Posted on 06/03/2008 2:57:44 PM PDT by B Knotts
(NECN) - Maybe, just maybe, the oil speculators are cashing out.
Oil prices fell sharply in New York on Tuesday, a fall sparked by declines in U.S. oil and gas consumption, and a rebound in the U.S. dollar. Light, sweet crude for July delivery fell $3.45 to settle at $124.31 a barrel on the New York Mercantile Exchange, and dropped below $124 in after-hours electronic trading.
Oil prices have fallen by 8 percent from their peak of $135 per barrel on May 22. Gasoline prices at the pumps, which often lag behind oil prices, have shown no sign of letting up yet. The national price of gasoline rose to an average of $3.98 per gallon today.
Yeah. Back to the good old days of $100 crude.
If...and that’s a big “if”...the speculators conclude that the game is over...it will go far below $100.
BTTT
The 136 is looking like a spike. Go back a month and find 115, which was exciting at the time. Halfway back from breathless to understandable.
On the down slope, yes.
There is no appreciable lag when the price is rising. Price rises are nearly instantaneous. Price decreases at the pumps take weeks.
Wonder why that is.
I don’t think it’s going to “burst.” It will probably stop growing so fast for a while.
I think it’s the same reason that I have to go over and over a wrinkle after I’ve ironed one into my shirt.
"Well, it's because we purchased that crude oil weeks ago at those prices, and it takes time for it to get through the refining 'pipeline' so to speak, so the price of gasoline you pay today reflects what we had to pay for crude when it entered the system."
</Evil Oil Apologist>
I used to think that but then I looked at the historic price of crude vs. gas at GasBuddy.com. Unless they're cooking the books the price at the pump is very, very close to the price of oil with the exception of May, 2006. My guess is that during that time period there was a refinery problem (something blew up, etc.).
Worth checking out.
I got something crude (right here) I'd like to enter into their 'system'.
lol
Well, now he’s trying to get Congress to pop the bubble, so my guess is he already made his money in oil, and is now out of the market, or is shorting oil.
When was that, about 6 months ago? :o)
And, rightfully it should. However, what may be different than the run down following the oil embargo of the 70’s and early 80’s is our government, you know the one, the one that's here to help us? It's my hunch that this time when prices eventually do drop, there will be tax adder attached so to artificially keep prices high. After-all, the Dem's don't want “gun totting bible thumping” great unwashed to start driving those SUV’s and pickups again...
I agree.
I’m pretty sure Soros is behind this, but as rich as he is, I’m sure that he has covered his tracks well.
He’s a commie and wants nothing more than to embarrass our government, if the dims win in November (GOD FORBID!) the prices will tumble and the dollar will strengthen because of his influence, he doesn’t care about losing money (see “move0n.org”), only about his left wing agenda.
I’m not sure who is more evil: Soros or Putin.
There is no bubble. Bubbles occur when prices rise even though there is plenty inventory, regardless of whether it’s housing, oil or anything else. Prices will decline for awhile and will eventually shoot up again approaching $150 bbl by the end of the year.
You don’t think there is plenty of inventory?
>> Prices will decline for awhile and will eventually shoot up again approaching $150 bbl by the end of the year.
Ah, you’re long oil... better sell it before you really take a bath.
I seriously doubt there is an oil bubble. I see no evidence for one. High prices are here to stay so long as large new reserves aren't brought on line, and I don't see that happening any time soon.
That's got to be a candidate for the best example of wishful thinking of the day.
Finally, a post that exhibits some reason. I've been pointing out the lack of an inventory for about a week, and no one seems to get it. It's amazing what people force themselves to believe just because they wish it were true.
No. At least, I haven't seen any convincing evidence that there is. What makes you think there has been a buildup of inventory?
It doesn’t make a damn if the U.S. consumption of gas has slowed. The world consumption keeps going up. Now it may slow or even stay the same for a while but it will eventually continue to climb. As long as we import 60% of the oil we consume it will continue to rise over the long haul. The only thing that can bring it down is exploration and drilling in the the areas of this country that has been put off limits by the U.S. Congress. There is very little chance of that happening. Stay long in oil.
So if the price rose to $2000/barrel tomorrow, it wouldn’t be a bubble, as long as there wasn’t too much inventory?
I am an electronics technician and know a lot about energy conversion, thermodynamics and such.
BUT..I know little about stock sales and such. So, please educate me on what “long on oil” means.
The price of crude may take a pause but only briefly. A year from today, we’ll be in $150 territory or higher.
My experience is there is lag both ways. competition enters into the equation also
HERE's my nomination for the freakin' Understatement of the Decade Award!
Actual data shows otherwise.
Soros is completely behind it....but if he reversed positions and started shorting oil, he could double his money.
Besides, he was rich to begin with.
>>>He made himself rich speculating AGAINST the US dollar so why would he not help drive up oil prices in an effort to get Obama in the White House?
Whenever the oil prices start to drop some bigwig speculator or manipulator talking head has to mouth off with some phony reasons to drive it back up. Follow the money, Larry.
Yeah, that's what they were saying 15 years ago...
The station I live near recently installed an new electronic price sign, powered by red LEDs. Since they are not a major, and independent, they have to raise the prices to cover whatever the truck drops off...which is about every 2 or 3 days. I has probably gone up from 4.29, to 4.39, to 4.59 for regular in the past week.
Perhaps so, but you'll pardon my skepticism when personal experience - and apparently from other comments posted here, not just my own personal experience - indicates otherwise.
Please do post or link to this data.
Other more knowledgeable FReepers, gently correct me if I am wrong.
When you go "long" on something, whether it be a particular stock or commodity, you buy it now in the belief that it will appreciate in value (rise in price). Then, sell. Going "short" on something is the opposite; you sell now in the belief that it will drop in value.
I bought gasoline today. I try to do this every couple months just to top off the tank. Some old guy with a new Mustang pulled in for a fillup and it was nearly a sad situation as he drove off slowly so as to not spill any out the exhaust like he wished he could do. I also had an oil change at a quick lube kind of place and they wanted about $10 a quart, which included labor.
I did read an interesting discussion of this phenomenon a year or so ago in the Wall Street Journal.
Their point was that, when the market price of gasoline (or any other commodity) goes up, that is, when the cost of replacing what’s in your storage tank goes up, then what’s already IN the tank appreciates in value - you wouldn’t sell something for less than it would cost you to replace it, would you?
I followed them so far, but then they went off on some tangent about how, when a market DROPS, well then, you’ve got to sell what’s in your storage tank for what you paid for it, or you’d lose money, right?
Bullshit...
Sorry to have to flag thackney to deal with this endless myth if he wishes.
Also, as harder numbers come in, we find that demand has been softening more than thought, for longer than thought:
Shifts in the relationship between weekly-based, monthly data, and annual data illustrate that it is important to understand the tradeoffs of each data series to better interpret the petroleum supply situation. Dependence on only one set of the available petroleum information could skew analysis, especially during recent years when oil markets have been extremely volatile. So, choosing whether to use the “good”, “better”, or “best” petroleum data depends on the objective of the analysis.
For example, while the weekly series provides timely estimates of product supplied, recent monthly reports have revised these early estimates downward. March 2008 data, released earlier this week, estimated total petroleum data demand at 19.7 million barrels per day, over 600 thousand barrels per day lower than the weekly estimate. Over 500 thousand barrels per day of this revision resulted from much higher monthly estimates of exports. The EIA does not collect export data. They are gathered by the U.S. Bureau of the Census on a monthly basis and are received by EIA approximately seven weeks after the close of the reporting month. The weekly estimates for exports are projections based on past monthly data. Because the export data are highly variable, especially when, as occurred in the first quarter of 2008, oil markets are tight, weekly model-based estimates often do not adequately capture their full magnitude.
See #45. Exports from the U.S., an indication of international demand, were much lower in March than initially thought.
It means, “oil better go up more, or I’m going to lose my shirt.”
All it will take is a word or two from the nuts in Iran or Venezuela or a rebel attack in Nigeria to put supply fears in the hearts of speculators. But wait! Aren’t we due for a refinery fire here in the US? The fire starters must be late for work. Maybe the unons will help them out.
That’s right. A lot of things could cut world production. Anything from a hurricane to a wild hair on some petit tyrant someplace could be a problem.
The chicken little crowd is too smart by half and is now losing money on their stupid bet that oil is running out of supply and that buying and holding futures is a safe bet. Even Soros has gone short according to Rush.
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