Crude Oil = $100

TBP:  Wow! Congratulations, Mr. Crude Oil, that’s quite a number

CRUDE OIL: Well, I appreciate your saying so — its been a long time coming.

TBP: What do you attribute this accomplishment to?

CRUDE OIL: Well, there are many, many  people who share this honor. If I may, I’d like to thank the people who made this possible:

-Fed Chair Greenspan for your absolute commitment to debasing the Dollar and sparking this current round of inflation;

-Fed Chair Bernanke, for not deviating too far from Greenie’s policies.

-To the people of China and India now entering the middle class — mucho appreciado for your newfound consumption habits! Just keep doing what the Americans do and you will be all right;

-To the American people — keep on truckin’ — and keep on buying SUVs and large vehicles

-To the US Congress, for your steadfast commitment to ethanol (tee hee) — and what has to be the greatest energy policy in the world!

-And of course, to Messrs Bush and Cheney, for starting not one but two shooting wars in the Middle East.

Thank you all! It wouldn’t have been possible without each of you !

TBP:  Thanks Mr. Crude Oil — come by anytime . . .

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Crude Oil, Intra Day February Contract, January 2, 2008 (blue)

Crude_oil_jan_2_2008

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  1. Robert commented on Jan 2

    Barry, as I just commented in the shoutbox on superiorinvestor.net, you “are the shit.” I owe much of my profits over the last six years to your objective financial commentary. As a relatively new investor, you have helped me tremendously to look beyond the headlines and see what is really going on in the financial world and to invest accordingly (gold, silver, oil, and anything else that rises with inflation). Keep up the good work!

  2. Robert commented on Jan 2

    Barry, as I just commented in the shoutbox on superiorinvestor.net, you “are the shit.” I owe much of my profits over the last six years to your objective financial commentary. As a relatively new investor, you have helped me tremendously to look beyond the headlines and see what is really going on in the financial world and to invest accordingly (gold, silver, oil, and anything else that rises with inflation). Keep up the good work!

  3. michael schumacher commented on Jan 2

    the biggest contribution to $100 oil is the crap that the NYMEX allows in canceling contracts that have NO HOPE OF EVER BEING DELIVERED that are then used as shortages in the reporting number.

    The factors listed above have pushed up oil no question however the $30 premium it has now is solely the work of the crooks at the NYMEX. Do the math on the contracts vs. actual delivery (and more importantly Storage capacity at said facility to be delivered to) and it’s so obvious what gets done each week.

    That oil did not crater on the report that Iran suspended it’s nuclear program in late ’03 should have been the biggest clue that oil prices are in the hands of a very few…and I’m not talking about producers either.

    How many times are we going to be spoon fed “strikes in nigeria” and my personal favorite of the year:

    “Turkey to invade Iraq”

    Ciao
    MS

  4. Eric Davis commented on Jan 2

    Did I just hear that it was 1 paper traded contract?
    one trader said to another

    “I’ll give you a buck if you buy a contract at $100”

  5. MarkTX commented on Jan 2

    Oil @ $100

    TNX (yield) @ 3.9%

    who wudda thunk!!!!!

    There are a million reasons why this is so wrong, but I will agree with MS and expand (reach?) his words

    ALL PRICES are in the hands of a very few….

  6. Ross commented on Jan 2

    Oil at par? It’s just another number. Pass the non denatured ethanol.

  7. Marcus Aurelius commented on Jan 2

    The fat American is dead. Long live the thin American!

    Anyone want to buy a bicycle?

  8. Ross commented on Jan 2

    Anyone notice that China put export tariffs on their grain and removed all import tariffs on same?

    If you like paying $3.50 a gallon for gasoline you are going to love $10 bagels.

    Call for the week, MOOOoooooo. The best black gold for 08, Angus beef critters.

  9. michael schumacher commented on Jan 2

    And let the front running of the SPY begin….

    The Fed minutes come out in a few….

    Ciao
    MS

  10. ken h commented on Jan 2

    Amen Mike, Amen! Bubble Bubble Bubble! Much like housing they are going to screw themselves when we do FIND ANOTHER WAY. Talk about not knowing how to masage the sweet spot! Idiots!

  11. michael schumacher commented on Jan 2

    Money quote of the day:

    “I would imagine the speculators are the biggest drivers today,” said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

    What a douchebag……..

    **anyone who pays attention to the oil market knows that this guy will shill for ANYONE.

    Ciao
    MS

  12. John commented on Jan 2

    Well do we have inflation????

    Deflation?????

    Or the best of all worlds, STAGFLATION.

    It took some real geni-uses to screw this thing up but, do not doubt that starting wars, cutting taxes and ignoring the obvious with a religious ferocity knows no bounds.

  13. John commented on Jan 2

    Well do we have inflation????

    Deflation?????

    Or the best of all worlds, STAGFLATION.

    It took some real geni-uses to screw this thing up but, do not doubt that starting wars, cutting taxes and ignoring the obvious with a religious ferocity knows no bounds.

  14. LewDunbar commented on Jan 2

    You folks better start developing a taste for soylent green.

  15. lurker commented on Jan 2

    You folks are all so CRUDE!

  16. David Gaffen commented on Jan 2

    Oil Hits $100…We Think

    Has oil hit $100 or not? The New York Mercantile Exchange has confirmed that the front-month crude-oil contract indeed briefly touched the $100 mark in trading. However, the trades are few in number, and the $100 trades seem out of whack with where the market was trading in general.

    Crude oil briefly touched $100. Whether it holds up remains to be seen.

    According to several analysts, the highest trade recorded in Globex electronic trading was $99.60 a barrel. Phil Flynn, senior market analyst at Alaron Trading, says that the talk on the trading floor centers around one trade made at $100 a barrel, saying that “there’s going to be a lot of people crying foul about oil hitting $100, questioning whether it’s a legitimate trade.”

    A chart prepared by the Dow Jones data group shows four trades in the $99.90 to $100 range, two of which hit $100. James Newsome, Nymex’s president and CEO, said two trades occurred today near $100, one at $99.90 per barrel for one contract, and one hitting the $100 mark for 10 contracts. Both trades came to Nymex from a “commercial customer” and not a speculator, he said, declining to comment further on the identity of the buyer.

    Geopolitical events, which had fueled the market’s rise through 2007 but had quieted of late, were at the forefront of today’s action again, after armed militants killed 13 in the main oil hub of Nigeria, Port Harcourt. The dollar’s weakness also bolstered oil trading, but analysts say the volume has been light, adding to volatility.

    A closing high in the triple-digits now seems inevitable, and analysts say it points to the continued supply-and-demand dynamic in the market that has boosted the price in the last few weeks.

  17. Ralph commented on Jan 2

    Very Funny and Very Poignant!

  18. Juan commented on Jan 2

    Ahh Barry, in line with MS, you forgot to thank all the CTAs, commodity and energy hedgies, long-only funds (mutual funds, pension funds, etc.), lowly ETF investors, etc, all of whom – assisted by efficient market mythologies and stories galore – have for years been flowing record amounts into the wonderful paper barrels. Many of these good folks likely don’t know or have forgotten that commodity markets can be, well, extremely volatile and may not be quite so insulated from larger financial and real conditions.

  19. Stuart commented on Jan 2

    Remember all those so called “experts” who were calling for oil to fall back to $40 or so after it fell to $50 at the beginning of last year. Funny how few on the MSM bring that topic up now.

  20. michael schumacher commented on Jan 2

    even “mr. Oil” himself called for that to happen……..

    Always do the opposite of whatever the oil people tell you to do. You will be much better off if you do.

    Ciao
    MS

  21. Juan commented on Jan 2

    MS, upon rereading, it is apparent that I misphrased, i.e. that you did not forget to include the specs, some of whom even reside on the commercial side of the tracks.

  22. Juan commented on Jan 2

    Stuart, I may not remember all the so-called experts but do like to recall something that Matt Simmons wrote in Dec 1998:

    Effectively, the changing perceptions of a small handful of speculators now appear to set the price for West Texas Intermediate crude oil, which in turn sets the general price for almost all other crude grades throughout the world.

    If this is true, the world’s most important commodity is being priced by a handful of hedge funds or individual speculators…

    This does not mean that these speculators are necessarily wrong in their bearish views. Our intention in this report is to highlight that in the NYMEX crude oil market, price is not the beacon for fundamentals. Rather, it reflects the psychology of a small group of financial players. …

    For all those that fervently believe price movement always reflects fundamental changes in physical markets, the discussion in this paper bears careful reading. Our work strongly suggests that large swings in the funds’ net position in oil contracts on the NYMEX have driven virtually every significant movement of crude oil since the MG position was unwound in early 1994. The single exception was a brief period in the fall of 1996 when physical tightness in the market itself set the price of oil.
    (Is Another “MG” At Work? (Or, What is Driving Down the Price of Oil?), Matthew R. Simmons January 27, 1998)

    I do as well think that Robert Mabro’s explanation of the change in price regimes might be correct.

  23. Crude High commented on Jan 2

    “And of course, to Messrs Bush and Cheney, for starting not one but two shooting wars in the Middle East.”

    They only started one of the two wars. Some d-bag known as OBL started the first one.

  24. Sudeep Reddy commented on Jan 2

    $100 Oil Could Eat Away at Consumer Spending
    Oil prices only briefly touched $100 a barrel today, but a prolonged stay at that level could threaten a U.S. economy already weakened by an ailing housing market and increasingly cautious lenders.

    In the U.S., which remains the most oil-dependent industrialized nation, oil at $100 would threaten consumer spending, which accounts for more than two-thirds of U.S. economic activity and is already expected to soften as home values decline. Oil’s rise is sending up the price of gasoline — the most visible price in the U.S. economy — and that has major impact on consumer psychology. Readings of consumer confidence have been weakening recently.

    “If oil stays at the price it’s at, you could see gasoline prices at $3.60 or $4 a gallon, which is absolutely frightening,” said Paul Ashworth, senior U.S. economist at Capital Economics, a London-based research firm. “It’s going to have a fairly devastating impact.”

    Until recently Federal Reserve officials downplayed the inflationary impact of higher energy prices, noting inflation excluding food and energy had edged lower. And consumers’ and investors’ long-term expectations of inflation, as revealed by surveys and bond trading behavior, have remained relatively stable. But Fed officials recently have signaled a rising degree of discomfort with the inflationary implications of energy prices. The statement accompanying their last interest-rate move said that, along with higher prices for other commodities, energy prices “may put upward pressure on inflation.” Those concerns suggest the Fed feels little latitude to lower interest rates to cushion the shock of steeper fuel bills, since doing so could aggravate inflation.

    Economic forecasting firm Global Insight says that, in the U.S., each additional $10 per barrel increase in oil prices raises gasoline prices by roughly 19 cents a gallon, cuts growth in consumer spending by a third of a percentage point, reduces employment by 100,000 and adds one-half percentage point to consumer price inflation. Those factors combined will subtract two-tenths of a percentage point from the already slow 1.1% pace of growth the firm expects for the first half of 2008, Global Insight says.

    Growth in consumer spending slowed from an inflation-adjusted annual rate of 4% in the first quarter to about 1.4% in the second quarter as gasoline prices climbed in the spring and early summer, then rebounded to 3% in the third quarter. Economists now anticipate a slower fourth quarter, though not as slow as they feared earlier. Macroeconomic Advisers, a St. Louis forecaster, estimates that consumer spending increased in the fourth quarter at a 2.8% annual pace.

    “If gasoline prices go up, that means less to spend on everything else,” said David Greenlaw, Morgan Stanley’s chief U.S. fixed-income economist. “Whatever you get on gas prices eats into other forms of consumer spending.”

  25. CaptiousNut commented on Jan 2

    Every time I try to read this blog I get turned off by its pervasive ignorance.

    An economic/financial blog that politicizes security prices? Yeah, oil is high because of “two wars”. Why the heck are copper and lead high? I remember seeing academics and pundits on television a few years back explaining that the then $34 oil had “$3 of Bin Laden premium”. Today they say it’s ten or twenty dollars. Nonsense.

    Oil is high because of “SUVs”? That’s bull. Twenty years ago, with cheaper oil prices, everyone was driving cars with horrible fuel efficiency.

    Conspiracy theories, bogeymen, and personal neuroses….those are hardly sound launching boards for financial analysis.

    ~~~

    BR: Riddle me this: If everything else in the energy universe changed — no SUVs, China/India, ethanol policies, etc. — all of it.

    Hypothesize (regardless of which party is in the White House) the start of two simultaneous wars in the Middle East. What then happens to the price of oil? And, if the current two wars were to magically end, what would happen to the price of Oil then?

    ~~~

    No, I am not politicizing security prices, as you falsely assert — but you, sir, are politicizing facts.

  26. DavidB commented on Jan 3

    To paraphrase Adam Smith:

    Nothing solves high prices like high prices.

    You should interview gold too Barry. He is a real performer and survivor. Unlike oil he had the combined forces of government aligned against him to stop him. They tried to keep him locked in his prison below $300 but to paraphrase Adam Smith again:

    Nothing solves low prices like low prices…..(even when the governments of the world are aligned against you)

    Gold, unlike oil, truly is a self made commodity. He did it on his own. He did it his way with his rag tag group of believers. I predict that within two years gold enters its mania phase. Hop on board all

  27. VJ commented on Jan 3

    -And of course, to Messrs Bush and Cheney, for starting not one but two shooting wars in the Middle East.

    You know a better way to keep all that crude from the largest oil reserve on the planet off the market in order to create a false shortage and allow your relatives and friends to make egregious profits ?
    .

  28. Juan commented on Jan 3

    CaptiousNut,

    The few benchmarks crudes’ prices are set by futures trade not by D/S — meaning that all sorts of beliefs, even political notions, can/do/have become part of price formation.

  29. Peter commented on Jan 3

    I cannot believe that some people deny the fact that two wars going on at once in the middle east has added to energy prices.

    Why don’t you just delete the trolls and idiots from comments?

    ~~~

    BR: I think they make themselves look absurd. All I do is emphasize the flaws in their arguments (highlight the warts)

  30. CaptiousNut commented on Jan 3

    Barry, with respect, I don’t understand your response.

    The number of “if’s”, “riddles”, and “hypotheses” you need to make your argument is the clue that you’re fumbling around with the subjective.

    Security prices are not chemical compounds. One cannot scientifically break them down into consituent components.

    You say “if there’s war…oil goes up”. Well, what IF there was no war and Saddam cut off all his oil? What would happen to the price of oil then? You know, they are pumping 2.3 million barrels a day now – which is more than they did when Hussein was around. The “if” game is useless and childish.

    Commodities go through long periods of under-investment and over-investment. What we have now is a full blown cyclical bull market. I’ve yet to meet an oil whiner who had an explanation for high lead prices.

    Yeah, I am the myope who’s politicizing facts.

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