I am actually very surprise oil has held up so well when the world global economy and market crashing down.
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I am actually very surprise oil has held up so well when the world global economy and market crashing down.
Nita, I think it was one of your posts that provoked me to post these thoughts.
The price of oil has been going up in NZD terms over the past few days. The price is uncertain but oil has many things going for it.The NZD/USD will probably go much lower when the rate cuts come. If Maari and Kupe were pumping Bollard would be much happier.
Two days ago there was (another) chap out of the US saying that the marginal cost of oil production was about USD80 per barrel and that price could retreat to that. With the immense risks taken and technology applied it has to be a very profitable industry or it will not exist.
The POO could spike lower (besides that being potentially more disruptive than the recent spike to USD147) but:
· BHP’s cost of production last year was about USD80. A large established player – most new players’ costs will be much higher. The accounting surrounding the calculation of marginal costs is also doubtful. It is also historical.
· The marginal cost producers of oil are not in OPEC. Try oil sands, ethanol, deep water oil etc. The marginal costs of energy of all forms continue to increase. Liquid fuels more than most, because they are so convenient.
· Oil is no longer a commodity. This is another erroneous American accounting assumption that suits their manipulation of the world economy with derivative markets for everything. Nationalistic interests have taken control of access to oil fields. The big oil companies are not able to guarantee supply.
· Yesterday, OPEC in response to the US call for lower prices stated clearly that they intended to turn off the tap first. I could not find the Bloomberg quote again – one assumes that it was removed /edited out (only the Chinese censor LOL )– perhaps it wasn’t an official position just a Saudi saying that Iran and Iraq were still recovering from wars and needed the money. It was better for Saudis to leave the oil in the ground if the price wasn’t USD100. Now we don’t know what currency hedging in use so there will be some variation. They are determined not to flood the market with oil no matter how far demand declines – but they will try to meet demand at their price. OPEC has been talking to Russia lately as well.
· These actions around the world to ease the credit crisis are inflationary. Gold is going up. The new gold – oil will go up as soon as OPEC stop being Mr Nice guys to these *****.
· The Americans need petro dollars to remain USD and to help them out of their credit crisis. They will have to ensure that OPEC’s price for oil is supported in the new economy.
· The same US commentator above said “who knows what the Arabs will do”. I think he will be shown that the Arabs mean to be good citizens of the world – more than can be said of Americans under Bush.
The world needs to figure out how to live with a high oil price and that means using less - a low price doesn't help anyone.
Yes, I've noticed that too. I was more referring to fact of how AUD was the currency to be in according to a few people...I thought it would hold up a little better myself! Australia was near parity with the states only months ago and now below 70cents!
Oil price is still declining in NZD terms and production costs rising.
FPH is looking attractive again...
AUD is more exposed to volatile commodity prices than NZD, despite the drop in dairy prices!
;)
I'm not sure who is in the dark, but if you were a shareholder or had visited our website, you would know that in our June Quarterly Report we stated that:
"The funds... have been invested in short-term banking facilities with a number of S&P AA or better rated institutions. We are not in the business of financial speculation with shareholder funds".
For further clarification, our cash holdings are spread across a number of accounts with half a dozen of the major banks, and we are receiving appropriate rates of interest.
Our September Quarterly Report due out in late October and our AGM on 29 October will provided shareholders with more information on the company's performance and current strategy.
Its nice to know that you do pay attention to what goes on in these forums. The point that i was raising is that with all the fundamental analysis being discussed over the last 400 pages on this thread nobody has spoken about the interest or what banks are involved. Banks are crashing in some parts of the world you can at least tell us which countries the share holders money sits in. The very volatile exchange rates are another consideration. Macdunk
Code:Oil price in USD / EXCHRATE = NZD/barrel
yesterday 88.95 / .63 = 141.19
today 88.52 / .60 = 147.53
Where is this price decline you are speaking of???
Why would production costs be rising??????
NZD/USD now at 59.80c, below 60!!! Better go down to the petrol
station to fill up the car now!