Posted on 05/14/2008 9:04:06 AM PDT by khnyny
The premise is not false.
THe top of the speculative market has not yet been reached.
bookmarked
I found the following quote in an article posted on FR.
Rather nicely dovetails with your article, doesn’t it?
“This is not anything new and it will not help ease oil prices,” said Ehsan ul-Haq, head of research at JBC Energy in Vienna, Austria. “The oil futures market is very strong, but the physical markets are not so strong.”
http://www.freerepublic.com/focus/f-news/2005158/posts
nailed it ... and in that orde as well
This only explains part of the problem. The international spec market in currencies is run b and for people like George Soros. Soros helped crash several Asian economies decades ago and is taking aim at ours, to make an unimaginable amount of money and destroy our Republic. Abetting him in this are many of the usual suspects- the NY media, large international financial houses which own hedge fuds themselves, pols who wish to turn instability into their own power. The dollar may have beeen overvalued anyway, especially against the yuan and the Euro, but you can bet that as soon as some international instability arises the value of the dollar will rise again.
Stockpiled inventories are increasing and we are now at 6% decrease in demand. Back in March it was only 3%.
The energy executives' prediction about the future price for crude oil had sound backing. Just a few days earlier, Lehman Brothers (LEH) investment bank had said that this current oil pricing boom was quickly coming to an end. Michael Waldron, the bank's chief oil strategist, was quoted in Britain's Daily Telegraph on Apr. 24 as saying: "[Oil supply] is outpacing demand growth." Waldron added, "Inventories have been building since the beginning of the year. The Saudi Khursaniya field has just opened, with 500,000 barrels a day of production, and the new Khurais field will start next year with a further 1.2 million b/d [barrels a day]."
Waldron's assertion rang true. In the U.S. alone, stockpiles of oil climbed by 11.9 million barrels in the month preceding the Energy Information Agency's (EIA) May 7 inventory report; they were up by nearly 33 million barrels since Jan. 1. At the same time, MasterCard's (MA) May 7 gasoline report showed that gas demand has fallen by 5.8%, while the government suggested that gasoline consumption might have fallen by slightly over 6%.
We do know that refineries in the U.S. again cut back their utilization to 85%. That's down from 89% a year ago, in a season when production is normally 95%, only because they're trying to draw down gasoline inventories to bid gasoline prices up. Yet despite the reduced refinery runs, the EIA said, the U.S. managed to put another 800,000 barrels of gasoline in stock. The American Petroleum Institute put the gas gain at 1.4 million barrels. The point is that neither organization is in disagreement that gasoline was added into our active stocks; it's just a question of exactly how much.
Yep. Inflation and devalued dollar are only part of the reason. Speculation appears to be the major factor because supply is going up, not down.
With oil over $100, economists would say that we should be drowning in the stuff as anyone with oil in the ground has every incentive to get it to market in a hurry before the party is over. That is not happening, though not for a lack of trying. Capital spending by the energy companies and national oil companies has been up massively over the last few years, yet we have little spare capacity and inventories are near five year lows. (check out http://www.eia.doe.gov/emeu/steo/pub/gifs/Fig11.gif).
Everyone seems to be looking for a conspiracy theory or complicated answer. I don’t believe its that complicated. There are a fixed amount of barrels in the ground and after you extract about half of them, it gets harder and harder to get the next half. Geology beats economics in this case.
Bingo!! The ones pulling this stunt needs exposure. This restraint Ed Wallace is calling for implies gov't regulation, throttling small time investors such as myself.
Nonetheless, Ed Wallace bodyslams the rhetoric concerning outrageous crude oil pricing!
Another perspective on Iran and their oil I thought you might be interested in reading.
MARKET WATCH: Energy prices rebound amid talk of production cuts
http://www.ogj.com/display_article/328719/7/ONART/none/GenIn/1/MARKET-WATCH:-Energy-prices-rebound-amid-talk-of-production-cuts/
Olivier Jakob at Petromatrix, Zug, Switzerland, noted, “Iran has not reduced production even in times of OPEC quota reduction and with the [United Nations] sanctions [stemming from the dispute over Iran’s nuclear program] it would make little sense for them to lose the little market share they have been able to preserve.” Jakob said, “It is true, however, that they have about 25-30 million bbl of unsold oil sitting afloat on tankers, and talking the market up is good salesmanship to push the potential buyers to finally come to the table.”
“Looking at every cause except the True Cause.”
It goes with another rule of thumb that I have mentioned before: “Before they try the one thing that will work, they’ve got to try every other possible solution that won’t work, and observe that it doesn’t work.”
I predict that the top of the speculative market will amazingly happen right around the first Tuesday of November or shortly thereafter.
ping
That's changing, bigtime, right now.
Oz is seeing some rain, not a lot but perhaps enough. Ukraine and Kazakhstan crops look very good. Canada won't have another fluky off year like last year, and we've planted heavily.
Short of ferocious summer hailstorms over large areas, wheat will be a dollar lower, maybe two, before it'll be a dollar higher, take it to the bank.
Sheesh.
Say, btw Hack, do you have an estimate on the time frame involved to get the ex-cap figure back over 3 MMbbl/day?
“If they are cutting production, what are they storing on the tankers?”
Illegal Aliens?
The money supply aggregate that the Fed actually controls through reserve restrictions is M1, currency plus checking account balances.
M1 hasn't moved an inch in 3 straight years.
“The Fed has been increasing the money supply thus causing the dollar to devalue and inflation.”
We have a winner.
Environmentalism has driven refinery construction out of the country and locked up resources. Demand is way up in the developing world as we hit Hubbert’s peak. Speculation in the commodities market is driving up prices. But these aren’t new. What is new is the collapsing dollar. And unless Congress addresses our trade and budget deficits the problem will continue.
I read that question to be "Can you predict the future oil demand and supply levels?"
The answer is "No, I cannot."
Too many variables to answer. I could talk about what is predicted to come on-line, but how much oil will Asia keep using at what price? How long will China keep subsidizing their consumption?
Excellent post. Only significant factor left out is the lower dollar, which was beyond your scope here. The inelasticity of oil is what is driving prices now, during this worldwide economic boom.
If oil production had also increased at the same pace as the increase in the money supply the price of oil would be $50.00 a barrel..”
Exactly. The idea that speculators are somehow driving up the price of oil is ridiculous. As usual the our government is solely to blame for high oil prices, not OPEC, and not speculators.
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