Cramer says $125, Jim Jubak says $180!!!!!

[riskfreetrading]

Quote from 377OHMS:

I used to look for oil and remember the industry getting crushed in a 1981 oil glut. At that time oil prices increased to the point where it made economic sense to go find and produce oil. Eventually enough production capacity built up that prices crashed and many geotechnical firms went out of business including the one I worked for.

Yeah, we get screwed in the meantime but there is a self-corrective mechanism unless, of course, the demand-abatement part of that 1981 scenario is negated by the increasing demand of China and India. If so, we are screwed.

I paid 4.29 for diesel yesterday. I'm parking my truck and driving the Carrera for awhile lol.

Oil seems to have been a main influence in your life. Why you do not cycle or just walk?

 

[piezoe]

Quote from bob83:

wouldnt this be hedging a long position in the cash market? thats not really speculating at all, and the opposite of what everyone on ET does...

Bob, i hope i understand you correctly. If you are a producer (or major consumer) of commodities, then of course, for you, selling (or buying) forward contracts is a form of hedging against an adverse price move. You are locking in a price and hedging against a drop (rise) in price. This is the kind of thing that commodity producers and users, e.g., farmers, do regularly. For them, it is a form of speculation, since no one knows for certain what future prices will be.

But you are so right, ET futures traders don't want anything to do with the underlying commodity so they won't be hedging by actually using the cash market directly -- e.g., they won't actually be buying or selling a boatload of coffee beans and selling or buying a futures contract against the beans-- but regardless of the method they use to hedge, if they do, I think it will be the equivalent of hedging in the cash market. Or at least it better be, otherwise it's not going to be a very good hedge.

 

[Restricted]

Quote from Triple X:

Speculation is what is driving this, and the dollar collapse. The CEO of Exxon and Saudi Oil ministers have both blamed speculation for this runup. It is the hedgefunds and pension funds doing this.

There was an article in NY Times today about how speculation in Ag futures by big money is like a "tidal wave" and they are actually buying more contracts than there is physical product! Farmers are actually buying private insurance instead of using futures contracts to hedge. I think the same thing is happening here, big money is buying oil futures contracts.

Cramer says its not the hedgefunds. Cramer is never wrong.

 

[Trader5287]

Quote from Triple X:

Speculation is what is driving this, and the dollar collapse. The CEO of Exxon and Saudi Oil ministers have both blamed speculation for this runup. It is the hedgefunds and pension funds doing this.

There was an article in NY Times today about how speculation in Ag futures by big money is like a "tidal wave" and they are actually buying more contracts than there is physical product! Farmers are actually buying private insurance instead of using futures contracts to hedge. I think the same thing is happening here, big money is buying oil futures contracts.

Correct.

And intervention into the oil trading mechanism will come at a way lower level than 180$ imo. An oil trader here that tells you his livelihood can't be broken is a dreamer.

 

[ShoeshineBoy]

Quote from Triple X:

And so if I want to buy a long contract, and there are no sellers/shorts the market moves up until someone thinks it's overvalued

If you've got a bunch of longs and few shorts, the longs will be willing to pay any price (supposedly) and, as you stated, the shorts will be more likely to jump in as the price rises, right? And as the shorts sell, it adds more fuel to the cycle?

Is this the idea??

 

[ShoeshineBoy]

Quote from 377OHMS:

I used to look for oil and remember the industry getting crushed in a 1981 oil glut.

I cannot see a "glut":

The emerging and other economies are just growing too fast. Even if they slowed down to GDP growth just a few %/yr while we went slightly negative, we'd still have a net increasing demand. And with Australia, Mexico, Russia and Nigerian production decreasing for the next few years and Khurai not even coming online until next year, I just don't see how we could get a glut.

Mexico is extremely corrupt as is Nigeria - I don't see those changing until they're just plain desperate (maybe four years from now?).

Why do you think we'll get a significant oversupply?

 

[377OHMS]

Quote from riskfreetrading:

Oil seems to have been a main influence in your life. Why you do not cycle or just walk?

1 year in the biz doesn't constitute a "main influence". I'm an EE and take on an occasional diversion for a year or two.

I would cycle or walk if that was possible. I did a sabbatical at a hedge fund in Chicago and took the L and Metra. My vehicles sat in the garage. If I lived in the loop I'm not sure I would own a car but here in LA mass transit isn't an real option.

 

[Triple X]

Quote from ShoeshineBoy:

If you've got a bunch of longs and few shorts, the longs will be willing to pay any price (supposedly) and, as you stated, the shorts will be more likely to jump in as the price rises, right? And as the shorts sell, it adds more fuel to the cycle?

Is this the idea??

Yes, correct

 

[Triple X]

Kudlow tonight mentioned possible CFTC action in the Ag futures market, saying the level of speculation may be illegal. If this happens, they may target oil next.

 

[shortie]

oil price won't come down until clinton bombs iran