Oil price to collapse to $20 barrel

michaels

ad9898 wrote: »

... fusion, which is at least 2-3 decades away, if ever.

Last I read things were going badly in the latest test reactors (something about they hadn't jet invented the materials needed for the reactor containment which was proving a block to building the test reactor) and fusion which was a couple of decades away 20 years ago was now 50 years away...at least

ad9898_3

michaels wrote: »

Last I read things were going badly in the latest test reactors (something about they hadn't jet invented the materials needed for the reactor containment which was proving a block to building the test reactor) and fusion which was a couple of decades away 20 years ago was now 50 years away...at least

You may well be correct, to contain a star on earth will be no mean feat. With our current technological know how, it's a distant prospect.

damanpunk

novazombie wrote: »

The oil price is set to absolutely plummet

Get out of oil quick if you havent already.

http://www.moneyweek.com/investments/commodities/why-the-latest-oil-bubble-could-be-about-to-burst-14962.aspx

So then, why didn't we hit $20 last year when the world was in total meltdown? :rolleyes:

To be honest when you see the amount of work that goes into getting the stuff out of the ground $60-70 dollars a barrel is a bargain, infact $150 was!

Alan_Cross

novazombie wrote: »

The oil price is set to absolutely plummet

Get out of oil quick if you havent already.

http://www.moneyweek.com/investments/commodities/why-the-latest-oil-bubble-could-be-about-to-burst-14962.aspx

... and get into property...

StevieJ

The oil price is collapsing so they come up with the interesting recommendation, either go long or short BP and Shell Looks like they are covering all the angles.

How to profit from falling oil prices

While crude prices have been rising, we've suggested holding the high-yielding major oil stocks. They're still cheap, and their dividends should be sustainable as long as the average oil price stays above $30 a barrel. BP (LSE: BP) is on a current year p/e of 12x while Royal Dutch Shell (LSE: RDSB) is even better value on a 2009 multiple of below 10x. Both yield nearly 7%, which to us, certainly looks worth taking a risk on, even if – as we suspect – the oil price is heading lower.
But if the oil price is set to absolutely plummet as Prof. Verleger suggests, you could always 'short sell' it by buying a 'put' option. That means you'd be buying the right to sell at current levels even if the price plummets, so making a very good profit indeed. Clearly there's more risk here, as you're effectively selling something you don't own. For full details, see our recent oil price cover story:

Generali

StevieJ wrote: »

The oil price is collapsing so they come up with the interesting recommendation, either go long or short BP and Shell Looks like they are covering all the angles.

How to profit from falling oil prices

While crude prices have been rising, we've suggested holding the high-yielding major oil stocks. They're still cheap, and their dividends should be sustainable as long as the average oil price stays above $30 a barrel. BP (LSE: BP) is on a current year p/e of 12x while Royal Dutch Shell (LSE: RDSB) is even better value on a 2009 multiple of below 10x. Both yield nearly 7%, which to us, certainly looks worth taking a risk on, even if – as we suspect – the oil price is heading lower.
But if the oil price is set to absolutely plummet as Prof. Verleger suggests, you could always 'short sell' it by buying a 'put' option. That means you'd be buying the right to sell at current levels even if the price plummets, so making a very good profit indeed. Clearly there's more risk here, as you're effectively selling something you don't own. For full details, see our recent oil price cover story:

Selling covered call warrants would be the obvious trade. The dividend and the price you get for the warrant give you great protection on the downside. If the price rises then you lose the possible gain but you still get the warrant price.

Count_Dante

Doesn't the high yield of oil stocks suggest concern that the dividend is unsustainable?

Funny, this article, also from Moneyweek, suggests the dividend will be unsustainable if oil falls to $50 per barrel, not $30. I suspect a lot of investment and maintenance is being slashed to maintain the dividend.

http://www.moneyweek.com/investments/stock-markets/bps-dividend-looks-sustainable-43303.aspx

dopester

ad9898 and I have a bet made in early June... although I wish now I'd negotiated some more amusing penalty.

It is complex though.. my views are on deflation, the ability to pay, and overcapacity going into the next few years... when there are so many other variables and megapolitical issues involved with oil.

dopester wrote: »

I reckon we'll see oil locked in a kiss for sub $10 a barrel soon enough. Oil businesses having their credit ratings notched down.

ad9898 wrote: »

Didn't you know Donald, it's all floating in tankers just off the coast, waiting for the price to rise.:rolleyes:

$10 a barrel, jesus, the people who have not studied this subject aren't just burying their heads in the sand, their whole body is under, with barely their feet showing..... $10 a barrel, will never, ever be seen again, and if I had a house, I would put it on it, as well as the shirt on my back.

ad9898_3

dopester wrote: »

ad9898 and I have a bet made in early June... although I wish now I'd negotiated some more amusing penalty.

It is complex though.. my views are on deflation, the ability to pay, and overcapacity going into the next few years... when there are so many other variables and megapolitical issues involved with oil.

I'd still put my house on no $10 per barrel.

StevieJ

ad9898 wrote: »

I'd still put my house on no $10 per barrel.

Not a high risk strategy seeing as you don't have one