Crude Oil hits $97

Ouch!

"Crude prices have spiked more than 20 percent in the last three
weeks. The jump is unusual because this time of year is known as a
shoulder season – marked by slack demand – between the summer driving
and winter heating months.

Crude is now at or near all-time
highs, even adjusted for inflation. The last time oil was this high was
the early 1980s, when it rose to $93 to $101 a barrel, depending on the
inflation calculation used and the oil contract cited.

Fighting
between Turkey and the Kurds in oil-rich northern Iraq, reports showing
demand outpacing supply in the fourth quarter, a falling dollar and
lots of speculative investing have all been cited as reasons for the
runup.

Crude oil prices have surged nearly five-fold since
trading below $20 a barrel in 2002. Analysts say surging global demand
combined with limited new supply is the main underlying factor.

The surge in prices has also attracted lots of speculative investment money, further driving prices higher."

Crude_oil

Chart courtesy of Barchart

>

Source:
Oil hits another record above $97
Steve Hargreaves,
CNNMoney.com November 6 2007: 12:05 PM EST
http://money.cnn.com/2007/11/06/markets/oil_record/index.htm?postversion=2007110612

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What's been said:

Discussions found on the web:
  1. D. commented on Nov 6

    Well, our leaders are not letting money “disappear”, investors have less and less places to go and the world deconomy is still not down too much, so into which asset do you think money is flowing?

  2. Kp commented on Nov 6

    Go baby go. The higher it goes, the more money that flows into solar et al.

    Viva la revolution!

  3. Marcus Aurelius commented on Nov 6

    In light of the end of the world as we knew it, high oil prices are to be expected.

  4. f fff commented on Nov 6

    The economy is better than ever – it looks like the bulls are back on Wall Street. Everything is solved, just listen to the government and news.

  5. TP commented on Nov 6

    The price should be higher. It has been historically low, given the finite supply and inflation.

  6. Estragon commented on Nov 6

    No problem. We still have daddy Hu’s credit card. Fill’er up!

  7. Mr. Flibble commented on Nov 6

    The price is going up far too quickly to reflect growing demand or reduced supply. Sure both are playing a role, but it is hard to credit that demand has suddenly spiked or supplies have suddenly become really scarce. All in the last two months?!

    Do the prices track with the debasement of the dollar relative to other currencies? Or are we perhaps looking at a speculator-driven oil bubble?

  8. Barry Green commented on Nov 6

    Like anything, oil has gone up too far, too fast. One can rationalize many ways, but there’s little difference in the greed that drove the dot.com, housing prices & credit derivatives and now oil. Oil in the teen’s, 20’s and 30’s was artificially low, but things are getting a little carried away. If the powers that be push things further, I’m all for the entrenchment of alternative forms of energy, but oil has to pull back soon or financial pain will rain down on everyone opening potential for socio-polical power shifts that will undermine the current regimes. Could be a good thing, but I think we’ll see oil fall soon.

  9. Stuart commented on Nov 6

    Not to worry everybody. CNBC has been pulling analysts (and I use that term politely) out of the woodwork all saying that oil is destined to fall back down to $60. I guess that means
    (a) peace is about to break out in the mid-east next week…psst, never mind about that Pakistan thing…doesn’t count I guess.
    (b) they’re about to find the biggest oil field ever….psst, never mind about the fact even if they did, and it’s not like they haven’t been looking for the past oh say 30 years, it takes 10 years to get it going
    (c) I guess the industrial revolution underway in two countries that have combined 2.5 billion people will sudden grind to a halt next week with all those factories going quiet…psst, In the US 2.5 cars per person, in China 28 persons per car.
    (d) Oil production from existing wells I guess will rise…psst, never mind the fact all the big ones, including now Gharwar all in decline
    (e) The top oil producer is now Russia is suddenly going to embrace the US and sell it’s oil real cheap…psst, never mind they’re making out like bandits at these prices

    These wall street analysts that keep calling for oil to collapse should’ve been the 1st jobs offshored to India. They’ve been wrong since it climbed past $25. Why they consistently win air time is one of the mysteries of our time.

  10. Boom2Bust.com commented on Nov 6

    I would like to know what supermodel Gisele Bundchen thinks about high oil prices, thank you…

  11. Stuart commented on Nov 6

    We’ll see, but he’s been calling it correct so far so I post below.

    Author: Jim Sinclair

    The following are coming events you should be paying attention to.

    1. Morgan Stanley and derivative markdowns.
    2. The revelation that no entity announcing derivative losses has significantly marked down the value of these instruments. They are ALL still marking to model which is a financial cartoon lacking any real vision of a true price. There are more losses, larger than already released, coming down the financial pike. The financial entities are praying for a comeback in the underlying assets which will only get worse, not better.
    3. CDO problems for General Motors, Ford and Chrysler are large enough to be the silver bullet in the heart of US auto making.

  12. Adam commented on Nov 6

    I think this makes clean energy ETFs even more attractive as long and short term investments.

  13. Andre Haroche commented on Nov 6

    Key question – is this a structural change (ie permanent supply/demand imbalance) or temporary (ie conflict premium, temporary supply shortages, weak dollar).

    I am a LT BULL in energy. google ‘peak oil’ – 2 yrs ago people were laughing, now they’re not. But peaking’s not expected to 2010 or so.. then permanent 100-200+ oil may be the norm.

    So are we peaking now or is this temporary and as the pundits say, 60’s/bbl is in the cards?

    any comments??

  14. Gisele commented on Nov 6

    Tommy & I think Oil prices will be going higher. I recommend the Oil ETF USO.

  15. SAM commented on Nov 6

    in euro terms it is Euro 66.
    Not too bad..
    blame the incompetent FED for speculator pile-on…

  16. Mike_in_FL commented on Nov 6

    I think frankly this move is crossing from a fundamentally driven move to one based purely on liquidity and the dollar’s ongoing debasement. The bottom line is we’re paying oil producers in dollars that are steadily losing value, day in and day out. So the dollar price of oil has to rise to compensate for the declining purchasing power of the dollars we’re exchanging for oil. Until Heli-Ben or Hammerin’ Hank step in to support the dollar, we’re going to continue to get these big moves in dollar-denominated commodities. My two cents (soon to be worth 1.5 cents) anyway…

  17. ARISTOTLE commented on Nov 6

    Like Muckdog says “Dammit Barry, don’t confuse me with the facts!”

  18. michael schumacher commented on Nov 6

    to understand why oil is at this level you MUST understand the NYMEX pit and how it operates. The parallels between the overall market and the pit traders in oil is quite striking.

    It’s all widely available information…you just gotta go look for it.

    Anyone who thinks that demand is driving oil prices is missing the entire picture. It is an artificial event that is stoked each and every week when the MYMEX allows millions of barrels of oil (that were never going to be delivered in the first place)to be canceled and then has the temerity to allow it to be reported as a shortage in the next week’s “inventory”…ever notice why it’s always a surprise that there is a shortage. All you have to do is go back a week’s time to see how many of these contracts were canceled and that gives you a good idea of what the coming week’s “shortfall” should be.

    Worked like a charm the last two month’s.

    As I said it’s all widely available it just takes some time and a willingness to see beyond how it’s reported.

    Ciao
    MS

  19. michael schumacher commented on Nov 6

    and here we go again with the last half an hour pump job.

    At least try and space it out a bit so it isn’t so damn obvious what GS is doing to the SPY and Q’s.

    un believable that this shit goes on each day and no one says a thing about it. Just like the oil game…..ever wonder why the gains in oil occur ,roughly, in the last half an hour of trading???

    Hmmmmm…just like the indicies over the last few weeks.

    Wait until the next shoe……that small problem of insurance is the latest “issue”

    Ciao
    MS

  20. chris commented on Nov 6

    My ‘rithmetic ain’t good but if the WTI contract was $52 in January, and $97 now, isn’t that within spittin’ distance of 100%?
    Never mind the $10 price in 1999.
    Maybe these peak oil folk are on to something.

  21. chris commented on Nov 6

    My ‘rithmetic ain’t good but if the WTI contract was $52 in January, and $97 now, isn’t that within spittin’ distance of 100%?
    Never mind the $10 price in 1999.
    Maybe these peak oil folk are on to something.

  22. Michael C. commented on Nov 6

    >>>un believable that this shit goes on each day and no one says a thing about it. Just like the oil game…..ever wonder why the gains in oil occur ,roughly, in the last half an hour of trading???<<< Yes, it's all a conspiracy. The market should make sense and be orderly.

  23. chris commented on Nov 6

    Oops! Pardon me.

  24. X commented on Nov 6

    The shorts are getting hammered all the way up. Soon they will give up. Then everyone will be long and then……..poof!

  25. sn commented on Nov 6

    I try not to be a conspiracy wingnut but when I see trading patterns like that it sure looks like collusion to me. At minimum it looks like the EMH is being violated here.

    If you and I and a few of our friends were to pump a thinly traded penny-stock in the last hour of every day, I wonder how long it would take for the SEC to start nosing around asking questions?

    MS – I think the point is to make the pattern obvious. Then after it’s established, lots of people jump in in the last hour doing their (whoever *they* are) work for them. Also, it makes the market very dangerous to short in the last hour – I mean would you be shorting in the last hour or would you be covering?

  26. rickrude commented on Nov 6

    The price should be higher. It has been historically low, given the finite supply and inflation.

    Posted by: TP | Nov 6, 2007 1:44:07 PM
    !!!!!!!!!!

    yes, finally a logical answer by TP.
    I agree 100%.

  27. JoJo commented on Nov 6

    “I think this makes clean energy ETFs even more attractive as long and short term investments.”

    Today:

    GEX +8.52%
    ESLR +10.81%
    SPWR +15.73%

  28. New Yorker commented on Nov 6

    Logical maybe… but we have been having warmer winters and people are cutting back on driving. What are the consumption numbers I wonder?

  29. Boom2Bust.com commented on Nov 6

    Thanks Gisele (and Tommy). Your euros are in the mail…

  30. wally commented on Nov 6

    Thank you, Ben Bernanke.

  31. Rich Lather commented on Nov 6

    Supply and demand and peak oil have nothing to do with it. Its money rushing in from other exploited investments.

    This shit has been going on since 2003. Every March and every August oil hits a new high, more people notice and get on the cyclical for the next-go-around.

    Now that Recession is in the air, stocks are iffy, and bonds got tainted by the real estate bubble, there’s hardly anything more to exploit in the domestic arena other than commodities.

    Perhaps this is due to boomers and their investment cash sloshing through the system, or hedge funds colluding to create bubbles, either way, a few guilty parties will float to the surface when this seasonal bubble pops. I, and many others, hope it pops soon. I eagerly await the Goldman Sachs sell-off.

  32. David commented on Nov 6

    Barry-
    Oil and gold will go down, this is just like 1979-1980 under Jimmy Carter.

    “I think the devil will not have damned, lest the oil that’s in should set hell on fire.” William Shakespeare

  33. sylvia commented on Nov 6

    rich lather and all the rest of you to whom the price of anything only goes up when its in a bubble, please. do a minimum of homework on the fundamentals. worldwide oil production has been flat for two years (!). and demand, weirdly enough (greetings from beijing and bangalore) has not.

    if you honestly think that the the same analysis can be applied, across the board, to all types of stocks, i’m sure you won’t mind eating T-bills and cooking with Yahoo stock certificates in a few years. cause at $97/barrel, that’s where we’re headed.

    tulip crazes are a bubble. miami condo crazes are a bubble. crazy runups in the price of things that people need to survive, like oil and wheat, are not.

  34. Byno commented on Nov 6

    Word to Sylvia.

    We’re not discovering enough oil to replace the fields that are going off-line, and demand sure as shit isn’t going to subside unless BRIC craters.

    Imagine if oil production, which peaked in ’06, starts to slowly decline. $100/bbl will seem like a bargain.

  35. Rich Lather commented on Nov 6

    True. The cycles are increasing in intensity as oil diminishes, the dollar deflates and Bush continues to spend like a reckless blueblood child with no credit limit.

    This is not the tipping point of oil going parabolic. Oil will be back to relatively reasonable levels (higher than the highest seasonal lows) in February.

    For every doomsayer of peak oil there is a well in former soviet ‘stans that is preparing to go online with a pipeline. The “discovery gap” will only affect your children as long as Central Asian and African oil gets on the market.

    Your fear mongering indicates you are long on oil. There’s no peak oil yet, just like there’s no peak gold..yet.

  36. Richard commented on Nov 6

    commodities have been a surefire winner for the last couple of years. i’ve been riding it up in a number of ways. check out IGNBX the fund manager has his head on straight and his track record is impeccable.

  37. Sammy20 commented on Nov 7

    The dollar is just getting worked over tonight!

  38. Forsooth commented on Nov 7

    My guess is that oil is being allowed to go up so much in order to take the heat for the coming wave of inflation.

  39. beca commented on Nov 7

    Are gas prices high enough yet for GM/Ford/Chrysler to consider making some smaller cars?

  40. bakrob99 commented on Nov 7

    If you were to price the rise of Gold in Euro’s (or just about any other currency than USD) you’d have a much different story.

  41. Greg0658 commented on Nov 7

    maybe the sum up is Americas gluttonous behavior

    but thats what makes capitalism go round

    balance :-)

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