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TUI, I agree with you on most of the points. Can you give the...

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Fangk

2,580 Posts.

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22/07/15

15:30

Post #: 15675578
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Originally posted by tui ↑

It has been a staggering last 10 months. After 4 bountiful years of $100 plus, the oil industry changed dramatically. Today it was under $50.

In the next few months the world will realize this shale oil is nothing but a ponzi scheme. Fueled by cheap credit, $100 plus oil and even now by foolhardy investors. Such is the media.

This is my synopsis.

1. There is about 2 million barrels without a home. That's 2 million surplus out of total world daily production of 90 million barrels per day. It is nothing. Imagine running a business if you used these stock ratios.
2.World total oil production is decreasing by about 5% per annum. Say 4.5 mbpa What is going to replace this?
(a) New offshore discoveries. A few possibilities but most have shut up shop.
(b) More shale oil? Not even at $70. A big decline is coming. Even at full throttle shale oil runs out in 2022. The sweet spots have been taken.
(c) More onshore discoveries. Not likely. We are consuming 4 times the oil we find. Of course Iran will help but just think of ISIS and remember what Saddam did to his oil fields. Blew the lot of them up. 6 months to repair.
(d) Alternative fuels. They have to help at an increasing rate

The world needs all the oil it can get. China uses one quarter of the oil per capita versus the USA and India has hardly even started. These countries are thirsting for oil.

This 'Glut' will disappear over the next year and a half on an alarming scale.

Exploration cutbacks have been made by the Majors. Believe it or not they were actually cutting back at $10o. Costs have soared... and now of course they are being pared back. If the oil industry is not investing then trouble lies ahead.

4. I have never experienced a situation when best to invest in the oil industry

(a) Middle East Turmoil. It only takes one shoulder mounted rocket to take out a refinery. One of them hit a destroyer offshore Israel yesterday. It is getting worse. If the Middle East goes, get to your supermarket and buckle up. Would be a nightmare. And at the moments there are loose heads in the Middle East.../everywhere ..... brainwashed to do stupid things.
(b) The media are full of the 'glut'.
(c) China's slowdown.Which is real. But their oil consumption will grow.
(d )India's emergence
( d) Greece's exit. ( Just print euros on grease proof paper.)
(e) Oil consumption is on the rise.

Very shortly the US banks will review their shale stocks. They do it 3 months in arrears. Their is so much money invested in shale oil Bonds. Frightening. The next two reviews will kill the shale oil industry. And then the Saudi's will crank the price up but only to about $70. The shalers' will re emerge but not on the same scale. The easy credit has gone. And the sweet spots are being sucked dry.

And in the meantime , as the oil price goes up on a production decline curve, gas will be the transmission energy to take us into the future. And SXY has some good gas projects which will be sold into a high priced market once Gladstone gets going.

At the moment no one likes oil and gas. That alone, is a good reason to buy.
GLTA. ......Quite a few analysts like SXY. ...but phew, this industry is at an all time low.

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TUI, I agree with you on most of the points. Can you give the reference supporting your point "2.World total oil production is decreasing by about 5% per annum. Say 4.5 mbpa What is going to replace this?"? Cheers.

SXY Price at posting: 26.5¢ Sentiment: Hold Disclosure: Held
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