I like Oil

[2B]

Aside...A March Forbes article
Itemizing The Oil Bust: 75,000 Layoffs And Counting - Forbes quoted the industry lay offs at nearly 75,000... I wonder what will happen to those remote areas that grew with new employees, new homes, and the families that moved to have the benefit of higher oil industry wages. How long will they be able to stay where they are without a steady income.

Houston is seeing a significant number of O&G job losses. Houston has been booming with the whole oil industry. I know that there have been a substantial number of layoffs but there's no sign of a real estate drop so far.

O&G has always been cyclical and this is just another one of those times. Those that have overextended will be punished. Except for my home value, I'm glad to be out of the game.

 

[Lakewood90712]

Bought (UCO) in at 6.55, sold at 8 just now. 22.14% before transaction fees. Might get back in if it drops, might not. I figure the quick profit covers my ETF expense ratios for the year, and then some.

Well done !

 

[Fermion]

So much for $20 oil.

How can the analysts be so wrong and still get airtime?

UCO at $10.25 btw.

 

[ziggy29]

Just a warning: If I get back in to an oil play, short the hell out of it. There is precedent for that.

 

[bld999]

Just a warning: If I get back in to an oil play, short the hell out of it. There is precedent for that.

Don't you just hate that feeling of being a human leading indicator?
I have felt it myself.

 

[Jack_Pine]

I just recently started following oil and the why's and predictions and such because of how it effects the value of our business. It makes the stock market seem like an exact science IMHO.

Th oil price predictions are stated so confidently and are all over the board from extreme to extreme. Makes it entertaining but not very informative.................

 

[imoldernu]

I found this NYT article on the "production" part of oil drilling to be fascinating.
The technology involved, is far beyond anything I had imagined,

http://www.nytimes.com/2015/05/12/business/energy-environment/drillers-answer-low-oil-prices-with-cost-saving-innovations.html?partner=MYWAY&ei=5065

Here's the headline, if you need to Google to get past the NYT paywall...
"Drillers Answer Low Oil Prices With Cost-Saving Innovations"

 

[dallas27]

Read today that barclay is expecting US oil supply to continue to outpace demand all year, pushing stored oil even further. Maybe we will see another big price dip before this is all said and done. If we do, i will absolutely buy into UCO again, that may be the trigger for congress to allow export.

We will see


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[explanade]

Heard on CNBC that there's a report of $76 a barrel.

By 2025.

 

[bld999]

Heard on CNBC that there's a report of $76 a barrel.

By 2025.

If anybody knows what happens ten years from now it would be cnbc.

 

[aja8888]

Heard on CNBC that there's a report of $76 a barrel.

By 2025.

Was that for Brent or WTI?

 

[explanade]

It wasn't CNBC's report, they were just citing it.

I don't recall which it was for. Why is there such a spread between Brent and WTI?

 

[Nemo2]

Why is there such a spread between Brent and WTI?

Brent vs. WTI

 

[Mulligan]

It wasn't CNBC's report, they were just citing it.

I don't recall which it was for. Why is there such a spread between Brent and WTI?

I THINK the reason I have read is oversupply of oil in US as crude is "stranded here" in its raw form. The spread does narrow from time to time though.
CNBC...I love it for some entertainment. Ever heard anyone make as big as deal of an "impending" quarter point rate hike? Heck I wouldn't consider wasting my time moving a CD for that!


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[Jack_Pine]

Our recent reports are saying 70 by late 2016. It really all depends on what the Saudis do.

 

[Totoro]

Starting to believe that there's a big chance much oil will never be extracted, the "stranded assets" problem. This due do falling renewables costs, efficiency measures and potential carbon taxes (or stopping subsidies). In addition to coal being the lowest cost fossil fuel.

Probably a big reason why the Saudis haven't scaled back yet, and won't. If there is a good chance you'll never pump up the oil in the future, you have every incentive to pump up and sell as much as you can today.

If in addition the shale sources keep lowering their production costs, well it seems the Oil age is past its peak (in terms of profits).

I'll probably ditch my last oil stock end of this year at evaluation time. Pretty sure oil has a long run to go, huge momentum and industrial base, heyday days however seem to be just about done for. Maybe one last price peak in the next five years?

No crystal ball, still it doesn't look so good.

 

[aja8888]

Starting to believe that there's a big chance much oil will never be extracted, the "stranded assets" problem. This due do falling renewables costs, efficiency measures and potential carbon taxes (or stopping subsidies). In addition to coal being the lowest cost fossil fuel.

Probably a big reason why the Saudis haven't scaled back yet, and won't. If there is a good chance you'll never pump up the oil in the future, you have every incentive to pump up and sell as much as you can today.

If in addition the shale sources keep lowering their production costs, well it seems the Oil age is past its peak (in terms of profits).

I'll probably ditch my last oil stock end of this year at evaluation time. Pretty sure oil has a long run to go, huge momentum and industrial base, heyday days however seem to be just about done for. Maybe one last price peak in the next five years?

No crystal ball, still it doesn't look so good.

One of the key events that has made oil production and futures pricing a bit more predictable is the ability to extract oil from existing reserves once thought unachievable at a profitable cost. No more is there talk of finding the next big oil field. Horizontal drilling and the ability to fracture the formation along the 1/2 to 1 mile run(s) has made old fields productive again. And in some cases, more productive than originally drilled.

Oil companies can bring on a new horizontal well in less tan 30 days (in Texas) and complete it and shut it in or choke it down to limit production. This allows tham the ability to keep the leasehold (through minimal production) and be able to "turn up" the output at any given moment. There is talk of the Saudi's reentering some of their older vertical wells and drilling horizontals to obtain the left behind oil.

What appears to be happening is that the newer production technologies have given producers the ability to drill/complete/shut in/produce at a defined rate and at any given moment. I suspect that this concept will aid in commodity price leveling over the future. All bets are off it there are wars or factors that disrupt worldwide production.

 

[brewer12345]

All bets are off it there are wars or factors that disrupt worldwide production.

This is the thing that is a bit spooky, IMO. Have been watching the events in the Mideast with interest. Hard to tell how much of it is feints, but the Saudis and the Iranians seem to be getting more aggressive with each other. The Iranians shooting at merchant ships in international waters and apparently seeking to break the Saudi blockade of Yemen is particularly worth watching. If Iran wishes to get nasty quickly, it would not be hard for them to make transit of the gulf of Aden pretty much impossible for merchant ships. They shot at a refined products tanker last week from sea. Shore based artillery or missiles would be even more effective. Blow up a tanker in the gulf and things will get interesting quickly.

 

[explanade]

Is there going to be any fallout from fracking?

I think there was a report of water contamination in PA and there have been a lot of earthquakes in TX.

Or is there so much money being made that any concerns about damaged properties or contamination will be swept away?

Surprised if there isn't litigation coming.

 

[brewer12345]

Is there going to be any fallout from fracking?

I think there was a report of water contamination in PA and there have been a lot of earthquakes in TX.

Or is there so much money being made that any concerns about damaged properties or contamination will be swept away?

Surprised if there isn't litigation coming.

All energy production has risks and costs. Think the Saudi stuff comes for free? Want a nuke plant near your house?

 

[haha]

This is the thing that is a bit spooky, IMO. Have been watching the events in the Mideast with interest. Hard to tell how much of it is feints, but the Saudis and the Iranians seem to be getting more aggressive with each other. The Iranians shooting at merchant ships in international waters and apparently seeking to break the Saudi blockade of Yemen is particularly worth watching. If Iran wishes to get nasty quickly, it would not be hard for them to make transit of the gulf of Aden pretty much impossible for merchant ships. They shot at a refined products tanker last week from sea. Shore based artillery or missiles would be even more effective. Blow up a tanker in the gulf and things will get interesting quickly.

This is as you say, the big question. The Gulf is full of US warships, yet the Iranians are shooting at crude tankers?

Somebody is playing loose here.

Ha

 

[haha]

All energy production has risks and costs. Think the Saudi stuff comes for free? Want a nuke plant near your house?

I think this is classic NIMBY. Just like San Francisco. Somebody pays for the strong controls on new residential building. But not the people who already own homes there. They benefit from it.

The extra costs are paid by the steep rents that non-homeowners pay, and the huge prices that new entrants to the homeownership rolls pay.

Ha

 

[brewer12345]

This is as you say, the big question. The Gulf is full of US warships, yet the Iranians are shooting at crude tankers?

Somebody is playing loose here.

Ha

Search me. They forced a container ship into an Iranian port on an extremely flimsy pretext and then shot at a refined products carrier in international waters. They keep firing warning shots at slow-moving [-]enormous bombs[/-] hydrocarbons tankers and it is only a matter of time before one blows up. I can only imagine what will happen to oil prices and tanker rates if that happens.

 

[aja8888]

Is there going to be any fallout from fracking?

I think there was a report of water contamination in PA and there have been a lot of earthquakes in TX.

Or is there so much money being made that any concerns about damaged properties or contamination will be swept away?

Surprised if there isn't litigation coming.

There never has been an EPA-verified case of groundwater contamination from fraccing. Now there have been above ground spills of frac water/crude oil and produced water in PA, and those have been dealt with and resolved, and are on a continuing basis. There are spills associated with oil and gas production, just like spills of other liquids from a wide variety of industries.

There are minor earthquakes happening in Oklahoma that have been studied to see if they may have been influenced by oil and gas activities, but no conclusive evidence has proven that so, at least to my knowledge.

Probably the most contaminated properties in the US are the result of industrial activities (Love Canal, hundreds of Superfund sites, spills from rail cars, etc, etc.). Not many from oil and gas activities in comparison.

Most significant Oil & Gas litigation is from outside the U.S. where legacy production got caught up in new environmental rules and counties came hunting for dollars from large oil companies. Try South America for starters.

 

[brewer12345]

I'd add that the more obvious dumb messes from the oil industry these days all seem to be from transporting the stuff on rail cars, especially the very light condensate.