Oil at less than $48/barrel

[Smokescreen]

kschachn....that is simply incorrect and I have no idea how that analysis could have been arrived at when every piece of news and economic study says otherwise.

OPEC IS flooding the market with oil. There are thousands of articles and news reports about it.

USA is definitely NOT bringing more supply to the market. It costs too much to produce it in comparison to OPEC. I live in the heart of the oil industry and they (US and CDN owned oil companies) are shutting down production all over the place. Oil riggers are losing work at quite a rate. Shale oil, oil sands oil production can only occur when the price of oil is high enough to pay for it, which is above $80 a barrel or more. Otherwise the oil companies aren't making a profit but losing money to produce and that won't happen.

Since US shale, Canadian oil sands and OPEC production have enormously different production costs. OPEC is flooding the market to establish dominance in the oil industry. They have the muscle to do it too as they have huge capacity and ability for pennies on the dollar compared to US. This motion to flood the market also has ties back to when USA established by one means or another to have oil sold in US dollars per barrel back in the 60's-70's. Fast forward to today and the economies of scale have shifted that economic weight and methods is no longer viable and OPEC wants it to be known. They have openly said that they have purposely boosted production and will continue to do so for at least a year until they establish their intentions.

This also has an economic side effect to any country whose industry is tied to oil production in that they are slumping. This information is widely available if one were to look it up. Look at the bigger picture here. Punishment to Russia and the US are indeed the agenda.

 

[kschachn]

You are injecting emotion and politics into the facts of worldwide crude production. True, the Canadian and US shale/tar sands oil production will decrease as prices have dropped below their cost to produce - but OPEC output has not increased and "flooded" the market to cause this recent drop in prices. OPEC has not cut production in response to the recent drop, but that isn't the same as flooding the market.

Why should OPEC cut production? Their cost to produce is massively lower than the non-conventional oil producers.

Look it up yourself http://www.eia.gov/

Originally Posted By: Smokescreen
kschachn....that is simply incorrect and I have no idea how that analysis could have been arrived at when every piece of news and economic study says otherwise.

OPEC IS flooding the market with oil. There are thousands of articles and news reports about it.

USA is definitely NOT bringing more supply to the market. It costs too much to produce it in comparison to OPEC. I live in the heart of the oil industry and they (US and CDN owned oil companies) are shutting down production all over the place. Oil riggers are losing work at quite a rate. Shale oil, oil sands oil production can only occur when the price of oil is high enough to pay for it, which is above $80 a barrel or more. Otherwise the oil companies aren't making a profit but losing money to produce and that won't happen.

Since US shale, Canadian oil sands and OPEC production have enormously different production costs. OPEC is flooding the market to establish dominance in the oil industry. They have the muscle to do it too as they have huge capacity and ability for pennies on the dollar compared to US. This motion to flood the market also has ties back to when USA established by one means or another to have oil sold in US dollars per barrel back in the 60's-70's. Fast forward to today and the economies of scale have shifted that economic weight and methods is no longer viable and OPEC wants it to be known. They have openly said that they have purposely boosted production and will continue to do so for at least a year until they establish their intentions.

This also has an economic side effect to any country whose industry is tied to oil production in that they are slumping. This information is widely available if one were to look it up. Look at the bigger picture here. Punishment to Russia and the US are indeed the agenda.

 

[Smokescreen]

Originally Posted By: kschachn
You are injecting emotion and politics into the facts of worldwide crude production. True, the Canadian and US shale/tar sands oil production will decrease as prices have dropped below their cost to produce - but OPEC output has not increased and "flooded" the market to cause this recent drop in prices. OPEC has not cut production in response to the recent drop, but that isn't the same as flooding the market.

Why should OPEC cut production? Their cost to produce is massively lower than the non-conventional oil producers.

Look it up yourself http://www.eia.gov/

Originally Posted By: Smokescreen
kschachn....that is simply incorrect and I have no idea how that analysis could have been arrived at when every piece of news and economic study says otherwise.

OPEC IS flooding the market with oil. There are thousands of articles and news reports about it.

USA is definitely NOT bringing more supply to the market. It costs too much to produce it in comparison to OPEC. I live in the heart of the oil industry and they (US and CDN owned oil companies) are shutting down production all over the place. Oil riggers are losing work at quite a rate. Shale oil, oil sands oil production can only occur when the price of oil is high enough to pay for it, which is above $80 a barrel or more. Otherwise the oil companies aren't making a profit but losing money to produce and that won't happen.

Since US shale, Canadian oil sands and OPEC production have enormously different production costs. OPEC is flooding the market to establish dominance in the oil industry. They have the muscle to do it too as they have huge capacity and ability for pennies on the dollar compared to US. This motion to flood the market also has ties back to when USA established by one means or another to have oil sold in US dollars per barrel back in the 60's-70's. Fast forward to today and the economies of scale have shifted that economic weight and methods is no longer viable and OPEC wants it to be known. They have openly said that they have purposely boosted production and will continue to do so for at least a year until they establish their intentions.

This also has an economic side effect to any country whose industry is tied to oil production in that they are slumping. This information is widely available if one were to look it up. Look at the bigger picture here. Punishment to Russia and the US are indeed the agenda.


What?!

There is no emotion in this, nor politics. It is simply world facts.

http://www.bloomberg.com/news/2014-10-10...ear-market.html

http://www.wsj.com/articles/opec-oil-supply-in-september-highest-since-summer-2013-1412938482

http://in.reuters.com/article/2014/09/30/opec-oil-survey-idINL6N0RV24M20140930


OPEC won't cut production, I never said they would or should, not sure where that even came from. You need to educate yourself on what OPEC is and how they operate etc. The fact that they control almost half the entire worlds oil (43%) give some weight to their actions which have far more reaching effects than the US does.
http://www.aps.org/units/fps/newsletters/201401/opec.cfm

That site you quoted has very little bearing on anything except what is happening in the US and from only one departments point of view within that division. What are we supposed to derive from it?

 

[kschachn]

Oil production by region. Compare the outputs of OPEC nations against North America for the past year or two.

Originally Posted By: Smokescreen
That site you quoted has very little bearing on anything except what is happening in the US and from only one departments point of view within that division. What are we supposed to derive from it?

 

[gfh77665]

Originally Posted By: bvance554
You can easily correlate the increase in energy prices to the decrease in our economy.


No, you have it backwards. You can correlate a DEcrease in energy prices with a DEcrease in the economy.

Last time oil crashed in 2009 we were having a stock market crash and financial meltdown. Conversely, just a few months ago, WTI was $100+ and the stock market was hitting new all time highs.

 

[HTSS_TR]

Originally Posted By: grampi
Originally Posted By: HTSS_TR
Originally Posted By: grampi
How can you say the opposite when the very thing I described is happening right before our eyes? The industry controls prices by controlling supply...the only thing demand has to do with the equation is it tells the industry where to set production levels to maximize profits...it's always been that way and it will always be that way until something else comes along to replace fossil fuels, then THAT form of energy will be price controlled the same way...

If that is the case then why there are more supply than demand as of the last several months ? If oil industry (Exxon-Mobil , Shell, Texaco-Chevron, BP ...) controls the supply side why don't they reduce it to keep crude oil at $100+ ?

All big oil companies can't do anything about curtailing supply, because countries with oil fields don't allow them much freedom in controlling everything.


Are you living under a rock? Supply is higher than demand right now because OPEC is trying to bankrupt Russia, so they refuse to lower production...

You said very clearly "The industry controls prices by controlling supply"

What do you mean "The industry" ?

It's very obvious that the oil industry is hurting with this price falling.

 

[Propflux01]

Originally Posted By: bvance554
Originally Posted By: Propflux01

Easy... Exxon (oil companies) DO control the pricing. One way is by predicting futures, then when demand exceeds what the predicted usage amount are then fuel $$ go up. Keep your predicted usage underbid, and you can keep prices high. Oil has been in glut status for quite some time, and prices are just now coming down. Oil companies also set prices any which way they desire. It is a commodity, and treated as such.


ok, you're right. Big oil also killed the guy that invented the 100 mpg carburetor so they could keep consumption, and their profits high.


If you were "big oil" and wanted to keep your profits up, wouldn't you? Happens all the time in business.

 

[Finz]

Originally Posted By: gfh77665
Originally Posted By: bvance554
You can easily correlate the increase in energy prices to the decrease in our economy.


No, you have it backwards. You can correlate a DEcrease in energy prices with a DEcrease in the economy.

Last time oil crashed in 2009 we were having a stock market crash and financial meltdown. Conversely, just a few months ago, WTI was $100+ and the stock market was hitting new all time highs.


I don't believe that's correct...

A stronger dollar yields cheaper oil... More bang for the buck

The financial meltdown and corresponding price of oil were tied but more coincidental and for reasons outside this discussion and bucking normal market trends.

I believe the stronger case is that

*. OPEC is maintaining production... Especially the Saudis as their production costs are so low in comparison to the others

*. The Chinese, Japanese and India economies are in a slump that has reduced demand creating a surplus, for lack of a better word

*. The US dollar is stronger... Again, more bang for the buck (purchasing power per $)

Plenty of other considerations as well, but, IMO, the above 3 are having a tremendous impact.

 

[bvance554]

Argue all you want about the complex oil market, I don't care. I'm just enjoying the relatively cheap gasoline. I don't care who profits or loses because right now... I'm profiting more than I was a few months ago.

 

[gfh77665]

Originally Posted By: Finz
Originally Posted By: gfh77665
Originally Posted By: bvance554
You can easily correlate the increase in energy prices to the decrease in our economy.


No, you have it backwards. You can correlate a DEcrease in energy prices with a DEcrease in the economy.

Last time oil crashed in 2009 we were having a stock market crash and financial meltdown. Conversely, just a few months ago, WTI was $100+ and the stock market was hitting new all time highs.


I don't believe that's correct...

A stronger dollar yields cheaper oil... More bang for the buck

The financial meltdown and corresponding price of oil were tied but more coincidental and for reasons outside this discussion and bucking normal market trends.


We can agree to disagree.

First a "stronger dollar" is simply a measure of our currencys relative value vs. others, not necessarily an indicator of an overall "strong economy". Thinking this is an easy mistake that many people make. In fact, some nations purposely devalue their currency to spur their economy.

Then, you could claim the depressed crude prices were just a "coincidence" in 2009, but you don't explain the crude prices that ascended along with the market and GDP growth. Growing GDP = more energy consumption = higher crude prices. In fact, overlay a historical WTI price chart with the SP500 or DJIA and see what you think.

 

[grampi]

Originally Posted By: HTSS_TR
Originally Posted By: grampi
Originally Posted By: HTSS_TR
Originally Posted By: grampi
How can you say the opposite when the very thing I described is happening right before our eyes? The industry controls prices by controlling supply...the only thing demand has to do with the equation is it tells the industry where to set production levels to maximize profits...it's always been that way and it will always be that way until something else comes along to replace fossil fuels, then THAT form of energy will be price controlled the same way...

If that is the case then why there are more supply than demand as of the last several months ? If oil industry (Exxon-Mobil , Shell, Texaco-Chevron, BP ...) controls the supply side why don't they reduce it to keep crude oil at $100+ ?

All big oil companies can't do anything about curtailing supply, because countries with oil fields don't allow them much freedom in controlling everything.


Are you living under a rock? Supply is higher than demand right now because OPEC is trying to bankrupt Russia, so they refuse to lower production...

You said very clearly "The industry controls prices by controlling supply"

What do you mean "The industry" ?

It's very obvious that the oil industry is hurting with this price falling.


Any company or country that has anything to do with the exploration of oil, extraction, refinement, etc., (basically everything from finding the oil to pumping the fuel) is part of the oil industry...and yes they are hurting, but they're doing it to themselves...

 

[kschachn]

And the increased supply from NA. Don't forget the US is currently the largest crude producer in the world:

http://www.bloomberg.com/news/2014-07-04...king-saudi.html

All of which will change with the recent fall in price...

Originally Posted By: Finz
I believe the stronger case is that

*. OPEC is maintaining production... Especially the Saudis as their production costs are so low in comparison to the others

*. The Chinese, Japanese and India economies are in a slump that has reduced demand creating a surplus, for lack of a better word

*. The US dollar is stronger... Again, more bang for the buck (purchasing power per $)

Plenty of other considerations as well, but, IMO, the above 3 are having a tremendous impact.

 

[supton]

Originally Posted By: kschachn
And the increased supply from NA. Don't forget the US is currently the largest crude producer in the world:

http://www.bloomberg.com/news/2014-07-04...king-saudi.html

All of which will change with the recent fall in price...


I have to wonder, now that we have ramped up production, if we were to idle it due to loss of profit, how long it would take to ramp back up if Saudi's cut production.

 

[Win]

Per bbl production costs may be relevant to North American producers, but that varies widely, and I question how relevant it is to the middle east and other producers. Oil is pretty much their big source of revenue - they have to pump it and sell it, or they can't pay their bills, once their savings run out.

The Russians have to pump their oil, or their wells freeze and are useless. They also have to pay their bills.

North America has already demonstrated it can produce enormous quantities of crude and was on track to produce another 1M bbl / day beyond what it was already producing, so whether NA produces or not, that is a moderating influence on the per bbl price of oil by itself.

My WAG is that after a few months, maybe years, of this game of chicken, it will stabilize around $60-70 / bbl for the foreseeable future.

 

[SteveSRT8]

Originally Posted By: kschachn
OPEC isn't flooding the market, the US is. OPEC is producing the same amount of oil as they ever have, we are the ones bringing a new supply into the market.

Originally Posted By: grampi
It makes perfect sense. If it didn't, OPEC flooding the market with supply would have no effect on prices...


^^^It would seem that I have discovered one of those confused folk I was telling everyone about...

 

[chrisri]

I've seen on news that oil is under 48 $, but some BRAND oil that's supposedly used in Europe is more expensive at 53 $ per barrel. Is this some media [censored] or there's some truth in it ?

 

[kschachn]

Brand? Do you mean the separate pricing quoted for Brent Crude?

If so, that is always quoted since it is a benchmark for light sweet crude.

Originally Posted By: chrisri
I've seen on news that oil is under 48 $, but some BRAND oil that's supposedly used in Europe is more expensive at 53 $ per barrel. Is this some media [censored] or there's some truth in it ?

 

[kozanoglu]

Originally Posted By: chrisri
I've seen on news that oil is under 48 $, but some BRAND oil that's supposedly used in Europe is more expensive at 53 $ per barrel. Is this some media [censored] or there's some truth in it ?


Yeah specifically expensive for Europe. What makes it really special and sweeter is European tax. Some truth to it.

 

[MalfunctionProne]

YES, but, IF this has not been touched on: When will corporate greed kill this late 90s level of gas prices? WHEN?

 

[chrisri]

Originally Posted By: kschachn
Brand? Do you mean the separate pricing quoted for Brent Crude?

If so, that is always quoted since it is a benchmark for light sweet crude.

Originally Posted By: chrisri
I've seen on news that oil is under 48 $, but some BRAND oil that's supposedly used in Europe is more expensive at 53 $ per barrel. Is this some media [censored] or there's some truth in it ?


It could be, maybe I heard wrong. I do remember however that they did mention it's oil for Europe in a sense it's different in some way. Probably standard [censored] we get . Greedy [censored].