Wow: Briefing is reporting that COMDX electronic trade has crude above the $124 level, now up 65 cents to $124.18.
Crude Oil Futures, June Contract
Graph courtesy of Bar Charts
Oil = $124
May 8, 2008 3:35pm by Barry Ritholtz
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Someone needs to nuke the NYmex and get this foolishness over with.
So obvious what’s happening…
Ciao
MS
Heck, they might as well just bid it up to a bazillion gazillion dollars and get it over with.
Would probably goose the dow to 15K, anyways…
I don’t understand how people can say the fundamentals justify this. I look at the same US inventory reports as everyone else and oil stocks are up over last year. So the supply and demand fundamentals do not justify this. The dollar has stopped its precipitous decline as well. What da hell is going on? The market has removed itself from reality back at $100/barrel.
Suprise (not) CRB index always peaks out during or after a war. Since the Federal Budget deficit is on it’s way to toping
$500,000,000,000 and the FED is pumping money like there is no tomorrow, why is anyone surprised that oil is going up.
The big money is rotating into commodities, CRB is going nuts and war is always the cause.
Every war for 100 years has brought a peak in the CRB. Sun TZu in the first book ever writting about war said that where armies march, prices follow. So no surprise here at all.
How can anyone that knows anything about history not have seen this coming. Then add to the lethal brew the fact that oil demand is going up, and supply is constrained, how can prices not go up.
Sit back and enjoy the ride. I bought all the oil stocks/energy stocks I could when it was obvious we were going to start a war in the Middle East (all those threatening WMDS, and nasty Iraqis. My big mistake was that I sold enough to cover my original investment.
Now I’m playing with house money. Granted it is now getting scary, but I’ve done what I could. I waited for a major pull back but it didn’t come so I’ll do with what I”ve got.
What are all these idjits planning to do with their $124 oil come June? Sure as heck ain’t gonna sell it actual consumers. Dan Akroyd and Eddie Murphy are about to make a killing in the pit.
dollar hasn’t bottomed yet and more weakenss this year
This guy kinds of smacks of conspiracy theorist and I have mixed feelings about http://www.atimes.com (but it seems to have quite a larger readership), but the article nevertheless seems to have some very good information in it.
Instead of things like Nymex, CRB, FED apparently one should be thinking in terms of CFTC (Yes there is somebody out there tasked to monitor for commodity manipulation! But why they’re not doing there job, is another issue), ICE Futures and WTI vs Brent.
And it’s a good story
http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html
And after that, I should try and refind that WSJ article about closing some of this door and the howls of protest that have resulted. I assume the present head of the CFTC is a Bush appointee (but haven’t looked that up yet).
pat
Remember when the Discount Window was a taboo?
“””
In March, the Fed decided to lend to investment banks from the discount window, a privilege previously reserved for more tightly regulated commercial banks. It also expanded the types of eligible collateral in an effort to provide liquidity to strained markets such as mortgage-backed securities.
Total borrowings at the discount window, including both depository institutions and primary dealers, stood at $27.79 billion as of Wednesday, down about $2 billion from the previous week. Average daily borrowing was $28.21 billion, according to Thursday’s report.
“””
Barry,
You might consider a lifetime plot of USO (I believe it was originated in Sping of 2006,) then overlay the multitude of Fed easings, both the interest rate cuts and the instantiation of the various alphabet soup facilities.
That picture will tell a very interesting story.
threatening WMDS, and nasty Iraqis. My big mistake was that I sold enough to cover my original investment.
Now I’m playing with house money. Granted it is now getting scary, but I’ve done what I could. I waited for a major pull back but it didn’t come so I’ll do with what I”ve got.
Posted by: farmera1 | May 8, 2008 4:12:12 PM
!!!!!!!!!!!!!!
finally someone with some common sense had
the foresight to buy oil stocks because oil was going up.
Congrats Farmeral….
I can’t say the same for the whiners/academics here..
I ‘m holding the house money and all my money in the oil stocks.
Positive Feedback Loop, momentum speculation at it’s finest. Who needs fundamentals with all of these self-fulfilling prophecies creating so much “value”. Personally, the larger the oil/commodity bubble becomes, the greater the implosion. Giddyup!
Why won’t oil go to +$150 with the bozos in the Bush administration in full hue and cry about Iran? Read Ignatius column in the WaPo today, which I assume is a planted column using another lazy journalist. All we have to do is raqid a few camps in Iran and watch the Gulf of Hormuz shut down. This is what is driving the price of oil. Never short Bush/Cheney ignorance.
hey guys, with oil even at $80 bucks,nat gas at 10,
all my oil companies would be raking in big $$.
I sleep very well at night, and pay the higher prices at the pump with a smile on my face.
If Bernanke is going to be barred from raising the Fed funds rate before the election, a price of $150/barrel before the end of 2008 is not out of the question.
Oil is going bubble because the bears finally found a way to beat the bulls at their own game.
All bears have to do is pour some money into oil to get the stock market to collapse.
Bears are doing this working together and they can keep it up as long as they want to.
I said about a week ago to buy oil because of this.
The gov’t blocking the market from falling is BS. Let’s see them block oil.
When oil goes up because it trades worldwide a single gov’t is powerless.
Of course anything can backfire so I’ve placed only what I can afford to lose if it does blow up.
But it’s working very well.
actually short term, 18 months are so, oil is not tight. ’08 and ’09 will see about 7 mil barrels come onstream from new production. 6 mil will replace depletion, and 1 mil will be new production. After ’09, run.
Even Gartman missed this one, a guy who I listen to.Well all the brilliant minds said 125, so I guess I get short? lol
I love the Fast Money thesis on the USO….
“It’s going up because it’s going up…don’t over think it meat…just get long. With so many smart guys talking about why this shouldn’t be…it just means its going higher.”
This is pretty humorous…there were a lot of smart people talking about the nasdaq bubble back at 3000 and 4000…..of course, they were correct….but had to take a ride to 5000 first.
I’m not sure where we’re at in relation to that analogy. What I can say is that the crude spreads are NOT supporting this rally…the difference between the front month and outter months is COLLAPSING. Physical crude was trading even with the M1 futures….this is NOT bullish fundamentally.
The complex is being led by Heating Oil which is being led by Euro Gasoil…this is NOT healthy heading into the middle of summer. Gasoline should be leading the complex this time of year.
This is a blowoff in the process. Energy prices are going to collapse hard in the next few weeks. My target was 120.50 for crude and 11.50 for natty….I was wrong on the crude….If it can past 125.50…then we’re heading for 133 before the mega dump.
My natty target is still holding.
AT.
How long does any drilling project take from start to the point when the gas is in your car? Drilling in the outer continental shelf is not likely to do very much in the immediate time frame. How come the administration didn’t think about using less gas? Cause “the market will take care of it!” Never any bumps on the road with that approach. We can see how well that is working with the current financial crisis. Can we say Bear Sterns?
If you on the right really wanted to make it tougher on the terrorists you would have thought of ways to try to reduce or eliminate buying oil from those who do not like us. Then there would be less $ for anti American efforts.
Bush thinking about energy is a bit like having a carpenter replace the glass in your windows. A hammer is just not the right tool. Considering that there was a republican president and republicans in the majority for 8 years I would like to point out that no energy policy was initiated. No Manhattan project to make us energy independent.
It all depends on your priorities. Both Jimmy Carter and Gerald Ford wanted to make us energy independent. When Reagan took office he had the solar panels removed from the White House and reversed all the energy saving bills. Why did he do that?
With the democrats we get Cherche la femme (remember the blue dress!) but with the Republicans we seem to get Cherche l’dargent”.
Until we change the campaign finance laws we are going to have politicians beholden to special interests, just so they can achieve or retain office.
Also if any president was really against big spending and government he could let it be known that he would veto any bill that had earmarks or pork in it. But that would require a spine…..
“I hate Democrats”,
It’s not all bad. And if it is, you better take it up with the right people.
First, do you think smart Republicans want to drill everywhere in the US right now? I agree we should drill off the continental shelves, at some point. But, we have to keep some for a rainy day. You don’t want to run out of fuel before the other countries. Not a good strategic move. Do you think we’re at the mercy of other countries now? Think longer term and imagine what it would be like if we already tapped all our supplies and still needed more from abroad.
You, as a consumer, need to think about that scenario. And, for now, suck it up.
To the extent you hear certain members of the GOP talking about how environmentalists are blocking drilling, I believe some believe it. But, I believe some Republicans say it to score political points but *really* don’t want to push too hard. Because making oil cheap again — so cheap that we waste it — hurts the country long-term.
Second, what’s more plentiful than oil? Dollars and credit in dollars! Thank the current administration for depreciating the currency. And I mean that partially in a good way. The fact is that Americans can’t compete with cheap, often equally-educated labor abroad. Unfortunately, depreciating the currency to make our exports more competitive comes with a price: you can’t go escorting your kids to a gazillion after-school activities in a Hummer without paying for it.
So, in my view, you can look at this current policy as both (a) protecting our long-term oil supplies and (b) helping our export competitiveness while (unfortunately) simultaneously hurting our lifestyles. And if you have a problem with (b), take it up with your Republican administration who clearly take no steps in favor of a “strong dollar policy” — except maybe to score some points with their most clueless of constituents.
But, who said life was easy? Now, get back to work to earn your daily oil. (I am.)
Iran & Venezuela use oil tankers to manipulate global markets
http://www.world-check.com/articles/2008/05/09/iran-venezuela-use-oil-tankers-manipulate-gliobal-/
“””
A large number of tankers lie at anchor in the Persian Gulf, and elsewhere, all leased by Iran and Venezuela, and all therefore unavailable to carry oil for other prospective charter clients.
“””
I had no idea Iran and Venezuela owned all of the world’s oil tankers. So which country is Condoleezza Rice from?
Gartman dumped his gold too.
This is getting interesting…
US-Iran showdown in Gulf – 7 May 2008
http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/opinion/2008/May/opinion_May27.xml§ion=opinion&col=
“””
THE risks of an accidental showdown between the US Navy and Iran in the Gulf have only increased now that the Pentagon has deployed a second aircraft carrier battle group to the region and replaced Admiral Fallon with General Petraeus as the new commander of CENTCOM.
“””
(my last post tonight, I promise)
Perusing this thread, it becomes obvious that we live in an age full of people who know that they, and they alone, have the truth–and these truth-bearers all disagree. This type of thinking is a throwback to the 16th century. Back then the truths were revealed by God. Heaven only knows where you guys come up with your “truths,” as any facts concerning oil supply, such as Saudi Arabia’s oil producing capacity, are only available to a handfull of persons on the planet.
I have respect for those of you who back your beliefs up with some money. For the rest of you, I detect the foul stench of flatulance.
Somewhat along the same track of John Borchers above, Gary Dorsch over at Financial Sense has an interesting perspective on the escalating price of Oil… (The rate of increase in the MZM money supply– as noted by Dorsch in the second Chart– can be found at the St. Louis Federal Reserve cite…):
http://www.financialsense.com/Market/wrapup.htm
So the most unpopular president of the last 80 years is going to start a war with Iran right before he leaves office because he can.
And the 99% of the world’s population who think this a bad idea are going to be dragged into paying $300 a barrel while the missiles fly. AND THERE IS NOTHING ANYONE CAN DO ABOUT IT.
All the stupid antics of the credit crisis and any other manufactured commercial disaster (climate change, etc.) you can think of pale in comparison to the absolute sense of despair that awaits such a conclusion to the last eight years. AND THERE IS NOTHING ANYONE CAN DO ABOUT IT. That’s what making everyone crazy. Our fate is completely out of our hands. We are about to become the pawns of a Grand Game that we never approved of and never signed up for. Now we will know how the rest of the world feels.
>> I have respect for those of you who back your beliefs up with some money.
>> Posted by: DownSouth | May 8, 2008 9:26:31 PM
DownSouth, how would you ever know? Your (and my) only choice is to read everyone’s opinion and then decide which one makes the most sense.
>> it becomes obvious that we live in an age full of people who know that they, and they alone, have the truth–and these truth-bearers all disagree.
Not true. For any opinion stated on this thread, you can find many, many similar posts online. No one here thinks “they alone” have the truth.
>> This type of thinking is a throwback to the 16th century.
It’s never been different.
question?
in the oil traders world … if you have 1 million barrels in contracts for Aug’08 @ $100 per barrel = $100million … and because of shipping problems there is no oil to fill your contract … and other peoples contracts start backing up unfilled too … what happens?
Comment by W. Engdahl:
“As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price.”
http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html
Greg,
My guess is:
– Unhedged onshore producers will (a) earn higher profits and (b) defer any optional maintenance.
– Unhedged consumers will have to outbid each other for actual unhedged supply.
That will drive spot prices higher in local currency terms.
So far, that seems elementary. Maybe someone else can take it further.
…
I’ve read the US is still like the 3rd or so biggest oil producer. Our problem is waste; not a shortage.
And OPEC only controls less than half of supply. Anyone who wants to produce “full tilt” is “free” to do so. But, the fact is that production costs keep rising. No one’s going to drill for expensive oil until they’re sure the price will stay high. It’s too expensive to build “extra capacity” and not use it.
I’m no expert though. So, although I believe fundamentals have driven the oil bull, I have a big gaping hole in my knowledge, especially regarding the kinds of things MS talks about.
These are just late evening idle thoughts, so bear with me… :-)
Isn’t there another market operating here overlaying the first? The other one would be called “there are investment dollars with no place to land”. Seems to me that this run-up is partly based on solid-sounding ideas about supply fears but also it’s about the run-up itself. Well, that’s a bubble, in essence, but like the housing bubble it’s fueled by money trying to find a reasonable place to rest. Basically people need an investment and given the state of just about everything else one can bet on (including mares) commodities are the investment of the moment. Like the recent housing run-up, it’s taking much longer than any watcher would imagine reasonable for this one to slow as well.
So, imagine the supply and demand of investment money, where demand is the money itching to get invested and supply are the investment vehicles. For housing it wasn’t until the money tap got squeezed that demand fell off. So, what could upset investment in the oil markets in the same way? Either supply needs to increase (another decent investment vehicle coming to the fore that attracts the money instead) or demand has to slacken, but there is no shortage of demand that I can see short of a hedge fund collapse.
Eh, it’s late, but I like markets, so I’m thinking maybe this particular irrational market isn’t what everyone assumes it is.
Greg,
Important thing to note is that WTI contracts are delivered FOB into Cushing, Oklahoma, so shipping really isn’t your main problem. Squeezes will be much more dependent on availability of tankage in Cushing and access to the pipelines.
To : Darkness 2:08:18
“For housing it wasn’t until the money tap got squeezed that demand fell off.”
I wouldn’t mix investment demand with housing demand. Housing speculative bubble collapsed when there was no borrower left to squeeze, demand for investment was still around.
“So, what could upset investment in the oil markets in the same way?”
I think it is only when the economy is down that the oil bubble will burst. Just like in housing, oil prices would go down only when there wopuld be no more real oil buyer left to squeeze.
Now, why would the economy go down? Crazy oil prices could impair the global economy by the means of inflation, or the current liquidity/solvability crisis in the financial markets could help speeding things up.
We’ve got some time left, but IMHO, when you come to see your ordinary Wall-Mart empty, or when your bank smells like Northern Rock spirit, watch for the oil crush the day after.
Fortunately, America could act wisely beforehand, sparing us the krach by going to war instead, and save their political ass thereby.
George and Dick possibly set the whole debt thing just for that, but this is conspirationist thinking and I shouldn’t let myself tell what I think of it all to self-confident american day traders on a public forum.
So, okay, excuse me, it is just about oil, short education, go long on war, and bless America.
Gee, Big Oil says the price spike is because of “supply and demand”. The EIA (Energy Information Agency) reports that demand for crude oil in the United States for 2008 will be the lowest in five years.
Allrightythen.
.
Darkness …. reading your late nite post
I was thinking the correct place for spare cash in these times would be to put it in salaries of common workers … but there is no payback mechanism to VC … so thats out I guess
hey theres another “ism”
Crude through the roof is a sign of inflation guys. Since we can’t rely on the CPI and M3 money supply anymore, how the hell are we suppose to know inflation is through the roof? Commodities are all rising. The Fed is printing loads of money to lower the bench mark, what do we expect????
I wish people were talking about how the “Enron Loophole” in the commodities Futures Modernization Act of 2000 unleashed this speculation and the CFTC jurisdictional decision in 2006 let the dogs off the leash.
Read about it at http://newsbusters.org/node/6858
“The key here is that CFMA allowed for the creation of electronic
futures exchanges that would not be governed by the CFTC, and
determined that energy futures and derivatives could be traded on such
exchanges. In the view of this Senate report, this precipitated a
tremendous expansion in the demand for energy related contracts. . .
January of this year [2006]when the CFTC decided to allow the largest
electronic energy exchange, the Intercontinental Exchange (ICE), to
use its terminals to trade U.S. crude oil futures. Three months later,
this was amended to also allow ICE trading of U.S. gasoline and
heating oil contracts. As such, investors from all over the world can
trade U.S. energy contracts without any oversight by an American
regulatory body.”
Retrogrouch: actually both jp and I (patfla) are referring to pretty much the same story. Look at the http://www.atimes.com article that we both point to.
It’s long but it helps to read the thread.