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The Surf Report
- Thread starter marketsurfer
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we were gently stopped out, not slammed this morning on the DJIA longs. we are back long the DJIA after 2 entry attempts at the channel break. LONG DJIA. Short OIL
surfer
surfer
I'm just trying to point out you look foolish by quoting platitudes. The trend could be up or down depending on your timeframe, and you only say "I told you so" after surf's trades are down. Very lame. (i.e. you say "it's a bull market" yet you say "short djia" so which is it? or is it either one (the other one) depending on whether surf loses)Quote from Wittgenstein:
Look at the trend, so you don't have to ask.
closing DJIA longs here at 10070 , taking profits
FLAT DJIA
surfer
FLAT DJIA
surfer
Quote from patsup:
I'm just trying to point out you look foolish by quoting platitudes. The trend could be up or down depending on your timeframe, and you only say "I told you so" after surf's trades are down. Very lame. (i.e. you say "it's a bull market" yet you say "short djia" so which is it? or is it either one (the other one) depending on whether surf loses)
Ditto
greenspan's talk on oil
holding OIL short here
U.S. Fed Chairman Greenspan Speaks on Oil Market (Text)
2004-10-15 12:00 (New York)
Oct. 15 (Bloomberg) -- The following is the text of Federal
Reserve Chairman Alan Greenspan's speech on the oil market to the
National Italian American Foundation in Washington:
Owing to the current turmoil in oil markets, a number of
analysts have raised the specter of the world soon running out of
oil. This concern emerges periodically in large measure because
of the inherent uncertainty of estimates of worldwide reserves.
Such episodes of heightened anxiety about pending depletion date
back a century and more. But, unlike past concerns, the current
situation reflects an increasing fear that existing reserves and
productive crude oil capacity have become subject to potential
geopolitical adversity. These anxieties patently are not
frivolous given the stark realities evident in many areas of the
world.
While there are concerns of seeming inadequate levels of
investment to meet expected rising world demand for oil over
coming decades, technology, given a more supportive environment,
is likely to ensure the needed supplies, at least for a very long
while.
Notwithstanding the recent paucity of discoveries of new
major oil fields, innovation has proved adequate to meet ever-
rising demands for oil. Increasingly sophisticated techniques
have facilitated far deeper drilling of promising fields,
especially offshore, and have significantly increased the average
proportion of oil reserves eventually brought to the surface.
During the past decade, despite more than 250 billion barrels of
oil extracted worldwide, net proved reserves rose in excess of
100 billion barrels. That is, gross additions to reserves have
significantly exceeded the extraction of oil the reserves
replaced. Indeed, in fields where, two decades ago, roughly one-
third of the oil in place ultimately could be extracted, almost
half appears to be recoverable today. I exclude from these
calculations the reported vast reserves of so-called
unconventional oils such as Canadian tar sands and Venezuelan
heavy oil.
Gains in proved reserves have been concentrated among OPEC
members, though proved reserves in the United States, for the
most part offshore, apparently have risen slightly during the
past five years. The uptrend in world proved reserves is likely
to continue at least for awhile. Oil service firms still report
significant involvement in reservoir extension and enhancement.
Nonetheless, growing uncertainties about the long-term security
of world oil production, especially in the Middle East, have been
pressing oil prices sharply higher.
These heightened worries about the reliability of supply
have led to a pronounced increase in the demand to hold larger
precautionary inventories of oil. In addition to the ongoing
endeavors of the oil industry to build inventories, demand from
investors who have accumulated large net long positions in
distant oil futures and options is expanding once again. Such
speculative positions are claims against future oil holdings of
oil firms$10
per barrel since late August, to an exceptionally high $17 a
barrel. While spot prices for WTI soared in recent weeks to meet
the rising demand for light products, prices of heavier crudes
lagged.
This temporary partial fragmentation of the crude oil market
has clearly pushed gasoline prices higher than would have been
the case were all crudes available to supply the demand for
lighter grades of oil products. Moreover, gasoline prices are no
longer buffered against increasing crude oil costs as they were
during the summer surge in crude oil prices. Earlier refinery
capacity shortages had augmented gasoline refinery-marketing
margins by 20 to 30 cents per gallon. But those elevated margins
were quickly eroded by competition, thus allowing gasoline prices
to actually fall during the summer months even as crude oil
prices remained firm. That cushion no longer exists. Refinery-
marketing margins are back to normal and, hence, future gasoline
and home heating oil prices will likely mirror changes in costs
of light crude oil.
With increasing investment in upgrading capacity at
refineries, the short-term refinery problem will be resolved.
More worrisome are the longer-term uncertainties that in recent
years have been boosting prices in distant futures markets for
oil.
Between 1990 and 2000, although spot crude oil prices ranged
between $11 and $40 per barrel for WTI crude, distant futures
exhibited little variation around $20 per barrel. The presumption
was that temporary increases in demand or shortfalls of supply
would lead producers, with sufficient time to seek, discover,
drill, and lift oil, or expand reservoir recovery from existing
fields, to raise output by enough to eventually cause prices to
fall back to the presumed long-term marginal cost of extracting
oil. Even an increasingly inhospitable and costly exploratory
environment -- an environment that reflects more than a century
of draining the more immediately accessible sources of crude oil
-- did not seem to weigh significantly on distant price
prospects.
Such long-term price tranquility has faded dramatically over
the past four years. Prices for delivery in 2010 of light, low-
sulphur crude rose to more than $35 per barrel when spot prices
touched near $49 per barrel in late August. Rising geopolitical
concerns about insecure reserves and the lack of investment to
exploit them appear to be the key sources of upward pressure on
distant future prices. However, the most recent runup in spot
prices to nearly $55 per barrel, attributed largely to the
destructive effects of Hurricane Ivan, left the price for
delivery in 2010 barely above its August high. This suggests that
part of the recent rise in spot prices is expected to wash out
over the longer run.
Should future balances between supply and demand remain
precarious, incentives for oil consumers in developed countries
to decrease the oil intensity of their economies will doubtless
continue. Presumably, similar developments will emerge in the
large oil-consuming developing economies.
Elevated long-term oil futures prices, if sustained at
current levels or higher, would no doubt alter the extent of, and
manner in which, the world consumes oil. Much of the capital
infrastructure of the United States and elsewhere was built in
anticipation of lower real oil prices than currently prevail or
are anticipated for the future. Unless oil prices fall back, some
of the more oil-intensive parts of our capital stock would lose
part of their competitive edge and presumably be displaced, as
was the case following the price increases of the late 1970s.
Those prices reduced the subsequent oil intensity of the U.S.
economy by almost half. Much of the oil displacement occurred by
1985, within a few years of the peak in the real price of oil.
Progress in reducing oil intensity has continued since then, but
at a lessened pace.
The extraordinary uncertainties about oil prices of late are
reminiscent of the early years of oil development. Over the past
few decades, crude oil prices have been determined largely by
international market participants, especially OPEC. But that was
not always the case.
In the early twentieth century, pricing power was firmly in
the hands of Americans, predominately John D. Rockefeller and
Standard Oil. Reportedly appalled by the volatility of crude oil
prices in the early years of the petroleum industry, Rockefeller
endeavored with some success to control those prices. After the
breakup of Standard Oil in 1911, pricing power remained with the
United States -- first with the U.S. oil companies and later with
the Texas Railroad Commission, which raised allowable output to
suppress price spikes and cut output to prevent sharp price
declines. Indeed, as late as 1952, U.S. crude oil production (44
percent of which was in Texas) still accounted for more than half
of the world total. However, that historical role came to an end
in 1971, when excess crude oil capacity in the United States was
finally
EDITED for length restrictions
holding OIL short here
U.S. Fed Chairman Greenspan Speaks on Oil Market (Text)
2004-10-15 12:00 (New York)
Oct. 15 (Bloomberg) -- The following is the text of Federal
Reserve Chairman Alan Greenspan's speech on the oil market to the
National Italian American Foundation in Washington:
Owing to the current turmoil in oil markets, a number of
analysts have raised the specter of the world soon running out of
oil. This concern emerges periodically in large measure because
of the inherent uncertainty of estimates of worldwide reserves.
Such episodes of heightened anxiety about pending depletion date
back a century and more. But, unlike past concerns, the current
situation reflects an increasing fear that existing reserves and
productive crude oil capacity have become subject to potential
geopolitical adversity. These anxieties patently are not
frivolous given the stark realities evident in many areas of the
world.
While there are concerns of seeming inadequate levels of
investment to meet expected rising world demand for oil over
coming decades, technology, given a more supportive environment,
is likely to ensure the needed supplies, at least for a very long
while.
Notwithstanding the recent paucity of discoveries of new
major oil fields, innovation has proved adequate to meet ever-
rising demands for oil. Increasingly sophisticated techniques
have facilitated far deeper drilling of promising fields,
especially offshore, and have significantly increased the average
proportion of oil reserves eventually brought to the surface.
During the past decade, despite more than 250 billion barrels of
oil extracted worldwide, net proved reserves rose in excess of
100 billion barrels. That is, gross additions to reserves have
significantly exceeded the extraction of oil the reserves
replaced. Indeed, in fields where, two decades ago, roughly one-
third of the oil in place ultimately could be extracted, almost
half appears to be recoverable today. I exclude from these
calculations the reported vast reserves of so-called
unconventional oils such as Canadian tar sands and Venezuelan
heavy oil.
Gains in proved reserves have been concentrated among OPEC
members, though proved reserves in the United States, for the
most part offshore, apparently have risen slightly during the
past five years. The uptrend in world proved reserves is likely
to continue at least for awhile. Oil service firms still report
significant involvement in reservoir extension and enhancement.
Nonetheless, growing uncertainties about the long-term security
of world oil production, especially in the Middle East, have been
pressing oil prices sharply higher.
These heightened worries about the reliability of supply
have led to a pronounced increase in the demand to hold larger
precautionary inventories of oil. In addition to the ongoing
endeavors of the oil industry to build inventories, demand from
investors who have accumulated large net long positions in
distant oil futures and options is expanding once again. Such
speculative positions are claims against future oil holdings of
oil firms$10
per barrel since late August, to an exceptionally high $17 a
barrel. While spot prices for WTI soared in recent weeks to meet
the rising demand for light products, prices of heavier crudes
lagged.
This temporary partial fragmentation of the crude oil market
has clearly pushed gasoline prices higher than would have been
the case were all crudes available to supply the demand for
lighter grades of oil products. Moreover, gasoline prices are no
longer buffered against increasing crude oil costs as they were
during the summer surge in crude oil prices. Earlier refinery
capacity shortages had augmented gasoline refinery-marketing
margins by 20 to 30 cents per gallon. But those elevated margins
were quickly eroded by competition, thus allowing gasoline prices
to actually fall during the summer months even as crude oil
prices remained firm. That cushion no longer exists. Refinery-
marketing margins are back to normal and, hence, future gasoline
and home heating oil prices will likely mirror changes in costs
of light crude oil.
With increasing investment in upgrading capacity at
refineries, the short-term refinery problem will be resolved.
More worrisome are the longer-term uncertainties that in recent
years have been boosting prices in distant futures markets for
oil.
Between 1990 and 2000, although spot crude oil prices ranged
between $11 and $40 per barrel for WTI crude, distant futures
exhibited little variation around $20 per barrel. The presumption
was that temporary increases in demand or shortfalls of supply
would lead producers, with sufficient time to seek, discover,
drill, and lift oil, or expand reservoir recovery from existing
fields, to raise output by enough to eventually cause prices to
fall back to the presumed long-term marginal cost of extracting
oil. Even an increasingly inhospitable and costly exploratory
environment -- an environment that reflects more than a century
of draining the more immediately accessible sources of crude oil
-- did not seem to weigh significantly on distant price
prospects.
Such long-term price tranquility has faded dramatically over
the past four years. Prices for delivery in 2010 of light, low-
sulphur crude rose to more than $35 per barrel when spot prices
touched near $49 per barrel in late August. Rising geopolitical
concerns about insecure reserves and the lack of investment to
exploit them appear to be the key sources of upward pressure on
distant future prices. However, the most recent runup in spot
prices to nearly $55 per barrel, attributed largely to the
destructive effects of Hurricane Ivan, left the price for
delivery in 2010 barely above its August high. This suggests that
part of the recent rise in spot prices is expected to wash out
over the longer run.
Should future balances between supply and demand remain
precarious, incentives for oil consumers in developed countries
to decrease the oil intensity of their economies will doubtless
continue. Presumably, similar developments will emerge in the
large oil-consuming developing economies.
Elevated long-term oil futures prices, if sustained at
current levels or higher, would no doubt alter the extent of, and
manner in which, the world consumes oil. Much of the capital
infrastructure of the United States and elsewhere was built in
anticipation of lower real oil prices than currently prevail or
are anticipated for the future. Unless oil prices fall back, some
of the more oil-intensive parts of our capital stock would lose
part of their competitive edge and presumably be displaced, as
was the case following the price increases of the late 1970s.
Those prices reduced the subsequent oil intensity of the U.S.
economy by almost half. Much of the oil displacement occurred by
1985, within a few years of the peak in the real price of oil.
Progress in reducing oil intensity has continued since then, but
at a lessened pace.
The extraordinary uncertainties about oil prices of late are
reminiscent of the early years of oil development. Over the past
few decades, crude oil prices have been determined largely by
international market participants, especially OPEC. But that was
not always the case.
In the early twentieth century, pricing power was firmly in
the hands of Americans, predominately John D. Rockefeller and
Standard Oil. Reportedly appalled by the volatility of crude oil
prices in the early years of the petroleum industry, Rockefeller
endeavored with some success to control those prices. After the
breakup of Standard Oil in 1911, pricing power remained with the
United States -- first with the U.S. oil companies and later with
the Texas Railroad Commission, which raised allowable output to
suppress price spikes and cut output to prevent sharp price
declines. Indeed, as late as 1952, U.S. crude oil production (44
percent of which was in Texas) still accounted for more than half
of the world total. However, that historical role came to an end
in 1971, when excess crude oil capacity in the United States was
finally
EDITED for length restrictions
Quote from marketsurfer:
greenspan's talk on oil
U.S. Fed Chairman Greenspan Speaks on Oil Market (Text)
2004-10-15 12:00 (New York)
d-oh!
Bad move on Greenspan's part imho. Strong hands aren't going to change their minds just b/c he gave a speech -especially given his track record of prognostication- and he risks the danger of appearing desperate.
If anything his remarks may inspire more little guys to step into the squeeze (no offense surf)... we may drop here yet, but so far it's a classic case and new highs will give profitable trendfollowers a chance to grind it in...
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