Is it time to buy Oil?
Answers
989 points
rvilmur answered one year ago …
Only if you are an oil using company where I would be buying oil for future delivery. Right now too many companies bought forward very expensive oil and are loosing too much to take new positions. I do expect that oil will rise again but supply and demand must stabilize again. OPEC members need to quit cheating on their quotas and speculators need to get burned a bit on their short positions. Watch futures trends for clues.
In oil service, I would monitor NBR and NOV.
In production and exploration, I would monitor MCF, CHK, CRK, KWK, PXP, ME, and ATPG.
2222 points
readytoretire answered one year ago …
As the weekly inventory numbers in the US show, demand is still falling, and inventory going up. With the world economy still slowing, I don't look for a major price anytime soon. And it will be tempered by the urge to cheat as soon as the price firms as the countries will think they can grab some extra money after having had to sell for so cheap for so long. Unless we and the world make some major changes, the next runup could get ugly, even more so than the last one did. But there should be a gentle on-ramp before the fun starts.
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3963 points
MNSL answered one year ago …
Factors to watch before buying oil:
Global manufacturing depression
Demand destruction. Slumping demand for commodities such as mining products
Impact of financial market crisis in the global economy
Serious downturn in construction worldwide. Slow down in China.
Shut down in projects. Some commodity projects will be canceled and others deferred until markets recover
BHP Billiton abandoned its hostile $66 billion bid for Rio, the world’s third-largest mining company
Commodity profit in the next 02 years lower than expected because of declining commodity price
Job cuts and labor problems
Recession, depression and slower world growth including China, Japan, Germany
Commodity business are expected to reduce
Commodity Production cut on weak demand Ex: BHP Billiton
It is unlikely to revive growth in the manufacturing sector soon. Tyre, textiles, metal and metal products and leather products will hit hard.
Car sales are falling rapidly.
Lower investment and production in industries such as auto, electronics and technology. Eg: Sony, Toyota
678 points
BoxCar answered one year ago …
Supply and Demand will rule Oil prices. Supply is UP, Demand is Down. 2 things-
When you hear of Oil Tankers full of high priced crude waiting for a higher bid, it
reminds me of 1974, plenty of Oil (and Gas) was left in storage to drive price up.
(I know a gas truck driver who used abandoned gas stations to store gas at nite.)
With automakers on the ropes and new auto sales in a slump, means we continue to
drive gas-guzzlers a few years longer, but on Xsgvg trip to Tucson, AZ when I set
my cruise on 70mph, I found myself passing every truck! Truckers told me their
goveners were set at 64mph for a 20% drop in 80mph speed to affect a 40% drop
in consumption (drag is proportional to speed squared) Reduction in demand is
also effected by less freight to haul and BRIC not using as much plastics as before.
In all these forces combined I'd say Supply far exceeds a diminished Demand and
will continue for awhile. Chances of economy being restored to levels that drove Oil
to its peak are slim because the 2nd shoe to drop comes in 2010/11 when all the
other ARM mortgages are scheduled to be RESET and start another spiral down.
In short, wait until other shoe drops and demand goes over a cliff, but buy food as
can't EAT oil nor gold when 2nd Great Depression ensues. Sorry about that-
