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AeroWesty
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 3:20 pm

Quoting planemaker (Reply 99):
Will be interesting to see what happens tomorrow when the NYMEX is open.  

This is becoming fascinating to watch. The price of oil detaching from US dollar strength/weakness while the Saudis aren't willing to be the usual fall guy in OPEC to be depended upon to reduce production.

Six weeks ago, when I first posted this thread, I was wondering what would happen when the Saudis were faced with an oil price which wouldn't be sustainable to continue supporting their domestic budget/social programs without keeping their oil moving. I'm more than willing to be corrected on this and listen to alternate opinions, but it looks to me as if this should be a sobering message to the other OPEC members + Russia rather than anyone else.
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 4:14 pm

Quoting AeroWesty (Reply 100):
I was wondering what would happen when the Saudis were faced with an oil price which wouldn't be sustainable to continue supporting their domestic budget/social programs without keeping their oil moving.

The Saudis have more than enough cash stored away to weather the low prices for a few weeks. By then, they would hope that shale oil would become so costly to extract that the production would fall and Saudi oil share would fill in, driving up demand and hence, price.

Quoting AeroWesty (Reply 100):
but it looks to me as if this should be a sobering message to the other OPEC members + Russia rather than anyone else.

Interestingly enough, I read that Iran also supported keeping output stable and even Russia agreed to it. The question is whether the move will backfire. What if the US continues to produce shale oil? ROPEC* can't possibly be looking at low prices indefinitely. Is ROPEC's move to make a massive production cut to bring back oil to a more comfortable level some time in the future?


*ROPEC = Russia + OPEC...copyright!
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Okie
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 4:33 pm

Quoting einsteinboricua (Reply 101):
Interestingly enough, I read that Iran also supported keeping output stable and even Russia agreed to it. The question is whether the move will backfire

The real question is who the certain OPEC member states are after.
Is the target a member state or non members? There have been more than one country dissolved the association with OPEC.

The US production is a secondary concern. I believe you need to dig a little deeper in what is going on amongst OPEC and the ME members.

Okie

[Edited 2014-11-28 08:34:02]
 
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 4:44 pm

Quoting AeroWesty (Reply 100):
but it looks to me as if this should be a sobering message to the other OPEC members + Russia rather than anyone else.

It is also a sobering message to the shale oil industry or more accurately any of the alternate oil and energy sources that have sprung up in the ten years or so.

Quoting einsteinboricua (Reply 101):
The Saudis have more than enough cash stored away to weather the low prices for a few weeks. By then, they would hope that shale oil would become so costly to extract that the production would fall and Saudi oil share would fill in, driving up demand and hence, price.

The Saudi's, Kuwait, Qatar, and the UAE can weather a lower price for years actually, not just a few weeks. Yes it would affect their countries budget but their cost to pump could handle it. The rest of OPEC etc. can't really but they can't afford to pump less really so they can't make an effective threat that would affect world prices.

The real question is how will the shale producers react? It will take at least a year to see any effect as there is too much capital tied up in the production and momentum will carry it on for a while and the return on that capital is still needed. They key thing is that no matter what does happen in the next few years the world and the industry knows that these additional resources are there which will affect the pricing power of OPEC.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
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pu
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 5:13 pm

Quoting AeroWesty (Reply 100):
OPEC members + Russia



Almost all asset prices (and especially commodities) are controlled by the financial markets, not the actual people/companies/countries in the underlying business of selling the commodity.

Very big pockets flush out every asset class from time to time by bringing the price very low: real estate, oil, currencies, equities, etc....so that sooner or later only the biggest players can afford to play for the long term. The Saudis can play, Russia however will face true disaster: all of this is mixed in with global politics and Russia is the dark horse at the moment.



Pu
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Fri Nov 28, 2014 6:45 pm

Quoting AeroWesty (Reply 100):
This is becoming fascinating to watch.

  

Very few people saw this coming. The ramifications are obviously huge.

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Quoting einsteinboricua (Reply 101):
I read that Iran also supported keeping output stable

I read opposite... they went along because they had simply no choice. Before the meeting they were pushing for a cut.

Quoting einsteinboricua (Reply 101):
and even Russia agreed to it.

Russia also doesn't have a choice. Unlike OPEC members, Russia cannot simply throttle back Siberian production. Plus, they need every dollar.

Quoting einsteinboricua (Reply 101):
Is ROPEC's move to make a massive production cut to bring back oil to a more comfortable level some time in the future?

The meeting shows how OPEC is losing (has lost) its grip on the oil market. Just a hint of a production reduction would have been enough to send prices climbing in the past... but not now Clearly this is all about the Saudis... the other members were mere bit players.

Quoting Tugger (Reply 103):
The real question is how will the shale producers react? It will take at least a year to see any effect as there is too much capital tied up in the production and momentum will carry it on for a while and the return on that capital is still needed. They key thing is that no matter what does happen in the next few years the world and the industry knows that these additional resources are there which will affect the pricing power of OPEC.

Well, now we'll see what the true prices are for extracting shale oil at the different basins and for the different producers.

There are a few things that collectively are upsetting OPEC's cart in addition to shale oil:

- Slowed down or stalled real growth
- Continued increasing efficiency
- Increasing alt fuel & energy use

Other things that could contribute to further upsetting OPEC's cart in the mid and long term future:

- One of 3 pipelines getting approval to be built from the tar sands in Canada
- Japan Nuclear restarts
- Resolution of ME and Libyan conflicts (both Libya and Iraq are pumping below capacity)
- Petrobras, Pemex and PDVSA getting their acts together
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pu
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RE: Crude Falls Below Saudi Break-even Price

Sat Nov 29, 2014 11:09 pm

Quoting planemaker (Reply 105):
Very few people saw this coming

Very few people see ANYTHING coming correctly over the long term. Otherwise, everyone would be billionaires. Conventional wisdom is almost always wrong. It has to be. Take China and their false growth figures for instance.....



Pu
 
AeroWesty
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RE: Crude Falls Below Saudi Break-even Price

Sun Nov 30, 2014 4:54 am

Quoting pu (Reply 106):
Conventional wisdom is almost always wrong. It has to be.

Interesting that you believe that. Most internet search algorithms are based on that as a whole, the average of the crowd is right. While individuals may be wrong, their median is correct.

Quoting pu (Reply 106):
Very few people see ANYTHING coming correctly over the long term. Otherwise, everyone would be billionaires.

Lots of people see lots of things correctly over the long term all the time, but simply lack the conviction in their beliefs and are afraid of their exposure to the risk of losing it all to really let loose and get to a billion. The result of one penny doubled every day for 30 days is over $5 million. Getting to a billion is a piece of cake if you really dedicate yourself to it. Heck, I'll even give you the penny.
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planemaker
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RE: Crude Falls Below Saudi Break-even Price

Mon Dec 01, 2014 4:51 pm

Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Mon Dec 01, 2014 6:55 pm

I wouldn't hold my breath just yet for $40 oil. I can see $55-$60 sticking around for a good time. The issue will be if ROPEC's move will kill shale oil or will shale oil continue despite being costlier to extract.
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Mon Dec 01, 2014 7:12 pm

Quoting planemaker (Reply 105):
- Continued increasing efficiency
- Increasing alt fuel & energy use

This along with what others have mentioned with the new drilling methods creating new sources of oil now available around the world has really reshaped things. It will be an interesting few years ahead.

Quoting einsteinboricua (Reply 109):
I wouldn't hold my breath just yet for $40 oil. I can see $55-$60 sticking around for a good time. The issue will be if ROPEC's move will kill shale oil or will shale oil continue despite being costlier to extract.

There is a hell of a lot capacity now at Cushing. Max capacity is about 80MBBL currently and it is sitting around 25M now. It has been increasing for the last couple months as the price has gone down so I can see oil storage there increasing for the next few years as traders seek the price they want. I am thinking it will settle around $60-$65 but we shall have to wait and watch to see what it does.

Tugg
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planemaker
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 02, 2014 12:31 am

Quoting Tugger (Reply 110):
I am thinking it will settle around $60-$65 but we shall have to wait and watch to see what it does.

It will be very interesting to see how the shale sector reacts... they have some time. The tar sands is interesting as well... Suncor have costs of $24 a barrel at their Fort Hills project and many tar sand companies' costs are below $40 to $45.

Quoting Tugger (Reply 110):
I am thinking it will settle around $60-$65 but we shall have to wait and watch to see what it does.
Quoting Tugger (Reply 110):
This along with what others have mentioned with the new drilling methods creating new sources of oil now available around the world has really reshaped things. It will be an interesting few years ahead.

OPEC is pretty screwed as $60-$65 is not nearly high enough for any member, including Saudi Arabia... but if they go higher they encourage marginal shale oil plays. They can't win.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 3:51 pm

Quoting Tugger (Reply 110):
I am thinking it will settle around $60-$65 but we shall have to wait and watch to see what it does.

This from Bloomberg:

Quote:
OPEC’s price war against the American shale industry will erode drilling budgets, shrink profits and even bankrupt some companies. It won’t do the one thing cartel leader Saudi Arabia wants: reduce U.S. production.

In the three geologic formations that account for 88 percent of U.S. shale oil output -- North Dakota’s Bakken and the Eagle Ford and Permian in Texas -- explorers can drill new wells profitably in some areas even if crude falls to $25 a barrel, according to a team of analysts led by Manuj Nikhanj at ITG Investment Research Inc. That’s less than half yesterday’s $67.38 closing price for U.S. crude.

So... how low can it go?

Iraq is about to dump another 300k barrels/day onto the market!
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Pellegrine
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 6:17 pm

Quoting planemaker (Reply 99):
Which surplus?? It it has always been about OPEC's production surplus...

You can believe all of your own nonsense, but it doesn't impress me. The world is in a production surplus, not just OPEC.

Quoting planemaker (Reply 105):
There are a few things that collectively are upsetting OPEC's cart in addition to shale oil:
Quoting planemaker (Reply 108):
Oil at $40 Possible as Market Redraws Politics From Caracas to Tehran
Quoting planemaker (Reply 111):
OPEC is pretty screwed as $60-$65 is not nearly high enough for any member, including Saudi Arabia... but if they go higher they encourage marginal shale oil plays. They can't win.

What is this incessant obsession with "breaking OPEC"? You do realize that low prices hurt a lot of domestic producers, especially small companies?

Quoting planemaker (Reply 111):
The tar sands is interesting as well... Suncor have costs of $24 a barrel at their Fort Hills project and many tar sand companies' costs are below $40 to $45.

Canadian Oil Sands Ltd. has already cut their dividend, that pretty much sums up how the biggest oil sands player is doing.

Quoting planemaker (Reply 112):
So... how low can it go?

Iraq is about to dump another 300k barrels/day onto the market!

Key words in that Bloomberg article "explorers can drill new wells profitably in some areas." That doesn't mean the entirety of the Bakken, Eagle Ford, and Permian formations would be profitable at $25/bbl. Far from it.

The Kurdish agreement allows for up to 550,000 bbl/d to be exported north to Ceyhan. It doesn't state that the Kurds are going to immediately add 330,000 barrels to their 220,000 bbl/day current exports. Pipeline attacks and insecurities in the region are going to make that difficult anyway.
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 6:24 pm

Quoting Pellegrine (Reply 113):
Pipeline attacks and insecurities in the region are going to make that difficult anyway.

Oddly enough, despite the ISIS scare in the region, oil hasn't been volatile and the fact that ISIS is using oil would suggest that pipelines in Northern Iraq should remain safe. Pipelines in Nigeria, however...
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 6:41 pm

Quoting Pellegrine (Reply 113):
What is this incessant obsession with "breaking OPEC"? You do realize that low prices hurt a lot of domestic producers, especially small companies?

Just curious, so you are saying you agree with price controls on products, even ones that exist on the open markets with multiple production sources?

Tugg
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planemaker
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 7:19 pm

Quoting Tugger (Reply 115):
Just curious, so you are saying you agree with price controls on products, even ones that exist on the open markets with multiple production sources?

Don't expect a rational answer.  
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Pellegrine
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 04, 2014 8:30 pm

Quoting Tugger (Reply 115):

Just curious, so you are saying you agree with price controls on products, even ones that exist on the open markets with multiple production sources?

My opinion on that subject doesn't matter; I am only one person. But for business purposes, I would say yes, it is beneficial. OPEC has played a crucial role in the past of stabilizing the market. Wild price swings, and a sustained period of low prices aren't good for anyone because it leads to less capex, less drilling, and less reserve replacement.

Quoting planemaker (Reply 116):
Don't expect a rational answer.

You're funny.
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casinterest
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 10, 2014 9:05 pm

Wow,
Anyone else amazed that in the two months since the OP started this thread that oil has plummeted from
87 WTI, and 91 Brent to
61 WTI and 64 Brent?

Quoting Pellegrine (Reply 117):
Wild price swings, and a sustained period of low prices aren't good for anyone because it leads to less capex, less drilling, and less reserve

However we have wild price swings to the 100 + range the past 10 years because it has benefitted OPEC in the absence of clear alternatives to OPEC oil supply Now that clear alternatives have arrived, Oil is plummeting.
The market has corrected itself. Less capex and less drilling will eventually determine if the correction is overdone or not.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain
 
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 10, 2014 10:04 pm

I'm just waiting to see the first gas stations in my area to go below $2/gallon. Right now the average I've seen is around $2.15, with lower prices if you opt for the car wash. And according to stats, MO has the lowest average price in the nation. Definitely a welcome relief for the nation and the economy. Could this be the last ingredient needed to boost the economic recovery (jobs, wages, etc.)?
"You haven't seen a tree until you've seen its shadow from the sky."
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 12, 2014 3:47 pm

Quoting casinterest (Reply 118):
Anyone else amazed that in the two months since the OP started this thread that oil has plummeted from

Nope, I'm not. I've been saying that the world is awash with oil.

Quoting casinterest (Reply 118):
However we have wild price swings to the 100 + range the past 10 years because it has benefitted OPEC in the absence of clear alternatives to OPEC oil supply Now that clear alternatives have arrived, Oil is plummeting.
The market has corrected itself. Less capex and less drilling will eventually determine if the correction is overdone or not.

Yup... funny that some people can't figure that out.
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RayChuang
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RE: Crude Falls Below Saudi Break-even Price

Sat Dec 13, 2014 3:45 am

I think right now what people are starting to realize is that the combination of increased US petroleum production and China signing that gigantic US$400 billion deal with Russia to develop petroleum resources in eastern Siberia could mean OPEC nations could lose most of their petroleum sales to their two biggest customers, USA and China. And that will result in a glut of crude oil and natural gas, which will drop the price dramatically. In short, Adam Smith's invisible hand just judo-chopped the oil futures speculators.
 
Okie
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RE: Crude Falls Below Saudi Break-even Price

Sat Dec 13, 2014 3:53 pm

Quoting RayChuang (Reply 121):
I think right now what people are starting to realize is that the combination of increased US petroleum production and China signing that gigantic US$400 billion deal with Russia to develop petroleum resources in eastern Siberia could mean OPEC nations could lose most of their petroleum sales to their two biggest customers,

  
Now you are getting it.

I will refer you to my previous post

Quoting okie (Reply 102):
The real question is who the certain OPEC member states are after.
Is the target a member state or non members? There have been more than one country dissolved the association with OPEC.

The US production is a secondary concern. I believe you need to dig a little deeper in what is going on amongst OPEC and the ME members

Now which OPEC member imports oil from the non OPEC member Russia and the OPEC member owes a lot of debt to China.

Okie
 
aircatalonia
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RE: Crude Falls Below Saudi Break-even Price

Sat Dec 13, 2014 9:46 pm

Some would argue that shale oil was not even profitable in the first place. If prices stay low, fracking may prove to have been a "dead-end" technology. Maybe this cure is worse that the disease itself. After all they used to bleed people as a "cure" for many diseases.
 
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Aesma
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RE: Crude Falls Below Saudi Break-even Price

Sat Dec 13, 2014 10:44 pm

The disease is CO2 emissions and this doesn't help at all.

I'm starting to see lower prices at the pump too, now only 6,5$/gallon, when it was 8 recently...
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Sat Dec 13, 2014 11:38 pm

My car was running just above empty. Can't believe that with $18 I filled up my tank with $2.10/gallon gas...and the slide is still not over.
"You haven't seen a tree until you've seen its shadow from the sky."
 
offloaded
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 16, 2014 4:51 pm

Quoting Aesma (Reply 124):
I'm starting to see lower prices at the pump too,

Here too, but it seems to be taking a while. Perhaps retailers who have taken a beating in recent years are trying to make some money?

Here in Portugal, tax is going up 5c / L next year. Part of the problem with falling oil prices seems to be that governments think that as people have got used to paying much more for fuel, when the price drops, they can get away with raising taxes.
To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
 
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 16, 2014 5:21 pm

Quoting aircatalonia (Reply 123):
Some would argue that shale oil was not even profitable in the first place. If prices stay low, fracking may prove to have been a "dead-end" technology. Maybe this cure is worse that the disease itself. After all they used to bleed people as a "cure" for many diseases.

Or this may prove that fracking is a reliable process and source and can be performed at the current market prices. Initial investments often require a higher rate of return, of profitability, in order to get investors to put their money in. That is what drove the initial high cost/high price of fracking. Now there is a large infrastructure in place working and producing, and there is a lot infrastructure coming online to support the recent and future growth. People now know this works and can make money. This won't suddenly disappear and will persist to keep making the industry competitive even as prices come down. With the falling prices some companies will declare bankruptcy which will ease their debt burden even as they keep operating to keep cash moving, some will fail and sell themselves or equipment at "fire sale" prices which means whoever buys them now has a lower cost threshold to be profitable. Those with deep pockets will go on for a while and may buy up others that are struggling.

Over time prices will at some point stabilize and begin to rise as mergers occur and pricing power begins to return to the "known" producers (the Chevron's and Aramco's of the world) but how much will depend on the current adoption of "alternative energy" etc. However the expansion of sources for fuel and energy around the world with the development of fracking technology adds significant down-pressure to the ability to raise prices. The control is not just with a small group of countries and companies at this point.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 16, 2014 8:07 pm

Quoting Tugger (Reply 127):
Or this may prove that fracking is a reliable process and source and can be performed at the current market prices.

There have been several articles that fracking is viable in many areas even at current prices. Even Argentina is getting on the act... Shale Veteran Takes On Argentina’s $6 Billion Shortfall

Quote:
Argentina is depending on two things to reverse a three-year energy shortfall that’s costing $6 billion a year: a shale formation bigger than Massachusetts and Miguel Galuccio, who has worked on drilling operations from North Dakota to Poland and India.
Quoting Tugger (Reply 127):
This won't suddenly disappear and will persist to keep making the industry competitive even as prices come down.

Fracking input prices have already started dropping...

Quote:
U.S. producers may boost output still further from the highest rate in more than three decades as costs decline almost as fast as oil prices, according to Goldman Sachs Group Inc.

“Oil producers can spend less to get the same or potentially even more in terms of production,” the bank said today in an e-mailed report. “While reductions in capex are coming faster than expected, it is unlikely to translate into less supply.”
Quoting Tugger (Reply 127):
but how much will depend on the current adoption of "alternative energy" etc.

Yes, not just alternative energy but energy efficiency as well.

Quoting Pellegrine (Reply 113):
Canadian Oil Sands Ltd. has already cut their dividend, that pretty much sums up how the biggest oil sands player is doing.

And oil sand production doesn't just continue but expands: Oil Sands Output Rises as Canadian Crude Falls Below $40

Quote:
Canadian heavy crude traded below $40 a barrel for the first time in five years just as surge of new projects are scheduled to start operation.

A total of 14 new oil sands projects are scheduled to start next year with a combined capacity of 266,240 barrels a day, according to data published by Oilsands Review. That’s 36 percent more than was started in 2014.
Quoting Pellegrine (Reply 113):
What is this incessant obsession with "breaking OPEC"?

No obsession - just reporting what is reported in the news. I guess the world has an 'obsession'...   

The Relentless Production of Shale Oil Is Breaking OPEC’s Neck

Why and How We Should Break OPEC Now

Breaking OPEC’s Grip
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Pellegrine
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 16, 2014 10:53 pm

Quoting casinterest (Reply 118):
However we have wild price swings to the 100 + range the past 10 years because it has benefitted OPEC in the absence of clear alternatives to OPEC oil supply Now that clear alternatives have arrived

Oil was stable over the past 2 years around $100/bbl actually.

Quoting casinterest (Reply 118):
Less capex and less drilling will eventually determine if the correction is overdone or not.

It's already happening in the Bakken:

http://www.cnbc.com/id/102265279

And many cos are cutting capex 20%+ for 2015. Production hit won't come til 2016 really though. Oil price many time lags the true supply/demand situation. Oversupply was there for many weeks before the $ started falling.

Quoting planemaker (Reply 128):
And oil sand production doesn't just continue but expands: Oil Sands Output Rises as Canadian Crude Falls Below $40

I mean come on. Both you and I know that the investment is already in the ground, so there is no choice but to go forward. Western companies don't sink billions in investment and then shut-in wells (or mining/digging in this case) unless there is a severe problem. They're going to produce flat out and pay off debt. That doesn't mean the level of investment will continue, nor the level of production. It isn't. Production always lags investment.

Quoting planemaker (Reply 128):
No obsession - just reporting what is reported in the news. I guess the world has an 'obsession'...

The Relentless Production of Shale Oil Is Breaking OPEC’s Neck

Why and How We Should Break OPEC Now

Breaking OPEC’s Grip

It's really stupid rags trying to sell stories based on ignorant nationalism. People need to stop being so nationalistic. Oil is globally fungible.

What is "good for OPEC" is good for the small private US oil company pumping 200 barrels a day out of stripper wells.

A lot of the sentiment that "scary foreign people control a critical resource" is misplaced. Saudis, Kuwaitis, and Emiratis are America's best friends. And like the UAE Minister said recently, they don't care if it goes to $40/bbl. (Because they're smart enough to know it can't possibly stay there over the long term.)
We fly JETS, we don't fly donkeys. Citizenship/Residence::: Washington DC, US; Vaud, CH; Providenciales, TCI (hence my avi)
 
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casinterest
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RE: Crude Falls Below Saudi Break-even Price

Tue Dec 16, 2014 11:00 pm

Quoting Pellegrine (Reply 129):
Oil was stable over the past 2 years around $100/bbl actually.

Not really. If it crashed this fast, that $100/bbl was stimulating too much production.

Quoting Pellegrine (Reply 129):
It's already happening in the Bakken:

http://www.cnbc.com/id/102265279

And many cos are cutting capex 20%+ for 2015. Production hit won't come til 2016 really though. Oil price many time lags the true supply/demand situation. Oversupply was there for many weeks before the $ started falling.

But that CAPEX may not affect the wells that are already in place providing the increased demand. 100 dollars may be a long ways out again, and 55 dollars may be the bottom, but somewhere in between is the real price balance point, and the market is currently seeking that balance.

Quoting Pellegrine (Reply 129):

What is "good for OPEC" is good for the small private US oil company pumping 200 barrels a day out of stripper wells.

Not necessarily. especially, when what is "Good for Opec" causes a whole bunch of folks to jump into the game and overproduce, causing it to be bad for all involved.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 7:16 am

Quoting Pellegrine (Reply 129):
I mean come on.

Exactly, come on! It just shows how awash with oil the world is! 
Quoting Pellegrine (Reply 129):
It's really stupid rags trying to sell stories based on ignorant nationalism.

Ya, Bloomberg is a "really stupid rag".   

Quoting Pellegrine (Reply 129):
People need to stop being so nationalistic.

It is simple economics... nothing about nationalism. 
Quoting Pellegrine (Reply 129):
A lot of the sentiment that "scary foreign people control a critical resource" is misplaced.



No, they are not "scary"... just from a different century. Take oil $ away from them and quickly return to that century.

Quoting Pellegrine (Reply 129):
And like the UAE Minister said recently, they don't care if it goes to $40/bbl.

Exactly... the UAE gives a rats a$$ about the other OPEC members (and of course not to mention Iran). OPEC is having a "civil war"... too many member states need oil price way above tar sand and shale profitability...

Quoting Pellegrine (Reply 129):
(Because they're smart enough to know it can't possibly stay there over the long term.)

  

Quoting casinterest (Reply 130):
Not really. If it crashed this fast, that $100/bbl was stimulating too much production.

It was over $110 for most of the period.

Quoting casinterest (Reply 130):
but somewhere in between is the real price balance point,

And OPEC is screwed coz most member states need +$100 to survive.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 7:31 am

Quoting planemaker (Reply 131):
And OPEC is screwed coz most member states need +$100 to survive.

While many may be, some, the most important producers like Kuwait, UAE and Saudi Arabia, don't absolutely need such a high price point. They may prefer it to be able to fulfill their national agenda as they desire but their debt is under control and their cost to pump it from the ground and get it to market is very low. So they can pump and make money for a sustained period of time at a very low price factor (from what I have seen it hovers somewhere around $40 per bbl to be able to function as the petronations they are). Again this is just the key OPEC nations, not all of them. The other have significant debt issues and infrastructure costs that preclude being able to support such a low price (i.e.: $40) for a significant amount of time without causing a crisis of some type.

I still think the price will stabilize at around $60-$65 in the coming year with current conditions but we will have to wait and see what actually happens.

Tugg

[Edited 2014-12-16 23:45:53]
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
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Kiwirob
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 10:09 am

Quoting Tugger (Reply 132):
some, the most important producers like Kuwait, UAE and Saudi Arabia, don't absolutely need such a high price point.

Norway's an important producer, they need Brent crude above $70.
 
offloaded
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 11:16 am

$184 for Libya? That sounds ridiculous. There are only 6 million of them. Maybe when South Africa returns the billions Gaddafi hid down there they won't need such a high oil price.   
To no one will we sell, or deny, or delay, right or justice - Magna Carta, 1215
 
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casinterest
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 3:23 pm

Quoting planemaker (Reply 131):
It was over $110 for most of the period.

Yeah, but if you actually look back to 2009 and forward to now. Oil fluctuated at a 70-110 range, and fracking was still growing. Geopolitical issues and the old days of OPEC helped influence higher market shares. It has only been in the last year where a lot of Geopolitical issues have been lessened and the supply of oil has tilted to new locals that the panic began. There are a lot of unknowns, but I think Fracking and tar sands at 70are profitable, and I think that the Market reaction right now may be overdone, but a necessary readjustment.

Quoting planemaker (Reply 131):

And OPEC is screwed coz most member states need +$100 to survive.

They are not screwed. Most of them have a reserve fund, and can withstand months if not years at a lower price. However their will have to be adjustments to their expectation and budgets going forward. It's not like $100 oil has been a magic number for years. They use to have to live off of 30 dollar oil not so long ago.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain
 
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Tugger
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 3:38 pm

Quoting KiwiRob (Reply 133):
Norway's an important producer, they need Brent crude above $70.

Only to support their social funding elements, not to pump the oil/energy from the ground. A notions social needs that are funded by their oil sales are not the concern of the rest of the market.

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 4:15 pm

Quoting Tugger (Reply 132):
(from what I have seen it hovers somewhere around $40 per bbl to be able to function as the petronations they are).

According to the the chart above, the minimum is $77 for Qatar in order to balance their budget. Of course, several of them have sizable sovereign wealth funds that they can draw upon to balance their current budgets but unless oil gets back up to over $100 they are eventually screwed... Venezuela already... Iran a lot longer.

Quoting casinterest (Reply 135):
They are not screwed.

I was referring to OPEC the organization, not the individual countries... though many of them are screwed - it is just a matter of time as I alluded to above. OPEC can no longer dictate the oil markets.

Quoting casinterest (Reply 135):
They use to have to live off of 30 dollar oil not so long ago.

Didn't Abu Dhabi bail out Dubai with billions not so long ago? Try getting them to live off of $30 oil now... let alone the +$100 that most of them need.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Kiwirob
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 5:50 pm

Quoting Tugger (Reply 136):
Only to support their social funding elements, not to pump the oil/energy from the ground. A notions social needs that are funded by their oil sales are not the concern of the rest of the market.

The govt doesn't use the oil revenue much at all, what the price drop has done is stop investment on the Norwegian continental shelf and driven the oil companies operating in Norway to fire over 7000 employees. The krone has also sunk to it's lowest rate in years, level with the Swedish krona which is hasn't been in decades.

To cap it all off the price of a litre of gas still hasn't dropped!

Quoting planemaker (Reply 137):
Of course, several of them have sizable sovereign wealth funds that they can draw upon to balance their current budgets but unless oil gets back up to over $100 they are eventually screwed

This is also true for Norway.
 
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einsteinboricua
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 6:08 pm

Quoting casinterest (Reply 135):
They use to have to live off of 30 dollar oil not so long ago.

I think oil at $80-$100 was overpriced. They lived off of $30 oil, but $30 in the 70s isn't worth the same in the 10s. A more reasonable price is the $55-$65 range.

When oil started going up, it was due to perceived unrest and wars. The Iraq War is no more (save for ISIS in the north and because they're using oil to finance their operations I doubt they'll risk putting that supply in jeopardy. This could also be a way to reduce ISIS's leverage by making the black market oil less expensive); Libya and Iraq are pumping as we speak (rather than a trickle); shale oil and reduced consumption by the US...this bubble needed to deflate a long time ago.
"You haven't seen a tree until you've seen its shadow from the sky."
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Wed Dec 17, 2014 6:43 pm

Quoting einsteinboricua (Reply 139):
They lived off of $30 oil, but $30 in the 70s isn't worth the same in the 10s. A more reasonable price is the $55-$65 range.

Plus, their populations have expanded and their social spending has matched that growth. Can't put the genie back in the bottle now.

Quoting einsteinboricua (Reply 139):
shale oil and reduced consumption by the US...this bubble needed to deflate a long time ago.

And continued demand destruction... it isn't like we're going to switch back to fossil fuels. Even Boeing is getting the green bug....  
.
Boeing to replace fossil-fuel energy at Washington factory where it assembles 737 jetliners

Quote:

RENTON, Wash. — Boeing said Tuesday it plans to buy renewable energy credits to replace fossil-fuel power at the factory in Washington state where it assembles its 737 commercial airplanes.

The aerospace company and the utility, Puget Sound Energy, said the plan will move the Renton factory near Seattle toward an all-renewable energy mix.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Pellegrine
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 18, 2014 3:17 am

Quoting planemaker (Reply 131):
Ya, Bloomberg is a "really stupid rag".

Jajaja, I trade on a level 2 Bloomberg terminal. Do you even know what that is? I summed up your argument in two words...ignorant nationalism...because that's exactly what it is. OPEC isn't going away, and it doesn't even matter either way whether they're here or not.

News organizations publish stories to sell. Nationalism sells to around half of Americans.

Your graphic is really silly. Because countries like Algeria and Nigeria have been doing perfectly fine in their own developing ways, and oil hasn't been around $120-130/bbl for any sustained period of time. Now if the IMF is shooting pie in the sky numbers (and ruining countries), well that's what they're known to do.

And guess what? I have a few far more detailed graphics for you:





There is no way current supply can last beyond 2015-6 at US$55-60/bbl. Especially the way tight oil (fracked) wells decline...anywhere from 3x to 20x+ faster than conventional oil wells.
We fly JETS, we don't fly donkeys. Citizenship/Residence::: Washington DC, US; Vaud, CH; Providenciales, TCI (hence my avi)
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Thu Dec 18, 2014 6:34 am

Quoting Pellegrine (Reply 141):
Your graphic is really silly.

First you say Bloomberg is "a really stupid rag"... now you say the chart by the IMF and Deutsche Bank "is really silly"... you've got a better career in stand-up than "trading"!

Even funnier, you don't even comprehend the chart!   

Quoting Pellegrine (Reply 141):
And guess what? I have a few far more detailed graphics for you:

Oh, great, a self proclaimed "trader" that can only supply a chart with costs from mid-2011.   

I guess is why you are so off the mark with your prognostications...

Quoting Pellegrine (Reply 31):
If Saudis want $100/bbl oil, they'll get it
Quoting Pellegrine (Reply 27):
I believe they will cut production moderately.

But, then again, you believe that Venezuela has an oil policy stretching out many years....   

Quoting Pellegrine (Reply 97):
most of the current members have oil policy stretching out many years, including Venezuela.

.
.

Quoting Pellegrine (Reply 141):
There is no way current supply can last beyond 2015-6 at US$55-60/bbl.

Obviously you don't "trade" for an oil company...

Quote:
In the U.S., Exxon spent an average of $12.72 to extract a barrel of oil last year, its cheapest operating region aside from Asia and Europe, company figures showed. Some operators have even lower costs: Continental Resources Inc. (CLR) spends about 99 cents to pump each barrel from its 1.8 billion-barrel discovery known as the South Central Oklahoma Oil Province, or SCOOP.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
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Pellegrine
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 5:43 am

Quoting planemaker (Reply 142):
First you say Bloomberg is "a really stupid rag"... now you say the chart by the IMF and Deutsche Bank "is really silly"... you've got a better career in stand-up than "trading"!

Even funnier, you don't even comprehend the chart!

Tell me what I can't comprehend, because that is no graph that anyone in the industry would ever use. It's a graphic for public media consumption.

Quoting planemaker (Reply 142):
Oh, great, a self proclaimed "trader" that can only supply a chart with costs from mid-2011.

I guess is why you are so off the mark with your prognostications...

Again, you can't have it both ways. Costs for US producers aren't going to collapse, and costs for Mid East producers skyrocket. The budget issue doesn't matter as much. It's a talking point for Western media.

The other chart is projected costs based on current data.

Quoting planemaker (Reply 142):
But, then again, you believe that Venezuela has an oil policy stretching out many years....

Every oil exporter does. It shouldn't be surprising to you.

Quoting planemaker (Reply 142):
Obviously you don't "trade" for an oil company...

Obviously you don't "comprehend" very well. You don't know who I trade for. Why don't you tell me how many barrels SCOOP pumps per day "at $0.99/bbl cost". SCOOP produced 36,346 bbl/day for CLR in 3Q '14. Yeah, that's a whole lot of oil for CLR, Oklahoma, and the USA.

Meanwhile, those countries in that graph pump their entire production at those costs.
We fly JETS, we don't fly donkeys. Citizenship/Residence::: Washington DC, US; Vaud, CH; Providenciales, TCI (hence my avi)
 
planemaker
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 6:10 am

Quoting Pellegrine (Reply 143):
Tell me what I can't comprehend, because that is no graph that anyone in the industry would ever use. It's a graphic for public media consumption.

It is pointless to try to rationally discuss something with you when you can't even understand a basic chart... and because you can't understand it you slag it... like you did Bloomberg.

Quoting Pellegrine (Reply 143):
Again, you can't have it both ways.

Using a chart from mid-2011 doesn't cut it!

Quoting Pellegrine (Reply 143):
Every oil exporter does. It shouldn't be surprising to you.

It is utterly ridiculous to state that Venezuela has an oil policy stretching out many years!   

Quoting Pellegrine (Reply 143):
You don't know who I trade for.

You can claim anything you want but the proof is in the pudding. Anyone that states that Venezuela has an oil policy stretching out many years... or that If Saudis want $100/bbl oil, they'll get it... or that they were going cut production... obviously isn't a good trader.   
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
aircatalonia
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 10:54 am

I'm interested to see how the oil industry flights such as SK951 will perform in this climate. With lower revenues will they look for cheaper alternatives or will cheap oil make these all-business flights even more profitable?

[Edited 2014-12-19 02:55:37]
 
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Kiwirob
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 1:20 pm

Quoting aircatalonia (Reply 145):
I'm interested to see how the oil industry flights such as SK951 will perform in this climate.

10,000 oil and gas workers have been laid off in Norway over the past month or so, many engineers and managers not just the muscle offshore, so the pool for people using the flight has somewhat dried up IMO.

http://www.energypost.eu/oil-price-c...ening-demise-norways-oil-industry/
 
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casinterest
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 4:48 pm

Quoting KiwiRob (Reply 146):

10,000 oil and gas workers have been laid off in Norway over the past month or so, many engineers and managers not just the muscle offshore, so the pool for people using the flight has somewhat dried up IMO.

Things are going as they should in a market where prices are going way down. The Supply is still going to be there for the future when the numbers folks determine it will be profitably to rehire folks.

Quoting Pellegrine (Reply 143):
Meanwhile, those countries in that graph pump their entire production at those costs.

Which is why the prices have been over inflated for the last few years. They can pump cheaper, but their competition was not as present as it has become. The time to get lean and mean has arrived.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain
 
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Kiwirob
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 6:51 pm

Quoting casinterest (Reply 147):
Things are going as they should in a market where prices are going way down.

Still doesn't help the 10,000 people and their families who have just lost their jobs. People who are earning 800,000 to 1,000,000 NOK on average, it's a lot of lost tax revenue for a small country like Norway and a lot of highly paid people to absorb into other industries.
 
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casinterest
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RE: Crude Falls Below Saudi Break-even Price

Fri Dec 19, 2014 6:55 pm

Quoting KiwiRob (Reply 148):
Still doesn't help the 10,000 people and their families who have just lost their jobs. People who are earning 800,000 to 1,000,000 NOK on average, it's a lot of lost tax revenue for a small country like Norway and a lot of highly paid people to absorb into other industries.

Not that it isn't sad for the individual folks, but that is nothing compared to what I saw in the US tech industry in 2001-2002, and 2008-2009, It is the market correcting itself, and as I said above, I think a lot of the price drop has been a tad overdone.
Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did..So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.--Mark Twain

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