Crude oil

[swissie]

These days, everybody is mesmerized by fluctuating currency rates. In the longer run, Asian currencies will gain against "Old World Currencies". Period. Further discussion about the subject are unnecessary.

Among all the currency-turmoil, the world has lost sight of the 2 essentials that keeps the world spinning: Food and Crude-Oil. Nothing else.

Not very often have I seen opportunities as presented today as far as Crude-Oil is concerned. ( I have started trading commodities in 1968, at a time orders could only be transferred to the CBOT by way of Telefone and a round term commission to buy and sell a contract of soybeans was 45 US/Dollars. !!!! Nevermind.

The current crude-Oil price is a gift (an extremely rare event in Commodities-Trading).

The crude-oil-faucet of the world (Saudi-Arabia) has decided to drive the "Fracking- Crowd" in the US and the "Tar sand eaters " in Canada out of business. Working nicely so far.The Saudies never made it a secret: We will maintain market share at all cost.

By the time the crude-oil price reaches down to 30$ a barrel, all the "Frackers and Oil-Sand -Eaters" will have found their destiny in a bankruptcy-court..

When done, the "Crude-Oil-Faucet", called Saudi-Arabia, will tighten the Faucet once more (and the price of Crude-Oil will increase slightly.)

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Is it time to invest in Crude-Oil (the lifeblood of the Global-Economy). Basically yes and by Farang-Analysis.. But Thai-Wife will strongly advice against it. Why ?

Dwell on it.

Cheers.

[beachproperty]

I agree.....it's an opportunity to make some BIG money

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”....Warren Buffet Edited January 27, 2015 by beachproperty

[daveAustin]

Thai-Wife will strongly advice against it. Why ?

Because she'd rather you spend the money on her.

I'd wait a bit longer on oil. But reckon gold would be a surer bet as most of it has already been dug up and will be hoarded by the Chinese etc.

[beachproperty]

Thai-Wife will strongly advice against it. Why ?

Because she'd rather you spend the money on her.

I'd wait a bit longer on oil. But reckon gold would be a surer bet as most of it has already been dug up and will be hoarded by the Chinese etc.

Not sure gold is the better bet ....BUT ...I like gold also...as in uncertain times....gold is a good hedge...AND we're definitely in uncertain times

[Litlos]

Interesting article on the oil price at "talkmarkets.com 55751" google it, by Michael Snyder

Will the oil price come back up again, yes. Is the oil still in the ground (shale) and the technology available to extract it = yes. Timetable on higher oil prices. I wish I knew.

Short term the smaller shale oil producers go bankrupt and the holdings taken over by the majors who have deep pockets. Ask Iran about trying to beat the oil majors and how it worked out for them.

Cheers

[NeverSure]

A lot of the shale producers are financed by stock sales and won't go bankrupt. A lot of them are debt financed and will. Those who are stock capitalized may find a lot of the stockholders selling though. Don't know if the majors would buy.

I just bought some oil stock only because it was low. buy low... I have no idea how I'll do with it, or how long it might take if it does go up. With the US sitting on more extracted oil on hand than it has in 80 years, I don't know how the price could go way up soon. There's an oil glut and I don't know if Saudi could stop that. There's Russia, Canada, Argentina, Mexico and the US all wanting a piece of the market and "peak oil" has been debunked for the time being. 20 years ago we were "supposed" to be starting to run out of oil about now.

No one has talked about Alaska and the environmentalists have kept oil companies away. But it's the 50th state in the US and it has gobs of oil. If there every was an oil shortage attitudes could change when professor Katy finds empty gas stations.

There won't be an oil shortage in my lifetime and if my stock doesn't go up I'll leave it to my heirs. They already understand that it's a lifetime holding, even for them.

[NeverSure]

These days, everybody is mesmerized by fluctuating currency rates. In the longer run, Asian currencies will gain against "Old World Currencies". Period. Further discussion about the subject are unnecessary.

No more discussion necessary. But you're wrong. Asia is corrupt. China is corrupt and communist. Its economy is on the brink. Its banking including the notorious Shadow Banking isn't transparent. It no longer has really cheap labor and even the US is repatriating some manufacturing because robots are cheaper than cheap people. The US can now make clothing without human intervention. It doesn't pay to ship cotton to China, pay labor and ship the finished product back when robots work cheap. One of the things that started the China manufacturing boom was clothing. Another was electronics and that manufacturing is getting more automated.

China's economy is in big trouble. Watch them start to print money in the next year just as the Euro will do. Much of China's manufacturing and GDP has been due to the building of ghost cities. They are due for a real estate bust.

For a country to prosper, it has to be able to produce new wealth. That would be like mining iron ore and turning into steel. The steel is new wealth. More new wealth would be turning that steel into a new car or a refrigerator. China doesn't have all of the pieces to do that. They can't grow the cotton to feed their clothing manufacturing and they don't have the oil to make the synthetics. The raw materials have to be imported. Then they add value by making things from those resources, but they only get paid for cheap labor. The finished product belongs to Nike who uses that cheap labor and moves the product to where they get the high price. China doesn't win that one. That same thing happens with most of what China makes. China makes an IPhone with cheap labor and Apple sells it for a fortune. Apple makes the money.

[Xircal]

I doubt very much if you'll see the fracking business go down the tubes somehow. the US knows as well as you do that oil won't stay at its current level forever and sooner or later, it'll benefit from the price increase as well when it arrives.

Similarly, the US wants to reduce its dependence on foreign supply while still maintaining the country's high standard of living. The decision to go ahead with the Keystone XL Pipeline is a clear signal to the rest of the world of those intentions and although costly at the moment, the US is not going to shelve the project just because the Saudis don't want to play ball anymore.

[hhgz]

".. the world has lost sight of the 2 essentials that keeps the world spinning: Food and Crude-Oil..."

No, it has not. Your basic premise is wrong.

[Berkshire]

I just hope low oil prices won't undo some of the gains the world has made in the area of alternative energy, hybrid/electric cars, and conservation in general. Especially research into other forms of clean energy such as hydrogen fusion, not to mention improvements to existing solar, wind, hydro, and nuclear technology. Would be a real shame.

[swissie]

These days, everybody is mesmerized by fluctuating currency rates. In the longer run, Asian currencies will gain against "Old World Currencies". Period. Further discussion about the subject are unnecessary.

No more discussion necessary. But you're wrong. Asia is corrupt. China is corrupt and communist. Its economy is on the brink. Its banking including the notorious Shadow Banking isn't transparent. It no longer has really cheap labor and even the US is repatriating some manufacturing because robots are cheaper than cheap people. The US can now make clothing without human intervention. It doesn't pay to ship cotton to China, pay labor and ship the finished product back when robots work cheap. One of the things that started the China manufacturing boom was clothing. Another was electronics and that manufacturing is getting more automated.

China's economy is in big trouble. Watch them start to print money in the next year just as the Euro will do. Much of China's manufacturing and GDP has been due to the building of ghost cities. They are due for a real estate bust.

For a country to prosper, it has to be able to produce new wealth. That would be like mining iron ore and turning into steel. The steel is new wealth. More new wealth would be turning that steel into a new car or a refrigerator. China doesn't have all of the pieces to do that. They can't grow the cotton to feed their clothing manufacturing and they don't have the oil to make the synthetics. The raw materials have to be imported. Then they add value by making things from those resources, but they only get paid for cheap labor. The finished product belongs to Nike who uses that cheap labor and moves the product to where they get the high price. China doesn't win that one. That same thing happens with most of what China makes. China makes an IPhone with cheap labor and Apple sells it for a fortune. Apple makes the money.

Fully automated production facilities and robots have raised the productivity- factor globally to unheard of levels before.

Only problem: Robots don't buy refrigerators nor cars and are lousy taxpayers. So, where will it lead us: The ever increasing amount of cheaply produced goods, will find less and less buyers. (Impoverished and unemployed masses have not the buying power to absorb the flood of cheaply produced non-tax paying robots).

As long we are willing to accept basic mathematics, 2+2=4, the outcome is clear.

Cheers

[bartender100]

Saudis are doing what the Americans tell them, always have. This is about Russia, not fracking

[kwonitoy]

The crude-oil-faucet of the world (Saudi-Arabia) has decided to drive the "Fracking- Crowd" in the US and the "Tar sand eaters " in Canada out of business. Working nicely so far.The Saudies never made it a secret: We will maintain market share at all cost.

Swissie

Syncrude Canada was first put on line in 1978 when the price of oil was around $14 per barrel.

At that price they built and paid for a 6 billion dollar plant.

The plant has long since been paid for and expanded beyond belief

They can run and still make a profit at a much lower price than today.

They won't build any new plants at today's price but there are a lot of legacy players in Fort Mac that aren't going anywhere

[iphad]

These days, everybody is mesmerized by fluctuating currency rates. In the longer run, Asian currencies will gain against "Old World Currencies". Period. Further discussion about the subject are unnecessary.

No more discussion necessary. But you're wrong. Asia is corrupt. China is corrupt and communist. Its economy is on the brink. Its banking including the notorious Shadow Banking isn't transparent. It no longer has really cheap labor and even the US is repatriating some manufacturing because robots are cheaper than cheap people. The US can now make clothing without human intervention. It doesn't pay to ship cotton to China, pay labor and ship the finished product back when robots work cheap. One of the things that started the China manufacturing boom was clothing. Another was electronics and that manufacturing is getting more automated.

China's economy is in big trouble. Watch them start to print money in the next year just as the Euro will do. Much of China's manufacturing and GDP has been due to the building of ghost cities. They are due for a real estate bust.

For a country to prosper, it has to be able to produce new wealth. That would be like mining iron ore and turning into steel. The steel is new wealth. More new wealth would be turning that steel into a new car or a refrigerator. China doesn't have all of the pieces to do that. They can't grow the cotton to feed their clothing manufacturing and they don't have the oil to make the synthetics. The raw materials have to be imported. Then they add value by making things from those resources, but they only get paid for cheap labor. The finished product belongs to Nike who uses that cheap labor and moves the product to where they get the high price. China doesn't win that one. That same thing happens with most of what China makes. China makes an IPhone with cheap labor and Apple sells it for a fortune. Apple makes the money.

Asia is growing & prospering..

China grows more cotton than any other country in the world...

China has access to oil & gas ...from Russia.

China owns almost all of the port facilities in Australia..Vancouver in Canada & buying up properties all over the world...they even bought the Chase Manhattan building in NY that has the largest underground vault in the world & a underground tunnel to the US Fed across the street.

China has surplus foreign reserves & still buying gold every month.

China is opening up yuan swap facilities in every almost every country.

China is in the process of building a rapid train service across Asia & Europe from Shanghai to Spain Via Germany.

So I doubt very much China will be doing a QE.

Look to China buying up farms in the the EU now that the Euro is in retreat.

China's yuan is pegged to the US dollar...if the US continues with QE4 ...China might have to cut their losses & unpeg to the US dollar & follow Switzerland's lead to unpeg from the Euro.

I'd bet my dollars on China...

Edited January 29, 2015 by iphad

[canuckoverseas]

Good luck with that 'bet', fundamentals of the US economy are far better than China.