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.

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 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.

Global Financial Crisis Makes Oil a Great Hedge

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

What Happened to Peak Oil?

It is likely a generation will pass, at least in the US, before a significant amount of renewable energy is available to be harnessed, to offset enough of our oil based consumption to avert "peak oil."
There are just too many people who, as one presidential candidate uses the phrase, "just don't get it" that by virtue of their personal oil consumption habits stand in the way of any near term measurable success. I define "near term" as 20-30 years for the purposes of this discussion.
On the other hand, it seems that an entire generation of young people who are at the age to become politically active "do get it" and are enlightened enough about the potential environmental and economic concerns, to promote the changes necessary to deal with this demon we have named "peak oil."
For those of us caught in the middle of this conflict, our work is to encourage and to offer support and guidance to that younger generation's effort where are abilities and finances provide us an opportunity to do so.
Once we "know what we know" that knowledge brings with it a moral imperative to act.
We need to help the issues of the day move forward and address the present as well as potential future deterioration of our economy and the environment.

Q4 Oil Price Targets

All of the best minds put together in one room could only make a "best guess" as to what Q4 holds, but at least SA has given us some numbers to talk about.
I am concerned about the aftermath of the November elections as it might or might not relate to the Iran nuclear issue and the price of oil. We could easily see $125 per barrel change to $250 per barrel overnight. I certainly hope that does not happen.
My best guess is that the above sample represents "as good a guess" as anybody else has right now, so go with it at $125.

Will Drilling Offshore Affect World Oil Prices?

The economic impact of offshore drilling is simply too far away in years to venture an educated guess. It's not like one day the "oil gate" will open and all of this offshore oil will come on line. The process will take time and it is likely that the crude produced will be "absorbed" into the world market without much of an impact whatever.
For example, by the time year 2025 oil products from offshore production platforms reach the market, it is very likely the consumer won't notice any price difference at the pump. Whether supply/demand factors will make that happen or be it via manipulation by the oil producers, the outcome will remain the same. Take your pick as per your politics.

As Oil Slides, Will Contrarians Turn to Refiners?

One would think that you could short oil and play the long position on oil refiners at the same time. This past week, Sunoco Inc (SUN) went up by 14.07%, Holly Corp (HOC) by 12.32%, Valero Energy (VLO) by 11.94%, Frontier Oil (FTO) by 12.93% and Alon USA (ALJ) by 5.00% while crude oil went down by -5.70%.
My hunch is that we can rely on the American consumer to soon return to some of their previous wasteful driving habits and keep the demand for refined crude oil products high. That would bode well for this group of stocks, easing the conservation effect that demand destruction was beginning to provide, unfortunate as that may be.
We are likely to see crude oil level off and hold somewhere around $110 a barrel and that support level could hold into early fall, providing the refiners ample time to stockpile crude oil inventories and/or future contracts to meet their needs for some time to come. That would further stabilize this industry past the near future.
I'm going with Chad on this call....that contrarians will turn to oil refiners and I believe that they began to do so about a week ago.

Crude Oil: How Far Will It Fall?

No one has considered the potential for political consequences in the pricing of oil, especially right around election day, in the US. If McCain wins I think Israel would "stand down" and let him work on Iran when he gets into office. If Obama wins, I would anticipate a maverick action against Iran by Israel while Bush is still in the White House.
Now, I'm only throwing that out there.....what do you think would happen? $200 a barrel overnight would be my guess.

The Obama/McCain Energy Charade: Nothing But Empty Ideas

The sad truth is Obama is just positioning himself for votes and really doesn't care about the economic consequences of the $1,000 per family rebate, the windfall profit tax or his plan to raid the strategic petroleum reserves.
McCain's ad campagin is becoming tiresome and is promoting apathy among our younger voters. McCain may have a better energy plan, but if he looses the election in November....then we're stuck with a real mess!