oil bottoms

[murray t turtle]

Well that's only $4 from here. The historical price of oil is somewhere around $20, despite what many people are saying, it's not inconceivable it will get back there again. Are the Saudis really going to knife their competitors and not twist the blade? That doesn't really make sense.

One interesting phenomenon is that the Russians are now pumping more oil than ever before, despite the lower prices. THat kind of makes sense. They need the cash now more than ever. Also, I haven't seen anything about this, but a country like Venezuela will shift production from domestic consumption to the international market, adding more supply at lower prices. VZ just recently raised the price of domestic oil from like 5c to 6c a galllon. It's not just selling the oil below market price, it's selling the oil at a $15B annual loss. Mexico has brought in foreign expertize now that Pemex isn't bringing in as much revenue as before. So it's the inverse of the typical supply curve: more supply at lower prices.

%%
You maybe right, BillyJR; 1 year candlechart trend is still down, still downtrend. Even $20 looks HI priced in 1980's LOL; NOT a prediction but 50 day moving average+ 50 day price has turned up.[GS -elitelink somewhere ] estimate is $20 -40.....NOT a prediction, but TX TEA has already closed above $40 in MARCH................................................................................NOT a prediction;trend comment.

 

[murray t turtle]

This is good. He's predicting a price bouncing between $40 and $20 over the next six - nine months.

http://www.bloomberg.com/news/videos/2016-02-09/goldman-s-currie-expects-oil-volatility-to-go-higher

LOL,,, that maybe where i read than.LOL Thru march,2016 that was reasonable One year trend is still down ; ......longer term TX TEA [wti]trends are still up NOT a prediction ;simply uptrend analysis,2016.I like cheap gasoline myself ; my REALTORS wife ran out of gasoline,trying to game gas on the low bid.LOL

 

[billyjoerob]

I'm not sure what you're saying, turtle. are you saying long term trend up? As you say, WTI is still below the 200 day/10 month, so it's still in a historic downtrend. If you look at the chart I posted, most bottoms take a while, longer than the current bottom. We could see a retest of the bottom, especially if the April 17 meeting is a bust.

 

[billyjoerob]

The bearish case on the *oil stocks* is a little different than the bearish case on oil. The oil stocks are priced for much higher oil, not just Chevron and Exxon but the crappy little E&Ps are priced for much higher oil. Any realization that oil is not going back to $80 in a straight shot and the stocks could take another leg down. To get an idea of just how eager the oil bulls are to light their money on fire, look at the gaps the last two days in XLE.

 

[billyjoerob]

Here are some long term charts. If these 10 and 20 year trend lines are broken, it would indicate that something fundamental has changed in the oil market.

 

[billyjoerob]

Lets say the average historical price of CL in 10 years between 1989 to 1999 is $20.
Between the oil consumption of year 98-99 to 06-16, i believe the volume in year 06-16 is higher hence the probability of reaching $20 again will be quite low. Hence the demand is still high which causes Russians and other player to keep pumping oil. Do correct me if you think otherwise.
Thanks~

markets do crazy things, look at the CRB, it is at 25 year lows. If I told you 20 years ago that China would be a massive economy far larger than Japan and that commodities would be lower than they were back then (and they were at crazy lows back then) you probably would not have believed me. Now looking back, the commodities boom looks like a small blip within a relentless trend of deflation. That could turn out to be true in oil as well.

It's possible that oil could face the same glut as we see in natgas and natgas liquids. Crack open the rock a little, and gas comes out. Crack it open a little more, and NGL comes out. A little more and oil comes out. Its possible we could see the same glut in oil as has already occurred in natgas. And remember that the historic ratio of oil/gas is 6-1. That would put oil at $12.

But plenty of people believe the shale story. Most of the banks see oil lower for longer, with a hockey stick out a few years. But the stocks are not pricing that in. Exxon and Chevron are 33% of the XLE and they are priced for $80 oil. So a large part of the public at least isn't buying into the shale revolution.

 

[murray t turtle]

I'm not sure what you're saying, turtle. are you saying long term trend up? As you say, WTI is still below the 200 day/10 month, so it's still in a historic downtrend. If you look at the chart I posted, most bottoms take a while, longer than the current bottom. We could see a retest of the bottom, especially if the April 17 meeting is a bust.

%%
Yes;
as your first 1987/+ oil chart shows= an uptrend. As you noted 1 year is down;+ 50 days Price is up.XOM makes money on good food also-their XOM traders coffee is good BUT ovepriced LOL

 

[Starkoff Andrew]

Looking back to the 80s, oil bottoms tend to take a couple of months (this is a monthly chart). And the confirmation that it's a bottom is a break above the 10 month moving avg. The recent bottom failed to break above the 10 month ma at $41. The oil market is a two-tier market - most of the production is cheap OPEC oil with a cost basis in the $10s, and the marginal producers are much higher, in the $50s+. So the marginal supply is at $50 . . . or at $15, if the marginal supply is coming from Iran or Libya.

There is truth in your words. If you will see on volumes accumulation you can see a big accumulation on 45.4.

 

[murray t turtle]

There is truth in your words. If you will see on volumes accumulation you can see a big accumulation on 45.4.

%%
You maybe right big a... @$45;
but take off the extreme HI+extreme extreme LOW price.

MODERN TRADER[FEB,2016 magazine ] has the low forecasted from 14 analysts; $26.84= extreme low+ $83= extreme HI. NEXT level low is $27.42.MODE HI[mode=most common#HI]is $50+ YES i included $49.50 as $50[round up or down..........................................LOL] I'm more a trend follower than forecaster but i like both-especially study + good trends.[NOT a prediction] Thanks Andrew, and all..

 

[murray t turtle]

Looking back to the 80s, oil bottoms tend to take a couple of months (this is a monthly chart). And the confirmation that it's a bottom is a break above the 10 month moving avg. The recent bottom failed to break above the 10 month ma at $41. The oil market is a two-tier market - most of the production is cheap OPEC oil with a cost basis in the $10s, and the marginal producers are much higher, in the $50s+. So the marginal supply is at $50 . . . or at $15, if the marginal supply is coming from Iran or Libya.

Billy Joe;
I was reading a 2015 Futures mag-[now MODERN TRADER mag ]- they had an average price production cost chart+ had Libya @ $190/barrel i find that hard-impossible to swallow.LOL. [Maybe so Libya could say ''we sell below cost''LOL ]They usually have good charts. Strange ;google says Libya break even is $184 /barrel

BUT Royal Dutch Shell plc [Shell Transport, Shell Trading....] has average Asia [opec...]production cost @ $$7.42/barrel+ average selling cost ,Asia=$47.73

And Royal Dutch Shell average, USA production cost= $20.28= average USA selling price=$44.99.[Shell oil prices come thru 2o15 annual report,pg 37, 37] NOT a stock tip or prediction.