I like Oil

[NW-Bound]

...Tech goes up and up more, oil and gas and everything associated with these goes down and down more. Grrrr!

The above post was made 2 months ago. Things have changed in the recent weeks, and tech stocks such as Apple, Internet stocks such as Facebook, and biotechs have been beaten worse than the overall market. For example, at this point of writing today, AAPL is down 3.57%, FB down 3.84%, Intel down 9.2%, and but the S&P is down 2.3% and XOM matches it. And XBI, a biotech ETF is down 5.4%.

I'd say we are not too far from capitulation, where people sell everything indiscriminately.

 

[dallas27]

Iran sanctions lifted, presumably that means oil is fair game. The end is nigh, the end is nigh.

And me with no spare cash to bet for a few weeks...


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[Brat]

It will take a few months for Iran to open up its oil trades but all the traders are running the numbers now. Oil prices will continue to fall. Talk about a race to the bottom....

 

[aja8888]

It will take a few months for Iran to open up its oil trades but all the traders are running the numbers now. Oil prices will continue to fall. Talk about a race to the bottom....

They will probably ramp up to 500,000 barrels per day in 2016 when global consumption is about 94,000,000 barrels per day. Looks like about 1/2 % increase.

 

[audreyh1]

Iran sanctions lifted, presumably that means oil is fair game. The end is nigh, the end is nigh.

And me with no spare cash to bet for a few weeks...


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I believe this has been anticipated and priced in. Was in Dec I think.

Doesn't matter much when oil comes to market, it affects futures now.

 

[Mulligan]

They will probably ramp up to 500,000 barrels per day in 2016 when global consumption is about 94,000,000 barrels per day. Looks like about 1/2 % increase.

Iran used to be able to really crank out the volume way more than that. Any chance they can ever return to "the good old days"?


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[aja8888]

Iran used to be able to really crank out the volume way more than that. Any chance they can ever return to "the good old days"?


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The problem with production in nations like Iraq, Iran, Mexico, etc is they have an aged infrastructure and their technical knowledge is not that advanced. No one I know has gone to any of those countries and helped build a new pipeline system or large storage and transportation assets. It's been the other way around, everything has been suffering from lack of maintenance, and in war torn areas, damaged.

The Mexicans kicked us out decades ago and oil companies have been reluctant to help them without up front payments. The three large refineries in Mexico are literally falling apart due to lack of maintenance. I was at a large ammonia production facility near Veracruz years ago and the 10,000 metric ton per day plant was ailing and several chemical processing units were permanently down as they corroded away. Sad.

The Saudis had the benefit of long time US involvement and educating their engineers over here. Plus, we sold them US assets (refineries, terminals) in 1989 (Texaco) and they were very happy to get them for an outlet for their crude.

 

[audreyh1]

The problem with production in nations like Iraq, Iran, Mexico, etc is they have an aged infrastructure and their technical knowledge is not that advanced. No one I know has gone to any of those countries and helped build a new pipeline system or large storage and transportation assets. It's been the other way around, everything has been suffering from lack of maintenance, and in war torn areas, damaged.

The Mexicans kicked us out decades ago and oil companies have been reluctant to help them without up front payments. The three large refineries in Mexico are literally falling apart due to lack of maintenance. I was at a large ammonia production facility near Veracruz years ago and the 10,000 metric ton per day plant was ailing and several chemical processing units were permanently down as they corroded away. Sad.

The Saudis had the benefit of long time US involvement and educating their engineers over here. Plus, we sold them US assets (refineries, terminals) in 1989 (Texaco) and they were very happy to get them for an outlet for their crude.

Not only that, but now in several areas of Mexico there are such security problems it's hard to see them successfully bringing in foreign expertise. So it's not just aged infrastructure!!

When I heard local excitement about the new Mexico fracking potential in the Mexican states just south of the border and the US business that would help them, I just shook my head. Exactly how are they going to secure the sites to protect the people there and be able to get anything done?

Of course now its moot, as oil prices plummeted before any of the Mexico fracking development could even get started.

 

[Mulligan]

The problem with production in nations like Iraq, Iran, Mexico, etc is they have an aged infrastructure and their technical knowledge is not that advanced. No one I know has gone to any of those countries and helped build a new pipeline system or large storage and transportation assets. It's been the other way around, everything has been suffering from lack of maintenance, and in war torn areas, damaged.

The Mexicans kicked us out decades ago and oil companies have been reluctant to help them without up front payments. The three large refineries in Mexico are literally falling apart due to lack of maintenance. I was at a large ammonia production facility near Veracruz years ago and the 10,000 metric ton per day plant was ailing and several chemical processing units were permanently down as they corroded away. Sad.

The Saudis had the benefit of long time US involvement and educating their engineers over here. Plus, we sold them US assets (refineries, terminals) in 1989 (Texaco) and they were very happy to get them for an outlet for their crude.

I imagine they are way behind then because technology has really driven extraction costs down here in US just in past few years.
Audrey, speaking of safety. My cousin 20 years ago was a pipeline welder in Africa making huge 6 figures plus. Every one of the welders he told me had an armed military guard protecting him while he was working on the pipeline. Pretty intense!



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[aja8888]

I imagine they are way behind then because technology has really driven extraction costs down here in US just in past few years.
Audrey, speaking of safety. My cousin 20 years ago was a pipeline welder in Africa making huge 6 figures plus. Every one of the welders he told me had an armed military guard protecting him while he was working on the pipeline. Pretty intense!

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When I was in Veracruz at the PEMEX ammonia plant for a week, we had armed guards. That was during NAFTA when PEMEX was supposed to sell that plant and I was with a group of attorneys and investment bankers conducting due diligence for a US based chemical company (the buyer). The sale never got done (that's another story). It was not a fun trip.

 

[explanade]

Wow, Veracrus is near Mexico City.

I thought it was only near the border where the big traffickers were the problem.

Hell the Yucatan is fairly close too. Lot of Americans on House Hunters looking for homes in Merida and Playa del Carmen.

 

[audreyh1]

I imagine they are way behind then because technology has really driven extraction costs down here in US just in past few years.
Audrey, speaking of safety. My cousin 20 years ago was a pipeline welder in Africa making huge 6 figures plus. Every one of the welders he told me had an armed military guard protecting him while he was working on the pipeline. Pretty intense!

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Yeah - and then you had better hope the armed guard isn't being paid by the bad guys!

 

[audreyh1]

Wow, Veracrus is near Mexico City.

I thought it was only near the border where the big traffickers were the problem.

Hell the Yucatan is fairly close too. Lot of Americans on House Hunters looking for homes in Merida and Playa del Carmen.

Veracruz, has had plenty of violence in recent years including public bus hijackings. Not so safe anymore.
How Veracruz Became the Most Dangerous State in Mexico for Journalists
https://news.vice.com/article/how-veracruz-became-the-most-dangerous-state-in-mexico-for-journalists

 

[Mulligan]

When I was in Veracruz at the PEMEX ammonia plant for a week, we had armed guards. That was during NAFTA when PEMEX was supposed to sell that plant and I was with a group of attorneys and investment bankers conducting due diligence for a US based chemical company (the buyer). The sale never got done (that's another story). It was not a fun trip.

Aja's thoughts while there.... "What have I got myself into?".... Then a few seconds later a second thought..."Oh I remember...the boatload of cash I am going to have if I make it back alive".


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[aja8888]

Aja's thoughts while there.... "What have I got myself into?".... Then a few seconds later a second thought..."Oh I remember...the boatload of cash I am going to have if I make it back alive".


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I initially was thinking of "where is the best seafood restaurant in the area" and later thought if I ever get out of here alive, I'm not coming back!

We were here: Cosoleacaque, Veracruz state

https://www.google.com/maps/place/C...2!3m1!1s0x85e9882c86693b55:0x7eb09a51607f1558

 

[explanade]

Mexico sounds like an absolute cesspool.

But of course all the drug demand from the US is creating the situation there.

Weak govt. and then all the drug money has corrupted the country.

 

[audreyh1]

The serious compounded problem is that once there isn't enough easy money to be made in drug trafficking, the well trained gang members turn to extortion, kidnapping, and violence.

 

[Mulligan]

I initially was thinking of "where is the best seafood restaurant in the area" and later thought if I ever get out of here alive, I'm not coming back!



We were here: Cosoleacaque, Veracruz state



https://www.google.com/maps/place/C...2!3m1!1s0x85e9882c86693b55:0x7eb09a51607f1558

At least you were near the ocean. I just read an article about Iran readying to produce their 500,000 barrels. But they also said their goal is 2 million. It didn't say when but article suggested that extra production "goal" could send oil into the teens... I imagine goals aren't always achievable though. My goal of having more hair on my head hasn't achieved much success so far.


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[explanade]

Hmm but whom do they have to kidnap? There is no middle class in Latin America.

Local police though will still be bought off or just don't give enough of a damn to risk their lives upholding the law.

Supposedly the federal marines will go after the drug gangs but there are probably not enough of them.

 

[audreyh1]

Hmm but whom do they have to kidnap? There is no middle class in Latin America.

Local police though will still be bought off or just don't give enough of a damn to risk their lives upholding the law.

Supposedly the federal marines will go after the drug gangs but there are probably not enough of them.

Kidnapping for ransom is rampant in Mexico. There are (or used to be) tons of wealthy people in Mexico. We have whole neighborhoods in my area that are wealthy Mexicans who have moved north of the border to get away from these threats. Local police can't protect them and and they are told their best option is to leave.

Monterrey used to be a very wealthy high-tech city with a large class of educated professionals - kind of like a Mexican version of Silicon Valley. It was the most modern and advanced city in Mexico. Many of these folks have had to leave.

Nightly curfews. People afraid to be on the street. It's been a nightmare for years.

 

[explanade]

I thought a lot of them were ultra wealthy and would have their own private armies.

Well that probably makes the situation worse, as tax revenues are low and you have people leaving, then less resources to resist the drug gangs.

 

[aja8888]

Kidnapping for ransom is rampant in Mexico. There are (or used to be) tons of wealthy people in Mexico. We have whole neighborhoods in my area that are wealthy Mexicans who have moved north of the border to get away from these threats. Local police can't protect them and and they are told their best option is to leave.

Monterrey used to be a very wealthy high-tech city with a large class of educated professionals - kind of like a Mexican version of Silicon Valley. It was the most modern and advanced city in Mexico. Many of these folks have had to leave.

We have lots of wealthy Mexicans up here too (north of Houston). many living in the multi-million dollar homes with cars parked in front with a "person" inside the car 24 hours per day. A very exclusive development named Carlton Woods in our township is called "Carlos Woods" by the ladies in DW's church group.

 

[Brat]

We now have more ethanol than demand can absorb.

Maybe the cost of cattle feed will come down as corn farmers search for other buyers.

Another tid-bit http://www.zerohedge.com/news/2016-...nergy-mark-market-tells-banks-not-force-shale

Brewer.. where are you?

 

[ziggy29]

I thought a lot of them were ultra wealthy and would have their own private armies.

Yes, and you'd better hope you can (and will) pay them more than anyone else, because as mercenaries, if your rival will pay you more than you'll pay for them to turn on you....

 

[aja8888]

We now have more ethanol than demand can absorb.

Maybe the cost of cattle feed will come down as corn farmers search for other buyers.

Another tid-bit Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears | Zero Hedge

Brewer.. where are you?

So now a stealth bank bailout is in the works! Who would have guessed?

"Fraud is fine as long as the Fed does it."

Watch the upcoming oil & gas asset sales and bankruptcies!