LOL!!!!!.................
Posted on 06/27/2008 5:06:43 AM PDT by Red Badger
Crude prices jumped over USD 3 to hit a fresh all time high of USD142 per barrel in intra-day trade.
The surge comes after OPEC President said he expects prices to be between USD150-170 per barrel in a few months. However, he added that USD200 per barrel might not become a reality anytime soon. A weakening dollar is also giving support.
Prices retreated a bit after the US House of Representatives approved a Bill aimed at curbing excessive energy-market speculation but continued above USD139 per barrel.
What has caused the sudden jump in prices?
Manisha Gupta, CNBC-TV18
It was really a technical level. We have been facing resistance at around USD 140 per barrel level for the last whole month; actually prices have been trading about USD 130 per barrel to USD 139 per barrel in the recent couple of months. USD 140 per barrel breached, I think it was really easy for the markets to take out the next resistance - it is at USD 142.7 per barrel; USD 143 per barrel to be exact and the spike that has been talked about in the recent days the factors are all in place. We have seen good demand coming out from Japan.
One should remember that the imports in the last month were up by nearly 8%, China has been importing nearly 25% on the higher side. The support is coming and despite these higher prices we have seen even US try to fill up its strategic petroleum reserve those are up by nearly 2%. So the demand is in, the supply concerns are numerous because we have seen supply decline from Nigeria and North Sea and Libya also has been talking about decline and production here.
The Organization of the Petroleum Exporting Countries (OPEC) statements yesterday were really a trigger there because USD 150 per barrel to USD 170 per barrel - if the OPEC President comes out and says that it is the level that you could see in the coming summer, I think that is much a trigger for the prices here. Apart from that, we have all those big brokerage companies really talking about USD 150 per barrel to USD 200 per barrel in the coming couple of months itself.
Morgan Stanley also has given that deadline of July 4 that is a time that before you would see USD 150 per barrel coming to the markets.
Is a Commodity Futures Trading Commission (CFTC) action due:
The CFTC actually has not reacted till time. CFTC has been hiking margins, they have done it couple of times already in the two months but they really have been milder increases in the markets. People have just knocked off a couple of contracts because of these increase in margins. There has been no major liquidation happening because of what they have done.
One reason why OPEC is not hiking margins very too much is because they would be - it would really lead to liquidation of contracts and there is this fear that all of this business, that Nymex is doing right now would shift to Middle East or Dubai, so they are not taking that step because of that fear because lots of positions would then go to other countries like UK or Dubai that’s one reason there.
Apart from that, since 1973 since CFTC has been into the markets, they have only invoked emergency only four times and that is also because of very major reasons because of price strengths in last few months or last few years, they say is not a very big reason for them to invoke emergency. But the way prices are rising right now, I think it is a major concern, prices have increased by 10% just in this month, up 45% in 2008 and up 98% in past 12 months. So I think that kind of thing should be strong enough to provoke them to take some emergency steps right now.
Will crude see USD150 per barrel now?
USD 140 per barrel never really was a resistance - USD141-143 per barrel has been a congestion area and if crude really takes on that, USD 150-160-170 per barrel are the kind of levels you have been watching in the market - internationally those are the levels we have been getting. Even when you speak to Indian analyst, they have been targeting or they have been seeing on waves anything between USD170 per barrel to USD 185 per barrel on the higher side till the year-end. But then the kind of momentum that we have been seeing in crude prices despite crude being overbought in the markets much more gains is what the people are expecting here. We haven’t really seen demand go on the lower side, demand has gone up in most of the countries. If you just isolate US on the other side, the and demand in US has gone down by 2% but if you look at Japan and if you look at US, India, Asian markets, Middle East and far East everywhere demand has been keeping up despite these higher prices, and with the speculative money into the markets, I think USD150-170 per barrel on the higher side is not going anywhere.
How have Asian markets reacted to the news?
Sajjal Patel, CNBC-TV18
It is a very bleak picture here in Asia as you have so many headwinds. There is the Wall Street tumbling and of course oil prices, which have just hit another record high. That’s really slamming the transport stocks, particularly the airlines and on top of that you have the financials especially after the Goldman Sachs said there would be more write-downs for a number of the banks in the US.
If one takes a look at the damage, Japan for example - Nikkei 225 closing to a two-month low, down 2.01%. One has to remember that these markets posted their seventh straight session of losses there. The boarder topics off by about 1.8% and the exporters severally hit because they are dealing with another problem and that is a surge in the Yen. There is lot of damage in the auto stocks like Toyota, which is off by 2%. Sony, the big lager there, was down 4.3%.
South Korea, the Kospi has similar damage although off the day’s lows, closing down 1.9%. Again we saw a very heavy selling in the export stocks, particularly the techs that get a lot of their earnings from the US. The Hong Kong markets i.e. the Hang Seng index right now down about 2%. H-shares are off by 2.3% and are seeing pretty heavy selling in a lot of the blue chips -- Sinopec comes to mind because it is a refinery, so it is taking a big hit on the back of high oil prices as well as the heavy weight PetroChina and the airlines which are no surprise there, that they are selling off heavily as well.
Shanghai Composite was the big loser today. It was down 5.3% because we are seeing selling there are as well for similar reasons but another concern there is liquidity concerns. We could see some big IPOs coming to that market and of course there is concerns that that market might not be able to absorb new equity issues. So again very weak picture here in Asia.
Experts speak:
Hans Redeker, Global Currency Strategist, BNP Paribas, feels that the emerging market environment is much more dependent on crude, and energy. In China, about 80% of the CPI increase can be attributed to crude and energy, and that compares to a very low rating in UK, Germany, or Euro zone, he added.
“What we have to look at is the Asian inflation rate, the movements and outperformance of inflation, its impact on economic growth, and the possibility to develop a second round of effects.”
He feels that a prudent Monetary Policy in Asia. “‘We had been arguing for a long period of time that the linkage and under weightage of Asian currencies to the dollar was responsible for this wave of liquidity and allocation of capital in financial markets.”
That was responsible for the problems that we are currently seeing in credit, he added. “When you look at credit spreads widening in the US, Europe etc, the financial sector is seeing huge stress.”
“We have to ask our selves what are to be these implications. “ He said that if this means that credit is going to be less available in future, then it is going to be the case. According to him in total, it means that globally we are not seeing a de-coupling but a downturn in economic activity. With that, you will sooner or later have an impact on commodity markets, Redeker added.
Victor Shum, Senior VP, Purvin & Gertz expects that in the short term, supply side risks and dollar movements will continue to drive up prices. There may be some profit taking to stop pricings from going further. Despite that, the bullish trend remains intact. “If oil convincingly breaks through USD140 per barrel, then certainly the next level we are looking at is the USD150 per barrel mark and the momentum is there and the bullish upper trend remains intact.”
Excerpts from CNBC-TV18's exclusive interview with Victor Shum:
Q: Your thought on the market crossing USD 140 per barrel, what’s your thoughts led to it and what levels are people working with now?
A: While in less than 24 hours, oil has crossed the USD 140 per barrel mark twice now and whilst primarily driven by the weak dollar. The US Dollar is not hovering near 3 week lows versus the Euro and there are now renewed credit concerns in the US markets and t the weak US economic fundamentals. Goldman Sachs yesterday issued a report which downgrades Citi Bank and also General Motors in the US and that has really caused a rally over the last 24 hours. In the short term, supply side risks and dollar movements will continue to drive up prices. There may be some profit taking to stop pricings from going further, so despite the bullish trend remains intact.
Q; Apart from all those speculative and fundamental news that have been supporting crude prices, you made that very important point about the US dollar weakness and there are some calculations doing rounds that for ever 1% of the US dollar decline, there would be 8-10 per USD of increase in crude prices, what calculations are you doing?
A: One can do the status quo co-relation but I tend to focus more on the big macro movements. And ever since the US Fed reserve started to progressively cut interest rates in August last year, we have seen this near doubling of oil pricing. So, certainly there were reduced interest rates in the US and hence the weakening dollar has pushed oil pricing ahead. The key question remains what will the US Fed do with this interest raise with the last indications are that they wont raise interest rates anytime soon, that has caused speculation in amongst currency traders to cause a further weakening of the dollar. And here we are setting new records for oil and so if the European Central Bank raised the interest rates in July, which is actually expected then that will make the Euro strong and hence the Dollar weaker. So in the coming weeks whilst the movements in the Euro versus the dollar, we may see further reasons for oil pricing to go up.
Q: Just to sum it up, to put it really crudely, over the next 7-10 days, do you think there is a much greater chance of crude trading closer to USD 150 per barrel or above it and there is for it to get about to a USD 130 per barrel or even a USD 125 per barrel?
A: If oil convincingly breaks through USD 140 per barrel, then certainly the next level we are looking at is the USD 150 per barrel mark and the momentum is there and the bullish upper trend remains intact.
Gosh, I really hope we don’t starting drilling for our own oil or something crazy like that.
ping!...
I guess the speculators won’t control the American oil fields???
At this point, I can’t see Dems in Congress being recalcitrant anymore, especially since this is an election year. It would mean sure death at the polls................
And a good *&$%#*@ morning to you too, I still drive a *&^%$#@ Suburban.... :-)
Annnnnnnd it’s at $141.32 on the futures before the opening bell.
The industry is speculating $150 by the end of July. Seems to be locked in a self fullfilling prophesy.
And we sit here and listen to a do-nothing Congress say:"If we permit drilling in ANWR, the OCS, or federal lands, it will be years before it affects price, so we're not going to do anything." In other words, out Congress is saying: "The benefit accrue after I might be out of office so I have no interest in it."
Well, you IDIOTS, how much more evidence do you need that ANYTHING that impacts expectations CAN and DOES influence the spot price of oil, just as we see here. How 'bout you try this: Announce that, as of tomorrow, ANWR, OCS, and all federal lands are open for exploration and drilling. How long do you think it would take for the spot price of oil to fall like a rock just because you had the stones to do what's right for the country rather than your reelection. A 12% approval rating and you think pi$$ing off a few tree huggers is going to get you reelected? You people are a disgrace.
He can't............
Today's payday, isn't it? Or, tomorrow?
LOL!!!!!.................
There is only one thing that can stop it and break this bubble, Open up every thing we got. Drill, Drill, Drill
The American economy, driven by the confidence and buying habits of the public, is now and will continue to reflect the will of an alarmed and wary consumer. Americans are patient to a fault, but when crude oil prices took another jump from $30 to $32 per barrel, they saw retail gasoline dealers immediately post prices of $1.599 or more for regular unleaded. As March began, John Q. Public rebelled.from
Blame can readily be pinned on a failed foreign and domestic policy in which the Clinton administration and Congress have looked at election-year politics, while ignoring the effect of rapid-rising crude oil prices for the past 12 months.Read the whole article at the link. It will cause a chuckle in light of the current state of affairs.
For example, in southwest Florida, surrounded by water, ports and hoping to keep oil rigs at bay in the Gulf, a gallon of unleaded regular was $ .899 in February 1999. Now, at $1.599, the price increase is $ .70 per gallon or an astronomical 78 percent in the past 12 months.
I don’t understand why the oil companies don’t drill on the land that they already have leased. Can someone explain that? It seems that if they bought the lease, then they would have already done the tests to see if there was oil, and if there wasn’t, they wouldn’t have bought the lease. This is all getting very confusing.
That would be bad?
What we're seeing here is the result of steep decline in the value of the U.S. dollar. Foreign investors and commodity suppliers aren't stupid . . . they know damn well that the U.S. has every intention of paying for these massive liabilities by inflating the dollar at rates not seen since the 1970s.
And for a contrarian view...
AMEX:DUG UltraShort Oil & Gas ProShares
http://finance.google.com/finance?q=AMEX:DUG
ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas IndexSM
I am not an owner of this stock, BTW, but
If you believe that Oil prices are maxing out,
it is an interesting play
Note to Congresscritters up for election. Whoever says YES to drilling here and NOW will get my vote. Period.
Snaildarters be damned.
I'm pretty sure the oil company has to lease the land before they can do any testing.
http://www.doi.gov/news/08_News_Releases/080319a.html
They have the leases, have examined the possibilities and concluded that there is either no oil or very little to be economically feasible, especially since all the enviro-whacko groups will file a lawsuit to stop any activity that they can. The Dems in Congress and their pals, the RINOS and greenie-weenies, will not allow any more leases to be let on any lands that could possibly contain real reserves, in the name of “protecting the environment”, when really it’s all about “protecting their power.”...........
Just ban election year promise.
I am all for it. Once the American consumer stops buying everyone's s&^t, we'll see how much these "growing" countries continue.
Deadly defeat will wait for Republicans across the board in November.
The higher the oil goes the most likely McLame is going to lose election.
General perception is it happened on GW Bush clock. Never mind Dems have majority, Republican had total mandate from 2000 to 2006 and they haven't make one single step to US energy independence, instead they sold us to China.
Now idiot McLame promises energy independence by 2035, this idiot has no clue about economy (by his own addmition). We can not wait until 2035, most of us will be dead by then, and more importantly our economy and way of life will be comparable to Africa in the process.
The Dems will be very hard pressed to keep their coalition together on this subject. Every Representative is up for election, and faces a hostile public (Congress’ approval rating 12%). They know people don’t want to hear about “future” solutions of “alternative” energy when their cars sitting idle in the driveway burn gasoline in the “here and now”...................
True true. The dollar is getting worth less every day. Witness how many dollars it takes to buy 55 gallons of oil; $143.
Today, majority of US voters do not pay taxes. No wonder out-of-control spending continues unabated; creating never to be paid debts. Those debts a bonds that the world investment community no longer trusts. So they sell the dollars in exchange for EUROs, etc and buy EURO bonds.
So much for the past and present. World financial leaders are evaluating American’s future under the leadership of Barrack Hussein Obama. Simply said: “ADMFs”.
Then the market will come back down.
I know it will - Queen Nancy told me so.
Republicans have woken up and are beating the country over the head that we need to drill and refine, NOW!!! Keep it up, Republicans!!!
Queen Nancy will be deposed fairly soon if she keeps up this “Let them eat cake” swan song of hers............
As it was explained to me by a Geologist friend who has been working in the oil biz for about 25 years, oil leases are considered "idle" by the gubmint until they are actually producing oil. All the time the exploration, test wells, mapping, boundary wells, moving the equipment needed for all this effort and such are being done, the lease is considered to be "idle".
By the gubmint using this "idle" term to describe leased land that isn't currently producing oil, it allows certain congresscritters, those with a vested interest in keeping oil prices high, to use it to demonize the oil companies and make it appear to the casual observer, the dumb masses, like nothing is going on, when it really is. It takes time to find oil. It's not just a matter of going out into the middle of a field and sinking a well. Wells cost big bucks to drill, as does moving the infrastructure needed to drill an oil well and the facilities to deal with the oil once you find it. Every oil company uses every available technology at their disposal to make sure they have a decent chance of finding oil in a particular area before they drill the expensive hole. All the time this "pre-exploration" is going on, our gumbing calls it "idle". Just more gubmint smoke and mirrors....
That's what I was told, anyway. I'm sure there is someone here in the oil biz that can expand further.
If you axe me, to see the definition of "idle", take a look at Congress......
They are so entrenched with the envirowhacko crowd that they cannot break loose even when they really need to. The envirowhacko crowd WANTS $5, $6, and even $7 a gallon gasoline because they know that extreme energy prices makes it fairly easy to force into a lifestyle THEY want us to live.
Don’t you care about the Alaskan Antelope Fly? It’s only found in ANWR you know. People like you with your SUV-size appetite for oil are responsible for climate change and the main reason why I didn’t see a 90 degree day until halfway through June this year.
/s
Saw my first $4.99/gal this morning.
“Don’t you care about the Alaskan Antelope Fly?”
I had to google that to be sure you made that up. lol
This is only the beginning..................
+ Just because an oil company has a lease doesn't mean there is oil on it. This is a liberal argument: Oil companies should drill on what they have leased now. They have leased these lands because they are not allowed to lease known oil producing lands and must search and try to find oil on their existing leases. So far there is no oil on most of them therefore drilling there would be quite useless. They need to drill where there is oil, I.E.: Alaska,(anwr), Off shore in CA and FL and they need to open up the oil shale in the mid-west and start converting that to oil(it is finacially feasible now).Plus we need to mine our coal, the stuff Clinton put off limits, we need to build nukes.
It might seem like an odd concept to you but people come first with me and I say to he** with "pristine" areas, we need to drill.
As I stated at top, your statement is quite liberal in nature and you are either unable to actually ascertain the truth of the drilling issue or you are a troll trying to advance your agenda here on FR. I am a naturally suspicious guy so I lean toward the latter.
Have leases been sold in the places that we all want them to drill yet? Who owns the lands that we want them to drill on?
Who gets the lease money?
Take a pill. Some people actually need to understand before they buy into a theory. Trying to figure out who does and who doesn't have an agenda can be a real brain teaser.
Doesn’t the lease carry with it, the right to drill?
So who gets the lease money from all the places that we want them to drill in, that haven’t been leased yet?
Let me get this straight;
An area cannot be tested for oil unless it’s leased?
Are the the areas that we want to drill in already leased or not?
If the areas we want to drill in have not been leased, then that means they haven’t been tested? If not tested, how do we know there is oil?
Who gets the lease money for the places that we want to drill in?
I don’t trust either side. That is why I am soliciting answers.
I’m sure you thought your comment was necessary, so if it makes you feel better to attempt to denigrate people here, feel free.
Every man, woman and child in the United States. Indirectly as government revenue of course.
My understanding is in order for a company, any company, to do this sort of testing they must have the permission of the owner of the mineral rights for the property. That may or may not be the owner of the actual turf.
Are the the areas that we want to drill in already leased or not?
My understanding is some are and some are not. The Federal Gubmint is the single largest land owner in the continental USA and I saw a figure recently that indicated something like 90% of all Federal land is off limits to drilling and exploration. IIRC, the figure for private land that is off limits is something like 65%.
If the areas we want to drill in have not been leased, then that means they haven’t been tested? If not tested, how do we know there is oil?
They don't. In fact, a lot of times oil companies will purchase leases without knowing if there is oil on them. This tells me that the oil companies know there is still a hell of a lot of oil out there to be found. Otherwise, why would you spend millions on a lease that had a very low potential for producing a profit? This, in and of itself, IMHO, is the best evidence that so-called "peak oil" is a myth.
Who gets the lease money for the places that we want to drill?
The Federal gubmint if it's on public lands, which is what the congresscrittes like Chucky Schumer are chirping about being "idle". All this "free" money is how come all the Congresscritters have cradle to grave health care, guaranteed retirement plans, nice gas guzzling cars to drive at our expense, etc. We're all just a bunch of complicit serfs who keep feeding the monster......
Thanks.
Could Bush do an executive order that would turn the national lands over to the state in which the land is? For example turn ANWR over to Alaska, taking it off the federal register. I know Palin would drill. The off-shore drilling is a little trickier. But could it be done if he had the guts?
They are, if after the seismic surveys indicate there is a sufficient oil/gas to economically go after. Sometimes that takes years. The ones that are dry or nearly dry, they don't.
Oil and gas doesn't exist everywhere in large quantities. The companies don't know for sure until they get start exploring AFTER they pay for the lease. Sometime the initial seismic surveys look good but exploratory drilling still turns a dry hole.
Leases are often kept for years until the oil company can fully determine that it is not worthwhile for production. Wells can cost millions and take months (in some locations), they don't want to waste chasing fields that cannot be produced. They would much rather lease too many acres and pick and choose the ones they can make production from.
Thanks
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