Oil Bears Outnumber Bulls; Don't Expect $4/Gallon to Be a Tipping Point

Last Thursday we polled readers for their thoughts on oil and gas prices. Below we provide the results of our two polls. At current price levels, almost two-thirds of Bespoke readers say they are currently bearish on the price of oil. As The Big Picture has been highlighting recently, even though oil remains in a nice bullish uptrend, sentiment is negative, making oil bulls the contrarians.

When we asked readers what fuel price would cause them to change their driving habits, it was good to see that 39% say they already have. But those looking for a demand decrease if gas gets to $4/gallon may not want to get their hopes up, as only 13% said that level would cause them to alter their driving. Twenty-one percent said $5/gallon would cause them to change, and unfortunately, 16% said that no price will make them change. Hopefully it's because they're already taking the train.

Comments

[JohnPseudonym]

Declining dollar = increasing cost of oil.

Fed/gov is printing money and stimulating the economy at the same time.

Both of those work together to drive up oil prices.

When 1 or both reverse, so will the price of oil.

There may be short term profit taking swings, but a real trend down needs the economy to slow and dollar to strengthen.

[buyitcheap]

Even an attempt at expanded production, a stoppage in rate reductions, (possibly an increase in rates?) and a stronger dollar would help take the starch out of oil prices. But at this point, jawboning is over, action must be taken.

[AmesTiedeman]

April 29, 2008. The day to get short oil. Target 100, then next target: 88

[Fanning]

High gas price is good for the environment and more smart cars will be made worldwise at a more affordable price.

[paultaut]

Either we are going into a recession, are in a recession or we are going into a short mild downturn....

A short mild downturn can be the only outcome for the recent rally in the stock markets. This can translate into a temporary reprieve in oil only on a seasonal basis.

If the economy starts to expand as predicted, there is only one direction that commodity prices will go...and it ain't down. I use AIN'T because thats the level of intelligence most commodity bears use....

Its the same old, same old...We are the World, what happens to us, happens to everyone...not anymore.

The USA has to catch Pneumonia before the rest of the world will have to sneeze...

[Ronmac]

I keep waiting for Ames Tiedeman's oil correction, but, at least so far, it isn't happening. Sure tries my patience. However, I don't see how oil can go too far down with Russian, Nigerian, Mexican and who knows who all not producing the oil they once did. Add to that their own internal usage and all of the other regular suspects (China etc)...and I just can't see it diving to $90. But, if it does, I sure will be a buyer.

[Jack Yetiv]

Ronmac, you're going to have to wait an eternity for oil to get back to $90. OPEC won't let it.

OPEC countries have made it clear they are VERY happy with oil at $120, and they will REDUCE production to keep oil north of $100.

However, as the surveys above show, OPEC probably won't have to reduce production anytime soon. Americans' minimal decrease in use of oil products will be more than compensated for by the growing oil demand of developing economies.

Jack

[AmesTiedeman]

Ronmac, be patient. Look at USO, OIL and DUG. Things are changing. Be patient. T.Boone Pickens is wrong. We are going to correct very hard before we go to 150.00. I see 100 then 88.

[AmesTiedeman]

Jack:

OPEC cannot control the speculators anymore today than they could when oil hit $10.40 in 1998. Oil is the biggest bubble I have ever seen. It is bigger than housing, and dot com. There is no supply issues. None. Not a single person in the western world or in Asia is having to wait in lines to buy gasoline. We do not have a shortage either. Look at the North Dakota finds, look at Canada, look at Brazil, look at the Gulf of Mexico. We go lower friend. The collapse of the dollar moved oil up $50.00 higher than it ever should have gone. Get short oil and just smile.

[Kezorm]

China just announced an 8% y-o-y increase in consumption. If that trend persists, and if Mexico, Russia, Iran and Kuwait have peaked, just where do you think the oil is going to come from to meet the needs of emerging markets?