[Cashmere]

Any thoughts on this?

If there ever was a signal to sell, you'd think it would be the inventory build.

[Jack]

Do investment managers understand peak oil? I suspect they do.

Do inventory numbers really matter as peak oil develops? I suspect not.

Perhaps the market is confirming our views.

[bkwillia]

Sept futures trading expired today, so this may be some last minute buying. Also, OPEC is threatening to cut production if they see big inventory builds. Finally, much of this oil was delayed by hurricane Edouard so the build is exaggerated. That said, I would not be surprised to see a sell off tomorrow.

[MadScientist]

it may be an indication of just how low the inventories got before the DD hit.

large inventory build up = recovery from large inventory depletion?

[joeltrout]

Do investment managers understand peak oil? I suspect they do.

Ha, I seriously doubt that.

Do inventory numbers really matter as peak oil develops? I suspect not.

Well if inventory is going up then that means someone is supply us with oil which means their production isn't dropping like a rock or else they would not be supply us with more and more oil.

Perhaps the market is confirming our views.

That will be the day.

Are you using reverse psychology?

joeltrout

[Jack]

Ha, I seriously doubt that.

Have you corresponded with any of them? I have. The several I have communicated with know. (Not suspect. Know.)

That does not mean they tell their clients.

Well if inventory is going up then that means someone is supply us with oil which means their production isn't dropping like a rock or else they would not be supply us with more and more oil.

Does your understanding of Peak Oil lead you to believe production will "drop like a rock"?

As for suppliers - they are selling a resource in exchange for money they want or need.

Are you using reverse psychology?

Hardly. Study the charts. Examine the underlying facts.

[joeltrout]

Ha, I seriously doubt that.

Have you corresponded with any of them?

Not to blow my own horn but I am in the oil and gas investment division as a Senior Energy Asset Analyst for one of the top 5 insurance companies in the world.

Since 2003 we have committed over $450 million to oil and gas fund managers that invest in on-shore domestic upstream oil and gas operations/exploratory developments and not one team has ever mentioned peak oil on a business level or social level. They believe supplies are tight but they explain it as being cyclical. Most all of the fund managers have been through the ups and downs of oil.

I introduced the head of our energy investment team to peak oil last year. He had heard of it but didn't know anything about it and he has around 26 years experience in upstream oil and gas, both in the industry or on wall street raising capital.

So yes we talk to quite a few managers and the oil and gas capital providers at most of the large investment firms such as goldman, jp morgan, etc... None of which have ever mentioned peak oil.

joeltrout

[DantesPeak]

The week before last, it was well known and even documented here that there were a number of tankers waiting to unload crude in the GOM outside of Texas, while multiple tropical storms passed through the area. Roughly half the gain in crude stocks was a result of these delays.

The other part of the gain was caused by the intentional, and somewhat unintentional, slowdown of refinery operations - due to lack of sufficent profit,

[Jack]

Not to blow my own horn but I am in the oil and gas investment division as a Senior Energy Asset Analyst for one of the top 5 insurance companies in the world.

Since 2003 we have committed over $450 million to oil and gas fund managers that invest in on-shore domestic upstream oil and gas operations/exploratory developments and not one team has ever mentioned peak oil on a business level or social level. They believe supplies are tight but they explain it as being cyclical. Most all of the fund managers have been through the ups and downs of oil.

Our experiences differ. I'll go with mine. You go with yours.

[americandream]

Ha, I seriously doubt that.

Have you corresponded with any of them?

Not to blow my own horn but I am in the oil and gas investment division as a Senior Energy Asset Analyst for one of the top 5 insurance companies in the world.

Since 2003 we have committed over $450 million to oil and gas fund managers that invest in on-shore domestic upstream oil and gas operations/exploratory developments and not one team has ever mentioned peak oil on a business level or social level. They believe supplies are tight but they explain it as being cyclical. Most all of the fund managers have been through the ups and downs of oil.

I introduced the head of our energy investment team to peak oil last year. He had heard of it but didn't know anything about it and he has around 26 years experience in upstream oil and gas, both in the industry or on wall street raising capital.

So yes we talk to quite a few managers and the oil and gas capital providers at most of the large investment firms such as goldman, jp morgan, etc... None of which have ever mentioned peak oil.

joeltrout

A finite resource has a cyclical function as demand for it expands and consequently slowly and steadily rises!

Just how much are you fellows being paid? With the likes of you at the helm, I'm going to have to find a god to help me.

[copious.abundance]

It only closed up 45 cents higher, not $1.61.

[DantesPeak]

It only closed up 45 cents higher, not $1.61.

That 45c is the expiring September contract. The continuing October contract was up $1.61.

[ROCKMAN]

Joel,

I understand your experience in these matters so I'm not really arguing against the points you brought out. As you know I've been in the upstream end of the oil patch for 33 years. And I've never heard the term PO used. I don't hear it today around the office. But we've known of its significance for over 20 years at a minimum. We've always referred to it as the "reserve replacement problem". It's the same animal as PO except applied to a corporate level.

Again, I'm don't want to sound like I'm knocking the folks you deal with but for much of that 20 year period we didn't run around pitching the downside of PO. In other words, when you're selling any investment you tend to avoid any negatives even if they might lend a little support to you. I suppose the big distinction is whether you’re selling hard assets or stock in a public company. In light of PO assets might look great but the future of a public company could be brought into doubt if you begin presenting a picture of long term inabilities to drill more wells. But I suspect we might start seeing the PO term show up in your world as its presence/implications become more obvious.

[joeltrout]

But we've known of its significance for over 20 years at a minimum. We've always referred to it as the "reserve replacement problem". It's the same animal as PO except applied to a corporate level.

My experiences are many management teams that we do business tend to focus on small domestic production/reserves and actually care less about global production/reserves. They are in the business to make themselves and their clients money, not to replace global reserves. So I think they do not look at the big picture because it is almost irrelavant to them in terms of the projects they work other than the price of oil going up because supply is tight. But like I said most all of them have been through the cycles. My boss was with 3 different companies that went belly-up during the bust. He still strongly believes the world will drill itself into a bust this go around. That is why he stands firm on using $45/bbl. He believes we might be hitting that low in the next couple of years.

Every oil company that has ever existed knows about production declining and the difficulty in replacing reserves. If it was easy for them to replace production then they would be making a lot more profit than they already are. I think they don't understand what is going on globally with production/reserves.

joeltrout

[ROCKMAN]

That's exactly what I meant by corporate PO. The company didn't know or care what the rest of the world was doing. All they knew that is if they didn't increase their reserve base y-o-y their market makers would dump them. If you don't know what I mean by market makers those are the trading houses that push small cap oil companies that no one has ever heard of. I was VP Geology at one such company back in the 90's. We paid $42 million (stock and cash) for a company my engineer and I evaluated at $16 million. But we bought it because it was a available and we need to do something immediate to show reserve growth. THE FACT THAT THE ACQUISITION WAS A MONEY LOOSER DIDN'T MATTER TO MANGEMENT. The irony is that the Wall Street raider, Karl Icon, took notice of us and was successful in the hostile take over. On the one hand it served him right to force us to sell him a dead company. He and his et als lost around $35 million on the stock. But he then bought the company bonds for $0.45 on the dollar ($45 million) and we paid him $11 million per year in interest for 5 years while we slowly depleted the company.

As someone once said, watching small cap oil companies grow is like watching sausage being made: it can kill your appetite for the product.

[copious.abundance]

Closed down $6.59 today. Maybe those oil traders finally got around to reading the oil report.