Up 8% yesterday, mainly due to signs of a large future decrease in production in North America. Nothing surprising about any of this, though it did happen a bit sooner than I was expecting. Going to be interesting to see where the price goes from here. On related news, Chevron released their Q4 results yesterday. Decent but nothing spectacular, some asset sales in there that beefed up the numbers and their debt increased by a lot so I'm not planning on hitting the buy button. Exxon to release financials on Monday.
Well, I think we can guarantee that it will spike higher than ever (or at least in the 100 something) and will then instantly drop since it will hurt the global ecomony.
I believe the Saudis are the ones calling the shots here. Should they cut production then oil prices will start rising steadily. But they'd only do that when they've achieved their goals. Until then all we'll see is a slight rise in prices then a dip and so on for a while. But eventually, no matter how long it takes, oil prices will go up once again [and consumers + investors] should prepare themselves for that].
Yes I also think that the eventual rise of brent to higher levels is almost inevitable. Consumers can't really prepare for it, except if they are planning their monthly budgets far into the future, then they should plan on paying a bit more for fuel etc. But for investors there are 3 interesting questions: when will the price of oil bounce back? How high will it go? How to profit from this? I have yet to open any other positions than those that I've had for quite some time, but Exxon released their financials today (going to take a look soon) and then there is one more quarterly report from Suncor that I want to read... after that I might be ready to invest.
The excessive production is already causing major crisis both in Russia and Angola, so this is what happens to the ones with economic sanctions, they suffer the consequences.
Oil has been on the rise recently and I think that now we have seen the bottom. I wanted to buy already when we were hovering at about $49 per barrel but I wasn't too sure of the direction yet. Grabbed some USO today as soon as the markets opened. I'm not too familiar with more detailed products and still need to wait a couple days for some quarterly reports before I dive into any oil related companies. This seems like a good and rather simple way to bet on the rising oil price in the long term.
It's kind of fascinating as to how we got to this low oil environment. I don't recall any analysts predicting this a year ago, even if some are now arguing that the price decline is a structural shift (which if is the case, surely they would have foreseen it?). I just wonder what conversation we'll all be having in a year's time...
A structural change hardly calls for the price to drop 60% in a matter of months. According to everyone last summer "we are running out of oil", and now when we are producing a % or two more than we use, it's suddenly abundant. As always the price is based on speculations about the future, but this dip still seems to be like a huge exaggeration.
Some of it has to do with the election in the USA last fall. I think most people now are more comfortable believing that the USA will become a fairly significant oil exporter. I think even if a Dem wins the White House next election, there just isn´t really a lot of ´save the environment´ motivation right now and it wouldn´t be a priority for any democrats. I think most of the country, especially moderate dems believe it is more important to be oil independent than to overly-protect the environment. I also think the shift from Iran to Iraq by Europe has some long term benefits. I have an open order in for a company called Nordic American Tankers ( NAT ) and will be buying on a dip. I love this company, very good mgmt and they are a good oil play when you are betting on price increases. They do what is called ´spot´ contracts, which are basically short term, or 1-time contracts for shipping oil and they benefit a lot because they own the largest tankers that are still able to transport across the Suez canal. Historically, they are always in the group of companies that gets the earliest benefit in a jump in oil prices. Actual oil companies usually take longer to see the benefits of higher prices.
Yes the fact that the US is drilling more does have an effect. But it's mainly a psychological one, elections last fall won't translate to increased oil production during the same winter. That being said, cost per barrel for NEW shale oil wells in the USA is somewhere between $50 and $90 according to some sources. So once again, these _POSSIBLE_ new wells will not even go into operation if oil prices stay where they currently are. Even the current "abundance" isn't as large as it may seem, now is the season when the refiniries are on maintenance pauses. If you look at the reserve numbers, crude reserves have gone up to all time highs (which everyone is talking about) yet most of the articles barely mention the fact that refined reserves have dropped. NAT is an interesting pick. However their stock price seems to have jumped up with the oil price going down? Strange move for a company that would benefit from higher prices?
