Ron2008

Thinking of Going Long Oil? Here's What to Consider

"Recent, larger than expected US inventory drawdowns suggest the supply/ demand imbalance is ending"

Oil inventory has dropped almost every December. Plus fog in the Gulf has hampered deliveries.

The recent drawdowns are useless in determining if the supply/demand imbalance is ending.

Jim Rogers: Lessons from a Legend

You are definitely correct on this point!


On Dec 10 09:31 PM Kitegeezer wrote:

> I can tell you that Rogers recommendation to buy a farm is bunk.
> You would be far better off buying agricultural futures and living
> in a nice residence in a cosmopolitan city. The history of civilization
> is built on exploiting farmers, today is no different. How much bargaining
> power does a farmer have? - you tell me, he has to borrow money for
> inputs and his suppliers and customers are essentially the same people.
> Where I live in Brazil, they are exactly the same people.

Today in Commodities: Dust Starts to Settle

Melsen, chart out a NG futures chart. The prices peak in Nov and DROP through the winter. The last 5 winters have had higher prices in Nov than Feb.


On Dec 10 08:52 AM Melsen wrote:


> Regarding NG trading at higher prices in winter, it is only natural
> considering seasonal demand and drawdowns in inventories.

After Failing to Cruise Past $80, Crude's Stuck Around $70

"The winter months are upon many parts of the US, which means demand for petroleum based products for home heating and transportation will be on the rise."

Demand for oil products for transportation in the winter decreases not increases. This easily offsets the increased heating oil demand.

Today in Commodities: Crouching Tiger Hidden Commodity

You can't see that there is no demand for oil right now? That refineries are shutting down because of a lack of demand? That there are millions of barrels of oil and oil products in floating storage? That Cushing is getting very full?

Only funds think oil should be above $70 right now.

On Dec 10 05:30 PM rick12345 wrote:

> Oil has been dumped for no particular reason that I can see. While
> it should be at $80 - $85 and heading toward a $100 average, strangely
> it hasn't.

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')

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.

Flattening Oil Contango: Is It a Bullish Sign?

ryan, you are looking at the wrong number. That 3,167 is a lot more than just gasoline imports. Look at Figure 9 on your link. The gasoline imports are only 878.

Also your 18 mil barrels of crude needed to make 9 mil of gasoline is wrong. It only took 14.7 mil to make 8.9 mil for the Sep 18 week.

Gasoline isn't going to $4 in 3 months. If it does, then we will be in the Greatest Depression ever.


On Sep 24 10:57 AM ryanclarke wrote:

> The EIA data is available at www.eia.doe.gov/oil_ga...
> .
>
> Note in Table 12. U.S. Petroleum Balance Sheet, Week Ending 05/22/2009
> the value of Gross Product Imports (5) --- gasoline imports ---
> 3,167.
>
> Note the last EIA report listed the Gross Product Imports as 2,592
> .
>
> At the current price of about $2.50/gallon in the United States,
> refiners outside the United States that sell their product in Euros
> have no desire to export their gasoline. Thus, even with substantial
> crude stockpiles in the United States, I estimate their will be a
> shortage of gasoline in the United States ( stockpiles of gasoline
> below 190 MB before the end of the year ). This estimate is based
> upon a net decrease of about 500,000 thousand barrels per day gasoline
> imports into the U.S.
>
> The result is the following: If the dollar doesn't get 'strong' then
> gasoline prices will go back to $4/gallon in about three months.