jepittman

Oil: Reduced Drilling Activity May Explain Recent Price Increase

Another factor might be substantial production cutbacks by OPEC, particularly Saudi Arabia. Also, liquidity availability in global financial markets could contribute.

Bullish Amid Oil Majors' Lay Offs

An awful lot has been made of 'geopolitical events' limiting oil flows. Has anyone really calculated how much oil has NOT come to market because of 'geopolitical events'? IMO this is more fear than reality.

I am in agreement that supply cuts now will bring higher prices later. Perhaps sooner than many think. Markets anticipate quite well and the discounting can begin long before the fundamentals are obvious. Supply cuts by producers are REAL unlike imagined or feared forced cuts caused by 'geopolitical events'.

Market May Get Cheaper, But Tail Can't Wag the Dog Forever

1974 may offer a comparable situation to today's market. It had a similar 'waterfall dump' that is somewhat contrary to the gradual decline of 1981 - 1982. In both cases however stocks were cheap and patient stockholders reaped large rewards by refusing to panic along with the crowd.

IMO Treasuries are unlikely to decline dramatically until the global economy shows unmistakable signs of a sustainable recovery, and the Federal Reserve is not a threat to monetize virtually unlimited amounts of treasury debt.

Bearish investors today are earning virtually nothing on taxable riskless short term securities and CD's. Chairman Bernanke has unmistakeably signaled this will be the case for the forseeable future. Futures prices are confirming it. Security valuations are low by historical standards and shortsellers initiating positions near today's levels are fighting the Federal Reserve.

Despite conventional wisdom, especially among posters to SA, the US dollar has held its value versus other currencies in the developed world quite well. In spite of the problems facing the USA, there are arguably greater problems facing Europe and Japan. Recessions facing these large economies are at least as daunting as in the USA and look to be deeper and more protracted. The highest probability is for the US to exit the recession far sooner than the other developed economies, which explains much of the dollar's recent relative strength.

I do not mean to belittle the problems and difficulties facing the US economy and its markets. They are indeed severe and have been noted by numerous posters on these forums. I would submit however, it is precisely these problems that have given rise to the highly unusual opportunities present in today's markets. If all were well, prices would never be this distressed.

As the author says, "the markets are unsustainably cheap". The Federal Reserve is determined to reflate not only the US economy but all economies connected to ours. Because the dollar is the world's reserve currency, all modern economies will follow. We will either recover or decline together. The world's central banks say "RECOVERY", and with that will come substantially higher risk asset prices.


On Jan 13 10:56 AM John Lounsbury wrote:

> Nick Abe - - -
>
> You wrote: "The charts that I included a few days ago show that stocks
> are cheap relative to Treasuries." You are arguing that stock should
> rise in response to this fact. Why couldn't the ratio return to normal
> levels by Treasuries falling in price?
>
> You graph shows 1987 to date. I would argue that conditions in 2009
> are more like 1974 and 1932 (and possibly 1941?) than any of the
> market bottoms you have cited.
>
> I think many of the commenters are correct in questioning your analysis.
> The work is, in my opinion, good analysis. It is simply incomplete.
> Maybe you can flesh it out in another article.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

It seems there are a number of lingering oil bulls around. Trouble with being bullish on oil right now is the world's developed economies are all in recession and supplies are so high that there's nowhere to put the stuff except on floating tankers. I know the long term argument for recovering prices is a good one. But right now we are swimming in the stuff and running out of places to put it. Hardly a catalyst for higher prices near term.

When the economy starts to show signs the worst is over may be a time to begin slowly building positions. IMHO its still a little early.

Why Oil Will Head Higher

Sean,

Thanks for the article. Your scenario is very plausible. An economic recovery is coming IMO this year, maybe sooner than most expect. Oil, gold, and stocks will transition to bull markets. It won't happen in a straight line but the stage is being set for higher prices.

FedEx On Advertising, Asia, Oil and Taxes

I assume the last paragraph is Fred Smith's editorial. I believe what he says is correct. I do NOT believe the incoming Congress and Administration will implement anything that even remotely resembles it. It does not mean there will not be an economic recovery that will significantly benefit Fed Ex. They are a terrifically well run operation that will survive and prosper regardless of who is in charge of the government.

An Update on the Energy Patch

Well I just got back from a trip to the hinterlands in a small southern state and I can report the gobs (good ole boys) are back in their 12 mpg pickumup trucks and are gleefully running up and down the roads again. With gasoline back to $1.50 a gallon it won't be long before demand is back 'up t' snuff as they say 'round here. Your investors should be eyeing their favorite oil stocks for entry points over the next few months if my scoutin' is any indication.

2009 Oil Estimates

EVERYTHING??? You mean to say we could actually have an ECONOMIC RECOVERY soon?? You mean even the STOCK MARKET could go UP?? My heavens!! A BULL!! Marc Faber and Jim Rogers are BULLISH on US equities even though they would not be caught dead owning one. Folks you can't have inflating commodities in this environment without an economic and stock market recovery. If Faber and Rogers say inflation, then they also have to admit a global economic recovery is a given. With that comes a new bull market in stocks.


On Dec 23 06:47 AM Simmons wrote:

> MArc Faber is predicting big inflation ahead. Marc and Jim Rogers
> both agree on this topic. We will se higher prices ahead not only
> for OIL but for everything.
>
> www.jimrogers-investme.../

OPEC Targets Higher Oil Prices: Who Wins and Who Loses

OPEC has a very spotty track record sticking to lower production quotas. The temptation to pump a few extra barrels is ever present. Also, the global economy is still several months away from a meaningful recovery.

The American consumer has largely made the shift to higher milage cars and has learned how to eliminate frivolus driving. Any hike in gas prices will be met with the newly learned reponses of reduced driving and a continuing shift to hybrid cars.

While it is entirely possible we could see $75 a barrel oil again as the global economy inevitably recovers, a near term return to $100+ is a longshot at best.

Low Oil Prices Kill Energy Investment

The fixing of a minimum oil price would go a long way toward accomplishing the goals the author outlines. However the political problems of hiking gas prices on the public, which is how opponents would criticize it, make it unlikely to happen.

Where Will Oil Go from Here? Goldman Says $45, Iran Says $100

Have at it HH. I would love to read something in depth from you.


On Dec 14 09:10 AM Herbert Hoover wrote:

> I predict that Goldman Sachs share price will be less than a barrel
> of oil in 2009. Can I write an meaningless article too?

Oil Price Decline Bad News for Future Supplies

Sheeeesh! More worthless gibberish.

Oil Breaks Below $60

Oil certainly looks lower. Gasoline where I am is approaching $2.00 which leaves money in people's pockets, especially since many have made the switch to more fuel efficient vehicles and made some serious driving habit changes. Not to mention that frivolous driving is practically dead. Look for more good consumer confidence numbers.

Reality Hits Oil Market, Dollar Could Benefit

The world economy needs lower oil prices. Petroleum costs are embedded in somewhere in virtually every product and service. Lower costs will cushion the economic decline.