That is EXACTLY what I was thinking from the instant I heard about this stunt. Prosecutors can convene a grand jury to investigate anything. Let's find out where they were positioned in energies. GS is the biggest futures broker in the world. Geo.
Yep, the high oil prices have just started to spread across the economy. These markets are global. ******************** Beijing : 01-03-2005 The largest steel maker in China, Baosteel, agreed with two of the world's major iron ore providers on price hikes for 2005, the company said Monday. On behalf of Chinese steel makers, Shanghai-based Baosteel heldnegotiations with Hamersley of Australia and Companhia Vale do RioDoce (CVRD) of Brazil last week and agreed to raise ore prices 71.5-percent from those in 2004. On Feb. 22, Nippon Steel reached an agreement with CVRD on the same price increase, after which Baosteel announced on its websitethat the price hike is "out of the range that steel industry can sustain, which definitely will bring negative impact to the long-term healthy development of global steel industry." Analysts said Chinese steel manufacturers should try to gain more leverage by taking the advantage of its share in the purchase of iron ore in the world market.
Agreed ... growth in world demand is running at 1.8 million barrels per day per year (IEA), with global demand forecast at 84.3 mb/day for 2005. Global supply will not be able to keep up in the long term ... take all proven reserves and double them, and with current growth rates we exhaust all of the reserves within 70 years. Problems will arise long before that. The immediate problem will be to keep pace with the growth in demand in China/India where it's clear they are getting ready to increase demand at a rapid rate (look at purchases of cars, and road building in particular in India) ... if these economies begin to use oil at rates anywhere near the rate of US/Europe, world demand can double in very short order. The long term trend of oil prices will remain up, and $105 is a conservative estimate of where oil will go, depending of course, on the time frame. Even with oil at $56, we are still not at levels seen in 1981 at the peak ($35 in US with price controls, probably $39 worldwide), which amounts to $82 in todays dollars, which explains why the economy is currently able to absorb extra energy costs. When spending on oil reaches some critical fraction of GDP however, there will be major fallout. In addition, it's quite possible that short term increases can be made in production, to continue to meet demand, as happened in February with world production adding 885kb/day to supply (about 60% of it non-OPEC). So I'ld say this Goldman analyst is perfectly reasonable making a $105 forecast, but the key question is when we will get there. If he means it will happen this year, I wouldn't necessarily expect him to be right and would definitely be inclined to sell at such levels thinking that it's a speculative bubble. But if he only means it will happen in the long run, I think he's right and that's where we're headed.
Realistically with the growth rate (and mega potential) from China/India I don't think it's impossible to see $100 a barrel.. Factor in terrorism/safety issues and technology inefficientcies there is alot of room for growth in the oil especially in naturally gas with the winters becoming colder.. I actually think the rise in price is a good thing because it would force the masses to think alternatively and that would advance our civilization... Aside from that I belive that the trend is very stong and don't be supprised to see +$60 this month... Investors just got a little scared when they heard the improving inventories report but the main trend quickly corrected as expected. Don't rely on dead dinasaurs..
just out of curiosity, anyone have a long term chart of oil prices? elliott wave-wise, are we still in first wave or now in third wave? TIA
Meanwhile, it seems there's another thread on similar topic w/ a twist of conspiracy theory.... http://www.elitetrader.com/vb/showthread.php?s=&threadid=47420
Aside from rumors promoting greed and fear we need to focus on the issues to properly determine the long term value.. example: -Inventories -industy safety effecting supply levels and transportation -future demand projections -current technology (how efficiency) relative to now please ad modify your own... just take a drive down a long stretch of highway and look at all the grades in roads which cars and trucks have to overcome.. When they were built they weren't built to be efficient they where built to connect point a to point be.. People are expanding rapidly and yet we (as a whole) do things pretty much the same as before.. Today we have to adapt to the inceases in the use of our precious commodities... Short-cuts put us in more quicksand..
Sure, oil can hit $100. But what will be the value of the dollar buying the $100 oil? About 2.6 Eur/USD assuming $50 oil at 1.30 Eur/USD. (I think the $5-7 extra is a risk premium currently) Do YOU see the euro going to 2.6? I'm short USD but I'll be long out of my structural play before then, thank you. Demand from China and India is completely dependent upon them developing their internal economies, which are none too stable and likely dependent upon external demand (read: US) while they get their stuff together. Maybe in 2040, but not in 2006. With our economy looking like it is going to hit the wall pretty quickly (did you see the nonfarm? how 'bout that stock market?) that demand will take a hit too. Also, at about $60 barrel, alternative technologies become quite attractive. That will not only hold down demand, but will keep prices down a bit. I don't disagree that we may see $75 oil in a few years, but I wouldn't say it is imminent. For those of you who missed out on the current run-up, wait until after memorial day. You'll get your chance to buy back in in the high 40's. Question is, will it back down to the low 40's before rising? Elliot wavers: feels like a 1st wave.