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Oil Falls Below $40 for First Time Since 2009 as Glut Grows

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Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#151

Post by jessaustin »

dwharrison wrote: post #93
callmeed wrote: post #73

Earlier quoted context omitted.

So, how long until my 5-figure position in UCO gets back to June levels? https://www.google.com/finance?cid=14807175

Tough question. 2-3 years...maybe longer. An awful lot of production capacity has to be sweep out of the North American market (production is actually still going UP!!!). A lot of small to mid-size operating companies will need to go bankrupt...they're the ones keeping production volumes high. They need the cash to cover interest on the bank notes taken out to drill and frack those wells. The other wildcard is how qu…

If Congress would repeal the Carter-era export ban on crude oil, that would go a long way towards re-balancing the North American markets, but that seems to be a low-probability event.

Once the tanks are all full, options for producers will include going bankrupt, smuggling, and... oh, yeah, dumping $100k's on lobbying Congress. I anticipate option 3, even though the warming goons and refiners (bedfellows...) will probably fight it tooth and nail.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#152

Post by mistermann »

redthrowaway wrote: post #143
dwharrison wrote: post #54

Earlier quoted context omitted.

That primarily impacts Canadian heavy crude exports. The BP Whiting refinery was the primary consumer of Canadian crude. Few other refineries (other than some on the Gulf coast) are configured to handle the product. That's why Canadian crude prices are collapsing...and why the price of gasoline in the upper midwest is going up. The only other option for Canadian crude to pipeline export to the Texas gulf coast. The p…

We're already getting squeezed. We officially entered into a recession a while back. Housing prices in Alberta have collapsed. Every other province is about to get squeezed as all the oil patch workers head home and look for jobs. Buying things online sucks, and travelling is a terrible idea. Budget's shot to hell in the middle of an election, which is good if it helps force Harper out.

> Housing prices in Alberta have collapsed.

Sales have collapsed perhaps, but not prices. We shall see if $30 oil can take the wind out of Canadian real estate, I'll believe it when I see it, the confidence level of Canadians when it comes to housing is extremely high.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#153

Post by caminante »

makomk wrote: post #126
ori_b wrote: post #11

This is slightly worrying, because if we want to reduce CO2 emissions, we need to leave the oil in the ground. High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.

This is why the idea that the free market will solve global warming doesn't stand up. We need to leave a huge amount of oil in the ground, it's in the financial interest of oil producers to make sure that doesn't happen, and the price of extraction is low enough that many of them can sell it dirt cheap to ensure it all goes. Indeed, I've seen arguments that the Saudis are driving down the price in part because they'v…

> This is why the idea that the free market will solve global warming doesn't stand up...

Regardless of your suggested approach to solve global warming, I suggest you reconsider your reasoning. There's a limit as to how much oil companies can extract and remain profitable. To that point, oil storage utilization is at a historic high with new investments at a historic low.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#155

Post by redthrowaway »

mistermann wrote: post #152
redthrowaway wrote: post #143

Earlier quoted context omitted.

We're already getting squeezed. We officially entered into a recession a while back. Housing prices in Alberta have collapsed. Every other province is about to get squeezed as all the oil patch workers head home and look for jobs. Buying things online sucks, and travelling is a terrible idea. Budget's shot to hell in the middle of an election, which is good if it helps force Harper out.

> Housing prices in Alberta have collapsed. Sales have collapsed perhaps, but not prices. We shall see if $30 oil can take the wind out of Canadian real estate, I'll believe it when I see it, the confidence level of Canadians when it comes to housing is extremely high.

You're right. Sales are down 30% in Calgary, but prices have only dropped 1.6%. [1] Still, that's compared to a 9% rise for the rest of Canada. [2] I'd still expect them to drop significantly more as laid-off oil workers burn through their savings and find themselves unable to pay their mortgage.

[1] http://www.creb.com/Seller_Resources/Housing_Statistics/ [2] http://public.tableau.com/shared/S48Y522MR?:display_count=no

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#156

Post by cma »

icebraining wrote: post #115
pyre wrote: post #77

Earlier quoted context omitted.

The real "problem" with Capitalism is that the effects of the trade-offs being made are either not felt directly by the perpetrators or the feedback loop is too long that you end up in a "slowly boiling frog" situation. If the person that reaps all of the money for a particular business makes enough money off of the venture that they can insulate themselves from the consequences, that is a failure of Capitalism. For…

A supporter of capitalism would say the problem there is the lack of capitalism - someone should have owned the waterway, so that they'd have an incentive to sue if there was someone dumping stuff.

That would need changes to laws. A real supporter of capitalism would say the government should be owned by a king or group of shareholders who could put those kind of laws into place and defund the care of the disabled, etc.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#157

Post by sadkingbilly »

callmeed wrote: post #73
dwharrison wrote: post #25

And it will go lower! Canadian crude hit $23/bbl earlier in the week. North America is close to maxing out storage capacity...possibly within 90 days. We've not been this close to max storage capacity in more than 80 years. North American crude oil production currently exceeds demand (meaning what we have capacity to refine) by over 1 million barrels a day. All that extra is getting dumped into storage. And the sprea…

So, how long until my 5-figure position in UCO gets back to June levels? https://www.google.com/finance?cid=14807175

That's the problem with oil and gold. No dividends. So you sit on it for a couple of years, earning nothing. Still, oil is a finite resource and is very sensitive to world events, war, etc.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#158

Post by a8da6b0c91d »

maxerickson wrote: post #148
a8da6b0c91d wrote: post #130

Earlier quoted context omitted.

Physical USD cash. There's going to be a lot of deflation as huge defaults, including national defaults, sweep the land. I don't think you understand the dynamics. Oil will stay down and much less will be pumped. Without cheap abundant oil you don't get enough credit circulating in the economy that people can afford higher prices. There is no more cheap abundant oil. The higher cost drillers will simply go bankrupt a…

Demand and supply have both increased during the price decline: https://www.iea.org/oilmarketreport/omrpublic/ That suggests that supply has increased more than demand.

This is temporary. The fracking operations are in the process of going belly up, but pumping like mad in the meantime.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#159

Post by a8da6b0c91d »

saryant wrote: post #144
a8da6b0c91d wrote: post #130

Earlier quoted context omitted.

Physical USD cash. There's going to be a lot of deflation as huge defaults, including national defaults, sweep the land. I don't think you understand the dynamics. Oil will stay down and much less will be pumped. Without cheap abundant oil you don't get enough credit circulating in the economy that people can afford higher prices. There is no more cheap abundant oil. The higher cost drillers will simply go bankrupt a…

America is now the world's swing producer, because our drillers are more sensitive to market pressure than the sovereign producers of OPEC or Russia. If supply becomes tight, American producers can very quickly ramp up production and then shut it in again when demand falls. There's also no reason to believe that further technological innovation won't further reduce the costs of American production, especially in tigh…

American producers are bankrupt. The fields are worth pennies on the dollar. Wake up. It's over.

Re: Oil Falls Below $40 for First Time Since 2009 as Glut Grows

#160

Post by crdoconnor »

makomk wrote: post #126
ori_b wrote: post #11

This is slightly worrying, because if we want to reduce CO2 emissions, we need to leave the oil in the ground. High prices may not be ideal economically, but they do reduce demand for oil, and increase demand for alternative energy.

This is why the idea that the free market will solve global warming doesn't stand up. We need to leave a huge amount of oil in the ground, it's in the financial interest of oil producers to make sure that doesn't happen, and the price of extraction is low enough that many of them can sell it dirt cheap to ensure it all goes. Indeed, I've seen arguments that the Saudis are driving down the price in part because they'v…

>This is why the idea that the free market will solve global warming doesn't stand up.

The idea that there's such a thing as a 'free market' at all doesn't stand up. It's a mythical beast.

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