I like Oil

[hesperus]

Just take the yield and run. Who knows....

that may be the best game around for awhile

 

[VFK57]

Is oil price at the bottom already? Some economists think it is while other point out to much lower price due to very possible recession in 2016.

 

[Running_Man]

Is oil price at the bottom already? Some economists think it is while other point out to much lower price due to very possible recession in 2016.

Oil is definitely putting in at least a short term bottom based on how the market is reacting, whether it is a final bottom who knows? As for why there is lower prices it seems clear to me the economy overall is on a treadmill of lower usage of labor or materials to purchase items which requires lower cost processes. Optimization of shipping production and retail is increasing all the time. Viewing the usage of human labor as waste in the production of goods is leading to lower and lower usage of human capital and ever increasing levels of technology and mechanical labor. This is also true at production sites of new oil drill sites as many of these sites have been made far more productive than prior drill sites lowering the cost per barrel and increasing production, price is usually set at the margin.

Robots are coming for your job: Amazon, McDonald’s and the next wave of dangerous capitalist “disruption” - Salon.com

Oil Companies Tap New Technologies to Lower Production Costs - WSJ

This has been seen in all the oil calls as each company continues to expect the others to cut production while each company is touting it's own new highly efficient means of production that will let it lift production 4-8 percent with less labor. Overall the cut in interest has made giant leaps in technology affordable for companies.

 

[Mulligan]

Oil is definitely putting in at least a short term bottom based on how the market is reacting, whether it is a final bottom who knows? As for why there is lower prices it seems clear to me the economy overall is on a treadmill of lower usage of labor or materials to purchase items which requires lower cost processes. Optimization of shipping production and retail is increasing all the time. Viewing the usage of human labor as waste in the production of goods is leading to lower and lower usage of human capital and ever increasing levels of technology and mechanical labor. This is also true at production sites of new oil drill sites as many of these sites have been made far more productive than prior drill sites lowering the cost per barrel and increasing production, price is usually set at the margin.



Robots are coming for your job: Amazon, McDonald’s and the next wave of dangerous capitalist “disruption” - Salon.com



Oil Companies Tap New Technologies to Lower Production Costs - WSJ



This has been seen in all the oil calls as each company continues to expect the others to cut production while each company is touting it's own new highly efficient means of production that will let it lift production 4-8 percent with less labor. Overall the cut in interest has made giant leaps in technology affordable for companies.

And it has happened quickly hasnt it.... It wasnt a couple years ago Canadian tar sands were quoted production costs north of $70 a barrel. Suncor has it under $30 already... "The best cure for low oil prices is low oil prices" is still probably true. But the mechanisms for this occurring has changed dramatically. And all the while Exxon stock just acts like this is all just a minor blip. Crazy stuff...


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[aja8888]

Is oil price at the bottom already? Some economists think it is while other point out to much lower price due to very possible recession in 2016.

I just returned from North Dakota last Friday working on a bankrupt oil service company (workout and possible sale candidate). Everything in the Bakken is at a standstill. The only oilfield activity is related to servicing existing production that is not shut in. It's bleak.

Oil sold out of the area was ranging from $20 - 30 BBL as transportation costs are on top of that.

So has oil bottomed? As RM said above, probably for the short term. Since all oilfield costs are coming down (including drilling, which is not happening), there may be better days ahead as labor costs are coming in. Given what is going on in the industry on a worldwide basis, no way would I make a call on the price of oil next year.

 

[ESRwannabe]

Is oil price at the bottom already? Some economists think it is while other point out to much lower price due to very possible recession in 2016.

I think we will see the bottom for oil in 2016. If this keeps going on much longer we will see some countries go down hard (Venezuela, Brazil, Iraq, etc).

The bottom may be in for AMLP (mlp etf). Its up again today, 4.45% right now. Its been up around 5% the last two days as well. Might have a 15% gain in three days. The dividend yield has now fallen to 10%.

 

[NW-Bound]

Bloomberg has an article saying some investors are either fearing or betting that oil may even drop to $15/barrel.

Oh boy! Will we again see gasoline cheaper than bottled water? This was outrageous, but true.

Extreme Oil Bears Bet on $25, $20 and Even $15 a Barrel in 2016 - Bloomberg Business

 

[explanade]

Heard oil was up like 9% this week.

 

[aja8888]

Heard oil was up like 9% this week.

Better top up before it goes higher.

 

[NW-Bound]

Having sold quite a bit of energy stocks earlier in the year, I started to buy them back.

Yesterday, I bought back OIH, an oil service ETF with constituents like Schlumberger and Halliburton.

Also wrote a cash-covered put on XLE. This latter ETF covering oil producers like Exxon and Chevron, I still have some shares, so only make a small option play.

 

[aja8888]

Here's a good article explaining the world's oil situation. It is really written to explain the recent lifting of the U.S. ban on selling crude oil worldwide, but the article does a good job pointing out the situation in detail.

Congress’ decision to lift the 40-year U.S. ban on crude oil exports reflects the same misinformed and distorted thinking that declares that the world’s highest cost producer–tight oil–can somehow also be the world’s swing producer.

The 1975 export ban was enacted because of the disastrous economic consequences of becoming dependent on imports following the peaking of U.S. oil production in 1970. Now that oil production is again close to peak levels, we have apparently forgotten that imports were the problem then and that we import twice as much today as in 1975.

Forbes Welcome

 

[Car-Guy]

Here's a good article explaining the world's oil situation. It is really written to explain the recent lifting of the U.S. ban on selling crude oil worldwide, but the article does a good job pointing out the situation in detail.



Forbes Welcome

Interesting article, thanks for sharing. Investment or gamble, I'm still buying big oil....

 

[OrcasIslandBound]

A couple of weeks back, we bought about $10k of VDE, an index of mostly oil related stocks. Our thinking was that the oil stocks had been hammered and by now should be in a position to go up. We're down 5% so far, but I'll let you know in a couple of years if this was a good move or not.

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[Hamlet]

Hey, Chipotle has done a great job, no doubt, but you're still comparing growth rates off of bases that are an order of magnitude different. Lots of companies grow strong out of the gate. Will Chipolte still be doing great in 10 years? Or will it fall by the wayside like a large percentage or restaurant companies do?

How big do you think Chipotle is going to get? That PE of 55 is going to take a massive amount of fast growth to justify. Although a little less will be needed tomorrow when the stock opens.

I'm not sure comparing book values of a company that funds massive dividends and buybacks and one that still mostly building out new restaurants really makes much sense. Would you like MCD more if it had kept all that cash sitting around?

On the plus side, CMG just authorized expanding their stock buyback, so they will spend $200 million of that book value reducing their share count by 1%.

I think I'll stick with MCD. We'll see how things look in 2025.

Sometimes looking back can make you feel smart. Money not lost is just as good as money made.

 

[Running_Man]

T Boone Pickens is just killing me! A year ago he predicted by end of 2015 oil would be 70-75. Today he says by the end of the year oil will be 70-75, he was only off by a year!! After stating that Oil then collapses in price. Now I do not pretend to know what the price of oil will be by year end, possible to be 75 also possible to be $15.00. This year is the year of major pain for oil and the related dependent companies if the price does not recover, to bank on a recovery is not a plan, it is wishful thinking. Remember that when you pick companies to invest in......

 

[petershk]

T Boone Pickens is just killing me! A year ago he predicted by end of 2015 oil would be 70-75. Today he says by the end of the year oil will be 70-75, he was only off by a year!! After stating that Oil then collapses in price. Now I do not pretend to know what the price of oil will be by year end, possible to be 75 also possible to be $15.00. This year is the year of major pain for oil and the related dependent companies if the price does not recover, to bank on a recovery is not a plan, it is wishful thinking. Remember that when you pick companies to invest in......

Yeah. I think Howard Marks said it best... no one has anything intelligent to say about the price of Oil... mostly because the things that impact that are so numerous and unpredictable that it's silly to try and say "it'll be $x by time period Y." It'll be somewhere between 0 and infinity by the end of the year .

What I DO think is that there is a reasonable probability that the world will continue to use more oil and that there will be less of it during that time for at least the next 10-20 years; and I think that the companies that can have some ability to profit from that ecosystem will return above average returns to their shareholders based on their price today (assuming they survive). How and when that happens... I have no idea and if it takes long enough... yes... being late/early is indistinguishable from being wrong. All investments are probable outcomes, right .

I simply think that the probability of that happening is slightly better than, for example, bonds returning higher than average returns... tech companies... consumer cyclicals, gold, etc. Relative to other opportunities I think oil companies in particular are reasonably cheap... so far they have just gotten cheaper.

 

[haha]

Yeah. I think Howard Marks said it best... no one has anything intelligent to say about the price of Oil... mostly because the things that impact that are so numerous and unpredictable that it's silly to try and say "it'll be $x by time period Y." It'll be somewhere between 0 and infinity by the end of the year .

What I DO think is that there is a reasonable probability that the world will continue to use more oil and that there will be less of it during that time for at least the next 10-20 years; and I think that the companies that can have some ability to profit from that ecosystem will return above average returns to their shareholders based on their price today (assuming they survive). How and when that happens... I have no idea and if it takes long enough... yes... being late/early is indistinguishable from being wrong. All investments are probable outcomes, right .

I simply think that the probability of that happening is slightly better than, for example, bonds returning higher than average returns... tech companies... consumer cyclicals, gold, etc. Relative to other opportunities I think oil companies in particular are reasonably cheap... so far they have just gotten cheaper.

Agree, but I believe that the probability of oil and gas survivors outdoing bonds over 2-3 years is very large, not slight. Meanwhile the oil industry will shrink, and undergo consolidation. Also, in addition to higher probabilities, the payoffs will be much greater. Likely involving a lot more thrills and chills than short to intermediate bonds. But this is as it should be.

Ha

 

[Mulligan]

Agree, but I believe that the probability of oil and gas survivors outdoing bonds over 2-3 years is very large, not slight. Meanwhile the oil industry will shrink, and undergo consolidation. Also, in addition to higher probabilities, the payoffs will be much greater. Likely involving a lot more thrills and chills than short to intermediate bonds. But this is as it should be.



Ha

Agreed, but figuring out the big winners is beyond me. And just making the simple integrated oil Exxon play isn't going to make untold riches. That darn stock sits like a statue in the wind.....Including dividends, if you bought it at peak 18 months ago, you wouldn't even be out 20%. And yes it does frustrate me because I would jump in if it was in the 50's. Yet, the market isn't going to allow this to happen.


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[Coolius]

Agreed, but figuring out the big winners is beyond me. And just making the simple integrated oil Exxon play isn't going to make untold riches. That darn stock sits like a statue in the wind.....Including dividends, if you bought it at peak 18 months ago, you wouldn't even be out 20%. And yes it does frustrate me because I would jump in if it was in the 50's. Yet, the market isn't going to allow this to happen.


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XOM is even UP today, in the midst of the sturm und drang.

makes me tempted to buy, if it ever goes below $70........

 

[Mulligan]

XOM is even UP today, in the midst of the sturm und drang.

makes me tempted to buy, if it ever goes below $70........

That trade is way too lazy for your abilities, Coolius. Time for you to make a killing and load up Chesapeake 2017 and 2021 bonds!


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[Coolius]

That trade is way too lazy for your abilities, Coolius. Time for you to make a killing and load up Chesapeake 2017 and 2021 bonds!


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Nah, I don't like the way Aubrey McClendon parts his hair.......

 

[haha]

Nah, I don't like the way Aubrey McClendon parts his hair.......

But he is long gone from CHK.

Ha

 

[Mulligan]

Well there you have it, Coolius. Your lone obstacle is out of the way....Load up on those bonds and then you can set up a Gates Foundation in a few years.


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[Coolius]

Just tongue in cheek, Ha.

Mulligan is always trying to send me to the poorhouse...... telling me to buy exotic story stuff that will sprout like the beanstalk in the fairy tale.

He just doesn't like competition in the Trapped Utility Preferred area, wants to keep the whole pie for himself.

 

[Ed_The_Gypsy]

oh-dark thirty here on the left coast, but the Beeb (BBC) reports that Saudi arabia is considering selling ARAMCO.

If I had a few pence, I might consider buying XOM on spec. Not the best choice? China something may be a better deal. I don't know how to make money on that.

Back to mutual funds for me.