# Oil cut in production by canada just a little



## 1980z28 (Mar 4, 2010)

http://news.google.ca/news/url?sa=T...ajjLN4&usg=AFQjCNEPAHyDM1ydD0VrWvcdF5Vtd15-jg

So it goes a few barrels here and there


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## Chris L (Nov 16, 2011)

The market would be perfectly balanced if SA wasn't over producing. Odd huh.


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## 1980z28 (Mar 4, 2010)

Chris L said:


> The market would be perfectly balanced if SA wasn't over producing. Odd huh.



Will start to buy one oil stock,being the largest producer

Will buy maybe this week for the future,going to sell my 1000 shares of bmo this week if it gets to 75


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## lightcycle (Mar 24, 2012)

Chris L said:


> The market would be perfectly balanced if SA wasn't over producing. Odd huh.


Let's not start this again! 

Seriously, why is it SA's job to regulate the supply? Why can't Russia or the US shale industry cut back their production? The decrease in supply would have the same effect on prices. The answer is that in the past SA has been *the* swing producer. That's not the reality today, but they are still expected to fill that role. I don't think that's fair and I can see why they've turned the taps full on and given the rest of the oil producers the big fat middle finger.


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## OhGreatGuru (May 24, 2009)

For years SA has been the main player in OPEC, and true to its purpose of a cartel, they followed a strategy of boosting oil prices as high as the market will bear. But with Russia, Canada, and US oil shale threatening their market share, last year SA decided on a price war. And it's working too. But Europe and North America need to decide if it is really in our interests to keep funneling money into obscenely rich medieval fiefdoms, that promote a very conservative brand of Islam; and some of whose citizens are bankrolling terrorists.


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## Chris L (Nov 16, 2011)

So instead of swing producer, they are overproducer. By your logic, they should just turn the taps on full and supply 100% of the world's oil needs. All they need to do is produce the same, they are bound to destroy their own industry. Race to the bottom never turns out as expected.


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## AltaRed (Jun 8, 2009)

Money talks and the world needs energy. Oil demand over 95 million barrels per day and likely still to climb a bit more near term. SA will be a force for decades to come no matter what anyone thinks. They are simply carving out and protecting a 10-12% global market share for themselves. I would do the same, i.e. don't let your competitors squeeze you out.


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## lightcycle (Mar 24, 2012)

Chris L said:


> So instead of swing producer, they are overproducer.


But can't you say the same for Russia and the US? Are they not overproducing as well? What governing entity decided the limits for OPEC and non-OPEC producers?


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## AltaRed (Jun 8, 2009)

^
+1


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## Chris L (Nov 16, 2011)

lightcycle said:


> But can't you say the same for Russia and the US? Are they not overproducing as well? What governing entity decided the limits for OPEC and non-OPEC producers?


Using historic metric, they are putting out more than they would normally - to meet normal market conditions of supply/demand. SA can do whatever it wants, it doesn't mean it's the right call. Time will tell if they can maintain market share and maintain prices simultaneously. 

If they were smart, they'd probably cut back to a historically "normal" amount, let the rest of the world spill their oil reserves and then be sole producer moving forward. Why give your product away for free? I seriously doubt this will actually work. Free market is always going to swoop back in to meet demand. They think they can have it both ways. I have my doubts that in the long run, things will support this decision. It will probably just produce wild swings in oil prices in the future.


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## AltaRed (Jun 8, 2009)

Chris L said:


> Using historic metric, they are putting out more than they would normally


No more than the over major producers. Look at this chart http://www.eia.gov/beta/international/?fips=RS albeit only through 2014. USA has actually grown since then too. On a percentage basis, USA has been the worst of the lot.

The USA specifically http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W USA is way above its long term average.


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## mordko (Jan 23, 2016)

AltaRed said:


> No more than the over major producers. Look at this chart http://www.eia.gov/beta/international/?fips=RS albeit only through 2014. USA has actually grown since then too. On a percentage basis, USA has been the worst of the lot.
> 
> The USA specifically http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W USA is way above its long term average.


They didn't have shale oil. Now they do. Not exactly stunning they are above "long term average".


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## Pluto (Sep 12, 2013)

I think OPEC and SA caused their own problems by artificially cutting back on supply in the first place. The high prices that result just brought on more supply and competition. They exacerbate the boom and bust cycles by production cuts to increase price. I think they see the error now, and are bent on producing the max and put the high cost producers out of business. Anyway, I'm not counting on any artificial production cuts anytime soon. (Is that pessimism? Its darkest before the dawn? ).


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## AltaRed (Jun 8, 2009)

mordko said:


> They didn't have shale oil. Now they do. Not exactly stunning they are above "long term average".


Okay, but let's stop blaming Saudi for the price collapse. They have decided to just keep their percentage market share (of ever increasing demand). Back when the Saudis were producing 8-8.5 million barrels a day or so, global demand was under 90 million barrels per day (high 80s actually). Saudi should be able to maintain their percentage. I agree with Pluto. SA should have just kept pace with increasing demand. I think they will from now on.

If anyone is to blame, it is the Americans. Dumb asses that they are.


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## lightcycle (Mar 24, 2012)

AltaRed said:


> If anyone is to blame, it is the Americans. Dumb asses that they are.


I disagree.

Even though I don't think the onus is on them to unilaterally cut and abdicate market share, this whole oversupply and subsequent race to the bottom was created by the shale boom, which was only made possible by $100 oil - a situation that the Saudis manufactured in the first place.

Now the Saudis want to put the Shale genie back in the bottle by strangling them with low prices, but they couldn't foresee how strong the genie would get. It's not a $55 break-even Genie now, it's closer to $30 and now the whole industry is going to suffer in the long run. Canadian oil being the first in line for maximum pain.


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## AltaRed (Jun 8, 2009)

In terms of who created the situation in the first place, I don't disagree that SA triggered the problem with high prices. That said, western oil producers threw money at projects on the premise artificial pricing would hold indefinitely. They should have known better too (my career was in the oil patch). Hence that is why I say 'dumb asses'. 

Perhaps this time, there will be true price float with no one attempting to manipulate prices going forward. Let the chips fall where they may. Lowest cost producer wins, highest cost producer goes out of business.


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## lightcycle (Mar 24, 2012)

Yep. Much as I loathe to say, "This time it's different", there really is no one swing producer anymore. There is no way a global cartel can police itself against natural market forces. Can US companies even join such a cartel or volunteer production cuts and impose caps legally without breaching anti-trust laws?


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## Ethan (Aug 8, 2010)

Put me in the camp of Saudi Arabia has no idea what they're doing. Oil prices have been high for years, at any time they could have increased production to discourage investment in high cost jurisdictions like the oil sands or investment in research that lead to new technologies like fracking. Instead, they waited to flood the market until their competitors became able to increase production, losing much of their influence and revenue in the process. It's like supply/demand principles are in reverse are in Saudi Arabia. When the global supply of oil is low, they decrease production. When the global supply of oil is high, they increase production.

Saudi Arabia can do what they want, but I question why they are doing what they are.


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## Chris L (Nov 16, 2011)

It's a little naive to say that SA can "afford" their current policy. They can't...not at their current spending level. SA needs oil at $100 just as much as the next guy, which is exactly WHY they are doing what they are doing. They are trying to restore the price of oil while maintaining market share. To maintain their standard of living, they need oil much, much higher than it is currently. You think they're enjoying this process? Not likely. The only important factor is that they can endure pain for longer than the next guy. They're also able to respond to the cries of "Uncle" from other producers and cut in response. But it's a 'you first' stance.


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## lightcycle (Mar 24, 2012)

Sounds like we're all on the same page, then!


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## Chris L (Nov 16, 2011)

lightcycle said:


> Sounds like we're all on the same page, then!


More or less, haha.


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## Rysto (Nov 22, 2010)

Ethan said:


> It's like supply/demand principles are in reverse are in Saudi Arabia. When the global supply of oil is low, they decrease production. When the global supply of oil is high, they increase production.
> 
> Saudi Arabia can do what they want, but I question why they are doing what they are.


Ultimately what happened is that SA lost the ability to control the market. Before shale oil, they could limit production, cause oil prices to rise and profit from the rise. Now if they limit production, a bunch more shale oil producers come online to pick up the slack, the price of oil does not rise and SA gets no benefit.

The market has fundamentally changed out from under SA. The question now is whether they can permanently crush shale oil production and regain control of the market.


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## Chris L (Nov 16, 2011)

They can't crush shale permanently. The US will figure out how to turn wells of and on, more cheaply. SA has already lost control. They're simply ceding control, as we speak. Wild upswings and downswings will ensue until capitalism finds balance. It always does. But in the meantime, the next big swing is up.


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## lightcycle (Mar 24, 2012)

Chris L said:


> But in the meantime, the next big swing is up.


$20 before $40!


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## Chris L (Nov 16, 2011)

Why $20. Why not $15 or zero? lol Holding on to that $20 notion is what's holding it back. But going to $20 is pretty irrational. Oil has value. I think it's worth more than $30 a barrel...but you have to admit it's pretty sticky at the $30 mark! Just itching to go up. So once negative oil NEWS, stops hitting the markets left and right, it'll be good to go. Stupid headlines!!! lol

Edit: $27.5 is as low as you get. 

We never see $20, $21, or $22 oil.

Side bet?


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## lightcycle (Mar 24, 2012)

I only said $20 *before* $40. Might go lower. I'm not that optimistic because there's so much negative news in the "pipeline" (pun intended) that the market is ignoring. Is <$20 an over-reaction. Probably, but the market is as irrational as it is short-sighted. None of these variables like Iran are priced in. The price of oil is directly influenced by every new news release showing hard numbers related to increase in oversupply and decrease in global demand. I'm afraid you bought into a sucker's rally because of the "leaked" Russian/OPEC cut rumour. Saudis say No Cut. Would be a huge loss of face to turn around and suddenly cut...

The US is having major storage issues with their containment facilities close to being maxed out. Causing all sorts of current problems like being unable to move oil around to create blends for WTI specifications.

And still, US output showing no discernible decline.

I'll see your $27.50 and raise you a $20 before $40!


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## Chris L (Nov 16, 2011)

Ha,ha. Well playing in this. If oil can no longer be stored, then maybe producers will start pouring it back down their own wells  How can it get much worse! It's getting hard to write new negative headlines. They went with storage and Iran this morning and oil is up. Market already knew that.

I'll take your $20 (I wasn't going to force you into it)!

$40 before $20. Whoot!

I've been in an out, just buying the peaks and selling the troughs.


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## lightcycle (Mar 24, 2012)




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## Nerd Investor (Nov 3, 2015)

Chris L said:


> Ha,ha. Well playing in this. If oil can no longer be stored, then maybe producers will start pouring it back down their own wells  How can it get much worse! It's getting hard to write new negative headlines. They went with storage and Iran this morning and oil is up. Market already knew that.
> 
> I'll take your $20 (I wasn't going to force you into it)!
> 
> ...


You might find it more profitable to buy the troughs and sell the peaks.


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## Chris L (Nov 16, 2011)

No wonder I had it all wrong.


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## lightcycle (Mar 24, 2012)

Chris L said:


> Edit: $27.5 is as low as you get.


$27.45 Less than 24 hours after your prediction.


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## Chris L (Nov 16, 2011)

I knew you'd be getting excited. Only 25% plunge to go.


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## lightcycle (Mar 24, 2012)

Trust me, I'm not excited.

Low oil price affects my overall portfolio negatively.

I would love to see $40 oil sooner than $20.


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## Underworld (Aug 26, 2009)

lightcycle said:


> $27.45 Less than 24 hours after your prediction.


Lol!


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## Underworld (Aug 26, 2009)

I thought about my situation this morning. I'm heavily leveraged in real estate in Calgary. If it goes to crap I've managed to get my net worth to 240k in 3 years. I'm 34. Got till im 65.
I should be looking more at the long term horizon and not sweating the in-between.


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## lightcycle (Mar 24, 2012)

This is a really insightful article on Forbes challenging some of the notions about Saudi Arabia's motives and strategy, and the role US oil is playing. All backed up by charts and figures.

http://www.forbes.com/sites/arthurb...ion-declines-another-million-barrels-per-day/

tldr:

- OPEC could cut tomorrow and it still wouldn't affect the downwards price pressure on oil because US shale would quickly capitalize and oversupply the market again
- US and non-OPEC caused the current oversupply problem, not SA: Canada is (was?) part of the problem. Brazil is a big player!
- US oil rig counts has fallen, but the number of producing wells has increased, leading to no noticeable decline in US output
- Shale is not as efficient as they are boasting about, access to external capital has only just started declining (as of October 2015). Huh!
- Saudi strategy is not to kill US shale, it's to cut off the access to external capital (as sags suggested). 
- Expensive oil sands is actually top of the hit list. Makes you wonder if Canadian Energy Indexes are the smartest play when timing an oil bottom.
- Saudis have $653B reserves in 2015. Expected reserves for 2017 are $443B, still *more* than they had from 2007 to 2010. They can commit and execute on their strategy for the long haul.


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## Chris L (Nov 16, 2011)

Thanks for the article.


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## Underworld (Aug 26, 2009)

Nice thanks for the link


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## Chris L (Nov 16, 2011)

Very wild swings in oil today.


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## lightcycle (Mar 24, 2012)

Dead cat bounce off 13 year lows? Just noise when you zoom the scale out.


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## Chris L (Nov 16, 2011)

Back up to the split-level. Going back your way (down) or mine (up)?


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## Chris L (Nov 16, 2011)

So SA including Russia has agreed to FREEZE current oil outputs. In other words, they insist on not killing [themselves] their industry. Production cuts will come from nations outside of OPEC in due time for a slow and steady recovery in oil prices. What you say LightCycle?


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## lightcycle (Mar 24, 2012)

Chris L said:


> So SA including Russia has agreed to FREEZE current oil outputs. In other words, they insist on not killing [themselves] their industry. Production cuts will come from nations outside of OPEC in due time for a slow and steady recovery in oil prices. What you say LightCycle?


It's a freeze. At current rates, oil is still being overproduced by 1.7MM barrels a day. And this isn't counting what Iran and Libya is going to bring to the table at a later date. Remember, oil prices are dictated by supply and demand. Nobody's actually agreed to reduce the oversupply and demand is on a downward trend.

Russia and SA are staving off low oil prices by dropping hints and rumours in the marketplace. It's only going to delay the inevitable when the hard numbers come out.

I still think we're going lower than higher.

I just read an article saying that Russia actually can't afford to slow down production because of the cold weather damage to decreased use of the pipelines.

The key figure to look at is US output. A few months showing a downtrend and working off the current glut then I'll think we've turned the corner.


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## lightcycle (Mar 24, 2012)

Also, Russia cheats. There have been many precedents set in the past where Russia has agreed to curtail output but didn't. This time might not be any different. Saudis know this already, having been burnt too many times.

Again, the key is in the numbers. Not lip service.


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## Chris L (Nov 16, 2011)

When would you guess this will happen? At $30 there must be some production coming off....?

I believe $50-60 is where SA is comfortable, this will blow off a lot of the marginal production and it could stay there indefinitely as far as they are concerned. Of course, once things have blown off and this new level is established, it could be a wild uptick before settling back down seeing as how production will come off. It will be interesting to see how fast US can ramp back up if prices begin to soar again. But of course, this looks to be 1-2 years off, but you never know. Some instability in the mid-East could change things rapidly.


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## lightcycle (Mar 24, 2012)

1-2 years sounds about right. Maybe $40 by 2nd half. Maybe not, depending on how resilient US shale is, and if global demand picks up or not.


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## AltaRed (Jun 8, 2009)

I agree with Lightcycle that SA and Russia are just talking up the price. It will help arrest more free fall but is not really going to make a material difference in supply or price recovery. Actual supply/demand data is where the rubber hits the road.


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## Chris L (Nov 16, 2011)

And now you can add Iran to "talking up the price." But this seems to be playing out much like I had anticipated. Oil output frozen at current levels with a drop coming from NonOPEC. When that drop comes in and if not deep enough, some cuts from OPEC. No one want to switch to the bull side yet? So in a little while we see more oil storage glut. No biggie. SA never wanted prices to be so low (for so long).

And don't forget war: http://www.marketwatch.com/story/ex...-oil-prices-higher-2016-02-17?dist=beforebell


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## lightcycle (Mar 24, 2012)

Are you daytrading oil?


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## Chris L (Nov 16, 2011)

Some buy and hold, some in and out


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## lightcycle (Mar 24, 2012)

There's a trading pattern forming around the $30 mark. The oil producers are playing the cut/no cut tease, first Russia talks it up, Saudis take it down, then OPEC talks it back up, Saudi Arabia brings it down again. Looks like Iraq is readying to buoy the markets again around the $29 level. Then another player (probably Saudis again) will take it down when it reaches $32.

They're managing it around a number where it's too low for the US to invest in more rigs, but high enough not too hurt the Saudis too much.

I don't think they can do this forever, but until hard numbers come out it's one way to delay the inevitable.


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## Chris L (Nov 16, 2011)

....the inevitable being?

I figured you might be willing to concede, but I suspect not. Seeing as how they're doing their best to hold prices firm, is a strong indication that they feel enough damage is done and we won't see that $20 mark. Hard numbers WILL show decreases in oil supply. How can it happen otherwise? Production is coming off all over the place, it's just not quite showing up in reserves just yet. 

Spending some time on the highways...all those cars sucking back all that oil. In due time...bottom has to be in.

Hitting $32...the Saudis will be happy to see prices go up steadily. There's absolutely no harm in that from their view.


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## nobleea (Oct 11, 2013)

Most execs believe that 2016 is going to be a bad year. Oil may be up, but budgets are still down and unlikely to be adjusted. 2017 will see a return to normalcy.

Many producers have cut costs and found efficiencies. Whereas before they needed $80/bbl to break even, now they can do it at $50. And that's a mostly systemic change which means their costs are unlikely to go up as the market increases. Decline curves are a fact of all oil wells. Many suppliers and producers would be happy and very profitable at 50-60/bbl.

The Saudis are just playing a game of bluff. They cannot continue with these low prices for more than a few years. Just not economically possible to sustain their populace. There's no way they'd risk telling their people to get a job, rather than caving in and letting oil rise. Everyone knows this. It's just a game of chicken. By cutting all this capital investment, all your doing is coiling the spring up a bit more.
There is no paradigm shift. It is not different this time.

People will look back and whine about how they almost bought oil stocks when they were at their lowest in 2016 - and look at the prices now. Just like people did in the last few stock cavings.


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## AltaRed (Jun 8, 2009)

Demand is climbing year over year and development capital spending is way down, so it is inevitable that prices will go back up when that supply/demand balance is achieved. The only question is when. That said, while there could be a fairly rapid steep rise when the traders have to cover their positions, it will most likely overshoot and settle back down to some fairly narrow trading range.

I suspect the bottom feeders will cause steep hikes in some oil company stock prices in the short term but realism will then set in after that. It is dangerous for amateurs to be speculators. Success will almost always be just luck.


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## lightcycle (Mar 24, 2012)

Chris L said:


> Seeing as how they're doing their best to hold prices firm, is a strong indication that they feel enough damage is done and we won't see that $20 mark


Who is they?

Every time a non-Saudi country tries to talk the market up, Saudi comes around and dismisses the rumour and brings it down again.

First Russia says they are willing to cooperate with Saudi on cuts. Then SA says no such talks are in place. Then OPEC says they have announced a production freeze. Then SA says "yeah, but no cuts". Now Iraq is voicing the "We must all cut". They are just words.



Chris L said:


> Hard numbers WILL show decreases in oil supply. How can it happen otherwise? Production is coming off all over the place, it's just not quite showing up in reserves just yet.


Russia and Saudi Arabia already told the market they are going to hold production steady. No cuts, they said.

Iran coming online is going to more than supplant any slowdown in US shale production - which is slow to take hold because although rig counts are down, the existing wells are still producing.

I'm not married to the idea that oil has not bottomed yet. I'm just basing my opinion on data, not by feel or rumours or speculation based on what oil ministers leak to the media.

If there is a prolonged period of increased demand and decreased supply, I'll certainly change my opinion.

Do you have such numbers?


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## lightcycle (Mar 24, 2012)

Here's what Iran thinks of the OPEC production freeze:

http://oilprice.com/Energy/Crude-Oil/Iranian-Oil-Minister-Calls-OPEC-Production-Freeze-A-Joke.html

"You're going to cap us at a million barrels a day? Screw you."

How much do you think US production is going to decline by? A million? Less?

It's simple math. Addition and subtraction.


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## Chris L (Nov 16, 2011)

You have to be a little more patient to see the numbers decline. They are in the "pipeline." 

They means = Saudis. They could pump more and kill the market, but they would rather shore up prices.


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## hboy43 (May 10, 2009)

Chris L said:


> You have to be a little more patient to see the numbers decline. They are in the "pipeline."
> 
> They means = Saudis. They could pump more and kill the market, but they would rather shore up prices.


I don't spend any time trying to forecast oil prices. Or anything else. I just deal with what I know for certain. I know for certain that things move in cycles. I know for certain that oil has been in the dumps for 1.5 years. I know for certain that oil being used in significant quantities for the next 30 years has a greater probability than lots of things really but say my being alive in 30 years. I know for certain that resource executives are earning their keep these days ruthlessly driving down costs, see ECA and TCK.B recent releases for example. I know for certain that most fear a loss more than they value a gain, and that my brain is atypical and does not have that feature. I knew for certain that ECA was bouncing off new lows a few days ago, had dropped to 4.x% of portfolio, and was smaller percentage of portfolio than BTE, so added another 4400 @ $4.52 and 3500 @ $4.37 to achieve in the aggregate 23,300 @ $8.64.

So if investing is buy low, sell high, how does it look? Low ~$4, me ~$8, 5 year high ~$30. $4 below me and $22 above. People often mention dart boards when discussing stock investing. Well, put up a dart board with the above range and what do you think? I'll even spot you $0 to $4 too. 

Before the SHTF I had 3000 ECA at ACB $19.90 for $about $60,000. Resources were about 13% of portfolio, about half the then TSX weighting. Today I have about $120,000 ECA and resources are about 35% (or 27% if you remove LRE which will either return my capital or be bankrupt in the next 2 months or so) of portfolio or about double current TSX weighting. The common wisdom is that my current state is risky. I have never understood how holding/buying at $x is riskier in the long term than at $x*2 or $x*3. I hear people when they say that resources can bite you in the *** with the cyclical nature. Who says one has to hold when things are going well? I didn't (much, just SU, ECA, HSE for my 13%, hardly high fliers.) I was under weight when things were "normal" or going well and am now over weight when all is gloomy. If I get my capital back from LRE, a good part of that will likely go to financials which are sitting under weight currently and suffering their own gloomy days. I was lucky enough to get some RY at under $66 just yesterday with the proceeds of 200 JNJ hived off at $US104 (and exchange rate 0.72) a few days ago.

hboy43


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## Chris L (Nov 16, 2011)

Bumping up this thread....because, well...


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## lightcycle (Mar 24, 2012)

Ha! 

Totally irrational.

China manufacturing data confirms more slowdown. Crude goes up.

*smh*

Oh well, looking forward to the bump up in the portfolio today...


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## Chris L (Nov 16, 2011)

Chooo, choo!


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## peterk (May 16, 2010)

I'll take it! +15% in 4 days for my portfolio


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## Chris L (Nov 16, 2011)

....and $37....we're my man at?


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## lightcycle (Mar 24, 2012)

Still doubting the fundamentals, but you could see $40 sooner I thought.


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## Chris L (Nov 16, 2011)

$38.

And this:

"Saudi Arabia is seeking a bank loan of between $6B-$8B, in what would be the first significant foreign borrowing by the kingdom's government in over a decade. Riyadh has asked lenders to submit proposals to extend it a five-year U.S. dollar loan of that size, with an option to increase it, to help plug a record budget shortfall caused by low oil prices. The kingdom's deficit reached nearly $100B last year."

Music.


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## Chris L (Nov 16, 2011)

thirty nine and a half....


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## peterk (May 16, 2010)

Chris L said:


> $38.
> 
> And this:
> 
> ...


What does that tell us though? It is no gigantic secret that SA is bleeding cash, or that it will have to draw on it's massive foreign reserves, or that it can't thrive as a nation at the current oil levels indefinitely. It's also no secret that SA will be one of the last men standing as far as oil producing entities goes, based on cost.

Seeking debt seems to me makes it seem like SA is exploring all avenues for a "long haul" budgetary deficit, so that it doesn't draw down currency reserves as fast as currently is doing... It seem like a reaffirming of their commitment to not manipulate the price level with production cuts...

Am I missing why this is good news for oil prices? I hope so!


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## Chris L (Nov 16, 2011)

Because they don't want low oil prices. That's news to many people. People mistakenly believe that they are okay to drive down the price and are trying to "crush the competition"....they are not and can not afford to do this - this is a purely irrational conclusion. 

They are ---Trying to maintain their market share ONLY.

They have as much at stake in maintaining oil at $100 as every other oil producer. End of story. Is everyone shrugging off their meetings to freeze oil production?

Their country will turn into a sh*t hole without oil at $100. They use that price to sustain their nation, to support their people, to prevent civil unrest, to employ their citizens.

This is exactly why oil values will return. If all else fails, they can cut their oversupply of oil. They still have that Ace.


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## nobleea (Oct 11, 2013)

Chris L said:


> Their country will turn into a sh*t hole without oil at $100. They use that price to sustain their nation, to support their people, to prevent civil unrest, to employ their citizens.


This. It's fairly predictable what is going to happen to oil. It's the short term moves and counter moves that are interesting to watch and fog things up a bit.

A 6-8B loan by SA might keep them going for a few months. Many people don't realize how much cash they are bleeding right now. Talk to expats who have worked or are working over there. The SA locals are lazy. Most of them don't work, and those that do work VERY slowly. The whole country lives a life of entitlement, paid for by the govt. If SA can't cause a few more bankruptcies in the short term, their gamble has failed. They'll let the oil price rise again (all the while talking their bluster to save face) and they can keep their peoples content. Even if they do cause some more bankruptcies, it's just to scare off lenders and equity from jumping right back in when prices resume.

They've underestimated the resourcefulness and innovation possible in a market driven economy. Their actions have helped make domestic oil producers the most efficient they've ever been. The structural changes that have been made will pay dividends for many years. Many have dropped their $/bbl production costs by 20-40%.

This whole thing will be used as an interesting case study in economics courses for decades to come.


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## Chris L (Nov 16, 2011)

$Forty$

Okay, I'm done. I've said my piece, placed my bets, and will ride this up to the heavens. Good luck!


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