Crude O I L Price

[VegasVic]

Peak Oil might actually already be an reality and we are living it right now. Peak Oil being peak production and NOT peak price.

This is what I'm thinking and would like to know about investments of 5 -10+ years. The chances of prices skyrocketing in the future seems high.

Peak Oil is a myth however markets have gotten wise to the idea that there will be any near shortage of oil, and in conjunction with serious development in alternative fuel sources - oil has seen its peak. Expect lower oil prices for the long term.

Thanks BM, considering you're prediction on exchange rates over the past 2+ years, I'm more sure than ever regarding peak oil.

Smithson, Britmaverick was the only voice other than myself here on thaivisa 6+ months ago that was predicting a bursting of the oil bubble at a time when GS was predicting $200/bbl oil by years end! I can personally attest to that, because I was shouting to short oil in nearly all of my posts back then and the only one who agreed was Brit The oil bubble was a result of hedge fund, investment bank and derivative maddness! I will agree to a point that "easy cheap oil" may be at a peak, but between the worldwide craze for green energy, new technologies, CNG, and coal gasification, Oil is headed lower and will remain at these relatively low prices for the next few years. BTW I believe that the world has also seen peak demand for oil as well, at least for the next 3-5 years and possibly well beyond that

[Smithson]

SI will agree to a point that "easy cheap oil" may be at a peak, but between the worldwide craze for green energy, new technologies, CNG, and coal gasification, Oil is headed lower and will remain at these relatively low prices for the next few years. BTW I believe that the world has also seen peak demand for oil as well, at least for the next 3-5 years and possibly well beyond that

If the current oil price and poor world economy continues, then there is no incentive to develop either green energy or new technologies.

The demand may have already peaked for the time being or even the next 3-5 years, but once there is solid economic growth demand will rise again. The alternative sources, green or otherwise, just aren't as good.

[meom]

Interesting article by Jack Kemp on Reuters today regarding the oil futures market.

http://blogs.reuters.com/great-debate/2008...in-in-question/

[Briggsy]

OK, Brent Crude now trading at under $38.

Time to go over the top of the trenches and put my money where my mouth is. Missed my opportunity today as the internet went down and the markets closed early. London markets re-open on Mon 29, I believe. Barring any steep increase in the opening price, I am going in on a leveraged ETF. I'm prepared to wait as long as it takes to see a profit (2,3,4 years?). I feel sooner or later, demand will pick up and/or supply will be threatened (war/revolution/political crisis), the speculators will jump in and the oil price will rise. Money for old rope.

Feel free to mock me when oil hits $20 a barrel in 2 or 3 months.

[LaoPo]

Oil falls 9 percent on economic gloom

Wed Dec 24, 2008 2:43pm EST

By Rebekah Kebede

NEW YORK (Reuters) - Oil dropped 9 percent on Wednesday as another round of gloomy economic data showed the United States has fallen deeper into recession.

U.S. crude settled at $35.35, down $3.63 or 9.31 percent. London Brent crude settled at $36.61 a barrel, down $3.75.

The losses came after government data showing U.S. jobless claims rose to a 26-year high and consumers cut spending for the fifth consecutive month in November.

Nearly 2 million U.S. workers have lost their jobs this year, driving the unemployment rate up to 6.7 percent and slowing consumer spending as incomes shrank.

The negative economic news reinforced expectations of a continued slowdown in energy consumption.

"Until the price is low enough to break through the cloud of economic gloom and doom, oil is going to be under some pressure," said Mike Fitzpatrick, vice president at MF Global in New York.

Oil prices have dropped about $110 a barrel since July as a global financial crisis has cut consumer and business demand for fuels, raising alarm bells for OPEC producers that have slashed 5 percent of global oil production to stem the slide.

The dismal economic data outlook overshadowed a U.S. Energy Information Administration report on Wednesday showing that U.S. crude inventories dropped 3.1 million barrels last week as imports slowed, countering expectations of a 400,000 barrel rise.

Gasoline stockpiles, meanwhile, rose by 3.3 million barrels, exceeding the build of 500,000 barrels predicted by analysts. Distillates, including heating oil, rose by 1.8 million barrels versus expectations for a 200,000 barrel increase.

"Although this market could scoop up some modest support off of the 3.1 million barrel draw in total crude stocks, the data looks bearish from our perspective given the larger-than-expected increases in (refined fuel) supplies," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Record inventories of crude at the NYMEX delivery point in Cushing, Oklahoma, also may have encouraged selling, analysts said.

Demand, which has deteriorated during a worldwide economic downturn, sank again. Distillate consumption slipped 5.1 percent over the past four weeks compared with the same period a year ago and gasoline demand fell by 2.7 percent.

The Organization of the Petroleum Exporting Countries (OPEC) already has announced cuts of around 5 percent in global oil supplies and may call an emergency meeting before March if prices extend their slide, OPEC's President Chakib Khelil said on Tuesday.

-Reuters

LaoPo

[Smithson]

Feel free to mock me when oil hits $20 a barrel in 2 or 3 months.

I wouldn't be surprised if it did, but even if it takes 5+ years, oil will rise considerably. With banks going under, stocks falling, real estate losing etc., oil seems a good bet. Even gold, which normally does well in hard times, isn't performing great.

[sorensen]

OK, so The World is in financial crises today, but so was Thailand back in July 1997 when the Asian crises started. I will argue that Thailand isolated as a country was in more trouble in 1997 than the world as a whole is in 2008. After all SET felt from around 1,700 to 280 in the years following 1997, a whopping 85% drop and even more if you factor in the devaluation of the Thai baht.

Now, take a look at Thailand's energy consumption during and after the Asian crises (see attachment).

Electricity consumption barely dropped at all and oil consumption was "only" down 7-8% for a few years before it too off and up again.

Now my 2 cents. Come hel_l or high water, financial melt down and what not. The world will still consume oil, gas and electricity in ever increasing amounts.

We might have a few years of relative cheap oil ($25-40), but oil WILL increase in price and hit $100 again within the next 10 years.

I work for Halliburton, so I might be a bit bias to the industry, but all indicators I hear of are pointing to higher prices.

Thailand.xls

[britmaveric]

^Nah my sources at Exxon/Mobile saying oil is done - expect low oil in the future, they are sinking all their R&D into alternative fuel sources.

[Smithson]

^Nah my sources at Exxon/Mobile saying oil is done - expect low oil in the future, they are sinking all their R&D into alternative fuel sources.

This points towards a dwindling supply.

It's a no-brainier, the world is addicted to oil. What alternatives can deliver power like oil does?

Edited December 25, 2008 by Smithson

[britmaveric]

^you would be shocked what they have in development - these aren't stupid people - they realize oil will be worthless in the future.

[ray08]

Oil should never of hit near $150 in the first place ,speculators just went crazy in the market, not being an expert on oil consumption ,but

i would say cars would have to be up there with major consumption,the future for oil looks bleak , Hybrids are coming strong into favour,

alternatives like electricty and hydrogen are looking good ,

The horse has bolted and companies are focusing on alternatives and more fuel efficient products , the consumers themselves are demanding such products ,Oil will come back and increase in price in the short term , but long term Oil will be hit hard by decrease in real demand as alternatives hit the market.

[tjo o tjim]

^you would be shocked what they have in development - these aren't stupid people - they realize oil will be worthless in the future.

While I have bought into DXO prematurely and for ideological reasons ($40 oil isn't good for developing alternatives in my mind), it is hard to imagine an innovation that can significantly curtail oil consumption in a 5-year event horizon. Oil makes a reasonable hedge against some other investments.

Looking at electric vehicles as a starting point, product announcements were made by GM and Tesla 3-4 years ago which have still failed to come to fruition. Likewise, despite significant gains, sources of stationary power such as wind and PV are still a long way from producing 20% of the electricity for any country.

The things that are viable are synthetic oil from coal, and increased use of LPG. Both of these are happening today, but not on the kind of scale required for a significant impact. The timeline to ramp up production and distribution of these products to the point where they impact oil consumption is at least 5-7 years.

So, it is hard for me to believe that Oil isn't "worth" $50-70 average over the next 5 years

[HardenedSoul]

If this finanacial crisis is for real, I wouldn't expect to see crude back over 5o in the next 5 years at least.

That HAS to be the most ridiculous statement I've read this year !

You simply cannot be serious !

I positively GUARANTEE it'll be back over $50 by the end of the first quarter of '09 ! Feel free to pull me up on this by end of of March.

Surely you recognise that the same speculators who had their hand in pushing oil to $147 in the summer are now hopping on one of the few remaining games in town - shorting oil. I expect a lot of short-covering once the reversal is in. "Demand destruction" is a bandwagon that I don't care to join because once the bond bubble explodes, there's a very good chance we'll see commodities in general and oil in particular head back up. Let's see how long the cries of deflation continue . . . .

Edited December 25, 2008 by HardenedSoul

[britmaveric]

$20 by end of the 1Q 2009 is more likely.

[LaoPo]

If this finanacial crisis is for real, I wouldn't expect to see crude back over 5o in the next 5 years at least.

That HAS to be the most ridiculous statement I've read this year !

You simply cannot be serious !

I positively GUARANTEE it'll be back over $50 by the end of the first quarter of '09 ! Feel free to pull me up on this by end of of March,

I don't think so.....demand going up sharp, from now around $ 36 to over $ 50...by end March 2009.... ....don't think so.

Hmmmm...

Happy Christmas

LaoPo

[HardenedSoul]

I don't think so.....demand going up sharp, from now around $ 36 to over $ 50...by end March 2009.... ....don't think so.

Hmmmm...

Happy Christmas

LaoPo

Demand's got nothing to do with the wild gyrations in the price. Last time I looked, people were still driving around in Bangkok, London and Paris. I'm sure they're doing the same all over the world just like they were doing in the summer. Like the markets in everything else - property, equities - that in oil overshoots on both the up and downside. It's clear that oil at its current level is unsustainable and it's not going to take the markets long to realise that the market needs to be based on supply factors rather than demand.

I've piled into the oil service and exploration companies as well as cash-rich, mid-sized oil producers for the medium to long term. No brainer really . . .

[britmaveric]

Go short lad - there is where the dosh is.

[LaoPo]

I don't think so.....demand going up sharp, from now around $ 36 to over $ 50...by end March 2009.... ....don't think so.

Hmmmm...

Happy Christmas

LaoPo

Demand's got nothing to do with the wild gyrations in the price. Last time I looked, people were still driving around in Bangkok, London and Paris. I'm sure they're doing the same all over the world just like they were doing in the summer. Like the markets in everything else - property, equities - that in oil overshoots on both the up and downside. It's clear that oil at its current level is unsustainable and it's not going to take the markets long to realise that the market needs to be based on supply factors rather than demand.

I've piled into the oil service and exploration companies as well as cash-rich, mid-sized oil producers for the medium to long term. No brainer really . . .

I wish you good luck than...you need it.

BTW: medium to long term isn't really end March 2009, is it ?

LaoPo

[HardenedSoul]

I wish you good luck than...you need it.

BTW: medium to long term isn't really end March 2009, is it ?

LaoPo

Of course it isn't but I didn't say I was basing my investment decisions on the price of oil merely exceeding $50 a barrel. I genuinely believe that oil will be at well over $150 within the next couple of years and that is based on unimpaired fundamentals.

The $50 call is based on nothing more than the expectation that speculators are the ones driving the price down and that they'll be looking for somewhere to put all those repatriated dollars once the bond bubble pops.

[tiz435]

The strength (or weakness) of the dollar as well as any major geopolitical events will both have their say..My dosh will be on long side in 2009 . Agree about DXO and similar plays, but will be a bumpy ride.

[flying]

Does anyone know how much oil is used to produce electricity? Just curious because I know here they kick in the generators everyday at peak consumption time.

This makes me wonder about the future electric cars. Of course I am sure it is only a fraction compared to running a gas engine but..................was just curious.

[Groongthep]

^Nah my sources at Exxon/Mobile saying oil is done - expect low oil in the future, they are sinking all their R&D into alternative fuel sources.

It's hard to believe you know much about a company whose name you can't even spell correctly. You are correct however that they are sinking huge amounts of R&D money into alternatives, especially if one considers LNG to be an alternative.

Edited December 25, 2008 by Groongthep

[Naam]

Does anyone know how much oil is used to produce electricity? Just curious because I know here they kick in the generators everyday at peak consumption time.

This makes me wonder about the future electric cars. Of course I am sure it is only a fraction compared to running a gas engine but..................was just curious.

no it is not a fraction! energywise the savings are hardly worth to mention except if the trend abandoning nuclear energy reverses. but even then the electric car has no future if only conventional nuclear power plants -instead of the extremely dangerous "fast breeders"- are built. reason: nuclear fuel is as finite as is fossile fuel. the scarcity can only be dealt with (for centuries to come) with the afore-mentioned fast breeders.

electric cars will have one advantage and that is to reduce pollution in metropolitan areas. but even that is based on the assumption that the energy required is generated without pollution.

[flying]

no it is not a fraction! energywise the savings are hardly worth to mention except if the trend abandoning nuclear energy reverses. but even then the electric car has no future if only conventional nuclear power plants -instead of the extremely dangerous "fast breeders"- are built. reason: nuclear fuel is as finite as is fossile fuel. the scarcity can only be dealt with (for centuries to come) with the afore-mentioned fast breeders.

electric cars will have one advantage and that is to reduce pollution in metropolitan areas. but even that is based on the assumption that the energy required is generated without pollution.

Thanks Namm

I had a hunch but had hoped for better.

Well lets hope they get cracking on that electro magnet vehicle soon!

Merry Christmas by the way

Although I know it is the day after over there now.

Edited December 25, 2008 by flying

[Naam]

Well lets hope they get cracking on that electro magnet vehicle soon!

Merry Christmas by the way Although I know it is the day after over there now.

there is no and won't be an electro magnet vehicle Flying and neither will a perpetuum mobile ever exist which scientists are trying to invent since centuries. there is energy only. to use energy for specific purposes it has to be produced/generated respectively "made available". except for solar, wind, thermal planetary energy or tides producing energy pollutes the planet and so does most of the energy usage.

Merry Christmas to you too! however you are slightly mistaken. as a continental european i celebrate Christmas on 24th of december and that was day before yesterday

[flying]

there is no and won't be an electro magnet vehicle Flying and neither will a perpetuum mobile ever exist which scientists are trying to invent since centuries. there is energy only. to use energy for specific purposes it has to be produced/generated respectively "made available". except for solar, wind, thermal planetary energy or tides producing energy pollutes the planet and so does most of the energy usage.

Merry Christmas to you too! however you are slightly mistaken. as a continental european i celebrate Christmas on 24th of december and that was day before yesterday

But what about the Flux capacitor?

Ok belated Merry Christmas too

Having had kids for so many years we always celebrate on the 24th too actually

As they could not wait till morning....Now my Thai wife is the same way & we open gifts on the eve too.

[Naam]

there is no and won't be an electro magnet vehicle Flying and neither will a perpetuum mobile ever exist which scientists are trying to invent since centuries. there is energy only. to use energy for specific purposes it has to be produced/generated respectively "made available". except for solar, wind, thermal planetary energy or tides producing energy pollutes the planet and so does most of the energy usage.

But what about the Flux capacitor?

the Flux Capacitor has a great future when combined and used parallel with the Yewranium Waverunnerphaser which is still under development. the combination will be called "mobile bullshittiensis" and for fuel most of the scientists agree that optimal performance can be achieved using refined mosquito farts. a big advantage for tropical countries.

[sorensen]

But what about the Flux capacitor?

Ok belated Merry Christmas too

Having had kids for so many years we always celebrate on the 24th too actually

As they could not wait till morning....Now my Thai wife is the same way & we open gifts on the eve too.

I strongly agree. The Flux Capacitor is the only long term variable energy solution for Thailand. Perfect mix of low cost and zero emission. All you need is a late night phone call from an ex-gf and you current sweet heart will easily delivery the 2.1 GW required to run a Flux Capacitor for a few weeks. Been ther done that!

[sorensen]

there is no and won't be an electro magnet vehicle Flying and neither will a perpetuum mobile ever exist which scientists are trying to invent since centuries. there is energy only. to use energy for specific purposes it has to be produced/generated respectively "made available". except for solar, wind, thermal planetary energy or tides producing energy pollutes the planet and so does most of the energy usage.

But what about the Flux capacitor?

the Flux Capacitor has a great future when combined and used parallel with the Yewranium Waverunnerphaser which is still under development. the combination will be called "mobile bullshittiensis" and for fuel most of the scientists agree that optimal performance can be achieved using refined mosquito farts. a big advantage for tropical countries.

I strongly agree. The Flux Capacitor is the only long term variable energy solution for Thailand. Perfect mix of low cost and zero emission. All you need is a late night phone call from an ex-gf and you current sweet heart will easily delivery the 2.1 GW required to run a Flux Capacitor for a few weeks. Been ther done that!

[Smithson]

Ask the mechanics who were flat out doing LPG/NGV conversion 6 months ago about the current demand for these alternatives. All the stories in the western media about green energy and sustainability have been replaced by tales of economic woes. With oil cheap again and families short of cash, buying an expensive hybrid isn't on the agenda.

Take a look around you, you'll see just about everything you own has oil based components and even if it doesn't oil was a significant part of the production process.

The fuel companies are doing the R&D because the future is a dwindling supply. If their raw material was going to be cheap for the next 20 years, why look for alternatives?

So, back to my question. What's a safe way to invest in oil with a view to selling in 10+ years?