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$160 Oil This Week


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In the developed countries at least, it seems that a higher oil price is needed to get significant demand destruction. A recent survey of the public in Finland found that most people would need petrol (gasoline) prices to be at least 60 eurocents higher per litre before they would begin to reduce usage. A litre of 95-octane is about €1.42 at the moment and a lot of that price is taxes.

 

A consequence may be that inadequate demand destruction leads to shortages as Zapata George is saying. He's always very entertaining to listen to.

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Very interesting, I remember seeing the news story about Cheney visiting the Saudis over the oil price, the Saudis said that they would do what they could to ensure stable oil production, but nothing about raising production.

 

From what I remember on FSN over the past few years Zapata's oil price predictions have been pretty accurate. Is $160-220 a price that we could see IF demand does outstrip supply? I would be interested to hear other thoughts on a what a supply shortage could do to the oil price over the short term.

 

Thanks Frizzers for brining us that interview at short notice.

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Zapata is pushing it a bit this time, $160 - $220? He also thinks that stock markets are oversold and due a bounce from here. Now, no way can I see the US markets going up at all if oil hits $160. More likely the Dow and S&P would have sharp corrections on the downside at any sudden surge in the price of oil. I can see $120 in the short term, especially if a few more pipelines are taken out in the middle east, but not $160, not in the short term anyway. If it does happen, watch out world stock markets.

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Russian Oil Output May Fall for First Time in Decade in 2008

 

By Greg Walters

 

March 27 (Bloomberg) -- Russian oil output may fall this year for the first time in a decade as the world's second-biggest supplier struggles with rising costs and harder-to-reach fields, Natural Resources Minister Yuri Trutnev said.

 

``Two years ago, we said the growth rate was falling, and we said this was bad for Russia, remember?'' Trutnev said in televised remarks after a government meeting in Moscow today. ``Now we're saying the production rate is falling this year. This is not a bogeyman, unfortunately, this is real,'' Trutnev said, without giving a specific forecast.

Link:

http://www.bloomberg.com/apps/news?pid=206...mp;refer=energy

 

$160 does sound pretty amazing. But credible if a genuine supply shortage occurs.

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Well, not 100% Guaranteed, but nevertheless 'Zapata' George says there's a supply shortage coming.

 

http://commoditywatch.podbean.com/2008/03/...than-you-think/

 

Dr Bubb features too

 

Good interview Frizzers. Although Zapata George's prediction seems extreme I've found when I've listened to him previously that he doesn't do hype for the sake of it. He looks at the fundamentals and I like his idea that fundamentals will always prevail ultimately. I use this idea to keep me strong when investing and watching sharps corrections such as the recent one in gold and silver. If I remember rightly he called the bottom of the drop in crude from $80 last year the same week on Jim Puplava's show.

 

I think his prediction should be given credibility although whether it plays is yet to be seen. We seem to be experiencing squeezes in many commoditities currently - e.g. silver, wheat, corn. Something I've noticed round where I live (Cambridge) is that around Xmas and the New Year lots of petrol stations kept having cones lined up outside stopping cars coming in. One evening I needed to fill up my car and the only station that didn't have any cones was turning everyone away. At the time I did think perhaps we were starting to see the pressure on supply. Of course this is only anecdotal and I've not seen it again for a while. Has anyone else noticed problems like this in their area?

 

Jim Puplava has also predicted a time when there will be shortages and people won't be worrying about the price, rather whether they can get it at all!

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Yep, ZG has now repeated his views on FS newshour http://feeds.feedburner.com/fsn and he specifically said "next week". Now, is this a real "next week" or a metaphysical "next week"? ;) To be fair he did mention something about the next "90 days" as well. I'd love to believe it was real and have the balls to take a MASSIVE position on it and clean up.... hmmmmmm.

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So oils dropped to $102.5. Is now the time to get in for the big up move?

Well, if it is going to happen this week then it's a bargain, or is it a 90 day prediction? You do wonder if ZG will look silly after this one, but he has made some decent calls in the past. However, a $60 move in oil in such a short time period would indicate serious problems which even the mainstream media would have difficulty ignoring.

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Well, if it is going to happen this week then it's a bargain, or is it a 90 day prediction? You do wonder if ZG will look silly after this one, but he has made some decent calls in the past. However, a $60 move in oil in such a short time period would indicate serious problems which even the mainstream media would have difficulty ignoring.

He mentioned within 90 days on financialsense last week.

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Quick thought on oil:

 

Isn't it reasonable to think that prospects over the next 3 to 6 months could see oil developing somewhat of a 'win/win' situation for itself?

 

ie. recently (last 2 weeks) equity markets in a minor rally, positive sentiment being gushed at every opportunity by those with the 'traditional' equity interests to protect, and much of the mainstream media adding support to the 'worst is over' camp. If this bear market rally continues for a few months then we'd expect oil to do well wouldn't we? I mean no recession, no economic woes means no drop in demand, right?

 

Alternatively, the equity markets come to their senses, equities head for a new bottom and everything is all doom and gloom again, you never know there could even be a bank or two with a few $bn worth of margin calls again. We'd still expect oil to rise wouldn't we (along with gold and silver), as cash rushes for the exits and the (already overused) 'safe havens'?

 

 

 

 

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Auote from Thomson Financial

 

"According to data released Wednesday by the U.S. Energy Information Administration, demand for crude oil products fell an annual 1.3 percent over the last four weeks, while crude stocks surged 7.4 million barrels last week.

 

On the other hand, however, the data also showed gasoline stocks declined by a much larger than expected 4.5 million barrels last week. Traders chose to focus on this figure rather than on falling demand or rising crude stocks.

 

As a result, oil prices rose sharply on Wednesday, but have since retraced some of those gains.

 

"The truth is that demand for oil overall is weakening. Yet whether or not demand matters right now is still the debate," noted Alaron Trading trader Phil Flynn.

 

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Certainly don't disagree with you CC (Friz ;) ). I was posting really to demonstrate some growing publicity around the supply shortages and from that, possible support for ZG's comments. I agree that the demand argument is often touted rather lazily though. Strange how US gov't backed statistical releases might add support to a price reduction argument... <_<

 

Can't remember the stats but Jim Puplava has often talked about the proportion of oil demand growth driven by the US being very small over the last 10 years; in a similar vain, any US slowdown would thus conversely have very little effect on reducing global demand growth.

 

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