[DantesPeak]

$this->bbcode_second_pass_quote('Carlhole', 'T')here 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.

[alokin]

My guess: a mix of some things: dollar strengthened (why??), China takes cars off the road due to Olympic Games, demand destruction in the US and maybe in other countries as well.
And maybe someone really don't want the oil to be up at the moment.

[madrid]

I am not thinking conspiracies on the part of candidates or that the Repubs or Dems could manipulate prices.

But there are geopolitical things in motion:

One thing, geopolitically, that has occurred is that the US is now talking directly to Iran-- that in and of itself has pushed oil down substantially-- maybe 15-20 dollars in itself. That was something that the Bush administration initated. The US chose to join the talks that were going on between Iran and the EU in Geneva. The US administration chose to ignore Israel's pleas that it launch an attack, and it chose to pursue, for the time being, diplomacy. That is a fact.

That, more than demand destruction, is what pushed oil down 20 dollars.

But I predict to you that oil is going to fall at least another 20 dollars between now and the conventions. The same freekin thing happened in 2006 during the elections. Look at the following charts if you don't remember:

http://cmd-chart.blogspot.com/2007/04/w ... harts.html

http://www.msnbc.msn.com/id/12400801/

It will go down, and I will tell you why it will go down. Because speculation is just as real as peak oil is real. Think about how fast oil went from 100$ (Jan 1) to 150$(June)-- it went up in less than 6 months. Much of this was traders digesting the new understanding that peak oil is real. If usable oil is truly finite, peaking and then diminishing, a realistic assessment is that it should be worth 400$ a barrel right now. And yet it is not worth that much, because there would be real chaos if it went from 100 to 400 in the space of 6 months. In fact, what is happening is speculators pushing the price down artificially low, down to 150$. Now they are just pushing it down to 100$.

The only thing I see is the election, and traders all over the world, temporarily going back to the old cornucopian model for 6 weeks until after the conventions. In fact, I would not at all be surprised if during the next month that the stock market gains 6 or 7 hundred points, and oil and gold go down to 100 and 750 each (or even less).

Yes demand destruction is a factor, but it is not enough of a factor to make up for the ruinous decline in Cantarell, that should be kicking us in the ass right now.

One other thing-- note how quiet, with the exception of today's suicide bombs, Iraq is. That again is US policy-- I suspect the US military is paying militias big bucks to keep things quiet on the street for the next few months. And here, I am talking about big, big bucks, that will make Iraq a huge headache for the next president.

The Saudis historically favor republicans over democrats because they think the Dems are bought and paid for by the Israel lobby. (They don't understand that both parties are bought and paid for by the Lobby).

I lost a shitload of money over the past month betting against the financials, and I stand to lose a shitload more before this summer is done, because I refused to think that the elections would push down the price of oil for a while. IT is in no one's interest, not the Saudis, not the gov't of China, not the Europeans, not the Israelis, not even the democrats, for there to be the complete destruction of the republican party, which would occur if things really went out of control at the moment.

I think eventually the Repub party will implode, but it won't occur on this election cycle, and there are powerful forces that are trying to make that happen... Just my 2 cents.

[CarlosFerreira]

$this->bbcode_second_pass_quote('r101958', 'C')arlos: 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.

[Fiddlerdave]

$this->bbcode_second_pass_quote('f2tornado', '')$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.

[alokin]

foddler, remember demand destruction - not for China and India.

My feeling is that if prices stay low too long and even Wall Street is on the upwards trend that we will only crash harder (not only the US), everything worsens every day: climate change, depth, dependency on oil etc.
It gives some individuals here, including us, some more time to prepare, but we're the minority, the mayority still drives SUV and everywhere, buys new clothes for the kids if they can afford it.

[Cashmere]

$this->bbcode_second_pass_quote('', 'O')il prices rebounded from their lows Wednesday after a surprise decline in the nation's gasoline stockpile countered investor sentiment that U.S. demand was falling.

[yesplease]

It's both. Check out the price/income elasticity of demand. Less income and people tend to cut back. Higher prices and people tend to cut back. The problem wrt GDP manifests itself when people cut back on other purchases but not fuel consumption, which tends to be the case short run. Long run, people use more efficient vehicles, move closer to work, work closer to home, use mass transit, etc... And fuel costs as a percentage of per capita GDP drop back down.

[CarlosFerreira]

$this->bbcode_second_pass_quote('yesplease', 'A')nd fuel costs as a percentage of per capita GDP drop back down.

[yesplease]

I'm not quite following something. What do you mean by lower offer?

[CarlosFerreira]

$this->bbcode_second_pass_quote('yesplease', 'I')'m not quite following something. What do you mean by lower offer?

[yesplease]

Gotcha! I have a feeling we'll be seeing a race between the decline rate and demand destruction via more efficient use, a reduction of use, changes in habits, and replacements. My guess is that oil will stabilize around an inflation adjusted ~$150/bbl for the next few years and increase from there to ~$250-350/bbl long run as replacement comes on strong following higher oil prices.

[zoidberg]

To heck with this how low can it go talk. We know whats up around here.

modified to include never option. I tried to modify the poll question anyways. Didnt seem to take.

To be fair, including "never" votes.

Total votes never: 1.

[smallpoxgirl]

Yesterday.

[eastbay]

$this->bbcode_second_pass_quote('smallpoxgirl', 'Y')esterday.

[lorenzo]

You didn't include the option: "never". It would only be fair to include that choice.

My bet is that the tiny upticks we're going to see over the coming year, are going to be tiny bubbles fueled by geopolitical news. All these bubbles will be occuring on a grand downward trend to $70-80.

Only after we've hit that point, might there be a gradual increase in prices towards a long term plateau as massive alternatives and renewables keep coming online and electrification of personal transport begins to mass-penetrate the market, and as conservation and efficiency are beginning to do their work.

"Never".

[Cashmere]

2 bucks a day for 3 weeks and we're at 150.

Very possible.

[DantesPeak]

Last Monday, when every energy 'analyst' in the major media stated that the price would keep dropping because of bearish trends - despite indications demand was increasing (due to lower prices) and supplies falling (for example, the bombed BTC pipeline).

If the BTC pipeline is shut for good (not a prediction), then we have new highs before the end of the year.

[joewp]

$this->bbcode_second_pass_quote('lorenzo', '
')Only after we've hit that point, might there be a gradual increase in prices towards a long term plateau as massive alternatives and renewables keep coming online and electrification of personal transport begins to mass-penetrate the market, and as conservation and efficiency are beginning to do their work.

"Never".

[GoghGoner]

With the airlines, car industry, truckers, governments going broke at 120-140 oil, I don't see it making it past the 160 mark until supply (world exports) fall quite a bit more -- I guess 2010 Q3 but it could come a year earlier or a two years later depending on how the geopolitical factors weigh in.