$37.65

Professional Mariner Forum
151

[QUOTE=ombugge;180794]Brent is above $40 and rising: http://www.oilpubs.com/oso/article.asp?v1=18949
"Buying by speculative financial investors is boosting the price rise".
Is it a casino game, not based on actual “supply and demand” but on manipulation by the said speculators??[/QUOTE]

  1. The world economy is in a depression and has been since 2008, you can call it a recession if it makes you feel better but it is a depression and the cause is due to the same thing that caused the depression of 1929. Therefore the the demand for oil is low.
  2. The drilling contractors built too many rigs. It was a poor business decision and the surplus of rigs is driving down day rates.
  3. Until some of the drilling contractors go bankrupt or scrap a LOT of rigs there will be no increase in day rates. The pain for those working on rigs will continue.
  4. Nothing will improve for either the oil companies or those that contract with them until there is an improvement in the world economy.
    In economic terms; 99% of people have no money to spend beyond that required to survive and the 1% that do have money already have what they want.

This is going to take awhile.

152

[QUOTE=ombugge;180794]Brent is above $40 and rising: Clarksons Research
“Buying by speculative financial investors is boosting the price rise”.
Is it a casino game, not based on actual “supply and demand” but on manipulation by the said speculators??[/QUOTE]

I believe the situation is just the opposite and it is the speculators headed to the exits which is causing the price of crude to stabilize

[B]Specter Of $20 Oil Recedes As Speculators Flee Bearish Bets[/B]

Monday, March 07, 2016

(Bloomberg) – Hedge funds unwound bearish bets at the fastest pace in 10 months as fear of oil sinking to $20 a barrel faded.

A lot has happened since Goldman Sachs Group Inc. made that forecast a month ago. Some U.S. shale drillers have thrown in the towel after a year of maintaining supply in the face of plunging prices, saying they’ll pump less in 2016. Saudi Arabia, Russia and other large producers have frozen output and plan to meet later this month to discuss further measures to support prices.

“We might see the real bottom being behind us,” Ed Morse, head of global commodity research at Citigroup Inc., said in a interview Friday with Bloomberg TV. “Eventually we’ll see U.S. supply falling.”

Speculators reduced their short positions in West Texas Intermediate crude by 15 percent in the week ended March 1, according to U.S. Commodity Futures Trading Commission data. Futures gained 7.9 percent in the report week and have jumped 40 percent since hitting a 12-year low on Feb. 11. The front-month contract traded at $36.63 a barrel at 12:06 p.m. Singapore time.

U.S. crude production fell for a sixth time in the week ended Feb. 26 to 9.08 million barrels a day, the lowest level since November 2014, according to the Energy Information Administration.

Apache Corp. said last month its oil and natural gas output will fall as much as 11 percent in 2016. Continental Resources Inc. projected a 10 percent cut and Whiting Petroleum Corp. a 15 percent reduction.

Producer Meeting

Members of the Organization of Petroleum Exporting Countries intend to meet with other producers between March 20 and April 1, Russian Energy Minister Alexander Novak said on Russian state television March 4. There hasn’t been a final decision on timing and location, according to Novak.

Saudi Arabia, Russia, Qatar and Venezuela agreed on Feb. 16 in Doha that they would freeze production, if other producers followed suit, in an effort to tackle the global oversupply.

“Many people believe that we might have seen the worst of it,” said Bart Melek, head of commodity strategy at TD Securities in Toronto. “We are seeing pretty significant declines in U.S. production. There is hope that soon an OPEC agreement will come.”

The premium of December WTI puts over calls shrank Friday to the lowest level since Jan. 25, and a an index measuring volatility in the largest oil exchange-traded fund has dropped to the lowest in almost two months.

Speculators’ short positions in WTI fell by 25,639 contracts of futures and options combined to 150,718, the biggest decline since April 21, CFTC data show. Longs, or bets on rising prices, fell by 753. The exodus of bearish bets resulted in a 24,886-contract jump in the net-long position.

Other Markets

In other markets, net bearish wagers on U.S. ultra low sulfur diesel rose by 2,801 contracts. Diesel futures climbed 7.6 percent in the period. Net bullish bets on Nymex gasoline climbed 5,534 contracts as front-month futures gained 35 percent.

Prices climbed even as U.S. crude supplies increased by 10.4 million barrels in the week ended Feb. 26 to 518 million, according to the EIA. That’s the highest level since 1930.

“The market is ignoring the builds in U.S. supplies,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market is starting to realize that there will be a production freeze if not a cut. The mood has changed.”

with speculators leaving and a gradual adsorption of the 2-3M/bpd over supply, the price will become stable then begin its gradual rise back to a realistic number for the market which to me is in the $70-80/bbl range. Remember it is the speculators which cause unnatural high prices as well as low prices with crude and if they were prohibited to buy then we would not have the situation we have today. Of course we would not have $100+/bbl oil either. Crude oil should only be sold to those who will refine it and not to those who only buy to make profits on it.

153

here is some more good news for the price of crude

[B]EIA: Second-Biggest US Shale Output Drop Seen For April[/B]

by Reuters

Monday, March 07, 2016

NEW YORK, March 7 (Reuters) - U.S. shale oil production in April is expected to chalk up the second-largest monthly decline on record, and the sixth straight monthly decrease, a U.S. government forecast released on Monday showed.

Total output is expected to fall by 106,000 barrels per day to 4.87 million bpd, according to the U.S. Energy Information Administration’s (EIA) drilling productivity report. That would be the second largest monthly drop after a record 121,000 bpd-decline in January 2015, based on data dating back to 2007.

Production from the Bakken Formation in North Dakota is expected to fall 28,000 bpd, the fifth consecutive monthly drop, while output from the Eagle Ford Formation is forecast to drop 58,000 bpd, the ninth consecutive monthly slide, the EIA said.

Production from the Permian Basin in West Texas is expected to fall 4,000 bpd, the first decline since June, it added.

Global oil prices have slumped more than 70 percent in the past 19 months, causing producers to hold back on capital spending and focus on drilling in more cost-effective areas.

Oil production per rig rose to new records across the shale plays, jumping 6 bpd in the Bakken, 10 bpd in the Eagle Ford and 6 bpd in the Permian.

Total natural gas output is expected to decline for a fifth consecutive month in April to 46.3 billion cubic feet per day (bcfd), the lowest since July 2015, the EIA said. That would be down almost 0.5 bcfd from March, making it the biggest monthly decline since March 2013, it noted.

The biggest regional decline was expected to be in Eagle Ford, down 0.2 bcfd from March to 6.3 bcfd in April, the lowest level of output in the basin since April 2014, the EIA said.

In the Marcellus Formation, the biggest U.S. shale gas field, in Pennsylvania and West Virginia, April output was expected to decline by 0.1 bcfd from March to 17.3 bcfd. That would be the second monthly decline in a row and the biggest decline since July 2013

as well as this report

[B]China Crude Oil Imports Hit Record 8 MMbopd In February[/B]

Adam Rose & Florence Tan

Tuesday, March 08, 2016

BEIJING/SINGAPORE, March 8 (Reuters) - China’s February crude oil imports jumped 20 percent on year to their highest ever on a daily basis, as prices at their lowest in more than a decade drove buying from a group of new importers and state and commercial stockpiling.

The world’s second-largest oil consumer imported 31.80 million tonnes of crude last month, or a record 8.0 million barrels per day (bpd), data from China’s General Administration of Customs showed on Tuesday.

China’s robust crude demand has been supported by independent refiners, also known as teapots, that have been receiving import quotas from Beijing over the past nine months.

“This is the teapot effect,” said Virendra Chauhan, an analyst at Energy Aspects in Singapore.

“Higher teapot demand and stronger refining margins which encouraged higher refinery throughputs have contributed to increased imports,” he said.

On a daily basis, February’s imports also jumped roughly 27 percent from 6.29 million bpd in January.

Last week, Beijing-based consultancy SIA Energy said it expects China’s 2016 crude imports to rise by 860,000 bpd, or nearly 13 percent, boosted by storage needs, robust gasoline demand and fuel exports.

The country’s top energy group state-owned China National Petroleum Corporation (CNPC) forecast in January that the China’s net crude imports would rise 7.3 percent this year.

China’s imports reached a previous record of 7.81 million bpd in December, closing out 2015 with an average 6.71 million bpd, according to customs data for the full year.

The February volumes were more than a million bpd higher than the final estimate by Thomson Reuters Oil Research and Forecasts, which had expected more deliveries to spill over into March. March imports are forecast by the Thomson Reuters analysts at under 7 million bpd.

Fuel exports in February rose 71.8 percent on a daily basis compared to the same month last year, reaching 2.99 million tonnes, or 721,700 bpd, after hitting a record 975,500 bpd in December, as China continues to export more diesel amid weakening domestic demand for the industrial fuel.

Net fuel exports were 350,000 tonnes in February.

For a summary of China’s commodities trade see. A breakdown of the data will be available later in the month.

(1 tonne of crude oil=7.3 barrels)

(1 tonne of refined fuel=7 barrels)

154

[QUOTE=c.captain;180821]Crude oil should only be sold to those who will refine it and not to those who only buy to make profits on it.[/QUOTE]

Exactly what I’ve been saying for years.

155

[QUOTE=Capt. Phoenix;180884]Exactly what I’ve been saying for years.[/QUOTE]

Problem is, how do you enforce that? Do we really want the government to make decisions as to who can purchase what? Careful what you wish for.

156

[QUOTE=cmakin;181097]Problem is, how do you enforce that? Do we really want the government to make decisions as to who can purchase what? Careful what you wish for.[/QUOTE]

Ban all commodities and futures trading on the exchanges.

157

with the recent rise in the price of crude comes this to consider

[B]If Oil Prices Have Hit Bottom, the Top May Not Be Too Far Away[/B]

Grant Smith

Tuesday, March 15, 2016

(Bloomberg) – The top of the oil market may be closer than you think.

With Brent futures having bounced back as high as $41 a barrel, the International Energy Agency sees “light at the end of the tunnel,” and Goldman Sachs Group Inc. is spotting “green shoots.” Even so, many analysts warn that, like the failed rally last year, this recovery will sputter once prices go high enough to keep U.S. crude flowing.

“If prices keep going up, U.S. production from shale producers is extremely responsive,” Jamie Webster, vice president of crude markets at IHS Energy, said in a Bloomberg Television interview. “Falling U.S. production is the key dynamic you need to get supply to equal demand, and that might not actually happen,” meaning prices could fall again.

Brent futures have recovered about 40 percent from the 12- year low of $27.10 reached in January, trading for $38.59 at 4:34 p.m. Tuesday in London. With output outside the Organization of Petroleum Exporting Countries set for its biggest slump since 1992, “prices might have bottomed out,” according to the IEA. Yet world crude benchmarks may struggle to push past $50 a barrel this year as any further price recovery only delays the production cuts needed to balance the market, according to the median of a Bloomberg survey of nine analysts.

While U.S. crude productionhas retreated 5.5 percent since last summer, the process of depleting bloated inventories is just getting started, according to Goldman Sachs. The bank, which foresaw oil’s plunge into the $20s, predicts prices still need to stay low enough to starve producers of capital, otherwise the output losses necessary to remove the supply surplus won’t happen.

“An early rally in prices before a deficit materializes would prove self-defeating,” Jeffrey Currie, head of commodities research at Goldman Sachs in New York, said in a report on March 11.

The recovery “could throw a lifeline to U.S. producers” that would “limit oil production declines,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.

Sustainable Price

The argument that $50 represents a ceiling for crude is flawed, according to Sanford C Bernstein & Co., which sees prices returning to $70 in the next year. The industry can’t stay profitable at current price levels, having lost $3 for each barrel produced last year even as companies squeezed costs, it said.

“The price of oil has to rise to balance the market in the medium run, and the medium run might be sooner than people think,” analysts including Bob Brackett in New York said in a report.

The rally could in any case sputter out before it even reaches the point that revives U.S. production, according to UBS’s Staunovo. Temporary price support from pipeline disruptions in Iraq will fade, while talks between OPEC and non- members on freezing supply while have little impact, he said. Iran still insists it won’t accept any freeze until it restores about 1 million barrels of exports now that sanctions have been lifted, Russian Energy Minister Alexander Novak said Monday following a meeting in Tehran.

Similar Trend

This year’s price trend is nonetheless similar to last year, IHS’s Webster said. West Texas Intermediate crude climbed 40 percent from late March 2015 as U.S. drilling plummeted, yet stalled near $61 that summer as the nation’s production kept going. The U.S. benchmark ultimately sank near $40 again by August.

The resilience of U.S. production has taken OPEC by surprise, Secretary-General Abdalla El-Badri said last month. Break-even prices at North American shale wells declined by 40 percent between 2013 and 2015, according to consultant Rystad Energy AS. Crude output remains near 9 million barrels a day even as data from Baker Hughes Inc. shows drillers are using the fewest rigs since 2009.

The reduction in costs makes OPEC’s forecast for a 700,000 barrel-a-day contraction in non-OPEC output this year “more uncertain,” the group said in its monthly oil-market report Monday.

As a result of efficiency gains, the “shale band” – the price range that allows output to be profitable – has fallen by about $10 since last year to $45-$55 a barrel, said Olivier Jakob, managing director at consultant Petromatrix GmbH, who originated the term. This year’s rally has already buoyed U.S. drillers, who raised $10 billion of extra funds on Wall Street.

There’s a cache of suspended wells stretching from south Texas to the Rocky Mountains that can be completed as soon as prices rise high enough, according to analysts at Bloomberg Intelligence. This reserve is known as the “fracklog,” in reference to the technique of hydraulic fracturing, or fracking, used by the shale industry.

“There’s a cap that has to do with when the high-cost frackers will come back in, at say $50,” Catherine Mann, chief economist at the Organization of Economic Cooperation and Development, said in a Bloomberg Television interview. “You’ve got frackers out there whose capacity to come into the market is very, very flexible. So there’s a range now.”

158

I guess I will order that new Mercedes my wife wants since the recovery is close.

159

$70 next year…I doubt it.

160

[QUOTE=Capt. Phoenix;181102]Ban all commodities and futures trading on the exchanges.[/QUOTE]

As an ex-trader, I can tell you stories about the havoc wreaked on actual users by speculators.

161

like if everyone who in theory " owned " oil or futures wanted to take actual delivery of it? Impossible?

162

[QUOTE=smoker;181395]As an ex-trader, I can tell you stories about the havoc wreaked on actual users by speculators.[/QUOTE]

At BEST commodity brokers are right a little over 50% of the time so the wise ignore what they say the future holds. The ones that do make money run under the table deals, like when Marc Rich was selling Iranian oil to the Israelis during an “embargo”. Money trumps all ideology, religion and politics.
What is clear to anyone is the world economy is in a depression and has been since 2008, courtesy of the kings of finance. China propped up the world for a while but now they have run out of tricks. This is going to take a LONG time to fix even with a major shift in economic distribution which is not likely to happen.
If I were a young engineer I’d learn to repair robots, if I were a young deck officer I’d learn to … I dunno maybe some martial arts to take out the few remaining job holders.

163

[QUOTE=z-drive;181397]like if everyone who in theory " owned " oil or futures wanted to take actual delivery of it? Impossible?[/QUOTE]

Not take actual deliveries, but speculate, based on perceived demand and supply and not on actual economic fundamentals, raising the price of the commodity to unrealistic highs. Wheat is soon going to be the latest darling. Both India and Pakistan has had a lousy winter and both will be importing shortly.

164

[QUOTE=cmakin;181097]Problem is, how do you enforce that? Do we really want the government to make decisions as to who can purchase what? Careful what you wish for.[/QUOTE]

The “government” has been making those decisions via tariffs, restrictions on trade, trade agreements and international/interstate commerce since the beginning of time. The question has always been does the “government’s” decision benefit the population as a whole or those with financial means to pull the strings of government? There was a revolution in the US around 1776 over that very issue. The citizens of many other countries historically have had to remind “government” that government exists to represent the well being of the majority not the minority which has seized control of the money thru monopoly agreements.

165

Let us hope that these optimistic predictions are true and the pessimist will have to eat their words.

For me it is too late, as I have thrown in the towel. With no work coming my way, or at least not enough to cover the high cost of living in Singapore, I decided to move back to the low cost tax heaven of Norway.

A bit of a cultural shock after nearly 5 decades in Singapore, of which more than 4 in the Offshore industry in one form or another.

I’m not ready for the rocking chair just yet though, so I will be looking around for something to keep me occupied, whether in the same field, or in some other ventures.

Living in the center of the Norwegian Maritime cluster there may be some opportunities. I still have ideas and knowledge that may be useful for a while yet, low oil prices not withstanding.