Oil Collapse Soon On Dollar Stabilization And Demand Destruction?

dsq · Jun 3, 2008

The dollar started to stabilize at about the same time oil hit 100$.In the last 2 months gas consumption has declined 5%.
Yet oil has rallied another 35 pts!

Much of the rally in oil from 30-100 was due to the dollar decline.
I am thinking that the stabilized currency and demand situation is going to hit oil pretty soon.

dsq · Jun 3, 2008

I see an air pocket down to $100 in the next 30 days...then down to 70-80 before labor day.
Dont know how long the price will stay down but once it crashes through 100 i dont think it will trade above 100 for a few yrs.

makloda · Jun 3, 2008

Quote from dsq:
In the last 2 months gas consumption has declined 5%.

Unfortunately the US only accounts for around 20% of total global consumption. 5% less demand in the US means a total of 1% in lower demand that became 'available' on the supply side and was easily gobbled up by emerging markets.

PaulRon · Jun 3, 2008

Quote from dsq:

I see an air pocket down to $100 in the next 30 days...then down to 70-80 before labor day.
Dont know how long the price will stay down but once it crashes through 100 i dont think it will trade above 100 for a few yrs.

supply and demand is diverging, not converging... so your mid to long term scenario is impossible

kalzayani · Jun 3, 2008

hi
I do USO...this is what I got for a few days

USO Shrt Long _________ Profit Range
Today 117.26 94.65 _________ 102.49 108.63
T+1 117.31 94.69 _________ 102.53 108.68
T+2 117.36 94.74 _________ 102.57 108.73
T+3 117.41 94.78 _________ 102.62 108.78
T+4 117.46 94.83 _________ 102.66 108.82
T+5 117.50 94.87 _________ 102.70 108.87

95 area is not a bad buy for a few days

dsq · Jun 3, 2008

Quote from makloda:

Unfortunately the US only accounts for around 20% of total global consumption. 5% less demand in the US means a total of 1% in lower demand that became 'available' on the supply side and was easily gobbled up by emerging markets.

yeah, ive been pondering that als

ur oil demand is being overtaken by chindia.I think usa influence will be of less import in this new century as well.

But if we sneeze,economically im sure the rest of the world will be affected to some extent.

One theory going is that high oil could ruin china as it has to transport all its junk to the usa via oil propelled transit.Comes a point where it is cheaper to make the stuff here than to import from across the earth.

Anyway the currency aspect is very real and i think it accounts for 30-50% of oil surge price.

Mercor · Jun 3, 2008

Quote from dsq:

One theory going is that high oil could ruin china as it has to transport all its junk to the usa via oil propelled transit.Comes a point where it is cheaper to make the stuff here than to import from across the earth.

This is already happening. Non-union manufacturering in the USA is cheaper in many areas.

Also We only assume economics effect the US market....High fuel costs also limit consumer growth in china....

gobar · Jun 3, 2008

dont jump so fast on oil...

june 1st kicks the hurricane season and any news of a hurricane can easily send oil $5 or more...

1 good play might be sell USO buy UNG

natural gas will pass $15 this season...

ByLoSellHi · Jun 3, 2008

Quote from makloda:

Unfortunately the US only accounts for around 20% of total global consumption. 5% less demand in the US means a total of 1% in lower demand that became 'available' on the supply side and was easily gobbled up by emerging markets.

Only 20%?

The U.S. is 2% of the world's population.

That one-fifth share of the consumption pie is a pretty large one - larger than any other country - even those, such as China, 10x larger.

World oil consumption has grown at 3% a year, yet the price of crude oil has been manipulated up 100% in the last 11 months.

makloda · Jun 3, 2008

Quote from ByLoSellHi:
Only 20%?

'Only' as in 'The US' share of global consumption used to be a lot higher'.

If US demand dropped by 10% over three years (which would be a lot) that would - all other things equal & very hypothetically - only have a 2% net effect on global supply/demand. 20% less would mean a 4% net effect etc.

Oil prices will likely top out at a point where global demand is destroyed, where ever that is. Global consumption != US consumption.