# hang on to oil stocks?



## jargey3000 (Jan 25, 2011)

like a lot of folks maybe, I've got a couple of 'oil' stocks (CPG & WCP) that I've held for a long time, which are now finally getting back into the black for me, on an ACB. I'm anxious to pull the trigger & take a profit & run. But...same old story..Should I hang to them, at least through the summer, to squeeze a few more points out of them? All indications seem to still point "up", at least for the near-term...but...who knows-with oil?
Comments from the peanut gallery welcomed.


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## jargey3000 (Jan 25, 2011)

for example:


__ https://twitter.com/i/web/status/1534111875381837824


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## cainvest (May 1, 2013)

Oil stocks could rise more and, if you are following it daily, you can easily sell when you want providing your holdings have enough trading volume. I recently sold most of mine (mainly xeg) to buy other stocks. Nobody knows where the peak will be but if you don't have an immediate use for that money, just let it ride.


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## Covariance (Oct 20, 2020)

jargey3000 said:


> like a lot of folks maybe, I've got a couple of 'oil' stocks (CPG & WCP) that I've held for a long time, which are now finally getting back into the black for me, on an ACB. I'm anxious to pull the trigger & take a profit & run. But...same old story..Should I hang to them, at least through the summer, to squeeze a few more points out of them? All indications seem to still point "up", at least for the near-term...but...who knows-with oil?
> Comments from the peanut gallery welcomed.


I can offer you an answer from two different perspectives

First, I would step back and view these holdings in the broader context of your total portfolio. Unless you have proprietary knowledge of oil stocks it would be best to view this in terms of what percentage of your portfolio makes sense allocated to oil. If these are 10% of your portfolio or 90% of your portfolio the answer would be very different.

Second perspective, and perhaps getting more to the heart of your question. Timing the exit? Focus on the issues driving these stocks higher and any change thereto. When news of those market forces changing hit, it will drive change in equity prices - Russia (supply), China (demand), OPEC + (supply), global GDP growth (demand). What drove them up will drive higher, or lower.


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## scorpion_ca (Nov 3, 2014)

You could use dollar cost averaging method to sell those stocks.


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## londoncalling (Sep 17, 2011)

Here is a link that is somewhat related on selling a bull rally.

Buying Stocks Is Easy, Selling Is The Hard: 7 Rules To Manage Risk | Investing.com 

I think there is a lot to be gained by considering when to sell before one even makes their purchase. Do you determine and measure the holding period by time? share price? other valuation metrics? change in external conditions? YMMV but I prefer to buy and monitor. My purchases in oil stocks in 2021 were to hold till fall. I predicated that on a quick reolution to the war in Ukraine and without a China lockdown. The summer months sees an increase on oil usage where as the winter months see a reliance on nat gas increase. As such I intend to hold to Q3 but world events may result in different action. I am also content to hold certain oil stocks should they go back down (CNQ). It has proven it can weather both up and down cycles. I may sell if I feel overvaluation and buy back in at a later date. I will be looking to exit others like CPG and SGY later this year. I may set some mental or physical stops to exit. If the position is large it makes sense to sell in chunks as a hedge. My positions are quite small so they will be full exits. Likely more then what you were seeking in regards to seeking general advice on when to sell your positions. However, when to sell will be a different time for everyone.


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## zinfit (Mar 21, 2021)

londoncalling said:


> Here is a link that is somewhat related on selling a bull rally.
> 
> Buying Stocks Is Easy, Selling Is The Hard: 7 Rules To Manage Risk | Investing.com
> 
> I think there is a lot to be gained by considering when to sell before one even makes their purchase. Do you determine and measure the holding period by time? share price? other valuation metrics? change in external conditions? YMMV but I prefer to buy and monitor. My purchases in oil stocks in 2021 were to hold till fall. I predicated that on a quick reolution to the war in Ukraine and without a China lockdown. The summer months sees an increase on oil usage where as the winter months see a reliance on nat gas increase. As such I intend to hold to Q3 but world events may result in different action. I am also content to hold certain oil stocks should they go back down (CNQ). It has proven it can weather both up and down cycles. I may sell if I feel overvaluation and buy back in at a later date. I will be looking to exit others like CPG and SGY later this year. I may set some mental or physical stops to exit. If the position is large it makes sense to sell in chunks as a hedge. My positions are quite small so they will be full exits. Likely more then what you were seeking in regards to seeking general advice on when to sell your positions. However, when to sell will be a different time for everyone.


Sounds like my approach. If we had a settlement of the Ukraine war I expect a short term downer but I would buy into that downturn. My reason is simple the west will not be moving quickly to remove Russian sanctions. The other concern is a tough supply/demand situation on NG. If one things it is high now wait until the winter. Oil might back off to may-be $90 but NG is a different kettle of fish. Demand destruction works on oil it has little impact on NG unless people decide to keep their thermostat at 17 this winter.


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## Ponderling (Mar 1, 2013)

I aim to keep equal weight in 11 equity sub sectors. Energy is currently overweight, so am looking at the 8 or so companies we call energy stock to see if any should be sold whole, or which should get a hair cut. 

Yes I have lost money in the past (CPG for example) but some of the present ones were bought June 2020 or had positions added to when we were deep in covid and awash in excess oil.


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## londoncalling (Sep 17, 2011)

@Ponderling Is it just energy that has so many individual holdings or is it similar across the 11 subs? How many of the stocks are Canadian/US/ other? The reason I ask is because I hold approximately 40 positions at any one time with varying weights to each sector. Last update I had a range of 3% REITs to 23% Financials. Energy was just a sliver under 10% which is below the TSX considerably. If I was at 25% I would definitely be trimming at current levels.


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## Ponderling (Mar 1, 2013)

LC: Similar approach in each sub sector. 

Currently across my wife and my TFSA/RRSP/NONREG we hold 88 individual stocks. 

About one fifth in US stocks for places Canada is kinda sparse, like heath care, or 5th or 6th telecom stocks.

Some things we do go with etf's - IYW, for tech. a few things for S&P500, few things for international too, and bond funds and preferred shares.


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## zinfit (Mar 21, 2021)

Ponderling said:


> I aim to keep equal weight in 11 equity sub sectors. Energy is currently overweight, so am looking at the 8 or so companies we call energy stock to see if any should be sold whole, or which should get a hair cut.
> 
> Yes I have lost money in the past (CPG for example) but some of the present ones were bought June 2020 or had positions added to when we were deep in covid and awash in excess oil.


CPG seems to be favourite with Canadians. I think they had a big dividends back 15 years ago and a lot of investors were chasing that stock back then. I just see better value and better assets at reasonable prices with other producers. Enerplus, Tamarack Valley and Arc Resources are three that I score higher then CPG. Enerplus has a giant position in the Dakota Bakke formation. Probably twice the size of CPG 's SK baked holdings. CPG is getting the Canadian price Enerplus gets the WTI plus a premium . Another plus is they have a position in the Marclius in the NE US which gives them a NG play. TVE has some great assets in the Clearwater formation. They are drilling very productive wells that gives them a one month payback for every well. Arc Resources is the big player in the Monterey . I have nothing against CPG but I think there are better options .


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## AltaRed (Jun 8, 2009)

CPG was essentially a ponzi scheme for a long time diluting equity to buy up more shite. It took a shellacking with the oil downturn and I suspect most folk who had their heads handed to them are mostly gone. I saw that movie too many times in my O&G career. I don't know who the 'new investors' in CPF are.


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## londoncalling (Sep 17, 2011)

I don't think there are many new investors in CPG. I hold a micro position that I bought in my early days of DIY. 2012? 2014? It was touted as an amazing growth by acquisition story by many talking heads, analysts and forum members. I still hold it in my account as a reminder of what not to do. Even now it makes up less than .1% of my portfolio so it serves no purpose beyond the lesson. I had often considered averaging down on a whim when it was a penny stock but I thought that would be making an additional mistake. I guess I was wrong on both the original buy and not taking a flyer would on it when it was sub .50c. I would be curious who would be buying now. I don't follow it and haven't a clue as to if it has better management these days. It has underperformed the rest of the oil stocks but recently has been promoted by talking heads on BNN.


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## AltaRed (Jun 8, 2009)

It is a different company today because it had to be but many will avoid it simply due to its past. AltaGas was a different situation but fell apart due to an acquisition hungry CEO biting off more than he could chew. Management quality matters a lot in these medium sized companies, as in Mike Rose. Everything he touched turned to gold, including TOU today.


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## londoncalling (Sep 17, 2011)

zinfit said:


> TVE has some great assets in the Clearwater formation. They are drilling very productive wells that gives them a one month payback for every well. Arc Resources is the big player in the Monterey . I have nothing against CPG but I think there are better options .


Tamarack Valley Energy Ltd. Solidifies Position as the Largest Clearwater Producer with the Acquisition of ... (tmx.com) 

Today's announcement was an interesting one. The private acquisition should increase the bottom line quickly. I watched a soundbite from the CEO today and this multileg drilling operation should provide greater production and margins than some fracking wells. As much as I am excited by the acquisition and company I am going to sit on the sidelines. I think it is a good move for the company and shareholders will be rewarded even further than the dividend increase.


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## zinfit (Mar 21, 2021)

londoncalling said:


> Tamarack Valley Energy Ltd. Solidifies Position as the Largest Clearwater Producer with the Acquisition of ... (tmx.com)
> 
> Today's announcement was an interesting one. The private acquisition should increase the bottom line quickly. I watched a soundbite from the CEO today and this multileg drilling operation should provide greater production and margins than some fracking wells. As much as I am excited by the acquisition and company I am going to sit on the sidelines. I think it is a good move for the company and shareholders will be rewarded even further than the dividend increase.


I think this is an excellent acquisition . It won't take long for TVE to digest this acquisition.


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## newfoundlander61 (Feb 6, 2011)

I have been holding ENB & SU for a some time now, will keep ENB long term but sell SU at some point.


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## zinfit (Mar 21, 2021)

My largest position is Enerplus . Even though it is a Alberta company almost all its production is from the Bakken formation in North Dakota. It produces about 100,000 BPD of very high quality light crude oil and it gets about $2 over the WTI price. It has 15 years of reserves and does have NG from the Marcelis shale and selling again at the best pricing for NG . I know some have a focus on Crescent Point . Crescent has a large position in the SK portion of the Bakke formation. IMO Enerplus is a superior stock over CPE. The North Dakota Bakken is much larger and productive then the portion in SK. RY has it rated as their best energy stock.


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## doctrine (Sep 30, 2011)

zinfit said:


> My largest position is Enerplus . Even though it is a Alberta company almost all its production is from the Bakken formation in North Dakota. It produces about 100,000 BPD of very high quality light crude oil and it gets about $2 over the WTI price. It has 15 years of reserves and does have NG from the Marcelis shale and selling again at the best pricing for NG . I know some have a focus on Crescent Point . Crescent has a large position in the SK portion of the Bakke formation. IMO Enerplus is a superior stock over CPE. The North Dakota Bakken is much larger and productive then the portion in SK. RY has it rated as their best energy stock.


ERF is a stock I bought a lot of at about $2.50 back in Nov 20, and is executing to perfection; bought assets in the price crash, have paid off debt, and using excess cash to buy back buckets of shares. ERF gets an A+ in my books even at today's $20+ price. The difference with CPG is that ERF has been returning cash for over a year now, whereas CPG is just starting to return money to shareholders. They are about a year behind but I would give them a "B+" for making the right moves and avoiding expensive acquisitions 3 years into a bull oil run; if anything, like ERF they are selling off less productive assets.


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## zinfit (Mar 21, 2021)

doctrine said:


> ERF is a stock I bought a lot of at about $2.50 back in Nov 20, and is executing to perfection; bought assets in the price crash, have paid off debt, and using excess cash to buy back buckets of shares. ERF gets an A+ in my books even at today's $20+ price. The difference with CPG is that ERF has been returning cash for over a year now, whereas CPG is just starting to return money to shareholders. They are about a year behind but I would give them a "B+" for making the right moves and avoiding expensive acquisitions 3 years into a bull oil run; if anything, like ERF they are selling off less productive assets.


it is a lot better to make acquisitions using FCF and cash on the balance sheet than creating more shares or borrowing money. CPG had a notorious record of creating shares to pay for very high priced acquisitions. It looks like those days are in the past. I still think the North Dakota assets are the best part of the Bakken formation with optimal premium pricing above WTI.


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## EPS_Investor (Sep 7, 2017)

I'm thinking oil will push up hard once the SPR reserves are done year end. 2023 could possibly be $100+ again.

In the meantime I picked up 3 oil plays (Large, Mid, Small) in the oil sector - CPG, SGY, EW. I got a double call on CPG by next summer, triple on SGY and EW could be a 5+ bagger once their massive royalty deal goes through.

JMHO please do your own research before buying.


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## zinfit (Mar 21, 2021)

EPS_Investor said:


> I'm thinking oil will push up hard once the SPR reserves are done year end. 2023 could possibly be $100+ again.
> 
> In the meantime I picked up 3 oil plays (Large, Mid, Small) in the oil sector - CPG, SGY, EW. I got a double call on CPG by next summer, triple on SGY and EW could be a 5+ bagger once their massive royalty deal goes through.
> 
> JMHO please do your own research before buying.


Good point. One would think the Europe winter and the Chinese relaxing covid restrictions should be bullish. Another fact is the giant Freeport LNG plant will soon be back in operation. Most of the energy stocks have NG production. Europe will seeking every BTU of LNG that they can get their hands on. A cold winter would be a big draw on supply as well.


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## Buckwheat (Dec 11, 2021)

I see a gazillion reasons why oil will bull. The only possible negative, IMO, is if Putin uses tactical nuclear weapons to attack tanks and other targets. Such weapons are nothing like thermonuclear strategic weapons ('atom bombs') but would have such psychological effects as to push all markets down 20, 30, 40% or whatever, be it oil or gerbil food. Otherwise, the war will keep gas, oil, and coal stocks up. To me it's an all or nothing thing: Happy Investors or Nukes.

I should add that the price of oil will likely average about $96-$97 for the next while, chiefly because that is where Saudi wants it, not higher.


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## Covariance (Oct 20, 2020)

Does anyone have any suggestions of studies or sites that are unbiased and reliable in predication of oil, NG demand?


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## AltaRed (Jun 8, 2009)

Covariance said:


> Does anyone have any suggestions of studies or sites that are unbiased and reliable in predication of oil, NG demand?


No such "reliable" thing exists since supply and demand are so volatile given geo-political events, OPEC, global growth, etc. Not only can various organizations not predict the next 10 years, they cannot predict the next 12 months. You might consider McKinsey as an independent source but I suspect they rely heavily on BP's Energy Outlook, IEA, etc. and provide some of their own spin on trends. You can spend money buying McKinsey's or Wood Mackenzie's detailed reports but you would be wasting your money.

I tend to trust BP's annual work more than probably anything else given the effort they put into it BUT like everyone else, they will have their own guesses on technology advances, geo-political events, etc.

Added later: McKinsey's perspective makes an assumption that may be slightly too optimistic (my opinion) about countries meeting climate change commitments. For example, they think peak oil demand will occur between 2024 and 2027 (2-5 years from now) at 104 MMBBLs/D. I think it will be closer to 2030 at a slightly higher rate.


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## Covariance (Oct 20, 2020)

Thanks @AltaRed I'll check these out. My interest is on the demand side and you've given some good threads to follow.


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## MrMatt (Dec 21, 2011)

Covariance said:


> Thanks @AltaRed I'll check these out. My interest is on the demand side and you've given some good threads to follow.


I don't see big growth here, the political winds are pretty strong against it.

What I think will happen is the upcoming energy shortages will cause pricing spikes, but I think oil is "doomed" long term, though I think that it will last longer than the political opponents want.


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## Money172375 (Jun 29, 2018)

MrMatt said:


> I don't see big growth here, the political winds are pretty strong against it.
> 
> What I think will happen is the upcoming energy shortages will cause pricing spikes, but I think oil is "doomed" long term, though I think that it will last longer than the political opponents want.


Who are the big CanadIan players impacted by this? I‘m not deep into how Suncor, TRP, ENB, Emera etc divide their activities between oil, gas etc.

is the thinking that nat gas will outlive gasoline and heating oil? Or all they all impacted the same?

I bought some of these stocks years ago before I did any real research. I plan to eliminate them all from my portfolio eventually, but which ones do you believe are at most risk long-term?


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## Covariance (Oct 20, 2020)

MrMatt said:


> I don't see big growth here, the political winds are pretty strong against it.
> 
> What I think will happen is the upcoming energy shortages will cause pricing spikes, but I think oil is "doomed" long term, though I think that it will last longer than the political opponents want.


Not an oil commodity play. I'm doing a semi annual update on my energy investment. I went long in '21 on the assumption the sector was cheap, not going away anytime soon, and operators would focus on cashflow. At the moment I'm fleshing out a global recession, flat growth scenarios and how they might impact demand for '23, and '24 and in turn how that would impact cashflow of producers.


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## MrMatt (Dec 21, 2011)

Money172375 said:


> Who are the big CanadIan players impacted by this? I‘m not deep into how Suncor, TRP, ENB, Emera etc divide their activities between oil, gas etc.
> 
> is the thinking that nat gas will outlive gasoline and heating oil? Or all they all impacted the same?
> 
> I bought some of these stocks years ago before I did any real research. I plan to eliminate them all from my portfolio eventually, but which ones do you believe are at most risk long-term?


I think they're all being targetted with the same brush. Please note, I'm overly political/politically sensitive wrt to investing.

To the political greenies, a clean natural gas plant is just as bad as a coal plant belching smog.


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## AltaRed (Jun 8, 2009)

O&G are quite different commodities with different end use demand. There is no longer much near term fuel switching capability between the two except maybe in some industrial markets. 

Natural gas demand (including LNG) will primarily be influenced by electrical generation in particular to support/supplement renewable power. Space heating is the next big slice of the pie but I see that going into slow decline as more new build goes electrical and more natural gas conversions take place. Oil demand is primarily driven by transportation, especially land, air and to a lesser extent marine. I tend to agree with the KcKinsey chart (link I provided in a prior post) that peak oil demand will occur first, with peak natural gas demand following in 5 years or so thereafter.

The relative value of each (to each other) is going to depend on those factors and the ability to replenish supplies as existing sources deplete. I have no firm views on how each will play out longer term. I have not been in individual O&G stocks for some time and while the near term looks good, I wouldn't bet on owning these stocks long term... OR one will have to very selective on who it is can stay on top of the pyramid based on net margin.


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## AltaRed (Jun 8, 2009)

Ultimately commodity prices will approach a glass ceiling when demand falls off enough to discourage more supply. The marginal producers will get squeezed out. That is how a mature industry works.


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## peterk (May 16, 2010)

Buckwheat said:


> I see a gazillion reasons why oil will bull. The only possible negative, IMO, is if Putin uses tactical nuclear weapons to attack tanks and other targets. Such weapons are nothing like thermonuclear strategic weapons ('atom bombs') but would have such psychological effects as to push all markets down 20, 30, 40% or whatever, be it oil or gerbil food. Otherwise, the war will keep gas, oil, and coal stocks up. To me it's an all or nothing thing: Happy Investors or Nukes.
> 
> I should add that the price of oil will likely average about $96-$97 for the next while, chiefly because that is where Saudi wants it, not higher.


That's crazy -Even though I'm very bullish, there's still plenty of normal reasons why oil could turn lower too and stay low.

Main reason being that non OPEC production could stay very stable or grow even. I do wonder just how much smoke and mirrors is the argument that conventional oil will soon fall off a cliff due to "chronic under-investment". 

I also don't think that hostile western governments necessarily means throttled total production. It might just mean increased expenses for big oil, more acquisitions of smaller companies that can't handle it (with big oil gobbling up their production), and billions of government dollars thrown down the drain (what's new) at nonsense like carbon capture. Big oil can continue growing production while improving their green credentials, closing off access to competing small companies, and raking in taxpayer dollars. This is what "net" zero is all about.

You've seen the recent news about which government, USA or Canada is going to pay for carbon capture harder, while pretending like their cracking down on oil companies? Hilarious.


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## AltaRed (Jun 8, 2009)

The bigger dynamic than big oil is state oil (sovereign) oil companies which don't answer to, nor are handicapped by, shareholders and western governments harassing them. Big oil likely produces less than 20% (my WAG) of the world's oil. Big oil will simply get squeezed out as demand falls. Long after they are chased from OECD countries, they will remain welcome in many other parts of the world. Does anyone think the likes of Brazil, Guyana, Nigeria, Angola, Venezuela amongst others will shut down their O&G industries? Never mind the Middle Eastern countries with the lion's share of production and reserves to begin with.


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## Covariance (Oct 20, 2020)

If one wants to pull on a thread and see how this can play out - just dig into why diesel prices are so high on the eastern coast of North America.


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## MrMatt (Dec 21, 2011)

Covariance said:


> If one wants to pull on a thread and see how this can play out - just dig into why diesel prices are so high on the eastern coast of North America.


Uh high demand and not enough supply because the "environmentalists" have been waging a multi-decade war on the supply?


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## Covariance (Oct 20, 2020)

MrMatt said:


> Uh high demand and not enough supply because the "environmentalists" have been waging a multi-decade war on the supply?


More or less. Although demand is merely "normal" in the sense that it is within what has been forecast for some time. Pull away supply (war) and reduce refining domestically (enviros) over time and then threaten existing friendly suppliers who then essentially have no incentive to add capacity.


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## AltaRed (Jun 8, 2009)

To reinforce post #37, there is no incentive for publicly traded companies to add refining capacity when, in addition to regulatory headwinds, fuel demand growth will likely roll over circa 2030. State refiners can and do add refining capacity as per IEA


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## doctrine (Sep 30, 2011)

peterk said:


> That's crazy -Even though I'm very bullish, there's still plenty of normal reasons why oil could turn lower too and stay low.
> 
> Main reason being that non OPEC production could stay very stable or grow even. I do wonder just how much smoke and mirrors is the argument that conventional oil will soon fall off a cliff due to "chronic under-investment".
> 
> ...


"Big oil" - Exxon, Chevron, BP, Total, etc, has been unable to grow production for 20 years despite desperately trying to do so. Now they are investing billions less, and redirecting that cash to windmills and such. I do not foresee an outcome where they invest less in nominal terms and grow production when they have decades of evidence of being unable to do so when they were actually trying.

Outside of North America, in the last 15 years, oil production has fallen about 5%. The only growth has been the US and Canada and that is quite over given capital expenditures peaked 8 years ago, not even counting for inflation. Big national oil, aka OPEC, have only seen their production decline, not grow.

Maybe someone comes up with the $1-2 trillion and 5-10 years necessary to replicate US Shale and Canadian oil sands, but it will be easy enough to foresee 5-10 years in advance.


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## AltaRed (Jun 8, 2009)

I agree big oil may not have increased oil production over a 20 year period but some have maintained it such as Exxon over 2001-2021 and that is with net sales of assets along the way. I am too lazy to search for the data for the other 5 or so big oil companies. 

There is no particular need to increase production anyway. More is not always better on a net margin basis. There is no doubt in my mind that when global oil demand rolls over, big oil will see at least a proportionate decline in overall production along with global demand decline, and chances are it could be a disproportionate decline (decreasing market share).


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## hboy54 (Sep 16, 2016)

Wow something hammered oil prices down about $5 in an hour or two. Checked market in the morning, went outside a few hours, came back to a bloodbath.


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## AltaRed (Jun 8, 2009)

OPEC+ did not make any further production cuts.


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