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Oil Spike

Discussion in 'Commodities' started by jonojpsg, Feb 24, 2011.

  1. jonojpsg

    jonojpsg

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    Hi all,
    Just wanted to raise the current spike in the price of oil as a potential trade that everyone should be either on or looking seriously at.

    Obviously most, if not all, of you would be aware of the current situation in the middle east and the disruptions, both realised and potential, to oil supply that this poses. Since Monday the oil price has spiked from around $88ish to currently $98ish and could go much higher.

    It was pointed out to me the other day however that on IEA (International Energy Agency) data for the last qtr of 2010, world oil supply was 88.2 mbpd (million barrels per day) whereas world oil demand was 88.9 mbpd. Forecast demand for 2011 is 89.1 mbdp with q3 and q4 demand peaking around 89.8 mbpd.

    This being the case COMBINED with supply disruptions from the worlds main oil producing region could definitely see oil prices heading north towards 2008s highs of $150 and possibly beyond. As I and no doubt others watched this occur and did not take advantage of it, I am on board this time and thought I'd bring it up as a possible trade.

    Happy trading :)
     
  2. Agentm

    Agentm

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    my original target without the M/E situation was for WTI to go $140


    with lybia crude being pretty darn spectacular, to replace the 2% of world turnover with that level of crude is not going to happen. 800,000 per day is already offline right now, about half of the lybian turnover.

    imho the $220 region that some have speculated is pretty hair raising,,
     
  3. matty77

    matty77

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    Question is, what companies benefit from a spike in oil prices? (what companies on the ASX... that is)
     
  4. Tysonboss1

    Tysonboss1

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    First thought would lead you to think the oil producers, Bhp , woodside, beach etc.etc. But most of them have the bulk of their production hedged at fixed prices, So the upside is somtimes limited unless it is a sustained increase. Also temparary spikes have limited effect on earnings when looking back at an entire years production.

    If you wanted to speculate on the commodity itself you may see bigger wins (or loses)
     
  5. nukz

    nukz 888

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    Been long on Brent & WTI Crude quite a significant amount since things started in Egypt got out today with Brent at 112 and Crude touching 100 briefly before.

    If there is even a touch of things spreading to Saudi Arabia i will be going long again for sure.

    I would also look at the recent declines in Sugar/Rice as a possible entry point as well.
     
  6. ThingyMajiggy

    ThingyMajiggy

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    Awesome....must be time to short then :D
     
  7. ThingyMajiggy

    ThingyMajiggy

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    $4 rally in the last hour and a half....not bad! :eek::eek:
     
  8. Smurf1976

    Smurf1976

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    I hold quite a few oil and other energy stocks.

    As a whole, they've gone nowhere since this started and for today they are down. All of these are stocks that have historically been correlated to the oil price.:2twocents
     
  9. jonojpsg

    jonojpsg

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    Ohhhhh mannnnn did I love that spike:D:D That was the quickest $6k I have ever made:eek: Been trading oil long over the last couple of months and was actually down a bit up until the start of this week then have been actively in and out a few times.

    Was out this morning again but had an alert on at $99.60 which went off at dinner. Got on after dinner and bought 20 A$1 contracts at $100.10 then in 15 minutes watched it go to $103!!! Unbelievable sitting there watching it - never seen anything like it??? Maybe spikes on the HangSeng index TH? Anyway, my hourly rate after closing out at $102.50 came to $24000/hr for that 15 minutes of fame hahaha:D
     
  10. DB008

    DB008

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    +1
    I sold TAP the other day as it hasn't moved much for the past few weeks (will skyrocket now). I wish that there was a OIL ETF (like precious metal etf's).
     
  11. IFocus

    IFocus You are arguing with a Galah

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    Saudi Arabia is the big one.
     
  12. nukz

    nukz 888

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    Speaking of precious metals, gold has almost had the same effect in the last few days as oil so it cant be ruled out as a trade.

    Anyway anybody trade the vix? i used to just use it as a reference point for trading but i decided to go long on Wednesday which has been ok so far.
     
  13. DB008

    DB008

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    I trade though my SMSF, and l am bullish on oil. What would be the best way to go about getting exposure to oil?
     
  14. Bullion Money

    Bullion Money

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    Dont forget the little brother Silver as well.

    It rose 9% over 3 days then dropped 4% then up 2% now down again 1% (rough percentages)

    Im not chartist but it looks like classic wedge patterns.

    Both gold and silver look bullish.
     
  15. Slipperz

    Slipperz

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    Invest in an oil company.
     
  16. skyQuake

    skyQuake

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    Looks like that spike post Au session yesterday was the last hurrah to squeeze everyone out..
     
  17. Slipperz

    Slipperz

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    The trajectory of Libyan oil production remains concerning. Estimates of current shut in production vary from a low of 500,000 barrels/day (b/d) to over 1 million, from a total production of 1.6 million barrels/day (mmb/d).

    Company withdrawal of expatriate production workers appears to be a major contributing cause of the production decline, not damage to producing fields, although other factors are in play. Though Libya is a small producer, its oil is highly prized in the Mediterranean basin by Italian, French, and other regional buyers, as well as in northwest Europe for use by heavy, sour-based refiners as a blending crude.

    Libyan export terminals appear still to be able to accept export cargoes, but with fighting around Ras Lanuf--home to the largest refinery and the country's largest oil export facility--tanker owners are likely to be hesitant to commit tankers to begin loading in the face of potential harm to ships and crews. In addition, there are reports of buyers being unable to decide who to pay, and some may be having trouble obtaining insurance coverage.


    Foreign buyers of Libyan oil, primarily refiners, as well as spot and forward traders, appear to have bid up global market prices of the higher-quality sweet crudes, similar to those produced by international oil companies (IOCs) in Libya, as they try to cover demand for future refining activities or purely to speculate by betting on continuation, if not spreading, of current market disruption to other suppliers in the Arabian gulf.

    Refiners' efforts to cover their crude needs from alternative suppliers reflect the shortage of Libyan crude oil, which is attractive for its higher production of gasoline and diesel for the major consuming markets.

    These alternative, and generally similar, sweet crudes are from Algeria and Nigeria in the Atlantic Basin and Azerbaijan in the Caspian. The increased demand for these crudes comes at a time when parts of Nigerian production are already shut in. The increased demand reflects requirements from European and probably Asian buyers. Nigerian crude is purchased by select U.S. refiners, who are competing to maintain supply of the higher-quality crude oils prized at this time of the year.

    Not surprisingly, sweet crude prices in Singapore are also up, reflecting in part China's refinery requirements for higher-quality sweet crude. Chinese companies are estimated to import about 11 percent of Libyan production--or close to 200,000 b/d.

    Chinese refineries were historically dependent on domestic sweet crude to charge their refineries. It would not be surprising if Chinese traders are contributing to the price run-up as they seek to cover forward requirements with purchases of alternative European and African sweet crudes.

    Seasonal factors contribute substantially to the price run-up, as refiners have begun producing gasoline and diesel for the summer driving season in the Northern Hemisphere following normal seasonal maintenance.

    For those refiners lacking deep conversion capacity, Libyan and related sweet crudes are used to blend with less attractive crude oil to reduce sulfur content and to increase production of higher-end transportation fuels for the summer driving season.

    All of these factors contribute to the general increase in global oil prices, particularly for the higher-valued crude oil.

    U.S. officials have indicated that the United States may draw from the Strategic Petroleum Reserve to address current high crude oil prices. Saudi Arabia also indicated it may increase production to meet the shortage.

    Unfortunately, current high prices are not related to the current shortage of global crude oil supplies. Rather, some market participants appear to believe that the political trouble in Libya may increase, as well as spread to the other major producers with excess capacity, leading to a major physical shortage in global crude supplies and a further increase in prices--and that any crude that may come to the market as a result of increased production, or from the U.S. Strategic Petroleum Reserve, may not be of the appropriate quality or sufficient quantity to meet current demand.

    Alan S. Hegburg is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.
     
  18. Wysiwyg

    Wysiwyg Everyone wants money

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    We are still paying the same at the fuel depots as when the price per barrel of WTC was $110 USD.

    Why are the producers of oil charging so much nowadays?
     
  19. MARKETWINNER

    MARKETWINNER

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    We cannot avoid currency and commodity volatility time to time due to demand and supply situations, global short term events and speculation link to currencies and commodities.

    In the short run oil prices will have spikes due to short term events and in the long run oil will come down due to new developments in the oil sector.

    I have noticed many countries such as USA, Europe and Asian countries are trying their best to become either energy self sufficient or reduce dependence on imports by developing their domestic alternative energy sectors including domestic bio-diesel.

    My ideas are not a recommendation to either buy or sell any security or currency. Please do your own research prior to making any investment decisions.
     
  20. CanOz

    CanOz Home runs feel good, but base hits pay bills!

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    Oil and all markets have price changes due to the structure of the market, as well as fundamental factors....

    - - - Updated - - -

    What would you say now?

    I wonder if that was a short term top? Lol...
     
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