[Bones707]

(12-10-2014 11:48 AM)VolandoVengoVolandoVoy Wrote:  

(12-10-2014 11:38 AM)The Texas Prophet Wrote:  

(12-09-2014 07:28 PM)VolandoVengoVolandoVoy Wrote:  

And down it goes...damn this could turn out to have a profound effect on geopolitics for years.
Venezuela in particular, is truly fucked.

"The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over coming months as market forces shake out the weakest producers, Bank of America has warned."

http://www.telegraph.co.uk/finance/oilpr...-dies.html

Venezuela will soon have to start selling its gold reserves. No bueno.

Maduro might in the end get kicked out of power, not by the CIA, but by OPEC.

About a year and a half ago, I thought Venezuela would be a great investment opportunity. The whole fortunes are made when there is blood in the streets concept.
My view was that after the death of Chavez, Maduro would try and hold things together, but would be unable to. And that a relatively mild period of civil unrest and rioting by Venezuela standards (200 dead) would follow for 6 months or a year, and then there would be an accommodation between the Chavistas and the opposition to create something workable. And that this something workable, even if it sucked, would be vastly better than the Chavista style of mismanagement. And that adding the Orinoco heavy crude to this and consistently high oil prices, would mean a significant economic boom.
Now? I just see massive chaos, with Maduro becoming more and more like the famous former Mayor of Kabul, President Karzai.

Venezuela imploding has long been overdue. When you have ultra leftist dictators coming to power, you always know shit will come in time due to the usual mismanagement that leftist countries experience combined if this takes places in countries that overdepend on one commodity (i.e Oil). Burn Baby Burn!

[Tex Pro]

WTI Crude Crashes Into The $50s:

http://www.zerohedge.com/news/2014-12-11...rashes-50s

^WTI is now trading in the $59-$60 range. This shit is heading lower. Wouldn't be surprised if WTI heads into the low $50s per barrel.

[VolandoVengoVolandoVoy]

Shit's getting real bad real quick in Venezuela.

"Swaps traders are almost certain that Venezuela will default as the rout in oil prices pressures government finances and sends bond prices to a 16-year low.
Benchmark notes due 2027 dropped to 43.75 cents on the dollar as of 11:35 a.m. in New York, the lowest since September 1998, as crude extended a bear market decline. The upfront cost of contracts to insure Venezuelan debt against non-payment for five years is at 59 percent, bringing the implied probability of default to 93 percent, the highest in the world."

http://www.bloomberg.com/news/2014-12-11...ce-98.html

[Easy E]

WTI keeps dropping.

It is now trading around $57/58. Not good for shale oil production.

[Easy E]

(12-12-2014 01:23 PM)VolandoVengoVolandoVoy Wrote:  

Shit's getting real bad real quick in Venezuela.

"Swaps traders are almost certain that Venezuela will default as the rout in oil prices pressures government finances and sends bond prices to a 16-year low.
Benchmark notes due 2027 dropped to 43.75 cents on the dollar as of 11:35 a.m. in New York, the lowest since September 1998, as crude extended a bear market decline. The upfront cost of contracts to insure Venezuelan debt against non-payment for five years is at 59 percent, bringing the implied probability of default to 93 percent, the highest in the world."

http://www.bloomberg.com/news/2014-12-11...ce-98.html

A default won't happen immediately, but if oil prices stay low into mid-to-late 2015, then there will probably be a default.

That is why Venezuela desperately needs OPEC to cut production to at least stabilize the price of oil.

My bet is the Saudis won't cut unless oil drops drastically, like to $40/bbl.

[VolandoVengoVolandoVoy]

When I talk about Venezuela being fucked, I didn't have in mind an immediate default.
I was thinking more along the lines of major civil unrest like the 1989 Caracazo (http://en.wikipedia.org/wiki/Caracazo) in which 2000 died.
As the government seeks to desperately stave off a default, I think there is the potential for real disaster.
The murder rate is worse than a war zone, the inflation the highest in the world, the corruption among the worst in the world..if you are the average Venezuelan, what do you really have left to lose at this point? Even if you are uneducated, you probably don't believe the government lies any more.

http://www.ft.com/intl/cms/s/0/4a965a04-...abdc0.html

“A serious economic adjustment needs a sincere economy . . . but for the government’s power groups the possibility of becoming millionaires is just too enormous,” says Mercedes de Freitas, head of the local chapter of Transparency International, which ranks Venezuela near the bottom of its corruption index.
Removing a domestic petrol subsidy, as Indonesia has done, would save the government $12bn a year, economists estimate, equivalent to 6 per cent of economic output or a third of the fiscal deficit.
But that would counter the interests of government insiders, such as senior military officers, who analysts say continue to support the government and for whom cheap petrol allegedly fuels a contraband trade worth some $4bn a year.
“There are tremendous arbitrage opportunities,” says Felipe Pérez Martí, planning minister under former president Hugo Chávez. “The scheme favouring government rent-seekers has been cemented.”"

[villageindian]

Just wanted to add my 2cents to this thread with lots of good inputs.

No doubt that the industry is looking to reduce spending. So our company is cutting capex for the next year and we are looking at a price of $60-80 over the next 2 years. It will be volatile but should settle in this range over the next 2-3 years.

Regarding jobs, I would move quickly to Texas and Louisiana rather than stay in Canada. Because each of the posts here have talked about break-even prices outside US only but not looked at Canada. At $50, heavy oil becomes unsustainable and Alberta/BC will start to slow down. The projects in TX and LA are chemical and refinery related so you can get it. Also the wages are higher than BC and ALB so it makes sense to lock them down now before it goes down due to the industry.

Right now, we are starting to see the US HY Energy Index moving up into unseen territory. (ZH is posting on this). Because energy makes about ~20% of the index weight, an increase in this numbers and explosion of this index means that all E&P that raised bonds for their spending programs will have to soon service their debt when it comes calling.

Given the large number of companies on the index and who have raised capital, it could be difficult all around if this index/companies collapsed and there is an impact on production. I would watch this closely alongside with another development expected to impact in the next 2 years - the end of OPEC.

Yes, I am calling for the end of OPEC not because they are trying to engage in a bloodbath against NA and seriously impacting the markets. But that they are going to be impacted majorly due to the looming changes in the US dollar and the fact that the US has to make a choice in breaking up with Saudi Arabia over oil.

[Tex Pro]

U.A.E. Sees OPEC Output Unchanged Even If Oil Price Drops to $40

http://www.bloomberg.com/news/2014-12-14...to-40.html

[Easy E]

Damn, WTI is now trading in the $56 territory.

Also, the USA stock market is reacting badly to this drop in oil. I guess the S&P energy sector blowing up is bad for the economy. LOL!

[Easy E]

WTI is now in the $54 territory.

Oil was up yesterday, but is back down today. I personally think the stock market is erroneously discounting the effect of these low oil prices on the E&P sector with its recent rally. If these low prices last a few more months, expect massive reductions in capex and lots of job cuts as rigs get pulled. This is especially true in the shale oil industry since those type of wells rapidly deplete.

[Tex Pro]

Comstock Suspends Drilling In Eagle Ford Due To Plunging Oil Prices

http://www.zerohedge.com/news/2014-12-18...oil-prices

[RichieP]

(12-10-2014 02:10 PM)Aliblahba Wrote:  

Venezuela, Nigeria, ect go to shit due to the plummeting oil prices. Halliburton goes in and redevelopes the oilfields (military backed) when price of oil is convienently $120 bbl. Sounds like biz as usual. Don't hate the biggest lion for taking his share.

This is why I like this forum. Actual insight from people who've been around the block / had skin in the game.

Who knows whether it will go down like that, but that comment is an "Ahh now I get it" moment, for me at least

[Brian Shima]

Hold on to your jobs people on yeah a big FUCK YOU to all of the liberals who are so happy about this and not caring about their fellow man like they always claim to. They would rather have a family starving and cheap gas for their fuel efficient cars than oil being pumped faster than a $2 whore

[White Trash King]

Oil has always been boom or bust. If your in it, you need to make sure you have enough 'fuck you' money set up do whatever you need/want to do. Its just a matter of how long. http://www.usatoday.com/story/money/mark.../20639881/

[Tex Pro]

Saudi Arabia says won't cut oil output

http://www.reuters.com/article/2014/12/2...5W20141221

[VolandoVengoVolandoVoy]

Interesting article that makes a case for possible trading range of 20-50 USD per barrel as a new reality.


http://blogs.reuters.com/anatole-kaletsk...er-barrel/

Quote:

In view of this history, the demarcation line between the monopolistic and competitive regimes at a little below $50 a barrel seems a reasonable estimate of where one boundary of the new long-term trading range might end up. But will $50 be a floor or a ceiling for the oil price in the years ahead?

There are several reasons to expect a new trading range as low as $20 to $50, as in the period from 1986 to 2004. Technological and environmental pressures are reducing long-term oil demand and threatening to turn much of the high-cost oil outside the Middle East into a “stranded asset” similar to the earth’s vast unwanted coal reserves. Additional pressures for low oil prices in the long term include the possible lifting of sanctions on Iran and Russia and the ending of civil wars in Iraq and Libya, which between them would release additional oil reserves bigger than Saudi Arabia’s on to the world markets.

The U.S. shale revolution is perhaps the strongest argument for a return to competitive pricing instead of the OPEC-dominated monopoly regimes of 1974-85 and 2005-14. Although shale oil is relatively costly, production can be turned on and off much more easily – and cheaply – than from conventional oilfields. This means that shale prospectors should now be the “swing producers” in global oil markets instead of the Saudis. In a truly competitive market, the Saudis and other low-cost producers would always be pumping at maximum output, while shale shuts off when demand is weak and ramps up when demand is strong. This competitive logic suggests that marginal costs of U.S. shale oil, generally estimated at $40 to $50, should in the future be a ceiling for global oil prices, not a floor.

[Aliblahba]

   

[Tex Pro]

WTI is back to trading at around $55.

It had been up to as much as $59, but it has given up all the gains since it became clear that the Saudis are not going to cut production until at least June 2015 when OPEC meets again.

WTI could head further down as oil producers try to make up for lower profits with higher production, leading to a downward spiral in price as a price war breaks out.

[Easy E]

[Tex Pro]

Natural Gas Drops Below $3 for First Time Since 2012

http://www.bloomberg.com/news/2014-12-26...-2012.html

[Peregrine]

Those in the oil fields who are optimistic because places are still hiring should be aware that many shops haven't felt the pain yet due to futures. As long as their hedges are in place, they don't feel the pain. I'm betting that many of these places are hoping that oil will rebound to 80+ before their hedges run out.

But if oil stays at the current spot price or sinks even lower, batten down the hatches and hang on because a storm's coming.

[Tex Pro]

[Tex Pro]

Oil prices hits fresh five-and-a-half-year lows; Brent below $56

http://finance.yahoo.com/news/oil-prices...29495.html

[VolandoVengoVolandoVoy]

Down to 50.27 now...big slide so far this Monday

[Easy E]

Oil is only going to head lower. I think we definitely could see $40/bbl oil in the next few months.

Paradoxically, when oil prices plunge, drillers try to pump out more in order to make up in volume what they lose in profit per barrel. There will be blood.