Crude over $40 (as closed price)

Discussion in 'Commodity Futures' started by andrasnm, May 12, 2004.

  1. ~$1 short of all time high ever.
    Obviously pissing these billions was not 'money well spent' unless it is for Haliburton or some CIA front companies.
    So the market is down. It will be down much more after election cause no matter who is in we a screwed.
    My TrendSage Software has picked Crude as number 1 up-trend and that so far is working out. I do expect to break the all time high and after that it is $45 or bust
    maybe I should buy a bicycle....
  2. Long term trend is UP, but I expect Crude to break hard somewhere along the line back into the 20s before going to 100 within the next 10 years.
  3. Because of the Peak Oil theory?
  4. I think it's a multitude of reasons.

    Peak oil theory is one. Asian demand is another. USD as world's reserve currency and the world's leading importer combined with our currency debasement policy (and countries exporting to US needing to debase to remain competitive) is a 3rd.

    Put all three together and you have a mega uptrend.

    What we see at the gas pump is not necessarily so proportional to oil prices you see in futures because of taxes factored in.
  5. josbarr


    LONDON, May 10 (Reuters) - Saudi Arabia's call for OPEC to cool prices
    by increasing supply aims to douse a rally that has sent oil prices up
    around 20 percent this year to the highest level in 13-years. Despite
    Saudi Oil Minister Ali al-Naimi's comments, oil prices are still
    within a dollar or the $40 mark after rising 22 percent this year.
    Following is a list of the main factors behind oil's price surge.

    -- Low inventories.

    Oil companies have sought to become more efficient and free up capital
    by holding lower stocks of oil. This has given the oil industry less
    of a cushion against sudden supply disruptions.

    A wave of oil mergers following 1998-1999's price crash also reduced
    the number of companies holding inventory. A series of supply
    disruptions last year -- the war in Iraq, Venezuela's general strike,
    and ethnic unrest in Nigeria -- further cut into stocks.

    -- OPEC supply management emboldens speculators

    The OPEC oil cartel, which controls around half the world's exports,
    has worked hard to stop stocks building -- especially in the United
    States -- during periods of seasonally weak demand. Ministers have
    announced plans to cut production before prices start to weaken,
    giving refiners no chance to replenish stocks with cheap crude or

    The resulting lack of stock cover leaves refiners more vulnerable to
    supply disruptions and increases the likelihood of price spikes. This
    in turn has attracted heavy buying interest from big-money speculative
    hedge funds.

    "OPEC strategy has shaped oil markets into a bullish machine in a
    tense international environment," said consultants PFC Energy. "This
    has caught the attention of speculators and hedge funds, who have
    magnified the current pressures in oil markets."

    The post-September 11 chill in relations between Saudi Arabia and the
    United States means that Riyadh is no longer willing to act as a
    guarantor of cheap oil as during the 1990s. "While the Kingdom remains
    the ultimate guarantor of oil supplies in case of emergency, it has
    given up its role of price moderator inside OPEC", PFC Energy said.

    -- Political tensions in oil producing nations

    Tensions in the Middle East, especially Iraq, have undermined traders'
    confidence in security of supply from the region, which pumps a third
    of the world's oil. Iraqi exports have finally recovered to pre-war
    levels but traders fear they will be disrupted again in the run-up to
    the June 30 handover of power to the Iraqis.

    A possible August referendum over Venezuelan President Hugo Chavez'
    rule could again destabilise exports from a big U.S. supplier.
    Potential unrest in Nigeria is another flashpoint, while traders fear
    Islamic militants could also target oil infrastructure.

    Shootings at a Saudi petrochemical plant earlier this month have
    fostered fears of a larger attack on the kingdom's tightly-protected
    oil facilities.

    Concern over possible supply disruptions have spurred many countries,
    including the United States, to increase their strategic oil
    inventories, which withdrawn further supply from an already tight

    -- Rising demand

    China's economic expansion has given a dramatic boost to world oil
    demand, sucking in crude and refined products from all around the
    world. Unless China's economy overheats, traders expect its fuel
    demand to keep growing for the next two or three years, which has
    encouraged the speculative hedge funds to bet that high oil prices are
    here to stay.

    At the same time, sharper growth in the U.S. economy, which devours a
    quarter or all world oil, is driving competition between Asia and the
    U.S. for supplies.

    The demand growth has caught analysts such as the International Energy
    Agency by surprise. Consumption forecasts have been too low, which
    means that producers have been keeping supplies even tighter than they
    needed to prevent stocks building.

    Higher demand means that a shortage of refining capacity that has
    plagued the United States for the last four years has now spread to
    Asia, again leaving the global oil supply system more exposed to

    --Refinery bottlenecks

    Environmental regulations are pushing up the price of making fuel,
    forcing companies to build expensive new facilities and making it
    harder to ship supplies between regions.

    In the United States, individual states demand an array of different
    gasoline blends. This makes it harder to ship supplies between states
    and to import supplies from abroad.

    The high costs of building the units needed to make the new grades of
    fuels means that capacity is in short supply.

    Environmental concerns has also made it more expensive to build new
    refineries, and much harder to get the necessary permits.

    The United States accounts for about 45 percent of world gasoline
    consumption, with demand bolstered by the growing numbers of
    low-mileage-per-gallon sports utility vehicles on America's highways.

    This has driven a growing need for the high-quality light, low-sulphur
    crude that is good for making gasoline. Most of OPEC's crude is heavy
    and high-sulphur.

    -- Scarcer oil

    Big oil reservoirs are becoming harder to find and more expensive to
    develop. Many of the oil provinces outside OPEC are mature, which
    means that finds are now smaller, need more costly technology to
    develop and fall faster from peak production.

    Oil companies have also been cautious on spending since the '97-'98
    price crash slashed their share prices and forced them into a spate of
    mergers. They have focused on large-scale projects, which will give
    them good margins.

    Many of these ventures are in remote areas, which demand expensive
    equipment and are more susceptible to delays. Forecasts of non-OPEC
    supply growth -- especially when the rebound in Russian production is
    stripped out -- have consistently been overstated, giving OPEC much
    more room for manoeuvre.

    The increased cost of finding and developing non-OPEC oil has fuelled
    speculators convictions that oil markets are a good long-term bet.
    Royal Dutch/Shell <RD.AS>'s reserves troubles have reinforced the view
    that oil is becoming harder to find.

    In OPEC, which holds around two-thirds of the world's oil reserves,
    many nations either do not allow foreign investment in oil, or have
    unattractive investment and legal terms.

    This has slowed down production capacity growth in most OPEC nations,
    meaning that most are producing flat out to meet current demand. Only
    Saudi Arabia holds substantial spare capacity, giving it even more
    leverage over prices.

    Copyright 2004, Reuters News Service
  6. my thinking is that crude/gas futs will trend up until June 30, which is when we hand over Iraq to the new government there.

    after that watch for it to break, and break in a big way. Ill probably short a day or 2 before.

    Just a thought
  7. The premium of June over July was at one point +$1.50 and now has gone to a small discount. This is quite telling, in my opinion.

    $41.50 could be the top.
  8. Anyone take a look at July Crude Oil today?

  9. looks like 40 - 41 - the contract high is now going to be major resistance ?

    but T Boone Pickens the other day said
    we will see $50 before $30

    and he has bigger pockets than me plus more $ inside them

  10. BrianLA


    ... at these levels? There's so much hot $ chasing these things, especially light crude, that there could be a short term trading oppty. At $39.33/barrel, approx. $6 in fund speculation is built into the price. If the rest of OPEC goes with the Saudis on June 3rd, that could trigger profit taking. The key is the timeframe around June 30th, when Iraq handover and FOMC decision occur on the same day. If everything go smoothly, that would be bad for oil and great for equities. But that's a BIG if.
    #10     May 22, 2004