Oil Prices

The OPEC will call for a cut in production but everyone will cut very little or not cut at all to tou chi..

Oil prices fallen from $100 bucks to $85 over last 2 months.. I just went to refuel my tank at shell.. Was wondering why am I still paying $2.21 for 98!

(10-10-2014, 11:00 AM)DP28 Wrote: Oil prices fallen from $100 bucks to $85 over last 2 months.. I just went to refuel my tank at shell.. Was wondering why am I still paying $2.21 for 98!

Monopoly business here what can we do? Don't be surprised when oil price recovers back to $100, you might pay $2.38 for 98. Even USA pump price have dropped 18cts in response to lower oil price. Here wait long long. Maybe oil price here is only part of the price equation.

Could be a reflection of the poor global economy. The past few years oil maintain expensive as there was the Iran sanctions and arab spring limiting supply

Either that or its the usual pre recession drop


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Energy firms brace for pain as oil price slides
RUSSELL GOLD AND ERIN AILWORTH THE WALL STREET JOURNAL OCTOBER 11, 2014 12:00AM

Energy firms brace for pain
The world is awash with oil but demand is lagging behind. Source: AP
TUMBLING oil prices are starting to frighten energy companies around the globe, especially drillers in North America, where crude is expensive to pump.

Global oil prices have fallen about 8 per cent in the past four weeks. The European oil benchmark closed on Thursday at $US90.05 a barrel, its lowest point in 29 months. The price of a barrel in the US closed at $US85.77, its lowest since December 2012.

Weakening oil prices could put a crimp in the US energy boom. At $US90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, says a report by Goldman Sachs Group. While fracking costs run the gamut, producers often break even around $US80 to $US85.

“There could be an immense amount of pain,” said energy economist Phil Verleger. “As prices fall, you will see companies slow down dramatically.”

Paul Sankey, an energy analyst with Wolfe Research, said the first drillers to react to declining crude prices would be some in the least productive fringes of North Dakota’s Bakken Shale. “We’re not quite there yet,” he said, but a further drop of $US4 or $US5 a barrel will force companies to begin trimming their capital budgets.

Shares of Continental Resources and Whiting Petroleum, which are focused in the Bakken, fell by more than 5 per cent each yesterday.

Jim Noe, executive vice-president at Hercules Offshore, a Houston-based drilling-services company with rigs in the Gulf of Mexico, the Mideast, India and West Africa, said companies such as his were monitoring weak oil prices closely. Hercules said its business was affected by a slowdown in drilling activity in the second quarter. Hercules’s stock fell 6.3 per cent.

The fundamental problem is that the world is awash with oil, but demand for energy is growing more slowly amid tepid economic growth around the globe, especially in China.

Companies are always reluctant to be the first to cut their energy output, hoping that others flinch first. And hedging can help companies weather temporary drops.

The overall US economy, and especially industries such as refining and air travel, would benefit from lower oil prices.

Some US oilfields, including the Eagle Ford Shale and Permian Basin in Texas, would remain attractive for drillers even at much lower oil prices. An analysis by Robert W. Baird & Co said prices could drop to $US53 a barrel in certain parts of the Eagle Ford and still be profitable to drill.

It would take a sustained decline in prices to make companies cut back, some experts say. Earlier this week, Houston energy investment bank Tudor, Pickering, Holt & Co said that while falling commodity prices would cause its clients to question their plans for next year, it was “too early to hit the panic button.”

Long-term price declines are just what some forecasters expect. Barclays cut its outlook on Thursday, citing unexpectedly high crude production in Libya after years of disruptions. The bank now expects Brent crude, the European benchmark, to average $US93 a barrel for the rest of the year, down 12 per cent from the bank’s previous forecast of $US106. Barclays also cut its 2015 forecast, to $US96 from $US107 a barrel.

For the past couple of years, the global oil markets have been buoyed by a glut of crude oil coming out of the US Shale-drilling in North Dakota, Texas and Colorado has increased US production by nearly three million barrels a day since 2011, accounting for all of the global increase. US output more than made up for losses from war or weather disruptions.

The Organisation of the Petroleum Exporting Countries, which typically has propped up prices by cutting its output, is showing signs of discord.

Saudi Arabia has cut what it charges for its crude, a surprising move since many observers had expected it to cut output to buttress prices. A Saudi official late last month said that if oil prices went below $US90 a barrel, oil companies would decrease output and prices would rebound towards $US100.

OPEC competition pushes crude lower
DOW JONES NEWSWIRES OCTOBER 13, 2014 9:15PM

Oil prices fell further in the European session on Monday morning as the price war between members of the Organisation of the Petroleum Exporting Countries intensified.

Iraq became the latest member of the organisation that represents some of the world's largest producers to offer larger discounts to the main benchmarks.

The Middle Eastern nation cut the November price of its Basrah Light crude grade for Asian and European customers by US65 cents, following similar moves by other OPEC members, including Saudi Arabia and Iran.

The round of price cuts have sparked speculation that the group is heading toward a price war as booming global supply and sluggish demand leave the market more competitive.

"What we really need to know is whether Saudi Arabia and some fellow OPEC allies have finally decided that there is no point in fighting the price slide in the face of such an overwhelming supply excess," David Hufton, of oil broker PVM, said. "We have long argued in this report that the OPEC response should be to allow prices to find a level that chokes off the competition and revives demand."

November Brent crude on London's ICE Futures exchange was $US1.82 lower at $US88.39 a barrel. On the New York Mercantile Exchange, light, sweet crude futures for delivery in November were down $US1.32 at $US84.50 a barrel.

ICE gas oil for October was down $US3.75, at $US760.00 a metric ton. Gasoline was down 364 points at $US2.2211 a gallon.

Just a random thought, if we know that Oil has limited supply, why not cut down your output now and keep it for 30 years later and sell it? This is simply because oil has limited supply

The US previously was a net importer of Oil despite having large reserves and is now starting to export as prices are higher. Also here is an article from Motley Fool Sg on oil prices

http://www.fool.sg/2014/10/13/why-are-oi...ding-down/

(13-10-2014, 10:06 PM)CY09 Wrote: Just a random thought, if we know that Oil has limited supply, why not cut down your output now and keep it for 30 years later and sell it? This is simply because oil has limited supply

Let me see if my thoughts are correct. If i make a living only by selling oil and oil price has declined. To continue to sustain my standard of living, i have no choice but to sell more oil.

Brent crude oil price slides to four-year low
AFP OCTOBER 14, 2014 7:30AM

OPEC Oil Production Rises, and More

OIL prices have slid lower, with Brent crude hitting a four-year low, on oversupply worries heightened by OPEC signals that producers have no intention of cutting output.

US benchmark West Texas Intermediate for November on Monday slipped US8c, closing at $US85.74, the lowest price since December 2012.

Brent North Sea crude for delivery in November, the international benchmark, dropped $US1.32 to close at $US88.89 a barrel in London trade, its lowest level since late 2010.

The market took on a “bearish tone” after recent comments from some members of the Organization of the Petroleum Exporting Countries showed complacency with the oversupply situation, according to Matt Smith of Schneider Electric.

OPEC kingpin Saudi Arabia indicated it was “comfortable with price around $US90”, he said, adding that apparently “they are more about market share than price.”

Iraq became the latest OPEC crude exporter to cut its prices after similar moves by Saudi Arabia and Iran.

“OPEC is still giving no indication that it might take steps to shore up prices,” Commerzbank analysts said in a research note.

“Iraq is now the third important OPEC member to significantly lower its sales prices as compared with the international benchmarks,” they added.

However, Kuwaiti Oil Minister Ali al-Omair said on Sunday that he expects falling prices to recover during the Northern Hemisphere winter — but OPEC was unlikely to counter the slide in the short term.

“We expect (oil prices) to increase in the winter season or at least preserve its current level,” Mr Omair said, cited by the official KUNA news agency.

The minister also said he believes that oil will not drop below $US76-77 a barrel, which is the production cost in Russia and the United States.

The decline was expected due to geopolitical factors, a rise in supplies and negative forecasts for global economic growth, according to Mr Omair.

He said Kuwait has not received any invitation for an emergency OPEC meeting to discuss prices but would attend if one were scheduled.

Venezuela on Friday said it would request such an emergency OPEC meeting.

“We are going to ask for an extraordinary OPEC meeting,” Foreign Minister Rafael Ramirez, who is the nation’s former oil minister and ex-head of the public oil company PDVSA, said.

“We need to try to coordinate some sort of action to stop falling oil prices,” he added.

Saudi's inaction is very intriguing

Besides the supply from US shale which we had discussed in other threads, shale should be losing money now at $85 WTI so that part of the dynamics will actually change, I think the reason is to reduce profitability for Russian energy to squeeze their short term USD cashflow, and no I don't think it is a simple conspiracy theory.