Crude is screwed, man.

[vanzandt]

Don't have time to respond now but all your points are misinformed zzz1.

Mav.....
$500 oil?!
Did I read that right?
EDIT:
I did read that right.

The trend is NOT down. The price of oil will go parabolic with time. The marginal cost to drill that oil will go higher and higher. Eventually it will be uneconomical to drill. At some point I imagine oil will be 500+. But we won't be able to extract it even at that price.

 

[Overnight]

Mav.....
$500 oil?!
Did I read that right?
EDIT:
I did read that right.

Heh yeah, Mad Max stuff.

---------------

I can see crude dropping a bit. Tomorrow's speech will be a red-letter day. This is gonna' suck ass, boys and girls, if he doesn't give details.

 

[Maverick74]

What are you talking about? While I would never trade against the trend the long term fundamentals clearly favor lower oil prices. The marginal cost of extracting oil outside the middle east clearly are going down over time. Less oil demand from renewable energies. Battery powered cars. New chemical compounds that reeuce crude derivative inputs. All those speak for lower oil prices not higher ones. But its way too early to even think of shorts

You are confusing things here. The marginal cost of extraction is going down for the oil we have at and near the surface, this is the economical oil. As we dig deeper over time, and I'm talking the next 50 years here, the oil will become more and uneconomical. As we get deeper into the surface the marginal cost to extract this oil will go parabolic and since price = marginal cost that means the price of will will go parabolic. This is not disputable.

 

[Maverick74]

That would have an adverse effect, sir. Higher prices in the backend incentivice producers to invest in new projects which will result in over supplies down the road.

Yes, you are talking about forward hedging. I'm talking about the "shape" of the curve. The shape of the curve dictates if and when to store and when to produce.

 

[Maverick74]

Forwards in any asset class have zero predictive value for short term trading, there is tons of research in the open that supports this point. Forwards are priced based on no arbitrage arguments and neither sport nor forward price changes now nor forward curves have any predictive value for tomorrows prices or price changes in 1 hour

Forwards do NOT predict prices. The SHAPE of the curve DOES indicate the incentive to store now and sell later or sell now. Just as the shape of the yield curve indicates economic conditions, the shape of the energy curves indicates the supply and demand balance.

 

[Maverick74]

How so? Disagree vehemently. I traded and made markets in forwards of many many different underlying assrts and structured exotics using forwards all the time and could not disagree more with your assertion

You are confusing "prediction" with value.

 

[Maverick74]

Mav.....
$500 oil?!
Did I read that right?
EDIT:
I did read that right.

Over the next 50 years...yes. This is not really disputed in the economics community although some will say we will be using very little of that oil and that is likely the case but we will run out of "economical oil" and that is a fact.

 

[Maverick74]

As any industry veteran and they will tell you that the prop groups at Shell, ExxonMobil, BP are all not doing fantastically great. What does that tell you? That they know not a bit more about the eminent strike, pipeline sabotage, hurricane impact, political decisions by opec and non opec members than any other informed player in the industry. The oil market is way too big for a single company and its prop group to sway prices just because they are better informed about their own company projects.

The physical players are cleaning up. You have no idea what you are talking about.

 

[Maverick74]

https://www.bloomberg.com/news/arti...highest-profit-since-2011-as-oil-prices-swing

 

[Maverick74]

Yes, Zzz1, there is also the matter of commercials getting it wrong despite their being better informed on balance. Yet another (annoying) moving part...

And so, I will sit on the sidelines and watch the exchange between you and Mav.

Commercials are not getting it wrong. They are not in the business of "predicting" oil. They produce oil at cost and sell on the margins. BP is one slight exception as they have historically been aggressive in the paper markets as well as the physical. But firms like Trafigura, Vitol, Glencore, Gunvor are VERY informed, VERY aggressive and VERY profitable.