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Old 11-18-2015, 04:26 PM   #541
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Maybe the military operations they're doing in Yemen is getting expensive. Heard they were buying a lot of missiles from US.

Or maybe they fear ISIL will overthrow them.
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Old 12-02-2015, 10:50 AM   #542
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I figured I would add this since it backs up my conspiracy theory on the oil price decline... Just saw this article:

GERMAN INTEL SEES RISK IN SAUDI PRINCE'S THIRST FOR POWER

News from The Associated Press

From the article:

"BERLIN (AP) -- Germany's foreign intelligence agency believes Saudi Arabia's ambitious defense minister could endanger the Gulf kingdom's ties with regional allies by attempting to cement his place in the royal succession, according to a memo released Wednesday."

"It is unusual for the BND spy agency to publicly release such a blunt assessment on a country that is considered an ally of the West. Germany has long-standing political and economic ties with Saudi Arabia."

...

"In addition to his role as deputy crown prince and defense minister, Mohammed bin Salman also oversees the country's top economic council and Saudi oil policy."

...

"Washington-based think tank The Brookings Institution published an essay in September that said the prince's "unbridled ambition has alienated many of his fellow princes," adding that "he has a reputation for arrogance and ruthlessness.""
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Old 12-02-2015, 11:06 AM   #543
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If what I am parroting from reading is true, oil could be in trouble from more than Saudi's oil dump long term. Suncor can extract tar oil for under $30 a barrel now and there is over a hundred years supply of that stuff. Plus China has found big shale oil supplies and are starting to use US technology to extract it at economical prices. US producers are also lowering extraction costs quickly in a very short period of time. Who knows, but supply doesn't appear to be a near term problem. And I assume Libya and Iran still aren't getting much out to market like they were back in the day.


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Old 12-02-2015, 11:13 AM   #544
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If what I am parroting from reading is true, oil could be in trouble from more than Saudi's oil dump long term. Suncor can extract tar oil for under $30 a barrel now and there is over a hundred years supply of that stuff. Plus China has found big shale oil supplies and are starting to use US technology to extract it at economical prices. US producers are also lowering extraction costs quickly in a very short period of time. Who knows, but supply doesn't appear to be a near term problem. And I assume Libya and Iran still aren't getting much out to market like they were back in the day.


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Could be. My expectation is that the technology will keep improving, making extracting oil more cost efficient and adding more supply. My only bet so far is on the midstream sector which is used to transport the oil around in the US where its needed.

So far lower oil price has resulted in more demand, which in turn means more demand for midstream. Right now midstream is being correlated to oil price, but I imagine that will fade over time. Historically midstream has not been so 1 to 1 correlated with oil.

I've been thinking about buying into the downstream (marathon petroleum) as low oil price is great for them.
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Old 12-02-2015, 11:31 AM   #545
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Could be. My expectation is that the technology will keep improving, making extracting oil more cost efficient and adding more supply. My only bet so far is on the midstream sector which is used to transport the oil around in the US where its needed.

So far lower oil price has resulted in more demand, which in turn means more demand for midstream. Right now midstream is being correlated to oil price, but I imagine that will fade over time. Historically midstream has not been so 1 to 1 correlated with oil.

I've been thinking about buying into the downstream (marathon petroleum) as low oil price is great for them.
I think I would wait until crude futures are in the low $30's before I would invest in any energy-related stocks. That would also be at or after the time many mid-tier, highly leveraged producers are bankrupt or have sold off their assets. I am talking U.S. companies here only.

The best bets at that time may be the large integrated companies (ExxonMobil, Chevron. etc).

The top midstream companies will be sufficiently beat up by then and will have been forced to lower fees for pipeline deliveries. The best of the breed are Enterprise, Magellan Midstream, etc.
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Old 12-03-2015, 12:41 AM   #546
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Read another good article today about the oil crisis.

Oil speculators risk 'short squeeze' if impulsive Saudi Prince throws OPEC surprise - Telegraph

"Hedge funds have taken their bets. The market is convinced that Saudi Arabia will ignore the revolt within OPEC at a potentially explosive meeting on Friday, continuing to flood the global markets with excess oil."

...

"They are at the mercy of opaque palace politics in Riyadh that few understand. Helima Croft, a former analyst for the US Central Intelligence Agency and now at RBC Capital Markets, says the only man who now matters is the deputy crown prince, Mohammed bin Salman."

'The headstrong 30-year-old has amassed all the power as minister of defence, chairman of Aramco and head of the Kingdom's top economic council, much to the annoyance of the old guard. "He is running everything and it comes down to whether he thinks Saudi Arabia can take the pain for another year," she said."
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Old 12-03-2015, 09:23 AM   #547
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The best of the breed are Enterprise, Magellan Midstream, etc.
Agreed, and I might add Spectra (SEP) to that list for gas. My MLP holdings are almost entirely comprised of these three. I've whittled down/eliminated a couple of other ones in the past couple of years like BWP, and some PAA.
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Old 12-03-2015, 02:35 PM   #548
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My guess is the OPEC meeting tomorrow doesn't change anything and output levels stay as is another year.

I expect oil to keep going down in 2016. Maybe even getting to $20 like Goldman Sachs predicted.

Maybe in 2017 it will start going back up again. It'll go up eventually as oil reliant countries slip into chaos (your already seeing it with venezuela, brazil, iraq, etc). I believe around $1.5 trillion in oil capex has been canceled already. When the correction comes it could be very violent... I've read predictions that it could get up to $200 if the correction is violent enough.

Maybe that would be the impetus needed by the next president to want energy independence, which we could have, provided we don't let other countries essential engage in "dumping".

Shale was one of the bright spots of the economy providing jobs.
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Old 12-03-2015, 02:46 PM   #549
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Perhaps the guvment needs to increase the depletion allowance? We need to do something to help out the suffering oil companies.

I get the feeling that the technology of oil production (and to a lesser extent, energy production in general) has changed the economic model that OPEC used to manage prices and production. There are enough additional independent (from OPEC) producers that can start producing when oil prices go up. Low oil prices may shut them down and hurt them financially. But when oil prices go back up, with some time lag, they can start producing again. Additional sources of oil and other energy tends to loosen the grip that OPEC has had in the past.
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Old 12-03-2015, 04:28 PM   #550
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Sheesh! If oil gets any lower, I will have to turn off the electric motor system in my hybrid. Otherwise I will never break even.

By the way, what ever happened to those folks screaming that the oil companies can charge us whatever they want because we have to pay it?
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Old 12-03-2015, 05:45 PM   #551
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I used to like oil

but I don't anymore.

Ha
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Old 12-04-2015, 07:51 AM   #552
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I dropped my shares on Total a few days go. Reasonable profit made, nothing spectacular.

In my individual portfolio there is no more oil to be found now, and not planning on every owning it again. Don't trust the longterm (10 - 20 years) dynamics.
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Old 12-04-2015, 12:45 PM   #553
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From what I understand OPEC has decided to raise output... lol

Hopefully we will see some big bankruptcies going on during the election. I guess as long as its bad for Russia the US is cool with it.
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Old 12-04-2015, 01:01 PM   #554
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If you look at the price to forward-earnings (next 12 months) ratio, energy sector ETF is the highest (32.4) compared to the next highest consumer staples ETF (20.1). It's got plenty of scope to go down further. I know energy does not equate to oil, but still ...

Yahoo!
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Old 12-07-2015, 11:09 AM   #555
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Good lord. What happened today? Everything in oil is down huge.

AMLP is down 8%...

I actually spent the weekend listening to the Q-1 conf calls for more constituents in the AMLP index this weekend and everything is fine. The companies are profitable, they are growing, and the dividends are covered by cash flow.

Jesus, even MPC, a downstream company which benefits from cheap oil is down 4%. What kind of logic is that?
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Old 12-07-2015, 11:18 AM   #556
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Good lord. What happened today? Everything in oil is down huge.

AMLP is down 8%...

I actually spent the weekend listening to the Q-1 conf calls for more constituents in the AMLP index this weekend and everything is fine. The companies are profitable, they are growing, and the dividends are covered by cash flow.

Jesus, even MPC, a downstream company which benefits from cheap oil is down 4%. What kind of logic is that?
The whole market is down, and oil is not in favor.

Plus, fund mangers are pushing equities down so they can buy them back cheaper to make a profit this quarter and set themselves up for next year (this is all speculation by me)
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Old 12-07-2015, 01:37 PM   #557
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Still have my crazy limit order in for 500 shares of XOM @ $55.09...during the last mini crash it got within $10, maybe a little more panic will get it there? 😏


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Old 12-07-2015, 01:52 PM   #558
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Still have my crazy limit order in for 500 shares of XOM @ $55.09...during the last mini crash it got within $10, maybe a little more panic will get it there?


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My trouble is every time something hits an entry point for me, I immediately lower my entry point..I remember a few weeks ago if KMI-A get to $40 I will buy some... Now under $34 and I am still watching...Maybe at $30 now.


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Old 12-07-2015, 03:57 PM   #559
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I suspect the highly leveraged nature of lots of the production forces pump at any price. Logic isn't really driving the train I think . But then... People buying a car for the next 3-7 years because of today's gas price doesn't make sense either.

I've learned the hard way to avoid heavily leveraged companies as the ones with less debt tend to survive longer in a protracted downturn.

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Old 12-07-2015, 04:44 PM   #560
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I suspect the highly leveraged nature of lots of the production forces pump at any price.
Not really, many operators have shut high cost wells in. And high cost wells are typically those with low production volumes. U.S, production is pretty steady and has dropped about 100,000 bpd in the last few months. we still need to import about 3 million bpd to meet internal demand on a steady state basis.

What's going on in the U.S. is the curtailment of drilling new wells since that is a high cost event.
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