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  • A Smart Trader
  • 1 Comment
  • My Website

  May 25 08:19 AM
  I agree that crude oil will go down once it peaks at about $150-200, but it wont get crushed
  
  Unlike Internet stocks, there is a real demand for oil and I doubt it will fall below $80
  

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  • ship shape and bristol fashion
  • 59 Comments

  May 25 10:24 AM
  Hear, hear A Smart Trader!

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  • ship shape and bristol fashion
  • 59 Comments

  May 25 11:00 AM
  The author states, that the oil market is primarily driven by speculation. That is quite a statement, since the author doesn't deliver any evidence to support this. Conspiracy theories about huge rogue offshore storage facilities are just as ridiculous as the 'area 51' crap.
  
  Even if such facilities exist, how much can it be? Let's say 10 days worth of production. That would be around 850-860 million barrels (which would be gigantic tank farms; where are they please; Think: commercial inventories in the entire US are 320 million barrels right now). Anyone really think this is responsible for 70$ of the price of WTI? Come on!
  
  Here's what's going on:
  
  1. Emerging markets have huge economic growth. Right or wrong?
  Right.
  
  2. Anyone think, that growth of that magnitude can be achieved without
  substantial growth in demand for oil and other commodities?
  Not really.
  
  3. Is it true, that when there is one pie, and suddenly twice as many
  people want a piece of that pie, that the price for a piece is going to
  double? Yes!
  
  4. Is it true, that every 'super giant field' (which made cheap oil possible)
  on the planet is in decline?
  Yes.
  
  5. Do oil companies around the world scramble to bring new production
  online? Yes, otherwise oil service companies wouldn't make as much
  money as the do.
  
  6. Is it true, that this new production is mostly absorbed by the decline
  of existing production? Yes, obviously.
  
  7. Now the important question: Is new production coming online ONLY
  because of the seemingly high price of oil? Yes, definitely!
  
  8. Is any oil company going to develop projects with per barrel costs
  north of 65$, when the price of oil is 65$ or less? Hardly.
  
  To sum up:
  
  NEW OIL FIELDS ARE BEING DEVELOPED, BECAUSE OIL IS UP,
  OIL IS NOT UP IN SPITE OF NEW PRODUCTION!
  
  
  
  

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  • mathieugp
  • 3 Comments

  May 25 11:18 AM
  I agree with a severe pullback, maybe at 80$ levels but not for long. OPEC will decrease production if this kind of pullback occurs and this will push the prices more around 100$.

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  • mathieugp
  • 3 Comments

  May 25 11:18 AM
  I agree with a severe pullback, maybe at 80$ levels but not for long. OPEC will decrease production if this kind of pullback occurs and this will push the prices more around 100$.

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  • paultaut
  • 1078 Comments

  May 25 12:09 PM
  Opec has made it clear that $120 is their new base. They want to keep their reserves for future generations and do not see a downside to production reduction.(catchy, production reduction, ya ya ya)
  
  There is no and will not be a bubble until Oil companies are at least 20% of the S&P ala tech/financials the previous darlings.
  
  Currently, oil is moving up in spite of all of the naysayers. A massive wall of worry with everyone predicting a major correction and calling for a top.
  
  Most oil analysts have yet to value oil companies based on $100 oil let alone where we are now.

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  • ship shape and bristol fashion
  • 59 Comments

  May 25 12:21 PM
  Exactly.

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  • CaptBob
  • 198 Comments

  May 25 01:28 PM
  In the supply/demand market of commodities, oil, and anything else is worth what the top bidder is willing to pay--simple huh??
  
  Anything in a permanent decline will cost more, especially in a market where the value of the currency used to purchase it is in decline for the opposite reason >the quantity of $$'s is increasing!!<.
  
  It's not just OPEC. Anyone in possession of a dwindling commodity is a fool to sell to other that the highest bidder. Christ may turn the water to wine but the Govt. will immediately step in and tax the wine, to the point of diminishing returns, simply because they can!.
  
  Get used to the idea that you're in an auction!.
  Those who can, commute by helicopter.
  The tier below go by limousine.
  Care to share a limo.?
  I'll drive my car thank you.
  Care to share a ride?
  I'll take the train, thanks.
  I find riding a bike healthy.
  When walking, try to work close to home.
  
  When we smarten up and actually develop and bring to market viable -(the key word)-alternatives, then the piano will start again and all the above will stand--march--and hope for a better-read affordable chair to occupy.
  
  P.S. Except the helicopter occupant will always stay put and not even notice the piano.
  
  
  

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  • x8jx
  • 3 Comments

  May 25 03:40 PM
  Oil will not even correct. You may see fluctuations of +-$10 around the $130 mark, before oil stabilizes at about $150. Only then will some asian governements stop subsidizing fuel.

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  • surgcare
  • 153 Comments

  May 25 06:16 PM
  DUMB DUMB DUMB The author must be short oil

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  • ArtfulDodger
  • 94 Comments

  May 26 03:49 PM
  Techies and fundamentalists aside, there is one important point (left out in most discussions of the price of any security or commodity) that every well-seasoned investor must understand: what I call "the scam factor."
  
  You have to be a child and not have lived through the oodles of pump and dump acts that the NY crowd scams the public with to go for this one.
  
  How can so many people believe that, all of a sudden, China and India are grabbing up all the oil in the world, causing prices per barrel to rise 50% over a few months?
  
  China doesn't even report how much oil it buys, uses, or stores. The best we can guesstimate is that over the last five years China has gone from 4.9 million bpd to a little over 6.8 million bpd. The US uses about 20 million bpd.
  
  How can so many people believe that, all of a sudden, there is a shortage of oil? That refiners can't refine enough oil? That there are break downs in the infrastructure lines?
  
  And for God's sake America is an exporter of oil; we are not dependent upon "foreign oil," unless you call Canada a foreign nation. And I personally don't mind sending the Canadians money for oil, which is where America gets the majority of its imported oil.
  
  Our oil companies do indeed pick up oil in the Middle East, but they take over 90% of that oil to Europe, the UK, Japan, China, et al.
  
  Does no one remember the 1970s?
  
  It's the same old slop warmed over, and the investing public is going for it again—big time!
  
  Known reserves (fairly easily retrievable oil) in 1970 were about 560 billion barrels. By 2000 they were over 1 trillion. Eight years later they are about 1.6 trillion. (see PS below)
  
  The world uses somewhere between 75 million bpd and 86 million bpd. (Nobody is exactly sure, though; these are estimates.)
  
  What's the problem? Where's the shortage?
  
  The telling sign that the first major downturn is about to come is that after Goldman Sachs and T. Boone and nearly everyone else you can imagine came on the tube pumping the ppb at $150 & $200, the price has not moved even 5% since then (from $127).
  
  Pickens has been an oil bull since the 70s, and GS always piles on late to get the public in after the momentum players are fully invested.
  
  If the ppb continues to stall in the low to mid-130s, the momentum players will know the public is finally fully invested. There will then be no more money to go in.
  
  So when they've depleted the public's pockets, they'll start dumping and the public (suckers that WSt. uses them as), which is now buying oil and energy stocks as never before, will get killed—per usual.
  
  That's a view from someone who bought his first stock in 1967 and has been watching the NY crowd run these scams on the public for the last 35 years. They use the same method of operation over and over. And why shouldn't they? The Congress doesn't understand what they're doing, and quite frankly, few other people do.
  
  Jim Cramer has admitted to doing this back when he ran a hedge fund; the people running these operations aren't smarter than the average bear. They're simply more crooked and devious.
  
  They're greedy and heartless, too. They won't stop. Soon after the "we're running out of oil" and "China and India are using up all the world's oil" and "refineries can't refine enough oil" scam is over, they'll move to another sector and within a few months the financial media and the Big NY Houses will begin pumping it. And, guess what? The public will go for it again.
  
  Rebeldog
  
  PS: Iraq has just announced that its latest survey shows that they have another 225 billion barrels in reserve. Thus, add another 225 billion barrels to the World's reserves.

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  • TradeProfit
  • 6 Comments

  May 26 06:07 PM
  I thought future contracts are structuraled like an option strategies which have never delivered any drip of oil, but to realize the profit or loss in time & intrinsic value..... Yet, In option trade we have to use 100% cash to commence our positions, but in "futures", traders use marginable 20 times buying power, if regulator will not allow the use of any margins, then all speculators will be called to close their positions. Subsequently, prices of the contracts will drop big time !
  
  So Simple ! No need those scholaristic numbers to prove the earth is better then other planets, if prices are not right !

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