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Oil Prices Continue to Plummet

T

Train

Lifer
Link
Oil Prices Continue to Plummet

Crude oil futures continued to plummet today on the belief that fuel supplies in the United States will be adequate to deal with its coming winter.

Light, sweet crude for December on the New York Mercantile Exchange fell 24 cents from its overnight closing to 47.13 dollars per barrel in after-hours electronic trade early today. The benchmark was at its lowest level since more than seven weeks ago, when Nymex oil closed at 47.10 dollars on September 21.

Prices are roughly 70% more than a year ago, but would have to surpass 90 dollars per barrel to reach the inflation-adjusted peak set in 1980.

In London, Brent crude for December delivery plunged 2.21 dollars to close at 43.71 dollars per barrel on the International Petroleum Exchange.

Still, the market remains jittery due to the world?s limited supply cushion, only about 1% of the 82.4 million barrels consumed daily worldwide, and the reason why events in Iraq and Nigeria are being closely watched.

In Iraq, militants have vowed to disrupt Iraq?s badly needed oil exports, and an export pipeline already has been knocked out by saboteurs.

Meanwhile, in Nigeria, a looming general strike moves closer to its start date Nov. 16 to protest domestic fuel prices.
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I think someone posted here a while back that oil would eventually level off at $45/barrel everything I'm reading now seems to point to that as true. $45 still aint cheap, but at least it will be stable.

Bloomberg: Crude Oil Falls as U.S. Inventories Are Expected to Show a Gain
 
Oil is never stable. It will always go up and down according to supply and demand, and global perceptions of political stability/instability.

The long term trend is up. It's just a matter of how much and when.
 
Originally posted by: WinstonSmith
Oil is never stable. It will always go up and down according to supply and demand, and global perceptions of political stability/instability.

The long term trend is up. It's just a matter of how much and when.
Click to expand...
the stability of the prices isnt a function of production alone (see second link) it also has a lot to do with inventories. The more we can hold in a buffer, the more stable prices will be, countries and thier refineries are actually increasing the amount of oil they can hold in reserve, this will stabilize prices, because they will be able to weather a supply shortage much better.

 
Originally posted by: Train
Originally posted by: WinstonSmith
Oil is never stable. It will always go up and down according to supply and demand, and global perceptions of political stability/instability.

The long term trend is up. It's just a matter of how much and when.
Click to expand...
the stability of the prices isnt a function of production alone (see second link) it also has a lot to do with inventories. The more we can hold in a buffer, the more stable prices will be, countries and thier refineries are actually increasing the amount of oil they can hold in reserve, this will stabilize prices, because they will be able to weather a supply shortage much better.
Click to expand...

Prices take 2 steps forward, 1 step back.
 
So much for Train's steady $45 a barrel theory:

11-23-2004 Oil Prices Pass $50 Mark on Winter Fears

Other factors putting upward pressure on oil prices include the declining value of the dollar, sabotage against oil infrastructure in Iraq and the limited amount of excess oil production capacity worldwide.

The current 1 percent production capacity buffer leaves the industry little room to maneuver in the event of an unexpected supply disruption and explains why the market is so sensitive to geopolitical stability.
===============================================================

Geopolitical Stability Ha
 
Originally posted by: dmcowen674
So much for Train's steady $45 a barrel theory:

11-23-2004 Oil Prices Pass $50 Mark on Winter Fears

Other factors putting upward pressure on oil prices include the declining value of the dollar, sabotage against oil infrastructure in Iraq and the limited amount of excess oil production capacity worldwide.

The current 1 percent production capacity buffer leaves the industry little room to maneuver in the event of an unexpected supply disruption and explains why the market is so sensitive to geopolitical stability.
===============================================================

Geopolitical Stability Ha
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Like I said... two steps forward, 1 step back.... rinse, repeat.... We'll hit $70/barrel by the end of the winter.
 
If we invade Iran oil will hit 200-300 dollars. Generally, a country under stress loses about half of its exports in oil (1979 upheaval, the Venuz. conflict, Libya bombings in 1980 etc etc). Right now, Iran is the #2 producer of crude and number #2 exporter as well (~5 million barrels). Losing 2.5 million barrels in a time where spare capacity is ~400,000 barrels is not a smart decision.

Also, Saudi Arabia's claim of 2+ million more spare capacity is simply PR talk. If one takes a look at the oil well structures they would draw extra supplies from, the geography technically allows them, but the damage done (oil is pulled up from porous rocks) would be immense. They could risk total collapse of several important oil fields (including Ghawar). So don't count on Saudi "spare" capacity to make up the losses in Iran.

200-300 dollar oil in America means more than just 6-8 dollar gas. It means EVERYTHING will cost tons more. Oil is involved in nearly every industry from the bottom to the top (manufacture to transport). It is more than just gas and electricty. It is involved in food, medicine, plastics, steel, computers; you name it, oil is probably involved in some way.
 
Originally posted by: 0marTheZealot
If we invade Iran oil will hit 200-300 dollars. Generally, a country under stress loses about half of its exports in oil (1979 upheaval, the Venuz. conflict, Libya bombings in 1980 etc etc). Right now, Iran is the #2 producer of crude and number #2 exporter as well (~5 million barrels). Losing 2.5 million barrels in a time where spare capacity is ~400,000 barrels is not a smart decision.

Also, Saudi Arabia's claim of 2+ million more spare capacity is simply PR talk. If one takes a look at the oil well structures they would draw extra supplies from, the geography technically allows them, but the damage done (oil is pulled up from porous rocks) would be immense. They could risk total collapse of several important oil fields (including Ghawar). So don't count on Saudi "spare" capacity to make up the losses in Iran.

200-300 dollar oil in America means more than just 6-8 dollar gas. It means EVERYTHING will cost tons more. Oil is involved in nearly every industry from the bottom to the top (manufacture to transport). It is more than just gas and electricty. It is involved in food, medicine, plastics, steel, computers; you name it, oil is probably involved in some way.
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I don't understand your formula.

When Oil was $25 a barrel Gas was $1

When Oil went to $35 barrel it went to $2

When it hits $60 it should be $3 a gallon as I predicted by end of this year.

at $70 Barrel should be $4

$100 Barrel should be $6 gallon

$140 Barrle should net $8 gallon gas

$200 Barrel should net $10 gallon gas
 
Closed at 48.94

The weekly US oil inventory report from the Dept. of Energy is expected at 10:30 ET... Analysts anticipate an increase of 700K barrels for crude and an increase of 350K for distillates...
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-moneycentral
 
Other factors putting upward pressure on oil prices include the declining value of the dollar, sabotage against oil infrastructure in Iraq and the limited amount of excess oil production capacity worldwide.
Click to expand...

I would add commodity speculators to the reason. There is always money to be made and lost by large movements in prices. I'll would imagine part of the reason for the increases are trend traders.
This probably dates me but I remember leaded gas :thumbsdown: and gas at less than 99 cents a gallon :thumbsup:
 
CNN reported yesterday morning that OPEC is considering "LOWERING" output because of worldwide rising inventories. The new economy where rising inventories = rising prices.
 
Dave, I think you need to account for inflation and the disastrous effects on the world economy a $ 200 dollar barrel price would bring with it. There are already too many dollars loose around the world (the dollar is overvalued). If the US tried to print dollars to buy oil at that price the US economy would simply collapse to hyperinflation. For certain the US dollar would no longer be the world currency reserve in that scenario. At some point along the curve your formula should simply start to accelerate the price increase. So what in todays money is a $ 200 dollar barrel could be say $ 600 dollars a barrel in inflated money bringing with it a say $ 50 dollar gallon. (Those figures are just to make the point)



 
Originally posted by: chowderhead
Other factors putting upward pressure on oil prices include the declining value of the dollar, sabotage against oil infrastructure in Iraq and the limited amount of excess oil production capacity worldwide.
Click to expand...

I would add commodity speculators to the reason. There is always money to be made and lost by large movements in prices. I'll would imagine part of the reason for the increases are trend traders.
This probably dates me but I remember leaded gas :thumbsdown: and gas at less than 99 cents a gallon :thumbsup:
Click to expand...

I remember 25 cent Gas :shocked:
 
Originally posted by: chowderhead
Other factors putting upward pressure on oil prices include the declining value of the dollar, sabotage against oil infrastructure in Iraq and the limited amount of excess oil production capacity worldwide.
Click to expand...

I would add commodity speculators to the reason. There is always money to be made and lost by large movements in prices. I'll would imagine part of the reason for the increases are trend traders.
This probably dates me but I remember leaded gas :thumbsdown: and gas at less than 99 cents a gallon :thumbsup:
Click to expand...

Gas was $0.51 in Corbin, KY ($0.59 in Lexington, KY) in 1998. Oil bottomed at around $11 per barrell then. OPEC tightened the screws....and kept tightening them until the bottom was empty and there was not enough to go around. They have opened up, but now demand is growing faster than supply.
 
Originally posted by: GrGr
Dave, I think you need to account for inflation and the disastrous effects on the world economy a $ 200 dollar barrel price would bring with it. There are already too many dollars loose around the world (the dollar is overvalued). If the US tried to print dollars to buy oil at that price the US economy would simply collapse to hyperinflation. For certain the US dollar would no longer be the world currency reserve in that scenario. At some point along the curve your formula should simply start to accelerate the price increase. So what in todays money is a $ 200 dollar barrel could be say $ 600 dollars a barrel in inflated money bringing with it a say $ 50 dollar gallon. (Those figures are just to make the point)
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Precisely why the rest of the world is moving away from the dollar. The U.S. is no longer the dominate power of the World Economy, the dollar is rapidly just becoming another peso.
 
Originally posted by: Engineer
CNN reported yesterday morning that OPEC is considering "LOWERING" output because of worldwide rising inventories. The new economy where rising inventories = rising prices.
Click to expand...

I do not see an accurate reflection of U.S. Inventories. One week they say we have an oversupply and the next they say we are 10+% behind the previous year, makes no sense.

China on the other hand says they are building massive Reserve Tanks but again do not see them to believe it.

The only thing we see is prices.

If supply was really in jeopardy then why is there not refineries and distribution tanks running out, Gas stations out of Gas etc???

In other words like the 1973 Oil Embargo but for real this time.

 
Originally posted by: dmcowen674
Originally posted by: Engineer
CNN reported yesterday morning that OPEC is considering "LOWERING" output because of worldwide rising inventories. The new economy where rising inventories = rising prices.
Click to expand...

I do not see an accurate reflection of U.S. Inventories. One week they say we have an oversupply and the next they say we are 10+% behind the previous year, makes no sense.

China on the other hand says they are building massive Reserve Tanks but again do not see them to believe it.

The only thing we see is prices.

If supply was really in jeopardy then why is there not refineries and distribution tanks running out, Gas stations out of Gas etc???

In other words like the 1973 Oil Embargo but for real this time.
Click to expand...

But hey, ExxonMobile made 6.4 Billion in profit last Quarter. All is good!

 
lol when the price of oil hits 200 dollars, the news reports will say that in adjusted dollars, the 1979 oil price was 250! Just to placate the American public.
I've seen it go from $70 to $90 as of lately (price of 1979 crude in 2004 dollars).
 
Originally posted by: 0marTheZealot
lol when the price of oil hits 200 dollars, the news reports will say that in adjusted dollars, the 1979 oil price was 250! Just to placate the American public.
I've seen it go from $70 to $90 as of lately (price of 1979 crude in 2004 dollars).
Click to expand...

Hey, it works like a champ, even elects Idiots for POTUS.

 
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