There is a lot of confusion and concern about were oil prices are heading.
Read: http://blogs.wsj.com/moneybeat/2014/09/ ... o-100-oil/
Keep in mind that IEA is expecting the global demand for oil to increase to close to 94 million bbls per day in the 4th quarter: http://omrpublic.iea.org/
September is a "soft month" for oil demand. As winter approaches, the demand for heating oil increases since 90% of humans live in the northern hemisphere and a lot of them still burn oil to heat their homes.
Crude Oil Prices
Crude Oil Prices
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices
Refineries operated at 93.9% of their capacity last week, 0.6 percentage points up from the week of August 29. Analysts were expecting a 0.33 percentage-point decline. As refineries enter into seasonal maintenance, analysts expect a lower operating rate.
Refinery maintenance
As the summer driving season has ended, refiners are scheduling maintenance for September and October as they transition to winter-grade fuel from summer-grade fuels.
As refineries demand less crude and while crude production continues to grow, WTI crude prices will be pressured.
The maintenance period will end in mid-October and demand will increase.
Refinery maintenance
As the summer driving season has ended, refiners are scheduling maintenance for September and October as they transition to winter-grade fuel from summer-grade fuels.
As refineries demand less crude and while crude production continues to grow, WTI crude prices will be pressured.
The maintenance period will end in mid-October and demand will increase.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices
Heard Dennis Gartman on CNBC call a bottom today in WTI and predicts the spread between Brent and WTI will close. Hope he is right.
Re: Crude Oil Prices
I do think we will see the bottom for WTI in September. This is a soft month for demand.
I also saw a report today that said strong U.S. dollar is impacting Brent more than WTI. It does make some sense.
I also saw a report today that said strong U.S. dollar is impacting Brent more than WTI. It does make some sense.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices
The quotes below are from one of the many newsletters I get. These are from one of the most respected analyst that I follow.
"Over the past five years US oil production has increased by 3.22 million barrels per day (bpd). In fact, nearly 84% of the global oil production increase over that time span took place in the US. The rest of the world lagged far behind the US in growing oil production, yet most of the demand growth has been taking place in developing countries." Keep in mind that since 2005 the U.S. and Canada are the only two countries with meaningful production increases. OPEC production is actually lower today than what it was in 2005.
"For long-term investors positioned in quality companies, the current dip toward $90/bbl isn't of huge concern. As long as US oil production can continue to advance at its recent pace, the price of oil will probably trade in a range of $100 +/- $15/bbl. Numerous oil companies will continue to be highly profitable at those prices -- particularly those that are growing their output and thus driving the US production increase."
"There is little risk in oil trading at $80/bbl for long if it reaches that low point, because marginal production will start to be shut in. Further, OPEC maintains significant power to move the world's oil markets, and the budgets of many OPEC countries are now dependent upon $100+ oil. Therefore, they will also move to ensure that oil prices don't remain depressed for long."
"The current correction in oil prices may be causing some angst for those with oil stocks in their portfolios, but long-term demand growth in developing countries will continue, and global oil production will struggle to keep pace. I have said for a few years that I expect the price of WTI to trade mostly between about $80/bbl and $120/bbl as long as US production continues to climb, but when prices do break out they will break to the high side."
"While there has been an overall correction in the energy sector as oil prices have declined, this has created some real bargains in the industry." I could not agree more. All of our Sweet 16 companies will do just fine if oil stays around $90/bbl.
"Over the past five years US oil production has increased by 3.22 million barrels per day (bpd). In fact, nearly 84% of the global oil production increase over that time span took place in the US. The rest of the world lagged far behind the US in growing oil production, yet most of the demand growth has been taking place in developing countries." Keep in mind that since 2005 the U.S. and Canada are the only two countries with meaningful production increases. OPEC production is actually lower today than what it was in 2005.
"For long-term investors positioned in quality companies, the current dip toward $90/bbl isn't of huge concern. As long as US oil production can continue to advance at its recent pace, the price of oil will probably trade in a range of $100 +/- $15/bbl. Numerous oil companies will continue to be highly profitable at those prices -- particularly those that are growing their output and thus driving the US production increase."
"There is little risk in oil trading at $80/bbl for long if it reaches that low point, because marginal production will start to be shut in. Further, OPEC maintains significant power to move the world's oil markets, and the budgets of many OPEC countries are now dependent upon $100+ oil. Therefore, they will also move to ensure that oil prices don't remain depressed for long."
"The current correction in oil prices may be causing some angst for those with oil stocks in their portfolios, but long-term demand growth in developing countries will continue, and global oil production will struggle to keep pace. I have said for a few years that I expect the price of WTI to trade mostly between about $80/bbl and $120/bbl as long as US production continues to climb, but when prices do break out they will break to the high side."
"While there has been an overall correction in the energy sector as oil prices have declined, this has created some real bargains in the industry." I could not agree more. All of our Sweet 16 companies will do just fine if oil stays around $90/bbl.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group