Ain't this chart pretty? (Gas prices)

Tilted

Tilted

..
Tilted said:
I just noticed that the price at the closest gas station to me is now $2.139, it was $2.079 (IIRC) a couple days ago. :frown:

Heating oil (i.e. off-road diesel) at that station is also up to $2.519 from $2.449 (IIRC) last week.
Click to expand...

Now they're $2.499 (gas) and $2.799 (off-road).

There's a big disconnect between gas futures and oil futures right now. RBOB is at about $1.95 / gallon while WTI is at about $50 / barrel. Even Brent is only about $61 / barrel. Those barrel oil prices would typically be more in line with something like $1.60 gallon gas (RBOB) prices.
 
Tilted

Tilted

..
WTI Oil is back down where it was in late January, a little above $44. But RBOB Gas remains significantly higher than it was at its recent bottom (from around the same time). So I still wouldn't expect pump prices to drop below their lowest levels from a month and a half ago, at least not soon.
 
Tilted

Tilted

..
Well... WTI is now above $57 and Brent is about $65, and RBOB got back to the $2 level today. Long term I'd have expected prices to be rising - and, unless we're really wrong when it comes to increased production potential, I would still expect them to be higher a year and 3 years from now. But, given the continued supply glut we're seeing in U.S. regional markets, I wouldn't discount the possibility that we could see a quick (though temporary) decline in oil prices at some point. Here, in the U.S. in particular, we are running out of storage capacity. But we also have seen small overall production declines for the last 2 reported weeks, so perhaps stocks will soon reach their peak and we'll start to see some draw down. Who knows?

Anyway, best guess, I think we're gonna see the next step (back) up in pump prices over the next few weeks. Hopefully it isn't too big a step before prices stabilize, relatively speaking, again.
 
CRHS89

CRHS89

Well-Known Member
Normally prices at the pump have been much cheaper in LP than in leonardtown, but this week it was 2.49 in LP and 2.39 in Leoanrdtown.
 
Tilted

Tilted

..
This chart, however, isn't so pretty. According to Baker Hughes' data, the number of oil rigs operating in the U.S. has been more than cut in half over the last 6 months.


8-yr BHRC : WTI Chart.jpg
 
Tilted

Tilted

..
Is WTI going to break $60 today? It's over $59, though down a tad this morning, and RBOB is around $2.03.

I'm starting to worry that the timing of this oil price decline is going to turn out to be an anti-Goldilocks scenario, so to speak, from a macroeconomic perspective. That is to say, it will be long enough to realize the negative effects on the economy - on economic growth and employment - but not long enough to realize the positive effects.

From most people's individual perspectives, any pump price relief is a good thing - at the least, it's more money they can save or use to pay down debt. But from a macroeconomic perspective, there are negative effects as well as positive effects. For now the negative effects seem larger. They likely represented a drag on GDP growth in this past quarter and there have been a number of layoffs in the oil industry and less economic activity with so many rigs being sidelined. It seems it might take a while for the positive effects, e.g. from people spending the extra money they have and creating new economic activity, to show up. If the price of oil goes back up too far too fast, the result may be that we got the negative without ever really getting the positive.
 
Tilted

Tilted

..
It took a couple more days, but WTI broke above $60. It's almost at $62 now. Brent's at $69 and RBOB's at $2.09. That suggests that pump prices will climb a bit further.
 
stgislander

stgislander

Well-Known Member
PREMO Member
Tilted said:
It took a couple more days, but WTI broke above $60. It's almost at $62 now. Brent's at $69 and RBOB's at $2.09. That suggests that pump prices will climb a bit further.
Click to expand...

We've been hearing about the wells in the Gulf being temporarily shutdown due to the low prices. Any guess what the price needs to be to spin those wells back into operation?
 
Tilted

Tilted

..
stgislander said:
We've been hearing about the wells in the Gulf being temporarily shutdown due to the low prices. Any guess what the price needs to be to spin those wells back into operation?
Click to expand...

I assume you're referring to drilling / new well development being halted? We're definitely seeing that now.

As for what it takes to get those projects going again, I'm sure it's different for different wells / areas / companies. So at $60 they'll be some wells being drilled a couple months from now that wouldn't have been at $50. And at $80 they'll be even more. At what point could we expect most of them to be back on track, as they would have been had we not seen the rapid price decline? Who knows, I'd guess in the $80 - $90 range. But I think it's more than just the barrel price. It's the expectation of price stability. I think even if tomorrow we saw prices go back to where they were 10 months ago (e.g. the high $90s for WTI), not all of the production growth that would have happened (had prices just remained there) will happen. Much of it would probably return fairly quickly, but I think some would not. The decisions that were affecting how many wells got drilled weren't just based on where the barrel price was on a given day, but on expectations that it was likely to stay around there or go higher. Oil prices had been fairly stable for a while, and conventional wisdom had demand more or less keeping up with supply such that a huge price decline wasn't expected by most - and traditionally OPEC could have been counted on to step in and halt a sharp price decline even if one happened.

The steep decline we saw put a hurt on some people, a lot of smaller energy companies - not the Exxons of the world but smaller players that were highly leveraged or otherwise couldn't afford the sustained cash flow hit from prices being cut in half for a while. They made decisions to allocate capital based on the assumption (or perceived high likelihood) that prices would be staying high for a while. Now they realize, because of a fresh real world demonstration, that they can be wrong in such regards. So they have to be gun shy to some extent. Regardless of where prices go from here, the overcorrection likely did some lasting damage when it comes to new production being developed in the coming years. That is at least what OPEC is counting on, and I tend to think they know this business fairly well.

Anyway, my best guess is that $80 - $90 barrel oil is probably the sweet spot for consumers. As much as cheaper is better for us, I think that's about as low as prices can be for a prolonged period while still sufficiently incentivizing enough effort to develop new production. But really, who knows? So many things could change that would affect that market.
 
Tilted

Tilted

..
And we just got the weekly U.S. inventories number which unexpectedly showed a decline. Stockpiles have been (for the most part) building for a while and are near historically high levels. But maybe we've reached that inflection point where lower prices have affected actual current production (and consumption) enough such that the trend going forward will be for them to draw down.
 
Tilted

Tilted

..
The Baker Hughes U.S. oil rig count increased for both of the last 2 reported weeks, the first of those was the first time it had increased since late last year. I wouldn't count on that being the beginning of a substantial upward trend - we'll likely remain well below where we were a year ago. But maybe it represents a bottom and stabilization in active U.S. oil rig counts and, with a little luck, we'll see an upward trend going forward. That wouldn't necessarily mean we'd reached that point in areas where new oil production is more expensive though, e.g. in the Bakken.
 
Tilted

Tilted

..
Oil prices have been getting creamed for the last month or so. Even Brent closed below $50 yesterday. And wholesale gas has been moving along with, RBOB is down about 30 cents over the last month. The global oil market is still oversupplied and with the Iran nuke deal we might expect it to be easier for them to get even more oil to market. OPEC shows no signs of cutting production to support prices. They actually recently went the other way, increasing production to further suppress prices. Saudi Arabia alone reportedly boosted production by nearly a million barrels per day a few months ago.
 
kwillia

kwillia

n/a
The founding partner of Again Capital made his call for $30 oil last month, but told CNBC's "Squawk Box" developments in China may have moved the timeline forward. He said he expects to see a 30 print by October, followed by a rebound that will put the cost of U.S. crude in the mid-$50s next year.

"It's coming early. It's coming fast," he said, adding that oil in the $20s is possible, but that would be an overshoot to the downside.

http://www.msn.com/en-us/money/markets/dollar30-oil-coming-sooner-than-you-think-kilduff/ar-BBlGdB5
 
Tilted

Tilted

..
After falling to a 6+ year low last week and closing just above $38 last Monday, WTI Crude has seen a big move upward. It's up about 24% in just the last 3 trading days from Wednesday's close of $38.88 to a little above $48 right now. RBOB Gasoline has seen a similar move, up about 23 cents from its Wednesday close of $1.373.

EIA data tells us that U.S. production fell by more than 300K barrels per day between April and June.
 
Gilligan

Gilligan

#*! boat!
PREMO Member
Quite a bounce. I don't want to see oil go too low; I'm content with the cost of premium gasoline hovering around the $3 mark.
 
You must log in or register to reply here.
Top