Anyone got an Oil Crystal Ball?

[JPatrick]

Barring a radical change in the world as we know it, I can't see how we can avoid a sharp sell off in oil this week, possibly as early as tomorrow.  Maybe just a two day event, but if Iran behaves it seems unavoidable. 
Anyone got an inside track??

 

[brewer12345]

You see any let-up in global oil demand? You see any new sources of large-scale supply coming on? I don't see either. Could oil drop today, tomorrow, etc.? Sure. But unless we start to get into a global recession that reduces demand, its hard to see how oil will drop below 60.

 

[JPatrick]

You see any let-up in global oil demand?  You see any new sources of large-scale supply coming on?  I don't see either.  Could oil drop today, tomorrow, etc.?  Sure.  But unless we start to get into a global recession that reduces demand, its hard to see how oil will drop below 60.

I don't see any of that-------------but, I do see oil that is overpriced due to the terror premium----like I'm about 8 bucks per barrel scared and the market is about 14 bucks scared.
If I'm right we need to come down about 6 bucks without regard to the factors you mention above.

 

[kjpliny]

I see oil going to $200+/barrel over the next decade. The earth is peaking and demand is rising and alternatives are lagging.

 

[JPatrick]

Oil has cracked below the $60 level and fresh inventory levels are due tomorrow (02-15-06).
High inventory numbers could take another $4 off the price before the weekend.
Could it be the low hanging fruit out in the oil patch has been picked for a few months?

 

[brewer12345]

Said it before and I will say it again: No way oil will go back to the levels of 2002-2003 unless we see another global recession. Supply is inflexible, so it all hinges on demand.

 

[Marshac]

Said it before and I will say it again: No way oil will go back to the levels of 2002-2003 unless we see another global recession.  Supply is inflexible, so it all hinges on demand.

I agree with this. Depending on whom you listen to, we could start seeing the back side of the supply curve within this decade. Compound 3% demand growth with a 4% supply decline, and in one year you have a 7% shortfall.... ugly.

 

[FC4free]

Sorry, but I see a lot of oil "alternatives." Did you see the pieces on 60 Minutes recently? The Oil Sands of Alberta, Canada? A method promoted by the Governor of Montana to convert coal into diesel fuel? Not from 60 Minutes, but Colorado apparently has oil shale.

At $65/barrel, a lot of these alternatives appear to start to become economically viable.

There is also all the oil up in ANWR.

It may or may not go down much from here. But, $200/barrel? Not likely.

 

[MasterBlaster]

Well Barbara Streisand might not like it if we had to strip mine all of Montana just so you can drive your Excursion around.

So for environmental reasons, Oil Shale/ Oil sands are not going to be developed in quantity in our lifetime.

 

[FC4free]

Why are we letting Barbara Streisand and the other Hollywood liberals dictate this to us? Do they own the land where the coal is located? NO! If someone wants to mine their land, they should be allowed to. There are federal and state requirements to return to the land to a nice state after mining -- just enforce those.

Oil Shale and Oil Sands have great potential. Use nuclear to create the heat necessary to extract the oil. My impression from the 60 Minutes piece on Oil Sands is that it is being developed rapidly. T. Boone Pickens has invested $500 million in this project.

 

[brewer12345]

Oil Shale and Oil Sands have great potential.  Use nuclear to create the heat necessary to extract the oil.  My impression from the 60 Minutes piece on Oil Sands is that it is being developed rapidly.  T. Boone Pickens has invested $500 million in this project. 

Just like that, huh? T Boone, $500 million, snap your fingers and whoosh, out comes the oil, eh? If only it were that simple. Unfortunately, it doesn't work that way. Supply can only grow slowly because there are a LOT of impediments to extracting and (more importantly) getting the stuff to market.

 

[AltaRed]

Just like that, huh?  T Boone, $500 million, snap your fingers and whoosh, out comes the oil, eh?  If only it were that simple.  Unfortunately, it doesn't work that way.  Supply can only grow slowly because there are a LOT of impediments to extracting and (more importantly) getting the stuff to market.

I agree it isn't that simple. Upwards of 7 years from the start of a project to first production. And given the world must replace about 3-5 million barrels per day of production each year just to stay even, the oil sands can only contribute about 8-10% of that amount. It's all about pulling all the levers on all the sources.

 

[bpp]

I had high hopes for this thread, but I see it isn't about sex at all.

Bpp

 

[cute fuzzy bunny]

I might have an oil filled computer...

 

[sgeeeee]

I had high hopes for this thread, but I see it isn't about sex at all. 

Bpp

And why not? Have we exhausted big bazoogas? snipped weenies? humping frequency? I think not. Let's get back to the big issues.

 

[Ed_The_Gypsy]

All I got is Hubbert's Pimple. Left the bazongas on the Left Coast. :

T Boone might have bought a minority share in something, but half-a-billion dollars don't buy much in shale oil or tar sands. The most recent new plant in Ft McMurray cost about $5.7 billion CND and produces about 160,000 bbls/day in a year (fuzzy number). Maintenance costs are unbelievable.

 

[kumquat]

Any of you oil bulls remember 1974?

 

[Spanky]

Any of you oil bulls remember 1974?

The price of oil quadrupled because of the embargo?

 

[kumquat]

And it was going to stay sky-high forever.

 

[haha]

True, each situation should be looked at on its own merits. And market psychology does seem to be cyclical in most instances.

However, I don't think that the geology and supply of a non-renewable resource necessarily share this cyclicity.

My guess is that crude and natural gas market prices will fluctuate, but that the mean of these fluctuations going forward will be higher than looking back to the 1990s.

Long term, well chosen energy investments should do well, although they will be volatile. Unfortunately, the volatility is more certain than the ultimate gain. I have a moderate sized position in a driller. The closing value can vary $5000-$7000 a day. It was easier to hold when I was closer to my entry price; but if one sells under these circumstances, all gains will be small ones.

Incidentally, I have posted about energy investments since I joined this board 3 years ago. Plenty of people have voiced the opinion that energy was over-extended, the victim of manipulation, a bubble, etc.

While some of this is undoubtedly true in some degree (not the bubble thesis); I think the hedgehog take-home is that the world-wide rate of hydrocarbon discovery has slowed, and the cost of producing what is left has increased. Meanwhile, a lot of people who formerly pulled rickshaws are driving Mercedes.

So I think at least some oil investments look pretty good! 

Ha

 

[rrspike]

There is also all the oil up in ANWR.

IMHO, this ANWR thing is a huge red herring. The Energy Information Administration, or EIA, tells us "But even at peak production.... the United States would still have to import two-thirds of its oil, as opposed to an expected 70 percent if the refuge’s oil remained off the market." So ANWR would reduce our need for imported oil by 4% of the total US projected demand if we could get at all the ANWR oil http://www.msnbc.msn.com/id/4542853/

The DOI http://www.doi.gov/news/030312.htm is quick to point out how much more oil there is in ANWR than in any other place in US, but fails to tell us the obvious : the US domestic supply is satisfying only a fairly small amount of total US consumption. Check this for a wake-up call on all this huffing and puffing by the administration: http://www.agiweb.org/legis105/anwr.html. I also read somewhare that the ANWR reserves would be used up in less than 15 years if extraction plans proposed by US Administration were implemented....
I'd rather have the ANWR preserved for future generations in its pristine state and see some serious attempts at curbing consumption.

 

[Cool Dood]

I see oil going to $200+/barrel over the next decade. The earth is peaking and demand is rising and alternatives are lagging.

lololololololololol