A prediction from *T*

[*T*]

A barrel of crude will hit $30 before it hits $200.

yours

t

[Chris]

Re: A prediction from *T*

was looking for $40 but I agree that down is more likely than up at this stage in the game.

[GRG55]

Re: A prediction from *T*

A barrel of crude will hit $30 before it hits $200.

yours

t

This is just a different way of saying that in the short run the US Dollar will remain a "strong" currency...:p

[*T*]

Re: A prediction from *T*

This is just a different way of saying that in the short run the US Dollar will remain a "strong" currency...:p

Not really, unless you measure strength against oil. I just think there will be further demand destruction which will in the shorter term outstrip the supply destruction. I.e. more of the same until it reverses.

[GRG55]

Re: A prediction from *T*

Not really, unless you measure strength against oil. I just think there will be further demand destruction which will in the shorter term outstrip the supply destruction. I.e. more of the same until it reverses.

THe movements of the oil price in the short run have absolutely nothing to do with supply and demand. If you disagree with that statement then show me a logical argument for how global supply and demand could fluctuate as much, and as rapidly, [up and down] as the oil price has since the beginning of this year.

Predicting "more of the same until it reverses" seems like the sort of forecast one could apply to anything...

When the US Dollar breaks down, the oil price will be one of the main beneficiaries. When...

[TRake]

Re: A prediction from *T*

THe movements of the oil price in the short run have absolutely nothing to do with supply and demand. If you disagree with that statement then show me a logical argument for how global supply and demand could fluctuate as much, and as rapidly, [up and down] as the oil price has since the beginning of this year.

Predicting "more of the same until it reverses" seems like the sort of forecast one could apply to anything...

When the US Dollar breaks down, the oil price will be one of the main beneficiaries. When...

I agree, fundamentals have gone out the window for the moment. I think the movement to gold has yet to happen, but it will happen at some point. I just hope that silver can catch a bid with it. I am too poor to buy gold.

[*T*]

Re: A prediction from *T*

THe movements of the oil price in the short run have absolutely nothing to do with supply and demand. If you disagree with that statement then show me a logical argument for how global supply and demand could fluctuate as much, and as rapidly, [up and down] as the oil price has since the beginning of this year.

I agree with this. However I said shorter, not short. So I am saying it will go down due to a second wave of demand destruction then up due to supply destruction and inflation. That's not saying nothing.

It's not a particularly well backed-up argument I agree, more of a gut feeling, that's why I put it in rant & rave and not news.

[The Outback Oracle]

Re: A prediction from *T*

THe movements of the oil price in the short run have absolutely nothing to do with supply and demand. If you disagree with that statement then show me a logical argument for how global supply and demand could fluctuate as much, and as rapidly, [up and down] as the oil price has since the beginning of this year.

Predicting "more of the same until it reverses" seems like the sort of forecast one could apply to anything...

When the US Dollar breaks down, the oil price will be one of the main beneficiaries. When...

GRG...I don't see it. Now given you're a fair bit more attuned than I am...here's the question. The Oil price is now 30% what it was at $147. The USD is not worth 3 times what it was a few months ago by any measure (except Zimbabwe). So surely the price variation is not just movement of the USD. Is it possibleshort term supply is VERY inelastic (maybe even negative). Further it is very difficult to store for other than short periods (if I remember your comments correctly) Thus small changes in demand can cause massive changes in price.?
Forgive me if i sem a simpleton.

[GRG55]

Re: A prediction from *T*

GRG...I don't see it. Now given you're a fair bit more attuned than I am...here's the question. The Oil price is now 30% what it was at $147. The USD is not worth 3 times what it was a few months ago by any measure (except Zimbabwe). So surely the price variation is not just movement of the USD. Is it possibleshort term supply is VERY inelastic (maybe even negative). Further it is very difficult to store for other than short periods (if I remember your comments correctly) Thus small changes in demand can cause massive changes in price.?
Forgive me if i sem a simpleton.

No, it is not just movement of the US Dollar...but it will take a sustained drop in the US Dollar to create a sustained rise in the nominal price of oil [think of it as a necessary, but not necessarily sufficient, condition -a point that Finster and I have long chosen to somewhat disagree over].

As for demand influences on the short term price of oil...below is a table of the daily spot price of WTI at Cushing, Oklahoma for every trading day from January 2, 2009 to April 21, 2009, inclusive. Alongside is the percent change from the previous day [with daily changes greater than 5% highlighted]. One has to have a pretty active imagination to believe that underlying physical demand is having any influence on the short term price behaviour. The price early this past week is the same as the opening day of the year...yet demand destruction in the USA, and globally, has been ongoing - and significant - so far this year according to all reports.

I am thankful, however, that every time the price of oil drops 8 or 10 percent in one day nobody feels compelled to start an "Oil Getting Killed!!!!" thread...:rolleyes:

2-Jan-09	46.17
	48.61	5.3%
	48.56	-0.1%
	42.75	-12.0%
	41.68	-2.5%
	40.69	-2.4%
	37.65	-7.5%
	37.77	0.3%
	37.43	-0.9%
	35.41	-5.4%
	35.38	-0.1%
	38.57	9.0%
	42.56	10.3%
	42.33	-0.5%
	45.12	6.6%
	46.50	3.1%
	41.67	-10.4%
	42.04	0.9%
	41.58	-1.1%
	41.73	0.4%
	41.35	-0.9%
	40.87	-1.2%
	40.27	-1.5%
	41.15	2.2%
	40.24	-2.2%
	39.58	-1.6%
	37.54	-5.2%
	35.93	-4.3%
	34.03	-5.3%
	37.63	10.6%
	34.96	-7.1%
	34.67	-0.8%
	39.60	14.2%
	39.35	-0.6%
	37.66	-4.3%
	38.86	3.2%
	41.64	7.2%
	43.18	3.7%
	44.15	2.2%
	40.07	-9.2%
	41.57	3.7%
	45.28	8.9%
	43.54	-3.8%
	45.43	4.3%
	47.01	3.5%
	45.68	-2.8%
	42.46	-7.0%
	46.91	10.5%
	46.22	-1.5%
	47.33	2.4%
	48.97	3.5%
	48.12	-1.7%
	51.46	6.9%
	51.55	0.2%
	53.05	2.9%
	53.36	0.6%
	52.24	-2.1%
	53.87	3.1%
	52.41	-2.7%
	48.49	-7.5%
	49.64	2.4%
	48.46	-2.4%
	52.61	8.6%
	52.52	-0.2%
	51.10	-2.7%
	49.13	-3.9%
	49.37	0.5%
	52.24	5.8%
	50.22	-3.9%
	49.51	-1.4%
	49.26	-0.5%
	49.97	1.4%
	50.36	0.8%
	45.82	-9.0%
21-Apr-09	46.65	1.8%

[Supercilious]

Re: A prediction from *T*

There is a simple trick to determine what would be the equilibrium price of oil if the goldman machine was not screwing with the spot price. During the last contract according to my calculations the equilibrium price price was $74-78bbl.

According to my reading the dollar has to fall 20-40%relatively fast in order to have the Fed pulling the biggest bait and switch and create a sectoral housing inflation that would stabilize the nominal (not real) price of housing. That means in about 2-6 months the equilibrium price of oil should be around $100. Of course there will be the additional depressing effect of OPEC cheating (countries starved for dollars will cheat and produce more than their quota)

Remember I'm talking about the equilibrium price. If the goldman rig of financial oil stays in place the price of oil will be exactly the price goldman wants to be.... Because what Goldman wants, Goldman gets.

Of course there is a remote possibility that people will not take it anymore and we will see all the Goldman guys put in orange jumpsuits and starting new careers as geishas for the military guard dogs... Well, ... we should not abandon hope

[The Outback Oracle]

Re: A prediction from *T*

GRG, sorry again if I'm being thick, so putting aside Symbols tin foil hat notion for a minute, most of the movement is due to some sort of financial squeeze (be it Goldman or whatever)?
I meant to add that as an alternative in my original question to you.

As to a sustained increase in the price, the squeeze on supply long-term which results from current postponement of development activity and declining production of existing fields, should surely create upward pressure on price.
I won't go near the geopolitical questions that you know much more about than I do.
I guess we might be just differing over what sort of time frame 'sustained' means.

WRT demand, I have a sort of 'itch i can't scratch' that you are taking a bit too much of a US centric view of the world. The decoupling with China was not going to occur on the way down this escalator, but i'm starting to think the next 5 to 10 years are sure going to see some radical changes and that decoupling is starting to look like a certainty. Demand, or trends in demand in the US, may no longer mean that is the trend world wide. Just a thought!.

We know little to nothing about how Finster's FDI is constructed, only that it gives us an indicator of what is happening now. I keep thinking that a rise in the price of oil is the equivalent of a fall in the dollar (given the linkage of oil to teh cost of production of everything) ...which is essentially what symbols is saying (I think)

[cobben]

Re: A prediction from *T*

"Predicting "more of the same until it reverses" seems like the sort of forecast one could apply to anything..."

I see $USD down & $USD denominated oil down too (though oil perhaps with a lag), and no I'm not paying any attention to any fundamentals.

and I'm wondering about the divergence between US nat. gas (crashing already?) & oil (soon to crash?):

http://stockcharts.com/h-sc/ui?s=$NA...d=p56724850150

http://stockcharts.com/h-sc/ui?s=UNG...d=p37957123984


and the potential for divergences between "US-local" oil (Nymex?) & "non-US / international" oil (Brent? or some other?) , which I do not know how to do a spread chart of.

[TRake]

Re: A prediction from *T*

"Predicting "more of the same until it reverses" seems like the sort of forecast one could apply to anything..."

I see $USD down & $USD denominated oil down too (though oil perhaps with a lag), and no I'm not paying any attention to any fundamentals.

and I'm wondering about the divergence between US nat. gas (crashing already?) & oil (soon to crash?):

http://stockcharts.com/h-sc/ui?s=$NA...d=p56724850150

http://stockcharts.com/h-sc/ui?s=UNG...d=p37957123984


and the potential for divergences between "US-local" oil (Nymex?) & "non-US / international" oil (Brent? or some other?) , which I do not know how to do a spread chart of.

I have been studying this also. Who is wrong, oil or natural gas? Buying Nymex Crude when it goes below Brent has been a winner for me lately. I am thinking the answer may lie in coal prices. I could be mistaken, but I think coal has moved higher since early march, but I can't prove it.

http://www.eia.doe.gov/cneaf/coal/pa...s/coalmar.html
This site leads me to believe coal is getting cheaper, but then this is the government talking.

Average Cost of Metallurgical Coal Priced at Coke Plants,
4Q2005 - 4Q2008, and at Export Docks, Oct 2005 - Dec 2008
(Dollars per Short Ton)



I can't give a good answer yet, but serious consideration is being given to using natual gas vs. coal for electric power production.
For instance, sort of hypothetically speaking (with rounding), a coal power plant in 2008 produced 23000 tons of carbon emissions. The government requirement may only allow 15000 tons per year starting in ? 2010? 2011? tomorrow? nobody knows. To accomplish this the plant would have to supplement with natural gas. My employer is currently scrambling to study and improve our carbon emissions. Due to the current price of natural gas, they have no problem running tests where a unit uses 5% NG with 95% coal, 15% NG with 85% coal, and so on. It would take me a few days to determing volumes of NG used at these levels, but the point is, if coal goes higher eventually it will drag NG with it, but I am sure everyone knows that already.

[cobben]

Re: A prediction from *T*

I have a number of reasons for wanting to watch this stuff from an international viewpoint, more geopolitical that investment related.

From a US-perspective-only investment viewpoint, i.e. assuming no near-term geopolitical dislocations, do you see a potential fractal pattern developing in the $NATGAS:$WTIC spread chart?

[TRake]

Re: A prediction from *T*

I have a number of reasons for wanting to watch this stuff from an international viewpoint, more geopolitical that investment related.

From a US-perspective-only investment viewpoint, i.e. assuming no near-term geopolitical dislocations, do you see a potential fractal pattern developing in the $NATGAS:$WTIC spread chart?

I need help. Where would I chart $NATGAS:$WTIC? And I am not afraid to sound stupid so, what does WTIC stand for? To know one must first understand that they don't know.

I prefer to use a pencil and paper along with unadulterated data, if possible.