Oil is too cheap by $50. One wonders what the real price would be if there weren't a cartel divisively keeping oil prices low. More interesting, what would the price of oil be if it weren't owned by "Princes" ?
That statement is outrageous. I personally think Oil should be much lower and the contango on the oil curve supports that. What's bidding oil up is not the actual commodity but rather the fact that it's being used as a currency. Also there are a tremendous amounts of long only commodity funds that are holding boatloads of oil contracts. There are no supply issues in oil right now. Our SPR in this country is at record levels. Unfortunately oil is priced in dollars and therefore as we continue to print money, petro dollars go up in value. You just pulled that $50 number out of your ass. Nitro come on man, if you are going to make outrageous claims, back them up. I do think oil will drift higher over time. Not because of supply issues but because of the dollar. Having said there, this thing could drop like a rock if that oil curve flattens.
I don't have a model for the price of oil. That is just opinion. I believe that oil is too cheap at current market prices, maybe by a $100, for the reasons given in the original post.
Let me get this straight. Was oil not owned by the so called Princes when it was $12 a barrel in the mid 90's? Come on man, now this thread is moving into conspiracy waters now. Let me guess, the royal families were feeling generous in the mid 90's to give their oil away for free. Oy vey.
Ughhh! You want to nominalize earnings but not price? How can you do that mathematically? You can't! You have to nominalize them both. Sure, earnings today are high in notional terms due to a depressed dollar but that is also why stock prices are higher! Hence why the S&P is at 1312.
Here are some of the classic trading mistakes that nitro made on this thread: 1. He assumed he would be right on the trade. He had no plan for dealing with the trade being a major loser. 2. He took too much risk. 3. He had no loss control method - he had no plan for keeping them to an acceptable level, or altering his position once it was apparent that it was wrong. 4. He assumed that a model with a good track record cannot suddenly stop working, and had not considered how to deal with that (inevitable) eventuality. 5. He used a mean-reversion method in a trending market. 6. He became emotional about the trade, and emotionally attached to his model. He was more concerned with proving his theory right, than in making money or following sound trading principles. 7. He blithely dismissed the concerns of multiple experienced traders who had no vested interest in whether his trade was profitable or not. Hopefully those who read this thread can gain some value from these mistakes, and thus be less likely to repeat them in future. Maybe that group can include nitro himself, although I suspect account blowup may be required before he snaps out of his mental fog and realises the necessity of changing losing habits.
Good point. In those days, we were just beginning to realize, or at least I became conscious of, the fact that oil was not in endless supply. I think you misunderstand though, I am saying that the price is being kept ___LOW___ on purpose by the cartel, not high!