BradL45
16 years ago
I have ERX, DIG and DXO(DXO outpacing ERX today), just to put eggs into different baskets, energy will rock. DXO is so cheap, it should be a higher bagger(just like a penny stock,lol) in the future.
I have BGU, TMA, and some FAS as well, most of these only short term. The energy stocks I'll trade to free shares today, and scale out if it retracts, I'm not ready to call bottom just yet :) the flip side of these ETF's will be traded again soon.
What happens if C slips into the $2's in the coming weeks or GS fails, FAZ for me.
I have my core of PBT and FRO as well, and would like to hold my XOM, OXY, SLB, RIG, V, and WFC longer term if their PPS holds(scaled stops are set).
SELLING this bump :)
ERX will be a good trader, and be a VERY expensive ETF in the future.
frenchee
16 years ago
OPEC to Meet in Attempt to Halt Oil-Price Decline
By SPENCER SWARTZ
OPEC members will meet later this month in a bid to halt the tumble in crude prices, amid signs that a global economic slowdown is punishing near-term demand for oil.
The news of the meeting, which analysts expect will result in another production cut, came as oil prices hit a 22-month low amid fresh evidence that the world's industrialized economies are in recession and consumers and industries are cutting back on fuel spending.
The Paris-based International Energy Agency on Thursday slashed its forecasts for global oil demand, saying it will grow by just 0.1% this year. That is down from last month's projection of 0.5% growth and far below the 1.1% growth rate of 2007. Many analysts think global oil demand will actually contract this year, for the first time since 1983.
On Thursday on the New York Mercantile Exchange, U.S. benchmark crude closed up $2.08, or 3.7%, at $58.24 a barrel on market expectations that OPEC will cut output again.
With gloom hanging over demand, Organization of Petroleum Exporting Countries members will meet Nov. 29 in Cairo, just a month after a hastily arranged gathering in October, according to people familiar with the matter.
The cartel's secretariat in Vienna didn't confirm the meeting, but OPEC delegates said the group's 12 members will meet at an already scheduled gathering of Arab oil-producing nations.
Analysts expect the meeting to result in another substantial reduction in the group's production. OPEC agreed to cut output by a total of two million barrels a day at its last two meetings in September and October, but those moves have so far failed to stop the slide in crude prices. Global demand for oil is about 86 million barrels a day; OPEC supplies roughly 40% of that total.
OPEC price hawks Iran and Venezuela have argued in recent days for a further one-million-barrel-a-day reduction to supply, though it is unclear what sort of appetite OPEC kingpin Saudi Arabia would have for another big cut. The kingdom likely will want assurances that other OPEC members are complying with the cuts they have already agreed to before shouldering more output reductions.
The IEA, an energy watchdog that advises 28 industrialized countries, said Thursday that consumers and businesses globally are expected to use on average 86.2 million barrels a day this year -- a downward revision of 330,000 barrels from the agency's October report.
The IEA also slashed its 2009 world crude demand forecast by 670,000 barrels a day and said consumption next year is expected to grow by a mere 0.4% to 86.5 million barrels a day.
The changes in the IEA's forecasts underscore the extent to which a slowing global economy is hurting crude consumption.
"We are looking at an outright recessionary environment in the U.S. and other major economies so this new forecast reflects that," said IEA analyst David Martin.
That dark outlook was confirmed Thursday by Germany, Europe's biggest economy, which said it entered recession after economic activity fell in both the second and third quarters.
In a departure from past months, the IEA made its first substantial downward revision to forecast oil demand in China and other emerging markets, where much of the growth in energy consumption has come from in recent years. Expected demand in 2009 in these nations was cut by 260,000 barrels a day to 39.5 million barrels a day, with most of that decline coming in China.
frenchee
16 years ago
$60 Oil…And Why it Won't Last
By Byron King
I've been getting a lot of calls and e-mails from people asking about the falling prices for oil in recent weeks. The immediate explanation is that world economic activity is decelerating. Demand is falling. OPEC announced cuts in output. But the markets still believe that economic decline will trump the ability of OPEC to prop up the price of oil.
Enjoy cheap oil while it lasts.
Just over the horizon, things are about to become dicey. This week, the International Energy Agency (IEA) will release a new report on the future of world energy. In its World Energy Outlook, the IEA will state categorically: "Current global trends in energy supply and consumption are patently unsustainable."
There's not much wiggle room in that statement. According to the IEA, despite the recent fall in oil prices, the medium- and long-term outlooks for energy supplies are grim. Conventional oil output is destined to decline. Demand will still grow, however, especially in the developing world. And the twain shall only meet by prices rising to clear the market.
The IEA performed a comprehensive study of 800 of the world's largest oil fields. And it concluded that depletion in conventional oil fields is occurring at a rate in excess of 9% per year. (That's an average. We see depletion rates in excess of 15% in Mexico's Cantarell field, for example.) This means that absent large amounts of new drilling, new investment in enhanced recovery and new discoveries, the current worldwide oil output will decline by over 9% per year. And if it keeps going along this trend (there's no reason why it won't), the base of world oil output could conceivably dry up within seven-10 years.
Don't get me wrong. The world won't run out of oil in seven-10 years. That's not how it works. It's just that volumes of conventional oil are declining. The takeaway point is that the energy markets will tighten up, like a hangman's noose around the collective neck of the oil-consuming world.
So how long will we have to wait for this "future" to show up? Well, how long will the current worldwide recession last? I don't know. But I do know that if you can afford to be patient with your funds, you should be buying at this very moment the companies that own oil reserves in the ground, and the oil service companies that extract oil and natural gas. These firms should eventually stage a comeback as oil prices rise again.
According to the IEA, even with massive levels of investment in the oil patch, the best estimate is that the global oil industry can reduce the rate of depletion to perhaps the 6% range. So the world energy industry will have to run faster just to keep from falling too far behind the demand curves.
Again, you need to keep in mind that current energy prices are just too low to support the level of energy investment that the world needs going forward. (Meanwhile, the U.S. government is spending trillions of dollars just to bail out the banks and bankers, not one of whom runs pump jacks.)
The IEA estimates that the oil industry will have to invest over $350 billion per year to counter the steep rates of decline in output. And even that will not be sufficient to maintain levels of output for traditional forms of crude oil. Thus, much of the future investment will have to go toward extracting other kinds of hydrocarbon substances. And these "other kinds" tend to be very expensive to develop.
There are many different kinds of hydrocarbon molecules in the world. The total worldwide carbon base actually adds up to a very big number, and that is NOT including the carbon that is part of the current living biology of the planet. For now I'm just discussing the fossilized carbon like oil, natural gas, bitumen in tar sands, oil shale and coal.
The big problem for the non-oil forms of carbon is the cost of converting it into a viable fuel. We see that, for example, in the Canadian tar sands projects. Lots of steel, concrete, labor, machinery, water and energy input -- all to extract this thick, gunky crud that has to be upgraded to something that looks like diesel fuel.
The tar sands are full of hydrocarbons, but they are not inexpensive to extract. The same goes for every other non-convention hydrocarbon source.
The nearby chart shows the total hydrocarbon resources in the world and the relative costs to convert them into a barrel of oil or oil equivalent. This is my summary, based on several different government and academic compilations:
BradL45
16 years ago
We still have downside, BUT I bought some CHK, not my normal oil play, but it got severely trampled on with the CEO's margin call, poor guy was once a Billionaire, and is worth much less now.
It's just a flip for me due to the low divy, but it's moving nice. I sold lots of shares today to get to freebies, so lets see where Chesapeake will take us.
Nice push EOD, DIG broke $35(for a second or 2), my fav Solar stock rallyed in the 2nd part of the day, UP23%, I'm a little bit GIDDY now,lol. FSLR even up larger 25%.
CHK up 12% just today.
I'm wagering for up action in the market on Friday, we might just have us a short term rally.
:)
BradL45
16 years ago
We are thinking along the same lines, bottoms take time, and we play the bounces along the way(really good bounces).
DUG is rocking today, and my bottom play in oil is ~$52/barrel, soft target anyways with some fibs #'s. Oil will swing until we flatten out.
More upside left today, I still expect to hit some sell targets, and some buys in the Ultrashort ETF's, I've bought some TWM and FXP(still more pain) today, but no SKF and DUG. I also bought Puts, and some mild calls on the ultrashorts.
LVS, DRYS, and FSLR are cranking it today, LVS was a bagger for me, I skimmed 10% profit, capital removed, and riding dirty with the rest(Roth play), and the rest of the long stocks I bought last week and Monday, I'm 60-100% gone. I have too low of an average in some BIG names(AAPL, FSLR, POT, WFC,V, MA) to sell all of them, hard stops are set, and I'll scale out of them with down action. :( All my Nov calls are on freebies now.
Oct was VERY good to me, I love the swings. The next 2 weeks will be lighter trading for me, I'm heading down Under, I have a 950SE(double and single track) with my name on it, and will get in some Diving, and maybe 1 day of flying(trike and/or free flying).
Take care, and Rape Profit
Good day Mate and I hope the 950(6 days) does not kick my $ss, I'm still not 100% from the last time I got Bent. :)
BradL45
16 years ago
We got a rally, I'd like to see another big up day, then I'll sell all my DIG, let it reset and play again.
The DIG/DUG tug of war is a good trade. Oil is really low, it's going to bounce, then when the market bottoms, we can have a large uptrend. I've sold down many long Oil stocks, and will sell more in the AM on a pop.
SKF/UYG working the same, and I trade TWM and FXP(reload point today and tomorrow)
bxb
16 years ago
Oil in a Week (Decision to Cut Output & OPEC)
Walid Khadduri
Al-Hayat - 27/10/08/
http://english.daralhayat.com/business/10-2008/Article-20081027-3e34c4c8-c0a8-10ed-011c-4d165d73bb57/story.html
The decision to reschedule OPEC's extraordinary ministerial meeting from November 18 to October 24 was the toughest for the organization these days. The date signaled for markets that OPEC does not believe there is an urgent need that justifies holding an immediate extraordinary meeting at a time when prices are falling on a daily basis.
The extraordinary meeting was held just days before the American presidential elections and in concurrence with a major financial crisis hitting American and international markets. This places OPEC's decision under the microscope and presents it as an opportunity for politicians and pundits in industrial nations who wish to talk about the lack of cooperation on the side of oil-producing nations with the difficult resolutions made by industrial countries to stabilize the financial system. Criticism of OPEC is likely to increase as a result of the decision by the ministerial meeting to cut output, especially at this phase when industrial nations consider falling oil prices to be the only positive indicator of possible global economic stability following the US subprime mortgage crisis and the ensuing massive losses.
What exactly does OPEC's decision to cut output mean?
OPEC has long adopted a policy of balancing demand and supply in international oil markets. Since a significant drop has been noted in demand over the past few months, the organization wanted to ensure the equilibrium by cutting supply in a manner that corresponds with the decline in demand. The problem is that there is a variation in the figures and forecasts about the decline in demand published by the International Energy Agency and OPEC. In fact, the published numbers vary from one country to another within OPEC itself.
Naturally, there are those who point to the rapid decline of prices since August. Just as the price increase in the first half of 2008 was rapid and spectacular, so seems to be the case of decline now. If this means anything, it implies that the oil pricing system decided in free markets in New York and London on the basis of future prices of oil while severely lacking transparency as a result of speculations and monopolies, requires numerous reforms and control systems like the rest of the international money system or else there will be no end for this vicious cycle of rapidly rising prices followed by a rapid bust.
Some of the tough questions discussed by the ministerial meeting were: how deep should be the output cut? What is the objective of the cut? Is it to balance demand and supply, to cut falling prices, to attempt to stabilize prices within the range of $70 to $90, or returning them to $100 and above as demanded by Iran and Venezuela, even if such a proposal enjoyed no support from any other states?
It is noted that there exists an oil cycle of approximately ten years for the meltdown of prices in the recent past, even when causes varied in each case. The collapse of prices in 1986 was caused by the increasing supply from outside OPEC whereas the second collapse in 1998 was caused by the Asian economic crisis and the decline in demand there at a time when OPEC increased output (the Jakarta resolution of 1997). The current price meltdown, on the other hand, is caused by the decline in demand as a result of the rapid and massive increase in prices during the first two half of the year in addition to the declining demand as a result of the global financial crisis and the lack of confidence in the proposed economic solutions.
The question here is: how does OPEC evaluate the current global economic crisis. Should it focus on its ability to inject trillions of dollars to stop the global financial meltdown, especially as it appears that the upward and downward fluctuations in the markets over the past few days seem to fall within treatable levels, or should it consider this a historic meltdown and deal with it accordingly?
The problem facing OPEC right now lies in the fact that two basic factors are pushing prices downwards: the first is the consumer response to cut demand as a result of high prices in recent months; the second is the declining rates of oil spending and consumption as a result of the global financial crisis. These factors require that OPEC cut supplies to establish balance between demand and supply, but doubts lurk about the ability of the organization to end the trend of falling prices with a single resolution in such a gloomy economic environment.
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