Oil Prices

[thriftyandboringinohio]

Let's talk oil prices (yes GRG55, I am look at you...).
Recall that we had convinced ourselves around here that the price of oil and the price of gold are tightly correlated.

Here's the EIA price outlook chart, now nearly a year old. It shows a surprising little jump in oil prices then a leveling off.
link to report https://www.eia.gov/outlooks/aeo/index.php

Well try as I might I can't get the image to show properly. Funny, it shows in my preview but not on the page. Oh well.
You can see it here

https://www.eia.gov/opendata/embed.p...&date_mode=all


The political effect of renewing sanctions on Iran might have an effect if they turn out to have real teeth.
Since the EIA present the analysis in constant dollars, the rising oil price should be real.


.
..

[dcarrigg]

Re: Oil Prices

I'm no grg55. Don't know what oil prices will do. Just chiming in to say they issued waivers to the Iran sanctions specifically for oil to every big country in Asia, & the Saudi response was to announce a slash in production.

[GRG55]

Re: Oil Prices

Whatever the official forecasts they won't be accurate. That's a given.

Earlier this year we had an interesting situation. The US$ exchange rate was increasing (e.g. favouring the US$) and oil prices, in US$ terms, were also rising significantly.

This kicked the legs out from underneath emerging market economies. With their across the board declining currency purchasing power the real price of oil skyrocketed for them. EM nations contain roughly 85% of world population, and in recent decades have, in aggregate, become a more important contributor to global economic growth.

I believe the price of oil in EMs is a more important contributor than the Trump Administration's trade spats to the current poor worldwide economic performance.

We are late in this expansion cycle. I would expect commodities to show their usual late cycle strength before we roll over into the next global recession. Despite the exemptions granted to select Iranian oil importers, or the increasingly volatile, desperate pronouncements from Saudi Arabia, one more oil price runup that contributes to tipping us all into recession should not surprise.

[Mega]

Re: Oil Prices

Very much my thoughts early this year...............i sold out my stocks
100% cash right now with some "Yellow stuff" just in case i hit hyper inflation or Labour gov.

Mike

[jk]

Re: Oil Prices

read this-

https://www.themacrotourist.com/post...11/13/chipper/

[touchring]

Re: Oil Prices

Whatever the official forecasts they won't be accurate. That's a given.

Earlier this year we had an interesting situation. The US$ exchange rate was increasing (e.g. favouring the US$) and oil prices, in US$ terms, were also rising significantly.

This kicked the legs out from underneath emerging market economies. With their across the board declining currency purchasing power the real price of oil skyrocketed for them. EM nations contain roughly 85% of world population, and in recent decades have, in aggregate, become a more important contributor to global economic growth.

I believe the price of oil in EMs is a more important contributor than the Trump Administration's trade spats to the current poor worldwide economic performance.

We are late in this expansion cycle. I would expect commodities to show their usual late cycle strength before we roll over into the next global recession. Despite the exemptions granted to select Iranian oil importers, or the increasingly volatile, desperate pronouncements from Saudi Arabia, one more oil price runup that contributes to tipping us all into recession should not surprise.

Thanks for sharing. Do you mean you expect one more run up in oil price?

[GRG55]

Re: Oil Prices

Thanks for sharing. Do you mean you expect one more run up in oil price?

Barring a global recession, yes.
And the current low oil prices materially reduce the probability of a global recession at this time.

[jk]

Re: Oil Prices

Barring a global recession, yes.
And the current low oil prices materially reduce the probability of a global recession at this time.

any guesses on the break-even for continued u.s. shale investments? if shale becomes uneconomic that will also hit the b.o.p.

[vt]

Re: Oil Prices

The cost of finding oil is being reduced annually by better technology.

On the other side of the cost equation don't forget EJ's comment that shale oil wells reserves are likely to be less than forecast, plus rising interest rates will
cause lenders to be reluctant to fund new wells.

Of course a recession may bring interest rates down and keep wells producing.

[touchring]

Re: Oil Prices

Barring a global recession, yes.
And the current low oil prices materially reduce the probability of a global recession at this time.

I read that Canadian oil sand is now for sale for like $11 a barrel. This works out to 7 cents per litre. How is it even possible to make any money out of this?

Any opportunity here to grab some oil sand stock in this adnormally?