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Old 03-17-2016, 10:30 AM   #2021
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I get access to a lot of these forecasts at work. They're all garbage. Don't get me wrong, the reasoning these guys present seems to always make sense but it's all a completely fruitless exercise.

I haven't seen one that forecasts that this is the new norm but I think that's what I would believe the most.
Yeah that's the thing. A lot of these forecasts need to also include a disclaimer saying "If nothing changes then our forecast is valid".

Thing is.... There is always something that changes.

I doubt this is the new norm though, but I also doubt we'll ever see 100 oil again.
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Old 03-17-2016, 11:12 AM   #2022
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It's near impossible to predict these things, especially when the market is not entirely rational - prices continued to increase despite a clearly building supply glut.

At least we are seeing US production continue to decrease from a peak in July 2015 and with rig count down from a peak in Oct '14. So that's a positive trend.
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Old 03-17-2016, 11:16 AM   #2023
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It's near impossible to predict these things, especially when the market is not entirely rational - prices continued to increase despite a clearly building supply glut.

At least we are seeing US production continue to decrease from a peak in July 2015 and with rig count down from a peak in Oct '14. So that's a positive trend.
I believe that the market was being irrational previously because it was so focused on the short term inventory glut, and now is acting more rationally and realizing we could be in an undersupplied market as early as this year.

There is a clear change in market behaviour here, and I believe it's based on fundamentals, though the consensus is short squeeze or whatever. I've been pounding the drum on this pretty hard. Still not locking in gains from the 20s, I personally think we could be back at $50 pretty easily by year end.

But, I know nothing. Nobody knows. Only thing is that when you get these extreme levels of sentiment, either high or low, they tend to overshoot.
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Old 03-17-2016, 11:21 AM   #2024
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I believe that the market was being irrational previously because it was so focused on the short term inventory glut, and now is acting more rationally and realizing we could be in an undersupplied market as early as this year.

There is a clear change in market behaviour here, and I believe it's based on fundamentals, though the consensus is short squeeze or whatever. I've been pounding the drum on this pretty hard. Still not locking in gains from the 20s, I personally think we could be back at $50 pretty easily by year end.

But, I know nothing. Nobody knows. Only thing is that when you get these extreme levels of sentiment, either high or low, they tend to overshoot.
I think your right and we could possibly see it go higher this year.
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Old 03-17-2016, 11:23 AM   #2025
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I'm sure the last 10% move in oil and probably the 10% before that is due entirely to the us federal reserve decision yesterday.
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Old 03-17-2016, 11:38 AM   #2026
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It's due to this:
OPEC and non-OPEC producers including the top two exporters, Saudi Arabia and Russia, will hold talks on April 17 in Qatar over a plan to freeze output, increasing the likelihood of the first global supply deal in 15 years.

I believe all together, the worlds top producers amounting to 70% of global production are going to meet. They could make a difference, and that is why markets are reacting.
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Old 03-17-2016, 12:07 PM   #2027
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I'm sure the last 10% move in oil and probably the 10% before that is due entirely to the us federal reserve decision yesterday.
I think you are correct, the CAD dollar has appreciated almost 14% since mid January, $32.50 to $40.00 in real terms is like $32.50 to $36.00, exchange factored in.

I think the output freeze is not a major factor in most investors or speculators eyes, they freeze output at high levels but also expect some of their members to adding production and not participating. There credibility is weak at best.

Probably has more to do with the weakening US dollar (Fed Decisions) and the IEA's recent US production estimates of +/-8.5 million barrels per day by end of 2016. Down from +/-9.3 million year over year, and a peak of 9.6 million in June of 2015.
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Old 03-17-2016, 12:22 PM   #2028
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You can't really argue with the price action either. At exactly 2 pm Est uwti went from $23.90 to $27.50 ish today. I think the anticipation of the 2pm fed announcement started at the beginning of the day with a big gap up from $22. Before that the price actually went down a day after the news of the 17th meeting. But that's probably still an optimist factor.
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Old 03-17-2016, 12:31 PM   #2029
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Applying that kind of logic is a bit foolish, as that analysis is pretty mickey mouse given the seismic shift in declines and production profiles globally when comparing those historical periods.. Annual average reservoir declines are now more than 100% steeper than they were back then, owing to horizontal drilling and frac'ing.

Will be interesting to see how it plays out!

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I don't know if it's just finance people trying to be bullish/optimistic or that they are disconnected from it all...

But I definitely hear that all the time from industry people, that this is the new norm/new paradigm for the next decade (or two!).

Our company just posted this comparing 1985 to what is being forcast and how this is going to be a 20-year rut.

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Old 03-17-2016, 01:29 PM   #2030
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I don't know if it's just finance people trying to be bullish/optimistic or that they are disconnected from it all...

But I definitely hear that all the time from industry people, that this is the new norm/new paradigm for the next decade (or two!).

Our company just posted this comparing 1985 to what is being forecasted and how this is going to be a 20-year rut.

You just posted a 20 year prediction for the price of oil???

AND you criticized other peoples' predictions for being disconnected?

lol
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Old 03-17-2016, 01:47 PM   #2031
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Originally Posted by Hack&Lube View Post
I don't know if it's just finance people trying to be bullish/optimistic or that they are disconnected from it all...

But I definitely hear that all the time from industry people, that this is the new norm/new paradigm for the next decade (or two!).

Our company just posted this comparing 1985 to what is being forecasted and how this is going to be a 20-year rut.

Not trying to pick on you specifically Hack & Lube, but no wonder most of these companies can't turn a profit unless oil prices are criminally high.... They have no clue what the hell they're doing. Probably the same idiots that predicted that oil will be at $100 for the next century are now predicting $15 oil until the end of the millennium.
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Old 03-17-2016, 02:04 PM   #2032
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I don't buy into any forecast that puts this rut longer than 3-5 years. The replacement cost for a barrel is just too high now and demand growth hasn't stagnated significantly. I also don't buy into the bull#### about how producers have been able to reduce costs by 30-40% permanently. 30+% of production is uneconomical at these prices, there's no way this is a 20 year trough unless Saudi discovers two more Ghawars.
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Old 03-17-2016, 03:01 PM   #2033
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TransCanada announces US$13B deal to acquire Columbia Pipeline Group

http://calgaryherald.com/business/en...pipeline-group
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Old 03-17-2016, 06:12 PM   #2034
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Good time for the big Canadian oil players to acquire other companies.

Also, Canadian dollar is up to $.77 today against the greenback. yay!
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Old 03-17-2016, 06:14 PM   #2035
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Good time for the big Canadian oil players to acquire other companies.
Though they'll likely clean house as well.
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Old 03-21-2016, 08:22 AM   #2036
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Federal government defines ‘upstream emissions’ for proposed energy regulations

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The federal government has officially slapped a definition on “upstream emissions,” which are now being factored into all environmental reviews for major oil and gas projects.
Yup, a big middle finger to O&G. I was hoping it'd be industry wide and not so specific that it really can only affect O&G.
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Old 03-21-2016, 08:28 AM   #2037
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The worst part about all this is that we don't even have a good strong Premier to advocate for our province. Sad time to be an Albertan.
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Old 03-21-2016, 08:32 AM   #2038
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The estimate of upstream emissions for PNW LNG was cobbled together with the help of a Pembina Institute study. At least they used an unbiased and industry friendly source.
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Old 03-21-2016, 11:06 AM   #2039
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Quote:
Originally Posted by burn_this_city View Post
I don't buy into any forecast that puts this rut longer than 3-5 years. The replacement cost for a barrel is just too high now and demand growth hasn't stagnated significantly. I also don't buy into the bull#### about how producers have been able to reduce costs by 30-40% permanently. 30+% of production is uneconomical at these prices, there's no way this is a 20 year trough unless Saudi discovers two more Ghawars.
It's tough to find current info on Ghawar, but my personal conspiracy theory (maybe others have predicted this but I haven't seen it) is that the Saudi's are driving the price down enabling them to scoop up cheap reserves from failing companies in other parts of the world to replace the inevitability of Ghawar declining dramatically. Then, once complete, they announce Ghawar can't maintain it's 5MMbbl/day pace. We instantly go from oil surplus to deficit, the price of oil sky rockets, and they're set. I haven't been able to find evidence of this yet though .
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Old 03-21-2016, 11:42 AM   #2040
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It's tough to find current info on Ghawar, but my personal conspiracy theory (maybe others have predicted this but I haven't seen it) is that the Saudi's are driving the price down enabling them to scoop up cheap reserves from failing companies in other parts of the world to replace the inevitability of Ghawar declining dramatically. Then, once complete, they announce Ghawar can't maintain it's 5MMbbl/day pace. We instantly go from oil surplus to deficit, the price of oil sky rockets, and they're set. I haven't been able to find evidence of this yet though .
Their actions seem to suggest they think they'll have trouble selling the crude they can produce. They just broke up their Motiva joint venture with Shell, and kept the largest refinery from it instead of the higher margin chemicals business. Apparently they tried to buy the other refineries as well but Shell wouldn't sell. That suggests to me they're worried about finding a home for the crude they'll produce, not that they're trying to buy cheap barrels.
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