Why I believe oil will go to $35 per barrel...

[eagle488]

Quote from peppermint:

Well, are you willing to test that assumption up with real money in a real trade??? Get back to us when you back up your statements with trades. Good luck.

No, Im not willing to trade on that assumption.

Trading oil is like sitting down at a casino to gamble. I've never been a gambler and thats not my game. You wont find me at a blackjack table. The NYMEX appears to be one wild casino and not an area where trade goes down.

However, I do know about cranes. They are very expensive items. There are more cranes in the middle east right now then anywhere in the world. Someone needs to pay for all this equipment.

How can OPEC cut oil production when they are trying to pay for all the growth projects? Caterpillar doesnt except IOUs.

The Arabs are not honest dealers. You can trust them to go in the direction that compensates them monetarily. They send out a press release stating they are cutting oil. Press releases are cheap and what I wipe my ass with in the morning. A press release is a cheap tactic to throw a floor under the markets. What they do in reality is different...there are not inspectors at the oil pumping stations making sure that the production is being cut.

There is also George Bush who is no longer filling the SPR and is stating that the oil companies dont have to repay the loan of oil taken out last year.

Last, but not least, was the video of the B-52 bomber flying around the skies on synthetic gasoline. Can you imagine all the airplanes at John F. Kennedy doing the same thing? Maybe this is a bullish sign for the airlines? If that B-52 can fly around on synthetic gasoline, then there is no end to the applications.

http://www.ultracleanfuels.com/articles/carlist_092606.htm

 

[John47]

commodity corner in barrons this week talked about how OPEC wouldn't let oil even get to $50 without cutting supply to support the price.

 

[nevadan]

quote from eagle488:
Last, but not least, was the video of the B-52 bomber flying around the skies on synthetic gasoline. Can you imagine all the airplanes at John F. Kennedy doing the same thing? Maybe this is a bullish sign for the airlines? If that B-52 can fly around on synthetic gasoline, then there is no end to the applications.

Actually, jet fuel is an oil, not gasoline. A closer approximation is kerosene.

 

[Lights]

oil prices are driven by demand. when hit $78, naturally demand diminished. when oil goes lower, demand increases cos consumer perceives it as cheap, thus driving prices higher. LT trend is for higher oil cos that threshold will always rise. If told someone 5 years ago that the consumer would be happy with $60 oil (as of friday's close) and $2.25 unleaded, he wouldn't understand.

it's the boiling frog syndrome. throw a frog into a pot of boiling water, he’ll jump out, place a frog into a pot of lukewarm water and slowly turn up the heat, it will boil to death. same with oil prices

if people become acclimated to state of affairs over a sufficient period of time, they come to accept it as normal.

you probably won't see a loaf of bread sold for a nickel ever again. don't bet on ever seeing $1 gasoline.

Quote from eagle488:

Everyone is pumping as much as they can right now. Everyone from some guy who owns a small well in Long Beach, California to the Russian guys...Everyone with a well is pumping as hard as possible. The Arabs have invested themselves in expensive growth projects. Iran has involved itself in a very expensive nuclear program. Developing nuclear weapons is the most expensive project one can undertake. The UAE is trying to rival the likes of Las Vegas. Well, I could go on and on.

The Arabs believed that oil would just continue to go up and up and up. The reality is that everyone was pumping so hard that it created a tremendous supply. Meanwhile, demand dropped as the consumers became more aware and technology advanced. It didnt help matters to see a B-52 bomber flying around on synthetic fuel.

The Arabs then started on all these growth and military projects. Then oil pulled back 22% and they are now in a panic. They say they are going to cut back production, but they lie. They cant cut production otherwise they will make less money. Lets say they cut production by 1 million barrels per day, thats $55 million dollars per day that they are not bringing in. So they will say they cut production, but they wont. In fact, they will increase production to make up for the lower price. As production increases, the price of oil will go down still further. The oil inventory report will come in each week saying that there is more and more oil. More ships will be stuck at the ports because they have so much they cant even give it away to the local homeless.

It wont be long until gasoline is at .99 a gallon and the SUV will come back in style once again. No SUVS for me, thank you, I would rather have a fast small car.

Yes sir, Im not kidding. The Arabs will lose money if they cut production. When they say they are cutting production, it means they are raising it. Just like when you hear Jim Cramer telling you its time to buy or sell NYX. Iran is going to increase production so they can fund their expensive nuclear program. The UAE needs to build some type of weird islands with glass houses off the coast for moguls like Donald Trump. Overinvestment=the need for cash=the need for selling more oil....

Imagine you have an oil store and the demand is high. The price of oil suddenly falls and the other area oil stores want to get together to sell less oil. However, your building a nuclear weapon in the backyard and a replica of the Las Vegas strip on the street and it costs lots of dollars. All of the guys who loaned you the cash to do it are looking at you funny now, they want to see the loans repaid. Are you going to cooperate with the other oil store owners, cut your production and then make less dollars? What will happen to the nuclear weapons and the Tropicana?

 

[Lights]

annual global demand at 84.9 million barrels per day (mbd) which means over 31 billion barrels annually. This means consumption is now within 2 mbd of production. At any one time there are about 54 days of stock in the OECD system plus 37 days in emergency stockpiles. that's enough for 3 months. in other words, whenever there is a supply disruption, by politics, weather or anything else, oil squeezes hard.

whether this is all true or not doesn't matter as long as people, especially the oil commercials and speculators perceive and trade it as such.

 

[eagle488]

Quote from Lights:


you probably won't see a loaf of bread sold for a nickel ever again. don't bet on ever seeing $1 gasoline.

I would almost agree with you on this.

However, bread is much different then oil. I dont see a bunch of middle aged overweight guys in a big room somewhere yelling at each other about bread. I dont see a bunch of Arabs cornering the world on bread. I dont see guys looking at candlestick charts on a daily basis because of bread.

I fully expect to see gasoline back at $1 per gallon sometime in the next 3 years and oil at $35 per barrel.

The dominoes are starting to fall. Soon the creditors for the Arabs will be demanding their cash and they will have no choice but to pump full speed ahead like a teenage male with his first woman. The SPR only has 6 more percent to go to being filled. Even if the US started filling it, it wouldnt be long before its filled to the top.

Then there are all the alternative fuels and conservation. The Hybrid cars that are appearing on the street everywhere. Windmills and solar being placed on top of buildings. Technology will find more large reserves of oil in other places. We have not yet tapped all the places in Alaska or off-shore. What about those oil sands in Canada?

Everyone has become bullish on oil now its time for a big dump. As oil corrects downward people will lose confidence in it as investment vehicle. Oil did not trade up because of a supply problem. It was mainly because of a bunch of overweight men in a large room yelling at each other.