Crude Oil

[Mick100]

Heavy Metal -"As I've said before, oil reaches a cyclical annual peak around now.... back to $60 by Xmas?"

Tricha - "Depends if we u believe in peak oil like I do (1000 barrells a second)"

Tricha, I would really be surprised if peak oil will have the sort of instant impact you seem to be implying. It's probably going to be a gradual realisation that peak production has been achieved, some time after the event has actually occurred...certainly not something that is going to impact the oil market one way or the other by this Christmas.

Who's to say we haven't already hit peak oil
Richard Hienburge and Matt Simmons claim conventional oil production peaked in May, 2005 - they have yet to be proven wrong
OPEC keep saying that they can ramp up production - they have yet to prove it.
It will probably take some kind of event to trigger a realisation of peak oil - that event could be any number of things at any time.

[Mick100]

Mike100,thanks for posting these GOT reports. They seem to be reasonably accurate at indicating future prices.Has any survey been done over time on just how good these commerical short positions are for given future prices?

digger
The information is only as good as the person analysing it
Different people will gain their own different insights from the COT reports

I have only started following them in the last few months myself so I'm no expert. One thing I do know is that the commercials represent the "smart money." Large traders and small speculators (momentum players) represent the "dumb money". That's why I follow the commercials.

I have gone over the historical reports from last yr when oil peaked in july -august at $78. Net short positions peaked at 75000 contracts on open interest of 1,200,000 contracts. At present open interest stands at 1,500,000 contracts - 25% higher than last yr. So if we assume the same buying/selling pressures as last yr we should expect a peak in net shorts of around 94,000 contracts (75000 + 25%)
Also the recent peak this yr in july-august, net short positions ranged between 104,000 and 119,000 throughout this period.
My estimate of a turning point in price will be when net shorts are over 90,000 but probably closer to 120,000 - then it's just a matter of watching the chart for weakness.
At the moment it looks as if we will test $90.
.

[Huang Chung]

Mick100 - Who's to say we haven't already hit peak oil

Exactly my point Mick, it's not one of those things where a bell will ring once we've reached peak production, it might take a year or two to realise that the peak has come and gone.

Even if we do go past the peak, what will be important is how quickly supply will start to drop off.....a slow decline or something sharper. Probably, world production will bob around peak levels for a number of years before tapering off in any significant way. Will there be panic, and when, who would really know at this stage of the game.

[tricha]

Who's to say we haven't already hit peak oil
Richard Hienburge and Matt Simmons claim conventional oil production peaked in May, 2005 - they have yet to be proven wrong
OPEC keep saying that they can ramp up production - they have yet to prove it.
It will probably take some kind of event to trigger a realisation of peak oil - that event could be any number of things at any time.

Exactly Mick one of the seven deadly sins will blow oil way past $100 a barrell, watch the panic set in then, carless days, speed limits lowered, it will get ugly again for a lot longer this time around.

I know I keep going on about it Huang, the answers to your questions are in this book, " 1000 barrells a second " excellent reading if u want to try and stay, ahead of the herd

Huang - "Even if we do go past the peak, what will be important is how quickly supply will start to drop off.....a slow decline or something sharper. Probably, world production will bob around peak levels for a number of years before tapering off in any significant way. Will there be panic, and when, who would really know at this stage of the game. "

[digger]

digger
The information is only as good as the person analysing it
Different people will gain their own different insights from the COT reports

I have only started following them in the last few months myself so I'm no expert. One thing I do know is that the commercials represent the "smart money." Large traders and small speculators (momentum players) represent the "dumb money". That's why I follow the commercials.

I have gone over the historical reports from last yr when oil peaked in july -august at $78. Net short positions peaked at 75000 contracts on open interest of 1,200,000 contracts. At present open interest stands at 1,500,000 contracts - 25% higher than last yr. So if we assume the same buying/selling pressures as last yr we should expect a peak in net shorts of around 94,000 contracts (75000 + 25%)
Also the recent peak this yr in july-august, net short positions ranged between 104,000 and 119,000 throughout this period.
My estimate of a turning point in price will be when net shorts are over 90,000 but probably closer to 120,000 - then it's just a matter of watching the chart for weakness.
At the moment it looks as if we will test $90.
.

Thanks again Mick100,most interesting way of looking at it.

[digger]

Doubly interesting seeing that WTI has just hit a new record high of 80-59. Might have to get some info and start studying these commericals COT reports.

[Gofish.]

http://news.independent.co.uk/business/news/article2966842.ece

18 September 2007 10:55
Oil industry 'sleepwalking into crisis'

Former Shell chairman says that diminishing resources could push price of crude to $150 a barrel

By David Strahan and Andrew Murray-Watson

Published: 17 September 2007

Lord Oxburgh, the former chairman of Shell, has issued a stark warning that the price of oil could hit $150 per barrel, with oil production peaking within the next 20 years.
He accused the industry of having its head "in the sand" about the depletion of supplies, and warned: "We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware."
In an interview with The Independent on Sunday ahead of his address to the Association for the Study of Peak Oil in Ireland this week, Lord Oxburgh, one of the most respected names in the energy industry, said a rapid increase in the price of oil was inevitable as demand continued to outstrip supply. He said: "We can probably go on extracting oil from the ground for a very long time, but it is going to get very expensive indeed.
"And once you see oil prices in excess of $100 or $150 a barrel, the alternatives simply become more attractive on price grounds if on no others."
Lord Oxburgh added that oil majors must invest more heavily in developing viable alternatives to oil and gas. "If you look at it from oil companies' point of view, effectively what they're doing at the moment is continuing business as usual, and sticking their toes in the water in a number of areas which might become important in future.
"But at present there is a relatively poor business case for making significantly greater investment in these new areas."
Commenting on whether "peak oil" – the point when global oil production goes into terminal decline – was likely to be reached in the near future, he said: "In a way it scarcely matters; what really matters is the gap between production and demand. I don't know whether there is going to be a peak in world oil production, whether it's going to plateau and then slowly come down.
"It could well plateau within the next 20 years, and I guess I would be surprised if it hadn't."
The price of crude oil closed above $80 a barrel for the first time on Thursday, as a hurricane in Texas raised supply concerns.
US light crude hit $80.20, two cents higher than the price it touched on Wednesday. Oil prices have risen 30 per cent since the start of this year and are four times higher than their 2002 level.
The latest figures from the US Energy Information Administration show that global liquid fuels production in August was almost a million barrels per day lower than the same period in 2006.
The International Energy Agency has forecast what it calls an oil "supply crunch" by 2012, a prediction that Lord Oxburgh said could possibly come to pass. Lord Oxburgh is currently chairman of D1 Oils, a biodiesel company listed on the AIM market.

[tricha]

Gofish - "The latest figures from the US Energy Information Administration show that global liquid fuels production in August was almost a million barrels per day lower than the same period in 2006."


Break point!



Oil hits record on supply fears

Prices have been above $70 for much of the past year

Oil prices have hit another record - breaching the $81 a barrel mark for the first time.
US light, sweet crude hit $81.01 in after hours trade on worries about rising demand amid constrained supply.
Supplies of oil in the US are running at their lowest level in eight months with fears that world energy supplies will hit critical levels this winter.
The Organization of the Petroleum Exporting Countries (Opec) last week agreed on a small supply increase.
But analysts do not believe the 500,000 barrels per day hike in output is sufficient to stem the rally in oil prices.
"We believe that this will be too little, too late, barring an outright collapse in demand, and now expect inventories to draw to critical levels this winter," said investment bank Goldman Sachs. The firm predicted that oil prices would hit $85 a barrel by the end of this year. In London on Monday, Brent crude rose 76 cents to $76.98 a barrel.

[Huang Chung]

Dipped my big toe back into the oil patch today by picking up some AED.

This stock has been kind to me in the past, and I'm hoping for a repeat performance. All things going well, it should be less than a fortnight to 'first oil', which, as Shrewdy keeps telling us, should mean a re-rating.

Here's hoping.

[Oiler]

Chavez vows to expand gas, oil production
Eric Watkins
Senior Correspondent
LOS ANGELES, Sept. 19 -- Venezuelan President Hugo Chavez said his government is "launching the socialist gas revolution," claiming that Venezuela possesses "80% of South America's gas reserves" and "30% of the gas reserves in the Americas."
He said Sept. 16 that his administration would invest $18 billion to expand natural gas production to 11 bcfd over the next 5 years from 7 bcfd.
Touting his country's assets, Chavez said Venezuela has proved gas reserves of 150 tcf onshore and 30 tcf offshore.
Meanwhile, the Venezuelan leader said his government also plans to increase the country's production of crude oil to "5 million b/d in 2012," up from the current 3.2 million b/d.
"We'll take it there on pace with prices because for us it's more important to maintain the correct price of oil than to flood the market," said Chavez, who added that the world is entering an energy crisis because "oil is running out."
Contact Eric Watkins at hippalus@yahoo.com.

Chavez has spoken so it must be true.....we are running out of oil.