How Crude Oil's Collapse Unfolded

[Erik C]

The Saudis are swimming in cash, and their cash pile will be even higher as they buy up the world's oil related stocks at these current bargain prices. Then they'll cut the oil output again and the price of oil will rise again and quickly, along with all the oil related stocks that they have acquired.

At the recent OPEC meeting, non OPEC oil companies were there too. Including the Russians. The head of Rosneft met privately with the Saudi oil minister. Russia is on good terms with Iran, and they've been talking oil deals. Between the sanctions on Russia and the Ruble collapse, Russian oil stocks are cheap even compared to the current low prices in  Europe and North America.

The Saudis can buy an interest in every aspect of the oil business globally. Then they make money on oil anywhere on Earth from well to final user. They won't care where the oil is, nor who is pumping it, as they can control the price, as they've recently demonstrated. Once the cut the oil output again, the price of oil will rise to former levels, and so will their newly acquired hoard of the worlds oil related stock shares. Overnight, the Saudis will make 100s of billions of US Dollars. And it is totally under their control to make it happen, so they will do it.

Hedge funds are now loading up on oil related shares too. 2015's best investment returns will be in the oil/energy sector.

[El Diablo Blanco]

Yep, Oil will bounce back and profit takers will buy in now and make quick Cash.

Fact.  Goldman Sachs was required to take $7 bilion in TARP money even though they didn't need it.  They took the money and dumped it into oil, oil went up, they cashed out and were the first to pay back the feds their loan.

[2Thick]

I've been big in energy for a long time - not really into the big integrated names like Exxon or Chevron... more into the up and coming drillers, servicers, etc - Continental, EOG, Diamondback, Pioneer, Schlumberger, Halliburton, Nabors, Apache, Baker Hughes (just sold) etc, etc.

I took a fair amount of profits off the table in early Oct and bought more puts, but I do also dollar cost average with new $ every week and have been buying a little more here and there as they have been falling. I've also got into small positions on a few other more speculative names that have been falling hard.

I'm also starting to look at their debt and nibble on that as well. Carefully putting a few bucks into the debt of a number of these companies when they are trading at 50, or even 20 cents on the dollar of par value a few years away from their maturities can be a very good investment overall as well - as long as the vast majority of them don't default.

When I see that crude once again looks like it's building upward momentum, I'll start buying in larger amounts of more shares again of those favorites I still own, and perhaps find some new opportunities.

[denarii]

Petroleum Intelligence Weekly ?  hahaha.

Give me a break about Saudis needing $106 oil.  Their entire oil infrastructure has been paid for years ago.  Everything they pump is pure proift.  Saudis were the richest people in the world when oil was $20, you don't think over the last decade at $100 that their wealth didn't go up 5X?  They are swimming in cash.

106 to finance imports and govt spending. Cash costs r more like 30

[Da Freak]

smartest GB thread in errm, forever?

/h2

[Erik C]

106 to finance imports and govt spending. Cash costs r more like 30

The price of a barrel of oil will go well over $100.00 per, as soon as the Saudis cut their oil output again.

[El Diablo Blanco]

The price of a barrel of oil will go well over $100.00 per, as soon as the Saudis cut their oil output again.

Got to love how the Texas oilmen sit back and blame the Saudis while they are biggest fucking manupulators in the world.  They are collected money hand over fist and no one gets mad at them, they just deflect it to the Saudis.

[Lexus II]

Petroleum Intelligence Weekly ?  hahaha.

Give me a break about Saudis needing $106 oil.  Their entire oil infrastructure has been paid for years ago.  Everything they pump is pure proift.  Saudis were the richest people in the world when oil was $20, you don't think over the last decade at $100 that their wealth didn't go up 5X?  They are swimming in cash.

Comment from: bioguy7519
Seeking Alpha
Saudi Arabia: Do The Math

[snip]
First, one needs to understand the Saudi government supports the entire native Saudi population with a comfortable living from oil revenue (citizens don't pay taxes, the government pays the citizens, a majority of whom do not work). In addition, the government continues to pay huge sums of money to foreign workers who staff Saudi businesses, hospitals, etc. Unfortunately for the Saudis, their population is among the fastest growing on earth, with a growth rate much faster than growth in oil revenue (oil was ~$102 when I was there). Put simply, their costs are rising at levels which are unsustainable if they lose crude market share (or long term pricing power). The Saudi Ministers are keenly aware of this imbalance and are working to ease financial strain in two ways: #1 The Saudi government is rapidly trying to push native Saudis into the workforce through a program they call "suadization." This will save hundreds of billions of dollars in annual foreign labor costs. #2, More importantly for you and I, the Saudi Oil Ministers want to secure their dominance in the oil market. They've placed what I see as a risky bet they can drive short term oil prices down far enough top cripple shale and deep water producers and, they hope, slow foreign production. While they may have some success in slowing short-term oil production, I can assure you, the Saudi's are not in a position to maintain oil prices below $80/barrel, and they know it. This is an entirely unveiled attempt by the Saudis to retain market share because they know their current levels of financial expenditures cannot be maintained without dominance in global oil production.

 
That said, Saudi Arabia is currently among the wealthiest nations on earth. It is a country where Lamborghini's and Ferraris are almost as common as Lexus is to you and I, and a place where most citizens still do not need jobs to live relatively lavish lifestyles. The Saudi's can't bare $60 oil forever, but they have enough fiscal padding to stay comfortable as low as $30/barrel for longer than many marginal shale producers want to admit.

[Erik C]

The Saudis are going to be dominant in the global oil market. They cut the price of oil, by increasing their oil output, after selling all their shares of oil related stocks. Oil related stocks have crashed in price, along with the fall in the price of oil, and the Saudis are buying up oil related stocks, all over the world. In a very short time they will have acquired major holdings in anything oil related, from the wells to delivery to the end user. From now on, wherever oil is produced, the Saudis will own a piece of it. Then they cut their supply, and the price of oil, including their oil, and the price of oil related shares of stocks will all rise to new highs. It's all under Saudi control. Total win win situation for the Saudis. The news media are wrong about what's going on with oil. Even if shale, oil sand tar, and more deep sea drilling were cut back, as soon as the price of oil went up, then they'd start in again at it. It would be pointless for the Saudis to have increased oil output for stopping the competition from competing, because that won't happen, but they can buy up a big chunk of the competition, and do it at bargain prices right now. So that's has to be what the Saudis are really doing.

[El Diablo Blanco]

The Saudis are going to be dominant in the global oil market. They cut the price of oil, by increasing their oil output, after selling all their shares of oil related stocks. Oil related stocks have crashed in price, along with the fall in the price of oil, and the Saudis are buying up oil related stocks, all over the world. In a very short time they will have acquired major holdings in anything oil related, from the wells to delivery to the end user. From now on, wherever oil is produced, the Saudis will own a piece of it. Then they cut their supply, and the price of oil, including their oil, and the price of oil related shares of stocks will all rise to new highs. It's all under Saudi control. Total win win situation for the Saudis. The news media are wrong about what's going on with oil. Even if shale, oil sand tar, and more deep sea drilling were cut back, as soon as the price of oil went up, then they'd start in again at it. It would be pointless for the Saudis to have increased oil output for stopping the competition from competing, because that won't happen, but they can buy up a big chunk of the competition, and do it at bargain prices right now. So that's has to be what the Saudis are really doing.

Same deflecting BS.  Don't forget the US Oil mongers that are also in play with this.

[Teutonic Knight]

Petroleum Intelligence Weekly ?  hahaha.

Give me a break about Saudis needing $106 oil.  Their entire oil infrastructure has been paid for years ago.  Everything they pump is pure proift.  Saudis were the richest people in the world when oil was $20, you don't think over the last decade at $100 that their wealth didn't go up 5X?  They are swimming in cash.

Royal family, yes.
Others ?.

[Erik C]

Same deflecting BS.  Don't forget the US Oil mongers that are also in play with this.

There is only one force at play here. At least only one that knows what's really going on, because they started it. The Saudis increased their oil output, thereby lowering the price of oil, that began this market disruption. Their oil minister said that Saudi Arabia could withstand low oil prices for a year. That's not long enough to drive any of the oil producing competitors out of business permanently. So that's not their game plan here. They're doing something else completely, and it won't take a year to get it done. All they need is for oil related stocks to take a big drop. Oh wait, they already made that happen!

[El Diablo Blanco]

There is only one force at play here. At least only one that knows what's really going on, because they started it. The Saudis increased their oil output, thereby lowering the price of oil, that began this market disruption. Their oil minister said that Saudi Arabia could withstand low oil prices for a year. That's not long enough to drive any of the oil producing competitors out of business permanently. So that's not their game plan here. They're doing something else completely, and it won't take a year to get it done. All they need is for oil related stocks to take a big drop. Oh wait, they already made that happen!

Saudis don't piss unless their US counterparts agree.  They know the USA is there to protect those vile scum from the rest of the middle east from going in there. 

[MikMaq]

I think its desperaton by the saudi's. Their oil production is about to peak, and they need their last big stash to last.

[El Diablo Blanco]

I think its desperaton by the saudi's. Their oil production is about to peak, and they need their last big stash to last.

The proven oil reserves in Saudi Arabia are the second largest claimed in the world, estimated to be 267 billion barrels (42×109 m3) (Gbbl hereafter), including 2.5 Gbbl in the Saudi–Kuwaiti neutral zone. These reserves were the largest in the world until Venezuela announced they had increased their proven reserves to 297 Gbbl in January 2011.[1] The Saudi reserves are about one-fifth of the world's total conventional oil reserves, a large fraction of these reserves comes from a small number of very large oil fields, and past production amounts to 40% of the stated reserves

Not sure why we don't hear more about Venezuela.