[AAA]

$this->bbcode_second_pass_quote('threadbear', 'M')oney is flowing out of treasuries and into commodities. It's that simple. Watch the dollar weaken as prices for anything other than deflated assets, rise. But be careful here. There's a different administration controlling things now, one that WILL crack down on the ICE, the energy desks at major banks, and other agencies that game the energy markets too high. Anything over 70.00 is going to set off alarm bells and get the pols involved. Like it or not.

[TheDude]

$this->bbcode_second_pass_quote('threadbear', 'L')ows--35.00
Highs--60.00
Close--58.00

[OutOfGas]

US oil consumption has not fallen that much. Industrial consumption has fallen much more than transportation.
Any perceived improvement in the economy will drive the price of oil higher. I think we will see another oil price spike this summer in spite of a bad economy. In the US, driving a car is one of the last things the masses will give up.
Peak oil is coming and TSWHTF.

[threadbear]

AAA, Thanks for compliment. I'm flattered but feel somewhat undeserving.

Dude, Do I think the market will top out at 60.00 still? Hmmm...It could shoot the moon again, but I'm pretty sure 70.00 will be the upper limit. If the govt. is on top of it, they should start sending out some serious warning signals to gamers, at around 60.00. That might bring it back to earth. If they quit flooding the market with gold leases, every time gold goes over 900.00 per oz., that will help. Gold will start behaving like an inflation hedge, if it is allowed. So far, they've only trained swing traders like synchronized dancing bears, to perform on command.

[copious.abundance]

They're baa-aack. http://www.cnbc.com/id/30603801
$this->bbcode_second_pass_quote('', '[')b]Oil Prices Ignore Supply, Demand Picture: Here's Why By: Sharon Epperson, CNBC Senior Energy Correspondent | 06 May 2009 | 03:46 PM ET
Why is oil trading near a 6-month high—breaking into a new range—and rallying above $56 a barrel, when oil supplies are at the highest level we've seen since 1990 and demand is tanking?

Oil remains technically strong today, despite rather bearish fundamentals, as traders continue to follow the equities market. Crude's broken into a new range and a settlement above $55 is significant.

What's fueling the momentum? Nymex traders tell me they're seeing new money coming in from passive funds that are reallocating assets away from precious metals and into energy holdings. It's this money flow—rather than the fundamental supply/demand data—that's driving oil prices higher.[...]

[AirlinePilot]

Anyone with half a brain can see several simple facts.

Over the last 3-4 months the oil industry is cutting production to attempt to prop up the price. Forward investment curves are falling apart somewhat with the current banking/lending crisis and dont appear to have an end in sight. Global demand is seen as rising on supposed "good" economic news. This against the backdrop of layoffs in both rigs and key employment requiring some lag time for increases in production when demand signals a return to growth. Top it all off with a possible helping of Israeli military prowess and, well, you get my drift.

I see no huge rise in prices until we start working down some of the US inventory.

It's all about perception here and some speculation as money flows into what some consider safer investments rather than equities or bonds. I frankly doubt that any real ability to shackle this market exists. Not to say this isnt possible but I'll believe it when I see it.

We can all see that longer term we are going to have a problem, unless of course, your name is Oilfinder As a result of all the above,you have this steady and sure rise in crude price. Calling a top to this is a crap shoot. Too many moving parts at the moment and several of them could swing things very dramatically. Overall unless we have a global systemic financial collapse, the trend is up IMHO.

[TheDude]

$this->bbcode_second_pass_quote('AirlinePilot', 'A')nyone with half a brain can see several simple facts.

[TheDude]

$this->bbcode_second_pass_quote('OilFinder2', '[')b]What's fueling the momentum? Nymex traders tell me they're seeing new money coming in from passive funds that are reallocating assets away from precious metals and into energy holdings. It's this money flow—rather than the fundamental supply/demand data—that's driving oil prices higher.[...]

[AirlinePilot]

I believe the largest mover of the oil markets right now will be this nebulous perception that demand is going to increase due to the global economy showing signs of slowing its rate of decline. Even though IMHO we are far from out of the woods with respect to that, it shows the correlation of perception versus reality to the market.

I'm sure many of us would agree that the price rise last year and subsequent fall had little to do with supply/demand realities. Small moves in that equation are going to result in huge price moves. I think some of that IS a result of the entire Peak Oil issue and where we were last year with the medias coverage of it.

[AirlinePilot]

Say hello to 60$ oil.

[TheDude]

$this->bbcode_second_pass_quote('AirlinePilot', 'S')ay hello to 60$ oil.

[davep]

From the FT:

http://www.ft.com/cms/s/0/b93eef02-449c-11de-82d6-00144feabdc0.html

Oil recovery ignores fundamentals

Take a quick look at the oil price and you would think the market is rapidly returning to health. On Tuesday, the market’s main benchmark – West Texas Intermediate – jumped to a six-month high of $60.48 a barrel, up 85 per cent from February’s low of $32.7.

Oil futures graphic for MarketsDig deeper into the world of physical oil and another picture emerges, however: the fundamentals of supply and demand are weak – much weaker than current prices imply.

Traders – some of the top executives at the world’s largest oil companies – say the recent rise in oil prices is due to investor flows and bets about long-term supply and demand, rather than any improvement in the near-term physical market.

“It is difficult to reconcile the fundamentals with the surge in the prices,” a senior executive at a large trading house says, reflecting a widely shared view. “The move from $50 to $60 was not based on fundamentals,” adds another top executive at an important bank which trades physical oil.

To be sure, traders are not forecasting a return of the lows of the year of $30 a barrel. But many reckon prices need to fall $10 in order to align with fundamentals.

Most analysts agree. Adam Sieminski, chief energy analyst at Deutsche Bank in Washington, says: “Oil prices have been supported by rising sentiment in the equity markets.”

Jeffrey Currie, head of commodities research at Goldman Sachs in London, says, while oil investors have been pricing-in the improving economic outlook, “the market can only do this as long as there is room to store the oil and bridge the gap between the currently weak demand environment and the anticipated stronger forward fundamentals.

“With inventories already at record levels, the risk is that oil inventories [will] breach storage capacity and force spot prices lower,”he adds.

However, some analysts – and a few traders – disagree. They believe the surge does not represent any violation of fundamentals. On the contrary, Costanza Jacazio, an oil analyst at Barclays Capital in New York, reckons the rise is the result of “one of the most important” fundamentals, namely that prices at $40-$50 leave the market “dangerously far from equilibrium” in the long term.

The conflicting views suggest next week’s Opec meeting in Vienna could be even more difficult than usual, with ministers caught between bearish near-term physical fundamentals and a bullish futures market.

Opec – with a vested interest in talking up the market – agrees with the downbeat physical traders’ view, downplaying the sustainability of recent prices. In its latest monthly report, published last week, the cartel said oil prices “have remained above $50 a barrel due more to market sentiment than [to] fundamentals”.

“Considerable risks remain as oil market fundamentals are far from balanced due to the persistent contraction in demand and growing supply overhang,” it said.

Demand is contracting at its fastest pace since 1981. The International Energy Agency, the western countries’ oil watchdog, forecasts a fall in consumption of 2.6m barrels a day this year compared with 2008. Such a fall would wipe out five years of demand growth, pushing average oil consumption this year to 83.2m b/d, the lowest since 2004. Traders say although demand appears to have hit a bottom – in part due to the seasonal pick-up in demand as the summer’s driving season arrives – there is little sign consumption will rise substantially in the near-term.

The supply front is even more worrying for the oil bulls. After eight consecutive months of Opec production cuts, the cartel marginally lifted its production in April and it appears certain another increase will follow this month. Nonetheless, overall compliance with the cuts – at 80 per cent of the promised 4.2m b/d – is still impressive by historical standards. At the same time, non-Opec production has held up better than expected in spite of mature oil fields in areas such as the North Sea, Alaska and Mexico and lower investment elsewhere.

Overall, global oil production increased last month for the first time since October, rising 230,000 b/d to 83.6m b/d. With demand this quarter estimated at only 82.3m b/d, more oil was forced into storage, bringing inventories to record levels.

Developed countries’ onshore inventories surged counter-seasonally in the first quarter and preliminary data suggest they increased further in March and April. Measured as days of demand, OECD total inventories are today enough to cover a massive 62.4 days of consumption, much more than the traditional range of 50-55 days. Although developing countries’ statistics on inventories are, at best, sketchy, traders reckon they also increased in the first quarter, notably in China.

What is more, a record amount of crude oil and oil products is floating at sea in tankers.

Traders estimate about 100m barrels of crude and about 25-30m barrels of oil products – mostly distillates such as diesel and kerosene – are sitting in tankerswaiting for a pick-up in demand.

That would represent a 40 per cent increase uponfloating storage levels in late March.

“Taking in account supply, demand and stocks, we should see oil at $40 rather than $60,” one senior oil trader estimates.

[AirlinePilot]

While I dont doubt that some of this is about investors clamoring for safe places, it isnt the whole story. The MSM is ignoring gasoline demand. There is something pretty fishy going on with inventory numbers if youv'e been following memmel's posts and China is trying desperately to buy and store a whole lot more using their DOLLARS Gee I wonder why?

It does not take a rocket scientist to understand that the market is being driven from many angles right now and investor money is simply one of them.
I dare think about what happens if and when we get REAL signs of a recovery!

[AirlinePilot]

$this->bbcode_second_pass_quote('davep', ' ')At the same time, non-Opec production has held up better than expected in spite of mature oil fields in areas such as the North Sea, Alaska and Mexico and lower investment elsewhere.

[frankthetank]

Above $62... Gasoline up to 2.37 here... Think its about ready to jump...

I agree what your saying about China. I think they want to spend those dollars on something with value before that money is worthless.

[TWilliam]

Does anyone else notice a tendency for the ADVFN stock chart for LS Crude in the site's left side panel to flatline, sometimes for extended periods, any time price movements get especially interesting? What's up with that?

[AAA]

$this->bbcode_second_pass_quote('frankthetank', 'A')bove $62... Gasoline up to 2.37 here... Think its about ready to jump...

[davep]

$this->bbcode_second_pass_quote('AAA', '')$this->bbcode_second_pass_quote('frankthetank', 'A')bove $62... Gasoline up to 2.37 here... Think its about ready to jump...

[davep]

$this->bbcode_second_pass_quote('AirlinePilot', 'C')ompletely innacurate. Poor reporting or spin, call it what you will but thats just flat out wrong and has been for a while. Unless your a corny.

[threadbear]

$this->bbcode_second_pass_quote('AirlinePilot', 'W')hile I dont doubt that some of this is about investors clamoring for safe places, it isnt the whole story. !