What you have described is exactly what happened in every major region, US included, that has experienced a peak in oil production thus far. Trouble is, you're talking globally...tysonboss
Non-OPEC production appears to be severely constrained - perhaps diminishing.
High oil prices that supposedly are getting high cost projects into production are not materialising with meaningful contributions to global supply.
Increased exploration expenditure is less and less successful as all the known areas are well drilled and low probability, low resource outcomes are the rule of the day.
tysonboss
Although not discounting a chance return to $80, the likelihood is rarer by the week.
The chart below shows a rate of incline of moving averages that is increasing.
If we were to assume (for discussion only) that yesterday was oil's near term peak, then we would expect a probable new low (support point) within 6 months.
Given the market is in strong buying mode it is difficult to see what would or could trigger any sustained price decline.
Oil is not gold and the "you can trade any commodity" argument becomes fanciful to the extent that there is a fundamental demand equation underpinning price action.
In this case we have suppliers either squeezing oil, or they may be simply unable to increase output to meet global demand. I think there are feet in both camps.
Non-OPEC production appears to be severely constrained - perhaps diminishing.
High oil prices that supposedly are getting high cost projects into production are not materialising with meaningful contributions to global supply.
Increased exploration expenditure is less and less successful as all the known areas are well drilled and low probability, low resource outcomes are the rule of the day.
Exploration is tending to high risk, high cost projects on the chance of getting lucky.
Little wonder its the likes of WPL and OSH, with strong reserves and good production profiles, that are powering our equity market.
I think I last year tipped oil to average at $120 this year. It was intentionally provocative. Lest we get a sharp correction soon, it's 2008 average price - which is about $100 - looks like being a near term benchmark, with good prospects of rising steadily higher.
TEHRAN (AFP) - Even at 115 dollars a barrel, oil is priced too low, Iranian President Mahmoud Ahmadinejad said in comments published on Saturday adding that the commodity "should find its real value".
"Oil at 115 dollars a barrel in today's market is a deceiving figure, oil is a strategic commodity and should find its real value," the state broadcaster's website quoted Ahmadinejad as saying on Friday.
"The dollar is no longer money, they just print a bunch of paper which is circulated in the world without any commodity backing," he said.
Late last year, Iran announced that it had stopped carrying out its oil transactions in dollars.
"At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies, " Nozari was quoted as saying in December.
Our Iranian buddies reckon Oil is too cheap.
http://au.news.yahoo.com/080419/19/16jfu.html
I find that reason or excuse for not dealing in USD interesting , they now deal in Euros which itself has little commodity backing ?
Our Iranian buddies reckon Oil is too cheap.
http://au.news.yahoo.com/080419/19/16jfu.html
I find that reason or excuse for not dealing in USD interesting , they now deal in Euros which itself has little commodity backing ?
Near enough to $120 - good enough to take some profits here I think, nice big number for the specs to achieve before a spell. $1 in 10 minutes, there's your volatility eh. Maybe even a short is on the cards? Yes, short @ $119.90.
....Oil is now becoming a big problem though, wow @ $120, it almost doubled in a year...
Then, let us pray that it won't almost double again in the next year!
(US$240 would sorta hurt some at the bowser.... except if you hold mainly oil stocks and commute via walking, pushbike, public transport almost exclusively, that is!)
AJ
Oil is now becoming a big problem though, wow @ $120, it almost doubled in a year... lucky my car use is quite low otherwise I would be hurting. But I can feel it for people who fill up 200+ liters a week..
$1.80 @ a bowser near you soon I reckon.
Gas is as finite as oil.There has to be more money flowing into alternatives,... I like the sound of the gas to liquid technolgy, they can make synthetic diesel out of natural gas, we need to build a gas to liquid plants before it's to late.
Agreed 100%. Electricity from renewables is the only technology we have that comes anywhere near being a viable alternative in the long term. And even it has a lot of problems - which makes the point that any alternative is inferior to oil in some way.Gas is as finite as oil.
So all we do is delay the inevitable.
We need to move to electricity via renewables very quickly and conserve oil & gas as much as practicable.
We are presently on an energy merry go round: Jumping off one source for another, cheaper one. Until it's too expensive and they jump off that too.
Coal's price rise was inevitable, next will be gas as consumers flock too the cheapest alternative, and so the merry go round....
Gas is as finite as oil.
So all we do is delay the inevitable.
We need to move to electricity via renewables very quickly and conserve oil & gas as much as practicable.
We are presently on an energy merry go round: Jumping off one source for another, cheaper one. Until it's too expensive and they jump off that too.
Coal's price rise was inevitable, next will be gas as consumers flock too the cheapest alternative, and so the merry go round....
The idea, while seeming good, ignores the substitution effect.yes but it would buy us 20years or so,
I am not saying dump oil,... I am just saying use to gas to supplement the oil supplies till better tech can come on board.
There is alot of natural gas around especially when you take into account coal seam methane,... so using that to supplement existing supplies of crude would aleast bring about some sort of price stability, untill other longerterm soloutions can be phased in.
lets face it we need a furel that can be used in existing equipment,... synthetic diesel and ulp from gas can be used.
http://www.businessweek.com/magazine/content/08_18/b4082000518114.htm?campaign_id=rss_dailyFor 20 years now, county workers in Palm Beach County, Fla., have been counting cars with sensors at strategic points along its 4,000 miles of roads. Nearly every year traffic volume has climbed at least 2%. But in 2007 there was a slight decline in the number of vehicles on the roads. This year traffic is down 7.5% through March. "We're seeing a very significant change," says county engineer George Webb. "We're having a good time speculating why."
It's not just Palm Beach. Traffic levels are trending downward nationwide. Preliminary figures from the Federal Highway Administration show it falling 1.4% last year. Now, with nationwide gasoline prices having passed the inflation-adjusted record of $3.40 a gallon set back in 1981, the U.S. Energy Information Administration is predicting that gasoline consumption will actually fall 0.3% this year. That would be the first annual decline since 1991. Others believe the falloff in consumption is steeper than the government's numbers show. "Our canaries out there tell us they are seeing demand drop much more considerably than the fraction the EIA is talking about," says Tom Kloza, chief oil analyst at Oil Price Information Service, a Gaithersburg (Md.) market research firm.
Is oil-guzzling America changing its ways? Some think so, though it's worth noting the U.S. still consumes one-third of the world's annual gasoline output. "It appears we've finally hit the ceiling that's causing the U.S. population to rethink how and where they use their vehicles," says Paul Weissgarber, who heads the energy practice at consulting firm A.T. Kearney.
When themes recur, as is now the case with oil\gold it's handy to reflect on "positions".I see exactly what your referring to Red , but correlations aren't always what they seem , and sometimes coincidental . I'm not directing this at you Red , but please feel free to debate this with me and whomever wishes .
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