OilFinder

Why Is Oil Creeping Back Up?

On Jun 01 01:29 PM Michael Fitzsimmons wrote:

> "creeping" up? i say more like galloping higher. to the comment above:
>
>
> "oil prices up ...dollar going down...simple" (34 thumbs up...)<br/>
>
> it actually isn't that simple. since march, oil is up over 50% and
> yet the dollar is only down what, 9% or so? the reason oil is going
> up is not only a falling dollar, but supply and demand fundamentals
> and traders' understanding that despite near 20 year high US inventories,
> a functioning world economy will burn that off very quickly (a few
> months). china just set a record for monthly car sales. india is
> selling cars and motorcycles as well. meanwhile, on the supply side,
> not only is OPEC cutting production but oil company E&amp;P budgets
Sorry Fitz, OPEC is not cutting back production anymore:
www.bloomberg.com/apps...
And oil production/exploration budgets are making a comeback.
In Canada:
www.bloomberg.com/apps...
And OPEC:
www.bloomberg.com/apps...

Why Is Oil Creeping Back Up?

"The flip-side to this argument is that these ups and downs in the oil market are simply market reactions to future expectations. Expectations of increased future demand may be driving the increases in oil prices . . ."

Once again we have investors killing their own investment. In anticipation of future (not present) demand increases, investors drive up the price of oil. Of course this will have the unfortunate effect (for the investors) of killing the very demand increases they expected. It will also increase production. Both of which, in turn, will (eventually) kill the price of oil.

Oh well, no matter. I rather enjoy the thought of idiotic investors losing their shirts on stupid bets.

My Oil Outlook

"1- If successive quarters of -6% US GDP and a global recession cannot get oil to stay below $45 - $50, I'm not sure what can."

The main reason why oil is stuck around $50 now while during a similar period around 1999-2003 it had gone below $20 is because ten years ago the US dollar index was over 100 then while now it's only hovering around the mid-80's.

www.insidefutures.com/...;MACD