OIL – Black gold, Texas tea!By popular demand here is our thread for OIL
Best2You4You – Benjamin
This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.
Speaking of oil, here is a link to a blog by David Haggith that I also scan:
http://thegreatrecession.info/blog/central-banks-running-oil-market/
Please do go back and check out his other blog entries on oil (and other economy related topics). I think he presents a macro view along with solid points in a micro setting (USA) that makes sense, at least to me.
Ultimately, oil, like gold, is subject to the whims of Central Bankers who are making up rules (and breaking others) at their whim. Markets will correct in time, but that time may cost us poor ordinary citizens plenty in the run.
Jayne
No position in oil, yet. Debating a position once it falls. It has to. Don’t have any particular companies on my horizon as yet.
Thanks Ben for setting up an oil investing thread. The first thing that I would bring to your attention on this topic, folks, would be this very packed discussion on the coming credit crisis in the oil patch (ie there is much more pain to come, the oil crash has not played out yet), from the experts in resources – ie Sprott:
http://sprottglobal.com/media/83563/february_-_oil_market_commentary.mp3
This three quarter hour talk merits listening to carefully when you’re not going to be distracted. Or listen more than once, as you’ll invariably find you missed stuff first time – it’s densely packed.
I’ll try to summarise from memory briefly :-
– Rick explains how the fracking boom was driven not just by technology but also cheap credit, and goes into details how that credit is likely to evolve going forward
– The fracking industry is going into liquidation
– This will wreak havoc on their corporate (aka ‘junk’) bonds, causing cascading effects all the way to sovereign bonds. Bear in mind that when bonds sneeze, the equity (share price) catches the flu.
– Sprott are going to make out like bandits because they will know the good bonds and equities to slurp up once the whole asset class swoons. They will then collect coupons in the double digits for a few years before enjoying a large capital gain at redemption. (The bad companies will go bankrupt and their assets get bought on the cheap by the good ones.)
Rick specifically mentions Toscana Energy Income (TEI in canada) as being experts in the skill of picking up distressed but good assets in this field. This is a stock he tipped back in WRIC13 (at the same time that he made me aware of Ivanhoe Mines, for those that are following that recent discussion on a different thread). I have been sitting on a position of TEI since then, even after it dropped to a small fraction of its share price along with the recent oil crash.
I would be glad if anyone can add some comment to the following thesis :-
My tentative thesis here is that TEI is not going under because Sprott own them. They will hopefully suffer a further shareprice decline when the effluent finally hits the fan, so to speak, which will be a buying opportunity. If I get a stink bid filled at under C$1 and then in five years the price goes back up to the mid teens, that will be a pleasant experience. However if TEI do a massively diluting private placement which only Sprott and their institutional buddies can partake in, then the share price may never return to those lofty heights and that will not be so pleasant.
Frahman looked at that stock the other day after you mentioned it, but didn’t buy any. I just didn’t consider it the best time to buy, everything is still falling. We are in the middle of all of this with our oilfield company here in LA. We do production work on the offshore rigs. We have had very few jobs since August of 2015. We are on very thin ice at the moment. Thank God we have NO debt! That is the only reason we have survived. There is going to be a great transfer of wealth. There are auctions every week in our area. So many people without jobs, the labor force may not be there when it ever picks up.
We went through the downturn in the 80’s, but I have never seen it like this. Boats and rigs stacked everywhere. Something is very different about this time, but I can’t put my finger on it.
I have some of the oil stocks and I didn’t sell, just letting them sit. I don’t believe we are at the point where we all will be driving electric cars and trucks. After the powers that be quit manipulating things maybe we will have an upswing. Your guess is as good as mine.
Also a question…I saw on yahoo finance the other day about the terriost episode blowing up a Chevron platform in Nigeria. My husband never saw anything on the news and I don’t watch TV so just wondering if any of you had heard anything.
Ben, whatever you add to the coffee in the am …. keep doing it. ๐ You’re great. Thanks for opening the thread.
Until Exxon finds a way to make huge profits from the existence and thriving of electric cars oil will remain the main source of powering our cars. The Koch brothers who between them are worth north of 50 billion simply will shut down any attempt by the likes of Tesla Motors to reintroduce electric cars that Nikola Tesla knew in the early 1900s was the solution for that century and beyond. Hence, oil is here to stay and speculators can drive it up and down anytime they want. No, it is not OPEC, Russia, Saudis that dictate the price but our low profile home grown speculators that are driving it. All the rest is BS and disinformation. Internet is the perfect vehicle to keep the dillusion among common, honest and educated folks that the FIX is not in. No, its not the government as they are just an appendage of the American oligarchs, such as the ones mentioned above. The weapons industry will thrive, the oil speculation will continue…. and the naive will always foot the price. No company is safe if they become targets of such entities as Exxon. So, yes TEI may be a good bet because it is Canadian, but look how devastated tar sands industry in Alberta has become. It is a perfect example that even countries are not safe never mind particular entities. Go figure who or what is next. How many of you readers realizes that the US will force over 50 percent of the population to be self employed within 5-7 years. Who is preparing us for that?? I have a suggestion, start planning now to be able to cope then…… to be continued (please be free to add, challenge or provide your theory about this gigantic shift.
Respectfully for the truth,
Bobby Dee (the Truth Sayer)
Truth sayer….I would like for you to expound upon the statement that within 5-7 years 50 % of US will be self employed? Hummmmm….is that the people on the govt dole? Agree about Exxon too. They were a horrible company to try to do business with. Would you believe that they would put on a function and then divide the cost among us contractors to pay for! ALSO…..those on the take are prevelant in this environment too!
No longer do business with them period, as we don’t operate like this. Just wondering where integrity and morals of this country went to?
Hey investor101 – Very cool to have an ‘oil industry insider’ like yourself here who can tell us stories ‘from the coalface’ as it were – I find them fascinating. On TEI – yes I agree (and hope) it will present a cheaper entry point later this year, maybe early next.
Kindest regards -fr
Author: hendrixnuzzles Comment: http://www.stockgumshoe.com/2016/03/microblog-golds-next-bull-run-what-to-buy/comment-page-4/#comment-4787908
Last year I had large positions in oil but made good exits before the slaughter. Stayed mostly with big oil like CVX, XOM, BP, TOT. Dabbled in PBR and CNOOC. But now I am out of everything.
I would like positions in the oil and gas sector, but feel the macro picture is so uncertain
that I am staying away. I just have no feeling at all for what is happening.
Further I don’t know how to analyze it. There are so many variables. Prices have collapsed and there is going to be a wave of bankruptcies. And there are many many types of companies. Big oil, regional producers, pipelines, oilfield services, MLPs, natural gas, commodity plays, shipping, refiners, deep water drillers, foreign and domestic, and on and on. To say nothing of OPEC and the potential influence of politics.
You are so right on the mark, Hendrix. Also Thanks Frahman for the sprott piece with Rick Rule, I just believe he is a very smart man and I like him. I was cut off midway by our son, LTC Army, 101st airborne now in Taji, Iraq. Technology can be a wonderful thing to allow us to see his face and talk to him, but breaks my heart every time. They are there for 9 mts, this is his 5th time over and I am sick of it all!!!!!!!! He said they are so undermanned it is a shame. Two choppers went in to get the Navy Seal and looked like swiss cheese coming back there was so much fire. This is all so political, just like Rule was talking about. Our world has changed and not for the better. This is absolutely global and I don’t know how anyone can make a rational decision in this environment. This post may seem not in order, but believe me when I tell you it is all about the oil and resources, and at whose expense I do ask?
Elon Musk’s plans for the car industry promise to disrupt yet another market – platinum… http://www.bloomberg.com/news/articles/2016-05-05/oil-isn-t-the-only-commodity-threatened-by-tesla-s-rise
Doesn’t scare me at all… I think new uses will always be found for PGMs owing to their unique catalytic properties. Heck, China’s air quality problem may be a ‘driver’ for more platinum/palladium demand…And who knows, maybe Lithium batteries are going to be replaced by something better – that uses PGMs…
Recall that when digital cameras made silver emulsion films obsolete there were many who predicted the end of industrial demand for silver – whereas it just freed up supply for new innovation – solar panels, electronics…
20+ year #OIL chart #FUGLY #BEAR #FLAG
#OIL #Shorts $DUG $DWTI look great
#BUY (L 4K $DUG) https://twitter.com/qz/status/729363600243068928
via R Murray MD CFII Retweeted R Murray MD CFII โ@Qwovadis 2h2 hours ago
Going to electric cars may cause the price of oil to go down, but where will we get the extra energy needed to charge all the cars? Coal fired plants? Nuclear power plants? Gas fired power plants? I wish politics wasn’t so much a part of this as it is like a wild card. If the European union falls apart, individual nations may well scrap all the ‘green’ efforts as they rebuild their tattered economies.
Well, I guess every petrol car replaced by an electric car is one fewer petrol tank to fill – so that fuel can go to generate electricity for the power grid. But transport aside, there is a whole lot of other places modern society needs oil.
In a weird way most of the food we eat is pumped out of the oil resevoirs: without the fertilizers produced from oil, farms would be growing but a fraction of what they currently produce. (So if oil were ever to run out suddenly, it could lead to famine.) Then there is the whole world of polymers. Burning complex hydrocarbons found in crude oil for heat and electric is actually a shameful waste of a precious resource.
In the long run, given the exponential rate of progress in solar technology, it is easy to see that the world’s electricity demand could easily be supplied from sunlight by covering just a small fraction of one equator-proximal desert with solar collectors. The main stumbling blocks currently are actually in the technology for storage and transmission of electrical energy over continental distances. But I have little doubt that these challenges will be met.
Meanwhile, in the mid-term I can imagine natural gas and uranium based electricity generation taking over from coal and oil, to bridge the time till we have a global solar power infrastructure.
Sprott Resource’s CEO Steve Yuzpe on Q1 2016 Results — Earnings Call
On Sprott Resource Corp earnings call they discuss the oil market and more
http://edge.media-server.com/m/p/72v36mx3
(You don’t need to put your own email details in the registration page, you can give Mickey Mouse’s email address and can still listen !)
The transcript is available on Seeking Alpha: http://seekingalpha.com/a/2d6ga?p=djnw
But you need to register to get past the first page…
Long $SCP but been regretting it for a long time LoL
This morning from AFP: Global oil supply glut to ‘shrink dramatically’ this year: IEA
A global oil glut that has sent prices tumbling is set to “shrink dramatically” later this year, as wildfires have disrupted Canada’s output and demand in India soars, the International Energy Agency (IEA) said Thursday.
Demand for oil worldwide is set to grow at a “solid” rate in 2016, with India the “star performer” after making up nearly 30 percent of the global increase in demand in the first quarter of the year, the IEA said.
“This provides further support for the argument that India is taking over from China as the main growth market for oil,” the 29-nation IEA said in its monthly report.
The oil market has for months been depressed by a vast oversupply.
Oil prices surged to six-month highs this week and are now well over $46 a barrel after plummeting below $30 early in the year. They are nevertheless far below the $100-a-barrel mark of mid-2014.
But the IEA said it believed “that the global supply surplus of oil will shrink dramatically later this year”. In Canada devastating wildfires near Fort McMurray forced a production curb early this month, which, the IEA said, would result in oil supplies falling to just over 3.7 million barrels a day in May, nearly 1 mb/d less than at the start of the year.
The IEA said the events in Canada, however, had not sent oil prices sharply higher, as would have been expected some years ago, with Brent crude hovering around $45 a barrel showing little reaction.
Iran, the IEA said, had provided the other surprise.
Its oil production and exports increased slightly faster than expected following Iran’s return to the market after the lifting of sanctions under its nuclear deal.
Iranian oil production in April was nearly 3.6 mb/d, a level last achieved in November 2011 before Western sanctions against Tehran were tightened, the IEA noted.
“Even more important for global markets, oil exports reached 2 mb/d, a dramatic increase from the 1.4 mb/d seen in March,” it added.
I spent three years immersed in the oil patch as a newbie. FWIW – I did find that the single most important news source was Michael Filloon at Seeking Alpha. I trusted his information like I trust Dr. KSS on our biotech thread, and HendrixNuzzles on precious metals.
jk
P.S. It goes without saying that at the top of the heap is Travis and his Thinkolator!
Very long and deep Stock Gumshoe.
jk
Turkey holds crucial place on oil routes http://www.ft.com/cms/s/0/3d5e0c80-4af0-11e6-8d68-72e9211e86ab.html#axzz4EaIEPJHg
$DWTI #FOMC #Energy -What Now for Oil Prices Following the Fed’s No-Change Decision? SmallCap Network ww.smallcapnetwork.com
#oops, Link 4 above: http://www.smallcapnetwork.com/What-Now-for-Oil-Prices-Following-the-Feds-No-Change-Decision/s/article/view/p/mid/7/id/2126/
$MUR No position – Murphy Oil Sees Quadruple its Average Call Volume
Murphy Oil ($MUR โ NYSE)
http://www.bottarelliresearch.com/trades/2016/08/02/murphy-oil-sees-quadruple-average-call-volume
http://images.bottarelliresearch.com/trades/20160802-murphy-oil-sees-quadruple-average-call-volume/MURaug2.png #image
ThankYou bottarelliresearch.com ~ Ben @H0U3
“North America #Oilfield #Equipment Rental Market – Trends and Forecast till 2019” https://lnkd.in/eJ_PMnn on @LinkedIn https://twitter.com/davidan22751315/status/761158981020594176 ~ Ben
Calendar – If you are in Prague today…Come join me for this Gellner Seminar: “Ungrid-able Ecologies” Gellner’s seminar
Faculty of Humanities, Charles University in Prague; Czech Association for Social Anthropology; Masaryk Czech Sociological Association and Institute of Sociology of the Czech Academy of Sciences invite you to 158th Gellner’s seminar. The seminar will be held on Tuesday August 23, 2016 in AKC, Czech Academy of Sciences (Husova 4a, Prague 1).
Assoc. Prof. Natasha Myers (York University, Toronto, Canada) will give lecture โBecoming Sensor in an Oak Savannah Photosynethetic Mattering, Kinesthetic Attunements, and Protocols for an Ungrid-able Ecologyโ. http://fhs.cuni.cz/FHSENG-510.html?event=13559&lang=en
A quote from above..The author says….”It describes my efforts to cultivate a queer, feminist, decolonized ecology within an ancient oak savannah in Torontoโs High Park, a happening 10,000 years in-the-making.” ?? I think I see the LGBTQUOG&%FL getting longer and more insane by the day.
The largest oil deposit ever found in America was just discovered in Texas http://www.businessinsider.com/usgs-estimates-20-billion-oil-barrels-in-texas-wolfcamp-shale-formation-2016-11
$DGAZ np – 3x Velocity Bear ST – charts and tweet
Monthly: http://finviz.com/quote.ashx?t=DGAZ&ty=c&ta=0&p=m
Weekly: http://finviz.com/quote.ashx?t=DGAZ&ty=c&ta=0&p=w
Daily: http://finviz.com/quote.ashx?t=DGAZ&ty=c&ta=0&p=d
$Dgaz Weekly Volume is Huge. Like dec. 2014 bottom. Makes u go hmm $Natgas.
https://twitter.com/silvertonstock/status/807291915267817472
@silvertonstock Schweet . I’m glad I at least held some $dgaz over weekend Bc of the huge DGAZ volume specifically https://twitter.com/silvertonstock/status/808096732084981760
Thanks Blind John Stocks 4 the posts on $TWTR
Oil Slides After Saudis Suggest Early End To OPEC Deal
https://twitter.com/zerohedge/status/820984333351718912