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Marcus Aurelius's Comments Stream Stats
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OPEC: Too Little, Too Late
I believe the oil rally of summer '08 was a tech/speculative rally. The situation was like a spring with a lot of tension, when it lets go it recoils and does not stop until it is way past its natural point of equilibrium.
Where are we in relation to the equilibrium point? Well US oil stocks are high in relation to the five year average and dropped only by a little bit in the last week or so and we have Thunder Horse ramping up to be in full production within two years. However, we do have the economic downturn going on. My wife's nephew is a sailor and tells us six of his company's ships are docked - not enough material coming from China to the US.
Right now we are still above equilibrium, but when economies starting recovering watch out.
OPEC Cuts, Oil Falls: Something's Not Sustainable
OPEC Cuts, Oil Falls: Something's Not Sustainable
Hey everyone, he is not saying going to war with India, China, or Russia to plunder their oil, he is saying unless we come up with an alternative to oil we will be waring against them (and they against us) for what oil is left, no matter who is on top of it.
Booba, I must say you done good today, your boss at the KGB or whatever it is called today spent a few good rubles.
There is a third option and that is we curtail (at our option or otherwise) oil dependent activities and never ever forget, oil is about more than energy and serves as the raw material for medicines, plastics, fertilizers, etc etc etc.
I think those who say we didn't go to war in Iraq or wherever on account of oil are just as barmy as those who say it was the sole reason (or any one of a number of other kooky ideas - e.g. to avenge the foiled assassination plot against HW). Oil elevates what would otherwise be a wasteland to vital importance, as I say above, so much of our modern lives depend on it. The difference is there are a whole set of reasons oil being one of them.
Oil: A Slippery Slope Ahead?
Oil: A Slippery Slope Ahead?
I too agree with you, geopolitical risk is not adequately priced into oil. I would think given a serious event in the Persian Gulf region we could see oil 2x in couple of weeks.
Oil: A Slippery Slope Ahead?
It has long been known Iran has been stockpiling crude oil (albeit mostly sour crude and in a time of historically high prices) for some time, I recall seeing such talk at this site and others. What is new now, is others are starting to do that in a more rational strategy to capture higher market prices (in a period of relatively low prices). However, that will probably slightly raise prices and then cause them to fall further when the tankers start to race each other to offloading points.
Right now, the sour economic mood is driving the oil market. Any OPEC cut to be announced is most likely already factored into pricing, and looking at the latest chart from the USEIA I see oil stocks are pushing the upper end of the average range, if you look, despite the rapidly dropping oil prices we see a large uptick in stocks. If the economy was humming that chart would look a lot different.
Demonic Short Sellers
Any financial instrument can be used for legitimate business financial practices or for rank speculation. Heck even the simple and straight-forward practice of buying stock with cash and holding it until the price goes up can be reduced to rank speculation. The difference being most people understand the practice.
Demonic Short Sellers
I have a basic grasp of derivatives namely options and futures. When studying up on them I noted a very strong resemblance of puts to my auto insurance policy. In both cases I pay a premium for a time limited policy. In the case of my auto policy if a deer jumps out and totals my car I sell the car at its pre-wreck value to the insurance company, if I have a stock and it crashes then I sell the puts and at least get something back.
How Low Can Crude Oil and Gas Go?
Ex-Patriates in the Middle East are now worried their host nations will start taxing their incomes. Two events would typically trigger such thoughts in the governments of the Middle East weak dollar & low oil prices.
I expect CL to go sideways for a month maybe two months and then rise again to meet the summer driving season. However, I do not expect prices to approach last summer's highs, unless of course, some sort of major disaster (natural or otherwise) hits the energy production chain.
Alcohol Can Be a Gas: Debunking Myths About Ethanol
I have an E85 truck but have been burning E10 or E0 (when I can find it) because I ran the numbers and found I need about a 25% premium for the ethanol cents per mile to match the E10/E0 cents per mile and that does not factor in the pain in the...regarding reduced range and the scarcity of gas stations carrying E85.
Ethanol has a place in our energy supply, welfanol does not.
14 Beaten-Up Financials That Now Offer Real Value
OPEC to Cut Production at Friday Meeting, but Will Prices React?
Anyway, I think oil is getting close to finding a bottom, some analysts think with or without OPEC cutbacks, oil is overshooting its bottom right now and $70.00/barrel is about equilibrium. However, with the all the FUD about the future & the global economy, I expect to see demand die off and bring down oil prices.
The last time gasoline was at or under $1.00/gallon was when the Southeast Asian currency meltdown was underway.
The Return of Lending: Still Distant
The Return of Lending: Still Distant
I think this is where the problem lays. The credit industry got so caught up in schemes far removed from what credit is, the focus shifted from the foundation of credit to the top level suites.
When the focus shifted from the foundation to the penthouse the foundation suffered and as a result the penthouse is now crashing down. Problem is, before we can restore the foundation we have the clear the mangled remains of the penthouse.
Credit transformed itself from a means of building wealth (i.e. only take out loans when you are reasonably certain your earnings can pay back the loan and its costs) to being wealth in and of itself. How many of us appeared wealthy but in the end are no better than Carey & Daniels in Dumb and Dumber?
How Does the Financial Crisis Affect the Peak Oil Thesis?