"CRUDE" oil, an absolute must see program !!!

Saudis have a political position to maintain, you think they will speak the truth? No... they will say what ever helps their game.

Fluctuation... its called "price discovery" and its constant.

 

Doesn't that seem a bit contradictory?

Add the same behavior by speculators with huge amounts of money at their disposal. Eventually those futures positions are closed out and the oil is delivered at some price. With the producing nations acting to hold up prices and speculators added in, the final price is higher than it would be if natural supply and demand were the sole determinants. As Frosty put it, "If I go and buy a kilo of potatos, I need to buy from the farmer if I can. If I cant, I don't want every one around to have bought and sold them and all made a bit on them first, and I end up paying the most."

 

New Math

The constant M (money), no matter in what formula it is used, will always be greater than the variable T (truth).

 

That is the process of natural supply and demand ! Its a bun fight with $$$$$ Yes suppliers withhold if they are not happy with price, that's normal... would you sell your car to me for $10 just because you have no other offer at the time? No... you wait until you are forced to move or are happy with the price.

You assign to much market power to "speculators", they are minnows in this market. Wall Street mutters speculator's all the time just to cover the fact that they have mostly been dead wrong on their analysis for eight years now. Think about it... even if you did have x billion dollars and you bid the price of oil up why would you go beyond a level that the broad market was willing to pay? Short answer is you would not, this because you have to sell it back to the market to take profit, if they will not support the price then you lose $$$$$$$$$. Its a fiction unless the market is small and you can corner it and keep the corner in place. Try that and see what the US gov does to you. If there was any proof that manipulation was going on the US govt would trounce it in a flash... politically speaking high oil is a real pain, if they could "fix" it quick, it would be done.

Why don't you try manipulation for yourself? Try throwing a 100K at an illiquid penny dreadful and see what happens, see how easy it is to lose money when you "become the market" which is what manipulation implies. Well actually I suggest you don't because you will lose a packet and the market will punish you.

That's another point, for every "speculator" there are just as many trying to profit from shorting a top as there are those going long at a bottom... it cuts both ways the market is predatory and it will find weakness where ever it is. If you are long and wrong (as manipulating high prices suggests) they will slaughter you by shorting the life out of your positions. Trade futures for a bit then you might start to see how this thing works.

Buying potatoes and potato futures are two different things... everybody in the futures market is speculating on the future price now, that's the point, they are either selling to lock in a good price, buying for the same reason. Most players believe the price will be higher or lower hence they move now with a futures contract, speculating that their call will be right. Using the term "speculator's" is a bit redundant in that sense... anyway I take you mean those that don't want to deliver or take delivery.

Charlie please believe me that in the vast majority of cases there are only losses to be had by attempting to drag the price away from the natural balance of the market either up or down for any extended period. These people are not stupid they are looking for defensive US dollar plays at the moment, the thing that should worry you is why they are running from the traditional into the likes of oil and gold.

Get ready for $200 oil, its coming relatively soon and its needed to fuel the drive to replace oil as a major energy source. Painfully high prices are the only thing that will do it.

 

The price is high at the moment because the market collectively believe it needs to be. If they are wrong it will come down and stay down, if they are right it will go higher until enough supply drawn out or enough demand is killed off. i.e balance.

We desperately need more supply at the moment, it takes 10 years to get anything done in this industry so even if we had found it today the public could not access it for another 10 years. We have only just reached the price levels that the market is willing to go and significantly ramp up exploration again. This in itself is too late already by current evidence, to suggest that the price of oil needs to be lower is just plain irresponsible, those investing in the oil market now are incentivising the securing of as much supply as will be possible and as good a price as will be possible. That is capitalism at work, the system that everyone seems to love to hate but owe their fat western lifestyles too.

Your choice cheap oil now and bugger all at insane prices later OR expensive oil now which leads to responsible use and greater discovery efforts and a more reasonable deal in the future.

The system is working, let it work and don't let politics and warm fuzzy nice ideas interfere as that will assuredly lead to shortage and prices extremes.

Just let the market do its job and respond at your level, prolly by saving fuel.

 

Frosty
Heinz is on the money with this topic.

Speculators are not middle men. They are just taking a position based on their research. Oil is not as heavily traded as other commodities. Here is a different, if dated, view on oil trading:
http://www.econ.mq.edu.au/research/2006/Daily_volume_multiples_3_06.pdf

There are certainly speculators who have the clout to move prices and start a bull run in certain markets; even with the GBP. They then get out as the market tops and can make a killing. There are winners and losers. These are not middle men making money by passing on costs to the average joe. They make money from smaller fry or producers or users who need some price stability.

There are speculators in the market but there are also traders in the market who need the stuff and want to lock in a price now to guarantee a future position in the same way you lock in an interest rate. Their business cannot tolerate the wide fluctuations on a daily basis so they average the price out by buying futures. Inevitably they lose out to the smart speculators but what CEO wants to go to the quarterly press conference showing a steady profit increase rather than a windfall one period and a massive loss the next. (Must say that losses have not been common in the oil industry in the last couple of years though).

I would not be holding my breath for oil to get under USD75 a barrel in the next few months. It would be interesting to see the total cost of new oil production. The price you pay has nothing to do with the USD3/brl that the Saudi oil costs but the total cost of the highest priced barrel produced. There will be no added production unless the price is sufficient to bring in more investment. Oil investment has been poor up until a couple of years ago.

If you were the Saudi oil minister would you be working hard to bring on more production to bring down the oil price or would you be looking forward to a 90+% profit on every drop currently produced knowing that there is no new production outside your control cheaper than the current price. AND the market is still increasing in volume.

The best chance we have of seeing lower oil prices soon is a worldwide health scare. I remember walking around Singapore airport late one night and seeing only a few other travellers in the huge building amongst a few security staff. That was only 5 years ago.

Rick W.

 

Ok,-- the potato things was a bad example.

The Saudi oil minister has more on his plate than merely making money for Saudi.

 

Probably got some potatoes on there for a start, alongside his meat and two veg!

 

ummmm,,,isnt the whole "market" thingy based on the salesmen law?? buy low,,or medium,,,and SELL BIG?,,then when people do that we cry bout it.,,,so who is to be the "last" person to make a profit on anything in the market?,,,should we say,,,awwwww sorry,,but you bought that last week at $4 a share,,,and well we think that enough,,,so you cant sell it for any more.
wasnt the market SUPPOSE to bring the value of our commodities and our businesses up? hehe

 

http://www.commodityonline.com/news/topstory/newsdetails.php?id=6711 and to save you the jump, here it is...

Without biofuel crude prices could be $150-200
Commodity Online
SINGAPORE: What would have been the crude oil price now with out the limited production of biodiesel. It would have reached $150-200 per barrel.

Experts attending the two-day Plantation Investment Asia 2008 Conference here said that many richer countries may subsidise biofuel to keep crude oil prices in check. The present production of 4-5 million barrels of biofuel has helped to keep world crude oil prices at current levels.

Biodiesel industry is in for tough times following high prices of edible oils, the feedstock of biodiesel, which has made its production unviable in US and Europe. There is high overcapacity in many plants in these two regions.

Chris de Lavigne, Frost and Sullivan, Singapore and David Jackson of LMC International Ltd said biodiesel production was linked to political will. If politicians don’t encourage biodiesel production, the industry will not take off.

In Argentina, subsidies and state support to biodiesel made it viable for biodiesel producers to survive and profit. Many small and medium firms producing biodiesel may go out of business and a shakeout in the industry is likely at the global level.

Diversion of food crops for fuel purposes is being viewed with alarm in poorer countries because people there spend 70 percent of their income on food and food prices have risen 40 percent in recent years.

Experts agreed the solution to the seemingly endless food versus fuel debate was to encourage production of biofuels from plant waste and other non-edible biomass.

India is trying to use bagasse, a waste product of sugar production, to produce energy. Coconut husks can also be used to produce energy. Such products don’t cut into food supply.

 

I reckon we will see 150 - 200 a barrel sooner than many realise...

With Antarctica melting at a far greater rate than previously anticipated possible, melt of this icecap will see a rash of exploration activity seeking more oil fields...

 

Boats fer chriss sake boats!!

 

I reckon we will see 150 - 200 a barrel sooner than many realise...
man its gonna cost alot to sail boats,,hehe
betta safy? hehe

 

The US has some reasonable reserves but they are locked off in environmentally sensitive areas. The oil companies say they can get at it with minimal impact but the political climate is not supportive. I'm not sure but I suspect that there has been a "use their oil first" attitude underlying the policies that have segregated these resources. If that is so its been quite a smart move, however the development of these assets will take some time and by the looks of it some sort of crisis before the political climate becomes supportive. It all spells out that their will be quite some pressure in the oil price before this is done and dusted. I notice that Goldman are now talking of a $200 super spike... that was $100 not long ago.

 

Conversion of food lines to other "more profitable" products has impact...

"

Govt on overdrive to control food prices​

A spate of bans on food exports
G. Srinivasan
New Delhi, March 24 The Commerce Ministry and the Finance Ministry appear to be on an overdrive to ensure that prices of essential commodities such as wheat, rice and edible oil do not flare up, as inflation is being driven by food and fuel prices of late. " ...

more at website... http://www.thehindubusinessline.com/2008/03/25/stories/2008032550171200.htm