Oil Price Slide Continues

I personally find it hard to believe that recent news about fusion or LENR has anything to do with this, but the recent slide in oil prices continues, and to day the benchmark prices for crude oil have slipped below psychologically important levels.

Reuters reported this morning that:

Brent crude oil fell below $85 a barrel on Monday after Goldman Sachs slashed its price forecasts, citing abundant supply and lacklustre demand despite a pick-up in global economic growth.

In US markets, WTI crude oil is trading below $80, at around $79.50 at this moment; Goldman Sachs set $75 as a near term target price for WTI — and $70 in the second half of 2015.

This slump is serious news for nations whose economy depends in large part on revenues from oil sales, but interestingly Saudi Arabia has yet to call for a cut in production from OPEC members, even though countries like Venezuela are urging OPEC to act by cutting oil production to help bring prices back up.

Some analysts are reporting that Saudi Arabia is actually hoping that lower oil prices will affect investments in the North American oil industry. The US is now highly competitive with Saudi Arabia with prices at current levels, but shale production technology is more expensive, and at certain price points shale oil production becomes unprofitable. Saudi Arabia can produce oil profitably. See below for a chart which shows the breakeven price points for various types and places of oil production.

While there are various reasons put forward for the fluctuation of oil prices, generally speaking, I think it’s supply and demand that drives the overall direction. Supplies worldwide are up, with the US now contributing as much oil as Saudi Arabia to world markets. I believe that technological innovation in the auto industry is one factor that will continue to affect the consumption of oil. While still not ubiquitous by any means, electric and hybrid vehicles are becoming increasingly popular. We also are seeing fuel cells and natural gas being developed for transportation. Overall economic slowdown will also have an impact on the amount of oil that is consumed.

On this site we have discussed the impact that LENR could have on energy markets. I think if it is widely accepted as a commercially viable technology (we are not there yet), we could see much more pressure on the energy markets. As things stands now, there are maybe some forward-looking traders who have been paying attention to the LENR story, and could possibly be making bets based on future expectations, but I think for the most part it is still not considered an significant factor in the energy markets.

  • Christopher Calder

    What I find hard to believe is that people think $85 a barrel oil is cheap. If the USA had a decent energy policy and allowed drilling everywhere oil exists and it is practical to drill, the USA would not have to import any oil and costs would fall. The USA drills more efficiently than any country in the world, but misguided politics continues our energy shortage. It will take time for LENR to replace oil. In the meantime we should drill on the White House lawn if we could find oil there.

    • LilyLover

      It’s better to export fiat dollar in exchange for oil. Nowhere else, can you get something for nothing. It’s also better to maintain our oil fields operational so as to not rely upon others. It’s better to keep production running so as to devalue their demands for oil-price. We have the best strategy of extracting other people’s oil at least possible cost. They know what they are doing. Ethics? Do you think they care? Why exhaust our oil if we can keep exhausting someone else’s? The day we suck them dry and make them beg for food, we can forgive our own debts and go all out and rule them. Oil is power; let’s consume theirs’ first; then we can enjoy our surplus later. – This is a very good policy from the POV of current policy makers. It’s not misguided. It’s precisely calculated!

      • mytakeis

        I upvoted “It’s better to export fiat dollar in exchange for oil. Nowhere else, can you get something for nothing.”

    • LilyLover

      BTW stay off that lawn. I love it.
      You’ve got something against green grass? … Huh? Buddy? Huh? …Tell me … you’ve got something against my grass? Hunh?…
      🙂

  • Ophelia Rump

    The fact is that there will not be anywhere near the same demand for oil in the next year because the world population will be a fraction of it’s current value.

    These are projections for the coming year for Ebola infections by month.
    The infection rate is derived from the WHO observed cases for September and October. This is not a worst case scenario, this is the current case scenario.

    Sept__Oct__Nov__Dec__Jan___Feb___Mar___Apr____May____Jun__
    8750__12K__29K__70K__169K__406K__975K__2 Mil__5 Mil__13 Million

    July____Aug_____Sep______Oct______Nov____Dec______Jan
    32 Mil__77 Mil__186 Mil__447 Mil__1 Bil__2.5 Bil__6 Billion

    To calculate the next months infections you simply multiply the previous month by 2.4
    the R0 or rate of infection. Both September and October have this rate.

    Air travel will be one of the first major impacts and they consume vast quantities of fuel.
    There is nothing planned which would do more than slow progression down for a few weeks.
    The 4 thousand planned beds will not serve the required 70% of Novembers 29 thousand new infections. Hundreds of thousands of doses of vaccine will not be enough in April when there are 2 Million new infections. Several Million doses of vaccine will not be enough December of 2015 when the number of infected has already exceeded the population of the planet.
    The actual rate of death is 70% of all infected for this current outbreak.

    • georgehants

      Ophelia, well that has made me feel better.

      • Ophelia Rump

        Sorry about that.

        • georgehants

          Ophelia, are those that survive the infection then immune from further attacks?

          • Ophelia Rump

            Yes and no. This strain has already had 400 mutations during this outbreak, which is extreme.

            You may be immune for a while, but with high mutation and large populations eventually the immunity no longer keeps up with reality.

      • Omega Z

        Apology. Didn’t intend it that way.
        Yes, There is the means of intervention. Shut down a few oil wells & change the supply/demand dynamics. 🙂

        There is actually a certain range where they can reduce supply & net more money selling less. The Saudi’s will do this as soon as they think the price could drop below $80 a barrel for an extended period of time. They’ve pegged that as their price line. They think it is a fair value. From their perspective, likely we would also.

        Alternately, They try to ramp up production once it exceeds $90 a barrel.(For 2 primary reasons) This is in self interest. They have a couple 100 billion invested through out the World. High prices tend to hurt the world economy which is bad for their portfolio. The other is they are aware when prices are to high, people look to alternatives. The Saudi’s are aware that people are creatures of habit. Therefore, people turning to alternatives make them very nervous.

    • PappyYokum

      On a happier note, the Jan 2016 figure can’t be correct because there will not be 6 billion people left to infect. Gulf of Mexico cruise, anyone?

      • Ophelia Rump

        Pappy, I love the name!

        It would be a long cruise with no stops.

    • Argon

      Dear Orphelia, Reality does not follow maths! You are so affected by todays US media. There is known ways this dicease can spread from human to another, and informing people about that will cut the problem to pretty much current regions. Two most important factors being:
      -Spreads only by touching body fluids, so not over the air like flu does (public places, air planes)
      -Person (even with virus) without symptoms does not spread the dicease!

      I really wonder who benefits of spreading this mass hysteria. Last case in US was more than week ago and still people keeps talking about that.

      And to original topic. I see it hard to believe any correlation between e-cat news and oil price, but more down to earth reason is supply/demand ratio. Overall news flood about fusion (hot&cold) and LENR and other alternatives, could have even passed certain tresholds causing possibly some uncertainity. We are just not quite there yet. Unfortunately second report was not convincing enough to affect any of the current investement plans.

      • Ophelia Rump

        No, sadly I am unaffected by media. I affect media. I infect media.
        The numbers are very real projections of the current reality, everything else is illusion.

        This is very much like watching a giant herd of elephants charge a speeding train. You cannot predict the outcome, but you can know that it will be spectacular and horrific.

        Half the world’s population is third world, the other half is pretentious and just as ignorant.

        • morse

          People don’t wanna hear this but we are still in an economic crisis ! People are careful when spending money even if this means less traveling.

    • Paul Smith

      This reminds me the book “The Stand” by Stephen King. Have you read it?

      • pierre

        great book and tv mini series

      • Ophelia Rump

        Yes, he is an excellent author. I have read a few of his books.

    • bachcole

      I and many other people more qualified than me made similar projections for AIDS in the early 1980’s, and those projections simply failed miserably. I agree that the breakout of Ebola is a very dangerous development for the human race. But consider the following:

      Most of these current victims are people who simply did not understand that handling the dead bodies of Ebola victims is the best way to contract the disease, and they habitually handled the dead bodies of their loved ones as part of their grieving process. Most everyone else in the world now know this. This is akin to the fact that AIDS is contracted mostly by unprotected homosexual sex. We are getting a better handle on how Ebola is transmitted.

      The scientific modern (mostly Western) world is learning a lot of other things about the transmission of Ebola that I don’t even know about yet. They say that Ebola can be transmitted from counter surfaces. Most people in the modern world are germ-phobic, and it my opinion this germ-phobia has now become a good thing. I will be telling my wife that it is OK for her to be germ-phobic. Everyone keeps their counter surfaces sparkly clean in the modern world.

      Also, for most of us, the temperature of the counter tops is much lower than the temperature in western Africa. My counter tops are like 66 degrees F (nights non-Summer) to 81 degrees F (days Summer). In western Africa, I am sure that their counter tops are usually like 75 to 95.

      I don’t think that this and many other good reasons are any reason to lower our guard. I applaud the US states in our northeast who are quaranteening anyone coming back from western Africa, despite what the Traitor-in-Chief is saying.

      Most of the current victims were weakened by poor diet and lifestyle. Admittedly, if being overweight is a risk factor, we in the West are screwed. For me, 45 years a health nut, I will be taking lots of vitamin C, low carbs, big salads, free range eggs, rebounding, yoga, etc. etc. etc. And I won’t be losing so much as a second of sleep over the matter, particularly since poor sleep is a risk factor for poor health and death.

      • Ophelia Rump

        I had to lookup rebounding, that does look like fun.

        • bachcole

          Rebounding does amazing things for my health. One must be careful to use a very soft bounce, which costs more.

    • US_Citizen71

      Those numbers only work if no changes occur. As the infected numbers reach the millions or tens of millions, many borders will close, blockades will be enforced, martial law will get implemented in severely affected areas, totalitarian governments like N.Korea will implement harsh quarantine rules possibly including annihilation of the infected if the problem becomes severe enough in their country or in neighboring countries. As the numbers reach higher more and more moderate governments will implement the same style controls. How to handle outbreaks reaching levels you describe has been modeled and ‘war gamed’ for decades. The uninfected will sacrifice the infected in the end to save themselves. This is nothing the world hasn’t experienced before, look at how the black plague was handled in the middle-ages.

      • Ophelia Rump

        It would require significant change, and I pray for that. I have yet to see any planned which would be significant at the time of delivery.

        As I recall the whole black plague thing did not play out so well.

    • pierre

      mary you are so funny!

      • Ophelia Rump

        be nice

    • LCD

      There is no reason to scare people like this, this is a silly post.

      • Ophelia Rump
        • Obvious

          Better load up on cheap oil now. Winter is coming, air traffic is not slowing, people are not abandoning their cars, railways and transport trucks are still moving goods, and no home/airplane/automobile/transport E-Cats are imminently going to reduce the pain at the pumps. Enjoy the cheap prices while they last.

    • mytakeis

      This really need not be: exercise, eat well and maximize you vitamin C. Then you can look at the future optimistically. Oil is coming down because the writing is on the wall, the age of free energy is a clarion call.

  • mcloki

    Low cost oil also helps reduce the demand by the American Consumer for electric cars. And the Oil producers are very worried that once a consumer goes electric they will not return to gas. Every new electric vehicle on the road is 10 years of lost gas sales. It adds up for the oil companies. 3-4 dollar gas was making a lot of people consider going Dylan and switching to electric. Think of it as a way to choke out a blossoming business by stifling demand.

  • PappyYokum

    In my opinion, gasoline and oil have been in the same financial bubble as real estate, stocks and bonds. The Federal Reserve recently announced it was going to end its quantitative easing. It was going to cut its bond purchases. The bubble is expected to deflate. Oil is only one of several things affected. Recession may follow.

  • Hi all

    I made the prediction two years ago, that when the Market took on board the fact of a working LENR the short term price of oil would drop to around $70 to account for a predicted maximum 30 year life span for oil as a fuel, it appears that my research was taken on board.

    I was able to make some of my research available publicly on various sites including a post in the comments on this page:
    http://oilprice.com/Latest-Energy-News/World-News/NASA-Expect-Low-Energy-Nuclear-Reactors-to-Replace-Domestic-Boilers.html

    Not surprising I suppose, that those who saw the full research made plans accordingly, though it baffled me at first until I read the Sifferkol research.
    http://oilprice.com/Finance/investing-and-trading-reports/Why-Are-the-Big-Financial-Institutions-Selling-Oil-BIG.html

    Both I and those at Sifferkol were tracking how the big players in the Oil business and the markets were reacting to the fact of an LENR Black Swan.

    When Oil companies began selling off trillions of dollars worth of oil fields while banking the cash, it was obvious their corporate intelligence had the full facts on LENR and the E-Cat, Sifferkol found the next piece in the puzzle by following the money trail to see exactly what they were doing with the cash.

    Now according to my calculations we will have 30 years of decline in the fossil fuel market, depending how they manage the decline, surprisingly resisting the change will actually hasten the speed of LENR adoption, as anyone who studies the history of such paradigm shifts understands, hence why Saudi Arabia is already embarked on a policy of managed decline.

    This is now the twilight of the fossil fuel age and the dawn of the LENR future and time to consider where the truly great investment future is, for this new LENR Age will be more powerful than the steam age, the Automotive age, the electric age, the Internet age, and the mobile tech age combined; we cannot even begin to guess all the new wonders to come.

    Kind Regards walker

    • NT

      Thanks IAN,
      It follows that the oil kingdoms should now be heavily investing their Trillions made from oil into LENR technology and development for their own countries long term survival – that would be very good indeed for the world, if it were happening?

      • Hi all

        In reply to NT

        I think people have to understand LENR is an enabling technology, like those other Black Swan paradigm shifts I mentioned.

        One area I do know that is being heavily invested in is future space industries, some of them are looking for the next Klondike, the more sensible are looking to sell shovels to the those who do the digging. 😉

        Kind Regards walker

  • Ophelia Rump

    So we can pencil humanity in for about 30%. Unless we speed things along ourselves. I suppose that is something.

  • Ophelia Rump

    Are you really that afraid of reality?

  • LilyLover

    Also, I’d like to make a logical prediction about formation of monopolies amongst oilcos. Saudi’s will try to buy-out as much oil across the globe as they can. So would the top dog of M&A amongst the Oilcos. This will happen despite the falling oil prices. Why? For future-proofing the chemicals business. Then Agro-industry will come-up with synthetic solution to devalue the petrochem. Drama – drama … end result … universal recycling and “we don’t need you – old money” – way of life.

  • EEStorFanFibb

    along the lines of this topic is this recent essay by Jeff Rubin.

    http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/blame-china-for-ominous-signs-in-canadas-resource-sector/article21311766/#dashboard/follows/

    Why China’s slowdown is taking a heavy toll on Canada

    • Ophelia Rump

      Wow that was a depressing read.

  • EEStorFanFibb

    Electric Vehicle drive trains are already far superior to any ICE drive train in efficiency, durability, and performance …. batteries and charging infrastructure will improve and there will be no stopping electrification.

  • LCD

    I don’t think this is LENR related.

    • Ophelia Rump

      We will never know. Investments are like poker.
      If LENR is having an impact, I have to believe it is a very small impact at this point, hidden inside the noise. I do agree with you though, there are enough other factors to keep most minds busy. The question is what are the big dollar minds really weighing as the most influential factors?

  • deleo77

    This article makes mention of the Lockheed fusion announcement. I think it’s a combination of a slow global economy, hundreds of millions of Chinese buying electric scooters versus gas powered cars, Tesla, better battery storage, natural gas, more domestic oil production, and perhaps fusion news (a lot of hot and a little bit of cold).

    My bet is that the ground-breaking announcement in the next several months will come from Blacklight Power. I think they are close and will be the first company to break through in a major way. IH is perhaps 6 months or so after that.

    http://www.businessinsider.com/dennis-gartman-sees-oil-collapsing-2014-10

    • friendlyprogrammer

      That will be so awesome if Randell Mills saves the day. Many stilll think he is a scammer, but he is a Harvard educated Medical Doctor who could make millions in profit just running a normal practice.

      I like the ecat,but the energy seems to be too difficult to harness. The BLP invention could save the day even if it runs at 1/100th of its predicted abilities.

      • Fortyniner

        The multi-e-cat reactor (‘pilot plant’) is undoubtedly a tricky device to run, but stable control is probably within the capability of the computer in your mobile phone – in other words, it’s just an engineering problem and will be quickly solved then progressively refined.

        Mill’s device by contrast is a wobbling heap of potential and probably fatal problems resulting from poor design and blind (or perhaps not so blind) optimism, and unlike e-cat, has not yet even been shown to be O/U. I know where I’d put my money.

  • Daniel Maris

    I think if the test results have been downloaded over 100,000 times, then the news about the E Cat must be spreading. I think it may have a marginal effect, in contributing to a sense of unease within the industry, similar to the ongoing price reduction in solar power, coupled with much cheaper batteries promised by Elon Musk (who normally keeps his promises).

  • Christopher Calder

    GENERAL POINT – The Earth has survived giant asteroid strikes and ice ages that froze everything down to the equator, and nature lives on. People should remember it is not nature that is in jeopardy on this planet; it is the human race that is in danger. Humans could be snuffed out quite easily, and the USA as a viable entity could be destroyed even easier. The trees, the grass, the animals are all far more resilient than us. Oil drilling is needed for our survival right now because we need oil to grow food. Without oil we starve to death, your dogs and cats and horses included. I remember when people thought the Alaska oil pipeline was the end of the world. Drilling for oil and building pipelines is no great disaster for nature. A massive human kill-off due to poor political judgements should be a major worry for all of us, not oil exploration.

  • Omega Z

    What’s up with Oil Prices.
    Oil is very sensitive to supply/demand once outside a window of +/- range.
    It is a Commodity or for all intents & purposes a fancy word for “Auction-able product”
    It is auctioned to the highest bidder or bidded up when supply is short & bidded down when there is a surplus.
    The Worlds largest Oil consumer, the U.S., has doubled it’s production while reducing it’s demand. Add to that, the World Economy is in a slump.
    ———————————————–
    Elon Musk’s, Tesla uses an 85Kwh-e Battery.
    In the best conversion scenarios, you’ll need about “40” 10Kw E-cats to be comparable to Tesla’s Battery power.

    Even if the technology was readily available & cheap enough for this purpose, It would require approximately 400,000,000 10Kw E-cats to replace slightly less then 1% of the existing cars in use.

    $100 plus oil isn’t gone. It’s just taking a break. Once the World economy recovers, It will come roaring back.

  • Pierre

    Not sure if my question was answered, regarding is there enough nickel around to use ecats to replace oil. Would love it to be true through. Need to see the right math.

    Seems reasonable that 10 billion people would need 1 billion ecats for all their powere needs, and how many grams would these ecats need? We would need to dig it all out of the ground, transport it, etc….I mean, if I need a kilogram to power my lifetime, the. We need 10 billion kilograms, or rather 100 billion to cover several generations?

    Nickel is finite and we aren’t going into space to get it.

    Is there really 100 billion kilograms of nickel readily available on the planet?

    • Donk970

      Yearly production of nickel is on the order of a trillion grams. That’s every year. If you have ten billion e-cats using a gram a year you are talking about one percent of yearly production of nickel.

      • Fortyniner

        In any case it appears that the nickel may be only the substrate that facilitates cold fusion, and that hydrogen, lithium and possibly aluminium are the ‘fuels’ that are consumed. The 62-Ni is probably recyclable into new reactors.

        • Donk970

          If I were doing these experiments I would really really want to know these things. Will the reactor run on pure Ni62? Is there any He4, He3, H2 or H3 produced? Knowing these things will at least give a rough idea of what the major energy producing reaction is.

  • GreenWin

    “GARTMAN: We’re Witnessing The End Of The Oil Era” CNBC, 10/27/2014

    “In discussing the “end of oil,” Gartman referenced news from Lockheed Martin earlier
    this month that the aerospace giant has made a technological
    breakthrough in developing a power source based on nuclear fusion.”

    This is the story making the rounds of commodities traders and insiders. As the Elforsk/E-Cat report is publicly available from Elforsk – it is surely a catalyst in futures trading.

    http://www.businessinsider.com/dennis-gartman-sees-oil-collapsing-2014-10#ixzz3HSAYvitY

    • Buck

      GW,

      I like putting two factors together.

      From your cited story, they ask the question: “what is the proper price for a barrel of oil delivered in 12 months?”

      From Rossi’s statements: it will be about about a year before the customer’s pilot plant will become available for a tour and review of results.

      Assuming only positive results for Rossi, this points to the Hot-Cat beginning to impact futures one year out. From a psychological standpoint, LENR will begin to impact actual pricing very soon, relatively speaking. For oil traders, how do you accept an increase the price of oil futures when you inherently recognize that the perfect substitute is there . . .

      Good Old Supply and Demand . . . it is without mercy.

      • I guess so, but what will happen when the supply side realizes that their days are counted? What happens when the Saudis realize that today they’ll get $81, but in 5 years maybe less than $20?

        • Buck

          I believe you already have a sense of the answer.

          And, what makes you think that some of the fossil fuel producers don’t already know and have begun adjusting their long term plans?

          What do you think the more sound, reasonable leaders will do?

          • Of course, they are already doing it as we speak. And they’ve been doing it for the last couple of years. Swap dealers (GS JPM etc) are short 400k-500k contracts in WTI since 2010. I believe they are buying as much time as they can, but they know what’s coming. Thats why they’re talking about Lockheed and not the E-cat.

          • GreenWin

            It also appears the entire Ebola “scare” is a rather transparent cover for stock market sell off. Another delay tactic to cover major players unloading as much oil as possible before the price hits Gartman’s predicted $10/bbl.

            Saudi should jump into LENR now, if only to demonstrate geopolitical savvy and tell OPEC it plans to remain in the energy business.

  • Timar

    Of course I could have looked directly at the Vattenfall website:

    http://corporate.vattenfall.com/news-and-media/press-releases/2014/vattenfall-investigates-ownership-options-for-its-lignite-operations/

    I’m curious of what they mean by “other types of power generation” 😉

  • Hi all

    As more and more in the market look for the cause of oil dropping so fast, and become aware of the LENR announcement; the price will drop to the Goldman Sachs predicted level of $70; it is inevitable.

    After that we are talking a few decades of managed decline, depending how valuable it is to switch; if oil prices keep lowering in response to the take up of LENR then that will slow the speed of LENR take up. If however oil prices remain high then LENR take up will be much faster. This is just basic economics.

    Kind Regards walker

  • jousterusa

    I was reading “An Impossible Invention” when the oil price slide began, and I noted that in one section Mats Lewan predicts that oil prices will “immediately” fall upon the announcement of a successful test of cold fusion. Indeed, the price slide began Oct. 8, the same day the article was published, here and on Arkiv, and has not really abated since.

  • Christopher Calder

    I just noticed gold is down to $1,172.49 as of Oct. 31st.