Oil Prices

[Behappyalways]

What matters are marginal costs -- the expense of retrieving oil once the holes have been drilled and pipelines laid. That number is more like $10 to $20 a barrel in the Persian Gulf, and about the same for U.S. shale-oil producers. The estimated $50 to $69 a barrel break-even point for most new U.S. shale-oil production is less relevant.


Ready for $20 Oil?
http://www.bloombergview.com/articles/20...for-20-oil


http://investideas.net/forum/viewtopic.p...4&start=30

[HitandRun]

Ready for $20 Oil?
http://www.bloombergview.com/articles/20...for-20-oil

"$20? I am even ready for $10. Heck, I'll even take money for using gas. "

I like this comment best out of those comments in Bloomberg.

[CityFarmer]

OPEC view on oil price?

Exclusive: Arab OPEC sources see oil back above $70 by end-2015

ABU DHABI - Arab OPEC producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of next year as a global economic recovery revives demand, OPEC delegates said this week in the first indication of where the group expects oil markets to ‎stabilize in the medium term.

The delegates, some of which are from core Gulf OPEC producing countries, said they may not see - and some may not even welcome now - a return to $100 any time soon. Once deemed a “fair” price by many major producers, $100 a barrel crude is encouraging too much new production from high cost producers outside the exporting group, some sources say.

But they believe that once the breakneck growth of high cost producers such as U.S. shale patch slows and lower prices begin to stimulate demand, oil prices could begin finding a new equilibrium by the end of 2015 – even in the absence of any production cuts by OPEC, something that has been repeatedly ruled out.

"‎The general thinking is that prices can’t collapse, prices can touch $60 or a bit lower for some months then come back to an acceptable level which is $80 a barrel, but probably after eight months to a year," one Gulf oil source told Reuters.

A separate Gulf OPEC source said: "We have to wait and see. We don't see 100 dollars for next year, unless there is a sudden supply disruption. But average of 70-80 dollars for next year – yes.”
...
http://www.todayonline.com/business/excl...0-end-2015

[orangetea]

Found the article

http://www.mti.gov.sg/MTIInsights/Docume...11__FA.pdf


MTI Insights
An Inquiry into the Retail Petrol Market in Singapore

Dated 19 May 2011

Correct me if this is a flawed view...

Regarding the oil cartels in Singapore Petrol stations, the only competition will come as more private owners own the stations...

Whereby in the US, owners can adjust the price and create price wars to attract customers. Probably as the US is a large area, the oil conglomerates pass the running cost to owners instead of operating their own.

But i tend to think that pump stations here are already run by individuals as business...
If so, why are they not creating this kind of price war...

Is it because there is agreement with their source (Shell, Chervon, Exxon Mobil and SPC) to abide by the rules and only change pump price only when officially instructed to do so? If this is true, then the competition watch dog in SG is not doing their job...

Then an app like grab taxi would allow competitive fuel prices....

I would like to see diesel at S$0.60 again in my recollection of 2004 prices here

[CityFarmer]

Oil price is volatile...

Oil up on stronger-than-expected U.S. GDP growth data

NEW YORK - Oil rose by more than $2 a barrel on Tuesday, rallying for a second time in three days, after data showing the fastest rate of U.S. economic growth in 11 years bolstered expectations for crude demand.

Crude markets pared gains after preliminary data from industry group American Petroleum Institute showed a build of more than 5 million barrels in U.S. crude stockpiles last week versus expectations for a drop. The U.S. Energy Information Administration will release official inventory data at 10:30 a.m. ET on Wednesday.
...
http://www.todayonline.com/business/oil-...rm-us-data

[Behappyalways]

Who Gets Hurt When Oil Falls
http://www.bloombergview.com/articles/20...-oil-falls

[swakoo]

before moderator removes this post due to OT,
lyrics are to be replaced with this

[specuvestor]

actually just occured to me that with shale diminished, the biggest risk adjusted trade is actually on WTI reversing discount and trading normal premium to Brent again

Quick update on Petrobras that we discussed in another thread:

It suddenly just occurred to me that a good example how a pte enterprise, excluding the banks, can have a moral hazard as well is Petrobras.

Petrobas has debt that is roughly 1/3 of Brazil's foreign reserves. With oil crash I think it is an accident waiting to happen.

http://www.valuebuddies.com/thread-5237-...#pid103337

(Bloomberg) -- Petroleo Brasileiro SA, the Brazilian oil
producer mired in the country’s largest-ever corruption
investigation, is a step closer to seeing its credit rating cut
after Moody’s Investors Service placed it under review.
Petrobras’s Baa2 rating, the second-lowest investment
grade, may be lowered as concern mounts about the company’s
ability to raise cash amid delays in releasing financial
results, Moody’s said in a statement today. On Dec. 3, it
reduced the state-run company’s baseline credit assessment,
which doesn’t take into account government support, to junk.
The producer, which has posted negative free cash flow in
every quarter since 2010, has twice delayed quarterly financial
statements as it works to adjust the value of assets to account
for costs tied to the corruption investigation. The Rio de
Janeiro-based company must report unaudited results by the end
of January to avoid violating agreements on some bonds, which
may prompt creditors to demand their money back.
The corruption probe dates to March, when police began
arresting people suspected of money laundering and other crimes.
Several figures subsequently turned state’s witness. In their
testimony, much of which has been released by the court in
charge of the case, they describe a cartel of construction
companies that for years fixed bids on Petrobras contracts and
paid bribes to executives at the oil producer.

[CityFarmer]

Let's put the oil rigs drop in right perspective. A high of 1609 since June, and the low is 1499, six months later. It is a drop of merely 7%, no big deal isn't it? The reduction in production should be minimum, and nothing much will change in oil supply, IMO...

Oil rigs in US drop by 37 to lowest level since April

NEW YORK (Dec 30): US oil drillers, facing the lowest crude prices in five years and rising competition from suppliers abroad, idled the most rigs since 2012.

Rigs targeting oil declined by 37 to 1,499 in the week ended Dec 26, the lowest since April, Baker Hughes Inc said on its website, extending the three-week decline to 76.

Those drilling for natural gas increased by two to 340, the Houston-based field services company said.

The total rig count, which includes one miscellaneous rig, dropped 35 to 1,840, also an eight-month low.

The number of rigs targeting US oil is down from a record 1,609 following a US$55-a-barrel drop in global prices since June, threatening to slow the shale-drilling boom that’s propelled domestic production to the highest in three decades.

As the Organization of Petroleum Exporting Countries resists calls to cut output, US producers including Continental Resources and ConocoPhillips plan to trim spending.

“We should see the rig count going down at least through the end of the first quarter as a reaction to the low oil prices,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas, before the report.

“By midyear, we should see measurable impacts on production.”

The international benchmark North Sea Brent oil and the US counterpart West Texas Intermediate crude are both trading at their lowest levels since 2009.
...
http://www.theedgemarkets.com/sg/article...evel-april

[specuvestor]

^^ CF its about delta. Not only is shale not going to grow as previously projected but it is going to decline. "Incredible" since shale producers claim they are profitable at $50 yet aggregate production looks like will be declining soon. What is said is not matching action. The fat lady will sing when these overleveraged producers start to bankrupt

And if oil gets marked at year low, shale producers capacity to borrow will drop dramatically as their P1 reserve estimate collapses.

It's about delta. The low cost shale will continue to pump but new capacity will be limited. The growth of shale has plateau if oil stays below US$80 WTI. Business investments don't start and go based on what is oil price is tomorrow and next week. The uncertain outlook for oil to move back above US$100 is likely to crimp the whoole space for next 12 months at least.

GCC will be hurt by the lower oil price but their main expenditure is capex which actually can be deferred. US startegic interest will be hurt as their ambition to be energy sufficient with shale will be delayed, if ever.

Biggest beneficiary is actually China but net net I think the GCC and US had come to an agreement that this is a worthwhile tradeoff vs the global political outcome.

[Image: eqtf1j.jpg]

http://www.bloomberg.com/news/2014-10-17...om-it.html

I cant believe anyone would start a shale project based on break even price of $140. That makes no sense whatsoever.

My rough feel is that shale projects break even is roughly $80-90 oil price which is why I posted earlier shale should be losing money at $85 WTI

OPEC is important because they are major exporter. US is important because they are major importer. There is a difference. And China is major player increasingly

A bit ironic that I was championing shale more than a year ago in this forum when people were still skeptical but when people are fearful now i am saying shale production likely plateau if oil price remains $80 WTI or below

It will be a major event if petrobras defaults, even bigger than Argentina. And Greece is having elections in Jan. 2015 is not shaping up well

http://www.reuters.com/article/2014/12/2...JB20141229

(Reuters) - Petrobras, Brazil's state-run oil company, could be declared in technical default on some of its foreign debt as early as Tuesday if bondholders pursue efforts to force it to speed up its assessment of losses in a giant corruption scandal.

The push, led by New York-based Aurelius Capital, applies to $54 billion of Petrobras bonds governed by U.S. law in New York state. Aurelius, a "distressed debt" fund, is asking investors to put the company into default as "a precautionary step," according to a Dec. 29 letter from the firm reviewed by Reuters.