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  • Crude Oil: The Fundamental Bottom Is In [View article]
    The problem with Iran isn't production or capacity it's that there aren't many refineries out there set up to refine Iranian sour. Iran has been selling throughout the sanctions but using some pretty drastic methods (stories of ship to ship transfers in the middle of the ocean). There absolutely -will- be Iranian capacity available in the event sanctions are lifted. The problem is there aren't many markets it can readily be sold into in the short term.
    Apr 2, 2015. 06:45 PM | 2 Likes Like |Link to Comment
  • Crude Oil: The Fundamental Bottom Is In [View article]
    You're misunderstanding how the oil market works. It's not about 'jumping in' at all. The way oil moves around the world is pretty complicated and often doesn't have much to do with whether a market area is well supplied or not, or which crude product is primarily fed to said market area.

    Also, your test case of "US production falling 1m barrels" isn't accounting for anything happening in tandem. There are a lot of moving parts to the global energy market. Whether or not SA would choose to increase imports to the US in the face of declining US shale production, other countries most likely would. The way oil is financed and hedged often finds oil being delivered into fully supplied markets that have no need or desire to accept it.

    Meanwhile, SA has enormous amounts of US dollar reserves outside of its dollar denominated assets. They aren't likely to liquidate those as they will most likely look to poorly performing Euro denominated assets first. They have huge amounts of maneuverability to produce at this price and lower.

    In the meantime Nigeria and Venezuela are falling apart. Global demand growth is slowing, China has been for a decade the demand growth epicenter of oil and has slowed from a double digit growth rate to about 6% while diversifying its energy source allocation....

    You are thinking of SA as if it's XOM which it isn't. And the oil market isn't anywhere near as simple as your comment suggests it may be.
    Apr 2, 2015. 08:44 AM | 12 Likes Like |Link to Comment
  • Crude Oil: The Fundamental Bottom Is In [View article]
    2m barrels is the amount of oil US shale displaced over the last few years from Nigerian imports to the US alone.

    OPEC is attempting to assert its role as arbiter or price. SA is under zero pressure due to its dollar denominated assets in a dollar strengthening environment. SA is the Wizard behind the curtain at OPEC. Venezuelan and Mexican imports to the US have also fallen as US shale has risen. I could go on.
    Apr 2, 2015. 08:03 AM | 2 Likes Like |Link to Comment
  • Crude Oil: The Fundamental Bottom Is In [View article]
    The point I'm making isn't about abstract long term macro or central bank policy but about the relative ease with which global supply will instantly fill any void in US production. Countries are falling apart hoping the US will reduce output just so they can pick it up.
    Apr 2, 2015. 07:47 AM | Likes Like |Link to Comment
  • Crude Oil: The Fundamental Bottom Is In [View article]
    Every single long in oil is relying on US fundamentals for guidance and completely ignoring the amount of slack in global supply capacity.
    Apr 2, 2015. 07:38 AM | 7 Likes Like |Link to Comment
  • Greater than expected build weigh on natural gas futures [View news story]
    The macro picture for both oil and ng is flattish. Unless you are daytrading technicals, there's nothing fundamental to trade on to make money and you are better served looking elsewhere.

    NG price will only increase when the pipeline capacities to move it to demand areas increase. So if you want to sit on something midstream MLPs aren't a bad idea. Prices have come down so they aren't too expensive these days. You can play it with an ETF like AMLP.
    Apr 1, 2015. 01:41 PM | Likes Like |Link to Comment
  • Report: Greek bailout talks end with no deal; Goldman frets, Mobius buys [View news story]
    Only if Germany will Lubitz the EU.
    Mar 31, 2015. 10:03 AM | 3 Likes Like |Link to Comment
  • Euro hit by Greek uncertainty [View news story]
    Or maybe:

    "a government official said on Friday the country won’t service its debt if creditors don’t release more funds. "

    Mar 30, 2015. 09:19 AM | Likes Like |Link to Comment
  • Greater than expected build weigh on natural gas futures [View news story]
    No, different products. Used to be that way in some markets internationally, but not in the US.
    Mar 30, 2015. 09:07 AM | 1 Like Like |Link to Comment
  • Angie's List halts $40M expansion, cites new Indiana law [View news story]
    Yes, respect the tyranny of the majority! The minority opinion has no place in US politics! Err... wait a minute....
    Mar 29, 2015. 08:58 PM | 1 Like Like |Link to Comment
  • Coal stocks could be near a bottom, J.P. Morgan team says [View news story]
    A lot of the tighter regulations on coal were initiated under administrations prior to the Obama admin - including both the Bush admin (Republican) and the Clinton admin (Democrat), but their implementation was delayed so long as to fall under the Obama admin.

    The point being that you can't bet Republicans will vote against the regulatory reform. They may choose to stop initiating or implementing new programs (the Obama admin chose to continue increasing legislation against coal) but the chances of them actually changing direction on current programs is close to nil. There will be a mild bump in coal's favor under a Repub admin but the trajectory will be the same.
    Mar 28, 2015. 07:36 AM | Likes Like |Link to Comment
  • Senate passes GOP budget plan [View news story]
    How many ACA repeal votes is Congress up to now, 60? 65?
    Mar 27, 2015. 10:00 AM | 2 Likes Like |Link to Comment
  • Yemen turmoil has oil challenging $50 per barrel [View news story]
    There's a push pull that has a time-lag. The inverse movement logic is that with oil at $40 the economy at large does indeed have more capital to engage in energy consuming projects. Which pushes up demand and may push up the price of oil in the event supply doesn't rise to meet demand. Eventually energy prices rise to the point that they choke off projects and future demand recedes until price drops.

    The correlated movement logic is that the economy does better thus it will use more oil thus it will drive prices oil up, but doesn't account for fluctuations in supply-demand or time-lag.

    Non-OPEC producers have NEVER acted in concert with OPEC, instead allowing OPEC to absorb price shocks. And in OPEC, that has usually meant SA since the others guys could not or would not abide.

    US shale is going to find this out the hard way. People are pressuring US shale to reduce output and be the marginal producer in control of price. When US production comes off market there will be plenty of international production to fill the gap.

    The question for the global oil market today is who is going to get bent over the barrel, and that question has not been answered yet.
    Mar 27, 2015. 09:54 AM | Likes Like |Link to Comment
  • Yemen turmoil has oil challenging $50 per barrel [View news story]
    Don't get me wrong, I don't think it's high right now and I expect it to drop again. I watch - and have watched since the early 90s - the barrel price of oil very closely. The volume and rush of speculators into oil in the last 10 years has been awesome to behold. And I get this pretty intense sense that its a lot of amateurs who have no grasp on how macro works.

    I've watched oil flip from inversely correlated to the global economic indices, to directly correlated, and back again in the time I've watched.

    Saudis have been on record as saying $90 oil is 'fair' that $100 oil is normal... all sorts of things. I think looking to them for safeguarding price is a red herring. Hell, a 'global price stability council' is merely a cartel by another name. OPEC didn't - couldn't - stop oil spiraling up and it couldn't stop it falling down. They control percentage wise less of the worlds supply today, and when OPEC was formed the US was reliant for some 70% of its oil on OPEC. Things have changed.

    My comment wasn't a note on my business model - which is sustainable to $80 oil - it was mostly a comment on how there seems to be a severe disconnect in many people's understandings of how oil impacts business. Cheering for a higher price is directly correlated to a small percentage of investors who are still bullish on price, while a lower price directly favors pretty much everyone else.
    Mar 26, 2015. 11:23 AM | Likes Like |Link to Comment
  • Yemen turmoil has oil challenging $50 per barrel [View news story]
    I find the excitement on bullish oil idiotic. Low oil has enabled me in the last year to hire more and initiate capital improvement projects and perform deferred maintenance.

    Higher oil will stop that all in its tracks.

    How do you guys correlate a bullish oil environment with improving economic fundamentals in the greater economy? Or is it purely the fact that you are overweight in XOM?
    Mar 26, 2015. 10:27 AM | 1 Like Like |Link to Comment