I see the term correction used a lot in articles relating to the price of oil. What are your opinions on the term correction when in reference to the current price of oil. Should it be corrected to prices when they were elevated to over 100 dollars a barrel? It seems most talk of correction refer to a positive correction as in, its not worth a lot and should be corrected to be worth more. I personally see the true correction going to a lower price, as most past price inflating in oil were through war, or speculation that turned out to be incorrect; and not due to lack of oil in the ground, production, or lack of oil in storage. Oil at current reserves, production, and what is currently in storage and stored on the sea should be an oversupply and drive prices down; a negative correction. Oil Correction Stalls On Strong Dollar, Rising Rig Count http://oilprice.com/Energy/Energy-G...Stalls-On-Strong-Dollar-Rising-Rig-Count.html Morgan Stanley on Oil Prices: 'A Refinery-Driven Correction Is Upon Us' http://www.bloomberg.com/news/artic...rices-a-refinery-driven-correction-is-upon-us Oil market to recover in 2016: Harold Hamm http://www.cnbc.com/2015/12/21/oil-market-to-correct-in-2016-harold-hamm.html "We've seen tremendous growth in the market for our supply. It's up about 3 percent on an annual basis, so it's quickly correcting," the Continental Resources chairman and CEO told CNBC's "Squawk Box." "2016 will be the year for correction, and we estimate the first half." Once market watchers see the supply and demand lines cross, prices will begin to recover, he added. Global oil markets are estimated to be oversupplied by about 1.5 million barrels of crude a day. Commodity prices have plummeted from highs above $100 per barrel amid a rout that accelerated after OPEC decided to forgo production caps in November 2014. UAE Sees Oil Price 'Correction' By Year-End; Brent Tops $40 http://www.investors.com/news/uae-sees-correction-in-oil-prices-iranian-crude-arrives-in-europe/ Im still optimistic that at the end of the year or before the end of the year, we will see some correction, UAE Energy Minister Suhail al Mazrouei told Bloomberg. We need to be patient. Its not happening in weeks or months. Correcting to a sustainable price will take time.
Usually means if the prices are low... ... there'll be a correction that'll raise prices... Conversely if the prices are high... ... there'll be a correction that will result in lower prices.
dont follow it closely but it seems price is about right now and for a few years with Iran and Saudi oil flooding the market and with American oil in reserve by the ton as needed.
No on says it is just right. The only reference point is profitability. I see you live here in Houston, and as you must know by the question, most drilling and exploration companies need $50 or so. Especially after all of the cost cutting and tech innovations, the Permian and Eagle Ford are still very profitable at current levels. The ones that suffering are offshore deep and ultra deep water drillers like RIG, WTI and Hercules. As for the Saudis pumping and max capacity, that isn't sustainable indefinitely. The rest of OPEC is getting screwed by their market share/manipulation tactics. Russia, Brazil, etc are all taking a bath at these prices and they will soon regulate. Pure supply and demand will take over. Futures are extremely volatile. Most of it is technical based, such as short covering, and chatter driving the price up and down. Eventually things will settle as geopolitics starts to take shape and everyone agrees on a market share and price point. Current sentiment at my firm is $60 or so in a year. There will be a ton of day to day volatility until that point. Also, not to get too in to this, the strength of the dollar plays a major role in the price of the barrel. Commodities are pegged to the dollar and when it is strong (like it is now) commodities typically suffer.
but by that point there will be a host of new factors causing continued volatility. Sentiment at your firm or at Goldman has always been silly.
Any sentiment or prediction is based off certain historical assumptions and evaluation of current data available. If it is silly than why care at all? Maybe because billions of dollars are in play and basic commodity business practice is hedge timing. It isn't silly because big money doesn't think it is silly and that is why sentiment from the majors move markets. There is value in sentiment and analyst expectations even if you are a contrarian. There are players on both sides of the trade. You have to realize that sentiment only means that we believe that there is more upside potential because of X factors. The media and followers of an analyst expect a number, not just "It looks like it will go up because of geopolitical issues and supply control." The number doesn't mean as much as the mid to long term sentiment of upward movement.
Price stability would be the end result of a correction. If prices continue to fluctuate, then an equilibrium between production and consumption isn't reached yet.
smart people don't care; they know a monkey throwing darts knows as much as sentiment. - - - Updated - - - so prices are higher and all of us our poorer?????????
No smart people do care, because they realize that others care and that influences markets. Well, I am American who lives in Houston, and I want America succeed. We frack in America, and fracking requires a certain price. I also want emerging markets to succeed, and I don't want the Middle East to control the supply of oil and control the entire market. If the Saudi's control the market than no one benefits but them and we are strangled and dependent.
Some of the swinging prices besides the usual changeover of blends and such has to do with production, new wells coming online, etc. No worries though. A tropical storm will be a devastating to our wallets hurricane soon enough. .
Firstly, I agree and I think the latest rally this week that is taking oil to near 50 dollars a barrel on "supposed" speculation of a supply cut at the next opec meeting has been more effected by the hit the dollar has taken all week. Stocks indexes fall, dollar rises on rate-hike bets Fri Aug 19, 2016 11:11am EDT http://www.reuters.com/article/us-global-markets-idUSKCN10U02I In currency markets, the dollar was higher against six major world rivals amid revived Fed rate hike expectations. The dollar index .DXY rose 0.4 percent to 94.545, moving away from eight-week lows touched on Thursday. [FRX/] The price of oil is actually going down on Friday as the dollar is moving away from its lows I still think OPEC and Saudi Arabia still control the oil market more than people think, their word effects the market in a major way. We have taken a big production hit here in the US, if the same percentage production drop happened in SA it would be a cluster **** and not as sustainable as it has been when we are effected. I dont see any production cuts and the loss of revenue at least in SA were predicted as they were the ones who caused crash with their production hikes. Cutting back at this point will not help them and they are producing more and more each month just hitting another record last month. Their economy is not is not in the hole everyone wishes it was because of this and if honestly as I stated before they have a plan of action. Despite Low Oil Prices, Saudi Arabia Stabilizing Economy Aug 04, 2016, 2:54 PM CDT http://oilprice.com/Energy/Energy-G...-Prices-Saudi-Arabia-Stabilizing-Economy.html I also dont believe American producers on some of their profitability points and when and where they can make money. If it was the range they were claiming when the market started falling our production levels would have been trashed. They seem to be able to lift for cheaper than they were claiming (Im not surprised at that really, and as a capitalism I dont think anyone should be); unless you want to believe innovation and new tech just appeared at the right time to make it happen. Still a massive glut for this time of year and nobody is really budging. I hate being a business that is hoping for the worst to happen in order to drive up a commodity that has shown is much more available and that can be produced in much larger numbers than stated in the past, compounded with stagnate demand growth that could possibly start going negative with new tech within a decade.
1) a lot of small companies with huge loans to pay off had to keep going if even at a loss. 2) it's been long enough now that many are learning how to produce for less and less which would not have happened without amazing low prices thanks to ME wars
