Hurricane about to fuck up all the oil refineries in the gulf real good. When the markets closed Firday, the Hurricane was forcasted to be weak and hit the Florida Panhadle. This thread was created arond this time as oil futures got crushed. Right after the markets closed, a new advistory was issued which put it right over the gulf of Mexico.
It looks to headed straight for Port Fourchon, LA where about 25% of our domestic oil enters from and 15% or so of our imports come in. I work in the (oil) industry and I can tell you it really depends on how this area fairs. Jay (Houston, TX)
Jay, since you work in the oil industry, would you say that a temporary disruption due to weather (as long as it's not a catastrophic once-a-decade-event) would be significant, given that 1/ the fact the US commercial crude oil stocks are at FIVE (5) YEAR HIGHS of 320mil barrels (DOUBLE the 5yr average), 2/ the fact that the government stocks (Strategic Petroleum Reserve) has just filled 100% at 700mil barrels (the Bush-istas BigOil puppets have kept adding to it last 2yr, regardless that it would further spike temporary "demand"). This alone will free 130kbpd for "normal" consumption. 3/ The effect of speculators (I've sent some relevant material some days ago), hoarding oil in warehouses in Europe for the past 1.5yr, effectively front-running the others. 4/ The flat or even down in real demand from virtually everywhere (Asia, US, Europe) during 2005, contrary to prior years. IMO this oil bubble was engineered by BigOil (Bushistas), big speculative capital, helped by misinformation spread by the media, which added fuel to the speculative mania (all those investors pouring capital into commodity index funds -GSCI is 40% oil- as "we're running out of oil").
Don't have time to comment on all your points below at the moment. I believe a tempory disruption would pull us in the $70-75 range. Something like a strong CAT 4 or 5 placing a direct hit on Fourchon and we could see a once in a (multi)decade energy market event. If that happened their isn't really anything (energy market event wise) to compare that to. I would just be making a wild guess.....
all of this and not a single mention of china and india --- the media has won the dumbing down of americans award for an umpteenth year in a row!
I assume you know that China's oil imports were DOWN -1.2% YoY for the first 5 months of 2005. Andy Xie (Morgan Stanley chief economist for Asian region) argued back in June-2005 that Asian demand is falling fast and said that oil price could collapse soon. ( http://edition.cnn.com/2005/BUSINESS/06/15/oil.collapse/ ) IMO, many other FACTS (i.e. things which can be objectively measured) support this weakening in demand in physical oil market, e.g. the rates for VLCCs (very large crude carriers) supertankers. VLCC rates for Asia have collapsed from $200k/day in Nov-04 to $25k/day recently (and -45% drop in 4 weeks recently). Maybe in 5 or 10 years, booming Asia (if growth keeps on) demand will tighten the market. But AT THIS MOMENT, all evidence I've seen suggests that oil is a speculative bubble.
http://hurricane.methaz.org/hurapak/AAL122005_gomex_oil.html I'm long some energy (shoulda coulda been more). I'm thinking of exiting on a gap up (assuming that is what we'll have on Monday). Anyone else care to share their game plan? mtzianos, I can totally see oil falling as the whole world finds itself leaning in the wrong direction. I posted this a while back: http://www.elitetrader.com/vb/showthread.php?s=&threadid=52938&highlight=freshly+squeezed There are a lot of great macro ideas in there.
I happened to catch Chris Mathews interviewing T. Boone Pickens on XM radio yest about 4:00 PT. He made some very good points that seem to get lost in all the Prozac induced talk about conspiracies like the quoted post. #1. Price has yet to impact demand in the US and the price will continue rising until it does. #2. Demand for gas is or will shortly reach 87M barrells/day, while production and refining are at 85M B/D. All this talk about "we just need to build more refineries" is bs. He made a very good point that the supply is limited and any adjustment will have to on the demand side (hence higher prices). Supply and production (refining) are in balance. #3. China is currently rationing gasoline. #4 What I found really interesting is that he had no idea how this might affect the markets, but he said the 4th qtr will be very interesting to see how it unfolds. He is convinced something has to give. Mathews asked some of the dumbest questions and seemed like he was trying to say all this was due to Bush/Big Oil/Saudis/Haliburton (yes he really did ask). Pickens responded that it was supply and demand, pure and simple.
Arnie, the points brought up previously deal with this question: what if we suddenly find ourselves in a situation where China's demand falls off? Even a small decline in China will have a huge effect on world demand/supply. No one knows if/when this may happen. But no one can dispute that it is a major factor. Just as TBP said, its about supply/demand.