Oil Getting Crushed...

Quote from Babak:

Arnie, the points brought up previously deal with this question: what if we suddenly find ourselves in a situation where China's demand falls off? Even a small decline in China will have a huge effect on world demand/supply. No one knows if/when this may happen. But no one can dispute that it is a major factor. Just as TBP said, its about supply/demand.
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I'm sure T Boone was'nt talking up his position. :)

Crude inventories are at an all time high going into next few months which have less demand. It's the undercapacity in refining ( seems all refineries are being shut down for some reason or another) that's leading to the perception of a shortage. Asians are bringing online some refineries, so at the macro level we are inside of a peak price band. Question is are we at the top or bottom of the band.
 
Quote from mhashe:

I'm sure T Boone was'nt talking up his position. :)

Crude inventories are at an all time high going into next few months which have less demand. It's the undercapacity in refining ( seems all refineries are being shut down for some reason or another) that's leading to the perception of a shortage. Asians are bringing online some refineries, so at the macro level we are inside of a peak price band. Question is are we at the top or bottom of the band.
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Agreed.
Meanwhile, Katrina has been upgraded to Category 3 with winds at 115 MPH, and is now tracking West, but looking to turn more North overnight towards New Orleans.

Landfall expected Monday as a Category 4.
Wow, New Orleans could get wiped-out at that rate.

http://aolsvc.weather.aol.com/maps.adp?type=national&id=AOL_TROP_ATL_12_projected_path_440x297
 
Quote from mhashe:

I'm sure T Boone was'nt talking up his position. :)

Crude inventories are at an all time high going into next few months which have less demand. It's the undercapacity in refining ( seems all refineries are being shut down for some reason or another) that's leading to the perception of a shortage. Asians are bringing online some refineries, so at the macro level we are inside of a peak price band. Question is are we at the top or bottom of the band.
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I agree.

It's quite unbelievable how many people will simply REFUSE to look at the FACTS. Just the facts please!

1/ US 2005 demand FLAT (+0.3%)
Latest report by American Petroleum Institute (26-Jul-05):
"Total domestic deliveries, a key measure of demand, rose just 0.3% over the level for January through June of the year before, compared with an annual 3.5% increase in 2004. As a result of slower growth across all major refined petroleum products, this year's first half showed the weakest results for a six-month period since the first half of 2002.

2/ China demand DOWN (-1.2%)
China oil imports down -1.2% YoY. VLCC supertanker shipping rates to Asia plunging (see previous post of mine)

3/ Commercial oil stocks at 5yr HIGHS (DOUBLE from 5yr avg) and US government Strategic Petroleum Reserve full to the MAX of its capacity (finished filling it last week). Gasoline stocks are -1% from 5yr average.

4/ Capital is pouring into this market, both in futures and in physical market (hoarding oil) for over 2yr. Big investors invest in "commodity index funds". Uptrend begets more and more buying. Now oil speculation is within reach of retail public: Oil ETF has already made its debute in UK and more are to follow.

I've looked at this from many different angles and as I wrote before, all facts point to a speculative bubble, SHORT TERM.

If "Peak Oil", or "Saudi oil production is drying up" have merit, I do not know. But there there is some evidence (ref: article by Yergin in WashingtonPost, he's talking about 20% rise in MBpd supply), suggesting that on the medium-term (2-5yr) the supply-side is in better condition than most realise.

My opinion is that $60+ oil was forced upon the world by BigOil / Bush-istas.

I like to keep things SIMPLE: "just follow the money". Who has made it like bandits during the last 5yr? Big Oil and Defense industry.

Now the SPR is 100% full, who knows, they might invade Iran, to keep the oil bull going.

A sad situation indeed. As sad as people hoping/praying for a physical catastrophe (typhoon), if it's going to make them profits. Or those people asking which stocks would benefit from the Tsunami event some months ago.
 
It really doesn’t matter if people are bullish on oil as a result of high gas prices and an under-supply of refineries. The new demand for raw energy by the Asians is real and consistently underestimated. Their ability to build refineries will be underestimated as well, imo.

In addition to this enormous new demand for light sweet crude, it causes all sorts of old fashioned geopolitical problems as energy consumers of different nation states compete for the same sources of energy. This all causes bullish volatility in oil.

And all the news releases pertaining to some terrorist threat in Saudi Arabia, news about Chavez saying he was "kidding" about not selling his oil to America, or him telling the Americans to “suck on it,” or some hurricane happening in the Gulf of Mexico, only causes volatility in the bullish direction long term. Because all of it has to do with interrupting and interfering with supply, which is supplying this “surprising” and “startling” rise in global demand for energy.

Of course, as the price of oil goes up, it will force innovation in the industries associated with energy production (oil refinery/new energy technologies) and energy consumption (conservation technologies.) But there will be a lag in all of this.

I would look at places like this:

http://www.intertanko.com/

In particular:

http://www.intertanko.com/tankernews/artikkel.asp?id=5828

than the mainstream media.
 
the breed of cunt on this board is unbelievable. Yes the recent rise in Oil has everything to do with Bush and BigOil and nothing to do with growing world wide consumption and a limited supply of non-renewable resources which is quickly being depleted.
 
Quote from The Kin:

the breed of cunt on this board is unbelievable. Yes the recent rise in Oil has everything to do with Bush and BigOil and nothing to do with growing world wide consumption and a limited supply of non-renewable resources which is quickly being depleted.
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Man, talk about exposing your ignorance. :D
 
I didn't see anyone of those posters, who claim that oil can only go higher, attempt to address the facts of short-term (next 6-12 months) and medium-term (5yr) supply-demand.

The reality is that, the huge run-up in oil prices over last 2yr was mostly due to big stockpiling of reserves,by EVERYONE AT THE SAME TIME.

As I wrote earlier, demand spiked last 2yr due to the Bushistas refilling 700mil barrel SPR to the max, at the same time that US/EU commercials were doubling their own stocks (600mil bar) and specs hoarding. And Asian demand rising between 2000 and 2004 (NOT in 2005 anymore)

Anyway, right now, even if a natural disaster (e.g. Katrina) temporarily affects oil operations (remember it'd only be a US disruption), any responsible US government would release stocks from now 100% full 700Mbar SPR, to soften the blow on the real economy. I'm not sure even the Bush-istas can avoid doing so, even with all the brainwashing power they have over the american sheeple.

Meanwhile, OPEC says crude and distillate stockpiles are ABOVE SEVEN (7) YEAR AVERAGE. And exploring options to moderate them.

OPEC to explore options to reduce crude prices in September meeting --

PWR-OIL-OPEC-SHEIKH AHMAD
OPEC to explore options to reduce crude prices in September meeting --

minister KUWAIT, Aug 28 (KUNA) -- Minister of Energy and OPEC President Sheikh Ahmad Al-Fahad Al-Sabah said on Sunday the cartel will be exploring options to keep crude prices at moderate levels during its meeting in September. "We are becoming increasingly concerned at the continuing high level of oil prices, which does not properly reflect the underlying fundamentals of the market," he said in a statement issued here today.

The leading official asserted that "oil resources and supplies are plentiful and OPEC has been producing more than the call on OPEC crude by 1.5 million BPD in the 3Q-05," noting that current supply exceeds demand leading to buildup in stocks. Stocks of crude and distillates are above their seven year average.

Existing spare capacity in OPEC countries, together with new capacity additions early next year, will be more than adequate to cover demand growth throughout the winter this year and in 2006. Much of the new capacity to be added from OPEC and Non OPEC is in terms of lighter crudes which is needed by the market.

Furthermore, demand is starting to slow down as a result of high prices.

In view of these fundamentals, one expects to witness some price moderation rather than further rises, Shiekh Ahmad said.

To address the many complex issues involved, OPEC will be exploring various options for the September meeting which will hopefully contribute to moderate prices.

(end)
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Quote from mtzianos:


I like to keep things SIMPLE: "just follow the money". Who has made it like bandits during the last 5yr? Big Oil and Defense industry.
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Almost right. If you follow the money to its final destination it would be OPEC and non-OPEC countries. A lot of very happy Sheikhs and Mullahs.
 
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