interesting to note what the chart say about the oil price.
History and the charts show us every time oil has fallen off a cliff it has recovered very rapidly.
This time seems to be distinctly different giving weight to the true supply and demand issue's that are currently effecting the price rather than just the traders.
After a brief rally which saw nynex oil climb 28% above the lows we have fallen back to be 7-8% above the lows.......this is technically very bearish and a good sign that low oil prices are here to stay for sometime......which is very good news for NZR.
history shows the long term price of oil is under $40, $100 oil was an anomaly
Might actually head lower in the short term with limited floating storage now available and USA stockpiles increasing. At some stage the oil stored by the chinese will hit the market and drive the price down a bit. Again, I think that the price of oil is a very small part to play in the profit that NZR make and other factors such as the rolling refinery strikes in the USA have got a lot bigger part to play.
Of interesting note, good to see the Commercial Manager of the refinery buying shares, was a bit shocked to see that it was the first disclosure notice for him as it looks like he has been buying for a while. Might be that he has now accumulated over 10k of them.
Dubai spot price basically follows the nymex price or very close to.
Does anyone know if NZR buy using hedging or is spot price only.
Due to 40% of NZR oil being paid based on the BRENT price it is essential for maximising of profits that the spread between Brent and Dubai is as little as possible.
Currently the spread has widened from $4 in NOV/DEC to about $7 now.
What this basically means is NZR currently pays a premium of $7 per barrel for 40% of it's oil supplies........
In saying that Brent is a superior product to Dubai oil.
However many refineries around the world are 75% Brent.
The spread has average between $8-$10 when Oil was trading at $100
In the last 2 months the spread has been very volatile ranging from $0-13
Watch this spread closely as it has a lot to do with NZR's profit margins.
Hi Snaps
My understanding is NZR is purely a tolling operation getting paid $US per barrel processed. The only advantage in decreased oil, is storage costs to the oils owners, the oil companies.
Regards
-dodgy
think this is the spread $2.43 very small, if im wrong please correct
Hi Bull
I don't remember any mention of NZR having any percentage draw down of Dubai, Brent etc crude for the refinery but that the reconfiguration will enable the use of a wider range of crude feed stocks , e.g differing viscosity and sulphur contents etc. This would enhance profitability due to differing product production eg more fertilizer raw material or whatever. Even NZ oil from Maari/Tui etc. priced on Tapis I think, can be processed if considered desirable (low viscosity?).
Regards
-d
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Originally Posted by bull....
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