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Has Oil been more hated and unloved ?


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How times have changed. Do you remember when oil was $150 a barrel, and there was a commentator (I can't remember his name, I think he's dead now) that kept saying it was "PEAK OIL" and that we haven't discovered a major oil well like Gawar for decades. I remember listening to the endless bullish podcasts about oil. They can't replace it once it is used. We are past peak oil. Liquid oil for transportation for freight cannot be replaced. We are doomed etc.. on and on it went.

It caused truck drivers to protest. There was a brief moment when the petrol stations were empty.

But now, funds are selling oil. University pension funds are shunning it. Fossil fuels contribute to global warming through CO2 release on oil combustion. We are all switching our IC cars to electric cars. New IC cars will be banned - you just won't be able to buy them. People have been protesting at the oil giant's head offices in London. It is unethical to invest in oil - woe betide anyone that does. Tobacco companies appear to be more ethical!

So is this the end for oil? For good? There will never be a bull market in oil again?

I know we must be near the bottom here. But we could bump along the bottom for some time, especially as global travel is muted from the Covid-19 pandemic. Perhaps after the gold bull market, oil will be the place to be again. But I can't imagine it from down here.

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Posted (edited)

Ah remember $300 oil?

When this video came out, the top of the market wasn't far away, sometime in June 2008. I think this was filmed sometime in early 2007 according to the up loader date, when oil was $65

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It is the middle of 2020 today - and prices are at 2004 levels. Way back at the start before the oil boom started.

Edited by 201p
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36 minutes ago, Frank Hovis said:

Think of it like tobacco stocks.

All the ethical funds will shun it but people will keep buying it, the profits will keep rolling as will the dividends.

They will be high yielders for decades.

There is more to oil than Petrol & Diesel, the world hasn't got much of a future post oil, so most of the greenwash is just to make the oil last a wee bit longer.

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3 minutes ago, Chewing Grass said:

There is more to oil than Petrol & Diesel, the world hasn't got much of a future post oil, so most of the greenwash is just to make the oil last a wee bit longer.

I don't think there's that much thought behind it.

It's the Greta zombies mouthing "oil bad" and politicians jumping accordingly thinking that there may be votes in it.

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On 10/08/2020 at 20:19, 201p said:

I know we must be near the bottom here. But we could bump along the bottom for some time, especially as global travel is muted from the Covid-19 pandemic.

Transport is a minor fraction of global oil use (25--30%). Surely, oil consumption will be back where  it was in no time because because being cold at home, sweltering in the office, having no food, or having electricity blackouts is not a politically acceptable option? Is the reason for the low oil price the fact that production is inelastic, and all the storage capacity is full?

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Edited by Nippy
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^ I really don't have a clue about oil's fundamentals. The market went to the extreme to the upside, and I do think it has swung to the other way to the other extreme.

There is probably a window of opportunity to have a look around, see which oilers are the strongest that survive through this lean period for them. Then they should do well when the cycle comes back round. 

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On 15/08/2020 at 02:06, Nippy said:

Transport is a minor fraction of global oil use (25--30%). Surely, oil consumption will be back where  it was in no time because because being cold at home, sweltering in the office, having no food, or having electricity blackouts is not a politically acceptable option? Is the reason for the low oil price the fact that production is inelastic, and all the storage capacity is full?

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My view is that oil is low because

i) US shale production, real or imagined

ii) global decline in demand due to pandemic (think of all the car journeys you have not done in the past six months.  Now times that by a billion).

iii) global decline in demand due to less wars 

iv) global decline in demand due to gvt subsidies for 'green' energy

v) continued messages from Saudi that their reserves are good

 

I suspect that the first four of those will end soonish.  The last one, having dealt with the middle east a bit, will not be overturned until something horrible and non-deniable happens (such as a field sputtering to a halt with 50 years of paper reserves left) that the rulers cannot deny and cannot blame on an underling.

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  • 1 month later...

Column: Crude oil industry is starting to hear echoes of coal's demise

“Everyone’s talking about this great reset ... What do we need to do to survive this?”

https://uk.reuters.com/article/uk-column-russell-oil-outlook/column-crude-oil-industry-is-starting-to-hear-echoes-of-coals-demise-idUKKBN26816S

Really can it be crude oil is in it's death throes?

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On 18/09/2020 at 07:19, 201p said:

Column: Crude oil industry is starting to hear echoes of coal's demise

“Everyone’s talking about this great reset ... What do we need to do to survive this?”

https://uk.reuters.com/article/uk-column-russell-oil-outlook/column-crude-oil-industry-is-starting-to-hear-echoes-of-coals-demise-idUKKBN26816S

Really can it be crude oil is in it's death throes?

 

No, people are being rather silly and just trying to fill column inches.

Unlike coal, oil is easy to extract, energy dense, readily portable, and easy to refine into many highly valuable fuels.

It will be used and burned until al the easily-extractable stuff is gone because the alternative is mass starvation. 

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This anti-oil thing feels like one of the greatest contrarian investment opportunities of the past 100 years.  Modern society depends on massive energy use, and the politicians jobs depend on people having heat, light, and consumer goods beyond anything possible without oil.

Do you think that the population of Europe or the USA would stand for no heating in the winter or no aircon in the summer whilst oil remained available?  If you have ever experienced a New York winter - and I have been there in Jan/Feb a couple of times - you cannot imagine what would happen without cheap energy.  That means oil, until we crack something better.

I thank every day DODBODS helping me get my head round the economic and investment opportunities we are seeing - I always knew gold and silver would boom (against other assets) when the big debt reset comes, and now I also see how oil companies are long term going to be incredibly valuable in an inflationary world.  Farming?  Aviation?  Manufacturing?  Technology?  all the companies in those sectors will see their costs rise more than income.  Oil - I think the opposite.

So I am pretty happen with the continued negativity on oil in the mass media.  Means I can buy a few more shares as the pennies save up.  If - as I hope - the dividends are huge in the future, that will what keeps me inflation-protected.

 

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  • 3 weeks later...
2 hours ago, Great Guy said:

To save money the oil companies are reducing investment in oil exploration. If oil demand builds up there might not be a lot of oil to go around....

A saying in the financial community is "the cure for low oil prices is low oil prices".

I bunged £20k in today; I think they're ridiculously cheap.

Shell was a third of its five year peak.

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Now that I have been enlightened by the Global Reset and Build Back Better - I know fossil fuels are not part of the grand plan. Boris has promised to build wind turbines (why aren't we throwing money at getting the pandemic over with?).

OR it is to scare everyone out of these oil companies which still have an important asset. Energy.

This makes it even more important to watch this sector.

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1 minute ago, 5min OCD speculator said:

only £20k? you puff! You missed the bottom by a week but welcome abroad :)

I'm trying not to trade as I want to go out and do more interesting things; I stuck everything in low cost index funds which will just look after themselves.

I went for income units rather than accum to give me some gambling cash and that's where this lot has gone.

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On 18/09/2020 at 07:19, 201p said:

Column: Crude oil industry is starting to hear echoes of coal's demise

“Everyone’s talking about this great reset ... What do we need to do to survive this?”

https://uk.reuters.com/article/uk-column-russell-oil-outlook/column-crude-oil-industry-is-starting-to-hear-echoes-of-coals-demise-idUKKBN26816S

Really can it be crude oil is in it's death throes?

Yes,but in the time between now and the end oil will hit record prices and companies will make massive amounts of free cash.People told me back in 2000 smoking was finished and so were tobacco companies.BAT ended up giving me a dividend yield of 80%,Imperial similar and massive capital gains.

Oil will see an all time record price this cycle,and may go parabolic from $200 to $300 in a month late cycle.

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2 hours ago, Frank Hovis said:

it was £12k of cash sat in my ISA and £10k in my SIPP.

Snap, I'm using ISA and SIPP......if I go any deeper I'll be using margined CFD money xD

3 hours ago, Frank Hovis said:

I stuck everything in low cost index funds which will just look after themselves.

So where does this bit fit in?

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On 09/10/2020 at 16:10, Frank Hovis said:

I bunged £20k in today; I think they're ridiculously cheap.

Shell was a third of its five year peak.

Oil demand might be in long term decline but we're not going to go oil free any time soon....

At the moment we're using 40gw of electricity (source gridwatch). There are about 20 million cars in the uk. If 10% of  cars were electric and plugged into charge at 5kw each we'd need an extra 10gw of electricity supply.... there simply isn't the electricity supply for an all electric car fleet.

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