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Oil is set to fall by 30% this year, says Levitt Capital's Robert Levitt. The impact of...

Oil is set to fall by 30% this year, says Levitt Capital's Robert Levitt. The impact of increased shale oil supplies have been drastically underestimated by the markets, Levitt says. This increase, when combined with the resolution of pipeline transportation issues, should ease upward pressure on oil prices. "Once we have all these issues straightened out, the price of oil is going to come down and that will be a great boom for the global economy."
Comments (58)
  • mix
    , contributor
    Comments (84) | Send Message
     
    But we're soon to have $4 per gallon gas again, and it's February?
    15 Feb 2013, 07:26 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    Still no new refineries in the US, and refined products are easily exported. Buy the refiners on pullbacks.
    15 Feb 2013, 07:30 PM Reply Like
  • HoldAndBuyInvestor
    , contributor
    Comments (146) | Send Message
     
    Like 2-3 years back, too many people on this board were saying all refineries were going bankrupt, just like people are now saying for coal. I did loaded WNR heavily. Paid off well.
    15 Feb 2013, 08:52 PM Reply Like
  • moneyTalksBSWalks
    , contributor
    Comments (193) | Send Message
     
    I have been considering a few coal names too that look good from a technical angle but have held back on concern around 4 more years of an anti coal administration.
    15 Feb 2013, 10:57 PM Reply Like
  • billddrummer
    , contributor
    Comments (1672) | Send Message
     
    There's already $4 gas in Northern CA.

     

    This morning I passed a gas station that posted prices for regular unleaded at $4.009 for cash, $4.069 for credit.

     

    This afternoon, the same station showed $4.069 for cash, $4.129 for credit.

     

    Where's the relief coming from?
    16 Feb 2013, 12:47 AM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    Unfortunately supply of oil cannot keep up with demand from paper traded contracts like energy ETFS out there which has distorted the price of gas at the pump. I doubt there are 30% oil supplies on the planet to cover demand from energy shares
    16 Feb 2013, 07:53 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    Cali has special regulations on energy that make it largely unconnected from the rest of the US market. A refinery outage in Cali, like we saw over the summer, can drastically increase prices there. The state either needs less strict regulation, or new refineries, or both.
    16 Feb 2013, 10:33 AM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    I read that if California allowed extraction of oil from its Monterey shale of an estimated 15 B barrels it could solve all its financial problems
    16 Feb 2013, 03:29 PM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    June, so all of those traders are taking possession of their contract ?
    16 Feb 2013, 06:45 PM Reply Like
  • Joseph Poma
    , contributor
    Comments (437) | Send Message
     
    Be happy the credit/cash spread is only 6 cents! Here in New York the spread is sometimes upwards of 20 cents... Robbery!
    16 Feb 2013, 11:42 PM Reply Like
  • wigit5
    , contributor
    Comments (3964) | Send Message
     
    so $COP is going to have a rough year?
    15 Feb 2013, 07:44 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4040) | Send Message
     
    He may well be correct. One way to exploit this move would be to invest in the airlines. My favorite* is Spirit Airlines (SAVE).

     

    *My favorite as an investment. My understanding, which I sincerely hope that I never have to confirm, is that it is wretched to actually fly on. In my experience there is an almost perfectly inverse correlation between financially justified and pleasurable air travel. SAVE is in the economical but lousy experience quadrant. Perhaps one can invest sensibly so that one never is forced to travel sensibly and can instead travel in the opposite quadrant.
    15 Feb 2013, 08:12 PM Reply Like
  • wigit5
    , contributor
    Comments (3964) | Send Message
     
    I'll confirm for you... worst flight I ever had was on Spirit...
    15 Feb 2013, 08:15 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1272) | Send Message
     
    Over the years I have been tempted a few times to invest in an airline stock. Thank God I never acted on that impulse. Those stocks are very tough to make money on.
    15 Feb 2013, 08:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4040) | Send Message
     
    Been a horrible industry for investors historically.
    15 Feb 2013, 08:51 PM Reply Like
  • moneyTalksBSWalks
    , contributor
    Comments (193) | Send Message
     
    Dunno about other sectors but fortunately the DFW outbound flights have new and clean planes. I have heard that the older planes are indeed crappy.
    15 Feb 2013, 10:31 PM Reply Like
  • thestockbroker
    , contributor
    Comments (330) | Send Message
     
    we have flown Spirit probably 12 times in the last 2-3 years, it's like all other discount airlines, except the stews are polite and friendly. planes are clean, the things the people on the plane can control are done well. I have said for 10+ years, if ANY OTHER business treated their customers like all airlines do, they would be out of business. Why we tolerate it is beyond me
    15 Feb 2013, 10:36 PM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    JJMC, is not Spirit Airline sticker symbol a matter of concern ?
    16 Feb 2013, 06:47 PM Reply Like
  • jerrycalpha
    , contributor
    Comments (59) | Send Message
     
    This might be a big problem for the Great White North's tar oil. I understand its breakeven is around $80/brl. Once they shove the xl pipe through so they can export it to the global market, all those high paying temp. pipeline jobs will be gone. I'm not sure what the nukes they are considering using in upper Alberta to heat it up enough to get it flowing will be used for at that stage. Maybe they should just build the line to New Brunswick instead and refine it there to keep gas under two bucks a liter.
    15 Feb 2013, 08:19 PM Reply Like
  • marpy
    , contributor
    Comments (688) | Send Message
     
    Your break even price for oil sands is way to high. Just look a CVE - they are producing oil sands crude at less than 1/2 that price. Same for COS and a lot of the other oil sands producers. As well, the predominant source of energy that they are using in the production process is natural gas. Nuclear reactors were never considered as an energy source for this purpose - with huge amounts of nat gas -makes no sense.
    16 Feb 2013, 08:50 AM Reply Like
  • TruffelPig
    , contributor
    Comments (4059) | Send Message
     
    I sold my oil producers a while ago and they seem to all go down still (kept ERF though because too far in the red and dividend). This, to me, indicates easing prices. Just that shale oil can not go as low as the guy says - oil companies do not make money than. Bought refiners a while ago. So I agree with him largely.
    15 Feb 2013, 08:20 PM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2413) | Send Message
     
    No more peak oil. Now it's PEEK? OIL!

     

    The entire recovery from March 2009 had been generated by investments and expansion by the oil/natural gas industries. The Anointed One's stimulus I, II, III...and the FEDs QExx's have been irrelevant.
    15 Feb 2013, 08:22 PM Reply Like
  • carl2591
    , contributor
    Comments (46) | Send Message
     
    dam shame we have to endure more big oil and speculators games.. There needs to be a higher price paid on futures contracts for speculators to reduce the crazy fluctuation in oil future prices.

     

    Plus we need more refineries in the US and not exporting of oil.. are you serious we are exporting fricken oil.. to who.. WHY.. ??

     

    if Obama was spend time trying to fix the country's real problems he might be considered a good president in the end.. so far i am not impressed.
    15 Feb 2013, 08:24 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    I am not sure if we have exported oil by itself but we exporting oil byproducts to the tune of $70B-$80B a year to Europe where diesel and gasoline are more expensive than here; the spread of the WTI and Brent was wide enough to have oil refineries in the US ship out the byproducts (higher margins); I don't know how much is the spread right now but I think it has been managed in the future markets; I hear we are exporting even to Venezuela since an explosion in one deadly explosion last year at a refinery;; I don't know how this dude can make such predictions when there are so many variables like the $$ going down, petro$$ losing ground, and low cost oil is less and less.
    15 Feb 2013, 09:27 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Rinascimento,

     

    There's a half dozen bearish weights looking for an opportunity to drag price down but none have triggered. Like you say, however, there are also some bullish ones, but the bullish ones seem mostly priced in.

     

    I don't know what it will take, oil is still in an uptrend and being traded that way, and money still going into derivatives products that hold product off the market. Eventually it will change, this year? Maybe.

     

    As long as there is growth in int'l GDPs I don't think traders/investors in oil will switch direction even with supply growth currently outbalancing demand growth.
    16 Feb 2013, 09:10 AM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Refiners historically have been a leading indicator of a selloff - and have led the steep run up since late last year in the energy sector.
    15 Feb 2013, 08:43 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4059) | Send Message
     
    Times change - WTI-Brent spread is enormous. They make a ton of money. Not forever, but maybe another 2 superb years long.
    15 Feb 2013, 08:48 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4040) | Send Message
     
    We began investing in CVR Energy, Inc. (CVI) in part to be ready to exploit that spread. It has been our favorite means to take advantage of the situation.
    15 Feb 2013, 08:52 PM Reply Like
  • TiantongQ
    , contributor
    Comments (246) | Send Message
     
    Why just 2 years? How long does it take to reconfigure and build new refineries? I still don't have a clear picture of where all the existing and future pipelines and refineries are for different grades of crude and how the railroads are going to play into all of this. Is $1.88 roughly the peak quarterly earnings for VLO now that they've transitioned all light crude to domestic?

     

    Is coal ready for a double? Is ACI a good way to play this?

     

    How about steel? Is X (US Steel) good?
    15 Feb 2013, 09:21 PM Reply Like
  • TiantongQ
    , contributor
    Comments (246) | Send Message
     
    How do the refineries compare? CVI vs WNR (mentioned by another person above) vs VLO vs TSO etc.? How did you come to pick CVI in the first place? What are some of your current picks? Thanks.
    15 Feb 2013, 09:25 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4040) | Send Message
     
    CVI was a complicated case, but it was largely an opportunity to spin-off a non-core asset. Some of my current investment ideas are here (click on the tickers for additional information): http://seekingalpha.co...
    15 Feb 2013, 09:45 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    Oil will fall as the economy does.
    15 Feb 2013, 08:57 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    Don't count on it; only a world depression will bring price down; with US$ going down and market manipulations prices will go up; prices going down is same as supply destruction
    15 Feb 2013, 10:17 PM Reply Like
  • AZ Desert Trader
    , contributor
    Comments (232) | Send Message
     
    So this means we don't need Keystone XL right?

     

    How long before Faux News network spins this as bad for the economy so they get blame Obama?

     

    Sorry couldn't help myself.
    15 Feb 2013, 09:04 PM Reply Like
  • bikerron1
    , contributor
    Comments (469) | Send Message
     
    What I see at the pump tells me we won't 80 dollar oil this year. We are only one bomb away from 150 oil. It's not if, but when.
    15 Feb 2013, 09:58 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    Oil in the US trades at a $20-$25 discount to Brent - more in some cases, depending on the type and place. Iran is no longer exporting due to the embargo, and prices barely budged. You'd have to have the Saudi's nearly turn off exports to see $150 WTI, and I don't even know if that would get you there for very long.
    15 Feb 2013, 10:27 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    Yes, Iran is not exporting to Europe and US but is exporting to China, India, South Korea, and other countries and trading oil for gold and other currencies, not in US$; why do you think we want to bomb Iran? and who do you think is winning? if there is a revolution in Saudi Arabia, how much do you think oil is going to be?
    15 Feb 2013, 11:10 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    IEA reports are pointing towards Iran exporting less than 1 million bpd, down from 2.2 million bpd before the sanctions. Before the sanctions Iran was the 3rd largest oil exporter in the world, behind the Saudis and Russia. The fact that cutting their export ability 50% didn't rally prices shows how flush the world is with oil. Like I said, if the Saudi's turned off exports (which they won't, and there wont be a revolution there either), Brent prices would spike, but the logistics of the land locked US crude mean US prices would still be well below Brent.

     

    And the US doesnt "want to bomb Iran" because they are exporting oil in exchange for gold, the sanctions are in place to deter Iran's nuclear program. The Israeli's will bomb Iran long before the US does anyway.
    15 Feb 2013, 11:46 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    You are downplaying the fact that England is starting to import oil because of the North Sea oil production going down, the role of petrodollars, sanctions on Iran are because they are trading their oil not in US$ (remember Saddam wanted to trade its oil in Euros), corruption in Saudi Arabia is prevalent and the same oil reserve numbers have been used and not audited for their oil fields for decades; the US not the dominant oil player any longer; Russia is the top producer and largest reserves than US; I am not sure about Iran and Iraq but I think they are up there; the US has not bombed Iran simply because the war simulations results are negative
    16 Feb 2013, 01:06 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    " The fact that cutting their export ability 50% didn't rally prices shows how flush the world is with oil."

     

    This occurred concurrently with some pretty significant non-OPEC product coming on, or back on, the market. To which we have added significant US shale product.

     

    An Iranian resolution will absolutely result in some pretty strong bearish forces on price, even as it has had very little bullish impact.
    16 Feb 2013, 09:17 AM Reply Like
  • Stephen Aniston
    , contributor
    Comments (2313) | Send Message
     
    Israel already blew up their nuke facilities. The only thing that can happen with Iran is say strong words, then keel and comply with everything thrown their way. Then their oil - 6 million barrels a day - comes back onto the international market after restrictions are lifted.
    16 Feb 2013, 06:56 PM Reply Like
  • ykp3888
    , contributor
    Comments (22) | Send Message
     
    If there is too much supply, wouldn't the oil company cut supply? Supply and demand...supply more than demand so cut output and cut job.
    15 Feb 2013, 10:35 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Often times they can't. A lot of commodity companies have borrowed against proven reserves (a very common business model) so even if price falls dramatically it still favors them to continue producing since they can deliver product to financiers at a lower cost than their borrow reflects.

     

    Financiers than bring that product to market via derivatives products or take advantage of contango to break even, keeping that supply off market to drive pricing higher.
    16 Feb 2013, 09:20 AM Reply Like
  • june1234
    , contributor
    Comments (2499) | Send Message
     
    Unfortunately these days the price of gas is distorted by the demand for shares of energy related ETFs Before they came up with all those paper traded commodities contracts commodities trading was primarily done by say someone trying to hedge an orange crop against a bad winter. Today I doubt there are 20 to 30% actual commodities on the entire planet to back the demand for paper traded contracts out there .
    16 Feb 2013, 03:30 AM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    Don't Goldman Sachs and JPM decide the price of crude like in the run up to $145 last time? the poor souls got make some $$ trading!!
    16 Feb 2013, 10:11 AM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    June, 95% of all derivatives (that are in the money) are never asked to make delivery,,,

     

    You clear do not understand how the option or future markets work...
    16 Feb 2013, 07:06 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    The one confused here is you blueice. One the one hand you talk about derivatives and on the other about delivery. You wouldn't do that if you were as knowledgeable about these markets as you imply in your comment.

     

    Derivatives products never result in delivery, futures contracts do. Derivative products tend to invest in the contracts. The are options on the contracts, but they are very illiquid markets and not the best mechanism to hedge in futures.

     

    The derivatives products take supply off the market and roll contracts, which have expiration dates, and do not intend to take delivery.

     

    Supply being removed from the market, means less is left for actual consumers: i.e. an artificial shortage is created leading to price increases. And that's what june above is referring to.
    17 Feb 2013, 12:02 PM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    KMI, hear is the quote

     

    Unfortunately these days the price of gas is distorted by the demand for shares of energy related ETFs Before they came up with all those paper traded commodities contracts commodities trading was primarily done by say someone trying to hedge an orange crop against a bad winter. Today I doubt there are 20 to 30% actual commodities on the entire planet to back the demand for paper traded contracts out there ...

     

    "Derivatives products never result in delivery, futures contracts do. Derivative products tend to invest in the contracts." Sorry, but I find that statement very convoluted, KMI, and wrong...

     

    So buying energy stock ETFs will distort gasoline prices ? Agree or disagree, KMI..?

     

    June, is using the same old worn out silver conspiracy argument, that if it is not a 100% commods base supply to actual future contracts traded...As I said before, the deliveries are so few, it is not material...

     

    "An arrangement or instrument (such as a future, option, or warrant) whose value derives from and is dependent on the value of an underlying asset"

     

    From a dictionary....

     

    Another source: http://bit.ly/XjGQmP

     

    Please familiarize yourself with the word Derivatives....Thank you kindly....
    17 Feb 2013, 12:26 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    blueice, you are so woefully underinformed that I can't be bothered to continue this conversation. It's especially telling that you went out and did some research in an attempt to understand these products and support your comment and yet still failed to grasp their underlying mechanisms.

     

    Good luck in your rambling.
    18 Feb 2013, 08:18 AM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    KMI, from a person whom does not understand the mean of derivatives, a stinging rebuttal ?? LOL

     

    You do not even bother to answer my simply questions...

     

    You are not preforming any public service by misinforming readers, on SA...

     

    Speaking about rambling, here is one of your memorable quotes:

     

    "Derivatives products never result in delivery, futures contracts do. Derivative products tend to invest in the contracts."

     

    "Because of how terrible the cost is for oil vis a vis alternative energies, the world is experiencing an interesting shift off of oil that is just in the early stretch."

     

    You have no rebuttal but only surly comments which adds no value to this website....

     

    I will say, however, your post are rather entertaining as I take them to my economic professor for an explanation...
    18 Feb 2013, 10:53 AM Reply Like
  • bdarken
    , contributor
    Comments (417) | Send Message
     
    Oil price more about (over) supply of printed dollars than supply/demand of crude itself.
    16 Feb 2013, 07:29 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Only in the imaginations of "investors".

     

    Food price inflation this year will be blamed on dollar devaluation, with complete disregard for prevailing market forces...
    16 Feb 2013, 09:21 AM Reply Like
  • marpy
    , contributor
    Comments (688) | Send Message
     
    Increase in shale oil output plus oil sands output verses increased demand from from far eastern markets and declines from conventional fields - I do not expect oil to drop in price anytime soon as world demand will dictate otherwise. Unlike nat gas, oil and refined products are very easy to export off shore so once the pipeline issues are worked out, regional pricing differences will moderate and those willing to pay the going rate will get the oil or refined product.
    16 Feb 2013, 08:37 AM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Watch global demand growth. The developed world is all decreasing its consumption. Demand growth is located in developing nations and demand growth has been slowing in the biggest of them, China.

     

    Because of how terrible the cost is for oil vis a vis alternative energies, the world is experiencing an interesting shift off of oil that is just in the early stretch. There's huge new non-oil generation capacity coming online globally, and its displacing oil in many developing nations where oil was popular because of lack of infrastructure, and oil is more easily transportable.

     

    But at these prices oil is multiples of cost more expensive to run on a BTU basis versus pretty much every alternative.

     

    And that thesis doesn't even account for efficiencies of consumption going forward: as in increasing production coming from decreasing energy.
    16 Feb 2013, 09:26 AM Reply Like
  • Raj Mehta
    , contributor
    Comments (521) | Send Message
     
    Crude oil prices will have wide swings always - unless government action curbs speculative demand.
    16 Feb 2013, 09:48 PM Reply Like
  • blueice
    , contributor
    Comments (3006) | Send Message
     
    UURUM, remove more contracts from the market and the swings in prices will be ever larger...

     

    Trust the government and blame the speculators is a bad policy...
    17 Feb 2013, 10:04 AM Reply Like
  • vireoman
    , contributor
    Comments (865) | Send Message
     
    It was only a week ago that the EIA raised their estimate for the average selling price of gasoline in the US this year to $3.55/gallon. Most of the recent uptick in demand for oil is due to China. If growth takes off in China this year, so will the price of oil.
    16 Feb 2013, 10:31 PM Reply Like
  • Rinascimento
    , contributor
    Comments (1029) | Send Message
     
    I don't believe whatever the EIA says; gasoline went down fast for the election and now is up fast; no surprise there since election is over; why blame China for having a growing economy and being a top producer for cars
    16 Feb 2013, 11:48 PM Reply Like
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