I like Oil

[Lakedog]

I sure was wrong about oil. I thought surely things would be normal after three years. Maybe this is the new normal.


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I believe it has only been two years since oil was at $100 (June/July of 2014) - so maybe you will still be right about three years?

 

[Mulligan]

Who knows, as I sure dont..But I did read if oil consumption stayed the same and suddenly we produced world wide 500,000 barrels less than is consumed daily it would take 15 years to burn off the stored capacity. That is a lot of oil above ground already!


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[explanade]

Well I heard US auto sales have been roaring and now China just reported car sales up 26% in July, the biggest jump in 3 years there.

 

[Ed_The_Gypsy]

I was wrong about oil as well and it hurt. Now I agree with the chairman of BP that this is a sea change.

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[VFK57]

It is all depend on consumption, if the weather is cooler , some major well is destroyed, world instability, dollar devaluatiin etc., etc

 

[target2019]

Tale of three investments:
1. PBF - smaller refiner purchased late 2014, down 23%. It was very profitable at times, and continues to pay dividend, which has been flat for several years.
2. XOM - I watched and read for a long time. As PBF was soaring (low oil prices help refiner), XOM started touching depths as CVX and others had been doing for long stretches. A similar investment of $$ to XOM on 9/1/2015 is as profitable now as PBF is negative. XOM dividend will grow slightly this year.
3. VGENX - Since early 2013 I've placed SEP-IRA contributions here. The annual personal performance reported by Vanguard is -2.2%. Yield is +2.2% now.

Performance charts for these look very similar in 2008-2009 and 2015-2016. Expecting a rebound in 2016-2017.

 

[NoiseBoy]

Historically, depressed oil prices (if you can figure out what that means) can last for quite a long time.

This may be truer now than ever due to the new technology of shale extraction, better formation identification techniques, horizontal drilling and improved fracturing methods.

What may influence large crude oil price swings these days may be political problems (wars, etc) or supply curtailments. But these may be short lived in the big picture.

Oil is a commodity and you have to remember that.

I agree with this. Also, I am of the opinion that $100/bbl oil is not coming back anytime soon. I read somewhere, perhaps it was earlier in this long thread, that if you adjusted the pre-OPEC 1970s price of oil for inflation, you'd end up right about where we are at today. Shale extraction has much lower costs to enter than previous oil exploration options, so lots of people jumped on the bandwagon, and it was easy to get loans to go exploring when oil was at $100/bbl. Eventually supply exceeded demand, China cooled off & etc., so now we're in a period where companies that got fat on $100 oil have to resize their operations. This has happened to coal too, which is getting hammered by cheap natural gas prices, so commodity companies are taking a beating. I don't think that it is an indicator of the overall health of our economy, but the cooling effect of coming down from our $100/bbl oil high is more pronounced now than is the stimulating effect of cheaper fuel prices to the general public.

 

[ESRwannabe]

I think it might be a demographic problem, which if true we aren't getting out of it until 2035 or so...

Econimica: Why This Time is Completely, Utterly, Totally Different...Like the Difference between a Hurricane and an Ice Age

 

[Car-Guy]

I've been telling myself for months that I'd quit swing trading CVX and XOM and start buying and holding them once they fall below a certain range. (for me that's 97 for CVX and 82 for XOM). Well they are both just about there. I'm hesitant but suspect I'll start buying and holding both of these pretty soon in small chunks, on down days, and DCA if they keep falling.

Any others considering big oil at these prices and world conditions?

 

[laurence]

Too bad gas in Cali is still pushing $3.00. Every car is getting phenomenal gas mileage now, though. I helped my little sister buy her first "new" car - a Mazda 3 with 10k miles on it. It gets 40 on the highway with a regular engine, but it's a great ride. Gas prices don't really have the sting they once did. But does the increased demand in-elasticity outweigh the decreased per capita volume?

The economy is growing so slowly, and in areas that aren't nearly fossil fuel dependent, i.e. much smaller % of their cost of production made up of oil. I understand a new, huge oil field has become extractable in west Texas due to technology advances. OPEC is a shadow of it's former self. There are fields of shale gas laying fallow waiting for oil prices to rise and make them profitable again. I say there are just too many safety valves in the short term to see any real appreciation and growth in profitability in this area. I mean, unless Israel nukes Mecca....

 

[aaronc879]

I've been telling myself for months that I'd quit swing trading CVX and XOM and start buying and holding them once they fall below a certain range. (for me that's 97 for CVX and 82 for XOM). Well they are both just about there. I'm hesitant but suspect I'll start buying and holding both of these pretty soon in small chunks, on down days, and DCA if they keep falling.

Any others considering big oil at these prices and world conditions?

After my last attempt at buying an individual oil stock at what I thought was a good price, I am done with individual stocks. The market is too unpredictable and volatile. I'll stick with index funds and maybe 1 or 2 vanguard mutual funds.

 

[Fermion]

Remember in this thread when we sort of liked Seadrill? I just noticed today it is $2

Wow.

Oil seems to be dead.

 

[aaronc879]

Remember in this thread when we sort of liked Seadrill? I just noticed today it is $2

Wow.

Oil seems to be dead.

I never like Seadrill(SRDL) but I really liked Seadrill Partners(SDLP) and bought many thousands of shares at $5+ and it's now barely above $3. Ouch!

 

[harley]

After my last attempt at buying an individual oil stock at what I thought was a good price, I am done with individual stocks. The market is too unpredictable and volatile. I'll stick with index funds and maybe 1 or 2 vanguard mutual funds.

Maybe a good idea for you, but I want to point out that the problem you explained in another thread wasn't that you were trading individual stocks, but that you bet the house on a single stock. Even in individual stock trading it's better to have a little diversification. I've got about 20 stocks in my gambling portfolio. So even though my SDLP is down 50%, my overall portfolio is up quite nicely.

 

[aja8888]

Remember in this thread when we sort of liked Seadrill? I just noticed today it is $2

Wow.

Oil seems to be dead.

Stay away from ANY oil services stock (onshore or offshore services). Until crude and natural gas prices go up, and stay up, these firms are going to be scrambling to stay in business. The only individual stock I would consider owning (long term) is ExxonMobil and that will be when it goes back to the low $70's or lower and does not cut the dividend.

 

[explanade]

Coincidentally, I read speculation that if the election goes a certain way, federal leases for on and offshore drilling could be really opened up.

 

[aja8888]

Coincidentally, I read speculation that if the election goes a certain way, federal leases for on and offshore drilling could be really opened up.

The last round of offshore lease sales went badly for the gov - no buyers. Too expensive to drill offshore. That's the bottom line.

 

[explanade]

I thought some states had offshore drilling bans for years.

For instance CA in the '90s and FL in the 2000s.

But this was all before fracking and horizontal drilling techniques became refined.

 

[aja8888]

I thought some states had offshore drilling bans for years.

For instance CA in the '90s and FL in the 2000s.

But this was all before fracking and horizontal drilling techniques became refined.

Correct, and they still do have bans. Opening up leases offshore won't do much good if there are few companies that can produce profitably. In addition, there are over 1,300 wells drilled onshore that are shut in waiting for completion and could be brought into production within a quick time frame.

Wells have been fracced since the early days of drilling (1940's and before). It's nothing new but there are much better methods and we can now frac long horizontal legs of wells, in which that technology wan't available over 10 years ago.

What is new is the shale play advances, better fraccing techniques, better downhole tooling, reliable and accurate 3D sismic tools, horizontal and directional drilling accuracy, etc. It's all mostly been available, but advancements in technology across the board have made finding and producing hydrocarbons more productive.

We still need to drill new wells in the U.S. to replace what's being sold here, but because of pricing, offshore makes no economic sense right now, leases or no leases.

 

[Car-Guy]

I've been telling myself for months that I'd quit swing trading CVX and XOM and start buying and holding them once they fall below a certain range. (for me that's 97 for CVX and 82 for XOM). Well they are both just about there. I'm hesitant but suspect I'll start buying and holding both of these pretty soon in small chunks, on down days, and DCA if they keep falling.

Any others considering big oil at these prices and world conditions?

Well that was pure luck. XOM dropped to the mid 82 range yesterday so I picked up 1000 shares and was prepared to buy more as it dropped. Well today it jumped to over 87 at one point and I just couldn't resist. Missed the bottom yesterday and the top today by a little but not too bad.

 

[explanade]

CNBC app. on my iPhone flashed a notification about an OPEC deal, which made oil futures go up. That was around 11:30 AM PST.

 

[Car-Guy]

CNBC app. on my iPhone flashed a notification about an OPEC deal, which made oil futures go up. That was around 11:30 AM PST.

That's what did it. Held til near the market close today. Time will tell if I should have held but I can't kick too much on a 24 hour flip like that.

 

[Sunset]

That's what did it. Held til near the market close today. Time will tell if I should have held but I can't kick too much on a 24 hour flip like that.

You could call that Sweet Crude

 

[VFK57]

I think that CVX, RDS, XOM, etc are valuable, high dividend paying stocks to keep. The world is still running on NG and Oil. Hopefully the price has stabilized.

 

[Car-Guy]

You could call that Sweet Crude