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A Bloodbath Looms Over Oil Markets

4,301 Views | 19 Replies | Last: 7 yr ago by 74OA
chris1515
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http://oilprice.com/Energy/Energy-General/A-Bloodbath-Looms-Over-Oil-Markets.html

I don't know if the points in the article are valid or not, but the logic seems reasonable. If nothing else, it's a eye catching headline.

"There's a lot of complacency out there. If these bets start to unwind, it will be a bloodbath," Doug King, chief investment officer at RCMA Asset Management, told the Wall Street Journal in an interview.
nu awlins ag
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It's like this. You a have a living room set. The original price is $1000, then you raise it to $1200. Then you have a sale and "slash" prices to $999. Have you really lowered the price?
mm98
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nu awlins ag said:

It's like this. You a have a living room set. The original price is $1000, then you raise it to $1200. Then you have a sale and "slash" prices to $999. Have you really lowered the price?


The Jos A Bank sale....
nu awlins ag
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Exactly or Star Furniture....
Vernada
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What? They don't cut prices. They just add more for free.
aggies12thman
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Good information but LOL.

Global inventories have gone down. EIA and API don't report those numbers.
aggies12thman
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It is quite sad how clueless traders/ wall streeters are with Oil.

It is without question, our most important commodity and they don't bother to learn about the business. They just look at the basics from API/EIA and rig numbers from Baker. They don't take into account overseas inventories and how much time it takes for a well to begin producing.
Vernada
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What is there to know? Prices go up - rigs start pumping.
nu awlins ag
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aggies12thman said:

It is quite sad how clueless traders/ wall streeters are with Oil.

It is without question, our most important commodity and they don't bother to learn about the business. They just look at the basics from API/EIA and rig numbers from Baker. They don't take into account overseas inventories and how much time it takes for a well to begin producing.
Exactly. I've beaten that horse dead more than a few times. Most of the increase in production comes from companies releasing oil in storage facilities. Yes, we can drill one well faster today than 5 years ago, but you still have to put in some infrastructure which takes time. Some areas are faster than others. In 2014 EOG was building storage tanks in prep for lower prices. They cut back on drilling as they had 400+ wells they were going to drill in 2015 to around half I think. They spent more on storage. Smart producers did the same thing. Again, they add some rigs weekly and Goldman and others automatically assume each well is producing thousands of barrels within a few weeks. For such astute people they sure are dumb when it comes to actually understanding how the industry really operates and all the variables at play.
aggies12thman
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jake2011 said:

aggies12thman said:

It is quite sad how clueless traders/ wall streeters are with Oil.

It is without question, our most important commodity and they don't bother to learn about the business. They just look at the basics from API/EIA and rig numbers from Baker. They don't take into account overseas inventories and how much time it takes for a well to begin producing.


If you are so smart and know where the true price will go just place some oil future bets and you will never need to work again.
Here's my prediction: It will settle at a higher price than 60$ sometime in the future.
mts6175
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Vernada said:

What is there to know? Prices go up - rigs start pumping.


Rigs don't pump.......
Charlie Conway
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mts6175 said:

Vernada said:

What is there to know? Prices go up - rigs start pumping.


Rigs don't pump.......
I think that's his point
BlackGoldAg2011
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mts6175 said:

Vernada said:

What is there to know? Prices go up - rigs start pumping.


Rigs don't pump.......

atmtws
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They pump mud downhole...technically. Increasing demand for diesel.
ClickClack
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ATMTWS said:

They pump mud downhole...technically. Increasing demand for diesel.

No, the mud pumps do that.

This article seems a little over-dramatic to me. Could oil dip a little bit because of the reasons he cited? They could. Bloodbath? I don't see why it would be.
74OA
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Even if prices did rise to $60 a barrel in the next year or so, that doesn't offer much help to countries like SA, Russia and Venezuela which all need prices at or over $100 to avoid a huge drop in their population's standard of living.

With US shale break-even now at ~$35, giant new domestic fields being found regularly and capacity still with a huge upside, I don't understand how any such price rise wouldn't be tamped right back down again by idling US production kicking in.....

Latigo
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You should short it. You will probably make a fortune.
Ragoo
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What is even more elastic is that not all oil is the same. One barrel of 14 API is different than 1 barrel of 50 API. Some countries and regions only produce the former which will increase demands for lighter crudes for blending.
aggies12thman
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Definitely short oil.

We can make a movie about how you saw this crash coming when nobody else did. Call it 'The Big Short.'
74OA
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US eating OPEC market share......
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