Wow - Oil closes at 105.57, after hitting 105.97, 3 cents short of $106

[Bill]

Dang, that's just getting BRUTAL.

Told you it wouldn't be long before we saw the $105 barrel.

Wonder if we'll see the $110 barrel next week?

I bought some kerosene for a kerosene heater tonight - $3.50 a gallon. Ouch.

http://www.msnbc.msn.com/id/12400801/

Light, sweet crude for April delivery rose 95 cents to settle at a record $105.47 a barrel on the New York Mercantile Exchange, after earlier spiking to a new trading record of $105.97. However, prices alternated between gains and losses frequently Thursday as some investors sold to lock in profits from a rally that added 6 percent to crude's price in two days.

Helping push oil prices higher Thursday was an overnight rebel attack on a Colombian oil pipeline that transports 60,000 barrels of oil a day for export markets.


A 60,000 BPD supply line controlling the value of an 87 million barrel day.

[bigfootzx]

$112 is predicted based soley on speculation, not fundementals.


But considering the way oil has been trading lately, Zaro said, it's likely that the price could rise as high as $112. Time for Congressional Investigation into wall street manipulation. Not just the oil companies, plenty of blame to spread around.

http://www.oilwatchdog.org/articles/?storyId=18836
So, again, why are prices so high?

One answer: speculation.

The past dozen years have been a daisy chain of speculative bubbles and bursts, starting with the investments in obscure foreign currencies -- such as the Thai bhat -- that provoked the Asian economic crisis of 1997 and 1998.

Now, the same folks who drove up currencies in the mid-1990s, dot-com stocks in the late 1990s and housing prices in the early 2000s are at work with oil and other commodities, seeking other get-rich-quick investments.

[Bill]

So decline has nothing to do with it, you say.

Nor increase of demand.

Nor the shifts in oil quality among non-opec producers.

Nor the reduction in output from mexico, the north sea, alaska, and so many others.

Why don't you read more about it, instead of buying the corporate party line without examining the evidence.

The speculators WOULDN'T BE SPECULATING if it weren't for these other factors.

They know more than you do, that's why they are speculating. Do you think these guys would be buying oil futures at 105 if they had any reason to beleive they couldn't sell it at a profit months from now? Do you think they are intentionally throwing money away, just to fuck you over?

Oil has become the new commodified asset most likely to increase in value, that's why the speculators are snapping it up.

You're mistaking the effect for the cause. Which is just what the commentators want you to do.

Read about it - and go outside the industry commentators.

Because, if you will remember, 2 years ago the industry commentators were swearing on a stack of bibles that we would see $30 oil again before we saw $70 oil. The industry commentators can't be trusted.

I know, I'm talking to a deaf man who wants to beleive in the nasty speculators, and that the laws of supply and demand and the laws of physics have magically been broken by the greedy speculators and by nothing else.

I'm wasting my time. But other people aren't so determined not to read for themselves, maybe they will profit from it.

[disrupter]

Maybe you should only post increases in record crude prices at 2 dollar intervals,

inflation & all.

[Independent Harry]

So decline has nothing to do with it, you say.

Nor increase of demand.

Nor the shifts in oil quality among non-opec producers.

Nor the reduction in output from mexico, the north sea, alaska, and so many others.

Why don't you read more about it, instead of buying the corporate party line without examining the evidence.

The speculators WOULDN'T BE SPECULATING if it weren't for these other factors.

They know more than you do, that's why they are speculating. Do you think these guys would be buying oil futures at 105 if they had any reason to beleive they couldn't sell it at a profit months from now? Do you think they are intentionally throwing money away, just to fuck you over?

Oil has become the new commodified asset most likely to increase in value, that's why the speculators are snapping it up.

You're mistaking the effect for the cause. Which is just what the commentators want you to do.

Read about it - and go outside the industry commentators.

Because, if you will remember, 2 years ago the industry commentators were swearing on a stack of bibles that we would see $30 oil again before we saw $70 oil. The industry commentators can't be trusted.

I know, I'm talking to a deaf man who wants to beleive in the nasty speculators, and that the laws of supply and demand and the laws of physics have magically been broken by the greedy speculators and by nothing else.

I'm wasting my time. But other people aren't so determined not to read for themselves, maybe they will profit from it.

Yes I tihnk you'll find bigfootz is very good at sticking his fingers in his ears and screaming nahanhanhnahnahanhanhanahnahanah, so as not to actually read your post.

[disrupter]

Will it really be a surprise unless it hits 120.00 a barrel?

The Bush/Cheney looted American Dollar is collapsing,
of course you will have to use more of this cheapened money to buy a barrel of oil.

how do you think KBR has profits so huge their tax bill SHOULD HAVE BEEN 1/2 a Billion Dollars?
Except of course they ducked that with a PO Box in the Bahamas.
Don't you wish YOU could duck taxes with a PO Box in the Bahamas?
And that you had Hundreds of billions in unbidded completely unscrutinized government contracts where the sky was the limit due to shrill war hysteria?

All America produces anymore is lies, bullshit & entertainment, no wonder no one is excited to possess dollars.

[bigfootzx]

you clowns do not understand manipulation versus a shift away from fundementals, Bill sounds like every greedy goone who every hyped a market
using the same old mantra, repeat what the other guy said and it must be true. Go educate yourself on the underlying causes off the 1970's oil crisis, go beyond OPEC and maybe you will catch up to the real problem. Obvioulsy youdon't get because you do not trade futures for a living, I've been doing this fulltime since 1996 and I look beyond the monkey see monkey crap that Bill is programmed to believe.

Bill if you had a clue, you would know Congress has been investigating the oil companies for manipulation and the investigation is shifting to wall street. Demand increase 1.8% last quarter, wow, the oil spikit is running dry, yet Cambridge Researchs says we have more oil than reported. Maybe your a neocon and living the pipe dream.

Go eat a banana................. its monkey time Bill.

[disrupter]

It is the US government from top to bottom that needs to be investigated.

Trillions spent on a war, most of which is just war profiteering,

Which is part of the reason any kind of success in Iraq is IMPOSSIBLE.

[bigfootzx]

Yes I tihnk you'll find bigfootz is very good at sticking his fingers in his ears and screaming nahanhanhnahnahanhanhanahnahanah, so as not to actually read your post.

Harry, aren't you the one who said, don't always believe what they tell you???You boys follow what they want you to believe, a shift from fundementals is exactly how internet and tech stocks were manipulated. Wall street threw out fundementals and hyped prices with false research,same as today. Why are they investigate oil companies??? hmmm, oil companies also trade futures contracts.

The trading practices are a large part of problem, fundementals suggest the price should be around $70. What the hell lets blow out the economy and rape the wealth one more time. All that was said above is old news Bill is a clueless a-toma-tom reading only what the wall street machine feeds him.

Dick Cheney would like Bill!!

[bigfootzx]

You boys believe whatever you choose, but keep an open mind to factors beyond supply and demand. Is it 1973 all over again?? Watch the show and enjoy the prices at the pump, the Ivory Tower will appreciate you contributing to their retirement!!

Bill enjoy the negative puns while you can, time will change and then its my turn. I enjoy the challege!!

Wallstreet is equal in the blame along with the big oil companies. Goldman Sachs produced 40% of its revenue from trading energy in 2006 for a total of $37 billion, see page 4http://www.ftc.gov/bcp/workshops/energymarkets/background/slocum_oilgas.pdf

The recent IEA report, widely picked up, made no mention of price elasticity, and assumed a 2,2 percent annual increase in demand. Funny, isn’t it, when demand last year went up only 0.7 percent?
So, implicit in the IEA report projections was a drop in oil prices. There is anywhere from $20 to $40 a fear priced into every barrel of oil now. What happens if that fear goes away?
Look for some websites to change their tune or disappear in the months ahead.

http://www.oilwatchdog.org/articles/?storyId=18748
Lehman's chief energy economist, Edward Morse, told Bloomberg television today that oil prices, which rose to a record $100.10 a barrel on the New York Mercantile Exchange yesterday, are being driven by financial markets rather than supply-demand fundamentals. That's not news, but the fallout is.

http://www.oilwatchdog.org/articles/?storyId=8288&index=31&topicId=8059&topicId=8063
FTCR also pointed to last fall's precipitous drop in the price of gasoline, which trimmed oil company profits in the weeks before the November 2006 election. Gasoline prices rose again immediately after the election, despite falling oil prices, and were further boosted by President Bush's announcement in January that he would increase the size of the Strategic Oil Reserve

http://www.huffingtonpost.com/jamie-court/wall-street-analysts-say-_b_33052.html
In mid-October, New York Global/Securities published strong advice to buy "oil stocks and futures" to take advantage of a nearly certain post-election price increase. The investor guidance mentions previous price dips that followed Senate hearings and investigations, particularly post-Katrina and this summer amid a similar price spike. The column contains a persuasive chart matching Congressional interest in oil and gasoline prices to subsequent dips in the price of crude oil. Then, when the heat came off, up went prices again. Similarly, "[A]fter the elections we believe oil will appreciate until there is fear in the market that Congress will take action, " says New York Global, an international investment banking and securities company.

[Independent Harry]

Harry, aren't you the one who said, don't always believe what they tell you???You boys follow what they want you to believe, a shift from fundementals is exactly how internet and tech stocks were manipulated. Wall street threw out fundementals and hyped prices with false research,same as today. Why are they investigate oil companies??? hmmm, oil companies also trade futures contracts.

The trading practices are a large part of problem, fundementals suggest the price should be around $70. What the hell lets blow out the economy and rape the wealth one more time. All that was said above is old news Bill is a clueless a-toma-tom reading only what the wall street machine feeds him.

Dick Cheney would like Bill!!

A shift from fundamentals is alwaysa sign that there is a bubble, such as the tech stocks, but wall Street didn't manipulate that, Wall Street is simply the investors. With tech Stocks the reason everythign fell apart was because there was no actual assetts to back up the paper wealth. When companies didn't start producing the earnings per share projected by these speculative buyers, and everyone found out there were no hard assetts there, investors lost confidence and the bubble burst.

Same thing with the real estate market, they shifted from fundamentals, because it was assumed that property values would continue to go up. All of a sudden when no one had the money to pay for their houses anymore, boom, it was realized the actual value of the assetts were far less than the speculative values of the properties.

Oil is a differnet creature than those types of markets though. Oil is a finite supply, it is the absolute life blood of the world. So when you get fears of terrorist attacks, and oil shortages, especially with developing nations starting to enter a huge age of oil consumption (India, China, etc...) we are looking at oil becoming a rare commodity. So this is driving prices up. When you have a shift from fundamentals, it is because people beleive the prices of something are not tied to the actual assetts of the product or company. This is false, but this is not a bubble with the oil. Supplies are running short, and it simply means that we had better find a new avenue of energy soon.

[bigfootzx]

A shift from fundamentals is alwaysa sign that there is a bubble, such as the tech stocks, but wall Street didn't manipulate that, Wall Street is simply the investors. With tech Stocks the reason everythign fell apart was because there was no actual assetts to back up the paper wealth. When companies didn't start producing the earnings per share projected by these speculative buyers, and everyone found out there were no hard assetts there, investors lost confidence and the bubble burst.

Same thing with the real estate market, they shifted from fundamentals, because it was assumed that property values would continue to go up. All of a sudden when no one had the money to pay for their houses anymore, boom, it was realized the actual value of the assetts were far less than the speculative values of the properties.

Oil is a differnet creature than those types of markets though. Oil is a finite supply, it is the absolute life blood of the world. So when you get fears of terrorist attacks, and oil shortages, especially with developing nations starting to enter a huge age of oil consumption (India, China, etc...) we are looking at oil becoming a rare commodity. So this is driving prices up. When you have a shift from fundamentals, it is because people beleive the prices of something are not tied to the actual assetts of the product or company. This is false, but this is not a bubble with the oil. Supplies are running short, and it simply means that we had better find a new avenue of energy soon.

I know, the fear premium has widened too $ 30 to $40. Oil is in a bubble market. Research the 70' oil crisis and only look for articles on wall streets role, the same shift from fundementals occured. There is more supply than suggested. Read the article on the link posted below. There is more going on than just a declining commodity.

http://energybulletin.net/22381.html
CAMBRIDGE, Mass., November 14, 2006 – In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future. CERA said those who espouse the theory that the world's oil production has already peaked lack evidence to support their claims.

Watch the media focus shift away from peak oil models to wallstreet scandal talk as the new president takes office. Then the Dems will change policy to lower oil prices and investigate fraud. The oil scandal is one of my primary reasons Obama will win the presidency, not the best candidate I've seen but 4 more year of a Rep. will guarantee the supply demand distorttion will continue.

[bigfootzx]

It is the US government from top to bottom that needs to be investigated.

Trillions spent on a war, most of which is just war profiteering,

Which is part of the reason any kind of success in Iraq is IMPOSSIBLE.

http://marketplace.publicradio.org/display/web/2008/03/03/meaw_adv_corporations/
Commentator Charles Handy says American corporations are run more like totalitarian states than pillars of democracy. He hopes they can restore their reputations as forces of economic good. Last in a series. Article on website.

[bigfootzx]

Read about the Enron Loophole Act and the Oiligopoly

http://www.huffingtonpost.com/raymond-j-learsy/the-enron-loophole-helps-_b_25463.html
Senators Carl Levin (D., Mich.) and Norm Coleman (R., Minn.), the ranking minority member and chairman, respectively, of the Senate Permanent Subcommittee on Investigations, are urging Congress to enact legislation that would close major loopholes in federal oversight of oil and gas trades. The so-called Enron loophole put limits on the ability of the Commodity Futures Trading Commission (CFTC) to prevent speculative trading in energy and commodity markets. It's interesting to note that since the Enron loophole went into effect in 2000, the price of crude has risen by nearly 500 percent. Coincidence? Perhaps.

To quote Sen. Levin, "Right now there is no U.S. cop on the beat overseeing energy trades on over-the-counter, electronic exchanges or foreign exchanges. . . . Enron has already taught us how energy traders can manipulate prices and walk over consumers if they think no one is looking. . . ."

Sen. Coleman cut to the chase: "We need to explore legislative ideas to ensure that energy prices reflect the true market forces of supply and demand. . . ." In the meantime, OPEC and the oil patch are munching their baloney sandwiches, salted with crocodile tears, as they lug their loot to the bank.

[Bill]

Here's something to read on the various schools of thought about the rising price of oil.

One will notice speculators are not mentioned.

OECD is the "free market" states, that's the US and our friends, like Britain, Canada, and about 30 others.

Here's a bit from the article - I've bolded the most critical line.

http://seekingalpha.com/article/67631-two-explanations-for-surging-oil-prices

Here are two European insights on current developments in the price of oil. One is from Barclays and the other by Chris Skrebowski who maintains a list of global oil fields under development (megaprojects) and edits Petroleum Review. The reports are in close agreement.

The Oil and Gas Journal (2/11/08) reported that Barclays Capital, the investment banking arm of Barclays Bank, PLC has issued a report on the broad outlines of the current market for oil. Their conclusion is that, “The rise in prices has been less about anything happening in a dynamic fashion to push prices up …[than] The failure of of rising prices to loosen global [supplies].” Demand is increasing steadily from China, Saudi Arabia, and India, in that order and is expected to continue that way.

Barclays expects demand in 2008 to grow by 1.7%, up from 1.2% in 2007. They do not believe economic weakness in the U.S. and possibly EU will be sufficient to dent the growth of the developing economies. “…almost half of global [oil demand] growth in 2007 came from a region [the Middle East and Russia, I presume] where the direct short-term linkages to the OECD…[are] weak.”
Skrebowski reinforces Barclays’s views by pointing to current inventory tightness. He says, “Between July 2007 and December 2007 OECD oil stocks went from the top of the five-year range to the bottom…Forward supply has slipped from 55 days to 51 days in just five months…in 4Q07 the stockdraw was running at 1.1 mn b.d according to the International Energy Agency [EIA]. If stocks are not rebuilt to more comfortable levels, price spikes and supply shortfalls become much more likely.”

He goes on to point out that OECD oil demand has been slowing steadily since 2005, but that OECD oil production has been slowing even faster. Thus, OECD demand for imports is increasing despite its reduced use of oil.



It's a short article, so I'll post the rest of it too.

Skrebowski contrasts OECD attitudes toward oil and free markets with those of oil exporters who believe in subsidizing their domestic oil price so that consumers do not experience the economic motivations of the free market as seen in OECD countries. This is one reason for the rapid increase in domestic oil demand among oil exporting countries that is cutting into the availability of oil on the export markets. He sees little indication that this oil price subsidies will stop in the near term. Subsidies are also in place in high-growth countries that do not export oil, such as China.

“The conclusion is that we now have an oil world in which the impact of high oil prices is only really felt in the OECD countries where demand is already falling.”

Skrebowski’s sense that oil inventories are tight in the West is interesting from a couple of viewpoints. First, Matt Simmons and Charlie Maxwell seem to confirm Skrebowski’s view. They have been saying that inventory reductions during the past few years is one way that oil demand and supply have been balanced.

Secondly, OPEC has been justifying the maintenance of stable production levels by saying for some time that “markets are well supplied,” referring to OEDC markets. Well, that does not seem to be quite the case according to Screbowski, Simmons and Maxwell.

All of this makes one wonder if the OPEC countries are actually in a position to increase their exports or if they are covering up an inability to increase supplies by saying that action is not needed. Now that OPEC has adjourned until next September, it may be well into the Fall until we find out more about the truth of this matter.

[bigfootzx]

Interesting article, I've read similar stories in IBD. I remember Saudi Aramco refusing to allow American geologists to have a close inspection of their operations, citing security concerns as well as suggesting they had nothing to hide. Price did go higher after this event, oil was $48 or so. More research hit market suggesting Aramco was on a decline sharper than normal and covering it up. But no proof has ever been substantiated. We'll see if they meet demand or not as time progresses.

The Saudi's were insulted by Americans suggesting they were lying, some muslims are easily insulted, in fact, a joke could be interpreted as an insult under Sharia Law. They need to open the books and allow outsiders access. It could calm fears if they can substantiate proven reserves and output capacity.