Featured Is Oil On The Way Up?

Nope.

 

Doubt it.

 

The answer is in the article: "Sharp gains over the past three trading sessions were driven by a combination of short covering and chart-readers again looking to call a bottom falsely," Citi said in a report, saying that prices may yet test new lows before year's end.

Oil (or an commodity) isn't going to rise until demand continues to exceed supply. A lot more blood has to be spilled on the supply side and I don't believe the increased demand in earlier forecasts is there.

 

One thing that might drive demand up a little bit is an early winter.
One of the good things about climate change is that......well, it's always changing.
We saw 60's this year on the Redneck Riviera in August (Usually doesn't happen until mid-Sep) so it might be an indicator.

An early winter might mean a temporary shortage in the annual shift to home heating oil, but several things will soften even this impact:
1. No Gulf hurricanes....or even US hurricanes (yet)
2. Conversion to NATGAS a no-brainer now. Solar on the horizon for some areas.
3. Iran spooling up to export the gooey black stuff without restrictions.
4.0 China shifting from supercharged economy to being merely high powered.
4.1 China's exporters (S.A. and some PAC rims) are going to decelerate a bit.
4.3 EU economy shifting from nearly failed to no kidding.....NEARLY failed.
5. OPEC....isn't.

 

Oil prices are so low because of a glut of supply. Saudi Arabia is playing chicken, and hopes others cut production. Saudi raised production in the face of falling demand and greater non opec supply.
OPEC ready to talk, boosting oil prices

Oil Prices Soar Amid Lower U.S. Output Estimates, OPEC Article - WSJ

US production is dropping. The Russian economy is in shambles partially on the low oil prices. European and US gas usaage is going up with the lower prices.

When opec decides the price goes up it goes up. I expect to see $70/bbl oil again due to opec production cuts, but that may take 3 years. As for now its a nasty ride. People are buying less fuel efficient vehicles, and they will be the big complainers the next time the price spikes. The spike in the late 70s (nominal $107/bbl 1980) produced large supplies and a low of nominal $31/bbl in 1986. They rose slowly until the end of the gulf war, then fell to $17.26 in 1998. That is a long time with a broken opec. From 1998 there were steady increases to a peak in 2008 of $100 (for the year, the real peak was quite a bit higher for a short period of time). I think 2015 is the bottom from there. It took a decade to go from the low levels in 1998 to the high ones in 2008. I expect this rise will be slow too.

 

Nope. I am still predicting $1.00 in some areas by Feb_2016.

 

I'm wondering if OPEC didn't shoot themselves in the foot by forcing oil prices so high for so long that it made fracking, as environmentally destructive as it is, a viable way to get oil.

Sure, US and Canadian production will slow down if oil prices stay "low" in the $30-45 range. But the instant oil prices go back up to say, $75-95+ a barrel, couldn't the frackers just start the oil wells back up and drive prices right back down again?

It's not like we'll suddenly forget how to frack. And even with this current high supply, some oil producers are attempting to find more cost effective ways to get more bang for their buck, such as re-fracking areas they already drilled.

That said, I'm not too worried about the oil supply. I'm more interested in the refineries. Anytime one of those guys goes down, gas prices suddenly spike ridiculously high. I saw prices go from $2.52 to $2.99, then 3.29 in less than a week. Currently they're back down to around $2.49 or so, but this is a good reminder for me to get a plug-in, and avoid these sudden price spikes.

 

To be honest, I think the recent jump was a "dead cat bounce".

 

OPEC can now only influence oil prices above a floor established by increased US production.
They can cause a brief spike through very drastic production cuts (think: embargo) but energy is pretty important...and thus the more times they try to influence the spot price, the less effective their influence is the next time.
Right now I'm hearing some people in the biz say that $60 is the new ceiling....which translates into something like $2.50 - $3.00 in a non oppressively taxed environment.
I just don't think that 60 bucks is sustainable when SA can pull oil out of the ground for $16.

POTUS just green lit more exploration, and as pointed out earlier more supply streams are going to be coming on line soon.
Barring some political or natural disaster, I see oil stair-stepping it's way back below 40 for a while.

Some day?
Gas WILL rise sharply, but it's won't be a supply/demand thing.
We're going to have to join some of the more socialistic countries by taxing the stuff to pay for infrastructure - something that will just have to happen sooner or later.

 

45 bucks right now.

 

I hope so, my freakin Prius has depreciated 8k since I bought it used three years ago, while my 2005 Toyota Tacoma has gone up in value by 2k. How the HEL$ am I suppose to come out ahead or break even in the long run!

 

I'm glad the price of oil has been low. It allowed me to pay a low price for my 2013 used Prius. If gas was going way up, fear would have jacked up Prius prices.

My monthly fuel costs have dropped from $300/month to less than a $100.

I hear some States are taxing Prius' because they are not paying enough taxes at the pump.

 

The oil states economies are in trouble now with the Saudi's borrowing billions to keep their handouts going to keep the population from revolting against the government. They can't cut production in the short run or they have to borrow more.

 

Way in the future, if we become a hydrogen based economy, the Middle East can return to their 19th century ways. When the money stops, o well, too bad so sad.

I'm too old to ever see the full hydrogen based economy. Though I think it would be cool to own a fuel cell car in 10 or 15 years if the price comes down to Prius prices.

 

your assuming they made it to the 19th century from the 6th?

 

lol

 

I was flying out of Riyadh, Saudi Arabia in1985 when we were monitoring the Iran, Iraq war. What an interesting place! Trying to sleep for our next mission and the "call to prayer" loud speaker outside my hotel window comes on at 100db. Needed to take different routes to the base every day so not to get killed.

Wonderful experience, but would not go there today. Tourists are still not welcome, so no need to worry about that one.

 

We all die. Just realize our toys will always wear out. They are not an "investment" but a tool to accomplish other tasks.

Bob Wilson

 

We've been fracking for over 50 years. DOE in the 1990s worked with drillers to improve the technique. Even at the cheap oil and gas in the late 90s, it was worthwhile developing better fracking technology.

Sure but that takes time. Oil blackmail, the spikes, the speculation is short lived. It isn't like we can just turn on and off a spigot in the bakkan or the eagle ford. That is why production has lasted this long and prices have dropped so far. Turning it on again takes a long time too.

The price didn't spike just because opec wanted it to last time. political instability in a number of opec nations caused short supplies. Now saudi is pumping a record amount deciding it would rather other countries shut down than it.

I'm worried oil black mail will happen again if we don't continue to cut opec imports. Iran may start over producing with saudi arabia, in a tit for tat gamble to hurt each other, which could send prices lower, but I think we found a real bottom around $40/bbl. Lots of oil in the US costs $39/bbl to produce, and you won't turn it back on at $42/barrel as then you are only making $3 and it may go lower.

Definitely if the US continues to reduce gasoline consumption per capita, the economy will be less hurt by another spike.

I agree refineries are a problem. outside the gulf area refineries, many regions have too little refinitng and poor maintenance. In california I think that is by design to cause price spikes and more efficient cars, but I don't think its good politicy in most of the country. Refining profits are just so low that no one wants to build a new one or properly maintain old ones unless they are in Texas or Louisiana. The gulf refineries do have problems with weather as we saw in 2005, which means its bad to put so much of the countries fuel in one regions hands. The problems this year are a BP refinery in indiana (bp is the worst at maintenance IMHO) and an exxon refinery in California. A small extra oil tax could subsidize some strategic refinery building that would help reduce these spikes.