You are probably correct as you are trading it every day and can see that the current relationships in place (dollar down, crude up). Your calls and the folks on CL Redux are fascinating to follow. If the world sees a significant trade war as a result of the current stresses in FX exchange rates, I believe the overall demand for oil will drop with the fall in global trade. If the Fed and China can come to terms to avoid a trade war, it is likely that oil will move and stay above $100. At this point the developed economies seem to have offshored a bit too much for their own good. The politicians want jobs back to placate an angry electorate and to help rebalance budgets over taxed with bail out / stimulus packages / etc. The real unknown in this equation is how fast China can foster / develop it's own internal domestic demand. The Chinese stimulus package (in Reminbi terms) was ~ 10 x the size of the US stimulus bill. The bull case for oil was well made in "Midnight in the Desert". Those days lie ahead. For now everything rests with the outcome of the current political brinkmanship and questionable central bank policies.
Complete nonsense - did you see the price of other assets, with no speculative component, that collapsed from summer 2008 to early 2009? What kind of market observer looks at the H2 2008 environment, with the banking system going to the brink of insolvency, the market and economy melting down, credit-default swaps on firms like General Electric pricing in actual risk of bankruptcy - and concludes that price falls were caused by speculation? Er...might it not have been the biggest economic collapse since the early 30s that had something to do with it?
*OIL 83.11 +1.42 +1.74% Now thats what im talking about, a few more rallies in oil and $90 is on the way, at $100 a barrel, $3.50 gas is coming to a city near you!!!!!! Consumers are going to love this rise in commodities.
quote from the report------------- "Congress should eliminate the Enron loophole that currently limits CFTC oversight of key U.S. energy commodity markets and put the CFTC back on the beat policing these markets. -------------------------------------------------------------------------------- "the enron loophole" The workings of that bastard Phil Gramm who arranged somehow to get his wife appointed to the CFTC AND the Board of Enron!!!!, when he wasn't to busy seeing that Glass-Steagall got gutted. Talk about a conflict of interest!!! . http://firedoglake.com/2008/05/28/mccains-cronies-phil-gramm-r-enron-and-his-ubs-lobbying-problem/ http://www.ritholtz.com/blog/2010/10/judge-cftc-corrupt-wendy-gramm-criminal/ It was Gramm, not Palen, who made it impossible for me to even consider voting for John McCain.. McCain had no better judgment than to appoint Gramm as his chief economic adviser and that idiot Palen as his V.P. running mate.
Damn! George W. Bush must be taking care of his oil buddies AGAIN. How can this be? Where's my Messiah!!!!
psytrade - Great article on economic aspects of Marine Transportation. I worked in the shipping business for 20+ years. This article touched on a wide range of subjects, much of which are independent of oil prices. The reference (inserted in green below) to Brent spreads is the most relevant comment on current oil prices. The spread between the first and sixth Brent oil contracts traded on the London-based ICE Futures Europe narrowed to an average of $1.93 a barrel in the third quarter, from $5.48 at the start of 2009, spurring traders to remove almost all the fuel stored at sea and returning ships to compete for business. The spread has narrowed to $1.81 so far this quarter. The price chart I uploaded early shows that oil prices recovered from ~ $35/bbl to $80/bbl in 2009. The failure of pricing to move much beyond the late 2009 price range implies that oil is fairly priced from the oversold levels of early 2009. Charter rates are a function of both new buildings and a release of VLCC tonnage involved in floating storage. A flattening of back month prices is why floating storage gets released. This implies flat to declining prices moving forward for oil. Oil Pricing in 2010 has been supported by adverse US$ exchange rates. The unknown here is the amount of additional FX adjustment that lies ahead for the US$ against the currencies of principal oil consuming nations.
I agree it is an over simplification to lay the entire blame on the significant collapse in pricing on the unwinding of excessive speculative positions. If fundamentals correctly placed prices at ~$140/bbl in June 08, I have a hard time understanding why the current price remains so far from that 08 level. Conclude what you want about the collapse in oil prices, my predominate issue is with the prior rise in pricing. This has all appearances of excessive speculation. I believe this is the primary reason why the "Enron loophole" was closed.
US$ seems to be getting bid today. Oil pricing is a function of FED action going forward. (Reuters) - Oil consolidated close to $83 on Tuesday, steadying after two days of gains as the dollar rose and ahead of a report that is expected to show an increase in U.S. crude oil stockpiles. From the above article: "The U.S. oil data will be a reminder that the oil market is well supplied and that prices over $80 per barrel are not driven by fundamentals," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt. Read more here: http://www.reuters.com/article/idUSTRE69541420101026