The Keystone Pipeline is another reason why long oil is risky. The Republicans are attaching the Keystone pipeline to the extension of jobless benefits and the payroll tax holiday. The unions back the Keystone pipeline.
I'd say we have pretty clear evidence now going back 40 years that somewhere around $100/bbl (current dollars) growth gets meaningfully choked off. Doesn't mean we can't spike 50-100% above that, but it does imply it would be difficult to do so, and it most likely would be a blip, not a sustained level.
keystone smeeshstone. We started running out of oil the day Henry Ford poured a gallon in his Model T. We burn more in one day than it takes 2,000,000 years to produce. If we drill every last drop out of ANWAR that is less than a 3 year supply. Nobody will do anything about it until we burn the last barrel. But that doesn't mean you can make money in here going long on margin. If you had nothing else to do with your money and you just wanted to prove I'm right you could buy some USO and tell your grandkids about it (because some day it will be theirs.) otherwise the price of crude and especially RBOB can go up higher and faster than people can decide they can't afford it. But it takes deeper pockets than I have to trade it.
This past spring, Goldman Sachs and other technicians, said that oil will rise to new highs by this summer. Instead, it dropped like a rock alongside the SPX. A lot of bear technicians like Robert Prechter believe we're in the midst of a crash. If that happens, oil will follow the SPX down - again.
"Super" bullish on oil ? ... Not so much. USA just became an oil EXPORTER for the first time in 20 years Seems like a lot of supply coming on too. USA just found the "Saudi Arabia" of oil in the shale out west Petrobras (PBR) just found a bunch of deepwater oil. Pipeline out of Canada Oil Sands, etc. Demand seems to Flat at best Alternatives won't stop Europe demand falling off a cliff Make a good case for shorting oil (LOL) JMHO Too many other trades out there, to be messing with something that can be munipulated so easily too.
just because a companys stock goes down does not mean they're suddenly going to start using less oil. The question becomes how much is a share worth and how much is a barrel worth, and that depends on how much a dollar will buy. Break even on a barrel for Saudi is about $32, so anything more than that is just the game. They've publicly stated they would prefer 70 to 80 stable oil, but they don't rule the whole oil world or even OPEC.
Saudi claims they can keep pumping just like they do now for fifty years or more with no drop in production. But the world doesn't claim it can keep using just what it uses now for fifty years. Everytime someone comes up with a new idea it ususally involves more oil. Just look at amazon. When you look at it it doesn't look like it uses much oil, but it's hard to estimate how much crude has been burned because of them from the day they went public at $8 to get the stock to wherever the heck it is now.
The Saudis are using ever-increasing amounts of what they pump for internal consumption instead of making it available for export. Their peak export volume is already 30 years in the rear view mirror.
if the price goes high enough they may just convert to solar and quit consuming it and sell it all on the world market. At any rate, price is hard to guess, but unless something changes, demand is growing faster than supply is growing. Peak oil is kind of a losing argument, because there's always another barrel out there if you want to pay to go get it. Every time crude goes above $100 someone discovers a new field. And I don't have to tell you the folly of domestic production. If I have a well in my back yard do you think I'm going to give you a break on the price just because you're American? Get in line with the rest of the world, it's going to the highest bidder.