The time has come to get long oil

Start building positions... we hit $150 before end of year.

 

Please outline your premises.

 

Time to get long oil was sub 40$.

Bit late to the party there.

 

Pls do not forget one simple thing...Indeed 150 USD per barrel is not so expensive for developed countries and it's not relevant to producers either Despite of that the current equilibrium between daily suppy/demand does only matter. E.g. India won't be able to buy oil for 150 USD in the current turbulence...What You gonna do with surpluses? The storage capacity worldwide will be over in June as well as tankers. Even OPEC is not able to cut production further since its air conditioning, power generation, skating rings in the desert are highly relying on associated gas production. You just couldn't cut more...If You will do simple calculation ans statistic surveys, it appears that all correlation, that proofed to be reliable in the past, were broken down by this up trend...I have no idea why, though Somebody placed a bet on "V-shape" recovery of global markets...?

 

Scholar: Unconventional gas reserves ‘enormous’

For every Mcf of gas produced from conventional basins around the

world, nine times that amount of recoverable unconventional gas exists

in the same basin, according to the head of the petroleum engineering

department at Texas A&M University.

Stephen Holditch told Platts on the sidelines of the Offshore

Technology Conference in Houston late Monday that the 1:9 ratio is

based on a study of eight North American basins.

“We’ve studied publicly available data on how much oil and gas has

been produced in different basins and how much is still in these basins

in terms of proved, probable and possible reserves,” he said. “It falls out that 10%

of the oil and gas is in conventional reservoirs and 90% is in unconventional

ones,” including coalbed methane, shale gas and tight-sands gas.

“We feel that this 90-10 split is part of how natural gas resources are distributed,

and it will more or less hold true for every natural gas basin in the world,”

Holditch said.

His team of researchers examined only those reserves classified as technically

recoverable. “We know where it is and we have the technology to recover it,

but we can’t book it as reserves because we either haven’t drilled the wells or

there’s no pipeline there, or the gas price isn’t high enough to make it economic,”

he added.

Unconventional gas reserves such as those found in the Bossier Sands in East

Texas and the Haynesville, Barnett, Woodford, Haynesville and Marcellus shales

“aren’t unique to North America,” Holditch maintained. “South America, the

Middle East, Russia, the North Sea or wherever, if you can go into these basins

and estimate the amount of conventional oil and gas that’s going to be recovered,

multiply that by nine and that’s how much unconventional gas can be

recovered.”

Holditch’s hypothesis contradicts popular theories — such as the peak oil theory

— that the world is running out of hydrocarbons. “The peak oil theory is

based on production from conventional oil fields,” he said. “What I’m saying is

that peak oil theory is only the top of that resource triangle.”

According to Holditch, “there’s an enormous amount of unconventional oil

and gas” around the world, including heavy oil in Canada, Venezuela and

Indonesia, as well as the shale gas being developed in the US.

“There are a lot of tight gas reservoirs in the Middle East. They’re just now

waking up to what they really have,” he said. “The other basins in the Middle

East and Russia have never tested their source rocks and when they do, they’re

going to find enormous amounts of oil and gas.” — Jim Magill



From Platts Gas Daily, May 6, 2009 issue

 

$80.00

 

I'll say $40 before $80.

 

we will be lucky if it even comes to $45
IMO max we will reach is $75 and hover between $60-$70 in most of the 2nd half

 

Product fundamentals are horrible, you may be right, but I am betting you won't as volumes will not decrease enough to offset the sharp losses in demand we are experiencing. Too many OPEC nations must have cash flow and will not cut back enough offset the balance this summer. The ONLY save for oil is an attack on Iranian facilities by Israel, and even that would be a somewhat short-lived price response.

Check out these statistics, very indicative of how much we are truly in a strong recession, and these are current #'s, not lagging data of a month ago or longer-

Highlights this week:

US petroleum inventories keep piling up in the US. Over the past four weeks, US commercial petroleum stocks have built three times the 5-year average from 1,054 mmb to 1,087 mmb, despite adding over 5.7 mmb of crude to the US SPR over the past month

US total petroleum product demand fell once again in this report, led by a week-over-week fall in gasoline. Over the last four weeks, demand was down 7.9% or the equivalent of 1.5 mmb/d

US total petroleum product exports were up more than 0.4 mmb/d year-over-year last week and set a new all-time record at 1.75 mmb/d

It is increasing looking like a supply glut for distillates continues to develop. Even after dropping yields and minimizing imports going forward, distillate stocks look to continue building strongly. Our projections show that in two weeks stocks will be at all-time highs and well beyond that two weeks later

US refining runs have increased by 0.8 mmb/d over the past three weeks to 14.8 mmb/d and should continue rising seasonally. Last year saw runs max at 15.5 mmb/d during the first week of June

US propane demand has also been notably weak YTD 2009. Over the past four weeks, propane demand is down 9.3% to 3.87 mmb/d and stocks sit 53% higher year-over-year

Data from RBS Sempra Commodities Fundamentals Desk

 

I really can't see that happening, neither do I see a sell-off to $40 either, I would predict that we trade between $48 and $78 for the rest of the year.

I think that a lot behind oil's squeeze to $147 was hedge funds/speculators driving the price higher and higher and causing more and more panic buying by the people who actually needed the oil but a lot of these players using these tactics can't afford to do it any more or have been killed being long into the last sell-off.