Crude oil is $86 today.... beginning of the end?

i invested heavily in carbon credits in the 90's and im really to sell now...

 

I remember when diesel neared 1.00 a gallon in the early 90's....The sky was gonna fall...Truckers all over we're gonna get out if it topped a dollar per. Mostly all talk...few I knew actually got out of trucking. The strong and smart adapted and survived.

A downturn will be the same....bust for some, probably many....and opportunities for the tough, nimble footed, fast thinking risk taker.

Just my opinion.

 

Yes, & them probably will shortly go up higher than ever. Yesterday I filled up my car to go to a VA hospital today & gas was under $3.00 per gallon here in Arkansas.

 

Do you suppose its down now to try & stop the Keystone pipe line? Maybe oil companies are causing this to keep completion lower so prices can be higher in the long run? The big boys seems to control everything.

 

Supply vs demand always rules in the end. But there are a lot of variables to the supply side these days. On the demand side, lower oil prices will stimulate economies globally and demand will increase. I think there is a year or more of price fluctuations coming while the markets adjust to all of the variables associated with the increase in production.

 

Per Bloomberg:

West Texas Intermediate crude is poised to extend its slump below $90 as consumption slows and supplies climb from the U.S. and Libya, according to the most accurate forecaster of prices of the grade in the second quarter.
Crude is under pressure because of signs of easing demand in emerging markets, said Jason Kenney, an equity analyst at Banco Santander SA. Prices are also falling because of “comfortable supply” as U.S. shale oil production booms and Libyan crude output rebounds, he said. WTI fell below $90 a barrel today for the first time in 17 months, extending this year’s decline to 9.9 percent.
Surging output from shale deposits has turned the U.S. into the world’s largest producer of liquid petroleum, cutting its need for imports just as the pace of global demand is slowing. U.S. crude output rose to the most since 1986 last month, while OPEC pumped at the highest level in a year.
“I think it’s reasonable to stay cautious rather than bullish on oil prices,” Kenney said in a phone interview from Edinburgh. “The challenge in oil pricing globally at the minute is weak consumption trends across northeast Asia and also in the Middle East and Latin America.”
WTI will average $97.50 a barrel this year, dropping to $86 in 2015, according to Santander. The U.S. benchmark traded $2.06 lower at $88.67 a barrel on the New York Mercantile Exchange at 11:47 a.m. London time. Brent crude, the European benchmark, fell 20 percent from its June peak to trade at $92.24 a barrel today on London’s ICE Futures Europe exchange.

Demand Trend

“The global oil demand trend showed clear signs of weakening” last quarter, as demand growth from the same period a year earlier fell to 480,000 barrels a day, the lowest in two and a half years, according to a Sept. 11 report from the International Energy Agency in Paris. The adviser to 29 industrialized nations also trimmed its demand forecast for next year to 93.8 million barrels a day because of a “weaker outlook for Europe and China.”
The Organization of Petroleum Exporting Countries probably won’t react immediately to the oil price slump by reducing production because “they can probably withstand Brent prices between $80 to $85,” Kenney said.
OPEC output increased by 413,000 barrels a day to 30.935 million in September as Libyan production rebounded to the highest level in more than a year, according to a Bloomberg survey. Saudi Arabia yesterday dropped its official selling price for crude oil to Asia to the lowest level since 2008 amid speculation it was seeking to gain market share in the fastest-growing region for petroleum demand.
Bloomberg ranked energy forecasters based on the accuracy of their predictions for the most recent eight quarters ending on June 30, 2014. Kenney’s average margin of error of 4.11 percent was the lowest.







So what does all this mean? Lower prices for oil - yes. A collapse of the fields - no. The sky is not falling and production will continue. Maybe just a little slower.

 

profit margins will be squeezed, and companies will NOT drill in the more expensive regions.... New lands will not be explored and drilled. Current plays will continue, but the rapid growth is over, we have hit the plateau stage of the boom bust cycle..

Natural gas was the first to tank, and now we are tanking the price of crude oil, with the world wide production, and the current laws against the US exporting of the resource.



Howard Newman, legendary private equity maven behind Pinebrook Road Partners said in a recent talk at Yale that most shale oil fields in the U.S. can still generate a return at $80 a barrel, but that if prices slipped below that producers would cut capital investment in marginal plays to preserve balance sheet strength. Morgan Stanley analysts noted recently that the average marginal cost of production from the big unconventional plays is about $64 per barrel (excluding land acquisition costs).

read more here: http://www.forbes.com/sites/christo...ale-oil-boom-could-end-sooner-than-you-think/

 

My understanding is that the boom/bust cycles in oil drilling usually last about 5 years, give or take a few. Yeah, the boom cannot go on forever, it just doesn't work that way. The stock market does not just keep going up, up, up either.

 

My step mom just left this Earth, 24 years after my old man died, and I'll get that dough soon.

My son rattled off Exon Mobil, Chevron, some others... where to stash the cash.