Ron2008

World Series of Crude Oil: Winner Decides Winter Gasoline Prices

Looking at the new DCOT report, the Manged Money net long percentage of total open interest is at its' highest level for the the entire 3+ years of data given to us by the CFTC. Even higher than it was in 2008.

In the last 3 weeks the Managed Money group has gone from 60,002 net long to 130,712 net long in crude oil. And not surprisingly, the price went from 66.71 to 79.09 on the day of the reports.

Managed Money is clearly driving prices.

The Manged Money group also added a huge 21,605 net longs last week in Unleaded Gasoline. Highly unusual for this time of the year.

What is the Goldman and JPMorgan game plan? Looks like going long right now. But that doesn't make sense to me. There are very few fundamentals to back up this latest rise. They are on their own.

World Recovery Is in the Hands of OPEC

The problem is you are treating oil as an asset class and not a commodity. Thus more dollars are chasing to the long side of oil than normally would.

If all of the specs who wanted to preserve the value of their wealth would buy precious metals, then you would have your safe haven and the economy wouldn't be ruined by the specs buying a commodity that affects the world to such a huge extent.

I hope you realize how big a "tax" the inflated prices of oil and gasoline, caused by your speculation, are to the US economy.

The US uses about 14 million barrels of oil a day, right now. If there is $20 of spec premium added to the price, that is a $280 million dollar per day "tax". $8.4 billion a month. $102 billion a year.

By speculating to preserve your wealth, you are on the other hand causing the price of everything you purchase to cost more. Are you really gaining anything?

On Oct 25 10:40 PM derryl wrote:

> The "wall of liquidity" that is chasing all asset classes, including
> commodities like oil, is interested not only and often not even primarily
> in making speculative gains. A lot of this money is just pension
> funds and ETF retail investors like you and me trying to preserve
> the value of our wealth as the dollar devalues. Yes this 'speculative'
> money holds the price of oil higher than oil market supply and demand
> would indicate, but how do you tell all those people that you're
> not allowing them to put their wealth into commodities to preserve
> it against devaluation? (I own oil stocks but not ETFs, though I
> sympathize with ETF commodity 'speculators')

Gasoline and Diesel Fuel Prices: Scaring Investors in Time for Halloween

Yes there will be decreasing imports, but there are zero signs of increasing demand. And today's jump up in prices will not help demand at all.

I fail to see how a report that said gasoline demand decreased was bullish for prices. But that is where the specs want it to go.


On Oct 20 01:27 PM ryanclarke wrote:

> If the dollar continues to weaken and gasoline continues NOT to be
> imported from oversees into the United States, the U.S. should experinece
> a rerun of the Fall of 2007. My prediction is the following: increasing
> gasoline consumption in the U.S. ( +9 MBPD ) should produce low levels
> of gasoline in U.S. storage within the next two months which should
> induce oil to at least $100/drum by next spring.

Oil Price Rises to Highest Level in 2009

$82 oil today. They are nuts.

California: Leveraged to Gasoline Prices and Nearing the Breaking Point

The investment banks have been leveraged 20-45 to 1 for years. Even before the interest rate got to zero.

The Republican Congress repealing Glass-Steagall and Phil Gramm's (R) deregulating is what got us in this mess. That is what gave the investment banks access to too much money.


On Oct 17 11:02 AM ron_paulite wrote:

> If the Fed didn't keep interest rate so low for so long, Goldman
> Sach and the other investment banks wouldn't be able to get so much
> cheap money to play with. Many investors would have been quite
> happy to leave a lot of their money in bank saving accounts rather
> than handing it over to Wall Street.
>
> Yes, the investment banks were also at fault. But that's the nature
> of banksters. It is their job and in their DNA to make money
> for themselves and their clients, whether going long or short - yes
> even at the expense of the national or even world economy. It
> is the job of the government to ensure they do not get out of hand
> and more importantly not to create the environment for excessive
> risk taking -- and zero interest rate encourages excessive risk taking.
> We need sound monetary policy.

Oil's Up and Down Ride

The Nov oil (CL) futures contract expires on Tuesday. The Nov options have already expired. You want the Dec or Jan contract.

The Jan CL options expire 12/16. A $75 put costs $3.57 or $3,570.
www2.barchart.com/optq...

On Oct 17 11:05 AM sethmcs wrote:

> I am itching to bet oil down from this level. Not sure the best
> way to do that. Buy puts on the November contract? Buy puts on
> USO or OIL? Could somebody more experienced in trading commodity
> options explain the ins and outs. I have 25+ years experience with
> equity options.

Oil Outpacing its Own ETF

Same thing happened to Gold puts in early Sep when Gold took off higher.


On Oct 16 01:33 PM ValueInvestor wrote:

> I've seen instances when all OJ futures traded up on the day and
> the calls all settled down. What the heck is going on? The CFTC
> should interview the settlement comity and ask whats going on.<br/>

California: Leveraged to Gasoline Prices and Nearing the Breaking Point

So correct. The Ron Paulites may want to blame the gov but it is the deregulated and unharnessed Goldman and others that will kill any recovery with their inflated oil prices.


On Oct 16 09:00 PM Gary A wrote:

> Goldman Sachs traders don't care about the price of oil, except to
> make money. Don't worry, they have shorted the rest of America, most
> likely, and are prepared for the meltdown.
>
> Until Goldman goes away, long oil and short reits may be the play.

Oil's Up and Down Ride

Excellent article!

Goldman needs booms and busts to make money. They don't care one bit about the 16.8% they run into the ground.

Inflation Trade Breaks Out Across the Board

You're dreaming if you think we are headed to $150 oil in the coming months. If oil goes to $150, we will be in the next depression.

In order to have inflation you have to have demand. Since people are still getting laid off and not getting raises, where is this demand going to come from? Foreclosures just hit a new all time high.

There may be inflation on Wall Street but there isn't any on Main Street.

Oil: Three Month Roll Breaks the Buck

Or is the market realizing that the recovery will be far slower than they thought, so they are running out of buyers for the back months?

It's not lack of supply, it's lack of demand.

Natural Gas Currently Offers the Best Near-Term Investment Opportunity

"Meanwhile, US natural gas production is plummeting due to the lack of drilling activity; producers need to see prices rally back over USD6 per MMBtu to start drilling and stem these production declines."

Are you sure about that? I don't see any sources for that price. But I did find this.

Producers in the Eagle Ford can break even when natural gas is priced as low as $3.88 per million British thermal units, the firm said, versus break-even prices of $5.18 in the Barnett, $3.74 in the Marcellus and $4.49 in the Haynesville.
www.chron.com/disp/sto...

Here's more data on consumption that is opposite of what you said.

Consumption will fall by 2.4 percent this year and remain flat in 2010, according to the Energy Information Administration

Why Did Natural Gas Spike?

NG went up because the extremely short hedge funds had to get out by buying. That's it.

Their net short went from 139,508 (9/01) to 93,812 (9/29). A decrease of 45,696. Plus they dropped almost 20,000 spreads which were probably short the front month.

Natural Gas Currently Offers the Best Near-Term Investment Opportunity

You're ignoring one huge point. NG inventories are the highest in history. Even the coldest winter in history will not take inventories below the 5 year average by the end of winter.

The futures prices for 2010 are already at or above $6.00. Rigs have been added every month for a while now.

NG consumption is rising this year? You don't have a chart from EIA to back up that statement.

July consumption was 3.9% lower than July 08.

You also spend way too much time on LNG, which is such a tiny part of the market that it isn't worth including.

Out of (Natural) Gas

Below normal summer temps have little correlation to below normal winter temps, lately. From 1979 to 2008 we have had 8 below normal temp summers. The next winter was below normal twice and above normal six times.


On Oct 04 08:33 PM User 422955 wrote:

> to jerrydd: Where are semis going to tank up if they were to run
> on NG?
>
> To all you El Nin(y)o fans: I live in mid-MO. Our temps have been
> below average from early July to the present. People here (including
> me) expect a long, cold winter. I hope El Nino is correct and we
> turn out to be incorrect. Wait and see.