Oil is opening at $81/bbl this morning. It has made quite a run with little news.
The median price forecasts of analysts surveyed by Bloomberg yesterday:
2011 Forecast:
Oil: $85
NG: $5.25
2012 Forecast:
Oil: $94
NG: $5.50
What I'm using in my forecast models for 2011:
Oil: $80
NG: $4.50
Dan
Oil and Gas Prices
Oil and Gas Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil and Gas Prices
Eight Reasons to Buy Oil
By Christian A. DeHaemer | Friday, October 1st, 2010
Sweet, sweet crude is breaking out…
1. Breakout
The price of oil has broken out of its short-term consolidation pattern. Time will tell if we can hit a new high above $84, but the chart suggests we are going up. The Moving Average Convergence Divergence (MACD) has crossed over (albeit, a week signal above the center line).
2. Ecuador coup
There are a number of articles out today that suggest that a coup d'état in Ecuador has pushed up the price of oil. Ecuador is a member of OPEC. The country produces 470,000 bpd of crude a day and ships most of it to the United States.
3. China buying spree
In other bullish news for crude, the Chinese oil firm Sinopec is buying the Spanish oil company Repsol for $7.1 billion for a 40% stake in a Brazilian energy project. In other words, the Chinese commodity buying spree continues.
4. U.S. GDP growth
Others are pointing to the fact that revised figures from the U.S. Commerce Department showed a 1.7% GDP growth in the second quarter — up a point from the same estimate issued last month.
5. More jobs, more business
There have also been government reports this week that showed that business activity in the U.S. unexpectedly accelerated, and the ranks of the unemployed are thinning.
6. Stock market up
Furthermore, the S&P500 rose 8.8% in September — its best September in 70 years!
The stock market is a leading indicator. Obviously, investors are looking out six months and think things will be better, demand will be up, and the business cycle will return to expansion.
7. Supplies are falling
According to the Energy Department, supplies of crude oil fell 475,000 barrels to 357.9 million last week. Gasoline stockpiles tumbled 3.47 million barrels to 222.6 million. This was the biggest decline since Oct. 9, 2009.
On the flip side, demand picked up... Consumption of gasoline jumped 6.1 percent last week to 9.38 million barrels a day — the biggest one-week increase since Feb. 19.
8. The dollar is falling
The Flight to Risk
Over the past year, investors afraid of risk bought the dollar in a “flight to safety."
They accepted almost zero percent interest rates on a fiat currency backed by tremendous debt and unfunded entitlements as far as the eye can see…
I’m not sure why investors see the dollar and U.S. Treasury bonds as a safe investment to flock to in times of international tribulation, but they do. Tradition, I guess.
But I digress. The point is as the world economy is percolating off the bottom, investors are seeking out greater returns.
Since mid-June, you see a “flight to risk.” UUP is an ETF that goes up at twice the rate for the U.S. dollar against a basket of currencies.
As the dollar falls, prices of things that are priced in dollars and yet have intrinsic value — such as oil, food, gold, copper — tend to go up in price.
And judging by the chart above, the dollar could fall a bit more before we get a bounce.
Buy gold, buy oil, buy uranium…
Sincerely,
Christian DeHaemer
Energy & Capital
By Christian A. DeHaemer | Friday, October 1st, 2010
Sweet, sweet crude is breaking out…
1. Breakout
The price of oil has broken out of its short-term consolidation pattern. Time will tell if we can hit a new high above $84, but the chart suggests we are going up. The Moving Average Convergence Divergence (MACD) has crossed over (albeit, a week signal above the center line).
2. Ecuador coup
There are a number of articles out today that suggest that a coup d'état in Ecuador has pushed up the price of oil. Ecuador is a member of OPEC. The country produces 470,000 bpd of crude a day and ships most of it to the United States.
3. China buying spree
In other bullish news for crude, the Chinese oil firm Sinopec is buying the Spanish oil company Repsol for $7.1 billion for a 40% stake in a Brazilian energy project. In other words, the Chinese commodity buying spree continues.
4. U.S. GDP growth
Others are pointing to the fact that revised figures from the U.S. Commerce Department showed a 1.7% GDP growth in the second quarter — up a point from the same estimate issued last month.
5. More jobs, more business
There have also been government reports this week that showed that business activity in the U.S. unexpectedly accelerated, and the ranks of the unemployed are thinning.
6. Stock market up
Furthermore, the S&P500 rose 8.8% in September — its best September in 70 years!
The stock market is a leading indicator. Obviously, investors are looking out six months and think things will be better, demand will be up, and the business cycle will return to expansion.
7. Supplies are falling
According to the Energy Department, supplies of crude oil fell 475,000 barrels to 357.9 million last week. Gasoline stockpiles tumbled 3.47 million barrels to 222.6 million. This was the biggest decline since Oct. 9, 2009.
On the flip side, demand picked up... Consumption of gasoline jumped 6.1 percent last week to 9.38 million barrels a day — the biggest one-week increase since Feb. 19.
8. The dollar is falling
The Flight to Risk
Over the past year, investors afraid of risk bought the dollar in a “flight to safety."
They accepted almost zero percent interest rates on a fiat currency backed by tremendous debt and unfunded entitlements as far as the eye can see…
I’m not sure why investors see the dollar and U.S. Treasury bonds as a safe investment to flock to in times of international tribulation, but they do. Tradition, I guess.
But I digress. The point is as the world economy is percolating off the bottom, investors are seeking out greater returns.
Since mid-June, you see a “flight to risk.” UUP is an ETF that goes up at twice the rate for the U.S. dollar against a basket of currencies.
As the dollar falls, prices of things that are priced in dollars and yet have intrinsic value — such as oil, food, gold, copper — tend to go up in price.
And judging by the chart above, the dollar could fall a bit more before we get a bounce.
Buy gold, buy oil, buy uranium…
Sincerely,
Christian DeHaemer
Energy & Capital
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil and Gas Prices
Dan, if I saw correctly, RayJames has recently lowered their estimate of average '11 oil price to $80 (from $90 I believe). If you still get their stuff, I was wondering if you have the report in which they made this change, and if so, could you paste up the exec. summary of it, thanks.
Re: Oil and Gas Prices
It will take more than this to slow Chinese growth. For the good of our nation's economy, I want oil prices to drift higher. These 10% jumps send gasoline and home heating oil prices higher. That hurts the workers and the unemployed that are getting hammered by this extended jobless recovery. If oil holds over $80/bbl the Sweet-16 will be just fine. - Dan
China rate increase sends oil lower
China raised interest rates, the dollar strengthened and oil prices fell.
Jonathan Fahey and Chris Kahn, AP Energy Writers, On Tuesday October 19, 2010, 11:55 am
NEW YORK (AP) -- Oil prices fell about 2 percent Tuesday after China surprised markets by raising interest rates in an attempt to cool its red-hot economy.
Benchmark oil for November delivery was down $1.78, or 2 percent, to $81.38 a barrel on the New York Mercantile Exchange.
Investors had been pushing oil prices higher since the U.S. Federal Reserve indicated in late August that it's prepared to pour more money into the nation's economy to spur growth. That led to a steep weakening of the dollar. Because oil is priced in dollars, when the dollar falls, oil gets cheaper for holders of foreign currency, so they buy more oil and send prices higher.
The Chinese rate increase of 0.25 percent, its first such move in nearly three years, had the effect of strengthening the dollar, and investors sent prices of crude oil, gasoline, and heating oil lower. They also bailed out of other commodities like gold.
"It took the wind out of the sales of the oil market," said Phil Flynn, senior energy analyst at PFGBest in Chicago. "It gave the dollar some momentum and commodity traders moved for the exits."
The dollar rose 1.34 percent against an index of foreign currencies.
Oil has been trading in concert with the U.S. stock market recently, and that trend continued. The Dow Jones Industrial Average lost 114 points, or 1 percent, in morning trading.
Gasoline prices fell even more sharply than oil, nearly 3 percent to about $2.09 cents a gallon. Gasoline prices had been pushed higher with oil prices, and also because strikes at oil refineries in France had made investors nervous about supply disruptions.
Though strikes continued Tuesday, concerns over supply disruptions were overwhelmed by the effects of the rising dollar.
Gasoline pump prices were flat overnight at a national average of $2.829 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 9.8 cents more expensive than a month ago and 26.5 cents higher than a year ago.
Investors have pushed oil prices higher in spite of abundant supplies in the U.S. in part because of expected demand from China's growing economy. "If you start to raise interest rates in China and their economy slows, then global inventories suddenly look higher," said Flynn.
An oil supply report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Wednesday.
"High oil inventories combined with sluggish demand conditions in most advanced economies are expected to keep the oil market in surplus over the rest of 2010," said National Australia Bank, which forecasts crude will average $78 a barrel in the fourth quarter.
Heating fell 5 cents to $2.2289 a gallon. In London, Brent crude fell $1.69 to $82.68 a barrel on the ICE Futures exchange.
Natural gas, on the other hand rose about 2 percent, to $3.497 per thousand cubic feet. Natural gas is insulated by global supply and demand trends because so much is produced domestically. High supplies have kept prices relatively low. Analysts say investors have been selling gas when oil prices go up, and are now buying as oil is falling.
China rate increase sends oil lower
China raised interest rates, the dollar strengthened and oil prices fell.
Jonathan Fahey and Chris Kahn, AP Energy Writers, On Tuesday October 19, 2010, 11:55 am
NEW YORK (AP) -- Oil prices fell about 2 percent Tuesday after China surprised markets by raising interest rates in an attempt to cool its red-hot economy.
Benchmark oil for November delivery was down $1.78, or 2 percent, to $81.38 a barrel on the New York Mercantile Exchange.
Investors had been pushing oil prices higher since the U.S. Federal Reserve indicated in late August that it's prepared to pour more money into the nation's economy to spur growth. That led to a steep weakening of the dollar. Because oil is priced in dollars, when the dollar falls, oil gets cheaper for holders of foreign currency, so they buy more oil and send prices higher.
The Chinese rate increase of 0.25 percent, its first such move in nearly three years, had the effect of strengthening the dollar, and investors sent prices of crude oil, gasoline, and heating oil lower. They also bailed out of other commodities like gold.
"It took the wind out of the sales of the oil market," said Phil Flynn, senior energy analyst at PFGBest in Chicago. "It gave the dollar some momentum and commodity traders moved for the exits."
The dollar rose 1.34 percent against an index of foreign currencies.
Oil has been trading in concert with the U.S. stock market recently, and that trend continued. The Dow Jones Industrial Average lost 114 points, or 1 percent, in morning trading.
Gasoline prices fell even more sharply than oil, nearly 3 percent to about $2.09 cents a gallon. Gasoline prices had been pushed higher with oil prices, and also because strikes at oil refineries in France had made investors nervous about supply disruptions.
Though strikes continued Tuesday, concerns over supply disruptions were overwhelmed by the effects of the rising dollar.
Gasoline pump prices were flat overnight at a national average of $2.829 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 9.8 cents more expensive than a month ago and 26.5 cents higher than a year ago.
Investors have pushed oil prices higher in spite of abundant supplies in the U.S. in part because of expected demand from China's growing economy. "If you start to raise interest rates in China and their economy slows, then global inventories suddenly look higher," said Flynn.
An oil supply report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Wednesday.
"High oil inventories combined with sluggish demand conditions in most advanced economies are expected to keep the oil market in surplus over the rest of 2010," said National Australia Bank, which forecasts crude will average $78 a barrel in the fourth quarter.
Heating fell 5 cents to $2.2289 a gallon. In London, Brent crude fell $1.69 to $82.68 a barrel on the ICE Futures exchange.
Natural gas, on the other hand rose about 2 percent, to $3.497 per thousand cubic feet. Natural gas is insulated by global supply and demand trends because so much is produced domestically. High supplies have kept prices relatively low. Analysts say investors have been selling gas when oil prices go up, and are now buying as oil is falling.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil and Gas Prices
I will have a report on what UBS thinks on Thursday morning.
Oceanaire Restaurant
The Galleria, Houston, Texas
Wednesday, October 20th
6:00 P.M.
For Food, Fun & Energy
We are pleased to welcome
Nicole Decker, UBS Chief Energy Sector Analyst,
To speak about "The Future of Oil and Gas"
Why we believe oil prices will rise in 2011
North America natural gas prices: how low, how long?
Can the industry recover from the Gulf of Mexico oil spill?
What about investors?
Oceanaire Restaurant
The Galleria, Houston, Texas
Wednesday, October 20th
6:00 P.M.
For Food, Fun & Energy
We are pleased to welcome
Nicole Decker, UBS Chief Energy Sector Analyst,
To speak about "The Future of Oil and Gas"
Why we believe oil prices will rise in 2011
North America natural gas prices: how low, how long?
Can the industry recover from the Gulf of Mexico oil spill?
What about investors?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil and Gas Prices
Raymond James price forecasts for 2011:
$80 oil (WTI)
$4.25 gas (Henry Hub)
$80 oil (WTI)
$4.25 gas (Henry Hub)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil and Gas Prices
I thought the presentation by UBS was interesting. I really don’t agree at all with her long term oil price forecast of $65/bbl. I think she is ignoring the geopolitical risk premium that will stay in the oil price until the Iranian situation is resolved (ain’t going to happen anytime soon) and the inflationary period ahead. IMO OPEC is now totally in control of oil prices. They were clearly supporting $70 and now (due to the weaker US dollar) will raise their base price to $80/bbl. I think there is a lot more chance for us to see $100 before we see $65 for oil again.
I hope natural gas goes back to $7.00 but I don’t see that for at least two years. The old 6:1 ratio to the oil price is dead. Today we sit at 23:1.
I do think natural gas will average $4.50 next year (maybe this is just hope).
UBS top picks: WFT, DVN, HES and APC
I do like Devon and will take a look at that former Sweet-16 member. APC and HES have some issues in my opinion.
Here is another point of view.
These guys are good. See what they have to say about gas prices.
https://ghsecurities.bluematrix.com/doc ... a79280.pdf
For the first time since 1Q10, we are becoming more optimistic about natural gas prices in the future. It is our opinion that oil may be the best thing to happen to natural gas since the Natural Gas Wellhead Decontrol Act of 1989 was inked that deregulated natural gas prices. By this, we mean that the technology that generated an overabundance of natural gas is now migrating to potentially better economic unconventional oil reservoirs. Given the relative value per MMBtu, we believe it will be likely difficult for human, financial, and oilfield service assets to migrate back to natural gas drilling if these oily projects are economically viable. In other words, the mechanism for bursting the new gas bubble may now be in place as long as a disparity exists between U.S. natural gas prices and global crude prices. And, much like the early 1990s, it is not likely to be a one or two quarter fix. However, natural gas price recovery could occur in 2H11 if operators curb natural gas spending and there remains an increasing focus on liquids rich projects.
I hope natural gas goes back to $7.00 but I don’t see that for at least two years. The old 6:1 ratio to the oil price is dead. Today we sit at 23:1.
I do think natural gas will average $4.50 next year (maybe this is just hope).
UBS top picks: WFT, DVN, HES and APC
I do like Devon and will take a look at that former Sweet-16 member. APC and HES have some issues in my opinion.
Here is another point of view.
These guys are good. See what they have to say about gas prices.
https://ghsecurities.bluematrix.com/doc ... a79280.pdf
For the first time since 1Q10, we are becoming more optimistic about natural gas prices in the future. It is our opinion that oil may be the best thing to happen to natural gas since the Natural Gas Wellhead Decontrol Act of 1989 was inked that deregulated natural gas prices. By this, we mean that the technology that generated an overabundance of natural gas is now migrating to potentially better economic unconventional oil reservoirs. Given the relative value per MMBtu, we believe it will be likely difficult for human, financial, and oilfield service assets to migrate back to natural gas drilling if these oily projects are economically viable. In other words, the mechanism for bursting the new gas bubble may now be in place as long as a disparity exists between U.S. natural gas prices and global crude prices. And, much like the early 1990s, it is not likely to be a one or two quarter fix. However, natural gas price recovery could occur in 2H11 if operators curb natural gas spending and there remains an increasing focus on liquids rich projects.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group