This post has now become over the size limit (so this is last update), I had to edit out some redundant arguments. I would still appreciate reasons that you see oil climbing, because with everything so far, I seem pretty sure it is going to find a new low.
This is the best supporting answer that I have got, thanks /r/whatdoiwantsk
USD rally + OPEC not cutting = oil prices crash. That's pretty much all there is to it. Either or especially both of those change, and we'll see a reversal.
These are the arguments that I was replied to with on why oil should climb, and my responses:
OPEC controls the market/r/drunkenstarcraft
OPEC used to be the say all end all to oil. Their problem is very transparent now though. If they artificially inflate prices, they will lose market share to people who can produce oil at those higher prices. They have very cheap oil, and the only thing they can do is produce more of that cheap oil to hamper foreign production...but at the same time they are trying to keep prices inflated while pumping and selling as much oil as they can. They simply don't have as much power as they used to....because they don't have an option like they used to.
No I insist, OPEC controls the market because if they say they are going to cutback production, the price will jump /r/staticchange
I think you are half right. If they said we're dropping production, yes prices would skyrocket....right along with everyone else's production, and then we would have a supply glut...kind of like right now. The thing is...they can't say they are decreasing production...and they don't want to say they are increasing...but they are.
Oil is too big to fail /r/letthebasskick
So your best argument is that oil is too big to fail? The government is going to bail out oil companies if they go belly up? I think growth and profits accelerate when the price of energy comes down...I would think consolidation in the oil industry would just lead to organic economic growth...rather than a disaster. It would be a disaster to people who have invested too heavily in oil.
"because we depend on it", "oil is king", "energy density" /r/hokaythxbai, oh and corn...just fucking corn http://redd.it/32tiu1
not going to reply, unless you insist
My own argument - The dollar could be on the decline
The problem is still there if the dollar inflates price...we have a supply glut. If the value of the dollar decreases, and oil continues to climb, it becomes economical for a lot of wells to come back online, and production will ramp, and at the same time, if prices are up, then demand will most likely go down. I suppose we could lift the export band at that point (or any point), but then what do you think OPEC will do?...not stop drilling and losing customers, that is for sure.
Rig count /r/hexmasta
Jaffe put the break-even prices for oil production at $37 in the Eagle Ford Shale in South Texas and the Bakken formation in North Dakota, $48 for the Permian Basin in West Texas and eastern New Mexico, and $43 for the Mississippi Lime in Oklahoma and Kansas.
There are roughly 2,500 to 3,500 drilled but uncompleted oil wells in the United States, according to analysts at IHS Inc. (NYSE: IHS). As many as 1,400 of those wells are located in the Eagle Ford shale play in south Texas.
What do you think rig count is going to do if oil goes up?
Oh and plus, there are a lot of wells that still have to be completed by law...
Wells must be completed within one year of being drilled by state law. More than 100 wells will hit that deadline in June.
Demand is going to increase /r/staticchange
This is highly speculative, and loses weight as prices increase...and in my opinion a little ignorant considering the current oversupply. I don't think that demand has had its run and is over. I think that the control over the price of oil has had its run, and is now over. Production and demand are going to dictate prices, not so much politics and geology.
Iran deal is going to fall through /r/norcon
Probably, maybe not. Doesn't change the fact that they are increasing production and still have outlets to sell their oil.
Everyone including Goldman Sachs say oil will fall to new lows, I do the opposite /r/vixgdx, /r/sharked...others
This pisses me off that I have to add this, but apparently a lot of people agree (which in itself is funny). Ok...so all the info available, and the people familiar with the situation are expecting the price of oil to go down...so naturally you are a genius contrarian investor that is about to make a killing. So that means you must have bought WTI when it was in the $40's, and when everyone was scared it would keep going down (like all the info suggest). Now what? Oil is up about 30% from that low...when people were being "greedy". You think oil is going to just keep shooting up? How much more? 40%, 50%, 220%? If you are buying up oil now, I would say you're jumping on a retard fueled band wagon, you are not being greedy, you are not being a contrarian investor, you are being a fucktard (if this is your'e only argument). You might be able to make an argument about being greedy when oil goes back down to the $40 range, but I think I'm going to wait for more like the low $30. Also, I think the fact this same post got down voted to 0 in /r/stocks proves my point as well.
Not to mention there are still emerging markets where oil will become a necessity on top of the fact that the population of the world is not diminishing. It's expanding exponentially/r/cod3r__
Silly thing about humanity is that we evolve, technology evolves, infrastructure for emerging markets evolve. I completely agree that demand will increase. Emerging markets will grow...even faster with cheap energy. Renewable energy will still keep growing faster. Can you imagine how much different the world will be once we can harness fusion power? Anyhow, daily dependence on oil will decrease over time. And, we add about 1 billion people every 15 years...since about 1960, not exactly exponential (thanks for making me look that up.)
Another conflict will spill over some borders in the Middle East /r/arKK
This is probably the best argument I have got yet, and one that I'm fairly ill equipped to argue. I can say that it is highly speculative, but not really far fetched. I do feel like bringing an end to the control over oil could help the middle east get together for the better good of their nations to export as much oil as they can, but I feel like I should slap myself for saying that.
a discovery completely undermining the estimated reserves left /r/arKK
again, very speculative for near term, but not far fetched...and something we should be expecting in the future, but how far into the future...who knows. I do know we are growing less dependent on oil, and are moving towards renewables, plus technology evolves. Since we are being speculative, I pose this question...What happens to the world once humanity figures out how to harness fusion power?...there will be a lot of people who will give a lot less fucks about oil when that happens (and we are very close).
Wait, back to OPEC...As far as OPEC goes, they have to do something. At the current price point, OPEC by majority is not happy./r/KU76
Very true. In order for a large portion of OPEC to remain fiscal balance, oil needs to be higher....how much higher?....ridiculously higher. According to Thomsan Reuters it starts at ~$58 for Qatar, and ends at ~$136 for Iran.
Why? Because it's not a private business over there. Fiscal breakeven pays for a majority of their "government" expenditures....including subsidies and royal privileges. The cost that it actually takes them to produce a barrel of oil is actually the cheapest on earth. They have been so used to relying on oil production, and having the ability to manipulate the market, that they have grown very used to making a very wide margin. The profits from oil in Saudi Arabia account for ~80% of what the "government" spends....which is why on the above Thompsan Reuters chart, it says their breakeven is ~$93.
So, it's funny that they are increasing production. Why?...to drive out U.S. shale. But wait, how long are they going to be able to do that for? Not very, even though they have massive reserves, they also have massive expenditures...a few years probably at best. This is where I get speculative, and what this half tard thinks is going on. The thing is, is that this is a bit of an economic war that is going on. Guess who is good at war...and economics? There is a bit of chess going on right now. Shale put OPEC in check. OPEC's only option is to adjust. There is a lot of corruption, a lot of waist, a lot of arrogance...that just got put into check. So it's their move. From the looks of things, I would say they are hell bent on applying the pressure back on Shale...which will work (hasn't quite yet)...but, (I believe at least) it will drive out some competition for a bit...no, not forever. They are going to have to diversify their economies....which is a good thing. Saudi Arabia has openly admitted to this, as well as Putin...and they have been working on it. So, what am I saying? What I have been saying, supply and demand are going to dictate the price of oil....not so much politics and geology. Right now we are oversupplied, and that is going to get worse...for now.
why would OPEC shoot themselves in the foot to regain market share from US Shale, that will just as quickly be lost? Possibly the U.S. hired OPEC to drop oil prices to put the hurt on Russia for the whole Ukraine/Crimea situation last year, which comes with the added benefit of boosting the US economy. /r/KU76
I have been beating my head to understand how Russia ties into all this...I've been especially curious as to the recent deviation the Ruble has taken from the price of oil. Most recent signs say that Russia's economy is on the rebound...which doesn't make a whole lot of since in my book. If there are some behind the scenes maneuvering going on, I would say that Russia is doing really good at withstanding it so far, and that gives me more reason to suspect that this June meeting will maintain the current course, until some hurt starts really getting applied to where it is intended to be directed, be it shale or Russia.
Also, the majority of new discoveries are shale, deepwater or tar sands. These all need oil around $100 to be viable. /r/the_ultravixens
http://ift.tt/1HnH2d1 Jaffe put the break-even prices for oil production at $37 in the Eagle Ford Shale in South Texas and the Bakken formation in North Dakota, $48 for the Permian Basin in West Texas and eastern New Mexico, and $43 for the Mississippi Lime in Oklahoma and Kansas.
oil sands
Breakeven costs for existing projects such as Kearl Phase 1 stand at US$42 per barrel, with Husky’s Lloydminster (US$28), Cenvous’ Christina Lake ($26) and Suncor operations (US$30.3), all comfortably below WTI’s current price of US$46 per barrel, Citibank data shows.
Deepwater
the average breakeven oil price needed for new deepwater Gulf of Mexico developments in early stages of construction is between $65 and $75 per barrel. That “breakeven” implies a long-term annualized 10% return on capital.
Now, there was a lot more money being thrown at all these projects when oil was over $100, and I do agree that there will be a lot less investment if oil stays, or decrease...but like a said, there has already been significant investment in projects to keep supply climbing for the next several years.
If you look at the finances of the shale drillers, nobody was running a positive cashflow at $100 per barrel, so there is simply no way that breakevens are $45 outside of the most prolific core areas. /r/the_ultravixens
I believe we agree that the most costly oil is deepwater...so I looked up Seadrill's EPS from Q1 '14, and it was $1.58...they most certainly were making money.
Wind and solar provide around 1% of global energy, and it's all in the form of electricity. They currently do not fuel aeroplanes, trucks, boats or combine harvesters. In the timescales we're discussing (up to maybe 5-10 years max) they are irrelevant. /r/the_ultravixens
You are right here, they are still in their infancies. This section is growing very quickly. The technology is growing, the infastucture is growing, and the efficiency is growing. I think it will still be ~3 decades before we are running off renewable energy...I'm hoping for sooner, but we will most certainly have enough oil to make it
Submitted April 20, 2015 at 11:35PM by Semitard http://ift.tt/1EmcMzW
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