The price of oil is usually measured on a per-barrel basis. The price also can be quoted as the spot price, which is the price of buying a barrel at the current moment, or as the futures price, which is the cost of buying a barrel of oil in future months. Two main contracts traded are West Texas Intermediate (WTI) and Brent Crude. WTI oil is light sweet oil and very well suited for gasoline. Brent Crude is a blend of oil from the North Sea. Futures prices are quoted in increments of 1,000 barrels of oil for every one contract.
Hooray, gasoline prices at the pumps have declined to their lowest levels this year! Better yet, they’re looking to head even lower, as oil prices begin to unravel below $100.00 per barrel.
The level of oil reserves jumped by 5.2 million barrels for the week ended October 18, according to the Energy Information Administration (EIA). There are some 379.8 million barrels of oil in our reserves, and that doesn’t include those in the Strategic Petroleum Reserve.
With the rise in reserves and lower demand due to the recent government impasse, the country is importing only 7.7 million barrels per day versus the four-week average of 8.0 million, according to the EIA. (Source: “Summary of Weekly Petroleum Data for the Week Ending October 18,” Energy Information Administration web site, last accessed October 25, 2013.)
Today, the United States is less dependent on foreign oil than at any time in its recent history. The country is producing more domestic oil specifically from the shale oil in North Dakota and Montana. (Read “Why You Shouldn’t Be Worried About Surging Oil Prices.”).
The EIA says North America is now the biggest producer of usable shale oil in the world, and it’s only going to get bigger as new technologies surface that can extract even harder to get oil. In 2012, shale gas represented 39% of total natural gas production in 2012 in the United States, according to the EIA. Canada was second at 15%.
In my view, the rapid development of shale oil will continue to lessen the country’s dependence on OPEC oil, and this is good for both the economy and … Read More
The way things are going, the place to be in capital markets seems to be in energy. Oil and gas stocks, particularly smaller ones, continue to be solid earners in a stock market looking for direction.
While oil prices gyrate on geopolitical events, market speculators have been bidding the commodity based on the slightly positive tone in U.S. economic data. It doesn’t take a lot for market participants to bid oil. The only way to beat it as a consumer is to own a piece of the company.
While many junior oil and gas producers are moving higher in value on the stock market, valuations are particularly lofty. They were high to begin with, before recent events in Syria, but they have only gotten worse. Now isn’t particularly a good time to be considering new positions on the stock market, but the energy sector is a bright light in an otherwise lackluster environment.
Jim Rogers, the “Investment Biker,” wrote that he would continually analyze all capital markets, but trade very little. He would wait until an investment opportunity became so compelling, and then take on a considerable position (with leverage).
I don’t see this kind of opportunity with oil, but I do see it in natural gas as a longer-term, cyclical play after the natural gas build-out is completed.
One of the most successful natural gas producers on the stock market has been Cabot Oil & Gas Corporation (COG). Even with flat natural gas prices, this oil and gas producer is up four-fold since the beginning of 2010. Its valuation is super lofty, but then again, this enterprise is delivering … Read More
This is an entirely free service. No credit card required.
We hate spam as much as you do.