Oil Price Watch

[earl]

94.50!!!!!

[Coyflyte]

You should begin to see the correlation here.  After the market's blood bath yesterday and indecicisiveness today all commodities were up; oil, metals, and ag. (OK, gold was only about even.)   Money is streaming out of the market and into commodities...again.  Pure speculation and fear of the market tanking.  What's safe?  Something you can HOLD; commodities.

Man, just take a look! 

http://www.farmfutures.com/ME2/Default.asp

Dec. corn up .1040 to $4.16.  Dec. soybeans up .1600 to $11.51.  Wheat up .400 to $9.34!  Grain prices havn't been at this sustained level since the early 1970's. 

Again, gold itself my have been about even today, but the one year change of +29.66% speak volumes.

Since lower the Fed rate hasn't helped, "Helicopter Ben" will begin monetizing the debt with the multi-national central bank plan to make annonymous bank laons (money creating liquidity injections) through the Fed funds window.  The deflation/inflation tug-o-war is now moving in the favor of inflation. 

If there's a need to make annonymous loans to banks to maintain liquidity in the system it tells me that there must be some scary critters trying to get out of the closet.

Back on subject; oil will continue up more rapidly based on speculation AND supply concerns.  We just may see $100 by New Years'. 

[tinfox]

Grain prices havn't been at this sustained level since the early 1970's. 

Hmmm, wasn't that about the time Nixon took the U.S. off the gold standard?  Funny how Jimmy Carter gets the blame for all that inflation.

[Chip Haynes]

Oil's at $94.61 this morning. We should see $95 today easily, I would think. As I understand it, the cut off date for next month's contract bids is next Friday (the 21st), so we should start to see quite a run up over the next eight days. I would say that $100 seems obvious, but I do suspect there's a certain built-in reluctance in the market to cross that line.

Better fasten your seat belts, it's going to be a bumpy flight!

[bkwillia]

Its interesting how oil has jump back to mid 90's with no real threats to production.  That assassination on Lebanon's military leader might have added to the war risk premium.

[Chip Haynes]

"It's interesting how oil has jump back to mid 90's with no real threats to production."

You mean, other than Hubbert's Curve?

 

[Chip Haynes]

By the way- Oil is drifting back down this afternoon- just under $91.00 right now.

[Chip Haynes]

Oil starts the week under $90.00 at $89.89 this morning.

[45MPG]

I keep asking myself "why?" Most of the news programs blame the quick rise the last couple of months on speculators. Maybe. However, my conspiracy tainted thoughts have me wondering---did the close approach to $100.00 make too many people start thinking about PO? Did 'TPTB' manage to get these prices dropped down to take the attention off of prices? Will it start going up again and QUIETLT finally cross $100, then continue slowly upwards?

[Chip Haynes]

   Of course the price is caused by speculators. Isn't that the very nature of what we're watching when we watch oil prices? And hasn't it always been that way? Correct me if I'm wrong here (PLEASE), but: The whole point of "the price of oil" is that the "price" is what is currently being bid for oil delivered the following month. In essence, these bidders are betting that if they bid, say, $90 for a barrel of oil next month, that the actually non-contract price for oil next month will be higher than $90, so they're getting a real deal. Is my understanding correct in that regard? And if it is, maybe we're watching the wrong thing. Maybe, instead of focusing on the bids for next month's oil, we should instead focus on the non-contract price of oil being sold right now.

What do you think?   

[wizgrav]

Could it be that major importers like China secure precious oil contracts in addition to offloading their dollar reserves with caution so as not to topple the system (they don't want that, yet).
Maybe they buy until their moves start to cause instability and then they let it "cool down" a little, kinda like the frog that slowly boils to death.
And there's always the case I'm talking complete nonsense as I don't have the slightest experience on commodities trading.

[Chip Haynes]

That sounds reasonable, Wiz''. I've long suspected that the Chinese are funding their headlong rush into the oil age by selling us plastic pumpkins at Wally World. So what does a communist country do with all that cash? They can bid up the price of oil 'til the yaks come home. And when the oil runs out? They go back to bicycles and trains and don't blink an eye.

[BlueOwl]

I don't think oil will push up past $100 unless something triggers it.  Article after article I read doesn't seem to think that there is any reason for $100/barrel oil save for pure speculation.  And that's, for the moment, probably completely correct (there simply is no data, that I've read, showing extraordinary supply declines for this time of year).

What I have noticed, however, is that supply is tight enough that the tiniest threat to supply anywhere seems to be enough to get traders jumpy and the price is bumping up as a result.

Unfortunately, I haven't been watching oil prices for 5, 10, or 20+ years, so maybe this is a new trend of hyper-sensitivity to supply-side events, or maybe this is business as usual in the oil trading world.  I'm not sure. (anyone?)

Next spring will be interesting, however.  Right now demand is low (esp. gasoline), as it always is this time of year.  Where gas prices end up next summer should be interesting.  Where the economy is sitting next year should also be sitting.  And if there is some major supply disruption, things will definitely be interesting.

[Chip Haynes]

Oil is at $91.60 this morning, up almost two dollars over yesterday morning. As little as I've been following it, I think I notice a daily trend: The price tends to climb in the morning, drop around midday and climb again after a late lunch. Usually, the second climb puts it higher than the late morning climb. If you were to plot it on a graph, it would be a shallow "Z" curve on its side. That is just my casual observation. There are, of course, much longer trends that push oil up and down in the course of any given week or month. Will oil hit $100 this week? Well, right now it seems very quiet. Yes, it gained almost two bucks in the last 24 hours, but it may not gain two bucks a day all week. We may have to wait until spring to see $100 oil. Or at least Friday.

You never know.

[DarthBruder]

On CNBC last night, a talking head said "Oil is down for the fourth straight day, which is it's longest losing streak since October."

It was down a few cents but still above $90 and this guy is talking himself off the ledge because a few days in a row the price didn't go up substantially and the length of time that a big rise didn't happen is equal to a length of time that this didn't happen from a few weeks ago.

That's like an alcoholic saying, "Well, yeah, I'm blitzed all the time but I just went 15 minutes without a drink, which I haven't done in a year. Woot!"