sell! sell! sell!

[tiznow]

Back to bad news is good news for now.. Gdp number bad so more fuel for not rate hikes time to party on...

will just have to see if this is yet another head fake till the inevitable day that ez money bubble pops.. Or just the first squeeze in a new bear market..

 

[tiznow]

Missed that Japan went to a negative deposit rate.. That was the catalyst..

just keeps getting funnier..


The Bank of Japan said in a statement that it would cut rates further into negative territory if it needed to push borrowing costs even lower. It said the policy would continue as long as needed to achieve an inflation target of 2%.

 

[CHOPTALK]

I was wrong about the oil bottom thinking it would not go below $50, but what's happening right now is setting up a huge bubble in the other direction.

In the 80s when we had the last true oil glut the world was producing as much as 14 million barrels a day more then we use at its peak.

Also we had more storage realitivly speaking.

Right now in the middle of all this doom and gloom we are only producing about 1.5 million barrels a day more then we are using.

The OPEC nations other then Iran are putting out very close to max output right now .

So this 1.5 million extra oil we are producing a day over consumption won't last long.

I think the slowdown in China thing is blown out of proportion. The fact is China is still importing more oil then ever to this day. Just not at the same increase as in the past. At the end of the day oil demand keeps rising .

Oil companies world wide has already cut almost 1.8 trillion that was slatted from now to 2020.

This great shale boom you keep hearing about those wells don't have near the shelf life of a conventional well. The average depletion of a conventional well is less then 5% a year.

The average depletion of shale well is upwards of 30%.

That means all these new completions that just came online are going to decline real quick and there won't be anything behind it to replace that lost production .

Then all of a sudden that 1.5 million barrels a day vaporizes almost overnight and you have the makings for the greatest oil shortage in history.

This is going to happen almost in the blink of an eye.

I don't think the speculators are accurately accounting for the depletion rate of these new completions.

And with almost 2 trillion in future projects cancelled they won't be able to flip a switch and make up for this shortage over night .


Anyone who believes this nonsense about cheap oil is here to stay simply does not understand how this industry works.

It takes constant investment to keep production up. Now more then ever because these new completions deplete so fast.

The only way I am wrong about any of what I say In this post is if I'm wrong about 1 or both of 2 things:

1) OPEC is not producing at max capacity or close to it.
2) We have some radical breakthroughs really soon for alternate energy.

Baring me being wrong about 1 or both of the above statements we are building up for the largest oil shortage in history.

 

[PatsFan1283]

Well if there is a economic slowdown on a global level then even China will slow and we'll have even more excess supply. If there is more downside then it will likely just hinge on whether or not that happens.

Even with the decline rates, most estimates seem to indicate that domestic production won't peak until like 2020. So yeah, peak oil will probably return at some point as global economies continue to grow but it is still 4-5 years away and you might have to hold through a bust if the economy goes into recession.

 

[eek.]

Alternative energy has put a lid on wild oil price swings and the higher oil gets the more people, and governments, will turn away from it as a primary energy resource, the higher oil gets... the more money they can pour into alternatives to oil
Deflationary pressures are holding everything down as well, putting a lid on the growth orgies of the past 60 years

They had this sort of thing in the 1880s, overproduction, poor wages job/opportunity shortages, leading to stagnation.
Then add in loadsa debt for our modern world.

Businesses will trundle along just fine while ordinary people battle to survive and get by but if $30 oil and 0% interest rates can't kick off a new financial growth period then the easy money growth periods of the past are over IMO

 

[eek.]

It's not like companies aren't trying, they're having to run a lot faster just to keep up

They've got these things going for 69quid on ebay now(free post), a full windows 8.1 install, a quad core processor, 6-8 hours battery life, weighs virtually nothing in the hand, incredible.

 

[CHOPTALK]

Well if there is a economic slowdown on a global level then even China will slow and we'll have even more excess supply. If there is more downside then it will likely just hinge on whether or not that happens.

Even with the decline rates, most estimates seem to indicate that domestic production won't peak until like 2020. So yeah, peak oil will probably return at some point as global economies continue to grow but it is still 4-5 years away and you might have to hold through a bust if the economy goes into recession.

Unless OPEC is holding back domestic production is about to start declining rapidly.
If OPEC can't replace this lost production we about to hit a big shortfall .

We are right at peak production right now (non OPEC ).

These people don't know what they are talking about when it comes to depletion on these new wells.

You can't use the old models for depletion with most of these new wells in tight formations .

It takes constant investment to keep it going.

A lot of these shale producers or in big trouble right now flowing at a loss just to keep the cash flow going .

Once the cash flow goes below their payments they will get shut down.

So not only are you dealing with depletion you are also dealing with many thousands of wells getting completely shut in very soon.

It takes at least 2 years for a project to go from the drawing board to making oil.

You can't just flip a switch and start producing again.

And demand is not going down. We only have about a 1.5 million barrel a day buffer to begin with not counting the high storage.
But it won't take long for the draw down to zap all this so called excess storage everyone keeps talking about .

Everyday sales of SUVs go up.
Consumption and demand is still rising.

Yes China has slowed down but the worlds project in for needed oil is still on the rise.

There is no chance that it's going to take till 2020 before we hit peak production unless OPEC is holding back .

And all indications are they are producing right at max levels other then Iran and maybe Libya .

 

[CHOPTALK]

We down over 15% since July where I'm at and have not made any investments to recover that loss. If it would have been 3 years ago not only would we have recovered that 15% loss we would have exceeded it by now.

And I'm not even in the shale business that's known for rapid depletion. And it's not as costly to re complete in the zones I deal with as it is up north.

So I'm in a good situation relatively speaking and we down 15%.

 

[CHOPTALK]

And the only reason you haven't seen this rapid depletion yet is because you still have a lot of projects that have already been paid for years ago just now coming online.

The backlog has about run its course.

Its taken this long for the number of wells getting shut in or depleted to out number the new wells coming online.

You can't just shut down multi billion dollar projects that have already been financed in the middle of a project regardless of the oil price.

And you have to open the wells to flow just for cash flow sake even if you are selling at a loss .

But all this stuff is about to go away.

We are almost done with all the pre financed projects and all that's about to be off the books with very few future projects in the works to replace it.

 

[tiznow]

Looks like rally/squeeze over.. Oil and markets heading back down..

time to head back down and test the lows to find out if this finally the global ez money bubble burst or they manage to keep it blown up a while longer...

--------

yeah depletion rates on these wells are terrible from what I've read and there will be no new investment for a while..

just a natural bust following a boom..

Assuming we heading for a bear I'll be gobbling up plenty of oil plays from the carnage .. I already started nibbling some.. Be patient no rush.. Central banks won't be able to prop this up any longer IMO..

 

[tiznow]

Continue to believe .. Gold the best play right now

if they continue to promote debting and spending with central banking policy and prop the bubble it will do well.. If the bubble crumbles it will do well being a safe haven during gloom and doom.. Win win either way after a long consolidation period...

last 3-4 years for gold just a cyclical bear inside a very long term secular bull that started in 2000 when global governments/central bankers started us down the path of insane fiscal irresponsibility.. The bull won't end till fiscal sanity returns and that day is nowhere in sight..

 

[CHOPTALK]

Just about every OPEC nation getting squeezed right now other then maybe SA.
Once it hits 25 there is going to have to be a meeting . To curb production but I honestly believe they are intentionally creating this future boom.

The excess is not nearly as great as reported. And once the the wells get shut and depleted it's going to take a long time to get production back up.

Yes this is a tough time right now for the oil business but I honestly feel like 4 years from now we will be over $150 a barrel .

 

[CHOPTALK]

And 150 is on the low side.
The majors are going buy up these independents at garage sale prices and make serious bank in the very near future.

They taking 1 step back and about to take 10 steps forward.

Only the strong will survive but when it's over they gonna be stronger then ever.

The oil industry about to consolidate over 50% in the next 5 years

 

[tiznow]

Not saying 150 can't happen but it's unsustainable.. Just like sub 30 oil is IMO

fair price when market is balance and global economy in decent shape 50-70.. The opec guys can make money and sustain some degree of mega socialism to appease their people.. Some NA guys can make money and aren't drilling for super expensive/dirty stuff (Canadian tar sands crap etc)... Affordable prices for average joe.. And alternative energy is viable competition.. As we need to move that way as much as possible with booming human population..

all the fed/central banking bubbles are causing major volatility and distortions in all markets..

 

[CHOPTALK]

An average conventional well can last up to 30 years with depletion as low as 3% a year.

These new wells in tight formations average about a 3 year life span and that's if they maintain them.

The drop in out production is about to fall off the map without new investment .

 

[tiznow]

Not dusagreeing that it may swing back way the other way and overshoot to upside again... On the other side of this bust.. As production falls off during this potential looming global recession.. we are in boom/bust economic model long term so it seems

just saying 150 oil not sustainable long term..

well unless the fed gets desperate enough to get some hyperinflation going by helicoptering fiat to the masses vs just shoveling to banks

just hand out 50k to every man women and child problem solved lol nothing would surprise me anymore..

 

[eek.]

just hand out 50k to every man women and child problem solved lol nothing would surprise me anymore..

That's what welfare did
Poor people spend every dollar they get on stuff produced/owned/controlled by the rich

The less welfare you have, the less the rich profit

Governments shovel money into the bottom of the capitalist ponzi pyramid

 

[CHOPTALK]

Not dusagreeing that it may swing back way the other way and overshoot to upside again... On the other side of this bust.. As production falls off during this potential looming global recession.. we are in boom/bust economic model long term so it seems

just saying 150 oil not sustainable long term..

well unless the fed gets desperate enough to get some hyperinflation going by helicoptering fiat to the masses vs just shoveling to banks

just hand out 50k to every man women and child problem solved lol nothing would surprise me anymore..

i agree it's not sustainable but it's going to happen and it's going to stay that way for longer the
next time then it did the past time.

Some of these companies getting so desperate they starting to sell some of these rigs for scrap iron .

Once the excess is gone they won't even have the means to make up for it for a long long time.

 

[CHOPTALK]

One of the problems is oil did not gradually fall based on supply like it was supposed to.

This buildup just did not show up overnight .

For some reason everyone ignored for a long period of time.

So the investments and the projects did not slow down in conjunction with the buildup at an equal speed.

The prices should Have been gradually coming down over a long period of time rather then this abrupt sudden drop.

Until very recently we have been spending and investing based on 100 oil instead of tapering off gradually.

Now we are going in the complete opposite direction going to almost a complete stop and now it's going to go the other direction.

 

[PatsFan1283]

Isn't the benefit of shale that it can start/stop production much faster than conventional wells? So if oils hit 55, 60, then shale drillers will step in and fill the need for more demand.

This is how I always understood why the near-term upside was limited even if oil goes up again.