[rkerver]

... of 61.26 USD as of 6-Oct-2005 10:00 PM EST. For all you presumptive of your knowledge and expertise, I have question for you. Why's oil heading down? I mean with the whole Iraq mess, the Katrina disaster, the peak oil scare, a whole host of ghouls running about in the season of death. I wanna see behind the mask. What's happening?

[Colorado-Valley]

Current low seasonal demand, the emergency petroleum reserve has been opened, Europe is sending its surplus fuel stocks to the U.S., high prices have spurred some conservation ... etc., etc.

[rkerver]

Colorado-Valley
$this->bbcode_second_pass_quote('', 'C')urrent low seasonal demand, the emergency petroleum reserve has been opened, Europe is sending its surplus fuel stocks to the U.S., high prices have spurred some conservation ... etc., etc.

[Colorado-Valley]

I think we've got about three weeks. Enjoy the fall and be sure to buy some thermal underwear.

There is one possibility ... a recession can do wonders for fuel demand.

[rkerver]

May not be a bad thing for America. Take yer pick, sell the SUV and conserve, or gamble loosing yer job in the recession. Can always bike to work.

[peripato]

$this->bbcode_second_pass_quote('rkerver', '.').. of 61.26 USD as of 6-Oct-2005 10:00 PM EST. For all you presumptive of your knowledge and expertise, I have question for you. Why's oil heading down? I mean with the whole Iraq mess, the Katrina disaster, the peak oil scare, a whole host of ghouls running about in the season of death. I wanna see behind the mask. What's happening?

[OilsNotWell]

$this->bbcode_second_pass_quote('', 'C')hairman Alan threatening to keep raising domestic interest rates, which may bring on a recession, is a sure-fire way to lower oil prices.

[turmoil]

Patience young Padawan.

[peripato]

$this->bbcode_second_pass_quote('OilsNotWell', '')$this->bbcode_second_pass_quote('', 'C')hairman Alan threatening to keep raising domestic interest rates, which may bring on a recession, is a sure-fire way to lower oil prices.

[MicroHydro]

Look at a 12 month chart for ANY commodity. The line is very wiggly. There is a reason for this. Commodities trading is a zero sum game. For the pros to win, the amateurs must lose, as 80% of them do.

Commodities pros do not make their money by following fundamentals or long term secular trends. They make their money by being on the right side of the short term fluctuations. Pros know the inside game and you don't. They screw over the amateurs with counterintuitive short term market swings. The amateurs buy end towards the end of a upswing, panic near the end of an unexpected downswing and sell, locking in a capital loss.

Hint: While the amateur cannot do precise market timing, this is a secular bull market for commodities. The 1980s were the great bond bull, the 1990s were the great stock bull, the great commodities bull started in 2001. Commodities have at least another 5 years to run. Long term buy and hold works in this environment. Pullbacks in a secular bull market are a buying opportunity.

[peripato]

Hi MicroHydro,

Who are you addressing this too? $this->bbcode_second_pass_quote('MicroHydro', 'L')ook at a 12 month chart for ANY commodity. The line is very wiggly. There is a reason for this. Commodities trading is a zero sum game. For the pros to win, the amateurs must lose, as 80% of them do

[MicroHydro]

$this->bbcode_second_pass_quote('peripato', 'T')his is why most amateurs lose money - they are not trading with an edge.

[peripato]

$this->bbcode_second_pass_quote('MicroHydro', '')$this->bbcode_second_pass_quote('peripato', 'T')his is why most amateurs lose money - they are not trading with an edge.

[Doly]

It's all very well, philosophically, but in practical terms: when do you expect peak price of oil? What are the sort of markers that would warn you that peak price is happening?

[seldom_seen]

$this->bbcode_second_pass_quote('peripato', 'A') trading edge is using a financial instrument (such as options, or futures and options in combination) only when you can obtain some advantage from it.

[seldom_seen]

$this->bbcode_second_pass_quote('Doly', 'w')hen do you expect peak price of oil? What are the sort of markers that would warn you that peak price is happening?

[MrBill]

Simple moving averages are all you need to catch 'the big trend' (i.e. peak oil), but beware, in choppy, sideways markets they will whipsaw you like a rag doll.

People like to deride traders, but try it sometime. You think the products are in short supply and there is adequate crude due to reduced refining capacity, but then demand falls and all of a sudden you have ample spare capacity, record high imports and the gov't s intention to release SPR capacity at will and the market falls 20-25% in a little over a week. Laugh all you want, but those are real losses. So unless you have a small, piddly position, it hurts.

A head and shoulders looks a lot like an A, B, C correction while it is happening, but getting it right requires going home on a Friday night short crude oil while Rita is bearing down on Houston. Ya, some get it right and some don't, but both Katerina and Rita were completely different storms between Friday night and Monday morning. Mostly we shrugged Katerina off as it passed through the Texas Panhandle with very little damage only to be caught out when it turned around and picked up strength, and mainly there were a lot of doomers who were confidently predicting Rita to be much worse than katerina.

Hindsight is 20/20, but it looks a lot different when I have to decide this morning whether at $62.00 we are in a Friday afternoon correction higher or looking to test channel support at $60?

My two cents in any case.

[SuperNova]

Well said Bill



I follow this site as I do the 'OILDRUM' out of interest..... I think there are plenty of people on here who dig up useful research and make good observations which then allow me to moderate my thinking. - at the same time I try to filter out the 'end is nigh' extremists

Short term.. this winter, higher.

Medium Term - early next year to 30 months out....I think... (and no I don't know when)... but I am confident we will see oil prices fall substantially at some point over the next 2 years. Why... well: Prices are arguably hurting demand right now, the economy looks shaky and the fed are determined to stand on inflation - even at the cost of economic growth. Add to this increased rig counts (more exploration) and refinery builds taking place and I think you have a medium term glut in the oil mkt.

In the longer term... I don't disagree, oil is a finite commodity and we are probably close to peak oil (before the peak or just past the peak I don't know) .. so longer term hydrocarbons become less readily available - the price of hydrocarbons depends really on how dependent we are on them as supplies reduce - er supply & demand economics no??

My trading horizon is rarely more than 12 months out.

[rkerver]

OK, thanks all for your illuminative posts. I've decided I'd rather be an amateur in the fullest sense of that word, rather than brutal. What I glean is that, rather than having money invested, possession of the real goods is better, like propane in the tank. But then, isn't that hording and greed and therefore contrary to the spirit of being an amateur? I'm fascinated with the concept of an "external rate of return" (see http://www.socialfunds.com/news/print.cgi?sfArticleId=484). This may be too philosophical, but the idea of investing in a socially responsible fashion has been gaining traction. As the quintessential socially responsible amateur investor, I'd like to put my money somewhere where it gets both a good internal return and is doing lots of good (an external return), and forget about it, because lots of others are doing the same. But all these troublesome downturns in a market crazed by greed and brutishness is making even that impossible.

[MrBill]

I don't see what's stopping you? There are plenty of green funds out there? Just go do it.

Just invest in companies that don't use any scarce resources or produce any harmful byproducts, and then when you get your dividend cheque donate it to a charity, which will do some further good with the money.


Good luck.