/biz/ - Business & Finance

>making a new thread before the old one hits bump limit
oy vey

>seeing my thread being continued and /biz/ having a good thread

Finally.

>>666100
What advice can you give to a noon who wants to safely get in on the oil fun? I have some shares in VNR that I feel should fare well. I have scottrade and can't buy oil futures but have been looking into etf set up on oil

>>666125
if you have no experience trading, i don't recommend getting into oil for the day-trading fun that the old thread was all about.

what i'd recommend you do is lock in with XOM (exxon mobil) and buy shares for your RRSP/401k and take the dividend. with the current dip being close to 88 (52-week 86) it's a pretty good price and it gives you a solid 3% dividend. you can buy and forget until the day you retire.

>>666138
Okay I'll take a look, what about medium to long term? I had some shares in sdrl Which I sold thank god. Do you see these kinds of offshore drilling companies coming back?

>>666125
safety is an illusion.

make of it what you will...

>>666138
this is good advice. i should take heed...

>>666125
i did a little prelim research into VNR and it looks like it's a competently managed company. the hedges the company has going for 2015 are about 20% hedged oil (3.2 million barrels produced, 692 barrels hedged at 91) and locked in at 4ish for NG, which pays above cost atm. what i'm worried about is how they're going to play oil - they're in 8 basins. how are they going to compete with developers who know the lay of the land better?

i want to see their guidance going into 2015 and any update - i expect their end of year 2014 results to be bad, but industry average. i'm not too sure about the future prospects, but it could go both ways.

In the oil crash scenario presented in the last thread, you all discussed the price recovering as rigs are taken offline and production slows. In the context of the Saudi Arabia / western price war going on, is there any chance that the US government would subsidize oil to maintain its precious energy independence, protecting the crash?

>>666188
Protracting*

>>666188
No. I don't forsee any significant increase in energy subsidies to increase production in low price environment because it is entirely unnecessary. consider the following: WTI is forbidden by law to be exported to other countries. WTI is currently trading at a discount to Brent. if the government wanted to keep the fledgling explorers alive, the first step they would have done is revoke that restriction and you'd see a massive rally and a lower brent price as new oil is added into the global production consumption mix. WTI will rise, brent will fall until they reach an equilibrium.

the reason why the government isn't exporting WTI is both because of good/bad policy making and politics. it can be argued from both sides.

from the government's perspective, they lose taxable revenues the longer oil prices stay depressed, which means their budgets get thrown sideways. from the oil production side, they too want high prices for oil so that they can reap profits. it's only the consumption side that wants lower oil prices and the ripple effect that low oil will have, but because most consumption of petroleum products are inelastic, consumers will pay at a higher price anyway without any significant lowering of demand.

from an economists point of view, low oil prices -could- stimulate the economy by allowing more disposable income to be spent on other areas of a person's life and circulate money, and that effect would be best shown by the poor, working poor, and middle class. to find out how much, you'd have to study the aggregate economy, production and consumption patterns and trends. truthfully, it'd be nearly impossible to model because there is simultaneously not enough data and also too much data to digest. /1

>>666217
the potential taxable income from a slightly revitalized consumption base would be pared against the potential taxable earnings from taxing oil companies.

the spillover effects of both would be a highly contentious debate, especially if you include the role of government financing, budgeting and deficit spending. any one who can reasonably come up with an equitable unifying solution should be appointed the secretary of commerce and win a nobel prize for economics.

there is no danger of the production being permanently lost as a result of the saudi price war. production will simply shift owners. the liquidity of the american producers are too high; the market would simply consolidate as it will soon when balance sheets start to fail.

it is my opinion that the USA will not try to protract the crash, but there isn't much the USA can do against foreign energy policy. there is talk about oil being developed in mexico that can go as low as 22/operating barrel. when the keystone pipeline is finally approved and finished, refineries will probably take advantage of the price of west canada sour and re-tune, driving demand of WTI or Brent refinery side down and depress global oil prices. of course this stuff is all medium-long term away (5-10 or maybe more years away) but i think low oil prices are here to stay. don't confuse this with me saying that oil is going to stay at 30-50; i fully foresee oil prices falling and then recovering to 70-80, but i don't see it going back into the 100's any time soon. /2

>>666188
Ala, too big to fail?

It is an election year coming up here...

Honestly, the thought has crossed my mind. IT especially crossed my mind during the last earnings announcements for large oil companies where they didn't even draw down the dividend payments.

>they didn't even draw down their dividend payments

It was extremely irresponsible of them to have paid out those dividends with the head winds those companies will face in the coming year.


we are already subsidizing all their oil exploration... it wouldn't surprise me if we increase that....

They are probably busy putting a bunch of bonus structures in place for all their executives too so that they will get paid even in bail out scenarios...

>>666237
oil companies are not taxed at all after you take into account the subsidies they get for oil exploration.

The first step to revitalizing a tax base from the oil industry is to make them pay for their own exploration.

>>666188
no.
here is a good article that helps explain what is going on globally. http://www.bloombergview.com/articles/2015-02-16/oil-prices-likely-to-fall-as-supplies-rise-demand-falls

something to keep in mind is that the US has a ban on domestically produced crude exports. that means that all that shale oil being produced has to be refined in the US. before a crazy subsidizing scheme could happen, the export ban would be lifted. this might be something to watch out for... if the ban is lifted, US producers are likely to see better revenue and US refiners are likely to see revenue cuts.

>>666217
only crude is banned from export. refined products (like gas) are priced by global market as they can be and are exported. the retail consumer of petroleum products doesn't realize any savings from low wti crude price.

>>666188
just to be clear, rigs are what make NEW wells. rigs being side-lined means no new wells. what has been happening is that producers have been shutting down drilling rigs while doing what they can to increase existing well production... so even though there are fewer new wells being drilled, crude production continues to rise.

tl/dr: taking rigs offline != capping wells off

>>666261

this might be a shot in the dark but did you by chance read >>662503

i know that only WTI is banned from direct export and that refined products are exported globally; that's why US imports so much oil. it exports refined products.

I disagree with you when you say that there are no benefits to the consumer when WTI prices are depressed. true - the majority of the benefit will be given to the refineries, but the end consumer will still realize savings from low WTI prices as evidenced by the drop in gasoline prices over a 6 month period.

WTI and brent are linked together although they do not always move at the same price. in the scenario where a global overabundance of oil is caused by americans reducing their demand of brent and increasing production of WTI thus causing both brent and low WTI prices, it is obvious that the consumer will benefit because marginal cost savings are passed along from a lower cost of feedstock refinery side due to competition between refineries. that number isn't 0. at the same time, refineries are what is going to benefit most from the collapse in oil because refining capacity is rigid and demand for refined products is inelastic. i recognize that the benefits passed along to the consumer are marginal, but that number is not 0. this is why i said it -could- stimulate the economy by allowing more disposable income to be spent, but that it will mostly apply to the poor, working poor and middle class. i don't know if those gas savings would all be spent on consumption or put into savings though.

>>666305
>>666274
talking about imports/exports have made me come to a realization about another indicator i could use to gauge storage capacity for WTI. if a tanker carrying 2 million barrels of crude oil drops off their cargo, they're not going to go back empty handed. they'll have to carry gasoline or some other refined product and ship it to another part of the world right? but if tankers are taken off the line to store oil because of contango, then wouldn't that cause a rise in global gasoline prices rise as less brent makes it over to be refined and less gasoline is shipped out? couldn't we take a look at gasoline spot and futures and use that as a function to measure how much offshore capacity is removed?

>>666317
that's a good thought. we should find out what the next most traded liquid petroleum product is and track it. just make sure it is transported in the same type of tanker crude is.

>>666330
Do lng ;)

>>666305
ok, yeah, i agree with this. what i meant was that US retail consumers will not see prices on finished products that are discounted in relation to global markets (accounting for existing variances.)
true, when refineries produce too much of a region-specific product (like 10% ethanol winter blend gasoline) it will be reflected in the price... but for the most part, global markets set the price on finished petrol products.

no, i haven't read thru the NIRP thread yet.

What companies should I be watching? I have XOM and DWTI and VNR. Right now I am watching from a distance because I am still learning but it's very interesting.

>>666359
i like watching uso and clj15

>>666359

>dwti
>a company

>>666317
i did just a little bit of googling and it looks like 'empty' tankers will travel 'in ballast' to their next load.

i did run across this article from 1987... back when the US was friendly with Iraq... and Iraq was friendly with Kuwait... and they were all hating on Iran. http://articles.philly.com/1987-08-23/news/26168574_1_gas-princess-gas-queen-gas-king

crazy days

>>666305
just read thru that thread. good stuff. info relevant to this thread.

>>663804
>>663860
>>663878
>>663890

that anon was on fire...
i can't believe /biz/ had two great threads at the same time.

Is now a good time to buy UWTI?

>>666374
>2011+4
>never been inside a dwti

shiggy

>>666418
it is not a good time to buy UWTI from a fundamental, position trading standpoint. and it won't be until oil hits 30

it is an extremely risky time to buy UWTI from a swing trader/day trader standpoint

How would the build up of oil supply affect the water and rail transport stocks involved with shipping energy? I'm betting it would first decrease demand over time, and then, if a massive sell-off happens, that these stocks would rebound, at least.

>>666383
i did a bit of research myself too into the matter and learnt a couple new things

http://www.cnbc.com/id/102335399#..

so as of jan we know that there is potentially 25 million barrels of strorage capacity at sea booked by shell.

the article also gave us a reference point to look for - 100,000 was the every day cost to charter one of these ships.

http://www.eia.gov/todayinenergy/detail.cfm?id=17991

this is a list of the classes of ships that deliver oil and petroleum. we don't have to worry about the general purpose and medium range because they only deliver refined products.

the last two classes are the most obvious choice to store oil offshore so they'll be the first to be all chartered off so we can look at the charter price for 12 month contracts and who's buying them to see where we're at for mobile storage.

the middle three classes are deliverable for both reined petroleum and crude. once the supertankers are all gone, we'll see these ones start to get chartered too, which is where the hypothesis that the rise in gasoline prices as reflected by ICE futures and TOCOM crude will most likely indicate the big crunch.

so i also learnt that refineries actually don't to the ethanol blending on site; they're done at the terminal racks. i always wondered if other countries used the same ethanol blend that americans did. it would appear that they don't as international gasoline is best represented by ICE, not RBOB futures.

So: now that the land capacity is expected to be all dried up, we need to start looking at the charter rates for the super tankers and the ICE futures rising.

does that make sense?

>>666686

sweet stuff

>>666686
http://www.bloomberg.com/news/articles/2015-01-14/oilatsea-storage-seen-driving-tanker-rates-to-sixyear-high

further to that, it shows that about a month and a half ago, japan chartered storage at 89,000 for storage

so that got me thinking: why not take a look at the financials of the big tanker companies that were listed on that article?

http://hugin.info/182/R/1897541/673501.pdf

that one there is for Froneline, which indicates for year end 2014:

The average daily time charter equivalents ("TCEs") earned in the spot and period market in the fourth quarter by the Company's VLCCs and Suezmax tankers were $27,900 and $26,000 compared with $24,600 and $18,600 in the preceding quarter. The spot earnings for the Company's VLCCs and Suezmax vessels were $27,400 and $27,200 compared with $23,900 and $19,500 in the preceding quarter.

i tried to access Nippon Yusen Kaisha and the Baltic Exchange and get a quote but they need usernames and passwords and i need like a bill of ladelling and i don't have that but maybe if you anons did, you could post the up to date rates.

regardless though, thanks to the magic of actually decent news reporting from bloomberg, we can see that the storage cost for chartering was approaching 100,000 a day in japan and that gentlemen, is the magic number that we need to look for.

>>666692
an amendment:

1)i got the numbers wrong. I said 89,000; that number is actually 83,853. i don't know why i thought 89,000.

2)japan did not charter for storage; they chartered 83,853 for delivery, but for all intents and purposes, if they're charging that much to deliver, they'll need to pay that much for storage

3)100,000 is the hypothetical maximum, but declining charter rates would also serve as an indicator for whether or not contango has been resolved

>>666692
yeah i know i'm making a lot of posts; i'm kind of writing this stuff down as i find this shit out.

http://www.bloomberg.com/news/articles/2015-02-19/supertankers-speeding-up-as-oil-price-rout-seen-adding-cargoes

Tanker rates have surged amid signals that China accelerated purchases of crude to fill its stockpiles after Brent crude, the global benchmark, collapsed last year. Prices plunged in part because the Organization of Petroleum Exporting Countries pledged to keep pumping oil amid a global oversupply. The ships earned an average of more than $71,000 a day since the start of January, the best start to a year in Baltic Exchange data that begin in mid-2008.

In 2 months they've made more than $71k a day more than they did in january. taking the forecast data that i included from frontline indicating that the contract for year end 2014 was 27k indicates that we're already at $95k day rate for tanker rates.

tankers move faster for two reasons:
1) there is large demand for shipping to storage like to china
2) the above is happening while ships are taken off the line to store oil

we know that old tankers are the first to be carted off to store oil because staying still causes damage to the vessel, but that's still carrying capacity that's taken off the line.

jesus fuck this might be happening faster than i thought.

Is there any real reason to NOT invest in these tanker companies at this time?

>>666738
at least three reasons:
1) these oil prices aren't going to stick around forever and then they go, so do the storage costs
2) locked in contracts mean that not every company will lock in at top dollar as those who locked in at 27k for 12 months aren't going to reap the benefit of 71k storage
3) shipping companies don't just carry tankers, they also carry dry bulk and dry bulk has been in a steep decline
>>666699
another fucking amendment. i'm sleep deprived and i made a mistake. i added 27k + 71k average when i should have subtracted 27k from 71k to show growth total from dec-end feb.
44k increase over two months models...about 2 months at this rate until storage hits 100k

>>666686
>>666692
>>666695
>>666699
>>666745

nice work, anon. hopefully there is another anon here who can access the Baltic Exchange.

>>666738
from the cnbc article posted earlier:
"After years in the doldrums, due to a glut of ships and soft demand, tanker rates have been strengthening in recent months helped by firmer bookings and slower fleet growth."

when the oil market stabilizes, there will probably still be a glut of tankers and lower/no demand for storage.

... although, it is /biz/ness-like to buy high, sell low.

>>666864
That's the new game, anyway. Should've sold my wti shorts at 48 but got greedy.

Are psychopaths better at trading because they don't get emotional about money?

>>666859
Ah the good ol' Baltic.

I used the BDI to get the fuck out of the market in 08 before things really went to shit.

https://www.bondvigilantes.com/blog/2014/07/31/collapse-baltic-dry-shipping-index-telling-us-global-growth/

It is frighteningly low these days.

>>666906
This is part of the reason I have all my money in cash on the sidelines and some of it parked in bets against the market at this point.

surely it's just down because of a return to manufacturing in the US and we are just making everything over here again so we don't need shipping...

mfw SPGSCL tracking up 1.5%
DWTI +1%
UWTI -1%
supposed to move at x3 index

>>666917
i'm actually showing dwti down half a percent.

my face when i buy into dwti and tvix and both underlying indexes move in the correct direction for me to win, but the tracking fucking sucks and i make NOTHING.

>>666920

maybe you SHOULDN'T be expecting your money to always go up when the underlying goes up.

these things are dictated by supply/demand more than the underlying tracking

>>666925

like with the vix/tvix
im looking for the vix to go to 13.4
yet im looking for the tvix to go to 2

Is rig count still @ 1030 PST?

end of the line. everybody off, get cleaned up if you took a beating, and get back in line.

see you guys for next month's wild ride.

>>667052
But the question is: what ride were you guys on? The one going up with oil, or down with oil?

>>667064
I was on the one going down but didn't get off in time. Never thought I'd see $48

>>667080
Oil falling off a cliff again today... or atleast this one index.

oil prices elsewhere seem to be fairly stable.

in either case dwti is responsing favorably.

>>667097
That drop gave me quick 1,5% gains. I'm really jumpy right now, so I'm selling whenever I feel the profit is good.

>>667097
>>667106

Now the wider oil market is reflecting the drop.

>>667052
getting in the line for oil going up (even though it shouldn't).

Slow moving day for oil

let's play a game i like to call who's a crazy mofo?

who's going to hold DWTI/UWTI over the weekend?

>>667131
Bought DWTI at $98 and plan to drop it at $130. I think I'll hold for the weekend.

>>667131
Bought uwti yesterday at 2.85 and its only at 2.88 so I probably will

>>667139
Or maybe I should just sell now cause oil might keep going down next week

>>667131
hahahahaha

holding dwti and i am asking myself this question RIGHT NOW.

The few times that I have decided to keep my positions in leveraged ETF/ETNs over the weekend, based on my conviction and belief in my analysis it has paid off.

but.. i do worry about it everytime.

What if some batshit crazy thing happens to an oil producing country over the weekend? Like David Copperfield just makes Saudi Arabia disappear like he did the Statue of Liberty that time?

mang... I would get fucked.

Good thing that could never happen.

>>667131
yolo-ing some uwti this weekend

>>667138
>>667142
you guys craay! blip go up!!!!

>>667154
>that fucking drop

People are dumping their shares seeing how WTI has not gone up much in price today.

That just tells me not to sell.

>>667138
>>667139
>>667142
>>667145
i just double-downed on DWTI on the pullback because i'm bearish on oil. and i'm going to hold over the weekend.
it's the declining drop of rig counts which has the bulls so up and about. 33 drop this week vs. 43 drop. last week.
but then the inventory report will come out next week.

>>667139
Bought at 2.84 so I'm in the same boat. Gonna hang on and see what happens. Keeping my eye on XOM and dwti but no buying yet.

WTI-Brent spread close to $13 and this is with the USD rally

>>667163
man, i'm bearish too... but THE PATTERN, although slowing, says it'll go up. there isn't anything happening to interrupt that pattern and i don't expect it to until THE DROP... which i guess could happen at any time, but more likely when storage is used up.

you guys holding over the weekend are stiffer then me. good luck!

Just got in DWTI at 112. I'm either gonna sell it before the end of the day or hold during the weekend, which doesn't sound as suicidal as UWTI. Though holding during the weekend is still bad either way.

>>667188
what a coincidence, so did i.
just look at that WTI-Brent spread
it's over $13 now.

>>667193
>just look at that WTI-Brent spread

What do you think this means? Brent going down or WTI going up?

>heating oil
>dem gains

>>667193

Could someone explain to me what the brent spread has to do with anything? As if I were a 5 year old?

From what I can gather, they are two types of oil, which require two different types of refining technique.

brent is an easier oil to refine, which is why it is usually more expensive. (cheaper to refine)

when the spread is tight... does this mean that the price of brent is depressed? and when it is wide does it mean that the price of WTI is depressed?

wouldnt' a wide spread mean WTI should go up, since instead of paying the premium for brent, people could buy wti and refine that instead?

i know there is tooling and machining cost to change the refinery around probably.. but shouldn't these spreads stay more locked?

what is allowing this to open up and close? what is driving this crap?

>>667193
alright... take a look at this USO chart and tell me what the hell it means... why such a predictable pattern that's been repeating for 3 months now?

>>667197
brent and wti are both light sweet... i think they can be refined with the same setup. wti is only sold to US refineries (US export law) whereas brent is sold all over.

>>667198
simplest way to say it is that:
>wednesday EIA inventory storage report comes out.
>Friday baker hughes releases rig declines. >wednesday bears beat the price down and friday bulls come back and say 'this is the bottom!'
we talked about this on the last thread, no?

>>667202
ah.. ok. thanks for the clarification. so that would imply that a WTI and brent spread indicates oversupply in the US, but not around the world, per se.

and price fluctuations in wti indicate US market only supply/demand, while brent price movements indicate world supply demand inclusive of US.

so if the saudi's haven't stopped pumping, and infact are producing slightly more than they stated they would, and world demand is said to be low... then brent should be lower.

and wti being even lower means that the US supply demand position is even more fucked up than the rest of the world.

>>667198
This is a classic triple top break out chart pattern.

Study up on point and figure charts. These little bastards are fucking delicious.

>>667217
yes... so why would you hold dwti? shouldn't we expect to see the optimists drive the price back up? or are you expecting to hold it for a week?

>>667227
I think I should have called it a triple top break down... since it has been deaded down instead of up.

>>667221
yup yup

>>667227
will do. in the meantime, can you answer >>667229

>>667197
>>667202
i think there's a little confusion as to how the brent benchmark works, so i'll explain it a bit.

brent is a grade of low sulfur oil produced in the north sea which is in europe. it is almost certainly entirely produced and consumed there,

when i say brent oil is being refined in the USA, i mean brent-priced oils, oils that are priced according to the brent benchmark. the oils that are priced according to the brent benchmark require refineries are configured differently than WTI in the US because they are not all sweet oil, oils that are priced relative to the brent include a whole basket of different oils like the oman or dubai from the middle east

http://en.wikipedia.org/wiki/OPEC_Reference_Basket

different regions in the USA process different grades of oil. there is geographical difference which means that brent-priced oils can only be processed in refinery locations that are convenient from a shippling perspective. WTI is typically processed in regions closest to the production/storage/pipeline accessible sites of the USA and other parts of the states process sour crudes exclusively like the west canadian select or mayan.

a spread in prices between brent and WTI indicates the difference in production, storage and consumption patterns. the purchasing power of the USD can also affect the spread. the more WTI is unhinged from following brent, the more it follows my bearish hypothesis from the last thread.

>>667229


>>667227 is indicating another triple bottom break down. three O's in a row followed by one lower.

That is only on the technical side of the argument though.

The supply glut and cushing being filled to the brim is the more important REAL reason that anyone would hold DWTI right now and believe that the price of oil will go lower.

supply is at an all time high, demand is not matching it. price generally goes down. that is where we are. the only thing stopping it from going lower is virtual demand from the contango spread and the investors that are willing to actually take delivery of oil and store it. - there is only so much of this storage capacity to go around though and as storage gets more expensive contango spreads will widen from the year long contract price and this will allow the price of oil to fall.

there is a small chance that the futures price of oil will fall too when people realize that companies are still just pumping away and more and more supply glut builds, which will lower future prices as we'll have to work throught the glut in the future...

>>667232
>>667229
i'm holding DWTI because the optimists should have driven the price of it down since DWTI is supposed to work the inverse of SPGGSCI.

you may be holding uwti on friday because you think the price of oil will rise and maybe it will continue on monday, but i think the price of oil will drop on monday,

why am i doing that even though the price of oil could rise on monday like the oil cycle?

because of volatility. i am almost certain that oil will decline in the long run in the future and i am also reasonably certain that oil will decline on monday. locking in at 112 suits my needs. thus, holding a position to short oil best suits my investing needs.

you guys are holding uwti because you think oil prices will keep going up on monday as per the oil cycle right? but what if you're wrong? what's your contingency?

DWTI 116.35 -1.73%
UWTI 2.87 0.88%
SPGSCL 270.20 2.35%

so from here you can see that the index went up 2.35% but oil only advanced 0.88% while bears declined 1.73% and these are all supposed to be x3 leverage. my conclusion is that considering their trading volumes is that the buying pressure that's supposed to keep uwti up is weakening while bears agree that oil is about to go down, which is why they're not declining as much as they're supposed to.

What do you guys think, will "the DROP" come next week already? Storage was filling up pretty damn quick last week, and I don't see why it would've slowed down? Also like >>667244 said, seems like people are betting more atm for oil to go down soon.

>>667244
I agree with this analysis. I actually have INDEXSP:SPGSCLP at 3.3% for the day now.. meaning DWTI should have done -10%. that is a lot of support from bears.

I set sells to get me out of DWTI and TVIX at a very small (negligible) profit but neither has triggered today.

Guess I am holding through the weekend...

I have to wonder about the wisdom in holding DWTI and TVIX at the same time. One is a bet on lower oil prices which should be good for the economy and companies... the other is a bet against the market... hmm.....

>>667251

It'll be while before oil starts dropping like a rock. Until then, DWTI seems more plausible at the moment until inventory report goes full reversal.

>>667258
I think most people think "rig count" means "oil rig." And so they are expecting supply to decrease. "rig" means "drilling rig." That means that supply isn't going to do anything but stay high for at least 6 months while some of the wells start to slow down.

There was a previous poster that said that he thought some rigs were stopped back in october, but i don't remember rig counts dropping till december or january.

in anycase, the supply side isn't going to change till april or june, and by then cushing gon' fill up.

oil is on it's way down. i figure i'll sell when it hits 240. I need atleast 100% return on this investment for the time that I have put into researching it.

>>667265
the highest point for number of rigs in operation was in october 2014 so i peg it 6 months from that day when oil production starts to decline from those wells and sharply (horizontal declines very fast)

that puts me at about late march, early april

i wouldn't be too caught up on making 100% returns. you might never make a sale. it's better to make a portion of the profits and make a sale than to lick your wounds for being stubborn. the short and long positions will reverse very quickly.

>>667235
that helps explain some articles i've read. they do the same thing i think - use 'brent' as lingo for 'oil priced relative to brent benchmark'... i'll have to go back and re-read all this stuff again

>>667243
i'm not holding either thru the weekend. i want to enjoy my weekend! but, your strategy sounds good to me... i too expect a decline in the not-to-distant future

>>667244
interesting. are you sure you're just not seeing what you want to see? (i haven't looked at volumes... just a knee-jerk confirmation bias skepticism aka shitpost)

>>667272
There you are!

Thanks for the explanation. I was wondering how you got your dates. That makes a lot of sense!

>100% returns

I was kind of joking about that. I'll be quite happy with 30% and I likely won't be selling based off % up or down. I tend to actually sell by what I am seeing from the market and what the news is telling me. From that, I'll sell DWTI whenever the drop gets ahead of itself, or whenever the news for oil supply starts to show meaningful decreases. It is likely that I won't gauge the exact top or bottom with this method, but it is usually directionally correct for me.

>>667272

Is there a way... from looking at rig counts, that you can devine the number of rigs that are horizontal? would you guess that 100% of rigs that have been stopped already were horizontal?

I would imagine so....

>>667272
if your production decline forecast is correct (late march, early april) can >>667265 his oil storage capacity forecast also be correct (full around mid-late april)?

omg. we've already seen the bottom!

>>667282
ofc baker hughes

http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother

rig count summary

as you presumed, most of them were horizontal.

>>667283
the land capacity storage should be finished within 1-2 weeks if the rate of oil production accelerated like it has the last 2 weeks. offshore storage via tankers is something i'm trying to chart now based on TCE contracts and storage per day.

my model indicates storage should be finished april; production should decline significantly around march-april

estimates of course; i'm not a prophet so i don't know what the future holds but that's my hypothesis. there are macroeconomic factors which can affect oil prices so timing can change.

>>667272

So I loved your idea so much that I went and looked up some stuff. pic related!

I think early december is our best number to use for when rig count started to drop...

That puts us at late May if it takes 6 months for those wells to start slowing down.

The second and third charts on the following page would lead me to believe that it might take longer for things to slow down, considering there are still rigs out there that are not stopped:

http://www.resilience.org/stories/2015-01-27/tight-oil-production-will-fade-quickly-the-truth-about-rig-counts#

The following shows an example well lifecycle...

http://www.quora.com/What-is-the-average-life-of-a-shale-oil-well-in-the-Bakken-formation

And I think this supports your argument of 6 months, because it looks like half your daily output is gone in about 6 or 7 months.

The interesting thing though is that it does still continue to produce non-trivial amounts of oil for years... So I think we have some supply that will just keep ending up on the market for years.

It may not be at today's crazy supply rate, but i think you could still see supply from fracking in the neighborhood of a third of current production 1,000,000 to 333,000,000 barrel per day.

This is actually quite a bit...

anyway, i'd put the supply decrease as starting in mid april at the earliest.

i think cushing and storage costs will go up and now vs future contract spreads will widen allowing the price of oil to drop a bit more between now and then.

but maybe not by as much as i might have thought earlier.

this has been an interesting research exercise.

>>667325

it's a pretty quick drop off.. but there is a good bit of "Free" production that oil companies aren't going to say no to, once the initial spurt calms down.

>>667325
>>667328
you guys are awesome.
before all this research and analysis, i was really leaning towards a bottom somewhere between 35 and 40/bbl (not quite as low as the goldman forecast)... now, seeing how close production and storage might really be, it seems to be 'too close to call.' if production starts dropping off fast enough that cushing never 'fills', we really may have seen the bottom already at 44.37.

so, before i start growing horns... i was wondering if refinery production is interrupted when they switch from producing winter blend fuel to producing summer blend fuel. i think they switch over to producing summer blend in march and april. even if they shut down or slow down for a few days it could have huge implications on whether there is a major oil price drop or not. right? if the union strike isn't resolved, will the switch-over be smooth? what is involved with switching... just close a couple valves and open others or shut-down, re-tool, re-configure???

you guys are going to know so much about oil...

>>667325
>>667328

good work anon, but one thing you're forgetting is that oil rig counts were rising all throughout last year before plateauing in october-december, which means that if we're seeing results 6-months in delay, we should still see accelerated production 6 months after the highest point of production, which puts it at about late march followed by a production plateau of 2 months then a linear decline in oil production per well for the months after. thus, the highest point in oil productivity should be in late march, early april, followed by two months of relatively steady production from april to june, followed by oil production declining linearly from late-june, early july.

all the while consumption of oil related products should follow historic trends, so oil prices will begin secular market upward momentum going up starting in late june, early july.

that's the production side of the supply equation.

storage side, land capacity will continue to get filled up while production is still ramped up before it plateaus and that storage capacity should be all but filled in 2 weeks time. then, the storage will go to offshore storage, which is at least another 25 million barrels from shell's 12, 12-month contracted super tankers. we'll have to watch out for how much the contract price for hauling crude is to determine when offshore storage is all eaten up.

the hypothetical lowest point of WTI would be the point when production is at peak and storage is at lowest. peak production should occur in late march/early april and plateau for the next two months while storage costs will continue to soar until it runs out. storage should run out when contract to store oil reaches around $100,000 a day to store.

if the refinery strike goes on and affects the winter-summer blend in march, then that will cause storage to be consumed at a faster rate than otherwise, which is why it is important to watch that. /1

>>667792

the strength of the USD as ECB QE kicks in will lower the cost of brent and WTI because they are priced in USD, driving down the price.

slowing/accelerating global/USD production growth or other geopolitical factors will affect the supply-demand situation of brent and we'll need to keep an eye on that and adjust our pricing based on that.

so for me, the trend down in oil should continue anywhere from april-june with the lowest price, all things being equal, being reached late june. i'd probably settle for being off two weeks and lock in long positions mid june OR when I see storage costs rise above $95,000 for off shore.

if prices were to rebound, then it would make shale economically viable again, and produce the same over-supply issue, no?

Chinese data PMI shows contraction in February, at 49.9 up from 49.8 in Jan and bank rate lowered 25 basis points, the 2nd rate cut in 3 months.
USA growth at 2.2% vs. projected 2.6%

Don't want to jinx it but it looks like oil is set to fall on monday

bumparoo

Alright guys, a new week for oil. You folks gonna bet on oil going up or down? Personally, I think I'm jumping on the DWTI train again for the thrills and chills.

I had a dream last night that uwti jumped up to $12.

What the fuck biz why am I dreaming about this shit now

>>668715
But 50 is growth.

pre-market news:

brent knocked down almost $2, 1$ spread narrowed WTI compared to brent thanks to bank of china rate cut and ECB QE strengthening USD. gold is rallying as a result as well, as predicted.

gasoline rbob down $4 from closing of march and into april contracts to 192 indicating price adjustment for refined goods as contango continues

WTI shorts up 17% compared to last week as increasing numbers of analysts agree that the oil bounce might have been a dead cat bounce and be headed lower

how was your weekend /biz/?

>>669949

>iraq and saudi arabia INCREASING production even further

>no sign of stopping in the US or companies going under yet

>oil flowing like water

ya if it went up in the next few weeks i'd be stupefied honestly.

>>670082
not quite. PMI of 50=no change, >50=growth, 50<=contraction

going up to 49.9 from 49.8 is slowing the contraction, but still a contraction

>>670091
actually, there are market consolidation events happening in the USA.

back in dec 2014, Kodiak merged with Whiting Petroleum. they are now poised to be another takeover target due to their assets

SD is a company i'm keeping my eye on for another consolidation event either through acquisition or merger.

>>670093

I'm talking on a larger scale though, big enough to shake up production numbers.

>>670095
a merger or acquisition isn't going to affect production or operations in the short run, but it will reduce the number of players in the oil game in the USA

if you analyze the individual companies, you can see how their pain has translated to declining rig counts. SD, which i just mentioned, cut their capex spending by shutting down 75% of their rigs thanks to the oil slump. it's stuff like this that tells the bigger picture later on

>>670102

Well said i can't disagree at all.

Why is uwti up to 3$?

I feel stupid buying exxon now. Should have waited.

>>670130
it's bullish buying sentiment driving up the price. at this price i would sell if i was holding uWTI and buy DWTI.

it's completely unhinged from reality. it's trading up 5% when the index is tracing 0.7% and it's supposed to emulate 3x.

and this is all when oil is headed DOWN.

>>670136
This, don't do anything rash now. Kill your emotions boys and just ride this out.

I've been wanting to get into dwti for a while now

it's the difference in reporting between the Markit PMI report and the ISM PMI report.

Markit says US grew to a 4 month high at 55.1 PMI

ISM says it fell to 52.9 in feb from 53.5 in jan to 13 month low

market is having trouble understanding which of these two conflicting reports is right

WTI is rising today, closing the spread from $13 to $11 to brent in one day on stronger manufacturing data, which is why WTI is going up, making the index go up and UWTI go up by extension.

i'm actually kind of confused.

>>670138

Oil diving again. Seriously, I can never get used to these bullish rallies at times like these.

>>670191
I know what you're saying, I think everybody knows that feel. Just have to keep calm and carry on watching those ticks and lines...

let the bulls have this day, we'll take the next

>>670225
This, just keep calm boys. I've locked myself in at 116 dollars, and I don't feel any pressure to sell at the moment. WTI will be swinging down soon enough, probably next week at the latest.

Whats your take on CVX for the next 10 years, /biz/?

http://finance.yahoo.com/q/fc?s=CLJ15.NYM+Futures+Chain

>>670233
sooner than that... probably tomorrow. just be patient.

>>670239
the bulls are already losing momentum; oil's down 50.28 from 51 high.

the market's trying to make sense of it: did US manufacturing growth rate rise or fall in feb? two benchmark reports say two different things

meanwhile brent continues its freefall~

they're going to go below $60 soon.

What are our thoughts on this genscape report? Where is all the oil going if not Cushing?

>>670360
I don't get genscape. what does the report say?

>>670392
It said inventories at Cushing only went up 1.39 million barrels last week. I don't get genscape either, but wsj reported that it was a main factor in the price rise earlier.

>>670396
Well according to the EIA report Cushing went up 2.4 million barrels. But I could be just reading/understanding this wrong: http://www.eia.gov/petroleum/supply/weekly/pdf/table4.pdf

>>670408
Those are last week's numbers. The genscape numbers are in advance of the eia release on Wednesday.

>>670441
Alright, then I can understand the market reaction today.

>>670444

11:37 AM Falling Rig Count Is A Harbinger Of Normalization In Crude Oil Supply And Demand - SeekingAlpha
11:12 AM Cushing Will Fill Up - Will It Cause WTI Crude Oil Prices Drop? A Look At 2012 - SeekingAlpha
6:21 AM Oil: Refining Is King - It's More Than The Strike - SeekingAlpha
6:06 AM Gasoline: A Bull Market And It's Not Even Driving Season - SeekingAlpha
4:28 AM Energy Industry Weekly Update - Is U.S. Crude Oil Production Related To Rotary Rig Count? - SeekingAlpha

sheesh... looks like SeekingAlpha is writing this thread.

I know this is a oil thread but what about natural gas? Why isn't anybody talking about natural gas? It is good time to invest in natural gas?

>>670238
in graph format.
this is the reason storage is running out. you can buy 1000 barrels of oil at 49.91 and sell it a month later at 51.87. if you do the transaction instantly that's $1960 minus storage costs (i've heard near $0.50/month/bbl is a good ballpark figure for storage). now do the same thing for 1000000 barrels.

now here's an interesting question: what will happen to the price of oil when all the storage is full? no one will be able to take delivery

they can't shut down production in this cold weather. The oil turns to sludge in the pipes. So low prices will be here as long as it's cold out.

>>670948
depends on what kind of oil it is. all the shale oil is light stuff so that could be shut in if necessary. oil in the san joaquin valley/venezuela is very thick and doesn't flow well in cold temps

Is anyone here actually long on oil/UWTI? I realize that having negative opinions is really popular on 4chan -- this game sucks, this stock sucks, it's going through the floor.

I'm trying to get a sense for how much of the "oil's going to plummet any day now, I just KNOW it" sentiment is typical 4chan faggotry and how much is actually likely

>>670995
that's a stupid question, asking for someone's opinion to form your own opinion is just retarded. before you arrive at the conclusion of whether oil is going to rise or fall, try studying the subject. you could have 100 monkeys telling you oil is going to rise/fall but that's not indicative of their opinion being any more valid than a contrary one. the only way that asking for someone's opinion is helpful is if you accept that their opinion is valid, which means that there has to be some kind of reasoning behind it.

instead of asking how many people think oil is going to rise/fall, ask instead why people think oil will rise/fall.

>>671000
That's why I asked if anyone here is long oil. So they can explain their reasoning.

>>671001
>I'm trying to get a sense for how much of the "oil's going to plummet any day now, I just KNOW it" sentiment is typical 4chan faggotry and how much is actually likely

how exactly are you going to get a sense of whether or not the bearish sentiment is bullshit? have you read the bearish scenario detailed above? there are more than enough arguments explaining why the bearish scenario is likely to occur.

are you asking me to play devil's advocate and spin an opposite story based on the same information? if there were bulls on this board i think they'd have shared their opinion on the matter by now.

what i'm trying to say is, why don't you study the same facts we've all been studying and form your own opinion?

>>671022
why don't you stop being an autistic faggot who can't understand an invitation for discussion

>are you asking me to play devil's advocate and spin an opposite story based on the same information?

if you're bearish on oil, I didn't ask you to do or post shit

>>671023
you call this an invitation for discussion but you can't even form your own opinion. i don't know if it's because you're too lazy to read or just someone to say they're bullish on oil.

i don't need your permission to post, that's the beauty of free speech.

what part of economics don't you understand? maybe i can help you out.

>>671040
>>671040
Chill, you're trying too hard brah. We are creatures of habit dont let this become a personality trait otherwise you wont get far as a person

>>670995
>>671001
>>671023
>>671098

official /biz/ spoonfed fageitz list

>>671000

sick trips brah.

PS: no one is going long on oil UWTI right now, because of a cool phrase called "dont try and catch a falling knife."

shits just like parties: better to show up late than early.

>>671110
reading comprehension isnt your strong suit huh champ? Im open to dialogue about how you came to this conclusion but seeing as the initial statement was just a bit too much for you it would be an exercise in futility

dont worry brah youll make it.... eventually

>>671123

do you have any dialogue other than being a douche? I'd like to read your thoughts, that is, if you have any

>>671127
>douche

Strong words champ, I would engage in a back and forth battle of wits with you but it would be of no use as you have arrived to the battle unarmed

Stay safe brah

>>671135

Nice research, top notch stuff. Certainly will be referring to your studies in the future.

>champ
>brah

Repetitive catchphrases in place of a cogent argument; this is why I come to /biz/.

>>671139
I fail to see which posts gave you the impression I requested information or provided information but that would imply your reading comprehension was significantly higher than the person who I originally replied to. Refer to previous post you are ill equipped in terms of wits.

Birds of a feather they say eh? its okay kiddo next time

>>671148

show researches or gtfo

>>671148
looks like you fell into his sarchasm
>inb4 you spelt sarcasm wrong
>inb4 you spelt spelled wrong
but since we're all here let's talk about asia market close before europe starts
WTI is holding at about $50 with bulls backing the buying pressure. genscape says cushing grew by 1.39 million barrels but they didn't say anything about total inventory growth as there are 0.83 million barrels of oil bypassing cushing per day.
any takers on guessing wednesday's EIA numbers before API releases their report at 4:30?

Bump

>>666081

i hate oil and dwti.
supply is greater than demand on a global scale.

>price remains stable or increases.

this is bullshit /biz

>>671391
Because current price is not indicative of current factors, but of expected future price

>>671399

There are no current indications that the supply demand imbalance will change other than reduced capex, but that will take years.

>>671403
Hey... what if.... Saudia Arabia.... Cuts back

They did what they came to do, which was to put pressure on US / Canada oil investments. Maybe they try for $30 a barrel but eventually they're going to stop flooding the market

>>671412

What if they increase production in an attempt to regain lost market share?

>>671391

Yeah, shit's whack. Holding my ass real tight till tomorrow, since It's all up to the EIA gods at this point.

If I was Saudi-Arabia or OPEC, I sure as hell wouldn't cut production now. If they don't push even some other non-OPEC players out, then they will continue to lose their market share in the future.

>>671434
This.

I think there will be a lot of people holding 60 dollar oil next year with no one to sell it to.

>>671434
I would. To wreck babys like you. How much did you fgts lose?

>>671417
>>671434
it's definitely a possibility that they keep the pressure on but they've already secured several deals with asian countries, I don't know much about the NA situation aside from rig counts and the layoffs

>>671449
Uh, what? I haven't lost anything yet m8, and even if I'd lose everything I would still be ok. So why the negative attitude?

>>671391
well, the bulls didn't rally quite as much as they have been. I think they're starting to peel off... getting nervous waiting for the report just like us.

wait until the API report at 4:30; that will give you the general market perception going ahead tomorrow.

>>671585
Tomorrow?

>>671595
It is normally Tuesday afternoons, Wednesday in the event of a holiday that falls on a Monday.

anyone else watching the house energy hearing?

http://energycommerce.house.gov/hearing/21st-century-energy-markets-how-changing-dynamics-world-energy-markets-impact-our-economy

>>666081
well.. anyone got the word from the API report yet?

>>671647

Based off afterhours trading prices I am guessing that the report is for less than expected crude storage.

so when are all the oil tanks going to be filled up and is the price going to drop

>>671653
next tuesday they will fill up. the government will try to supress the information so that the melt down doesn't happen, but the world will find out by next thursday or friday.

den it habbens.

>>671655
So your thesis is now that it's all a conspiracy?

>>671660
no i'm just joking around now. i don't have a working thesis until someone posts actual numbers from the report.

>>671665
Good. It would have been an obvious joke anywhere but here.

API indicates crude grew 2.9 million barrels instead of analyst predicted 3.7

>>671684
The api numbers have been shading higher than actual, so there's a decent chance we all get smoked tomorrow

so the analysts were off by 0.8 million barrels this round; with genscape and API reporting in less than expected oil storage, EIA is probably going to report similar data.

this is important because it this continues for two weeks in a row then it might be a sign that oil production is plateauing out in which case we'll have to revisit the bearish hypothesis. the sell-off in prices as the contracts expire is still a thing, but the price target might have to be revised. we can't just dismiss new data.

of course it's also possible that less oil is making it to storage because of new freight regulation. a whole bunch of cars got derailed in february so there might be fewer deliveries as a result. oil vapor pressure is one of the hotspot topics at the moment. north dakota is set to implement in april new regulation which would forbid cars carrying high oil vapor pressure crude oil commonly found in shale oil from passing through unless they conformed to lower vapor pressure, which would reduce the amount of oil stored per car.

colder weather conditions (causing sluggishness in the pipes) is another possible explanation.

higher refining consumption of oil though is my wager based on the gasoline inventory, which rose by 530k barrels while analysts predicted 1.7 million decline. there's probably a mix of weaker consumer demand for refined product, but i think it's because of higher refinery utilization. the refinery strike isn't supposed to seriously affect gasoline prices until the switch to summer blends which is supposed to happen in about two weeks.

>>671700
i agree, i think WTI is due for a rally and DWTI is going to fall. it's undeniable that less oil made it to cushing last week. whether this is a one-off or whether it's the start of a trend is something to be hotly contested.

you guys know i'm a bear, but as always, i recommend doing your due diligence. how am i going to play this one? i might exit my short position for the moment and get back in at a better price. i still think oil is going down and i think i locked in at a good price but all the information points to the bulls winning this week, so i'll exit, take a loss, wait for DWTI to go down a little more on friday and reenter on monday then see how next wednesday pans out.

>>671836
I just read that there will be record cold temps across much of the country this week. Does that mean the refineries will keep cranking out those heating oils?

>>671836
I'm with you on that.

If this is going to be the rate going forward, or especially if it continues to slow, we'll see price head up so much that they'll start turning on the rigs again.

that will be the fastest i have ever seen a market reach equilibrium in my lifetime and i will be truly humbled.

>>671845
the largest component of residential heating is natural gas in urban areas with heating oil used in less developed rural areas. winter is ending, so i don't see much need to increase production of heating oil especially since heating oil can be produced from the left-over 23 gallons after the 19 gallons of gasoline is processed from a single barrel of oil.

the price of heating oil however has shot up over the last few days, but this is likely to be one-off.

natural gas on the other hand (ugaz specifically) is likely to see a nice little rally once the EIA reports on the stock, so i'll probably put my money into that for a day before dropping out.

hmm that's weird, oil is going down a little after market

>>671919

>>671919
low volume should be ignored, doesn't really mean anything

>>672282
true, but now the asian markets have weighed in and think oil should head down and in 2:30 europe will take over

>>672345

I just hope it might go down enough, so I can bail DWTI earlier as possible and maybe break even. Gasoline inventories could be the cause of the current price hike, but still scared how the US dollar index has been erratic lately.

>>672401
i'm talking about brent not WTI; i should've specified

it was curious because SA said that it was raising oil prices for asia due to demand but it looks like it was because india cut it's interest rate, strengthening the dollar

if the sanctions against iran are lifted then brent will fall harder, so i guess it kind of makes sense in that context

>>671836
Just exited my position @ 106.00. Lost around 400 euros, but I've made a lot more with DWTI in the past 2 weeks so it doesn't hurt as much. We will see what next week brings in, be it good or bad for oil.

>>672572
oh snap!

>>672572

Also bailed at a lost. Even though my planned exit was today, I still can't wrap around how bullish oil is lately. Not to mention how it's unphased towards today's rising US dollar.

>>672572
why would you sell before inventory

ahahahahahahaaha the bearish hypothesis was right

oil rose by 10.3 million barrels

expect oil to crash now

>>672615
Yessss

>>672615

API report was a bad ruse holy fuck.

>>672615
Fuck. I sold at open and just bought back. Lost about 60 bucks in this fuck fest.

>>672615
What a crazy week.

>>672620
>>672622
>>672619
>>672614
well that's part of the picture. API was wrong about production numbers but cushing itself only built 500k barrels to 49.2 million barrels. genscape was actually wrong on how much it grew (or didn't).

at 444.4 million barrels in storage, we've reached a milestone. from the sept 30 2014 report which indicated a net storage capacity of 439 million barrels, we are now filling up the shadowy "added" capacity that has been added since that time.

Cushing at the time was estimated to hold a maximum shell capacity of 85 million barrels, with 70.8 million barrel working capacity.

the magic number i'm looking for is 67%. when cushing reaches 56.95 (round to 57) million barrels, that's when we should see shit hit the fan. that's 7.8 million barrels of capacity left.

we are currently at 57.88% shell utilization, 69.5 % working capacity

from this point on, things will move even faster.

GL gents

>>672627
Since there's only 7.8 million capacity left, is it best to just hold dwti until next Wednesday. I went in yesterday at 109

>>672632
Remember it only costs 50 cent a barrel to store a cushing a month. There are other storage options out there that cost more.

>>672632
you went in at 109? i went in at 112 on friday, on month end and i debated with myself whether or not i should have faith in my own hypothesis from monday to this morning. in the end, i decided to believe in my work and not to sell and it appears my faith was rewarded.

it is so hard to believe in yourself when the entire world is telling you the sky is falling.

for those of you that sold, i don't want you to feel bad or that you felt cheated. you guys made the prudent, safe choice and all the information available at the time led to that conclusion. you did your due diligence.

as for whether or not you should sell next wednesday, it depends. i think there are still a few cycles left before the crunch so i will personally exit once DWTI reaches about 116 or higher, depending on the multiplier effect of beta-slippage as i forecast tomorrow to be a drop in WTI as well.

and now, some news.

http://www.eia.gov/todayinenergy/detail.cfm?id=20192

gulf of mexico projects are too far ahead to be stopped and their projected production numbers are very interesting. if you read the report, it goes further to say that the current production is unreported. that's right follks, there's production going on in the gulf of mexico that's unreported.

in addition to this, i want you guys to pay close attention to the WTI/Brent spread. this is, as i have said before, a key indicator about what the future holds.

Brent continues its fall and is now below resistance of 60 a barrel. the bears have it now. it will probably go down to 58-59 at the next resistance level and hold until there is more news, but with everyone ramping their QE and lowering their interest rates, brent is likely to continue falling relative to USD strength.

Production numbers and manufacturing growth will be another indicator to look for.

TOCOM slippage is another thing to look for. TOCOM is the BEST indicator for how middle eastern oil is being consumed as it is exported directly to asia.

>>672615
sweet

>>672620
i love a good ruse

>>672622
I thought last night I would get the fuck out early this morning.. but I was making love to my mistress this morning and totally forgot about it.. win/win!

Loving the volatility ride this morning as well.


Yall might like the following article about how SEC rules are forcing companies to currently value their reserves at a price of 95 bucks a barrel and only value reserves that can be economically "proved" at that price, but the future quarters here will force people to reduce their reserve calculations of what can be economically produced based off the lower price:

"The Price of Oil Is About to Blow a Hole in Corporate Accounting"

http://www.bloomberg.com/news/articles/2015-03-04/oil-at-95-a-barrel-discovered-in-sec-rules-on-reserves

I think you will see the stocks of oil company take a dive on valuation concerns. It's a paper worries, but the stock will dive a bit undoubtedly. oil etf's like ERX, that track oil companies, will get hit, and will probably be a buy on the dip.

>>672648
you. i like you.

that report checks out; the reasoning is sound. we've always suspected that companies were going to get consolidated as the oil motionpicture drags out and after this quarter end all the oil developers are going to have to revise their statements. equity collapse in oil sector is not only likely, it is inevitable. we've been saying it since the beginning, this is a pissing match between big balance sheets and saudi foreign reserves.

i'm not saying all of these companies will go chapter 11 over night - far from it. they'll still have some budget or lines of credit left over or they'll cut their capex like SD did. some will probably sell off their reserves cheap to help balance their budget which will make them unattractive investments. i said it before and i'll say it again, a lot of these companies are already dead.

what does that mean?
step one: pick a company
step two: research balance sheet of said company
step three: buy puts in 6-9 months
step four: get in the money and win more money

i'm shorting sandridge like no fucking tomorrow. i lost money investing in you once, it's about damn time i made my money back on your demise.

>>672660
>i lost money investing in you once, it's about damn time i made my money back on your demise.

You. I like you too.

>>672643
I managed to sell a piece at 120 after buying at 115, but I'm still behind. As I woke up I told myself to not let this dwti holding become something I couldn't control. Now that your thesis is very much back in play, I had to get chips back on the table though.

>>672648
I work as an auditor in valuation and the oil holdings I've worked on this year have been very contentious with the clients. As my manager put it, they are mostly "rats nests of trash"

ExxonMobil announced capital expenditures if anyone cares.

>>672673

Mind sharing some highlights? or a link?

>>672678
http://247wallst.com/energy-business/2015/03/04/is-a-12-capex-cut-by-exxon-mobil-realistic/

12% cut, 4.5 billion capex reduction.

>>672401
Fuck guys, I got rused hard! Should've waited...

>>666081

Another good "the price will go lower article out today."

U.S. Running Out Of Oil Storage? Blame Canada.

http://www.forbes.com/sites/christopherhelman/2015/03/04/u-s-running-out-of-oil-storage-blame-canada/

"...sometime in April U.S. storage could hit 'tank tops.' With too much oil and not enough places to put it, the natural market response would be for the price of crude to plummet, maybe even down into the $20 range"

This article says cushing is 67% filled. I believe this to be a bad estimate as I think they are neglecting the capacity needed to mix blends as well as the capacity that may not be readily available. I put the estimate on cushing at closer to at least 75%.

What the fuck just happened? WTI at 51.56?

>>672803
Buy dwti.
You are welcome

That fucking drop

>>672803

>>672803
OH SHIT ITS FOR REALL BUY UWTI BUY UCO NOW

Bought uwti last week at 2.83 and sold today at 3.25. Might have been premature selling. Dwti under 100 now. XOM hanging out around 87. Good buy for both?

>>672811
XOM has been going down since I bought two weeks ago. I think it is an even better buy now. That said you will have to hold for a year.

>>672806 14:05:43
>Buy dwti.

>>672810 14:11:59
>BUY UWTI


Wow.. lots of rational well thought out investing advice here.

>>672818
I'm shitposting. Making money off my awesome LL put option.

>>672803
fuck it. i have confidence in my work; i'll buy more DWTI. 40 more shares at 99.88

watch me lose money trying to catch a falling knife /biz/

Market is closing and the current oil pricing still defies logic. Apparently low demand, high supply and high USD calls for higher oil pricing. I assume this shit is running on speculation, since I refuse to follow the bullish herd at a crazy time like this.

>>672956
i think it's because the bulls are only looking at cushing filling 500k barrels and exxon announcing their capex reduction that's driving up the price.

i'll be honest, even if the above is the reason for the rally, they're not good reasons for a rally. so, i sold some of my other shares and went down heavy on DWTI again.

time will tell.

>>672956
Except youre assuming thats the whole picture, which it isn't. Ever played puzzles? Sometimes its best to not make sense of it till you find them all.

>>672956
woah. i go away for a couple hours to get enchiladas made for dinner before dh gets home and this is what happens. don't even have time to analyze intraday 'cause i've gotta go shitpost on facebook so hubby thinks that's what i've been doing all day............

>>672965
it's obvious that the bulls aren't pricing in the storage situation.

apparently a saudi minister commented on rising demand for oil and price stabilization so the market is ignoring the storage situation in entirety and say it's time to go up.

i wonder how asia is going to feel about this?

>>672969
Good job on finding a matching piece. Big boys of the world are talking to each other now instead of having their backs at each other.

iin b4 congress passes bill to lift export ban and all the bears get fucked

>>672969

In the same sentence though, he said that Saudi Arabia would pump as much oil as was needed to satisfy the new clients they are picking up.

This means the people that used to supply those clients will likely still have the ability to pump and net production should increase.

Of course demand is going to grow, we've known that ever since we had emerging markets like india and china with huge GDP numbers.

Why the bulls decide that today is the day to recognize OBVIOUS growth is beyond me. It takes a saudi minister to remind the world of the countries increasing GDPs?

ridiculous.

>>672803

wti is actually at 5.8?

>>672978
They would risk alienating their constituencies and they're under no pressure to do that.

>>672978

republican controlled congress.... making a move like that to dick over the american people? maybe.

but still.. probably not.

>>672978

the only way for congress to be under pressure to do this is if WTI gets down into the 10s. as a bail out measure for american oil companies.

in this scenario, the bears have already won.

>>672981
honestly man, i have no idea. this has gotten to the point where i can't predict the short-term outcome with any measure of reliability anymore. it's like the marked no longer cares about indicators or warning signs.

10.3. that's double-digit increase in supply inventory and the price still goes up. i don't think the bulls care about news or reports anymore they're just going to buy.

let's see how long they can keep this up.

Is it possible that Cushing was kept emptier this week on purpose because the refinery maintenance coming up will push the capacity limits there? Just trying to understand what the numbers mean.

>>672983

woops looks like they had bad earnings
then dej idk wtf is going up for

>>673042
Yet when Warren Buffet sneezes the market yellows

>>673244

Hike is running on speculation and positive optimism. I would want to ride the nonsensical bullish rally wave, but there's that side of me telling that I'll get smacked a lot worse than what happened today.

>bought uwti at 2.90 last week
>decided to sell today at 3.10
>jumps to 3.30 30 minutes later
why am i so bad at investing?

>>673507
PIGS
GET
SLAUGHTERED

>>673510
You're right. I should be happy with what I made. Still, I can't help but to feel bad knowing that I could have doubled my profit if I had held on for 30 minutes, or the rest of the day.

>>673123

No, refinery maintenance would mean it would build up then decrease during the summer months to meat demand. The producers aren't going to change their production until they can't store it somewhere. This report means that production may be decreasing to match demand or it is simply noise in the week to week data.

>>673521

Also I want to add I can't wait to see what's going to happen when there isn't any more storage left come June. It is going to be crazy.

I've been thinking what if they are matching oil supply the same as demand and the almost full storage is for max profit for when prices start going up.

Here's a dumb question from an oilfieldfag why are you guys and the market even touching this given the risks right now? You can't make the same profit trading something more stable? Or are you all dreaming of some crazy hike to the moon only oil can make? That would make sense but at a time like this isn't the writing on the wall? How could it go up barring some unpredictable Big World Event?

>>673575
Greed mainly. Nothing else is as volatile as oil currently. Unless you want to play penny stocks which is even more insane.

>>673575
it's the volatility that makes it worthwhile pursuing. you'll never get rich if you never take risks and this is the safest risk with the biggest return that i can find.

if things pan out and i make it out of the cycle keikaku doori then i'm going to be set pretty much for life. sometimes you've just got to take that one big risk.

>>673510
Cramer pls go

>>673589
>>673587
Thanks for the info. What percentage of your portfolios are in oil right now?

>>666081
What do you guys expect from Thursday & Friday? More of bulls running the show? Also what's the bump limit on /biz/?

If you buy oil stocks right now and are able to have a 2-5 yr time line you are 100% in the money on the major players. Not to mention some amazing dividend payers out there. Once oil hits $100 wait a few months maybe collect another dividend just sell it all and move on to something else.

My current portfolio on oil
RDS.A 225 shares @ $63
HAL 200 shares @ 41.75
RIG 200 shares @ 16
VGENX 200 shares @ 50.50

For how long should someone plan to hold onto an leveraged ETF like UWTI?

>>673617
1/3rd of my entire port is shorting oil ATM. I will use the proceeds of that movement to go long oil immediately after the big crunch and hold until oil hits around $65-75 and sell then go in the year after in november.
>>673627
bump limit should be 300 like the other boards
>>673650
not too long. EFT suffers from EFT decay so ideally you want to get in and get out on big movements and then put your money into something else before you go in for the next big movement.

>Girlfriend dumping money she's comfortable losing into our savings account.
>Still unsure if I'm gonna try to get into oil with a piddly couple hundred dollars.

>Need something to do then sit on my ass all day.
>Got no problem studying infographics and shit.
>Have a boner for economics & meta/micro/macro in general.

Wat do fellas?

>>673712
Hey man, if you want to do it and can take risks, go for it.

>>673677
Once you go long on oil, are you gonna go into stocks such as XOM?

>>673042

>>673773
thanks for infographic but that's an unconfirmed report and that doesn't explain the timing for the sudden trend reversal

if a pipeline got blown up it'd have been confirmed by a news source by now.

prices are sinking today though, which is nice

>>673773
Yeah, I doubt that any attack would have that big of an impact without serious damage to the pipelines. And even if it did, how would people know it the very instant the attack starts?

Anyay, DWTI going up again/oil going down. How's your Thursday morning starting USA bros?

>>673773
libyans are saying that the security of their 11 oil fields are in jeopardy

oil wells in the Ajil field however, were set on fire in iraq, but those fields were controlled by ISIS and they only outputted 25,000 barrels a day - and that was when they were run by competent workers.

>>673784
so, the API report out on Tuesday said:


crude inventories rose by 2.9 million barrels from last week


which was a much smaller than expected inventory increase, leading to some confusion...


until the EIA report on Wednesday said:


U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.3 million barrels from the previous week. At 444.4 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.


and oil began to fall... but then some middle east/Africa news broke in the US:
More turmoil in Libya as attackers hit two of the country’s oil fields on Tuesday and the Islamist group Dawn launched an air raid on the country’s Sidra oil terminal


and then:


Iraqiya TV channel said in flash news followed by IraqiNews.com, “The ISIS group burned today oil pipelines in Tel Husaybah east of Tikrit.”


and:


YEMEN GUNMEN BLOW UP OIL PIPELINE IN SHABWA: ARABIYA

of course there has to be more to that rally than middle east/Africa oil news... but it might be a contributing factor.

>>673795
sorry about the format... pasted from email and it didn't show that way in composition box thingy

>>673795
instability in the middle east and africa undoubtedly contributed to the rally in WTI, which is weird because WTI gained moreso than brent, but as i said, it's the Aijil oil field which got set ablaze by ISIS members when the iraqi went on the offensive, and the Aijil oil field was formerly controlled by ISIS

http://ca.reuters.com/article/topNews/idCAKBN0M10Z420150305

there were gunman at the sidra oil terminal and they caused heavy damage to the administrative/residential buildings and equipment, but it was the government of libya who counterattacked with air raids, not any islamist group

http://www.aljazeera.com/news/middleeast/2015/03/libya-attacks-isil-oil-fields-150304224800443.html

your news is kind of on, kind of off. they're more rumors than news, but i can definitely see why markets might be moved by them, especially since information from the middle east is jumbled

>>673805
speculation in a highly volatile market where even the API and the EIA don't agree and you expect me to get my facts straight while i'm spreading rumors of war? lol! this ride is still wild but we need higher highs and lower lows in order to keep the thrills!!!

gl today gents and ladies.

>>673811
amen brother, GL and good hunting

'bout an hour now before the bulls get out of bed to come crash our party?

>>673911
well, they can crash it now... in at 100, out at 103.99.

there are a lot of bulls that believe we've bottomed out, i wouldn't be surprised if they decided to ramp up the pressure again even though every country is forecasting lower growth and high risk of deflation

mexico, india, china; the list goes on for revisions in growth forecast

central banks are either cutting or keeping their rates frozen at or near 0

QE for ECB is now set to start officially on the 9th, japan renewed their commitment to buy back bonds, some fed mems are now revising their rate hike for 2016.

consumer spending is probably going to go down again with the rate the USD is powering up, and this isn't even its final form.

germany jan. factory orders down 3.9 instead of 1.0 predicted, france PMI in contraction, 0% growth GDP for italy, eurozone down 9% collective. UK PMI is up though, not surprisingly because the rest of europe is so uncompetitive.

US PMI indicates weakening manufacturing, exports down, imports up, there is no reason for oil prices to pick up except for middle-east risk now. that is the only real thing the bulls have to support themselves now.

but after lunch time the bulls will be back and oil will rally again because that's what they do nowadays, go all in.

>>673940

<--- see that award?

yeah, you didn't win it. :)

they're not gonna fool me today!

>>673943
Good thing he doesn't need sunshine, only money matters!

Anyways, I'm feeling like the bull tide might -finally- be starting to die off? Or am I just being rused again?

>>674038
i'm staying in my barrel until i see some confirmation. they're keeping dwti off 106 and probably going back to 103 for some line-dancing. i'm so tempted but i know i'm beginning to smell like bacon.

>>674038
wednesday and thursday is usually the bear's turn to shine and friday's are the bull's but wednesday's turn of events has rattled the markets and forcing a reevaluation. we're expected to see declining rigs for the 13th week in a row; god forbid if baker hughes reports an increase in rigs because that will be the last straw on the bull`s back as it would mean that the oil producers will be scaling operations upward. i would be very surprised, nay, shocked if that happened.

i predict friday to be a bull's day as normal.

Predictions for next week: Eia announces another surge in surplus, refinery strike ends twenty minutes later, bulls win.

>all 31 banks pass the fed's stress test

Under the severely adverse conditions, stocks fall by 60 percent by the fourth quarter of 2015 and housing prices drop by about 25 percent. Unemployment peaks at 10 percent, gross domestic product declines by 4.5 percent and the price of oil rises to $110 per barrel. Long-term Treasury yields fall to 1 percent in the fourth quarter of 2014 and then rise slowly.

yeah with 110 oil of course you'll pass the stress test. you adjust to 55 and you'll see the cracks go through the roof because banks have made tremendous loans and bets on shale oil over the last seven years.

this is bullshit, we're being spoonfed lies

>>672956

I read an article this morning saying that the price rise in oil after the latest huge glut report was a short squeeze.

I expect oil to continue to fall.

I like Mark Cuban coming out today and telling everyone the sky is falling too. That's nice. I hope more people start acting a bit more realistic about the current market valuation....

>>674167
have a look at this article... i like the optimism but i just don't see it until we start seeing flat/declining inventory.

http://www.futuresmag.com/2015/03/05/only-diamonds-last-forever

whatever the case, i think the end is near.

>>673795
>U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.3 million barrels from the previous week. At 444.4 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.


us crude consumption is ~19 million barrels a day. this is 23 days worth of storage if they stopped pumping right now.

if you were to see a supply shortage of 5% of daily consumption, it would take 467 days for us to eat through our supply glut.

oil gon' be down for a long time!

and it has a long way to fall still.

oil produced in the future will have to compete with the cost of oil in storage.

so we are going to see 60 dollar oil for atleast a year or two probably.

>>674186
looks like the same problem oil companies have >>672648

sort of off topic, but i wonder what became of this: "The G20 confirmed that uninsured bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure.

This leads to the logical conclusion that following a bank failure, a bank deposit is no longer money in the way a banknote is.

As Zero Hedge noted: “Large deposits at banks are no longer money, as this legislation will formally push them down through the capital structure to a position of material capital risk in any ‘failing’ institution. In our last financial crisis, deposits were de facto guaranteed by the state, but from November 16 holders of large-scale deposits will be, both de facto and de jure, just another creditor squabbling over their share of the assets of a failed bank.”"
http://www.afr.com/p/markets/small_step_for_leap_for_tbtf_banks_ZLrMJCNOG4jNty1KOD9KRP

and yes... i know... it's zerohedge but i seem to remember reading something soon after about JP Morgan beginning a sort of NIRP (maybe in that yellen thread) on large deposits likely to flee in a crisis. i just wonder how many ways these banks are playing with numbers in order to pass the test.

>>674251
here is a more cloudy outlook... one that i think most of us could get behind:
http://www.marketwatch.com/story/storage-dearth-may-drive-oil-prices-to-30-2015-03-05?mod=MW_story_more_headlines

>>674251
the bearish hypothesis that i've been working on for the last two weeks indicates that peak production should be reached late march - april followed by a plateau of 2 months and serious declines in oil production after that.

the key to the hypothesis is the cost of storing oil will eventually force massive selling and create artificial supply, as the storage cost for storing oil is cumulative. if the low cost environment for oil remains at this level thanks to higher production, less demand growth and increased storage then eventually there will be a massive squeeze because traders can't afford to maintain their position anymore and must close similar to how the trading worked during the subprime mortgage crisis. it's the artificial supply that will be added to the existing supply as everyone starts selling oil contracts that's going to kill oil prices. much like an earthquake, there's going to be an aftershock. why? Because OPEC, specifically Saudi Arabia isn't cutting production like they did in 2008.

everywhere i go, bulls keep saying oil bottomed out, oil bottomed out, look at price $43, oil bottomed out, but then they don't realize that the only reason oil prices recovered so fast the last time was because OPEC cut production in addition to lower US oil rig counts, and they can cut production on the flick of a switch because oil producers in OPEC are largely state owned (at least 51%).

shale oil isn't. it's determined purely by economics.and a certain number of wells must be drilled and oil produced to satisfy debt obligations.

the reason why i am bearish on oil and why i think bulls are idiots is because they don't understand that fundamentally, shale oil is going to follow brent prices, not the other way around and so long as brent prices stay low like OPEC wants and saudi arabia has repeatedly said they will continue to produce, the people that hold WTI in storage are the ones who are going to /1

the bust of 2008 wasn't caused by the shale boom

>>674321
lose money storing oil because oil prices aren't going to recover at the same rate or price as it did 2008-2009.

and IF the USD keeps strengthening like it has, holders lose money even faster because brent devalues, and with looming deflationary pressures slowing down growth and increasing the real value of costs, then bears should come out on top /2

someone should start a new thread; we're gonna hit bump limit soon

Do you think the retarded production capability due to LA ports being blockaded has anything to do with the ongoing reduced consumption?

Let's be honest the only reason there's a supply glut is because someone's not using it anymore. But whom?

Perhaps we weary consumers...

>>674321
>the hypothesis is the cost of storing oil will eventually force massive selling

How can this be true if storage is less than 50 cents a barrel per month at Cushing?

>>674422
>the only reason there's a supply glut is because someone's not using it anymore.

Right, this is driven by lowered demand only.

It has nothing to do with an 80% increase in domestic production, and saudi arabia opening the taps on their end at the same time...

>>674441
the futures spot price for oil 1 year (12 months) in the future is currently 60.69.

the present spot price is 51.04

the spread is 9.65, which is the profit to be made by holding oil for 12 months.

it costs 50 cents to store oil at cushing for a month, before the lease expires and prices get negotiated upward as supply fills.

at current prices assuming 50 cents to store a barrel at cushing, you will make 3.65 in profit as a result of holding oil for 12 months.

as storage capacity declines, the cost of storage rises as alternative locations are utilized to store oil. those options cost more than cushing, and if offshore, land storage. when the future benefit of storing oil over a 12 month period is less than buying a futures contract in that time (backwardation) then a massive sell-off will occur as everyone tries to exit their loss positions (because holding oil at now is worth less than in the future). this creates artifical supply as the oil inside the storage is being sold at a discount to cut losses. in essence, using current numbers, 444.4 million barrels becomes 888.8 barrels on paper.

producing more oil and increasing the stored amount lowers the future price for oil as there is more oil available in the future to use. thus with every increase of oil storage inventory, the price narrows between future spot price and current spot price. if there is no upside to holding oil in the future, then everyone will want to exit, hence the firesale.

a persistently low futures price for oil caused by factors outside of storage. the strength of the USD for example, lowers the price of brent because the USD is more valuable. WTI follows brent downward as brent is the benchmark. this narrows the spread between future spot and spot.

cost of storing oil (50 cents) rises in real value as USD is valued more over other currencies. storage costs at cushing will also rise as storage capacity runs out because of storage demand. /1

>>674305
>http://www.marketwatch.com/story/storage-dearth-may-drive-oil-prices-to-30-2015-03-05?mod=MW_story_more_headlines


fantastic chart. thanks for the article!

>>674543
stronger USD makes increases the incentive to import oil at a discount to the future (brent-priced grades) and increase storage.

lower growth = lower demand for oil as it does not scale in sync. thus, more oil is added to inventory.

production outside of US control (OPEC and non-OPEC nations) continue production in over-supplied world. OPEC nations have national agendas and MUST continue producing oil set by quota system so long as Saudi Arabia says so as most nations can continue producing oil at a profit even at $60, although margins are slimmer. balancing national budgets based off of reduced tax revenue however, is absorbed via debt or price fixing as in venezuela.

artificial demand for oil via demand for storage drives up the price of oil but as storage capacity runs out, the price collapses. WTI follows a lock-step price decline. WTI will be hit harder than brent because it cannot be exported.

thus, the more deflationary pressure there is in the world, the faster the price of oil collapses. /2

>>674543
>444.4 million barrels becomes 888.8 barrels on paper.


more like.. the 8 million barrels we produce per day and the 10 million barrels we import per day becomes 444 million barrels in a day, as everyone rushes for the door.

it's gonna be a slaughterfest.

I can't wait.

You have no idea how hard I will party if the douchebags on wallstreet who have it all figured out and have their oil locked in at 50 bucks a barrel, all suddenly have to face the fact that the price of oil next year is going to be 50 bucks a barrel, break even at best, and not enough to cover storage fees.

GLORIOUS. It's just a matter of time. the glut is going to be huge. we see no drop in supply yet. and there are thousands of rigs that are still operating.

we lost 600 rigs over the last 3 months. Each one of those rigs shutting down, was that rig finishing drilling a new well. it's called sunk cost.. you already spent 12 million getting the rig there and under contract? might as well drill that well. we might see another 1000 rigs come offline in the next 2 months. that will be a nother 1000 new wells.

we won't be producing 1800 wells a month anymore.. but we're still making wells.

even if production doesn't grow, we're at a surplus. all we have to do is stay at a surplus and we'll hit storage capacity easily.

this is going to be a fucking murder fest.

check out this chart of nat gas production and rig count. nat gas rig count got cut in half and nat gas production continued to rise for 6 YEARS.

because rigs have gotten more efficient and drill more efficient wells these days. you don't need as many rigs as you used to...

many people believe that oil production will follow a similar pattern.

http://www.bloomberg.com/news/articles/2015-02-13/this-chart-shows-why-the-number-of-oil-rigs-may-not-matter-anymore

> tfw accepted into Texas A&M and LSU for Petroleum Engineering.

Texas A&M is by far the better program and if you graduate you are literally guaranteed a job with a top company, but the curriculum is insanely difficult. LSU gave me some dank scholarships and I feel I could stand out better at LSU because there is less competition, but the average starting salary is around $10,000 lower than at TAMU.

Decisions, decisions...

>>674576

Now, I myself went to Texas A&M. I'm an Aggie.

>Business?

Tight end. And I had a fair amount of success against the split-T defense. See, when they line up symmetrical that away, it allows me to buttonhook and, you know, do a down-and-in, up-and-out and different things... post pattern every now and then. Your tight ends don't generally run a post. But if the QB calls it, hell, I'm ready.
Yeah... both great schools... tough choice.

new bread

>>674581

>>674536
Saudi didn't open any taps, they just didn't close them when asked to by the cartel.

Seem like it's all Americas fault for flooding the market

The only "oil" trading I'd be doing right now is shorting the hell out of tight oil producers and energy sector junk bonds.

Trading the commodity is too much of a gamble for me - Saudi Arabia's senile king could wake up one day and cut production hard enough to drive the price right back up.