Thanks. Balance are you reading this :)
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In your example, they could indeed buy at $59, and then deliver in Dec 18 at $14 higher BUT they also have to pay the storage, and an implied borrowing cost (or if you like, an opportunity cost) to fund the initial purchase. The futures prices reflect these costs. Producers and consumers will operate in the futures markets fairly mechanically, to remove risk, and maintain a stable balance sheet. Speculators, on the other hand.........assist with making a liquid market, and take on risk as they see fit
But my point is SPOT is everything, the futures prices are merely a function of dynamics relating to costs of carry
HTH
thats it from me - there's a world full of explanations only a keystroke or two away, that can develop your understanding
Agreed Xerof except that if the market perceived there was going to be a shortage of oil in the future the futures prices would reflect that perceived shortage. Also your proposition that futures simply reflect spot plus holding costs assumes there's ample storage around, which there isn't. Presently the market is telling us via the futures that there's ample cheap oil for the foreseeable future that's my point and was in response to diggers proposition that prices would recover substantially within 2 years, probably sooner. Lower for longer for both interest rates and oil is where I see it.
In an environment of lower oil for longer and reduced exploration I'd expect a prudent board and CEO to be looking hard at head count and head office costs.
Could be possible that Zeta make a partial takeover for 51% then try and merge with CUE.
Apparently partial T/O not on, but stand to be corrected.
The lot or nothing.
Yes they got a few shares in CUE.
Yes indeed it would. This is something I simple can not understand. If FUTURES is so great we should be able to look back and see what we have today. How many FUTURES predicted the present crash?? They did not because it is politically driven. Try Putin if you do not understand. When you get that you will see why I say it will all be different in two years regardless of what the current FUTURES says. But yes Paper Tiger if you can get your comparison please post it here. From what I can see Futures are no more accurate than the old dart throw.
Futures represent the consensus view of where oil will be, the consensus of speculators, traders, producers and large consumers. Its also a product of spot plus holding costs if anyone's game enough to try and store the stuff for 4 years and has the facility to do so. Predicting the future is always fraught with massive amounts of variations but the fact remains some producers are locking in December 2018 production at circa $73, unless the longer futures are all just speculators.
Of course nobody saw this coming and therefore nobody knows when it might recover either which makes a bit of a nonsense of your claim it'll come good within two years...its all just speculation but the futures nonetheless give you an idea of current consensus view. Conspiracy theories abound e.g. have the Saudi's and Americans cooperated to keep production up and conspired against Russia to give them some serious cold war "treatment". You think Putin will give in any time soon and this cold war will be over soon, really ?
Nicely called bung5...:
Purchase of interest in Cue Energy
9:05am, 22 Dec 2014 | GENERAL
New Zealand Oil & Gas has agreed to purchase 19.99 per cent of shares in ASX-listed exploration and production company Cue Energy.
The holding was purchased off market from Todd Petroleum Mining at AUD10 cents per share, for a total value of AUD$13.96 million. The agreement is expected to be completed today.
Chief executive Andrew Knight says, "Cue has a 5 per cent interest in the Maari field in PMP 38160, which we view as a quality asset and exposure to it fits our portfolio well."
John Pagani
External Relations Manager
+64 21 570 872
Time to start buying CUE.
Leaves Todd mining and Todd energy with about 6% of Cue. As Todd is a pretty sharp minerals investor I would question this move - I think Zeta already has a lump of Cue which has not performed at all well in the last 4-5 years. I think $m20 would go along way towards a div and resulting share price uplift.
Happy holidays to all and safe investing 2015 !!
Zeta has been buying CUE over the last few months presumably to try and sort a merger with NZO. A stake of 19.9% in CUE doesn't really achieve much however a merge with CUE makes great sense as they can cut out the huge admin costs and reap the large revenue and exploration portfolio that CUE has.
bung5
Obviously you don't live in the merged Auckland Super city - promised synergies actually means More not Less . I have yet to see very many listed companies mergers result in anywhere near the promised savings. Democratic companies need more shareholders of fair spread not consolidated weight throwers. I guess it may be different in Buenos Aires but I would be surprised . Maybe Christina would know.
Haha I don't think Christina is a fan of capitalism. I'm back in wellington now where they are planning on following on Auckland s success as a Supercity :P
You may be right, but it doesn't mean it won't happen. I'm not a shareholder of NZO for a few years now but I will be increasing my shareholding in CUE to take advantage of what I think will happen.