Oil falls below $50.
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Andy Neill
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How about $46.80 - the previous low on 15 May 05?
Ih8AFYesmen
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The airlines who hedged fuel at higher prices (i.e. Alaska) will continue to cry bloody murder. They'll continue to bitch and moan about how much their pu$$y hurts and that they are losing so much money.
Indy319FA
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Last I heard the "experts" expect it to fall to $40 a barrel........
Good bye coal liquification, oil shale, and other alternatives. You can't make any money off alternatives with oil at these prices. The only thing that will survive is the USAF coal liquification program because it is a guaranteed contract....
ANWAR anyone?
Good bye coal liquification, oil shale, and other alternatives. You can't make any money off alternatives with oil at these prices. The only thing that will survive is the USAF coal liquification program because it is a guaranteed contract....
ANWAR anyone?
November 20, 2008, 2:04 pm
Goldman Backs Off Its Oil ‘Super Spike’ Theory
Posted by stockstowatchtoday_topeditor
TURNS OUT, $200 CRUDE WAS TOO AGGRESSIVE A CALL
That ‘’super spike” in oil prices that Goldman insisted would lift crude to $200 a barrel ….? Turned out to be a dagger that has pierced Goldman itself. It never really turned out to be that prescient: instead of the 50% jump in oil that Goldman anticipated back in May, when it made the call with crude trading at $132, the price of a barrel never got more than 11% higher. And has since, of course, lost fully two-thirds of that price in the intervening four months.
Now Goldman is left with the ignomy of summarily abandoning the investors who listen to its research calls, telling them effectively that they’re on their own. On Thursday, Goldman said it was ”closing” its recommendations for oil trades. Meaning that in a perilous time when the traders who pay attention to Goldman’s recommendations could use some guidance the most, Goldman has opted to give them the least. And some traders are furious about it, comparing the maneuver to then-strategist Abby Cohen’s decision to abandon her targets for equity indexes in the fall 2001, citing the uncertainties abounding in the market.
Goldman specifically talked about four trade recommendations it previously issued, and said clients shouldn’t put any stock in them any longer. One particular trade, a Nymex-WTI swap on the 2012 contract, issued in September, when crude already had declined to below $70, suggested that the contract would reflate to a range of $120 to $140. Obviously, that hasn’t happened.
In the end, the last laugh is on Goldman, ironically enough. Back in 2005, when Goldman oil analysts first started talking about a ‘’super spike” in energy prices, the prospect of crude going to as much as $105 a barrel, as they suggested, seemed like folly. The market subsequently vindicated them. When those same analysts raised their foreecasts last March, and first spoke of the $200 price point, a lot of traders still tittered. When Goldman spoke more determinedly about $200 in May, it seemed less far-fetched.
The big losers, of course, would be anybody who continued to trade on Goldman’s recommendations. And the stocks of companies linked to those underlying commodities. Exploration and production names have had an awful go of it Thursday, integrated majors bad to a lesser extent. Apache (APA) lost 6%, Chevron (CVX) fell 2%, and ConocoPhillips (COP) 1%. But Goldman …? What did Goldman lose today? It’s worth noting that, for reasons unrelated to its oil trading call, Goldman shares dropped below their 1999 IPO price in Thursday’s trading.
Goldman Backs Off Its Oil ‘Super Spike’ Theory
Posted by stockstowatchtoday_topeditor
TURNS OUT, $200 CRUDE WAS TOO AGGRESSIVE A CALL
That ‘’super spike” in oil prices that Goldman insisted would lift crude to $200 a barrel ….? Turned out to be a dagger that has pierced Goldman itself. It never really turned out to be that prescient: instead of the 50% jump in oil that Goldman anticipated back in May, when it made the call with crude trading at $132, the price of a barrel never got more than 11% higher. And has since, of course, lost fully two-thirds of that price in the intervening four months.
Now Goldman is left with the ignomy of summarily abandoning the investors who listen to its research calls, telling them effectively that they’re on their own. On Thursday, Goldman said it was ”closing” its recommendations for oil trades. Meaning that in a perilous time when the traders who pay attention to Goldman’s recommendations could use some guidance the most, Goldman has opted to give them the least. And some traders are furious about it, comparing the maneuver to then-strategist Abby Cohen’s decision to abandon her targets for equity indexes in the fall 2001, citing the uncertainties abounding in the market.
Goldman specifically talked about four trade recommendations it previously issued, and said clients shouldn’t put any stock in them any longer. One particular trade, a Nymex-WTI swap on the 2012 contract, issued in September, when crude already had declined to below $70, suggested that the contract would reflate to a range of $120 to $140. Obviously, that hasn’t happened.
In the end, the last laugh is on Goldman, ironically enough. Back in 2005, when Goldman oil analysts first started talking about a ‘’super spike” in energy prices, the prospect of crude going to as much as $105 a barrel, as they suggested, seemed like folly. The market subsequently vindicated them. When those same analysts raised their foreecasts last March, and first spoke of the $200 price point, a lot of traders still tittered. When Goldman spoke more determinedly about $200 in May, it seemed less far-fetched.
The big losers, of course, would be anybody who continued to trade on Goldman’s recommendations. And the stocks of companies linked to those underlying commodities. Exploration and production names have had an awful go of it Thursday, integrated majors bad to a lesser extent. Apache (APA) lost 6%, Chevron (CVX) fell 2%, and ConocoPhillips (COP) 1%. But Goldman …? What did Goldman lose today? It’s worth noting that, for reasons unrelated to its oil trading call, Goldman shares dropped below their 1999 IPO price in Thursday’s trading.
johnsonrod
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Funny how politicians aren't BLAMING oil companies for this reduction in oil costs.... Those idiot politicians. Maybe now they understand that oil price is a function of oil demand and not necessarily oil company pricing power. Yeah, let's go tax those oil companies harder now - right?
Again, you don't hear any politicians complaining about oil company greed nowadays...
Again, you don't hear any politicians complaining about oil company greed nowadays...
SpauldingSmails
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I think I'd take picture of oil prices now, it'll last longer.
I love how everyone takes a 3 month trend and just shoots the line in one direction. "Oh oh, oil is going up... it's gonna go to $200/bbl!!!! Arrrggghhhh!" "Oh oh, now oil is going down... it's gonna go to $20/bbl!!!! Weeeeeee!"
You think we're going to be able to keep printing off money like the Wiemar Republic and commodity prices will stay flat or regress... good luck with that. I'm not saying $147/bbl, but I don't think we'll sit below $50/bbl long either.
I love how everyone takes a 3 month trend and just shoots the line in one direction. "Oh oh, oil is going up... it's gonna go to $200/bbl!!!! Arrrggghhhh!" "Oh oh, now oil is going down... it's gonna go to $20/bbl!!!! Weeeeeee!"
You think we're going to be able to keep printing off money like the Wiemar Republic and commodity prices will stay flat or regress... good luck with that. I'm not saying $147/bbl, but I don't think we'll sit below $50/bbl long either.
captjim
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I totally agree with you. OPEC won't let these prices fall and stay below $60. Most of the OPEC countries have their budgets set for $60+ oil. Look for a large production cut in Dec which will cause a rise above $70.
General Lee
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That usually doesn't work, since some of the OPEC nations cheat anyway and try to sell as much as they can at the highest price out there. Otherwise, the oil sits as the price still drops due to the Worldwide economic downturn.
Bye Bye--General Lee
Worldwide demand destruction is going parabolic. $20/bbl oil seems likely. Oil demand is very inelastic with respect to price, so it isn't going to matter if oil is $20/bbl or $200/bbl, it has little effect on demand. Demand for oil is tied to the global economic engine - and that engine has stalled out.
If we have a long term worldwide economic depression, oil demand won't pick up for a LONG time. And once demand does pick up, oil prices will quickly shoot up due to lack of production capability (oil countries won't be able to increase supply to match demand) - but I don't see that happening for close to a decade.
As for speculation on oil supply cuts by OPEC and other oil producing states, that's nice in theory. It doesn't happen in practice.
Right now, oil futures are bigtime in contango which is why any company that chooses to pursue an aggressive hedging strategy is going to get hammered in the future. Until they get closer to backwardation, it is foolish for an airline to hedge.
If we have a long term worldwide economic depression, oil demand won't pick up for a LONG time. And once demand does pick up, oil prices will quickly shoot up due to lack of production capability (oil countries won't be able to increase supply to match demand) - but I don't see that happening for close to a decade.
As for speculation on oil supply cuts by OPEC and other oil producing states, that's nice in theory. It doesn't happen in practice.
Right now, oil futures are bigtime in contango which is why any company that chooses to pursue an aggressive hedging strategy is going to get hammered in the future. Until they get closer to backwardation, it is foolish for an airline to hedge.
milky
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Smart speculators make money both directions. That's how the market works.
captjim
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I'm sitting in my apt in Kuwait looking at all of buildings go up. I was in Doha, Qatar and in Dubai a couple days before that, the buildings and infrastructure growth is amazing, those countries have to finance that stuff. I'll just say, I'm a big believer of supply and demand. I know that speculators have a big hand in this subject, but supply and demand will now determin pricing.
As was mentioned earlier, all OPEC partners have to stick with the quota's set forth. Saudi is the wild card, hopefully they keep the spickets wide open. I do hope that prices stay low for the sake of all of us.
As was mentioned earlier, all OPEC partners have to stick with the quota's set forth. Saudi is the wild card, hopefully they keep the spickets wide open. I do hope that prices stay low for the sake of all of us.
CaptJim, you've got a front row seat to a bubble economy. The same stuff happened in Thailand in the late 90s. When the bottom fell out in Thailand, there were a lot of half-built skyscrapers that were abandoned. I see the end game being the same in the Middle East.
I expect Dubai's economy to blow up first. After that, all the rest of the dominos will fall over there.
I expect Dubai's economy to blow up first. After that, all the rest of the dominos will fall over there.
... more like lucky speculators. Until you've got some nut in the game, it's easy to call it from the sidelines.
Even when I see a countertrend rally developing, I won't play my market thesis in the opposite direction. I'll go all cash first. I went all cash Friday morning because I was expecting a short term market bounce. I've been playing a total market meltdown thesis for more than a year now; it's served me well. I got lucky and avoided portfolio carnage in the last hour of trading Friday.
Trying to play every market vagary is a guaranteed ticket to the poorhouse. ... not to mention that trying to chase every yip in the markets messes with your cranium case.