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Old 06-10-2016, 08:27 PM   #1021
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Oil must have gotten ahead of itself. It finished above $50 earlier in the week. Then dropped and today the alert I got on my iPhone said increased rig count. So the oil companies are increasing production or something?
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Old 06-10-2016, 09:03 PM   #1022
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Oil must have gotten ahead of itself. It finished above $50 earlier in the week. Then dropped and today the alert I got on my iPhone said increased rig count. So the oil companies are increasing production or something?
U.S. rig count is an indicator of drilling activity. That really doesn't mean all new production. New wells are drilled for a variety of reasons with varying lead times. In simple terms:

New production can be drilled, but not brought to completion to "hold" a ground lease permit obtained up to 18 months ago.

New drilling can be for a re-completion of an existing well to try to obtain additional well life.

Leases can be drilled to replace played out wells to maintain existing levels of production. Oil companies have to do this to stay in business.

Exploratory wells are sometimes drilled to conduct tests to evaluate the extent of the pay zones.

There are also "workover" rigs used in the field to "fix" wells with production problems but they are not counted in the rig count.

Hope this helps.
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Old 06-10-2016, 09:22 PM   #1023
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Yeah it does.

But can oil going up in price stimulate these drilling activities?

Or are you saying a lot of this activity might have been planned awhile back, before they knew which way the oil price was going?
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Old 06-10-2016, 09:42 PM   #1024
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Yeah it does.

But can oil going up in price stimulate these drilling activities?

Or are you saying a lot of this activity might have been planned awhile back, before they knew which way the oil price was going?
Yes to both questions.

Oil is a worldwide commodity.

What drives oil sales is supply and demand. No one knows what the price of oil will be tomorrow or next week.

Oil companies MUST replace what they sell or they will go out of business. Any company that sells crude oil has to drill wells (or acquire other companies that have crude oil reserves) in order to stay even with sales. Since it takes months to years to obtain leases and permits to drill, they have a long lead time in front of them.

The oil price you hear from the talking heads on CNBC is the futures contract price bidding. It has nothing to do with current crude sales prices or production levels as they vary based on crude quality, location, inventory, hedged pricing, discounts, etc.

Since the business is so complex and convoluted, the only data point to decide on what's going on across the board, is rig count and futures pricing. Throw in the lack of intelligent/knowledgeable news reports and you have what you have, which is not much.
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Old 06-11-2016, 09:48 PM   #1025
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Right... that's partially why the price can vary so widely over years. Since it's a competitive arena being too early or too late can be catastrophic.

For me the only question is when oil will no longer be a primary driver of many parts of the economy. Despite large technical leaps in many areas I still think it's decades away from making big dents in oil use so... I put my 5-10 year hat on when looking at oil companies and believe that oil will probably become much more expensive before it goes away or become a lot cheaper... when... no idea. I've been "long" a few oil companies for over a year now and doing OK generally... not great but not bad. I suspect over the next 3-5 years they will do quite well... but who knows

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Old 06-12-2016, 01:13 AM   #1026
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One thing I heard peripherally related is that unemployment in Houston and other big Texas cities is still 3-4%, despite the oil price decline.
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Old 06-12-2016, 06:34 AM   #1027
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One thing I heard peripherally related is that unemployment in Houston and other big Texas cities is still 3-4%, despite the oil price decline.
Do you mean "because of the oil price decline?"

Yes, declining oil production based on drilling new wells and transportation construction (pipelines, terminals etc) has decimated the Houston-based companies. This is especially true of oilfield service companies like Halliburton, Weatherford, BJ services, etc. I personally know several people out of work for over a year now, and they are also off the unemployment insurance rolls by this time.
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Old 06-12-2016, 08:56 AM   #1028
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I mean in spite of it. That's still a very low rate.
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Old 06-12-2016, 09:15 AM   #1029
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I mean in spite of it. That's still a very low rate.
Those are only the ones that are on the UI rolls. Many are beyond and not counted in the "rate".
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Old 06-12-2016, 10:06 AM   #1030
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Right they're not counted if they're no longer "looking" for a new job.

It hasn't gotten that bleak that people have stopped looking for jobs has it?
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Old 06-12-2016, 10:11 AM   #1031
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Right they're not counted if they're no longer "looking" for a new job.

It hasn't gotten that bleak that people have stopped looking for jobs has it?
No, people are looking, but in the oil & gas industry, there are few new jobs or job openings due to vacated positions.

Most vacated positions are either filled internally with a job combination of duties or eliminated by contract work (where it fits).
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Old 06-12-2016, 10:16 AM   #1032
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Hmm, so does it feel like things have slowed down in Houston?

Are the restaurants and the malls still full?

Traffic still as bad?

Real estate still in demand or have prices leveled off?
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Old 06-12-2016, 10:22 AM   #1033
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Hmm, so does it feel like things have slowed down in Houston?

No, we have lots of lawn work this time of year.

Are the restaurants and the malls still full?

I don't go to malls, but Denny's was full this morning.

Traffic still as bad?

Not as bad as L.A. or Chicago, but still bad as the lawn guys are pulling trailers in the fast lanes. We have lots of water too.

Real estate still in demand or have prices leveled off?

The only homes I see that have dropped in price lately are the ones that were flooded twice in the last 30 days. Apartment rents are on the rise and RVs are moving well.
Answers above.
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Old 07-12-2016, 10:50 AM   #1034
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If SDLP goes back down under $5, i'm buying. Of course if I buy then it's guaranteed to plummet.
I bought and not only did it not plummet, it's on fire!

It has broken thru the $6 upper resistance level so it could now go much higher.
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Old 07-12-2016, 09:31 PM   #1035
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I made an absolute killing in oil in a one day trade today. Bought TNK (oil shipper) yesterday and it jumped 10% in one day. Only one small detail...I bought 500 shares....at 2.88... So Im up a little over $100.... Pretty weak, I know. But I was bored yesterday and it was something to do with play dough money.


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Old 07-17-2016, 06:22 AM   #1036
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Looking at ETE as a potential trade. Why would a pipeline ETF get hammered in relation to oil prices. Is their transport revenue tied to the cost of crude?



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I like Oil
Old 08-01-2016, 12:22 PM   #1037
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I like Oil

Oil back below 40, bear market again....22% off previous high


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Old 08-01-2016, 12:36 PM   #1038
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Oil back below 40, bear market again....22% off previous high


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Yep, summer driving season is over so people are driving less. Focus is now on heating oil (No. 1 & 2).
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Old 08-01-2016, 01:03 PM   #1039
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Well I threw in the towel on oil a while back (whenever last post was made on thread) and it looks like things have gotten worse. In hindsight I think I was too bullish based on the US, not taking enough into account how bad the test of the world was doing. Now, I wonder if we might be going into a recession soon.
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Old 08-01-2016, 01:29 PM   #1040
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I sold my XLE this morning. So it must be a bottom now.
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