[JohnDenver]

$this->bbcode_second_pass_quote('DantesPeak', 'I') said many months ago that most speculative oil trading activity concerned betting on prices to drop, now that has been proven to be true.

[JohnDenver]

$this->bbcode_second_pass_quote('DantesPeak', ' ')US oil + oil product imports are falling 200,000 bpd faster than 'demand destruction' as you call it.

[Micki]

You can rarely point at just one reason for price moving ina certain direction.
Short term wise it is hard to say what demand destruction has done for the price. As I said in early July sometimes just before the price peaked out, $150 would be a resistance point. The simple reasons were; Round numbers usually form resistance/support, too many traders with too easy profits, expected bounce back in US$.

Once the ball is rolling down again, you will have weak hands and momentum traders selling out long positions and going short.
Unless there are very very eager buyers out there, the price can move down a fair bit as many new longs want to see how low price goes before jumping onboard.

Certain events can of course turn things around very quickly.

Personally I would not short oil as I see heck of a lot more upside risks than downside risks.

[ClassicSpiderman]

It was apparent that the market could not support $145 oil, so the price went back down to a more 'reasonable' $125.

Of course, that doesn't stop the cornucopians from crowing and saying that the peak oilists and doomsayers were wrong.

Perhaps I need to post another "Oil drops below $xxx !!! Peak oil is defeated!!!!!!" thread.

[Heineken]

The highs will be higher and the lows will be higher. That's what it will be.

[CarlosFerreira]

$this->bbcode_second_pass_quote('Micki', 'Y')ou can rarely point at just one reason for price moving ina certain direction.
Short term wise it is hard to say what demand destruction has done for the price. As I said in early July sometimes just before the price peaked out, $150 would be a resistance point. The simple reasons were; Round numbers usually form resistance/support, too many traders with too easy profits, expected bounce back in US$.

Once the ball is rolling down again, you will have weak hands and momentum traders selling out long positions and going short.
Unless there are very very eager buyers out there, the price can move down a fair bit as many new longs want to see how low price goes before jumping onboard.

Certain events can of course turn things around very quickly.

Personally I would not short oil as I see heck of a lot more upside risks than downside risks.

[NoWorries]

Stock market appears poised to make up its losses from yesterday; it's +135 and climbing!

But the big kicker: Oil dropped $4 in the past 1 hour! And this after attacks on Nigerian pipeline made the news!


What the heck is going on with these trends?

[Peleg]

As for stocks no one likes to lose money so their is a retracement at each major psyche point. As for oil, if they can get oil below $110 I will consider a trend change, but it will only be because the US consumer is reducing consumption as they are already, not because supply has found a way to get over the plateau.

Dem's da fax.

The Dow has about 15 to 20% further to fall probably over the next two years. So, you should make money off the small rallies if you can. I know alot of people are shorting the market and feel bearish long term for stocks. Commodities are going to rise and fall based upon demand and supply, when recession is feared you might get a commodities bubble but eventually the lowered demand caused by deep recession catches up and commodities come down.

Peak oil is still sitting there in the dark waiting for us to dare to think we can consume 120 mbpd in oil. Price will punish us severely for such arrogance.

[CarlosFerreira]

There's a thread around here concerning why did the price drop $20.

http://www.peakoil.com/fortopic43685.html

You might merge. As for price elasticity, keeps your pants on. We'll pay for this decrease the moment people read that news, take a deep breath, think the worst is over and drive 200 miles to nowhere this weekend.

[Iaato]

$this->bbcode_second_pass_quote('DantesPeak', 'T')he price spike before the drop of $20 also had much to do with SemGroup.

There appears to be a strong possibility that their traders who bet on falling prices did not follow company trading guidelines. When the loss was discovered, the short positions had to be closed out, driving up the price to a level we now call a price spike.

This has almost nothing to do with long term supply/demand. So far in 2008, net oil + product imports are dropping faster than 'demand destruction'. Demand destruction is just another (erroneous) way of saying that demand must drop somehow to available levels of supply.

[CarlosFerreira]

$this->bbcode_second_pass_quote('Iaato', '
')Since we're selectively outlawing naked shorting, why don't we just take it the next step and outlaw all shorting?

[madrid]

No one seems to recall what was happening in the second half of 2006 to make oil go precipitously down?

I'll refresh your memory:

elections, elections, elections.

Now I don't think there is a grand conspiracy to make oil go down for the presidential election. The fact is, however, that it is perceived to be in everyone's interest, in Saudi, in New York, in London, in Iran, in China, that the US elections occur in a way that one of the two major parties gets elected and there are not riots in the streets ala 1968.

Thus, the prices go down temporarily, followed by a huge rise, post election.

[TheDude]

That would pre-suppose that there's a producer with the capacity to bring enough oil to market to dampen prices in the first place.

The Stop Excessive Energy Speculation Act has failed.

Partisan fight kills bill to curb oil speculation , Whitehouse ...

$this->bbcode_second_pass_quote('', 'T')he bill, the Stop Excessive Energy Speculation Act - sponsored by Majority Leader Harry Reid (D-NV) and supported by the Rhode Island Congressional delegation, which would have placed limits on traders who don’t intend to actually physically trade petroleum products, failed to garner the 60 votes required to break a Republican filibuster. The Democrats could only garner 50 votes.

The bill would have also enhanced the size, scope and authority of the Commodities Futures Trading Commission (CFTC), forced oil traders to trade through intermediaries and created study groups to monitor the commodities markets.

Rhode Island Congressmen Sheldon Whitehouse (D-RI) and James Langevin (D-RI), a Dean of the Business School at the University of Rhode Island and a Republican financial planner all said regulations of oil speculators would bring down energy prices. And late last week, the CEO’s of all of America’s major airlines sent out an open letter supporting the crackdown on “excessive speculation.”

Although most Republican Senators agree that speculation needs to be subject to stricter regulations, they refused to allow the bill to move forward as long as it didn’t contain amendments allowing for the expansion of drilling in the United States. The Republicans argued that increasing the supply could only do one thing to oil prices; bring them down.

Polls showed the American public agrees with the Republicans on that issue. A Zogby Poll released late last month found 74 percent of those asked said they supported offshore drilling and 59 percent supported drilling in the Alaskan National Wildlife Reserve (ANWR). Numerous other polls found similar results.

[CarlosFerreira]

Do you think it's even remotely possible one of the candidates can use speculators to keep oil prices artificially low in order to tip the scales? I mean, how much would it cost - in money?

[r101958]

A question....as we all laud the 'demand destruction' that is going on. Can anybody tell me what all this demand destruction amounts to ....really?

Demand destruction = Lost jobs/slowing economy

not the other way around. This is just as Kunstler has written about in long emergency.

Am I way off here.....i'd like to see some replies......please...not too many four letter words though....

[the48thronin]

$this->bbcode_second_pass_quote('r101958', 'A') question....as we all laud the 'demand destruction' that is going on. Can anybody tell me what all this demand destruction amounts to ....really?

Demand destruction = Lost jobs/slowing economy

not the other way around. This is just as Kunstler has written about in long emergency.

Am I way off here.....i'd like to see some replies......please...not too many four letter words though....

[CarlosFerreira]

$this->bbcode_second_pass_quote('r101958', 'A') question....as we all laud the 'demand destruction' that is going on. Can anybody tell me what all this demand destruction amounts to ....really?

Demand destruction = Lost jobs/slowing economy

not the other way around. This is just as Kunstler has written about in long emergency.

Am I way off here.....i'd like to see some replies......please...not too many four letter words though....

[r101958]

Carlos: Yes....exactly....couldn't have said it better myself. In my opinion, when people elaborate on how wonderful the 'demand destruction' and how it is going to bring down oil prices......I believe they really don't understand that all that 'demand destruction' is resulting in lost jobs and more probs for the economy. They think it is the magic answer and now everything can go back to normal. I think they are in for a surprise. That, or I am way off.

[f2tornado]

$this->bbcode_second_pass_quote('r101958', 'I') believe they really don't understand that all that 'demand destruction' is resulting in lost jobs and more probs for the economy.

[Carlhole]

There isn't really any argument here!

Oil hits 7-week low on demand worries, dollar gain

$this->bbcode_second_pass_quote('', 'A')nd demand for oil in the U.S. — the world's thirstiest consumer — continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department's Energy Information Administration said Monday.

"We're seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold.

"Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.

Also weighing on prices was a sharply stronger dollar compared to the euro, which made commodities less attractive to investors who have bought oil futures as a hedge against inflation and weakness in the U.S. currency.