Will Oil Find a Bottom?

Cheeky!

Good one! That cracks me up.

Sure it will - no one will produce at less than $0.
Based on this, I'm guessing we're pretty close to bottom, maybe $45. I bought gasoline last week at $1.899/gal. (for you Californian ).

$ 2.85, thanks to our wonderful Democratic legislature.. Tax went up another 10 cents at the first of the year due to Carbon Credit charges….

gotta love it

Is that a total brain blowout through the nostrils about to happen, or just a minor stroke?

I expect continued volatility.OPEC is essentially dead. the Russians are hurting for cash so they're pumping like no tomorrow. at certain price levels near here fracking doesn't make sense...depending on individual sites. basically there is not enough storage for existing product so the market is being flooded.I wouldn't be surprised to see short term spikes into the 30's, its a good time to be in the storage biz for crude.ethanol will be on the ropes soon

I want to follow up on my ethanol comment. I'm a Calif guy and this crap is the worst if you're a car guy. people like me will actually seek out and pay more fore pure gas.

heres a link to a vid that illustrates the issue well.

I'm not endorsing anyone or anything.I just think the ethanol boondoggle/ripoff wont last if we have plenty of crude.https://www.youtube.com/watch?v=DL_8SkZjEPc

the farm lobby is powerful, they wont give their cash cow away without a fight.people bought the idea when it was sold as, "we'll just grow fuel", but clearly ethanol isn't a drop in substitute and has caused untold damage to millions of fuel systems. it lowers mileage. etc. the masses aren't so fooled anymore. bring on more fracking and real gas!

I am surprised and pleased to find that I got good answers there. I agree our country needs to actually keep drilling here and drilling now, and keep forcing down the price of oil (along with the Saudis). Help them out a little, you know what I mean? Unfortunately, we could wind up costing the exploration companies some money with thinking like that. They are not operated by the government, so they are in fact proficient at what they are doing, and are there to make insane corporate profits for their bosses. That is what makes the wheels turn.

"...to make insane corporate profits for their bosses."

What exactly is insane?

Last quarter Exxon made 7.5% profit.

Is that too much?

How about Home Depot? Those gangsters made 35% last quarter. Maybe BIG Lumber is the real threat to the 99 percenters?

I guess I should distinguish between facetious statements and serious ones, huh.

I agree that Big Oil does make a huge percent profit, nor do any of the chemical manufacturers, but they still come away at the end of the day with a lot of money. Nature of the beast. Who would work for them if not?

As to Home Depot - don't get me started. I will drive an extra 20 minutes if need be just to not do business with Home Depot. I especially abhor (hate is too strong a word) their incessant commercials on television, where they "command" the audience to "let's do this". What if I don't want a "this" or a "that"? I don't start projects because some Big Box Store "commands" me to.

How totally disingenuous of you.

I'm appalled that you would stoop so low!

On the one hand you quote "profit" for poor Exxon mobile.

Then you switch to "gross profit" to prove your point with Home Depot.

Pants on fire?

Here's the real number, from your own source:

Exxon Mobil Gross Profit Margin (Quarterly):

34.53% for Sept. 30, 2014

Thanks for the correction. When I Googled the amount for BIG Lumber I thought I was getting the same thing as I had for BIG Oil.

Frankly, we are in the low 60° mark right now and I just thought my trousers must have simply come straight from the dryer...

Now that I see the problem I have made good use of our swimming pool. ;-)

That's OK.

Given your outstanding record here, not to mention your insight into all things intellectual, consider yourself flogged.

Thanks, I needed that! :-)

Was that on the same place where the oil bottomed out?

We don't know yet.

The bottom hasn't appeared, yet.

The answer is yes of course there is a bottom, the only question is how low and how long.......Let's start with a few charts...the reasons for what's happening...

Oil producers and large volume consumers, use hedges to guard against financial exposure in prices that can swing wildly for any number of reasons....So the oil producers will not cut production until the financial instruments there are using are depleted....and that means that oil companies can continue at present level production for probably a year after break-even price has been breached....now the break-even price varies from well to well and can only be estimated by degrees of pressure as price drops, but we can use an average for each specific region and type of oil....but this is speculation and subjective in nature, so we'll just say $50, so having made that leap we can say, generally speaking, that if oil prices remain below that level for perhaps a year that this will be the potential pivot price point, or the 4P vector...

That then means that demand must meet supply before that time in order to prevent production slowdowns here in the US, so if you believe global growth will pick up over the next year, taking into account that some economies rely heavily on the price of oil to fuel economic growth, then prices will recover within the next year going forward....In my opinion any recovery will be slow and methodical in area's outside the US, as the oil price is a slight boost to our economy at these low levels....however this only has a near term effect of perhaps a year....So economic growth outside the US is the key which will determine length and depth of oil prices....

http://www.businessinsider.com/chart-new-world-oil-demand-blasts-past-old-world-2012-1

http://www.businessinsider.com/r-revamped-us-oil-hedges-may-test-opecs-patience-2015-1

http://oilprice.com/Energy/Crude-Oil/World-Oil-Production-at-3312014Where-are-We-Headed.html

http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

Palm trees and coconuts planting seem to be an advantage, after all the million barrels of crude they throw on air.

I bet Air Liquide is already leading the race for recovery.

http://www.cnbc.com/id/102308102, UNDER 50 bucks!

No.

It will continue to collapse until it forms a black hole and subsequently swallows the Earth.

It turns out, the environmentalists were crudely right after all.

silly answer, oil has no gravity!

Yes, but the only other option I have is to get you to sit on my driveway after I get done doing one of my oil changes. :-)

Oil has AP gravity, silly man!

Oh and by the way, don't know if you know this, but the oil at the top of the barrel (the last to be pumped out) is always worth a lot more than the oil at the bottom of the barrel.

Nothing in "free fall" has weight apparently, just mass, at least not until it hits something.

your closing price jan5 2015

Yet another article on the "why" of the collapse(?).

Really?

http://rationalwiki.org/wiki/Globalresearch.ca

if its on the internet it must be true

This article pretty much covers it....

http://www.reuters.com/article/2014/12/30/us-kaletsky-oil-idUSKBN0K81G720141230

Another case of dueling sources.

Where's our chief muckraker?

Price of oil, pipeline benefits, tax increases, tax decreases, just depends where your bread gets buttered.

About the only thing we seem to be able to agree upon is the collective uselessness, pettiness and ineptitude of our political leaders.

"About the only thing we seem to be able to agree upon is the collective uselessness, pettiness and ineptitude of our political leaders."

Then, good news, we should have even more to agree on! I understand the next wave of them is coming now.

"Will the Morality of Politics Find a Bottom?"

Yes, then it will be immoral.

Already been done - her name was Monica!

The question is who will blink first?

Saudi Arabia has enough money to outlast tcmtech's current employer, who's payinh him with borrowed money.

As much as I bitch about gas prices, I think it needs to stay around $2.50/gal or 90 dollars/barrel to keep things stable.

Yes. When the price is equal to or below the cost of production for a long enough period of time, it will stop declining.

I am old enough to remember when we (USA) decided importing oil from the Arab countries was cheaper than producing it in country.

Subsequently we shut down a lot of our producing oil fields and refineries then started importing the cheaper oil.

In the years that followed the oil & gasoline prices took off like a rocket.

By the time we realized what was happening, all of the abandoned fields soured and the cost to recover the wells and put them back into operation was too high so we allowed the extortion on oil prices to continue.

Then the military "police actions" started in the Mideast causing some to wake up and realize our tenacious military position caused by being almost 100% dependent on foreign oil as well as the instability and volatility being experienced by our economy.

Every country in the world that is a "super-power" must have a dependable, low cost supply of oil to fuel their military and business or they will suffer collapse of their economy and/or be defeated.

I could be wrong but I feel the declining price of crude is a direct economic measure designed to drive the price of crude down far enough so that the cost to produce in the USA will lead to our repeating the cycle over.

Time will tell of that I am sure. (Boy do I ever hope I am wrong.)

actually many wells that were thought to be "pumped out", have found a second life thanks to the evil fracking

Yep! I do think it is interesting that most of the chemicals used in the fracking process have been distilled from crude which is already existing in the ground yet few seem to recognize this.

On the "dry" wells; There is more to the story than most realize and much more than is allowed to be published.

My family provided various oil well services to the petroleum industry during the late 60's through the late 80's.

During that tile period there was a large quantity of producing wells which were shut down intentionally to drive the price of oil up.

Injecting live steam and chemicals work in some cases to soften the crude and promote new inflow however there is a significant number of wells that have been sitting so long that a new well has to be drilled at the site. (Expensive!)

Along these same lines:

When I was a kid back in 1973 I distinctly remember being told months before the gasoline shortage that it was going to occur.

Funny thing was that during the so called "shortage" the Gulf of Mexico was so stuffed with tankers waiting to offload it was almost impossible to maneuver a boat of any size and fishing as well as shrimping came to an abrupt halt.

The plan worked well as all oil & gasoline price controls were removed, the large oil companies refused to pay their bills, and most all of the small independent producers as well as oil well service companies went out of business.

Shockhiscan, Sorry to say you're not wrong, this is simply a calculated move to drive the higher cost producers into dormancy (or bankruptcy for the weaker hands). It may not have quite the impact overall that it did the last few times, due to some of the alternative energy sources that are coming on line now, but it will affect the short term economics of many upcoming projects and delay or eliminate many of them. I suspect that electric vehicles and their manufacturers are a major target, and that fracking and drilling will halt until the economics will tip back in their favor in a few years.

This no different than drug dealers flooding a market with cheap dope to drive out the small players while at the same time creating a new pool of dependent users. It's just the economic cycle grinding through familiar ground...again and again.

"I suspect that electric vehicles and their manufacturers are a major target..."

Considering the EV sales make up such a tiny fraction of total automotive sales (0.6% as of 2013 in the US), I think they are nothing more than a gnat in the larger picture.

http://cleantechnica.com/2013/09/30/electric-vehicles-speeding-toward-7-global-sales-2020/maybe

Well that is the hope, 7% by 2020.

But that is for all types of hybrids and EVs.

Plus, the data really does not support the original claim that the suppressed oil prices are part of a conspiracy to primarily (he used the word major) suppress electric vehicles.

They simply are not a threat to the market.

The cost of fracked shale oil extraction is guestimated between $25 and $90 a barrel, (and the lower price is a bit 'rubbery'). Obviously, if the delivered price is $60 or less, then the idea of making a profit and keeping the bankers happy becomes somewhat of a worry.

Gold recovery has enjoyed multiple cost reduction processes, making uneconomic deposits very profitable. Heap Leaching is one example.

Now, if there was an open perspective to shale oil (and gas) recovery, then expensive fracking (and fracking sands) might be replaced by much lower cost strategies which could be an interesting game changer ... and more change at the gas station. One of those game changers could be the cost effective 3D down-the-hole high water pressure drilling system, that WON the innovative mining section of the 2014 Australian Mining Prospect Awards.

Alternatives to oil are renewables & vegetable oil. Mideast countries cannot plant veg oil trees due to shortage of water.Their choice is renewables only. But many others have oil & water for plantations as well as renewables. Those who have technology will survive.

well its crashing again today, looks like 48 bucks to me

down another 4% today

When the refineries quit making an acceptable profit, it will have bottomed out.

Motor fuel to consumer spot check.

5 January 2015, Cheyenne WY USA:
Unlead regular gasoline (E-10), self serve, 85 octane: $1.91 per gallon.
This down from $3.50 a gallon on 12 September 2014.

$47.93 close today, do I hear 40 bucks soon????

Australian gas pricing does vary across the country. It would seem that US pricing is approaching half the retail cost of almost 4 months ago ... whereas in our part of the world it has only dropped around 30%. Oh the world of taxes, shipping, shutting down refineries and oil company profits that impact on the level playing field.

The 'Dutch Disease' is another complicating factor in Australia with the current Federal Government's direction that has got messy with the dropping of the major gas, coal and iron ore commodity export prices.

Dutch disease can have the following steps:
1. High profits from exporting commodities creates demand from all who want a share.
2. Increasing costs of local goods are replaced by increased low cost imports. Job losses.
3. Manufacturing shrinks and/or bought cheaply by overseas companies.
4. Commodity exporters ramp up the export capacity (with high cost capital)
5. Exporting revenues fall with oversupplied decreasing commodity prices (gas & iron ore)
6. Government policies based on chiseling their cut on all levels cannot be funded.
7. Greed wins ... again!

I think this whole mess is simply going to come down to who blinks first and so far the American track record tends to show we have a lazy eye when it comes to blinking over financial threats.

As far as my personal job goes well as long as they keep me entertained and paid I will be here. When that ends no big deal for me I have enough fall back measures in place to not really have to concern myself about finding another oil field job, or any other job for that matter, any time soon.

"When that ends no big deal for me I have enough fall back measures in place to not really have to concern myself about finding another oil field job, or any other job for that matter, any time soon."

Then again, Wasn't it the 'little missus' who 'encouraged' you to come out of retirement so you wouldn't be 'sitting around the house all day?' The choice to 'not be concerned about getting another job' might not be yours alone to make.

On the other hand, if you were at home, we'd get more of those entertaining stories about the wife, or the 'interesting' neighbors. Those were always fun to read.

Actually her attitude has changed fora full 180.

After her dad left due to his visitors Visa expiring about two months ago all of my former house chore work that he had apparently picked up when I went to work now fell fully on her.

He was gone about three days before her attitude about my working swung too, "Well if you want to quit your job thats Okay with me just as long as you keep covering your half of the bills and go back to do doing your part of the chores again."

My response to that was basically, "No. Thats Okay. I like my job now so I think I will stay there. You go ahead and keep doing everything yourself just like I said would happen back when you insisted I get a job because I do nothing at home all day."

Now to top it off I have been volunteering to work some of my days off now as well just to well you know, Be me.

Your household sounds almost as passive-aggressive as mine. I am sort of happy to learn that my wife has at least something in common with one other human being on this planet (no its not me). Funny thing, before we got married it was wine and roses. Now it is her yelling at the top of her voice at 05:45 that I slammed the storm door on the way outside for my first smoke of the day (tobacco, not that other stuff). But why am I sitting here at work, and telling on her? I suppose I have no shame.

At first in our relationship, it was the sound of a high pitched woman screaming, and the smell of burning rubber, now it is still the high-pitched screaming, but with a more nasal tone to it. No rubber to be found anywhere.

My software model indicates that by this time next year, they will pay me to fill my tank!

fat chance, the fun is temporary

By the way, you haven't made your guesstimate of the bottom. I said $45 - I'm sweating it, but so far I'm still in the game.

We gloat, but the implications scare the hell out of me.

I sense impending doom.

Doom how? I think it'll be 'interesting' to see the effect on Russia/Iran.

complex answer. I think the key is how much pain can Russia take.their ruble has crashed, the oil they've relied on so much isn't worth as much.http://www.themoscowtimes.com/opinion/article/two-sides-to-every-weak-ruble/493641.html they're shooting themselves in the foot right now selling at fire-sale prices.I just looked at a chart. I don't see strong support until around $40 I think knowing Putin is in a vise is sad if he lightens up his BS I think the Euros will get off his case. the Chinese will always buy for a good price. I think we'll surely see 70 oil again....after Putin gets a spanking

A somewhat tongue in cheek solution would be to pump the oil back into the underground reservoirs (or mine would be better) to be extracted when pricing is higher (again). But then an astute oil pumping entity would leave it in the ground for a future extraction day and give the pumps a rest.

From a banking perspective, the oil only loses its value after it is recovered. While it still stays in the ground, then you can 'pitch the value' at a much higher historical value, and borrow against that future recovered asset. Now, if you buy that perspective and fund me with a loan, I have a bridge or two I can sell you!

you almost described a fracking business model

Hmm, wonder if the SPR is full? I seem to remember the Feds 'borrowing' some several years ago to try to moderate high prices. Did they replace it? I suspect the Saudis would frown on anybody attempting to profit off the situation.

Just take me to your banker ... I will share a percentage and a beer with you as we watch the yoyo oil prices go up, down, up, down ... and then we might play a round of 'Monopoly', or the online oil game from Funny Games.

Back to the original question you posed ... "will oil find a bottom" .... well it someone depends on the players, the payers (we at the gas station), the pollies and the passions of some to run the total pool. Watch this space.

We were talking about this at work last night and the word from the people in the know who do the number crunching is that the price of oil would have to drop below ~$26 a bbl for drilling and fraccing to become cost prohibitive here in ND.

That's the average. The upper and lower numbers for our wells is between ~$35 for low yield wells and ~$22 for high yield wells.

Guess I might be keeping my job a bit longer.

That seems to be the good news. So far, the recent jobs report shows weak job growth, and weaker wages. With the Euro zone in technical deflation, how long before this goes worldwide?

Some will curse the dark, some will light a candle, other will drill here, drill now.

I think the record low participation rate is the headlinehttp://www.zerohedge.com/news/2015-01-09/labor-participation-rate-drops-fresh-38-year-low-record-929-million-americans-not-la

I don't remember the exact numbers, but I heard this morning that unemployment is below 6%. That's the good news.

The bad news is that wages are down. That's the bad news.

The real news is that many people (like me), who have been 'out of work' for so long we quit relying on the unemployment office, are not 'unemployed' by the gubment's definition. We don't have a regular job, but we're not 'unemployed'.

That always annoyed me too (the two times I was unemployed) when I found out the "unemployed" was actually only "persons collecting unemployment benefits". The remaining folk who are out of work remain unreported. I think the government/media's excuse (and this was way before Obama) was that it was a difficult number to establish, (so we'll just leave it unreported, shall we? And while we're at it, let's not clarify what the number we DO report actually represents.)

When the folks running things have to create all these categories in order to "paint" the screen with the numbers they want people to see, it is still just using statistics to pull the wool over the American people's eyes.

We have not seen a truly honest politician since....hmmm...let me see...Geo. Washington? All joking aside, I think there should be some standards in reporting that gives all the facts, but that would also require educating some folks and a lot of them, so that they will truly see what they are being shown.

The bottom line to this is there needs to be a re-vitalization of American industriousness, ingenuity, dignity, and self-reliance so that people all over are empowered to earn a better living than they are getting today. But this will take all the fortitude, will, determination, and truth we can pump into the machine.

The bottom line to this is there needs to be a re-vitalization of American industriousness, ingenuity, dignity, and self-reliance so that people all over are empowered to earn a better living than they are getting today. But this will take all the fortitude, will, determination, and truth we can pump into the machine.

I agree, but sadly, I have my doubts as to whether the current folks are up to the task. It requires too much time and effort in a world filled with instant gratification (woo hoo...I have 500 likes on FB).

I'm doing my damnedest to instill the things you mention into my kids. It's tough battling their peers.

Cheap labor, cheap shipping and the Walmart syndrome have added to the "junk bond" mentality of US business practices.

Buy junk overseas where labor is 50 cents an hour, ship it here from BFE, undercut the competition to drive them out of business and then give back build toys, such as: The museum has amassed $488 million in assets as of August 2008.

Crystal Bridges Museum of American Art - Wikipedia, the ...

The "American Dream" has turned into a nightmare.

Re-writing the "American Dream" is surely in your own (collective) hands.

From an Australian perspective, the underground swell in the USA is apparently towards an European perspective.

Meanwhile in Australia, some pollies and conservatives who enjoyed free uni education etc now want more and more 'user pays', less social welfare, cheap imports and the killing off of local manufacture. The car industry will see GM, Ford and Toyota stop making cars in Australia within 100 weeks. Mitsubishi and Nissan have already closed shop. Similarly, the national government would prefer to buy $20B in Jap subs and kill off the local sub industry. Our cigar-smoking treasurer sees it as the 'American Dream' to aspire to, well the dream of some decades ago.

Now all of the above in a local context is somewhat dependent on high oil, gas, iron ore and coal prices ... well hello .... these commodities have all seemingly 'headed south for the winter'. Maybe it is time to assemble a 'World Dream' ... wasn't that in part what the UN was established for 70 years ago?

Thing is the UN has nothing to do with the original objective of the UN charter. Now it is all about Agenda 21. Look out for your guns, as they are next.

OK, I'll buy that.

I was going into a store, passing a young man, not missing any limbs, or otherwise injured or incapable, who was carrying a "Need money" sign. I asked him how much he wanted for his youth and potential, as I felt he was pissing away the greatest advantage he had. He looked like he had been struck by lightening, jumped up, and got as far away from me as he could. I wish I had a picture. It used to be that Society itself would shun and shame someone into at least asking for work, but I guess that period in the History books. Sad...

The bad news is that is just the U6 number. It is those workers out of work and collecting compensation. Once you are unemployed and your unemployment compensation runs out you are no longer counted as unemployed in the U6 number.

The U5 unemployment number is just over 12%.

That represents those that are out of work and have exhausted their compensation, but have not yet found a job.

Those that like to promote how bad things are will usually talk about the U5 number and the total number of people of working age that are not working.

Those that like to push a rosier picture cite the U6 number.

Usually the U6 number is actually a good barometer of employment health. However, with the last recession so many people have been displaced are are now off the unemployment compensation list that it is skewing the U6 number such that it looks better than it really is.

At the current rate of GDP growth it is estimated that it will take somewhere between 10 to 15 years to reach parity with the employment percentage numbers we had prior to the recession crash.

That should give you an idea of just how serious the recession has been. Obviously not as bad as the Great Depression, but we had a major war to pull us out of that with the GI Bill and a host of other factors that aligned to create the boom of the 1950s and 1960s.

It's my understanding from looking at this issue years ago, if you've worked even a short time in the month (such as one day) you are counted as employed for that month. Sounds like a misleading way to categorize data.

its Friday, oil is trading in the 47s

traded as low as 47.16 today, last was $48.43, more Gulf crude id expected to come into the market next week so it could bump down again

currently trading in the 45's

$1.86/gal today for reg. in Mesa AZ.

We buy groceries at Safeway. They give gas discounts at their pumps, depending how much you spend for the food.

Last week with the discount I paid $1.09/gal.

Most places in Lubbock, TX showing $1.779/gallon regular gasoline today.

Also been hearing chatter that O'Bummer wants to increase the taxes on fuels by an enormous amount. That guy could wreck a steel ball with a sponge!

Brent crude and WTI continued their headlong plunge today, hitting record six-year lows, as an oil minister from OPEC reiterated that the group would not change its production strategy. The United Arab Emirates will continue to expand output, while shale drillers will probably be the first to curb production as prices fall, said Energy Minister Suhail Al Mazrouei. Brent crude is down 2.9% at $46.07, while WTI passed a key $45 benchmark, dropping 2.8% to $44.78. Source: Alpha

OK, so I am asking again ... who is running the book on this one?

who knew???

Oil resumed its decline after its biggest gain since June 2012 yesterday, bolstering speculation that a global supply glut will continue to push prices down. Brent crude is now trading lower than WTI for the second time this week, after a similar drop on Tuesday, when the gap between the two benchmarks came to a close for the first time since July 2013. Brent is 3.1% lower at $47.20/bbl, while WTI is down 2% at $47.53.

Apache says it will also lay off several hundred employees, cutting 5% of its workforce this week. The move signals one of the first major workforce cuts at an American oil producer after the recent drop in crude prices. Apache (NYSE:APA) had been profitable through the U.S. energy boom until the third quarter of last year, when it reported a $1.24B loss.

The above 2 stories from ALPHA
And there's a bottom out there ... somewhere?

its going lower