What Does Oil Drilling Entail?

Oil drilling can be a risky venture, but not if it is tackled the right way. It is also an expensive endeavor. The costs associated with oil and gas drilling can begin at a minimum of $400,000. Most oil wells also produce some amount of gas. The first ever oil wells are believed to have been sunk in China. Oil and gas drilling usually is completed in stages, such as planning the process, drilling the well, completing the well, producing crude oil, and, eventually, abandonment of the well after it has served its purpose. Energy Exploration, Inc. is trying to bring about innovation in the field of energy investments and is on the lookout for serious investors. Investing in energy exploration can prove to be a very lucrative venture in the long term.

Besides making a profit from the discovery of natural gas or oil, there are many tax advantages available to people who are involved in oil investments or gas investments. This is because the government recognizes the potential benefits associated with discovering new forms of energy. These include Congressional incentives, intangible drilling costs tax deductions, and alternative minimum taxes. The intangible drilling costs deduction can even mean that a substantial portion of the investment may be 100 percent deductible. The tax benefits differ for each individual, and consulting with your tax advisor will help you calculate the exemptions you can benefit from by investing. For example, a person in the tax bracket of 35 percent may claim up to an 80 percent deduction on an initial investment of $100,000. Energy Exploration, Inc. is focusing on drilling re-entry wells with proven resources to up the benefits to its investors. They are working toward establishing long-term investment relationships with prospective investors.

Choosing to rejuvenate old oil wells by using new means of technologies is catching on amongst oil exploring companies. These wells, which are known as re-entry wells, first have to be identified by experts from among different wells that are declining in terms of production. The re-entry process in itself is not a new one. In fact, it has been used by oil companies since the 1950s for various reasons.

Re-entry drilling systems can be of two types-conventional drilling or coiled tube drilling (CTD). The method used will depend on various factors, including the location of the well and the possible resources that it has left. Sidetracks are the chosen method for re-entering a well. This involves using conventional drilling fluids. Oil base mud systems and air drilling systems are the different types of options available for the purpose. If all factors involved are not considered fully, the chances of a successful operation are further weakened. Oklahoma and Arizona are believed to have a number of wells that are suitable for re-entry purposes. The staff at Energy Exploration, Inc. are qualified to help you understand what investing in Energy Exploration, Inc means to you and for the company. Their goal is to pursue projects that have at least a 90 percent success rate.  (ArticlesBase SC #3824785)

What are Oil Seeps?

Put simply, oil seeps are naturally occurring oil and natural gas “springs” which rise from oil reservoirs within the earth and emerge at the surface. Seeps usually contain some mixture of natural gas, crude oil, water and asphaltum, which is a thick substance commonly known as tar. Similar to the manner in which freshwater springs on the earth’s surface originate from collected water underground, oil seeps originate from underground collections of oil that have accumulated within porous rock and have been contained by impermeable rock.

Oil seeps occur both on shore and under water, and provide valuable insight about the location of oil reservoirs deep within the earth. Since we have yet to develop a one hundred percent accurate way of determining the location of underground oil reservoirs, the presence of oil seeps provides valuable clues that can reduce the risk of wasted capital for oil drilling endeavors by companies such as Western Pipeline Corporation. The first project believed to have been dedicated to drilling for oil, led by Edwin Drake, took place in Titusville, Pennsylvania, in an area that was chosen in part because of the known oil seeps.

Oil seeps provide a natural resource which has been used by humans for various purposes throughout history, long before the advent of commercial drilling as we know it today. Native Americans are believed to have used resources collected from oil seeps for such purposes as lantern fuel, lubricant for wagon wheels and adhesive for weapons and canoes centuries ago. Asphaltum from seeps is also believed to have been used by such civilizations as face paint and for decorative additions to bowls and jewelry.

Oil seeps on land, though they may only release small amounts of oil and be difficult to see, provide scientists with important clues about the underground environment and the potential of an oil reservoir being located beneath. Likewise, oil seeps in the ocean are evidence of possible oil reservoirs below the sea floor, which modern oil drilling technology is now capable of extracting. Oil and natural gas released through vents in the ocean floor float and collect on the surface of the water, often forming oil covered natural gas bubbles and eventually a film of oil on the surface, making them easy to locate. Over time, large amounts of oil collect on the surface that eventually become visible from satellite images. Combined with information from other technologies, satellite analysis of oil seeps can provide scientists important data about the type of oil that is present as well as the potential for successful excavation.

The presence of oil seeps leading to further exploration has resulted in the discoveries of numerous productive oil reservoirs in the past. Without the natural clues about subsurface activity provided by oil seeps, we may have never discovered oil and its many commercial uses that are so common today. (ArticlesBase SC #173478)

BP Oil Spill – Compensation Claims Process for Those Adversely Affected Along the Gulf Coast

American citizens living along the gulf coast, many of whom have been directly affected by the recent BP gulf oil spill, are being hired in ever increasing numbers by the British oil giant to perform much of the necessary cleanup and boom-setting operations there.  Many of these responders are fishermen who would normally be working the rich waters of the Gulf of Mexico to bring in a vital portion of the nation's seafood supply.  Unfortunately for these folks, federal officials have had to shut down most of the fishing and harvesting activities.  This is due to the still uncontrolled well-head gushing unprecedented amounts of crude oil into the heart of America's fragile wetlands, beaches, and estuaries.  In addition, a recent six-month ban on offshore drilling in response to the BP oil rig disaster threatens to put even more gulf coast residents out of work at a time when the unemployment rate is already sky high.

BP has promised to pay all "legitimate" claims by people and businesses affected by the April 20th spill.  At this point, the financial claims payment process is nowhere near as efficient as it needs to be.  This is mainly because BP's policy of waiting for books to close each month is not efficient enough.  As well, demands placed on fishermen and business owners to prove their losses by producing financial statements, is further complicating this issue.  As the fishing and tourism industries in these states are seasonal and often short-lived, it can be extremely difficult to prove losses when there is no consistent paper trail to follow.  This has understandably led to a lot of confusion and frustration between British Petroleum and the local businesses and individuals affected by the crisis.

Unfortunately, we are probably closer to the beginning of this crisis than we are to the end of it.  Most of the toughest work remains, as the real oil spill cleanup efforts haven't even started yet.  This is mainly because only a small percentage of the millions of gallons of spilled crude oil have yet to come ashore.  Already though, we are hearing an alarming number of reports concerning oil spill cleanup workers complaining of unsafe working conditions adversely affecting their health.  Consistent and prolonged exposure to extremely high concentrations of raw hydrocarbons (crude oil) has been proven to be a potentially deadly and hazardous work environment.

The   symptoms   now   being   reported   by  some   of   the   BP  oil   spill  crews   are  eerily  similar  to  those  experienced   by  individuals   who  participated    in    the  Exxon   Valdez  oil   spill  cleanup  in  1989.  For  this   reason,  oil   rig   personnel,  cleanup   crews,    boom  layers,   etc.  are   likely   to   experience  serious   health   problems   down   the   road. Any  legitimate workers compensation, accident compensation,  and or accident  injury claim  associated   with  this   disaster  is  sure  to  trouble  both  British  Petroleum and  the US government forthe  foreseeable  future.  (ArticlesBase SC #2634170)

Why Horizontal Drilling Results In A Lucrative Texas Oil Investment

Can investing in a more costly form of drilling mean better returns? Yes, if drilling for oil is performed utilizing horizontal drilling. Oil drilling technology has advanced a tremendous amount over the last quarter of a century. And while some people talk of the long-lost “good ole’ days” of oil drilling in Texas, Texas oil investment is still a possibility with horizontal drilling.

Enhanced Oil Recovery Paves Way to Future Extraction Methods

With rising prices for each barrel of oil, oil and gas investing is becoming more and more appealing. Especially with the newer enhanced oil recovery (EOR) systems in place that were not available even a decade ago.

EOR is an improved oil recovery system that uses techniques aimed at extracting more oil from a reservoir that cannot be achieved by direct drilling. One of those techniques is horizontal drilling, which can extract up to 60% or more of an oil reservoir, compare to only 20%-40% using traditional vertical drilling.

Now your Texas oil investment can reap big rewards with a company that practices horizontal drilling. Horizontal drilling uses coil tubing rather than 30-foot sections of steel pipe used on traditional wells. The coil tubing allows the drilling angle to be much more flexible, even drilling at angles of 90 degrees to 95 degrees. And rather than spinning the steel tubing to turn the drill, coil tubing techniques send high-pressure drilling mud through the tube which in turn triggers a pressure-sensitive hydraulic motor that rotates the drill bit.

It's Not Just Where you Drill - The Angle Can be Critical

Controlling the angle at which the drill bores into oil reserves is the key. Direct vertical drilling greatly reduces the exposure to the oil reservoir. Crude oil tends to accumulate within pockets of layered rock, usually sandstone. And because crude oil moves extremely slowly a direct tap from a vertical drill tends to produce low tap.

However, since horizontal drilling allows can access a crude oil reserve from the side, the total exposure to the entire reservoir is greatly increased, resulting in much more and faster oil recovery. In addition, horizontal drilling can access more than one pocket of crude oil. That means instead of drilling multiple vertical wells, only two or three horizontal wells may be needed to tap an entire oil field.

In addition, natural gas can now be collected from crude oil drilling using a process that converts the gas into a liquid state. Where once natural gas was burned off from crude oil production wells, it can now be harnessed and turned into a usable product.

Texas oil investing is at a new milestone. It is now possible to tap into wells that were once unreachable, and extract more crude oil than ever possible. If you are interested in oil and gas investing, now is the time to look into what could be a very profitable venture. Be sure you analyze the risks and benefits of oil and gas investing, and find a reputable oil company to invest in that meets your investing objectives.(ArticlesBase SC #1873355)

Oil and Natural Gas Drilling similarities

Drilling for both the oil and natural gas has been taken up by many oil drilling companies in this world and this has been primarily with an aim to satisfy the energy requirements of the world. Indeed many nations across the world have put on their concerted efforts with an idea to harness these two forms of energy the oil and natural gas which already have proved themselves to be the key players of the world economy. There are numerous oil wells and gas wells across the world and several best producing oil wells for sale are listed here.

The various oil exploring and drilling companies across the world have made use of the modern technology to develop new and faster methods to drill out the oil and natural gas from the reserves beneath the earth. It is generally found that whenever a drilling is underway to bring out the crude oil contained within the oil well or the oil block, natural gas in addition with many other gases emanate out of the well.

Over the centuries the natural gas that has been given out during the drilling procedure of the crude oil is termed as its byproduct. In the late 1800's when the use of this natural gas that came out along with the crude oil was not known, it was often regarded as a nuisance and it was considered as a hazard for the oil explorers. Hence it was disposed off quickly by means of burning it.

It was only in the later years that it was discovered that this gas could very well be put to use for domestic and industrial purposes. This led to the ultimate storage of the natural gas in the form of cylinders and wherever possible it was sent through pipelines directly to the homes and many other industries for various types of applications. Natural gas consists mainly of methane gas. It is this methane gas which is a hydrocarbon that gives the burning ability to the natural gas.

There is another name that is related to the natural gas and it is often referred to as the "casinghead gas". Another name that it is attributed to the natural gas is "associated gas". In the case of the drilling of oil wells the former methods that were used for digging the oil wells centuries before, was to hand dig the well which ultimately was stopped when the oil makes its appearance. This system of hand digging was actually being practiced in the oil fields of Azerbaijan, where it is claimed that the oil wells were dug for nearly hundreds of meters down the earth's crust to finally reveal the crude oil. But with the passage of time this practice has given way to the modern technological methods where drilling machines are being used, which dig wells that are several meters deep. Hence to drill out the oil and natural gas more successfully from the surface of the earth, new techniques like the horizontal drilling and a still newer method like Nitrogen drilling methods are being put to use by the oil drilling companies worldwide.   (ArticlesBase SC #3929317)

Oil Well drilling techniques

Oil has gained the reputation of having become one of the most precious commodities that has been found on earth. Nations which possess this valuable reserve have become the most powerful and wealthy in this world and in other words really rule the world economy. This wonder commodity has become an irreplaceable thing whether it is utilized for the industrial applications or for the domestic purposes.

Most of the countries the world over in the past used to depend very much on the crude oil that was being imported from foreign countries mainly from the gulf regions. As a result these countries had to pay huge amounts that were needed for shipping the oil to their respective regions. With the development of the modern technology almost all the countries in this world have taken up the work of exploring for the untapped oil reserves within their geographical boundaries. In this endeavor most of the countries have really succeeded well enough with the discovery of huge oil reserves. This made them self sufficient for meeting their own home needs of crude oil and in many cases they had surplus amounts of crude which they could export to other oil needing countries and gain the foreign exchange.

Oil wells were regarded as the wealth of any nation and the amount of oil that was drilled out from these oil wells started to decrease with the course of time. Thus the modern scientific community has made huge technological advances in the refinement of the drilling techniques that was followed in the past. The oil well drilling methods that were used in the past involved the conventional drilling method which was called as the percussion method. This method was being widely followed in almost all the oil wells across the world. In this oil well drilling technique the earth's surface is penetrated by means of a very heavy tool that drills out the oil through the hole. The greatest disadvantage of this method was that, this process was a really slow and time consuming process and the drilling had to be occasionally stopped. There are numerous oil wells and gas wells across the world and several best producing oil wells for sale are listed here

In the case of the modern drilling methods the oil well drillers use the horizontal drilling method, which was found to be a very effective method when compared to the conventional drilling method that was used till now. The greatest advantage of this method was that the wells that were drilled by the horizontal drilling had larger surface area which in turn made the oil well to be highly productive.

These modern drilling techniques have ensured the oil drilling and exploration companies to reach out the pockets of oil reserves that are located far away from the drill site. As a result of this the oil drilling companies are able to reach out the oil pockets that are located near the heavily populated areas without causing any sort of disturbance to the people over there or to the environment of that particular locality. Hence it can be said that the modern drilling techniques have become a boon to the oil drilling companies.  (ArticlesBase SC #3929356)

What are Oil Seeps?

Put simply, oil seeps are naturally occurring oil and natural gas “springs” which rise from oil reservoirs within the earth and emerge at the surface. Seeps usually contain some mixture of natural gas, crude oil, water and asphaltum, which is a thick substance commonly known as tar. Similar to the manner in which freshwater springs on the earth’s surface originate from collected water underground, oil seeps originate from underground collections of oil that have accumulated within porous rock and have been contained by impermeable rock.



Oil seeps occur both on shore and under water, and provide valuable insight about the location of oil reservoirs deep within the earth. Since we have yet to develop a one hundred percent accurate way of determining the location of underground oil reservoirs, the presence of oil seeps provides valuable clues that can reduce the risk of wasted capital for oil drilling endeavors by companies such as Western Pipeline Corporation. The first project believed to have been dedicated to drilling for oil, led by Edwin Drake, took place in Titusville, Pennsylvania, in an area that was chosen in part because of the known oil seeps.



Oil seeps provide a natural resource which has been used by humans for various purposes throughout history, long before the advent of commercial drilling as we know it today. Native Americans are believed to have used resources collected from oil seeps for such purposes as lantern fuel, lubricant for wagon wheels and adhesive for weapons and canoes centuries ago. Asphaltum from seeps is also believed to have been used by such civilizations as face paint and for decorative additions to bowls and jewelry.



Oil seeps on land, though they may only release small amounts of oil and be difficult to see, provide scientists with important clues about the underground environment and the potential of an oil reservoir being located beneath. Likewise, oil seeps in the ocean are evidence of possible oil reservoirs below the sea floor, which modern oil drilling technology is now capable of extracting. Oil and natural gas released through vents in the ocean floor float and collect on the surface of the water, often forming oil covered natural gas bubbles and eventually a film of oil on the surface, making them easy to locate. Over time, large amounts of oil collect on the surface that eventually become visible from satellite images. Combined with information from other technologies, satellite analysis of oil seeps can provide scientists important data about the type of oil that is present as well as the potential for successful excavation.


The presence of oil seeps leading to further exploration has resulted in the discoveries of numerous productive oil reservoirs in the past. Without the natural clues about subsurface activity provided by oil seeps, we may have never discovered oil and its many commercial uses that are so common today.  (ArticlesBase SC #173478)

Ukraine - Oil and Gas potential is large - A market for minor and medium sized oil and gas companies to explore and produce?

Ukraine represent a market for minor to medium sized oil and gas companies as no major international player has made permanent presence there yet in the exploration or production phase

This article is only meant to give a brief overview of activities within the oil and gas sector in Ukraine. If you would require more details into activities in the country, either on a company basis or asset basis, please feel free to contact me at sak@ec-ba.com and we can discuss it further.

There are at the present many players in Oil and Gas Exploration sector within Ukraine. Some international companies like Shell and Lukoil have found a niche within the downstream part of the oil and gas business, as there is yet to be found such major players within the upstream segment of the oil and gas industry of Ukraine.

Ukraine, being a net importer of energy, is well endowed with its own resources. The oil and gas reserves in the country are estimated at the level of 2,3 billion barrels of oil equivalent, with natural gas contributing 87% of the total. Ukraine's gas reserves account for 0,6% of total world proven gas reserves and 0,2% of oil reserves.

Hydrocarbon resources of Ukraine are estimated at 7-8 billion tons of fuel equivalent. Average annual oil and gas production amounts to 18 billion cubic meters of natural gas and 4 million tons of crude oil and covers 25 % of the demand for natural gas and 13 % of the demand for crude oil in Ukraine. Crude oil and natural gas are imported primarily from Russia, or through Russia from Turkmenistan (natural gas) and Kazakhstan (crude oil). Oil and gas make up to 60 % of the primary fuel consumption in Ukraine, including 40 % natural gas and 20 % oil.

Several major international oil and gas companies have exited this country for various reasons. But still there are some medium to small sized companies left in Ukraine. Most companies have bought themselves into production assets with potential for brown field exploration opportunities. Some companies have expanded their exploration efforts to maintain and to expand their proven resources within the country.

Companies like. Total, ExxonMobil. Shell and other majors like Chevron. Wintershall and OMW have all tried to venture Ukraine oil and gas production and exploration, without any success. It is not the lack of opportunities given by Mother Nature. Geologists have reported of several good opportunities both onshore and offshore. Please contact me for more details if you want to have some. However the political regime and the business environment have not been in favor of these companies. And they have either decided not to enter or already have exited the country.

Up to 250 enterprises of various types of ownership operate in the oil and gas sector: in exploration, production, refining or pipelines. The largest companies are subsidiaries of state owned holding company Naftogaz Ukrainy.

Companies left in the country pursuing production and exploration opportunities are a mix from various countries around the world as well as some domestic players.

Naftogaz`s subsidiary Ukrgazvydobuvannya and subordinate companies Ukrnafta and Chornomornaftogaz produce 97% of domestic natural gas and 96% of domestic crude oil and condensate. Chornomornaftogaz extracts oil and gas in Crimea on the Black and Azov Sea shelves, while Ukrgazvydobuvannia and Ukrnafta operate on land. Ukrnafta itself, a 50% state-owned company, is the largest oil producer in Ukraine (94% of domestic oil production.) Despite the high level of state control, there is a number of successfully operating international companies in oil and gas extraction. They are mostly working in joint ventures or under joint activity agreements with Ukrnafta or with Naftogaz`s subsidiaries. The Law on Production Sharing Agreements and the Oil & Gas Law were intended to simplify the procedure of obtaining licenses for oil & gas exploration and extraction and provide additional guaranties for the investors.

I list below some of the companies involved in the upstream part of the oil and gas business in Ukraine. If you need further details, please do not hesitate to contact me on email sak@ec-ba.com. As seen from the list below there is 9 players from Ukraine, 8 from UK, 6 from the U.S.A and 8 from Russia. There are several companies from other countries as well, but they are only present with minor amounts.

VikOil (Ukrainian)

Ukrnafta VAT (Ukraine)

Ukrgazbydobuvannya Affiliated Company (Ukraine)

Naftogaz of Ukraine NJSC (Ukraine)

Shebelinkagazvydobuvannya (Ukraine)

Poltavgazvydobuvannya (Ukraine)

Kharkivgazvydobuvannya (Ukraine)

L'vivgazvydobuvannya (Ukraine)

Ferroexpo (Ukraine)

CanArgo Energy (UK)

Poltava Petroeum Company JV (UK)

Europa Oil & Gas Ltd (UK)

Cadogan (UK)

Cardinal Resources plc (UK)

JKX Oil & Gas plc (UK)

Nostra Terra Oil and Gas Company plc (UK)

Regal Petroleum plc (UK)

Hunt Oil (U.S.A)

Vanco (U.S.A)

Chevron (USA)

USENCO (USA)

JV UkrKarpat Oil (USA)

JV Karpatsky Petroleum Corporation (USA)

TNK-BP Holding (Russia)

RAO Gazprom (Russia)

TNK (Russia)

Lukoil (Russia)

SlavNeft (Russia)

TatNeft (Russia)

Gruppa Alliance (Russia)

Alliance Oil Company (Refineries) (Russia)

Kuwait Energy (Kuwait) – Asset was previously owned by Cardinal Energy Ltd (UK)

Kazakhoil (Kherson refinery) (Kazakhstan)

Itera International Energy Company USA and Ukraine)

Itera-Ukraine (USA and Ukraine)

JV Eurogas (USA and Germany)

Polish Oil &Gas Company (Poland)

JV Plast (Greece-Cyprus)

Epic Energy Ltd (Canada)

Capital Oil (Swedish)

Tiway Oil (Norway)

According to the 2008 gas balance, in the current year, the country will consume 75 bcm of this fuel, with 55 bcm being imported, while 20 bcm is of domestic extraction. The level of annual oil consumption in Ukraine is some 20 million tons with the domestic extraction of some 4.5 million tons of oil and gas condensate.

The hydrocarbon resources in Ukraine are estimated at 7-8 billion tons of fuel equivalent. Average annual oil and gas production amounts to 18 billion cubic meters of natural gas and 4 million tons of crude oil and covers 25 % of the demand for natural gas and 13 % of the demand for crude oil in Ukraine. Crude oil and natural gas are imported primarily from Russia, or through Russia from Turkmenistan (natural gas) and Kazakhstan (crude oil). Oil and gas make up to 60 % of the primary fuel consumption in Ukraine, including 40 % natural gas and 20 % oil.

There are three petroliferous regions in Ukraine: in the west (the Carpathian region), in the east (the Dnipro-Donetsk region) and in the south (the Black Sea - Azov Sea region). The Dnipro-Donetsk basin is a major producing region of Ukraine accounting for 90% of Ukrainian production from over 120 oil and gas fields. The cumulative production from the basin is estimated at over 52 trillion cubic feet of gas and 1,3 billion barrels of oil. Over 3,000 wells have been drilled in the basin to date. The basin holds potential for deep gas exploration (deeper than 3.8km). The Carpathian basin is relatively large - over 700 million barrels of oil and 8 trillion cubic feet of natural gas. The Carpathian foredeep has been explored to depths of 4.0km to 4.5km. Despite the extensive activities, deeper parts of the basin offer very good potential for further exploration. The Black Sea - Azov Sea basin is predominantly gas-prone and includes natural gas fields. The Ukrainian part of the Black Sea shelf may have substantial oil and gas reserves, with mild weather and maximum water depth of 100 m. The hydrocarbon potential of the Ukrainian Black Sea shelf is substantial and it has been inefficiently explored, i.e. large structures in deeper waters have been bypassed due to the lack of offshore technology during Soviet times.

Amongst oil industry specialists working in Ukraine there is a widespread belief that, in spite of the challenges, the benefits both for investors and for the country from successful oil and gas exploration/production projects are potentially very substantial. Currently a great deal of work is being done in Ukraine by many dedicated individuals in government and in state organizations to maintain and extend the improvements in the legal, fiscal and business regimes. Such effort is now being rewarded by a steadily improving climate for upstream investment. As a result the future for Ukraine’s oil and gas sector is now brighter than at any time previously.

I have written several articles and books about Ukraine business environment and law, as well as about the oil and gas potential within Ukraine. You will find most of these in lulu.com. Here is a reference to one of the books i have written;

http://www.lulu.com/content/paperback-book/ukrainian-onshore-and-offshore-oil-and-gas-potential-increases/2459366

You can find more of my books by go to;

www.lulu.com/stig

In addition we are constantly updating our virtual dataroom for Ukraine at www.ec-ba.com



(ArticlesBase SC #932464)

Betting on Crude Oil to Fall

The continued weakness in the Oil markets is playing havoc across the commodity exporting nations. Russia’s recent emergency measures have confirmed the problems.

With memories of Russia’s effective wiping out of state debt back in 1998 very much to the fore, the chances of anyone coming to their aid is slim. The same can be said for Venezuela, Argentina, Iran etc.

Crude Oil is now pushing to a two year low and, if anything, the outlook looks ever more painful.

Not only this but Airlines and others who hedged their fuel costs earlier this year at $100, $120 per barrel or even higher will now be asked for cash margin on these forward purchased contracts. In the current poor economic situation who would lend to an airline to make a margin call? This could lead to enforced liquidation, if indeed this has not already happened to some. That may well drive the markets much lower. This is not a prospect that leads to a happy prognosis on individual state security.

BA has managed to confound analysts by reporting much higher Turnover than expected but in the same breathe reported a loss of £49m. A £65m profit was expected. Obviously the higher fuel costs were not being offset by the BA surcharges. With Crude Oil now down at around $50 (I would recommend a bit of hedging at these levels) the cut in costs is running against the fall in current passenger numbers. Octobers passenger numbers were down 4.4% on last year. Not exactly surprising. Nevertheless the reported loss can truly be said to be a sign of the past rather than any indication at all of the future. BA is likely to be a last-man-standing airline so selling out at this stage would not appear to be on the cards.

Many complained that the high oil prices were due to speculators pushing the price up. I wonder if those same commentators will cheer the speculators who are supposedly spread betting on crude oil to fall in price.

FinancialSpreads.com and paddypowertrader have both reported a surge in clients selling oil. The latter has confirmed a 25% increase in the number of accounts shorting crude (betting on oil to go down).

Crude prices have slumped more than 60% in value since hitting record highs of $147 per barrel in July 2008. They are now at their lowest levels since January 2007.

So whilst Russia et al may be experiencing problems, individual investors seem to be on the side of the consumer and driving down the price of oil.

So far OPEC has failed to control the market and the speculators have been winning.

If Russia continues to experience financial difficulties they may have little choice but to continue producing at the same rates and OPEC will have more problems controlling the price.

Is it time to join the speculators or just enjoy cheaper petrol?

NB. Financial spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.

Retrieved from "http://www.articlesbase.com/investing-articles/betting-on-crude-oil-to-fall-650028.html"

(ArticlesBase SC #650028)

Appearance of Crude oil

Crude oil varies greatly in appearance depending on its composition. It is usually black or dark brown (although it may be yellowish or even greenish). In the reservoir it is usually found in association with natural gas, which being lighter forms a gas cap over the petroleum, and saline water which, being heavier than most forms of crude oil, generally sinks beneath it. Crude oil may also be found in semi-solid form mixed with sand and water, as in the Athabasca oil sands in Canada, where it is usually referred to as crude bitumen. In Canada, bitumen is considered a sticky, tar-like form of crude oil which is so thick and heavy that it must be heated or diluted before it will flow.Venezuela also has large amounts of oil in the Orinoco oil sands, although the hydrocarbons trapped in them are more fluid than in Canada and are usually called extra heavy oil. These oil sands resources are called unconventional oil to distinguish them from oil which can be extracted using traditional oil well methods. Between them, Canada and Venezuela contain an estimated 3.6 trillion barrels (570×10⁹ m³) of bitumen and extra-heavy oil, about twice the volume of the world's reserves of conventional oil.^