junkyarddog

Oil Won't Drop Forever

You can't go wrong with comments like that, it's just like saying "buy low, sell high". What we need to know is one minor detail: timing.

I'm sure most people will agree oil will eventually go up, the question is by how much, how fast, how long. Without some guidelines on this information simply speculating that "oil will go up" is a bit useless for investors.

Crude Oil Back Above $110; Trading Halted (Briefly)

It's all fundamentals based on supply and demand...

Options Trader: Friday Outlook

Doomsayers always seem to know best: everything will go to pot, I'm prepared, and you are not. I know and you don't.

Since I can't prove the universal negative, that the world will be OK, therefore I must be wrong. Tough crowd.

Options Trader: Friday Outlook

We consume 1/4 of the world's energy and yet we're almost 1/3 of the world's market. Our throughput is still OK, but yes, we're wasteful and we can improve. However, to say it's America's [sole] responsibility to reduce consumption is ludicrous. Talk to China, India and other emergent economies and tell them the same.

I agree the "earth needs a break"; alternative sources of energy and more efficiency are the way to go, but not ONLY for America.

Options Trader: Friday Outlook

I couldn't agree more. I am one of those Americans whose discretionary spending has shrunk quite a bit. Just buying heating oil for this coming Winter is costing me an EXTRA $2,700, and I have a new house, with higher insulation layers. Others with older homes, the elderly (they need higher temperatures), and with less income are in a tough spot. So, yes, let's try to convince them cheaper oil is bad for the economy.

I'm a huge soccer fan and recently an Arab group bought an English club in the Premier League: Manchester City. It's an inexpressive club, except for recently. The new Arab owners want to buy the most expensive soccer players in the world: Kaka (130 million euros), Cristiano Ronalso ($170 million) and others. Their plan: spend over $300 million euros until mid next year in new signings. Where's that money coming from?

From that iPod I bought at the store or the extra $2,700 I'm spending to heat my house?

What would we do without you Phil... Thanks for keeping the sanity in check.

Myth and Meaning in the Great Oil Game

So much academia, so little information. I guess this "Russian" adage still holds true: those who can do, those who can't teach.

The comments above are spot on; they're better than the article!

IEA's Oil Market Outlook: Off the Mark

Very educational article, thanks!

Truth is, NO ONE can pinpoint exactly what is going on. This whole oil business is still a bit shady. If I'm wrong, Congress would already enacted a law to arrest / sue / tax / kill whoever is responsible for such price increase (not realizing themselves Congress has quite a share of the blame).

Hey, Congress, Speculators May Not Be the Bad Guys

The author's analysis is incomplete and flawed. So many articles have already been published here (SA) that he should do his own homework. For example, what is or who are speculators?

They are necessary to bring liquidity to the market. Once educated, no one will have a problem with that. The problem is the ridiculously low margin requirements to buy oil contracts: 5%.

Don't get rid of the speculators, just increase the margin requirements. I can only leverage 50% with stocks, so why can't such traders do the same?

Again, the author needs to research this topic a bit more.

Speculating on Oil Regulation - Not the Most Effective Tool

The regulators may "have no clue", but what is the problem raising the margin requirements from only 5% to, say 30, 40 or even 50%?

You can't outlaw speculation, but you can make it more civilized. Unless, of course, you consider "fair" someone with 5% leverage being able to roll 100%. I can't do that with my stocks, so why should commodities be an exception?

Also, in 2004 we had 13 billion dollars traded in commodities and by March 2008 this volume had increased only 20 fold, to 260 billions. I wonder if this small increase could possibly affect prices... Yes, since then the dollar must have tanked 30 fold, and demand for oil increased 50 fold, right? So, I guess oil at $140 is still a bargain.

Reasons to Love 3-Digit Oil

A little comment about hybrid cars: they don't work. Well, at least not when you drive over 30 mph when the "fossil" engine kicks in.

I don't know about you, but if I drive 30 mph or less where I live, I'll cause an accident. Hybrid cars (electric) are definitely a step towards the right direction but right now they do little or nothing to solve our transportation problems.

Oil's Gains Are Due to Fundamentals, Not Speculation

Get real wrote: "oil is as much of a necessity as water". Although oil is critical, this assertive is ridiculous. If you think that way, oil is inelastic and thus people will pay, heck, $2,000 dollars for a gallon of gas. As such, what BullishOnOil! wrote above is true.

At $200 a barrel the world will go into a deeper recession, in which case I agree with George Soros, demand will decrease.

Keep looking out of your window at SUV traffic in New Jersey. Also check the sidewalks.

Oil's Gains Are Due to Fundamentals, Not Speculation

AmericanAbroad: in Europe you have the benefit of a large infrastructure for public transporation, so you may opt to drive your car to work or take the train. Here in the US, as you know, this is hardly an option. It is what it is and it's our fault.

And $9 is the "unit" price, which is one piece of the equation. The other piece is the volume of gallons. If I could get by with 1 gallon a gasoline per week and pay, say, $20 dollars for this single gallon, I'd jump for joy. So, it's not the $9 dollars alone, is the total cost of your energy bill.

Also, last I heard things weren't that rosy on your neck of the woods, with truck drivers striking in Portugal, Spain, and France to protest the current high prices of fuel. Imagine what they'll do if it goes even higher.

Oil's Gains Are Due to Fundamentals, Not Speculation

>>Even Goldman Sachs' $200 prediction looks to cheap for me.<<
That's moronic, it can only come from people that look at charts and numbers every day without checking reality.

At $200 a barrel, gasoline would be around $9 dollars a gallon, diesel around $11, heating oil over $10. Simple question: who can afford that? Who do you think is going to pay for your $200 a barrel?

The author makes the classic mistake of thinking the price of oil is inelastic. His "facts" are questionable, for 10 authors you point out that support the peak oil theory, there are other 10 to question it. Besides the point, there are tar sands (reservers that are more than double the crude oil in Saudi Arabia), shale oil, coal, etc. So, in the long run prices will go DOWN, if anything, due to lower demand for sweet crude.

I just think it's ludricous to think the economy can support a $200 oil barrel. It sounds more and more like the house bubble as if people would never not stop buying 1/2 million dollar homes, the sky is the limit.

Ah, these stupid analysists... if they only would measure their "facts" against reality...

10 Notes on the Crude Oil Fixation

It's easy to pick pieces of information and string them anyway you want. The arguments the author makes could serve very well for people who believe oil is in a bubble. For example: supply / demand.

Has demand for oil increased over 600% since 2001 like oil prices did? Weak dollar: has the dollar lost that much value to justify these high prices? Even after losing over 30% in value since 2003, oil went higher much disproportionally to the dollar.

I'm not arguing either way, every one already has their own opinion. But to say that contracts "help" stabilize somehow the price of oil and this is not a speculative market -- as in my very simple 2 examples above -- is ground breaking theory. I just wish the author would elaborate more and make a case for that.

Oil: This Isn't a Bubble

I don't know where the author gets the data either, but one huge mistake: the assumption that the data is static AND that the data is reliable.

So, the supply / demand ratio will not change? Did it change 12% in two days to justify the rally last week? Most important: what makes the author think the world can afford $140 or more a barrel? People will consume less, subsidized fuel will die. India can do only so much spending 22 billion dollars a year in gas subsidies at CURRENT prices. How long will China last doing the same? Not long if the world cuts down on discretionary spending and the whole world goes into recession / stagflation. Then WHO, please tell me, will be able to pay $140+ for oil? How can this be sustainable in the long run? And the author simply says as a matter of fact: it's not a bubble. What about some facts to back this claim? Supply / demand is not cutting it.