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Posted
  • Location: Leeds/Bradford border, 185 metres above sea level, around 600 feet
  • Location: Leeds/Bradford border, 185 metres above sea level, around 600 feet

    Yes, not going to shoot up suddenly. I'm still thinking we should be looking at $70-80 for Brent at least by the end of the year.

     

    Inventories will start to tail off soon as US shale production declines (now happening). Also, US refineries have been going through their spring shut-down for maintenance and change over in preparation for summer blend production. When that starts, they'll begin eating into US storage.

     

    The effect is mainly on WTI as you can see from prices. Brent baseline has been rising from January. WTI has remained more constant as that's where the glut is and the US can't export raw crude.

     

    There was some speculation Iran was going to 'flood the market' if sanctions were lifted. However, that's largely dog biscuits. They do have a lot in Storage, but sanctions have destroyed their production capacity with so many shut-downs / lack of equipment and overseas tech*. Even if they could freely export tomorrow it will take a long time before they could get back to anywhere near theoretical full production.

     

    The speculation here, like that about storage in the US running out imminently, is largely down to those with a vested interest in the price falling further pushing these ideas. Basically, the short sellers on the stock markets. They make a mockery of price being related to supply and demand!

     

    ---

     

    *My co already has a growing list of jobs with them if/when we are actually able to work with them legally. Suffice to say many of the problems they wish us to help solve are down to long term shut-ins. The longer a field is mothballed, the more aches and pains you get trying to restart it!

     

    Iran being part of OPEC and having a higher cost per barrel probably won't want to flood the market anyway, at least until foreign investment allows for technology transfer to produce much more efficiently. Watching Bloomberg economists surveyed believe that they could almost immediately increase production to 4 million barrels per day with sanctions gone (i think around the double of now) but they'd need more efficient production to increase to 7. 

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    Posted
  • Location: Near Lauder, SE Scotland, 175 m asl
  • Location: Near Lauder, SE Scotland, 175 m asl

    A bit of an update on that '100 billion' barrel discovery in England.

     

    More like just a few % of that at best for now.

     

    http://www.bbc.co.uk/news/business-32314895

     

    Size of UK oil find as yet unproven

     

    ...UKOG announced: "The company has not undertaken work outside of its licence areas sufficient to comment on the possible OIP [oil in place] in either the approximate 1,100 sq miles or the whole of the Weald Basin."

     

     

    Definitely looks like a very thin reservoir spread over a large area, like shale. Source rocks in the area would back that up.

     

    If so, highly likely any oil would be concentrated in 'sweet spots' where the rocks were thermally mature, and not spread over the entire basin.

     

    Also require a lot of wells drilled over a large area of countryside like shale, hence, as noted, the 'barrels per square mile' reserve estimates. Conventional oil and gas is never quoted in such terms as it is highly concentrated what is normally quite a small area.

     

    I suspect the big numbers quoted were to boost share price and investment. Shale companies are notorious for this, quoting unproven 'estimates' to encourage investment, but keeping quiet about actual proven recoverable which is often a fraction of estimates.

    Edited by scottish skier
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    Posted
  • Location: Camborne
  • Location: Camborne

    A bit of an update on that '100 billion' barrel discovery in England.

     

    More like just a few % of that at best for now.

     

     

    Definitely looks like a very thin reservoir spread over a large area, like shale. Source rocks in the area would back that up.

     

    If so, highly likely any oil would be concentrated in 'sweet spots' where the rocks were thermally mature, and not spread over the entire basin.

     

    Also require a lot of wells drilled over a large area of countryside like shale, hence, as noted, the 'barrels per square mile' reserve estimates. Conventional oil and gas is never quoted in such terms as it is highly concentrated what is normally quite a small area.

     

    I suspect the big numbers quoted were to boost share price and investment. Shale companies are notorious for this, quoting unproven 'estimates' to encourage investment, but keeping quite about actual proven recoverable which is often a fraction of estimates.

     

    Your not wrong there SS. I didn't keep the details but one of the business bods in the Times did breakdown of this. Very shady indeed.

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    Posted
  • Location: Carryduff, County Down 420ft ASL
  • Location: Carryduff, County Down 420ft ASL

    Brent Crude on the move again, now up to $64 a barrell.

     

    With demand starting to pick up from a the improving world economy and supply remaining tight, that chart is only going one way. i reckon we'll be back to €90 a barrell by year end and the Scottish Economies "Black hole" will be back in surplus.

     

    http://www.bbc.co.uk/news/business/market_data/commodities/default.stm

    Edited by mountain shadow
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    Posted
  • Location: Calgary, Canada (1190m asl)
  • Weather Preferences: Wind driven falling snow
  • Location: Calgary, Canada (1190m asl)

    Brent Crude on the move again, now up to $64 a barrell.

     

    With demand starting to pick up from a the improving world economy and supply remaining tight, that chart is only going one way. i reckon we'll be back to €90 a barrell by year end and the Scottish Economies "Black hole" will be back in surplus.

     

    http://www.bbc.co.uk/news/business/market_data/commodities/default.stm

     

    I know you will have factored this in MS, but it's worth remembering that Sterling would have to increase in value by 15% to get back to the same level it was at last year. The value of a barrel of oil in £ hasn't dropped as much as it has in $.

    Edited by CatchMyDrift
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    Posted
  • Location: Near Lauder, SE Scotland, 175 m asl
  • Location: Near Lauder, SE Scotland, 175 m asl

    This in Energy Voice today.

     

    https://www.energyvoice.com/oilandgas/77691/tony-hayward-beaten-shale-prices-set-to-boost-crude/

     

    Tony Hayward: ‘Beaten shale prices set to boost crude’
     
    A combination of cost-cutting measures by oil and gas firms and Opec’s decision not to curb output is laying the foundations for the next crude price surge, former BP chief executive Tony Hayward said yesterday....
     
    ......The peak of US shale supply has arrived earlier than anticipated. … The supply chain in the US has been decimated. … It will take several years to take activity back,†said Mr Hayward, who is now chief executive of mid-sized oil producer Genel.
     
    The huge scale of capital and workforce withdrawal in the sector is also laying the seeds for the next bull market and a surge in prices to back above $100, he was quoted as saying at a summit in Lausanne, Switzerland.

     

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    Posted
  • Location: Orleton, 6 miles south of Ludlow
  • Location: Orleton, 6 miles south of Ludlow

    Rise in oil prices not yet come through to heating oil, but price at the pumps is slowly edging upwards, just a penny every week or so. Prices at the pumps now about 4p/L higher than their minimum.

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    Posted
  • Location: South Cheshire
  • Weather Preferences: Warm and sunny
  • Location: South Cheshire

    Rise in oil prices not yet come through to heating oil, but price at the pumps is slowly edging upwards, just a penny every week or so. Prices at the pumps now about 4p/L higher than their minimum.

    More like 8p here.

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    • 3 weeks later...
    Posted
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield
  • Weather Preferences: Any Extreme
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield

    Well the Price continues too slowly rise. Now 1.17p per litre 

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    Posted
  • Location: Longlevens, 16m ASL / Bradley Stoke, 75m ASL
  • Weather Preferences: Hot sunny summers, cold snowy winters
  • Location: Longlevens, 16m ASL / Bradley Stoke, 75m ASL

    Certainly no deflation at the pumps, seems to be going up at 1p per every two weeks at the moment.

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    Posted
  • Location: Leeds/Bradford border, 185 metres above sea level, around 600 feet
  • Location: Leeds/Bradford border, 185 metres above sea level, around 600 feet

    Certainly no deflation at the pumps, seems to be going up at 1p per every two weeks at the moment.

     

    Inflation/Deflation is measured year on year so you'd have to remember what the price was a year ago to correctly state that.

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    Posted
  • Location: Longlevens, 16m ASL / Bradley Stoke, 75m ASL
  • Weather Preferences: Hot sunny summers, cold snowy winters
  • Location: Longlevens, 16m ASL / Bradley Stoke, 75m ASL

    Inflation/Deflation is measured year on year so you'd have to remember what the price was a year ago to correctly state that.

    Sorry Mr Pedant!

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    Posted
  • Location: Back in Edmonton Alberta(via Chelmsford, Exeter & Calgary)
  • Location: Back in Edmonton Alberta(via Chelmsford, Exeter & Calgary)

    Well the Price continues too slowly rise. Now 1.17p per litre 

    Diesel is now at 1.23 here at main stream stations only 5p short of the 1.28 before oil crashed

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    Posted
  • Location: Beccles, Suffolk.
  • Weather Preferences: Thunder, snow, heat, sunshine...
  • Location: Beccles, Suffolk.

    Diesel is now at 1.23 here at main stream stations only 5p short of the 1.28 before oil crashed

    Aye, CM...Rip-off territory is creeping ever closer. :angry:

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    Posted
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield
  • Weather Preferences: Any Extreme
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield

    Petrol anything from 1.15 to 1.19 here Diesel only a few pence more expensive where not long ago the difference was about 10p a litre.

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    Posted
  • Location: Orleton, 6 miles south of Ludlow
  • Location: Orleton, 6 miles south of Ludlow

    Diesel currently 120.9/L around here.

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    Posted
  • Location: Near Lauder, SE Scotland, 175 m asl
  • Location: Near Lauder, SE Scotland, 175 m asl

    Well, price recovery per barrel since bottom out is occurring faster than after the much larger 2009 price crash.

     

    Shale oil has gone belly up with rig numbers completely collapsed and still falling. That's now feeding into declining US production / stockpiles. The nature of shale means the decline is likely to accelerate as flow rates of running wells collapse but there are increasingly fewer new wells to replace them. A ponzi scheme to begin with and now falling apart. It may recover in the future, but on a much smaller scale. 

     

    Saudis will likely keep pumping for now, especially as world demand in growing. There's even rumours they are struggling with spare capacity to the extent they are refusing to sell more to the Chinese.

     

    Also, oil majors such as shell warning of high prices within as possibly little as a year, but certainly by 3 years or so due to the collapse of shale and cut backs in investment in conventional while demand continues to steadily rise.

     

    Still some banks and traders insisting on further falls. I'd say ignore these and listen to the oil companies. Banks and investors want to drive the price down so they can make money e.g. short selling. They know nothing about oil; that's the realm of geologists and production engineers.

     

    Reality is that we are no longer in the world of cheap oil. People went after shale not because new technology made it economic to produce, but because high prices meant existing technology could potentially make it viable.

     

    My own prediction is ~$80 a barrel by the end of the year. By end 2016 could readily be $120 a barrel. Good chance it will be tempered by sanctions lifted in Iran to keep it more $90-100 for a year or two. However, the instability in the middle east caused by ISIS is unpredictable and could cause a shock rise depending on what happens in Iraq and Libya (even possible problems for Saudi if things spill over). Right now for example, Libyan output is up an down like a drunk on a pogo stick.

     

    Of course part of the rise will be down to investors again. We've had the panic that prices were falling so people were 'sell, sell, sell'. Next the panic will set in about how there's not going to be enough being produced in a few years so we'll get 'Buy, buy, buy!.

     

    Oil is a clear cut case of how the free market doesn't work; the value of oil right now is way below what it's real value is. 

     

    First we had onshore conventional. Then we had offshore shallow conventional. Then we had offshore increasingly deeper water conventional. Then we had very remote offshore deep water conventional. Started with easy, then got harder and harder. Then we went for really hard; tight shale. But it was still way to early to be touching that stuff as there's a good lot of conventional still left so pop went the shale bubble.

     

    Ultimately, what makes oil economically viable to extract is that the energy expended getting it out of the ground and to its final point of use is less than the energy you get from the oil itself. Increasingly we do have to put more and more in to get the same back and that makes oil increasingly costly.

     

    But then traders don't get that, so we get volatility.

    Edited by scottish skier
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    Posted
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield
  • Weather Preferences: Any Extreme
  • Location: Sheffield South Yorkshire 160M Powering the Sheffield Shield

    Not really a free market though is it as it's still really controlled by the middle east and what happens there. If the US shale oil had been built on a sound premise then the Saudi tactics of trying to force them out wouldn't have worked and we would have had a proper free market. Any Governments can stop worrying about deflation and start worrying about inflation and continuing falling demand in the home market.

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    Posted
  • Location: Cheddington, Buckinghamshire
  • Weather Preferences: Winter: Cold & Snowy, Summer: Just not hot
  • Location: Cheddington, Buckinghamshire

    Unleaded 114.9p at local Sainsburys.

    Better than 137p from a year or so ago.

     

    Rejoice, we're being slightly less ripped off than before!

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    Posted
  • Location: Beccles, Suffolk.
  • Weather Preferences: Thunder, snow, heat, sunshine...
  • Location: Beccles, Suffolk.

    Rejoice, we're being slightly less ripped off than before!

    It's probably gone up since then, anyway (not that we'd have been told?) Oil barons don't tend to hang around!

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    Posted
  • Location: Near Lauder, SE Scotland, 175 m asl
  • Location: Near Lauder, SE Scotland, 175 m asl

    I'm not sure people quite understand how the market works.

     

    Firstly, most of the costs at the pump are George Osborne going through your pockets.

     

    unleaded-12th-august-2011.png Diesel-12th-august-2011.png

     

    Secondly, why would e.g. Shell, Total or BP reduced prices at the pump if the price of oil is at rock bottom?

     

    That makes no sense at all.

     

    If the market price of oil is low, then oil and gas companies lose money and staff. A low market price doesn't mean it is cheaper to produce and refine oil. It means it is increasingly uneconomical to do so.

     

    So, shouting 'Hey, the oil price is low so it should be cheaper at the pumps' is somewhat nonsensical.

     

    Of course if you are not a producer, but buying oil or refined fuels on the open market, a low oil price means you can buy cheap and sell on the forecourt cheaper.

     

    So, if you are looking for rip-offs, you need to look at non-oil company forecourts and see what the prices are like compared to your e.g. Shell garage.

     

    And note I'm not saying oil companies are angels out to give us the best deal. No, they can make big profits and be very greedy. A greed which can cost them 10's of thousands of jobs like right now in the Shale bust.

     

    They can also be involved in cartel-like behaviour. That is capitalism that the West has embraced. Certainly, anyone who votes Tory shouldn't complain about someone try to maximise profit from them!

     

    Anyway, the crux of the matter is people need to stop shouting for cheaper oil and gas.

     

    Those days are gone. Prices were cheap at the forecourts in the past (e.g. 15+ years ago) because oil was cheap to produce. It came from enormous fields where you just stuck a well in and out it gushed for decades. We've emptied most of these and so costs are rising. They will continue to do so. Part of that will be profit, the profit will vary with the oil price. Right now there are fields making a loss but are kept going because to shut-in and start up again when the price is higher would be more costly than just making a loss for a few years.

     

    Anyway, there will likely be a bit of volatility around OPEC's latest announcement, possibly a drop in price which will have the city traders lying to you that the price is going to plunge (so they can profit from short selling), but in the end the baseline price is back in the way up, has been since January, and there's no obvious reason for it to stop as oil is running low in the long term.

     

    We just had a glut that the markets jumped on. It's now correcting.

     

    $100 a barrel oil is realistic. It was at that price because that's increasingly what it costs to produce and make sufficient profit to invest in new sources. It will return there in time. Might take just a year, probably a couple.

    Edited by scottish skier
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    Posted
  • Location: Back in Edmonton Alberta(via Chelmsford, Exeter & Calgary)
  • Location: Back in Edmonton Alberta(via Chelmsford, Exeter & Calgary)

    I'm not sure people quite understand how the market works.

     

    Firstly, most of the costs at the pump are George Osborne going through your pockets.

     

    unleaded-12th-august-2011.png Diesel-12th-august-2011.png

     

    Secondly, why would e.g. Shell, Total or BP reduced prices at the pump if the price of oil is at rock bottom?

     

    That makes no sense at all.

     

    If the market price of oil is low, then oil and gas companies lose money and staff. A low market price doesn't mean it is cheaper to produce and refine oil. It means it is increasingly uneconomical to do so.

     

    So, shouting 'Hey, the oil price is low so it should be cheaper at the pumps' is somewhat nonsensical.

     

    Of course if you are not a producer, but buying oil or refined fuels on the open market, a low oil price means you can buy cheap and sell on the forecourt cheaper.

     

    So, if you are looking for rip-offs, you need to look at non-oil company forecourts and see what the prices are like compared to your e.g. Shell garage.

     

    And note I'm not saying oil companies are angels out to give us the best deal. No, they can make big profits and be very greedy. A greed which can cost them 10's of thousands of jobs like right now in the Shale bust.

     

    They can also be involved in cartel-like behaviour. That is capitalism that the West has embraced. Certainly, anyone who votes Tory shouldn't complain about someone try to maximise profit from them!

     

    Anyway, the crux of the matter is people need to stop shouting for cheaper oil and gas.

     

    Those days are gone. Prices were cheap at the forecourts in the past (e.g. 15+ years ago) because oil was cheap to produce. It came from enormous fields where you just stuck a well in and out it gushed for decades. We've emptied most of these and so costs are rising. They will continue to do so. Part of that will be profit, the profit will vary with the oil price. Right now there are fields making a loss but are kept going because to shut-in and start up again when the price is higher would be more costly than just making a loss for a few years.

     

    Anyway, there will likely be a bit of volatility around OPEC's latest announcement, possibly a drop in price which will have the city traders lying to you that the price is going to plunge (so they can profit from short selling), but in the end the baseline price is back in the way up, has been since January, and there's no obvious reason for it to stop as oil is running low in the long term.

     

    We just had a glut that the markets jumped on. It's now correcting.

     

    $100 a barrel oil is realistic. It was at that price because that's increasingly what it costs to produce and make sufficient profit to invest in new sources. It will return there in time. Might take just a year, probably a couple.

    so why does the price of petrol follow the price of oil more closely in North America for example? when the oil priced crashed in 2008/9 from a high of $150 to $40 the price of petrol crashed in North America as it did somewhat here..there on in the price of petrol has never come close to the high price per litre in 2008 and has remained well below that level ever since..yet in the UK it has far exceeded what the price was back in 2008 and still remains above that value.

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