Jet Fuel Prices WILL Be Climbing A LOT, and Soon

[jetflyer]

http://www.bloggingstocks.com/2008/...ees-oil-falling-to-85-in-q2-backs-alternativ/

And yet he still sees it dropping to $85.

Your article about Pickens' prediction for a fall from $100 to $85 is from FEBRUARY!??

Boone was on the wrong side of that trade! He says he immediately reversed his position and went long not losing his hedge fund customers too much money.

Boone thinks we're at or very close to peak oil and that up is the direction for the long term future, and I agree.

 

[FL510in10min]

So Jetflyer so u see a drop before another rise?

 

[jetflyer]

Hi FL510,

I think it's almost impossible barring the shutting of the Strait of Hormuz or war with Iran that oil will rise above about $132 without a pretty good drop first. It looks like the topping process is happening now. We're simply too overbought according to the MACD. You have to get new buyers willing to buy.

Look at the chart for WTIC here:
http://stockcharts.com/charts/gallery.html?$wtic

1.39 times the 200 day moving average has been serious resistance for some time for gold and oil and I don't see that being broken.

We're pretty much there now.

There is also a long term trend channel that oil is right up against right now. So unless we enter new uncharted territory the trend channel will hold and we'll see a fall in oil for a while.

Where will it fall?

Two most likely possibilities:
Most likely: 200 Day moving average which is at 93.87 and rising quickly. It should be at about $100 in about 2 months, and I think at that same time it will be greeted by the front month price for WTIC

Second most likely: 50 Day moving average which is at 112.48 and rising quickly. It should be about $115 when oil meets it. I think we'll go down to the 50dma, pause here, bounce upwards then fall cutting right through it on the way down to $100 but if we stay around here for a while bouncing up and down we could work off the overbought condition enough to go to new highs......

We'll see but I don't see higher than $132 without atleast hitting about $115 first.....

A good editorial from one of my favorite analysts for you to read is by Clive Maund from a couple days ago talking about how oil is about to fall:
http://www.321energy.com/editorials/maund/maund051408.html

See ya,
Jet

 

[jetflyer]

Thinking about this again.

Look here:
http://www.321energy.com/editorials/maund/maund051408.html

I bet that intermediate trend channel holds and we only go down to about $110 and works sideways for months like it did when it dropped from $100 to 85 bounced back up, down, back up, then back to $85 to meet that same trend channel I'm talking about.

I bet it just duplicates what it did then....

Well heck, who really knows!! It could do that or go to $100 to meet the 200 DMA. I just know it has to go down before it goes back up.....

Fundamentals are just too great right now.... Working off that overbought condition is crucial though...

Jet

 

[Razorback Flyer]

You KNOW prices are too high if even the peakniks are predicting a pullback!

The race for alternatives is gaining some speed:

http://money.cnn.com/news/newsfeeds/articles/djf500/200805151534DOWJONESDJONLINE000967_FORTUNE5.htm


I had another link, but its down right now. I'll try to post when it returns.

 

[deepwater]

Jet i have to agree with you,on this trade, taking my profits off the table in DIG and hope to rebuy it in the
$100 range which looks like the new floor. technicals
show an overbought sector and it looks like a little bit
of churn before the drop. Fundamentally, long term
I dont know if we are at peak oil yet or it is in the near future. What i do see is the easy oil has been recovered. Now it is getting much harder to retreive
it, harder and more expensive to refine it, more expensive to transport it, lack of excess refining capacity, old fields declining as quick as new ones are brought online, and a billion Chinese who want a car, only 1 in 70 have one now, etc. Is it the end of the world? no just a different one where we will adapt with smaller cars, alternate energy etc meaning in the end a lower standard of living.
what does it mean for our industry? More bankruptcy, mergers and possibly less people flying.
I just hope we don't end up in another 70's stagflation economy or worse. I'm going to quit
typing before I depress myself.

 

[jetflyer]

deepwater,

I think you're right about the pullback and how things will turn out. It's not the end of the world. Society will not break down. Life will go on. We're just enterting a new world where people will pay more for energy, food, plastics, and other petroleum products, etc.

I think we'll all be a little poorer because of the inflation but life will go on.

Preparing yourself for hard economic times is about the only thing one can do.

Jet

 

[PCL_128]

deepwater,

I think you're right about the pullback and how things will turn out. It's not the end of the world. Society will not break down. Life will go on. We're just enterting a new world where people will pay more for energy, food, plastics, and other petroleum products, etc.

I think we'll all be a little poorer because of the inflation but life will go on.

Preparing yourself for hard economic times is about the only thing one can do.

Jet

A very reasonable post from you. Good to see.

 

[jetflyer]

Peak Oil was all over CNBC yesterday.

The author of the US Govt DOE funded Study on Peak Oil Robert Hirsch spoke about peak oil on CNBC. He basically said alternatives aren't going to cut it and oil production totals will fall in the future.
Watch here:
Dr. Hirsch Discusses Peak Oil on CNBC

Then legendary Texas oil man T. Boone Pickens spoke about the world having reached peak oil on CNBC.
Watch here:
http://www.cnbc.com/id/15840232?video=747990771

The traders on Wall Street are starting to believe in peak oil. Read below:
Financial Times:

.Shortage fears push oil futures near $140

By Carola Hoyos and Javier Blas in London
Published: May 20 2008 19:06 | Last updated: May 21 2008 10:57

Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel, further stoking inflationary pressures in the global economy.

The spot price of Nymex West Texas Intermediate hit a record $130.30 a barrel on Wednesday. On Tuesday investors had rushed to buy oil futures contracts as far forward as December 2016, pushing their prices as high as $139.50 a barrel, up more than $9.50 on the day.

Veteran traders said they had never seen such a jump and said investors were increasingly betting that oil production would soon peak because of geopolitical and geological constraints.

Neil McMahon, of Sanford Bernstein, said: “Peak oil views – regardless of whether right or wrong – are seeping into the market and supporting high prices.”

Anne-Louise Hittle, of Wood Mackenzie, added that investors were shifting their focus from the short-term to the medium-term, where supply fears played a bigger role. Since January, long-term futures oil contracts, such as those for delivery in 2016, have jumped almost 60 per cent, while near-term prices have gone up 35 per cent.

That trend was exacerbated by T. Boone Pickens, the influential investor who believes world oil production is about to peak as aging fields run dry. He warned that oil prices would hit $150 a barrel by the end of the year.

“Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.”

Mr Pickens’s view is still in the minority in the oil industry. But concerns over future oil supplies are fast moving into the mainstream and influencing investors.

Politicians have expressed concern that speculators are forcing prices higher and Joseph Lieberman, the influential senator, said he was considering legislation to limit big institutional investors in commodities markets.

Some energy executives have warned that geopolitical supply constraints will mean production will not be able to match demand as early as 2012 to 2015.

This comes as demand, especially from China, is set to continue to grow, while that of the US slows. Adam Sieminski, chief energy economist at Deutsche Bank, said: “The price is going to go up until governments that subsidise oil consumption in Asia and the Middle East can no longer afford it.”

So far China is doing the opposite, having recently retrenched subsidies. Analysts say Chinese demand could surge further as the country faces shortages of coal and hydropower.

Nervousness about Chinese energy demand was exacerbated on Tuesday when officials said 32 power plants had been forced to close because of coal shortages.

PetroChina and Sinopec, the two biggest domestic oil groups, also have diverted fuel supplies to the quake-hit Sichuan region.

Even with all that said the price should come down soon even though we just reached $130/barrel!!

 

[Lear70]

Even with all that said the price should come down soon even though we just reached $130/barrel!!

Wishful thinking.

We're going to be around $150 a brl come 4th of July.

I'm betting the correction comes somewhere between $150 and $200, about the beginning of 2009, and stays around $100-$110 for a long time to come.

The only way we'll adjust is if we negotiate higher wages to compensate for the higher cost of living. Most pilot wages (except SWA) haven't kept up with inflation AT ALL over the last 20 years, and now it's about to get a whole lot worse.

Something is going to have to give,,,