Correction to $105 will feel like a crash

Discussion in 'Commodity Futures' started by silk, May 23, 2008.

  1. silk


    For 5 years the price went up as America consumed more and more. Now finally America has hit its breaking point and consumption is down alot. And demand only going to get worse later in year as airlines cut back on capacity I.E. AMR. CNBC running OIL Crisis Prime Time Special same day Crude opened 135 and reversed on record volume.

    I would not want to be long crude here over next 8 weeks. Too many things could send it crashing.

    (1) reality that demand is actually falling finally in America.

    (2) Congress demanding SPR release.

    (3) China and other countries reducing subsidies.

    (4) OPEC surprise production increase. Opec can't be happy with all this media attention. They need the world to keep buying SUV's and not find alternative fuels ect. OPEC my try to get the price down 10% quick here. They've got $95 as their budget for 2008. They don't care if it falls to $110.

    (5) The economy could take next leg down.
  2. silk


    When Crude hit $75 in 2006 and there was a big outcry, the price mysteriously started falling, eventually all way back to $60.

    The outcry this time is much larger. I think the powers that control Crude like it to stay out of the headlines so they will let it simmer down some. They are fine with $100. They averaged about $77 in 2007. They will be happy to average $110 in 2008. They can try for $140's next year.
  3. silk


    I don't think Opec, the oil co's or the other national oil co's want the world economy to crumble or have the aviation industry all go bankrupt ect.

    I suspect the price will start mysteriously falling for awhile from here. "THEY" will get it down now.
  5. inflation adjusted price is 110. You will not see oil break this level.


    The US stock market is in a Stealth Bear, when adjusted for inflation, its one of the worse Dow in the History of the Markets. PERIOD.

    You think the dollar is going to rebound back to PAR?

    America is not going to do well this decade. The government is "ShowBoating" but they can't do anything.

    The consumer is finished.

    The Consumer in Debt is going to walk away from Cars, Credit Cars that will keep the credit crunch going.

    Industry will be laying off by summers end, Retail Closings.

    This will be a wake up call for America.

    Russia and China will be controlling most of the OIL in Asia.


    Now the question is, does America fall hard over night, or limp into the next decade?
  6. Silk, you make some good points regarding the price of crude oil, are you going to short the USO, or buy puts on it now??
  7. There is a lot of political pressure to get the oil price down. Couple with the realization that the next President of the United States will not be as friendly with the oil sector. Gas price will mysteriously go down fast when the election season comes closer just like it did in 04.
  8. #10     Jun 10, 2008