A "normal" price of oil hasn't existed since after 9/11, Just quickly looking at this chart it looks like there hasn't been a 2 year period without a major (>$20/bbl) price change since 2002...

http://www.barchart.com/chart.php?sym=CLY00&t=BAR&size=M&v=0&g=1&p=MN&d=X&qb=1&style=technical&template

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All signs point to a new "normal" of $60-$80/bbl long term. How long it takes to get there? Who knows.

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i'd take 60-80 all day long

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What do y'all think about this:

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Saudi billionaire businessman Prince Alwaleed bin Talal told me we will not see $100-a-barrel oil again.

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Interesting, since in this interview Prince Alwaleed also states that nobody saw the drop coming just 6 months prior.

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As long as oil is priced in dollars, when the dollar is week oil will look more expensive. Right now the dollar is strong. It's not the only factor, but it contributes.

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He's not really saying anything that anyone inside the industry hasn't been for the last 5 years - $100 oil isn't healthy for anyone, $60-80 is where it needs to be.

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Never once heard anyone say $100 oil isn't healthy for anyone.

Ever.

Read a couple times where the Saudis said they thought $100 oil was a good place to be.

Mattress Mack has a new promotion betting on the price of oil. If you buy $7k worth of furniture and oil closes above $85/bbl on 12/31, then the furniture is free.

Three thoughts:

1) This seems like a sucker bet. Odds have to be pretty small that we get to $85 by the end of the year
2) This seems pretty distasteful to publicly speculate on this matter that's fixing to really put the strain on the entire Houston economy.
3) It's actually a pretty good way to hedge his potential slowdown in business. I bet he can probably track his revenue pretty closely to the price of oil. Get the people to buy now in case they don't want to buy for the next couple of years.

Shouldn't he be making the bets to the downside (e.g. <$30) so people can hedge?

In other news, about to smash through $46... At what point are the 80s back?

About a month ago, Rex Tillerson said XOM test projects down to $40 oil before starting. I think 40 is going to be support

So $40 is the magic number where mass layoffs start?

We are looking to buy a home and trying to guess the best time to buy.

I just bought a house, so this downturn kind of sucks and I resent my friends who are openly cheering for the market to fall out. However, to answer your question LawAg, I think you won't see the market fall out for a few months after the massive layoffs start.

$35. Little to no resistance between the current level and $40. Break $40 and your'e looking at $35 easily

WTI down 2 bucks today to $46.35

Personally I would wait until June or July and then gauge the market to maybe try and pick something up in mid to late autumn. But if there's really some shock to the system maybe March or April could have some good pricing.

The summer months tend to have higher pricing and (and higher inventory) because most people want to move when the kids are out of school, so take that into consideration.

I have a feeling that the current state of oil is already affecting the Houston real estate market. The effects may take a bit to show up in the numbers.

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I have a feeling that the current state of oil is already affecting the Houston real estate market. The effects may take a bit to show up in the numbers.

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Agree. I'm just guessing but I would think there's a 2 to 3 month lag.

It has started already, just look at the price reductions on HAR.com.

Psychology plays a huge part in real estate, so I'm certain the plunge in oil is having some impact. The dual income couple making a collective $225k might have been considering a $575k house just outside the Beltway on the West side. Now they are probably taking a wait and see approach with rumors of future layoffs.

The real damage will probably happen in about a year when the layoffs hit and people are forced to sell. That will have a domino effect. It only takes a couple of panic sales or foreclosure to depress prices in an entire neighborhood.

2015 - $30-50, average $40
2016 - $40-60, average $50
2017 - $50-70, average $60
2018 - $60-80, average $70
2019 and beyond, average $70

I think oil hits less than $35 in the next 30 days. And trades in the $30s a lot during the first half of this year. I don't see any quick rebound as OPEC wants to get supply down to demand, which means reducing American supply! And then keeping the american supply under control to avoid another glut of oil. So this means layoffs and bankruptcies. It is going to be very tough for at least the next 24 months in the oilpatch. Especially in the recent hot drilling areas.

The lower prices drop, the quicker we can start rebounding. But any rebound is going to be slower than what most people think. This is not a boomerang like 2009! OPEc is serious about reducing American supply.

Where the **** did you pull that **** out of?

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Where the **** did you pull that **** out of?

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His ass

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Where the **** did you pull that **** out of?

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You want to read all 35 pages of this thread. I've been pretty accurate. The OPEC story is world news, so it's not like I'm going out on a limb here. I've posted charts on this board showing supply and demand for years and decades as well as pricing history. There are numerous articles on the web so by cross-referencing it is possible to calculate how much supply comes online at different pricing points. Same for estimating demand. Put all this data together and best guesses can be made.

You might not have noticed, but the "experts", like Goldman Sachs, have continued to revise their estimates lower. GS just came out with a $39 average for the first half of 2015.

Jeff has the right idea. The Saudis saw that the quick plunge and rebound in 2008-2009 had no lasting impact on their competitors and political foes. They are determined to play the long game and will keep supply up as necessary to ensure that prices remain under $60'for a couple of years. Maybe even lower and longer.

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Jeff has the right idea. The Saudis saw that the quick plunge and rebound in 2008-2009 had no lasting impact on their competitors and political foes. They are determined to play the long game and will keep supply up as necessary to ensure that prices remain under $60'for a couple of years. Maybe even lower and longer.

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I think the Tom Clancy-esque geopolitcal aspect stops that from happening. Venezuela, Russia, Nigeria and several other large fairly powerful (at least on a global scale) countries cannot survive with oil that low. I wouldn't put it past oil Putin to start sabotaging Saudi o&g assets, and the SOB is crazy enough to invade Poland or hell maybe even bomb Saudi to get the prices up.

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Jeff has the right idea. The Saudis saw that the quick plunge and rebound in 2008-2009 had no lasting impact on their competitors and political foes. They are determined to play the long game and will keep supply up as necessary to ensure that prices remain under $60'for a couple of years. Maybe even lower and longer.

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I think the Tom Clancy-esque geopolitcal aspect stops that from happening. Venezuela, Russia, Nigeria and several other large fairly powerful (at least on a global scale) countries cannot survive with oil that low. I wouldn't put it past oil Putin to start sabotaging Saudi o&g assets, and the SOB is crazy enough to invade Poland or hell maybe even bomb Saudi to get the prices up.

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I just had this exact convo.

Tiny sample size but I do industrial outside sales in Houston and it has been business as usual. Parking lots full, people willing to meet, nothing negative, etc.

News searches on Google don't really yield many articles regarding potential downfall of Houston over the next couple years. Everything seems to talk about a slight setback. Hopefully everyone else is right but I just can't help feel this is all calm before the storm.

I don't think that will be necessary. Extended sub-$50 and especially sub-$40 oil will probably cause another civil war in Nigeria (they are already struggling to contain Boko Haram) and Venezuela's economy will collapse (it's already close). Russia won't need to bomb anyone. That will cause a supply disruption that will increase oil prices. The question is whether US production falls before that.

http://www.cnbc.com/id/102326971?trknav=homestack:topnews:6

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Overall, the analysis found, the impact of $40 oil on global production would be very small, based on data covering some 75 million barrels a day of production. At $50-a-barrel Brent, only 190,000 barrels a day is unprofitable, representing just 0.2 percent of global supply. Seventeen countries supply oil that is cash negative at $50, with the main contributors being the United Kingdom and the United States. At $45 a barrel, only 400,000 barrels per day, or just 0.4 percent of global supply, are unprofitable. Half of that is from conventional onshore production in the U.S. And at $40 a barrel, just 1.5 million barrels per day represents unprofitable production, or just 1.6 percent of global supply. Most of that production comes from several oil sands projects in Canada

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Im a Global Sales Director in the Oil & Gas industry (focus on subsea) living in Houston and my wife is a Realtor with Remax.

I can tell you that the Houston housing market has already been down for months. 2014 was not that good of a year for Housing. People freaked out last year with all the news of a housing shortage due to Exxon coming in. Most of the movement was with people already here just moving around because Exxon hasn't opened up yet. Homes became over-priced and buyers just simply decided to opt out of purchasing until prices came down.

What is interesting now is that mortgage rates are the lowest they have been since June of 2013. This will get people interested in buying if they can or doing a Refinance. Exxon is still moving into their digs in The Woodlands at the end of 2015. That is when you will see the market pick up. People will be moving into the area and the freeway projects for expanding Hwy 249; finishing most of the Grand Parkway will be done before the end of 2015 and Hwy 290 expansion will not stop.

Deepwater Subsea projects have a 20-25 year life cycle. The price of oil isn't going to kill off those projects because they plan for fluctuations in the price over the life of the field. There will be some belt-tightening in the Subsea world and there will be some lay-offs. But the companies with low-debt and borrowing power will make it through. It is really hard to find experienced help in the offshore/deepwater subsea field and you don't layoff people that you worked hard to find/train. You will need all those folks when the market has its natural bounce back.

It takes 18 months to 2 years to make a subsea X-mas tree and most of the major projects can take twice that long or longer just to go from the planning stage to first-oil. Over the life of a field there are many requirements for maintenance, intervention and repair of existing equipment on the sea floor. The need to keep the oil flowing in deepwater subsea doesn't stop because the price of oil is low.

These studies analyzing the impact of $40 oil are missing the big picture. Yes, the marginal cost of most production is below that, but many poor relatively unstable countries need the profits from $100 oil to maintain order.

There is going to be a lot of pressure on the Saudi's from other OPEC members. It'll be interesting to see how they respond. They may be willing to break up OPEC to preserve their own market share. Or maybe they will agree to OPEC production cuts but require the majority of those cuts come from other OPEC members to protect Saudi market share. 2015 will be interesting.

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I can tell you that the Houston housing market has already been down for months. 2014 was not that good of a year for Housing

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Compared to 2013 it might not have been as good, but 2014 was an extremely good year for Houston housing. Saying otherwise is crazy even if your wife is in the industry.

What they "need" is going to have little relation to what they will actually get. Venezuela and Nigeria have no practical means to prop up the price of oil. They have to keep producing as much as possible.

Putin is very unlikely to start WWIII simply to prop oil. The oligarchs who support him would abandon him if he further ruins their business ventures. And invading Poland isn't likely to alter the fundamental supply/demand balance anyway. Hell, it could cause the opposite as worldwide consumer discretionary spending plunges.

My point is there will be supply disruptions due to unrest in those countries, not due to anything they try to do to support prices.

Or maybe not.

From what I understand, production continued during the last Nigerian civil war.

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My point is there will be supply disruptions due to unrest in those countries, not due to anything they try to do to support prices.

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One has to wonder if the Saudi's could very well subsidize these unstable countries just enough to get by through this adjustment period?

Just an idea that hasn't been discussed by analysts or media outlets.

any desirable school district and neighborhood are still popping...its not an insane market anymore but it still is performing really well and slowly regressing to the mean instead of being on the outskirts of the positive standard deviations. Can you just put any number out and any house and expect the house to go? No... but if its a good looking house in a nice area that's priced well, its going to sell and sell quickly. And thats directly from a 30 year veteran (my realtor) in the industry who has been a top 5 earner during that time.

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My point is there will be supply disruptions due to unrest in those countries, not due to anything they try to do to support prices.

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One has to wonder if the Saudi's could very well subsidize these unstable countries just enough to get by through this adjustment period?

Just an idea that hasn't been discussed by analysts or media outlets.

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Doubt it... The Saudis want their market share. I don't think they care where they get it from and they still have a chip on their shoulder from the 80s when they cut and everyone else sold under the table without cutting.