Oil price discussion and analysis

[Aussiejeff]

Re: OIL AGAIN!

$5 dollar drop and counting, no bounce off the $130 mark.... channel 10 news dedicates 10 min of their late edition to oil, time to take profits... but caution still needed

Not even the news that March US driving miles have plummeted the MOST EVER could prevent oil climbing back up another $1.38 to close at $131.59 (WTI)
http://www.bloomberg.com/apps/news?pid=20602099&sid=aITA.IZ8Acpo&refer=energy

Then there is the latest comment by the US Energy Secretary that even if the US dollar strengthened significantly, it wouldn't stop the oil price from rising... http://www.bloomberg.com/apps/news?pid=20602099&sid=asrGXF7ezZow&refer=energy

Throw in the self-fulfilling pressure from funds looking for a $150+ price within 6 months and it is hard to see any other way but up over that period....

IMO of course.

 

[ShareIt]

Re: OIL AGAIN!

Not even the news that March US driving miles have plummeted the MOST EVER could prevent oil climbing back up another $1.38 to close at $131.59 (WTI)
http://www.bloomberg.com/apps/news?pid=20602099&sid=aITA.IZ8Acpo&refer=energy

Then there is the latest comment by the US Energy Secretary that even if the US dollar strengthened significantly, it wouldn't stop the oil price from rising... http://www.bloomberg.com/apps/news?pid=20602099&sid=asrGXF7ezZow&refer=energy

Throw in the self-fulfilling pressure from funds looking for a $150+ price within 6 months and it is hard to see any other way but up over that period....

IMO of course.

Come on Aussie Jeff... do you really think markets drop in one day by huge % (unless we have some really bad unexpected news / good)? This $5 drop is a start... but it will go up and down, up and down... then the fear kicks in some where down the track and that's where you get the big drop.... you are trading the market i.e which is emotion, not the news

 

[haunting]

Re: OIL AGAIN!

Back to the Future - Steam Rules! A working external combustion engine!

http://www.popsci.com/scitech/article/2008-05/steam-under-hood

By zealously reusing every possible bit of heat, steam engines can convert up to 46 percent of incoming energy into torque. Most gas-powered internal combustion engines, in contrast, are only about 25 percent efficient. Schoell’s prototype also emits much cleaner exhaust than a standard gas engine; unburned fuel sits in the combustion chamber until the engine fires up again, and eventually nearly all the waste particles and unused fuel are incinerated.

 

[rederob]

Re: OIL AGAIN!

But even though the State has paid for my nights entertainment , I'm more than certain that oil will achieve a price average of $140 pb ....... actually $142.80 , so IMHO $120.60 -$142.80 will see us out until 2014 at least in the median range ...... unless the unexpected pops up and chits all over my calculations .

By 2014 if oil is not over $200 per barrel it will only be because demand destruction led more quickly to a viable energy alternative for motor vehicles.
Frankly, I can't see that happening so soon, but perhaps by 2020 our technologists have gotten their acts together and oil prices could stabilise.

Technically we all know that oil is extremely overbought.
So I checked the charts to see the potential range of a selldown, and it suggests a drop of 35% is possible over longer terms. In other words, when the present oil price peaks, it is possible that a $50 fall could occur over a term around 6 months (to $85 if oil has already peaked). To get there, oil will need to crash through some interesting price points: Support at $120, at $110, and at $100
At $85 oil has formidable support. If oil gets that low in coming months a mortgage on the house will be in order.
For the moment it is apparent that traders are buying into all of oil's dips, so there remains further upside before any blow-off top. I am tipping a minor correction of $15 within the month, and a cycle peak of $170 before a major correction and period of consolidation. I believe that $120 will prove support in the second half of 2008.

 

[Uncle Festivus]

Re: OIL AGAIN!

I think that China and India will grow quicker than expected and with it will come massive oil demand. I dont think people realise the scale of these countries as they evolve and westernise, lots of people and lots of demand.

The American economy and dollar looks nasty, so hedging against it buying oil looks likely to continue. The funny thing is, when they do turn around their economy, oil dmand will increase............ironic.

Sentiment, i think speculators want oil to go to between $150 -200, whether it is justified is irrelevant, if enough people think it will reeach these prices it will reach it.

The Saudis, can they actually pump more oil, got my doubts, i reckon its all smoke and mirrors. Just wait untl they say, sorry we just cant pump any more oil and our reserves are declining quicker than we realised. Oh dear, we will have a problem.

Its not an infinate resource. People need to change their thinking, its not that oil is expensive, it is that it has been way too cheap for way too long. Start thinking like that and its a different picture.

But, if i was entering new positions at the moment i would put on a trailing stop, where and at what level depends on your individual situation and level of acceptable risk.

I would most likely set different stops as i pyramided into the market. Hard question to answer because there are many different answers and it depends on your own circumstances.

as for the high of oil before it turns, time will tell.


JW

The Chindia 'call option' is not looking too flash at the moment. These countries have subsidised fuel, so they (the governments) are taking big hits, along with input price pressures & inflation. They would love to raise prices but risk civil unrest eg Indonesia. Wages are stagnating or going backwards. It's not going to happen in this cycle now.

If this was a genuine lack of supply/increasing demand equation we would have global rationing going on. Queue's outside servos'? I still haven't seen any of this going on. For eg, Shell recently couldn't supply premium from their outlets - Caltex had plenty.

Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?

 

[michael_selway]

Re: OIL AGAIN!

The Chindia 'call option' is not looking too flash at the moment. These countries have subsidised fuel, so they (the governments) are taking big hits, along with input price pressures & inflation. They would love to raise prices but risk civil unrest eg Indonesia. Wages are stagnating or going backwards. It's not going to happen in this cycle now.

If this was a genuine lack of supply/increasing demand equation we would have global rationing going on. Queue's outside servos'? I still haven't seen any of this going on. For eg, Shell recently couldn't supply premium from their outlets - Caltex had plenty.

Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?

Have you heard this before:

"Global Recession with increasing prices in OIL, GOLD, COAL etc?"

thx

MS

 

[haunting]

Re: OIL AGAIN!

http://www.mcadforums.com/forums/files/michael_masters_written_testimony.pdf

- here is a report outlining how CFTC deregulation has created a commodity speculative "monster".

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3934155.ece

- here is a report on a country's reaction to rampant speculation in the commodity futures market. They resorted to barter trade! If this practice spreads, it would mean most of the commodity exchanges will be in trouble eventually. More than likely this will exert a lot of pressure on the law makers to "fix" the loop holes as reported in the Michael Masters' testimony.

Should the law makers go to work on fixing the regulatory loophole, I think, it is not going to be "pretty" for the big time speculators and the commodity market.

Not pretty at all.

 

[JeSSica WaBBit]

Re: OIL AGAIN!

Thanks Haunting,

interesting reading.

Only problem is that those bods in congress have close ties with the folks who are making money from high oil prices, so, i dont see them closing any loop holes anytime soon.

Its time for the world to feel the pain for being dumb asses for becoming so reliant on oil, i still think oil is cheap, just wait to the real price increases kick in then you'll here them screaming.

People are whinging at the moment but they can still cope, i think we need to go to $200.00 plus before they really have to change ther life styles. Plenty left in the tank!!!!

Well, it cost me $5.46 to fill my scooter last week, which gets me to and from work for the entire week. Food is going up but i am not hurting enough yet to change my habits.

Time will tell.........................still think $150.00 before any turn around.

JW

 

[rederob]

Re: OIL AGAIN!

Global recession = sub $80 oil within 12 months probably sooner. Goldman Sachs in the ICE market & their indices = play their game. Have you ever wondered why these guys always end up smelling like roses when everyone else is headlining huge losses?

You are assuming that supply will be able to meet demand in 12 months time.
Just remember that present crude output is unable to satisfy demand, which is supplemented by biofuels, NGLs and condensates.
In 5 year's time the jig's up: The numbers don't stack up and the shortfall will be in millions of barrels per day.
In 3 years time we might still be scraping by, as demand destruction caps global consumption and supply finds a tense equilibrium.
Unless there is a major paradigm shift, and soon, oil at $200 will be a certainty within 5 years.

 

[Smurf1976]

Re: OIL AGAIN!

In 5 year's time the jig's up: The numbers don't stack up and the shortfall will be in millions of barrels per day.

I'm convinced we'll see physical shortages at some point.

Anecdotally, there's plenty of evidence that non-oil industry (that is, consumer) stocks are already being seriously drawn down. And oil industry stocks are still falling despite that - consumption is clearly higher than production.

To make it worse, we've also been drawing down coal, uranium and hydro (water) as well. And guess what you do in the power industry when you don't have enough output from hydro, coal and nuclear sources? Yep, that's when you fire up those old oil-fired plants built in the 60's and 70's.

 

[Uncle Festivus]

Re: OIL AGAIN!

Have you heard this before:

"Global Recession with increasing prices in OIL, GOLD, COAL etc?"

thx

MS

Out of the 2 commodities and the currency, only one of those will keep going up?

High oil prices = global recession = low oil prices? Self correcting through demand destruction and/or supply substitution with newly viable technologies? The only questions now are how high is high enough for a global recession, or has it arrived already? It doesn't really matter why the price is high (demand or spec), the end result is the same.

 

[MRC & Co]

Re: OIL AGAIN!

I think the point of rederob is despite high oil prices, how fast can substitution take effect? Probably very little impact over the short to medium-term.

Demand destruction will occur, but how much of an impact will China/India have on this? In the form of both increased consumption and far more personal transportation.

Surely somebody has run some regression analysis on this, with available data (FWIW), which can be found in a report somewhere........it would have to be a hot debate amongst the economic community these days, of which I no longer partake.

 

[haunting]

Re: OIL AGAIN!

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml

- Germany in call for ban on oil speculation

German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.

The first shot has been fired. Next, wait for the rush to the door.

 

[rederob]

Re: OIL AGAIN!

By Ambrose Evans-Pritchard
Last Updated: 1:40am BST 26/05/2008

Speculators are split, with some betting that oil will fall. The mass of money coming into the commodity indexes is mostly from pension funds and long-term investors.

Oil markets are likely to shrug off the moves as political posturing, instead focusing on Norway’s suspension of crude output at three platforms, cutting supply by 138,000 barrels a day.

The news comes as Lloyd’s Marine Intelligence reported Opec oil shipments fell by 1m barrels per day in the four weeks to May 4, confirming suspicions that the market has been chronically short of supply.

If OPEC is falling short by a million barrels a day, and it has spare capacity, how much is really "spare".
Is the market only being driven up because funds are piling in, or are funds piling in because they realise the market still has further to climb on supply concerns?
If the market was being driven mostly on speculation, it would have had a few large corrections in recent months while it was heavily overbought. It might be waiting for the big blow off, but will it get to $150 or higher before that happens?
Already today oil prices have inched up another dollar, so if the markets are reacting to the news, it's the news that the oil market is getting tighter.
I'm enjoying the ride - no stops!

 

[Hopeful]

Mclaren on OIL

This is available for free on his site http://www.mclarenreport.net.au/articles/articles/181/1/May-23-2008-CNBC-SquawkBox-Europe/Page1.htmlso I'm sure posting it here shouldn't be a problem:

This is an identifiable trend and can be qualified as the exhaustion phase of a blowoff trend. Anytime a market can show three or four ascending trendlines it is in the exhaustion phase of a trend. Since most markets like to exhaust into highs this is not unusual. The previous exhaustion occurred in November 2007 and the final leg was 90 calendar days and was followed by a small sideways consolidation rather than a change in trend. This leg up has now exceeded 90 calendar days and is now 105 days, if we start the count from the last low the date is way out to June 30th and that seem a bit long to continue this exhaustion style of trend. I believe the longest it could go is June 21st but could end any thrust up now. If it corrects back more than 4 trading days the exhaustion will be complete. It will then correct back either ¼ of the last leg up or 1/3 to 3/8 of the last trend up. If you are looking for a top in oil the history of this market is tops take many months to form even when following an exhaustion phase, sometimes even closer to a year. So if the top where in today it would only be vulnerable to 115 before coming back up to form a very large topping pattern or even a consolidation before moving higher. But make no mistake this is an exhaustion phase of this trend and will end very soon. The dollar is looking vulnerable again and the base in T-BONDS is now questionable.

He's a bit ambiguous but can't complain - it's free.

First he targets late June for a top, then he says a top can take months or even a year to form even during exhaustion , then says this up trend will end very soon. Double Dutch.

Anyone else want to have a go at interpreting this?

 

[CamKawa]

Re: OIL AGAIN!

There's a video entitled "Wendt of Fat Prophets Says Oil Price May Rise Above $150" I think this may be sell signal. I saw this guy predicting gold could go to 2, 3, or 4000 right before it started its biggest weekly decline in 25 years.
http://www.bloomberg.com/index.html?Intro=intro3

 

[michael_selway]

Re: OIL AGAIN!

There's a video entitled "Wendt of Fat Prophets Says Oil Price May Rise Above $150" I think this may be sell signal. I saw this guy predicting gold could go to 2, 3, or 4000 right before it started its biggest weekly decline in 25 years.
http://www.bloomberg.com/index.html?Intro=intro3

Hm so you are bearish on OIL? Short Term or Long Term?

Thanks

MS

 

[agro]

Re: OIL AGAIN!

Hm so you are bearish on OIL? Short Term or Long Term?

Thanks

MS

how can one be bearish on oil - that must be joke of the day


http://www.cnbc.com/id/24723260

"The Saudis claim they have more oil," Pickens told CNBC. "They don't. The President wasted his time to go to Saudi Arabia, to say, 'Give us more oil.' They can't give any more oil...they're stacking up the money as fast as they can stack it up."

Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million,

they have 150-200$ a barrel target by end of the year

looking at energy prices you can see already up:

http://www.bloomberg.com/energy/

 

[CamKawa]

Re: OIL AGAIN!

how can one be bearish on oil - that must be joke of the day

That's the sort of attitude that forms bubbles.

"Emotional and cognitive biases (see behavioral finance) seem to be the causes of bubbles. But, often, when the phenomenon appears, pundits try to find a rationale, so as not to be against the crowd. Thus, sometimes, people will dismiss concerns about overpriced markets by citing a new economy where the old stock valuation rules may no longer apply. This type of thinking helps to further propagate the bubble whereby everyone is investing with the intent of finding a greater fool."
source: http://en.wikipedia.org/wiki/Stock_market_bubble

Just had a quick flick through the history books and found one of oils corrections. Not a bad one from just over $80 back down to $55, a little 32% drop, nothing to be scared of really.

 

[Smurf1976]

Re: OIL AGAIN!

Long term, I'm absolutely bullish on oil given the geological fundamentals and the inherent problem of energy - we just don't have any real alternative anywhere near ready for mass implementation.

But short term, I keep hearing everyone from funds managers to the local council work crew saying oil's going up, up and away. That's a sell signal IMO if you're a short term trader (which I'm not by the way). Everyone bullish, who's left to buy?