Skip to comments.Oil and gold: Rally won't last
Posted on 03/08/2011 7:03:53 AM PST by SeekAndFind
NEW YORK (CNNMoney) -- Oil above $100! Gold hitting new records! Don't fear the headlines. Most market experts think oil and gold prices will settle down as the unrest in North Africa and the Middle East region subsides.
In fact, a majority of investment strategists and money managers are leaving their year-end forecasts unchanged, according to an exclusive CNNMoney survey.
On average, experts expect gold and oil prices to edge up about 4% by the end of 2011. That would put oil at around $95 a barrel and gold just under $1,500 an ounce by the end of the year. Crude prices started the year around $91 a barrel, while gold was at $1,420.
Since the uprisings in Egypt at the end of January caught investors' attention, oil has rallied almost 25%, while gold prices have surged almost 10%.
"The upward pressure on oil is all related to the tension in the Middle East," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "While we think the issues won't resolve quickly, we should have more clarity by the end of the year, and that will relieve some of the upward pressure."
Like 80% of the 23 survey respondents, Ghriskey isn't changing his year-end target for crude oil. He is calling for oil to end 2011 at around $100 barrel, citing growth in global energy consumption.
Still, risks remain.
Bell Investment Advisors' Matt King is leaving his year-end forecast for oil unchanged at $95 per barrel. But he said prices could surge as high as $150 per barrel if the political instability spreads beyond Libya and disrupts oil production.
(Excerpt) Read more at money.cnn.com ...
anyone that thinks prices on any goods, including oil and gold, will ‘settle down’ is delusional
not one thing being done by this administration will have any positive impact on the economy. not one thing.
quite the opposite. digging deeper into debt by almost a quarter trillion dollars ... EVERY MONTH... does nothing but hurt our financial standing in the world while also devaluing the dollar.
therefore... EVERYTHING will be going up.
It isn’t a rally, it’s reality. The only unsupported rally I see is in the stock market.
Gee, Lou Dobbs said the same thing...wonder where he came from?
The only thing I think that can stop this gold/oil rally completely is another deflationary finance disaster that throws us back to about the mid 2010 situation with Greece and the end of the stimulus $$.
Any jobs recovery will equal inflation,
Sounds like advice from Goldman Sachs. Remember that advice about a month ago when gold was about $100 less than now?
This is rather ominous: Morgan Stanley halts Libya trade “Most estimates suggest around half of the country’s 1.6 million barrels per day of oil production capacity has been suspended due to clashes between government forces and rebels. Some trade sources expect other oil companies to follow the bank’s lead and halt oil trade with Libya, effectively halting exports to the international market. “Players won’t be able to buy Libyan crude even if it’s there. It won’t matter if they are producing or not,” said a crude oil trader. Austrian energy group OMV said today it was still getting oil from Libya despite severe output disruptions. “
Then maybe the oil traders should be funding the Libyan rebels? They do owe them bigtime...
I know a Bulgarian gentleman who once managed a cement plant in Libya. If you ask him his initial reaction is “Oh, my God! What a horrible country!”. The way he describes it, the place was only operational about half the time due to shoddy, worn out equipment and a slacker workforce. I suspect that is also the case with their oil production most of the time, but for some reason that is never reflected in the trading price.
I would find this more reassuring if they mentioned how long it is likely to be until unrest in Africa and the Middle East subsides. So far I haven't seen any progress in several thousand years, do they have some insight that the ongoing unrest is finally about to end after so many generations of violence?
Gives real meaning to ‘financial risk’ when you depend on 3rd world hell holes for commodities. You might check to see if you have any stock in these companies:
Apache Corp. has the highest exposure among North American producers to any single country experiencing turmoil, Fitch said. Apaches 163,300 boe/d of output in Egypt is 24% of Fitchs assessment of the companys recent total production.
Exposure levels in Libya include Marathon, 12% of total production; Suncor Energy Inc., 8%; Hess Corp., 5%; ConocoPhillips, 3%, and Occidental Petroleum Corp., 1%.
Fitch called Algeria the other North African country that could present the largest concerns for North American-based upstream companies. There, sizable exposure levels include Anadarko Petroleum Corp., 7% of total production, and Hess, 3%. ConocoPhillips produced 14,000 boe/d in Algeria in the third quarter last year, less than 1% of total production, according to Fitch estimates.
North American companies with production in restive Yemen include Nexen Inc., 11% of estimated total production, and Oxy, 6%.
Among European oil and gas companies tracked by Fitch, four have production in Libya or Egypt, the firm said in a separate report.
Eni, OMV, and Repsol have production exposure of 9-14% in Libya, with Eni as the most exposed, Fitch said. About one fourth of BG Energy Holdings Ltd.s total oil and gas output is in Egypt.
There could be a more pronounced impact on European oil and gas companies operations and financials if the political unrest spreads across Africa and/or the Middle East, Fitch said, adding it does not currently view this scenario as very likely.”
This is just early March and gold is already at $1430. The fed is printing as fast as it can and the government's control of spending is laughable. I suspect that the "experts" that say gold won't surpass $1500 an ounce may be experts in global warming, but they sure ain't experts in economics.
Author’s work history includes an internship at some muslim girl’s magazine.
Some of my old contacts in the energy industry agree to a point. The current spike is not all reality. There was a LOT of money that left commodities to go to oil in the last month.
If users in March think oil will be higher in July, it will be higher in July, because they will have paid higher prices in March for July delivery, and they won't sell it at a loss when the time comes.
This is what happened in 2008 when the price of oil plunged but the cost of gasoline stayed up.
From what I have seen and heard, some of the same investors went to energy (not just oil). When they see that the time is right, that money will go and the prices will drop some.
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