Oil prices at year end 2008

[ntalwar]

Hey, good guess!

Why - It's $121 today. I think we may have another dip (but not to a level below $105) in the next few weeks, but I still think we'll finish the year higher than today's close. There are many unknowns, of course, between now and then. A weakening dollar and a stimulus package in China would be bullish factors.

 

[anitram]

I think I feel pretty optimistic about the dollar, maybe more than I should be, and I'm going on little more than a gut feeling at this point. $105 may be too low, but I think $110 is a reasonable guess.

 

[financeguy]

Well, it looks like oil lost all of yesterday's gains today.

 

[ntalwar]

I think a 10% correction is likely at this point. The US driving season ends after Labor Day, and energy prices tend to be weak in September. There's also a possibility of a release of oil from the strategic petroleum reserve in this election year (similar to what Bill Clinton did in Sept. 1999). I exited my long positions a few weeks ago and may wait until after the election to get back in, depending on the trends.

 

[financeguy]

I exited my long positions a few weeks ago and may wait until after the election to get back in, depending on the trends.

Interesting.

 

[financeguy]

Oil falls below $100 a barrel ahead of Opec meeting - Times Online

 

[ntalwar]

Oil falls below $100 a barrel ahead of Opec meeting - Times Online

Yeah - the market is a bit unusual at the moment. Hurricane Gustav shut several refineries (triggering SPR oil to be released). And about $15 of that drop was due to gains in the dollar over the past two months. Interestingly the stock market dropped today - it usually rallies when oil tanks. We might be seeing deflation set in a bit. The forecasters didn't predict the 3-4% decline in demand and global slowdown we've seen due to the high prices. A lot of the offshore drilling projects McCain wants may be at risk at these price levels and below, which is probably fine by OPEC. My new price floor for the rest of the year is mid-90s, although I think it'll bounce off of that level.

 

[financeguy]

It is going lower. Short this mofo all the way down.

 

[ntalwar]

I'm not a big fan of Jim Cramer, but here's his take:

Here's how I feel about it: I believe that oil must be headed much lower, or you could not get this type of action. It has to, because China has simply stopped buying anything.

I urge people to recognize that the speculators certainly accentuated and exacerbated any moves in oil that might have been bullish, but the underlying bullish tendency was because of China, not any of the extraneous issues.

I think once China gets working on their current liquidity crisis (e.g. by printing more money), we'll see a rebound. It's not only oil - most of the commodities are getting hammered.

 

[ntalwar]

ft.com:

Opec agrees on small cut to oil production

VIENNA, Sept 10 - OPEC’s new production allocations totalling 28.8m barrels per day, agreed on Wednesday, represent a 520,000 bpd cut from the group’s July output, OPEC President Chakib Khelil said.

Khelil said he still saw surplus oil supply building on the market by the end of the year and increasing in the first months of 2009.

He told a news conference at the end of OPEC’s near five hours meeting that members will adjust output over the next 40 days.

 

[ntalwar]

Possible gasoline shortages coming to the East Coast and Midwest because of Gulf Coast hurricanes and refinery shutdowns.

From Indiana:


Wholesale gas prices are over $4 along the Gulf Coast, and price spikes are being seen in other areas as well. There are reports of "voluntary rationing" in states like North Carolina and Tennessee as well.

SC today:

 

[financeguy]

Another shorting opportunity next week, then.

 

[ntalwar]

Another shorting opportunity next week, then.

This week has been good for shorting crude and going long product (i.e. gasoline). That crack spread should widen if the refineries stay offline for a while.

 

[ntalwar]

Hurricane Ike gas price spikes - gas is back over $4 in many places. This will get a lot worse IMO.

 

[melon]

Okay, which dumbass decided to put such a large percentage of the nation's oil refineries in a fucking hurricane zone?

 

[Se7en]

guys, how can i make some money off of this situation?

 

[financeguy]

guys, how can i make some money off of this situation?

I use financial spreadbetting ( Spread betting - Wikipedia, the free encyclopedia ) ,

but I don't know if it is legal in the US.

 

[financeguy]

Well, oil is now just above my 85-95 range, having traded in the early 90s at one point.

Let's see if it stays there until year end.

 

[sue4u2]

Okay, which dumbass decided to put such a large percentage of the nation's oil refineries in a fucking hurricane zone?

Thank you..
I've always wondered this. You build the majority of the nations supply in not just a likely area of destruction, but a known area.. Then over decades don't change it...WTF.. it's incomprehensible.
But what isn't, now is

 

[melon]

Speculation caused rise in oil, study says - Sep. 10, 2008

Study blames speculation for oil's rise

WASHINGTON (AP) -- Speculation by large investors -- and not supply and demand for oil -- were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.

The report by Masters Capital Management said investors poured $60 billion into oil futures markets during the first five months of the year as oil prices soared from $95 a barrel in January to $145 a barrel by July.

Since then, these investors have withdrawn $39 billion from those markets as prices have retreated dramatically, the report said. Oil traded at just under $102 a barrel Wednesday on the New York Mercantile Exchange.

"We have clear evidence the fund flow pushed prices up and the fund flow pushed prices down," said Michael Masters of Masters Capital Management, calling the amount of money moving into oil futures markets by large institutional investors in the early part of the year "way off the scale."

Masters said its analysis shows investors "began a massive stampede for the exits" on July 15 and that this caused the price decline.

 

[phillyfan26]

I did not realize how much better we were doing here in the greater Philadelphia area than many places in the country.

I left home for vacation with gas prices at about $3.90 and returned about two weeks later to find them about $3.60. And they've just kept falling.

 

[ntalwar]

Well, oil is now just above my 85-95 range, having traded in the early 90s at one point.

Let's see if it stays there until year end.

Yeah, but look at what go it to that point - near financial armageddon .

I blame two or three factors for the dip to 90:
- 20-25% of US refining capacity went off line (and remains so) due to hurricanes. Refineries that are shut do not buy crude oil, and those that did could not receive it from tankers as ports are closed (or operating at reduced rates). The SPR released over a million barrels of oil. Tankers are waiting to unload their cargoes in the Gulf of Mexico. The Saudis also increased output starting in July (by half a million bpd or so).

- Fear of counterparty risk in futures, and mass liquidation by hedge funds and firms like Lehman and Merrill Lynch. Morgan Stanley is a big player in the physical oil market (they own storage tanks, etc.), and they unloaded physical oil to raise cash.

- The global economic slowdown has caused demand destruction.

We topped $100 today. If we go back to the 80s and low 90s, that could be a bad sign for the economy IMO.

I did not realize how much better we were doing here in the greater Philadelphia area than many places in the country.

That's one of the benefits of having local refineries, and not being dependent on gasoline refined in Texas/ La.

 

[phillyfan26]

I just looked up some gas info on my town.

Our current average price is $3.62, with $3.51 the lowest price in the area.

The price this time a year ago was $2.70. That shocked me. I feel pleased that I can get gas at $3.65 right now.

 

[ntalwar]

This is why I think the perception of the role of speculators (to the upside) is overblown for oil prices. The October oil contract hit $130 today - it expired today and speculators are not allowed to trade it on the final day (only physical producers and consumers can). The November contract (which has speculators) is around $20 below October. Normally, the price spread between months is very narrow ($1-2 max) Speculation can work both ways.

 

[Vincent Vega]

That's right, it works both ways. However, it also shows how much of an influence speculation nowadays has on the oil price and how speculation can make this essential good, as well as other even more important ones, way more expensive than it should be (though the green part of my heart can't really be opposed to that ).

I would say, in the case of food any speculation and derivatives trading should be prohibited, no matter how large the influence is. The trend is rather driving the price up than down, and that's utterly immoral considering how many people can't afford food even at regular prices.

 

[ntalwar]

However, it also shows how much of an influence speculation nowadays has on the oil price and how speculation can make this essential good, as well as other even more important ones, way more expensive than it should be (though the green part of my heart can't really be opposed to that ).

Fundamentals of demand and supply win out in the end. This October oil contract was priced at $90 a barrel last week, and on the day of expiration (when it becomes a spot contract) it hit $130. Prices would be a lot more volatile without speculators in the market.

I would say, in the case of food any speculation and derivatives trading should be prohibited, no matter how large the influence is. The trend is rather driving the price up than down, and that's utterly immoral considering how many people can't afford food even at regular prices.

Not necessarily. India banned futures trading on some essential food items, and prices rose. There was a supply disruption in some grains due to the drought earlier in the year and grain prices were sky-high. The drought situation improved, and grain prices plummeted.

 

[Vincent Vega]

Sure, prices still rise due to a variety of reasons. But if you have a shortage and then add speculation I doubt it would improve the situation, except maybe if speculators in futures got it totally wrong before.
Derivatives sure have the advantage of securing a farmer prices months before when one is willing to pay them and when without he might have lost a lot of money in classical trade. The question still remains: How (badly) are consumers especially in poor regions affected by speculation? For me, personally, anything that potentially artificially raises the price for food is not acceptable.

 

[ntalwar]

The question still remains: How (badly) are consumers especially in poor regions affected by speculation? For me, personally, anything that potentially artificially raises the price for food is not acceptable.

Factoring in an ever-growing world population, supply is a much bigger problem than price. Even with high prices, the grain shortage was so severe that many traditional food exporters banned exports - India banned rice exports, Kazakhstan banned wheat exports, etc. Spot prices frequently far exceed futures prices.

 

[financeguy]

The financial experts over at the (shortly to be defunct) investment bank Goldman Sachs have now declared their new oil price estimate at 75 a barrel, instead of 110 (which replaced a previous, even higher, estimate.)

Bloomberg.com: Worldwide


I am just another gobshite with an internet connection, I correctly sussed the oil price increase of earlier this year as a BUBBLE, I assessed the year end price at 85-95, everyone said - "That's rubbish, it'll be way more". If anything I might have OVER-estimated.

These Goldman Sachs people are AMATEURS. They DESERVE to go down. And they will.

 

[Vincent Vega]

Isn't it rather strategy by banks and other financial institutes to make certain estimates since they know that people listen to them and they have already prepared for that?
I know that in the beginning of the year every financial institution, economic research institutes etc. all said something else, so that estimates varied between around $70 to more than $200.