Oil at $50 Will be Bad for U.S.

For 2019, I am still hoping for $70 Brent, and $65 WTI. 

Shocking, I know  ; )

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4 hours ago, Tom Kirkman said:

For 2019, I am still hoping for $70 Brent, and $65 WTI. 

Shocking, I know  ; )

you need a coffee mug that has that on it

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16 minutes ago, Rodent said:

you need a coffee mug that has that on it

I never did get my barrel of oil?

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1 hour ago, Dan Warnick said:

I never did get my barrel of oil?

!!!! oh no!! I'm on it!

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Its bad for US  (biggest producer) good for China (biggest importer). 

If I was Trump I would like to see expensive oil at least until shale oil is booming.

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2 hours ago, Tomasz said:

 

If I was Trump I would like to see expensive oil at least until shale oil is booming.

I've read that much of the shale oil is dependent on continued exploration due to the short production lifespan of the wells.  The companies require decent oil prices to fund the next well before the current wells slow down or the whole thing will collapse.  Boom or bust oil.

That's the one nice thing about Oilsands - it's kind of expensive to get out of the ground but once the facility is operational it produces oil for a very long time - you don't constantly need new projects.

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$50 oil isn't bad for the U.S. (or for "us"). It's called streamlining. And American consumers who drive big ol' gas guzzling vehicles enjoy the sub $50 oil. American consumers who vote. 

You want to know who $50 oil is bad for? Saudi Arabia. Venezuela. Iran. Nearly all of OPEC. These lower prices will hurt. 

Let's take a trip down memory lane. What came out of the last price crash? Some oil and gas companies who couldn't hack it at sub$50 oil went under. Bye bye. What remained was meaner, leaner US oil companies who had figured out how to do it better, cheaper.

The first attempt at curtailing production in order to lift prices was back in April  '16. In Q1 '16, OPEC was producing 32.5 million bpd. OPEC couldn't get the deal done. The world was swimming in oil. Ahhhh!!!!  Brent was dangerously close to $40/bbl. Crikey! The narrative after that meeting was that Saudi Arabia refused to do the bulk of the cutting, and obviously some other OPEC members refused. They went away from the meeting empty handed. And then what did OPEC do? Ramped up production. Soon they were producing 33.6 million bpd. Then Nov comes around and they finally agree to do some cutting... TO 32.5 MILLION BPD. Everyone likes to look at how much each country cut from October levels, right before the deal--but October production was artificially high. Part of OPEC's grand scheme. What about OPEC production changes from April 16 levels when the original cuts were discussed? Who in OPEC came out ahead from the Nov cuts? Who lost?

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Saudi Arabia didn't have to do much heavy lifting after all, so it would appear, and Iran and Iraq came out like bandits (particularly because Iraq produced well above its quota nearly the entire time). Venezuela looks like they got screwed, but the writing was on the wall--production was declining anyway. Might as well make more money per barrel.

Prices rose, sure. Who won? Venezuela, surely, without higher prices, its collapse would have come even sooner. And like I said, they weren't going to be able to keep production up anyway. Saudi Arabia, yes, who is practically producing what they were in Q1 2016 but was suddenly enjoying much higher prices. Lots of winners here, including Iran and Iraq.

Who lost from the OPEC cuts? Importers, surely. China, India, Japan, South Korea.... maybe the US somewhat since we import quite a bit, but offset with higher-priced exports to some degree.

Fast forward to today. Trump issues waivers to... guess who? China, India, Japan, South Korea....Prices are now falling again, in large part because of how the waivers were issued as kind of a shocker. So those countries win! We're making new friends.  They were the hardest hit during the OPEC cuts. This is a gift from the US. Sanction Iran, make new friends, even from some of Iran's best customers.

This time around Saudi Arabia loses methinks. I don't think the US loses here. US oil companies may get squeezed a bit, but that's all necessary belt tightening if we are to continue to compete. 

 

That was all a bit like word vomiting. My apologies. Sometimes the conspiracy theorist in me gets a bit carried away.

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Wow!  Great job, Rodent.  Well written, with fact based figures and data to back it up.  Good on you!  I agree on all points.

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Just another PR stunt by the moron in charge. He obviously has no clue how many homes in America are supported by oil, and another bust would almost instantly destroy those great unemployment numbers he's been bragging about for over a year. And that GDP? gone when the fallout of laid off oil workers starts showing up in the numbers as well. The city of Houston really depends on oil, and if it weren't Houston it would be some other large metropolis suffering from low oil prices. He needs to shut his mouth and stay out of the oil business because he obviously has no clue what he is talking about. I would say that gasoline prices have dropped off about .25 a gallon. WHEW HEW!!! What a significant savings in my pocket every week.

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My dig at Goldman Sachs is because they manipulate everything in the major world markets.  Every thing.  Read the first 4 paragraphs in the Wikipedia page and then skip to the Contents, 5 Controversies and legal issues.  As others and I have said before, if Goldman Sachs tells you a market is primed to invest in, GET OUT!

Goldman Sachs

As a "Bulge Bracket" bank, it is one of the largest investment banking enterprises in the world.[3][4] It is a primary dealer in the United States Treasury security market and more generally, a prominent market maker. The bank also owns Goldman Sachs Bank USA, a direct bank. Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in Lower Manhattan with additional offices in other international financial centers.[5]

As a result of its involvement in securitization during the subprime mortgage crisis, Goldman Sachs suffered during the 2007-2008 financial crisis,[6][7] and received a $10 billion investment from the United States Department of the Treasury as part of the Troubled Asset Relief Program, a financial bailout created by the Emergency Economic Stabilization Act of 2008. The investment was made in November 2008 and was repaid in June 2009.[8][9]

Former employees of Goldman Sachs have moved on to government positions. Notable examples includes former U.S. Secretaries of the Treasury Robert Rubin and Henry Paulson; current United States Secretary of the Treasury Steven Mnuchin; former chief economic advisor Gary Cohn; European Central Bank President Mario Draghi; former Bank of Canada Governor and current Governor of the Bank of England Mark Carney and the former Prime Minister of Australia Malcolm Turnbull. In addition, former Goldman employees have headed the New York Stock Exchange, the World Bank, and competing banks such as Citigroup and Merrill Lynch.

5Controversies and legal issues

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2 hours ago, Rodent said:

That was all a bit like word vomiting. My apologies.

That was brilliant.  Please continue.

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50 is bad in that they make less money, but $30 is the breakeven for west texas. so there can be a lot more pain. if the elites, eu etc who are planning to crash the us economy, and they follow through, oil indeed will drop into bleed territory, only one who can survive will be the saudis. but once its all over eventually through reduced productions, and closed up wells,  they will get oil back up to $70, not worries there. For now enjoy the lower gas prices, which will be here to stay for a while

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What about how bad $50 is for Saudis? 

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1 minute ago, TraderTate said:

What about how bad $50 is for Saudis? 

What price do they need to float the Kingdom and their mega-project ambitions plus Vision 2030? I quit paying attention, but it's well north of $50. 

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4 minutes ago, John Foote said:

What price do they need to float the Kingdom and their mega-project ambitions plus Vision 2030? I quit paying attention, but it's well north of $50. 

Estimates vary around $80 to $100.

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3 hours ago, Dan Warnick said:

My dig at Goldman Sachs is because they manipulate everything in the major world markets. 

In "Absolute Coincidence", Goldman Signed Queens Real Estate Deal Same Day As Amazon HQ2 Announcement

On the very same day that Amazon.com Inc. announced that Long Island City, New York, would be half of its new headquarters, Goldman Sachs signed a massive real estate deal less than a mile away, Bloomberg reports.

The timing was an “absolute coincidence,” said Margaret Anadu, the head of Goldman Sachs’s Urban Investment Group, who was the real estate transaction coordinator on the $83 million apartment complex deal, in Hunter’s Point South.

... An influx of 25,000 new Amazon employees could mean that Goldman's massive new apartment building is the big winner.

So another "lucky coincidence", or did Goldman uncoincidentally get a several months' head start on Amazon's "secret" move? You decide.

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4 hours ago, Rodent said:

Trump issues waivers to... guess who? China, India, Japan, South Korea....Prices are now falling again, in large part because of how the waivers were issued as kind of a shocker. So those countries win! We're making new friends.  They were the hardest hit during the OPEC cuts. This is a gift from the US. Sanction Iran, make new friends, even from some of Iran's best customers.

Gift for China and Iran during a trade war.  "maximum pressure" LOL.

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We have just formed a U S company to minimize the effects of lack of pipeline  space and the lack of government assistance to help western producers get their products to market. To give an example our producers receive aproximately $14.00 for oil yet government purchases millions a day from offshore sources. Once the darling province with oil and gas we now are suffering with unemployment, office space at 25% vacancy and suggested at 40%.

So we are venturing into the U S exploration for oil and gas where the opportunities exist and   we have found willing partners.

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10 hours ago, Tomasz said:

Its bad for US  (biggest producer) good for China (biggest importer). 

If I was Trump I would like to see expensive oil at least until shale oil is booming.

But we also produce  most of our own oil and since we are a huge consumer it is a huge benefit to the overall economy. 

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10 hours ago, Enthalpic said:

Gift for China and Iran during a trade war.  "maximum pressure" LOL.

gift for China, yes. Gift for Iran, no. if the world sees this as maximum pressure, then I think the job is done. I'm not sure it actually has to be maximum pressure. Concessions are often made behind the scenes. some of these can be found by reading between the lines, others the world may never know. 

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8 hours ago, Rodent said:

gift for China, yes. Gift for Iran, no. if the world sees this as maximum pressure, then I think the job is done. I'm not sure it actually has to be maximum pressure. Concessions are often made behind the scenes. some of these can be found by reading between the lines, others the world may never know. 

I don't see it as maximum pressure.  Trump threatens "maximum pressure" against Iran then gives a waiver to the massive market of China - a nation he is in a trade war with.  

I don't doubt untold concessions/deals are being made; Trump's personal businesses will almost certainly boom in just over two years.

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$50 (and lower) oil is bad for the muslim states exporting terrorism, principally Saudi and Iran. Anything that deprives them of cash is not only good for the US but the entire world. But our alliance with Saudi. Temporary, although you could be talking years or a decade, until Iran is dealt with and battery technology is cheaper and more widespread. Inevitably Saudi will be in the crosshairs too.

True, this will eventually hurt US shale companies but do you want to be a country that exports commodities or one that imports commodities and makes value added products? Those who make things are the wealthiest and most powerful nations.

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On 11/27/2018 at 12:25 AM, Marina Schwarz said:

The latest breathtakingly shocking revelation from Goldman Sachs: Goldman Sachs says $50 crude is bad for the U.S.

Never trust anything Government Sachs says. The real mafia is on Wall St.

https://www.nytimes.com/2018/11/09/business/goldman-sachs-malaysia-1mdb.html

https://mobile.reuters.com/article/amp/idUSKCN1NX0WB

 

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