Oil Prices

[BlueKelah]

Warren Buffett Sells Entire Exxon Stake
Oracle of Omaha has spoken.

Will Shale Oil Go the Way of Natural Gas?
Apparently Rig count drop doesn't mean production drop, production can peak months later.

Get Ready for $10 Oil
By A. Gary Shilling
[["Saudi Arabia requires a price of more than $90 to fund its budget. But it has $726 billion in foreign currency reserves and is betting it can survive for two years with prices of less than $40 a barrel.

Furthermore, the price when producers chicken out isn’t necessarily the average cost of production, which for 80 percent of new U.S. shale oil production this year will be $50 to $69 a barrel, according to Daniel Yergin of energy consultant IHS Cambridge Energy Research Associates. Instead, the chicken-out point is the marginal cost of production, or the additional costs after the wells are drilled and the pipes are laid. Another way to think of it: It's the price at which cash flow for an additional barrel falls to zero.

Last month, Wood Mackenzie, an energy research organization, found that of 2,222 oil fields surveyed worldwide, only 1.6 percent would have negative cash flow at $40 a barrel. That suggests there won't be a lot of chickening out at $40. Keep in mind that the marginal cost for efficient U.S. shale-oil producers is about $10 to $20 a barrel in the Permian Basin in Texas and about the same for oil produced in the Persian Gulf. "]]

[yewkim]

http://www.cnbc.com/id/102432925

According to Nomura, there was an increases demand of 2 to 3 million barrel per day since the middle of last year as low price encourage consumption.( u hear that toward the end of the second video, interview with Nomura, Michael Kurtz). So this 14m increase is a really no issue. Market are going through some profit taking. So any simple reason is taken as face value. Don't fall for these news. The demand is still strong as shown in the price action itself.

I think only if 49.5 is taken and stay for 2 to 3 sessions, otherwise oil of 65$/70$ is still on course. I don't see it stay at 50$ for long either.

[yewkim]

cityfarmer

I am referring purely to oil only, not any stock or counter that require due diligent as in value investing.

Oil is heading higher, currently 52$, but i believe with each day pass, the supply is building up. Next week, we will hear again US stockpile at record high, then it may retrace down a little only to soar even higher later.

Just as I see oil the way it is tonight. It drop to 49.83 and then head back higher.

Just as though I have affinity with crude oil, it was 50.5 when i post the early post. Now it is back up to 52. prove market price action cannot lie. The law of supply and demand can never lie. Counting rig shut down and barrels are lagging indicator.

So profit taking over, time for oil to get back to work it way up. So what can we say of supply n demand??? I would not be surprise if oil end up positive by end of today session.

And very soon, we will be back to 53$ and hopefully 55$ taken for good.

[HitandRun]

EOG Resources (one of the pioneers in LTO aka shale oil) - 4Q14 (Market Cap > USD 50 billion)
Reported profit of 444.6 million, after taking into consideration mark to market gains on commodity derivative contracts of 750.1 million, gain on asset dispositions of 431.9 million and impairments of 535.6 million. [Without all these funky stuff, how can EOG report any profit? Looks like 1Q15 would be worse, especially with a much smaller forward hedge...]

Forecasting crude and condensate production in USA of 287 to 297 thousand barrels per day for 1Q15 (vs 301.5 for 4Q14). Expects production will decline further in 2Q15 and 3Q15 due to deliberate attempts to delay well completions. Will cut capex by 40% in 2015.


CEO's key remarks:

Our over arching goal this year is to prepare for oil price recovery.

It is clear that the current oil prices are too low to meet the world's supply needs and the market will re-balance.

We do not believe that growing oil production, in what could turn out to be a short cycle & low price environment, is the right thing to do.

Expects rebound in oil price by 4Q15 or 1Q16 due to drop in US oil production.

P.S. EOG was also saying that it can rely on innovations like High Density Fracs to improve well productivity. I would be a bit sceptical at the moment as the data is a bit iffy on whether such innovations are actually more akin to super straws, or really result in a net increase in recovery % ultimately, only time will tell....

[Behappyalways]

Another Big Reason to Think Oil Prices Aren't Going Up Soon
http://www.bloomberg.com/news/articles/2...ng-up-soon

[henryjohn]

April 2015 Nymex Oil close 50.75. Drop USD1.08.

[BlueKelah]

Even oil traders have to look at the fundamentals to trade.

Oil production and supply still too much despite small growth in demand globally. Short-term may be volatile, long term price should go downwards until something happens to supply.

Demand growth of a few percent a year should not warrant a jump of 10-20percent of price in a few weeks. Its just the traders shorting and covering their shorts.

[yewkim]

Unfortunately, Oil trader trade on perceive demand and supply, they don't use value investing. The word "trader" already designated their designation.

Just as in stock, a 10-20 % move even in a day ( not few weeks) too is not surprising, if the demand and supply of the counter is good. We always witness this in stock over at SGX, isn't it?

So we always say short term price is irrational, but long term fundamental rule. So long term, we are going to see oil at a low again, at 35$/40$, if break, then 20$/25$, hope not, because the fundamental by then will be very very bad over all.

[yewkim]

April 2015 Nymex Oil close 50.75. Drop USD1.08.

So it is over? I too am looking eye big big, LOL

Now we read strike at refineries is getting worse and that is some 18.5 percent of U.S. production capacity, I don't know if that is bad, maybe that will be reason for them to push oil back up again, we wait to see.

And not forgetting Libya. From 1.6 million in January down to current 200,000 because of ISIS. That is quite a lot of reduction.

http://www.cnbc.com/id/102444059

[henryjohn]

April 2015 Nymex Oil close 50.75. Drop USD1.08.

So it is over? I too am looking eye big big, LOL

Now we read strike at refineries is getting worse and that is some 18.5 percent of U.S. production capacity, I don't know if that is bad, maybe that will be reason for them to push oil back up again, we wait to see.

And not forgetting Libya. From 1.6 million in January down to current 200,000 because of ISIS. That is quite a lot of reduction.

http://www.cnbc.com/id/102444059

http://www.cmegroup.com/trading/energy/c...crude.html

The market is the best teacher.