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Oil's Biggest Bounce Since OPEC "But Economy Is Not Strong & Stocks Too High"
The bottom-callers are out en masse as crude oil prices head for the 3rd up-day in a row and the biigest bounce since OPEC's last meeting. Overnight comments from the BP CEO on OPEC "wanting to test the market" and OPEC delegates warnings that this rebound may not be long-lasting,"prices are stabilizing around $40 to $45, but the world economy is not very strong and stocks are too high.'' Other OPEC delegates suggested prices will drop to $30-35 before this is over (in the first or second quarter)...
BP CEO is not exactly upbeat...
Oil prices may stay depressed until summer due to weak seasonal demand even as Saudi Arabia's strategy of curbing the output growth of rival producers might have started achieving tangible results, OPEC delegates told Reuters.
...
Two other OPEC delegates, one of whom is from a Gulf producer, said they could not rule out prices dropping to as low as $30-$35 due to weak demand combined with global refinery maintenance in the first and second quarters of 2015.
"Prices are supported now by winter and stockpiling,'' one of the delegates said.
Another Gulf delegate said: "The general feeling is that prices will still remain lower than what we all want because of the excess of supply in the market. The expectation is that these stocks will not decrease before the first half of the year.''
"There are a number of good signs, for example the shutdown of some production in the U.S. and Canada. So it means that the policy decision made in the last meeting was the correct one, it'll be slow, painful for some more than others but in the end effective,'' that delegate said.
Biggest jump since OPEC...
But credit is not buying it...
Charts: Bloomberg
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these oil freaks are starting to look like gold freaks. happy like a dog with a bone for the smallest piece of bullish news.
As a farmer I can see the real value of oil and all the products that I use every day that are derived from oil (diesel, fertilizer, drugs, pesticides, plastics, etc.). If I have oil, I can actually do and grow real shit.
Perhaps I can interest you in a financial "product"?
LOL!!
I think he might be interested in Ukrainian Hryvnia denominated war bonds.
Good Lord... IT'S A RECOVERY!!!!!! (you all Believe it now?)
Nah.
Oil has utility. It fuels your vehicle, heats your home and powers the factory where you work.
Gold does nothing but sparkle. Gold will fall to under $800 this year.
Gold to oil ratio is heading back to reasonable levels with gold headed down and oil going up, currently around 25 but still historically high.
Gold's utility is to PAY for oil, and anything else...
oil is a barbaric relict. And my car runs on groupon vouchers.
Forget oil. That was yesterday's trade.
Buy Radioshack, BTFD. It has negative valuation, so its to the moon for you gamblers!
Just delisted from themain exchanges.
Good luck selling.
LOL!
Get right in there deadwood, put your money where you mouth is!
no thanks...
Please give me a second, i'm gonna go get my spacesuit.
Oil bugs.
You have to hand it to the drilling companies. They are slamming the lid shut on new projects at a record pace. Just shy of actually setting rigs and well heads ablaze a-la Kuwait circa 1990 as Iraqi forces exited the country.
They always do, it's par for the course with mineral and energy extraction operations. The oil and gas is going nowhere, so just wait until it's economic to drill again. Same old.
The benefit of oil and gas over coal or uranium is that when the 'mining' excavation stops (drilling), the open oil and gas holes keep producing for quite awhile, and the cost of extending it may not be that much. So if your costs are low, you can still make a fortune from existing low-cost production. So you just get rid of the rigs and drillers, your costs plummet, your margin goes through the roof, and you are still able to pay the bills, make a profit, pay-down debt, and build up a buffer to get rolling again. So people expecting this to fold-up fast may be in for surprise.
Then the question will be how much of this production is non-traditional (fracking)? And of course, how levered?
Alllegedly, fracking requires constant drilling in order to keep up with well fall-off rates.
NO, they don't.
That's a question. The more interesting one is: How much production that operates with lower decline rates will come online while US shale drillers are busy dying and where will it be?
Aussie driller in Eagle ford cost per barrel ~$15 minus royalities close to 10k boepd, so will be interesting to see the decline when ones not drilling at maximum speed.
from 40+ locations this year down to 6, with drilling costs almost 1mil cheaper per hole/frac. no debt and cashed up.
still looks ok to me, and almost 150% discount from recent highs
what time do markets declare self help today? oh wait...........
Love these algo-written stories quoting unnamed OPEC sources. Amazingly hitting just as oil rebounds a bit. And clearly stating the goal of crushing frackers.
Along with the daily mis-interpretations of Greek officials, is there really any point at reading these fairy tales?
Purely for the algo's amusement.
Don't want them getting suspicious, after all.
Shits and Giggles.
Hmm, looks like oil is banking on fueling up all them vehicles sold.
oil looked ready for a bounce in January as noted below
http://bullandbearmash.com/chart/wti-oil-daily-falls-sharply-expecting-w...
this won't last - oil will roll over again
I think they can keep oil above and around 50. The rampant financialization that kept it at 100 for years isn't gone. They will reload and try it again, buying up futures to keep prices high. Interest rates this low will help them build more oil storage facilities. I can already see it, a fund that profits by "building storage facilities to profit from arbitrage blah blah blah" until it blows up and oil is at 30.
If only all of the extra housing could be converted to oil storage...
Do algorithms understand humor yet?
Since the central banks are propping up the markets and debt - it has become very important to prop up oil prices (or at least manage them). Yet another hole in the global economic dike that needs constant attention. Does anyone think there's anything they aren't %^&* with? Probably mapped out pork bellies and cotton prices for 5 years.
Your collapse is managed, do not fear.
Add four more employees and 18 pages of matrices and fourier transforms to the Fed's Unified Global Economic Formula of Dominance
Stawks too high? Obviously we must pump them higher then!
Removing rigs does not shut production down, it generally makes no difference to existing production levels. If you have loans to pay, are you going to close production and default and loss you business and assets, or remain open, produce as much as possible, and make some moves to stay alive a lot longer than doing nothing?
yes, production that is already in place will continue only as long as it can. However, unless you really think that oil will just keep coming out of existing wells at the same rate, then all I can say is, good luck with that.
Remember, the Fed has a printer, they can buy assets much longere than anyone on earth can remain solvent.
See the real problem yet?
But I didn't say that, you did. I pointed out above that production would decline, I also said it may be quite cheap to extend it for a while, again a temporary fix, but those are the moves people make to buy time for prices to come back towards economic. Otherwise just run it until it is not worth continuing with and cap it for later. It's a typical commodity boom-bust. I've seen it plenty of times. The people who don't make it SHOULD go broke and be bought out by those who can keep it operating, at a later date, when conditions improve.
I have no idea why bring QE into this topic.
The Saudis are still in the old 'mega oilfield' mentality where exploration, test wells, production wells and delivery take perhaps 5 years to put into place. Frackers can re-start production in just a few months, as pretty much anyplace you sink a well in North Dakota or other fracking zones is going to produce some oil. If anything, the actual cost to produce 'fracking oil' will decline as the oil services companies will have to lower their prices -- essentially making US and Canadian frackers MOAR competitive with OPEC.
It's going to be very interesting to see how economic this US production is, it may surprise a lot of people. But even if it isn't, like you say, it's going to fire-up production again, as soon as the price rises enough, so this will keep oil and gas prices lower and range-bound for years.
With CAPEX down billions, there has been much opportunity lost already. This is a clear indication (oil production by OPEC), to take down US fracking, Russia and Iran sales.
The best part of all of this is you get to fill up your tank for $20-30 less than you did 6 months ago. A lot of jobs have already been lost, and more will come, with the prices low.
I figure the .gov will paper over all of this anyway, and lie to us some more about the dismal state of jobs. The bank carry trade is alive and well, no matter EPS and Revenues are constantly being moved down to match the lower expectations. How long can this go on? Perhaps for a while longer it seems.
This is the age of manipulation and lies. Forward to the abyss!
What I see is that gasoline now costs 30 cents more a gallon than it did a week ago. In an un-manipulated market with a supposed glut of oil, that should not be possible.
Are you not aware that 10% of US refining is offline due to a strike?
Except they have been expecting this I think because the refinery utilization was near 95% last month and that's not normal this time of year I don't think. So as a result there are massive stockpiles of refined products. Of course that's good that they get worked off for the refiners because they will be able to raise prices but I haven't seen mine rise yet.
BTFD
The path to the bottom is never a straight line. There are no significant factors putting pressure on oil prices in any direction except down. Over supply and no demand is not helped much by less over supply and still no demand, and we're not even to that point yet. This is speculators playing with themselves, hoping the fantasy can continue. Dream on!
$35/bbl bitches. Get used to it.
So long Canada, we hardly knew ye.
Gas going back up...that didn't take long ..was 1.72 yesterday....1.85 today sure tomorrow it will be over 2.00
You do realize this information is available?
http://www.eia.gov/petroleum/supply/weekly/
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