With oil dipping below $70 today do you think airlines are loading up on futures contracts or is there further room to fall. I saw that OPEC has moved up their “extraordinary meeting” two weeks ahead of time. The Saudis just won’t give us the satisfaction of paying $2.50 at the pump.
I think OIl will eventualy settle between 60-70/barrell.
is there an Oil ETF or something that tracks crude spot directly?
Yeah I think its USO or that might be the Ultra Short Oil…which I wish I had purchased a few months ago, saying I would but chickend out!
DIG is ultra long oil… was thinking of picking up some shares… whaddya think?
Go with DUG, OPEC can never agree on anything, even when they publiclly state they will act together they never do.
whodey you think oil has room to fall? OPEC can just cut supply any damn time they feel like it especially when all piss poor countries start going bankrupt because oil is so cheap. I dont see much room for it to drop further, imo
Cartels don’t always work teh way they are intended…if I’m gettign oil at $80/barrell and they want to cut production I might say that I’m cutting back but still pump at my normal rate to get more money…
fxguy1234 Wrote: ------------------------------------------------------- > whodey you think oil has room to fall? OPEC can > just cut supply any damn time they feel like it > especially when all piss poor countries start > going bankrupt because oil is so cheap. > > I dont see much room for it to drop further, imo in the long term i totally agree to trade this market in the short term though, i think oil will fall further and the oil & gas companies will fall even further. once the world economy is back on its feet in 12-18 months from now I wouldn’t believe that oil would be
My buddy met with a famous airline analyst the other day who says the next big news from airlines will be how they are taking big hits on oil hedging…I bet most airlines hedged at $120+
UAUA purchased fuel caps averaging $111 for the rest of 2008 and $118 for 2009. OUCH!!
How can airlines take a hit on hedging? If hedged properly shouldn’t airlines have fuel price neutral positions (taking into account the hedge and what they pay in the spot market) and be ambivalent to oil price volatility? I know in practice they aren’t I just have never understood why this wasn’t the case. Thanks in advance for the education.
B/c they have a contract to purchase oil at $xxx, Good luck trying find someone will to enter into an offsetting contract to sell at that amount! That sucks. Southwest has done an extremely well job at hedging oil. I think they are still hedged around 70/barrell.
WSJ article today’s says SW will take a good hit…
dea_cfa Wrote: ------------------------------------------------------- > How can airlines take a hit on hedging? If hedged > properly shouldn’t airlines have fuel price > neutral positions (taking into account the hedge > and what they pay in the spot market) and be > ambivalent to oil price volatility? I know in > practice they aren’t I just have never understood > why this wasn’t the case. > > Thanks in advance for the education. My understanding is that airlines only hedge against potential increases in the price of oil. When oil was skyrocketing this summer because every energy analyst out there was saying we’d hit $200 per barrel this year, Airlines were probably loading up on futures contracts when oil was ~$120. Suppose next year the price of oil stays close to the current range of $70-80, those airlines who thought they were hedging will be paying a $40-50 premium per barrel. Talk about overpaying.