Boat and after-market truck accessory dealers are getting ready for a good year.

I am mystified why the national energy conversation continues to fixate on oil, when LNG will be the real game changer for the US in just two years: DOMINANCE

11/1 leverage on crude length. This is going to pull back .

Cyp0111 said:

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11/1 leverage on crude length. This is going to pull back .

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Explain this to me like I am 5 please.

jbanda said:

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Cyp0111 said:

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11/1 leverage on crude length. This is going to pull back .

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Explain this to me like I am 5 please.

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I don't understand futures either, but from what I read in the paper, it's cheaper for a trader to buy longterm contracts right now than short term ones.

Isn't that called backwardation?

Im more interested in knowing why he thinks it'll pull back.

Cyp0111 said:

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11/1 leverage on crude length. This is going to pull back .

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This. Paper contracts outnumber actual crude bbls 50:1.

WSJ had the story on it, basically explaining we are flirting with the 60s on account of traders, despite a weakening dollar and continued output.

AustinAg008 said:

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Cyp0111 said:

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11/1 leverage on crude length. This is going to pull back .

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This. Paper contracts outnumber actual crude bbls 50:1.

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Then again this meant nothing when it crashed.

techno-ag said:

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WSJ had the story on it, basically explaining we are flirting with the 60s on account of traders, despite a weakening dollar and continued output.

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A weakening dollar is good for oil prices (i.e. it takes more dollars to buy a barrel of oil, all else equal) and despite increasing output, global demand is strengthening and the market is tightening. Factor in instability in Venezuela, Mexico and Nigeria and proxy fighting between Iran and Saudi Arabia and there's a lot of reason to think this could tighten much more.

Ag2012 said:

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techno-ag said:

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WSJ had the story on it, basically explaining we are flirting with the 60s on account of traders, despite a weakening dollar and continued output.

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A weakening dollar is good for oil prices (i.e. it takes more dollars to buy a barrel of oil, all else equal) and despite increasing output, global demand is strengthening and the market is tightening. Factor in instability in Venezuela, Mexico and Nigeria and proxy fighting between Iran and Saudi Arabia and there's a lot of reason to think this could tighten much more.

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You're right. I worded it wrong.

Ahh got it. Well long oil is a crowded trade for sure, but there seems to be strong fundamental support for that position.

Ag2012 said:

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techno-ag said:

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WSJ had the story on it, basically explaining we are flirting with the 60s on account of traders, despite a weakening dollar and continued output.

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A weakening dollar is good for oil prices (i.e. it takes more dollars to buy a barrel of oil, all else equal) and despite increasing output, global demand is strengthening and the market is tightening. Factor in instability in Venezuela, Mexico and Nigeria and proxy fighting between Iran and Saudi Arabia and there's a lot of reason to think this could tighten much more.

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except the dollar is weakening for not so certain reasons. Over the next several years the Fed is going to be removing trillions of dollars as they tighten their monetary policy. By the end of 2018 they will have removed 540 Billion dollars. This should in itself strengthen the dollar. We will see.

I think there is support for crude on a fundamental basis of 50+ for WTI ranging up to high 50's with Brent in the 60-65. I think the paper money has this market $7-8 over extended. I think the refinery turnaround season being screwed up has added support to a small extent as well.

Ragoo said:

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Ag2012 said:

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techno-ag said:

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WSJ had the story on it, basically explaining we are flirting with the 60s on account of traders, despite a weakening dollar and continued output.

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A weakening dollar is good for oil prices (i.e. it takes more dollars to buy a barrel of oil, all else equal) and despite increasing output, global demand is strengthening and the market is tightening. Factor in instability in Venezuela, Mexico and Nigeria and proxy fighting between Iran and Saudi Arabia and there's a lot of reason to think this could tighten much more.

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except the dollar is weakening for not so certain reasons. Over the next several years the Fed is going to be removing trillions of dollars as they tighten their monetary policy. By the end of 2018 they will have removed 540 Billion dollars. This should in itself strengthen the dollar. We will see.

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Weakening/strengthening is more complicated than that, The fed pumped in trillions since 2009 without significant inflation (weakening against goods and services), rising oil prices (weakening against oil), or weakening against forex basket. Plus, reducing the fed balance sheet by 540 billion is small compared to the accumulated 4.5 trillion the fed added through the QE years bond buying program.

Strengthening/weakening will somewhat depend on what everyone else does. If other central banks unwind their currency devaluing processes the same or faster then the US, we could see weakening in the face of tightening policy,

Cyp0111 said:

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I think there is support for crude on a fundamental basis of 50+ for WTI ranging up to high 50's with Brent in the 60-65. I think the paper money has this market $7-8 over extended. I think the refinery turnaround season being screwed up has added support to a small extent as well.

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I'm just happy it's up.

Ragoo said:

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Over the next several years the Fed is going to be removing trillions of dollars as they tighten their monetary policy. By the end of 2018 they will have removed 540 Billion dollars. This should in itself strengthen the dollar. We will see.

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In theory. Then again, when has man ever pulled off something this interwoven, complex, and important.

AgLA06 said:

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Ragoo said:

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Over the next several years the Fed is going to be removing trillions of dollars as they tighten their monetary policy. By the end of 2018 they will have removed 540 Billion dollars. This should in itself strengthen the dollar. We will see.

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In theory. Then again, when has man ever pulled off something this interwoven, complex, and important.

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I mean, all they are doing is not reinvesting their yield in bonds or buying new bonds any more. It's not like they are actually selling them, just naturally deleveraging over time.

Anyways, the oil market looks pretty strong to me. I wouldn't be surprised if there is a pullback due to seasonal weakness, but this summer could be pretty exciting barring some unforeseen economic change in the next 5 months or so.

The seasonal weakness will likely be delayed to an extent.

techno-ag said:

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I'm just happy it's up.

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double post

Here's a great summary of the current state of play with oil: Shale is King

""OPEC missed the point," said Ren Ortiz, a former OPEC secretary general and former Ecuadorean energy minister. "They thought they could recover the U.S. market by bringing the prices down. Now the U.S. has gained the leading position in the world oil market regardless of what OPEC does.""

Quote:

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Analysts at Bank of America-Merrill Lynch last week said electric cars will take 40 percent of the personal transportation market by 2030, and 90 percent by 2050. They also expect demand for oil to peak in 2035, which is in line with predictions made by Royal Dutch Shell and consulting firm Wood Mackenzie.

RELATED: Self-driving taxis, electric trucks arrive in 2019

While that may sound like the distant future, most large oil firms make major investment decisions on 20-year or 30-year time frames. Which brings us back to the oil executive's quandary: Will future oil prices generate enough profit to justify the investment decision I must make today?

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http://www.houstonchronicle.com/business/columnists/tomlinson/article/Energy-business-is-in-a-treacherous-transition-12524830.php

That peak will be just in time for my retirement, if not sooner.

I'll be 45. I'm good with retiring then!

30% of the US energy usage is transportation. Of that, 1% currently comes from electricity. Our power plants currently do not have extra capacity. Not sure where all this extra electricity is going to come from.

It sounds to me like it would be a good time to invest in a Lithium mine. Or Cobalt.

https://www.bloomberg.com/graphics/2017-lithium-battery-future/

Cobalt.

FarmerJohn said:

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30% of the US energy usage is transportation. Of that, 1% currently comes from electricity. Our power plants currently do not have extra capacity. Not sure where all this extra electricity is going to come from.

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Unicorns on treadmills.

techno-ag said:

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FarmerJohn said:

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30% of the US energy usage is transportation. Of that, 1% currently comes from electricity. Our power plants currently do not have extra capacity. Not sure where all this extra electricity is going to come from.

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Unicorns on treadmills.

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But will the unicorn actually take off?

Not sure if everyone heard but one of the Permian titans of industry, Ted Collins, passed away. He was a great man and will be missed.

Exxon going all in on shale.


"Exxon Mobil, the nation's largest oil company, said the tripling of oil and natural gas production would bring its output in the Permian Basin to 600,000 barrels a day. To support that increased production, it said, it will invest more than $2 billion to expand a recently acquired transport terminal and other production infrastructure. It noted in a statement that "recent changes in the U.S. corporate tax rate create an environment for increased future capital investments."

It also said that "reduced drilling costs, technology improvements and expanded acreage" gave the company the opportunity to produce efficiently in the Permian.

Energy companies are quickly building pipelines to move Permian oil and gas to Gulf of Mexico ports for export as well as pipelines to Mexico, where natural gas from the United States is replacing oil and coal to remake the country's electricity system and clean up urban air.

On Monday, Exxon Mobil said it would spend $50 billion on United States operations over the next five years. Much of that spending had been previously announced, but it highlighted the company's continued shift in preference to operations in the United States and the Western Hemisphere, after decades of searching to replace reserves in far-flung regions that are frequently unstable.

With the price of West Texas intermediate crude oil rising to around $65 a barrel from below $40 in recent years, the Energy Department predicts that daily domestic oil production will increase to an average of 10.3 million barrels a day this year from an average of 9.3 million in 2017 setting a production record and surpassing the output of Saudi Arabia. The department projects an additional 500,000 barrels of production in 2019."

Make some hole

74OA said:

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Energy companies are quickly building pipelines to move Permian oil and gas to Gulf of Mexico ports for export as well as pipelines to Mexico, where natural gas from the United States is replacing oil and coal to remake the country's electricity system and clean up urban air.

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See, All this shale drilling and pipeline building is good for the environment.