I like Oil

[want2flyy]

Speaking of Russia

Central Bank rose their interest rate to 17% because of ruble; wonder how that will/won't effect RSX and Gazprom.

 

[Looking4Ward]

I tend to agree with the sentiment that oil will be down for a while, too much supply and not enough demand. Plus the Saudi's and similar need to keep the income taps flowing. Wait and let the panic sellers bail out and lick their wounds. Then it is time to jump in. I am watching this and trying to figure out how to invest some, when I feel the time is right. Probably stay with a ETF or mutual fund that is is energy sector, rather than individual stocks.

I've had a roughly 5% position in each of Vanguard's Energy and Healthcare Admiral funds. I considered them on the "backend" of my portfolio, something I wouldn't touch for a couple of decades.

Problem is they are in my taxable accounts, not my IRA. So yesterday I took this whole situation as an opportunity to move some funds out of my Target Retirement 2025 fund in my IRA to both Vanguard Energy and Healthcare Admiral funds.

Now I've got a 10% position in both. I want to slowly dissolve my position in each of these funds in my taxable account over time - the Energy fund currently has a 5 figure loss so I'll wait until it recovers, the Healthcare fund has a 5 figure capital gain so I'll do it over time.

But I've always liked having a long term position in each of those funds and am not worried much about what is happening "today" rather how they will look 20 years from now.

 

[Ed_The_Gypsy]

I couldn't stand it! Bought CVX today at 4.1% dividend yield!

10 weeks to go turned into 3 weeks to go. Project cancelled and we were all given notice. Good thing. That chair was killing me.

 

[REWahoo]

10 weeks to go turned into 3 weeks to go. Project cancelled and we were all given notice. Good thing. That chair was killing me.

Are you going to hang up your spurs?

 

[Mulligan]

I couldn't stand it! Bought CVX today at 4.1% dividend yield!

10 weeks to go turned into 3 weeks to go. Project cancelled and we were all given notice. Good thing. That chair was killing me.

Here is what I don't understand about these integrated oil stock prices... I jumped in on CVX at $108 around February and oil was about $100 a barrel. The stock bounced back super quick and I sold a bit early at $125, but it was a quick profit inside my HSA, so no taxes. But how can the stock be $113 now with $70 oil. It makes no sense to me.


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[aja8888]

Here is what I don't understand about these integrated oil stock prices... I jumped in on CVX at $108 around February and oil was about $100 a barrel. The stock bounced back super quick and I sold a bit early at $125, but it was a quick profit inside my HSA, so no taxes. But how can the stock be $113 now with $70 oil. It makes no sense to me.


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That's the magic of the stock market! I presume when Chevron reports earnings and they are lower, the price will fall. But, then again, supposedly, the market is valuing the economy 6 months out in the future. But on the other hand, a lot depends on how many shorts are in a stock position. Plus, if Cramer touts a stock, it bounces. And then we have this guy:



Simple?

 

[Mulligan]

That's the magic of the stock market! I presume when Chevron reports earnings and they are lower, the price will fall. But, then again, supposedly, the market is valuing the economy 6 months out in the future. But on the other hand, a lot depends on how many shorts are in a stock position. Plus, if Cramer touts a stock, it bounces. And then we have this guy:

View attachment 20744

Simple?

Ya, I admit I have no business buying stocks, but I shouldn't bet on football games either. I got lucky on a few this year, but I was owed for some stinker purchases from the past. I just knew CVX would crater to $90 and XOM $70 and I would buy me some. Mr. Market isn't going to accommodate me.


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[aja8888]

Ya, I admit I have no business buying stocks, but I shouldn't bet on football games either. I got lucky on a few this year, but I was owed for some stinker purchases from the past. I just knew CVX would crater to $90 and XOM $70 and I would buy me some. Mr. Market isn't going to accommodate me.


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Individual stock picking is too hard. I have about 5 dividend players and lost my @$$ on one this year. I can't even pick oil stocks and have been in the industry since 1980. Go figure.

A price that is stuck in my head permanently was Exxon at $28. That was not too many years ago. I didn't buy any.

On an industry note, we haven't seen the smoke clear on the oil price drop yet. It hasn't been long enough yet and there are too many factors worldwide that can affect the price. Look at Petrobras (Brazilian oil co.). It's a hat size now, and may go lower.

When CAPX gets cut next year and the drillers/service companies are going down for the count, those may be a better play on the rebound.

 

[FIRE'd@51]

I couldn't stand it! Bought CVX today at 4.1% dividend yield!

Curious how you figure that? The current indicated annual dividend is 4.28 and yesterday's low was 112.32.

 

[HF63]

Besides oil, the other thing that bothers me is commodity prices. If the drop on oil is an over supply problem, this ought to be good for commodities since they used up a lot of energy. The lower prices is probably an indication that the world economy is slowing down. If the lowers prices continues, the shale oil, cracking companies will be in trouble.

 

[Brat]

I looked at dry bulk shippers a couple weeks ago and their stocks were decimated.

 

[aja8888]

I looked at dry bulk shippers a couple weeks ago and their stocks were decimated.

Commodity prices and demand are down, so not much to ship for a good fee.

Next you will see Amazon acquiring the shippers and offering two day delivery with Prime membership.

 

[gcgang]

According to Financial Times, OPEC has dramatically changed their philosophy, more so than anytime since the 1970s. They will now focus on maintaining their market share, won't be surprised if prices drop to $20, saying $100 oil is over.


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[Lakedog]

Oil going lower near term is quite possible but don't see $100 oil being over. With a long term view, will continue adding to energy/oil investments if oil does go lower.

 

[aja8888]

According to Financial Times, OPEC has dramatically changed their philosophy, more so than anytime since the 1970s. They will now focus on maintaining their market share, won't be surprised if prices drop to $20, saying $100 oil is over.


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There isn't one oil producer, nationalized country or private company, that want's oil to stay at a price well under $100/bbl (especially the Saudi's). Once the consumer's gobble up the cheap fuels, and get used to a steady diet of it, we will see a supply shortage (rate of increase in production vs. rate of increase in consumption) and prices will rise dramatically.

 

[Lakewood90712]

I would like to see the Strategic Petroleum Reserve expanded to a one year of imports size. I,m sure this would take time, even if the political direction and will was there. This would sure take up some of the current oversupply.

Boone Pickens sure wouldn't like that , he publicly urged the Gov. to abolish it and sell off the oil within the last year or so .

Boone wanting no oil reserve might have something to do with his struggling baby, Clean Energy Fuels CLNE. They have a quite a few LNG truck fuel stations , ( Boone's dream of" the natural gas highway " ) some that were never even opened. With Diesel dropping , CNG / LNG truck demand weakening, and a bunch of non-convertible debt coming due in the next year or so, CLNE will be really stressed. Was going to try and make some $$$$ with some put's, but its too late.

 

[Jack_Pine]

According to Financial Times, OPEC has dramatically changed their philosophy, more so than anytime since the 1970s. They will now focus on maintaining their market share, won't be surprised if prices drop to $20, saying $100 oil is over.


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Saudi says $100 oil is over because of US/Canada production. They did not see this coming and are still searching for a way to deal with it.

They are trying to stay in control....................

We do a lot of business in the Us oil fields and we hear they are going to sitck out the price drop. At worst they may suspend new wells but hta's about it.

This will be a very interesting watch.................

 

[aja8888]

A good take on the oil price situation (written at $65/bbl):

Petroleum & Resources Corporation(NYSEEO): What An Investor Should Do In This Oil Bust | ETF DAILY NEWS

"Whenever things heat up – or cool off – in the natural resource markets, the first man I turn to is Rick Rule, CEO, president and director of Sprott U.S. Holdings, a securities brokerage and asset manager specializing in natural resource plays."

Our member Running Man has recommended PEO in an earlier post. I have no intentions of this post being an endorsement on PEO.

 

[gcgang]

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M

Link shows US EIA data on gasoline consumption over the past 30 years. In 2003, never less than 60mm gallons per month. In 2014, never much more than 20mm per month.

Remember in early 80s oil went from about $30 to $8 in about a month, and then stayed down for 10+ years.


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[ERD50]

U.S. Total Gasoline Retail Sales by Refiners (Thousand Gallons per Day)

Link shows US EIA data on gasoline consumption over the past 30 years. In 2003, never less than 60mm gallons per month. In 2014, never much more than 20mm per month.

Remember in early 80s oil went from about $30 to $8 in about a month, and then stayed down for 10+ years.


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I don't think that chart is telling you what you think it does. I just can't believe we use ~ 1/3 the gasoline we did in 2003 - that's a huge difference.

I think the term 'retail sales by refiners' must be some subset of total use?

These other refs make more sense to me:

How much gasoline does the United States consume? - FAQ - U.S. Energy Information Administration (EIA)

U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels)

Looks like we are using just a bit less than 2003, down from 2007 peaks.

-ERD50

 

[MichaelB]

The data I recall is US gasoline consumption has been flat since '08 but recently began to increase once again. Here's the US DOE data U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels per Day)

 

[aja8888]

U.S. Total Gasoline Retail Sales by Refiners (Thousand Gallons per Day)

Link shows US EIA data on gasoline consumption over the past 30 years. In 2003, never less than 60mm gallons per month. In 2014, never much more than 20mm per month.

Remember in early 80s oil went from about $30 to $8 in about a month, and then stayed down for 10+ years.


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Retail sales by refiners is just sales to their "owned and operated" branded stations. Most large oil companies with refineries are selling branded stations to get out of retailing. In most cases they require the new buyer to maintain the "brand" since they usually broker them the refined product under a contract.

 

[bmcgonig]

Retail sales by refiners is just sales to their "owned and operated" branded stations. Most large oil companies with refineries are selling branded stations to get out of retailing. In most cases they require the new buyer to maintain the "brand" since they usually broker them the refined product under a contract.

Aja, if I remember correctly you live in Texas. How do you feel about the Texas / Louisiana economy with all this going on?


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[dallas27]

OP here... Still haven't bought in yet. No carnage yet. Everyone seems to be playing international oil price chicken.

When it's starts going sideways for a couple intermediate players, I think i will buy in if my contributions are ready at the right time.


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[aja8888]

Aja, if I remember correctly you live in Texas. How do you feel about the Texas / Louisiana economy with all this going on?


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It seems the oil producers are still producing at the same rates as the current wells payout after drilling, and that could go on for years (with decline, of course). We will still need oil regardless of the price. Lots of talk and recent newspaper articles about a reduction in new drilling activity and that will happen, but with a time lag. Article in today's Houston Chronicle mentions upcoming job losses in oil related industries.

I would suspect that energy type jobs will soften and there will be layoffs, but no real sense that it is escalating yet.

Low oil prices, say under $40/bbl, would have to persist for a couple of years before the Gulf economies would really suffer. Right now, just the expensive projects will be put on hold (new horizontal wells, deep offshore drilling, etc).

Holiday Inn Express rooms are still $300/night in Midland/Odessa.....