Syd_RE, thanks for pointing it out. With global equity markets experiencing the worst 1H in 26 years, all eyes are oil now. I think if the price continues to climb, the market seems not yet for a rebound. And the issue with Iran certainly doesn’t help.
Oil price is the result of supply and demand in the spot market. The futures price can’t get more than a cash and carry away from the spot. The foreign currency part may have an impact but its small. You have a big up move between March/Apil in crude oil prices but nothing in currency. So I don’t see the cause and effect here.
I think that oil is likely a bit overpriced right now. . . but the long-term trend will be increasing oil prices. Throw a hurricane in the mix in the Gulf this summer and we will blow right through $150.
Wow, look at the oil price in the past two days!!! OPAC revised its demand forecast and many speculators retreats after a huge rally. Should be below 130 in a month. And if Obama became the President, its terrible news for oil.
amoynahan Wrote: ------------------------------------------------------- > Oil price is the result of supply and demand in > the spot market. No, all the price action in oil is driven by the futures markets. In some other markets, it’s spot driving the futures. > The futures price can’t get more > than a cash and carry away from the spot. Which does not mean spot drives futures. > The > foreign currency part may have an impact but its > small. You have a big up move between March/Apil > in crude oil prices but nothing in currency. So I > don’t see the cause and effect here.
somebody told me that in the past year, demand for oil (including BRIC) has increased around 18% whereas the price of oil had almost doubled. can anybody confirm this? if that was true, supply is definitely lower or something (someone) is driving the thing up, so i do believe it’s mostly speculators
jaz Wrote: ------------------------------------------------------- > somebody told me that in the past year, demand for > oil (including BRIC) has increased around 18% > whereas the price of oil had almost doubled. can > anybody confirm this? if that was true, supply is > definitely lower or something (someone) is driving > the thing up, so i do believe it’s mostly > speculators I don’t follow your logic. The elasticity of demand doesn’t have anything to do with whether there are speculators or not.
In other words, why can’t an 18% increase in demand translate to a two-fold increase in price?
JoeyDVivre Wrote: ------------------------------------------------------- > In other words, why can’t an 18% increase in > demand translate to a two-fold increase in price? Just gotta ask. What’s your status on oil now? We’re down about 14% from peak. Popping an aweful lot like a bubble isn’t it?
I don’t think I have ever expressed an opinion on oil one way or another, except that I think futures markets are a fine place for oil to be priced. There is no doubt it’s getting pounded - down another $4+ today.
Spierce, you gotta be kidding? Gloating at $129/barrel oil? Sheesh.
virginCFAhooker Wrote: ------------------------------------------------------- > Spierce, you gotta be kidding? Gloating at > $129/barrel oil? Sheesh. Yeah, it’s going to go from 147 to 80 in 2 weeks…
The funny thing about that number is that most of the E&Ps I look at have sold most of their forward production at around 80.
Oil does not meet the classic definition of a bubble but remains a bit overpriced. We did just dodge a bullet with Dolly hitting where it did.
JustPass Wrote: ------------------------------------------------------- > Oil does not meet the classic definition of a > bubble but remains a bit overpriced. > > We did just dodge a bullet with Dolly hitting > where it did. What is the classic definition? I’ve never seen a definition myself, I’d love to know what it is. All I have ever read is a very subjective extrapolation of evidence. Whew, yeah, that 5% of our oil production is so huge. That hurricane musta been built into the 147 price, weeks before it even formed.
spierce Wrote: ------------------------------------------------------- > virginCFAhooker Wrote: > -------------------------------------------------- > ----- > > Spierce, you gotta be kidding? Gloating at > > $129/barrel oil? Sheesh. > > Yeah, it’s going to go from 147 to 80 in 2 > weeks… Just wanted to make sure this gem was saved. I think it’s past the edit period, but you can’t take chances when you see something like this.
NakedPuts Wrote: ------------------------------------------------------- > spierce Wrote: > -------------------------------------------------- > ----- > > virginCFAhooker Wrote: > > > -------------------------------------------------- > > > ----- > > > Spierce, you gotta be kidding? Gloating at > > > $129/barrel oil? Sheesh. > > > > Yeah, it’s going to go from 147 to 80 in 2 > > weeks… > > Just wanted to make sure this gem was saved. I > think it’s past the edit period, but you can’t > take chances when you see something like this. The meaning of the post was to say… “Yeah, like would drop to $80 in two weeks”, the peak was what? 2 weeks ago? It was kinda sarcastic. It didn’t raise that fast and it won’t drop that fast, but it will drop. Hey, and by the way…“there is no bubble, there is no bubble, there is no bubble” Ohh, dang, sorry guys. http://news.yahoo.com/s/nm/20080722/bs_nm/semgroup_dc_1
I think that given the US dollar decline, a lot of the run up in oil has yet to come. With $150 already somewhat of an expectation, longer term market particpants are looking towards $200 a barrel. I personally don’t see the bubble…nore do I see a bubble with Potash. With Nortel the P/E Ratio topped out at like 120 times. Take half of that, 60, and you’ve got Potash at $270 or a nice, 25% return. And if you figure EPS growth to, say, $7 you’ve got a $420 share price for almost a two bagger. Willy
Agrium is another easy lay up at 21 times earnings. Is this thing hits 30/35 you’ve made plenty. Willy
Consider this. . . the S&P 500 Energy sector would need to double up a few times to match the performance of the S&P 500 Tech sector from 1994-2000. And. . . the move in the energy sector has had much greater cumulative earnings growth vs. the tech sector over this time. So, how is this a bubble? Since you are the one with the “compelling” argument that it is a bubble, perhaps you can give us the definition.