Oil Bubble?

[J.4knee]

Americans will be thrilled with $3 gasoline

There is just something fundamentaly wrong with that thought. [:@]

[Guest srobak]

Yeah - it's incorrect. No one I know will be thrilled for squat with that kind of pricetag.

[oldbuckster]

Personally, I think Americans will be thrilled with $3 gasoline at the pump and the energy crisis will be forgotten for another decade (which may or may not have anything to do with oil backed Republican administrations).

That is a very honest, and I believe, true statement .... although $3.00 is kinda' low .... drilling for more equals more profit, same problem !!!

[Colin]

$64 oil

http://articles.moneycentral.msn.com/Investing/SuperModels/CouldOilPlungeTo65ABarrel.aspx

[Colin]

In June, I said

"19) After a final blow-off spike higher, possibly much higher, look for a crash, in the next few months, possibly years, below $100 a WTI barrel!"

with Crude below $100, gasoline now looks rich compared to Crude...

[Colin]

Well, I could be wrong again, I certainly was about the price of Fannie and Freddie (so far), but I believe that this pop in weekly WTI Crude prices will expire shortly, then we will have a serious test of support below $90, the gap near $85, and support below $80.

On the monthly chart, there seems to a lot of congestion near $60, but if this turns into support I don’t know. I do know the Saudis say that $60-70 a barrel is the price where alternative fuels - such as shale oil, which the US has plenty of - become viable. In the next several months, after a surprising crash, I suspect that the price might rise again to the $90 level – where short term immediate demand keeps it just above the price of converting long term demand to alternative fuels.

Meantime, we have long-term predictions for $500/barrel Crude:

http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index.htm

[Colin]

But taking all these measures together, the bank says $60 a barrel seems like a probable place for oil prices to bottom out.

That would represent a gasoline price of just over $2 a gallon. Good news for motorists burned at paying over $4 a gallon for much of the summer, but bad news if that price drop at the pump also comes with a pink slip from the boss.

http://money.cnn.com/2008/10/10/news/economy/oil_prices/?postversion=2008101013

[Colin]

The change comes after OPEC's president, Chakib Khelil, reportedly said that the "ideal" price for oil is between $70 and $90 a barrel.

http://money.cnn.com/2008/10/16/markets/oil/?postversion=2008101615

[oldtimer]

Ideal for them.

[Colin]

...I suspect Crude will rise $10-20 again (without any scary crisis event, like a bomb) before falling, first to $110, then $100, before testing lows below $90, even to mid-60s...8/7/2008

If am I so smart, why aren't I rich?

[jacksonbart]

It takes money to make money and hindsight is not smarts.

[Colin]

The roots of this mess are the misapplication of economic measures. We allowed cartels and applied tariffs and import barriers, when we should have overseen new emerging markets.

The OPEC cartel squeezed crude oil prices twice in the seventies. Why such anti-capitalistic cartels are allowed to exist is beyond me. They are anathema to free markets and societies.

The high price of oil led to an import boom in low cost, energy efficient, reliable automobiles from resurgent WWII enemies, Japan and Germany. The U.S. passed tariffs and import duties to save our century old auto industry.

When Clinton #1 campaigned for president, he said we could not save our manufacturing base from cheap over seas labor and materials. Foreign carmakers began assembling automobiles here in the U.S., which allowed them to make larger, more luxurious, more powerful American style automobiles.

U.S. market share of the Detroit 3 fell below 50% for the first time in July 2007. Now Toyota and Honda models have more domestic content than many Detroit 3 automobiles.

(http://findarticles.com/p/articles/mi_qa3631/is_200710/ai_n21033393)

The current Republican administration did nothing about systemically high unemployment rates and yet another oil cartel squeeze. It did nothing about 65 million acres in unused oil leases or releasing oil from the Strategic Reserves. It did nothing about shipping more oil from the newly captured fourth largest reserves in the world. Saddam Hussein pumped more oil than Bush 2 did. It did nothing when Greenspan warned that 25% of mortgages in the housing boom were speculative only. Or Freddie and Fannie made a secondary market in $300B of IndyMac liar loans. It let Paulson and his buddies set leverage limits for themselves with their own risk models.

This administration and Congress failed to let either the SEC or the CFTC regulate the credit swap market. The result was a loophole that greedy bankers and traders could drive a fleet of borrowed oil tankers through!

[BEC]

Colin said: "This administration and Congress failed to let either the SEC or the CFTC regulate the credit swap market. The result was a loophole that greedy bankers and traders could drive a fleet of borrowed oil tankers through!"

Which administration?

[JJkizak]

Both of them. I believe what I heard was the credit default swaps were created as an answer to the insurance company re-insurance deals, everybody insuring everybody just in case the regular insurance failed. Wall street used the best mathematical minds to come up with the swaps syndrome which was and is totally unregulated. John Mccain was the head of the committee in congress that came up with additional de-regulation for the banks and reccommended to Clinton to sign the bill. Clinton and Mccain were and still are buddy-buddy. (interview with Clinton on TV) All of the safeguards legislated by congress after the Great Depression were slowly done away with with the exception of social security which keeps the money flowing. And the free market guys wanted to get rid of that. The SEC relaxed the short sale rules (COX) and the blockhead? scheme that was outlawed in 1906 was re-instituted by congress around 2001. It is nothing more than a pyramid scheme. Wall Street was having a ball until the bottom fell out. The hedge fund managers who were before congress denied any wrong doing, each one of them earning over 1 billion dollars in salary per year. They also said regulation would not work. Now that's real funny. They have the right to earn 1 billion per year even if the country goes down the drain.

JJK

[Jeff Matthews]

It takes money to make money and hindsight is not smarts.

Check out the initial post in this thread (by moi, of course []). If I had money to hedge against oil at the time, I'd be rich. []

[Colin]

With no support yet on the monthly charts, Crude looks like it could drive down to $30 per barrel

before OPEC meetings at the end of Nov and middle of Dec!

[Colin]

'Well, who's the largest oil company in America?' And they'll always say, 'Well, Exxon Mobil or Chevron, or BP.' But I'll say, 'No. Morgan Stanley.'"

http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770_page3.shtml

[JJkizak]

You got that right. The supply/demand thing did not work with the speculators (Wall street based) and now

it's all coming to papa.

JJK

[Guest " "]

Another legal pyrimind...with out folks coming in at the bottom...you never move up...pyrimid never splits...you don't make money.

[Colin]

One year ago, I thought Crude Oil futures “will crash and drive through $90.” Once again, I suspect Crude will fail to make new highs above $70 this summer “before heading lower.” Failure to make new highs will change Crude into a mid-term bearish market. I expect Crude will test the lows below $50 by this fall. Again, “stocks and crude are almost always lowest in December.”