the_lazy_observer

Oil Breaks Below $60

oil is lower because credit is drying up. the extraordinary rise in oil prices was fuelled by speculation, which is funded by cheap credit. with the credit crunch, all that is drying up. if the speculators can't find cheap credit, or in fact ANY credit, to buy oil, the prices will probably go down to a more realistic level -- prices before the credit bubble era.


On Nov 11 03:35 PM OilyGasMiner wrote:

> I find it interesting that market forces and selling pressure has
> defeated OPEC’s efforts to cut supply to artificially boost prices.
> This is clear indication that we are heading deeper into a recession.
> The question is will continual supply reductions result in an upward
> movement of the price per barrel? Or will the market NOT react until
> the financial sector has been catered to by the new Obama regime?
> In either case NOW is a prime opportunity to take hold of undervalued
> oil equities, or perhaps the purchase of oil futures. I’ve been scoping
> the Canadian market for opportunities as I find that this will yield
> the greater return relative to the US. Their economy is more sound,
> and regardless of the notion that the contagion will tank their economy,
> we are finding that the opposite is true. They are many prospects
> trading below cash value that will result in a handsome reward for
> those who are patient and willing to wait. For Cdn I personally use
> the Canadian portal at www.stockresearchporta... that some
> of you might find helpful. Don’t get me wrong, I’m not saying to
> buy today, tomorrow, or next week. The key issue is that no one can
> foresee the bottom. No technical analyst or equity analyst for that
> matter. We are living in unprecedented times, and let’s face it,
> the majority of our market analysts ARE YOUNG. What does that mean?
> It means they have no experience of situations of this magnitude.
> We ought to get back to our history books and review the past trends
> during the depression and get ourselves properly educated to brace
> the stormy markets ahead. We must be patient, and we must be knowledgeable.
> Be prepared.

Reality Hits Oil Market, Dollar Could Benefit

oil is lower because credit is drying up. the extraordinary rise in oil prices was fuelled by speculation, which is funded by cheap credit. with the credit crunch, all that is drying up. if the speculators can't find cheap credit, or in fact ANY credit, to buy oil, the prices will probably go down to a more realistic level -- prices before the credit bubble era.

Reality Hits Oil Market, Dollar Could Benefit

you're right. oil is taking a nosedive not primarily because of weak global demand (the world is using just as much oil as before, if not more). the reason oil prices are decreasing is because the credit available to buy up all those speculative oil bets have gone dry.


On Nov 11 11:09 AM Georealist wrote:

> Ms. Lien has it precisely backwards..the dollar isn't necessarily
> benefitting from lower oil..it is the CAUSE in large part of lower
> oil. Refuge capital is taking money from everywhere and shovelling
> it into US dollars...the financial disarray and the evident recession
> worldwide IS the cause of lower oil prices (one can include whatever
> speculative unwinding one wants in that equation..20% sound reasonable?).
>
> A couple of token remarks concerning reality..first..the US $ is
> only "strong" because almost every other currency is worse off..However!
> the notion that a country that throws TRILLIONS at bailouts and stimulus
> packages can possible harbor sound money is absurd.
> Second...oil wil remain low until investors wake up to the notion
> that producers will provide only the bare minimum..AND NO..AS IN
> NONE!..NEW PROJECTS WILL GO FORWARD. That includes pipelines to transport
> the stuff. Good luck piling back in then..you'll need a crowbar to
> get thru the door.