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Petr Message Board

docjoe999 3 posts  |  Last Activity: May 22, 2014 3:15 AM Member since: Dec 23, 1999
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  • Reply to

    update on the oil market

    by docjoe999 May 22, 2014 3:05 AM
    docjoe999 docjoe999 May 22, 2014 3:15 AM Flag

    In addition to the shale oil technology being adopted by the rest of the world, there have been major advances in offshore drilling. Unless prices cater, the U.S. producing a million bpd more oil every year is likely to keep happening and other countries will be adding to their production as well.

    On the demand end, world demand is barely up despite central banks cranking up the money presses to full capacity. Only thing that may get demand higher is lower oil prices.

    Finally, you have the dollar. Only against they yen is the dollar fairly valued. The big rival to the dollar, the Euro, is priced at ridiculous levels, and the reason for that is the Fed has been pumping dollars into European banks to keep the dollar lower so our exports are cheaper than Europe's.

    Outside of continued chaos in the OPEC nations like Iraq, Iran, Venezeula, and Libya, there is nothing positive. The latest scare is in Russia-Ukraine, but there is zero indication Russian oil will be cut off from the West by Ukraine. Zero indication of it.

  • Maybe there are some old timers who still rememeber my posts. I have been working more and checking on the market much less than I was. Everything that I had said about world oil supply and demand has come true with three notable exceptions: Libya, Iraq, and Iran.

    U.S. oil production is exploding, and the rest of the world has yet to adopt shale oil production, so the long term outlook for the price of oil may be the most abysmal at any time in the last 50 years. U.S. production was down to 5 million bpd on average in 2008 when prices briefly peaked and then were hammered down. By 2011, production got up to about 5.6 million bpd, but since then production has soared by nearly a million bpd year after year. The U.S. produced 8.4 milion bpd last week.

    And the U.S. has gone from importing 10 million bpd from 2004 to 2010 to importing about 5.6 million bpd as of last week. Meanwhile, overall world demand has been tepid. Even mightly China has seen overall demand for oil be flat for 2 years.

    Anyone who believes in peak oil now is a fool as are the idiots thinking Chinese demand would continue growing unabated, so how come gas is still $3+ a gallon?

    Four words: Obama, the Fed, Libya, Iraq, and Iran. Because of Obama's bone headed sanctions against Iran, nearly a million bpd of oil has been kept off the market. No one is talking about Iraq, but they should be. Truth is production there is the same now as it was under Sadam. Libyan production is in the toilet, and it is but another example of the U.S. winning the war but not the peace. Production is now lower than it was when the Libyan revolution was going on, but it is not in the news. I don't know how people in Libya are not starving given that 90% of all of Libya's exports were from oil and production has gone from 1.6 mbpd to 0.3 mbpd. The Libyans probably are starving but our media is not reporting it.Thanks to the Fed, people are fleeing the dollar and have looked to put money in gold and to a lesser extent oil.

    Sentiment: Strong Sell

  • docjoe999 docjoe999 May 22, 2014 2:38 AM Flag

    Nah, I am still short and getting killed. This administration and the Fed have done me in. Musk and the other short term guys were right, and I was wrong. What is that phrase? The market can be irrational longer than you can be solvent. What I realized though is that building a business where I generate my own income and have control over it is far better than investing in a rigged market with often corrupt managements and board of directors. At least now I control my own destiny income wise.

    Maybe I would be singing a different tune if things were going better, but things don't make sense to me now. I underestimated how ruthlessly the fed would inject money into the economy to get prices higher and how so many would completely ignore the long term. You ask people how long can the governments of the world print money to pay their bills, and everyone acknowledges it is a problem, but they buy stocks and bonds because they are going higher. Value is out, and kissing government's bums are in. Point is that this money spraying completely decimated my value based models. How in the world did Portuguese and Greek bonds go up in value? How is it that the Euro has not collapsed? The one word answer is money printing, and I was a fool to think people would see the long term problems with it instead of piling on for short term gains.

    So you keep hearing about how great things are, but I don't personally see it, and anyone who dares say otherwise will be off the finanical news channels in a second.

    As for PBR, I wouldn't touch it with a 100 foot pole. Its true market value is zero. The pols will always put the Brazilian worker and government ahead of the investors. Once things go South in the oil market, PBR will start losing money and investors won't even be getting dividends. Everyone was afraid of losing money in Brazil in 2003 and no one is now.

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