Oil falls below $50.

[SpauldingSmails]

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.

 

[captjim]

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 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.

 

[clippyrip]

Why did they not do this in the 80s when oil was $17 a barrel. It was the speculators and when the legislation screwed their game, the price dropped. No conspiracy.

 

[General Lee]

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.

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

 

[Andy]

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.

 

[milky]

It really breaks my heart to see oil drop. I wanted the speculators to have a good Christmas.

Smart speculators make money both directions. That's how the market works.

 

[captjim]

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.

 

[Andy]

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.

 

[Andy]

Smart speculators make money both directions. That's how the market works.

... 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.

 

[pilotss]

No Wait, It's peak oil! It's peak oil.....

***Crickets***