Oil at $25 next year. Start buying futures now!

[inteller]

Incredible.....yet predicted.  Retraction in US demand is outpacing reduction in supply.  Bloomberg is reporting that if China catches the recession cold oil will hit $25 next year.

I'm just glad Oklahoma companies are less exposed to oil than in the past.  Now lets just hope for a really cold winter to burn through the natural gas inventories.

[Hometown]

inteller I just don't believe these dramatic price fluxuations are all market driven.  You may not want to go into detail but do you believe we've experienced any price manipulation?

After seeing what happened in California with the manipulation of electric prices, I believe we've been had.

Anyway, when oil plummets and everyone else looses interest, is exactly the time Tulsa should go work trying to enlarge her niche in the oil business.  

You work the cycles to your advantage.

[inteller]

price manipulation from speculation?  Oh you bet!  But like most things speculators get into, they know little about the product they speculate on, so they went fleeing in droves when the first guy blinked and started selling.  Also a LOT of them had major hedge positions.  thats what did semgroup in.  if oil had dropped -sooner- semgroup would be an extremely rich company right now (though they would have got burned eventually)

but now is a good time to get in on the next run up.

[momof4forJesus]

ok

[nathanm]

quote:Originally posted by momof4forJesus

ok

You registered just to post that?

[Townsend]

quote:Originally posted by nathanm

quote:Originally posted by momof4forJesus

ok

You registered just to post that?

Journey of 1,000 miles?

[Steve]

The recent nosedive in oil and gasoline prices has done nothing to change my gasoline purchase habits.  Some analysts are predicting gas below $1 a gallon in Tulsa in early 2009.  I will continue to use as little gasoline as possible, regardless of price.

All it will take is one bad Gulf of Mexico storm, one insane terrorist act in the Middle East, a few more pirate hijacked oil tankers, and we will be all paying $4 a gallon again in no time, due to the insanity of futures traders.  It would pay everyone to just ween themselves off of gasoline permanently as I have tried to do, so these crazy price fluxes have minimal impact to your household.

[nathanm]

quote:Originally posted by Steve

The recent nosedive in oil and gasoline prices has done nothing to change my gasoline purchase habits.  Some analysts are predicting gas below $1 a gallon in Tulsa in early 2009.  I will continue to use as little gasoline as possible, regardless of price.

All it will take is one bad Gulf of Mexico storm, one insane terrorist act in the Middle East, a few more pirate hijacked oil tankers, and we will be all paying $4 a gallon again in no time, due to the insanity of futures traders.  It would pay everyone to just ween themselves off of gasoline permanently as I have tried to do, so these crazy price fluxes have minimal impact to your household.

That's definitely a good long term strategy. The lower price of fuel does make it much more attractive to drive to distant destinations, though! I might actually go somewhere this winter. []

[OUGrad05]

This collapse in prices will be fairly limited in term I would think.  World demand is just in the tank right now and appears as though it will stay there for some significant time fram (a year maybe).  

Oil is poised to drop into the low 30's regardless of china, as the original poster pointed out if china/india start softening subtantially oil could dip lower.  But production decline curves are about 6% a year and while some drilling/new supplies will come online in the near term, the net decline worldwide will still be somewhere in the neighborhood of 3 to 4% a year.  Which means in about 18 months we've watched most of the excess capacity dwindle on a world wide basis.  That should provide a an uptick in prices.  Also a LOT of major projects have been shelved or cancelled because of the recent price drops.  This does not bode well for the next run up in prices.  The next run up could make 150 dollar oil look cheap if we in fact run up against true supply constraints in 2012 to 2015 time frame (which seems likely).

As for Oklahoma, we're heavy into nat gas but keep in mind the US gets most of its gas domestically we brought on 7 or 8% new supply this year with another 2% coming on next year and demand in 2009 is expected to be down 1% from this year which has been pretty flat.  Barring some unforseen circumstance or a rapid economic recovery nat gas will bottom next summer in the 3.50/M range.

[sauerkraut]

The oil price drop will be ending next week. OPEC is meeting next week to slash oil production big time. Iran wants OPEC to keep cutting oil production until oil is at $80.00-$100.00 a barrel range. OPEC claims they will not stop cutting production until their goals are met. Obama will be helping OPEC when Obama puts the off-shore drilling ban back in effect,and  Obama also wants to put 360,000 acres of oil rich land in Utah off limits to drilling during his first day in office. Get ready for $5.00 a gallon gasoline real soon. We are at OPEC's Mercy.[xx(]

[Hoss]

quote:Originally posted by sauerkraut

The oil price drop will be ending next week. OPEC is meeting next week to slash oil production big time. Iran wants OPEC to keep cutting oil production until oil is at $80.00-$100.00 a barrel range. OPEC claims they will not stop cutting production until their goals are met. Obama will be helping OPEC when Obama puts the off-shore drilling ban back in effect,and  Obama also wants to put 360,000 acres of oil rich land in Utah off limits to drilling during his first day in office. Get ready for $5.00 a gallon gasoline real soon. We are at OPEC's Mercy.[xx(]

They did the same thing last month and the month before with no results.  Why do people seem to think OPEC is the be-all/end all of oil prices.

Supply and demand people.  We aren't 'demanding' as much but they are supplying the same.  They cut production, we reduce our demand like we have been.

Oil is in a free-fall.  I don't think OPEC is going to hurt that in the short term.  Maybe next year, but right now; doubtful.

Oh, and btw Ohio resident, Obama won, quit complaining via innuendo.

[TulsaFan-inTexas]

quote:Originally posted by Steve

The recent nosedive in oil and gasoline prices has done nothing to change my gasoline purchase habits.  Some analysts are predicting gas below $1 a gallon in Tulsa in early 2009.  I will continue to use as little gasoline as possible, regardless of price.

All it will take is one bad Gulf of Mexico storm, one insane terrorist act in the Middle East, a few more pirate hijacked oil tankers, and we will be all paying $4 a gallon again in no time, due to the insanity of futures traders.  It would pay everyone to just ween themselves off of gasoline permanently as I have tried to do, so these crazy price fluxes have minimal impact to your household.

That's a good practice.

[nathanm]

quote:Originally posted by sauerkraut

The oil price drop will be ending next week. OPEC is meeting next week to slash oil production big time. Iran wants OPEC to keep cutting oil production until oil is at $80.00-$100.00 a barrel range. OPEC claims they will not stop cutting production until their goals are met. Obama will be helping OPEC when Obama puts the off-shore drilling ban back in effect,and  Obama also wants to put 360,000 acres of oil rich land in Utah off limits to drilling during his first day in office. Get ready for $5.00 a gallon gasoline real soon. We are at OPEC's Mercy.[xx(]

You may want to reconsider getting all your news from wingnut radio. You might actually be informed about how the world works if you expanded your horizons.

For example, they fail to tell you that zero barrels per day of production has zero effect on oil prices. (Since you apparently need to be told that)

They also fail to point out that there is a finite flow rate of oil from a field. Saudi Arabia is having a big problem with their falloff in flow rate as their fields age. They still have a gobsmacking ridiculous amount of oil under the sand, but they are having a hard time producing enough to keep up with demand.

Similarly, we can drill all we want here, and it will hardly make a dent in our imports, simply because we can't extract it quickly enough to meet our consumption needs without risking damage to the formations in which the oil is contained.

Besides, fundamentals never supported oil at the price highs or anywhere near it. Speculators drove up the price. Now we're in the midst of an overcorrection.

[OUGrad05]

quote:Originally posted by nathanm

quote:Originally posted by sauerkraut

The oil price drop will be ending next week. OPEC is meeting next week to slash oil production big time. Iran wants OPEC to keep cutting oil production until oil is at $80.00-$100.00 a barrel range. OPEC claims they will not stop cutting production until their goals are met. Obama will be helping OPEC when Obama puts the off-shore drilling ban back in effect,and  Obama also wants to put 360,000 acres of oil rich land in Utah off limits to drilling during his first day in office. Get ready for $5.00 a gallon gasoline real soon. We are at OPEC's Mercy.[xx(]

You may want to reconsider getting all your news from wingnut radio. You might actually be informed about how the world works if you expanded your horizons.

For example, they fail to tell you that zero barrels per day of production has zero effect on oil prices. (Since you apparently need to be told that)

They also fail to point out that there is a finite flow rate of oil from a field. Saudi Arabia is having a big problem with their falloff in flow rate as their fields age. They still have a gobsmacking ridiculous amount of oil under the sand, but they are having a hard time producing enough to keep up with demand.

Similarly, we can drill all we want here, and it will hardly make a dent in our imports, simply because we can't extract it quickly enough to meet our consumption needs without risking damage to the formations in which the oil is contained.

Besides, fundamentals never supported oil at the price highs or anywhere near it. Speculators drove up the price. Now we're in the midst of an overcorrection.

Nathan you hit the nail on the head, as I mentioned yesterday the natural decline for an oil well is about 6% a year.

You also correctly pointed out that some of Saudi's big wells are falling off at more than 8% a year unless they do more drilling.  

Things got way out of hand.  Supply/Demand I feel oil should have never topped 100 bucks.  By that same token I feel given the recession about 40 to 50 dollars right now is probably fair.  Anything less than that is beginning to get stupid in the other direction and it will also be a short lived trough.  Perhaps 12 to 18 months that oil stays below the 40 dollar mark.

[inteller]

if oil gets back up to $62 I think the economy around here will be pretty healthy.  A lot of the wells that go in these days have a cost basis of about $62-65.  rig counts are going down right now because producers can't afford to bring in a well at $45 a barrel.