JREwing

Is Oil Bubbling Over?

Paultaut is right. When so many people are convinced that something is a bubble, then it most certainly is not. In the 90s everybody was crazy about techstocks, not just joe public.

The oil price on the other hand, is hated by everybody. There are even NYMEX floor traders, who call it crazy (I guess they went short and got their butts kicked).

That is not a bubbly environment.

The problem is, that people don't understand the oil business. The 30 year long underinvestment, the time it takes to bring new production online. Joe Kernen type folks, who neglect the fact, that in the time new production comes online, existing fields are being depleted. They don't understand refinery runs, that's why most people thought the last inventory data was bearish, when it was exactly the opposite.

By the way, I bet half of that price increase last week was because of all that populist talk of gas tax breaks during the driving season. You lower the price and demand destruction doesn't take place and then the price goes up again. Traders anticipate that.

Don't get me wrong. I guess they're gonna take 5 or 10 bucks of the barrel after every rally, BUT THE OILBOOM WILL ONLY COME TO END WHEN EITHER THE WORLD ECONOMY IS IN THE TOILET OR WHEN OIL IS NO LONGER THE PRIMARY TRANSPORTATION FUEL.

People in the west are used to, that only they take advantage of all the valuable commodities our planet has to offer. That is over, because 2 billion people want a piece of the pie and they don't care, if we here want commodities to be dirt cheap. They can pay for it and they are gonna buy the stuff.

GET USED TO IT!

Is Oil Bubbling Over?

When the pain gets bad enough they're gonna open up everything.

Is Oil Bubbling Over?

First to maher:

Dude just get lost! You are nothing but a bum!

Second to the session:

Are you for real??
'it increases the quantity demanded... but not demand.'
That is an increase in demand. When things, people need, are cheaper, they buy more of it.
Go back to economics 101.

Is Oil Bubbling Over?

Even if it where theoretically possible to eliminate speculation the oil market, it wouldn't do any good. Let's say that takes 25 bucks of a barrel.

Any decrease in price would be met by an increase in demand an therefore offset.

I am shocked by the number of people who seem to be unable to understand the principle of 'supply and demand'.