Posted on 09/02/2010 3:44:05 AM PDT by Rashputin
The price of a barrel of oil would be closer to $10 if the commodity wasn't traded as an investment instrument, given the record-high levels of U.S. oil inventories, Peter Beutel, president of Cameron Hanover, told CNBC Monday.
"I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn't be anywhere near where it is," Beutel said.
"We have so much oil right now, more than we've had in 27 years. Why is it 27 years? Because that's how far our records go back. It's probably the most in 50 or 100 years," he added.
Part of the reason the price of oil is currently above $74 US%40CL.1
loading... Quote | Chart | News | Profile [US@CL.1 Loading... () ] a barrel is because of a belief in the economic recovery, Beutel said.
Comments by Federal Reserve Chairman Ben Bernanke over the weekend gave the commodity a boost as he signalled a willingness to support the fragile economic recovery with additional policy measures.
From a historical perspective, Beutel pointed out that the current level of inventories is even higher than when the price of oil was below $20 a barrel.
"We've got 50 million barrels of crude more than we had two years ago. We have 176 million of distillate," Beutel said. "When I started in the business back in 1980 we used to think to ourselves: "Gee, we would love it if we had 140 million barrels of distillates to start the winter."
Not all market watchers agree that the price of oil should or will go lower. Jonathan Barratt, managing director at Commodity Broking Services, told CNBC that he thinks oil will rise to between $82 and $85 a barrel. © 2010 CNBC.com
“oil bubble?”
Huh? I don't know of anyone that buys oil as a long-term investment. I think it's mostly bought as a hedge against price fluctuations.
I have no doubt this is the case. The oil/gasoline market is the biggest rigged joke in history.
Another note to the author...an efficient market (i.e. active trading) is always better for consumers in the long run than a thinly traded, monopolistic or oligopolistic market.
It’s called supply AND demand for a reason. No mention about how much base demand has risen over the same time period.
When oil gets back to ten bucks a barrel, I'll expect to see a three bedroom house (new construction) for $30,000.00, and midsize cars in the $5-7,000 range (also new).
Oil is a commodity, and the dollar 'value' is more a reflection of the value of the currency than the commodity.
factor in inflation and the devaluing of USD which oil is priced in, it be MORE than $15
Yeah, and analysts should be around 50 cents a dozen.
That stuff all cost that much in the late 90’s? Wow, learned something new.
Our oil policy, set at the highest levels, insures that Saudi Arabia has a lot of money to push Muslum expansion around the world. Let the US adopt nuclear power and drill for some domestic oil (and natural gas) and lets see what happens. Let convert some coal into hydrocarbon products to further reduce our dependence on foreign oil. This in one of the biggest scandals in the history.
we haven’t had an efficient, free market for a long time now. Totally rigged to suck every penny out of the free middle class. Now we have a serfdom with Sorros, et al on top.
Yep, everyone cheering rigged high prices should be forced to pray to mecca 5 times a day. They’re begging for it with this nonsense.
The speculator crowd will be here soon arguing that speculator dollars are good for everyone.
I didn’t say it would necessarily go to $10, but certainly close to what it was in the late 90’s which was $20-30’s.
You're right, everyone who comes near oil makes money. I'm not against profits but the Saudis and the U.S. government are the two pigs first at the trough.
I wonder at some of the ones who are on here cheering for higher prices. Is it a vested financial motive or some twisted idealogy?
There is a greater surplus of oil and gasoline now than ever in our history. The consumer is being gouged so that the Wall St. traders can make money shifting paper amongst themselves.
LIES!!!! Back in the 70’s I was told we only had enough to last 10 years. Why would Jimmah make that up?? We must be pumping out the last of the wells by now. no? s/
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.