I'm Short Crude Oil!

[Harmonica]

Harmonica,

Sorry this cut/paste is so long but very interesting.

The gist of it is that oil production has aleady peaked.Do you have a counter argument? If its true that peak production has passed then the $10 barrel is hisory.

Regards.

Jaidam,

I found the data I was referring to -- actually I had posted this info in a previous thread, dated January 25, titled, "Crude Oil going to a final high? -- Traders, your thoughts and opinions, please?"

Here it is:

My post from Jan 28.

Food for thought for the fundamentalists here ----

There is no shortage of oil. Not even in the next 100 years.

Wall Street Journal says there's plentty of Oil and the shortage fears are unjustified.

3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that's trillion -- over a century's worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Alan Greenspan noted that, "During the past decade... gross additions to [world] reserves have significantly exceeded the extraction of oil the reserves replaced."

Nice, nice, nice!

In that same thread is my Feb 4 call for a rally !

"Approaching support! And much lower @ 42.33 (currently) is the 200-day moving average -- its got to rebound by or before then"

My misadventures?

[jaidam]

Harmonica,

Sorry this cut/paste is so long but very interesting.

The gist of it is that oil production has aleady peaked.Do you have a counter argument? If its true that peak production has passed then the $10 barrel is hisory.

Regards.

<{POST_SNAPBACK}>

Jaidam,

I found the data I was referring to -- actually I had posted this info in a previous thread, dated January 25, titled, "Crude Oil going to a final high? -- Traders, your thoughts and opinions, please?"

Here it is:

My post from Jan 28.

Food for thought for the fundamentalists here ----

There is no shortage of oil. Not even in the next 100 years.

Wall Street Journal says there's plentty of Oil and the shortage fears are unjustified.

3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that's trillion -- over a century's worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Alan Greenspan noted that, "During the past decade... gross additions to [world] reserves have significantly exceeded the extraction of oil the reserves replaced."

Nice, nice, nice!

In that same thread is my Feb 4 call for a rally !

"Approaching support! And much lower @ 42.33 (currently) is the 200-day moving average -- its got to rebound by or before then"

My misadventures?

<{POST_SNAPBACK}>

Interesting but.

Are you aware of the extraction costs from the Athabasca tar sands?

I remember reading recently that using current technology its around $30 a barrel.

I will look into this and report back.This is a crucial point because they are not going to extract and refine the barrel for 30 bucks and then sell it at 10.

[Harmonica]

Harmonica,

Sorry this cut/paste is so long but very interesting.

The gist of it is that oil production has aleady peaked.Do you have a counter argument? If its true that peak production has passed then the $10 barrel is hisory.

Regards.

Jaidam,

I found the data I was referring to -- actually I had posted this info in a previous thread, dated January 25, titled, "Crude Oil going to a final high? -- Traders, your thoughts and opinions, please?"

Here it is:

My post from Jan 28.

Food for thought for the fundamentalists here ----

There is no shortage of oil. Not even in the next 100 years.

Wall Street Journal says there's plentty of Oil and the shortage fears are unjustified.

3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that's trillion -- over a century's worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Alan Greenspan noted that, "During the past decade... gross additions to [world] reserves have significantly exceeded the extraction of oil the reserves replaced."

Nice, nice, nice!

In that same thread is my Feb 4 call for a rally !

"Approaching support! And much lower @ 42.33 (currently) is the 200-day moving average -- its got to rebound by or before then"

My misadventures?

Interesting but.

Are you aware of the extraction costs from the Athabasca tar sands?

I remember reading recently that using current technology its around $30 a barrel.

I will look into this and report back.This is a crucial point because they are not going to extract and refine the barrel for 30 bucks and then sell it at 10.

Actually, I might be able to help you in that quest -- a major company in Atlanta, Georgia reported at the same time that the costs would be, if memory serves @ around $2.40 to extract. I would like to get my hands on that article, regardless who wrote it, especially if, as you state, the costs would be that high. I'll do my digging to come up with it.

Goodluck!

[Harmonica]

Hehehehehe,

No, this has nothing to do with my post above, about the Crude Oil surplus (although it certainly helps sentiment -- mine, that is!

The odds are exceedingly high that the SHORT opportunity on Crude Oil Futures will materialize this coming week.

Highly likely for tomorrow, Monday.

This is a purely TECHNICAL call!

If it shows up, I'll be in like Flint. I've been waiting for this for quite some time, especially after it was becoming increasingly apparent that to go LONG would cause me more stress!

Wish me luck!

[jaidam]

$30barrel price for mining/refining tar sands seems to high.

After a quick google search I can find several estimates in the $10-20 range.

[PeaceBlondie]

Harmonica, I think the phrase is "In like Flynn" referring to that Tasmania actor, Errol Flynn. Unless you're referring to Michael Moore's home town of Flint, Michigan.

For the long, long run - more than 10 years distant - the major oil suppliers will remain OPEC (including Venezuela), the USA and Canada, and Russia. Tar sand would require many billions of dollars of basic investment (or R&D) which takes several years.

No entirely new refinery has been built in the USA since 1976. Refining capacity is a bottleneck in the system.

But in the short term (April 2005) Harmonica may be dead right - what goes up, usually free-falls even faster. Except for the price of gasoline at the pump.

[bartender100]

U.S. light crude hit a record $57.79 a barrel, surpassing Friday's high of $57.70, which was triggered by a forecast that prices could spike above $100 due to robust global demand and tight spare capacity.

Better to go long now

[LivinLOS]

As was briefly touched upon in an above post...

The oil in the ground problem is not the biggest hurdle, over production is a big risk to 'wasting' large reserves of cheap oil however better extraction technologies will find ways to make oil economical (probably at increased prices mind)...

The issue is due to a lack of inward investment refineries are not only drastically under invested and running at full tilt but those refineries are geared towards light sweet crude being easier to refine.. As the supplies of the best run out more work, time, and refining costs are incurred which is 'one' of many weak links in the investment chain.. Another is the lack (and diminishing) tanker fleets..

Then of course looking at nearly logarythmic consuption curves of developing nations and you have a reason for massive under supply in the next 10 years while inward investment needs to catch up..

This in itself does not mean Harm's short term (day or monthly) position is incorrect but what it does mean is the world will need to get used to > $40 per barrel and seeing 70 within a couple of year timeframe is very very possible.. Then if one of many possible damaging factors come into play 100 coule well be the norm before this decade is out..

Many many things can at this point in time go wrong for the oil supply chain but very few things can go right..

[Harmonica]

Harmonica, I think the phrase is "In like Flynn" referring to that Tasmania actor, Errol Flynn.  Unless you're referring to Michael Moore's home town of Flint, Michigan.

For the long, long run - more than 10 years distant - the major oil suppliers will remain OPEC (including Venezuela), the USA and Canada, and Russia.  Tar sand would require many billions of dollars of basic investment (or R&D) which takes several years.

No entirely new refinery has been built in the USA since 1976.  Refining capacity is a bottleneck in the system.

But in the short term (April 2005) Harmonica may be dead right - what goes up, usually free-falls even faster.  Except for the price of gasoline at the pump.

Thanks PB, but I was referring to James Coburn in "Our man Flint" -- that is of course if my memory serves; it could be "Flynn", but I still do think it was "Flint" --

if wrong, would appreciate the correction(s).

[Harmonica]

As was briefly touched upon in an above post...

The oil in the ground problem is not the biggest hurdle, over production is a big risk to 'wasting' large reserves of cheap oil however better extraction technologies will find ways to make oil economical (probably at increased prices mind)... 

The issue is due to a lack of inward investment refineries are not only drastically under invested and running at full tilt but those refineries are geared towards light sweet crude being easier to refine.. As the supplies of the best run out more work, time, and refining costs are incurred which is 'one' of many weak links in the investment chain.. Another is the lack (and diminishing) tanker fleets..

Then of course looking at nearly logarythmic consuption curves of developing nations and you have a reason for massive under supply in the next 10 years while inward investment needs to catch up..

This in itself does not mean Harm's short term (day or monthly) position is incorrect but what it does mean is the world will need to get used to > $40 per barrel and seeing 70 within a couple of year timeframe is very very possible.. Then if one of many possible damaging factors come into play 100 coule well be the norm before this decade is out..

Many many things can at this point in time go wrong for the oil supply chain but very few things can go right..

Excellent points, as always, LivinLOS -- due to the extreme challenge I have placed a renewal order for my Reuters DataLink continuous futures package -- why? I am very interested to see whether what I see on both the current and previous months' crude futures also shows up in the "continuous" version. I discontinued my subscription back in September 2004; perhaps that was an error!

It might take a few days to get this reinstatement completed -- but if I see confirmation there too; I'll be madder than ###### and won't take this uptrend anymore!

[Khun Larry]

I'm SHORT the Crude (just like The Donald!)

<{POST_SNAPBACK}>

YOU MUST BE CRAZY.

That is like shorting land in Manhattan.

[~G~]

My prediction for Crude oil stands at around $10+ within 4 years, most likely 3 years!  I have no intention to change that.

10$ in 3-4 years? I assume than that China's and India's industrial development will come to a complete stop, that Americans and Europeans will all convert to bicycles and candles and that we'll use dragons for trasnportation instead of airplanes...

<{POST_SNAPBACK}>

Didn't you say the same things in 1990 when Oil stood at $41 and then 8 years later was @ $10? Hehehehehe

<{POST_SNAPBACK}>

Actually I didn't - China was very different back then, and so were standard oil resources... For the resources you mention... Well, R&D and infrastructure construction costs are usually underestimated, rarely overestimated...

[Harmonica]

Hehehehehe, 

No, this has nothing to do with my post above, about the Crude Oil surplus (although it certainly helps sentiment -- mine, that is! 

The odds are exceedingly high that the SHORT  opportunity on Crude Oil Futures will materialize this coming week.

Highly likely for tomorrow, Monday.

This is a purely TECHNICAL call! 

If it shows up, I'll be in like Flint.  I've been waiting for this for quite some time, especially after it was becoming increasingly apparent that to go LONG would cause me more stress! 

Wish me luck!

 

If the April 1 closing high stays unchallenged, then my call is correct!

Crude's given up $2 since my call. STOPLOSS plugged in to protect gains!

Adios!

[britmaveric]

Harmonica - you forgot to add Yanks are planning to tap the Arctic Reserve. From all indications this is a heavy reserve deposit.

I'm with you a free fall is coming. Oil is artificially overpriced on pure speculation alone. The drop will be crushing when it occurs.

Edited April 6, 2005 by britmaveric

[jaidam]

The $10 barrel forecast within 3/5 years seems to be popular with members of TV.

If you have some spare time and a stiff drink handy read this.

http://www.lifeaftertheoilcrash.net/

This explains why you will soon see a $200+ barrel price.

[Harmonica]

Harmonica - you forgot to add Yanks are planning to tap the Arctic Reserve.  From all indications this is a heavy reserve deposit.

I'm with you a free fall is coming. Oil is artificially overpriced on pure speculation alone.  The drop will be crushing when it occurs.

Thanks Brit -- there were several comments that Alan G made yesterday about the situation; I think the Arctic Reserve was one of them, but I might be mistaken.

The free fall? Bless you; hope we are right. I still believe this to be the case! I am holding my position!

[~G~]

It does not matter how much oil there is... What matters is who 'controls' that oil. It does not even matter who 'owns' the oil... it matters who 'controls' the oil and therefore the PRICE of that oil. It is not about supply and demand... it is all about 'control'.

<{POST_SNAPBACK}>

Oil isn't gold. You don't buy it to put in a safe. You don't base your money on it. You burn it. It's useless unless it burns (or gets processed into another product).

It means it's useless unless you make it disappear.

Bottom line is if there isn't enough to match the demand the price will go up. People (or organizations) don't lower their standard of living (or business activity) unless they have to. They don't consume less unless it's too expensive.

[britmaveric]

It does not matter how much oil there is... What matters is who 'controls' that oil. It does not even matter who 'owns' the oil... it matters who 'controls' the oil and therefore the PRICE of that oil. It is not about supply and demand... it is all about 'control'.

<{POST_SNAPBACK}>

Oil isn't gold. You don't buy it to put in a safe. You don't base your money on it. You burn it. It's useless unless it burns (or gets processed into another product).

It means it's useless unless you make it disappear.

Bottom line is if there isn't enough to match the demand the price will go up. People (or organizations) don't lower their standard of living (or business activity) unless they have to. They don't consume less unless it's too expensive.

<{POST_SNAPBACK}>

Unfortunately oil is a commodity no one can do without. The price doesnt effect demand - demand will always be present no matter how high the price gets. Very inelastic commodity.

[lamphun]

Harmonica - you forgot to add Yanks are planning to tap the Arctic Reserve.  From all indications this is a heavy reserve deposit.

I'm with you a free fall is coming. Oil is artificially overpriced on pure speculation alone.  The drop will be crushing when it occurs.

Thanks Brit -- there were several comments that Alan G made yesterday about the situation; I think the Arctic Reserve was one of them, but I might be mistaken.

The free fall? Bless you; hope we are right. I still believe this to be the case! I am holding my position!

Considering the high consumption levels, the amount of oil in the ANWR would only be enough to supply the US for a few months. It won't really put a dent in imports. The comment about under investment and a refinery bottleneck was spot on. Presently there is plenty of oil it's just not getting past the refineries.

I doubt we'll see 10 dollars again. Too much demand but a high price will bring in new plays such as the tar sands so there shouldn't be a shortage. I do expect the price to drop. More competition will mean lower profit margins.

[ArtfulD]

Aside from price of oil, I am very concerned about future supplies....frankly Id be happy if oil did go to and stay at $100+ just so people consider it more valuable and dont waste it so much.

Storys such as http://www.guardian.co.uk/life/science/sto...1451582,00.html

are good tho, if indeed they find suitable ways of mining the hydrates it will be a great thing. Regardless of what the greens say about CO2 in the air, solar power etc just cant provide the requirements atm. Add to that when you try and build a wind farm suddenly the wind farm location isnt good enough and you have to build the thing 1000 miles offshore to keep them happy, as long as theres no seal collony within 400 miles that is.

[Darknight]

You guy's get off the drugs

TO many crazy stories here.

There's only on Short ......

ps: it's a joke, if you don't beleive me, i'll make you do this thread "thailand related"

[lamphun]

Deisel up 3 baht due to phoney oil shortage.

[britmaveric]

Deisel up 3 baht due to phoney oil shortage. 

<{POST_SNAPBACK}>

Trust me someone could start a rumor and price of oil would go up. I think yanks had a refinery explosion in Texas and the refinery made a statement that nought was affected. Prices of crude shot up on this news. Its all pretty silly if you ask me. If ever there was a need for price control - oil is a definite candidate.

[Harmonica]

You guy's get off the drugs 

TO many crazy stories here.

There's only on Short ......   

ps: it's a joke, if you don't beleive me, i'll make you do this thread "thailand related"   

Just to keep you happy -- if Crude does start going down, Thailand can rethink her pretext regarding price hikes -- but I'm sure they would want to fill up the coffers first. Would like to see Diesel here down to 15 and lower.

[~G~]

It does not matter how much oil there is... What matters is who 'controls' that oil. It does not even matter who 'owns' the oil... it matters who 'controls' the oil and therefore the PRICE of that oil. It is not about supply and demand... it is all about 'control'.

<{POST_SNAPBACK}>

Oil isn't gold. You don't buy it to put in a safe. You don't base your money on it. You burn it. It's useless unless it burns (or gets processed into another product).

It means it's useless unless you make it disappear.

Bottom line is if there isn't enough to match the demand the price will go up. People (or organizations) don't lower their standard of living (or business activity) unless they have to. They don't consume less unless it's too expensive.

<{POST_SNAPBACK}>

Unfortunately oil is a commodity no one can do without. The price doesnt effect demand - demand will always be present no matter how high the price gets. Very inelastic commodity.

<{POST_SNAPBACK}>

Demand for oil will always be there; but consumption WILL go down as price goes up. Otherwise, price can go up to infinity. Why should it stop?

For example, if an importer in the US needs to pay double for shipping container of rice from Thailand, it will mean that his profit will all be gone paying for the shipment. In that case, he will simply not do it - therefor consumption of transportation services - and oil - went down.

Another example, if oil prices are so high that flights will cost double (just to exaggurate), will you use exactly the same number of flights? Or will you consider flying a bit less often?

[ArtfulD]

http://money.cnn.com/2005/04/07/news/inter....reut/index.htm

Interesting read from the IMF on oil over the next 20/30 years...I dont see how you can refute it in the long term, oil is running out and there will be massive competition for it thus prompting price increases. Ofcourse price will fluxuate over the time, but oil so cheap as it was before I think is long gone now. Interesting to read that the IMF is mentioning stock supplies peaking also. As G mentions, consumption will drop however when prices hurt too much, which could lead to a long term constriction of growth the world over and perhaps lessen the strain on oil supplies. As supplies tighten its who will bid the most for oil? It will be tthe likes of G8 countries who are only able to afford it. No way could countries like Indonesia and Thailand etc and most others subsidise it to the extent needed for their general population to be able to afford it without bankrupting themselves, tourism will go to nothing as very few will be able to afford flights, it will go back to the 60s etc in that long haul flights are only for the wealthy. Also as G mentions, import/export costs will rocket so that you cant rely so much on foreign markets purchasing your goods, local products will stay more local.

Yes Im a major pessimist on the whole situation long term

[britmaveric]

Well I think by the time oil is that bad off - we will all be buried or close to it.

Reasons not to worry:

1. Alternative fuel sources - Hydrogen or Fuel Cells

2. Technological advances

3. World travel will become cheaper not more expensive

BTW Oil will drop dramatically sooner rather than later!!!!

[~G~]

...Oil will drop dramatically sooner rather than later!!!!

<{POST_SNAPBACK}>

If you strongly believe in that, are you short oil like Harm?

[Harmonica]

Hehehehehe, 

No, this has nothing to do with my post above, about the Crude Oil surplus (although it certainly helps sentiment -- mine, that is! 

The odds are exceedingly high that the SHORT  opportunity on Crude Oil Futures will materialize this coming week.

Highly likely for tomorrow, Monday.

This is a purely TECHNICAL call! 

If it shows up, I'll be in like Flint.  I've been waiting for this for quite some time, especially after it was becoming increasingly apparent that to go LONG would cause me more stress! 

Wish me luck!

 

Hehehehe! Crude down again! SHORT thriving! Almost $3.00 drop since Monday!

Look Ma, most traders worldwide would give their left (and right nuts) to make a call like this, but what do I get? Attacks when I'm wrong or off and NOT a word when I'm right.

Observe the turn on "high probability for Monday" as stated on Sunday.

[~G~]

Hehehehe!    Crude down again!  SHORT thriving!  Almost $3.00 drop since Monday! 

Look Ma, most traders worldwide would give their left (and right nuts) to make a call like this, but what do I get?  Attacks when I'm wrong or off and NOT a word when I'm right. 

Observe the turn on "high probability for Monday" as stated on Sunday.

 

<{POST_SNAPBACK}>

Harm... Did you close the position and take the profit? If so, you have my congratulations. Otherwise, this is still early for applause. I didn't read this thread carefully... is this a long term position you're taking or not?