Oil prices going down

[Osama + 248]

8 hours ago, Jan van Eck said:

Ultimately, when the dust settles, I have no idea.  The reality of these markets is that they are driven by two factors:  greed and fear. 

I appreciate that you will find that unsatisfactory.  OK, so here are some theoretical thoughts. You assume that lack of capital investment in new fields will ultimately, at some future point, lead to reductions in offered product (crude oil).  But remember that most crude is not consumed "straight." There are exceptions:  crude from the Bakken in North Dakota is railed to Portland, Oregon, and the trans-Pacific ships can and sometimes do take the material straight from the railcar for use as bunker.  The Bakken crude has some diesel mixed in, used as a fracking fluid, and I suspect also contains volatiles as bubbles in the oil, such as butane and pentane.  That makes the crude capable of burn without further refining. 

The rest of the crude is being sold to refiners.  If production cannot fill orders, then prices will rise until some refiners drop out, because oil is a physical product and the refineries need physical product.  The refiners are creating finished product to be (eventually) sold at retail, so there will again not be enough production to supply orders, and the prices at retail rise until buyers either economize (i.e. driving slower, turning down the house thermostat) or drop out as buyers. Those buyers then look for substitute goods to replace their oil consumption habits. 

It is this threat of substitute goods that puts fear into the hearts of oil producing nations: the permanent loss of customers. When that happens, you will again see producers pumping loads that cannot find a home, and raids on competing producers by dropping the price.  As oil is inelastic, a price collapse is entirely predictable.  Let us look as some of these substitute goods. 

In Western markets, the first substitute good is insulation, also referenced as "weatherization."  When buyers are pushed to spend money on insulation, a permanent final customer home is lost, forever, to producers.  Insulation of an older home requires getting into the walls, and creating an air-lock at the entrance door.  Now, tearing out the sheetrock on the inside is a bear, lots of dust and disruption, so typically the outside wood clapboard covering is removed, a plastic wrap sheet is installed, and a layer of insulation board is attached. Then the siding is re-attached.  Now, this is an expensive project, and if the price of heating oil is low enough, nobody does this.  Jack up the price,and this is one result. 

The other result is that customers yank out the oil furnace and install a propane or natural-gas furnace, going to "substitute goods" for oil. 

The next area of substitute goods is with the automobile (and bus and truck).  Much has been written about electric drives, so I won't go there.  What you will see is an explosion of hybrid offerings, which effectively reduce the amount of distillate fuel needed to travel a specific distance. So, once that fleet hits, permanent customers are lost forever to the producers. 

Even more dangerous to the producers is the electric bicycle.  Consumers faced with high vehicle ownership costs, including insurance, maintenance, and fuel, will abandon those machines and buy a bicycle  (or its more expensive cousin, the electric motorcycle).  Electric bikes are in a rapid phase of evolution, and mass acceptance is out there simply because the barriers to entry to manufacture them are quite low.  Anybody can get into the business.  Caveat:  I own a production plant that makes a version that will run at 45 mph and with a range of 40 miles per charge, and has saddle-bags to carry your briefcase and groceries. The operating cost including finance is $15 a week.  As a substitute good, it permanently steals customers from the oil refiners and producers. And there are many entrants into the market, including bike-share companies, that make it cheaper and cheaper to get a substitute product. 

The further result of substitution of goods is the electric hoverboard (or rollerboard), which consists in essence of a plank onto which wheels are mounted, plus a collapsible pole and handlebars for control.  A small electric motor is fitted and a battery.   The urbanite can effortlessly roll along at a decent clip on his hoverboard, and when mounting a bus or at the office, fold down the handle and carry it as a satchel.  Your fuel use is down to zero. 

As substitute goods hit the market, oil becomes a good with limited homes.  And as these substitute goods, especially in personal transport, hit with a vengeance, there being low barriers to entry for manufacturers and low retail pricing which entices buyers of the machines, your distillate fuel consumption drops below what is being produced. And now the shoe is on the other foot, with oil loads chasing homes with closed doors.  So, again, blood is in the water and producers are fighting with each other to unload their production - and the price of oil drops like a stone. 

The point is that the overall demand for fuels, if unmet, will result in a stimulation of substitute goods, which will permanently take consumption off the table.  And this is the big fear of the producers.  Two things drive markets:  greed, and fear. 

Incredible. Thank you for writing such an insightful comment!! "Greed and fear".....I'll remember that!

[Jan van Eck + 7,558]

1 hour ago, William Edwards said:

Thanks for the additional perspective on substitute options.

Since you are obviously a much better typist and are infinitely more willing to give detailed explanations than I, could I make a request? Would you consider doing a piece in which you discuss the impact of timing, or lag time, on the change in both supply and demand which would result from a change in price? It would seem that most of the thinking considers an instantaneous response when, in fact, response time for high cost production may be decades to either turn on or turn off the resulting investment. A decision is made today, and the result appears in 2025. The response of demand to a price change is quicker, but still may be a year or two, and the impact is much smaller.  Would you consider thinking through and presenting this timing aspect?

Operating an industry with wildly fluctuating prices and long lag times is analogous to driving a car where both the accelerator and the brake have a five mile lag between activation and result. You would never be able to know when to hit the gas or the brake, and, further, you would never be able to look back and examine what you should have done. This explains the fundamental reason why most people get it wrong when they assess prices, supply and demand.

Will;

Your automobile accelerator-brake  analogy is quite apt.  Indeed, it is the big conundrum faced in multiple industries, and you even see it in military contracting, where hardware is ordered and by the time it is ready, the requirements in the field have vastly changed and made it all obsolete.  

The obstacle in this case is that I pronounce myself incompetent to write such an analysis, as I do not have the proper depth of grounding in the oil industry to do that accurately.  As Clint Eastwood put it:  "A man's gotta know his limitations."

Indeed, if anyone were capable, it would be you!

Edited June 11, 2018 by Jan van Eck

[Rodent + 1,424]

8 hours ago, Jan van Eck said:

In Western markets, the first substitute good is insulation, also referenced as "weatherization."  When buyers are pushed to spend money on insulation, a permanent final customer home is lost, forever, to producers.  Insulation of an older home requires getting into the walls, and creating an air-lock at the entrance door.  Now, tearing out the sheetrock on the inside is a bear, lots of dust and disruption, so typically the outside wood clapboard covering is removed, a plastic wrap sheet is installed, and a layer of insulation board is attached. Then the siding is re-attached.  Now, this is an expensive project, and if the price of heating oil is low enough, nobody does this.  Jack up the price,and this is one result. 

The other result is that customers yank out the oil furnace and install a propane or natural-gas furnace, going to "substitute goods" for oil. 

This is absolutely true, at least anecdotally, so I can only assume it is widespread. A few years ago when propane shot up to nearly $4/gallon in 2014, we added another layer of insulation in our attic and installed a wood burning stove. We still use propane to some extent, but instead of using one 500-gallon tank or more every month during winter, we now use less than one of those tanks per year. Prices have since come down (At 1.69/gal now)--we still use a lot less, but this year the price was low enough that we decided to save the wood and burn propane the last month of winter. Weighing dollar signs against hours of splitting and stacking more wood.... 

[William Edwards + 708]

1 minute ago, Rodent said:

This is absolutely true, at least anecdotally, so I can only assume it is widespread. A few years ago when propane shot up to nearly $4/gallon in 2014, we added another layer of insulation in our attic and installed a wood burning stove. We still use propane to some extent, but instead of using one 500-gallon tank or more every month during winter, we now use less than one of those tanks per year. Prices have since come down (At 1.69/gal now)--we still use a lot less, but this year the price was low enough that we decided to save the wood and burn propane the last month of winter. Weighing dollar signs against hours of splitting and stacking more wood.... 

Reality in play. Thanks.

[jaycee + 348]

2 hours ago, William Edwards said:

"OPEC and Russia continually produce oil at below production costs"? "cartel"? Since my understanding is that neither of these statements are valid, could you please enlighten me by presenting the validation of your assertions? And regarding your use of the term "glut", could you please define this for us? History has shown that there has always been enough oil supply at the prevailing price. Obviously the supply capability was more than enough, and whether that capability exceeded consumption by one barrel or a million barrels was of little actual significance.

My guess is that when you provide your explanation it will be based upon the flawed presumption that, somehow, supply capability or demand magically set the price of oil, and on an instantaneous basis. If I have guessed wrong, please straighten me out.

I did not state Russia and OPEC sell at below production cost it is you who are cutting and pasting my post to make it mean that.
Regards the glut surely having oil build up in storage facilities all round the world means that there is a glut and storage facilities reducing the amount stored show that the glut is diminishing? To me this is obvious and the Cushing numbers a few months ago definitely showed a glut due to OPEC and Russia pumping for all they were worth trying to bankrupt the shale oilers.
Regards to supply and demand setting the price I am inclined to say that the futures market sets the price. The fear of a shortage drives the price up and fear of a glut drives it down hence the news flow of possible production increases by OPEC and Russia bringing the price down the last week or so.

[Ramesh + 1]

On 6/5/2018 at 9:33 PM, William Edwards said:

Osama's reasoning is sound. I might suggest some additional guidance regarding the potential price range going forward. Since there is absolutely no correlation between price and demand, inventories, spare capacity, the weather, Trump's latest tweet or anything else, we conclude that the actual price level will be a random trading number. The only guidance that I can rely on is the historical record. Therefore I can easily see a price as low as $20 over the next few years, since that has been a historical comfort low.

Do you think the oil cartel will allow the crude to fall around 25 in near term? I guess 60 will be the near term price

[Manfred Kruger + 40]

Historically oil prices overshoot both on the downside and the upside. Just as 140 4/bbl. in 2008 was an extreme unsustainable overshot, 30 $/bbl in 2016 was an extreme unsustainable undershot. The US fracking industry has taken the role of marginal global producer and needs average prices above $50/bbl to make a profit. Therefore that seems like a good probable bottom. Prices above $100/bbl create demand destruction and therefore seem like a good probable top.  $70 to $80 for Brent seems like a happy median price that all can live with. The current $10+/bbl differential between Brent and WTI should contract once sufficient crude export infrastructure comes on stream in the USGC.

[William Edwards + 708]

11 minutes ago, jaycee said:

I did not state Russia and OPEC sell at below production cost it is you who are cutting and pasting my post to make it mean that.
Regards the glut surely having oil build up in storage facilities all round the world means that there is a glut and storage facilities reducing the amount stored show that the glut is diminishing? To me this is obvious and the Cushing numbers a few months ago definitely showed a glut due to OPEC and Russia pumping for all they were worth trying to bankrupt the shale oilers.
Regards to supply and demand setting the price I am inclined to say that the futures market sets the price. The fear of a shortage drives the price up and fear of a glut drives it down hence the news flow of possible production increases by OPEC and Russia bringing the price down the last week or so.

You have made the level of your thinking clear. Thanks. Now I need to rush off and add to the glut of gasoline in my car's tank, now that I know that inventory is also defined as "glut".

[William Edwards + 708]

5 minutes ago, Ramesh said:

Do you think the oil cartel will allow the crude to fall around 25 in near term? I guess 60 will be the near term price

The idea that there is an oil "cartel" is pure fiction. There is no effective cartel in oil, nor has there been one for the past fifty years. That concept is media-inspired fiction. A cartel should control the price. Have you looked at the price history since 1975?

[Jan van Eck + 7,558]

1 hour ago, Rodent said:

This is absolutely true, at least anecdotally, so I can only assume it is widespread. A few years ago when propane shot up to nearly $4/gallon in 2014, we added another layer of insulation in our attic and installed a wood burning stove. We still use propane to some extent, but instead of using one 500-gallon tank or more every month during winter, we now use less than one of those tanks per year. Prices have since come down (At 1.69/gal now)--we still use a lot less, but this year the price was low enough that we decided to save the wood and burn propane the last month of winter. Weighing dollar signs against hours of splitting and stacking more wood.... 

Wood  (biomass) in various forms, either as cordwood, or pellets, or "hockey pucks" of highly compressed sawdust, are making substantial inroads into traditional heating-oil markets.  In Vermont, the State Govt has instituted a subsidy program to install industrial-scale pellet burners for boilers in schools and other large buildings, as a sole-source heating system. The idea seems to be to find a market for the wood resources that currently lie fallow due to the collapse of the pulp and paper industries  (in larger part due to the advances of electronic communication and the Internet!). Once changed over, those markets are lost forever to oil refiners and, by extension, to producers. I anticipate that this trend will continue, and indeed accelerate.  I anticipate that other sources of biomass, including reeds and weeds that choke up ponds, will be harvested and converted into heating fuels.  The oil/gas industry is not anticipating, nor making allowances for, these inroads into their traditional markets. 

PS If you add a small fan to the wood-burning stove to pass convective air around it, then you will get heat that will drive you out into the snow! Those stoves heat by both convection and radiation. 

PPS:  If you find that the late split sections are still wet, then to speed-dry, place two cement bricks on the top of your stove, and lay the split pieces next to go in on top of those.  The rising heat will rapidly dry out the wood pieces, and pre-heat them for insertion into the stove. They might take over an hour each, but once you get them seriously dry, and hot, they will burn nicely!  And you are not losing heat to driving out moisture and making your stove run colder.  (Don't get them too close and keep an eye on it, or you will char the wood and create smoke!)

Edited June 11, 2018 by Jan van Eck
Added the P. P.S.

[William Edwards + 708]

26 minutes ago, Manfred Kruger said:

Historically oil prices overshoot both on the downside and the upside. Just as 140 4/bbl. in 2008 was an extreme unsustainable overshot, 30 $/bbl in 2016 was an extreme unsustainable undershot. The US fracking industry has taken the role of marginal global producer and needs average prices above $50/bbl to make a profit. Therefore that seems like a good probable bottom. Prices above $100/bbl create demand destruction and therefore seem like a good probable top.  $70 to $80 for Brent seems like a happy median price that all can live with. The current $10+/bbl differential between Brent and WTI should contract once sufficient crude export infrastructure comes on stream in the USGC.

I agree that $140 was an overshoot and that $30 was a slight undershoot, although not "an extreme unsustainable undershot". Past that our ideas diverge. You go from speculative trading-inspired overshoot and undershoot to cost based prices and, at that point you depart from reality to fantasy, in my view. As for numbers for sustained levels, I think the historical record of a $20/B floor is one side (the price stayed below $20 on an inflation-adjusted basis for 100 years) and the $60 cost for the sustained ability to produce 100,000,000 B/D is the upper side. Somewhere in between seems to be a reasonable average.

As far as I can tell, the WTI/Brent number is a trading vehicle subject to the usual whims of speculators.

[William Edwards + 708]

22 minutes ago, Jan van Eck said:

Wood  (biomass) in various forms, either as cordwood, or pellets, or "hockey pucks" of highly compressed sawdust, are making substantial inroads into traditional heating-oil markets.  In Vermont, the State Govt has instituted a subsidy program to install industrial-scale pellet burners for boilers in schools and other large buildings, as a sole-source heating system. The idea seems to be to find a market for the wood resources that currently lie fallow due to the collapse of the pulp and paper industries  (in larger part due to the advances of electronic communication and the Internet!). Once changed over, those markets are lost forever to oil refiners and, by extension, to producers. I anticipate that this trend will continue, and indeed accelerate.  I anticipate that other sources of biomass, including reeds and weeds that choke up ponds, will be harvested and converted into heating fuels.  The oil/gas industry is not anticipating, nor making allowances for, these inroads into their traditional markets. 

PS If you add a small fan to the wood-burning stove to pass convective air around it, then you will get heat that will drive you out into the snow! Those stoves heat by both convection and radiation. 

PPS:  If you find that the late split sections are still wet, then to speed-dry, place two cement bricks on the top of your stove, and lay the split pieces next to go in on top of those.  The rising heat will rapidly dry out the wood pieces, and pre-heat them for insertion into the stove. They might take over an hour each, but once you get them seriously dry, and hot, they will burn nicely!  And you are not losing heat to driving out moisture and making your stove run colder.  (Don't get them too close and keep an eye on it, or you will char the wood and create smoke!)

You are an outstanding source of practical advice.

[Jan van Eck + 7,558]

7 minutes ago, William Edwards said:

As far as I can tell, the WTI/Brent number is a trading vehicle subject to the usual whims of speculators.

Yup, sure is.  Driven by speculators.

[jaycee + 348]

5 hours ago, William Edwards said:

You have made the level of your thinking clear. Thanks. Now I need to rush off and add to the glut of gasoline in my car's tank, now that I know that inventory is also defined as "glut".

OK if you want to be obtuse and read your own answers into my ones i will explain a little more of what to me is blantantly obvious. A glut of oil is proven if the amount in storage is rising ie you are selling less than is being consumed. If inventory levels world wide go down, not in your car I feel I have to point ouit for some reason, then clearly there is no glut. So far you have miss quoted me and deliberately read the wrong meaning into my posts what will you do this time?

[William Edwards + 708]

1 minute ago, jaycee said:

OK if you want to be obtuse and read your own answers into my ones i will explain a little more of what to me is blantantly obvious. A glut of oil is proven if the amount in storage is rising ie you are selling less than is being consumed. If inventory levels world wide go down, not in your car I feel I have to point ouit for some reason, then clearly there is no glut. So far you have miss quoted me and deliberately read the wrong meaning into my posts what will you do this time?

My apologies!

[Refman + 207]

7 hours ago, Jan van Eck said:

Wood  (biomass) in various forms, either as cordwood, or pellets, or "hockey pucks" of highly compressed sawdust, are making substantial inroads into traditional heating-oil markets. 

PS If you add a small fan to the wood-burning stove to pass convective air around it, then you will get heat that will drive you out into the snow! Those stoves heat by both convection and radiation. 

PPS:  If you find that the late split sections are still wet, then to speed-dry, place two cement bricks on the top of your stove, and lay the split pieces next to go in on top of those.  The rising heat will rapidly dry out the wood pieces, and pre-heat them for insertion into the stove. They might take over an hour each, but once you get them seriously dry, and hot, they will burn nicely!  And you are not losing heat to driving out moisture and making your stove run colder.  (Don't get them too close and keep an eye on it, or you will char the wood and create smoke!)

We put a wood burning stove with fan into our new house that is under construction. Even in Central/South Texas we do get cold enough for heat. Hoping that the wood stove will almost eliminate any other need to heat. We also made sure the house had a lot of insulation installed. 

Looking forward to seeing how energy efficient it is in a month or two.

[Manfred Kruger + 40]

William, since there are several differing opinions about future oil prices in this group and the analysis is getting more complicated and confusing I think that giving actual estimated forecasts will probably be of more value to participants.

I am not sure about the level of detail or timing that should be used but have some ideas that will settle the issue. 

Period: June-December 2018 and January-June 2019. Low, high and average price for WTI and Brent.

I have a feeling that any estimates coming from this group will be superior those from OPEC, EIA and IEA economists.

Are you willing to do so and keep a record for future discussion???

[William Edwards + 708]

2 hours ago, Manfred Kruger said:

William, since there are several differing opinions about future oil prices in this group and the analysis is getting more complicated and confusing I think that giving actual estimated forecasts will probably be of more value to participants.

I am not sure about the level of detail or timing that should be used but have some ideas that will settle the issue. 

Period: June-December 2018 and January-June 2019. Low, high and average price for WTI and Brent.

I have a feeling that any estimates coming from this group will be superior those from OPEC, EIA and IEA economists.

Are you willing to do so and keep a record for future discussion???

Splendid idea, Manfred. However I suspect that we may have different ideas as to the appropriate time span of our forecasts. You see, in my view, daily price numbers are simply the reflection of the random results of speculative trading and are not subject to rational forecasting. I view such "forecasts" as "guesses" I have no ability to guess accurately, so I usually decline that opportunity.

But I believe that it is possible to reasonably forecast future trends, recognizing that the daily prices will fluctuate both above and below the trend line. In fact, I am comfortable using, today, a three year old forecast of my expectations of the trend. The reason that I use a long term trend forecast is that historical data show a thirty-year pattern of price movement, from high to high or low to low. The popular forecast period shown today begin about the year 2000, thereby showing only the most recent 15-year upswing in prices. For the entire cycle we need to go back to the middle 1980's.

My forecast, shown below, also shows the past seventy years. I made this forecast in late 2014 while prices were still above $80/B. For perspective I have also shown OPEC's forecast as presented in 2014, 2015 and 2016. Their expectations of rapidly recovering prices were shared by most of the industry. My forecast, shown as EEC, has proven to be reasonably accurate. I still stick with it as the fundamental basis of the forecast has not changed. Further, the advance of the date for the IMO bunker spec change, that was announced a couple of years ago, pretty much guarantees further lowering of the price to historically low levels after the year 2020 begins.

Please add your forecast and we will compare notes in a couple of years.

 

Edited June 12, 2018 by William Edwards

[Jan van Eck + 7,558]

9 hours ago, Refman said:

We put a wood burning stove with fan into our new house that is under construction. Even in Central/South Texas we do get cold enough for heat. Hoping that the wood stove will almost eliminate any other need to heat. We also made sure the house had a lot of insulation installed. 

Looking forward to seeing how energy efficient it is in a month or two.

If that stove is a decent cast-iron unit, you can forget about supplemental heat as long as your wood is dry. There are guys up in the North Country, especially in the hills of New Hampshire,Vermont,and all through Maine, that only heat with wood, mostly because they are impoverished, and cutting firewood is something everybody can do and remains a cheap solution. It gets seriously cold up there, down to -24F, so if wood heat does the job under those conditions, it will handle your Texas winter just fine. 

What you want to watch out for is the chimney design.  Houses without proper insulation and air spacing around the chimneys will catch fire if you have a chimney fire, which is common enough if that wood is not fully seasoned.  And keep that fire "hot" to avoid having pitch build up on the inside of the chimney.  A chimney fire is like a roaring blowtorch and they are a serious bear to put out. They cannot use water or it will crack the chimney, so sand bags are dropped down from the top.  

[Dennis Coyne + 82]

On ‎6‎/‎7‎/‎2018 at 8:32 PM, Tom Kirkman said:

Please take care with absolutes, William.  Opposing / differing viewpoints are allowed.

Hi Tom,

 

I did at one point suggest demand determines the oil price.  This was in response to William suggesting that the swing producer sets the price.  I generally think of a swing producer as setting the level of output, so they guess at what the rest of the World will produce and set their output level to try to keep the oil price in some price range between x and y.  So from a World supply level, consider that there is vertical supply curve at some output level Q which the swing producer adjusts their output level to maintain.  Under those circumstances the World Demand schedule will determine the price level (remember economics has the strange convention of Price on the vertical axis and quantity (or output) on the horizontal axis.  This is reversed from typical scientific convention where the independent variable (price in this case) is usually presented on the horizontal axis.

In any case I misinterpreted William as he does not believe demand determines the price of oil (or not demand alone).  Upon reading more of his comments, I don't think he believes the swing producer is able to guess very accurately what other producers will produce (or maybe it is only Dennis that thinks this) and thus the idea of a vertical supply curve is not apt.

In other comments William has suggested that supply and demand will try to adjust to the oil price and at least in the long term they will tend to match (I agree with this as well).  In the short term, it takes time for both supply and demand to adjust to the oil price and both tend to be inelastic in the short term (large changes in price result in relatively small changes in quantity of supply or quantity of demand) and this causes a lot of oil price volatility which is fairly random.

[Dennis Coyne + 82]

On ‎6‎/‎7‎/‎2018 at 7:02 PM, William Edwards said:

If that is what you think of as a marginal producer, then there’s no surprise we are on such different pages. I define the marginal, or swing, producer as the one that provides the last increment of supply. Of course that is a completely different concept from your definition.

William,

The standard definition I have given is the proper concept of the marginal producer.  In short, the swing producer is not the marginal producer, in fact very much the opposite.

The marginal producer can be thought of as marginally profitable, they are the highest cost, lowest profit producers.   One would have thought you would be familiar with this terminology.

[Manfred Kruger + 40]

To add my 2 cents the effect of marginal or swing producer are the same with the possible exception of timing. In my view anyone who can add or reduce production quickly is a swing producer. Countries with existing spare production capacity such as Saudi Arabia can do so almost immediately and are therefore swing producers. US shale producers are also able to do so relatively quickly but need more time to either drill another well or frack a DUC, therefore I consider them marginal producers. On the opposite spectrum traditional producers developing new hydrocarbon fields, especially offshore fields, that hold the largest undeveloped resources can take a decade or longer to develop.

[Manfred Kruger + 40]

Although complicated by the futures markets and speculators in the short term it is the last barrel sold in the spot market that ultimately sets the spot price. A sale presumes that there is both the supply and demand for that barrel. In the old days we used to joke that we were selling heating oil to the dentists when we were hedging on the NYMEX.

[jaycee + 348]

21 hours ago, William Edwards said:

The idea that there is an oil "cartel" is pure fiction. There is no effective cartel in oil, nor has there been one for the past fifty years. That concept is media-inspired fiction. A cartel should control the price. Have you looked at the price history since 1975?

Since I have 5 mins I thought I would reread some of the comments here and notice I did not reply to your comment that there is no cartel operating as they have not been successful. Just because a cartel is not always successful does not mean it does not exist nor does it mean it does not have success. The problem with oil is it has multiple supply problems due to the locations it is found in, mostly politically unstable or hostile environments, and not all OPEC members are always aligned to the object as they maybe actually fighting each other outside of the cartel with land armies. Add in unpredictable events like the collapse of Venezuelan oil, the arab spring, the rise of US shale etc and you have a difficult environment to actually control oil prices but to suggest they do not try is plain wrong. You have a sometimes ineffective cartel admittedly however sometimes the wishes align and it does effect the oil price the recent reduction in output and corresponding rise in prices indicates it can have success. I suggest if oil spikes down again to $20 their wishes will rapidly align again and with Russian ones too.

[William Edwards + 708]

24 minutes ago, Manfred Kruger said:

Although complicated by the futures markets and speculators in the short term it is the last barrel sold in the spot market that ultimately sets the spot price. A sale presumes that there is both the supply and demand for that barrel. In the old days we used to joke that we were selling heating oil to the dentists when we were hedging on the NYMEX.

Just to clarify, Manfred, was the last cargo that you sold priced as a number, $XX/B, or was it priced as $XX off of the closing price of a futures exchange on date of loading? If the latter, it was the futures exchange that set the price, not the spot market.