been instigating waves of unrest across numerous countries through many years, and if they really wanted it, the KSA would disintegrate within months, if not weeks...

I'm not even talking about just curbing their oil production at a level the puppet-masters deem appropriate

[bryant.coleman]

There are too much oil at present, most storage places are full. So the price might drop or stable around current price before rise later.

The prices will continue to drop in the short term, before stabilizing at $30-35 levels by the second half of 2016. Most of the American shale oil producers will be able to operate at a profit, but their margins will be severely reduced. OPEC and Russia will not be affected, as their cost of production is low. However, high cost producers such as Venezuela, Canada and Brazil will be affected. 

[eternalgloom]

I don't see how oil could prices could rise to near $200 in the really long term.
I'm not really knowledgeable on this subject, but it would seem pretty counter-intuitive to me that demand for oil will continue to rise in the next 100 years or so.

[Gastotade]

I don't see how oil could prices could rise to near $200 in the really long term.
I'm not really knowledgeable on this subject, but it would seem pretty counter-intuitive to me that demand for oil will continue to rise in the next 100 years or so.

The oil price will rise due to general inflation and may be plus several percentage points. Most commodities rise long term.

[arthurminton]

well totally agree with you as far as you short term prediction as Iran has a unique goal which it wants to accomplish by not cutting down the supply of oil in the global markets in spite of having a very low demand for oil globally, but I still doubt hour long term prediction I would say oil might touch $100 or even less before we find some efficient alternative to oil.

It is not that simple. Oil is a key economic commodity and the most important building block of the economies today at that. But if the economies are crashing, there is no use for such blocks. The problem, ultimately, is not in the supply side (over-supply or under-supply), it is the demand side that is collapsing (this is another reason why the prospects for oil alternatives are grim as much)...

Long story short, there might not be tomorrow for oil

Isn't that oversimplifying it? There is is still a demand for oil and it is still growing every year, the only thing is that it is not growing as fast as expected

It has been growing till now. But when the world economy comes to a halt (in fact, it is already there), there will be no need for so much oil, and demand will collapse (what's left of it). It is not about overproduction per se, it is about over-everything, so the game is set to be over as well...

We have yet to see the pain (and blood in the streets)

I do not think that there will be blood on the streets, you major economies are coming to a halt because there investment and lending are not paying of, which are dependent on the economy of major countries ( if you understand what I am trying to say), everybody knows things are bad, the economies according to my understanding stand on three pillars demand , supply, and psychology
so there is no need to make things sound that eco economic is complex, and oil will again reach $100, dam sure about this.

[deisik]

Isn't that oversimplifying it? There is is still a demand for oil and it is still growing every year, the only thing is that it is not growing as fast as expected

It has been growing till now. But when the world economy comes to a halt (in fact, it is already there), there will be no need for so much oil, and demand will collapse (what's left of it). It is not about overproduction per se, it is about over-everything, so the game is set to be over as well...

We have yet to see the pain (and blood in the streets)

I do not think that there will be blood on the streets, you major economies are coming to a halt because there investment and lending are not paying of, which are dependent on the economy of major countries ( if you understand what I am trying to say), everybody knows things are bad, the economies according to my understanding stand on three pillars demand , supply, and psychology
so there is no need to make things sound that eco economic is complex, and oil will again reach $100, dam sure about this.

This is a one way ticket. To keep things running you need a constant flow of capital expenditures and investments in exploration and future production. The system can work by itself for some time only...

And then it breaks, and you are left with smithereens

[jaysabi]

I don't see how oil could prices could rise to near $200 in the really long term.
I'm not really knowledgeable on this subject, but it would seem pretty counter-intuitive to me that demand for oil will continue to rise in the next 100 years or so.

The US built its wealth largely on the back of cheap oil. All developing economies are counting on oil for the same thing. The cost efficiency of oil is very high, and that makes oil very attractive for developing economies. There are cleaner technologies out there for sure, but they are expensive to develop and implement, and even more so for developing economies. Oil is cheap and easy. It will continue to play a role globally for the foreseeable future.

[CryptyMike]

Oil will most likely go up over the next year, especially after a significantly low price. Also, cleaner technology is still too expensive, so oil is the way to go for many countries that are developing. I imagine going long in oil futures is hot right now.

Especially right now the price is at... $37ish vs even October when it was around $50 I believe.

[jaysabi]

Oil will most likely go up over the next year, especially after a significantly low price. Also, cleaner technology is still too expensive, so oil is the way to go for many countries that are developing. I imagine going long in oil futures is hot right now.

Especially right now the price is at... $37ish vs even October when it was around $50 I believe.

Not so fast. Low oil prices are here to stay in the immediate future. Global oil storage capacity is nearly topped out.

http://www.msn.com/en-us/money/markets/dow-jones-drops-on-crude-concerns/ar-BBo472u?li=AA9ZWtY&ocid=ansmsnmoney11

Crude oil lost 2.9% to close at $36.76 a barrel after American Petroleum Institute inventory data released Tuesday afternoon showed a stockpile build of 2.9 million barrels, far ahead of expectations. Today’s Energy Information Administration numbers showed a 2.6-million-barrel build vs. a drop of 5.9 million barrels last week.

Adding additional pressure were comments from Saudi Arabia’s energy minister that his country’s oil output strategy is “reliable” and won’t be changed.

Other wrinkles include rising U.S. oil production and the fact that global crude storage is quickly approaching capacity. Seasonally, stockpiles tend to drop at the end of the year and rise in the first few weeks of the New Year due to tax implications. A repeat in early 2016 could well push crude oil to fresh lows not seen since the early 2000s.

A tank topping in various areas of the energy market is looking increasingly likely heading into 2016. In a recent note to clients, Goldman Sachs said avoiding inventory top-out would require a slowdown of production, due to producer financial stress and the shutting of funding for producers with oil near $40. But that’s just not happening.

Their warning: Oil may need to fall to cash costs near $20 a barrel to force production cuts.

I previously thought oil reaching $20 was unfathomable, but the world is not using near the oil that is currently being produced, and producers are refusing to cut production. When the world tops out storage capacity, the price will fall dramatically. Only then will producers begin to change their tune about the rate of production.

[deisik]

The prices will continue to drop in the short term, before stabilizing at $30-35 levels by the second half of 2016. Most of the American shale oil producers will be able to operate at a profit, but their margins will be severely reduced

Many of the US shale oil producers are now turning into galvanized zombies that are running (or just walking, lol) on debt. They are no longer profitable, but unlike normal companies that would file for bankruptcy or just silently wind up their business in such circumstances (thereby giving in to the law of supply and demand), they are not slowing down their production but actually increasing it. Why? Because the only thing that an oil producer can do to pay the interest on that debt as the oil prices continue to fall is to pump and sell even more oil...

How long they can be "debt-driven" in this zombie mode remains to be seen, though

[jaysabi]

Wikipedia lists shale production costs as ranging from $95 to $25. That range is so large as not to be very useful, and I can't find many sources supporting the low end of that range. It seems likely that U.S. producers are currently producing at a loss or, at best, on razor thin profit margins. The coming quarters will reveal a lot of useful information from public U.S. producers about their intentions about production as they report financial results in this face of continued oil price declines.

[deisik]

Wikipedia lists shale production costs as ranging from $95 to $25. That range is so large as not to be very useful, and I can't find many sources supporting the low end of that range. It seems likely that U.S. producers are currently producing at a loss or, at best, on razor thin profit margins. The coming quarters will reveal a lot of useful information from public U.S. producers about their intentions about production as they report financial results in this face of continued oil price declines.

You should also take into account that many of them had hedged their future production when the prices were higher. In fact, they have been hedging all the way down to $40 and below...

You may want to look at the amount of oil put options traded

[jaysabi]

Wikipedia lists shale production costs as ranging from $95 to $25. That range is so large as not to be very useful, and I can't find many sources supporting the low end of that range. It seems likely that U.S. producers are currently producing at a loss or, at best, on razor thin profit margins. The coming quarters will reveal a lot of useful information from public U.S. producers about their intentions about production as they report financial results in this face of continued oil price declines.

You should also take into account that many of them had hedged their future production when the prices were higher. In fact, they have been hedging all the way down to $40 and below...

You may want to look at the amount of oil put options traded

I don't know of a way to distinguish between what is activity from energy producers and what is activity from energy traders and speculators in the oil futures market, so just looking at the trading data doesn't help me much. The only hard data I know is the financial information filed with the SEC each quarter. Most other data points seem to rely on a lot of conjecture.

[deisik]

I don't know of a way to distinguish between what is activity from energy producers and what is activity from energy traders and speculators in the oil futures market, so just looking at the trading data doesn't help me much. The only hard data I know is the financial information filed with the SEC each quarter. Most other data points seem to rely on a lot of conjecture.

I assume that speculators neither can nor want to make physical delivery, lol. They will have to sell those options long before expiry. Besides, the total majority of them are evidently trading the nearest months (hit and run tactics)...

So there should be a way to separate the wheat from the chaff, wtf

[mixan]

Oil has gone down since the summer but the price remained high where I am from and now just in the last month has it gone down. The price of the gas at the pumps are manipulated by the manufacturing baron's of these oil companies. They predict the price will stay this way for another week and then prices will slowly rise again. People are hoarding because of this. Gas prices have not been this low for over a decade here. See and learn what skepticism can do to bitcoin in this fashion as well.