[evilgenius]

Don't forget if the US can put the Saudis in charge of both their pool of reserves and the Iraqi pool then a single swing producer can overproduce and undermine the Russian block's attempt to constrict supplies and therefore make more from less. Also ensuring US dominance into a prolonged end-game.

I sited Goldman and other items, but really it is the lessening of the war premium. Whether it is post surge or no surge there will be a repositioning of US troops vis a vis Iraq and/or the surrounding states. The smart money always moves before the herd. Goldman is connected (I guess, therefore, you can call them smart) so they moved early.

Funny thing is, pulling back isn't going to be enough. Everything isn't set until you can safely build the infrastructure to get the oil out of the ground and into the ships in the Gulf lickety split. Swing producer status won't be acheived until the infrastructure is in place. The Sunnis will have to do a lot on their own for this to happen. They probably won't be able to pull it off. The troops will have to go back. This is where it could all go wrong. If the Russian block through its proxy, Iran, can flood Iraq with enough weapons and fighters to prolong the next war the Saudis might feel their only option is to cut a deal and divide Iraq between them. It would depend on the deal but the swing producer that can undercut prices in the modern world might not materialize.

[AirlinePilot]

evilgenuis,

Dont take this the wrong way but have you been paying any attention to what is going on around here?

We have a ME on the verge of an all out war, a whacked weather situation in the US due to El Nino, demand has not been destroyed and continues its merry growth. SA may be in decline right now. Mexico has very big resource and infrastructure problems and we have not found enough oil to keep up with depletion.

Just because the price of crude is a bit volatile right now due to hedge funds trying to make a quick buck doesnt mean you can count out what is rapidly becoming a large freight train coming at us.

Who around here actually believes there is anyone who can be a swing producer anymore? I mean prove it. SA is playing games and I dont believe they have any spare capacity. Russia certainly doesnt either. They may have the upper hand when it comes to NG but as far as oil goes, they are not far from being a net importer themselves.

40$ a bbl? Frankly i doubt it, other than a momentary low until the next spike hits. I have a very bad feeling about this year and all that could go wrong. There is very little factual evidence that as far as fundamentals go you will see support for 40 or lower. I'd submit to you that this optimism has infected folks who dont want to recognize the real problems which are staring them in the face. Either that or they just dont have access to the information.

Look at the trend, all we currently have is a slight dip in the steady increase over the last 4-5 years.

Its just noise around the uphill climb.

[evilgenius]

Yeah, yeah I hear you AP, but it doesn't matter that oil is peaking for the above to be true, it helps that it is peaking now, but it could be done with a future peak in mind. It only matters that being able to overproduce, even to the point of damaging wells, will put the current regime into a commanding position throughout the end-game. By bucking up the petro-dollar they can fix the investment environment. Even if we don't get out of this with all 6.5 billion intact those remaining will theoretically be using dollars.

It is about them thinking beyond the peak.

[Revi]

The price of oil went up a bit in Asian trading. I think it hit over $53. I don't think it'll stay down long. Mister Market can't see very far out there. I don't know, but something could happen tomorrow that could drive the price up again. I think it'll be back up there during the summer driving season.

[DantesPeak]

It is not unusual for US energy demands to be low the last week of December – since its kind of informal vacation week.

We will have to see at least a few more weeks of low energy demands (excluding jet fuel demand, which has been depressed by winter storms) before we can truly say US oil/product demand has dropped for good. Gasoline demand held up well through most all of December, and other economic indicators don't show the US economy I recession.

Also don't forget the US is only 1/4 of the oil energy equation. One should assume lower prices would allow even poorer countries to buy more oil with the same amount of money.

[oilluber]

$this->bbcode_second_pass_quote('DantesPeak', 'I')t is not unusual for US energy demands to be low the last week of December – since its kind of informal vacation week.

We will have to see at least a few more weeks of low energy demands (excluding jet fuel demand, which has been depressed by winter storms) before we can truly say US oil/product demand has dropped for good. Gasoline demand held up well through most all of December, and other economic indicators don't show the US economy I recession.

Also don't forget the US is only 1/4 of the oil energy equation. One should assume lower prices would allow even poorer countries to buy more oil with the same amount of money.

[Chuckmak]

THIS is an oil price crash:
[web]http://news.bbc.co.uk/1/hi/business/the_economy/254255.stm[/web]

[Temperedoil]

What is interesting in the story posted there is that it suggests a view at the time that the price of oil would not rise the way it has since then. It shows how wrong analysts can be, even when they are sure of what they say.

That would offer some insight into the recent fall in the price of oil, with traders and analysts probably feeling confident that the bad news is over for now, with only concerns over the US / Iran situation, the possibility of further OPEC cuts (even there, the majority view reported in the news media appears to be that OPEC are not likely to maintain a solid front on real cuts in production), and watchful eyes on China and India likely to be the main reasons for the price not yet falling even further.

Traders and analysts are simply not prepared for the looming situation of demand exceeding supply on a long term basis. Or, so it would seem at present.

[Chuckmak]

$this->bbcode_second_pass_quote('Temperedoil', 'W')hat is interesting in the story posted there is that it suggests a view at the time that the price of oil would not rise the way it has since then. It shows how wrong analysts can be, even when they are sure of what they say.

[Revi]

The price dipped to $51.35 today again. What's up?

[nth]

Q2 is the slow quarter of the year and when demand is at the lowest. Traders are assuming that OECD have enough storage for this winter, so they are looking at increasing demand in later half of Q2 and Q3. We need to see a big drop in stored heating oil to change this picture. OPEC cut will probably not be as effective.

[shortonoil]

Oil is not the only commodity that is experiencing this downward tread. Molybdenum, copper, nickel, tungsten, zinc, aluminum, and lead are all showing very low 5 year stock quantities, and yet their prices are going down. When you see a decline in metals and energy as wide spread as this decline, you can be sure that economic activity is declining. Even the Chinese can’t make stuff without metals and fuel - clever as they are. The collapse of the US housing market, just as I suspected, would be the canary in the cage. Look out below, the sky is falling. It is time to get into short positions, just watch out for the GS and JP Morgan beasts. They love to snack on small short position traders!

[Revi]

Are we in a deflationary recession already? It seems like all commodities are going down. Maybe the economy is really going south now. What will this upcoming year be like?

[shortonoil]

Revi said:

$this->bbcode_second_pass_quote('', 'A')re we in a deflationary recession already? It seems like all commodities are going down. Maybe the economy is really going south now. What will this upcoming year be like?

[rockdoc123]

$this->bbcode_second_pass_quote('', 'A')re we in a deflationary recession already? It seems like all commodities are going down. Maybe the economy is really going south now. What will this upcoming year be like?

[shortonoil]

rockdoc123 said:

$this->bbcode_second_pass_quote('', 'n')ot according to the IMF who predicts continued growth in 2007:

[threadbear]

Most of your post is comedic in nature, though this paragraph does perhaps have something to it.

$this->bbcode_second_pass_quote('Kingcoal', ' ').
Every time the price should have come back to Earth, the US would do something to spook the markets. The problem with artificially propped up prices is that a reduction in demand can cause the prop to break. I think that is what's happening. A lot of very rich people have their assets affected by sudden dropping oil prices. They will take steps to try to restore the prop. Perhaps the recent troop "surge" is, in part, an attempt to prop prices back up.

[Zardoz]

How low can oil prices go?

$this->bbcode_second_pass_quote('', 'R')emember, more so than at any other time in the past, short-term market movements are being driven by the more than 9,000 hedge funds, many of which have highly leveraged positions in the oil markets. Clearly many momentum players are closing their long position, while others are initiating new short positions. This type of speculative trading exaggerates the severity of corrections, but is also sows the seeds for an equally dramatic rally.

Leverage is a two-edged sword. When real physical demand finally turns the market, those shorting into this decline will be forced to cover. Finding few real sellers at these depressed prices, this added demand will send prices sharply higher.

[oilluber]

Boone Pickens called for 50 oil last winter, when it did not happen,
he turned bullish in spring.
Now he was calling for 70 oil, it did not happen, the big difference
according to the rumor mill, he got caught with his pants down,
I wonder if he covered his position or still giving away some of his
billions of profits from the last 6 yrs ??

[Lore]

$this->bbcode_second_pass_quote('oilluber', 'B')oone Pickens called for 50 oil last winter, when it did not happen,
he turned bullish in spring.
Now he was calling for 70 oil, it did not happen, the big difference
according to the rumor mill, he got caught with his pants down,
I wonder if he covered his position or still giving away some of his
billions of profits from the last 6 yrs ??