The thing is oil isnt a ''bubble'', and it hasnt ''collapsed''. A bubble is something thats 'price' goes alot higher than what can actually be justified as its 'value'. And so that will work with things like companies who get some good media headlines and their price is rocketed up, however they still cant meet the 'value' that justifies that price. Oil however, while $150s may have looked high, it is ridiculously and incredibly cheap still! (Over here in UK we are currently having $8s per gallon when we travel in taxis like i do) But even with oil at $150, while that may look high, but infact it means that a family of 5people can travel 2miles in a car for just 16cents!!! :eek: If you have just $1 you could go for 8miles!!! Now how the f**k can anyone try claiming that tht is expensive??! You try going anywhere else in the world and asking someone to transport you and your family 8miles for just 60pence and they will just laugh in your face! $150/$4 oil is ridiculously cheap still. - fact People who think it was just ''a bubble'' are very very foolish, and should think more with their own mind and logic and do some basic research on google or even just use their brain to try picturing the world trying to cope without oil... lol And 2ndly oil hasnt ''collapsed'' at all. Its fallen roughly $100s in 6months, and so while that was a very fast fall, people need to learn that tradi is nothing to do with maths or probability at all!! Its merely to do with basic angles and duration of time. Oil rose extremely fast from $60s - $150, and so accordingly fell quite fast too. Tats how markets work and how people who trade off extremes trade though. The fact that its fallen so fast will invenitably mean that it will rise back again. So saying its ''collapsed'' is just wishful thinking, since its only undone what took it 1year to do, and about 60% of it could be contributed to the stronger dollar. (So oil's 'value' hasnt actually fallen much at all, its numberical price in dollars has been moved lower as the value of each $1 got stronger, but so the vlaue of the oil if it wasn't tied to the dollar currency hasnt actually fallen that much at all) 1 of the problems the oil price had in sustaining its high levels was that it forgot that its not just a market-toy liek shares and currencies are, its a real physcial thing with its own underlying real value, and relies on humans being able to purchase it for its price to keep rising. If the price of oil rose just $5s per year, in 30years no-one out there would be complaining about $200 - $300 oil, since it would have happend so so slowly and dradually that people would have been able to get used to it and would barely notice it year-on-year. And so would be able to keep buying it, as no-one going to even notice spending a few extra dollars per every few hundred miles that they want to drive their car. However it was because oil shot-up $100 dollars in 1year that at very fast speed that people and businesses like airlines responded in such an extreme way, as the price increase and jolts were very extreme. So in conclusion oil has actually only lost about $30s of its actual underlying value. (The other $70 is merely a numerical coversion result of it being priced in a certain currency) And so i still stand by my view, that i have held and harped on about since i was 8years old (12years ago now).... That in 40-60years time when we have usedu 80-90% of the barrle sof oil thats in the reserves of oil in the middleast, and so down to the last 10% of the remaining barrels on earth.., that you wont be able to just ''buy oil'' or buy petrol like you can at the moment. It will have an industrial sale price of between $600 - $1,500 per each remaining barrel, but it will all be government rationed though, as they will be the only 1s who can buy it and distribute it out. The priority and majority of it will also be given to police, fire service and ambulance, as the emergency service being able to drive around is more important than normal people being able to. And the militay will get high priority too. Although we wont really need a military, and neither will usa, as the middleasten countries will already rule the world anyways and we will just be their oversea's servants who have no way of threatening them ever. lol Since what would be the point of usa getting all huffy and saying they will bomb iran if iran sends bombs to usa, Just to then have to phone iran up and ask if they can buy some oil from them for fuel for their bomber planes!!
Oil seems to be making news again as seen below: http://in.biz.yahoo.com/090519/137/batllu.html http://in.biz.yahoo.com/090521/137/batm33.html
The US produce about 8,3 millions barrels of oil per day, that's 50% more than Iran production levels, and Of top of that Iran have a predominantly heavy sour crude, rather than the light sweet crude that much of the world wants. production is falling in Venezuela, Iraq, Iran, Indonesia, Libya, Nigeria,Kuwait, Mexico, and Russia. Saudi Arabia is pushing on astring to maintain production at current levels. Also, new production that is brought on line toreplace mature light crude is predominantly âdifficult to refineâ sour crude. Prices do not run linearly. They zigzag. Crude moved to $63.00 today -which was essentially the old november 2008 high - and everyone turned bullish. The Market is near a backwardation and the shipping market has been in a "soft mini-rally" over the last few weeks, we could see the Oil in the 69's-72's levels, But I won't bet the house on that, If the equity market crash, The WTI will have a correction. The WTI/BRENT can go into a contango as early as next week.
do you have any idea how ridiculous this is? oil will never reach $600. it won't even reach $300. the world currently revolves around an oil based economy, and expensive as fuck oil ($1500/bbl? hah no way) would be beneficial for no one. once oil gets to $150 and stays there, recovering oil shale in colorado, utah, and wyoming in the united states will be extremely profitable. you know how much oil is locked up in that shale? "Estimated U.S. oil shale reserves total an astonishing 1.5 trillion barrels of oil - or more than five times the stated reserves of Saudi Arabia." that would put the united states right back to the top.
a classic thread needing to me resurrected with all the fresh Oil speculation out there...don't be concerned Oil bears...read here..
1) A lot of people are unaware that there are 2 types of demand out there. Physical demand and paper demand. No one in this world knows the make up of this picture. In other words no one knows which one is higher than the other. As long as the paper demand is out there, there will always be speculation like in 2008 when the prices hit $147/barrel. How do we know $147 is a result of paper demand instead of actual demand? It is easy. Back in 2008, Saudi Aramco, the number one producer in terms of spare capacity, announced that they had a tanker full of oil out in the ocean that they try to sell but could not. Because there was no demand. Yet the price was at all time high. They were not able to store this oil because back at that time all storages were full. So it is obvious that the paper demand was on action. I believe once the paper demand dissappears or banned, oil should trade much much lower. The only reason oil is trading above $80/barrel right now is because Saudi Arabia and other big producers demand higher dollars due to lower value of dollar. Today's oil price has nothing to do with ACTUAL DEMAND AND SUPPLY. If FED increases interest rates which will push the USD higher then oil price will go lower. This is obvious. 2) A lot of people are unaware of peak oil. There is not even one single well in the world that had not hit a peak. They always hit and will hit a peak followed by a straight fall in production. This is INEVITABLE Back in 2008 and 2009 when the prices fell from $147 to low 30s many off shore projects have been suspended due to the costs being higher than low 30s. In other words, the easy and cheap oil is gone. If there were cheaper ways to produce oil, companies or countries would drill it. They would not bother with projects where the cost is $60-70/barrel. 3) If the chinese Yuan is let free floating against the USD, Yuan will appreciate overnight. I read some estimates where prediction goes as high as USD= 3RMB in a few years. Currently Yuan is trading or pegged to USD = 6.82 RMB that means oil will become half cheaper in 3 years for Chinese people. Since oil imports of China has the biggest increase among all nations historically, currently consuming 9MMB/D (USA is 18MMB/D), you would expect that the oil price will inrease. Conclusion: In the short run I would expect oil prices to go down due to higher USD In the medium term, when the chinese Yuan start to appreciate, oil demand will explode which will increase the price in USD terms but maybe not in Yuan terms. (This is very important), Chinese people wouldn't care because they don't earn dollars, they earn Yuan and they pay in Yuan. In the long term, peak oil will hit and oil price will increase so high that it will make sense to run every machine with solar power.
why? Oil is 85 today and just a quick hop away from 100 even right now and it is not even summer yet. I find it easy to imagine it going over 100 even under normal circumstances if the current trend continues. If anything destabilizing happened in Middle East for instance oil can jump $10 or more in a single session. What about this is hard to imagine?