I like Oil

[dallas27]

Crude prices seem like they are entering a price range that is unsustainable long term. Seems like a softball pitch to me.

USO/UCO is where I'll be in the next week or two, probably UCO.

Argument against Oil rebounding significantly in the next 3 years?

 

[Ed_The_Gypsy]

I do, too. My oil portfolio does not seem to have dived at all.
I like pipelines better, though. They get paid no matter what WTI is. I am watching the dividends, though.
My HO: a good time to buy.

 

[bld999]

I liked oil a little too early.. .

I'm patient, though.

 

[Lakewood90712]

Crude prices seem like they are entering a price range that is unsustainable long term. Seems like a softball pitch to me.

USO/UCO is where I'll be in the next week or two, probably UCO.

Argument against Oil rebounding significantly in the next 3 years?

Define "Significantly"

I like oil stocks too, for the dividends. Might buy some more when things settle down.

I don't like trying to catch falling knives.

 

[dallas27]

Define "Significantly"

I like oil stocks too, for the dividends. Might buy some more when things settle down.

I don't like trying to catch falling knives.

I'm not talking company stock, I'm talking about direct play on the price of a barrel. USO/UCO track the market price. UCO is leveraged 200%.

Significant is at least 20% percent, in my mind. to each their own. Although I'm eyeing the leveraged play with UCO on this one.

 

[aja8888]

Wait until you read that majors (and some smaller companies) are shutting in wells and curtailing new drilling (cutting CAPX). Then wait a bit longer when auto companies can't build enough big trucks and SUV's. Then load up.

If you have midstream MLP's, hold them as they won't be affected significantly by crude or natural gas prices.

 

[MichaelB]

Actually, one bullish bet on a petroleum price recovery would be one of the Russia ETFs. RSX is the biggest but there are others.

 

[Lakewood90712]

Wait until you read that majors (and some smaller companies) are shutting in wells and curtailing new drilling (cutting CAPX). Then wait a bit longer when auto companies can't build enough big trucks and SUV's. Then load up.

If you have midstream MLP's, hold them as they won't be affected significantly by crude or natural gas prices.

When oil prices go back up , do the oil service and drilling co. stocks tend to lead, or lag the crude oil price run up ?

Maybe I can make enough money to buy one of those slick , $60,000, 11 mpg. Ford King Ranch pick-Up trucks.

 

[eta2020]

Actually, one bullish bet on a petroleum price recovery would be one of the Russia ETFs. RSX is the biggest but there are others.

With RSX you have to be bullish on Putin not invading another country as well.

 

[Totoro]

Argument against Oil rebounding significantly in the next 3 years?

I think a reasonably good bet that oil will go back up. Exactly when is tough to know.

Reasons it might not rebound are the same factors influencing it now:

• Shale oil & gas extraction experience keeps growing, potentially making it ever more cheaper
• Shift from oil to gas in some areas
• Shift from oil to electric in other areas
• Other oil substitutes keep getting cheaper, taxes keep going up
• Some of the demand drops away through energy savings (insulation, efficiency)
• Oil producers can't reduce production by much since they need the revenues now

I'd only play on a price rise if I could find a specific event which is very likely to happen before a certain time. Not sure there is one for oil though.

 

[Totoro]

Actually, one bullish bet on a petroleum price recovery would be one of the Russia ETFs. RSX is the biggest but there are others.

It's a dual bet though in the case of Russia: you are betting that the sanctions against Russia won't escalate.

Gazprom specifically is getting silly in terms of valuation, now listed at roughly twice its typical earnings (!).

 

[eta2020]

RSX price is driven by geopolitical risks hence loss or gain can be much huge.

There is no real private property since Putin can put anybody to jail and confiscate the companies that they own. Yevtushenkov is last such case.

That makes RSX a trade. I like buy and hold

Economically China is a winner having Russia as source of cheap natural resources. I would rather buy China as benefactor of cheap oil and Russia selling natural resources at discount price due to growing sanctions. Those are smart guys negotiating natural gas deal for last 10 years until they got super price for 30 year deal.

 

[imoldernu]

I wasn't smart enough to predict the current drop in prices.

I KNOW I'm not smart enough to predict future prices.

 

[FUEGO]

Interesting. DW (who has no interest in the markets at all) just commented now is the time to buy oil not more than 1 hour ago.

 

[dallas27]

Wait until you read that majors (and some smaller companies) are shutting in wells and curtailing new drilling (cutting CAPX). Then wait a bit longer when auto companies can't build enough big trucks and SUV's. Then load up.

If you have midstream MLP's, hold them as they won't be affected significantly by crude or natural gas prices.

Agreed, in fact i think this is the aim of opec's endgame.


Sent from my iPhone using Early Retirement Forum

 

[Ed_The_Gypsy]

I'm not talking company stock, I'm talking about direct play on the price of a barrel. USO/UCO track the market price. UCO is leveraged 200%.

Significant is at least 20% percent, in my mind. to each their own. Although I'm eyeing the leveraged play with UCO on this one.

Oh. Sorry, not acquainted with trades on the commodity itself. Too tricky for me.

I PREDICT (ahem) that the price WILL go up again. But I have no idea when. Meantime, back to the pipeline dividends.

 

[Ed_The_Gypsy]

I do, too. My oil portfolio does not seem to have dived at all.

I spoke too soon. The Thanksgiving holiday closed the markets. LNCO (why? they are hedged) and Canadian Oil Sands took hits, but Matthews Asian Growth and Income (indirect play on China, subject opened earlier in this thread) went up. Pipelines/midstream relatively stable. I am not doing anything until the new year when I start doing the Backdoor Roth. Long and staying long.

 

[Sunset]

Well prices for crude fell about 2007 from 145 bbl to 40 bbl in about a year, and took about 3 yrs to climb back to 80 bbl.
So really prices could fall another $20 a bbl pretty easily.

 

[frayne]

I wasn't smart enough to predict the current drop in prices.

I KNOW I'm not smart enough to predict future prices.

Ditto !


Interesting read and some think low prices are here to stay for awhile.


http://www.bloomberg.com/news/2014-...ressure-oil-s-weakest-from-iran-to-shale.html

 

[heeyy_joe]

UPS & FDX are big beneficiaries of lower energy prices. Shoppers pounding the pavement wearing out their shoes, go long DSW.

 

[MichaelB]

I PREDICT (ahem) that the price WILL go up again. But I have no idea when. Meantime, back to the pipeline dividends.

Really going out there on a limb, aren't you Gypsy Ed?

This is pretty treacherous ground, unforgiving to those making the wrong choices. One thing we know for sure is petroleum is a critical component and driver of global economic growth. A price decline this big, if sustained, should be an important and unexpected tailwind for some of those moribund and anemic developed economies such as EU and Japan. An increase will do the opposite. Which will it be?

 

[Closet_Gamer]

I am in no way smart enough to know what oil prices are going but I would caution against recency bias on oil prices as it seems like some really serious things are happening in the oil biz that could mark a discontinuity in how that industry works.

I read yesterday that shale oil and gas reserves in the US are now estimated at the equivalent of 2000 BILLION barrels. The US currently consumes 12 Billion barrels per year. So the reserves are the current equivalent of the U.S. able to care for itself for 166 years...and energy consumption in the states is now growing only about 1% per year as the economy becomes much more energy efficient. The U.S. is now the largest exporter of hydrocarbons in the world and sudden availability of cheap energy is starting to overwhelm the cost of labor in calculations of where to put large manufacturing, etc. European companies are looking to build large, energy intensive manufacturing in the states due to its availability of cheap energy. Petro-states worldwide are licking their wounds and looking panic'd. We're talking about some of the world's worst countries becoming insolvent. OPECs decision not to cut production volumes was an attempt to tactically drive the oil price down to shut off some shale wells.

I'll bet on the productivity and innovation genius of western shale and oil sands people over the govt run, fat oil oligopoly any day. Combine innovation with political stability and energy could become a very regional business again with North America being pretty self-sufficient and the rest of the world (China, India, Japan...) dealing with the Middle East.

Imagine what happens if Europe loosens its views on oil and gas extraction -- an not unlikely outcome as Russia continues to threaten cutting off gas to Eastern Europe.

Regardless, huge things are afoot here both for oil and society including possibly a global move from "impending energy scarcity" to "energy abundance." Oil price volatility is likely guaranteed, but who knows which way it will go and when?

Time to curl up for a nap with my boring index funds

 

[frayne]

Krotoole, what is the source of the article you are quoting ?

 

[Closet_Gamer]

Krotoole, what is the source of the article you are quoting ?

Five numbers reveal our energy future: Column

 

[Closet_Gamer]

Krotoole, what is the source of the article you are quoting ?

Here's another...

http://www.ft.com/intl/cms/s/0/c441...44feabdc0.html?siteedition=intl#axzz3KTcX3Fyd

Some data came from a 3rd article...if I can find it I'll send it along