The 'track the price of Oil' thread

[Ram]

What the eff! Oil made its single biggest price increase in a day, in history, yesterday! It jumped almost $16/barrel, to close at $110/barrel. I dont understand this. 3 weeks ago, they told oil was falling coz the outlook for global economic growth was weak, the demand was expected to drop, hence the prices dropped. What happened in between then and now, for that to change, I cant figure out. No one's come up with any positive news on the economy, nor has there been any spike in violence in middle east, or some drastic supply cut by OPEC. This is turning out to be inexplicable!

[Ram]

Goldman Sachs Predicts $200/Barrel Oil May 07, 2008 At first, you may have mistaken it for more ranting from Venezuelan president Hugo Chavez. But do not be fooled: $200-a-barrel oil could very well be in your future. Goldman Sachs, otherwise known as the largest and most successful investment bank in the world, has said prices could hit the previously unthinkable mark within the next six months, as gluttonous demand for oil continues on a worldwide scale. While economists and environmentalists used to have little in common other than an affinity for the color green, this news should please both groups. It brings the price of fossil fuels more in line with their costs to the environment, and encourages people to find more sustainable means of transportation without interfering in the free market. Indeed, this is only the latest such overlap in interests between the two formerly inimical schools of thought. So while a few economically-minded people might still take a green pie in the schnoz now and then, it seems increased demand for oil worldwide could be the beginning of a beautiful friendship. http://www.matternetwork.com/2008/5/goldman-sachs-predicts-200-oil.cfm --------------- Goldman predicts oil price will fall to $30 Independent, The (London), Dec 13, 2008 Oil prices could hit $30 a barrel by March, Goldman Sachs said yesterday. Arjun Murti, an analyst at the investment bank, said: "[We have] again lowered our 2009 WTI [West Texas Intermediate] oil price view, though we believe oil markets have entered the bottoming phase of the cycle." The report marks a big change in views at Goldman, which last May said the oil price could reach $200 within two years. http://findarticles.com/p/articles/mi_qn4158/is_/ai_n31131869 ------------------ :haha: How many ivy-school MBAs,How many board meetings, How many cups of tea and plates of cookies does it take to do such an embarrassing U-turn?

[Ram]

Unfortunately, this low price of Oil will have an adverse impact on the Green movement. Now that fuel's cheap again, no one will be bothered to spend extra money on greener sources of energy.

[Guest dada_rocks]

I suppose this time people are serious and I am told the messiha has been elected so can't even hide behidn the fact that white house was not on the green-birgade side hence they failed.. moreover people if suddenly go crazy with fuel consumption then they are bonafide idiots and deserve everything they get in terms of failed economy.........

[novpj]

You give them too little credit; the research analysts are there to fool the common man and typically behind the curve on what Goldman;s trading desk is doing. In fact Goldman;s research is a good contra indicator; now that they have come up with this report I guess their trading desks are going long oil; the same kind of game they played with sub prime mortgage. There is an excellent article n sub prime crisis written by Michael Lewis. Its a long but fun read - the kicker to me is the description of Merrill on Page 7 when Steve Eisman (the hedge fund manager that Michael Lewis focuses on) short Merrill because his thesis is that Goldman is like the smart kid that makes off with the cream and Merrill is like the fat dumb kid left holding the bag in every crisis. I admire people who can simplify complex things into simpler patterns and this act of betting on the stupidity of an institution just takes the cake. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?tid=true#page1

[sandtest]

As I have said before, I am saying now and I will stick to this -- OPEC countries lead by those greedy Sheikhs of Saudi Arabia cut oil production whenever oil reaches to it's REAL price (which IMO should never be more than $50). Of course they are covertly supported by big oil companies of US and Europe in this money extortion scheme. For oil starved, growing ecconomies like Asian countries(India-China) who normally endure the bad effects of inflation due to rising oil price, I will say again- grow some balls, form a RICE CARTEL same like Oil Cartel of Opec countries which is nothing but a bunch of Organized money extortion group given legitimacy by UN with deep influence of Giant Oil companies having huge assets in Gulf Countries. Pressure Pakis that if you export Rice to your Islamic pious birathers in Gulf you can kiss goodby to Indus water treaty. And if India can rope in China for this, there is nothing ***** will dare to do defying Asian rice cartel-- if at all it happens a reality.

OPEC to cut oil production by 2 mn barrels December 17, 2008 18:40 IST Last Updated: December 17, 2008 19:04 IST The Organisation of the Petroleum Exporting Countries (OPEC) has decided to cut its daily oil production by about 2 million barrels. OPEC's daily output target is 27.3 million barrels. On of the world top oil exporters, Saudi Arabi has supported Opec's move in a bid to tide over the crisis. This is the biggest ever cut by OPEC in a bid to balance supply and demand. OPEC accounts for about 35 per cent of the crude oil market. "The demand for OPEC crude in 2008 is expected to average 31.6 million barrel per day (mb/d), a decline of 0.7 mb/d from the previous year. In 2009, the demand for OPEC crude is expected to average 30.2 mb/d, a drop of 1.4 mb/d from the current year," states an OPEC study. The growing imbalance in the oil market over the coming quarters will lead to a much higher overhang in inventories, if the global recession deepens, states an OPEC study. The OPEC members met on Wednesday to chalk out a strategy to check the fall in prices. Oil prices had zoomed to a high of $147 in July. The oil cartel expects the production cuts would stabilise prices, which have now fallen to a low of $44. "The year 2008 has been a year of sharp revisions to the world oil demand forecast. The oil demand growth has been slashed from initial estimate of 1.3 million barrel per day (mb/d) to negative growth of about 0.1 mb/d," OPEC says. The recession in the global economy has been the main driver for the fall in oil demand. Although the recent drop in oil prices should have eased pressure on oil demand, the sharp acceleration of the financial crisis since mid-September and spreading consequences across the globe have more than offset the impact of lower prices on oil demand growth, the OPEC study says. http://www.rediff.com/money/2008/dec/17bcrisis-opec-to-cut-oil-production.htm

[triam]

A rice cartel will not work, just because Rice is not an exhaustible resource, if a cartel indeed forms, brazil or any african or south american country can just increase its rice production and corner the market by going out of the cartel. OPEC is an ugly beast, the simple reason being it is not just an economic cartel but also a political one created as an opposition to Eisenhowers decree that US should get some % of oil from Canada and Mexico and not middle east (forgot the exact percentages), which makes it very dangerous, since the decisions they make are not influenced just by economic decisions. Although, the political interference in OPEC's decisions have gone down considerably, it still remains a concern where a situation like the oil crisis of 1973 is always on the horizon as an unspoken threat. This probably is one of the major reasons that the US and most european countries treat Saudi Arabia with baby gloves. It is fair to criticize OPEC when their decisions are based on political agendas like the one from 1973, but nowadays their decisions are mostly based on economic agendas. The decision to decrease or cap their oil production is purely an economic decision. For most of the OPEC countries, revenue from Oil exports is the single biggest source of income, and if they do not curtail the production and allow the oil price to fall below a certain dollar value, their whole countries economies will collapse. Lurker, The reason that you dont see a direct price difference between the oil industry and the retail industry like airlines could be because most of the corporations tend to put a fixed price contract in place when they foresee a rise in price. For example when a gallon was around 4 $ in the US, a lot of corporations signed 1 to 2 year deals with companies like Exxon for a fixed price of gas at 4.5 $ or something similar, expecting the gas prices to keep going higher. Unfortunately, for these corporations the price of gas actually fell down, but they are still bound by the contract for the next 1-2 years so they are stuck. This kind of contracts was how SouthWest obliterated the other Airline carriers when they had a contract with Exxon (I guess) and the gas prices actually went up higher than the contract price agreed btw SW and Exxon.

[Ram]

Oil price now upto $66/barrel. Is this a sign of growth, or sign of disaster?

[The Outsider]

^ Neither.....OPEC had cut production due to the economic lull.

[Ram]

^ Neither.....OPEC had cut production due to the economic lull.

Production cuts/increases have little impact on the price of oil. Right through the price boom early last year, OPEC repeatedly increased output, but it had little or no effect on the rapidly increasing price of oil.

[kumble_rocks]

^ agree. Looks like Oil traders are back to their old tricks . Time to reign in on them.