RE:RE:RE:RE:RE:RE:STC Not Alone In 2021 Share Price Dropmasfortuna wrote: Hey Long!
f you don't know anything about oil and gas, then I would recommend that you don't comment on it. As an fyi, Saudi Arabi is having a hard time meeting the agreed increase in supplies agreed upon last year NEVER MIND increasing it further. Russia maybe? It appears Russia has maxed out its output capacity. Iranian oil? China has been buying 400k barrels a day illegally for the last 6 months. I could go on. I think oil will be in a bull cycle for the next 2 years at least. Mas
mas,
1) U.S. Shale oil has been a game-changer for the USA in terms of trying to achieve energy independence. The problem is that shale wells usually have a relatively short-life, and thus equipment / projects need to be moved around more frequently, causing added expense. This is fine as long as the price of oil is high, but the bigger the drop in the price of oil, the more potential U.S. shale projects become un-economical and are delayed or cancelled.
Big drops on oil prices happened twice over the past 8 years:
a) When WTI dropped from 100.00 in June 2014 to under 40.00 by Jan 2016 and didn't break the 70.00 mark again until Sept 2018.
b) When WTI dropped from 60.00 in Dec 2019 to under 20.00 in March 2020 (coinciding with the onset of the COVID pandemic) and didn't recover back to 60.00 until Feb 2021 (less than a year ago).
Name me a person who predicted in advance that the above two oil price face-plants would occur, and how long they would last.
2) Canadian Oil Sands operations are expensive to build and get up and running, but when they do, they stay put for a long time and are usually not shut down like U.S. shale plays because shutting down oil sands operations then starting them jp again when oil prices improve are usually very costly. Instead, when oil prices drop, oil sands producers either sell oil at the discounted prices and make less money or at least try to break even, or they pay for storing the oil, hoping that they can get a better price selling the barrels later on and make up for the added cost of storage.
3) In terms of OPEC+ vs. the USA, the following exerpts are from an Investopedia article dated December 31, 2021 entitled "OPEC vs. The US: Who Controls Oil Prices": The Organization of the Petroleum Exporting Countries (OPEC) was formed to negotiate matters concerning oil prices and production. OPEC countries include the following 13 nations:
- Algeria
- Angola
- Congo
- Equatorial Guinea
- Gabon
- Iran
- Iraq
- Kuwait
- Libya
- Nigeria
- Saudi Arabia
- United Arab Emirates
- Venezuela
OPEC+ came into existence in late 2016 as a means for the top oil-exporting nations to exert control over the price of the precious commodity. OPEC+ is an amalgamation of OPEC and 10 other oil-exporting nations such as Russia and Kazakhstan.
OPEC+ remains influential due to three primary factors:
An absence of alternative sources equivalent to its dominant position
A lack of economically feasible alternatives to crude oil in the energy sector
OPEC, especially Saudi Arabia, has the world's lowest barrel production costs
These advantages enable OPEC+ to have a wide-ranging influence over oil prices. Thus, when there is a glut of oil in the world, OPEC+ cuts back on its production quotas. When there is less oil, it increases oil prices to maintain stable levels of production.
it is important to note that, although the United States is the top producing nation, the top exporters are predominantly members of OPEC+, which means that they are still the key player in the oil price determination process. There may come a day when OPEC loses its clout, but that day is not yet here.