$200, $400 Oil by end of 2009, and 2010-12, respectively

[jerpy]

I sympathise. I was waiting for a pull back to circa $108 when the damn thing took off, and I've been burnt chasing market rallies before ! And yes, I also was then kicking myself for not getting in on the pull back to $122.

 

I do think capital restraint mchanisms will become more and more apparent as the authorities get more and more desparate to appear to be doing something, so I still can't rule out restrictions on the US market. In fact, its such a stupid thing to do from the US perspective (the death knell for $ based oil markets) that I almosst expect it.

 

Reductions in subsidies though I think won't damage demand that much. I appreciate the standard of living in the countries in question is lower than say US/UK standards but all the same costs in places like Malaysia are very low anyway I believe and there are few alternatives to using oil as fuel as growth accelarates.

 

Same as both. Also fear short term correction, considered futures but again the deposit and calls puts me off, so trying to pick odd winners in the hope their may be a pull back that let's me in more comfortably.

[kernull]

I'm faced with the same dilema, my buy in target was $110 when it started to correct last time and now I'm thinking perhaps I should have jumped aboard at $122.

 

you still can. right now as NY closed we are at 130 support line, 131.71 as I am writing , asia will open and they should test 135 together with london. so if you buy now, by the time it will reach 132 you can lock profits and try to get into the (possible) train to 140 , the dollar rallied, but markets are random, so anything can happend and we go up again.

[GTG]

you still can. right now as NY closed we are at 130 support line, 131.71 as I am writing , asia will open and they should test 135 together with london. so if you buy now, by the time it will reach 132 you can lock profits and try to get into the (possible) train to 140 , the dollar rallied, but markets are random, so anything can happend and we go up again.

 

You saying "buy in" on an asian market?

[enrieb]

Oil price crisis threatens to reverse globalisation

The Times June 11, 2008

Carl Mortished: World Business Briefing

http://business.timesonline.co.uk/tol/busi...icle4107268.ece

 

With brutal efficiency, the oil price is beginning to duff up a monster of the 20th century: globalisation. Those great tentacles that gripped our world in a hideous embrace are suddenly weakening and the multinational octopus is looking a bit pale and sickly. The extraordinary rise in the price of crude oil is wrecking outsourced business models everywhere and distance from your customer is no longer merely a matter of dull logistics. Whether you are selling coiled steel or cut flowers, the cost of transport is a problem.

 

America's steel industry is enjoying an unexpected revival, its competitive edge sharpened by the tariff wall erected by the cost of shipping heavy, low added-value products across the Pacific. We hear fewer complaints from Americans about Asian steel-dumping; instead, it is Asian exporters who are feeling the pinch and the pressure is from inputs as well as shipping to customers.

 

China needs to import iron ore and coking coal, but the cost of shipping a tonne of ore from Brazil to China now exceeds $100, a cost that is equal to the value of the mineral itself. The oil overhead for passage from the Atlantic to the Pacific is proving to be a powerful bargaining chip in negotiations between some Australian iron ore mining companies and their Chinese steel mill customers. Antipodean miners are holding out for a higher price, arguing that some of the benefit of lower carriage costs belongs to producers. Proximity is suddenly more profitable and local solutions begin to look less like the expensive option. It would be rash to predict a revival of the Yorkshire textile mill and the demise of the Guangdong sweatshop, but you have to ask whether it makes sense to ship stuff from China when the price of a sea voyage from Shanghai represents half of the value of the product.

 

The economics of long-distance supply chains are being rewritten; if it is small and expensive - drugs and sophisticated electronics, for example - fuel costs have little impact, but bulky goods are under the cosh. Furniture, footwear, basic machinery, building materials - this is the stuff that China exports in vast quantities to America and it was very cheap, until now.

 

Economists at CIBC World Markets reckon that globalisation might go into reverse if the escalation in fuel costs continues. The freight cost of importing goods into America represented an effective tariff of 3 per cent when the oil price was $20 per barrel in 2000; it is now more than 9 per cent and will rise to 11 per cent if oil hits $150, CIBC says.

[kernull]

You saying "buy in" on an asian market?

 

yes. did tonight what I told you to do. but I exited at 133.75 because i thought they must retest 130 once again. and what may happen today is a spike to 136 on inventories at 10:35 am, but this may fall, I beleive they must secure 130 support very-very good to go for 140. (when I speak about 130 I mean it may be 130.50, 130.80, 131.20, 131.50, something like that..., but not 129.80, 130.00 because thats a signal of weakness)

 

I don't think a pullback could go lower than 125 , in my opinion this will never happen again. so you just have to watch the bottom, a strong bottom on some support line and get in

[GTG]

yes. did tonight what I told you to do. but I exited at 133.75 because i thought they must retest 130 once again. and what may happen today is a spike to 136 on inventories at 10:35 am, but this may fall, I beleive they must secure 130 support very-very good to go for 140. (when I speak about 130 I mean it may be 130.50, 130.80, 131.20, 131.50, something like that..., but not 129.80, 130.00 because thats a signal of weakness)

 

I don't think a pullback could go lower than 125 , in my opinion this will never happen again. so you just have to watch the bottom, a strong bottom on some support line and get in

 

Thanks for your insights Kerr, you seem confident that the speculator argument is for the most part invalid. Could I ask you what investment vehicle/s you use on which Asian exchange and the broker you use, thanks?

 

They are now blaming speculators on London ICE exchange for higher prices:

 

http://www.ft.com/cms/s/0/b962d938-3716-11...?nclick_check=1

 

I think this sums up the kerfuffle.

 

In a video interview with the Financial Times John Damgard, president of the US Futures Industry Association, warned against such a move, saying the CFTC was under “intense pressure” from Congress. US politicians “looking for somebody to blame” for high energy prices could result in retaliation from foreign countries, he said.

 

 

[kernull]

Thanks for your insights Kerr, you seem confident that the speculator argument is for the most part invalid. Could I ask you what investment vehicle/s you use on which Asian exchange and the broker you use, thanks?

 

They are now blaming speculators on London ICE exchange for higher prices:

 

http://www.ft.com/cms/s/0/b962d938-3716-11...?nclick_check=1

 

I think this sums up the kerfuffle.

 

well I use CFD trading with futures (oil,natural gas,gold,silver,copper,soybeans and us bonds, major indexes, just everything you need to trade on the global scale), if you are in london or us, you probably could not use it, google for "gci trading" , this is my broker, I am very satisfied with the software. Check out 'shorting nasdaq' thread on this forum about CFD trading before entering it, many people dont like CFDs because it has high leverage and risk, but personaly I like it a lot.

[wren]

Now the U.S. Navy predict $400 oil.

Oil Could Hit $400 a Barrel by 2018

 

That's the forecast from U.S. Navy Admiral William Owens, who sees rising tensions between the U.S. and China as they scramble for energy

<snip>

"The big story is productivity in China," he asserts, noting it is an incredible 9%, or three times the level of productivity in the US during its 1990s peak. Admiral Owens attributes this to the country's high-quality infrastructure. It will allow the Chinese economy to soon become the second-largest in the world, with a GDP big enough to justify comparison with the US.

 

That in turn means demand for energy will see oil prices reach $400 a barrel by 2018, he argues. This is not only because of demand in China, India and elsewhere, but because of the nationalisation of oil fields in countries such as Russia, Venezuela and in the Caucasus. And energy efficiency in China is not very high.

http://www.businessweek.com/globalbiz/cont...global+business

[GTG]

well I use CFD trading with futures (oil,natural gas,gold,silver,copper,soybeans and us bonds, major indexes, just everything you need to trade on the global scale), if you are in london or us, you probably could not use it, google for "gci trading" , this is my broker, I am very satisfied with the software. Check out 'shorting nasdaq' thread on this forum about CFD trading before entering it, many people dont like CFDs because it has high leverage and risk, but personaly I like it a lot.

 

I checked out your brokers website, they look good and as UK resident I'd be able to open an account, they say they have over 10,000 clients world wide. The Paypal funding option is very attractive also but I'm not so sure about the jurisdiction, Belize? In any case it maybe a one for the future, being relatively new to investing/trading I'm just finding me feet so futures and CFD's are a little further up the learning curve ATM. I'll be having a look at the "shorting nasdaq" thread with interest though, as it happens I've had a position open for about a week now shorting the DJ financial sector(got in before the downgrade of the monoline insurers). It's currently showing a 10% gain and I think it's got a fair way to go, the only thing I'm concerned about is the counter party risk in the event of a complete meltdown. Thanks again for sharing.

 

[kernull]

US crude inventories are suspiciously going lower. prices spike but are not sustained. so, what may happend, is that US stoped buying oil with the intention to drive the price down. maybe shorting oil is a good strategy in the short term.

[kernull]

US crude inventories are suspiciously going lower. prices spike but are not sustained. so, what may happend, is that US stoped buying oil with the intention to drive the price down. maybe shorting oil is a good strategy in the short term.

 

well market says we are going to consolidate in the 132 -138 area before jump to 140 area, some analysts predict 148, i am going up with the crowd

[GTG]

Oil's quite a scary looking chart ATM and as I'm not a trader averaging in is going to be my best bet.

[kernull]

looks like we need one more test in the 130 area to go for 150 oil. dont think a probable rally in $USD (in case of Irish people decision favors $USD) will drive oil below 130, but lets see it.

[kernull]

Oil's quite a scary looking chart ATM and as I'm not a trader averaging in is going to be my best bet.

 

well I believe that there is no such thing as traders & investors. We are all traders. It happends that investors are long-term traders. And if an investor do not times the market he will lose just as the day trader does. Even in physical business, you have to identify trends.

If you are interested in mega-trends here is an interesting discussion:

http://www.netcastdaily.com/broadcast/fsn2008-0607-3a.mp3

source (http://www.financialsense.com/fsn/main.html)

[kernull]

we just completed symmetrical continuation triangle between 131 and 139 price range on the daily. consolidation point 135.50 . jump probably monday ???

[drbubb]

Charlie Maxwell, the "grand old man of Oil analysis"...

 

is now calling for $300 oil, I heard on Gold Seek radio

[kernull]

Check out this : http://www.nationmaster.com/graph/ene_oil_...oil-consumption

US consumes 3 times what China consumes!

If US drops consumption by half, it may equal to what China , Russia and India consume together. Without USA world may forget peak oil for long time!

[drbubb]

Check out this : http://www.nationmaster.com/graph/ene_oil_...oil-consumption

US consumes 3 times what China consumes!

If US drops consumption by half, it may equal to what China , Russia and India consume together. Without USA world may forget peak oil for long time!

 

American's consume over 25 barrels per annum, that's 1,000 gallons, or $4,000* on gasoline in a year.

This figure will keep rising, until they start cutting back. $5,000, $8,000, $10,000... whatever is needed.

At what percentage of their income, will they really take this seriously?

 

A weak dollar, while China and India have strong currencies will put HUGE pressure

on US oil consumers. It's the end of the American Suburban dream

 

How long before we hear the mainstream media extolling the virtues of "Carfree" Living?

 

===

*at $4 per gallon, figures according to GoldSeek Radio

[wren]

This graph is a nice illustration of how oil production has hit a wall:

 

The lines with 1%, 2.5% and 5% are the percentages of global GDP used to pay for oil.

 

From here:

http://www.princeton.edu/hubbert/current-events.html

[ConvertedGoldBug]

Here's an article on Kitco, suggesting that the big banks are responsible for the speculative frenzy in oil prices.

 

http://www.kitco.com/ind/willie/jun122008.html

 

[scroll to the bottom of the article...]

 

CRUDE OIL SPECULATORS ARE BIG BANKS

 

Lastly, a comment on crude oil and the concern over speculators. Some of the biggest speculators are the Wall Street bankers. As policy have been discussed toward more speculator control, some of the biggest violators are Goldman Sachs, Morgan Stanley, and Deutsche Bank. This group has been very active in buying and leasing enormous storage tanks for holding crude oil. They have been active in recent months in securing a vertical integration of control, from owning oil storage centers, oil pipelines, electrical power plants, and gasoline refineries. They even purchased some future North Sea oil production. All this without a single peep in the subservient US financial press networks! Details are provided in the June Hat Trick Letter. They destroyed the housing & mortgage industry. The have set their sights on the energy industry next. Tighter control of speculators would enable them to control the energy market much more effectively. JPMorgan taught Enron everything they ever learned.

 

Hmmm... interesting that Goldman Sachs are mentioned first! Seems to confirm suggestions that they've made a large investment, and then they publicly predict a much higher price in the future so the price goes up and gives them nice profits.

 

[drbubb]

Here's an article on Kitco, suggesting that the big banks are responsible for the speculative frenzy in oil prices.

 

JPMorgan taught Enron everything they ever learned.

Haha. If only he knew where Oil swaps came from (!)

It wasnt Goldman Sachs. It wasnt Enron.

 

Here's a clue: (see note 1, and the date):

http://www.eia.doe.gov/oiaf/servicerpt/der...mary_notes.html

 

It wasnt JP Morgan. Chase did the first oil swap, and guess who designed it?

[chazza]

Haha. If only he knew where Oil swaps came from (!)

It wasnt Goldman Sachs. It wasnt Enron.

 

Here's a clue: (see note 1, and the date):

http://www.eia.doe.gov/oiaf/servicerpt/der...mary_notes.html

 

It wasnt JP Morgan. Chase did the first oil swap, and guess who designed it?

 

You should have christened it an Oil Hampton Swap or something....

 

[drbubb]

You should have christened it an Oil Hampton Swap or something....

 

Of course, many people lined up to take credit for Chase's pioneering of this instrument.

And indeed, many were involved in making it a reality

 

[GTG]

U.S. to Set New Limits on Oil Trade Overseas

 

http://www.nytimes.com/2008/06/18/business...ml?ref=business

 

WASHINGTON (AP) — Federal regulators said on Tuesday that they would place stricter limits on foreign exchanges that trade American oil as concerns continue to grow about the role of speculation in rising fuel prices. Some lawmakers said the move was long overdue.

 

At a Senate hearing to assess its performance, the Commodity Futures Trading Commission said it would require the London-based ICE Futures Europe exchange to adopt position limits used in the United States for the trading of the West Texas Intermediate crude oil contract, which is linked to a similar contract on the New York Mercantile Exchange.

 

Under the new agreement, foreign officials also will share daily trading data with American authorities and report any violations. Previously they shared data on a weekly basis.

 

IntercontinentalExchange Inc. in Atlanta, the parent company of ICE Futures Europe, plans to comply with the new rules and said the commission’s action would have almost no impact on its customers or business.

 

The commission’s acting chairman, Walter L. Lukken, had previously told Congress that oil prices appeared to reflect market fundamentals. He pointed to the declining value of the dollar and rising demand in developing nations as major factors behind the multiyear ascent in oil prices.

 

But in the last month the agency has taken a flurry of actions to gather more data on unregulated trading, including over-the-counter swaps.

 

Considering the commission’s limited view of the futures market, Senator Byron L. Dorgan, a North Dakota Democrat, questioned whether regulators knew enough about the markets to gauge the effects of speculation.

 

“If you don’t have the foggiest idea what percentage of total contracts you are regulating, you wouldn’t have a clue whether there is excessive speculation in the markets,” Mr. Dorgan said.

 

Anyone think it will keep a lid on the price in the short term?

[drbubb]

Chris Puplava thinks that Oil prices have reached a "choke point" for the US

 

 

 

"Rising fuel costs are hitting lower income brackets the hardest as food and energy represent a larger proportion of DPI. For example, a minimum wage earner has to work 35.3 minutes just to pay for one gallon of gas, 39% longer than the peak of 25.3 minutes reached in 1981. Clearly the consumer is feeling the pinch from rising energy prices as wages have failed to keep pace with inflation.

 

The economy is likely to contract significantly as it has in the past with crude advancing as it is, as there are already visible cracks in various areas of the economy. For example, we have reached new lows in the Consumer Confidence Expectations Index, National Association of Home Builders Housing Market Index, and the National Restaurant Association’s Restaurant Performance Index. These three indexes clearly show how much damage has been done over the last two years from a housing depression coupled with an energy shock."

 

/more: http://www.financialsense.com/Market/wrapup.htm