Posted on 08/21/2011 5:55:34 PM PDT by SeekAndFind
News reports continue to show the progressive demise of the Qaddafi regime in Libya.
Rebel forces have apparently taken more of the country’s oil refining (Zawiya) and processing infrastructure (Brega). Most observers give the Qaddafi regime limited time before a full regime change takes place in Libya. Watch what happens to oil prices if and when the Qaddafis lose and leave.
In short order, Libyan oil production will ramp up. As it does, oil prices in world markets will fall and oil futures markets will reflect the expected increase in production of oil from Libya. The key prices to watch are those trading in Europe, like Brent. US oil prices (WTI) are no longer the leading indicator of world prices intersecting with world supply/demand. Excess inventory at Cushing, OK is complicating the pricing structure. We expect oil prices to fall when highly desirable, sweet Libyan crude production is fully resumed and enters the pipeline. Maybe, they are going to fall by a lot. This will come as a much-needed boost to the US economy and to others in the world.
Remember: the oil price acts like a sales tax on consumption. To clarify this relationship we convert crude oil prices to gasoline prices and then estimate what a change in gas price will mean for the American consumer. Roughly, a penny drop in the gas price per gallon gives Americans 1.4 billion more dollars a year to spend on other than gasoline. That is a huge stimulant to the economy. The ratio is different in Europe because the gas taxes are so much higher there. Nevertheless, it is still significant.
(Excerpt) Read more at businessinsider.com ...
The Economy will soar to heights never seen in the History of what used to be the United States of America.
Everything will be peaches and cream by the time makes his State of the Union Campaign Speech to the Nation next January. He will then announce that Libya will become our number one Ally in the Region replacing Israel.
I’m sorry. I am confusing you with another player here. 2005 and 2006 could see the print coming. I don’t remember everything I said but it just looked bad all over.
Crude Oil WTI Oct 11 -0.36 82.05 82.27 83.35 81.57 00:17 Heating Oil Sep 11 -0.0411 2.8634 2.9055 2.9140 2.8634 00:17 Gasoline RBOB Sep 11 -0.0518 2.7894 2.8550 2.8560 2.7862 00:12' Natural Gas Sep 11 -0.056 3.884 3.893 3.897 3.879 00:07 Crude Oil Brent Oct 11 -2.53 106.09 106.89 108.67 106.01 00:17
What's not "true"? The markets are already recognising this development. If anyone except total jihadi bozos take over Libya, 1) Libyan crude will be lifted again w/in a month, or less, the facilities have not been damaged except incidentally, and 2) Brent will take a hit relative to WTI, likely for some time and some considerable number of dollars per barrel.
Not precisely nuclear physics, here, eh?
Good trading to you!
That’s what I thought but the Dems are about as trustworthy as Muslims when it comes to keeping promises!
Mel
However, being a trader, I look at things rather differently than non-traders.
Libyan crude does indeed flow to Europe. In the absence of Libyan crude, Euro refineries tend to run Brent, and some Urals, although -- Urals being generally sour -- this is less desirable.
No matter who ends up running Libya, that group/faction/whatever is going to have to produce and export in order to pay the bills.
And, like it or not, the WTI-Brent crude spread is going to come in (narrow from it's current $22-23 level) big time. In case you're curious, this spread, WTI-Brent, has historically run from +/- $2-3 dollars/bbl. It's now over $20/bbl.
You do the math. Not all that much difference in a barrel of Brent and a barrel of WTI. Certainly not $20 worth, eh?
Good trading to you!
Even jihadi bozos have to pay the bills, right?
The world price of crude should not be significantly affected by Qaddafi's elimination, overall, and in that sense ONLY, this is a non-event.
I don’t believe a word of this.
There isn’t enough spare European resources to manage an increase in Libya’s oil output. That’s assuming the rebels will even let them in the country.
That’s the only event that counts.
Oil controls civilization.
Oh, and one more thing.
The Brent spread normalizing . . . normal is about -$0.50. It ‘s not usually above WTI (where usually is defined as more or less never until this year).
Well, the bad news about that is the spread was $10 . . . in January. Before Libya was even on the radar screen.
I don’t daytrade but I follow the markets along with a great many people who do, and the WTI/Brent spread has not passed beneath my notice. I agree with your analysis, the primary result of bringing more Libyan oil to market will be to reduce the spread.
Good trading to you!
Right you are. So, only enter the trade to make 5-6-8 dollars, not the whole enchilada. The spread will not normalise to historical levels until such time as Cushing can be “unlandlocked” and crude can flow conveniently to the Gulf for export. The Keystone XL project is critical here (and, what else?, is being held up by the ecoturds and the Marxists in the State Dep’t).
Do you think Qadaffy Duck's gold would affect prices depending on how it might get released? Or is it not enough to affect gold prices globally?
I didn't mean "whatever" as an insult...if that's what you mean. I was flippant..though. Didn't mean it that way..
I think there are many indicators out there to follow....That's all.
Peace, Love...and Bobby Sherman.
Oh...and own some metals!!
IF, it's "us" they want to bail them out!
That said...I don't watch banking stocks.
I tend to trade energy and metals...
And some civilizations control their oil for the good of all , not glut of a few ( i.e. the Kurds are prospering at about the same rate we are not).
The is much more wrong with the world economy than Libya or it’s oil.
But changing attitudes about oil can help....
Sorry for the late response but when the week gets started, I just have time to ramble through. I don’t know what would come of that gold. I don’t know where it is either.
I told my boss that he was taking a huge risk when he dumped his entire 401k in gold futures. That was when it was at 900.
I don’t have any advice from here. Cheers!
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