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Crude Oil
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Quote from michaelscott:
The question of "fear" emerges. Is the fear of the Iranians driving oil? The answer is no. During the 80s, Iran and Iraq were in a constant war that killed over 1 million people. We had the Soviets pointing nuclear missiles at us and children hiding under desks in missile drills. Yet, the price of oil went down.
Supply and demand drive oil prices, not fear. There are more people on this earth then ever before and foreign countries are starting to come out of their shell. Communism is no more and the world moves forward. The demand for oil is driving the price. [/B]
I disagree, last summer clearly pointed out that fear of reduced supply most definitely drives the futures. Watching the Nymex live data in reaction to news will also reveal this. Why look at 1980 to justify what will happen today? We wouldn't pull up a 27 year chart to put on a short term trade with a stock, why do it with CL?
Global opinion has changed drastically since the '80's. I understand you are stating your opinion for a bull oil market and I agree that CL is still in bull mode, but geo-political fears and hurricanes cannot be discounted in the equation, a lack or abundance of either the former or latter will have a meaningful effect.
Remember the false report of an attack on Iran several weeks ago? The fastest price increase ever seen on the Nymex ensued...that's fear.
Quote from OldTrader:
Maybe you guys should take a look at the Commitment of Traders report. Record commercial shorts, record speculator longs....not exactly a prescription for higher prices. Then there is the record inventory at Cushing, OK.
OldTrader
What I think has happened is that the NYMEX WTI contract has gotten out of synch with the global oil market, so for the moment Brent seems to be a better barometer for oil worldwide than CL due to the glut at Cushing. Brent is trading around 67.20 at the moment and WTI is 64.40, and was trading at a premium of more than 6 dollars in the last week or two. The Dubai Mercantile Exchange is getting ready to list an Oman crude oil contract that will be a sour crude variety and should take away some of the volume of the other two benchmarks that have been in competition with basically only one another up to this point. The ICE is also listing a Middle East sour that begins trading on 5/21. The pricing of the sour contracts and that of Brent should be taken into consideration when looking at the price of oil, as it is arguable that the CL contract is now being affected more by particulars of the delivery point than by the underlying fundamentals of the commodity.
I am not a conspiracy theorist, and Matthew Simmons and other peak oil alarmists have little credibility this early on in my opinion, but the fact is that we produce and consume damn close to 85 million barrels a day, and while demand keeps increasing supply does not. Rig counts may be high, but those rigs are sucking less and less oil out of the ground, and it is only with new technologies that we are able to keep up current supply levels. There may be a pullback to the mid to low 50's, but barring a total economic meltdown I don't think we'll go much lower and if we do get that low I would be buying all of the outer year futures and/or options that I could.
Logic says:
for something to be not true...all you have to do is show that one time....
now this Oil correlation with war mamboo Jamobo
is shown to be not true...not once , 2 times...maybe 100 times..
so should it work this time?
This is when Economics + Political science was tought togeather...
this whole thing is BS
Supply and demand....Which is really the price
so price commands to where it should be...Maybe give that a try.
not some politicians that put this text books and Newspapers.
GL
for something to be not true...all you have to do is show that one time....
now this Oil correlation with war mamboo Jamobo
is shown to be not true...not once , 2 times...maybe 100 times..
so should it work this time?
This is when Economics + Political science was tought togeather...
this whole thing is BS
Supply and demand....Which is really the price
so price commands to where it should be...Maybe give that a try.
not some politicians that put this text books and Newspapers.
GL
Look at it this way for a change
U Like tomatoes...right?...
say Tomatoes is at $1/lb
a year latter Tomatoes goes to 2$
demand is still the same from last year
so price depends on demand?
Demand depends on price?...
I say niether...Price depends on price
people find other ways which makes demand go down...and so does the price.
in all cases price find thier way and Traders do not.
"Nothing depends on something else"
U Like tomatoes...right?...
say Tomatoes is at $1/lb
a year latter Tomatoes goes to 2$
demand is still the same from last year
so price depends on demand?
Demand depends on price?...
I say niether...Price depends on price
people find other ways which makes demand go down...and so does the price.
in all cases price find thier way and Traders do not.
"Nothing depends on something else"
Tomatoes are much more price elastic than energy; there are other vegetables that can be substituted for tomatoes if the price gets too high. Conversely there are few alternatives to oil for motor fuel at this point, and the global economy is largely dependent on petroleum to fuel its growth...at least for now, which makes petroleum much more price inelastic. Eventually there would be a price which would cause significant demand destruction, but it doesn't appear that we haven't gotten there quite yet...
As I pointed out earlier, oil has been in a macro bull market since the late 90s. The recession and the 9/11 attacks failed to bring the oil market down.
When something is in emotion, it usually stays in motion until it hits a wall. If the wall isnt strong enough to stop it then it goes right through it.
Nothing seems to stop oil from advancing. It will keep advancing until the target is reached. There will be ups and downs. There will be events that will both encourage and discourage it such as recession and other events.
However, I have confidence that we will reach the target before an oil bear sets in.
When something is in emotion, it usually stays in motion until it hits a wall. If the wall isnt strong enough to stop it then it goes right through it.
Nothing seems to stop oil from advancing. It will keep advancing until the target is reached. There will be ups and downs. There will be events that will both encourage and discourage it such as recession and other events.
However, I have confidence that we will reach the target before an oil bear sets in.
Commodities such as oils are cyclicals. Oil can someday go to $200 but doesn't mean it won't first touch $20.
Quote from michaelscott:
As I pointed out earlier, oil has been in a macro bull market since the late 90s. The recession and the 9/11 attacks failed to bring the oil market down.
When something is in emotion, it usually stays in motion until it hits a wall. If the wall isnt strong enough to stop it then it goes right through it.
Nothing seems to stop oil from advancing. It will keep advancing until the target is reached. There will be ups and downs. There will be events that will both encourage and discourage it such as recession and other events.
However, I have confidence that we will reach the target before an oil bear sets in.