Oil must fall to $28
- Thread starter silk
- Start date
Quote from asap:
thats why they're planning bombing iran. to keep oil price on track.
Of course, but it's Iran's fault for stealing the USA's oil and burying it underground.
The economy will get out of a recession/slowdown the same way it always does, which is by markets clearing excess inventory via lower prices in slump sectors, and ongoing growth via the inherent year on year value-creation caused by entrepreneurial activity across all the other sectors of the economy (those that were not artificially propped up by cheap money & speculation).
As for commodity prices, a slowdown/recession would certainly be expected to put pressure on them. However, there is an additional factor in that commodities in general are in a secular bull market. Long-term supply is still lacking in almost everything except gold, after 2 decades of declining spending. This should IMO put a floor on any price decline. Rather than trading in the expectation of a huge crash, one might rather trade expecting something of a correction, which should then be bought rather than shorted. Try to envisage where the price of oil and other commodities is likely to be in 2009, 2010, 2011, once the slowdown/recession has been and gone.
In the same way that 1980-2000 had several bear markets in stocks, but none that lasted very long, and none that did not ultimately offer fantastic buying opportunitites for the longer-term, I think commodities will be the same from 2000 to quite a bit into the future. We had a nasty recession in the early 1990s, and what happened to stocks? They went down a tad and then soared higher as soon as the problems had gone. Many people expected stocks to crash in 1990, 1991, but apart from sectoral slumps in finance and real estate companies, there really wasn't much of a decline.
IMO commodities will be the same this year. With oil I could see the lows being taken out, and it maybe trading into the mid 40s. But I would be licking my chops if that happens, because ultimately I think it is going up to $100. It would really have to start trading $38, 37, before I'd view it as fundamentally rejecting the bull hypothesis.
The only slight nagging doubt is that no one here believes your prediction. So hmm, maybe we do have more downside in 2007.
What a load of BULLSH!T , trade and invest what you see, not what you think !!! 
SUPPLY AND DEMAND
More emphasis on DEMAND
there's a SHITLOAD of DEMAND
the world runs on oil. Everything you own, everything you consume had something to do with oil, between transportation to manufacturing to whatever.... the world is becoming MORE industrialized especially China/India, as well we're not reducing our emissions or consumption, infact its still increasing.....
Why would oil drop?! Makes no sense at a fundamental level. I understand prices are interconnected... but if the price of gas drops significantly people aren't going to be filling up their cars more.... they still have the same size tanks....
the world is run by oil......
Expect 70+ , this was just a downswing. There's a lack of easily accesable (or cheap to produce) oil. ALOT of oil is no longer profitable to extract at $28. Companys wont run at a loss. It'll go up..
More emphasis on DEMAND
there's a SHITLOAD of DEMAND
the world runs on oil. Everything you own, everything you consume had something to do with oil, between transportation to manufacturing to whatever.... the world is becoming MORE industrialized especially China/India, as well we're not reducing our emissions or consumption, infact its still increasing.....
Why would oil drop?! Makes no sense at a fundamental level. I understand prices are interconnected... but if the price of gas drops significantly people aren't going to be filling up their cars more.... they still have the same size tanks....
the world is run by oil......
Expect 70+ , this was just a downswing. There's a lack of easily accesable (or cheap to produce) oil. ALOT of oil is no longer profitable to extract at $28. Companys wont run at a loss. It'll go up..
$25 oil would allow the world to slip past the current crisis though.. and were prices that low for a long enough time Hugo Chavez' regime would fall through it's arse and hang itself... maybe Putin too, could be a good thing for everybody...
it'd be hard to get everyone on the same page if you wanted to topple unliked leaders by deflating the price of crude... wouldn't make any sense... no gov't has enough clout to keep OPEC in check or to ask many oil producing countries to run at a loss just to get rid of a couple of unliked rulers. Makes no sense....
WTF happened to the "peak oil" crowd?
Their time would be better spent tracking how Bush Jr. makes his money out of office. High oil prices were Bush's parting gift to his past and future benefactors.
the financial payback for a Jr. lackey can be very lucrative.
Their time would be better spent tracking how Bush Jr. makes his money out of office. High oil prices were Bush's parting gift to his past and future benefactors.
the financial payback for a Jr. lackey can be very lucrative.
I think some of you didnt notice the date on page 1. This thread is like almost 2 years old. All those conversations took place in early 2007. And good call to the guy that said he thought oil would hit 150 before it hit 28.