insideoil

22 Comments

    • Global Stock Markets: Going Nowhere Fast [view article]
      Any thoughts on why it was the UK market that turned first - maybe the weakest link, or just simply sharper at spotting problems ahead ?
      Another casual observation of course is how long the turn in one market has taken to work its way through to other markets. We may live in a global economy ( linked markets), but it sure has seemed to take awhile for all to realise that.
      Looking around in the GCC at all the crazy activity that has yet to even pause, one cannot help but feel something has yet to crack. But, then again, there is one huge energy bubble that may have to burst first.       Sep 04 01:43 AM
    • Options Trader: Friday Outlook [view article]
      Phil - you are always good for a read, but the anti-IOC rhetoric is getting to be a bit much. You have relentlessy failed to get it that more product is heading East - because they are prepared to pay more. No amount of US based BS is going to change that oil product flows to those who are willing to pay, and pay more to protect their future. If the US investment strategy in energy remains none at all, you can hardly blame the big oil boys for doing what they have to do for their own interests. Your country is bankrupt, both morally and financially, but again the Oil Co's did not do that, your own country men did that to themselves. Admittedly as things get tough, higher oil prices are to no one's advantage, but please try to get an egg in front of this chicken. Opec is next week, and one wonders how the investment portfolio is looking for some of the sovereign funds long on US and EU assets. Shutting back oil supply again to prop up pricing would be such a shot in the foot on losing capital, so here is hoping that the desire for a return to global prosperity keeps the pumps running and the market well supplied in spite of the possibility of lower short term revenues.
      As for the Chinese operating in Iraq - supported by Russians, well perhaps someone else should share the load in getting shot at. I am pretty sure its no fun, no matter where you come from. If they manage to improve the flows from Iraq, it will just make the overall balance that much more manageable for everyone. Why the great bias that it has to be done by the USA if you feel so badly about these US based IOC's?
      As for the politics - as an outsider it does seem important, but as smart people recently pointed out , like drunks on a booze binge, it only matters if someone can get folk to dry out a little, and manage the realities of living within their means.       Aug 31 04:50 AM
    • Fishing for an Answer: Energy, Energy, Energy [view article]
      Just reverse the extract below. As US interest rates are dropped to pay for previous bouts of money printing, oil prices go up as supply/demand fundamentals provide fruitfull ground for speculators to hold onto the "real" value of their money.

      "The US dollar remains under pressure as 'old Europe' and other emerging country investors have figured out that the US is just all rhetoric when it comes to financial discipline. The Fed is hoping to print our way out of our oil driven financial deficit. Each time the price of a barrel goes up a dollar, Ben just rings up the printer and tells him to ship another batch of hundreds out the loading dock."

      Maybe the US needs to realise no-one else is coming to play with them this time. They would all rather burn in hell, and take their chances on their own. It must be really bad for that to happen - one would think. The solution has to be that the US raises interest rates - burns its banks, but gets the oil price to fall to at least tolerable levels for the world as a whole.
      Jul 07 01:22 AM
    • Preparing for the Fall [view article]
      Oil knows nothing - but the speculators chasing the price seem to know something. Just for the saying, what is short is refining capacity - not oil, and what is long are customers outside of the USA still willing (and I did NOT say capable) to pay for it. This can only break when a) subsidies on fuel start disappearing and b) countries start offloading their USD links, both directly in terms of currency and in terms of trade.
      The markets will wobble and sway their way downwards as the pont of indifference between losing your cash on inflation or losing your capital altogether varies based on sentiments and manipulation of central bankers.
      If you have the cash in hand - you may have to do a little hard work these days - and directly find, buy and manage companies with positive cash flow - using actual money. These are the only guys who will be the winners. The rest of us will be fleeced to pay off the bankers and the feds of this world - as they both need each other to survive, and they have the rules on their side to make sure they survive, and at your expense.
      What is needed is a clear and delivered message of putting interest rates UP - to put some back into the US $. It will flush out the bad loans and all those who took a fat chance will pay for their mistakes and (unbacked) greed.
      If this does not happen, it will be a slow slide to hell, and you will pay for it anyway in stagflation. However the bankers and the Fed will always prefer the slow boiled frog to the quick leap into the fire -the first way they get to stay in their jobs and plead that they had no choice. The result is the same - but the process even more protracted and painfull. Easy money is over - the system is striking back. Have an nice day.       Jun 08 12:51 AM
    • How Much Worse Can It Get For Oil? [view article]
      You all loved it when it went your way - all ups and no risk. Bitching is not going to solve the present mess - only concerted action to get demand down and supply up, and will get the present fuel price to level out (assuming the $ stays constant). To the extent that none of the easy solutions are still available - sorry - you are going to wind up paying the price. Now please someone tell me the investment strategy that allows me just to hold value - never mind lose my shirt !!!
      Oh - and by the way - just watch out for that Iran war thing. Ever since time began it is the big wild card that really makes the difference. Hezbollah making coup in Lebanon is just getting a bit too close to absolute mayhem for financial comfort.       May 11 07:01 AM
    • Toward a U.S. Energy Policy [view article]
      Perhaps you should start throwing some rocks at your local Nimbies, both on LNG import facilities as well as new refineries. As long as it costs a fortune to get approvals in place to build - never mind the actual cost of building - refining capacity, imported energy, conversion of coal, and even new nuclear plants just will not happen in the time frame required to meet demand. The US Joe is now the victim of his own foolishness, simply as a minority was allowed to dictate the price to be paid by the majority. There is no one else to blame but your own past silence. May 08 09:26 AM
    • Record High Crude: Free Markets Meet the Cartel [view article]
      Would that include the fact that in the USA less tax is paid on oil products - are you suggesting you would like to pay what they pay at the pump in Europe ?
      May 08 09:12 AM
    • Two Explanations for Surging Oil Prices [view article]
      Slowly the light dawns - how long does it take to recognise a negative trend - it seems forever - until it hits you hard enough.
      3 sets of analysis are still missing for me.
      a) total liquid hydrocarbons - supply & demand
      b) total energy supply/demand - with an estimate at what price, switching will occur and in what applications/energy supply media, and
      c) countries listed by demand level that subsidise oil prices - with an estimate of own supply.
      The first will give an idea of what can be used short term to fill growth gaps, the second the longer term position, and the third to identify where ongoing growth will not be impacted by price change -so determining the completely inelastic high growth part of the demand.
      I/m not smart enough - or do not have time enough - to do this work, but I think the results ( if actually obtainable) will tell the scary tale.
      I personally believe there is plenty of energy available - the only variable being the cost of investment, extraction and delivery - with the cost not always being in money. Non-money factors are attitides to CO2 emmission generally, environmental managment of nuclear waste, and "clean" processing of "dirty" coal. Wind and solar can never make up the gap (time, availability of resources, and lack of scale make this impossible) - but will still help. Even if OPEC can encourage its memebers to increase demand - face it - there is little incentive for them to do anything else but manage their resources for the longer term.
      The lack of certainty over the "elasticity" of demand in the first world is only an excuse for delaying investment - as it is always taken as the first cure to the problem. For a start - much of these savings on demand have been made already, and for seconds - its not where the growth problem exists.
      The article above - in my view- has started to capture the rapidly growing collective wisdom that the energy problem has shifted, both in cause and in cure. Let us see the real bankers step up to the plate to get the real investing done in real projects for a real demand for real people.       Mar 09 12:25 AM
    • Deutsche Bank’s $150 Call: Peak Oil Light [view article]
      1. The use of energy model seems to be shifting towards oil at price where its only use will be where there is no other easy alternative - largely automotive. For the rest substitution will happen - largely by electricity generated from other sources, be it coal, nuclear, or via green renewables.
      2. I agree that "hoarding" is a negative, and not a correct view - oil producers are looking to the long term, as opposed to providing immediate gratification at lower prices to lower value users.
      The producers are quite capable of doing their own economic assesments to maximise their returns - at present the prices of products versus ever higher costs of extraction, coupled with the risk that demand does indeed slow, makes for poor investment.
      3. The issue is what price level will supply meet demand - and then to ask what marginal supply, and what marginal demand. As reflected this could provide a wide range - as low as $30/bbl - to as high as the Hugo Chavez $200/bbl. Quite a level of uncertainty - and substantial risk.
      4. If you have all the petropesos you need for your local needs, if you find investment doors in the USA and Europe being difficult to enter, what possible sense is their for oil producers to invest high, with an expectation of low returns both on the added revenue and what you can do with the revenue?
      5. My bet - $150/bbl oil is very possible - and mostly because investment will not happen in advance to make the outcome any different. Demand for oil is robust and has not even flinched at $100/bbl, but the risk of the downside remains a wild card that has to be played through. Take pity on poor countries without oil.       Mar 02 04:22 AM
    • Stuart Staniford: Two Mysteries of Oil Supply Data [view article]
      It seems using the tag of "hoarding" is very negative and inappropriate - the producers are being smart in managing their resources over the long term - and are not willing to damage production prospects for high short term and speculator driven demand. Why should they - they do not need any more petropeso US$'s , and the cost of bringing in new capacity is extremely high at present. Furthermore their customers have threatened to do all they can to undermine the long term value of any new capacity investments, through any alternative energy sourcing they can find. Using the negative of "hoarding" - seems a remarkable accusation, telling more about the accusors than the accused. It seems greed shows no boundaries - and even those that show common sense in way of such greed - get smeared for being inconvenient. Get over it - cheap oil is history. The message of peak oil is not that there is no oil - it is just that it is not going to be easy or cheap until demand is cooled off, or the alternatives are able to kick in with a meaningful contribution - also not easy or cheap. Feb 28 12:32 AM
    • The Minotaur, the Labyrinth and the Icarus Rally [view article]
      Face the market (reality) by letting interest rates increase (medicine) to stiffen the back of the US$ (moral integrity) - it will kill the inflation (cancer) , but it may also kill the patient ( US consumer). In the same analogy if you let the cancer persist it can only get worse, spread further, and be even more irrepairable if allowed to continue - and then eventually the patient dies anyway - just after an even more protracted and painfull death.
      Maybe just the USA is in denial over having a cancer that needs to be treated. Funny things these analogies, they really do get you thinking.       Feb 27 06:30 AM
    • Look to the Markets to Assess Inflation [view article]
      Simply add the thought that oil at $100/bbl today is the same value arguably as oil at $60/bbl, based on old exchange rates US$/Euro. The conclusion then is that it will be US equities that have a problem, not the rest of the world- as it is only the US (and US peg countries) really seeing the inflation.
      Maybe you could do the same analysis, but from the perspective of the Euro ? I for one would be most intrigued to the outcome.
      Perhaps also add to this the inflationary impact all those extra petrodollars will have - unless GCC/Opec players switch to Euro's or a basket of currencies.
      So many options - so little time !!!       Feb 27 04:03 AM
    • Cutting Off Oil to Spite Your Face [view article]
      You miss a big point - in that while Chavez needs the money, he has bigger political needs to find an excuse for non-performance to his own voters. Politically EM is handing him a "perfect enemy", and providing just the cover he needs to hide the increasing dysfunction resulting from kicking out both in-house as well as ex-pat expertise. Army people are not trained to run plant- and it shows in reduced output.
      As for encouraging the rest to follow - there are many looking for a good excuse not to put money into added production. It costs investment money just to maintain production, never mind meet the needs of a growing world economy - and others outside of the USA are clamouring for that supply.
      If the oil price goes up due to reduced supply - there is not a lot to drive oil based economies to invest in more supply right now. The downside of reduced demand simply has not happened - and has been so far an empty caution. Project costs are overpriced right now - and every oil economy has been looking for ways to avoid immediate investment on added oil discovery or even downstream processing. Chavez will not find voluble support - more like just provide a convenient excuse for supporting countries to quietly overide or obfuscate past committments made on a political level.
      The issues are not nearly as linear as you perceive them. I can readily believe $200/bbl - just as I believed $100/bbl when we were at $30/bbl just a few years back.       Feb 13 05:34 AM
    • Supply and Demand Still Guiding Markets: Equities Not Overpriced [view article]
      "15 times forward earnings'. Therein lies the rub - they are not 15 times historic earnings, and a low P/E is only low as long as earnings are high and projections are met !! Until the bubble has deflated and and true value has been tested by the market maybe its better to keep your cash ready till prices reach P/E of 15 based on historic proven earnings. Cash is now king again - and I want more dead sure returns for my money. Aug 16 07:09 AM
    • Big Ben Panics and Gold Responds [view article]
      Leo - I was afraid that someone would answer just as you have. Everything one (ethically) stands for tells one not to be so cynical, but reality laid out as it has been this last week, stripped naked of its misleading perceptions or false hopes makes it difficult to come up with any other conclusion.
      Under this understanding - what happens to asset inflation and living cost inflation ? Are you saying that living cost inflation has to kick in to cover the cost of the "free" money being dispensed so liberally, or that the gap will be covered by having to produce more to be paid the same or less than before i.e that higher productivity is the way that living cost inflation will be kept under control? With interest rates not changing much, is the assumption then that asset pricing will have a soft landing - i.e a gentle deflation, or a stage managed slow increase that the investor is still willing to stay in the market. I guess as you say - it is business as usual - but you know you are paying the price while being productive and working for a living. It seems to me that the flexibility to manage such a tightrope have been significantly reduced - so we should expect volatile times - no-brainer for that one.       Aug 14 04:39 AM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»