Hey /biz/, what do you guys think will happen to crude prices in the next few years? Do you think they will rise back up? Haven't many U.S. wells been capped?
What do you guys think about buying like $1000 of UWTI stock? I think it's a bit risky, but my thinking is as follows....if crude rises back to previous highs, as seen in the chart, you will at least increase your money 5x (it was trading at like $10/shares before it dropped). In the past, it has even traded at like $600 shares, which would be amazing gains. Worst case scenario, I guess you lose $1000. What do you guys think? Do you think crude will rise back up in late 2017 or 2018?
The general understanding is that there needs to be a major capitulation before there will be a rebound. One more massive drop and a swath of bankruptcies. I want to see names like Linn, Energy XXI, Seadrill,Penn Virginia, ect, completely taken out before there's any hope of recovery. It will likely happen this year, but not for a while longer.
As for UWTI, just fucking don't. Decay will kill you before you see profit. Look at a company like GTE or PAA -- something that will survive. I'd lean towards a midstream (a solid one mind you). Also, oil services will see a rebound as well... maybe a little bit of MDR.
If most oil companies are out of business, that leaves a small minority who has to meet demand. This means less supply and, since there are fewer suppliers, collusion is more likely.
Well you said earlier that current prices are too low for most oil companies to survive.
My logic is this: the current prices are artificial. Saudi Arabia, for whatever reason, started pumping more gas to gain market share. But even with greater market share, they're making less money. There is no reason for gas to be low other than this. Therefore, at some point, gas producers will pull back and let prices rise.
>Well you said earlier that current prices are too low for most oil companies to survive.
That's why prices will go up. Nobody can afford to keep producing at the current price but their all playing a game of chicken to essentially starve each other out. The game will end when production is curbed enough by the loss of the weakest producers to increase price. This will still leave at least 50%(my guess would be more but who knows really) of the original producers encompassing thousands of individual companies. It's not like there's going to be a handful of producers, even if there was as soon as they drove prices up new companies would spring up left and right.
Don't say gas when you mean oil. Natural gas prices are not related to this.
The Saudis were the ones who cut their production to keep total world production stable and prices high. Increases in output from North America made this position untenable so they simply quit trying to control the amount of oil produced worldwide.
>USA wanted to punish Russia.
>Saudi's wanted to stop American/Canadian competition.
>Current USA govt with Saudi engineered excess supply, flooding the market.
>American/Canadian oil producers hurt or go out of business and Russia heavily impacted.
>What do you guys think about buying like $1000 of UWTI stock?
tis a bit dubious for any long term bet/investment - I'd look at a more conventional ETF exposed to oil or oil companies for a long term view
a leveraged ETN which is exposed to time decay is more useful for a shorter term directional bet... jumping on a trend etc..
It's an ETN, not a stock. Why would you buy something without even knowing what it is? That's wanting to buy a German Shepard and you go to the shelter and come home with a cat instead and it scratches the shit out of you because you bought the wrong thing.
What is the point of this? I understand Leveraged ETFs generally, but why exactly do they have a 2:1 or 3:1 ratio? is it strictly so if you gain profits, you'll have excess to pay a management and commission fee?
I have been holding Uwti for several days now. Yes im at a small loss now but when oil does jump big time in the near future i stand to make a lot of money regardless.
Decay will only eat your gains if the price of the stock generally stays on the same level. But when uwti starts going up by a significant margin due to oil rebounding, I will start making my money several times over. Im sure.
I understand though that it may be wiser to just buy a ton of uwti shares only after its been confirmed that oil has fully rebounced.
>there are 2x leveraged ETFs that can be held for months to years (S&P 500, industry ETFs, etc)
The 3x long S&P one actually has better than 3x performance at times (over a period >1yr too)
because you're too diversified to reap any serious gains. you'll have certain companies go bust, while others eat up the vacuum. instead, i'd rather bet directly on the commodity, or at least a leveraged note of the commodity.
I think crude will decrease further in price due to greed. People seem to think we have hit a bottom, but my guess is that oil will keep going down to 24-25$. This due to the decreading demand. Yes demand is still there, but china is about to shit a hole throu its bed (decreasing demand even further), and saudi seems to want less competitors while still beeing able to profit hugely off 30$ a barrel. Not to mention that Iran just started flooding an already flooded market.
We have not seen the bottom yet
High prices cure high prices. Low prices cure low prices.
What has happened is this: The only old people who work for oil companies are on boards or custodial staffs. Oil cycles up and down in value through a person's lifetime. But the oil companies eat their young through lack of experience. (Look at Maersk's website for their fuel business. "Oh how young we are.." LOL)
So, when oil is high, oil companies' young leaders think it will never come down. And when oil prices are low they think it will never go up again. Many oil companies have employees at high levels in their organization who had never seen oil below $100 until June of 2014. So, when prices fall they think it's only temporary.
There is no amount of advice you can give to a young oil trader, engineer or financier. They are fucking know -it- alls. It's like thay are Nobel Prize winners because they have begun making a 6 figure annual salary. So they all fail every 6 years or so and most get into real estate or selling cars.
I've seen oil at $11 twice and once at $147 and all in between in the last 40 years. I'm retired now and dabble in consulting. But when I see a drilling contracter weeping on national TV about how Midland, TX, is in the shitter because of the oil "bust" I have to baka (as you young shitbirds abbreviate) and reflect on the fact that if energy companies had hired old pros the soon to be laid off would be financially prepared.