Oil Prices

Big Oil's Choice Amid Low Prices: Evolve Or Wither?

2/06/2015

Christopher Helman

http://www.forbes.com/sites/christopherh...r-whither/

(08-02-2015, 06:47 PM)Boon Wrote: Big Oil's Choice Amid Low Prices: Evolve Or Wither?

2/06/2015

Christopher Helman

http://www.forbes.com/sites/christopherh...r-whither/

Some interesting quotes:
"Big Oil was already finding it hard to grow during these last few years of high prices. Exxon Mobil XOM -0.19% has barely been able to eke out 1% annual growth despite a capex budget averaging $35 billion a year. What happens if you cut that capex? Oil flows will start falling rapidly."

Production declines as capex soars

As detailed by Steve Kopits (Douglas Westwood) in slide attached, the majors are having an epic struggle to maintain production. If I were them, I would be licking my chops over which independent oil company to acquire at the moment.


"The good news: “I think we’ve seen the bottom,” says Deloitte’s Robertson. “The question is not how low it’s going to go but how long.”

The longer the price is lower, the longer will the under investment period will be =>the higher the oil price will rebound.

P.S. Don't believe all my sh*t as I am an oil bull.

U.S. Rig Count Collapse Accelerates, Production Stays High

February 6th, 2015

http://etfdailynews.com/2015/02/06/u-s-r...tays-high/
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Watch this signal to see if oil’s recovery is for real

By William Watts

Published: Feb 6, 2015

http://www.marketwatch.com/story/watch-t...2015-02-06

(07-02-2015, 08:58 AM)yewkim Wrote: Good morning Moderator

My apology. But it was a forumer who comment on my post, thus I reply in that sense which is TA. Sorry about this.

But I think I would like to clarify my TA is deeper type than those use by trader. And I apply FA as well, I have spent tons of money on these course as well, through courses i have learn and has great indepth into market price action, which pretain to the law of supply and demand. The market price action is pricing oil right now and right here into the FA of oil some 6 months away, as market is always 6 months ahead of the real economy.This is because market think oil demand is going to be higher going forward.

Yes, i think those who disagree should just keep to themselves, and those agree should discuss what step to take to profit from this oil saga, instead of opposite view that end up debating no end, It spam this thread and also both party end sour. In the end, neither of them benefited.

My apology to all here if i ever offended you, words alone are not good expression of my real intention. But truely we must change fast with the market. In fact, if market price action dictate us to do so like last Friday when oil surge of 8% reversal, I take it seriously , thus I post here to share fast. My view of oil has since change to bullish.

Thanks you. I am truthly sorry for starting all this. But I still think oil is heading higher, 65$/70$ is my opinion. Thanks again.

I am convinced that you has posted with a good faith. Thank you.

Next, your posts aren't offensive. I am sure most, if not all participants in the discussion here, aren't offended. They have expressed their views, the same as you has. Unfortunately, or fortunately, the views are opposing. It is good, and exactly the purpose of a forum, and more so for VB.

Regards
Moderator

i always think anyone can learn from anyone. This means you can learn from " The Good, The Bad, And The Ugly. And even from "The Fool". And "The Fool" may be ourself from time to time in the Market.

Oil Companies May Keep Up Output to Repay Debt, BIS Report Says
http://www.bloomberg.com/news/articles/2...eport-says

Oil price recovery possible by year end: Credit Suisse

Jacqueline Woo

The Straits Times

Sunday, Feb 08, 2015

http://business.asiaone.com/news/oil-pri...dit-suisse

Well, it is looking increasingly like shale oil is very nimble, able to start and stop on a dime.

According to this link : http://www.vox.com/2014/12/3/7327147/oil...even-shale

North American shale oil production is up to about 8m barrels a day (bpd) versus a 2m bpd gap in supply over demand, with $65 per barrel production being economical at about 6m bpd production. This assumes no fresh supply at a lower cost of production.

So if I may take a stab at the crystal ball, I'd say $60-$65 per barrel is possible by year end. In the longer term, there'll be cap on oil prices due to the ever steadily improving technology, and continued nimbleness of shale oil players. So $60-65 is likely a long term cap as well (plus inflation + USD appreciation).

I'd go for the oil and service companies like Shlumberger or Halliburton as they'd continue to be long term beneficiaries of the need to spend money to go after oil even as oil prices cap earnings of pure oil plays. In the short term, you could go after the oil majors themselves as they'd tend to track recovering oil prices. In the ETF world for example, the ETFs to watch would be IEO, IEZ, XOP.

It seems that the speculators and traders are already seriously considering pooling their resources in oil storage facilities in anticipation of the rising oil prices by the end of the year.

Brilliant or overconfident?

Link:
http://www.maritime-executive.com/articl...il-traders

By MarEx 2015-02-08 14:47:14

The oil price crash has meant slashed budgets, staff layoffs and mothballed projects for big producers, but oil traders will celebrate their best market for years this week.

As hundreds of dealers flock to London for the annual International Petroleum Week, cocktail circuit talk will be of the chance of huge returns after years of low volatility.

For them the market presents near perfect conditions, mimicking the year after the 2008 oil crash when some booked their best profits in history. Then, those with the know-how and storage were able to lock-up millions of barrels of crude until prices eventually recovered.

The bumper profits on offer are reflected in the long list of IP Week parties, with no firms cancelling their events this year, even as they make cuts in other areas.

"I haven't been more positive about trading conditions since 2009," said Torbjorn Tornqvist, head of trading house Gunvor, one of the world's largest independent oil dealers, told Reuters.

"I see contango in the market, I see the cost of funding going down, I see the dollar strengthening, I see strong refining margins."

Contango - industry jargon for when prices for delivery months in the future are higher than in the spot market - is key to much of the trading boom.

Any trader with access to storage, on land or at sea, can buy a barrel of oil today for $58 and sell it 10 months down the line for $65, based on current prices.

Volatility has also jumped in recent weeks. After posting a 60 percent crash from above $115 a barrel June to near $45 in January, Brent crude oil has rallied by as much as 30 percent, touching $59 a barrel this week.

Prices have swung wildly, gaining as much as 9 percent in one session only to fall 5 percent the next, as traders wrestle over whether a price floor has really been hit, even as supplies look to continue outstripping demand in the first half of this year.

RAZOR'S EDGE

Gunvor and its rivals Glencore, Vitol, Mercuria and Trafigura have seen profits falling in the past five years versus the peak of 2009, although the amount of oil, coal, and gas they move has grown rapidly.

While revenues can amount to more than $300 billion a year for the biggest trader Vitol, profit-margins are razor thin, shrinking to less than 1 percent even in the better years.

"Whoever has storage this year will win," the head of Mercuria, Marco Dunand, told Reuters last month. "Not necessarily traders - but oil companies too and even refiners."

Oil majors BP and Shell, which have the biggest trading operations among international energy firms, have both reported improved results from trading divisions over the past week as part of their fourth quarter results.

"Since 2009, when a lot of oil was stored onshore and offshore, a lot of new storage capacity has been built and a lot of refineries were turned into storage," said Dunand.

Dunand estimates that by the end of the first quarter of 2015 some 400 million barrels of oil worth $22 billion will be stored onshore and offshore as global production volumes are still massively exceeding demand.

However, as storage is being gradually filled in Europe more and more barrels will be sent to the United States where storage capacity is still abundant, meaning potentially record profits for traders with a large presence there.

"There is a lot of spare capacity in the U.S. and some geographical rebalancing still remains to be done," said Dunand.

Copyright Reuters 2015.

(09-02-2015, 08:16 PM)bear Wrote: It seems that the speculators and traders are already seriously considering pooling their resources in oil storage facilities in anticipation of the rising oil prices by the end of the year.

Brilliant or overconfident?

Bear san

You are mistaken. This trade is almost risk free in that they are fully hedged. They are just using the contango to make some money.....