Forbes: Oil prices to fall...

yasir1212

Well-known member
Joined
Dec 15, 2004
Posts
154
Total Time
3200+
Let's hope Steve Forbes' bold statement holds true....

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/08/31/cnoil31.xml&menuId=242&sSheet=/portal/2005/08/31/ixportal.html

Forbes predicts oil will drop to $35 within a year

Steve Forbes, the billionaire business publisher, predicted that the oil bubble will burst inside a year and the price will plunge, as the impact of Hurricane Katrina sent the price of oil soaring to new record levels.

He spoke as Katrina shut down almost all the flow from the Gulf of Mexico, which provides over a quarter of the United States' oil. "I'll make a bold prediction. In 12 months you're going to see oil down to $35 to $40 a barrel," he said. "It is a huge bubble, I don't know what's going to pop it but eventually it will pop - you cannot go against supply and demand, you cannot go against the fundamentals forever."

Oil production in the gulf was down by 92pc, or 1.4m barrels, and gas production fell by 83pc as the hurricane threatened severe damage to the installations in the region. In response, the price of Brent in London spiked $3.22 a barrel to a record $68.09 while in New York oil was up $2.65 a barrel to $69.25 during late trading.

Analysts said it was unclear how much damage the hurricane had done to the 4,000 platforms and 33,000 miles of underwater pipelines in the gulf since few companies have been able to send helicopters over the region.

Shell said an aerial inspection of its Mars platform indicated some damage to its upper deck. Mars produces around 147,000 barrels of oil and 157m cubic feet of gas a day - 15pc of the Gulf of Mexico's overall production.

A spokesman for BP said there had not been any damage at its Mad Dog, Holstein or NaKika platforms but all of its 350,000 barrels a day in the region had been shut in. The US coast guard said seven rigs were adrift.

The Louisiana Offshore oil port, the largest import terminal in the US, has been shut, as have several refineries. The St Charles refinery, owned by Valero, is under 3ft of water.

The cut in the oil supply prompted the US government to promise that any shortfall would be made up from the stockpiles of the strategic petroleum reserve, which contains around 700m barrels. Last night one West Coast refiner applied for emergency supplies.

Mr Forbes said the whole concept of the strategic reserve was pushing prices higher. "The speculators know now that no matter what happens to the price of oil Uncle Sam is there buying almost every day," he said. "Stop the buying and in fact throw some of that oil on the open market, boy that would throw it in turmoil and send the price down."

The oil market has become a target for investors, since the returns have been significantly higher than those from the stock or bond markets in the past couple of years. Fundamentally there is enough oil to go around.
Stockpiles are full and Saudi Arabia has promised to step up production to 11m barrels a day.

"This is sheer bubble speculation. I'll be blunt, there's hardly a hedge fund in North America that hasn't speculated on oil futures," said Mr Forbes. He added that when prices did fall, the impact would make the dotcom collapse "look like a picnic".

Dominic Bryant, an analyst at BNP Paribas, suggested that increasing oil production could actually fuel price rises, since there would be less spare capacity available to meet any future shocks. He said prices could keep rising if Katrina turned out to be as destructive as Hurricane Ivan. The damage Ivan did to the region's underwater pipelines took six months to mend and added $10 to the oil price in the month following the storm.
 

Flying Illini

Hit me Peter!
Joined
Mar 9, 2003
Posts
2,291
Total Time
6000
If it will drop to $35 a barrel, why is it now at $70 a barrel....and why will it drop to $35 a barrel?
 

PCL_128

Well-known member
Joined
Nov 21, 2002
Posts
15,296
Total Time
5000+
Flying Illini said:
If it will drop to $35 a barrel, why is it now at $70 a barrel....and why will it drop to $35 a barrel?

I thought Mr. Forbes explained it quite well: oil is at $70/bbl now because idiotic speculators have bid the price up. Oil will be at $35/bbl because that's what the fundamentals point to. Speculators can only hold the price up for so long. Eventually, the market will return the price to where the fundamentals say it belongs.
 

Kream926

pimpin' aint easy
Joined
Feb 28, 2003
Posts
1,196
Total Time
1.21
i sure hope soo
 

PCL_128

Well-known member
Joined
Nov 21, 2002
Posts
15,296
Total Time
5000+
mzaharis said:
Why was NASDAQ at 5000 at one time - fundamentals?

Nope, same reason as oil: crazy speculators. They learned the hard way too.
 

Traderd

Well-known member
Joined
Feb 4, 2005
Posts
2,073
Total Time
5500
PCL_128 said:
Nope, same reason as oil: crazy speculators. They learned the hard way too.
PCL,

You do understand that there is just as much profit from NASDAQ 5K to 2K as from NAS 2K to 5K, right?

And as far as speculators, there are many who have profited from the move to $70 and have already profited from the move back to $68 and will continue to do so regardless of the direction. No reason to lose the farm or even your airplane.

The equity and commodity instruments available for trading are so incredibly liquid it is prudent to manage the extremes.
 

PCL_128

Well-known member
Joined
Nov 21, 2002
Posts
15,296
Total Time
5000+
Traderd said:
PCL,

You do understand that there is just as much profit from NASDAQ 5K to 2K as from NAS 2K to 5K, right?

And as far as speculators, there are many who have profited from the move to $70 and have already profited from the move back to $68 and will continue to do so regardless of the direction. No reason to lose the farm or even your airplane.

Very true. However, for every person that profited from the drop in the NASDAQ, there were many other people that lost their shirt. Very few people get involved in shorting. However, many average Americans get involved in these ridiculous bubbles, and they get hit hard when the bubble pops, as it always does. It's much better to invest in something that is supported by the fundamentals than to try to guess the next move of the various futures contracts.
 

Traderd

Well-known member
Joined
Feb 4, 2005
Posts
2,073
Total Time
5500
PCL_128 said:
Very true. However, for every person that profited from the drop in the NASDAQ, there were many other people that lost their shirt. Very few people get involved in shorting. However, many average Americans get involved in these ridiculous bubbles, and they get hit hard when the bubble pops, as it always does. It's much better to invest in something that is supported by the fundamentals than to try to guess the next move of the various futures contracts.

I would agree with your logic for people who do not work the markets on a daily basis. The average American you mention. I would not suggest those who are otherwise engaged day to day to trade equities or contracts for the short term.

However, even for average Americans, any position filled should always have a protective stop loss in place and strictly followed. Regardless of how market savy one may or not be (and I am far from savy), no one should risk so much of one's captital that a position's failure seriously impacts that capital balance. I know that is easy to say and harder to do. Fear and greed, same story as always. There really is no need to lose one's shirt. Just be disciplined and control that capital. Just as I feel that short term trading is not the best fit unless you have the time, niether do I believe that Buy and hold strategies are the best for the average investor.

As far as guessing the next move of futures contracts or stocks, everyone that enters a position is guessing the move. Some trade with longer time frames and greater stop limits than others, but all are guessing. Fundementals are a great way to determine your guess, but I can attest to the fact that technical indicators work very well also.

For a recent example (8/5/05), I went long on BIDU during its IPO at a weighted average of 1000 shares @$70 and sold at an average of $132.73 about three hours later. The maximum amount of capital risked was $1200 (a SL order placed for $68.80 later replaced at $100 or so with a $10 trailing stop). I knew nothing of the stock except that it was an IPO and entered based on a price volume discrepancy I have traded with for years. I have no such examples of large losses because I always limit my losses. Of course I have many losing trades but they are never so large as to endanger my capital.

While this is an extreme example and is more akin to a lottery win than a sucessful trade, it does demonstrate that one does not need to have any idea of the value of a stock to profit and that one can realize substantial profits while mitigating the risks associated with the very narrow time span the equity is held. As far as futures go, that is where the real profit potential lies mostly based on the leverage available. A dollar buys a lot of product relatively speaking but one can actually lose more than invested because of this leverage. And based on the margin calls I have seen discussed, it does happen.

Anyway, happy investing and I hope all turns out well for everyone in the markets, although I understand that is not a probable outcome.
 

satpak77

Marriott Platinum Member
Joined
Dec 2, 2003
Posts
3,015
Total Time
5000+
As far as guessing the next move of futures contracts or stocks, everyone that enters a position is guessing the move. Some trade with longer time frames and greater stop limits than others, but all are guessing. Fundementals are a great way to determine your guess, but I can attest to the fact that technical indicators work very well also.

and as you know....

the Market is Always Right

Fundamentals are better known as Funny-Mentals

The ultimate fundamental is price itself, everything that is known and unknown is boiled down to one thing, the price

There is no Bull Side or Bear side, just the correct side, trade with the trend

;)
 

satpak77

Marriott Platinum Member
Joined
Dec 2, 2003
Posts
3,015
Total Time
5000+
PCL_128 said:
Very true. However, for every person that profited from the drop in the NASDAQ, there were many other people that lost their shirt. Very few people get involved in shorting. However, many average Americans get involved in these ridiculous bubbles, and they get hit hard when the bubble pops, as it always does. It's much better to invest in something that is supported by the fundamentals than to try to guess the next move of the various futures contracts.

Shorting is not as complicated as it appears, it is simply a matter of trading stocks that are going down, instead of up. Instead of buying a stock, hoping it climbs, you short it, hoping it tanks. Not many investors do this, and very few mutual funds are legally allowed to short, with the exception of specific bear market/short funds such as BEARX.

The trader who combines fundamentals with technicals is probably better off than using either one independently. Basically buying good quality stocks at the correct time.

Another thing many traders/investors are not cognizant of is the overall market condition. If the market is in a new uptrend (March 2003-Dec 2003), his chances for success are much greater if he buys at that time then at the tail end of a bull market (end of 1999, early 2000), hoping that his stock will go up ten times.

Buy (or short) at the wrong time in the overall market cycle can seriously impeded your overall performance.

if I had 100K laying around I would have bought Unleaded Gas futures before Katrina hit...see chart

http://futures.tradingcharts.com/javachart/UG/95?returl=x2

while yes, high gas prices are hurting the economy, commodities traders who trade with the trend are making MILLIONS off crude oil and gas prices. Its not "bad" or "anti-American", this guys manage funds or work for investment companies, and its a chance to obtain profits. When the prices go down, they will go short, and make more money.
 
Last edited:

dmspilot00

Independent
Joined
Feb 22, 2002
Posts
712
Total Time
300
satpak77 said:
The ultimate fundamental is price itself, everything that is known and unknown is boiled down to one thing, the price

As an economics major, I'm happy that for once on a message board on the internet, I've found somebody that knows what they're talking about when it comes to gas prices.
 

empenage

Well-known member
Joined
Nov 25, 2001
Posts
528
Total Time
8500
satpak77 said:
Shorting is not as complicated as it appears, it is simply a matter of trading stocks that are going down, instead of up. Instead of buying a stock, hoping it climbs, you short it, hoping it tanks. Not many investors do this, and very few mutual funds are legally allowed to short, with the exception of specific bear market/short funds such as BEARX.

The trader who combines fundamentals with technicals is probably better off than using either one independently. Basically buying good quality stocks at the correct time.

Another thing many traders/investors are not cognizant of is the overall market condition. If the market is in a new uptrend (March 2003-Dec 2003), his chances for success are much greater if he buys at that time then at the tail end of a bull market (end of 1999, early 2000), hoping that his stock will go up ten times.

Buy (or short) at the wrong time in the overall market cycle can seriously impeded your overall performance.

if I had 100K laying around I would have bought Unleaded Gas futures before Katrina hit...see chart

http://futures.tradingcharts.com/javachart/UG/95?returl=x2

while yes, high gas prices are hurting the economy, commodities traders who trade with the trend are making MILLIONS off crude oil and gas prices. Its not "bad" or "anti-American", this guys manage funds or work for investment companies, and its a chance to obtain profits. When the prices go down, they will go short, and make more money.

Let me ask you a question.

If you were a terroist planning something like the World Trade Center, you could make money by shorting airline stocks right?
 

satpak77

Marriott Platinum Member
Joined
Dec 2, 2003
Posts
3,015
Total Time
5000+
empenage said:
Let me ask you a question.

If you were a terroist planning something like the World Trade Center, you could make money by shorting airline stocks right?

i suppose so but most people who "jump in" and try to be "ahead of" the next market move only loose money. Trend followers, who jump in once the trend already gets started, are usually the most profitable traders.

later
 

jetflyer

Concerned Citizen
Joined
Mar 8, 2002
Posts
2,040
Total Time
6k+
Sorry to burst the EXUBERANCE BUBBLE :(

Forbes is LYING?? Here is a posting on Australian Senator Kerry Nettle's Website. Kerry Nettle says that Forbes is lying and that he is telling his investors in a SUBSCRIBER ONLY newsletter that global oil production will PEAK very soon and the price of oil will skyrocket. Here is the link:

http://www.kerrynettle.org.au/600_media_sub.php?deptItemID=433

.Steve Forbes contradicts oil price claim in latest investor newsletter

1st Sep 05

Greens Senator Kerry Nettle today accused Steve Forbes, host of the CEO conference at the Opera House, of playing deceptive games with the Australian public over oil price claims.

Steve Forbes told the Prime Minister and media on Tuesday that oil prices will come back down to around $35 a barrel within a year, and that high prices are a speculation 'bubble'. Overnight his investor newsletter has advised the opposite.

The subscriber only Forbes Professional Timing Service states:

"THE MOST IMPORTANT ADVICE I HAVE GIVEN IN 20 YEARS"

"expect to see crude move to $65.00 this summer and to $76.00 by early next year."

"..the so-called terror premium in crude prices - which will remain until we see at least three years of peace in the fertile crescent".

And,

"We are at the point where the rubber hits the road, and the only rationing mechanism for whomever gets the available supply will be higher prices."

"What is Mr Forbes up to? It appears he is telling the Australian public and decision makers not to taking the spike in oil prices seriously, whilst telling his investors that the spike is a great profit making opportunity," Senator Nettle said.

"Mr Forbes public comments appear to be about discouraging steps to address the coming peak oil crisis, a crisis he admits as real to his investors.

"Steve Forbes is treating Australians with contempt. He should apologise for his deliberate deception.

"Australians should be worried if the Prime Minister is taking advice from the likes of Steve Forbes on an issue as vital as the looming energy crisis. This embarrassing incident underlines the untrustworthiness of Mr Forbes' advice.

"The Prime Minister should be listening to those who advocate investment in renewable energy and energy conservation measures which are in the long term interests of this country."

Contact – JonEdwards 0428 213 146

EXCERPT FROM FORBES NEWSLETTERS PROFESSIONAL TIMING SERVICE OVERLEAF…

1 September 2005 12:28:37 AM

FORBES NEWSLETTERS PROFESSIONAL TIMING SERVICE

THE MOST IMPORTANT ADVICE I HAVE GIVEN IN 20 YEARS
There are four major opportunities concerning crude oil, gold, stocks, and bonds that will make and break millionaires during the next 24 months.

First: Too late to buy oil? Not on your life!

A couple of years ago when oil was trading at $16.00 to $20.00 a barrel, I pointed out the ground floor investment opportunity developing in oil. We openly recommended Enerplus Resources (ERF-NYSE) in our publications. It was trading at $17.00 or less then and was paying a dividend of about 1.25% - MONTHLY. That amounted to 15% a year. After a brief correction this spring, crude oil is once again trading solidly over $55.00 a barrel. Enerplus is trading over $35.00, a dynamic double from our original recommendation. It is too late to chase Enerplus, and there are better buys out there that are yet to be discovered by the Street. I will tell you about one presently, but first ...

Opportunity #1 – An exceptional second chance to buy energy stocks.

The first of four major opportunities you will encounter this summer - which is also the biggest money making opportunity I have seen since crude oil was $20.00 - is to take advantage of the recent correction in the energy sector and buy some energy stocks. You may be skeptical about this - as investors were when we told them to "mortgage the house and buy stocks" in the spring of 1982. Nevertheless, here it is.


Oil and natural gas are on their way to significantly higher levels.I expect to see crude move to $65.00 this summer and to $76.00 by early next year. However, you can still buy select oil and gas producers that pay 11% to 15% dividends - and they pay monthly. It doesn't get better than that.


There are many reasons to invest now in oil and gas. Unrest in the Middle East and the so-called terror premium in crude prices - which will remain until we see at least three years of peace in the fertile crescent - are two reasons. I think that will be a long time coming. Now, Iran (a major world supplier) is making the news as a safe haven for terrorists as well as a nuclear threat.


Venezuela (the fourth largest supplier of U.S. crude oil) is becoming our avowed enemy. There is renewed strife in Nigeria. The lion’s share of the world’s crude is being produced from wells far beyond their prime, and some sources estimate that for every 2 to 4 barrels a day consumed, only 1 new barrel is being brought on line.


There is a major shortfall between supply and demand, and this shortfall is growing on a monthly basis. World demand increased 2.5 million barrels a day over the last year due to increased demand in the U.S. and Asia. India and China are industrializing at a feverish pace, and their energy appetite is increasing exponentially. China is aggressively expanding their infrastructure and their military, and they are developing an enormous strategic oil reserve that will be much bigger than ours. Mushrooming global consumption will easily be 86 MBD or more by the end of this year.

On the other hand, global production is very close to a peak, and there is no longer any near term "excess" production capacity left. Knowledgeable sources estimate that world production will never – that’s NEVER - exceed 90 million barrels a day (MBD). With one exception - which we discuss in our updated special report Oil - Slam Dunk Investing For Income And Capital Gains – Updated- alternative energy of any import is years in the future. We are at the point where the rubber hits the road, and the only rationing mechanism for whomever gets the available supply will be higher prices.
 
Last edited:

ChrisNNJ27

Member
Joined
Sep 19, 2004
Posts
13
Total Time
142
jetflyer said:
Forbes is LYING?? Here is a posting on Australian Senator Kerry Nettle's Website. Kerry Nettle says that Forbes is lying and that he is telling his investors in a SUBSCRIBER ONLY newsletter that global oil production will PEAK very soon and the price of oil will skyrocket. Here is the link:

http://www.kerrynettle.org.au/600_media_sub.php?deptItemID=433

Jet Enough already....

I think everyone knows where you stand with regard to Peak Oil Paranoia...
 

BoilerUP

Citation style...
Joined
Nov 11, 2003
Posts
5,311
Total Time
1500+
If somebody can factually verify that Forbes sent out a members-only newsletter contracting a public statement (because I refuse to believe the word of a single Austrailian Senator as posted on a lunatic fringe webboard where I believe many people are profiting hugely from the increase in oil prices), he'll get hung in the media for it. Forbes has a pretty good reputation, and I doubt he'd be so crass and arrogant as to think he could get away with such doubletalk.

Until then, I'll believe Mr. Forbes; he knows more about the stock market than I do
 

Mumra

New member
Joined
Aug 17, 2005
Posts
1
Total Time
220
To the posters that believe that the market price of a commodity reflects all known information about that commodity and that past price performance is irrelevant: bull.

Efficient markets theory was all the rage when I was in school around 15 years ago but I believe the behaviorlists are now gaining ground. Behavioralists believe that irrational decision making by individuals affects market prices (hence the stock bubble of 2000). Anyone using technical analysis would be a behavioralist.

http://www.techcentralstation.com/102004D.html
 

Traderd

Well-known member
Joined
Feb 4, 2005
Posts
2,073
Total Time
5500
Mumra said:
To the posters that believe that the market price of a commodity reflects all known information about that commodity and that past price performance is irrelevant: bull.

Efficient markets theory was all the rage when I was in school around 15 years ago but I believe the behaviorlists are now gaining ground. Behavioralists believe that irrational decision making by individuals affects market prices (hence the stock bubble of 2000). Anyone using technical analysis would be a behavioralist.

http://www.techcentralstation.com/102004D.html

That's me!

I could not care less about why a given equity or commodity's price is on the move nor do I care in which direction. It is without relevance to me if the price is speculative or based on someone's idea of sound fundamentals.

I care only that it moves.
 
Top