Author Topic: oil market right now is 'unprecedented'  (Read 5214 times)

rcjordan

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oil market right now is 'unprecedented'
« on: August 09, 2015, 11:04:39 AM »
worth a read
Quote
Credit Suisse added that while Saudi Arabia is expected to be running a 20% deficit in 2015, the kingdom is likely to be able to afford a "price war" for the foreseeable future. 

Writing for The Telegraph earlier this week, Ambrose Evans-Pritchard cited analysts at Bank of America that said OPEC is "effectively dissolved."


http://www.businessinsider.com/the-new-structure-of-the-oil-market-2015-8

Mackin USA

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Re: oil market right now is 'unprecedented'
« Reply #1 on: August 09, 2015, 01:19:52 PM »
We are in a deflationary period where all commodities are trading LOWER

That is scary !!

https://en.wikipedia.org/wiki/Deflation#Deflationary_spiral
Mr. Mackin

ergophobe

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Re: oil market right now is 'unprecedented'
« Reply #2 on: August 10, 2015, 01:51:19 PM »
We are in a deflationary period where all commodities are trading LOWER

I guess you aren't tracking the price of commodities hit by the drought in California... nuts, for example, aren't trading lower. Probably not beef either. Granted food is a small part of the average family's budget and a small part of an industrial budget, but not ALL commodities are trading lower.

Mackin USA

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Re: oil market right now is 'unprecedented'
« Reply #3 on: August 10, 2015, 05:00:24 PM »
ergophobe:

You are correct FOOD is another issue.
Mr. Mackin

rcjordan

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Re: oil market right now is 'unprecedented'
« Reply #4 on: August 12, 2015, 01:02:26 PM »
The world's biggest oil producers are pumping like there is no tomorrow.
The result: Oil prices fell to $43.08 a barrel, a six-year low.

http://money.cnn.com/2015/08/11/news/economy/oil-prices-collapse-opec/

When all you have is a hammer, every problem looks like a nail.

Mackin USA

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Re: oil market right now is 'unprecedented'
« Reply #5 on: August 12, 2015, 03:02:13 PM »
Mr. Mackin

littleman

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Re: oil market right now is 'unprecedented'
« Reply #6 on: August 12, 2015, 04:51:08 PM »
Not too long ago we were all talking about peak oil and how the price would skyrocket. 
From 2008:
Here comes $500 oil


Now everyone is saying that supply is going to outpace demand for quite a while.  I bet the Saudis will slow down production once they feel like they've pushed enough companies to cap their drills.  Meanwhile there is global warming and what that is going to do to world demand.  I guess in theory peak oil may never happen as we switch away from fossil fuel.


rcjordan

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Re: oil market right now is 'unprecedented'
« Reply #7 on: August 12, 2015, 05:12:43 PM »
>switch away

Yeah, renewables are hot-hot-hot now.  But I believe I've read that ships account for about half the carbon.

http://jalopnik.com/the-largest-piston-engine-in-the-world-makes-people-loo-1480385814

(be sure to scroll down to see the crankshaft image)

Let me know when Maersk drops a few Tesla battery packs in to replace that.
https://en.wikipedia.org/wiki/W%C3%A4rtsil%C3%A4-Sulzer_RTA96-C

So, yeah, we see the oil (and coal) market destabilized now, but all the old tech -from container ships to daily beaters- kinda puts a bottom in it for a while.

littleman

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Re: oil market right now is 'unprecedented'
« Reply #8 on: August 12, 2015, 05:41:46 PM »
That's a great point, that engine is amazing btw.  I don't think anybody has actually made one, but every time oil climbs there is talk about modern sail ships for cargo -- I doubt it will happen unless there is some type of global carbon tax making it economically viable.

ergophobe

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Re: oil market right now is 'unprecedented'
« Reply #9 on: August 12, 2015, 06:22:17 PM »
I don't know as I would count on that LM.

Oil has a price bottom built in because of the extraction and refining cost. Batteries have a built-in bottom because of fabrication and materials costs. Etc.

What we're seeing is that price levels created by scarcity are giving way to price levels created by cost. Cheaper extraction methods, glut of oil, falling demand in China and falling alternative energy prices will push oil prices down for a while and we may see oil selling at below cost for a while, which makes alternative energy less attractive.

But nothing can sell below cost forever and the advantage new technologies have is they are much lower on the optimization curve. The big question is whether or not the climate goes past a tipping point before the technology does.