With the fears of oil inventories rising to record levels and OPEC refusing to cut its production, the price of crude oil is still facing global downward pressure. Bearing in mind these factors, there seems to be no clear sign of a bull market for crude oil in sight. Nonetheless, not everyone agrees with what the market is doing. Many large financial institutions have large stakes in UCO and thus are still betting that crude oil can make a comeback beginning in 2015.
Let’s examine the top ten firms with the greatest stake in UCO, based on information from each firm’s 2014 4th quarter 13Fs.
The amount of money that these bulge bracket hedge funds and asset management firms are pumping into the crude oil market, more specifically UCO, is astounding. The risks of investing in a leveraged-ETF cannot be stressed enough. Losing 81% of a client’s portfolio would damage a firm’s reputation beyond repair. Even so, many firms are still choosing to invest hundreds of thousands and in Goldman Sachs’s case, millions in UCO overlooking the fact that the ETF tends to move between 5- 20% on a daily basis these days.
Analysts’ 2015 predictions for crude oil have ranged from $30 to an average of about $60 per barrel of WTI crude oil. With the current price of $49 and considering the massive oil glut, most investors are still bearish on crude oil. Contrarians such as Goldman Sachs and Deutsche AG are not as bearish based on a few projections. Quite frankly, Goldman Sachs does not see the current price of oil as being sustainable. The firm expects the global oil industry to face a loss of $1 trillion over the next decade if the price remains below $60 per barrel. Besides this, contrarians are also expecting conflicts in the Middle-East to play a large role in boosting the price of crude oil through a reduction in supply channels.
As a retail investor, it can sometimes be challenging to understand all of the moving pieces surrounding our investments, especially without access to an expensive wealth advisor. Thus, by observing where institutional investors are putting their money, retail investors may be able to get a sense of what both the market is doing as well as contrarians. Based on the fact that the most recent 13F displayed major holdings from the 2014 4th quarter, the upcoming 13F set to be released in May, will be a major determinant of each firm’s current outlook for crude oil which is something to key an eye on.
Nony on Sun, 5th Apr 2015 3:48 pm
given the price is in CONTANGO*, no most investors are NOT bearish.
*price gets higher further out in time on the futures curve.
BobInget on Sun, 5th Apr 2015 4:29 pm
When I write: “Venezuela, Ecuador are beholding Chinese to debt service of over 40
Billion” People must truly believe I’m making this shit up. I’m not.
Venezuelan oil production is most certainly not on the rise. Ecuador’s production is flat.
http://fortune.com/2015/01/08/china-steps-in-to-support-venezuela-ecuador-as-oil-prices-tumble/
Simply put, oil exported to China is not exported to the US.
Many readers here believe I’m obsessed with
World Wide Oil Wars in the Mideast and Africa. Al Shebab recent massacres in Kenya adds yet another country to our
Peak Oil Lists of Shames;
Libya, Iraq, Saudi Arabia, now Kenya,
Yemen, Syria, Nigeria, Egypt, Sudan, UAE,
Kuwait, Qatar, Bahrain, Iran, China, Russia,
supporting nations; USA, UK, France, Turkey,
Belgium, Morocco. Not directly involved but
deeply committed, include Pakistan
and Afghanistan. (Omitting Lebanon, and Israel still in acting declared war, not directly
connected to oil.
Should I once again post Wikipedia’s definition of a “World War” ?
While you are there, Wiki “Thirty Year War”.
If you don’t see similarities, ask yourself if we are not already one third of the Way?
If you believe in Peak Oil even the slightest
bit, you must realize this posted article dealing with financial minutia is obscuration, nothing less.
I pointed to China indebted Venezuela, Ecuador and Brazil, possibly Argentina and Brazil because these nations are not involved as are the twenty odd oil exporting nations directly involved in ‘securing’ Western Oil interests. It also must be said Islamic Militant Movements have yet to spread into South America.
nubs on Sun, 5th Apr 2015 5:12 pm
“The amount of money that these bulge bracket hedge funds and asset management firms are pumping into the crude oil market, more specifically UCO, is astounding.”
So let me get this straight. Goldman Sachs has $5.4 million and Deutsche Bank has $3.3 million in UCO. That’s chump change for them. Hardly worth noting.
Am I missing something important?
rockman on Sun, 5th Apr 2015 7:16 pm
“Surprisingly, the flow of crude oil is still accelerating”. A tad out of date. According to the Rail Road Commission Texas production (one of the two oil boom centers) production in Dec 2014 declined from 77.6 million bbls to 66.9 million bbls in Jan 2015…a decrease of 14.2%. Which isn’t as high as the 15.3% decrease from 81.5 million bbls in August 2014. Yes: as it stands today Texas reached its recent PO over 60 months ago.
I’ll let someone else update us on the status of the other boom center…the Bakken.
Makati1 on Sun, 5th Apr 2015 8:05 pm
These oily articles cause me to picture an old man of 110 who is constantly checking his pulse to see if he is still alive. LMAO
Nony on Sun, 5th Apr 2015 9:16 pm
Rockman, RRC production has a lag. No…production did not drop 15% in a month. Duh.
http://peakoilbarrel.com/texas-rrc-monthly-update/comment-page-1/#comment-14243
Nony on Sun, 5th Apr 2015 9:18 pm
http://peakoilbarrel.com/texas-rrc-oil-gas-production-data/
rockman on Sun, 5th Apr 2015 9:53 pm
“Rockman, RRC production has a lag. No…production did not drop 15% in a month. Duh”. Get the sh*t out of you eyes buddy: the production has been dropping since last August. That takes care of your bullsh*t lag comment.
Jimmy on Sun, 5th Apr 2015 11:28 pm
@nony- Ha! Owned. You’re such an asshat lol
marmico on Mon, 6th Apr 2015 1:49 am
The only asshat here is Rockman who posits:
1. Texas reached its recent PO over 60 months ago;
2. production has been dropping since last August
It takes a year for the Pony Express to deliver the production reports from Pecos to the RRC in Austin. 🙂
Nony on Mon, 6th Apr 2015 4:47 am
This Rock screwup reminds me of the one where he confused annual and monthly Marcellus change and then refused to admit it.
Nony on Mon, 6th Apr 2015 5:07 am
The lag in reporting is well known and understood/agreed on by both “sides”. Of course the lag means we really don’t know WHAT the real Texas production was for up to 2 years. So people (EIA, peakers) do estimates. But looking at the most recent 2 months and positing a 14% drop in a month is just silly beyond measure.
rockman on Mon, 6th Apr 2015 6:18 am
I assume even Nony (like everyone else) understands the misprint of 6 months for 60 months. Just shows a serious desperation to hold fast to being right in the face of overwhelming proof cancelling such opinions.
“But looking at the most recent 2 months and positing a 14% drop in a month is just silly beyond measure.” Again, you should take that up with the TRRC…it’s their stat.
shortonoil on Mon, 6th Apr 2015 9:17 am
A tad out of date. According to the Rail Road Commission Texas production (one of the two oil boom centers) production in Dec 2014 declined from 77.6 million bbls to 66.9 million bbls in Jan 2015…a decrease of 14.2%.
Recently Texas went from an all paper system to a computerized reporting system. That has expedited reporting, and tabulation. It is likely that the decline is actually worse than the 14.2% reported. Texas has always had delay of a few months before final revisions were published because of their paper system.
Dredd on Mon, 6th Apr 2015 11:58 am
“Big Guns Still Betting On Oil Comeback In 2015”
Hey, gunboat diplomacy got us here so it can get us out of here.
Sounds like a dichotomy.
BobInget on Mon, 6th Apr 2015 12:30 pm
For those keeping count, add Somalia to our list of shame.
Kenyan fighter jets have bombed positions of militant Islamist group al-Shabab in neighbouring Somalia, a military spokesman has told the BBC.
The warplanes had targeted two camps in the Gedo region, used by al-Shabab to cross into Kenya, the spokesman added.
This is Kenya’s first response to the al-Shabab assault which left 148 people dead at Garissa University last week.
President Uhuru Kenyatta had vowed to respond to the attack “in the severest way possible”.
Kenyan army spokesman David Obonyo told the BBC that the military had responded to “threats” by launching the air strikes on Sunday night in the remote region.
Two camps had been destroyed, he said, adding: “The bombings are part of the continued process and engagement against al-Shabab, which will go on.”
But an eyewitness, speaking to BBC Somali, said the attack had wounded three civilians, and destroyed livestock and wells in an area without an al-Shabab presence.
rockman on Mon, 6th Apr 2015 1:38 pm
shorty – Actually I have to give credit to marm for this one. I dug deep enough to find that the TRRC actually recently developed a fudge factor for the latest monthly preliminary rate. Given they know their data better then anyone else I’ll assume the “adjustment factor” is fairly accurate. For January you multiply that number by 1.175 which pushes it back up to about what we had been seeing. OTOH as I said I would wait another 2 or 3 months to let the lag time between rig move off and the beginning of production to pass before declaring the beginning of the production slide. But a slide that is as sure to come as the sun rising tomorrow.
marmico on Mon, 6th Apr 2015 1:39 pm
Just shows a serious desperation to hold fast to being right in the face of overwhelming proof cancelling such opinions.
No it shows that you are an asshat who desperately is searching for data that doesn’t exist.
January 2015 RRC oil data
December 2014 RRC oil data
Now do the arithmetic and adjust for the Permian freeze-offs.
shallow sand on Mon, 6th Apr 2015 2:42 pm
M & ROCKMAN. There was a long discussion about RRC slow numbers on peakoilbarrel.
RRC data appears to adjust for up to two years, for reasons partially, but not fully explained.
EIA figures are estimates, but appears they are usually fairly close. States have real information, but in RRC case it has a big time lag.
IMO, it appears US production may have peaked 12/14. Will need to have a few more months of reporting to know for sure.
US oil rigs peaked at 1,609 10/14. Makes sense that would hit oil production high two months later, given time to frack, etc.
Cold weather could also be a factor, but would take a ton of time to figure out how much as would need to review lease by lease to be accurate. Do you have data on cold weather effect, M?
Frack log could matter too, although that has existed due to demand constraints, and appears to have just become a business strategy since Thanksgiving.
If there is a price rebound, will likely take 2 months or more to see that reflected in production numbers in event oil rigs start to climb again. IMO would need 75+ WTI for a sustained period to see oil rigs move back up significantly. For me, that price would still be too low, but if the public companies can get their hands on the $$, they will drill. Wall Street punishes production declines in most cases.
Personally would like to see WTI up to about $60 and stay there. IMO would continue to see demand grow, and would continue to punish debt laden shale companies. But we don’t always get what we want.
In reality, probably $75 WTI would be best, would not hurt economy in US, would also keep all but worst shale companies in business, but they would be a little more cautious and stop with the Saudi America nonsense.
OTOH, look for Q 1 earnings for US shale to blow chunks, unless hedged adequately.
M, $75 would not cause your trucking company too much pain. LOL. Just kidding, but you and N sound like a friend of mine who owns one who has been letting me have it.
shortonoil on Mon, 6th Apr 2015 2:59 pm
OTOH as I said I would wait another 2 or 3 months to let the lag time between rig move off and the beginning of production to pass before declaring the beginning of the production slide. But a slide that is as sure to come as the sun rising tomorrow.
Its has to go down, unless Texas has figured out how to “grow” oil. State wide rig count from April 2013 to April 2015 fell from 833 to 456 rigs. Nation wide it has fallen 44%.
Baker Hughes:
http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother
Once the to-be completed inventory is used, production will start down at 17% the first month. I wonder if the bad mouthed little trolls will notice? Maybe they will go hide themselves in their mothers basement?
shortonoil on Mon, 6th Apr 2015 3:25 pm
“US oil rigs peaked at 1,609 10/14. Makes sense that would hit oil production high two months later, given time to frack, etc.”
There is still a considerable back log of unfracked wells, something in the neighborhood of 1,500 nationwide. So I wouldn’t expect too great a decline until later in the year. Oil may get up into the $60’s this year, and will probably stay in that vicinity through 2016:
http://www.thehillsgroup.org/depletion2_022.htm
$60 oil will keep some shale outfits going for a while, but eventually the creditors will start fully discounting their reserves. Once a few start writing down their shale investments, the money will disappear like magic. After that the Sheriffs start collecting a lot of overtime.
rockman on Mon, 6th Apr 2015 3:57 pm
“Makes sense that would hit oil production high two months later”. Not even close to the reality. If there were a frac crew standing next to the rig as it moved off location it would take at least two months for the first bbl to be produced…more likely 3 to 4 months. Someone obviously has no idea what it takes to get a well producing even if it doesn’t need to be frac’d.
I haven’t seen the number lately but at one point operators were waiting 6 to 8 months for a frac crew to get to their drilled wells. I suspect that time has lessened. But locations still have to be permatized, oil and water tanks moved in and hooked up, heater treaters and oil/water seperators bought and installed, etc. Just a rough guess but I suspect most of the wells that started producing in Jan were finished drilling around Oct 2014. And some further back then that.
rockman on Mon, 6th Apr 2015 3:58 pm
If I have time tomorrow I’ll try to pull up some of those wells that came on this Jan and see if I can back track them to their spud and TD dates.
Nony on Mon, 6th Apr 2015 4:09 pm
Rockman:
RRC has a very WELL KNOWN issue of adjusting the data over time. The reports into them can lag up to 2 years. So it is ROUTINE (every single month!) that this month’s production has less production than the last month’s. This is purely an artifact of the reporting lag. This has been extensively written about, including on peaker blogs. There’s no debate. You are just not with it, that you didn’t realize that.
Look at the curves, Rock. and think. Think hard. What do they show you?
http://peakoilbarrel.com/wp-content/uploads/2015/03/Texas-C-C1.png
P.s. You still screwed up monthly versus annual Marcellus change. And still have not admitted it. An annual increase looks real tiny, when it’s really a monthly increase!
Nony on Mon, 6th Apr 2015 4:13 pm
P.s. Rock, it’s interesting that you only NOW know about the Texas fudge factor. It has been written about for a long time and I was aware of it just from reading these blogs. And, BTW, it does not completely compensate for the late reporting either.
shallow sand on Mon, 6th Apr 2015 4:31 pm
ROCKMAN. I will readily admit I have no idea how long the lag time is in EFS or other shale plays. Whole different ballgame than what we play.
I do know that claims that number of wells drilled is irrelevant is silly.
And given those statements came from energy desks at big banks, who likely know better, was annoying to me.
Same people who claim US will soon run out of storage. I guess can’t blame them for talking their book when the business MSM is shallower than our wells. LOL!
Would appreciate the lag time info. Maybe it will show US is headed for a steeper drop.
N. Look at analyst estimates for public shale drillers. Almost all in the red for Q1 and 2015. Given 7-10 year write off of tangible leasehold equipment and and IDC’s exaggerates earnings higher, I would say profitability claims for shale at sub $50 oil are largely BS.
I suppose as M had me prove, however, wells may eventually payout ten plus years from now if you have an above average well, don’t care about present value of money and pay cash to drill.
shortonoil on Mon, 6th Apr 2015 6:44 pm
The reports into them can lag up to 2 years.
In Texas, and many other states a production declaration must be filed the same day that the oil is sold. No one is going to buy it without it. If oil was produced, and not reported for two years, it sat in a stock tank all that time. Not very likely.
Nony on Mon, 6th Apr 2015 7:23 pm
I agree that saying drilling numbers is irrelevant is silly. I also agree that saying we will “run out of storage and then prices will drop” is silly. After all, storage is filling up because of the arbitrage trade based on price going UP! (contango, not backwardation) [and in any case, price for storage will increase so that we don’t run out and have oil pouring down the streets.]
But you have to be careful to distinguish between one silly thing and another. Those silly comments by some other person in no way make it reasonable for Rock to NOT understand the very well documented RRC production reporting lags. Nor do they excuse him confusing a year’s change in production in the Marcellus versus a month’s.
Nony on Tue, 7th Apr 2015 5:37 am
Oh…and Rock, I didn’t fault you for 6 months versus 60. but if you look at the curves, you will discover that the peak is ALWAYS ~ 6 months ago. This is a feature of the reporting lag.
http://peakoilbarrel.com/wp-content/uploads/2015/03/Texas-C-C1.png
Again, this stuff has been discussed to death. Nothing new. Also, you should have had a “huh” factor from seeing a 14% decline in a month.
Now, it is possible that Texas dropped last month. But we have to wait to see. and it sure didn’t drop 14% in a month. And it sure didn’t peak in August.
Comments like that just show you not up to speed…and unwilling to admit it. So maybe a little less bluster about stupid Nony and a little less puffing your chest out and a little more humility is in order.
Davy on Tue, 7th Apr 2015 6:14 am
NOo, can you explain why oil prices are down and the economy is still a mess. Can you explain why debt monitarization and repressed rates are still the norm? You can’t NOo so all you can do is try to pin prick Rock on insignificant points. Rock obviously has you sucking eggs that is why you are constantly after him. The same is true of Marmi and his Freddy charts. Marmi, IMA, obviously knows little about the oil sector.
Rock is an industry insider. He has admitted to who and what he is. You have done no such thing because I imagine you are a fake. People like you that are unable to be honest about your credentials are suspect. You use fancy financial terms and discredited Econ 101 theory but your message is not playing out. You are appearing more and more a failure.
Nony on Tue, 7th Apr 2015 6:49 am
The Fed crap has nothing to do with Texas oil reporting. You are playing Davy word salad boy trying to mush everything together.
Davy on Tue, 7th Apr 2015 7:39 am
NOo, the Fed crap does matter because it discredits your whole message. You can nitpick your stupid pet peeves like Texas oil reporting but you are unable to address the underlying issues of demand and supply destruction. I love when you and the Marmi use your worn out “word salad Davy boy routine”. That means I touched a nerve. Now I know why you left PO for a few months the frustration got to be too much.
Nony on Tue, 7th Apr 2015 8:06 am
Davy: I’m not a defender of the Fed and Rock is wrong regardless of what the monetary policy is. We are talking about basic facts. This is just like his Marcellus growth confusion (year versus month) which he still has not admitted. how can you even discuss higher level topics or opinions with someone who won’t acknowledge facts when shown in mistake?
Davy on Tue, 7th Apr 2015 9:22 am
Look, NOo, your facts and figures between Rock don’t interest me. I don’t step where I don’t belong. That discussion is beyond me. My point is your message and its validity in the face of the likely demand and supply destruction seen with oil and financial repression and debt creation.
You corns can’t explain why the Fed can’t raise rates. Can you explain why this economy is a mess? All I see is preaching of all is well. If you tell me the economy is fine why can’t the Fed raise rates?
marmico on Tue, 7th Apr 2015 11:03 am
Do you have data on cold weather effect, M?
Genscape.
shallow sand on Tue, 7th Apr 2015 11:50 am
M. Thanks for link.