Timothy Stolz

A $40 Bottom in Oil?

What a mess we would find ourselves in with oil at $40 a barrel. How many oil drilling, service, tubular and transporting companies would find themselves holding worthless "future contracts for work?" There would be a shrinkage of investment dollars into new exploration that in and of itself, would create a shortage, eventually driving the price of crude right back up to where it would then become economically feasible to produce and refine.
My concern is that the opposite is likely to occur in the near term. The post above by JohnniePhenom suggests that the inflationary outcome of the influx of a hugh amount of new dollars into the worlds financial system could devalue the dollar causing the price of crude to rise. I think Johnnie is right.
And, another concern of mine comes from the words of Joe Biden...."He will be tested in his first six months" comment will likely ring true. I do not believe the Middle East is at all that stable and the Iran/Israel nuclear issue may very well come to a "head" early in Obama's Presidency. Just a hunch and I hope that I am wrong.
As wdhalgren said in his post....(this)(meaning oil) "could be the long term investment of the millenium."
I think oil will settle in the range of $62 - $72 until the market is "stressed" one way or the other.

U.S. Oil Companies Paid, Collected More in Taxes Than They Made in Profits in 2006

User 290436....how were you able to determine that the $90.445 million from the EIA data Table B5 was likely employee paid? It would be important to know without a doubt that what you say is fact.
I understand WHAT it is you are saying, I am just not certain as to the "definition" of the $90.445 number of what was reported in Table B5.
Can you or Mark Perry elaborate?

U.S. Oil Companies Paid, Collected More in Taxes Than They Made in Profits in 2006

Thank you for the documentation links to the EIA statistics. I ran a couple of copies for the "neighborhood loudmouth" who is always bashing the oil companies. I am opposed to the windfall profits tax as I believe it will damage our oil companies ability to compete in the world markets. This nut case goes out of his way to "preach" that the villian of high gas prices are the sinister oil companies, and that they should either pay more tax or be nationalized.
I doubt this will shut him up....but it will make me feel better!

Traffic Volume Continues to Fall in August; What Will Happen in the Coming Months?

Thank you for the statistics as it gives us all cause to stop and think. Short of doing multiple surveys, all we can do is offer a conjecture on how drivers might respond.
There will be a certain percentage of drivers who have found alternative or public transportation to be of a benefit and they will no longer be counted in driving miles. Others will abandon their fuel saving "experiments in saving gas" and go back to their heavy footed driving habits. Those drivers that bought into the idea of $147 per barrel oil as the new world order now have nice new fuel efficient cars to drive which with cheaper gas prices will take even longer to pay for themselves.
The real question shall be "At what point will the volume of miles driven by new drivers cross the apex of miles saved by all of the methods so attributed to milage savings?" The answer to that question then becomes the level where the graph above begins to go up. The reduced milage from demand destruction may still be ongoing, as will the reduction from public transportation and other like methods; but the graph goes up as does the gross number of miles driven.
At any rate, I think we can count on the American consumer, or at least a sufficient number of them, to be predictable and return to their wasteful driving habits.

OPEC's Cuts Can't Fight Global Recession Headwinds

Let us suppose that the accepted rule of supply and demand exists. That supply being more than the demand, as measured in a given quantity by the Center for Global Energy Studies and/or the US equivalent, the IEA. That demand is now measured to be contracting in 2008, for the first time in 15 years.
Now OPEC comes into the equation with a "stated" and who knows if "real" factor decreasing the supply by 1.5 mbd, that likely will only offset the equation by a portion of the decreasing demand.
At some point in time the OPEC decrease and the steady augmentation of the demand destruction component towards neutral or zero, should occur.
As measured in the beginning of OPEC's involvment in our equation, they really had no impact on the price of oil, cheating or not cheating. As the reduced demand component moves closer to neutral, in theory, OPEC begins to have an influence on the price of oil. In other words, "until the slack is drawn up in the rope, you can't make a noose." That slack is the reduced demand component of the oil price equation too large for OPEC to alter by their recent stated reduction. Maybe later when the demand catches back up with the supply they will have more of an ability to control prices.

OPEC to Cut Production at Friday Meeting, but Will Prices React?

Whew! And all I wanted to know is where do you think the per barrel price of oil was headed, $75 maybe?

OPEC to Cut Production at Friday Meeting, but Will Prices React?

I have a hunch that MANGOLFER is right about the price of oil already having the OPEC cut "priced in" but I don't think the proverbial "floor" is at $63 US or about where crude oil is priced before the US markets open this morning.
OPEC is likely to form a that floor at about $75 US but it may take a few weeks to work through the excess oil inventory before we see that $75 per barrel.
While we wait for that floor price to firm, there are a lot of oil and gas issues "on sale" and today, Friday the 24th of October, may bode well for the short traders and bargain hunters in this sector.

Oil Analysts' Forecasting Average (1-for-4) Holds

Why do I get the feeling, when it comes to the credibility of the EIA, the phrase "It's like the blind leading the blind" comes to mind?
The market seems to place a lot of "weight" upon those every Wednesday numbers, but I wonder how accurate or even truthful that report may be?
Does anybody really know?

Will OPEC Cut Production to Prevent Producer Deficits?

Since OPEC has the reputation of not being able to provide a cohesive unified approach to enforcing production quotas, I am going to guess that this time, at this Fridays meeting, something will be different.
Money, and quite a bit of it, is on the table this time around, and I believe the focus will be greed. The taste of "$147" per barrel oil was simply too good of a flavor not to try out the other flavors, like "$100" or "$85" or the soon to be favorite flavor of the western world at "$74.95."
OPEC is going to want to make a unified base price that is a measurement by which all of the worlds oil is priced. They have the oil....they have the power to set the price. They also have the power to enforce their own rules.
We shall see what Fridays OPEC meeting brings.

Oil Prices Search for a Bottom

Jim....your parting comment mentioned that you would not be surprised to see the price of oil "starting with a 5 before this is over" and then a further comment that you would not expect that price level to last very long.
Do you see that "5" as a starting figure for the price of a barrel of oil in our near future or further down the road? How long would you guess that price would last?
Thanks.

Why It Is Important to Start Reinvesting Now

Good, well thought-out and logical article. One thing that remains an unknown is the effect on the price of oil the OPEC meeting later next week might have.
Based on their past history, we may assume that they will "say one thing and do another" either way their actions may in fact establish a base of around $75-$90 for a barrel of crude oil.
Shiv....if the market does not get the capitulation of the energy stocks like you wrote, is it possible that this sector is at the bottom now?

The Bottom's Within Sight - Barron's

Please define that portion of the phrase "within the next few months."

Unpredictable Markets? Heed Your Own Voice

Each of us have our own unique "set of rules" by which we apply our trading methods. Robert uses an 8% stop to limit his downside, others commonly use a 10% threshold. What I got out of this article was the authors willingness to share with the reader his errors or mistakes that were made in applying his personal trading system.

Each of the responses above would have been more educational if they contained an example of the same.

I for one, contradicted one of my "trading rules" by going into the oil and gas sector to purchase stock BEFORE the EIA numbers came out last Wednesday. My trading rule is to wait until after those numbers are released to do ANY trading. My hunch that day was that the numbers would show only a modest rise in the inventories, not the dramatic numbers which came out. I found myself selling off the purchases I had made only an hour earlier, now at a loss.

Robert was candid enough to share with us his "learning event" and I complement him for doing so. Now, how about the rest of you?

Firesale in Oil and Gas (Upstream) Limited Partnerships

Excellent explanation of the "windfall gifts" being made available to the owners of this sector of oil and gas stocks. A bright spot in todays market does in fact exist.

Global Financial Crisis Makes Oil a Great Hedge

Jason....I wonder if your last sentence will still apply when the "heating season" starts?