maximax

Just a Commodities Correction - Not the End of the Bull (Part 2)

"We don't have skyrocketing interest rates and double-digit inflation." - we do not have double digit inflation due to changes in the measurement thereof, using the old methodology, inflation would be double digit. Google Shadow Stats for more info.

"According to Merrill Lynch, oil demand growth in the emerging markets has never contracted year-over-year in the modern era." - comments like these kill it for me. So you are writing about oil but do not even seem to have access to consumption stats, you seem to be merely quoting the conclusion of others. That won't go far in the shady sector of oil... and you get it wrong in saying that consumption increases have all been from the developing world. the big consumption jump of 2004 was led by China, but the US came to a rather close 2nd. But the main theme of the article, commodities are just pulling back and will resume, sounds reasonable to me, for oil that is. However that oil pullback could now last a bit longer than the 3-6 months I personally had expected, unless political events necessitate a strong rebound.

Getting More Constructive on Crude Oil

would not normally respond to such a contribution as I share Jake H's opinion but the author was so far one of the more decent contributors in the energy section of SA. Most of the other comments are pretty much akin to the standards provided in tabloids, I don't want to waste my time with them. One can still be bullish mid/long term on oil even if you believe in global warming and trust in the speedy development of alternative energy generation techniques, in fact some of them will be necessary if we are to get along with the amount of oil we can obtain going forward. Sure, peak oil concerns have been around for so many years, but unless you think that the stuff is infinite, they will be right one day. So no need to force into place solar cycle theories. And keep on thinking that man's activities on earth cannot have an impact on nature/the climate etc. Hope peddling such myths generates generational wealth to whoever does it, otherwise it is just not worth it.

Introduction to a Long Lecture on Oil

fireball - wrong. what a daydream. the US army is the biggest oil consuming entity worldwide. google for some articles by Sohbet Karbuz, he has researched US army oil use.

b pursley - not sure why i still react to your ramblings. not knowing you or m damon personally, i would still put him way above you in terms of ideas and insight, given that he is ex-harvard and roles like mr ripley simply couldnt have been played by a dumbass. but then his quotes relate to his movie character, not him personally.

3 Aspects to Pricing Oil

nah smokey, most posters here have an agenda, but no clue. Eichler's first two points are spot on, and actually nothing new if you had been reading industry journals like Argus/OMI etc instead of just dwelling on this site. I am ambiguous on the third point, the relationship between the spot and the futures market is very complicated, and academics are not in unison on what is happening here. Is the additional liquidity by speculators required for this market? Anyway, they risk their own money, all those gov't interventions called for risk taxpayer's money. And to all those supply-demand/Hubbert comments above - Eichler is not even contradicting them! In fact his points are based on S/D, and he calls them "aspects" not the whole picture! Indeed, economics is no more just about S vs D, they are now about truly understanding the microfoundations of a market, as well as the agent's incentives etc... not just foolishly applying two-dimensional textbook-like S-D curves like some of the above posters seem to try.

So smokey... (1) reserve estimates of the US offshore fields are old and vague, but do not expect to find another Ghahar/Cantarell etc that can keep up current US consumption ad infinitum. It will buy you time, but will not affect the price much (the US cannot use domestic fields to isolate itself from world markets), but it won't buy you very much time. (2) is much more important - solve the demand side, get yourself off the stuff. The main obstacle to progress here has been the present US gov't, which has happily invaded Iraq on behalf of its oil majors, but has been blocking climate and other progressive treaties. Political will is paramount, as energy efficiency is riddled with market failures. But many interest groups and voters are against it due to the negative short term implications...

Energy Subsidies and Levels of Demand

chinas crude oil imports amounted to something like 7.5-8.2% of total global crude oil imports in 2007, depending on your preferred data source, but the author underestimates the impact of China's subsidies on the crude marker prices which are light sweet grades. This is exactly what China's refineries need due to low plant complexities, and this is what is in short supply. The additional Saudi stuff is heavy stuff, not suitable for refining into middle distillates which is what the market currently craves, both in China and in the Western world. Also, traders think it matters so it does matter, for right or wrong. After the Chinese announcement the WTI front month contract dropped the most in a while, this cannot be said from the Saudi announcement to produce 200-500kb/d more in due course.

Oil Price Rise: Demand - Supply - Speculation

What are all these politically motivated comments on the oil market doing here that are of no interest to investors/speculators, written by people who do not understand what they are talking about (see Sylvanus comment for better info), and funnily enough, these articles are always followed by comments like "good article". yeah right. good for what? short sighted agendas? This is not a lobbying site. And paulk8756 - your 85% claim has already been discredited elsewhere on this site. Get a life. Go somewhere where you cannot cause any damage.

Really, Really Bad News About Oil

LUCIDONE - your comment smacks of ignorance but feel free to prove me wrong:

"proven untapped reserves in the US that may exceed Saudi reserves" - I heavily doubt that. I mean, they don't. Not conventional reserves. And forget about oil shale. But feel free to name your source(s).

"there will be a delayed ripple effect in China and India which will curb growth. A higher price of oil will also serve to curb growth, since the newly minted middle class of those countries have much less disposable income to absorb oil/gas price shocks." - it seems to be news to you that consumers don't pay market prices for petroleum products in these countries.

"discredited Hubbert's Peak predictions" - Hubbert's predictions were for the US and one of his scenarios initially worked. Nowadays Hubbert's methodology seems simplistic and outdated, but that does not mean oil supply is infinite.

"actually renewable nature of oil" - are you a proponent of the abiogenic oil theory? Or how long do you think it takes for biomass to become oil? For the purposes of mankind, petroleum is not renewable. I have read many downright ludicrous things about oil in reader's comments (and quite a few articles) here on seekingalpha, but this one wins the price.

Oil in Decline: The Tax That Proves a Point

I stopped reading this article after the 'credit crisis=exogenous event' statement. Of all events affecting the US economy, the credit crisis is the least exogenous. To rebrand the oil price as a tax is just wrong - as if Americans owned Middle Eastern/Venezuelan etc oil and the costs of finding it, getting it out of the ground, shipping and refining it wouldn' exist. And only a tiny marginal fraction of oil revenues finances terrorism. And terrorism also flourished in years of low oil prices. And spending whatever that oil tax is supposed to be on infrastructure and education is not necessarily more beneficial than investing the dosh abroad, especially as US growth has lagged other regions during the recent years. But reducing US oil consumption would certainly be applauded by the rest of the world, so feel free to go ahead on that point, for whatever reason. This author clearly has an agenda which he tries to wrap in a fake analysis. What I would like to read her are genuinely analytic&unbiased articles.