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Topic: US Oil  (Read 635 times) previous topic - next topic

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US Oil
WTIC looking bullish on all TF's IMO.



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Re: US Oil
Reply #1
Oil supply in the US comes roughly half from shale formations and that is not good reservoir rock due to its very low permeability of high resistance to flow within the matrix rock. While horizontal drilling and hydraulic fracture treating open massive formation surface to the wellbore that gives the appearance of a good well because it results in a high initial production rate, eventually the oil has to flow through ever greater distances of reservoir rock to get to the wellbore. The result is the very steep decline rates identified in the linked article. While the reservoir characteristics I just detailed are mossing from the article, the rest is pretty complete. What this means is US oil independence is going to be short lived and with low oil production, one can expect higher prices. It is worth noting that the author of the linked article has published elsewhere in his blog that oil prices will drop with dwindling supplies and openly states supply and demand is replaced by cost to produce. That argument is easily refuted, but that is for another post.

https://srsroccoreport.com/trouble-at-mighty-exxonmobil-adds-record-number-of-shale-wells-in-the-permian-while-production-plateaus/

Re: US Oil
Reply #2
BO and retest
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Re: US Oil
Reply #3
Oil will hit 88 at some point.

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Re: US Oil
Reply #4
Based on the thinking in reply 1 above, oil will not likely stop going up at $88/bbl.

  • sn00p
  • [*][*][*][*]
Re: US Oil
Reply #5

Re: US Oil
Reply #6
Crude oil and oil producer stocks are taking it on the chin as a result of the coronavirus. The XOM chart below suggest the carnage is not over and news reports are not signaling an end in sight either. Oil and the stocks will rebound, but IMHO we need to see progress on the virus before there will be a meaningful bounce as government orders to slow its spread are crippling for the economy thus crippling for oil consumption. This logic extends to base metals in all probability.



Longer term share price is at the bottom of the 2 sigma channel but fundamentals suggest waiting to get in may be prudent and for information, dividend yield is over 6%:


Re: US Oil
Reply #7
I know I posted the oil chart somewhere more recently than this thread.  Here is what I've been looking at. Sorry for not putting it here sooner.


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  • ken
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Re: US Oil
Reply #8
I know I posted the oil chart somewhere more recently than this thread.  Here is what I've been looking at. Sorry for not putting it here sooner.



I wonder if it can make it to 10 bucks?

Re: US Oil
Reply #9
ashamsad asked me about WTIC and a few producers.
I am not an oil expert by any means. With Saudi Arabia and Russia having their spat right when demand was already low, it's very hard to determine how this will go. It seems to me that global demand was crushed, there was already a glut before the virus. I don;t see oil going higher in the longer term but it could continue it's bounce in the shorter term. Personally, I wouldn't be going long on any stocks until prices are at very huge discounts. Like 90% off of their highs.
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  • ken
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Re: US Oil
Reply #10
ashamsad asked me about WTIC and a few producers.
Personally, I wouldn't be going long on any stocks until prices are at very huge discounts. Like 90% off of their highs.


Just look at pump prices. Not a chance until the topping happens in America and businesses re-open. Energy then will continue to be consumed driving up prices. How much? Who knows.

Re: US Oil
Reply #11
On expectation the Chinese Coronavirus stimulus bill would pass, I sold weekly XOM puts with strikes at $25, $28. and fewer contracts at $32 and $34 thinking if I got the shares put to me I would write calls on them. For the bunch, I received just over 1.5% for the week on the money at risk.

I did the same put writing for GDXJ with strikes at $19. $24 $29,and $31, again receiving about 1.5% for the combined contracts. I bought some EQX with about half the premiums and will apply the other half to put writing next week.

Re: US Oil
Reply #12

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Re: US Oil
Reply #13
There is a lot of oil production that is not economic at these prices, including essentially all shale oil. I doubt oil goes too much lower as transportation costs from middle east subtracted off current prices leave the producers over there with precious little for their grease.

Re: US Oil
Reply #14
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