No, Im not willing to trade on that assumption. Trading oil is like sitting down at a casino to gamble. I've never been a gambler and thats not my game. You wont find me at a blackjack table. The NYMEX appears to be one wild casino and not an area where trade goes down. However, I do know about cranes. They are very expensive items. There are more cranes in the middle east right now then anywhere in the world. Someone needs to pay for all this equipment. How can OPEC cut oil production when they are trying to pay for all the growth projects? Caterpillar doesnt except IOUs. The Arabs are not honest dealers. You can trust them to go in the direction that compensates them monetarily. They send out a press release stating they are cutting oil. Press releases are cheap and what I wipe my ass with in the morning. A press release is a cheap tactic to throw a floor under the markets. What they do in reality is different...there are not inspectors at the oil pumping stations making sure that the production is being cut. There is also George Bush who is no longer filling the SPR and is stating that the oil companies dont have to repay the loan of oil taken out last year. Last, but not least, was the video of the B-52 bomber flying around the skies on synthetic gasoline. Can you imagine all the airplanes at John F. Kennedy doing the same thing? Maybe this is a bullish sign for the airlines? If that B-52 can fly around on synthetic gasoline, then there is no end to the applications. http://www.ultracleanfuels.com/articles/carlist_092606.htm
commodity corner in barrons this week talked about how OPEC wouldn't let oil even get to $50 without cutting supply to support the price.
quote from eagle488: Last, but not least, was the video of the B-52 bomber flying around the skies on synthetic gasoline. Can you imagine all the airplanes at John F. Kennedy doing the same thing? Maybe this is a bullish sign for the airlines? If that B-52 can fly around on synthetic gasoline, then there is no end to the applications. Actually, jet fuel is an oil, not gasoline. A closer approximation is kerosene.
oil prices are driven by demand. when hit $78, naturally demand diminished. when oil goes lower, demand increases cos consumer perceives it as cheap, thus driving prices higher. LT trend is for higher oil cos that threshold will always rise. If told someone 5 years ago that the consumer would be happy with $60 oil (as of friday's close) and $2.25 unleaded, he wouldn't understand. it's the boiling frog syndrome. throw a frog into a pot of boiling water, heâll jump out, place a frog into a pot of lukewarm water and slowly turn up the heat, it will boil to death. same with oil prices if people become acclimated to state of affairs over a sufficient period of time, they come to accept it as normal. you probably won't see a loaf of bread sold for a nickel ever again. don't bet on ever seeing $1 gasoline.
annual global demand at 84.9 million barrels per day (mbd) which means over 31 billion barrels annually. This means consumption is now within 2 mbd of production. At any one time there are about 54 days of stock in the OECD system plus 37 days in emergency stockpiles. that's enough for 3 months. in other words, whenever there is a supply disruption, by politics, weather or anything else, oil squeezes hard. whether this is all true or not doesn't matter as long as people, especially the oil commercials and speculators perceive and trade it as such.
I would almost agree with you on this. However, bread is much different then oil. I dont see a bunch of middle aged overweight guys in a big room somewhere yelling at each other about bread. I dont see a bunch of Arabs cornering the world on bread. I dont see guys looking at candlestick charts on a daily basis because of bread. I fully expect to see gasoline back at $1 per gallon sometime in the next 3 years and oil at $35 per barrel. The dominoes are starting to fall. Soon the creditors for the Arabs will be demanding their cash and they will have no choice but to pump full speed ahead like a teenage male with his first woman. The SPR only has 6 more percent to go to being filled. Even if the US started filling it, it wouldnt be long before its filled to the top. Then there are all the alternative fuels and conservation. The Hybrid cars that are appearing on the street everywhere. Windmills and solar being placed on top of buildings. Technology will find more large reserves of oil in other places. We have not yet tapped all the places in Alaska or off-shore. What about those oil sands in Canada? Everyone has become bullish on oil now its time for a big dump. As oil corrects downward people will lose confidence in it as investment vehicle. Oil did not trade up because of a supply problem. It was mainly because of a bunch of overweight men in a large room yelling at each other.