PeakOil is You
More evidence of tightening oil fundamentals
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More evidence of tightening oil fundamentals
by pup55 » Tue 23 Oct 2007, 09:14:57
$this->bbcode_second_pass_quote('', 'O')n net, we believe that crude oil prices remain consistent with current supportive fundamentals, but vulnerable to the downside in the near term as weaker refinery margins potentially motivate refiners to reduce their demand for crude,” Goldman Sachs said, adding “However, downward price pressure on crude oil prices will likely prove temporary as the relatively low level of product inventories suggest sustained refinery run cuts are unlikely and as crude oil fundamentals remain tight. Further, it is important to note that the concentration of call options at $90/bbl and $100/bbl suggest the potential for a “negative gamma” effect to push prices sharply and rapidly higher should these key thresholds be reached.”
$this->bbcode_second_pass_quote('', 'A')s global inventories decline at a sustained pace and approach critically low levels, it is not surprising that price volatility increases and that the upside price swings tend to be much stronger. In every commodity, low levels of inventories typically create a “spikeprone” environment where the upward price movements can be particularly violent and the level of backwardation potentially extreme.
$this->bbcode_second_pass_quote('', 'A')s a result, we believe that crude oil prices remain vulnerable to further downward correction from current price levels, which would also be consistent with high price volatility that typically characterizes this time of year. However, we believe that downward pressure on oil prices resulting from refinery runs cuts will likely prove temporary
EnergyPub
Translation: You may take some lumps this fall, but long term the current pricing regime is justified by the fundamentals.
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pup55 - Light Sweet Crude
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Re: More evidence of tightening oil fundamentals
by vision-master » Tue 23 Oct 2007, 11:00:48
$this->bbcode_second_pass_quote('', 'W')CCO) Around the Twin Cities, gas is going for about $2.75 a gallon. That's up nearly a dime from a week ago, but it's nothing compared to what we might be paying by spring. That's because the cost of oil is in record territory again.
"We just broke the record," said David Morris, an energy analyst, commenting on the recent price spike that sent a barrel of oil above $90 for the first time.
"It's the largest increase in the shortest period of time in American history," he said.
Morris said the usual fundamental drivers of oil prices, such as supply and demand, are not what are fueling the run-up in price.
"The reason that the oil price is so high is in part speculation," said Morris.
Oil traders are worried about increasing tensions in the Middle East. What happens if Turkey does invade Iraq? What happens if the United States bombs a reactor in Iran? Their concerns about future oil disruptions drive up the price.
"Oh, I'm sure there's a way to make money somewhere squeezed into all that," said one man filling up in Minneapolis.
"That's what speculation is," said Morris. "What you have are a lot of people betting that the price of oil is going to go up, which drives the price of oil up, which drives the price of gasoline and heating oil."
So how come the price at the pump isn't changing as fast? The reason is demand. It's down because the summer driving season is over, but prices are higher than we think.
The average gas price in the Twin Cities today is $2.75 per gallon. Last year at this time it was $2.12. That has some forecasting more severe pain at the pump in our future.
Morris said if the price for a barrel of oil is in the $80 to $90 range once the spring and summer driving seasons begin, we'll see $3.50 to $4 dollar per gallon gasoline.
"Let's hope not," said one metro drive. "I fill up once a week and that's painful enough."
The high price of oil is also going to hit some of us in the wallet this winter. Most of us heat our homes with natural gas, but families that use heating oil could see their bills jump by more than 20 percent.
"We just broke the record," said David Morris, an energy analyst, commenting on the recent price spike that sent a barrel of oil above $90 for the first time.
"It's the largest increase in the shortest period of time in American history," he said.
Morris said the usual fundamental drivers of oil prices, such as supply and demand, are not what are fueling the run-up in price.
"The reason that the oil price is so high is in part speculation," said Morris.
Oil traders are worried about increasing tensions in the Middle East. What happens if Turkey does invade Iraq? What happens if the United States bombs a reactor in Iran? Their concerns about future oil disruptions drive up the price.
"Oh, I'm sure there's a way to make money somewhere squeezed into all that," said one man filling up in Minneapolis.
"That's what speculation is," said Morris. "What you have are a lot of people betting that the price of oil is going to go up, which drives the price of oil up, which drives the price of gasoline and heating oil."
So how come the price at the pump isn't changing as fast? The reason is demand. It's down because the summer driving season is over, but prices are higher than we think.
The average gas price in the Twin Cities today is $2.75 per gallon. Last year at this time it was $2.12. That has some forecasting more severe pain at the pump in our future.
Morris said if the price for a barrel of oil is in the $80 to $90 range once the spring and summer driving seasons begin, we'll see $3.50 to $4 dollar per gallon gasoline.
"Let's hope not," said one metro drive. "I fill up once a week and that's painful enough."
The high price of oil is also going to hit some of us in the wallet this winter. Most of us heat our homes with natural gas, but families that use heating oil could see their bills jump by more than 20 percent.
http://wcco.com/topstories/local_story_295174932.html
- vision-master