Crude Oil

[Packersoldkidney]

I'm going against the crowd here, and I think sub - $50 a barrel is defo on the cards in the not too distant future. I know Mick for one thinks the opposite, but this is not a competition over who's right and who's wrong, it's a forum for debate on topics like oil.

One of the main reasons why I think oil is in for a downwards revaluation is because oil at $70 + is now counted as a 'sure thing': that in particular is something to be extremely wary of.

There is a lot of speculative money in oil: if there is a recession or a slowdown coming along, then when that money unwinds from oil, then it will unwind in a fairly dramatic fashion.

Long term the prospects for oil are bright, short to medium term I'm not so sure.

[Mick100]

quote:Originally posted by Packersoldkidney
[

Long term the prospects for oil are bright, short to medium term I'm not so sure.

I agree 100%
And therein lies the difference between the way you and I veiw things.
I'm thinking about what's going to happen over the next five yrs and you're thinking about what may happen in the next fives weeks or months. I have never made a secret of the fact that I invest for the long term and you make no secret that most of your trading activity is very short term. I'm not at all surprised that we see things differently.
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[Packersoldkidney]

Yep, that sums it up Mick....just so long as we both walk away winners from the situation!

[Mick100]

One more thing I should say is that I do have shortterm veiws but the probability of my short term veiws being correct is only about 50/50 like many others I think. On the other hand I think the probability of my long term veiws being correct is maybe 85%. So I put my money on my long term beliefs and although I don't ignore the short term, it dosen't have a big impact on my investing decisions.
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[bermuda]

Mick100
I have read Twilight in the Desert by Matt Simmons several times and met him at the NZ Petroleum Conference earlier in the year.I have asked him to do a lecture in Christchurch NZ next year which he has offered to do for a nil Honorarium.Whether he can make it depends on a lot of factors but I am hopeful.All we have to do is meet his airfares and accommodation and we have the budget for that.

Anyway, his book is extremely credible and is not written in a defensive manner.He has done the research over many years and now employs over 150 people who are turning up some invaluable information about the oil industry

A while ago a Senior Kuwait hydrology expert told Simmons that he was worried that the Wasia aquifer might be close to depletion.If so this will have awful implications for efforts to sustain not just Saudia Arabia'a Northern fields but also the Nuetral zone and Kuwait's Burgan field.......Since then we have now been advised ( about 6 months ago ..and AFTER Twilight in the Desert was published ) that the Burgan field is now in decline.There are plenty of such examples of serious Saudi depletion and whilst we may now 'enjoy' a supply cushion of about 1.3 million barrels per day , if the Saudi fields cant keep up with rising demand then the price of oil must go up.

I agree that the current price is overheated and it could come back to $US 50/bbl but only if the following factors are resolved peacefully
1. Iran standoff approx $7 premium
2. Nigerian bloodshed/kidnapping $3 premium
3.Iraq. US anoounce a troop pullout and the oil infrastructure is repairs $1 premium
4.Osama bin laden is captured thus partially removing the very real threat to Saudi Production through sabotage or removal of the Saud Royal Family.$2 premium
5 A whole lot of other factors

So if all the above occured the price could come back to US 47/bbl but sooner or later demand will outstrip supply and the price will go up again.And of course you have to realise that OPEC increasingly need a higher price not only to sustain their lifestyle but also pay for the resources to sqeeze incremental oil out of their ageing oilfields.

For Bollard to say the price of oil will come down because that's how these cycles work demonstrates quite clearly that he thinks just as the economists think.Unfortunately it's time to get REAL.



particulaly

[tricha]

This is what Gerry posted on his subject about it.

Noteworthy Quote:

"In 1900, the US started to industrialize. We were using
one barrel of oil per person per year. By 1970, we were
using 27 barrels per person.

In 1950, Japan started to industrialize. They were using 1 barrel per person. By 1970, they were using 17.

In 1965, South Korea started to industrialize. They were using one barrel per person per year. By 2000 they were using 17.

Today, China uses 1.3 barrel per person per year and India uses 0.7."

Clyde C. Harrison

.................................................. ...................

So if India goes to 1.7 and China goes to 2.3 barrels per person per year.
We are looking at another 2.3 billion barrels per year consumption wery shortly, lets face it cars in China are multplying at a huge rate.

1 - Inflation rampent.

2 - Consumption increases.

3 - Peak oil here.

4 - World turbulance.

5 - Hurricanes and other natural disasters.

6 - The realisation that their oil is running out, the Arab States will be looking after it, make it last a lot longer and extract maxinium bucks for it.

I'm afraid Oil has only one way to go in the near future and that is up, up and away. It will become a luxury. Worth its weight in gold!

Cheers not so [B)][}]

[JBmurc]

yes a very precious resourse,IMO we will never see $50usbbl or less ever again and is much more likely we'll see higher crude prices as the world oil giants hit peak oil production -at current SP's TAP,STO,HDR,OSH,STU, look very cheap an great buying, they will be releasing there huge profits soon which should put the sector back on the bullish long term trend

[lanenz]

We are starting to go through the same phase as what happened during the 70's ealry 80's. As price of oil goes up then other commodities become more attractive. In my oinion it wont matter if the world runs out of oil because other resources would have taken over

[Kookaburra]

quote:Originally posted by lanenz

We are starting to go through the same phase as what happened during the 70's ealry 80's. As price of oil goes up then other commodities become more attractive. In my oinion it wont matter if the world runs out of oil because other resources would have taken over

Yes the final determinant of price will be the cost of substitution from a variety of other oil sources such as the oil sands of Canada, deep sea oil, or substitution with biofuels, hydrogen etc. Once tooled up the cost of these substitutes may well be less than the present price of oil. We always tend to overdoo things and so the price is bound to have a medium term reduction but the long term cost of energy is bound to rise as more and more of the world wants a slice of the first world life style.

[Mick100]

Bermuda

I have attemped to send you an email but it didn't get through. Could you email me via shaertrader to establish contact.

Thanks
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