I like Oil

[MichaelB]

A good post by James Hamilton (here) from Econbrowser. His conclusion is there is more downside ahead for US production.

If Iranian production is about to surge, Iraqi production remains high, and the Chinese economy is stumbling, that can only mean that even bigger drops in U.S. oil production are inevitable.

 

[aja8888]

A good post by James Hamilton (here) from Econbrowser. His conclusion is there is more downside ahead for US production.

Good article, tells the story.

Now that we have crude oil overproduction worldwide, it's interesting to look back at the price of crude oil just before the first U.S. oil embargo in 1972. Back then, oil was $3.60/bbl ($20.37/bbl inflation adjusted). Looks like we could be back there again.

Historical Oil Prices: InflationData.com

 

[NW-Bound]

Bloomberg has an article today saying that an oil refinery has offered -0.5$/barrel for high-sulfur crude out of ND. Yes, oil drillers have to pay for people to take low-quality crude off their hand.

From the article:

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website. That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.​

For more: The North Dakota Crude Oil That's Worth Less Than Nothing - Bloomberg Business.

 

[aja8888]

Bloomberg has an article today saying that an oil refinery has offered -0.5$/barrel for high-sulfur crude out of ND. Yes, oil drillers have to pay for people to take low-quality crude off their hand.

From the article:

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it would pay -$0.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a list price posted on its website. That’s down from $13.50 a barrel a year ago and $47.60 in January 2014.​

For more: The North Dakota Crude Oil That's Worth Less Than Nothing - Bloomberg Business.

It's all about pipeline priorities and the trucking cost of $10 - $12/bbl out of ND. Plus not all refineries can process high sulfur crude oil. from the article you referenced:

Enbridge Inc. stopped allowing high-sulfur crudes on its pipeline out of North Dakota in 2011, forcing North Dakota Sour producers to rely on more expensive transport such as trucks and trains, according to Auers.

 

[ls99]

Wow, if this keeps up the the local oil company will pay me to have my oil tank filled.

 

[aja8888]

Wow, if this keeps up the the local oil company will pay me to have my oil tank filled.

And gas stations will start having "gas wars" again! And cars like the Tesla and other electric ones will be discounted beyond belief. Maybe even Toyota will start giving a buyers a free Prius with each Tundra sold..and on and on...

 

[wmc1000]

speaking of gas wars - it lasted 1 day in mi - .77 gallon - - - Gas price fell to 77 cents at one Michigan site

 

[ls99]

Back at ya.

The drastic price cuts are part of a gas price war at three Houghton Lake, Mich., stations.

Gas wars: A gallon is just 46 cents here

 

[ls99]

And gas stations will start having "gas wars" again! And cars like the Tesla and other electric ones will be discounted beyond belief. Maybe even Toyota will start giving a buyers a free Prius with each Tundra sold..and on and on...

Right now if they paid me around $10,000.- I might accept a Tesla in my driveway. The garage is reserved for my monster suburban, Jag and DW's CTS.

 

[aaronc879]

I just caved and bought back into SDLP at $2.50/sh. It's now about 1.5% of my portfolio.

 

[wmc1000]

bought Marathon Petroleum at 41.20

 

[DEC-1982]

Could anybody tell me how the price of crude oil is shown? For example, finance.yahoo.com shows $27.77 (crude oil is below S&P futures), but I understand there are 8 or 10 or maybe more types of oils and prices. In fact I saw an article some time ago that showed many of these crude oil prices in the twenties when Brent and WTI were in the thirties.

 

[dirt_dobber]

It costs approx $8 to $13 per barrel for transport out of N.D. Bakken shale play

My former megacorp is about to go to zero rigs and zero frac crews for rest of the year.

 

[audreyh1]

Could anybody tell me how the price of crude oil is shown? For example, finance.yahoo.com shows $27.77 (crude oil is below S&P futures), but I understand there are 8 or 10 or maybe more types of oils and prices. In fact I saw an article some time ago that showed many of these crude oil prices in the twenties when Brent and WTI were in the thirties.

That's the WTI price you're quoting above, and the one most often used for oil.

 

[Nodak]

I lived in Mandan ND from 2011 to this past June. About twice a day a train with about 100 oil tanker cars would go through town headed east. I guess we were able to drill our way out of high gas prices.

 

[audreyh1]

I lived in Mandan ND from 2011 to this past June. About twice a day a train with about 100 oil tanker cars would go through town headed east. I guess we were able to drill our way out of high gas prices.

Actually, the Saudis were tired of ND drilling, so they let the price drop big time to stop it.

 

[Running_Man]

I just caved and bought back into SDLP at $2.50/sh. It's now about 1.5% of my portfolio.

Wow and in 24 hours it is down 25 percent, this oil market is in a free fall right now, because in looking at the financials of the company it does not appear they are going to go under which is what the stock price is saying, unless there is something that the company is not saying that someone with deep pockets there knows....

 

[aaronc879]

Wow and in 24 hours it is down 25 percent, this oil market is in a free fall right now, because in looking at the financials of the company it does not appear they are going to go under which is what the stock price is saying, unless there is something that the company is not saying that someone with deep pockets there knows....

Everything about the company says that it's worth more than it's share price. There is excessive panic selling going on right now. I expect that it'll come to an end soon then rebound to an accurate valuation which is above what I paid. It may take a while but the trade I made should be profitable, possibly very profitable after a couple years.

 

[hesperus]

+1
this has all the makings of panic

 

[DEC-1982]

That's the WTI price you're quoting above, and the one most often used for oil.

Thanks for explaining audreyh1.

 

[explanade]

So is shale oil production going to decline any time soon?

Seems producers all over the world are trying to maximize production and it's going to take significant drop in supply for the oil price to go back up.

But if it goes back up, a lot of producers will just go back online right?

 

[aja8888]

So is shale oil production going to decline any time soon?

Production from existing wells is declining on a daily basis. That is the reason new wells come on line (new drills).

However:

We (The U.S. refiners) use ~12 million BPD here of crude oil in making refined products in the U.S. and import roughly 1/3 of that from over 20 nations (based on last time I looked). Canada is the largest exporter to us. The rest (2/3) comes from our wells.

As long as we are importing crude cheaper than we can drill for it, I suspect any new drilling to replace imports or our own current production won't happen. (This is what OPEC would like to see)

 

[wmc1000]

that is why i am buying Downstream MPC

 

[petershk]

I'm still thinking that it's a giant game of chicken and the losers will be the ones who run out of money first and the winners will buy them very cheaply. It also seems like the financing piece has to work itself out.

At some point the price of oil caused by the oversupply will do that but so far the cars have remarkably brave at crashing into each other .

As long as there's no big drop in consumption I suspect the price will go to where enough oil is made to satisfy the need and still make a profit. If technology makes oil as userful as whale oil.. that's another story... But I don't think that's happening right now anyway.

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[explanade]

Jamie Dimon said barring a recession, which he doesn't believe is going to happen this year, oil is suppose to end at about $40 by the end of this year.

But he says he's not an oil expert, just something JPM's economists/experts are forecasting.