yank

Why Jim Rogers Still Favors Commodities

Finder:
I don't buy the "demand destruction" myth for one second. We are in the midst of a temporary "delevering" that has affected oil demand. Once recovery begins in the 2nd half of 09 oil demand will rise accordingly. What you also left out of your analysis (which was excellent by the way) is yes there is all this oil but what about:

-the collapse in production at Mexico's Cantarell Field (Mexico is 3rd largest exporter of oil to the US)
-Virtual complete shutdown of oil sands expansion work in Alberta as oil prices plummeted (Canada is the largest exporter of oil to the US)
-North Sea production has come to a complete standstill.
-Alaskan Slope production is declining precipitously.

So all of that "new" oil you are talking about is great but it will be nothing more than a susbstitute or replacement for existing production that has been lost due to collapsing prices and field declines. In other words we are running on a treadmill NOT finding additional production which will meaningfully impact supply.

Yank


On Apr 16 11:46 AM OilFinder wrote:

> @Yank,
>
> Petrobras tells us its sub-salt oil deposits are profitable as low
> as $40:
> www.bloomberg.com/apps...;sid=ayewS28nNJtc&...
>
> No reason to expect other offshore projects to be any different.
> BP's Thunder Horse project, now in operation and extracting oil and
> gas from 20,000+ feet deep, was discovered and planned when the price
> of oil was lower than it is now. Same with other deepwater projects
> in the Gulf of Mexico which have recently gone into operation, or
> will soon be so. All these were discovered and planned around 2000
> or shortly afterwards when oil was around $20 or $30.
>
> In addition, please read the link I provided on Iraq. Iraq's oil
> is precisely the "easy, cheap oil" you spoke of - and there appears
> to be Saudi-sized resources there. Between Iraq and the various deepwater
> sources I described, you will have large amounts of oil which can
> break even at $10 or $20 (Iraq) and $40 (deepwater) coming online
> over the next several years. Throw in an additional $10 for a 20%
> profit margin on the deepwater, and you have ample supplies of oil
> at $50. If you consider $50 oil to be expensive, then so be it.<br/>
>
> Finally, don't forget that supply is only half the equation. You
> might want to read a bit about the demand half:
> online.wsj.com/article...
>
> @Kelm,
>
> Please peruse my links on Brazil and Russia, especially Brazil. Then
> you need to read the USDA's write-up here:
> www.fas.usda.gov/pecad...;br/>Pay
> particular attention to the "Land Resources" and "Agricultural Expansion
> Potential" sections. We're talking about staggering amounts of land
> here, some of which has undergone development over the past several
> years, but with still much more left to go. Then, regarding the energy
> inputs you mentioned, read reply to Yank above.

Why Jim Rogers Still Favors Commodities

Oilfinder:
No one disputes that there is oil out there. Even Rogers will admit there i smore oil to extract. But the main point is that the easy, cheap oil is now gone. And with oil prices in the $40s it is no longer viable to explore deep-sea reserves. Until oil prices stabilize somewhere above $70-75 there will be no major drilling undertaken. It's all about the economics of drilling. Unless these E&P companies can earn a profit it doesn't mater what the supply/demand imbalances are.

Yank


On Apr 15 09:20 PM OilFinder wrote:

> Jim Rogers is a fool. If he thinks there haven't been - and won't
> be - any major new oil discoveries I'd suggest he start paying attention
> to the news.
>
> How does 100 billion barrels of recoverable oil in the Santos basin
> offshore Brazil sound?
> www.ft.com/cms/s/0/d98...
>
> And that is *just* in the Santos basin. The entire coast of Brazil
> is lined with hydrocarbon-rich basins, the majority of which have
> only lightly been explored. The governor of one northern Brazilian
> state believes his coast has similar deposits to one of Brazil's
> other big oil-producing basins, and he is probably right:
> www.bloomberg.com/apps...;sid=aIhOjFb14A4I&...
>
> Why is he probably right? Because his state used to be attached to
> the west coast of Africa - particularly Ghana - where they're just
> starting to make large discoveries:
> blogs.wsj.com/environm.../
>
> www.thestatesmanonline...;section=2
>
> For those who don't understand, South America and Africa were once
> attached but separated starting in the Jurassic. This was when the
> sediments eventually forming the oil began to deposit. If there is
> an area off the western coast of Africa with large oil deposits,
> there is a very high probability of a "twin" along the South American
> coast. And vice-versa. For example, the presence of large sub-salt
> reserves off the southeastern coast of Brazil almost certainly means
> similar deposits off the coasts of Namibia and Angola;
> ipsnews.net/news.asp?i...
> ----------------------...
> "Across the ocean, along the southwest African coasts of Angola,
> Congo and Namibia, there are similar amounts of oil. The Latin American
> and African coasts share a common geological formation which was
> split apart by the South Atlantic ocean, which separated the continents
> in prehistoric times, Mello, who has been studying the subject for
> 10 years, told IPS.
>
> There is a correspondence between the oil reserves in the Brazilian
> Campos basin and those in Angola. Both contain about nine billion
> barrels of oil, and a similar pairing appears likely between Namibia
> and the Santos basin, the expert said."
> ----------------------...
> But the sub-salt in Angola hasn't even been touched yet:
> www.rigzone.com/news/a...
>
> This likely also means that the large oil deposits off the coast
> of Nigeria and Equatorial Guinea are matched by (as yet undiscovered)
> large deposits off Brazil's northeastern coast.
>
> But we're not done when we're talking about Brazil. Go south. How
> does 60 billion barrels off the coast of the Falkland Islands sound?
>
> www.spiegel.de/interna...
>
>
> Some nice prospects to follow in several companies' Falkland leases:
>
> www.fogl.com/investor/...
> www.desireplc.co.uk/te...
> www.rockhopperexplorat...
>
> www.bordersandsouthern...
>
>
> Now let's see . . . lots of oil off the coast of Brazil. Almost certainly
> lots of oil off the coast of the Falklands. Now connect the dots.
> Between those two are two other countries beginning with a 'U' and
> an 'A'. 'A' in particular has a large coastline. Hmm, I wonder what's
> down there.
>
> But we still aren't done. Back to the west coast of Africa we head
> north from the recent discoveries in Ghana. Guess what? There's lots
> more almost certain to be discovered:
> investors.hyperdynamic...
>
>
> Next, starting in Guinea, trace the cross-Atlantic ridge lines on
> google-map's satellite view and you get to the Lesser Antilles. We
> already know there are large natural gas deposits off the coast of
> Trinidad and Tobago. Maybe the folks in Antigua and Dominica should
> start drilling.
>
> All this - and I've only discussed the South Atlantic! If you're
> tired of reading about offshore deposits you can peruse this for
> your entertainment:
> www.energyinvestmentst.../
>

Declining Global Trade Looks Bad for Commodity Investors

Flimsy article with nothing to back it up. Try this:

1. Baltic Dry Index bottomed in November and has climbed over 50% since then, reigniting global trade.
2. China announced today they will DOUBLE the amount of their stimulus package further increasing the demand for commodities.
3. Massive monetary stimulus and weak demand for servicing US debt by foreign investors will lead to an eventual collapse in the US dollar. The dollar collapse will spark a furious rally in oil, metals, gold, and softs.

Your article is wild speculation and cannot be supported by facts. Sorry.

Yank

Today's Commodity Prices Forecast Tomorrow's Inflation

Sean:
I understood what you were saying about copper. Other commodity analysts have concluded that if indeed we were entering a global depression copper should be trading well back below $1. Since it is not, one can only conclude that copper is stabilizing and building a new base anticipating a move back to $2 by the end of 2009. Just my thoughts anyway. Good luck.

Best,
Yank


On Jan 28 08:59 AM myWealth.com wrote:

> The last few days of price action on the copper chart is what I'm
> referring to.
>
> Even though we disagree, thanks for taking the time to read my articles.
> I appreciate it.

Why I Don't Own Commodities

sd cdl:
you have it right as the commodity bears may ignore the hard asset sector at their peril. I don't know why anyone could conclude that the commodity bull is "dead". Jim Rogers knows a lot more about these cycles than anyone and he has stated plainly they run on avg about 15 years. Since we started in the 2000-01 time frame, we are only in the middle "innings" of the ballgame. Another thing to consider is that in commodity bull cycles the most money is made at the beginning of the cycle (first 2-3 years) and near the end of the cycle (last 3-4 years). Instead of trying to "time" entry points it seems to make more sense just to buy n hold them.

True Wall of Worry Lies in Commodities, Not Equities

Davy:
I hear you about the commodities wall of worry. I've been long precious & base metals, and the energysector since 2002. Along the way I have heard all the maoning and handwringing that these prices are not "sustainable". Let them whine. As Jim Rogers has said we are only in the 2nr or 3rd inning of this supercycle. NO commodity bull market has ever lasted LESS than 15 years. As for gold, many so-called experts have gotten that call wrong. All one need do is look at the current PM of the UK, Gordon Brown. Brown SOLD 500 million tons of gold as the Chancellor of the Exchequer right before gold prices began a triple digit percent move up. Talk about "leaving money on the table". And the Brits went out and elected him Prime Minister! Go figure.

Commodity Analysts Believe the Party's Over

Bloomberg's commodity forecast is pretty much worthless. Nothing is stated to support WHY key commodities will decline this year. Just because they have gone up they will go down? Sorry, it doesn't work that way. Obviously Bloomberg missed the memo from Jim Rogers. We are still in the early stages of a "multi-year" bull cycle in commodities. Most of these hard assets have YEARS to run before they pull back. Bloomberg just doesn't get it.