Long term OIL

[BitcoinjunkieZ]

yeah guys.. just jump on that isis turkey train  who knows fracking wont destroy the planet and it all ends up with green electricity and cars are running aswell like this?
Could be possible.

[Oscoda]

yeah guys.. just jump on that isis turkey train  who knows fracking wont destroy the planet and it all ends up with green electricity and cars are running aswell like this?
Could be possible.

Remember if they cast out IS then the supply will be even more less. Causing a higher demand and the price may get a little boost.
The current oil price is too low, which makes it the perfect investment.

[criptix]

yeah guys.. just jump on that isis turkey train  who knows fracking wont destroy the planet and it all ends up with green electricity and cars are running aswell like this?
Could be possible.

Remember if they cast out IS then the supply will be even more less. Causing a higher demand and the price may get a little boost.
The current oil price is too low, which makes it the perfect investment.

No if crisis in syria and iraq is over you should expect an increase in supply because of easier production and transportation. But i doubt the ME will find peace soon.

Re shale oil production:

Its going down everywhere except a few exceptional locations since a year, most new projects are already canceled or on the border of.
We wont see further investment in shale oil when prices are that low - it is just uneconomical.

Shale oil is a dead end at this prices, even until 50$

[cameltoe]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

[Barnabe]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

They only consider the known reservoirs when they do their math. With the evolving drilling and exploration technologies, we could all die from global warming before running out of hydrocarbons ...

[GermanFoobla]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

Interesting and yes we've been told that and apparently paid too much for oil the last decade. Which makes you thing how media and so called experts do everything to earn a quick buck.
Quite sad if you ask me.

[angaper]

I also think the price of oil will rise toward the $50 level soon, but I don't think that the $100 level is likely to observe in a medium term.

[bryant.coleman]

Exactly what Im thinking, USA could reduce its supply and it does produce more then Saudi Arabia which is incredible to me but it also consumes a ton more.  So even if USA reduced, there is so much supply that other countries would just take up the slack and its possible price would not adjust.

The United States crude oil production will increase exponentially post-2017, after remaining at stable levels until then. New exploration and drilling projects are proceeding without much of a hiccup. If the oil remains at $35 to $40 levels, then the vast majority of the crude producers will be able to rake in good profits as well.

Conventional oil may give profits, but shale oil is much more expensive to drill so the increase may not be as big as you seem to think.

Yes. Shale oil is expensive to drill. But the expenses have come down considerably over the years. Off course, Aramco and Rosneft are able to produce crude oil with expenses as low as $2 per barrel. You won't get shale oil at those rates. Right now, one barrel of shale oil costs as much as $20 to $40, depending on the geology and the labor costs.

And I posted about the increase in 2017, after studying the various projects which are on the pipeline. Even if just 50% of these projects materialize, we are going to witness a huge increase in the shale oil output.

[deisik]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events

People are sheeple. They need someone to believe to (prophet or expert, you name it) without taking the pain of making their own decisions...

And someone to blame for if their "predictions" fail, lol

[deisik]

By the way, Warren Buffett bets on falling oil prices. His Berkshire Hathaway has bought about $1 billion worth of Phillips 66 (oil refinery) stock since the beginning of 2016 (oil refineries usually profit from falling oil prices):

Berkshire already owned 61.5 million shares of the oil refining giant, and has recently spent $964 million to buy an additional 12 million shares of the company. Buffett's firm now owns 14% of Phillips 66 shares, making it Bershire's sixth largest holding

The drop in prices means that Phillips can buy the crude it refines more cheaply. And it profits from the fact that the price of gas hasn't fallen as much as the price of oil has. Phillips' refining profits actually rose last year to $2.6 billion from $1.6 billion in 2014.

[botany]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

Interesting and yes we've been told that and apparently paid too much for oil the last decade. Which makes you thing how media and so called experts do everything to earn a quick buck.
Quite sad if you ask me.

The commodities derivatives market had a big role to play in the price shooting up in the last decade. The actual consumers of oil were the ones who had to pay the price. They played a more destructive role than OPEC did by forming a cartel.

[Barnabe]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

Interesting and yes we've been told that and apparently paid too much for oil the last decade. Which makes you thing how media and so called experts do everything to earn a quick buck.
Quite sad if you ask me.

The commodities derivatives market had a big role to play in the price shooting up in the last decade. The actual consumers of oil were the ones who had to pay the price. They played a more destructive role than OPEC did by forming a cartel.

I disagree, in these markets you can also short products, meaning that some people could also profit from a lower price. At best this kind of market can make little changes in oil price in very short term, but in long term only true consumption demand makes the price.

[tyz]

That is right! The consumption is pretty predictable. There is a constantly increase of need, caused by rising economic powers like india for instance. Even China will have an further increasing need of oil. I do not see oil prices below $25 as many do.

The amount of active rigs has reached the amount from 2009. The daily production in 2009 was 1/3 of the current production. If everything is going to get normalized then the production has to fall to this level again.

This is just with respect to US production, correct? The supply side is one aspect. What we are all seeing is the effect of the demand side, given that expected offtake from global growth is not happening.

Oil consumption is pretty steady and predictable on a global level. The current price issue is supply-side.

[botany]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

Interesting and yes we've been told that and apparently paid too much for oil the last decade. Which makes you thing how media and so called experts do everything to earn a quick buck.
Quite sad if you ask me.

The commodities derivatives market had a big role to play in the price shooting up in the last decade. The actual consumers of oil were the ones who had to pay the price. They played a more destructive role than OPEC did by forming a cartel.

I disagree, in these markets you can also short products, meaning that some people could also profit from a lower price. At best this kind of market can make little changes in oil price in very short term, but in long term only true consumption demand makes the price.

You can short products, but that isn't what was being done in the crude market. If you think physical markets determine the market price, look at this image (dated, but it conveys the message).

[STT]

THat is true but that figure is as a ratio to actual sales like the insurance industry relates to actual business.   Giant liabilities exist in insurance, unknown possibilities but will every business or house burn down in one year; no this is unlikely and these contracts however massive cannot change or determine the end price long term.  Short term yes, massive spikes are possible down or up just like the Insurance house of Lloyds almost went broke from some nasty global warming flooding, it all occurred at once.  Long term % moves are not so dramatic and the contract does not control the event occurring or not

http://www.independent.co.uk/news/uk/what-is-going-on-at-lloyds-and-will-it-go-bust-1616996.html

Only real supply and real purchases and genuine consumption not storage can set a long term price for oil.   The amount of oil in the ground within Iraq and Saudi and nearby countries is enough for 50 years at least.  
The low price now comes from low world growth, poverty in India even China means they dont even own engines or the money to transport these oil barrels over thousands of miles however cheap it is at source its not being used in those cases.
   If growth occurs, new consumers come into market.  You have a higher need for oil then the oil rig count can provide but even then the oil in the ground is a giant amount and its just a matter or setting up new production

Exactly what Im thinking, USA could reduce its supply and it does produce more then Saudi Arabia which is incredible to me but it also consumes a ton more.  So even if USA reduced, there is so much supply that other countries would just take up the slack and its possible price would not adjust.

The United States crude oil production will increase exponentially post-2017, after remaining at stable levels until then. New exploration and drilling projects are proceeding without much of a hiccup. If the oil remains at $35 to $40 levels, then the vast majority of the crude producers will be able to rake in good profits as well.

Conventional oil may give profits, but shale oil is much more expensive to drill so the increase may not be as big as you seem to think.

Yes. Shale oil is expensive to drill. But the expenses have come down considerably over the years. Off course, Aramco and Rosneft are able to produce crude oil with expenses as low as $2 per barrel. You won't get shale oil at those rates. Right now, one barrel of shale oil costs as much as $20 to $40, depending on the geology and the labor costs.

And I posted about the increase in 2017, after studying the various projects which are on the pipeline. Even if just 50% of these projects materialize, we are going to witness a huge increase in the shale oil output.

I wish Shale oil was this cheap, its production is short term then the giant oil fields of the middle east and more drilling is required to keep up production.  More fracturing of the rock and injection is needed to keep up oil and gas pressure.
I own the wrong things, unlike Buffet I take a share of the drilling not the refining.  He was smart, because theres no doubt the fuel will still be there but it wont be cheap or especially profitable at the drilling stage.  Right now I think royalty shares of the transportation is a smart bet and again Buffet owns the largest railway network asset.
On average shale I see at 40$ as staying alive, the middle east can probably go to $10 though even saudi arabia requires more profit to fund fiscal deficit like USA they spend too much as a government

[expert4knowledge]

I also think the price of oil will rise toward the $50 level soon, but I don't think that the $100 level is likely to observe in a medium term.

I strongly agree with you about this arising although previously I did not think like this!

[jaysabi]

For the past decades the experts were saying we will run out of oil soon then years and years later the price of oil is crashing because of overproduction? Comes to show you can never trust anyone that considers themselves an "expert" at predicting future events.

They only count reserves they know to exist (obviously you can't count oil you don't know exists), and saying we're going to run out of oil "soon" is relative. I don't know that anyone was saying soon as in we are on the verge of running out of oil so much as it was in the sense that we could estimate the current rate of consumption compared to proven reserves, and predict a window when oil would become scarce 50 or so years in the future. Relative to the millions of years it took for the Earth to produce that oil, that's "soon." But a lot has changed since then, including finding new reserves and advancement in technology that allowed accessing previously inaccessible oil in shale.

[jaysabi]

By the way, Warren Buffett bets on falling oil prices. His Berkshire Hathaway has bought about $1 billion worth of Phillips 66 (oil refinery) stock since the beginning of 2016 (oil refineries usually profit from falling oil prices):

Berkshire already owned 61.5 million shares of the oil refining giant, and has recently spent $964 million to buy an additional 12 million shares of the company. Buffett's firm now owns 14% of Phillips 66 shares, making it Bershire's sixth largest holding

The drop in prices means that Phillips can buy the crude it refines more cheaply. And it profits from the fact that the price of gas hasn't fallen as much as the price of oil has. Phillips' refining profits actually rose last year to $2.6 billion from $1.6 billion in 2014.

Berkshire isn't buying Phillips as a bet on falling oil prices, but on the fundamentals of the company, taking advantage of weakness in oil and general market pessimism during a down period in a cyclical industry. I think you're assigning a sinister motive that doesn't exist.

[botany]

By the way, Warren Buffett bets on falling oil prices. His Berkshire Hathaway has bought about $1 billion worth of Phillips 66 (oil refinery) stock since the beginning of 2016 (oil refineries usually profit from falling oil prices):

Berkshire already owned 61.5 million shares of the oil refining giant, and has recently spent $964 million to buy an additional 12 million shares of the company. Buffett's firm now owns 14% of Phillips 66 shares, making it Bershire's sixth largest holding

The drop in prices means that Phillips can buy the crude it refines more cheaply. And it profits from the fact that the price of gas hasn't fallen as much as the price of oil has. Phillips' refining profits actually rose last year to $2.6 billion from $1.6 billion in 2014.

Berkshire isn't buying Phillips as a bet on falling oil prices, but on the fundamentals of the company, taking advantage of weakness in oil and general market pessimism during a down period in a cyclical industry. I think you're assigning a sinister motive that doesn't exist.

I don't think there is a direct correlation between oil prices and refining margins.
Refining margins are getting squeezed, although crude prices have been benign.

http://www.bloomberg.com/news/articles/2016-01-19/oil-giants-start-losing-safety-net-as-refining-margins-squeezed

[deisik]

By the way, Warren Buffett bets on falling oil prices. His Berkshire Hathaway has bought about $1 billion worth of Phillips 66 (oil refinery) stock since the beginning of 2016 (oil refineries usually profit from falling oil prices):

Berkshire already owned 61.5 million shares of the oil refining giant, and has recently spent $964 million to buy an additional 12 million shares of the company. Buffett's firm now owns 14% of Phillips 66 shares, making it Bershire's sixth largest holding

The drop in prices means that Phillips can buy the crude it refines more cheaply. And it profits from the fact that the price of gas hasn't fallen as much as the price of oil has. Phillips' refining profits actually rose last year to $2.6 billion from $1.6 billion in 2014.

Berkshire isn't buying Phillips as a bet on falling oil prices, but on the fundamentals of the company, taking advantage of weakness in oil and general market pessimism during a down period in a cyclical industry. I think you're assigning a sinister motive that doesn't exist.

Obviously, you failed to read the article at the link I had provided (or even look at the headline), since if you did you would have known that it was not me who was allegedly assigning "a sinister motive that doesn't exist", lol...

The piece headline reads "Warren Buffett's $1 billion bet on oil"